Page 28 - Bauxite Resources Annual Report 2014

26 | Bauxite Resources Annual Report 2014
DIRECTORS’ REPORT
Directors’ Report cont.
Annual Report 2014 Bauxite Resources 26
• Commodity price risk – there is risk that the price of bauxite does not achieve or maintain levels that will support sustainable
mining or alumina refining operations. This may be the result of changes in global demand for aluminium, or changes in the
global supply chain for bauxite and alumina. The directors have considered this risk in light of predictions and commentaries
from various independent analysts and observers, and consider this risk to be low in the medium to long term.
• Environmental risk – the Group’s ability to develop mining operations or expand bauxite refining capacity are dependent on
obtaining the required environmental licences and ensuring minimal impact on the environment from any operations. The
directors have considered this risk, and consider this risk can be managed adequately by understanding the relevant
environmental guidelines and ensuring any proposed mining or refining operations demonstrate they are able to comply with
such guidelines.
• Land access risk – the Group’s ability to develop mining operations or expand bauxite refining capacity may be subject to
obtaining access by landholders. The directors have considered this risk, and consider the risk is minimised through
consultation by taking a proactive approach in forming close and open relationships with land holders and communities that
may be impacted by any potential mining or refining operation.
• Regulatory approval risk - the Group’s ability to develop mining operations or expand bauxite refining capacity may be
subject to obtaining approvals from various regulatory or government authorities to undertake mining or refining activities.
This may include, for example, the ability to obtain mining licenses for its tenements, or permits to export bauxite. The
directors have considered this risk, and consider that the risk can be mitigated largely by working closely with the relevant
regulatory authorities through any study phases.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
There were no significant changes in the state of affairs of the Group during the financial year.
RISK MANAGEMENT
The Board is responsible for ensuring that risks, and also opportunities, are identified on a timely basis and that activities are
aligned with the risks and opportunities identified by the Board.
The Company believes that it is crucial for all Board members to be a part of this process, and as such the Board has not
established a separate risk management committee.
The Board has a number of mechanisms in place to ensure that management’s objectives and activities are aligned with the
risks identified by the Board. These include the following:
• Board approval of a strategic plan, which encompasses strategy statements designed to meet stakeholders’ needs and
manage business risk.
• Implementation of Board approved operating plans and budgets and Board monitoring of progress against these budgets.
Following the signing of last year’s financial accounts the Company received a proposed claim which alleged that the Company
engaged in misleading and deceptive conduct in September 2009. The Company has since executed a conditional agreement
to settle this proposed claim in September 2014 as described in the section below titled Significant Events After The Balance
Date.
SIGNIFICANT EVENTS AFTER THE BALANCE DATE
Capital Return
The Company announced on 17 June 2014 that the BRL Board had recommended a capital return of 4 cents per share,
subject to shareholder approval. This followed a funding requirements review of its operations, projects and working capital to
determine where shareholders’ funds would be best allocated to create short and long term shareholder value, sufficient funds
were identified to support BRL’s wholly owned projects and JV arrangements in the near term.
As a consequence of this review, the BRL Board has identified surplus cash to the Company’s current requirements and
therefore is proposing to return 4 cents per share to shareholders in the form of a capital return. The Extraordinary General
Meeting was held on the 29 August 2014 and shareholders approved the Capital return. An amount of $9.276 million was
returned to shareholders on 11 September 2014.