2017
ANNUAL
REPORT
TS PAGE
I MANAGEMENT’S DISCUSSION & ANALYSIS
II
FINANCIAL STATEMENTS
III ANNUAL INFORMATION STATEMENT
TS PAGE
Board of Directors
Kevin Tomlinson
Archie Koimtsidis
Malik Easah
Mark Connelly
Simon Jackson
Robert Schafer
Non‐Executive Chairman
Managing Director
Executive Director
Non‐Executive Director
Non‐Executive Director
Non‐Executive Director
Chief Financial Officer
Derrick Weyrauch
Company Secretary
Australia
Sarah Shipway
Canada
Charlotte May
Suite 1, 28 Ord Street
West Perth WA
Tel: + 61 8 6558 0573
Fax: + 61 8 9322 6610
Durugu Residential Area KUMBOSCO,
BOLGATANGA, GHANA
Tel: + 233 (0) 261 905 220
www.cardinalresources.com.au
info@cardinalresources.com.au
Australia
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Level 11, 175 St Georges Terrace
Perth WA 6000
Canada
Computershare Investor Services Inc
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Toronto, Ontario, M5J2Y1 Canada
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Fax: + 1 416 981 9800
Canada
Bennett Jones LLP
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Toronto ON M5X 1A4
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Int: +61 8 9323 2000
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Australia
Steinepreis Paganin
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Perth WA 6000
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Lawyers
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TS PAGE
MANAGEMENT’S
DISCUSSION &
ANALYSIS (I)
Page 2 of 43
(the “Company” or the “Corporation” or “Cardinal”)
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended June 30, 2017
GENERAL
This Management’s Discussion and Analysis (“MD&A”) supplements, but does not form part of, the audited
consolidated financial statements of the Company for the year ended June 30, 2017 and notes thereto. The
following information, prepared as of September 29, 2017, should be read in conjunction with the Company’s
audited consolidated financial statements for the year ended June 30, 2017 and notes thereto. The Company
reports its financial position, results of operations and cash flows in accordance with International Financial
Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). All amounts
are expressed in Australian dollars unless otherwise indicated.
Additional information relevant to the Company’s activities can be found on SEDAR at www.sedar.com.
Cardinal’s shares are listed on the Australian Securities Exchange (“ASX”) and Toronto Stock Exchange (“TSX”)
under the symbol “CDV”, while its listed stock options (warrants) are listed on the ASX under the symbol
“CDVOA.”
FORWARD LOOKING INFORMATION
This MD&A may contain “forward‐looking information” under applicable Canadian securities laws that reflect the
Company’s current expectations and projections about its future results. When used in this MD&A, words
such as “will”, “may”, “should”, “estimate”, “intend”, “expect”, “anticipate” and similar expressions are
intended to identify forward‐looking information, which, by its very nature, is not a guarantee of the
Company’s future operational or financial performance.
Forward‐looking information includes statements that are not historical facts and includes but is not limited to:
Estimates and their underlying assumptions;
A.
Statements regarding plans, objectives and expectations with respect to the effectiveness of the
Company’s business model, future operations, the impact of regulatory initiatives on the Company’s
operations and market opportunities;
General industry and macroeconomic growth rates;
Expectations related to possible joint or strategic ventures; and
Statements regarding future performance.
B.
C.
D.
Forward‐looking information used in this MD&A is subject to various known and unknown risks, uncertainties
and other factors, most of which are difficult to predict and generally beyond the control of the Company.
These risks, uncertainties and other factors may include, but are not limited to, unavailability of financing,
failure to identify commercially viable mineral reserves, fluctuations in the market valuation for commodities,
difficulties in obtaining required approvals for the development of a mineral project, and other factors.
With respect to forward‐looking information contained in this MD&A, the Company has made assumptions.
Management’s Discussion & Analysis June 30, 2017
Page 3 of 43
Readers are cautioned not to place undue reliance on forward‐looking information, which speaks only as of the
date of this MD&A or as of the date otherwise specifically indicated herein. Due to risks, uncertainties and
other factors, including the risks, uncertainties and other factors identified above and elsewhere in this MD&A,
actual events may differ materially from those anticipated in such forward‐looking information. The Company
disclaims any intention or obligation to update or revise any forward‐looking information, whether as a
result of new information, future events or otherwise, except as required by securities law.
DESCRIPTION OF BUSINESS
The principal activity of the Corporation (and its subsidiaries) is gold exploration in Ghana. The Corporation holds
interests in five tenements prospective for gold mineralisation in Ghana in two NE‐SW trending Paleo‐
Proterozoic granite‐greenstone belts: the Bolgatanga Project and the Namdini Gold Project (“Namdini Gold
Project” or “Namdini”), which are, respectively, located within the Nangodi and Bole‐Bolgatanga Greenstone
Belts in northeast Ghana, and the Subranum Project, which is located within the Sefwi Greenstone Belt in
southwest Ghana.
The main focus of activity is the Namdini Gold Project where an Indicated Mineral Resource of 120 M tonnes
grading 1.1 g/t Au for 4.3 Moz Au and an Inferred Mineral Resource of 84 M tonnes grading 1.2 g/t Au for 3.1
Moz Au each at a 0.5 g/t Au cutoff grade, has been established. The map that follows shows the location of the
Namdini Gold Project and the Corporation’s other properties in Ghana.
Cardinal Resource’s Tenements in Ghana
Management’s Discussion & Analysis June 30, 2017
Page 4 of 43
CORPORATE HIGHLIGHTS
On November 7, 2016, the Company reported an initial Mineral Resource estimate for the Namdini Gold
Project of 3.8 Moz Au of Inferred and 0.25 Moz Au of Indicated gold resources, at a 0.5 g/t gold cut‐off
grade, calculated in accordance with the JORC 2012 Code.
Following the initial Namdini Mineral Resource estimate, on February 7, 2017, Cardinal continued reporting
drilling assay results that demonstrated resource extensions to the east, south and down‐dip.
On July 27, 2017, the Company reported results for Phase Two of its metallurgical test programme at
Namdini. Utilizing standard gold recovery techniques, the Company demonstrated a gold recovery rate of
86% with a conventional grind‐flotation‐regrind‐CIL flowsheet.
On September 18, 2017, the Company announced an updated Mineral Resource estimate for the Namdini
Gold Project in Ghana, West Africa. The updated Mineral Resource estimated an Indicated Mineral Resource
of 120 M tonnes grading 1.1 g/t Au for 4.3 Moz Au and an Inferred Mineral Resource of 84 M tonnes grading
1.2 g/t Au for 3.1 Moz Au, each at a 0.5 g/t Au cut off. On August 14, 2017, the Company announced a 4km
long auger drill hole soil gold anomaly on its Kungongo Prospect located 45 Km west of the Namdini Project.
On July 13, 2017, the Company reported that a Large‐Scale Mining License for Namdini was granted by the
Minister of Lands and Natural Resources of Ghana. Additionally, the Company has executed the necessary
documentation to assign the ‘Namdini Mining Licence’ to a wholly owned subsidiary of Cardinal.
Subsequent to June 30, 2017, the Company acquired two large scale prospecting licences located in
Northeastern Ghana from a subsidiary of Kinross Gold Corp. The licenses are strategically located adjacent to
Cardinal’s Ndongo tenement and cover 114 square kilometers, thereby increasing the combined Ndongo
tenements to 287 square kilometers. The enlarged area significantly increases Cardinal’s landholdings over
the Namdini major regional shear.
On July 10, 2017, the ordinary shares of the Company began trading in Canada, on the TSX, under the symbol
“CDV”.
On April 21, 2017, the Company announced the completion of a placement (the “April 2017 Placement”) of
45,598,266 Ordinary Shares to sophisticated and professional investors at an issue price of $0.50 per
Ordinary Share for aggregate gross proceeds of $22,799,133.
On April 12, 2017, following the receipt of Shareholder approval, 26,000,000 unlisted options (“Unlisted
Options”) were issued to certain officers and directors of the Corporation. Such Unlisted Options vest in
three tranches upon the achievement of certain specified performance criteria, have an exercise price of
$0.50 and expire on April 12, 2022. On August 1, 2017, 2,500,000 unlisted options were cancelled.
On July 19, 2016, the Corporation announced that it had issued 55,518,670 fully paid Ordinary Shares at a
price of $0.29 per Ordinary Share as the first part of a placement (the “July 2016 Placement”). On August
26, 2016, the Corporation announced the completion of the second tranche of the July 2016 Placement and
that, following shareholder approval at the general meeting of Shareholders, 19,481,330 fully paid Ordinary
Shares had been issued at a price of $0.29 per Ordinary Share.
As at June 30, 2017, cash and cash equivalents amounted to $28,592,718 (June 30, 2016 ‐ $4,864,822).
OUTLOOK
The Company is focused on the development of the Namdini Project through a Mineral Resource expansion
drilling programme and engineering studies, which will form the basis of a Preliminary Economic Assessment
(“PEA”).
Additional drilling is in progress to further improve Mineral Resource classification and to further expand the
resource. Cardinal anticipates continued newsflow and is planning another Mineral Resource update which will
feed into the ongoing PEA study.
Management’s Discussion & Analysis June 30, 2017
Page 5 of 43
Other drilling planned on the Namdini Gold Project, which will take place over the next year, will include
Geotechnical studies, close spaced Grade Control test patterns, Hydrogeological studies and Sterilization
programs over possible infrastructure location sites.
Development work going forward will also be focused on finalizing all necessary permits and design study phases
required to construct and commission a fully operational mine.
Diamond (DD), Reverse Circulation (RC) and Auger drilling is also planned for Cardinal’s regional tenements in
the Bolgatanga area which consist of the Ndongo Prospect, the Kungongo Prospect and the Bongo Prospect.
Detailed ground Geophysical surveys are also in progress at these tenements.
THE NAMDINI GOLD PROJECT
Property Title
Cardinal currently holds its interest in the Namdini Gold Project through an agreement dated July 23, 2014 (as
amended, the “Savannah Agreement”) between Savannah Mining Ghana Limited (“Savannah”) and Cardinal
Mining Services Limited (“CMS”), a wholly‐owned subsidiary of Cardinal, and agreements with the holders of
small scale mining licenses (“SML”) within the area comprising the Namdini Gold Project. Pursuant to the
Savannah Agreement, CMS and Savannah agreed that CMS would have an exclusive right of first refusal to
provide technical and financial support towards the development of the mining rights now comprising the
Namdini Gold Project, in exchange for which CMS would be entitled to “the entire gross mineral values” won
from any mining license in respect of which CMS provided support.
Namdini Project Proximity Map.
Management’s Discussion & Analysis June 30, 2017
Page 6 of 43
On May 11, 2017, Savannah and CMS entered into an amending agreement to the Savannah Agreement that,
among other things, defines “entire gross mineral values” as “the amount equal to the difference of (a) the gross
proceeds received by or on behalf of, or applied for the benefit of, SML from the sale or other disposal of any
mineral or metallic product extracted and recovered from the area covered by the Mining License(s) to any party
other than CMS or any affiliate of CMS less (b) any taxes or royalties that were paid by SML (other than any such
taxes or royalties that were paid by SML using funds provided by CMS or an affiliate of CMS).”
Pursuant to the Savannah Agreement, Savannah has entered into Sale and Purchase Agreements and license
relinquishment agreements with holders of small scale mining licenses within the area of the Namdini Lease (as
defined below) where the holders of these small‐scale mining licenses will have surrendered their small‐scale
mining licenses and all mineral rights to form part of the proposed Namdini Lease area. The small‐scale licenses
are in the process of being surrendered. The Savannah Agreement has an indefinite term, and neither party is
entitled to assign its rights or obligations under the Savannah Agreement.
Malik Easah, an executive director of Cardinal, is also the sole shareholder and director of Savannah. Savannah’s
sole business is the Savannah Agreement. Pursuant to an Option & Loan Agreement made in 2015 (the “Option
Agreement”) between Mr. Easah, Savannah and CMS, CMS holds an option to purchase all the outstanding
shares of Savannah from Mr. Easah for US$1.00 and holds all validly executed and irrevocable documents to give
effect to the purchase upon exercise of the option granted under the Option Agreement. The Option Agreement
also gives CMS the option to purchase all mining leases held by Savannah for US$1.00.
Pursuant to the Option Agreement, Savannah has agreed to hold any mining licenses applied for, or granted in
favour of, Savannah as trustee for CMS pending CMS exercise of its option to purchase the shares of Savannah or
its exercise of its option to purchase such mining licenses. The Option Agreement has an indefinite term, and
may be terminated by a non‐breaching party in the event that a party is in breach of the agreement and such
breach remains uncured for 90 days. CMS is entitled to assign its rights and obligations under the Option
Agreement in its absolute discretion and the other parties to the Option Agreement are not permitted to assign
their rights or obligations thereunder without the written consent of CMS.
The Minister signed a mining lease for Savannah (the “Namdini Lease”) on October 12, 2016 over an area of
approximately 19.54 km² in the Dakoto area of the Talensi District Assembly in the Upper East Region of Ghana.
The Namdini Lease is for an initial period of fifteen years ending October 11, 2031. An application can also be
submitted for an extension of the Namdini Lease if required. The Namdini Lease is currently being processed by
the Ghana Government. The final registration of the Namdini Lease to Savannah by the Ghana Government was
completed during July 2017.
Cardinal and Savannah have both signed the necessary documentation to assign the Namdini Mining License to
Cardinal Namdini Mining Limited (Cardinal Namdini), a wholly owned subsidiary of Cardinal, for $1.00 as per the
Savannah Agreement.
There are 82 small scale mining licenses within the area of the Namdini Lease. It is Cardinal’s intention and
expectation that Savannah will purchase all the small‐scale mining licenses in the area covered by the Namdini
Lease. To date, Savannah has purchased or obtained rights to purchase a significant number of these licenses,
including all such licenses covering the areas that Cardinal considers material to the mineralisation in the area
covered by the Namdini Lease. Small scale licenses held by Savannah are intended to be relinquished to the
Minerals Commission at the appropriate time.
On May 11, 2017, Savannah, CMS, CNM and Mr. Easah signed an agreement (the “Option Exercise Deed”) giving
effect to and providing for the assignment of the Namdini Lease to CNM. Pursuant to the Option Exercise Deed,
the parties agreed that, upon receipt of a written direction in agreed form from CMS, Savannah would take all
action and execute all instruments required to effect the assignment of all of Savannah’s rights and obligations
under the Namdini Lease to CNM. Under the Option Exercise Deed, CNM was also appointed as Savannah’s
Management’s Discussion & Analysis June 30, 2017
Page 7 of 43
attorney to do anything that it is obliged but has failed to do under the Option Exercise Deed or the Namdini
Lease. The Option Exercise deed is for an indefinite term.
Under the 2006 Mining Act the indirect transfer of ownership of a mining lease is subject to the non‐objection of
the Minister, and direct assignment of a mining lease requires the consent of the Minister. Cardinal does not
anticipate that any objection will be made by the Minister to the transfer of the Namdini Lease from Savannah
to CNM.
Mineral Resources
In September 2017, Cardinal commissioned MPR Geological Consultants Pty Ltd (“MPR”) to carry out an
independent updated Mineral Resource estimate for scoping study purposes, using Multiple Indicator Kriging
(“MIK”) and all of the updated drill hole database, with an effective date September 11, 2017. The MPR MIK
estimate reports increased Indicated tonnages at similar gold grades for higher contained gold at potentially
economic cut‐off grades.
Lower cut‐off
grade (g/t)
0.3
0.4
0.5
0.6
0.7
0.3
0.4
0.5
0.6
0.7
Million Tonnes
(Mt)
Average Grade
(Au g/t)
Indicated Resources
0.9
1.0
1.1
1.2
1.3
Inferred Resources
1.0
1.1
1.2
1.3
1.4
159
140
120
102
86
111
98
84
72
61
Million ounces
(Au Moz)
4.8
4.6
4.3
4.0
3.6
3.5
3.3
3.1
2.9
2.7
September 2017 MPR MIK NI43‐101 and JORC 2012 compliant resource estimate
Notes
JORC (2012) Code was followed for Mineral Resources. MRP has reconciled the Mineral Resources to
CIM Definition Standards (2014) and there are no material differences.
Mineral Resources are estimated at a cut‐off grade of 0.5 g/t Au constrained by a preliminary pit shell.
Mineral Resources are estimated using a long‐term gold price of US$1,500 per ounce.
Incorporates drill holes completed as of September 11, 2017.
Numbers may not add due to rounding.
1.
2.
3.
4.
5.
The table above highlights Mineral Resource estimations at a series of cut‐off grades. Currently, the 0.5 g/t Au
cut‐off grade approximates to an operational parameter that the Company believes to be applicable. This is in
accordance with the guidelines of Reasonable Prospects for Eventual Economic Extraction (“RPEEE”) per the
Canadian Institute of Mining, Metallurgy and Petroleum “CIM Definition Standards for Mineral Resources and
Mineral Reserves” (CIM, 2014) and the Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves (the JORC Code 2012).
MPR estimated recoverable resources for Namdini using MIK with block support adjustment, a method that has
been demonstrated to provide reliable estimates of recoverable open pit resources in gold deposits of diverse
geological styles. The mineralized domain used for the current study was interpreted by MPR and Cardinal
geologists on the basis of two metre down‐hole composited gold grades and captures zones of continuous
mineralisation with composite grades of greater than nominally 0.1 g/t Au. The domain trends north‐northeast
Management’s Discussion & Analysis June 30, 2017
Page 8 of 43
over 1.2 km and dips approximately 60o to the west with an average horizontal width of approximately 350m.
The Mineral Resource can reasonably be expected to provide appropriately reliable estimates of potential
mining outcomes at the assumed selectivity, without application of additional mining dilution or mining recovery
factors. Validation of the MIK model was undertaken visually and statistically.
Mineral Processing and Metallurgical Testing
Initial metallurgical testing was conducted, in 2016, on an initial composite sample obtained from a single drill
hole. Management does not consider the resultant master composite as representative of the Namdini deposit
and therefore cautions readers with respect to the reliance on the initial report.
In July 2017, the Company reported interim results for Phase Two of its metallurgical test programme at
Namdini. Utilizing standard gold recovery techniques the company demonstrated a gold recovery rate of 86%
with a conventional grind‐flotation‐regrind‐CIL flowsheet.
The Phase Two metallurgical test programme is focused on determining resource variability for the Company’s
main lithology domains being metavolcanics, granite and diorite. The test programme is developed to enhance
metallurgical understanding in order to help ensure a robust process design.
Cardinal selected 16 separate life of mine drill holes as representative samples from the three main lithologies
across the entire deposit. Each of the five metre downhole sample lengths were then composited by lithology for
metallurgical testing.
The geostatistical resource model was used to target the average grade of the combined sample for each
lithology, based on a notional cut‐off grade of 0.4 g/t Au (“grams per tonne gold”). The intervals were selected
to ensure that the following criteria were met:
Representative spatial distribution within the overall Namdini deposit,
A range of gold grades, predicted to be encountered during normal mining operations, and
Average gold grades matching the overall Namdini geostatistical resource model above a 0.4 g/t Au cut‐
off
In addition to the above, the Company is conducting additional tests for the anticipated starter pit area. The
supplemental metallurgical testing is still in progress.
As the metallurgical testing advances in the project development phase, the process flowsheet will continue to
be optimized in order to provide the necessary detailed design criteria.
Management’s Discussion & Analysis June 30, 2017
Page 9 of 43
Project Development Activities
Cardinal developed a study programme to advance the Namdini Gold Project. This consisted of engaging
consultants to assist with the phased development of the Namdini Gold Project. The consultants and their roles
are tabulated below:
Consultant
Suntech
IMO
OMC
Gekko
Lycopodium
Golder & Associates
Nemas Consult
Cardno BEC
Responsibility
Fresh Rock Metallurgical Testwork
Fresh Rock Metallurgical Testwork Scope of
Work
Comminution Design
Oxide Metallurgical Testwork
Process and Infrastructure Design
Mining Design
ESIA
Power Supply Study
Phase
Phase 1 metallurgical testwork
Phase 2 LoM metallurgical testwork
Scoping Study
Scoping and Prefeasibility Study
Scoping and Prefeasibility Study
Scoping and Prefeasibility Study
Full Permit and Licencing Phases
Scoping Study
The Company engaged Lycopodium Minerals Pty Ltd. (“Lycopodium”) and Golder Associates Ltd. (“Golder”) to
evaluate processing and mining options, respectively, for the Namdini Gold Project.
Independent Metallurgical Operations Pty Ltd. (“IMO”) are contracted to assist the Company in developing
testwork programmes through the different phases of the Namdini Gold Project. Suntech Geometallurgical
Laboratories (“Suntech”) and Gekko are contracted by the Company to undertake metallurgical testwork studies
on establishing the composition and amenability of the resource to different processing techniques. Testwork is
ongoing and entering into an optimization phase.
Oreway Mineral Consultants (“OMC”) are responsible for the comminution circuit design and interface directly
with the process designers in finalizing the comminution circuit requirements of the process.
Lycopodium’s mandate comprises the process plant, associated infrastructure and tailings facilities, while being
supported by Knights Piesold Ltd with respect to tailings management.
Golder’s mandate comprises geological, hydrology, hydrogeology, mining, geotechnical and environmental
services.
Cardno BEC completed a scoping study on the power reliability in Ghana and also considered different supply
options with recommendations that best suit the Company’s requirements from a technology and cost point of
view.
Three project size options are currently being evaluated; they include a 4.5 million tonne per annum (“mtpa”), 7
mtpa and 9.5 mtpa throughput.
Environmental Studies
Environmental matters in Ghana, including those related to mining, fall primarily under the oversight of the EPA,
as well as the Minerals Commission and the Inspectorate Division of the Minerals Commission. The EPA has laws
and regulations that govern, among other things, environmental and socio‐economic impact assessments and
statements, environmental management plans, emissions into the environment, environmental auditing and
review, and mine closure and reclamation, to which the Corporation’s operations are subject. Additional
provisions governing mine environmental management are provided in the 2006 Mining Act and the various
Minerals and Mining Regulations which came into force in 2012.
Management’s Discussion & Analysis June 30, 2017
Page 10 of 43
Cardinal duly registered the Namdini Gold Project with the EPA through the submission of an application form.
On November 20, 2016, the EPA, under reference number CA 6954/2 directed Cardinal to carry out an
Environmental Impact Assessment study (“EIA”) and submit an Environmental Impact Statement (“EIS”) to the
EPA, in line with the requirement of the Ghana EIA Procedures and Legislative Instrument 1652. As a first phase
in the preparation of the EIS report, the EPA has further directed that a scoping study to generate the terms of
reference for the EIA study be conducted and that a scoping report be submitted to the EPA for review.
NEMAS Consult Ltd (“NEMAS”), of Accra, Ghana, has been contracted by Cardinal to undertake the EIA for the
Namdini Gold Project. NEMAS has undertaken a site reconnaissance visit and commenced the scoping stage of
the process in accordance with the procedures for the EIA study (NEMAS, 2017).
Mining License
On July 13, 2017, the Company reported that a Large‐Scale Mining License for Namdini was granted by the
Minister of Lands and Natural Resources of Ghana. Additionally, the Company has executed the necessary
documentation with Savannah to assign the ‘Namdini Mining License’ to a wholly owned subsidiary of Cardinal.
The license is for an initial period of 15 years and is renewable.
The Namdini Mining License covers an area of 19.54 Sq Km in the Upper East Region of Ghana. Savannah
completed an EIS for Namdini and has filed the EIS with the Environmental Protection Agency (“EPA”). Following
completion of a PEA, Cardinal will submit to the Minerals Commission an updated EIS and an application for an
Operating Permit for the project scale envisioned in the PEA.
Social and Community
The only local community near the Namdini site comprises approximately 125 small‐scale miners and their
families. Management believes that the relationship between Cardinal and the local small‐scale miners is cordial
and respectful, especially as the miners are allowed to proceed with minor surface artisanal mining whilst
Cardinal exploration activities are ongoing.
Cardinal has undertaken various community support projects including building a community hall, as well as
drilling and equipping a potable water well.
OTHER PROPERTIES
Bolgatanga Project
The Bolgatanga Project consists of the Ndongo Prospect, the Kungongo Prospect and the Bongo Prospect.
Ndongo Prospecting License
The Ndongo Prospecting License was granted to Cardinal Resources Ghana Limited to prospect for gold in the
Bolgatanga and Telensi Nabdam District in the Upper East Region in the Republic of Ghana. The Ndongo
Prospecting License covers a total land size of 106.65 km². This tenement has now been combined with the
recently purchased Kinross ground.
Property Acquisition
Subsequent to June 30, 2017, the Company acquired a 100% interest in two prospecting licenses from Red Back
Mining Ghana Limited, a subsidiary of Kinross Gold Corporation. The licenses are strategically located adjacent to
Cardinal’s Ndongo tenement (173.36 sq km) which increases the new Ndongo combined tenement area to
286.67 sq km.
Management’s Discussion & Analysis June 30, 2017
Page 11 of 43
This enlarged area significantly increases Cardinal’s land holding over the Namdini major regional shear and
allows the Company to extend its exploration programme into this highly prospective area.
Kungongo Prospecting License
The Kungongo prospect is located in northeast Ghana some 25 km southwest of Bolgatanga town and 45 km
west of Cardinal’s Namdini project. The prospect covers an area of 120 sq km.
The extensive regional Bole‐Bolgatanga shear zone occurs over a length of 6.5 km across the northwest corner of
the tenement. The tenement contains Birimian greenstones which extend northeast of the tenement boundary.
Granitoids occur over a large portion of this tenement.
The Bole‐Bolgatanga shear zone is regarded as prospective as it displays a level of structural complexity that
would possibly provide structural trap positions for mineralizing fluids. The Kungongo permit straddles the
contact between the Bole Greenstone Belt and the granodiorite intrusive for some 6.5 km. Several anomalous
gold occurrences have been identified along this contact and some late alkaline intrusives are known to have
gold associated with them along their margins.
Various geophysical surveys have been carried out over the Kungongo Prospect by Cardinal. These have been
processed and interpreted by Southern Geoscience Consultants (“SGC Perth Australia”).
These included:
1. Airborne magnetic‐radiometric survey with interpretation and targets.
2. Gradient Array IP‐Resistivity survey with interpretation and targets.
3. Ground magnetic survey.
The initial interpretation assumes the rocks and stratigraphy and/or structure are most likely dipping to the
northwest as the resistivity and chargeability patterns tend to suggest this. Cardinal plans to test this with the
upcoming drill programme.
The targets within the prospect area have been covered with detailed auger drilling which samples the saprolite
horizons below the overburden to delineate areas of gold anomalism that could then be correlated with the
geophysical targets to determine follow up priorities.
On August 14, 2017, the Company announced the results of the Auger soil Au results which identified a 4Km long
anomalous Au zone in the northern section of the prospect.
Management’s Discussion & Analysis June 30, 2017
Page 12 of 43
Kungongo auger gold‐in‐soil anomalies
Diamond and RC scout drill testing under selected targets has commenced and results are expected during the
coming year.
Bongo Reconnaissance License
The Bongo prospect is located in northeast Ghana within the Bolgatanga Municipality and Bongo District. The
prospect covers an area of 509.46 Km2. Access to the concession area is by the Tamale Bolgatanga highway and
branch‐off the Zorko Tarongo major road and the Nayarogo road from another branch‐off at Bongo on the same
Tamale Bolgatanga highway. There are quite a number of offsets connected to these roads that make the area
very much accessible.
The geology of the area forms part of the Birimian Supergroup that consists of the assemblage of Sedimentary
and Volcanic facies rocks and is intruded by both the belt and basin type granitoids. The Birimian sedimentary
and volcanic facies are oriented in the northeast and southwest trend from the southwestern to the northern
part of Ghana; enters into Burkina Faso and correlates to the greenstone belt in the Niger‐Burkina Faso area.
The concession is dominated by three major intrusive complexes, predominantly the intermediate to the foliated
felsic basin type granitoids, the unifoliated hornblende granitoids of intermediate to mafic composition and the
pink‐reddish Bongo granitoids. The rock units have been folded, faulted and metamorphosed.
Mineralisation is mainly represented by structurally controlled auriferous quartz veins. Regionally, mineralized
quartz veins are hosted in sheared Birimian metasediments and granitoids.
The airborne geophysical survey over the Bongo Prospect delineated six interpreted target areas containing ~40
km of possible mineralised structures.
Management’s Discussion & Analysis June 30, 2017
Page 13 of 43
Soil auger programmes were completed over targets identified by airborne geophysical surveys. Gradient Array
Induced Polarisation (GAIP) and Ground Magnetic (GMAG) ground geophysical surveys will be undertaken over
the Au anomalous areas.
Subranum Project
The Subin‐Kasu Prospecting License covers a total land size of 68.70 km² located in the Offinso and Ahafo‐Ano
South District of the Ashanti Region in the Republic of Ghana, expires on September 15, 2017, and is eligible for
renewal. The Subin‐Kasu Project is subject to a 2% NSR royalty.
EXPLORATION UPDATE
During the year, exploration activities were mainly comprised of RC and DD at Namdini. Other exploration
activities including comprehensive auger drilling campaigns and ground geophysics were completed on the
Bongo, Ndongo and Kungongo tenements.
Namdini Drilling
During the twelve months ended June 30, 2017, the following drilling activities were conducted:
A comprehensive in‐fill, extensional and step‐out drilling programme was conducted with up to 11 drill rigs on
site. Drilling included RC and HQ diamond drilling.
Drill Method
No. Holes
Total
(m)
No.
Samples
Duplicates Blanks Standards
Resource Drilling
DD
RC + DD tails
RC
Total
Sterilisation Drilling
DD
RC + DD tails
RC
Total
Grand Total
64
9
38
111
‐
‐
7
7
118
23,729
1,220
7,198
32,148
‐
‐
710
710
32,858
22,671
1,182
6,447
30,300
‐
‐
632
632
30,932
0
26
309
335
‐
‐
31
31
365
539
31
170
740
‐
‐
16
16
756
539
29
170
738
‐
‐
16
16
754
Drill hole statistics for Namdini to June 30, 2017.
Samples were submitted to SGS Laboratories in Burkina Faso and Ghana for standard fire assay. QAQC
protocols were observed by the taking of duplicates (RC drilling), and inserting in‐house blanks and
commercial certified reference material (CRM) as standards.
Diamond Drilling
The drill rigs for the diamond drill holes were all aligned at ‐65⁰ dip drilling east which allows for the shallowing
of the drill hole with depth. The azimuth was set at 095⁰ instead of 100⁰ (normal to the strike of the formations)
as the borehole trace usually deflects to the right with depth due to the clockwise rotation of the drill rods.
The diamond drill holes were cored from surface. The soft near surface materials were drilled with a Triple Tube
core barrel to reduce core losses. Once harder rock was encountered, HW steel casing was inserted for drill hole
stability and HQ size core was drilled to their final depths.
Management’s Discussion & Analysis June 30, 2017
Page 14 of 43
The diamond drill holes were surveyed near the top of each drill hole, then every 30m down the hole to
determine the dip and azimuth of the drill holes with depth.
RC Drilling
The general strike of the host rocks is 010⁰ and dipping at approximately ‐60⁰ W. The RC drilling was orientated
normal (at 90⁰) to the strike of 100⁰ azimuth with all drill holes inclined to the east as these drill holes were all
planned to be relatively shallow and did not deviate very much from their intended planned directions.
The soft near surface materials were drilled until harder formations were encountered, then PVC casings were
inserted for drill hole stability. The transition and fresh rocks were drilled with button bits attached to the
hammer and dry chips were recovered at 1m intervals through a cyclone.
Combination RC and Diamond Drilling
Where deeper drilling was planned, RC drilling was initially done until water was encountered, then HW steel
casing was inserted for drill hole stability and HQ size core was drilled to the planned final depths.
The RC drill hole was surveyed only for dip at the end of the RC drilled portion of the drill hole as the azimuth
could not be determined due to the proximity of the metal rods which affects the magnetic readings. The drill
hole was surveyed for both azimuth and dip a short distance below the end of the HW casing, and then every
30m down the hole to determine the dip and azimuth of the drill hole until completed.
Diamond Drill Core
The core was orientated at each drill run using a digital instrument. The core was marked showing the base of
the drill hole, then the core from each drill run was laid in a length of angle iron to fit the core together so that
the orientation line could be drawn along the length of the core at the drill site. Initial geotechnical parameters
were measured at the drill site, with more detailed parameters measured in the core shed using this orientation
line as the datum line.
The core was photographed, cut in half, then quartered, with the same quarter sector consistently sampled to
reduce sample bias. The remaining three quarters of core were stored in metal core trays and placed on metal
racks under cover in the core shed at Bolgatanga. The quarter core samples were sent to the SGS Laboratories in
both Burkina Faso and Tarkwa, Ghana for fire assay to speed up the receipt of results.
RC Drill Sampling
RC samples were weighed and split in the field to obtain two samples from each meter drilled, with 1 sample for
laboratory analysis and the other stored at the Bolgatanga core yard for repeat analyses if required. Chips
selected from meter sample bags were washed, placed in chip trays, logged and photographed both dry and
wet. Completed chip trays were stored at the Bolgatanga core shed.
Namdini Auger Drilling
Grids of variable dimensions were constructed over each sample site which generated UTM co‐ordinates for
each drill hole. The drill rigs were mounted on 4 x 4 vehicles and drilled vertically through the soil overburden
and into the saprolite horizons below.
The saprolite horizons were sampled with roughly 3kg samples taken at each drill site. Field duplicates, blanks
and standards were alternately inserted after every 10th sample for QAQC controls.
Management’s Discussion & Analysis June 30, 2017
Page 15 of 43
The infill auger grid over the Main Namdini mineralized trend along strike to the north was at 50m x 50m, while
the grid over the remainder of the tenement area was at 100m x 50m.
A summary of auger drilling undertaken during the twelve months ended June 30, 2017 is as follows:
Drill Method
Auger Drilling
No.
Holes
4,815
Total
(m)
18,266.00
No.
Samples
4,815
Duplicates
Blanks
Standards
150
153
151
Total
Samples
5,269
Auger Drill hole statistics for Namdini to June 30, 2017
Gradient Array Induced Polarisation (GAIP) and Ground Magnetic surveys were previously completed over a
19.58 km2 area around the Namdini Gold Project.
The geochemical results will be combined with the ground geophysical interpretations to delineate drill
targets to extend and further enhance the gold potential of the Namdini Gold Project area.
The below figure highlights the anomalous Au areas within the Namdini Project Mining Lease. Drilling has
commenced to test these anomalous targets, and to sterilize potential mining infrastructure areas.
Namdini Project Auger Soil results.
Management’s Discussion & Analysis June 30, 2017
Page 16 of 43
REGIONAL EXPLORATION UPDATE
Bolgatanga Project (includes Ndongo, Kungongo, Bongo)
During the 12 months ended June 30, 2017, the Company conducted geological mapping, geophysical surveys
and auger drilling. A summary of regional auger drilling conducted during the year is as follows:
Namdini
Kungongo
Ndongo
Bongo
Nangodi
Totals
No.
Holes
4,815
4,043
3,441
8,180
39
Total
(m)
18,266
17,662
12,291
34,386
125
20,518 82,730
No.
Samples
4,815
4,043
3,441
8,180
39
20,518
Duplicates Blanks Standards
150
129
113
274
1
667
153
131
109
273
0
666
151
119
112
268
3
653
Auger Drill hole statistics for Regional Prospect Areas to June 30, 2017
Regional Prospect Areas Proximity Map
Management’s Discussion & Analysis June 30, 2017
Page 17 of 43
Ndongo Prospect
Infill shallow auger soil drilling was completed at 200m x 50m over a portion of Ndongo. The results from this
programme have identified scattered Au soil anomalies on 200m line spacing, with two possible drill targets.
These Au anomalous targets will be tested over the coming months with a combination of RC and DD scout drill
holes.
A drill hole and exploration data set obtained from the Kinross purchase of the Ndongo area, which contains the
historic Nangodi Mine, will be reviewed in detail and planned exploration programmes will commence over the
coming year.
Bongo Prospect
During the 12 months ended June 30, 2017, an airborne geophysical survey that was conducted over the Bongo
Prospect that delineated six interpreted target areas containing ~40 km of possible mineralized structures.
Two areas were selected for Auger drill hole soil sampling and the programme was completed successfully.
These target areas will be tested with RC and DD scout drill holes.
Kungongo Prospect
Infill shallow soil auger drilling was completed at 100m x 50m over the Kungongo Prospect Grid 1, with 1,852
holes drilled totalling 7,659m, with a combined total of 2,037 samples, including duplicates, blanks and
standards, which were submitted to the SGS Tarkwa laboratory for bottle roll (BLEG) analyses.
During the 12 months ended June 30, 2017, infill shallow soil auger drilling was completed at 100m x 50m over
the Kungongo Prospect. This programme identified a 4km long anomalous Au zone coincident with a known
regional shear.
Drill testing under selected targets has commenced and results will become available during the next financial
year.
Subranum Project
Previous exploration at Subranum has established that the northeast extension to the regional Bibiani Shear
Zone is developed for approximately 9 km trending SW‐NE across the Subranum tenement.
Management’s Discussion & Analysis June 30, 2017
Page 18 of 43
2013 airborne survey over
reduced to pole first vertical derivative magnetic image
This previous exploration has established a northeast trending anomalous zone of 5.2 km from the southwest
boundary. Previous drilling, however, had been on 11 fences of varying distances between 200m and 500m
apart.
Cardinal has planned a systematic diamond drilling programme to cover this 5.2 km anomalous strike length to
properly evaluate the gold mineralisation contained within this anomalous zone.
Clearing of the previous drill access tracks was started during the quarter ended March 31, 2017, with diamond
drilling planned to start later in 2017.
A soil auger program is planned for the remaining 3.8 km strike length in the NE portion of the tenement to
initially cover an approximately 400m width across the strike of the Bibiani Shear Zone. After analysis of these
results, either RC or diamond drilling could be planned to further assess any anomalies.
Management’s Discussion & Analysis June 30, 2017
Page 19 of 43
Competent / Qualified Person Statement
The scientific and technical information in this MD&A that relates to the Namdini Gold Project has been
reviewed and approved by Mr. Richard Bray, a Registered Professional Geologist with the Australian Institute of
Geoscientists and Mr. Ekow Taylor, a Chartered Professional Geologist with the Australasian Institute of Mining
and Metallurgy. Mr. Bray and Mr. Taylor have more than five years’ experience relevant to the styles of
mineralisation and type of deposits under consideration and to the activity which is being undertaken to qualify
as a Competent Person, as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves” and as a Qualified Person for the purposes of NI43‐101. Mr. Bray
and Mr. Taylor are full‐time employees of Cardinal and hold equity securities in the Company.
The scientific and technical information in this MD&A that relates to Exploration Results, Mineral Resources or
Ore Reserves at the Bolgatanga Project and Subranum Project is based on information prepared by Mr. Paul
Abbott, a full time employee of Cardinal Resources Limited, who is a Member of the Geological Society of
South Africa. Mr. 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 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves”.
JORC 2012
This report contains information extracted from the following reports which are available for viewing on the
Company’s website www.cardinalresources.com.au:
18 Sep 2017
23 Aug 2017
10 Aug 2017
6 April 2017
18 May 2017
6 Apr 2017
21 Mar 2017
21 Feb 2017
7 Feb 2017
2 Feb 2017
19 Dec 2016
07 Nov 2016
Cardinal’s Namdini Deposit Mineral Resource Update
Namdini Infill Drilling
Namdini Drilling
Technical Report on Namdini Gold Project NI 43‐101 Report
Mineralisation Down to 600m Vertical Depth
Technical Report on Namdini Gold Project NI 43‐101 Report
Interim Metallurgical Update
NMDD062 Intersects Mineralisation Down‐Dip
Significant Resource Extension Drilling Results Returned
Interim Metallurgical Update
Namdini Infill and Up‐Dip Drilling Results Returned
4 Million Ounce Maiden Resource at Namdini
The Company confirms it is not aware of any new information or data that materially affects the information
included in this report relating to exploration activities 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.
Management’s Discussion & Analysis June 30, 2017
Page 20 of 43
SELECTED ANNUAL INFORMATION
The following table provides information for the year ended June 30, 2017, 2016 and 2015:
Exploration and evaluation expenditures
Corporate general and administration
Share based payments
Amortisation
Net comprehensive loss
Loss per share – basic and fully diluted
Total assets
Total liabilities
Shareholders’ equity
June 30, 2017
June 30, 2016
June 30, 2015
15,794,617
3,637,864
1,964,324
426,572
21,724,298
7.12
30,109,678
3,903,107
26,206,571
7,182,584
1,216,910
874,000
94,932
9,243,909
5.55
5,661,536
1,713,467
3,948,069
2,143,615
616,772
0
69,778
3,495,726
3.82
1,351,751
368,148
983,603
Exploration and evaluation expenditures were all incurred in Ghana. The Company maintains a policy to expense
all exploration and evaluation expenses as incurred; these costs include tenement acquisition costs.
Starting in 2015, due to the exploration success at the Company’s Namdini Gold Project, the Company has on a
year‐over‐year basis increased exploration and evaluation spending, in order to outline and ultimately increase
the confidence level in the Namdini resource base. A maiden resource was published in November 2016, while
an updated resource was published in September 2017.
During this period, minimal expenditures were incurred on the Bolgatanga Project and Subranum Project.
Corporate general and administration expenses along with share based payments increased due to increased
corporate activity as a result of the exploration success at Namdini. Corporate general and administration
expenses consist of corporate administration costs incurred by the corporate office in Perth and Canada.
During the period, corporate administration included an increase in legal expenses due to listing the Company’s
ordinary shares on the TSX in Canada. Perth office expenses include personnel, professional fees, compliance
and regulatory fees and investor relations expenses.
Share based payments represent the expensing of fair value of the award on grant date. Under the fair value
based method, compensation cost attributable to options granted is measured at fair value on the grant date
and amortised over the vesting period. The amount recognised as an expense is adjusted to reflect any changes
in the Company’s estimate of the shares that will eventually vest and the effect of any non‐market vesting
conditions.
Share based payment arrangements in which the Company receives goods or services as consideration are
measured at the fair value of the good or service received, unless that fair value cannot be estimated.
Total assets and shareholders’ equity increased significantly in 2017 due to the issuance of share capital, which
in turn increased cash resources as at June 30, 2017.
The increase in total liabilities for the year ended June 30, 2017 is mainly attributable to increased
operations at the Namdini Gold Project and corporate activities.
As the Company is in the exploration stage, it does not generate operating revenue.
Management’s Discussion & Analysis June 30, 2017
Page 21 of 43
SELECTED QUARTERLY INFORMATION
The following table provides information for the eight fiscal quarters ended June 30, 2017:
Exploration and evaluation expenditures
Corporate general and administration
Share based payments
Amortisation
Net comprehensive loss
Loss per share – basic and fully diluted
Total assets
Total liabilities
Shareholders’ equity
Exploration and evaluation expenditures
Corporate general and administration
Share based payments
Amortisation
Net loss
Loss per share – basic and fully diluted
Total assets
Total liabilities
Shareholders’ equity
June 30, 2017
March 31, 2017
5,561,110
1,327,354
1,416,544
40,856
8,422,184
4.98
30,109,678
3,903,107
26,206,571
3,996,084
1,395,836
433,481
30,653
5,963,935
2.14
13,327,164
1,416,759
11,910,405
June 30, 2016
March 31, 2016
3,305,663
441,449
874,000
25,749
4,450,549
2.63
5,661,536
1,713,467
3,948,069
973,599
279,138
0
21,039
1,321,485
2.22
6,873,156
379,945
6,493,212
December 31, 2016
4,529,757
504,573
114,299
37,559
5,113,088
0.02
19,133,568
1,692,945
17,440,623
September 30, 2016
1,390,162
410,101
0
317,504
2,225,091
1.28
3,408,822
375,660
3,033,162
December 31, 2015
2,309,771
378,347
0
28,043
2,736,428
0.02
3,638,427
298,085
3,340,342
September 30, 2015
593,551
117,976
0
20,101
735,447
1.29
3,408,822
375,660
3,033,162
Exploration and evaluation expenditures were all incurred in Ghana. The Company maintains a policy to expense
all exploration and evaluation expenses as incurred. These costs include tenement license acquisition costs.
Starting in 2015, due to the exploration success at the Company’s Namdini Gold Project, the Company has on a
year‐over‐year basis increased exploration and evaluation spending, in order to outline and ultimately increase
the confidence level in the Namdini resource base.
During this period, minimal expenditures were incurred on the Bolgatanga Project and Subranum Project.
Corporate general and administration expenses along with share based payments increased due to increased
corporate activity as a result of the exploration success at Namdini. Corporate general and administration
expenses consist of corporate administration costs incurred by the corporate office in Perth and Canada. Perth
office expenses include personnel, professional fees, compliance and regulatory fees and investor relations
expenses.
From January 1, 2017, the Company began to increase its operations, given the inaugural resource estimate in
November 2016.
From January 1, 2017, the Company’s corporate general and administration expenses increased due to increase
of Perth staff from 3 personnel from the quarter ended December 31, 2016 to 8 personnel for the quarter
ended March 31, 2017 and June 30, 2017, which included the appointment of a Project Manager and Chief
Financial Officer.
During the quarter ended March 31, 2017 and June 30, 2017, corporate administration included an increase in
legal expenses due to listing the Company’s ordinary shares on the TSX in Canada; the Company shares listed on
the TSX in Canada on July 10, 2017.
Management’s Discussion & Analysis June 30, 2017
Page 22 of 43
Share based payments represent the expensing of fair value of the award on grant date. Under the fair value
based method, compensation cost attributable to options granted is measured at fair value on the grant date
and amortised over the vesting period. The amount recognised as an expense is adjusted to reflect any changes
in the Company’s estimate of the shares that will eventually vest and the effect of any non‐market vesting
conditions.
Share based payment arrangements in which the Company receives goods or services as consideration are
measured at the fair value of the good or service received, unless that fair value cannot be estimated.
The variances in total assets and shareholders’ equity are mainly attributable to equity placements, which
increased cash resources, while funding the Company’s exploration and evaluation expenditures and
administration expenses decreased cash resources.
As the Company is in the exploration stage, it does not generate operating revenue.
RESULTS OF OPERATIONS
Exploration and evaluation expenditures
Corporate general and administration
Share based payments
Amortisation
Interest and other income
Foreign exchange loss (gain)
Net Loss for the period
Three months ended June 30,
Twelve months ended June 30,
2017
2016
2017
2016
5,561,110
1,327,354
1,416,544
40,856
76,534
38,343
3,305,663
441,449
874,000
25,749
11,286
61,043
15,794,617
3,637,864
1,964,324
426,572
149,596
(116,923)
7,182,584
1,216,910
874,000
94,932
43,706
2,347
8,548,492
4,574,532
21,790,704
9,322,373
For the three and 12 month period ended June 30, 2017, the exploration and evaluation expenditures
increased from comparable periods mainly due to the increase in exploration activities at the Namdini
Gold Project, with minimal expenditures on the Bolgatanga and Subranum Projects.
Increased corporate general and administration expenditures are a result of the Company’s increased
operational activities and listing the Company’s ordinary shares on the TSX in Canada during 2017.
For the three and 12 month periods ended June 30, 2017 and 2016, exploration and evaluation expenditures
comprise:
Three months ended June 30,
Twelve months ended June 30,
2017
2016
2017
2016
Direct exploration costs
Indirect exploration costs
Site general and administration costs
Exploration and evaluation expenditures
4,590,908
782,418
187,784
5,561,110
2,445,985
670,470
189,208
3,305,663
12,831,069
1,662,790
1,300,758
15,794,617
5,544,457
914,609
723,518
7,182,584
Direct and indirect exploration costs increased for the three and 12 months period ended June 30, 2017,
compared to the same periods in 2016, due to the execution of larger drill programs to define and
subsequently to upgrade gold resources at Namdini.
Management’s Discussion & Analysis June 30, 2017
Page 23 of 43
Site general and administration costs increased for the three and twelve months ended June 30, 2017,
compared to the same periods in 2016, mainly due to increased salaries, office and administrative, professional
fees and travel expenses associated with the increased activities at Namdini.
Corporate, General and Administrative Expenses
Corporate administration expenditures for the three and twelve months ended June 30, 2017 increased,
compared to the same periods in 2016, mainly due to increased payroll expenses for increased staffing,
increased legal and professional fees, increased compliance and regulatory expenses for the TSX listing in
Canada, and increased travel and investor relations expenses associated with the increased corporate and
project activities.
Share based Payments
For the three and twelve month period ended June 30, 2017, share based payments increased, compared to
the same periods in 2016, primarily due to on March 3, 2017 the Company issued a notice of meeting to
issue milestone options, at the time of the meeting the shares in Cardinal closed at $0.44. The milestone
options were issued on April 12, 2017; at this date the shares in Cardinal closed at $0.59. Further, at the
time the Company agreed to issue the milestone options on a 30‐day VWAP, being $0.33 per share.
The increase in share based payments is also attributable to more options vesting during the current periods
compared to same periods in 2016.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
At June 30, 2017, the Company had cash and cash equivalents of $28,592,718 (June 30, 2016 ‐ $4,864,822)
available and current liabilities of $3,903,107 (June 30, 2016 ‐ $1,713,467).
At June 30, 2017, the Company had a working capital balance of $25,741,175 (June 30, 2016 ‐
$3,272,158).
The increase in cash and working capital was primarily due to $44,549,133 being raised through private
placements, and was offset by an increase in the Company’s activities, thus depleting cash balances.
On April 21, 2017, the Corporation announced the completion of a share placement (the “April 2017
Placement”) of 45,598,266 Ordinary Shares to sophisticated and professional investors at an issue price of $0.50
per Ordinary Share for aggregate gross proceeds of $22,799,133.
On July 19, 2016, the Corporation announced that it had issued 55,518,670 fully paid Ordinary Shares at a price
of $0.29 per Ordinary Share as the first part of a placement (the “July 2016 Placement”).
On August 26, 2016, the Corporation announced the completion of the second tranche of the July 2016
Placement and that, following shareholder approval at the general meeting of Shareholders, 19,481,330 fully
paid Ordinary Shares had been issued at a price of $0.29 per Ordinary Share.
On March 8, 2016, the Corporation confirmed it had successfully completed a capital raising to sophisticated and
institutional investors to issue 47,333,310 fully paid Ordinary Shares at $0.12 per Ordinary Share (“March 2016
Placement”). 4,666,668 fully paid Ordinary Shares forming part of the March 2016 Placement were issued on
May 9, 2016 after being approved at the Corporation’s meeting of Shareholders held on April 27, 2016. On May
9, 2016, the Directors of the Corporation (namely, Messrs. Archie Koimtsidis, Malik Easah and Mark Thomas)
purchased 1,750,002 fully paid Ordinary Shares for proceeds to the Corporation of approximately $210,000, on
the same terms and conditions as the March 2016 Placement.
Management’s Discussion & Analysis June 30, 2017
Page 24 of 43
On September 21, 2015, the Corporation confirmed it had successfully completed a capital raising to
sophisticated and institutional investors to issue 52,215,000 fully paid Ordinary Shares at $0.10 per Ordinary
Share, together with one free attaching listed option (each, a “Listed Option”) for every two Ordinary Shares
subscribed for (the “September 2015 Placement”). The first tranche of such placement was completed on
September 25, 2015, when 28,164,816 Ordinary Shares were issued to raise a total of $2,816,481. On November
27, 2015, following the receipt of shareholder approval, the second tranche of Ordinary Shares and all the Listed
Options that were part of the September 2015 Placement were issued. The second tranche included the issue of
10,000,000 Ordinary Shares and 5,000,000 Listed Options to Macquarie Bank Limited (“Macquarie”). On
November 27, 2015, the Directors of the Corporation (namely, Messrs. Alec Pismiris, Archie Koimtsidis, Malik
Easah, Simon Jackson and Mark Thomas) purchased 8,117,116 Ordinary Shares and 4,058,558 Listed Options for
proceeds to the Corporation of approximately $812,000, on the same terms and conditions as the September
2015 Placement.
The Company is in the exploration stage and, therefore, has no cash flow from operations.
Funds raised from previous financings are being used towards continued corporate development and general
working capital purposes. The Company expects its current capital resources to be sufficient to cover its
planned fiscal year 2018 activities. Actual funding requirements may vary from those planned due to a number
of factors, including the progress of the Company’s business activities and current economic and financial
market conditions. The Company will continue to pursue opportunities to raise additional capital through
equity markets to fund its future exploration and operating activities; however, there can be no assurance that
such financing will be available on a timely basis and under terms which are acceptable to the Company.
COMMITMENTS AND CONTINGENCIES
The Corporation has commitments in respect to the use of an office premise in Perth, Western Australia, for
$5,300 per month until September 30, 2018. The Corporation has an option to extend the lease for three years
after September 30, 2018.
The Corporation has commitments in respect to the use of an office premise outside of Australia, for C$1,863
per month until March 31, 2018.
Cardinal Resources Subranum Limited entered into a sale and purchase agreement dated April 6, 2012 with
Newmont Ghana Gold Limited (a subsidiary of Newmont Mining Corporation) for the purchase of the Subranum
Project. On November 24, 2015, the relevant Minister of the 2006 Mining Act approved the sale. Cardinal
Resources Subranum Limited acquired 100% of the Subin Kasu Prospecting License and paid to Newmont Ghana
Gold Limited US$50,000 on June 12, 2016.
US$50,000 will be paid to Newmont Ghana Gold Limited on the first anniversary being June 13, 2017 and a final
US$100,000 on the second anniversary date being June 12, 2018. In addition, Cardinal Resources Subranum
Limited will be required to spend US$250,000 on exploration within the first year from June 21, 2016 and a
further US$750,000 by June 12, 2018. The Company has met the year 1 minimum expenditure requirements.
Cardinal Resources Subranum Limited will be required to pay Newmont Ghana Gold Limited US$50,000 per
annum from the date which Cardinal Resources Subranum Limited reports a “gold resource estimate” of 1Moz of
gold. Subject to the grant of a Mining Lease under the 2006 Mining Act, Cardinal Resources Subranum Limited
will be required to pay Newmont Ghana Gold Limited a 2% net smelter royalty.
Management’s Discussion & Analysis June 30, 2017
Page 25 of 43
OFF‐BALANCE SHEET ARRANGEMENTS
There are no off‐balance sheet arrangements to which the Company is committed.
PROPOSED TRANSACTIONS
There are no proposed transactions that have not been disclosed herein.
FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
In common with all other businesses, the Company is exposed to risks that arise from its use of financial
instruments. This note describes the Company’s objectives, policies and processes for managing those risks and
the methods used to measure them. Further quantitative information in respect of these risks is presented
throughout this consolidated financial statements.
The Company is exposed to the following financial risks: credit risk, liquidity risk and market risk.
The Board of Directors has overall responsibility for the determination of the Company’s risk management
objectives and policies and, whilst retaining ultimate responsibility for them, it has delegated the authority for
designing and operating processes that ensure the effective implementation of the objectives and policies to
the Company’s management.
The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly
affecting the Company’s competitiveness and flexibility.
The Company’s risk exposure and the impact on the Company’s financial instruments are summarized below:
Credit Risk
Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to
meet its contractual obligations. The Company’s credit risk is primarily attributable to its cash and cash
equivalents. The Company limits exposure to credit risk by maintaining its cash and cash equivalents with large
financial institutions.
As at June 30,
2017
9,562,815
19,029,903
28,592,718
2016
4,864,822
0
4,864,822
2015
839,755
0
839,755
DESCRIPTION
Cash held in bank accounts
Term deposits (i)
Total
(i)
Terms of term deposits
Term
30 days
60 days
30 days
12 months
Liquidity Risk
Interest Rate
1.50%
2.50%
1.60%
3.00%
Liquidity risk is the risk that the Company will encounter difficulty in satisfying financial obligations as they
become due. The Company’s approach to managing liquidity risk is to provide reasonable assurance that it will
have sufficient funds to meet liabilities when due. The Company manages its liquidity risk by forecasting cash
flows required by operations and anticipated investing and financing activities. At June 30, 2017, the Company
had cash and cash equivalents of $28,592,718 million (June 30, 2016 ‐ $4,864,822 million) available and current
Management’s Discussion & Analysis June 30, 2017
Page 26 of 43
liabilities of $3,903,107 (June 30, 2016 ‐ $1,713,467). All of the Company’s financial liabilities have contractual
maturities of less than 30 days and are subject to normal trade terms.
Market Risk
Market risk is the risk that the fair value of, or future cash flows from, the Company’s financial instruments will
significantly fluctuate due to changes in market prices. The value of financial instruments can be affected
by changes in interest rates and foreign exchange rates. Management closely monitors commodity prices,
individual equity movements and the stock market to determine the appropriate course of action to be taken
by the Company.
Currency Risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will
fluctuate due to changes in foreign exchange rates. The Company is exposed to fluctuations in foreign
currencies through its operations in Ghana. The Company monitors this exposure, but has no hedge positions.
As at June 30, 2017, the Company is exposed to currency risk through the following financial assets and
liabilities denominated in currencies other than the Australian dollar:
DESCRIPTION
Cash
Other receivables
Value added tax receivables
Accounts payable and accrued liabilities
Total
June 30, 2017
June 30, 2016
US$ AUD
Equivalent
Ghana Cede AUD
Equivalent
US$ AUD
Equivalent
Ghana Cede AUD
Equivalent
1,040,823
0
0
(1,921,309)
(880,486)
39,709
0
0
(347,494)
(307,785)
1,292,764
0
0
(143,317)
1,149,447
22,250
0
0
(77,982)
(55,732)
Based on the above net exposures at June 30, 2017, a 1% depreciation or appreciation of the above currencies
against the Australian dollar would result in an increase or decrease of approximately $12,395 (June 30, 2016:
$15,503) in the Company’s net loss and comprehensive loss for the year.
Interest Rate Risk
Interest rate risk consists of two components:
To the extent that payments made or received on the Company’s monetary assets and liabilities are affected
by changes in the prevailing market interest rates, the Company is exposed to interest rate cash flow risk.
To the extent that changes in prevailing market rates differ from the interest rate in the Company’s
monetary assets and liabilities, the Company is exposed to interest rate price risk.
The Company considers interest rate risk to not be significant.
Determination of Fair Value
Fair values have been determined for measurement and/or disclosure purposes based on the following
methods. When applicable, further information about the assumptions made in determining fair values is
disclosed in the notes specific to that asset or liability.
The carrying amounts for accounts payable and accrued liabilities and due to related parties approximate fair
values due to their short‐term nature. Due to the use of subjective judgments and uncertainties in the
determination of fair values these values should not be interpreted as being realisable in an immediate
settlement of the financial instruments.
Management’s Discussion & Analysis June 30, 2017
Page 27 of 43
Fair Value Hierarchy
Financial instruments that are measured subsequent to initial recognition at fair value are grouped in levels 1 to
3 based on the degree to which the fair value is observable:
Level 1
Level 2
Level 3
Unadjusted quoted prices in active markets for identical assets or liabilities;
Inputs other than quoted prices included in Level 1 that are observable for the asset or
liability, either directly (i.e., as prices) or indirectly (i.e., derive from prices); and
Inputs for the asset or liability that are not based on observable market data (unobservable
inputs).
As at June 30, 2017 and June 30, 2016, the Company’s financial instruments are comprised of cash and cash
equivalents, other receivables, value added tax receivable, accounts payable and accrued liabilities, and due to
related parties. With the exception of cash and cash equivalents, all financial instruments held by the Company
are measured at amortized cost.
CAPITAL MANAGEMENT
The Company’s objective when managing capital is to safeguard the Company’s ability to continue as a
going concern in order to advance its mineral properties. The Company defines its capital as all components of
equity and short‐term debt. The Company manages its capital structure and makes adjustments to it to
effectively support the acquisition and exploration of mineral properties. The property in which the Company
currently has an interest is in the exploration stage; as such, the Company is dependent on external financing
to fund its activities.
The Company will spend its existing working capital and seek to raise additional amounts as needed by way of
equity financing or debt to carry out its planned corporate development and general administrative costs.
The Company will continue to assess new properties and seek to acquire an interest in additional properties if
it feels there is sufficient geologic or economic potential and if it has adequate financial resources to do so.
Management reviews its capital management approach on an ongoing basis and believes that this approach,
given the relative size of the Company, is reasonable. The Company’s investment policy is to hold cash in
interest‐bearing bank accounts or highly liquid short‐term interest‐bearing investments with maturities of one
year or less and which can be liquidated at any time without penalties. The Company is not subject to
externally imposed capital requirements and does not have exposure to asset‐backed commercial paper or
similar products. The Company expects its current capital resources to be sufficient to cover its operating costs
and to carry out its exploration activities through the next twelve months. As such, the Company will seek to
raise additional capital and believes it will be able to do so, but recognises the uncertainty attached thereto.
There have been no changes to the Company’s approach to capital management during the year ended June
30, 2017.
RELATED PARTY TRANSACTIONS
The Company had transactions during the years ended June 30, 2017 and 2016 with related parties consisting
of directors, officers and companies with common directors and/or officers:
Namdini Gold Project
Cardinal has advanced US$2,000,000 to Savannah, a company whose sole shareholder and director is Malik
Easah, a director of the Corporation. The purpose of this advance was development of a mining license in areas
in respect of which Savannah had entered into agreements with holders of small scale mining licenses. As at
June 30, 2017, US$1,600,000 has been applied toward the acquisition of small scale mining licenses in the area
covered by the Namdini Lease, US$4,000 has been applied to bank fees relating to the transfer, and the
remainder has been recorded as a prepayment in the consolidated financial statements of Cardinal.
Management’s Discussion & Analysis June 30, 2017
Page 28 of 43
The Board has approved total payments to Savannah of up to US$5,000,000 in the aggregate to fund the
acquisition of small scale mining licenses. The Corporation expects that the US$5,000,000 will be sufficient to
fund Savannah’s activities in relation to the development of the mining license by the acquisition of small scale
mining licenses.
In the event that an aggregate of US$5,000,000 is not sufficient to fund the acquisition of all the small‐scale
mining licenses in the Namdini Lease area, Savannah may request additional funds from the Corporation. In the
event that Savannah does request funds in excess of the US$5,000,000 that has been approved by the Board,
the Corporation would review Savannah’s request and determine whether the small‐scale mining licenses that
Savannah intends to purchase using the advanced funds are material to the mineralisation in the area covered
by the Namdini Lease. The Board will review the request and consider the outstanding small‐scale mining
licenses and reach a decision based on the best interests of the Corporation, including the Corporation’s
strategic goals.
Key Management Compensation
Key management personnel are persons responsible for planning, directing and controlling the activities of an
entity, and include certain directors and officers. For the years ended June 30, 2017 and 2016, key
management compensation comprises:
FOR THE YEARS ENDED
Salaries and benefits
Director fees
Consulting fees
Share‐based payments
Total
2017
68,438
774,899
280,000
1,185,561
2,308,898
2016
0
553,008
0
782,000
1,335,008
Details of key management personnel (KMP)
Directors
K Tomlinson
A Koimtsidis
M Easah
M Connelly
S Jackson
R Schafer
M Thomas
Executives
D Weyrauch
E Palmbachs
Title
Non‐Executive Chairman
Managing Director
Executive Director
Non‐Executive Director
Non‐Executive Director
Non‐Executive Director
Non‐Executive Director
Date of Appointment
7 November 2016
27 December 2012
27 December 2012
19 November 2015
31 August 2015
10 July 2017
31 August 2015
Date of Retirement
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
7 November 2016
Title
Chief Financial Officer
Chief Financial Officer
Date of Appointment
10 July 2017
1 March 2017
Date of Retirement
Not Applicable
24 May 2017
Management’s Discussion & Analysis June 30, 2017
Page 29 of 43
SHARE POSITION AND OUTSTANDING WARRANTS AND OPTIONS
The Company’s outstanding share position as at September 29, 2017 is as follows:
Common shares
Listed options
Unlisted options
50 Class A Performance Shares
60 Class C Performance Shares
Fully diluted share capital – September 29, 2017
Number of shares
350,529,559
115,682,937
31,500,000
5,000,000
6,000,000
508,712,496
Common Shares
The Corporation is authorised to issue an unlimited number of Ordinary Shares, subject to certain restrictions
prescribed in the ASX Listing Rules, the Corporations Act and the Corporation’s constitution. Under the ASX
Listing Rules, subject to certain exceptions and without the approval of Shareholders, the Corporation may not
issue or agree to issue during any 12‐month period equity securities (including options and other securities
convertible into equity) if the number of securities issued or agreed to be issued would exceed 15% of the total
equity securities on issue at the commencement of the 12‐month period. At the Corporation’s annual general
meeting held on November 7, 2016, shareholders approved the issue of an additional 10% of the Corporation’s
issued capital, subject to satisfaction of certain criteria prescribed in the ASX Listing Rules and the Corporation’s
notice of annual general meeting dated September 28, 2016.
Listed Options
Details of listed options (ASX: CDVOA) outstanding as of September 29, 2017 are:
Listed Options
September 30, 2019
115,682,937
Expiry
Number of Options
Weighted Average
Exercise Price
$0.15
Stock Options (“Unlisted Options”)
The Company has in place a stock option plan (the “Plan”), which allows the Company to issue options to
certain directors, officers, employees and consultants of the Company. The aggregate number of securities
reserved for issuance will be not more than 10% of the number of ordinary shares issued and outstanding from
time to time. The Plan provides that the number of stock options held by any one individual may not exceed
5% of the number of issued and outstanding ordinary shares. Options granted under the Plan may have a
maximum term of ten years. The exercise price of options granted under the Plan will not be less than the
market price of the Company’s shares on the day prior to the grant date. Stock options granted under the
Plan may be subject to vesting terms if imposed by the Board of Directors or required by the TSX Venture
Exchange. The milestone options were not issued under the Company’s stock option plan.
Management’s Discussion & Analysis June 30, 2017
The following is a summary of share purchase options activity for the period ended June 30, 2017:
During the period
Page 30 of 43
Expiry
Date
Grant
Date
3.18.16 3.18.20
4.03.17 4.12.22
Weighted avg. exercise price $0.4357
Exercise
Price
$0.22
$0.50
Opening
Granted Exercised
Balance
nil
9,500,000
26,000,000 nil
nil
nil
Closing
Balance
Expired /
Cancelled
1,500,000 8,000,000
2,500,000 23,500,000
Vested
and
Exercisable Unvested
8,000,000
‐
‐
23,500,000
(1) On April 3, 2017, Shareholders approved the issue of an aggregate of 26,000,000 Unlisted Options to
directors and certain officers of the Corporation, on the terms and conditions summarized in the chart
above and in the information below. Such Unlisted Options will vest in three tranches, and the Unlisted
Options constituting each tranche will be exercisable immediately upon vesting until April 18, 2022.
(i)
(ii)
(iii)
Tranche 1: the earlier of (A) the completion of a scoping study and (B) the completion of a
preliminary economic assessment of the Ghanaian Projects;
Tranche 2: on the beginning of earthworks for gold production at the Ghanaian Projects; and
Tranche 3: on the first pouring of gold at the Ghanaian Projects.
In May 2017 2,500,000 Milestone Options were cancelled.
Performance Shares
Holders of Class A Performance Shares are entitled to conversion of each Class A Performance Share into
100,000 Ordinary Shares upon the achievement of certain milestones or events. The conversion of Class A
Performance Shares is dependent upon satisfaction of one of the following performance hurdles to the
reasonable satisfaction of the Corporation by December 27, 2017:
the establishment of a JORC compliant inferred resource of at least 1 million ounces of gold within the
Exploration Tenements (as defined by the November 15, 2012 Prospectus for Non‐Renounceable
Entitlement Issue);
a project owned by the Corporation or any of its subsidiaries comprising all or part of the Exploration
Tenements being sold for at least $25 million in cash or cash equivalent; or
a joint venture arrangement being entered into in respect of any of the Exploration Tenements resulting
in cash or cash equivalent to the Corporation of not less than $25 million.
Management’s Discussion & Analysis June 30, 2017
The conversion of Class C Performance Shares will occur upon satisfaction of achieving a minimum inferred
resource (JORC compliant) of gold within the Ndongo Prospect by February 18, 2020, being no later than five
years after the date on which the Class C Performance Shares were issued. The table below sets out the
conversion of the Class C Performance Shares based on the achievement of performance hurdles.
Page 31 of 43
Performance Shares
10
5
5
5
5
5
5
5
5
5
5
60
Performance Hurdles (JORC
Inferred Au Resource)
500,000 ounces
750,000 ounces
1,000,000 ounces
1,250,000 ounces
1,500,000 ounces
1,750,000 ounces
2,000,000 ounces
2,250,000 ounces
2,500,000 ounces
2,750,000 ounces
3,000,000 ounces
Conversion to Ordinary
Shares
1,000,000
500,000
500,000
500,000
500,000
500,000
500,000
500,000
500,000
500,000
500,000
6,000,000
OTHER DATA
Additional information related to the Company is available for viewing at www.sedar.com.
ADOPTION OF NEW AND AMENDED IFRS PRONOUNCEMENTS
There are a number of new or amended Accounting Standards and Interpretations issued by the IASB, that are
not yet mandatory. The Group does not plan to adopt these standards early. The Group’s assessment of the
impact of these new or amended Accounting Standards and Interpretations, most relevant to the Group, are set
out below.
IFRS 2 Share‐based Payment (“IFRS 2”) – In June 2016, the IASB issued amendments to IFRS 2 Share‐based
Payment, covering the measurement of cash‐settled share‐based payments, classification of share‐based
payments settled net of tax withholdings, and accounting for a modification of a share‐based payment from
cash‐settled to equity‐settled. The new requirements could affect the classification and/or measurement of
these arrangements, and potentially the timing and amount of expense recognised for new and outstanding
awards. The amendments apply for annual periods beginning on or after January 1, 2018, with early adoption
permitted. The impact of the amendments to IFRS 2 on the Company’s consolidated financial statements has not
yet been determined.
IFRS 9 Financial Instruments (“IFRS 9”) – In July 2014, the IASB issued the final version of IFRS 9 Financial
Instruments, bringing together the classification and measurement, impairment and hedge accounting phases of
the IASB’s project to replace IAS 39 Financial Instruments: Recognition and Measurement. The mandatory
effective date of IFRS 9 would be annual periods beginning on or after January 1, 2018, with early adoption
permitted. The impact of IFRS 9 on the Company’s financial instruments has not yet been determined.
IFRS 15 Revenue from Contracts with Customers (“IFRS 15”) – In May 2014, the IASB issued IFRS 15, which covers
principles that an entity shall apply to report useful information to users of financial statements about the
nature, amount, timing, and uncertainty of revenue and cash flows arising from a contract with a customer. In
September 2015, the IASB deferred the effective date of the standard to annual reporting periods beginning on
Management’s Discussion & Analysis June 30, 2017
Page 32 of 43
or after January 1, 2018, with earlier application permitted. The impact of IFRS 15 on the Company’s
consolidated financial statements has not yet been determined.
IFRS 16 Leases (“IFRS 16”) – In January 2016, the IASB issued IFRS 16, which requires lessees to recognise assets
and liabilities for most leases. Application of the standard is mandatory for annual reporting periods beginning
on or after January 1, 2019, with earlier application permitted, provided the new revenue standard, IFRS 15, has
been applied or is applied at the same date as IFRS 16. The impact of IFRS 16 on the Company’s consolidated
financial statements has not yet been determined.
IFRIC 22 Foreign Currency Transactions and Advance Consideration (“IFRIC 22”) – In December 2016, the IASB
issued IFRIC 22. IFRIC 22 clarifies the date that should be used for translation when a foreign currency
transaction involves an advance payment or receipt. The interpretation is applicable for annual periods
beginning on or after January 1, 2018. The impact of IFRIC 22 on the Company’s consolidated financial
statements has not yet been determined
Risks Related to the Industry
Mineral Exploration, Development and Operating Risks
Mineral exploration is highly speculative in nature, generally involves a high degree of risk and frequently is non‐
productive. The mineral tenements of the Corporation are at various stages of exploration, and potential
investors should understand that mineral exploration and development are high‐risk undertakings. There can be
no assurance that exploration of these tenements, or any other tenements that may be acquired in the future,
will result in the discovery of an economic ore deposit. Even if an apparently viable deposit is identified, there is
no guarantee that it can be economically exploited or will result in a profitable commercial mining operation.
Resource acquisition, exploration, development and operation involve significant financial and other risks over
an extended period of time, which even a combination of careful evaluation, experience and knowledge may not
eliminate. Significant expenses are required to locate and establish economically viable mineral deposits, to
acquire equipment, and to fund construction, exploration and related operations, and few mining properties
that are explored are ultimately developed into producing mines.
Success in establishing an economically viable project is the result of a number of factors, including the quantity
and quality of minerals discovered, proximity to infrastructure, metal and mineral prices which are highly
cyclical, costs and efficiencies of the recovery methods that can be employed, the quality of management,
available technical expertise, taxes, royalties, environmental matters, government regulation (including land
tenure, land use and import/export regulations) and other factors. Even in the event that mineralisation is
discovered on a given property, it may take several years in the initial phases of drilling until production is
possible, during which time the economic feasibility of production may change as a result of such factors. The
effect of these factors cannot be accurately predicted, but the combination of these factors may result in the
Corporation not receiving an adequate return on its invested capital, and no assurance can be given that any
exploration program of the Corporation will result in the establishment or expansion of resources or reserves.
The Corporation’s operations are subject to all the hazards and risks normally encountered in the exploration,
development and production of gold and other minerals, including hazards relating to the discharge of
pollutants or hazardous chemicals, changes in anticipated grade and tonnage of ore, unusual or unexpected
adverse geological or geotechnical formations, unusual or unexpected adverse operating conditions, slope
failures, rock bursts, cave‐ins, seismic activity, the failure of pit walls, pillars or dams, fire, explosions, and natural
phenomena and ‘acts of God’ such as inclement weather conditions, floods, earthquakes or other conditions,
any of which could result in damage to, or destruction of, mineral properties or production facilities, personal
injury or death, damage to property, environmental damage, unexpected delays, monetary payments and
possible legal liability, which could have a material adverse impact upon the Corporation. In addition, any future
mining operations will be subject to the risks inherent in mining, including adverse fluctuations in fuel prices,
Management’s Discussion & Analysis June 30, 2017
Page 33 of 43
commodity prices, exchange rates and metal prices, increases in the costs of constructing and operating mining
and processing facilities, availability of energy and water supplies, access and transportation costs, delays and
repair costs resulting from equipment failure, changes in the regulatory environment, and industrial accidents
and labour actions or unrest. The occurrence of any of these risks could materially and adversely affect the
development of a project or the operations of a facility, which could have a material adverse impact upon the
Corporation.
Estimation of Mineralisation, Resources and Reserves
There is a degree of uncertainty attributable to the calculation of mineralisation, resources and reserves and
corresponding grades being mined or dedicated to future production. Until reserves or mineralisation are
actually mined and processed, the quantity of mineralisation and reserve grades must be considered estimates
only. These estimates depend upon geological interpretation and statistical inference drawn from drilling and
sampling analysis, which may prove unreliable. There can be no assurance such estimates will be accurate. In
addition, the quantity of reserves and mineralisation may vary depending on commodity prices. Any material
change in quantity of reserves, mineralisation, grade or stripping ratio may affect the economic viability of a
mine. In addition, there can be no assurance that recoveries from laboratory tests will be duplicated in tests
under on‐site conditions or during production. The inclusion of mineral resource estimates should not be
regarded as a representation that these amounts can be economically exploited and no assurances can be given
that such resources estimates will be converted into reserves. Different experts may provide different
interpretations of resource estimates.
Environmental, Health and Safety Regulations of the Resource Industry
Environmental matters in Ghana, including those related to mining, fall primarily under the oversight of the EPA,
as well as the Minerals Commission and the Mines Inspectorate Division of the Minerals Commission. The
Environmental Protection Agency Act, 1994 (Act 490), and the Environmental Assessment Regulations, 1999 (L.I.
1652) govern, among other things, environmental and socio‐economic impact assessments and statements,
environmental management plans, emissions into the environment, environmental auditing and review, and
mine closure and reclamation, to which the Corporation’s operations are subject.
Additional provisions governing mine environmental management are provided in the Minerals and Mining Act,
2006 (Act 703), and Minerals and Mining Regulations (Health, Safety and Technical) 2012 (L.I. 2182). The
Corporation believes it is in substantial compliance with these laws and regulations; however, the Corporation
notes a continuing trend toward substantially increased environmental requirements and evolving corporate
social responsibility expectations in Ghana, including the requirement for more permits, analysis, data gathering,
community hearings and negotiations than have been required in the past for both routine operational needs
and for new development projects.
Due to bureaucratic delays, there can be no assurance that all permits which the Corporation may require for
construction of mining facilities and conduct of mining operations, particularly environmental permits, will be
obtainable on reasonable terms or timeframes or that compliance with such laws and regulations would not
have an adverse effect on the profitability of any mining project that the Corporation might undertake.
All phases of the Corporation’s operations are subject to environmental regulations in various jurisdictions. If the
Corporation’s properties are proven to host economic reserves of metals, mining operations will be subject to
national and local laws relating to the protection of the environment, including laws regulating removal of
natural resources from the ground and the discharge of materials into the environment.
Mining operations will be subject to national and local laws and regulations which seek to maintain health and
safety standards by regulating the design and use of mining methods and equipment. Various permits from
government bodies are required for mining operations to be conducted; no assurance can be given that such
permits will be received.
Management’s Discussion & Analysis June 30, 2017
Page 34 of 43
No assurance can be given that environmental standards imposed by national or local authorities will not be
changed or that any such changes would not have material adverse effects on the Corporation’s activities.
Moreover, compliance with such laws may cause substantial delays or require capital outlays in excess of those
anticipated, thus causing an adverse effect on the Corporation. Additionally, the Corporation may be subject to
liability for pollution or other environmental damage, which it may not be able to insure against.
Failure to comply with applicable laws, regulations and permitting requirements may result in enforcement
actions thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or
be curtailed, and may include corrective measures requiring capital expenditures, installation of additional
equipment or remedial actions. Parties engaged in mining operations may be required to compensate those
suffering loss or damage by reason of the mining activities and may have civil or criminal fines or penalties
imposed for violations of applicable laws or regulations and, in particular, environmental laws.
Amendments to current laws, regulations and permits governing operations and activities of mining companies,
or more stringent implementation thereof, could have a material adverse impact on the Corporation and cause
increases in capital expenditures or production costs or reduction in levels of production at producing properties
or require abandonment or delays in development of new mining properties.
Competitive Conditions
There is aggressive competition within the mineral exploration and mining industry for the discovery and
acquisition of properties considered to have commercial potential, and for management and technical
personnel. The Corporation’s ability to acquire projects in the future is highly dependent on its ability to operate
and develop its current assets and its ability to obtain or generate the necessary financial resources. The
Corporation will compete with other parties in each of these respects, many of which have greater financial
resources than the Corporation. Accordingly, there can be no assurance that any of the Corporation’s future
acquisition efforts will be successful, or that it will be able to attract and retain required personnel. Any such
failure could have a material adverse impact upon the Corporation.
Risks Related to the Business
Operational Risks
The Corporation has not previously generated revenues from operations and its mineral projects are at an
exploration stage. Therefore, it is subject to many risks common to comparable companies, including under‐
capitalisation, cash shortages and limitations with respect to personnel, financial and other resources as well as
a lack of revenues. The Corporation has historically incurred significant losses as it has no sources of revenue
(other than interest income), and has significant cash requirements to meet its exploration commitments,
administrative overhead and maintain its mineral interests. The Corporation expects to continue to incur net
losses unless or until one or more of its properties enters into commercial production and generates sufficient
revenue to fund continuing operations. There can be no assurance that current exploration or development
programs will result in the discovery of commercial deposits or, ultimately, in profitable mining operations. See
also “Liquidity and Financing Risk” and “Funding Risk” below.
Liquidity and Financing Risk
The Corporation has no source of operating cash flow and may need to raise additional funding in the future
through the sale of equity or debt securities or by optioning or selling its properties. Any additional equity
financing will dilute shareholdings, and debt financing, if available, may involve restrictions on financing and
operating activities. No assurance can be given that additional funding will be available for further exploration
and development of the Corporation’s properties when required, upon terms acceptable to the Corporation or
at all. Failure to obtain such additional financing could result in the delay or indefinite postponement of further
exploration and development of its properties, or even a loss of property interest, which would have a material
adverse impact upon the Corporation.
Management’s Discussion & Analysis June 30, 2017
Page 35 of 43
Funding Risk
At the date of this MD&A, the Corporation has no income producing assets and will generate losses for the
foreseeable future. Until it is able to develop a project and generate appropriate cash flow, it is dependent upon
being able to obtain future equity or debt funding to support long term exploration. Neither the Corporation nor
any of the Directors nor any other party can provide any guarantee or assurance that if further funding is
required, such funding can be raised on terms favourable to the Corporation (or at all). Any additional equity
funding will dilute existing shareholders. Also, no guarantee or assurance can be given as to when a project can
be developed to the stage where it will generate cash flow. As such, a project would be dependent on many
factors,
for example exploration success, subsequent development, commissioning and operational
performance.
Exploration Costs
The exploration costs of the Corporation are based on certain assumptions with respect to the method and
timing of exploration. By their nature, these estimates and assumptions are subject to significant uncertainties
and, accordingly, the actual costs may materially differ from these estimates and assumptions. Accordingly, no
assurance can be given that the cost estimates and the underlying assumptions will be realized in practice, which
may materially and adversely affect the Corporation’s viability.
Uninsurable Risks
In the course of exploration, development and production of mineral properties, risks, including, but not limited
to, unexpected or unusual geological or operating conditions, natural disasters, inclement weather conditions,
pollution, rock bursts, cave‐ins, fires, flooding, earthquakes, civil unrest, terrorism and political violence may
occur. It is not always possible to fully insure against all risks associated with Cardinal’s operations and Cardinal
may decide not to take out insurance against certain risks as a result of high premiums or other reasons. Should
such liabilities arise, they could reduce or eliminate any future profitability and result in increasing costs and a
decline in the value of the securities of Cardinal.
Conflicts of Interest
Certain directors of the Corporation are, and may continue to be, involved in the mining and mineral exploration
industry through their direct and indirect participation in corporations, partnerships or joint ventures which are
potential competitors of the Corporation. Situations may arise in connection with potential acquisitions in
investments where the other interests of these directors may conflict with the interests of the Corporation. Any
Directors with conflicts of interest will be subject to and will follow the procedures set out in applicable
corporate and securities legislation, regulations, rules and policies.
Risks Related to Operating In Ghana
Environmental Bonds
The EPA from time to time reviews the reclamation bonds that are placed on the Corporation’s projects in
Ghana. As part of its periodic assessment of mine reclamation and closure costs, the EPA reviews the adequacy
of reclamation bonds and guarantees.
In certain cases, the EPA has requested higher levels of bonding based on its findings. If the EPA were to require
additional bonding at the Corporation’s properties, it may be difficult, if not impossible, to provide sufficient
bonding. If the Corporation is unable to meet any such increased bonding requirements or negotiate an
acceptable solution with the Government of Ghana, its operations and exploration and development activities in
Ghana may be materially adversely affected.
The Corporation is not in a position to state whether a review in respect of any of the Corporation’s projects in
Ghana is imminent or whether the outcome of such a review would be detrimental to the funding needs of the
Corporation.
Management’s Discussion & Analysis June 30, 2017
Page 36 of 43
Risks of Operating in Ghana
The Corporation’s projects in Ghana are subject to the risks of operating in foreign countries, including political
and economic considerations such as civil and tribal unrest, war (including in neighbouring countries), terrorist
actions, criminal activity, nationalisation, invalidation of governmental orders, failure to enforce existing laws,
labour disputes, corruption, sovereign risk, political instability, the failure of foreign parties, courts or
governments to honour or enforce contractual relations or uphold property rights, changing government
regulations with respect to mining (including royalties, environmental requirements, labour, taxation, land
tenure, foreign investments, income repatriation and capital recovery), fluctuations in currency exchange and
inflation rates, import and export restrictions, challenges to the title to properties or mineral rights in which the
Corporation has interests, problems or delays renewing licenses and permits, opposition to mining from local,
environmental or other non‐governmental organisations, increased financing costs, instability due to economic
under‐development, inadequate infrastructure, and the expropriation of property interests, as well as by laws
and policies of Canada affecting foreign trade, investment and taxation. As African governments continue to
struggle with deficits and depressed economies, the strength of commodity prices has resulted in the gold
mining sector being targeted as a source of revenue. Governments are continually assessing the terms for a
mining company to exploit resources in their country.
Furthermore, the Corporation requires consultants and employees to work in Ghana to carry out its planned
exploration and development programs. It may be difficult from time to time to find or hire qualified people in
the mineral exploration industry who are situated in Ghana, or to obtain all of the necessary services or
expertise in Ghana, or to conduct operations on its projects at reasonable rates. If qualified people and services
or expertise cannot be obtained in Ghana, the Corporation may need to seek and obtain those services from
service providers located outside of Ghana which could result in delays and higher costs to the Corporation.
Mineral resource companies face increasing public scrutiny of their activities, and are under pressure to
demonstrate that their operations have potential to generate satisfactory returns not only to their shareholders,
but also to benefit local governments and the communities surrounding its properties where it operates. The
potential consequences of these pressures include reputational damage, lawsuits, increasing social investment
obligations and pressure to increase taxes and future royalties payable to local governments and surrounding
communities. As a result of these considerations, the Corporation may incur increased costs and delays in
permitting and other operational matters with respect to its property interests in Ghana.
Any of the above events could delay or prevent the Corporation from exploring or developing its properties even
if economic quantities of minerals are found, and could have a material adverse impact upon the Corporation’s
foreign operations.
Government Policy Changes
The mineral exploration activities undertaken by the Corporation are subject to laws and regulations governing
health and worker safety, employment standards, exports, taxation, waste disposal, management and use of
toxic substances and explosives, protection of the environment, mine development and production, protection
of endangered and protected species, reclamation, historic and cultural preservation and other matters.
Exploration activities may also be affected in varying degrees by government regulations with respect to, but not
limited to, restrictions on future exploration and production, price controls, royalties, export controls, currency
availability, foreign exchange controls, income taxes, delays in obtaining or the inability to obtain necessary
permits, opposition to mining from environmental and other non‐governmental organisations, limitations on
foreign ownership, expropriation of property, ownership of assets, environmental legislation, labour relations,
limitations on repatriation of income and return of capital, limitations on mineral exports, high rates of inflation,
increased financing costs, and site safety.
The Corporation’s exploration programs with respect to the Corporation’s projects in Ghana will, in general, be
subject to approval by the Minerals Commission and other governmental agencies. Development of any of the
Management’s Discussion & Analysis June 30, 2017
Page 37 of 43
Corporation’s properties will be dependent on the Namdini Gold Project meeting environmental guidelines set
by EPA and, where required, being approved by governmental authorities such as the Minerals Commission.
Failure to comply with applicable laws, regulations and permits, even if inadvertent, may result in enforcement
actions thereunder, including the forfeiture of claims, orders by regulatory or judicial authorities requiring
operations to cease or be curtailed, and may include corrective measures requiring capital expenditures,
installation of additional equipment or costly remedial actions, which could have a material adverse impact upon
the Corporation. The Corporation may be required to compensate those claiming to suffer loss or damage by
reason of its activities and may have civil or criminal fines or penalties imposed for violations of such laws,
regulations and permits, which could have a material adverse impact upon the Corporation.
In addition, no assurance can be given that new rules and regulations will not be enacted or that existing rules
and regulations will not be applied in a manner which could limit or curtail development or future potential
production. Adverse changes in government policies or legislation may affect ownership of mineral interests,
taxation, royalties, land access, labour relations, and mining and exploration activities of the Corporation. It is
possible that the current system of exploration and mine permitting in Ghana may change, resulting in
impairment of rights and possibly expropriation of the Corporation’s properties without adequate
compensation.
Ownership Risks
The Corporation holds its interests in the Namdini Gold Project through contractual arrangements with
Savannah. Further, the Large‐Scale Mining Licence over an area approximately 19.54 Sq Km in the Upper East
Region of Ghana covering Cardinal’s Namdini Project has been granted by the Minister of Lands and Natural
Resources of Ghana. Cardinal and Savannah have both signed the necessary documentation to assign the
Namdini Mining License to Cardinal Namdini Mining Limited, a wholly owned subsidiary of Cardinal, for $1.00 as
per the Savannah Agreement.
The Constitution of Ghana vests title in every mineral in its natural state to the Government of Ghana. The
exercise of any mineral right in the form of reconnaissance, exploration or exploitation of any mineral in Ghana
requires an appropriate license or mineral right to be issued by the Government of Ghana acting through the
Minister. There is no assurance that title to the properties in which the Corporation has interests will not be
challenged. The acquisition of title to mineral exploration properties is a very detailed and time‐consuming
process. Title to and the area of mineral properties may be disputed. While the Corporation has diligently
investigated title to the properties in which it has an interest, it may be subject to prior unregistered agreements
or transfers or indigenous land claims and title may be affected by undetected defects. Consequently, the
boundaries may be disputed.
There can be no assurance that there are no prior unregistered agreements, claims or defects that may result in
the title to the properties in which the Corporation has an interest being challenged. Further, the Corporation’s
interests in the properties are subject to the risks that counterparties will fail to honour their contractual
commitments, that courts will not enforce such contractual obligations and that required governmental
approvals will not be obtained. A successful challenge to the precise area and location of these claims, or the
failure of counterparties to honour or of courts to enforce such contractual obligations could result in the
Corporation being unable to operate on its properties as anticipated or being unable to enforce its rights with
respect to its properties which could have a material adverse impact upon the Corporation.
Permitting and Licensing Risks
In addition to mineral rights, the Corporation will require some or all of the following permits, licenses or other
regulatory approvals to be able to carry out business operations in Ghana as it advances its projects: (i)
environmental permits; (ii) approved environmental management plans and environmental certificates; (iii)
reclamation bonds and approved reclamation plans; (iv) water usage permits; (v) business operating permits; (vi)
Management’s Discussion & Analysis June 30, 2017
Page 38 of 43
licenses to export, sell or dispose of minerals; (vii) permits/licenses to retain a specified percentage of mineral
export proceeds for purposes of debt servicing, dividend payment to foreign shareholders and acquisition of
plant and machinery for the mining project; (viii) permits to operate foreign exchange retention accounts with a
trustee bank; and (ix) immigration quotas to employ a specified number of non‐Ghanaians to work on mining
projects. The Corporation believes that it will be able to obtain and maintain in the future all such necessary
licenses and permits to carry on the activities which it intends to conduct, and intends to comply in all material
respects with the terms of such licenses and permits.
There can be no guarantee, however, that the Corporation will be able to obtain and maintain, at all times, all
the necessary licenses and permits required to undertake the proposed exploration and development or to place
its properties into commercial production and to operate mining facilities thereon. In the event of commercial
production, the cost of compliance with changes in governmental regulations has the potential to reduce the
profitability of operations or preclude the economic development of a particular property.
Artisanal Miners
The Corporation’s property interests are held in areas of Ghana that have historically been mined by artisanal
miners. As the Corporation further explores and advances its projects, it may be required to require the removal
of any artisanal miners operating on its properties. There is a risk that such artisanal miners may oppose the
Corporation’s operations, which may result in a disruption to any planned development and/or mining and
processing operations. In addition, artisanal miners have historically used chemicals that are harmful to the
environment to separate the precious metals from the ore. There can be no assurance that the Corporation will
not be subject to environmental liabilities resulting from such operations in the future, which could have a
material adverse impact on the Corporation. In addition, artisanal work practices are often unsafe and accidents
and/or incidents may occur on the Corporation’s property, and there is an added reputational risk that third
parties may wish to link the activities of the artisanal miners to that of the Corporation in the event of accidents
or incidents, which could have a material adverse impact on the Corporation.
General Risks
Market Conditions
Share market conditions may affect the value of the Corporation’s quoted securities regardless of the
Corporation’s operating performance. Share market conditions are affected by many factors such as: general
economic outlook; introduction of tax reform or other new legislation; interest rates and inflation rates; changes
in investor sentiment toward particular market sectors; the demand for, and supply of, capital; and terrorism or
other hostilities. The market price of securities can fall as well as rise and may be subject to varied and
unpredictable influences on the market for equities in general and resource exploration stocks in particular. The
Corporation does not warrant the future performance of the Corporation or any return on an investment in the
Corporation.
Stress in the Global Economy
Reduction in credit, combined with reduced economic activity and the fluctuations in the Australian dollar may
adversely affect businesses and industries that purchase commodities, affecting commodity prices in more
significant and unpredictable ways than the normal risks associated with commodity prices. The availability of
services such as drilling contractors and geological service companies and/or the terms on which these services
are provided may be adversely affected by the economic impact on the service providers. The adverse effects on
the capital markets generally make the raising of capital by equity or debt financing much more difficult and the
Corporation is dependent upon the capital markets to raise financing. Any of these events, or any other events
causing turmoil in world financial markets, may have a material adverse effect on the Corporation’s business,
operating results and financial condition.
Management’s Discussion & Analysis June 30, 2017
Page 39 of 43
Current Global Financial Condition
Current global financial conditions have been subject to increased volatility. As such, the Corporation is subject
to counterparty risk and liquidity. The Corporation is exposed to various counterparty risks including, but not
limited to financial institutions that hold the Corporation’s cash, and through companies that have payables to
the Corporation. The Corporation is also exposed to liquidity risks in meeting its operating expenditure
requirements in instances where cash positions are unable to be maintained or appropriate financing is
unavailable. These factors may impact the ability of the Corporation to obtain loans and other credit facilities in
the future and, if obtained, on terms favourable to the Corporation. If these increased levels of volatility and
market turmoil continue, the Corporation’s operations could be adversely impacted and the trading price of the
shares could be adversely affected.
Exchange Rate and Currency Risks
The Corporation undertakes certain transactions denominated in foreign currencies, hence exposures to
exchange rate fluctuations arise. The Corporation does not hedge this exposure. The Corporation manages its
foreign exchange risk by constantly reviewing its exposure and ensuring that there are appropriate cash balances
in order to meet its commitments.
Currency fluctuations may affect the cash flow which the Corporation may realise from its operations, since
most mineral commodities are sold in a world market in USD. The Corporation’s costs are incurred in AUD, GHS,
USD and CAD.
Commodity Prices
The price of the Ordinary Shares, and the Corporation’s profitability, financial results and exploration activities
may in the future be significantly adversely affected by declines in the price of precious metals. Precious metal
prices fluctuate on a daily basis and are affected by a number of factors beyond the control of the Corporation,
including the US dollar and other foreign currency exchange rates, central bank and financial institution lending
and sales, producer hedging activities, global and regional supply and demand, production costs, confidence in
the global monetary system, expectations of the future rate of inflation, the availability and attractiveness of
alternative investment vehicles, interest rates, terrorism and war, and other global or regional political or
economic events or conditions.
The price of gold has fluctuated widely in recent years, and future trends cannot be predicted with any degree of
certainty. In addition to adversely affecting the Corporation’s financial condition and exploration and
development activities, declining commodity prices can impact operations by requiring a reassessment of the
feasibility of a particular project, as well as have an impact on the perceptions of investors with respect to gold
equities, and therefore, the ability of the Corporation to raise capital. A sustained, significant decline in the price
of gold could also cause development of any properties in which the Corporation may hold an interest from time
to time to be impracticable. Future production from the Corporation’s future properties, if any, will be
dependent upon, among other things, the price of gold being adequate to make these properties economic.
There can be no assurance that the market price of gold will remain at current levels, that such price will
increase or that market prices will not fall.
Reliance on Key Personnel
The responsibility of overseeing the day‐to‐day operations and the strategic management of the Corporation
depends substantially on its senior management and its key personnel. There can be no assurance that there will
be no detrimental impact on the Corporation if one or more of these employees cease their employment.
Dilution Risk
Cardinal has outstanding options and Performance Shares. Should these securities be exercised or converted (as
applicable), the holders have the right to acquire additional Ordinary Shares, in accordance with the terms of
Management’s Discussion & Analysis June 30, 2017
Page 40 of 43
such securities. During the life of these securities, the holders have the opportunity to profit from a rise in the
market price of the Cardinal shares, possibly resulting in the dilution of existing securities.
CRITICAL ACCOUNTING ESTIMATES
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:
Determination of functional currency
The functional currency of the Company has been assessed by management based on consideration of the
currency and economic factors that mainly influence the Company’s operations. Changes to these factors may
have an impact on the judgment applied in the determination of the Company’s functional currency.
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.
Provisions
On an ongoing basis, the Company is subject to various claims and other legal disputes for which the outcomes
cannot be assessed with a high degree of certainty. A liability is recognised where, based on the Company’s
legal views and advice, it is considered probable that an outflow of resources will be required to settle a present
obligation that can be measured reliably.
By their nature, these provisions will only be resolved when one or more future events occur or fail to occur.
The assessment of such provisions inherently involves the exercise of significant judgment of the potential
outcome of future events.
MINERAL RESOURCE ESTIMATES
The Mineral Resources for the Corporation’s properties have been estimated in accordance with the JORC Code
and reconciled with the Canadian Institute of Mining, Metallurgy and Petroleum Definition Standards for Mineral
Resources and Mineral Reserves adopted by the CIM Council on May 10, 2014 (the “CIM Definition Standards”).
JORC Code
The following definitions are reproduced from the JORC Code:
“Mineral Resource” means a concentration or occurrence of solid material of economic interest in or on the
Earth’s crust in such form, grade or quality and quantity that there are reasonable prospects for eventual
economic extraction. The location, quantity, grade or quality, continuity and other geological characteristics of a
Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge,
including sampling.
“Inferred Mineral Resource” means that part of a Mineral Resource for which quantity and grade or quality are
estimated on the basis of limited geological evidence and sampling. Geological evidence is sufficient to imply but
not verify geological and grade or quality continuity. An Inferred Mineral Resource has a lower level of
confidence than that applying to an Indicated Mineral Resource (as defined herein) and must not be converted
to an Ore Reserve. It is reasonably expected that the majority of Inferred Mineral Resources could be upgraded
to Indicated Mineral Resources with continued exploration.
Management’s Discussion & Analysis June 30, 2017
Page 41 of 43
“Indicated Mineral Resource” means that part of a Mineral Resource for which quantity, grade or quality,
densities, shape and physical characteristics are estimated with sufficient confidence to allow the application of
Modifying Factors (as defined herein) as described below in sufficient detail to support mine planning and
evaluation of the economic viability of the deposit. Geological evidence is derived from adequately detailed and
reliable exploration, sampling and testing and is sufficient to assume geological and grade or quality continuity
between points of observation. An Indicated Mineral Resource has a lower level of confidence than that applying
to a Measured Mineral Resource (as defined herein) and may only be converted to a Probable Ore Reserve (as
defined herein).
“Measured Mineral Resource” means that part of a Mineral Resource for which quantity, grade or quality,
densities, shape, and physical characteristics are estimated with confidence sufficient to allow the application of
Modifying Factors to support detailed mine planning and final evaluation of the economic viability of the
deposit. Geological evidence is derived from detailed and reliable exploration, sampling and testing and is
sufficient to confirm geological and grade or quality continuity between points of observation. A Measured
Mineral Resource has a higher level of confidence than that applying to either an Indicated Mineral Resource or
an Inferred Mineral Resource. It may be converted to a Proven Ore Reserve (as defined herein) or to a Probable
Ore Reserve.
“Ore Reserve” means the economically mineable part of a Measured and/or Indicated Mineral Resource. It
includes diluting materials and allowances for losses, which may occur when the material is mined or extracted
and is defined by studies at pre‐feasibility or feasibility level as appropriate that include application of Modifying
Factors. Such studies demonstrate that, at the time of reporting, extraction could reasonably be justified. The
reference point at which Ore Reserves are defined, usually the point where the ore is delivered to the processing
plant, must be stated. It is important that, in all situations where the reference point is different, such as for a
saleable product, a clarifying statement is included to ensure that the reader is fully informed as to what is being
reported.
“Probable Ore Reserve” means the economically mineable part of an Indicated, and in some circumstances, a
Measured Mineral Resource. The confidence in the Modifying Factors applying to a Probable Ore Reserve is
lower than that applying to a Proven Ore Reserve.
“Proved Ore Reserve” means the economically mineable part of a Measured Mineral Resource. A Proved
Mineral Reserve implies a high degree of confidence in the Modifying Factors.
For the purposes of the JORC Code and CIM Definition Standards, “Modifying Factors” are considerations used
to convert Mineral Resources to Mineral Reserves. These include, but are not restricted to, mining, processing,
metallurgical, infrastructure, economic, marketing, legal, environmental, social and governmental factors.
There can be no assurance that those portions of such Mineral Resources will ultimately be converted into Ore
Reserves. Mineral Resources are not Ore Reserves and do not have demonstrated economic viability.
CAUTIONARY NOTE TO UNITED STATES SHAREHOLDERS CONCERNING ESTIMATES OF MINERAL RESERVES AND
MINERAL RESOURCES
This MD&A uses the terms “Probable Ore Reserve”, “Measured Mineral Resource”, “Indicated Mineral
Resource” and “Inferred Mineral Resource”. United States Shareholders are advised that while such terms are
recognised and required by Canadian and Australian standards or regulations, the SEC does not recognise them.
In particular, and without limiting the generality of this cautionary note, the term “Mineral Resource” does not
equate to the term “Ore Reserve”. This MD&A may use the terms “Probable Ore Reserves” and “Proved Ore
Reserves” as such terms are used under NI 43‐101, CIM Standards and the JORC Code, which standards differ
from the standards that apply under SEC Industry Guide 7. Under United States standards, mineralisation may
not be classified as an “Ore Reserve” unless the determination has been made that the mineralisation could be
Management’s Discussion & Analysis June 30, 2017
Page 42 of 43
economically and legally produced or extracted at the time the reserve determination is made. As such, certain
information contained in this MD&A concerning descriptions of mineralisation and resources and reserves under
NI 43‐101, CIM Standards and the JORC Code are not comparable to disclosures made by United States reporting
companies. “Inferred Mineral Resources” have a great amount of uncertainty as to their existence, and as to
their economic and legal feasibility. It cannot be assumed that all or any part of a Probable Ore Reserve,
Measured Mineral Resource, Indicated Mineral Resource or an Inferred Mineral Resource will ever be upgraded
to a higher category. Under Canadian and Australian rules, estimates of Inferred Mineral Resources may not
form the basis of feasibility or other economic studies. United States Shareholders are cautioned not to assume
that all or any part of Measured, Indicated or Inferred Mineral Resources will ever be converted into Ore
Reserves. United States Shareholders are also cautioned not to assume that all or any part of an Inferred Mineral
Resource exists, or is economically or legally mineable.
INTERNAL CONTROL OVER FINANCIAL REPORTING
Internal controls have been designed to provide reasonable assurance regarding the reliability of the
Company’s financial reporting and the preparation of financial statements for external purposes in accordance
with IFRS. As at June 30, 2017, the Company’s Chief Executive Officer and Chief Financial Officer evaluated or
caused to be evaluated under their supervision the effectiveness of the Company’s internal control over
financial reporting. The Chief Executive Officer and the Chief Financial Officer concluded that, as of June 30,
2017, the Company’s internal control over financial reporting was effective and no material weaknesses were
identified.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
The Company's management, including the Chief Executive Officer and Chief Financial Officer, does not expect
that its disclosure controls and procedures or internal controls and procedures will prevent all error and all
fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not
absolute, assurance that the objectives of the control system are met. Further, the design of a control system
must reflect the fact that there are resource constraints, and the benefits of controls must be considered
relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been
detected. These inherent limitations include the realities that judgments in decision‐making can be faulty, and
that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by
the individual acts of some persons, by collusion of two or more people, or by management override of the
control. The design of any system of controls also is based in part upon certain assumptions about the
likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated
goals under all potential future conditions; over time, control may become inadequate because of changes in
conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the
inherent limitations in a cost‐effective control system, misstatements due to error or fraud may occur and not
be detected.
The Company is required under Canadian securities laws to disclose herein any change in the Company’s
internal control over financial reporting that occurred during the Company’s most recent interim period that
has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial
reporting. There have been no changes in the Company’s internal control over financial reporting that occurred
during the Company’s most recent interim period that have materially affected, or are reasonably likely to
materially affect, the Company’s internal control over financial reporting.
DISCLOSURE CONTROLS AND PROCEDURES
Management is responsible for establishing and maintaining adequate internal controls over disclosure controls
and procedures, as defined in National Instrument 52‐109 Certification of Disclosure in Issuers’ Annual and
Management’s Discussion & Analysis June 30, 2017
Page 43 of 43
Interim Filings of the Canadian Securities Administrators and Rules 13a‐15(e) and Rule 15d‐15(e) under the
United States Exchange Act of 1934, as amended. Disclosure controls and procedures are designed to provide
reasonable assurance that all relevant information is gathered and reported to senior management, including
the Company’s Chief Executive Officer and Chief Financial Officer, on a timely basis so that appropriate
decisions can be made regarding public disclosure. As at June 30, 2017 management of the Company, with the
participation of the Chief Executive Officer and the Chief Financial Officer, evaluated the effectiveness of the
Company’s disclosure controls and procedures as required by Canadian securities laws. Based on that
evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that, as of June 30, 2017, the
disclosure controls and procedures were effective to provide reasonable assurance that information required to
be disclosed in the publicly filed reports is accumulated and communicated to management, including the Chief
Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Management’s Discussion & Analysis June 30, 2017
CONSOLIDATED
FINANCIAL
STATEMENTS (II)
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
CORPORATE DIRECTORY
CONTENTS
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
Shareholder Information
Schedule of Tenements
PAGE
3
19
20
21
22
23
49
50
51
55
57
DIRECTORS’ REPORT
The Directors of Cardinal Resources Limited submit herewith the annual financial report of Cardinal Resources
Limited for the period 1 July 2016 to 30 June 2017. 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 2017 and at the date of this report are
as follows. Directors were in office for the entire period unless otherwise stated.
KEVIN TOMLINSON
Non‐Executive Chairman
Appointed 7 November 2016
Mr Tomlinson possesses over 30 years’ experience in Geology and Finance with enormous experience within the
Toronto, Australian and London Stock Exchanges.
Mr Tomlinson holds an MSc in Structural Geology and a Grad Dip in Finance. From 1998 Mr Tomlinson has worked
in the finance sector raising over US$2 billion in equity.
Mr Tomlinson was previously Managing Director of Investment Banking at Westwind Partners/Stifel Nicolaus
where he advised a number of resource companies including Centamin Plc, Platinum Group Metals, Trelawney
Resources and Allied Gold. He was also an integral part of the Team raising finance for Osisko Mining and Semafo
Inc.
Mr Tomlinson was Director of Natural Resources at Williams de Broë and Head of Research for Hartleys Ltd in
Australia. Recent Directorships include Centamin Plc (producer), Orbis Gold (developer) and Medusa Mining
(producer) where he chaired the company through growth from $30m to over $700m market capitalisation in less
than 4 years.
Mr Tomlinson is a Fellow of the Institute of Directors, a Fellow of the Chartered Institute for Securities &
Investment and a Liveryman of the Worshipful Company of International Bankers
During the past 3 years he has also served as a director of the following listed companies;
Company
Xanadu Mines Limited
Plymouth Minerals Limited
Samco Gold Limited
Centamin PLC
Orbit Gold Ltd
Besra Gold Inc.
ARCHIE KOIMTSIDIS MBA
Managing Director
Appointed 27 December 2012
Date of Appointment
29 May 2017
8 June 2017
16 January 2012
17 January 2012
11 April 2017
17 January 2012
Date of Resignation
Not Applicable
Not Applicable
Not Applicable
16 May 2016
17 February 2015
10 April 2015
Mr Koimtsidis has for the last 24 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 in relation to the
Company’s projects in Ghana.
Consolidated Financial Statements for the Year Ended 30 June 2017
Page 3 of 57
DIRECTORS’ REPORT
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.
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.
MARK CONNELLY
Non‐Executive Director
Appointed 19 November 2015
Mr Connelly is the former Managing Director and Chief Executive Officer of Papillon Resources Limited, a Mali‐
based gold developer which recently merged with Vancouver‐based B2Gold Corp in a US$570 million deal.
Previously he was Chief Operating Officer of Endeavour Mining Corporation following its merger with Adamus
Resources Limited where he was Managing Director and CEO.
Mr Connelly has more than 28 years of experience in the mining industry, and has held senior executive positions
with Newmont Mining Corporation and Inmet Mining Corporation. He has extensive experience in financing,
development, construction and operation of mining projects in a variety of commodities including gold, base
metals and other resources in West Africa, Australia, North America and Europe.
During the past 3 years he has also served as a director of the following listed companies;
Company
West African Resources
Saracen Mineral Holdings
Ausdrill
Tiger Resources Limited
B2 Gold Corp
Manas Resources Ltd
Papillion Resources Limited
SIMON JACKSON B.Com, FCA
Non‐Executive Director
Appointed 31 August 2015
Date of Appointment
23 June 2015
15 April 2015
25 July 2012
31 December 2015
3 October 2014
1 January 2013
27 November 2012
Date of Resignation
Not Applicable
Not Applicable
Not Applicable
Not Applicable
10 June 2016
10 June 2015
2 October 2014
Simon Jackson is a Chartered Accountant with over 26 years gold industry experience in Australia and Africa.
Consolidated Financial Statements for the Year Ended 30 June 2017
Page 4 of 57
DIRECTORS’ REPORT
Mr Jackson is the CEO and Managing Director at Beadell Resources Ltd, a Brazilian gold producer. Prior to this he
was the Vice President Corporate Development and formerly the Chief Financial Officer for Red Back Mining Inc
prior to its takeover by Kinross Gold Corporation in September 2010. He was an integral part of the senior
management team that saw Red Back's market capitalisation grow from C$40 million in 2004 upon listing on TSX
to over C$9 billion on takeover.
Mr Jackson is currently MD and CEO of Beadell Resources Ltd (ASX: BDR), Non‐Executive Director of Sarama
Resources Ltd (TSXV: SWA) and Chairman of Orca Gold Inc. (TSXV: ORG). He holds a Bachelor of Commerce degree
from the University of Western Australia and is a Fellow of the Institute of Chartered Accountants in Australia,
initially spending 8 years with KPMG.
During the past 3 years he has also served as a director of the following listed companies;
Company
Beadell Resources Limited
Sarama Resources Ltd
Orca Gold Inc.
RB Energy Inc.
ROBERT SCHAFER B.Sc (Hons)
Non‐Executive Director
Appointed 10 July 2017
Date of Appointment
10 November 2013
11 March 2011
4 April 2013
31 January 2014
Date of Resignation
Not Applicable
Not Applicable
Not Applicable
2 April 2015
Robert has over 30 years of international experience as a geologist exploring for mineral deposits in more than 70
countries. As an executive, manager and field geologist with companies including Billiton, BHP, Kinross and Hunter
Dickinson, Robert led teams to the discovery of several deposits in the western USA (Briggs and Griffon gold
mines), as well as developing strategies that led to brownfields discoveries in western Canada, southern Africa and
far east Russia (Birkachan gold mine).
Robert is the immediate Past President of the Prospectors and Developers Association of Canada (PDAC) as well
as Past President of both the Canadian Institute for Mining, Metallurgy and Petroleum (CIM) and the Mining and
Metallurgical Society of America (MMSA). He is a Certified Corporate Director (ICD.D), a RPGeo and is also an
active member of the Society for Mining, Metallurgy and Exploration (SME) in the USA, where he served on its
Board for more than a decade.
Robert serves as a member of the Board of Directors for both the Canadian Mining Hall of Fame and National
Mining Hall of Fame in the USA. He is the recipient of the William Lawrence Saunders Gold Medal from the
American Institute of Mining, Metallurgical and Petroleum Engineers (AIME) and the Daniel C. Jackling Award from
SME for career achievements, two of the highest mining recognitions in the USA.
During the past 3 years he has also served as a director of the following listed companies;
Company
Amur Minerals Inc
Trigon Mining Inc
Volcanic Gold Mines Inc.
Minera IRL
Orex Exploration
Curtis Resources Ltd
Galway Gold
Lincoln Mining Corporation
Martina Minerals Corp
Rathdowney Resources Ltd
Date of Appointment
1 February 2006
20 April 2017
14 March 2017
12 September 2016
10 September 2010
28 January 2011
21 December 2012
9 April 2014
19 July 2005
15 March 2011
Date of Resignation
Not Applicable
Not Applicable
Not Applicable
30 November 2016
18 May 2017
20 November 2014
5 November 2014
12 December 2016
25 February 2015
15 April 2015
Consolidated Financial Statements for the Year Ended 30 June 2017
Page 5 of 57
DIRECTORS’ REPORT
MARK THOMAS B.Sc (Hons)
Non‐Executive Director
Appointed 31 August 2015
Retired 7 November 2016
Mark Thomas has over 28 years’ experience in exploration and mining geology, geostatistics and mining finance.
In 1994 Mr Thomas joined Macquarie Bank Limited in the Metals and Energy Capital Division undertaking a broad
range of equity and debt finance transactions in the mining sector.
Mr Thomas was an Executive Director of Macquarie Bank for 11 years until his retirement in late 2014. He has
extensive equity investment and banking experience with gold projects in West Africa, including undertaking
transactions for several of the significant gold mining projects developed in Ghana over the past two decades.
Mr Thomas is a graduate from the University of Wales with a Bachelor of Science (Hons) in Geology.
During the past three years he has held no other listed company directorships.
COMPANY SECRETARY
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
Kevin Tomlinson
Archie Koimtsidis
Malik Easah
Mark Connelly
Simon Jackson
Robert Schafer
Ordinary
Shares
Listed
Options
Unlisted
Options
‐
8,117,565
7,681,815
‐
1,000,000
‐
400,000
4,191,731
6,560,423
‐
500,000
‐
5,000,000
7,500,000
6,000,000
3,500,000
3,500,000
‐
Class A
Performance
Shares
‐
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.
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 2016 to 30 June 2017 after income tax was
a loss of $21,790,704 (2016: loss of $9,322,373).
The net assets of the consolidated group have increased from $3,948,069 at 30 June 2016 to $26,206,571 as at
30 June 2017. Total assets and Shareholder’s equity increased significantly in 2017 due to the issuance of share
capital, which in turn increased cash resources as at June 30, 2017.
The directors’ believe the Group is in a strong and stable financial position to expand and grow its current
operations.
Consolidated Financial Statements for the Year Ended 30 June 2017
Page 6 of 57
DIRECTORS’ REPORT
A review of operations of the consolidated entity during the year ended 30 June 2017 is provided in the
Management Discussion & Analysis immediately preceding the consolidated financial statement.
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 Management
Discussion & Analysis.
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 of the Company’s Directors held during the financial year
ended 30 June 2017 and the number of meetings attended by each Director. There were two committees of
Directors in existence during the financial year, these being the Audit and Risk Committee and the Remuneration
and Nomination Committee. We refer to the Company’s 2017 Corporate Governance Statement for more
information.
Note
Directors’
Meeting
Audit and Risk
Committee
Number of Meetings
Held
K Tomlinson
A Koimtsidis
M Easah
M Connelly
S Jackson
R Schafer
M Thomas
*By invitation
1
‐
‐
‐
‐
2
1
7
3
7
7
7
7
n/a
4
2
2
n/a
n/a
1
2
n/a
n/a
Remuneration and
Nomination
Committee
2
1*
n/a
n/a
2
2
n/a
n/a
Note 1: Mr Tomlinson was appointed on 7 November 2016 and Mr Thomas retired on 7 November 2016
Note 2: Mr Schafer was appointed on 10 July 2017
Consolidated Financial Statements for the Year Ended 30 June 2017
Page 7 of 57
DIRECTORS’ REPORT
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 has been obtained 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.
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.
Reliance on external remuneration consultants
In July 2016, the remuneration committee engaged BDO (WA) Pty Ltd (BDO) to review existing remuneration
policies and to provide recommendations on executive short‐term and long‐term incentive plan. BDO was paid
$6,250 for these services.
BDO has confirmed that any remuneration recommendations have been made free from undue influence by
members of the group’s key management personnel.
The following arrangements were made to ensure that the remuneration recommendations were free from undue
influence:
BDO was engaged by, and reported directly to, the chair of the remuneration committee. The agreement for
the provision of remuneration consulting services was executed by the chair of the remuneration committee
under delegated authority on behalf of the board.
The report containing the remuneration recommendations was provided by BDO directly to the chair of the
remuneration committee; and
BDO was permitted to speak to management throughout the engagement to understand company processes,
practices and other business issues and obtain management perspectives.
As a consequence, the Board is satisfied that the recommendations were made free from undue influence from
any members of the key management personnel.
Consolidated Financial Statements for the Year Ended 30 June 2017
Page 8 of 57
DIRECTORS’ REPORT
Details of key management personnel (KMP)
Directors
K Tomlinson
A Koimtsidis
M Easah
M Connelly
S Jackson
R Schafer
M Thomas
Executives
D Weyrauch
E Palmbachs
Title
Non‐Executive Chairman
Managing Director
Executive Director
Non‐Executive Director
Non‐Executive Director
Non‐Executive Director
Non‐Executive Director
Date of Appointment
7 November 2016
27 December 2012
27 December 2012
19 November 2015
31 August 2015
10 July 2017
31 August 2015
Date of Retirement
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
7 November 2016
Title
Chief Financial Officer
Chief Financial Officer
Date of Appointment
10 July 2017
1 March 2017
Date of Retirement
Not Applicable
24 May 2017
Remuneration Governance
Role of the Remuneration and Nomination Committee
The Remuneration and Nomination Committee’s role is to review and recommend remuneration for key
management personnel and review remuneration policies and practices including Company incentive schemes
and superannuation arrangements.
The Committee considers independent advice, where circumstances require, on the appropriateness of
remuneration to ensure the Group attracts, motivates and retains high quality people. An advisor was engaged
for the year ended 30 June 2017.
The ASX Listing Rules require that the maximum aggregate amount of remuneration to be allocated among the
non‐executive Directors be approved by shareholders in a general meeting. In proposing the maximum amount
for consideration by shareholders and in determining the allocation, the Remuneration and Nomination
Committee takes account of the time demands made on Directors and such factors as fees paid to non‐executive
Directors in comparable companies.
The Remuneration and Nomination Committee comprises of two non‐executive Directors.
Remuneration arrangements for Directors and executives are reviewed by the Remuneration and Nomination
Committee and recommended to the Board for approval. The Remuneration and Nomination Committee
considers external data and information, where appropriate, and may engage independent advisors where
appropriate to establish market benchmarks.
Remuneration arrangements are determined in conjunction with the annual review of the performance of
Directors, executives and employees of the Group. Performance of the Directors and the CFO of the Group is
evaluated by the Board, assisted by the Remuneration and Nomination Committee.
Remuneration policy and link to performance
The Company’s remuneration committee is made up of independent non‐executive directors. The committee
reviews and determines the Company’s remuneration policy and structure annually to ensure it remains aligned
to business needs and meets the Company’s remuneration principles. The committee also engages external
remuneration consultants, if required, to assist with this review. In particular, the Board aims to ensure that
remuneration practices are:
competitive and reasonable, enabling the Company to attract and retain key talent
aligned to the Company’s strategic and business objectives and the creation of shareholder value
Consolidated Financial Statements for the Year Ended 30 June 2017
Page 9 of 57
DIRECTORS’ REPORT
transparent and easily understood; and
acceptable to shareholders.
Remuneration Framework
Element
Fixed
Remuneration
(FR)
Short Term
Incentives (STI)
Long Term
Incentives (LTI)
Purpose
Provide competitive
market salary,
including
superannuation and
non‐monetary
benefits
Reward for in‐year
performances
Alignment to long‐
term shareholder
value
Performance Metric Potential Value
Nil
Positioned at
median market rate
Change for FY 2017
Reviewed in line
with market position
N/A
N/A
N/A
Five‐year milestone
hurdles
Introduce milestone
LTI
KMP and employees
receive 18,500,000
unlisted options
exercisable at $0.50
on meeting of
milestones.
Statutory performance indicators
The Company aims to align the executive remuneration to the Company’s strategic and business objectives and
the creation of shareholder wealth. The below table, titled “Statutory Key Performance Indicators of the Group
over the Last Five Years”, details measures of the group’s financial performance over the last five years as required
by the Corporations Act 2001. However, these are not necessarily consistent with the measures used in
determining the variable amounts of remuneration to be awarded to KMPs. As a consequence, there may not
always be a direct correlation between statutory key performance measures and the variable remuneration
awarded.
Statutory Key Performance Indicators of the Group over the Last Five Years
2017
2016
2015
2014
2013
Total Comprehensive Loss Attributable
to Member of the Company
Basic Loss Per Share
Increase/(decrease) in share price (%)
21,724,298
7.12
+1.76
9,243,909
5.55
+6.00
3,580,551
3.82
+2.5
10,164,082
13.58
‐2.5
2,007,516
4.20
+1.25
Non‐Executive Director Remuneration Policy
The 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
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
Consolidated Financial Statements for the Year Ended 30 June 2017
Page 10 of 57
DIRECTORS’ REPORT
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.
Employment Details of Members of Key Management Personnel
The following table provides employment details of persons who were, during the financial year, members of KMP
of the consolidated group. The table also illustrates the proportion of remuneration that was performance and
non‐performance based.
Position Held as
at 30 June 2017
and any change
during the year
Fixed
Remuneration
Contract Details
(Duration and
Termination)
Proportion of Elements of
Remuneration Related to
Performance (Other than Options
Issued)
Non‐Salary
Cash‐Based
Incentives
%
‐
‐
‐
‐
‐
‐
‐
Shares/Units
%
‐
‐
‐
‐
‐
‐
‐
K Tomlinson
Non‐Executive
Chairman
commenced on 7
November 2016
A Koimstidis Managing Director
M Easah
Executive Director
M Connelly
S Jackson
M Thomas
E Palmbachs
Non‐Executive
Director from 7
November 2016.
Previously Non‐
Executive
Chairman.
Non‐Executive
Director
Non‐Executive
Director retired on
7 November 2016
Chief Finance
Officer
commenced on 1
March 2017
retired on 24 May
2017
$9,198 per
month
No fixed term
No fixed term, 12
months’ notice
required to
terminate.
No fixed term, 6
months’ notice
required to
terminate.
No fixed term
No fixed term
No fixed term
No fixed term
$300,000 per
annum
US$210,000
per annum
$80,000 plus
statutory
superannuation
per annum
$80,000 plus
statutory
superannuation
per annum
$75,000 plus
statutory
superannuation
per annum
$250,000 plus
statutory
superannuation
per annum
Proportion of
Elements of
Remuneration
Not Related to
Performance
Fixed
Salary/Fees
%
18.54%
49.35%
47.23%
31.83%
31.83%
99.00%
‐
Terms of employment require that the Group is not required to provide an executive contracted person with a
minimum notice period prior to termination of contract, unless otherwise stated above. Termination payments
are not payable on resignation or under the circumstances of unsatisfactory performance.
Consolidated Financial Statements for the Year Ended 30 June 2017
Page 11 of 57
DIRECTORS’ REPORT
Remuneration of key management personnel
(i)
Options granted to key management personnel
During the year 21,000,000 milestone options were granted to key management personnel of the Company.
2,500,000 milestone options were forfeited during the year.
The Milestone Options shall vest and are exercisable at any time on and from:
(i) Milestone 1 ‐ the earlier of:
(A) the completion of a scoping study; or
(B) the completion of a preliminary economic assessment, of the Ghanaian Assets;
(i) Milestone 2 ‐ on the beginning of earthworks for gold production at the Ghanaian Assets; and
(ii) Milestone 3 ‐ on the first pouring of gold at the Ghanaian Assets, until 12 April 2022.
Using the Black & Scholes option model and based on the assumption below, the Options were ascribed the
following value:
Class of
Options
Number
Options
Valuation
Date
Market
Price of
Shares
Exercise
Price
Expiry
Date
Milestone 1
Milestone 2
Milestone 3
6,300,000
6,300,000
8,400,000
27.02.17
27.02.17
27.02.17
$0.525
$0.525
$0.525
$0.50
$0.50
$0.50
18.04.22
18.04.22
18.04.22
Risk
Free
Interest
Rate
2.17%
2.17%
2.17%
Volatility
(discount)
Indicative
Value per
Option
Total
Value
($)
Expense
for the
period
($)
99.50%
99.50%
99.50%
$0.39
$0.39
$0.39
2,495,968 841,107
2,495,968 280,369
3,327,957 224,295
The milestone options vest on meeting of the milestones.
The Key Management Personnel were issued unlisted options, details below:
Director
Milestone 1
K Tomlinson
A Koimtsidis
M Easah
M Connelly
S Jackson
E Palmbachs
1,500,000
1,350,000
1,200,000
750,000
750,000
750,000
Milestone 2
1,500,000
1,350,000
1,200,000
750,000
750,000
750,000
Milestone 3
2,000,000
1,800,000
1,600,000
1,000,000
1,000,000
1,000,000
Total Milestone Options
5,000,000
4,500,000
4,000,000
2,500,000
2,500,000
2,500,000
The milestone options granted to key management personnel were granted as remuneration. All rights expiry on
the earlier of their expiry date or termination of individual’s employment. The rights granted carry no dividend
or voting rights.
The value of the rights included in remuneration for the year is calculated in accordance with Australian
Accounting Standards.
Consolidated Financial Statements for the Year Ended 30 June 2017
Page 12 of 57
DIRECTORS’ REPORT
Short‐Term
Benefits
Post Employment
Benefits
Key
Management
Personnel
Salary,
Fees and
Leave
Non
Monetary
Superannuation
Equity Settled
Share‐Based
Payments
Shares/Options
Long
Term
Benefits
Long
Service
Leave
Total
(i)
$
$
$
(ii)
$
K Tomlinson (iii)
2017
2016
A Koimtsidis
2017
2016
M Easah
2017
2016
M Connelly
2017
2016
S Jackson
2017
2016
A Pismiris
2017
2016
E Palmbachs (iv)
2017
2016
M Thomas (iii)
2017
2016
Total
2017
2016
$
73,854
‐
286,667
222,500
233,901
168,995
69,333
29,476
69,333
46,750
‐
17,000
62,500
‐
26,154
55,750
821,742
540,471
3,862
‐
5,634
4,230
4,802
2,996
2,313
1,054
2,313
1,215
‐
144
670
‐
281
1,689
19,875
11,328
‐
‐
‐
‐
‐
‐
6,586
2,800
6,586
4,441
‐
‐
5,938
‐
2,485
5,296
21,595
12,537
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
$
398,138
‐
580,681
502,730
495,040
355,991
238,443
125,330
238,443
144,406
‐
17,144
69,108
‐
28,920
200,735
320,422
‐
288,380
276,000
256,337
184,000
160,211
92,000
160,211
92,000
‐
‐
‐
‐
‐
138,000
1,185,561
782,000
2,048,773
1,346,336
(i)
(ii)
(iii)
(iv)
Non monetary benefits are for directors’ and officers’ liability and legal expense insurance premiums.
Unlisted options were granted as part of remuneration. No cash benefit is received by the key
management personnel of the Group, until the sale of the resultant shares, which cannot be done unless
and until the rights have vested and the shares issued.
K Tomlinson was appointed on 7 November 2016 and M Thomas resigned on 7 November 2016.
E Palmbachs was appointed on 1 March 2017 and his appointment ended on 24 May 2017.
Consolidated Financial Statements for the Year Ended 30 June 2017
Page 13 of 57
DIRECTORS’ REPORT
Shareholdings of key management personnel
Key
Management
Personnel
Balance at
Beginning of
Year (ii)
Granted as
Remunerat
ion During
the Year
Issued on
Exercise of
Options
During the
Year
Other Changes During
the Year (i)
Balance at End of
Year
(iii)
K Tomlinson
A Koimtsidis
M Easah
M Connelly
S Jackson
E Palmbachs
M Thomas
‐
7,117,565
6,681,815
‐
1,000,000
17,441
3,833,334
18,650,155
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
1,000,000
1,000,000
‐
‐
‐
‐
2,000,000
‐
8,117,565
7,681,815
‐
1,000,000
17,441
3,833,334
20,650,155
(i)
(ii)
(iii)
On 5 September 2016 Class B Performance Shares were converted to ordinary shares.
Balance at the beginning of the financial year or at date of appointment, for those key management
personnel who were appointed during the financial year.
Balance at the end of the financial year or at date of retirement, for key management personnel who
retired before financial year end.
Listed Option holdings of key management personnel
Key
Management
Personnel
K Tomlinson
A Koimtsidis
M Easah
M Connelly
S Jackson
E Palmbachs
M Thomas
Total
Balance at
Beginning of
Year
(ii)
‐
4,191,731
6,560,423
‐
500,000
‐
1,950,000
13,202,154
Granted as
remuneration
Expired during
the year
Other Changes
During the Year
(i)
Balance at
End of Year
(iii)
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
400,000
‐
‐
‐
‐
‐
‐
400,000
400,000
4,191,731
6,560,423
‐
500,000
‐
1,950,000
13,602,154
(i)
(ii)
(iii)
On market purchase.
Balance at the beginning of the financial year or at date of appointment, for those key management
personnel who were appointed during the financial year.
Balance at the end of the financial year or at date of retirement, for key management personnel who
retired before financial year end.
Consolidated Financial Statements for the Year Ended 30 June 2017
Page 14 of 57
DIRECTORS’ REPORT
Unlisted Option holdings of key management personnel
Key
Management
Personnel
K Tomlinson
A Koimtsidis
M Easah
M Connelly
S Jackson
E Palmbachs
Mark Thomas
Total
Balance at
Beginning of Year
(iii)
Granted as
remuneration
(ii)
Grant
Value
($)
Expired
during the
year (i)
Net other
change
Balance at
End of Year
(iv)
‐
3,000,000
2,000,000
1,000,000
1,000,000
‐
1,500,000
8,500,000
5,000,000
4,500,000
4,000,000
2,500,000
2,500,000
2,500,000
‐
21,000,000
1,980,927
1,782,834
1,584,742
990,463
990,463
‐
‐
7,329,429
‐
‐
‐
‐
‐
(2,500,000)
(1,500,000)
(4,000,000)
‐
‐
‐
‐
‐
‐
‐
‐
5,000,000
7,500,000
6,000,000
3,500,000
3,500,000
‐
‐
25,500,000
(i)
(ii)
(iii)
(iv)
Forfeited during the year.
On the 12 April 2017 the Company issued unlisted employee options, exercisable at $0.50 on or before
12 April 2022, the options vest on certain milestones being achieved. The employee options were
approved at the Company’s General Meeting held on 3 April 2017.
Balance at the beginning of the financial year or at date of appointment, for those key management
personnel who were appointed during the financial year.
Balance at the end of the financial year or at date of retirement, for key management personnel who
retired before financial year end.
Key
Management
Personnel
Kevin Tomlinson
Archie Koimtsidis
Malik Easah
Mark Connelly
Simon Jackson
Total
Balance at end of
Year
Exercisable
Vested
Unexercisable
No.
5,000,000
7,500,000
6,000,000
3,500,000
3,500,000
25,500,000
No.
‐
3,000,000
2,000,000
1,000,000
1,000,000
7,000,000
No.
‐
‐
‐
‐
‐
‐
Total Vested
at End of
Year
No.
‐
3,000,000
2,000,000
1,000,000
1,000,000
7,000,000
Unvested
Total at End
of Year
No.
5,000,000
4,500,000
4,000,000
2,500,000
2,500,000
18,500,000
Class A Performance Shareholdings of key management personnel
On satisfaction of certain milestone events, each Class A Performance Share converts into 100,000 ordinary shares
(refer to note 12) in which case each key management personnel holding the Class A Performance Shares would
become entitled to a further 1,000,000 ordinary shares.
Key Management
Personnel
Balance at
1 July 2016
(ii)
Granted as
remuneration
Net other change
Balance at
30 June 2017
(i)
K Tomlinson
A Koimtsidis
M Easah
M Connelly
S Jackson
E Palmbachs
M Thomas
Total
‐
10
10
‐
‐
‐
‐
20
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
10
10
‐
‐
‐
‐
20
Consolidated Financial Statements for the Year Ended 30 June 2017
Page 15 of 57
DIRECTORS’ REPORT
(i)
(ii)
Balance at the end of the financial year or at date of retirement, for key management personnel who
retired before financial year end.
Balance at the beginning of the financial year or at date of appointment, for those key management
personnel who were appointed during the financial year.
Class B Performance Shareholdings of key management personnel
Key Management
Personnel
Balance at
1 July 2016
(ii)
Granted as
remuneration
Net other change
(iii)
Balance at
30 June 2017
(i)
K Tomlinson
A Koimtsidis
M Easah
M Thomas
S Jackson
E Palmbachs
M Thomas
Total
‐
10
10
‐
‐
‐
‐
20
‐
‐
‐
‐
‐
‐
‐
‐
‐
(10)
(10)
‐
‐
‐
‐
(20)
‐
‐
‐
‐
‐
‐
‐
‐
(i)
(ii)
(iii)
Balance at the end of the financial year or at date of retirement, for key management personnel who
retired before financial year end.
Balance at the beginning of the financial year or at date of appointment, for those key management
personnel who were appointed during the financial year.
On 5 September 2016, the Class B Performance Shares were converted into fully paid ordinary shares of
the Company upon vesting. Each Class B Performance Share converted into 100,000 ordinary shares in
the Company.
Other Equity‐related Key Management Personnel Transactions
There have been no other transactions involving equity instruments apart from those described in the tables above
relating to options and shareholdings.
Other Transactions with Key Management Personnel and/or their Related Parties
Tomlinson Consultancy, of which Kevin Tomlinson is a director, provided geological consulting services to the
Company. Amounts that have been paid or payable total $280,000 (2016: $0).
During the year ended 30 June 2017, Cardinal Resources Limited advanced $2,349,570 to Savannah, a Director
related entity. The purpose of the advance was development of a mining licence in areas in respect of which
Savannah had entered into agreements with holders of small scale licences. As at the date of this report,
$1,836,997 has been applied toward the development of the mining licence and the remainder has been recorded
as a prepayment in the consolidated financial statements of Cardinal Resources Limited.
Other than the above there were no other transactions conducted between the Group and Key Management
Personnel or their related parties, apart from those disclosed above relating to equity and compensation, that
were conducted other than in accordance with normal employee, customer or supplier relationships on terms no
more favourable than those reasonably expected under arm’s length dealings with unrelated persons.
END OF REMUNERATION REPORT
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
Consolidated Financial Statements for the Year Ended 30 June 2017
Page 16 of 57
DIRECTORS’ REPORT
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 $19,875 (2016: $11,328) 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:
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.
SHARES OPTIONS
Unissued shares
At the date of this report the Company had on issue 115,682,937 Listed Options in the Company, exercisable at
$0.15 on or before 30 September 2019. During the financial year none of these listed options were converted into
fully paid shares.
As at the date of this report the Company had on issue 8,000,000 unlisted options, exercisable at $0.22 on or
before 18 March 2020 and 23,500,000 unlisted options, exercisable at $0.50 on or before 12 April 2022
(“Milestone Options”). The milestone options vest on the Company achieving certain milestones. 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.
There have been no options granted over unissued shares or interests of any controlled entity within the Group
during or since the end of the reporting period.
For details of options issued to directors and executives, refer to the remuneration report.
CORPORATE GOVERNANCE STATEMENT
Cardinal Resources is committed to ensuring that its policies and practices reflect a high standard of corporate
governance. The Board has adopted a comprehensive framework of Corporate Governance Guidelines.
Throughout the 2017 financial year the Company’s governance was consistent with the Corporate Governance
Principles and Recommendations (3rd edition) published by the ASX Corporate Governance Council.
The Group’s Corporate Governance Statement can be viewed at the Company’s Corporate Governance page at
http://cardinalresources.com.au.
EVENTS SUBSEQUENT TO BALANCE DATE
On 1 August and 22 August 2017 290,994 and 175,608 options were exercised respectively.
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.
Consolidated Financial Statements for the Year Ended 30 June 2017
Page 17 of 57
DIRECTORS’ REPORT
Non Audit Services
The Company may decide to employ the auditor on assignments additional to their statutory audit duties where
the auditor’s expertise and experience with the company and/or the group are important.
Details of the amounts paid or payable to the BDO (WA) Pty Ltd (BDO) for audit and non‐audit services provided
during the year are set out below.
The board of Directors has considered the position and, in accordance with advice received from the audit
committee, is satisfied that the provision of the non‐audit services is compatible with the general standard of
independence for auditors imposed by the Corporations Act 2001. The Directors are satisfied that the provision of
non‐audit services by the auditor, as set out below, did not compromise the auditor independence requirements
of the Corporations Act 2001 for the following reasons:
all non‐audit services have been reviewed by the audit committee to ensure they do not impact the
impartiality and objectivity of the auditor
none of the services undermine the general principles relating to auditor independence as set out in APES 110
Code of Ethics for Professional Accountants.
During the year the following fees were paid or payable for non‐audit services provided by BDO, its related
practices and non‐related audit firms:
Remuneration for non‐audit services
Remuneration advice (including remuneration
recommendations)
Total remuneration for non‐audit services
AUDITOR’S INDEPENDENCE DECLARATION
2017
$
6,250
6,250
2016
$
‐
‐
The auditor’s independence declaration for the year ended 30 June 2017 has been received and can be found on
page 50 of the financial report.
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
CEO/MD
Dated this 29 September 2017
Consolidated Financial Statements for the Year Ended 30 June 2017
Page 18 of 57
FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2017
Australian Dollar ($)
REVENUE
EXPENDITURE
Corporate general and administration expenses
Amortization expenses
Exploration and evaluation expenses
Foreign exchange gain/(loss)
LOSS BEFORE INCOME TAX
Income tax
LOSS AFTER INCOME TAX
OTHER COMPREHENSIVE INCOME
Items that may be reclassified to profit or loss:
Exchange differences arising on translation of
foreign operations
TOTAL COMPREHENSIVE LOSS
TOTAL COMPREHENSIVE LOSS ATTRIBUTABLE
TO MEMBERS OF THE COMPANY
Note
30 JUNE 2017
$
30 JUNE 2016
$
4
5
9
6(a)
149,596
43,706
(5,602,188)
(426,572)
(15,794,617)
(116,923)
(21,790,704)
‐
(21,790,704)
(2,090,910)
(94,932)
(7,182,584)
2,347
(9,322,373)
‐
(9,322,373)
66,406
(21,724,298)
78,464
(9,243,909)
(21,724,298)
(9,243,909)
LOSS PER SHARE
Basic and diluted – cents per share
13
(7.12)
(5.55)
The above consolidated statement of profit or loss and other comprehensive
income should be read in conjunction with the accompanying notes
Consolidated Financial Statements for the Year Ended 30 June 2017
Page 19 of 57
FINANCIAL REPORT AS AT 30 JUNE 2017
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2017
Australian Dollar ($)
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Other assets
TOTAL CURRENT ASSETS
NON CURRENT ASSETS
Plant and equipment
TOTAL NON CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Provisions
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
Note
14(a)
8(a)
8(b)
9
10
11
12
30 JUNE 2017
$
30 JUNE 2016
$
28,592,718
132,655
918,909
29,644,282
465,396
465,396
4,864,822
16,280
104,523
4,985,625
675,911
675,911
30,109,678
5,661,536
3,883,409
19,698
3,903,107
3,903,107
26,206,571
68,628,035
2,477,988
(44,899,452)
26,206,571
1,713,467
‐
1,713,467
1,713,467
3,948,069
26,151,217
1,043,600
(23,246,748)
3,948,069
The above consolidated statement of financial position should be
read in conjunction with the accompanying notes
Consolidated Financial Statements for the Year Ended 30 June 2017
Page 20 of 57
FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2017
Australian ($)
SHARE CAPITAL
OPTIONS RESERVE
BALANCE AT 1 JULY 2016
Profit/(loss) for the period
Other comprehensive income
Total comprehensive income
Shares issued during the year
Employee share based payments
Transactions with owners in their
capacity of owners
Shares issue expenses
Options exercised during the year
Employee option based payments
Expiry of options
BALANCE AT 30 JUNE 2017
BALANCE AT 1 JULY 2015
Profit/(loss) for the period
Other comprehensive income
Total comprehensive income
Shares and options issued during the year
Shares issue expenses
Employee option based payments
Expiry of options
BALANCE AT 30 JUNE 2016
$
26,151,217
‐
‐
‐
44,549,133
395,285
(2,683,225)
215,625
‐
‐
68,628,035
14,816,842
‐
‐
‐
12,042,719
(708,344)
‐
‐
26,151,217
$
1,342,607
‐
‐
‐
‐
‐
‐
‐
1,505,982
(138,000)
2,710,589
732,423
‐
‐
‐
‐
‐
874,000
(263,816)
1,342,607
FOREIGN EXCHANGE
RESERVE
$
(299,007)
‐
66,406
66,406
‐
‐
‐
‐
‐
‐
(232,601)
(377,471)
‐
78,464
78,464
‐
‐
‐
‐
(299,007)
ACCUMULATED
LOSSES
$
(23,246,748)
(21,790,704)
‐
(21,790,704)
‐
‐
‐
‐
‐
138,000
(44,899,452)
(14,188,191)
(9,322,373)
‐
(9,322,373)
‐
‐
‐
263,816
(23,246,748)
TOTAL EQUITY
$
3,948,069
(21,790,704)
66,406
(21,724,298)
44,549,133
395,285
(2,683,225)
215,625
1,505,982
‐
26,206,571
983,603
(9,322,373)
78,464
(9,243,909)
12,042,719
(708,344)
874,000
‐
3,948,069
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes
Consolidated Financial Statements for the Year Ended 30 June 2017
Page 21 of 57
FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2017
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
Purchase of plant and equipment
Net cash outflow from investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Issue of shares and options net of capital raising costs
Net cash inflow from financing activities
Note
30 JUNE 2017
$
30 JUNE 2016
$
14(b)
(14,553,197)
(3,616,893)
143,074
(18,027,016)
(339,902)
(339,902)
42,081,533
42,081,533
(5,868,440)
(1,295,294)
30,325
(7,133,409)
(155,471)
(155,471)
11,334,374
11,334,374
Net increase/(decrease) in cash and cash equivalents
23,714,615
4,045,494
Cash and cash equivalents at the beginning of the
financial year
Exchange rate adjustment
4,864,822
13,281
839,755
(20,427)
CASH AND CASH EQUIVALENTS AT THE END OF THE
FINANCIAL YEAR
14(a)
28,592,718
4,864,822
The above consolidated statement of cash flows should be
read in conjunction with the accompanying notes
Consolidated Financial Statements for the Year Ended 30 June 2017
Page 22 of 57
FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
1.
CORPORATE INFORMATION
The financial report of Cardinal Resources Limited (“Cardinal Resources” or “the Company”) and its controlled
entities (“the Group”) for the year ended 30 June 2017 was authorised for issue in accordance with a resolution
of the directors on 29 September 2017.
Cardinal Resources Limited is a company limited by shares, incorporated in Australia whose shares are publicly
traded on the Australian Securities Exchange (“ASX”) and Toronto Stock Exchange (“TSX”). The consolidated
financial statements of the Company for the year ended 30 June 2017 is comprised of the Company and its
subsidiaries, together referred to as the Group or consolidated entity. The Company’s registered office is Suite
1, 28 Ord Street, West Perth, Western Australia 6005, Australia.
The nature of the operations and principal activity of the Group is described in the directors’ report.
2.
BASIS OF PRESENTATION
(a)
Statement of compliance
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 International Financial Reporting Standards
(“IFRS”) as issued by the International Accounting Standards Board (“IASB”).
(b)
Basis of preparation of the financial report
The financial report has been prepared on a historical cost basis.
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
Cardinal Resources (Australia) Pty Ltd
Cardinal Resources Ghana Limited
Cardinal Resources Subranum Limited
Cardinal Mining Services Limited
Cardinal Namdini Mining Limited
Country of incorporation
Percentage owned
Australia
Ghana
Ghana
Ghana
Ghana
2017
100%
100%
100%
100%
100%
2016
100%
100%
100%
100%
100%
All inter‐company balances have been eliminated in the consolidated financial statements.
(c)
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 operates, which the Company has determined is the Australian dollar. The
consolidated financial statements are presented in Australian dollars, which is the Cardinal Resources’ functional
currency. Cardinal Resources’ Ghanaian subsidiaries’, as detailed in note 2(b), functional currency is Ghana Cedis.
Consolidated Financial Statements for the Year Ended 30 June 2017
Page 23 of 57
FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
(d)
Principles of consolidation
Subsidiaries
Subsidiaries are all entities (including structured entities) over which the group has control. The group controls
an entity when the group is exposed to, or has rights to, variable returns from its involvement with the entity
and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are
fully consolidated from the date on which control is transferred to the group. They are deconsolidated from the
date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between group companies are
eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of
the transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure
consistency with the policies adopted by the group.
Non‐controlling interests in the results and equity of subsidiaries are shown separately in the consolidated
statement of profit or loss, statement of comprehensive income, statement of changes in equity and balance
sheet respectively.
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 2(b) 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.
(e)
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:
Determination of functional currency
The functional currency of the Company has been assessed by management based on consideration of the
currency and economic factors that mainly influence the Company’s operations. Changes to these factors may
have an impact on the judgment applied in the determination of the Company’s functional currency.
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 to note 6).
Provisions
On an ongoing basis, the Company is subject to various claims and other legal disputes for which the outcomes
cannot be assessed with a high degree of certainty. A liability is recognised where, based on the Company’s legal
views and advice, it is considered probable that an outflow of resources will be required to settle a present
obligation that can be measured reliably.
Consolidated Financial Statements for the Year Ended 30 June 2017
Page 24 of 57
FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
By their nature, these provisions will only be resolved when one or more future events occur or fail to occur. The
assessment of such provisions inherently involves the exercise of significant judgment of the potential outcome
of future events.
Share‐based payment transactions
The Group measures the cost of equity‐settled transactions by reference to the fair value of the equity
instrument at the date at which they are granted. The fair value of options granted is measured using the Black‐
Scholes option pricing model. The model uses assumptions and estimates as inputs (refer to note 15).
A probability of 100% has been applied to the milestones occurring for the milestone options on issue.
A probability of 0% has been applied to the Class A and C Performance Shares hurdles occurring.
Impairment of non‐financial assets
The Group assesses impairment at the end of each reporting period by evaluating conditions and events specific
to the Group that may be indicative of impairment triggers. Recoverable amounts of relevant assets are
reassessed using various key assumptions.
There is no impairment indicators for the year.
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a)
Exploration and evaluation expenditure
The Group expenses all exploration and evaluation expenditure incurred.
An area of interest is established where a discovery of economically recoverable resource is made. The area of
interest will be established as a mineral project. All activity relating to the area of interest is then subsequently
capitalised. When development is anticipated, costs will be carried forward until the decision to develop is made.
Each area of interest is reviewed regularly to determine whether it is appropriate to continue to carry forward
the capitalised cost.
(b)
Revenue
Revenue is recognised when significant risks and rewards of ownership have been transferred to the buyer, there
is no continuing managerial involvement with respect to the goods sold and they can be reliably measured at
the fair value of the consideration received or receivable to the extent that it is probable that the economic
benefits will flow to the Group.
Interest revenue is recognised using the effective interest method.
(c)
Employee benefits
Provision is made for the Group’s liability for employee benefits arising from services rendered by employees to
the statement of financial position 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, are 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 are measured at the present value of the estimated cash outflows to be made to
those benefits.
Consolidated Financial Statements for the Year Ended 30 June 2017
Page 25 of 57
FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
Contributions are made by the Group to employee superannuation funds and are charged as expenses when
incurred.
(d)
Share based payment transactions
The Company accounts for all equity‐settled stock‐based payments based on the fair value of the award on grant
date. Under the fair value based method, compensation cost attributable to options granted is measured at fair
value at the grant date and amortised over the vesting period. The amount recognised as an expense is adjusted
to reflect any changes in the Company’s estimate of the shares that will eventually vest and the effect of any
non‐market vesting conditions.
Share‐based payment arrangements in which the Company receives goods or services as consideration are
measured at the fair value of the good or service received, unless that fair value cannot be reliably estimated.
(e)
Foreign currency translation
The Australian dollar is considered to be the functional currency of the Company. Monetary assets and liabilities
of the Company's operations are translated into Australian dollars at the rate of exchange in effect at the
statement of financial position date, and non‐monetary assets and liabilities are translated at the historical rate
of exchange. Transactions in foreign currencies are translated at the actual rates of exchange. Foreign currency
gains and losses are recognised in profit or loss.
(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 statement of financial position 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 goodwill or 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 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:
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 interests
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 statement of financial position date and reduced
to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the
deferred income tax asset to be utilised.
Consolidated Financial Statements for the Year Ended 30 June 2017
Page 26 of 57
FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
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 statement of financial position date.
Income taxes relating to items recognised directly in equity are not in the statement of profit or loss and other
comprehensive income. Deferred income tax assets and deferred tax liabilities are offset only if a legally
enforceable right exists to set off current income tax assets against current income tax liabilities and the deferred
income tax assets relate to the same taxable entity and the same taxation authority.
(g)
Earnings per share
Basic earnings/(loss) per share is calculated as profit or 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 outstanding in the year, adjusted for any bonus element.
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into
account the after income tax effect of interest and other financing costs associated with dilutive potential shares
and the weighted average number of additional shares that would have been outstanding assuming the
conversion of all dilutive potential shares.
(h)
Cash and cash equivalents
Cash and short‐term deposits in the Consolidated Statement of Financial Position comprise cash in 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.
(i)
Plant and equipment
The Company’s plant and equipment are measured at cost less accumulated depreciation and impairment losses.
The cost of an item of plant and equipment includes expenditures that are directly attributable to the acquisition
or construction of the asset. The cost includes the cost of materials and direct labour, site preparation costs,
installation and assembly costs, and any other costs directly attributable to bringing the assets to the location
and conditions necessary for the assets to be capable of operating in the manner intended by management.
Depreciation is recorded over the estimated useful lives as outlined below:
Plant and Equipment
– First year depreciation percentage is between 25% and 37.50%. Subsequent years
depreciation percentage is between 18.75 and 25%.
Motor Vehicles
– 25% per year.
Significant components of plant and equipment that are identified as having different useful lives are
depreciated separately over their respective useful lives. Depreciation methods, useful lives and residual values,
if applicable, are reviewed and adjusted, if appropriate, at the end of each reporting period.
Gains and losses on disposal of plant and equipment are determined by comparing the proceeds from disposal
with the carrying amount of the plant and equipment and are recognised in profit or loss.
(j)
Impairment of non‐financial assets
The Group assesses impairment at the end of each reporting period by evaluating conditions and events specific
to the Group that may be indicative of impairment triggers. Recoverable amount of relevant assets is the higher
Consolidated Financial Statements for the Year Ended 30 June 2017
Page 27 of 57
FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
of value in use and 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).
Fair value less cost of disposal is the amount obtainable from the sale of an asset or cash‐generating unit in an
arm’s length transaction between knowledgeable, willing parties, less the costs of disposal. Costs of disposal are
incremental costs directly attributable to the disposal of an asset or cash‐generating unit, excluding finance costs
and income tax expense.
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 the 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.
(k)
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.
(l)
Financial instruments
Financial assets
The Company initially recognises financial assets at fair value on the date that they originated. All financial assets
are recognised initially on the date at which the Company becomes a party to the contractual provisions of the
instrument. The Company derecognises a financial asset when the contractual rights to the cash flows from the
asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction
in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest
in transferred financial assets that is created or retained by the Company is recognised as a separate asset or
liability.
The Company classifies its financial assets, being cash and cash equivalents and trade and other receivables, as
loans and receivables. Loans and receivables are financial assets with fixed or determinable payments that are
not quoted in an active market. Subsequent to initial recognition, loans and receivables are measured at
amortised cost using the effective interest rate method, less any impairment losses.
Consolidated Financial Statements for the Year Ended 30 June 2017
Page 28 of 57
FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
Financial liabilities
The Company initially recognises financial liabilities at fair value on the date that they originate. All financial
liabilities are recognised initially on the date at which the Company becomes a party to the contractual provisions
of the instrument. The Company derecognises a financial liability when its contractual obligations are discharged
or cancelled or expire.
The Company classifies its financial liabilities, being trade and other payables, as other liabilities. Subsequent to
initial recognition, other liabilities are measured at amortised cost using the effective interest rate method.
Effective interest rate method
The effective interest rate method is a method of calculating the amortised cost of a financial instrument and of
allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts
estimated future cash receipts through the expected life of the financial instrument or, where appropriate, a
shorter period, to the net carrying amount on initial recognition.
Transaction costs
Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial
liabilities are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate,
on initial recognition.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at the end of the reporting period. Financial assets are
considered to be impaired when there is objective evidence that, as a result of one or more events that occurred
after the initial recognition of the financial asset, the estimated future cash flows of the investment have been
affected.
(m)
Fair value
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. In assessing the fair value of a particular
contract, the market participant would consider the credit risk of the counterparty to the contract. Consequently,
when it is appropriate to do so, the Group adjusts its valuation models to incorporate a measure of credit risk.
In measuring fair value, the Group uses valuation techniques that would maximise the use of observable inputs
and minimise the use of unobservable inputs.
For assets and liabilities for which fair value is measured or disclosed in the financial report, the Group
determines whether transfers have occurred between levels in the hierarchy by re‐assessing categorization
(based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each
reporting period.
Level 1 – quoted prices (unadjusted) of identical instruments in active markets that the reporting entity has the
ability to access at the measurement date.
Level 2 – inputs are quoted prices of similar instruments in active markets; quoted prices for identical or similar
instruments in markets that are not active; inputs other than quoted prices used in a valuation model that are
observable for that instrument; and inputs that are derived principally from or corroborated by observable
market data by correlation or other means.
Level 3 – one or more significant inputs used in a valuation technique that are unobservable for the instruments.
Consolidated Financial Statements for the Year Ended 30 June 2017
Page 29 of 57
FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
Determination of fair value and the resulting hierarchy requires the use of observable market data whenever
available. The classification of a financial instrument in the hierarchy is based upon the lowest level of input that
is significant to the measurement of fair value.
(n)
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 relevant taxation authority. 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 relevant taxation authority is included as a current
asset or liability in the Consolidated Statement of Financial Position.
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 relevant
taxation authority are classified as operating cash flows.
(o)
Provisions
Provisions are recognised when it is probable that the Company is required to settle an obligation, as a result of
a past event, and the obligation can be reliably estimated. The provision represents the Company’s best estimate
of the amounts required to settle the obligation at the end of the reporting period. When a provision is
determined using the expected cash flow method, its carrying amount is the present value of those cash flows
(when the effect of the time value of money is material). When some or all of the amounts required to settle a
provision are expected to be recoverable from a third party, a receivable is recognised when it is virtually certain
reimbursement is receivable and the expected reimbursement can be reliably measured.
(p)
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision maker. The chief operating decision maker, who is responsible for allocating resources and
assessing performance of the operating segments, has been identified as the Board of Directors.
(q)
Adoption of new and revised standards
There are a number of new or amended Accounting Standards and Interpretations issued by the IASB, that are
not yet mandatory. The Group does not plan to adopt these standards early. The Group’s assessment of the
impact of these new or amended Accounting Standards and Interpretations, most relevant to the Group, are set
out below.
IFRS 2 Share‐based Payment (“IFRS 2”) – In June 2016, the IASB issued amendments to IFRS 2 Share‐based
Payment, covering the measurement of cash‐settled share‐based payments, classification of share‐based
payments settled net of tax withholdings, and accounting for a modification of a share‐based payment from
cash‐settled to equity‐settled. The new requirements could affect the classification and/or measurement of
these arrangements, and potentially the timing and amount of expense recognised for new and outstanding
awards. The amendments apply for annual periods beginning on or after January 1, 2018, with early adoption
permitted. The impact of the amendments to IFRS 2 on the Company’s consolidated financial statements has
not yet been determined.
IFRS 9 Financial Instruments (“IFRS 9”) – In July 2014, the IASB issued the final version of IFRS 9 Financial
Instruments, bringing together the classification and measurement, impairment and hedge accounting phases
of the IASB’s project to replace IAS 39 Financial Instruments: Recognition and Measurement. The mandatory
Consolidated Financial Statements for the Year Ended 30 June 2017
Page 30 of 57
FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
effective date of IFRS 9 would be annual periods beginning on or after January 1, 2018, with early adoption
permitted. The impact of IFRS 9 on the Company’s financial instruments has not yet been determined.
IFRS 15 Revenue from Contracts with Customers (“IFRS 15”) – In May 2014, the IASB issued IFRS 15, which covers
principles that an entity shall apply to report useful information to users of financial statements about the
nature, amount, timing, and uncertainty of revenue and cash flows arising from a contract with a customer. In
September 2015, the IASB deferred the effective date of the standard to annual reporting periods beginning on
or after January 1, 2018, with earlier application permitted. The impact of IFRS 15 on the Company’s consolidated
financial statements has not yet been determined.
IFRS 16 Leases (“IFRS 16”) – In January 2016, the IASB issued IFRS 16, which requires lessees to recognise assets
and liabilities for most leases. Application of the standard is mandatory for annual reporting periods beginning
on or after January 1, 2019, with earlier application permitted, provided the new revenue standard, IFRS 15, has
been applied or is applied at the same date as IFRS 16. The impact of IFRS 16 on the Company’s consolidated
financial statements has not yet been determined.
IFRIC 22 Foreign Currency Transactions and Advance Consideration (“IFRIC 22”) – In December 2016, the IASB
issued IFRIC 22. IFRIC 22 clarifies the date that should be used for translation when a foreign currency transaction
involves an advance payment or receipt. The interpretation is applicable for annual periods beginning on or after
January 1, 2018. The impact of IFRIC 22 on the Company’s consolidated financial statements has not yet been
determined.
4.
REVENUE
Other income
Interest from financial institutions
Reimbursements
Insurance proceeds
30 JUNE 2017
$
30 JUNE 2016
$
149,596
‐
‐
149,596
30,325
10,881
2,500
43,706
5.
(i)
EXPENSES
Corporate general and administration expenses include the following expenses:
Employee benefit expense
Salaries, fees and leave
Equity based payments (note 15)
Defined contribution superannuation expense
Other corporate general and administration expenses
Accounting, legal and consulting fees
Audit fees (note 5(ii))
ASX and ASIC fees
Information technology expenses
Insurance expenses
Promotional and conference expenses
Travel expenses
Other administration expenses
Total
30 JUNE 2017
$
30 JUNE 2016
$
666,858
1,964,325
48,337
1,202,691
60,855
87,750
88,698
47,375
384,291
755,742
295,266
5,602,188
180,284
874,000
12,538
287,753
24,500
30,488
24,517
20,305
381,713
177,101
77,711
2,090,910
Consolidated Financial Statements for the Year Ended 30 June 2017
Page 31 of 57
FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
(ii)
Auditors’ Remuneration
Auditing and review of the Company’s consolidated financial statements:
BDO (WA) Pty Ltd
Greenwich & Co Audit Pty Ltd
60,355
500
60,855
‐
24,500
24,500
The Company engaged BDO (WA) Pty Ltd for other services to the Company for $6,250 (2016: nil).
6.
INCOME TAX
(a)
Prima facie income tax benefit at 27.5% (2016: 28.5%) on loss from ordinary activities is reconciled to
the income tax provided in the consolidated financial statements.
Loss before income tax
Income tax calculated at 27.5% (2016: 28.5%)
30 JUNE 2017
$
(21,790,704)
(5,992,443)
30 JUNE 2016
$
(9,322,373)
(2,656,876)
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
‐
2,287,753
(220,528)
3,925,218
‐
‐
(183,263)
(108,575)
2,948,714
‐
(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 affects the Group in realising the benefits from the deductions or
the losses.
(c)
Tax losses
As at June 30, 2017, the Company’s Australian tax losses that can be applied against future taxable profit in the
amount of $10,984,023.
The Company’s also has Ghanian tax losses that can be applied against future taxable profit in the amount of
$15,682,324.
Consolidated Financial Statements for the Year Ended 30 June 2017
Page 32 of 57
FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
7.
(a)
KEY MANAGEMENT PERSONNEL
Details of key management personnel
Directors and Executives
Kevin Tomlinson – Non‐Executive Chairman – appointed 7 November 2016
Archie Koimtsidis – Managing Director
Malik Easah – Executive Director
Mark Connelly – Non‐Executive Director
Simon Jackson – Non‐Executive Director – appointed 31 August 2015
Erik Palmbachs – Chief Financial Officer – appointed 1 March 2017 and retired 24 May 2017
Mark Thomas – Non‐Executive Director – retired 7 November 2016
(b)
Compensation of key management personnel
Salaries, fees and leave
Non‐monetary (i)
Post employment benefits – superannuation
Equity based payments – Note 15
30 JUNE 2017
$
30 JUNE 2016
$
821,742
19,875
21,595
1,185,561
2,048,773
540,471
11,328
12,537
782,000
1,346,336
(i)
Non‐monetary benefits are for directors’ and officers’ liability and legal expense insurance premiums.
Refer to the remuneration report contained in the directors’ report for details of the remuneration paid/payable
and share and option holdings in relation to each of Group’s key management personnel for the year ended 30
June 2017.
(c)
Other transactions with key management personnel
Tomlinson Consultancy, of which Kevin Tomlinson is a director, provided geological consulting services to the
Company. Amounts that have been paid or payable total $280,000 (2016: nil).
8.
CURRENT ASSETS
(a)
Trade and other receivables
Government taxes receivable
Interest receivable
30 JUNE 2017
$
30 JUNE 2016
$
126,461
6,194
132,655
16,280
‐
16,280
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 (i)
Cash deposits
30 JUNE 2017
$
30 JUNE 2016
$
914,776
4,133
918,909
77,553
26,970
104,523
Consolidated Financial Statements for the Year Ended 30 June 2017
Page 33 of 57
FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
(i) Prepayments include an advance of $2,349,570 to Savannah Mining Ghana Limited (“Savannah”), a
director‐related entity. The purpose of the advance was development of a mining licence in areas in respect
of which Savannah had entered into agreements with holders of small scale licences. As at the date of this
report, $1,836,997 has been applied toward the development of the mining licence and has been recorded
as exploration in the profit or loss at balance date.
9.
PLANT AND EQUIPMENT
Cost
Balance as at 1 July 2016
Additions
Disposals
Foreign exchange movement
Balance as at 30 June 2017
Balance as at 1 July 2015
Additions
Disposals
Foreign exchange movement
Balance as at 30 June 2016
Accumulated depreciation
Balance as at 1 July 2016
Depreciation for the period
Disposals
Foreign exchange movement
Balance as at 30 June 2017
Balance as at 1 July 2015
Depreciation for the period
Disposals
Foreign exchange movement
Balance as at 30 June 2016
Carrying amounts
As at 30 June 2017
As at 30 June 2016
10.
TRADE AND OTHER PAYABLES
Trade and other payables (i)
Other accrued expenses
Plant and
Equipment
$
Vehicles
Total
$
$
704,108
222,527
‐
(94,344)
832,291
553,421
73,894
(11,592)
88,385
704,108
222,991
290,568
‐
(45,715)
467,844
141,793
71,494
(2,753)
12,457
222,991
272,906
57,327
‐
(36,565)
293,668
113,202
141,626
‐
18,078
272,906
78,112
136,004
‐
(21,397)
192,719
48,186
23,438
‐
6,488
78,112
977,014
279,854
‐
(130,909)
1,125,959
666,623
215,520
(11,592)
106,463
977,014
301,103
426,572
‐
(67,112)
660,563
189,979
94,932
(2,753)
18,945
301,103
364,447
481,117
100,949
194,794
465,396
675,911
30 JUNE 2017
$
2,038,115
1,845,294
3,883,409
30 JUNE 2016
$
1,581,718
131,749
1,713,467
(i) Trade payables are unsecured and are usually paid within 30 days of recognition. The carrying amounts of
trade and other payables are considered to be the same as their fair values due to their short‐term nature.
Consolidated Financial Statements for the Year Ended 30 June 2017
Page 34 of 57
FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
11.
ISSUED CAPITAL
(a)
Ordinary shares
The Company is authorised to issue an unlimited number of ordinary shares. All issued shares are fully paid and
have no par value. Changes in ordinary shares for the year ended 30 June 2017 and 2016 are as follows:
As at 1 July 2015
Transactions during the year
Shares issued (i)
Less: transaction costs (v)
As at 30 June 2016
As at 1 July 2016
Transactions during the year
Shares issued (ii)
Share based payments (iii)
Options exercised (iv)
Less: transaction costs (v)
As at 30 June 2017
NUMBER OF
SHARES
110,820,807
111,253,890
‐
222,074,697
$
14,816,842
12,042,719
(708,344)
26,151,217
222,074,697
26,151,217
125,598,266
952,484
1,437,500
‐
350,062,947
44,549,133
395,285
215,625
(2,683,225)
68,628,035
(i)
The following shares were issued during the financial year ended 30 June 2016
On 7 August 2015, 1,838,462 shares, together with one (1) free attaching option for everyone one
(1) share subscribed for, were issued at $0.065 per share to the directors of the Company. The
directors’ participation was approved at the General Meeting held on 27 July 2015;
On 25 September 2015, 28,164,816 shares, together with one (1) free attaching option for two (2)
shares subscribed for, were issued at $0.10 per shares pursuant to a placement to sophisticated
investors (“September 2015 placement”);
On 27 November 2015, 24,050,184 shares, together with one (1) free attaching option for two (2)
shares subscribed for, were issued at $0.10 per shares pursuant to a placement to sophisticated
investors;
On 27 November 2015, 8,117,116 shares, together with one (1) free attaching option for two (2)
shares subscribed for, were issued at $0.10 per share to the directors of the Company. The
directors’ participation was approved at the Annual General Meeting held on 19 November 2015;
On 8 March 2016, 42,666,642 shares were issued at $0.12 per share pursuant to a placement to
sophisticated investors;
On 9 May 2016, 4,666,668 shares were issued at $0.12 per share pursuant to a placement to
sophisticated investors; and
On 9 May 2016, 1,750,002 shares were issued at $0.12 per share to the directors of the Company.
The directors’ participation was approved at the General Meeting held on 17 February 2016.
(ii)
The following shares were issued during the financial year ended 30 June 2017
On 19 July 2016, 55,518,670 shares were issued at $0.29 per share pursuant to a placement to
sophisticated investors;
On 26 August 2016, 19,481,330 shares were issued at $0.29 per share pursuant to a placement to
sophisticated investors;
On 5 September 2016, 5,000,000 shares were issued on conversion of Class B Performance Shares.
The Class B Performance shares were issued as part of the acquisition of the share capital of
Cardinal (Australia) Pty Ltd by Cardinal Resources (previously Ridge Resources Limited). The issue
Consolidated Financial Statements for the Year Ended 30 June 2017
Page 35 of 57
FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
of these shares was approved by Shareholders of the Company at the General Meeting held on 19
November 2012; and
On 21 April 2017, 45,598,266 shares were issued at $0.50 per share pursuant to a placement to
sophisticated investors.
(iii)
Share based payments (refer to note 15)
A total of 952,494 shares were issued to Dr Julian Barnes for consideration for services provided to the
Company, for more information please see Notice of Meeting dated 28 September 2017. The shares were
issued in two tranches:
On 29 November 2016, 476,247 shares issued for services provided; and
On 25 May 2017, 476,247 shares issued for services provided.
The shares were valued as per the trading price as at the date issue, refer to note 15(ii).
(iv)
Exercise of Listed Options
(v)
Transactions costs represent the costs of issuing the shares.
12.
RESERVES
(a) Movement in options reserve
As at the beginning of the year
Options issued during the year
Expiry of unlisted options (i)
As at reporting date
30 JUNE 2017
$
1,342,607
1,505,982
(138,000)
2,710,589
30 JUNE 2016
$
732,423
874,000
(263,816)
1,342,607
(i)
On 11 January 2016, 11,000,000 options expired. None of these options were exercised.
(b) Movement in options exercisable at $0.15 on or before 30 September 2019
As at 1 July 2015
Transactions during the year
Options issued (i)
Exercise of options
As at 30 June 2016
As at 1 July 2016
Transactions during the year
Exercise of options
As at 30 June 2017
NUMBER OF
OPTIONS
70,998,288
46,588,751
‐
117,587,039
117,587,039
(1,437,500)
116,149,539
$
468,607
‐
‐
468,607
468,607
‐
468,607
(i)
The following options were issued during the financial year ended 30 June 2016
On 7 August 2015, 16,422,693 shares, together with one (1) free attaching option for every one (1)
share subscribed for, were issued at $0.065 per share.; and
Consolidated Financial Statements for the Year Ended 30 June 2017
Page 36 of 57
FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
On 27 November 2015, 32,167,300 shares and 30,166,058 options were issued on the same terms
as the September 2015 placement.
(c) Movement in unlisted options exercisable at $0.22 on or before 18 March 2020
As at 1 July 2015
Transactions during the year
Options issued (i)
As at 30 June 2016
As at 1 July 2016
Transactions during the year
Expiry of options
As at 30 June 2017
NUMBER OF
OPTIONS
‐
9,500,000
9,500,000
NUMBER OF
OPTIONS
9,500,000
(1,500,000)
8,000,000
$
‐
874,000
874,000
$
874,000
(138,000)
736,000
(i)
On 18 March 2016, the Company issued 9,500,000 unlisted options to employees and directors of the
Company (refer to Note 15 for details).
(d) Movement in unlisted milestones options exercisable at $0.50 on or before 12 April 2022
As at 1 July 2016
Transactions during the year
Options issued
Cancelled or forfeited during the year
As at 30 June 2017
Refer to note 15 for details.
NUMBER OF
OPTIONS
‐
26,000,000
(2,500,000)
23,500,000
$
‐
1,666,192
(160,210)
1,505,982
The following table shows the movement of listed and unlisted options for the years ended 30 June 2017 and
2016:
Balance as at 1 July 2016
Options granted (note 12 (d))
Options forfeited/exercised (note 12 (b), (c) and (d))
Balance as at 30 June 2017
Balance as at 1 July 2015
Options granted (note 12 (b) and (c))
Balance as at 30 June 2016
Number of Options
127,087,039
26,000,000
(5,437,500)
147,649,539
70,998,288
56,088,751
127,087,039
Weighted
Average
Exercise Price
$
$0.15
$0.50
($0.18)
$0.20
$0.15
$0.16
$0.15
Consolidated Financial Statements for the Year Ended 30 June 2017
Page 37 of 57
FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
The table below shows the outstanding options as at 30 June 2017 and 2016:
Outstanding
Vested
30 June
Exercise Price
$
Number of
Options
2017
2017
2017
2016
2016
0.15
0.22
0.50
0.15
0.22
116,149,539
8,000,000
23,500,000
117,587,039
9,500,000
(e) Movement in Performance Shares
Weighted
Average
Remaining
Contractual
life (days)
822
992
1,746
435
70
Number of
Options
116,149,539
8,000,000
‐
46,588,751
9,500,000
Weighted
Average
Remaining
Contractual
life (days)
651
47
‐
435
70
As at 1 July 2015
Transactions during the year
Performance Shares issued
As at 30 June 2016
As at 1 July 2016
Transactions during the year
Performance Shares issued
As at 30 June 2017
As at 1 July 2015
Transactions during the year
Performance Shares issued
As at 30 June 2016
As at 1 July 2016
Transactions during the year
Performance Shares issued (i)
As at 30 June 2017
NUMBER OF
CLASS A
PERFORMANCE
SHARES
50
‐
50
50
‐
50
NUMBER OF
CLASS B
PERFORMANCE
SHARES
50
‐
50
50
(50)
‐
$
$
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
(i)
On 5 September 2016, the Class B Performance Shares were converted to 5,000,000 ordinary shares under
the terms and conditions of the Performance Shares.
General terms attaching to the Performance Shares are set out below. For further details, see the Notice of
Meeting dated 19 November 2012.
Class A Performance Shares
(a)
Performance Shares: Each Class A Performance Share is a share in the capital of the Company.
Consolidated Financial Statements for the Year Ended 30 June 2017
Page 38 of 57
FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
Class A Performance Shares shall confer on the holder (the “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 restructured, 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 the ASX. However, upon conversion of the Class A
Performance Shares into shares, the Company must within 7 days after the conversion, apply for the
official quotation of the shares arising from the conversion on the 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 the 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 Class A 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 28
December 2012:
(i)
(ii)
(iii)
The establishment of 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 of 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
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 of 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.
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 Class A performance shares in the Group’s financial
statements.
Class B Performance Shares
(a)
Performance Shares: Each Class B Performance Share is a share in the capital of the Company.
Consolidated Financial Statements for the Year Ended 30 June 2017
Page 39 of 57
FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
Class B Performance Shares shall confer on the holder (the “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 restructured, 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 the ASX. However, upon conversion of the Class B
Performance Shares into shares, the Company must within 7 days after the conversion, apply for the
official quotation of the shares arising from the conversion on the 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 the 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 Class B Performance Shares
(j)
As outlined in note 11, on 5 September 2016, 50 Class B Performance Shares were converted into
5,000,000 fully paid ordinary shares of the Company. The Class B Performance Shares converted to
5,000,000 fully paid ordinary shares when the Company satisfied the requirement that the market
capitalization of the Company reached at least $50 million on an undiluted basis, determined by reference
to the preceding 30 day VWAP.
For further details, see the Notice of Meeting dated 19 November 2012.
Class C Performance Shares
As at 1 July 2015
Transactions during the year
Performance shares issued
As at 30 June 2016
As at 1 July 2016
Transactions during the year
Performance shares issued
As at 30 June 2017
NUMBER OF
CLASS C
PERFORMANCE
SHARES
60
‐
60
NUMBER OF
CLASS C
PERFORMANCE
SHARES
60
‐
60
$
$
‐
‐
‐
‐
‐
‐
Consolidated Financial Statements for the Year Ended 30 June 2017
Page 40 of 57
FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
The following Class C Performance Shares were issued during the financial year ended 30 June 2015
On 17 February 2015, 60 performance shares were issued pursuant to the Asset Sale Agreement with Savannah
to purchase the highly prospective Ndongo North concession adjacent to the exiting Ndongo area within the
Bolgatanga project area in North‐East Ghana.
There are 60 Performance Shares (convertible into a maximum of 6,000,000 shares) on issue at 30 June 2017.
General terms attaching to the Performance Shares are set out below.
The Directors are currently of the opinion that the non‐market vesting conditions are unlikely to be met within
5 years from the date of issue. As such, no value as been ascribed to the Performance Shares in the Group’s
consolidated financial statements.
The issue of 60 Performance Shares in the capital of the Company, each of which will convert to 100,000 shares
ranking equally with the existing shares in the proportions set out below upon satisfaction of achieving a
minimum JORC Inferred Resource of gold ounces within the Ndongo North Concession (“Performance Hurdles”)
by no later than five years after the date on which the Performance Shares are issued, being 18 February 2015:
Performance Shares
10
5
5
5
5
5
5
5
5
5
5
60
Performance Hurdles (JORC
Inferred Au Resource)
500,000 ounces
750,000 ounces
1,000,000 ounces
1,250,000 ounces
1,500,000 ounces
1,750,000 ounces
2,000,000 ounces
2,250,000 ounces
2,500,000 ounces
2,750,000 ounces
3,000,000 ounces
Conversion to Ordinary
Shares
1,000,000
500,000
500,000
500,000
500,000
500,000
500,000
500,000
500,000
500,000
500,000
6,000,000
In the event that the Company sells, transfers or otherwise disposes of all or part of the Ndongo North
Concession to a third party prior to the issuing of any shares upon conversion of any Performance Shares,
Savannah will be entitled to an amount equal to 49% of the sale proceeds less any related selling costs,
exploration and mining costs (plus a fixed 30% overhead amount), purchase costs in connection with the
acquisition of the Ndongo North Concession, and any other costs incurred with respect to the sale.
13.
LOSS PER SHARE
Loss attributable to the owners of the Company used in
calculating basic and diluted loss per share
(21,790,704)
(9,322,373)
30 JUNE 2017
$
30 JUNE 2016
$
Consolidated Financial Statements for the Year Ended 30 June 2017
Page 41 of 57
FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
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
2017
Number
2016
Number
305,800,068
167,886,217
305,800,068
167,886,217
As the Company has a loss for the year ended 30 June 2017, 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.
14.
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.
30 JUNE 2017
$
9,562,815
19,029,903
28,592,718
30 JUNE 2016
$
4,864,822
‐
4,864,822
Current – cash at bank
Term deposits (i)
(i)
Terms of term deposits
Term
30 days
60 days
30 days
12 months
Interest Rate
1.50%
2.50%
1.60%
3.00%
(b)
Reconciliation of loss after tax to net cash flows from operations
Loss after income tax
Non‐cash flows in profit
Depreciation expense
Share based payments
Foreign exchange movement
Changes in assets and liabilities
Increase in trade and other receivables
(Increase)/decrease in prepayments
Increase/(decrease) in trade and other payables
Increase/(decrease) in provisions
30 JUNE 2017
$
(21,790,704)
30 JUNE 2016
$
(9,322,373)
426,572
1,964,325
113,912
(116,375)
(814,386)
2,169,942
19,698
(18,027,016)
94,932
874,000
20,213
(3,402)
(82,049)
1,285,270
‐
(7,133,409)
Consolidated Financial Statements for the Year Ended 30 June 2017
Page 42 of 57
FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
15.
SHARE BASED PAYMENTS
(i)
The Company agreed and approved at the Company’s General Meeting held on 3 April 2017 to allot and
issue a total of 26,000,000 Milestone Options to employees of the Company; 2,500,000 Milestone
Options were cancelled during the year.
The terms and conditions of the options are detailed in the Notice of General Meeting dated 1 March
2017.
The Milestone Options shall vest and are exercisable at any time on and from:
(i) Milestone 1 ‐ the earlier of:
(A)
(B)
the completion of a scoping study; or
the completion of a preliminary economic assessment, of the Ghanaian Assets;
(ii) Milestone 2 ‐ on the beginning of earthworks for gold production at the Ghanaian Assets; and
(iii) Milestone 3 ‐ on the first pouring of gold at the Ghanaian Assets, until 12 April 2022.
Using the Black‐Scholes option model and based on the assumption below, the Options were ascribed the
following value:
Class of
Options
Number of
Options
Valuation
Date
Market
Price of
Shares
Exercise
Price
Expiry
Date
Milestone 1
Milestone 2
Milestone 3
7,800,000
7,800,000
10,400,000
27.02.17
27.02.17
27.02.17
$0.525
$0.525
$0.525
$0.50
$0.50
$0.50
18.04.22
18.04.22
18.04.22
Risk
Free
Interest
Rate
2.17%
2.17%
2.17%
Volatility
(discount)
Indicative
Value per
Option
Total
Value
($)
Expense
for the
period
($)
99.50%
99.50%
99.50%
$0.39
$0.39
$0.39
3,090,246 941,238
3,090,246 313,746
4,120,328 250,998
A probability of 100% has been applied to the milestones occurring.
(ii)
During the year, 952,494 fully paid ordinary shares were issued for services rendered; the shares were
ascribed the following value:
Date of Issue
Number of Shares
28.11.2016
25.05.2017
476,247
476,247
Price of
Shares (a)
$0.24
$0.59
Total Value
($)
114,299
114,299
Expense for
the period ($)
114,299
280,986
(a) The value of the shares was determined at the date it was agreed to issue the shares for services.
(iii)
(iv)
During the year the Company agreed to issue shares to employees of the Company for services rendered
to the Company. A total of 114,370 ordinary shares are owed to employees at 30 June 2017 and have
not been issued. The Company had valued the 114,370 shares at $58,545.
During the year ended 30 June 2016 the Company agreed and approved at the Company’s General
Meeting held on 17 February 2016 to allot and issue a total of 9,500,000 Options to employees of the
Company. The terms and conditions of the options are detailed in the Notice of General Meeting dated
1 January 2016. During the year 1,500,000 options were cancelled.
Consolidated Financial Statements for the Year Ended 30 June 2017
Page 43 of 57
FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
Using the Black‐Scholes option model and based on the assumption below, the Options were ascribed
the following value:
Exercise
Price
Expiry Date Risk Free
Interest
Rate
1.95%
Volatility
(discount)
97.48%
Indicative
Value per
Option
$0.092
$0.22
18.03.2020
Class of
Options
Number
of Options
Valuation
Date
Unlisted
Options
8,000,000 18.03.2016
Market
Price of
Shares
$0.15
16.
COMMITMENTS AND CONTINGENCIES
(a)
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
2017
$
130,480
130,480
260,960
2016
$
‐
‐
‐
The Group fully owns five 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.
Not later than one year
Later than one year but not later than two years
2017
$
1,254,717
15,900
1,270,617
2016
$
404,373
1,145,724
1,550,097
The Corporation has commitments in respect to the use of an office premises in Perth, Western Australia, for
$5,300 per month until 30 September 2018. The Corporation has an option to extend the lease for three months
after 30 September 2018.
The Corporation has commitments in respect to the use of an office outside of Australia, for C$1,863 per month
until 31 March 2018.
Cardinal Resources Subranum Limited entered into a sale and purchase agreement dated 6 April 2012 with
Newmont Ghana Gold Limited (a subsidiary of Newmont Mining Corporation) for the purchase of the Subranum
Project. On 24 November 2015, the relevant Minister of the 2006 Mining Act approved the sale. Cardinal
Resources Subranum Limited acquired 100% of the Subin Kasu Prospecting License and paid to Newmont Ghana
Gold Limited US$50,000 on 12 June 2016.
US$50,000 will be paid to Newmont Ghana Gold Limited on the first anniversary being 13 June 2017 and a final
US$100,000 on the second anniversary date being 12 June 2018. In addition, Cardinal Resources Subranum
Limited will be required to spend US$250,000 on exploration within the first year from 21 June 2016 and a further
US$750,000 being 12 June 2018. The Company has met the year 1 minimum expenditure requirements.
Consolidated Financial Statements for the Year Ended 30 June 2017
Page 44 of 57
FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
Cardinal Resources Subranum Limited will be required to pay Newmont Ghana Gold Limited US$50,000 per
annum from the date which Cardinal Resources Subranum Limited reports a “gold resource estimate” of 1Moz
of gold. Subject to the grant of a Mining Lease under the 2006 Mining Act, Cardinal Resources Subranum Limited
will be required to pay Newmont Ghana Gold Limited a 2% net smelter royalty.
17.
FINANCIAL INSTRUMENTS
(a)
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:
2017
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
Cash deposits
Financial liabilities
Trade and other payables
2016
14 (a)
8 (a)
8 (b)
10
Note
$
$
$
$
%
8,448,385
‐
‐
8,448,385
19,029,903
‐
‐
19,029,903
1,114,430
132,655
4,133
1,251,218
28,592,718
132,655
4,133
28,729,506
‐
‐
‐
‐
3,883,409
3,883,409
3,883,409
3,883,409
0.54%
‐
‐
‐
‐
‐
Floating
interest
rate
Fixed
interest
rate
Non‐
interest
bearing
Total
Weighted
average
interest rate
$
$
$
$
%
Financial assets
Cash and cash equivalents
Trade and other receivables
Cash deposits
14 (a)
8 (a)
8 (b)
Financial liabilities
Trade and other payables
10
3,497,522
‐
‐
3,497,522
‐
‐
‐
‐
‐
‐
‐
‐
1,367,300
16,280
26,970
1,410,550
4,864,822
16,280
26,970
4,908,072
1,713,467
1,713,467
1,713,467
1,713,467
1.11%
‐
‐
‐
‐
‐
Based on the balances as at 30 June 2017, a 1% movement in interest rates would increase/decrease the loss for
the year before taxation by $7,040 (2016: $2,914).
(b)
Credit risk
The maximum exposure to credit risk, excluding the value of any collateral or other security, at the statement of
financial position 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.
Consolidated Financial Statements for the Year Ended 30 June 2017
Page 45 of 57
FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
To manage credit risk from cash and cash equivalents, it is the Group’s policy to only deposit with banks
maintaining a minimum independent rating of ‘AA’.
(c)
Net fair values
The carrying amount of financial assets and financial liabilities recorded in the consolidated financial statements
represents their respective net fair value and is determined in accordance with the accounting policies disclosed
in note 3 to the financial statements.
(d)
Financial risk management
The Group’s financial instruments consist mainly of deposits with recognised banks, investment in term deposits
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 term deposits. 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 through its financial instruments are 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
Exposure to foreign exchange risk may result in the fair value or future cashflows of a financial instrument to
fluctuate due to movements 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 of the parent entity is considered immaterial and is therefore not shown.
2017
Australian dollar
GHS New Cedi
Statement of financial position exposure
Net Financial Assets/(Liabilities) In AUD
AUD
25,897,586
‐
25,897,586
USD
(880,486)
‐
(880,486)
GHS
(307,785)
‐
(307,785)
Total AUD
24,709,315
‐
24,709,315
2016
Australian dollar
GHS New Cedi
Statement of financial position exposure
Net Financial Assets/(Liabilities) In AUD
AUD
2,057,645
‐
2,057,645
USD
1,169,600
(20,153)
1,149,447
GHS
‐
(55,732)
(55,732)
Total AUD
3,227,245
(75,885)
3,151,360
Based on the statement of exposure at 30 June 2017, a 1% movement in foreign exchange rates would
increase/decrease the loss for the year before taxation by $12,395 (2016: $15,303).
(f)
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The
Group’s approach to managing liquidity risk is to ensure, as far as possible, that it will maintain cash or credit
terms with its suppliers to meet the operating requirements of the business and invest excess funds in highly
liquid short term cash deposits, Maintaining surplus working capital in highly liquid short term deposits allows
the Group to meet its primary objectives by being able to fund new development and acquisition opportunities
at short notice.
Consolidated Financial Statements for the Year Ended 30 June 2017
Page 46 of 57
FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
The responsibility for liquidity risk rests with the Board of Directors. The Group’s liquidity needs can likely be met
through cash on hand, short and long term borrowings subject to the current forecast operating parameters
being met.
The contractual maturities of the Group’s financial liabilities are as follows:
Within one month
Trade and other payables
Later than one month and no later than one year
Trade and other payables
18.
RELATED PARTY TRANSACTIONS
30 JUNE 2017
$
30 JUNE 2016
$
3,883,409
‐
3,883,409
1,713,467
‐
1,713,467
The Group has no related parties other than the 100% owned subsidiaries disclosed in note 2(b) and the key
management personnel as detailed in the remuneration report and disclosed in note 7.
During the year ended 30 June 2017, Cardinal Resources Limited advanced $2,349,570 to Savannah, a Director
related entity. The purpose of the advance was development of a mining licence in areas in respect of which
Savannah had entered into agreements with holders of small scale licences. As at the date of this report,
$1,836,997 has been applied toward the development of the mining licence and the remainder has been
recorded as a prepayment in the consolidated financial statements of Cardinal Resources Limited.
During the year ended 30 June 2017, Cardinal Resources Limited paid $280,000 to Non‐Executive Chairman
Kevin Tomlinson, who provided geological consulting services to the Company.
19.
SEGMENT REPORTING
For management purposes, the Group is organised into one main operating segment, which involves the
exploration of minerals in Ghana. All of the Group’s activities are interrelated, and discrete financial information
is reported to the Board as a single segment. Accordingly, all significant operating decisions are based upon
analysis of the Group as one segment.
The financial results from this segment are equivalent to the financial statements of the Group as a whole.
The accounting policies applied for internal reporting purposes are consistent with those applied in the
preparation of these consolidated financial statements.
Consolidated Financial Statements for the Year Ended 30 June 2017
Page 47 of 57
FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
20.
UNCONSOLIDATED PARENT COMPANY DISCLOSURE
(a)
Financial position for the year ended 30 June 2017
Australian Dollar ($)
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 2017
Australian Dollar $
Loss for the year
Other comprehensive income
Total comprehensive loss
30 JUNE 2017
$
30 JUNE 2016
$
27,953,124
129,365
28,082,489
3,553,384
‐
3,553,384
24,529,105
3,638,374
‐
3,638,374
1,635,481
‐
1,635,481
2,002,893
68,628,036
2,477,985
(46,576,916)
24,529,105
26,273,118
1,342,606
(25,612,831)
2,002,893
30 JUNE 2017
$
(8,589,150)
‐
(8,589,150)
30 JUNE 2016
$
(10,613,334)
‐
(10,613,334)
21.
EVENTS SUBSEQUENT TO STATEMENT OF FINANCIAL POSITION DATE
On 1 August and 22 August 2017, 290,994 and 175,608 options were exercised, respectively.
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.
Consolidated Financial Statements for the Year Ended 30 June 2017
Page 48 of 57
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 2017 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 2017.
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
CEO/MD
Dated this 29 September 2017
Perth, Western Australia
Consolidated Financial Statements for the Year Ended 30 June 2017
Page 49 of 57
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
DECLARATION OF INDEPENDENCE BY JARRAD PRUE TO THE DIRECTORS OF CARDINAL RESOURCES
LIMITED
As lead auditor of Cardinal Resources Limited for the year ended 30 June 2017, I declare that, to the
best of my knowledge and belief, there have been:
1. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Cardinal Resources Limited and the entities it controlled during the
period.
Jarrad Prue
Director
BDO Audit (WA) Pty Ltd
Perth, 29 September 2017
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275,
an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and
form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation other than for
the acts or omissions of financial services licensees
P 50 of 57 Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
INDEPENDENT AUDITOR'S REPORT
To the members of Cardinal Resources Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Cardinal Resources Limited (the Company) and its subsidiaries
(the Group), which comprises the consolidated statement of financial position as at 30 June 2017, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement
of changes in equity and the consolidated statement of cash flows for the year then ended, and notes
to the financial report, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements give a true and fair view of the
consolidated financial position of the Group as at 30 June 2017, and of its consolidated financial
performance and its consolidated cash flows for the year then ended in accordance with International
Financial Reporting Standards (IFRSs).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Financial Report section of our report. We are independent of the Company in accordance
with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional
Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the
financial statements in Australia, and we have fulfilled our other ethical responsibilities in accordance
with these requirements and the IESBA Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275,
an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and
form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation other than for
the acts or omissions of financial services licensees
P 51 of 57 Measurement of Share Based Payments
Key audit matter
How the matter was addressed in our audit
During the financial year ended 30 June 2017,
the Group issued incentive options to key
management personnel and employees, which
have been accounted for as share-based
payments. Refer to Note 15.
Refer to Note 2(e) of the financial report for a
description of the accounting policy and the
significant estimates and judgements applied to
these arrangements.
Share-based payments are a complex
accounting area and due to the complex and
judgemental estimates used in determining the
fair value of the share-based payments in
accordance with IFRS 2: Share Based Payments,
we consider the management’s calculation of
the share-based payment expense to be a key
audit matter.
Our procedures included, but were not limited to:
Reviewing relevant supporting documentation
to obtain an understanding of the contractual
nature and terms and conditions of the share-
based payment arrangements;
Reviewing management’s determination of the
fair value of the share-based payments
granted, considering the appropriateness of
the valuation methodology used and assessing
the valuation inputs;
Assessing management’s determination of
achieving non-market vesting conditions;
Assessing the allocation of the share-based
payment expense over management’s
expected vesting period; and
Assessing the adequacy of the related
disclosures in notes 15 and 2(e) to the
financial report.
Other information
The directors are responsible for the other information. The other information comprises the
information in the annual report for the year ended 30 June 2017, but does not include the financial
report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with IFRSs, and for such internal control as the directors determine is
necessary to enable the preparation of the financial report that gives a true and fair view and is free
from material misstatement, whether due to fraud or error.
P 52 of 57 In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with ISAs will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located in Appendix 1
to this report.
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 8 to 16 of the directors’ report for the
year ended 30 June 2017.
In our opinion, the Remuneration Report of Cardinal Resources Limited for the year ended 30 June
2017 complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
BDO Audit (WA) Pty Ltd
Jarrad Prue
Director
Perth, 29 September 2017
P 53 of 57 APPENDIX 1
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain
professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks,
and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
The risk of not detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a
going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the consolidated financial
statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial
statements, including the disclosures, and whether the consolidated financial statements
represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the group
audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and
other matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.
From the matters communicated with those charged with governance, we determine those matters
that were of most significance in the audit of the consolidated financial statements of the current
period and are therefore the key audit matters. We describe these matters in our auditor’s report
unless law or regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our report because the
adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
P 54 of 57 SHAREHOLDER INFORMATION
1
Distribution of holders
As at 29 September 2017 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
53
123
128
294
143
741
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
Bank of Nova Scotia and each of it associates/affiliates
Gold Fields
Van Eck Associates Corporation (and its associates)
Royal Bank of Canada and its related bodies corporate
4
Top 20 shareholders
Shares held
32,977,379
19,443,977
26,256,988
21,119,179
Percentage
interest %
10.85%
8.80%
7.49%
6.02%
The names of the 20 largest shareholders on the share register as at 29 September 2017, who hold 80.04% of
the ordinary shares of the Company, were as follows;
Shareholder
HSBC Custody Nominees (Australia) Limited
Corporate International Holdings BV
Citicorp Nominees Pty Ltd
Zero Nominees Pty Ltd
Canadian Register Control
J P Morgan Nominees Australia Limited
Macquarie Bank Limited
Oceanic Capital Pty Ltd
Mr Malik Mohammad Easah
Mr Arthur Koimtsidis
Arredo Pty Ltd
Merrill Lynch (Australia) Nominees Pty Limited
Panga Pty Ltd
Redland Plains Pty Ltd
Number
103,361,282
30,861,553
27,080,922
17,250,000
14,232,772
12,871,767
12,728,180
10,150,045
7,681,815
6,902,565
5,800,000
4,466,083
3,920,000
3,910,026
Consolidated Financial Statements for the Year Ended 30 June 2017
Page 55 of 57
SHAREHOLDER INFORMATION
St Barnabas Investments Pty Ltd
Invia Custodian Pty Ltd
CS Third Nominees Pty Limited
BNP Paribas Noms Pty Ltd
AWD Consultants Pty Ltd
Yarandi Investments Pty Ltd
5
Top 20 option holders
3,865,625
3,833,334
3,607,991
3,112,444
2,500,000
2,458,288
The names of the 20 largest option holders on the share register as at 29 September 2017, who hold 73.36% of
the listed options of the Company, were as follows;
Optionholder
Coprorate International Holdings BV
Oceanic Capital Pty Ltd
Mr Malik Mohammad Easah
Macquarie Bank Limited
Merrill Lynch (Australia) Nominees Pty Limited
Yarandi Investments Pty Ltd
Cleverman Investments Pty Ltd
Dixtru Pty Limited
Redland Plains Pty Ltd
Arredo Pty Ltd
Invia Custodian Pty Ltd
HSBC Custody Nominees (Australia) Limited
Mrs Sophie Kyriazis
Mr Sean Andrew Morrison
Mr Hendrik Hartmann
Mr David Ian Raymond Hall +Mrs Denise Allison Hall
Mr Owen Barry Merritt + Mrs Joanne Ross Merrett
Mr Tent Brindle
Citicorp Nominees Pty Limited
ACP Investments Pty Ltd
6
Consistency with business objectives
Number
31,220,051
8,058,390
6,560,423
5,000,000
3,537,000
3,200,000
3,085,000
3,000,000
2,200,000
2,000,000
1,950,000
1,928,000
1,767,944
1,586,073
1,450,000
1,300,027
1,300,000
1,265,000
1,254,880
1,200,000
The Company has used its cash and assets in a form readily convertible to cash that it had at the time of listing
in a way the consistent with its stated objectives.
Consolidated Financial Statements for the Year Ended 30 June 2017
Page 56 of 57
Cardinal Resources Limited mineral interest as at 29 September 2017
Project
Registered Holder
Note
Status
Equity Registry
No
GHANA
Bolgatanga Project
Ndongo Prospect
Cardinal Resources (Ghana) Limited
Kungongo Prospect Cardinal Resources (Ghana) Limited
Bongo Prospect
Cardinal Resources (Ghana) Limited
Namdini
‐
‐
‐
‐
1
Prospecting
Reconnaissance
Reconnaissance
Small
13
Licenses
Scale
100%
100%
100%
‐
PL9/22
RL9/28
RL9/29
‐
Subranum Project
Subranum Prospect Newmont
‐
Prospecting
‐
PL6/309
1.
Namdini Project: Cardinal Mining Services Limited (a subsidiary of Cardinal Resources Limited) acquired
82 Small Scale Licences (the “Namdini Project”) through the sale and purchase agreement with Savannah
Mining Limited (an affliated company of Cardinal Mining Services). Savannah Mining Limited had applied
for a Large Scale Mining License (ML) which has been signed by the Minister of Lands and Natural
Resources.
Subsequent to the year end Cardinal announced that the application by Savannah for a Large‐Scale Mining
Licence over an area of approximately 19.54 Sq Km in the Upper East Region of Ghana covering Cardinal’s
Namdini Project has been granted by the Minister of Lands and Natural Resources of Ghana.
Cardinal and Savannah have both signed the necessary documentation to assign the Namdini Mining
License to Cardinal Namdini Mining Limited (Cardinal Namdini), a wholly owned subsidiary of Cardinal, for
$1.00 as per the Savannah Agreement.
Savannah Mining Limited is continuing to seek and acquire small scale mining licences within the ML in
accordance with its existing contractual arrangements with the Company.
Consolidated Financial Statements for the Year Ended 30 June 2017
Page 57 of 57
ANNUAL
INFORMATION
FORM (III)
ANNUAL INFORMATION FORM
For the year ended June 30, 2017
Dated as of September 29, 2017
TABLE OF CONTENTS
INTRODUCTORY NOTES ................................................................................................................................. 1
FINANCIAL STATEMENTS ......................................................................................................................................... 1
CAUTIONARY STATEMENT REGARDING FORWARD‐LOOKING INFORMATION ..................................................................... 1
TECHNICAL INFORMATION ...................................................................................................................................... 3
MINERAL RESOURCE ESTIMATES .............................................................................................................................. 3
JORC CODE ......................................................................................................................................................... 4
CAUTIONARY NOTE TO US SHAREHOLDERS CONCERNING ESTIMATES OF MINERAL RESERVES AND MINERAL RESOURCES ......... 5
GLOSSARY ............................................................................................................................................................ 5
CORPORATE STRUCTURE ............................................................................................................................... 8
DESCRIPTION OF THE BUSINESS .................................................................................................................... 9
THE CORPORATION ................................................................................................................................................ 9
THREE YEAR HISTORY ........................................................................................................................................... 10
THE GHANAIAN MINING INDUSTRY ........................................................................................................................ 13
MINERAL PROPERTIES ................................................................................................................................. 17
NAMDINI GOLD PROJECT ...................................................................................................................................... 17
OTHER PROPERTIES AND ASSETS ............................................................................................................................ 27
CARDINAL’S OPERATIONS IN GHANA ....................................................................................................................... 28
EMPLOYEES ................................................................................................................................................. 10
RISK FACTORS .............................................................................................................................................. 30
DIVIDENDS .................................................................................................................................................. 39
DESCRIPTION OF CAPITAL STRUCTURE ........................................................................................................ 39
MARKET FOR SECURITIES ............................................................................................................................ 42
TRADING PRICE AND VOLUME ............................................................................................................................... 42
PRIOR SALES OF UNLISTED SECURITIES .................................................................................................................... 43
DIRECTORS AND OFFICERS .......................................................................................................................... 44
CEASE TRADE ORDERS, BANKRUPTCIES, PENALTIES OR SANCTIONS .............................................................................. 49
CONFLICTS OF INTEREST........................................................................................................................................ 51
LEGAL PROCEEDINGS AND REGULATORY ACTIONS ..................................................................................... 51
INTERESTS OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS ................................................ 51
TRANSFER AGENT AND REGISTRAR ............................................................................................................. 51
AUDIT COMMITTEE AND RELATED INFORMATION ...................................................................................... 52
THE AUDIT AND RISK COMMITTEE’S CHARTER .......................................................................................................... 52
COMPOSITION OF THE AUDIT AND RISK COMMITTEE ................................................................................................. 52
PRE‐APPROVAL POLICIES AND PROCEDURES ............................................................................................................. 52
EXTERNAL AUDITOR SERVICE FEES .......................................................................................................................... 53
MATERIAL CONTRACTS................................................................................................................................ 53
i
INTERESTS OF EXPERTS ............................................................................................................................... 54
ADDITIONAL INFORMATION ....................................................................................................................... 54
APPENDIX A ‐ AUDIT AND RISK COMMITTEE CHARTER ................................................................................ 55
PAGE ii
PAGE 1
INTRODUCTORY NOTES
In this Annual Information Form (the “AIF”), Cardinal Resources Limited is referred to as “Cardinal” or the
“Corporation”. Unless otherwise indicated, all information contained herein is as at September 29, 2017.
Unless otherwise indicated, in this AIF all references to (i) “$” or “AUD” are to Australian dollars; (ii) “US$” and
“USD” are to United States dollars; (iii) “C$” or “CAD” are to Canadian dollars; and (iv) “GHS” are to Ghanaian
cedi.
The Canadian dollar rates of exchange on September 29, 2017 were:
United States dollar(1)
C$1. 00=US$0.81
Australian dollar(1)
C$1. 00=$0.976
Note:
(1) Bank of Canada average exchange rate for September 29, 2017 as reported on the Bank of Canada
website.
Financial Statements
This AIF should be read in conjunction with the Corporation’s consolidated financial statements and
management’s discussion and analysis for the 12 months ended June 30, 2017. The consolidated financial
statements and management’s discussion and analysis are available on the Corporation’s website at
www.cardinalresources.com.au and under the Corporation’s profile on the SEDAR website at www.sedar.com.
All financial statements are prepared in accordance with International Financial Reporting Standards and are
reported in Canadian dollars.
Cautionary Statement Regarding Forward‐Looking Information
Certain statements contained in this AIF constitute forward‐looking information under applicable Canadian
securities laws. These statements relate to future events or future performance. All statements other than
statements of historical fact may be forward‐looking statements. Forward‐looking statements are often, but
not always, identified by the use of words such as “seek”, “anticipate”, “plan”, “continue”, “objectives”,
“strategies”, “estimate”, “expect”, “may”, “will”, “project”, “predict”, “potential”, “targeting”, “intend”,
“could”, “might”, “should”, “believe” and similar expressions. These statements involve known and unknown
risks, uncertainties and other factors that may cause actual results or events to differ materially from those
anticipated in such forward‐looking statements. The Corporation believes the expectations reflected in those
forward‐looking statements are reasonable but no assurance can be given that these expectations will prove
to be correct and such forward‐looking statements included in its AIF should not be unduly relied upon.
In particular, this AIF contains forward‐looking statements pertaining to the following:
Mineral Resource estimates;
targeting additional Mineral Resources and expansion of deposits;
the Corporation’s expectations, strategies and plans for the Ghanaian Projects, including the Corporation’s
planned exploration activities;
the amount of funds required to fund the development of the mining licence in areas in respect of which
Savannah had entered into agreements with holders of small scale mining licences;
2017 Annual Information Form
PAGE 2
the results of future exploration and drilling and estimated completion dates for certain milestones;
successfully adding or upgrading Mineral Resources and successfully developing new deposits;
the timing, receipt and maintenance of approvals, licences and permits from the Ghanaian government
and from any other applicable government, regulator or administrative body;
future financial or operating performance and condition of the Corporation and its business, operations
and properties; and
any other statement that may predict, forecast, indicate or imply future plans, intentions, levels of activity,
results, performance or achievements.
The actual results could differ materially from those anticipated in these forward‐looking statements or
information as a result of the risk factors set forth below and elsewhere in this AIF:
estimation of mineralization, resources and reserves;
environmental, health and safety regulations of the resource industry;
competitive conditions;
environmental bonds;
conflicts of interest;
risks of operating in Ghana;
government policy changes;
mineral exploration, development and operating risks;
operational risks;
liquidity and financing risks;
funding risk;
exploration costs;
uninsurable risks;
ownership risks;
permitting and licencing risks;
difficulty in enforcement of judgments;
market conditions;
dilution risk;
other factors discussed under “Risk Factors”; and
other risks and uncertainties described elsewhere in this AIF.
stress in the global economy;
current global financial condition;
reliance on key personnel;
exchange rate and currency risks;
commodity prices;
artisanal miners;
Although the forward‐looking statements contained in this AIF are based upon assumptions which the
Corporation believes to be reasonable, there can be no assurance that actual results will be consistent with
these forward‐looking statements. With respect to forward‐looking statements contained in this AIF, the
Corporation has made assumptions regarding: future commodity prices and royalty regimes; availability of
skilled labour; timing and amount of capital expenditures; future currency exchange and interest rates; the
impact of increasing competition; general conditions in economic and financial markets; availability of drilling
and related equipment; effects of regulation by governmental agencies; royalty rates; future tax rates; future
2017 Annual Information Form
PAGE 3
operating costs; availability of future sources of funding; ability to obtain financing and assumptions underlying
estimates related to adjusted funds from operations. The Corporation has included the above summary of
assumptions and risks related to forward‐looking information provided in this AIF in order to provide readers
with a more complete perspective on the Corporation’s future operations and such information may not be
appropriate for other purposes. The Corporation’s actual results, performance or achievement could differ
materially from those expressed in, or implied by, these forward‐looking statements and, accordingly, no
assurance can be given that any of the events anticipated by the forward‐looking statements will transpire or
occur, or if any of them do so, what benefits the Corporation will derive therefrom. These forward‐looking
statements are made as of the date of this AIF and the Corporation disclaims any intent or obligation to update
publicly any forward‐looking statements, whether as a result of new information, future events or results or
otherwise, other than as required by applicable securities laws.
Technical Information
The scientific and technical information contained in this AIF relating to the Namdini Gold Project is supported
by the technical report titled "Technical Report on the Namdini Gold Project, Ghana, West Africa", dated
effective April 5, 2017 (the "Technical Report"), prepared by (i) Ian T. Blakley, Principal Geologist and Vice‐
President and General Manager of RPA UK Ltd., who is a Professional Geoscientist in the Province of Ontario;
(ii) Sean D. Horan, Senior Geologist of RPA, who is a Professional Geoscientist in the Province of Ontario; and
(iii) Kathleen Ann Altman, Ph.D., Principal Metallurgist and Director, Mineral Processing and Metallurgy of RPA
(USA) Ltd., who is a Professional Engineer in the State of Colorado and a Qualified Member of the Mining and
Metallurgical Society of America. Each of Mr. Blakley, Mr. Horan and Dr. Altman is an independent "qualified
person" as such term is defined in NI 43‐101 and each has sufficient experience that is relevant to the style of
mineralization and type of deposit under consideration and to the activity that they are undertaking to qualify
as a "Competent Person" as such term is defined in the JORC Code. Each of Mr. Blakley, Mr. Horan and Dr.
Altman consents to the inclusion in this AIF of such scientific and technical information in the form and context
in which it appears and confirms that such information is based on and fairly represents the Technical Report.
The Technical Report is subject to certain assumptions, qualifications and procedures described therein.
Reference should be made to the full text of the Technical Report, which has been filed with Canadian securities
regulatory authorities pursuant to NI 43‐101 and is available for review under the Corporation's profile on
SEDAR at www.sedar.com. The Technical Report is not and shall not be deemed to be incorporated by
reference in this AIF.
Where appropriate, certain information contained in this AIF that relates to exploration and drilling results,
metallurgical testing and the Mineral Resource Estimate updates information derived from the Technical
Report. Any updates to the scientific or technical information derived from the Technical Report and any other
scientific or technical information contained in this AIF was prepared by or under the supervision of Nicolas
Johnson, MAIG, an employee of MPR. Mr. Johnson is an independent "qualified person" as such term is defined
in NI 43‐101 and has sufficient experience that is relevant to the style of mineralization and type of deposit
under consideration and to the activity that he is undertaking to qualify as a "Competent Person" as such term
is defined in the JORC Code. Mr. Johnson consents to the inclusion in this AIF of such scientific and technical
information in the form and context in which it appears.
Mineral Resource Estimates
The Mineral Resources for the Corporation’s properties have been estimated in accordance with the JORC Code
and reconciled with the Canadian Institute of Mining, Metallurgy and Petroleum Definition Standards for
Mineral Resources and Mineral Reserves adopted by the CIM Council on May 10, 2014 (the “CIM Definition
Standards”).
2017 Annual Information Form
PAGE 4
JORC Code
The following definitions are reproduced from the JORC Code:
“Mineral Resource” means a concentration or occurrence of solid material of economic interest in or on the
Earth’s crust in such form, grade or quality and quantity that there are reasonable prospects for eventual
economic extraction. The location, quantity, grade or quality, continuity and other geological characteristics of
a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge,
including sampling.
“Inferred Mineral Resource” means that part of a Mineral Resource for which quantity and grade or quality
are estimated on the basis of limited geological evidence and sampling. Geological evidence is sufficient to
imply but not verify geological and grade or quality continuity. An Inferred Mineral Resource has a lower level
of confidence than that applying to an Indicated Mineral Resource (as defined herein) and must not be
converted to an Ore Reserve. It is reasonably expected that the majority of Inferred Mineral Resources could
be upgraded to Indicated Mineral Resources with continued exploration.
“Indicated Mineral Resource” means that part of a Mineral Resource for which quantity, grade or quality,
densities, shape and physical characteristics are estimated with sufficient confidence to allow the application
of Modifying Factors (as defined herein) as described below in sufficient detail to support mine planning and
evaluation of the economic viability of the deposit. Geological evidence is derived from adequately detailed
and reliable exploration, sampling and testing and is sufficient to assume geological and grade or quality
continuity between points of observation. An Indicated Mineral Resource has a lower level of confidence than
that applying to a Measured Mineral Resource (as defined herein) and may only be converted to a Probable
Ore Reserve (as defined herein).
“Measured Mineral Resource” means that part of a Mineral Resource for which quantity, grade or quality,
densities, shape, and physical characteristics are estimated with confidence sufficient to allow the application
of Modifying Factors to support detailed mine planning and final evaluation of the economic viability of the
deposit. Geological evidence is derived from detailed and reliable exploration, sampling and testing and is
sufficient to confirm geological and grade or quality continuity between points of observation. A Measured
Mineral Resource has a higher level of confidence than that applying to either an Indicated Mineral Resource
or an Inferred Mineral Resource. It may be converted to a Proved Ore Reserve (as defined herein) or to a
Probable Ore Reserve.
“Ore Reserve” means the economically mineable part of a Measured and/or Indicated Mineral Resource. It
includes diluting materials and allowances for losses, which may occur when the material is mined or extracted
and is defined by studies at pre‐feasibility or feasibility level as appropriate that include application of
Modifying Factors. Such studies demonstrate that, at the time of reporting, extraction could reasonably be
justified. The reference point at which Ore Reserves are defined, usually the point where the ore is delivered
to the processing plant, must be stated. It is important that, in all situations where the reference point is
different, such as for a saleable product, a clarifying statement is included to ensure that the reader is fully
informed as to what is being reported.
“Probable Ore Reserve” means the economically mineable part of an Indicated, and in some circumstances, a
Measured Mineral Resource. The confidence in the Modifying Factors applying to a Probable Ore Reserve is
lower than that applying to a Proved Ore Reserve.
“Proved Ore Reserve” means the economically mineable part of a Measured Mineral Resource. A Proved
Mineral Ore Reserve implies a high degree of confidence in the Modifying Factors.
2017 Annual Information Form
PAGE 5
For the purposes of the JORC Code and CIM Definition Standards, “Modifying Factors” are considerations used
to convert Mineral Resources to Mineral Reserves. These include, but are not restricted to, mining, processing,
metallurgical, infrastructure, economic, marketing, legal, environmental, social and governmental factors.
There can be no assurance that those portions of such Mineral Resources will ultimately be converted into Ore
Reserves. Mineral Resources are not Ore Reserves and do not have demonstrated economic viability.
Cautionary note to US Shareholders Concerning Estimates of Mineral Reserves and Mineral Resources
This AIF uses the terms “Probable Ore Reserve”, “Measured Mineral Resource”, “Indicated Mineral Resource”
and “Inferred Mineral Resource”. United States Shareholders are advised that while such terms are recognized
and required by Canadian and Australian standards or regulations, the SEC does not recognize them. In
particular, and without limiting the generality of this cautionary note, the term “Mineral Resource” does not
equate to the term “Ore Reserve”. This AIF also uses the terms “Probable Ore Reserves” and “Proved Ore
Reserves” as such terms are used under NI 43‐101, CIM Standards and the JORC Code, which standards differ
from the standards that apply under SEC Industry Guide 7. Under United States standards, mineralization may
not be classified as an “Ore Reserve” unless the determination has been made that the mineralization could
be economically and legally produced or extracted at the time the reserve determination is made. As such,
certain information contained in this AIF concerning descriptions of mineralization and resources and reserves
under NI 43‐101, CIM Standards and the JORC Code are not comparable to disclosures made by United States
reporting companies. “Inferred Mineral Resources” have a great amount of uncertainty as to their existence,
and as to their economic and legal feasibility. It cannot be assumed that all or any part of a Probable Ore
Reserve, Measured Mineral Resource, Indicated Mineral Resource or an Inferred Mineral Resource will ever be
upgraded to a higher category. Under Canadian and Australian rules, estimates of Inferred Mineral Resources
may not form the basis of feasibility or other economic studies. United States Shareholders are cautioned not
to assume that all or any part of Measured, Indicated or Inferred Mineral Resources will ever be converted into
Ore Reserves. United States Shareholders are also cautioned not to assume that all or any part of an Inferred
Mineral Resource exists, or is economically or legally mineable.
Glossary
In this AIF, unless otherwise indicated or the context otherwise requires, the following terms shall have the
meaning set forth below:
“2006 Mining Act” means the Minerals and Mining Act 2006 (Act 703) (Ghana);
“AIF” means this Annual Information Form;
“affiliate” has the meaning ascribed thereto in National Instrument 62‐104 — Take‐Over Bids and Issuer Bids;
“ASX” means ASX Limited (ABN 98 008 624 691) or the Australian Securities Exchange operated by ASX Limited
(as the context requires);
“ASX Listing Rules” means the official listing rules of the ASX, as amended from time to time;
“Au” means gold;
“Audit and Risk Committee” means the audit and risk committee of the Board;
“BIA” means the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B‐3
2017 Annual Information Form
PAGE 6
“Board” means the board of directors of the Corporation;
“Bolgatanga Project” means, collectively, the Ndongo Prospect, the Kungongo Prospect and the Bongo
Prospect in Northwest Ghana;
“Bongo Prospect” means the property located in the Upper East Region of the Town of Bolgatanga covered by
reconnaissance licence number 2/2011 issued by the Government of Ghana through the Minister and of which
an application for renewal has been granted and is pending the signature of the Minister.
“Cardinal” or the “Corporation” means Cardinal Resources Limited, a corporation incorporated under the laws
of Australia, and unless otherwise stated or the context otherwise requires, references to the Corporation
mean the Corporation and its current and proposed subsidiaries on a consolidated basis;
“Cardinal Subranum” means Cardinal Resources Subranum Limited, a subsidiary of the Corporation;
“CCAA” means the Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C‐36;
“Class A Performance Shares” means the Class A performance shares of the Corporation, each of which is
convertible into 100,000 Ordinary Shares;
“Class C Performance Shares” means the Class C performance shares of the Corporation, each of which is
convertible into 100,000 Ordinary Shares;
“CMS” means Cardinal Mining Services Limited, a subsidiary of the Corporation;
“CMN” means Cardinal Namdini Mining Limited, a subsidiary of the Corporation;
“Corporations Act” means the Corporations Act, 2001 (Commonwealth of Australia), as amended, including
the regulations promulgated thereunder;
“Director” means a director of the Corporation;
“EPA” means the Ghana Environmental Protection Agency;
“Exploration Tenements” means the tenements forming part of the Bolgatanga Project and the Subranum
Project. For the avoidance of doubt, the Exploration Tenements do not include the tenements forming the
Namdini Gold Project;
“g” means grams;
“Ghanaian Projects” means the Namdini Gold Project, the Bolgatanga Project and the Subranum Project;
“Ghanaian Subsidiaries” means, collectively, Cardinal Subranum, CMS, Cardinal Resources Ghana Limited and
Cardinal Namdini Mining Limited;
“g/t” means grams per tonne;
“IFRS” means International Financial Reporting Standards as adopted by the International Accounting
Standards Board;
“JORC” means the Australasian Joint Ore Reserves Committee;
2017 Annual Information Form
“JORC Code” means the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves;
PAGE 7
“kg” means kilogram;
“km” means kilometre;
“km²” means square kilometre;
“Kungongo Prospect” means the property located in the Upper East Region of the Town of Bolgatanga covered
by reconnaissance licence number 1/2011 issued by the Government of Ghana through the Minister;
“kV” means kilovolt;
“Listed Option” means a listed option (warrant) to purchase Ordinary Shares;
“m” means metre;
“MASL” means metres above sea level;
“Minister” means the Minster responsible for Lands and Natural Resources of Ghana;
“Minerals Commission” means the Minerals Commission of the Government of Ghana.
“mm” means millimetre;
“MPR Geological” means MPR Geological Consultants Pty Ltd.;
“Namdini Gold Project” means the 13 licences acquired by a subsidiary of the Corporation in northeast Ghana;
“Ndongo Prospect” means the property in the Upper East Region of the Town of Bolgatanga covered by
prospecting licence number 17/2010 issued by the Government of Ghana through the Minister;
“NI 43‐101” means National Instrument 43‐101 – Standards of Disclosure for Mineral Projects, as amended
from time to time;
“NI 52‐110” means National Instrument 52‐110 – Audit Committees, as amended from time to time;
“Option Agreement” means the option and loan agreement between Mr. Easah, Savannah and CMS, pursuant
to which CMS holds an option to purchase all the outstanding shares of Savannah from Mr. Easah for US$1.00;
“Option Exercise Deed” means the option exercise deed dated May 11, 2017 between CMS, Savannah and
Cardinal Namdini Mining Limited;
“Ordinary Shares” means ordinary shares in the capital of the Corporation;
“oz” means Troy ounces (31.1035 g);
“Performance Shares” means, collectively, the Class A Performance Shares and the Class C Performance
Shares;
2017 Annual Information Form
PAGE 8
“Properties” means, collectively, the Bolgatanga Project, the Namdini Gold Project and the Subranum Project;
“Remuneration and Nomination Committee” means the remuneration and nomination committee of the
Board;
“RC” means reverse circulation;
“RPA” means Roscoe Postle Associates Inc.;
“Savannah” means Savannah Mining Ghana Limited, of which Malik Easah is the sole shareholder;
“Savannah Agreement” means the binding heads of agreement dated July 23, 2014 between CMS and
Savannah, pursuant to which CMS obtained a right of first refusal to provide all technical and financial support
for the development of mining licences held by Savannah;
“SEC” means the United States Securities and Exchange Commission;
“Shareholders” means the holders of Ordinary Shares;
“Subin Kasu Prospecting Licence” means prospecting licence number PL 61309 issued by the Government of
Ghana through the Minister;
“Subranum Project” means the Subranum project, consisting of the Subin Kasu Prospecting Licence, in
southwest Ghana;
“t” means metric tonne;
“Technical Report” means the technical report titled “Technical Report on the Namdini Gold Project, Ghana,
West Africa”, dated effective April 5, 2017;
“TSX” means the Toronto Stock Exchange;
“TSXV” means the TSX Venture Exchange;
“Unlisted Option” means an unlisted option to purchase Ordinary Shares;
“US” means the United States of America; and
“VWAP” means volume‐weighted average trading price on the ASX.
CORPORATE STRUCTURE
Cardinal Resources Limited was incorporated as Heguy Resources Limited under the Corporations Act on
November 11, 2010 and changed its name to Ridge Resources Limited (“Ridge”) on May 9, 2011 and then to
Cardinal Resources Limited on December 27, 2012. The Corporation’s head and registered office is at Suite 1,
28 Ord Street, West Perth, Australia, 6005. The Corporation maintains an office outside of Australia at The
Exchange Tower, Suite 1822, 130 King Street West, Toronto, Ontario, M5X 1E3 and in Ghana at Durugu
Residential Area, Kumbosco, Bolgatanga.
On August 27, 2012, Ridge announced that it had entered into an Implementation Agreement with Cardinal
Resources Limited, whereby Ridge would acquire 100% of the share capital of Cardinal. Ridge completed the
2017 Annual Information Form
PAGE 9
acquisition of Cardinal on December 27, 2012 and subsequently changed its name to Cardinal Resources
Limited.
The Corporation’s business under Ridge was operating as a Western Australian mineral exploration company.
The Corporation’s business since December 27, 2012 has been to explore and develop its Ghanaian Projects,
which consist of the Namdini Gold Project, the Bolgatanga Project and the Subranum Project.
The corporate structure is shown in the chart below. All of Cardinal’s subsidiaries are 100% owned.
Cardinal Resources
Limited
(Australia)
Cardinal Resources
(Australia) Pty Ltd
(Australia)
Cardinal Resources
Ghana Limited
(Ghana)
Cardinal Resources
Subranum Limited
(Ghana)
Cardinal Mining
Services Limited
(Ghana)
Cardinal Namdini
Mining Limited
(Ghana)
The Corporation is a reporting issuer in the province of Ontario, Canada. The Corporation’s Ordinary Shares are
listed and posted for trading on the Toronto Stock Exchange in Canada (the “TSX” or the “Exchange”) and on the
Australian Securities Exchange (the “ASX”) in Australia, in each case under the symbol “CDV”.
The Corporation
DESCRIPTION OF THE BUSINESS
interests
for
tenements
in Ghana
The principal activity of the Corporation (and
its subsidiaries) is gold exploration in Ghana.
in five
The Corporation holds
prospective
gold
mineralization
in two NE‐SW
granite‐
Paleo‐Proterozoic
trending
greenstone belts: the Bolgatanga Project and
the Namdini Gold Project, which are,
respectively, located within the Nangodi and
in
Bole‐Bolgatanga Greenstone
northeast Ghana, and the Subranum Project,
which is located within the Sefwi Greenstone
Belt in southwest Ghana. The main focus of
activity is the Namdini Gold Project. The
maps that follow show the location of the
Namdini Gold Project and the Corporation’s
other properties in Ghana.
Belts
2017 Annual Information Form
PAGE 10
Employees
The Corporation employed 117 full‐time employees as of June 30, 2017 and continued to employ 163 full‐time
employees as of the date of this AIF.
Three Year History
The following summary sets out the notable events in the Corporation’s history since the beginning of the
financial year ended June 30, 2015:
On September 18, 2014, the Corporation completed a capital raising thereby issuing 18,000,000 fully paid
Ordinary Shares, together with one free attaching Listed Option for every Ordinary Share subscribed for,
exercisable at $0.15 on or before September 30, 2019 (the “September 2014 Placement”) for gross proceeds
of $900,000. The Listed Options were issued on November 10, 2014 after the Shareholders approved the
issuance thereof at a meeting of Shareholders held on November 3, 2014.
On November 10, 2014, the directors of the Corporation purchased 4,880,000 fully paid Ordinary Shares and
4,880,000 Listed Options for gross proceeds of $244,000, on the same terms and conditions as the September
2014 Placement.
On January 22, 2015, the Corporation advised that it had completed a non‐renounceable entitlement issue of
options. The offer of one Listed Option for every two Ordinary Shares held by eligible holders of Ordinary Shares
on October 1, 2014 at an issue price of $0.01 per Listed Option. The Corporation raised approximately $481,183
before costs from the offer.
On June 5, 2015, the Corporation completed a placement to raise $947,975 through the issue of 14,584,231
fully paid Ordinary Shares with a free attaching Listed Option for every Ordinary Share subscribed for (the “June
2015 Placement”) at a price of $0.065. On August 7, 2015 the Directors of the Corporation (namely, Messrs.
Alec Pismiris, Archie Koimtsidis and Malik Easah) purchased 1,838,462 fully paid Ordinary Shares and 1,838,462
Listed Options to raise $119,500, on the same terms and conditions as the June 2015 Placement.
On June 15, 2015, the Corporation announced that the Executive Director of Cardinal, Mr. Marcus Michael,
had passed away.
On September 1, 2015, Cardinal announced that Mark Thomas and Simon Jackson had been appointed as non‐
executive Directors of the Corporation.
On September 21, 2015, the Corporation confirmed it had completed a capital raising thereby issuing
52,215,000 fully paid Ordinary Shares at $0.10 per Ordinary Share, together with one free attaching Listed
Option for every two Ordinary Shares subscribed for (the “September 2015 Placement”). The first tranche of
such placement was completed on September 25, 2015, when 28,164,816 Ordinary Shares were issued to raise
a total of $2,816,481. On November 27, 2015, following the receipt of shareholder approval, the second
tranche of Ordinary Shares and all the Listed Options that were part of the September 2015 Placement were
issued. The second tranche included the issue of 10,000,000 Ordinary Shares and 5,000,000 Listed Options to
Macquarie Bank Limited. On November 27, 2015, the Directors of the Corporation (namely, Messrs. Alec
Pismiris, Archie Koimtsidis, Malik Easah, Simon Jackson and Mark Thomas) purchased 8,117,116 Ordinary
Shares and 4,058,558 Listed Options for proceeds to the Corporation of approximately $812,000, on the same
terms and conditions as the September 2015 Placement.
2017 Annual Information Form
PAGE 11
On November 19, 2015, the Corporation announced the appointment of Mr. Mark Connelly as the Non‐
Executive Chairman. Mr. Connelly replaced Mr. Alec Pismiris, who resigned from the Board.
On March 8, 2016, the Corporation confirmed it had completed a capital raising thereby issuing 47,333,310
fully paid Ordinary Shares at $0.12 per Ordinary Share (the “March 2016 Placement”). 4,666,668 fully paid
Ordinary Shares forming part of the March 2016 Placement were issued on May 9, 2016 after being approved
at the Corporation’s meeting of Shareholders held on April 27, 2016. On May 9, 2016, the Directors of the
Corporation (namely, Messrs. Archie Koimtsidis, Malik Easah and Mark Thomas) purchased 1,750,002 fully paid
Ordinary Shares for proceeds to the Corporation of approximately $210,000, on the same terms and conditions
as the March 2016 Placement.
On July 19, 2016, the Corporation announced that it had issued 55,518,670 fully paid Ordinary Shares at a price
of $0.29 per Ordinary Share as the first part of a placement (the “July 2016 Placement”). On August 26, 2016,
the Corporation announced the completion of the second tranche of the July 2016 Placement and that,
following shareholder approval at the general meeting of Shareholders, 19,481,330 fully paid Ordinary Shares
had been issued at a price of $0.29 per Ordinary Share.
On September 5, 2016, 50 Class B performance shares (the “Class B Performance Shares”) were converted to
5,000,000 Ordinary Shares when the Corporation satisfied the vesting requirement of the Class B Performance
Shares.
Between August 26, 2016 and October 28, 2016, 1,435,000 Listed Options were exercised.
On November 7, 2016, Cardinal reported an initial resource estimate for the Namdini Gold Project of 3.8 million
ounces of inferred gold resources and 0.25 million ounces of indicated gold resources, calculated in accordance
with the JORC Code.
On November 7, 2016, the Corporation announced that Mr. Kevin Tomlinson had been appointed to the Board
and would serve as non‐executive chairman, that Mr. Mark Connelly, who had previously served as non‐
executive chairman, would remain as a non‐executive Director and that Mr. Mark Thomas, previously a non‐
executive Director, had retired as a Director.
On November 28, 2016, 476,247 Ordinary Shares were issued to Mr. Julian Barnes for services provided to the
Corporation. The issue was approved at the Corporation’s annual general meeting held on November 7, 2016.
On January 4, 2017, the Corporation announced that Mr. Bruce Lilford had been appointed Project Manager
at the Namdini Gold Project, effective January 3, 2017.
On February 2, 2017, Cardinal reported an interim metallurgical update for the Namdini Gold Project
identifying a number of conventional gold recovery techniques to enhance recoveries.
On February 6, 2017, the Corporation announced that Mr. Erik Palmbachs had been appointed as the
Corporation’s Chief Financial Officer, effective March 1, 2017. Mr. Palmbachs’ appointment as Chief Financial
Officer ended on May 24, 2017.
On February 7, 2017, Cardinal reporting drilling assay results at the Namdini Gold Project that demonstrated
resource extensions to the east and south and at depth.
On February 28, 2017, the Corporation announced that BDO (WA) Pty Ltd had been appointed as auditor for
the Corporation.
2017 Annual Information Form
PAGE 12
On March 21, 2017, Cardinal reported that conventional gold recovery techniques for the Namdini Gold Project
are showing overall gold recoveries of 84% are achievable and that crush‐float‐fine grind processing allows for
a low mass flotation concentrate with superior operating costs due to low volumes of high grade concentrate
to be processed.
On April 12, 2017, following the receipt of Shareholder approval, 26,000,000 unlisted options (“Unlisted
Options”) were issued to Directors and certain officers of the Corporation. Such Unlisted Options vest in three
tranches upon the achievement of certain specified performance criteria, have an exercise price of $0.50 and
expire on April 12, 2022.
On April 21, 2017, the Corporation announced the completion of a share placement (the “April 2017
Placement”) of 45,598,266 Ordinary Shares at an issue price of $0.50 per Ordinary Share for aggregate gross
proceeds of $22,799,133.
On May 24, 2017, Sarah Shipway was appointed interim Chief Financial Officer of the Corporation.
On May 25, 2017, 476,247 Ordinary Shares were issued to Mr. Julian Barnes for services provided to the
Corporation. The issue was approved at the Corporation’s annual general meeting held on November 7, 2016.
On July 10, 2017, the Corporation’s Ordinary Shares commenced trading on the TSX.
On July 10, 2017, Robert Schafer was appointed non‐executive Director of the Corporation and Derrick
Weyrauch was appointed as Chief Financial Officer of the Corporation.
On July 12, 2017, the Corporation announced that it had been granted a large scale mining licence over an area
of approximately 19.54 sq km covering the Corporation’s Namdini Gold Project and that an initial
Environmental Impact Statement was lodged with the EPA.
On July 26, 2017, the Corporation announced that interim results for Phase Two of its metallurgical test
programme for the Namdini Gold Project had demonstrated an overall increased gold recovery rate of 86%
utilizing standard gold recovery techniques.
On August 14, 2017, the Corporation announced two auger gold‐in‐soil anomalies (4.2 km long x 300 m wide
and 800 m x 250 m) were discovered with +100ppb gold anomaly along the entire strike of both anomalies
from exploration activities on its Kungongo Prospect.
On August 15, 2017, the Corporation announced that it had entered into a definitive agreement with Red Back
Mining Ghana Limited, a wholly‐owned subsidiary of Kinross Gold Corp., to acquire two large scale prospecting
licences which encompass the Namdini regional shear and which contains the historic producing “Nangodi”
gold mine and that combined with the Corporation’s existing Ndongo holdings, increases the land area to
287.67 km2.
On September 18, 2017, the Corporation announced an updated Mineral Resource estimate for its Namdini
Gold Project, including an Indicated Mineral Resource of 120 M tonnes grading 1.1 g/t Au for 4.3 Moz Au and
an Inferred Mineral Resource of 84 M tonnes grading 1.2 g/t Au for 3.1 Moz Au at 0.5 g/t Au cut‐off. The
effective date of the Mineral Resource Estimate is September 11, 2017.
2017 Annual Information Form
PAGE 13
The Ghanaian Mining Industry
Mining in Ghana
Ghana
Ghana is situated on the west coast of Africa, approximately 600 km north of the Equator on the Gulf of Guinea.
Accra, the capital city of Ghana, is located almost exactly on the Prime Meridian. The former British colony
changed its name from the Gold Coast to Ghana on achieving independence on March 6, 1957. Ghana is now
a republic with a population of approximately 25 million people and a democratically elected government.
English remains the official and commercial language.
The total land area of the country is approximately 238,000 km² and the topography is relatively flat. Ghana
has a tropical climate with two rainy seasons and two dry seasons in the southern sector each year. The climate
condition in the Upper East Region of Ghana, where the Namdini Gold Project and the Bolgatanga Project are
located, is tropical with a rainy season from May to October and a long dry season with virtually no rainfall
from October to April. Temperatures range between a maximum of 40°C in March/April and a minimum of
12°C in December. The natural vegetation in the Western Region, where the Subranum Project is located, is
moist tropical forest with a majority of the land converted to agricultural pursuits. The physiography of the
Namdini Gold Project area is primarily savanna grassland characterized by short scattered drought‐resistant
trees, scattered scrub, and grass that gets burnt by bushfire or scorched by the sun during the long dry season.
The climate is very dry. The most common trees are the Sheanut, Dawadawa, and Baobab.
The Ghanaian legal system is generally modelled after and based on British common law. The laws of Ghana
include the Constitution, national laws passed by Parliament (or under authority granted by Parliament) and
the common law of Ghana. The common law of Ghana includes customary rules which apply to particular
communities in Ghana.
The Corporation has found Ghana to be stable (politically and economically) over the time in which it has
engaged in operations in Ghana.
Mining Rights
The Constitution of Ghana vests title in every mineral in its natural state to the President of Ghana on behalf
of, and in trust for, the people of Ghana. The exercise of any mineral right in the form of reconnaissance,
exploration or exploitation of any mineral in Ghana requires an appropriate mineral right to be issued by the
Government of Ghana acting through the Minister responsible for Lands and Natural Resources (the
“Minister”). The Minister administers, promotes and regulates Ghana’s mineral wealth through the Minerals
Commission, a governmental organization established in accordance with the Minerals Commission Act 1993
(Act 450) and the Minerals and Mining Act 2006 (Act 703) (the “2006 Mining Act”).
Pursuant to the 2006 Mining Act, a number of regulations were passed in 2012 to clarify and implement
provisions of the 2006 Mining Act. These regulations relate to matters such as licensing, local content, technical
issues, mineral right holding costs, mine support services and resettlement and payment of compensation to
persons impacted by mining operations.
The 2006 Mining Act provides for a number of categories of licences.
A reconnaissance licence confers on the holder the right to search for a specific mineral or commodity within
the licence area by geochemical and photo‐geological surveys or other remote sensing techniques. Except as
2017 Annual Information Form
PAGE 14
otherwise provided in the licence, it does not permit drilling, excavation or other sub‐surface techniques. A
reconnaissance licence is normally granted for up to one year and may be renewed by the Minister from time
to time for periods up to one year at a time upon application by the holder. The size of the area over which a
reconnaissance licence may be granted is limited to 5,000 contiguous blocks or 1,050 km².
A corporate body duly registered in Ghana can apply to the Minerals Commission for a renewable exploration
(prospecting) license granting exclusive rights to explore for a particular mineral in a selected area for an initial
period not exceeding three years. A prospecting licence may be renewed for a maximum of two further terms
of up to three years each, subject to surrender of a portion of the area.
When exploration has successfully delineated a mineral reserve, an application may be made to the Minerals
Commission for conversion to a mining lease, granting a company the right to produce a specific product from
the concession area, normally for a period of 30 years or a lesser period that may be agreed upon with the
applicant.
Once a mineral right is issued to an entity by the Government of Ghana, Ghanaian mining laws prevent that
mineral right from being transferred, assigned or mortgaged by the licensee or mineral right holder without
the prior written approval of the Minister. The Ghana Minerals Commission is also required to maintain a public
register of all applications, grants, variations, transfers, suspensions and cancellations of such licences or
mineral rights. Official searches may be conducted in the public register to obtain information regarding any
mineral right granted by the Government of Ghana.
The 2006 Mining Act requires that any person who intends to acquire a controlling share of the equity of any
mining company that has been granted a mineral right must first give notice of its intent to the Minister and
also obtain the no objection of the Minister prior to acquiring a controlling share.
Under the 2006 Mining Act, the Government of Ghana is entitled to a 10% free carried interest in all companies
that hold mining leases. The 10% free carried interest entitles the Government of Ghana to a pro‐rata share of
future dividends. The Government of Ghana has no obligation to contribute development capital or to
operating expenses.
The Government of Ghana also has the right to acquire an additional interest in such companies for a price
fixed by agreement.
Under the 2006 Mining Act, the Government of Ghana is empowered to acquire a special or “golden” share in
any mining company. The special share would constitute a separate class of shares with such rights as the
Government of Ghana and the mining company might agree. Though deemed a preference share, it could be
redeemed without any consideration or for a consideration determined by the mining company and payable
to the holder on behalf of the Government of Ghana.
In the absence of any such agreement, the special share would have the following rights:
it would carry no voting rights but the holder would be entitled to receive notice of, and to attend and
speak at, any general meeting of the members or any separate meeting of the holders of any class of
shares;
it could only be issued to, held by, or transferred to the Government of Ghana or a person acting on behalf
of the Government of Ghana;
the written consent of the holder would be required for all amendments to the organizational documents
2017 Annual Information Form
PAGE 15
of the Corporation, the voluntary winding‐up or liquidation of the Corporation, or the disposal of any
mining lease, or the whole or any material part of the assets of the Corporation;
it would not confer a right to participate in the dividends, profits or assets of the Corporation or a return
of assets in a winding‐up or liquidation of the Corporation; and
the holder of a special share may require the Corporation to redeem the special share at any time for no
consideration or for a consideration determined by the Corporation.
To the Corporation’s knowledge, for as long as it has been operating in Ghana, no mining company has been
requested to issue a special share.
The Government of Ghana has a pre‐emptive right to purchase all gold and other minerals produced by mines
in Ghana. The purchase price would be agreed by the Government of Ghana and the mining company, or the
price established by any gold hedging arrangement between the Corporation and any third party approved by
the Government of Ghana, or the publicly quoted market price prevailing for the minerals or products as
delivered at the mine or plant where the right of pre‐emption was exercised. The Corporation understands
that the Government of Ghana has indicated it does not intend to take pre‐emptive action pursuant to its right
to purchase gold or other minerals so long as mining companies sell gold in accordance with certain procedures
approved by the Bank of Ghana.
Ghanaian Royalties and Taxes
Ghanaian law sets mineral royalties at a flat rate of 5% of mineral revenues. The corporate income tax rate is
35% of taxable income for mining companies. Capital expenditures (tax depreciation) are deductible at a flat
rate of 20% per year over a five‐year period.
The tax regulations disallow expenditures from one mining area as a deduction from revenues in a separate
mining area belonging to the same company in determining the Corporation’s taxable income for tax purposes.
Under the 2006 Mining Act, the Government of Ghana may enter into a stability agreement with the holder of
a mining lease, to ensure that the holder of the mining lease will not, for a period not exceeding 15 years from
the date of the agreement,
1. be adversely affected by a new enactment, order, instrument or other action made under a new enactment
or changes to an enactment, order, instrument that existed at the time of the stability agreement, or other
action taken under these that have the effect or purport to have the effect of imposing obligations upon
the holder or applicant of the mining lease, and
2. be adversely affected by subsequent changes to:
(a) the level of and payment of customs or other duties relating to the entry of materials, goods,
equipment and any other inputs necessary to the mining operations or project,
(b) the level of and payment of royalties, taxes, fees and other fiscal imports, and
(c)
laws relating to exchange control, transfer of capital and dividend remittance.
A stability agreement entered into is subject to ratification by the Parliament of Ghana.
2017 Annual Information Form
PAGE 16
In 2011, the Government of Ghana established a tax stability renegotiation team to review the existing tax
stability agreements of some major mining companies operating in Ghana.
Environmental and Other Laws and Regulations
All phases of mineral exploration, project development, and operations are subject to environmental laws and
regulations. These laws and regulations may define, among other things, air and water quality standards, waste
management requirements, and closure and rehabilitation obligations. In general, environmental legislation is
evolving to require stricter operating standards, more detailed socio‐economic and environmental impact
assessments for proposed projects, and a heightened degree of accountability of companies and their officers,
directors, and employees for corporate social responsibility, and health and safety. Changes in environmental
regulations, and the way they are interpreted by the regulatory authorities, could affect the way the
Corporation operates, resulting in higher environmental and social operating costs that may affect the viability
of operations.
Environmental matters in Ghana, including those related to mining, fall primarily under the oversight of the
Environmental Protection Agency (“EPA”), as well as the Minerals Commission and the Inspectorate Division
of the Minerals Commission. The EPA has laws and regulations that govern, among other things, environmental
and socio‐economic impact assessments and statements, environmental management plans, emissions into
the environment, environmental auditing and review, and mine closure and reclamation, to which the
Corporation’s operations are subject. Additional provisions governing mine environmental management are
provided in the 2006 Mining Act and the various Minerals and Mining Regulations which came into force in
2012.
The Corporation notes a continuing trend toward substantially increased environmental requirements and
evolving corporate social responsibility expectations in Ghana, including the requirement for more permits,
analysis, data gathering, community hearings, and negotiations than have been required in the past for both
routine operational needs and for new development projects. There has been a trend to longer lead times in
obtaining environmental permits.
The Corporation’s mineral exploration activities and anticipated development, mining and processing
operations will also be subject to various laws governing prospecting, development, production, taxes, labor
standards, occupational health and safety, land rights of local people and other matters. New rules and
regulations may be enacted or existing rules and regulations may be modified and applied in a manner that
could have an adverse effect on the Corporation’s financial position and results of operations.
The Corporation established objectives to achieve regulatory requirements in its exploration, development,
operation, closure, and post‐closure activities so that its employees, the local environment, and its stakeholder
communities are protected and that the next land use contributes to the sustainability of the local economy.
In order to meet its objectives, the Corporation:
educates its managers so that they are committed to creating a culture that makes social and
environmental matters an integral part of short‐term and long‐term operations and performance
management systems;
works with its employees so they understand and accept environmental and social policies and procedures
as a fundamental part of the business;
established, and continues to improve, operating standards and procedures that aim to meet or exceed
requirements in relevant laws and regulations, the commitments made in its environmental impact
2017 Annual Information Form
PAGE 17
statements, environmental and socio‐economic management plans, rehabilitation and closure plans, and
any international protocols to which the Corporation is a signatory;
incorporated environmental and human rights performance requirements into relevant contracts;
provides training to employees and contractors in environmental matters;
regularly prepares, reviews, updates, and implements site‐specific environmental management and
rehabilitation and closure plans;
works to progressively rehabilitate disturbed areas in conformance with site‐specific environmental plans;
consults with local communities and regulators to communicate its environmental management policies
and procedures;
regularly reviews its environmental performance;
intends to complete resettlement projects in accordance with the International Finance Corporation
Performance Standard 5 on land acquisition and involuntary resettlement when required; and
publicly reports social, health, safety and environmental performance.
MINERAL PROPERTIES
Namdini Gold Project
Where appropriate, certain information contained in this AIF updates information derived from the Technical
Report. Any updates to the scientific and technical information derived from the Technical Report was
prepared by or under the supervision of Nicolas Johnson, MAIG, an employee of MPR Geological. Mr. Johnson
is a “qualified person” for the purposes of NI 43‐101.
Property Description, Location and Access
The Namdini Gold Project is located in the northeastern region of Ghana approximately 50 km southeast of the
regional centre of Bolgatanga, and close to the southern border of Burkina Faso. The Namdini Gold Project area
is located approximately six kilometres southeast of the operating Shaanxi Mining Company Limited’s
underground gold mine. The Universal Transverse Mercator (UTM) co‐ordinates for the approximate centre of
the Namdini Gold Project are 756400.0 m N, 1177050.0 m E in WGS84/NUTM30 projection or 10°38’ 21” N
Latitude and ‐0°39’ 23” W Longitude. The nearest airport is located in Tamale, approximately a 2.5 hour drive
south of Bolgatanga via 160 km of paved road on National Highway N10. Tamale, located approximately 450
km north of the capital city of Accra, Ghana, is serviced by daily one hour scheduled commercial flights. Total
access time from the Accra to the Namdini Gold Project is approximately four hours using a combination of air
and road travel, and approximately 14 hours solely by road travel. Accra has direct flights to the United
Kingdom, Europe, South Africa, and the Middle East via regularly scheduled international commercial carriers.
The Namdini Gold Project area is readily accessible from Bolgatanga along paved highway followed by 15 km
of well‐travelled gravel roads. Access during the rainy season is slower due to waterlogged roads; however, the
main access roads are passable year‐round.
The Namdini Gold Project, along with Cardinal’s larger Bolgatanga Project, encompasses approximately 660
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PAGE 18
km² of Paleo‐Proterozoic greenstone belts in North Eastern Ghana. The Bolgatanga Project includes the
Kungongo and Bongo Reconnaissance Licences and the Ndongo Prospecting Licence. None of the Bolgatanga
Project tenements are contiguous with the Namdini Gold Project.
Property Ownership
Cardinal currently holds its interest in the Namdini Gold Project through an agreement dated July 23, 2014 (as
amended, the “Savannah Agreement”) between Savannah Mining Ghana Limited (“Savannah”) and Cardinal
Mining Services Limited (“CMS”), a wholly‐owned subsidiary of Cardinal, and agreements with the holders of
small scale mining licences within the area comprising the Namdini Gold Project. Pursuant to the Savannah
Agreement and an amending agreement entered into on May 11, 2017, CMS and Savannah agreed that CMS
would have an exclusive right of first refusal to provide technical and financial support towards the
development of the mining rights now comprising the Namdini Gold Project, in exchange for which CMS would
be entitled to “the entire gross mineral values” won from any mining licence in respect of which CMS provided
support. The “entire gross minerals values” is defined as “the amount equal to the difference of (a) the gross
proceeds received by or on behalf of, or applied for the benefit of, SML from the sale or other disposal of any
mineral or metallic product extracted and recovered from the area covered by the Mining License(s) to any
party other than CMS or any affiliate of CMS less (b) any taxes or royalties that were paid by SML (other than
any such taxes or royalties that were paid by SML using funds provided by CMS or an affiliate of CMS).”
Pursuant to the Savannah Agreement, Savannah has entered into Sale and Purchase Agreements and licence
relinquishment agreements with holders of small scale mining licences within the area of the Namdini Lease
(as defined below) where the holders of these small‐scale mining licences will have surrendered their small‐
scale licenses and all mineral rights to form part of the proposed Namdini Lease area. The small‐scale licences
are in the process of being surrendered. The Savannah Agreement has an indefinite term, and neither party is
entitled to assign its rights or obligations under the Savannah Agreement.
Malik Easah, an executive director of Cardinal, is also the sole shareholder and director of Savannah.
Savannah’s sole business is the Savannah Agreement. Pursuant to an Option & Loan Agreement made in 2015
(the “Option Agreement”) between Mr. Easah, Savannah and CMS, CMS holds an option to purchase all the
outstanding shares of Savannah from Mr. Easah for US$1.00 and holds all validly executed and irrevocable
documents to give effect to the purchase upon exercise of the option granted under the Option Agreement.
The Option Agreement also gives CMS the option to purchase all mining leases held by Savannah for US$1.00.
Pursuant to the Option Agreement, Savannah has agreed to hold any mining licences applied for, or granted in
favour, of Savannah as trustee for CMS pending CMS’s exercise of its option to purchase the shares of Savannah
or its exercise of its option to purchase such mining licences. The Option Agreement has an indefinite term,
and may be terminated by a non‐breaching party in the event that a party is in breach of the agreement and
such breach remains uncured for 90 days. CMS is entitled to assign its rights and obligations under the Option
Agreement in its absolute discretion and the other parties to the Option Agreement are not permitted to assign
their rights or obligations thereunder without the written consent of CMS.
Cardinal has received advice from Ghanaian counsel that, if Mr. Easah did not comply with his obligations under
or purported to terminate the Option Agreement or the Savannah Agreement, Cardinal may enforce the Option
Agreement or the Savannah Agreement by obtaining a judgment for specific performance from a Ghanaian
court.
The Minister signed a mining lease for Savannah (the “Namdini Lease”) on October 12, 2016 over an area of
approximately 19.54 km² in the Dakoto area of the Talensi District Assembly in the Upper East Region of Ghana.
The Namdini Lease is for an initial period of fifteen years ending October 11, 2031. An application can also be
2017 Annual Information Form
PAGE 19
submitted for an extension of the Namdini Lease if required. The Namdini Lease is currently being processed
by the Ghana Government. The final registration of the Namdini Lease to Savannah by the Ghana Government
was completed during July 2017.
Cardinal and Savannah have both signed the necessary documentation to assign the Namdini Mining License
to Cardinal Namdini Mining Limited (Cardinal Namdini), a wholly owned subsidiary of Cardinal, for $1.00 as per
the Savannah Agreement.
There are 82 small scale mining licences within the area of the Namdini Lease. It is Cardinal’s intention and
expectation that Savannah will purchase all the small scale licences in the area covered by the Namdini Lease.
To date, Savannah has purchased or obtained rights to purchase a significant number of these licences,
including all such licences covering the areas that Cardinal considers material to the mineralization in the area
covered by the Namdini Lease. Small scale licences held by Savannah are intended to be relinquished to the
Minerals Commission at the appropriate time.
On May 11, 2017 Savannah, CMS, CMN and Mr. Easah signed an agreement (the “Option Exercise Deed”) giving
effect to and providing for the assignment of the Namdini Lease to CMN. Pursuant to the Option Exercise Deed,
the parties agreed that, upon receipt of a written direction in agreed form from CMS, Savannah would take all
action and execute all instruments required to effect the assignment of all of Savannah’s rights and obligations
under the Namdini Lease to CMN. Under the Option Exercise Deed, CMN was also appointed as Savannah’s
attorney to do anything that it is obliged but has failed to do under the Option Exercise Deed or the Namdini
Lease. The Option Exercise deed is for an indefinite term.
There are no known significant factors or risks that may affect access, title or the right or ability to perform the
proposed work program on the property, including any environmental liabilities. The Corporation has all
required permits to conduct the proposed work program on the property.
Climate
The mean annual temperature in Bolgatanga is 28.3°C. The climate is characterized by one rainy season
between May and October where the rainfall is erratic spatially and in duration. The mean annual rainfall during
this period is between 800 mm and 1,100 mm. Temperatures during this period can be as low as 20°C at night,
but can reach more than 35°C during the daytime.
There is a long spell of dry season from December to late January, characterized by cool, dry and dusty
Harmattan winds. Temperatures during this period can be as low as 15°C at night and as high as 40°C during
the daytime. Humidity is, however, very low.
Climatic conditions have not affected Cardinal’s exploration activities, nor would they be expected to materially
affect any potential mining operations.
Local Resources
Ghana has long mining history and has experienced technical personnel including geologists and engineers.
Exploration and mining supplies are readily available within Ghana.
There is a significant labour pool available for training and recruitment for any envisioned mining operation.
The Namdini Gold Project enjoys the support of local communities.
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Existing Infrastructure
No Cardinal infrastructure is present at the Namdini Gold Project site other than a Security Hut. Fuel supply for
the drills is provided by diesel tankers. Fresh water is taken from a borehole located on the Namdini Gold
Project site. Cardinal maintains trails on the Namdini Gold Project site in order to facilitate exploration and
drilling activities.
Numerous historical trenches and adits, as well as organized artisanal gold mining sites, are located throughout
the property and only approximately 5% of the permit area has been affected by these activities. Artisanal
miners extract gold from the saprolite horizon, but also sink shafts as deep as 20 m to recover gold from quartz
veins.
Infrastructure at the Bolgatanga Project exploration office area includes the following:
A fenced and gated compound patrolled by security.
A brick constructed administrative office building including kitchen and bedroom accommodations.
Gated and fenced core processing area consisting of:
o
o
o
Outdoor roofed open core logging areas
Indoor core sawing area
Locked storage area for pulps and duplicates
Gated and fenced core storage area consisting of:
o
o
Outdoor roofed core storage racks
Bulk density station
Security office and camp support staff accommodation.
Power is distributed to Bolgatanga from the Ghanaian national transmission and distribution system based on
225 kV above ground transmission lines.
For any future development activities, it will be necessary to build all‐weather access roads and a bridge, as
well as infrastructure for sufficient power and water supplies. Cardinal’s surface rights allow sufficient areas
for potential processing plant sites, tailings storage areas, and waste disposal areas.
Physiography
The topography is generally flat with gently undulating terrain. The topography rises to the south where the
area is overlain by the sediments. Elevation varies from 175 MASL to 250 MASL. The average elevation of the
flat Savannah area is approximately 190 MASL.
The physiography of the Namdini Gold Project area is primarily savannah grassland characterized by short
scattered drought‐resistant trees, scattered scrub, and grass that gets burnt by bushfire or scorched by the sun
during the long dry season. The climate is very dry. The most common trees are the Sheanut, Dawadawa, and
Baobab.
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PAGE 21
The White Volta River is located approximately seven kilometres west of the Namdini Gold Project area.
History
The discovery of gold in this region occurred in late 1930s when a British businessman was shown some gold‐
bearing quartz veins at Nangodi by a local farmer. During the early 1960s, the Ghana Geological Survey
Department carried out limited shallow drilling around prospects, which had been identified by earlier work in
the 1930s. Again in the 1970s, some soil geochemistry and trenching were carried out over a 7 km stretch in
the Nangodi area where most of the known prospects occur.
Driven by activity elsewhere in Ghana and Burkina Faso during the mid‐1990s, numerous Canadian and
Australian junior explorers started to explore the north of Ghana. In particular, the discovery of Youga deposit
in Burkina Faso by International Gold Resources (“IGR”) is significant. During the same period in the mid‐1990s,
small‐scale miners inundated the area as the traditional small‐scale mining sites in southern Ghana were closed
(Tarkwa, Obuasi, Konongo, etc.).
BHP was the first to conduct a major reconnaissance exploration program in the mid‐1990s, covering most of
the Nangodi area. Other groups that acquired prospecting concessions in the mid‐1990s include IGR, Cluff
Resources, Teberebie Goldfields, Ashanti Goldfields, and Africwest Gold. Renewed interest in the area, after
the market downturn in 1997, began around 2004, with an increase in the gold price, and as a result of the
development of mines on the Burkina Faso side of the border.
The Namdini Gold Project was first discovered in September 2013 by prospecting. A small scale mining licence
was approved in 2014 and reverse circulation (“RC”) drilling began shortly thereafter. Prior to Cardinal, no
systematic exploration had been undertaken on the Namdini Gold Project. Small scale artisanal mining began
on the property circa 2013 following Cardinal’s initial exploration activities.
Geological Setting and Mineralization
The regional geological setting discussion presented below has been summarized from Pittuck and Arthur
(2015).
The Namdini Gold Project occurs in Paleo‐Proterozoic granite–greenstone terrain in the northeastern district
of Ghana, close to the border with Burkina Faso. The region contains several producing mines both on the
Ghana side of the border (Shaanxi Gold Mine) and in Burkina Faso (Youga Gold Mine). Evidence of artisanal
workings occurs throughout the area.
The Namdini Gold Project area is located in the Nangodi Greenstone Belt (NGB). The NGB is the extension of
the belt that crosses the border into Southern Burkina Faso. In Ghana, there are seven Paleo‐Proterozoic
granite–greenstone belts, which form part of the northeastern extension of the Paleo‐Proterozoic Birimian
basins that were created during the collision of the West African and Guyana Archean Shields. The main
lithologies in the belts are volcanic–sediment sequences of Birimian age (interbedded basic to intermediate
flows, felsic tuffs and fine‐grained sediments) overlying the earlier intervening sedimentary basins (greywackes
and phyllites) of the Tarkwaian formation. These basins are separated by major faults that probably controlled
early syn‐Birimian sedimentary basin downfaulting.
Locally the NGB trends north‐northeast to south‐southwest over a distance of 30 km and turns to an east‐
northeast to south‐southwest trend in the south of the area around Namdini. The belt is comprised of Birimian
age interbedded meta‐volcanics (mainly basalt flows) and meta‐sediments (phyllites) and occasional cherty
horizons. Some small basic to intermediate intrusions occur within the belt and have associated gold
2017 Annual Information Form
PAGE 22
mineralization. Meta‐sediments of Tarkwaian age occur adjacent to the belt and host the gold mineralization
of the nearby Youga mine. Much of the area to the south of the tenements is covered by later Voltaian Basin
sediments. The belts continue underneath this cover.
The Namdini Gold Project covers the southern extension of the Nangodi Greenstone Belt. In 2016, geological
consultants from Orefind Pty Ltd. (“Orefind”) conducted an on‐site structural study and then developed a
structural framework with controls on, and geometry of, the gold mineralization comprising the Namdini
deposit.
Orefind concluded that the rock types comprising the Namdini Gold Project include a steeply dipping Birimian
sequence of inter‐bedded foliated meta‐sedimentary and meta‐volcanic units, which have been intruded by a
medium‐grained granitoid and diorite. The southern part of the Namdini Gold Project is covered by flat lying
Voltaian Basin clastic sedimentary rocks that have been deposited unconformably on the Birimian sequence
and postdate mineralization and the host sequence.
Underneath the weathering profile, from west to east across the Namdini Gold Project area, the Birimian units
include meta‐sedimentary, meta‐volcaniclastic, granitoid (tonalite), diorite, and meta‐sedimentary.
The meta‐sedimentary and volcaniclastic rocks have been intensely altered with a pyrite‐carbonate‐muscovite‐
chlorite‐quartz. Alteration is prevalent in the volcaniclastic rocks. Similarly, the tonalite is extensively altered
and has been overprinted by silica‐sericite‐carbonate assemblages. The identity of carbonate alteration is
difficult and is best described as iron‐carbonate in the absence of petrological or geochemical characterization.
Namdini mineralization is located in the Namdini Greenstone Belt within a host sequence of meta‐
volcaniclastics, granitoids (tonalite) and diorites. The deposit is bounded on hanging wall and footwall sides by
metasediments.
Drilling has outlined mineralization with three dimensional continuity, with a size of approximately 1,500 m
long, 550 m wide and 450 m in depth.
In all rock types, the mineralization is accompanied by visible disseminated sulphides of pyrite and arsenopyrite
in both the veins and wall rocks. In diamond drill core, the mineralized zones are visually distinctive due to the
presence of millimetre to centimetre wide quartz‐carbonate veins that are commonly folded and possess
yellow‐brown sericite‐carbonate selvedges.
Visible gold occurs in strongly altered granite and is associated with sub‐millimetre wide silica‐sericite shears.
Deposit Types
The Namdini gold deposit appears to be a typical Birimian gold deposit, hosted in a mixture of meta‐sediments,
volcaniclastics and intrusives. Birimian rocks are composed of granitic‐gneiss terranes separated by linear
greenstone belts of meta‐sedimentary and meta‐volcanic rocks.
Exploration
All exploration work on the Namdini Gold Project has been completed by Cardinal. A field office, including core
logging and storage facilities, is located in Bolgatanga.
The primary objectives of Cardinal’s exploration strategy are to:
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PAGE 23
1.
2.
Improve understanding of the extent and style of mineralization in order to successfully diamond drill
and to increase the size and confidence level of the Mineral Resources for Namdini.
Optimize deposit models and use grassroots exploration methods to search for gold and its pathfinder
elements in order to potentially locate other deposits throughout Northern Ghana.
The Namdini Gold Project was first discovered in September 2013 by prospecting. A small scale Mining Licence
was approved in 2014 and RC drilling began shortly thereafter. After reviewing initial results, Cardinal drilled
additional RC holes in the same licence area. After approximately 88 RC holes, Cardinal had sufficient
confidence in the potential size of the Namdini Gold Project that it stepped out 600 m north along strike and
drilled a surface diamond drill hole (NMDD002) that intersected 87 m at 1.08 g/t Au and numerous other
significant intersections.
Drilling
All exploration at the Namdini Gold Project has been completed by Cardinal. Following the discovery drilling in
2013, an initial program of detailed RC drilling was undertaken in one small area, followed by a program of
sectional diamond drilling. A number of holes have RC collars and diamond drill tails. The below table presents
a summary of the drilling completed to September 2017.
Drilling Summary to September 2017
RC
Diamond Drill
RC Collar / DDH Tail
Total
Year
2014
2015
2016
2017
Total
No.
Metres
No.
Metres
No.
Metres
No.
Metres
45
42
19
36
4,815.00
4,619.30
2,540.00
7,841.00
‐
5
56
47
‐
1,656.55
14,163.32
24,737.32
142
19,815.30
108
40,557.19
‐
5
14
3
22
‐
1,184.68
3,295.42
827.83
45
52
89
86
4,815.00
7,460.53
19,998.74
33,406.15
5,307.93
272
65,680.42
Cardinal’s grassroots exploration procedures are generally focused on staged exploration in order to achieve
quick and effective means of sampling vast areas of land for the purpose of generating targets for further
detailed work. All sampling was conducted by qualified personnel under the direct supervision of appropriately
qualified Senior Geologists, and was managed by an experienced Cardinal Exploration Manager.
In April 2016, Cardinal revised diamond drill core sampling practices to collect quarter core rather than half
core samples. The rationale to use the quarter core approach was to enable quarter core to be available for
metallurgical testing on a routine basis whilst retaining half core as reference in the core trays.
In mid‐2016, Cardinal redirected its sample submissions from SGS Ouagadougou Laboratory in Burkina Faso to
SGS Tarkwa Laboratory in Ghana. The independent SGS commercial geochemical analytical laboratories in
Tarkwa and Ouagadougou are officially recognized by the South African National Accreditation System (SANAS)
for meeting the requirements of the ISO/IEC 17025 standard for specific registered tests for the minerals
industry.
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PAGE 24
Samples have principally been assayed using a 30 g or 50 g Fire Assay (FAA303 or FAA505) with an atomic
absorption finish. SGS mixes the sample with a fluxing agent and then melt it to create a “button”. Each button
is dissolved in aqua and then aspirated in an acetylene flame. This process typically returns results between
0.01 ppm Au and 100 ppm Au. Samples values below 0.01 ppm Au are returned as being below detection limit.
Sample values obtained above 100 ppm Au are re‐analyzed with a gravimetric finish, which can determine
values up to 3,000 ppm Au.
SGS has internal QA/QC procedures to ensure the results are accurate. During sample preparation, this
includes the use of barren material to clean crushers and pulverizers at the beginning of each job run,
confirmation of every 50th sample passing at 2 mm and 75 μm (SCR34), as well as determining the dust loss
percentage every week.
As part of the Cardinal Quality Assurance/Quality Control (QA/QC) a suite of internationally accredited and
certified reference material (standards) and locally sourced blanks are included in the sample submission
sequence. The standards cover the gold grade ranges expected at Namdini. Interlaboratory umpire analysis
was conducted in 2016.
No employee, officer, director or associate of Cardinal carried out any sample preparation on samples from
the Namdini Gold Project exploration program. Drill core was transported from the drill site by Cardinal vehicle
to the secure core yard facility at the Bolgatanga Field Exploration Office.
All samples collected for assaying are retained in a locked secure shed until they are collected by the assay
laboratory. Retained drill core is securely stored in the core storage compound and pulps are securely stored
in the exploration core logging area.
Data Verification
In the event of logging onto a printed log sheet, the data must be captured onto the geologist laptop at the
end of every shift. All logging data is then downloaded from the logging computer and synchronized into the
Maxwell Geoservices Datashed drill hole database at the end of every shift. Field data must be transferred by
the project geologist to the database administrator the same day as samples are submitted to the laboratory
for analysis.
The database administrator then validates the data and, if any problems are encountered, the project geologist
is immediately contacted and the necessary corrections made before the data is imported into the Micromine
drill hole database. Data must be in the database before any assay results are received from the laboratory.
Data exported out of the database must be signed off by the database administrator.
Cardinal maintains strict protocols with respect to the review and validation of assay results prior to importing
into the drill hole database.
Assay results received from the laboratory, in pdf and csv formats, are sent via email to the Managing Director
and Chief Executive Officer and the Exploration Manager for onward transfer to Datashed, which is then loaded
into the database.
Cardinal technical staff carry out routine analysis of the quality control data on receipt of assay results from
the laboratory in order to determine if the batch of samples has passed industry standard levels for control
samples. If the batch ‘fails’, the batch of assays is rejected and a re‐assay request for the batch of samples is
made to the laboratory.
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Mineral Processing and Metallurgical Testing
The Corporation’s metallurgical test programme for the Namdini Gold Project has demonstrated an overall
gold recovery rate of 86% utilizing standard gold recovery techniques. The test programme was developed to
enhance the Corporation metallurgical understanding in order to help ensure a robust process design.
The Corporation selected 16 separate life of mine drill holes as representative samples from the three main
lithologies across the entire deposit. Each of the five metre downhole sample lengths were then composited
by lithology for metallurgical testing. The geostatistical resource model was used to target the average grade
of the combined sample for each lithology, based on a notional cut‐off grade of 0.4 g/t Au. The intervals were
selected to ensure that the following criteria were met: (i) representative spatial distribution within the overall
Namdini gold deposit; (ii) a range of gold grades, predicted to be encountered during normal mining
operations; and (iii) average gold grades matching the overall Namdini geostatistical resource model above a
0.4 g/t Au cut‐off.
Mineral Resources
Geological interpretation and Mineral Resource estimation were completed by MPR incorporating drill holes
completed as of September 1, 2017. The Mineral Resource has been prepared in accordance with both the
Canadian Institute of Mining, Metallurgy and Petroleum CIM Definition Standards for Mineral Resources and
Mineral Reserves (2014) and the Australasian Code for Reporting of Exploration Results, Mineral Resources
and Ore Reserves (the JORC Code 2012).
MPR estimated recoverable resources using Multiple Indicator Kriging with block support adjustment, a
method that has been demonstrated to provide reliable estimates of recoverable open pit resources in gold
deposits of diverse geological styles. A cut‐off grade of 0.5 g/t Au was used for resource reporting. The table
below summarizes Mineral Resources at the Namdini Gold Project.
Table 2 ‐ Summary of Mineral Resources
Tonnage
(000 t)
120,000
84,000
Grade
(g/t Au)
1.1
1.2
Contained Metal
(000 oz Au)
4,300
3,100
Category
Indicated
Inferred
Notes:
(1) The Mineral Resource has been prepared in accordance with both the Canadian Institute of Mining,
Metallurgy and Petroleum CIM Definition Standards for Mineral Resources and Mineral Reserves (2014)
and the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the
JORC Code 2012).
(2) Mineral Resources are estimated at a cut‐off grade of 0.5 g/t Au.
(3) Mineral Resources are estimated using a long‐term gold price of US$1,500 per ounce.
(4) Incorporates drill holes completed as of September 11, 2017.
(5) Numbers may not add due to rounding
2017 Annual Information Form
PAGE 26
MPR is not aware of any environmental, permitting, legal, title, taxation, socio‐economic, marketing, political,
or other relevant factors that could materially affect the Mineral Resource estimate.
Environmental Studies
Environmental matters in Ghana, including those related to mining, fall primarily under the oversight of the
EPA, as well as the Minerals Commission and the Inspectorate Division of the Minerals Commission. The EPA
has laws and regulations that govern, among other things, environmental and socio‐economic impact
assessments and statements, environmental management plans, emissions
into the environment,
environmental auditing and review, and mine closure and reclamation, to which the Corporation’s operations
are subject. Additional provisions governing mine environmental management are provided in the 2006 Mining
Act and the various Minerals and Mining Regulations which came into force in 2012.
Cardinal duly registered the Namdini Gold Project with the EPA through the submission of an application form.
On November 20, 2016, the EPA, under reference number CA 6954/2 directed Cardinal to carry out an
Environmental Impact Assessment study (“EIA”) and submit an Environmental Impact Statement (“EIS”) to the
EPA, in line with the requirement of the Ghana EIA Procedures and Legislative Instrument 1652. As a first phase
in the preparation of the EIS report, the EPA has further directed that a scoping study to generate the terms of
reference for the EIA study be conducted and that a scoping report be submitted to the EPA for review.
NEMAS Consult Ltd (“NEMAS”), of Accra, Ghana, has been contracted by Cardinal to undertake the EIA for the
Namdini Gold Project. NEMAS has undertaken a site reconnaissance visit and commenced the scoping stage of
the process in accordance with the procedures for the EIA study (NEMAS, 2017).
With regard to exploration practices, as per the Cardinal Exploration Standard Operating Procedures Manual,
any potential emissions and effects associated with exploration activities, which could include habitat
modification and associated visual effects, are kept to a minimum. Auger drilling is used as a primary grassroots
exploration tool as this method does not cause significant impact on the hole surroundings.
For diamond and RC drilling site preparation and access in the Savannah grassland, it is mostly undergrowth
that is cleared, while larger trees are preserved. Drill sites are kept clean of rubbish and free of oil or fuel spills,
and are then remediated upon completion of drilling.
Social or Community Impact
The only local community near the Namdini Gold Project site comprises artisanal miners and their families. The
Corporation believes that relations between Cardinal and the local artisanal miners are cordial and respectful,
especially as they are allowed to proceed with minor surface artisanal mining whilst Cardinal exploration
activities are ongoing.
Local community members are hired and trained by Cardinal for exploration activities including clearing lines
for geochemical surveys, drill site preparation and clean up, and assisting Geological Technicians with RC
sample collection. All Cardinal personnel are given a preliminary induction briefing on site relative to the tasks
required. Personnel protective equipment is provided as required. For the security of all, the Ghana Police
Service patrol the Namdini Gold Project site 24 hours a day, 7 days a week.
Cardinal has undertaken various community support projects including building a community hall, as well as
drilling and equipping a potable water well.
Cardinal also maintains good relations with Bolgatanga Minerals Commission personnel, Community Chiefs,
2017 Annual Information Form
PAGE 27
and District Assemblymen. Cardinal’s Public Relations Officer handles all local issues.
Current Work and Future Plans
The Corporation is focused on the development of the Namdini Project through a Mineral Resource expansion
drilling programme, which will form the basis of a Preliminary Economic Assessment (“PEA”) which is ongoing.
Additional drilling is in progress to further improve Mineral Resource classification and to further expand the
resource. Cardinal anticipates continued newsflow and is planning another Mineral Resource update which
will feed into the ongoing PEA study.
Other drilling planned on the Namdini Gold Project, which will take place over the next year, will include
Geotechnical studies, close spaced Grade Control test patterns, Hydrogeological studies and Sterilization
programs over possible infrastructure location sites.
Development work going forward will also be focused on finalizing all necessary permits and design study
phases required to construct and commission a fully operational mine.
Other Properties and Assets
In addition to the Namdini Gold Project, the Corporation is carrying out exploration activities on its other
licences, although its main focus is on the Namdini Gold Project. Cardinal does not consider the other
properties to be material. No resources have as yet been established on the Corporation’s other properties.
Bolgatanga Project
The Bolgatanga Project consists of the Ndongo Prospect, the Kungongo Prospect and the Bongo Prospect.
Ndongo Prospecting Licence
The Ndongo Prospecting Licence was granted to Cardinal Resources Ghana Limited on July 7, 2014 for a period
of two years ending July 6, 2016. On October 31, 2016, the Minerals Commission extended the Ndongo
Prospecting Licence until October 31, 2017. On February 27, 2017, the Minerals Commission confirmed that
Cardinal Resources Ghana Limited is the holder and owner of the Ndongo Prospecting Licence.
The Ndongo Prospecting Licence was granted to Cardinal Resources Ghana Limited to prospect for and prove
gold in the Bolgatanga and Telensi Nabdam District in the Upper East Region in the Republic of Ghana. The
Ndongo Prospecting Licence covers a total land size of 106.65 km².
Kungongo Prospecting Licence
The Kungongo Prospecting Licence was originally granted to Cardinal Resources Ghana Limited on January 21,
2011 as a reconnaissance licence for one year ending January 20, 2012. After the expiration of the
reconnaissance licence, the Minerals Commission on its own upgraded the Kungongo Reconnaissance Licence
to Kungongo Prospecting Licence. On October 13, 2015, the Minerals Commission wrote to Cardinal Resources
Ghana Limited requesting it to pay for the extension of the Kungongo Prospecting Licence for a period of 12
months. Cardinal Resources Ghana Limited made the payment for the extension of the Kungongo Prospecting
Licence on June 17, 2016. On July 26, 2016, the Minerals Commission extended the Kungongo Prospecting
Licence to July 25, 2017. On February 27, 2017, the Minerals Commission confirmed that Cardinal Resources
Ghana Limited is the holder and owner of the Kungongo Prospecting Licence.
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The Kungongo Prospecting Licence covers a total land size of 120.12 km² and is eligible for renewal.
Bongo Reconnaissance Licence
The Bongo Reconnaissance Licence was granted to Cardinal Resources Ghana Limited on January 21, 2011 for
a period of one year ending January 20, 2012. Cardinal Resources Ghana Limited has applied for a renewal of
the Bongo Reconnaissance Licence and the Minerals Commission has recommended that the Minister renew
the Bongo Reconnaissance Licence in the name of Cardinal Resources Ghana Limited. The Minister is yet to
sign the renewal letter. However, on February 27, 2017, the Minerals Commission confirmed that Cardinal
Resources Ghana Limited is the holder and owner of the Bongo Reconnaissance Licence.
Subranum Project
Cardinal Resources Subranum Limited (“Cardinal Subranum”) is the beneficial and title holder of Subin‐Kasu
Prospecting Licence, which comprises the Subranum Project.
The Subin‐Kasu Prospecting Licence was originally granted to Newmont Ghana Gold Limited. On April 6, 2012,
Newmont Ghana Gold Limited entered into a Purchase and Sale Agreement with Cardinal Subranum and
assigned the Subin‐Kasu Prospecting Licence to Cardinal Subranum, in consideration for certain cash payments
and Cardinal’s agreement to incur certain exploration expenses.
Under the Purchase and Sale Agreement, Cardinal Subranum shall pay a two percent net smelter returns
royalty on all minerals mined, removed and sold in respect of the Subin‐Kasu Prospecting Licence.
On November 24, 2015, the Minister approved the Purchase and Sale Agreement and Cardinal Subranum
became the title holder of Subin‐Kasu Prospecting Licence until September 15, 2016. On November 18, 2016,
the Minerals Commission wrote to Cardinal Subranum requesting it to make payment for the extension of the
Subin‐Kasu Prospecting Licence for a period of 12 months. Cardinal Subranum made the payment for the
extension of the Subin‐Kasu Prospecting Licence on December 14, 2016. On February 27, 2017, the Minerals
Commission confirmed that Cardinal Resources Ghana Limited is the holder and owner of the Subin‐Kasu
Prospecting Licence.
The Subin‐Kasu Prospecting Licence covers a total land size of 68.70 km² located in the Offinso and Ahafo‐Ano
South District of the Ashanti Region in the Republic of Ghana, expires on September 15, 2017, and is eligible
for renewal.
Cardinal’s Operations in Ghana
The Corporation holds its material assets and carries on its business in Ghana largely though separate, wholly‐
owned, operating subsidiaries. As discussed above, Cardinal Subranum, CMS, Cardinal Resources Ghana
Limited and Cardinal Namdini Mining Limited (collectively, the “Ghanaian Subsidiaries”) are incorporated
under the laws of the Republic of Ghana. The Ghanaian Subsidiaries are indirectly wholly owned by the
Corporation.
The Corporation has established systems of corporate governance, internal controls over financial reporting
and disclosure controls and procedures that apply at all levels of the Corporation’s corporate structure. Such
systems are overseen by the Board and implemented by senior management of the Corporation. Certain
significant features of these systems are described below:
Control over Subsidiaries – The Corporation’s corporate structure has been designed to ensure that the
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Corporation is able to direct the operations of its subsidiaries. All of the Corporation’s subsidiaries, including
the Ghanaian Subsidiaries, are wholly‐owned. Accordingly, the Corporation controls the appointments of the
directors of the Corporation’s subsidiaries and the directors of such subsidiaries are ultimately accountable to
the Board and senior management. Mr. Koimtsidis and Mr. Easah, both of whom are directors of the
Corporation, are the only directors of the Ghanaian Subsidiaries. The corporate records, including minute
books, of the Ghanaian Subsidiaries are kept at the Corporation’s head office.
Under Ghanaian law, the shareholders of a corporation are entitled to remove directors at a duly convened
general meeting of a corporation. In the event that the Corporation wished to remove a director of a Ghanaian
Subsidiary, the Corporation would cause the shares in such Ghanaian Subsidiary to be voted for the removal of
such director. Removal would take place at a meeting duly convened for the purpose of such removal and held
at least 35 days after the notice of the meeting has been served on such director and any other directors of
such Ghanaian Subsidiary who are entitled to attend the general meeting.
As noted above, the only directors of Ghanaian Subsidiaries also serve as directors of the Corporation. In the
event that the Corporation wished to remove an officer of a Ghanaian Subsidiary, the directors of such
Ghanaian Subsidiary would take the requisite corporate action to remove such officer.
Risk Assessment – The Board is responsible for the management of the Corporation and, as such, supervises
the management of the business and affairs of the Corporation. The Board is responsible for approving any
capital expenditures and other transactions and matters that are considered material to the Corporation,
including matters of the Corporation’s subsidiaries that are considered material to the Corporation. In addition,
the Board has delegated certain risk‐management functions to the Audit and Risk Committee. The Audit and
Risk Committee is responsible for overseeing the Corporation’s risk management systems, practices and
procedures, for identifying and managing business, economic, environmental and social sustainability risks and
for reviewing the Corporation’s risk management framework at least annually.
Internal Control over Financial Reporting – The Corporation prepares its consolidated financial statements and
MD&A on a quarterly and annual basis, using International Financial Reporting Standards (IFRS), which require
financial information and disclosures from the Corporation’s subsidiaries. The Corporation implements internal
controls over the preparation of its financial statements and other financial disclosures to provide reasonable
assurance that its financial reporting is reliable and that the quarterly and annual financial statements and
MD&A are being prepared in accordance with IFRS. These internal controls include the following:
Management of the Corporation has direct access to relevant financial management of the Corporation’s
subsidiaries in order to verify and clarify all information required.
All public documents and statements relating to the Corporation and its subsidiaries containing material
information (including financial information) are reviewed by senior management (including the Chief
Executive Officer and Managing Director) before such material information is disclosed, to make sure that
all material information has been considered by management of the Corporation and properly disclosed.
The Audit and Risk Committee will review and approve the Corporation’s quarterly financial statements
and MD&A and will recommend to the Board for the Board’s approval the Corporation’s annual financial
statements and MD&A, and any other financial information requiring Board approval, prior to their
publication or release.
The Audit and Risk Committee assesses and evaluates the adequacy of the procedures in place for the
review of the Corporation’s public disclosure of financial information extracted or derived from the
Corporation’s financial statements, other than annual and quarterly financial disclosure.
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In addition, the Corporation engages its external auditor to perform an audit of the annual consolidated
financial statements in accordance with IFRS.
Disclosure Controls and Procedures – The responsibilities of the Audit and Risk Committee include oversight of
the Corporation’s internal control systems including identifying, monitoring and mitigating business risks as
well as compliance with legal, ethical and regulatory requirements.
CEO and CFO Certifications – In order for the Corporation’s Managing Director and Chief Executive Officer and
its Chief Financial Officer to be in a position to attest to the matters addressed in the quarterly and annual
certifications required by National Instrument 52‐109 – Certification of Disclosure in Issuers’ Annual and Interim
Filings, the Corporation has developed internal procedures and responsibilities throughout the organization
for its regular periodic and special situation reporting, in order to provide assurances that information that may
constitute material information will reach the appropriate individuals who review public documents and
statements relating to the Corporation and its subsidiaries containing material information, is prepared with
input from the responsible officers and employees, and is available for review by the Managing Director and
Chief Executive Officer and the Chief Financial Officer in a timely manner.
These systems of corporate governance, internal control over financial reporting and disclosure controls and
procedures are designed to ensure that, among other things, the Corporation has access to all material
information about its subsidiaries, including the books and records of its subsidiaries.
The Corporation provides funds to the Ghanaian Subsidiaries for exploration activities. As part of its corporate
governance practices, Cardinal has developed a Delegation of Authority Manual. The Delegation of Authority
Manual contains guidelines for delegated authorities that help in maintaining adequate controls within the
organization, including the flow of funds between Australia and Ghana.
RISK FACTORS
Prospective investors should carefully consider the following risk factors in addition to the other information
contained in this AIF. The risks and uncertainties described below are not the only ones facing the Corporation.
Additional risks and uncertainties not presently known to the Corporation or that the Corporation currently
considers immaterial may also impair the business and operations of the Corporation and cause the price of
the Ordinary Shares to decline. If any of the following risks actually occur, the Corporation’s business may be
harmed and the financial condition and results of operations may suffer significantly. In that event, the trading
price of the Ordinary Shares could decline and holders of the Ordinary Shares may lose all or part of their
investment.
Risks Related to the Industry
Mineral Exploration, Development and Operating Risks
Mineral exploration is highly speculative in nature, generally involves a high degree of risk and frequently is
non‐productive. The mineral tenements of the Corporation are at various stages of exploration, and potential
investors should understand that mineral exploration and development are high‐risk undertakings. There can
be no assurance that exploration of these tenements, or any other tenements that may be acquired in the
future, will result in the discovery of an economic ore deposit. Even if an apparently viable deposit is identified,
there is no guarantee that it can be economically exploited or will result in a profitable commercial mining
operation.
Resource acquisition, exploration, development and operation involve significant financial and other risks over
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an extended period of time, which even a combination of careful evaluation, experience and knowledge may
not eliminate. Significant expenses are required to locate and establish economically viable mineral deposits,
to acquire equipment, and to fund construction, exploration and related operations, and few mining properties
that are explored are ultimately developed into producing mines.
Success in establishing an economically viable project is the result of a number of factors, including the quantity
and quality of minerals discovered, proximity to infrastructure, metal and mineral prices which are highly
cyclical, costs and efficiencies of the recovery methods that can be employed, the quality of management,
available technical expertise, taxes, royalties, environmental matters, government regulation (including land
tenure, land use and import/export regulations) and other factors. Even in the event that mineralization is
discovered on a given property, it may take several years in the initial phases of drilling until production is
possible, during which time the economic feasibility of production may change as a result of such factors. The
effect of these factors cannot be accurately predicted, but the combination of these factors may result in the
Corporation not receiving an adequate return on its invested capital, and no assurance can be given that any
exploration program of the Corporation will result in the establishment or expansion of resources or reserves.
The Corporation’s operations are subject to all the hazards and risks normally encountered in the exploration,
development and production of gold and other minerals, including hazards relating to the discharge of
pollutants or hazardous chemicals, changes in anticipated grade and tonnage of ore, unusual or unexpected
adverse geological or geotechnical formations, unusual or unexpected adverse operating conditions, slope
failures, rock bursts, cave‐ins, seismic activity, the failure of pit walls, pillars or dams, fire, explosions, and
natural phenomena and ‘acts of God’ such as inclement weather conditions, floods, earthquakes or other
conditions, any of which could result in damage to, or destruction of, mineral properties or production facilities,
personal injury or death, damage to property, environmental damage, unexpected delays, monetary payments
and possible legal liability, which could have a material adverse impact upon the Corporation. In addition, any
future mining operations will be subject to the risks inherent in mining, including adverse fluctuations in fuel
prices, commodity prices, exchange rates and metal prices, increases in the costs of constructing and operating
mining and processing facilities, availability of energy and water supplies, access and transportation costs,
delays and repair costs resulting from equipment failure, changes in the regulatory environment, and industrial
accidents and labour actions or unrest. The occurrence of any of these risks could materially and adversely
affect the development of a project or the operations of a facility, which could have a material adverse impact
upon the Corporation.
Estimation of Mineralization, Resources and Reserves
There is a degree of uncertainty attributable to the calculation of mineralization, resources and reserves and
corresponding grades being mined or dedicated to future production. Until reserves or mineralization are
actually mined and processed, the quantity of mineralization and reserve grades must be considered estimates
only. These estimates depend upon geological interpretation and statistical inference drawn from drilling and
sampling analysis, which may prove unreliable. There can be no assurance such estimates will be accurate. In
addition, the quantity of reserves and mineralization may vary depending on commodity prices. Any material
change in quantity of reserves, mineralization, grade or stripping ratio may affect the economic viability of a
mine. In addition, there can be no assurance that recoveries from laboratory tests will be duplicated in tests
under on‐site conditions or during production. The inclusion of mineral resource estimates should not be
regarded as a representation that these amounts can be economically exploited and no assurances can be
given that such resources estimates will be converted into reserves. Different experts may provide different
interpretations of resource estimates.
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Environmental, Health and Safety Regulations of the Resource Industry
Environmental matters in Ghana, including those related to mining, fall primarily under the oversight of the
EPA, as well as the Minerals Commission and the Mines Inspectorate Division of the Minerals Commission. The
Environmental Protection Agency Act, 1994 (Act 490), and the Environmental Assessment Regulations, 1999
(L.I. 1652) govern, among other things, environmental and socio‐economic impact assessments and
statements, environmental management plans, emissions into the environment, environmental auditing and
review, and mine closure and reclamation, to which the Corporation’s operations are subject.
Additional provisions governing mine environmental management are provided in the Minerals and Mining
Act, 2006 (Act 703), and Minerals and Mining Regulations (Health, Safety and Technical) 2012 (L.I. 2182). The
Corporation believes it is in substantial compliance with these laws and regulations; however, the Corporation
notes a continuing trend toward substantially increased environmental requirements and evolving corporate
social responsibility expectations in Ghana, including the requirement for more permits, analysis, data
gathering, community hearings, and negotiations than have been required in the past for both routine
operational needs and for new development projects.
Due to bureaucratic delays, there can be no assurance that all permits which the Corporation may require for
construction of mining facilities and conduct of mining operations, particularly environmental permits, will be
obtainable on reasonable terms or timeframes or that compliance with such laws and regulations would not
have an adverse effect on the profitability of any mining project that the Corporation might undertake.
All phases of the Corporation’s operations are subject to environmental regulations in various jurisdictions. If
the Corporation’s properties are proven to host economic reserves of metals, mining operations will be subject
to national and local laws relating to the protection of the environment, including laws regulating removal of
natural resources from the ground and the discharge of materials into the environment.
Mining operations will be subject to national and local laws and regulations which seek to maintain health and
safety standards by regulating the design and use of mining methods and equipment. Various permits from
government bodies are required for mining operations to be conducted; no assurance can be given that such
permits will be received.
No assurance can be given that environmental standards imposed by national or local authorities will not be
changed or that any such changes would not have material adverse effects on the Corporation’s activities.
Moreover, compliance with such laws may cause substantial delays or require capital outlays in excess of those
anticipated, thus causing an adverse effect on the Corporation. Additionally, the Corporation may be subject
to liability for pollution or other environmental damage, which it may not be able to insure against.
Failure to comply with applicable laws, regulations and permitting requirements may result in enforcement
actions thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or
be curtailed, and may include corrective measures requiring capital expenditures, installation of additional
equipment or remedial actions. Parties engaged in mining operations may be required to compensate those
suffering loss or damage by reason of the mining activities and may have civil or criminal fines or penalties
imposed for violations of applicable laws or regulation and, in particular, environmental laws.
Amendments to current laws, regulations and permits governing operations and activities of mining
companies, or more stringent implementation thereof, could have a material adverse impact on the
Corporation and cause increases in capital expenditures or production costs or reduction in levels of production
at producing properties or require abandonment or delays in development of new mining properties.
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Competitive Conditions
There is aggressive competition within the mineral exploration and mining industry for the discovery and
acquisition of properties considered to have commercial potential, and for management and technical
personnel. The Corporation’s ability to acquire projects in the future is highly dependent on its ability to
operate and develop its current assets and its ability to obtain or generate the necessary financial resources.
The Corporation will compete with other parties in each of these respects, many of which have greater financial
resources than the Corporation. Accordingly, there can be no assurance that any of the Corporation’s future
acquisition efforts will be successful, or that it will be able to attract and retain required personnel. Any such
failure could have a material adverse impact upon the Corporation.
Risks Related to the Business
Operational Risks
The Corporation has not previously generated revenues from operations and its mineral projects are at an
exploration stage. Therefore, it is subject to many risks common to comparable companies, including under‐
capitalization, cash shortages and limitations with respect to personnel, financial and other resources as well
as a lack of revenues. The Corporation has historically incurred significant losses as it has no sources of revenue
(other than interest income), and has significant cash requirements to meet its exploration commitments,
administrative overhead and maintain its mineral interests. The Corporation expects to continue to incur net
losses unless or until one or more of its properties enters into commercial production and generates sufficient
revenue to fund continuing operations. There can be no assurance that current exploration or development
programs will result in the discovery of commercial deposits or, ultimately, in profitable mining operations. See
also “Liquidity and Financing Risk” and “Funding Risk” below.
Liquidity and Financing Risk
The Corporation has no source of operating cash flow and may need to raise additional funding in the future
through the sale of equity or debt securities or by optioning or selling its properties. Any additional equity
financing will dilute shareholdings, and debt financing, if available, may involve restrictions on financing and
operating activities. No assurance can be given that additional funding will be available for further exploration
and development of the Corporation’s properties when required, upon terms acceptable to the Corporation
or at all. Failure to obtain such additional financing could result in the delay or indefinite postponement of
further exploration and development of its properties, or even a loss of property interest, which would have a
material adverse impact upon the Corporation.
Funding Risk
At the date of this AIF, the Corporation has no income producing assets and will generate losses for the
foreseeable future. Until it is able to develop a project and generate appropriate cash flow, it is dependent
upon being able to obtain future equity or debt funding to support long term exploration. Neither the
Corporation nor any of the Directors nor any other party can provide any guarantee or assurance that if further
funding is required, such funding can be raised on terms favourable to the Corporation (or at all). Any additional
equity funding will dilute existing shareholders. Also, no guarantee or assurance can be given as to when a
project can be developed to the stage where it will generate cash flow. As such, a project would be dependent
on many factors, for example exploration success, subsequent development, commissioning and operational
performance.
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Exploration Costs
The exploration costs of the Corporation are based on certain assumptions with respect to the method and
timing of exploration. By their nature, these estimates and assumptions are subject to significant uncertainties
and, accordingly, the actual costs may materially differ from these estimates and assumptions. Accordingly, no
assurance can be given that the cost estimates and the underlying assumptions will be realized in practice,
which may materially and adversely affect the Corporation’s viability.
Uninsurable Risks
In the course of exploration, development and production of mineral properties, risks, including, but not
limited to, unexpected or unusual geological or operating conditions, natural disasters, inclement weather
conditions, pollution, rock bursts, cave‐ins, fires, flooding, earthquakes, civil unrest, terrorism and political
violence may occur. It is not always possible to fully insure against all risks associated with Cardinal’s operations
and Cardinal may decide not to take out insurance against certain risks as a result of high premiums or other
reasons. Should such liabilities arise, they could reduce or eliminate any future profitability and result in
increasing costs and a decline in the value of the securities of Cardinal.
Conflicts of Interest
Certain directors of the Corporation are, and may continue to be, involved in the mining and mineral
exploration industry through their direct and indirect participation in corporations, partnerships or joint
ventures which are potential competitors of the Corporation. Situations may arise in connection with potential
acquisitions in investments where the other interests of these directors may conflict with the interests of the
Corporation. Any Directors with conflicts of interest will be subject to and will follow the procedures set out in
applicable corporate and securities legislation, regulations, rules and policies.
Risks Related to Operating In Ghana
Environmental Bonds
The EPA from time to time reviews the reclamation bonds that are placed on the Corporation’s projects in
Ghana. As part of its periodic assessment of mine reclamation and closure costs, the EPA reviews the adequacy
of reclamation bonds and guarantees.
In certain cases, the EPA has requested higher levels of bonding based on its findings. If the EPA were to require
additional bonding at the Corporation’s properties, it may be difficult, if not impossible, to provide sufficient
bonding. If the Corporation is unable to meet any such increased bonding requirements or negotiate an
acceptable solution with the Government of Ghana, its operations and exploration and development activities
in Ghana may be materially adversely affected.
The Corporation is not in a position to state whether a review in respect of any of the Corporation’s projects in
Ghana is imminent or whether the outcome of such a review would be detrimental to the funding needs of the
Corporation.
Risks of Operating in Ghana
The Corporation’s projects in Ghana are subject to the risks of operating in foreign countries, including political
and economic considerations such as civil and tribal unrest, war (including in neighbouring countries), terrorist
actions, criminal activity, nationalization, invalidation of governmental orders, failure to enforce existing laws,
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labour disputes, corruption, sovereign risk, political instability, the failure of foreign parties, courts or
governments to honour or enforce contractual relations or uphold property rights, changing government
regulations with respect to mining (including royalties, environmental requirements, labour, taxation, land
tenure, foreign investments, income repatriation and capital recovery), fluctuations in currency exchange and
inflation rates, import and export restrictions, challenges to the title to properties or mineral rights in which
the Corporation has interests, problems or delays renewing licenses and permits, opposition to mining from
local, environmental or other non‐governmental organizations, increased financing costs, instability due to
economic under‐development, inadequate infrastructure, and the expropriation of property interests, as well
as by laws and policies of Canada affecting foreign trade, investment and taxation. As African governments
continue to struggle with deficits and depressed economies, the strength of commodity prices has resulted in
the gold mining sector being targeted as a source of revenue. Governments are continually assessing the terms
for a mining company to exploit resources in their country.
Furthermore, the Corporation requires consultants and employees to work in Ghana to carry out its planned
exploration and development programs. It may be difficult from time to time to find or hire qualified people in
the mineral exploration industry who are situated in Ghana, or to obtain all of the necessary services or
expertise in Ghana, or to conduct operations on its projects at reasonable rates. If qualified people and services
or expertise cannot be obtained in Ghana, the Corporation may need to seek and obtain those services from
service providers located outside of Ghana which could result in delays and higher costs to the Corporation.
Mineral resource companies face increasing public scrutiny of their activities, and are under pressure to
demonstrate that their operations have potential to generate satisfactory returns not only to their
shareholders, but also to benefit local governments and the communities surrounding its properties where it
operates. The potential consequences of these pressures include reputational damage, lawsuits, increasing
social investment obligations and pressure to increase taxes and future royalties payable to local governments
and surrounding communities. As a result of these considerations, the Corporation may incur increased costs
and delays in permitting and other operational matters with respect to its property interests in Ghana.
Any of the above events could delay or prevent the Corporation from exploring or developing its properties
even if economic quantities of minerals are found, and could have a material adverse impact upon the
Corporation’s foreign operations.
Government Policy Changes
The mineral exploration activities undertaken by the Corporation are subject to laws and regulations governing
health and worker safety, employment standards, exports, taxation, waste disposal, management and use of
toxic substances and explosives, protection of the environment, mine development and production, protection
of endangered and protected species, reclamation, historic and cultural preservation and other matters.
Exploration activities may also be affected in varying degrees by government regulations with respect to, but
not limited to, restrictions on future exploration and production, price controls, royalties, export controls,
currency availability, foreign exchange controls, income taxes, delays in obtaining or the inability to obtain
necessary permits, opposition to mining from environmental and other non‐governmental organizations,
limitations on foreign ownership, expropriation of property, ownership of assets, environmental legislation,
labour relations, limitations on repatriation of income and return of capital, limitations on mineral exports,
high rates of inflation, increased financing costs, and site safety.
The Corporation’s exploration programs with respect to the Corporation’s projects in Ghana will, in general, be
subject to approval by the Minerals Commission and other governmental agencies. Development of any of the
Corporation’s properties will be dependent on the Namdini Gold Project meeting environmental guidelines set
by EPA and, where required, being approved by governmental authorities such as the Minerals Commission.
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Failure to comply with applicable laws, regulations and permits, even if inadvertent, may result in enforcement
actions thereunder, including the forfeiture of claims, orders by regulatory or judicial authorities requiring
operations to cease or be curtailed, and may include corrective measures requiring capital expenditures,
installation of additional equipment or costly remedial actions, which could have a material adverse impact
upon the Corporation. The Corporation may be required to compensate those claiming to suffer loss or damage
by reason of its activities and may have civil or criminal fines or penalties imposed for violations of such laws,
regulations and permits, which could have a material adverse impact upon the Corporation.
In addition, no assurance can be given that new rules and regulations will not be enacted or that existing rules
and regulations will not be applied in a manner which could limit or curtail development or future potential
production. Adverse changes in government policies or legislation may affect ownership of mineral interests,
taxation, royalties, land access, labour relations, and mining and exploration activities of the Corporation. It is
possible that the current system of exploration and mine permitting in Ghana may change, resulting in
impairment of rights and possibly expropriation of the Corporation’s properties without adequate
compensation.
Ownership Risks
The Corporation holds its interests in the Namdini Gold Project through contractual arrangements with
Savannah. Further, the Namdini Lease issued to Savannah in October 2016 is currently being processed by the
Ghana government. For more information, please see “Namdini Gold Project”.
The Constitution of Ghana vests title in every mineral in its natural state to the Government of Ghana. The
exercise of any mineral right in the form of reconnaissance, exploration or exploitation of any mineral in Ghana
requires an appropriate licence or mineral right to be issued by the Government of Ghana acting through the
Minister. There is no assurance that title to the properties in which the Corporation has interests will not be
challenged. The acquisition of title to mineral exploration properties is a very detailed and time‐consuming
process. Title to and the area of mineral properties may be disputed. While the Corporation has diligently
investigated title to the properties in which it has an interest, it may be subject to prior unregistered
agreements or transfers or indigenous land claims and title may be affected by undetected defects.
Consequently, the boundaries may be disputed.
There can be no assurance that there are no prior unregistered agreements, claims or defects that may result
in the title to the properties in which the Corporation has an interest being challenged. Further, the
Corporation’s interests in the properties are subject to the risks that counterparties will fail to honour their
contractual commitments, that courts will not enforce such contractual obligations and that required
governmental approvals will not be obtained. A successful challenge to the precise area and location of these
claims, or the failure of counterparties to honour or of courts to enforce such contractual obligations could
result in the Corporation being unable to operate on its properties as anticipated or being unable to enforce
its rights with respect to its properties which could have a material adverse impact upon the Corporation.
Permitting and Licensing Risks
In addition to mineral rights, the Corporation will require some or all of the following permits, licences or other
regulatory approvals to be able to carry out business operations in Ghana as it advances its projects: (i)
environmental permits; (ii) approved environmental management plans and environmental certificates; (iii)
reclamation bonds and approved reclamation plans; (iv) water usage permits; (v) business operating permits;
(vi) licences to export, sell or dispose of minerals; (vii) permits/licences to retain a specified percentage of
mineral export proceeds for purposes of debt servicing, dividend payment to foreign shareholders and
acquisition of plant and machinery for the mining project; (viii) permits to operate foreign exchange retention
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accounts with a trustee bank; and (ix) immigration quotas to employ a specified number of non‐Ghanaians to
work on mining projects. The Corporation believes that it will be able to obtain and maintain in the future all
such necessary licences and permits to carry on the activities which it intends to conduct, and intends to comply
in all material respects with the terms of such licences and permits.
There can be no guarantee, however, that the Corporation will be able to obtain and maintain, at all times, all
the necessary licences and permits required to undertake the proposed exploration and development or to
place its properties into commercial production and to operate mining facilities thereon. In the event of
commercial production, the cost of compliance with changes in governmental regulations has the potential to
reduce the profitability of operations or preclude the economic development of a particular property.
Artisanal Miners
The Corporation’s property interests are held in areas of Ghana that have historically been mined by artisanal
miners. As the Corporation further explores and advances its projects, it may be required to require the
removal of any artisanal miners operating on its properties. There is a risk that such artisanal miners may
oppose the Corporation’s operations, which may result in a disruption to any planned development and/or
mining and processing operations. In addition, artisanal miners have historically used chemicals that are
harmful to the environment to separate the precious metals from the ore. There can be no assurance that the
Corporation will not be subject to environmental liabilities resulting from such operations in the future, which
could have a material adverse impact on the Corporation. In addition, artisanal work practices are often unsafe
and accidents and/or incidents may occur on the Corporation’s property, and there is an added reputational
risk that third parties may wish to link the activities of the artisanal miners to that of the Corporation in the
event of accidents or incidents, which could have a material adverse impact on the Corporation.
Difficulty in Enforcement of Judgements
All of the subsidiaries of the Corporation and the majority of its assets are located outside of Canada.
Accordingly, it may be difficult for investors to enforce within Canada any judgments obtained against the
Corporation, including judgments predicated upon the civil liability provisions of applicable Canadian securities
laws. Consequently, investors may be effectively prevented from pursuing remedies against the Corporation
under Canadian securities laws or otherwise.
The Corporation has subsidiaries incorporated in Australia and Ghana. Many of the directors and officers of
the Corporation reside outside of Canada, and substantially all of the assets of these persons are located
outside of Canada. It may not be possible for shareholders to effect service of process against the Corporation’s
directors and officers who are not resident in Canada. In the event a judgment is obtained in a Canadian court
against one or more of the Corporation’s directors or officers for violations of Canadian securities laws, it may
not be possible to enforce such judgment against those directors and officers. Additionally, it may be difficult
for an investor, or any other person or entity, to assert Canadian securities law claims in original actions
instituted in Australia or Ghana. Courts in these jurisdictions may refuse to hear a claim based on a violation of
Canadian securities laws on the grounds that such jurisdiction is not the most appropriate forum to bring such
a claim. Even if a foreign court agrees to hear a claim, it may determine that the local law, and not Canadian
law, is applicable to the claim. If Canadian law is found to be applicable, the content of applicable Canadian law
must be proven as a fact, which can be a time‐consuming and costly process. Certain matters of procedure will
also be governed by foreign law.
2017 Annual Information Form
PAGE 38
General Risks
Market Conditions
Share market conditions may affect the value of the Corporation’s quoted securities regardless of the
Corporation’s operating performance. Share market conditions are affected by many factors such as: general
economic outlook; introduction of tax reform or other new legislation; interest rates and inflation rates;
changes in investor sentiment toward particular market sectors; the demand for, and supply of, capital; and
terrorism or other hostilities. The market price of securities can fall as well as rise and may be subject to varied
and unpredictable influences on the market for equities in general and resource exploration stocks in
particular. The Corporation does not warrant the future performance of the Corporation or any return on an
investment in the Corporation.
Stress in the Global Economy
Reduction in credit, combined with reduced economic activity and the fluctuations in the Australian dollar may
adversely affect businesses and industries that purchase commodities, affecting commodity prices in more
significant and unpredictable ways than the normal risks associated with commodity prices. The availability of
services such as drilling contractors and geological service companies and/or the terms on which these services
are provided may be adversely affected by the economic impact on the service providers. The adverse effects
on the capital markets generally make the raising of capital by equity or debt financing much more difficult and
the Corporation is dependent upon the capital markets to raise financing. Any of these events, or any other
events causing turmoil in world financial markets, may have a material adverse effect on the Corporation’s
business, operating results and financial condition.
Current Global Financial Condition
Current global financial conditions have been subject to increased volatility. As such, the Corporation is subject
to counterparty risk and liquidity. The Corporation is exposed to various counterparty risks including, but not
limited to, financial institutions that hold the Corporation’s cash, and through companies that have payables
to the Corporation. The Corporation is also exposed to liquidity risks in meeting its operating expenditure
requirements in instances where cash positions are unable to be maintained or appropriate financing is
unavailable. These factors may impact the ability of the Corporation to obtain loans and other credit facilities
in the future and, if obtained, on terms favourable to the Corporation. If these increased levels of volatility and
market turmoil continue, the Corporation’s operations could be adversely impacted and the trading price of
the shares could be adversely affected.
Exchange Rate and Currency Risks
The Corporation undertakes certain transactions denominated in foreign currencies, hence exposures to
exchange rate fluctuations arise. The Corporation does not hedge this exposure. The Corporation manages its
foreign exchange risk by constantly reviewing its exposure and ensuring that there are appropriate cash
balances in order to meet its commitments.
Currency fluctuations may affect the cash flow which the Corporation may realize from its operations, since
most mineral commodities are sold in a world market in USD. The Corporation’s costs are incurred in AUD,
GHS, USD and CAD.
2017 Annual Information Form
PAGE 39
Commodity Prices
The price of the Ordinary Shares, and the Corporation’s profitability, financial results and exploration activities
may in the future be significantly adversely affected by declines in the price of precious metals. Precious metal
prices fluctuate on a daily basis and are affected by a number of factors beyond the control of the Corporation,
including the US dollar and other foreign currency exchange rates, central bank and financial institution lending
and sales, producer hedging activities, global and regional supply and demand, production costs, confidence in
the global monetary system, expectations of the future rate of inflation, the availability and attractiveness of
alternative investment vehicles, interest rates, terrorism and war, and other global or regional political or
economic events or conditions.
The price of gold has fluctuated widely in recent years, and future trends cannot be predicted with any degree
of certainty. In addition to adversely affecting the Corporation’s financial condition and exploration and
development activities, declining commodity prices can impact operations by requiring a reassessment of the
feasibility of a particular project, as well as have an impact on the perceptions of investors with respect to gold
equities, and therefore, the ability of the Corporation to raise capital. A sustained, significant decline in the
price of gold could also cause development of any properties in which the Corporation may hold an interest
from time to time to be impracticable. Future production from the Corporation’s future properties, if any, will
be dependent upon, among other things, the price of gold being adequate to make these properties economic.
There can be no assurance that the market price of gold will remain at current levels, that such price will
increase or that market prices will not fall.
Reliance on Key Personnel
The responsibility of overseeing the day‐to‐day operations and the strategic management of the Corporation
depends substantially on its senior management and its key personnel. There can be no assurance that there
will be no detrimental impact on the Corporation if one or more of these employees cease their employment.
Dilution Risk
Cardinal has outstanding options and Performance Shares, as detailed in the most recent financial statements
for the year ended June 30, 2017 and elsewhere in this AIF. Should these securities be exercised or converted
(as applicable), the holders have the right to acquire additional Ordinary Shares, in accordance with the terms
of such securities. During the life of these securities, the holders have the opportunity to profit from a rise in
the market price of the Cardinal shares, possibly resulting in the dilution of existing securities.
DIVIDENDS
To date, the Corporation has not paid any dividends on its Ordinary Shares and anticipates that it will retain all
future earnings and other cash resources for the future operation and development of its business. The
Corporation does not intend to declare or pay any cash dividends in the foreseeable future. Payment of any
future dividends will be at the discretion of the Board after taking into account many factors, including the
Corporation’s operating results, financial condition and current and anticipated cash needs.
Ordinary Shares
DESCRIPTION OF CAPITAL STRUCTURE
The Corporation’s authorized capital stock consists of an unlimited number of Ordinary Shares, of which
350,529,559 Ordinary Shares are issued and outstanding as of the date of this AIF.
2017 Annual Information Form
PAGE 40
All Ordinary Shares rank equally as to dividends, voting powers and participation in the distribution of assets.
All holders of Ordinary Shares are entitled to receive notice of any meetings of Shareholders of the Corporation,
and to attend and cast one vote per Ordinary Share at all such meetings. Holders of Ordinary Shares do not
have cumulative voting rights with respect to the election of directors. Holders of Ordinary Shares are entitled
to receive on a pro rata basis such dividends, if any, as and when declared by the Board at its discretion from
funds legally available therefor, and upon the liquidation, dissolution or winding up of the Corporation are
entitled to receive on a pro rata basis the net assets of the Corporation after payment of liabilities, in each case
subject to the rights, privileges, restrictions and conditions attaching to any other series or class of shares
ranking senior in priority to or on a pro rata basis with the holders of Ordinary Shares with respect to dividends
or liquidation. The Ordinary Shares do not carry any pre‐emptive, subscription, redemption or conversion
rights, nor do they contain any sinking or purchase fund provisions.
The Corporation is authorized to issue an unlimited number of Ordinary Shares, subject to certain restrictions
prescribed in the ASX Listing Rules, the Corporations Act and the Corporation’s constitution. Under the ASX
Listing Rules, subject to certain exceptions and without the approval of Shareholders, the Corporation may not
issue or agree to issue during any 12‐month period equity securities (including options and other securities
convertible into equity) if the number of securities issued or agreed to be issued would exceed 15% of the total
equity securities on issue at the commencement of the 12‐month period. At the Corporation’s annual general
meeting held on November 7, 2016, Shareholders approved the issue of an additional 10% of the Corporation’s
issued capital, subject to satisfaction of certain criteria prescribed in the ASX Listing Rules and the Corporation’s
notice of annual general meeting dated September 28, 2016.
Listed Options (Warrants)
As of the date of this AIF, the Corporation has 115,682,937 Listed Options outstanding. Each Listed Option is
exercisable until September 30, 2019 and, upon payment of $0.15, a holder of such Listed Option is entitled to
receivable one Ordinary Share. The Listed Options are listed and posted for trading on the ASX under the
symbol “CDVOA”.
Unlisted Options
The Corporation’s share option plan permits the Board to grant to directors, officers, consultants and
employees of the Corporation Unlisted Options to purchase Ordinary Shares from the Corporation. As at the
date of this AIF, the Corporation has issued 8,000,000 Unlisted Options under the share option plan.
As at the date of this AIF, there were 31,500,000 Unlisted Options to acquire Ordinary Shares outstanding.
Performance Shares
The Corporation is authorized to grant an unlimited number of Class A and Class C Performance Shares. As at
the date of this AIF, there were 50 Class A Performance Shares and 60 Class C Performance Shares issued and
outstanding. Holders of Performance Shares are entitled to conversion of each Performance Share into 100,000
Ordinary Shares upon the achievement of certain milestones or events as outlined below. The total number
of Ordinary Shares that would be issuable upon the conversion of all Class A and Class C Performance Shares
pursuant to the milestones and events having been achieved would be 11 million Ordinary Shares.
The conversion of Class A Performance Shares is dependent upon satisfaction of one of the following
performance hurdles to the reasonable satisfaction of the Corporation by December 27, 2017:
the establishment of a JORC compliant inferred resource of at least 1 million ounces of gold within the
2017 Annual Information Form
PAGE 41
Exploration Tenements;
a project owned by the Corporation or any of its subsidiaries comprising all or part of the Exploration
Tenements being sold for at least $25 million in cash or cash equivalent; or
a joint venture arrangement being entered into in respect of any of the Exploration Tenements resulting
in cash or cash equivalent to the Corporation of not less than $25 million.
The conversion of Class C Performance Shares will occur upon satisfaction of achieving a minimum inferred
resource (JORC compliant) of gold within the Ndongo Prospect by February 18, 2020, being no later than five
years after the date on which the Class C Performance Shares were issued. The table below sets out the
conversion of the Class C Performance Shares based on the achievement of performance hurdles.
Performance Shares
10
5
5
5
5
5
5
5
5
5
5
60
Performance Hurdles (JORC
Inferred Au Resource)
500,000 ounces
750,000 ounces
1,000,000 ounces
1,250,000 ounces
1,500,000 ounces
1,750,000 ounces
2,000,000 ounces
2,250,000 ounces
2,500,000 ounces
2,750,000 ounces
3,000,000 ounces
Conversion to Ordinary
Shares
1,000,000
500,000
500,000
500,000
500,000
500,000
500,000
500,000
500,000
500,000
500,000
6,000,000
General terms attaching to the Performance Shares are set out below.
Class A Performance Shares
(a) Each Class A Performance Share is a share in the capital of the Corporation.
(b) Class A Performance Shares shall confer on the holder the right to receive notices of general meetings and
financial reports and accounts of the Corporation that are circulated to shareholders. Holders have the
right to attend general meetings of shareholders of the Corporation.
(c) The Class A Performance Shares do not entitle the holder to vote on any resolutions proposed at a general
meeting of shareholders of the Corporation.
(d) The Class A Performance Shares do not entitle the holder to any dividends.
(e) The Class A Performance Shares are not transferable.
(f) If at any time the issued capital of the Corporation is reorganized, all rights of a holder will be changed to
the extent necessary to comply with the applicable Listing Rules at the time of reorganisation.
2017 Annual Information Form
PAGE 42
(g) The Class A Performance Shares will not be quoted on ASX. However, upon conversion of the Class A
Performance Shares into Ordinary Shares, the Corporation must, within seven (7) days after the
conversion, apply for the official quotation of the Ordinary Shares arising from the conversion on ASX.
(h) 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.
(i) The Ordinary Shares into which the Class A Performance Shares will convert will rank pari passu in all
respects with the other Ordinary Shares on issue.
Class C Performance Shares
(a) Each Class C Performance Share is a share in the capital of the Corporation.
(b) Class C Performance Shares shall confer on the holder the right to receive notices of general meetings and
financial reports and accounts of the Corporation that are circulated to shareholders. Holders have the
right to attend general meetings of shareholders of the Corporation.
(c) The Class C Performance Shares do not entitle the holder to vote on any resolutions proposed at a general
meeting of shareholders of the Corporation.
(d) The Class C Performance Shares do not entitle the holder to any dividends.
(e) The Class C Performance Shares are not transferable.
(f) If at any time the issued capital of the Corporation is reorganized, all rights of a holder will be changed to
the extent necessary to comply with the applicable Listing Rules at the time of reorganisation.
(g) The Class C Performance Shares will not be quoted on ASX. However, upon conversion of the Class C
Performance Shares into Ordinary Shares, the Corporation must, within seven (7) days after the
conversion, apply for the official quotation of the Ordinary Shares arising from the conversion on ASX.
(h) The Class C 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.
(i) The Ordinary Shares into which the Class C Performance Shares will convert will rank pari passu in all
respects with the other Ordinary Shares on issue.
MARKET FOR SECURITIES
Trading Price and Volume
Ordinary Shares
The Ordinary Shares are listed on the ASX and TSX and trade under the symbol “CDV”. The following table sets
forth the price range and trading volume of the Ordinary Shares on the ASX for each month during the most
2017 Annual Information Form
recently completed financial year. The Ordinary Shares commenced trading on the TSX on July 10, 2017.
PAGE 43
ASX Trading
Month
Price Per
Ordinary Share
High ($)
Low ($)
Trading
Volume
2016
July
August
September
October
November
December
2017
January
February
March
April
May
June
0.455
0.57
0.72
0.77
0.70
0.25
0.26
0.43
0.535
0.635
0.29
0.40
0.42
31,657,288
31,257,574
29,599,621
0.585
16,193,550
0.195
137,979,791
0.20
9,910,071
0.22
6,568,913
0.265
34,374,088
0.39
0.45
21,357,959
10,423,635
0.625
0.375
13,338,534
0.63
0.50
7,819,308
Source: Bloomberg
Prior Sales of Unlisted Securities
The only securities of the Corporation that are outstanding but not listed or quoted on a marketplace are the
Unlisted Options granted under the Corporation’s stock option plan which total 31,500,000 and the Class A and
Class C Performance Shares which total 50 and 60, respectively as of the date of this AIF. The following table
sets forth information with respect to the Unlisted Options and Performance Shares issued during the most
recently completed financial year.
Unlisted Options
During the financial year ended June 30, 2017, the Corporation issued the following Unlisted Options to acquire
Ordinary Shares.
2017 Annual Information Form
PAGE 44
Date of Issuance
Number of Securities
Issued (1)
Exercise Price per
Ordinary Share
Expiry Date
April 12, 2017
23,500,000
$0.22
April 12, 2022
Note:
(1) The vesting provisions of the 23,500,000 Unlisted Options are as follows:
7,050,000 options vest on the earlier of (a) the completion of a scoping study and (b) the completion
of a preliminary economic assessment of the Ghanaian assets;
7,050,000 options vest on the beginning of earthworks for gold production at the Ghanaian assets;
and
9,400,000 options vest on the first pouring of gold at the Ghanaian assets.
DIRECTORS AND OFFICERS
The following table sets forth the name and residence of each director and executive officer of the Corporation
as well as such individual’s positions and offices held with the Corporation, period of service as a Director (if
applicable), and principal occupation(s) during the five preceding years. The term of office of each of the
Directors (other than the Corporation’s Managing Director) expires at the end of the third annual general
meeting of Shareholders of the Corporation after such Director’s last election or appointment, provided that
one‐third of the Directors (other than the Managing Director) must retire at each annual general meeting.
Retiring Directors are eligible for re‐election. The term of office of the Corporation’s Managing Director expires
at the discretion of the Corporation’s directors, in accordance with his employment contract. When required,
the Corporation intends to apply for exemptions from the TSX requirements relating to director elections.
Number and Class of Securities
Beneficially Owned or Controlled
Principal Occupation(s) During
Past Five Years
Name,
Province or
State, and
Country of
Residence
Kevin
Tomlinson
London, United
Kingdom
Positions and
Offices Held
and Date of
Appointment
Director, Non‐
Executive
Chairman
November 7,
2016
Ordinary Shares: 0
Listed Options: 400,000
Unlisted Options: 5,000,000
Class A Performance Shares: 0
Class C Performance Shares: 0
Arthur (Archie)
Koimtsidis
Managing
Director
Western
Australia,
Australia
December 27,
2012
Ordinary Shares: 8,117,565
Listed Options: 4,191,731
Unlisted Options: 7,500,000
Class A Performance Shares: 10
Class C Performance Shares: 0
2017 Annual Information Form
Non‐executive Chairman of the
Corporation since November
2016; Director, Samco Gold
Limited since January 2012;
former Director, Centamin plc
(2012 to 2016) and Besra Gold
Inc. (2012 to 2015); former
Chairman, Maudore Minerals
Ltd. (2014 to 2014).
and Managing
Co‐founder
Director of the Corporation
since December 2012.
Name,
Province or
State, and
Country of
Residence
Positions and
Offices Held
and Date of
Appointment
Malik Easah,
Accra, Ghana
Executive
Director
December 27,
2012
Non‐Executive
Director
November 19,
2015
Mark
Connelly(1) (3)
Western
Australia,
Australia
PAGE 45
Number and Class of Securities
Beneficially Owned or Controlled
Principal Occupation(s) During
Past Five Years
Ordinary Shares: 7,681,815
Listed Options: 6,560,423
Unlisted Options: 6,000,000
Class A Performance Shares: 10
Class C Performance Shares: 60(2)
Ordinary Shares: 0
Listed Options: 0
Unlisted Options: 3,500,000
Class A Performance Shares: 0
Class C Performance Shares: 0
Co‐founder
Executive
and
Director of the Corporation
since December 2012.
Current Director, West African
Resources since June 2015,
Saracen Mineral Holdings since
April 2015, Ausdrill Limited
since July 2012, Tiger Resources
Limited since December 2015;
former Director B2 Gold Corp.
(2014
2016), Manas
Resources Ltd. (2013 to 2016);
former Managing Director and
CEO,
Resources
Limited (2012 to 2014) and
Adamus Resources
Limited
(2006 to 2012).
Papillion
to
Simon
Jackson(1) (3)
Western
Australia,
Australia
Non‐Executive
Director
August 31,
2015
Ordinary Shares: 1,000,000
Listed Options: 500,000
Unlisted Options: 3,500,000
Class A Performance Shares: 0
Class C Performance Shares: 0
Robert Schafer
Utah, USA(1)
Non‐Executive
Director
July 10, 2017
Ordinary Shares: 0
Listed Options: 0
Unlisted Options: 0
Class A Performance Shares: 0
Class C Performance Shares: 0
2017 Annual Information Form
Current Managing Director and
CEO, Beadell Resources Limited
since November 2015; former
Director, President and CEO,
Orca Gold Inc. (2013 to 2014);
former
Sirocco
President,
Mining Inc. (2011 to 2013); and
Corporate
former
Development
Chief
Financial Officer, Red Back
Mining Inc. (2004 to 2010).
and
VP,
Current Director, Volcanic Gold
Mines Inc. since March 2017
and Trigon Metals Inc. since
April 2017; former director
Martina Minerals Corp. (2005
to 2015); Curtis Resources Ltd.
(2011 to 2014), Rathdowney
Resources Ltd. (2011 to 2015),
Galway Metals Inc. (2012 to
2014), Minera
IRL Limited
(2016) and Orex Exploration
Name,
Province or
State, and
Country of
Residence
Positions and
Offices Held
and Date of
Appointment
Number and Class of Securities
Beneficially Owned or Controlled
Principal Occupation(s) During
Past Five Years
PAGE 46
Company
Secretary
Sarah Shipway
Western
Australia,
Australia
Ordinary Shares: 75,000
Listed Options: 0
Unlisted Options: 0
Class A Performance Shares: 0
Class C Performance Shares: 0
Derrick
Weyrauch
Ontario,
Canada
Chief Financial
Officer
Ordinary Shares: 80,000
Listed Options: 0
Unlisted Options: 0
Class A Performance Shares: 0
Class C Performance Shares: 0
Inc. (2016 to 2017).
Company Secretary of
the
Corporation since December
2012; current Director, Beacon
Minerals Limited since 2015
and St. George Mining Limited
since 2015.
Chief Financial Officer to the
Corporation since July 2017;
current Director of Banro
Corporation since 2013; former
Director of Jaguar Mining Inc.
(2014 to 2016), Minera IRL
Limited
Eco Oro
Minerals Corp. (2016 to 2017);
former Chief Financial
and
Officer,
Inc.
Jaguar Mining
(2014‐2016), Andina Minerals
Inc. (2010 to 2013) and Temex
Resources Corp. (2014).
(2016),
Notes:
(1) Member of the Audit and Risk Committee.
(2) Mr. Easah is the sole shareholder of Savannah Mining Ghana Limited, which holds the 60 outstanding
Class C Performance Shares. For a description of the conversion conditions for the Class C Performance
Shares, see “Description of Capital Structure” above.
(3) Member of the Remuneration and Nomination Committee.
Based on the disclosure available on the System for Electronic Disclosure by Insiders (“SEDI”), as of the date of
this AIF, the directors and executive officers of the Corporation, as a group, beneficially owned, or controlled
or directed, directly or indirectly, a total of 16,954,380 Ordinary Shares, representing approximately 4.8% of
the total number of Ordinary Shares outstanding.
Set forth below is a brief description of the background of the directors and executive officers of the
Corporation, including a description of each individual’s principal occupation(s) during the past five years.
Kevin Tomlinson – Director, Non‐Executive Chairman
Kevin Tomlinson possesses over 30 years’ experience in geology and finance with significant experience within
the Toronto, Australian and London Stock Exchanges.
Mr. Tomlinson holds a MSc in Structural Geology and a Graduate Diploma in Finance. From 1998, Mr.
2017 Annual Information Form
PAGE 47
Tomlinson has worked in the finance sector raising over US$2 billion in equity.
Mr. Tomlinson was previously Managing Director of Investment Banking at Westwind Partners/Stifel Nicolaus
where he advised a number of resource companies including Centamin Plc, Platinum Group Metals, Trelawney
Resources and Allied Gold. He was also an integral part of the team raising finance for Osisko Mining and
Semafo Inc.
Mr. Tomlinson was Director of Natural Resources at Williams de Broë and Head of Research for Hartleys Ltd in
Australia. Recent Directorships include Centamin Plc (producer), Orbis Gold (developer) and Medusa Mining
(producer) where he chaired the company through growth from $30 million to over $700 million in market
capitalization in less than four years.
Mr. Tomlinson is a Fellow of the Institute of Directors, a Fellow of the Chartered Institute for Securities &
Investment and a Liveryman of the Worshipful Company of International Bankers.
Arthur (Archie) Koimtsidis – Co‐founder, Managing Director
Archie Koimtsidis has 26 years’ experience in business in Ghana and has for the last 23 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 in relation
to the Corporation’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 resource projects in West
Africa.
Malik Easah – Co‐founder, Executive Director
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 has worked in the mining
industry in Ghana for 12 years.
Mark Connelly – Non‐Executive Director
Mark Connelly is the former Managing Director and Chief Executive Officer of Papillon Resources Limited, a
Mali‐based gold developer which recently merged with Vancouver‐based B2Gold Corp in a US$570 million
transaction. Previously, he was Chief Operating Officer of Endeavour Mining Corporation following its merger
with Adamus Resources Limited where he was Managing Director and CEO.
Mr. Connelly has more than 27 years of experience in the mining industry, and has held senior executive
positions with Newmont Mining Corporation and Inmet Mining Corporation. He has extensive experience in
financing, development, construction and operation of mining projects in a variety of commodities including
gold, base metals and other resources in West Africa, Australia, North America and Europe.
2017 Annual Information Form
PAGE 48
Simon Jackson – Non‐Executive Director
Simon Jackson is a Chartered Accountant with over 25 years of gold industry experience in Australia and Africa.
Mr. Jackson is the CEO and Managing Director at Beadell Resources Ltd, a Brazilian gold producer. Prior to this
he was the Vice President Corporate Development and formerly the Chief Financial Officer for Red Back Mining
Inc. prior to its takeover by Kinross Gold Corporation in September 2010. He was an integral part of the senior
management team that saw Red Back’s market capitalization grow from C$40 million in 2004 upon listing on
TSX to over C$9 billion on takeover.
Mr. Jackson holds a Bachelor of Commerce degree from the University of Western Australia and is a Fellow of
the Institute of Chartered Accountants in Australia, initially spending seven years with KPMG.
Robert Schafer – Non‐Executive Director
Robert Schafer has over 30 years of international experience as a geologist exploring for mineral deposits in
more than 70 countries. As an executive, manager and field geologist with companies including Billiton, BHP,
Kinross and Hunter Dickinson, Mr. Schafer led teams to the discovery of several deposits in the western USA
(Briggs and Griffon gold mines), as well as developing strategies that led to brownfields discoveries in western
Canada, southern Africa and far east Russia (Birkachan gold mine).
Mr. Schafer is the immediate Past President of the Prospectors and Developers Association of Canada (PDAC)
as well as Past President of both the Canadian Institute for Mining, Metallurgy and Petroleum (CIM) and the
Mining and Metallurgical Society of America (MMSA). He is a Certified Corporate Director (ICD.D), a RPGeo and
is also an active member of the Society for Mining, Metallurgy and Exploration (SME) in the USA, where he
served on its Board for more than a decade.
Mr. Schafer serves as a member of the Board of Directors for both the Canadian Mining Hall of Fame and
National Mining Hall of Fame in the USA. He is the recipient of the William Lawrence Saunders Gold Medal
from the American Institute of Mining, Metallurgical and Petroleum Engineers (AIME) and the Daniel C. Jackling
Award from SME for career achievements, two of the highest mining recognitions in the USA.
Sarah Shipway – Company Secretary
Sarah Shipway has been involved with the Corporation since inception. Prior to joining Cardinal, Ms. Shipway
was an accountant. Ms. Shipway holds a Bachelor of Commerce from Murdoch University and is a member of
the Institute of Chartered Accountants. Ms. Shipway is also non‐executive director for Beacon Minerals Limited
and St. George Mining Limited.
Derrick Weyrauch – Chief Financial Officer
Derrick Weyrauch is a Chartered Professional Accountant (“CPA CA”) with over 25 years of experience that
includes board and executive management roles at a number of publicly listed mining companies.
As the Chairman of the Special Committee for Restructuring and Recapitalization and then Chief Financial
Officer, Mr. Weyrauch was instrumental in the recent successful turnaround and financial restructuring of Jaguar
Mining, a gold producer with three operating underground mines and a 3.5 million ounce gold development
project in Brazil.
Previously, Mr. Weyrauch was the Chief Financial Officer of Andina Minerals, a development stage gold
company advancing 6.6 million ounces of proven and probable gold reserves towards development in the high
2017 Annual Information Form
PAGE 49
Andes of Chile where he led a US$800+ million project finance initiative.
Mr. Weyrauch currently serves as the Lead Independent Director and Audit Committee Chairman at Banro
Corporation.
Cease Trade Orders, Bankruptcies, Penalties or Sanctions
No director or executive officer of the Corporation, nor any personal holding company of any director or
executive officer of the Corporation, is, as at the date hereof, or was, within 10 years before the date hereof,
a director, chief executive officer or chief financial officer of any company (including the Corporation) that:
(a) was subject to a cease trade order, an order similar to a cease trade order, or an order that denied the
relevant company access to any exemption under securities legislation, that was in effect for a period of
more than 30 consecutive days, that was issued while the director or executive officer was acting in the
capacity as director, chief executive officer or chief financial officer; or
(b) was subject to a cease trade order, an order similar to a cease trade order or an order that denied the
relevant company access to any exemption under securities legislation, that was in effect for a period of
more than 30 consecutive days, that was issued after the director or executive officer ceased to be a
director, chief executive officer or chief financial officer, and which resulted from an event that occurred
while that person was acting in the capacity as director, chief executive officer or chief financial officer.
Other than as set out below, no director or executive officer of the Corporation or shareholder holding a
sufficient number of securities of the Corporation to affect materially the control of the Corporation, nor any
personal holding company of any such individual:
(i)
is, as at of the date hereof, or has been within 10 years before the date hereof, a director or executive
officer of any company (including the Corporation) that, while that person was acting in that capacity, or
within a year of such individual ceasing to act in that capacity, became bankrupt, made a proposal under
any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings,
arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to
hold its assets; or
(ii) has, within the 10 years before the date hereof, become bankrupt, made a proposal under any legislation
relating to bankruptcy or insolvency, become subject to or instituted any proceedings, arrangement or
compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of
such individual; or
(iii) has been subject to (i) any penalties or sanctions imposed by a court relating to securities legislation or by
a securities regulatory authority, or has entered into a settlement agreement with a securities regulatory
authority, or (ii) any other penalties or sanctions imposed by a court or regulatory body that would likely
be considered important to a reasonable investor in making an investment decision.
Simon Jackson served as a director of RB Energy Inc. (“RB Energy”), which, on October 13, 2014, announced
that its board of directors had approved an application for an initial order from the Québec Superior Court (the
“QCSC”) to commence proceedings under the CCAA. On October 14, 2014 the QCSC issued a limited initial
order and on October 15, 2014 the QCSC issued an amended and restated initial order in respect of RB Energy
and certain of its subsidiaries under the CCAA. The TSX de‐listed RB Energy’s common shares effective at the
close of business on November 24, 2014 for failure to meet the continued listing requirements of the exchange.
Mr. Jackson ceased to be a director of RB Energy on April 1, 2015.
2017 Annual Information Form
PAGE 50
Kevin Tomlinson served as a director of Maudore Minerals Ltd. (“Maudore”) until May 22, 2014, and of Besra
Gold Inc. (“Besra”) until April 10, 2015. On September 8, 2014, Maudore announced that it had filed a notice
of intention to make a proposal under the Bankruptcy and Insolvency Act (the “BIA”). On March 2, 2015,
Maudore announced that the Superior Court of the Province of Quebec (the “Court”) had granted an order
whereby Maudore’s proposal to creditors, which had initially been filed under the BIA, had been continued
under the CCAA and that the Court had granted an initial stay of proceedings under the CCAA. Maudore made
further announcements on March 27, 2015, June 19, 2015, September 22, 2015 and February 29, 2016 that
the Court had granted extensions of the stay of proceedings under the CCAA. On May 16, 2016, Maudore
announced that Maudore had, under the BIA, made an assignment of its property to a trustee for the benefit
of its creditors generally. On October 19, 2015, Besra announced that its board of directors had decided to file
a notice of intention to make a proposal (the “Notice of Intention”) under the BIA. On January 29, 2016, Besra
announced that, through its appointed proposal trustee, it had submitted a proposal (the “Proposal”) to its
creditors in accordance with the Notice of Intention to make a proposal. The Proposal was subsequently
amended on March 13, 2016 (the “Amended Proposal”). A meeting of creditors (the “Meeting”) was initially
called for March 17, 2016 and was adjourned until April 7, 2016 in order to permit creditors to consider the
Amended Proposal. On April 7, 2016, Besra announced that at the Meeting, the Amended Proposal had been
approved by a majority of unsecured creditors holding in excess of two‐thirds of the value of proven unsecured
creditor claims. The Amended Proposal was approved by the Ontario Superior Court of Justice (Commercial
List) on May 17, 2016. On December 17, 2014, the OSC issued a temporary cease trade order for the securities
of Besra, and on December 29, 2014, the OSC issued a further cease trade order directing that trading in the
securities of Besra cease until further order by the Director (together, the “Besra Cease Trade Order”). The
British Columbia Securities Commission issued a cease trade order on December 17, 2014; the Autorité des
marchés financiers issued a cease trade order on January 5, 2015; and the Alberta Securities Commission issued
a cease trade order on March 30, 2015. The OSC partially revoked the Besra Cease Trade Order on March 4,
2015 to permit trades and acts in furtherance of trades in connection with a proposed private placement
financing by Besra for proceeds of up to C$15 million. On April 7, 2015, the first tranche of such financing, with
gross proceeds of C$2 million, was completed. Besra received no further proceeds from such financing. On
October 14, 2016, the OSC issued an order (the “October 2016 Order”) partially revoking the Besra Cease Trade
Order to permit trades and acts in furtherance of trades that are necessary for and are in connection with the
Amended Proposal and a $10 million tranche of an exit financing. The October 2016 Order was subsequently
varied by the OSC on November 18, 2016, and Besra announced on November 18, 2016 that it had closed a
C$10 million “exit financing” and intended to deliver to the Proposal trustee the consideration necessary to
satisfy the elections made by creditors under the Proposal. Besra expects that once all requirements of the
Proposal have been satisfied, the Proposal trustee will issue a certificate of full performance. In October 2014
trading in the common shares of Besra on the ASX was suspended and Besra’s common shares were delisted
from the TSX because of Besra’s failure to file its financial statements for the year ended June 30, 2014.
Derrick H. Weyrauch was elected to the board of directors of Jaguar Mining Inc. ("Jaguar") in June 2013. As
part of a corporate turnaround and restructuring process, Jaguar declared insolvency and commenced a
voluntary proceeding under the CCAA on December 23, 2013 in the Ontario Superior Court of Justice. This
proceeding was commenced to implement a debt restructuring and financing transaction ("CCAA Plan") that
was negotiated prior to the commencement of the CCAA proceeding. On April 22, 2014, Jaguar implemented
the CCAA Plan and emerged from court protection under the CCAA. On May 2, 2014, the shares of Jaguar began
trading on the TSX Venture Exchange. Following the voluntary proceeding under the CCAA, the Toronto Stock
Exchange advised that it is reviewing the common shares of Jaguar with respect to meeting the requirements
for continued listing pursuant to the Expedited Review Process. The common shares were subsequently
suspended from trading on the Toronto Stock Exchange. In 2013, NYSE Regulation reached a decision to delist
Jaguar’s common shares in view of the fact that Jaguar’s common shares had fallen below the NYSE's continued
listing standard for an average closing price of less than US$1.00 over a consecutive 30 trading day period. As
a result, on June 3, 2013, NYSE Regulations, Inc. ("NYSE Regulation") commenced proceedings to delist the
2017 Annual Information Form
PAGE 51
common shares of Jaguar from the New York Stock Exchange ("NYSE") and trading in Jaguar’s common shares
was suspended prior to the opening on June 7, 2013.
Conflicts of Interest
To the best of the Corporation’s knowledge, and other than as disclosed in this AIF, there are no known existing
or potential material conflicts of interest between the Corporation or a subsidiary of the Corporation and any
director or officer of the Corporation or a subsidiary of the Corporation, except that certain of the directors
and officers serve as directors and officers of other public companies, and therefore it is possible that a conflict
may arise between their duties as a director or officer of the Corporation and their duties as a director or officer
of such other companies. See “Description of the Business – Risk Factors – Risks Associated with Conflicts of
Interest”.
LEGAL PROCEEDINGS AND REGULATORY ACTIONS
The Corporation is not a party to, and its property is not the subject of, any material legal proceedings, and the
Corporation was not a party to, and its property was not the subject of, any material legal proceedings during
the Corporation's most recently completed financial year. The Corporation is not aware of any contemplated
legal proceedings.
During the most recently completed financial year, no penalties or sanctions were imposed against the
Corporation by a court relating to securities legislation or by a securities regulatory authority, no penalties or
sanctions were imposed by a court or regulatory body against the Corporation that would likely be considered
important to a reasonable investor in making an investment decision, and no settlement agreements were
entered into by the Corporation before a court relating to securities legislation or with a securities regulatory
authority.
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS
Other than ad disclosed in this AIF, the Corporation is not aware of any material interest, direct or indirect, of
any director or officer of the Corporation, any person or company that beneficially owns, or controls or directs,
directly or indirectly, more than 10% of the Corporation’s voting securities, or any associate or affiliate of any
such persons or companies in any transaction within the three most recently completed financial years or
during the current financial year that has materially affected or is reasonably expected to materially affect the
Corporation.
TRANSFER AGENTS AND REGISTRARS
The transfer agent and registrar for the Ordinary Shares and the Listed Options of the Corporation in Australia
is Computershare Investor Services Pty Ltd (“Computershare (Australia)”), and the Ordinary Shares and Listed
Options are transferable at the offices of Computershare (Australia) in Perth.
The transfer agent and registrar for the Ordinary Shares of the Corporation in Canada is Computershare
Investor Services Inc. (“Computershare (Canada)”), and the Ordinary Shares are transferable at the offices of
Computershare (Canada) in Toronto.
2017 Annual Information Form
PAGE 52
AUDIT COMMITTEE AND RELATED INFORMATION
The Audit and Risk Committee’s Charter
The responsibilities and duties of the audit and risk committee (the “Audit and Risk Committee”) of the Board
are set out in the Audit and Risk Committee’s Charter (the “Charter”), the text of which is set forth in Appendix A
to this AIF.
Composition of the Audit and Risk Committee
The Audit and Risk Committee is comprised of Simon Jackson (Chair), Mark Connelly and Kevin Tomlinson. The
following chart sets out the Corporation’s assessment of the independence, financial literacy and relevant
educational background and experience supporting such financial literacy of each member of the Audit and
Risk Committee. Additional information about relevant experience of each member of the Audit and Risk
Committee can be found in such member’s biography under the heading “Directors and Executive Officers”
above.
Name
Independent(1)
Financially Literate(2)
Simon Jackson
Mark Connelly
Robert Schafer
Notes:
Yes
Yes
Yes
Yes
Yes
Yes
Relevant Education and
Experience
BCom, FCA
BBus
Graduate Diploma
Finance
(1) To be considered independent, a member of the Audit and Risk Committee must not have any direct or
indirect “material relationship” with the Corporation. A “material relationship” is a relationship which
could, in the view of the Board, be reasonably expected to interfere with the exercise of a member’s
independent judgment.
(2) To be considered financially literate, a member of the Audit and Risk Committee must have the ability to
read and understand a set of financial statements that present a breadth and level of complexity of
accounting issues that are generally comparable to the breadth and complexity of issues that can
reasonably be expected to be raised by the Corporation’s financial statements.
Reliance on Certain Exemptions
At no time since the commencement of the Corporation's most recently completed financial year, has the
Corporation relied on the exemption in section 2.4 of NI 52‐110 (De Minimis Non‐audit Services), the exemption
in section 3.2 of NI 52‐110 (Initial Public Offerings), the exemption in subsection 3.3(2) of NI 52‐110 (Controlled
Companies), the exemption in section 3.4 of NI 52‐110 (Events Outside Control of Member), the exemption in
section 3.5 of NI 52‐110 (Death, Disability or Resignation of Audit Committee Member), the exemption in
section 3.6 of NI 52‐110 (Temporary Exemption for Limited and Exceptional Circumstances) or an exemption
from NI 52‐110, in whole or in part, granted under Part 8 of NI 52‐110 (Exemptions).
2017 Annual Information Form
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Audit Committee Oversight
At no time since the commencement of the Corporation's most recently completed financial year has a
recommendation of the Audit and Risk Committee to nominate or compensate an external auditor not been
adopted by the Board.
Pre‐Approval Policies and Procedures
The Corporation has adopted policies and procedures with respect to the pre‐approval of audit and permitted
non‐audit services to be provided by its external auditor as set forth in the Charter. It is expected that the Audit
and Risk Committee will approve the provision of a specified list of audit and permitted non‐audit services that
the Audit and Risk Committee believes to be typical, reoccurring or otherwise likely to be provided by the
Corporation’s external auditor during the current fiscal year.
External Auditor Service Fees
The following table provides detail in respect of audit, audit related, tax and other fees paid by the Corporation
to the external auditors for professional services:
Reporting Period
June 30, 2017
June 30, 2016
Notes:
Audit
Fees (1)
$54,605
$24,500
Audited‐Related
Fees (2)
Tax
Fees (3)
Nil
Nil
Nil
Nil
All Other
Fees (4)
6,250
Nil
(1) “Audit Fees” include the aggregate fees billed by the Corporation’s external auditor for the audit of the annual
financial statements and other regulatory audits and filings.
(2) “Audit‐Related Fees” include the aggregate fees billed for assurance and related services by the Corporation’s
external auditor that are reasonably related to the performance of the audit or review of the Corporation's
financial statements but not included in “Audit Fees”.
(3) “Tax Fees” include the aggregate fees billed for professional services rendered by the Corporation's
external auditor for tax compliance, tax advice and tax planning.
(4) “All Other Fees” include the aggregate fees billed for products and services provided by the Corporation's
external auditor, other than as set out under the headings “Audit Fees”, “Audit Related Fees” and “Tax
Fees”.
MATERIAL CONTRACTS
The only material contracts entered into by on behalf of the Corporation or any of its subsidiaries within the
financial year ended June 30, 2017, or before the financial year ended June 30, 2017 if still in effect, are the
Savannah Agreement, the Option Agreement and the Option Exercise Deed discussed under “Namdini Gold
Project”.
2017 Annual Information Form
PAGE 54
INTERESTS OF EXPERTS
The following persons or companies are named as having prepared or certified a report, valuation, statement
or opinion described or included in a filing, or referred to in a filing, made by the Corporation under National
Instrument 51‐102 – Continuous Disclosure Obligations of the Canadian Securities Administrators during, or
relating to, the financial year ended June 30, 2017, and whose profession or business gives authority to the
report, valuation, statement or opinion made by the person or company:
Ian T. Blakley, P.Geo. of Roscoe Postle Associates Inc.;
Sean D. Horan, P.Geo. of Roscoe Postle Associates Inc.;
Kathleen Ann Altman, Ph.D., P.E. of Roscoe Postle Associates Inc.;
Nicolas Johnson, MAIG of MPR Geological Consultants Pty Ltd;
Brett Davis, OreFind Structural Consultants Pty Ltd.;
Jun Cowan, OreFind Structural Consultants Pty Ltd.; and
BDO Audit (WA) Pty Ltd.
To the best knowledge of the Corporation, the persons and companies referenced above each hold less than
1% of any outstanding securities of the Corporation, or of any associate or affiliate of the Corporation.
None of the persons referenced above or directors, officers or employees of a person or company referenced
above is or is expected to be elected, appointed or employed as a director, officer or employee of the
Corporation or of any associate or affiliate of the Corporation.
ADDITIONAL INFORMATION
Additional information relating to the Corporation can be found under the Corporation’s profile on the SEDAR
website at www.sedar.com. Additional information, including directors’ and officers’ remuneration and
indebtedness, principal holders of the Corporation’s securities and securities authorized for issuance under
equity compensation plans, if applicable, is contained in the Corporation’s information circular for its most
recent annual meeting of shareholders. Additional financial information is provided in the Corporation’s
audited consolidated financial statements and management’s discussion and analysis for its most recently
completed financial year.
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APPENDIX A ‐ AUDIT AND RISK COMMITTEE CHARTER
1.
ROLE
The role of the Audit and Risk Committee is to assist the Board in monitoring and reviewing any matters
of significance affecting financial reporting and compliance. This Charter defines the Audit and Risk
Committee’s function, composition, mode of operation, authority and responsibilities.
2.
COMPOSITION
The Board will adhere to the following composition requirements for the Committee.
(a)
(b)
(c)
(d)
(e)
(f)
(g)
The Committee must comprise at least three members.
All members of the Committee must be non‐executive Directors.
Except as permitted by NI 52‐110, all members of the Committee must be independent in
accordance with the criteria set out in Annexure A.
The Board will appoint members of the Committee. The Board may remove and replace
members of the Committee by resolution.
All members of the Committee must be able to read and understand financial statements that
present a breadth and level of complexity of accounting issues that are generally comparable
to the breadth and level of complexity of the issues reasonably expected to be raised by the
Corporation’s financial statements.
The Chairman of the Committee shall have leadership experience and a strong finance,
accounting or business background and will not be the Chair of the Board.
The external auditors, the other Directors, the Managing Director, Chief Financial Officer,
Company Secretary and other senior executives may be invited to Committee meetings at the
discretion of the Committee.
3.
PURPOSE
The primary purpose of the Committee is to assist the Board in fulfilling its statutory and fiduciary
responsibilities relating to:
(a)
(b)
(c)
(d)
the quality and integrity of the Corporation’s financial statements, accounting policies and
financial reporting and public disclosure practices;
compliance with all applicable laws, regulations and company policy;
the effectiveness and adequacy of internal control processes;
the performance of the Corporation’s external auditors and their appointment and removal;
2017 Annual Information Form
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(e)
(f)
(g)
(h)
(i)
the independence of the external auditor and the rotation of the lead engagement partner;
the scope and adequacy of the external audit;
any proposal for the external auditor to provide non‐audit services and whether it might
compromise the independence of the external auditor;
the identification and management of business, economic, environmental and social
sustainability risks; and
the review of the Corporation’s risk management framework at least annually to satisfy itself
that it continues to be sound and to determine whether there have been any changes in the
material business risks the Corporation faces and to ensure that they remain within the risk
appetite set by the Board.
A secondary function of the Committee is to perform such special reviews or investigations as the
Board may consider necessary.
4.
DUTIES AND RESPONSIBILITIES OF THE COMMITTEE
4.1
Review of Financial Reports
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
Review the appropriateness of the accounting principles adopted by management in the
financial reports and the integrity of the Corporation’s financial reporting.
Directly oversee the work of the external auditor engaged to prepare or issue an auditor’s
report and the results of the external audits of those reports.
Assess whether external reporting is adequate for shareholder needs.
Assess management processes supporting external reporting.
Establish procedures for receipt, retention and treatment of accounting complaints and
confidential, anonymous submission by employees of the Corporation of complaints regarding
questionable accounting or auditing matters.
Directly oversee the resolution of disagreements between management and the external
auditor regarding financial reporting.
Review the impact of any proposed changes in accounting policies on the financial statements.
Review the financial statements, MD&A and annual and interim profit or loss press releases
before the Corporation publicly discloses the information.
Ensure that, before the Board approves the Corporation’s financial statements for a financial
period, the Chief Executive Officer and Chief Financial Officer (or, if none, the person(s)
fulfilling those functions) have declared that, in their opinion, the financial records of the
Corporation have been properly maintained and that the financial statements comply with
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the appropriate accounting standards and give true and fair view of the financial position and
performance of the Corporation and that the opinion has been formed on the basis of a sound
system of risk management and internal control which is operating effectively.
(j)
Ensure that adequate procedures are in place for the review of the Corporation’s public
disclosure of financial information extracted or derived from its financial statements and
periodically assess the adequacy of those procedures.
4.2
Relationship with External Auditors
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
(l)
Recommend to the Board (i) the external auditor to be nominated for the purpose of
preparing or issuing an auditor’s report or performing another audit, review or attestation
services for the Corporation and (ii) the compensation of the external auditor.
Review performance, succession plans and rotation of lead engagement partner.
Approve the external audit plan and fees proposed for audit work to be performed.
Discuss any necessary recommendations to the Board for the approval of quarterly, half yearly
or annual reports.
Review the adequacy of accounting and financial controls together with the implementation
of any recommendations of the external auditor in relation thereto.
Meet with the external auditors at least twice in each financial year and at any other time the
Committee considers appropriate.
Provide pre‐approval of audit and non‐audit services that are to be undertaken by the external
auditor.
Ensure adequate disclosure as may be required by law of the Committee’s approval of all non‐
audit services provided by the external auditor.
Review the Corporation’s public disclosure required by applicable securities laws concerning
the audit committee and its members to ensure it is accurate and complete.
Ensure that the external auditor prepares and delivers an annual statement as to their
independence which includes details of all relationships with the Corporation.
Receive from the external auditor their report on, among other things, critical accounting
policies and alternative accounting treatment, prior to the filing of their audit report in
compliance with applicable securities law requirements and/or the Corporations Act.
Ensure that the external auditor attends the Corporation’s Annual General Meeting and is
available to answer questions from security holders relevant to the audit.
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4.3
Internal Audit Function
(a)
(b)
(c)
(d)
(e)
(f)
Monitor the need for a formal internal audit function and its scope.
Review and monitor the appointment or removal of the head of internal audit.
Assess the performance and objectivity of any internal audit procedures that may be in place.
Review risk management and internal compliance procedures.
Monitor the quality of the accounting function.
Review the internal controls of the Corporation via consideration of any comments from the
Corporation’s internal and/or external auditors and/or commissioning an independent report
on the Corporation’s internal controls.
4.4
Risk Management
(a)
(b)
(c)
(d)
Oversee the Corporation’s risk management systems, practices and procedures to ensure
effective risk identification and management and compliance with the Corporation’s Risk
Management Policy, internal guidelines and external requirements.
Assist in identifying and managing potential or apparent business, economic, environmental
and social sustainability risks (if appropriate) that could adversely affect the Corporation’s
prospects currently and for future financial years.
Review the Corporation’s Risk Management Policy at least annually to satisfy itself that it
continues to be sound.
Review reports by management on the efficiency and effectiveness of the Corporation’s Risk
Management Policy and associated internal compliance and control procedures.
4.5
Other
(a)
(b)
(c)
(d)
(e)
The Committee will oversee the Corporation’s environmental risk management, insurance and
occupational health and safety processes.
The Committee will oversee procedures for whistleblower protection.
As contemplated by the ASX Corporate Governance Council’s Corporate Governance Principles
and Recommendations, and to the extent that such deviation or waiver does not result in any
breach of the law, the Committee may approve any deviation or waiver from the “Corporate
code of conduct”. Any such waiver or deviation will be promptly disclosed where required by
applicable law.
The Committee will monitor related party transactions.
The Committee will review and approve the Corporation’s hiring policy regarding partners,
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employees and former partners and employees of the present and former external auditor of
the Corporation.
5.
MEETINGS
(a)
(b)
(c)
(d)
(e)
(f)
(g)
The Committee will meet at least twice in each financial year and additionally as circumstances
may require for it to undertake its role effectively.
Meetings are called by the Secretary as directed by the Board or at the request of the
Chairman of the Committee.
Where deemed appropriate by the Chairman of the Committee, meetings and subsequent
approvals and recommendations can be implemented by a circular written resolution or
conference call.
A quorum shall consist of two members of the Committee. In the absence of the Chairman of
the Committee or their nominees, the members shall elect one of their members as Chairman
of that meeting.
Decisions will be based on a majority of votes with the Chairman having a casting vote.
The Committee Chairman, through the Secretary, will prepare a report of the actions of the
Committee to be included in the Board papers for the next Board meeting.
Minutes of each meeting are included in the papers for the next full Board meeting after each
Committee meeting.
6.
SECRETARY
(a)
(b)
(c)
The Company Secretary or their nominee shall be the Secretary of the Committee and shall
attend meetings of the Committee as required.
The Secretary will be responsible for keeping the minutes of meetings of the Committee and
circulating them to Committee members and to the other members of the Board.
The Secretary shall distribute supporting papers for each meeting of the Committee as far in
advance as possible.
7.
RELIANCE ON INFORMATION OR PROFESSIONAL OR EXPERT ADVICE
Each member of the Committee is entitled to rely on information, or professional or expert advice, to
the extent permitted by law, given or prepared by:
(a)
(b)
an employee of the Group whom the member believes on reasonable grounds to be reliable
and competent in relation to the matters concerned;
a professional adviser or expert in relation to matters that the member believes on reasonable
grounds to be within the person’s professional or expert competence; or
2017 Annual Information Form
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(c)
another Director or officer of the Group in relation to matters within the Director’s or officer’s
authority.
8.
ACCESS TO ADVICE
(a)
(b)
(c)
Members of the Committee have rights of access to management and to the books and
records of the Corporation to enable them to discharge their duties as Committee members,
except where the Board determines that such access would be adverse to the Corporation’s
interests.
Members of the Committee may meet with the auditors, both internal and external, without
management being present.
Members of the Committee may engage independent legal counsel or other advisers they
consider necessary to assist them in carrying out their duties and responsibilities and set and
pay the compensation for any advisors employed by the Committee. Any costs incurred as a
result of the Committee consulting an independent expert will be borne by the Corporation.
9.
REVIEW OF CHARTER
(a)
(b)
The Board will conduct an annual review of the membership to ensure that the Committee
has carried out its functions in an effective manner, and will update the Charter and Risk
Management Policy as required or as a result of new laws or regulations.
The Charter and Risk Management Policy shall be made available to members on request, to
senior management, to the external auditor and to other parties as deemed appropriate, will
be posted to the Corporation’s website and will be included, where required, in the
Corporation’s public disclosure documents.
10.
REPORT TO THE BOARD
(a)
The Committee must report to the Board formally at the next Board meeting following from
the last Committee meeting on matters relevant to the Committee’s role and responsibilities.
(b)
The Committee must brief the Board promptly on all urgent and significant matters.
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ANNEXURE A – DEFINITION OF INDEPENDENCE
An audit committee member is independent if he or she:
(a)
(b)
has no direct or indirect material relationship with the Corporation, being a relationship which could,
in the view of the Corporation’s board of directors, be reasonably expected to interfere with the
exercise of a member’s independent judgement; and
is free of any interest, position, association or relationship that might influence, or reasonably be
perceived to influence, in a material respect his or her capacity to bring an independent judgement to
bear on issues before the board and to act in the best interests of the entity and its security holders
generally.
Material relationships
Subject to certain exemptions and further clarification set out in Canadian securities laws applicable to the
Corporation, the following individuals are considered to have a material relationship with the Corporation:
(a)
(b)
(c)
an individual who (i) accepts, directly or indirectly, any consulting, advisory or other compensatory fee
from the Corporation or any subsidiary entity of the Corporation, other than as remuneration for acting
in his or her capacity as a member of the board of directors or any board committee, or as a part‐time
chair or vice‐chair of the board or any board committee; or (ii) is an affiliated entity of the Corporation
or any of its subsidiary entities,
an individual who is, or has been within the last three years, an employee or executive officer of the
Corporation;
an individual whose immediate family member is, or has been within the last three years, an executive
officer of the Corporation;
(d)
an individual who:
i.
ii.
iii.
is a partner of a firm that is the Corporation’s internal or external auditor,
is an employee of that firm, or
was within the last three years a partner or employee of that firm and personally worked on
the Corporation’s audit within that time;
(e)
an individual whose spouse, minor child or stepchild, or child or stepchild who shares a home with the
individual:
i.
ii.
is a partner of a firm that is the Corporation’s internal or external auditor,
is an employee of that firm and participates in its audit, assurance or tax compliance (but not
tax planning) practice, or
iii.
was within the last three years a partner or employee of that firm and personally worked on
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PAGE 62
the Corporation’s audit within that time;
(f)
(g)
an individual who, or whose immediate family member, is or has been within the last three years, an
executive officer of an entity if any of the Corporation’s current executive officers serves or served at
that same time on the entity’s compensation committee; and
an individual who received, or whose immediate family member who is employed as an executive
officer of the Corporation received, more than $75,000 in direct compensation from the Corporation
during any 12 month period within the last three years.
Examples of interests, positions, associations or relationships affecting independence
Examples of interests, positions, associations and relationships that might cause doubts about the
independence of a director include if the director:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
is, or has been, employed in an executive capacity by the Corporation or any of its child entities and
there has not been a period of at least three years between ceasing such employment and serving on
the board;
is, or has within the last three years been, a partner, director or senior employee of a provider of
material professional services or a material consultant to the Corporation or any of its child entities;
is, or has been within the last three years, in a material business relationship (e.g. as a supplier or
customer) with the Corporation or any of its child entities, or an officer of, or otherwise associated
with, someone with such a relationship;
is a substantial security holder of the Corporation or an officer of, or otherwise associated with, a
substantial security holder of the Corporation;
has a material contractual relationship with the Corporation or its child entities other than as a
director;
has close family ties with any person who falls within any of the categories described above; or
has been a director of the Corporation for such a period that his or her independence may have been
compromised.
In each case, the materiality of the interest, position, association or relationship needs to be assessed to
determine whether it might interfere, or might reasonably be seen to interfere, with the director’s capacity to
bring an independent judgment to bear on issues before the Board and to act in the best interests of the
Corporation and its security holders generally.
2017 Annual Information Form