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