57
Murchison United NL
ABN 59 009 087 852
ANNUAL FINANCIAL REPORT
30 JUNE 2007
Murchison United NL
36 Outram Street
West Perth WA 6005
MURCHISON UNITED NL
(ABN 59 009 087 852)
CONTENTS TO FINANCIAL REPORT
Corporate Information 2
Directors' Report 3
Corporate Governance Statement 14
Schedule of Interests in Mining Tenements 17
Balance Sheet 18
Income Statement 19
Statement of Changes in Equity 20
Cash Flow Statement 21
Notes to Financial Statements 22
Directors' Declaration 54
Independent Audit Report to the Members of Murchison United NL 56
ASX Additional Information 58
MURCHISON UNITED NL
(ABN 59 009 087 852)
CORPORATE INFORMATION
ABN: 59 009 087 852
This annual report covers Murchison United NL as an individual entity. The Company's functional and
presentation currency is AUD ($).
A description of the Company's operations and of its principal activities is included in the review of
operations and activities in the directors' report on pages 3 to13. The directors' report is not part of the
financial report.
Directors Share Register
G R Featherby Computershare Investor Services Pty Ltd
M D Reilly Level 2, 45 St Georges Terrace
C D Grannell Perth
B Gustafsson (Appointed 3 October 2006) Western Australia
6000
Tel: +61 (0)8 9323 2000
Company Secretary
M D Reilly Auditors
Registered Office Ernst & Young
11 Mounts Bay Road
36 Outram Street Perth
West Perth Western Australia
Western Australia 6000
6005
Tel: +61 (0)8 9322 4071 Nominated Advisor
Solicitors RFC Corporate Finance Ltd
L15, QV1 Building
Hardy Bowen Lawyers 250 St Georges Terrace
L1, 28 Ord Street Perth
West Perth Western Australia
Western Australia 6000
6005
Nominated Broker
Bankers Hichens, Harrison & Co. plc
Bell Court House
National Australia Bank Ltd 11 Blomfield Street
Level 10 Exchange Plaza London
2 The Esplanade United Kingdom
Perth EC2M1LB
Western Australia
6000 Stock Exchanges
Australian Stock Exchange ASX - MUR
London Stock Exchange AIM - MUU
MURCHISON UNITED NL
(ABN 59 009 087 852)
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 JUNE 2007
Your Directors submit their report for the year ended 30 June 2007.
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. Directors were in office for this entire period unless otherwise stated.
Names, qualifications, experience and special responsibilities
Glenn Robert Featherby, aged 51, B.Com., A.C.A. (Non-Executive Chairman)
Mr. Featherby joined the Board on 2 August 2004. Mr Featherby has over 20 years' experience in corporate
advisory work and has worked extensively in the resources sector. He worked with KPMG in Perth, Western
Australia and London before establishing his own accounting practice in Perth in 1997. Mr Featherby was also a
non-executive director of Canadian & AIM listed European Goldfields Limited, and was the finance director of
Regal Petroleum Plc, having since resigned from both positions.
Mark David Reilly, aged 37, B.Bus., A.C.A. (Managing Director and Company Secretary)
Mr. Reilly joined the Board on 2 August 2004. Mr Reilly has over 15 year's experience in advisory work with
extensive experience in the mining, banking and finance industries. He worked with Coopers & Lybrand in Perth
before establishing a practice with Glenn Featherby.
Christopher David Grannell, aged 45, (Non-Executive Director)
Mr Grannell joined the Board on 4 April 2005. Mr Grannell has significant London capital markets experience
focused in the natural resources sector. Mr Grannell was an Executive Director and Chief Financial Officer of
European Goldfields Limited, a company listed on the Toronto Stock Exchange and the AIM market of the London
Stock Exchange.
Bosse Gustafsson, aged 62, (Technical Director)
Mr Gustafsson joined the board on the 3rd October 2006. Mr Gustafsson has over 35 years geological experience,
including more than 10 years in uranium exploration, and is a life time member of the Geological Society of
Sweden. He was formerly employed by the Geological Survey of Sweden, as its Senior Geologist in the Mineral
Resources Information Office, a position he held from 1993 until 2006. Mr Gustafsson has managed a number of
exploration programmes for both the department and private companies on a secondment basis, in various locations
throughout Europe, Africa and Latin America.
COMPANY SECRETARY
Mark David Reilly, aged 37, B.Bus., A.C.A. (Managing Director and Company Secretary)
Mr Reilly was appointed Company Secretary on 8 March 2007 following the untimely death of Joe Schiavi.
Joe Schiavi, aged 47, B.Bus. ACA (Company Secretary)
Mr Schiavi was appointed Company Secretary on 2 August 2004 and occupied the position until he passed away on 3
March 2007. Prior to holding this position he held a number of senior accounting, administration and Company
Secretary positions. Mr Schiavi was a Chartered Accountant for over 20 years.
MURCHISON UNITED NL
(ABN 59 009 087 852)
DIRECTORS' REPORT (Continued)
FOR THE YEAR ENDED 30 JUNE 2007
DIRECTORS (Continued)
Interests in the shares and options of the Company
As at the date of this report, the interests of the Directors in the shares and options of the Company were:
Number of Ordinary Shares Number of Options over
Ordinary Shares
G.R. Featherby 3,333,333 2,000,000
M.D. Reilly 4,000,000 3,500,000
C.D. Grannell - 2,000,000
B. Gustafsson - -
DIVIDENDS
No dividend has been paid since the end of the previous financial year. The Directors recommend that no
dividend be paid in respect of the current financial year.
PRINCIPAL ACTIVITIES
The principal activity of the Company during the course of the financial year was the exploration for minerals.
OPERATING AND FINANCIAL REVIEW
Operating Results for the year
The loss after income tax for the financial year was $1,869,422 (2006: $2,000,673).
Company Overview
During the year and up to the date of this report, the Company continues to investigate resource opportunities.
Currently these are focused on the Company's mining interests in the Republic of Guinea and the Islamic
Republic of Mauritania in West Africa. The Company also has two copper/cobalt projects in Australia: the
Millenium leases in the Cloncurry area in Queensland and its 50% JV interest in Maroochydore Copper Project,
operated by Aditya Birla Minerals Ltd (ASX - ABY), near Telfer in the Pilbara region of Western Australia.
The Directors of the Company are continuing to investigate resource opportunities in Australia and
internationally to assess their appropriateness for the Company.
Subsequent to year end, the Directors announced the successful completion of a placement raising $7,443,868 for
working capital purposes through the issue of 67,671,531 ordinary shares at 11 cents each from sophisticated
clients of Hartleys Limited and D J Carmichael Pty Limited.
MURCHISON UNITED NL
(ABN 59 009 087 852)
DIRECTORS' REPORT (Continued)
FOR THE YEAR ENDED 30 JUNE 2007
Shareholder Returns
Shareholder returns are via capital growth of the listed share price. The Company's Australian closing share
price as at 30 June 2007 was 14.0 cents compared to 7.7 cents as at the close of business on 30 June 2006. The
share price at the date of this report is 11.5 cents.
Share issues during the year
During the year 3,878,492 shares were issued to Renison Bell Limited approved shortfall creditors. This issue,
which was not for cash, was to satisfy an obligation of the Company under a Deed of Company Arrangement
("DOCA"), details of which are contained in Note 16 to the Financial Report. A further 12,500,000 shares were
issued to creditors of Renison Bell Limited for the non-cash component of consideration for the restructure to
retain the Maroochydore Copper JV Project.
During October 2006, the company issued 25,000,000 shares at $0.06 raising $1,409,472 after costs. The company
issued a further 40,819,165 shares at $0.11 in June 2007 raising $4,322,373 after costs as the first tranche of
a placement which was completed in July 2007.
Risk management
The Company takes a proactive approach to risk management. The Board is responsible for ensuring that risks, and
also opportunities, are identified on a timely basis and that the Company's objectives and 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 part of this process, and as such the Board has not established a separate risk
management committee.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Significant changes in the state of affairs of the Company during the financial year were as follows:
* The Company has successfully completed its initial drilling program at its Firawa Prospect in the
Republic of Guinea, with assay results confirming significant uranium intersections. .
* The Company has successfully negotiated a restructure with creditors of Renison Bell Ltd (Subject to
Deed of Company Arrangement) to retain the Maroochydore Copper JV Project.
* A budget for 2007-08 for Resource Development & Regional Exploration for the Maroochydore Copper JV
Project has been agreed with the project operators Aditya Birla Minerals Ltd with commencement of a drilling
programme in July 2007.
MURCHISON UNITED NL
(ABN 59 009 087 852)
DIRECTORS' REPORT (Continued)
FOR THE YEAR ENDED 30 JUNE 2007
SIGNIFICANT EVENTS AFTER THE BALANCE DATE
There has not arisen in the interval between the end of the financial year and the date of this report any item,
transaction or event of a material and unusual nature likely, in the opinion of the Directors, to affect
significantly the operations of the Company, the results of those operations, or the state of affairs of the
Company in subsequent financial years except that the second tranche of the placement announced in May 2007 was
completed with the issue of 26,852,366 ordinary shares at an issue price of A$0.11 to sophisticated clients of
DJ Carmichaels Limited and Hartleys Limited to raise $2,785,495 after costs for working capital purposes.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
Further information about likely developments in the operations of the Company and the expected results of those
operations in future financial years has not been included in this report because disclosure of that information
would be likely to result in unreasonable prejudice to the Company.
ENVIRONMENTAL REGULATION AND PERFORMANCE
The Company has an environmental security deposit of $7,950 (2006: $7,950) in relation to the Millennium mining
leases. There have been no calls on this deposit up to the date of this report. The Board believes that the
Company has adequate systems in place for the management of its environmental requirements and is not aware of
any breach of environmental requirements as they apply to the Company.
SHARE OPTIONS
Unissued Shares
As at the date of this report, there were 18,000,000 unissued ordinary shares under options (18,350,000 at 30
June 2007). Refer to note 17 of the financial statements for further details of the options outstanding.
Option holders do not have any right, by virtue of the option, to participate in any share issue of the company
or any related body corporate.
Shares issued as a result of the exercise of options
During the year and up to the date of this report, no options were exercised.
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
The Company has, in accordance with the Constitution, entered into insurance contracts, which indemnify
Directors and Officers of the Company against liabilities. In accordance with normal commercial practices,
under the terms of the insurance contracts, the details of the nature and extent of the liabilities insured
against and the amount of premiums paid are confidential.
MURCHISON UNITED NL
(ABN 59 009 087 852)
DIRECTORS' REPORT (Continued)
FOR THE YEAR ENDED 30 JUNE 2007
REMUNERATION REPORT (Audited)
This Remuneration Report outlines the director and executive remuneration arrangements of the Company in
accordance with the requirements of the Corporations Act 2001 and its Regulations. It also provides the
remuneration disclosures required by paragraphs Aus 25.4 to Aus 25.7.2 of AASB 124 Related Party Disclosures,
which have been transferred to the Remuneration Report in accordance with Corporations Regulation 2M.6.04. For
the purposes of this report Key Management Personnel (KMP) of the Company are defined as those persons having
authority and responsibility for planning, directing and controlling the major activities of the Company,
directly or indirectly.
Remuneration committee
The Remuneration Committee of the Board of Directors of the Company is responsible for determining and
reviewing remuneration arrangements for the Board and executives.
The Remuneration Committee assesses the appropriateness of the nature and amount of remuneration of executives
on a periodic basis by reference to relevant employment market conditions with the overall objective of
ensuring maximum stakeholder benefit from the retention of a high quality, high performing Board and executive
team.
Remuneration philosophy
The performance of the Company depends upon the quality of its Directors and Executives. To prosper, the Company
must attract, motivate and retain highly skilled Directors and Executives. To this end, the Company provides
competitive rewards to attract high calibre executives.
Remuneration structure
In accordance with best practice corporate governance, the structure of Non-Executive Director and Executive
remuneration is separate and distinct.
Non-executive director remuneration
Objective
The Board seeks to set aggregate remuneration at a level that provides the Company with the ability to attract
and retain Directors of the highest calibre, whilst incurring a cost that is acceptable to shareholders.
Structure
The Constitution and the ASX Listing Rules specify that the aggregate remuneration of Non-Executive Directors
shall be determined from time to time by a general meeting. The latest determination was at the Annual General
meeting held on 30 November 1998 when shareholders agreed an aggregate remuneration of $300,000 per year.
The amount of aggregate remuneration sought to be approved by Shareholders and the fee structure is reviewed
annually. The Board considers advice from external consultants as well as the fees paid to non-executive
directors of comparable companies when undertaking the annual review process.
Each Director receives a fee for being a Director of the Company.
Non-Executive Directors are encouraged by the Board to hold shares in the Company purchased by the Director.
The Non-Executive Directors of the Company can participate in the Employee Share Option Plan.
The remuneration of Non-Executive Directors for the years ending 30 June 2007 and 30 June 2006 are detailed
in Table 1 and 2 on page 10 of this report.
MURCHISON UNITED NL
(ABN 59 009 087 852)
DIRECTORS' REPORT (Continued)
FOR THE YEAR ENDED 30 JUNE 2007
REMUNERATION REPORT (Audited)
Executive remuneration
Objective
The Company aims to reward Executives with a level and mix of remuneration commensurate with their position and
responsibilities within the Company so as to:
* Align the interests of Executives with those of Shareholders; and
* Ensure total remuneration is competitive by market standards.
Structure
In determining the level and make-up of Executive remuneration, the Remuneration Committee obtained advice as
to remuneration paid to executive directors of comparable companies.
It is the Remuneration Committee's policy that employment contracts are only entered into with the Managing
Director and with no other Executives. Details of this contract are provided on page 9.
Remuneration consists of the following key elements:
* Fixed Remuneration; and
* Variable Remuneration - Long Term Incentives (LTI).
Fixed Remuneration
Objective
The level of fixed remuneration is set so as to provide a base level of remuneration, which is both appropriate
to the position and is competitive in the market.
Fixed remuneration is reviewed annually by the Remuneration Committee and the process consists of a review of
business and individual performance, relevant comparative remuneration in the market and internally and, where
appropriate, external advice on policies and practices. The Remuneration Committee has access to external advice
independent of management.
Structure
Executives are given the opportunity to receive their fixed (primary) remuneration in a variety of forms
including cash and fringe benefits. It is intended that the manner of payment chosen will be optimal for the
recipient without creating undue cost for the Company.
Variable Remuneration - Long Term Incentive (LTI)
Objective
The objective of the LTI plan is to reward Executives in a manner that aligns remuneration with the creation of
Shareholder wealth. As such, LTI grants are only made to Executives who are able to influence the generation of
Shareholder wealth and thus have an impact on the Company's performance against the relevant long-term
performance.
MURCHISON UNITED NL
(ABN 59 009 087 852)
DIRECTORS' REPORT (Continued)
FOR THE YEAR ENDED 30 JUNE 2007
REMUNERATION REPORT (Audited)
Structure
LTI grants to Executives are delivered in the form of share options. There are no performance conditions
attached to the options except that options do not vest until six months continuous employment is completed
from the time of granting the options. There were no options granted to executives during the year.
Company performance
In terms of the impact on the company's performance over the past 5 years, this is best reflected by the
movement in the company's earnings, EPS and share price as outlined in the following table:
2007 2006 2005 2004 2003
Net profit/ (loss) attributable to
equity holders (1,869,422) (2,000,673) (1,661,188) (1,794,103) 2,414,405
Basic Earnings/ (loss) per Share (0.006) (0.007) (0.008) (0.010) 0.016
Share price at 30 June (cents) 14.0 7.7 6.3 2.0 2.0
Share price growth over previous year 6.3 1.4 4.3 0.0 (37.0)
Employment contracts
The Managing Director, Mr Mark D Reilly, is employed under contract. The current employment contract commenced
on 1 January 2005. Under the terms of the present contract:
* Mr Reilly may resign from his position and thus terminate this contract by giving 6 months written
notice. On resignation by notice, any LTI options granted will have vested, or will vest during the notice
period.
* The Company may terminate this employment agreement by providing 6 months written notice or provide
payment in lieu of the notice period (based on the fixed component of Mr Reilly's remuneration). On termination
on notice by the Company, any LTI options granted will have vested, or will vest during the notice period.
* The Company may terminate the contract at any time without notice if serious misconduct has occurred.
Where termination with cause occurs, the Managing Director is only entitled to that portion of remuneration
which is fixed, and only up to the date of termination. On termination with cause any unvested options will
immediately be forfeited.
MURCHISON UNITED NL
(ABN 59 009 087 852)
DIRECTORS' REPORT (Continued)
FOR THE YEAR ENDED 30 JUNE 2007
REMUNERATION REPORT (Audited)
REMUNERATION OF KEY MANAGEMENT PERSONNEL
Table 1: Remuneration for the year ended 30 June 2007.
Short Term Benefits Post employment
Share- Total %
Salary & Fees Superannuation Retirement based Performanc
benefits Payment e related
Options
Directors $ $ $ $ $
G. R. Featherby 50,000 4,500 - - 54,500 -
M. D. Reilly 150,000 13,500 - - 163,500 -
C. D. Grannell 40,000 - - - 40,000 -
B. Gustafsson 161,556 - - - 161,556 -
Executives
J. Schiavi 68,808 20,908 - - 89,716 -
Total 470,364 38,908 - - 509,272 -
Table 2: Remuneration for the year ended 30 June 2006.
Short Term Benefits Post employment
Share- Total %
Salary & Fees Superannuation Retirement based Performanc
benefits Payment e related
Options
Directors $ $ $ $ $
G. R. Featherby 50,000 4,500 - - 54,500 -
M. D. Reilly 150,000 13,500 - - 163,500 -
D. Hutchins 25,000 - - - 25,000 -
C. D. Grannell 40,000 - - 142,800 182,800 -
Executives
J. Schiavi 86,500 22,500 - - 109,000 -
B. Gustafsson 84,890 - - - 84,890 -
Total 436,390 40,500 - 142,800 619,690 -
MURCHISON UNITED NL
(ABN 59 009 087 852)
DIRECTORS' REPORT (Continued)
FOR THE YEAR ENDED 30 JUNE 2007
REMUNERATION REPORT (Audited)
Table 3: Options granted as part of remuneration
During the year ended 30 June 2007, there were no options granted as equity compensation benefits to Directors
and key management personnel.
Granted Terms & Conditions for each Grant Vested
Number Grant Fair Exercise Expiry First Last
date Value per price per Date Exercise Exercise Number
option at option Date Date
Year ended grant
30 June 2006 date
($) ($)
C D Grannell 2,000,000 29.11.05 $0.0714 $0.055 29.11.10 29.11.05 29.11.10 2,000,000
There were no alterations to the terms and conditions of options granted as remuneration since their grant
date.
DIRECTORS' MEETINGS
The number of Directors' meetings and number of meetings attended by each of the Directors of the Company
during the financial year are:
Directors' Meetings Remuneration Audit Committee
Committee
G R Featherby 14 1 -
M D Reilly 14 N/A -
B Gustafsson 8 N/A N/A
C D Grannell 14 1 -
All Directors were eligible to attend all meetings held except for Mr. B Gustafsson, who was eligible to attend
11 Directors' meetings.
COMMITTEE MEMBERSHIP
The Board resolved to establish a Remunerations Committee on 18 June 2007, comprised of the Non-Executive
Directors, Mr. G R Featherby and Mr. C D Grannell, and an Audit Committee comprising Mr. G R Featherby, Mr. M D
Reilly and Mr. C D Grannell.
The Directors of the Company consider that due to the level of current operations, a separate Nomination
committee is not necessary.
MURCHISON UNITED NL
(ABN 59 009 087 852)
DIRECTORS' REPORT (Continued)
FOR THE YEAR ENDED 30 JUNE 2007
AUDITOR'S INDEPENDENCE
The Directors received the following declaration from the auditor of Murchison United NL.
ERNST & YOUNG The Ernst & Young Building Tel 61 8 9429 2222
11Mounts Bay Road Fax 61 8 9429 2436
Perth WA 6000
Australia
GPO Box M939
Perth WA 6843
Auditor's Independence Declaration to the Directors of Murchison United NL
In relation to our audit of the financial report of Murchison United NL for the financial year ended 30 June
2007, to the best of my knowledge and belief, there have been no contraventions of the auditor independence
requirements of the Corporations Act 2001 or any applicable code of professional conduct.
Ernst & Young
J P Dowling
Partner
Perth
27 September 2007
Liability limited by a scheme approved under
Professional Standards Legislation
JPD;HG;MURCHISON;021
MURCHISON UNITED NL
(ABN 59 009 087 852)
DIRECTORS' REPORT (Continued)
FOR THE YEAR ENDED 30 JUNE 2007
NON-AUDIT SERVICES
Ernst & Young received or are due to receive no amounts for the provision of non-audit services.
Signed in accordance with a resolution of the Directors.
.......................................
M D Reilly
MANAGING DIRECTOR
Perth, 27 September 2007
MURCHISON UNITED NL
(ABN 59 009 087 852)
CORPORATE GOVERNANCE STATEMENT
The Board of Directors of Murchison United NL is responsible for the corporate governance of the Company. The
Board monitors the business affairs of Murchison United NL on behalf of the Shareholders by whom they are
elected and to whom they are accountable.
Murchison United NL's Corporate Governance Statement is structured with reference to the Corporate Governance
Council's principles and recommendations, which are as follows:
Principle 1. Lay solid foundations for management and oversight
Principle 2. Structure the board to add value
Principle 3. Promote ethical and responsible decision making
Principle 4. Safeguard integrity in financial reporting
Principle 5. Make timely and balanced disclosures
Principle 6. Respect the rights of shareholders
Principle 7. Recognise and manage risk
Principle 8. Encourage enhanced performance
Principle 9. Remunerate fairly and responsibly
Principle 10. Recognise the legitimate interests of stakeholders
Murchison United NL's corporate governance practices were in place throughout the year ended 30 June 2007 and
were fully compliant with the Council's best practice recommendations other than as follows:
* the Remuneration Committee and Audit Committee were established on 18 June 2007;
* a Nomination Committee has not been established as this function is carried out by the full board; and
* the majority of the Board are not independent.
Structure of the Board
The skills, experience and expertise relevant to the position of director held by each director in office at
the date of the annual report is included in the Directors' Report. Directors of Murchison United NL are
considered to be independent when they are independent of management and free from any business or other
relationship that could materially interfere with - or could reasonably be perceived to materially interfere
with - the exercise of their unfettered and independent judgement.
In the context of director independence, 'materiality' is considered from both the Company and individual
director perspective. The determination of materiality requires consideration of both quantitative and
qualitative elements. An item is presumed to be quantitatively immaterial if it is equal to or less than 5% of
the appropriate base amount. It is presumed to be material (unless there is qualitative evidence to the
contrary) if it is equal to or greater than 10% of the appropriate base amount. Qualitative factors considered
include whether a relationship is strategically important, the competitive landscape, the nature of the
relationship and the contractual or other arrangements governing it and other factors that point to the actual
ability of the director in question to shape the direction of the Company's loyalty.
In accordance with the definition of independence above, and the materiality thresholds set, the following
Director of Murchison United NL is considered to be independent:
Name Position
C D Grannell Non-Executive Director
There are procedures in place, agreed by the Board, to enable Directors in furtherance of their duties to seek
independent professional advice at the Company's expense.
MURCHISON UNITED NL
(ABN 59 009 087 852)
CORPORATE GOVERNANCE STATEMENT (Continued)
Structure of the Board (Continued)
The term in office held by each Director in office at the date of this report is as follows:
Name Term in office
G R Featherby 1 Year
M D Reilly 3 Years
C D Grannell 1 Year
B Gustafsson 1 Year
Audit Committee
The Board established an Audit Committee on 18 June 2007, which operates under the direction of the Board. It
is the Board's responsibility to ensure that an effective internal control framework exists within the entity.
This includes internal controls to deal with both the effectiveness and efficiency of significant business
processes, the safeguarding of assets, the maintenance of proper accounting records, and the reliability of
financial information as well as non-financial considerations.
The Committee also provides the Board with additional assurance regarding the reliability of financial
information for inclusion in the financial reports. The members of the Audit Committee during the year were:
G R Featherby
M D Reilly
C D Grannell
Qualifications of audit committee members
Mr. Featherby has been a chartered accountant for more than 20 years and has been a director of two overseas
listed companies, including holding the position of Finance Director of Regal Petroleum plc, a company listed
on the AIM market of the London Stock Exchange.
Mr. Reilly is a chartered accountant with more than 15 years experience in corporate advisory work, including
establishing an accounting practice in partnership with Mr. Featherby.
Mr. Grannell has been a chartered accountant for more than 20 years and was an Executive Director and Chief
Financial Officer of European Goldfields Limited, a company listed on the Toronto Stock Exchange and the AIM
market of the London Stock Exchange.
Performance
The performance of the Board and key Executives is reviewed regularly against both measurable and qualitative
indicators. Each Board member's and key Executive's performance is assessed against specific and measurable
qualitative and quantitative performance criteria. The performance criteria against which Directors and
Executives are assessed are aligned with the financial and non-financial objectives of Murchison United NL.
Directors whose performance is consistently unsatisfactory may be asked to retire.
There is currently no Nomination Committee as all corporate governance issues relating to nomination are dealt
with by the full Board, due to the size of the Company, and ensuring arrangements are in place to adequately
manage those risks.
MURCHISON UNITED NL
(ABN 59 009 087 852)
CORPORATE GOVERNANCE STATEMENT (Continued)
Remuneration
It is the Company's objective to provide maximum stakeholder benefit from the retention of a high quality Board
and Executive team by remunerating Directors and key Executives fairly and appropriately with reference to
relevant employment market conditions. To assist in achieving this objective, the Remuneration Committee links
the nature and amount of Executive Directors' and Officers' remuneration to the Company's financial and
operational performance. The expected outcomes of the remuneration structure are:
* retention and motivation of key Executives;
* attraction of high quality management to the Company; and
* performance incentives that allow Executives to share the success of Murchison United NL.
For a full discussion of the Company's remuneration philosophy and framework and the remuneration received by
the Directors and Executives in the current period please refer to the Remuneration Report, which is contained
within the Directors' Report.
There is no scheme to provide retirement benefits, other than statutory superannuation, to Non-executive
Directors.
The Board is responsible for determining and reviewing compensation arrangements. The Board has established a
Remuneration Committee on 18 June 2007, comprising two non-executive directors. Members of the Remuneration
Committee are:
G R Featherby
C D Grannell
For details on the number of meetings of the Remuneration Committee held during the year and the attendees at
those meetings, refer to the Directors' Report.
MURCHISON UNITED NL
(ABN 59 009 087 852)
SCHEDULE OF INTERESTS IN MINING TENEMENTS
CURRENT AT 30 JUNE 2007
STATE TENEMENT NAME/LOCATION TENEMENT INTEREST COMMENTS
NUMBER
Queensland Rita Margaret ML 2512 100%
This Time Maybe l ML 2761 100%
Federal ML 2762 100%
Millennium #1 ML 7506 100%
Millennium #2 ML 7507 100%
Millennium #3 ML 7508 100%
Millennium #4 ML 7509 100%
WA Maroochydore EL45/1840 50% All Maroochydore tenements
Maroochydore EL45/1841 50% are part of a joint venture
Maroochydore ML45/711 50% with Aditya Birla Minerals
Maroochydore ML45/712 50% Ltd (ASX: ABY), the project
Maroochydore ML45/713 50% operator, who acquired a 50%
Maroochydore ML45/714 50% interest in the project from
Maroochydore ML45/715 50% Straits Resources Ltd
Maroochydore ML45/745 50%
Maroochydore ML45/746 50%
Maroochydore EL45/1018 50%
Maroochydore EL45/1839 50%
Maroochydore ML45/314 50%
Maroochydore ML45/315 50%
Maroochydore ML45/317 50%
Maroochydore ML45/318 50%
Maroochydore ML45/492 50%
NOTE: ML = Mining Lease; EL = Exploration Licence
COUNTRY TENEMENT NAME/LOCATION TENEMENT INTEREST COMMENTS
NUMBER
Republic of Beyla (Sesse) XP 105 100%
Guinea Beyla (Sesse) XP 106 100%
Kankan (Bohoduo) XP 107 100%
Kankan (Bohoduo) XP 129 100%
Kerouane (Bohoduo) XP 108 100%
Kerouane (Firawa) XP 109 100%
Kissidougou (Firawa) XP 110 100%
Kissidougou (Firawa) XP 130 100%
Republic of Steilet Zednes XP 281 100%
Mauritania D' Adem Essder XP 282 100%
Rhall Amane XP 283 100%
Tisram XP 284 100%
Gleibat Ten Ebdar XP 285 100%
Legleya XP 286 100%
NOTE: XP = Exploration Permits
MURCHISON UNITED NL
(ABN 59 009 087 852)
BALANCE SHEET
AS AT 30 JUNE 2007
Notes As at As at
30 June 30 June
2007 2006
$ $
ASSETS
Current Assets
Cash and cash equivalents 10 4,067,176 395,672
Trade and other receivables 11 7,950 7,950
Prepayments 8,846 18,592
Total Current Assets 4,083,972 422,214
Non-current assets
Available-for-sale financial assets 12 52,832 23,480
Exploration and evaluation expenditure 13 2,106,294 325,334
Property, plant and equipment 14 39,723 28,638
Total Non-Current Assets 2,198,849 377,452
TOTAL ASSETS 6,282,821 799,666
LIABILITIES
Current Liabilities
Trade and other payables 15 361,624 78,860
Provisions 16 52,309 339,612
Total Current Liabilities 413,933 418,472
TOTAL LIABILITIES 413,933 418,472
NET ASSETS 5,868,888 381,194
EQUITY
Issued capital 17 48,104,178 41,380,905
Reserves 18 1,401,393 767,550
Accumulated losses 18 (43,636,683) (41,767,261)
TOTAL EQUITY 5,868,888 381,194
MURCHISON UNITED NL
(ABN 59 009 087 852)
INCOME STATEMENT
FOR THE YEAR ENDED 30 JUNE 2007
2007 2006
Notes $ $
Revenue 6 60,975 64,143
Administration Expenses 7 (1,929,299) (1,500,344)
Finance Costs - -
Project evaluation expenses - (505,785)
Settlement of Renison Bell Ltd Creditors 16 (1,098) (58,687)
Loss before income tax (1,869,422) (2,000,673)
Income tax expense - -
Loss after tax (1,869,422) (2,000,673)
Net loss attributable to members of the Company (1,869,422) (2,000,673)
Earnings/(loss) per share (cents per share)
- basic loss for the year attributable to ordinary
equity holders of the Company 9 (0.006) (0.007)
- diluted loss for the year attributable to ordinary
equity holders of the Company 9 (0.006) (0.007)
MURCHISON UNITED NL
(ABN 59 009 087 852)
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2007
Attributable to equity holders of the Company Total equity
Issued Accumulated Net Equity
capital losses unrealised benefits
gains reserve reserve Total
$ $ $ $ $
At 1 July 2005 41,380,905 (39,766,588) - 101,861 1,716,178
Cost of share-based payment - - - 665,689 665,689
Total Expense recognised
directly in equity - - - 665,689 665,689
Loss for the period - (2,000,673) - - (2,000,673)
Total income/ (expense)
for the period - (2,000,673) - - (2,000,673)
At 30 June 2006 41,380,905 (41,767,261) - 767,550 381,194
Issued Accumulated Net Equity
capital losses unrealised benefits
gains reserve reserve Total
$ $ $ $ $
At 1 July 2006 41,380,905 (41,767,261) - 767,550 381,194
Net gains on available-
for-sale financial assets - - 29,352 - 29,352
Cost of share-based payment - - - 604,491 604,491
Total Expense recognised
directly in equity - - 29,352 - 29,352
Loss for the period - (1,869,422) - - (1,869,422)
Total income/(expense)
for the period - (1,869,422) 29,352 - (1,840,070)
Issue of ordinary shares 7,024,088 - - - 7,024,088
Transaction costs (300,815) - - - (300,815)
At 30 June 2007 48,104,178 (43,636,683) 29,352 1,372,041 5,868,888
MURCHISON UNITED NL
(ABN 59 009 087 852)
CASH FLOW STATEMENT
FOR THE YEAR ENDED 30 JUNE 2007
Notes 2007 2006
$ $
Cash flows from operating
activities
Payments to suppliers and (1,292,936) (1,296,112)
employees
Interest received 57,935 63,917
Net cash flows used in 19 (1,235,001) (1,232,195)
operating activities
Cash flows from investing
activities
Dividend received 1,211 226
Purchase of equipment (23,146) (35,166)
Payment for exploration (1,010,371) (325,334)
and evaluation costs
Net cash flows from (1,032,306) (360,274)
investing activities
Cash flows from financing
activities
Proceeds from issue of 5,990,033 -
shares
Cash received pending 204,358 -
share issue
Transaction costs (255,580) -
relating to issue of
shares
Net cash from financing 5,938,811 -
activities
Net (decrease)/increase
in cash and cash 3,671,504 (1,592,469)
equivalents held
Cash and cash equivalents
at the beginning of the 395,672 1,988,141
financial year
Cash and cash equivalents 10 4,067,176 395,672
at the end of financial
year
MURCHISON UNITED NL
(ABN 59 009 087 852)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2007
1. CORPORATE INFORMATION
The financial report of Murchison United NL for the year ended 30 June 2007 was authorised for issue in
accordance with a resolution of the directors on 28 September 2007.
Murchison United NL is a company limited by shares incorporated in Australia whose shares are publicly
traded on the Australian Stock Exchange, and on the AIM Board of the London Stock Exchange.
The nature of the operations and principal activities of the Company are described in the Directors'
Report.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Table of Contents
(a) Segment reporting
(b) Foreign currency translation
(c) Cash and cash equivalents
(d) Trade and other receivables
(e) Investments and other financial assets
(f) Exploration and evaluation expenditure
(g) Interest in a jointly controlled operation
(h) Property, plant and equipment
(i) Leases
(j) Impairment of non-financial assets other than goodwill
(k) Trade and other payables
(l) Provisions and employee leave benefits
(m) Share-based payment transactions
(n) Contributed equity
(o) Revenue recognition
(p) Income tax and other taxes
(q) Earnings per share
The financial report is a general-purpose financial report, which has been prepared in accordance with
the requirements of the Corporations Act 2001 and Australian Accounting Standards. The financial report
has also been prepared on a historical cost basis, except for Stock Exchange listed available-for-sale
investments, which have been measured at fair value.
The financial report is presented in Australian dollars.
Except for the amendments to AASB 101 Presentation of Financial Statements, which the Company has early
adopted, Australian Accounting Standards and Interpretations that have recently been issued or amended
but are not yet effective have not been adopted by the Company for the annual reporting period ending
30 June 2007.
These are outlined in the table below.
MURCHISON UNITED NL
(ABN 59 009 087 852)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2007
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Reference Title Summary Application Impact on Company Application
date of financial report date for
standard* Company*
AASB 2005- Amendments to Amendments arise from 1 January 2007 AASB 7 is a 1 July 2007
10 Australian Accounting the release in August disclosure standard
Standards [AASB 132, 2005 of AASB 7 so will have no
AASB 101, AASB 114, Financial Instruments: direct impact on the
AASB 117, AASB 133, Disclosures amounts included in
AASB 139, AASB 1, the Company's
AASB 4, AASB 1023 & financial statements.
AASB 1038] However, the
amendments will
result in changes to
the financial
instrument
disclosures included
in the Company's
financial report.
AASB 2007-1 Amendments to Amending standard 1 March 2007 This is consistent 1 July 2007
Australian Accounting issued as a consequence with the Company's
Standards arising of AASB Interpretation existing accounting
from AASB 11 Group and Treasury policies for share-
Interpretation 11 Share Transactions. based payments so
[AASB 2] will have no impact.
AASB 2007-2 Amendments to Amending standard 1 January 2008 As the Company 1 July 2008
Australian Accounting issued as a consequence currently has no
Standards arising of AASB Interpretation service concession
from AASB 12 Service Concession arrangements or
Interpretation 12 Arrangements. public-private-
[AASB 1, AASB 117, partnerships (PPP),
AASB 118, AASB 120, it is expected that
AASB 121, AASB 127, this Interpretation
AASB 131 & AASB 139] will have no impact
on its financial
report.
AASB 2007-3 Amendments to Amending standard 1 January 2009 AASB 8 is a 1 July 2009
Australian Accounting issued as a consequence disclosure standard
Standards arising of AASB 8 Operating so will have no
from AASB 8 [AASB 5, Segments. direct impact on the
AASB 6, AASB 102, amounts included in
AASB 107, AASB 119, the Company's
AASB 127, AASB 134, financial statements.
AASB 136, AASB 1023 & However the new
AASB 1038] standard may have an
impact on the segment
disclosures included
in the Company's
financial report.
MURCHISON UNITED NL
(ABN 59 009 087 852)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2007
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Reference Title Summary Application Impact on Company Application
date of financial report date for
standard* Company*
AASB 2007-4 Amendments to The standard is a 1 July 2007 As the Company does 1 July 2007
Australian Accounting result of the AASB not anticipate
Standards arising decision that, in changing any of its
from ED 151 and Other principle, all accounting policy
Amendments accounting policy choices as a result
options currently of the issue of AASB
existing in IFRS should 2007-4 this standard
be included in the will have no impact
Australian equivalents on the amounts
to IFRS and the included in the
additional Australian Company's financial
disclosures should be statements.
eliminated, other than
those considered Changes to disclosure
particularly relevant requirements will
in the Australian have no direct impact
reporting environment. on the amounts
included in the
Company's financial
statements. However
the new standard may
have an impact on the
disclosures included
in the Company's
financial report.
AASB 2007-6 Amendments to Amending standard 1 January 2009 As the Company does 1 July 2009
Australian Accounting issued as a consequence not currently
Standards arising of AASB 123 (revised) construct or produce
from AASB 123 [AASB Borrowing Costs. any qualifying assets
1, AASB 101, AASB which are financed by
107, AASB 111, AASB borrowings the
116 & AASB 138 and revised standard will
Interpretations 1 & have no impact.
12]
AASB 2007-7 Amendments to Amending standard 1 July 2007 Refer to AASB 2007-4 1 July 2007
Australian Accounting issued as a consequence above.
Standards [AASB 1, of AASB 2007-4
AASB 2, AASB 4, AASB
5, AASB 107 & AASB
128]
AASB 7 Financial New standard replacing 1 January Refer to AASB 2005-10 1 July 2007
Instruments: disclosure requirements 2007 above.
Disclosures. of AASB 132.
MURCHISON UNITED NL
(ABN 59 009 087 852)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2007
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Reference Title Summary Application Impact on Company Application
date of financial report date for
standard* Company*
AASB 8 Operating Segments This new standard will 1 January Refer to AASB 2007-3 1 July 2009
replace AASB 114 2009 above.
Segment Reporting and
adopts a management
approach to segment
reporting.
AASB 101 Presentation of Many of the disclosures 1 January AASB 101 is a 1 July 2007
(Revised Financial Statements from previous GAAP and 2007 disclosure standard
October all of the guidance so will have no
2006) from previous GAAP are direct impact on the
not carried forward in amounts included in
the October 2006 the Company's
version of AASB 101. financial statements.
The revised standard However, the revised
includes some text from standard may result
IAS 1 that is not in in changes to the
the existing AASB 101 disclosures included
and has fewer in the Company's
additional Australian financial report.
disclosure requirements
than the existing AASB
101.
AASB 123 Borrowing Costs AASB 123 previously 1 January Refer to AASB 2007-6 1 July 2009
(Revised permitted entities to 2009 above.
June 2007) choose between
expensing all borrowing
costs and capitalising
those that were
attributable to the
acquisition,
construction or
production of a
qualifying asset. The
revised version of AASB
123 requires borrowing
costs to be capitalised
if they are directly
attributable to the
acquisition,
construction or
production of a
qualifying asset.
MURCHISON UNITED NL
(ABN 59 009 087 852)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2007
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Reference Title Summary Application Impact on Company Application
date of financial report date for
standard* Company*
AASB Interim Financial Addresses an 1 November The prohibitions on 1 July 2007
Interpretat Reporting and inconsistency between 2006 reversing impairment
ion 10 Impairment AASB 134 Interim losses in AASB 136
Financial Reporting and and AASB 139 to take
the impairment precedence over the
requirements relating more general
to goodwill in AASB 136 statement in AASB 134
Impairment of Assets that interim
and equity instruments reporting is not
classified as available expected to have any
for sale in AASB 139 impact on the
Financial Instruments: Company's financial
Recognition and report.
Measurement
AASB Group and Treasury Specifies that a share- 1 March 2007 Refer to AASB 2007-1 1 July 2007
Interpretat Share Transactions based payment above.
ion 11 transaction in which an
entity receives
services as
consideration for its
own equity instruments
shall be accounted for
as equity-settled
AASB Service Concession Clarifies how operators 1 January Refer to AASB 2007-2 1 July 2008
Interpretat Arrangements recognise the 2008 above.
ion 12 infrastructure as a
financial asset and/or
an intangible asset -
not as property, plant
and equipment
AASB Service Concession The revised 1 January Refer to AASB 2007-2 1 July 2008
Interpretat Arrangements: interpretation was 2008 above.
ion 129 Disclosures issued as a result of
(revised the issue of
June 2007) Interpretation 12 and
requires specific
disclosures about
service concession
arrangements entered
into by an entity,
whether as a concession
provider or a
concession operator.
MURCHISON UNITED NL
(ABN 59 009 087 852)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2007
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Reference Title Summary Application Impact on Company Application
date of financial report date for
standard* Company*
IFRIC Customer Loyalty Deals with the 1 July 2008 This Company does not 1 July 2008
Interpretat Programmes accounting for customer have any customer
ion 13 loyalty programmes, loyalty programmes
which are used by and as such this
companies to provide interpretation is not
incentives to their expected to have any
customers to buy their impact on the
products or use their Company's financial
services. report.
IFRIC IAS 19 - The Asset Aims to clarify how to 1 January 2008 The Company does not 1 July 2008
Interpretat Ceiling: Availability determine in normal have a defined
ion 14 of Economic Benefits circumstances the limit benefit pension plan
and Minimum Funding on the asset that an and as such this
Requirements employer's balance interpretation is not
sheet may contain in expected to have any
respect of its defined impact on the
benefit pension plan. Company's financial
report.
* designates the beginning of the applicable annual reporting period
The financial report complies with Australian Accounting Standards, which include Australian
equivalents to International Financial Reporting Standards (AIFRS). The financial report also complies
with International Financial Reporting Standards (IFRS).
(a) Segment reporting
A business segment is a distinguishable component of the entity that is engaged in providing products
or services that are subject to risks and returns that are different to those of other business
segments. A geographical segment is a distinguishable component of the entity that is engaged in
providing products or services within a particular economic environment and is subject to risks and
returns that are different than those of segments operating in other economic environments.
(b) Foreign currency translation
(i) Functional and presentation currency
Both the functional and presentation currency of Murchison United NL is Australian Dollars (A$).
(ii) Transactions & balances
Transactions in foreign currencies are initially recorded in the functional currency by applying the
exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in
foreign currencies are retranslated at the rate of exchange ruling at the balance sheet date.
All exchange differences in the financial report are taken to profit or loss.
MURCHISON UNITED NL
(ABN 59 009 087 852)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2007
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(c) Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at bank and in hand and short-term
deposits with an original maturity of three months or less that are readily convertible to known
amounts of cash and which are subject to an insignificant risk of changes in value.
For the purpose of the Cash Flow Statement, cash and cash equivalents consist of cash and cash
equivalents as defined above, net of outstanding bank overdrafts. Bank overdrafts are included within
interest-bearing loans and borrowings in current liabilities on the balance sheet.
(d) Trade and other receivables
Trade receivables, which generally are security deposits held on 30-90 day terms, are recognised and
carried at the original amount less an allowance for any uncollectible amounts.
Collectibility of trade receivables is reviewed on an ongoing basis. Debts that are known to be
uncollectible are written off when identified. An allowance for doubtful debts is raised when there is
objective evidence that the Company will not be able to collect the debt.
(e) Investments and other financial assets
Financial assets in the scope of AASB 139 Financial Instruments: Recognition and Measurement are
classified as either financial assets at fair value through profit or loss, loans and receivables, held-
to-maturity investments, or available-for-sale financial assets. When financial assets are recognised
initially, they are measured at fair value, plus, in the case of investments not at fair value through
profit or loss, directly attributable transaction costs. The Company determines the classification of
its financial assets after initial recognition and, when allowed and appropriate, re-evaluates this
designation at each financial year-end.
All regular way purchases and sales of financial assets are recognised on the trade date i.e. the date
that the Company commits to purchase the asset. Regular way purchases or sales are purchases or sales
of financial assets under contracts that require delivery of the assets within the period established
generally by regulation or convention in the marketplace.
(i) Loans and receivables
Loans and receivables including loan notes and loans to key management personnel are non-derivative
financial assets with fixed or determinable payments that are not quoted in an active market. Such
assets are carried at amortised cost using the effective interest method. Gains and losses are
recognised in profit or loss when the loans and receivables are derecognised or impaired, as well as
through the amortisation process.
(ii) Available-for-sale investments
Available-for-sale investments are those non-derivative financial assets that are designated as
available-for-sale. After initial recognition available-for-sale investments are measured at fair value
with gains or losses being recognised as a separate component of equity until the investment is
derecognised or until the investment is determined to be impaired, at which time the cumulative gain or
loss previously reported in equity is recognised in profit or loss.
MURCHISON UNITED NL
(ABN 59 009 087 852)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2007
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(e) Investments and other financial assets (continued)
The fair values of investments that are actively traded in organised financial markets are determined
by reference to quoted market bid prices at the close of business on the balance sheet date. For
investments with no active market, fair values are determined using valuation techniques. Such
techniques include: using recent arm's length market transactions; reference to the current market
value of another instrument that is substantially the same; discounted cash flow analysis and option
pricing models making as much use of available and supportable market data as possible and keeping
judgemental inputs to a minimum.
(f) Exploration and evaluation expenditure
Expenditure on exploration and evaluation is accounted for in accordance with the 'area of interest'
method. Exploration and evaluation expenditure is capitalised provided the rights to tenure of the area
of interest is current and either:
* The exploration and evaluation activities are expected to be recouped through successful development
and exploitation of the area of interest or, alternatively, by its sale; or
* Exploration and evaluation activities in the area of interest have not at the reporting date reached a
stage that permits a reasonable assessment of the existence or otherwise of economically recoverable
reserves, and active and significant operations in, or relevant to, the area of interest are continuing.
When the technical feasibility and commercial viability of extracting a mineral resource have been
demonstrated then any capitalised exploration and evaluation expenditure is reclassified as capitalised
mine development. Prior to reclassification, capitalised exploration and evaluation expenditure is
assessed for impairment.
Impairment
The carrying value of capitalised exploration and evaluation expenditure is assessed for impairment at
the cash generating unit level whenever facts and circumstances suggest that the carrying amount of the
asset may exceed its recoverable amount.
An impairment exists when the carrying amount of an asset or cash-generating unit exceeds its
recoverable amount. The asset of cash-generating unit is then written down to its recoverable amount.
Any impairment losses are recognised in the income statement.
(g) Interest in a jointly controlled operation
The Company has an interest in a joint venture that is a jointly controlled operation. A joint venture
is a contractual arrangement whereby two or more parties undertake an economic activity that is subject
to joint control. The Maroochydore Copper Project is subject to a joint venture with Aditya Birla
Minerals Limited (ASX:ABY) who controls 50% and is the operator. The project is located approximately
100km southeast of their Nifty Copper mine operations and 60km south southeast of the Telfer copper-
gold mine in the Pilbara Region of Western Australia. The Company recognises its interest in the
jointly controlled operation by recognising its interest in the assets and the liabilities of the joint
venture. The Company also recognises the expenses that it incurs and its share of the income that it
earns from the sale of goods or services by the jointly controlled operation.
MURCHISON UNITED NL
(ABN 59 009 087 852)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2007
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(h) Property, plant and equipment
Plant and equipment is stated at historical cost less accumulated depreciation and any accumulated
impairment losses. Such cost includes the cost of replacing parts that are eligible for capitalisation
when the cost of replacing the parts is incurred. Similarly, when each major inspection is performed,
its cost is recognised in the carrying amount of the plant and equipment as a replacement only if it is
eligible for capitalisation. All other repairs and maintenance are recognised in profit or loss as
incurred.
Depreciation is calculated on a straight-line basis over the estimated useful life of the asset as
follows:
Plant and equipment - over 3 to 10 years.
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted if
appropriate, at each financial year-end. No changes were made to the useful lives of assets at
financial year-end for 2006 or 2007.
Disposal
An item of property, plant and equipment is derecognised upon disposal or when no further future
economic benefits are expected from its use or disposal.
Any gain or loss arising on derecognition of the asset (calculated as the difference between the net
disposal proceeds and the carrying amount of the asset) is included in profit or loss in the year the
asset is derecognised.
(i) Leases
The determination or whether an arrangement is or contains a lease is based on the substance of the
arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the
use of a specific asset or assets and the arrangement conveys a right to use the asset.
Company as a lessee
Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset
and the lease term if there is no reasonable certainty that the Company will obtain ownership by the
end of the lease term.
Operating lease payments are recognised as an expense in the income statement on a straight-line basis
over the lease term. Lease incentives are recognised in the income statement as an integral part of the
total lease expense.
MURCHISON UNITED NL
(ABN 59 009 087 852)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2007
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(j) Impairment of non-financial assets other than goodwill (Continued)
Intangible assets that have an indefinite useful life are not subject to amortisation and are tested
annually for impairment, or more frequently if events or changes in circumstances indicate that they
might be impaired. Other assets are tested for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the
amount by which the asset's carrying amount exceeds its recoverable amount. Recoverable amount is the
higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there are separately identifiable cash
inflows that are largely independent of the cash inflows from other assets or groups of assets (cash-
generating units). Non-financial assets other than goodwill that suffered an impairment are tested for
possible reversal of the impairment whenever events or changes in circumstances indicate that the
impairment may have reversed.
(k) Trade and other payables
Trade payables and other payables are carried at amortised cost. They represent liabilities for goods
and services provided to the Company prior to the end of the financial year that are unpaid and arise
when the Company becomes obliged to make future payments in respect of the purchase of these goods and
services. The amounts are unsecured and are usually paid within 30 days of recognition.
(l) Provisions and employee leave benefits
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result
of a past event, it is probable that an outflow of resources embodying economic benefits will be
required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
When the Company expects some or all of a provision to be reimbursed, for example under an insurance
contract, the reimbursement is recognised as a separate asset but only when the reimbursement is
virtually certain. The expense relating to any provision is presented in the income statement net of
any reimbursement.
Provisions are measured at the present value of management's best estimate of the expenditure required
to settle the present obligation at the balance sheet date. If the effect of the time value of money is
material, provisions are discounted using a current pre-tax rate that reflects the time value of money
and the risks specific to the liability. The increase in the provision resulting from the passage of
time is recognised in finance costs.
MURCHISON UNITED NL
(ABN 59 009 087 852)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2007
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(l) Provisions and employee leave benefits (continued)
Employee leave benefits
(i) Wages, salaries, annual leave and sick leave
Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick
leave expected to be settled within 12 months of the reporting date are recognised in respect of
employees' services up to the reporting date. They are measured at the amounts expected to be paid when
the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the leave
is taken and are measured at the rates paid or payable.
(m) Share-based payment transactions
The Company provides benefits to its employees (including key management personnel) in the form of
share-based payments, whereby employees render services in exchange for shares or rights over shares
(equity-settled transactions).
The Murchison United Employee Share Option Plan currently in place, was approved by Shareholders on 10
February 1996. The employee share scheme has been established where Murchison United NL may, at the
discretion of the Board, grant options over the ordinary shares of Murchison United NL to directors and
certain members of staff of the Company. The options, issued for nil consideration, are granted in
accordance with performance guidelines established by the Directors of Murchison United NL, although
the Board of Murchison United NL retains the final discretion on the issue of the options. The options
are issued for a term of 5 years and are exercisable beginning on the first anniversary of the date of
grant. The options cannot be transferred and will not be quoted on the ASX.
The cost of these equity-settled transactions with employees is measured by reference to the fair value
of the equity instruments at the date at which they are granted. The fair value is determined by an
external valuer using a Black & Scholes option modelling technique, further details of which are given
in note 23.
The cost of equity-settled transactions is recognised, together with a corresponding increase in
equity, over the period in which the performance conditions are fulfilled (the vesting period), ending
on the date on which the relevant employees become fully entitled to the award.
At each subsequent reporting date until vesting, the cumulative charge to the income statement is the
product of (i) the grant date fair value of the award; (ii) the current best estimate of the number of
awards that will vest, taking into account such factors as the likelihood of employee turnover during
the vesting period and the likelihood of non-market performance conditions being met; and (iii) the
expired portion of the vesting period.
The charge to the income statement for the period is the cumulative amount as calculated above less the
amounts already charged in previous periods. There is a corresponding credit to equity.
MURCHISON UNITED NL
(ABN 59 009 087 852)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2007
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(m) Share-based payment transactions (continued)
Until an award has vested, any amounts recorded are contingent and will be adjusted if more or fewer
awards vest than originally anticipated to do so. Any award subject to a market condition is considered
to vest irrespective of whether or not that market condition is fulfilled, provided that all other
conditions are satisfied.
If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the
terms had not been modified. An additional expense is recognised for any modification that increases
the total fair value of the share-based payment arrangement, or is otherwise beneficial to the
employee, as measured at the date of modification.
If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation,
and any expense not yet recognised for the award is recognised immediately. However, if a new award is
substituted for the cancelled award and designated as a replacement award on the date that it is
granted, the cancelled and new award are treated as if they were a modification of the original award,
as described in the previous paragraph.
The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the
computation of diluted earnings per share (see note 9).
(n) Contributed equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new
shares or options are shown in equity as a deduction, net of tax, from the proceeds.
(o) Revenue recognition
Revenue is recognised and measured at the fair value of the consideration received or receivable to the
extent it is probable that the economic benefits will flow to the Company and the revenue can be
reliably measured. The following specific recognition criteria must also be met before revenue is
recognised:
(i) Interest Income
Revenue is recognised as interest accrues using the effective interest method. This is a method of
calculating the amortised cost of a financial asset and allocating the interest income over the
relevant period using the effective interest rate, which is the rate that exactly discounts estimated
future cash receipts through the expected life of the financial asset to the net carrying amount of the
financial asset.
(ii)Dividends
Revenue is recognised when the Company's right to receive payment is established.
MURCHISON UNITED NL
(ABN 59 009 087 852)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2007
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(p) Income tax and other taxes
Current tax assets and liabilities for the current and prior periods are measured at the amount
expected to be recovered from or paid to the taxation authorities based on the current period's taxable
income. The tax rates and tax laws used to compute the amount are those that are enacted or
substantively enacted by the balance sheet date.
Deferred income tax is provided on all temporary differences at the balance sheet date between the tax
bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences except when the
deferred income tax liability arises from the initial recognition of goodwill or of an asset or
liability in a transaction that is not a business combination and that, at the time of the transaction,
affects neither the accounting profit nor taxable profit or loss.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of
unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be
available against which the deductible temporary differences and the carry-forward of unused tax
credits and unused tax losses can be utilised except when the deferred income tax asset relating to the
deductible temporary difference arises from the initial recognition of an asset or liability in a
transaction that is not a business combination and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss.
The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to
the extent that it is no longer probable that sufficient taxable profit will be available to allow all
or part of the deferred income tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed at each balance sheet date and are recognised to
the extent that it has become probable that future taxable profit will allow the deferred tax asset to
be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to
the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that
have been enacted or substantively enacted at the balance sheet date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in profit
or loss.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists
to set off current tax assets against current tax liabilities and the deferred tax assets and
liabilities relate to the same taxable entity and the same taxation authority.
Other taxes
Revenues, expenses and assets are recognised net of the amount of GST except:
* when the GST incurred on a purchase of goods and services is not recoverable from the taxation
authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as
part of the expense item as applicable; and
* receivables and payables, which are stated with the amount of GST included.
MURCHISON UNITED NL
(ABN 59 009 087 852)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2007
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(p) Income tax and other taxes (continued)
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of
receivables or payables in the balance sheet.
Cash flows are included in the Cash Flow Statement on a gross basis and the GST component of cash flows
arising from investing and financing activities, which is recoverable from, or payable to, the taxation
authority is classified as part of operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to,
the taxation authority.
(q) Earnings per share
Basic earnings per share is calculated as net profit attributable to members of the Company, adjusted
to exclude any costs of servicing equity (other than dividends), divided by the weighted average number
of ordinary shares, adjusted for any bonus element.
Diluted earnings per share is calculated as net profit attributable to members of the Company adjusted
for:
* costs of servicing equity (other than dividends);
* the after tax effect of dividends and interest associated with dilutive potential ordinary shares that
have been recognised as expenses; and
* other non-discretionary changes in revenues or expenses during the period that would result from the
dilution of potential ordinary shares;
divided by the weighted average number of ordinary shares and dilutive potential ordinary shares,
adjusted for any bonus element.
MURCHISON UNITED NL
(ABN 59 009 087 852)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2007
3. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Company's principal financial instruments comprise cash and short-term deposits.
The main purpose of financial instruments is to raise finance for the company's operations. The Company
has various other financial assets and liabilities such as trade receivables and trade payables, which
arise directly from its operations. The main risks arising from the Company's financial instruments are
cash flow interest rate risk, price risk, liquidity risk, foreign currency risk and credit risk.
Cash flow interest rate risk
The Company's exposure to the risk of changes in market interest rates relate primarily to the
Company's cash and short-term deposits with floating interest rates. The Company's policy is to manage
this risk by comparing the interest rates received with advertised available rates to ensure
competitiveness, whilst considering other matters such as security and operational efficiencies.
Price risk
The Company is exposed to changes in quoted prices of its investments in listed entities due to general
market forces or to factors specific to those entities. The Company's policy is to regularly monitor
market trading performance of these investments and any public announcements issued, to identify any
concerns with long-term performance expectations.
Liquidity risk
Prudent liquidity management involves the maintenance of sufficient cash, marketable securities,
committed credit facilities and access to capital markets. It is the policy of the board to ensure that
the Company is able to meet its financial obligations and maintain the flexibility to pursue attractive
investment opportunities through keeping committed credit lines available where possible, ensuring the
Company has sufficient working capital and preserving the 15% share issue limit available to the
Company under the ASX Listing Rules.
Foreign currency risk
The Company has exploration projects in the Republics of Guinea and Mauritania. The Company has
transactional currency exposures. Such exposure arises from expenditure for exploration and evaluation
which can be affected significantly by movements in the US$/A$ and Euro/A$ exchange rates. The Company
does not hedge this exposure at this point in time.
Credit risk
The Company's exposure to credit risk relates primarily to financial assets of cash and cash
equivalents and available-for-sale financial investments and arises from default by the counter party.
The Company's maximum exposure to credit risk at the reporting date in relation to each class of
recognised financial assets is the carrying amount of those assets as indicated in the balance sheet.
The Company manages this risk by investing with recognised credit worthy third parties.
MURCHISON UNITED NL
(ABN 59 009 087 852)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2007
4. Significant accounting judgements, estimates and assumptions
In applying the Company's accounting policies management continually evaluates judgments, estimates and
assumptions based on experience and other factors, including expectations of future events that may
have an impact on the Company. All judgments, estimates and assumptions made are believed to be
reasonable based on the most current set of circumstances available to management. Actual results may
differ from the judgments, estimates and assumptions. Significant judgments, estimates and assumptions
made by management in the preparation of these financial statements are outlined below:
Determination of mineral resources and ore reserves
The determination of reserves impacts the accounting for asset carrying values, depreciation and
amortisation rates, deferred stripping costs and provisions for decommissioning and restoration.
Murchison United NL estimates its mineral resources and ore reserves in accordance with the Australian
Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves 2004 (the 'JORC code').
The information on mineral resources and ore reserves were prepared by or under the supervision of
Competent Persons as defined in the JORC code. The amounts presented are based on the mineral resources
and ore reserves determined under the JORC code.
There are numerous uncertainties inherent in estimating mineral resources and ore reserves and
assumptions that are valid at the time of estimation may change significantly when new information
becomes available. Changes in the forecast prices of commodities, exchange rates, production costs or
recovery rates may change the economic status of reserves and may, ultimately, result in the reserves
being restated.
Impairment of capitalised exploration and evaluation expenditure
The future recoverability of capitalised exploration and evaluation expenditure is dependent on a
number of factors, including whether the Company decides to exploit the related lease itself or, if
not, whether it successfully recovers the related exploration and evaluation asset through sale.
Factors that could impact the future recoverability include the level of reserves and resources, future
technological changes, which could impact the cost of mining, future legal changes (including changes
to environmental restoration obligations) and changes to commodity prices.
To the extent that capitalised exploration and evaluation expenditure is determined not to be
recoverable in the future, profits and net assets will be reduced in the period in which this
determination is made.
In addition, exploration and evaluation expenditure is capitalised if activities in the area of
interest have not yet reached a stage that permits a reasonable assessment of the existence or
otherwise of economically recoverable reserves. To the extent it is determined in the future that this
capitalised expenditure should be written off, profits and net assets will be reduced in the period in
which this determination is made.
MURCHISON UNITED NL
(ABN 59 009 087 852)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2007
4. Significant accounting judgements, estimates and assumptions (Continued)
Classification of and valuation of investments
The Company has decided to classify investments in listed and unlisted securities as 'available-for-
sale' investments and movements in fair value are recognised directly in equity.
The fair value of investments that are actively traded in organised financial markets is determined by
reference to quoted market bid prices at the close of business on the balance sheet date. For
investments with no active market, fair value is determined using valuation techniques. Such techniques
include using recent arm's length market transactions; reference to the current market value of another
instrument that is substantially the same; discounted cash flow analysis and option pricing models.
Share-based payment transactions
The Company measures the cost of equity-settled transactions with employees or other parties by
reference to the fair value of the equity instruments at the date at which they are granted. The fair
value is determined by an external valuer using the Black & Scholes option pricing model, with the
assumptions detailed in note 23.
Recoverability of potential deferred income tax assets
The Company recognises deferred income tax assets in respect of tax losses to the extent that it is
probable that the future utilisation of these losses is considered probable. Assessing the future
utilisation of these losses requires the Company to make significant estimates related to expectations
of future taxable income. Estimates of future taxable income are based on forecast cash flows from
operations and the application of existing tax laws. To the extent that future cash flows and taxable
income differ significantly from estimates, this could result in significant changes to the deferred
income tax assets recognised, which would in turn impact future financial results.
MURCHISON UNITED NL
(ABN 59 009 087 852)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2007
5. SEGMENT INFORMATION
The principal activity of the Company during the course of the financial year was the exploration of
minerals.
The Company's primary segment reporting format is reported geographically in relation to the location
of the Company's exploration permits.
Geographical segments
The following tables present revenue and profit information and certain asset and liability information
regarding geographic segments for the years ended 30 June 2007 and 30 June 2006.
Australia Republic of Islamic Republic Total
Guinea of
Mauritania
$ $ $ $
Year ended 30 June 2007
Revenue
Sales to external customers - - - -
Unallocated revenue - - - 57,935
Segment revenue - - - 57,935
Result
Segment results (1,927,357) - - (1,927,357)
Net profit/(loss) for the year (1,927,357) - - (1,869,422)
Assets and liabilities
Segment assets 1,187,325 469,525 558,795 2,215,645
Unallocated assets - - - 4,067,176
Segment liabilities 413,933 - - 413,933
Other segment information
Capital expenditure 23,146 - - 23,146
Depreciation 12,062 12,062
Cash flow information
Net cash flow used in
operating activities (1,235,001) - - (1,235,001)
Net cash flow used in
investing activities (330,248) (324,862) (377,196) (1,032,306)
Net cash flow from financing
activities 5,938,811 - - 5,938,811
MURCHISON UNITED NL
(ABN 59 009 087 852)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2007
Australia Republic of Islamic Republic Total
Guinea of
Mauritania
$ $ $ $
Year ended 30 June 2006
Revenue
Sales to external customers - - - -
Result
Segment results (2,000,673) - - (2,000,673)
Assets and liabilities
Segment assets 493,994 144,663 161,009 799,666
Segment liabilities 418,472 - - 418,472
Other segment information
Capital expenditure 35,166 - - 35,166
Depreciation 9,178 9,178
Cash flow information
Net cash flow used in
operating activities (1,232,195) - - (1,232,195)
Net cash flow used in
investing activities (54,602) (144,663) (161,009) (360,274)
Net cash flow from financing
activities - - - -
Business segments
The Company has one business segment being the exploration for economic mineral ore assets.
MURCHISON UNITED NL
(ABN 59 009 087 852)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2007
2007 2006
$ $
6. REVENUE
Finance revenue 57,934 63,917
Dividends 1,211 226
Other 1,830 -
Total revenues from non-operating activities 60,975 64,143
Total revenue 60,975 64,143
7. EXPENSES
Administration Expenses:
Accounting & audit fees 49,550 21,400
Brokerage fees 161,431 6,033
Consulting fees 181,818 1,246
Depreciation of property, plant & equipment 12,062 9,178
Employee expenses - salaries and wages 462,031 490,943
Employee provisions (4,421) 3,199
Legal fees 20,591 7,502
Reporting & listing costs 109,035 66,026
Share based payments 604,491 665,689
Telecommunication & computing 48,099 38,289
Travel & accommodation 88,479 64,607
Minimum lease payments - operating lease 35,234 53,713
Other 160,899 72,519
Sub-total 1,929,299 1,500,344
Settlement of Renison Bell Ltd Creditors (i) 1,098 58,687
(i) Settlement of Renison Bell Ltd creditors' costs pursuant to the negotiated Deed of Company
Arrangement. For further information refer to Note 16.
MURCHISON UNITED NL
(ABN 59 009 087 852)
NOTES TO THE FINANCIAL STATEMENTS (Continued
FOR THE YEAR ENDED 30 JUNE 2007
2007 2006
$ $
8. TAXATION
The major components of income tax expense are:
Income Statement
Current income tax
Current income tax charge - -
Income tax expense reported in the income statement - -
A reconciliation from accounting loss to tax loss is as follows:
Accounting (loss) before income tax (1,869,422) (2,000,673)
At Company's statutory income tax rate of 30%
(2006:30%) (560,826) (600,202)
Expenditure not allowable for income tax purposes 181,909 219,622
Deferred tax benefits not brought to account 377,590 380,580
Income tax expense reported in the Income Statement - -
Deferred income tax
Deferred income tax at 30 June relates to the following:
Deferred tax liabilities
Available for sale securities 8,806 -
Set-off of deferred tax assets (8,806) -
Net deferred tax liabilities - -
Deferred tax assets
Capital raising costs deductible for tax recognised to the extent -
of deferred tax liabilities 8,806
Set-off of deferred tax liabilities (8,806) -
Deferred tax income/(expense) - -
The Company has losses arising of $10,948,414 (2006: 9,625,194) for which no deferred tax asset has been
recognised. These losses are available indefinitely for offset against future taxable profits of the Company in
which the losses arose subject to meeting certain statutory requirements.
At 30 June 2007, the Company has other deductible temporary differences of $223,647 (2006: 16,830) for which no
deferred tax asset has been recognised. None of these deductible temporary differences relate to investments in
subsidiaries, associates or joint ventures.
MURCHISON UNITED NL
(ABN 59 009 087 852)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2007
9. EARNINGS PER SHARE
The following reflects the income used in the basic and diluted earnings per share computations:
2007 2006
$ $
Net loss attributable to ordinary equity holders of the Company
1,869,422 2,000,673
Weighted average number of ordinary shares for basic earnings
per share 298,296,439 273,382,594
Weighted average number of ordinary shares adjusted
for the effect of dilution 298,296,439 273,382,594
350,000 options issued under the Employee Share Option Plan expired on 1 July 2007. On 17 July 2007, the Company
issued 26,852,366 fully paid ordinary shares at A$0.11 per share to finalise a placement to sophisticated
investors. There have been no other transactions involving ordinary shares or potential ordinary shares between
the reporting date and the date of completion of these financial statements. At the date of completion of these
financial statements the Company has 18,000,000 options and 2,250,000 partly paid shares on issue which would
not have a dilutive effect on basic earnings per share as calculated in accordance with AASB 133. the issue of
26,852,366 shares after the reporting date has not been included in the earnings per share calculation.
2007 2006
$ $
10. CURRENT ASSETS - CASH AND CASH EQUIVALENTS
Cash at bank and in hand 4,067,176 395,672
Cash at bank earns interest at floating rates based on daily bank deposit rates. The carrying amounts of cash
and cash equivalents represents fair value.
2007 2006
$ $
11. CURRENT ASSETS - TRADE AND OTHER RECEIVABLES
CURRENT
Security deposits 7,950 7,950
7,950 7,950
Security deposits have an average maturity of 90 days and have a floating interest rate, which has averaged
5.55% per annum for the year (2006:5.05%per annum).
MURCHISON UNITED NL
(ABN 59 009 087 852)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2007
12. NON-CURRENT ASSETS - AVAILABLE-FOR-SALE FINANCIAL INVESTMENTS
2007 2006
$ $
At fair value
Shares - unlisted - 14,532
Shares - listed 52,833 8,948
52,833 23,480
Available-for-sale investments consist of investments in ordinary shares, and therefore have no fixed maturity
date or coupon rate. The fair value at 30 June 2007 included unrealised gains during the financial year of
$29,353 (2006: Nil).
Listed shares
The fair value of listed available-for-sale investments has been determined directly by reference to published
price quotations in an active market. There are no individually material investments.
Unlisted shares
The fair value of the unlisted available-for-sale investments has been estimated using valuation techniques
based on assumptions that are not supported by observable market prices or rates. Management believes the
estimated fair values resulting from the valuation techniques and recorded in the balance sheet and any related
changes in fair values recorded in the income statement are reasonable and the most appropriate at the balance
sheet date. Unlisted shares held at 30 June 2006 converted to listed shares during 2007 financial year.
13. NON-CURRENT ASSETS - EXPLORATION AND EVALUATION EXPENDITURE
2007 2006
$ $
Carrying amount at beginning of year net of impairment 325,334 -
Additions 1,780,960 325,334
Carrying amount at end of year net of impairment 2,106,294 325,334
Exploration and evaluation costs have been capitalised at cost. No impairment loss was recognised in the 2007
financial year because either:
* The exploration and evaluation activities are expected to be recouped through successful development
and exploitation of the area of interest or, alternatively, by its sale; or
* Exploration and evaluation activities in each area of interest have not at the reporting date reached a
stage that permits a reasonable assessment of the existence or otherwise of economically recoverable
reserves, and active and significant operations in, or relevant to, the area of interest are continuing.
MURCHISON UNITED NL
(ABN 59 009 087 852)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2007
14. NON-CURRENT ASSETS - PROPERTY, PLANT AND EQUIPMENT
2007 2006
$ $
Plant and equipment
Carrying amount at beginning of year net of accumulated
depreciation and impairment 28,638 2,650
Additions 23,147 35,166
Depreciation (12,062) (9,178)
Carrying amount at end of year net of accumulated
depreciation and impairment 39,723 28,638
Plant and equipment
Cost 76,983 53,836
Accumulated depreciation and impairment (37,260) (25,198)
Net carrying amount at end of year 39,723 28,638
No impairment loss was recognised in the 2006 or 2007 financial years.
15. CURRENT LIABILITIES - TRADE AND OTHER PAYABLES
Trade payables and accruals 157,266 78,860
Other payables 204,358 -
Trade and other payables 361,624 78,860
Trade payables are non-interest bearing and are normally settled on 30 day terms.
Other payables represents a liability recognised for funds received before 30 June 2007 from potential
investors for acquisition of shares. A liability was recognised because at 30 June 2007 issue of these shares
was subject to receiving shareholder approval, which was subsequently obtained at a General Meeting held on 13
July 2007. The shares were subsequently issued on 17 July 2007 when the Company's placement was finalised.
16. CURRENT LIABILITIES - PROVISIONS
Employee DOCA Total
Benefits
$ $ $
At 1 July 2005 13,631 264,095 277,726
Arising during the year 3,199 58,687 61,886
At 30 June 2006 16,830 322,782 339,612
Arising during the year (4,421) (282,882) (287,303)
At 30 June 2007 - Current 12,409 39,900 52,309
DOCA
On 24 June 2003 Murchison appointed an external Administrator due to insolvency issues over its subsidiary
Renison Bell Limited. On 3 December 2003 Murchison entered into a Deed of Company Arrangement ("DOCA") with the
creditors of Renison Bell Limited.
MURCHISON UNITED NL
(ABN 59 009 087 852)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2007
16. CURRENT LIABILITIES - PROVISIONS (CONTINUED)
Under the terms of the DOCA which was approved at a creditors' meeting held on 13 November 2003, Murchison
United NL agreed to issue one fully paid ordinary share for each dollar of a creditor's admitted claim. A
minimum of a marketable parcel of shares ($500 share value) was to be issued to each creditor. On 3 February
2005 the Directors allotted 15,301,667 shares to those creditors admitted by the Deed Administrator to that
date. During 2006/07 financial year additional shares totalling 3,878,492 were issued for additional creditor
claims admitted by the Deed Administrator.
The Deed Administrator has advised that one claim is yet to be finalised and if approved, would potentially
require the issue of up to 285,000 shares. At year end a liability has been recognised based on one share per
dollar of the total outstanding claim as provided by the Administrator at a share price of 14.0 cents per share
(2006: 7.7 cents per share).
17. CONTRIBUTED EQUITY
2007 2006
$ $
Issued And Paid Up Capital
353,330,251 (2006: 271,132,594)
ordinary shares, fully paid 48,081,678 41,358,405
2,250,000 (2006: 2,250,000) of 25 cent
value ordinary shares, paid to 1 cent 22,500 22,500
48,104,178 41,380,905
Effective 1 July 1998, the Corporations legislation abolished the concept of authorised capital and par value
shares. Accordingly, the Company does not have authorised capital nor par value in respect of its issued
capital. Partly paid shares have been issued at 25 cents, accordingly 24 cents remains unpaid.
(a) Movement in Ordinary shares on issue
Balance at beginning of the year 41,380,905 41,380,905
Shares issued:
- 3,878,492 shares issued to Renison Bell Ltd
creditors under DOCA (1 share per $ debt) 283,980 -
- 12,500,000 shares issued to large creditors of Renison Bell Ltd for
Maroochydore project restructure 750,000
- 25,000,000 shares issued from placement at $0.06 per share -
1,500,000
- 40,819,165 shares issued from placement at $0.11 per share -
4,490,108
- Transaction costs arising from issue of shares through
placements (300,815) -
Balance at end of year 48,104,178 41,380,905
MURCHISON UNITED NL
(ABN 59 009 087 852)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2007
17. CONTRIBUTED EQUITY (Continued)
(b) Share Options
Options over ordinary shares:
During the financial year 6,000,000 (2006:4,500,000) options were issued over ordinary shares
exercisable at $0.075. The options are exercisable on or before the 3 May 2010.
At the end of the year, there were 18,350,000 (2006: 12,350,000) unissued ordinary shares in respect of
which options were outstanding. 18,000,000 of the options outstanding were not issued under the
Employee Share Option Plan. This includes
* 12,000,000 options with an exercise price of $0.055 and a weighted average remaining contractual life
of 3.0 years and
* 6,000,000 options with an exercise price of $0.075 and a weighted average remaining contractual life
of 2.8 years.
Details of the Employee Share option plan are provided in Note 23. Subsequent to the end of the
financial year, 350,000 options issued under the Employee Share Option Plan expired on the 1 July 2007.
(c) Terms and conditions of contributed equity
Ordinary Shares
Holders of ordinary shares are entitled to receive dividends as declared from time to time and at a
meeting, on a show of hands, every member present in person or by proxy shall have one vote and upon a
poll each shall have one vote per ordinary share.
In the event of the winding up of the Company, ordinary shareholders rank after creditors and are fully
entitled to any proceeds of liquidation.
Partly Paid Shares
Holders of partly paid shares are entitled to receive dividends as declared from time to time in the
proportion that the amount paid up on the share bears to the total amount payable. At a meeting, on a
show of hands, every member present in person or by proxy shall have one vote and such shares shall
upon a poll confer only that fraction of one vote which the amount paid up on that share bears to the
total par value. If calculation results in a fraction of a vote, that fraction shall be disregarded.
In the event of the winding up of the Company, partly paid shareholders rank equally with other
ordinary shareholders to the extent that they are paid up, but after creditors, and are fully entitled
to any proceeds of liquidation.
Commitment to issue Ordinary Shares
As disclosed in Note 16 the Company executed a Deed of Company Arrangement, which committed it to issue
fully paid ordinary shares to all unsatisfied creditors of Renison Bell Ltd. During the 2007 financial
year 3,878,492 shares were issued to approved creditors. As at the 30 June 2007 approximately 285,000
shares may be issued subject to the Deed Administrator's approval.
MURCHISON UNITED NL
(ABN 59 009 087 852)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2007
18. ACCUMULATED LOSSES AND RESERVES
a) Movements in accumulated losses were as follows:
2007 2006
$ $
Accumulated losses at 1 July (41,767,261) (39,766,588)
Net loss attributable to members of the Company (1,869,422) (2,000,673)
Accumulated losses at the end of the year (43,636,683) (41,767,261)
b) Other reserves:
Net unrealised Equity benefits Total
gains reserve reserve
$ $ $
At I July 2005 - 101,861 101,861
Share based payment - 665,689 665,689
At 30 June 2006 - 767,550 767,550
Net gains on available-for-sale assets 29,352 - 29,352
Share based payment - 604,491 604,491
At 30 June 2007 29,352 1,372,041 1,401,393
The Net Unrealised Gains Reserve records movements in the fair value of available-for-sale financial
assets.
The Equity Benefits Reserve is used to record the value of share based payments provided to key
management personnel and contractors as part of remuneration.
19. CASH FLOW STATEMENT RECONCILIATION
2007 2006
$ $
a) Reconciliation of net profit after tax to net cash
flows from operations
Net loss (1,869,422) (2,000,673)
Adjustments for:
Depreciation 12,062 9,178
Dividend receivable (1,211) (226)
Shares to be issued for creditor payment 1,098 58,687
Share options expensed 604,491 665,689
Changes in assets and liabilities
(Increase)/decrease in prepayments 9,747 (11,126)
(Decrease)/increase in trade payables 12,655 43,077
(Decrease)/increase in provisions (4,421) 3,199
Net cash from operating activities (1,235,001) (1,232,195)
b) There are no financing facilities held by the Company.
MURCHISON UNITED NL
(ABN 59 009 087 852)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2007
20. INTEREST IN JOINTLY CONTROLLED OPERATION
a) Joint venture details
The Maroochydore Copper Project in Western Australia is subject to a Joint Venture agreement with
Aditya Birla Minerals Limited (ASX:ABY), which has a 50% interest in the Project and is the operator.
The Project is located in the Pilbara region ,approximately 100km southeast of their Nifty Copper mine
operations and 60km south southeast of the Telfer copper-gold mine.
Maroochydore has a total estimated JORC compliant Indicated and Inferred Mineral Resource of 51 million
tonnes at a grade of 1% copper and 0.04% cobalt for 0.51 million tonnes of contained copper and 20,000
tonnes contained cobalt (at a 0.5% Cu cut-off). The Company's net attributable interest in this Mineral
Resource is 25.5 million tonnes at 1% copper and 0.04% cobalt for 0.25 million tonnes of contained
copper and 10,000 tonnes of contained cobalt.
b) Assets utilised in the jointly controlled operation
No Company assets are utilised in the jointly controlled operation. The Company has a financial
commitment to contribute 50% of the project expenditure as incurred to the project operator.
c) Commitments relating to the joint venture
2007 2006
$ $
Share of expenditure commitments (note 25) 105,550 -
21. RELATED PARTIES
(i) Murchison United NL is the ultimate parent company.
(ii) Details relating to key management personnel, including remuneration paid, are included in Note
22.
(iii) There were no other related party transactions.
MURCHISON UNITED NL
(ABN 59 009 087 852)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2007
22. KEY MANAGEMENT PERSONNEL DISCLOSURES
(a) Details of Key Management Personnel
G R Featherby Chairman appointed 2 August 2004
M D Reilly Managing Director appointed 2 August 2004 and
Company Secretary appointed 8 March 2007
C D Grannell Director (non-executive) appointed 4 April 2005
J Schiavi Company Secretary deceased 3 March 2007
B Gustafsson Technical Director appointed 3 October 2006
(previously Exploration Manager from 15 January 2006)
There were no other changes of the Executives or key management personnel after the
reporting date and the date the Financial Report was authorised for issue.
(b) Compensation of Key Management Personnel
2007 2006
$ $
Short-term employee benefits 470,364 436,390
Post-employment benefits 38,908 40,500
Other long-term benefits - -
Termination benefits - -
Sharebased payment - 142,800
509,272 619,690
(c) Option holdings of Key Management Personnel
Balance Granted as Options Net Balance at Vested at 30 June 2007
at Compensation Exercised Change end of
Year ended beginning Other period
of period
30 June 2007 1 July 30 June Total Not Exercisable
2006 2007 exercisable
G R Featherby 2,000,000 - - - 2,000,000 2,000,000 - 2,000,000
M D Reilly 3,500,000 - - - 3,500,000 3,500,000 - 3,500,000
C D Grannell 2,000,000 - - - 2,000,000 2,000,000 - 2,000,000
J Schiavi 2,000,000 - - - 2,000,000 2,000,000 - 2,000,000
Total 9,500,000 - - - 9,500,000 9,500,000 - 9,500,000
Balance Granted as Options Net Balance at Vested at 30 June 2006
at Compensation Exercised Change end of
Year ended beginning Other period
of period
30 June 2006 1 July 30 June Total Not Exercisable
2005 2006 exercisable
G R Featherby 2,000,000 - - - 2,000,000 2,000,000 - 2,000,000
M D Reilly 3,500,000 - - - 3,500,000 3,500,000 - 3,500,000
C D Grannell - 2,000,000 - - 2,000,000 2,000,000 - 2,000,000
J Schiavi 2,000,000 - - - 2,000,000 2,000,000 - 2,000,000
Total 7,500,000 2,000,000 - - 9,500,000 9,500,000 - 9,500,000
MURCHISON UNITED NL
(ABN 59 009 087 852)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2007
22. KEY MANAGEMENT PERSONNEL DISCLOSURES (Continued)
(d) Shareholdings of Key Management Personnel
Shares held Balance Granted as On Exercise Net Change Balance
in 1 July 06 Remuneration Of Options Other 30 June 07
Murchison
United Ltd
(number)
Year ended Ord Part Ord Part Ord Part Ord Part Ord Part
30 June 2007 Paid Paid Paid Paid Paid
G R Featherby 3,333,333 - - - - - - - 3,333,333 -
M D Reilly 3,333,333 - - - - - 666,667 - 4,000,000 -
C D Grannell - - - - - - - - - -
J Schiavi 1,000,000 - - - - - - - 1,000,000 -
B Gustafsson - - - - - - - - - -
Total 7,666,666 - - - - - - 8,333,333 -
Shares held Balance Granted as On Exercise Net Change Balance
in 1 July 05 Remuneration Of Options Other 30 June 06
Murchison
United Ltd
(number)
Year ended Ord Part Ord Part Ord Part Ord Part Ord Part
30 June 2006 Paid Paid Paid Paid Paid
G R Featherby 3,333,333 - - - - - - - 3,333,333 -
M D Reilly 3,333,333 - - - - - - - 3,333,333 -
D Hutchins 500,000 - - - - - - - 500,000 -
C D Grannell - - - - - - - - - -
J Schiavi 1,000,000 - - - - - - - 1,000,000 -
B Gustafsson - - - - - - - - - -
Total 8,166,666 - - - - - - 8,166,666 -
All equity transactions with key management personnel other than those arising from the exercise of
remuneration options have been entered into under terms and conditions no more favourable than those the
Company would have adopted if dealing at arm's length.
(e)Other key management personnel did not hold shares in the Company.
(f)Other transactions and balances with Key Management Personnel and their related parties.
The Company is currently renting an office at normal market prices from an entity associated with G R
Featherby and M D Reilly.
23. SHARE-BASED PAYMENT PLANS
Share Options issued as Remuneration
During the year there were no unlisted options (2006: 2,000,000) issued to Directors of the Company.
Employee Share Option Plan, 'ESOP'
At the Annual General Meeting held on the 29 November 1996 the shareholders approved the adoption of an employee
share option plan. The Plan is open to all directors, employees and consultants of the Company or any
Subsidiaries. Options issued under the plan together with any other scheme must not exceed 10% of the issued
capital of the Company at the time of the issue of the options. Options issued under the plan are unlisted for
no consideration. The exercise price shall be determined by the Directors but shall be not less than the higher
of the average closing sale price of the Company's fully paid Ordinary shares on the ASX over five trading days
immediately preceding the day of issue of the Options and $0.40 cents.
MURCHISON UNITED NL
(ABN 59 009 087 852)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2007
23. SHARE-BASED PAYMENT PLANS (Continued)
Summary of options granted under ESOP arrangements:
The following table illustrates the number (No.) and weighted average exercise prices (WAEP) of, and
movements in, share options issued during the year:
2007 2007 2006 2006
No. WAEP No. WAEP
Outstanding at the beginning of the year 350,000 0.46 550,000 0.71
Granted during the year - - - -
Forfeited during the year - - - -
Exercised during the year - - - -
Expired during the year - - 200,000 1.14
Outstanding at the end of the year 350,000 0.46 350,000 0.46
Exercisable at the end of the year 350,000 0.46 350,000 0.46
The outstanding balance as at 30 June 2007 is represented by:
Number of Options Grant Date Vesting Date Expiry Date Weighted Average
Exercise price
350,000 1 July 2002 1 July 2004 1 July 2007 $0.46
Note: these options expired after the reporting date on 1 July 2007.
Other equity-settled share-based payment transactions
Share based payments in 2007 financial year only relate to these grants.
During the financial year, options were granted for the following equity-settled share-based payments:
(a) 4,000,000 options at $0.001 each for services provided by a consultant and
(b) 2,000,000 options granted free of charge in accordance with a contract for the appointment of the
Company's Nominated Advisor.
The assessed fair value at grant date of options is allotted equally over the period from grant date to vesting
date. Fair values at grant date are independently determined using a Black & Scholes option pricing model that
takes into account the exercise price, the term of the option, the vesting and performance criteria, the non-
tradable nature of the option, the share price at grant date, expected volatility of the underlying share, the
expectation of dividends and the risk-free interest rate for the term of the option.
The fair value of options granted during 2007 was $0.100749 per option (2006: $0.0714).
MURCHISON UNITED NL
(ABN 59 009 087 852)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2007
23. SHARE-BASED PAYMENT PLANS (Continued)
The model inputs for unlisted options granted 3 May 2007 for the year ended 30 June 2007 included:
(a) 4,000,000 options were granted for consideration of $0.001 and 2,000,000 options were granted for no
consideration. Entitlements to the options were fully vested at the date granted.
(b) Exercise price of options: $0.075
(c) Time to maturity: 3 years
(d) Underlying share price range at date of options issue: $0.14
(e) Risk of underlying share/Annualised standard deviation: 88.04% (based on historical weekly volatility from
3 May 2004 to 30 April 2007)
(f) Expected Dividend yield: Nil
(g) Risk-free interest rate: 6.0625%
24. FAIR VALUE AND INTEREST RATE RISK
Fair values
All assets and liabilities recognised in the balance sheet, whether they are carried at cost or at fair value,
are recognised at amounts that represent a reasonable approximation of fair value unless otherwise stated in the
applicable notes.
Interest rate risk
The following table sets out the carrying amount, by maturity, of the financial instruments exposed to interest
rate risk:
Weighted
>1-2-3-4-5 Average
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