2018
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
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Lawyers
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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
Arredo Pty Ltd
Neon Capital Ltd
Panga Pty Ltd
St Barnabas Investments Pty Ltd
Number
105,432,057
42,818,182
35,932,692
34,161,082
17,250,000
17,039,532
10,475,045
7,681,815
5,807,991
5,800,000
4,000,000
3,920,000
3,865,625
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2018
Page 63 of 65
SHAREHOLDER INFORMATION
Invia Custodian Pty Ltd
Redland Plains Pty Ltd
Yarandi Investments Pty Ltd
Payzone Pty Ltd
AWD Consultants Pty Ltd
Mr David Ian Raymond Hall + Mrs Denise Allison Hall
Budworth Capital Pty Ltd
5
Top 20 option holders
3,833,334
3,757,860
2,498,288
2,390,625
2,372,676
2,250,000
2,067,100
The names of the 20 largest option holders on the share register as at 28 September 2018, who hold 77.08% of
the listed options of the Company, were as follows;
Optionholder
Corporate International Holdings BV
Oceanic Capital Pty Ltd
Mr Malik Mohammad Easah
HSBC Custody Nominees (Australia) Limited
Citicorp Nominees Pty Limited
Yarandi Investments Pty Ltd
Cleverman Investments Pty Ltd
Dixtru Pty Limited
Redland Plains Pty Ltd
Arredo Pty Ltd
Invia Custodian Pty Ltd
Mrs Sophie Kyriazis
Mr Hendrik Hatmann
Mr Sean Andrew Morrison
J P Morgan Nominees Australia Limited
Mr David Ian Raymond Hall + Mrs Denise Allison Hall
Mr Owen Barry Merrett + Mrs Joanne Ross Merrett
Bainpro Nominees Pty Limited
Mr Trent Brindle
ACP Investments Pty Ltd
Mr Danny Murphy + Mrs Susan Murphy
6
Consistency with business objectives
Number
38,220,051
8,058,390
6,560,423
3,379,599
3,337,461
3,200,000
3,085,000
3,000,000
2,200,000
2,000,000
1,950,000
1,767,944
1,670,400
1,586,073
1,419,231
1,300,027
1,300,000
1,209,76
1,200,000
1,200,000
1,135,000
The Company has used its cash and assets in a form readily convertible to cash that it had at the time of listing
in a way the consistent with its stated objectives.
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2018
Page 64 of 65
TENEMENT INFORMATION
Cardinal Resources Limited mineral interest as at 28 September 2018
Tenement
Licence Status
Ref
Note
Interest
Acquired During
Quarter
Interest
Divested
During Quarter
Interest Held
at End of
Quarter
Ghana
Bolgatanga
Project
Ndongo
Kungongo
Bongo
Nangodi
Yamergia
Namdini
Project
Namdini
Subranum
Project
Subranum
Prospecting
Reconnaissance
Reconnaissance
Prospecting
Prospecting
PL9/22
RL9/28
RL9/29
PL9/13
PL9/19
‐
‐
‐
‐
‐
Mining Licence
LVB14619/09
‐
Prospecting
PL/309
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
100%
100%
100%
100%
100%
100%
100%
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2018
Page 65 of 65
ANNUAL
INFORMATION
FORM (III)
ANNUAL INFORMATION FORM
For the year ended June 30, 2018
Dated as of September 28, 2018
TABLE OF CONTENTS
INTRODUCTORY NOTES ................................................................................................................................. 1
FINANCIAL STATEMENTS ......................................................................................................................................... 1
CAUTIONARY STATEMENT REGARDING FORWARD‐LOOKING INFORMATION ..................................................................... 1
TECHNICAL INFORMATION ...................................................................................................................................... 3
MINERAL RESOURCE ESTIMATES .............................................................................................................................. 3
JORC CODE ......................................................................................................................................................... 4
CAUTIONARY NOTE TO US SHAREHOLDERS CONCERNING ESTIMATES OF MINERAL RESERVES AND MINERAL RESOURCES ......... 5
GLOSSARY ............................................................................................................................................................ 5
CORPORATE STRUCTURE ............................................................................................................................... 9
DESCRIPTION OF THE BUSINESS .................................................................................................................... 9
THE CORPORATION ................................................................................................................................................ 9
THREE YEAR HISTORY ........................................................................................................................................... 10
THE GHANAIAN MINING INDUSTRY ........................................................................................................................ 15
MINERAL PROPERTIES ................................................................................................................................. 19
NAMDINI GOLD PROJECT ...................................................................................................................................... 19
OTHER PROPERTIES AND ASSETS ............................................................................................................................ 29
CARDINAL’S OPERATIONS IN GHANA ....................................................................................................................... 31
RISK FACTORS .............................................................................................................................................. 33
DIVIDENDS .................................................................................................................................................. 42
DESCRIPTION OF CAPITAL STRUCTURE ........................................................................................................ 42
MARKET FOR SECURITIES ............................................................................................................................ 44
TRADING PRICE AND VOLUME ............................................................................................................................... 44
PRIOR SALES OF UNLISTED SECURITIES .................................................................................................................... 45
DIRECTORS AND OFFICERS .......................................................................................................................... 46
CEASE TRADE ORDERS, BANKRUPTCIES, PENALTIES OR SANCTIONS .............................................................................. 51
CONFLICTS OF INTEREST........................................................................................................................................ 53
LEGAL PROCEEDINGS AND REGULATORY ACTIONS ..................................................................................... 53
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS .................................................. 53
TRANSFER AGENT AND REGISTRAR ............................................................................................................. 53
AUDIT COMMITTEE AND RELATED INFORMATION ...................................................................................... 54
THE AUDIT AND RISK COMMITTEE’S CHARTER .......................................................................................................... 54
COMPOSITION OF THE AUDIT AND RISK COMMITTEE ................................................................................................. 54
AUDIT COMMITTEE OVERSIGHT ............................................................................................................................. 55
EXTERNAL AUDITOR SERVICE FEES .......................................................................................................................... 55
MATERIAL CONTRACTS................................................................................................................................ 55
INTERESTS OF EXPERTS ............................................................................................................................... 56
i
ADDITIONAL INFORMATION ....................................................................................................................... 56
APPENDIX A ‐ AUDIT AND RISK COMMITTEE CHARTER ................................................................................ 57
PAGE ii
PAGE 1
INTRODUCTORY NOTES
In this Annual Information Form (the “AIF”), Cardinal Resources Limited is referred to as “Cardinal” or the
“Corporation”. Unless otherwise indicated, all information contained herein is as at September 28, 2018.
Unless otherwise indicated, in this AIF all references to (i) “$” or “AUD” are to Australian dollars; (ii) “US$” and
“USD” are to United States dollars; (iii) “C$” or “CAD” are to Canadian dollars; and (iv) “GHS” are to Ghanaian
cedi.
The Canadian dollar rates of exchange on were:
United States dollar(1)
C$1. 00=US$0.76
Australian dollar(1)
C$1. 00=$0.942
Note:
(1) Bank of Canada average exchange rate for September 28, 2018 as reported on the Bank of Canada
website.
Financial Statements
This AIF should be read in conjunction with the Corporation’s consolidated financial statements and
management’s discussion and analysis for the 12 months ended June 30, 2018. The consolidated financial
statements and management’s discussion and analysis are available on the Corporation’s website at
www.cardinalresources.com.au and under the Corporation’s profile on the SEDAR website at www.sedar.com.
All financial statements are prepared in accordance with International Financial Reporting Standards and are
reported in Australian dollars.
Cautionary Statement Regarding Forward‐Looking Information
Certain statements contained in this AIF constitute forward‐looking information under applicable Canadian
securities laws. These statements relate to future events or future performance. All statements other than
statements of historical fact may be forward‐looking statements. Forward‐looking statements are often, but
not always, identified by the use of words such as “seek”, “anticipate”, “plan”, “continue”, “objectives”,
“strategies”, “estimate”, “expect”, “may”, “will”, “project”, “predict”, “potential”, “targeting”, “intend”,
“could”, “might”, “should”, “believe” and similar expressions. These statements involve known and unknown
risks, uncertainties and other factors that may cause actual results or events to differ materially from those
anticipated in such forward‐looking statements. The Corporation believes the expectations reflected in those
forward‐looking statements are reasonable but no assurance can be given that these expectations will prove
to be correct and such forward‐looking statements included in its AIF should not be unduly relied upon.
In particular, this AIF contains forward‐looking statements pertaining to the following:
Mineral Resource estimates;
targeting additional Mineral Resources and expansion of deposits;
the Corporation’s expectations, strategies and plans for the Ghanaian Projects, including the Corporation’s
planned exploration activities;
the amount of funds required to fund the development of the mining licence in areas in respect of which
Savannah had entered into agreements with holders of small scale mining licences;
2018 Annual Information Form
PAGE 2
the results of future exploration and drilling and estimated completion dates for certain milestones;
successfully adding or upgrading Mineral Resources and successfully developing new deposits;
the timing, receipt and maintenance of approvals, licences and permits from the Ghanaian government
and from any other applicable government, regulator or administrative body;
future financial or operating performance and condition of the Corporation and its business, operations
and properties; and
any other statement that may predict, forecast, indicate or imply future plans, intentions, levels of activity,
results, performance or achievements.
The actual results could differ materially from those anticipated in these forward‐looking statements or
information as a result of the risk factors set forth below and elsewhere in this AIF:
estimation of mineralization, resources and reserves;
environmental, health and safety regulations of the resource industry;
competitive conditions;
environmental bonds;
conflicts of interest;
risks of operating in Ghana;
government policy changes;
mineral exploration, development and operating risks;
operational risks;
liquidity and financing risks;
funding risk;
exploration costs;
uninsurable risks;
ownership risks;
permitting and licencing risks;
difficulty in enforcement of judgments;
market conditions;
dilution risk;
other factors discussed under “Risk Factors”; and
other risks and uncertainties described elsewhere in this AIF.
stress in the global economy;
current global financial condition;
reliance on key personnel;
exchange rate and currency risks;
commodity prices;
artisanal miners;
Although the forward‐looking statements contained in this AIF are based upon assumptions which the
Corporation believes to be reasonable, there can be no assurance that actual results will be consistent with
these forward‐looking statements. With respect to forward‐looking statements contained in this AIF, the
Corporation has made assumptions regarding: future commodity prices and royalty regimes; availability of
skilled labour; timing and amount of capital expenditures; future currency exchange and interest rates; the
impact of increasing competition; general conditions in economic and financial markets; availability of drilling
and related equipment; effects of regulation by governmental agencies; royalty rates; future tax rates; future
2018 Annual Information Form
PAGE 3
operating costs; availability of future sources of funding; ability to obtain financing and assumptions underlying
estimates related to adjusted funds from operations. The Corporation has included the above summary of
assumptions and risks related to forward‐looking information provided in this AIF in order to provide readers
with a more complete perspective on the Corporation’s future operations and such information may not be
appropriate for other purposes. The Corporation’s actual results, performance or achievement could differ
materially from those expressed in, or implied by, these forward‐looking statements and, accordingly, no
assurance can be given that any of the events anticipated by the forward‐looking statements will transpire or
occur, or if any of them do so, what benefits the Corporation will derive therefrom. These forward‐looking
statements are made as of the date of this AIF and the Corporation disclaims any intent or obligation to update
publicly any forward‐looking statements, whether as a result of new information, future events or results or
otherwise, other than as required by applicable securities laws.
Technical Information
Where appropriate, certain information contained in this AIF relating to the Namdini Gold Project is supported
by the technical report titled "National Instrument 43‐101 Mineral Resource Estimation Technical Report”,
dated effective March 5, 2018 (the "Technical Report"), prepared by prepared by or under the supervision of
Nicolas Johnson, MAIG, an employee of MPR Geological Consultants Pty Ltd. Mr. Johnson is an independent
"Qualified Person" as such term is defined in NI 43‐101 and has sufficient experience that is relevant to the
style of mineralization and type of deposit under consideration and to the activity that he is undertaking to
qualify as a "Competent Person" as such term is defined in the JORC Code. Mr. Johnson consents to the
inclusion in this AIF of such scientific and technical information in the form and context in which it appears.
The Technical Report is subject to certain assumptions, qualifications and procedures described therein.
Reference should be made to the full text of the Technical Report, which has been filed with Canadian securities
regulatory authorities pursuant to NI 43‐101 and is available for review under the Corporation's profile on
SEDAR at www.sedar.com. The Technical Report is not and shall not be deemed to be incorporated by
reference in this AIF.
The scientific and technical information in this AIF that relates to Exploration Results at the Bolgatanga Project
and Subranum Project is based on information prepared by Mr. Paul Abbott, a full‐time employee of Cardinal
Resources Limited, who is a Member of the Geological Society of South Africa. Mr. Abbott has sufficient
experience which is relevant to the style of mineralisation and type of deposit under consideration and to the
activity which he is undertaking to qualify as a Competent Person, as defined in the 2012 Edition of the
“Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”.
The scientific and technical information in this AIF that relates to the Namdini Gold Project has been reviewed
and approved by Mr. Richard Bray, a Registered Professional Geologist with the Australian Institute of
Geoscientists and Mr. Ekow Taylor, a Chartered Professional Geologist with the Australasian Institute of Mining
and Metallurgy. Mr. Bray and Mr. Taylor have more than five years’ experience relevant to the styles of
mineralisation and type of deposits under consideration and to the activity which is being undertaken to qualify
as a Competent Person, as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves” and as a Qualified Person for the purposes of NI43‐101. Mr. Bray
and Mr. Taylor are full‐time employees of Cardinal and hold equity securities in the Company.
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
2018 Annual Information Form
PAGE 4
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 Proved Ore Reserve (as defined herein) or to a
Probable Ore Reserve.
“Ore Reserve” means the economically mineable part of a Measured and/or Indicated Mineral Resource. It
includes diluting materials and allowances for losses, which may occur when the material is mined or extracted
and is defined by studies at pre‐feasibility or feasibility level as appropriate that include application of
Modifying Factors. Such studies demonstrate that, at the time of reporting, extraction could reasonably be
justified. The reference point at which Ore Reserves are defined, usually the point where the ore is delivered
to the processing plant, must be stated. It is important that, in all situations where the reference point is
different, such as for a saleable product, a clarifying statement is included to ensure that the reader is fully
informed as to what is being reported.
“Probable Ore Reserve” means the economically mineable part of an Indicated, and in some circumstances, a
Measured Mineral Resource. The confidence in the Modifying Factors applying to a Probable Ore Reserve is
lower than that applying to a Proved Ore Reserve.
2018 Annual Information Form
PAGE 5
“Proved Ore Reserve” means the economically mineable part of a Measured Mineral Resource. A Proved
Mineral Ore Reserve implies a high degree of confidence in the Modifying Factors.
For the purposes of the JORC Code and CIM Definition Standards, “Modifying Factors” are considerations used
to convert Mineral Resources to Mineral Reserves. These include, but are not restricted to, mining, processing,
metallurgical, infrastructure, economic, marketing, legal, environmental, social and governmental factors.
There can be no assurance that those portions of such Mineral Resources will ultimately be converted into Ore
Reserves. Mineral Resources are not Ore Reserves and do not have demonstrated economic viability.
Cautionary note to US Shareholders Concerning Estimates of Mineral Reserves and Mineral Resources
This AIF uses the terms “Probable Ore Reserve”, “Measured Mineral Resource”, “Indicated Mineral Resource”
and “Inferred Mineral Resource”. United States Shareholders are advised that while such terms are recognized
and required by Canadian and Australian standards or regulations, the SEC does not recognize them. In
particular, and without limiting the generality of this cautionary note, the term “Mineral Resource” does not
equate to the term “Ore Reserve”. This AIF also uses the terms “Probable Ore Reserves” and “Proved Ore
Reserves” as such terms are used under NI 43‐101, CIM Standards and the JORC Code, which standards differ
from the standards that apply under SEC Industry Guide 7. Under United States standards, mineralization may
not be classified as an “Ore Reserve” unless the determination has been made that the mineralization could
be economically and legally produced or extracted at the time the reserve determination is made. As such,
certain information contained in this AIF concerning descriptions of mineralization and resources and reserves
under NI 43‐101, CIM Standards and the JORC Code are not comparable to disclosures made by United States
reporting companies. “Inferred Mineral Resources” have a great amount of uncertainty as to their existence,
and as to their economic and legal feasibility. It cannot be assumed that all or any part of a Probable Ore
Reserve, Measured Mineral Resource, Indicated Mineral Resource or an Inferred Mineral Resource will ever be
upgraded to a higher category. Under Canadian and Australian rules, estimates of Inferred Mineral Resources
may not form the basis of feasibility or other economic studies. United States Shareholders are cautioned not
to assume that all or any part of Measured, Indicated or Inferred Mineral Resources will ever be converted into
Ore Reserves. United States Shareholders are also cautioned not to assume that all or any part of an Inferred
Mineral Resource exists, or is economically or legally mineable.
Glossary
In this AIF, unless otherwise indicated or the context otherwise requires, the following terms shall have the
meaning set forth below:
“2006 Mining Act” means the Minerals and Mining Act 2006 (Act 703) (Ghana);
“AIF” means this Annual Information Form;
“affiliate” has the meaning ascribed thereto in National Instrument 62‐104 — Take‐Over Bids and Issuer Bids;
“ASX” means ASX Limited (ABN 98 008 624 691) or the Australian Securities Exchange operated by ASX Limited
(as the context requires);
“ASX Listing Rules” means the official listing rules of the ASX, as amended from time to time;
“Au” means gold;
2018 Annual Information Form
PAGE 6
“Audit and Risk Committee” means the audit and risk committee of the Board;
“BIA” means the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B‐3
“Board” means the board of directors of the Corporation;
“Bolgatanga Project” means, collectively, the Ndongo License Area, the Kungongo License Area and the Bongo
License Area in the Upper East Region of Ghana;
“Bongo License Area” means the property located in the Upper East Region of the Town of Bolgatanga covered
by reconnaissance licence number 2/2011 issued by the Government of Ghana through the Minister and of
which an application for renewal has been granted and is pending the signature of the Minister. The Bongo
licence covers an area of 453km2;
“Cardinal” or the “Corporation” means Cardinal Resources Limited, a corporation incorporated under the laws
of Australia, and unless otherwise stated or the context otherwise requires, references to the Corporation
mean the Corporation and its current and proposed subsidiaries on a consolidated basis;
“Cardinal Subranum” means Cardinal Resources Subranum Limited, a subsidiary of the Corporation;
“CCAA” means the Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C‐36;
“Class A Performance Shares” means the Class A performance shares of the Corporation, each of which is
convertible into 100,000 Ordinary Shares;
“Class C Performance Shares” means the Class C performance shares of the Corporation, each of which is
convertible into 100,000 Ordinary Shares;
“cm” means centimeter;
“CMS” means Cardinal Mining Services Limited, a subsidiary of the Corporation;
“CMN” means Cardinal Namdini Mining Limited, a subsidiary of the Corporation;
“Corporations Act” means the Corporations Act, 2001 (Commonwealth of Australia), as amended, including
the regulations promulgated thereunder;
“DD” means diamond drill;
“Director” means a director of the Corporation;
“EPA” means the Ghana Environmental Protection Agency;
“Exploration Tenements” means the tenements forming part of the Bolgatanga Project and the Subranum
Project. For the avoidance of doubt, the Exploration Tenements do not include the tenements forming the
Namdini Gold Project;
“g” means grams;
“Ghanaian Projects” means the Namdini Gold Project, the Bolgatanga Project and the Subranum Project;
2018 Annual Information Form
PAGE 7
“Ghanaian Subsidiaries” means, collectively, Cardinal Subranum, Cardinal Mining Services, Cardinal Resources
Ghana Limited and Cardinal Namdini Mining Limited;
“g/t” means grams per tonne;
“IFRS” means International Financial Reporting Standards as adopted by the International Accounting
Standards Board;
“JORC” means the Australasian Joint Ore Reserves Committee;
“JORC Code” means the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves;
“kg” means kilogram;
“km” means kilometre;
“km²” means square kilometre;
“Kungongo Licence Area” means the property located in the Upper East Region of the Town of Bolgatanga
covered by reconnaissance licence number 1/2011 issued by the Government of Ghana through the Minister.
The Kungongo license covers an area of 122km2;
“kV” means kilovolt;
“Listed Option” means a listed option (warrant) to purchase Ordinary Shares;
“m” means metre;
“MASL” means metres above sea level;
“Minister” means the Minster responsible for Lands and Natural Resources of Ghana;
“Minerals Commission” means the Minerals Commission of the Government of Ghana.
“mm” means millimetre;
“MPR Geological” means MPR Geological Consultants Pty Ltd.;
“Namdini Gold Project” means the Large‐Scale Mining Licence covering the Namdini Mining Lease. The Large‐
Scale Mining Licence covers 19.54km2 in the Datoko area of the Talensi District Assembly in Upper East Region
of Ghana.
“Ndongo Licence Area” means the combined Ndongo Prospecting licence number 17/2010 and the Nangodi
and Yameriga Prospecting licence number PL9/19 located in the Upper East Region of the town of Bolgatanga
issued by the Government of Ghana through the Minister. The Ndongo license covers an area of 295km2
“NI 43‐101” means National Instrument 43‐101 – Standards of Disclosure for Mineral Projects, as amended
from time to time;
“NI 52‐110” means National Instrument 52‐110 – Audit Committees, as amended from time to time;
2018 Annual Information Form
PAGE 8
“Option Agreement” means the option and loan agreement between Mr. Easah, Savannah and CMS, pursuant
to which CMS holds an option to purchase all the outstanding shares of Savannah from Mr. Easah for US$1.00;
“Option Exercise Deed” means the option exercise deed dated May 11, 2017 between CMS, Savannah and
Cardinal Namdini Mining Limited;
“Ordinary Shares” means ordinary shares in the capital of the Corporation;
“oz” means Troy ounces (31.1035 g);
“Performance Shares” means, the Class C Performance Shares;
“Properties” means, collectively, the Bolgatanga Project, the Namdini Gold Project and the Subranum Project;
“QAQC” means quality control and quality assurance;
“Remuneration and Nomination Committee” means the remuneration and nomination committee of the
Board;
“RC” means reverse circulation;
“RPA” means Roscoe Postle Associates Inc.;
“Savannah” means Savannah Mining Ghana Limited, of which Malik Easah is the sole shareholder;
“Savannah Agreement” means the binding heads of agreement dated July 23, 2014 between CMS and
Savannah, pursuant to which CMS obtained a right of first refusal to provide all technical and financial support
for the development of mining licences held by Savannah;
“SEC” means the United States Securities and Exchange Commission;
“Shareholders” means the holders of Ordinary Shares;
“Subin Kasu Prospecting Licence” means prospecting licence number PL6/309 issued by the Government of
Ghana through the Minister;
“Subranum Project” means the Subranum project, consisting of the Subin Kasu Prospecting Licence, in
southwest Ghana;
“t” means metric tonne;
“Technical Report” means the technical report titled “National Instrument 43‐101 Mineral Resource Estimation
Technical Report,”, dated effective April 5, 2018;
“TSX” means the Toronto Stock Exchange;
“TSXV” means the TSX Venture Exchange;
“Unlisted Option” means an unlisted option to purchase Ordinary Shares;
“US” means the United States of America; and
2018 Annual Information Form
PAGE 9
“VWAP” means volume‐weighted average trading price on the ASX.
CORPORATE STRUCTURE
Cardinal Resources Limited was incorporated as Heguy Resources Limited under the Corporations Act on
November 11, 2010 and changed its name to Ridge Resources Limited (“Ridge”) on May 9, 2011 and then to
Cardinal Resources Limited on December 27, 2012. The Corporation’s head and registered office is at Suite 1,
28 Ord Street, West Perth, Australia, 6005. The Corporation maintains offices outside of Australia.
On August 27, 2012, Ridge announced that it had entered into an Implementation Agreement with Cardinal
Resources Limited, whereby Ridge would acquire 100% of the share capital of Cardinal. Ridge completed the
acquisition of Cardinal on December 27, 2012 and subsequently changed its name to Cardinal Resources
Limited.
The Corporation’s business under Ridge was operating as a Western Australian mineral exploration company.
The Corporation’s business since December 27, 2012 has been to explore and develop its Ghanaian Projects,
which consist of the Namdini Gold Project, the Bolgatanga Project and the Subranum Project.
The corporate structure is shown in the chart below. All of Cardinal’s subsidiaries are 100% owned.
Cardinal Resources
Limited
(Australia)
Cardinal Resources
(Australia) Pty Ltd
(Australia)
Cardinal Resources
Ghana Limited
(Ghana)
Cardinal Resources
Subranum Limited
(Ghana)
Cardinal Mining
Services Limited
(Ghana)
Cardinal Namdini
Mining Limited
(Ghana)
The Corporation is a reporting issuer in the province of Ontario, Canada. The Corporation’s Ordinary Shares are
listed and posted for trading on the Toronto Stock Exchange in Canada (the “TSX” or the “Exchange”) and on the
Australian Securities Exchange (the “ASX”) in Australia, in each case under the symbol “CDV”.
The Corporation
DESCRIPTION OF THE BUSINESS
The principal activity of the Corporation (and its subsidiaries) is gold exploration in Ghana. The Corporation
holds interests in seven prospective tenements for gold mineralization in Ghana in two NE‐SW trending Paleo‐
Proterozoic granite‐greenstone belts: the Bolgatanga Project and the Namdini Gold Project, 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. The maps that follow show the location of the Namdini Gold Project and
the Corporation’s other properties in Ghana.
2018 Annual Information Form
PAGE 10
Figure 1 Cardinal Resource’s Tenements in Ghana
Employees
The Corporation employed 53 full‐time employees as of June 30, 2018 and continued to employ 48 full‐time
employees as of the date of this AIF.
Three Year History
The following summary sets out the notable events in the Corporation’s history since the beginning of the
financial year ended June 30, 2016:
On September 1, 2015, Cardinal announced that Mark Thomas and Simon Jackson had been appointed as non‐
executive Directors of the Corporation.
On September 21, 2015, the Corporation confirmed it had completed a capital raising thereby issuing
52,215,000 fully paid Ordinary Shares at $0.10 per Ordinary Share, together with one free attaching Listed
Option for every two Ordinary Shares subscribed for (the “September 2015 Placement”). The first tranche of
such placement was completed on September 25, 2015, when 28,164,816 Ordinary Shares were issued to raise
a total of $2,816,481. On November 27, 2015, following the receipt of shareholder approval, the second
2018 Annual Information Form
PAGE 11
tranche of Ordinary Shares and all the Listed Options that were part of the September 2015 Placement were
issued. The second tranche included the issue of 10,000,000 Ordinary Shares and 5,000,000 Listed Options to
Macquarie Bank Limited. On November 27, 2015, the Directors of the Corporation (namely, Messrs. Alec
Pismiris, Archie Koimtsidis, Malik Easah, Simon Jackson and Mark Thomas) purchased 8,117,116 Ordinary
Shares and 4,058,558 Listed Options for proceeds to the Corporation of approximately $812,000, on the same
terms and conditions as the September 2015 Placement.
On November 19, 2015, the Corporation announced the appointment of Mr. Mark Connelly as the Non‐
Executive Chairman. Mr. Connelly replaced Mr. Alec Pismiris, who resigned from the Board.
On March 8, 2016, the Corporation confirmed it had completed a capital raising thereby issuing 47,333,310
fully paid Ordinary Shares at $0.12 per Ordinary Share (the “March 2016 Placement”). 4,666,668 fully paid
Ordinary Shares forming part of the March 2016 Placement were issued on May 9, 2016 after being approved
at the Corporation’s meeting of Shareholders held on April 27, 2016. On May 9, 2016, the Directors of the
Corporation (namely, Messrs. Archie Koimtsidis, Malik Easah and Mark Thomas) purchased 1,750,002 fully paid
Ordinary Shares for proceeds to the Corporation of approximately $210,000, on the same terms and conditions
as the March 2016 Placement.
On July 19, 2016, the Corporation announced that it had issued 55,518,670 fully paid Ordinary Shares at a price
of $0.29 per Ordinary Share as the first part of a placement (the “July 2016 Placement”). On August 26, 2016,
the Corporation announced the completion of the second tranche of the July 2016 Placement and that,
following shareholder approval at the general meeting of Shareholders, 19,481,330 fully paid Ordinary Shares
had been issued at a price of $0.29 per Ordinary Share.
On September 5, 2016, 50 Class B performance shares (the “Class B Performance Shares”) were converted to
5,000,000 Ordinary Shares when the Corporation satisfied the vesting requirement of the Class B Performance
Shares.
Between August 26, 2016 and October 28, 2016, 1,435,000 Listed Options were exercised.
On November 7, 2016, Cardinal reported an initial resource estimate for the Namdini Gold Project of 3.8 million
ounces of inferred gold resources and 0.25 million ounces of indicated gold resources, calculated in accordance
with the JORC Code.
On November 7, 2016, the Corporation announced that Mr. Kevin Tomlinson had been appointed to the Board
and would serve as non‐executive chairman, that Mr. Mark Connelly, who had previously served as non‐
executive chairman, would remain as a non‐executive Director and that Mr. Mark Thomas, previously a non‐
executive Director, had retired as a Director.
On November 28, 2016, 476,247 Ordinary Shares were issued to Mr. Julian Barnes for services provided to the
Corporation. The issue was approved at the Corporation’s annual general meeting held on November 7, 2016.
On January 4, 2017, the Corporation announced that Mr. Bruce Lilford had been appointed Project Manager
at the Namdini Gold Project, effective January 3, 2017.
On February 2, 2017, Cardinal reported an interim metallurgical update for the Namdini Gold Project
identifying a number of conventional gold recovery techniques to enhance recoveries.
On February 6, 2017, the Corporation announced that Mr. Erik Palmbachs had been appointed as the
Corporation’s Chief Financial Officer, effective March 1, 2017. Mr. Palmbachs’ appointment as Chief Financial
2018 Annual Information Form
PAGE 12
Officer ended on May 24, 2017.
On February 7, 2017, Cardinal reporting drilling assay results at the Namdini Gold Project that demonstrated
resource extensions to the east and south and at depth.
On February 28, 2017, the Corporation announced that BDO (WA) Pty Ltd had been appointed as auditor for
the Corporation.
On March 21, 2017, Cardinal reported that conventional gold recovery techniques for the Namdini Gold Project
are showing overall gold recoveries of 84% are achievable and that crush‐float‐fine grind processing allows for
a low mass flotation concentrate with superior operating costs due to low volumes of high grade concentrate
to be processed.
On April 12, 2017, following the receipt of Shareholder approval, 26,000,000 Unlisted Options were issued to
Directors and certain officers of the Corporation. Such Unlisted Options vest in three tranches upon the
achievement of certain specified performance criteria, have an exercise price of $0.50 and expire on April 12,
2022.
On April 21, 2017, the Corporation announced the completion of a share placement (the “April 2017
Placement”) of 45,598,266 Ordinary Shares at an issue price of $0.50 per Ordinary Share for aggregate gross
proceeds of $22,799,133.
On May 24, 2017, Sarah Shipway was appointed interim Chief Financial Officer of the Corporation.
On May 25, 2017, 476,247 Ordinary Shares were issued to Mr. Julian Barnes for services provided to the
Corporation. The issue was approved at the Corporation’s annual general meeting held on November 7, 2016.
On July 10, 2017, the Corporation’s Ordinary Shares commenced trading on the TSX.
On July 10, 2017, Robert Schafer was appointed non‐executive Director of the Corporation and Derrick
Weyrauch was appointed as Chief Financial Officer of the Corporation.
On July 12, 2017, the Corporation announced that it had been granted a Large‐Scale Mining licence over an
area of approximately 19.54 sq km covering the Corporation’s Namdini Gold Project and that an initial
Environmental Impact Statement was lodged with the EPA.
On July 26, 2017, the Corporation announced that interim results for Phase Two of its metallurgical test
programme for the Namdini Gold Project had demonstrated an overall increased gold recovery rate of 86%
utilizing standard gold recovery techniques.
On August 14, 2017, the Corporation announced two auger gold‐in‐soil anomalies (4.2 km long x 300 m wide
and 800 m x 250 m) were discovered with +100ppb gold anomaly along the entire strike of both anomalies
from exploration activities on its Kungongo Prospect.
On August 15, 2017, the Corporation announced that it had entered into a definitive agreement with Red Back
Mining Ghana Limited, a wholly‐owned subsidiary of Kinross Gold Corp., to acquire two large‐scale prospecting
licences which encompass the Namdini regional shear and which contains the historic producing “Nangodi”
gold mine and that combined with the Corporation’s existing Ndongo holdings, increases the land area to
287.67 km2.
2018 Annual Information Form
PAGE 13
On September 18, 2017, the Corporation announced an updated Mineral Resource estimate for its Namdini
Gold Project, including an Indicated Mineral Resource of 120 M tonnes grading 1.1 g/t Au for 4.3 Moz Au and
an Inferred Mineral Resource of 84 M tonnes grading 1.2 g/t Au for 3.1 Moz Au at 0.5 g/t Au cut‐off. The
effective date of the Mineral Resource Estimate is September 11, 2017.
On October 12, 2017, the Corporation announced the appointment of two new Non‐Executive Directors,
namely Jacques McMullen and Michele Muscillo. The Corporation also advised that Mark Connelly and Simon
Jackson had resigned from the Board of Directors.
On October 20, 2017, the Corporation filed on SEDAR an updated technical report titled “Technical Report
Mineral Resource Estimation for the Namdini Gold Project, Ghana”, in respect of the Company’s Namdini Gold
Project in Ghana, West Africa.
On October 20, 2017, 1,000,000 fully paid ordinary shares were issued on exercise of Unlisted Options and
5,000,000 Unlisted Options expired, unexercised.
On October 23, 2017, the Corporation announced that it had entered into an agreement with Clarus Securities
Inc., on behalf of a syndicate of underwriters (collectively, the “Underwriters”), pursuant to which the
Underwriters have agreed to purchase, on a “brought deal” basis, 18,461,600 ordinary shares of the Company
at a price of C$0.65 per ordinary share for aggregate proceeds to the Company of C$12,000,040. On November
22, 2017 the brought deal was closed.
On November 10, 2017, 1,000,000 Unlisted Options were exercised.
On November 22, 2017, 5,758,000 Unlisted Options exercisable at $0.825 on or before 21 December 2022,
4,036,200 Unlisted Options exercisable at $0.965 on or before 21 December 2022, 1,000,000 Unlisted Options
exercisable at $0.75 on or before 21 December 2022 and 379,390 fully paid ordinary shares were issued.
On December 21, 2017, the Company issued 379,390 shares for services, 190,000 at a deemed value of $0.50
and 189,390 at a deemed value of $0.58.
On January 3, 2018, 50 Class A Performance shares expired.
On February 5, 2018, the Corporation released the results of its Preliminary Economic Assessment/Scoping
Study for the Namdini Project in Ghana, West Africa.
On March 1, 2018, 160,500 fully paid ordinary shares were issued on exercise of Listed Options.
On March 5, 2018, the Corporation advised that it had completed an update to the Mineral Resource estimate
for its Namdini Gold Project in Ghana, West Africa. As a result of an additional 15,684m of HQ diamond drilling
within 35 holes since the last Mineral Resource estimate in September 2017, the infill drill program has been
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 Resource and 0.5Moz of Inferred Mineral
Resources.
On March 12, 2018, 189,500 fully paid ordinary shares were issued on exercise of Listed Options.
On March 14, 2018, the Corporation announced that it had filed a National Instrument 43‐101 Technical Report
in respect to the Preliminary Economic Analysis announced on February 5, 2018.
2018 Annual Information Form
PAGE 14
On March 28, 2018, 403,500 fully paid ordinary shares were issued on exercise of Listed Options.
On April 10, 2018, 100,000 fully paid ordinary shares were issued on exercise of Listed Options.
On April 18, 2018, the Corporation announced that it had filed a National Instrument 43‐101 Technical Report
in respect of the Mineral Resource Estimation announced on March 5, 2018.
On April 19, 2018, 500,000 fully paid ordinary shares were issued on exercise of Listed Options.
On May 2, 2018, 150,000 fully paid ordinary shares were issued on exercise of Listed Options. 300,000 fully
paid ordinary shares were issued for services rendered to the Company.
On May 29, 2018, 49,507 fully paid ordinary shares were issued on exercise of Listed Options.
On June 12, 2018, 24 ordinary fully paid shares were issued on exercise of Listed Options. 340,000 fully paid
ordinary shares were issued for services rendered to the Company.
On July 16, 2018, the Corporation announced that it had intersected further gold at a new discovery named
Ndongo East on its 100% owned Ndongo Licence, located approximately 15km north of the Company’s flagship
Namdini Gold Project which has a 6.5Moz indicated Mineral Resource.
On July 31, 2018, the Corporation announced that it had received investment committee approval from and
executed a term sheet with Sprott Private Resource Lending (Collector), L.P. to be provided with a US$25
million senior secured credit facility. The Corporation announced on August 22, 2018 that the facility had been
finalised.
On July 31, 2018, 385,000 fully paid ordinary shares were issued on exercise of Listed Options.
On August 28, 2018, 4,250,000 fully paid ordinary shares were issued to Sprott Private Resource Lending
(Collector), L.P. as part of the senior secured credit facility.
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.
On September 19, 2018, 125,000 fully paid ordinary shares were issued on exercise of Listed Options.
2018 Annual Information Form
PAGE 15
The Ghanaian Mining Industry
Mining in Ghana
Ghana
Ghana is situated on the west coast of Africa, approximately 600 km north of the Equator on the Gulf of Guinea.
Accra, the capital city of Ghana, is located almost exactly on the Prime Meridian. The former British colony
changed its name from the Gold Coast to Ghana on achieving independence on March 6, 1957. Ghana is now
a republic with a population of approximately 25 million people and a democratically elected government.
English remains the official and commercial language.
The total land area of the country is approximately 238,000 km² and the topography is relatively flat. Ghana
has a tropical climate with two rainy seasons and two dry seasons in the southern sector each year. The climate
condition in the Upper East Region of Ghana, where the Namdini Gold Project and the Bolgatanga Project are
located, is tropical with a rainy season from May to October and a long dry season with virtually no rainfall
from October to April. Temperatures range between a maximum of 40°C in March/April and a minimum of
12°C in December. The natural vegetation in the Western Region, where the Subranum Project is located, is
moist tropical forest with a majority of the land converted to agricultural pursuits. The physiography of the
Namdini Gold Project area is primarily savannah grassland characterized by short scattered drought‐resistant
trees, scattered scrub, and grass that gets burnt by bushfire or scorched by the sun during the long dry season.
The climate is very dry. The most common trees are the Sheanut, Dawadawa, and Baobab.
The Ghanaian legal system is generally modelled after and based on British common law. The laws of Ghana
include the Constitution, national laws passed by Parliament (or under authority granted by Parliament) and
the common law of Ghana. The common law of Ghana includes customary rules which apply to particular
communities in Ghana.
The Corporation has found Ghana to be stable (politically and economically) over the time in which it has
engaged in operations in Ghana.
Mining Rights
The Constitution of Ghana vests title in every mineral in its natural state to the President of Ghana on behalf
of, and in trust for, the people of Ghana. The exercise of any mineral right in the form of reconnaissance,
exploration or exploitation of any mineral in Ghana requires an appropriate mineral right to be issued by the
Government of Ghana acting through the Minister responsible for Lands and Natural Resources (the
“Minister”). The Minister administers, promotes and regulates Ghana’s mineral wealth through the Minerals
Commission, a governmental organization established in accordance with the Minerals Commission Act 1993
(Act 450) and the Minerals and Mining Act 2006 (Act 703) (the “2006 Mining Act”).
Pursuant to the 2006 Mining Act, a number of regulations were passed in 2012 to clarify and implement
provisions of the 2006 Mining Act. These regulations relate to matters such as licensing, local content, technical
issues, mineral right holding costs, mine support services and resettlement and payment of compensation to
persons impacted by mining operations.
The 2006 Mining Act provides for a number of categories of licences.
A reconnaissance licence confers on the holder the right to search for a specific mineral or commodity within
the licence area by geochemical and photo‐geological surveys or other remote sensing techniques. Except as
2018 Annual Information Form
PAGE 16
otherwise provided in the licence, it does not permit drilling, excavation or other sub‐surface techniques. A
reconnaissance licence is normally granted for up to one year and may be renewed by the Minister from time
to time for periods up to one year at a time upon application by the holder. The size of the area over which a
reconnaissance licence may be granted is limited to 5,000 contiguous blocks or 1,050 km².
A corporate body duly registered in Ghana can apply to the Minerals Commission for a renewable exploration
(prospecting) licence granting exclusive rights to explore for a particular mineral in a selected area for an initial
period not exceeding three years. A prospecting licence may be renewed for a maximum of two further terms
of up to three years each, subject to surrender of a portion of the area.
When exploration has successfully delineated a mineral reserve, an application may be made to the Minerals
Commission for conversion to a mining lease, granting a company the right to produce a specific product from
the concession area, normally for a period of 30 years or a lesser period that may be agreed upon with the
applicant.
Once a mineral right is issued to an entity by the Government of Ghana, Ghanaian mining laws prevent that
mineral right from being transferred, assigned or mortgaged by the licensee or mineral right holder without
the prior written approval of the Minister. The Ghana Minerals Commission is also required to maintain a public
register of all applications, grants, variations, transfers, suspensions and cancellations of such licences or
mineral rights. Official searches may be conducted in the public register to obtain information regarding any
mineral right granted by the Government of Ghana.
The 2006 Mining Act requires that any person who intends to acquire a controlling share of the equity of any
mining company that has been granted a mineral right must first give notice of its intent to the Minister and
also obtain the no objection of the Minister prior to acquiring a controlling share.
Under the 2006 Mining Act, the Government of Ghana is entitled to a 10% free carried interest in all companies
that hold mining leases. The 10% free carried interest entitles the Government of Ghana to a pro‐rata share of
future dividends. The Government of Ghana has no obligation to contribute development capital or to
operating expenses.
The Government of Ghana also has the right to acquire an additional interest in such companies for a price
fixed by agreement.
Under the 2006 Mining Act, the Government of Ghana is empowered to acquire a special or “golden” share in
any mining company. The special share would constitute a separate class of shares with such rights as the
Government of Ghana and the mining company might agree. Though deemed a preference share, it could be
redeemed without any consideration or for a consideration determined by the mining company and payable
to the holder on behalf of the Government of Ghana.
In the absence of any such agreement, the special share would have the following rights:
it would carry no voting rights but the holder would be entitled to receive notice of, and to attend and
speak at, any general meeting of the members or any separate meeting of the holders of any class of
shares;
it could only be issued to, held by, or transferred to the Government of Ghana or a person acting on behalf
of the Government of Ghana;
the written consent of the holder would be required for all amendments to the organizational documents
2018 Annual Information Form
PAGE 17
of the Corporation, the voluntary winding‐up or liquidation of the Corporation, or the disposal of any
mining lease, or the whole or any material part of the assets of the Corporation;
it would not confer a right to participate in the dividends, profits or assets of the Corporation or a return
of assets in a winding‐up or liquidation of the Corporation; and
the holder of a special share may require the Corporation to redeem the special share at any time for no
consideration or for a consideration determined by the Corporation.
To the Corporation’s knowledge, for as long as it has been operating in Ghana, no mining company has been
requested to issue a special share.
The Government of Ghana has a pre‐emptive right to purchase all gold and other minerals produced by mines
in Ghana. The purchase price would be agreed by the Government of Ghana and the mining company, or the
price established by any gold hedging arrangement between the Corporation and any third party approved by
the Government of Ghana, or the publicly quoted market price prevailing for the minerals or products as
delivered at the mine or plant where the right of pre‐emption was exercised. The Corporation understands
that the Government of Ghana has indicated it does not intend to take pre‐emptive action pursuant to its right
to purchase gold or other minerals so long as mining companies sell gold in accordance with certain procedures
approved by the Bank of Ghana.
Ghanaian Royalties and Taxes
Ghanaian law sets mineral royalties at a flat rate of 5% of mineral revenues. The corporate income tax rate is
35% of taxable income for mining companies. Capital expenditures (tax depreciation) are deductible at a flat
rate of 20% per year over a five‐year period.
The tax regulations disallow expenditures from one mining area as a deduction from revenues in a separate
mining area belonging to the same company in determining the Corporation’s taxable income for tax purposes.
Under the 2006 Mining Act, the Government of Ghana may enter into a stability agreement with the holder of
a mining lease, to ensure that the holder of the mining lease will not, for a period not exceeding 15 years from
the date of the agreement,
1. be adversely affected by a new enactment, order, instrument or other action made under a new enactment
or changes to an enactment, order, instrument that existed at the time of the stability agreement, or other
action taken under these that have the effect or purport to have the effect of imposing obligations upon
the holder or applicant of the mining lease, and
2. be adversely affected by subsequent changes to:
(a) the level of and payment of customs or other duties relating to the entry of materials, goods,
equipment and any other inputs necessary to the mining operations or project,
(b) the level of and payment of royalties, taxes, fees and other fiscal imports, and
(c)
laws relating to exchange control, transfer of capital and dividend remittance.
A stability agreement entered into is subject to ratification by the Parliament of Ghana.
2018 Annual Information Form
PAGE 18
In 2011, the Government of Ghana established a tax stability renegotiation team to review the existing tax
stability agreements of some major mining companies operating in Ghana.
Environmental and Other Laws and Regulations
All phases of mineral exploration, project development, and operations are subject to environmental laws and
regulations. These laws and regulations may define, among other things, air and water quality standards, waste
management requirements, and closure and rehabilitation obligations. In general, environmental legislation is
evolving to require stricter operating standards, more detailed socio‐economic and environmental impact
assessments for proposed projects, and a heightened degree of accountability of companies and their officers,
directors, and employees for corporate social responsibility, and health and safety. Changes in environmental
regulations, and the way they are interpreted by the regulatory authorities, could affect the way the
Corporation operates, resulting in higher environmental and social operating costs that may affect the viability
of operations.
Environmental matters in Ghana, including those related to mining, fall primarily under the oversight of the
Environmental Protection Agency (“EPA”), as well as the Minerals Commission and the Inspectorate Division
of the Minerals Commission. The EPA has laws and regulations that govern, among other things, environmental
and socio‐economic impact assessments and statements, environmental management plans, emissions into
the environment, environmental auditing and review, and mine closure and reclamation, to which the
Corporation’s operations are subject. Additional provisions governing mine environmental management are
provided in the 2006 Mining Act and the various Minerals and Mining Regulations which came into force in
2012.
The Corporation notes a continuing trend toward substantially increased environmental requirements and
evolving corporate social responsibility expectations in Ghana, including the requirement for more permits,
analysis, data gathering, community hearings, and negotiations than have been required in the past for both
routine operational needs and for new development projects. There has been a trend to longer lead times in
obtaining environmental permits.
The Corporation’s mineral exploration activities and anticipated development, mining and processing
operations will also be subject to various laws governing prospecting, development, production, taxes, labor
standards, occupational health and safety, land rights of local people and other matters. New rules and
regulations may be enacted or existing rules and regulations may be modified and applied in a manner that
could have an adverse effect on the Corporation’s financial position and results of operations.
The Corporation established objectives to achieve regulatory requirements in its exploration, development,
operation, closure, and post‐closure activities so that its employees, the local environment, and its stakeholder
communities are protected and that the next land use contributes to the sustainability of the local economy.
In order to meet its objectives, the Corporation:
educates its managers so that they are committed to creating a culture that makes social and
environmental matters an integral part of short‐term and long‐term operations and performance
management systems;
works with its employees so they understand and accept environmental and social policies and procedures
as a fundamental part of the business;
established, and continues to improve, operating standards and procedures that aim to meet or exceed
requirements in relevant laws and regulations, the commitments made in its environmental impact
2018 Annual Information Form
PAGE 19
statements, environmental and socio‐economic management plans, rehabilitation and closure plans, and
any international protocols to which the Corporation is a signatory;
incorporated environmental and human rights performance requirements into relevant contracts;
provides training to employees and contractors in environmental matters;
regularly prepares, reviews, updates, and implements site‐specific environmental management and
rehabilitation and closure plans;
works to progressively rehabilitate disturbed areas in conformance with site‐specific environmental plans;
consults with local communities and regulators to communicate its environmental management policies
and procedures;
regularly reviews its environmental performance;
intends to complete resettlement projects in accordance with the International Finance Corporation
Performance Standard 5 on land acquisition and involuntary resettlement when required; and
publicly reports social, health, safety and environmental performance.
MINERAL PROPERTIES
Namdini Gold Project
Where appropriate, certain information contained in this AIF updates information derived from the Technical
Report the Corporation filed on April 18, 2018 in respect of the Mineral Resource Estimation announced on
March 5, 2018. Any updates to the scientific and technical information derived from the Technical Report was
prepared by or under the supervision of Nicolas Johnson, MAIG, an employee of MPR Geological. Mr. Johnson
is a “qualified person” for the purposes of NI 43‐101.
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.
Property Description, Location and Access
The Namdini Gold Project is located in the northeastern region of Ghana approximately 50 km southeast of the
regional centre of Bolgatanga, and close to the southern border of Burkina Faso. The Namdini Gold Project area
is located approximately six kilometres southeast of the operating Shaanxi Mining Company Limited’s
underground gold mine. The Universal Transverse Mercator (UTM) co‐ordinates for the approximate centre of
the Namdini Gold Project are 756400.0 m N, 1177050.0 m E in WGS84/NUTM30 projection or 10°38’ 21” N
Latitude and ‐0°39’ 23” W Longitude. The nearest airport is located in Tamale, approximately a 2.5 hour drive
south of Bolgatanga via 160 km of paved road on National Highway N10. Tamale, located approximately 450
km north of the capital city of Accra, Ghana, is serviced by daily one hour scheduled commercial flights. Total
access time from the Accra to the Namdini Gold Project is approximately four hours using a combination of air
and road travel, and approximately 14 hours solely by road travel. Accra has direct flights to the United
Kingdom, Europe, South Africa, and the Middle East via regularly scheduled international commercial carriers.
2018 Annual Information Form
PAGE 20
The Namdini Gold Project area is readily accessible from Bolgatanga along paved highway followed by 15 km
of well‐travelled gravel roads. Access during the rainy season is slower due to waterlogged roads; however, the
main access roads are passable year‐round.
The Namdini Gold Project, along with Cardinal’s larger Bolgatanga Project, encompasses approximately 660
km² of Paleo‐Proterozoic greenstone belts in North Eastern Ghana. The Bolgatanga Project includes the
Kungongo and Bongo Reconnaissance Licences and the Ndongo Prospecting Licence. None of the Bolgatanga
Project tenements are contiguous with the Namdini Gold Project.
Property Ownership
Cardinal holds its interest in the Namdini Gold Project through a Large‐Scale Mining Licence covering the
Namdini Mining Lease, which was issued in the December 2017 quarter. The Namdini Mining Lease was
assigned to CNM, 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 19.54km2
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.
Prior to the Mining Licence being issued, Cardinal held its interest through an agreement dated July 23, 2014
(as amended, the “Savannah Agreement”) between Savannah Mining Ghana Limited (“Savannah”) and
Cardinal Mining Services Limited (“CMS”), a wholly‐owned subsidiary of Cardinal, and agreements with the
holders of small scale mining licences within the area comprising the Namdini Gold Project.
Pursuant to the Savannah Agreement, Savannah has entered into Sale and Purchase Agreements and licence
relinquishment agreements with holders of small scale mining licences within the area of the Namdini Lease
(as defined below) where the holders of these small‐scale mining licences will have surrendered their small‐
scale licenses and all mineral rights to form part of the proposed Namdini Lease area.
Malik Easah, an executive director of Cardinal, is also the sole shareholder and director of Savannah.
Savannah’s sole business is the Savannah Agreement.
Pursuant to the Option Agreement, Savannah has agreed to hold any mining licences applied for, or granted in
favour, of Savannah as trustee for CMS pending CMS’s exercise of its option to purchase such mining licences.
The Option Agreement has an indefinite term, and may be terminated by a non‐breaching party in the event
that a party is in breach of the agreement and such breach remains uncured for 90 days. CMS is entitled to
assign its rights and obligations under the Option Agreement in its absolute discretion and the other parties to
the Option Agreement are not permitted to assign their rights or obligations thereunder without the written
consent of CMS.
The Minister signed a mining lease for Savannah (the “Namdini Lease”) on October 12, 2016 over an area of
approximately 19.54 km² in the Dakoto area of the Talensi District Assembly in the Upper East Region of Ghana.
The Namdini Lease is for an initial period of fifteen years ending October 11, 2031. An application can also be
submitted for an extension of the Namdini Lease if required. The final registration of the Namdini Lease to
Savannah by the Ghana Government was completed during July 2017.
On May 11, 2017 Savannah, CMS, CMN and Mr. Easah signed an agreement (the “Option Exercise Deed”) giving
effect to and providing for the assignment of the Namdini Lease to CMN. Pursuant to the Option Exercise Deed,
the parties agreed that, upon receipt of a written direction in agreed form from CMS, Savannah would take all
action and execute all instruments required to effect the assignment of all of Savannah’s rights and obligations
under the Namdini Lease to CMN. Under the Option Exercise Deed, CMN was also appointed as Savannah’s
2018 Annual Information Form
PAGE 21
attorney to do anything that it is obliged but has failed to do under the Option Exercise Deed or the Namdini
Lease. The Option Exercise deed is for an indefinite term.
Cardinal and Savannah have both signed the necessary documentation to assign the Namdini Mining Licence
to Cardinal Namdini Mining Limited (Cardinal Namdini), a wholly owned subsidiary of Cardinal, for $1.00 as per
the Savannah Agreement.
There are no known significant factors or risks that may affect access, title or the right or ability to perform the
proposed work program on the property, including any environmental liabilities. The Corporation has all
required permits to conduct the proposed work program on the property.
Climate
The mean annual temperature in Bolgatanga is 28.3°C. The climate is characterized by one rainy season
between May and October where the rainfall is erratic spatially and in duration. The mean annual rainfall during
this period is between 800 mm and 1,100 mm. Temperatures during this period can be as low as 20°C at night,
but can reach more than 35°C during the daytime.
There is a long spell of dry season from December to late January, characterized by cool, dry and dusty
Harmattan winds. Temperatures during this period can be as low as 15°C at night and as high as 40°C during
the daytime. Humidity is, however, very low.
Climatic conditions have not affected Cardinal’s exploration activities, nor would they be expected to materially
affect any potential mining operations.
Local Resources
Ghana has long mining history and has experienced technical personnel including geologists and engineers.
Exploration and mining supplies are readily available within Ghana.
There is a significant labour pool available for training and recruitment for any envisioned mining operation.
The Namdini Gold Project enjoys the support of local communities.
Existing Infrastructure
No Cardinal infrastructure is present at the Namdini Gold Project site other than two Security Huts. Fuel supply
for the drills is provided by diesel tankers. Fresh water is taken from a borehole located on the Namdini Gold
Project site. Cardinal maintains trails on the Namdini Gold Project site in order to facilitate exploration and
drilling activities.
Numerous historical trenches and adits, as well as organized artisanal gold mining sites, are located throughout
the property and only approximately 5% of the permit area has been affected by these activities. Artisanal
miners extract gold from the saprolite horizon, but also sink shafts as deep as 20 m to recover gold from quartz
veins.
Infrastructure at the Bolgatanga Project exploration office area includes the following:
A fenced and gated compound patrolled by security.
A brick constructed administrative office building including kitchen and bedroom accommodations.
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PAGE 22
Gated and fenced core processing area consisting of:
o Outdoor roofed open core logging areas
o
o
Indoor core sawing area
Locked storage area for pulps and duplicates
Gated and fenced core storage area consisting of:
o Outdoor roofed core storage racks
o Bulk density station
Security office and camp support staff accommodation.
Power is distributed to Bolgatanga from the Ghanaian national transmission and distribution system based on
225 kV above ground transmission lines.
For any future development activities, it will be necessary to build all‐weather access roads and a bridge, as
well as infrastructure for sufficient power and water supplies. Cardinal’s surface rights allow sufficient areas
for potential processing plant sites, tailings storage areas, and waste disposal areas.
Physiography
The topography is generally flat with gently undulating terrain. The topography rises to the south where the
area is overlain by the sediments. Elevation varies from 175 MASL to 250 MASL. The average elevation of the
flat Savannah area is approximately 190 MASL.
The physiography of the Namdini Gold Project area is primarily savannah grassland characterized by short
scattered drought‐resistant trees, scattered scrub, and grass that gets burnt by bushfire or scorched by the sun
during the long dry season. The climate is very dry. The most common trees are the Sheanut, Dawadawa, and
Baobab.
The White Volta River is located approximately 7km west of the Namdini Gold Project area.
History
The discovery of gold in this region occurred in late 1930s when a British businessman was shown some gold‐
bearing quartz veins at Nangodi by a local farmer. During the early 1960s, the Ghana Geological Survey
Department carried out limited shallow drilling around prospects, which had been identified by earlier work in
the 1930s. Again in the 1970s, some soil geochemistry and trenching were carried out over a 7 km stretch in
the Nangodi area where most of the known prospects occur.
Driven by activity elsewhere in Ghana and Burkina Faso during the mid‐1990s, numerous Canadian and
Australian junior explorers started to explore the north of Ghana. In particular, the discovery of Youga deposit
in Burkina Faso by International Gold Resources (“IGR”) is significant. During the same period in the mid‐1990s,
small‐scale miners inundated the area as the traditional small‐scale mining sites in southern Ghana were closed
(Tarkwa, Obuasi, Konongo, etc.).
BHP was the first to conduct a major reconnaissance exploration program in the mid‐1990s, covering most of
2018 Annual Information Form
PAGE 23
the Nangodi area. Other groups that acquired prospecting concessions in the mid‐1990s include IGR, Cluff
Resources, Teberebie Goldfields, Ashanti Goldfields, and Africwest Gold. Renewed interest in the area, after
the market downturn in 1997, began around 2004, with an increase in the gold price, and as a result of the
development of mines on the Burkina Faso side of the border.
The Namdini Gold Project was first discovered in September 2013 by prospecting. A small scale mining licence
was approved in 2014 and reverse circulation (“RC”) drilling began shortly thereafter. Prior to Cardinal, no
systematic exploration had been undertaken on the Namdini Gold Project. Small scale artisanal mining began
on the property circa 2013 following Cardinal’s initial exploration activities.
Geological Setting and Mineralization
The regional geological setting discussion presented below has been summarized from Pittuck and Arthur
(2015).
The Namdini Gold Project occurs in Paleo‐Proterozoic granite–greenstone terrain in the northeastern district
of Ghana, close to the border with Burkina Faso. The region contains several producing mines both on the
Ghana side of the border (Shaanxi Gold Mine) and in Burkina Faso (Youga Gold Mine). Evidence of artisanal
workings occurs throughout the area.
The Namdini Gold Project area is located in the Nangodi Greenstone Belt (NGB). The NGB is the extension of
the belt that crosses the border into Southern Burkina Faso. In Ghana, there are seven Paleo‐Proterozoic
granite–greenstone belts, which form part of the northeastern extension of the Paleo‐Proterozoic Birimian
basins that were created during the collision of the West African and Guyana Archean Shields. The main
lithologies in the belts are volcanic–sediment sequences of Birimian age (interbedded basic to intermediate
flows, felsic tuffs and fine‐grained sediments) overlying the earlier intervening sedimentary basins (greywackes
and phyllites) of the Tarkwaian formation. These basins are separated by major faults that probably controlled
early syn‐Birimian sedimentary basin downfaulting.
Locally the NGB trends north‐northeast to south‐southwest over a distance of 30 km and turns to an east‐
northeast to south‐southwest trend in the south of the area around Namdini. The belt is comprised of Birimian
age interbedded meta‐volcanics (mainly basalt flows) and meta‐sediments (phyllites) and occasional cherty
horizons. Some small basic to intermediate intrusions occur within the belt and have associated gold
mineralization. Meta‐sediments of Tarkwaian age occur adjacent to the belt and host the gold mineralization
of the nearby Youga mine. Much of the area to the south of the tenements is covered by later Voltaian Basin
sediments. The belts continue underneath this cover.
The Namdini Gold Project covers the southern extension of the Nangodi Greenstone Belt. In 2016, geological
consultants from Orefind Pty Ltd. (“Orefind”) conducted an on‐site structural study and then developed a
structural framework with controls on, and geometry of, the gold mineralization comprising the Namdini
deposit.
Orefind concluded that the rock types comprising the Namdini Gold Project include a steeply dipping Birimian
sequence of inter‐bedded foliated meta‐sedimentary and meta‐volcanic units, which have been intruded by a
medium‐grained granitoid and diorite. The southern part of the Namdini Gold Project is covered by flat lying
Voltaian Basin clastic sedimentary rocks that have been deposited unconformably on the Birimian sequence
and postdate mineralization and the host sequence.
Underneath the weathering profile, from west to east across the Namdini Gold Project area, the Birimian units
include meta‐sedimentary, meta‐volcaniclastic, granitoid (tonalite), diorite, and meta‐sedimentary.
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PAGE 24
The meta‐sedimentary and volcaniclastic rocks have been intensely altered with a pyrite‐carbonate‐muscovite‐
chlorite‐quartz. Alteration is prevalent in the volcaniclastic rocks. Similarly, the tonalite is extensively altered
and has been overprinted by silica‐sericite‐carbonate assemblages. The identity of carbonate alteration is
difficult and is best described as iron‐carbonate in the absence of petrological or geochemical characterization.
Namdini mineralization is located in the Namdini Greenstone Belt within a host sequence of meta‐
volcaniclastics, granitoids (tonalite) and diorites. The deposit is bounded on hanging wall and footwall sides by
metasediments.
Drilling has outlined mineralization with three‐dimensional continuity, with a size of approximately 1,200 m
long, 350 m wide and 650 m in depth.
In all rock types, the mineralization is accompanied by visible disseminated sulphides of pyrite and arsenopyrite
in both the veins and wall rocks. In diamond drill core, the mineralized zones are visually distinctive due to the
presence of millimetre to centimetre wide quartz‐carbonate veins that are commonly folded and possess
yellow‐brown sericite‐carbonate selvedges.
Visible gold occurs in strongly altered granite and is associated with sub‐millimetre wide silica‐sericite shears.
Deposit Types
The Namdini gold deposit appears to be a typical Birimian gold deposit, hosted in a mixture of meta‐sediments,
volcaniclastics and intrusives. Birimian rocks are composed of granitic‐gneiss terranes separated by linear
greenstone belts of meta‐sedimentary and meta‐volcanic rocks.
Exploration
All exploration work on the Namdini Gold Project has been completed by Cardinal. A field office, including core
logging and storage facilities, is located in Bolgatanga.
The primary objectives of Cardinal’s exploration strategy are to:
1.
Improve on the existing knowledge of the deposit and increase the future potential of the Namdini Gold
Project.
2. Extensional drill‐outs both along strike and down‐dip to increase the Mineral Resource base.
3. Upgrade Mineral Resource to enable optimized mine design, schedules and profitable gold production.
4. Continue with ongoing metallurgical optimization test work.
5. Progress with Preliminary Feasibility Study, (“PFS”) due for release in Q3 2018.
The Namdini Gold Project was first discovered in September 2013 by prospecting. A small‐scale Mining Licence
was approved in 2014 and RC drilling began shortly thereafter. After reviewing initial results, Cardinal drilled
additional RC holes in the same licence area. After approximately 88 RC holes, Cardinal had sufficient
confidence in the potential size of the Namdini Gold Project that it stepped out 600 m north along strike and
drilled a surface diamond drill hole (NMDD002) that intersected 87 m at 1.08 g/t Au and numerous other
significant intersections.
2018 Annual Information Form
PAGE 25
Drilling
All exploration at the Namdini Gold Project has been completed by Cardinal. Following the discovery drilling in
2013, an initial program of detailed RC drilling was undertaken in one small area, followed by a program of
sectional diamond drilling. A number of holes have RC collars and diamond drill tails. The below table presents
a summary of the drilling completed to September 2018.
Drilling Summary to September 2018
RC
DD
RC Collar / DD Tail
Total
No.
Metres
No.
Metres
No.
Metres
No.
Metres
45
42
19
36
75
4,815.00
4,619.30
2,540.00
7,841.00
8,348.20
‐
5
56
47
22
‐
1,656.55
‐
5
‐
1,184.68
14,163.32
14
3,295.42
24,737.32
7,326.79
3
‐
827.83
‐
45
52
89
86
97
4,815.00
7,460.53
19,998.74
33,406.15
15,673.99
217
28,163.50
130
47,883.98
22
5,307.93
466
81,354.41
Year
2014
2015
2016
2017
2018
Total
Sampling, Analysis and Security
Cardinal’s grassroots exploration procedures are generally focused on staged exploration in order to achieve
quick and effective means of sampling vast areas of land for the purpose of generating targets for further
detailed work Sampling is conducted according to Cardinal existing protocols and Quality Control procedures
as per industry best practice.
All samples collected for assaying are retained in a locked secure shed until they are collected by the assay
laboratory. Retained drill core is securely stored in the core storage compound and pulps are securely stored
in the exploration core logging area.
Sample delivery is managed by Cardinal. At the time of sample collection, a sign‐off process between Cardinal
and the laboratory delivery truck driver ensures that samples and paperwork correspond. The samples are then
transported to the laboratory where they are receipted against the dispatch documents. The assay
laboratories are responsible for the samples from the time of collection from Namdini Project site until final
results are returned and checked by Cardinal.
Sample pulps and coarse rejects are retained by the laboratories and are shipped back to Namdini after final
results are returned where they are stored under security.
As part of Cardinal’s QAQC protocol, a suite of internationally accredited and certified reference material and
locally sourced blanks are included in the sample submission sequence on a regular basis. The certified
reference materials and blanks are inserted in the ratio of 1:20. Duplicates are taken at the riffle splitter every
20th sample. No duplicate samples are taken from core samples.
Pulps from the original samples are submitted to a secondary laboratory for checks on accuracy and precision
of the primary laboratory (Check Assays). Coarse rejects are submitted back to the primary laboratory to assess
the adequacy of the sub‐sampling process (Check Samples).
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PAGE 26
Samples have been prepared and analyzed at SGS and Intertek Minerals Ltd (Intertek) laboratories in Tarkwa,
Ghana. Both SGS and Intertek are officially recognized by the South African National Accreditation System
(SANAS) under a Quality System, which accords to ISO/IEC 17025 standards.
Samples have principally been analyzed for Au by Fire Assay using 50 g of the sample (FAA303 or FAA505) with
an atomic absorption finish. The sub‐sample is mixed with a fluxing agent and then melt it to create a “button”.
Each button is dissolved in aqua and then aspirated in an acetylene flame. This process typically returns results
between 0.01 ppm Au and 100 ppm Au. Samples values below 0.01 ppm Au are returned as being below
detection limit. Sample values obtained above 100 ppm Au are re‐analyzed with a gravimetric finish, which
can determine values up to 3,000 ppm Au
The laboratories conduct their own internal quality checks including the use of certified reference materials
and/or in‐house controls, blanks and replicates. These quality results are reported along with sample results in
the final reports.
No employee, officer, director or associate of Cardinal carried out any sample preparation on samples from
the Namdini Gold Project exploration program. Drill core was transported from the drill site by Cardinal vehicle
to the secure core yard facility at the Bolgatanga Field Exploration Office.
Data Verification
Cardinal employs SQL as the central data storage system using DataShedTM software front‐end. The database
is managed by an independent data management consultant, Maxwell Geoservices (Maxwell). User access to
the database is regulated by specific user permissions. Existing protocols maximise data functionality and
quality whilst minimising the likelihood of error introduction at primary data collection points and subsequent
database upload, storage and retrieval points.
Data templates with lookup tables and fixed formatting are used for collecting primary data on field Toughbook
laptops and data subsequently imported into a secure central database. The SQL server database is configured
for optimal validation through constraints, library tables, triggers and stored procedures.
Data is captured onto the geologist laptop and synchronized into the drill hole database at the end of every
shift. Field data is transferred by the project geologist to the database the same day as samples are submitted
to the laboratory for analysis.
The independent Maxwell database administrator then validates the data in DataShed and, if any problems are
encountered, the project geologist is immediately contacted and the necessary corrections made before the
data is final imported into the SQL database. Data must be in the database before any assay results are received
from the laboratory. Data exported out of the database is checked and signed off by Maxwell.
Assay results are reported electronically by the laboratory, in pdf and csv formats, sent via email to Cardinal
and Maxwell which is then loaded into the database by Maxwell.
Cardinal technical staff carry out routine analysis of the quality control data on receipt of assay results from
the laboratory in order to determine if the batch of samples has passed industry standard levels for control
samples. If the batch ‘fails’, the batch of assays is rejected and a re‐assay request for the batch of samples is
made to the laboratory.
Mineral Processing and Metallurgical Testing
The Corporation’s ongoing metallurgical testwork programme continues to demonstrate support for standard
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PAGE 27
gold recovery techniques. Phase 3 of the metallurgical programme being performed at Suntech Laboratories
in South Africa, which demonstrated an overall recovery of 86%, was completed in Q3 2017.
The PFS testwork programme was relocated to ALS Laboratory in Perth in Q4 2017. This phase of metallurgical
testwork is focusing on optimising a process flowsheet which is described as a conventional primary crush,
SAG/Ball mill, re‐crush, flotation, regrind and carbon‐in‐leach circuit.
The PFS metallurgical testing programmes are categorized in four main parts being
I.
II.
III.
IV.
Comminution Testwork,
Starter Pit and Flotation Testwork,
Life of Mine Testwork and
Variability Testwork. The latest geostatistical resource model was used to target the average grade of
the combined sample for each target sample, based on a notional cut‐off grade of 0.5 g/t Au. The
intervals were selected to ensure that the following criteria were met:
a.
b.
representative spatial distribution within the overall Namdini gold deposit;
a range of gold grades, predicted to be encountered during normal mining operations;
c. average gold grades matching the overall Namdini geostatistical Mineral Resource above a
0.5 g/t Au cut‐off; and
d.
for the variability testwork, a range of gold and sulfur grades.
The PFS metallurgical testwork is ongoing.
Mineral Resources
Geological interpretation and Mineral Resource estimation were completed by MPR incorporating drill holes
completed as of March 5 2018. The Mineral Resource has been prepared in accordance with both the Canadian
Institute of Mining, Metallurgy and Petroleum CIM Definition Standards for Mineral Resources and Mineral
Reserves (2014) and the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore
Reserves (the JORC Code 2012). MPR estimated recoverable resources using Multiple Indicator Kriging with
post processing block support adjustment, a method that has been demonstrated to provide reliable estimates
of recoverable open pit resources in gold deposits of diverse geological styles. A cut‐off grade of 0.5 g/t Au was
used for resource reporting. The table below summarizes Mineral Resources at the Namdini Gold Project.
Table 2 ‐ Summary of Mineral Resources
Category
Indicated Mineral Resource
Inferred Mineral Resource
Tonnage
(000 t)
180,000
13,000
Grade
(g/t Au)
1.1
1.2
Contained Metal
(000 oz Au)
6,500
500
Notes:
(1) The Mineral Resource has been prepared in accordance with both the Canadian Institute of Mining, Metallurgy
and Petroleum CIM Definition Standards for Mineral Resources and Mineral Reserves (2014) and the
2018 Annual Information Form
PAGE 28
Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code
2012).
(2) Mineral Resources are estimated at a cut‐off grade of 0.5 g/t Au.
(3) Mineral Resources are estimated using a long‐term gold price of US$1,500 per ounce.
(4) Incorporates drill holes completed as of March 5, 2018.
(5) Numbers may not add due to rounding.
MPR is not aware of any environmental, permitting, legal, title, taxation, socio‐economic, marketing, political,
or other relevant factors that could materially affect the Mineral Resource estimate.
Environmental Studies
Environmental matters in Ghana, including those related to mining, fall primarily under the oversight of the
EPA, as well as the Minerals Commission and the Inspectorate Division of the Minerals Commission. The EPA
has laws and regulations that govern, among other things, environmental and socio‐economic impact
assessments and statements, environmental management plans, emissions
into the environment,
environmental auditing and review, and mine closure and reclamation, to which the Corporation’s operations
are subject. Additional provisions governing mine environmental management are provided in the 2006 Mining
Act and the various Minerals and Mining Regulations which came into force in 2012.
Savannah Mining Ghana Limited (“Savannah”) has completed an EIS (“Environmental Impact Statement”)
scoping report for Namdini and has 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 EPA and
Minerals Commission an updated EIS for the selected project scale option envisioned for the DFS prior to
commencement thereof.
NEMAS Consult has undertaken a site reconnaissance visit and completed the scoping stage of the process in
accordance with the Ghanaian Environmental Protection Agency procedures for the EIA. The scoping study
included preliminary field surveys, literature reviews and examination of appropriate legal and regularity
frameworks.
In compliance with the above regulations, the Namdini Gold Project was registered with the Ghana EPA for
environmental permitting. The EPA in response to the registration application by the Proponent in a letter
dated November 23, 2016 indicated that the project which falls under schedule 2 makes mandatory a full‐scale
Environmental Impact Assessment (“EIA”) study and submission of Environmental Impact Statement (“EIS”) to
the EPA.
In compliance with directives by the EPA, a scoping report was prepared and submitted to the Agency on June
22, 2017, which also set out the Terms of Reference (“ToR”) for the EIA and EIS (the “ESIA”) study. The scoping
report highlighted the following issues among others: Project Description, Environmental and Social baseline
conditions (mostly from secondary sources) and key environmental and social issues of impact and some
preliminary proposed mitigation measures. The scoping report also captured the various national and internals
laws, policies and guidelines that shall be triggered in course of the study. Additionally, the concerns of some
key stakeholders consulted were captured in the report and other key stakeholders needed to be consulted
were also identified.
On receiving the Scoping Report the EPA posted a Scoping Report Notification on page 24 of the August 18,
2017 edition of the Ghanaian Times (a government owned daily newspaper with a wide national circulation)
2018 Annual Information Form
PAGE 29
requesting persons who have an interest, concern or special knowledge relating to the potential environmental
effect of the proposed undertaking to contact or submit such concerns, etc., before the Environmental Impact
Statement notification, to the Executive Director at its National Office in Accra and/or the Regional Director at
its Regional office in Bolgatanga or the Managing Director of the proponent’s company in Bolgatanga. The EPA
also provided copies of the Scoping Report to the Talensi District Assembly in Tongo and to its Regional Office
in Bolgatanga.
NEMAS are in the process of a detailed environmental study which will be submitted to the Ghanaian EPA for
approval.
Social or Community Impact
The only local community near the Namdini Gold Project site comprises artisanal miners and their families. The
Corporation believes that relations between Cardinal and the local artisanal miners are cordial and respectful,
especially as they are allowed to proceed with minor surface artisanal mining whilst Cardinal exploration
activities are ongoing.
Local community members are hired and trained by Cardinal for exploration activities including clearing lines
for geochemical surveys, drill site preparation and clean up, and assisting Geological Technicians with RC
sample collection. All Cardinal personnel are given a preliminary induction briefing on site relative to the tasks
required. Personnel protective equipment is provided as required. For the security of all, the Ghana Police
Service patrol the Namdini Gold Project site 24 hours a day, 7 days a week.
Cardinal has an excellent relationship with neighbouring stakeholders, including engagement with the local
stakeholders. Granted mining leases cover all of the proposed mining and processing assets. There are no title
claims pending.
Expatriate and skilled Ghanaians from outside the local community will be accommodated in a single status
camp on site. An allowance for an accommodation camp to house up to 200 people has been made in the
capital cost estimate.
The local workforce will be bussed from the neighbouring population centres.
Compensation agreements are being negotiated for the proposed mining operation.
Current Work and Future Plans
The Corporation is focused on the development of the Namdini Project.
Should the outcome of the PFS be positive, the Cardinal Board will approve the progression to a Feasibility
Study (FS) on the Project to further define and support the case for full project funding and development.
Other Properties and Assets
In addition to the Namdini Gold Project, the Corporation is carrying out exploration activities on its other
licences, although its main focus is on the Namdini Gold Project. Cardinal during the year has also focused its
attention at the Ndongo Licence, with an exploration program being completed at Ndongo during the year.
Cardinal does not consider the other properties to be material. No resources have as yet been established on
the Corporation’s other properties.
2018 Annual Information Form
PAGE 30
Bolgatanga Project
The Bolgatanga Project consists of the Ndongo Licence Area, the Kungongo Licence Area and the Bongo Licence
Area.
Ndongo Licence Area
The Ndongo Licence comprises the combined, Ndongo Prospecting Licence, Nangodi Prospecting licence and
Yameriga Prospecting licence granted to Cardinal to prospect for and prove gold in the Bolgatanga and Telensi
Nabdam District in the Upper East Region in the Republic of Ghana.
The Ndongo prospecting licence number 17/2010 covering a land size of 173.36 km2 was granted to Cardinal
Resources Ghana Limited on July 7, 2014 for a period of two years ending July 6, 2016. On October 31, 2016,
the Minerals Commission extended the Ndongo Prospecting Licence until October 31, 2017. On February 27,
2017, the Minerals Commission confirmed that Cardinal Resources Ghana Limited is the holder and owner of
the Ndongo Prospecting Licence.
In August 2017, Cardinal entered into a definitive agreement with Red Back Mining Ghana Limited to acquire
100% ownership of Nangodi and Yameriga Prospecting Licences PL9/19, located adjacent to the Ndongo
propect in which expanded the combined Ndongo Lincence Area to 286.67km2.
Kungongo Licence Area
The Kungongo Prospecting Licence was originally granted to Cardinal Resources Ghana Limited on January 21,
2011 as a reconnaissance licence for one year ending January 20, 2012. After the expiration of the
reconnaissance licence, the Minerals Commission on its own upgraded the Kungongo Reconnaissance Licence
to a Prospecting Licence. On October 13, 2015, the Minerals Commission wrote to Cardinal Resources Ghana
Limited requesting it to pay for the extension of the Kungongo Prospecting Licence for a period of 12 months.
Cardinal Resources Ghana Limited made the payment for the extension of the Kungongo Prospecting Licence
on June 17, 2016. On July 26, 2016, the Minerals Commission extended the Kungongo Prospecting Licence to
July 25, 2017. On February 27, 2017, the Minerals Commission confirmed that Cardinal Resources Ghana
Limited is the holder and owner of the Kungongo Prospecting Licence.
The Kungongo Prospecting Licence covers a total land size of 120.12 km² and is eligible for renewal.
Bongo Licence Area
The Bongo Reconnaissance Licence was granted to Cardinal Resources Ghana Limited on January 21, 2011 for
a period of one year ending January 20, 2012. Cardinal Resources Ghana Limited has applied for a renewal of
the Bongo Reconnaissance Licence and the Minerals Commission has recommended that the Minister renew
the Bongo Reconnaissance Licence in the name of Cardinal Resources Ghana Limited. The Minister is yet to
sign the renewal letter. However, on February 27, 2017, the Minerals Commission confirmed that Cardinal
Resources Ghana Limited is the holder and owner of the Bongo Reconnaissance Licence.
Subranum Project
Cardinal Resources Subranum Limited (“Cardinal Subranum”) is the beneficial and title holder of Subin‐Kasu
Prospecting Licence, which comprises the Subranum Project.
The Subin‐Kasu Prospecting Licence was originally granted to Newmont Ghana Gold Limited. On April 6, 2012,
2018 Annual Information Form
PAGE 31
Newmont Ghana Gold Limited entered into a Purchase and Sale Agreement with Cardinal Subranum and
assigned the Subin‐Kasu Prospecting Licence to Cardinal Subranum, in consideration for certain cash payments
and Cardinal’s agreement to incur certain exploration expenses.
Under the Purchase and Sale Agreement, Cardinal Subranum shall pay a two percent net smelter returns
royalty on all minerals mined, removed and sold in respect of the Subin‐Kasu Prospecting Licence.
On November 24, 2015, the Minister approved the Purchase and Sale Agreement and Cardinal Subranum
became the title holder of Subin‐Kasu Prospecting Licence until September 15, 2016. On November 18, 2016,
the Minerals Commission wrote to Cardinal Subranum requesting it to make payment for the extension of the
Subin‐Kasu Prospecting Licence for a period of 12 months. Cardinal Subranum made the payment for the
extension of the Subin‐Kasu Prospecting Licence on December 14, 2016. On February 27, 2017, the Minerals
Commission confirmed that Cardinal Resources Ghana Limited is the holder and owner of the Subin‐Kasu
Prospecting Licence.
The Subin‐Kasu Prospecting Licence covers a total land size of 68.70 km² located in the Offinso and Ahafo‐Ano
South District of the Ashanti Region in the Republic of Ghana, expires on September 15, 2017, and is eligible
for renewal.
Cardinal’s Operations in Ghana
The Corporation holds its material assets and carries on its business in Ghana largely though separate, wholly‐
owned, operating subsidiaries. As discussed above, Cardinal Subranum, Cardinal Mining Services, Cardinal
Resources Ghana Limited and Cardinal Namdini Mining Limited (collectively, the “Ghanaian Subsidiaries”) are
incorporated under the laws of the Republic of Ghana. The Ghanaian Subsidiaries are indirectly wholly owned
by the Corporation.
The Corporation has established systems of corporate governance, internal controls over financial reporting
and disclosure controls and procedures that apply at all levels of the Corporation’s corporate structure. Such
systems are overseen by the Board and implemented by senior management of the Corporation. Certain
significant features of these systems are described below:
Control over Subsidiaries – The Corporation’s corporate structure has been designed to ensure that the
Corporation is able to direct the operations of its subsidiaries. All of the Corporation’s subsidiaries, including
the Ghanaian Subsidiaries, are wholly‐owned. Accordingly, the Corporation controls the appointments of the
directors of the Corporation’s subsidiaries and the directors of such subsidiaries are ultimately accountable to
the Board and senior management. Mr. Koimtsidis and Mr. Easah, both of whom are directors of the
Corporation, are the only directors of the Ghanaian Subsidiaries. The corporate records, including minute
books, of the Ghanaian Subsidiaries are kept at the Corporation’s head office.
Under Ghanaian law, the shareholders of a corporation are entitled to remove directors at a duly convened
general meeting of a corporation. In the event that the Corporation wished to remove a director of a Ghanaian
Subsidiary, the Corporation would cause the shares in such Ghanaian Subsidiary to be voted for the removal of
such director. Removal would take place at a meeting duly convened for the purpose of such removal and held
at least 35 days after the notice of the meeting has been served on such director and any other directors of
such Ghanaian Subsidiary who are entitled to attend the general meeting.
As noted above, the only directors of Ghanaian Subsidiaries also serve as directors of the Corporation. In the
event that the Corporation wished to remove an officer of a Ghanaian Subsidiary, the directors of such
Ghanaian Subsidiary would take the requisite corporate action to remove such officer.
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Risk Assessment – The Board is responsible for the management of the Corporation and, as such, supervises
the management of the business and affairs of the Corporation. The Board is responsible for approving any
capital expenditures and other transactions and matters that are considered material to the Corporation,
including matters of the Corporation’s subsidiaries that are considered material to the Corporation. In addition,
the Board has delegated certain risk‐management functions to the Audit and Risk Committee. The Audit and
Risk Committee is responsible for overseeing the Corporation’s risk management systems, practices and
procedures, for identifying and managing business, economic, environmental and social sustainability risks and
for reviewing the Corporation’s risk management framework at least annually.
Internal Control over Financial Reporting – The Corporation prepares its consolidated financial statements and
MD&A on a quarterly and annual basis, using International Financial Reporting Standards (IFRS), which require
financial information and disclosures from the Corporation’s subsidiaries. The Corporation implements internal
controls over the preparation of its financial statements and other financial disclosures to provide reasonable
assurance that its financial reporting is reliable and that the quarterly and annual financial statements and
MD&A are being prepared in accordance with IFRS. These internal controls include the following:
Management of the Corporation has direct access to relevant financial management of the Corporation’s
subsidiaries in order to verify and clarify all information required.
All public documents and statements relating to the Corporation and its subsidiaries containing material
information (including financial information) are reviewed by senior management (including the Chief
Executive Officer and Managing Director) before such material information is disclosed, to make sure that
all material information has been considered by management of the Corporation and properly disclosed.
The Audit and Risk Committee will review and approve the Corporation’s quarterly financial statements
and MD&A and will recommend to the Board for the Board’s approval the Corporation’s annual financial
statements and MD&A, and any other financial information requiring Board approval, prior to their
publication or release.
The Audit and Risk Committee assesses and evaluates the adequacy of the procedures in place for the
review of the Corporation’s public disclosure of financial information extracted or derived from the
Corporation’s financial statements, other than annual and quarterly financial disclosure.
In addition, the Corporation engages its external auditor to perform an audit of the annual consolidated
financial statements in accordance with IFRS.
Disclosure Controls and Procedures – The responsibilities of the Audit and Risk Committee include oversight of
the Corporation’s internal control systems including identifying, monitoring and mitigating business risks as
well as compliance with legal, ethical and regulatory requirements.
CEO and CFO Certifications – In order for the Corporation’s Managing Director and Chief Executive Officer and
its Chief Financial Officer to be in a position to attest to the matters addressed in the quarterly and annual
certifications required by National Instrument 52‐109 – Certification of Disclosure in Issuers’ Annual and Interim
Filings, the Corporation has developed internal procedures and responsibilities throughout the organization
for its regular periodic and special situation reporting, in order to provide assurances that information that may
constitute material information will reach the appropriate individuals who review public documents and
statements relating to the Corporation and its subsidiaries containing material information, is prepared with
input from the responsible officers and employees, and is available for review by the Managing Director and
Chief Executive Officer and the Chief Financial Officer in a timely manner.
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These systems of corporate governance, internal control over financial reporting and disclosure controls and
procedures are designed to ensure that, among other things, the Corporation has access to all material
information about its subsidiaries, including the books and records of its subsidiaries.
The Corporation provides funds to the Ghanaian Subsidiaries for exploration activities. As part of its corporate
governance practices, Cardinal has developed a Delegation of Authority Manual. The Delegation of Authority
Manual contains guidelines for delegated authorities that help in maintaining adequate controls within the
organization, including the flow of funds between Australia and Ghana.
RISK FACTORS
Prospective investors should carefully consider the following risk factors in addition to the other information
contained in this AIF. The risks and uncertainties described below are not the only ones facing the Corporation.
Additional risks and uncertainties not presently known to the Corporation or that the Corporation currently
considers immaterial may also impair the business and operations of the Corporation and cause the price of
the Ordinary Shares to decline. If any of the following risks actually occur, the Corporation’s business may be
harmed and the financial condition and results of operations may suffer significantly. In that event, the trading
price of the Ordinary Shares could decline and holders of the Ordinary Shares may lose all or part of their
investment.
Risks Related to the Industry
Mineral Exploration, Development and Operating Risks
Mineral exploration is highly speculative in nature, generally involves a high degree of risk and frequently is
non‐productive. The mineral tenements of the Corporation are at various stages of exploration, and potential
investors should understand that mineral exploration and development are high‐risk undertakings. There can
be no assurance that exploration of these tenements, or any other tenements that may be acquired in the
future, will result in the discovery of an economic ore deposit. Even if an apparently viable deposit is identified,
there is no guarantee that it can be economically exploited or will result in a profitable commercial mining
operation.
Resource acquisition, exploration, development and operation involve significant financial and other risks over
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,
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development and production of gold and other minerals, including hazards relating to the discharge of
pollutants or hazardous chemicals, changes in anticipated grade and tonnage of ore, unusual or unexpected
adverse geological or geotechnical formations, unusual or unexpected adverse operating conditions, slope
failures, rock bursts, cave‐ins, seismic activity, the failure of pit walls, pillars or dams, fire, explosions, and
natural phenomena and ‘acts of God’ such as inclement weather conditions, floods, earthquakes or other
conditions, any of which could result in damage to, or destruction of, mineral properties or production facilities,
personal injury or death, damage to property, environmental damage, unexpected delays, monetary payments
and possible legal liability, which could have a material adverse impact upon the Corporation. In addition, any
future mining operations will be subject to the risks inherent in mining, including adverse fluctuations in fuel
prices, commodity prices, exchange rates and metal prices, increases in the costs of constructing and operating
mining and processing facilities, availability of energy and water supplies, access and transportation costs,
delays and repair costs resulting from equipment failure, changes in the regulatory environment, and industrial
accidents and labour actions or unrest. The occurrence of any of these risks could materially and adversely
affect the development of a project or the operations of a facility, which could have a material adverse impact
upon the Corporation.
Estimation of Mineralization, Resources and Reserves
There is a degree of uncertainty attributable to the calculation of mineralization, resources and reserves and
corresponding grades being mined or dedicated to future production. Until reserves or mineralization are
actually mined and processed, the quantity of mineralization and reserve grades must be considered estimates
only. These estimates depend upon geological interpretation and statistical inference drawn from drilling and
sampling analysis, which may prove unreliable. There can be no assurance such estimates will be accurate. In
addition, the quantity of reserves and mineralization may vary depending on commodity prices. Any material
change in quantity of reserves, mineralization, grade or stripping ratio may affect the economic viability of a
mine. In addition, there can be no assurance that recoveries from laboratory tests will be duplicated in tests
under on‐site conditions or during production. The inclusion of mineral resource estimates should not be
regarded as a representation that these amounts can be economically exploited and no assurances can be
given that such resources estimates will be converted into reserves. Different experts may provide different
interpretations of resource estimates.
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
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obtainable on reasonable terms or timeframes or that compliance with such laws and regulations would not
have an adverse effect on the profitability of any mining project that the Corporation might undertake.
All phases of the Corporation’s operations are subject to environmental regulations in various jurisdictions. If
the Corporation’s properties are proven to host economic reserves of metals, mining operations will be subject
to national and local laws relating to the protection of the environment, including laws regulating removal of
natural resources from the ground and the discharge of materials into the environment.
Mining operations will be subject to national and local laws and regulations which seek to maintain health and
safety standards by regulating the design and use of mining methods and equipment. Various permits from
government bodies are required for mining operations to be conducted; no assurance can be given that such
permits will be received.
No assurance can be given that environmental standards imposed by national or local authorities will not be
changed or that any such changes would not have material adverse effects on the Corporation’s activities.
Moreover, compliance with such laws may cause substantial delays or require capital outlays in excess of those
anticipated, thus causing an adverse effect on the Corporation. Additionally, the Corporation may be subject
to liability for pollution or other environmental damage, which it may not be able to insure against.
Failure to comply with applicable laws, regulations and permitting requirements may result in enforcement
actions thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or
be curtailed, and may include corrective measures requiring capital expenditures, installation of additional
equipment or remedial actions. Parties engaged in mining operations may be required to compensate those
suffering loss or damage by reason of the mining activities and may have civil or criminal fines or penalties
imposed for violations of applicable laws or regulation and, in particular, environmental laws.
Amendments to current laws, regulations and permits governing operations and activities of mining
companies, or more stringent implementation thereof, could have a material adverse impact on the
Corporation and cause increases in capital expenditures or production costs or reduction in levels of production
at producing properties or require abandonment or delays in development of new mining properties.
Competitive Conditions
There is aggressive competition within the mineral exploration and mining industry for the discovery and
acquisition of properties considered to have commercial potential, and for management and technical
personnel. The Corporation’s ability to acquire projects in the future is highly dependent on its ability to
operate and develop its current assets and its ability to obtain or generate the necessary financial resources.
The Corporation will compete with other parties in each of these respects, many of which have greater financial
resources than the Corporation. Accordingly, there can be no assurance that any of the Corporation’s future
acquisition efforts will be successful, or that it will be able to attract and retain required personnel. Any such
failure could have a material adverse impact upon the Corporation.
Risks Related to the Business
Operational Risks
The Corporation has not previously generated revenues from operations and its mineral projects are at an
exploration stage. Therefore, it is subject to many risks common to comparable companies, including under‐
capitalization, cash shortages and limitations with respect to personnel, financial and other resources as well
as a lack of revenues. The Corporation has historically incurred significant losses as it has no sources of revenue
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PAGE 36
(other than interest income), and has significant cash requirements to meet its exploration commitments,
administrative overhead and maintain its mineral interests. The Corporation expects to continue to incur net
losses unless or until one or more of its properties enters into commercial production and generates sufficient
revenue to fund continuing operations. There can be no assurance that current exploration or development
programs will result in the discovery of commercial deposits or, ultimately, in profitable mining operations. See
also “Liquidity and Financing Risk” and “Funding Risk” below.
Liquidity and Financing Risk
The Corporation has no source of operating cash flow and may need to raise additional funding in the future
through the sale of equity or debt securities or by optioning or selling its properties. Any additional equity
financing will dilute shareholdings, and debt financing, if available, may involve restrictions on financing and
operating activities. No assurance can be given that additional funding will be available for further exploration
and development of the Corporation’s properties when required, upon terms acceptable to the Corporation
or at all. Failure to obtain such additional financing could result in the delay or indefinite postponement of
further exploration and development of its properties, or even a loss of property interest, which would have a
material adverse impact upon the Corporation.
Funding Risk
At the date of this AIF, the Corporation has no income producing assets and will generate losses for the
foreseeable future. Until it is able to develop a project and generate appropriate cash flow, it is dependent
upon being able to obtain future equity or debt funding to support long term exploration. Neither the
Corporation nor any of the Directors nor any other party can provide any guarantee or assurance that if further
funding is required, such funding can be raised on terms favourable to the Corporation (or at all). Any additional
equity funding will dilute existing shareholders. Also, no guarantee or assurance can be given as to when a
project can be developed to the stage where it will generate cash flow. As such, a project would be dependent
on many factors, for example exploration success, subsequent development, commissioning and operational
performance.
Exploration Costs
The exploration costs of the Corporation are based on certain assumptions with respect to the method and
timing of exploration. By their nature, these estimates and assumptions are subject to significant uncertainties
and, accordingly, the actual costs may materially differ from these estimates and assumptions. Accordingly, no
assurance can be given that the cost estimates and the underlying assumptions will be realized in practice,
which may materially and adversely affect the Corporation’s viability.
Uninsurable Risks
In the course of exploration, development and production of mineral properties, risks, including, but not
limited to, unexpected or unusual geological or operating conditions, natural disasters, inclement weather
conditions, pollution, rock bursts, cave‐ins, fires, flooding, earthquakes, civil unrest, terrorism and political
violence may occur. It is not always possible to fully insure against all risks associated with Cardinal’s operations
and Cardinal may decide not to take out insurance against certain risks as a result of high premiums or other
reasons. Should such liabilities arise, they could reduce or eliminate any future profitability and result in
increasing costs and a decline in the value of the securities of Cardinal.
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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 licences and permits, opposition to mining from
local, environmental or other non‐governmental organizations, increased financing costs, instability due to
economic under‐development, inadequate infrastructure, and the expropriation of property interests, as well
as by laws and policies of Canada affecting foreign trade, investment and taxation. As African governments
continue to struggle with deficits and depressed economies, the strength of commodity prices has resulted in
the gold mining sector being targeted as a source of revenue. Governments are continually assessing the terms
for a mining company to exploit resources in their country.
Furthermore, the Corporation requires consultants and employees to work in Ghana to carry out its planned
exploration and development programs. It may be difficult from time to time to find or hire qualified people in
the mineral exploration industry who are situated in Ghana, or to obtain all of the necessary services or
expertise in Ghana, or to conduct operations on its projects at reasonable rates. If qualified people and services
or expertise cannot be obtained in Ghana, the Corporation may need to seek and obtain those services from
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service providers located outside of Ghana which could result in delays and higher costs to the Corporation.
Mineral resource companies face increasing public scrutiny of their activities, and are under pressure to
demonstrate that their operations have potential to generate satisfactory returns not only to their
shareholders, but also to benefit local governments and the communities surrounding its properties where it
operates. The potential consequences of these pressures include reputational damage, lawsuits, increasing
social investment obligations and pressure to increase taxes and future royalties payable to local governments
and surrounding communities. As a result of these considerations, the Corporation may incur increased costs
and delays in permitting and other operational matters with respect to its property interests in Ghana.
Any of the above events could delay or prevent the Corporation from exploring or developing its properties
even if economic quantities of minerals are found, and could have a material adverse impact upon the
Corporation’s foreign operations.
Government Policy Changes
The mineral exploration activities undertaken by the Corporation are subject to laws and regulations governing
health and worker safety, employment standards, exports, taxation, waste disposal, management and use of
toxic substances and explosives, protection of the environment, mine development and production, protection
of endangered and protected species, reclamation, historic and cultural preservation and other matters.
Exploration activities may also be affected in varying degrees by government regulations with respect to, but
not limited to, restrictions on future exploration and production, price controls, royalties, export controls,
currency availability, foreign exchange controls, income taxes, delays in obtaining or the inability to obtain
necessary permits, opposition to mining from environmental and other non‐governmental organizations,
limitations on foreign ownership, expropriation of property, ownership of assets, environmental legislation,
labour relations, limitations on repatriation of income and return of capital, limitations on mineral exports,
high rates of inflation, increased financing costs, and site safety.
The Corporation’s exploration programs with respect to the Corporation’s projects in Ghana will, in general, be
subject to approval by the Minerals Commission and other governmental agencies. Development of any of the
Corporation’s properties will be dependent on the Namdini Gold Project meeting environmental guidelines set
by EPA and, where required, being approved by governmental authorities such as the Minerals Commission.
Failure to comply with applicable laws, regulations and permits, even if inadvertent, may result in enforcement
actions thereunder, including the forfeiture of claims, orders by regulatory or judicial authorities requiring
operations to cease or be curtailed, and may include corrective measures requiring capital expenditures,
installation of additional equipment or costly remedial actions, which could have a material adverse impact
upon the Corporation. The Corporation may be required to compensate those claiming to suffer loss or damage
by reason of its activities and may have civil or criminal fines or penalties imposed for violations of such laws,
regulations and permits, which could have a material adverse impact upon the Corporation.
In addition, no assurance can be given that new rules and regulations will not be enacted or that existing rules
and regulations will not be applied in a manner which could limit or curtail development or future potential
production. Adverse changes in government policies or legislation may affect ownership of mineral interests,
taxation, royalties, land access, labour relations, and mining and exploration activities of the Corporation. It is
possible that the current system of exploration and mine permitting in Ghana may change, resulting in
impairment of rights and possibly expropriation of the Corporation’s properties without adequate
compensation.
Ownership Risks
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The Corporation holds its interests in the Namdini Gold Project through a Large‐Scale Mining Licence. For more
information, please see “Namdini Gold Project”.
The Constitution of Ghana vests title in every mineral in its natural state to the Government of Ghana. The
exercise of any mineral right in the form of reconnaissance, exploration or exploitation of any mineral in Ghana
requires an appropriate licence or mineral right to be issued by the Government of Ghana acting through the
Minister. There is no assurance that title to the properties in which the Corporation has interests will not be
challenged. The acquisition of title to mineral exploration properties is a very detailed and time‐consuming
process. Title to and the area of mineral properties may be disputed. While the Corporation has diligently
investigated title to the properties in which it has an interest, it may be subject to prior unregistered
agreements or transfers or indigenous land claims and title may be affected by undetected defects.
Consequently, the boundaries may be disputed.
There can be no assurance that there are no prior unregistered agreements, claims or defects that may result
in the title to the properties in which the Corporation has an interest being challenged. Further, the
Corporation’s interests in the properties are subject to the risks that counterparties will fail to honour their
contractual commitments, that courts will not enforce such contractual obligations and that required
governmental approvals will not be obtained. A successful challenge to the precise area and location of these
claims, or the failure of counterparties to honour or of courts to enforce such contractual obligations could
result in the Corporation being unable to operate on its properties as anticipated or being unable to enforce
its rights with respect to its properties which could have a material adverse impact upon the Corporation.
Permitting and Licensing Risks
In addition to mineral rights, the Corporation will require some or all of the following permits, licences or other
regulatory approvals to be able to carry out business operations in Ghana as it advances its projects: (i)
environmental permits; (ii) approved environmental management plans and environmental certificates; (iii)
reclamation bonds and approved reclamation plans; (iv) water usage permits; (v) business operating permits;
(vi) licences to export, sell or dispose of minerals; (vii) permits/licences to retain a specified percentage of
mineral export proceeds for purposes of debt servicing, dividend payment to foreign shareholders and
acquisition of plant and machinery for the mining project; (viii) permits to operate foreign exchange retention
accounts with a trustee bank; and (ix) immigration quotas to employ a specified number of non‐Ghanaians to
work on mining projects. The Corporation believes that it will be able to obtain and maintain in the future all
such necessary licences and permits to carry on the activities which it intends to conduct, and intends to comply
in all material respects with the terms of such licences and permits.
There can be no guarantee, however, that the Corporation will be able to obtain and maintain, at all times, all
the necessary licences and permits required to undertake the proposed exploration and development or to
place its properties into commercial production and to operate mining facilities thereon. In the event of
commercial production, the cost of compliance with changes in governmental regulations has the potential to
reduce the profitability of operations or preclude the economic development of a particular property.
Artisanal Miners
The Corporation’s property interests are held in areas of Ghana that have historically been mined by artisanal
miners. As the Corporation further explores and advances its projects, it may be required to require the
removal of any artisanal miners operating on its properties. There is a risk that such artisanal miners may
oppose the Corporation’s operations, which may result in a disruption to any planned development and/or
mining and processing operations. In addition, artisanal miners have historically used chemicals that are
harmful to the environment to separate the precious metals from the ore. There can be no assurance that the
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Corporation will not be subject to environmental liabilities resulting from such operations in the future, which
could have a material adverse impact on the Corporation. In addition, artisanal work practices are often unsafe
and accidents and/or incidents may occur on the Corporation’s property, and there is an added reputational
risk that third parties may wish to link the activities of the artisanal miners to that of the Corporation in the
event of accidents or incidents, which could have a material adverse impact on the Corporation.
Difficulty in Enforcement of Judgements
All of the subsidiaries of the Corporation and the majority of its assets are located outside of Canada.
Accordingly, it may be difficult for investors to enforce within Canada any judgments obtained against the
Corporation, including judgments predicated upon the civil liability provisions of applicable Canadian securities
laws. Consequently, investors may be effectively prevented from pursuing remedies against the Corporation
under Canadian securities laws or otherwise.
The Corporation has subsidiaries incorporated in Australia and Ghana. Many of the directors and officers of
the Corporation reside outside of Canada, and substantially all of the assets of these persons are located
outside of Canada. It may not be possible for shareholders to effect service of process against the Corporation’s
directors and officers who are not resident in Canada. In the event a judgment is obtained in a Canadian court
against one or more of the Corporation’s directors or officers for violations of Canadian securities laws, it may
not be possible to enforce such judgment against those directors and officers. Additionally, it may be difficult
for an investor, or any other person or entity, to assert Canadian securities law claims in original actions
instituted in Australia or Ghana. Courts in these jurisdictions may refuse to hear a claim based on a violation of
Canadian securities laws on the grounds that such jurisdiction is not the most appropriate forum to bring such
a claim. Even if a foreign court agrees to hear a claim, it may determine that the local law, and not Canadian
law, is applicable to the claim. If Canadian law is found to be applicable, the content of applicable Canadian law
must be proven as a fact, which can be a time‐consuming and costly process. Certain matters of procedure will
also be governed by foreign law.
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
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events causing turmoil in world financial markets, may have a material adverse effect on the Corporation’s
business, operating results and financial condition.
Current Global Financial Condition
Current global financial conditions have been subject to increased volatility. As such, the Corporation is subject
to counterparty risk and liquidity. The Corporation is exposed to various counterparty risks including, but not
limited to, financial institutions that hold the Corporation’s cash, and through companies that have payables
to the Corporation. The Corporation is also exposed to liquidity risks in meeting its operating expenditure
requirements in instances where cash positions are unable to be maintained or appropriate financing is
unavailable. These factors may impact the ability of the Corporation to obtain loans and other credit facilities
in the future and, if obtained, on terms favourable to the Corporation. If these increased levels of volatility and
market turmoil continue, the Corporation’s operations could be adversely impacted and the trading price of
the shares could be adversely affected.
Exchange Rate and Currency Risks
The Corporation undertakes certain transactions denominated in foreign currencies, hence exposures to
exchange rate fluctuations arise. The Corporation does not hedge this exposure. The Corporation manages its
foreign exchange risk by constantly reviewing its exposure and ensuring that there are appropriate cash
balances in order to meet its commitments.
Currency fluctuations may affect the cash flow which the Corporation may realize from its operations, since
most mineral commodities are sold in a world market in USD. The Corporation’s costs are incurred in AUD,
GHS, USD and CAD.
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.
2018 Annual Information Form
PAGE 42
Reliance on Key Personnel
The responsibility of overseeing the day‐to‐day operations and the strategic management of the Corporation
depends substantially on its senior management and its key personnel. There can be no assurance that there
will be no detrimental impact on the Corporation if one or more of these employees cease their employment.
Dilution Risk
Cardinal has outstanding options and Performance Shares, as detailed in the most recent financial statements
for the year ended June 30, 2018 and elsewhere in this AIF. Should these securities be exercised or converted
(as applicable), the holders have the right to acquire additional Ordinary Shares, in accordance with the terms
of such securities. During the life of these securities, the holders have the opportunity to profit from a rise in
the market price of the Cardinal shares, possibly resulting in the dilution of existing securities.
DIVIDENDS
To date, the Corporation has not paid any dividends on its Ordinary Shares and anticipates that it will retain all
future earnings and other cash resources for the future operation and development of its business. The
Corporation does not intend to declare or pay any cash dividends in the foreseeable future. Payment of any
future dividends will be at the discretion of the Board after taking into account many factors, including the
Corporation’s operating results, financial condition and current and anticipated cash needs.
Ordinary Shares
DESCRIPTION OF CAPITAL STRUCTURE
The Corporation’s authorized capital stock consists of an unlimited number of Ordinary Shares, of which
378,823,580 Ordinary Shares are issued and outstanding as of the date of this AIF.
All Ordinary Shares rank equally as to dividends, voting powers and participation in the distribution of assets.
All holders of Ordinary Shares are entitled to receive notice of any meetings of Shareholders of the Corporation,
and to attend and cast one vote per Ordinary Share at all such meetings. Holders of Ordinary Shares do not
have cumulative voting rights with respect to the election of directors. Holders of Ordinary Shares are entitled
to receive on a pro rata basis such dividends, if any, as and when declared by the Board at its discretion from
funds legally available therefor, and upon the liquidation, dissolution or winding up of the Corporation are
entitled to receive on a pro rata basis the net assets of the Corporation after payment of liabilities, in each case
subject to the rights, privileges, restrictions and conditions attaching to any other series or class of shares
ranking senior in priority to or on a pro rata basis with the holders of Ordinary Shares with respect to dividends
or liquidation. The Ordinary Shares do not carry any pre‐emptive, subscription, redemption or conversion
rights, nor do they contain any sinking or purchase fund provisions.
The Corporation is authorized to issue an unlimited number of Ordinary Shares, subject to certain restrictions
prescribed in the ASX Listing Rules, the Corporations Act and the Corporation’s constitution. Under the ASX
Listing Rules, subject to certain exceptions and without the approval of Shareholders, the Corporation may not
issue or agree to issue during any 12‐month period equity securities (including options and other securities
convertible into equity) if the number of securities issued or agreed to be issued would exceed 15% of the total
equity securities on issue at the commencement of the 12‐month period. At the Corporation’s annual general
meeting held on November 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.
2018 Annual Information Form
PAGE 43
Listed Options (Warrants)
As of the date of this AIF, the Corporation has 113,619,906 Listed Options outstanding. Each Listed Option is
exercisable until September 30, 2019 and, upon payment of $0.15, a holder of such Listed Option is entitled to
receivable one Ordinary Share. The Listed Options are listed and posted for trading on the ASX under the
symbol “CDVOA”.
Unlisted Options
The Corporation’s share option plan permits the Board to grant to directors, officers, consultants and
employees of the Corporation Unlisted Options to purchase Ordinary Shares from the Corporation. As at the
date of this AIF, the Corporation has issued 7,000,000 Unlisted Options under the share option plan.
As at the date of this AIF, there were 35,294,200 Unlisted Options to acquire Ordinary Shares outstanding.
Performance Shares
The Corporation is authorized to grant an unlimited number of Class C Performance Shares. As at the date of
this AIF, there was 60 Class C Performance Shares issued and outstanding. Holders of Performance Shares are
entitled to conversion of each Performance Share into 100,000 Ordinary Shares upon the achievement of
certain milestones or events as outlined below. The total number of Ordinary Shares that would be issuable
upon the conversion of all Class C Performance Shares pursuant to the milestones and events having been
achieved would be 6 million Ordinary Shares.
The conversion of Class C Performance Shares will occur upon satisfaction of achieving a minimum inferred
resource (JORC compliant) of gold within the Ndongo Prospect by February 18, 2020, being no later than five
years after the date on which the Class C Performance Shares were issued. The table below sets out the
conversion of the Class C Performance Shares based on the achievement of performance hurdles.
Performance Shares
10
5
5
5
5
5
5
5
5
5
5
60
Performance Hurdles (JORC
Inferred Au Resource)
500,000 ounces
750,000 ounces
1,000,000 ounces
1,250,000 ounces
1,500,000 ounces
1,750,000 ounces
2,000,000 ounces
2,250,000 ounces
2,500,000 ounces
2,750,000 ounces
3,000,000 ounces
Conversion to Ordinary
Shares
1,000,000
500,000
500,000
500,000
500,000
500,000
500,000
500,000
500,000
500,000
500,000
6,000,000
General terms attaching to the Performance Shares are set out below.
Class C Performance Shares
(a) Each Class C Performance Share is a share in the capital of the Corporation.
2018 Annual Information Form
PAGE 44
(b) Class C Performance Shares shall confer on the holder the right to receive notices of general meetings and
financial reports and accounts of the Corporation that are circulated to shareholders. Holders have the
right to attend general meetings of shareholders of the Corporation.
(c) The Class C Performance Shares do not entitle the holder to vote on any resolutions proposed at a general
meeting of shareholders of the Corporation.
(d) The Class C Performance Shares do not entitle the holder to any dividends.
(e) The Class C Performance Shares are not transferable.
(f) If at any time the issued capital of the Corporation is reorganized, all rights of a holder will be changed to
the extent necessary to comply with the applicable Listing Rules at the time of reorganisation.
(g) The Class C Performance Shares will not be quoted on ASX. However, upon conversion of the Class C
Performance Shares into Ordinary Shares, the Corporation must, within seven (7) days after the
conversion, apply for the official quotation of the Ordinary Shares arising from the conversion on ASX.
(h) The Class C Performance Shares give the holders no rights other than those expressly provided by these
terms and those provided at law where such rights at law cannot be required by ASX.
(I) The Ordinary Shares into which the Class C Performance Shares will convert will rank pari passu in all
respects with the other Ordinary Shares on issue.
MARKET FOR SECURITIES
Trading Price and Volume
Ordinary Shares
The Ordinary Shares are listed on the ASX and TSX and trade under the symbol “CDV”. The following table sets
forth the price range and trading volume of the Ordinary Shares on the ASX for each month during the most
recently completed financial year. The Ordinary Shares commenced trading on the TSX on July 10, 2017.
ASX Trading
TSX Trading
Month
Price Per
Ordinary Share
Trading
Volume
Price Per
Ordinary Share
Trading Volume
High ($)
Low ($)
High (CA$)
Low (CA$)
2017
July
August
September
October
November
0.68
0.70
0.71
0.74
0.63
0.47
0.57
0.57
0.56
0.55
6,825,701
9,621,051
7,802,169
7,418,662
4,719,659
0.80
0.72
0.70
1.05
0.65
0.54
0.60
0.55
0.59
0.54
3,748,401
6,024,025
597,065
3,462,057
4,951,514
2018 Annual Information Form
PAGE 45
ASX Trading
TSX Trading
Month
Price Per
Ordinary Share
Trading
Volume
Price Per
Ordinary Share
Trading Volume
High ($)
Low ($)
High (CA$)
Low (CA$)
December
0.61
0.44
7,105,203
0.60
0.42
2,325,750
2018
January
February
March
April
May
June
0.56
0.56
0.59
0.56
0.52
0.49
0.45
0.45
0.51
0.46
0.44
0.40
8,662,499
10,937,688
5,363,175
5,493,014
2,365,339
2,463,020
0.55
0.55
0.60
0.63
0.48
0.48
0.45
0.44
0.51
0.48
0.44
0.38
2,109,290
4,042,818
3,403,600
1,029,217
1,984,947
1,777,900
Source: Bloomberg
Prior Sales of Unlisted Securities
The only securities of the Corporation that are outstanding but not listed or quoted on a marketplace are the
Unlisted Options granted under the Corporation’s stock option plan which total 35,294,200 and 60 Class C
Performance Shares, as of the date of this AIF, the Class C Performance Shares were issued in 2015. The
following table sets forth information with respect to the Unlisted Options and Performance Shares issued
during the most recently completed financial year.
Unlisted Options
During the financial year ended June 30, 2018, the Corporation issued the following Unlisted Options to acquire
Ordinary Shares.
Date of Issuance
December 21, 2017
December 21, 2017
5,758,000(1)
4,036,200(2)
December 21, 2017
1,000,000
Notes:
Number of Securities
Issued
Exercise Price per
Ordinary Share
$0.825
$0.965
$0.750
Expiry Date
December 21, 2022
December 21, 2022
December 21, 2022
(1) The vesting provisions of the 5,758,000 Unlisted Options are as follows:
1,727,400 options vest on the earlier of (a) the completion of a scoping study and (b) the completion of a
preliminary economic assessment of the Ghanaian assets;
2018 Annual Information Form
PAGE 46
1,727,400 options vest on the beginning of earthworks for gold production at the Ghanaian assets; and
2,303,200 options vest on the first pouring of gold at the Ghanaian assets.
(2) The vesting provisions of the 4,036,200 Unlisted Options are as follows:
1,729,800 options vest on the beginning of earthworks for gold production at the Ghanaian assets; and
2,306,400 options vest on the first pouring of gold at the Ghanaian assets.
DIRECTORS AND OFFICERS
The following table sets forth the name and residence of each director and executive officer of the Corporation
as well as such individual’s positions and offices held with the Corporation, period of service as a Director (if
applicable), and principal occupation(s) during the five preceding years. The term of office of each of the
Directors (other than the Corporation’s Managing Director) expires at the end of the third annual general
meeting of Shareholders of the Corporation after such Director’s last election or appointment, provided that
one‐third of the Directors (other than the Managing Director) must retire at each annual general meeting.
Retiring Directors are eligible for re‐election. The term of office of the Corporation’s Managing Director expires
at the discretion of the Corporation’s directors, in accordance with his employment contract. When required,
the Corporation intends to apply for exemptions from the TSX requirements relating to director elections.
Name,
Province or
State, and
Country of
Residence
Kevin
Tomlinson
London, United
Kingdom
Positions and
Offices Held
and Date of
Appointment
Director, Non‐
Executive
Chairman
November 7,
2016
Arthur (Archie)
Koimtsidis
Managing
Director
Western
Australia,
Australia
December 27,
2012
Malik Easah,
Accra, Ghana
Executive
Director
December 27,
2012
Robert Schafer
Utah, USA(1) (3)
Non‐Executive
Director
2018 Annual Information Form
Number and Class of Securities
Beneficially Owned or
Controlled
Principal Occupation(s) During
Past Five Years
Ordinary Shares: 0
Listed Options: 400,000
Unlisted Options: 5,000,000
Class C Performance Shares: 0
Ordinary Shares: 8,117,565
Listed Options: 4,191,731
Unlisted Options: 7,500,000
Class C Performance Shares: 0
Ordinary Shares: 7,681,815
Listed Options: 6,560,423
Unlisted Options: 6,000,000
Class C Performance Shares: 60(2)
the
Non‐executive Chairman of
Corporation since November 2016;
Director, Samco Gold Limited since
January 2012;
former Director,
Centamin plc (2012 to 2016) and
Besra Gold
Inc. (2012 to 2015);
former Chairman, Maudore Minerals
Ltd. (2014 to 2014).
Co‐founder and Managing Director of
the Corporation since December
2012.
Co‐founder and Executive Director of
the Corporation since December
2012.
Ordinary Shares: 10,000
Listed Options: 0
Unlisted Options: 2,897,000
Current Director, Volcanic Gold Mines
Inc. since March 2017 and Trigon
Metals Inc. since April 2017; former
director Martina Minerals Corp.
Name,
Province or
State, and
Country of
Residence
Positions and
Offices Held
and Date of
Appointment
Number and Class of Securities
Beneficially Owned or
Controlled
Principal Occupation(s) During
Past Five Years
PAGE 47
to
(2005 to 2015); Curtis Resources Ltd.
Rathdowney
(2011
2014),
Resources Ltd.
to 2015),
Galway Metals Inc. (2012 to 2014),
Minera IRL Limited (2016) and Orex
Exploration Inc. (2016 to 2017).
(2011
Equinox Gold
Director,
since
December 2017, Excellon Resources
since November 2017, NewCastle
Gold Ltd. March 2017 to December
2017; Advisor, Detour Gold Corp.
since 2016; Director and Principal,
Mines & Metals, BBA (2012 to 2015);
Chairman, Orvana Minerals Corp.
(2014 to 2016); Director, Fire River
Gold Corp. (2012 to 2013); Executive,
Barrick Gold Corporation (1994 to
2011).
is currently a Non‐
Mr Muscillo
Executive Director with Aeris
Resources Limited (ASX:AIS), Xanadu
Mines Limited (ASX: XAM) and Mako
Gold Limited (ASX:MKG). Formerly,
Michele was also Non‐Executive
Director of Orbis Gold Limited which
is currently owned by TSX‐Listed
SEMAFO Inc. (TSX:SMF).
July 10, 2017
Class C Performance Shares: 0
Jacques
McMullen(1) (3)
Canada
Non‐Executive
Director
October 11,
2017
Ordinary Shares: 0
Listed Options: 0
Unlisted Options: 2,018,100
Class C Performance Shares: 0
Michele
Muscillo(1) (3))
Non‐Executive
Director
Queensland,
Australia
October 11,
2017
Ordinary Shares: 0
Listed Options: 0
Unlisted Options: 2,018,100
Class C Performance Shares: 0
2018 Annual Information Form
Name,
Province or
State, and
Country of
Residence
Sarah Shipway
Western
Australia,
Australia
Derrick
Weyrauch
Ontario,
Canada
PAGE 48
Positions and
Offices Held
and Date of
Appointment
Company
Secretary
Number and Class of Securities
Beneficially Owned or
Controlled
Principal Occupation(s) During
Past Five Years
Ordinary Shares: 175,000
Listed Options: 0
Unlisted Options: 0
Class C Performance Shares: 0
of
Company
the
Secretary
Corporation since December 2012;
current Director, Beacon Minerals
Limited since 2015 and St. George
Mining Limited since 2015.
Chief Financial
Officer
Ordinary Shares: 80,000
Listed Options: 0
Unlisted Options: 2,897,000
Class C Performance Shares: 0
to
Chief Financial Officer
the
Corporation since July 2017; former
Director of Banro Corporation (2013
to 2018); Jaguar Mining Inc. (2014 to
2016), Minera IRL Limited (2016), Eco
Oro Minerals Corp. (2016 to 2017);
and former Chief Financial Officer,
Jaguar Mining
(2014‐2016),
Andina Minerals Inc. (2010 to 2013)
and Temex Resources Corp. (2014).
Inc.
Notes:
(1) Member of the Audit and Risk Committee.
(2) Mr. Easah is the sole shareholder of Savannah Mining Ghana Limited, which holds the 60 outstanding Class C
Performance Shares. For a description of the conversion conditions for the Class C Performance Shares, see
“Description of Capital Structure” above.
(3) Member of the Remuneration and Nomination Committee.
Based on the disclosure available on the System for Electronic Disclosure by Insiders (“SEDI”), as of the date of
this AIF, the directors and executive officers of the Corporation, as a group, beneficially owned, or controlled
or directed, directly or indirectly, a total of 15,709,380 Ordinary Shares, representing approximately 4.2% of
the total number of Ordinary Shares outstanding.
Set forth below is a brief description of the background of the directors and executive officers of the
Corporation, including a description of each individual’s principal occupation(s) during the past five years.
Kevin Tomlinson – Director, Non‐Executive Chairman
Kevin Tomlinson possesses over 30 years’ experience in Geology and Finance with enormous experience within
the Toronto, Australian and London Stock Exchanges.
Mr. Tomlinson holds a MSc in Structural Geology and a Grad Dip in Finance. From 1998 M.r Tomlinson has
worked in the finance sector raising over US$2 billion in equity.
M.r 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.
2018 Annual Information Form
PAGE 49
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 four years.
Mr. Tomlinson is a Fellow of the Institute of Directors, a Fellow of the Chartered Institute for Securities &
Investment and a Liveryman of the Worshipful Company of International Bankers.
Arthur (Archie) Koimtsidis – Co‐founder, Managing Director
Archie Koimtsidis has 27 years’ experience in business in Ghana and has for the last 23 years been involved in
all facets of gold exploration, discovery, production and refining in West Africa and South America. His most
recent appointment prior to joining Cardinal was as the Deputy Country Manager of Ghana for PMI Gold
Limited, a joint TSXV‐ and ASX‐listed company. During this time, he was responsible for all field operational
matters including coordination of exploration, drilling programs and human resource management in relation
to the Corporation’s projects in Ghana.
Mr. Koimtsidis has been instrumental in acquiring the Ghanaian Projects on behalf of Cardinal and has a unique
knowledge and understanding of geopolitical and operational matters relating to resource projects in West
Africa.
Malik Easah – Co‐founder, Executive Director
Malik Easah is the principal of successful alluvial mining operations in the North West Adansi Gold Obotan
concession and is currently developing additional payable gold permits within the Ashanti and Nangodi Gold
belts of Ghana.
Mr. Easah specializes in the manufacture of alluvial gold wash plants and recovery equipment and is regarded
as an authority in the development of alluvial mining operations in Ghana. Mr. Easah has worked in the mining
industry in Ghana for 12 years.
Robert Schafer – Non‐Executive Director
Robert Schafer has over 30 years of international experience as a geologist exploring for mineral deposits in
more than 70 countries. As an executive, manager and field geologist with companies including Billiton, BHP,
Kinross and Hunter Dickinson, Mr. Schafer led teams to the discovery of several deposits in the western USA
(Briggs and Griffon gold mines), as well as developing strategies that led to brownfields discoveries in western
Canada, southern Africa and far east Russia (Birkachan gold mine).
Mr. Schafer is the immediate Past President of the Prospectors and Developers Association of Canada (PDAC)
as well as Past President of both the Canadian Institute for Mining, Metallurgy and Petroleum (CIM) and the
Mining and Metallurgical Society of America (MMSA). He is a Certified Corporate Director (ICD.D), a RPGeo and
is also an active member of the Society for Mining, Metallurgy and Exploration (SME) in the USA, where he
served on its Board for more than a decade.
Mr. Schafer serves as a member of the Board of Directors for both the Canadian Mining Hall of Fame and
National Mining Hall of Fame in the USA. He is the recipient of the William Lawrence Saunders Gold Medal
from the American Institute of Mining, Metallurgical and Petroleum Engineers (AIME) and the Daniel C. Jackling
Award from SME for career achievements, two of the highest mining recognitions in the USA.
2018 Annual Information Form
PAGE 50
Jacques McMullen – Non‐Executive Director
Jacques 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, Mr McMullen 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, Mr McMullen 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).
Michele Muscillo – Non‐Executive Director
Michele Muscillo is a Partner with HopgoodGanim Lawyers in Australia. Mr Muscillo 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), Xanadu Mines
Limited (ASX: XAM) and Mako Gold Limited (ASX:MKG). Formerly, Michele was also Non‐Executive Director of
Orbis Gold Limited which is currently owned by TSX‐Listed SEMAFO Inc. (TSX:SMF).
Sarah Shipway – Company Secretary
Sarah Shipway has been involved with the Corporation since inception. Prior to joining Cardinal, Ms. Shipway
was an accountant. Ms. Shipway holds a Bachelor of Commerce from Murdoch University and is a member of
the Institute of Chartered Accountants. Ms. Shipway is also non‐executive director for Beacon Minerals Limited
and St. George Mining Limited.
Derrick Weyrauch – Chief Financial Officer
Derrick Weyrauch is a Chartered Professional Accountant (“CPA CA”) with over 25 years of experience that
includes board and executive management roles at a number of publicly listed mining companies.
As the Chairman of the Special Committee for Restructuring and Recapitalization and then Chief Financial
Officer, Mr. Weyrauch was instrumental in the recent successful turnaround and financial restructuring of Jaguar
Mining, a gold producer with three operating underground mines and a 3.5 million ounce gold development
project in Brazil.
Previously, Mr. Weyrauch was the Chief Financial Officer of Andina Minerals, a development stage gold
company advancing 6.6 million ounces of proven and probable gold reserves towards development in the high
Andes of Chile where he led a US$800+ million project finance initiative.
Mr. Weyrauch previously served as the Lead Independent Director and Audit Committee Chairman at Banro
2018 Annual Information Form
PAGE 51
Corporation and currently serves at the audit committee chairman at Cabral Dordinal and Magna Mining Corp.
Cease Trade Orders, Bankruptcies, Penalties or Sanctions
No director or executive officer of the Corporation, nor any personal holding company of any director or
executive officer of the Corporation, is, as at the date hereof, or was, within 10 years before the date hereof,
a director, chief executive officer or chief financial officer of any company (including the Corporation) that:
(a) was subject to a cease trade order, an order similar to a cease trade order, or an order that denied the
relevant company access to any exemption under securities legislation, that was in effect for a period of
more than 30 consecutive days, that was issued while the director or executive officer was acting in the
capacity as director, chief executive officer or chief financial officer; or
(b) was subject to a cease trade order, an order similar to a cease trade order or an order that denied the
relevant company access to any exemption under securities legislation, that was in effect for a period of
more than 30 consecutive days, that was issued after the director or executive officer ceased to be a
director, chief executive officer or chief financial officer, and which resulted from an event that occurred
while that person was acting in the capacity as director, chief executive officer or chief financial officer.
Other than as set out below, no director or executive officer of the Corporation or shareholder holding a
sufficient number of securities of the Corporation to affect materially the control of the Corporation, nor any
personal holding company of any such individual:
(i)
is, as at of the date hereof, or has been within 10 years before the date hereof, a director or executive
officer of any company (including the Corporation) that, while that person was acting in that capacity, or
within a year of such individual ceasing to act in that capacity, became bankrupt, made a proposal under
any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings,
arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to
hold its assets; or
(ii) has, within the 10 years before the date hereof, become bankrupt, made a proposal under any legislation
relating to bankruptcy or insolvency, become subject to or instituted any proceedings, arrangement or
compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of
such individual; or
(iii) has been subject to (i) any penalties or sanctions imposed by a court relating to securities legislation or by
a securities regulatory authority, or has entered into a settlement agreement with a securities regulatory
authority, or (ii) any other penalties or sanctions imposed by a court or regulatory body that would likely
be considered important to a reasonable investor in making an investment decision.
Kevin Tomlinson served as a director of Maudore Minerals Ltd. (“Maudore”) until May 22, 2014, and of Besra
Gold Inc. (“Besra”) until April 10, 2015. On September 8, 2014, Maudore announced that it had filed a notice
of intention to make a proposal under the Bankruptcy and Insolvency Act (the “BIA”). On March 2, 2015,
Maudore announced that the Superior Court of the Province of Quebec (the “Court”) had granted an order
whereby Maudore’s proposal to creditors, which had initially been filed under the BIA, had been continued
under the CCAA and that the Court had granted an initial stay of proceedings under the CCAA. Maudore made
further announcements on March 27, 2015, June 19, 2015, September 22, 2015 and February 29, 2016 that
the Court had granted extensions of the stay of proceedings under the CCAA. On May 16, 2016, Maudore
announced that Maudore had, under the BIA, made an assignment of its property to a trustee for the benefit
of its creditors generally. On October 19, 2015, Besra announced that its board of directors had decided to file
2018 Annual Information Form
PAGE 52
a notice of intention to make a proposal (the “Notice of Intention”) under the BIA. On January 29, 2016, Besra
announced that, through its appointed proposal trustee, it had submitted a proposal (the “Proposal”) to its
creditors in accordance with the Notice of Intention to make a proposal. The Proposal was subsequently
amended on March 13, 2016 (the “Amended Proposal”). A meeting of creditors (the “Meeting”) was initially
called for March 17, 2016 and was adjourned until April 7, 2016 in order to permit creditors to consider the
Amended Proposal. On April 7, 2016, Besra announced that at the Meeting, the Amended Proposal had been
approved by a majority of unsecured creditors holding in excess of two‐thirds of the value of proven unsecured
creditor claims. The Amended Proposal was approved by the Ontario Superior Court of Justice (Commercial
List) on May 17, 2016. On December 17, 2014, the OSC issued a temporary cease trade order for the securities
of Besra, and on December 29, 2014, the OSC issued a further cease trade order directing that trading in the
securities of Besra cease until further order by the Director (together, the “Besra Cease Trade Order”). The
British Columbia Securities Commission issued a cease trade order on December 17, 2014; the Autorité des
marchés financiers issued a cease trade order on January 5, 2015; and the Alberta Securities Commission issued
a cease trade order on March 30, 2015. The OSC partially revoked the Besra Cease Trade Order on March 4,
2015 to permit trades and acts in furtherance of trades in connection with a proposed private placement
financing by Besra for proceeds of up to C$15 million. On April 7, 2015, the first tranche of such financing, with
gross proceeds of C$2 million, was completed. Besra received no further proceeds from such financing. On
October 14, 2016, the OSC issued an order (the “October 2016 Order”) partially revoking the Besra Cease Trade
Order to permit trades and acts in furtherance of trades that are necessary for and are in connection with the
Amended Proposal and a $10 million tranche of an exit financing. The October 2016 Order was subsequently
varied by the OSC on November 18, 2016, and Besra announced on November 18, 2016 that it had closed a
C$10 million “exit financing” and intended to deliver to the Proposal trustee the consideration necessary to
satisfy the elections made by creditors under the Proposal. Besra expects that once all requirements of the
Proposal have been satisfied, the Proposal trustee will issue a certificate of full performance. In October 2014
trading in the common shares of Besra on the ASX was suspended and Besra’s common shares were delisted
from the TSX because of Besra’s failure to file its financial statements for the year ended June 30, 2014.
Derrick H. Weyrauch was elected to the board of directors of Jaguar Mining Inc. ("Jaguar") in June 2013. As
part of a corporate turnaround and restructuring process, Jaguar declared insolvency and commenced a
voluntary proceeding under the CCAA on December 23, 2013 in the Ontario Superior Court of Justice. This
proceeding was commenced to implement a debt restructuring and financing transaction ("CCAA Plan") that
was negotiated prior to the commencement of the CCAA proceeding. On April 22, 2014, Jaguar implemented
the CCAA Plan and emerged from court protection under the CCAA. On May 2, 2014, the shares of Jaguar began
trading on the TSX Venture Exchange. Following the voluntary proceeding under the CCAA, the Toronto Stock
Exchange advised that it is reviewing the common shares of Jaguar with respect to meeting the requirements
for continued listing pursuant to the Expedited Review Process. The common shares were subsequently
suspended from trading on the Toronto Stock Exchange. In 2013, NYSE Regulation reached a decision to delist
Jaguar’s common shares in view of the fact that Jaguar’s common shares had fallen below the NYSE's continued
listing standard for an average closing price of less than US$1.00 over a consecutive 30 trading day period. As
a result, on June 3, 2013, NYSE Regulations, Inc. ("NYSE Regulation") commenced proceedings to delist the
common shares of Jaguar from the New York Stock Exchange ("NYSE") and trading in Jaguar’s common shares
was suspended prior to the opening on June 7, 2013.
Mr. Weyrauch was a director of Banro Corporation (“Banro”). On November 20, 2017 Banro became subject
to a general cease trade order issued by the Ontario Securities Commission (the “CTO”) for failure to file its
interim financial statements and management’s discussion and analysis for the period ended September 30,
2017, and the certifications of such filings as required by National Instrument 52‐109. The filings were not made
due to significant uncertainty concerning Banro’s ability to continue as a going concern. As part of a corporate
turnaround and restructuring process, Banro declared insolvency and commenced a voluntary proceeding
under the CCAA on December 22, 2017 in the Ontario Superior Court of Justice. This proceeding was
2018 Annual Information Form
PAGE 53
commenced to implement a debt restructuring and sale and investment solicitation process (“SISP”). On May
3, 2018 Banro implemented the CCAA Plan and emerged from court protection under the CCAA.
Conflicts of Interest
To the best of the Corporation’s knowledge, and other than as disclosed in this AIF, there are no known existing
or potential material conflicts of interest between the Corporation or a subsidiary of the Corporation and any
director or officer of the Corporation or a subsidiary of the Corporation, except that certain of the directors
and officers serve as directors and officers of other public companies, and therefore it is possible that a conflict
may arise between their duties as a director or officer of the Corporation and their duties as a director or officer
of such other companies. See “Description of the Business – Risk Factors – Risks Associated with Conflicts of
Interest”.
LEGAL PROCEEDINGS AND REGULATORY ACTIONS
The Corporation is not a party to, and its property is not the subject of, any material legal proceedings, and the
Corporation was not a party to, and its property was not the subject of, any material legal proceedings during
the Corporation's most recently completed financial year. The Corporation is not aware of any contemplated
legal proceedings.
During the most recently completed financial year, no penalties or sanctions were imposed against the
Corporation by a court relating to securities legislation or by a securities regulatory authority, no penalties or
sanctions were imposed by a court or regulatory body against the Corporation that would likely be considered
important to a reasonable investor in making an investment decision, and no settlement agreements were
entered into by the Corporation before a court relating to securities legislation or with a securities regulatory
authority.
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS
Other than as disclosed in this AIF, the Corporation is not aware of any material interest, direct or indirect, of
any director or officer of the Corporation, any person or company that beneficially owns, or controls or directs,
directly or indirectly, more than 10% of the Corporation’s voting securities, or any associate or affiliate of any
such persons or companies in any transaction within the three most recently completed financial years or
during the current financial year that has materially affected or is reasonably expected to materially affect the
Corporation.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Ordinary Shares and the Listed Options of the Corporation in Australia
is Computershare Investor Services Pty Ltd (“Computershare (Australia)”), and the Ordinary Shares and Listed
Options are transferable at the offices of Computershare (Australia) in Perth.
The transfer agent and registrar for the Ordinary Shares of the Corporation in Canada is Computershare
Investor Services Inc. (“Computershare (Canada)”), and the Ordinary Shares are transferable at the offices of
Computershare (Canada) in Toronto.
2018 Annual Information Form
PAGE 54
AUDIT COMMITTEE AND RELATED INFORMATION
The Audit and Risk Committee’s Charter
The responsibilities and duties of the audit and risk committee (the “Audit and Risk Committee”) of the Board
are set out in the Audit and Risk Committee’s Charter (the “Charter”), the text of which is set forth in Appendix A
to this AIF.
Composition of the Audit and Risk Committee
The Audit and Risk Committee is comprised of Michele Muscillo (Chair), Jacques McMullen and Robert Schafer.
The following chart sets out the Corporation’s assessment of the independence, financial literacy and relevant
educational background and experience supporting such financial literacy of each member of the Audit and
Risk Committee. Additional information about relevant experience of each member of the Audit and Risk
Committee can be found in such member’s biography under the heading “Directors and Executive Officers”
above.
Name
Independent(1)
Financially Literate(2)
Michele Muscillo
Jacques McMullen
Robert Schafer
Notes:
Yes
Yes
Yes
Yes
Yes
Yes
Relevant Education and
Experience
Bachelor of Laws
Chair of audit committee
of Aeris Resources and
Xanadu mines.
BScA, MScA, PEng, ICD.D
Graduate Diploma
Finance
(1) To be considered independent, a member of the Audit and Risk Committee must not have any direct or indirect
“material relationship” with the Corporation. A “material relationship” is a relationship which could, in the view
of the Board, be reasonably expected to interfere with the exercise of a member’s independent judgment.
(2) To be considered financially literate, a member of the Audit and Risk Committee must have the ability to read
and understand a set of financial statements that present a breadth and level of complexity of accounting issues
that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be
raised by the Corporation’s financial statements.
Reliance on Certain Exemptions
At no time since the commencement of the Corporation's most recently completed financial year, has the
Corporation relied on the exemption in section 2.4 of NI 52‐110 (De Minimis Non‐audit Services), the exemption
in section 3.2 of NI 52‐110 (Initial Public Offerings), the exemption in subsection 3.3(2) of NI 52‐110 (Controlled
Companies), the exemption in section 3.4 of NI 52‐110 (Events Outside Control of Member), the exemption in
section 3.5 of NI 52‐110 (Death, Disability or Resignation of Audit Committee Member), the exemption in
section 3.6 of NI 52‐110 (Temporary Exemption for Limited and Exceptional Circumstances) or an exemption
from NI 52‐110, in whole or in part, granted under Part 8 of NI 52‐110 (Exemptions).
2018 Annual Information Form
PAGE 55
Audit Committee Oversight
At no time since the commencement of the Corporation's most recently completed financial year has a
recommendation of the Audit and Risk Committee to nominate or compensate an external auditor not been
adopted by the Board.
Pre‐Approval Policies and Procedures
The Corporation has adopted policies and procedures with respect to the pre‐approval of audit and permitted
non‐audit services to be provided by its external auditor as set forth in the Charter. It is expected that the Audit
and Risk Committee will approve the provision of a specified list of audit and permitted non‐audit services that
the Audit and Risk Committee believes to be typical, reoccurring or otherwise likely to be provided by the
Corporation’s external auditor during the current fiscal year.
External Auditor Service Fees
The following table provides detail in respect of audit, audit related, tax and other fees paid by the Corporation
to the external auditors for professional services:
Reporting Period
June 30, 2018
June 30, 2017
Audit
Fees (1)
$67,143
$54,605
Audited‐Related
Fees (2)
Nil
Nil
Tax
Fees (3)
$4,400
Nil
All Other
Fees (4)
$35,295
$6,250
Notes:
(1) “Audit Fees” include the aggregate fees billed by the Corporation’s external auditor for the audit of the annual
financial statements and other regulatory audits and filings.
(2) “Audit‐Related Fees” include the aggregate fees billed for assurance and related services by the Corporation’s
external auditor that are reasonably related to the performance of the audit or review of the Corporation's
financial statements but not included in “Audit Fees”.
(3) “Tax Fees” include the aggregate fees billed for professional services rendered by the Corporation's external
auditor for tax compliance, tax advice and tax planning.
(4) “All Other Fees” include the aggregate fees billed for products and services provided by the Corporation's
external auditor, other than as set out under the headings “Audit Fees”, “Audit Related Fees” and “Tax Fees”.
MATERIAL CONTRACTS
The Corporation is not party to any material contracts entered into by or on behalf of the Corporation or any
of its subsidiaries within the financial year ended June 30, 2018, or before the financial year ended June 30,
2018 if still in effect. Subsequent to the end of the financial year ended June 30, 2018, the Corporation
(together with its wholly owned subsidiaries) entered into a credit agreement (the “Credit Agreement”) with
Sprott Private Resource Lending (Collector), LP with respect to a US$25 million senior secured credit facility in
favour of the Corporation, as borrower (the “Credit Facility”). The Credit Facility was entered into to provide
the Corporation with working capitals to advance the Namdini Project. Amounts drawn by the Corporation
under the Credit Facility bear interest at a floating rate equal to 7.75% per annum plus the greater of (i) LIBOR
2018 Annual Information Form
PAGE 56
and (ii) 1.00%, per annum, calculated and compounded monthly on the last day of every month, and be payable
on the last business Day of each month. The Credit Facility matures on February 28, 2021. The Credit Facility is
secured by: (i) a first priority encumbrance granted by the Corporation and each of its wholly‐owned
subsidiaries, being Cardinal Mining Services Limited, Cardinal Namdini Mining Limited, Cardinal Resources
Ghana Limited and Cardinal Resources Subranum Limited (the “Subsidiaries”) in favour of Sprott; (ii) a
guarantee of the obligations of the Corporation as borrower by each of the Subsidiaries; and (iii) a pledge by
the Corporation of the shares of each of the Subsidiaries via a share charge agreement under the laws of Ghana
to Sprott. In connection with the completion of the Credit Facility, the Corporation agreed to issue to Sprott
and its affiliates 4,250,000 ordinary shares of the Corporation on a private placement as a work fee.
INTERESTS OF EXPERTS
The following persons or companies are named as having prepared or certified a report, valuation, statement
or opinion described or included in a filing, or referred to in a filing, made by the Corporation under National
Instrument 51‐102 – Continuous Disclosure Obligations of the Canadian Securities Administrators during, or
relating to, the financial year ended June 30, 2018, and whose profession or business gives authority to the
report, valuation, statement or opinion made by the person or company:
Glenn Turnbull, MAusIMM (CP) of Golder Associates Pty Ltd.;
Marc LeVier, MMSA (QP) of K. Marc LeVier & Associates, Inc.;
Nicolas Johnson, MAIG of MPR Geological Consultants Pty Ltd.; and
BDO Audit (WA) Pty Ltd.
To the best knowledge of the Corporation, the persons and companies referenced above each hold less than
1% of any outstanding securities of the Corporation, or of any associate or affiliate of the Corporation.
None of the persons referenced above or directors, officers or employees of a person or company referenced
above is or is expected to be elected, appointed or employed as a director, officer or employee of the
Corporation or of any associate or affiliate of the Corporation.
ADDITIONAL INFORMATION
Additional information relating to the Corporation can be found under the Corporation’s profile on the SEDAR
website at www.sedar.com. Additional information, including directors’ and officers’ remuneration and
indebtedness, principal holders of the Corporation’s securities and securities authorized for issuance under
equity compensation plans, if applicable, is contained in the Corporation’s information circular for its most
recent annual meeting of shareholders. Additional financial information is provided in the Corporation’s
audited consolidated financial statements and management’s discussion and analysis for its most recently
completed financial year.
2018 Annual Information Form
PAGE 57
APPENDIX A ‐ AUDIT AND RISK COMMITTEE CHARTER
1.
ROLE
The role of the Audit and Risk Committee is to assist the Board in monitoring and reviewing any matters
of significance affecting financial reporting and compliance. This Charter defines the Audit and Risk
Committee’s function, composition, mode of operation, authority and responsibilities.
2.
COMPOSITION
The Board will adhere to the following composition requirements for the Committee.
(a)
(b)
(c)
(d)
(e)
(f)
(g)
The Committee must comprise at least three members.
All members of the Committee must be non‐executive Directors.
Except as permitted by NI 52‐110, all members of the Committee must be independent in
accordance with the criteria set out in Annexure A.
The Board will appoint members of the Committee. The Board may remove and replace
members of the Committee by resolution.
All members of the Committee must be able to read and understand financial statements that
present a breadth and level of complexity of accounting issues that are generally comparable
to the breadth and level of complexity of the issues reasonably expected to be raised by the
Corporation’s financial statements.
The Chairman of the Committee shall have leadership experience and a strong finance,
accounting or business background and will not be the Chair of the Board.
The external auditors, the other Directors, the Managing Director, Chief Financial Officer,
Company Secretary and other senior executives may be invited to Committee meetings at the
discretion of the Committee.
3.
PURPOSE
The primary purpose of the Committee is to assist the Board in fulfilling its statutory and fiduciary
responsibilities relating to:
(a)
(b)
(c)
(d)
the quality and integrity of the Corporation’s financial statements, accounting policies and
financial reporting and public disclosure practices;
compliance with all applicable laws, regulations and company policy;
the effectiveness and adequacy of internal control processes;
the performance of the Corporation’s external auditors and their appointment and removal;
2018 Annual Information Form
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(e)
(f)
(g)
(h)
(i)
the independence of the external auditor and the rotation of the lead engagement partner;
the scope and adequacy of the external audit;
any proposal for the external auditor to provide non‐audit services and whether it might
compromise the independence of the external auditor;
the identification and management of business, economic, environmental and social
sustainability risks; and
the review of the Corporation’s risk management framework at least annually to satisfy itself
that it continues to be sound and to determine whether there have been any changes in the
material business risks the Corporation faces and to ensure that they remain within the risk
appetite set by the Board.
A secondary function of the Committee is to perform such special reviews or investigations as the
Board may consider necessary.
4.
DUTIES AND RESPONSIBILITIES OF THE COMMITTEE
4.1
Review of Financial Reports
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
Review the appropriateness of the accounting principles adopted by management in the
financial reports and the integrity of the Corporation’s financial reporting.
Directly oversee the work of the external auditor engaged to prepare or issue an auditor’s
report and the results of the external audits of those reports.
Assess whether external reporting is adequate for shareholder needs.
Assess management processes supporting external reporting.
Establish procedures for receipt, retention and treatment of accounting complaints and
confidential, anonymous submission by employees of the Corporation of complaints regarding
questionable accounting or auditing matters.
Directly oversee the resolution of disagreements between management and the external
auditor regarding financial reporting.
Review the impact of any proposed changes in accounting policies on the financial statements.
Review the financial statements, MD&A and annual and interim profit or loss press releases
before the Corporation publicly discloses the information.
Ensure that, before the Board approves the Corporation’s financial statements for a financial
period, the Chief Executive Officer and Chief Financial Officer (or, if none, the person(s)
fulfilling those functions) have declared that, in their opinion, the financial records of the
Corporation have been properly maintained and that the financial statements comply with
2018 Annual Information Form
PAGE 59
the appropriate accounting standards and give true and fair view of the financial position and
performance of the Corporation and that the opinion has been formed on the basis of a sound
system of risk management and internal control which is operating effectively.
(j)
Ensure that adequate procedures are in place for the review of the Corporation’s public
disclosure of financial information extracted or derived from its financial statements and
periodically assess the adequacy of those procedures.
4.2
Relationship with External Auditors
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
(l)
Recommend to the Board (i) the external auditor to be nominated for the purpose of
preparing or issuing an auditor’s report or performing another audit, review or attestation
services for the Corporation and (ii) the compensation of the external auditor.
Review performance, succession plans and rotation of lead engagement partner.
Approve the external audit plan and fees proposed for audit work to be performed.
Discuss any necessary recommendations to the Board for the approval of quarterly, half yearly
or annual reports.
Review the adequacy of accounting and financial controls together with the implementation
of any recommendations of the external auditor in relation thereto.
Meet with the external auditors at least twice in each financial year and at any other time the
Committee considers appropriate.
Provide pre‐approval of audit and non‐audit services that are to be undertaken by the external
auditor.
Ensure adequate disclosure as may be required by law of the Committee’s approval of all non‐
audit services provided by the external auditor.
Review the Corporation’s public disclosure required by applicable securities laws concerning
the audit committee and its members to ensure it is accurate and complete.
Ensure that the external auditor prepares and delivers an annual statement as to their
independence which includes details of all relationships with the Corporation.
Receive from the external auditor their report on, among other things, critical accounting
policies and alternative accounting treatment, prior to the filing of their audit report in
compliance with applicable securities law requirements and/or the Corporations Act.
Ensure that the external auditor attends the Corporation’s Annual General Meeting and is
available to answer questions from security holders relevant to the audit.
2018 Annual Information Form
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4.3
Internal Audit Function
(a)
(b)
(c)
(d)
(e)
(f)
Monitor the need for a formal internal audit function and its scope.
Review and monitor the appointment or removal of the head of internal audit.
Assess the performance and objectivity of any internal audit procedures that may be in place.
Review risk management and internal compliance procedures.
Monitor the quality of the accounting function.
Review the internal controls of the Corporation via consideration of any comments from the
Corporation’s internal and/or external auditors and/or commissioning an independent report
on the Corporation’s internal controls.
4.4
Risk Management
(a)
(b)
(c)
(d)
Oversee the Corporation’s risk management systems, practices and procedures to ensure
effective risk identification and management and compliance with the Corporation’s Risk
Management Policy, internal guidelines and external requirements.
Assist in identifying and managing potential or apparent business, economic, environmental
and social sustainability risks (if appropriate) that could adversely affect the Corporation’s
prospects currently and for future financial years.
Review the Corporation’s Risk Management Policy at least annually to satisfy itself that it
continues to be sound.
Review reports by management on the efficiency and effectiveness of the Corporation’s Risk
Management Policy and associated internal compliance and control procedures.
4.5
Other
(a)
(b)
(c)
(d)
(e)
The Committee will oversee the Corporation’s environmental risk management, insurance and
occupational health and safety processes.
The Committee will oversee procedures for whistleblower protection.
As contemplated by the ASX Corporate Governance Council’s Corporate Governance Principles
and Recommendations, and to the extent that such deviation or waiver does not result in any
breach of the law, the Committee may approve any deviation or waiver from the “Corporate
code of conduct”. Any such waiver or deviation will be promptly disclosed where required by
applicable law.
The Committee will monitor related party transactions.
The Committee will review and approve the Corporation’s hiring policy regarding partners,
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employees and former partners and employees of the present and former external auditor of
the Corporation.
5.
MEETINGS
(a)
(b)
(c)
(d)
(e)
(f)
(g)
The Committee will meet at least twice in each financial year and additionally as circumstances
may require for it to undertake its role effectively.
Meetings are called by the Secretary as directed by the Board or at the request of the
Chairman of the Committee.
Where deemed appropriate by the Chairman of the Committee, meetings and subsequent
approvals and recommendations can be implemented by a circular written resolution or
conference call.
A quorum shall consist of two members of the Committee. In the absence of the Chairman of
the Committee or their nominees, the members shall elect one of their members as Chairman
of that meeting.
Decisions will be based on a majority of votes with the Chairman having a casting vote.
The Committee Chairman, through the Secretary, will prepare a report of the actions of the
Committee to be included in the Board papers for the next Board meeting.
Minutes of each meeting are included in the papers for the next full Board meeting after each
Committee meeting.
6.
SECRETARY
(a)
(b)
(c)
The Company Secretary or their nominee shall be the Secretary of the Committee and shall
attend meetings of the Committee as required.
The Secretary will be responsible for keeping the minutes of meetings of the Committee and
circulating them to Committee members and to the other members of the Board.
The Secretary shall distribute supporting papers for each meeting of the Committee as far in
advance as possible.
7.
RELIANCE ON INFORMATION OR PROFESSIONAL OR EXPERT ADVICE
Each member of the Committee is entitled to rely on information, or professional or expert advice, to
the extent permitted by law, given or prepared by:
(a)
(b)
an employee of the Group whom the member believes on reasonable grounds to be reliable
and competent in relation to the matters concerned;
a professional adviser or expert in relation to matters that the member believes on reasonable
grounds to be within the person’s professional or expert competence; or
2018 Annual Information Form
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(c)
another Director or officer of the Group in relation to matters within the Director’s or officer’s
authority.
8.
ACCESS TO ADVICE
(a)
(b)
(c)
Members of the Committee have rights of access to management and to the books and
records of the Corporation to enable them to discharge their duties as Committee members,
except where the Board determines that such access would be adverse to the Corporation’s
interests.
Members of the Committee may meet with the auditors, both internal and external, without
management being present.
Members of the Committee may engage independent legal counsel or other advisers they
consider necessary to assist them in carrying out their duties and responsibilities and set and
pay the compensation for any advisors employed by the Committee. Any costs incurred as a
result of the Committee consulting an independent expert will be borne by the Corporation.
9.
REVIEW OF CHARTER
(a)
(b)
The Board will conduct an annual review of the membership to ensure that the Committee
has carried out its functions in an effective manner, and will update the Charter and Risk
Management Policy as required or as a result of new laws or regulations.
The Charter and Risk Management Policy shall be made available to members on request, to
senior management, to the external auditor and to other parties as deemed appropriate, will
be posted to the Corporation’s website and will be included, where required, in the
Corporation’s public disclosure documents.
10.
REPORT TO THE BOARD
(a)
The Committee must report to the Board formally at the next Board meeting following from
the last Committee meeting on matters relevant to the Committee’s role and responsibilities.
(b)
The Committee must brief the Board promptly on all urgent and significant matters.
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ANNEXURE A – DEFINITION OF INDEPENDENCE
An audit committee member is independent if he or she:
(a)
(b)
has no direct or indirect material relationship with the Corporation, being a relationship which could,
in the view of the Corporation’s board of directors, be reasonably expected to interfere with the
exercise of a member’s independent judgement; and
is free of any interest, position, association or relationship that might influence, or reasonably be
perceived to influence, in a material respect his or her capacity to bring an independent judgement to
bear on issues before the board and to act in the best interests of the entity and its security holders
generally.
Material relationships
Subject to certain exemptions and further clarification set out in Canadian securities laws applicable to the
Corporation, the following individuals are considered to have a material relationship with the Corporation:
(a)
(b)
(c)
an individual who (i) accepts, directly or indirectly, any consulting, advisory or other compensatory fee
from the Corporation or any subsidiary entity of the Corporation, other than as remuneration for acting
in his or her capacity as a member of the board of directors or any board committee, or as a part‐time
chair or vice‐chair of the board or any board committee; or (ii) is an affiliated entity of the Corporation
or any of its subsidiary entities,
an individual who is, or has been within the last three years, an employee or executive officer of the
Corporation;
an individual whose immediate family member is, or has been within the last three years, an executive
officer of the Corporation;
(d)
an individual who:
i.
ii.
iii.
is a partner of a firm that is the Corporation’s internal or external auditor,
is an employee of that firm, or
was within the last three years a partner or employee of that firm and personally worked on
the Corporation’s audit within that time;
(e)
an individual whose spouse, minor child or stepchild, or child or stepchild who shares a home with the
individual:
i.
ii.
is a partner of a firm that is the Corporation’s internal or external auditor,
is an employee of that firm and participates in its audit, assurance or tax compliance (but not
tax planning) practice, or
iii.
was within the last three years a partner or employee of that firm and personally worked on
2018 Annual Information Form
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the Corporation’s audit within that time;
(f)
(g)
an individual who, or whose immediate family member, is or has been within the last three years, an
executive officer of an entity if any of the Corporation’s current executive officers serves or served at
that same time on the entity’s compensation committee; and
an individual who received, or whose immediate family member who is employed as an executive
officer of the Corporation received, more than $75,000 in direct compensation from the Corporation
during any 12 month period within the last three years.
Examples of interests, positions, associations or relationships affecting independence
Examples of interests, positions, associations and relationships that might cause doubts about the
independence of a director include if the director:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
is, or has been, employed in an executive capacity by the Corporation or any of its child entities and
there has not been a period of at least three years between ceasing such employment and serving on
the board;
is, or has within the last three years been, a partner, director or senior employee of a provider of
material professional services or a material consultant to the Corporation or any of its child entities;
is, or has been within the last three years, in a material business relationship (e.g. as a supplier or
customer) with the Corporation or any of its child entities, or an officer of, or otherwise associated
with, someone with such a relationship;
is a substantial security holder of the Corporation or an officer of, or otherwise associated with, a
substantial security holder of the Corporation;
has a material contractual relationship with the Corporation or its child entities other than as a
director;
has close family ties with any person who falls within any of the categories described above; or
has been a director of the Corporation for such a period that his or her independence may have been
compromised.
In each case, the materiality of the interest, position, association or relationship needs to be assessed to
determine whether it might interfere, or might reasonably be seen to interfere, with the director’s capacity to
bring an independent judgment to bear on issues before the Board and to act in the best interests of the
Corporation and its security holders generally.
2018 Annual Information Form