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Newcrest Mining2 0 14 AN N UAL R EPO RT
CORPORATE DIRECTORY/CONTENTS PAGE
CORPORATE DIRECTORY
Board of Directors
Alec Pismiris – Non‐Executive Chairman
Archie Koimtsidis – Managing Director
Malik Easah – Executive Director
Marcus Michael – Executive Director
Company Secretary
Sarah Shipway
Registered Office
Level 1, 115 Cambridge Street
WEST LEEDERVILLE WA 6007
Tel: + 61 8 9322 6600
Fax: + 61 8 9322 6610
Website: www.cardinalresources.com.au
Email: info@cardinalresources.com.au
Ghana Office
Durugu Residential Area
KUMBOSCO, BOLGATANGA, GHANA
Tel: + 233 (0) 261 905 220
Australian Business Number
ABN 56 147 325 620
Share Register
Computershare Investor Services Pty Ltd
Level 2, Reserve Bank Building
45 St Georges Terrace
PERTH WA 6000
Tel: 1300 557 010
Int: +61 8 9323 2000
Fax: + 61 8 9323 2033
Stock Exchange Code
CDV – Ordinary Shares
Auditors
Somes Cooke
CONTENTS
PAGE
Review of Operations
Directors’ Report
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
Consolidated Statement
of Financial Position
Consolidated Statement
of Changes in Equity
Consolidated Statement
of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Auditor’s Independence Declaration
Independent Auditor’s Report
Corporate Governance Statement
Shareholder Information
Schedule of Tenements
3
17
28
29
30
31
32
54
55
56
58
67
69
Cardinal Resources Limited – Annual Report 2014
P 2
REVIEW OF OPERATIONS
REVIEW OF OPERATIONS
The Directors are pleased to present their report on Cardinal Resources Limited (Cardinal or the Company) for
the year ended 30 June 2014.
GHANA GOLD PROJECTS
Cardinal Resources Limited, through its wholly owned subsidiary, Cardinal Resources Ghana Limited, holds four
tenements prospective for gold mineralisation in Ghana in two NE‐SW trending Paleoproterozoic granite‐
greenstone belts: the Bolgatanga Project located within the Nangodi and Bole‐Bolgatanga Greenstone Belts in
NE Ghana and the Subranum Project located within the Sefwi Greenstone Belt in SW Ghana (Figure 1).
Figure 1: Cardinal Tenements in Ghana
Cardinal Resources Limited – Annual Report 2014
P 3
REVIEW OF OPERATIONS
Bolgatanga Project
The Bolgatanga Project has known gold mineralisation occurring in a variety of styles with identified historic
gold resources, artisanal workings and producing mines. The three tenements in the Bolgatanga project area
include Ndongo, Bongo and Kungongo (Figure 2), collectively covering an area of over 735 km2.
Ndongo straddles the Nangodi Greenstone Belt, while Bongo and Kungongo cover part of the NE extensions of
the Bole‐Bolgatanga Greenstone Belt.
The Nangodi Belt is regarded as the southern extension of the Youga Greenstone Belt in Burkina Faso where it
hosts the producing Endevour Mining Corporation (ASX:EVR) Youga gold mine.
The historic Nangodi underground gold mine is located north of the Ndongo tenement and produced some
18,620 oz Au from 23,600 tonnes, at an average grade of approximately 24.75 g/t gold (Ghana Department of
Mines records 1938).
Figure 2: Bolgatanga Project Tenements
Cardinal Resources Limited – Annual Report 2014
P 4
REVIEW OF OPERATIONS
Subranum Project
The Subranum tenement is situated in the southern portion of Ghana, approximately 45km NW of the city of
Kumasi, and 240 km NW of the capital city Accra, in the Sabranomu district. The granted Prospecting Licence is
known as Subin‐Kasu, which covers an area of 68.7 km2 (Figure 3).
The Subranum Project comprises a single tenement situated within the Sefwi‐Bibiani Greenstone Belt in SW
Ghana, and is proximal to the currently producing Bibiani and Chirano gold mines. Bibiani has produced over
3.8 Moz gold since its discovery in 1902, from a mixture of open pit and underground mining methods.
The Chirano gold mine (Kinross Mining Corporation), proximal to the Bibiani mine, produced in excess of
275,000 oz gold in 2013 (Kinross Gold Corp, 2014).
Despite the existence of these large discoveries and the long history of gold production in the area, the
remainder of the Sefwi‐Bibiani greenstone belt remains comparatively under‐developed. Exploration of the
Subranum Project will be targeting structurally controlled greenstone belt deposits, comprising fault and shear
hosted veins contained within intermediate volcaniclastic rocks and felsic intrusives.
Figure 3: Location of Subranum Licence
Airborne Geophysical Survey
An airborne geophysical survey was completed over both the Bolgatanga tenements and the Subranum
tenement by Terrascan Airborne GmbH and supervised by Southern Geoscience Consultants (SGC) in Perth.
These surveys obtained magnetics, radiometrics and elevation data all of which were processed and
interpreted by SGC. Images produced identified numerous target areas over all the Cardinal tenements for
field checking and subsequent further exploration.
Cardinal Resources Limited – Annual Report 2014
P 5
REVIEW OF OPERATIONS
BOLGATANGA PROJECTS
Ndongo Prospect
The Ndongo Prospect comprises four anomalous areas (Figure 4).
Figure 4: Ndongo Prospect with four areas explored and regional shear zone
Ndongo Central Area
Geochemical results from the 200m line grid identified an anomalous 3km long zone (Figure 5). Ground
geophysics was completed over the Central Zone to obtain more detailed information to identify gold
mineralisation. A Gradient Array IP method could not obtain any data due to the high surface conductivity
and the survey was changed to the Dipole‐Dipole IP (DDIP) method.
The DDIP survey was successfully completed and identified high conductivity zones coincident with the
geochemical soil anomalies (Figure 5). High conductivity suggested either graphite or sulphides or a
combination of both would be present in these areas. These high conductivity areas became the initial RC
drilling targets.
RC drilling intersected mostly silicified and unsilicified graphitic phyllites with primary pyrite blebs and
specks and quartz veinlets. Subsequent drilling intersected silicified rocks which defined a silica‐rich zone
Cardinal Resources Limited – Annual Report 2014
P 6
REVIEW OF OPERATIONS
which extends NE and SW. The SW extension of this resistive zone has some soil anomalies which are
planned to be drilled in the future.
Due to the complex refolding within this area, detailed structural mapping will be required before any
further drilling is considered.
Figure 5: Ndongo Central Area DDIP chargeability image and anomalous gold‐in‐soil values
with proposed drill lines and RC holes drilled
Cardinal Resources Limited – Annual Report 2014
P 7
REVIEW OF OPERATIONS
Ndongo West Prospect
A Gradient Array Induced Polarisation (GAIP) survey over Ndongo West defined a contact zone (resistive
and chargeable rocks) which coincided with a number of gold‐in‐soil anomalous values (Figure 6). This
contact zone was the RC drill target. An active artisanal shaft is located very near this contact zone.
Several random samples from the artisanal shaft waste dump assayed between 0.4 g/t and 2.1 g/t, with
an ore sample at 10.2 g/t.
Figure 6: Ndongo West Area GAIP chargeability/resistivity, and RC drill results
Cardinal Resources Limited – Annual Report 2014
P 8
REVIEW OF OPERATIONS
Narrow zones of gold mineralisation were encountered near surface around the prominent contact zone
and deeper drilling will be considered to identify possible wider zones of gold mineralisation.
Ndongo East Prospect
Cardinal’s airborne geophysics flown in 2013 delineated a major approximately 30 km long shear structure
trending roughly N‐S from the Ghana border (north) to the Voltaian escarpment (south) within the Nangodi
Greenstone Belt. Located along this major shear structure are the historical Nangodi Gold Mine, the producing
Shaanxi Gold Mine (Figure 4), as well as numerous Small Scale Licences and artisanal workings (Figure 4).
Figure 7: Ndongo East with rock and soil anomalies along regional shear
The major shear structure occurs over approximately 4 km along the eastern portion of the Ndongo tenement,
trending roughly N‐S (Figure 7). The major shear zone has significant outcrops of black manganiferous silicified
chert, wide quartz zones and foliated metasediments which form prominent hills within the tenement.
Cardinal Resources Limited – Annual Report 2014
P 9
REVIEW OF OPERATIONS
Soil and rock chip samples delineated an approximately 1.3 km anomalous strike length adjacent to the major
regional shear zone with anomalous gold values averaging 128ppb gold. Artisanal mining activity along this
shear structure exposed fractured smokey quartz rock which is an indicator of gold mineralisation.
The initial RC drilling program was only partially completed with six drill holes out of the planned 20 hole RC
drill program. The RC drilling program was at a shallow depth with an average of approximately 50m vertical
depth for the six holes drilled.
As both the historic Nangodi Mine and the producing Shaanxi Mine, which are also located along this same
major regional shear structure, discovered economic mineralisation beyond depths of 150 metres, a deeper
combined RC and diamond drilling program will be given consideration.
Ndongo Far East Prospect
An extensive high magnetic body has been identified from the airborne geophysics. This body has intruded into
the dilation (low pressure) zone formed at the southern end of the intrusive Pelungu Granitoid (Figure 8).
Figure 8: Ndongo Far East High Magnetic Body (from 2013 airborne survey)
A geochemical program has identified numerous encouraging gold‐in‐soil anomalies around this body which
need to be further investigated (Figure 9).
Cardinal Resources Limited – Annual Report 2014
P 10
REVIEW OF OPERATIONS
The nature and composition of the intrusive high magnetic body and the causes of the anomalous gold‐in‐soil
values will be considered using Gradient Array Induced Polarisation (GAIP) ground geophysical survey around
this magnetic body. It is anticipated that the survey will determine the geometry of the intrusive body and
whether there is a zone of brecciation or brittle deformation around it. Brittle deformation will allow any
mineralised fluids generated by the intrusion of the magnetic body to precipitate in these porous areas which
will then become the focus of a subsequent RC drilling program.
Figure 9: Ndongo Far East gold‐in‐soil anomalies around high magnetic intrusive
Cardinal Resources Limited – Annual Report 2014
P 11
REVIEW OF OPERATIONS
Kungongo Prospect
The regional Bole‐Bolgatanga Fault (Shear) Zone crosses the NW corner of the Kungongo Tenement
(Figure 10) and is a major exploration target area.
Artisanal mining activities to the NE along this shear zone, which are extracting high grade gold values
(Table 1).
Sample
ID
KU00001
KU00002
KU00003
KU00004
KU00005
Weight
(gms)
2,579
2,797
2,118
1,435
1,775
Au
(g/t)
Description
4.82 Artisanal mine silicified wallrock + py (from "waste" dump)
10.50 Artisanal mine silicified wallrock + py (from "waste" dump)
7.50 Artisanal mine silicified wallrock + py (from "waste" dump)
8.03 Artisanal mine silicified wallrock + py (from "waste" dump)
96.96 Artisanal mine ore + VG & py specks (from mine)
Table 1: Artisanal Mine Assay Results (NE of Kungongo Tenement)
Figure 10: Kungongo Tenement with Bole‐Bolgatanga Shear Zone (in NW)
and active artisanal shafts
Cardinal Resources Limited – Annual Report 2014
P 12
REVIEW OF OPERATIONS
The magnetics from the airborne geophysical survey identified two broad fault/shear zones (roughly 30
km total length) bounding possible greenstone belt sequences (Figure 11).
Figure 11: Kungongo Tenement Target Areas from 2013 detailed airborne survey
An initial exploration program would focus on Area A across the SW continuation of the major regional
Bole‐Bolgatanga Fault zone where six target areas have been identified along E‐W and NW‐SE trending
cross faults. A Gradient Array Induced Polarisation (GAIP) ground geophysical survey is planned to further
delineate RC drill targets in Area A.
A separate GAIP survey will then be considered over Area B to identify RC drill targets.
Cardinal Resources Limited – Annual Report 2014
P 13
REVIEW OF OPERATIONS
Bongo Prospect
The magnetics from the airborne geophysical survey identified six target areas (Figure 12) which were
field checked. Three of the areas (A, C and D) warrant further exploration.
Figure 12: Bongo Tenement Target Areas (from 2013 Detailed Airborne Survey )
Area A occurs across the major NE‐SW trending Bole‐Bolgatanga Fault (Shear) Zone with an approximate
18 km strike length. Soil sampling and a GAIP ground geophysical survey are to be considered along this
fault zone to generate drill targets.
Area C contains ultramafic and magnetic units. Soil sampling and a GAIP ground geophysical survey are to
be considered along this fault zone to generate drill targets.
Area D is likely to be the SW continuation of anomalous gold bearing units which have been identified in
Burkina Faso. Soil sampling and a GAIP ground geophysical survey are to be considered over this area to
generate drill targets.
SUBRANUM PROJECT
The high resolution airborne geophysical survey over the Subranum Tenement was completed in December
2013 by Terrascan Airborne GmbH (Germany) and supervised by Southern Geoscience Consultants (SGC) in
Perth.
Multiple structures have been identified over a nine km strike length correlating with significant gold‐in‐soil
anomalies and gold intersections through previous drilling by several exploration companies within the
tenement (Figure 13).
Cardinal Resources Limited – Annual Report 2014
P 14
REVIEW OF OPERATIONS
Figure 13: Historical RC drillholes (Newmont) with significant gold intersections highlighted.
Magnetic greyscale image in background.
Cardinal Resources Limited – Annual Report 2014
P 15
REVIEW OF OPERATIONS
This recent high quality magnetic data show a great deal of additional structural and lithological detail which
will aid geological mapping and targeting potassium‐rich alteration zones typical of shear zone hosted gold
deposits.
The results of the airborne geophysical survey have been integrated with Cardinal’s extensive geological and
sampling database which will identify targets for RC and diamond drilling.
A GAIP survey will be considered to further refine drill targets by identifying sulphidic and/or clay alteration
zones.
JORC 2004
Information
in this report that relates to the Bolgatanga and Subranum Projects are based on
information compiled by Paul Abbott, a full time employee of Cardinal Resources, who is a fellow of the
Australasian Institute of Mining and Metallurgy and a member of the South African Geological Society. Paul
Abbott has sufficient experience which is relevant to the style of mineralisation and type of deposit under
consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the
2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore
Reserves’. Paul Abbott consents to the inclusion in this report of the statements based on his information in
the form and context in which it appears.
JORC 2012
The Company confirms it is not aware of any new information or data that materially affects the information
included in market announcements relating to exploration activities carried out at the Bolgatanga and
Subranum Projects, Ghana and all material assumptions and technical parameters underpinning the
exploration activities in those market announcements continue to apply and have not been changed. The
Company confirms that the form and context in which the Competent Person’s findings are presented have not
been materially modified from the original market announcements.
Cardinal Resources Limited – Annual Report 2014
P 16
DIRECTORS’ REPORT
The Directors of Cardinal Resources Limited submit herewith the annual financial report of Cardinal Resources
Limited for the period 1 July 2013 to 30 June 2014. In order to comply with the provisions of the Corporations
Act 2001, the Directors report as follows:
DIRECTORS
The names and particulars of the directors of the Company as at 30 June 2014 and at the date of this report are
as follows. Directors were in office for the entire period unless otherwise stated.
ALEC PISMIRIS B.Com, IGIA, MAICD
Non‐Executive Chairman
Appointed 11 November 2010
Mr Pismiris is currently a director of Capital Investment Partners, a company which provides corporate advisory
services. Since 1990 Mr Pismiris has served as a director and company secretary for various ASX listed companies
as well as a number of unlisted public and private companies.
Mr Pismiris completed a Bachelor of Commerce degree at the University of Western Australia, a member of the
Australian Institute of Company Directors and is an associate of The Institute of Chartered Secretaries and
Administrators. Mr Pismiris has over 25 years’ experience in the securities, finance and mining industries. Mr
Pismiris has participated numerous times in the processes by which boards have assessed the acquisition and
financing of a diverse range of assets and has participated in and become familiar with the range of evaluation
criteria used and the due diligence processes commonly adopted in the commercial assessment of corporate
opportunities.
During the past 3 years he has also served as a director of the following listed companies;
Company
Mount Magnet South NL
Papillon Resources Limited
Aguia Resources Limited
Global Resources Corporation Limited
Prairie Downs Metals Limited
Horseshoe Metals Limited
Date of Appointment
2 August 2013
11 May 2006
26 May 2014
3 October 2013
16 October 2012
31 May 2011
Date of Resignation
Not Applicable
Not Applicable
Not Applicable
Not Applicable
22 June 2012
25 May 2012
ARCHIE KOIMTSIDIS MBA
Managing Director
Appointed 27 December 2012
Mr Koimtsidis has for the last 20 years been involved in all facets of gold exploration, discovery, production and
refining in West Africa and South America.
His most recent appointment prior to joining Cardinal was as the Deputy Country Manager of Ghana for PMI
Gold Limited a joint TSXV and ASX listed company. During this time he was responsible for all field operational
matters including coordination of exploration, drilling programs and human resource management relation to
the Company’s projects in Ghana.
Mr Koimtsidis has been instrumental in acquiring the Ghanaian projects on behalf of Cardinal and has a unique
knowledge and understanding of geopolitical and operational matters relating to resources projects in West
Africa.
During the past three years he has held no other listed company directorships.
Cardinal Resources Limited – Annual Report 2014
P 17
DIRECTORS’ REPORT
MALIK EASAH
Executive Director
Appointed 27 December 2012
Mr Malik Easah is the principal of successful alluvial mining operations in the North West Adansi Gold Obotan
concession and is currently developing additional payable gold permits within the Ashanti and Nangodi Gold
belts of Ghana.
Mr Easah specializes in the manufacture of alluvial gold wash plants and recovery equipment and is regarded as
an authority in the development of alluvial mining operations in Ghana.
Mr Easah is a resident in Ghana.
During the past three years he has held no other listed company directorships.
MARCUS MICHAEL CA, B.Bus
Executive Director
Appointed 27 December 2012
Mr Michael is a Chartered Accountant with extensive experience in the Australian financial markets including
ASX company listings, equity and debt funding, mergers and acquisitions and corporate restructures and
recapitalisations.
Mr Michael is a founding Director of Marshall Michael Pty Ltd, Chartered Accountants. Established in 1994 as a
boutique corporate and business advisory, wealth management, tax advisory and financial and management
reporting practice, servicing mining and exploration, healthcare and information technology sectors.
Mr Michael graduated from Curtin University with a Bachelor of Business and is a Member of the Institute of
Chartered Accountants.
During the past 3 years he has also served as a director of the following listed companies;
Company
Argent Minerals Limited
Beacon Minerals Limited
St George Mining Limited
Date of Appointment
4 April 2007
19 March 2012
19 October 2009
Date of Resignation
Not applicable
Not applicable
Not applicable
KLAUS ECKHOF MAusIMM
Non‐Executive Chairman
Appointed 1 February 2013
Retired 17 June 2014
Mr Eckhof is a senior exploration geologist with global contacts. Mr Eckhof has been instrumental in sourcing
and developing successful projects in Australia, Africa, Russia, South America and the Philippines.
He was formerly President and Chief Executive Officer of Moto Goldmines Limited, a company which was listed
on the Toronto Stock Exchange, before being acquired by Randgold Resources and Anglogold Ashanti, and within
4 years from Mr Eckhof’s appointment discovered just under 20 Moz of gold, completing a Bankable Feasibility
Study (BFS) in the Democratic Republic of Congo (DRC).
During the past 3 years he has also served as a director of the following listed companies;
Cardinal Resources Limited – Annual Report 2014
P 18
DIRECTORS’ REPORT
Company
Burey Gold Limited
Carnavale Resources Ltd
Panex Resources Inc
AVZ Limited
Erongo Energy Limited
Condor Gold PLC
African Mining Limited
Kilo Goldmines Limited
COMPANY SECRETARY
Date of Appointment
6 February 2012
1 January 2008
30 May 2006
12 May 2014
24 August 2011
September 1996
November 1995
13 April 2009
Date of Resignation
Not Applicable
Not Applicable
Not Applicable
Not Applicable
4 October 2013
April 2011
January 2011
31 December 2011
Sarah Shipway was appointed Company Secretary of Cardinal Resources on 27 December 2012. Sarah has a
Bachelor of Commerce from Murdoch University and is a member of the Institute of Chartered Accountants.
DIRECTORS’ INTEREST
At the date of this report, unless otherwise stated, the Directors held the following interests in Cardinal
Resources.
Name
Note
Ordinary
Shares
Listed
Options
Unlisted
Options
Alec Pismiris
Archie Koimtsidis
Malik Easah
Marcus Michael
Klaus Eckhof
‐
‐
‐
‐
1
2,572,500
4,225,000
1,916,750
4,009,683
1,500,000
1,911,250
2,037,500
958,375
2,382,025
750,000
554,712
‐
‐
‐
‐
Note 1: Directors holdings as at the date of retirement, being 17 June 2014
Class A
Performance
Shares
‐
10
10
10
10
Class B
Performance
Shares
‐
10
10
10
10
Other than detailed below, the Directors have no interest, whether directly or indirectly, in a contract or
proposed contract with Cardinal Resources Limited during the financial year end.
Marshall Michael Pty Ltd Chartered Accountants, of which Marcus Michael is a Director, provides accounting,
bookkeeping, corporate secretarial and administrative services to the Company.
PRINCIPAL ACTIVITIES
The principal activity of the Group is mineral exploration in Ghana.
RESULTS AND REVIEW OF OPERATIONS
The result of the consolidated entity for the financial year from 1 July 2013 to 30 June 2014 after income tax was
a loss of $10,164,082 (2013: loss of $2,007,516).
A review of operations of the consolidated entity during the year ended 30 June 2014 is provided in the “Review
of the Operations” immediately preceding this Directors’ Report.
LIKELY DEVELOPMENTS
The Group’s focus over the next financial year will be on its key projects – the Ghanaian tenements. Further
commentary on planned activities at these projects over the forthcoming year is provided in the “Review of
Operations”.
Cardinal Resources Limited – Annual Report 2014
P 19
DIRECTORS’ REPORT
The Board will continue to focus on creating value from the Company’s existing resource assets, as well as
pursuing new opportunities in resources sector to complement the Company’s current projects.
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
There have not been any significant changes in the state of affairs of the Group during the financial year, other
than as noted in this financial report.
ENVIRONMENTAL ISSUES
The Group is aware of its environmental obligations with regards to its exploration activities and ensures that it
complies with all applicable regulations when carrying out exploration work.
DIVIDENDS PAID OR RECOMMENDED
The directors do not recommend the payment of a dividend and no amount has been paid or declared by way of
a dividend to the date of this report.
DIRECTORS’ MEETINGS
The following table sets out the number of meetings held during each director’s period of directorship during
the year ended 30 June 2014 and the number of meetings attended by each director.
Name
Alec Pismiris
Archie Koimtsidis
Malik Easah
Marcus Michael
Klaus Eckhof
Note
‐
‐
‐
‐
1
Eligible to attend
8
8
7
8
7
Attended
8
8
4
8
7
Note 1: Mr Eckhof retired on 17 June 2014
REMUNERATION REPORT – AUDITED
Remuneration policy
The remuneration policy of Cardinal Resources Limited has been designed to align directors’ objectives with
shareholder and business objectives by providing a fixed remuneration component, which is assessed on an
annual basis in line with market rates. The Board of Cardinal Resources Limited believes the remuneration policy
to be appropriate and effective in its ability to attract and retain the best directors to run and manage the
Company.
The Board’s policy for determining the nature and amount of remuneration for Board members is as follows:
The remuneration policy and setting the terms and conditions for the Executive directors and other senior
staff members is developed and approved by the Board based on local and international trends among
comparative companies and industry generally. It examines terms and conditions for employee incentive
schemes, benefit plans and share plans. Independent advice is obtained when considered necessary to
confirm that executive remuneration is in line with market practice and is reasonable within Australian
executive reward practices.
All executives receive a base salary (which is based on factors such as length of service and experience) and,
if applicable, statutory superannuation.
Cardinal Resources Limited – Annual Report 2014
P 20
DIRECTORS’ REPORT
The Group is an exploration entity, and therefore speculative in terms of performance. Consistent with
attracting and retaining talented executives, directors and senior executives are paid market rates
associated with individuals in similar positions within the same industry. Options and performance
incentives may be issued particularly as the entity moves from an exploration to a producing entity and key
performance indicators such as profit and production and reserves growth can be used as measurements for
assessing executive performance.
The Board policy is to remunerate non‐executive directors at market rates for comparable companies for
time, commitment and responsibilities. The Executive Directors, in consultation with independent advisors,
determine payments to the non‐executives and review their remuneration annually, based on market
practice, duties and accountability. The maximum aggregate amount of fees that can be paid to non‐
executive directors is subject to approval by shareholders at the Annual General Meeting and is currently
$350,000 per annum. Fees for independent non‐executive directors are not linked to the performance of the
Group. To align Directors’ interests with shareholder interests, the directors are encouraged to hold shares
in the Company.
During the financial year the Company did not employ the use of remuneration consultants.
Details of directors and executives
Directors
A Pismiris
A Koimtsidis
M Easah
M Michael
K Eckhof
Title
Non‐Executive Chairman
Managing Director
Executive Director
Executive Director
Non‐Executive Chairman
Date of Appointment
11 November 2010
27 December 2012
27 December 2012
27 December 2012
1 February 2013
Date of Retirement
Not Applicable
Not Applicable
Not Applicable
Not Applicable
17 June 2014
The Company does not have any executives that are not Directors.
Executive Directors’ remuneration and other terms of employment are reviewed annually by the non‐executive
director(s) having regard to performance against goals set at the start of the year, relative comparable
information and independent expert advice.
Except as detailed in the Director’s Report, no director has received or become entitled to receive, during or
since the financial year end, a benefit because of a contract made by the Group or a related body corporate with
a director, a firm of which a director is a member or an entity in which a director has a substantial financial
interest. This statement excludes a benefit included in the aggregate amount of emoluments received or due
and receivable by directors and shown in the Remuneration Report, prepared in accordance with the
Corporations regulations, or the fixed salary of a full time employee of the Group.
Cardinal Resources Limited – Annual Report 2014
P 21
DIRECTORS’ REPORT
Remuneration of directors and executives
Remuneration for the financial year ended 30 June 2014.
Short‐Term Benefits
Post Employment
Benefits
Directors
Salary Fees
and Leave
Non
Monetary
Superannuation
Equity Settled
Share‐Based
Payments
Shares/Options
Total
Long
Term
Benefits
Long
Service
Leave
A Pismiris
2014
2013
A Koimtsidis
2014
2013
M Easah
2014
2013
M Michael
2014
2013
K Eckhof
2014
2013
J Shervington
2014
2013
D Kelly
2014
2013
Total
2014
2013
$
36,000
61,500
220,000
123,333
150,000
85,000
90,000
55,000
34,500
27,667
‐
32,500
‐
22,500
(i)
$
713
1,454
4,356
2,915
2,970
2,009
1,947
1,300
684
654
‐
768
‐
531
530,500
407,500
10,670
9,631
$
$
(ii)
$
‐
‐
‐
‐
‐
‐
8,325
4,950
‐
‐
‐
‐
‐
2,025
8,325
6,975
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
$
36,713
62,954
224,356
126,248
152,970
87,009
100,272
61,250
35,184
28,321
‐
33,268
‐
25,056
549,495
424,106
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
(i)
(ii)
Non monetary benefits are for directors’ and officers’ liability and legal expense insurance premiums.
No options or shares were granted as part of remuneration.
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
In accordance with the constitution, except as may be prohibited by the Corporations Act 2001, every Officer or
agent of the Company shall be indemnified out of the property of the entity against any liability incurred by him
in his capacity as Officer or agent of the Company or any related corporation in respect of any act or omission
whatsoever and howsoever occurring or in defending any proceedings, whether civil or criminal.
During the year the Company agreed to pay an annual insurance premium of $10,670 (2013: $9,631) in respect
of directors’ and officers’ liability and legal expenses’ insurance contracts, for directors, officers and employees
of the Company. The insurance premium relates to:
Cardinal Resources Limited – Annual Report 2014
P 22
DIRECTORS’ REPORT
Costs and expenses incurred by the relevant officers in defending proceedings, whether civil or criminal and
whatever the outcome.
Other liabilities that may arise from their position, with the exception of conduct involving a willful breach of
duty.
Shareholdings of key management personnel
Directors
Alec Pismiris
Archie Koimtsidis
Malik Easah
Marcus Michael
Klaus Eckhof (iv)
Total
Directors
Klaus Eckhof (i)
Archie Koimtsidis (i)
Malik Easah (i)
Marcus Michael (i), (iii)
Alec Pismiris (ii), (iii)
Jeremy Shervington (iv)
David Kelly (iv)
Total
Balance at
1 July 2013
2,572,500
4,225,000
1,916,750
4,009,683
1,500,000
14,223,933
Balance at
1 July 2012
1,500,000
4,225,000
1,916,750
3,859,683
1,010,000
1,800,397
500,000
14,811,830
Granted as
remuneration
‐
‐
‐
‐
‐
‐
Granted as
remuneration
‐
‐
‐
‐
‐
‐
‐
‐
Net other change
Balance at
30 June 2014
‐
‐
‐
‐
‐
‐
2,572,500
4,225,000
1,916,750
4,009,683
1,500,000
14,223,933
Net other change
Balance at
30 June 2013
‐
‐
‐
150,000
1,562,500
60,000
‐
1,772,500
1,500,000
4,225,000
1,916,750
4,009,683
2,572,500
1,860,397
500,000
16,584,330
(i)
(ii)
(iii)
(iv)
Balance at the beginning of the financial year or at the date the Director was appointed by the
Company, if appointed during the financial year.
On the 19 November 2012 Shareholders approved at the Company’s Annual General Meeting the
securities offered in relation to the acquisition of Cardinal Resources (Australia) Limited (“Cardinal
Australia”), whereby Cardinal (Australia) shareholders would receive pro‐rata in proportion to the
number of shares held by them respectively on a basis of 3 shares for every 4 Cardinal Australia shares
held and 1 Options for every 2 shares subscribed for.
Pro‐rata non‐renounceable entitlement issued of three (3) New Shares for every (2) Ordinary Shares
held by Cardinal at an issue price of $0.20 per New Share with three (3) for two (2) free options,
exercisable at $.20 on or before 30 June 2014.
Balance at the end of the financial year or at date of retirement, for Directors who retired before
financial year end.
Listed Option holdings of key management personnel
Directors
Alec Pismiris
Archie Koimtsidis
Malik Easah
Marcus Michael
Klaus Eckhof (iv)
Total
Balance at
1 July 2013
1,911,250
2,037,500
958,375
2,382,025
750,000
8,039,150
Granted as
remuneration
‐
‐
‐
‐
‐
‐
Net other change
‐
‐
‐
‐
‐
‐
Balance at
30 June 2014
1,911,250
2,037,500
958,375
2,382,025
750,000
8,039,150
Cardinal Resources Limited – Annual Report 2014
P 23
DIRECTORS’ REPORT
Directors
Klaus Eckhof (i)
Archie Koimtsidis (i)
Malik Easah (i)
Marcus Michael (i), (iii)
Alec Pismiris (ii), (iii)
Jeremy Shervington (iv)
David Kelly (iv)
Total
Balance at
1 July 2012
750,000
2,037,500
958,375
2,157,025
684,712
1,750,000
500,000
8,837,612
Granted as
remuneration
‐
‐
‐
‐
‐
‐
‐
‐
Net other change
‐
‐
‐
225,000
1,226,538
‐
‐
1,451,538
Balance at
30 June 2013
750,000
2,037,500
958,375
2,382,025
1,911,250
1,750,000
500,000
10,289,150
(i)
(ii)
(iii)
(iv)
Balance at the beginning of the financial year or at the date the Director was appointed by the
Company, if appointed during the financial year.
On the 19 November 2012 Shareholders approved at the Company’s Annual General Meeting the
securities offered in relation to the acquisition of Cardinal Resources (Australia) Limited (“Cardinal
Australia”), whereby Cardinal (Australia) shareholders would receive pro‐rata in proportion to the
number of shares held by them respectively on a basis of 3 shares for every 4 Cardinal Australia shares
held and 1 Options for every 2 shares subscribed for.
Pro‐rata non‐renounceable entitlement issued of three (3) New Shares for every (2) Ordinary Shares
held by Cardinal at an issue price of $0.20 per New Share with three (3) for two (2) free options,
exercisable at $.20 on or before 30 June 2014.
Balance at the end of the financial year or at date of retirement, for Directors who retired before
financial year end.
Unlisted Option holdings of key management personnel
Directors
Alec Pismiris
Archie Koimtsidis
Malik Easah
Marcus Michael
Klaus Eckhof (ii)
Total
Directors
Klaus Eckhof (i)
Archie Koimtsidis (i)
Malik Easah (i)
Marcus Michael (i)
Alec Pismiris
Jeremy Shervington (ii)
David Kelly (ii)
Total
Balance at
1 July 2013
544,712
‐
‐
‐
‐
554,712
Balance at
1 July 2012
‐
‐
‐
‐
554,712
‐
‐
554,712
Granted as
remuneration
‐
‐
‐
‐
‐
‐
Granted as
remuneration
‐
‐
‐
‐
‐
‐
‐
‐
Net other change
‐
‐
‐
‐
‐
‐
Net other change
‐
‐
‐
‐
‐
‐
‐
‐
Balance at
30 June 2014
544,712
‐
‐
‐
‐
544,712
Balance at
30 June 2013
‐
‐
‐
‐
554,712
‐
‐
554,712
(i)
(ii)
Balance at the beginning of the financial year or at the date the Director was appointed by the
Company, if appointed during the financial year.
Balance at the end of the financial year or at date of retirement, for Directors who retired before
financial year end.
Cardinal Resources Limited – Annual Report 2014
P 24
DIRECTORS’ REPORT
Class A Performance Shareholdings of key management personnel
Directors
Klaus Eckhof (ii)
Archie Koimtsidis
Malik Easah
Marcus Michael
Alec Pismiris
Total
Directors
Klaus Eckhof
Archie Koimtsidis
Malik Easah
Marcus Michael
Alec Pismiris
Jeremy Shervington (ii)
David Kelly (ii)
Total
Balance at
1 July 2013
Granted as
remuneration
Net other change
Balance at
30 June 2014
10
10
10
10
‐
40
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
10
10
10
10
‐
40
Balance at
1 July 2012
Granted as
remuneration
Net other change
(i)
Balance at
30 June 2013
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
10
10
10
10
‐
‐
‐
40
10
10
10
10
‐
‐
‐
40
(i)
(ii)
On satisfaction of certain milestone events, each Class A Performance Share converts into 100,000
ordinary shares (refer to note 13 (d)) in which case each Director would become entitled to a further
1,000,000 ordinary shares.
Balance at the end of the financial year or at date of retirement, for Directors who retired before
financial year end.
Class B Performance Shareholdings of key management personnel
Directors
Klaus Eckhof (ii)
Archie Koimtsidis
Malik Easah
Marcus Michael
Alec Pismiris
Total
Directors
Klaus Eckhof
Archie Koimtsidis
Malik Easah
Marcus Michael
Alec Pismiris
Jeremy Shervington (ii)
David Kelly (ii)
Total
Balance at
1 July 2013
Granted as
remuneration
Net other change
Balance at
30 June 2014
10
10
10
10
‐
40
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
10
10
10
10
‐
40
Balance at
1 July 2012
Granted as
remuneration
Net other change
(i)
Balance at
30 June 2013
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
10
10
10
10
‐
‐
‐
40
10
10
10
10
‐
‐
‐
40
Cardinal Resources Limited – Annual Report 2014
P 25
DIRECTORS’ REPORT
(i)
(ii)
On satisfaction of certain milestone events, each Class B Performance Share converts into 100,000
ordinary shares (refer to note 13(d)) in which case each Director would become entitled to a further
1,000,000 ordinary shares.
Balance at the end of the financial year or at date of retirement, for Directors who retired before
financial year end.
END OF REMUNERATION REPORT
SHARES OPTIONS
Unissued shares
During the year the Company had on issue 56,657,620 listed options in the Company, exercisable at $0.20 on or
before 30 June 2014. On 30 June 2014 56,657,620 options expired unexercised.
As at the date of this report the Company had on issue 11,000,000 unlisted options, exercisable at $0.20 on or
before 31 December 2015. During the financial year none of these unlisted options were converted into fully
paid shares.
Option holders do not have any rights to participate in any issues of shares of other interests in the Company or
any other entity.
EVENTS SUBSEQUENT TO BALANCE DATE
On 18 September 2014 Cardinal announced the completion of a Placement of shares at 5.0 cents together with
one free attaching options (New Options) for each share to raise up to $900,000.
In additional to the Placement, the directors of the Company (namely, Messers Alec Pismiris, Archie Koimtsidis,
Marcus Michael and Malik Easah) will, subject to shareholder approval, participate in a placement to subscribe
for a total of 4.88 million Shares and 4.88 million New Options for an aggregate subscription amount of
approximately $244,000 (Director Placement). The Director Placement will be made on the same terms and
conditions as the Placement.
The New Options will be exercisable at $0.15 on or before 5:00pm (WST) on the date that is 5 years from the
date of issue.
The New Options to be issued was part of the Placement and the Director Placement will be issued subject to
shareholder approval being obtained.
The Company will also undertake a pro‐rata non‐renounceable rights issue of New Options on the basis of one
New Option for every two shares held by eligible shareholders on the record date (Rights Issue).
The New Options to be issued under the Rights Issue will be issued on the same terms and conditions as the New
Options to be issued as part the Placement, and the subscription price for the New Options under the Rights
Issue will be $0.01 per New Option.
Other than the above, no matters or circumstances have arisen since the end of the financial year which
significantly affected or could significantly affect the operations of the Group, the results of those operations, or
the state of the affairs of the Group in future financial years.
Cardinal Resources Limited – Annual Report 2014
P 26
DIRECTORS’ REPORT
AUDITOR’S INDEPENDENCE DECLARATION
The auditor’s independence declaration for the year ended 30 June 2014 has been received and can be found on
page 55 of the financial report.
Non Audit Services
The Company’s auditor, Somes Cooke, did not provide any non‐audit services to the Company during the
financial year ended 30 June 2014.
Signed in accordance with a resolution of the directors made pursuant to s 298(2) of the Corporations Act 2001.
On behalf of the directors
ARCHIE KOIMTSIDIS
Managing Director
Dated this 25 September 2014
Cardinal Resources Limited – Annual Report 2014
P 27
FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2014
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2014
Australian Dollar ($)
REVENUE
EXPENDITURE
Administration expenses
Exploration expenses
Exploration expenditure written off
Impairment expense
Foreign exchange expense
LOSS BEFORE INCOME TAX
Income tax
LOSS AFTER INCOME TAX
OTHER COMPREHENSIVE INCOME
Items that me be reclassified to profit or loss:
Exchange differences arising on translation of
foreign operations
TOTAL COMPREHENSIVE INCOME
TOTAL COMPREHENSIVE INCOME
ATTRIBUTABLE TO MEMBERS OF THE
COMPANY
LOSS PER SHARE
Basic and diluted – cents per share
Note
30 JUNE 2014
$
30 JUNE 2013
$
3
4
10
5(a)
21,827
113,617
(566,432)
(1,989,996)
(47,719)
(7,309,500)
(73,528)
(9,965,348)
‐
(9,965,348)
(756,027)
(1,472,680)
‐
‐
201,486
(1,913,604)
‐
(1,913,604)
14
(198,734)
(10,164,082)
(93,912)
(2,007,516)
(10,164,082)
(2,007,516)
16
(13.58)
(4.2)
The above consolidated statement of profit or loss and other comprehensive
income should be read in conjunction with the accompanying notes
Cardinal Resources Limited – Annual Report 2014
P 28
FINANCIAL REPORT AS AT 30 JUNE 2014
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2014
Australian Dollar ($)
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Other assets
TOTAL CURRENT ASSETS
NON CURRENT ASSETS
Capitalised exploration and evaluation
Plant and equipment
TOTAL NON CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
Note
17(a)
8(a)
8(b)
9
11
12
13(a)
14
15
30 JUNE 2014
$
30 JUNE 2013
$
909,980
6,452
33,039
949,471
771,450
556,636
1,328,086
2,277,557
127,366
127,366
127,366
3,634,269
11,059
561,145
4,206,473
8,011,945
251,277
8,263,222
12,469,695
155,422
155,422
155,422
2,150,191
12,314,273
12,871,486
(28,830)
(10,692,465)
2,150,191
12,871,486
1,572,404
(2,129,617)
12,314,273
The above consolidated statement of financial position should be
read in conjunction with the accompanying notes
Cardinal Resources Limited – Annual Report 2014
P 29
FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2014
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2014
Australian ($)
SHARE CAPITAL
OPTIONS RESERVE
BALANCE AT 1 JULY 2013
Total comprehensive income
Expiry of options
BALANCE AT 30 JUNE 2014
BALANCE AT 1 JULY 2012
Total comprehensive income
Shares issued during the year
Share issue expenses
Share based payment expense
BALANCE AT 30 JUNE 2013
$
12,871,486
‐
‐
12,871,486
2,024,917
‐
11,317,998
(461,429)
(10,000)
12,871,486
$
1,666,316
‐
(1,402,500)
263,816
253,816
‐
1,412,500
‐
‐
1,666,316
FOREIGN EXCHANGE
RESERVE
$
(93,912)
(198,734)
‐
(292,646)
‐
(93,912)
‐
‐
‐
(93,912)
ACCUMULATED LOSSES
TOTAL EQUITY
$
(2,129,617)
(9,965,348)
1,402,500
(10,692,465)
(216,013)
(1,913,604)
‐
‐
‐
(2,129,617)
$
12,314,273
(10,164,082)
‐
2,150,191
2,062,720
(2,007,516)
12,730,498
(461,429)
(10,000)
12,314,273
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes
Cardinal Resources Limited – Annual Report 2014
P 30
Note
30 JUNE 2014
$
30 JUNE 2013
$
FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2014
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2014
Australian Dollar ($)
CASH FLOWS FROM OPERATING ACTIVITIES
Expenditure on mineral interests
Other payments to suppliers and employees
Interest received
Net cash outflow from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Payment for acquisition of mineral interest
Payments for term deposits
Purchase of plant and equipment
Cash acquired on acquisition of subsidiary
Net cash outflow from investing activities
CASH FLOW FROM FINANCING ACTIVITIES
Issue of shares and options net of capital raising costs
Net cash flows from financing activities
17(b)
24
(2,003,253)
(541,476)
21,617
(2,523,112)
(174,052)
520,502
(477,099)
‐
(130,649)
‐
‐
Net (decrease)/increase in cash and cash equivalents
(2,653,761)
Cash and cash equivalents at the beginning of the
financial year
Exchange rate adjustment
3,634,269
(70,528)
(1,226,038)
(922,923)
67,003
(2,081,958)
‐
(449,381)
(72,800)
329,978
(192,203)
4,089,086
4,089,086
1,814,925
2,008,090
(188,746)
CASH AND CASH EQUIVALENTS AT THE END OF THE
FINANCIAL YEAR
17(a)
909,980
3,634,269
The above consolidated statement of cash flows should be
read in conjunction with the accompanying notes
Cardinal Resources Limited – Annual Report 2014
P 31
FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2014
1
CORPORATE INFORMATION
The financial report of Cardinal Resources Limited (”Cardinal Resources” or “the Company”) for the year ended
30 June 2014 was authorised for issue in accordance with a resolution of the directors on 25 September 2014.
Cardinal Resources Limited is a company limited by shares, incorporated in Australia whose shares are publicly
traded on the Australian Securities Exchange. The consolidated financial statements of the Company for year
ended 30 June 2014 comprise of the Company and its subsidiaries together referred to as the Group or
consolidated entity.
The nature of the operations and principal activity of the Group is described in the directors’ report.
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a)
Basis of Preparation of the Financial Report
The financial report is a general purpose financial report, which has been prepared in accordance with the
requirements of the Corporations Act 2001, Accounting Standards and Interpretations and complies with other
requirements of the law. The financial report also complies with the International Financial Reporting
Standards. The financial report has also been prepared on a historical cost basis.
The financial report is presented in Australian dollars. The following accounting policies have been adopted by
the consolidated entity.
(b)
Principles of Consolidation
The consolidated financial statements incorporate assets, liabilities and results of entities controlled by
Cardinal Resources Limited at the end of the reporting period. A controlled entity is any entity over which
Cardinal Resources has the power to govern the financial and operating policies so as to obtain the benefits
from the entity’s activities. Control will generally exist when the parent owns, directly or indirectly through
subsidiaries, more than half of the voting power of an entity. In assessing the power to govern, the existence
and effect of holdings of actual and potential voting rights are also considered.
When controlled entities have entered or left the Group during the year, the financial performance of those
entities are included only for the period of year that they were controlled. A list of controlled entities is
contained in note 24 to the financial statements.
In preparing the consolidated financial statements, all inter‐group balances and transactions between entities
in the consolidated group have been eliminated on consolidation. Accounting policies of subsidiaries have
been changed where necessary to ensure consistency with those adopted by the parent entity.
Non‐controlling interests, being the equity in a subsidiary not attributable, directly or indirectly, to a parent,
are shown separately within the equity section of the consolidated Statement of Financial Position and
Statement of Profit or Loss and Other Comprehensive Income. The non‐controlling interests in the net assets
comprise their interests at the date of the original business combination and their share of changes in equity
since that date.
Cardinal Resources Limited – Annual Report 2014
P 32
FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2014
(c)
Business combinations
Business combinations occur where an acquirer obtains control over one or more businesses and results in the
consolidation of its assets and liabilities.
A business combination is accounted for by applying the acquisition method, unless it is a combination
involving entities or businesses under common control. The acquisition method requires that for each business
combination one of the combining entities must be identified as the acquirer (i.e. parent entity). The business
combination will be accounted for as at the acquisition date, which is the date that control over the acquiree is
obtained by the parent entity. At this date, the parent shall recognise, in the consolidated accounts, and
subject to certain limited exceptions, the fair value of the identifiable assets acquired and liabilities assumed.
In addition, contingent liabilities of the acquiree will be recognised where a present obligation has been
incurred and its fair value can be reliably measured.
The acquisition may result in the recognition of goodwill or a gain from a bargain purchase. The method
adopted for the measurement of goodwill will impact on the measurement of any non‐controlling interest to
be recognised in the acquiree where less than 100% ownership interest is held in the acquiree.
The acquisition date fair value of the consideration transferred for a business combination plus the acquisition
date fair value of any previously held equity interest shall form the cost of the investment in the separate
financial statements. Consideration may comprise the sum of the assets transferred by the acquirer, liabilities
incurred by the acquirer to the former owners of the acquiree and the equity interests issued by the acquirer.
Fair value uplifts in the value of pre‐existing holdings are taken to the statement of comprehensive income.
Where changes in the value of such equity holdings had previously been recognised in other comprehensive
income, such amounts are recycled to profit or loss.
Included in the measurement of consideration transferred is any asset or liability resulting from a contingent
consideration arrangement. Any obligation incurred relating to contingent consideration is classified as either a
financial liability or equity instrument, depending upon the nature of the arrangement. Rights to refunds of
consideration previously paid are recognised as a receivable. Subsequent to initial recognition, contingent
consideration classified as equity is not remeasured and its subsequent settlement is accounted for within
equity. Contingent consideration classified as an asset or a liability is remeasured each reporting period to fair
value through the statement of comprehensive income unless the change in value can be identified as existing
at acquisition date.
All transaction costs incurred in relation to the business combination are expensed to the statement of
comprehensive income.
(d)
Adoption of new and revised standards
A number of new standards, amendments to standards and interpretations issued by the AASB which are not
yet mandatorily applicable to the Group have not been applied in preparing these consolidated financial
statements. Those which may be relevant to the Group are set out below. The Group does not plan to adopt
these standards early.
Other standards not yet applicable
These standards are not expected to have a material impact on the entity in the current or future reporting
periods.
Cardinal Resources Limited – Annual Report 2014
P 33
FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2014
Standard/Interpretation
Effective for annual
reporting periods
beginning on or after
Expected to be initially
applied in the financial
year ending
AASB 1031 ‘Materiality’ (2013)
1 January 2017
30 June 2018
AASB 2012‐3 ‘Amendments to Australian
Accounting Standards – Offsetting Financial Assets and
Financial Liabilities’
AASB 2013‐3 ‘Amendments to AASB 136 – Recoverable
Amount Disclosures for Non‐Financial Assets’
AASB 2013‐4 ‘Amendments to Australian Accounting
Standards – Novation of Derivatives and Continuation of
Hedge Accounting
AASB 2013‐5 ‘Amendments to Australian Accounting
Standards – Investment Entities
AASB 2013‐9 ‘Amendments to Australian Accounting
Standards – Conceptual Framework, Materiality and
Financial Instruments’
(e)
Statement of compliance
1 January 2014
30 June 2015
1 January 2014
30 June 2015
1 January 2014
30 June 2015
1 January 2014
30 June 2015
1 January 2014
30 June 2015
The financial report complies with Australian Accounting Standards, which include Australian equivalents to
International Financial Reporting Standards (“AIFRS”). Compliance with AIFRS ensures that the financial report,
comprising the financial statements and notes thereto, complies with International Financial Reporting
Standards (“IFRS”).
(f)
Income Tax
Current income tax refunded/(expensed) charged to profit or loss is tax refundable/(payable). Those amounts
recognised are expected to be recovered from/(paid to) the relevant taxation authority.
Deferred income tax is provided on all temporary differences at the balance sheet date between the tax bases
of 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 liability 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
that accounting profit nor taxable profit or loss; and
in respect of taxable temporary differences associated with investments in subsidiaries, associates and
interests in joint ventures, except where the timing of the reversal of the temporary differences will
not reverse in the foreseeable future.
Deferred income tax assets are recognised for all the deductible temporary differences, carry‐forward 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:
Cardinal Resources Limited – Annual Report 2014
P 34
FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2014
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; and
in respect of deductible temporary differences with investments in subsidiaries, associates and
interest in joint ventures, deferred tax assets in the foreseeable future and taxable profit will be
available against which the temporary differences can be utilised.
The carrying amount of deferred income tax is reviewed at each balance sheet date and reduced to the extent
that 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 (and tax laws) that have been enacted or
substantively enacted at the balance sheet date.
Income taxes relating to items recognised directly in equity are not in the income statement.
(g)
Exploration and evaluation expenditure
All exploration and evaluation expenditure on areas of interest are expensed as incurred except for cost of
acquisition, which may be capitalised to areas of interest and carried forward where right of tenure of the area
of interest is current and they are expected to be recouped through sale or successful development and
exploitation of the area of interest or, where exploration and evaluation activities in the area of interest have
not yet reached a stage that permits reasonable assessment of the existence of economically recoverable
reserves.
When an area of interest is abandoned or the directors decide that it is not commercial, any accumulated
acquisition costs in respect of that area are written off in the financial period the decision is made. Each area of
interest is also reviewed at the end of each accounting period and accumulated costs written off to the extent
that they will not be recoverable in the future. Where projects have advanced to the stage that directors have
made a decision to mine, they are classified as development properties. When further development
expenditure is incurred in respect of a development property, such expenditure is carried forward as part of
the cost of that development property only when substantial future economic benefits are established.
Otherwise such expenditure is classified as part of the cost of production or written off where production has
not commenced.
(h)
Revenue
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and
the revenue can be reliably measured. Interest revenue is recognised using the effective interest method.
(i)
Cash and cash equivalents
Cash and short‐term deposits in the consolidated Statement of Financial Position 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 consolidated Statement of Cash Flows, cash and cash equivalents consist of cash and
cash equivalents as defined above, net of outstanding bank overdrafts.
Cardinal Resources Limited – Annual Report 2014
P 35
FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2014
(j)
Employee benefits
Provision is made for the Group’s liability for employee benefits arising from services rendered by employees
to balance date. Employee benefits expected to be settled within one year together with entitlements arising
from wages and salaries and annual leave which will be settled after one year, have measured at the amounts
expected to be paid when the liability is settled, plus related on‐costs. Other employee benefits payable later
than one year have been measured at the present value of the estimated cash outflows to be made to those
benefits.
Contributions are made by the Group to employee superannuation funds and are charged as expenses when
incurred.
(k)
Impairment of assets
The consolidated group assesses impairment at the end of each reporting period by evaluating conditions and
events specific to the consolidated group that may be indicative of impairment triggers. Recoverable amounts
of relevant assets are reassessed using fair value less cost to sell. In such cases the asset is tested for
impairment as part of the cash‐generating unit to which it belongs. When the carrying amount of an asset or
cash‐generating unit exceeds its recoverable amount, the asset or cash‐generating unit is considered impaired
and it is written down to its recoverable amount.
In assessing the value in use, the estimated future cash flows are discounted to their present value using a pre‐
tax discount rate that reflects current market assessments of the time value of money and the risks specific to
the asset. Impairment losses relating to continuing operations are recognised in those expense categories
consistent with the function of the impaired asset unless the asset is carried at revalued amount (in which case
the impairment loss is treated as a revaluation decrease).
An assessment is also made at each reporting date as to whether there is any indication that previously
recognised impairment losses may no longer exist or may have decreased. If such indication exists, the
recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has been a
change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was
recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That
increased amount cannot exceed the carrying amount that would have been determined, net of depreciation,
had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit or
loss unless the asset is carried at revalued amount, in which case the reversal is treated as a revaluation
increase. After such a reversal the depreciation charge is adjusted in future periods to allocate the asset’s
revised carrying amount, less any residual value, on a systemic basis over its remaining useful life.
(l)
Earnings per share
Basic earnings per share is calculated as net loss attributable to members of the Company, adjusted to exclude
any costs of servicing equity (other than dividends) and preference share dividends, divided by the weighted
average number of ordinary shares, adjusted for any bonus element.
(m)
Goods and services tax (GST)
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 Taxation Office (“ATO”). In these circumstances the GST is
recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and
payables in the consolidated Statement of Financial Position are shown inclusive of GST.
The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the
Consolidated Statement of Financial Position.
Cardinal Resources Limited – Annual Report 2014
P 36
FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2014
Cash Flows are included in the Consolidated Statement of Cash Flows on a net basis. The GST components of
cash flows arising from investing and financial activities which are recoverable from, or payable to, the ATO are
classified as operating cash flows.
(n)
Investments
All investments are initially recognised at cost, being the fair value of the consideration given and including
acquisition charges associated with the investment.
After initial recognition, investments, which are classified as held for trading and available‐for‐sale, are
measured at fair value. Gains or losses on investments held for trading are recognised in the consolidated
profit or loss.
Gains or losses on available‐for‐sale investments are recognised as a separate component of equity until the
investment is sold, collected or otherwise disposed of, or until the investment is determined to be impaired, at
which time the cumulative gain or loss previously reported in equity is included in the profit or loss.
(o)
Contributed equity
Ordinary shares and options are classified as contributed equity. Incremental costs directly attributable to the
issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
(p)
Significant accounting estimates and judgements
The carrying amount of certain assets and liabilities are often determined based on estimates and assumptions
of future events. The key estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of certain assets and liabilities within the next annual reporting period are:
Deferred taxation
The potential deferred tax asset arising from the tax losses and temporary differences have not been
recognised as an asset because recovery of the tax losses is not yet considered probable (refer note 5).
Subsidiary Loans
Provision has been made for all unsecured loans with subsidiaries as it is uncertain if and when the loans will
be recovered.
Exploration and evaluation assets
The accounting policy for exploration and evaluation expenditure results in expenditure being capitalised for
an area of interest where it is considered likely to be recoverable by future exploitation or sale or where the
activities have not reached a stage which permits a reasonable assessment of the existence of reserves.
This policy requires management to make certain estimates as to future events and circumstances, in
particular whether an economically viable extraction operation can be established. Any such estimates and
assumptions may change as new information becomes available. If, after having capitalised the expenditure
under the policy, a judgement is made that the recovery of the expenditure is unlikely, the relevant capitalised
amount will be written off to profit and loss.
Cardinal Resources Limited – Annual Report 2014
P 37
FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2014
Impairment
The consolidated group assesses impairment at the end of each reporting period by evaluating conditions and
events specific to the consolidated group that may be indicative of impairment triggers. Recoverable amounts
of relevant assets are reassessed using various key assumptions.
(q)
Comparative information
Comparative information is amended where appropriate to ensure consistency in presentation with the
current year.
3
REVENUE
Other income
Interest from financial institutions
4
EXPENSES
Administration expenses include the following expenses:
Company secretarial fees
Directors fees
Defined contribution superannuation expense
5
INCOME TAX
CONSOLIDATED
30 JUNE 2014
$
CONSOLIDATED
30 JUNE 2013
$
21,827
21,827
113,617
113,617
CONSOLIDATED
30 JUNE 2014
$
CONSOLIDATED
30 JUNE 2013
$
‐
160,500
8,325
168,825
22,500
385,000
6,975
414,475
(a)
Prima facie income tax benefit at 30% on loss from ordinary activities is reconciled to the income tax
provided in the financial statements
Loss before income tax
Income tax calculated at 30%
CONSOLIDATED
30 JUNE 2014
$
(9,965,348)
(2,989,603)
CONSOLIDATED
30 JUNE 2013
$
(1,913,604)
(574,081)
Tax effect of;‐
Expenses not allowed
Sundry – temporary differences
Section 40‐880 deduction
Future income tax benefit not brought to account
Income tax refund (payable) attributable to operating
losses
14,365
2,549,044
(58,177)
484,371
‐
135
(92,432)
(72,710)
739,088
‐
Cardinal Resources Limited – Annual Report 2014
P 38
FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2014
(b)
Deferred tax assets
The potential deferred tax asset arising from the tax losses and temporary differences have not been
recognised as an asset because recovery of tax losses is not yet probable.
The benefits will only be obtained if:
(i)
(ii)
(iii)
The Group derives future assessable income of a nature and of an amount sufficient to enable the
benefit from the deduction for the losses to be realised;
The Group continues to comply with the conditions in deductibility imposed by the Law; and
No change in tax legislation adversely affect the Group in realising the benefits from the deductions or
the losses.
6
AUDITOR’S REMUNERATION
Auditing and review of the Company’s financial statements
7
(a)
KEY MANAGEMENT PERSONNEL
Details of key management personnel
CONSOLIDATED
30 JUNE 2014
$
26,000
26,000
CONSOLIDATED
30 JUNE 2013
$
31,900
31,900
Directors and Executives
Alec Pismiris – Non‐Executive Chairman – Prior to 17 June 2014 Non‐Executive Director
Archie Koimtsidis – Managing Director
Malik Easah – Executive Director
Marcus Michael – Executive Director
Klaus Eckhof – Non‐Executive Chairman – Retired 17 June 2014
(b)
Compensation of key management personnel
Salaries, fees and leave
Non monetary
Post employment benefits – superannuation
CONSOLIDATED
30 JUNE 2014
$
CONSOLIDATED
30 JUNE 2013
$
530,500
10,670
8,325
549,495
407,500
9,631
6,975
424,106
Refer to the remuneration report contained in the directors report for details of the remuneration
paid/payable and share and options holdings in relation to each of Group’s key management personnel for the
year ended 30 June 2014.
8
CURRENT ASSETS
(a)
Trade and Other Receivables
Other receivables
Government taxes receivables
CONSOLIDATED
30 JUNE 2014
$
‐
6,452
6,452
CONSOLIDATED
30 JUNE 2013
$
3,125
7,934
11,059
Cardinal Resources Limited – Annual Report 2014
P 39
FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2014
GST and income tax amounts are non‐interest bearing and have repayment terms applicable under the
relevant government authorities. No trade and other receivables are impaired or past due.
(b)
Other Assets
Prepayments
Cash deposits
9
CAPITALISED EXPLORATION AND EVALUATION
Balance at the beginning of the year
Cost of acquisitions
Expenditure written off
Acquired on acquisition of subsidiary (Note 24)
Impairment (Note 10)
Foreign exchange movement
Balance at end of year (i)
CONSOLIDATED
30 JUNE 2014
$
23,395
9,644
33,039
CONSOLIDATED
30 JUNE 2014
$
8,011,945
174,052
(47,719)
‐
(7,309,500)
(57,328)
771,450
CONSOLIDATED
30 JUNE 2013
$
43,244
517,901
561,145
CONSOLIDATED
30 JUNE 2013
$
103,985
87,446
‐
7,924,499
(103,985)
‐
8,011,945
(i)
The Recoupment of costs carried forwarded in relation to areas of interest in the exploration and
evaluation phases is dependent on the successful development and commercial exploitation on the
sale of the respective area.
10
IMPAIRMENT EXPENSE
Impairment expense (i)
CONSOLIDATED
30 JUNE 2014
$
7,309,500
7,309,500
CONSOLIDATED
30 JUNE 2013
$
‐
‐
(i)
In light of the current market conditions, the Directors’ have conservatively estimated the recoverable
amount of its mineral projects based on the Company’s market capitalisation. As a result the Group
has impaired its capitalised deferred exploration and evaluation expenditure by $7,309,500 as at 30
June 2014. As this is an estimation, the actual recoverable amount may be significantly different to this
value. Future exploration and evaluation results and changes in commodity prices may increase the
estimated recoverable amount in the future, which may result in the reversal of some or all of
impairment recognised.
11
PLANT AND EQUIPMENT
Plant and Equipment
Carrying amount at the beginning of the year
Additions
Depreciation expense
Foreign exchange movement
Total plant and equipment
Cardinal Resources Limited – Annual Report 2014
CONSOLIDATED
30 JUNE 2014
$
CONSOLIDATED
30 JUNE 2013
$
251,277
467,455
(91,219)
(70,877)
556,636
‐
371,694
(120,417)
‐
251,277
P 40
FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2014
Plant and equipment
At cost
Less: accumulated depreciation
Total plant and equipment
12
TRADE AND OTHER PAYABLES
Trade and other payables
Other accrued expenses
13
(a)
ISSUED CAPITAL
Movement in ordinary shares on issue
At 1 July 2012
Transactions during the period
Shares issued
Exercise of options
Less: transaction costs
At 30 June 2013
As 1 July 2013
Transactions during the year
Shares issued
Exercise of options
Less: transaction costs
At 30 June 2014
CONSOLIDATED
30 JUNE 2014
$
CONSOLIDATED
30 JUNE 2013
$
691,542
(134,906)
556,636
369,418
(118,141)
251,277
CONSOLIDATED
30 JUNE 2014
$
85,017
42,349
127,366
CONSOLIDATED
30 JUNE 2013
$
118,073
37,349
155,422
(i)
(ii)
(iii)
NUMBER OF
SHARES
16,713,500
56,615,576
27,500
‐
73,356,576
73,356,576
‐
‐
‐
73,356,576
$
2,024,917
11,312,498
5,500
(471,429)
12,871,486
12,871,486
‐
‐
‐
12,871,486
(i)
The following shares were issued during the financial year ended 30 June 2013
On 28 December 2012 20,450,576 shares were issued at $0.20 per share were issued pursuant to
the Non‐Renounceable Entitlement Offer dated 15 November 2012;
On 28 December 2012 33,000,000 shares were issued to shareholders of Cardinal Resources
(Australia) Pty Ltd to acquire Cardinal Resources (Australia) Pty Ltd;
On 28 December 2012 1,500,000 shares were issued in full satisfaction of loans made to Cardinal
(Australia) Pty Ltd; and
On 10 January 2013 1,665,000 shares were issued at $0.20 per share pursuant to the Non‐
Renounceable Entitlement Offer dated 15 November 2012.
(ii)
The following shares were issued on exercise of options during the financial year ended 30 June 2013
On 23 November 2012 15,000 shares were issued on exercise of $0.20 options expiring 30 June
2014; and
Cardinal Resources Limited – Annual Report 2014
P 41
FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2014
On 28 November 2012 12,500 shares were issued on exercise of $0.20 options expiring 30 June
2014.
(iii) Transactions costs represent the costs of issuing the shares, and includes
On 8 February 2013 5,000,000 options were issued at $0.002 per Option to the Lead Manager
Azure Capital Limited as part consideration for underwriting up to $4.0 million of the Cardinal
Non‐Renounceable Entitlement Offer (see note 18).
(b)
Movement in options exercisable at $0.20 on or before 30 June 2014
At 1 July 2012
Transactions during the period
Options issued
Exercise of options
At 30 June 2013
As 1 July 2013
Transactions during the year
Options issued
Expiry of Options
At 30 June 2014
NUMBER OF
OPTIONS
6,261,750
50,423,370
(27,500)
56,657,620
56,657,620
‐
(56,657,620)
‐
(i)
(ii)
(iii)
$
‐
1,402,500
‐
1,402,500
1,402,500
‐
(1,402,500)
‐
(i)
The following options were issued during the financial year ended 30 June 2013
On 28 December 2012 30,675,870 options were issued pursuant to the Non‐Renounceable
Entitlement Offer dated 15 November 2012;
On 28 December 2012 16,500,000 options were issued to shareholders of Cardinal Resources
(Australia) Pty Ltd to acquire Cardinal Resources (Australia) Pty Ltd;
On 28 December 2012 750,000 options were issued in full satisfaction of loans made to Cardinal
(Australia) Pty Ltd; and
On 10 January 2013 2,497,500 options were issued pursuant to the Non‐Renounceable
Entitlement Offer dated 15 November 2012.
(ii)
The following shares were issued on exercise of options during the financial year ended 30 June 2013
On 23 November 2012 15,000 shares were issued on exercise of $0.20 options expiring 30 June
2014; and
On 28 November 2012 12,500 shares were issued on exercise of $0.20 options expiring 30 June
2014.
(iii) On 30 June 2014 56,657,620 options expired. None of these options were exercised.
Cardinal Resources Limited – Annual Report 2014
P 42
FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2014
(c)
Movement in unlisted options exercisable at $0.20 on or before 31 December 2015
At 1 July 2012
Transactions during the period
Options issued
At 30 June 2013
As 1 July 2013
Transactions during the year
Options issued
At 30 June 2014
(i)
NUMBER OF
OPTIONS
6,000,000
5,000,000
11,000,000
11,000,000
‐
11,000,000
$
‐
10,000
10,000
10,000
‐
10,000
(i)
The following unlisted options were issued during the financial year ended 30 June 2013
On 8 February 2013 in accordance with the terms of a corporate advisory mandate, Azure Capital
Limited and its nominees were issued 5,000,000 Lead Manager Options were issued at $0.002 per
option as part consideration for underwriting up to $4.0 million of the Cardinal Non‐
Renounceable Entitlement Issue (see note 18).
(d)
Movement in Performance Shares
At 1 July 2012
Transactions during the period
Performance shares issued
At 30 June 2013
As 1 July 2013
Transactions during the year
Performance shares issued
At 30 June 2014
At 1 July 2012
Transactions during the period
Performance shares issued
At 30 June 2013
As 1 July 2013
Transactions during the year
Performance shares issued
At 30 June 2014
(i)
(i)
NUMBER OF
CLASS A
PERFORMANCE
SHARES
‐
50
50
50
‐
50
NUMBER OF
CLASS B
PERFORMANCE
SHARES
‐
50
50
50
‐
50
$
$
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
Cardinal Resources Limited – Annual Report 2014
P 43
FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2014
(i)
The following performance shares were issued during the financial year ended 30 June 2013
On 28 December 2012, 100 performance shares were issued pursuant to the Cardinal offer.
There are 100 Performance Shares (convertible into a maximum of 10,000,000 Shares) on issue at 30 June
2014.
General terms attaching to the Performance Shares are set out below.
The Directors are currently of the opinion that the vesting conditions are unlikely to be met within 5 years from
Completion date. As such, no value as been ascribed to the performance shares in the group’s financial
statements.
Class A Performance Shares
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
Performance Shares: Each Class A Performance Share is a share in the capital of the Company.
Class A Performance Shares shall confer on the holder (Holder) the right to receive notices of general
meetings and financial reports and accounts of the Company that are circulated to shareholders.
Holders have the right to attend general meetings of shareholders of the Company.
The Class A Performance Shares do not entitle the Holder to vote on any resolutions proposed at a
general meeting of shareholders of the Company.
The Class A Performance Shares do not entitle the Holder to any dividends.
The Class A Performance Shares are not transferable.
If at any time the issue capital of the Company is reconstructured, all rights of a Holder will be changed
to the extent necessary to comply with the applicable Listing Rules at the time of reorganisation.
The Class A Performance Shares will not be quoted on ASX. However, upon conversion of the Class A
Performance Shares into Shares, the Company must within seven (7) days after the conversion, apply for
the official quotation of the Shares arising from the conversion on ASX.
The Class A Performance Shares give the Holders no rights other than those expressly provided by these
terms and those provided at law where such rights at law cannot be required by ASX.
The Shares into which the Class A Performance Shares will convert will rank pari passu in all respects
with the other Shares on issue.
Conversion of the Performance Shares
(j)
Each Class A Performance Share will convert into 100,000 Shares upon satisfaction of one of the
following performance hurdles to the reasonable satisfaction of the Company by no later than 5 years
from the Completion Date:
(i)
(ii)
The establishment of an inferred resources (JORC compliant) of at least 1 million ounces of gold
within the tenements owned by the Company or any of its subsidiaries comprised buy the
Ghanaian Projects and DRC Projects;
A project owned by the Company or any of its subsidiaries being comprised by the tenements
the subject of all or part of the Ghanaian Projects or DRC Projects, being sold for at least $25
million in cash or cash equivalent; or
Cardinal Resources Limited – Annual Report 2014
P 44
FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2014
(iii)
A joint venture arrangement being entered into in respect of any tenement or tenements
owned by the Company or of any of its subsidiaries and being comprised by all or part of the
Ghanaian Projects or DRC Projects resulting in a payment in cash or cash equivalent of the
Company or not less than $25 million.
(with all of the above performance hurdles constituting the “Class A Performance Hurdle)
(k)
The Company will issue the Holder with new holding statements for the Shares as soon as practicable
following the conversion of the Class A Performance Shares into Shares.
Class B Performance Shares
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
Performance Shares: Each Class B Performance Share is a share in the capital of the Company.
Class B Performance Shares shall confer on the holder (Holder) the right to receive notices of general
meetings and financial reports and accounts of the Company that are circulated to shareholders.
Holders have the right to attend general meetings of shareholders of the Company.
The Class B Performance Shares do not entitle the Holder to vote on any resolutions proposed at a
general meeting of shareholders of the Company.
The Class B Performance Shares do not entitle the Holder to any dividends.
The Class B Performance Shares are not transferable.
If at any time the issue capital of the Company is reconstructured, all rights of a Holder will be changed
to the extent necessary to comply with the applicable Listing Rules at the time of reorganisation.
The Class B Performance Shares will not be quoted on ASX. However, upon conversion of the Class B
Performance Shares into Shares, the Company must within seven (7) days after the conversion, apply for
the official quotation of the Shares arising from the conversion on ASX.
The Class B Performance Shares give the Holders no rights other than those expressly provided by these
terms and those provided at law where such rights at law cannot be required by ASX.
The Shares into which the Class B Performance Shares will convert will rank pari passu in all respects
with the other Shares on issue.
Conversion of the Performance Shares
(j)
Each Class B Performance Share will convert into 100,000 Shares upon satisfaction of one of the
following performance hurdles to the reasonable satisfaction of the Company by no later than 5 years
from the Completion Date:
(i) The market capitalisation of the Company reaching at least $50 million on an undiluted basis
determined by reference to the preceding 30 day VWAP;
(with all of the above performance hurdles constituting the “Class B Performance Hurdle)
(k)
The Company will issue the Holder with new holding statements for the Shares as soon as practicable
following the conversion of the Class B Performance Shares into Shares.
Cardinal Resources Limited – Annual Report 2014
P 45
FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2014
14
RESERVES
Movements in options reserve
At the beginning of the year
Options issued during the year (i), (ii)
Expiry of unlisted options (iii)
At reporting date
CONSOLIDATED
30 JUNE 2014
$
1,666,316
‐
(1,402,500)
263,816
CONSOLIDATED
30 JUNE 2013
$
253,816
1,412,500
‐
1,666,316
(i)
On 28 December 2012, as part consideration for the acquisition of Cardinal Resources (Australia) Limited
(Note 24), the parent entity issued 16,500,000 options to subscribe for ordinary shares, exercisable at
$0.20 each on or before 30 June 2014. The fair value of the options issued was estimated at the date of
grant using the Bionomial Option Pricing Model. The following table sets out the assumptions made in
determining the fair value of the options granted:
Grant Date
Dividend yield
Expected volatility
Risk‐free interest rate
Option exercise price
Expected life (years)
Share price on date of grant
28 December 2012
0.00%
80.00%
2.62%
$0.20
1.5
$0.204
(ii)
On 8 February 2013 in accordance with the terms of a corporate advisory mandate, Azure Capital
Limited and its nominees were issued 5,000,000 Lead Manager Options were issued at $0.002 per
option as part consideration for underwriting up to $4.0 million of the Cardinal Non‐Renounceable
Entitlement Issue (see note 18).
(iii)
On 30 June 2014 56,657,620 options expired. None of these options has been exercised.
Movements in foreign translation reserve
At the beginning of the year
Foreign translation
15
ACCUMULATED LOSSES
Accumulated losses at the beginning of the year
Loss for the year
Expiry of unlisted options
Accumulated losses at the end of the year
CONSOLIDATED
30 JUNE 2014
$
(93,912)
(198,734)
(292,646)
CONSOLIDATED
30 JUNE 2014
$
(2,129,617)
(9,965,348)
1,402,500
(10,692,465)
CONSOLIDATED
30 JUNE 2013
$
‐
(93,912)
(93,912)
CONSOLIDATED
30 JUNE 2013
$
(216,013)
(1,913,604)
‐
(2,129,617)
Cardinal Resources Limited – Annual Report 2014
P 46
FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2014
16
LOSS PER SHARE
Loss attributable to the owners of the Company used in
calculating basic and diluted loss per shares
Weighted average number of shares on issue during the
financial year used in the calculation of basic earnings
per share
Weighted average number of ordinary shares for
diluted earnings per share
CONSOLIDATED
30 JUNE 2014
$
CONSOLIDATED
30 JUNE 2013
$
(9,965,348)
(9,965,348)
2014
Number
(1,913,604)
(1,913,604)
2013
Number
73,356,576
45,366,169
73,356,576
45,366,169
As the Company has made a loss for the year ended 30 June 2014, all options on issue are considered anti‐
dilutive and have not been included in the calculation of diluted earnings per share. These options could
potentially dilute basic earnings per share in the future.
17
NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS
(a)
Reconciliation of cash and cash equivalents
For the purposes of the consolidated statement of cash flows, cash and cash equivalents consist of cash at
bank and in hand and short‐term deposits with an original maturity of three months or less, net of outstanding
bank overdrafts.
Current – cash at bank
Short term deposits
CONSOLIDATED
30 JUNE 2014
$
909,980
‐
909,980
CONSOLIDATED
30 JUNE 2013
$
3,127,529
506,740
3,634,269
(b)
Reconciliation of loss after tax to net cash flows from operations
Loss after income tax
Non‐cash flows in profit
Depreciation expense
Exploration write off
Impairment expense
Changes in assets and liabilities
Decrease in trade and other receivables
Decrease/(increase) in prepayments
(Decrease) in trade and other payables
CONSOLIDATED
30 JUNE 2014
$
(9,965,348)
CONSOLIDATED
30 JUNE 2013
$
(1,913,604)
91,219
47,719
7,309,500
2,006
19,850
(28,058)
(2,523,112)
70,887
‐
‐
26,409
(111,764)
(153,886)
(2,081,958)
Cardinal Resources Limited – Annual Report 2014
P 47
FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2014
Non‐Cash Transactions
(a)
Acquisition of Entities
During the year ended 30 June 2013 the Company acquired 100% of Cardinal Resources (Australia) Pty
Ltd and repaid loans by the issue of ordinary shares see note 13(a)(i), 13(b)(i) and 24.
(b)
Underwriting fee see note 13(c)(i).
(c)
18
Repayment of subsidiary loans see note 13(a)(i).
SHARE BASED PAYMENTS
(a)
Supplier Options
(i)
There were no supplier options issued during the year ended 30 June 2014.
(ii)
On 8 February 2013 in accordance with the terms of a corporate advisory mandate, Azure
Capital Limited and its nominees were issued 5,000,000 Lead Manager Options were issued at
$0.002 per option as part consideration for underwriting up to $4.0 million of the Cardinal Non‐
Renounceable Entitlement Issue.
The fair value of the options issued, being $0.082 per option, was estimated at the date of grant
using the Binomial Option Pricing Model. The following table sets out the assumptions made in
determining the fair value of the options granted:
Grant Date
Dividend yield
Expected volatility
Risk‐free interest rate
Option exercise price
Expected life (years)
Share price on date of grant
8 February 2013
0.00%
80.00%
2.62%
$0.20
2.0
$0.17
19
(a)
COMMITMENTS AND CONTINGENCIES
Commitment
Mineral exploration commitment
In order to maintain the current rights of tenure to exploration tenements, the Group has the following
discretionary exploration expenditure requirements.
Not later than one year
Later than one year but not later than two years
(b)
Contingent liabilities and commitments
2014
$
‐
‐
‐
2013
$
‐
‐
‐
The Group fully owns four subsidiaries, the main activities of which are exploration. The effect of these
subsidiaries is to make the Cardinal Resources owned subsidiaries contractually responsible for any
transactions undertaken by the subsidiary. The parent entity has provided certain guarantees to third parties
whereby certain liabilities of the subsidiary are guaranteed.
Cardinal Resources Limited – Annual Report 2014
P 48
FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2014
The Group has no contingent liabilities and commitments at 30 June 2013 and 30 June 2014.
20
EVENTS SUBSEQUENT TO BALANCE DATE
On 18 September 2014 Cardinal announced the completion of a Placement of shares at 5.0 cents together with
one free attaching options (“New Options”) for each share to raise up to $900,000.
In additional to the Placement, the directors of the Company (namely, Messers Alec Pismiris, Archie Koimtsidis,
Marcus Michael and Malik Easah) will, subject to shareholder approval, participate in a placement to subscribe
for a total of 4.88 million Shares and 4.88 million New Options for an aggregate subscription amount of
approximately $244,000 (“Director Placement”). The Director Placement will be made on the same terms and
conditions as the Placement.
The New Options will be exercisable at $0.15 on or before 5:00pm (WST) on the date that is 5 years from the
date of issue.
The New Options to be issued was part of the Placement and the Director Placement will be issued subject to
shareholder approval being obtained.
The Company will also undertake a pro‐rata non‐renounceable rights issue of New Options on the basis of one
New Option for every two shares held by eligible shareholders on the record date (“Rights Issue’).
The New Options to be issued under the Rights Issue will be issued on the same terms and conditions as the
New Options to be issued as part the Placement, and the subscription price for the New Options under the
Rights Issue will be $0.01 per New Option.
Other than the above, no matters or circumstances have arisen since the end of the financial year which
significantly affected or could significantly affect the operations of the Group, the results of those operations,
or the state of the affairs of the Group in future financial years.
21
(a)
FINANCIAL INSTRUMENTS
Interest Rate Risk
The Group’s exposure to interest rate risk, which is the risk that the financial instrument’s value will fluctuate
as a result of changes in market interest rates and the effective weighted average interest rates on those
financial assets and financial liabilities, is as follows:
2014
Note
Floating
interest
rate
Fixed
interest
rate
Non‐
interest
bearing
Total
Weighted
average
interest rate
Financial assets
Cash and cash equivalents
Trade and other receivables
Other assets
17 (a)
8 (a)
8 (b)
Financial liabilities
Trade and other payables
12
$
$
$
$
%
88,375
‐
‐
88,375
‐
‐
‐
‐
‐
‐
‐
‐
821,605
6,452
33,039
861,096
909,980
6,452
33,039
949,471
127,366
127,366
127,366
127,366
2.82%
‐
‐
‐
‐
‐
Cardinal Resources Limited – Annual Report 2014
P 49
FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2014
2013
Note
Floating
interest
rate
Fixed
interest
rate
Non‐
interest
bearing
Total
Weighted
average
interest rate
Financial assets
Cash and cash equivalents
Trade and other receivables
Other assets
17 (a)
8 (a)
8 (b)
Financial liabilities
Trade and other payables
12
$
$
$
$
%
3,331,100
‐
‐
3,331,100
‐
‐
517,901
517,901
303,168
11,059
43,243
357,470
3,634,268
11,059
561,144
4,206,471
‐
‐
‐
‐
155,422
155,422
155,422
155,422
4.01%
‐
6.42%
‐
‐
‐
Based on the balances at 30 June 2014 a 1% movement in interest rates would increase/decrease the loss for
the year before taxation by $884 (2013: $38,490).
(b)
Credit Risk
The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to
recognised financial assets is the carrying amount of those assets, net of any allowance for doubtful debts, as
disclosed in the statement of financial position and notes to the financial report.
The Group does not have any material credit risk exposure to any single debtor or group of debtors under
financial instruments entered into by the Group.
(c)
Net Fair Values
The carrying amount of financial assets and financial liabilities recorded in the financial statements represent
their respective net fair value and is determined in accordance with the accounting policies disclosed in note 2
to the financial statements.
(d)
Financial risk management
The Group’s financial instruments consist mainly of deposits with recognised banks, investment in bank bills up
to 90 days, accounts receivable and accounts payable. Liquidity is managed, when sufficient funds are
available, by holding sufficient funds in a current account to service current obligations and surplus funds
invested in bank bills. The directors analyse interest rate exposure and evaluate treasury management
strategies in the context of the most recent economic conditions and forecasts. The main risks the Group is
exposed to is through its financial instruments is the depository banking institution itself, holding the funds,
and interest rates. The Group's credit risk is minimal as being an exploration Company, it has no significant
financial assets other than cash and term deposits.
(e)
Foreign Currency Risk
Foreign Currency Transactions and Balances
Functional and presentation currency
The functional currency of each of the Group’s entities is measured using the currency of the primary
economic environment in which that entity operations. The consolidated financial statements are presented in
Australian dollars, which is the parent entity’s functional currency.
Cardinal Resources Limited – Annual Report 2014
P 50
FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2014
Transactions and balances
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the
date of the transaction. Foreign currency monetary items are translated at the year‐end exchange rate.
Non‐monetary items measured at historical cost continue to be carried at the exchange rate at the date of the
transaction. Non‐monetary items measured at fair value are reported at the exchange rate at the date when
fair values were determined.
Exchange differences arising on the translation of monetary items are recognised in profit or loss, except
where deferred in equity as a qualifying cash flow or new investment hedge.
Exchange differences arising on the translation of non‐monetary items are recognised directly in other
comprehensive income to the extent that the underlying gain or loss is recouped in other comprehensive
income; otherwise the exchange difference is recognised in profit or loss.
Foreign exchange risk
Exposure to foreign exchange risk may result in the fair value or future cashflows of a financial instrument
fluctuating due to movement in foreign exchange rates of currencies in which the Group holds financial
instruments which are other than the AUD functional currency of the Group.
The following table shows the foreign currency risk on the financial assets and liabilities of the Group’s
operations denominated in currencies other than the functional currency of the operations. The foreign
currency risk in the books of the parent entity is considered immaterial and is therefore not shown.
Consolidated Group
Functional currency of entity:
Australian dollar
GHS New Cedi
Statement of financial position exposure
(f)
Market Price Risk
Net Financial Assets/(Liabilities) In AUD
AUD
USD
GHS
Total AUD
573,847
‐
573,847
774,821
‐
774,821
‐
801,523
801,523
1,348,668
801,523
2,150,191
The Group is not exposed to market price risk as it does not have any investments other than an interest in the
subsidiaries.
22
RELATED PARTY TRANSACTIONS
The Group has no related parties other than the 100% owned subsidiaries disclosed in note 24 and the key
management personnel as detailed in the remuneration report and disclosed in note 7. At 30 June 2014
balances due from the subsidiaries were:
Australian Dollar ($)
Cardinal Resources (Australia) Pty Ltd
Cardinal Resources Ghana Limited
Cardinal Resources Subranum Limited
Cardinal Mining Services Limited
30 JUNE 2014
$
4,129,130
814,485
8,670
‐
4,952,285
30 JUNE 2013
$
3,908,930
124,538
‐
‐
4,033,468
Cardinal Resources Limited – Annual Report 2014
P 51
FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2014
These amounts comprise of funds provided by the parent company for exploration activities.
During the financial year nil fees (2013: $272,812) were paid and accrued under normal terms and conditions
to Azure Capital Limited, of which Mr Pismiris was a Director.
During the financial year fees of $5,926 (2013: $163,341) were paid and accrued under normal terms and
conditions to Drumgaghan Pty Ltd of which Mr Shervington is a Director, including nil fees (2013: $32,500) for
the provision of services in his capacity as a Director and $5,926 (2013: $130,841) for legal services at normal
commercial terms.
Accounting, bookkeeping, corporate secretarial and administration service fees of $160,542 (2013: $128,098)
were paid or payable on ordinary commercial terms during the year to Marshall Michael Pty Ltd, a company in
which Mr Michael is a director.
23
SEGMENT REPORTING
For management purposes, the Group is organised into one main operating segment, which involves the
exploration of minerals in Ghana. All of the Group’s activities are interrelated, and discrete financial
information is reported to the Board as a single segment. Accordingly, all significant operating decisions are
based upon analysis of the Group as one segment.
The financial results from this segment are equivalent to the financial statements of the Group as a whole.
The accounting policies applied for internal reporting purposes are consistent with those applied in the
preparation of these financial statements.
24
SUBSIDIARIES
The parent entity, Cardinal Resources Limited, has 100% interest in the below subsidiaries. Cardinal Resources
Limited is required to make all the financial and operating policy decisions of these subsidiaries.
Subsidiaries of Cardinal Resources
Limited
Country of incorporation
Percentage owned %
Cardinal Resources (Australia) Pty Ltd
Cardinal Resources Ghana Limited
Cardinal Resources Subranum Limited
Cardinal Mining Services Limited
Australia
Ghana
Ghana
Ghana
2014
100%
100%
100%
100%
2013
100%
100%
100%
100%
The parent entity acquired a 100% interest in Cardinal Resources (Australia) Limited on 28 December 2012.
Cardinal Resources (Australia) Limited has a 100% interest in Cardinal Resources Ghana Limited, Cardinal
Mining Services Limited, and Cardinal Resources Subranum Limited. Details of the acquisition were as follows:
Purchase Consideration
Ordinary Shares (note 13 (a))
Options (note 13 (b))
Fair Value
$
6,600,000
1,402,500
8,002,500
Cardinal Resources Limited – Annual Report 2014
P 52
FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2014
Fair value of net assets acquired on date of acquisition
Cash and cash equivalent
Current trade and other receivables
Plant and equipment
Exploration project interests
Trade and other payables
Loans payable
25
PARENT COMPANY DISCLOSURE
(a)
Financial Position for the year ended 30 June 2014
Australian Dollar ($)
Assets
Current assets
Non‐current assets
Total assets
Liabilities
Current liabilities
Non‐current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
(b)
Financial Performance for the year ended 30 June 2014
Australian Dollar $
Profit (loss) for the year
Other comprehensive income
Total comprehensive income (loss)
(c)
Guarantees entered into by the Parent Entity
329,978
6,286
249,364
7,924,499
(218,244)
(289,383)
8,002,500
30 JUNE 2014
$
152,631
693,000
845,631
89,119
‐
89,119
756,512
12,993,387
263,816
(12,500,691)
756,512
30 JUNE 2014
$
(8,969,208)
‐
(8,969,208
30 JUNE 2013
$
1,784,280
12,040,679
13,824,959
190,309
3,908,930
4,099,239
9,725,720
12,993,387
1,666,316
(4,933,983)
9,725,720
30 JUNE 2013
$
(4,717,969)
‐
(4,717,969)
30 JUNE 2014
$
30 JUNE 2013
$
‐
‐
‐
‐
Cardinal Resources Limited – Annual Report 2014
P 53
DIRECTOR’S DECLARATION
In the opinion of the Directors of Cardinal Resources Limited (“the Company”)
(a)
The financial statements and the notes and the additional disclosures included in the directors’ report
designated as audited of the Group are in accordance with the Corporations Act 2001, including:
(i)
Giving a true and fair view of the Group’s financial position as at 30 June 2014 and of its
performance for the year ended that date; and
(ii)
Complying with Accounting Standards and Corporations Regulations 2001, and:
(b)
(c)
There are reasonable grounds to believe that the Company will be able to pay its debts as and when
they become due and payable.
The financial statements and notes comply with International Financial Reporting Standards as
disclosed in note 2.
This declaration has been made after receiving the declarations required to be made to the directors in
accordance with section 295A of the Corporations Act 2001 for the financial year ended 30 June 2014.
Signed in accordance with a resolution of the Directors made pursuant to section 295(5) of the Corporations
Act 2001.
On behalf of the Board
Archie Koimtsidis
Managing Director
Dated this 25 September 2014
Perth, Western Australia
Cardinal Resources Limited – Annual Report 2014
P 54
P 55 P 56 P 57 CORPORATE GOVERNANCE STATEMENT
In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of
Cardinal Resources Limited (Cardinal) adhere to strict principles of corporate governance.
The Board of Directors of Cardinal is responsible for the overall corporate governance of the Company, guiding
and monitoring the business and affairs of Cardinal on behalf of the shareholders by whom they are elected and
to whom they are accountable.
The Corporate Governance Statement is structured with reference to the Australian Stock Exchange Corporate
Governance Council’s (Council) “Principles of Good Corporate Governance and Best Practice Recommendations”.
In accordance with the recommendations of the Council, the Corporate Governance Statement must now contain
certain specific information and must disclose the extent to which the Company has followed the guidelines
during the period. Where a recommendation has not been followed, that fact must be disclosed, together with
the reasons for the departure. Cardinal’s Corporate Governance Statement has been structured with reference to
the Council’s principles and recommendations. The following is a summary of Cardinal’s adherence to the
Council’s principles and recommendations:
Principle 1.
Lay solid foundations for management and oversight
Cardinal largely complies with this recommendation except the Board and senior management
of Cardinal actively participate in the operations of the Company due to the scale and nature of
the Company’s current operations.
Principle 2.
Structure the Board to add value
Cardinal complies with this recommendation.
Principle 3.
Principle 4.
Promote ethical and responsible decision making
Cardinal complies with this recommendation except that it has not adopted a formal policy on
diversity due to the scale and nature of the Company’s current operations.
Safeguard integrity in financial reporting
Cardinal largely complies with this recommendation except that it has not established an Audit
Committee due to the scale and nature of the Company’s current operations. The Board carried
out the duties of the audit committee.
Principle 5.
Make timely and balanced disclosure
Cardinal complies with this recommendation.
Principle 6.
Respect the rights of shareholders
Cardinal complies with this recommendation.
Principle 7.
Recognise and manage risk
Cardinal complies with this recommendation.
Principle 8.
Remunerate fairly and responsibly
Cardinal largely complies with this recommendation except that it has not established a
Remuneration Committee due to the scale and nature of the Company’s current operations.
The Company will consider long term incentives including the grant of options or performance
rights. The objective of long term incentives is to ensure maximum stakeholder benefit is
achieved from the retention of a high quality Board and to provide incentive for Directors to
identify new commercial opportunities for the Company.
Cardinal Resources Limited – Annual Report 2014
P 58
CORPORATE GOVERNANCE STATEMENT
The Cardinal Resources Limited corporate governance policies and procedures are largely consistent with the
Council’s best practice recommendations. The process to achieve consistency with the Council’s recommendations
are gradual and where the Company’s corporate governance practices do not correlate with the practices
recommended by the Council, the Company does not consider that the practices are appropriate for the Company
due to the scale and nature of the Company’s operations.
To illustrate where the Company has addressed each of the Council’s recommendations, the following table cross‐
references each recommendation with sections of this report. The table does not provide the full text of each
recommendation but rather the topic covered.
Recommendation
Section
Recommendation 1.1 Functions of the Board and Management
Recommendation 1.2 Senior Executive Evaluation
Recommendation 1.3 Reporting on Principle 1
Recommendation 2.1 Independent Directors
Recommendation 2.2 Independent Chair
1.1
1.3
1
1.2
1.2
Recommendation 2.3 Role of the Chair and CEO
Not Applicable
Recommendation 2.4 Establishment of Nomination Committee
Recommendation 2.5 Board and Individual Director Evaluation
Recommendation 2.6 Reporting on Principle 2
Recommendation 3.1 Code of Conduct
Recommendation 3.2 Company Diversity Policy
Recommendation 3.3 Reporting on Principle 3
Recommendation 4.1 Establishment of Audit Committee
Recommendation 4.2 Structure of the Audit Committee
Recommendation 4.3 Audit Committee Charter
Recommendation 4.4 Reporting on Principle 4
Recommendation 5.1 Policy for Compliance with Continuous Disclosure
Recommendation 5.2 Reporting on Principle 5
Recommendation 6.1 Communications Strategy
Recommendation 6.2 Reporting on Principle 6
Recommendation 7.1 Policies on Risk Oversight and Management
Recommendation 7.2 Risk Management Report
Recommendation 7.3 CEO and CFO Assurance
Recommendation 7.4 Reporting on Principle 7
Recommendation 8.1 Establishment of Remuneration Committee
Recommendation 8.2 Structure of Remuneration Committee
Recommendation 8.3 Executive and Non‐Executive Director Remuneration
Recommendation 8.3 Reporting on Principle 8
2.3
1.4.11
2
2.4
1.4.10
1.1
2.1
2.1
2.1
2.1
1.4.4
2.5
1.4.8 and 2.5
1.4.8 and 2.5
2.1
1.4.12
1.4.12
2.4
2.2
2.2
2.2
2.2
Cardinal Resources Limited – Annual Report 2014
P 59
CORPORATE GOVERNANCE STATEMENT
1. Board of Directors
1.1
Role of the Board
The Board’s current role is to collectively govern and manage the Company. The Directors must act in the best
interests of the Company as a whole. It is the role of the Board to govern and manage the Company in accordance
with the stated objectives of the Company. In carrying out its governance role, the main task of the Board is to drive
the performance of the Company. The Board must also ensure that the Company complies with all of its
contractual, statutory and any other legal obligations, including the requirements of any regulatory body. The Board
has the final responsibility for the successful operations of the Company.
To assist the Board in carrying out its functions, it has developed a Code of Conduct to guide the Directors in the
performance of their roles.
1.2 Composition of the Board
To add value to the Company, the Board has been formed so that it has effective composition, size and
commitment to adequately discharge its responsibilities and duties. The names of the Directors and their
qualifications and experience are stated in the Director’s Report. Directors are appointed based on their experience
and on the independence of their decision‐making and judgment.
The Company’s Constitution provides for the appointment of a minimum number of Directors as three and up to a
maximum of seven. Currently the Company has four Directors comprising of a Non‐Executive Chairman, a Managing
Director and two Executive Directors. The Constitution does not require a shareholding qualification for Directors.
The Company recognises the importance of Non‐executive Directors and the external perspective and advice that
Non‐executive Directors can offer.
An independent Director:
is a Non Executive Director and;
is not a substantial shareholder of the Company or an officer of, or otherwise associated directly with, a
substantial shareholder of the Company;
within the last three years has not been employed in an Executive capacity by the Company or another
Company member, or been a Director after ceasing to hold any such employment;
within the last three years has not been a principal of a material professional adviser or a material consultant
to the Company or another Company member, or an employee materially associated with the service
provided;
is not a material supplier or customer of the Company or another Company member, or an officer of or
otherwise associated directly or indirectly with a material supplier or customer;
has no material contractual relationship with the Company or other Company member other than as a
Director of the Company;
has not served on the Board for a period which could, or could reasonably be perceived to, materially
interfere with the Director’s ability to act in the best interests of the Company; and
is free from any interest and any business or other relationship which could, or could reasonably be
perceived to, materially interfere with the Director’s ability to act in the best interests of the Company.
The Company has no non‐executive directors.
Cardinal Resources Limited – Annual Report 2014
P 60
CORPORATE GOVERNANCE STATEMENT
1.3 Responsibilities of the Board
In general, the Board is responsible for, and has the authority to determine, all matters relating to the policies,
practices, management and operations of the Company. It is required to do all things that may be necessary to be
done in order to carry out the objectives of the Company.
Without intending to limit this general role of the Board, the principal functions and responsibilities of the Board
include the following:
(i)
(ii)
Leadership of the organisation: overseeing the Company and establishing codes that reflect the values of the
Company and guide the conduct of the Board, management and employees.
Strategy formulation: working to set and review the overall strategy and goals for the Company and ensuring
that there are policies in place to govern the operation of the Company.
(iii) Overseeing planning activities: overseeing the development of the Company’s strategic plan and approving
(iv)
that plan as well as the annual and long‐term budgets.
Shareholder
communications policy and promoting participation at general meetings of the Company.
liaison: ensuring effective communications with shareholders through an appropriate
(v) Monitoring, compliance and risk management: overseeing the Company’s risk management, compliance,
control and accountability systems and monitoring and directing the financial and operational performance of
the Company.
(vi) Company finances: approving expenses in excess of those approved in the annual budget and approving and
monitoring acquisitions, divestitures and financial and other reporting.
(vii) Human resources: appointing, and, where appropriate, removing the Managing Director/Chief Executive
Officer and Chief Financial Officer as well as reviewing their performance and monitoring the performance of
senior management in their implementation of the Company’s strategy.
(viii) Ensuring the health, safety and well‐being of employees: in conjunction with the senior management team,
developing, overseeing and reviewing the effectiveness of the Company’s occupational health and safety
systems to ensure the well‐being of all employees.
(ix) Delegation of authority: where appropriate delegating appropriate powers to the Company’s Executives to
ensure the effective day‐to‐day management of the Company and establishing and determining the powers
and functions of any Committees of the Board.
In general, the Board is responsible for, and has the authority to determine, all matters relating to the policies,
practices, management and operations of the Company. It is required to do all things that may be necessary to be
done in order to carry out the objectives of the Company.
Without intending to limit this general role of the Board, the principal functions and responsibilities of the Board
include the following.
1.4 Board Policies
1.4.1 Conflicts of Interest
Directors must disclose to the Board actual or potential conflicts of interest that may or might reasonably be
thought to exist between the interests of the Director and the interests of any other parties in carrying out the
activities of the Company and if requested by the Board, within seven days or such further period as may be
permitted, take such necessary and reasonable steps to remove any conflict of interest.
If a Director cannot or is unwilling to remove a conflict of interest then the Director must, as per the Corporations
Act, absent himself or herself from the room when discussion and/or voting occurs on matters about which the
conflict relates.
Cardinal Resources Limited – Annual Report 2014
P 61
CORPORATE GOVERNANCE STATEMENT
1.4.2
Commitments
Each member of the Board is committed to spending sufficient time to enable them to carry out their duties as a
Director of the Company.
1.4.3
Confidentiality
In accordance with legal requirements and agreed ethical standards, Directors of the Company have agreed to keep
confidential, information received in the course of the exercise of their duties and will not disclose non‐public
information except where disclosure is authorised or legally mandated.
1.4.4 Continuous Disclosure
The Board has designated the Company Secretary as the person responsible for overseeing and coordinating
disclosure of information to the ASX as well as communicating with the ASX. In accordance with the ASX Listing
Rules, the Company immediately notifies the ASX of information:
Concerning the Company that a reasonable person would expect to have a material effect on the price or
value of the Company’s securities; and
That would, or would be likely to, influence persons who commonly invest in securities in deciding whether
to acquire or dispose of the Company’s securities.
Upon confirmation of receipt from the ASX, the Company is able to publish the information in accordance with this
policy.
1.4.5 Education and Induction
New Directors undergo an induction process in which they are given a full briefing on the Company. Information
conveyed to new Directors includes:
Details of the roles and responsibilities of a Director with an outline of the qualities required to be a
successful Director;
Formal policies on Director appointment as well as conduct and contribution expectations;
Details of all relevant legal requirements;
A copy of the Board Charter;
Guidelines on how the Board processes function;
Details of past, recent and likely future developments relating to the Board including anticipated
regulatory changes;
Background information on and contact information for key people in the organisation including an
outline of their roles and capabilities;
An analysis of the Company;
A synopsis of the current strategic direction of the Company including a copy of the current strategic plan
and annual budget; and
A copy of the Constitution of the Company.
1.4.6 Independent Professional Advice
The Board collectively and each Director has the right to seek independent professional advice at the Company’s
expense, up to specified limits, to assist them to carry out their responsibilities.
Cardinal Resources Limited – Annual Report 2014
P 62
CORPORATE GOVERNANCE STATEMENT
1.4.7 Related Party Transactions
Related party transactions include any financial transaction between a Director and the Company and will be
reported in writing to each Board meeting. Unless there is an exemption under the Corporations Act from the
requirement to obtain shareholder approval for the related party transaction, the Board cannot approve the
transaction.
1.4.8
Shareholder Communication
The Company respects the rights of its shareholders and to facilitate the effective exercise of those rights the
Company is committed to:
(i)
Communicating effectively with shareholders through releases to the market via ASX, information mailed
to shareholders and the general meetings of the Company;
(ii) Giving shareholders ready access to balanced and understandable information about the Company and
corporate proposals;
(iii) Making it easy for shareholders to participate in general meetings of the Company; and
(iv) Requesting the external auditor to attend the annual general meeting and be available to answer
shareholder questions about the conduct of the audit and the preparation and content of the auditor’s
report.
The Company also makes available a telephone number and for shareholders to make enquiries of the Company.
1.4.9 Trading in Company Securities
The Company has a Code for Trading in Securities (“Code”) which sets out the requirements for Directors and
Employees trading in Company Securities. In order to ensure that Directors and Employees do not inadvertently
breach the insider trading provisions of the Corporations Act, Directors and Employees are only permitted to
trade in Company Securities in limited circumstances determined by this Code. The circumstances in which
Directors and Employees are not permitted to trade in Company Securities are called Closed Periods and are
defined as:
Directors and/or Employees possessing information that they know, or ought reasonably to know, is
inside information in relation to Company Securities; or
the Company Secretary has issued an instruction prohibiting trading in Company Securities by Directors
and Employees; or
it is the day on which the Company has made, or is expected to make, an announcement to the ASX; or
when Directors and/or Employees wishing to trade in Company securities have not complied with the
requirement to seek written approval from the Chair of the Board or his or her delegate.
Consideration will be given to any special circumstances (eg financial hardship).
The completion of any such trade by a Director must also be notified to the Company Secretary who in turn
advises the ASX.
1.4.10 Diversity Policy
The Board is committed to establishing a policy concerning diversity including but not limited to gender, age,
ethnicity and cultural background. On establishment of a diversity policy, the Board intends to introduce
procedures to ensure its proper implementation.
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CORPORATE GOVERNANCE STATEMENT
1.4.11 Performance Review/Evaluation
The Board intends to conduct an evaluation of its performance annually. There was no evaluation conducted
during the financial period.
1.4.12 Recognise and Manage Risk
The Board will seek the relevant assurance from the chief executive officer and chief financial officer (or their
equivalents) at the relevant time that the declaration provided in accordance with section 295A of the
Corporations Act is founded on a sound system of risk management and internal control and that the system is
operating effectively in all material respects in relation to financial reporting risk.
2.
Board Committees
2.1
Audit and Compliance Committee
The Directors have elected not to appoint an Audit and Compliance Committee due to the scale and nature of the
Company’s activities.
It is the Board’s responsibility to ensure that an effective internal control framework exists within the Company to
deal with the effectiveness and efficiency of business processes, the safeguarding of assets, the maintenance of
proper accounting records and the reliability of financial information. The Board has been delegated the
responsibility for the establishment and maintenance of the internal control framework and ethical standards. The
responsibilities include the following:
Oversee and appraise the independence, quality and extent of the total audit effort;
Perform an independent overview of the financial information prepared by Company management for
shareholders and prospective shareholders;
Evaluate the adequacy and effectiveness of the Company’s risk management and financial control, and other
internal control systems and evaluate the operation thereof;
Review and endorse the annual and half year attestation statements in accordance with regulatory
requirements;
The appointment of external auditors;
Review and implement risk management and internal control structures appropriate to the needs of
Cardinal;
Monitor compliance issues applicable laws and regulations, particularly compliance with the Stock Exchange
Listing Rules;
Review all public releases to the ASX of material consequence, prior to release to the market; and
Review of Corporate Governance Practices.
2.2
Remuneration Committee
The Directors have elected not to appoint a Remuneration Committee due to the scale and nature of the Company’s
activities.
It is the Company’s objective to provide maximum stakeholder benefit from the retention of a high quality Board by
remunerating Directors fairly and appropriately with reference to relevant market conditions. To assist in achieving
this objective, the Board attempts to link the nature and amount of Directors’ emoluments to the Company’s
performance. The outcome of the remuneration structure is:
Reward Executives for Company and individual performance against appropriate benchmarks;
Align the interests of the Executives with those of shareholders;
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CORPORATE GOVERNANCE STATEMENT
Link reward with the strategic goals and performance of the Company; and
Ensure remuneration is comparable to market standards.
For details of the amount of remuneration and all monetary and non‐monetary components for each of the
Directors during the financial period, refer to the Directors’ Report.
There is no scheme to provide retirement benefits, other than statutory superannuation, to Directors.
For further information in relation to the remuneration of Directors, refer to the Directors’ Report.
2.3
Nomination Committee
The Directors have elected not to appoint a Nomination Committee due to the scale and nature of the Company’s
activities.
Subject to the provision of the Company’s Constitution, the issues of Board composition and selection criteria for
Directors are dealt with by the full Board. The Board continues to have the mix of skills and experience necessary for
the conduct of the Company’s activities.
The Constitution provides for events whereby Directors may be removed from the Board. Similarly shareholders
have the ability to nominate, appoint and remove Directors. In addition, the Constitution provides for the regular
rotation of Directors which ensures that Directors seek re‐election by shareholders at least once every three years.
Given these existing regulatory requirements, Directors are not appointed for a specified term and Directors’
continuity of service is in the hands of shareholders.
2.4 Company Code Of Conduct
As part of its commitment to recognising the legitimate interests of stakeholders, the Company has established a
Code of Conduct to guide compliance with legal and other obligations to legitimate stakeholders. These
stakeholders include employees, clients, customers, government authorities, creditors and the community as
whole.
This Code includes the following:
Responsibilities to Shareholders and the Financial Community Generally
The Company complies with the spirit as well as the letter of all laws and regulations that govern shareholders’
rights. The Company has processes in place designed to ensure the truthful and factual presentation of the
Company’s financial position and prepares and maintains its accounts fairly and accurately in accordance with the
generally accepted accounting and financial reporting standards.
Responsibilities to Clients, Customers and Consumers
Each employee has an obligation to use their best efforts to deal in a fair and responsible manner with each of the
Company’s clients, customers and consumers. The Company for its part is committed to providing clients,
customers and consumers with fair value.
Employment Practices
The Company endeavours to provide a safe workplace in which there is equal opportunity for all employees at all
levels of the Company. The Company does not tolerate the offering or acceptance of bribes or the misuse of
Company assets or resources.
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CORPORATE GOVERNANCE STATEMENT
Obligations Relative to Fair Trading and Dealing
The Company aims to conduct its business fairly and to compete ethically and in accordance with relevant
competition laws. The Company strives to deal fairly with the Company’s customers, suppliers, competitors and
other employees and encourages it employees to strive to do the same.
Responsibilities to the Community
As part of the community the Company is committed to conducting its business in accordance with applicable
environmental laws and regulations and encourages all employees to have regard for the environment when
carrying out their jobs.
Responsibility to the Individual
The Company is committed to keeping private information collected during the course of its activities, confidential
and protected from uses other than those for which it was provided.
Conflicts of Interest
Employees and Directors must avoid conflicts as well as the appearance of conflicts between personal interests and
the interests of the Company.
How the Company Complies with Legislation Affecting its Operations
Within Australia, the Company strives to comply with the spirit and the letter of all legislation affecting its
operations. Outside Australia, the Company will abide by local laws in all countries in which it operates. Where
those laws are not as stringent as the Company’s operating policies, particularly in relation to the environment,
workplace practices, intellectual property and the giving of “gifts”, Company policy will prevail.
How the Company Monitors and Ensures Compliance with its Code
The Board, management and all employees of the Company are committed to implementing this Code of Conduct
and each individual is accountable for such compliance. Disciplinary measures may be imposed for violating the
Code.
2.5
Shareholder Communication
The Board aims to ensure that shareholders are informed of all major developments affecting the Company’s state
of affairs. Information is communicated to shareholders as follows:
The Annual Financial Report is distributed to all shareholders (unless a shareholder has specifically requested
not to receive the document). The Board ensures that the annual report includes relevant information about
the operations of the Company during the financial year, changes in the state of affairs of the Company and
details of future developments, in addition to other disclosures required by the Corporations Act 2001;
developments, in addition to other disclosures required by the Corporations Act 2001;
Release of a Half‐Yearly Report to the Australian Stock Exchange Limited;
The Company’s website at www.cardinalresources.com.au; and
Proposed major changes in the economic entity which may impact on share ownership rights are submitted
to a vote of shareholders.
The Board encourages full participation of shareholders at the Annual General Meeting to ensure a high level of
accountability and identification with the Company’s strategy and goals. Shareholders are responsible for voting on
appointment of Directors, appointment of auditors, level of remuneration of Non‐Executive Directors and any
matters of special business.
Cardinal Resources Limited – Annual Report 2014
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SHAREHOLDER INFORMATION
1
Distribution of holders
As at 25 September 2014 the distribution of shareholders was as follows:
Ordinary shares
Size of holding
1 – 1,000
1,001 –5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
2
Voting rights
Number of holders
2
6
92
136
110
346
There are no restrictions to voting rights attached to the ordinary shares. On a show of hands every member
present in person will have one vote and upon a poll, every member present or by proxy will have one vote
each share held.
3
Substantial shareholders
The names of the substantial shareholders who have notified the Company in accordance with Section 671B of
the Corporation Act 2001 are;
Shareholder
St Barnabas Investments Pty Ltd
Arthur Koimtsidis
Panga Pty Ltd
Riverfront Nominees Pty Ltd
Oceanic Capital Pty Ltd
4
Top 20 shareholders
Shares held
5,668,432
4,225,000
4,150,397
3,859,683
3,844,012
Percentage
interest %
7.73%
5.89%
5.79%
5.38%
5.24%
The names of the 20 largest shareholders on the share register as at 25 September 2014, who hold 55.82% of
the ordinary shares of the Company, were as follows;
Shareholder
St Barnabas Investments Pty Ltd
Mr Arthur Koimtsidis
Panga Pty Ltd
Riverfront Nominees Pty Ltd
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