Page 27 - Bauxite Resources Annual Report 2014

Annual Report 2014 Bauxite Resources | 25
DIRECTORS’ REPORT
Directors’ Report cont.
25 Bauxite Resources Annual Report 2014
The Group earned $1,695,348 in interest revenue in the year compared to $2,138,115 in 2013, a 21% decline that is largely
reflective of the general decline in interest rates over the course of the past two financial years. The average rate earned on
investments during the year was 3.9%, compared to an average rate of 4.7% in 2013. The Group’s cash balances also
diminished by $2,550,743 over the course of the year.
The Group ended the financial year with cash reserves of $40,935,260 (2013: $43,486,003).
The Cash Flow Statement on page 44 of this Annual Financial Report sets out details of the use of these cash funds. However
a small part of the decline in cash reserves was due to the Company’s decision to acquire a limited number of its own shares
from the market. To 30 June 2014, $221,102 had been expended in acquiring shares in on-market transactions. The decision
to undertake this share buy-back was taken by the Board, as the Board considered that Company’s current share price did not
accurately reflect the strong underlying cash position and value within the Company’s assets and the share buyback
represented an opportunity to add value to the remaining shares on issue. The buy-back scheme was deferred in
September 2013 and cancelled in May 2014 with the total of 1,800,000 shares purchased under the scheme during the year.
Note 8 of this Annual Financial Report also shows that in 2014 the Group had $544,862 in Sundry Receivables outstanding
(2013: $1,655,318). The amount in 2013 represents the total amount of cash calls unpaid by the joint venture partner in the
BRJV, Yankuang Resources Pty Ltd (“Yankuang”). $482,869 represents a debt due to the Company directly, following its
decision to make one of the outstanding cash calls to BRJV on behalf of Yankuang. The unpaid cash calls from 2013 were all
paid in July 2013.
Other than this utilisation of cash to fund the Group’s activities during the year, the Group’s financial position remained relatively
unchanged and stable.
DIVIDENDS
No dividends were paid or declared during the financial year. No recommendation for payment of dividends has been made.
SHAREHOLDER RETURNS
2014 2013
Basic earnings per share (cents) (2.0) (2.2)
Diluted earnings per share (cents) (1.9) (2.2)
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
The Company continues to explore for additional bauxite resources within its existing tenements in its own right for both export
and refinery grade bauxite.
The Company is working with Yankuang Resources Pty Ltd (“Yankuang”), under its Bauxite Resources and Alumina Refinery
joint ventures, for development of bauxite mining and alumina refining capacity in Western Australia. Whilst limited studies have
been undertaken under the refinery joint venture no feasibility study has yet commenced.
In respect of its own tenements, following the release of its upgraded resource at the Fortuna deposit, announced on
4 September 2013, the Company believes the Fortuna resource is of sufficient scale to support development evaluation for
supply of bauxite into the international market. The Company is currently undertaking scoping studies to investigate ways of
monetising the value of this asset, taking into account the global outlook for alumina production, over the coming financial
periods. These studies include, among other things, thorough investigations into geological, mining and logistical aspects of the
project. It will also include analysis of potential buyers of the bauxite product, and potential partners to undertake any mining
development if that is appropriate, to maximise the value to shareholders. Following these studies environmental and impact
studies will be undertaken to ensure the Company minimises environmental and community impacts of any potential mining
operation.
In the coming 12 months, particular focus is being placed on moving forward the joint ventures with both Yankuang and HD
Mining and Investments Pty Ltd (“HD Mining”) whilst continuing on the development studies needed to support
commercialisation of the Fortuna deposit.
The Group’s future plans are not without risk. Aside from the accepted and normal risks associated with any minerals
exploration venture, such as accurate and reliable resource identification and measurement, these include (but are not limited
to):