drm half yearly report and accounts · 2015. 3. 10. · doray minerals limited amn corporate +61...

DECEMBER 2014 HALF YEAR RESULTS

Increased production delivers increase in revenue to A$60.1M Net cash flow from operations A$27.1M maintained despite lower gold price EBITDA A$24.3M, Net profit after tax A$4M Debt reduced to A$12M

Doray Minerals Limited (ASX: DRM, Doray, the Company) today announced its financial results for the six-month period ending 31 December 2014. Production for the 6 months ending 31 December 2014 totalled 39,228 ounces, a slight increase over the previous six months. Gold sold increased by approximately 9% and resulted in a 6% increase in revenue to A$60.1 million. A reduction in depreciation and amortisation charges and monthly improvements in grade, costs and margin resulted in maintenance of cash flow from operations at approximately A$27 million despite a lower gold price environment. Table 1. Summary of half-year results for period ending 31 December 2014

Units 6 months to 31 Dec 2014

6 Months to 30 Jun 2014

6 months to 31 Dec 2013

Revenue from gold sales A$M 60.1 56.7 53.9

Gross profit A$M 8.5 9.3 21.8

Net profit/(loss) before tax A$M 5.1 (26.4)1 18.0

Tax (expense)/benefit A$M (1.1) 8.2 (5.4)

Net profit/(loss) after tax A$M 4.0 (18.2) 12.5

Earnings/(loss) per share cents 2.9 (11.6) 8.8

Net cash flow from operations A$M 27.1 27.3 30.5

Doray Managing Director Allan Kelly said the results exceeded expectations in what the Company foreshadowed to the market as a leaner period of cash flow for the Project. “Coming in to the first half of the 2015 financial year, we forecast lower grades and higher costs at Andy Well as we transitioned from treating stockpiled higher grade open pit material to being purely dependant on underground ore,” Mr Kelly said. “I’m pleased to say that we had considerable success in reducing unplanned dilution underground and saw significant monthly improvement in our head grade, costs and profit margins resulting in better than expected results for the half year.”

1 Includes A$32 million impairment

ASX Announcement

11 March 2015

ASX:DRM

Doray Minerals Ltd, 11 March 2015

The Company expects increased production and cash flow in the second half of the year as a result of the high-grade stage 2 open pit, which was recently increased by 67%. As a result, the Company recently upgraded its production guidance to 85,000-90,000 ounces (previously 77,000-85,000 ounces) at a cash operating cost of A$600-700/oz (previously A$700-800/oz). “We will also see the benefits from a significantly improved gold price since October 2014 and a reduction the diesel price” Mr Kelly said. Doray will conduct a Half Yearly Results teleconference on Wednesday 11 March at 0830 WST (1130 EST). Dial in details are below: Teleconference details: Dial-in number from an Australian landline: 1800 246 489

Dial-in number from an Australian mobile phone: 03 9011 8100

International dial-in numbers:

Canada: 1 877 304 3572

Canada-Toronto: 1 647 426 9199

Hong Kong: 3 051 2709

Switzerland: 0 800 836 593

UK: 0 8 00 279 4157

For any difficulties with international calls please dial: +61 3 9011 7100. Enter the PIN: 444 779#

You will hear music until the moderator (call leader) joins the meeting. Please dial in a few minutes before the conference starts.

During the meeting:

When participants join or leave the meeting two beeps will be heard. If you are calling from a noisy location mute/unmute yourself by pressing *6 on your phone. For assistance during the meeting, press *0 (star zero).

A recording of the conference call will be available. If you would like a copy please let us know and we will send you the link.

-ENDS-

ASX:DRM

Doray Minerals Ltd, 11 March 2015

For further information, please contact: Allan Kelly Margie Livingston Managing Director Associate Doray Minerals Limited AMN Corporate +61 (08) 9226 0600 +61 (0)438 661 131 [email protected] [email protected]

About Doray Minerals Limited Doray Minerals Limited (ASX: DRM) is a Western Australian high-grade gold producer, developer and explorer. The Company began mining at its Andy Well Gold Project in the northern Murchison region of Western Australia in August 2013 and recently announced a recommended Takeover Offer for ASX-listed Mutiny Gold Ltd. Doray has a strategic portfolio of gold exploration properties within Western Australia and South Australia and each presents multiple discovery opportunities. The Company's Board and management team has expertise in discovery, development and production.

ACN: 138 978 631

CONSOLIDATED INTERIM FINANCIAL REPORT

FOR THE HALF‐YEAR ENDED

31 DECEMBER 2014

Note: The information contained herein should be read in conjunction with the most recent annual report.

INTERIM FINANCIAL REPORT For the half year ended 31 December 2014 INDEX Corporate Directory 1 Directors’ Report 2 Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income 8 Condensed Consolidated Statement of Financial Position 9 Condensed Consolidated Statement of Changes in Equity 10 Condensed Consolidated Statement of Cash Flows 11 Notes to the Financial Statements 12 Directors’ Declaration 20 Auditor’s Independence Declaration 21 Auditor’s Review Report 22

Doray Minerals Limited Interim Financial Report 2014 ACN: 138 978 631

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CORPORATE DIRECTORY

DIRECTORS: Peter Alexander Non‐Executive Chairman Allan Kelly Managing Director Jay Stephenson Non‐Executive Director Leigh Junk Non‐Executive Director Peter Lester Non‐Executive Director Allan Brown Non‐Executive Director COMPANY SECRETARY: Iain Garrett PRINCIPAL AND REGISTERED OFFICE Level 3, 41‐43 Ord Street WEST PERTH WA 6005 Telephone (08) 9226 0600 Facsimile (08) 9226 0633 Website www.dorayminerals.com.au

AUDITORS: Nexia Perth Audit Services Pty Ltd Level 3 88 William Street GPO Box 2570 PERTH WA 6001 Telephone (08) 9463 2463 Facsimile (08) 9463 2499

SHARE REGISTRY: Computershare Investor Services Pty Ltd Level 2, Reserve Bank Building 45 St George’s Terrace PERTH WA 6000 Telephone 1300 557 010 Facsimile (08) 9323 2033

HOME EXCHANGE: ASX Limited Exchange Plaza 2 The Esplanade PERTH WA 6000 ASX Code: DRM


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DIRECTORS’ REPORT Your directors present their financial report of Doray Minerals Limited (“Doray” or “the Group”) for the half year ended 31st December 2014. In order to comply with the provisions of the Corporations Act 2001, the directors present their report as follows: 1. DIRECTORS The following persons were directors of Doray Minerals Limited during the period and up to the date of this report: Mr Peter Alexander Non‐Executive Chairman Mr Allan Kelly Managing Director Mr Jay Stephenson Non‐Executive Director Mr Leigh Junk Non‐Executive Director Mr Peter Lester Non‐Executive Director (appointed 1 September 2014) Mr Allan Brown Non‐Executive Director (appointed 26 February 2015) 2. FINANCIAL RESULT The profit of the Group for the period after tax amounted to $3,969,000 (half year ended 31 December 2013 profit: $12,536,000). 3. OVERVIEW Doray Minerals Limited (ASX: DRM, “Doray”) is an Australian‐based high‐grade gold producer and exploration company. The Company operates the Andy Well Gold Project, located approximately 45km north of Meekatharra, in the northern Murchison region of Western Australia and is the first new gold operation in the Murchison in over 10 years. Doray commenced mining and site works in November 2012 with first gold production in August 2013, approximately 3.5 years after the initial discovery of the high‐grade Wilber Lode gold deposit by Doray in March 2010. Doray recently announced a Board Recommended Takeover Offer for Mutiny Gold Limited (ASX: MYG, “Mutiny”). The combination of the two companies will form a leading mid‐tier, high‐grade West Australian gold company with an attractive and complementary portfolio of production, development and exploration assets 4. ANDY WELL GOLD PROJECT

Activity during the half year focused on the processing of ore exclusively from the high‐grade Wilber Lode underground gold mine. The Group progressed with underground development and stoping to both northern and southern panels of the Wilber Lode, as well as preparing for mining of the Stage 2 Open Pit cut‐back scheduled for the second half of the 2015 financial year. Doray achieved two significant milestones during the period ‐ producing its 100,000th ounce since commencement of production in August 2013 and passing 365 days without a Lost Time Injury (LTI) – with no mining or production related LTI since the commencement of construction in November 2012. This excellent safety performance demonstrates Doray’s commitment to placing the safety of its employees and contractors foremost. Doray has successfully implemented alternative mining methods to minimise stoping dilution and to suit


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the local ground conditions. These methods include sub‐level benching with in‐situ and/or cemented rock fill (“CRF”) sill pillars and/or progressive backfill using the “Avoca” mining method. As a result, mine grade, head grade and gold production improved throughout the half year with a resulting improvement in costs and profit margin. Table 1. Summary of mine physicals for December 2014 Half Year.

Units Sept 14 Qtr Dec 14 Qtr 2015 FYTD

Underground Ore Mined t 77,735 80,459 158,194

Underground Ore Grade g/t 7.41 8.21 7.82

Contained gold oz 18,531 21,245 39,776

A total of 148,352 wet tonnes were milled during the half year at a rate of 33.9 tonnes/hr with total gold recoveries of 98% and a reconciled mill head grade of 8.40g/t. Total gold recovered was 39,257 ounces with a 27 ounce increase in Gold‐in‐circuit (GIC), resulting in total gold production of 39,228 ounces. Cash operating cost (C1) for the half year was A$698/oz, whilst the All‐In Sustaining Cost (AISC) was A$1,238/oz compared with an average price received for the same period of A$1,477/oz. Table 2. Summary of Production for December 2014 Half Year.

Units Sept 14 Qtr Dec 14 Qtr 2015 FYTD

Ore processed tonnes 73,835 74,517 148,352

Head grade g/t 7.82 8.98 8.40

Recovery % 98.1 97.9 98.0

Gold recovered oz 18,203 21,054 39,257

GIC change oz ‐62 89 27

Gold produced oz 18,265 20,963 39,228

Cash Operating Costs A$M 14.1 13.3 27.4

Cash Operating Cost (C1)1 A$/oz 773 633 698

Royalties A$M 1.2 0.9 2.1

C1 plus royalties A$/oz 840 675 752

Depreciation/Amortisation A$M 9.2 10.1 19.2

C2 Cost A$/oz 1,276 1,115 1,190

Total Production Costs A$M 24.9 24.4 49.3

Total Cost (C3)2 A$/oz 1,366 1,166 1,260

All‐in Sustaining Cost (AISC)3 A$/oz 1,384 1,1104 1,238

Gold sold oz 18,962 21,584 40,545

Revenue from gold sales A$M 28.6 31.3 60.0

Average price received A$/oz 1,508 1,450 1,477

Average margin A$/oz 124 340 239

1 Includes mining, processing, site admin and refining costs less silver credits 2 Includes depreciation and amortisation of mining development, royalties, net bank charges and attributable corporate costs 3 As per World Gold Council guidelines 4 Includes a A$14/oz charge related to the issue of employee options in December 2013.


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During the period, the Company provided an update of its production and cost guidance for the 2015 financial year following a significant increase in the size of the high‐grade Wilber Stage 2 open pit mining inventory and improved operating results since August 2014. Following the completion of grade control drilling, the Company announced a 67% increase to the size of the high‐grade Stage 2 open pit at Andy Well, to approximately 23,500 ounces @ 16.1g/t Au (see ASX release dated 7 January 2015) compared with that previously quoted in the July 2012 BFS (approximately 14,000 ounces @ 15.3g/t). Gold production from Andy Well is now expected to be in the range of 85,000 to 90,000 ounces for the 2015 financial year (previously 77,000 to 85,000 ounces). Full year cash operating costs (C1) are expected to be in the range of A$600‐700/oz (previously A$700‐800/oz).. In September 2014, the Company announced an updated Resource and Reserve Statement for the Andy Well Project as at 30 June 2014 (refer to ASX release dated 25 September 2014), increasing the Resource Inventory at Andy Well by 75,000 ounces, replacing the depletion of mining over the past 12 months. Additionally, the high‐grade Judy Lode Resource was converted into an initial Ore Reserve and replaced the first year of underground production from the Wilber Lode. Subsequent to the end of reporting period the additional high‐grade Stage 2 open pit ounces (9,500 ounces @ 17.4g/t) were added to the Andy Well Ore Reserve inventory (see ASX release dated 7 January 2015). Realignment of a portion of the Great Northern Highway commenced in November with mining of the Stage 2 open pit scheduled to commence in January 2015 and be completed by July 2015. 5. Exploration and New Business Doray has an exploration tenement portfolio covering a total of approximately 4,000km2 in both Western Australia (WA) and South Australia (SA). In the northern Murchison Region of WA, Doray is actively exploring for gold mineralisation which has the potential to provide additional near‐term development opportunities for the Andy Well Gold Project. The Company continues to explore for large, stand‐alone development opportunities over its entire exploration portfolio in WA and SA. Exploration at Andy Well was centred primarily on identifying and defining parallel gold bearing structures to the Wilber Lode, through targets identified in the footwall corridor. Work was completed primarily focussed on extending the Wilber and Judy Lodes at depth, follow‐up drilling of the Suzie Zone. Recent drilling results from within the nearby Suzie Zone also indicated the potential for additional shallow high‐grade material which could be exploited as part of the Stage 2 open pit mining exercise, further proof of the upside potential of the Andy Well project. Also at Andy Well, step‐out diamond drilling has intersected mineralised quartz lode at depths beyond 600m below surface at both the Wilber and Judy Lodes. These deep intersections are significant in that they confirm that the Wilber and Judy Lode structures and, by inference, the other structures present at Andy Well, continue at significant depths below current drilling and hence provide clear potential for extensions to the mine life at Andy Well. Doray had early exploration success at the Horse Well JV Project, where the presence of a major mineralised structure at “Dusk til Dawn” was confirmed. RC drilling intersected high‐grade gold with 65m @ 2.6 g/t Au from 50m, including 13m @ 8.2g/t Au from 50m. During the period, Doray also signed a strategic Farm‐in Agreement with Iluka Resources Ltd (Iluka) to explore its 21,000km2 Central and Western Gawler Craton tenement portfolio in South Australia. Doray will have the right to earn up to 80% of any ‘gold resources’ discovered within the project area with Iluka retaining rights to discoveries of other commodities made by the Company, unless it elects not to do so.


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6. TAKEOVER OFFER FOR MUTINY GOLD

On 28th October 2014, the Company announced it had reached agreement with the Board of Mutiny Gold Ltd (ASX: MYG, “Mutiny”) to merge the two companies via a unanimously recommended off‐market Takeover Offer for Mutiny by Doray. The combination of the two companies will create a leading, mid‐tier high‐grade West Australian gold producer and explorer with an existing production asset at Andy Well and a development‐ready asset at the high‐grade Deflector gold‐copper‐silver project in the southern Murchison. Mutiny shareholders were offered one Doray Share for every 9.5 Mutiny shares, giving Mutiny shareholders a premium to recent trading price and between 30% and 33% of the merged entity. Mutiny shareholders also retain exposure to the development of the Deflector project whilst gaining exposure to Doray’s existing assets, including the high‐grade Andy Well Gold Project. Following development of the Deflector Gold Project, Doray’s annualised production is expected to double to approximately 160,000 ounces per annum (gold equivalent). Doray believes, given the similarities in nature and scale between the proposed Deflector operations and those at Andy Well, that it has the skills, recent experience and track record to secure the required funding and bring the Deflector project into production as expeditiously as possible. As at 31 December 2014, the Company had received acceptances for 70.1% of the Shares on issue and 78% of the listed Options. Subsequent to the end of the period, Doray continued to increase the acceptance level of Shares and listed Options and declared the Offers unconditional on 15 January 2015 and compulsory acquisition was announced on 4 February 2015 once 90% relevant interest in Mutiny had been achieved.

Competent Person Statement The information in this announcement regarding Doray’s Exploration Results, Mineral Resources or Ore Reserves has been extracted from Doray ASX announcements dated 6 August 2014, 10 September 2014, 25 September 2014, 13 November 2014, 10 December 2014, 18 December 2014 and 7 January 2015 and is available on the Doray website at www.dorayminerals.com.au or through the ASX website at www.asx.com.au (using ticker code “DRM”). Doray confirms that it is not aware of any new information or data that materially affects the information included in the original market announcement and that all material assumptions and technical parameters underpinning the estimates in that market announcement continue to apply and have not materially changed. Doray confirms that the form and context in which the Competent Person’s findings are presented have not been materially modified from the original market announcement.


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Figure 1. Murchison region geology showing location of Deflector in relation to existing Doray projects, including the Andy Well Gold Project.


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7. CORPORATE On 1 September 2014, the Group appointed Mr Peter Lester to the Board as a Non‐Executive Director. 8. SIGNIFICANT EVENTS AFTER THE REPORTING DATE

On 29 January 2015, the Company announced that it had agreed to a refinancing and restructure of its project finance facility with the Commonwealth Bank of Australia to Westpac Banking Corporation to enable improved access to cash flow from its high‐grade Andy Well Gold Project in Western Australia for exploration and business development activities. As part of the refinancing and restructure, Westpac will pay out the $17 million outstanding balance of the existing project finance facility and provide an additional $6 million to assist with costs relating to the takeover of Mutiny Gold Ltd and expenses relating to commencement of the high‐grade Stage 2 open pit.

On 4 February 2015, the Company declared the Takeover Offer for Mutiny unconditional following the achievement of over 90% relevant interest in Mutiny.

On 25 February 2015, the Company announced a maiden high‐grade Resource for the Suzie Zone, within the Company’s Andy Well Gold Project in the northern Murchison region of Western Australia. The Suzie Zone is located parallel to the operating Wilber Lode underground mine and the Judy Lode, which is scheduled for underground mining in the near‐term.

On 26 February 2015, the Company appointed Mr Allan Brown to the Board as a Non‐Executive Director.

There are no other significant events after the reporting date. 9. AUDITORS’ INDEPENDENCE DECLARATION The auditors’ independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 21. This report is signed in accordance with a resolution of the Board of Directors with pursuant to section 306.3 of the Corporations Act 2001. 10. ROUNDING OFF OF AMOUNTS The company is a company of the kind referred to in ASIC Class Order 98/100 and in accordance with that Class Order amounts in the directors’ report and the financial statements are rounded off to the nearest thousand dollars, unless otherwise indicated. For and on behalf of the Board

____________________________ PETER ALEXANDER CHAIRMAN Perth, Western Australia Dated this 10th day of March 2015


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CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME For the half year ended 31 December 2014

CONSOLIDATED

31 December

2014 31 December

2013

Note

$’000

$’000

Revenue from operations 60,072 53,940

Mining and processing costs (29,947) (17,548)

Depreciation and amortisation (19,235) (12,684)

Royalty expense (2,113) (1,945)

Exploration and evaluation expenditure write off (236) ‐

Gross profit 8,541 21,763

Corporate and other expenses (2,986) (2,350)

Results from operating activities 5,555 19,413

Financial income 332 205

Financial expense (831) (1,647)

Net financing (expense)/ income (499) (1,442)

Profit before income tax 5,056 17,971

Income tax expense (1,087) (5,435)

Net profit for the period 3,969 12,536

Other comprehensive income

Items that may subsequently be reclassified to profit or loss

Effective portion of changes in fair value of cash flow hedges

(2,601) (2,515)

Total items that may subsequently be reclassified to profit or loss

(2,601) (2,515)

Other comprehensive income for the half year, net of income tax

(2,601) (2,515)

Total comprehensive profit for the period 1,368 10,021

Profit per share attributable to ordinary equity holders

Cents Cents

‐basic and diluted 3 2.4 8.8

The above statement should be read in conjunction with the accompanying notes.


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CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 31 December 2014

CONSOLIDATED 31 December 30 June 2014 2014 Note $’000 $’000ASSETS

Current Assets Cash and cash equivalents 8 14,616 15,656Trade and other receivables 124 921Inventories 4,212 6,070Financial asset – gold hedge 4 1,013 4,728Prepayments 477 41

Total Current Assets 20,442 27,416

Non‐Current Assets Property, plant and equipment 5 55,457 56,824Exploration assets 6 15,148 10,697Mine development asset 7 14,163 13,879Deferred tax assets 5,832 5,953

Total Non‐Current Assets 90,600 87,353

TOTAL ASSETS 111,042 114,769

LIABILITIES

Current Liabilities Trade and other payables 16,481 20,160Provisions 856 1,298Borrowings 12,949 14,664

Total Current Liabilities 30,286 36,122

Non‐Current Liabilities Provisions 1,240 1,222Borrowings 586 698

Total Non‐Current Liabilities 1,826 1,920

TOTAL LIABILITIES

32,112 38,042

NET ASSETS

78,930 76,727

EQUITY

Issued capital 91,000 90,412Reserves 4,456 6,810Accumulated losses (16,526) (20,495) TOTAL EQUITY 78,930 76,727

The above statement of financial position should be read in conjunction with the accompanying notes.


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CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the half year ended 31 December 2014

CONSOLIDATED Issued

capital

$’000

Reserves

$’000

Accumulated profit/(losses)

$’000

Total

$’000

Balance at 1 July 2014 90,412 6,810 (20,495) 76,727

Profit attributable to members of the Group ‐ ‐ 3,969 3,969

Other comprehensive income ‐ (2,601) ‐ (2,601)

Total 90,412 4,209 (16,526) 78,095

Transactions with owners, directly in equity

Options exercised during the period 736 ‐ ‐ 736

Share based payments ‐ 247 ‐ 247

Share issue costs (148) ‐ ‐ (148)

At 31 December 2014 91,000 4,456 (16,526) 78,930

Issued

capital

$’000

Reserves

$’000

Accumulated losses

$’000

Total

$’000

Balance at 1 July 2013 73,947 10,838 (14,847) 69,938

Profit attributable to members of the Group ‐ ‐ 12,536 12,536

Other comprehensive income ‐ (2,515) ‐ (2,515)

Total 73,947 8,323 (2,311) 79,959

Transactions with owners, directly in equity

Options exercised during the period 5 ‐ ‐ 5

Share based payments ‐ 145 ‐ 145

At 31 December 2013 73,952 8,468 (2,311) 80,109



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CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS For the half year ended 31 December 2014

CONSOLIDATED

31 December

2014 31 December

2013

$’000

$’000

Cash flows from operating activities

Receipts from gold and other metal sales 60,076 53,940

Payments to suppliers and employees (incl royalties) (32,394) (22,496)

Net interest (paid)/received (499) (942)

Net cash from operating activities 27,183 30,502

Cash flows from investing activities

Purchase of property, plant and equipment (4,165) (1,009)

Payments for exploration and evaluation expenditure (4,687) (2,695)

Payments for mine development assets (13,987) (18,625)

Purchase of minority JV partner interest (4,000) (4,000)

Net cash used in investing activities (26,839) (26,329)

Cash flows from financing activities

Repayment of borrowings (2,120) (6,144)

Proceeds from the issue of options 736 5

Net cash provided from financing activities (1,384) (6,139)

Net (decrease)/increase in cash and cash equivalents (1,040) (1,966)

Cash and cash equivalents at 1 July 15,656 25,700

Cash and cash equivalents at the end of the period 14,616 23,734



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NOTES TO THE FINANCIAL STATEMENTS For the half‐year ended 31 December 2014 Note 1 (a) BASIS OF PREPARATION The half‐year financial report is a general purpose financial report prepared in accordance with the requirements of the Corporations Act 2001 and Australian Accounting Standard AASB 134: Interim Financial Reporting. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards. This half‐year financial report is intended to provide users with an update on the latest consolidated annual financial statements of Doray Minerals Limited and its subsidiaries (“the Group”). As such, it does not contain information that represents relatively insignificant changes occurring during the half‐year within the Group. It is therefore recommended that this financial report be read in conjunction with the annual financial report for the year ended 30 June 2014 and any public announcements made by Doray Minerals Limited during the half‐year in accordance with the continuous disclosure requirements arising under the Corporations Act 2001. The same accounting policies and methods of computation, apart from those noted below, have been followed in this interim financial report as were applied in the most recent annual financial statements. Amortisation The Group amortised mine properties in production on a units of production basis over economically recoverable reserves and resources until 30 June 2014. From 1 July 2014 this was changed to ounces produced from tonnes produced. Financial Position The half‐year financial report has been prepared on a going concern basis, which contemplates the continuity of normal business activity and the realisation of assets and the settlement of liabilities in the normal course of business. The Group has realised a profit of $3,969,000 (31 December 2013: profit of $12,536,000) for the half‐year ended 31 December 2014. As at 31 December 2014 the Group has net current liabilities of $9,844,000 (30 June 2014: net current liabilities of $8,706,000) which includes cash and cash equivalents of $14,616,000, trade and other receivables of $124,000, inventories of $4,212,000, a gold hedge financial asset of $1,013,000, trade payables of $16,481,000, current provisions of $856,000 and borrowings of $12,949,000. The payment of trade payables, borrowings and forecast operational and capital expenditure arising from the mining operations at the Andy Well Gold Project are expected to be met from existing cash resources and operational cash flows. Any shortfalls experienced in the near term will be covered by the restructuring of debt or through a capital raising. Based on the reasons above, the directors believe it is appropriate that the financial report be prepared on a going concern basis. Rounding off of amounts The company is a company of the kind referred to in ASIC Class Order 98/100 and in accordance with that Class Order amounts in the directors’ report and the financial statements are rounded off to the nearest thousand dollars, unless otherwise indicated.


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NOTES TO THE FINANCIAL STATEMENTS For the half‐year ended 31 December 2014 Note 1 (continued) Application of new accounting standards The Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to their operations and effective for the current half‐year. New and revised Standards and amendments thereof and Interpretations effective for the current half‐year that are relevant to the Group include:

AASB 1031 ‘Materiality’ (2013)

AASB 2013‐5 ‘Amendments to Australian Accounting Standards – Investment Entities’

AASB 2012‐3 ‘Amendments to Australian Accounting Standards – Offsetting Financial Assets and Financial Liabilities’

AASB 2013‐3 ‘Amendments to AASB 136 – Recoverable Amount Disclosures for Non‐ Financial Assets’

AASB 2014‐1 ‘Amendments to Australian Accounting Standards’

Part A: ‘Annual Improvements 2010‐2012 and 2011‐2013 Cycles’

Part C: ‘Materiality’ Impact of the application of AASB 1031 ‘Materiality’ (2013) The revised AASB 1031 is an interim standard that cross‐references to other Standards and the Framework for the Preparation and Presentation of Financial Statements (issued December 2013) that contain guidance on materiality. The AASB is progressively removing references to AASB 1031 in all Standards and Interpretations, and once all these references have been removed, AASB 1031 will be withdrawn. The adoption of AASB 1031 does not have any material impact on the disclosures or the amounts recognised in the Group's condensed consolidated financial statements. Impact of the application of AASB 2013‐5 ‘Amendments to Australian Accounting Standards – Investment Entities’ The Group has applied the amendments to AASB 10, AASB 12 and AASB 127 for the first time in the current year. The amendments to AASB 10 define an investment entity and require a reporting entity that meets the definition of an investment entity not to consolidate its subsidiaries but instead to measure its subsidiaries at fair value through profit or loss in its consolidated and separate financial statements. To qualify as an investment entity, a reporting entity is required to:

obtain funds from one or more investors for the purpose of providing them with investment management services;

commit to its investor(s) that its business purpose is to invest funds solely for returns from capital appreciation, investment income, or both; and

measure and evaluate performance of substantially all of its investments on a fair value basis.

Consequential amendments have been made to AASB 12 and AASB 127 to introduce new disclosure requirements for investment entities.


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NOTES TO THE FINANCIAL STATEMENTS For the half‐year ended 31 December 2014 Note 1 (continued) As the Company is not an investment entity (assessed based on the criteria set out in AASB 10 as at 1 January 2014), the application of the amendments does not have any material impact on the disclosures or the amounts recognised in the Group's condensed consolidated financial statements. Impact of the application of AASB 2012‐3 ‘Amendments to Australian Accounting Standards – Offsetting Financial Assets and Financial Liabilities’ The Group has applied the amendments to AASB 132 for the first time in the current year. The amendments to AASB 132 clarify the requirements relating to the offset of financial assets and financial liabilities. Specifically, the amendments clarify the meaning of ‘currently has a legally enforceable right of set‐off’ and ‘simultaneous realisation and settlement’. The amendments have been applied retrospectively. The Group has assessed whether certain of its financial assets and financial liabilities qualify for offset based on the criteria set out in the amendments and concluded that the application of the amendments does not have any material impact on the amounts recognised in the Group's condensed consolidated financial statements. Impact of the application of AASB 2013‐3 ‘Amendments to AASB 136 – Recoverable Amount Disclosures for Non‐Financial Assets’ The Group has applied the amendments to AASB 136 for the first time in the current year. The amendments to AASB 136 remove the requirement to disclose the recoverable amount of a cash‐generating unit (CGU) to which goodwill or other intangible assets with indefinite useful lives had been allocated when there has been no impairment or reversal of impairment of the related CGU. Furthermore, the amendments introduce additional disclosure requirements applicable to when the recoverable amount of an asset or a CGU is measured at fair value less costs of disposal. These new disclosures include the fair value hierarchy, key assumptions and valuation techniques used which are in line with the disclosure required by AASB 13 ‘Fair Value Measurements’. The application of these amendments does not have any material impact on the disclosures in the Group's condensed consolidated financial statements. Impact of the application of AASB 2013‐9 ‘Amendments to Australian Accounting Standards’– Part B: ‘Materiality’ This amending standard makes amendments to particular Australian Accounting Standards to delete references to AASB 1031, at the same time it makes various editorial corrections to Australian Accounting Standards as well. The adoption of amending standard does not have any material impact on the disclosures or the amounts recognised in the Group's condensed consolidated financial statements.


15

NOTES TO THE FINANCIAL STATEMENTS For the half‐year ended 31 December 2014 Note 1 (continued) Impact of the application of AASB 2014‐1 ‘Amendments to Australian Accounting Standards’ Part A: ‘Annual Improvements 2010‐2012 and 2011‐2013 Cycle’ The Annual Improvements 2010‐2012 Cycle include a number of amendments to various AASBs, which are summarised below. The amendments to AASB 2 (i) change the definitions of ‘vesting condition’ and ‘market condition’; and (ii) add definitions for ‘performance condition’ and ‘service condition’ which were previously included within the definition of ‘vesting condition’. The amendments to AASB 2 are effective for share‐based payment transactions for which the grant date is on or after 1 July 2014. The amendments to AASB 3 clarify that contingent consideration that is classified as an asset or a liability should be measured at fair value at each reporting date, irrespective of whether the contingent consideration is a financial instrument within the scope of AASB 9 or AASB 139 or a non‐financial asset or liability. Changes in fair value (other than measurement period adjustments) should be recognised in profit and loss. The amendments to AASB 3 are effective for business combinations for which the acquisition date is on or after 1 July 2014. The amendments to AASB 8 (i) require an entity to disclose the judgements made by management in applying the aggregation criteria to operating segments, including a description of the operating segments aggregated and the economic indicators assessed in determining whether the operating segments have ‘similar economic characteristics’; and (ii) clarify that a reconciliation of the total of the reportable segments’ assets to the entity’s assets should only be provided if the segment assets are regularly provided to the chief operating decision‐maker. The amendments to the basis for conclusions of AASB 13 clarify that the issue of AASB 13 and consequential amendments to AASB 139 and AASB 9 did not remove the ability to measure short‐term receivables and payables with no stated interest rate at their invoice amounts without discounting, if the effect of discounting is immaterial. As the amendments do not contain any effective date, they are considered to be immediately effective. The amendments to AASB 116 and AASB 138 remove perceived inconsistencies in the accounting for accumulated depreciation/amortisation when an item of property, plant and equipment or an intangible asset is revalued. The amended standards clarify that the gross carrying amount is adjusted in a manner consistent with the revaluation of the carrying amount of the asset and that accumulated depreciation/amortisation is the difference between the gross carrying amount and the carrying amount after taking into account accumulated impairment losses. The amendments to AASB 124 clarify that a management entity providing key management personnel services to a reporting entity is a related party of the reporting entity. Consequently, the reporting entity should disclose as related party transactions the amounts incurred for the service paid or payable to the management entity for the provision of key management personnel services. However, disclosure of the components of such compensation is not required. The ‘Annual Improvements 2011‐2013 Cycle’ include a number of amendments to various AASBs, which are summarised below.


16

NOTES TO THE FINANCIAL STATEMENTS For the half‐year ended 31 December 2014 Note 1 (continued) The amendments to AASB 3 clarify that the standard does not apply to the accounting for the formation of all types of joint arrangement in the financial statements of the joint arrangement itself. The amendments to AASB 13 clarify that the scope of the portfolio exception for measuring the fair value of a group of financial assets and financial liabilities on a net basis includes all contracts that are within the scope of, and accounted for in accordance with, AASB 139 or AASB 9, even if those contracts do not meet the definitions of financial assets or financial liabilities within AASB 132. The amendments to AASB 140 clarify that AASB 140 and AASB 3 are not mutually exclusive and application of both standards may be required. Consequently, an entity acquiring investment property must determine whether: (a) the property meets the definition of investment property in terms of AASB 140; and (b) the transaction meets the definition of a business combination under AASB 3. Part C – ‘Materiality’ This amending standard makes amendments to particular Australian Accounting Standards to delete their references to AASB 1031, which historically has been referenced in each Australian Accounting Standard. The adoption of amending standard does not have any material impact on the disclosures or the amounts recognised in the Group's condensed consolidated financial statements. Note that AASB 14 ‘Regulatory Deferral Accounts’ and AASB 2014‐1 ‘Amendments to Australian Accounting Standards – Part D: ’Consequential Amendments arising from AASB 14’ is not applicable to the Group as the Group is not a first‐time adopter of Australian Accounting Standards. Note 2 OPERATING SEGMENT The accounting policies used by the Company in reporting segments are in accordance with the measurement principles of Australian Accounting Standards. The financial information presented to the directors are organised to show financial information for the Group and are not further disaggregated. Hence management consider the Group as a whole to be one operating segment. Note 3 EARNINGS PER SHARE

December 2014

December2013

Basic and diluted profit per share (cents) 2.4 8.8Profit attributable to members of Doray Minerals Limited ($’000) $3,969 $12,536Weighted average number of shares in issue 165,458,409 141,867,867


17

NOTES TO THE FINANCIAL STATEMENTS For the half‐year ended 31 December 2014 Note 4 FINANCIAL ASSET – GOLD HEDGE

December 2014 $’000

June2014$,000

Derivative financial instrument 1,013 4,728

In January 2013, Doray undertook a gold hedging programme comprising the forward sale of 45,000 ounces at an average price of A$1,620 per ounce over the first 14 months of production, comprising approximately 50% of total production from the Andy Well Gold Project over this period. The Group undertook further hedging in March 2014 comprising the forward sale of an additional 39,651 ounces at an average price of A$1,505.50 per ounce over the period October 2014 to September 2015. In December 2014 another 6,000 ounces at A$1,420.80 per ounce was hedged over the period January 2015 to March 2015. Fair Value of Financial Assets The methods and valuation techniques used for the purpose of measuring fair value of the company’s financial assets are unchanged compared to the previous reporting period. The levels of the hierarchy are as follows:

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices) Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

31 December 2014

Level 1

$’000

Level 2

$’000

Level 3

$’000

Total

$’000

Derivative Financial Asset ‐ 1,013 ‐ 1,103

Total ‐ 1,013 ‐ 1,013

Valuation Techniques and Key Inputs: Future cash flows are estimated based on forward gold prices (from observable forward gold prices at the end of the reporting period) and the contract gold price, and discounted at a rate that reflects the credit risk of the various counterparties. Note 5 PROPERTY PLANT AND EQUIPMENT Property, Plant and Equipment $’000Balance at the beginning of the period 56,824Additions 4,165Depreciation (5,532)Disposals ‐

Balance at the end of the period 55,457


18

NOTES TO THE FINANCIAL STATEMENTS For the half‐year ended 31 December 2014 Note 6 EXPLORATION AND EVALUATION ASSETS

Exploration and Evaluation Assets $’000Balance at the beginning of the period 10,697Exploration of tenements 4,687 Exploration expenditure written off (236)


The ultimate recoupment of deferred exploration and evaluation expenditure carried forward is dependent upon the successful development and exploitation, or alternatively, sale of the respective areas of interest at an amount greater than or equal to the carrying value. A regular review is undertaken of each area of interest within exploration and evaluation to determine the appropriateness of continuing to carry forward costs in relation to that area of interest. Exploration and evaluation assets are assessed for write down if facts and circumstances suggest that the carrying value exceeds the recoverable amount which resulted in a write off of $236,000 on exploration and evaluation assets for the period ended 31 December 2014 (2013: $192,000). Note 7 MINE DEVELOPMENT ASSETS Mine Development Assets $’000Balance at the beginning of the period 13,879Additions 13,987Amortisation (13,703)


Note 8 CASH AND CASH EQUIVALENTS Under the term of the bank loan agreement, the Group is required to maintain cash on deposit in a Debt Service Reserve Account which amounted to $5,000,000 at 31 December 2014. The cash cannot be withdrawn or used by the Group for liquidity purposes whilst the borrowing is outstanding. For the periodic repayments of the borrowings, the Group and the lender intend to net settle. As a result, the Group’s borrowings have been presented net of the cash on deposit, as the requirements under Australian Accounting Standards to offset have been met. Note 9 CAPITAL EXPENDITURE COMMITMENTS 2014

$’000 2013$’000

Plant and equipment 290 ‐

Accommodation village expansion

220 ‐


19

NOTES TO THE FINANCIAL STATEMENTS For the half‐year ended 31 December 2014 Note 10 EVENTS SUBSEQUENT TO REPORTING DATE

On 29 January 2015, the Company announced that it had agreed to a refinancing and restructure of its project finance facility with the Commonwealth Bank of Australia to Westpac Banking Corporation to enable improved access to cash flow from its high‐grade Andy Well Gold Project in Western Australia for exploration and business development activities. As part of the refinancing and restructure, Westpac will pay out the $17 million outstanding balance of the existing project finance facility and provide an additional $6 million to assist with costs relating to the takeover of Mutiny Gold Ltd and expenses relating to commencement of the high‐grade Stage 2 open pit.

On 4 February 2015, the Company declared the Takeover Offer for Mutiny unconditional following the achievement of over 90% relevant interest in Mutiny.

On 25 February 2015, the Company announced a maiden high‐grade Resource for the Suzie Zone, within the Company’s Andy Well Gold Project in the northern Murchison region of Western Australia. The Suzie Zone is located parallel to the operating Wilber Lode underground mine and the Judy Lode, which is scheduled for underground mining in the near‐term.

On 26 February 2015, the Company appointed Mr Allan Brown to the Board as a Non‐Executive Director.

There are no other significant events after the reporting date.


20

NOTES TO THE FINANCIAL STATEMENTS For the half‐year ended 31 December 2014 DIRECTORS’ DECLARATION The Directors of the Group declare that: 1. The financial statements and notes set out on pages 8 to 19:

(a) comply with Accounting Standard AASB 134: Interim Financial Reporting and the Corporations Act

2001, and (b) give a true and fair view of the Group’s financial position as at 31 December 2014 and of its

performance for the half year ended on that date. 2. In the Directors’ opinion, there are reasonable grounds to believe that the Group will be able to pay

its debts as and when they become due and payable. This declaration is made in accordance with a resolution of the Directors and is signed for and on behalf of the Directors by:

_________________________ PETER ALEXANDER CHAIRMAN Perth, Western Australia Dated this 10th day of March 2015

Auditor’s independence declaration under section 307C of the Corporations Act 2001 To the directors of Doray Minerals Limited I declare that, to the best of my knowledge and belief, in relation to the review for the half year ended 31 December 2014, there have been:

(i) no contraventions of the auditor’s independence requirements as set out in the Corporations Act 2001 in relation to the review; and

(ii) no contraventions of any applicable code of professional conduct in relation to the review.

Nexia Perth Audit Services

Amar Nathwani Director Perth 10 March 2015

Independent Auditor’s Review Report to the members of Doray Minerals Limited Report on the Half-Year Financial Report We have reviewed the accompanying half-year financial report of Doray Minerals Limited and its controlled entities (the “Group”), which comprises the condensed consolidated statement of financial position as at 31 December 2014, the condensed consolidated statement of profit or loss and other comprehensive income, condensed consolidated statement of changes in equity and condensed consolidated statement of cash flows for the half-year ended on that date, other selected explanatory notes and the directors’ declaration of the Group comprising the Company and the entities it controlled at the half-year end or from time to time during the half-year. Directors’ Responsibility for the Half-Year Financial Report The directors of the Group are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001. This responsibility includes: establishing and maintaining internal controls relevant to the preparation and fair presentation of the half-year financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor’s Responsibility Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the Group’s financial position as at 31 December 2014 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. As the auditor of Doray Minerals Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report. A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Independence In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of Doray Minerals Limited, would be in the same terms if given to the directors as at the time of this auditor’s report.

Conclusion Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of Doray Minerals Limited and its controlled entities is not in accordance with the Corporations Act 2001 including: (a) giving a true and fair view of the Group’s financial position as at 31 December 2014 and

of its performance for the half-year ended on that date; and (b) complying with Accounting Standard AASB 134 Interim Financial Reporting and

Corporations Regulations 2001.

Nexia Perth Audit Services Pty Ltd

Amar Nathwani Director Perth 10 March 2015

drm half yearly report and accounts · 2015. 3. 10. · doray minerals limited amn corporate +61...

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