Prospectus - Kingsrose Mining

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Section 9 Investigating Accountant’s Report NOTES TO THE UNAUDITED FINANCIAL STATEMENTS AS AT 31 AUGUST 2007 1. FINANCIAL REPORTING FRAMEWORK Basis of preparation of Proforma Financial Information The Proforma Financial Information of <strong>Kingsrose</strong> <strong>Mining</strong> Limited has been prepared in accordance with the recognition and measurement, but not all of the disclosure requirements of applicable Accounting Standard and other authoritative pronouncements of the AASB. Significant Accounting Policies (a) Exploration, evaluation, development and restoration costs Exploration and evaluation expenditure Exploration and evaluation expenditure is stated at cost and is accumulated in respect of each identifiable area of interest. Such costs are only carried forward in respect of areas of interest for which the rights of tenure are current and where: - such costs are expected to be recouped through successful development and exploitation of the area of interest or, alternatively, by its sale; or - activities in the area have not yet reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves and active and significant operations in, or in relation, to the area are continuing. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest. Where carried- forward expenditure does not satisfy the policy stated above it is written off to the income statement in the period in which it is incurred. Accumulated costs in relation to an abandoned area are written off to the income statement in the period in which the decision to abandon the area is made. Mine development costs Costs incurred in bringing the operation to a mining stage have been capitalised as mine development costs. The company will determine an appropriate amortisation policy in respect of these costs. Rehabilitation, restoration and environmental costs Long-term environmental obligations are based on the company's environmental management plans, in compliance with current environmental and regulatory requirements. The costs include obligations relating to reclamation, waste site closure, plant closure and other costs associated with the restoration of the site. Full provision is made based on the net present value of the estimated cost of restoring the environment disturbance that has been incurred as at the balance date. Increases due to additional environmental disturbance (to the extent that it relates to the development of an asset) are capitalised and amortised over the remaining lives of the mines. Annual increases in provision relating to the change in the present value of the provision are accounted for in earnings. The estimated costs of rehabilitation are reviewed annually and adjusted as appropriate for changes in legislation, technology or other circumstances. Cost estimates are not reduced by the potential proceeds from the sale of assets or from plant clean-up at closure. Page 46
(b) (c) (d) (e) (f) (g) Income tax Deferred income tax is provided on all temporary differences at the balance sheet date between the tax bases and of the assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax liabilities are recognised for all taxable temporary differences except where the deferred income tax arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of transaction, affects neither the accounting profit nor taxable profit or loss. Deferred income tax assets are recognised for all deductible temporary differences, carryforward of unused tax assets 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 assets and unused tax losses can be utilised except where 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. 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 of (and tax laws) that have been enacted or substantially enacted at the balance sheet date. Income taxes relating to items recognised directly in equity are recognised in equity and not in the income statement. Cash and cash equivalents Cash and short-term deposits in the balance sheet comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less. For the purposes of the cash flow statements, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts. Inventory Inventories are measured at the lower of cost and net realisable value. Property, plant and equipment Plant and equipment is measured on the cost basis less depreciation and impairment losses. Depreciation is calculated on plant and equipment using the diminishing value basis. Rates used are: Class of Fixed Asset Depreciation Rate Headframe and property improvements 5% - 7.5% Plant and equipment 10% - 20% Motor vehicles 18.75% Low value pooled items 37.5% Goods and services tax Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office ("ATO"). In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable. Receivables and payables are stated with the amount of GST included. Impairment At each reporting date, the company assesses whether there is any indication that an asset may be impaired. Where an indicator of impairment exists, the company makes a formal estimate of the recoverable amount. Page 47
Page 1 and 2: Kingsrose Mining Limited ABN 49 112
Page 3 and 4: Table of Contents Section 1 Key Poi
Page 5 and 6: Section 2 Chairman’s Letter Dear
Page 7 and 8: Application of Proceeds at Full Sub
Page 9 and 10: 4.4 Application for Shares Applicat
Page 11 and 12: Section 5 Company and Project Overv
Page 13 and 14: Section 6 Directors and Corporate G
Page 15 and 16: As the Company’s activities devel
Page 17 and 18: Additionally, tenements are subject
Page 19 and 20: Potential Acquisitions As part of i
Page 21 and 22: In addition, GIPL made independent
Page 23 and 24: Figure 2. Regional Geology 1. Intro
Page 25 and 26: Figure 3. Project Geology and Tenem
Page 27 and 28: 6. Past Exploration up to 1998 The
Page 29 and 30: 1. Proving up gold resources to the
Page 31 and 32: Table 3. Significant Results The su
Page 33 and 34: Holla, L.A., 2001. Geological setti
Page 35 and 36: Conduits Conglomerate Country rock
Page 37 and 38: Lava Limestone Lineament Lithologic
Page 39 and 40: Stockwork Stratabound Stratigraphy
Page 41 and 42: Under the terms of an asset sale ag
Page 43 and 44: APPENDIX 1 ASSETS BEING ACQUIRED AN
Page 45 and 46: To be read in conjunction with the
Page 47: APPENDIX 2 STATEMENT OF CASH FLOWS
Page 51 and 52: Unaudited Proforma 31 August 2007 U
Page 53 and 54: $ $ 10. CONVERTIBLE NOTES - UNSECUR
Page 55 and 56: 2.1 Western Australia Tenements in
Page 57 and 58: included a revised threshold test f
Page 59 and 60: • Compensation may have to be agr
Page 61 and 62: Notes: 1. The tenement is subject t
Page 63 and 64: expenditure will be borne by the pa
Page 65 and 66: Section 12 Additional Information 1
Page 67 and 68: Rights on Winding Up Subject to the
Page 69 and 70: Early Redemption by Noteholder The
Page 71 and 72: Section 13 Director’s Responsibil
Page 73 and 74: Application This Application Form r
Page 75 and 76: Application This Application Form r
Page 77 and 78: Airleg miner boring a level drive f

Prospectus - Kingsrose Mining

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