More annual reports from Carnavale Resources:
2023 ReportABN 49 119 450 243
AND CONTROLLED ENTITIES
ANNUAL REPORT
FOR THE YEAR ENDED 30 JUNE 2021
CARNAVALE RESOURCES LIMITED
CONTENTS
Corporate Directory
Review of Operations
Directors' Report
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
AUDITORS
SHARE REGISTRY
SECURITIES EXCHANGE
Telephone:
Facsimile:
Email:
Website:
(08) 9380 9098
(08) 9380 6761
admin@carnavaleresources.com
www.carnavaleresources.com
HLB Mann Judd (WA Partnership)
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
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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 mobility sector and
other new-age disruptive technologies, together with gold, nickel and copper. The Company has two gold
exploration projects, a PGE-Ni Cu project and a Nickel sulphide project. All these projects are located in
Western Australia (figure 1).
During the reporting period, Carnavale secured the right to acquire 80% of the high-grade Kookynie Gold
Project, located immediately west of the Kookynie townsite and 60km south of Leonora. The Project consists
of 3 tenements E40/355, P40/1380 and P40/1381. Carnavale also purchased 100% of tenements P40/1480
and E40/394 at the Kookynie Gold Project from unrelated vendors.
After the year end Carnavale elected to exercise the option to acquire 80% of the Kookynie Gold project.
Extensive aircore drilling has been completed at the Kookynie project during the period.
Figure 1
Location Plan of Projects
Carnavale signed an exclusive and binding 24-month Option Agreement to acquire 80% of the Ora Banda
South Gold Project (“OBSP”), which covers an area of approximately 25km2, located 65km northwest of
Kalgoorlie in the Yilgarn Craton, Western Australia (Figure 1) and 8km south of the Ora Banda Mining Centre.
During the reporting period Carnavale acquired 100% of the Barracuda PGE–Ni-Cu Project located in the
Windimurra igneous complex of the Murchison district WA. The project is located 60km east of Mt Magnet.
The Company also advanced the Grey Dam Nickel Sulphide Project, located 74km east of Kalgoorlie, Western
Australia.
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CARNAVALE RESOURCES LIMITED
REVIEW OF OPERATIONS
Highlights
Exploration during the reporting period included RC and diamond drilling at the Grey Dam Nickel Project
followed by 3 programs of aircore drilling at the Kookynie Gold Project, initial soil sampling at the Ora Banda
Gold Project and initial site visit to the Barracuda PGE–Cu-Ni project that included collecting rock chip samples.
A program of soil sampling followed by a moving loop EM survey was completed at the Mt Alexander Nickel
Project.
Kookynie Gold Project
▪
▪
▪
A comprehensive soil sampling program of 1,180 samples was completed over the
residual soil domains with aircore drilling focused on gold targets under cover.
Acquired additional strategic prospective ground at the Kookynie Gold project 100% of
P40/1480 and 100% of application - E40/394
Completed a campaign of aircore drilling consisting of 3 programs totaling 391 holes for
19,938m targeting structurally controlled, high-grade gold mineralisation. Significant
high grade results from the third round of aircore included:
4m @ 31.08g/t from 96m (hole ends in mineralisation)
2m @ 32.5g/t from 18m
8m @ 4.06g/t from 20m (inc. 2m @ 15.6g/t)
12m @ 3.37g/t from 50m
2m @ 16.3g/t from 10m
6m @ 2.53g/t from 18m (inc. 2m @ 6.55g/t)
6m @ 2.32g/t from 26m (inc. 4m @ 3.29g/t)
▪ Hole KOAC294
▪ Hole KOAC324
▪ Hole KOAC322
▪ Hole KOAC290
▪ Hole KOAC361
▪ Hole KOAC347
▪ Hole KOAC348
▪ High-grade gold mineralisation was intersected at McTavish East over 550m and
remains open to the northeast and at McTavish North over 240m and remains open
to the north.
Ora Banda South Gold Project
▪
▪
▪
▪
Acquisition of a 24-month option over prospective and under explored landholding in
the well-endowed Ora Banda region where over 6Moz of gold has been produced from
nearby mines including the Ora Banda, Siberia, Bullant and Mt Pleasant mines.
Geological and structural setting analogous to Goldfields +2.5Moz Invincible Gold Mine
associated with the Black Flag Group sediments and the Kurrawang Conglomerates
and intersecting Carnage Shear Zone.
Encouraging soil anomalies and bedrock gold mineralisation highlighted in limited past
exploration.
A program of 1,100 soil samples assayed for multi elements and gold were taken from
the residual soil across the tenement package.
Barracuda PGE-Ni-Cu Project
▪
▪
▪
▪
Acquisition of 100% of the Barracuda PGE -Ni-Cu Project
Initial site visit completed with sampling of the outcropping chromitite returning assay
results including 3.45g/t 4PGE and 3.38g/t 4PGE.
Outcropping mineralisation on the contact between mafic (gabbroic) and olivine-rich
ultramafic rocks assaying up to 8.27g/t 4PGE in previous work.
PGE-sulphide minerals identified by WA Geological Survey within the Project area.
Grey Dam Nickel Sulphide Project
▪
▪
Multi-element analysis from drilling is encouraging for the development of nickel
sulphides within mafic/ultramafic package. Additional UFF soil sampling planned.
New Gold target – encouraging gold intersections from the drilling include:
▪
▪
8m @ 0.32g/t Au from 38m and
12m @ 0.55g/t Au from 52m in DD002A
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CARNAVALE RESOURCES LIMITED
REVIEW OF OPERATIONS
The Kookynie Gold Project
The Kookynie Gold Project is located in the central portions of the historic Kookynie mining centre (figure 2)
and Carnavale’s strategy is to explore and define sufficient high-grade gold resources that can be mined and
transported to a processing plant nearby.
Figure 2, Kookynie Gold Project with historic deposits.
The Kookynie Gold Project is adjacent to Nex Metals Ltd (ASX: NME) and Metalicity Ltd.’s (ASX: MCT) high-
grade Leipold, McTavish, Cosmopolitan and Champion deposits, being successfully explored by MCT (Figure
2). MCT’s McTavish prospect is 200m directly along strike from and adjacent to Carnavale’s McTavish East
prospect and immediately south along strike from Carnavale’s McTavish North prospects.
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CARNAVALE RESOURCES LIMITED
REVIEW OF OPERATIONS
High grade intercepts recorded by MCT from the McTavish project include 5m @ 25.9g/t in McTRC0049, 6m@
20.6g/t in McTRC0064 and 3m @ 19.1g/t in McTRC0044 (MCT ASX release 8 July 2021).
Carnavale has identified a mineralised zone that strikes over 550m at McTavish East (Figure 3), open to the
north and a mineralised zone that strikes for 240m at McTavish North open to the northeast. Both zones host
high-grade gold mineralisation characteristic of the Kookynie mining camp.
Two types of gold mineralisation occur in the Kookynie area, high-grade gold associated with pyritic quartz
veins hosted within north to northeast dipping structures crosscutting favourable lithologies and high-grade
gold associated in fault zones within magnetic, differentiated fractions of the granite plutons.
Figure 3, Plan of McTavish East mineralisation over Aeromagnetic image
(third program in yellow callouts, first and second program in blue callouts.)
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CARNAVALE RESOURCES LIMITED
REVIEW OF OPERATIONS
Aircore Drilling Programs
During the period Bostech Drilling completed 391 holes in three programs of aircore at the Kookynie Gold
Project for 19,938m. The third program tested the extents and potential of the multiple gold anomalies and
structural features identified by the first and second round of aircore drilling completed earlier in the period.
The drilling at the Kookynie Gold Project is part of a systematic exploration approach employed by the
Company targeting high-grade gold mineralisation associated with structural corridors.
Carnavale was able to define the nature of the high-grade gold mineralisation in detail. Mineralisation found at
the Kookynie Gold Project is similar to that hosted by historic mines in the area such as Cosmopolitan, Leipold,
and McTavish. The third phase of aircore drilling has also significantly improved the understanding of the gold
anomalism in the weathered profile, enabling the Company to progress to RC drilling to test the depth limits of
the mineralisation.
Exploration results
McTavish East
Immediately to the east of NME and MCT’s McTavish tenement (McTavish East), Carnavale has discovered
gold mineralisation with the anomaly striking over 550m remaining open to the northeast (Figure 3).
Significant intercepts include:
• Hole KOAC294
• Hole KOAC324
• Hole KOAC322
• Hole KOAC290
• Hole KOAC291
4m @ 31.08g/t from 96m (hole ends in mineralisation)
2m @ 32.5g/t from 18m
8m@ 4.06g/t from 20m (inc. 2m @ 15.6g/t)
12m @ 3.37g/t from 50m
6m @ 2.09g/t from 82m and
8m @ 1.02g/t from 52m (inc. 4m@ 1.76g/t)
• Hole KOAC299
5m @ 1.73g/t from 74m (inc. 3m @ 2.68g/t)
Figure 4, Section through McTavish East showing geology and mineralisation.
(third program in yellow callouts, first and second program drilling in blue callouts.)
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CARNAVALE RESOURCES LIMITED
REVIEW OF OPERATIONS
In the third phase, the aircore drilling was extended along strike of the original anomaly to the northeast to
expand the footprint of the gold mineralisation prior to RC drilling. The third phase of aircore has successfully
extended the mineralised zone by over 100m to the northeast and remains open (Figure 3).
The mineralisation at the McTavish East prospect is steeply dipping to the east and is structurally controlled
by northeast striking structures that can be interpreted from the aeromagnetic images flown by Carnavale in
late 2020. These mineralising structures have been the subject of deeper weathering that can be seen in the
section through McTavish East (Figure 4). The initial high grade hit at McTavish east, 2m@ 16.25 g/t in hole
KOAC 210, has been extended down dip into the fresh rock with further bonanza gold grades in hole
KOAC294 with 4m @ 31.08g/t. ending in mineralisation.
Transported gold has been identified in the drilling and plotted on plan (Figure 3) showing the relationship to
the deeper primary mineralisation. The transported gold mineralisation extends to the northeast and to the
east of the primary mineralisation. This shallow gold anomalism in the transported material provided an
additional pathfinder and vector for the deeper primary high-grade mineralisation.
It is notable that the upper regolith profile, over the primary gold mineralisation, appears to be depleted in
gold for the first few metres, with significant gold mineralisation identified in the lower saprolite.
Primary gold mineralisation at McTavish East is found in northeast trending structures that have a deeper
weathering profile and are characterized by an alluvial gold anomaly to the east. McTavish East remains
open to the northeast.
McTavish North
Figure 5, Plan of McTavish North mineralisation over Aeromagnetic image.
Third program in yellow callouts, first and second program in blue callouts.)
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CARNAVALE RESOURCES LIMITED
REVIEW OF OPERATIONS
The gold anomalies to the north of NME and MCT’s McTavish tenement (McTavish North) are characterised
by a number of shallow old workings and pits. The recent third aircore drilling program intercepted high-
grade shallow gold mineralisation in weathered rock. Significant intercepts from the most recent drilling
include:
• Hole KOAC361
• Hole KOAC347
• Hole KOAC348
• Hole KOAC363
• Hole KOAC356
• Hole KOAC368
2m @ 16.3g/t from 10m
6m @ 2.53g/t from 18m (inc. 2m @ 6.55g/t)
6m @ 2.32g/t from 26m (inc. 4m @ 3.29g/t)
4m @ 2.95g/t from 0m
6m @ 1.75g/t from 26m (inc. 2m @ 4.64g/t)
8m @ 1.23g/t from 31m
The McTavish North Prospect has abundant old workings and pits developed by historic prospectors that
have not been tested by modern exploration techniques until now. Rock chips from around these old
workings have returned gold assays that include 33.21g/t and 9.93g/t.
The aircore drilling has identified wide zones of gold mineralisation in the regolith profile that provide a vector
to potential high-grade mineralisation at depth. The new zone identified by recent drilling strikes 240m to the
north and remains open (Figure 5).
The primary gold mineralisation at McTavish North strikes north/south on a structure that hosts MCT and
NME’s McTavish project to the South. Additional structures within McTavish North strike northeast, and the
Company notes both anomalies have not been closed off and the gold system remains open. The mineralised
structures are interpreted to dip to the east and are adjacent to the contact between the intermediate and
the mafic volcanics.
The Company considers the recent results provide evidence of multiple targets in the McTavish area with
potential for stacked higher grade lodes within each target. Overall, the project area contains many similar
structural targets with anomalous gold and multielement targets which require further follow-up drilling to test
the bedrock under a thin veneer of transported cover.
Figure 6, Location of new tenement acquisition E40/394
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CARNAVALE RESOURCES LIMITED
REVIEW OF OPERATIONS
Strategic Tenement acquisitions
As part of Carnavale Resources strategic exploration plan at Kookynie, the Company acquired 100% of
tenement application E40/394, which represents 4,500ha of exploration ground, within the prospective Melita
formation from prospector Bruce Legendre and 100% of P40/1480 from Duane Briggs which lies adjacent to
the NME and MCT tenements of Leopold and McTavish (Figure 6).
Exploration Strategy
CAV’s proposed work program at the Kookynie Gold Project includes:
• RC drilling testing at depth and along strike from the shallow high-grade gold mineralisation
defined by the recent aircore drilling.
•
•
Interpretation of the multi-element geochemistry and drainage anomalies to provide further
understanding of the morphology of the mineralising systems
Identify additional targets within the Kookynie tenement package
Permits in place
During the period, the Company completed an ethnographic heritage survey of the tenement package, in
conjunction with the native title holders, to ensure that any potential areas of cultural significance are not
disturbed. The survey has found no areas that will impact on the Company’s current exploration plans.
Ora Banda South Gold Project
In October 2020, Carnavale signed an exclusive and binding 24-month Option Agreement with Western
Resources Pty Ltd to acquire 80% of the Ora Banda South Project (“OBSP”, “Project”), which covers an area
of approximately 25km2, located 65km northwest of Kalgoorlie in the Yilgarn Craton, Western Australia
(Figure 1) and 8km south of the Ora Banda Mining Centre.
The Ora Banda region is well endowed with gold, with numerous mines to be found in the local area. The
Project area is surrounded by the significant historic mines of Ora Banda, Siberia, Bullant, Mt Pleasant,
Cashmans and Lady Bountiful, that have produced in excess of 6Moz, all within 15km of the project. The
southern portion of the tenement package is host to 4km and 1.2km long auger gold anomalies that occur
along the Carnage Shear Zone and the remaining strike remains to be tested.
Carnavale is excited to be exploring for structural targets defined by the Carnage Shear Zone and associated
structures that intersect the late basin Kurrajong sediments, that include the Black Flag Group and
Kurrawang conglomerates. This setting is analogous to the geology of the +2.5Moz Invincible deposits,
discovered by Goldfields Ltd in 2012. The late basin sediments of the Kurrajong sediments were always
considered a poor gold exploration target up until Goldfields Ltd discovered the Invincible deposits near
Kambalda.
The Invincible deposits are hosted by mudstones of the Black Flag Group within the northwest trending
Speedway Shear Zone. Mineralisation at Invincible comprises bedding-parallel, shear-hosted, laminated to
brecciated quartz veins accompanied by intense albite alteration, pyrite, and free gold.
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CARNAVALE RESOURCES LIMITED
REVIEW OF OPERATIONS
Figure 7 - Ora Banda South Project showing structural interpretation of the
Carnage Shear Zone and associated minor shears.
(Tenure in blue over geology with recent significant gold results and historic gold
deposits.)
Ora Banda South extends for over 15km along the Carnage Shear Zone hosted within the late basin
Kurrajong sediments. Much of the tenement package is concealed by shallow recent transported cover,
which has hindered previous explorers (Figure 7).
During the period, exploration at the Ora Banda South Gold project included a program of soil sampling
located over the residual soil profile, targeting regolith gold in soil anomalies that have been created by
structurally controlled bedrock gold mineralisation at depth.
Further details of the Ora Banda South Project acquisition can be found in the Company’s ASX release
“Carnavale Bolsters Gold Portfolio with New Acquisition - Ora Banda South dated 5 October 2020.
The Barracuda PGE-Ni-Cu Project
The Barracuda Platinum-Palladium-Nickel-Copper (PGE-Ni-Cu) Project (granted license E58/551) is located
60km east of the gold mining town of Mt Magnet in the Murchison district of Western Australia (figure 8).
Platinum Pt
Palladium Pd
Rhodium Rh
Ruthenium Ru
4PGE
g/t
0.002
1.12
1.58
1.07
1.60
g/t
0.002
0.67
1.50
0.81
1.52
g/t
0.002
0.09
0.15
0.10
0.15
g/t
0.002
0.14
0.16
0.13
0.18
g/t
Concentration
0.002
Detection limit
2.03
3.39
2.11
3.45
Table 1 CAV rock chip sample results detailing Platinum Group Elements.
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CARNAVALE RESOURCES LIMITED
REVIEW OF OPERATIONS
Outcropping PGE mineralisation assaying 8.27g/t PGE was discovered by Pancon in 1987 on the contact
between mafic and olivine-rich ultramafic rocks. Subsequently, PGE-sulphide minerals were identified in the
rocks by the Western Australia Geological Survey in 2016.
This highly prospective area has the potential to host substantial magmatic, mafic-ultramafic intrusion-related
Pt-Pd-Ni-Cu sulphide deposits and has received no attention since Pancon drilled 1,811m of diamond and
shallow (<100m) RC holes in 1988.
CAV has contracted a Heli VTEM survey to be flown in the 4th quarter of 2021. This represents the latest
airborne EM technology available to delineate conductors for drill testing. No ground-based electrical
geophysical surveys (EM, IP) have ever been conducted within E58/551.
Carnavale geologists visited the Project in March and sampled the chromitite outcropping within the project
area with assay results that include 3.45g/t 4PGE and 3.39g/t 4PGE plus up to 12.55% chrome (Table 1).
Figure 8, Location of E58/551 close to Mt Magnet in the Windimurra igneous complex
While this particular outcrop of PGE mineralisation is of limited area extent, it is highly significant, in that it
conclusively demonstrates that basic and ultrabasic magmas (crystallising as mafic and ultramafic rocks)
were interacting to concentrate PGE metals to potentially economic grades of PGE mineralisation.
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CARNAVALE RESOURCES LIMITED
REVIEW OF OPERATIONS
Exploration Strategy
CAV’s proposed work program includes:
• Fly the Project area with airborne EM (used by Chalice Mining Limited (ASX: CHN) to define the
Julimar PGE- Ni-Cu-Co-Au discovery).
• Digitally capture the Pancontinental soil geochemistry and contour the PGE, Ni, and Cu data to
define metal-anomalous trends.
• Follow-up airborne EM anomalies with ground EM, with priority given to areas with established,
coincident PGE-Cu-Ni soil anomalism.
• Drill-test targets subject to results.
Grey Dam Nickel Sulphide Project
Following a data review that outlined coincident nickel copper and platinum anomalies located over
prospective mafic ultramafic geology package a moving loop EM survey was completed that highlighted 5
bedrock targets that warranted drill testing.
Figure 9, Diamond Drilling at Grey Dam
Nickel Project
Figure 10, Geology with EM
priority conductors
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CARNAVALE RESOURCES LIMITED
REVIEW OF OPERATIONS
The phase 1 RC and diamond drilling campaign was completed in October 2020. The drilling program
comprised seven holes for a total of 1,701m. Three of these holes were drilled with diamond core tails
allowing deeper targets to be tested (See ASX release Grey Dam drilling commenced 10 September 2020).
The drilling was targeting Kambalda style nickel sulphides.
EM conductors and Drill targets
The Company identified 5 priority targets that were drill tested (Figure 10). A summary of the drilling at each
target is provided below. Target 1 and 3 have identified the EM conductor and require no further work.
The drilling at target 2, 4 and 5 intersected the mafic and ultramafic package but did not close off the
opportunity for nickel sulphide mineralisation. These holes were surveyed by a downhole electromagnetic
survey (DHEM) to test for the potential for the presence of off hole conductors adjacent to the drillhole.
Notably a potential EM conductor was interpreted to be within 60m of the end of hole DDH002B. No off-hole
conductors were identified in target 4 and 5.
Figure 11, New gold Anomaly with local geology and EM conductor
Mafic unit green Ultramafic unit purple and sediments brown
This initial drilling program, targeting nickel sulphide mineralisation at Grey Dam, has confirmed and
enhanced the understanding of the geology at the target area. The geochemistry and multi-element assay
results remain positive for the development of nickel sulphide mineralisation within the Grey Dam
mafic/ultramafic package.
New Gold Anomaly
Carnavale intersected shallow gold mineralisation from 38m downhole in DDH002A at the fresh rock
interface. Gold intercepts including 8m @ 0.32g/t, 12m @ 0.55g/t in DDH002A and 2m @ 0.22g/t in
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CARNAVALE RESOURCES LIMITED
REVIEW OF OPERATIONS
DDH002B. This mineralisation aligns with historic anomalous gold results in wide spaced aircore drilling,
from previous explorers.
The mineralized trend is aligned with a structure interpreted from the aeromagnetic imagery (Figure 11). The
Grey Dam area is prospective for shallow gold mineralisation, with potentially open pittable gold resources
delineated in the neighbouring tenements held by Kalnorth Gold Mines Ltd.
Exploration Strategy
• The Company has completed a program of Ultra Fine Fraction (UFF) soil sampling over the
northern limb of the ultramafic/mafic package that lies under cover. Results are pending.
• The next stage of exploration utilising ground EM or drilling will depend upon the results from the
and modelling of the UFF assays.
•
review the existing drill data, geochemical data and aeromagnetic imagery for potential further
testing of the new gold anomaly.
Mt Alexander Nickel Project
In December 2020 the Company completed 5 lines of moving loop EM traverses (MLEM) at the Mt Alexander
Project. The survey was conducted over the multi element soil anomalies identified in the earlier UFF soil
sampling program. The survey results did not identify any conductors that could be indicative of nickel
sulphides.
The MLEM survey was followed in late December by 4 days of field mapping and rock chip sampling. The
mapping program discovered gossanous material in the southwest of the Mt Alexander tenement area
associated with quartz veining and structures identified in the aeromagnetic survey. However these gossans
were barren. No further work was completed, and the Company declined to exercise the option to acquire
an interest in this tenement package.
New Opportunities
The Company continues to assess new opportunities for high demand metals, such as gold, nickel, tin,
copper, nickel and cobalt, to supply the increasing demand for technology metals consumed in the rapidly
growing batteries, electric motors and electronics industry.
Corporate
Capital Raisings and Share issues
During the period, the Company issued 395,326,674 ordinary fully paid shares following the exercise of
395,326,674 CAVOA listed options exercisable at $0.007 raising $2,767,287.
In August 2020, the Company paid an option fee of $100,000 cash and issued 37.5 million ordinary shares to
Western Resources Pty Ltd for the right to acquire 80% of the Kookynie Gold Project. The Company also
issued 1.5 million shares to Gold Geological Consulting Pty Ltd as a fee for facilitating the transaction.
In September and October 2020, the Company issued 99 million shares to Mr Klaus Eckhof arising from the
conversion of 99 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, $0.009 and $0.0011 respectively 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.
In October 2020, the Company paid an option fee of $75,000 and issued 10 million ordinary shares to Western
Resources Pty Ltd for the right to acquire 80% of the Ora Banda South Gold Project.
In October 2020, the Company agreed to acquire 100% of tenement E40/394 from Bruce Legendre at the
Kookynie Gold Project for a total consideration of $5,000 plus 1% gross royalty on revenue.
In March and April 2021, the Company paid $50,000 in cash and issued 20 million fully paid ordinary shares
for the acquisition of the Barracuda PGE-Ni-Cu Project. In addition, a 0.5% Net Smelter Return royalty was
granted on minerals produced from the tenement.
In March 2021, the Company issued 300 million shares at $0.007 each to raise $2.1 million to high net worth
overseas, sophisticated and professional investors, comprising existing and new shareholders (“Placement”)
(before costs of raising). 150 million free attaching options (exercisable at $0.01 on or before 31 July 2022)
were issued to the participants of the Placement, following shareholder approval received at a general meeting
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CARNAVALE RESOURCES LIMITED
REVIEW OF OPERATIONS
of shareholders held in May 2021. Golden Triangle Capital Pty Ltd (‘GTCap’) was appointed as Lead Manager
for the Placement. For managing the capital raising (including obtaining the firm commitments), GTCap
received a 6% capital raising fee and received 40 million unlisted options exercisable at $0.01 each on or
before 31 July 2022.
In May 2021, following receipt of shareholder approval, Directors, Mr Ron Gajewski subscribed for 15 million
new ordinary shares (and 7.5 million attaching options) and Mr Andrew Beckwith subscribed for 3 million new
ordinary shares (and 1.5 million attaching options) raising $126,000.
Key appointments
In May 2021, the Company advised the appointment of Humphrey Hale as Chief Executive Officer (CEO),
effective 1st June 2021.
Mr Hale held the role of consulting Managing Geologist from July 2020 and has successfully managed the
acquisition of new opportunities and exploration of the Company’s assets. Carnavale is pleased that Mr Hale
has formally joined the team to take the Company to the next discovery.
Mr Hale has over 25 years’ experience in the resource industry, exploring and developing assets. His most
recent role has been as an exploration and mining consultant, providing corporate and project development
services to the gold and battery metal sectors, including Chalice Gold Mines Ltd and Erinbar Ltd. Prior to this,
as Executive Director of ASX listed Infinity Lithium Ltd, he was instrumental in the growth and development of
the San Jose lithium asset in Spain.
Mr Hale was 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 acquisition to construction. During his time as MD at Wolf, Humphrey negotiated offtake
agreements and structured Project finance.
Prior to this Humphrey was exploration manager at AngloGold Ashanti’s (AGA) Sunrise Dam Gold Mine
responsible for mine exploration and the substantial drill out required for the UG feasibility study.
Humphrey’s experience includes the development of exploration assets to resources, the management and
delivery of feasibility studies and associated substantial capital raisings. Through his previous roles Humphrey
has gained extensive experience in market equities, strategy development, compliance with ASX listing rules
and disclosures including responsible corporate governance, brand development and investor relations.
Competent Person’s Statement
The information in this report that relates to Exploration Results is based on, and fairly represents, information
compiled by Mr Humphrey Hale, who is a Member of the Australasian Institute of Geoscientists. Mr Hale is the
Chief Executive Officer of Carnavale and has sufficient experience which is relevant to the style of
mineralisation and type of deposit under consideration and to the activity he is undertaking to qualify as a
competent person as defined in the 2012 Edition of the “Australasian Code for reporting of Exploration Results,
Exploration Targets, Mineral Resources and Ore Reserves” (JORC Code). Mr Hale consents to the inclusion
in this report of the matters based upon his information in the form and context in which it appears.
Information relating to Previous Disclosure
The technical and financial information in this report that relates to the Grey Dam Project has been previously
reported by the Company in compliance with JORC 2012 in various releases between 19 March 2018 and 6
November 2020. The technical and financial information in this report that relates to the Kookynie Gold Project
has been previously reported by the Company in compliance with JORC 2012 in various releases between 4
August 2020 and 15 July 2021. The technical and financial information in this report that relates to the Ora
Banda South Gold Project has been previously reported by the Company in compliance with JORC 2012 in
various releases between 5 October 2020 and 2 September 2021. The technical and financial information in
this report that relates to the Barracuda PGE-Ni-Cu Project has been previously reported by the Company in
compliance with JORC 2012 in various releases between 11 March 2021 and 6 May 2021.
The Company confirms that it is not aware of any new information or data that materially affects the information
included in these earlier 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.
15
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 2021 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
Non-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
Non-Executive Director
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 is currently
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 9.0Moz, and the recent discovery of the large Hemi gold 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
Date appointed
9 May 2017
5 February 2018
Date ceased
-
-
16
CARNAVALE RESOURCES LIMITED
DIRECTORS’ REPORT
COMPANY SECRETARY
Paul Jurman, BCom, CPA
Appointed 22 November 2006
Mr Jurman is a Certified Practising Accountant with over 15 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
135,728,409
36,361,370
5,000,000
Unlisted Options
Ex $0.01, expiring 31/07/22
7,500,000
1,500,000
-
Unlisted Options
Ex $0.012, expiring 30/11/23
25,000,000
25,000,000
10,000,000
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 2021 was $1,487,002 (2020: $2,355,740). 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 0.07 cents (30 June 2020: 0.17 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 2021 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 2021/22
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.
17
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
gold, cobalt, nickel, tin, 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.
• The Company announced it elected to exercise its Option pursuant to the agreement to acquire 80% of
the Kookynie Gold Project, comprising tenements E40/355, P40/1380 and P40/1381 from Western
Resources Pty Ltd and upon exercise of the Option, paid $250,000 cash and issued 50 million ordinary
shares to Western Resources Pty Ltd. Western Resources Pty Ltd agreed to a voluntary 3 month
escrow on the ordinary shares issued.
ENVIRONMENTAL ISSUES
The Group is aware of its environmental obligations with regards to its exploration activities and ensures that it
complies with all regulations when carrying out exploration work.
DIRECTORS’ MEETINGS
The number of meetings of the Directors and the number of meetings attended by each Director during the year
ended 30 June 2021 were:
Name
R Gajewski
A Beckwith
R Brans
Eligible to attend
4
4
4
Attended
4
4
4
There were 4 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.
18
CARNAVALE RESOURCES LIMITED
DIRECTORS’ REPORT
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
This report outlays the remuneration arrangements in place for the Key Management Personnel (as defined
under section 300A of the Corporations Act 2001) of Carnavale Resources Limited.
The following were Key Management Personnel of the Company during or since the end of the financial period.
Directors
R Gajewski
A Beckwith
R Brans
Non-Executive Chairman
Non-Executive Director
Non-Executive Director
Appointed 18 October 2006
Appointed 29 July 2014
Appointed 17 September 2013
Other Senior Management
The term ‘senior management’ is used in this remuneration report to refer to the following persons. Except as
noted, the named persons held their current position for the whole of the financial year and since the end of the
financial year:
Senior Management
H Hale
Chief Executive Officer
Appointed 1 June 2021
There have been no other changes of Key Management Personnel after the reporting date and up to the date
the financial report was authorised for issue.
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 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.
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.
19
CARNAVALE RESOURCES LIMITED
DIRECTORS’ REPORT
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 Structure
In accordance with best practice corporate governance, the structure of remuneration for Non-Executive
Directors and Executive Directors is separate and distinct.
Details of Remuneration
Details of the remuneration of the Directors and other Key Management Personnel of the Company are set out
in the following table. The Key Management Personnel of the Company are the Directors of Carnavale
Resources Limited and the Chief Executive Officer. Detail of the employment contract with the Chief Executive
Officer is as follow:
Name
Term of Agreement
Base Salary
including
Superannuation
Termination Benefit
Humphrey Hale
Chief Executive Officer
Ongoing commencing 1
June 2021
$198,000
May be terminated by either Mr Hale
or the Company by providing three
months’ notice.
Voting and comments made at the Company’s 2020 Annual General Meeting (AGM) – At the 2020 AGM,
99.98% of the votes received supported the adoption of the remuneration report for the year ended 30 June
2020. The Company did not receive any specific feedback at the AGM regarding its remuneration practices.
Remuneration of KMP:
Remuneration for the year ended 30 June 2021
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, Directors
Other KMP
Chief Executive
Officer
H Hale
Total KMP
42,000
30,000
28,438
100,438
26,000
-
-
26,000
-
-
2,702
2,702
218,187
218,187
78,917
515,291
286,187
248,187
110,057
644,431
-
100,438
173,800
199,800
1,425
4,127
55,695
570,986
230,920
875,351
76.24
87.91
71.71
24.12
20
CARNAVALE RESOURCES LIMITED
DIRECTORS’ REPORT
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
Accounting, secretarial and corporate service fees of $92,352 (2020: $55,811) and rental fees of $30,000 (2020:
$30,000) were paid or payable during the year ended 30 June 2021 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 2021
Key Management
Personnel
Grant date
Number granted
Number vested at
year end
Average fair value
per option at grant
date
Maximum
total value
of grant yet
to vest
R Gajewski
A Beckwith
R Brans
Other KMP
H Hale
30 Nov 2020 25,000,000
30 Nov 2020 25,000,000
30 Nov 2020 10,000,000
25,000,000
25,000,000
10,000,000
0.71 cents
0.71 cents
0.71 cents
31 July 2020 15,000,000
15,000,000
0.355 cents
-
-
-
-
Assumptions used in valuing the options issued are as follows:
Grant Date
Expiry Date
31 July 2020
31 July 2020
30 Nov 2020
31 July 2022
31 July 2022
30 Nov 2023
Exercise
price
Fair value
Price of
per
shares on
option
grant date
0.55 cents
0.37 cents 1 cent
0.34 cents 1.2 cents 0.55 cents
0.71 cents 1.2 cents 0.9 cents
Expected
Volatility
164%
164%
152%
Risk free
interest
rate
0.25%
0.25%
0.25%
Dividend
yield
-
-
-
Each option entitles the holder to purchase one ordinary share in the Company. The estimated value disclosed
above is calculated at the date of grant using the Black-Scholes option pricing model.
Other than the above, no options over unissued ordinary shares 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 options over unissued ordinary shares since the end of the financial year to
any Directors or officers as part of their remuneration.
Performance Rights granted as part of remuneration for the year ended 30 June 2021
The Company has not granted any performance rights during the financial year to any Directors or officers as
part of their remuneration. The following performance rights were granted during the year ended 30 June 2019
and expired unexercised on 30 June 2021.
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
- 30 June 2021
- 30 June 2021
- 30 June 2021
21
CARNAVALE RESOURCES LIMITED
DIRECTORS’ REPORT
Performance Rights granted as part of remuneration for the year ended 30 June 2021 - continued
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 2021
Directors
R Gajewski
A Beckwith
R Brans
Total
Other KMP
H Hale
Total
Balance at
1 July 2020
Granted as
remuneration
Net other
change (i)
Balance at 30
June 2021
96,582,728
31,361,370
4,000,000
131,944,098
-
131,944,098
-
-
-
-
-
-
39,145,681
5,000,000
1,000,000
45,145,681
135,728,409
36,361,370
5,000,000
177,089,779
-
45,145,681
-
177,089,779
(i)
In May 2021, following receipt of shareholder approval, Directors, Mr Gajewski subscribed for 15 million
new ordinary shares (and 7.5 million attaching options) and Mr Beckwith subscribed for 3 million new
ordinary shares (and 1.5 million attaching options) raising $126,000. The Directors were allotted a total
of 27,145,681 ordinary shares on exercise of 27,145,681 CAVOA listed options at $0.007 each raising
$190,019.76.
Option holdings of key management personnel
Year ended 30 June 2021
Directors
R Gajewski
A Beckwith
R Brans
Total
Other KMP
H Hale
Total
Balance at 1
July 2020
Granted as
remuneration
Net other
change (i)
Net other
change (i)
Balance at 30
June 2021
24,145,681
2,000,000
1,000,000
27,145,681
25,000,000
25,000,000
10,000,000
60,000,000
(24,145,681)
(2,000,000)
(1,000,000)
(27,145,681)
7,500,000
1,500,000
-
9,000,000
32,500,000
26,500,000
10,000,000
69,000,000
-
27,145,681
15,000,000
75,000,000
-
(27,145,681)
-
9,000,000
15,000,000
84,000,000
(i)
Refer to (i) above under Shareholdings of key management personnel.
Performance Rights holdings of key management personnel
Year ended 30 June 2021
Directors
R Gajewski
A Beckwith
R Brans
Total
Balance at 1
July 2020
Granted as
remuneration
Net other
change (i)
Balance at 30
June 2021
15,000,000
15,000,000
3,000,000
33,000,000
-
-
-
-
(15,000,000)
(15,000,000)
(3,000,000)
(33,000,000)
-
-
-
-
(i)
The performance rights expired unexercised on 30 June 2021 as the vesting conditions were not met.
End of Remuneration report
22
CARNAVALE RESOURCES LIMITED
DIRECTORS’ REPORT
SHARE OPTIONS AND PERFORMANCE RIGHTS
As at the date of this report, there are 306,000,000 Unlisted Options on issue.
Unlisted Options
Unlisted Options
Unlisted Options
Unlisted Options
Number
214,000,000
15,000,000
7,000,000
70,000,000
Exercise Price (cents)
1.0
1.5
1.2
1.2
Expiry Date
31 July 2022
31 July 2022
30 November 2022
30 November 2023
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 as follows:
•
•
•
•
In August 2020 the Company issued a total of 15,000,000 options exercisable at $0.01 on or before 31
July 2022 and 15,000,000 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.
In November 2020 the Company issued 7,000,000 options exercisable at $0.012 on or before 30
November 2022 to a technical consultant, responsible for implementing the ongoing exploration
activities.
In November 2020, following shareholder approval received at the annual general meeting of
shareholders held on 27 November 2020, a total of 70 million options were issued to Mr Gajewski
(25,000,000 options), Mr Beckwith (25,000,000 options), Mr Brans (10,000,000) and Mr Jurman
(10,000,000 options). The options expire on 30 November 2023 and are exercisable at $0.012 each;
and
In May 2021, the Company allotted 159,000,000 free attaching options (exercisable at $0.01 on or
before 31 July 2022) to sophisticated and professional investors who participated in the March 2021
placement of 318,000,000 fully paid shares at an issue price of $0.007 each to raise $2,226,000. A
further 40,000,000 options, on the same terms, were issued to Golden Triangle Capital Pty Ltd as partial
consideration for managing the March 2021 placement.
There were no options issued after 30 June 2021 and up to the date of this report.
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
In accordance with the constitution, except as may be prohibited by the Corporations Act 2001, every officer or
agent of the 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 $9,657 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.
NON - AUDIT SERVICES
There have been no non-audit services provided by the Group’s auditor during the year (2020: Nil).
23
CARNAVALE RESOURCES LIMITED
DIRECTORS’ REPORT
AUDITOR’S INDEPENDENCE DECLARATION
The lead auditor’s independence declaration for the year ended 30 June 2021 has been received and forms part
of the directors’ report and can be found on the following page of the annual report.
CORPORATE GOVERNANCE STATEMENT
The Board of Directors of the Company is responsible for the corporate governance of the Company and guides
and monitors the business and affairs 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 the extent to which they have followed the
recommendations set by the ASX Corporate Governance Council during the reporting period. The Company
has disclosed this information on its website at www.carnavaleresources.com/corporate-governance. The
Corporate Governance Statement is current as at 30 June 2021, and has been approved by the Board of
Directors.
The Company’s website at www.carnavaleresources.com contains a corporate governance section that includes
copies of the Company’s corporate governance policies.
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 24th day of September 2021.
Perth, Western Australia
24
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 2021, 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
24 September 2021
M R Ohm
Partner
25
CARNAVALE RESOURCES LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2021
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
2021
$
10,627
10,627
2020
$
28,381
28,381
(576,034)
(131,174)
(11,877)
(529)
(813,862)
(298,913)
(1,881,695)
-
(10,392)
(193,121)
(1,522,849)
35,847
(2,355,740)
-
3
11
14
5
Net loss attributable to members of the parent entity
(1,487,002)
(2,355,740)
Other comprehensive income for the period, net of tax
-
-
Total comprehensive loss for the year
(1,487,002)
(2,355,740)
Loss per share
Basic – cents
Diluted – cents
16
16
(0.07)
(0.07)
(0.17)
(0.17)
The accompanying notes form part of these financial statements
26
CARNAVALE RESOURCES LIMITED
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2021
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
2021
$
2020
$
17(a)
8
9
3,529,684
118,479
13,815
3,661,978
1,189,773
25,413
10,819
1,226,005
10
11
12
13
14
15
20,000
3,463,595
3,483,595
20,000
1,006,965
1,026,965
7,145,573
2,252,970
291,661
291,661
76,610
76,610
291,661
76,610
6,853,912
2,176,360
36,484,552
2,583,326
(32,213,966)
6,853,912
31,154,097
1,749,227
(30,726,964)
2,176,360
The accompanying notes form part of these financial statements
27
CARNAVALE RESOURCES LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2021
Consolidated
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
Issued
capital
$
Reserves
$
Accumulated
losses
$
Total
$
Balance at 1 July 2020
31,154,097
1,749,227
(30,726,964)
2,176,360
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 and
options issued
Fair value of performance rights
converted
Balance at 30 June 2021
-
-
5,171,692
-
-
-
-
992,862
(1,487,002)
(1,487,002)
(1,487,002)
(1,487,002)
-
-
5,171,692
992,862
158,763
36,484,552
(158,763)
2,583,326
-
(32,213,966)
-
6,853,912
The accompanying notes form part of these financial statements
28
CARNAVALE RESOURCES LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2021
Note
Consolidated
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
17(b)
Cash flows from investing activities
Payments for exploration and evaluation expenditure
Payments for acquisition of exploration tenements
Refunds from exploration 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
2021
$
2020
$
(548,999)
(4,377)
1,947
10,000
(541,429)
(1,695,971)
(265,323)
8,714
(1,952,580)
(412,484)
-
8,150
10,000
(394,334)
(727,897)
(30,000)
-
(757,897)
4,993,287
(158,944)
4,834,343
2,227,212
(76,450)
2,150,762
Net increase in cash and cash equivalents held
2,340,334
998,531
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
1,189,773
191,201
(423)
41
Cash and cash equivalents at the end of the financial year
17(a) 3,529,684
1,189,773
The accompanying notes form part of these financial statements
29
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
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 2021
In the year ended 30 June 2021, 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.
Standards and Interpretations on issue not yet effective
The Directors have also reviewed all Standards and Interpretations that have been issued but are not
yet effective for the year ended 30 June 2021.
As a result of this review the Directors have determined that there is no material impact of the Standards
and Interpretations on issue not yet effective on the Group and, therefore, no change is necessary to
Group accounting policies.
(c)
Statement of compliance
The financial statement of Carnavale Resources Limited (the Company) for the year ended 30 June
2021 was authorised for issue in accordance with a resolution of the Directors on 24 September 2021.
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’).
30
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(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 2021 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.
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.
31
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(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 control of the goods or services has passed, and 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.
32
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
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.
33
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(m) Financial Instruments
Investments and other financial assets are initially measured at fair value. Transaction costs are included
as part of the initial measurement, except for financial assets at fair value through profit or loss. Such
assets are subsequently measured at either amortised cost or fair value depending on their
classification. Classification is determined based on both the business model within which such assets
are held and the contractual cash flow characteristics of the financial asset unless an accounting
mismatch is being avoided.
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.
Financial assets are derecognised when the rights to receive cash flows have expired or have been
transferred and the consolidated entity has transferred substantially all the risks and rewards of
ownership. When there is no reasonable expectation of recovering part or all of a financial asset, its
carrying value is written off.
Financial assets at fair value through profit or loss
Financial assets not measured at amortised cost or at fair value through other comprehensive income
are classified as financial assets at fair value through profit or loss. Typically, such financial assets will
be either be: (i) held for trading, where they are acquired for the purpose of selling in the short-term with
an intention of making a profit, or a derivative; or (ii) designated as such upon initial recognition where
permitted. Fair value movements are recognised in profit or loss.
Financial assets at fair value through other comprehensive income
Financial assets at fair value through other comprehensive income include equity investments which the
Group intends to hold for the foreseeable future and has irrevocably elected to classify them as such
upon initial recognition.
Impairment of financial assets
The Group recognises a loss allowance for expected credit losses on financial assets which are either
measured at amortised cost or fair value through other comprehensive income. The measurement of
the loss allowance depends upon the consolidated entity's assessment at the end of each reporting
period as to whether the financial instrument's credit risk has increased significantly since initial
recognition, based on reasonable and supportable information that is available, without undue cost or
effort to obtain.
Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-
month expected credit loss allowance is estimated. This represents a portion of the asset's lifetime
expected credit losses that is attributable to a default event that is possible within the next 12 months.
Where a financial asset has become credit impaired or where it is determined that credit risk has
increased significantly, the loss allowance is based on the asset's lifetime expected credit losses. The
amount of expected credit loss recognised is measured on the basis of the probability weighted present
value of anticipated cash shortfalls over the life of the instrument discounted at the original effective
interest rate.
For financial assets mandatorily measured at fair value through other comprehensive income, the loss
allowance is recognised in other comprehensive income with a corresponding expense through profit or
loss. In all other cases, the loss allowance reduces the asset's carrying value with a corresponding
expense through profit or loss.
34
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(n)
Foreign currency translation
Both the functional and presentation currency of Carnavale Resources Limited is Australian dollars.
Each entity in the Group determines its own functional currency and items included in the financial
statements of each entity are measured using that functional currency.
Transactions in foreign currencies are initially recorded in the functional currency by applying the
exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in
foreign currencies are retranslated at the rate of exchange ruling at the balance date.
All exchange differences in the consolidated financial report are taken to profit or loss with the exception
of differences on foreign currency borrowings that provide a hedge against a net investment in a foreign
entity. These are taken directly to equity until the disposal of the net investment, at which time they are
recognised in profit or loss.
Tax charges and credits attributable to exchange differences on those borrowings are also recognised
in equity. Non-monetary items that are measured in terms of historical cost in a foreign currency are
translated using the exchange rate as at the date of the initial transaction. Non-monetary items
measured at fair value in a foreign currency are translated using the exchange rates at the date when
the fair value was determined.
As at the reporting date the assets and liabilities of this subsidiary are translated into the presentation
currency of Carnavale Resources Limited at the rate of exchange ruling at the balance date and its
statement of financial performance is translated at the weighted average exchange rate for the year.
The exchange differences arising on the translation are taken directly to a separate component of equity.
On disposal of a foreign entity, the deferred cumulative amount recognised in equity relating to that
particular foreign operation is recognised in profit or loss.
(o) 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
(p)
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.
(q)
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.
35
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(r)
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.
(s)
Share based payments
For equity-settled share-based payment transactions, the Group shall measure the goods or services
received, and the corresponding increase in equity, directly, at the fair value of the goods or services
received, unless that fair value cannot be estimated reliably. If the Group cannot estimate reliably the
fair value of the goods or services received, the Group shall measure their value, and the corresponding
increase in equity, indirectly, by reference to1 the fair value of the equity instruments granted.
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.
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.
36
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
2.
(t)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
(u) 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.
37
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
3.
REVENUE
Other revenue
Interest earned
Other income
4.
EXPENSES
Consolidated
2021
$
1,912
8,715
10,627
2020
$
8,381
20,000
28,381
Consolidated
2021
$
2020
$
131,174
11,877
1,881,695
-
Loss before income tax includes the following
specific expenses:
Exploration expenditure impaired
Due diligence expenses
INCOME TAX
5.
(a)
Prima facie tax benefit at 30% (2020: 27.5%) on loss from ordinary activities is reconciled to the
income tax provided in the financial statements
Loss before income tax
Consolidated
2021
$
(1,487,002)
2020
$
(2,355,740)
Prima facie income tax benefit at 30% (2020: 27.5%)
446,101
647,829
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
(11,228)
550,089
(39,352)
33,948
(244,159)
10,754
(185)
745,968
(745,968)
-
(1,878)
123,822
(517,466)
17,039
(53,108)
5,500
(234)
221,504
(221,504)
-
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
2021
$
9,155,690
2,795,459
104,534
12,055,683
2020
$
7,731,110
2,562,504
30,228
10,323,842
(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;
38
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
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
A Beckwith
R Brans
Senior Management
H Hale
(b) Compensation of key management personnel
Short-term employee benefits
Post-employment benefits
Share-based payments
Consolidated
2021
$
761,827
2020
$
230,165
Consolidated
2021
$
2020
$
26,342
26,342
25,326
25,326
Consolidated
2021
$
300,238
4,127
570,986
875,351
2020
$
159,750
2,280
92,184
254,214
Information regarding individual directors’ and senior management compensation is provided in the
Remuneration report on pages 19 to 22.
(c) Other key management personnel transactions
Accounting, secretarial and corporate service fees of $92,352 (2020: $55,811) and rental fees of
$30,000 (2020: $30,000) were paid or payable during the year ended 30 June 2021 on normal terms
and conditions to Corporate Consultants Pty Ltd, a company in which Mr Gajewski is a director and has
a beneficial interest.
39
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
8.
CURRENT RECEIVABLES
Other receivables
Consolidated
2021
$
118,479
118,479
2020
$
25,413
25,413
Other receivables represent amounts outstanding for goods and services tax (GST) and R & D tax
refund, 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
2021
$
2020
$
13,815
10,819
Consolidated
2021
$
20,000
2020
$
20,000
Consolidated
2021
$
2020
$
3,463,595
1,006,965
1,006,965
754,173
1,833,631
(131,174)
3,463,595
2,388,399
50,000
450,261
(1,881,695)
1,006,965
(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 to acquire up to 80% of the Mt Alexander Nickel Project. The prior
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
2021
$
2020
$
291,661
76,610
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.
40
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
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
2021
Number
2020
Number
1,495,403,629 742,999,560
2021
$
2020
$
31,154,097 28,969,953
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
Shares issued during period on conversion
of performance rights
Shares issued during the period on exercise
of options
Shares issued in August 2020 as initial
share consideration for the right to earn 80%
of the Kookynie Gold Project
Shares issued in August 2020 as facilitation
fee in relation to the Kookynie Gold Project
Shares
for
acquisition of exploration licence P40/1480
Shares issued in October 2020 as initial
share consideration for the right to earn 80%
of the Ora Banda Gold Project
Shares
consultancy services
Kookynie Gold Project
Share placement at an issue price of 0.7
cents each in March and May 2021
Shares issued in April 2021 for acquisition
of exploration licence E58/551
Transaction costs arising from issue of
securities
in October 2020
to
relating
in September 2020
for
the
issued
issued
- 742,404,069
-
10,000,000
-
-
2,227,212
20,000
99,000,000
395,326,674
37,500,000
1,500,000
1,500,000
10,000,000
2,000,000
318,000,000
20,000,000
-
-
-
-
-
-
-
-
-
-
-
158,763
2,767,287
206,250
7,500
18,000
110,000
20,000
2,226,000
154,600
-
-
-
-
-
-
-
-
-
(337,945)
(63,068)
Balance at end of year
2,380,230,303 1,495,403,629
36,484,552 31,154,097
(c)
Share options
Options to subscribe for ordinary shares in the capital of the Company have been granted as follows:
2021
Exercise
Period
On or before 30
September 2020 (i)
On or before 31 July
2022 (ii)
On or before 31 July
2022 (ii)
Exercise
Price
Opening
Balance
1 July 2020
Options
Issued
2020/2021
Number
Number
Options
Exercised /
Expired
2020/2021
Number
Closing
Balance
30 June 2021
Number
$0.007
408,702,011
-
(408,702,011)
-
$0.01
$0.015
-
-
15,000,000
15,000,000
-
-
15,000,000
15,000,000
41
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
13.
ISSUED CAPITAL (continued)
2021
Exercise
Period
Exercise
Price
Opening
Balance
1 July 2020
Options
Issued
2020/2021
On or before 31 July
2022 (iii)
On or before 30
November 2022 (iv)
On or before 30
November 2023 (v)
Total
Number
Number
-
-
-
199,000,000
7,000,000
70,000,000
$0.01
$0.012
$0.012
Options
Exercised /
Expired
2020/2021
Number
-
-
-
Closing
Balance
30 June 2021
Number
199,000,000
7,000,000
70,000,000
408,702,011
306,000,000
(408,702,011)
306,000,000
(i)
(ii)
(iii)
(iv)
(v)
During the period, the Company allotted 395,326,674 ordinary fully paid shares following the
exercise of 395,326,674 CAVOA listed options exercisable at $0.007 raising $2,767,287.
13,375,337 CAVOA options expired unexercised on 30 September 2020.
In July 2020, the Company issued 30,000,000 unlisted options, expiring on 31 July 2022 to
technical consultants, including 15,000,000 to Mr Hale (CEO).
In May 2021, the Company allotted 159,000,000 free attaching options to sophisticated and
professional investors who participated in the March and May 2021 placement of 318,000,000
fully paid shares at an issue price of $0.007 each to raise $2,226,000. A further 40,000,000
options were issued to Golden Triangle Capital Pty Ltd as partial consideration for managing
the March 2021 placement.
In November 2020, the Company issued 7,000,000 unlisted options to a technical consultant.
In November 2020, following shareholder approval received at the annual general meeting of
shareholders held on 27 November 2020, a total of 70,000,000 options were issued to Mr
Gajewski (25,000,000 options), Mr Beckwith (25,000,000 options), Mr Brans (10,000,000) and
Mr Jurman (10,000,000 options).
2020
Exercise
Period
Exercise
Price
Opening
Balance
1 July 2020
Options
Issued
2020/2021
Number
Number
Options
Exercised /
Expired
2020/2021
Number
Closing
Balance
30 June 2021
Number
On or before 30
December 2019
On or before 30
September 2020 (i), (ii)
Total
(d) Performance rights
$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
Performance rights in the capital of the Company have been granted as follows
2021
Grant Date
Expiry
Date
Opening
Balance
1 July 2020
Rights
Issued
2020/2021
Number
Number
6 September 2019 and
22 November 2019 (i)
10 August 2018
31 Dec
2020
30 June
2021
Total
-
-
99,000,000
36,000,000
135,000,000
42
Rights
Exercised /
Expired
2020/2021
Number
(99,000,000)
(36,000,000)
(135,000,000)
Closing
Balance
30 June 2021
Number
-
-
-
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
13.
ISSUED CAPITAL (continued)
(i) In September 2020, the Company issued 99 million shares to Mr Klaus Eckhof arising from the
conversion of 99 million performance rights, which vested upon the completion of the market vesting
conditions.
The performance rights were 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
2021
$
2020
$
2,583,326
2,583,326
1,749,227
1,749,227
(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
Fair value of options issued to directors, company
secretary and consultants
Shares issued on conversion of performance rights by
technical consultant
Balance at end of year
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
43
Consolidated
2021
$
2020
$
1,749,227
1,556,106
166,496
193,121
826,366
-
(158,763)
2,583,326
-
1,749,227
Consolidated
2021
$
(30,726,964)
(1,487,002)
(32,213,966)
2020
$
(28,371,224)
(2,355,740)
(30,726,964)
Consolidated
2021
$
2020
$
(1,487,002)
(2,355,740)
Number
Number
2,018,836,447
-
1,408,348,460
-
2,018,836,447
1,408,348,460
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
16. LOSS PER SHARE (continued)
Effect of Dilutive Securities - Share Options
The Company has 306,000,000 share options at 30 June 2021 (30 June 2020: 408,702,011). 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
2021
$
3,529,684
3,529,684
2020
$
1,189,773
1,189,773
(b) Reconciliation of loss after tax to net cash outflows from operations
Loss after income tax
Exploration expenditure impaired / expensed
Exploration bond refunded
Net exchange differences
Share-based payments expense
Due diligence expenses – shares issued
Consulting fees – shares issued
(Increase) / decrease in assets
Trade and other receivables
Increase / (decrease) in liabilities
Trade and other payables
Consolidated
2021
$
(1,487,002)
2020
$
(2,355,740)
131,174
(8,714)
420
813,862
7,500
20,000
1,881,695
-
10,467
193,121
-
-
(39,939)
(17,112)
21,270
(541,429)
(106,765)
(394,334)
(c) Non-cash investing activities
In August 2020, the Company issued 37.5 million shares as partial consideration to the vendor for the
right to acquire up to 80% of the Kookynie Gold Project.
In August 2020, the Company issued 1.5 million shares as a facilitation fee and in October 2020, the
Company issued 2 million shares for consultancy services all in relation to the Kookynie Gold Project.
In September 2020, the Company issued 1.5 million shares as partial consideration for the acquisition
of exploration licence P40/1480.
In September and October 2020, the Company issued 99 million shares to Mr Klaus Eckhof arising from
the conversion of 99 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, $0.009 and $0.0011
respectively for a consecutive period of at least 15 business days. The performance rights were
approved by shareholders at the 2019 Annual General Meeting.
In October 2020, the Company issued 10 million shares as partial consideration to the vendor for the
right to acquire up to 80% of the Ora Banda Gold Project.
In April 2021, the Company issued 20 million shares as partial consideration to the vendors for the
Barracuda PGE-Ni-Cu Project (granted license E58/551).
44
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
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 (2020: $82,300).
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 (2020: $20,000).
The Group has 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 (2020: $90,000).
In August 2020, the Company signed an exclusive and binding Option Agreement with Western
Resources Pty Ltd to acquire 80% of the Kookynie Gold Project and in order to maintain current
contractual rights, the Group has certain commitments to meet minimum expenditure requirements. The
current annual minimum lease expenditure commitments on this tenement package is $60,920. Under
the terms of the agreement, the Company elected to acquire 80% of the tenement before 28 July 2021
and paid $250,000 and issued 50 million ordinary shares to Western Resources Pty Ltd.
In September 2020, the Company agreed to purchase 100% of tenement P40/1480 at the Kookynie
Gold Project and in order to maintain current contractual rights, the Group must spend $6,560 to meet
minimum lease expenditure commitments.
In October 2020, the Company signed an exclusive and binding Option Agreement with Western
Resources Pty Ltd to acquire 80% of the Ora Banda South Gold Project and in order to maintain current
contractual rights, the Group has certain commitments to meet minimum expenditure requirements. The
current annual minimum lease expenditure commitments on this tenement package is $100,720. Under
the terms of the agreement, the Company may explore the tenement area and may elect to acquire 80%
of the tenement by 3 October 2022 by a payment of $150,000 and issue 15 million ordinary shares to
Western Resources Pty Ltd.
In April 2021, the Company agreed to purchase 100% of the Barracuda Platinum-Palladium-Nickel-
Copper (PGE-Ni-Cu) Project (granted license E58/551) and in order to maintain current contractual
rights, the Group must spend $20,000 to meet minimum lease expenditure commitments.
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.
45
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
18. COMMITMENTS AND CONTINGENCIES (continued
(b) Contingent liabilities
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%.
Barracuda Platinum-Palladium-Nickel-Copper (PGE-Ni-Cu) Project
• A 0.5% Net Smelter Return (‘NSR’) royalty is payable on all minerals produced from the
tenement.
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.
• The Company announced it elected to exercise its Option pursuant to the agreement to acquire
80% of the Kookynie Gold Project, comprising tenements E40/355, P40/1380 and P40/1381 from
Western Resources Pty Ltd and upon exercise of the Option, paid $250,000 cash and issued 50
million ordinary shares to Western Resources Pty Ltd. Western Resources Pty Ltd agreed to a
voluntary 3 month escrow on the shares issued.
46
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
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 that was material to the Group.
(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 2021
30 June 2020
Assets
Liabilities
Assets
Liabilities
$
-
$
-
$
-
$
-
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
%
2021
Financial assets
Cash and cash equivalents 17(a)
Trade and other
receivables
8
3,483,844
-
3,483,844
Financial liabilities
Trade and other payables
12
-
-
-
-
-
45,840
3,529,684
0.07
118,479
164,319
118,479
3,648,163
291,661
291,661
47
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
20. FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (continued)
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
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 2020.
Consolidated
30 June 2021
Variable rate instruments
Cash flow sensitivity (net)
30 June 2020
Variable rate instruments
Cash flow sensitivity (net)
Profit or (Loss)
100bp
increase
$
100bp
decrease
$
28,250
28,250
14,832
14,832
(28,250)
(28,250)
(14,832)
(14,832)
100bp
increase
$
28,250
28,250
14,832
14,832
Equity
100bp
decrease
$
(28,250)
(28,250)
(14,832)
(14,832)
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 2021
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.
2021
Within 1
Financial liabilities
Trade and other payables
Total Financial Liabilities
year
$
291,661
291,661
2020
Within 1
Financial liabilities
Trade and other payables
Total Financial Liabilities
year
$
76,610
76,610
49
Between 1
and 5
years
$
-
-
Between 1
and 5
years
$
-
-
After 5
years
$
-
-
After 5
years
$
-
-
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
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
2021
%
2020
%
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 Australia
and investing activities in Australia.
2021
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
$
Eliminations Consolidated
$
$
10,627
10,627
-
-
(1,353,018)
(169,528)
3,681,978
-
3,463,595
2,587,804
59,061
232,600
-
131,174
-
-
-
-
-
-
10,627
10,627
(1,522,849)
35,847
(1,487,002)
7,145,573
2,587,804
291,661
131,174
50
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
22. SEGMENT REPORTING (continued)
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
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
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
2021
$
3,545,191
3,359,250
6,904,441
50,529
50,529
2020
$
1,175,650
1,033,180
2,208,830
33,790
33,790
6,853,912
2,175,040
36,484,552
2,583,326
(32,213,966)
6,853,912
31,154,097
1,749,227
(30,728,284)
2,175,040
2021
$
2020
$
Loss for the year after income tax
Other comprehensive income
Total comprehensive loss
(1,485,682)
-
(1,485,662)
(2,354,274)
-
(2,354,274)
51
CARNAVALE RESOURCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
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 2021 or 30 June 2020 other than
as disclosed in Note 18 above.
(d) Contractual commitments for the acquisition of property, plant or equipment
As at 30 June 2021 (30 June 2020 – $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 2021 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 2021.
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 24th day of September 2021
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 2021, 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 2021 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.
Key Audit Matter
How our audit addressed the key audit
matter
Carrying value of exploration and evaluation
expenditure
Refer to Note 11
The Company has capitalised exploration and
evaluation expenditure of $3,463,595 as at 30
June 2021.
Our procedures included but were not
limited to the following:
54
Key Audit Matter
How our audit addressed the key audit
matter
Carrying value of exploration and evaluation
expenditure
Refer to Note 11
Our audit procedures determined that the
carrying value of exploration and evaluation
expenditure was a key audit matter as it was an
area which required the most communication
with those charged with governance and was
determined to be of key importance to the users
of the financial statements.
processes
- We obtained an understanding of the
key
associated with
management’s review of the carrying
value of exploration and evaluation
expenditure;
- We obtained evidence
the
Company has current rights to tenure
of its areas of interest;
that
- We considered the existence of any
indicators of impairment;
- We substantiated a sample of
additions to exploration expenditure
during the year;
- We enquired with management and
reviewed ASX announcements and
minutes of Directors’ meetings
to
ensure that the Company had not
decided to discontinue exploration and
evaluation at its areas of interest; and
- We examined the disclosure 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 2021, 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 2021.
In our opinion, the Remuneration Report of Carnavale Resources Limited for the year ended 30
June 2021 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
24 September 2021
M R Ohm
Partner
57
CARNAVALE RESOURCES LIMITED
SHAREHOLDER INFORMATION
The shareholder information set out below was applicable as at 21 September 2021.
1.
Distribution of holders of listed equity securities
Size of holding
Ordinary Shares
1
1,001
5,001
10,001
-
-
-
-
1,000
5,000
10,000
100,000
100,001 and over
2.
Voting rights
71
52
56
448
946
1,573
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
135,728,409
4.
Unmarketable parcels
As at 21 September 2021 there were 454 shareholders with unmarketable parcels of shares.
5.
Top 20 shareholders (CAV)
The names of the twenty largest shareholders as at 21 September 2021, who hold 49.54% of the fully
paid ordinary shares of the Company were as follows:
Name of holder
Number of
Shares
Percentage
held
Troca Enterprises Pty Ltd
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