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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
Robert Schafer
Jacques McMullen
Michele Muscillo
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
Durugu Residential Area KUMBOSCO,
BOLGATANGA, GHANA
Tel: + 233 (0) 261 905 220
www.cardinalresources.com.au
info@cardinalresources.com.au
Australia
Computershare Investor Services Pty Ltd
Level 11, 175 St Georges Terrace
Perth WA 6000
Canada
Computershare Investor Services Inc
11th Floor, 100 University Avenue
Toronto, Ontario, M5J2Y1 Canada
Tel: + 1 416 9449
Fax: + 1 416 981 9800
Canada
Bennett Jones LLP
3400 One First Canadian Place
Toronto ON M5X 1A4
Tel: 1300 850 505
Int: +61 8 9323 2000
Fax: + 61 8 9323 2033
Australia
Steinepreis Paganin
Level 4, The Read Building
16 Milligan Street
Perth WA 6000
BDO (WA) Pty Ltd
38 Station Street
Subiaco WA 6008
Tel: + 61 8 6382 4600
Fax: +61 8 6382 4601
Registered Office
Ghana Office
Website
Email
Share Register
Lawyers
Auditors
TS PAGE
Page 1 of 39
(the “Company” or the “Corporation” or “Cardinal”)
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended June 30, 2018
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 three and twelve months ended June 30, 2018. The
following information, prepared as of September 28, 2018, should be read in conjunction with the Company’s
audited consolidated financial statements for the year ended June 30, 2018 and the audited consolidated financial
statements for the year ended June 30, 2017. 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 reflects 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, 2018
Page 2 of 39
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 mineralization 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 180 Mt grading 1.1
g/t Au for 6.5 Moz Au and an Inferred Mineral Resource of 13 Mt grading 1.2 g/t Au for 0.5 Moz Au each at a 0.5
g/t Au cutoff grade, has been established. The map below shows the location of the Namdini Gold Project and the
Corporation’s other properties in Ghana.
Figure 1 Cardinal Resource’s Tenements in Ghana
Management’s Discussion & Analysis June 30, 2018
Page 3 of 39
CORPORATE HIGHLIGHTS
On April 4, 2018, the Company advised that first pass regional exploration drilling was underway. Recent
RC drilling results on the Kungongo Prospect were announced which focused primarily on shallow auger
soil gold anomalies and ground magnetics targets. Drilling confirmed a sequence of mixed sediments and
mafic volcanics. The initial RC drilling was completed on a series of fences between 400m and 1,600m
apart. Hole spacing on lines was at 50m to 100m centres with the drilling covering approximately 3.6km
of strike length along the target. Gold intersections returned were encouraging with some significant
grades and multiple zones encountered.
On April 19, 2018, a Technical Report on the Namdini Gold Project was filed on SEDAR where the Company
announced an updated Mineral Resource estimate of an Indicated Mineral Resource of 180 Mt grading
1.1 g/t Au for 6.5 Moz Au and an Inferred Mineral Resource of 13 Mt grading 1.2 g/t Au for 0.5 Moz Au,
each at a 0.5 g/t Au cut off. The mineralisation remains open along strike and down dip. The NI43‐101
Technical Report was authored by MPR Geological Consultants Pty Ltd and has an effective date of March
5, 2018. The Technical Report can be viewed under the Company's issuer profile on SEDAR at
www.sedar.com or the Company’s website www.cardinalresources.com.au
On May 28, 2018, the Company announced that encouraging first pass shallow RC drilling gold results
were returned from one of the six coincident gold‐in‐soil and geophysical targets on the Ndongo Licence
within the Bolgatanga Project, which is located ~15 km north of the Company’s Namdini Gold Project with
an Indicated Mineral Resource of 6.5 Moz Au (Figure 2). These preliminary results were very positive and
confirmed previous historical exploration by Etruscan Resources.
On July 16, 2018 ,the Company announced that it had intersected further gold mineralisation at a new
discovery named Ndongo East on its 100% owned Ndongo License, located approximately 15 km north of
the Company’s flagship Namdini Gold Project which has a 6.5 Moz Indicated Mineral Resource (Figure 3).
During the next quarter, the Company expects to announce further exploration results from its
comprehensive campaign to continue to add value to its Bolgatanga exploration tenement package.
On July 31, 2018, the Company announced that it had received investment committee approval from and
executed a term sheet with Sprott Private Resource Lending (Collector), L.P. (“Sprott”) to be provided with
a US$25 million senior secured credit facility (“Facility”). The Facility is subject to mutually satisfactory
documentation and other customary conditions precedent, which are expected to be completed on or
about 17 August 2018. The US$25 million Facility will provide working capital and funding to complete the
Preliminary and Definitive Feasibility Studies for Namdini.
On August 22, 2018, The Company announced that it had completed the final legal and formal
documentation allowing it to enter into a transaction for US$25 million with Sprott.
On September 18, 2018, the Corporation announced the results of its pre‐feasibility study (PFS) on the
Namdini Project, highlighted by a 4.76 Moz maiden probable ore reserve at a 1.14 g/t cut‐off. A press
release announcing the results of the PFS is available on SEDAR at www.sedar.com. A technical report
containing the PFS and prepared in accordance with NI 43‐101 will be available on SEDAR at
www.sedar.com within 45 days.
Management’s Discussion & Analysis June 30, 2018
Page 4 of 39
OUTLOOK
The principal activity of the Corporation (and its subsidiaries) is gold exploration in Ghana. The main focus of
activity is the development of the Namdini Gold Project. The Namdini Project location has attractive advantages
from a development and infrastructure point of view. Located near water, power, sealed roads to air and seaports.
Ghana also provides skilled labour through its extensive history of mining and the large number of operating mines
in country.
As key milestones are achieved, the Company will continue to generate news flow from its ongoing metallurgical
test work, greenfield exploration assets and Preliminary Feasibility Study activities.
Development work includes progressing all necessary permits and design study phases required to construct and
commission a fully operational mine.
Given the PEA recommendation, further evaluations and trade‐offs in relation to mine scheduling, plant design
and costings have been initiated to support the PFS stage.
Cardinal Resources has attracted support, as the Namdini Gold Project is located in Ghana, a jurisdiction with a
long history of mining, and stable political system. Ghana is home to several junior, intermediate and senior
mining companies. Ghana has an established mining and tax regime in place that provides a clear framework for
advancing projects.
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 have also been in progress at these tenements.
THE NAMDINI GOLD PROJECT
Mining Licence / Property Title
During the December 2017 quarter, a Large‐Scale Mining Licence covering the Namdini Mining Lease was assigned
to Cardinal Namdini Mining Limited (“Cardinal Namdini”), a wholly owned subsidiary of Cardinal, by the Minister
of Lands and Natural Resources under the Ghanaian Minerals and Mining Act 2006 (Act 703). The Large‐Scale
Mining Licence, which covers 19.54 km2 in the Dakoto area of the Talensi District Assembly in Upper East Region
of Ghana evidenced by a Mining Lease is for an initial period of 15 years and is renewable.
Management’s Discussion & Analysis June 30, 2018
Page 5 of 39
Mineral Resources
Figure 2 Namdini Project Proximity Map
In March 2018, Cardinal released an updated Mineral Resource estimate for its Namdini Gold Project in Ghana,
West Africa which incorporates the results from the latest infill drilling program completed in Q4 of 2017 totalling
approximately 15,684m in 35 drill holes. The primary aim of the drilling program was to infill the deposit within
the conceptual pit to focus on converting the remaining Inferred Mineral Resources to the Indicated category.
Lower cut‐off
grade (Au g/t)
0.4
0.5
0.6
0.4
0.5
0.6
Average Grade
(Au g/t)
Million Tonnes
(Mt)
Indicated Mineral Resources
210
180
152
Inferred Mineral Resources
15
13
11
1.0
1.1
1.2
1.1
1.2
1.4
Million Ounces
(Au Moz)
6.9
6.5
6.0
0.6
0.5
0.5
Table 1: March 2018 MPR MIK NI43‐101 and JORC 2012 compliant Mineral Resource estimate
Notes
1.
2.
JORC (2012) Code was followed for the Mineral Resources. MPR 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.
Management’s Discussion & Analysis June 30, 2018
Page 6 of 39
3.
4.
Incorporates drill holes completed as of February 2018.
Numbers may not add due to rounding.
The table above (Table 1) 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).
Project Development Activities
Cardinal is progressing with their prefeasibility study program to further advance the Namdini Gold Project. This
consists of continuing with previously selected and newly selected consultants to assist with the phased
development of the Namdini Gold Project. The consultants and their roles are tabulated below:
Golder Associates
Study Managers. Mine planning and Whittle Optimisation. Pit
design and mine scheduling. Geotechnical, Hydrology and
Hydrogeology engineering. Responsible for the compilation of
the NI43‐101 reports
Lycopodium Limited
Process plant and associated infrastructure. Capital and
Operating cost estimation and input into the NI43‐101 reports
Orway Minerals Consultants
Comminution data analysis and crushing and grinding circuit
option study
ALS Laboratory (Perth)
Metallurgical testwork to support the process design and
criteria
Knight Piesold Consulting
Tailings Storage Facility and associated infrastructure design
IMO Metallurgy
Metallurgical and process flowsheet development
MPR Geological Consultants Mineral Resource Modelling of the Namdini Deposit
Orefind
Intermine
Geology and deposit structural genesis
Mine Schedule Optimisation
Nemas Consult Pty Ltd
Environmental Impact Assessment Study
BDO
Financial Model Reviewer
Management’s Discussion & Analysis June 30, 2018
Project Development Timeline
Page 7 of 39
Figure 2: Namdini Project Development Timeline
As a result of Cardinal’s infill drilling programme in Q3 and Q4 2017, the Company has been highly successful in
delivering a substantial conversion of the Inferred category ounces into the Indicated Mineral Resource category
which is now at 6.5Moz of Indicated Mineral Resources and 0.5Moz of Inferred Mineral Resources (TSX/ASX Press
Release March 5, 2018). This compares favourably against the previous Mineral Resource estimate of 4.3Moz
Indicated and 3.1Moz Inferred (ASX/TSX Press Release September 18, 2017).
Cardinal’s understanding of the geology, structural constraints and distribution of the mineralisation has
significantly improved from the results of the drilling. The NI 43‐101 Mineral Resource Estimation Technical Report
April 18, 2018 can be viewed under the Company's issuer profile on SEDAR at www.sedar.com and on the
Company’s website at www.cardinalresources.com.au.
The higher‐grade areas of the deposit, close to surface, will be targeted within the Stage 1 pit in the early years of
production. This is a region where higher‐grade gold mineralisation is located at and just below the topographic
surface. Ongoing studies indicate this pit will be the area most likely to repay capital investment soonest. It is
envisaged that approximately 900,000 oz to 1,000,000 oz will be produced over three to four years at an average
head grade of approximately 1.3 to 1.5 g/t Au.
These higher‐grade areas were tested with a close spaced RC Drilling pattern which emulated the expected Grade
Control parameters that will be applied during production. This Grade Control drilling targeted the near surface
portion of the modelled mineralisation, as defined by the broad spaced resource definition drilling and subsequent
Mineral Resource Model. The program was designed to define the grade distribution of gold mineralisation at and
near surface within the targeted Starter Pit area (Press Release December 11, 2017 Cardinal Grade Control Drill
Results Returned).
Ongoing metallurgical optimisation testwork is being performed at the ALS Laboratory in Perth as part of Cardinal’s
metallurgical testwork programme for its Namdini Gold Project. Part of the programme is specifically targeting
the envisaged starter pit area since it includes over a quarter of the expected total gold ounce count. Further
testing is also ongoing on life of mine samples which are separated by our three main lithologies; metavolcanic,
granite and diorite.
Management’s Discussion & Analysis June 30, 2018
Page 8 of 39
A maiden Mineral Ore Reserve is expected to be announced as part of the PFS study, currently underway for the
Namdini Open Pit Project.
Further studies are being conducted on HV power supply which include back‐up power and alternative power
supply opportunities.
In support of the mine design, Golder has carried out a study of existing geotechnical information, reviewed
information on mineral resource estimates, conducted a site visit and gathered detailed core logging data from
specific geotechnically targeted drill locations within the project area. The life‐of‐mine pit design will consider
slope performance based on models developed from laboratory results of sampled drill core. The report will
present feasibility‐level slope designs based on data collected in the field and reports made available by Cardinal.
A hydrogeological fieldwork programme was undertaken comprising a hydro‐census of surrounding properties to
identify groundwater users. Groundwater exploration drilling of five pairs of boreholes converted to deep and
shallow monitoring wells was completed. Characterisation of groundwater quality by sampling and laboratory
analysis, groundwater monitoring and hydraulic testing was completed. Development of a conceptual model for
assessment of pit inflows, potential impacts on mine dewatering on local, plus regional groundwater and surface
water systems, has been completed in support of the mine design.
A hydrology programme including the development of a stormwater plan and overall site water balance was also
completed. Hydrological design criteria are being developed, largely based on International Finance Corporation
requirements.
Savannah Mining Ghana Limited (“Savannah”) completed an EIS for Namdini and filed the EIS with the
Environmental Protection Agency (“EPA”). In accordance with EPA Regulations 15(1b) and (1c) of the
Environmental Assessment Regulations, 1999 (LI 1652) and Ghana’s Environmental Impact Assessment (EIA)
Procedures, the Environmental Protection Agency (EPA) issued a public notification on the proposed Namdini Gold
Mining Project. Cardinal will submit to the Minerals Commission an updated EIS and an application for an
Operating Permit for the project scale envisioned in the PFS.
BDO have provided a detailed, independent, financial model review of all procedures and internal logic applied in the
model. BDO confirmed that the model is in good standing and provided a written report to this effect.
Due to the larger indicated resource, the Company is also considering larger throughput options in parallel, which
may have positive outcomes on project economics.
Management’s Discussion & Analysis June 30, 2018
Page 9 of 39
REGIONAL EXPLORATION UPDATE
Bolgatanga Project
The Bolgatanga Project includes the Ndongo, Kungongo and Bongo Prospects (Figure 3). The main focus of the
Company’s Diamond (DD) and Reverse Circulation (RC) drilling was on the highly prospective areas along the
Nangodi Shear Zone during this quarter. Detailed ground geophysical surveys were also in progress over the
Ndongo and Kungongo tenements.
Figure 3: Bolgatanga Project Tenements
Subranum Project
The Subranum Project is located in southwest Ghana (Figure 1). DD and Auger drilling are planned for this
project.
Management’s Discussion & Analysis June 30, 2018
Page 10 of 39
BOLGATANGA PROJECT
Exploration Drilling
A total of 117 RC holes were drilled on the enlarged Ndongo tenement during the quarter with 15,049 samples,
including QAQC controls, submitted to Ghana based laboratories for fire assay (Table 2).
Prospect
Drill Method
Ndongo
Total
RC Drilling
No.
Holes
117
117
Total
(m)
13,764
13,764
No.
Samples
13,698
13,698
Duplicates
Blanks
Stds
672
672
342
342
337
337
Total
Samples
15,049
15,049
Table 2: Exploration Drilling for Q2 2018
Ndongo Tenement
The Company has concentrated its exploration focus this quarter on the Ndongo Licence which covers an area of
295km2. The area was recently expanded by the purchase of two exploration licence areas from Kinross Gold in
August 2017 (Figure 3). Exploration has defined six prospects totalling 70km in strike length only 15km north of
the Namdini Gold Project.
The Company considers the Licence area to be highly prospective for the discovery of economic gold
mineralisation associated with the prolific Nangodi Shear Zone, a splay fault off the main regional‐scale Bole‐
Bolgatanga Shear. Elsewhere, the Nangodi Shear Zone is spatially related to no fewer than four major gold
discoveries, including the Company’s Namdini Gold Project, the Shaanxi Mine, the historic Nangodi Gold Mine and
the Youga Gold Mine in Burkina Faso, adjacent to the Ghana border (Figure 3). In addition, there are numerous
historic shallow artisanal workings along many parts of this shear zone.
Target A – Prospect Zupeliga South
Target A was previously named Ndongo West prior to the acquisition of the surrounding Kinross ground.
Numerous gold‐in‐soil anomalies, RAB drilling, shallow artisanal diggings and several deeper artisanal shafts
all indicate the gold‐bearing potential of this recently acquired area (Figure 4).
At Ndongo West, Gradient Array IP (“GAIP”) and ground magnetic surveys identified a very well‐developed
contact zone between conductive and resistive units, along which the artisanal shafts are located.
Once the former Kinross ground was added to Ndongo West, this extended the Target A strike length to 12 km
and 1.5 km width and is now called Zupeliga South Prospect (Figure 4).
The prospect is underlain by weakly to strongly magnetic mafic‐ultramafic volcanic units which are intruded
locally by granodiorite. The volcanic units are altered and contain pyrite, minor pyrrhotite, magnetite, minor
arsenopyrite and silica.
The geology of this prospect is more complex as folding has been identified with the fold axis orientated
~020⁰, and the rock units striking ~300⁰ and dipping north at ~60⁰. The structures imply open anticlinal folds
although plunges have yet to be determined.
Gold of variable grades is found within highly magnetised mafic volcanic horizons with disseminated
sulphides and cross‐cutting pyrite and smoky quartz veinlets. Higher gold grades occur within a sheared, less
magnetic and siliceous altered inner zone within the magnetic corridor which also has cross‐cutting pyrite
and quartz veinlets.
Gold mineralisation has initially been located within an area of ~200 m strike length by ~100 m width within
the larger Target A area which has a strike length of ~12 km and a width of ~1.5 km. At this early stage,
Management’s Discussion & Analysis June 30, 2018
mineralisation appears to be open along strike, especially along the fold axes and at depth with further
drilling planned to evaluate the two limbs of the anticlines.
Page 11 of 39
Figure 4: Ndongo Prospecting Licence showing local prospects
Management’s Discussion & Analysis June 30, 2018
Page 12 of 39
Six large scale targets which are considered highly prospective for gold mineralisation, have been defined from
coincident historical drill data, auger soil anomalies and geophysical surveys (Press Release May 18, 2018
Encouraging First Pass Gold Results at Ndongo).
Exploration will continue over the tenements with field confirmation and exploration drilling required to test the
targets that have been generated.
Kungongo Tenement
The Kungongo Licence is located in northeast Ghana some 45km west of the Company’s Namdini Gold Project.
The Licence covers an area of 122 km2 and is a renewable Exploration Licence (Figure 3).
Recent RC drilling has focused primarily on shallow auger soil gold anomalies and ground magnetics. Drilling has
confirmed a sequence of mixed sediments and mafic volcanics. The initial RC drilling was completed on a series
of fences between 400m and 1,600m apart. Hole spacing on lines was at 50m to 100m centres with the drilling
covering approximately 3.6km of strike length along the target. Gold intersections returned were encouraging
with some significant grades and multiple zones encountered, (ASX Release April 4, 2018 First Pass Regional
Exploration Drilling Underway).
No drilling was conducted by the company on the Kungongo Prospect during the quarter ended June 30, 2018.
However, ground geophysical surveys have continued.
5,000m of RC and diamond drilling is designed to follow up the widely‐spaced anomalous first pass results.
Bongo Prospect
The Bongo Licence covers an area of 453 km2 adjacent to the regional Bole‐Bolgatanga Shear and is dominated by
three major intrusive complexes, predominantly granitoids of intermediate to foliated felsic basin types
intercalated with mafic volcanic flows (Figure 3).
Six target areas were initially identified from the airborne geophysical survey. Three of these target areas totaling
26km in strike length within the northwestern, northeastern and southeastern parts of the Bongo Licence were
generated from auger soil anomalies, previous air magnetic interpretation, mapping and ground truthing over the
Licence.
Reconnaissance RC drilling was delayed and is now expected to commence Q3 2018 across all anomalous targets.
SUBRANUM PROJECT
The Subranum Project covers an area of 69 km² located in southwest Ghana. The license straddles the eastern
margin of the Sefwi Gold Belt. There is 9 km of prospective sheared contact between Birimian phyllites and
greywackes to the east and mafic to intermediate volcanics and volcaniclastics to the west. Granitoid stocks of
the Dixcove suite intrude this shear zone. The Sefwi Belt is highly prospective and is spatially related to major
discoveries including the 7 Moz Bibiani Gold Mine (approximately 70 km southwest), Newmont’s Ahafo 23 Moz
Gold Mine (approximately 53 km west) and Kinross’ Chirano 5 Moz Gold Mine (approximately 110 km southwest).
Management’s Discussion & Analysis June 30, 2018
Page 13 of 39
Clearing of the previous drill access tracks was completed during the previous quarter, with diamond (DD) drilling
now started during this quarter (Table 3).
Prospect
Drill Method
Subranum
Total
DD Drilling
No.
Holes
4
4
Total
(m)
695.60
695.60
No.
Samples
0
0
Duplicates
Blanks
Stds
0
0
0
0
0
0
Total
Samples
0
0
Table 3: Exploration Drilling for Q2 2018
As the gold mineralised, NE‐SW trending Bibiani Shear Zone is developed throughout the tenement, the initial
drilling will focus on a 5.2 km strike length from the southwestern edge of the tenement towards the northeast
along strike (Figure 5).
Figure 5: Subranum Project with Bibiani Shear through the tenement
A soil auger programme planned for the remaining 3.8 km strike length in the NE portion of the tenement to
initially cover a ~400m width across the strike of the Bibiani Shear Zone,was delayed due to extensive rain and will
commence in Q3 2018, weather permitting.
Management’s Discussion & Analysis June 30, 2018
Page 14 of 39
CORPORATE
Subsequent to the quarter end the Company was pleased to announce that it had received investment
committee approval from and executed a term sheet with Sprott Private Resource Lending (Collector), L.P.
(“Sprott”) to be provided with a US$25 million senior secured credit facility (“Facility”). The Facility is subject
to mutually satisfactory documentation and other customary conditions precedent, which was competed on
22 August 2018.
A positive Preliminary Economic Assessment released in March this year clearly demonstrated Cardinal’s
flagship Namdini Gold Project in Ghana to be a low capital cost, high‐margin development opportunity.
The US$25 million Facility will provide working capital and funding to complete the Preliminary and Definitive
Feasibility Studies for Namdini.
Key terms of the Facility are as follows:
Committed loan facility for US$25 million to be funded on the closing date
30‐month repayment term
Interest rate of LIBOR + 7.75%
Early repayment flexibility
Issue of 4,250,000 ordinary shares issued to Sprott (subject to regulatory approvals)
The Facility is secured against assets of Cardinal and its wholly owned subsidiary, Cardinal Namdini
Mining Limited.
Competent / Qualified Person Statement
All production targets for the Namdini Gold Mine referred to in this report are underpinned by estimated Mineral
Resources which were prepared by competent persons and qualified persons in accordance with the requirements
of the JORC Code and National Instrument 43‐101‐ Standards of Disclosure for Mineral Projects (“NI43‐101”),
respectively.
The information in this report that relates to Namdini Mineral Resources is based on information compiled and
reviewed by Mr Nicholas Johnson, a Competent Person who is a Member of the Australian Institute of
Geoscientists and a full‐time employee of MPR Geological Consultants Pty Ltd. Mr Johnson has sufficient
experience which is relevant to the style of mineralization and type of deposit under consideration and to the
activity which he has undertaken to qualify as a Competent Person as defined in the JORC Code 2012 and is a
qualified person for the purposes of NI43‐101. Mr Johnson has no economic, financial or pecuniary interest in the
company and consents to the inclusion in this report of the matters based on his information in the form and
context in which it appears.
The information in this report that relates to Namdini Ore Reserves and mining studies is based on information
compiled and reviewed by Mr Glenn Turnbull, a Competent Person who is a Chartered Engineer and Member of
the Australasian Institute of Mining and Metallurgy and a full‐time employee of Golder. Mr Turnbull has sufficient
experience which is relevant to the style of mineralization and type of deposit under consideration and to the
activity which he has undertaken to qualify as a Competent Person as defined in the JORC Code 2012 and is a
qualified person for the purposes of NI43‐101. Mr Turnbull has no economic, financial or pecuniary interest in the
company and consents to the inclusion in this report of the matters based on his information in the form and
context in which it appears.
Management’s Discussion & Analysis June 30, 2018
Page 15 of 39
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
mineralization 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, who is a member of the Geological Society of South Africa. Mr.
Abbott has sufficient experience which is relevant to the style of mineralization and type of deposit under
consideration and 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:
o 18 Sep 2018
o 16 July 2018
o 28 May 2018
o 19 April 2018
o 04 April 2018
o 05 Mar 2018
o 22 Feb 2018
o 05 Feb 2018
o 22 Jan 2018
o 14 Dec 2017
o 12 Dec 2017
Cardinal Namdini Pre‐Feasibility Study 4.76Moz Ore Reserve
Cardinal Makes New Gold Discovery at Ndongo East
Encouraging First Pass Gold Results at Ndongo
Technical Report on Namdini Gold Project Filed on SEDAR
First Pass Regional Exploration Drilling Underway
Cardinal Upgrades Indicated Mineral Resource to 6.5Moz
Cardinal Infill Drilling Results Returned
Namdini Gold Project Preliminary Economic Assessment
Namdini Infill Drilling Results Returned
Namdini Drilling and Regional Exploration Update
Cardinal Grade Control Drill Results Returned
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, 2018
Page 16 of 39
SELECTED ANNUAL INFORMATION
The following table provides information for the year ended June 30, 2018, 2017 and 2016:
Exploration and evaluation expenditures
$ 26,747,592
$ 15,794,617
$ 7,182,584
June 30, 2018
June 30, 2017
June 30, 2016
Corporate general and administration
Share based payments
Amortisation
Net comprehensive loss
Loss per share – basic and fully diluted
Total assets
Total liabilities
Shareholders’ equity
5,945,652
4,742,362
217,454
37,690,470
10.22
10,241,614
4,766,976
10,241,614
3,637,864
1,964,324
426,572
21,724,298
7.12
30,109,678
3,903,107
26,206,571
1,216,910
874,000
94,932
9,243,909
5.55
5,661,536
1,713,467
3,948,069
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.
During the year the Company released an updated resource was published in September 2017, in February 2018
the Company published its Preliminary Economic Assessment at Namdini and a Pre‐Feasibility Study at Namdini
published in September 2018.
During this period, minimal expenditures were incurred on the Bolgatanga Project and Subranum Project.
Corporate general and administration expenses increased due to increased corporate activity, as a result of the
exploration success at Namdini, which resulted in a TSX listing in July 2017, the C$12 million financing that
occurred in Q4 2017 and increased legal, staffing, professional fees, travel and promotional costs.
From January 1, 2017, the Company’s corporate general and administration expenses increased due to an
increase of Perth staff from 3 personnel to 7 personnel, which included the appointment of a Project Manager,
Geology Manager, Canadian Corporate Secretary and Chief Financial Officer. There have been no significant
changes to staff from the quarter ended June 30, 2017 to June 30, 2018 and as a result the expenses are regular.
Corporate general and administration expenses consist of corporate administration costs incurred by the
corporate office in Perth. Perth office expenses include personnel, professional fees, compliance and regulatory
fees, and investor relations expenses.
Share based payments represents 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
amortized over the vesting period. The amount recognized 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.
Management’s Discussion & Analysis June 30, 2018
Page 17 of 39
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.
SELECTED QUARTERLY INFORMATION
The following table provides information for the eight quarters:
Exploration and evaluation expenditures
Corporate general and administration
Share/Option based payments
Amortization
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/Option based payments
Amortization
Net comprehensive loss
Loss per share – basic and fully diluted
Total assets
Total liabilities
Shareholders’ equity
June 30, 2018
March 31, 2018
$ 3,653,287
1,646,341
899,469
67,080
6,148,313
1.62
10,241,614
4,766,976
5,474,638
$ 4,640,781
1,151,889
1,582,306
50,674
7,357,850
0.02
15,406,176
4,789,126
10,617,050
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
5,964,073
2.26
13,327,164
1,416,759
11,910,405
December 31, 2017
$ 8,978,587
1,833,531
1,107,762
62,813
12,249,188
0.03
20,938,595
4,617,683
16,320,912
September 30, 2017
$ 9,474,793
1,313,891
1,152,825
36,887
12,066,104
3.44
21,342,325
6,411,267
14,931,058
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
$ 1,378,046
422,216
‐
317,504
2,161,417
1.28
22,842,390
453,227
22,389,163
Exploration and evaluation expenditures were all incurred in respect of the Company’s Ghanaian mining assets.
The Company maintains a policy to expense all exploration and evaluation expenditures 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 and to prepare initial technical evaluations of development
scenarios.
From January 1, 2017, the Company significantly increased its operations, given the inaugural resource estimate
for the Namdini Gold Project in November 2016.
During this period, minimal expenditures were incurred on the Bolgatanga Project and Subranum Project.
Corporate general and administration expenses increased due to increased corporate activity, as a result of the
exploration success at Namdini, which resulted in a TSX listing in July 2017, the C$12 million financing that
occurred in Q4 2017 and increased legal, staffing, professional fees, travel and promotional costs.
Management’s Discussion & Analysis June 30, 2018
Page 18 of 39
From January 1, 2017, the Company’s corporate general and administration expenses increased due to an
increase of Perth staff from 3 personnel to 7 personnel, which included the appointment of a Project Manager,
Geology Manager, Canadian Corporate Secretary and Chief Financial Officer. There have been no significant
changes to staff from the quarter ended June 30, 2017 to June 30, 2018 and as a result the expenses are regular.
Corporate general and administration expenses consist of corporate administration costs incurred by the
corporate office in Perth. Perth office expenses include personnel, professional fees, compliance and regulatory
fees, and investor relations expenses.
Share based payments represents 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
amortized over the vesting period. The amount recognized 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.
The increase in total liabilities for the year ended June 30, 2018 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.
RESULTS OF OPERATIONS
Exploration and evaluation expenditures
Corporate general and administration
Share/Option based payments
Amortization
Interest and other income
Foreign exchange loss (gain)
Net Loss for the period
Three months ended June 30,
2017
2018
$ 3,653,287
1,646,341
899,469
67,080
33,006
193,028
6,148,313
5,878,614
1,327,354
1,416,544
40,853
117,176
193,499
8,422,184
Twelve months ended June 30,
2018
26,747,592
5,945,652
4,742,362
217,454
174,313
295,903
2017
15,794,617
3,637,864
1,964,324
426,572
149,596
116,923
37,690,470
21,790,704
For the three and twelve months ended June 30, 2018, exploration and evaluation expenditures increased
from comparable periods due to the increase in exploration activities at the Namdini Gold Project, with
minimal expenditures on the Bongo, Kungongo and Subranum Projects. Namdini exploration activities
included but was not limited to infill drilling, geotechnical drilling, grade control drilling at the proposed
starter pit location, preparation of the PEA and metallurgical test work, while 2017 activities included the
preparation of an initial resource estimate and resource drilling.
The Company’s corporate general and administration expenses have increased from the prior year due to an
increase in costs due the Company’s listing on the TSX in July 2017. Incremental costs were incurred in
respect of the July 2017 TSX listing, staffing, legal fees, office rental, professional fees and investor relations
costs.
Management’s Discussion & Analysis June 30, 2018
Page 19 of 39
For the three months ended June 30, 2018, share based payments have remained regular. For the twelve
months ended June 30 2018 share based payments have increased, compared to the same period in 2017,
primarily due to the issuance of milestone options on March 18 and December 21, 2017 to directors,
officers, and consultants. The fair value of the option grants is being amortized to income over their
respective vesting periods.
For the three and twelve months ended June 30, 2018 and 2017, exploration and evaluation expenditures
comprise:
Three months ended June 30,
2017
2018
Twelve months ended June 30,
2018
2017
Direct exploration costs
Indirect exploration costs
Site general and administration costs
2,788,986
590,126
274,175
4,590,908
782,418
187,784
Exploration and evaluation expenditures
3,653,287
5,561,110
19,352,705
5,189,502
2,205,242
26,747,449
12,831,069
1,662,790
1,300,758
15,794,617
Direct and indirect exploration costs increased for twelve months ended June 30, 2018, compared to the same
period in 2017, mainly due to the execution of larger drill programs to define and to upgrade gold resources at
Namdini. In the second half of 2017, Namdini activities included the preparation and drilling of an extensive
resource estimate upgrade programme. This included but was not limited to resource extension drilling, infill
drilling and grade control drilling.
The cost also included activities required for the preparation and completion of a Preliminary Economic
Assessment and associated metallurgical test work. Costs were also attributable to engineering design and
metallurgical testwork underway towards the Preliminary Feasibility Study due in Q3 2018. In the nine months
ended March 2018, the Company initiated additional regional exploration activities.
Site general and administration costs increased for the twelve months ended June 30, 2018, compared to the
same period in 2017, mainly due to increased salaries, office and administrative, professional fees and travel
expenses associated with the increased activities at Namdini and Ndongo.
Corporate, General and Administration Expenses
Corporate administration expenditures for the three and twelve months ended June 30, 2018 increased,
compared to the same periods in 2017, mainly due to increase payroll expenses for increased staffing, increased
legal and professional fees, increased compliance and regulatory expenses in relation for the TSX listing in Canada
in July 2017, and increased travel and investor relation expenses associated with the increased corporate and
project activities.
Share based Payments
For the three and twelve months period ended June 30, 2018, share based payments increase, compared to the
same periods in 2016, mainly due to the on October 23, 2017 the Company issued a notice of meeting to issue
milestone options to key management personnel, including directors, of the Company. The milestone options
were issued on December 21, 2017.
The increase in share based payments is also attributable to Milestone 1, of the milestone options issued, vesting
during the year.
Management’s Discussion & Analysis June 30, 2018
Page 20 of 39
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
As at June 30, 2018, the Company had cash and cash equivalents of $7,303,807 (June 30, 2017 ‐ $28,592,718)
and current liabilities of $4,766,976 (June 30, 2017 ‐ $3,903,107).
As at June 30, 2018, the Company had a working capital balance of $3,517,055 (June 30, 2017 ‐
$25,741,175).
On 21 November 2017, by way of a Bought Deal Financing, 18,461,600 shares were issued at CA$0.65 per share
to raise a total of CA$12,000,040 (AU$12,396,736).
The decreases in cash and working capital from June 30, 2017 to June 2018 was $22,224,120 and was
primarily due to the Company’s ongoing exploration & evaluation activities at the Namdini Gold Project
and at its regional tenements.
Funds raised from previous financings are being used toward continued advancement and development
of the Company’s Projects and general working capital purposes. After year end, on August 22, 2018 the
Company completed a credit facility with Sprott for US$25m. The Company expects its current capital
resources to be sufficient to advance its planned 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, development 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 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 2019.
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.
On 7 November 2017 US$50,000 was paid to Newmont Ghana Gold Limited on the one anniversary and on 23
November 2017 a final payment of US$100,000 was made for the second anniversary date. 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 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, 2018
Page 21 of 39
Cardinal Namdini Mining Limited (Cardinal Namdini), entered into a Net Smelter Royalty Deed, whereby Cardinal
Namdini will pay to Savannah a Royalty equal to:
(a)
(b)
4% of the Net Smelter Return on the first 50,000 ounces of Specified Minerals produced within each small‐
scale license which was purchased by Savannah within the Large Scale Mining License; and
A 2% Net Smelter Return, effective from production of the 50,001 ounces of Specified Minerals produced
within each small‐scale licence which was purchased by Savannah within the Large Scale Mining License.
Cardinal entered into a definitive agreement with Kinross Gold Group subsidiary Red Back Mining Ghana Limited
(Red Back) to acquire 100% ownership of two large scale prospecting licences located in North East Ghana.
Cardinal has entered into a Royalty Agreement with Red Back, whereby Cardinal shall pay to Red back a 1% net
smelter return royalty on any minerals produced from the properties.
The Corporation has commitments in respect to a secured credit facility, completed on August 22, 2018. The key
terms of the credit facility are as follows:
Committed loan facility of US$25 million
30‐month repayment term
Interest rate of LIBOR + 7.75%
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 the consolidated financial statements.
The Company is exposed to the following financial risks: credit risk, liquidity risk, market risk, currency risk and
interest rate 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:
Management’s Discussion & Analysis June 30, 2018
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.
Page 22 of 39
Cash held in bank accounts
Term deposits
Liquidity Risk
June 30,
2018
$ 2,819,794
4,484,013
June 30,
2017
$ 9,562,815
19,029,903
$ 7,303,807
$ 28,592,718
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. All of the Company’s financial liabilities
have contractual maturities of less than 30 days and are subject to normal trade terms.
At June 30, 2018, the Company had cash and cash equivalents of $7,303,807 (June 30, 2017 ‐ $28,592,715)
available and current liabilities of $4,766,976 (June 30, 2017 ‐ $3,903,107). All of the Company’s financial liabilities
have contractual maturities of less than 30 days and are subject to normal trade terms.
Market Risk
Market risk is the risk that the fair value of, or future cash flows from, the Company’s financial instruments will
significantly fluctuate due to changes in market prices. The value of financial instruments can be affected
by changes in interest rates and foreign exchange rates. Management closely monitors commodity prices,
individual equity movements and the stock market to determine the appropriate course of action to be taken by
the Company.
Currency Risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will
fluctuate due to changes in foreign exchange rates. The Company is exposed to fluctuations in foreign currencies
through its operations in Ghana. The Company monitors this exposure, but has no hedge positions.
As at June 30, 2018, the Company is exposed to currency risk through the following financial assets and liabilities
denominated in currencies other than the Australian dollar:
DESCRIPTION
Cash
Other receivables
Value added tax receivables
Accounts payable and accrued liabilities
Total
June 30, 2018
June 30, 2017
US$ AUD
Equivalent
Ghana Cede AUD
Equivalent
US$ AUD
Equivalent
Ghana Cede AUD
Equivalent
$ 2,681,665
0
0
(3,267,257)
$ (585,592)
$ 93,508
0
724,137
(616,542)
$ 1,040,823
0
0
(1,921,309)
$ 201,103
$ (880,486)
$ 39,709
0
0
(347,494)
$ (307,785)
Based on the balances as at June 30, 2018, a 1% movement in foreign exchange rates would increase/decrease
the loss for the year before taxation by $3,585 (2017: $12,395).
Management’s Discussion & Analysis June 30, 2018
Page 23 of 39
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 realizable in an immediate
settlement of the financial instruments.
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., derived from prices); and
Inputs for the asset or liability that are not based on observable market data (unobservable
inputs).
As at June 30, 2018 and June 30, 2017, 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
Management’s Discussion & Analysis June 30, 2018
Page 24 of 39
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 recognizes the uncertainty attached thereto. There
have been no changes to the Company’s approach to capital management during the three months ended June
30, 2018.
RELATED PARTY TRANSACTIONS
The Company had transactions during the three and nine months ended June 30, 2018 with related parties
consisting of directors, officers and companies with common directors and/or officers:
Namdini Gold Project
During the year ended 30 June 2018, Cardinal Resources Limited advanced $4,000,674 to Savannah, a related
entity to Director Mr Malik Easah. 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, $916,362 has been recorded as a prepayment in the consolidated financial statements of Cardinal
Resources Limited. The difference has been applied toward the development of the mining licence and expensed
during the period.
Consulting Agreement
Tomlinson Consultancy, of which Kevin Tomlinson is a director, provided geological consulting services to the
Company. Amounts that have been paid or payable for the twelve months ended June 30, 2018 was $337,218
(2017: $280,000).
Robert Schafer, a director, provided consulting services to the Company. Amount that have been paid or payable
for the twelve months ended June 30, 2018 was $12,911 (2017: $0).
HopgoodGanim of which Michele Muscillo, a director, is a partner of, provided legal services to the Company.
Amounts that have been paid or payable total $3,506 (2017: $0).
For the twelve months ended June 30, 2018 830,000 shares have been issued to employees of the Company as
part consideration for services provided to the Company.
A total of 189,390 shares were issued to Dr Julian Barnes, a former consultant of the corporation, for consideration
for services provided to the Company.
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. Key management compensation comprises:
Salaries, fees and leave
Non‐monetary
Superannuation expense
Equity based payments
Three months ended June 30,
2017
2018
Twelve months ended June 30,
2017
2018
$ 403,203
23,943
‐
478,619
$ 905,765
$ 337,690
4,061
2,305
308,450
$ 652,506
$ 1,239,277
38,850
4,268
2,955,160
$ 4,237,555
$ 736,957
9,725
10,363
308,450
$ 1,065,495
Management’s Discussion & Analysis June 30, 2018
Page 25 of 39
SHARE POSITION AND OUTSTANDING WARRANTS AND OPTIONS
The Company’s outstanding share position as at the date hereof, is as follows:
Common shares
Listed options
Unlisted options
Milestone Options
60 Class C Performance Shares
Fully diluted share capital
Common Shares
Number of shares
378,323,580
113,619,906
7,000,000
28,294,200
6,000,000
533,237,686
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 22, 2017, 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 October 18, 2017.
Listed Options
Details of listed options (ASX: CDVOA) outstanding as of the date hereof are:
Listed Options
September 30, 2019
113,619,906
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 5% 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 Exchange. The milestone options were
not issued under the Company’s stock option plan.
Management’s Discussion & Analysis June 30, 2018
The following is a summary of share purchase options activity for the three and twelve months ended June 30,
2018:
Page 26 of 39
Grant
Date
03.18.16
04.03.17
12.21.17
12.21.17
12.21.17
Weighted average exercise price $0.57
Expiry
Date
03.18.20
04.12.22
12.21.22
12.21.22
12.21.22
Exercise
Price
$0.22
$0.50
$0.75
$0.825
$0.965
Opening
Balance
8,000,000
23,500,000
nil
nil
nil
During the period
Granted
nil
nil
1,000,000
5,758,000
4,036,200
Exercised
2,000,000
nil
nil
nil
nil
Expired /
Cancelled
nil
5,000,000
nil
nil
nil
Closing
Balance
6,000,000
18,500,000
1,000,000
5,758,000
4,036,200
Vested and
Exercisable
6,000,000
5,550,000
1,000,000
1,727,400
nil
Unvested
‐
12,950,000
‐
4,030,600
4,036,200
Performance Shares
During Q4 2017, Class A Performance Shares expired.
Holders of Class A Performance Shares were 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 was dependent upon satisfaction of one of the following performance hurdles to the reasonable
satisfaction of the Corporation by December 27, 2017, the Class A Performance Shares expired unexercised on
December 28, 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.
Ghanaian projects for the Class A Performance Shares was defined by the Notice of Meeting dated 2 October 2012,
being the assets owned by Cardinal located in Ghana, being the Bolgatanga Project area (Kungongo, Bongo and
Ndongo) and the Subranum Project.
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
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
Conversion to Ordinary
Shares
1,000,000
500,000
500,000
500,000
500,000
500,000
500,000
500,000
500,000
Management’s Discussion & Analysis June 30, 2018
Page 27 of 39
5
5
60
2,750,000 ounces
3,000,000 ounces
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
Accounting Standards issued by the AASB that are not yet mandatorily applicable to the Group, together with an
assessment of the potential impact of such pronouncements on the Group when adopted in future periods, are
discussed below:
–
AASB 9: Financial Instruments and associated Amending Standards (applicable to annual reporting periods
beginning on or after 1 July 2018).
The Standard will be applicable retrospectively (subject to the provisions on hedge accounting outlined
below) and includes revised requirements for the classification and measurement of financial instruments
requirements for financial instruments and hedge accounting.
–
AASB 2014‐7: Amendments to Australian Accounting Standards arising from AASB 9 (December 2014)
AASB 2014‐7 (issued December 2014) gives effect to the consequential amendments to Australian
Accounting Standards (including Interpretations) arising from the issue of AASB 9: Financial Instruments
(December 2014). More significantly, additional disclosure requirements have been added to AASB 7:
Financial Instruments: Disclosures regarding credit risk exposures of the entity. This Standard also makes
various editorial corrections to Australian Accounting Standards and an Interpretation.
AASB 2014‐7 mandatorily applies to annual reporting periods beginning on or after 1 January 2018. Earlier
application is permitted, provided AASB 9 (December 2014) is applied for the same period.
–
AASB 15: Revenue from Contracts with Customers (applicable to annual reporting periods beginning on or
after 1 July 2018, as deferred by AASB 2015‐8: Amendments to Australian Accounting Standards – Effective
Date of AASB 15).
AASB 2014‐5: Amendments to Australian Accounting Standards arising from AASB 15
This Standard is applicable to annual reporting periods beginning on or after 1 January 2017 and makes
consequential amendments to various Australian Accounting Standards arising as a result of the issue of
AASB 15: Revenue from Contracts with Customers. AASB 2014‐5 is not expected to impact the Group’s
financial statements.
When effective, this Standard will replace the current accounting requirements applicable to revenue with
a single, principles‐based model. Apart from a limited number of exceptions, including leases, the new
revenue model in AASB 15 will apply to all contracts with customers as well as non‐monetary exchanges
between entities in the same line of business to facilitate sales to customers and potential customers.
The core principle of the Standard is that an entity will recognise revenue to depict the transfer of promised
goods or services to customers in an amount that reflects the consideration to which the entity expects to
be entitled in exchange for the goods or services. To achieve this objective, AASB 15 provides the following
five‐step process:
Management’s Discussion & Analysis June 30, 2018
Page 28 of 39
‐ identify the contract(s) with a customer;
‐ identify the performance obligations in the contract(s);
‐ determine the transaction price;
‐ allocate the transaction price to the performance obligations in the contract(s); and
‐ recognise revenue when (or as) the performance obligations are satisfied.
The transitional provisions of this Standard permit an entity to either: restate the contracts that existed in
each prior period presented per AASB 108: Accounting Policies, Changes in Accounting Estimates and Errors
(subject to certain practical expedients in AASB 15); or recognise the cumulative effect of retrospective
application to incomplete contracts on the date of initial application. There are also enhanced disclosure
requirements.
–
AASB 16: Leases (applicable to annual reporting periods beginning on or after 1 July 2019).
When effective, this Standard will replace the current accounting requirements applicable to leases in AASB
117: Leases and related Interpretations. AASB 16 introduces a single lessee accounting model that
eliminates the requirement for leases to be classified as operating or finance leases.
The main changes introduced by the new Standard are as follows:
‐
‐
‐
‐
‐
recognition of a right‐of‐use asset and lease liability for all leases (excluding short‐term leases with a
lease term 12 months or less of tenure and leases relating to low‐value assets);
depreciation of right‐of‐use assets in line with AASB 116: Property, Plant and Equipment in profit or
loss and unwinding of the liability in principal and interest components;
inclusion of variable lease payments that depend on an index or a rate in the initial measurement of
the lease liability using the index or rate at the commencement date;
application of a practical expedient to permit a lessee to elect not to separate non‐lease components
and instead account for all components as a lease; and
inclusion of additional disclosure requirements.
The transitional provisions of AASB 16 allow a lessee to either retrospectively apply the Standard to
comparatives in line with AASB 108 or recognise the cumulative effect of retrospective application as an
adjustment to opening equity on the date of initial application.
RISKS AND UNCERTAINTIES
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
Management’s Discussion & Analysis June 30, 2018
Page 29 of 39
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 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 changes 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
resource estimates will be converted into reserves. Different experts may provide different interpretations of
resource estimates.
Management’s Discussion & Analysis June 30, 2018
Page 30 of 39
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 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.
Management’s Discussion & Analysis June 30, 2018
Page 31 of 39
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.
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 cost estimates and 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 realised 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,
Management’s Discussion & Analysis June 30, 2018
Page 32 of 39
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,
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
Management’s Discussion & Analysis June 30, 2018
Page 33 of 39
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.
Ghana’s Income Tax Act, 2015, Act 896 (together with its subsequent amendments, the “Ghanaian Tax Act”)
provides for a withholding tax on payments to goods and service providers. The Ghanaian Tax Act provides for
withholding tax in the range of 5‐20% depending on the nature of the item or service acquired. Additionally, the
Ghanaian Tax Act provides for a withholding tax of 3% on the supply or use of goods to a resident. The Corporation
is required to make assessments as liabilities are incurred to ensure the appropriate amount is withheld and
remitted to the Ghanaian Revenue Authority. Failure to withhold the applicable amounts could result in penalties
and interest for late payment. Failure to comply with the Ghanaian Tax Act, as the same may be amended from
time to time, could result in adverse tax consequences which may have a material adverse effect on the
Corporation’s financial condition. Further, no assurance can be given that new taxation rules or accounting policies
will not be enacted by the government of Ghana or that existing rules will not be applied in a manner which could
result in Cardinal being subject to additional taxation or which could otherwise have a material adverse effect on
Cardinal’s profitability, results of operations, financial condition and the trading price of Cardinal’s securities.
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.
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
Management’s Discussion & Analysis June 30, 2018
Page 34 of 39
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 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)
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, the removal of any artisanal miners
Management’s Discussion & Analysis June 30, 2018
Page 35 of 39
operating on its properties may be required. 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.
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.
Management’s Discussion & Analysis June 30, 2018
Page 36 of 39
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 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:
Deferred taxation
The potential deferred tax asset arising from the tax losses and temporary differences have not been recognized
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 recognized 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.
Management’s Discussion & Analysis June 30, 2018
Page 37 of 39
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.
“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
Management’s Discussion & Analysis June 30, 2018
Page 38 of 39
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
recognized 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, 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 MD&A 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.
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, 2018, 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, 2018, 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.
Management’s Discussion & Analysis June 30, 2018
Page 39 of 39
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
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, 2018 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, 2018, 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, 2018
CONSOLIDATED
FINANCIAL
STATEMENTS (II)
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
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 Consolidated Financial Statements
Directors’ Declaration
Auditor’s Independence Declaration
Independent Auditor’s Report
Shareholder Information
Schedule of Tenements
PAGE
3
22
23
24
25
26
57
58
59
63
65
DIRECTORS’ REPORT
The Directors of Cardinal Resources Limited submit herewith the annual financial report of Cardinal Resources
Limited for the period 1 July 2017 to 30 June 2018. 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 2018 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
Orbis Gold Ltd
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
Date of Resignation
Not Applicable
Not Applicable
Not Applicable
16 May 2016
17 February 2015
Mr Koimtsidis has for the last 27 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 Three and Twelve Months Ended 30 June 2018
Page 3 of 65
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.
ROBERT SCHAFER B.Sc (Hons)
Non‐Executive Director
Appointed 10 July 2017
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.
Orosur Mining Inc.
Minera IRL
Orex Exploration
Curtis Resources Ltd
Galway Gold
Lincoln Mining Corporation
Date of Appointment
1 February 2006
20 April 2017
14 March 2017
19 June 2018
12 September 2016
10 September 2010
28 January 2011
21 December 2012
9 April 2014
Date of Resignation
Not Applicable
Not Applicable
Not Applicable
Not Applicable
30 November 2016
18 May 2017
20 November 2014
5 November 2014
12 December 2016
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2018
Page 4 of 65
DIRECTORS’ REPORT
Martina Minerals Corp
Rathdowney Resources Ltd
19 July 2005
15 March 2011
25 February 2015
15 April 2015
JACQUES MCMULLEN
Non‐Executive Director
Appointed: 11 October 2017
Mr McMullen retired in 2012 after a distinguished 35‐year career in the mining industry of which the last 17 years
were with Barrick Gold Corporation where he held the positions of Senior VP Special Projects and Technical
Services. In his role as Senior VP of Barrick, Jacques was instrumental in the development of many mines including
Goldstrike, Veladero, Lagunas Norte, Cowal and Bulyanhulu. His experience includes all phases of development
including feasibility, construction, commissioning, ramp‐up and operation’s optimization.
Following his retirement, Mr. McMullen joined BBA as Principal, Mines & Metals and Director. BBA is a Canadian
based, global engineering firm. At BBA, Jacques focused on the Borden Lake development project which was
purchased by Goldcorp. Additionally, Jacques was Chairman of Orvana Minerals Corp. (TSX: ORV) and is currently
a Director at Equinox Gold Ltd. (TSX‐V: EQX), Excellon Resources (TSX:EXN) and a corporate advisor to Detour Gold
Corporation (Detour Gold: TSX: DGC).
During the past 3 years he has also served as a director of the following listed companies;
Company
Excellon Resources
Equinox Gold
New Castle Gold
MICHELE MUSCILLO
Non‐Executive Director
Appointed: 11 October 2017
Date of Appointment
3 November 2017
22 December 2017
11 October 2017
Date of Resignation
Not Applicable
Not Applicable
22 December 2017
Mr Muscillo is a Partner with HopgoodGanim Lawyers in Australia. Michele has practised exclusively in corporate
law for over 15 years and has extensive experience in capital markets transactions, including the negotiation of
significant commercial contracts and agreements. As part of this role, Mr Muscillo has acted on numerous IPOs
and debt and equity raisings, and advised both bidders and targets on public market control transactions. His key
areas of practice include Corporate Advisory and Governance, Capital Markets, Resources and Energy.
Mr Muscillo is currently a Non‐Executive Director with Aeris Resources Limited (ASX:AIS) and Xanadu Mines
Limited (ASX: XAM). Formerly, Michele was also Non‐Executive Director of Orbis Gold Limited which is currently
owned by TSX‐Listed SEMAFO Inc. (TSX:SMF).
During the past 3 years he has also served as a director of the following listed companies;
Company
Xanadu Mines Limited
Mako Gold Limited
Aeris Resources
MARK CONNELLY
Non‐Executive Director
Appointed: 19 November 2015
Retired: 11 October 2017
Date of Appointment
14 August 2017
20 April 2017
2 May 2013
Date of Resignation
Not Applicable
Not Applicable
Not Applicable
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.
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2018
Page 5 of 65
DIRECTORS’ REPORT
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
Retired: 11 October 2017
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.
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.
COMPANY SECRETARY
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
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.
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2018
Page 6 of 65
DIRECTORS’ REPORT
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
Robert Schafer
Jacques McMullen
Michele Muscillo
Ordinary
Shares
‐
8,017,565
7,681,815
10,000
‐
‐
Listed
Options
400,000
4,191,731
6,560,423
‐
‐
‐
Unlisted
Options
5,000,000
7,500,000
6,000,000
2,897,000
2,018,100
2,018,100
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 2017 to 30 June 2018 after income tax was
a loss of $37,182,844 (2017: loss of 21,790,704).
The net assets of the consolidated group have decreased from $26,206,571 at 30 June 2017 to $5,474,638 as at
30 June 2018. Total assets and Shareholder’s equity decreased in 2018 due to a decrease in cash resources as at
June 30, 2018.
The directors believe the Group is in a strong and stable financial position to expand and grow its current
operations.
A review of operations of the consolidated entity during the year ended 30 June 2018 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.
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2018
Page 7 of 65
DIRECTORS’ REPORT
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 2018 and the number of meetings attended by each Director. There were three committees of
Directors in existence during the financial year, these being the Audit and Risk Committee, the Remuneration and
Nomination Committee and the Health and Safety Committee. We refer to the Company’s 2018 Corporate
Governance Statement for more information.
Note
Directors’
Meeting
Audit and Risk
Committee
Number of Meetings Held
K Tomlinson
A Koimtsidis
M Easah
R Schafer
J McMullen
M Muscillo
M Connelly
S Jackson
*By invitation
‐
‐
‐
‐
‐
1
1
2
2
5
5
5
5
5
3
3
1
1
5
1
‐
‐
3
3
3
1
2
Remuneration and
Nomination
Committee
3
2
‐
‐
1
1
1
2
2
Health and
Safety
Committee
3
3
‐
‐
3
3
‐
‐
‐
Note 1: Mr McMullen and M Muscillo were appointed to the Board on 11 October 2017
Note 2: Mr Connelly and Mr Jackson retired from the Board on 11 October 2017
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
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2018
Page 8 of 65
DIRECTORS’ REPORT
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 2017, 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.
Details of key management personnel (KMP)
Directors
K Tomlinson
A Koimtsidis
M Easah
R Schafer
J McMullen
M Muscillo
M Connelly
S Jackson
Executives
D Weyrauch
Title
Non‐Executive Chairman
Managing Director
Executive Director
Non‐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
10 July 2017
11 October 2017
11 October 2017
19 November 2015
31 August 2015
Date of Retirement
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
11 October 2017
11 October 2017
Title
Chief Financial Officer
Date of Appointment
10 July 2017
Date of Retirement
Not Applicable
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 and recommendations implemented through 30 June 2018.
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2018
Page 9 of 65
DIRECTORS’ REPORT
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 three 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
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
Statutory performance indicators
Performance Metric Potential Value
Nil
Positioned at
median market rate
Change for FY 2018
Reviewed in line
with market position
N/A
N/A
N/A
Five‐year milestone
hurdles
Introduce milestone
LTI
KMP and employees
have received
13,500,000 unlisted
options exercisable
at $0.50 on meeting
of milestones.
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
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2018
Page 10 of 65
DIRECTORS’ REPORT
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
Total Comprehensive Loss Attributable to
Member of the Company
Basic Loss Per Share
Increase/(decrease) in share price (%)
2018
2017
2016
2015
2014
37,690,470
10.22
(1.23)
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
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 $573,000 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 Directors’ Report, no director has received or become entitled to receive, during or since
the financial year end, a benefit because of a contract made by the Group or a related body corporate with a
director, a firm of which a director is a member or an entity in which a director has a substantial financial interest.
This statement excludes a benefit included in the aggregate amount of emoluments received or due and receivable
by directors and shown in the Remuneration Report, prepared in accordance with the Corporations regulations,
or the fixed salary of a full time employee of the Group.
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 2018
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)
K Tomlinson
Non‐Executive
Chairman
A Koimtsidis Managing Director
M Easah
Executive Director
$9,198 per
month
$300,000 per
annum
US$210,000
per annum
No fixed term
No fixed term, 12
months’ notice
required to
terminate.
No fixed term, 6
months’ notice
required to
terminate.
Non‐Salary
Cash‐Based
Incentives
%
‐
‐
‐
Shares/Units
%
‐
‐
‐
Proportion of
Elements of
Remuneration
Not Related to
Performance
Fixed
Salary/Fees
%
14%
31%
32%
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2018
Page 11 of 65
DIRECTORS’ REPORT
R Schafer
J McMullen
M Muscillo
M Connelly
S Jackson
D Weyrauch
Non‐Executive
Director
commenced on 10
July 2017
Non‐Executive
Director
commenced on 11
October 2017
Non‐Executive
Director
commenced on 11
October 2017
Non‐Executive
Director retired on
11 October 2017
Non‐Executive
Director retired on
11 October 2017
Chief Finance
Officer
commenced on 10
July 2017
$87,600 plus
statutory
superannuation
per annum
$87,600 plus
statutory
superannuation
per annum
$87,6000 plus
statutory
superannuation
per annum
$80,000 plus
statutory
superannuation
per annum
$80,000 plus
statutory
superannuation
per annum
CA$250,000
plus Australian
statutory
superannuation
per annum
No fixed term
No fixed term
No fixed term
No fixed term
No fixed term
No fixed term, 3
months’ notice
required to
terminate.
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
15%
31%
31%
100%
100%
39%
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.
Remuneration of key management personnel
(i) Milestone Options exercise price of $0.50 granted to key management personnel
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 key management personnel and employees of the Company; 5,000,000
Milestone Options were cancelled during the year (2017: 2,500,000). As at 30 June 2018, the Company had
18,500,000 milestone options on issue of which 13,500,000 milestone options relate to key management
personnel.
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;
(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.
A probability of 100% has been applied to the milestones occurring for the milestone options on issue. During the
year Milestone 1 vested. The expected accounting vesting date determined at grant date for Milestones 2 and 3
was 31 March 2020 and 31 March 2022, respectively.
Using the Black & Scholes option model and based on the assumption below, the Options were ascribed the
following value:
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2018
Page 12 of 65
DIRECTORS’ REPORT
Class of
Options
Number
Options
Valuation
Date
Market
Price of
Shares
Exercise
Price
Expiry
Date
Milestone 1
Milestone 2
Milestone 3
4,050,000
4,050,000
5,400,000
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
year ($)
99.50%
99.50%
99.50%
$0.39
$0.39
$0.39
1,604,610 1,063,878
1,604,610 534,870
2,139,480 427,896
During the year 5,000,000 milestone options issued to key management were forfeited during the year, an
expense totalling $320,524 was reversed.
The milestone options with an exercise price of $0.50 were issued to below key management personnel and vest
on meeting of the milestones.
Director
Milestone 1
K Tomlinson
A Koimtsidis
M Easah
1,500,000
1,350,000
1,200,000
Milestone 2
1,500,000
1,350,000
1,200,000
Milestone 3
2,000,000
1,800,000
1,600,000
Total Milestone Options
5,000,000
4,500,000
4,000,000
(ii) Milestone Options exercise price of $0.825 granted to key management personnel
During the year the Company issued 5,758,000 options to key management personnel of the Company, which
have an exercise price of $0.825.
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;
(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 21 December 2022.
A probability of 100% has been applied to the milestones occurring for the milestone options on issue. During the
year Milestone 1 vested. The expected accounting vesting date determined at grant date for Milestones 2 and 3
was 31 March 2020 and 31 March 2022, respectively.
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
1,727,400
1,727,400
2,303,200
22.11.17
22.11.17
22.11.17
$0.555
$0.555
$0.555
$0.825
$0.825
$0.825
21.12.22
21.12.22
21.12.22
Risk
Free
Interest
Rate
1.50%
1.50%
1.50%
Volatility
(discount)
Indicative
Value per
Option
Total
Value
($)
99.50%
99.50%
99.50%
$0.385
$0.385
$0.385
665,540
665,540
887,387
Expense
for the
year
($)
665,540
172,664
123,717
The milestone options with an exercise price of $0.825 were issued to below key management personnel and
vest on meeting of the milestones.
Director
B Schafer
D Weyrauch
Milestone 1
863,700
863,700
Milestone 2
863,700
863,700
Milestone 3
1,151,600
1,151,600
Total Milestone Options
2,879,000
2,879,000
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2018
Page 13 of 65
DIRECTORS’ REPORT
(iii)
Milestone Options exercise price of $0.965 granted to key management personnel
During the year the Company 4,036,200 options to key management personnel of the Company, which have an
exercise price of $0.965.
The Milestone Options shall vest and are exercisable at any time on and from:
(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 21 December 2022.
A probability of 100% has been applied to the milestones occurring for the milestone options on issue. The
expected accounting vesting date determined at grant date for Milestones 2 and 3 was 31 March 2020 and 31
March 2022, respectively.
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 2
Milestone 3
1,729,800
2,306,400
22.11.17
22.11.17
$0.555
$0.555
$0.965
$0.965
21.12.22
21.12.22
Risk
Free
Interest
Rate
1.50%
1.50%
Volatility
(discount)
Indicative
Value per
Option
Total
Value
($)
Expense
for the
year ($)
99.50%
99.50%
$0.37
$0.37
644,738
859,651
167,267
119,850
The milestone options with an exercise price of $0.965 were issued to below key management personnel and
vest on meeting of the milestones.
Director
Milestone 1
J McMullen
M Muscillo
‐
‐
Milestone 2
864,900
864,900
Milestone 3
1,153,200
1,153,200
Total Milestone Options
2,018,100
2,018,100
The below Key Management Personnel were issued unlisted options on 18 March 2016, details below:
Director
Total Unlisted Options
A Koimtsidis
M Easah
3,000,000
2,000,000
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 Three and Twelve Months Ended 30 June 2018
Page 14 of 65
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)
$
$
110,375
73,854
300,000
286,667
271,013
233,901
81,044
‐
62,050
‐
62,050
‐
307,821
‐
22,462
69,333
22,462
69,333
‐
62,500
‐
26,154
K Tomlinson
2018
2017
A Koimtsidis
2018
2017
M Easah
2018
2017
R Schafer (iii)
2018
2017
J McMullen (iv)
2018
2017
M Muscillo (iv)
2018
2017
D Weyrauch (iii)
2018
2017
M Connelly (iv)
2018
2017
S Jackson (iv)
2018
2017
E Palmbachs (vi)
2018
2017
M Thomas (v)
2018
2017
Total
2018
2017
7,402
3,862
8,386
5,634
7,492
4,802
4,831
‐
1,768
‐
1,768
‐
6,781
‐
211
2,313
211
2,313
‐
670
‐
281
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
2,134
6,586
2,134
6,586
‐
5,398
‐
2,485
$
868,386
398,138
983,934
580,681
878,992
495,040
566,836
‐
207,377
‐
207,377
‐
795,563
‐
(135,455)
238,443
(135,455)
238,443
‐
69,108
‐
28,920
750,609
320,422
675,548
288,380
600,487
256,337
480,961
‐
143,559
‐
143,559
‐
480,961
‐
(160,262)
160,211
(160,262)
160,211
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
1,239,277
821,742
38,850
11,328
4,268
12,537
2,955,160
782,000
4,237,555
1,346,336
(i)
(ii)
(iii)
(iv)
(v)
(vi)
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.
R Schafer and D Weyrauch were appointed on 10 July 2017.
J McMullen and M Muscillo were appointed on 11 October 2017 and M Connelly and S Jackson retired on
11 October 2017.
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 Three and Twelve Months Ended 30 June 2018
Page 15 of 65
DIRECTORS’ REPORT
Shareholdings of key management personnel
Key
Management
Personnel
Balance at
Beginning of
Year (i)
Granted as
Remunerat
ion During
the Year
Issued on
Exercise of
Options
During the
Year
Other Changes During
the Year
Balance at End of
Year
(ii)
K Tomlinson
A Koimtsidis
M Easah
R Schafer
J McMullen
M Muscillo
D Weyrauch
M Connelly
S Jackson
‐
8,117,565
7,681,815
10,000
‐
‐
80,000
‐
1,000,000
16,889,380
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
(100,000)
‐
‐
‐
‐
‐
‐
‐
(100,000)
‐
8,017,565
7,681,815
10,000
‐
‐
80,000
‐
1,000,000
16,789,380
(i)
(ii)
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
R Schafer
J McMullen
M Muscillo
D Weyrauch
M Connelly
S Jackson
Total
Balance at
Beginning of
Year
(i)
400,000
4,191,731
6,560,423
‐
‐
‐
‐
‐
500,000
11,652,154
Granted as
remuneration
Expired during
the year
Other Changes
During the Year
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
Balance at
End of Year
(ii)
400,000
4,191,731
6,560,423
‐
‐
‐
‐
‐
500,000
11,652,154
(i)
(ii)
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 Three and Twelve Months Ended 30 June 2018
Page 16 of 65
DIRECTORS’ REPORT
Key
Management
Personnel
Balance at
Beginning of Year
(v)
Granted as
remuneration
Grant
Value
($)
Expired
during the
year (i)
Net other
change
(ii)
Balance at
End of Year
(vi)
K Tomlinson
A Koimtsidis
M Easah
R Schafer (iii)
J McMullen (iv)
M Muscillo (iv)
D Weyrauch (iii)
M Connelly
S Jackson
Total
5,000,000
7,500,000
6,000,000
‐
‐
‐
‐
3,500,000
3,500,000
25,500,000
‐
‐
‐
2,879,000
2,018,100
2,018,100
2,879,000
‐
‐
9,794,200
‐
‐
‐
1,109,233
752,195
752,195
1,109,233
‐
‐
3,722,856
‐
‐
‐
‐
‐
‐
‐
(2,500,000)
(2,500,000)
(5,000,000)
‐
‐
‐
‐
‐
‐
‐
(1,000,000)
(1,000,000)
(2,000,000)
5,000,000
7,500,000
6,000,000
2,879,000
2,018,100
2,018,100
2,879,000
‐
‐
28,294,200
(i)
(ii)
(iii)
(iv)
(v)
(vi)
Forfeited during the year.
Exercised during the year.
On the 21 December 2017 the Company issued unlisted employee options, exercisable at $0.825 on or
before 21 December 2022, the options vest on certain milestones being achieved. The employee options
were approved at the Company’s General Meeting held on 22 November 2017.
On the 21 December 2017 the Company issued unlisted employee options, exercisable at $0.965 on or
before 21 December 2022, the options vest on certain milestones being achieved. The employee options
were approved at the Company’s General Meeting held on 22 November 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
R Schafer
J McMullen
M Muscillo
D Weyrauch
Total
Balance at end of
Year
Exercisable
No.
5,000,000
7,500,000
6,000,000
2,879,000
2,018,100
2,018,100
2,879,000
28,294,200
No.
1,500,000
4,350,000
3,200,000
863,700
‐
‐
863,700
10,777,400
Total Vested
During the
Year
No.
1,500,000
1,350,000
1,200,000
863,700
‐
‐
863,700
5,777,400
Unvested
Total at End
of Year
No.
3,500,000
3,150,000
2,800,000
2,015,300
2,018,100
2,018,100
2,015,300
17,516,800
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.
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2018
Page 17 of 65
DIRECTORS’ REPORT
Key Management
Personnel
Balance at
1 July 2017
(ii)
Granted as
remuneration
Net other change
(iii)
Balance at
30 June 2018
(i)
K Tomlinson
A Koimtsidis
M Easah
R Schafer
J McMullen
M Muscillo
D Weyrauch
M Connelly
S Jackson
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.
Expired during the year.
Class C Performance Shareholdings of key management personnel
On satisfaction of certain milestone events, each Class C Performance Share converts into 500,000 ordinary shares
(refer to note 12) in which case each key management personnel holding the Class C Performance Shares would
become entitled to a further 500,000 ordinary shares.
Key Management
Personnel
Balance at
1 July 2017
(ii)
Granted as
remuneration
Net other change
(iii)
Balance at
30 June 2018
(i)
K Tomlinson
A Koimtsidis
M Easah
R Schafer
J McMullen
M Muscillo
D Weyrauch
M Connelly
S Jackson
Total
(i)
‐
‐
60
‐
‐
‐
‐
‐
‐
60
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
60
‐
‐
‐
‐
‐
‐
60
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.
Expired during the year.
Mr. Easah is the sole shareholder of Savannah Mining Ghana Limited, which holds the 60 outstanding
Class C Performance Shares.
(ii)
(iii)
(iv)
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.
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2018
Page 18 of 65
DIRECTORS’ REPORT
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 $337,218 (2017: $280,000).
Robert Schafer, a director, provided consulting services to the Company. Amount that have been paid or payable
total $12,911 (2017: $0).
HopgoodGanim of which Michele Muscillo, a director, is a partner of, provided legal services to the Company.
Amounts that have been paid or payable total $3,506 (2017: $0).
During the year ended 30 June 2018, Cardinal Resources Limited advanced $4,000,674 to Savannah, a related
entity to Director Mr Malik Easah. 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, $916,362 has been recorded as a prepayment in the consolidated financial statements of Cardinal
Resources Limited. The difference has been applied toward the development of the mining licence and expensed
during the period.
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
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 $38,850 (2017: $19,875) 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 113,619,906 Listed Options in the Company, exercisable at
$0.15 on or before 30 September 2019. During the financial year 2,019,633 of these listed options were converted
into fully paid shares.
As at the date of this report the Company had on issue 6,000,000 unlisted options, exercisable at $0.22 on or
before 18 March 2020, 18,500,000 unlisted milestone options, exercisable at $0.50 on or before 12 April 2022,
5,758,000 unlisted milestone options, exercisable at $0.825 on or before 21 December 2022, 4,036,200 unlisted
milestone options, exercisable at $0.965 on or before 21 December 2022 and 1,000,000 unlisted options,
exercisable at $0.75 on or before 21 December 2022.
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2018
Page 19 of 65
DIRECTORS’ REPORT
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 2018 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 20 September 2018 the Company announced that 125,000 Listed Options had been exercised.
On 31 July 2018 the Company announced that it had received investment committee approval from and executed
a term sheet with Sprott Private Resource Lending (Collector), L.P. (“Sprott”) to provide a US$25 million senior
secured credit facility (“Facility”).
The Company announced on 23 August 2018 the completion of the satisfactory documentation and other
customary conditions precedent in relation to the facility. The facility commenced on 23 August 2018.
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.
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
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2018
Page 20 of 65
DIRECTORS’ REPORT
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)
Taxation advise and review of financial model
Other
Total remuneration for non‐audit services
AUDITOR’S INDEPENDENCE DECLARATION
2018
$
‐
4,400
35,295
39,695
2017
$
6,250
‐
‐
6,250
The auditor’s independence declaration for the year ended 30 June 2018 has been received and can be found on
page 58 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 28 September 2018
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2018
Page 21 of 65
FINANCIAL REPORT FOR THE THREE AND TWELVE MONTHS ENDED 30 JUNE 2018
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE THREE AND TWELVE MONTHS ENDED 30 JUNE 2018
For the period ended
Note
Unaudited Three Months Ended
June 30,
2018
June 30,
2017
Revenue
4
$
33,006
117,176
174,312
Twelve Months Ended
June 30,
2018
(2,784,541)
(40,853)
(5,878,614)
38,344
(8,548,488)
‐
(8,548,488)
(10,688,014)
(217,454)
(26,747,592)
295,904
(37,182,844)
‐
(37,182,844)
June 30,
2017
149,596
(5,602,188)
(426,572)
(15,794,617)
(116,923)
(21,790,704)
‐
(21,790,704)
Operating expenses
Corporate administration expenses
Depreciation expense
Exploration and evaluation expenses
Foreign exchange gain/(loss)
Net Loss for the period
Income tax
Loss after income tax
Other comprehensive gain (loss)
Items that may be reclassified to profit or loss:
Unrealized foreign exchange on translation
Comprehensive loss for the period
Loss per share, basis and diluted
Weighted average number of common shares
outstanding
5
9
6(a)
$
$
$
$
(2,545,810)
(67,080)
(3,653,287)
193,028
(6,040,143)
‐
(6,040,143)
(108,170)
(6,148,313)
(1.62)
126,307
(8,422,181)
(2.73)
(507,626)
(37,690,470)
(10.22)
66,406
(21,724,298)
(7.12)
13
372,820,197
312,906,521
363,630,782
305,800,068
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 Three and Twelve Months Ended 30 June 2018
Page 22 of 65
FINANCIAL REPORT AS AT 30 JUNE 2018
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2018
As at
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Other assets
Non‐current assets
Plant and equipment
TOTAL ASSETS
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Trade and other payables
Provisions
Shareholders’ equity
Issued capital
Reserves
Accumulated losses
Note
14(a)
8(a)
8(b)
9
10
11
12
June 30,
2018
June 30,
2017
7,303,807
980,224
1,393,434
9,677,465
564,149
564,149
28,592,718
132,655
918,909
29,644,282
465,396
465,396
10,241,614
30,109,678
4,707,018
59,958
4,766,976
81,369,056
6,003,878
(81,898,296)
5,474,638
3,883,409
19,698
3,903,107
68,628,035
2,477,988
(44,899,452)
26,206,571
TOTAL LIABILITIES AND SHAREHOLDERS’
EQUITY
10,241,614
30,109,678
The above consolidated statement of financial position should be
read in conjunction with the accompanying notes
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2018
Page 23 of 65
FINANCIAL REPORT FOR THE TWELVE MONTHS ENDED 30 JUNE 2018
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE TWELVE MONTHS ENDED 30 JUNE 2018
Australian ($)
SHARE CAPITAL
OPTIONS RESERVE
Balance at 1 July 2017
Loss for the year
Other comprehensive loss
Total comprehensive loss
Shares issued during the year
Exercise/expiry of options
Share/Option based payments
Share issue expenses
Balance at 30 June 2018
Balance at 1 July 2016
Loss for the year
Other comprehensive loss
Total comprehensive loss
Shares issued during the year
Exercise/expiry of options
Share/Option based payments
Shares issue expenses
Balance at 30 June 2017
$
68,628,035
‐
‐
‐
12,396,736
742,945
524,846
(923,506)
81,369,056
26,151,217
‐
‐
‐
44,549,133
215,625
395,285
(2,683,225)
68,628,035
$
2,710,589
‐
‐
‐
‐
(184,000)
4,217,516
‐
6,744,105
1,342,607
‐
‐
‐
‐
(138,000)
1,505,982
‐
2,710,589
FOREIGN EXCHANGE
RESERVE
$
(232,601)
‐
(507,626)
(507,626)
‐
‐
‐
‐
(740,227)
(299,007)
‐
66,406
66,406
‐
‐
‐
‐
(232,601)
ACCUMULATED
LOSSES
$
(44,899,452)
(37,182,844)
‐
(37,182,844)
‐
184,000
‐
‐
(81,898,296)
(23,246,748)
(21,790,704)
‐
(21,790,704)
‐
138,000
‐
‐
(44,899,452)
TOTAL EQUITY
$
26,206,571
(37,182,844)
(507,626)
(37,690,470)
12,396,736
742,945
4,742,362
(923,506)
5,474,638
3,948,069
(21,790,704)
66,406
(21,724,298)
44,549,133
215,625
1,901,267
(2,683,225)
26,206,571
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2018
Page 24 of 65
FINANCIAL REPORT FOR THE THREE AND TWELVE MONTHS ENDED 30 JUNE 2018
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE AND TWELVE MONTHS ENDED 30 JUNE 2018
For the period ended
Note
Operating activities
Expenditure on mineral interests
Payments to suppliers and employees
Interest received
Net cash outflow used in operating activities
Investing activities
Purchase of plant and equipment
Net cash outflow used in investing activities
Financing activities
Issue of shares and options net of capital raising costs
Net cash inflow from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the
period
Effect of changes in exchange rates on cash
Cash and cash equivalents at the end of the financial
year
Twelve months ended
Unaudited Three months ended
June 30,
2018
June 30,
2017
(4,661,452)
(1,169,548)
22,316
(5,808,684)
(3,546,212)
(1,413,783)
70,344
(4,889,651)
30 June,
2018
(26,726,883)
(6,183,954)
161,864
(32,748,973)
14(b)
(132,190)
(132,190)
(151,506)
(151,506)
(316,207)
(316,207)
45,299
45,299
21,250,426
21,250,426
12,145,849
12,145,849
(5,895,575)
16,209,269
(20,919,331)
23,714,615
13,304,533
(105,151)
12,195,074
188,375
28,592,718
(369,580)
4,864,822
13,281
14(a)
7,303,807
28,592,718
7,303,807
28,592,718
30 June,
2017
(14,553,197)
(3,616,893)
143,074
(18,027,016)
(339,902)
(339,902)
42,081,533
42,081,533
The above consolidated statement of cash flows should be
read in conjunction with the accompanying notes
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2018
Page 25 of 65
FINANCIAL REPORT FOR THE THREE AND TWELVE MONTHS ENDED
30 JUNE 2018
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 2018 was authorised for issue in accordance with a resolution
of the directors on 28 September 2018.
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 2018 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
2018
100%
100%
100%
100%
100%
2017
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. 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.
(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
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2018
Page 26 of 65
FINANCIAL REPORT FOR THE THREE AND TWELVE MONTHS ENDED
30 JUNE 2018
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 and other comprehensive income, statement of comprehensive income, statement
of changes in equity and statement of financial position 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.
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.
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2018
Page 27 of 65
FINANCIAL REPORT FOR THE THREE AND TWELVE MONTHS ENDED
30 JUNE 2018
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. During
the year Milestone 1 vested. The expected accounting vesting date determined at grant date for Milestones 2
and 3 was 31 March 2020 and 31 March 2022, respectively.
A probability of 0% has been applied to the 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 are 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 would then be
subsequently capitalised. When development is anticipated, costs will be carried forward until the decision to
develop is made.
(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.
Contributions are made by the Group to employee superannuation funds and are charged as expenses when
incurred.
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2018
Page 28 of 65
FINANCIAL REPORT FOR THE THREE AND TWELVE MONTHS ENDED
30 JUNE 2018
(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 Three and Twelve Months Ended 30 June 2018
Page 29 of 65
FINANCIAL REPORT FOR THE THREE AND TWELVE MONTHS ENDED
30 JUNE 2018
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 Three and Twelve Months Ended 30 June 2018
Page 30 of 65
FINANCIAL REPORT FOR THE THREE AND TWELVE MONTHS ENDED
30 JUNE 2018
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.
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
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2018
Page 31 of 65
FINANCIAL REPORT FOR THE THREE AND TWELVE MONTHS ENDED
30 JUNE 2018
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 Three and Twelve Months Ended 30 June 2018
Page 32 of 65
FINANCIAL REPORT FOR THE THREE AND TWELVE MONTHS ENDED
30 JUNE 2018
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
Accounting Standards issued by the AASB that are not yet mandatorily applicable to the Group, together with an
assessment of the potential impact of such pronouncements on the Group when adopted in future periods, are
discussed below:
–
AASB 9: Financial Instruments and associated Amending Standards (applicable to annual reporting periods
beginning on or after 1 July 2018).
The Standard will be applicable retrospectively (subject to the provisions on hedge accounting outlined
below) and includes revised requirements for the classification and measurement of financial instruments
requirements for financial instruments and hedge accounting.
–
AASB 2014‐7: Amendments to Australian Accounting Standards arising from AASB 9 (December 2014)
AASB 2014‐7 (issued December 2014) gives effect to the consequential amendments to Australian
Accounting Standards (including Interpretations) arising from the issue of AASB 9: Financial Instruments
(December 2014). More significantly, additional disclosure requirements have been added to AASB 7:
Financial Instruments: Disclosures regarding credit risk exposures of the entity. This Standard also makes
various editorial corrections to Australian Accounting Standards and an Interpretation.
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2018
Page 33 of 65
FINANCIAL REPORT FOR THE THREE AND TWELVE MONTHS ENDED
30 JUNE 2018
AASB 2014‐7 mandatorily applies to annual reporting periods beginning on or after 1 January 2018. Earlier
application is permitted, provided AASB 9 (December 2014) is applied for the same period.
–
AASB 15: Revenue from Contracts with Customers (applicable to annual reporting periods beginning on
or after 1 July 2018, as deferred by AASB 2015‐8: Amendments to Australian Accounting Standards –
Effective Date of AASB 15).
AASB 2014‐5: Amendments to Australian Accounting Standards arising from AASB 15
This Standard is applicable to annual reporting periods beginning on or after 1 January 2017 and makes
consequential amendments to various Australian Accounting Standards arising as a result of the issue of
AASB 15: Revenue from Contracts with Customers. AASB 2014‐5 is not expected to impact the Group’s
financial statements.
When effective, this Standard will replace the current accounting requirements applicable to revenue with
a single, principles‐based model. Apart from a limited number of exceptions, including leases, the new
revenue model in AASB 15 will apply to all contracts with customers as well as non‐monetary exchanges
between entities in the same line of business to facilitate sales to customers and potential customers.
The core principle of the Standard is that an entity will recognise revenue to depict the transfer of
promised goods or services to customers in an amount that reflects the consideration to which the entity
expects to be entitled in exchange for the goods or services. To achieve this objective, AASB 15 provides
the following five‐step process:
‐ identify the contract(s) with a customer;
‐ identify the performance obligations in the contract(s);
‐ determine the transaction price;
‐ allocate the transaction price to the performance obligations in the contract(s); and
‐ recognise revenue when (or as) the performance obligations are satisfied.
The transitional provisions of this Standard permit an entity to either: restate the contracts that existed
in each prior period presented per AASB 108: Accounting Policies, Changes in Accounting Estimates and
Errors (subject to certain practical expedients in AASB 15); or recognise the cumulative effect of
retrospective application to incomplete contracts on the date of initial application. There are also
enhanced disclosure requirements.
–
AASB 16: Leases (applicable to annual reporting periods beginning on or after 1 July 2019).
When effective, this Standard will replace the current accounting requirements applicable to leases in
AASB 117: Leases and related Interpretations. AASB 16 introduces a single lessee accounting model that
eliminates the requirement for leases to be classified as operating or finance leases.
The main changes introduced by the new Standard are as follows:
‐
‐
‐
‐
‐
recognition of a right‐of‐use asset and lease liability for all leases (excluding short‐term leases with
a lease term 12 months or less of tenure and leases relating to low‐value assets);
depreciation of right‐of‐use assets in line with AASB 116: Property, Plant and Equipment in profit
or loss and unwinding of the liability in principal and interest components;
inclusion of variable lease payments that depend on an index or a rate in the initial measurement
of the lease liability using the index or rate at the commencement date;
application of a practical expedient to permit a lessee to elect not to separate non‐lease
components and instead account for all components as a lease; and
inclusion of additional disclosure requirements.
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2018
Page 34 of 65
FINANCIAL REPORT FOR THE THREE AND TWELVE MONTHS ENDED
30 JUNE 2018
The transitional provisions of AASB 16 allow a lessee to either retrospectively apply the Standard to
comparatives in line with AASB 108 or recognise the cumulative effect of retrospective application as an
adjustment to opening equity on the date of initial application.
4.
REVENUE
Other income
Interest from financial institutions
Reimbursements
Insurance proceeds
June 30,
2018
June 30,
2017
161,962
11,032
1,318
174,312
149,596
‐
‐
149,596
5.
(i)
EXPENSES
Corporate general and administration expenses include the following expenses:
June 30,
2018
June 30,
2017
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))
Regulatory fees
Information technology expenses
Insurance expenses
Promotional and conference expenses
Travel expenses
Other administration expenses
Total
(ii)
Auditors’ Remuneration
1,272,896
4,871,593
85,015
1,917,148
67,144
272,656
91,080
79,730
580,777
989,730
460,245
10,688,014
June, 30
2018
Auditing and review of the Company’s consolidated financial statements:
BDO (WA) Pty Ltd
Greenwich & Co Audit Pty Ltd
67,144
‐
67,144
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
June, 30
2017
60,355
500
60,855
The Company engaged BDO (WA) Pty Ltd for non‐audit services, which included but not limited to tax advice
and review of financial model to the Company for $39,695 (2017: $6,250).
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2018
Page 35 of 65
FINANCIAL REPORT FOR THE THREE AND TWELVE MONTHS ENDED
30 JUNE 2018
6.
INCOME TAX
(a)
Prima facie income tax benefit at 27.5% (2017: 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% (2017: 28.5%)
30 JUNE 2018
$
(37,182,844)
(10,225,282)
30 JUNE 2017
$
(21,790,704)
(5,992,443)
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
3,232
(785,890)
(5,417)
11,013,357
‐
‐
2,287,753
(220,528)
3,925,218
‐
(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, 2018, the Company’s Australian tax losses that can be applied against future taxable profit in the
amount of $46,507,346.
The Company’s also has Ghanaian tax losses that can be applied against future taxable profit in the amount of
$31,972,400.
7.
(a)
KEY MANAGEMENT PERSONNEL
Details of key management personnel
Directors and Executives
Kevin Tomlinson – Non‐Executive Chairman
Archie Koimtsidis – Managing Director
Malik Easah – Executive Director
Robert Schafer ‐ Non‐Executive Director – Appointed on 10 July 2017
Jacques McMullen ‐ Non‐Executive Director Appointed on 11 October 2017
Michele Muscillo ‐ Non‐Executive Director Appointed on 11 October 2017
Derrick Weyrauch – Chief Financial Officer – Appointed 10 July 2017
Mark Connelly – Non‐Executive Director – Retired on 11 October 2017
Simon Jackson – Non‐Executive Director – Retired on 11 October 2017
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2018
Page 36 of 65
FINANCIAL REPORT FOR THE THREE AND TWELVE MONTHS ENDED
30 JUNE 2018
(b)
Compensation of key management personnel
Salaries, fees and leave
Non‐monetary (i)
Post employment benefits – superannuation
Equity based payments – Note 15
30 JUNE 2018
$
1,239,277
38,850
4,268
2,955,160
4,237,555
30 JUNE 2017
$
821,742
19,875
21,595
1,185,561
2,048,773
(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 2018.
(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 $337,218 (2017: $280,000).
Robert Schafer, a director, provided consulting services to the Company. Amount that have been paid or payable
total $12,911 (2017: $0).
HopgoodGanim of which Michele Muscillo, a director, is a partner of, provided legal services to the Company.
Amounts that have been paid or payable total $3,506 (2017: $0).
During the year ended 30 June 2018, Cardinal Resources Limited advanced $4,000,674 to Savannah, a related
entity to Director Mr Malik Easah. 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, $916,362 has been recorded as a prepayment in the consolidated financial statements of Cardinal
Resources Limited. The difference has been applied toward the development of the mining licence and expensed
during the period.
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.
8.
CURRENT ASSETS
(a)
Trade and other receivables
Government taxes receivable
Interest receivable
Other
June 30,
2017
126,461
6,194
‐
132,655
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.
June 30,
2018
818,752
6,292
155,180
980,224
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2018
Page 37 of 65
FINANCIAL REPORT FOR THE THREE AND TWELVE MONTHS ENDED
30 JUNE 2018
(b)
Other assets
Prepayments (i)
Cash deposits
June 30,
2018
1,393,434
‐
1,393,434
June 30,
2017
914,776
4,133
918,909
(i) Prepayments include an advance of $916,362 to Savannah Mining Ghana Limited (“Savannah”), a related
entity to Director Mr Malik Easah. 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. During the
year ended 30 June 2018, Cardinal Resources Limited advanced $4,000,674 to Savannah. As at the date of
this report, $916,362 has been recorded as a prepayment in the consolidated financial statements of
Cardinal Resources Limited. The difference has been applied toward the development of the mining licence
and expensed during the period.
9.
PLANT AND EQUIPMENT
Plant and Equipment
Vehicles
Total
Cost
Balance as at July 1, 2017
Additions
Disposals
Foreign exchange movement
Balance as at June 30, 2018
Balance as at July 1, 2016
Additions
Disposals
Foreign exchange movement
Balance as at June 30, 2017
Accumulated depreciation
Balance as at July 1, 2017
Depreciation for the period
Disposals
Foreign exchange movement
Balance as at June 30, 2018
Balance as at July 1, 2016
Depreciation for the period
Disposals
Foreign exchange movement
Balance as at June 30, 2017
Carrying amounts
As at 30 June 2018
As at 30 June 2017
832,291
226,903
(2,776)
(25,023)
$1,031,395
704,108
222,527
‐
(94,344)
$832,291
293,668
87,984
‐
2,647
$384,299
272,906
57,327
‐
(36,565)
$293,668
1,125,959
314,887
(2,776)
(22,376)
$1,415,694
977,014
279,854
‐
(130,909)
$1,125,959
Plant and Equipment
Vehicles
Total
467,844
188,154
(2,132)
(40,031)
$613,835
222,991
290,568
‐
(45,715)
$467,844
192,719
29,300
‐
15,691
$237,710
78,112
136,004
‐
(21,397)
$192,719
660,563
217,454
(2,132)
(24,340)
$851,545
301,103
426,572
‐
(67,112)
660,563
$417,560
$364,447
$146,589
$100,949
$564,149
$465,396
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2018
Page 38 of 65
FINANCIAL REPORT FOR THE THREE AND TWELVE MONTHS ENDED
30 JUNE 2018
10.
TRADE AND OTHER PAYABLES
Trade and other payables (i)
Other accrued expenses
June 30,
2018
3,450,142
1,256,876
4,707,018
June 30,
2017
2,038,115
1,845,294
3,883,409
(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.
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 2018 and 2017 are as follows:
As at July 1, 2016
Transactions during the year
Shares issued (i)
Share based payments (iii)
Options exercised (v)
Less: transaction costs (vii)
As at June 30, 2017
As at July 1, 2017
Transactions during the year
Shares issued (ii)
Share based payments (iv)
Options exercised (v)
Unlisted options exercise (vi)
Less: transaction costs (vii)
As at June 30, 2018
Number of Shares
222,074,707
125,598,266
952,484
1,437,500
‐
350,062,957
$26,151,217
44,549,133
395,285
215,625
(2,683,225)
68,628,035
350,062,957
$68,628,035
18,461,600
1,019,390
2,019,633
2,000,000
‐
373,563,580
12,396,736
524,846
302,945
440,000
(923,506)
81,369,056
(i)
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
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.
(ii)
The following shares were issued during the financial year ended 30 June 2018
On 22 November 2017, 18,461,600 shares were issued at $0.671 (C$0.65) per share pursuant to a
placement to a ‘brought deal” basis with a syndicated of underwriters.
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2018
Page 39 of 65
FINANCIAL REPORT FOR THE THREE AND TWELVE MONTHS ENDED
30 JUNE 2018
(iii)
Share based payments (refer to note 15) for the year ended 30 June 2017
A total of 952,484 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:
(a) On 29 November 2016, 476,247 shares issued for services provided; and
(b) On 25 May 2017, 476,247 shares issued for services provided.
(iv)
Share based payments (refer to note 15) for the year ended 30 June 2018
A total of 1,019,390 shares were issued to employees of the Company for consideration for services
provided to the Company.
(a) On 21 December 2017, 190,000 shares at $0.50 per share issued for services provided;
(b) On 2 May 2018, 300,000 shares at $0.50 per share issued for services provided; and
(c) On 12 June 2018 340,000 shares at $0.50 per share issued for services provided.
The shares were valued as per the trading price as at the date issue, refer to note 15(iv).
On 21 December 2017, 189,390 shares at $0.58 per share 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 valued as per the trading price as at the date issue, refer to note 15(iii).
(v)
Exercise of Listed Options
(vi)
Exercise of unlisted options, exercise price $0.22 per share.
(vii) 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 (ii)
Expiry of unlisted options (i)
As at reporting date (ii)
June 30,
2018
$
2,710,589
4,217,516
(184,000)
6,744,105
June 30,
2017
$
1,342,607
1,505,982
(138,000)
2,710,589
(i)
(ii)
On 19 October 2017, 5,000,000 options were expired on retirement of key management personnel.
The below options were on issue as at 30 June 2018.
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2018
Page 40 of 65
FINANCIAL REPORT FOR THE THREE AND TWELVE MONTHS ENDED
30 JUNE 2018
Grant Date
2018
Number of
Options
Balance at
30 June 2018
2018
Expense
During the
Period
12 April 2017
21 December 2017
21 December 2017
21 December 2017
Total
Milestone Options Ex. $0.50
Milestone Options Ex. $0.50
Milestone Options Ex. $0.965
Unlisted Options Ex.
‐
18,500,000
5,758,000
4,036,200
1,000,000
29,294,200
2,456,729
961,921
287,117
511,749
4,217,516
(b) Movement in options exercisable at $0.15 on or before 30 September 2019
2017
Number of
Options
Balance at
30 June
2017
23,500,000
‐
‐
‐
23,500,000
2017
Expense
During the
Period
1,505,982
‐
‐
‐
1,505,982
As at 1 July 2016
Transactions during the year
Exercise of options
As at 30 June 2017
As at 1 July 2017
Transactions during the year
Exercise of options
As at 30 June 2018
Number of
Options
117,587,039
(1,437,500)
116,149,539
116,149,539
(2,019,633)
114,129,906
(c) Movement in unlisted options exercisable at $0.22 on or before 18 March 2020
As at 1 July 2016
Transactions during the year
Expiry of options
As at 30 June 2017
As at 1 July 2017
Transactions during the year
Exercise of options (ii)
Expiry of options
As at 30 June 2018
Number of
Options
9,500,000
(1,500,000)
8,000,000
8,000,000
(2,000,000)
‐
6,000,000
$
468,607
‐
468,607
468,607
‐
468,607
$
874,000
(138,000)
736,000
736,000
(184,000)
‐
552,000
(i)
(ii)
On 18 March 2016, the Company issued 9,500,000 unlisted options to employees and directors of the
Company.
On the 19 October 2017 1,000,000 unlisted options were exercised and on 10 November 2017 1,000,000
unlisted options were exercised.
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2018
Page 41 of 65
FINANCIAL REPORT FOR THE THREE AND TWELVE MONTHS ENDED
30 JUNE 2018
(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
As at 1 July 2017
Transactions during the year
Options issued
Options expense during the period
Cancelled or forfeited during the year
As at 30 June 2018
Number of
Options
‐
26,000,000
(2,500,000)
23,500,000
$
‐
1,666,192
(160,210)
1,505,982
23,500,000
1,505,982
‐
‐
(5,000,000)
18,500,000
‐
2,777,253
(320,524)
$3,962,711
(e) Movement in unlisted milestones options exercisable at $0.825 on or 21 December 2022
As at 1 July 2017
Transactions during the year
Options issued
Cancelled or forfeited during the year
As at 30 June 2018
Number of
Options
‐
5,758,000
‐
5,758,000
$
‐
961,821
‐
961,821
(f) Movement in unlisted milestones options exercisable at $0.965 on or before 21 December 2022
As at 1 July 2017
Transactions during the year
Options issued
Cancelled or forfeited during the year
As at 30 June 2018
Number of
Options
‐
4,036,200
‐
4,036,200
(g)
Movement in unlisted options exercisable at $0.75 on or before 21 December 2022
As at 1 July 2017
Transactions during the year
Options issued
Cancelled or forfeited during the year
As at 30 June 2018
Number of
Options
‐
1,000,000
‐
1,000,000
$
‐
287,117
‐
287,117
$
‐
511,748
‐
511,748
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2018
Page 42 of 65
FINANCIAL REPORT FOR THE THREE AND TWELVE MONTHS ENDED
30 JUNE 2018
The following table shows the movement of listed and unlisted options for the years ended 30 June 2018 and
2017:
Balance as at 1 July 2017
Options granted (note 12 (e),(f),(g))
Options forfeited/exercised (note 12 (b), (c) and (d))
Balance as at 30 June 2018
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
Number of Options
147,649,539
10,794,200
(9,019,633)
149,424,106
127,087,039
26,000,000
(5,437,500)
147,649,539
Weighted
Average
Exercise Price
$
$0.20
$0.87
($0.36)
$0.25
$0.15
$0.50
($0.18)
$0.20
The table below shows the outstanding options as at 30 June 2018 and 2017:
Outstanding
Vested
30 June
Exercise Price
$
Number of
Options
2018
2018
2018
2018
2018
2018
2017
2017
2017
0.150
0.220
0.500
0.825
0.965
0.750
0.15
0.22
0.50
114,129,906
6,000,000
18,500,000
5,578,000
4,036,200
1,000,000
116,149,539
8,000,000
23,500,000
(i) Movement in Performance Shares
Weighted
Average
Remaining
Contractual
life (days)
457
627
1,382
1,635
1,635
1,635
822
992
1,746
Number of
Options
114,129,906
6,000,000
5,550,000
1,727,400
‐
1,000,000
116,149,539
8,000,000
‐
Weighted
Average
Remaining
Contractual
life (days)
349
25
51
19
‐
11
651
47
‐
Number of Class
A Performance
Shares
$
As at 1 July 2016
Transactions during the year
Performance Shares expired
As at 30 June 2017
As at 1 July 2017
Transactions during the year
Performance Shares expired (i)
As at 30 June 2018
(i)
During the year 50 Class A Performance Shares expired.
50
‐
50
50
(50)
‐
‐
‐
‐
‐
‐
‐
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2018
Page 43 of 65
FINANCIAL REPORT FOR THE THREE AND TWELVE MONTHS ENDED
30 JUNE 2018
As at 1 July 2016
Transactions during the year
Performance Shares issued (i)
As at 30 June 2017
As at 1 July 2017
Transactions during the year
Performance Shares issued
As at 30 June 2018
Number of Class B
Performance
Shares
$
50
(50)
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
(ii)
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)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
Performance Shares: Each Class A Performance Share is a share in the capital of the Company.
Class A Performance Shares shall confer on the holder (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:
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2018
Page 44 of 65
FINANCIAL REPORT FOR THE THREE AND TWELVE MONTHS ENDED
30 JUNE 2018
(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.
Expiry of Class A Performance Shares
The Class A performance shares expired on 28 December 2017.
Class B Performance Shares
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
Performance Shares: Each Class B Performance Share is a share in the capital of the Company.
Class B Performance Shares shall confer on the holder (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
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2018
Page 45 of 65
FINANCIAL REPORT FOR THE THREE AND TWELVE MONTHS ENDED
30 JUNE 2018
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 2016
Transactions during the year
Performance shares issued
As at 30 June 2017
As at 1 July 2017
Transactions during the year
Performance shares issued
As at 30 June 2018
Number of
Performance
Shares
60
‐
60
Number of
Performance
Shares
60
‐
60
‐
‐
‐
‐
‐
‐
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 2018.
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
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
Conversion to Ordinary
Shares
1,000,000
500,000
500,000
500,000
500,000
500,000
500,000
500,000
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2018
Page 46 of 65
FINANCIAL REPORT FOR THE THREE AND TWELVE MONTHS ENDED
30 JUNE 2018
5
5
5
60
2,500,000 ounces
2,750,000 ounces
3,000,000 ounces
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
(37,182,844)
(21,790,704)
June 30,
2018
June 30,
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
2018
Number
2017
Number
363,630,782
305,800,068
363,630,782
305,800,068
As the Company has a loss for the three and twelve months ended June 30, 2018 and 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.
Current – cash at bank
Term deposits (i)
(i)
Terms of term deposits
Term
30 days
60 days
Interest Rate
1.50%
2.50%
June 30, 2018
2,819,794
4,484,013
7,303,807
June 30, 2017
9,562,815
19,029,903
28,592,718
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2018
Page 47 of 65
FINANCIAL REPORT FOR THE THREE AND TWELVE MONTHS ENDED
30 JUNE 2018
(b)
Reconciliation of loss after tax to net cash flows from operations
Loss after income tax
Non‐cash flows in profit
Depreciation expense
Equity based payments
Foreign exchange movement
Changes in assets and liabilities
Increase in trade and other receivables
Increase in prepayments
Increase/(decrease) in trade and other payables
Increase/(decrease) in provisions
15.
SHARE BASED PAYMENTS
June 30, 2018
(37,182,844)
June 30, 2017
(21,790,704)
217,454
4,871,593
295,904
(847,673)
(147,798)
4,131
40,260
(32,748,973)
426,572
1,964,325
(116,923)
(116,375)
(814,386)
2,400,777
19,698
(18,027,016)
(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 key management personnel and employees of the
Company; 5,000,000 Milestone Options were cancelled during the year (2017: 2,500,000). As at 30 June
2018, the Company had 18,500,000 milestone options on issue of which 13,500,000 milestone options
relate to key management personnel.
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.
During the year Milestone 1 vested. The expected accounting vesting date determined at grant date for
Milestones 2 and 3 was 31 March 2020 and 31 March 2022, respectively.
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
Total
5,550,000
5,550,000
7,400,000
18,500,000
$0.525
$0.525
$0.525
$0.525
A probability of 100% has been applied to the milestones occurring.
18.04.22
18.04.22
18.04.22
18.04.22
27.02.17
27.02.17
27.02.17
27.02.17
$0.50
$0.50
$0.50
$0.50
Risk
Free
Interest
Rate
2.17%
2.17%
2.17%
2.17%
Volatility
(discount)
Indicative
Value per
Option
Total
Value
($)
Expense
for the
year ($)
99.50%
99.50%
99.50%
99.50%
$0.39
$0.39
$0.39
$0.39
2,198,910 1,457,907
2,198,910 732,970
2,931,880 586,376
7,329,700 2,777,253
During the year 5,000,000 milestone options issued to key management were forfeited during the year, an
expense totalling $320,524 was reversed.
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2018
Page 48 of 65
FINANCIAL REPORT FOR THE THREE AND TWELVE MONTHS ENDED
30 JUNE 2018
(ii) During the year the Company 5,758,000 options to key management personnel of the Company, which
have an exercise price of $0.825.
The terms and conditions of the options are detailed in the Notice of General Meeting dated 18 October
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 21 December 2022.
During the year Milestone 1 was met. The expected accounting vesting date determined at grant date
for Milestones 2 and 3 was 31 March 2020 and 31 March 2022, respectively.
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
Milestone 1
Milestone 2
Milestone 3
Total
1,727,400
1,727,400
2,303,200
5,758,000
22.11.17
22.11.17
22.11.17
22.11.17
Market
Price of
Shares
$0.555
$0.555
$0.555
$0.555
Exercise
Price
Expiry
Date
$0.825
$0.825
$0.825
$0.825
21.12.22
21.12.22
21.12.22
21.22.22
Risk
Free
Interest
Rate
1.50%
1.50%
1.50%
1.50%
Volatility
(discount)
Indicative
Value per
Option
Total
Value
($)
Expense
for the
year ($)
99.50%
99.50%
99.50%
99.50%
$0.385
$0.385
$0.385
$0.385
665,540
665,540
665,540
172,664
123,717
887,387
2,218,467 961,921
A probability of 100% has been applied to the milestones occurring.
The milestone options vest on meeting of the milestones.
(iii) During the year the Company 4,036,200 options to key management personnel of the Company, which
have an exercise price of $0.965.
The terms and conditions of the options are detailed in the Notice of General Meeting dated 18 October
2017.
The Milestone Options shall vest and are exercisable at any time on and from:
(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 21 December 2022.
The expected accounting vesting date determined at grant date for Milestones 2 and 3 was 31 March
2020 and 31 March 2022, respectively.
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2018
Page 49 of 65
FINANCIAL REPORT FOR THE THREE AND TWELVE MONTHS ENDED
30 JUNE 2018
Using the Black & Scholes option model and based on the assumption below, the Options were ascribed the
following value:
Class of
Options
Milestone 2
Milestone 3
Total
Expiry
Date
Exercise
Price
Number
Options
Valuation
Date
Market
Price of
Shares
Risk
Free
Interest
Rate
1.50%
1.50%
1.50%
A probability of 100% has been applied to the milestones occurring.
(iii)
1,729,800
2,306,400
4,036,200
21.12.22
21.12.22
21.12.22
22.11.17
22.11.17
22.11.17
$0.965
$0.965
$0.965
$0.555
$0.555
$0.555
Volatility
(discount)
Indicative
Value per
Option
Total
Value
($)
Expense
for the
year ($)
99.50%
99.50%
99.50%
$0.37
$0.37
$0.37
167,267
644,738
859,651
119,850
1,504,389 287,117
During the year, 189,390 fully paid ordinary shares were issued for services rendered; the shares were
ascribed the following value:
Date of Issue
Number of Shares
21.12.2017
189,390
Price of
Shares (a)
$0.58
Total Value
($)
109,846
Expense for
the year ($)
109,846
(a) The value of the shares was determined at the date it was agreed to issue the shares for services.
(iv)
During the year, 830,000 fully paid ordinary shares to employees of the Company for services rendered
to the Company; the shares were ascribed the following value:
Date of Issue
Number of Shares
21.12.2017
02.05.2018
12.06.2018
190,000
300,000
340,000
Price of
Shares (a)
$0.50
$0.50
$0.50
Total Value
($)
95,000
150,000
170,000
Expense for
the year($)
95,000
150,000
170,000
(a) The value of the shares was determined at the date it was agreed to issue the shares for services.
(v)
During the year the Company agreed to issue 1,000,000 unlisted options for services rendered to the
Company. The value of the service was unable to be reliably measured and as such the options were
measured at their fair value.
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
Unlisted
Options
1,000,000
18.10.2017
Market
Price of
Shares
$0.69
Exercise
Price
Expiry Date
$0.75
21.12.2022
Risk Free
Interest
Rate
1.50%
Volatility
(discount)
99.50%
Indicative
Value per
Option
$0.51
Expense
for the
year ($)
511,749
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2018
Page 50 of 65
FINANCIAL REPORT FOR THE THREE AND TWELVE MONTHS ENDED
30 JUNE 2018
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
2018
135,366
135,366
270,732
2017
130,480
130,480
260,960
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
2018
385,329
147,340
532,669
2017
1,254,717
15,900
1,270,617
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 2019.
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.
On 7 November 2017 US$50,000 was paid to Newmont Ghana Gold Limited on the one anniversary and on 23
November 2017 a final payment of US$100,000 was made for the second anniversary date. 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 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.
Cardinal Namdini Mining Limited (Cardinal Namdini), entered into a Net Smelter Royalty Deed, whereby Cardinal
Namdini will pay to Savannah a Royalty equal to:
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2018
Page 51 of 65
FINANCIAL REPORT FOR THE THREE AND TWELVE MONTHS ENDED
30 JUNE 2018
(a)
(b)
4% of the Net Smelter Return on the first 50,000 ounces of Specified Minerals produced within each small‐
scale license which was purchased by Savannah within the Large Scale Mining License; and
A 2% Net Smelter Return, effective from production of the 50,001 ounces of Specified Minerals produced
within each small‐scale licence which was purchased by Savannah within the Large Scale Mining License.
Cardinal entered into a definitive agreement with Kinross Gold Group subsidiary Red Back Mining Ghana Limited
(Red Back) to acquire 100% ownership of two large scale prospecting licences located in North East Ghana.
Cardinal has entered into a Royalty Agreement with Red Back, whereby Cardinal shall pay to Red back a 1% net
smelter return royalty on any minerals produced from the properties.
The Corporation has commitments in respect to a secured credit facility, completed on August 22, 2018. The key
terms of the credit facility are as follows:
Committed loan facility of US$25 million
30‐month repayment term
Interest rate of LIBOR + 7.75%
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:
2018
Financial assets
Cash and cash equivalents
Trade and other receivables
Cash deposits
Financial liabilities
Trade and other payables
2017
Note
14 (a)
8 (a)
8 (b)
10
Note
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
Floating
interest
rate
Fixed
interest
rate
Non‐
interest
bearing
Total
Weighted
average
interest rate
4,465,327
‐
‐
4,465,327
18,686
‐
‐
18,686
2,819,794
980,224
‐
3,800,018
7,303,807
980,224
‐
8,284,031
‐
‐
‐
‐
3,746,767
3,746,767
3,746,767
3,746,767
0.76%
‐
‐
‐
‐
Floating
interest
rate
Fixed
interest
rate
Non‐
interest
bearing
Total
Weighted
average
interest rate
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%
‐
‐
‐
‐
‐
Based on the balances as at 30 June 2018, a 1% movement in interest rates would increase/decrease the loss for
the year before taxation by $3,721 (2017: $7,040).
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2018
Page 52 of 65
FINANCIAL REPORT FOR THE THREE AND TWELVE MONTHS ENDED
30 JUNE 2018
(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.
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.
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2018
Page 53 of 65
FINANCIAL REPORT FOR THE THREE AND TWELVE MONTHS ENDED
30 JUNE 2018
2018
Net Financial Assets/(Liabilities) In AUD
Australian dollar
GHS New Cedi
Statement
of
position exposure
2017
financial
Australian dollar
GHS New Cedi
Statement
of
position exposure
financial
AUD
3,843,939
‐
USD
374,412
‐
GHS
(523,034)
‐
CAD
(138,276)
‐
Total AUD
3,557,040
‐
3,843,939
374,412
(523,034)
(138,276)
3,557,040
Net Financial Assets/(Liabilities) In AUD
AUD
25,897,586
‐
USD
(880,486)
‐
GHS
(307,785)
‐
CAD
‐
‐
Total AUD
24,709,315
‐
25,897,586
(880,486)
(307,785)
‐
24,709,315
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 $3,585 (2017: $12,395).
(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.
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
June 30,
2018
3,746,767
‐
3,746,767
June 30,
2017
3,883,409
‐
3,883,409
Tomlinson Consultancy, of which Kevin Tomlinson is a director, provided geological consulting services to the
Company. Amounts that have been paid or payable total $337,218 (2017: $280,000).
Robert Schafer, a director, provided consulting services to the Company. Amount that have been paid or payable
total $12,911 (2017: $0).
HopgoodGanim of which Michele Muscillo, a director, is a partner of, provided legal services to the Company.
Amounts that have been paid or payable total $3,506 (2017: $0).
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2018
Page 54 of 65
FINANCIAL REPORT FOR THE THREE AND TWELVE MONTHS ENDED
30 JUNE 2018
During the year ended 30 June 2018, Cardinal Resources Limited advanced $4,000,674 to Savannah, a related
entity to Director Mr Malik Easah. 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, $916,362 has been recorded as a prepayment in the consolidated financial statements of Cardinal
Resources Limited. The difference has been applied toward the development of the mining licence and expensed
during the period.
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.
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.
20.
UNCONSOLIDATED PARENT COMPANY DISCLOSURE
(a)
Financial position for the year ended 30 June 2018
As at
Assets
Current assets
Non‐current assets
Total assets
Liabilities
Current liabilities
Non‐current liabilities
Total liabilities
Equity
Issued capital
Reserves
Accumulated losses
Total equity
June 30 ,2018
June 30, 2017
5,138,918
186,144
5,325,062
2,008,057
‐
2,008,057
81,369,056
6,744,105
(84,796,156)
3,317,005
27,953,124
129,365
28,082,489
3,553,384
‐
3,553,384
68,628,036
2,477,985
(46,576,916)
24,529,105
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2018
Page 55 of 65
FINANCIAL REPORT FOR THE THREE AND TWELVE MONTHS ENDED
30 JUNE 2018
(b)
Financial performance for the year ended 30 June 2018
Loss for the year
Other comprehensive income
Total comprehensive loss
30 JUNE 2018
$
(25,695,715)
‐
(25,695,715)
30 JUNE 2017
$
(8,589,150)
‐
(8,589,150)
21.
EVENTS SUBSEQUENT TO STATEMENT OF FINANCIAL POSITION DATE
On 20 September 2018 the Company announced that 125,000 Listed Options had been exercised.
On 31 July 2018 the Company announced that it had received investment committee approval from and
executed a term sheet with Sprott Private Resource Lending (Collector), L.P. (“Sprott”) to provide a US$25 million
senior secured credit facility (“Facility”).
The Company announced on 23 August 2018 the completion of the satisfactory documentation and other
customary conditions precedent in relation to the facility. The facility commenced on 23 August 2018.
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 Three and Twelve Months Ended 30 June 2018
Page 56 of 65
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 2018 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 2018.
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 28 September 2018
Perth, Western Australia
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2018
Page 57 of 65
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 2018, I declare that, to the
best of my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. 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, 28 September 2018
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
Page 58 of 65 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 2018, 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 and the directors’
declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(i)
(ii)
Giving a true and fair view of the Group’s financial position as at 30 June 2018 and of its
financial performance for the year ended on that date; and
Complying with International Financial Reporting Standards and the Corporations Regulations
2001.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing. 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 Group in accordance with the
Corporations Act 2001 and the ethical requirements of the International Ethics Standards Board for
Accountants’ Code of Ethics for Professional Accountants (IESBA Code) that are relevant to our audit of
the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance
with the IESBA Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
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
Page 59 of 65 Measurement of Share-based Payments
Key audit matter
How the matter was addressed in our audit
During the financial year ended 30 June 2018, the
Our procedures included, but were not limited to:
Group issued options and shares to key management
personnel, consultants and employees, which have
been accounted for as share based payments.
(cid:120)
Reviewing market announcements and board
minutes to ensure all the new share-based
payments granted during the year have been
Refer to Note 2(e) and Note 3(d) of the financial report
accounted for;
for a description of the accounting policy and
significant estimates and judgements applied to these
arrangements and Notes 11, 12 and 15 of the financial
report for disclosure of the arrangements.
(cid:120)
Reviewing relevant supporting
documentation to obtain an understanding of
the contractual nature and terms and
conditions of the share-based payment
Share-based payments are a complex accounting area
arrangements;
and due to the complex and judgemental estimates
(cid:120)
Evaluating management’s methodology for
used in determining the fair value of the share-based
calculating the fair value of the share-based
payments in accordance with IFRS 2: Share Based
payments including assessing the valuation
Payments, we consider the Group’s calculation of the
inputs using internal specialists where
share-based payment expense to be a key audit
required;
matter.
(cid:120)
Recalculating estimated fair value of the
share based payments using relevant
valuation methodologies;
(cid:120)
Assessing the allocation of the share-based
(cid:120)
(cid:120)
payment expense over management’s
expected vesting period;
Assessing management’s determination of
achieving milestones; and
Assessing the adequacy of the related
disclosures in Notes 2(e), 3(d), 11, 12 and 15
to the financial report.
Other information
The directors are responsible for the other information. The other information comprises the
information in the Group’s annual report for the year ended 30 June 2018, 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.
Page 60 of 65 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 International Financial Reporting Standards and the Corporations
Act 2001 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.
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 the International Financial Reporting Standards 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 19 of the directors’ report for the
year ended 30 June 2018.
In our opinion, the Remuneration Report of Cardinal Resources Limited, for the year ended 30 June
2018 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
International Standards on Auditing.
BDO Audit (WA) Pty Ltd
Jarrad Prue
Director
Perth, 28 September 2018
Page 61 of 65 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
Appendix 1
As part of an audit in accordance with International Standards on Auditing, we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:
(cid:120)
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.
(cid:120) 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.
(cid:120)
(cid:120)
(cid:120)
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.
(cid:120) 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.
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
Page 62 of 65 SHAREHOLDER INFORMATION
1
Distribution of holders
As at 28 September 2018 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
79
105
117
310
132
743
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
Corporate International Holdings BV (together, the Gold
Fields Group)
Van Eck Associates Corporation (and its associates)
4
Top 20 shareholders
Shares held
32,227,379
30,861,553
26,256,988
Percentage
interest %
9.77%
8.80%
7.49%
The names of the 20 largest shareholders on the share register as at 28 September 2018, who hold 82.83% of
the ordinary shares of the Company, were as follows;
Shareholder
HSBC Custody Nominees (Australia) Limited
Corporate International Holdings BV
Canadian Register Control
Citicorp Nominees Pty Ltd
Zero Nominees Pty Ltd
J P Morgan Nominees Australia Limited
Oceanic Capital Pty Ltd
Mr Malik Mohammad Easah
CS Third Nominees Pty Limited
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