azm annual report - asx · 2013. 9. 27. · magazine. geoffrey jones be (civil), fie aust, cp eng...

AZUMAH RESOURCES LIMITED ABN: 72 112 320 251

ANNUAL REPORT for the year ended 30 June 2013

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Azumah Resources Limited Annual Report 2013

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CORPORATE INFORMATION

ABN 72 112 320 251

Directors

Michael Atkins (Non-executive Chairman)

Stephen Stone (Managing Director)

Geoffrey Jones (Non-executive Director)

William LeClair (Non-Executive Director)

Company Secretary

Dennis Wilkins

Registered Office

Ground Floor, 20 Kings Park Road

WEST PERTH WA 6005

Principal Place of Business

Suite 2, 11 Ventnor Avenue

WEST PERTH WA 6005

Telephone: +61 89486 7911

Facsimile: +61 8 9486 4417

Solicitors

Gilbert + Tobin 1202 Hay Street WEST PERTH WA 6005

Bankers

National Australia Bank Limited 1232 Hay Street WEST PERTH WA 6005

Barclays Bank of Ghana Ltd

High Street

Accra GHANA

Share Register

Security Transfer Registrars Pty Ltd

770 Canning Highway

APPLECROSS WA 6153

Telephone: (08) 9315 2333

Facsimile: (08) 9315 2233

Auditors

BDO Audit (WA) Pty Ltd

38 Station Street SUBIACO WA 6008

Stock Exchange Listing

Azumah Resources Limited shares are listed on the Australian Securities Exchange (ASX code: AZM) and the Toronto Stock Exchange (TSX code: AZR).

Internet: www.azumahresources.com.au

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CONTENTS

Chairman’s Letter 3

Directors' Report 5

Auditor’s Independence Declaration 21

Corporate Governance Statement 22

Consolidated Statement of Profit or Loss and Other Comprehensive Income 28

Consolidated Statement of Financial Position 29

Consolidated Statement of Changes in Equity 30

Consolidated Statement of Cash Flows 31

Notes to the Consolidated Financial Statements 32

Directors' Declaration 60

Independent Auditors’ Report 61

ASX Additional Information 63

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CHAIRMAN’S LETTER

Dear Fellow Shareholders

Azumah has made excellent progress on several fronts including at the beginning of 2013 a 30% increase in Mineral Resources to 2.2Moz which has provided the impetus to advance an expanded Wa Gold Project (‘Project’).

This has been against a backdrop of severe junior sector share market devaluations especially amongst Azumah’s West African exploration and producer peers. Nevertheless, Azumah has steadfastly maintained its focus on adding real value for shareholders primarily through increasing Mineral Resources and delivering a ‘development’ ready Project appropriately configured to enhance its bankability and returns through a continuing focus on margin maximisation.

We anticipate that the revised Feasibility Study now underway will see a material improvement in the current Project economics which will further de-risk the Project and enable Azumah to continue on its path from explorer to producer.

The high level of support for the Project in Ghana is demonstrated by the progress made with various government instrumentalities; The Ghana Minerals Commission, MINCOM has recommended to the Minister for Lands and Natural Resources that Mining Licences be granted over Azumah’s key deposits; Ghana’s national power infrastructure utility, GridCo, has re-routed a major new arterial transmission line towards the Project and already surveyed in a spur line to the ‘mine gate’ and a licence to extract water from the Black Volta River has also been issued. These are consistent with Ghana’s status as a favoured nation in which to develop a new gold mine in West Africa.

The industry downturn also has its positive side in that the Project’s bottom line will be directly enhanced by the easing of pressure on operating and capital cost inputs and indirectly by the freeing up of over-engaged operators and an increasing pool of available talent from which to build in-house management, development and operational teams.

Securing development finance for the estimated $160M establishment capital for the Project is clearly a challenge in the present market. The Company is assessing a wide range of corporate and Project level funding solutions which will also work to unlock the real value of the Project which is clearly not reflected in the Company’s present market capitalisation.

The Company has moved to promptly reduce outgoings and preserve precious capital until the market conditions stabilise and improve, which we are confident they will. Senior management lead by Managing Director, Stephen Stone, plus all Board members have voluntarily reduced their remuneration by 25% as have all retained employees. The Company retains a highly regarded core management and technical team that is intent on seeing the Project through to production and whose performance incentives are fully aligned to doing so.

Encouragingly, there appears to be some tentative early signs of recovery in global markets, including in the junior resources sector, and so hopefully this will see renewed interest in the resources sector by capital markets which will coincide with any decision by Azumah to proceed with development.

Exploration and discovery is the Company’s lifeblood and its geological team has continued to expand the target pipeline within the Company’s strategic and prospective 3,100km2 landholding. A recent review of its extensive datasets has identified several drill-ready targets and many more earlier stage targets that we are all looking forward to testing. We are confident that Azumah’s licence holdings will continue to deliver valuable discoveries to expand and extend the Project. The Company’s field base at Kalsegra remains one of the best facilities in West Africa from which to conduct exploration and is on stand-by to fire-up again to full capacity at short notice.

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It remains to thank the whole Azumah team lead by Stephen Stone and also my Board colleagues for their enormous and unrelenting efforts this last 12 months notwithstanding the difficult operating conditions.

I also acknowledge the support and steadfastness of Azumah’s many loyal shareholders, and our many supporters in Ghana, and assure you that everyone at Azumah is working hard to advance the Project and increase the value of your investment in the Company.

Michael Atkins

Chairman 26 September 2013

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DIRECTORS REPORT

Your directors submit their report on the consolidated entity (referred to hereafter as “the Group”) consisting of Azumah Resources Limited and the entities it controlled at the end of, or during, the year ended 30 June 2013.

DIRECTORS The names and details of the Company’s directors in office during the financial year and until the date of this report are as follows.

Where applicable, all current and former directorships held in listed public companies over the past three years have been detailed below.

Directors were in office for this entire period unless otherwise stated.

Michael Atkins B.Comm, Non-Executive Chairman (Member of audit and remuneration committees)

Mr Atkins is a Fellow of the Australian Institute of Company Directors.

He was a founding partner of a national Chartered Accounting practice from 1979 to 1987 and was a Fellow of the Institute of Chartered Accountants in Australia until resigning in June 2011.

Between 1987 and 1998 he was a director of, and involved in the executive management of, several publicly listed resource companies with operations in Australia, USA, South East Asia and Africa. From 1990 to 1995 he was Managing Director and later a non-executive director of Claremont Petroleum NL and Beach Petroleum NL during their reconstruction, and then remained as a Non-Executive Director until 1995. He was also founding Executive Chairman of Gallery Gold Ltd until 1998, and remained a Non-Executive Director until 2000.

Since February 2009 Mr Atkins has been a Director - Corporate Finance at Patersons Securities Limited where he advises on the formation of, and capital raising for, emerging companies in the Australian resources sector.

He is currently non-executive Chairman of ASX listed public company, Legend Mining Ltd and a non-executive director of Enterprise Uranium Limited. During the year he was also non-executive Chairman of Westgold Resources Ltd (resigned 19 October 2012). He is a member of the Audit Committee of Azumah.

Stephen Stone, BSc (Hons) Mining Geology, MAusIMM, FAICD, Managing Director

Mr Stone graduated with honours in Mining Geology from University of Wales, Cardiff and has since gained more than 30 years’ operating, project evaluation, executive management and corporate development experience in the international mining and exploration industry.

Mr Stone worked for several years at the large open pit and underground copper mines of the Zambian Copperbelt. He came to Australia in 1986 and since then has been involved in the formation and management of several junior ASX listed exploration companies.

He joined Azumah as its Non-Executive Chairman in November 2006, was appointed its Executive Chairman in December 2007 and Managing Director in October 2009.

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Mr Stone is a Member of the Australasian Institute of Mining and Metallurgy, a Fellow of the Australian Institute of Company Directors and a member of the Editorial Board of International Mining Magazine.

Geoffrey Jones BE (Civil), FIE Aust, CP Eng

Mr Jones is a Fellow of the Institution of Engineers, Australia, with a Bachelor of Engineering (Civil) degree. He has over 25 years’ experience in the evaluation, design, development, commissioning and operation of major resource projects in Australia and overseas, especially in Africa, including Ghana.

He spent over six years as Group Project Engineer for ASX-listed Resolute Limited with responsibility for the successful development of its Obotan Gold Project in Ghana, Golden Pride Gold Project in Tanzania, as well as the Chalice and Bullabulling Gold Projects in Western Australia. For all of these projects, his involvement ranged from feasibility study preparation through to development, commissioning and start-up operations.

Mr Jones has operated his own project management and engineering consultancy, JMG Projects Pty Ltd, servicing the mining industry. In this capacity Mr Jones has completed works on gold and base metal projects for Australian and overseas based mining groups. Mr Jones is currently employed with GR Engineering Services Limited as the Managing Director.

Mr Jones is also a director of GR Engineering Services Limited, Brumby Resources Limited and Energy Metals Limited.

William (Bill) LeClair BComm, FCA (Appointed 14 May 2012, Member of audit and remuneration committees)

Mr LeClair is a Chartered Accountant and a resident of Canada. He has many years of financial and mining experience and an extensive background in North American markets as a past executive and director of several Toronto Stock Exchange (TSX) listed companies.

He was President and CEO of TSX-listed Crew Gold Corporation, prior to it being taken over in 2010. Crew Gold employed up to 3,000 staff in operating mines and exploration projects in multiple jurisdictions, including West Africa where it operated the 250,000-ounce per year LEFA gold mine in Guinea.

Currently Mr LeClair is also a director and Chairman of the Audit Committee of Copper North Ltd., a Vancouver based company listed on the TSX. He is the chairman of the Audit Committee of Azumah and a member of the Remuneration Committee. Previously Mr LeClair was a director of Goldbrook Ventures Inc.

COMPANY SECRETARY

Dennis Wilkins B.Bus., AICD, ACIS

Mr Wilkins is the founder and principal of DWCorporate Pty Ltd a privately held corporate advisory firm servicing the natural resources industry.

Since 1994 he has been a director of, and involved in the executive management of, several publicly listed resource companies with operations in Australia, PNG, Scandinavia and Africa. From 1995 to 2001 he was the Finance Director of Lynas Corporation Ltd during the period when the Mt Weld Rare

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Earths project was acquired by the group. He was also founding director and advisor to Atlas Iron Limited at the time of Atlas’ initial public offering in 2006.

Since July 2001 Mr Wilkins has been a running DW Corporate Pty Ltd where he advises on the formation of, and capital raising for, emerging companies in the Australian resources sector.

He is currently non-executive Chairman of Australian listed company Key Petroleum Limited and non-executive director of Duketon Mining Limited.

Interests in the shares and options of the Company and related bodies corporate

As at the date of this report, the interests of the directors in the shares and options of Azumah Resources Limited were:

Ordinary Shares Options over Performance Ordinary Shares Rights

Michael Atkins 600,000 2,000,000 -

Stephen Stone 7,633,633 2,500,000 2,000,000

Geoffrey Jones - 2,000,000 -

William LeClair - 1,000,000 -

PRINCIPAL ACTIVITIES

Azumah Resources Limited is a Perth-based mineral exploration company entirely focused on exploring and developing its 100%-owned Wa Gold Project in northwest Ghana, West Africa.

DIVIDENDS

No dividends were paid or declared during the financial year. No recommendation for payment of dividends has been made.

REVIEW OF OPERATIONS

Azumah Resources Limited is an Australian Securities Exchange (ASX: AZM) and Toronto Stock Exchange (TSX: AZR) listed resource company focused on exploring and developing the first stand-alone commercial-scale gold mining operation at its 100%-owned Wa Gold Project in Ghana’s emerging north-west gold province.

During the year, Azumah:

Increased Measured and Indicated Resources by 38% to 1,406,000oz of gold and increased Inferred Resources to 797,000oz Au (Table 1).

Completed a Feasibility Study for the Wa Gold Project in August 2012 which demonstrated that the Project is technically and commercially viable with no fatal flaws.

Commenced a revision of the 2012 Feasibility Study and Mineral Reserves (Table 2) to incorporate increased Mineral Resources, classification upgrades, metallurgical optimisations, revised establishment and operating costs and a review of other key inputs.

Identified an opportunity, using a dedicated flotation and regrind circuit, to increase metallurgical recoveries for Julie primary ore by up to 5% on the ~85% utilised in the ‘Stage One’ Feasibility Study. Julie primary material is now expected to comprise 17% of the overall mill feed, up from 3% in the Feasibility Study. The additional circuit will increase capital costs by 7%-10%, which expense is scheduled to occur in the third year of production.

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Completed a 13-hole, 422m combined RC and diamond core drilling programme at Julie to collect representative core samples for additional metallurgical test work, primarily from the areas of expanded resources not previously tested.

Completed a programme of geotechnical studies at the expanded Julie deposit.

Issued targets for the Feasibility Study Revision and Reserve update planned for later in 2013 (Table 3) which is targeting a high production (100,000 oz pa) mine with lower cash costs (US$700/oz) over a +6 year initial mine life.

Obtained recommendations from the Minerals Commission of Ghana to the Minister of Lands and Natural Resources that two mining leases be granted over the Kunche-Bepkong and the Julie deposits.

Received a Water Permit from the Ghana Water Resources Commission for the extraction of process plant water from the adjacent Black Volta River.

Completed power line route survey work with Gridco, the Ghanaian power infrastructure utility, for the extension of a Gridco-funded 161kV line to Azumah’s planned processing site.

Completed 26,000 metres of drilling for over 338 holes during the 2013 drilling season, including 64 diamond drill holes for 3,637m, 251 RC holes for 21,652m and 24 air core holes for 306m.

Increased Julie deposit global Mineral Resources by 84% to more than 1.0Moz.

Undertook additional infill drilling at the Julie deposit to upgrade the classification to Indicated Mineral Resources of Inferred Mineral Resources captured within preliminary planned pits.

Updated the global Julie Mineral Resources in June 2013 to take into account the re-classification of Mineral Resources arising from infill drilling. The update, resulted in the conversion of 600,000t of Inferred Mineral Resource at a grade of 2.70g/t to Indicated. The infill drilling results were consistent with previous drilling and no change in global contained gold occurred.

Upgraded the classification of approximately 40,000oz gold contained within the existing designed pits at Kunche that were previously classified as Inferred and hence excluded from the Mineral Reserve.

Achieved a maiden Inferred Mineral Resource of 85,000oz gold at Aduane located between Kunche and Bepkong.

Undertook RC drilling at the Josephine North prospect and confirmed mineralisation beneath artisanal workings.

Completed drilling at Basabli, Yiziri and Sabala prospects.

Undertook several low-cost programmes of soil and auger sampling to elevate areas of interest to target status.

Completed a comprehensive, project-wide exploration review that confirmed and ranked for follow-up 15 prospects, 53 exploration targets and 58 broader areas of interest.

Corporate

Reduced Azumah’s operating expenditure, commencing with a volunteered 25% reduction in the Managing Director’s salary and Non-Executive Board member fees, staff retrenchments and/or movement of staff from employee to as-needed contractor arrangements, cancellation and/or reduction of various retainer arrangements and services contracts, and several other cost-saving initiatives across the Company

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Completed an independent technical report on the Wa Gold Project titled “Wa Gold Project, Ghana, 43-101 Technical Report” with an effective date of 27th August 2012 which was filed on Sedar (www.sedar.com) providing a summary of the Feasibility Study and the Mineral Resources and Mineral Reserves.

Sold Azumah’s shareholding in Endeavour Mining Corporation to realise net proceeds of $2.28M, and

Retained cash and listed investments as of 30 June 2013 of $4.3 million, including a 15.5% ($0.6M) investment in neighbouring licence holder, Castle Minerals Limited.

Table 1: Mineral Resource Estimate (CSA Global Pty Ltd – June 2013)

Cut-off Measured Indicated Measured and Indicated Inferred

0.5 g/t Au Tonnes Grade Gold Tonnes Grade Gold Tonnes Grade Gold Tonnes Grade Gold

(Mt) (g/t Au) (oz) (Mt) (g/t Au) (oz) (Mt) (g/t Au) (oz) (Mt) (g/t Au) (oz)

Kunche 8.42 1.73 468,000 2.24 1.38 99,000 10.65 1.66 567,000 4.86 1.17 183,000

Bepkong 2.22 1.79 128,000 1.7 1.33 73,000 3.92 1.59 200,000 1.17 1.17 44,000

Aduane 1.77 1.5 85,000

Julie 0.80 1.95 50,000 8.93 2.05 589,000 9.73 2.04 639,000 6.64 1.9 406,000

Collette 1.69 1.45 79,000

Total 11.4 1.76 646,000 12.9 1.84 761,000 24.3 1.80 1,406,000 16.1 1.54 797,000

Values have been rounded

Table 2: Mineral Reserve Summary (Coffey Mining – August 2012)

Mineral Reserve Summary

(As of 21st Aug 2012) Proved Probable Contained Gold

Tonnes (Mt) Grade (g/t Au) Tonnes (Mt) Grade (g/t Au) oz Au(1)

Bepkong

Kunche

Julie

1.7

2.3

-

1.9

2.1

-

0.2

1.6

1.0

2.0

1.6

2.4

117,000

238,000

74,000

Total 4.0 2.0 2.8 1.9 430,000

* Values have been rounded

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Table 3: Feasibility Study Revision Targets and ‘Stage One’ Feasibility Study

Parameters

TARGETS

Feasibility Study

Revision Q4 2013*

"Stage One" Feasibility

Study August 2012

Gold Price for Optimisations US$/oz $1,200 $1,300

Gold Price for Revenue US$/oz $1,400 $1,600

Plant throughput (primary ore) Mtpa 1.3 1.0

Optimised Mineral Resource Mt 8.9 - 9.5 6.8(1)

Average gold grade g/t 2.2 - 2.4 2.0(1)

Contained gold oz TBD 430,000(1)

Recovery (average) % ~91.0 92.4

Annual production (average) oz pa ~100,000 67,000

Establishment capital US$M ~$160M $144M

Site cash costs (LOM) (2) (pre royalties) US$/oz ~700 802

Total costs (LOM) incl. capital & royalties US$/oz ~1,120 1,306

Mine life years 6.0 6.0

Project payback (post royalties & tax) years 1.9 2.9

Refer “Notes on Table 3” below (1) Mineral Reserve (2) LOM = Life of Mine

Notes on Table 3

In relation to Feasibility Study Update Revision in Table 3 (‘Targets’), the potential quantity and grade of the Target Optimised Mineral Resources is conceptual in nature, in that there has been insufficient study work completed to date to define the Optimised Mineral Resources. It is uncertain if the further Feasibility Study work will result in the additional Optimised Mineral Resources. Please also refer to the Cautionary Statement.

The Target Optimised Mineral Resources are based on preliminary Whittle optimisations using the independently estimated January 2013 Measured & Indicated Mineral Resources at Kunche, Bepkong and Julie with the addition of 50% of the Inferred material captured within the optimised pits at Julie. This addition is consistent with infill drilling undertaken since January 2013 (refer ASX release dated 13th June 2013). Optimisations have been scaled to account for ore losses and additional waste expected during the final pit design phase. Scalings are consistent with the August 2012 Feasibility Study. Mining costs were derived from a contractor’s proposal for the Feasibility Study. Given the expected increased scale of operations at Julie, a downward revision to Julie mining costs has been applied and is consistent with those mining costs in the Study for Kunche and Bepkong. The Target Mineral Resource optimisations for Julie also include a haulage cost. Mining costs and haulage costs will be updated as part of the Feasibility Study revision. Processing costs included in the Target Optimised Mineral Resources were updated by GR Engineering Services Limited as at January 2013. Additional variability metallurgical test work has been undertaken for Kunche, Bepkong and Julie and results incorporated into the 2013 Targets. Capital costs have been factored by Azumah using the 1.0Mtpa Study as a base and will be updated as part of the Feasibility Study revision. Other assumptions are as per the Study.

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Cautionary Statement

The Company has not made a production decision and its strategic plan to develop a gold mining operation is subject to the results of an update to the ‘Stage One’ Feasibility Study (refer ASX release dated 28th August 2012) and other factors, some of which are beyond the Company’s control. The Mineral Resources disclosed herein are preliminary in nature and include Inferred Mineral Resources that are considered too speculative geologically to have economic considerations applied to them to be categorised as Mineral Reserves. There is no certainty that the Mineral Resources disclosed herein will be realised or converted to Mineral Reserves. Inferred Mineral Resources captured in optimised pits may not all be converted to Measured and Indicated Resources. Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability. Target, expected and anticipated numbers contained herein are not confirmed, are not JORC or NI 43:101 compliant and are indicative only. Target Mineral Reserves implied herein are based on preliminary Whittle optimisations using adjusted Feasibility Study assumptions.

Competent Persons’ Statement

The scientific and technical information in this report that relates to the in-situ Mineral Resource estimates for the Kunche, Aduane and Julie deposits is based on information compiled by Mr Dmitry Pertel, who a full-time employee (Manager - Resources) of CSA Global Pty Ltd. Mr Pertel is a Member of the Australian Institute of Geoscientists and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’ and to qualify as a “Qualified Person” as defined in National Instrument 43 -101 – Standards of Disclosure for Mineral Projects (“NI 43-101”) of the Canadian Securities Administrators. Mr Pertel has reviewed and approved the disclosure of the relevant scientific or technical information contained in this announcement that relates to the Kunche, Aduane and Julie Mineral Resource estimates.

The scientific and technical information in this report that relates to the in-situ Mineral Resource estimates for the Bepkong deposit is based on information compiled by Mr David Williams, who is a geological consultant employed by CSA Global Pty Ltd. Mr Williams is a Member of the Australian Institute of Geoscientists and the Australian Institute of Mining and Metallurgy and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’ and to qualify as a “Qualified Person” as defined in National Instrument 43 -101 – Standards of Disclosure for Mineral Projects (“NI 43-101”) of the Canadian Securities Administrators. Mr Williams has reviewed and approved the disclosure of all scientific or technical information contained in this announcement that relates to the Bepkong Mineral Resource estimate.

The scientific and technical information in this report that relates to the geology of the deposits and exploration results is based on information compiled by Mr Stephen Stone, who is a full-time employee (Managing Director) of Azumah Resources Ltd. Mr Stone is a Member of the Australian Institute of Mining and Metallurgy and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’ and to qualify as a “Qualified Person” as defined in National Instrument 43 -101 – Standards of Disclosure for Mineral Projects (“NI 43-101”) of the Canadian Securities Administrators. Mr Stone is the Qualified Person overseeing Azumah’s exploration projects and has reviewed and approved the disclosure of all scientific or technical information contained in this announcement.

For further information, including a description of Azumah’s standard data verification processes, quality assurance and quality control measures, and details of the key assumptions, parameters and methods used to estimate the Mineral Resources and Mineral Reserves set out in this report and the

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extent to which the estimate of previously declared Mineral Resources and Mineral Reserves set out herein may be materially affected by any known environmental, permitting, legal, title, taxation, socio-political, marketing or relevant issues, readers are directed to the technical report titled “Wa Gold Project, Ghana 43-101 Technical Report”, effective as of 27 August, 2012, available on www.sedar.com.

The reported Mineral Reserves have been compiled by Mr Harry Warries. Mr Warries is a Fellow of the Australasian Institute of Mining and Metallurgy and an employee of Coffey Mining Pty Ltd. He has sufficient experience, relevant to the style of mineralisation and type of deposit under consideration and to the activity he is undertaking, to qualify as a Qualified Person as defined in the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Definition Standards of November 2010, as well as a Competent Person as defined in the ‘Australasian Code for Reporting of Mineral Resources and Ore Reserves’ of December 2004 (“JORC Code”) as prepared by the Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy, the Australian Institute of Geoscientists and the Minerals Council of Australia. Mr Warries gives Azumah Resources Limited consent to use this reserve estimate in reports.

Forward-Looking Statement

This release contains forward-looking information. Such forward-looking information is often, but not always, identified by the use of words such as “seek”, “anticipate”, “believe”, “plan”, “estimate”, “expect” and “intend”, and statements that an event or result “may”, “will”, “should”, “could”, or “might” occur or be achieved, and other similar expressions. In providing the forward-looking information in this news release, the Company has made numerous assumptions regarding: (i) the accuracy of exploration results received to date; (ii) anticipated costs and expenses; (iii) that the results of the feasibility study continue to be positive; and (iv) that future exploration results are as anticipated.

Management believes that these assumptions are reasonable. Forward-looking information is subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those contained in the forward-looking information. Some of these risks, uncertainties and other factors are described under the heading “Risks Factors” in the Company’s annual information form available on www.sedar.com. Forward-looking information is based on estimates and opinions of management at the date the statements are made. Except as required by law, Azumah does not undertake any obligation to update forward-looking information even if circumstances or management’s estimates or opinions should change. Readers should not place reliance on forward-looking information and readers are advised to consider such forward-looking statements in light of the risks set forth in the Company’s continuous disclosure filings as found at the (Canadian) SEDAR website.

All notes pertaining to the above referred to resource estimates can be viewed at www.azumahresources.com.au

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FINANCE REVIEW

The Group began the financial year with a cash reserve of $13,803,291. Funds were used to actively advance the Group’s projects located in Ghana, West Africa.

During the year total exploration expenditure incurred by the Group amounted to $8,126,705. In line with the Company’s accounting policies, all exploration expenditure was written off at year end. Total Administration expenditure of $5,467,720, Impairment expenditure of $4,183,807, Salaries and Employee Benefits of $1,324,030 and non-cash expenditure total amounted to $756,741 were incurred for the same period. This has resulted in an operating loss after income tax for the year ended 30 June 2013 of $19,128,990 (2012: $23,895,460).

At 30 June 2013 cash and cash equivalents totalled $3,619,098.

OPERATING RESULTS FOR THE YEAR

Summarised operating results are as follows:

2013

Revenues

$

Results

$

Consolidated entity revenues and loss from ordinary activities before income tax expense 249,669 (19,128,990)

RISK MANAGEMENT

The board is responsible for ensuring that risks, and also opportunities, are identified on a timely basis and that activities are aligned with the risks and opportunities identified by the board.

The Company believes that it is crucial for all board members to be a part of this process, and as such the board has not established a separate risk management committee

The board has a number of mechanisms in place to ensure that management’s objectives and activities are aligned with the risks identified by the board. These include the following:

Board approval of a strategic plan, which encompasses strategy statements designed to meet stakeholders needs and manage business risk.

Implementation of board approved operating plans and budgets and board monitoring of progress against these budgets.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

Other than as disclosed in this Annual Report no significant changes in the state of affairs of the Group occurred during the financial year.

SIGNIFICANT EVENTS AFTER THE REPORTING DATE

No matters or circumstances, besides those disclosed at note 21, have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial years.

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LIKELY DEVELOPMENTS AND EXPECTED RESULTS

The Group expects to maintain the present status and level of operations and hence there are no likely developments in the Group’s operations.

ENVIRONMENTAL REGULATION AND PERFORMANCE

The Group is subject to significant environmental regulation in respect to its exploration activities.

The Group aims to ensure the appropriate standard of environmental care is achieved, and in doing so, that it is aware of and is in compliance with all environmental legislation. The directors of the Group are not aware of any breach of environmental legislation for the year under review.

The directors have considered the recently enacted National Greenhouse and Energy Reporting Act 2007 (the NGER Act) which introduces a single national reporting framework for the reporting and dissemination of information about greenhouse gas emissions, greenhouse gas projects, and energy use and production of corporations. At the current stage of development, the directors have determined that the NGER Act will have no effect on the Group for the current, nor subsequent, financial year. The directors will reassess this position as and when the need arises.

REMUNERATION REPORT (AUDITED)

The information provided in this remuneration report has been audited as required by section 308(3C) of the Corporations Act 2001.

Principles used to determine the nature and amount of remuneration

Remuneration Governance and Policy

The Remuneration Committee consists of Bill LeClair, Michael Atkins and Geoff Jones (Chairman). The Corporate Governance Statement provides further information on the role of this committee. The remuneration policy of Azumah Resources Limited has been designed to align director and executive objectives with shareholder and business objectives by providing a fixed remuneration component and offering specific long-term and short-term incentives. The board of Azumah Resources Limited believes the remuneration policy to be appropriate and effective in its ability to attract and retain the best executives and directors to run and manage the Group.

The board’s policy for determining the nature and amount of remuneration for board members and senior executives of the Group is as follows:

The remuneration policy, setting the terms and conditions for the executive directors and other senior executives, was developed by the board. The board reviews executive packages annually and determines policy recommendations by reference to executive performance and comparable information from industry sectors and other listed companies in similar industries.

The board may exercise discretion in relation to approving incentives, bonuses and options. The policy is designed to attract and retain the highest calibre of executives and reward them for performance that results in long-term growth in shareholder wealth.

Executives are also entitled to participate in the employee share and option arrangements.

Where required, the executive directors and executives receive a superannuation guarantee contribution required by the government, which was 9% in the reporting period, and do not receive any other retirement benefits.

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All remuneration paid to directors and executives is valued at the cost to the Company and expensed. Options are valued using an option pricing methodology depending on the terms of the options.

The board policy is to remunerate non-executive directors at market rates for comparable companies for time, commitment and responsibilities. The board determines payments to the non-executive directors and reviews their remuneration annually, based on market practice, duties and accountability. Independent external advice is sought when required. The maximum aggregate amount of fees that can be paid to non-executive directors is subject to approval by shareholders at the Annual General Meeting (currently $500,000). Fees for non-executive directors are not linked to the performance of the Group. However, to align directors’ interests with shareholder interests, the directors are encouraged to hold shares in the Company.

Performance based remuneration

The Group has recently introduced short term incentives into executive remuneration packages, upon the satisfaction of specific performance goals. The performance goals are based on the Group delineating JORC Code gold resources of specific sizes and grades with the criteria set individually for the executives in their respective service agreements. No bonuses have been paid during the 2013 financial year based on the satisfaction of contractual performance goals. The Board believes that the use of gold resources as a means of calculating incentives is appropriate for a gold exploration company as there is a correlation between the size of a Company’s resource base and its share price.

The Group does not currently have any long term incentives included in executive remuneration.

Company performance, shareholder wealth and directors’ and executives’ remuneration

No relationship exists between shareholder wealth, director and executive remuneration and Company performance due to the infant stage of the Company’s operations.

The table below shows the gross revenue, losses and earnings per share for the last five years for the listed entity.

2013 2012 2011 2010 2009 $ $ $ $ $ Revenue 249,669 694,921 1,035,527 314,411 124,889 Net loss (19,128,990) (23,895,460) (21,790,944) (10,242,288) (2,628,113) Loss per share (cents) (5.7) (7.9) (8.7) (6.0) (2.8) Share price at year end (cents) 2.7 18.5 54.0 41.0 13.5

No dividends have been paid.

Use of remuneration consultants

The Group did not employ the services of any remuneration consultants during the financial year ended 30 June 2013.

Voting and comments made at the Company’s 2012 Annual General Meeting

The Company received approximately 96% of “yes” votes on its remuneration report for the 2012 financial year. The Company did not receive any specific feedback at the AGM or throughout the year on its remuneration practices.

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Details of remuneration

Details of the remuneration of the directors and the key management personnel of the Group are set out in the following table.

The key management personnel of the Group include the directors and company secretary as per pages 5 to 7 above and the following executive officers who have authority and responsibility for planning, directing and controlling activities within the Group:

Paul Amoako-Atta – Mineral Licence Manager

Given the size and nature of operations of the Group, there are no other employees who are required to have their remuneration disclosed in accordance with the Corporations Act 2001.

KEY MANAGEMENT PERSONNEL OF THE GROUP

Short-Term Post-Employment Share-based

Payments

Total

Percentage Relevant to

Share-based Payments

Percentage Performance

Related Salary & Fees Cash Bonus

Non-Monetary

Super-annuation

Retirement benefits

Options & Performance

Rights

$ $ $ $ $ $ $ % %

Directors

Michael Atkins

2013 112,050 - 1,266 10,084 - 88,778 212,178 41.8 -

2012 99,333 - 4,740 8,940 - 58,487 171,500 34.1 -

Stephen Stone

2013 359,327 - 1,266 32,339 - 161,445 554,377 20.3 8.8

2012 355,000 - 4,740 - - 142,842 502,582 16.4 12.0

Geoffrey Jones

2013 53,854 - 1,266 4,847 - 88,777 148,744 59.7 -

2012 50,000 - 4,740 4,500 - 58,487 117,727 49.7 -

William LeClair

2013 64,037 - 1,266 - - 4,440 69,743 6.4 -

2012 9,494 - - - - - 9,494 - -

Other key management personnel

Dennis Wilkins

2013 92,168 - - - - - 92,168 - -

2012 217,130 - - - - - 217,130 - -

Paul Amoako-Atta(1)

2013 74,056 - - - - - 74,056 - -

2012 67,743 - - - - - 67,743 - -

Total key management personnel compensation

2013 755,492 - 5,064 47,270 - 343,440 1,151,266

2012 798,700 - 14,220 13,440 - 259,816 1,086,176

(1) In addition to the above remuneration a total of $Nil (2012: $239,180) was paid to Terrex Limited, a Ghanaian registered company of which Mr Amoako-Atta is a director and shareholder. Terrex Limited provided in country exploration, geological and field personnel and support services, and tenement management services to the Group during the prior year and the amounts paid were at arm’s length.

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Service Agreements

The details of service agreements of the key management personnel of the Group are as follows:

Stephen Stone, Managing Director and Chief Executive Officer:

Term of agreement – Employment commencing 1 July 2012 continuing until employment is terminated.

Total remuneration package of $400,000 consisting of a base salary of $366,972 (gross) and a superannuation contribution of $33,028. The total remuneration package was temporarily reduced to $300,000 effective from 1 June 2013.

The agreement may be terminated by the Company giving 9 months’ notice in writing, or by Mr Stone giving 3 months written notice, or applicable shorter periods upon breach of contract by either party. There are no benefits payable on termination other than entitlements accrued to the date of termination.

Dennis Wilkins, Company Secretary:

Term of agreement – Ongoing, with 3 months’ notice of termination required.

Mr Wilkins' firm, DWCorporate, is engaged to provide accounting and company secretarial services. The agreement provides for a monthly retainer of $1,750 with additional fees charged on an hourly basis, and all amounts are included in Mr Wilkins’ remuneration. There are no benefits payable on termination other than entitlements accrued to the date of termination.

None of the other directors or key management personnel have service agreements in place. Share-Based Compensation

Options

Options are issued to directors and executives as part of their remuneration. The Company does not have a formal policy in relation to the key management personnel limiting their exposure to risk in relation to the securities, but the Board actively discourages key personnel management from obtaining mortgages in securities held in the Company.

The following options were granted to or vesting with key management personnel during the year, there were no options forfeited during the year:

Grant Date Granted Number

Vested Number

Date Vesting & Exercisable

Expiry Date Exercise

Price (cents)

Value per option at grant

date (cents)

Exercised Number

% of Remuneration

Directors

Michael Atkins 30/11/2011 1,000,000 Nil (2) 30/11/2014 60 26.3 N/A 20.6

Michael Atkins 18/05/2010 1,000,000 1,000,000 27/08/2012 15/12/2013 26 42.4 N/A 21.2

Stephen Stone 18/05/2010 2,500,000 2,500,000 27/08/2012 15/12/2013 26 42.4 N/A 20.3

Geoffrey Jones 30/11/2011 1,000,000 Nil (2) 30/11/2014 60 26.3 N/A 29.4

Geoffrey Jones 18/05/2010 1,000,000 1,000,000 27/08/2012 15/12/2013 26 42.4 N/A 30.2

William LeClair 19/11/2012 1,000,000 Nil (2) 30/11/2014 26 3.0(1) N/A 6.4

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(1) The value at grant date in accordance with AASB 2: Share Based Payments of options granted during the year as part of remuneration. For options granted during the current year, the valuation inputs for the Black-Scholes option pricing model were as follows:

Underlying Share Price

(cents) Exercise Price

(cents) Volatility Valuation Date Expiration Date

William LeClair 10.5 26.0 92.49% 19/11/2012 30/11/2014

(2) These options have a performance vesting condition, being obtainment of Project Finance to

establish the Company’s first gold production operation. At the reporting date, the Board has determined that the probability of this performance condition being met is 50%.

There were no ordinary shares in the Company provided as a result of the exercise of remuneration options during the year.

Performance Rights

Performance rights are issued to directors and executives as part of their remuneration, following the approval by shareholders of the Company’s Performance Rights Plan at the 2011 Annual General Meeting.

The following performance rights were granted to or vesting with key management personnel during the year, there were no performance rights forfeited during the year:

Grant Date Granted Number

Vested Number

Date Vesting &

Exercisable Expiry Date

Value per right at

grant date (cents)(1)

% of Remuneration

Directors

Stephen Stone 30/11/2011 2,000,000 Nil (2) 30/11/2014 41.5 8.8

(1) The value at grant date in accordance with AASB 2: Share Based Payments of performance rights granted during the year as part of remuneration. The value is the closing share price on grant date.

(2) The performance conditions for these rights are:

Half will vest upon Project Finance to establish the Company’s first gold production operation.

The other half will vest upon obtainment of Practical Completion of plant and associated infrastructure required to establish the Company’s first gold production operation.

At the reporting date, the Board has determined that the probability of these performance conditions being met is 50% for Project Finance and 0% for Practical Completion.

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DIRECTORS’ MEETINGS

During the year the Company held thirteen meetings of directors. The attendance of directors at meetings of the board was:

Committee Meetings

Directors Meetings Audit Remuneration A B A B A B

Michael Atkins 13 13 - - - -

Stephen Stone 13 13 * * * *

Geoffrey Jones 12 13 - - - -

William LeClair 13 13 - - - -

A – Number of meetings attended.

B – Number of meetings held during the time the director held office during the year.

* – Not a member of the relevant committee.

SHARES UNDER OPTION

At the date of this report there are 8,000,000 unissued ordinary shares in respect of which options are outstanding.

Number of options

Balance at the beginning of the year 9,500,000

Movements of share options during the year:

Issued, exercisable at 60 cents on or before 30 November 2014 1,000,000

Expired on 30 April 2013, exercisable at 14 cents (2,500,000)

Total number of options outstanding as at 30 June 2013 and the date of this report 8,000,000

The balance is comprised of the following:

Date options issued Expiry date Exercise price (cents) Number of options

21 May 2010 15 Dec 2013 26 4,500,000

27 Jan 2011 15 Dec 2013 92.4 500,000

30 Nov 2011 30 Nov 2014 60 2,000,000

5 Dec 2012 30 Nov 2014 60 1,000,000

Total number of options outstanding at the date of this report 8,000,000

No person entitled to exercise any option referred to above has or had, by virtue of the option, a right to participate in any share issue of any other body corporate.

SHARES ISSUED ON THE EXERCISE OF OPTIONS

There were no ordinary shares of Azumah Resources Limited issued during the year ended 30 June 2013, and up to the date of this report, on the exercise of options. No amounts are unpaid on any of the shares.

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INSURANCE OF DIRECTORS AND OFFICERS

During the financial year, Azumah Resources Limited paid a premium to insure the directors and secretary of the Company. The total amount of insurance contract premiums paid was $5,064. The amount has been included in the compensation amounts disclosed for key management personnel elsewhere in this report and in the notes to the financial statements.

The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the officers in their capacity as officers of the Company, and any other payments arising from liabilities incurred by the officers in connection with such proceedings. This does not include such liabilities that arise from conduct involving a wilful breach of duty by the officers or the improper use by the officers of their position or of information to gain advantage for themselves or someone else or to cause detriment to the company. It is not possible to apportion the premium between amounts relating to the insurance against legal costs and those relating to other liabilities.

NON-AUDIT SERVICES

The following non-audit services were provided by the entity's auditor, BDO Audit (WA) Pty Ltd or associated entities. The directors are satisfied that the provision of non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that the provision of non-audit services by the auditor, as set out below, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:

All non-audit services have been reviewed by the audit committee to ensure they do not impact the impartiality and objectivity of the auditor;

None of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants.

BDO Corporate Tax (WA) Pty Ltd and BDO Audit (WA) Pty Ltd received or are due to receive the following amounts for the provision of non-audit services:

2013

$

2012

$

Taxation compliance services 8,869 12,031

AUDITOR’S INDEPENDENCE DECLARATION

A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 21.

Signed in accordance with a resolution of the directors.

Stephen Stone

Managing Director

Perth, 26 September 2013

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38 Station StreetSubiaco, WA 6008PO Box 700 West Perth WA 6872Australia

Tel: +8 6382 4600Fax: +8 6382 4601www.bdo.com.au

BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN 77 050110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO (Australia) Ltd are members of BDO International Ltd, a UK company limitedby guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional StandardsLegislation (other than for the acts or omissions of financial services licensees) in each State or Territory other than Tasmania.

DECLARATION OF INDEPENDENCE BY GLYN O’BRIEN TO THE DIRECTORS OFAZUMAH RESOURCES LIMITED

As lead auditor of Azumah Resources Limited for the year ended 30 June 2013, I declare that, to thebest of my knowledge and belief, there have been no contraventions of:

• the auditor independence requirements of the Corporations Act 2001 in relation to the audit;and

• any applicable code of professional conduct in relation to the audit.

This declaration is in respect of Azumah Resources Limited and the entities it controlled during theperiod.

GLYN O’BRIENDirector

BDO Audit (WA) Pty LtdPerth, Western Australia26 September 2013

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CORPORATE GOVERNANCE STATEMENT

The Board of Directors

The Company's constitution provides that the number of directors shall not be less than three and not more than nine. There is no requirement for any shareholding qualification.

As and if the Company's activities increase in size, nature and scope the size of the board will be reviewed periodically, and as circumstances demand. The optimum number of directors required to supervise adequately the Company's constitution will be determined within the limitations imposed by the constitution.

The membership of the board, its activities and composition are subject to periodic review. The criteria for determining the identification and appointment of a suitable candidate for the board shall include quality of the individual, background of experience and achievement, compatibility with other board members, credibility within the Company's scope of activities, intellectual ability to contribute to the board's duties and physical ability to undertake the board's duties and responsibilities.

Directors are initially appointed by the full board subject to election by shareholders at the next general meeting. Under the Company's constitution the tenure of a director (other than managing director, and only one managing director where the position is jointly held) is subject to reappointment by shareholders not later than the third anniversary following his or her last appointment. Subject to the requirements of the Corporations Act 2001 (Cth) (Corporations Act), the board does not subscribe to the principle of retirement age and there is no maximum period of service as a director. A managing director may be appointed for any period and on any terms the directors think fit and, subject to the terms of any agreement entered into, may revoke any appointment.

The board considers that the Company is not currently of a size, nor are its affairs of such complexity to justify the formation of separate or special committees (other than an Audit Committee and Remuneration Committee) at this time. The board as a whole is able to address the governance aspects of the full scope of the Company's activities and to ensure that it adheres to appropriate ethical standards.

Role of the Board

The board's primary role is the protection and enhancement of long-term shareholder value.

To fulfil this role, the board is responsible for oversight of management and the overall corporate governance of the Company including its strategic direction, establishing goals for management and monitoring the achievement of these goals.

Appointments to Other Boards

Directors are required to take into consideration any potential conflicts of interest when accepting appointments to other boards.

Independent Professional Advice

The board has determined that individual directors have the right in connection with their duties and responsibilities as directors, to seek independent professional advice at the Company's expense. With the exception of expenses for legal advice in relation to directors’ rights and duties, the engagement of an outside adviser is subject to prior consultation with the Chairman (or another director if appropriate) and this will not be withheld unreasonably.

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CORPORATE GOVERNANCE STATEMENT (CONT’D)

Continuous Review of Corporate Governance

Directors consider, on an ongoing basis, how management information is presented to them and whether such information is sufficient to enable them to discharge their duties as directors of the Company. Such information must be sufficient to enable the directors to determine appropriate operating and financial strategies from time to time in light of changing circumstances and economic conditions. The directors recognise that mineral exploration is an inherently risky business and that operational strategies adopted should, notwithstanding, be directed towards improving or maintaining the net worth of the Company.

ASX Principles of Good Corporate Governance

The board has reviewed its current practices in light of the Second Edition ASX Corporate Governance Principles and Recommendations with 2010 amendments with a view to making amendments where applicable after considering the Company's size and the resources it has available.

As the Company's activities develop in size, nature and scope, the size of the board and the implementation of any additional formal corporate governance committees will be given further consideration.

The board has adopted the Second Edition Recommendations (with 2010 amendments) and the following table sets out the Company's present position in relation to each of the principles.

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ASX Principle Status Reference/comment

Principle 1: Lay solid foundations for

management and oversight

1.1 Companies should establish the functions reserved to the board and those delegated to senior executives and disclose those functions

A The Board Charter includes matters reserved for the Board and is included on the Company’s website.

1.2 Companies should disclose the process for evaluating the performance of senior executives

A The remuneration of executive and non-executive directors is reviewed by the Remuneration Committee and the Board with the exclusion of the Director concerned. The remuneration of management and employees is reviewed by the Managing Director and approved by the Board.

Acting in its ordinary capacity, the Board from time to time carries out the process of considering and determining performance issues including the identification of matters that may have a material effect on the price of company securities. Whenever relevant, any such matters are reported to ASX.

1.3 Companies should provide the information indicated in the Guide to reporting on Principle 1

A

Principle 2: Structure the board to add value 2.1 A majority of the board should be

independent directors A Michael Atkins, Geoff Jones and William LeClair are

considered to be independent directors 2.2 The chair should be an independent

director A

2.3 The roles of chair and chief executive officer should not be exercised by the same individual

A

2.4 The board should establish a nomination committee

A The full Board undertakes the duties that fall to the nomination committee under the Company’s Nomination Committee Charter, which is included on the Company’s website.

2.5 Companies should disclose the process for evaluating the performance of the board, its committees and individual directors

A Disclosed in the Board Charter and Nomination Committee Charter, which are included on the Company’s website. The remuneration of executive and non-executive directors is reviewed by the Board with the exception of the director concerned.


A The skills and experience of Directors are set out in the Company’s Annual Report and on its website.

The period held in office by each director is set out in the Director’s Report in the Company’s Annual Report.

A = Adopted N/A = Not adopted

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ASX Principle Status Reference/comment Principle 3: Promote ethical and responsible

decision-making

3.1 Companies should establish a code of conduct and disclose the code or a summary of the code.

A The Company has formulated a general Code of Conduct and a Code of Conduct for Directors and Executives which all employees and directors are expected, at a minimum, to follow.

the practices necessary to maintain confidence in the company’s integrity

the practices necessary to take into account their legal obligations and the reasonable expectations of their stakeholders

the responsibility and accountability of individuals for reporting and investigating reports of unethical practices

3.2 Companies should establish a policy concerning diversity and disclose the policy or a summary of that policy. The policy should include requirements for the Board to establish measurable objectives for achieving gender diversity and for the Board to assess annually both the objectives and progress in achieving them.

N/A The Company has adopted a diversity policy which can be viewed on its website. The Company recognises that a diverse and talented workforce is a competitive advantage and encourages a culture that embraces diversity. The Company does not think that it is appropriate to state measurable objectives for achieving gender diversity due to its size and stage of development.

3.4 Companies should disclose in each annual report the proportion of women employees in the whole organisation, women in senior executive positions and women on the Board.

A The proportion of women employees in the whole organisation is 50% (excluding directors).

There are currently no women in senior executive positions or on the Board.


A

Principle 4: Safeguard integrity in financial

reporting

4.1 The board should establish an audit committee

A The Company has established an audit committee which comprises only non-executive directors (William LeClair, Michael Atkins and Geoffrey Jones). The charter for this committee is disclosed on the Company’s website.

4.2 The audit committee should be structured so that it:

• consists only of non-executive directors

A

• consists of a majority of independent directors

A

• is chaired by an independent chair, who is not chair of the board

A

• has at least three members A


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Principle 4: Safeguard integrity in financial reporting (cont’d)

4.3 The audit committee should have a formal charter

A


A The Committee meets at least every six months and more frequently as required.

Principle 5: Make timely and balanced

disclosure

5.1 Companies should establish written policies designed to ensure compliance with ASX Listing Rule disclosure requirements and to ensure accountability at a senior executive level for that compliance and disclose those policies or a summary of those policies

A The Company has adopted a Continuous Disclosure Policy, a copy of which is available on the Company’s website. Disclosure is also reviewed as a routine agenda item at each Board meeting.

5.2 Companies should provide the

information indicated in the Guide to reporting on Principle 5

A

Principle 6: Respect the rights of

shareholders

6.1 Companies should design a communications policy for promoting effective communication with shareholders and encouraging their participation at general meetings and disclose their policy or a summary of that policy

A The Company has a Shareholder Communication Policy, a copy of which is available on the Company’s website. The Policy specifically encourages full participation of shareholders at the Annual General Meeting to ensure a high level of accountability and identification with the Company’s strategy and goals and outlines the various ways in which the Company communicates with shareholders.


A

Principle 7: Recognise and manage risk 7.1 Companies should establish

policies for the oversight and management of material business risks and disclose a summary of those policies

A The full Board undertakes the duties which fall to the Risk Management Committee under the Company’s Risk Management Policy, which is included on the Company’s website. The Board recognises its responsibility for identifying areas of significant business risk and for ensuring that arrangements are in place for adequately managing these risks. This issue is regularly reviewed at Board meetings and risk management culture is encouraged amongst employees and contractors.

7.2 The board should require management to design and implement the risk management and internal control system to manage the company’s material business risks and report to it on whether those risks are being managed effectively. The board should disclose that management has reported to it as to the effectiveness of the company’s management of its material business risks

N/A The Board determines the Group’s ‘risk profile’ and is responsible for overseeing and approving risk management strategy and policies, internal compliance and non-financial internal control. This issue is regularly reviewed at Board meetings and risk management culture is encouraged amongst employees and contractors.

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Principle 7: Recognise and manage risk (cont’d)

7.3 The board should disclose whether it has received assurance from the chief executive officer (or equivalent) and the chief financial officer (or equivalent) that the declaration provided in accordance with section 295A of the Corporations Act is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting risks

A The Board has received the required assurance and declaration.

7.4 Companies should provide the

information indicated in the Guide to reporting on Principle 7

A

Principle 8: Remunerate fairly and

responsibly

8.1 The board should establish a remuneration committee

A

8.2 The remuneration committee should be structured so that it:

consists of a majority of independent directors

A The Company has established a remuneration committee which comprises three non-executive directors (Geoffrey Jones, Michael Atkins and William LeClair), all of whom are considered independent.

is chaired by an independent chair

A

has at least three members.

A

8.3 Companies should clearly distinguish the structure of non-executive directors’ remuneration from that of executive directors and senior executives

A The Remuneration Committee operates under the Remuneration Committee Charter. The Charter states that no executive is to be directly involved in deciding their own remuneration and that, when making recommendations to the Board, the Committee should clearly distinguish the structure of non-executive director’s remuneration from that of executive directors and senior executives.


A Refer to the Remuneration Report in the Company’s Annual Report. The executive directors and executives receive a superannuation guarantee contribution as required by the government, which is currently 9%, and do not receive any other retirement benefits.


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CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

YEAR ENDED 30 JUNE 2013 Notes Consolidated

2013 2012

$ $

REVENUE 4(a) 220,123 694,921

Other income 4(b) 29,546 -

EXPENDITURE

Depreciation expense (315,463) (298,343)

Salaries and employee benefits expense (1,324,030) (1,206,423)

Exploration expenditure (8,126,705) (16,456,929)

Impairment expense 5 (4,183,807) (4,142,010)

Net loss on disposal of available-for-sale financial assets 5 (3,987,682) -

Administration expenses (1,480,038) (2,195,860)

Share-based payments expense 24 (441,278) (290,816)

LOSS BEFORE INCOME TAX (19,609,334) (23,895,460)

INCOME TAX BENEFIT 6 480,344 -

LOSS AFTER INCOME TAX FOR THE YEAR ATTRIBUTABLE TO OWNERS OF AZUMAH RESOURCES LIMITED (19,128,990) (23,895,460)

OTHER COMPREHENSIVE INCOME

Items that may be reclassified to profit or loss

Net (loss)/gain on revaluation of financial assets (69,885) 1,422,515

Exchange differences on translation of foreign operations 205,395 247,147

Other comprehensive income for the year, net of tax 135,510 1,669,662

TOTAL COMPREHENSIVE LOSS FOR THE YEAR ATTRIBUTABLE TO OWNERS OF AZUMAH RESOURCES LIMITED (18,993,480) (22,225,798)

Basic and diluted loss per share for loss attributable to the ordinary equity holders of the Company (cents per share) 23 (5.7) (7.9)

The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the Notes to the Consolidated Financial Statements.

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AT 30 JUNE 2013 Notes Consolidated

2013 2012

$ $

CURRENT ASSETS

Cash and cash equivalents 7 3,619,098 13,803,291

Trade and other receivables 8 675,075 1,284,145

Available-for-sale financial assets 9 560,159 10,565,261

TOTAL CURRENT ASSETS 4,854,332 25,652,697

NON-CURRENT ASSETS

Property, plant and equipment 10 2,140,743 2,239,578

TOTAL NON-CURRENT ASSETS 2,140,743 2,239,578

TOTAL ASSETS 6,995,075 27,892,275

CURRENT LIABILITIES

Trade and other payables 11 734,653 3,079,651

TOTAL CURRENT LIABILITIES 734,653 3,079,651

TOTAL LIABILITIES 734,653 3,079,651

NET ASSETS 6,260,422 24,812,624

EQUITY

Contributed equity 12 93,046,418 92,946,668

Reserves 13 5,249,265 4,772,227

Accumulated losses (92,035,261) (72,906,271)

TOTAL EQUITY 6,260,422 24,812,624

The above Consolidated Statement of Financial Position should be read in conjunction with the Notes to the Consolidated Financial Statements.

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

YEAR ENDED 30 JUNE 2013

Notes Contributed

Equity

Share-Based Payments Reserve

Fair Value Reserve

Foreign Currency

Translation Reserve

Accumulated Losses Total

Consolidated $ $ $ $ $ $

BALANCE AT 1 JULY 2011 74,801,900 3,861,459 (1,352,629) 302,920 (49,010,811) 28,602,839

Loss for the year - - - - (23,895,460) (23,895,460)


Net gain on revaluation of financial assets - - 1,422,515 - - 1,422,515

Exchange differences on translation of foreign operations - - - 247,147 - 247,147

TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE YEAR - - 1,422,515 247,147 (23,895,460) (22,225,798)

TRANSACTIONS WITH OWNERS IN THEIR CAPACITY AS OWNERS

Shares issued during the year 12 19,494,692 - - - - 19,494,692

Share issue transaction costs 12 (1,349,924) - - - - (1,349,924)

Share-based payments expense - 290,816 - - - 290,816

BALANCE AT 30 JUNE 2012 92,946,668 4,152,275 69,885 550,067 (72,906,271) 24,812,624

Loss for the year - - - - (19,128,990) (19,128,990)


Net loss on revaluation of financial assets - - (69,885) - - (69,885)

Exchange differences on translation of foreign operations - - - 205,395 - 205,395

TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE YEAR - - (69,885) 205,395 (19,128,990) (18,993,480)

TRANSACTIONS WITH OWNERS IN THEIR CAPACITY AS OWNERS

Shares issued during the year 12 99,750 (99,750) - - - -

Share-based payments expense - 441,278 - - - 441,278

BALANCE AT 30 JUNE 2013 93,046,418 4,493,803 - 755,462 (92,035,261) 6,260,422

The above Consolidated Statement of Changes in Equity should be read in conjunction with the Notes to the Consolidated Financial Statements.

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CONSOLIDATED STATEMENT OF CASHFLOWS

YEAR ENDED 30 JUNE 2013 Notes Consolidated

2013 2012

$ $

CASH FLOWS FROM OPERATING ACTIVITIES

Payments to suppliers and employees (2,783,309) (3,426,087)

Interest received 313,249 605,178

Expenditure on mining interests (9,923,700) (17,902,320)

NET CASH (OUTFLOW) FROM OPERATING ACTIVITIES 22 (12,393,760) (20,723,229)

CASH FLOWS FROM INVESTING ACTIVITIES

Payments for available-for-sale financial assets - (913,460)

Proceeds on sale of available-for-sale financial assets 2,281,728 -

Payments for property, plant and equipment (74,794) (534,364)

NET CASH INFLOW/(OUTFLOW) FROM INVESTING ACTIVITIES 2,206,934 (1,447,824)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from issues of ordinary shares - 19,318,942

Payment of share issue costs - (1,349,924)

NET CASH INFLOW FROM FINANCING ACTIVITIES - 17,969,018

NET (DECREASE) IN CASH AND CASH EQUIVALENTS (10,186,826) (4,202,035)

Cash and cash equivalents at the beginning of the financial year 13,803,291 18,045,310

Effects of exchange rate changes on cash and cash equivalents 2,633 (39,984)

CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR 7 3,619,098 13,803,291

The above Consolidated Statement of Cashflows should be read in conjunction with the Notes to the Consolidated Financial Statements.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial statements are for the consolidated entity consisting of Azumah Resources Limited and its subsidiaries. The financial statements are presented in the Australian currency. Azumah Resources Limited is a company limited by shares, domiciled and incorporated in Australia. The financial statements were authorised for issue by the directors on 26 September 2013. The directors have the power to amend and reissue the financial statements.

(a) Basis of preparation

These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board and the Corporations Act 2001. Azumah Resources Limited is a for-profit entity for the purpose of preparing the financial statements.

(i) Compliance with IFRS

The consolidated financial statements of the Azumah Resources Limited Group also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

(ii) New and amended standards adopted by the Group

None of the new standards and amendments to standards that are mandatory for the first time for the financial year beginning 1 July 2012 affected any of the amounts recognised in the current period or any prior period and are not likely to affect future periods. However, amendments made to AASB 101 Presentation of Financial Statements effective 1 July 2012 now require the statement of comprehensive income to show the items of comprehensive income grouped into those that are not permitted to be reclassified to profit or loss in a future period and those that may have to be reclassified if certain conditions are met.

(iii) Early adoption of standards

The Group has not elected to apply any pronouncements before their operative date in the annual reporting period beginning 1 July 2012.

(iv) Historical cost convention

These financial statements have been prepared under the historical cost convention, as modified by the revaluation of available-for-sale financial assets and financial assets and liabilities (including derivatives) at fair value through the profit and loss.

(b) Principles of consolidation

(i) Subsidiaries

The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Azumah Resources Limited (“Company” or “parent entity”) as at 30 June 2013 and the results of all subsidiaries for the year then ended. Azumah Resources Limited and its subsidiaries together are referred to in these financial statements as the Group or the consolidated entity.

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(b) Principles of consolidation (cont’d)

(i) Subsidiaries(cont’d)

Subsidiaries are all entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies, generally accompanying a shareholding of more than one-half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

The acquisition method of accounting is used to account for business combinations by the Group.

Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statement of profit or loss and other comprehensive income, statement of changes in equity and statement of financial position respectively.

Investments in subsidiaries are accounted for at cost in the separate financial statements of Azumah Resources Limited.

(ii) Changes in ownership interests

The Group treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity owners of the Group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling interests and any consideration paid or received is recognised in a separate reserve within equity attributable to owners of Azumah Resources Limited.

When the Group ceases to have control, any retained interest in the entity is remeasured to its fair value with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, jointly controlled entity or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.

If the ownership interest in a jointly controlled entity or associate is reduced but joint control or significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income are reclassified to profit or loss where appropriate.

(c) Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the full Board of Directors.

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(d) Foreign currency translation

(i) Functional and presentation currency

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in Australian dollars, which is Azumah Resources Limited's functional and presentation currency.

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.

(iii) Group companies

The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position;

income and expenses for each statement of profit or loss and other comprehensive income are translated at average exchange rates (unless that is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and

all resulting exchange differences are recognised in other comprehensive income.

On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of borrowings and other financial instruments designated as hedges of such investments, are recognised in other comprehensive income. When a foreign operation is sold or any borrowings forming part of the net investment are repaid, the associated exchange differences are reclassified to profit or loss, as part of the gain or loss on sale.

(e) Revenue recognition

Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the financial assets.

(f) Income tax

The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on th

azm annual report - asx · 2013. 9. 27. · magazine. geoffrey jones be (civil), fie aust, cp eng...

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