More annual reports from Carnavale Resources:
2023 ReportABN 49 119 450 243
AND CONTROLLED ENTITIES
ANNUAL REPORT
FOR THE YEAR ENDED 30 JUNE 2014
CARNAVALE RESOURCES LIMITED
CONTENTS
Corporate Directory
Review of Operations
Directors' Report
Corporate Governance Statement
Auditor’s Independence Declaration
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Directors' Declaration
Independent Auditor’s Report
Shareholder Information
Schedule of Mineral Concession Interests
Page
1
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45
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48
50
CARNAVALE RESOURCES LIMITED
CORPORATE DIRECTORY
DIRECTORS
Ron Gajewski
Andrew Beckwith
Klaus Eckhof
Rhett Brans
COMPANY SECRETARY
Paul Jurman
PRINCIPAL AND REGISTERED
OFFICE
Level 1, Suite 5
The Business Centre
55 Salvado Road
Subiaco WA 6008
AUDITORS
SHARE REGISTRY
SECURITIES EXCHANGE
Telephone:
Facsimile:
Email:
Website:
(08) 9380 9098
(08) 9380 6761
admin@carnavaleresources.com
www.carnavaleresources.com
HLB Mann Judd
Level 4 130 Stirling Street
Perth WA 6000
Security Transfer Registrars Pty Ltd
770 Canning Highway
Applecross WA 6153
Telephone:
Facsimile:
(08) 9315 2333
(08) 9315 2233
Australian Securities Exchange
Exchange Plaza
2 The Esplanade
Perth WA 6000
ASX CODE
CAV
1
CARNAVALE RESOURCES LIMITED
REVIEW OF OPERATIONS
Arizona & Nevada Gold-Silver-Copper Projects, USA
Subsequent to the end of the reporting period, Carnavale entered into an agreement giving it the option to
acquire the rights to two highly prospective gold (Au)-silver (Ag)-copper (Cu) projects in Arizona and Nevada,
USA.
Carnavale entered into an option agreement with Tojo Minerals Pty Ltd (“Tojo”) whereby Carnavale can
acquire all of the issued shares in Tojo within a seven-month period.
About Tojo
Tojo is a private Australian exploration company established to acquire exploration and development
resource projects, in highly prospective regions within stable mining friendly countries focussing initially on
the USA and Australia. Tojo has identified and acquired the rights to explore highly prospective gold-silver-
copper projects in the mining friendly states of Arizona and Nevada, USA.
Little Butte Project - Arizona
The Little Butte project is a gold-copper exploration project in which Tojo has the right to earn 100% (subject
to third party royalty) and is located approximately 250km south - southeast of Las Vegas and 200km west of
Phoenix. Tenure comprises mineral claims covering an area approximately 9km2. Project highlights are as
follows:
Immediate “walk up” drill targets with the potential to rapidly define a near surface open pittable
oxide gold-copper resource in the near term, associated with 2 parallel oxide gold-copper shear zone
targets with over 1km strike length each.
Encouraging high grade shallow oxide gold results in limited existing drilling includes:
13.7m @ 11.33g/t including 4.5m @ 33.65g/t
33.5m @ 2.95g/t including 22.8m @ 4.06g/t
Deeper Cu-Au sulphide “chargeability” target defined in geophysics beneath numerous small scale
high grade historical surface Cu-Au workings.
The immediate programme comprises compilation of all existing data, including the more recent previous
drilling, acquisition of additional geophysical data to aid deeper drill targeting and RC drilling to delineate the
shallow oxide gold potential.
Red Hills Project - Nevada
The Red Hills project is highly prospective for large “multi-million ounce” Carlin style Au-Ag potential and is
located approximately 400km north of Las Vegas and comprises mineral claims covering an area
approximately 10km2. Historical small scale underground mining previously undertaken in the early 1900’s
has occurred within the project area.
Tojo has rights to earn up to a 75% interest in the project with the following highlights:
Located along an under-explored portion of the prolific +100Moz Carlin Trend.
Look-a-like and new proven mineralisation model based on recent Long Canyon (+2.5Moz)
discovery acquired by Newmont for US$2.3B in 2012 via a takeover.
Encouraging Au and Ag results in rock chip sampling over at least 2km of prospective stratigraphy.
A programme of mapping, geochemical sampling and geophysical surveys was recently completed with
results anticipated in late September 2014.
2
CARNAVALE RESOURCES LIMITED
REVIEW OF OPERATIONS
Transaction Details
Carnavale has entered into an Option Agreement to acquire 100% of Tojo in a share-based transaction and
includes a minimum commitment in direct project expenditure up to 28 February 2015.
The key terms of the Option Agreement are as follows:
Carnavale issued 9.78M of the 10.5M fully paid shares to be issued to Tojo shareholders on 14 August
2014 as an option fee, with the shares subject to voluntary escrow for a 6 month period. The remaining
0.72M fully paid shares are to be issued to Mr Gajewski or his nominee, subject to obtaining the
necessary shareholder approvals at the general meeting scheduled for 26 September 2014.
Carnavale is required to spend US$500,000 direct project expenditure on the two US projects by 28
February 2015 before any withdrawal.
Carnavale has the sole right to elect to acquire all the shares in Tojo, up to 28 February 2015.
Upon exercise of the Option,
Carnavale is required to issue 21M fully paid shares to Tojo shareholders to acquire 100% of Tojo.
Carnavale is required to issue Tojo shareholders with a total of 42M performance shares, which will have the
right to convert to up to 42M fully paid shares in Carnavale upon the successful completion of the following
performance related milestones:
(i) On defining a JORC Code compliant indicated mineral resource of not less than 500,000 ounces of
gold or gold equivalent at greater than or equal to 0.8g/tonne gold or gold equivalent in respect of the
Little Butte Project or if a decision to mine is made based on a preliminary feasibility study on the
Little Butte Project within 3 years, 21M performance shares will convert to fully paid shares; and
(ii) On defining a JORC Code compliant indicated mineral resource of not less than 500,000 ounces of
gold or gold equivalent at greater than or equal to 0.8g/tonne gold or gold equivalent in respect of the
Red Hills Project or if a decision to mine is made based on a preliminary feasibility study on the Red
Hills Project within 4 years, 21M performance shares will convert to fully paid shares.
(iii) Performance shares will be subject to other terms and conditions that are customary for such
shares, including conversion to ordinary shares on a change in control of the Company.
Essex Project (Utah, USA)
During the year, Carnavale entered into an exclusive option agreement with Consolidated Copper & Metals
Inc (“CCM”) to form a Joint Venture with respect to the Essex Project. CCM holds all the rights and
entitlements to the Essex Project. Carnavale agreed to provide funding of up to US$500,000 (“the Option
Amount”) on a staged basis to earn an exclusive option to acquire 65% of the Essex Project.
The Essex Project consists of nearly 30 hectares (72 acres) of land located 5km (3 miles) outside the town of
Milford, Beaver County, Utah. This area is located in south-western Utah, approximately 3.5 hours drive
from Las Vegas, Nevada (heading north-east) or 3.5 hours drive (south-west) from Salt Lake City, Utah.
Field activities undertaken during the period included aerial photography, contouring, auger drilling /
sampling, metallurgical test work, resource calculation, permitting, concept design, capital and operating cost
estimates.
The initial results from exploration and evaluation of the project did not meet the Company’s investment
criteria and the Company withdrew from its agreement to earn an interest in the Essex Project.
3
CARNAVALE RESOURCES LIMITED
REVIEW OF OPERATIONS
Long Horse Project (Western Australia) – Joint Venture with Barrambie Minerals Limited
The Long Horse Project covers a total of 87 blocks south-west of Coolgardie, WA. It is adjacent to mineral
claims and nickel sulphide occurrences known as the Queen Victoria Rocks Project owned by Hannans
Reward Limited (ASX: HNR). The Long Horse project area also includes areas formerly included in a joint
venture between Emu Nickel Limited and Mincor Resources NL.
The Emu Nickel Limited and Mincor Resources NL joint venture identified a large magnetic anomaly at the
margin of felsic granitoid intrusions. Postulated causes for the magnetic anomaly were a large magnetite
source formed at an endoskarn setting or a folded banded iron formation wrapped around the granitoid. One
reverse circulation drill hole (WRC017) was completed which tested the peak of a magnetic anomaly to 175
metres for a possible magnetite iron deposit. The hole was planned to go deeper but was abandoned as
water inflows became too high. The hole intersected a number of thin BIF sequences.
With the granting of some of the tenements at Long Horse during the June quarter, Carnavale plans to
complete a desktop review of historical data and to commence reconnaissance exploration of several
prospects to further refine priority targets.
Corporate
Board Changes
Mr Rhett Brans was appointed to the Board as a Non-Executive Director during the year and, subsequent to
year end, Mr Andrew Beckwith was appointed Managing Director, in line with the proposed acquisition of
Tojo and the new growth strategy.
Mr Peter Christie resigned as a Director of the Board in August 2014. The Board wishes to thank Mr Christie
for his contribution to the Company since his appointment as a founding director in 2006.
Capital Raisings
In October 2013, the Company completed an underwritten pro-rata non-renounceable entitlement issue to
shareholders on the basis of one share for every three shares held at the record date at an issue price of 1.5
cents per share to raise approximately $438,699 together with two free attaching options exercisable at 3
cents each and an expiry date of 30 November 2016.
In November 2013, Carnavale completed a securities placement of 36.67 million shares at 1.5 cents per
share to raise $550,000 before costs together with two free attaching options (on the same terms as
disclosed above) for every share applied for and allotted (“Placement”). Directors of Carnavale subscribed
for $110,000 in the Placement after receving shareholder approval at the Annual General meeting held in
November 2013.
The funds raised were used to satisfy the Option Amount commitment in relation to the Essex Project and to
provide general working capital.
Competent Person’s Statements – Exploration Results
The information in this report
that relates to the Tojo Projects was first reported by the Company in
compliance with JORC 2012 in market releases dated 30 July 2014 and 31 July 2014. The Company
confirms that it is not aware of any new information or data that materially affects the information included in
the market announcements dated 30 July 2014 and 31 July 2014.
The information in this report that relates to exploration results is based on, and fairly represents information
and supporting documentation prepared by Mr Andrew Beckwith, a Competent Person who is a member of
The Australasian Institute of Mining and Metallurgy. Mr Beckwith is a Director of Carnavale Resources
Limited. Mr Beckwith has sufficient experience that is relevant to the style of mineralisation and type of
deposit under consideration and to the activity being undertaken to qualify as a Competent Person as
defined in the 2012 Edition of
the “Australasian Code for Reporting of Exploration Results, Mineral
Resource and Ore Reserves”. Mr Beckwith consents to the inclusion in this report of the matters based on
his information in the form and context in which it appears.
4
CARNAVALE RESOURCES LIMITED
DIRECTORS’ REPORT
The Directors of Carnavale Resources Limited submit herewith the annual financial report of Carnavale
Resources Limited (“Company”) and its controlled entities (“Consolidated Entity” or “Group”) for the year
ended 30 June 2014 and the independent auditor’s report thereon. 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 during or since the end of the financial year are
as follows.
Directors were in office for the entire period unless otherwise stated.
Ron Gajewski, BBus, CPA
Executive Chairman
Appointed 18 October 2006
Mr Gajewski is an accountant by profession, with many years of experience as a director of public listed
companies and as a corporate advisor to public companies.
Mr Gajewski has held directorships with mining companies listed in both Canada and Australia.
During the past three years he has also served as a director of the following listed companies:
Company
Date appointed
Date ceased
Explaurum Limited (formerly Erongo Energy Limited)
Burey Gold Limited
9 July 2007
23 March 2005
27 November 2013
12 August 2014
Andrew Beckwith, BSc Geology, AusIMM
Managing Director
Appointed 29 July 2014
Mr Beckwith is a successful explorer whose past experience includes senior technical roles with AngloGold
Ashanti, Acacia Resources, Helix Resources, Normandy NFM, North Flinders Mines, BP Minerals Australia
and at Westgold Resources, where he led the team initially as exploration manager and then as Managing
Director. Additionally, Mr Beckwith recently held the position of director of Bulletin Resources.
During his time with Westgold, he was intimately involved in the Explorer 108 Pb-Zn-Ag and the Au-Cu
Rover 1 (1.2Moz) discoveries, both in the Northern Territory. Westgold was awarded the “2008 Explorer of
the Year” for the Rover 1 discovery and also went on to acquire the Central Murchison Gold Project, in
Western Australia, with growth from an initial 1.9Moz resource on acquisition to the current 5.0Moz with
mining development currently under assessment. Westgold was acquired by Metals X Limited in 2012.
During the past three years he has also served as a director of the following listed companies:
Company
Westgold Resources Limited
Bulletin Resources Limited
Klaus Eckhof, Dipl. Geol. TU, AusIMM
Non-Executive Director
Appointed 1 January 2008
Date appointed
18 January 2008
13 August 2013
Date ceased
19 October 2012
24 June 2014
Mr. Eckhof is a geologist who has global contacts and has been instrumental in sourcing and developing
successful projects in Australia, Africa, Russia, South America and the Philippines.
He is currently Chairman of Burey Gold Limited (ASX: BYR) and was formerly President and Chief Executive
Officer of Moto Goldmines Limited (“MGL”). Within four years of Mr Eckhof’s appointment, MGL discovered
just under 20 million ounces of gold and completed a bankable feasibility study at the Moto Gold Project in
the Democratic Republic of Congo . MGL was subsequently acquired by Randgold Resources.
5
CARNAVALE RESOURCES LIMITED
DIRECTORS’ REPORT
During the past three years he has also served as a director of the following listed companies:
Company
Date appointed
Date ceased
Burey Gold Limited
AVZ Limited
Cardinal Resources Limited
Explaurum Limited (formerly Erongo Energy Limited)
6 February 2012
12 May 2014
1 February 2013
24 August 2011
-
-
16 June 2014
4 October 2013
Rhett Brans, MIEAust CPEng
Non-Executive Director
Appointed 17 September 2013
Mr Brans has 39 years of experience in project development of treatment plants and mine developments. In
his former role as Executive Director at Perseus Mining Limited, he successfully completed a Bankable
Feasibility Study and completed construction of the 5.5 million tonnes per year Edikan Gold Mine in Ghana.
He also completed a Feasibility Study for the Sissingue Gold Project in Cote d’Ivoire, which was ready at the
time for construction.
Earlier with Minproc, he was responsible for the management (both directly and indirectly) of the engineering
design, procurement and construction management of 22 mineral extraction facilities. Within this period he
was responsible, as the overall project manager, for a $340 million fully integrated mineral sands extraction
and treatment facility for Ti-West, now called Ticor.
In addition, as a founding Director of Tritton Resources Limited and Managing Director of a successful
engineering consulting company, Mr Brans has been involved with the development of more than 20 further
projects in Australia and Africa.
During the past three years he has also served as a director of the following listed companies:
Company
Syrah Resources Limited
Perseus Mining Limited
Tiger Resources Limited
Peter Christie, BBus
Non-Executive Director
Appointed 28 April 2006
Resigned 5 August 2014
Date appointed
12 June 2013
26 May 2004
11 July 2008
Date ceased
-
15 November 2013
22 May 2013
Mr Christie graduated from Curtin University with a Bachelor of Business in 1983, is a qualified accountant
and tax agent, and has over 24 years of public accounting experience.
He has served on several public company boards in the resource sector since 2006 and also developed
extensive hospitality and property development interests.
During the past three years he has also served as Chairman of the following listed companies:
Company
Date appointed
Date ceased
Safety Medical Products Limited
Narhex Life Sciences Limited
6 October 2010
13 January 2011
-
-
COMPANY SECRETARY
Paul Jurman, BCom, CPA
Appointed 22 November 2006
Mr Jurman is a Certified Practising Accountant with over 10 years experience and has been involved with a
diverse range of Australian public listed companies in company secretarial and financial roles. He is also a
director and company secretary of Nemex Resources Limited and Explaurum Limited.
6
CARNAVALE RESOURCES LIMITED
DIRECTORS’ REPORT
Directors’ interests
The relevant interests in the shares and options of the consolidated entity at the date of this report are as
follows:
Name
R Gajewski
A Beckwith
K Eckhof
R Brans
Ordinary shares
12,497,618
6,831,390
3,333,333
2,000,000
Options
16,220,750
-
6,666,666
4,000,000
No director has an interest, whether directly or indirectly, in a contract or proposed contract with the
consolidated entity.
PRINCIPAL ACTIVITIES
The principal activity of the Group was mineral exploration in Australia and USA.
RESULTS AND DIVIDENDS
The consolidated loss after tax for the year ended 30 June 2014 was $947,119 (2013: $441,598). No
dividends were paid during the year and the Directors do not recommend payment of a dividend.
EARNINGS PER SHARE
Basic loss per share for the year was 0.72 cents (30 June 2013: 0.50 cents).
REVIEW OF OPERATIONS / OPERATING AND FINANCIAL REVIEW
The Group is engaged in mineral exploration for metals in USA and Australia. A review of the Group’s
operations, including information on exploration activity and results thereof, financial position, strategies and
projects of the consolidated entity during the year ended 30 June 2014 is provided in this Financial Report
and, in particular, in the "Review of Operations" section immediately preceding this Directors’ Report. The
Group’s financial position, financial performance and use of funds information for the financial year is
provided in the financial statements that follow this Directors’ Report.
As an exploration entity, the Group has no operating revenue or earnings and consequently the Group’s
performance can not be gauged by reference to those measures.
Instead, the Directors’ consider the
Group’s performance based on the the success of exploration activity, acquisition of additional prospective
mineral interests and, in general, the value added to the Group’s mineral portfolio during the course of the
financial year.
Whilst performance can be gauged by reference to market capitalisation, that measure is also subject to
numerous external factors. These external factors can be specific to the Group, generic to the mining
industry and generic to the stock market as a whole and the Board and management would only be able to
control a small number of these factors.
The Group’s business strategy for the financial year ahead and, in the foreseeable future, is to continue
exploration activity on the Group’s existing mineral projects,
identify and assess new mineral project
opportunities throughout
the world and review development strategies where individual projects have
reached a stage that allows for such an assessment. Due to the inherent risky nature of the Group’s
activities, the Directors are unable to comment on the likely results or success of these strategies. The
Group’s activites are also subject to numerous risks, mostly outside the Board’s and management’s control.
These risks can be specific to the Group, generic to the mining industry and generic to the stock market as a
whole. The key risks, expressed in summary form, affecting the Group and its future performance include
but are not limited to:
Geological and technical risk posed to exploration and commercial exploitation success;
Sovereign risk, change in government policy, change in mining and fiscal legislation;
Prevention of access by reason of political or civil unrest, outbreak of hostilities, inability to obtain
regulatory or landowner consents or approvals, or native title issues;
force majeure events;
7
CARNAVALE RESOURCES LIMITED
DIRECTORS’ REPORT
change in metal market conditions;
mineral title tenure and renewal risks; and
capital requirement and lack of future funding.
This is not an exhaustive list of risks faced by the Group or an investment in it. There are other risks generic
to the stock market and the world economy as whole and other risks generic to the mining industry, all of
which can impact on the Group.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
The Company’s objective is to maximise shareholder value through the discovery and delineation of
significant gold, copper, silver and other mineral deposits in USA and Australia.
The Directors are unable to comment on the likely results from the Company’s planned exploration activities
due to the speculative nature of such activities.
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
There has not been any significant changes in the state of affairs of the company and its controlled entities
during the financial year, other than as noted in this financial report.
SUBSEQUENT EVENTS
On 30 July 2014, the Company announced it had entered into an agreement giving it the option to acquire
the rights to two highly prospective Gold (Au) –Silver (Ag) - Copper (Cu) projects (Little Butte Project and
Red Hills Project) in Arizona and Nevada, USA. Carnavale has entered into an option agreement with Tojo
whereby Carnavale can acquire all of the issued shares in Tojo within a 7 month period.
The key terms of the Option Agreement are detailed in the "Review of Operations" section immediately
preceding this Directors’ Report.
On 4 August 2014, the Company confirmed that it had issued 28,663,202 shares at a price of 1.5 cents each
to professional and sophisticated investors raising $429,948. The monies will be used to fund the exploration
commitment as part of the option agreement to acquire Tojo and will be also be used for working capital.
On 14 August 2014, the Company issued 9.78M of the 10.5M fully paid shares to be issued to Tojo
shareholders as an option fee, with the shares subject to voluntary escrow for a 6 month period. The
remaining 0.72M fully paid shares are to be issued to Mr Gajewski or his nominee, subject to obtaining the
necessary shareholder approvals at the general meeting scheduled for 26 September 2014.
Other than the above, no matter or circumstance has arisen which has significantly affected, or may
significantly affect, the operations of the consolidated entity, the results of those operations or the state of
affairs of the consolidated entity in subsequent financial years.
ENVIRONMENTAL ISSUES
The Group is aware of its environmental obligations with regards to its exploration activities and ensures that
it complies with all regulations when carrying out exploration work.
DIRECTORS’ MEETINGS
The number of meetings of the Directors and the number of meetings attended by each Director during the
year ended 30 June 2014 were:
Name
R Gajewski
P Christie
K Eckhof
R Brans
Eligible to
attend
3
3
3
2
Attended
3
3
3
2
8
CARNAVALE RESOURCES LIMITED
DIRECTORS’ REPORT
REMUNERATION REPORT – AUDITED
Remuneration policy
The remuneration policy of Carnavale Resources Limited has been designed to align directors’ objectives
with shareholder and business objectives by providing a fixed remuneration component which is assessed
on an annual basis in line with market rates. The Board of Carnavale Resources Limited believes the
remuneration policy to be appropriate and effective in its ability to attract and retain the best directors to run
and manage the Company.
The Board’s policy for determining the nature and amount of remuneration for Board members is as follows:
The remuneration policy and setting the terms and conditions for the Executive Directors and other
senior staff members is developed and approved by the Board based on local and international trends
It examines terms and conditions for employee
among comparative companies and industry generally.
incentive schemes, benefit plans and share plans.
Independent advice is obtained when considered
necessary to confirm that executive remuneration is in line with market practice and is reasonable
within Australian executive reward practices.
All executives receive a base salary (which is based on factors such as length of service and
experience) and superannuation.
The Consolidated Entity is an exploration entity and is, therefore, speculative in terms of performance.
Consistent with attracting and retaining talented executives, directors and senior executives are paid
market rates associated with individuals in similar positions within the same industry. Options and
performance incentives may be issued particularly as the Consolidated Entity moves from an
exploration to a producing entity and key performance indicators such as profit and production and
reserves growth can be used as measurements for assessing executive performance.
The Board policy is to remunerate non-executive directors at market rates for comparable companies
for time, commitment and responsibilities. The Executive Director, in consultation with independent
advisors, determine payments to the non-executive directors and review their remuneration annually,
based on market practice, duties and accountability. The Constitution and the ASX Listing Rules
specify that the aggregate remuneration of Non-Executive Directors shall be determined from time to
time by a general meeting. An amount not exceeding the amount determined is then divided between
the directors as agreed. The latest determination was at a shareholders meeting on 5 January 2007
when the shareholders approved an aggregate remuneration of $200,000 per year. Fees for non-
executive directors are not linked to the performance of the Consolidated Entity. However, to align
Directors’
interests with shareholder interests, the directors are encouraged to hold shares in the
Company.
Details of specified key management personnel
Directors
R Gajewski
A Beckwith
P Christie
K Eckhof
R Brans
Executives
P Jurman
Executive Chairman
Managing Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Appointed 18 October 2006
Appointed 29 July 2014
Appointed 28 April 2006
Resigned 5 August 2014
Appointed 1 January 2008
Appointed 17 September 2013
Company Secretary
Appointed 22 November 2006
Executive Directors’ remuneration and other terms of employment are reviewed annually by the non-
the year, relative
executive directors having regard to performance against goals set at
comparative information and independent expert advice.
the start of
Except as detailed in the Remuneration Report, no director has received or become entitled to receive,
during or since the financial period, a benefit because of a contract made by the Consolidated Entity or a
related body corporate with a director, a firm of which a director is a member or an entity in which a director
has a substantial financial interest. This statement excludes a benefit included in the aggregate amount of
emoluments received or due and receivable by directors and shown in the Remuneration Report, prepared in
accordance with the Corporations regulations, or the fixed salary of a full time employee of the Consolidated
Entity.
9
CARNAVALE RESOURCES LIMITED
DIRECTORS’ REPORT
Remuneration of specified directors and specified executives:
Remuneration for the year ended 30 June 2014
Short-term benefits
Directors’
fees
$
Consulting
fees
$
-
25,000
24,000
18,933
67,933
150,000
-
-
42,000
192,000
-
-
Directors
R Gajewski
P Christie
K Eckhof
R Brans
Total
Executives
P Jurman
Post-
employ-
ment
Super-
annuation
$
-
-
-
1,751
1,751
Remuneration for the year ended 30 June 2013
$
$
$
Directors
R Gajewski
P Christie
K Eckhof
Total
Executives
P Jurman
-
25,000
24,000
49,000
245,000
-
-
245,000
-
-
-
-
-
-
-
-
Equity-
based
compens-
ation
Total
Proportion
related to
performance
$
$
%
-
-
-
-
-
-
-
-
-
-
-
$
150,000
25,000
24,000
62,684
261,684
-
$
%
245,000
25,000
24,000
294,000
-
-
-
-
-
-
-
-
-
-
Accounting, secretarial and corporate service fees of $60,313 (2013: $58,208) and rental fees of $37,118
(2013: $29,993) were paid or payable during the year ended 30 June 2014 on normal terms and conditions
to Corporate Consultants Pty Ltd, a company in which Mr Gajewski and Mr Jurman are directors and have a
beneficial interest.
Corporate Consultants Pty Ltd also holds a rental security deposit of $9,375 (2013: $9,375) - (Note 12).
Remuneration Options
The Company has not granted any options over unissued ordinary shares during or since the end of the
financial year to any Directors or officers as part of their remuneration.
Performance Rights granted as part of remuneration for the year ended 30 June 2014
Grant date
Number
granted
Number
vested
at year
end
Average fair
value per
performance
right at grant
date
Maximum
total
value of
grant yet
to vest
Expiry date
Directors
R Gajewski
P Christie
K Eckhof
R Brans
Executives
P Jurman
27 November 2013
27 November 2013
27 November 2013
27 November 2013
4,000,000
1,000,000
1,000,000
1,000,000
27 November 2013
500,000
-
-
-
-
$0.018
$0.018
$0.018
$0.018
$0.018
-
-
-
-
-
30 June 2014
30 June 2014
30 June 2014
30 June 2014
30 June 2014
The Performance Rights were granted with respect to the Essex Project and the vesting and the conversion
of the Performance Rights into ordinary shares would only occur upon successful acquisition of a 65%
interest in the Essex Project by the Company. The Company withdrew from the Essex project during the
year and the Performance Rights lapsed. All amounts recognised in the income statement were reversed
and no expense was recorded in the income statement for the financial year ending 30 June 2014.
10
CARNAVALE RESOURCES LIMITED
DIRECTORS’ REPORT
Shareholdings of key management personnel
Year ended 30 June 2014
Directors
R Gajewski
P Christie
K Eckhof
R Brans
Total
Executive
P Jurman
Balance at
1 July 2013
Granted as
remuneration
Net other
change (i) (ii)
Balance at 30
June 2014
4,387,243
522,001
-
-
4,909,244
-
-
-
-
-
-
-
8,110,375
174,002
3,333,333
2,000,000
13,617,710
12,497,618
696,003
3,333,333
2,000,000
18,526,954
-
-
(i)
In October 2013, the Company completed an underwritten pro-rata (on the basis of one share for
every three shares held) non-renounceable entitlement issue of shares (at a price of 1.5 cents
each) together with two free attaching options exercisable at 3 cents each and an expiry date of 30
November 2016. Each of the directors who were entitled to receive securities participated in this
non-renounceable entitlements issue. Mr Gajewski sub-underwrote the non – renounceable
entitlement issue and was required to subscribe for 4,647,959 shares and 9,295,918 options to
complete the shortfall which arose under the Entitlements Issue.
(ii) In November 2013, the Company completed a placement of 36.67 million shares at 1.5 cents per
share together with two free attaching options (on the same terms as disclosed above). The
Directors received shareholder approval for participation in the placement. Mr Eckhof subscribed
for 3,333,333 shares and 6,666,666 options and Mr Gajewski and Brans each subscribed for
2,000,000 shares and 4,000,000 options.
Year ended 30 June 2013
Directors
R Gajewski
P Christie
K Eckhof
Total
Executive
P Jurman
Balance at
1 July 2012
Granted as
remuneration
Net other
change
Balance at 30
June 2013
3,887,243
522,001
-
4,409,244
-
-
-
-
-
-
500,000
-
-
500,000
4,387,243
522,001
-
4,909,244
-
-
Option holdings of key management personnel
Year ended 30 June 2014
Balance at 1
July 2013
Granted as
remuneration
Net other
change (i)
Balance at 30
June 2014
16,220,750
348,004
6,666,666
4,000,000
27,235,420
16,220,750
348,004
6,666,666
4,000,000
27,235,420
-
-
-
-
-
-
Directors
R Gajewski
P Christie
K Eckhof
R Brans
Total
Executive
P Jurman
(i) Refer to (i) and (ii) above.
-
-
-
-
-
-
11
CARNAVALE RESOURCES LIMITED
DIRECTORS’ REPORT
Option holdings of key management personnel (continued)
Year ended 30 June 2013
Directors
R Gajewski
P Christie
K Eckhof
Total
Executive
P Jurman
Balance at 1
July 2012
Granted as
remuneration
Net other
change (i)
Balance at 30
June 2013
3,665,344
522,001
-
4,187,345
-
-
-
-
-
-
(3,665,344)
(522,001)
-
(4,187,345)
-
-
-
-
-
-
(i) The options expired unexercised on 28 February 2013.
Employment contracts of directors and executives
The Company has entered into an employment agreement with Mr Ron Gajewski whereby Mr Gajewski
receives remuneration of $150,000 plus GST (formerly $264,000 per annum plus GST) effective from 1 May
2013. The agreement may be terminated subject to a 3 month notice period.
Subsequent to year end the Company entered into an agreement with Mr Andrew Beckwith where he is
retained as the Managing Director and receives remuneration of $15,000 plus GST per calendar month plus
superannuation at the prevailing statutory rate.
End of Remuneration report
SHARE OPTIONS
As at the date of this report, there are 131,826,452 options over unissued ordinary shares in the Company
comprising.
Unlisted Options
Number
131,826,452
Exercise Price (cents)
3
Expiry Date
30 November 2016
These options do not entitle the holder to participate in any share issue of the Company or any other body
corporate. There are no options to subscribe for shares in any controlled entity.
Options issued during the year were as follows:
In October 2013, the Company completed an underwritten pro-rata non-renounceable entitlement
issue to shareholders on the basis of one share for every three shares held at an issue price of 1.5
cents per share together with two free attaching options exercisable at 3 cents each and an expiry
date of 30 November 2016. 58,493,138 options were allotted in October 2013.
In November 2013, the Company completed a placement of 36.67 million shares at 1.5 cents per
share together with two free attaching options (on the same terms as disclosed above). 73,333,334
options were allotted in November 2013.
There were no options issued after 30 June 2014 and up to the date of this report.
Shares issued on exercise of options
During or since the end of the financial year, the Company issued 20 ordinary shares as a result of the
exercise of options.
12
CARNAVALE RESOURCES LIMITED
DIRECTORS’ REPORT
PERFORMANCE RIGHTS
As at the date of this report, there were no Performance Rights outstanding in the Company.
Performance Rights issued during the year were as follows:
In November 2013, shareholders approved the issue of 7.5 million Performance Rights to the
Directors and company secretary. Vesting and the conversion of the Performance Rights into
ordinary shares would only occur upon successful acquisition of a 65% interest in the Essex Project
by the Company.
The Company withdrew from the Essex project during the year and the
Performance Rights lapsed.
There were no Performance Rights issued after 30 June 2014 and up to the date of this 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 Consolidated Entity shall be indemnified out of the property of the Consolidated Entity against
any liability incurred by him in his capacity as Officer or agent of the Consolidated Entity or any related
corporation in respect of any act or omission whatsoever and howsoever occurring or in defending any
proceedings, whether civil or criminal.
During the period the Company agreed to pay an annual
insurance premium of $7,865 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 wilful
breach of duty.
AUDITOR’S INDEPENDENCE DECLARATION
The lead auditor’s independence declaration for the year ended 30 June 2014 has been received and forms
part of the directors’ report and can be found on page 21 of the financial report.
NON - AUDIT SERVICES
There have been no non-audit services provided by the Company’s auditor during the year (2013: Nil).
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.
_________________
RON GAJEWSKI
Director
Dated this 9th day of September 2014.
Perth, Western Australia
13
CARNAVALE RESOURCES LIMITED
CORPORATE GOVERNANCE STATEMENT
ASX Listing Rule 4.10.3 requires listed companies to disclose in their Annual Report the extent to which they
have complied with the ASX Best Practice Recommendations of the ASX Corporate Governance Council in
the reporting period. A description of the Company’s main corporate governance practices is set out below.
All these practices, unless otherwise stated, were in place for the entire year.
The Company’s website at www.carnavaleresources.com contains a corporate governance section that
includes copies of the Company’s corporate governance policies.
Principle 1: Lay solid foundations for management and oversight
Role of the Board and of Senior Executives (1.1)
The Board is ultimately responsible for the overall management of Carnavale and for directing its strategic
goals, with the aim of creating and delivering shareholder value through maximising the performance of
Carnavale's business.
In performing its role, the Board’s specific responsibilities include:
endorsement of the strategic direction for Carnavale's business strategies and objectives;
approving policies covering the management of business risks, safety and occupational health,
community and environmental issues;
monitoring Carnavale's operational and financial position and performance;
identifying the principal risks faced by Carnavale and ensuring that appropriate control and monitoring
systems are in place to manage the impact of these risks;
ensuring that Carnavale's financial and other reporting mechanisms result in adequate, accurate and
timely information being provided to the Board;
approving processes, procedures and systems to ensure that financial results are appropriately and
accurately reported on a timely basis;
ensuring that shareholders and the financial market as a whole are fully informed of all material
developments in relation to Carnavale and its businesses;
appointing and, where appropriate, removing the CEO, approving other key executive appointments
including the Company Secretary, and planning for executive succession;
overseeing and evaluating the performance of the CEO and other senior executives in the context of
Carnavale’s strategies and objectives;
ensuring processes and procedures are in place for evaluating the performance of the Board and each
Director;
reviewing and approving executive remuneration and general salary and bonus policy;
approving Carnavale's budgets and business plans and monitoring the progress of major capital
expenditures, capital management, acquisitions and divestitures;
reviewing and approving Carnavale’s internal compliance and control systems and codes of conduct;
approving processes, procedures and systems to ensure Carnavale's compliance with all
governmental regulations and accounting standards; and
approving processes, procedures and systems to ensure that Carnavale conducts its business openly
and ethically in accordance with the Company’s code of conduct.
laws,
The Board has delegated to the Executive Chairman authority over the day-to-day management of
Carnavale and its operations. This delegation of authority includes responsibility for:
developing business plans, budgets and strategies for Carnavale for consideration by the Board and,
to the extent approved by the Board, implementing these plans, budgets and strategies;
operating Carnavale's businesses within the parameters set by the Board from time to time, and
keeping the Board informed of material developments in Carnavale's businesses;
where proposed transactions, commitments or arrangements exceed the parameters set by the Board,
referring the matter to the Board for its consideration and approval;
identifying and managing operational and other risks and, where those risks could have a material
impact on Carnavale's businesses, formulating strategies for managing these risks for consideration
by the Board;
managing Carnavale’s current financial and other reporting mechanisms and control and monitoring
systems to ensure that these mechanisms and systems capture all relevant material information on a
timely basis and are functioning effectively;
14
CARNAVALE RESOURCES LIMITED
CORPORATE GOVERNANCE STATEMENT
the Board is provided with sufficient
ensuring that
information on a timely basis in regard to
Carnavale's businesses, and in particular with respect to Carnavale's performance, financial condition,
operating results and prospects, to position the Board to fulfil its governance responsibilities;
implementing the policies, processes and codes of conduct approved by the Board; and
implementing policies, processes and procedures for the management and development of
Company’s employees.
the
This statement of matters reserved for the Board and areas of delegated authority to the Executive Chairman
is contained in the Board Charter posted on the Company’s website.
Senior Executive Performance Review (1.2)
The Company has one executive director, Mr Gajewski and he is responsible for ensuring that the Company
achieves the goals established by the Board.
Due to the size of the Company and the nature of its business, it has not been deemed necessary to institute
a formal documented performance review program of Mr Gajewski. The Board considers that at this stage of
the Company’s development an informal process is appropriate.
This process for evaluating senior executives is contained in the Performance Evaluation and Remuneration
Policy posted on the Company’s website.
Principle 2: Structure the board to add value
The Board operates in accordance with the broad principles set out in its charter which is available from the
corporate governance information section of the Company website. The Board has been formed so that it
has effective composition, size and commitment to adequately discharge its responsibilities and duties given
its current size and scale of operations.
The names experience and responsibilities of Directors of the Company in office at the date of this statement
are set out in the Directors’ Report.
Independent Directors (2.1)
In assessing whether a director is classified as independent, the Board considers the independence criteria
set out in the ASX Corporate Governance Council Recommendation 2.1 and other facts, information and
circumstances deemed by the Board to be relevant.
Using the ASX Best Practice Recommendations on the assessment of the independence of Directors, the
Board considers that of a total of four Directors, Mr Christie, Mr. Eckhof and Mr Brans are considered to be
independent. Mr Gajewski is employed in an executive capacity by the Company and so is not considered to
be independent. ASX Corporate Governance Council Recommendation 2.1 requires a majority of the Board
to be independent directors. The Board considers that at this stage of the Company’s development, the
experience and knowledge of the Board is appropriate,
Chairman and Chief Executive Officer (CEO) (2.2, 2.3)
The Chairman is responsible for leadership of the Board, for ensuring that the Board functions effectively,
and for communicating the views of the Board to the public.
Mr Gajewski was appointed Executive Chairman from 28 February 2011 and therefore exercises the role of
Chairman and Executive director.
The Company therefore does not comply with ASX Corporate
Governance Council Recommendation 2.2 which states the Chairman should be an independent director
and 2.3 which states the role of Chairman and CEO should not be exercised by the same individual. The
Board considers that the current composition of the Board is adequate for the Company's current size and
operations, and includes an appropriate mix of skills and expertise, relevant to the Company's business. The
the directors possess skills and experience suitable for building the
Company considers that each of
It is the
Company. The Board takes the responsibilities of best practice in corporate governance seriously.
Board’s intention to review its composition on a continual basis as the Company’s expands its activities and
greater demands and skills amongst directors become necessary.
15
CARNAVALE RESOURCES LIMITED
CORPORATE GOVERNANCE STATEMENT
Nomination Committee (2.4)
The Company does not have a nomination committee. The Board considers that the Company is not
currently of a size nor are its affairs of such complexity to justify the formation of separate or special
committees at this time. The Board as a whole is able to address the governance aspects of the full scope of
the Company’s activities and to ensure that it adheres to appropriate ethical standards. In particular, the full
Board considers those matters that would usually be the responsibility of a nomination committee. The
Board considers that no efficiencies or other benefits would be gained by establishing a separate nomination
committee.
Directors are appointed under the terms of the Company’s constitution. Appointments to the Board are based
upon merit and against criteria that serves to maintain an appropriate balance of skills, expertise, and
experience of the board. The categories considered necessary for this purpose are a blend of accounting
and finance, business, technical and administration skills.
It is the policy of the Company that new Directors undergo an induction process in which they are given a full
briefing on the Company.
In order to achieve continuing improvement in Board performance, all Directors
are encouraged to undergo continual professional development. Specifically, Directors are provided with the
resources and training to address skills gaps where they are identified.
The Constitution of the Company requires one third of the directors, other than the Managing Director, to
retire from office at each Annual General Meeting. Directors who have been appointed by the Board are
required to retire from office at
in
determining the number of directors to retire at that Annual General Meeting. Directors cannot hold office for
a period in excess of three years or later than the third Annual General Meeting following their appointment
without submitting themselves for re-election. Retiring directors are eligible for re-election by shareholders
the next Annual General Meeting and are not
taken into account
This selection, nomination and appointment process is detailed in the Board Charter on the company
website.
Board Performance Review (2.5)
It is the policy of the Board to conduct evaluation of its performance. This policy is to ensure individual
Directors and the Board as a whole work efficiently and effectively in achieving their functions.
Each year the Board undertakes the following activities:
The Chairman meets with each non-executive director separately to discuss individual performance
and ideas for improvement; and
The Board as a whole discusses and analyses its own performance during the year including
suggestions for change or improvement.
Due to the size of the Board and the nature of its business, it has not been deemed necessary to institute a
formal documented performance review program of individuals. The Chairman conducted an informal review
process whereby he discussed with individual directors their attitude, performance and approach toward
meeting the short and long term objectives of the Company. The Board considers that at this stage of the
Company’s development an informal process is appropriate.
This process for evaluating the Board and Directors is contained in the Performance Evaluation and
Remuneration Policy posted on the Company’s website.
Independent Professional Advice
The Board collectively and each Director has the right to seek independent professional advice at the
Company’s expense, up to specified limits, to assist them to carry out their responsibilities.
16
CARNAVALE RESOURCES LIMITED
CORPORATE GOVERNANCE STATEMENT
Principle 3: Promote ethical and responsible decision making
Code of Conduct (3.1)
The Company has developed a Code of Conduct (the Code), which has been endorsed by the Board and
applies to all employees, Directors and officers. The Code may be amended from time to time as necessary
to ensure it reflects the practices necessary to maintain confidence in the Company’s integrity and to take
into account legal obligations and reasonable expectations of the Company’s stakeholders. The Code
outlines the responsibility and accountability of Company personnel to report and investigate reports of
unethical practices.
This Code of Conduct can be found on the company website.
Trading Policy (3.1)
Trading in Company securities is regulated by the Corporations Act and the ASX Listing Rules. The Board
makes all Directors, officers and employees aware on appointment that it is prohibited to trade in the
that Director, officer or employee is in the possession of price sensitive
Company’s securities whilst
information.
For details of shares held by Directors and officers please refer to the Directors’ Report. Directors are
required to report to the Company Secretary any movements in their holdings of Company securities, which
are reported to ASX in the required timeframe prescribed by the ASX Listing Rules.
This Share Trading Policy can be found on the company website.
Diversity (3.2, 3.3, 3.4)
The Company has a commitment to workplace diversity and ensuring that a diverse mix of skills and talent
exists amongst its directors, officers and employees.
The Board recognises the value of providing an inclusive workplace and the value of having a workforce
made up of individuals with diverse skills, values, background and experiences, with a commitment to
equality and respect. Given the current scale of operations, stage of development and size of the workforce,
the Board considers it impractical to have a formal diversity policy.
Due to the size of the Company and its workforce, the Board does not consider it appropriate to set
measurable objectives for achieving gender diversity at this time.
Principle 4: Safeguard Integrity in Financial reporting
Audit Committee (4.1, 4.2, 4.3)
The Company does not have an audit committee. The Board considers that the Company is not currently of
a size nor are its affairs of such complexity to justify the formation of separate or special committees at this
time. The Board as a whole is able to address the governance aspects of the full scope of the Company’s
activities and to ensure that it adheres to appropriate ethical standards. In particular, the full Board considers
those matters that would usually be the responsibility of an audit committee. The Board considers that no
efficiencies or other benefits would be gained by establishing a separate audit committee.
External Auditors
The Company requires external auditors to demonstrate quality and independence. The performance of the
external auditor is reviewed and applications for tender of external audit services requested as deemed
appropriate, taking into consideration assessment of performance, existing value and tender costs.
It is HLB Mann Judd’s policy to rotate audit engagement partners on listed companies at least every 5 years.
17
CARNAVALE RESOURCES LIMITED
CORPORATE GOVERNANCE STATEMENT
Principle 5 & 6: Making Timely and Balanced Disclosure and Shareholder Communication
Continuous Disclosure Policy and Shareholder Communication (5.1, 6.1)
The Company has developed a Continuous Disclosure Policy which has been endorsed by the Board. The
Continuous Disclosure Policy ensures compliance with ASX Listing Rules and Corporations Act obligations
to keep the market fully informed of information which may have a material effect on the price or value of its
securities and outlines accountability at a senior executive level for that compliance. All ASX announcements
are to be posted to the Company website as soon as possible after confirmation of receipt is received from
ASX, including all financial reports.
The Board encourages full participation of shareholders at the Annual General Meeting to ensure a high
level of accountability and identification with the Company's strategy and goals. In preparing for general
meetings of the Company, the Company drafts the notice of meeting and related explanatory information so
that they provide all of the information that is relevant to shareholders in making decisions on matters to be
voted on by them at the meeting. This information is presented clearly and concisely so that it is easy to
understand and not ambiguous. The Company uses general meetings as a tool to effectively communicate
with shareholders and allows shareholders a reasonable opportunity to ask questions of the Board of
Directors and to otherwise participate in the meeting. The external auditor of the Company is asked to
attend each annual general meeting and to be available to answer shareholder questions about the conduct
of the audit and the preparation and content of the auditor’s report.
Important issues are presented to the
shareholders as single resolutions. The shareholders are also responsible for voting on the appointment of
Directors.
The Company is committed to maintaining a Company website with general information about the Company
and its operations and information specifically targeted at keeping the Company’s shareholders informed
about the Company.
In particular, where appropriate, after confirmation of receipt by the ASX, the following
are posted to the Company website:
relevant announcements made to the market via the ASX;
media releases;
investment updates;
company presentations and media briefings;
copies of press releases and announcements for the preceding three years; and
copies of annual and half yearly reports including financial statements for the preceding three years.
The Continuous Disclosure Policy and Shareholder Communication Policy can be found on the Company
website.
Principle 7: Recognise and Manage Risk
The Company is not currently of a size to require the formation of committees. The full Board has the
responsibility for the risk management, compliance and internal controls systems of the Company.
Risk Management (7.1, 7.2)
Risks are assessed and managed by management who are responsible for designing, implementing and
reporting on the adequacy of the Company’s risk management and internal control system. The Company’s
risk management policy is designed to provide the framework to identify, assess, monitor and manage the
risks associated with the Company’s business. The Company adopts practices designed to identify
significant areas of business risk and to effectively manage those risks in accordance with the Company’s
risk profile. The Board also monitors risks and controls through its financial reporting and audit process and
regular operating reports from management which include safety, health and environmental aspects. The
risks involved in a resources sector company and the specific uncertainties for the Company continue to be
regularly monitored and the Managing Director regularly appraises the full Board of the Company as to the
effectiveness of the Company’s management of its material business risks. All proposals reviewed by the
Board include a consideration of the issues and risks of the proposal.
18
CARNAVALE RESOURCES LIMITED
CORPORATE GOVERNANCE STATEMENT
The Company’s main areas of risk include:
exploration;
new project acquisitions;
security of tenure;
environment;
government policy changes and political risk;
occupational health and safety;
financial reporting; and
continuous disclosure obligations.
Assurances from the Executive Chairman and the Company Secretary/Financial Controller (7.3)
It is the responsibility of the Board to regularly assess the adequacy of the Company’s risk management and
internal control systems and that
its financial affairs comply with applicable laws and regulations and
professional practices.
Regular consideration is given to all these matters by the Board. The Company has in place an internal
control framework to assist the Board in identifying, assessing, monitoring and managing risk.
The Company’s internal control system is monitored by the Board and assessed regularly to ensure
effectiveness and relevance to the Company’s current and future operations. Procedures have been put into
place to ensure the Executive Chairman and the Company Secretary/Financial Controller state in writing to
the Board that the integrity of the financial statements is founded on a sound system of risk management and
internal compliance and control and that the Company’s risk management and internal compliance and
control system is operating efficiently and effectively.
The Executive Chairman and the Company Secretary/Financial Controller have declared in writing to the
Board that the Company’s financial statements for the year ended 30 June 2014 present a true and fair view,
in all material aspects, of the Company’s financial condition and operational results and are in accordance
with relevant accounting standards, that this is founded on a sound system of risk management and internal
compliance and control and that the Company’s risk management and internal compliance and control
system is operating efficiently and effectively. This representation is made by the Executive Chairman and
Company Secretary/Financial Controller prior to the Director’s approval of the release of the annual and half
yearly accounts. This representation is made after enquiry of, and representation by, appropriate levels of
management.
The Risk Management Policy can be found on the Company website.
Principle 8: Remunerate Fairly and Responsibly
Remuneration Committee (8.1)
The Company does not have a remuneration committee. The Board considers that the Company is not
currently of a size nor are its affairs of such complexity to justify the formation of separate or special
committees at this time. The Board as a whole is able to address the governance aspects of the full scope of
the Company’s activities and to ensure that it adheres to appropriate ethical standards. In particular, the full
Board considers those matters that would usually be the responsibility of a remuneration committee. The
Board considers that no efficiencies or other benefits would be gained by establishing a separate
remuneration committee.
Remuneration Policy (8.2)
The remuneration policy of Carnavale Resources has been designed to align Director’s objectives with
shareholder and business objectives by providing a fixed remuneration component which is assessed on an
annual basis in line with market rates. The Board of Carnavale Resources believes the remuneration policy
to be appropriate and effective in its ability to attract and retain the best Directors to run and manage the
company. Directors’ Remuneration is approved by resolutions of
the Board. The Board’s policy for
determining the nature and amount of remuneration for Board members is as follows:
19
CARNAVALE RESOURCES LIMITED
CORPORATE GOVERNANCE STATEMENT
Non-Executive Directors
The Board policy is to remunerate Non-Executive Directors at market rates for comparable companies for
time, commitment and responsibilities. Payments to the Non-Executive Directors are reviewed annually,
based on market practice, duties and accountability. The maximum aggregate amount of fees that can be
paid to Non-Executive Directors is subject to approval by shareholders at the Annual General Meeting. Fees
for Non-Executive Directors are not linked to the performance of the Company. However, to align Directors’
interests with shareholder interests, the Directors are encouraged to hold shares in the Company. Non-
Executive Directors are entitled to receive incentive options (subject
is
considered an appropriate method of providing sufficient reward whilst maintaining cash reserves. There is
no scheme to provide retirement benefits, other than statutory superannuation, to Non-Executive Directors.
to shareholder approval) as it
Executives
The Company is committed to remunerating its senior executives in a manner that is market-competitive and
consistent with best practice as well as supporting the interests of shareholders. Consequently,
the
remuneration of senior executives may be comprised of the following:
is determined from a review of
fixed salary that
requirements and expectations;
a performance bonus designed to reward actual achievement by the individual of performance
objectives and for materially improved Company performance;
participation in any option scheme with thresholds approved by shareholders;
statutory superannuation.
the market and reflects core performance
By remunerating senior executives through performance and long-term incentive plans in addition to their
fixed remuneration, the Company aims to align the interests of senior executives with those of shareholders
and increase Company performance.
The objective behind using this remuneration structure is to drive improved Company performance and
thereby increase shareholder value as well as aligning the interests of executives and shareholders.
Participants in equity-based remuneration plans are not permitted to enter into any transactions that would
limit the economic risk of options or other unvested entitlements. Details of this policy can be found in the
Performance Evaluation and Remuneration Policy on the Company website.
For details of remuneration paid to Directors and officers for the financial year please refer to the Directors’
Report.
20
CARNAVALE RESOURCES LIMITED
AUDITOR’S INDEPENDENCE DECLARATION
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the consolidated financial report of Carnavale Resources Limited for
the year ended 30 June 2014, I declare that to the best of my knowledge and belief, there have been
no contraventions of:
a)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit;
and
b) any applicable code of professional conduct in relation to the audit.
Perth, Western Australia
9 September 2014
M R W Ohm
Partner
HLB Mann Judd (WA Partnership) ABN 22 193 232 714
Level 4, 130 Stirling Street Perth WA 6000. PO Box 8124 Perth BC 6849 Telephone +61 (08) 9227 7500. Fax +61 (08) 9227 7533.
Email: hlb@hlbwa.com.au. Website: http://www.hlb.com.au
Liability limited by a scheme approved under Professional Standards Legislation
HLB Mann Judd (WA Partnership) is a member of
International, a worldwide organisation of accounting firms and business advisers.
21
CARNAVALE RESOURCES LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2014
Revenue
Expenditure
Administrative expenses
Exploration expenditure impaired
Foreign exchange gain / (loss)
Share based payment expense
Loss before related income tax benefit
Income tax benefit
Note
Consolidated
2014
$
38,545
38,545
2013
$
41,188
41,188
(509,185)
(411,537)
(1,942)
(63,000)
(484,664)
(25,237)
27,115
-
(947,119)
-
(441,598)
-
3
4
11
4
4
5
Net loss attributable to members of the parent entity
(947,119)
(441,598)
Other comprehensive income / (loss) for the period, net of
tax
-
-
Total comprehensive loss for the year
(947,119)
(441,598)
Loss per share
Basic – cents
Diluted – cents
17
17
(0.72)
(0.72)
(0.50)
(0.50)
The accompanying notes form part of these financial statements
22
CARNAVALE RESOURCES LIMITED
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2014
Current assets
Cash and cash equivalents
Receivables
Other assets
Total current assets
Non-current assets
Plant and equipment
Exploration and evaluation expenditure
Other assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Total current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Note
Consolidated
2014
$
2013
$
18(a)
8
9
1,527,499
11,954
10,121
1,549,574
1,466,072
8,484
10,121
1,484,677
10
11
12
13
14
15
16
3,439
-
9,375
12,814
6,189
-
9,375
15,564
1,562,388
1,500,241
68,578
68,578
48,816
48,816
68,578
48,816
1,493,810
1,451,425
23,614,874
1,249,661
(23,370,725)
1,493,810
22,625,370
1,249,661
(22,423,606)
1,451,425
The accompanying notes form part of these financial statements
23
CARNAVALE RESOURCES LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2014
Consolidated
Issued
capital
$
Option
reserve
$
Accumulated
losses
$
Total
$
Balance at 1 July 2012
22,625,370
1,249,661
(21,982,008)
1,893,023
Loss attributable to members of the
parent entity
Total comprehensive loss for the year
Balance at 30 June 2013
-
-
22,625,370
-
-
1,249,661
(441,598)
(441,598)
(22,423,606)
(441,598)
(441,598)
1,451,425
Consolidated
Issued
capital
$
Option
reserve
$
Accumulated
losses
$
Total
$
Balance at 1 July 2013
22,625,370
1,249,661
(22,423,606)
1,451,425
Loss attributable to members of the
parent entity
Total comprehensive loss for the year
Shares issued during the year (net of
issue costs)
Balance at 30 June 2014
-
-
-
-
(947,119)
(947,119)
(947,119)
(947,119)
989,504
23,614,874
-
1,249,661
-
(23,370,725)
989,504
1,493,810
The accompanying notes form part of these financial statements
24
CARNAVALE RESOURCES LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2014
Cash flows from operating activities
Payments to suppliers
Interest received
Net cash outflows from operating activities
Cash flows from investing activities
Payments for exploration and development expenditure
Payments for property, plant and equipment
Net cash outflows from investing activities
Cash flows from financing activities
Proceeds from issue of shares and options
Issue costs - shares and options
Net cash inflows from financing activities
Note
Consolidated
2014
$
2013
$
(487,742)
36,144
(451,598)
(440,510)
41,188
(399,322)
18(b)
(411,537)
-
(411,537)
(17,289)
(8,939)
(26,228)
988,699
(62,195)
926,504
-
-
-
Net increase / (decrease) in cash and cash equivalents held
63,369
(425,550)
Effect of foreign exchange fluctuations on cash held
(1,942)
27,115
Cash and cash equivalents at the beginning of the financial year
1,466,072
1,864,507
Cash and cash equivalents at the end of the financial year
18(a)
1,527,499
1,466,072
The accompanying notes form part of these financial statements
25
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
1.
CORPORATE INFORMATION
Carnavale Resources Limited is a company limited by shares,
Company’s shares are publicly traded on the Australian Securities Exchange.
incorporated in Australia. The
The nature of the operations and principal activity of the Group is mineral exploration.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a)
Basis of preparation
The financial statements are general purpose financial statements, which have 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 statements have also
been prepared on a historical cost basis, except for available for-sale financial assets which have been
measured at fair value. Cost is based on the fair values of the consideration given in exchange for
assets.
The financial report is presented in Australian dollars.
The accounting policies detailed below have been consistently applied to all of the years presented
unless otherwise stated. The financial statements are for the consolidated entity consisting of
Carnavale Resources Limited and its subsidiaries.
(b)
Adoption of new and revised standards
In the year ended 30 June 2014, the Directors have reviewed all of the new and revised Standards
and Interpretations issued by the AASB that are relevant to the Group’s operations and effective for
the current annual reporting period.
It has been determined by the Directors that there is no impact, material or otherwise, of the new and
revised Standards and Interpretations on the Group’s business and, therefore, no change is necessary
to Group accounting policies.
The Directors have also reviewed all new Standards and Interpretations that have been issued but are
not yet effective for the year ended 30 June 2014. As a result of this review the Directors have
determined that there is no impact, material or otherwise, of the new and revised Standards and
Interpretations on the Group and, therefore, no change is necessary to Group accounting policies.
(c)
Statement of compliance
The financial statement of Carnavale Resources Limited (the Company) for the year ended 30 June
2014 was authorised for issue in accordance with a resolution of the Directors on 9th September 2014.
The financial
report complies with Australian Accounting Standards, which include Australian
equivalents to International Financial Reporting Standards (‘AIFRS’). Compliance with AIFRS ensures
that
the financial report, comprising the financial statements and notes thereto, complies with
International Financial Reporting Standards (‘IFRS’).
26
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
2.
(d)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Basis of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of
Carnavale Resources Limited (‘company’ or ‘parent entity’) as at 30 June 2014 and the results of all
subsidiaries for the year then ended. Carnavale Resources Limited and its subsidiaries are referred to
in this financial report as the group or the consolidated entity.
The financial statements of the subsidiaries are prepared for the same reporting period as the parent
company, using consistent accounting policies.
intercompany balances and transactions,
In preparing the consolidated financial statements, all
income and expenses and profit and losses resulting from intra-group transactions have been
eliminated in full.
Subsidiaries are fully consolidated from the date on which control
is transferred to the Group and
cease to be consolidated from the date on which control is transferred out of the Group. Control exists
where the company has the power to govern the financial and operating policies of an entity so as to
obtain benefits from its activities. The existence and effect of potential voting rights that are currently
exercisable or convertible are considered when assessing when the Group controls another entity
The acquisition of subsidiaries has been accounted for using the purchase method of accounting. The
purchase method of accounting involves allocating the cost of the business combination to the fair
value of the assets acquired and the liabilities and contingent liabilities assumed at the date of
acquisition. Accordingly, the consolidated financial statements include the results of subsidiaries for
the period from their acquisition.
(e)
Income tax
Deferred income tax is provided on all temporary differences at the balance date between the tax
bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences:
except where the deferred income tax liability arises from the initial recognition of an asset or
liability in a transaction that is not a business combination and, at the time of the transaction,
affects neither that accounting profit nor taxable profit or loss; and
in respect of
associates and interests in joint ventures, except where the timing of
temporary differences will not reverse in the foreseeable future.
taxable temporary differences associated with investments in subsidiaries,
the
the reversal of
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 are only recognised to the extent that it is
probable that the temporary differences will reverse in the foreseeable future and taxable profit
will be available against which the temporary differences can be utilised.
The carrying amount of deferred income tax assets is reviewed at each balance 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.
27
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(e)
Income tax (continued)
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to
the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that
have been enacted or substantively enacted at the balance date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in the
statement of comprehensive income.
(f)
Exploration and evaluation expenditure
Exploration and evaluation expenditures in relation to each separate area of interest are recognised as
an exploration and evaluation asset
in the year in which they are incurred where the following
conditions are satisfied:
(i)
(ii)
the rights to tenure of the area of interest are current; and
at least one of the following conditions is also met:
(a)
(b)
the exploration and evaluation expenditures are expected to be recouped through
successful development and exploration of the area of interest, or alternatively, by its
sale; or
exploration and evaluation activities in the area of interest have not at the reporting date
reached a stage which permits a reasonable assessment of the existence or otherwise of
economically recoverable reserves, and active and significant operations in, or in relation
to, the area of interest are continuing.
Exploration and evaluation assets are initially measured at cost and include acquisition of rights to
explore, studies, exploratory drilling,
trenching and sampling and associated activities and an
allocation of depreciation and amortised of assets used in exploration and evaluation activities.
General and administrative costs are only included in the measurement of exploration and evaluation
costs where they are related directly to operational activities in a particular area of interest.
Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest
that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount.
The recoverable amount of the exploration and evaluation asset (for the cash generating unit(s) to
interest) is estimated to
which it has been allocated being no larger than the relevant area of
loss subsequently
determine the extent of
reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable
amount, but only to the extent that the increased carrying amount does not exceed the carrying
amount that would have been determined had no impairment loss been recognised for the asset in
previous years.
loss (if any). Where an impairment
the impairment
(g)
Revenue
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group
and the revenue can be reliably measured. The following specific recognition criteria must also be met
before revenue is recognised:
Interest
Revenue is recognised as the interest accrues (using the effective interest method, which is the rate
the financial
that exactly discounts estimated future cash receipts through the expected life of
instrument) to the net carrying amount of the financial asset.
(h)
Cash and cash equivalents
Cash and short-term deposits in the statement of financial position comprise cash at bank and in hand
and short-term deposits with an original maturity of three months or less.
For the purposes of the statement of cash flows, cash and cash equivalents consist of cash and cash
equivalents as defined above, net of outstanding bank overdrafts.
28
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
2.
(i)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Employee benefits
Provision is made for the Group’s liability for employee benefits arising from services rendered by
employees to balance date (where applicable). Employee benefits expected to be settled within one
year together with entitlements arising from wages and salaries, annual leave and sick leave which will
be settled after one year, have been measured at the amounts expected to be paid when the liability is
settled, plus related on-costs. Other employee benefits payable later than one year have been
measured at the present value of the estimated future cash outflows to be made for those benefits.
Contributions are made by the Group to employee superannuation funds and are charged as
expenses when incurred (where applicable).
(j)
Impairment of assets
financial assets is impaired and makes an estimate of
The Group assesses at the end of each reporting period whether there is objective evidence that a
the asset’s
financial asset or group of
recoverable amount. An asset’s recoverable amount is the higher of its fair value less costs to sell and
its value in use and is determined for an individual asset, unless the asset does not generate cash
inflows that are largely independent of those from other assets or groups of assets and the asset's
value in use cannot be estimated to be close to its fair value. 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 is written down to its recoverable amount.
In assessing 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).
losses may no longer exist or may have decreased.
is also made at each reporting date as to whether any previously recognised
An assessment
impairment
the
recoverable amount is estimated. A previously recognised impairment loss is reversed only if there
has been a change in the estimates used to determine the asset’s recoverable amount since the last
impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its
recoverable amount. That increased amount cannot exceed the carrying amount that would have been
determined, net of depreciation, had no impairment loss been recognised for the asset in prior years.
Such reversal is recognised in profit or loss unless the asset is carried at revalued amount, in which
case the reversal is treated as a revaluation increase. After such a reversal the depreciation charge is
adjusted in future periods to allocate the asset’s revised carrying amount, less any residual value, on a
systematic basis over its remaining useful life.
If such indication exists,
(k)
Earnings per share
Basic earnings per share is calculated as net profit / (loss) attributable to members of the parent,
adjusted to exclude any costs of servicing equity (other than dividends) and preference share
dividends, divided by the weighted average number of ordinary shares, adjusted for any bonus
element.
(l)
Goods and services tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount
In these circumstances the
of GST incurred is not recoverable from the Australian Tax Office (“ATO”).
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 statement of financial position are shown inclusive of GST.
The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or
liability in the statement of financial position.
Cash flows are included in the statement of cash flows on a gross basis. The GST components of
cash flows arising from investing and financing activities which are recoverable from, or payable to, the
ATO are classified as operating cash flows.
29
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(m)
Investments
investments are initially recognised at cost, being the fair value of the consideration given and
All
including acquisition charges associated with the investment.
After initial recognition, investments, which are classified as held for trading and available-for-sale, are
measured at
fair value. Gains or losses on investments held for trading are recognised in the
statement of comprehensive income.
Gains or losses on available-for-sale investments are recognised as a separate component of equity
until the investment is sold, collected or otherwise disposed of, or until the investment is determined to
be impaired, at which time the cumulative gain or loss previously reported in equity is included in the
statement of comprehensive income.
(n)
Financial assets
Financial assets and financial liabilities are recognised in the statement of financial position when the
Group becomes party to the contractual provisions of the financial
instrument. A financial asset is
derecognised when the contractual rights to the cash flows from the financial assets expire or are
transferred and no longer controlled by the entity. A financial liability is removed from the statement of
financial position when the obligation specified in the contract is discharged or cancelled or expires.
Financial assets and financial liabilities classified as held for trading are measured at fair value through
profit or loss.
Upon initial recognition a financial asset or financial liability is designated as at fair value through profit
or loss when:
(a)
(b)
an entire contract containing one or more embedded derivatives is designated as a financial
asset or financial liability at fair value through profit or loss.
doing so results in more relevant information, because either:
(i)
it eliminates or significantly reduces a measurement or recognition inconsistency that
would otherwise arise from measuring assets or liabilities or recognising gains or losses
on them on different bases; or
a group of financial assets, financial liabilities or both is managed and its performance is
evaluated on a fair value basis, in accordance with a documented risk management or
investment strategy, and information about the group is provided internally on that basis
to key management personnel.
(ii)
Investments in equity instruments that do not have a quoted market price in an active market, and
whose fair value cannot be reliably measured are not designated as at fair value though profit or loss.
A gain or loss arising from a change in the fair value of a financial asset or financial liability classified
as at fair value through profit or loss is recognised in profit or loss.
Financial assets not measured at fair value comprise:
(a)
(b)
(c)
loans and receivables being non-derivative financial assets with fixed or determinable payments
that are not quoted in an active market. These are measured at amortised cost using the
effective interest rate method;
held-to-maturity investments being non-derivative financial assets with fixed or determinable
payments and fixed maturity that will be held to maturity. These are measured at amortised
cost using the effective interest method; and
investments in equity instruments that do not have a quoted market price in an active market
and whose fair value cannot be reliably measured. These are measured at cost together with
derivatives that are linked to and must be settled by the delivery of such investments.
30
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(n)
Financial assets (continued)
Available-for-sale financial assets are non-derivative financial assets which are designated as
available-for-sale or that are not classified as loans and receivables, held-to-maturity investments or
financial assets as at fair value through profit or loss.
A gain or loss arising from a change in the fair value of an available-for-sale financial asset is
recognised directly in equity, through the statement of changes in equity (except for impairment losses
and foreign exchange gains and losses) until the financial asset is derecognised at which time the
cumulative gain or loss previously recognised in equity is recognised in profit or loss.
Regular purchases of financial assets are accounted for as follows:
financial assets held for trading – at trade date
held-to-maturity investments – at trade date
loans and receivables – at trade date
available-for-sale financial assets – at trade date
liabilities are measured at amortised cost using the effective
Except for the following all financial
interest rate method.
financial
(a)
measured at fair value.
financial
derecognition or are accounted for using the continuing involvement approach.
liabilities at
(b)
liabilities that arise when a transfer of a financial asset does not qualify for
fair value through profit and loss and derivatives that are liabilities
The amortised cost of a financial asset or a financial liability is the amount initially recognised minus
principal repayments, plus or minus cumulative amortisation of any difference between the initial
amount and maturity amount and minus any write-down for impairment or uncollectability.
(o)
Foreign currency translation
Both the functional and presentation currency of Carnavale Resources Limited is Australian dollars.
Each entity in the Group determines its own functional currency and items included in the financial
statements of each entity are measured using that functional currency.
Transactions in foreign currencies are initially recorded in the functional currency by applying the
exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in
foreign currencies are retranslated at the rate of exchange ruling at the balance date.
All exchange differences in the consolidated financial report are taken to profit or loss with the
exception of differences on foreign currency borrowings that provide a hedge against a net investment
in a foreign entity. These are taken directly to equity until the disposal of the net investment, at which
time they are recognised in profit or loss.
Tax charges and credits attributable to exchange differences on those borrowings are also recognised
in equity. Non-monetary items that are measured in terms of historical cost in a foreign currency are
translated using the exchange rate as at the date of the initial transaction. Non-monetary items
measured at fair value in a foreign currency are translated using the exchange rates at the date when
the fair value was determined.
As at the reporting date the assets and liabilities of this subsidiary are translated into the presentation
currency of Carnavale Resources Limited at the rate of exchange ruling at the balance date and its
statement of financial performance is translated at the weighted average exchange rate for the year.
The exchange differences arising on the translation are taken directly to a separate component of
equity. On disposal of a foreign entity, the deferred cumulative amount recognised in equity relating to
that particular foreign operation is recognised in profit or loss.
31
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(p) Plant and equipment
Plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment
losses.
The assets' residual values, useful
lives and amortisation methods are reviewed, and adjusted if
appropriate, at each financial year end. Depreciation is calculated on a diminishing value basis over
the estimated useful life of the assets as follows:
Plant and equipment – 4 years
(q)
Trade and other payables
Trade payables and other payables are carried at cost and represent liabilities for goods and services
provided to the consolidated entity prior to the end of the financial year that are unpaid and arise when
the consolidated entity becomes obliged to make future payments in respect of the purchase of these
goods and services.
(r)
Issued capital
Ordinary shares are classified as equity.
shares are shown in equity as a deduction, net of tax, from the proceeds.
Incremental costs directly attributable to the issue of new
(s)
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 of Carnavale Resources Limited.
(t)
Significant accounting estimates
The carrying amounts of certain assets and liabilities are often determined based on estimates and
assumptions of future events. There are no key estimates and assumptions which have a significant
risk of causing a material adjustment to the carrying amounts of certain assets and liabilities within the
next annual reporting period.
(u)
Trade and other receivables
Trade receivables, which generally have 30-90 day terms, are recognised and carried at original
invoice amount less an allowance for any uncollectible amounts. An allowance for doubtful debts is
made when collection of the full amount is no longer probable. Bad debts are written off when
identified.
trade receivables is continually reviewed and those that are considered to be
Impairment of
uncollectible are written off by reducing the carrying amount directly. An allowance account is used
when there is objective evidence that the Group will not be able to collect all amounts due according to
the original contractual terms. Factors considered by the Group in making this determination include
information and significant
known significant financial difficulties of the debtor, review of financial
delinquency in making contractual payments to the Group. The impairment allowance is set equal to
the difference between the carrying amount of the receivable and the present value of estimated future
cash flows, discounted at
the original effective interest rate. Where receivables are short-term,
discounting is not applied in determining the allowance.
When a trade receivable for which an impairment allowance had been recognised becomes
uncollectible in a subsequent period, it is written off against the allowance account. Subsequent
recoveries of amounts previously written off are credited against other expenses in the statement of
comprehensive income.
32
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
3.
REVENUE
Other revenue
Interest earned
4.
EXPENSES
Consolidated
2014
$
38,545
38,545
2013
$
41,188
41,188
Consolidated
2014
$
2013
$
63,000
2,750
1,942
-
2,888
(27,115)
Loss before income tax includes the following
specific expenses:
Share based payment expense
Depreciation of plant and equipment
Foreign exchange (gain)/loss
INCOME TAX
5.
(a)
Prima facie tax benefit at 30% on loss from ordinary activities is reconciled to the income tax
provided in the financial statements
Loss before income tax
Consolidated
2014
$
(947,119)
2013
$
(441,598)
Prima facie income tax benefit at 30%
284,136
132,479
Tax effect of amounts which are not tax (deductible) / taxable in
calculating taxable income:
Due diligence / capital related costs
Exploration expenses impaired
Tax effect of capitalised share issue costs
Income tax benefit adjusted for non (deductible) / taxable items
Deferred tax asset not brought to account
Income tax benefit
(45,448)
(123,461)
38,765
153,992
(153,992)
-
-
(2,384)
39,003
169,098
(169,098)
-
(b)
Deferred tax assets
The potential deferred tax asset arising from tax losses and temporary differences has not been
recognised as an asset because recovery of tax losses is not yet considered probable.
Carry forward revenue losses
Carry forward capital losses
Capital raising costs
The benefits will only be obtained if:
Consolidated
2014
$
6,312,773
2,494,367
18,326
8,825,466
2013
$
6,162,419
2,421,724
38,432
8,622,575
(i)
the companies in the group derive future assessable income of a nature and of an amount
sufficient to enable the benefit from the deduction for the losses to be realised;
33
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
5.
INCOME TAX (continued)
(b)
Deferred tax assets (continued)
(ii)
the companies continue to comply with the conditions for deductibility imposed by the Law; and
(iii)
no changes in tax legislation adversely affect the companies in realising the benefits from the
deductions for the losses.
6.
AUDITOR’S REMUNERATION
The auditor of Carnavale Resources Limited is HLB Mann
Judd.
Amounts received or due and receivable by the
Company’s auditors for:
Auditing or reviewing the Company’s financial
statements
7.
(a)
KEY MANAGEMENT PERSONNEL
Details of key management personnel
Directors
R Gajewski (appointed 18 October 2006)
P Christie (appointed 28 April 2006, resigned 5 August 2014)
K Eckhof (appointed 1 January 2008)
R Brans (appointed 17 September 2013)
Executive
P Jurman – Company Secretary
(b)
Compensation of key management personnel
Short-term employee benefits
Post-employment benefits
(c)
Other key management personnel transactions
Consolidated
2014
$
2013
$
21,205
21,205
28,000
28,000
Consolidated
2014
$
259,933
1,751
261,684
2013
$
294,000
-
294,000
Accounting, secretarial and corporate service fees of $60,313 (2013: $58,208) and rental fees of
$37,118 (2013: $29,993) were paid or payable during the year ended 30 June 2014 on normal terms
and conditions to Corporate Consultants Pty Ltd, a company in which Mr Gajewski and Mr Jurman are
directors and have a beneficial interest.
Corporate Consultants Pty Ltd also holds a rental security deposit of $9,375 (2013: $9,375) - (Note
12).
34
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
8.
CURRENT RECEIVABLES
Other receivables (i)
Interest receivable
Consolidated
2014
$
9,554
2,400
11,954
2013
$
8,484
-
8,484
(i) Other receivables represents amounts outstanding for goods and services tax (GST), which are
non-interest bearing, with repayment terms applicable under the relevant government authorities.
9.
OTHER CURRENT ASSETS
Prepayments
10.
PLANT AND EQUIPMENT
Plant and equipment, at cost
Less: accumulated depreciation
Balance at beginning of year
Additions
Depreciation expense
11.
EXPLORATION AND EVALUATION EXPENDITURE
Exploration and evaluation costs carried forward in respect
of exploration areas of interest (i)
Opening balance
Exploration expenditure
Exploration expenditure impaired (ii)
Consolidated
2014
$
2013
$
10,121
10,121
Consolidated
2014
$
10,527
(7,088)
3,439
6,189
-
(2,750)
3,439
2013
$
10,527
(4,338)
6,189
138
8,939
(2,888)
6,189
-
-
-
411,537
(411,537)
-
7,948
17,289
(25,237)
-
(i)
The ultimate recoupment of costs carried forward in relation to areas of interest in the exploration
and evaluation phases is dependent on the successful development and commercial exploitation
or sale of the respective areas.
(ii) During the year ended 30 June 2014, the Company entered into an exclusive option agreement
with Consolidated Copper & Metals Inc (“CCM”) to form a joint venture with respect to the Essex
Project. Carnavale agreed to provide funding of up to US$500,000 on a staged basis to earn an
exclusive option to acquire 65% of
Initial results from exploration and
the Essex Project.
evaluation of the project did not meet the Company’s investment criteria and the Company
withdrew from the agreement.
35
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
12. OTHER NON-CURRENT ASSETS
Rental security deposit (Note 7 (c))
13.
TRADE AND OTHER PAYABLES
Current
Trade and other payables (i)
Consolidated
2014
$
9,375
9,375
2013
$
9,375
9,375
Consolidated
2014
$
68,578
68,578
2013
$
48,816
48,816
(i)
Trade and other payables amounts represent liabilities for goods and services provided to the
Group prior to the end of the financial period which are unpaid. The amounts are unsecured
and are usually paid within 30 days of recognition.
14.
ISSUED CAPITAL
(a)
Issued capital
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
(b) Movements in share capital
Balance at beginning of period
2014
Number
87,739,708
2013
Number
87,739,708
2014
$
22,625,370
2013
$
22,625,370
Non renounceable entitlement issue at an
issue price of 1.5 cents each in October
2013
Shares issued for project
November 2013
Share placement at an issue price of 1.5
cents each in November 2013
Exercise of options
Transaction costs arising from issue of
securities
introduction in
29,246,569
3,000,000
36,666,667
20
-
-
-
-
-
-
438,698
63,000
550,000
1
(62,195)
-
-
-
-
-
Balance at end of period
156,652,964
87,739,708
23,614,874
22,625,370
15.
RESERVES
Option reserve
Total
Consolidated
2014
$
2013
$
1,249,661
1,249,661
1,249,661
1,249,661
36
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
15.
RESERVES (continued)
(a) Option reserve
The option reserve represents amounts received in consideration for the issue of options to subscribe
for ordinary shares in the Company and the value of options issued to third parties for services
rendered.
(b) Movement in Options over ordinary shares
Options to subscribe for ordinary shares in the capital of the Company have been granted as follows:
2014
Exercise
Period
Exercise
Price
Opening
Balance
1 July
2013
Options
Issued
2013/2014
Options
Expired
2013/2014
Closing
Balance
30 June 2014
On or before 30 November
2016
Number
Number
Number
Number
$0.03
-
131,826,472
(20)
131,826,452
In October 2013, the Company completed an underwritten pro-rata non-renounceable entitlement
issue to shareholders on the basis of one share for every three shares held at an issue price of 1.5
cents per share together with two free attaching options exercisable at 3 cents each and an expiry
date of 30 November 2016. 58,493,138 options were allotted in October 2013.
In November 2013, the Company completed a placement of 36.67 million shares at 1.5 cents per
share together with two free attaching options (on the same terms as disclosed above). 73,333,334
options were allotted in November 2013.
2013
Exercise
Period
Exercise
Price
Opening
Balance
1 July
2012
Options
Issued
2012/2013
Options
Expired
2012/2013
Closing
Balance
30 June 2013
On or before 28 February
2013
Number
Number
Number
Number
$0.20
79,588,524
-
(79,588,524)
-
79,588,524 options expired unexercised on 28 February 2013.
16.
ACCUMULATED LOSSES
Accumulated losses at the beginning of the year
Loss for the year
Accumulated losses at the end of the year
Consolidated
2014
$
(22,423,606)
(947,119)
(23,370,725)
2013
$
(21,982,008)
(441,598)
(22,423,606)
37
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
17.
LOSS PER SHARE
Net loss after income tax attributable to members of the
Company
Weighted average number of shares on issue during the
financial year used in the calculation of basic earnings
per share
Effect of dilution
Weighted average number of ordinary shares for diluted
earnings per share
Effect of Dilutive Securities - Share Options
Consolidated
2014
$
2013
$
(947,119)
(441,598)
Number
Number
130,749,422
-
87,739,708
-
130,749,422
87,739,708
The Company has 131,826,452 share options at 30 June 2014 (30 June 2013: Nil). Options are
considered to be potential ordinary shares. However, in periods of a net loss, share options are anti-
dilutive, as their exercise will not result in lower earnings per share. The options have therefore not
been included in the determination of diluted earnings per share.
18.
(a)
NOTES TO THE STATEMENT OF CASH FLOWS
Reconciliation of cash and cash equivalents
For the purposes of the statement of cash flows, cash and cash equivalents consists of cash at bank
three months or less, net of
and in hand and short-term deposits with an original maturity of
outstanding bank overdrafts.
Cash at bank
Consolidated
2014
$
1,527,499
1,527,499
2013
$
1,466,072
1,466,072
(b)
Reconciliation of loss after tax to net cash flows from operations
Loss after income tax
Depreciation
Exploration expenditure and PP&E impaired
Net exchange differences
Share based payment expense
(Increase) / decrease in assets
Trade and other receivables
Increase / (decrease) in liabilities
Trade and other payables
Consolidated
2014
$
(947,119)
2,750
411,537
1,942
63,000
2013
$
(441,598)
2,888
25,237
(27,115)
-
(3,471)
11,531
19,763
(451,598)
29,735
(399,322)
(c) Non-cash financing of investing activities
There were no non-cash financing of investing activities during the financial year.
38
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
19.
(a)
COMMITMENTS AND CONTINGENCIES
Commitments
Mineral exploration commitments
Within one year
One year to five years
Total
Consolidated
2014
$
50,000
-
50,000
2013
$
50,000
-
50,000
It is estimated that the consolidated entity is required to make the above outlays to satisfy exploration
permit conditions on the Long Horse project.
Lease commitments
Within one year
One year to five years
Total
Consolidated
2014
$
22,150
5,584
27,734
2013
$
22,150
27,734
49,884
The group leases its corporate offices under non-cancellable operating leases expiring within five
years.
(b)
Contingent liabilities
The consolidated entity does not have any contingent liabilities at balance date.
20.
EVENTS SUBSEQUENT TO BALANCE DATE
On 30 July 2014, the Company announced it had entered into an agreement giving it the option to
acquire the rights to two highly prospective Gold (Au) –Silver (Ag) - Copper (Cu) projects (Little Butte
Project and Red Hills Project) in Arizona and Nevada, USA. Carnavale has entered into an option
agreement with Tojo whereby Carnavale can acquire all of the issued shares in Tojo within a 7 month
period.
The key terms of the Option Agreement are detailed in the "Review of Operations" section immediately
preceding this Directors’ Report.
On 4 August 2014, the Company confirmed that it had issued 28,663,202 shares at a price of 1.5
cents each to professional and sophisticated investors raising $429,948 . The monies will be used to
fund the exploration commitment as part of the option agreement to acquire Tojo and will be also be
used for working capital.
On 14 August 2014, the Company issued 9.78M of the 10.5M fully paid shares to be issued to Tojo
shareholders as an option fee, with the shares subject to voluntary escrow for a 6 month period. The
remaining 0.72M fully paid shares are to be issued to Mr Gajewski or his nominee, subject to obtaining
the necessary shareholder approvals at the general meeting scheduled for 26 September 2014.
Other than the above, no matters or circumstances have arisen since 30 June 2014 that have or may
significantly affect the operations, results, or state of affairs of the consolidated entity in future financial
years.
39
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
21.
FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS
Overview
The activities of the Company expose it to a variety of financial risks, including:
market risk;
credit risk; and
liquidity and capital risks.
The Company’s overall risk management program focuses on the unpredictability of financial markets
the business.
and seeks to minimise potential adverse effects on the financial performance of
Carnavale will use different methods to measure different types of risk to which it is exposed. These
methods include sensitivity analysis in the case of interest rate, foreign exchange and other price risks
and ageing analysis for credit risk.
This note presents information about the Company’s exposure to each of the above risks, their
objectives, policies and processes for measuring and managing risk, and the management of capital.
The Board of Directors has overall responsibility for the establishment and oversight of the risk
framework. Management monitors and manages the financial risks relating to the
management
operations of the Company through regular reviews of the risks.
(a)
Market risk
(i) Foreign exchange risk
Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities
that are denominated in a currency that is not the entity’s functional currency. The Australian dollar is
the reporting currency for the Group and the functional currency for the parent company; however the
Group currently holds foreign currency, namely US Dollars.
At 30 June 2014, had the Australian Dollar weakened / strengthened by 10% against the US Dollar
with all other variables held constant, both the post-tax loss and equity for the year would be $9,917
higher / $12,121 lower, mainly as a result of the change in value of the foreign cash and cash
equivalents held by the Group as at balance date.
(ii)
Exposure to currency risk
The Group’s exposure to foreign currency risk at balance date was as follows, based on notional
amounts:
United States Dollar
30 June 2014
30 June 2013
Assets
Liabilities
Assets
Liabilities
$
102,754
$
41,580
$
242,714
$
-
40
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
21.
FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (continued)
(iii) Interest rate risk
The Group is exposed to movements in market interest rates on short term deposits.
The Group’s exposure to interest rate risk and the effective weighted average interest rate for each
class of financial assets and financial liabilities is set out in the following table:
2014
Financial assets
Cash and cash equivalents
Trade and other
receivables
Financial liabilities
Trade and other payables
Note
Floating
interest
rate
Fixed
interest
rate
Non-
interest
bearing
Total
$
$
$
$
Weighted
average
interest
rate
%
18(a)
262,310
1,263,909
1,280
1,527,499
2.42
8
-
262,310
-
1,263,909
11,954
13,234
11,954
1,539,453
13
Note
-
-
68,578
68,578
Floating
interest
rate
Fixed
interest
rate
Non-
interest
bearing
Total
$
$
$
$
Weighted
average
interest
rate
%
2013
Financial assets
Cash and cash equivalents
Trade and other
receivables
Financial liabilities
Trade and other payables
18(a)
1,465,291
8
13
-
1,465,291
-
-
-
-
-
781
1,466,072
2.53
8,484
9,265
8,484
1,474,556
48,816
48,816
Cash flow sensitivity analysis for variable rate instruments
A change of 100 basis points in interest rates at the reporting date would have increased (decreased)
equity and profit or loss by the amounts shown below, where interest is applicable. This analysis
assumes that all other variables remain constant. The analysis is performed on the same basis for
2013.
Consolidated
Profit or (Loss)
30 June 2014
Variable rate instruments
Cash flow sensitivity (net)
30 June 2013
Variable rate instruments
Cash flow sensitivity (net)
100bp
decrease
$
(15,907)
(15,907)
(16,271)
(16,271)
100bp
increase
$
15,907
15,907
16,271
16,271
41
100bp
increase
$
Equity
100bp
decrease
$
15,907
15,907
16,271
16,271
(15,907)
(15,907)
(16,271)
(16,271)
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
21.
FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (continued)
Financial assets
Trade receivables from other entities are carried at nominal amounts less any allowance for doubtful
debts. Other receivables are carried at nominal amounts due. Interest is recorded as income on an
accruals basis.
Financial liabilities
Liabilities are recognised for amounts to be paid in the future for goods and services received, whether
or not billed to the group.
Net fair value of financial assets and liabilities
The carrying amount of financial assets and liabilities approximates fair value because of their short-
term maturity.
(iv) Commodity price risk
As Carnavale has explored for a variety of minerals including gold, copper, molybdenum, iron and oil,
it will be exposed to the risks of fluctuation in prices for those minerals. The market for all of these
minerals has a history of volatility, moving not only with the standard forces of supply and demand, but
also in the case of gold, to investment and disinvestment. Prices fluctuate widely in response to
changing levels of supply and demand but, in the long run, prices are related to the marginal cost of
supply.
(b)
Credit risk
Credit risk is the risk of financial
loss to the Group if a customer or counterparty to a financial
instrument fails to meet its contractual obligations, and arises principally from the Group’s receivables
from customers and cash and investment deposits. The Group has adopted the policy of only dealing
with credit worthy counterparties and obtaining sufficient collateral or other security where appropriate,
as a means of mitigating the risk of financial loss from defaults.
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 does not have significant exposure to
any single counterparty or any group of counterparties having similar characteristics. The carrying
amount of financial assets recorded in the financial statements, net of any provisions for losses,
represents the Group’s maximum exposure to credit risk.
The Company and Group have established an allowance for impairment that represents their estimate
of incurred losses in respect of other receivables and investments. The main components of this
allowance are a specific loss component
that relates to individually significant exposures. The
management does not expect any counterparty to fail to meet its obligations.
(c)
Liquidity and capital risk
The Group’s total capital is defined as the shareholders’ net equity plus any net debt. The objectives
when managing the Company’s capital is to safeguard the business as a going concern, to maximise
returns to shareholders and to maintain an optimal capital structure in order to reduce the cost of
capital.
The Group does not have a target debt / equity ratio but has a policy of maintaining a flexible financing
structure so as to be able to take advantage of investment opportunities when they arise. There are no
externally imposed capital requirements.
There have been no changes in the strategy adopted by management to control the capital of the
Group since the prior year.
42
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
21.
FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (continued)
(c)
Liquidity and capital risk (continued)
The Group’s total capital is defined as the shareholders’ net equity plus any net debt. The objectives
when managing the Company’s capital is to safeguard the business as a going concern, to maximise
returns to shareholders and to maintain an optimal capital structure in order to reduce the cost of
capital.
The Group does not have a target debt / equity ratio but has a policy of maintaining a flexible financing
structure so as to be able to take advantage of investment opportunities when they arise. There are no
externally imposed capital requirements.
There have been no changes in the strategy adopted by management to control the capital of the
Group since the prior year.
The table below analyses the Group’s financial
remaining period from the balance date to the contractual maturity date.
liabilities into maturity groupings based on the
2014
Financial liabilities
Trade and other payables
Total Financial Liabilities
2013
Financial liabilities
Trade and other payables
Total Financial Liabilities
Within 1
year
$
68,578
68,578
Within 1
year
$
48,816
48,816
Between 1
and 5
years
$
-
-
Between 1
and 5
years
$
-
-
After 5
years
$
-
-
After 5
years
$
-
-
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 is to ensure, as far as possible, that it will always have
sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without
incurring unacceptable losses or risking damage to the Group’s reputation.
The Group manages liquidity risk by maintaining adequate reserves by continuously monitoring
forecast and actual cash flows.
If the Company anticipates a need to raise additional capital in the next 12 months to meet forecasted
operational activities, then the decision on how the Company will raise future capital will depend on
market conditions existing at that time.
Typically the Group ensures that it has sufficient cash on demand to meet expected operational
expenses for a period of 60 days, including the servicing of financial obligations. This excludes the
potential
impact of extreme circumstances that cannot reasonably be predicted, such as natural
disasters.
22.
INVESTMENT IN CONTROLLED ENTITIES
Entity
Country of
incorporation
Equity
holding
Equity
holding
Carnavale Petroleum Pty Ltd
Australia
2014
%
100
2013
%
100
43
Contribution to
consolidated
result
2014
$
Contribution to
consolidated
result
2013
$
-
-
-
-
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
23.
SEGMENT REPORTING
The directors have considered the requirements of AASB 8 – Operating Segments and the internal
reports that are reviewed by the chief operating decision maker (the Board) in allocating resources and
have concluded that, during the year, Carnavale operated predominantly in one business segment
being mineral exploration within Australia and USA. Accordingly, under the management approach
outlined above only one operating segment has been identified and no further disclosure is required in
the annual report.
24.
PARENT ENTITY DISCLOSURES
(a)
Summary financial information
Financial Position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Total liabilities
Net assets
Equity
Issued capital
Option premium reserve
Accumulated losses
Total equity
Financial performance
Loss for the year after income tax
Other comprehensive income / (loss)
Total comprehensive loss
2014
$
1,549,574
12,814
1,562,388
68,578
68,578
2013
$
1,484,677
15,564
1,500,241
48,816
48,816
1,493,810
1,451,425
23,614,874
1,249,661
(23,370,725)
1,493,810
22,625,370
1,249,661
(22,423,606)
1,451,425
2014
$
(947,119)
-
(947,119)
2013
$
(441,598)
-
(441,598)
(b)
Guarantees entered into by the parent entity in relation to the debts of its subsidiary
Carnavale Resources Limited has not entered into any guarantees in relation to the debts of its
subsidiary.
(c)
Contingent liabilities of the parent
The parent entity did not have any contingent liabilities as at 30 June 2014 or 30 June 2013.
(d)
Contractual commitments for the acquisition of property, plant or equipment
As at 30 June 2014 (30 June 2013 – $Nil), the parent entity did not have any contractual commitments
for the acquisition of property, plant or equipment.
44
CARNAVALE RESOURCES LIMITED
DIRECTORS’ DECLARATION
In the opinion of the Directors of Carnavale Resources Limited:
(a)
The accompanying financial statements and notes are in accordance with the Corporations Act 2001
including:
(i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2014 and of
its performance for the year then ended; and
(ii) complying with Accounting Accounting Standards,the Corporations Regulations 2001, professional
reporting requirements and other mandatory 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 thereto are in accordance with International Financial Reporting
Standards issued by the International Accounting Standards Board.
This declaration has been made after receiving the declarations required to be made to the directors in
accordance with section 295A of the Corporations Act 2001 for the financial year ended 30 June 2014.
Signed in accordance with a resolution of the Directors made pursuant to s 295(5) of the Corporations Act
2001.
On behalf of the Board.
RON GAJEWSKI
Director
Dated this 9th day of September 2014
Perth, Western Australia
45
CARNAVALE RESOURCES LIMITED
INDEPENDENT AUDITOR’S REPORT
INDEPENDENT AUDITOR’S REPORT
To the members of Carnavale Resources Limited
Report on the Financial Report
We have audited the accompanying financial report of Carnavale Resources Limited (“the
company”), which comprises the consolidated statement of financial position as at 30 June 2014, the
consolidated statement of comprehensive income, the consolidated statement of changes in equity
and the consolidated statement of cash flows for the year then ended, notes comprising a summary
of significant accounting policies and other explanatory information, and the directors’ declaration for
the consolidated entity. The consolidated entity comprises the company and the entities it controlled
at the year’s end or from time to time during the financial year.
Directors’ responsibility 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 Australian Accounting 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 is free from material misstatement, whether due to fraud or error.
In Note 2(c), the directors also state, in accordance with Accounting Standard AASB 101:
Presentation of Financial Statements, that the financial report complies with International Financial
Reporting Standards.
Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted
our audit in accordance with Australian Auditing Standards. Those standards require that we comply
with relevant ethical requirements relating to audit engagements and plan and perform the audit to
obtain reasonable assurance whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the financial report. The procedures selected depend on the auditor’s judgement, including the
assessment of the risks of material misstatement of the financial report, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the
company’s preparation and fair presentation of the financial report 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 internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of accounting estimates made by the directors,
as well as evaluating the overall presentation of the financial report.
Our audit did not involve an analysis of the prudence of business decisions made by directors or
management.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.
HLB Mann Judd (WA Partnership) ABN 22 193 232 714
Level 4, 130 Stirling Street Perth WA 6000. PO Box 8124 Perth BC 6849 Telephone +61 (08) 9227 7500. Fax +61 (08) 9227 7533.
Email: hlb@hlbwa.com.au. Website: http://www.hlb.com.au
Liability limited by a scheme approved under Professional Standards Legislation
HLB Mann Judd (WA Partnership) is a member of
International, a worldwide organisation of accounting firms and business advisers.
46
CARNAVALE RESOURCES LIMITED
INDEPENDENT AUDITOR’S REPORT
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations
Act 2001.
Auditor’s opinion
In our opinion:
(a) the financial report of Carnavale Resources Limited is in accordance with the Corporations
Act 2001, including:
(i) giving a true and fair view of the consolidated entity’s financial position as at 30 June
2014 and of its performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations
2001; and
(b) the financial report also complies with International Financial Reporting Standards as
disclosed in Note 2(c).
Report on the Remuneration Report
We have audited the remuneration report included in the directors’ report for the year ended 30 June
2014. The directors of the company are responsible for the preparation and presentation of the
remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the remuneration report, based on our audit conducted in accordance
with Australian Auditing Standards.
Auditor’s opinion
In our opinion the remuneration report of Carnavale Resources Limited for the year ended 30 June
2014 complies with section 300A of the Corporations Act 2001.
HLB Mann Judd
Chartered Accountants
Perth, Western Australia
9 September 2014
M R W Ohm
Partner
47
CARNAVALE RESOURCES LIMITED
SHAREHOLDER INFORMATION
The shareholder information set out below was applicable as at 5 September 2014.
1.
Distribution of holders of equity securities
Size of holding
Ordinary Shares
1 -
1,001 -
5,001 -
10,001 -
1,000
5,000
10,000
100,000
100,001 and over
2.
Voting rights
39
52
80
174
139
484
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 for each share held.
3.
Substantial Shareholders
An extract of the Company’s register of substantial shareholders is set out below.
Shareholder
Vienna Holdings Pty Ltd and Redtown Enterprises Pty Ltd
Number of Shares
12,497,618
4.
Unmarketable parcels
As at 5 September 2014 there were 262 shareholders with unmarketable parcels of shares.
5.
Top 20 shareholders
The names of the twenty largest shareholders as at 5 September 2014, who hold 59.74 % of the fully
paid ordinary shares of the Company were as follows:
Name of holder
Number of
ordinary fully
paid shares held
Percentage held
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
JP Morgan Nominees Ltd
Vienna Holdings Pty Ltd
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