2019
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
Michele Muscillo
Dr. Kenneth G. Thomas
Trevor Schultz
Non‐Executive Chairman
Managing Director
Executive Director
Non‐Executive Director
Non‐Executive Director
Non‐Executive Director
Chief Financial Officer
Jon Grygorcewicz
Company Secretary
Australia
Sarah Shipway
Canada
Charlotte May
Registered Office
Ground Floor, 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
Ghana Office
Website
Email
Share Register
Lawyers
Auditors
TS PAGE
Page 1 of 42
(the “Company” or the “Corporation” or “Cardinal”)
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended June 30, 2019
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, 2019. The
following information, prepared as of September 3, 2019, should be read in conjunction with the Company’s
audited consolidated financial statements for the year ended June 30, 2019 and the audited consolidated financial
statements for the year ended June 30, 2018. 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, 2019
Page 2 of 42
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 Company (and its subsidiaries) is gold exploration and mine development in Ghana.
The Company holds tenements prospective for gold mineralisation in Ghana in two granite‐greenstone belts: the
Bolgatanga Project and the Namdini Gold Project (“Namdini Gold Project” or “Namdini”), which are, respectively,
located within the Greenstone Belts in northeast Ghana and the Subranum Project, which is located within the
Sefwi Greenstone Belt.
The main focus of activity is the Namdini Gold Project which has a gold Mineral Reserve of 5.1 Moz (138.6Mt @
1.13g/t Au; 0.5g/t Au cut‐off) inclusive of 0.4 Moz Proved (7.4 Mt @ 1.31g/t Au; 0.5 g/t Au cut‐off) and 4.7 Moz
Probable (131.2 Mt @ 1.12 g/t Au; 0.5g/t Au cut‐off).
Figure 1: Cardinal Resource’s Tenements in Ghana
Management’s Discussion & Analysis June 30, 2019
Page 3 of 42
OUTLOOK
The principal activity of the Company (and its subsidiaries) is gold exploration and mine development in Ghana.
The Company holds interests in tenements prospective for gold mineralisation in Ghana in two NE‐SW trending
Paleo‐Proterozoic granite‐greenstone belts: the Bolgatanga Project and the Namdini Gold Project”, 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 which has a gold Mineral Reserve of 5.1 Moz (138.6Mt @
1.13g/t Au; 0.5g/t Au cut‐off) inclusive of 0.4 Moz Proved (7.4 Mt @ 1.31g/t Au; 0.5 g/t Au cut‐off) and 4.7 Moz
Probable (131.2 Mt @ 1.12 g/t Au; 0.5g/t Au cut‐off) and a soon to be completed Feasibility Study. The Company
expects to continue to generate positive news flow from its ongoing greenfield exploration assets and Feasibility
Study activities.
CORPORATE HIGHLIGHTS
On April 3, 2019 the Company announced an updated Mineral Reserve for the Namdini Gold Project which
included a Mineral Resource update and optimisation studies to improve the level of definition of the current
pit design.
On April 10, 2019 the Company announced its Feasibility Study status and project finance updates. The
Company remains on schedule for delivery of the Feasibility Study by end of Q3 2019.
On June 4, 2019 the Company announced positive metallurgical updates on the Namdini Gold Project as a
result of investigation into the utilisation of the AachenTM process. Results of preliminary testwork has
demonstrated potential for material improvements to the projects economics, including possible reduction in
both operating and capital costs. Further testwork is continuing, to provide definitive data.
Subsequent to end of Quarter
On July 10, 2019 the Company reported further shallow drill results at the Ndongo East discovery located
approximately 24km north and within hauling distance of the Company’s Namdini Gold Project. The close
spaced drilling has delineated a well‐defined mineralised zone over a strike length of 150 metres, within the
initial 450 metre mineralised discovery zone.
On July 12, 2019 the Company held a public hearing and a presentation for the Traditional Paramount Chief.
On July 16, 2019 the Company announced the results of an infill program for the Namdini Deposit. The close
spaced infill drilling, along with the previous Grade Control program within the proposed starter pit, confirms
the robustness of the Namdini Mineral Resource.
Successful Public Hearing – Strong local support for the Namdini Project
Under the supervision of Ghana Government Ministries, Environmental Protection Agency and The Minerals
Commission, Cardinal held a public hearing for the Namdini Gold project which exceeded expectations in relation
to the current and future support of the Namdini Project proceeding into mine development.
Local invited dignitaries and participants from all the surrounding communities attended the public hearing which
was well received. There were no objections or obstructions to the Namdini Project proceeding.
A separate presentation was conducted for the Traditional Paramount Chief of the Upper East Region, Tongraan
Kugbilsong Nanlebegtang, and his Sub‐Chiefs within the Talensi District, where the Namdini Project is located. This
was also successful in garnishing continued support for the Namdini Project.
Management’s Discussion & Analysis June 30, 2019
Page 4 of 42
Public Hearing at Namdini Project site
Traditional Paramount Chief Presentation
THE NAMDINI GOLD PROJECT
Property Title / Mining Lease
A Large‐Scale Mining License covering the Namdini Mining Lease was granted 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) in December 2017. The Large‐Scale Mining License covers
19.54 km2 in the Dakoto area of the Talensi District Assembly in Upper East Region of Ghana evidenced by a Mining
Lease for an initial period of 15 years and is renewable.
Table 1 lists the coordinate extents of the Namdini Gold Project lease. Approximate central coordinates of the
deposit are 756,400.0mN, 1,177,050.0mE in WGS (UTM) 84 Zone 30N projection or 10°38’ 21” N Longitude and
0°39’.23” W Latitude.
Management’s Discussion & Analysis June 30, 2019
Page 5 of 42
Corner
Longitude
Top Left
Top Right
Bottom Right
Bottom Left
10° 39' 42" N
10° 40’ 57” N
10° 37' 00" N
10° 36' 60" N
Latitude
0° 40’ 15” W
0° 38 30" W
0° 38 30" W
0° 40' 15" W
Table 1: Coordinates of the Namdini Gold Project Lease
Figure 2: shows the lease and pit outline superimposed on the regional physiography image.
Management’s Discussion & Analysis June 30, 2019
Page 6 of 42
Mineral Resource and Mineral Reserves Update
The Mineral Resource incorporates the results from all resource drilling to February 5, 2019 comprising 175 HQ
diamond core holes and 151 RC drill holes totalling 87,140 metres. (ASX / TSX Press Release April 3, and April 18,
2019)
Reverse circulation drilling (nominally 5¼ inch diameter) was generally 200 metres or less in depth.
Diamond drilling was HQ in both weathered and fresh rock. Most diamond holes and RC holes were downhole
surveyed at intervals of generally 30 metres. All HQ core was orientated.
The resource drilling comprises east‐west trending traverses of easterly inclined holes. Hole spacing varied from
around 12.5 by 25 metres in shallow portions of the southern part of the deposit to around 50 by 50 metres and
broader in the north and at depth.
Tables 2 and 3 highlight the Mineral Resource estimation reported at a 0.5 g/t Au cut‐off grade. Currently, the 0.5
g/t Au cut‐off grade approximates 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). The effective date of the Mineral Resource estimate is the April 3, 2019.
All figures in Tables 2 and 3 have been rounded to reflect the relative precision of the estimates and to include
rounding errors. Mineral Resources are inclusive of Ore Reserves.
Material
Type
Tonnes
(Mt)
Gold Grade
(g/t Au)
Contained Gold
(Moz)
Mineral Resource
Category
Measured
Measured
Measured Resource
Indicated
Indicated
Indicated Resource
Oxide
Fresh
Total
Oxide
Fresh
Total
Measured and Indicated
Oxide
Measured and Indicated
Fresh
Measured and Indicated
Total
1.1
6.4
7.5
3.3
171
174
4.40
177
182
1.23
1.33
1.31
1.08
1.11
1.11
1.12
1.12
1.12
0.04
0.27
0.32
0.11
6.10
6.21
0.16
6.38
6.53
Table 2: Namdini Measured and Indicated Mineral Resource estimate at 0.5g/t Au cut off – April 3, 2019
Mineral Resource
Category
Inferred
Inferred
Inferred Resource
Type
Oxide
Fresh
Total
Tonnes
(Mt)
0.04
12
12
Gold Grade
(g/t Au)
Contained Gold
(Moz)
1.0
1.2
1.2
0.001
0.46
0.46
Table 3: Namdini Mineral Resource Inferred estimate at 0.5 g/t Au cut off – April 3, 2019
Management’s Discussion & Analysis June 30, 2019
Page 7 of 42
Mineral Reserves were estimated for the Namdini Gold Project by Golder Associates, which is summarised in Table
4. The total Proved and Probable Ore Reserve is estimated at 138.6Mt at 1.13g/t Au with a contained gold content
of 5.1 Moz at 0.5 g/t Au cut off.
The Mineral Reserve for the Project is reported according to the Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves, JORC Code 2012 and Canadian Institute of Mining, Metallurgy and
Petroleum “CIM Definition Standards for Mineral Resources and Mineral Reserves” (CIM, 2014). The Mineral
Resource was converted after applying Modifying Factors. The Proved and Probable Mineral Reserve estimate are
based on the Mineral Resource classified as Measured and Indicated. Table 4 presents a summary of the Ore
Reserves on a 100% Project basis.
Mineral Reserve
Category
Proved
Proved
Proved Reserve
Probable
Probable
Probable Ore Reserve
Proved and Probable
Proved and Probable
Proved and Probable
Type
Oxide
Fresh
Total
Oxide
Fresh
Total
Oxide
Fresh
Total
Tonnes
(Mt)
Gold Grade
(g/t)
Contained Gold
(Moz)
1.0
6.4
7.4
3.0
128.2
131.2
4.1
134.5
138.6
1.21
1.33
1.31
1.08
1.13
1.12
1.11
1.13
1.13
0.1
0.3
0.4
0.1
4.6
4.7
0.2
4.9
5.1
Table 4: Summary of Namdini’s Proved and Probable Mineral Reserve estimate at 0.5 g/t Au cut off – April 3,
2019.
Table 4 Notes:
1.
2.
3.
4.
5.
The Mineral Reserve reported in accordance with JORC Code 2012 guidelines and Canadian Institute of Mining, Metallurgy
and Petroleum “CIM Definition Standards for Mineral Resources and Mineral Reserves” (CIM, 2014).
The Mineral Reserve was evaluated using a gold price of USD $1,300 / oz with USD $1,225 / oz optimised pit chosen for
Mineral Reserve pit design to maximise cash flow.
The Mineral Reserve was evaluated using an average cut‐off grade of 0.5 g/t Au.
Ore block grade and tonnage dilution was incorporated through the use of an MIK recoverable resource estimation model
which was demonstrated to incorporate an expected level of equivalent ore loss and dilution for the scale of mining
envisaged.
All figures are rounded to reflect appropriate levels of confidence. Apparent differences may occur due to rounding.
The mine design and Mineral Reserve estimate is based on the Mineral Resource model of April 3, 2019.
Trial open pit optimisations were run in Whittle 4XTM software to define the base of potentially economic material.
Four cut back pits were then selected and full mine designs applied.
The Measured and Indicated Mineral Resource are inclusive of those Mineral Resources modified to produce the
Mineral Reserves.
Management’s Discussion & Analysis June 30, 2019
Page 8 of 42
Project Development and Finance Update
Project Finance Adviser, Cutfield Freeman & Co, has been working closely with Cardinal to ensure that Cardinal is
well positioned to execute project finance for the Namdini Gold Project as swiftly as possible following completion
of the Feasibility Study.
There has been substantial interest received from a range of potential financiers, providing the Company with a
strong degree of confidence that it will be capable of securing the required project funding package on favourable
terms.
Cardinal’s Project Finance team is continuing to evaluate Indicative Term Sheets from a number of project
financiers including traditional senior debt lenders to possible corporate scenarios.
Project Development Partners
COMPANY
Lycopodium
Golder Associates
Orway Minerals Consultants
ALS Laboratory (Perth)
ROLE
Feasibility Study Managers. Process plant and associated
infrastructure. Capital and Process Operating cost
estimation.
Mine design, planning, optimisation and scheduling.
Geotechnical, Hydrology and Hydrogeological engineering.
Mine operational costs and compilation of the JORC (2012)
and NI 43‐101 Technical reports.
Comminution data analysis, crushing and grinding option
studies.
Metallurgical testwork to support the process design
criteria.
Knight Piésold Consulting
Tailings Storage Facility and selected infrastructure design.
Independent Metallurgical Operations
Metallurgical testwork management, analysis and process
flowsheet development.
MPR Geological Consultants
Mineral Resource modelling of the Namdini Deposit.
Orefind
Geology and deposit structural genesis.
Sebbag Group International
Mine Design Review.
NEMAS Consult & Geoscience Consulting
Environmental Impact Assessment Study.
Whittle Consulting
Alastri Software
Enterprise Optimisation of the Namdini Project.
Tactical Scheduling, Haulage Modelling and Stockpile
Management Software.
Maelgwyn Mineral Services Africa
AachenTM process metallurgical optimisation.
BDO Advisory
MKM Social
Financial Model Integrity & Reviewer (PEA, PFS and FS).
Socio‐Economic Study and Resettlement Action Plan.
Table 5: Study Team
Management’s Discussion & Analysis June 30, 2019
Page 9 of 42
Project Metallurgical Update
Cardinal has been working with Maelgwyn Mineral Services Africa (MMSA) for approximately two years. Initial
positive leach results were returned from MMSA laboratories in South Africa from pilot scale testwork utilising the
AachenTM process which has led the Company to further the testwork as results were highly encouraging. These
results were announced in ASX/TSX announcement on June 4, 2019. AachenTM is a relatively simple, proven
process being used by several gold producers. These operations have consistently demonstrated an uplift in gold
recoveries.
Testwork on integrating the AachenTM process into the Namdini flowsheet demonstrated potential to increase
gold recovery for the Life of Mine study and also suggested an increase in the regrind size from sub 10 microns
(µm). Further substantial testwork is ongoing to consider the optimal regrind size and target recovery. A detailed
cost benefit analysis is underway as part of the programme.
Feasibility Study Update
Cardinal continued with its feasibility study (FS) engineering consultants in detailing the Namdini Gold Project
design for further mining, processing and infrastructure definition. A number of site visits have been held to
further define:
Infrastructure (Knight Piesold):
Further geotechnical testing of the waste dump, tailings storage facility, water storage facility,
air strip and access road;
o Geological testing included test pitting of 124 different locations within the project
area
A walkover survey of site was carried out in order to inspect the existing terrain in relation to the
proposed infrastructure developments and potential borrow sources. A series of observations
and photographs were collected during the walkover/inspection of the water storage facility site,
airstrip site, access road alignment, potential drainage medium and concrete aggregate sources,
process plant site and open pit footprint;
Bulk samples of sand were collected from a tributary of the White Volta River approximately 5km
from Namdini in order to assess its suitability for use as drainage medium in construction of the
TSF;
Three existing rock quarries located near to the town of Pwalugu 26 km from the Namdini Project
on Highway 10 to Bolgatanga were visited in order to inspect the quarry operations, to sample
the quarry products for suitability testing for use as fine and coarse concrete aggregate and to
source typical prices for the various construction products; and
Representative samples of in‐situ soils were collected from test pits and boreholes for lab testing.
In‐country Construction Capability (Lycopodium):
Meeting with in‐country contractors and suppliers to ascertain capacity, capability and workload
with the intent to select potential contractors and commence prequalification;
Improve understanding of local procurement availability;
Gain detailed insight into the local and government authorities involved with the project approval
process regarding construction;
Management’s Discussion & Analysis June 30, 2019
Page 10 of 42
Investigate the Government’s list of local procurement suppliers suitable for the Namdini Gold
Project;
Perform due diligence on construction plant and equipment availability in‐country; and
Ascertain transportation and logistics requirements.
Maelgwyn Minerals South Africa (MMSA) Visit (Lycopodium and Cardinal Team):
Visits to the MMSA laboratory facilities in Johannesburg, South Africa and three mining
operations where the Aachen™ process is currently operating occurred in March and June 2019;
These visits were highly informative and encouraging in demonstrating successful scale up of the
Aachen™ reactor from bench top and pilot laboratory testwork to full scale operationand its
applicability to Namdini; and
MMSA offer a full installation and maintenance lease programme for their units, which have been
proven to be successful by a number of gold producers.
The mining design at Namdini has focused on maximising value in extracting and processing the higher‐grade areas
of the pit during the initial years of production. Multiple mining schedules are being assessed with the best case
being selected, including capital cost payback, profitability as well as sustainability.
The Namdini flowsheet design has been updated to include the AachenTM unit which will be installed as part of
the pre‐leach aeration tank after the regrind circuit. The unit is effortlessly installed and requires a minimum
footprint.
The FS engineering design for the process facility and associated infrastructure is nearing completion. Cardinal’s
engineering consultants, Lycopodium, have solicited detailed quotations and tenders for a principle equipment
and materials in the design. Local companies have been approached to provide budget pricing for potential supply
of construction materials and labour.
The capital and operating cost estimates are being populated with all recent tenders, quotations and data which
will be developed into fully costed estimates, delivering a well‐rounded feasibility study.
Environmental and Social Update
Developing a successful and sustainable gold mine is a key focus for Cardinal, as part of our Corporate Social
Responsibility in ensuring Social Licence, including local and national participation, social and community uplift,
whilst ensuring environmental rehabilitation and where possible enhancement. Cardinal currently employs three
local consultants for its Environment Protection Agency (EPA) approval process and Relocation Action Plan (RAP)
process. All environmental applications have been submitted and public hearings were recently concluded with
no objections and positive feedback. It is anticipated that the necessary approvals and permitting will be in place
by the end of this year.
Project Development Timeline
The Company continues to aim for delivery of the Feasibility Study by end of Q3 2019 upon receiving completed
laboratory testwork, checks and sign‐offs being delivered by Maelgwyn using its Aachen Process (ASX/TSX press
release June 4, 2019).
The following schedule is subject to available funding, positive outcomes for the FS and favorable timelines for
permitting;
Management’s Discussion & Analysis June 30, 2019
Milestone
Completion of PFS (Completed)
Completion of FS
Final Investment Decision
Target Production Commencement
Page 11 of 42
Target Timeline
Q3 2018
Q3 2019
Q4 2019
H2 2022
Table 6: Namdini Project Development Timeline
Namdini Drilling
Programme
Starter Pit Infill drilling
Sterilization Drilling
Southern Extension
Totals
No.
Holes
13
51
3
67
RC
(m)
1,137
5,251
‐
Total
DD
(m)
(m)
857.5
1,994.5
423.92 5,674.92
597.08
597.08
8,266.5
6,388.0 1,878.5
No.
Samples
2,003
5,675
605
8,283
No.
Duplicates
55
253
‐
308
No.
Blanks
47
135
15
197
No.
Stds
49
135
14
198
Total
Samples
2,154
6,198
634
8,986
Namdini Starter Pit Infill Drilling
Table 7: Namdini Drilling
A total of 8 reverse circulation (“RC”) and 5 diamond drill (“DD”) holes were drilled on the Namdini tenement for
a total of 1,994.5m with 2,154 samples, including QAQC controls, submitted to SGS Ghana laboratory for gold
analysis using the Fire Assay analytical method (Table 7).
The program was successfully completed in Q2 2019. The aim of this program was to test the current Mineral
Resource model (ASX/TSX Press Release April 3, 2019 and April 18, 2019) with the closely spaced drilling over a
selected area within the proposed starter pit which will provide the first two to three years of mill feed.
The close spaced infill drilling programme, within the proposed starter pit, confirms the robustness of the Mineral
Resource, thereby providing higher confidence in predicting operational outcomes. (please see ASX/TSX
announcement July 16, 2019).
Further drilling is planned for next financial year over this starter pit area.
Namdini Infrastructure Sterilization Drilling
A total of 50 RC and 1 DD sterilization holes were drilled within Namdini Mining License for a total of 5,674.92m
with 6,198 samples, including QAQC controls, submitted to Intertek Ghana laboratory for gold analysis using the
Fire Assay analytical method (Table 7). No significant mineralisation was intersected.
This drilling was conducted over the northern area of the mining lease and also covered the proposed plant area.
Further drilling is planned for next financial year over other proposed infrastructure areas to assess the suitability
of tails storage areas and waste / low grade stockpile dumps and to ensure that potential mineralisation is not
sterilized by construction of any infrastructure.
Namdini Southern Extension Drilling
3 DD holes were completed in the southern extension area of the Namdini deposit for a total of 597.08m with 634
samples, including QAQC controls, submitted to SGS Ghana laboratory for gold analysis using the Fire Assay
analytical method (Table 6). Assays results for this drilling are still pending and the results will be analyzed in Q3
2019.
Drilling in this area was to determine whether the mineralization extended to the south of the current planned
open pit. Further drilling is planned during this current quarter.
Management’s Discussion & Analysis June 30, 2019
Page 12 of 42
REGIONAL EXPLORATION UPDATE
The Company has two exploration projects: The Bolgatanga Project which includes the Bongo, Kungongo and
Ndongo Prospecting License Areas (Figure 3) and the Subranum Project located in southwest Ghana (Figure 1). No
exploration activities were completed on the Subranum project during this quarter.
The main focus of the Company’s DD and RC drilling was on the highly prospective areas along the Nangodi Shear
Zone (within Ndongo) during this quarter. Detailed ground geophysical surveys were also ongoing over the
Ndongo License area during the quarter. During the first six months of 2019, Cardinal reported several
intersections of high‐grade gold at its new Ndongo East discovery within the Ndongo License (refer to news
releases dated January 23, 2019 and March 27, 2019).
*7.4Mt @ 1.31g/t Au for 0.4Moz Au Proved and 131.2Mt @ 1.12g/t Au for 4.7Moz Au Probable; 0.5g/t Au cutoff
Figure 3: Bolgatanga Project Tenements
Management’s Discussion & Analysis June 30, 2019
Page 13 of 42
BOLGATANGA PROJECT
Ndongo License Area
The Company has continued to concentrate its exploration focus this quarter on the Ndongo License which covers
an area of 295km2 (Figure 3). Exploration has defined seven prospects (Figure 4) totalling 70km in strike length
only 15‐25km north of the Namdini Gold Project.
The Nangodi Shear Zone which lies within the Ndongo tenement 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 4). In addition, there are numerous
historic shallow artisanal workings along many parts of this shear zone.
Ndongo East Prospect
A total of 13 DD holes were drilled on the Ndongo East Prospect during the quarter for a total of 817.56m with
872 samples, including QAQC controls, submitted to SGS Ghana analytical laboratory for analysis for gold using
the Fire Assay analytical method (Table 8). Please see ASX/TSX announcement March 27, 2019.
Prospect
Ndongo
East
Drill
Method
DD
No.
Holes
13
Total
(m)
817.56
No.
Samples
831
Duplicates
Blanks
Stds
‐
19
22
Total
Samples
872
Table 8: Exploration Drilling for Q2 2019
The Ndongo East Prospect is located within NE‐SW trending Birimian metavolcanics and metasediments.
During this quarter, a recently completed diamond drilling program has intercepted further high‐grade gold zones
(ASX/TSX release July 10, 2019) (Figure 5). Results provide further confidence in the potential to define high grade
satellite pits within hauling distance of the Namdini Gold Project.
Currently, two diamond rigs continue to test the strike and depth extents of the mineralised system of this
prospect. Geophysical surveys and auger soil drilling programmes are underway to identify additional drill targets
within the much broader target area spanning approximately 7km.
Best intercepts in the new holes reported this quarter include:
o 5.3m @ 13.9g/t Au from 78m in NDDD063
o 5.5m @ 3.8g/t Au from 31m in NDDD072
o 3.7m @ 3.3g/t Au from 59m in NDDD064
o 2.7m @ 7.7g/t Au from 19m in NDDD068
o 2.0m @ 18.3g/t Au from 59m in NDDD066
Gold mineralisation at Ndongo East is confined to specific gold–bearing, pyrite‐silica‐ankerite carbonate altered,
shear zones which dip to the northwest. Drilling indicates two orientations to the mineralisation, namely a steeply‐
dipping northwest orientation and a shallower west‐southwest plunging orientation.
A marker horizon comprising a very narrow, thinly bedded, black pyritic mudstone has been observed to occur at
the base of the mineralised intersections within the metavolcanics and could mark a hiatus in the continuation of
volcanic activity in the area. Although this marker horizon appears to be unrelated to mineralisation within the
metavolcanics, it will be a very useful marker as more shallow diamond drilling is completed further along strike.
The mineralised system is open along a northeast‐southwest strike and at depth with multiple mineralised
intersections. The high‐grade mineralised structures have been tested to a shallow depth of approximately 70m
vertically below surface.
Management’s Discussion & Analysis June 30, 2019
Page 14 of 42
Figure 4: Ndongo Prospecting License showing local prospects
Management’s Discussion & Analysis June 30, 2019
Page 15 of 42
Figure 5: Ndongo East Prospect with drill locations showing NE‐SW mineralised structures open along strike.
Management’s Discussion & Analysis June 30, 2019
Page 16 of 42
Kungongo Tenement
The Kungongo License is located in northeast Ghana some 40km west of the Company’s Namdini Gold Project.
The License covers an area of 122km2 and is a renewable Exploration License (Figure 3).
No exploration activities were completed on this tenement during the quarter.
Bongo Tenement
The Bongo Licence covers an area of 453km2 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).
No exploration activities were completed on this tenement during the quarter.
SUBRANUM PROJECT
The Subranum Project covers an area of 69km² located in southwest Ghana. The license straddles the eastern
margin of the Sefwi Gold Belt which is bounded by the regional Bibiani Shear Zone (“BSZ”) stretching about 200km
across southwestern Ghana.
There is 9km of the BSZ developed within the Subranum license trending NE to SW. The BSZ forms a very
prospective, sheared contact between Birimian phyllites and greywackes to the southeast and mafic to
intermediate volcanics and volcaniclastics to the northwest. Granitoid stocks of the Dixcove suite intrude this
shear zone.
The portion of the Bibiani Shear Zone occurring within the Subranum tenement is 9km long, trending SW to NE.
Previous extensive exploration has outlined a 5km long gold target, extending from the SW tenement boundary
towards the NE, with the remaining 4km of the 9km strike length remaining relatively unexplored.
Only a very small portion of this 5km long gold target was diamond drilled during drilling programmes in 2018.
No exploration activities were undertaken on this tenement during this quarter.
TENEMENT SCHEDULE (ASX Listing Rule 5.3.3).
The following mining tenement information is provided pursuant to ASX Listing Rule 5.3.3. No tenements in part
or whole were relinquished, surrendered or otherwise divested during the quarter ended 30 June 2019.
Tenement
License Status
Ref
Interest
Acquired
During
Quarter
Interest
Divested
During
Quarter
Interest Held
at End of
Quarter
Ghana
Bolgatanga Project
Ndongo
Prospecting
Kungongo
Bongo
Prospecting
Prospecting
PL9/13,
PL9/19,
PL9/22 &
PL936
RL9/28
PL9/29,
PL9/37 &
PL9/38
Namdini Project
Namdini
Subranum Project
Subranum
Mining License
LVB14619/09
Prospecting
PL/309
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
100%
100%
100%
100%
100%
Management’s Discussion & Analysis June 30, 2019
Page 17 of 42
Competent / Qualified Person Statement
All production targets for the Namdini Gold Mine referred to in this MD&A 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.
Scientific and technical information contained in this MD&A pertaining to the AachenTM was reviewed by Mr. Daryl
Evans, Independent Metallurgical Operations Pty Ltd (IMO), who is a ‘qualified person’ as defined by National
Instrument 43‐101 Standards of Disclosure for Mineral Projects (“NI43‐101”). Mr. Evans holds a Qualified
Professional status being a fellow of the Australasian Institute of Mining and Metallurgy (FAusIMM). IMO is an
independent consulting firm appointed by Cardinal. IMO and Mr. Evans consent to the inclusion of the matters in
this MD&Aof the statements based on the information in the form and context in which it appears.
The information in this MD&A 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 MD&A of the matters based on his information in the form and
context in which it appears.
The information in this MD&A 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 MD&A of the matters based on his information in the form and
context in which it appears.
The scientific and technical information in this MD&A that relates to the Exploration Results, Mineral Resources
and Ore Reserves at 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, 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”. Mr. Abbott is a full‐time employee of
Cardinal and holds equity securities in the Company.
JORC 2012 (ASX Listing Rule 5.23.2)
This MD&A contains information extracted from the following reports which are available for viewing on the
Company’s website www.cardinalresources.com.au:
o 16 July 2019
o 10 July 2019
Cardinal’s Starter Pit Infill Drilling Results
Cardinal Reports Further Shallow High‐Grade Gold
Management’s Discussion & Analysis June 30, 2019
Page 18 of 42
Positive Metallurgical Update on the Namdini Project
Addendum to Namdini Ore Reserve Press Release
Feasibility Study and Project Finance Updates
Cardinal’s Namdini Ore Reserve Now 5.1 Moz
o 04 June 2019
o 18 April 2019
o 10 April 2019
o 03 April 2019
o 27 March 2019 Cardinal Intercepts High‐Grade Shallow Gold at Ndongo East
o 23 Jan 2019
Cardinal Hits More High‐Grade Shallow Gold at Ndongo East
o 28 Nov 2018 New Drill Season hits high‐grade shallow gold at Ndongo East
o 18 Sept 2018
Cardinal Namdini Pre‐Feasibility Study 4.76Moz Ore Reserve
o 29 Aug 2018
Cardinal Extends Ndongo East Discovery Strike Length
o 31 July 2018
Cardinal Executes U$5 Million Term Sheet with Sprott
o 16 July 2018
Cardinal Makes New Gold Discovery at Ndongo East
o 28 May 2018
Encouraging First Pass Gold Results at Ndongo
o 19 April 2018
Technical Report on Namdini Gold Project Filed on SEDAR
o 04 April 2018
First Pass Regional Exploration Drilling Underway
o 05 Mar 2018
Cardinal Upgrades Indicated Mineral Resource to 6.5Moz
o 22 Feb 2018
Cardinal Infill Drilling Results Returned
o 05 Feb 2018
Namdini Gold Project Preliminary Economic Assessment
o 22 Jan 2018
Namdini Infill Drilling Results Returned
o 14 Dec 2017
Namdini Drilling and Regional Exploration Update
o 12 Dec 2017
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 MD&A 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, 2019
Page 19 of 42
SELECTED ANNUAL INFORMATION
The following table provides information for the year ended June 30, 2019, 2018 and 2017:
June 30, 2019
June 30, 2018
June 30, 2017
Exploration and evaluation expenditures
$ 14,940,749
$ 26,747,592
$ 15,794,617
Corporate general and administration
Share based payments
Amortisation
Net comprehensive loss
Loss per share – basic and undiluted (cents)
Total assets
Total liabilities
Total non‐current financial liabilities
Shareholders’ equity
10,407,136
1,792,292
314,731
27,050,962
7.12
20,834,148
38,975,858
35,604,680
(18,141,710)
5,945,652
4,742,362
217,454
37,182,844
10.22
10,241,614
4,766,976
‐
5,474,638
3,637,864
1,964,324
426,572
21,790,704
7.12
30,109,678
3,903,107
‐
26,206,571
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.
During the year ended June 30, 2019 exploration and evaluation expenditures have decreased from comparable
period due to the Company ramp up of exploration during the period ended June 30, 2018 which included the
preparation of an initial resource estimated through resource drilling. Infill exploration at Namdini is now minimal
as the Company prepares its feasibility study.
During the year ended June 30, 2018 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.
The Company’s focus during the year ended June 30, 2019 was completion of the feasibility study at the Namdini
Project.
In conjunction with the reduced expenditure at Namdini, there is also reduced exploration expenditure on the
Bongo, Kungongo and Subranum Projects.
During the year ended June 30, 2019, minimal expenditures were incurred on the Bolgatanga Project and
Subranum Project.
The Company’s corporate general and administration expenses have increased from the prior year due to an
increase in the costs of the Company, which includes the Facility. There have been no significant changes to staff
from the year ended June 30, 2019 and 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
Management’s Discussion & Analysis June 30, 2019
Page 20 of 42
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.
Share based payments have decreased due to the Milestone 1 hurdle, being the completion of a PEA, being
achieved in February 2018 and being fully expensed.
The variances in total assets and shareholders’ equity are mainly attributable to the Company entering into
the Facility and increasing the liabilities of the Company.
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:
June 30, 2019
March 31, 2019
Exploration and evaluation expenditures
Corporate general and administration
Share/Option based payments
Amortization
Net comprehensive loss
Loss per share – basic and undiluted (cents)
$ 6,426,350
2,065,569
984,879
101,981
9,497,304
2.48
$ 3,148,110
2,793,398
437,274
68,386
6,332,902
1.62
June 30, 2018
March 31, 2018
Exploration and evaluation expenditures
Corporate general and administration
Share/Option based payments
Amortization
Net comprehensive loss
Loss per share – basic and undiluted (cents)
$ 3,653,287
1,646,341
899,469
67,080
6,148,313
1.62
$ 4,640,781
1,151,889
1,582,306
50,674
7,357,850
1.87
December 31,
2018
$ 2,677,484
3,207,356
(206,785)
58,632
5,621,705
1.51
December 31,
2017
$ 8,978,587
1,833,531
1,107,762
62,813
12,249,188
3.29
September 30,
2018
$2,688,805
2,340,813
576,924
85,732
5,599,051
1.51
September 30,
2017
$ 9,474,793
1,313,891
1,152,825
36,887
12,066,104
3.44
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.
Since March 31, 2018 exploration and evaluation expenditure has remain consistent. In February 2018 the
Company published its Preliminary Economic Assessment at Namdini which included the preparation of an initial
resource estimated through resource drilling.
A Pre‐Feasibility Study at Namdini was published in September 2018 and a feasibility study is expected to be
released in the September 2019 quarter. Infill exploration at Namdini is now minimal as the Company prepares
its feasibility study.
During the year ended June 30, 2019, minimal expenditures were incurred on the Bolgatanga Project and
Subranum Project.
Management’s Discussion & Analysis June 30, 2019
Page 21 of 42
The Company’s corporate general and administration expenses have increased from the prior year due to an
increase in the costs of the Company, which includes the Facility. There have been no significant changes to staff
from the year ended June 30, 2019 and June 30, 2018 and as a result these 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.
Share based payments have decreased due to the Milestone 1 hurdle, being the completion of a PEA, being
achieved in February 2018 and being fully expensed.
The movement in total assets and shareholders’ equity are mainly attributable to the Company entering into
the Facility and increasing the liabilities of the Company.
As the Company is in the exploration stage, it does not generate operating revenue.
The increase in total liabilities for the year ended June 30, 2019 is mainly attributable to the Facility.
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,
Twelve months ended June 30,
2019
2018
$ 6,426,350
2,065,569
984,879
101,981
107,064
25,589
$ 3,653,287
1,646,341
899,469
67,080
33,006
193,028
2019
$ 14,940,749
10,407,136
1,792,292
314,731
365,859
(38,087)
2018
26,747,592
5,945,652
4,742,362
217,454
174,313
295,903
9,497,304
6,040,143
27,050,962
37,182,844
Management’s Discussion & Analysis June 30, 2019
Page 22 of 42
For the three months ended June 30, 2019, exploration and evaluation expenditures increased from
comparable periods due to the increase in exploration activities at the Namdini Gold Project, which
included infill drilling. There was minimal expenditures on the Bongo, Kungongo and Subranum Projects.
For the twelve months ended June 30, 2019, exploration and evaluation expenditures decreased from
comparable periods due to in February 2018 the Company published its Preliminary Economic Assessment
at Namdini which included the preparation of an initial resource estimated through resource drilling.
The Company’s corporate general and administration expenses have increased from the prior year due to an
increase in the costs of the Company, which includes the Facility. There have been no significant changes to
staff from the year ended June 30, 2019 and June 30, 2018 and as a result the expenses are regular.
Incremental costs were incurred in respect of the staffing, legal fees, office rental, professional fees and
investor relations costs.
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.
For the three and twelve months ended June 30, 2019 and 2018, exploration and evaluation expenditures
comprise:
Three months ended June 30,
2018
2019
Twelve months ended June 30,
2019
2018
Direct exploration costs
Indirect exploration costs
Site general and administration costs
4,806,918
943,975
2,788,986
590,126
675,457
274,175
Exploration and evaluation expenditures
6,426,350
3,653,287
10,417,041
2,697,315
1,826,393
14,940,749
19,352,705
5,189,502
2,205,385
26,747,592
Direct and indirect exploration costs increased for three months ended June 30, 2019, compared to the same
period in 2018, mainly due to the execution of the infill drill program to define and to upgrade gold resources at
Namdini.
Direct and indirect exploration costs decreased for twelve months ended June 30, 2019, compared to the same
period in 2018, due to in February 2018 the Company published its Preliminary Economic Assessment at Namdini
which included the preparation of an initial resource estimated through resource drilling.
The cost in 2018 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.
Site general and administration costs decreased for the twelve months ended June 30, 2019, compared to the
same period in 2018, mainly due to decrease salaries, office and administrative, professional fees and travel
expenses associated with the decreased activities at Namdini and Ndongo.
Corporate, General and Administration Expenses
The Company’s corporate general and administration expenses have increased from the prior year due to an
increase in the costs of the Company, which includes the Facility. There have been no significant changes to staff
from the year ended June 30, 2019 and June 30, 2018 and as a result these expenses are regular.
Management’s Discussion & Analysis June 30, 2019
Page 23 of 42
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
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.
Share based payments have decreased due to the Milestone 1 hurdle, being the completion of a PEA, being
achieved in February 2018 and being fully expensed.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
As at June 30, 2019, the Company had cash and cash equivalents of $18,735,456 (June 30, 2018 ‐ $7,303,807)
and current liabilities of $3,371,178 (June 30, 2018 ‐ $4,766,976).
As at June 30, 2019, the Company had a working capital balance of $15,620,928 (June 30, 2018 ‐
$3,517,055).
On August 22, 2018 the Company secured a credit facility with Sprott Private Resources Lending
(Collector), L.P. The committed facility was for US$25 million (AU$34 million)
The increase in cash and working capital from June 30, 2018 to June 2019 was $12,103,873 and was
primarily due the Company increasing its cash and cash equivalents with the credit facility.
Funds raised from the credit facility are being used toward continued advancement and development of
the Company’s Projects and general working capital purposes. 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
$5,480 per month, the lease is for five years from 8 January 2019.
The Corporation has commitments in respect to the use of an office outside of Australia, for C$2,702 per month
until 31 March 2021.
Management’s Discussion & Analysis June 30, 2019
Page 24 of 42
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 (Ghana), 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 (“Royalty Deed”)
in January 2018, whereby Cardinal Namdini will pay to Savannah Mining Limited (“Savannah”) a net smelter return
royalty (“Net Smelter Return”) equal to:
a) 4% of the Net Smelter Return on the first 50,000 ounces of Specified Minerals (as defined in the Royalty Deed)
produced within each small‐scale license which was purchased by Savannah within the Large Scale Mining
License (as defined in the Royalty Deed); and
b) 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”) in 2017 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 Company has commitments in respect to the Facility. The key terms of the Facility are as follows:
Committed loan facility of US$25 million;
30‐month repayment term, being 28 February 2021;
50% of the interest is capitalised and payable on loan maturity.
Interest rate of LIBOR + 7.75%.; and
The credit facility is secured against assets of Cardinal and its wholly owned subsidiary, Cardinal Namdini Mining
Limited.
(i) Loan Covenants
Cardinal Resources has complied with the financial covenants of its credit facility during the June 30, 2019
reporting period.
a) Under the terms of the credit facility, Cardinal’s working capital ratio shall be equal to or greater than 1.20 to
1.00; and
b) The amount of Cardinal’s unrestricted cash is greater than US$2,500,000 or if, denominated in AU$ equivalent
to US$2,500,000.
Cardinal has complied with these covenants throughout the report period.
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.
Management’s Discussion & Analysis June 30, 2019
Page 25 of 42
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 (the “Board”) has overall responsibility for the determination of the Company’s risk
management objectives and policies and, whilst retaining ultimate responsibility for them, it has delegated the
authority for designing and operating processes that ensure the effective implementation of the objectives and
policies to the Company’s management.
The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly
affecting the Company’s competitiveness and flexibility.
The Company’s risk exposure and the impact on the Company’s financial instruments are summarized below:
Credit Risk
Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet
its contractual obligations. The Company’s credit risk is primarily attributable to its cash and cash equivalents.
The Company limits exposure to credit risk by maintaining its cash and cash equivalents with large financial
institutions.
Current – cash at bank
Term deposits
Liquidity Risk
June 30, 2019
June 30, 2018
4,503,464
14,231,992
18,735,456
2,819,794
4,484,013
7,303,807
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, 2019, the Company had cash and cash equivalents of $18,735,456 (June 30, 2018 ‐ $7,303,807)
available and current liabilities of $3,371,178 (June 30, 2018 ‐ $4,766,976). 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.
Management’s Discussion & Analysis June 30, 2019
Page 26 of 42
As at June 30, 2019, the Company is exposed to currency risk through the following financial assets and liabilities
denominated in currencies other than the Australian dollar:
2019
Net Financial Assets/(Liabilities) In AUD
Australian dollar
GHS New Cedi
Statement
of
position exposure
2018
AUD
3,935,628
USD
(24,128,328)
financial
‐
3,935,628
‐
(24,128,328)
GHS
85,202
‐
85,202
CAD
(47,842)
‐
(47,842)
Total AUD
(20,155,34
0)
‐
(20,155,340)
Net Financial Assets/(Liabilities) In AUD
Australian dollar
GHS New Cedi
Statement
of
position exposure
financial
AUD
3,843,939
‐
USD
374,412
‐
GHS
(523,034)
‐
CAD
(138,277)
‐
Total AUD
3,557,040
‐
3,843,939
374,412
(523,034)
(138,277)
3,557,040
Based on the statement of exposure at 30 June 2019, a 1% movement in foreign exchange rates would
increase/decrease the loss for the year before taxation by $343,065 (2018: $3,585).
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).
Management’s Discussion & Analysis June 30, 2019
Page 27 of 42
As at June 30, 2019 and June 30, 2018, the Company’s financial instruments are comprised of cash and cash
equivalents, other receivables, value added tax receivable, accounts payable and accrued liabilities, and due to
related parties. With the exception of cash and cash equivalents, all financial instruments held by the Company
are measured at amortized cost.
CAPITAL MANAGEMENT
The Company’s objective when managing capital is to safeguard the Company’s ability to continue as a going
concern in order to advance its mineral properties. The Company defines its capital as all components of equity
and short‐term debt. The Company manages its capital structure and makes adjustments to it to effectively
support the acquisition and exploration of mineral properties. The property in which the Company currently
has an interest is in the exploration stage; as such, the Company is dependent on external financing to fund its
activities.
The Company will spend its existing working capital and seek to raise additional amounts as needed by way of
equity financing or debt to carry out its planned corporate development and general administrative costs.
The Company will continue to assess new properties and seek to acquire an interest in additional properties if it
feels there is sufficient geologic or economic potential and if it has adequate financial resources to do so.
Management reviews its capital management approach on an ongoing basis and believes that this approach,
given the relative size of the Company, is reasonable. The Company’s investment policy is to hold cash in interest‐
bearing bank accounts or highly liquid short‐term interest‐bearing investments with maturities of one year or
less and which can be liquidated at any time without penalties. The Company is not subject to externally
imposed capital requirements and does not have exposure to asset‐backed commercial paper or similar
products. The Company expects its current capital resources to be sufficient to cover its operating costs and to
carry out its exploration activities through the next twelve months. As such, the Company will seek to raise
additional capital and believes it will be able to do so, but 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, 2019.
RELATED PARTY TRANSACTIONS
The Company had transactions during the three and twelve months ended June 30, 2019 with related parties
consisting of directors, officers and companies with common directors and/or officers:
Namdini Gold Project
During the year ended 30 June 2019, Cardinal Resources Limited has advanced funds to Savannah 2019: nil (2018:
$4,000,674), a related entity to Director Mr Malik Easah. The purpose of an advance was for the 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 MD&A, $280,300 (2018: $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 total $309,624 (2018: $$337,218).
HopgoodGanim Lawyers of which Michele Muscillo, a director, is a partner of, provided legal services to the
Company. Amounts that have been paid or payable total $5,028 (2018: $$3,506).
Management’s Discussion & Analysis June 30, 2019
Page 28 of 42
Robert Schafer, a director, provided consulting services to the Company. Amounts that have been paid or payable
total $0 (2018: $12,911). 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.
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
Termination payments
Three months ended June 30,
2018
2019
Twelve months ended June 30,
2018
2019
$ 280,589
18,537
‐
323,908
‐
$ 403,203
23,943
‐
478,619
‐
$ 1,175,732
90,199
3,800
1,183,751
67,126
$ 1,239,277
38,850
4,268
2,955,160
‐
$ 623,034
$ 905,765
$ 2,520,608
$ 4,237,555
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
387,028,921
106,916,696
8,867,817
24,878,198
6,000,000
533,691,632
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 of the Corporation, 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 October 31, 2018, 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 31, 2018.
Listed Options
Details of listed options (ASX: CDVOA) outstanding as of the date hereof are:
Listed Options
September 30, 2019
106,916,696
Expiry
Number of Options
Weighted Average
Exercise Price
$0.15
Management’s Discussion & Analysis June 30, 2019
Page 29 of 42
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 or required by the TSX. The milestone options were not issued under the
Company’s stock option plan.
The following is a summary of share purchase options activity for the three and twelve months ended June 30,
2019:
Grant
Date
03.18.16
04.03.17
12.21.17
12.21.17
12.21.17
11.04.19
11.04.19
12.03.19
Weighted average exercise price $0.57
Expiry
Date
03.18.20
04.12.22
12.21.22
12.21.22
12.21.22
12.21.22
12.21.22
12.03.21
Exercise
Price
$0.220
$0.500
$0.750
$0.825
$0.965
$0.680
$0.590
$1.000
Opening
Balance
6,000,000
18,500,000
1,000,000
5,758,000
4,036,200
‐
‐
‐
During the period
Granted
nil
nil
nil
nil
nil
2,180,049
2,180,049
1,867,817
Exercised
nil
nil
nil
nil
nil
nil
nil
nil
Expired /
Cancelled
nil
nil
nil
5,758,000
2,018,100
nil
nil
nil
Closing
Balance
6,000,000
18,500,000
1,000,000
‐
2,018,100
2,180,049
2,180,049
1,867,817
Vested and
Exercisable
6,000,000
5,550,000
1,000,000
‐
‐
‐
‐
1,867,817
Unvested
‐
12,950,000
‐
‐
2,018,100
2,180,049
2,180,049
‐
Performance 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
Management’s Discussion & Analysis June 30, 2019
Page 30 of 42
OTHER DATA
Additional information related to the Company, including the Company’s Annual Information Form dated
September 3, 2019 is available for viewing at www.sedar.com.
ADOPTION OF NEW AND AMENDED IFRS PRONOUNCEMENTS
There are a number of new or amended Accounting Standards and Interpretations issued by the IASB that are not
yet mandatory. The Company does not plan to adopt these standards early. The Company’s assessment of the
impact of these new or amended Accounting Standards and Interpretations, most relevant to the Company, are
set out below.
The following accounting standards were issued with an effective date of 1 July 2018:
•
•
IFRS 9: Financial Instruments – The Board has reviewed the new accounting standard and has assessed that
the adoption of the new standard has no impact on the results of the Group for the period ended 30 June
2019; and
IFRS 15: Revenue from Contracts with Customers ‐ The Board has reviewed the new accounting standard and
has assessed that the adoption of the new standard has no impact on the results of the Group for the period
ended 30 June 2019.
Accounting Standards issued by the Australian Accounting Standards Board (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:
•
IFRS 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 IAS 17: Leases and related
Interpretations. IFRS 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 IAS 16: 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 IFRS 16 allow a lessee to either retrospectively apply the Standard to comparatives
in line with IAS 8 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
Management’s Discussion & Analysis June 30, 2019
Page 31 of 42
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,
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, 2019
Page 32 of 42
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, 2019
Page 33 of 42
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.
Borrowing Risk
Lenders to the Company, including Sprott as primary lender under the Facility, impose covenants and obligations
on the part of the Company to maintain the good standing of the agreements and security arrangements of the
borrowed funds. In particular, the Facility contains certain covenants and representations and warranties, the
breach of which could result in a default and the acceleration of maturity of the Facility, the lender realizing on its
security, or diminished availability of refinancing alternatives or increase the associated costs thereof. Though the
Company anticipates being able to remain in compliance with all positive covenants under its credit arrangements,
there is no assurance that unforeseen events or circumstances may lead to the breach of the Company’s
obligations to its lenders, under the Facility or otherwise, which, if not waived by the lender, would have a material
adverse impact on the Company.
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.
Management’s Discussion & Analysis June 30, 2019
Page 34 of 42
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,
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.
Foreign currency risk
Exposure to foreign currency risk may result in the fair value or future cash flows of a financial instrument
fluctuating due to movement in foreign exchange rates of currencies in which the Company holds financial
instruments which are other than the AUD functional currency of the Company.
With instruments being held by overseas operations, fluctuations in the US dollar and Ghanaian Cedis may impact
the Company’s financial results.
Interest Rate Risk
Exposure to interest rate risk arises on financial assets and financial liabilities recognised at the end of the
reporting period whereby a future change in interest rates will affect future cash flows or the fair value of fixed
rate financial instruments.
The financial instruments that primarily expose the Company to interest rate risk are borrowings (including the
Facility) and cash and cash equivalents.
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
Management’s Discussion & Analysis June 30, 2019
Page 35 of 42
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
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
Management’s Discussion & Analysis June 30, 2019
Page 36 of 42
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
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
Management’s Discussion & Analysis June 30, 2019
Page 37 of 42
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
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.
Management’s Discussion & Analysis June 30, 2019
Page 38 of 42
Stress in the Global Economy
Reduction in credit, combined with reduced economic activity and the fluctuations in the Australian dollar may
adversely affect businesses and industries that purchase commodities, affecting commodity prices in more
significant and unpredictable ways than the normal risks associated with commodity prices. The availability of
services such as drilling contractors and geological service companies and/or the terms on which these services
are provided may be adversely affected by the economic impact on the service providers. The adverse effects on
the capital markets generally make the raising of capital by equity or debt financing much more difficult and the
Corporation is dependent upon the capital markets to raise financing. Any of these events, or any other events
causing turmoil in world financial markets, may have a material adverse effect on the Corporation’s business,
operating results and financial condition.
Current Global Financial Condition
Current global financial conditions have been subject to increased volatility. As such, the Corporation is subject to
counterparty risk and liquidity. The Corporation is exposed to various counterparty risks including, but not limited
to financial institutions that hold the Corporation’s cash, and through companies that have payables to the
Corporation. The Corporation is also exposed to liquidity risks in meeting its operating expenditure requirements
in instances where cash positions are unable to be maintained or appropriate financing is unavailable. These
factors may impact the ability of the Corporation to obtain loans and other credit facilities in the future and, if
obtained, on terms favourable to the Corporation. If these increased levels of volatility and market turmoil
continue, the Corporation’s operations could be adversely impacted and the trading price of the shares could be
adversely affected.
Exchange Rate and Currency Risks
The Corporation undertakes certain transactions denominated in foreign currencies, hence exposures to exchange
rate fluctuations arise. The Corporation does not hedge this exposure. The Corporation manages its foreign
exchange risk by constantly reviewing its exposure and ensuring that there are appropriate cash balances in order
to meet its commitments.
Currency fluctuations may affect the cash flow which the Corporation may 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
Management’s Discussion & Analysis June 30, 2019
Page 39 of 42
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.
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.
Management’s Discussion & Analysis June 30, 2019
Page 40 of 42
“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
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
Management’s Discussion & Analysis June 30, 2019
Page 41 of 42
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, 2019, 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, 2019, the Company’s
internal control over financial reporting was effective and no material weaknesses were identified.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
The Company's management, including the Chief Executive Officer and Chief Financial Officer, does not expect
that its disclosure controls and procedures or internal controls and procedures will prevent all error and all fraud.
A control system, no matter how well conceived and operated, can provide only reasonable, not absolute,
assurance that the objectives of the control system are met. Further, the design of a control system must reflect
the fact that there are resource constraints, and the benefits of controls must be considered relative to their
costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute
assurance that all control issues and instances of fraud, if any, within the Company have been detected. These
inherent limitations include the realities that judgments in decision‐making can be faulty, and that breakdowns
can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts
of some persons, by collusion of two or more people, or by management override of the control. The design of
any system of controls also is based in part upon certain assumptions about the likelihood of future events, and
there can be no assurance that any design will succeed in achieving its stated goals under all potential future
conditions; over time, control may become inadequate because of changes in conditions, or the degree of
compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost‐
effective control system, misstatements due to error or fraud may occur and not be detected.
The Company is required under Canadian securities laws to disclose herein any change in the Company’s internal
control over financial reporting that occurred during the Company’s most recent interim period that has
materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial
reporting. There have been no changes in the Company’s internal control over financial reporting that occurred
Management’s Discussion & Analysis June 30, 2019
Page 42 of 42
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, 2019 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, 2019, 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, 2019
CONSOLIDATED
FINANCIAL
STATEMENTS (II)
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
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
25
26
27
28
29
61
62
63
67
69
DIRECTORS’ REPORT
The Directors of Cardinal Resources Limited submit herewith the annual financial report of Cardinal Resources Limited
for the period 1 July 2018 to 30 June 2019. 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 2019 and at the date of this report are as
follows. Directors were in office for the entire period unless otherwise stated.
Kevin Tomlinson
Special Responsibilities
Appointed
Experience
Non‐Executive Chairman
Member of Technical Committee
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.
Other current listed company
directorships
Former listed directorships in
the last three years
Plymouth Minerals Limited (since June 2017)
Samco Gold Limited (since January 2012)
Centamin Egypt Limited (since January 2012)
Xanadu Mines Limited (May 2017 to April 2019)
Archie Koimtsidis MBA
Appointed
Experience
Managing Director
27 December 2012
Mr Koimtsidis has for the last 28 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 2019
Page 3 of 69
DIRECTORS’ REPORT
Other current listed company
directorships
Former listed directorships in
the last three years
Malik Easah
Special Responsibilities
Appointed
Experience
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.
None
None
Executive Director
Member of Health, Safety, Environment & Social Committee
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.
Other current listed company
directorships
Former listed directorships in
the last three years
Mr Easah is a resident in Ghana.
None
None
Michele Muscillo
Special Responsibilities
Appointed
Experience
Non‐Executive Director
Chairman of the Audit, Risk & Compliance Committee and the Remuneration
and Nomination Committee
11 October 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.
Other current listed company
directorships
Former listed directorships in
the last three years
Xanadu Mines Limited (since August 2017)
Mako Gold Limited (since April 2017)
Aeris Resources (since May 2013)
Orbis Gold Limited which is currently owned by TSX‐Listed SEMAFO Inc.
(TSX:SMF).
Dr Kenneth G. Thomas
Special Responsibilities
Appointed
Non‐Executive Director
Chairman of the Technical Committee. Member of the
Member of Audit, Risk & Compliance Committee, Health, Safety,
Environmental & Social Committee and Remuneration and Nomination
Committee
31 October 2018
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2019
Page 4 of 69
DIRECTORS’ REPORT
Experience
Other current listed company
directorships
Former listed directorships in
the last three years
Trevor Schultz
Special Responsibilities
Appointed
Experience
Other current listed company
directorships
Former listed directorships in
the last three years
Dr. Thomas has over 45 years in the mining industry with experience in
project development, construction and operations. Until July 2012 he was
Senior Vice President, Projects, Kinross Gold Corporation and previously, for
6 years, a Global Managing Director and Board Director at Hatch Ltd, a leading
international engineering and construction firm.
From 1987 to 2001 he served in progressively senior roles at Barrick Gold
Corporation to Senior Vice President, Technical Services. Prior to Barrick Gold
Corporation, he also worked for 10 years in Zambia and South Africa with
Anglo American Corporation.
Ken has a doctorate in Technical Sciences (Project Implementation) from
Delft University of Technology and in 2001 he was awarded the Selwyn G.
Blaylock Medal by the Canadian Institute of Mining, Metallurgy and
Petroleum (CIM) for advancements in mining internationally. In addition, he
is a Fellow and Past President of the CIM. Ken is an experienced public
including his current appointment as director of
company director,
Continental Gold (TSX: CNL).
Continental Gold Inc (since June 2015)
Avalon Advanced Minerals Inc. (from February 2014 to February 2019)
Candente Gold Corp. (from December 2012 to January 2019)
Non‐Executive Director
Chairman of the Health, Safety, Environmental & Social Committee
Member of Audit, Risk & Compliance Committee, Technical Committee and
the Remuneration and Nomination Committee.
2 January 2019
Mr Schultz has over 45 years in the mining industry with experience in project
development, construction and operations. Between 2008 and 2018 he was
an Executive and Non‐Executive Director with Centamin Egypt and was
responsible for the construction of the 12Mtpa processing plant which has a
similar flowsheet to Cardinal’s proposed flowsheet.
Prior to this, he served as Chief Operating Officer at Ashanti Goldfields
Corporation (now Anglo Gold Ashanti Ltd) and was a resident of Ghana for 6
years. Furthermore, he worked for BHP in Australia and America and in South
Africa with Anglo American Corporation.
Trevor has an MA in Economics from Trinity College, England (1968), an MSc
in Mining Engineering, from Witwatersrand University, South Africa (1972)
and an Advanced Management Programme Diploma from Harvard Business
School, USA (1986).
Centamin Egypt (since May 2005)
None
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2019
Page 5 of 69
DIRECTORS’ REPORT
Robert Schafer B.Sc (Hons)
Appointed
Retired
Experience
Other current listed company
directorships
Former listed directorships in
the last three years
Jacques McMullen
Appointed
Retired
Experience
Other current listed company
directorships
Former listed directorships in
the last three years
Non‐Executive Director
10 July 2017
2 January 2019
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 the 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.
Amur Minerals Inc (from February 2006), Trigon Mining Inc (from April 2017),
Volcanic Gold Mines Inc. (from 14 March 2017) and Orosur Mining Inc. (from
June 2018)
Minera
IRL (September 2016 to November 2016), Orex Exploration
(September 2010 to May 2017), Lincoln Mining Corporation (April 2014 to
December 2016)
Non‐Executive Director
11 October 2017
31 October 2018
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.
Excellon Resources (from November 2017) and Equinox Gold (from
December 2017)
New Castle Gold (October 2017 to December 2017) and Orvana Minerals
Corp. (TSX: ORV)
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2019
Page 6 of 69
DIRECTORS’ REPORT
COMPANY SECRETARY
Sarah Shipway B Bus, CA
Appointed
Experience
Company Secretary
27 December 2012
Sarah Shipway was appointed Company Secretary of Cardinal Resources on
27 December 2012.
Sarah has a Bachelor of Commerce from Murdoch University and is a member
of the Institute of Chartered Accountants.
DIRECTORS’ INTEREST
At the date of this report, unless otherwise stated, the Directors held the following interests in Cardinal Resources.
Name
Kevin Tomlinson
Archie Koimtsidis
Malik Easah
Michele Muscillo
Dr Kenneth G. Thomas
Trevor Schultz
Ordinary
Shares
‐
8,017,565
7,681,815
‐
‐
‐
Listed
Options
400,000
4,191,731
6,560,423
‐
‐
‐
Unlisted
Options
5,000,000
7,500,000
6,000,000
2,018,100
2,180,049
2,180,049
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 2018 to 30 June 2019 after income tax was a loss
of $27,050,962 (2018: loss of 37,182,844).
The net assets of the consolidated group have decreased from $5,474,638 at 30 June 2018 to ($18,141,710) as at 30
June 2019. Total assets and Shareholder’s equity decreased in 2019 due to borrowings of $35,604,680 at 30 June 2019
compared to no borrowings at 30 June 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 2019 is provided in the Management
Discussion & Analysis immediately preceding the consolidated financial statement.
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2019
Page 7 of 69
DIRECTORS’ REPORT
LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS
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 REGULATIONS
The Group is aware of its environmental obligations with regards to its exploration activities and ensures that it
complies with all applicable regulations when carrying out exploration work.
DIVIDENDS PAID OR RECOMMENDED
The directors do not recommend the payment of a dividend and no amount has been paid or declared by way of a
dividend to the date of this report.
DIRECTORS’ MEETINGS
The following table sets out the number of meetings of the Company’s Directors held during the financial year ended
30 June 2019 and the number of meetings attended by each Director. There were four committees of Directors in
existence during the financial year, these being the Audit and Risk Committee, the Remuneration and Nomination
Committee, the Health and Safety Committee and the Technical Committee. We refer to the Company’s 2019
Corporate Governance Statement for more information.
Note
Directors’
Meeting
Audit and Risk
Committee
Number of Meetings Held
K Tomlinson
A Koimtsidis
M Easah
M Muscillo
Dr K G Thomas
T Schultz
R Schafer
J McMullen
*By invitation
‐
‐
‐
‐
‐
1
2
2
1
2
2
2
2
2
1
1
1
‐
4
1*
‐
‐
4
3
1
2
‐
Remuneration
and Nomination
Committee
‐
‐
‐
‐
‐
‐
‐
‐
‐
Health and
Safety
Committee
1
1
‐
‐
‐
‐
‐
1
1
Technical
Committee
1
‐
‐
‐
‐
1
‐
‐
‐
Note 1: Dr K G Thomas was appointed to the Board on 31 October 2018 and J McMullen retired from the Board on 31
October 2018.
Note 2: T Schultz was appointed to the Board on 2 January 2019 and R Schafer retired from the Board on 2 January
2019.
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2019
Page 8 of 69
DIRECTORS’ REPORT
REMUNERATION REPORT – AUDITED
1. Remuneration Report overview
The Directors’ of Cardinal Resources Limited present the Remuneration Report (the Report) for the Company and its
controlled entities for the year ended 30 June 2019. This report forms part of the Directors’ Report and has been
audited in accordance with section 300A of the Corporations Act 2001.
The report details the remuneration arrangements for Cardinal’s key management personnel (KMP):
Non‐Executive Directors (NEDs); and
Executive Directors and Senior Executives (collectively the Executives).
KMP’s are those persons who, directly or indirectly, have authority and responsibility for planning, directing and
controlling the major activities of the Company and the Group.
The table below outlines the KMP of the Group during FY 2019.
Name
Non‐Executive Directors
Kevin Tomlinson
Michele Muscillo
Dr Kenneth G. Thomas
Trevor Schultz
Executive Directors
Archie Koimtsidis
Malik Easah
Senior Executives
Jon Grygorewicz
Former Non‐Executive Directors
Robert Schafer
Jacques McMullen
Former Senior Executives
Derrick Weyrauch
Position
Non‐Executive Chairman
Non‐Executive Director
Non‐Executive Director
Non‐Executive Director
Chief Financial Officer
Non‐Executive Director
Non‐Executive Director
Chief Financial Officer
Chief Executive Officer/Managing Director
Executive Director
Term as KMP
Full financial year
Full financial year
Appointed 31 October 2018
Appointed 2 January 2019
Full financial year
Full financial year
Appointed on 31 October 2018
Retired 2 January 2019
Retired 31 October 2018
Retired on 31 October 2018
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2019
Page 9 of 69
DIRECTORS’ REPORT
2. How Remuneration of Governed
Remuneration Decision Making
The below diagram represents the Group’s remuneration decision making framework.
REMUNERATION
CONSULTANTS
External, independent advice and
information that is free from
influence of management
BOARD OF DIRECTORS
Review and Approve
REMUNERATION AND NOMINATION COMMITTEE
Advise the Board on: Company wide remuneration framework and
policy. Executive and NED remuneration outcomes
CEO
Recommendations of remuneration outcomes for executive team
MANAGEMENT
Implementation of remuneration policies and practices
Advising the Remuneration and Nomination Committee of changing
statutory and market conditions
Role of the Remuneration and Nomination Committee
The Remuneration and Nomination Committee (Committee) operates under a Board‐approved Charter. The purpose
of the Committee is to provide assistance and recommendations to the Board to ensure that it is able to fulfill its
responsibilities relating to the following:
Short term and long‐term incentive plans;
Remuneration strategy;
NED remuneration;
KMP remuneration;
Annual performance review of the CEO and senior executives;
Review remuneration reporting;
Nomination and review of applications for Board of Directors positions;
Diversity strategy and gender pay strategy;
Board size and composition;
Director induction and continuing professional development;
Annual Board performance review; and
Succession planning and talent management.
A copy of the Charter is available on the Company’s website under the Corporate Governance section
www.cardinalresources.com.au.
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2019
Page 10 of 69
DIRECTORS’ REPORT
The composition of the Committee is set out below. The committee consists solely of NEDs. The CEO/MD and others
may be invited to attend all or part of meetings by the Committee Chairman as required and appropriate, but have no
vote on matters before the Committee.
Use of Remuneration Consultants
The Committee has the resources and authority appropriate to perform its duties and responsibilities, including the
authority to engage external professional on terms it deems appropriate.
The Committee has established protocols to ensure that if remuneration recommendations, as defined by the
Corporations Act 2001, are made by independent remuneration consultants they are free from bias and undue
influence by members of the KMP to whom the recommendations relate. The Committee engages the remuneration
consultant and receive all reports directly from the remuneration consultant.
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 2019 and recommendations will be implemented through 30 June 2019/2020.
The Committee engaged the services of BDO (WA) Pty Ltd (BDO). The Committee is satisfied with the advice received
from BDO is free from bias and undue influence. The remuneration review provided to the Committee as input into
decision making only. The Committee will consider the review, along with other factors, in making its remuneration
decisions.
The fees paid to BDO for the remuneration review was $17,550. In addition to providing the remuneration review,
BDO provided other advisory services and was paid a total of $24,160 for these services. BDO also provides audit
services to the Company and was paid a total of $71,668 for these audit services.
BDO has confirmed that any remuneration reviews 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 review results were free from undue
influence:
BDO was engaged by, and reported directly to, the chair and secretary 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 review results was provided by BDO directly to the chair and secretary 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.
Securities Trading Policy
Cardinal’s Securities Trading Policy (Policy) provides clear guidance on how company securities, including shares and
options, may be dealt with and applies to NED’s, Executives and all other personnel of the Company including
employees and contractors.
The Securities Trading Policy details acceptable and unacceptable periods for trading in Company Securities including
the consequences of beaching the Policy.
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2019
Page 11 of 69
DIRECTORS’ REPORT
The Policy also sets out specific governance approval of how the Chairman, Directors, officers and staff can deal in
Company
section at
www.cardinalresources.com.au.
Securities. The Company’s Policy
can be accessed
the Corporate
from
Remuneration Report approval at FY2018 Annual General Meeting (AGM)
The remuneration report for the FY2018 received positive shareholder support at the FY2018 AGM.
3. Executive Remuneration Policy and Practices
Cardinal’s Board is committed to delivering remuneration strategy outcomes that:
Align the interests of Executives with shareholders and further the Company’s key business drivers;
Attract, motivate and retain high performing Executives;
Acceptable to shareholders.
Transparent and easily understood; and
The remuneration strategy as the Company releases it feasibility study will identify and reward high performers and
recognizes the contribution of each employee to the continued growth and success of the Group.
2019 Executive Remuneration Mix
The mix of fixed and at‐risk remuneration various depending on the role of the Executives. More senior positions have
a greater proportion of at‐risk remuneration.
CEO
Executive
Director
51%
54%
49%
46%
0%
20%
40%
60%
80%
100%
TFR
LTI at Risk
Total at Risk
49%
46%
Total Fixed Remuneration (TFR) and market positioning of TFR
Cardinal has adopted a market positioning strategy designed to attract and retain talented employees, and to reward
them for delivering strong performance. The market positioning strategy also supports fair and equitable outcomes
between employees.
TFR acts as a base‐level reward and includes cash, compulsory superannuation and any salary‐sacrificed items and is
reviewed annually. Cardinal has set the baseline TFR for executives at the 75th percentile of the defined market. The
Board considers variations to the benchmark based on:
The size and complexity of the role;
The criticality of the role to successful execution of the business strategy;
Role accountabilities;
Period of service; and
Market pay levels for comparable roles.
Skills and experience of the individual;
When determining the relevant market for each role, Cardinal considers the companies from which it sources talent,
and to who it could potentially lose talent. During the year the Company engaged BDO, an independent remuneration
advisor, to provide remuneration benchmarking data as input into setting remuneration for Executive KMP.
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2019
Page 12 of 69
DIRECTORS’ REPORT
Give the stage of the Company it has been determined that short‐term incentives paid in cash are not applicable. As a
result, the Company has not initiated a short‐term incentive plan.
Table 1 – LTI Plan: Key Questions and Answers
Long Term Incentive (LTI) Plan: Key Questions and Answers on how it works
Why does
the Board
consider an LTI Plan to be
appropriate?
The Board believes that an LTI Plan can:
Focus and motivate Executives to achieve outcomes that are aligned to
optimizing shareholder value;
Ensure that business decisions and strategic planning have regard to the
Company and Group’s long‐term performance;
Be consistent with remuneration governance guidelines;
Be consistent and competitive with current practices of comparable
companies; and
Create an
immediate ownership mindset among the executive
participants, linking a substantial portion of the potential reward to
Cardinal’s on‐going share price and returns to shareholders.
How is the award delivered? Awards are in the form of performance rights (Rights) over ordinary shares in the
Company for no consideration. The Rights carry neither a right to dividends or
voting.
Grants are made as KMP are appointed.
How often are grants made
and was a grant made in
2019?
What is the quantum of the
award and what allocation
methodology is used?
What are the performance
conditions?
Rights were granted to Non‐Executive Directors upon receipt of shareholder
approval during the year.
The quantum of Rights granted to an Executive is determined by the number of
rights on issue and the exercise price is determined using a 50% mark up to 30‐
day VWAP from appointment.
The two performance conditions, referred to as the vesting conditions are:
Service Condition – The service condition is met if employment with
Cardinal is continuous for the period commencing on or around the
grant date until the Rights vest; and
Performance Condition – Upon meeting the milestone hurdle attached
to each right.
Why are the performance
conditions selected?
The Board reviews the performance conditions to determine the appropriate
hurdles based on Cardinal’s strategy.
Service based conditions are used to encourage retention.
Setting long term incentive targets appropriate for different stages of the
Company’s cycle is complex and challenging. Whilst the Board holds long term
incentives should not change during different phases of the Group’s cycle and
remain more stable over time (unlike short term incentives that should reflect
the current operational environment and macroeconomic setting) it is also
acknowledged a more nuanced approach may be required in the future.
The performance period is for approximately 3 years and expire on 21 December
2022.
The LTI Plan is reviewed annually by the Board.
If the Executive’s employment is terminated for cause, or due to resignation, all
unvested performance rights will lapse.
is
What is the performance
period?
When
the LTI Plan
schedule to be reviewed by
the Board?
What happens to Rights
granted under the LTI Plan
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2019
Page 13 of 69
DIRECTORS’ REPORT
when an Executive ceases
employment?
Can Cardinal clawback LTI
awards?
If and when the performance rights vest, shares will be allocated in accordance
with the plan rules and other condition of the grant.
In the event of serious misconduct or material misstatement in the Company’s
financial statements, the Board may:
Reset the vesting condition and/or alter the performance period
applying to the award;
Deem all awards which have not vested to have lapsed or been
forfeited; and/or
Deem all or any shares following vesting of an award to have lapsed or
been forfeited.
What happens in the event
of a change of control?
In the event of a change in control the Options will vest and become exercisable
in accordance with the term and conditions of the options.
4. Executive Remuneration outcomes in FY 2019
Company Performance
A summary of Cardinal’s business performance as measured by a range of financial and other indicators, including
disclosure required by the Corporations Act 2001, is outline below.
Table 2 – Company Performance for five years
Total Comprehensive Loss Attributable to
Member of the Company
Cash and cash equivalents at year end
Basic Loss Per Share
ASX share price at the end of the year ($)
Increase/(decrease) in share price (%)
2019
2018
2017
2016
2015
27,814,227
18,735,456
7.12
$0.34
(1.26)
37,690,470 21,724,298
28,592,718
7,303,807
7.12
10.22
$0.53
$0.43
+1.76
(1.23)
9,243,909
4,864,822
5.55
$0.30
+6.00
3,580,551
839,755
3.82
$0.05
+2.5
STI Performance and outcomes for FY2019
The Company during the year ended 30 June 2019 had no STI’s in place. The Company has undertaken a review of STI
for the financial year ended 30 June 2020.
LTI Plan Vesting Outcomes for FY2019
Long term incentive (LTI) benefits received in the form of milestone options are currently in place. LTI benefits are
provided in the form of equity allocations.
The equity vest in the future subject to milestones being achieved. The objective of issuing the LTI’s to all KMP’s,
including non‐executive directors, is to align the interests of executives with those of shareholders. If shareholders do
well, executives are rewarded. Conversely, where shareholders do not do well, neither does the executive.
Unvested equity is forfeited if the executive resigns before the end of the performance period.
During the FY2019 the below milestones had not vested:
The beginning of earthworks for gold production at the Ghanaian Assets (Milestone 2); and
The first pouring of gold at the Ghanaian Assets (Milestone 3).
The Company has undertaken a review of the Company LTI’s for the financial year ended 30 June 2020.
Executive KMP Contracts
The Remuneration Committee reviews and agrees Executive Service and Employment Agreements for Key
Management Personnel on a periodic basis. The Remuneration Committee is also assisted, where appropriate, by
external consultants specialising in remuneration reviews and other employment issues.
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2019
Page 14 of 69
DIRECTORS’ REPORT
The following employment agreements where in place as at 30 June 2019 and as at the date of this report, unless
otherwise noted, based upon the following terms;
Table 3 – Executive KMP Contracts
Name
A Koimtsidis
M Easah
Jon Grygorewicz
Term on
Contract
On‐going
employment
agreement
On‐going
employment
agreement
On‐going
services
agreement
Notice Period
(Company)
12 months
Notice Period
(KMP)
12 months
6 months
6 months
STI and LTI treatment on
termination1
Vested LTI’s the executive has 30
days to exercise. Unvested
automatically lapse.
Vested LTI’s the executive has 30
days to exercise. Unvested
automatically lapse.
2 months
2 months
Not Applicable
1. Subject to statutory limitations
Termination Payments
The Company made a termination payment during the year ended 30 June 2019 to the Company’s prior CFO Derrick
Weyrauch.
Other than the above, no termination payments have been made by the Company.
Executive KMP Remuneration Tables
The actual remuneration earned by Executive KMP in FY2019 is set out below. The information is considered relevant
as it provides shareholders with a view of the remuneration actually paid to Executives for performance in FY2019. The
value of remuneration includes equity grants where the Executive received control of the shares in FY2019 and
different from the remuneration disclosures in Table 5, which disclosures the value of LTI grants which may or may not
vest in future years. The table disclosure the value of LTI grants from previous years which have vested in FY2019.
Table 4 – Executive KMP Actual Remuneration Earned in FY2019
Salary and
Fees 1
$
300,000
298,780
56,500
218,202
Name
A Koimtsidis
M Easah
Jon Grygorewicz
D Weyrauch
1. Salary and fees comprise base salary, superannuation and leave entitlements. It reflects the total of “salary and
Total Actual
Remuneration
$
300,000
298,780
56,500
218,202
Benefits and
Allowances
$
‐
‐
‐
‐
Short‐Term
Incentive
$
‐
‐
‐
‐
LTI Plan
Rights
$
‐
‐
‐
‐
fees” and “superannuation” in the statutory remuneration table.
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2019
Page 15 of 69
DIRECTORS’ REPORT
Statutory Executive KMP Remuneration
Table 5 sets out Executive KMP remuneration calculated in accordance with statutory accounting requirements.
Table 5 – Statutory Executive KMP Remuneration
Short‐term benefits
Salary,
Fees and
Leave
$
Non‐
Monetary
(i)
$
Long‐term
benefits
Long
Service
Leave
$
Post‐
employment
Super‐
annuation
Share‐based
payments
LTI Plan
Rights
$
$
Termination
Payments
Total
Name
A Koimtsidis
2019
2018
M Easah
2019
2018
J Grygorcewicz
2019
2018
D Weyrauch
2019
2018
Total
2019
2018
300,000
300,000
298,780
271,013
56,500
‐
151,076
307,821
806,356
878,834
17,581
8,386
16,563
7,492
1,646
‐
16,052
6,781
51,842
22,659
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
$
‐
‐
‐
‐
303,433
675,548
269,719
600,487
‐
‐
$
621,014
983,934
585,062
878,992
58,146
‐
234,254
795,563
‐
480,961
67,126
‐
573,152
1,756,996
67,126
‐
1,498,476
2,658,489
(i)
(ii)
(iii)
(iv)
Non‐monetary benefits are for directors’ and officers’ liability and legal expense insurance premiums.
Unlisted options were granted as part of remuneration. No cash benefit is received by the key management
personnel of the Group, until the sale of the resultant shares, which cannot be done unless and until the rights
have vested and the shares issued.
D Weyrauch was appointed on 10 July 2017 and retired on 31 October 2018.
J Grygorcewicz was appointed on 31 October 2018.
7.
Non‐Executive Director Remuneration
NED Remuneration Policy and Fee Structure
Cardinal’s NED remuneration policy is designed to attract and retain suitably skilled Director who can discharge the
roles and responsibilities required in terms of good governance, oversight, independence and objectivity. The Board
seeks to attract Directors with different skills, experience, expertise and diversity.
Under the ASX Listing Rules, the total annual fee pool for NED’s is determined by shareholders. The current maximum
aggregate NED fee pool is $573,000 per annum and was approved by Shareholders at the 2017 Annual General
Meeting.
Within the aggregate amount, NED’s fees are reviewed annually by the Remuneration and Nomination Committee
(Committee), and set by the Board. The Committee considered the advice from external consultants when undertaking
the annual review process.
Structure
The remuneration of NEDs consists of directors’ fee, there was no committee fees paid to NEDs for serving on sub‐
committees. Further development of the fee structure for NEDs is proposed for 2019/2020 as part of the revised
remuneration strategy designed to attract and retain talent on the Cardinal Board.
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2019
Page 16 of 69
DIRECTORS’ REPORT
Statutory NED Remuneration
The following table sets out the NED fees calculated in accordance with statutory accounting requirements and which
reflects the actual remuneration received.
Statutory NED Fee Disclosure
Table 6 ‐ NED fees for the year ended 30 June 2019 and 30 June 2018
Short‐Term Benefits
Name
Base Fee
$
Non‐Monetary (i)
$
Long‐Term
Benefits
LTI
$
Post‐
Employment
Superannuation
$
110,376
110,375
87,600
62,050
58,400
‐
40,000
‐
43,800
81,044
29,200
62,050
‐
22,462
‐
22,462
13,039
7,402
9,133
1,768
2,341
‐
2,022
‐
10,971
4,831
851
1,768
‐
211
‐
211
337,148
750,609
225,889
143,559
21,957
‐
25,605
‐
‐
480,961
‐
143,559
‐
(160,262)
‐
(160,262)
‐
‐
‐
‐
‐
‐
3,800
‐
‐
‐
‐
‐
‐
2,134
‐
2,134
Total
$
460,563
868,386
322,622
207,377
82,698
‐
71,427
‐
54,771
566,836
30,051
207,377
‐
(135,455)
‐
(135,455)
K Tomlinson
2019
2018
M Muscillo (ii)
2019
2018
Dr K G. Thomas (iii)
2019
2018
T Schultz (iv)
2019
2018
R Schafer (iv), (v)
2019
2018
J McMullen (ii), (iii)
2019
2018
M Connelly (ii)
2019
2018
S Jackson (ii)
2019
2018
Total Remuneration
2019
2018
(i)
(ii)
38,357
16,191
369,376
360,443
610,599
1,198,164
1,022,132
1,579,066
Non‐Monetary benefits are for directors’ and officers’ liability and legal expense insurance premiums.
J McMullen and M Muscillo were appointed on 11 October 2017 and M Connelly and S Jackson retired on
11 October 2017.
Dr K G. Thomas was appointed on 31 October 2018 and J McMullen retired on 31 October 2018.
T Schultz was appointed on 2 January 2019 and R Schafer retired on 2 January 2019.
R Schafer was appointed on 10 July 2017.
3,800
4,268
(iii)
(iv)
(v)
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2019
Page 17 of 69
DIRECTORS’ REPORT
8. Equity Instrument Reporting
Rights Holdings of KMP
The following table sets out details of movements in performance rights held by Executive KMP, issued as part of LTI
explained in section 3.
Table 7 – Executive KMP Milestone Options – LTI
Name
Balance at 1
July 2018
Granted
Vested
LapsedD
Balance at
30 June
2019
4,500,000
4,000,000
Unvested Value of
unvested
Rights
303,433
269,719
3,150,000
2,800,000
Archie Koimtsidis
Malik Easah
Former KMP’s
Derrick Weyrauch
4,500,000A
4,000,000A
‐
‐
‐
‐
‐
‐
‐
2,879,000 B
‐
A. This relates to the FY2017 and were granted on the approval from shareholders at the Company’s shareholder
meeting held on 3 April 2017. If vesting conditions are achieved these rights will vest on or before 12 April 2022.
B. This relates to the FY2018 and were granted on approval from shareholders at the Company’s Annual General
Meeting held on 22 November 2017. If vesting conditions are achieved these rights will vest on or before 21
December 2022.
(2,879,000)
‐
‐
‐
The Rights on foot, including those granted as part of the FY2019 LTI award are detailed in the table below. Should the
Rights not vest, the award will expire at vesting date.
Rights Holdings of NED
The following table sets out details of movements in performance rights held by NED’s, issued as part of LTI explained
in section 3.
Table 8 – NED Milestone Options – LTI
Name
Balance at 1
July 2018
Granted
Vested
LapsedD
Balance at
30 June
2019
Unvested Value of
unvested
Rights
337,148
225,889
21,957
25,605
5,000,000 3,500,000
2,018,100 2,018,100
2,180,049 2,180,049
2,180,049 2,180,049
5,000,000A
2,018,100B
‐
‐
‐
‐
2,180,049C
2,180,049C
‐
‐
‐
‐
‐
‐
‐
‐
Kevin Tomlinson
Michele Muscillo
Dr Kenneth G. Thomas
Trevor Schultz
Former NED’s
Jacques McMullen
Robert Schafer
‐
‐
2,018,100 B
2,879,000 B
‐
‐
A. This relates to the FY2017 and were granted on the approval from shareholders at the Company’s shareholder
meeting held on 3 April 2017. If vesting conditions are achieved these rights will vest on or before 12 April 2022.
B. This relates to the FY2018 and were granted on approval from shareholders at the Company’s Annual General
Meeting held on 22 November 2017. If vesting conditions are achieved these rights will vest on or before 21
December 2022.
(2,018,100)
(2,879,000)
‐
‐
‐
‐
‐
‐
C. This relates to the FY2019 and were granted on approval from shareholders at the Company’s shareholder meeting
held on 11 April 2019. If vesting conditions are achieved these rights will vest on or before 21 December 2022.
D. Lapsed due to retirement from the Company.
The Rights on foot, including those granted as part of the FY2019 LTI award are detailed in the table below. Should the
Rights not vest, the award will expire at vesting date.
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2019
Page 18 of 69
DIRECTORS’ REPORT
Table 9 – Rights – LTI
Name
Grant
Grant
Date
Unlisted
Options
Number of RightsA
Fair
Value of
RightsH
Expense
for the
Year ($)
Performance
and Service
Period
‐
‐
‐
‐
‐
‐
‐
‐
FY2017
FY2016
FY2017
FY2016
FY2017
FY2018
‐
27.02.17
18.03.17 3,000,000
27.02.17
18.03.17 2,000,000
27.02.17
22.11.18
‐
‐
‐
Milestone
1B
1,350,000
‐
1,200,000
‐
1,500,000
‐
Milestone
2C
1,350,000
‐
1,200,000
‐
1,500,000
864,900
Milestone
3C
1,800,000 1,782,900
‐
‐
1,600,000 1,584,800
‐
‐
2,000,000 1,981,000
1,153,200 2,018,100
303,433
‐
269,719
‐
337,148
225,889
FY2019
11.04.19
‐
‐
934,307
1,245,742
207,417
21,957
Archie KoimtsidisD
Malik EasahD
Kevin TomlinsonD
Michele MuscilloE
Dr Kenneth G.
ThomasF
Trevor SchultzG
1,245,742
A. The Milestone Options shall vest and are exercisable at any time on and from:
11.04.19
934,307
FY2019
‐
‐
241,875
25,605
(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.
B. During the year ended 30 June 2018 Milestone 1 vested.
C. The expected accounting vesting date determined at grant date for Milestones 2 and 3 was 30 September 2020 and
31 March 2022, respectively.
D. The milestone options were issued with an exercise price of $0.50.
E. The milestone options were issued with an exercise price of $0.965.
F. The milestone options were issued with an exercise price of $0.679.
G. The milestone options were issued with an exercise price of $0.59.
H. The value of the rights included in remuneration for the year is calculated in accordance with Australian Accounting
Standards for further details please see note 13.
On satisfaction of certain milestone events, each Class C Performance Share converts into 500,000 ordinary shares
(refer to note 13) in which case each key management personnel holding the Class C Performance Shares would
become entitled to a further 500,000 ordinary shares.
Table 10 ‐ Class C Performance Shareholdings of key management personnel
Key Management
Personnel
A Koimtsidis
M Easah
J Grygorcewicz
Former KMP’s
D Weyrauch
Total
Balance at
1 July 2018
(ii)
Granted as
remuneration
Net other change
(iii)
Balance at
30 June 2019
(i)
‐
60
‐
‐
60
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
60
‐
‐
60
(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.
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2019
Page 19 of 69
DIRECTORS’ REPORT
(iv)
Mr. Easah is the sole shareholder of Savannah Mining Ghana Limited, which holds the 60 outstanding Class C
Performance Shares.
Share and Option Holdings of KMP
The following table sets out the movements in the number of ordinary shares in the Company held, directly, by each
KMP, including their related parties.
Table 11: Shareholdings of Key Management Personnel ‐ 2019
Balance
01.07.18
(ii)
8,017,565
7,681,815
‐
80,000
Granted as
Remuneration
Options
Exercised
‐
‐
‐
‐
‐
‐
‐
‐
Net
Change
Other
‐
‐
‐
‐
Balance
30.06.19
(i)
8,017,565
7,681,815
‐
80,000
Directors
A Koimtsidis
M Easah
KMP
J Grygorewicz
D Weyrauch
(i) Date of retirement, if applicable
(ii) Date of appointment, if applicable
Table 12: Listed Options holdings of Key Management Personnel ‐ 2019
Balance
01.07.18
(iii)
Granted as
Remuneration
Options
Exercised
Performance
Rights
Vested
Net
Change
Other (i)
Balance
30.06.19
(ii)
Vested at 30 June 2019
Exercisable
Total
4,191,731
6,560,423
Listed Options
Directors
A Koimtsidis
M Easah
KMP
J Grygorewicz
D Weyrauch
(i)
(ii)
(iii) Date of appointment, if applicable
Purchased on market
Date of retirement, if applicable
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
4,191,731 4,191,731
6,560,423 6,560,423
4,191,731
6,560,423
20,000
‐
20,000
‐
20,000
‐
20,000
‐
Share and Option Holdings of NED’s
The following table sets out the movements in the number of ordinary shares in the Company held, directly, by each
NED’s, including their related parties.
Table 13: Shareholdings of NED Personnel ‐ 2019
Balance
01.07.18
(ii)
‐
‐
‐
‐
10,000
‐
Granted as
Remuneration
Options
Exercised
Net
Change
Other
Balance
30.06.19
(i)
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
10,000
‐
Directors
K Tomlinson
M Muscillo
K G Thomas
T Schultz
R Schafer
J McMullen
(iii) Date of retirement, if applicable
(iv) Date of appointment, if applicable
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2019
Page 20 of 69
DIRECTORS’ REPORT
Table 12: Listed Options holdings of NED Personnel ‐ 2019
Balance
01.07.18
(iii)
Granted as
Remuneration
Options
Exercised
Performance
Rights
Vested
Net
Change
Other (i)
Balance
30.06.19
(ii)
Vested at 30 June 2019
Exercisable
Total
Listed Options
Directors
K Tomlinson
M Muscillo
K G Thomas
T Schultz
R Schafer
J McMullen
(iv)
(v)
(vi) Date of appointment, if applicable
Purchased on market
Date of retirement, if applicable
400,000
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
400,000
‐
‐
‐
‐
‐
400,000
‐
‐
‐
‐
‐
400,000
‐
‐
‐
‐
‐
9. Other Transactions and balance with KMP and NED’s and their related parties
Other Equity‐related Key Management Personnel and NED’s Transactions
There have been no other transactions involving equity instruments apart from those described in the tables above
relating to options and shareholdings.
Other Transactions with Key Management Personnel and NED’s 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 $309,624 (2018: $337,218).
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 $5,028 (2018: $3,506).
Robert Schafer, a director, provided consulting services to the Company. Amount that have been paid or payable total
$0 (2018: $$12,911).
During the year ended 30 June 2019, Cardinal Resources Limited has advanced funds to Savannah 2019: nil (2018:
$4,000,674), a related entity to Director Mr Malik Easah. The purpose of an advance was for the 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, $280,300 (2018: $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 AUDITED 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.
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2019
Page 21 of 69
DIRECTORS’ REPORT
During the year the Company agreed to pay an annual insurance premium of $90,200 (2018: $38,850) 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 106,916,696 Listed Options in the Company, exercisable at $0.15
on or before 30 September 2019. During the financial year 3,757,971 of these listed options were converted into fully
paid shares.
As at the date of this report the Company had on issue the below options:
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,
2,018,100 unlisted milestone 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;
2,180,049 unlisted milestone options, exercisable at $0.679 on or before 21 December 2022;
2,180,049 unlisted milestone options, exercisable at $0.59 on or before 21 December 2022; and
1,867,817 unlisted options exercisable at $1.00 per share.
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 2019 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 REPORTING DATE
On 4 July 2019 the Company issued 59,975 fully paid ordinary shares on exercise of Listed Options.
On 11 July 2019 the Company issued 280,000 fully paid ordinary shares on exercise of Listed Options.
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2019
Page 22 of 69
DIRECTORS’ REPORT
On 17 July 2019 the Company issued 600,000 fully paid ordinary shares on exercise of Listed Options. The Company
also issued 73,530 and 635,161 shares at a deemed issue price of $0.34 and $0.336 respectively for services rendered
to the Company.
On 24 July 2019 the Company issued 130,000 fully paid ordinary shares on exercise of Listed Options.
On 29 July 2019 the Company issued 126,000 fully paid ordinary shares on exercise of Listed Options.
On 7 August 2019 the Company issued 252,500 fully paid ordinary shares on exercise of Listed Options.
On 14 August 2019 the Company issued 220,261 fully paid ordinary shares on exercise of Listed Options.
On 19 August 2019 the Company issued 617,500 fully paid ordinary shares on exercise of Listed Options.
On 21 August 2019 the Company issued 827,048 fully paid ordinary shares on exercise of Listed Options.
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
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
Taxation advice
Review of financial model
Total remuneration for non‐audit services
2019
$
17,550
5,660
18,500
41,710
2018
$
‐
39,695
‐
39,695
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2019
Page 23 of 69
DIRECTORS’ REPORT
AUDITOR’S INDEPENDENCE DECLARATION
The auditor’s independence declaration for the year ended 30 June 2019 has been received and can be found on page
62 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 3 September 2019
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2019
Page 24 of 69
FINANCIAL REPORT FOR THE THREE AND TWELVE MONTHS ENDED 30 JUNE 2019
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE THREE AND TWELVE MONTHS ENDED 30 JUNE 2019
For the period ended
Note
Unaudited Three Months Ended
June 30,
2019
June 30,
2018
Revenue
4
$
107,064
33,006
365,859
Audited Twelve Months Ended
June 30,
2019
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, basic and diluted (cents)
Weighted average number of common shares
outstanding
5
9
6(a)
15
15
$
$
$
$
(3,050,448)
(101,981)
(6,426,350)
(25,589)
(9,497,304)
‐
(9,497,304)
(98,171)
(9,595,475)
(2.48)
(2,545,810)
(67,080)
(3,653,287)
193,028
(6,040,143)
‐
(6,040,143)
(12,199,428)
(314,731)
(14,940,749)
38,087
(27,050,962)
‐
(27,050,962)
June 30,
2018
174,312
(10,688,014)
(217,454)
(26,747,592)
295,904
(37,182,844)
‐
(37,182,844)
(108,170)
(6,148,313)
(1.62)
(763,265)
(27,814,227)
(7.12)
(507,626)
(37,690,470)
(10.22)
382,864,991
372,820,197
379,752,526
363,630,782
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 2019
Page 25 of 69
FINANCIAL REPORT AS AT 30 JUNE 2019
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2019
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’ DEFICIT
Current Liabilities
Trade and other payables
Provisions
Non‐Current Liabilities
Borrowings
TOTAL LIABILITIES
Shareholders’ Deficit
Issued capital
Reserves
Accumulated losses
Note
16(a)
8(a)
8(b)
9
10
11
12
13
14
June 30,
2019
June 30,
2018
18,735,456
256,650
847,392
19,839,498
994,650
994,650
7,303,807
980,224
1,393,434
9,677,465
564,149
564,149
20,834,148
10,241,614
3,286,116
85,062
3,371,178
35,604,680
35,604,680
38,975,858
84,460,427
5,681,581
(108,283,718)
(18,141,710)
4,707,018
59,958
4,766,976
‐
‐
4,766,976
81,369,056
6,003,878
(81,898,296)
5,474,638
TOTAL LIABILITIES AND SHAREHOLDERS’
DEFICIT
20,834,148
10,241,614
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 2019
Page 26 of 69
FINANCIAL REPORT FOR THE TWELVE MONTHS ENDED 30 JUNE 2019
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE TWELVE MONTHS ENDED 30 JUNE 2019
Australian ($)
SHARE CAPITAL
OPTIONS RESERVE
Balance at 1 July 2018
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 2019
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
Shares issue expenses
Balance at 30 June 2018
$
81,369,056
‐
‐
‐
‐
563,696
2,535,378
(7,703)
84,460,427
68,628,035
‐
‐
‐
12,396,736
742,945
524,846
(923,506)
81,369,056
$
6,744,105
‐
‐
‐
‐
(1,351,324)
1,792,292
‐
7,185,073
2,710,589
‐
‐
‐
‐
(184,000)
4,217,516
‐
6,744,105
FOREIGN EXCHANGE
RESERVE
$
(740,227)
‐
(763,265)
(763,265)
‐
‐
‐
‐
(1,503,492)
(232,601)
‐
(507,626)
(507,626)
‐
‐
‐
‐
(740,227)
ACCUMULATED
LOSSES
$
(81,898,296)
(27,050,962)
‐
(27,050,962)
‐
665,540
‐
‐
(108,283,718)
(44,899,452)
(37,182,844)
‐
(37,182,844)
‐
184,000
‐
‐
(81,898,296)
TOTAL EQUITY
$
5,474,638
(27,050,962)
(763,265)
(27,814,227)
‐
(122,088)
4,327,670
(7,703)
(18,141,710)
26,206,571
(37,182,844)
(507,626)
(37,690,470)
12,396,736
742,945
4,742,362
(923,506)
5,474,638
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 2019
Page 27 of 69
FINANCIAL REPORT FOR THE THREE AND TWELVE MONTHS ENDED 30 JUNE 2019
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE AND TWELVE MONTHS ENDED 30 JUNE 2019
For the period ended
Note
Unaudited Three months ended
June 30,
2019
June 30,
2018
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
Interest paid
Proceeds from borrowings net of 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
16(b)
(4,270,510)
(1,606,463)
113,801
(5,763,172)
(308,895)
(308,895)
39,891
(479,819)
‐
(439,928)
Audited Twelve months ended
30 June,
2019
(14,171,472)
(5,995,737)
322,733
(19,844,476)
(4,661,452)
(1,169,548)
22,316
(5,808,684)
(132,190)
(132,190)
(749,258)
(749,258)
45,299
‐
‐
45,299
555,993
(1,790,033)
33,921,932
32,687,892
30 June,
2018
(26,726,883)
(6,183,954)
161,864
(32,748,973)
(316,207)
(316,207)
12,145,849
‐
‐
12,145,849
(6,511,995)
(5,895,575)
12,094,158
(20,919,331)
24,985,941
261,510
13,304,533
(105,151)
7,303,807
(662,509)
28,592,718
(369,580)
16(a)
18,735,456
7,303,807
18,735,456
7,303,807
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 2019
Page 28 of 69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS THREE AND TWELVE
MONTHS ENDED 30 JUNE 2019
1.
CORPORATE INFORMATION
The financial report of Cardinal Resources Limited (“Cardinal Resources” or “the Company”) and its controlled
entities (“the Group”) for the three and twelve months ended 30 June 2019 was authorised for issue in
accordance with a resolution of the directors on 3 September 2019.
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 2019 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
2019
100%
100%
100%
100%
100%
2018
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.
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2019
Page 29 of 69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS THREE AND TWELVE
MONTHS ENDED 30 JUNE 2019
(d)
Principles of consolidation
Subsidiaries
Subsidiaries are all entities (including structured entities) over which the group has control. The group controls
an entity when the group is exposed to, or has rights to, variable returns from its involvement with the entity
and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are
fully consolidated from the date on which control is transferred to the group. They are deconsolidated from the
date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between group companies are
eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of
the transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure
consistency with the policies adopted by the group.
Non‐controlling interests in the results and equity of subsidiaries are shown separately in the consolidated
statement of profit or loss and other 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).
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2019
Page 30 of 69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS THREE AND TWELVE
MONTHS ENDED 30 JUNE 2019
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.
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 17).
A probability of 100% has been applied to the milestones occurring for the milestone options on issue. During
the 2018 financial year Milestone 1 vested. The expected accounting vesting date determined at grant date for
Milestones 2 and 3 was 30 September 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
Under IFRS 15 Revenue, revenue is recognised when a performance obligation is satisfied, being when control
of the goods or services underlying the performance obligations is transferred to the customer.
(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
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2019
Page 31 of 69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS THREE AND TWELVE
MONTHS ENDED 30 JUNE 2019
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.
(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.
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2019
Page 32 of 69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS THREE AND TWELVE
MONTHS ENDED 30 JUNE 2019
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.
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.
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2019
Page 33 of 69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS THREE AND TWELVE
MONTHS ENDED 30 JUNE 2019
(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
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.
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2019
Page 34 of 69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS THREE AND TWELVE
MONTHS ENDED 30 JUNE 2019
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
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.
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2019
Page 35 of 69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS THREE AND TWELVE
MONTHS ENDED 30 JUNE 2019
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.
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.
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2019
Page 36 of 69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS THREE AND TWELVE
MONTHS ENDED 30 JUNE 2019
(q)
Adoption of new and revised standards
There are a number of new or amended Accounting Standards and Interpretations issued by the IASB that are
not yet mandatory. The Company does not plan to adopt these standards early. The Company’s assessment of
the impact of these new or amended Accounting Standards and Interpretations, most relevant to the Company,
are set out below.
The following accounting standards were issued with an effective date of 1 July 2018:
•
•
IFRS 9: Financial Instruments – The Board has reviewed the new accounting standard and has assessed that
the adoption of the new standard has no impact on the results of the Group for the period ended 30 June
2019; and
IFRS 15: Revenue from Contracts with Customers ‐ The Board has reviewed the new accounting standard
and has assessed that the adoption of the new standard has no impact on the results of the Group for the
period ended 30 June 2019.
Accounting Standards issued by the Australian Accounting Standards Board (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:
•
IFRS 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 IAS 17: Leases and
related Interpretations. IFRS 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 IAS 16: 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 IFRS 16 allow a lessee to either retrospectively apply the Standard to comparatives
in line with IAS 8 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,
2019
June 30,
2018
364,445
‐
1,414
365,859
161,962
11,032
1,318
174,312
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2019
Page 37 of 69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS THREE AND TWELVE
MONTHS ENDED 30 JUNE 2019
5.
(i)
EXPENSES
Corporate general and administration expenses include the following expenses:
June 30,
2019
June 30,
2018
Employee benefit expense
Salaries, fees and leave
Equity based payments (note 17)
Defined contribution superannuation expense
Other corporate general and administration expenses
Accounting, legal and consulting fees
Audit fees (note 5(ii))
Borrowing expenses
Regulatory fees
Information technology expenses
Insurance expenses
Interest expense
Office expenses
Promotional and conference expenses
Travel expenses
Other administration expenses
Total
(ii)
Auditors’ Remuneration
1,329,580
1,158,705
101,384
1,976,212
71,668
919,554
154,839
104,188
86,954
3,204,817
249,504
795,700
717,751
1,328,572
12,199,428
June, 30
2019
Auditing and review of the Company’s consolidated financial statements:
BDO (WA) Pty Ltd
71,668
71,668
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
67,144
67,144
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 $41,710 (2018: $39,695).
6.
INCOME TAX
(a)
Prima facie income tax benefit at 27.5% (2018: 27.5%) 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%
30 JUNE 2019
$
(27,050,962)
(7,439,014)
30 JUNE 2018
$
(37,182,844)
(10,225,282)
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
1,310
4,210,082
(16,489)
3,244,111
‐
3,232
(785,890)
(5,417)
11,013,357
‐
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2019
Page 38 of 69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS THREE AND TWELVE
MONTHS ENDED 30 JUNE 2019
(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, 2019, the Company’s Australian tax losses that can be applied against future taxable profit in the
amount of $45,463,133.
The Company’s also has Ghanaian tax losses that can be applied against future taxable profit in the amount of
$55,101,666.
7.
(a)
KEY MANAGEMENT PERSONNEL
Details of key management personnel
Executive KMP
Archie Koimtsidis – Managing Director
Malik Easah – Executive Director
Jon Grygorcewicz – Chief Financial Officer – Appointed on 31 October 2018
Derrick Weyrauch – Chief Financial Officer – Appointed 10 July 2017 and retired on 31 October 2018
NED’s
Kevin Tomlinson – Non‐Executive Chairman
Michele Muscillo ‐ Non‐Executive Director ‐ Appointed on 11 October 2017
Dr Kenneth G. Thomas – Non‐Executive Director – Appointed on 31 October 2018
Trevor Schultz – Non‐Executive Director – Appointed on 2 January 2019
Robert Schafer ‐ Non‐Executive Director – Appointed on 10 July 2017 and retired on 2 January 2019
Jacques McMullen ‐ Non‐Executive Director Appointed on 11 October 2017 and retired on 31 October 2018
(b)
Compensation of executive key management personnel and non‐executive directors
Salaries, fees and leave
Non‐monetary (i)
Post employment benefits – superannuation
Equity based payments – Note 17
Termination Payments
30 JUNE 2019
$
1,175,732
90,199
3,800
1,183,751
67,126
2,520,608
30 JUNE 2018
$
1,239,277
38,850
4,268
2,955,160
‐
4,237,555
(i)
Non‐monetary benefits are for directors’ and officers’ liability and legal expense insurance premiums.
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2019
Page 39 of 69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS THREE AND TWELVE
MONTHS ENDED 30 JUNE 2019
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 2019.
(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 $309,624 (2018: $337,218).
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 $5,028 (2018: $3,506).
Robert Schafer, a director, provided consulting services to the Company. Amount that have been paid or payable
total $0 (2018: $12,911).
During the year ended 30 June 2019, Cardinal Resources Limited has advanced funds to Savannah 2019: nil
(2018: $4,000,674), a related entity to Director Mr Malik Easah. The purpose of an advance was for the
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, $280,300 (2018: $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,
2018
818,752
6,292
155,180
980,224
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,
2019
186,992
48,003
21,655
256,650
(b)
Other assets
Prepayments (i)
Cash deposits
June 30,
2019
839,824
7,568
847,392
June 30,
2018
1,393,434
‐
1,393,434
(i) Prepayments include an advance of $280,300 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, $280,300 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.
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2019
Page 40 of 69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS THREE AND TWELVE
MONTHS ENDED 30 JUNE 2019
9.
PLANT AND EQUIPMENT
Cost
Balance as at July 1, 2018
Additions
Disposals
Foreign exchange movement
Balance as at June 30, 2019
Balance as at July 1, 2017
Additions
Disposals
Foreign exchange movement
Balance as at June 30, 2018
Accumulated depreciation
Balance as at July 1, 2018
Depreciation for the period
Disposals
Foreign exchange movement
Balance as at June 30, 2019
Balance as at July 1, 2017
Depreciation for the period
Disposals
Foreign exchange movement
Balance as at June 30, 2018
Carrying amounts
As at 30 June 2019
As at 30 June 2018
10.
TRADE AND OTHER PAYABLES
Trade and other payables (i)
Other accrued expenses
Plant and Equipment
Vehicles
Total
$1,031,395
317,392
(4,024)
(27,677)
$1,317,086
832,291
226,903
(2,776)
(25,023)
$1,031,395
$384,299
397,026
(1,122)
(24,015)
$756,188
293,668
87,984
‐
2,647
$384,299
$1,415,694
714,418
(5,146)
(51,692)
$2,073,274
1,125,959
314,887
(2,776)
(22,376)
$1,415,694
Plant and Equipment
Vehicles
Total
$613,835
299,168
‐
(81,757)
$831,246
467,844
188,154
(2,132)
(40,031)
$613,835
$237,710
15,563
‐
(5,895)
$247,378
192,719
29,300
‐
15,691
$237,710
$851,545
314,731
‐
(87,652)
$1,078,624
660,563
217,454
(2,132)
(24,340)
$851,545
$485,840
$417,560
$508,810
$146,589
$994,650
$564,149
June 30,
2019
2,689,016
597,100
3,286,116
June 30,
2018
3,450,142
1,256,876
4,707,018
(i) Trade payables are unsecured and are usually paid within 30 days of recognition. The carrying amounts of
trade and other payables are considered to be the same as their fair values due to their short‐term nature.
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2019
Page 41 of 69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS THREE AND TWELVE
MONTHS ENDED 30 JUNE 2019
11.
BORROWINGS
Secured credit facility
Foreign exchange on credit facility
Transaction costs
(i) Secured Credit Facility
June 30,
2019
$ 36,134,808
1,308,979
(1,839,107)
$ 35,604,680
June 30,
2018
$ ‐
‐
‐
$ ‐
The credit facility is secured by Sprott Private Resources Lending (Collector), L.P 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, being 28 February 2021;
50% of the interest is accrued and payable on loan maturity.
Interest rate of LIBOR + 7.75%; and
The credit facility is secured against assets of Cardinal and its wholly owned subsidiary, Cardinal Namdini
Mining Limited.
(ii) Loan Covenants
Cardinal Resources has complied with the financial covenants of its credit facility during the June 30, 2019
reporting period.
(i) Under the terms of the credit facility, Cardinal’s Working Capital Ratio shall be equal to or greater than
1.20 to 1.00; and
(ii) The amount of Cardinal’s Unrestricted Cash is greater than US$2,500,000 or if, denominated in AU$
equivalent to US$2,500,000.
Cardinal has complied with these covenants throughout the year.
12.
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 2019 are as follows:
As at July 1, 2017
Transactions during the year
Shares issued (i)
Share based payments (ii)
Options exercised (iii)
Unlisted options exercise (iv)
Less: transaction costs (vi)
As at June 30, 2018
Number of Shares
350,062,957
Amount $
$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
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2019
Page 42 of 69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS THREE AND TWELVE
MONTHS ENDED 30 JUNE 2019
As at July 1, 2018
Transactions during the year
Shares issued
Share based payments (v)
Options exercised (iii)
Less: transaction costs (vi)
As at June 30, 2019
Number of Shares
373,563,580
‐
5,543,440
3,757,971
‐
382,864,991
Amount $
$81,369,056
‐
2,535,378
563,696
(7,703)
84,460,427
(i)
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 syndicate of underwriters.
(ii)
Share based payments (refer to note 17) 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 17(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 17(iii).
(iii)
Exercise of Listed Options
(iv)
Exercise of unlisted options, exercise price $0.22 per share.
(v)
Share based payments (refer to note 17) for the year ended 30 June 2019
A total of 357,952 shares were issued to employees of the Company for consideration for services
provided to the Company.
(a) On 1 October 2018, 177,001 shares at $0.46 per share issued for services provided;
(b) On 19 November 2018, 116,848 shares at $0.41 per share issued for services provided; and
(c) On 12 June 2018 64,103 shares at $0.39 per share issued for services provided.
On 28 August 2018 the Company issued 4,250,000 shares at $0.47 per shares to Sprott in relation to the
Facility, refer to Note 11.
On 19 November 2018 the Company issued 935,488 shares at $0.41 per share to a consultant in relation
to services rendered to the Company.
(vi)
Transactions costs represent the costs of issuing the shares.
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2019
Page 43 of 69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS THREE AND TWELVE
MONTHS ENDED 30 JUNE 2019
13.
RESERVES
(a) Movement in options reserve
As at the beginning of the year
Options issued during the year
Expiry of unlisted options
As at reporting date
(i)
The below options were on issue as at 30 June 2019.
June 30,
2019
$
6,744,105
1,792,292
(1,351,324)
7,185,073
June 30,
2018
$
2,710,589
4,217,516
(184,000)
6,744,105
Grant Date
Listed Options
Unlisted Options Ex. $0.22
Milestone Options Ex. $0.50
‐
18 March 2016
12 April 2017
21 December 2017 Milestone Options Ex. $0.825
21 December 2017 Milestone Options Ex. $0.965
21 December 2017
30 April 2019
30 April 2019
12 March 2019
Total
Unlisted Options Ex.$0.75
Milestone Options Ex. $0.679
Milestone Options Ex. $0.59
Unlisted Options Ex. $1.00
‐
2019
Number of
Options Balance
at 30 June 2019
2019
Expense
During the
Period
2018
Number of
Options Balance at
30 June 2018
2018
Expense
During the
Period
110,371,935
6,000,000
18,500,000
‐
2,018,100
1,000,000
2,180,049
2,180,049
1,867,817
144,177,950
‐
‐
1,247,595
185,911
285,823
‐
21,957
25,605
25,401
1,792,292
114,129,906
6,000,000
18,500,000
5,758,000
4,036,200
1,000,000
‐
‐
‐
149,424,106
‐
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
As at 1 July 2017
Transactions during the year
Exercise of options
As at 30 June 2018
As at 1 July 2018
Transactions during the year
Exercise of options
As at 30 June 2019
Number of
Options
116,149,539
(2,019,633)
114,129,906
114,129,906
(3,757,971)
110,371,935
(c) Movement in unlisted options exercisable at $0.22 on or before 18 March 2020
As at 1 July 2017
Transactions during the year
Exercise of options (ii)
Expiry of options
As at 30 June 2018
Number of
Options
8,000,000
(2,000,000)
‐
6,000,000
$
468,607
‐
468,607
468,607
‐
468,607
$
736,000
(184,000)
‐
552,000
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2019
Page 44 of 69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS THREE AND TWELVE
MONTHS ENDED 30 JUNE 2019
As at 1 July 2018
Transactions during the year
Exercise of options
Expiry of options
As at 30 June 2019
Number of
Options
6,000,000
‐
‐
6,000,000
$
552,000
‐
‐
552,000
(i)
(ii)
On 18 March 2016, the Company issued 9,500,000 unlisted options to employees and directors of the
Company.
On 19 October 2017 1,000,000 unlisted options were exercised and on 10 November 2017 1,000,000
unlisted options were exercised.
(d) Movement in unlisted milestones options exercisable at $0.50 on or before 12 April 2022
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
As at 1 July 2018
Transactions during the year
Options issued
Options expense during the period
Cancelled or forfeited during the year
As at 30 June 2019
Number of
Options
23,500,000
‐
‐
(5,000,000)
18,500,000
$
1,505,982
‐
2,777,253
(320,524)
$3,962,711
18,500,000
3,962,711
‐
‐
‐
18,500,000
(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
As at 1 July 2018
Transactions during the year
Options expensed
Cancelled or forfeited during the year
As at 30 June 2019
Number of
Options
‐
5,758,000
‐
5,758,000
Number of
Options
5,758,000
‐
(5,758,000)
‐
‐
1,247,595
‐
$5,210,306
$
‐
961,821
‐
961,821
$
961,821
185,911
(1,147,732)
‐
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2019
Page 45 of 69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS THREE AND TWELVE
MONTHS ENDED 30 JUNE 2019
(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
As at 1 July 2019
Transactions during the year
Options expense
Cancelled or forfeited during the year
As at 30 June 2019
Number of
Options
‐
4,036,200
‐
4,036,200
Number of
Options
4,036,200
‐
(2,018,100)
2,018,100
(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
As at 1 July 2019
Transactions during the year
Options issued
Cancelled or forfeited during the year
As at 30 June 2019
Number of
Options
‐
1,000,000
‐
1,000,000
Number of
Options
1,000,000
‐
‐
1,000,000
$
‐
287,117
‐
287,117
$
287,117
285,823
(203,349)
369,448
$
‐
511,748
‐
511,748
$
511,748
‐
‐
511,748
(h) Movement in unlisted milestones options exercisable at $0.679 on or before 21 December 2022
As at 1 July 2018
Transactions during the year
Options issued
Cancelled or forfeited during the year
As at 30 June 2019
Number of
Options
‐
2,180,049
‐
2,180,049
$
‐
21,957
‐
21,957
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2019
Page 46 of 69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS THREE AND TWELVE
MONTHS ENDED 30 JUNE 2019
(i) Movement in unlisted milestones options exercisable at $0.59 on or before 21 December 2022
As at 1 July 2018
Transactions during the year
Options issued
Cancelled or forfeited during the year
As at 30 June 2019
Number of
Options
‐
2,180,049
‐
2,180,049
(j) Movement in unlisted options exercisable at $1.00 on or before 12 March 2021
As at 1 July 2018
Transactions during the year
Options issued
Cancelled or forfeited during the year
As at 30 June 2019
Number of
Options
‐
1,867,817
‐
1,867,817
$
$
‐
25,605
‐
25,605
‐
25,401
‐
25,401
The following table shows the movement of listed and unlisted options for the years ended 30 June 2019 and
2018:
Balance as at 1 July 2018
Options granted (note 13 (h),(i),(j))
Options forfeited/exercised (note 13 (b), (c) and (d))
Balance as at 30 June 2019
Balance as at 1 July 2017
Options granted (note 13 (e),(f),(g))
Options forfeited/exercised (note 13 (b), (c) and (d))
Balance as at 30 June 2018
Number of Options
149,424,106
6,227,915
(11,474,071)
144,177,950
147,649,539
10,794,200
(9,019,633)
149,424,106
Weighted
Average
Exercise Price
$
$0.25
$0.77
($0.63)
$0.24
$0.20
$0.87
($0.36)
$0.25
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2019
Page 47 of 69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS THREE AND TWELVE
MONTHS ENDED 30 JUNE 2019
The table below shows the outstanding options as at 30 June 2019 and 2018:
Outstanding
Vested
30 June
Exercise Price
$
Number of
Options
Remaining
Contractual
life (days)
Number of
Options
2019
2019
2019
2019
2019
2019
2019
2019
2018
2018
2018
2018
2018
2018
0.150
0.220
0.500
0.965
0.750
0.679
0.590
1.000
0.150
0.220
0.500
0.825
0.965
0.750
110,371,935
6,000,000
18,500,000
2,018,100
1,000,000
2,180,049
2,180,049
1,867,817
114,129,906
6,000,000
18,500,000
5,578,000
4,036,200
1,000,000
92
262
1,017
1,270
1,270
1,270
1,270
619
457
627
1,382
1,635
1,635
1,635
110,371,935
6,000,000
5,550,000
‐
1,000,000
‐
‐
1,867,817
114,129,906
6,000,000
5,550,000
1,727,400
‐
1,000,000
(i) Movement in Performance Shares
Weighted
Average
Remaining
Contractual
life (days)
70
11
39
‐
9
‐
‐
8
349
25
51
19
‐
11
Number of Class
A Performance
Shares
$
As at 1 July 2017
Transactions during the year
Performance Shares expired (i)
As at 30 June 2018
As at 1 July 2018
Transactions during the year
Performance Shares expired
As at 30 June 2019
(i)
During the year 50 Class A Performance Shares expired.
50
(50)
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
General terms attaching to the Performance Shares are set out below. For further details, see the Notice of
Meeting dated 19 November 2012.
Class C Performance Shares
As at 1 July 2017
Transactions during the year
Performance shares issued
As at 30 June 2018
Number of
Performance
Shares
60
‐
60
‐
‐
‐
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2019
Page 48 of 69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS THREE AND TWELVE
MONTHS ENDED 30 JUNE 2019
As at 1 July 2018
Transactions during the year
Performance shares issued
As at 30 June 2019
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 2019.
General terms attaching to the Performance Shares are set out below.
The Directors are currently of the opinion that the non‐market vesting conditions are unlikely to be met within
5 years from the date of issue. As such, no value as been ascribed to the Performance Shares in the Group’s
consolidated financial statements.
The issue of 60 Performance Shares in the capital of the Company, each of which will convert to 100,000 shares
ranking equally with the existing shares in the proportions set out below upon satisfaction of achieving a
minimum JORC Inferred Resource of gold ounces within the Ndongo North Concession (“Performance Hurdles”)
by no later than five years after the date on which the Performance Shares are issued, being 18 February 2015:
Performance Shares
10
5
5
5
5
5
5
5
5
5
5
60
Performance Hurdles (JORC
Inferred Au Resource)
500,000 ounces
750,000 ounces
1,000,000 ounces
1,250,000 ounces
1,500,000 ounces
1,750,000 ounces
2,000,000 ounces
2,250,000 ounces
2,500,000 ounces
2,750,000 ounces
3,000,000 ounces
Conversion to Ordinary
Shares
1,000,000
500,000
500,000
500,000
500,000
500,000
500,000
500,000
500,000
500,000
500,000
6,000,000
In the event that the Company sells, transfers or otherwise disposes of all or part of the Ndongo North
Concession to a third party prior to the issuing of any shares upon conversion of any Performance Shares,
Savannah will be entitled to an amount equal to 49% of the sale proceeds less any related selling costs,
exploration and mining costs (plus a fixed 30% overhead amount), purchase costs in connection with the
acquisition of the Ndongo North Concession, and any other costs incurred with respect to the sale.
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2019
Page 49 of 69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS THREE AND TWELVE
MONTHS ENDED 30 JUNE 2019
14.
ACCUMULATED LOSSES
Opening balance
Loss for the year
Expiry of options
15.
LOSS PER SHARE
June 30,
2019
81,898,296
27,050,962
(665,540)
108,283,718
June 30,
2018
44,899,452
37,182,844
(184,000)
81,898,296
Net loss
Weighted average number of shares outstanding
Basic and undiluted loss per share (cents)
Unaudited Three months
ended June 30,
Audited Twelve months
ended June 30,
2019
$ (9,497,304)
382,864,991
$ (2.48)
2018
$ (6,040,143)
372,820,197
$ (1.62)
2019
$ (27,050,962)
379,752,526
$ (7.12)
2018
$ (37,182,844)
363,630,782
$ (10.22)
16.
(a)
NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS
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
June 30, 2019
4,503,464
14,231,992
18,735,456
June 30, 2018
2,819,794
4,484,013
7,303,807
Term
30 days
60 days
Interest Rate
1.50%
2.50%
(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
Borrowing costs
Capitalised interest on borrowings
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
June 30, 2019
(27,050,962)
June 30, 2018
(37,182,844)
314,731
1,158,705
1,558,320
1,883,196
(373,881)
723,574
546,042
1,420,902
(25,103)
(19,844,476)
217,454
4,871,593
‐
‐
295,904
(847,673)
(147,798)
4,131
40,260
(32,748,973)
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2019
Page 50 of 69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS THREE AND TWELVE
MONTHS ENDED 30 JUNE 2019
(c)
Reconciliation of cash and non‐cash movements in liabilities arising from financing activities
Non‐Cash Changes
June 30,
2018
$
‐
‐
Borrowings
Total liabilities from
financing liabilities
17.
SHARE BASED PAYMENTS
Cashflows
Transaction
Costs
Interest
June 30,
2019
$
33,921,932
$
(1,839,107)
1,308,979 2,212,876
$
$
35,604,680
33,921,932
(1,839,107)
1,308,979
2,212,876
35,604,680
Foreign
Exchange
Movement
$
(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 (2018: 2,500,000). As at 30 June
2019, 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 ended 30 June 2018 Milestone 1 vested. The expected accounting vesting date
determined at grant date for Milestones 2 and 3 was 30 September 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
27.02.17
27.02.17
27.02.17
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
$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
2,198,910 661,072
2,931,880 586,376
7,329,700 1,247,448
During the year no milestone options issued to key management were forfeited or exercised.
(ii) During the year ended 30 June 2019 the Company issued 5,758,000 options to key management
personnel of the Company, which have an exercise price of $0.825. During the year 5,758,000 milestone
options were cancelled.
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2019
Page 51 of 69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS THREE AND TWELVE
MONTHS ENDED 30 JUNE 2019
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 30 September 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
‐
‐
‐
‐
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
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
‐
‐
‐
‐
185,911
‐
‐
185,911
A probability of 100% has been applied to the milestones occurring.
The milestone options vest on meeting of the milestones.
(iii)
During the year ended 30 June 2018 the Company 4,036,200 options to key management personnel of
the Company, which have an exercise price of $0.965. 2,018,100 milestone options were cancelled during
the year. As at 30 June 2019, the Company had 2,018,100 milestone options on issue.
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 30 September
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 2019
Page 52 of 69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS THREE AND TWELVE
MONTHS ENDED 30 JUNE 2019
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.
864,900
1,153,200
2,018,100
$0.965
$0.965
$0.965
$0.555
$0.555
$0.555
21.12.22
21.12.22
22.11.17
22.11.17
Volatility
(discount)
Indicative
Value per
Option
Total
Value
($)
Expense
for the
year ($)
99.50%
99.50%
99.50%
$0.37
$0.37
$0.37
210,101
159,347
369,448
161,343
124,480
285,823
(iv) During the year 2,180,049 milestone options were issued to a Director of the Company, which have an
exercise price of $0.679.
The terms and conditions of the options are detailed in the Notice of General Meeting dated 5 March
2019.
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 30 September
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
Milestone 2
Milestone 3
Total
Expiry
Date
Exercise
Price
Number
Options
Valuation
Date
Market
Price of
Shares
Risk
Free
Interest
Rate
1.65%
1.65%
1.65%
A probability of 100% has been applied to the milestones occurring.
934,307
1,245,742
2,180,049
$0.679
$0.679
$0.679
$0.405
$0.405
$0.405
21.12.22
21.12.22
11.04.19
11.04.19
Volatility
(discount)
Indicative
Value per
Option
Total
Value
($)
Expense
for the
year ($)
50%
50%
50%
$0.095
$0.095
$0.095
88,893
118,524
207,417
13,218
8,739
21,957
(v) During the year 2,180,049 milestone options were issued to a Director of the Company, which have an
exercise price of $0.590.
The terms and conditions of the options are detailed in the Notice of General Meeting dated 5 March
2019.
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 30 September
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 2019
Page 53 of 69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS THREE AND TWELVE
MONTHS ENDED 30 JUNE 2019
Class of
Options
Milestone 2
Milestone 3
Total
Expiry
Date
Exercise
Price
Number
Options
Valuation
Date
Market
Price of
Shares
Risk
Free
Interest
Rate
1.65%
1.65%
1.65%
A probability of 100% has been applied to the milestones occurring.
934,307
1,245,742
2,180,049
$0.590
$0.590
$0.590
$0.405
$0.405
$0.405
21.12.22
21.12.22
11.04.19
11.04.19
Volatility
(discount)
Indicative
Value per
Option
Total
Value
($)
Expense
for the
year ($)
50%
50%
50%
$0.111
$0.111
$0.111
103,660
138,214
241,874
15,414
10,191
25,605
(vi)
During the year, 4,250,000 fully paid ordinary shares were issued to Sprott Private Resources Lending
(Collector), L.P. as part of the secured credit facility; the shares were ascribed the following value:
Date of Issue
Number of Shares
28.08.2018
4,250,000
Price of
Shares (a)
$0.47
Total Value
($)
1,997,500
Expense for
the year ($)
1,997,500
(a)
The value of the shares was determined at the date it was agreed to issue the shares for services.
(vii)
During the year, 935,488 fully paid ordinary shares were issued for services rendered; the shares were
ascribed the following value:
Date of Issue
Number of Shares
19.11.2018
935,488
Price of
Shares (a)
$0.41
Total Value
($)
383,550
Expense for
the year ($)
383,550
The value of the shares was determined at the date it was agreed to issue the shares for services
(viii)
During the year, 357,952 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
01.10.2018
19.11.2018
04.06.2019
177,001
116,848
64,103
Price of
Shares (a)
$0.46
$0.41
$0.39
Total Value
($)
81,420
47,908
25,000
Expense for
the year($)
81,420
47,908
25,000
(a)
The value of the shares was determined at the date it was agreed to issue the shares for services.
(ix)
During the year the Company agreed to issue 1,867,817 unlisted options to a consultant of the Company
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
1,867,817
12.03.19
Market
Price of
Shares
$0.40
Exercise
Price
Expiry Date
$1.00
12.03.21
Risk Free
Interest
Rate
1.66%
Volatility
(discount)
44.33%
Indicative
Value per
Option
$0.014
Expense
for the
year ($)
25,401
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2019
Page 54 of 69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS THREE AND TWELVE
MONTHS ENDED 30 JUNE 2019
18.
CONTINGENT ASSETS
A subsidiary, Cardinal Resources Ghana Limited, has lodged a claim to refund Value Added Tax (VAT) paid in
Ghana during the course of business. The refund is expected to be received once the Company has moved into
production. However, the contingent asset has not been recognised as a receivable as at 30 June 2019, as receipt
of the funds is contingent on the Company being in production.
There are no other contingent assets as at 30 June 2019.
19.
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
2019
499,814
488,018
987,832
2018
135,366
135,366
270,732
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
2019
2018
97,864
87,325
185,189
385,329
147,340
532,669
The Corporation has commitments in respect to the use of an office premises in Perth, Western Australia, for
$5,480 per month, the lease is for five years from 8 January 2019.
The Corporation has commitments in respect to the use of an office outside of Australia, for C$2,702 per month
until 31 March 2021.
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 (“Royalty Deed”)
in January 2018, whereby Cardinal Namdini will pay to Savannah Mining Limited (“Savannah”) a net smelter
return royalty (“Royalty”) equal to:
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2019
Page 55 of 69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS THREE AND TWELVE
MONTHS ENDED 30 JUNE 2019
(a)
(b)
4% of the Net Smelter Return on the first 50,000 ounces of Specified Minerals (as defined in the Royalty
Deed) produced within each small‐scale license which was purchased by Savannah within the Large Scale
Mining License (as defined in the Royalty Deed); 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) in 2017 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.
20.
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:
Note
Floating
interest rate
Fixed
interest
rate
Non‐
interest
bearing
Total
Weighted
average
interest rate
2019
Financial assets
Cash and cash equivalents
Trade and other receivables
Cash deposits
Financial liabilities
Trade and other payables
Borrowings
2018
16
8(a)
8(b)
10
11
Note
Financial assets
Cash and cash equivalents
Trade and other receivables
Cash deposits
16 (a)
8 (a)
8 (b)
Financial liabilities
Trade and other payables
10
1,615,539
‐
‐
1,615,539
14,213,306
‐
‐
14,213,306
2,906,611
256,650
7,568
3,170,829
18,735,456
256,650
7,568
18,999,674
‐
35,604,680
35,604,680
‐
‐
‐
3,286,116
‐
3,286,116
3,286,116
35,604,680
38,890,796
1.95%
‐
‐
‐
11.11%
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
‐
‐
‐
‐
4,707,018
4,707,018
4,707,018
4,707,018
0.76%
‐
‐
‐
‐
Based on the balances as at 30 June 2019, a 1% movement in interest rates would increase/decrease the loss for
the year before taxation by $4,829 (2018: $3,721).
(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.
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2019
Page 56 of 69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS THREE AND TWELVE
MONTHS ENDED 30 JUNE 2019
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, accounts payable and borrowings. 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.
2019
Net Financial Assets/(Liabilities) In AUD
Australian dollar
GHS New Cedi
Statement
of
position exposure
2018
AUD
3,935,628
‐
3,935,628
USD
(24,128,328)
‐
(24,128,328)
GHS
85,202
‐
85,202
CAD
(47,842)
‐
(47,842)
Total AUD
(20,155,340)
‐
(20,155,340)
financial
Net Financial Assets/(Liabilities) In AUD
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
3,557,041
‐
3,843,939
374,412
(523,034)
(138,276)
3,557,041
Based on the statement of exposure at 30 June 2019, a 1% movement in foreign exchange rates would
increase/decrease the loss for the year before taxation by $343,065 (2018: $3,585).
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2019
Page 57 of 69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS THREE AND TWELVE
MONTHS ENDED 30 JUNE 2019
(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.
(g)
Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction
costs. They are subsequently measured at amortised costs using the effective interest method.
Where there is an unconditional right to defer settlement of the liability for at least 12 months after the reporting
date, the loans or borrowings are classified as non‐current.
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
June 30,
2019
June 30,
2018
$ 3,286,116
$ 4,707,108
‐
$ 3,286,116
‐
$ 4,707,108
Contractual maturities
of financial liabilities
As at March 31, 2019
Non‐derivatives
Trade payables
Borrowings
Total non‐derivatives
Less than
6 months
6 – 12
months
Between 1 and
2 years
Between
2 and 5
years
Over
5
years
Total
contractual
cash flows
Carrying amount
(assets)/liabilities
‐
881,092
881,092
‐
910,556
910,556
‐
38,495,085
38,495,085
‐
‐
‐
‐
‐
‐
40,286,733
40,286,733
‐
35,604,680
35,604,680
21.
RELATED PARTY TRANSACTIONS
Tomlinson Consultancy, of which Kevin Tomlinson is a director, provided geological consulting services to the
Company. Amounts that have been paid or payable total $309,624 (2018: $$337,218).
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 $5,028 (2018: $3,506).
Robert Schafer, a director, provided consulting services to the Company. Amount that have been paid or payable
total $0 (2018: $12,911).
During the year ended 30 June 2019, Cardinal Resources Limited has advanced funds to Savannah 2019: nil
(2018: $4,000,674), a related entity to Director Mr Malik Easah. The purpose of an advance was for the
development of a mining licence in areas in respect of which Savannah had entered into agreements with holders
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2019
Page 58 of 69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS THREE AND TWELVE
MONTHS ENDED 30 JUNE 2019
of small scale licences. As at the date of this report, $280,300 (2018: $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.
22.
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.
23.
UNCONSOLIDATED PARENT COMPANY DISCLOSURE
(a)
Financial position for the year ended 30 June 2019
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/deficiency in equity
(b)
Financial performance for the year ended 30 June 2019
Loss for the year
Other comprehensive income
Total comprehensive loss
June 30 ,2019
June 30, 2018
18,808,888
170,000
18,978,888
1,975,005
35,604,680
37,579,685
84,582,327
7,185,072
(110,368,196)
(18,600,797)
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
30 JUNE 2019
$
(26,115,681)
‐
(26,115,681)
30 JUNE 2018
$
(25,695,715)
‐
(25,695,715)
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2019
Page 59 of 69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS THREE AND TWELVE
MONTHS ENDED 30 JUNE 2019
24.
EVENTS SUBSEQUENT TO STATEMENT OF FINANCIAL POSITION DATE
On 4 July 2019 the Company issued 59,975 fully paid ordinary shares on exercise of Listed Options.
On 11 July 2019 the Company issued 280,000 fully paid ordinary shares on exercise of Listed Options.
On 17 July 2019 the Company issued 600,000 fully paid ordinary shares on exercise of Listed Options. The
Company also issued 73,530 and 635,161 shares at a deemed issue price of $0.34 and $0.336 respectively for
services rendered to the Company.
On 24 July 2019 the Company issued 130,000 fully paid ordinary shares on exercise of Listed Options.
On 29 July 2019 the Company issued 126,000 fully paid ordinary shares on exercise of Listed Options.
On 7 August 2019 the Company issued 252,500 fully paid ordinary shares on exercise of Listed Options.
On 19 August 2019 the Company issued 617,500 fully paid ordinary shares on exercise of Listed Options.
On 21 August 2019 the Company issued 827,048 fully paid ordinary shares on exercise of Listed Options.
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 2019
Page 60 of 69
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)
(ii)
Giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its
performance for the year ended that date; and
Complying with Accounting Standards and Corporations Regulations 2001, and other
mandatory professional reporting requirements:
(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 2019.
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 3 September 2019
Perth, Western Australia
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2019
Page 61 of 69
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 2019, 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, 3 September 2019
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.
P 62 of 69 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 2019 and
2018, and 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 years
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 2019 and 2018, and of
its financial performance for the years then ended; 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.
P 63 of 69 Measurement of Share-based Payments
Key audit matter
How the matter was addressed in our audit
During the financial year ended 30 June 2019, 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:127)
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 12, 13, and 17 of the financial
report for disclosure of the arrangements.
(cid:127)
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
used in determining the fair value of the share-based
payments in accordance with IFRS 2: Share Based
Payments, we consider the Group’s calculation of the
share-based payment expense to be a key audit
matter.
(cid:127)
Evaluating management’s methodology for
calculating the fair value of the share-based
payments including assessing the valuation
inputs using internal specialists where
required;
(cid:127)
(cid:127)
(cid:127)
(cid:127)
Recalculating estimated fair value of the
share based payments using relevant
valuation methodologies;
Assessing the allocation of the share-based
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), 12, 13 and 17
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 2019, 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.
P 64 of 69 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 9 to 21 of the directors’ report for the
year ended 30 June 2019.
In our opinion, the Remuneration Report of Cardinal Resources Limited, for the year ended 30 June
2019, 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, 3 September 2019
P 65 of 69 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:
·
Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks,
and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
The risk of not detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
· Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
·
·
·
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a
going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the consolidated financial
statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial
statements, including the disclosures, and whether the consolidated financial statements
represent the underlying transactions and events in a manner that achieves fair presentation.
· Obtain sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the group
audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and
other matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.
From the matters communicated with those charged with governance, we determine those matters
that were of most significance in the audit of the consolidated financial statements of the current
period and are therefore the key audit matters. We describe these matters in our auditor’s report
unless law or regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our report because the
adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
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.
P 66 of 69 SHAREHOLDER INFORMATION
1
Distribution of holders
As at 3 September 2019 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
83
147
167
419
173
989
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
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
Percentage
interest %
9.77%
24,698,305
6.41%
The names of the 20 largest shareholders on the share register as at 3 September 2019, who hold 78.29% 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
J P Morgan Nominees Australia Limited
Zero Nominees Pty Ltd
Oceanic Capital Pty Ltd
Mr Malik Mohammad Easah
Arredo Pty Ltd
National Nominees Limited
Neon Capital Ltd
Panga Pty Ltd
St Barnabas Investments Pty Ltd
Redland Plains Pty Ltd
Number
103,769,173
42,818,182
33,429,879
24,115,086
20,012,138
17,250,000
10,535,045
7,681,815
6,500,000
4,283,342
4,000,000
3,920,000
3,865,625
3,757,860
Consolidated Financial Statements for the Three and Twelve Months Ended 30 June 2019
Page 67 of 69
SHAREHOLDER INFORMATION
Invia Custodian Pty Ltd
Macquirie Bank Limited
CS Third Nominees Pty Limited
AWD Consultants Pty Ltd
Yarandi Investments Pty Ltd
Payzone Pty Ltd
5
Top 20 option holders
3,733,334
3,116,308
2,807,992
2,800,000
2,498,288
2,390,625
The names of the 20 largest option holders on the share register as at 3 September 2019, who hold 85.22% 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
JP Morgan Nominees Australian Pty Limited
Yarandi Investments Pty Ltd
Dixtru Pty Limited
Citicorp Nominees Pty Ltd
Redland Plains Pty Ltd
Arredo Pty Ltd
Invia Custodian Pty Ltd
Mr Hendrick Hartmann
Mrs Sophie Kyriazis
Mr Sean Andrew Morrison
Mr David Ian Raymond Hall + Mrs Denise Allison Hall
Mr Owen Barry Merrett + Mrs Joanne Ross Merrett
ACP Investments Pty Ltd
Panga Pty Ltd
Caves Road Investments Pty Ltd
ACP Investments Pty Ltd
Riverfront Nominees Pty Ltd
6
Consistency with business objectives
Number
38,220,051
8,058,390
6,560,423
5,320,191
4,591,731
3,200,000
3,000,000
2,740,055
2,200,000
2,000,000
1,950,000
1,852,120
1,767,944
1,586,073
1,300,027
1,300,000
1,200,000
1,168,380
1,100,000
1,000,000
1,000,000
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 2019
Page 68 of 69
TENEMENT INFORMATION
Cardinal Resources Limited mineral interest as at 3 September 2019
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 2019
Page 69 of 69
ANNUAL
INFORMATION
FORM (III)
ANNUAL INFORMATION FORM
For the year ended June 30, 2019
Dated September 3, 2019
TABLE OF CONTENTS
INTRODUCTORY NOTES ......................................................................................................................................... 1
Financial Statements ................................................................................................................................................. 1
Cautionary Statement Regarding Forward‐Looking Information .............................................................................. 1
Technical Information ............................................................................................................................................... 3
Mineral Resource Estimates ..................................................................................................................................... 4
JORC Code ................................................................................................................................................................. 4
Cautionary note to US Shareholders Concerning Estimates of Mineral Reserves and Mineral Resources .............. 5
Glossary ..................................................................................................................................................................... 6
CORPORATE STRUCTURE ..................................................................................................................................... 12
DESCRIPTION OF THE BUSINESS .......................................................................................................................... 12
The Corporation ...................................................................................................................................................... 12
Employees ............................................................................................................................................................... 13
Three Year History ................................................................................................................................................... 13
The Ghanaian Mining Industry ................................................................................................................................ 19
NAMDINI PROJECT TECHNICAL REPORT SUMMARY ............................................................................................ 23
Introduction ............................................................................................................................................................ 23
PFS parameters and material assumptions ............................................................................................................. 24
Mining Licence ........................................................................................................................................................ 25
Namdini Mineral Resources .................................................................................................................................... 25
Geology ................................................................................................................................................................... 25
Mining ..................................................................................................................................................................... 28
Mineral processing and metallurgical testing ......................................................................................................... 33
Process Plant ........................................................................................................................................................... 37
Infrastructure .......................................................................................................................................................... 37
Operating costs ....................................................................................................................................................... 41
Capital costs ............................................................................................................................................................ 42
Environmental ......................................................................................................................................................... 44
Social ....................................................................................................................................................................... 44
Economic evaluation ............................................................................................................................................... 45
Next stages .............................................................................................................................................................. 45
OTHER PROPERTIES AND ASSETS ......................................................................................................................... 46
Bolgatanga Project .................................................................................................................................................. 46
Subranum Project ................................................................................................................................................... 47
Cardinal’s Operations in Ghana .............................................................................................................................. 47
RISK FACTORS ..................................................................................................................................................... 49
Risks Related to the Industry .................................................................................................................................. 49
Risks Related to the Business .................................................................................................................................. 52
Risks Related to Operating in Ghana ....................................................................................................................... 53
General Risks ........................................................................................................................................................... 56
DIVIDENDS .......................................................................................................................................................... 58
DESCRIPTION OF CAPITAL STRUCTURE ................................................................................................................ 58
Ordinary Shares ....................................................................................................................................................... 58
Listed Options (Warrants) ....................................................................................................................................... 59
Unlisted Options ..................................................................................................................................................... 59
Performance Shares ................................................................................................................................................ 59
Class C Performance Shares .................................................................................................................................... 60
PAGE ii
MARKET FOR SECURITIES .................................................................................................................................... 60
Trading Price and Volume ....................................................................................................................................... 60
Prior Sales of Unlisted Securities............................................................................................................................. 61
DIRECTORS AND OFFICERS .................................................................................................................................. 62
Cease Trade Orders, Bankruptcies, Penalties or Sanctions ..................................................................................... 66
Conflicts of Interest ................................................................................................................................................. 68
LEGAL PROCEEDINGS AND REGULATORY ACTIONS.............................................................................................. 68
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS .......................................................... 68
TRANSFER AGENT AND REGISTRAR ..................................................................................................................... 68
AUDIT COMMITTEE AND RELATED INFORMATION .............................................................................................. 69
The Audit and Risk Committee’s Charter ................................................................................................................ 69
Composition of the Audit and Risk Committee ....................................................................................................... 69
Reliance on Certain Exemptions ............................................................................................................................. 70
Audit Committee Oversight .................................................................................................................................... 70
Pre‐Approval Policies and Procedures .................................................................................................................... 70
External Auditor Service Fees ................................................................................................................................. 70
MATERIAL CONTRACTS ....................................................................................................................................... 71
INTERESTS OF EXPERTS ....................................................................................................................................... 71
ADDITIONAL INFORMATION ............................................................................................................................... 72
APPENDIX A ‐ AUDIT AND RISK COMMITTEE CHARTER ........................................................................................ 73
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 3, 2019. Unless
otherwise indicated, in this AIF all references to (i) “$” or “AUD” are to Australian dollars; (ii) “US$” and “USD”
are to United States dollars; (iii) “C$” or “CAD” are to Canadian dollars; and (iv) “GHS” are to Ghanaian cedi.
The Canadian dollar rates of exchange on September 3, 2019 were:
United States dollar(1)
C$1. 00=$1.323
Australian dollar(1)
C$1. 00 = $0.947
Note:
(1) Bank of Canada average exchange rate for September 3, 2019 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, 2019. 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;
2019 Annual Information Form
PAGE 2
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;
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
2019 Annual Information Form
PAGE 3
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
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
Except where indicated, the disclosure contained in this AIF that is of an economic, scientific or technical nature
has been summarized or extracted from the technical report titled “National Instrument 43‐101 Namdini Gold
Project Preliminary Feasibility Study Technical Report Ghana, West Africa”, dated effective October 25, 2018
(the “Technical Report”). The Technical Report was prepared by (i) Mr. Glenn Turnbull, Principal Mining
Engineer of Golder Associates Pty Ltd; (ii) Mr. Nicolas Johnson, Consulting Geologist with MPR Geological
Consultants Pty Ltd; and (iii) Mr. Daryl Evans, Consulting Metallurgist with Independent Metallurgical
Operations Pty Ltd. Each of Mr. Glenn Turnbull, Mr. Nicolas Johnson and Mr. Daryl Evans 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. Each of Mr. Glenn Turnbull, Mr.
Nicolas Johnson and Mr. Daryl Evans consents to the inclusion in this AIF of such scientific and technical
information in the form and context in which it appears and confirms that such information is based on and
fairly represents the Technical Report. Readers should consult the Technical Report to obtain further
particulars regarding the Namdini Gold Project. The Technical Report, which constitutes the current technical
report for the Namdini Gold Project, was filed on SEDAR on October 25, 2018 and, other than the extract of
the Executive Summary thereof, which is included in this AIF, is incorporated by reference in its entirety in this
AIF.
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 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”.
Where appropriate, certain information contained in this AIF that relates to exploration and drilling results,
metallurgical testing, the Mineral Resource estimate and the Ore Reserve estimate, updates information
derived from the Technical Report. Any updates to the scientific and technical information derived from the
2019 Annual Information Form
PAGE 4
Technical Report were prepared by or under the supervision of Mr. Glenn Turnbull, FIMM, MAusIMM, Eur. Ing.
C. Eng, an employee of Golder (as defined below). Mr. Glenn Turnbull is a “qualified person” for the purposes
of NI 43‐101.
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 Corporation.
Mineral Resource Estimates
The Ore Reserves and 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
2019 Annual Information Form
PAGE 5
sufficient to confirm geological and grade or quality continuity between points of observation. A Measured
Mineral Resource has a higher level of confidence than that applying to either an Indicated Mineral Resource
or an Inferred Mineral Resource. It may be converted to a Proved Ore Reserve (as defined herein) or to a
Probable Ore Reserve.
“Ore Reserve” means the economically mineable part of a Measured and/or Indicated Mineral Resource. It
includes diluting materials and allowances for losses, which may occur when the material is mined or extracted
and is defined by studies at pre‐feasibility or feasibility level as appropriate that include application of
Modifying Factors. Such studies demonstrate that, at the time of reporting, extraction could reasonably be
justified. The reference point at which Ore Reserves are defined, usually the point where the ore is delivered
to the processing plant, must be stated. It is important that, in all situations where the reference point is
different, such as for a saleable product, a clarifying statement is included to ensure that the reader is fully
informed as to what is being reported.
“Probable Ore Reserve” means the economically mineable part of an Indicated, and in some circumstances, a
Measured Mineral Resource. The confidence in the Modifying Factors applying to a Probable Ore Reserve is
lower than that applying to a Proved Ore Reserve.
“Proved Ore Reserve” means the economically mineable part of a Measured Mineral Resource. A Proved
Mineral Ore Reserve implies a high degree of confidence in the Modifying Factors.
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 Securities Exchange Commission (“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 Definition 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 Definition 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.
2019 Annual Information Form
PAGE 6
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);
“affiliate” has the meaning ascribed thereto in National Instrument 62‐104 — Take‐Over Bids and Issuer Bids;
“AIF” means this Annual Information Form;
“Amended Proposal” has the meaning ascribed thereto in the section “Cease Trade Orders, Bankruptcies,
Penalties or Sanctions” of this AIF;
“ASX” means ASX Limited (ABN 98 008 624 691) or the Australian Securities Exchange operated by ASX Limited
(as the context requires);
“ASX Listing Rules” means the official listing rules of the ASX, as amended from time to time;
“Au” means gold;
“Audit and Risk Committee” means the audit and risk committee of the Board;
“Banro” means Banro Corporation;
“Besra” means Besra Gold Inc.;
“Besra Cease Trade Order” has the meaning ascribed thereto in the section “Cease Trade Orders, Bankruptcies,
Penalties or Sanctions” of this AIF;
“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” or “Bolgatanga” means, collectively, the Ndongo Licence Area, the Kungongo Licence
Area and the Bongo Licence Area in the upper east region of Ghana;
“Bongo Licence 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;
“BQR” means bulk quantity request;
“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;
2019 Annual Information Form
PAGE 7
“CCAA” means the Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C‐36;
“CCAA Plan” has the meaning ascribed thereto in the section “Cease Trade Orders, Bankruptcies, Penalties or
Sanctions” of this AIF;
“Charter” means the charter of the Audit and Risk Committee;
“CIL” means carbon‐in‐leach;
“CIM Definition Standards” means the 2014 CIM Definition Standards for Mineral Resources and Mineral
Reserves;
“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;
“CMN” means Cardinal Namdini Mining Limited, a subsidiary of the Corporation;
“COG” means cut‐off grade (in g/t Au);
“Computershare (Australia)” means Computershare Investor Services Pty Ltd;
“Computershare (Canada)” means Computershare Investor Services Inc.;
“Corporations Act” means the Corporations Act, 2001 (Commonwealth of Australia), as amended, including
the regulations promulgated thereunder;
“Credit Facility” means the credit agreement entered into on August 22, 2018 by the Corporation (together
with its wholly owned subsidiaries) 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;
“Court” means the Superior Court of the Province of Quebec;
“Director” means a director of the Corporation;
“EIA” means Environmental Impact Assessment;
“EIS” means Environmental Impact Statement;
“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;
“g/t” means grams per tonne;
“Ghanaian Projects” means the Namdini Gold Project, the Bolgatanga Project and the Subranum Project;
2019 Annual Information Form
“Ghanaian Subsidiaries” means, collectively, Cardinal Subranum, Cardinal Mining Services Limited, Cardinal
Resources Ghana Limited and Cardinal Namdini Mining Limited;
PAGE 8
“Golder” means Golder Associates Pty Ltd;
“GRIDCo” means Ghana Grid Company Ltd;
“IFRS” means International Financial Reporting Standards as adopted by the International Accounting
Standards Board;
“Jaguar” means Jaguar Mining Inc.;
“JK Drop Weight Test” means the Julius Kruttschnitt drop weight test;
“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;
“July 2016 Placement” means the Corporation’s issuance on July 19, 2016, of 55,518,670 fully paid Ordinary
Shares at a price of $0.29 per Ordinary Share as the first part of a placement;
“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 licence covers an area of 122km2;
“kV” means kilovolt;
“Listed Option” means a listed option (warrant) to purchase Ordinary Shares;
“LOM” means life of mine;
“Lycopodium” means Lycopodium Minerals Pty Ltd;
“m” means metre;
“Maudore” means Maudore Minerals Ltd.;
“MIK” means multiple indicator kriging;
“Minerals Commission” means the Minerals Commission of the Government of Ghana.
“Minister” means the Minster responsible for Lands and Natural Resources of Ghana;
“mm” means millimetre;
2019 Annual Information Form
PAGE 9
“MOX” means moderately oxidized weathered rock;
“MPR Geological” means MPR Geological Consultants Pty Ltd.;
“Mt” means million tonnes;
“Mtpa” means million tonnes a year;
“NAG” means net acid generating;
“Namdini Gold Project” or “Namdini” 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 the upper
east region of Ghana.
“NAPP” means net acid producing potential;
“Ndongo Licence” 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;
“Ndongo Licence Area”means the property covered by 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 Licence
covers an area of 295km2;
“NEMAS” means NEMAS Consult Ltd;
“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;
“Notice of Intention” has the meaning ascribed thereto in the section “Cease Trade Orders, Bankruptcies,
Penalties or Sanctions” of this AIF;
“NYSE” means the New York Stock Exchange;
“October 2016 Order” has the meaning ascribed thereto in the section “Cease Trade Orders, Bankruptcies,
Penalties or Sanctions” of this AIF;
“October 2017 Placement” mean the issuance of 18,461,600 ordinary shares of the Corporation at a price of
C$0.65 per ordinary share for aggregate proceeds to the Corporation of C$12,000,040 under the agreement
with Clarus Securities Inc., on behalf of a syndicate of underwriters, pursuant to which the underwriters have
agreed to purchase, on a “brought deal” basis.
“OMC” means Orway Mineral Consultants;
“Ordinary Shares” means ordinary shares in the capital of the Corporation;
“Orefind” means Orefind Pty Ltd;
2019 Annual Information Form
PAGE 10
“oz” means Troy ounces (31.1035 g);
“PEA” means preliminary economic assessment;
“Performance Shares” means, the Class C Performance Shares;
“PFS” means preliminary feasibility study;
“Properties” means, collectively, the Bolgatanga Project, the Namdini Gold Project and the Subranum Project;
“Proposal” has the meaning ascribed thereto in the section “Cease Trade Orders, Bankruptcies, Penalties or
Sanctions” of this AIF;
“QAQC” means quality control and quality assurance;
“RC” means reverse circulation;
“Remuneration and Nomination Committee” means the remuneration and nomination committee of the
Board;
“Ridge” means Ridge Resources Limited;
“SABC” means SAG mill followed by closed circuit ball mill and recycle pebble crushing;
“SAG” means semi‐autogenous grinding (mill);
“Savannah” means Savannah Mining Ghana Limited, of which Malik Easah is the sole shareholder;
“SEC” means the United States Securities and Exchange Commission;
“September 2015 Placement” means the Corporation’s issuance of 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, on September 21, 2015.
“Shareholders” means the holders of Ordinary Shares;
“SMC Variability Test” means semi‐autogenous mill comminution variability testwork;
“SOX” means sulfur oxides;
“Subin Kasu Prospecting Licence” means prospecting licence number PL6/309 issued by the Government of
Ghana through the Minister;
“Subranum Project” or “Subranum” 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 Namdini Gold Project
Preliminary Feasibility Study Technical Report Ghana, West Africa”, dated effective October 25, 2018;
2019 Annual Information Form
PAGE 11
“TRANS” means transition zone of partially weathered rock below MOX zone;
“TSX” means the Toronto Stock Exchange;
“TSXV” means the TSX Venture Exchange;
“µm” means micron (millionth of mm);
“Unlisted Option” means an unlisted option to purchase Ordinary Shares;
“US” means the United States of America; and
“w/w” means weight for weight (e.g. for slurry density).
2019 Annual Information Form
PAGE 12
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”) 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.
2019 Annual Information Form
PAGE 13
Figure 1 Cardinal Resource’s Tenements in Ghana
Employees
The Corporation employed 53 full‐time employees as of June 30, 2019 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, 2017:
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
2019 Annual Information Form
PAGE 14
5,000,000 Ordinary Shares when the Corporation satisfied the vesting requirement of the Class B Performance
Shares.
Between August 26, 2016 and October 28, 2016, 1,435,000 Listed Options were exercised.
On November 7, 2016, Cardinal reported an initial resource estimate for the Namdini Gold Project of 3.8 million
ounces of inferred gold resources and 0.25 million ounces of indicated gold resources, calculated in accordance
with the JORC Code.
On November 7, 2016, the Corporation announced that Mr. Kevin Tomlinson had been appointed to the Board
and would serve as non‐executive chairman, that Mr. Mark Connelly, who had previously served as non‐
executive chairman, would remain as a non‐executive Director and that Mr. Mark Thomas, previously a non‐
executive Director, had retired as a Director.
On November 28, 2016, 476,247 Ordinary Shares were issued to Mr. Julian Barnes for services provided to the
Corporation. The issue was approved at the Corporation’s annual general meeting held on November 7, 2016.
On January 4, 2017, the Corporation announced that Mr. Bruce Lilford had been appointed Project Manager
at the Namdini Gold Project, effective January 3, 2017.
On February 2, 2017, Cardinal reported an interim metallurgical update for the Namdini Gold Project
identifying a number of conventional gold recovery techniques to enhance recoveries.
On February 6, 2017, the Corporation announced that Mr. Erik Palmbachs had been appointed as the
Corporation’s Chief Financial Officer, effective March 1, 2017. Mr. Palmbachs’ appointment as Chief Financial
Officer ended on May 24, 2017.
On February 7, 2017, Cardinal reporting drilling assay results at the Namdini Gold Project that demonstrated
resource extensions to the east and south and at depth.
On February 28, 2017, the Corporation announced that BDO (WA) Pty Ltd. had been appointed as auditor for
the Corporation.
On March 21, 2017, Cardinal reported that conventional gold recovery techniques for the Namdini Gold Project
showed overall gold recoveries of 84% are achievable and that crush‐float‐fine grind processing would allow
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 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.
2019 Annual Information Form
PAGE 15
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 (“EIS”) 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 that encompassed the Namdini regional shear and which contained the historic producing “Nangodi”
gold mine and that combined with the Corporation’s existing Ndongo holdings, increases the land area to
287.67 km2.
On September 18, 2017, the Corporation announced an updated Mineral Resource estimate for its Namdini
Gold Project, including an Indicated Mineral Resource of 120 M tonnes grading 1.1 g/t Au for 4.3 Moz Au and
an Inferred Mineral Resource of 84 M tonnes grading 1.2 g/t Au for 3.1 Moz Au at 0.5 g/t Au cut‐off. The
effective date of the Mineral Resource Estimate is September 11, 2017.
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 Corporation’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, pursuant to which the underwriters have agreed to purchase, on
a “brought deal” basis, 18,461,600 ordinary shares of the Corporation at a price of C$0.65 per ordinary share
for aggregate proceeds to the Corporation 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.
2019 Annual Information Form
PAGE 16
On December 21, 2017, the Corporation 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 Gold 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 was
successful in delivering a substantial conversion of the inferred category ounces into the Indicated Mineral
Resource category increasing it to 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 of the preliminary economic analysis announced on February 5, 2018.
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 Corporation.
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 Corporation.
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 Corporation’s
flagship Namdini Gold Project that had a 6.5Moz indicated Mineral Resource.
On July 31, 2018, the Corporation announced that it had executed a term sheet with Sprott Private Resource
Lending (Collector), L.P. for 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.
2019 Annual Information Form
PAGE 17
On September 18, 2018, the Corporation announced the results of its pre‐feasibility study on the Namdini Gold
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.
On October 25 2018, the Corporation filed a technical report titled “National Instrument 43‐101 Preliminary
Feasibility Study Technical Report Namdini Gold Project Ghana West Africa”.
On October 31, 2018, Derrick Weyrauch resigned from the Corporation. Mr. Weyrauch’s position as an
executive officer was concurrently filled by the appointment of Mr. Jon Grygorcewicz as CFO. Also on October
31, 2018, Mr. Jacques McMullen resigned as a Director of the Corporation and Dr. Kenneth G. Thomas was
appointed as a Director.
On November 2, 2018, 224,000 fully paid ordinary shares were issued on exercise of Listed Options.
On November 19, 2018, 130,000 fully paid ordinary shares were issued on exercise of Listed Options and
47,801, 20,877, 48,170 and 935,488 fully paid ordinary shares were issued at a deemed issue price of $0.523,
$0.479, $0.519 and $0.45 per share respectively to employees and consultants of the Corporation in
consideration for services rendered to the Corporation.
On November 28, 2018 the Corporation released first drilling results, encountering further high‐grade and
shallow gold mineralization at the Ndongo East tenement.
On November 30, 2018 the Corporation filled an amended annual information from which amended and
replaced the annual information form file on September 28, 2018. The amended AIF was updated to included
current technical disclosure, as required by s 5.4 of the National Instrument 51‐102F2, on the basis of the pre‐
feasibility study entitled “National Instrument 43‐101 Namdini Gold Project Preliminary Feasibility Study
Technical Report, Ghana, West Africa” dated October 25, 2018.
On December 6, 2018, 145,000 fully paid ordinary shares were issued on exercise of Listed Options.
On January 2, 2019 the Corporation announced the appointment of Mr. Trevor Schultz as Non‐Executive
Director. Mr. Robert Schafer retired from the Board on January 2, 2019.
On January 2, 2019, 243,000 fully paid ordinary shares were issued on exercise of Listed Options.
On January 23, 2019 the Corporation announced first drilling results from the Ndongo Prospecting License.
On January 30, 2019, 690,000 fully paid ordinary shares were issued on exercise of Listed Options.
On February 2, 2019 a change in substantial holder notice was lodged, Bank of Nova Scotia and each of its
associates/affiliates voting power decreased from 9.77% undiluted to 8.65% undiluted.
On February 8, 2019, 900,000 fully paid ordinary shares were issued on exercise of Listed Options.
On February 22, 2019, 150,000 fully paid ordinary shares were issued on exercise of Listed Options.
On March 12, 2019, 116,571 fully paid ordinary shares were issued on exercise of Listed Options. 1,867,571
Unlisted Options exercisable at $1.00 on or before March 12, 2021 were issued to a consultant of the
Corporation in consideration for services rendered to the Corporation. The Corporation also cancelled
2,018,100 milestone options exercisable at $0.965 on or before December, 21 2022 and 5,758,000 milestone
2019 Annual Information Form
PAGE 18
options exercisable at $0.825 on or before December, 21 2022.
On March 22, 2019, 185,000 fully paid ordinary shares were issued on exercise of Listed Options.
On March 27, 2019 the Corporation announced further intersections of high‐grade, shallow gold mineralization
at the Ndongo East deposit.
On April 3, 2019 the Corporation announced an optimized Ore Reserve estimate for the Namdini Gold Project.
5.1 million ounces Proved and Probable Ore Reserve estimate from 138.6 Mt @ 1.13 g/t Au (0.5 g/t Au cut‐off).
On April 10, 2019 the Corporation announced an updated to its feasibility study and project finance activities
in respect to the Corporation’s Ore Reserve at the Namdini Gold Project.
On April 11, 2019 the Corporation received shareholder approval to issue milestone options to Directors’ Dr.
Kenneth G. Thomas and Mr/ Trevor Schultz, Directors of the Corporation. On March 11, 2019 the Corporation
issued a notice of meeting to approve the issue of milestone options to Dr. Kenneth G. Thomas and Mr. Trevor
Schultz.
On April 18, 2019, 112,000 fully paid ordinary shares were issued on exercise of Listed Options.
On April 30, 2019, 2,180,049 milestone options exercisable at $0.697 on or before December, 21 2022 and
2,180,049 milestone options exercisable at $0.590 on or before December, 21 2022 where issued, the
milestone options were approved at the shareholder meeting held on April 11, 2019.
On May 7, 2019, 18,500 fully paid ordinary shares were issued on exercise of Listed Options.
On May 10, 2019 a ceasing to be substantial holder in the Corporation was provided the Corporation. Royal
Bank of Canada and its related bodies corporate advised that their shareholder has fallen below 5%.
On June 4, 2019 Cardinal advised that positive leach results had been received which are expected to enhance
the Namdini project economics and further testwork had been initiated.
On June 4, 2019, 148,000 fully paid ordinary shares were issued on exercise of Listed Options. A further 64,103
fully paid ordinary shares at a deemed issue price of $0.39 were issued to an employee of the Corporation for
services rendered to the Corporation.
On July 4, 2019, 59,975 fully paid ordinary shares were issued on exercise of Listed Options.
On July 10, 2019 the Corporation announced further intersections of shallow, high‐grade gold mineralization
from a 15‐hole, 883m diamond drill programme at Ndongo East.
On July 11, 2019, 280,000 fully paid ordinary shares were issued on exercise of Listed Options.
On July 16, 2019 the Corporation announced positive results from a selected area within the proposed started
pit that encompasses the first 2 to 3 years of production at the Namdini Gold Project.
On July 17, 2019, 600,000 fully paid ordinary shares were issued on exercise of Listed Options. 73,530 and
635,161 fully paid ordinary shares at a deemed issue price of $0.34 and $0.336 per share respectively were
issued to an employee and consultant of the Corporation in consideration for services rendered to the
Corporation.
2019 Annual Information Form
PAGE 19
On July 23, 2019, 130,000 fully paid ordinary shares were issued on exercise of Listed Options.
On July 26, 2019, 126,000 fully paid ordinary shares were issued on exercise of Listed Options.
On July 31, 2019, 341,955 fully paid ordinary shares were issued on exercise of Listed Options.
On August 7, 2019, 252,500 fully paid ordinary shares were issued on exercise of Listed Options.
On August 14, 2019, 220,261 fully paid ordinary shares were issued on exercise of Listed Options.
On August 19, 2019, 617,500 fully paid ordinary shares were issued on exercise of Listed Options.
On August 21, 2019, 827,048 fully paid ordinary shares were issued on exercise of Listed Options.
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
2019 Annual Information Form
PAGE 20
“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
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
2019 Annual Information Form
PAGE 21
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
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
2019 Annual Information Form
PAGE 22
imposing obligations upon the holder or applicant of the mining lease, and
2.
be adversely affected by subsequent changes to:
(a)
(b)
(c)
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,
the level of and payment of royalties, taxes, fees and other fiscal imports, and
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.
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
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
2019 Annual Information Form
PAGE 23
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
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.
NAMDINI PROJECT TECHNICAL REPORT SUMMARY
The following is an extract of Section 1 – Summary of the Technical Report prepared by Golder. See also
“Technical Information”. The balance of the Technical Report is incorporated herein by reference.
Introduction
The principal activity of the Corporation is gold exploration and development 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, 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 a Mineral Resource at a 0.5 g/t Au cut‐off grade
has been established comprising: 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. Figure 1 of the Technical Report
2019 Annual Information Form
PAGE 24
shows the location of the Namdini Gold Project and the Corporation’s other properties in Ghana.
The Technical Report presents the result of the preliminary feasibility study (“PFS”) carried out by Cardinal on
the Namdini Gold Project.
PFS parameters and material assumptions
The PFS capital cost estimates were completed to an accuracy of +30/‐20% for the 9.5 Mtpa option and
undertaken based on open pit mining from the existing March 2018 Mineral Resources.
Metallurgical testwork carried out to date indicates that gold can be satisfactorily recovered from Namdini ore
using conventional flotation, regrind and carbon‐in‐leach (“CIL”) of the flotation concentrate. The testwork is
considered sufficient to determine that the Namdini Gold Project Mineral Resource represents a deposit with
potential economic extraction. Estimation of capital costs was prepared by Lycopodium Minerals Pty Ltd
(“Lycopodium”) for the process plant and associated infrastructure.
The proposed plant incorporates primary crushing, grinding and re‐crush (SABC), gravity, flotation, concentrate
regrind and CIL gold extraction. Three production throughputs were assessed by Cardinal, namely 9.5, 7.0 and
4.5 Mtpa. The 9.5 and 4.5 Mtpa throughput options were factored from the 7.0 Mtpa option (+20/‐15%
accuracy) and are therefore lower in accuracy at +30/‐20%. A contingency factor of 5% was added to the 9.5
and 4.5 Mtpa options over and above the project contingency.
Golder provided open pit mine engineering services. The work comprised collation of input parameters, open
pit optimization studies, pit designs and detailed NPV optimized mine schedules. A series of shells from the
open pit optimizations was selected and used to generate engineering pit designs that included starter pit and
life of mine (“LOM”) stages for the LOM production schedule.
Golder estimated the Ore Reserve in accordance with the JORC Code. The term ‘Ore Reserve’ is synonymous
with the term ‘Mineral Reserve’ as used by Canadian NI 43‐101 and conforms with the CIM Definition
Standards. The JORC Code is defined as an ‘acceptable foreign code’ under NI 43‐101. For the purposes of
reporting under NI 43‐101 a JORC Table 1 is not required, but it was provided as Appendix 1 to the Technical
Report.
The Ore Reserve estimate is based on the revised Mineral Resource model referred to in the press release by
Cardinal Resources Limited to the ASX and TSX, dated March 5, 2018 titled ‘Cardinal Upgrades Indicated
Mineral Resource to 6.5 Moz’. Golder provided an estimate of mining costs, including drill and blast, haulage,
rehabilitation and administration costs. Lycopodium provided processing cost estimates.
The Ore Reserve was estimated from the Mineral Resource after consideration of the level of confidence in the
Mineral Resource and considering material and relevant modifying factors including mining, processing,
infrastructure, environmental, legal, social and commercial factors. The Probable Ore Reserve estimate is based
on Indicated Mineral Resources. No Inferred Mineral Resource was included in the Ore Reserve. The Ore
Reserve represents the economically mineable part of the Indicated Mineral Resources. There is no Proved Ore
Reserve since no Measured Mineral Resource has yet been defined. Mineral Resource estimates are reported
inclusive of those Mineral Resources converted to Ore Reserves.
The proposed mine plan is technically achievable. All technical proposals made for the operational phase
involve the application of conventional technology that is widely utilized in the gold industry. Financial
modelling completed as part of the PFS show that the Namdini Gold Project is economically viable under
current assumptions. Modifying Factors (mining, processing, infrastructure, environmental, legal, social and
2019 Annual Information Form
PAGE 25
commercial) were considered during the Ore Reserve estimation process. The PFS incorporates a number of
factors and assumptions as outlined in the sections within the report.
The financial model was completed as a real discounted model. A LOM financial analysis was performed using
the discounted cash flow method and varying real discount rates. The financial analysis was used to determine
the potential economic return of the project over the LOM.
The preliminary schedule is shown in Section 26.4 (Table 154) of the Technical Report and is subject to available
funding, positive outcomes for the PFS and the feasibility study and favorable timelines for permitting.
The gold price assumptions used for the purposes of the PFS and the project gold price for the financial analysis
are presented in Table 144 of the Technical Report.
Mining Licence
During the quarter ended 31 December 2017, a large‐scale mining licence covering the Namdini mining lease
was assigned to CMN, 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 fifteen (15) years and is renewable for up to a further thirty (30) years.
Savannah has completed an EIS scoping report for Namdini and has filed the EIS with the 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 EPA issued a public notification on the proposed
Namdini Gold Project. Cardinal will submit to the EPA and Minerals Commission an updated EIS for the selected
project scale option envisioned for the feasibility study prior to commencement thereof.
Namdini Mineral Resources
Independent mining industry consultant, MPR Geological was commissioned by Cardinal to estimate the
Mineral Resources of the Namdini deposit. The Mineral Resource estimate was reported in accordance with
the JORC Code. The JORC Table 1 was provided as Appendix 1 of the Technical Summary provided to the ASX
and TSX in the press release by Cardinal, dated March 5, 2018 titled ‘Cardinal Upgrades Indicated Mineral
Resource to 6.5 Moz.’
The Mineral Resource estimate, summarized in Table 81 and Table 82 of the Technical Report, reports the
Mineral Resources by category and material type (weathering) above a 0.5 g/t gold cut‐off grade. The
classification categories of Inferred and Indicated Mineral Resources under the JORC Code are equivalent to
the CIM Definition Standards categories of the same name.
Geology
The Namdini gold deposit is a large, structurally controlled, orogenic gold deposit within the Nangodi
Greenstone Belt, with numerous features similar to deposits found elsewhere in late Proterozoic Birimian
terranes of West Africa. To date the Namdini gold deposit has been delineated over a strike length of 1.15 km,
up to 300 m wide and 700 m deep.
In 2016, geological consultants from Orefind Pty Ltd (“Orefind”) conducted an on‐site study and developed a
structural framework of the controls and geometry of gold mineralization comprising the Namdini deposit.
Orefind concluded that the rock types comprising the Namdini Gold Project included a steeply west dipping
2019 Annual Information Form
PAGE 26
Birimian sequence of interbedded, foliated, metasedimentary and metavolcanic 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, the Birimian units include metasedimentary, metavolcanic, granitoid
(tonalite) and diorite. The metasedimentary and volcaniclastic lithologies have been intensely altered with a
resulting pyrite‐carbonate‐muscovite‐chlorite‐quartz assemblage. Alteration
in the
volcaniclastic units. Similarly, the tonalite is extensively altered and has been overprinted by silica‐sericite‐
carbonate assemblages.
is most prevalent
In all rock types, the mineralization is accompanied by visible disseminated sulfides of pyrite and very minor
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 selvages. Rare visible gold occurs in strongly altered
granite and is associated with sub‐millimetre wide silica‐sericite shears.
Drilling techniques
The input dataset used for the Namdini Mineral Resource estimate comprises a total of 167 HQ diamond core
holes and 144 RC drill holes totalling 82,870 m.
Reverse circulation drilling of 140 (nominally 5¼ inch) or 125 mm diameter was usually 200 m or less in depth.
All reverse circulation holes were downhole surveyed at 30 m intervals.
Diamond drilling was HQ in both weathered and fresh rock. All diamond holes were downhole surveyed at 30
m intervals. All HQ core was orientated.
Sampling
All reverse circulation samples were collected at the drill site over 1 m intervals and split using a multi‐stage
riffle splitter.
Diamond core was generally sawn in half; with half sent for assaying, and half retained in core trays for future
reference. One metre samples were taken and submitted to an independent laboratory for assaying. At the
laboratory, both core and reverse circulation samples followed a standard procedure of drying, crushing and
grinding. The pulverized samples were thoroughly mixed on a rolling mat (‘carpet rolled’) and then 200 g of
sub‐sample was collected. Internal laboratory checks required at least 90% of the pulp passing 75 microns. A
50 g charge was produced for subsequent fire assay analysis.
Very good recovery of both core and reverse circulation samples were recorded and considered to be
representative of the mineralization defined by the drilling.
Sample analytical methods
Cardinal used two laboratories for its geological sample submissions: SGS Ouagadougou Laboratory in Burkina
Faso, and SGS Tarkwa Laboratory in Ghana. The independent SGS commercial geochemical analytical
laboratories are officially recognized by the South African National Accreditation System for meeting the
requirements of the ISO/IEC 17025 standard for specific registered tests for the Minerals Industry.
As part of the Cardinal QAQC, a suite of internationally accredited and certified reference material (standards)
2019 Annual Information Form
PAGE 27
and locally sourced blanks were included in the sample submission sequence. The standards cover gold grade
ranges expected at Namdini. Interlaboratory umpire analyses were also conducted.
Certified reference material (blanks and standards) were submitted into the sample stream at a rate of 1 in 22
samples. Duplicate samples of reverse circulation chips were taken at a rate of 1 in 22.
No employee, officer, director, or associate of Cardinal carried out any sample preparation on samples from
the Namdini Gold Project exploration programme.
Drill core was transported from the drill site by a Cardinal vehicle to the secure core yard facility at the
Bolgatanga field exploration office only.
All samples collected for assaying are retained in a locked, secure storage facility until they are collected and
transported by the SGS laboratory personnel. Retained drill core is securely stored in the core storage facility
and pulps and coarse rejects returned from the laboratories are securely stored in the exploration core logging
area and at a nearby secure location in Bolgatanga, Ghana.
Estimation methodology
MPR Geological estimated recoverable resources for Namdini using multiple indicator kriging (“MIK”) with
block support adjustment, a method that has been demonstrated to provide reliable estimates of recoverable
open pit resources in gold deposits of diverse geological styles. The Mineral Resource was estimated by MIK
using GS3M resource modelling software developed by FSSI Consultants (Australia) Pty Ltd.
Estimation was constrained within a mineralization envelope (wireframe) based on geological logging and
grade thresholds. The three‐main host lithologies are granite, metavolcanics and diorite. Where geological
contacts were not clearly controlling the distribution of mineralization, a grade cut‐off of approximately 0.1 g/t
Au was used to construct Mineral Resource boundaries.
The domain trends north‐northeast over 1.3 km and dips approximately 60˚ to the west with an average
horizontal width of approximately 350 m. The Mineral Resource can reasonably be expected to provide
appropriately reliable estimates of potential mining outcomes at the assumed selectivity, without application
of additional mining dilution or mining recovery factors. Validation of the MIK model was undertaken visually
and statistically and reviewed independently.
Parent block dimensions of 12.5 mE by 25 mN by 5 m RL were used for estimation. All sample assays were
composited to 2 m prior to estimation.
Classification
The Namdini Mineral Resource has been classified into the Indicated and Inferred categories, in accordance
with the JORC Code and the CIM Definition Standards. A range of criteria were considered in determining this
classification including geological and grade continuity, data quality and drill hole spacing.
Resource model blocks have been classified as Indicated or Inferred on the basis of search passes and a wire‐
frame outlining more closely drilled portions of the mineralization. Blocks within the classification wire‐frame
informed by all search passes were classified as Indicated. Blocks outside the classification wire‐frame and
estimated by iteration 1 are classified as Indicated. All remaining blocks estimated by iterations 2 and 3 were
assigned to the Inferred category.
The three progressively more relaxed search criteria used for MIK estimation are presented in Table 68 of the
2019 Annual Information Form
PAGE 28
Technical Report. The search ellipsoids were aligned with the general mineralization orientation.
MPR Geological considers the estimation technique and parameters appropriate for this style of mineralization.
Based on the information presented in the PFS, the Ore Reserve estimation process has converted 73% of the
Indicated Mineral Resources to Probable Ore Reserves.
Mining
The mine design and Ore Reserve estimate is based on the revised Mineral Resource model referred to in the
press release by Cardinal Resources Limited to the ASX and TSX, dated 5 March 2018.
Trial open pit optimizations were run in Whittle 4X at a US$1,300/oz gold price (which was the appropriate
gold price at the time of the optimization runs) to define the base of potentially economic material. Four cut
back pits were then selected and full mine designs applied.
The Ore Reserve reported in the PFS is a sub‐set of the Indicated Mineral Resource which can be extracted
from the mine and processed with an economically acceptable outcome.
Mining of the Namdini Gold Project has been assumed to be medium‐scale using conventional open pit mining
equipment. The mining process will include drill and blast as well as conventional load and haul operations.
There is expected to be a very limited amount of free‐dig material with the majority of material assumed to
require drilling and blasting.
Mining will be carried out using staged cut backs with four identified stages incorporated within the LOM final
pit. The mining schedule incorporates movement of ore and waste on 10 m mining benches, by year for each
of the four mining stages.
Except for the initial plant commissioning, oxide ore will be stockpiled temporarily and batch‐fed into the
process plant when suitable volumes are available, ensuring that no more than 10% of the plant available time
is used to process oxide in any one year. Waste rock will be stockpiled separately on the western side of the
pit.
Metallurgical work carried out to date indicates that gold can be satisfactorily recovered from Namdini ore
using conventional flotation, regrind and CIL cyanidation techniques. The work is considered sufficient to
determine that the Namdini Gold Project Mineral Resource represents a deposit with potential for economic
extraction.
Mining factors
The in situ deposit Mineral Resource model is the basis for the mining model used for the starter pit and LOM
pit planning and assessment reporting. The resource model has cell dimensions of 12.5 m (east) by 25 m (north)
by 5 m (elevation). The MIK adjustment assumes a moderately selective mining unit of 10 m × 5 m × 2.5 m,
which has been applied to Namdini’s relatively low‐grade, large‐tonnage, disseminated deposit.
Mining will consist of a conventional hydraulic shovel operation typically using 400 t class excavators in a face‐
shovel configuration and 150 t class (Cat 785 or similar) rigid body dump trucks hauling on designed access
roads. An auxiliary mining fleet of dozers, graders, water carts and utility vehicles will support the mining
operation. The appropriately‐sized equipment is of medium scale and is less amenable to selective mining.
With 60 m minimum mining width as noted, selective mining practices are limited for development of this
orebody.
2019 Annual Information Form
PAGE 29
Mining is proposed on 5 m flitches in the ore, within 10 m benches. The base case optimization was determined
as part of the PFS and was run using Indicated Mineral Resources only. There is currently no Measured Mineral
Resource within the Namdini resource model.
A gold cut‐off grade of 0.5 g/t Au was applied to the mineralized material. Process costs and mining costs were
supplied by independent consultants and compared with similar gold projects. Gold grades were supplied with
the model as estimated proportional grades using the MIK recoverable resource estimation technique.
For purposes of selecting the optimum Whittle pit for mine design purposes, Golder estimated a mining cost
of US$3.50 per tonne of rock mined (see Section 16.14 of the Technical Report) based on experience with
similar mining operations in the region, which includes grade control sampling, laboratory assay, analysis and
supervision costs. The input process and general and administration cost for the baseline 7.0 Mtpa option was
estimated at US$14.50/t milled plus an additional US$1.50/t allowance for stockpile reclaim. All tonnes were
assumed to be on a dry basis.
Once the optimum selected Whittle pit was selected and mine design completed, a detailed mining movement
schedule was supplied to two prospective mining contract companies to assist with the provision of a detailed
mining cost estimate. Quotations were provided by both companies which supported an all‐in contract mining
cost used in the PFS. Further discussions and negotiations will continue with suitable mining contractors prior
to any award of the mining contract.
Metallurgical test work was used to estimate the recoverable fraction from the oxide, transition and fresh ore
components, with gold grade and proportion of the block at varying MIK cut‐off points coded in the block
model.
Using the identified marginal cut‐off grade, the proportion of ore per parcel and gold grade above the cut‐off
grade were included within the mining model to allow export of the parcelled (ore + waste) blocks to the pit
optimiser for open pit optimization.
No consideration has been made for underground extensions of the operation in the PFS. A minimum mining
width of 60 m was assumed. Mining dilution and recovery are addressed in the modelling method (MIK with
variance adjustment) and the utilization of flitch mining. No Inferred Mineral Resources have been included
for the PFS within the LOM planning. Mining infrastructure requirements were assumed to be provided by the
selected mining contractor with the mining performed on an outsourced basis.
Grade control will be based on sampling from RC drilling spaced at approximately 10 mE by 15 mN with samples
taken at 1.5 m intervals downhole. All grade control sampling assays are assumed to be determined by fire
assay on the mine site. Standard QAQC protocols will be applied comprising 1 in every 10 samples.
Geotechnical parameters
In support of the mine design, Golder carried out a study of existing geotechnical information, reviewed
information on mineral resource estimates, conducted a detailed pit geotechnical drilling campaign supervised
by a site visit by a senior Golder engineer and gathered detailed rotary core logging data from selected drill
locations within the Namdini Gold Project area.
The LOM pit design considers slope performance based on models developed from laboratory results of
sampled drill core. The results present feasibility‐level slope designs based on data collected in the field, plus
data and reports made available by Cardinal.
2019 Annual Information Form
PAGE 30
Based on geotechnical and hydrogeological considerations from site investigations at the project area, the
design sectors were designated around Namdini Gold Project pit.
Inter‐ramps (bench stacks) in slightly weathered to fresh rock should consist of four benches. These are to be
separated by 25 m ramps or geotechnical berms (this means that a 25 m geotechnical berm should be included
after every 80 m of fresh rock benches). The design table includes an alternative berm width of 5 m, along with
the corresponding inter‐ramp angle.
Golder recommended that at the beginning of excavation the narrower width be used for benches in SOX, MOX
and TRANS materials in temporary walls. Should this geometry perform well then it could be applied to the
final walls as well. Should it prove inadequate or problematic, the wider 6‐m berms could be used for the final
walls in SOX, MOX and TRANS materials.
Pit optimizations
Pit optimizations were completed using the Lerchs‐Grossman algorithm in Whittle 4X to calculate the optimal
pit at specified input parameters that were determined prior to the study. A wireframe pit shell for each gold
price considered was the resultant output. One of these was selected as the base for the final LOM pit design.
A smaller pit approximately 1 Moz was chosen for the starter pit to maximize discounted cash flow and
minimize time for capital payback.
Mine scheduling
Mine scheduling was used to maximize value through deferring of larger strip ratio cut‐backs until later in the
mine life. The maximum value pit was selected using a discounted average net present value and determined
to align with a revenue factor shell of approximately $1,105/oz using estimated LOM input prices and costs. Pit
shells were converted into engineering designs prior to export of the contained resource model for scheduling
purposes.
Minemax Scheduler, a commercial linear programming software package was used to model the mining
sequence, the processing plant and different ore feeds to maximize net present value for the nominated
parameters and constraints. Major constraints included mill throughput, mining limits and oxide feed
proportion. The material selection to satisfy processing requirements was based on cut‐off grade, mineable
ore, processing and selling costs.
The mine scheduling programme includes revenue and cost information. The scheduling software assesses the
value generated by each block to determine whether the block is fed directly to the plant, stockpiled or treated
as waste. Further financial analysis to determine more realistic absolute financial indicators and sensitivity
analysis are performed separately, using the tonnes and grades extracted from the schedule.
The mine design of the Namdini Gold Project consists of a series of nested conventional pit layouts with
orebody access provided by a series of ramps. The orebody can be considered a layered sequence consisting
of strongly oxidized, moderately oxidized, transition, and fresh mineralized zones.
High level mine production schedules were evaluated for the three scenarios considered (9.5, 7.0 and 4.5 Mtpa
mill throughputs) using a starter pit with subsequent pushbacks to the final LOM pit extent.
The schedules allowed an initial ramp up for the process plant in each case before full process plant production
was assumed. In order to gain maximum value from the 9.5 Mtpa option, an estimated total peak rock
movement of some 30 Mtpa is required in year 7 of the schedule, whereas the 7.0 Mtpa option indicated a
2019 Annual Information Form
PAGE 31
total peak required movement of some 17 Mtpa. The 4.5 Mtpa option saw a peak total required rock
movement of some 15 Mtpa.
Mine design criteria
The mine design criteria were developed to allow for development and assessment of designs to provide plant
feed rates of 9.5, 7.0 and 4.5 Mtpa.
For the mining study, the maximum mining movement has allowed for a strip ratio of up to 2:1 in order that
the initial optimizations are not ‘mining‐limited’.
For the conceptual pit design, two geotechnical domains namely Zone 1 – Slightly and Moderately Oxidized
Weathering Domain and Zone 2 – Transitional and Fresh Weathering Domain, were used to define pit bench
heights, berm widths and slope angles.
Pit design criteria were based on Golder’s geotechnical recommendations with the deposit broadly broken up
into weathered (oxide), partially weathered (transition) and fresh domains, with two distinct domains on the
hangingwall and footwall sides of the ore zone (bearing 295°). Refer to Table 96 of the Technical Report for the
geotechnical configurations used for the mine pit design criteria.
For practical pit design purposes, the berm widths were rationalized to an 8 m wide berm to avoid having
multiple berm widths required on the same mining bench. Analysis of the block model indicated that the semi‐
weathered (transition) material reaches a maximum depth of 160 m RL. Thus, it was deemed prudent to
maintain single benches with 6 m berm widths above this level and adopt double‐benching (20 m) with 8 m
berms below it. Adoption of the 6 m berm in both the oxide and transition zones adds a level of increased
safety and ease of management in the weathered part of the deposit. Detailed geotechnical zones were then
flagged into the mining resource model with which to guide the pit design angles.
The pit was designed with four stages. The initial stage (starter pit) provides early access to the higher‐grade
ore near the surface. The second stage is largely an expansion of the initial stage targeting the ore to a greater
depth. The stage designs were created for optimal ore delivery from the first two stages, due to their low strip
ratio and waste rock movement. The third and fourth stages contain a greater proportion of waste rock. A
minimum mining width of 60 m was established between the stages.
The pit designs have targeted the maximum discounted value pit shell at a US$1,300/oz gold price (note that
the US$1,300/oz gold price was applicable at the time of the Whittle optimizations performed in Q2 2018). Pit
optimization using Whittle software was used to identify the optimum pit shell with the Inferred Resource
material considered as waste rock. The identified pit was then considered for practical staging to minimize
waste movement and improve the cashflow for the project. The analysis allowed the selection of four stages
with the initial stage targeting a relatively higher‐grade area of ore near surface. Access was allowed to the
first three stages by a ramp from the northern edge of the pit as the volume of waste rock in the first three
stages is considered modest. The final fourth stage has a main access ramp on the western side of the pit to
provide a shorter haul to the waste rock dump, given that the final stage has a higher strip ratio than the
preceding three stages. Having the primary access on the western side of the pit reduces waste rock haulage
costs and thus improves the overall value.
Given limited opportunity outside the starter pit to target higher grade zones, stage design was largely focused
on targeting maximum value change points within practical mining constraint limits, such as the minimum
mining width for the pushbacks. The first stage is a relatively small ‘mini‐pit’ on the northeast side of the
deposit. The first stage contains an estimated 19.9 Mt of fresh ore with an additional 4.0 Mt of oxide and
2019 Annual Information Form
PAGE 32
transition ore. This will be stockpiled and processed in campaigns such that a maximum of 10% of available
processing time is used for treating the oxide and transition ore in any annual period. The remaining three pit
stages follow a traditional pit expansion with the pits pushing out towards the dip of the ore and the pit
deepening with each stage.
The indicative production schedules are outlined in Table 152 of the Technical Report.
Mining cost
The PFS assumes the mining contractor will bear the total mining capital cost under an outsourced mining
arrangement with the costs recovered by the mining contractor on a cost per tonne mined basis.
Mining costs were solicited from two of the largest in‐country mining contractors. The estimated base mining
cost has an applied incremental cost with depth, to account for increased haulage costs and the depth of mining
increases in line with standard mining cost principles.
All costs in the Technical Report have been determined on a US dollar basis.
Cut‐off grade
An estimated marginal cut‐off grade was established at 0.5 g/t using an assumed long‐term gold price of
US$1,300/ounce. The provided Mineral Resource model was validated and used to develop a mining model, as
the basis for the LOM plan and economic assessment.
Gold royalties were assumed at 5% of gold price, with payable gold estimated at 99.8% of doré exported. The
net gold price was thus $39.63/g. The input processing cost provided in May 2018 was $14.49/t plus an
additional $1.50/t allowed for stockpile reclaim giving a total of $15.99/t of mill feed (as dry tonnes). Thus, the
marginal cut‐off grade (“COG”) was estimated as: process cost/(net gold price * process recovery) giving 0.5
g/t (to one significant figure).
Using this marginal COG, the proportion of ore and the gold grade above the COG, were defined in the mining
model and the parcelled proportions of ore, above cut‐off within the blocks were exported for open pit
optimization.
The 0.5 g/t Au cut‐off approximates an operational parameter that the Corporation believes to be applicable.
This is in accordance with the guidelines of Reasonable Prospects for Eventual Economic Extraction in the CIM
Definition Standards and the JORC Code.
Ore Reserve
Ore Reserves were estimated for the Namdini Gold Project as part of the PFS by Golder. The total Probable Ore
Reserve is estimated at 129.6 Mt at 1.14 g/t Au with a contained gold content of 4,760 koz.
The Ore Reserve for the Namdini Gold Project is reported according to the JORC Code and CIM Definition
Standards. The Mineral Resource was converted by applying Modifying Factors. The Probable Ore Reserve
estimate is based on the Mineral Resource classified as Indicated. Table 83 of the Technical Report presents a
summary of the Ore Reserves on a 100% project basis at a US$1,300/oz gold price.
2019 Annual Information Form
PAGE 33
Mineral processing and metallurgical testing
Introduction
The PFS phase of metallurgical testwork focused on development of the flowsheet as presented in Cardinal’s
preliminary economic assessment (“PEA”). The flowsheet is described as a conventional primary crush,
SAG/ball mill and re‐crush, gravity, flotation, regrind and carbon‐in‐leach process. Metallurgical results proved
to be consistent and strongly supported the flowsheet as described above.
All fresh rock metallurgical testwork for the PFS was carried out by ALS Laboratory in Perth, Australia. This work
followed on from the PEA metallurgical testwork completed by Suntech Geomet Laboratories in Johannesburg,
South Africa.
Further oxide (weathered rock) metallurgical testwork was not necessary. The oxide PEA results were carried
into the PFS.
The PFS fresh rock was metallurgically tested in four parts:
Starter pit and flotation specific testwork (to test for initial ore metallurgical response):
o Mineralogy and gold deportment
o Gravity recoverable gold
o Flotation
o Cyanide leach testwork of bulk rougher flotation concentrate at various regrind sizes.
LOM testwork (to test for ore metallurgical response for the entire mine life):
o Mineralogy and gold deportment
o Gravity recoverable gold
o Flotation
o Cyanide leach testwork of bulk rougher flotation concentrate at various regrind sizes.
Variability testwork (to test for combinations of gold and varying sulfur grades):
o Mineralogy and gold deportment
o Gravity recoverable gold
o Flotation
o Cyanide leach testwork of bulk rougher flotation concentrate at various regrind sizes.
Comminution testwork:
o Semi‐autogenous mill comminution variability testwork using HQ core samples
o
Julius Kruttschnitt Drop Weight Test testwork using PQ core samples.
The ALS Laboratory test scope focused on optimization of the flotation and cyanide leach response across a
range of representative master and variability composites formed from selected drill core samples.
Metallurgical flowsheet development testwork has been supported based on a wide range of testwork,
including:
2019 Annual Information Form
PAGE 34
Comprehensive master and variability composite head assay analysis, XRD and QEMSCAN mineralogy,
and diagnostic leach characterisation.
Coupled gravity recovery and flotation optimization across a range of primary grind sizes and including
assessment of alternative reagent regimes and conditions.
Flotation variability testing based on the optimal regime derived from the master composite tests.
Comparative whole ore leach testing over a range of grind sizes, including: direct cyanidation, CIL, lead
nitrate dosing, air and oxygen sparging.
Flotation concentrate leaching based on bulk flotation concentrates formed from master composites,
LOM and variability composites. The test scope covered a wide range of regrind sizes and leach
methodologies including lead nitrate assisted leaching.
Comminution characterisation, including: Julius Kruttschnitt drop weight test (“JK Drop Weight Test”),
uniaxial compressive strength, bond suite and semi‐autogenous mill comminution style testwork
(“SMC Variability Test”) applied to HQ drill core variability lithological composites and PQ drill core
lithological composites.
Results
Key findings from the testwork were:
Comminution:
The JK Drop Weight Test showed A*b values ranged between 30 and 42 for the PQ samples.
The SMC Variability Test showed derived A*b values between 30 and 47 for the HQ samples.
The bond ball mix work index test indicated a range between 14.7 and 19.7 with an average of 16.9
kwh/t.
Bond abrasion index ranged between 0.03 and 0.29, with the granite ore type having the highest
values.
Mineralogy:
Native gold is the predominant gold bearing mineral with very low silver content (<2 ppm Ag average).
Pyrite is the dominant sulfide mineral in the composites where the majority of the gold is associated.
P80 of the pyrite ranged from 82 µm to 93 µm.
Pyrite is classified as ‘well‐liberated’ from the host rock minerals with close to 85% liberation.
Free gold particles were detected during a thorough optical search (using a binocular stereo‐
microscope) of the unmounted gravity concentrates. These gold grains are approximately 200 µm in
diameter and rounded in appearance.
Separate testing of the mineralization confirms that it is not preg‐robbing.
Flotation:
High gold recoveries averaging 95% to concentrate for the majority of composites.
Addition of a co‐collector blended with base case (potassium amyl xanthate) collector did not show a
Fast flotation kinetics observed with majority of the gold recovered in less than 5 minutes.
definite benefit to gold recovery.
2019 Annual Information Form
PAGE 35
Upfront gravity gold recovery improved total gold recovery and mostly eliminated variability in the
flotation tails grade.
Gravity and flotation resulted in average tail grades ranging from of 0.05 to 0.14 g/t.
Flotation mass recovery to concentrate averaged 7% w/w; concentrate grade based on the starter pit
composite averaged approximately 30 g/t without gravity recovery and approximately 20 g/t with
prior gravity recovery.
All gravity gold, flotation, regrind and leach results were analysed to produce regression recovery
curves for the starter pit and for the LOM samples. These curves were then applied to the varying head
grades of the mine schedule to yield an overall recovery result which for the starter pit was 86% and
LOM (including the starter pit) was 84%. These overall recoveries include oxide ore, which were
applied at an average of 90% based on previous testwork. These were achieved at a grind P98 of 15
µm.
Leach:
Concentrate leach feed grades based on starter pit and separate LOM lithology composites ranged
between 10 g/t and 27.5 g/t, ranging between 15 and 17 g/t on average.
Leach residues ranged from 1.94 g/t for the starter pit composite to 2.28 g/t for the separate LOM
lithology composites at a grind P98 of 15 µm. This range in leach residue grade is equivalent to 0.14‐
0.16 g/t on a whole ore basis, assuming an average flotation concentrate mass recovery of 7%.
Comminution and metallurgical testwork has provided preliminary
characteristics and metallurgical response of the three Namdini lithologies.
information about the physical
The processing route for the Namdini ores would be a conventional: crush, primary grind, sulfide flotation
followed by regrind and CIL cyanidation of the flotation concentrate.
Orway Mineral Consultants has utilized the comminution results for comminution circuit selection and mill
sizing. A primary crushing and SABC comminution circuit (open circuit SAG mill with recycle pebble crushing
followed by closed circuit ball mill/hydrocyclones) was selected by Orway Mineral Consultants based on the
available comminution parameters.
Metallurgical testing conclusion
Key results supporting selection of the process flowsheet from the metallurgical testing are as follows:
Comminution:
From uniaxial compressive strength testing, the Namdini ore is amenable to conventional jaw or
gyratory crushing.
SAG mill comminution testing supports configuration of the comminution circuit based on the
proposed SABC flowsheet, incorporating SAG milling and recycle crushing of SAG mill scats, coupled
with ball milling to a finished primary grind (P80) size of 106 µm.
Gravity:
Gravity testwork proved the requirement of an upfront gravity recovery process. Prior gravity
treatment lifted base‐line recovery, mitigating lower flotation recovery of free gold. The inclusion of a
gravity circuit is justified based on recoveries achieved for the starter pit composite.
2019 Annual Information Form
PAGE 36
Flotation:
Metallurgical response was very consistent for all lithologies.
Gold and sulfur flotation kinetics were rapid with high recovery (> 90%) achieved after five minutes
with an industry standard reagent regime.
Variable grind and flotation testing confirmed a primary grind and flotation P80 of 106 µm suitable for
on‐going development. However, scope for increasing the primary grind to P80 of 150 µm without
compromising flotation recovery is a possibility.
Site water analysis indicated low concentrations of sulfate and multi‐valent cations, also indicating
little impact on flotation. Subsequent testing in site water confirmed no measurable impact on
flotation kinetics or recovery.
Leach:
Leach kinetics were rapid with extraction plateauing after 24‐36 hours retention. Consistent with the
current flowsheet, CIL leaching and recovery are supported. However, an opportunity exists to reduce
the process design leach residence time allowed which is currently 72 hours.
Leach residue grade is predicated primarily on grind size and leach feed grade; separate lithology
residues tended toward a relatively constant (terminal) grade at low leach feed grade.
Leach residue grade reduces with decreasing regrind size.
Starter pit composite reported 87.9% extraction at a calculated head of 1.96 g/t and a regrind P98 of
15 µm. Gold recovery based on the average starter pit head grade of 1.31 g/t is calculated at 85.1%
based on a concentrate regrind P98 of 15 µm. A combination of oxide and fresh material yields an
overall recovery of for the starter pit of 86%.
Gold recovery based on LOM blend proportions: 60% metavolcanics, 30% granite and 10% diorite and
LOM head grading 1.15 g/t is calculated at 84% based on a fine concentrate regrind P98 of 15 µm.
Flowsheet development:
Metallurgical testwork carried out to date indicates that the Namdini Gold Project can utilise a
standard gold recovery process plant design with no innovative technology required.
The metallurgical process uses well‐tested technology for all unit operations.
No deleterious elements were identified in the testwork that could affect the saleability or price of the
gold doré produced.
Namdini will produce readily saleable gold doré which will be exported for refining.
Gold is recovered using primary crushing, SAG and ball mill grinding with re‐crush, gravity recovery
(Knelson Concentrator), flotation, concentrate regrind circuit and a CIL circuit.
A grind P80 of 106 µm was utilized for the primary grind design of the PFS assessment.
Gravity recovery has been incorporated given the presence of gravity recoverable gold.
Laboratory flotation testwork indicated fast sulfide flotation kinetics; the circuit comprises six stages
of rougher flotation.
The flotation concentrate is reground and subjected to pre‐aeration before CIL.
Gold recovery will be by a conventional CIL with elution circuit, electrowinning and gold smelting to
recover gold from the loaded carbon to produce doré.
2019 Annual Information Form
PAGE 37
Industry typical design parameters were assumed for the study where testwork was not completed.
Detailed metallurgical testwork is continuing for the Namdini Gold Project under the direction of
Cardinal to support completion of the feasibility study.
Process Plant
Annual nominal throughput processing options of 9.5, 7.0 and 4.5 Mtpa were investigated as part of the PFS.
Note that all options were designed to meet the International Cyanide Management Code for the manufacture,
transport, and use of cyanide in the production of gold.
Assessment of the comminution circuit identified upper and lower throughput limits as follows:
9.5 Mtpa as the largest throughput that could be achieved with dual pinion mill drives.
7.0 Mtpa throughput that could be accommodated with dual pinion mill drives.
4.5 Mtpa as the largest throughput that could be accommodated by a jaw crusher.
Flowsheet
The process plant design incorporates the following unit process operations:
Single stage primary crushing with a gyratory crusher to produce a P80 of 150 mm.
Crushed ore feeding a coarse ore stockpile (12 hours live) with ore reclaim via two apron feeders.
Two stage SAG/ball mill grinding in closed circuit with cyclones to produce a grind P80 of 106 µm. This
includes recrushing of pebbles from the SAG mill.
Gravity recovery including a scalping screen, a single 70‐inch centrifugal concentrator and a CS4000
intensive leach reactor.
Rougher flotation to produce a gold‐rich sulfide concentrate.
High intensity regrind of the flotation concentrate followed by thickening to minimize CIL tankage and
reduce overall reagent consumption.
Commercially recognised high intensity grinding mill technology is utilized to regrind flotation
concentrate.
Thickening of the flotation tails for water recovery prior to disposal in a separate non‐cyanide tailings
storage facility.
A concentrate CIL circuit incorporating one pre‐leach tank and seven CIL tanks for gold and silver
adsorption.
A 3.5 tonne split AngloAmerican Research Laboratory elution circuit, electrowinning and smelting to
recover gold and silver and produce doré.
CIL tailings treatment incorporating cyanide destruction by sulfur dioxide and oxygen.
Concentrate CIL tailings disposal in a lined tailings storage facility.
Figure 130 indicates the selected PFS flowsheet for the Namdini Gold Project.
Infrastructure
Roads and power
Lycopodium has completed PFS level analysis covering all related aspects of the infrastructure requirement
2019 Annual Information Form
including power, water, road access and waste management.
The site will be accessed by road from the west with a new, approximately 25 km, gravel road linking the site
to the existing national road N10 between Pwalagu and Winkogo. The N10 provides good access to the major
cities and ports in southern Ghana and no upgrades of the N10 will be required. The site access road will follow
a similar route to the proposed new power line for the existing substation north of Pwalagu.
PAGE 38
Infrastructure will include the following dedicated elements:
Unsealed road;
HV power line;
Water supply line from the White Volta River.
The site is located approximately 20 km outside Bolgatanga and 180 km from Tamale. Serviced camp style
accommodation will also be integrated in the proximity of the operation. A shuttle bus service will operate
from Bolgatanga to and from site as required.
Cardinal has sufficient area on its leases to cater for its planned land requirements.
The study assumed that a new, approximately 30 km dual high voltage transmission power line will be
constructed.
Power supply to the process plant includes the modifications necessary in the electricity grid connection, and
associated Ghana Grid Company Ltd (“GRIDCo”) substations as well as the 161 kV high voltage power line to
the process plant.
GRIDCo currently supplies a 161 kV high voltage power line from Tamale substation to the Bolgatanga
substation. The connection point for the Namdini Gold Project will be near Pwalagu and will traverse a corridor
to a new GRIDCo substation close to the Namdini mine.
The GRIDCo substation will transform power at 11 kV to a plant feeder circuit breaker terminal in the Namdini
mine substation at the plant site which will then be distributed mine‐wide, including the accommodation and
other site infrastructure facilities.
Site facilities and layout
The location of the plant, pit and waste dump is shown in Figure 132 of the Technical Report.
Hydrogeology and hydrology
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. Characterization 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.
2019 Annual Information Form
PAGE 39
Geotechnical investigation
A geotechnical investigation of the proposed site facilities is summarized in Section 18.4 of the Technical
Report.
Water supply
A river abstraction system will be installed to provide any shortfall in process water requirements during the
operation. An abstraction tower will be constructed on the northern bank of the White Volta River
approximately 8.5 km to the west of the process plant. This will comprise submersible pumps situated within
an intake tower located within a trench excavated into the northern bank of the White Volta River. A water
storage facility will store 30 days’ supply of process water to account for periods during which pumping from
the river is not permitted. The facility will comprise a lined ‘turkey’s nest’ pond located directly to the north of
the process plant.
A pipe branch from the main raw water pipeline will supply the potable water treatment plant located at the
camp that will purify the water after which it will be reticulated across the site.
A vendor packaged modular potable water treatment plant including filtration, ultraviolet sterilization and
chlorination will be installed at the accommodation camp with the treated water reticulated to the site
buildings, ablutions, safety showers and other potable water outlets.
Tailings Storage Facilities
Tailings testing
Tailings were subject to physical testing. Results indicate that flotation tails will have a rapid rate of supernatant
release of 46% of contained water excluding rainfall. CIL tails would be similar but at a slower rate. Ultimate
settled density (air dried) was 1.47 t/m3 for CIL tails and 1.67 t/m3 for flotation tails.
Geochemical testing indicated the following:
The flotation tailings samples recorded negative net acid producing potential (“NAPP”) values and weakly
alkaline net acid generating (“NAG”) pH values. Therefore, the diorite and metavolcanic flotation tailings are
classified as acid consuming and the granite rougher tailings as non‐acid forming.
The CIL tailings sample recorded a positive NAPP and a low NAG pH, resulting in a classification of potentially
acid forming.
On the basis of the multi‐element results, both the flotation and CIL tailings storage facilities will be designed
to prevent the loss of solids. The flotation tailings storage facility will require a basic cover system on closure.
The cover system for the CIL tailings storage facility will be driven by the need to control potential acid
generation by precluding oxygen and water ingress to limit on‐going oxidation of the tailings and seepage.
Based on supernatant analysis, the flotation tailings facility will require a compacted soil liner to limit seepage.
In addition, the facility will have an under‐drainage system to limit the hydraulic head acting on the soil liner.
The CIL tailings facility will require a robust engineered liner system, likely comprising of a compacted soil liner
with overlying high‐density polyethylene liner and underdrainage system.
2019 Annual Information Form
PAGE 40
Tailings Storage Facility design
Flotation Tailings Storage Facility
The flotation tailings storage facility will be constructed as a side valley‐type storage facility to the southwest
of the open pit. The facility will be constructed as two cells with zoned earth fill perimeter embankments and
will be lined with a low permeability compacted soil liner. The total basin area will be 311 Ha and is designed
to accommodate 120 Mt of tailings. The tailings storage facility embankments will be constructed in stages to
suit storage requirements with stage 1 constructed initially to provide capacity for the first 12 months of
operation and subsequent stages constructed using downstream method.
The tailings storage facility basin area will be cleared, grubbed and stripped of topsoil. A 300 mm depth
compacted soil liner will be constructed over the entire tailings storage facility basin area as either reworked
in situ material (assumed 70%) or imported Zone A (30%) material.
The tailings storage facility design incorporates an underdrainage system comprising a network of branch and
collector drains in each cell. The underdrainage system drains by gravity to a collection sump located at the
lowest point in each cell.
Supernatant water will be removed from the tailings storage facility via a submersible pump (designed by
others) mounted in a decant tower. Temporary decants will be provided to suit the tailings deposition schedule
in each cell. The final decants will be located along the divider embankment between the two cells.
CIL Tailings Storage Facility
The CIL tailings storage facility will be constructed as a paddock‐type storage facility to the south of the open
pit. The facility will be constructed as a single cell with zoned earthfill perimeter embankments and will be lined
with compacted soil liner overlain by a synthetic high‐density polyethylene geomembrane. The total basin area
will be approximately 45 Ha and is designed to accommodate 9.6 Mt of tailings. The tailings storage facility
embankments will be constructed in stages to suit storage requirements with stage 1 constructed initially to
provide capacity for the first 12 months of operation and subsequent stages constructed using downstream
raise construction methods to a final elevation of RL266.0 m (all throughput options). Staged embankment
crest elevations will vary between throughput options.
The tailings storage facility basin area will be cleared, grubbed and topsoil stripped, and a 200 mm depth
compacted soil liner will be constructed over the entire tailings storage facility basin area as either re‐worked
in situ material (assumed 30%) or imported Zone A (70%) material. This will be overlain by a 1.5 mm thick
smooth high‐density polyethylene geomembrane liner.
The tailings storage facility design incorporates an underdrainage system comprising a network of branch and
collector drains. The underdrainage system drains by gravity to two collection sumps located at the lowest
points in the cell at the southeast and southwest corners.
Supernatant water will be removed from the tailings storage facility via a submersible pump (designed by
others) mounted in a decant tower located along the western embankment of the facility.
In order to mitigate seepage losses through the basin area, minimize the phreatic surface in the embankments,
and increase the settled density of the deposited tailings, a number of seepage control and underdrainage
collection features have been integrated into the design of each facility. The seepage control and
underdrainage collection systems will consist of the following components:
2019 Annual Information Form
PAGE 41
Low permeability soil liner.
Synthetic high‐density polyethylene geomembrane.
Cut‐off trench.
Basin underdrainage collection system.
Underdrainage collection sump.
Upstream toe drain.
Leak collection system.
Each cell of the flotation tailings storage facility will operate with a series of three decant towers which will be
constructed, operated and subsequently decommissioned to suit the staged development of the facility and of
the tailings beaches in each cell. The CIL tailings storage facility will operate with a single decant tower
throughout the life of the facility.
The decant towers will be raised as required with each embankment lift and will consist of the following
components:
An access causeway constructed of local coarse gravel material.
A slotted concrete decant tower consisting of 1.8 m square slotted precast concrete sections
surrounded by clean waste rock with a minimum size of 100 mm.
A submersible pump with float control switches mounted on a lifting hoist.
The decant pump in each tower will be raised on a regular basis to ensure that no tailings enters the
pump intake.
The tailings storage facilities have been designed to completely contain storm events during operation
up to and including an annual exceedance probability of 1 in 1,000 (flotation tailings storage facility
cell 2) or 1 in 10,000 (flotation tailings storage facility cell 1 and CIL tailings storage facility) on top of
the predicted maximum pond level under average climatic conditions, without the emergency
spillways operating. Consequently, exceeding the storm storage capacity of the facilities at any stage
of operation is unlikely. Regardless, in the event that the storage capacity of a facility is exceeded,
water which cannot be stored within the facility will discharge via an engineered spillway.
Operating costs
The purpose of this operating cost estimate is to provide substantiated costs which can be utilized for a
preliminary assessment of the viability of the Namdini Gold Project. The operating costs have been developed
by:
Lycopodium – processing and general and administration costs.
Golder – mining costs.
Cardinal – owners costs.
Operating costs have been determined for a mine that operates 24 hours per day, 365 days per year. The
operating estimate is considered to have an accuracy of ±25%, is presented in United States dollars (US$) and
is based on prices obtained during the first quarter of 2018 (1Q18). Study currency exchange rates were
confirmed by Cardinal.
The 9.5 Mtpa and 4.5 Mtpa options were factored from the 7.0 Mtpa option.
2019 Annual Information Form
The operating costs have been compiled from a variety of sources, including the following:
PAGE 42
The LOM design mass recovery to flotation concentrate of 7.5% (this is based on recent testwork
showing good gold recovery to concentrate at this mass pull).
Flotation reagent consumption based on recent prefeasibility optimization testwork.
Leaching reagent consumption based on industry norms in anticipation of final testwork results.
Calculated reagent usage regimes for cyanide detoxification prior to testwork.
Modelling by OMC for crushing and grinding energy and consumables based on the final comminution
testwork.
Typical industry data from equipment vendors.
Lycopodium’s database of costs for similar sized operations.
Budget pricing or Lycopodium’s database of prices for consumables.
Additional operating costs added by Cardinal to allow for the finer grind results.
Mining costs solicited from two of the largest in‐country mining contractors. The estimated base
mining cost has an applied incremental cost with depth, to account for increased haulage costs and
the depth of mining increases in line with standard mining cost principles.
Operating costs per tonne of ore processed (129.6 Mt of ore) are tabulated in Table 141 of the Technical Report.
Owners costs are tabulated in Table 142 of the Technical Report.
Sustaining capital costs provided by consultants and Cardinal were compiled from a variety of sources and
compared against existing and planned operations elsewhere in Ghana.
Sustaining capital costs which include rehabilitation and mine closure are tabulated in Table 143 of the
Technical Report.
Capital costs
The mining establishment cost was provided by in‐country mining contractors. The process plant and
infrastructure costs were estimated by Lycopodium. The costs for the tailings storage facility were provided by
Knight Piésold. The capital costs include owner’s project cost and contingency as calculated by Lycopodium.
The PFS capital cost estimate was completed to an accuracy of +30 %/‐20 % for the 9.5 Mtpa option and was
undertaken based on open pit mining from the existing March 2018 Mineral Resource. The proposed plant
comprises primary crushing, SABC, gravity recovery, flotation, concentrate regrind and CIL recovery. Three
production throughputs were assessed by Cardinal, namely 9.5, 7.0 and 4.5 Mtpa. The 9.5 and 4.5 Mtpa
throughput options were factored from the 7.0 Mtpa option (+20/‐15% accuracy) and are therefore lower in
accuracy at +30/‐20%. A contingency factor of 5% was added to the 9.5 and 4.5 Mtpa options over and above
the project contingency.
The factored estimates were established by assessing the correlation between cost and the process design
criteria with factors being determined by discipline for all areas of the estimate.
2019 Annual Information Form
PAGE 43
Capital costs are summarized below from Table 150 of the Technical Report.
Unit
9.5 Mtpa
7.0 Mtpa
4.5 Mtpa
US$ (M)
414
348
300
The capital cost in all three throughput scenarios reduced compared to those in the PEA. The main contributors
to the reduction were:
Flotation recovery mass pull was reduced from 15% to 7.5%, based on flotation testwork optimization.
This reduction effectively reduced this section of the processing plant by 50% in terms of duty.
Optimized plant layout, which reduced the plant footprint.
Optimized steel structures, which ensured that all structures are fit for purpose.
More accurately designed plant based off engineered quantities, which allowed a reduction in the
growth allowance and contingency.
Overall plant layout and equipment sizing was prepared with sufficient detail to permit an assessment of the
engineering quantities for the majority of the facilities for earthworks, concrete, steelwork and mechanical
items. The layouts enabled preliminary estimates of quantities to be taken for all areas and for interconnecting
items such as pipe racks.
Unit rates for labour and materials were derived from responses to BQRs sent to fabricators and contractors
experienced in the scale and type of work in the region.
Budget pricing for equipment was obtained from reputable suppliers with the exception of low value items
which were costed from Lycopodium’s database of recent project costs.
For the accommodation camp, offices, workshops and similar items, appropriate budget pricing was obtained
from reputable suppliers of similar prefabricated designs.
Knight Piésold provided the design and quantities of the following infrastructure items that were subsequently
costed by Lycopodium.
The capital cost estimate includes:
Direct costs of the project development.
Indirect costs associated with the design, construction and commissioning of the new facilities.
Owner’s cost associated with the management of the project from design, engineering and
construction up to the handover to operations and project close‐out.
Insurance and operating spares, first fills.
Costs associated with operational readiness and pre‐production operations.
Growth allowance on quantity, pricing and unit rates variance.
Contingency on project scope definition and risks.
The material quantities and unit cost estimates were developed from engineering drawings, estimates and
calculations at the level required for PFS and validated against estimates from similar sized projects.
2019 Annual Information Form
PAGE 44
Cardinal allowed for additional capital costs for a finer grind. These were factored costs obtained from
Lycopodium.
Environmental
NEMAS Consult Ltd (“NEMAS”) 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
Environmental Impact Assessment (“EIA”). The NEMAS 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 23 November 2016, indicated that the project which falls under Schedule 2 makes mandatory a full‐scale
EIA study and submission of EIS to the EPA.
In compliance with directives by the EPA, a scoping report was prepared and submitted to the agency on 22
June 2017, which also set out the Terms of Reference for the EIA and EIS study. The scoping study 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 study report also captured the various national and
internal laws, policies and guidelines that shall be triggered. Additionally, the concerns of some key
stakeholders consulted were captured in the report as consulted. Other key stakeholders that need 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)
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 EIS 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 EIS which will be submitted to the Ghanaian EPA for approval.
Social
The PFS environmental study was progressed by NEMAS, including active engagement of local and state
regulatory bodies.
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 centers. Compensation agreements are
being negotiated for the proposed mining operation.
2019 Annual Information Form
PAGE 45
Economic evaluation
Key economic statistics for the comparison of the 9.5 Mtpa, 7.0 Mtpa and 4.5 Mtpa option are included in Table
150 of the Technical Report.
The starter pit key estimated production comparison results are presented in Table 151 of the Technical Report.
The starter pit includes the first 2.5 years of operation (24 Mt at 1.31 g/t for 1.06 Moz at 0.5 g/t cut off).
The LOM key estimated production comparison results for the 3 throughput options are presented in Table
152 of the Technical Report.
Figure 137 of the Technical Report to Figure 140 of the Technical Report illustrate the 9.5 Mtpa option pre‐tax
and post‐tax sensitivities at a gold price of US$1,250/oz.
Based upon LOM production and cost parameters, the post‐tax net present value sensitivities are shown in
Table 149 of the Technical Report for the 9.5 Mtpa option.
The results of a study on higher throughput options is provided in Section 24.1 of the Technical Report.
A staged funding approach for the on‐going development of the Namdini Gold Project is discussed in Section
22.6 of the Technical Report.
Next stages
Based on the positive PFS outcome, the Board has approved the immediate progression to a feasibility study
of the Namdini Gold Project to further define and support the case for full project funding and development.
The feasibility study budget for the Namdini Gold Project is summarised below, from Table 153 of the Technical
Report.
Item
Cost (US$k)
Feasibility Study Value Engineering
Feasibility Study
Detailed design and long lead equipment procurement
Namdini drilling
Namdini geophysics
Total
101
1,408
5,732
1,121
13
8,375
2019 Annual Information Form
PAGE 46
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.
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
prospect which expanded the combined Ndongo Licence 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. As at the date of this AIF, the
2019 Annual Information Form
PAGE 47
renewal letter has not been signed by the Minister, 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 the Subin‐
Kasu prospecting licence, which comprises the Subranum Project.
The Subin‐Kasu prospecting licence was originally granted to Newmont Ghana Gold Limited. On April 6, 2012,
Newmont Ghana Gold Limited entered into a Purchase and Sale Agreement with Cardinal Subranum and
assigned the Subin‐Kasu prospecting licence to Cardinal Subranum, in consideration for certain cash payments
and Cardinal’s agreement to incur certain exploration expenses and grant.
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 Limited,
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
2019 Annual Information Form
PAGE 48
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.
The only directors of Ghanaian Subsidiaries also serve as directors of the Corporation. In the event that the
Corporation wished to remove an officer of a Ghanaian Subsidiary, the directors of such Ghanaian Subsidiary
would take the requisite corporate action to remove such officer.
Risk Assessment – The Board is responsible for the management of the Corporation and, as such, supervises
the management of the business and affairs of the Corporation. The Board is responsible for approving any
capital expenditures and other transactions and matters that are considered material to the Corporation,
including matters of the Corporation’s subsidiaries that are considered material to the Corporation. In addition,
the Board has delegated certain risk‐management functions to the Audit and Risk Committee. The Audit and
Risk Committee is responsible for overseeing the Corporation’s risk management systems, practices and
procedures, for identifying and managing business, economic, environmental and social sustainability risks and
for reviewing the Corporation’s risk management framework at least annually.
Internal Control over Financial Reporting – The Corporation prepares its consolidated financial statements and
MD&A on a quarterly and annual basis, using International Financial Reporting Standards (IFRS), which require
financial information and disclosures from the Corporation’s subsidiaries. The Corporation implements internal
controls over the preparation of its financial statements and other financial disclosures to provide reasonable
assurance that its financial reporting is reliable and that the quarterly and annual financial statements and
MD&A are being prepared in accordance with IFRS. These internal controls include the following:
Management of the Corporation has direct access to relevant financial management of the Corporation’s
subsidiaries in order to verify and clarify all information required.
All public documents and statements relating to the Corporation and its subsidiaries containing material
information (including financial information) are reviewed by senior management (including the Chief
Executive Officer and Managing Director) before such material information is disclosed, to make sure that
all material information has been considered by management of the Corporation and properly disclosed.
The Audit and Risk Committee will review and approve the Corporation’s quarterly financial statements
and MD&A and will recommend to the Board for the Board’s approval the Corporation’s annual financial
statements and MD&A, and any other financial information requiring Board approval, prior to their
publication or release.
The Audit and Risk Committee assesses and evaluates the adequacy of the procedures in place for the
review of the Corporation’s public disclosure of financial information extracted or derived from the
Corporation’s financial statements, other than annual and quarterly financial disclosure.
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.
2019 Annual Information Form
PAGE 49
CEO and CFO Certifications – In order for the Corporation’s Managing Director and Chief Executive Officer and
its Chief Financial Officer to be in a position to attest to the matters addressed in the quarterly and annual
certifications required by National Instrument 52‐109 – Certification of Disclosure in Issuers’ Annual and Interim
Filings, the Corporation has developed internal procedures and responsibilities throughout the organization
for its regular periodic and special situation reporting, in order to provide assurances that information that may
constitute material information will reach the appropriate individuals who review public documents and
statements relating to the Corporation and its subsidiaries containing material information, is prepared with
input from the responsible officers and employees, and is available for review by the Managing Director and
Chief Executive Officer and the Chief Financial Officer in a timely manner.
These systems of corporate governance, internal control over financial reporting and disclosure controls and
procedures are designed to ensure that, among other things, the Corporation has access to all material
information about its subsidiaries, including the books and records of its subsidiaries.
The Corporation provides funds to the Ghanaian Subsidiaries for exploration activities. As part of its corporate
governance practices, Cardinal has developed a Delegation of Authority Manual. The Delegation of Authority
Manual contains guidelines for delegated authorities that help in maintaining adequate controls within the
organization, including the flow of funds between Australia and Ghana.
RISK FACTORS
Prospective investors should carefully consider the following risk factors in addition to the other information
contained in this AIF. The risks and uncertainties described below are not the only ones facing the Corporation.
Additional risks and uncertainties not presently known to the Corporation or that the Corporation currently
considers immaterial may also impair the business and operations of the Corporation and cause the price of
the Ordinary Shares to decline. If any of the following risks actually occur, the Corporation’s business may be
harmed and the financial condition and results of operations may suffer significantly. In that event, the trading
price of the Ordinary Shares could decline and holders of the Ordinary Shares may lose all or part of their
investment.
Risks Related to the Industry
Mineral Exploration, Development and Operating Risks
Mineral exploration is highly speculative in nature, generally involves a high degree of risk and frequently is
non‐productive. The mineral tenements of the Corporation are at various stages of exploration, and potential
investors should understand that mineral exploration and development are high‐risk undertakings. There can
be no assurance that exploration of these tenements, or any other tenements that may be acquired in the
future, will result in the discovery of an economic ore deposit. Even if an apparently viable deposit is identified,
there is no guarantee that it can be economically exploited or will result in a profitable commercial mining
operation.
Resource acquisition, exploration, development and operation involve significant financial and other risks over
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
2019 Annual Information Form
PAGE 50
cyclical, costs and efficiencies of the recovery methods that can be employed, the quality of management,
available technical expertise, taxes, royalties, environmental matters, government regulation (including land
tenure, land use and import/export regulations) and other factors. Even in the event that mineralization is
discovered on a given property, it may take several years in the initial phases of drilling until production is
possible, during which time the economic feasibility of production may change as a result of such factors. The
effect of these factors cannot be accurately predicted, but the combination of these factors may result in the
Corporation not receiving an adequate return on its invested capital, and no assurance can be given that any
exploration program of the Corporation will result in the establishment or expansion of resources or reserves.
The Corporation’s operations are subject to all the hazards and risks normally encountered in the exploration,
development and production of gold and other minerals, including hazards relating to the discharge of
pollutants or hazardous chemicals, changes in anticipated grade and tonnage of ore, unusual or unexpected
adverse geological or geotechnical formations, unusual or unexpected adverse operating conditions, slope
failures, rock bursts, cave‐ins, seismic activity, the failure of pit walls, pillars or dams, fire, explosions, and
natural phenomena and ‘acts of God’ such as inclement weather conditions, floods, earthquakes or other
conditions, any of which could result in damage to, or destruction of, mineral properties or production facilities,
personal injury or death, damage to property, environmental damage, unexpected delays, monetary payments
and possible legal liability, which could have a material adverse impact upon the Corporation. In addition, any
future mining operations will be subject to the risks inherent in mining, including adverse fluctuations in fuel
prices, commodity prices, exchange rates and metal prices, increases in the costs of constructing and operating
mining and processing facilities, availability of energy and water supplies, access and transportation costs,
delays and repair costs resulting from equipment failure, changes in the regulatory environment, and industrial
accidents and labour actions or unrest. The occurrence of any of these risks could materially and adversely
affect the development of a project or the operations of a facility, which could have a material adverse impact
upon the Corporation.
Estimation of Mineralization, Resources and Reserves
There is a degree of uncertainty attributable to the calculation of mineralization, resources and reserves and
corresponding grades being mined or dedicated to future production. Until reserves or mineralization are
actually mined and processed, the quantity of mineralization and reserve grades must be considered estimates
only. These estimates depend upon geological interpretation and statistical inference drawn from drilling and
sampling analysis, which may prove unreliable. There can be no assurance such estimates will be accurate. In
addition, the quantity of reserves and mineralization may vary depending on commodity prices. Any material
change in quantity of reserves, mineralization, grade or stripping ratio may affect the economic viability of a
mine. In addition, there can be no assurance that recoveries from laboratory tests will be duplicated in tests
under on‐site conditions or during production. The inclusion of mineral resource estimates should not be
regarded as a representation that these amounts can be economically exploited and no assurances can be
given that such resources estimates will be converted into reserves. Different experts may provide different
interpretations of resource estimates.
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.
2019 Annual Information Form
PAGE 51
Additional provisions governing mine environmental management are provided in the Minerals and Mining
Act, 2006 (Act 703), and Minerals and Mining Regulations (Health, Safety and Technical) 2012 (L.I. 2182). The
Corporation believes it is in substantial compliance with these laws and regulations; however, the Corporation
notes a continuing trend toward substantially increased environmental requirements and evolving corporate
social responsibility expectations in Ghana, including the requirement for more permits, analysis, data
gathering, community hearings, and negotiations than have been required in the past for both routine
operational needs and for new development projects.
Due to bureaucratic delays, there can be no assurance that all permits which the Corporation may require for
construction of mining facilities and conduct of mining operations, particularly environmental permits, will be
obtainable on reasonable terms or timeframes or that compliance with such laws and regulations would not
have an adverse effect on the profitability of any mining project that the Corporation might undertake.
All phases of the Corporation’s operations are subject to environmental regulations in various jurisdictions. If
the Corporation’s properties are proven to host economic reserves of metals, mining operations will be subject
to national and local laws relating to the protection of the environment, including laws regulating removal of
natural resources from the ground and the discharge of materials into the environment.
Mining operations will be subject to national and local laws and regulations which seek to maintain health and
safety standards by regulating the design and use of mining methods and equipment. Various permits from
government bodies are required for mining operations to be conducted; no assurance can be given that such
permits will be received.
No assurance can be given that environmental standards imposed by national or local authorities will not be
changed or that any such changes would not have material adverse effects on the Corporation’s activities.
Moreover, compliance with such laws may cause substantial delays or require capital outlays in excess of those
anticipated, thus causing an adverse effect on the Corporation. Additionally, the Corporation may be subject
to liability for pollution or other environmental damage, which it may not be able to insure against.
Failure to comply with applicable laws, regulations and permitting requirements may result in enforcement
actions thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or
be curtailed, and may include corrective measures requiring capital expenditures, installation of additional
equipment or remedial actions. Parties engaged in mining operations may be required to compensate those
suffering loss or damage by reason of the mining activities and may have civil or criminal fines or penalties
imposed for violations of applicable laws or regulation and, in particular, environmental laws.
Amendments to current laws, regulations and permits governing operations and activities of mining
companies, or more stringent implementation thereof, could have a material adverse impact on the
Corporation and cause increases in capital expenditures or production costs or reduction in levels of production
at producing properties or require abandonment or delays in development of new mining properties.
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
2019 Annual Information Form
PAGE 52
failure could have a material adverse impact upon the Corporation.
Risks Related to the Business
Operational Risks
The Corporation has not previously generated revenues from operations and its mineral projects are at an
exploration stage. Therefore, it is subject to many risks common to comparable companies, including under‐
capitalization, cash shortages and limitations with respect to personnel, financial and other resources as well
as a lack of revenues. The Corporation has historically incurred significant losses as it has no sources of revenue
(other than interest income), and has significant cash requirements to meet its exploration commitments,
administrative overhead and maintain its mineral interests. The Corporation expects to continue to incur net
losses unless or until one or more of its properties enters into commercial production and generates sufficient
revenue to fund continuing operations. There can be no assurance that current exploration or development
programs will result in the discovery of commercial deposits or, ultimately, in profitable mining operations. See
also “Liquidity and Financing Risk” and “Funding Risk” below.
Liquidity and Financing Risk
The Corporation has no source of operating cash flow and may need to raise additional funding in the future
through the sale of equity or debt securities or by optioning or selling its properties. Any additional equity
financing will dilute shareholdings, and debt financing, if available, may involve restrictions on financing and
operating activities. No assurance can be given that additional funding will be available for further exploration
and development of the Corporation’s properties when required, upon terms acceptable to the Corporation
or at all. Failure to obtain such additional financing could result in the delay or indefinite postponement of
further exploration and development of its properties, or even a loss of property interest, which would have a
material adverse impact upon the Corporation.
Funding Risk
At the date of this AIF, the Corporation has no income producing assets and will generate losses for the
foreseeable future. Until it is able to develop a project and generate appropriate cash flow, it is dependent
upon being able to obtain future equity or debt funding to support long term exploration. Neither the
Corporation nor any of the Directors nor any other party can provide any guarantee or assurance that if further
funding is required, such funding can be raised on terms favourable to the Corporation (or at all). Any additional
equity funding will dilute existing shareholders. Also, no guarantee or assurance can be given as to when a
project can be developed to the stage where it will generate cash flow. As such, a project would be dependent
on many factors, for example exploration success, subsequent development, commissioning and operational
performance.
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.
2019 Annual Information Form
PAGE 53
Uninsurable Risks
In the course of exploration, development and production of mineral properties, risks, including, but not
limited to, unexpected or unusual geological or operating conditions, natural disasters, inclement weather
conditions, pollution, rock bursts, cave‐ins, fires, flooding, earthquakes, civil unrest, terrorism and political
violence may occur. It is not always possible to fully insure against all risks associated with Cardinal’s operations
and Cardinal may decide not to take out insurance against certain risks as a result of high premiums or other
reasons. Should such liabilities arise, they could reduce or eliminate any future profitability and result in
increasing costs and a decline in the value of the securities of Cardinal.
Conflicts of Interest
Certain directors of the Corporation are, and may continue to be, involved in the mining and mineral
exploration industry through their direct and indirect participation in corporations, partnerships or joint
ventures which are potential competitors of the Corporation. Situations may arise in connection with potential
acquisitions in investments where the other interests of these directors may conflict with the interests of the
Corporation. Any Directors with conflicts of interest will be subject to and will follow the procedures set out in
applicable corporate and securities legislation, regulations, rules and policies.
Risks Related to Operating in Ghana
Environmental Bonds
The EPA from time to time reviews the reclamation bonds that are placed on the Corporation’s projects in
Ghana. As part of its periodic assessment of mine reclamation and closure costs, the EPA reviews the adequacy
of reclamation bonds and guarantees.
In certain cases, the EPA has requested higher levels of bonding based on its findings. If the EPA were to require
additional bonding at the Corporation’s properties, it may be difficult, if not impossible, to provide sufficient
bonding. If the Corporation is unable to meet any such increased bonding requirements or negotiate an
acceptable solution with the Government of Ghana, its operations and exploration and development activities
in Ghana may be materially adversely affected.
The Corporation is not in a position to state whether a review in respect of any of the Corporation’s projects in
Ghana is imminent or whether the outcome of such a review would be detrimental to the funding needs of the
Corporation.
Risks of Operating in Ghana
The Corporation’s projects in Ghana are subject to the risks of operating in foreign countries, including political
and economic considerations such as civil and tribal unrest, war (including in neighbouring countries), terrorist
actions, criminal activity, nationalization, invalidation of governmental orders, failure to enforce existing laws,
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
2019 Annual Information Form
PAGE 54
as by laws and policies of Canada affecting foreign trade, investment and taxation. As African governments
continue to struggle with deficits and depressed economies, the strength of commodity prices has resulted in
the gold mining sector being targeted as a source of revenue. Governments are continually assessing the terms
for a mining company to exploit resources in their country.
Furthermore, the Corporation requires consultants and employees to work in Ghana to carry out its planned
exploration and development programs. It may be difficult from time to time to find or hire qualified people in
the mineral exploration industry who are situated in Ghana, or to obtain all of the necessary services or
expertise in Ghana, or to conduct operations on its projects at reasonable rates. If qualified people and services
or expertise cannot be obtained in Ghana, the Corporation may need to seek and obtain those services from
service providers located outside of Ghana which could result in delays and higher costs to the Corporation.
Mineral resource companies face increasing public scrutiny of their activities, and are under pressure to
demonstrate that their operations have potential to generate satisfactory returns not only to their
shareholders, but also to benefit local governments and the communities surrounding its properties where it
operates. The potential consequences of these pressures include reputational damage, lawsuits, increasing
social investment obligations and pressure to increase taxes and future royalties payable to local governments
and surrounding communities. As a result of these considerations, the Corporation may incur increased costs
and delays in permitting and other operational matters with respect to its property interests in Ghana.
Any of the above events could delay or prevent the Corporation from exploring or developing its properties
even if economic quantities of minerals are found, and could have a material adverse impact upon the
Corporation’s foreign operations.
Government Policy Changes
The mineral exploration activities undertaken by the Corporation are subject to laws and regulations governing
health and worker safety, employment standards, exports, taxation, waste disposal, management and use of
toxic substances and explosives, protection of the environment, mine development and production, protection
of endangered and protected species, reclamation, historic and cultural preservation and other matters.
Exploration activities may also be affected in varying degrees by government regulations with respect to, but
not limited to, restrictions on future exploration and production, price controls, royalties, export controls,
currency availability, foreign exchange controls, income taxes, delays in obtaining or the inability to obtain
necessary permits, opposition to mining from environmental and other non‐governmental organizations,
limitations on foreign ownership, expropriation of property, ownership of assets, environmental legislation,
labour relations, limitations on repatriation of income and return of capital, limitations on mineral exports,
high rates of inflation, increased financing costs, and site safety.
The Corporation’s exploration programs with respect to the Corporation’s projects in Ghana will, in general, be
subject to approval by the Minerals Commission and other governmental agencies. Development of any of the
Corporation’s properties will be dependent on the Namdini Gold Project meeting environmental guidelines set
by EPA and, where required, being approved by governmental authorities such as the Minerals Commission.
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.
2019 Annual Information Form
PAGE 55
In addition, no assurance can be given that new rules and regulations will not be enacted or that existing rules
and regulations will not be applied in a manner which could limit or curtail development or future potential
production. Adverse changes in government policies or legislation may affect ownership of mineral interests,
taxation, royalties, land access, labour relations, and mining and exploration activities of the Corporation. It is
possible that the current system of exploration and mine permitting in Ghana may change, resulting in
impairment of rights and possibly expropriation of the Corporation’s properties without adequate
compensation.
Ownership Risks
The Corporation holds its interests in the Namdini Gold Project through 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
2019 Annual Information Form
PAGE 56
reduce the profitability of operations or preclude the economic development of a particular property.
Artisanal Miners
The Corporation’s property interests are held in areas of Ghana that have historically been mined by artisanal
miners. As the Corporation further explores and advances its projects, it may be required to require the
removal of any artisanal miners operating on its properties. There is a risk that such artisanal miners may
oppose the Corporation’s operations, which may result in a disruption to any planned development and/or
mining and processing operations. In addition, artisanal miners have historically used chemicals that are
harmful to the environment to separate the precious metals from the ore. There can be no assurance that the
Corporation will not be subject to environmental liabilities resulting from such operations in the future, which
could have a material adverse impact on the Corporation. In addition, artisanal work practices are often unsafe
and accidents and/or incidents may occur on the Corporation’s property, and there is an added reputational
risk that third parties may wish to link the activities of the artisanal miners to that of the Corporation in the
event of accidents or incidents, which could have a material adverse impact on the Corporation.
Difficulty in Enforcement of Judgements
All of the subsidiaries of the Corporation and the majority of its assets are located outside of Canada.
Accordingly, it may be difficult for investors to enforce within Canada any judgments obtained against the
Corporation, including judgments predicated upon the civil liability provisions of applicable Canadian securities
laws. Consequently, investors may be effectively prevented from pursuing remedies against the Corporation
under Canadian securities laws or otherwise.
The Corporation has subsidiaries incorporated in Australia and Ghana. Many of the directors and officers of
the Corporation reside outside of Canada, and substantially all of the assets of these persons are located
outside of Canada. It may not be possible for shareholders to effect service of process against the Corporation’s
directors and officers who are not resident in Canada. In the event a judgment is obtained in a Canadian court
against one or more of the Corporation’s directors or officers for violations of Canadian securities laws, it may
not be possible to enforce such judgment against those directors and officers. Additionally, it may be difficult
for an investor, or any other person or entity, to assert Canadian securities law claims in original actions
instituted in Australia or Ghana. Courts in these jurisdictions may refuse to hear a claim based on a violation of
Canadian securities laws on the grounds that such jurisdiction is not the most appropriate forum to bring such
a claim. Even if a foreign court agrees to hear a claim, it may determine that the local law, and not Canadian
law, is applicable to the claim. If Canadian law is found to be applicable, the content of applicable Canadian law
must be proven as a fact, which can be a time‐consuming and costly process. Certain matters of procedure will
also be governed by foreign law.
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.
2019 Annual Information Form
PAGE 57
Stress in the Global Economy
Reduction in credit, combined with reduced economic activity and the fluctuations in the Australian dollar may
adversely affect businesses and industries that purchase commodities, affecting commodity prices in more
significant and unpredictable ways than the normal risks associated with commodity prices. The availability of
services such as drilling contractors and geological service companies and/or the terms on which these services
are provided may be adversely affected by the economic impact on the service providers. The adverse effects
on the capital markets generally make the raising of capital by equity or debt financing much more difficult and
the Corporation is dependent upon the capital markets to raise financing. Any of these events, or any other
events causing turmoil in world financial markets, may have a material adverse effect on the Corporation’s
business, operating results and financial condition.
Current Global Financial Condition
Current global financial conditions have been subject to increased volatility. As such, the Corporation is subject
to counterparty risk and liquidity. The Corporation is exposed to various counterparty risks including, but not
limited to, financial institutions that hold the Corporation’s cash, and through companies that have payables
to the Corporation. The Corporation is also exposed to liquidity risks in meeting its operating expenditure
requirements in instances where cash positions are unable to be maintained or appropriate financing is
unavailable. These factors may impact the ability of the Corporation to obtain loans and other credit facilities
in the future and, if obtained, on terms favourable to the Corporation. If these increased levels of volatility and
market turmoil continue, the Corporation’s operations could be adversely impacted and the trading price of
the shares could be adversely affected.
Exchange Rate and Currency Risks
The Corporation undertakes certain transactions denominated in foreign currencies, hence exposures to
exchange rate fluctuations arise. The Corporation does not hedge this exposure. The Corporation manages its
foreign exchange risk by constantly reviewing its exposure and ensuring that there are appropriate cash
balances in order to meet its commitments.
Currency fluctuations may affect the cash flow which the Corporation may realize from its operations, since
most mineral commodities are sold in a world market in USD. The Corporation’s costs are incurred in AUD,
GHS, USD and CAD.
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
2019 Annual Information Form
PAGE 58
equities, and therefore, the ability of the Corporation to raise capital. A sustained, significant decline in the
price of gold could also cause development of any properties in which the Corporation may hold an interest
from time to time to be impracticable. Future production from the Corporation’s future properties, if any, will
be dependent upon, among other things, the price of gold being adequate to make these properties economic.
There can be no assurance that the market price of gold will remain at current levels, that such price will
increase or that market prices will not fall.
Reliance on Key Personnel
The responsibility of overseeing the day‐to‐day operations and the strategic management of the Corporation
depends substantially on its senior management and its key personnel. There can be no assurance that there
will be no detrimental impact on the Corporation if one or more of these employees cease their employment.
Dilution Risk
Cardinal has outstanding options and Performance Shares, as detailed in the most recent financial statements
for the year ended June 30, 2019 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
387,028,921 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
2019 Annual Information Form
PAGE 59
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 October 31, 2018 Shareholders approved the issue of an additional 10% of the Corporation’s
issued capital, subject to satisfaction of certain criteria prescribed in the ASX Listing Rules and the Corporation’s
notice of annual general meeting dated September 25, 2018.
Listed Options (Warrants)
As of the date of this AIF, the Corporation has 106,916,696 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 33,746,015 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
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
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
2019 Annual Information Form
PAGE 60
5
60
3,000,000 ounces
500,000
6,000,000
General terms attaching to the Performance Shares are set out below.
Class C Performance Shares
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(I)
Each Class C Performance Share is a share in the capital of the Corporation.
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.
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.
The Class C Performance Shares do not entitle the holder to any dividends.
The Class C Performance Shares are not transferable.
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.
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 days after the
conversion, apply for the official quotation of the Ordinary Shares arising from the conversion on ASX.
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.
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
2019 Annual Information Form
PAGE 61
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$)
2018
July
August
0.50
0.45
0.41
3,142,599
0.385
2,549,611
September
0.485
0.455
1,909,336
October
November
December
2019
0.46
0.44
0.43
0.42
0.38
0.37
5,991,325
2,711,572
2,551,207
January
0.442
0.345
2,408,869
February
March
April
May
June
July
August
0.44
0.39
0.425
0.40
0.375
3,047,995
0.33
0.32
0.36
3,475,060
4,869,367
2,593,627
0.375
0.295
16,791,039
0.38
0.53
0.325
15,812,717
0.355
17,995,888
Source: Bloomberg
Prior Sales of Unlisted Securities
0.5
0.45
0.475
0.44
0.425
0.42
0.44
0.425
0.36
0.395
0.36
0.36
0.36
0.46
0.38
0.365
0.4
0.38
0.35
0.35
0.36
0.34
0.32
0.32
0.34
0.295
0.285
0.325
1,646,295
1,011,711
385,075
427,388
282,900
183,455
467,200
2,219,506
2,368,004
740,873
586,800
785,500
2,308,994
1,849,521
As at the date of this AIF, the only securities of the Corporation that are outstanding but not listed or quoted
on a marketplace are the Unlisted Options which total 33,746,015 and 60 Class C Performance Shares. The
following table sets forth information with respect to Unlisted Options issued during the financial year ended
June 30, 2019. No Performance Shares were issued during the most recently completed financial year.
Unlisted Options
During the financial year ended June 30, 2019, the Corporation issued the following Unlisted Options to acquire
Ordinary Shares.
2019 Annual Information Form
PAGE 62
Number of Securities
Issued
Exercise Price per
Ordinary Share
2,180,049(1)
2,180,049(1)
1,867,817
$0.679
$0.590
$1.00
Expiry Date
December 21, 2022
December 21, 2022
March 12, 2021
Date of Issuance
April 30, 2019
April 30, 2019
March 12, 2019
Notes:
(1) The vesting provisions of the 2,180,049 Unlisted Options are as follows:
934,307 options vest on the beginning of earthworks for gold production at the Ghanaian assets; and
1,245,742 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. On August 8,
2019, pursuant to section 401.1 of the TSX Company Manual, the Corporation received an exemption relating
to annual director elections.
Name, Province
or State, and
Country of
Residence
Kevin
Tomlinson(3)(4)
London, United
Kingdom
Positions and
Offices Held
and Date of
Appointment
Director, Non‐
Executive
Chairman
November 7,
2016
Number and Class of Securities
Beneficially Owned or Controlled
(1)
Principal Occupation(s)
During
Past Five Years
Shares: 0
Listed Options: 400,000
Unlisted Options: 5,000,000
Class C Performance Shares: 0
Non‐executive Chairman of
the Corporation since
November 2016; Plymouth
Minerals Limited since June
2017, Samco Gold Limited
since January 2012 and
Centamin Egypt Limited
since January 2012.
Former Director, Xanadu
Mines Limited (2017 to
2019), Centamin plc (2012 to
2016); Orbis Gold Ltd (2015
to 2017); Besra Gold Inc.
(2012 to 2015); Maudore
Minerals Ltd. (2012 to 2014)
2019 Annual Information Form
PAGE 63
Number and Class of Securities
Beneficially Owned or Controlled
(1)
Principal Occupation(s)
During
Past Five Years
Name, Province
or State, and
Country of
Residence
Arthur (Archie)
Koimtsidis
Western Australia,
Australia
Malik
Easah (8)
Accra, Ghana
Michele
Muscillo(1)(2)
Queensland,
Australia
Positions and
Offices Held
and Date of
Appointment
Managing
Director
December 27,
2012
Executive
Director
December 27,
2012
Non‐Executive
Director
October 11,
2017
Shares: 8,017,565
Listed Options: 4,191,731
Unlisted Options: 7,500,000
Class C Performance Shares: 0
Shares: 7,681,815
Listed Options: 6,560,423
Unlisted Options: 6,000,000
Class C Performance Shares: 60(2)
Shares: 0
Listed Options: 0
Unlisted Options: 2,018,100
Class C Performance Shares: 0
Co‐founder and Managing
Director of the Corporation
since December 2012
Co‐founder and Executive
Director of the Corporation
since December 2012
Partner, Hopgood Ganim
Lawyers since 2008; Director
Aeris Resources Limited,
since 2013, Xanadu Mines
Limited, since 2017 and
Mako Gold Limited, since
2017. Formerly, Director of
Orbis Gold Limited which is
currently owned by TSX‐
Listed SEMAFO Inc.
Director, Continental Gold
Inc, since 2015.
Former Director Avalon
Advanced Minerals Inc.,
from 2014 to 2019 and
Candente Gold Corp., from
2012 to 2019.
Former Director, Centamin
Egypt, from 2008 to 2018.
CFO, Latin Resources Ltd
since 2017 and Oakdale
Resources Ltd since May
2019.
Former CFO Venture
Minerals Ltd from 2012 to
2014 and Politis Central
Services Group from 2017 to
2018.
Dr. Kenneth G.
Thomas(1)(2)(3)(4)(5)
Canada
Non‐Executive
Director
October 31,
2018
Shares: 0
Listed Options: 0
Unlisted Options: 2,180,049
Class C Performance Shares: 0
Trevor
Schultz(1)(2)(3)(4)(7)
Jon
Grygorcewicz(6)
Non‐Executive
Director
January 2,
2019
CFO
Shares: 0
Listed Options: 0
Unlisted Options: 2,180,049
Class C Performance Shares: 0
Shares: 0
Listed Options: 20,000
Unlisted Options: 0
Class C Performance Shares: 0
Notes:
(1) Member of the Audit and Risk Committee.
(2) Member of the Remuneration and Nomination Committee.
(3) Member of the Health, Safety and Environmental Committee.
(4) Member of the Technical Committee
2019 Annual Information Form
PAGE 64
(5) On October 31, 2018, Dr. Kenneth G. Thomas was appointed as a director.
(6) On October 31, 2018, Jon Grygorcewicz was appointed as CFO.
(7) On January 2, 2019, Trevor Schultz was appointed as a director.
(8) 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.
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 15,699,380 Ordinary Shares, representing approximately 4.05% 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 Graduate Diploma 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 Limited (developer) and Medusa
Mining (producer) where he chaired the company through growth from $30 million to over $700 million 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.
2019 Annual Information Form
PAGE 65
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 over 12 years.
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. Mr Muscillo has acted on numerous IPOs and
debt and equity raisings, and has 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, Mr. Michele Michele was also Non‐Executive
Director of Orbis Gold Limited which is currently owned by TSX‐Listed SEMAFO Inc. (TSX:SMF).
Dr Kenneth G. Thomas – Non‐Executive Director
Dr. Thomas has over 45 years in the mining industry with experience in project development, construction and
operations. Until July 2012 he was Senior Vice President, Projects, Kinross Gold Corporation and previously, for
six years, Global Managing Director and Board Director at Hatch Ltd, a leading international engineering and
construction firm.
From 1987 to 2001 he served in progressively senior roles at Barrick Gold Corporation to Senior Vice President,
Technical Services. Prior to Barrick Gold Corporation, he also worked for 10 years in Zambia and South Africa
with Anglo American Corporation.
Dr. Thomas has a doctorate in Technical Sciences (Project Implementation) from Delft University of Technology
and in 2001 he was awarded the Selwyn G. Blaylock Medal by the Canadian Institute of Mining, Metallurgy and
Petroleum (CIM) for advancements in mining internationally. In addition, he is a Fellow and Past President of
the CIM. He is an experienced public company director, including his current appointment as director of
Continental Gold (TSX: CNL).
Trevor Schultz – Non‐Executive Director
Mr Schultz has over 45 years in the mining industry with experience in project development, construction and
operations. Between 2008 and 2018 he was an Executive and Non‐Executive Director with Centamin Egypt
and was responsible for the construction of the 12Mtpa processing plant which has a similar flowsheet to
Cardinal’s proposed flowsheet.
Prior to this, he served as Chief Operating Officer at Ashanti Goldfields Corporation (now Anglo Gold Ashanti
Ltd) and was a resident of Ghana for 6 years. Furthermore, he worked for BHP in Australia and America and in
South Africa with Anglo American Corporation.
Trevor has an MA in Economics from Trinity College, England (1968), an MSc in Mining Engineering, from
2019 Annual Information Form
PAGE 66
Witwatersrand University, South Africa (1972) and an Advanced Management Programme Diploma from
Harvard Business School, USA (1986).
Jon Grygorcewicz – CFO
Mr. Grygorcewicz has 30 years financial management experience, gained in senior financial management
positions on the ASX and Singapore Exchange Limited (SGX).
Mr. Grygorcewicz has significant experience in implementing new debt facilities with Australian and
international banks for developing gold and iron ore resource projects particularly to de‐risk projects in the
early start‐up development phase.
In prior CFO roles he gained extensive financial and commercial experience within the heavy engineering
services and manufacturing industries across operations spanning Australia and South East Asia.
In his position at Venture Minerals Limited he was an integral part of the development team in bringing the
Riley Iron Ore Project to the brink of production and previously successfully transitioned Focus Minerals
Limited’s Coolgardie Gold Projects through the respective open pit and underground mining development
phases to become, at the time, a substantial Australian gold producer.
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.
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)
(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 while the director or executive officer was acting in
the capacity as director, chief executive officer or chief financial officer; or
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,
2019 Annual Information Form
PAGE 67
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
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
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.
(ii)
(iii)
Kevin Tomlinson served as a director of Maudore Minerals Ltd. (“Maudore”) until May 22, 2014, and of Besra
Gold Inc. (“Besra”) until April 10, 2015. On September 8, 2014, Maudore announced that it had filed a notice
of intention to make a proposal under the Bankruptcy and Insolvency Act (the “BIA”). On March 2, 2015,
Maudore announced that the Superior Court of the Province of Quebec (the “Court”) had granted an order
whereby Maudore’s proposal to creditors, which had initially been filed under the BIA, had been continued
under the CCAA and that the Court had granted an initial stay of proceedings under the CCAA. Maudore made
further announcements on March 27, 2015, June 19, 2015, September 22, 2015 and February 29, 2016 that
the Court had granted extensions of the stay of proceedings under the CCAA. On May 16, 2016, Maudore
announced that Maudore had, under the BIA, made an assignment of its property to a trustee for the benefit
of its creditors generally. On October 19, 2015, Besra announced that its board of directors had decided to file
a notice of intention to make a proposal (the “Notice of Intention”) under the BIA. On January 29, 2016, Besra
announced that, through its appointed proposal trustee, it had submitted a proposal (the “Proposal”) to its
creditors in accordance with the Notice of Intention to make a proposal. The Proposal was subsequently
amended on March 13, 2016 (the “Amended Proposal”). A meeting of creditors (the “Meeting”) was initially
called for March 17, 2016 and was adjourned until April 7, 2016 in order to permit creditors to consider the
Amended Proposal. On April 7, 2016, Besra announced that at the Meeting, the Amended Proposal had been
approved by a majority of unsecured creditors holding in excess of two‐thirds of the value of proven unsecured
creditor claims. The Amended Proposal was approved by the Ontario Superior Court of Justice (Commercial
List) on May 17, 2016. On December 17, 2014, the OSC issued a temporary cease trade order for the securities
of Besra, and on December 29, 2014, the OSC issued a further cease trade order directing that trading in the
securities of Besra cease until further order by the Director (together, the “Besra Cease Trade Order”). The
British Columbia Securities Commission issued a cease trade order on December 17, 2014; the Autorité des
marchés financiers issued a cease trade order on January 5, 2015; and the Alberta Securities Commission issued
a cease trade order on March 30, 2015. The OSC partially revoked the Besra Cease Trade Order on March 4,
2015 to permit trades and acts in furtherance of trades in connection with a proposed private placement
financing by Besra for proceeds of up to C$15 million. On April 7, 2015, the first tranche of such financing, with
gross proceeds of C$2 million, was completed. Besra received no further proceeds from such financing. On
October 14, 2016, the OSC issued an order (the “October 2016 Order”) partially revoking the Besra Cease Trade
Order to permit trades and acts in furtherance of trades that are necessary for and are in connection with the
Amended Proposal and a $10 million tranche of an exit financing. The October 2016 Order was subsequently
varied by the OSC on November 18, 2016, and Besra announced on November 18, 2016 that it had closed a
C$10 million “exit financing” and intended to deliver to the Proposal trustee the consideration necessary to
satisfy the elections made by creditors under the Proposal. Besra expects that once all requirements of the
Proposal have been satisfied, the Proposal trustee will issue a certificate of full performance. In October 2014
trading in the common shares of Besra on the ASX was suspended and Besra’s common shares were delisted
2019 Annual Information Form
PAGE 68
from the TSX because of Besra’s failure to file its financial statements for the year ended June 30, 2014.
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.
2019 Annual Information Form
PAGE 69
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), Dr. Kenneth G. Thomas and Trevor
Schultz. 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
Yes
Yes
Dr. Kenneth G. Thomas
Yes
Yes
Trevor Schultz
Yes
Yes
2019 Annual Information Form
Relevant Education and
Experience
Bachelor of Laws
Chair of audit committee
of Aeris Resources
Limited and Xanadu
Mines Limited.
Over 45 years’
experience in the mining
industry in
project development,
construction and
operations. Dr. Thomas
has held numerous
senior roles
during his career and has
been involved in
compensation matters
throughout this time.
Over 45 years’
experience in the mining
industry. He has
experience in project
development,
construction and
operations. Mr. Schultz
has experience in
numerous senior roles
with involvement in a
number of compensation
matters.
PAGE 70
Notes:
(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).
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, 2019
June 30, 2018
Audit
Fees (1)
$71,668
$67,143
Audited‐Related
Fees (2)
Nil
Nil
Tax
Fees (3)
$5,660
$4,400
All Other
Fees (4)
$36,050
$35,295
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.
2019 Annual Information Form
PAGE 71
(2)
(3)
(4)
“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”.
“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.
“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
During the financial year ended June 30, 2019, the Corporation (together with its wholly owned subsidiaries)
entered into a 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 Gold 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 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 (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
2019 Annual Information Form
PAGE 72
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.
2019 Annual Information Form
PAGE 73
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)
(e)
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;
the independence of the external auditor and the rotation of the lead engagement partner;
2019 Annual Information Form
PAGE 74
(f)
(g)
(h)
(i)
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
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
2019 Annual Information Form
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
PAGE 75
(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.
4.3
Internal Audit Function
(a)
(b)
(c)
(d)
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.
2019 Annual Information Form
PAGE 76
(e)
(f)
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,
employees and former partners and employees of the present and former external auditor of
the Corporation.
5.
MEETINGS
(a)
(b)
(c)
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
2019 Annual Information Form
PAGE 77
conference call.
(d)
(e)
(f)
(g)
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)
(c)
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
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
2019 Annual Information Form
PAGE 78
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.
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;
2019 Annual Information Form
PAGE 79
(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.
iii.
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
was within the last three years a partner or employee of that firm and personally worked on
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)
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;
(f)
has close family ties with any person who falls within any of the categories described above; or
2019 Annual Information Form
PAGE 80
(g)
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.
2019 Annual Information Form