CONTENTS
Chairman's Letter to Shareholders | 1 |
Corporate | 2 |
Review of Operations | 3 |
Royalties | 11 |
People at GCR | 12 |
Directors' Report | 13 |
Auditor's Independence Declaration | 17 |
Corporate Governance Statement | 18 |
Income Statement | 19 |
Balance Sheet | 20 |
Cash Flow Statement | 21 |
Statement of Changes in Equity | 22 |
Notes to the Financial Statements | 23 |
Directors' Declaration | 37 |
Independent Audit Report to the Members | 38 |
Interests in Mining Tenements | 40 |
Shareholder Information | 41 |
COMPANY PARTICULARS
DIRECTORS
Christopher Ryan, BEcon, MBA, FAusIMM
Chairman
Kim Stanton-Cook, BA (Geology and Geophysics)
MAIG, GSA, ASEG, SEG
Managing Director
Kerry McHugh, BCom (Hons)
Non-executive Director
David Timms, BSc (Hons), PEng, FAIG, FAusIMM Non-executive Director
Chris Torrey, MSc, MAIG, FSEG, RP Geo Non-executive Director
PRINCIPAL AND REGISTERED OFFICE
22 Edgeworth David Avenue
Hornsby NSW 2077
Australia
Ph | +612 9472 3500 |
Fax | +612 9482 8488 |
info@goldencross.com.au | |
Website | www.goldencross.com.au |
ABN | 65 063 075 178 |
COMPANY SECRETARY AND ALTERNATE DIRECTOR
Daven Timms, BSc LLB (Hons ), F Fin, AMPLA, MAusIMM
STOCK EXCHANGE LISTING
Golden Cross Resources Ltd's shares are listed on the Australian Stock Exchange (Listing Code GCR)
AUDITOR
Ernst & Young
Chartered Accountants
680 George Street
Sydney NSW 2000
SHARE REGISTER
Registries Limited
Level 2, 28 Margaret Street
Sydney NSW
Ph: +612 9290 9600
CHAIRMAN'S LETTER TO SHAREHOLDERS
Dear Shareholder
The Copper Hill Project has been at the centre of the Company's activities for much of the past year. Based on extensive drilling, the Company was able to announce a substantial copper and gold resource. Further studies have been undertaken to consider the commercial opportunity which the Copper Hill Project represents to the Company.
We have reached the conclusion that the Project has economic merit and that with prevailing copper and gold prices, the Project will deliver a very satisfactory investment return on the capital cost required to bring a mine into production. So in that sense the Company believes the Copper Hill Project has been a success to date.
The challenge facing the Company now is to identify and assess the available options for financing the Project with a view to delivering the best value outcome to the Company's shareholders. It is readily apparent that the equity component required in the project financing if the Company were to attempt to go it alone is outside the capacity of the Company to raise without a massive dilution of the existing shareholder base. Even if such a capital raising were possible, the pricing required would probably not serve the best interests of shareholders.
The Company believes that the Project would be considered an attractive opportunity for a number of larger companies interested in participating in projects such as Copper Hill. So the focus looking forward is to engage such companies in negotiations with a view to a satisfactory outcome to all parties.
The conclusions reached in relation to the Copper Hill Project inevitably caused the Company to give greater emphasis to its other two key activities, business development and exploration. The Company's cash position, which at 30 June 2007 was slightly in excess of $5 million, has provided a sound basis for this broader approach to the Company's activities.
The Company has divested or relinquished a number of projects, perhaps the most notable of which is the Adelong project which was sold during the year under review. A critical review has been undertaken of all the exploration properties in the Company's portfolio with a view to ensuring that the Company's exploration expertise and capital is directed towards enhancing the probability of exploration success in the near to medium term.
The rationalisation of the exploration portfolio has opened the door to the Company taking on additional projects and two significant new initiatives were announced during the year and another in August 2007:
- the acquisition of King Eagle Resources Pty Limited, which brought with it a number of exploration properties in Queensland and Western Australia which among them are considered to be highly prospective for uranium, nickel and gold;
- a new joint venture over a property in Panama prospective for epithermal gold, followed closely by the acquisition of an option over an extensive geophysical, geochemical, geological and structural survey (including airborne magnetic and radiometric data) database covering most of Panama;
- a new joint venture over two properties in eastern Labrador which are highly prospective for uranium.
Each of these new initiatives is described in detail in the Review of Operations in this Annual Report.
With new exploration initiatives being undertaken on existing properties as well as the new properties and the prospect that a suitable partner for the Copper Hill Project will be found, I view the coming year with much optimism for value creation and enhancement.
Yours faithfully
Christopher Ryan
Chairman
Golden Cross Resources Ltd Annual Report 2007 | 1 |
CORPORATE
Objectives
The Company's long-term objective is to participate in the discovery of one or more world-class mineral deposits. The short-term objective is to add value through exploration and development of mineral properties.
Value may be added through identifying and acquiring mineral properties in prospective locations, generating drill targets through sampling and innovative modelling, delineating resources, entering into significant farm-out or royalty arrangements with other companies, together with developing projects through to production, or acquiring advanced projects, to provide cash flow.
The Company maintained its focus on its Copper Hill Project near Molong in NSW, working towards mining the large, low grade, copper-gold resource. The Company completed a second 15,000m drilling program, confirmed the resource estimates and has commenced mining studies and financial modelling. The projected $333 million capital cost will require a joint venturer to take the project to development.
Risk and Reward
The Company seeks to balance its quest for significant shareholder rewards with the prudent management of downside risk.
On the reward upside, the Company is constantly searching for new opportunities, both at the corporate and exploration level, and this is reflected in the new projects, both in Australia and overseas, added to the portfolio during 2007.
New mineral properties continue to be sought in prospective locations, such as new or proven mineral fields or geologically- prospective terrain. Once a property is acquired, a detailed
investigation is undertaken to ascertain its potential and whether the possible size and prospectivity of the mineral target warrants sole funding by the Company or initial funding by others, through a farm-out.
Farm-outs are a tool used by the Company to manage downside risk, inherent in exploration, by sharing the exploration and development costs and the ownership of a project. Recent examples include the following:
- Broken Hill farm-out to CVRD-Inco in June 2006 (can spend $2.4 million to earn 60%); and
- Cargo farm-out to Cybele in December 2006 (can spend $5 million to earn 70%).
These, and our other joint venturers, bring additional skills and new approaches to GCR's projects as well as the funding for the drilling programs to make the discoveries in which the Company can share.
Exploration on Golden Cross properties during 2006 - 2007
Exploration expenditure on GCR properties during 2006 - 2007 was in excess of $6 million.
Once again, GCR's exploration expenditure was focused on drilling key projects, with over 20,000m of drilling completed during 2006 - 2007 on GCR properties.
Royalties
GCR holds five royalties, described on page 11, including the Mt Boppy 3% gross royalty, which, when mining recommences, will provide GCR with revenue of approximately $0.5 million to 1.0 million over the next few years.
2 | Golden Cross Resources Ltd Annual Report 2007 |
REVIEW OF OPERATIONS
The Company's primary near-term objective is to discover an ore body, by definition one that can be economically exploited, in countries with low sovereign risk and a well established culture of mining. We have sought, and found, drill-ready projects in such countries.
GCR has expanded its base metals, gold and uranium exploration activities throughout Australia, established a base for operations and a gold joint venture in Panama and farmed into two uranium projects in Labrador, Canada. GCR's management team has broad experience in these metals and countries.
GCR's commodity mix also reflects the strengths and experience of management. GCR is seeking metals with straight-forward marketing requirements and treatment/recovery processes.
Our commodity mix, by area, includes:
- NSW - copper, gold, lead-zinc-silver and platinum
- Queensland - uranium, copper, gold, silver
- Western Australia - nickel, gold, uranium
- Panama - gold, copper
- Canada - uranium, gold.
The Company has focused its attention on the Copper Hill deposit over the past year and has attempted to increase both tonnes and grade by additional drilling. We were not successful in this quest and the hoped-for high grade zones continue to elude us in the immediate Copper Hill area. New targets have been defined within our tenement and these will form the basis for the next round of exploration.
The Copper Hill deposit can be economically exploited in the right metals market scenario. At copper and gold prices midway between long term averages and current spot, positive NPVs can be obtained, using industry average cost assumptions. The estimated capital cost of about $330 million means that GCR will require a joint venturer to share the costs to take the project forward.
The past few years have seen an increase in global mining and exploration activity, as world demand for all mining commodities has increased. There are strong arguments to suggest that demand will remain high for the foreseeable future. It is on this basis that our confidence in Copper Hill's future is maintained.
GCR continued to hold well-mineralised properties in prospective areas of New South Wales through the lean years and has conducted initial, near surface exploration, with limited drilling, on all of them. With Copper Hill at the forefront, it was necessary to farm out many of our best properties in order to see them progress. Our joint venturers have commenced active work, including drilling, and we remain hopeful that we will be able to participate in successful discoveries with our colleagues
- CVRD-Inco,Zinifex, Cybele, Tri Origin, Consolidated Broken Hill, Newport Exploration and Kempfield Silver.
COPPER HILL - NSW
The Copper Hill copper-gold deposit contains 420,000 tonnes of copper and 1.20 million ounces of gold. It is located 5 km north of Molong in eastern New South Wales and is held 100% by GCR.
GCR's tenement, Exploration Licence 6391, covers the Copper Hill Intrusive Complex, a late-Ordoviciancalc-alkaline, dacitic, multi-phase intrusive complex within a north-south trending sequence of Ordovician andesitic lavas and sediments extending along strike for 18 km (Fig 1).
To date approximately $8.4 million has been spent on the project by GCR, using a range of exploration techniques including geophysics and geochemistry. In total, 580 holes have been drilled with approximately 19,000m of diamond coring and 50,000m of reverse circulation percussion drilling.
Detailed airborne magnetic and radiometric surveys and induced polarisation surveys, in conjunction with compiled geochemical data, new geochemistry and geological interpretations have
yielded new target areas beside and beneath Copper Hill, along strike and in a new area to the east at the Power Anomaly.
Figure 1. Simplified Geology of the Copper Hill tenement.
Geological Setting
Copper Hill is located near the northern end of the Molong Volcanic Belt (MVB), composed predominantly of andesitic lavas and tuffs and intruded by numerous stock-like monzonite, diorite, tonalite and dacite bodies from Ordovician to Middle Devonian times.
The Copper Hill Intrusive Complex dominates the scene in this part of the MVB. It forms a topographically outstanding, northwest-trending cluster of dacite and lesser diorite intrusives.
At Little Copper Hill, 2 km to the north, dacite porphyries coalesce to form a narrow body that broadens toward the southeast to a width of over 500m at Copper Hill, then tapers again to the south, terminating against a non-outcropping microgranodiorite body 1 km south towards Wattle Hill (Fig 1).
Alteration and Mineralisation
High grade mineralisation (1.0% copper and + 1.5 g/t gold) is contained in stockworks and sheeted vein sets within, and forming carapaces to, dacite porphyries exhibiting strong hydrothermal alteration, with local quartz-magnetite and carbonate veining. Lower grade mineralisation (average 0.3% copper and 0.3 g/t gold) occurs as thin veinlets and disseminations with variable alteration within dacite porphyries and andesitic lavas and tuffs.
Golden Cross Resources Ltd Annual Report 2007 | 3 |
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Golden Cross Resources Ltd. published this content on 12 August 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 23 August 2022 10:45:06 UTC.