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Argo Exploration Limited Half-year Financial Report - 31 December 2012 ABN 38 120 917 535
Argo Exploration Limited
Half-year Financial Report - 31 December 2012
ABN 38 120 917 535
Page
3478
9101112131718
Argo Exploration LimitedContents31 December 2012
Contents
Financial reportStatement of comprehensive incomeStatement of financial position
Corporate directoryReview of OperationsDirectors' reportAuditor's independence declaration
Statement of cash flowsStatement of changes in equity
Notes to the financial statementsDirectors' declaration
Independent auditor's review report to the members of Argo Exploration Limited
2
Argo Exploration Limited
31 December 2012Corporate directory
Melanie J Leydin
600 Bourke Street
Level 4
Hugh Herbert(Executive Chairman and Managing Director)Justin Hondris(Non-Executive Director)Christopher Martin
Holman Fenwick Willan
MELBOURNE VIC 3000
Level 4Principal place of business
Registered office
Justin Mouchacca
MELBOURNE VIC 3000
Grant Thornton Audit Pty LtdAuditorThe Rialto
(Non-Executive Director)
South Melbourne VIC 3205100 Albert Road
Company secretaries
www.argoexploration.com.au
Argo Exploration Limited shares are listed on the Australian Securities Exchange (ASX code: AXT)
Website
Stock exchange listing
Directors
100 Albert RoadSouth Melbourne VIC 3205
Solicitors
Level 30, 525 Collins Street
Level 39, Bourke Place
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Argo Exploration Limited Review of Operations 31 December 2012
Argo-Xstrata Copper Joint Venture – EL4164 Intercept Hill
During the December half under review, Xstrata Copper Ltd (‘Xstrata Copper’), as operator of the Argo-Xstrata Copper Joint Venture, received and evaluated assay results for drill holes WJE002 and WJE003 from Winjabbie East prospect located with EL4164, Intercept Hill.
Assay data confirmed that very fine-grained sulphide mineralization intersected within the Tapley Hill Formation intervals at Winjabbie East Prospect was mainly the iron sulphide, pyrite, in concentrations ranging from 3% to 5% throughout.
Intensely skarn/IOCG-altered basement directly underlies Tapley Hill Formation at Winjabbie East prospect and covers a large area of ~1,000 by 400 meters. Skarn/IOCG-altered basement intervals from all four holes drilled at the prospect to date returned anomalous copper-gold assay results, punctuated with generally narrow zones of low-grade mineralization (2 to 10 meters at 0.1% to 0.85% Cu) and isolated high-grade, meter increments at 1.0% to 3.6% Cu.
Best intervals for WJE002 are 3 meters 0.15% Cu from 831m and 3 meters at 0.12% Cu from 876m. The best gold value was 0.18g/t Au at 874m.
The best intervals for WJE003 are 2 meters at 0.7% Cu from 883 meters and 2 meters at 0.22% Cu, 1.6g/t Au and 3g/t Ag from 891 meters. Three isolated 1 meter samples returned greater than 1.0% Cu, with the maximum being 2.11% Cu. Gold is generally low, except in four 1 meter samples in a short zone between 891 meters and 904 meters with values of 2.09, 1.24, 0.61 and 1.10g/t Au. Drilling to date by Argo and Xstrata Copper confirmed significant structural perturbation of cover sequence stratigraphic units, possibly involving re-activation and propagation of basement-piercing faults into the cover sequence. These fault structures may act as loci for copper-gold mineralizing fluids, as suggested by late-stage, massive gold-bearing chalcopyrite/pyrite-quartz, and gold-bearing arsenopyrite-quartz, veins superimposed on skarn/IOCG-altered protolith, and the underlying less-altered basement meta-siltstone and quartzite. Argo believes that the potential for fault-controlled, gold-dominated mineralization in the cover sequence requires further evaluation. However, based on the results of drilling to date, Xstrata Copper concluded that the Winjabbie East prospect is unlikely to host medium- to high-grade copper mineralization of reasonable economic tonnage, either as skarn or a related IOCG body within the confines of the partially tested alteration system, to be materially relevant to a company the size of Xstrata, and to warrant their further drilling at Winjabbie East prospect. Xstrata Copper further concluded that there were currently no accessible targets of suitable size, to meet its strategic requirements, remaining to be tested. Hence, subsequent to the end of the December 2012 half year, Mount Isa Mines Limited (‘Xstrata Copper’), having met all minimum expenditures necessary to withdraw from the Joint Venture during the Earn-in Period, gave 30 days’ notice, commencing 9th January 2013, of withdrawal from the Exploration Farm-in and Joint Venture Agreement (‘Agreement’). Consequently, Argo is now making arrangements to have full records of work carried out by Xstrata Copper delivered to the Company together with the relocation of all relevant drill cores to storage in Adelaide. Argo will conduct its own comprehensive evaluation of these data, as and when received, in order to formulate its strategy moving forward. At the same time, the Company will initiate further negotiations with representatives of the Native Title claimants in an attempt to secure clearance to drill test the premier Cane Grass Prospect target within the Exploration License.
Consistent with the terms of the Agreement, rehabilitation of Winjabbie East drill sites, WJE002 and WJE003 has been completed with the rehabilitation work being undertaken by Arcoona station personnel. The rehabilitated sites were inspected and photographed by Xstrata Copper during a field visit on the 20th November 2012, and a Rehabilitation Report has been prepared and submitted to DMITRE relating to this rehabilitation. Xstrata Copper has advised that there is no outstanding rehabilitation work, related to the activities of the Joint Venture, to be undertaken.
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Argo Exploration Limited Review of Operations 31 December 2012
Argo will carry out a site inspection to verify that all necessary rehabilitation, arising from Joint Venture activities, has been satisfactorily undertaken.
Xstrata Copper’s withdrawal from the Joint Venture does not diminish the overall exploration potential for the Intercept Hill Exploration License, with several high quality targets, including the prime target of Canegrass South, yet to be tested once access issues are overcome. Xstrata Copper expended a total of $2,086,267 on exploration within EL4164 during the earn-in period. Consistent with the terms of the Agreement, Argo retains 100% interest in EL4164, Intercept Hill. After taking into account the withdrawal of Mount Isa Mines Limited (‘Xstrata Copper’) from the Joint Venture and after reviewing the Company’s proposed expenditure on the project, it was resolved subsequent to 31 December 2012 that the Company would not budget any further work for this project due to the current budgetary constraints of the Company. As such, the Directors have resolved to impair the carrying amount of the prior exploration expenditure amounting to $6,220,937. This does not diminish the prospectivity of the exploration area.
Toondulya EL4284 (Argo 100%)
No new field-based activities were undertaken during the half-year.
Planning for a 20 hole reverse circulation (RC) drilling program of up to 2,500 meters progressed with aspects of access and RC rig availability being assessed.
Clarification was sought concerning interpretation of various ‘activity’ definitions, particularly those of land clearing and advanced exploration, contained within the Gawler Ranges Mineral Exploration Indigenous Land Use Agreement (ILUA). Verbal advice received from DMITRE is favourable and it is believed that, subject to the prescribed written notices being served in accordance with the ILUA and the Mining Act, and adherence to the terms of the ILUA, there should be no access impediments for the contemplated RC drilling program.
Pantheon Resources Plc (Argo 6.83% shareholder)
Argo received advice that the announced spud date for the Kara Farms #1H (KF#1H) well in Tyler County, East Texas has been further delayed and was now estimated to spud during Quarter 1, 2013.
The operator of the Tyler County joint venture advised its targeted commencement date for operations on the Kara Farms #1H well to be first quarter 2013, subject to commercial, operational and macroeconomic factors.
. During the last several months, the operator has:
1. Completed a comprehensive two-year analysis, in conjunction with the Bureau of Economic Geology at the University of Texas at Austin, aimed at decoding the geophysical expression of productive Woodbine by analysing data from 2,500 Woodbine wells, over 2,600 miles of 2D seismic and the acquisition of 3D seismic over producing Woodbine;
2. Upgraded the potential for its Woodbine play following the conclusion of the extensive 2 year study leading to reduced risk profile and increased potential for hydrocarbon;
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Argo Exploration Limited Review of Operations 31 December 2012 3. Concluded that Woodbine underlying JV acreage appears analogous to the nearby Polk County
Double A Wells field;
4. Estimated production from the Double A Wells field of circa 20 million barrels of condensate and 415 bcf of natural gas to date;
5. Confirmed JV belief that its acreage may have potential to contain a similar size field;
6. Noted that, if confirmed to be present, development may involve up to 17 horizontal or up to 50 vertical wells to drain the Woodbine field;
7. Noted that the JV’s Woodbine target is a gas condensate play. This makes it correlated to the oil price as the associated liquids usually trade at par or a premium to the crude oil price; and
8. Indicated that gross NPV10, on a mean reserve case, is estimated to be ~US$65 million per vertical Woodbine well and ~US$200 million per horizontal well using a US$100 per barrel constant price for crude oil and US$3.00 per million BTU (“mmBTU”) for natural gas in 2012, rising to a constant US$4.50 per mmBTU for 2013 and beyond.
Corporate
Cash reserves at the end of the December Quarter stood at $260,804 with no secured debt while the value of the Pantheon Resources Plc investment was $1,646,546 at an exchange rate of 0.6428. The Board continues to examine quality commercial opportunities to expand its exploration/ development portfolio.
6
Argo Exploration Limited Directors' report 31 December 2012
The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the 'consolidated entity') consisting of Argo Exploration Limited (referred to hereafter as the 'company' or 'parent entity') and the entities it controlled for the half-year ended 31 December 2012. Directors The following persons were directors of Argo Exploration Limited during the whole of the financial half-year and up to the date of this report, unless otherwise stated: Dr Hugh Herbert (Executive Chairman and Managing Director) Mr Justin Hondris (Non-Executive Director) Mr Christopher Martin (Non-Executive Director) (Appointed 27 February 2013) Ms Meredith Bird (Non-Executive Director) (Resigned 27 February 2013) Principal activities During the financial half-year the principal consulting activities of the consolidated entity consisted of exploration and development of mineral resources emphasising copper, gold and uranium. Review of operations The loss for the consolidated entity after providing for income tax amounted to $5,546,328 (31 December 2011: $1,352,059). Refer to the separate operational and technical Reviews of operations preceding this Directors' report. Financial Position The net assets of the consolidated entity decreased by $5,546,328 to $4,239,682 as at 31 December 2012 (30 June 2012: $9,786,010). The decrease was mainly as a result of the write off of the Intercept Hill Project (EL4164) as described in the Review of operations preceding this Directors report. This was offset to a limited degree by the increased value of the Company's investment in an AIM listed Oil & Gas exploration and production company, Pantheon Resources Plc ("Pantheon": AIM Code: PANR). The consolidated entity's working capital, being current assets less current liabilities increased by $632,656 to $1,861,108 (30 June 2012: $1,228,452). During the period the consolidated entity had negative cash flows of $324,404 from operating activities and $75,084 from exploration and evaluation activities (2011: $203,045 and $189,342).
Significant changes in the state of affairs There were no significant changes in the state of affairs of the consolidated entity during the financial half-year. Auditor's independence declaration A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 8. This report is made in accordance with a resolution of directors, pursuant to section 306(3)(a) of the Corporations Act 2001. On behalf of the directors
________________________________ Dr. Hugh K. Herbert Chairman 15 March 2013 Melbourne
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Grant Thornton Audit Pty Ltd ACN 130 913 594 The Rialto, Level 30 525 Collins St Melbourne Victoria 3000 GPO Box 4736 Melbourne Victoria 3001 T +61 3 8320 2222 F +61 3 8320 2200 E [email protected] W www.grantthornton.com.au
Grant Thornton Australia Limited is a member firm within Grant Thornton International Ltd. Grant Thornton International Ltd and the member firms are not a worldwide partnership. Grant Thornton Australia Limited, together with its subsidiaries and related entities, delivers its services independently in Australia.
Liability limited by a scheme approved under Professional Standards Legislation
Auditor’s Independence Declaration To The Directors of Argo Exploration Limited In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the review of Argo Exploration Limited for the half-year ended 31 December 2012, I declare that, to the best of my knowledge and belief, there have been:
a no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and
b no contraventions of any applicable code of professional conduct in relation to the review.
GRANT THORNTON AUDIT PTY LTD Chartered Accountants
B. A. Mackenzie Partner - Audit & Assurance Melbourne, 15 March 2013
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Note
31 December
2012
31 December
2011$ $
7,410 25,282
4 933,573 -
(51,778) (95,080)(20,839) (28,153)
(175,396) (183,791)(5,670) (5,761)
(6,233,399) - - (1,062,835)
(229) (1,721)
(5,546,328) (1,352,059)
- -
(5,546,328) (1,352,059)
- -
(5,546,328) (1,352,059)
Cents Cents
(5.82) (1.63)(5.82) (1.63)
Basic earnings per share
Other comprehensive income for the half-year, net of tax
Total comprehensive income for the half-year attributable to the owners of Argo Exploration Limited
Loss before income tax expense
Diluted earnings per share
Consolidated
Expenses
Administrative expenses
Argo Exploration Limited
For the half-year ended 31 December 2012Statement of comprehensive income
Corporate expenses
Employee benefits expense
Other income
Revenue
Depreciation and amortisation expense
Loss on revaluation of FVTPL investmentsWrite off of exploration expenditure
Finance costs
Loss after income tax expense for the half-year attributable to the owners of Argo Exploration Limited
Income tax expense
The above statement of comprehensive income should be read in conjunction with the accompanying notes
9
Note
31 December
201230 June
2012$ $
260,905 665,727 37,357 30,625
5 1,646,546 712,973 28,702 9,017
1,973,510 1,418,342
15,590 21,259 6 2,362,984 8,536,299
2,378,574 8,557,558
4,352,084 9,975,900
84,735 157,113 27,667 32,777
112,402 189,890
112,402 189,890
4,239,682 9,786,010
13,163,356 13,163,356 (8,923,674) (3,377,346)
4,239,682 9,786,010
Argo Exploration LimitedStatement of financial positionAs at 31 December 2012
Consolidated
Trade and other payablesBorrowings
Total assets
Issued capitalEquity
Net assets
Total equity
Accumulated losses
Trade and other receivablesFinancial assets at fair value through profit or loss
Total current liabilities
Current liabilities
Non-current assets
Total current assets
Current assets
Assets
Cash and cash equivalents
Other
Property, plant and equipment
Total liabilities
Exploration and evaluation
Liabilities
Total non-current assets
The above statement of financial position should be read in conjunction with the accompanying notes
10
Totalequity
$ $ $
12,793,414 (1,110,251) 11,683,163
(1,352,059) (1,352,059)
- - - - - -
- - - - (1,352,059) (1,352,059)
- - - 12,793,414 (2,462,310) 10,331,104
Totalequity
$ $ $
13,163,356 (3,377,346) 9,786,010
(5,546,328) (5,546,328)
- - - - - -
- - - - (5,546,328) (5,546,328)
- - - 13,163,356 (8,923,674) 4,239,682
Contributedequity Losses
Accumulated
equityContributed Contributed
equityAccumulated
Losses
ConsolidatedBalance at 1 July 2011
Loss after income tax expense for the half-year
Total comprehensive income for the half-year
Balance at 31 December 2011
Consolidated
Argo Exploration Limited
For the half-year ended 31 December 2012Statement of changes in equity
Other comprehensive income for the half-year, net of tax
Other comprehensive income for the half-year, net of tax
Loss after income tax expense for the half-year
Total comprehensive income for the half-year
Balance at 1 July 2012
Balance at 31 December 2012
The above statement of changes in equity should be read in conjunction with the accompanying notes
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Note
31 December
2012
31 December
2011$ $
(331,365) (226,606)6,961 25,282
- (1,721)
(324,404) (203,045)
6 (75,084) (189,342)
(75,084) (189,342)
(5,334) (4,254)
(5,334) (4,254)
(404,822) (396,641)665,727 1,141,941
260,905 745,300
Net decrease in cash and cash equivalents
Cash flows from financing activities
Net cash used in investing activities
Repayment of borrowings
Payments for exploration and evaluation
Argo Exploration Limited
For the half-year ended 31 December 2012Statement of cash flows
Cash and cash equivalents at the beginning of the financial half-year
Cash and cash equivalents at the end of the financial half-year
Cash flows from investing activities
Net cash used in financing activities
Consolidated
Cash flows from operating activities
Interest receivedPayments to suppliers and employees (inclusive of GST)
Interest and other finance costs paid
Net cash used in operating activities
The above statement of cash flows should be read in conjunction with the accompanying notes
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The financial report was authorised for issue, in accordance with a resolution of directors, on 15 March 2013. Thedirectors have the power to amend and reissue the financial report.
The principal accounting policies adopted are consistent with those of the previous financial year and correspondinginterim reporting period, except for the policies stated below.
100 Albert RoadSouth Melbourne VIC 3205
A description of the nature of the consolidated entity's operations and its principal activities are included in thedirectors' report, which is not part of the financial report.
Note 2. Significant accounting policies
Argo Exploration Limited
These general purpose financial statements for the interim half-year reporting period ended 31 December 2012 havebeen prepared in accordance with Australian Accounting Standard AASB 134 'Interim Financial Reporting' and theCorporations Act 2001, as appropriate for for-profit oriented entities. Compliance with AASB 134 ensures compliancewith International Financial Reporting Standard IAS 34 'Interim Financial Reporting'.
31 December 2012
These general purpose financial statements do not include all the notes of the type normally included in annualfinancial statements. Accordingly, these financial statements are to be read in conjunction with the annual report forthe year ended 30 June 2012 and any public announcements made by the company during the interim reportingperiod in accordance with the continuous disclosure requirements of the Corporations Act 2001.
Notes to the financial statements
Note 1. General information
The financial report covers Argo Exploration Limited as a consolidated entity consisting of Argo Exploration Limitedand the entities it controlled. The financial report is presented in Australian dollars, which is Argo Exploration Limited'sfunctional and presentation currency.
The financial report has been prepared on the going concern basis, which contemplates continuity of normal businessactivities and realisation of assets and settlement of liabilities in the ordinary course of business. The going concern ofthe consolidated entity is dependent upon it maintaining sufficient funds for its operations and commitments. TheDirectors continue to monitor the ongoing funding requirements of the consolidated entity. The Directors are confidentthat sufficient funds can be secured if required by a combination of capital raising, sale of assets or joint ventures toenable the consolidated entity to continue as a going concern and as such are of the opinion that the financial reporthas been appropriately prepared on a going concern basis.
The Company also has the option to liquidate its position in Pantheon Resources Plc if there is insufficient fundsbeing generated through capital raisings. As at 31 December 2012 the Company’s investment in PantheonResources Plc was carried at the market rate $1,646,546. At the date of this report, the Company's investment inPantheon Resources Plc has increased significantly due to an increase in the share price and was approximately$2,320,000.
Argo Exploration Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Itsregistered office and principal place of business is:
Going Concern
The financial report consists of the financial statements, notes to the financial statements and the directors'declaration.
Level 4
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Argo Exploration Limited
31 December 2012Notes to the financial statements
31 December
2012
31 December
2011$ $
933,573 -
31 December
201230 June
2012$ $
1,646,546 712,973
712,973 2,204,890 933,573 -
- (1,491,917)
- - 1,646,546 712,973
Consolidated
Ordinary shares - designated at fair value through profit or loss
Opening fair value
Consolidated
Note 4. Other income
Identification of reportable operating segments
The Company operated predominately as an explorer for base precious metals, with the emphasis on copper, gold,and uranium mineralisation within Australia.
AASB 8 requires operating segments to be identified on the basis of internal reports about the components of theGroup that are regularly reviewed by the cheif operating decision maker in order to allocate resources to the segmentand to assess its performance. The board reviews the Company as a whole in the business segment of mineralexploration within Australia.
Note 3. Operating segments
The consolidated entity has adopted all of the new, revised or amending Accounting Standards and Interpretationsissued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.
New, revised or amending Accounting Standards and Interpretations adopted
Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not beenearly adopted.
Note 2. Significant accounting policies (continued)
Gain on financial assets at fair value through profit and
Reconciliation
Note 5. Current assets - financial assets at fair value through profit or loss
Reconciliation of the fair values at the beginning and end of the current financial half-year are set out below:
Revaluation decrements
Closing fair value
Revaluation increments
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Notes to the financial statementsArgo Exploration Limited
31 December 2012
31 December
201230 June
2012$ $
2,362,984 8,536,299 - - 2,362,984 8,536,299
- - 2,362,984 8,536,299
Total$ $ $ $ $ $
- - - - 8,536,299 8,536,299 75,084 75,084
(6,248,399) (6,248,399)
- - - - 2,362,984 2,362,984
Note 9. Commitments
Note 8. Contingent liabilities
Under the Joint Venture Agreement with Mount Isa Mines Limited, all existing expenditure commitments in respect oflicence EL4164, Intercept Hill, have been met. The Company still has expenditure commitments in respect of licenceEL4284, amounting to $146,930 up to the licence end date of 14 July 2013.
Exploration and evaluation - at cost
Balance at 31 December 2012
Note 6. Non-current assets - exploration and evaluation
Reconciliations of the written down values at the beginning and end of the current financial half-year are set out below:
The recoverability of the carrying amount of the exploration and evaluation assets is dependent upon the continuationof the Company's rights to tenure of the interests, results of future exploration and successful development or,alternatively, sale of the respective areas of interest.
AdditionsWrite off of assets
Exploration
Consolidated
During the period ended 31 December 2012 the Company resolved to write off the carrying value of the Intercept HillProject (EL4164) amounting to $6,220,937. The decision was made after taking into account the Company'sproposed expenditure on the project and the withdrawal of Mount Isa Mines Limited ('Xstrata Copper') from the JointVenture.
ConsolidatedBalance at 1 July 2012
Reconciliations
There were no dividends paid, recommended or declared during the current or previous financial half-year.
Note 7. Equity - dividends
The consolidated entity does not have any contingent liabilities at reporting date.
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Argo Exploration Limited
31 December 2012Notes to the financial statements
31 December
201230 June
2012% %
100.00 100.00 100.00 100.00
*
On 10 January 2013 the Company announced that Mount Isa Mines Ltd ('Xstrata Copper') in accordance with theExploration Farm-in and Joint Venture Agreement ('Agreement'), has given 30 days' notice, commencing 9 January2013, of withdrawal from the Agreement having met all minimum expenditures necessary to withdraw from the JointVenture during the Earn-in period. Consistent with the terms of the Agreement, Argo retains 100% interest in EL4164,Intercept Hill.
On 2 January 2013 the Company issued 30,000,000 fully paid ordinary shares at $0.009 (0.90 cents) each to fundongoing working capital commitments for the Company as approved by shareholders at the Company's generalmeeting held on 2 October 2012.
Note 10. Subsidiaries
incorporation
Note 11. Events after the reporting period
Equity holding
Country of
Australia
Name of entity
No other matter or circumstance has arisen since 31 December 2012 that has significantly affected, or maysignificantly affect the consolidated entity's operations, the results of those operations, or the consolidated entity'sstate of affairs in future financial years.
Athena Mines Pty LtdOlympic Resources Limited *
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries inaccordance with the accounting policy described in note 2:
The wholly-owned subsidiary has entered into a deed of cross guarantee with Argo Exploration Limited pursuantto ASIC Class Order 98/1418 and is relieved from the requirements to prepare and lodge an audited financialreport. The deed of cross guarantee was signed on 1 June 2009.
Australia
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Argo Exploration Limited Directors' declaration
In the directors' opinion: ● the attached financial statements and notes thereto comply with the Corporations Act 2001, Australian
Accounting Standard AASB 134 'Interim Financial Reporting', the Corporations Regulations 2001 and other mandatory professional reporting requirements;
● the attached financial statements and notes thereto give a true and fair view of the consolidated entity's financial
position as at 31 December 2012 and of its performance for the financial half-year ended on that date; and
● there are reasonable grounds to believe that the company will be able to pay its debts as and when they become
due and payable. Signed in accordance with a resolution of directors made pursuant to section 303(5) of the Corporations Act 2001. On behalf of the directors
________________________________ Dr. Hugh K. Herbert Chairman 15 March 2013 Melbourne
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Grant Thornton Audit Pty Ltd ACN 130 913 594 The Rialto, Level 30 525 Collins St Melbourne Victoria 3000 GPO Box 4736 Melbourne Victoria 3001
T +61 3 8320 2222 F +61 3 8320 2200 E [email protected] W www.grantthornton.com.au
Grant Thornton Australia Limited is a member firm within Grant Thornton International Ltd. Grant Thornton International Ltd and the member firms are not a worldwide partnership. Grant Thornton Australia Limited, together
with its subsidiaries and related entities, delivers its services independently in Australia.
Liability limited by a scheme approved under Professional Standards Legislation
Independent Auditor’s Review Report
To the Members of Argo Exploration Limited
We have reviewed the accompanying half-year financial report of Argo Exploration Limited
(“Company”), which comprises the consolidated financial statements being the statement of
financial position as at 31 December 2012, and the statement of comprehensive income,
statement of changes in equity and statement of cash flows for the half-year ended on that
date, notes comprising a statement or description of accounting policies, other explanatory
information and the directors’ declaration of the consolidated entity, comprising both the
Company and the entities it controlled at the half-year’s end or from time to time during the
half-year.
Directors’ responsibility for the half-year financial report
The directors of Argo Exploration 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 and the Corporations Act 2001 and for such controls 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 consolidated half-year financial report
based on our review. We conducted our review in accordance with the 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 Argo Exploration Limited consolidated entity’s financial position as at
31 December 2012 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 Argo Exploration Limited, ASRE 2410 requires that we
comply with the ethical requirements relevant to the audit of the annual financial report.
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2
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.
Independence
In conducting our review, we complied with the independence requirements of the
Corporations Act 2001.
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 Argo Exploration 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 2012 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.
Significant uncertainty regarding going concern
Without qualification to the audit opinion expressed above, attention is drawn to the
following matter. As a result of matters described in Note 2 in the half year financial report
which indicates that the Entity incurred a net loss of $5,546,328 and net operating cash
outflows of $324,404 during the half year ended 31 December 2012. This condition, along
with other matters as set forth in Note 2, indicate the existence of a material uncertainty
which may cast significant doubt about the Entity’s ability to continue as a going concern
and whether it will realise its assets and extinguish its liabilities in the normal course of
business and at the amounts stated in the financial statements.
GRANT THORNTON AUDIT PTY LTD Chartered Accountants
B. A. Mackenzie
Partner - Audit & Assurance
Melbourne, 15 March 2013
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