More annual reports from Carnavale Resources:
2023 ReportABN 49 119 450 243
AND CONTROLLED ENTITIES
ANNUAL REPORT
FOR THE YEAR ENDED 30 JUNE 2015
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
2
17
27
36
37
38
39
40
41
65
66
68
70
CARNAVALE RESOURCES LIMITED
CORPORATE DIRECTORY
DIRECTORS
Ron Gajewski
Andrew Beckwith
Rhett Brans
Andrew Chapman
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
Carnavale Resources Limited (“Carnavale” or “Company”) is an Australian based mineral exploration
company with gold and base metal projects in Nevada and Arizona in south west of the United States of
America (Figure 1).
Figure 1
Location of Carnavale’s Projects in the USA
On 29 July 2014, Carnavale entered into a Option Agreement with Tojo Minerals Pty Ltd (“Tojo”) whereby
Carnavale could acquire all of the shares in Tojo after completing project expenditure of US$500,000, on
Tojo’s two highly prospective US based projects at Red Hills (Nevada) and Little Butte (Arizona), prior to the
28th February 2015
During the period, Carnavale carried out a number of work programmes to assess the prospectivity of the
projects and in February 2015 elected to acquire Tojo under the terms of the Option Agreement.
Red Hills Project , Nevada, USA –Au-Ag-Cu-Pb-Zn
(Carnavale earning 51% with the right to earn a total 75% equity)
The Red Hills Project comprises mineral claims covering an area of approximately 13.4km2, located in
eastern Nevada, USA. The project area is considered highly prospective for large multi-million ounce scale
“Carlin style” gold and silver deposits and also strucuturally controlled polymetallic (gold, silver, copper, lead
and zinc) deposits.
The project is located within an underexplored portion of a major tectonic scale northwest structural corridor,
arguably the southeastern extension of the Carlin Gold Trend, one of Nevada’s most prolific gold producing
corridors in the USA. This single trend hosts a string of clustered, large multi-million ounce gold deposits and
has produced over 70M ounces of gold to date including approximately 5M ounces in 2014. The Barrick
owned Bald Mountain Gold Mine (produced 161,000 ounces of gold in 2014 with existing proven and
probable reserves of 1.36 million ounces as of Dec 2014) is the closest major gold mine, located 100km to
the north west along this Carlin Trend (Figure 2).
The newly discovered Long Canyon deposit (+2.6Moz Au resource and growing), owned by Newmont and
the Kinsley Gold Project, being explored by Pilot Gold, are both hosted in the same rock sequences that
outcrop at Red Hills. These prospective host rocks coupled with the north west controlling strucutres of the
Carlin Trend provides a focus for large scale Carlin style and other style of polymetallic mineralisation.
2
CARNAVALE RESOURCES LIMITED
REVIEW OF OPERATIONS
Figure 2
Red Hills lies on the south eastern extension of the Carlin Trend
The recent discovery of the large scale multi-million ounce Long Canyon Gold Deposit has highlighted the
prospectivity of eastern Nevada which had previously been overlooked for significant Carlin style discoveries.
In 2011, Newmont acquired Fronteer Gold in a US$2.6B corporate transaction to secure the Long Canyon
deposit and since acquiring Long Canyon, Newmont has stated this deposit is expected to grow to in excess
of 10Moz and is currently in the process of developing an open pit mine.
Importantly, the Red Hills Project occurs in the same geological sequence as the Long Canyon deposit.
Previous sampling by our joint venture partners, Columbus Gold, highlighted significant potential for Carlin
style gold-silver mineralisation in the same prospective rocks as seen at Long Canyon. Carnavale
recognised the importance of the major northwest structural trend as a conduit for potential mineralising
fluids into these under-explored and potentially receptive host rocks. Also, the prospective nature of this
located
geological sequence is also subsequently supported by recent drilling at
approximately 70km to the north of Red Hills, where operator Pilot Gold has intersected encouraging high
grade gold mineralisation (e.g. 36m @ 8.5g/t and 53m @ 7.5g/t) deeper in the same geological sequence.
the Kinsley project,
Initially, Carnavale completed reconnaissance rock-chip and soil sampling along selected traverses within
the project area, which confirmed earlier Columbus Gold rock chip sampling both expanding and generating
new priority targets. A subsequent new gravity survey was undertaken, and this data with an existing ground
magnetic survey and regional scale landsat imagery provides support to an encouraging regional structural
setting and provides an excellent conduit for the mineralising fluids from deeper interpreted intrusive bodies,
which may represent the source to the precious minerals and base metal mineralisation.
3
CARNAVALE RESOURCES LIMITED
REVIEW OF OPERATIONS
Figure 3
SW-NE orientated section through the Red Hills project area showing zone of anomalous
geochemistry relative to the interpreted deeper intrusive body based on modelling of gravity data.
The intrusive body at depth is interpreted to be the potential source of the mineralisation at Red Hills
within a strong NW trending structural corridor and package of highly prospective potential host
rocks.
Additional detailed soil sampling and mapping has further enhanced the definition of four main anomalous
areas at Rattler, Cobra, Tiger and Viper (Figure 4). The geochemical soil sampling results were considered
very encouraging and enhanced the near surface exploration targets particularly at Rattler, Cobra and Tiger
where the anomalous results are also coincident with a number of old historic mine workings from the early
1900’s.
Figure 4
Priority anomalies at the Red Hills Project , Nevada
4
CARNAVALE RESOURCES LIMITED
REVIEW OF OPERATIONS
As the mapping and sampling has progressed, it has become apparent the historic mine workings are
intimately associated with a number of substantial structures and three of
the strongly anomalous
geochemical trends at Rattler, Cobra and Tiger. Accordingly detailed mapping and sampling was completed
in these workings where it was deemed safe to enter. The results were very encouraging with a number of
localities yielding high grade polymetallic mineralisation defined over mineable widths both within the
underground workings and at surface.
Rattler Prospect (Au-Ag-Cu-Pb-Zn)
The Rattler multi-element anomaly (Figure 4) is located in the west-dipping limestones, dolomites to silty
carbonate rocks of the Ordovician aged Pogonip Group and mapping has defined the poorly outcropping
“Rattler Shear Zone” along the contact zone with the Eureka Quartzite. These geological units are important
prospective geological units for gold mineralisation at Bald Mountain, Long Canyon and potentially at Kinsley
as highlighted in Figure 5.
Figure 5
Prospective rocks units at Red Hills are similar to Pilot Gold’s Kinsley Project and other
major gold mines in Nevada including Bald Mountain and Long Canyon. (adapted from Pilot Gold report)
Geochemical soil and rock chip sampling has defined a 500m long x 150m wide zone of highly anomalous
results which is coincident with many of the larger historic underground workings and a steep Eureka
Quartzite scree slope which masks much of the anomalous zone. A series of sub - vertical shafts also occur
along approximately 250m strike length near or at the contact with the Eureka Quartzite and the Pogonip
Group Limestone units. The polymetallic mineralisation along this contact at one of the shafts is hosted
within a 7.8m wide shear zone reporting 7.8m+ @ 0.52g/t Au, 105g/t Ag, 2.6% Zn, 2.8% Pb (4.5g/t AuEq*)
including a higher grade gossanous portion grading 3.5m+ @ 1.1g/t Au, 205g/t Ag, 5.2% Zn, 5.9 % Pb
(9.2g/t AuEq*) with over 3m of gossan material mined out in the shallow surface workings.
5
CARNAVALE RESOURCES LIMITED
REVIEW OF OPERATIONS
*Gold Equivalence or AuEq
The Gold Equivalence calculation represents total metal value for each metal, assuming 100% recovery,
summed and expressed in equivalent gold grade or ounces. The metal prices used in the calculation being
US$1100/oz Au, US$5000/t Cu, US$15/oz Ag, US$2100/t Zn and US$1800/t Pb
The Gold Equivalent Formula is AuEq(g/t) = Au(g/t) + 1.41Cu(%) + 0.013Ag(g/t) + 0.59Zn(%) + 0.51Pb(%)
(Rounding errors may occur.)
Figure 6
Rattler Shear Zone detailed horizontal channel sampling showing sample intervals,
mined gossanous zone and remanent high grade gossanous material
A horizontal adit occurs approximately 50m vertically below these shafts and outcropping mineralised shear
zone. Inspection of this adit indicates at least three structural zones were mined with the most significant
workings interpreted to occur below the shear zone. The main ore workings had collapsed along strike and
could not be inspected, however the flow of fresh air suggest the mine workings reach surface. The historic
in the greater Red Hills area, where reported
Rattler underground workings appear to be the largest
production during the early 1900’s is 229 ounces of gold, 35,029 ounces of silver, 550 pounds of copper and
789,782 pounds of lead.
At Rattler, an Exploration Target1 has been estimated based on a potential strike length of between 250m to
400m and a width of 7.8m up to 20m based on other rock chip sampling and mapping which suggests the
shear zone may extend to 20m true width.
Rattler Exploration Target Range
2.3Mt @ 4.5g/t to 9.2g/t AuEq* (330,000 to 680,000oz AuEqOz)1
9.6Mt @ 4.5g/t to 9.2g/t AuEq* (1,390,000 to 2,800,000oz AuEqOz)1
These target ranges represents an excellent and immediate high priority drill target and subsequent to year-
end, Carnavale commenced a drilling programme to test the Rattler Shear zone for potential high-grade
polymetallic mineralisation.
1 Please note the Exploration Targets referred to in this report are conceptual in nature, where there
has been insufficient exploration to define a Mineral Resource and it
further
exploration will result in the determination of a Mineral Resource.
is uncertain if
Rattler Lower range-250m strike x 7.8m width x 300m depth x SG of 4 for massive sulphides = 2.3Mt
Rattler Upper range-400m strike x 20m width x 300m depth x SG of 4 for massive sulphides = 9.6Mt
6
CARNAVALE RESOURCES LIMITED
REVIEW OF OPERATIONS
Cobra Prospect (Au-Ag-Cu-Pb-Zn)
The Cobra multi-element anomaly (Figure 4) is located in west-dipping limestones, dolomites to silty
carbonate rocks of the Ordovician aged Pogonip Group and mapping has defined a potentially dipping north
west dipping splay thrust/fault that obliquely cuts the west dipping sediments. Mineralisation within the
thrust/fault zone has been mapped and sampled within the Cobra historic adit with high grade polymetallic
mineralisation defined.
The anomalous multi-element soil anomaly occurs in Pogonip Group limestones and sediments over a broad
zone 950m x 650m in dimensions. The larger Cobra adit and various smaller workings fall within the
anomalous soil sampling zone.
Rock-chip and soil sampling shows the area is highly anomalous in gold, silver, copper, lead and zinc
including 17 rock chip samples yielding >100ppb Au to a peak of 1.99g/t Au and 21 samples with high-grade
silver >10g/t (8 samples >100g/t Ag) peaking at 479g/t Ag (~15oz/t) from outcrops to old workings. Copper
occurs to a peak 25.5%, lead to 13.95% and zinc to 7.8%.
Sampling of a small outcrop near the adit entrance shows minor visible oxide copper mineralisation
(malachite) and returned 3.0+m @ 1.5% Cu, 0.6g/t Au, 317g/t Ag, 9.9% Zn, 4.0 % Pb (14.7g/t AuEq*) from
detailed channel sampling.
Subsequent underground mapping and detailed channel sampling in the adjacent horizontal adit showed
high grade polymetallic Au-Ag-Cu-Pb-Zn mineralisation along the 123m adit at the sheared contact with a
highly deformed and altered limestone. The mineralisation is hosted in a limestone breccia beneath the
sheared margin.
The following Table 1 highlights a summary of channel samples within the Cobra Thrust Fault and
subdivided into the sheared margin and the internal breccia. In total 124 samples were taken from the
Cobra workings with 36 samples defining the sheared and breccia mineralisation with the remaining
samples taken within the altered dolomite which is not considered to host any significant mineralisation
except right at the sheared margin.
SHEARED MARGIN
BRECCIA
0.37
Au g/t
0.97
Au g/t
262
Ag g/t
726
Ag g/t
0.5
3.2
Cu %
Pb %
1.6
4.0
Cu %
Pb %
AVERAGE GRADE of Shear and Breccia Zones
Table 1
Summary of Cobra Thrust Fault sample results
0.67
Au g/t
494
Ag g/t
1.1
3.6
Cu %
Pb %
2.0
Zn %
4.8
Zn %
3.4
Zn %
7.37
AuEq g/t
17.56
AuEq g/t
12.46
AuEq g/t
The sample results are considered very encouraging and mapping indicated the mineralisation dipped
between 40-55 degree to the north west and with a potential thickness up to 9m. Historic mining was noted
on two levels with sampling and mapping only carried out on the upper level due to safety concerns on the
lower level.
At Cobra, an Exploration Target1 has been estimated based on two shear zones with a potential strike length
of between 400m to 600m and a width of 4m up to 10m based on sampling of the adit and other rock chip
sampling and mapping.
Cobra ExplorationTarget Range
2.5Mt @ 4.5g/t to 14.7g/t AuEq* (360,000 to 1,180,000oz AuEqOz)1
9.6Mt @ 4.5g/t to 14.7g/t AuEq*(1,390,000 to 4,540,000oz AuEqOz)1
7
CARNAVALE RESOURCES LIMITED
REVIEW OF OPERATIONS
These target ranges represents an excellent and immediate high priority drill target and subsequent to year-
end, Carnavale commenced a diamond drilling programme to test the Cobra Shear zone for potential high-
grade polymetallic mineralisation. Results of the first hole did not intersect any significant mineralisation and
results of the two other holes remain pending. Further assessment of the orientation of mineralisation is
currently underway.
1 Please note the Exploration Targets referred to in this report are conceptual in nature, where there
further
has been insufficient exploration to define a Mineral Resource and it
exploration will result in the determination of a Mineral Resource.
is uncertain if
Cobra Lower range - 2 shears zones each 400m strike x 4m width x 200m depth x SG of 4 for massive
sulphides = 2.5Mt
Cobra Upper range - 2 shears zones each 600m strike x 10m width x 200m depth x SG of 4 for massive
sulphides = 9.6Mt
Tiger Prospect
The Antler Shear Zone, located parallel and approximately 100m west of the Rattler Shear Zone, is a 100m
to 300m wide, north-south trending, sub-vertical to steeply west dipping mineralised structural zone over
1500m strike length, west of the Eureka Quartzite. It most likely represents a thrust between the younger
Ordovician Hanson Creek and Lone Mountain Formations to the west and the older and prospective
Ordovician Pogonip Group and Notch Peak Formation to the east. Mapping defined a highly deformed,
sheared and brecciated zone, which hosts a series of historical mine workings and lesser workings or test
pits over at least 1500m strike length with the strongest development occurring over approximately 500m
strike and adjacent to the Rattler trend.
The detailed soil sampling over the Tiger prospect area shows three sub-parallel trends, two 400m long and
the third 200m long and semi-coincident with a series of historic workings and also a small parasitic fold.
Peak results include 169ppb Au, 37.4g/t Ag, 248ppm Zn and 612ppm Pb. Importantly, the Tiger anomalies
are sub-parallel to the main Rattler Shear Zone and range from only 60m to 300m to the west.
High grade rock-chip sampling coincident with the main historical workings include the following results:
-
-
-
-
Au: 2.16g/t, 0.90g/t, 0.53g/t, 0.33g/t, 0.23g/t, 0.11g/t.
Ag: 1535g/t (~49oz/t), 285g/t (~9oz/t), 147g/t (4.7oz/t), 144g/t (4.6oz/t), 118g/t (3.7oz/t).
Pb: 6.4%, 5.1%, 3.3%, 2.0%, 1.3%, 1.2%, 1.1%.
Zn: 24.8%, 12.8%, 4.8%, 3.8%, 2.9%
The Pb-Zn-Ag mineralisation appears to be generally associated with a network of narrow zones of sheared
to brecciated limestone rocks with widths typically <1m to maximum of 3m wide. The numerous small shafts
and mine workings occur along an interpreted 400m of strike length. Mapping has delineated two styles of
mineralisation related to firstly sub-vertical shear zones with extensive alteration and brecciation. The second
style of mineralisation comprises breccias in the core of small scale anticlines and sheared out anticlines
west of the main Tiger Shear Zone. Small workings occur on these zones however they are difficult to
sample on surface due to limited outcrop of the breccia zones under folded siltstone and unsafe workings
that have not been sampled.
Carnavale mapped and sampled two smaller adits and associated workings at Tiger, immediately west of the
Rattler Shear Zone. The entire 40 samples set shows elevated silver results ranging from 1.3g/t to a
maximum of 33.3g/t and an overall average of 6.5g/t Ag. Only one sample has elevated copper to 0.2% Cu,
5 samples with elevated Pb over 0.1% to a peak of 0.24% Pb and 9 samples above 0.1% Zn to a peak of
1.1% Zn.
Further assessment of this area is required to fully understand the potential of this area as a number of other
workings not sampled in this programme that show a different style of mineralisation in a “pyrite rich matrix
supported breccia”.
8
CARNAVALE RESOURCES LIMITED
REVIEW OF OPERATIONS
Viper Anomaly
The Viper anomaly (Figure 4) is a wide spaced multi-element soil anomaly along the interpreted contact of
the stratigraphically higher Pogonip Group and the lower Notch Peak Formation beneath the shallow (1-5m)
soil cover. This stratigraphic contact is an important target as strong “Carlin style” gold mineralisation occurs
in this position at the Long Canyon gold deposit (refer Figure 5).
The anomaly trends north south and extends over 1,900m by up to 300m. Coincident anomalous silver
results (>1g/t) occur coincident with low order anomalous gold (>3ppb) over a strike length of 500m within
the larger multi element zone. The multi-element geochemical signature suggests similarities with other Au-
Ag “Carlin Style” deposits.
Further assessment of this area is required to fully understand the potential of this area.
LITTLE BUTTE PROJECT, ARIZONA
(Carnavale – 10 year Option to earn 100%, subject to a royalty)
The Little Butte Project, comprises mineral claims covering an area approximately 9km²,
located
approximately 250km south - southeast of Las Vegas and 200km west of Phoenix, in the state of Arizona.
The area lies within the major Walker Lane corridor spanning from southern Nevada, through Arizona and
south into Mexico which hosts many large epithermal to porprhyry related Au, Cu-Au and Cu-Mo deposits.
During the period the Company focussed on drill testing the shallow near surface oxide gold potential at the
Railway Prospect. This drilling defined a strong zone of broad subhorizontal “supergene” gold and partially
overprinting copper mineralisation.
Subsequent activites included the completion of a deeper searching dipole-dipole geophysical survey which
highlights a shallow west dipping sediment contact unconformably overlying older basement granite which
correlates with previous mapping throughout the project area. The sediment granite sequence is then down -
faulted to the west by a number of subvertical controlling faults. The survey also defines a potential younger
intruding “chargeable” body which is greater than 800m long and over 300m wide and open to the south and
north. This new deeper “intrusive ” body may represent a source to the gold and copper mineralisation. The
supergene mineralisation is therefore interpreted as “leakage” up the faults and remobilised into the deeply
weathered sediments above. Results of the activities are summarised below.
The Company is now assessing the implications of this deeper “chargeable” and intrusive body and the
numerous other shallow copper-gold workings through out the project area before deciding on the next
programme of activities.
Railway Prospect
At the Railway prospect, within the project area, the Company is targeting structurally controlled gold-copper
mineralisation associated with a number of north south structural trends, where earlier RC and diamond
drilling had defined encouraging shallow zones of moderate (1-4g/t Au) to low grade (0.1-1g/t Au) gold and
lesser copper in highly weathered sediments. Numerous historic shallow oxide copper workings exist within
other portions of the project area.
Detailed assessment of the previous drill data generated a number of encouraging “walkup drill targets” over
at least 500m strike length with mineralisation poorly tested to approximately 110 vertical metres in highly
weathered interbedded siltstones and sandstones together with discrete zones of breccia.
Examination of the existing diamond core, shows the high-grade gold mineralisation is typically associated
with massive hematite rich veins with stockworks of thin quartz veining to massive breccias with a hematite-
rich matrix. Coarse gold “flakes” can been seen in the margin of one of the hematite rich veins (Figure 7) and
in limited surface samples.
9
CARNAVALE RESOURCES LIMITED
REVIEW OF OPERATIONS
Figure 7
Railway Prospect –Visible gold “flakes” in hematite rich veining within historic diamond
core (field of view approximately 3cm x 8cm)
Deep weathering, in excess of 110m depth, is interpreted to have remobilised a large portion of the primary
gold and copper mineralisation into subhorizontal broad “supergene” horizons. Importantly, these large
zones of generally lower grade remobilised “supergene” gold (0.1 - 1.0g/t) and copper (0.1-0.4% Cu)
remained open in many directions particualrly to the north and west.
An existing shallow penetration IP survey was reprocessed and highlighted two main north south trends
which appeared to control and form bounding structures to the known gold and copper mineralisation in
earlier drilling.
To test and extend this near surface shallow supergene gold and copper mineralisation, Carnavale
completed an RC drilling programme that comprised of 18 holes for a total advance of 1,734m. The
programme was designed to test the near surface weathered portions of the prospect area to confirm
continuity of the higher grade gold zones in the hematite rich and structurally controlled breccia’s along the
south-eastern margin and the shallow broad secondary “supergene” gold and copper mineralization evident
in the central and northern portions of the prospect.
The new drilling confirmed the gross continuity of the broad flat lying and generally low grade and partially
overlapping gold and copper supergene plume of mineralization over approximately 500m strike length, up to
300m in width and to a maximum thickness of approximately 50m in the central portions of the Railway
Prospect. Figure 8 and 9 are drill sections which highlight the broad lateral extent of the supergene gold and
copper mineralisation.
The results also show the internal higher grade gold zones within the broad supergene zones are less
continuous than expected. The supergene copper mineralisation demonstrates quite consistent partially
overlapping zones in the range of 0.1-0.4% Cu values in individual samples.
Carnavale considers the large supergene gold and copper plume evident at the Railway Prospect represents
a highly encouraging anomaly above or nearby to a deeper fresh sulphide rich source.
10
CARNAVALE RESOURCES LIMITED
REVIEW OF OPERATIONS
Table 2
Summary of the more significant supergene intercepts in RC drilling from the Railway
Prospect
LB-1402R 7.6m @ 2.57g/t Au, 0.14% Cu from 10.7m (2.82g/t AuEq)
including 3m @ 6.07g/t Au
LB-1404R 3m @ 0.67g/t Au, 0.02% Cu from 33.5m (0.7g/t AuEq)
LB-1406R 12.2m @ 0.6g/t Au, 0.08% Cu from 29m (0.73g/t AuEq)
including 1.5m @ 3.49g/t Au
LB-1407R 70.1m @ 0.22g/t Au, 0.18% Cu from 12.2m (0.52g/t AuEq)
including 1.5m @ 2.21%Cu
LB-1409R 45.7m @ 0.73g/t Au, 0.24% Cu from 10.7m (1.15g/t AuEq)
including 1.5m @ 17.25g/t Au and 1.65% Cu
LB-1410R 12.2m @ 0.08g/t Au, 0.27% Cu from 9.1m (0.53g/t AuEq)
LB-1413R 62.5m @ 0.43g/t Au, 0.12% Cu from 25.9m (0.61g/t AuEq)
including 1.5m @ 2.78g/t Au and
including 7.6m @ 1.74g/t Au
LB-1414R 3m @ 0.9g/t Au, 0% Cu from 83.8m (0.89g/t AuEq)
including 1.5m @ 1.52g/t Au
LB-1414R 4.6m @ 1.14g/t Au, 0.01% Cu from 129.5m (1.11g/t AuEq)
including 3m @ 1.51g/t Au
LB-1416R 38.1m @ 0.15g/t Au, 0.23% Cu from 4.6m (0.57g/t AuEq)
including 1.5m @ 2.32g/t Au
HISTORICAL Drilling
LB-1001
18.3m @ 0.53g/t Au, 0.05% Cu from 36.6m (0.57g/t AuEq)
LB-1002
29.0m @ 1.25g/t Au, 0.03% Cu from 19.8m (1.29g/t AuEq)
LB-1009
29.0m @ 5.39g/t Au, 0.16% Cu from 3m (5.65g/t AuEq)
LB-1010
44.2m @ 2.25g/t Au, 0.36% Cu from 0m (2.85g/t AuEq)
LB-1013
26.2m @ 2.4g/t Au, 0.18% Cu from 6.1m (2.71g/t AuEq)
LB-1014
42.7m @ 1.2g/t Au, 0.11% Cu from 12.8m (1.39g/t AuEq)
LB-1015
20.9m @ 1.32g/t Au, 0.31% Cu from 1.4m (1.84g/t AuEq)
LB-1016
46.3m @ 0.4g/t Au, 0.12% Cu from 4m (0.61g/t AuEq)
LB-1017
11.7m @ 0.15g/t Au, 0.37% Cu from 14.5m (0.77g/t AuEq)
LB-1018
19.5m @ 0.42g/t Au, 0.22% Cu from 9.4m (0.8g/t AuEq)
LB-1101
30.5m @ 2.35g/t Au, 0.07% Cu from 39.6m (2.46g/t AuEq)
LB-1106
71.6m @ 0.71g/t Au, 0.07% Cu from 19.8m (0.83g/t AuEq)
Subsequent to the RC drilling programme, an assessment of the project data was undertaken and a decision
was made to undertake a broader and deeper penetrating dipole-dipole IP geophysical survey (DDIP) over
the Railway prospect area to determine potential for a deeper bedrock source to the extensive secondary
gold and copper mineralisation seen in the highly weathered rocks near surface.
The assessment of the previous data suggests all the existing drilling has only tested the near surface
secondary supergene style of mineralisation within the younger Tertiary sediment package totally within the
deeply weathered profile. Most of
the known gold and copper mineralisation occurs associated with
extensive iron rich and strongly weathered siltstones, sandstones and hematite rich breccias with minor
quartz-hematite-chlorite veining. The previous gradient array IP (GAIP) data, which only penetrates to
approximatley 200 vertical metres, suggests a series of north - south trending chargeabilty and resistivity
features which correlate moderately with the main supergene plume of copper and gold mineralisation.
11
CARNAVALE RESOURCES LIMITED
REVIEW OF OPERATIONS
Fig 8
Drill Section 3762600N, showing Au-Cu supergene blanket
Fig 9
Drill Section 3762640N, showing Au-Cu supergene blanket
12
CARNAVALE RESOURCES LIMITED
REVIEW OF OPERATIONS
A dipole-dipole IP geophysical survey (DDIP) was undertaken over the Railway Prospect and comprised of 4
east-west orientated IP lines (figure 10) using a 200m spaced dipole-dipole configuration for 12.8 line
kilometres with resultant good quality data obtained.
Results of inversion modelling indicates the depth of penetration was significantly deeper at around 700-
800m below surface than the previous IP survey. The modelling also indicates a shallow west dipping
sediment basement interface at approximately 200-350m depth, with a series of north -south trending faults
which down fault the sediments to the west (Figure 11).
Fig 10 –Plan view of Dipole Dipole IP survey showing the four IP lines and three interpreted north
south to north east trending faults.
Fig 11 Cross Section view of “resistivity” Dipole-Dipole IP survey showing the shallow displaced
west dipping sediment granite contact, down faulted to the west. (looking north)
Significantly the DDIP survey shows the older granitic basement
is generally non resistive and non
chargeable, however it has also defined a large chargeable body at depth below the current known gold and
copper mineralisation. This “chargeable” “body is approximatley 800m wide, fault bounded by the Railway
and East faults and extends beyond the survey limits (~1000m along strike) and remains open.
13
CARNAVALE RESOURCES LIMITED
REVIEW OF OPERATIONS
Fig 12 Cross Section view of “chargeablity” Dipole-Dipole IP survey showing the displaced west
dipping sediment granite contact, down faulted to the west. (looking north)
Fig 13 Cross Section view showing potential chargeable younger intrusive body – potential
mineralised porphyry intrusion, possibly related to gold copper mineralisation (looking north)
14
CARNAVALE RESOURCES LIMITED
REVIEW OF OPERATIONS
Fig 14 Rotated plan view showing “chargeable high” remains open to the north and south beyond
the DDIP survey limits
Importantly, this younger intrusive may represent the source of the gold and copper mineralisation where
remobilised Au-Cu mineralised fluids have ‘leaked” along the faults into the sediments above the intrusive
system. Deep weathering has then remobilised the gold and copper to create the large supergene plume
evident in the previous shallow drilling. Accordingly, this deeper intrusive target may represent a potential
gold - copper bearing porphyry target.
Further ongoing assessment of this target and drilling data is currently underway prior to designing additional
programmes.
Transaction Details
Carnavale entered into an Option Agreement to acquire 100% of Tojo in a share-based transaction and
included a minimum commitment in direct project expenditure up to 28 February 2015.
The key terms of the Option Agreement were as follows:
Carnavale issued 10.5 million fully paid shares to the Tojo shareholders as an option fee and Carnavale
was required to spend US$500,000 direct project expenditure on the two US projects by 28 February
2015 before any withdrawal.
After spending greater than USD$500K, the Company advised it would exercise the option to acquire Tojo
and issued 21 million shares to Tojo shareholders to acquire 100% of Tojo.
Carnavale issued Tojo shareholders 42 million performance shares, which will have the right to convert to up
to 42 million 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, 21 million 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, 21 million performance shares will convert to fully paid shares.
15
CARNAVALE RESOURCES LIMITED
REVIEW OF OPERATIONS
Long Horse Project (Western Australia) – Joint Venture with Barrambie Minerals Limited
The Long Horse Project covered 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 initial results from a desktop review of historical data of the project did not meet the Company’s
investment criteria and the Company withdrew from its agreement to earn an interest in the Long Horse
Project.
Corporate
Board Changes
Mr Andrew Chapman was appointed to the Board as a Non-Executive Director during the year, in line with
the acquisition of Tojo and the new growth strategy.
Mr Peter Christie resigned in August 2014 and Mr Klaus Eckhof resigned in July 2015. The Board wishes to
thank Mr Christie and Mr Eckhof for their contribution to the Company since their appointments as directors.
Capital Raisings
In August and October 2014, the Company completed a placement of 34,632,384 shares at 1.5 cents per
share together with 34,632,384 free attaching options exercisable at 3 cents each and an expiry date of 30
November 2016 to raise $519,486.
In June 2015, the Company completed a placement of 32.5 million shares at 2 cents per share together with
16.25 million option (on the same terms as disclosed above) to raise $650,000.
The funds raised were used to satisfy the Option Amount commitment in relation to the Tojo acquisition,
ongoing exploration activities and to provide general working capital.
Competent Person’s Statements – Exploration Results
The information in this report that relates to the Red Hills Project was previously reported by the Company in
compliance with JORC 2012 in market releases dated 30 July 2015 and 31 August 2015. 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 2015 and 31 August 2015.
The information in this report that relates to the Little Butte Project was previously reported by the Company
in compliance with JORC 2012 in a market release dated 30 July 2015. The Company confirms that it is not
aware of any new information or data that materially affects the information included in the market
announcement dated 30 July 2015.
16
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 2015 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
Explaurum Limited
Burey Gold Limited
Andrew Beckwith, BSc Geology, AusIMM
Managing Director
Appointed 29 July 2014
Date appointed
Date ceased
9 July 2007
23 March 2005
27 November 2013
12 August 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 underway by Metals X, which acquired Westgold 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
Rhett Brans, MIEAust CPEng
Independent Non-Executive Director
Appointed 17 September 2013
Date appointed
18 January 2008
13 August 2013
Date ceased
19 October 2012
24 June 2014
Mr Brans has 40 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
17
CARNAVALE RESOURCES LIMITED
DIRECTORS’ REPORT
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
RMG Limited
Perseus Mining Limited
Tiger Resources Limited
Andrew Chapman CA
Independent Non-Executive Director
Appointed 31 March 2015
Date appointed
12 June 2013
19 January 2015
26 May 2004
11 July 2008
Date ceased
-
-
15 November 2013
22 May 2013
Mr Chapman is a Chartered Accountant with over 20 years’ experience with publicly listed companies where
he has held positions as Company Secretary and Chief Financial Officer and has experience in the areas of
corporate acquisitions, divestments and capital raisings. He has worked for a number of public companies in
the mineral resources, oil and gas and technology sectors. Mr Chapman is currently the Company Secretary
for Bulletin Resources Limited.
Mr Chapman is an associate member of the Institute of Chartered Accountants (ICAA) and a Fellow
of the Financial Services Institute of Australasia (Finsia).
During the past three years he has also served as a director of the following listed companies:
Company
Matsa Resources Limited
Date appointed
17 December 2009
Date ceased
-
Klaus Eckhof, Dipl. Geol. TU, AusIMM
Independent Non-Executive Director
Appointed 1 January 2008, resigned 20 July 2015.
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 Managing Director of AVZ Limited and 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.
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
6 February 2012
12 May 2014
1 February 2013
24 August 2011
-
-
16 June 2014
4 October 2013
Peter Christie, BBus
Independent Non-Executive Director
Appointed 28 April 2006, resigned 5 August 2014
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.
18
CARNAVALE RESOURCES LIMITED
DIRECTORS’ REPORT
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.
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
R Brans
A Chapman
Ordinary shares
Options
18,960,000
16,161,370
2,000,000
5,045,900
19,523,132
6,666,600
4,000,000
1,333,400
Performance
shares
2,880,000
11,326,360
-
4,950,000
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 2015 was $552,328 (2014: $947,119). 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 0.28 cents (30 June 2014: 0.72 cents).
REVIEW OF OPERATIONS / OPERATING AND FINANCIAL REVIEW
The Group is engaged in mineral exploration for metals in Australia and USA. 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 2015 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
the world and review development strategies where individual projects have
opportunities throughout
19
CARNAVALE RESOURCES LIMITED
DIRECTORS’ REPORT
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 activities 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;
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
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 2015 were:
Name
R Gajewski
A Beckwith
R Brans
A Chapman
K Eckhof
P Christie
Eligible to
attend
6
6
6
3
6
-
Attended
6
6
6
3
6
-
20
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
A Chapman
Executive Chairman
Managing Director
Non-Executive 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
Resigned 20 July 2015
Appointed 17 September 2013
Appointed 31 March 2015
Executive Directors’ remuneration and other terms of employment are reviewed annually by the non-
executive directors having regard to performance against goals set at
the year, relative
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.
21
CARNAVALE RESOURCES LIMITED
DIRECTORS’ REPORT
Remuneration of specified directors and specified executives:
Remuneration for the year ended 30 June 2015
Short-term benefits
Directors’
fees
$
Consulting
fees
$
-
-
24,000
6,000
24,000
2,404
56,404
118,500
180,675
-
-
-
-
299,175
Directors
R Gajewski
A Beckwith
R Brans
A Chapman
K Eckhof
P Christie
Total
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
Post-
employ-
ment
Super-
annuation
$
-
-
2,280
570
-
-
2,850
Post-
employ-
ment
Super-
annuation
$
-
-
-
1,751
1,751
Equity-
based
compens-
ation
Total
Proportion
related to
performance
$
$
%
118,500
180,675
26,280
6,570
24,000
2,404
358,429
Total
-
-
-
-
-
-
-
Equity-
based
compens-
ation
-
-
-
-
-
-
Proportion
related to
performance
$
$
%
-
-
-
-
-
150,000
25,000
24,000
62,684
261,684
-
-
-
-
Accounting, secretarial and corporate service fees of $91,028 (2014: $60,313) and rental fees of $31,891
(2014: $37,118) were paid or payable during the year ended 30 June 2015 on normal terms and conditions
to Corporate Consultants Pty Ltd, a company in which Mr Gajewski is a director and has a beneficial interest.
Corporate Consultants Pty Ltd also holds a rental security deposit of $9,375 (2014: $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 2015
The Company has not granted any performance rights as part of remuneration during or since the end of the
financial year to any Directors or officers as part of their remuneration.
22
CARNAVALE RESOURCES LIMITED
DIRECTORS’ REPORT
Shareholdings of key management personnel
Year ended 30 June 2015
Directors
R Gajewski
A Beckwith
R Brans
A Chapman
K Eckhof
P Christie
Total
Balance at
1 July 2014
Granted as
remuneration
Net other
change (i) (ii)
(iii) (iv)
Balance at 30
June 2015
12,497,618
N/A
2,000,000
N/A
3,333,333
696,003
18,526,954
-
-
-
-
-
-
-
6,462,382
16,161,370
-
5,045,900
-
-
27,669,652
18,960,000
16,161,370
2,000,000
5,045,900
3,333,333
N/A
45,500,603
(i) Mr Beckwith and Mr Chapman were appointed as directors during the year ended 30 June 2015.
Mr Beckwith held 3,999,800 shares and Mr Chapman held 5,045,900 shares at the date of
appointment.
(iii)
(ii) The Company issued 10,500,000 shares as an option fee and a further 21,000,000 shares as
consideration for the acquisition of 100% of the share capital of Tojo to Tojo shareholders. Mr
Beckwith received 8,494,770 shares and Mr Gajewski received 2,160,000 shares in their capacity
as Tojo shareholders.
In August and October 2014, the Company completed a placement of 34,632,384 shares at 1.5
cents per share together with 34,632,384 free attaching options exercisable at 3 cents each and
an expiry date of 30 November 2016 to raise $519,486. Having received shareholder approval
for participation in the placement Mr Beckwith subscribed for 2,666,800 shares and 2,666,800
options and Mr Gajewski subscribed for 3,302,382 shares and 3,302,382 options. Mr Beckwith
and Mr Gajewski each bought a further 1,000,000 shares on-market during the year ended 30
June 2015.
(iv) Mr Christie resigned as a director during the year ended 30 June 2015.
Option holdings of key management personnel
Year ended 30 June 2015
Directors
R Gajewski (i)
A Beckwith (ii)
R Brans
A Chapman (iii)
K Eckhof
P Christie (iv)
Total
Balance at 1
July 2014
Granted as
remuneration
Net other
change (i) (ii)
(iii) (iv)
Balance at 30
June 2015
16,220,750
N/A
4,000,000
N/A
6,666,666
348,004
27,235,420
-
-
-
-
-
-
-
3,302,382
6,666,600
-
1,333,400
-
-
11,302,382
19,523,132
6,666,600
4,000,000
1,333,400
6,666,666
N/A
38,189,798
(i) Refer to (iii) above under Shareholdings of key management personnel for the year ended 30 June
2015.
(ii) Mr Beckwith was appointed a director during the year ended 30 June 2015. Before joining the
Board, Mr Beckwith committed to a placement undertaken by the Company. Having subscribed for
3,999,800 shares as detailed at (i) above under Shareholdings of key management personnel for
the year ended 30 June 2015 he was entitled to receive 3,999,800 options. The options were
issued in October 2014 following receipt of shareholder approval. Mr Beckwith also received a
further 2,666,800 options following participation in the placement detailed at (iii) above under
Shareholdings of key management personnel for the year ended 30 June 2015.
23
CARNAVALE RESOURCES LIMITED
DIRECTORS’ REPORT
Option holdings of key management personnel - continued
(iii) Mr Chapman was appointed a director during the year ended 30 June 2015 and this amount
represented the options held at the date of appointment.
(iv)Mr Christie resigned as a director during the year ended 30 June 2015.
Performance shares holdings of key management personnel –Year ended 30 June 2015
Year ended 30 June 2015
Directors
R Gajewski
A Beckwith
R Brans
A Chapman
K Eckhof
P Christie
Total
Balance at
1 July 2014
Granted as
remuneration
Net other change
(i) (ii) (iii)
Balance at 30
June 2015
-
N/A
-
N/A
-
-
-
-
-
-
-
-
-
-
2,880,000
11,326,360
-
4,950,000
-
-
19,156,360
2,880,000
11,326,360
-
4,950,000
-
-
19,156,360
(i)
(ii)
(iii)
The Performance Shares are split evenly between A Class Convertible Performance Shares;
and B Class Convertible Performance Shares.
The Company issued these Performance Shares as consideration for the acquisition of 100% of
the share capital of Tojo to Tojo shareholders. Mr Gajewski, Mr Beckwith and Mr Chapman
were Tojo shareholders and received these shares in proportion to their shareholding in Tojo.
Mr Chapman was appointed a director during the year ended 30 June 2015 and this amount
represented the performance shares held at the date of appointment.
Employment contracts of directors and executives
The Company has entered into an employment agreement with Mr Ron Gajewski whereby Mr Gajewski
receives remuneration of $96,000 plus GST (formerly $150,000 per annum plus GST) effective from 1
December 2014. The agreement may be terminated subject to a 3 month notice period.
The Company has entered into an employment agreement with Mr Andrew Beckwith whereby Mr Beckwith
as Managing Director receives remuneration of $16,425 plus GST per calendar month.
End of Remuneration report
SHARE OPTIONS
As at the date of this report, there are 186,208,836 options over unissued ordinary shares in the Company
comprising.
Unlisted Options
Number
186,208,836
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 September 2014, the Company completed a placement of 34,632,384 shares at 1.5 cents per
share together with 34,632,384 free attaching options exercisable at 3 cents each and an expiry date
of 30 November 2016.
In June 2015, the Company completed a placement of 32.5 million shares at 2 cents per share
together with 16.25 million options (on the same terms as disclosed above).
In June 2015, the Company issued 4 million options (on the same terms as disclosed above) to to a
third party for arranging the majority of the placement.
24
CARNAVALE RESOURCES LIMITED
DIRECTORS’ REPORT
SHARE OPTIONS - continued
There were no options issued after 30 June 2015 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 500,000 ordinary shares as a result of the
exercise of options.
PERFORMANCE SHARES
As at the date of this report, there are 42 million Performance Shares outstanding in the Company.
Performance Shares issued during the year were as follows:
a) 21 million A Class Convertible Performance Shares will have the right to convert to 21
indicated
million Shares upon the successful completion of a JORC Code compliant
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 from the date of issue of the Performance Shares; and
b) 21 million B Class Convertible Performance Shares will have the right to convert to 21
million Shares upon the successful completion of 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 from the date of issue of the Performance Shares.
There were no Performance Shares issued after 30 June 2015 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 2015 has been received and forms
part of the directors’ report and can be found on page 36 of the financial report.
25
CARNAVALE RESOURCES LIMITED
DIRECTORS’ REPORT
NON - AUDIT SERVICES
There have been no non-audit services provided by the Company’s auditor during the year (2014: 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.
__________________
ANDREW BECKWITH
Managing Director
Dated this 29th day of September 2015.
Perth, Western Australia
26
CARNAVALE RESOURCES LIMITED
CORPORATE GOVERNANCE STATEMENT
The Board is responsible for the corporate governance of the Company. The Board guides and monitors the
business and affairs of the Company on behalf of the shareholders by whom they are elected and to whom
they are accountable. The Company’s governance approach aims to achieve exploration, development and
financial success while meeting stakeholders’ expectations of sound corporate governance practices by
proactively determining and adopting the most appropriate corporate governance arrangements.
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.
The Corporate Governance Statement is current as at 30 June 2015, and has been approved by the Board
of Directors. All these practices, unless otherwise stated, were in place for the entire year. They comply with
the ASX Corporate Governance Principles and Recommendations (3rd edition).
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
Recommendation 1.1:
Companies should disclose the respective roles and responsibilities of its board and management and those
matters expressly reserved to the Board and those delegated to management and disclose those functions.
In governing the Company, the
The Board’s role is to govern the Company rather than to manage it.
Directors must act in the best interests of the Company as a whole.
It is the role of the senior management
to manage the Company in accordance with the direction and delegations of the Board and the responsibility
of the Board to oversee the activities of management in carrying out these delegated duties.
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 Managing Director, approving other key executive
appointments including the Company Secretary, and planning for executive succession;
overseeing and evaluating the performance of the Managing Director 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 Managing Director (MD) is responsible for the attainment of the Company’s goals and vision for the
future, in accordance with the strategies, policies, programs and performance requirements approved by the
Board.
The MD’s specific responsibilities include:
27
CARNAVALE RESOURCES LIMITED
CORPORATE GOVERNANCE STATEMENT
Responsibility for the achievement of corporate goals and objectives;
Development of short, medium and long term corporate strategies and planning to achieve the
Company’s vision and overall business objectives;
Implementing and monitoring strategy and reporting/presenting to the Board on current and future
initiatives;
Advise the Board regarding the most effective organisational structure and oversee its
implementation;
Assessment of business opportunities of potential benefit to the Company;
Establish and maintain effective and positive relationships with Board members, shareholders, the
investment community and other government and business liaisons;
Undertake the role of key company spokesperson;
Recommend policies to the Board in relation to a range of organisational
issues including
delegations of authority, consultancies and performance incentives;
Ensure statutory, legal and regulatory compliance and comply with corporate policies and standards;
Ensure appropriate risk management practices and policies are in place; and
Select and appoint staff.
This statement of matters reserved for the Board and areas of delegated authority to the Managing Director
is contained in the Board Charter posted on the Company’s website.
Recommendation 1.2:
Companies should undertake appropriate checks before appointing a person, or putting forward to security
holders a candidate for election, as a director and provide security holders with all material information in its
possession relevant to a decision on whether or not to elect or re-elect a director.
The Company undertakes checks on any person who is being considered as a director. These checks may
include character, experience, education and financial history and background.
All security holder releases will contain material
decision to be made on whether or not to elect or re-elect a director.
information about any candidate to enable an informed
Recommendation 1.3:
Companies should have a written agreement with each director and senior executive setting out the terms of
their appointment.
Mr Beckwith has a formal employment contract and the non-executive directors have a letter of appointment
including a director’s interest agreement with respect to disclosure of security interests.
Recommendation 1.4:
The Company Secretary should be accountable directly to the Board, through the chair, on all matters to do
with the proper functioning of the Board.
The Company Secretary has a direct reporting line to the Board, through the Chair.
Recommendation 1.5:
The Company should establish a policy concerning diversity and disclose the policy or summary of the
policy.
The policy should include requirements for the Board to establish measureable objectives for
achieving gender diversity and for the Board to assess annually both the objectives and progress in
achieving them.
The Company recognises that a talented and diverse workforce is a key competitive advantage. The
Company is committed to developing a workplace that promotes diversity. The Company’s policy is to recruit
and manage on the basis of competence and performance regardless of age, nationality, race gender,
religious beliefs, sexuality, physical ability or cultural background. The Company has not yet formalised this
policy into a written document. It is the Board’s intention to formalise the policy at a time when the size of the
Company and its activities warrants such a structure.
The Company has four staff (comprising the four directors), none of which is a woman. There are no women
in senior executive positions or on the board.
28
CARNAVALE RESOURCES LIMITED
CORPORATE GOVERNANCE STATEMENT
Recommendation 1.6:
The Company should have and disclose a process for periodically evaluating the performance of the Board,
its committees and individual directors and whether a performance evaluation was undertaken in the
reporting period in accordance with that process.
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
during the financial year whereby the performance of the Board as a whole and the individual contributions of
each director were discussed. The board considers that at this stage of the Company’s development an
informal process is appropriate.
Recommendation 1.7:
The Company should have and disclose a process for periodically evaluating the performance of senior
executives and whether a performance evaluation was undertaken in the reporting period in accordance with
that process.
The Board undertakes a review of the Managing Director’s performance, at least annually, including setting
the goals for the coming year and reviewing the achievement of these goals.
Performance has been measured to date by the efficiency and effectiveness of the enhancement of the
Company’s mineral interest portfolio, the designing and implementation of the exploration and development
programme, maintenance of relationships with joint venture partners and the securing of ongoing funding so
as to continue its exploration and development activities. This performance evaluation is not based on
specific financial indicators such as earnings or dividends as the Company is at the exploration stage and
during this period is expected to incur operating losses.
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 senior executives. The Chairman conducted an
informal review process whereby he discussed with the Managing Director the 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.
Principle 2: Structure the board to add value
Recommendation 2.1:
The Board should establish a Nomination Committee which the majority should be independent directors
(including the Chair).
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
29
CARNAVALE RESOURCES LIMITED
CORPORATE GOVERNANCE STATEMENT
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
In order to achieve continuing improvement in Board performance, all Directors
briefing on the Company.
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.
Recommendation 2.2:
The Company should have and disclose a Board skills matrix setting out the mix of skills and diversity that
the Board currently has or is looking to achieve in its membership.
Chairman
Managing
Director
Non-executive
Directors
Company
Secretary
Leadership
Strategy / Risk
Communication
Fundraising
Mining Industry
Governance
Health,
environment
safety
and
Financial acumen
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Each director has the right of access to all relevant company information and to the Company’s employees
and, subject to prior consultation with the Chairperson, may seek independent professional advice from a
suitably qualified adviser at the Company’s expense. The director must consult with an advisor suitably
qualified in the relevant field, and obtain the Chairman’s approval of the fee payable for the advice before
proceeding with the consultation. A copy of the advice received by the director is made available to all other
members of the Board.
Recommendation 2.3:
The Company should disclose the names of the directors considered to be independent directors and length
of service of each director.
The names, experience and responsibilities of Directors of
this
statement are set out in the Directors’ Report (including names of the directors considered to be independent
directors and length of service of each director).
the Company in office at
the date of
Recommendation 2.4:
A majority of the Board of the Company should be independent directors.
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, two are
considered to be independent, Mr Rhett Brans and Mr Andrew Chapman and therefore the Company does
30
CARNAVALE RESOURCES LIMITED
CORPORATE GOVERNANCE STATEMENT
currently not have a majority of independent directors. Mr Eckhof was considered an independent director
until his resignation in July 2015.
Mr Andrew Beckwith is the Managing Director of the Company and is not considered to be independent. Mr
Gajewski is employed in an executive capacity by the Company and is not considered to be independent.
The Company considers that each of the directors possesses the skills and experience suitable for building
the Company and that the current composition of the Board is adequate for the Company's current size and
operations.
Recommendation 2.5:
The Chair of the Board should be an independent director, and should not be the CEO of the Company.
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 2.5 which states the Chairman should be an independent director.
Effective from 29 July 2014, Mr Andrew Beckwith was appointed as Managing Director and is responsible for
implementing Company strategies and policies.
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 Company considers that each of the directors possess skills and experience suitable for building the
Company. The Board takes the responsibilities of best practice in corporate governance seriously.
It is the
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.
Recommendation 2.6:
The Company should have a program for inducting new directors and provide appropriate professional
development opportunities for directors to develop and maintain the skills and knowledge needed to perform
their role as directors effectively.
The Board Charter provides for induction and professional development for the Board.
Principle 3: Promote ethical and responsible decision making
Companies should have a Code of Conduct for its directors, senior executives and employees.
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 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.
Principle 4: Safeguard Integrity in Financial reporting
Recommendation 4.1
The Board should have an Audit Committee.
31
CARNAVALE RESOURCES LIMITED
CORPORATE GOVERNANCE STATEMENT
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.
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 are 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
Recommendation 4.2
The Board of the Company should, before it approves the Company’s financial statements for a financial
period, receive from its CEO and CFO a declaration that, in their opinion, the financial records of the entity
have been properly maintained and that the financial statements comply with the appropriate accounting
standards and give a true and fair view of the financial position and performance of the entity and that the
opinion has been formed on the basis of a sound system of risk management and internal control which is
operating effectively.
The Board receives the necessary declaration in writing from the Managing Director and the Company
Secretary/Financial Controller with respect to the financial records, the financial statements and the system
of risk management and internal control before it approves the Company’s financial statements for a financial
period.
Recommendation 4.3
The Company should ensure that the external auditor is present at the AGM and be available to answer
questions from security holders relevant to the audit.
The Company invites the auditor or representative of the auditor to the AGM.
Principle 5: Making Timely and Balanced Disclosure
Recommendation 5.1:
Companies should have a written policy for complying with its continuous disclosure obligations under the
Listing Rules.
The Company has developed an ASX Listing Rules Disclosure Strategy which has been endorsed by the
Board. The ASX Listing Rules Disclosure Strategy ensures compliance with ASX Listing Rules and
Corporations Act 2001 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’s website as soon as possible
after confirmation of receipt is received from ASX, including all financial reports.
Principle 6 – Respect the rights of security holders
Recommendation 6.1:
Companies should provide information about itself and its governance to investors via its website.
The Company is committed to maintaining a Company website with general information about the Company
information about governance and information specifically targeted at keeping the
and its operations,
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’s website:
relevant announcements made to the market via the ASX;
notices of meetings;
investment updates;
company presentations and media releases;
copies of press releases and announcements for (at least) the preceding three years; and
32
CARNAVALE RESOURCES LIMITED
CORPORATE GOVERNANCE STATEMENT
copies of annual, half-yearly and quarterly reports including financial statements for (at least) the
preceding three years.
Recommendations 6.2 and 6.3:
Companies should design and implement an investor relations program to facilitate two-way communication
with investors.
Companies should disclose the policies and processes it has in place to facilitate and encourage
participation at meetings of security holders.
The Managing Director makes himself available to meet shareholders and regularly responds to enquiries
made via telephone or email. The Managing Director also completes periodic investor presentations to
facilitate engagement with investors and other financial market participants.
The Board encourages full participation of shareholders at the Annual General Meeting. In preparing for
general meetings of the Company, the Company drafts the notice of meeting and related explanatory
information so that shareholders are provided with all of the information that is relevant to shareholders in
making decisions on matters to be voted on by them at the meeting. The Company 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.
Recommendation 6.4:
Companies should give security holders the option to receive communications from, and send
communications to, the entity and its security registry electronically.
Information about the Company is regularly emailed to all shareholders who lodge their email contact details
with the Company. Information on lodging email addresses and on submitting information requests with the
Company is available on the Company’s website. Shareholders can receive communications from, and send
communications to, the Company’s security registry electronically.
Principle 7 – Recognise and manage risk
Recommendation 7.1:
The Board should have a committee or committees to oversee risk.
The Company is not currently of a size to require the formation of committees to oversee risk. The full Board
has the responsibility for the risk management, compliance and internal controls systems of the Company.
Management, through the Managing Director, is responsible for designing, implementing and reporting on
the Company’s risk management and internal control system. The Company’s risk
the adequacy of
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 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 Board 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.
Recommendation 7.2:
The Board should review the entity’s risk management framework at least annually to satisfy itself that it
continues to be sound and disclose whether such a review has taken place.
The Board considers risks and discusses risk management at each Board meeting. Review of the risk
management framework is an on-going process rather than an annual formal review. The Company’s main
areas of risk include:
33
CARNAVALE RESOURCES LIMITED
CORPORATE GOVERNANCE STATEMENT
exploration;
security of tenure including native title risk;
joint venture management;
new project acquisitions;
environment;
occupational health and safety;
government policy changes;
funding;
commodity prices;
retention of key staff;
financial reporting; and
continuous disclosure obligations.
Recommendation 7.3:
The Company should disclose if it has an internal audit function.
The Company does not have an internal audit function. The Board considers that the Company is not
currently of a size, nor are its affairs of such complexity, to justify the formation of an internal audit function at
this time. The Board as a whole regularly evaluates and improves the effectiveness of its risk management
(refer above) and internal control processes.
Recommendation 7.4:
The Company should disclose whether it has any material exposure to economic, environmental and social
sustainability risks and, if it does, how it manages or intends to manage those risks.
The Company is of the view that it has adequately disclosed the nature of its operations and relevant
information on exposure to economic, environmental and social sustainability risks. Other than general risks
associated with the mineral exploration industry, the Company does not currently have material exposure to
environmental and social sustainability risks.
Principle 8 – Remunerate fairly and responsibly
Recommendation 8.1:
The Board should have a Remuneration Committee.
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.
Recommendation 8.2:
A company should separately disclose its policies and practices regarding the remuneration of non-executive
directors and the remuneration of executive directors and other senior executives.
The Company provides disclosure of all Directors and executives remuneration in its annual report.
The remuneration policy of Carnavale 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 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:
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,
34
CARNAVALE RESOURCES LIMITED
CORPORATE GOVERNANCE STATEMENT
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.
The value of shares and incentive options where they are granted to non-executive directors are calculated
using the Black-Scholes-Merton option pricing model.
to shareholder approval) as it
Executives
The senior executive of the Company is the Managing Director. 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:
fixed salary that is determined from a review of the market and reflects core performance 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 incentive option issues with thresholds approved by shareholders; and
statutory superannuation.
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 value of shares and incentive options where they are to be
granted to senior executives are calculated using the Black-Scholes-Merton option pricing model.
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.
The Board may use its discretion with respect to the payment of bonuses, incentive share options and other
incentive payments.
For details of remuneration paid to Directors and officers for the financial year please refer to the Directors’
Report.
Recommendation 8.3:
A Company which has an equity based remuneration scheme should have a policy on whether participants
are permitted to enter into transactions (whether through the use of derivatives or otherwise) which limit the
economic risk of participating in the scheme and disclose that policy or summary of it.
The Company does not have an equity based remuneration scheme which is affected by this
recommendation.
Recipients of equity-based remuneration (eg.
transactions that would limit the economic risk of options or other unvested entitlements.
incentives options) are not permitted to enter into any
35
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 2015, I declare that to the best of my knowledge and belief, there have been no
contraventions of:
a)
b)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
any applicable code of professional conduct in relation to the audit.
Perth, Western Australia
29 September 2015
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.
36
CARNAVALE RESOURCES LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2015
Revenue
Expenditure
Administrative expenses
Exploration expenditure impaired
Foreign exchange loss
Option fee paid
Share based payment expense
Loss before related income tax benefit
Income tax benefit
Note
Consolidated
2015
$
76,718
76,718
(533,584)
(22,962)
-
(52,500)
(20,000)
2014
$
38,545
38,545
(509,185)
(411,537)
(1,942)
-
(63,000)
(552,328)
-
(947,119)
-
3
4
11
4
4
5
Net loss attributable to members of the parent entity
(552,328)
(947,119)
Other comprehensive income / (loss) for the period, net of
tax
Items that may be reclassified subsequently to profit or loss
Exchange gain / (loss) arising on translation of foreign
operations
2,722
-
Total comprehensive loss for the year
(549,606)
(947,119)
Loss per share
Basic – cents
Diluted – cents
17
17
(0.28)
(0.28)
(0.72)
(0.72)
The accompanying notes form part of these financial statements
37
CARNAVALE RESOURCES LIMITED
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2015
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
2015
$
2014
$
18(a)
8
9
10
11
12
13
14
15
16
1,253,481
17,218
51,122
1,321,821
689
1,256,182
30,158
1,287,029
1,527,499
11,954
10,121
1,549,574
3,439
-
9,375
12,814
2,608,850
1,562,388
47,931
47,931
68,578
68,578
47,931
68,578
2,560,919
1,493,810
25,179,894
1,304,078
(23,923,053)
2,560,919
23,614,874
1,249,661
(23,370,725)
1,493,810
The accompanying notes form part of these financial statements
38
CARNAVALE RESOURCES LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2015
Consolidated
Issued
capital
$
Reserves
$
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
Consolidated
Issued
capital
$
Reserves
$
Accumulated
losses
$
Total
$
Balance at 1 July 2014
23,614,874
1,249,661
(23,370,725)
1,493,810
Loss attributable to members of the
parent entity
Exchange gain on translation of foreign
operations
Total comprehensive loss for the year
Shares issued during the year (net of
issue costs)
Fair value of options issued
Balance at 30 June 2015
-
-
-
-
(552,328)
(552,328)
2,722
2,722
-
(552,328)
2,722
(549,606)
1,565,020
-
25,179,894
-
51,695
1,304,078
-
-
(23,923,053)
1,565,020
51,695
2,560,919
The accompanying notes form part of these financial statements
39
CARNAVALE RESOURCES LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2015
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 mineral licence security bond
Cash acquired on acquisition of Tojo Minerals Pty Ltd
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
2015
$
2014
$
(513,565)
32,163
(481,402)
(487,742)
36,144
(451,598)
18(b)
(1,022,994)
(20,783)
99,399
(944,378)
(411,537)
-
-
(411,537)
1,169,486
(45,271)
1,124,215
988,699
(62,195)
926,504
Net increase / (decrease) in cash and cash equivalents held
(301,565)
63,369
Effect of foreign exchange fluctuations on cash held
27,547
(1,942)
Cash and cash equivalents at the beginning of the financial year
1,527,499
1,466,072
Cash and cash equivalents at the end of the financial year
18(a)
1,253,481
1,527,499
The accompanying notes form part of these financial statements
40
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
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. Cost is based on the fair values of the consideration given in
exchange for assets.
The financial report is presented in Australian dollars.
Going Concern
The financial statements have been prepared on the going concern basis, which contemplates the
continuity of normal business activity and the commercial realisation of the Group’s assets and the
settlement of liabilities in the normal course of business.
The Group has incurred a loss for the year after tax of $552,328 (2014: $947,119) and experienced
net operating and investing cash outflows of $1,425,780 (2014: $863,135). As at 30 June 2015, the
Group has net current assets of $1,273,890.
The Board recognises that additional funding is required to ensure that the Group can continue to fund
its operations and further develop its mineral exploration and evaluation assets for a period of at least
twelve months from the date of signing this financial report. The Directors believe that such additional
funding is potentially available from a number of sources including:
funding expenditure from parties earning a joint venture interest
project
Group’s projects;
the placement of further securities; and
the sale of assets.
in the
The Directors believe the Group will obtain sufficient
the funding
opportunities detailed above to enable it to continue as a going concern and therefore that it is
appropriate to prepare the financial statements on a going concern basis.
funding from one or more of
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 2015, 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.
41
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(b)
Adoption of new and revised standards (continued)
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 2015. 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
2015 was authorised for issue in accordance with a resolution of the Directors on 29th September
2015.
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’).
(d)
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 2015 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 taxable temporary differences associated with investments in subsidiaries,
associates and interests in joint ventures, except where the timing of the reversal of the
temporary differences will not reverse in the foreseeable future.
42
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(e)
Income tax (continued)
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.
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
trenching and sampling and associated activities and an
explore, studies, exploratory drilling,
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
which it has been allocated being no larger than the relevant area of
interest) is estimated to
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
43
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(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
that exactly discounts estimated future cash receipts through the expected life of
the financial
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.
(i)
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
financial asset or group of
the asset’s
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,
44
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(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.
(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
instrument. A financial asset is
Group becomes party to the contractual provisions of the financial
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.
45
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(n)
Financial assets (continued)
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.
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.
46
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(o)
Foreign currency translation (continued)
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.
(p) Plant and equipment
Plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment
losses.
lives and amortisation methods are reviewed, and adjusted if
The assets' residual values, useful
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)
Critical accounting estimates and judgements
The application of accounting policies requires the use of judgements, estimates and assumptions
about carrying values of assets and liabilities that are not readily apparent from other sources. The
estimates and associated assumptions are based on historical experience and other factors that are
considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions are
recognised in the period in which the estimate is revised if it affects only that period, or in the period of
the revision and future periods if the revision affects both current and future periods.
47
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
2.
(t)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Critical accounting estimates and judgements (continued)
The key estimates and assumptions that have a significant risk of causing a material adjustment to the
carrying amounts of certain assets and liabilities within the next annual reporting period are:
Exploration and evaluation expenditure
The Group’s accounting policy for exploration and evaluation expenditure is set out in Note 1 (f). The
application of this policy necessarily requires the Board to make certain estimates and assumptions as
to future events and circumstances. Any such estimates and assumptions may change as new
is
information becomes available.
concluded that the expenditures are unlikely to be recoverable by future exploitation or sale, then the
relevant capitalised amount will be written off to the statement of comprehensive income.
If, after having capitalised expenditure under this policy,
it
The Board determines when an area of interest should be abandoned. When a decision is made that
an area of interest is not commercially viable, all costs that have been capitalised in respect of that
area of interest are written off. The Directors’ decision is made after considering the likelihood of
finding commercially viable reserves.
Share-based payment transactions
The Group measures the cost of equity-settled transactions with employees and consultants by
reference to the fair value of the equity instruments at the date at which they are granted. The fair
value of options is determined using a Black-Scholes-Merton model, using various assumptions.
Obligation to issue ordinary shares
The Company has an obligation to issue 42 million shares in respect to the acquisition of Tojo
Minerals Pty Ltd, subject to achievement of certain performance conditions as set out in Note 14.
Australian Accounting Standard AASB 2 Share-Based Payment requires the Company to account for
this transaction based on the best available estimate of the number of shares expected to vest and
revise that estimate, if necessary, if subsequent information indicates that the number of shares
this requirement requires
expected to vest differs from previous estimates. The application of
significant judgement by the directors.
The directors have assessed that, as at the date of issue of the financial report, the likelihood of
shares being issued by the Company under the above obligation is less likely than more likely, and
accordingly, no accounting transaction has been recorded for this obligation.
(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.
48
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
3.
REVENUE
Other revenue
Interest earned
Foreign currency exchange gains
4.
EXPENSES
Loss before income tax includes the following
specific expenses:
Share based payment expense
Depreciation of plant and equipment
Foreign exchange loss
INCOME TAX
5.
(a)
Consolidated
2015
$
29,887
46,831
76,718
2014
$
38,545
-
38,545
Consolidated
2015
$
2014
$
20,000
2,750
-
63,000
2,750
1,942
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
2015
$
(552,328)
2014
$
(947,119)
Prima facie income tax benefit at 30%
165,698
284,136
Tax effect of amounts which are not tax (deductible) / taxable in
calculating taxable income:
Due diligence / capital related costs
Exploration expenses incurred
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
(17,293)
235,105
20,158
403,668
(403,668)
-
(45,448)
(123,461)
38,765
153,992
(153,992)
-
(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
2015
$
6,710,727
2,467,067
59,251
9,237,045
2014
$
6,312,773
2,494,367
18,326
8,825,466
(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;
49
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
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.
(c)
Deferred tax liabilities
The potential deferred tax liability arising from capitalised exploration expenditure has not been
recognised as a liability. This would reduce the potential deferred tax asset noted at (b) above.
Deferred exploration and evaluation expenditure
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)
A Beckwith (appointed 29 July 2014)
R Brans (appointed 17 September 2013)
A Chapman (appointed 31 March 2015)
P Christie (appointed 28 April 2006, resigned 5 August 2014)
K Eckhof (appointed 1 January 2008, resigned 20 July 2015)
Executive
P Jurman – Company Secretary
(b)
Compensation of key management personnel
Short-term employee benefits
Post-employment benefits
Consolidated
2015
$
235,105
2014
$
-
Consolidated
2015
$
2014
$
22,000
22,000
21,205
21,205
Consolidated
2015
$
355,579
2,850
358,429
2014
$
259,933
1,751
261,684
Information regarding individual directors’ compensation is provided in the Remuneration report on
pages 21 to 24.
50
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
7.
KEY MANAGEMENT PERSONNEL - continued
(c)
Other key management personnel transactions
Accounting, secretarial and corporate service fees of $91,028 (2014: $60,313) and rental fees of
$31,891 (2014: $37,118) were paid or payable during the year ended 30 June 2015 on normal terms
and conditions to Corporate Consultants Pty Ltd, a company in which Mr Gajewski is a director and
has a beneficial interest.
Corporate Consultants Pty Ltd also holds a rental security deposit of $9,375 (2014: $9,375) - (Note
12).
8.
CURRENT RECEIVABLES
Other receivables (i)
Interest receivable
Consolidated
2015
$
17,218
-
17,218
2014
$
9,554
2,400
11,954
(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
Acquisition costs incurred through acquisition of Tojo
Minerals Pty Ltd – non-cash
Exploration expenditure incurred
Exploration expenditure impaired (ii)
51
Consolidated
2015
$
2014
$
51,122
10,121
Consolidated
2015
$
10,527
(9,838)
689
3,439
-
(2,750)
689
2014
$
10,527
(7,088)
3,439
6,189
-
(2,750)
3,439
Consolidated
2015
$
2014
$
1,256,182
-
472,500
806,644
(22,962)
1,256,182
-
-
-
411,537
(411,537)
-
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
11.
EXPLORATION AND EVALUATION EXPENDITURE - continued
(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.
12. OTHER NON-CURRENT ASSETS
Rental security deposit (Note 7 (c))
Mineral licence security bond
13.
TRADE AND OTHER PAYABLES
Current
Trade and other payables (i)
Consolidated
2015
$
9,375
20,783
30,158
2014
$
9,375
-
9,375
Consolidated
2015
$
47,931
47,931
2014
$
68,578
68,578
(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.
52
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
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
Share placement at an issue price of 1.5
cents each in August and October 2014
Shares issued to acquire Tojo Minerals Pty
Ltd in August and October 2014.
Shares issued as part of remuneration of
consultant.
Share placement at an issue price of 2
cents each in June 2015.
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
2015
Number
156,652,964
2014
Number
87,739,708
2015
$
23,614,874
2014
$
22,625,370
34,632,384
31,500,000
1,000,000
32,500,000
-
-
-
-
519,486
472,500
20,000
650,000
-
-
-
-
-
-
-
-
-
29,246,569
3,000,000
36,666,667
20
-
-
-
-
438,698
63,000
550,000
1
-
(96,966)
(62,195)
Balance at end of period
256,285,348
156,652,964
25,179,894
23,614,874
(c)
Share options
Options to subscribe for ordinary shares in the capital of the Company have been granted as follows:
2015
Exercise
Period
Exercise
Price
Opening
Balance
1 July 2014
Options
Issued
2014/2015
Options
Expired
2014/2015
Closing
Balance
30 June 2015
On or before 30 November
2016
Number
Number
Number
Number
$0.03
131,826,452
54,882,384
-
186,708,836
In August and October 2014, the Company completed a placement of 34,632,384 shares at 1.5 cents
per share together with 34,632,384 free attaching options exercisable at 3 cents each and an expiry
date of 30 November 2016.
In June 2015, the Company completed a placement of 32.5 million shares at 2 cents per share
together with 16.25 million options (on the same terms as disclosed above). The Company also
issued 4 million options (on the same terms as disclosed above) to a third party for arranging the
majority of the placement.
53
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
14.
ISSUED CAPITAL - continued
(c)
Share options –continued
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.
(d)
Performance shares
Performance shares in the Company granted during the year ended 30 June 2015:
Ex.
price
Expiry
date
Opening
balance
Granted
during the
year
Number
Number
Vested and
converted
into shares
during the
year
Number
Forfeited
during the
year
Balance
at end of
year
Number
Number
Vested and
exercisable at
end of the
year
Number
Nil
Nil
13-Mar
18
13-Mar
19
-
-
-
21,000,000
21,000,000
42,000,000
-
-
-
-
-
-
21,000,000
21,000,000
-
-
42,000,000
-
21 million A Class Convertible Performance Shares have the right to convert to 21 million Shares upon
the successful completion of 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 from the date of issue of the Performance
Shares.
21 million B Class Convertible Performance Shares have the right to convert to 21 million Shares upon
the successful completion of 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 from the date of issue of the Performance
Shares.
Performance Shares have been issued to acquire Tojo, and provide the Company with a means to
compensate the vendors in proportion to subsequent success in developing the property.
54
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
15.
RESERVES
Option reserve (a)
Foreign currency translation reserve (b)
Total
(a) Option reserve
Consolidated
2015
$
2014
$
1,301,356
2,722
1,304,078
1,249,661
-
1,249,661
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.
Opening balance
Fair value of options issued to consultants
Balance at end of year
(b) Foreign currency transaltion reserve
Consolidated
2015
$
2014
$
1,249,661
51,695
1,301,356
1,249,661
-
1,249,661
The foreign currency translation reserve is used to record exchange differences from the translation of
the financial statements of foreign operations.
Opening balance
Currency translation differences arising during the year
Balance at end of year
16.
ACCUMULATED LOSSES
Accumulated losses at the beginning of the year
Loss for the year
Accumulated losses at the end of the year
Consolidated
2015
$
-
2,722
2,722
2014
$
-
-
-
Consolidated
2015
$
(23,370,725)
(552,328)
(23,923,053)
2014
$
(22,423,606)
(947,119)
(23,370,725)
55
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
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
2015
$
2014
$
(552,328)
(947,119)
Number
Number
196,621,952
-
130,749,422
-
196,621,952
130,749,422
The Company has 186,708,836 share options at 30 June 2015 (30 June 2014: 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
and in hand and short-term deposits with an original maturity of
three months or less, net of
outstanding bank overdrafts.
Cash at bank
Consolidated
2015
$
1,253,481
1,253,481
2014
$
1,527,499
1,527,499
(b)
Reconciliation of loss after tax to net cash flows from operations
Consolidated
2015
$
(552,328)
2,750
22,962
(44,368)
52,500
20,000
2014
$
(947,119)
2,750
411,537
1,942
-
63,000
(6,418)
(3,471)
23,500
(481,402)
19,763
(451,598)
Loss after income tax
Depreciation
Exploration expenditure and PP&E impaired
Net exchange differences
Option fee expensed
Share based payment expense
(Increase) / decrease in assets
Trade and other receivables
Increase / (decrease) in liabilities
Trade and other payables
56
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
18.
NOTES TO THE STATEMENT OF CASH FLOWS - continued
(c) Non-cash financing of investing activities
Settlement and completion of the transaction to acquire a 100% interest in the share capital of Tojo
Minerals Pty Ltd (“Tojo”), which has rights to acquire two highly prospective gold-silver-copper projects
in Arizona and Nevada, USA was completed during the year ended 30 June 2015. The total
consideration paid by the Company was:
Issue of 10.5 million ordinary shares to Tojo shareholders as a fee for the grant of an
option which gave Carnavale the right to acquire 100% of the share capital of Tojo on
or before 28 February 2015.
Issue of 21 million ordinary shares upon exercising the option; and
Issue of 42 million Performance shares, which will have the right to convert to up to 42
million fully paid shares in Carnavale upon the successful completion of resource
based performance milestones.
19.
ACQUISITION OF SUBSIDIARY
In March 2015, the Company acquired all of the issued shares in Tojo Minerals Pty Ltd, which has
rights to two highly prospective Gold (Au) –Silver (Ag) - Copper (Cu) projects (Little Butte Project and
Red Hills Project) in Arizona and Nevada, USA. The key terms of the Agreement are referred to in
note 18 c).
This transaction was an acquisition of assets and does not meet the requirements of AASB 3 Business
Combinations.
The purchase price was allocated as follows:
Purchase consideration (shares issued)
Cash consideration
Assets and liabilities acquired at acquisition date:
Cash
Trade and other receivables
Loan payable
Trade and other payables
Exploration and evaluation expenditure – fair value of mineral properties
acquired
Total
The cash inflow on acquisition is as follows:
Net cash acquired with subsidiary
Net cash inflow
Consolidated
2015
$
472,500
-
472,500
99,399
34,157
(558,188)
(35,485)
932,617
472,500
99,399
99,399
57
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
19.
(a)
COMMITMENTS AND CONTINGENCIES
Commitments
In order to maintain current contractual rights concerning its mineral projects, the Group is required to
meet minimum exploration expenditure requirements and make annual option payments as specified
by joint venture agreements. These obligations are not provided for in the financial report and are not
payable at balance date.
Little Butte Project: The Group holds a Property Option Agreement with MinQuest Inc, whereby it
has the right to earn 100% of the project tenements via expenditure of US$6M over a period of ten
years from the execution date of 31 July 2013, subject to a retained 3% Net Smelter Royalty (NSR) by
MinQuest.
Red Hills Project: The Group holds joint venture earn-in rights with Columbus Gold (US) Corporation
whereby it has the right to initially earn 51% of the project tenements via expenditure of US$2M over a
period of three years from the execution date of 15 August 2013. Tojo has the additional right to elect
to earn an additional 24% (total of 75%) via additional expenditure of US$7M over a further period of 4
years from this election. Expenditure thereafter is on a pro rata basis with dilution clauses standard in
this type of agreement. The project has an underlying 2% Net Smelter Royalty (NSR) to a third party.
The agreement has the right for the Group to purchase 1% of the third party NSR for US$2M.
Mineral exploration commitments
Within one year
One year to five years
Later than five years
Total
Project acquisition commitments
Within one year
One year to five years
Later than five years
Total
Consolidated
2015
$
247,098
6,286,555
3,331,156
9,864,809
2014
$
50,000
-
-
50,000
Consolidated
2015
$
26,127
326,583
130,634
483,344
2014
$
-
-
-
-
If the Group decides to withdraw from the agreements above, the Group will not be required to incur
the commitments in the tables above.
If the Group does not meet these obligations, assets recognised in the statement of financial position
may require review to determine the appropriateness of carrying values. The sale, transfer or farm-out
of exploration rights to third parties will reduce or extinguish these obligations.
Lease commitments
The group leases its corporate offices under non-cancellable operating leases expiring within five
years.
Within one year
One year to five years
Total
(b)
Contingent liabilities
Consolidated
2015
$
5,584
-
5,584
2014
$
22,150
5,584
27,734
The consolidated entity does not have any contingent liabilities at balance date.
58
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
20.
EVENTS SUBSEQUENT TO BALANCE DATE
No matters or circumstances have arisen since 30 June 2015 that have or may significantly affect the
operations, results, or state of affairs of the consolidated entity in future financial years.
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 2015, 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 $30,227
higher / $37,130 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 2015
30 June 2014
Assets
Liabilities
Assets
Liabilities
$
333,334
$
7,761
$
109,085
$
44,140
59
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
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:
Note
Floating
interest
rate
Fixed
interest
rate
Non-
interest
bearing
Total
$
$
$
$
Weighted
average
interest
rate
%
2015
Financial assets
Cash and cash equivalents
Trade and other
receivables
Financial liabilities
Trade and other payables
2014
Financial assets
Cash and cash equivalents
Trade and other
receivables
Financial liabilities
Trade and other payables
18(a)
918,718
8
-
918,718
13
Note
-
-
-
-
-
334,763
1,253,481
2.41
17,218
351,981
17,218
1,270,699
47,931
47,931
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
13
-
262,310
-
1,263,909
11,954
13,234
11,954
1,539,453
-
-
68,578
68,578
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
2014.
Consolidated
Profit or (Loss)
30 June 2015
Variable rate instruments
Cash flow sensitivity (net)
30 June 2014
Variable rate instruments
Cash flow sensitivity (net)
100bp
decrease
$
(12,386)
(12,386)
(15,907)
(15,907)
100bp
increase
$
12,386
12,386
15,907
15,907
60
100bp
increase
$
Equity
100bp
decrease
$
12,386
12,386
15,907
15,907
(12,386)
(12,386)
(15,907)
(15,907)
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
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 explores for a variety of minerals including gold, silver, zinc, lead and copper, 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.
61
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
21.
FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (continued)
(c)
Liquidity and capital risk (continued)
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.
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
2015
Financial liabilities
Trade and other payables
Total Financial Liabilities
2014
Financial liabilities
Trade and other payables
Total Financial Liabilities
Within 1
year
$
47,931
47,931
Within 1
year
$
68,578
68,578
Between 1
and 5
years
$
-
-
Between 1
and 5
years
$
-
-
After 5
years
$
-
-
After 5
years
$
-
-
22.
INVESTMENT IN CONTROLLED ENTITIES
(a) Particulars in relation to subsidiaries
Entity
Country of
incorporation
Equity
holding
Equity
holding
Class of
Shares
Parent Entity
Carnavale Resources Limited
Subsidiaries
Carnavale Petroleum Pty Ltd
Tojo Minerals Pty Ltd
Subsidiaries of Tojo Minerals Pty Ltd
Rattler Holdings Inc.
Rattler Minerals Arizona LLC
Rattler Minerals Nevada LLC
2015
%
2014
%
100
100
100
100
100
100
-
-
-
-
Ord
Ord
Ord
Ord
Ord
Australia
Australia
USA
USA
USA
62
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
22.
INVESTMENT IN CONTROLLED ENTITIES - continued
(b) Terms and conditions of loans to related parties
Loan advances have been made to subsidiaries noted in the table above. The loans are interest free,
unsecured and repayable only when the borrower’s cash flow permits. The recoverability of these
loans is dependent upon the successful development and exploitation of the areas of interest currently
being explored by the parent’s subsidiary entities.
(c) Risk exposure
Refer to Note 21 for information on the Group’s and parent entity’s exposure to credit,
exchange and interest rate risk.
foreign
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 in the mineral exploration industry in USA
and investing activities in Australia.
2015
Business segments
Revenue
Other external revenue
Total segment revenue
Results
Operating loss before income tax
Income tax benefit
Net loss
Assets
Segment assets
Non-current assets acquired
Liabilities
Segment liabilities
Other segment information
Depreciation
2014
Business segments
Revenue
Other external revenue
Total segment revenue
Results
Operating loss before income tax
Income tax benefit
Net loss
Assets
Segment assets
Non-current assets acquired
Liabilities
Segment liabilities
Other segment information
Depreciation
Investing
Australia
$
Mineral
Exploration
USA
$
Eliminations
Consolidated
$
$
76,718
76,718
-
-
(525,436)
(26,892)
1,292,694
-
36,319
2,750
1,316,156
1,279,144
11,612
Investing
Australia
$
Mineral
Exploration
USA
$
38,545
38,545
-
-
-
(535,582)
(411,537)
-
411,537
-
-
1,562,388
-
68,578
2,750
63
-
-
-
-
-
-
-
76,718
76,718
(552,328)
-
(552,328)
2,608,850
1,279,144
47,931
2,750
Eliminations
Consolidated
$
$
-
-
-
-
-
-
-
38,545
38,545
(947,119)
-
(947,119)
1,562,388
411,537
68,578
2,750
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
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
2015
$
999,559
1,575,867
2,575,426
36,318
36,318
2014
$
1,549,574
12,814
1,562,388
68,578
68,578
2,539,108
1,493,810
25,179,894
1,301,356
(23,942,142)
2,539,108
23,614,874
1,249,661
(23,370,725)
1,493,810
2015
$
(571,417)
-
(571,417)
2014
$
(947,119)
-
(947,119)
(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 2015 or 30 June 2014.
(d)
Contractual commitments for the acquisition of property, plant or equipment
As at 30 June 2015 (30 June 2014 – $Nil), the parent entity did not have any contractual commitments
for the acquisition of property, plant or equipment.
64
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 2015 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 2015.
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.
ANDREW BECKWITH
Managing Director
Dated this 29th day of September 2015
Perth, Western Australia
65
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 2015, 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 Group 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.
66
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 Group’s financial position as at 30 June 2015 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
2015. 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
2015 complies with section 300A of the Corporations Act 2001.
HLB Mann Judd
Chartered Accountants
Perth, Western Australia
29 September 2015
M R W Ohm
Partner
67
CARNAVALE RESOURCES LIMITED
SHAREHOLDER INFORMATION
The shareholder information set out below was applicable as at 24 September 2015.
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
52
50
79
301
248
730
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
Andrew Beckwith, Penelope Beckwith and Penand Pty Ltd
Number of Shares
18,960,000
16,161,370
4.
Unmarketable parcels
As at 21 September 2015 there were 262 shareholders with unmarketable parcels of shares.
5.
Top 20 shareholders
The names of the twenty largest shareholders as at 21 September 2015, who hold 54.57% 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
J P Morgan Nominees Australia Ltd
Vienna Holdings Pty Ltd
Continue reading text version or see original annual report in PDF format above