More annual reports from Carnavale Resources:
2023 ReportABN 49 119 450 243
AND CONTROLLED ENTITIES
ANNUAL REPORT
FOR THE YEAR ENDED 30 JUNE 2020
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
Annual Mineral Resources and Ore Reserves Statement
Schedule of Mineral Concession Interests
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CARNAVALE RESOURCES LIMITED
CORPORATE DIRECTORY
DIRECTORS
Ron Gajewski
Andrew Beckwith
Rhett Brans
COMPANY SECRETARY
Paul Jurman
PRINCIPAL AND REGISTERED
OFFICE
Level 2, Suite 9
389 Oxford Street
Mount Hawthorn WA 6016
Telephone:
Facsimile:
Email:
Website:
(08) 9380 9098
(08) 9380 6761
admin@carnavaleresources.com
www.carnavaleresources.com
AUDITORS
SHARE REGISTRY
SECURITIES EXCHANGE
HLB Mann Judd
Level 4, 130 Stirling Street
Perth WA 6000
Automic Group
Level 2, 267 St Georges Terrace
Perth WA 6000
Telephone: 1300 288 664
Australian Securities Exchange
Level 40, Central Park
152-158 St Georges Terrace
Perth WA 6000
ASX CODE
CAV
CAVOA
1
CARNAVALE RESOURCES LIMITED
REVIEW OF OPERATIONS
Introduction
Carnavale Resources Limited (“Carnavale” or “Company”) is an Australian based mineral exploration company
with a strategy to acquire and explore high quality advanced exploration and development projects, prospective
for strategic minerals associated with the rapidly increasing demand within the electric battery sector and other
new-age disruptive technologies, together with the gold, nickel and copper resource sector.
The Company is currently exploring and advancing the Grey Dam Nickel Project, located 74km east of
Kalgoorlie, Western Australia and during the period secured the right to acquire up to 80% of the Mt Alexander
Nickel Project, which covers approximately 24km2 of the prospective granite greenstone belt that hosts the
Cathedrals Ni-Cu-Co-PGE project, owned by St George Mining Limited.
Post the reporting period, Carnavale secured the right to acquire 80% of the high-grade Kookynie Gold Project
from Western Resources Pty Ltd, located west of the Kookynie townsite and 60km south of Leonora. The
Project consists of 3 tenements E40/355, P40/1380 and P40/1381.
Figure 1
Project
Location Plan - Grey Dam Nickel Project, Mt Alexander Nickel Project and Kookynie Gold
Management boosted for success
To advance the technical development of Carnavale’s projects, the Company is pleased to have secured the
services of Exploration consultants, Mr Allan Kneeshaw and Mr Humphrey Hale.
Mr Kneeshaw was commissioned in October 2019 to review the Company’s exploration projects, focussing on
the prospectivity for nickel sulphide mineralisation across Grey Dam and Mt Alexander. In addition, Mr
Kneeshaw has been instrumental in the review process of new projects for Carnavale, including the high-grade
Kookynie Gold Project.
2
CARNAVALE RESOURCES LIMITED
REVIEW OF OPERATIONS
After the reporting period, Carnavale appointed Mr Humphrey Hale as consultant to assist in managing the
exploration activities. Mr Hale’s role is to drive success at Carnavale’s projects and review possible future
opportunities for the Company.
Mr Hale is well known to the Carnavale team having worked alongside both Mr Kneeshaw and Mr Beckwith at
AngloGold Ashanti (AGA) whilst managing the substantial drill out for the underground Feasibility Study at
Sunrise Dam Gold Mine.
Mr Hale was also Managing Director at Wolf Minerals Limited (Wolf) from its IPO, in early 2007 until January
2014. Under Mr Hale’s management, Wolf acquired and developed a substantial tungsten and tin deposit in
Europe, taking the project from initial review to construction.
Subsequently, Mr Hale was a Director at ASX listed Infinity Minerals Limited (formerly Plymouth Minerals
Limited) and worked as a consultant to several ASX listed and unlisted junior exploration companies including
Liontown Resources Limited, Chalice Gold Mines Limited and Erinbar Limited.
Grey Dam Ni-Co Project, WA, Australia
(Carnavale 100% of M28/378 and E28/1477 and option to acquire 80% of E28/2587, E28/2567, E28/2682,
E28/2760 and E28/2506)
In late June 2019, Carnavale secured the rights to earn 80% in the adjoining tenement E28/2587 to the Grey
Dam project from Simon Buswell-Smith and in November 2019 also secured the right to acquire up to 80% of
the adjacent tenement portfolio held by Mithril Resources Limited (ASX: MTH or Mithril) (E28/2567, E28/2682,
E28/2760, and E28/2506). The Grey Dam Nickel Project is in the Kurnalpi region approximately 80km east of
Kalgoorlie, Western Australia. These acquisitions significantly increased the Company’s overall footprint at the
Grey Dam Nickel Project.
The expanded Grey Dam Nickel Project now covers 108km2 of prospective and contiguous tenure and 30km
of bedrock ultramafic/mafic sequences prospective for Nickel Sulphide (NiS) style mineralisation (Figure 1).
The Grey Dam Nickel Project hosts a near surface laterite resource and is also considered prospective for
high value Ni-Cu sulphide style mineralisation. The Company previously completed exploration activities
focussed on testing the two folded prospective ultramafic sequences for nickel-cobalt mineralisation. Drilling
in the nose of the fold closure resulted in a shallow laterite nickel-cobalt resource (14.6Mt @ 0.75% Ni and
0.049% Co JORC 2012). Whilst this exploration was successful, Carnavale believes that high value nickel
sulphide can also be discovered at the Project.
Carnavale is currently focussed on discovering Kambalda style, nickel sulphide mineralisation associated with
the ultramafic mafic sequences at the Grey Dam Nickel Project. The Project covers two ultramafic/mafic
sequences prospective for nickel sulphide (NiS), komatiite hosted mineralisation, similar to the nearby Black
Swan and Silver Swan Ni Mines, located 50km to the west (Figure 2) and at Wellington, Acra, Pinnacles and
Wyo Well resource areas.
The host sequence at Black Swan is considered comparable to the two host sequences (A and B) at the Grey
Dam Project (Figure 3). The large Bulong nickel and cobalt deposit is also evident of the shallow laterite style
of deposit in the region and is a direct comparison of the Grey Dam laterite Ni-Co resource and provides longer
term exploration potential.
A detailed review of all previous exploration within the Grey Dam tenement package has been completed and
defines two prospective ultramafic sequences that have demonstrated evidence of Ni sulphide mineralisation
along strike and existing anomalous exploration targets highlighted.
The Company commissioned a fixed loop EM (FLEM) geophysical survey to test these areas of coincident
copper, nickel, and platinum mineralisation. The survey outlined many strong conductors plus additional minor
conductors, separate from the Ni-Co laterite resource (Figure 3). The EM survey areas defined direct drill
targets. Data collection of the ground EM grids was completed by Vortex Geophysics and processing/modelling
was finalised with geophysical consultants, Resource Potentials.
Whilst conducting the FLEM survey an additional area was identified, that highlighted conductivity, adjacent to
and outside the planned survey area. The FLEM survey was extended to include this new anomaly. This
extension to the survey identified a strong conductor (Target 3) that will be drill tested in the forthcoming
diamond drilling campaign.
3
CARNAVALE RESOURCES LIMITED
REVIEW OF OPERATIONS
Figure 2
Regional setting of Carnavale’s Grey Dam Project (Blue) and new tenement area (Black)
Figure 3 Grey Dam Project showing EM targets and reconnaissance UFF soil traverses
4
CARNAVALE RESOURCES LIMITED
REVIEW OF OPERATIONS
The FLEM survey defined 4 very strong, high-priority conductors (i.e. Targets 1 to 4 up to 5000 siemens
conductance) plus a number of lesser conductors (Figure 4).
As previously noted, past exploration over the prospective Ni Sequence B is limited (Figure 3). This sequence
is known to host other sulphide style mineralisation along strike and external to the project area.
Reconnaissance ultrafine fraction (UFF) soil sampling has been completed along 8 regional traverses where
interpreted shallow bedrock is expected.
The UFF soil samples have been submitted to the laboratory and the Company has finalised a research
agreement with CSIRO to use this sampling data as part of a larger collaborative research study on the
application of the innovative UFF soil sampling techniques to detect Ni sulphide mineralisation. Results of all
UFF soil sampling remain pending at the end of the period.
Subsequent to the end of the financial year, Carnavale commenced a program of 1,500m of RC and diamond
drilling, targeting nickel sulphide mineralisation. The drilling program has been designed to test the strongest
conductors identified by the recent fixed loop electro-magnetic (FLEM) geophysical survey, at the Grey Dam
Nickel Project. It is anticipated the program will be completed in October 2020.
Subject to positive drilling results, additional surface EM surveys would be planned to test strike extensions of
the ultramafic sequence that occur between Target 1 and 2 (Figure 4).
Figure 4
EM targets and geology (priority one - red conductors)
5
CARNAVALE RESOURCES LIMITED
REVIEW OF OPERATIONS
Acquisition terms
As detailed above, Carnavale secured an option to earn 80% of the prospective tenement package (E28/2567,
E28/2682, E28/2760, and E28/2506) as outlined in the previous ASX release “Carnavale expands Nickel
Sulphide potential at Grey Dam, WA” dated 11 November 2019, on the following terms:
Upon signing of the agreement Carnavale paid a non-refundable Option Fee of $20,000.
Carnavale has a three (3) year period (Option Period) from signing the agreement during
which Carnavale has the sole right to explore the tenements at its sole cost and risk.
Carnavale has the right to withdraw from the agreement at any time by providing 30
business days written notice and leaving the tenements in good standing.
Carnavale may elect to acquire 80% of the tenements by payment of $250,000 to Mithril
within 14 business days anytime within the Option Period.
On Carnavale’s decision to acquire 80% equity in the tenements, Mithril must elect
within 30 business days to either:
Transfer 100% equity in the tenements to Carnavale and receive a 1% NSR
royalty on all commodities produced from the Tenements; or
Enter into a formal Joint Venture agreement, based on the following key
terms and conditions:
The initial interest of the parties shall be Carnavale 80% and Mithril 20%.
The parties are required to contribute to expenditure on a pro rata basis.
Carnavale shall be the initial joint venture manager.
Standard management and pre-emptive rights terms.
Mt Alexander (Ni-Cu-Co-PGE) Project, Australia
(Option to acquire 80% of E29/960, E29/961 and P29/2356)
During the period, Carnavale secured the right to acquire up to 80% of the Mt Alexander Project, which covers
approximately 24km2 of the prospective granite greenstone belt that hosts the Cathedrals Ni-Cu-Co-PGE
project, owned by St George Mining Limited (Figure 5) (ASX release “New Mt Alexander Nickel Sulphide
Project, WA” dated 5 December 2019).
At St George Mining’s Cathedral, the massive nickel-copper-cobalt-PGE (platinum group elements)
mineralisation is high-grade and hosted by mafic intrusions within the poorly explored granite-greenstone belt.
The intrusions have been emplaced along ENE trending structures and represents a new style of
mineralisation in the region. Early low-cost exploration activities, using a combination of mapping and surface
rock chip sampling followed by EM geophysical surveys, has been highly successful in delineating direct drill
targets along the Cathedrals Trend (Figure 6).
Carnavale has interpreted a series of similar ENE trending structures through the project area and review of
previous exploration data indicates very limited exploration has tested these targets. Very limited outcrop
occurs throughout the project area and the Company has undertaken low cost UFF soils sampling as a
technique to assess the potential for Ni sulphide mineralisation in bedrock.
The UFF soil program comprised 10 north-south traverses on 500m spaced lines across the entire Project
area for a total of 505 samples taken at 50m to 100m intervals along the lines (Figure 5). The sampling was
designed to provide the best coverage and resolution to the ENE target structures, similar to those that host
the nickel-copper-cobalt-platinum mineralisation discovered by St George Mining Limited to the immediate
north.
The UFF soil geochemistry is designed to provide explorers with a very sensitive method to look beneath the
thin transported cover. This information is also complimented with mapping and Sentinel satellite imagery to
create a detailed combined regolith and geology map (Figure 5). This data and detailed interpretation shows
that most of the tenement package is covered by thin transported material with granite bedrock and ENE
trending mafic intrusions similar to the Cathedrals trend (Figure 6).
6
CARNAVALE RESOURCES LIMITED
REVIEW OF OPERATIONS
Results from the UFF soil program were received after the reporting period. The UFF soil data has been
integrated and domained to the regolith. The data was levelled against calcium content to help domain the
results with regard to the regolith and geology. The combined Additive Index, results from the levelled soil
data. The UFF soil data has successfully defined multiple, discrete anomalous areas in multiple elements, with
long strike lengths, that show strong correlation with he interpreted target domains within ENE trending
structures.
The data shows overlapping geochemical signatures in platinum, copper and nickel which flags the potential
prospectivity for Ni-Cu-Co-PGE sulphide rich mineralisation beneath the transported cover. The results
highlight a strong soil response in the north and west and in the central east of the Project area which are
aligned with the interpreted ENE trending structures. The soil anomalies are extensive, defining a strike length
in excess of 3km in the northwest zone and over 1.5km of strike length at the eastern zone.
Programs going forward
Carnavale is planning to follow up the newly defined UFF soil targets with ground EM surveys aiming to define
direct drilling targets. The EM surveys will be targeting nickel-copper-cobalt-platinum sulphide rich
mineralisation similar to the Cathedrals trend immediately to the north.
Figure 5 Data has been Ca-Normalised. Data shown as additive Index (Ni, Cu & Pt)
Acquisition terms
The terms of the Option Agreement to acquire an 80% interest in E29/960, E29/961 and P29/2356 are
summarised below:
Carnavale paid a non-refundable Option Fee comprising $10,000 cash and issued the
vendor 10 million fully paid shares in Carnavale.
Carnavale has a four (4) year period (Option Period) from signing the Agreement during
which Carnavale has the sole right to explore the tenements at its sole cost and risk and
maintain the tenements in good standing during the Option Period.
Carnavale has the right to withdraw from the Agreement at any time by providing 30
business days written notice and leaving the tenements in good standing.
7
CARNAVALE RESOURCES LIMITED
REVIEW OF OPERATIONS
Carnavale may at any time during the Option Period elect to acquire 80% of the
tenements by written notice (Option Exercise Notice) and payment of $250,000 in cash
or fully paid Carnavale shares at Carnavale’s election. The calculation for the quantum
of shares will be based on the 10 trading days VWAP of CAV shares preceding the date
of Option Exercise Notice.
Upon receipt of the Option Exercise Notice, the vendor will have 30 days to elect to
either
retain 20% equity in the tenements on a pro rata contributing Joint Venture
basis; or
transfer the remaining 20% equity in the tenements to Carnavale in
exchange for the grant of a 1% Net Smelter Royalty on the tenements.
Carnavale retains a first right of refusal to acquire the Royalty for $750,000.
Figure 6 Mt Alexander Project showing proximity to the Cathedrals Ni Sulphide Trend, interpreted
ENE trends and soil sampling traverses
Kikagati Tin Project, Southern Uganda
The Company withdrew from the Kikagati Tin Project having reviewed the drilling data in detail and considered
the highly nuggetty nature of the mineralisation and specific structural controls on mineralisation would make
it difficult to define a JORC compliant resource capable of supporting a large scale, economic development.
8
CARNAVALE RESOURCES LIMITED
REVIEW OF OPERATIONS
Business Development
The Company continues to actively evaluate new projects ranging from early greenfields exploration to
advanced near-term resource potential with a primary focus on Tin, Lithium, Cobalt, Silver, Nickel, Gold and
Copper in prospective geological regions.
Corporate
Capital Raisings and Share issues
In July 2019, Carnavale completed a non-renounceable entitlement issue to existing shareholders on the basis
of one share for every one share held at the record date at an issue price of $0.003 per share together with
one free attaching option for every 2 shares issued (exercisable at $0.007 on or before 30 September 2020)
(“Rights Issue”). The Rights Issue closed on 19 July 2019 and shareholders subscribed for 389,827,255
shares and 194,913,609 options raising $1.169 million. In August 2019, under the terms of the Rights Issue,
the Company placed the majority of the Shortfall Securities raising a further $1.058 million through the issue
of 352,576,814 shares and 176,288,402 options.
The funds raised were applied towards ongoing exploration activities at the Company’s Kikagati Tin Project in
Uganda, Grey Dam Project in Western Australia and for working capital.
In July 2019, the Company issued 37.5 million options (exercisable at $0.007 on or before 30 September 2020)
to sophisticated and professional investors who participated in a placement in May 2019 for 75 million fully
paid shares at an issue price of $0.003 each.
In September 2019, the Company announced the appointment of Mr. Klaus Eckhof as a Corporate and
Technical Advisor and agreed to issue Mr Eckhof a total of 99 million performance rights with an expiry date
of 31 December 2020. Tranche 1, 2 and 3 performance rights (each tranche comprising 33 million performance
rights) have a market vesting condition being a daily volume weighted average share price of at least $0.007,
$0.009 and $0.011 respectively over a consecutive 15 trading days.
In December 2019, the Company paid $10,000 cash and issued 10 million shares in Carnavale as partial
consideration for the right to acquire up to 80% of the Mt Alexander Project.
Information relating to Previous Disclosure
Information relating to Exploration Results and Mineral Resources associated with previous disclosures
relating to the Grey Dam Project Mt Alexander Project and the Kikagati Project in this report has been
extracted from the following ASX announcements:
Carnavale expands Nickel Sulphide potential at Grey Dam, WA dated 11 Nov 2019.
MTH, New Exploration partner for the Kurnalpi Project, dated 11 Nov 2019.
New Mt Alexander Nickel Sulphide Project, WA dated 5 Dec 2019.
Strong EM conductors defined at Grey Dam dated 3 Jun 2020.
Grey Dam Ni-Co Mineral Resource Update dated 26 February 2019.
The Company confirms that it is not aware of any new information or data that materially affects the information
included in the original market announcements. The Company confirms that the form and context in which the
Competent Person’s findings are presented have not been materially modified from the original market
announcements.
Statements regarding Carnavale Resources’ plans with respect to its mineral properties are forward-looking
statements. There can be no assurance that Carnavale Resources’ plans for development of its mineral
properties will proceed as currently expected. There can also be no assurance that Carnavale Resources’ will
be able to confirm the presence of additional mineral deposits, that any mineralisation will prove to be economic
or that a mine will successfully be developed on any of Carnavale Resources’ mineral properties.
9
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 (“Group”) for the year ended 30 June 2020 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 previously held directorships with mining companies listed in both Canada and Australia.
Mr Gajewski holds no other listed company directorships and has held no other listed company directorships in
the last 3 years.
Andrew Beckwith, BSc Geology, AusIMM
Managing Director – to 30 June 2020, Technical Director from 1 July 2020
Appointed 29 July 2014
Mr Beckwith is a geologist, with a career spanning 30 years across the Australian mining industry. Roles include
senior technical and management roles within a range of companies from large gold producers to small explorers
through to corporate positions in ASX listed companies including Managing Director at Westgold and Technical
Director at De Grey Mining. He has been involved in many successful exploration teams including the early
stages of the multi-million ounce Tropicana gold discovery (AngloGold Ashanti) and oversaw the growth in
resources at Westgold, through a combination of organic exploration and corporate acquisition to established
~5.0M ounces in gold resources, which has gone on to become a leading Australian gold producer. More
recently at De Grey, he has been intimately involved with the rapid growth of gold resources from 0.3Moz to the
current 2.2Moz, and the recent discovery of the large Hemi deposit.
During the past three years he has also served as a director of the following listed companies:
Company
De Grey Mining Limited
Date appointed
26 October 2017
Date ceased
-
Rhett Brans, MIEAust CPEng
Independent Non-Executive Director
Appointed 17 September 2013
Mr Brans is a civil engineer with more than 40 years of experience in project development of treatment plants
and mine developments and an experienced director having fulfilled directorship responsibilities in a number of
ASX listed mining companies since 2004.
Throughout his career, Mr Brans has been involved in the co-ordination and management of scoping and
feasibility studies and the design and construction of mineral treatment plants across a range of commodities
and geographies including gold in Ghana, copper and lithium in the DRC, graphite in Mozambique, gold, copper,
coal and mineral sands in Australia. He has extensive experience as an owner’s representative for several
successful mine feasibility studies and project developments.
During the past three years he has also served as a director of the following ASX listed companies:
Company
Australian Potash Limited
AVZ Minerals Limited
Syrah Resources Limited
Date appointed
9 May 2017
5 February 2018
12 June 2013
Date ceased
-
-
31 December 2017
10
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
company secretary of Tempest Minerals Limited and Platina Resources Limited.
Directors’ interests
The relevant interests in the shares and options of the Company at the date of this report are as follows:
Name
Ordinary shares
R Gajewski
A Beckwith
R Brans
120,728,409
31,361,370
4,000,000
Listed Options Performance
Rights
15,000,000
15,000,000
3,000,000
-
2,000,000
1,000,000
No director has an interest, whether directly or indirectly, in a contract or proposed contract with the Group.
PRINCIPAL ACTIVITIES
The principal activity of the Group during the course of the year was acquiring and exploring mineral interests,
prospective for precious metals and energy.
RESULTS AND DIVIDENDS
The consolidated loss after tax for the year ended 30 June 2020 was $2,355,740 (2019: $479,919). No dividends
were paid during the year and the Directors do not recommend payment of a dividend.
LOSS PER SHARE
Basic loss per share for the year was 0.17 cents (30 June 2019: 0.07 cents).
REVIEW OF OPERATIONS / OPERATING AND FINANCIAL REVIEW
The Group is currently engaged in mineral exploration for metals in Australia. A review of the Group’s
operations, including information on exploration activity and results thereof, financial position, strategies and
projects of the Group during the year ended 30 June 2020 is provided in this Annual 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.
The Coronavirus (COVID-19) pandemic has to date not had a significant direct financial impact on the Group.
Staff have been able to work from home and have remained in good health. The Group has refocussed its
activities on its Western Australian projects and the Company is on track to complete the majority of its planned
exploration program during the current field season. The majority of the planned program for the 2020/21
financial year is focussed on the WA projects. The Company will engage with WA based consultants for planned
exploration programs, including for drilling services. Completion of the program is subject to there being no
internal travel restrictions or health concerns associated with travel in Western Australia, and contractors
delivering agreed services.
As an exploration entity, the Group has no operating revenue or earnings and consequently the Group’s
performance cannot be gauged by reference to those measures. Instead, the Directors consider the Group’s
performance based on 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.
11
CARNAVALE RESOURCES LIMITED
DIRECTORS’ REPORT
REVIEW OF OPERATIONS / OPERATING AND FINANCIAL REVIEW (continued)
The Group’s business strategy for the financial year ahead and, in the foreseeable future, is to continue
exploration activity on the Group’s existing mineral projects, identify and assess new mineral project
opportunities throughout the world and review development strategies where individual projects have reached
a stage that allows for such an assessment. Due to the inherent risky nature of the Group’s activities, the
Directors are unable to comment on the likely results or success of these strategies. The Group’s 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 a 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
cobalt, nickel, tin, gold, copper, silver and other mineral deposits throughout the world.
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 Annual Report.
SUBSEQUENT EVENTS
No matter or circumstance has arisen which has significantly affected, or may significantly affect, the operations
of the Group, the results of those operations or the state of affairs of the Group in subsequent financial years
other than the matters referred to below.
In August 2020, the Company signed an exclusive and binding Option Agreement with Western
Resources Pty Ltd, a West Australian private company, to acquire 80% of the high-grade Kookynie Gold
Project (“KGP”, “Project”). Following completion of the due diligence period, the Company paid an
option fee of $100,000 cash and issued 37.5 million ordinary shares to Western Resources Pty Ltd. The
Company also issued 1.5 million shares to Gold Geological Consulting Pty Ltd as a fee for facilitating
the agreement for the Project.
In September 2020, the Company issued 33 million shares to Mr Klaus Eckhof arising from the
conversion of 33 million performance rights, which vested upon the completion of the Company’s Shares
having traded at a volume weighted average price of at least $0.007 for a consecutive period of at least
15 business days. The performance rights were approved by shareholders at the 2019 Annual General
Meeting.
In September 2020, the Company agreed to purchase 100% of tenement P40/1480 at the Kookynie
Gold Project for a total consideration of $10,000 (paid) in cash plus the issue of 1.5 million ordinary
shares in CAV.
Subsequent to year-end and prior to the date of this report, the Company has allotted 141,334,145
ordinary fully paid shares following the exercise of 141,334,145 CAVOA listed options exercisable at
$0.007 raising $989,339.
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.
12
CARNAVALE RESOURCES LIMITED
DIRECTORS’ REPORT
DIRECTORS’ MEETINGS
The number of meetings of the Directors and the number of meetings attended by each Director during the year
ended 30 June 2020 were:
Name
R Gajewski
A Beckwith
R Brans
Eligible to attend
2
2
2
Attended
2
2
2
There were 2 directors’ meetings held during the year. However, Matters of Board business have also been
resolved by circular resolutions of Directors, which are a record of decisions made at a number of informal
meetings of the Directors held to control, implement and monitor the Group’s activities throughout the period.
At present, the Company does not have any formally constituted committees of the Board. The Directors
consider that the Group is not of a size nor are its affairs of such complexity as to justify the formation of special
committees.
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 among
comparative companies and industry generally. It examines terms and conditions for employee 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 Group 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 Group 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 Directors, 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 Group. However, to align Directors’ interests with shareholder
interests, the directors are encouraged to hold shares in the Company.
Voting and comments made at the Company’s 2019 Annual General Meeting (AGM) – At the 2019 AGM,
100% of the votes received supported the adoption of the remuneration report for the year ended 30 June 2019.
The Company did not receive any specific feedback at the AGM regarding its remuneration practices.
13
CARNAVALE RESOURCES LIMITED
DIRECTORS’ REPORT
Details of specified key management personnel (KMP)
Directors
R Gajewski
A Beckwith
R Brans
Executive Chairman
Managing Director
Technical Director
Non-Executive Director
Appointed 18 October 2006
From 29 July 2014 – 30 June 2020
From 1 July 2020
Appointed 17 September 2013
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 start of the year, relative comparative information
and independent expert advice.
With effect from 1 July 2017, Mr Gajewski’s remuneration arrangement was subject to a consulting fee of $3,000
per month (plus GST) for his role as a part-time executive Chairman. Mr Gajewski is entitled to charge consulting
fees for services over and above his role as part-time executive Chairman as agreed by the Board.
Effective from 1 December 2015, Mr Beckwith reverted to a monthly director fee of $2,000 per month (plus
GST). Mr Beckwith is entitled to charge consulting fees for services over and above his role as part-time
Managing Director / Technical Director as agreed by the Board.
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 Group or a related body corporate with
a director, a firm of which a director is a member or an entity in which a director has a substantial financial
interest. This statement excludes a benefit included in the aggregate amount of emoluments received or due
and receivable by directors and shown in the Remuneration Report, prepared in accordance with the
Corporations regulations, or the fixed salary of a full time employee of the Group.
Remuneration of KMP:
Remuneration for the year ended 30 June 2020
Short-term benefits
Directors’
fees
$
Consulting
fees
$
Post-
employ-
ment
Super-
annuation
$
Equity-
based
compens-
ation
Total
Proportion
related to
performance
$
$
%
Directors
R Gajewski
A Beckwith
R Brans
Total
36,000
24,000
24,000
84,000
24,000
51,750
-
75,750
-
-
2,280
2,280
41,902
41,902
8,380
92,184
101,902
117,652
34,660
254,214
41.1
35.6
24.2
Remuneration for the year ended 30 June 2019
Short-term benefits
Directors’
fees
$
Consulting
fees
$
Post-
employ-
ment
Super-
annuation
$
Equity-
based
compens-
ation
Total
Proportion
related to
performance
$
$
%
Directors
R Gajewski
A Beckwith
R Brans
Total
36,000
24,000
24,000
84,000
12,000
58,140
-
70,140
-
-
2,280
2,280
38,811
38,811
7,762
85,384
86,811
120,951
34,042
241,804
44.7
32.1
22.8
Accounting, secretarial and corporate service fees of $55,811 (2019: $70,402) and rental fees of $30,000 (2019:
$30,000) were paid or payable during the year ended 30 June 2020 on normal terms and conditions to Corporate
Consultants Pty Ltd, a company in which Mr Gajewski is a director and has a beneficial interest.
Remuneration Options granted as part of remuneration for the year ended 30 June 2020
The Company has not granted any options during the financial year to any Directors or officers as part of their
remuneration.
14
CARNAVALE RESOURCES LIMITED
DIRECTORS’ REPORT
Performance Rights granted as part of remuneration for the year ended 30 June 2020
The Company has not granted any performance rights during 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 2019
Grant date
Number
granted
Number
vested
at year
end
Average fair
value per
performance
right at grant
date
Maximum
total
value of
grant yet
to vest
Expiry date
Directors
R Gajewski
A Beckwith
R Brans
10 August 2018
10 August 2018
10 August 2018
15,000,000
15,000,000
3,000,000
-
-
-
$0.0082
$0.0082
$0.0082
$41,787 30 June 2021
$41,787 30 June 2021
$8,358 30 June 2021
In August 2018, the Company issued a total of 36 million performance rights with an expiry date of 30
June 2021 as part of the remuneration packages of the Board and the Company Secretary, pursuant to
shareholder approval received on 26 July 2018. Tranche 1, 2 and 3 performance rights (each tranche
comprising 12 million performance rights) have a market vesting condition being a daily volume weighted
average share price of at least $0.03, $0.04 and $0.05 respectively over a consecutive 10 trading days.
Refer to note 13 (d) for details of the valuation of these performance rights. The value of these
performance rights is being brought to account over the vesting period.
Other than the above, no performance rights in Carnavale Resources Limited were granted to, were
forfeited by, or were exercised by key management personnel of the Company (as part of their
remuneration).
The Company has not granted any performance rights since the end of the financial year to any Directors
or officers as part of their remuneration.
Shareholdings of key management personnel
Year ended 30 June 2020
Directors
R Gajewski
A Beckwith
R Brans
Total
Balance at
1 July 2019
Granted as
remuneration
Net other
change (i)
Balance at 30
June 2020
48,291,364
26,661,370
2,000,000
76,952,734
-
-
-
-
48,291,364
4,700,000
2,000,000
54,991,364
96,582,728
31,361,370
4,000,000
131,944,098
(i)
In July 2019, the Company completed a Rights Issue to existing shareholders based on one share
for every one share held at the record date at an issue price of $0.003 per share together with one
free attaching option for every 2 shares issued (exercisable at $0.007 on or before 30 September
2020). Mr Gajewski and Mr Brans subscribed for their entitlement in full and Mr Beckwith subscribed
for 4,000,000 shares. In September 2019, Mr Beckwith received 700,000 Shares which were
distributed as part proceeds of Mr Beckwith’s father’s deceased estate.
Option holdings of key management personnel
Year ended 30 June 2020
Balance at 1
July 2019
Granted as
remuneration
Net other
change (i)
Net other
change (ii)
Balance at 30
June 2020
Directors
R Gajewski
A Beckwith
R Brans
Total
13,000,000
4,000,000
1,000,000
18,000,000
-
-
-
-
(13,000,000)
(4,000,000)
(1,000,000)
(18,000,000)
24,145,681
2,000,000
1,000,000
27,145,681
24,145,681
2,000,000
1,000,000
27,145,681
(i)
(ii)
The options expired unexercised.
Refer to (i) above under Shareholdings of key management personnel.
15
CARNAVALE RESOURCES LIMITED
DIRECTORS’ REPORT
Performance Rights holdings of key management personnel
Year ended 30 June 2020
Directors
R Gajewski
A Beckwith
R Brans
Total
Balance at 1
July 2019
Granted as
remuneration
Net other
change
Balance at 30
June 2020
15,000,000
15,000,000
3,000,000
33,000,000
-
-
-
-
-
-
-
-
15,000,000
15,000,000
3,000,000
33,000,000
Refer above for details of Performance Rights granted as part of remuneration for the year ended 30
June 2019.
End of Remuneration report
SHARE OPTIONS AND PERFORMANCE RIGHTS
As at the date of this report, there are 267,367,866 Listed Options, 30,000,000 Unlisted Options and
102,000,000 performance rights on issue.
Listed Options (CAVOA)
Unlisted Options
Unlisted Options
Performance Rights
Performance Rights
Number
267,367,866
15,000,000
15,000,000
66,000,000
36,000,000
Exercise Price (cents)
0.7
1.0
1.5
-
-
Expiry Date
30 September 2020
31 July 2022
31 July 2022
31 December 2020
30 June 2021
These options and performance rights do not entitle the holder to participate in any share issue of the Company
or any other body corporate.
During the financial year, the Company issued options and performance rights as follows:
In July 2019, the Company allotted 37,500,000 free attaching options to sophisticated and professional
investors who participated in the May 2019 placement of 75,000,000 fully paid shares at an issue price
of $0.003 each to raise $225,000; and
In July and August 2019, the Company completed a non-renounceable entitlement issue to
shareholders on the basis of one share for every one share held at an issue price of $0.003 per share
together with one free attaching option exercisable at $0.007 each and an expiry date of 30 September
2020 for every 2 shares issued. 194,913,609 options were allotted in July 2019 and a further
176,288,402 options were allotted in August 2019 following placement of the Shortfall Securities.
In September 2019, the Company appointed Mr. Klaus Eckhof as a Corporate and Technical Advisor
and agreed to issue Mr Eckhof a total of 99 million performance rights with an expiry date of 31
December 2020. Tranche 1, 2 and 3 performance rights (each tranche comprising 33 million
performance rights) have a market vesting condition being a daily volume weighted average share price
of at least $0.007, $0.009 and $0.011 respectively over a consecutive 15 trading days. 33,333,333
performance rights were issued on 6 September 2019 and 66,666,667 were issued on 22 November
2019, following receipt of shareholder approval.
Options issued after 30 June 2020 and up to the date of this report were as follows:
In August 2020 the Company issued a total of 15,000,000 Unlisted Options exercisable at $0.01 on or
before 31 July 2022 and 15,000,000 Unlisted Options exercisable at $0.015 on or before 31 July 2022
to consultants, Mr Allan Kneeshaw and Mr Humphrey Hale who are responsible for managing the
ongoing exploration activities.
Subsequent to year-end and prior to the date of this report, the Company has issued 141,334,145 ordinary fully
paid shares following the exercise of 141,334,145 CAVOA listed options exercisable at $0.007 raising $989,339.
Subsequent to year-end and prior to the date of this report, the Company has issued 33,000,000 ordinary shares
to Mr Eckhof on vesting of 33,000,000 performance rights with an expiry date of 31 December 2020.
16
CARNAVALE RESOURCES LIMITED
DIRECTORS’ 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 Group shall be indemnified out of the property of the Group against any liability incurred by him in
his capacity as Officer or agent of the Group 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 $9,082 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 2020 has been received and forms part
of the directors’ report and can be found on page 29 of the annual report.
NON - AUDIT SERVICES
There have been no non-audit services provided by the Group’s auditor during the year (2019: Nil).
Signed in accordance with a resolution of the directors made pursuant to s 298(2) of the Corporations Act 2001.
On behalf of the Directors.
__________________
RON GAJEWSKI
Chairman
Dated this 22nd day of September 2020.
Perth, Western Australia
17
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 2020 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.
The Board’s role is to govern the Company rather than to manage it. In governing the Company, the 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 laws,
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.
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.
From 1 July 2020, the responsibility for the day-to-day operation and administration of the Company was
delegated by the Board to the Executive Chairman.
18
CARNAVALE RESOURCES LIMITED
CORPORATE GOVERNANCE STATEMENT
The MD’s specific responsibilities included:
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 MD 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 information about any candidate to enable an informed
decision to be made on whether or not to elect or re-elect a director.
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 measurable 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 three staff (comprising the three directors), none of whom are women. There are no women
in senior executive positions or on the board.
19
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 MD / TD’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 MD 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
experience of the board. The categories considered necessary for this purpose are a blend of accounting and
finance, business, technical and administration skills.
It is the policy of the Company that new Directors undergo an induction process in which they are given a full
briefing on the Company. In order to achieve continuing improvement in Board performance, all Directors are
encouraged to undergo continual professional development. Specifically, Directors are provided with the
resources and training to address skills gaps where they are identified.
The Constitution of the Company requires one third of the directors, other than the MD, to retire from office at
each Annual General Meeting. Directors who have been appointed by the Board are required to retire from
office at the next Annual General Meeting and are not taken into account 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.
This selection, nomination and appointment process is detailed in the Board Charter on the company website.
20
CARNAVALE RESOURCES LIMITED
CORPORATE GOVERNANCE STATEMENT
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
Technical
Director
Non-executive
Director
/
Company
Secretary
Leadership
Strategy / Risk
Communication
Fundraising
Mining Industry
Governance
X
X
X
X
X
X
Health, safety and
environment
Financial acumen
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 the Company in office at the date 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).
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 three Directors, only Mr
Rhett Brans is considered to be independent and therefore the Company does currently not have a majority
of independent directors.
Mr Andrew Beckwith acted as the Managing Director of the Company up to 30 June 2020 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.
21
CARNAVALE RESOURCES LIMITED
CORPORATE GOVERNANCE STATEMENT
Effective from 29 July 2014 to 30 June 2020, 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
Company’s securities whilst that Director, officer or employee is in the possession of price sensitive
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.
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.
22
CARNAVALE RESOURCES LIMITED
CORPORATE GOVERNANCE STATEMENT
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 ensures it receives the required declarations in writing to the Board that the Company’s financial
statements present a true and fair view, in all material aspects, of the Company’s financial condition and
operational results and are in accordance with relevant accounting standards, that this is founded on a sound
system of risk management and internal compliance and control and that the Company’s risk management
and internal compliance and control system is operating efficiently and effectively. This representation is prior
to the Director’s approval of the release of the annual and half yearly accounts. This representation is made
after enquiry of, and representation by, appropriate levels of management.
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
and its operations, information about governance and information specifically targeted at keeping the
Company’s shareholders informed about the Company. In particular, where appropriate, after confirmation of
receipt by the ASX, the following are posted to the Company’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
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 Directors make themselves available to meet shareholders and regularly respond to enquiries made via
telephone or email. Periodic investor presentations to facilitate engagement with investors and other financial
market participants are also undertaken.
23
CARNAVALE RESOURCES LIMITED
CORPORATE GOVERNANCE STATEMENT
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 MD, is responsible for designing, implementing and reporting on the adequacy of
the Company’s risk management and internal control system. The Company’s risk management policy is
designed to provide the framework to identify, assess, monitor and manage the risks associated with the
Company’s business. The Company adopts practices designed to identify significant areas of business risk
and to effectively manage those risks in accordance with the Company’s risk profile. The risks involved in a
resources sector company and the specific uncertainties for the Company continue to be regularly monitored
and the MD and Executive Chairman 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:
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.
24
CARNAVALE RESOURCES LIMITED
CORPORATE GOVERNANCE STATEMENT
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 the remuneration of all Directors and other key management personnel
(if applicable) in its annual report.
The remuneration policy of Carnavale 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 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, 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 to shareholder approval) as it 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.
25
CARNAVALE RESOURCES LIMITED
CORPORATE GOVERNANCE STATEMENT
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 other key management personnel 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 (e.g. incentives options) are not permitted to enter into any
transactions that would limit the economic risk of options or other unvested entitlements.
26
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 2020, I declare that to the best of my knowledge and belief, there
have been no contraventions of:
a)
the auditor independence requirements of the Corporations Act 2001 in relation to the
audit; and
b)
any applicable code of professional conduct in relation to the audit.
Perth, Western Australia
22 September 2020
L Di Giallonardo
Partner
27
CARNAVALE RESOURCES LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2020
Revenue
Expenditure
Administrative expenses
Exploration expenditure impaired
Due diligence expenses
Foreign exchange loss
Share-based payments expense
Loss before related income tax benefit
Income tax benefit
Note
Consolidated
2020
$
28,381
28,381
(298,913)
(1,881,695)
-
(10,392)
(193,121)
2019
$
10,241
10,241
(358,639)
(18,608)
(5,314)
(14,453)
(93,146)
(2,355,740)
-
(479,919)
-
3
11
14
5
Net loss attributable to members of the parent entity
(2,355,740)
(479,919)
Other comprehensive income for the period, net of tax
-
-
Total comprehensive loss for the year
(2,355,740)
(479,919)
Loss per share
Basic – cents
Diluted – cents
16
16
(0.17)
(0.17)
(0.07)
(0.07)
The accompanying notes form part of these financial statements
28
CARNAVALE RESOURCES LIMITED
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2020
Current assets
Cash and cash equivalents
Receivables
Other assets
Total current assets
Non-current assets
Other assets
Exploration and evaluation expenditure
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
2020
$
2019
$
17(a)
8
9
1,189,773
25,413
10,819
1,226,005
191,201
8,271
10,850
210,322
10
11
12
13
14
15
20,000
1,006,965
1,026,965
20,000
2,388,399
2,408,399
2,252,970
2,618,721
76,610
76,610
463,886
463,886
76,610
463,886
2,176,360
2,154,835
31,154,097
1,749,227
(30,726,964)
2,176,360
28,969,953
1,556,106
(28,371,224)
2,154,835
The accompanying notes form part of these financial statements
29
CARNAVALE RESOURCES LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2020
Consolidated
Issued
capital
$
Reserves
$
Accumulated
losses
$
Total
$
Balance at 1 July 2018
28,510,898
1,462,960
(27,891,305)
2,082,553
Loss attributable to members of the
parent entity
Total comprehensive loss for the year
Shares and options issued during the
year (net of issue costs)
Fair value of performance rights issued
Balance at 30 June 2019
-
-
-
-
(479,919)
(479,919)
(479,919)
(479,919)
459,055
-
28,969,953
-
93,146
1,556,106
-
-
(28,371,224)
459,055
93,146
2,154,835
Issued
capital
$
Reserves
$
Accumulated
losses
$
Total
$
Balance at 1 July 2019
28,969,953
1,556,106
(28,371,224)
2,154,835
Loss attributable to members of the
parent entity
Total comprehensive loss for the year
Shares and options issued during the
year (net of issue costs)
Fair value of performance rights issued
Balance at 30 June 2020
-
-
-
-
(2,355,740)
(2,355,740)
(2,355,740)
(2,355,740)
2,184,144
-
31,154,097
-
193,121
1,749,227
-
-
(30,726,964)
2,184,144
193,121
2,176,360
The accompanying notes form part of these financial statements
30
CARNAVALE RESOURCES LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2020
Note
Consolidated
2020
$
2019
$
Cash flows from operating activities
Payments to suppliers
Payments for due diligence and project generation expenses
Interest received
Other income
Net cash outflows from operating activities
(412,484)
-
8,150
10,000
(394,334)
(246,307)
(5,313)
11,629
-
(239,991)
17(b)
Cash flows from investing activities
Payments for exploration and development expenditure
Payments for acquisition of exploration tenements
Payments for credit card bond
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
(727,897)
(30,000)
-
(757,897)
(1,558,484)
(228,055)
(20,000)
(1,806,539)
2,227,212
(76,450)
2,150,762
327,000
(4,563)
322,437
Net (decrease) / increase in cash and cash equivalents held
998,531
(1,724,093)
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate fluctuations on the balances of cash held
in foreign currencies
191,201
1,919,037
41
(3,743)
Cash and cash equivalents at the end of the financial year
17(a) 1,189,773
191,201
The accompanying notes form part of these financial statements
31
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
1.
CORPORATE INFORMATION
Carnavale Resources Limited is a company limited by shares, incorporated in Australia. The Company’s
shares are publicly traded on the Australian Securities Exchange.
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. For the purpose of preparing the consolidated financial statements, the Company
is a for-profit entity.
The financial report is presented in whole Australian dollars.
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 accounting policies detailed below have been consistently applied to all of the years presented
unless otherwise stated. The financial statements are for the Group consisting of Carnavale Resources
Limited and its subsidiaries.
(b) New, revised or amending Accounting Standards and Interpretations adopted
Standards and Interpretations applicable to 30 June 2020
In the year ended 30 June 2020, the Directors have reviewed all of the new and revised Standards and
Interpretations issued by the AASB that are relevant to the Group and effective for the current annual
reporting period. This includes consideration of AASB 16 Leases.
As a result of this review, the Group has applied AASB 16 from 1 July 2019.
AASB 16 replaces AASB 117 Leases and sets out the principles for the recognition, measurement,
presentation and disclosure of leases.
AASB 16 introduces a single lessee accounting model and requires a lessee to recognise assets and
liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value.
A lessee is required to recognise a right-of-use asset representing its right to use the underlying leased
asset and a lease liability representing its obligations to make lease payments. A lessee measures
right-of-use assets similarly to other non-financial assets (such as property, plant and equipment) and
lease liabilities similarly to other financial liabilities.
As a consequence, a lessee recognises depreciation of the right-of-use asset and interest on the lease
liability, and also classifies cash repayments of the lease liability into a principal portion and an interest
portion and presents them in the statement of cash flows applying AASB 107 Statement of Cash Flows.
AASB 16 substantially carries forward the lessor accounting requirements in AASB 117 Leases.
Accordingly, a lessor continues to classify its leases as operating leases or finance leases, and to
account for those two types of leases differently.
AASB 16 is effective from annual reporting periods beginning on or after 1 January 2019. A lessee can
choose to apply the Standard using a full retrospective or modified retrospective approach.
There is no material impact to profit or loss or net assets on the adoption of this new standard in the
current or comparative periods as the short term lease exemption in AASB 16 was utilised.
Standards and Interpretations in issue not yet adopted
The Directors have also reviewed all Standards and Interpretations in issue not yet adopted for the year
ended 30 June 2020.
As a result of this review the Directors have determined that there is no material impact of the Standards
and Interpretations in issue not yet adopted on the Group and, therefore, no change is necessary to
Group accounting policies.
32
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
2.
(c)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Statement of compliance
The financial statement of Carnavale Resources Limited (the Company) for the year ended 30 June
2020 was authorised for issue in accordance with a resolution of the Directors on 22 September 2020.
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 2020 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.
The financial statements of the subsidiaries are prepared for the same reporting period as the parent
company, using consistent accounting policies.
In preparing the consolidated financial statements, all intercompany balances and transactions, 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.
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.
33
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(e)
Income tax (continued)
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to
the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have
been enacted or substantively enacted at the balance date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in the
statement of comprehensive income.
(f) Exploration and evaluation expenditure
Exploration and evaluation expenditures in relation to each separate area of interest are recognised as
an exploration and evaluation asset in the year in which they are incurred where the following conditions
are satisfied:
(i)
(ii)
the rights to tenure of the area of interest are current; and
at least one of the following conditions is also met:
(a)
(b)
the exploration and evaluation expenditures are expected to be recouped through
successful development and exploration of the area of interest, or alternatively, by its sale;
or
exploration and evaluation activities in the area of interest have not at the reporting date
reached a stage which permits a reasonable assessment of the existence or otherwise of
economically recoverable reserves, and active and significant operations in, or in relation
to, the area of interest are continuing.
Exploration and evaluation assets are initially measured at cost and include acquisition of rights to
explore, studies, exploratory drilling, trenching and sampling and associated activities and an allocation
of depreciation and amortised of assets used in exploration and evaluation activities. General and
administrative costs are only included in the measurement of exploration and evaluation costs where
they are related directly to operational activities in a particular area of interest.
Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest
that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount.
The recoverable amount of the exploration and evaluation asset (for the cash generating unit(s) to which
it has been allocated being no larger than the relevant area of interest) is estimated to determine the
extent of the impairment loss (if any). Where an impairment loss subsequently 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.
(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.
34
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
2.
(i)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Employee benefits
Provision is made for the Group’s liability for employee benefits arising from services rendered by
employees to balance date (where applicable). Employee benefits expected to be settled within one
year together with entitlements arising from wages and salaries, annual leave and sick leave which will
be settled after one year, have been measured at the amounts expected to be paid when the liability is
settled, plus related on-costs. Other employee benefits payable later than one year have been
measured at the present value of the estimated future cash outflows to be made for those benefits.
Contributions are made by the Group to employee superannuation funds and are charged as expenses
when incurred (where applicable).
(j)
Impairment of assets
The Group assesses at the end of each reporting period whether there is objective evidence that a
financial asset or group of financial assets is impaired and makes an estimate 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).
An assessment is also made at each reporting date as to whether any previously recognised impairment
losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is
estimated. A previously recognised impairment loss is reversed only if there has been a change in the
estimates used to determine the asset’s recoverable amount since the last impairment loss was
recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount.
That increased amount cannot exceed the carrying amount that would have been determined, net of
depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is
recognised in profit or loss unless the asset is carried at 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.
(k)
Earnings / (loss) per share
Basic earnings / (loss) 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
of GST incurred is not recoverable from the Australian Tax Office (“ATO”). In these circumstances the
GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense.
Receivables and payables in the 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.
35
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(m)
Investments
All investments are initially recognised at cost, being the fair value of the consideration given and
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 instruments
Financial assets are measured at amortised cost if they are held within a business model whose
objective is to hold assets in order to collect contractual cash flows which arise on specified dates and
are solely principal and interest. All other financial instrument assets are classified and measured at fair
value through profit or loss unless the entity makes an irrevocable election on initial recognition to
present gains and losses on equity instruments (that are not held-for-trading) in other comprehensive
income. For financial liabilities, the portion of the change in fair value that relates to the Group’s credit
risk is presented in other comprehensive income.
Hedge accounting requirements align the accounting treatment with the Group’s risk management
activities. The Group does not currently have any impaired financial assets, financial liabilities with
changes in fair value due to credit risk presented in other comprehensive income, or financial
instruments requiring hedge accounting.
Impairment of financial assets
Financial assets may be impaired based on an expected credit loss model to recognise an allowance.
Such impairment is measured in a way that reflects: (a) an unbiased and probability-weighted amount
that is determined by evaluating a range of possible outcomes; (b) the time value of money; and (c)
reasonable and supportable information that is available without undue cost or effort at the reporting
date about past events, current conditions and forecasts of future economic conditions.
(o)
Foreign currency translation
Both the functional and presentation currency of Carnavale Resources Limited is Australian dollars.
Each entity in the Group determines its own functional currency and items included in the financial
statements of each entity are measured using that functional currency.
Transactions in foreign currencies are initially recorded in the functional currency by applying the
exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in
foreign currencies are retranslated at the rate of exchange ruling at the balance date.
All exchange differences in the consolidated financial report are taken to profit or loss with the exception
of differences on foreign currency borrowings that provide a hedge against a net investment in a foreign
entity. These are taken directly to equity until the disposal of the net investment, at which time they are
recognised in profit or loss.
Tax charges and credits attributable to exchange differences on those borrowings are also recognised
in equity. Non-monetary items that are measured in terms of historical cost in a foreign currency are
translated using the exchange rate as at the date of the initial transaction. Non-monetary items
measured at fair value in a foreign currency are translated using the exchange rates at the date when
the fair value was determined.
As at the reporting date the assets and liabilities of this subsidiary are translated into the presentation
currency of Carnavale Resources Limited at the rate of exchange ruling at the balance date and its
statement of financial performance is translated at the weighted average exchange rate for the year.
36
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(o)
Foreign currency translation (continued)
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.
The assets' residual values, useful lives and amortisation methods are reviewed, and adjusted if
appropriate, at each financial year end. Depreciation is calculated on a diminishing value basis over the
estimated useful life of the assets as follows:
Plant and equipment – 4 years
(q)
Trade and other payables
Trade payables and other payables are carried at cost and represent liabilities for goods and services
provided to the Group prior to the end of the financial year that are unpaid and arise when the Group
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. Incremental costs directly attributable to the issue of new
shares are shown in equity as a deduction, net of tax, from the proceeds.
(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)
Share based payments
The Group, from time to time, provides compensation benefits to employees (including directors) and
consultants of the Group in the form of share-based payment transactions, whereby employees and
consultants render services in exchange for shares or rights over shares (‘equity-settled transactions’).
The cost of these equity-settled transactions is measured by reference to the fair value at the date at
which they are granted. The fair value is determined by a Black-Scholes-Merton model.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity,
over the period in which the performance conditions are fulfilled, ending on the date on which the
recipient become fully entitled to the award (‘vesting date’).
The cumulative expense recognised for equity-settled transactions at each reporting date until vesting
date reflects (i) the extent to which the vesting period has expired and (ii) the number of awards that, in
the opinion of the directors of the Group, will ultimately vest. This opinion is formed based on the best
available information at balance date. No adjustment is made for the likelihood of market performance
conditions being met as the effect of these conditions is included in the determination of fair value at
grant date.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is
conditional upon a market condition.
Where the terms of an equity-settled award are modified, as a minimum an expense is recognised as if
the terms had not been modified. In addition, an expense is recognised for any increase in the value of
the transaction as a result of the modification, as measured at the date of modification.
37
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
2.
(t)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Share based payments (continued)
Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation,
and any expense not yet recognised for the award is recognised immediately. However, if a new award
is substituted for the cancelled award, and designated as a replacement award on the date that it is
granted, the cancelled and new award are treated as if they were a modification of the original award,
as described in the previous paragraph.
The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the
computation of earnings per share.
(u) 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.
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 2 (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
information becomes available. If, after having capitalised expenditure under this policy, it is 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.
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.
(v)
Parent Entity Financial Information
The financial information for the parent entity, Carnavale Resources Limited, disclosed in Note 23 has
been prepared on the same basis as the consolidated financial statements.
38
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
3.
REVENUE
Other revenue
Interest earned
Other income
4.
EXPENSES
Consolidated
2020
$
8,381
20,000
28,381
2019
$
10,241
-
10,241
Consolidated
2020
$
2019
$
1,881,695
-
18,608
5,313
Loss before income tax includes the following
specific expenses:
Exploration expenditure impaired
Due diligence expenses
INCOME TAX
5.
(a)
Prima facie tax benefit at 27.5% (2019: 27.5%) on loss from ordinary activities is reconciled to
the income tax provided in the financial statements
Loss before income tax
Consolidated
2020
$
(2,355,740)
2019
$
(479,919)
Prima facie income tax benefit at 27.5% (2019: 27.5%)
647,829
131,978
Tax effect of amounts which are not tax (deductible) / taxable in
calculating taxable income:
Due diligence / capital related costs
Exploration expenses incurred
Exploration expenses impaired
Tax effect of capitalised share issue costs
Share based payment expense
Other non-assessable items
Other non-deductible items
Income tax benefit adjusted for non (deductible) / taxable items
Deferred tax asset not brought to account
Income tax benefit
(b) Deferred tax assets
(1,878)
123,822
(517,466)
17,039
(53,108)
5,500
(234)
221,504
(221,504)
-
(1,902)
538,693
-
19,200
(25,615)
-
-
662,354
(662,354)
-
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
2020
$
7,731,110
2,562,504
30,228
10,323,842
2019
$
7,509,701
2,562,504
29,924
10,102,129
(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;
39
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
5.
INCOME TAX (continued)
(b) Deferred tax assets (continued)
(ii)
(iii)
the companies in the Group continue to comply with the conditions for deductibility imposed by
the Law; and
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.
KEY MANAGEMENT PERSONNEL
(a) Details of key management personnel
Directors
R Gajewski (appointed 18 October 2006)
A Beckwith (appointed 29 July 2014)
R Brans (appointed 17 September 2013)
(b) Compensation of key management personnel
Short-term employee benefits
Post-employment benefits
Share-based payments
Consolidated
2020
$
230,165
2019
$
563,845
Consolidated
2020
$
2019
$
25,326
25,326
24,364
24,364
Consolidated
2020
$
159,750
2,280
92,184
254,214
2019
$
154,140
2,280
85,384
241,804
Information regarding individual directors’ compensation is provided in the Remuneration report on
pages 13 to 16.
(c) Other key management personnel transactions
Accounting, secretarial and corporate service fees of $55,811 (2019: $70,402) and rental fees of
$30,000 (2019: $30,000) were paid or payable during the year ended 30 June 2020 on normal terms
and conditions to Corporate Consultants Pty Ltd, a company in which Mr Gajewski is a director and has
a beneficial interest.
40
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
8.
CURRENT RECEIVABLES
Other receivables
Consolidated
2020
$
25,413
25,413
2019
$
8,271
8,271
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. OTHER ASSETS
Credit card bond
11. EXPLORATION AND EVALUATION EXPENDITURE
Exploration and evaluation costs carried forward in respect
of exploration areas of interest (i)
Opening balance
Acquisition costs – exploration licences
Exploration expenditure incurred
Exploration expenditure impaired (i)
Consolidated
2020
$
2019
$
10,819
10,850
Consolidated
2020
$
20,000
2019
$
20,000
Consolidated
2020
$
2019
$
1,006,965
2,388,399
2,388,399
50,000
450,261
(1,881,695)
1,006,965
201,460
228,055
1,977,492
(18,608)
2,388,399
(i) The impairment of exploration expenditure in both periods relates to carried forward expenditure in
respect of relinquished tenements. The current period impairment relates to the directors’ decision
to withdraw from the agreement with African Panther Resources (U) Limited to acquire up to 70%
of the Kikagati Tin Project. The 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.
12. TRADE AND OTHER PAYABLES
Current
Trade and other payables
Consolidated
2020
$
2019
$
76,610
463,886
Trade and other payables 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.
41
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
13.
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 year
Share placement at an issue price of 1.7
cents each in August 2018
Shares issued as facilitation fee in relation
to the Kikagati Project in August 2018
Shares issued as option extension fee in
relation to the Kikagati Project in December
2018
Share placement at an issue price of 0.3
cents each in May 2019
Non-renounceable rights issue completed in
July and August 2019 at an issue price of
0.3 cents each
Shares issued for acquisition of exploration
licences in December 2019
Transaction costs arising from issue of
securities
2019
2020
Number
Number
742,999,560 641,999,560 28,969,953
2020
$
2019
$
28,510,898
-
-
-
-
6,000,000
10,000,000
10,000,000
75,000,000
-
-
-
-
102,000
90,000
60,000
225,000
742,404,069
10,000,000
-
-
-
-
2,227,212
20,000
-
-
(63,068)
(17,945)
Balance at end of year
1,495,403,629 742,999,560 31,154,097
28.969.953
(c)
Share options
Options to subscribe for ordinary shares in the capital of the Company have been granted as follows:
2020
Exercise
Period
Exercise
Price
Opening
Balance
1 July 2019
Options
Issued
2019/2020
Number
Number
Options
Exercised /
Expired
2019/2020
Number
Closing
Balance
30 June 2020
Number
On or before 30
December 2019
On or before 30
September 2020 (i), (ii)
Total
$0.02
60,000,000
-
(60,000,000)
-
$0.007
- 408,702,011
-
408,702,011
60,000,000 408,702,011
(60,000,000)
408,702,011
(i)
(ii)
In July 2019, the Company allotted 37,500,000 options to sophisticated and professional
investors who participated in the May 2019 placement of 75,000,000 fully paid shares at an
issue price of $0.003 each to raise $225,000.
In July and August 2019, the Company completed a non-renounceable entitlement issue to
shareholders on the basis of one share for every one share held at an issue price of $0.003 per
share together with one free attaching option exercisable at $0.007 each and an expiry date of
30 September 2020 for every 2 shares issued. 194,913,609 options were allotted in July 2019
and a further 176,288,402 options were allotted in August 2019 following placement of the
Shortfall Securities.
42
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
13.
ISSUED CAPITAL (continued)
2019
Exercise
Period
Exercise
Price
Opening
Balance
1 July 2018
Options
Issued
2018/2019
On or before 30
December 2019
Total
(d) Performance rights
Number
Number
$0.02
60,000,000
60,000,000
-
-
Options
Exercised /
Expired
2018/2019
Number
-
-
Closing
Balance
30 June 2019
Number
60,000,000
60,000,000
Performance rights in the capital of the Company have been granted as follows
2020
Grant Date
Expiry
Date
Opening
Balance
1 July 2019
Rights
Issued
2019/2020
6 September 2019 and
22 November 2019 (i)
10 August 2018
31 Dec
2020
30 June
2021
Total
Number
Number
- 99,000,000
36,000,000
-
36,000,000 99,000,000
Rights
Exercised /
Expired
2019/2020
Number
-
-
-
Closing
Balance
30 June 2020
Number
99,000,000
36,000,000
135,000,000
(i) In September 2019, the Company appointed Mr. Klaus Eckhof as a Corporate and Technical Advisor
and agreed to issue Mr Eckhof a total of 99 million performance rights with an expiry date of 31
December 2020. Tranche 1, 2 and 3 performance rights (each tranche comprising 33 million
performance rights) have a market vesting condition being a daily volume weighted average share price
of at least $0.007, $0.009 and $0.011 respectively over a consecutive 15 trading days.
The performance rights have been valued using a trinomial barrier option methodology using the
following inputs:
Date of issue
Share price on date of issue
Expected volatility
Risk-free interest rate
Expiry date of rights
Tranche 1
6 September 2019
0.3 cents
139%
1.5%
31 December 2020
Tranche 2 and 3
22 November 2019
0.2 cents
148%
1.5%
31 December 2020
14. RESERVES
Share-based payments reserve (a)
Total
Consolidated
2020
$
1,749,227
1,749,227
2019
$
1,556,106
1,556,106
(a) Share-based payments reserve
The share-based payments reserve represents amounts received in consideration for the issue of
options to subscribe for ordinary shares in the Company and the value of options and performance rights
issued to parties for services rendered.
Opening balance
Fair value of performance rights issued to directors,
company secretary and consultants
Balance at end of year
43
Consolidated
2020
$
1,556,106
2019
$
1,462,960
193,121
1,749,227
93,146
1,556,106
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
15. ACCUMULATED LOSSES
Accumulated losses at the beginning of the year
Loss for the year
Accumulated losses at the end of the year
16. 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
2020
$
(28,371,224)
(2,355,740)
(30,726,964)
2019
$
(27,891,305)
(479,919)
(28,371,224)
Consolidated
2020
$
2019
$
(2,355,740)
(479,919)
Number
Number
1,408,348,460
-
667,038,022
-
1,408,348,460
667,038,022
The Company has 408,702,011 share options at 30 June 2020 (30 June 2019: 60,000,000). 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.
17. NOTES TO THE STATEMENT OF CASH FLOWS
(a) 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
2020
$
1,189,773
1,189,773
2019
$
191,201
191,201
(b) Reconciliation of loss after tax to net cash outflows from operations
Consolidated
2020
$
(2,355,740)
1,881,695
10,467
193,121
2019
$
(479,919)
18,608
14,453
93,146
(17,112)
7,172
(106,765)
(394,334)
106,549
(239,991)
Loss after income tax
Exploration expenditure impaired / expensed
Net exchange differences
Share-based payments expense
(Increase) / decrease in assets
Trade and other receivables
Increase / (decrease) in liabilities
Trade and other payables
44
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
17. NOTES TO THE STATEMENT OF CASH FLOWS (continued)
(c) Non-cash investing activities
In December 2019, the Company issued 10 million shares as partial consideration to the vendor for the
right to acquire up to 80% of the Mt Alexander Project.
18. COMMITMENTS AND CONTINGENCIES
(a) Commitments
In order to maintain current contractual rights concerning its mineral projects, the Group has certain
commitments to meet minimum expenditure requirements on the mineral exploration assets in which it
has an interest.
The current annual minimum lease expenditure commitments on tenements wholly owned by the Group
comprising E28/1477 and M28/378, which covers the Grey Dam Project is $82,300 (2019: $107,373).
The Group has the right to acquire up to 80% of tenement E28/2587 which is part of the Grey Dam
project and in order to maintain current contractual rights, the Group must meet current annual minimum
lease expenditure commitments of $20,000.
During the period, the Group secured an option to earn 80% of the prospective tenement package
(E28/2567, E28/2682, E28/2760, and E28/2506) which covers the Grey Dam project and in order to
maintain current contractual rights, the Group must meet minimum expenditure requirements of
$90,000.
During the period, the Group secured the right to acquire up to 80% of the Mt Alexander Project,
comprising E29/960, E29/961 and P29/2356 and in order to maintain current contractual rights, the
Group must meet minimum expenditure requirements of $47,440.
If the Group decides to relinquish certain leases and/or does not meet these obligations, assets
recognised in the balance sheet 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.
(b) Contingent liabilities
The Group does not have any contingent liabilities at balance date other than as below:
In accordance with the tenement acquisition agreements and option agreements entered into by the
Group the following deferred consideration may become payable in future periods:
Grey Dam Project
M28/378
A 2% gross royalty is payable comprising a 1% gross revenue payable on all nickel, copper,
cobalt value if any profit from them is derived and a 1% total gold production royalty.
E28/2587
Under the terms of the agreement, Carnavale may explore the tenement area and may elect to
acquire 80% of the tenement by 21 June 2022 and a payment of $80,000. At the vendors
election, Carnavale may earn an additional 10% interest by sole funding further expenditure of
$1,000,000. Upon Carnavale earning 90% of project, the vendor will have a 10% free carried
interest until a decision to mine with funding pro-rata thereafter.
E28/2567, E28/2682, E28/2760, and E28/2506
Under the terms of the agreement, Carnavale may explore the tenement area and may elect to
acquire 80% of the tenements by 11 November 2022 and payment of $250,000. On Carnavale’s
decision to acquire 80% equity in the tenements, Mithril must elect within 30 business days to
either:
Transfer 100% equity in the tenements to Carnavale and receive a 1% NSR royalty on
all commodities produced from the Tenements; or
Enter into a formal Joint Venture agreement, with the initial interest of the parties to be
Carnavale 80% and Mithril 20%.
45
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
18. COMMITMENTS AND CONTINGENCIES (continued
(b) Contingent liabilities
Mt Alexander Project
Under the terms of the agreement, Carnavale may explore the tenement area and may elect to
earn 80% of the tenements by 4 December 2023 and payment of $250,000 in cash or fully paid
Carnavale shares at Carnavale’s election. On Carnavale’s decision to acquire 80% equity in the
tenements, Mr Van Maris must elect within 30 business days to either:
Transfer 100% equity in the tenements to Carnavale and receive a 1% NSR royalty on
all commodities produced from the Tenements and Carnavale retains a first right of
refusal to acquire the Royalty for $750,000; or
Enter into a formal Joint Venture agreement, with the initial interest of the parties to be
Carnavale 80% and Mr Van Maris 20%.
Enter into a formal Joint Venture agreement, with the initial interest of the parties to be
Carnavale 80% and Mr Van Maris 20%.
19. EVENTS SUBSEQUENT TO BALANCE DATE
No matter or circumstance has arisen which has significantly affected, or may significantly affect, the
operations of the Group, the results of those operations or the state of affairs of the Group in subsequent
financial years other than the matters referred to below.
In August 2020, the Company signed an exclusive and binding Option Agreement with Western
Resources Pty Ltd, a West Australian private company, to acquire 80% of the high-grade Kookynie
Gold Project (“Project”). Following completion of the due diligence period, the Company paid an
option fee of $100,000 cash and issued 37.5 million ordinary shares to Western Resources Pty Ltd.
The Company also issued 1.5 million shares to Gold Geological Consulting Pty Ltd as a fee for
facilitating the agreement for the Project.
In September 2020, the Company issued 33 million shares to Mr Klaus Eckhof arising from the
conversion of 33 million performance rights, which vested upon the completion of the Company’s
Shares having traded at a volume weighted average price of at least $0.007 for a consecutive period
of at least 15 business days. The performance rights were approved by shareholders at the 2019
Annual General Meeting.
In September 2020, the Company agreed to purchase 100% of tenement P40/1480 at the Kookynie
Gold Project for a total consideration of $10,000 (paid) in cash plus the issue of 1.5 million ordinary
shares in CAV.
Subsequent to year-end and prior to the date of this report, the Company has allotted 141,334,145
ordinary fully paid shares following the exercise of 141,334,145 CAVOA listed options exercisable at
$0.007 raising $989,339.
46
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
20. 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
and seeks to minimise potential adverse effects on the financial performance of the business. 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
management framework. Management monitors and manages the financial risks relating to the
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 during
the financial year, the Group currently held foreign currency, namely US dollars. At period end, the
Group did not have any foreign exchange risk.
(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
(iii) Interest rate risk
30 June 2020
30 June 2019
Assets
Liabilities
Assets
Liabilities
$
-
$
-
$
1,277
$
287,722
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
%
2020
Financial assets
Cash and cash equivalents 17(a)
Trade and other
receivables
8
1,181,801
-
1,181,801
Financial liabilities
Trade and other payables
12
-
-
-
-
-
7,972
1,189,773
0.57
25,413
33,385
25,413
1,215,186
76,610
76,610
47
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
20. FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (continued)
$
$
$
$
%
2019
Financial assets
Cash and cash equivalents 17(a)
Trade and other
receivables
8
188,506
-
188,506
Financial liabilities
Trade and other payables
12
-
-
-
-
-
2,695
191,201
1.25
8,271
10,966
8,271
199,472
463,886
463,886
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 2019.
Consolidated
30 June 2020
Variable rate instruments
Cash flow sensitivity (net)
30 June 2019
Variable rate instruments
Cash flow sensitivity (net)
Profit or (Loss)
100bp
increase
$
100bp
decrease
$
14,832
14,832
8,145
8,145
(14,832)
(14,832)
(8,145)
(8,145)
100bp
increase
$
14,832
14,832
Equity
100bp
decrease
$
(14,832)
(14,832)
8,145
8,145
(8,145)
(8,145)
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, tin, nickel, copper and cobalt, 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.
48
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
20. FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (continued)
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.
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 liabilities into maturity groupings based on the remaining
period from the balance date to the contractual maturity date.
2020
Financial liabilities
Trade and other payables
Total Financial Liabilities
2019
Financial liabilities
Trade and other payables
Total Financial Liabilities
Between 1
and 5
years
$
-
-
Between 1
and 5
years
$
-
-
After 5
years
$
-
-
After 5
years
$
-
-
Within 1
year
$
76,610
76,610
Within 1
year
$
463,886
463,886
49
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
21.
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
(b) Risk exposure
2020
%
2019
%
Australia
Australia
100
100
100
100
Ord
Ord
Refer to Note 20 for information on the Group’s and parent entity’s exposure to credit, foreign exchange
and interest rate risk.
22. 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 Africa
and Australia and investing activities in Australia.
2020
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
Impairment of exploration and
evaluation expenditure
Investing
Australia
$
Mineral
Exploration
Australia /
Africa
$
28,381
28,381
-
-
(472,579)
(1,883,172)
1,246,005
-
1,006,965
500,261
37,790
38,820
-
1,881,695
Eliminations Consolidated
$
$
-
-
11
-
-
-
28,381
28,381
(2,355,740)
-
(2,355,740)
2,252,970
500,261
76,610
1,881,695
50
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Investing
Australia
$
Mineral
Exploration
Australia /
Africa
$
10,241
10,241
-
-
(455,203)
(24,716)
230,322
-
2,388,399
2,137,492
149,138
314,748
-
18,608
Eliminations Consolidated
$
$
-
-
-
-
-
-
10,241
10,241
(479,919)
-
(479,919)
2,618,721
2,137,492
463,886
18,608
22. SEGMENT REPORTING (continued)
2019
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
Impairment of exploration and
evaluation expenditure
23. 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
Share-based payment reserve
Accumulated losses
Total equity
Financial performance
Loss for the year after income tax
Other comprehensive income
Total comprehensive loss
51
2020
$
1,175,650
1,033,180
2,208,830
33,790
33,790
2019
$
209,372
2,400,046
2,609,418
457,369
457,369
2,175,040
2,152,049
31,154,097
1,749,227
(30,728,284)
2,175,040
28,969,953
1,556,106
(28,374,010)
2,152,049
2020
$
(2,354,274)
-
(2,354,274)
2019
$
(479,165)
-
(479,165)
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
23. PARENT ENTITY DISCLOSURES (continued)
(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 2020 or 30 June 2019 other than
as disclosed in Note 18 above.
(d) Contractual commitments for the acquisition of property, plant or equipment
As at 30 June 2020 (30 June 2019 – $Nil), the parent entity did not have any contractual commitments
for the acquisition of property, plant or equipment.
52
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 Group’s financial position as at 30 June 2020 and of its performance
for the year then ended; and
(ii) complying with 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 2020.
Signed in accordance with a resolution of the Directors made pursuant to s 295(5) of the Corporations Act
2001.
On behalf of the Board.
RON GAJEWSKI
Chairman
Dated this 22nd day of September 2020
Perth, Western Australia
53
INDEPENDENT AUDITOR’S REPORT
To the members of Carnavale Resources Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Carnavale Resources Limited (“the Company”) and its
controlled entities (“the Group”), which comprises the consolidated statement of financial position
as at 30 June 2020, 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, and notes to the financial statements, including a summary of significant accounting
policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the
Corporations Act 2001, including:
a) giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its
financial performance for the year then ended; and
b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report. We are independent of the Group in accordance with the
auditor independence requirements of the Corporations Act 2001 and the ethical requirements of
the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (“the Code”) that are relevant to our audit of the financial report in
Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the financial report of the current period. These matters were addressed in the context
of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters. We have determined the matters described below to
be the key audit matters to be communicated in our report.
54
Key Audit Matter
How our audit addressed the key audit
matter
Carrying value of exploration and evaluation expenditure
Note 11 of the financial statements
In accordance with AASB 6 Exploration for and
Evaluation of Mineral Resources,
the Group
capitalises acquisition costs of rights to explore
together with subsequent exploration and evaluation
expenditure and applies
the cost model after
recognition.
Our procedures included but were not
limited to the following:
• We obtained an understanding of the
key
associated with
management’s review of the exploration
and evaluation asset carrying values;
processes
Our audit focussed on the Group’s assessment of the
carrying amount of the capitalised exploration and
evaluation asset, because this is one of the most
significant assets of the Group. There is a risk that the
capitalised expenditure no
the
recognition criteria of the standard. In addition, we
considered it necessary to assess whether facts and
circumstances existed to suggest that the carrying
amount of an exploration and evaluation asset may
exceed its recoverable amount.
longer meets
• We
considered
Directors’
assessment of potential indicators of
impairment;
the
• We obtained evidence that the Group
has current rights to tenure of its areas
of interest;
• We examined the exploration budget for
2021 and discussed with management
the nature of planned ongoing activities;
• We enquired with management and
reviewed ASX announcements and
minutes of Directors’ meetings to ensure
that the Group had not decided to
discontinue exploration and evaluation
at its areas of interest; and
• We examined the disclosures made in
the financial report.
Information other than the financial report and auditor’s report thereon
The directors are responsible for the other information. The other information comprises the
information included in the Group’s annual report for the year ended 30 June 2020, but does not
include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives
a true and fair view in accordance with 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 gives a true and fair view and is free from material misstatement, whether
due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group
to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors either intend to liquidate the Group
or to cease operations, or have no realistic alternative but to do so.
55
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with Australian Auditing Standards will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
-
Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
-
-
- Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a
going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the financial report or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions
may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and
events in a manner that achieves fair presentation.
-
We communicate with the directors regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
56
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included within the directors’ report for the year ended
30 June 2020.
In our opinion, the Remuneration Report of Carnavale Resources Limited for the year ended 30
June 2020 complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted
in accordance with Australian Auditing Standards.
HLB Mann Judd
Chartered Accountants
Perth, Western Australia
22 September 2020
L Di Giallonardo
Partner
57
CARNAVALE RESOURCES LIMITED
SHAREHOLDER INFORMATION
The shareholder information set out below was applicable as at 18 September 2020.
1.
Distribution of holders of listed equity securities
Size of holding
Ordinary Shares
Listed Options
($0.007 @ 30-Sept-20)
1
1,001
5,001
10,001
-
-
-
-
1,000
5,000
10,000
100,000
100,001 and over
2.
Voting rights
66
49
56
311
576
1,058
9
7
1
16
51
84
There are no restrictions to voting rights attached to the ordinary shares. On a show of hands every
member present in person will have one vote and upon a poll, every member present or by proxy will
have one vote for each share held.
3.
Substantial Shareholders
An extract of the Company’s register of substantial shareholders is set out below.
Shareholder
Vienna Holdings Pty Ltd and Redtown Enterprises Pty Ltd
Number of Shares
120,728,409
4.
Unmarketable parcels
As at 18 September 2020 there were 314 shareholders with unmarketable parcels of shares.
5.
Top 20 shareholders (CAV)
The names of the twenty largest shareholders as at 18 September 2020, who hold 54.95% of the fully
paid ordinary shares of the Company were as follows:
Name of holder
Number of
Shares
Percentage
held
1
2
3
4
5
6
7
8
9
10
Vienna Holdings Pty Ltd
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