For personal use only - ASX · Stirling Resources Limited ABN 94 009 659 054 . FINANCIAL REPORT . For the half-year ended . 31 December 2013. For personal use only

Stirling Resources Limited ABN 94 009 659 054

FINANCIAL REPORT

For the half-year ended 31 December 2013

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STIRLING RESOURCES LIMITED

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CORPORATE DIRECTORY

CONTENTS

BOARD OF DIRECTORS

Directors’ report ............................................................ 3

Auditor’s independence declaration .............................. 6

Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income ............................... 7

Condensed Consolidated Statement of Financial Position ........................................................ 8

Condensed Consolidated Statement of Changes in Equity ......................................................... 9

Condensed Consolidated Statement of Cash Flows ................................................................. 10

Notes to the Financial Statements ............................... 11

Declaration by directors .............................................. 17

Independent auditor’s report ....................................... 18

Martin Depisch Gerhard Kornfeld Thomas Styblo Patrick Corr

Managing Director Non-executive Director Non-executive Director Non-executive Director

COMPANY SECRETARY

Shannon Coates

REGISTERED OFFICE 45 Ventnor Avenue, West Perth, Western Australia, 6005 Web site: www.stirlingresources.com.au Postal Address 45 Ventnor Avenue, West Perth, Western Australia, 6005 Telephone: +61 8 9389 4478 Facsimile: +61 8 9389 4400 Web site: www.stirlingresources.com.au SHARE REGISTRY Computershare Investor Services Pty Ltd 45 St George’s Terrace, Perth Western Australia 6000 Telephone: (61 8) 9323 2000 Facsimile: (61 8) 9323 2033 E-mail: [email protected] Web-site: www.computershare.com.au AUDITORS Stantons International SOLICITORS Steinepreis Paganin STOCK EXCHANGE LISTING ASX Code: SRE. Securities in Stirling Resources Limited are currently suspended from trading on the Australian Securities Exchange.

This half year financial report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the Annual Report for the year ended 30 June 2013 and any public

announcements made by Stirling Resources Limited during the half year in accordance with the continuous disclosure requirements of the Corporations Act 2001.

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DIRECTORS' REPORT

The directors present their financial report of Stirling Resources Limited (the “Company”) and of the consolidated entity, being the Company and its controlled entities (the “Group”) for the half-year ended 31 December 2013. DIRECTORS The names of the directors of the Company in office during the course of the half-year and up to the date of this report are as follows: Martin Depisch (Non-executive Chairman. Appointed Non-executive Director on 28 November 2011, Non-

executive Chairman on 24 July 2012) Dr. Gerhard Kornfeld (Non-executive Director. Appointed 14 September 2012) Thomas Styblo (Non-executive Director. Appointed 28 March 2012) Patrick Corr (Non-executive Director. Appointed 28February 2014) Unless otherwise indicated, all directors held their position as a director throughout the entire half-year and up to the date of this report. REVIEW OF OPERATIONS AND ACTIVITES DETAILS OF RESULTS FOR THE PERIOD The loss attributable to members of Stirling Resources Limited for the half-year ended 31 December 2013 was $2,148,503 (profit 2012: $960,218). No dividends were paid or declared payable during or since the half-year. SETTLEMENT OF LEGAL DISPUTE WITH MZI RESOURCES Stirling Resources Limited (“Stirling” or “Company”) (ASX: SRE) announced on 13 September 2013, the Company and MZI Resources Limited (“MZI”) had successfully settled the legal dispute in relation to certain tenements in the Tiwi Islands and mainland Northern Territory. Pursuant to the Deed of Settlement between Stirling, MZI and Stirling’s wholly owned subsidiary, Stirling Zircon Pty Ltd (Stirling Zircon) and DCM DECOmetal GmbH (“DCM”), executed on 12 September 2013:

MZI will issue 78,717,747 MZI shares to Stirling Zircon and pay Stirling Zircon $1million on a deferred basis and interest of 10% on that amount payable at six monthly intervals.

Stirling Zircon will execute transfers of the Tiwi Tenements to MZI, and MZI will continue to assume all liabilities in respect of its activities on those tenements from May 2009.

Stirling Zircon will receive a 0.5% gross royalty from the Keysbrook Project mineral sands production, limited to the currently approved project area.

The Agency Agreement between DCM and MZI is terminated with no amounts payable by MZI.

Stirling Zircon will not, for a period of 12 months from the date of MZI shareholder approval, requisition a general meeting of MZI shareholders to change the composition of the MZI board or encourage any other person to do so.

Stirling Zircon undertakes that, upon MZI obtaining secured debt funding of at least $40 million, it will for a period of 24 months from shareholder approval, vote in favour of any resolution recommended by the directors of MZI which concerns or facilitates.

As announced on 23 October 2013, MZI shareholders approved the terms of the settlement between MZI and DCM. SHAREHOLDERS APPROVE CONVERSION OF DEBT TO EQUITY On 24 December 2013, Stirling shareholders provided approval to vary the terms of the existing loan from DCM and enter into a Loan Amendment Agreement with DCM; and to issue up to 392,000,000 Shares to DCM on part-conversion of the Loan. These shares were subsequently issued on 24 December 2013.

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MZI RESOURCES LIMITED Keysbrook During the six month period ended 31 December 2013, MZI announced that its cornerstone investor, Resource Capital Fund (RCF), would provide a US$41.5 million funding package for the development of the Keysbrook Project. MZI also announced that GR Engineering Services Limited (GR Engineering) was the preferred engineering, procurement and construction (EPC) contractor for Keysbrook. On 4 November 2013, MZI announced it had raised $5 million in equity, ensuring the company had sufficient funds to continue early stage work on Keysbrook while it finalises debt funding. The $5 million comprised a $4.04 million share placement at 1.03 cents a share and share purchase plan shortfall funding of $960,000 at 1.296 cents a share, which was approved by MZI shareholders on 22 October 2013. On 19 December 2013, MZI further announced that RCF had agreed to provide a US$3.5 million short term loan facility to MZI, ensuring it had sufficient funds to continue the early stage engineering, design work and other activities at Keysbrook while it finalises longer term debt funding. Funding MZI’s cash position stood at $5.18 million as at 31 December 2013. Corporate As announced on 23 October 2013, MZI shareholders approved the terms of the settlement between the Stirling, Stirling Zircon, MZI and DCM in relation to certain tenements in the Tiwi Islands and mainland Northern Territory. REDBANK COPPER LIMITED During the six month period ended 31 December 2013, Redbank Copper Limited’s (“Redbank”) copper project remained on “care and maintenance” and no exploration activities were conducted on its 100% owned tenements. SWAN GOLD MINING LIMITED Swan Gold Limited’s (SWA) operations remained on care and maintenance during the six month period ended 31 December 2013. SWA is currently considering its options moving forward and has noted it will provide an update in due course. Corporate On 14 November 2013, SWA announced that it’s wholly owned subsidiary Carnegie Gold Pty Ltd had reached an agreement to relinquish its right to explore and mine the tenement M24/862 with Norton Gold Fields Limited, Paddington Gold Pty Ltd and Neil Edward Newman. The agreement provides that Carnegie will remove the caveat currently registered on M24/862 and will consent to the dismissal of the action currently before the Warden’s Court. Carnegie will receive net proceeds of $1.4 million from Norton. The current agreement between Carnegie and Neil Edward Newman for the rights to explore and mine M24/862 will cease upon completion. CORPORATE Stirling’s cash balance at 31 December 2013 was $153,994. Stirling continues to have the financial support of DCM. On 18 December 2013, Mr Martin Depisch, Non-Executive Chairman of the Company, was appointed to the position of Managing Director. At the General Meeting held on 24 December 2013, DCM obtained approval from the Company's shareholders to increase its interest in the Company to 91.03% as a result of the part-conversion of a loan to the Company.

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EVENTS SUBSEQUENT TO THE END OF THE REPORTING PERIOD On 24 January 2014, the Company despatched a Compulsory Acquisition Notice and accompanying independent expert's report (Expert Report) prepared by RSM Bird Cameron. The Company has been informed that DCM is entitled, and now wishes, to compulsorily acquire the outstanding fully paid ordinary shares in the Company pursuant to Division 1 of Part 6A.2 of the Corporations Act. On 17 February 2014, the Company’s registered address changed to 45 Ventnor Avenue, West Perth WA 6005. The Company announced the appointment of Patrick Corr as Non-executive Director on 28 February 2014. Mr Corr is a lawyer specialising in the laws regulating the companies and securities industries in Australia, with a particular focus on minerals and natural resources. He has extensive knowledge of the legal, regulatory and commercial requirements, as well as the practical considerations, involved in mineral and resource project transactions in Australia and internationally. On 11 March 2014, the Company announced it had entered into a secured loan agreement with its major shareholder, DCM DECOmetal GmbH on commercial terms to fund the Company’s working capital requirements. The loan facility is for up to $200,000, with interest at the rate of 10% per annum, principal and interest repayable by 30 September 2014. AUDITOR’S INDEPENDENCE DECLARATION A copy of the auditors’ independence declaration as required under Section 307C of the Corporations Act is included on page 6 of this financial report. Signed in accordance with a resolution of the Board of Directors.

Martin Depisch Managing Director Perth, Western Australia 14 March 2014

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6

PO Box 1908

West Perth WA 6872

Australia

Level 2, 1 Walker Avenue

West Perth WA 6005

Australia

Tel: +61 8 9481 3188

Fax: +61 8 9321 1204

ABN: 84 144 581 519

www.stantons.com.au

Liability limited by a scheme approved

under Professional Standards Legislation

Stantons International Audit and Consulting Pty Ltd

trading as

Chartered Accountants and Consultants 14 March 2014 Board of Directors Stirling Resources Limited 45 Ventnor Avenue West Perth, WA 6005 AUSTRALIA Dear Directors

RE: STIRLING RESOURCES LIMITED In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the directors of Stirling Resources Limited. As the Audit Director for the review of the financial statements of Stirling Resources Limited for the half-year ended 31 December 2013, I declare that to the best of my knowledge and belief, there have been no contraventions of: (i) the auditor independence requirements of the Corporations Act 2001 in relation to the review; and (ii) any applicable code of professional conduct in relation to the review.

Yours sincerely STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LTD (Trading as Stantons International) (Authorised Audit Company)

Martin Michalik Director

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CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER

COMPREHENSIVE INCOME


NOTE 31 Dec 2013 31 Dec 2012 $ $ Revenue Other income 114,438 215,049 Gain on reversal of provision for impairment of loan receivable

-

2,589,000

Employee and directors – remuneration expenses - - Depreciation and amortisation (20,189) (40,290) Corporate and administrative expenses (486,516) (567,386) Finance costs (720,322) (1,118,366) (1,112,589) 1,078,007 Share of loss of associates accounted for using equity method

2

(1,035,914) (117,789)

(Loss) / Profit before income tax (2,148,503) 960,218 Income tax expense - - (Loss) / Profit for the period (2,148,503) 960,218 Other comprehensive (loss) / income for the period Items that will not be reclassified subsequently to profit or loss

-

-

Items that may be reclassified subsequently to profit or loss

-

-

Total comprehensive (loss) income for the period (2,148,503) 960,218 Loss attributable to: - Members of Stirling Resources Limited (2,148,503) 960,218 Total comprehensive loss attributable to: - Members of Stirling Resources Limited (2,148,503) 960,218 (Loss) / Earnings per share Basic and diluted (loss) / profit (cents per share) (0.49) 0.23

The accompanying notes form part of these financial statements.

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CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 31 December 2013

NOTE 31 Dec 2013 30 Jun 2013 $ $ CURRENT ASSETS Cash and cash equivalents 153,994 498,773 Trade and other receivables 182,885 412,737

TOTAL CURRENT ASSETS 336,879 911,510 NON-CURRENT ASSETS Trade and other receivables 5 6,000,000 6,000,000 Investments accounted for using equity method 2 3,276,869 4,297,783 Plant and equipment - 16,919

TOTAL NON-CURRENT ASSETS 9,276,869 10,314,702 TOTAL ASSETS 9,613,748 11,226,212 CURRENT LIABILITIES Trade and other payables 303,627 422,426 Interest bearing loans and borrowings 6 20,809,953 20,547,115

TOTAL CURRENT LIABILITIES 21,113,580 20,969,541 NON-CURRENT LIABILITIES Interest bearing loans and borrowings - -

TOTAL NON-CURRENT LIABILITIES - - TOTAL LIABILITIES 21,113,580 20,969,541 NET DEFICENCY (11,499,832) (9,743,329) EQUITY Issued capital 3 48,588,664 48,196,664 Accumulated losses (62,119,585) (59,971,082) Reserves 2,031,089 2,031,089 TOTAL DEFICIENCY (11,499,832) (9,743,329)

The accompanying notes form part of these financial statements.

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CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the half-year ended 31 December 2013

Consolidated

Issued capital Reserves Accumulated

losses Total equity

$ $ $ $

At 1 July 2012 48,196,664 2,031,089 (59,009,850) (8,782,097) Profit for the period

-

-

960,218

960,218

Other comprehensive income for the period - - - -

Total comprehensive income for the period - - 960,218 960,218 Equity Transactions

-

-

-

-

At 31 December 2012 48,196,664 2,031,089 (58,049,632) (7,821,879) At 1 July 2013 48,196,664 2,031,089 (59,971,082) (9,743,329) (Loss) for the period

-

-

(2,148,503) (2,148,503)

Other comprehensive income for the period - - - -

Total comprehensive (loss) for the period

-

-

(2,148,503) (2,148,503) Equity Transactions

392,000

-

- 392,000

At 31 December 2013 48,588,664 2,031,089 (62,119,585) (11,499,832)

The accompanying notes form part of these financial statements. For

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CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS


NOTE 31 Dec 2013 31 Dec 2012 $ $ Cash flows from operating activities

Receipts from customers 237,088 129,576 Payments to suppliers and employees (593,704) (588,358) Interest received 25,913 3,119 Interest paid (5,282) Net cash (outflow) from operating activities

(330,703) (460,945)

Cash flows from investing activities

Proceeds from sale of plant and equipment 2,195 - Payments for plant and equipment (1,271) - Payments for equity investments (15,000) - Net cash (outflow) from investing activities

(14,076)

-

Cash flows from financing activities

Loans advanced to related parties - (115,500) Proceeds from borrowings - 545,514 Net cash inflow from financing activities

-

430,014

Net (decrease) / increase in cash and cash equivalents (344,779) (30,931) Cash and cash equivalents at the start of the half year 498,773 55,542

Effect of exchange rate fluctuations on cash held - - Cash and cash equivalents at the end of the half year 153,994 24,611

The above statement should be read in conjunction with the accompanying notes.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Statement of Compliance

The half year financial report is a general purpose financial report which has been prepared in accordance with the Corporations Act 2001 and AASB 134 Interim Financial Reporting. Compliance with AASB 134 ensures compliance with International Reporting Standard IAS 34 Interim Financial Reporting. The half year does not include the notes of the type normally included in an annual financial report and should be read in conjunction with the most recent financial report.

(b) Basis of Preparation

The financial report has been prepared on a historical cost basis except for the revaluation of certain non-current assets and financial instruments. Cost is based on the fair value of the consideration given in exchange for assets. The financial report is presented in Australian dollars unless otherwise noted. The accounting policies adopted in the preparation of the half year financial report are consistent with those of the Company’s previous annual financial report ending 30 June 2013 except for the impact of the Standards and Interpretations described below. These policies are consistent with the Australian Accounting Standards and with International Financial Reporting Standards. The group has adopted all the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (AASB) that are relevant to their operations and effective for the current reporting period.

(c) New and Revised Accounting Requirements Applicable to the Current Half-year Reporting Period

The Group has adopted the following new and revised Australian Accounting Standards from 1 July 2013 together with consequential amendments to other Standards: (i) Consolidated financial statements

− AASB 10: Consolidated Financial Statements; − AASB 127: Separate Financial Statements (August 2011); − AASB 2011-7: Amendments to Australian Accounting Standards arising from the Consolidation Standards; and − AASB 2012-10: Amendments to Australian Accounting Standards — Transition Guidance and Other Amendments.

These Standards became mandatorily applicable from 1 January 2013 and became applicable to the Group for the first time in the current half-year reporting period 1 July 2013 to 31 December 2013. The Group has applied these Accounting Standards retrospectively in accordance with AASB 108: Accounting Policies, Changes in Accounting Estimates and Errors and the specific transition requirements in AASB 10 and AASB 11. The effects of initial application of these Standards in the current half-year reporting period are as follows: Consolidated financial statements: AASB 10 provides a revised definition of control and additional application guidance so that a single control model will apply to all investees. Revised AASB 127 facilitates the application of AASB 10 and prescribes requirements for separate financial statements of the parent entity. On adoption of AASB 10, the assets, liabilities and non-controlling interests related to investments in businesses that are now assessed as being controlled by the Group, and were therefore not previously consolidated, are measured as if the investee had been consolidated (and therefore applied acquisition accounting in accordance with AASB 3: Business Combinations) from the date when the Group obtained control of that investee on the basis of the requirements in AASB 10. Upon the initial application of AASB 10, retrospective restatement of financial statement amounts of the year that immediately precedes the date of initial application (ie 2012-2013) is necessary. When control is considered to have been obtained earlier than the beginning of the immediately preceding year (ie pre-1 July 2012), any difference between the amount of assets, liabilities and non-controlling interests recognised and the previous carrying amount of the investment in that investee is recognised as an adjustment to equity as at 1 July 2012.

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CONDENSED NOTES TO THE FINANCIAL STATEMENTS For the half year ended 31 December 2013 1. Basis of Preparation (continued) Although the first-time application of AASB 10 (together with the associated Standards) caused certain changes to the Group's accounting policy for consolidation and determining control, it did not result in any changes to the amounts reported in the Group's financial statements as the "controlled" status of the existing subsidiaries did not change, nor did it result in any new subsidiaries being included in the Group as a consequence of the revised definition. (ii) Other These Standards make changes to presentation and disclosure requirements, but did not affect the Group's accounting policies or the amounts reported in the financial statements. AASB 119: Employee Benefits (September 2011) and AASB 2011-10: Amendments to Australian Accounting Standards arising from AASB 119 (September 2011). These Standards did not affect the Group's accounting policies or the amounts reported in the financial statements, mainly because the Group does not have defined benefit plan assets or obligations. (iii) Principles of Consolidation The consolidated financial statements incorporate all of the assets, liabilities and results of the parent (Inca Minerals Limited) and all of the subsidiaries. Subsidiaries are entities the parent controls. The parent controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The assets, liabilities and results of all subsidiaries are fully consolidated into the financial statements of the Group from the date on which control is obtained by the Group. The consolidation of a subsidiary is discontinued from the date that control ceases. Intercompany transactions, balances and unrealised gains or losses on transactions between Group entities are fully eliminated on consolidation. Accounting policies of subsidiaries have been changed and adjustments made where necessary to ensure uniformity of the accounting policies adopted by the Group. Equity interests in a subsidiary not attributable, directly or indirectly, to the Group are presented as “non controlling interests". The Group initially recognises non-controlling interests that are present ownership interests in subsidiaries and are entitled to a proportionate share of the subsidiary's net assets on liquidation at either fair value or at the non-controlling interests' proportionate share of the subsidiary's net assets. Subsequent to initial recognition, non-controlling interests are attributed their share of profit or loss and each component of other comprehensive income. Non-controlling interests are shown separately within the equity section of the statement of financial position and statement of comprehensive income.

(d) Going Concern The financial report has been prepared on a going concern basis, which contemplates the continuity of normal business activity and the realisation of assets and the settlement of liabilities in the ordinary course of business. The Consolidated Entity has incurred a net loss after tax for the half year ended 31 December 2013 of $2,148,504 (2012 profit: $960,218) and experienced net cash outflows from operating, investing and financing activities of $344,779 (2012: outflow $30,931). As at 31 December 2013 the Consolidated Entity had a working capital deficiency of $20,776,701 (30 June 2013: $20,058,031).

The ability of the Consolidated Entity to continue as a going concern is dependent on the Consolidated Entity’s ability to:

• Successfully complete additional capital raisings or receive additional loan funding.

The Directors have reviewed the Consolidated Entity’s overall position and outlook in respect of the matters identified above and are of the opinion that there are reasonable grounds to believe that the Consolidated Entity will continue as a going concern and that the use of the going concern basis is appropriate in the circumstances. Should the Directors not be successful in achieving the matters set out above, there is material uncertainty whether the Consolidated Entity will be able to continue as a going concern and therefore whether it will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report.

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The financial report does not include any adjustments relating to the recoverability and classification of recorded asset amounts, or to the amounts and classification of liabilities that might be necessary should the Consolidated Entity not continue as a going concern.

2. INVESTMENT ACCOUNTED FOR USING THE EQUITY METHOD

31 December 2013

30 June 2013

$

$

Investment in associates (a) (b) (c) 3,276,869 4,297,783

(a) Reconciliation of movement in investment accounted for using the equity method – Redbank Copper Limited.

Balance at 1 July - 117,789 Provision for impairment - (117,789) Share of loss for the period - -

Balance at 31 December 2013 / 30 June 2013 - -

(b) Reconciliation of movement in investment accounted for using the equity method – Swan Gold Mining Limited.

Balance at 1 July - -

Share of loss for the period - -

Balance at 31 December 2013 / 30 June 2013 - -

(c) Reconciliation of movement in investment accounted for using the equity method – MZI Resources Limited.

Balance at 1 July

4,297,783

5,019,648

Share of profit / (loss) for the period (1,035,914) (721,865) Provision for impairment - - Additional shares acquired 15,000 -

Balance at 31 December 2013 / 30 June 2013 3,276,869 4,297,783

Name of Entity Country of Incorporation

Principal Activity

Ownership Dec 2013

OwnershipJun 2013

Redbank Copper Limited

Australia Copper exploration

and evaluation 2.00% 2.00%

Swan Gold Mining Limited Australia Gold exploration and evaluation

9.65% 9.65%

MZI Resources Limited Australia Mineral sands exploration and

evaluation

19.69% 29.50%

As at 31 December 2013 Stirling Copper Pty Limited, a 100% subsidiary of Stirling Resources Limited, held 46,962,324 (June 2013: 46,962,324) fully paid ordinary shares in Redbank Copper Limited (an Australian listed entity).

As at 31 December 2013 Stirling Gold Pty Limited, a 100% subsidiary of Stirling Resources Limited, held 86,238,215 (June 2013: 86,238,215) fully paid ordinary shares in Swan Gold Mining Limited (an Australian listed entity).

As at 31 December 2013 Stirling Zircon Pty Limited, a 100% subsidiary of Stirling Resources Limited, held 503,122,187 (June 2013: 501,964,779) fully paid ordinary shares in MZI Resources Limited (an Australian listed entity).

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4. SEGMENT INFORMATION

AASB 8 requires the “management approach” under which operating segment information is presented on the basis that is used for internal reporting purposes and reviewed by the chief operating decision maker in order to allocate resources to the segment and to assess its performance. The Group operates predominantly in one business and geographical segment, being an investor in mineral exploration and development companies in Australia.

The Corporate segment provides the financial, corporate and administrative support required by the Group. This segment derives revenue from management fees and the management of funds on hand.

Segments – 6 months ended 31 December 2013

Investments Corporate Consolidated

$ $ $ Segment revenue - 114,438 114,438 Segment profit / (loss) (1,035,914) (1,112,590) (2,148,504) Unallocated expenses - Results from operation activities Less: discontinued operation Profit / (Loss) before tax - continuing operations

(2,148,504) -

(2,148,504)

Segment Assets Segment Liabilities

3,276,869 -

6,336,878 (21,113,580)

9,613,747 (21,113,580)

Investment in associates – equity method 3,276,869 - 3,276,869 Property, Plant & Equipment additions - - - Exploration additions - - - Included within segment result: Depreciation and amortisation - (20,189) (20,189) Loss in associates accounted for using the equity method

- - -

Impairment of non current assets - - - Interest expense - (720,322) (720,322) Interest revenue - 6,797 6,797

3. ISSUED CAPITAL

31 December 2013

Shares

31 December 2013

$

30 June 2013

Shares

30 June 2013

$

Opening balance 1 July

419,829,476

48,196,664

419,829,476

48,196,664

Issues of ordinary shares

392,000,000 392,000 - -

Closing balance 31 December 2013 / 30 June 2013 811,829,476 48,588,664 419,829,476 48,196,664

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Segments – 6 months ended 31 December 2012

Investments Corporate Consolidated

$ $ $ Segment revenue - 2,804,049 2,804,049 Segment profit / (loss) (117,789) 1,078,007 960,218 Unallocated expenses - Results from operation activities Less: discontinued operation Profit / (Loss) before tax - continuing operations

960,218 -

960,218

Segment Assets Segment Liabilities

5,019,648 -

10,899,531 (23,741,058)

15,919,179 (23,741,058)

Investment in associates – equity method 5,019,648 - 5,019,648 Property, Plant & Equipment additions - - - Exploration additions - - - Included within segment result: Depreciation and amortisation - (40,290) (40,290) Loss in associates accounted for using the equity method

(117,789) - (117,789)

Impairment of non current assets - - - Interest expense - (1,118,366) (1,118,366) Interest revenue - 3,119 3,119

5. NON-CURRENT TRADE AND OTHER RECEIVABLES

31 Dec 13 $

30 Jun 13 $

Unsecured loan – Swan Gold Mining Limited (i) 5,000,000 5,000,000 Unsecured loan – MZI Resources Limited (ii) 1,000,000 1,000,000 6,000,000 6,000,000

(i) The recoverability of this unsecured loan is dependent upon a successful recapitalisation of Swan Gold Mining Limited (“Swan”), and the subsequent ability of Swan to repay its debt. Stirling is currently in the process of entering into a Loan Facility Agreement with Swan, under which the loan will become secured by the tenements held by Swan.

(ii) The recoverability of this unsecured loan is dependent upon a successful recapitalisation of MZI Resources Limited (“MZI”), and the subsequent ability of MZI to repay its debt.

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6. INTEREST BEARING LOANS AND BORROWINGS

Current 31 Dec 2013 $

30 June 2013 $

Unsecured loan – DCM (i) 2,408,000 2,800,000 Commercial bond – DCM (ii) 10,000,000 10,000,000 Commercial bond capitalised interest – DCM (ii) 4,800,213 4,277,200 Unsecured convertible note – DCM (iii) 2,600,000 2,600,000 Unsecured convertible note capitalised interest – DCM (iii) 1,001,740 869,915 20,809,953 20,547,115

(i) Unsecured loans are funds advanced by DCM and are unsecured, with no interest charged and payable at call. (ii) Commercial bond is with DCM and is secured by a fixed and floating charge over the assets of Stirling Zircon Pty

Ltd, with interest charged at 9.375%. Repayment is due 1 July 2014. (iii) Convertible notes are with DCM and are convertible any time for 6,500,000 shares at $0.40 per share. Interest is

charged at 7.5% and payable six months ended 31 December 2013. Maturity of the notes is on 30 January 2014. 7. SUBSEQUENT EVENTS

On 24 January 2014, the Company despatched a Compulsory Acquisition Notice and accompanying independent expert's report (Expert Report) prepared by RSM Bird Cameron. The Company has been informed that DCM is entitled, and now wishes, to compulsorily acquire the outstanding fully paid ordinary shares in the Company pursuant to Division 1 of Part 6A.2 of the Corporations Act. On 17 February 2014, the Company’s registered address changed to 45 Ventnor Avenue, West Perth WA 6005. The Company announced the appointment of Patrick Corr as Non-executive Director on 28 February 2014. Mr Corr is a lawyer specialising in the laws regulating the companies and securities industries in Australia, with a particular focus on minerals and natural resources. He has extensive knowledge of the legal, regulatory and commercial requirements, as well as the practical considerations, involved in mineral and resource project transactions in Australia and internationally. On 11 March 2014, the Company announced it had entered into a secured loan agreement with its major shareholder, DCM DECOmetal GmbH on commercial terms to fund the Company’s working capital requirements. The loan facility is for up to $200,000, with interest at the rate of 10% per annum, principal and interest repayable by 30 September 2014. 8. EXPENDITURE COMMITMENTS

31 Dec 13 $

30 Jun 13 $

Operating Leases (non-cancellable) Minimum lease payments - not later than one year 139,761 350,170 - later than one year but not later than five years - - - greater than five years - - 139,761 350,170

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DECLARATION BY DIRECTORS

The directors of the Company declare that; 1. the financial statements and notes are in accordance with the Corporations Act 2001, including:

(a) complying with Australian Accounting Standards AASB 134 Interim Financial Reporting and the Corporations Regulations 2001; and

(b) giving a true and fair view of the consolidated entity’s financial position as at 31 December 2013 and of

its performance for the half year then ended; and 2. In the directors’ opinion, there are reasonable grounds to believe that the consolidated entity will be able to

pay its debts as and when they become due and payable. This declaration is made in accordance with a resolution of the directors.

Martin Depisch

Non-executive Chairman

Perth, Western Australia 14 March 2014

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PO Box 1908

West Perth WA 6872

Australia

Level 2, 1 Walker Avenue

West Perth WA 6005

Australia

Tel: +61 8 9481 3188

Fax: +61 8 9321 1204

ABN: 84 144 581 519

www.stantons.com.au

Liability limited by a scheme approved

under Professional Standards Legislation

Stantons International Audit and Consulting Pty Ltd

trading as

Chartered Accountants and Consultants

INDEPENDENT AUDITOR’S REVIEW REPORT

TO THE MEMBERS OF STIRLING RESOURCES LIMITED

Report on the Half-Year Financial Report We have reviewed the accompanying half-year financial report of Stirling Resources Limited, which comprises the condensed consolidated statement of financial position as at 31 December 2013, the condensed consolidated statement of profit or loss and other comprehensive income, condensed consolidated statement of changes in equity, and condensed consolidated statement of cash flows for the half-year ended on that date, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration for Stirling Resources Limited (“the Consolidated Entity”). The Consolidated Entity comprises both Stirling Resources Limited (“the Company”) and the entities it controlled during the half year.

Directors’ Responsibility for the Half-Year Financial Report

The directors of Stirling Resources Limited are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the half-year financial report that is free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the Consolidated Entity’s financial position as at 31 December 2013 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. As the auditor of Stirling Resources Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report. A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Whilst we considered the effectiveness of management’s internal controls over financial reporting when determining the nature and extent of our procedures, our review was not designed to provide assurance on internal controls. Our review did not involve an analysis of the prudence of business decisions made by the directors or management.

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Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, has been provided to the directors of Stirling Resources Limited on 14 March 2014.

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of Stirling Resources Limited is not in accordance with the Corporations Act 2001 including: (a) giving a true and fair view of the Consolidated Entity’s financial position as at 31 December

2013 and of its performance for the half-year ended on that date; and

(b) complying with Accounting Standard AASB 134 Interim Financial Reporting and Corporations Regulations 2001.

Inherent Uncertainty Regarding Continuation as a Going Concern

Without qualification to the conclusion expressed above, we draw you attention to Note 1(d) to the half-year financial report which indicates that at 31 December 2013 the Consolidated Entity had a net working capital deficiency of $20,776,701. At the reporting date, the Consolidated Entity had cash and cash equivalents of $153,994 and incurred a loss after tax for the period of $2,148,503. The consolidated entity has loans payable to DCM DECOmetal GmbH of $20,809,953. The ability of the consolidated entity to continue as a going concern and meet its planned investment, administration and other commitments is dependent upon DCM DECOmetal GmbH not calling upon the aforementioned loans and the consolidated entity raising further working capital and/or successfully realising its investments. In the event that the consolidated entity is not successful in raising further equity or successfully realising its investments, the Consolidated Entity may not be able to meet its liabilities as and when they fall due and the realisable value of the consolidated entity’s current and non-current assets may be significantly less than book values

Emphasis of matter regarding the Recoverability of loans

As at 31 December 2013, the financial report as outlined in note 5, records two unsecured loans receivable totalling $6,000,000 from Swan Gold Mining Limited and MZI Resources Limited to the Consolidated Entity. The recoverability of these unsecured loans is dependent on the ability of these entities to successfully recapitalise, to raise funds or commence profitable operations. The directors of the Consolidated Entity are confident these loans are fully recoverable and therefore no provision has been made against these two loans at the reporting date. In the event that Swan Gold Mining Limited and MZI Resources Limited are, individually or collectively, unable to successfully raise further capital, recapitalise or commence profitable operations, the carrying value of these loans may be considerably lower than its stated values.

STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LTD (Trading as Stantons International) (An Authorised Audit Company)

Martin Michalik Director West Perth, Western Australia 14 March 2014

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Documents

For personal use only - ASX · Stirling Resources Limited ABN 94 009 659 054 . FINANCIAL REPORT . For the half-year ended . 31 December 2013. For personal use only