CASTILLO COPPER LIMITED
(formerly known as Oakland Resources Limited)
ABN 52 137 606 476
Annual Report
30 June 2013
Corporate Directory
Directors
Mr. Brian McMaster (Non-Executive Chairman)
Dr. Nicholas Lindsay (Managing Director)
Mr. Scott Funston (Executive Director)
Mr. Daniel Crennan (Non-Executive Director)
Company Secretary
Mr. David McEntaggart
Registered Office and Principal Place of Business
Level 1
330 Churchill Avenue,
Subiaco, WA 6008
Australia
Telephone: + 618 9200 4491
Facsimile: + 618 9200 4469
Share Registry
Computershare Investor Services Pty Ltd
Level 2, Reserve Bank Building
45 St Georges Terrace
Perth, WA 6000
Telephone: + 618 9323 2000
Facsimile: + 618 9323 2033
Auditors
RSM Bird Cameron Partners
8 St Georges Terrace
Perth WA 6000 Australia
Stock Exchange Listing
Australian Securities Exchange
(Home Exchange: Perth, Western Australia)
ASX Code: CCZ
Contents
Directors’ Report
Corporate Governance Statement
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors’ Declaration
Auditor’s Independence Declaration
Independent Auditor’s Report
ASX Additional Information
Tenement Table
Page No
1
10
14
15
16
17
18
45
46
47
49
51
Castillo Copper Limited - Directors’ Report
The directors of Castillo Copper Limited and its subsidiaries (“Castillo” or the “Group”) submit the financial report of
the Group for the year ended 30 June 2013. In order to comply with the provisions of the Corporations Act 2001, the
directors report as follows:
DIRECTORS
The names, qualifications and experience of the Group’s Directors in office during the year and until the date of this
report are as follows. Directors were in office for this entire financial year unless otherwise stated.
Mr. Brian McMaster –Non-Executive Chairman (appointed 31 August 2013)
Mr. McMaster is a Chartered Accountant and has 20 years’ experience in the area of corporate reconstruction and
turnaround / performance improvement. Mr. McMaster’s experience includes numerous reorganisations and
turnarounds, including being instrumental in the recapitalisation and listing of 12 Australian companies on the ASX.
Mr. McMaster was a previous partner of the restructuring firm, Korda Mentha, and prior to that was a partner at Ernst
& Young. His experience includes significant working periods in the United States, South America, Asia and India.
Mr. McMaster is currently a Director of Lindian Resources Limited (appointed 20 June 2011), Caravel Energy Limited
(appointed 2 December 2011), Wolf Petroleum Limited (appointed 24 April 2012), The Waterberg Coal Company
Limited (appointed 17 April 2012), Black Star Petroleum Limited (appointed 9 August 2012), Paradigm Metals Limited
(appointed 14 September 2012) and Firestone Energy Limited (appointed 14 June 2013). He has not held any other
listed directorships in the past three years.
Dr. Nicholas Lindsay - Executive Director (appointed 21 May 2013)
Dr. Lindsay has over 25 years’ experience in the global mining industry, with focus on the technical and commercial
assessment, and the development of new business opportunities in various commodities including copper, gold and
iron ore in Australia, Former Soviet Union, South Africa and South America (Chile, Peru and Argentina). He has
worked in both the major and junior mining sectors, and as an Independent Consultant based in Chile, a country with
which he has a long association. He has a BSc Honours degree in Geology and an MBA from the University of Otago
(New Zealand), and a PhD from the University of the Witwatersrand (South Africa).
Dr. Lindsay is a member of the Australian Institute of Geoscientists and the AusIMM. Dr. Lindsay’s key experience is
the recognition, assessment and management of new business opportunities in the copper, zinc, gold, titanium
mineral sands, coal and iron ore sectors; including mergers and acquisitions, portfolio restructuring and disposals. Dr.
Lindsay also has extensive experience with the commercial development of mineral properties.
Dr. Lindsay is currently a director of Voyager Resources Limited (appointed 12 June 2009) and a director of Laguna
Resources Limited which has now been delisted (appointed 6 August 2009, delisted 15 February 2012).
Scott Funston - Executive Director (appointed 19 November 2012)
Mr. Funston is a qualified Chartered Accountant and Company Secretary with more than 10 years’ experience in the
mining industry and the accounting profession. His expertise is financial management, regulatory compliance and
corporate advice. Mr. Funston possesses a strong knowledge of the Australian Securities Exchange requirements
and currently assists or has previously assisted a number of resources companies operating throughout Australia,
South America, Asia, USA and Canada with financial accounting, stock exchange compliance and regulatory
activities.
Mr. Funston is currently a Director of Lindian Resources Limited (appointed 5 May 2011), Avanco Resources Limited
(appointed 17 March 2009), The Waterberg Coal Company Limited (appointed 5 April 2013) and Highfield Resources
Limited (appointed 2 November 2012). He has not held any other listed Directorships over the past three years.
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Mr. Daniel Crennan – Non-Executive Director (appointed 21 May 2013)
Mr. Crennan completed his Articles at Griffith Hack Patent and Trade Mark Attorneys, Lawyers. He also completed a
research internship at the International Criminal Tribunal for former Yugoslavia in the Hague under Judge Richard
May. Daniel co-authored the Law Council of Australia submission to the Joint Standing Committee on Treaties in
relation to the establishment of the International Criminal Court. Whilst undertaking his law degree, Mr. Crennan
studied Public International Law at Leiden University, the Netherlands. Mr. Crennan appears primarily in major
commercial disputes or prosecutions conducted by regulators.
Mr. Crennan is currently a director of ASX listed Haranga Resources Limited (appointed 28 March 2012) and The
Waterberg Coal Company Limited (appointed 12 April 2012). He was also previously a director of Hunnu Coal
Limited.
Mr. William Ryan –former Non-Executive Chairman (appointed 21 May 2013, resigned 31 August 2013)
Mr Ryan holds a Masters degree in Chemical Engineering and has over 40 years’ experience in mining, metallurgy
and management. His career has included 4 years in metallurgical research at Amdel in Adelaide, 11 years at
Endeavour Resources Limited in Melbourne, and a brief role at Bond Resources in 1981 to 1982. Following this, Mr
Ryan provided consultancy services through Rytech Pty Ltd. In 1987, Mr Ryan took control of what became Titan
Resources NL and resigned from that position after 17 years in June 2004.
Mr Ryan was the President of the influential mining lobby group AMEC for 5 years (1995 – 2000), a Councillor of the
WA Chamber of Minerals and Energy for 2 years and an inaugural Councillor of the Australian Gold Council. He is a
Fellow of the Australasian Institute of Mining and Metallurgy and a Fellow of the Australian Institute of Company
Directors.
Mr. Matthew Wood – former Executive Chairman (appointed 19 November 2012, resigned 21 May 2013)
Mr. Wood has over 20 years’ experience in the resource sector with both major and junior resource companies and
has extensive experience in the technical and economic evaluation of resource projects throughout the world. Mr.
Wood’s expertise is in project identification, negotiation, acquisition and corporate development. Mr. Wood has an
Honours degree in Geology from the University of New South Wales in Australia and a graduate certificate in mineral
economics from the Western Australian School of Mines.
Mr. Vernon Tidy – former Non-Executive Director (resigned 21 May 2013)
Mr. Tidy has more than 25 years’ experience in the resource sector. He was previously a partner with Ernst & Young
where he headed that firm’s Perth office Mining and Metals group. He has also worked in their Sydney and Port
Moresby offices.
During his time at Ernst & Young he worked with a broad range of companies ranging from multi-national mining,
multi commodity producers and junior explorers through to support companies to the industry. He primarily serviced
listed companies. His experience includes dealing with major industry transactions, fund raisings, restructures and
initial public offers. He has assisted companies listing on ASX, AIM and TSX.
Mr. Tidy has a Bachelor of Business degree from Curtin University, is a Fellow of the Institute of Chartered
Accountants in Australia and is a member of the Australian Institute of Company Directors.
Mr. Mark Arundell – former Managing Director (resigned 19 November 2012)
Mr. Arundell has over 25 years’ experience in the mining industry working for major companies such as Rio Tinto,
North Ltd and Renison Goldfields Consolidated. Mr. Arundell has a Masters of Economic Geology degree from the
University of Tasmania, an Honours degree in Geology from the University of Melbourne and a Graduate Certificate
in Management from Deakin University. Mr. Arundell is a member of the Australian Institute of Geoscientists.
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Mr. Arundell has extensive experience in New South Wales having been involved in the development of the Lucky
Draw gold mine (RGC), discovery and evaluation of the Hackneys Creek and Spring Gully gold deposits and as
exploration leader for the Northparkes and Lake Cowal projects (North). Mr. Arundell has also worked at Mt Lyell and
Henty and thus brings a wealth of experience in gold related Volcanic Massive Sulphide mineralisation to the
Company.
Mr. Anthony Polglase – former Non-Executive Director (resigned 19 November 2012)
With over 30 years multi-disciplined mining experience across ten different countries, Mr. Polglase is qualified in
mechanical and electrical engineering with an Honours degree in Metallurgy from the Camborne School of Mines,
UK. Mr. Polglase has acquired detailed knowledge relating to the development and operation of gold, copper, lead,
zinc and tin projects and has either been responsible for or closely involved with the commissioning of more than
seven mining projects. Project management including critical evaluation, implementation and commissioning are Mr.
Polglase's strengths. Mr. Polglase has a demonstrated ability of successfully bringing projects on line in the most
challenging of environments.
Mr. David McEntaggart – Company Secretary (appointed 19 November 2012)
Mr. McEntaggart has a Bachelor of Commerce and is a qualified Chartered Accountant with experience in the mining
industry and accounting profession. His experience includes exposure to Australian and international resource
companies. Mr. McEntaggart provides services to a number of companies specialising in financial accounting and
securities exchange compliance.
INTERESTS IN THE SECURITIES OF THE GROUP
As at the date of this report, the interests of the Directors in the securities of Castillo Copper Limited were:
Director
Ordinary Shares
Options over ordinary
B. McMaster
N. Lindsay
S. Funston
D Crennan
shares exercisable at
10 cents
1,750,000
-
750,000
-
1,270,000
5,765,001
2,895,001
500,000
RESULTS OF OPERATIONS
The net loss of the Group for the year after income tax was $633,333 (2012: $1,587,680) and the net assets of the
Group at 30 June 2013 was $3,171,186 (2012: $1,443,367).
DIVIDENDS
No dividend was paid or declared by the Group in the year and up to the date of this report.
CORPORATE STRUCTURE
Castillo Copper Limited is a company limited by shares that is incorporated and domiciled in Australia.
NATURE OF OPERATIONS AND PRINCIPAL ACTIVITIES
During the financial year, the principal activity was mineral exploration and examination of new resource
opportunities. The Group currently holds copper projects in Chile and gold projects in Australia.
EMPLOYEES
The Group had no employees at 30 June 2013 (2012:Nil).
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REVIEW OF OPERATIONS
During the year the Company completed the acquisition of Castillo Exploration Limited (formerly Castillo Copper
Limited). The acquisition of Castillo Exploration enhanced the project portfolio of the Company through ownership of
highly prospective Chilean Copper projects.
Exploration activity on the Chilean properties was completed in preparation for drilling in the spring and summer of
2013/14.
RIO ROCIN COPPER PROJECT
The Rio Rocin project consists of 4,650 hectares of concessions located approximately 140 km north of Santiago in
the San Felipe Province of the Valparaiso Region, on the same structural trend that hosts giant porphyry copper
mines such as El Teniente (Codelco), Los Bronces (Anglo American), Andina (Codelco) and Los Pelambres
(Antofagasta Minerals).
The two sectors of the project (2,200 ha) known as El Chilón and Los Bayos are granted mining concessions under
option and positioned within the Andrés-Amos porphyry copper cluster. This was discovered by the Anglo Cominco
joint venture in the 1980s and is now partially held by Teck Resources. Los Bayos (63% Castillo) forms a classic
leached cap overlying porphyry copper mineralisation, whereas Chilón (100% Castillo) is the southern sector
contiguous with Los Bayos.
The Company also has 2,450 hectares of additional exploration claims in the vicinity of Los Bayos and Chilón
sectors. These are yet to be tested.
Geology
The project area covers a significant portion of a northerly trending quartz-sericite-clay altered, mineralised diorite
porphyry, which intrudes the Upper Cretaceous-Lower Tertiary and Miocene volcano-sedimentary formations of
central Chile.
Los Bayos sector is interpreted to be a leached cap over the mineralised porphyry, with El Chilón connected to the
system by a regional north-south trending reverse fault. The principal target for exploration is supergene
mineralisation which may provide a higher grade for development than might occur in the primary mineralisation. It
is thought that the supergene, which would be generated from strong acid leaching at Los Bayos, has been
deposited below it and laterally in the Chilón sector using the principal structure as a conduit.
Exploration
Two phases of exploration have been undertaken and completed. In the first phase, detailed geological mapping
confirmed the identification and nature of the Andrés-Amos porphyry copper cluster and the location of Rio Rocin
properties within that feature.
The second phase comprised a comprehensive geophysical exploration, which included ground magnetics, induced
polarisation (dipole-dipole) and resistivity. The ground magnetics programme generated a magnetic low under Los
Bayos sector and northern-most part of the Chilón sector. On the basis of the ground magnetic work, two north-south
lines were surveyed by induced polarisation and resistivity methods.
The IP/resistivity (dipole-dipole) programme was designed to penetrate 400 metres, which was deemed necessary to
pick a full profile for potential mineralisation. The two lines were 4,000 metres long and 500 metres apart, with
measurements taken every 150 metres. The results of the IP and resistivity work show the presence of three
anomalies that require drill testing for supergene mineralisation. These coincide with the magnetic lows at Los
Bayos and northern Chilón and are high quality anomalies that are thought to provide indicators of supergene
sulphide mineralisation.
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Drilling
The identification and definition of geophysical anomalies for testing is a major advance in this project. The next
phase is drilling. A programme of 2,000 metres of diamond drilling is being planned for execution in the early
summer of late 2013.
POSADA AND RESGUARDO COPPER PROJECTS
Posada
The Posada project area (6,100 hectares) is located 60 km south of Copiapo on the copper-iron belt of Northern
Chile. Exploration work has focused on the identification of an iron oxide copper gold (IOCG) target hosted within the
Mesozoic arc volcanics. Induced Polarisation (IP) and resistivity work conducted in 2012 identified a large 4 x 1 km
anomaly. Recent ground magnetics has helped elucidate structural features and assisted in planning the next stage
in exploration, which is drilling. A programme of 2,000 metres of reverse circulation and diamond drilling is planned to
test the anomaly for mineralisation.
Resguardo
The Resguardo project area (1,840 hectares) is located 95 km north east of Copiapo at the southern end of the
Middle Tertiary porphyry copper belt that hosts the Salvador and Potrerillos porphyry copper mines. Exploration work
has focused on expanding the metallogenic footprint of the copper breccia pipe and mine on the property, with
alteration mapping and ground magnetics. This has revealed the structural elements and defined drill targets. About
2,000 metres of reverse circulation drilling is being planned.
CORPORATE
Following completion of the acquisition of Castillo Exploration Ltd, Mr William Ryan, Dr Nicholas Lindsay and Mr
Daniel Crennan were appointed to the Board of Directors with Mr Matthew Wood and Mr Vernon Tidy resigning. Mr
Scott Funston was appointed to the Board during the year whilst Mr Mark Arundell and Mr Anthony Polglase also
resigned during the year. On 31 August 2013, Mr Brian McMaster was appointed to the Board as Non-Executive
Chairman following the resignation of Mr William Ryan.
Castillo Copper maintains an aggressive position in continuous assessment of new opportunities as they arise in
Chile, and has acquired substantial areas of exploration concessions. In addition, it continues to rationalise its
tenement holdings in New South Wales.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
During the year the Group acquired 100% of the shares in Castillo Exploration Ltd, resulting in the acquisition of a
portfolio of Copper projects in Chile.
There were no other significant changes in the state of affairs of the Group during the year.
SIGNIFICANT EVENTS AFTER THE BALANCE DATE
On 28 August 2013 the Group announced that it had signed a mandate on a best endeavours basis to raise $3.5
million (before costs) through the issue of 350 million shares at $0.01 per share. The funds raised will be used to
advance the Company’s copper projects in Chile with drilling programmes planned and allow the Company to
continue to evaluate new opportunities as they arise.
On 31 August 2013 Mr Brian McMaster was appointed as Non-Executive Chairman of the Company following the
resignation of Mr William Ryan.
There were no other known significant events from the end of the financial year to the date of this report.
Castillo Copper Limited
5 2013 Annual Report to Shareholders
Castillo Copper Limited - Directors’ Report
LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS
Likely developments in the operations of the Company are set out in the above review of operations. Disclosure of
any further information has not been included in this report because, in the reasonable opinion of the Directors, to do
so would be likely to prejudice the business activities of the Group and is dependent upon the results of future
exploration and evaluation.
ENVIRONMENTAL REGULATION AND PERFORMANCE
The operations of the Group are presently subject to environmental regulation under the laws of the Commonwealth
of Australia and the State of New South Wales and the Republic of Chile. The Group is, to the best of its knowledge,
at all times in full environmental compliance with the conditions of its licenses.
SHARE OPTIONS
As at the date of this report, there were 17,100,000 unissued ordinary shares under options (17,100,000 at the
reporting date). The details of the options at the date of this report are as follows:
Number
Exercise Price $
12,100,000
5,000,000
0.20
0.10
Expiry Date
30 June 2014
30 June 2017
On 20 May 2013, 5,000,000 unlisted options exercisable at 10c before 30 June 2017 were issued as consideration
for corporate advisory services. No other options were issued during the financial year.
No option holder has any right under the options to participate in any other share issue of the Group or any other
entity. No options expired or were exercised during the financial year or since the end of the financial year.
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
The Group has made an agreement indemnifying all the Directors and Officers of the Group against all losses or
liabilities incurred by each Director or Officer in their capacity as Directors or Officers of the Group to the extent
permitted by the Corporation Act 2001. The indemnification specifically excludes wilful acts of negligence. The Group
paid insurance premiums in respect of Directors’ and Officers’ Liability Insurance contracts for current officers of the
Group. The liabilities insured are damages and legal costs that may be incurred in defending civil or criminal
proceedings that may be brought against the Officers in their capacity as Officers of entities in the Group. The total
amount of insurance premiums paid has not been disclosed due to confidentiality reasons.
DIRECTORS’ MEETINGS
During the financial year, in addition to regular Board discussions, the number of meetings of directors held during
the year and the number of meetings attended by each director were as follows:
Director
Mr. William Ryan
Mr. Matthew Wood
Dr. Nicholas Lindsay
Mr. Scott Funston
Mr. Daniel Crennan
Mr. Vernon Tidy
Mr. Mark Arundell
Mr. Anthony Polglase
Number of Meetings Eligible
Number of Meetings
to Attend
Attended
2
-
2
2
2
1
1
1
2
-
2
2
1
1
1
-
PROCEEDINGS ON BEHALF OF THE GROUP
No person has applied for leave of the court to bring proceedings on behalf of the Group or intervene in any
proceedings to which the Group is a party for the purpose of taking responsibility on behalf of the Group for all or any
part of those proceedings. The Group was not a party to any such proceedings during the year.
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Castillo Copper Limited - Directors’ Report
CORPORATE GOVERNANCE
In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of Castillo
Copper Limited support and have adhered to the principles of sound corporate governance. The Board recognises
the recommendations of the Australian Securities Exchange Corporate Governance Council, and considers that
Castillo Copper is in compliance with those guidelines to the extent possible, which are of importance to the
commercial operation of a junior listed resources company. During the financial year, shareholders continued to
receive the benefit of an efficient and cost effective corporate governance policy for the Group. The Group’s
Corporate Governance Statement and disclosures are contained elsewhere in the annual report.
AUDITOR’S INDEPENDENCE AND NON-AUDIT SERVICES
Section 307C of the Corporations Act 2001 requires the Group’s auditors to provide the Directors of Castillo Copper
Limited with an Independence Declaration in relation to the audit of the financial report. A copy of that declaration is
included within this report.
There were no non-audit services provided by the Group’s auditor.
REMUNERATION REPORT (AUDITED)
This report outlines the remuneration arrangements in place for directors and executives of Castillo Copper Limited in
accordance with the requirements of the Corporation Act 2001 and its Regulations. For the purpose of this report,
Key Management Personnel (KMP) of the Group are defined as those persons having authority and responsibility for
planning, directing and controlling the major activities of the Group, directly or indirectly, including any officer
(whether executive or otherwise) of the Group.
Details of Key Management Personnel
Mr. Brian McMaster (Non-Executive Chairman)
Dr. Nicholas Lindsay (Managing Director)
Mr. Scott Funston (Executive Director)
Mr. Daniel Crennan (Non-Executive Director)
Mr. William Ryan (former Non-Executive Chairman)
Mr. Matthew Wood (former Executive Chairman)
Mr. Vernon Tidy (former Non-Executive Director)
Mr. Mark Arundell (former Managing Director)
Mr. Anthony Polglase (former Non-Executive Director)
Remuneration Policy
The Board is responsible for determining and reviewing compensation arrangements for the Directors. The Board
assesses the appropriateness of the nature and amount of emoluments of such officers on a periodic basis by
reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder
benefit from the retention of a high quality board and executive team. The Group does not link the nature and
amount of the emoluments of such officers to the Group’s financial or operational performance. The expected
outcome of this remuneration structure is to retain and motivate Directors.
As part of its Corporate Governance Policies and Procedures, the Board has adopted a formal Remuneration
Committee Charter. Due to the current size of the Group and number of directors, the Board has elected not to create
a separate Remuneration Committee but has instead decided to undertake the function of the Committee as a full
Board under the guidance of the formal charter.
The rewards for Directors’ have no set or pre-determined performance conditions or key performance indicators as
part of their remuneration due to the current nature of the business operations. The Board determines appropriate
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Castillo Copper Limited - Directors’ Report
levels of performance rewards as and when they consider rewards are warranted. The Group has no policy on
executives and directors entering into contracts to hedge their exposure to options or shares granted as part of their
remuneration package.
The table below shows the performance of the Group as measured by loss per share since incorporation in June
2009:
As at 30 June
Loss per share (cents)
2013
(1.78)
2012
(5.29)
2011
(7.71)
2010
(2.30)
Details of the nature and amount of each element of the emolument of each Director and Executive of the Group for
the financial year are as follows:
Short term
Options
Post
employment
2013
Base Directors’ Consulting
Share based
Option
Salary
Fees
Fees
Payments
Superannuation
Total
Related
Director
Mr. William Ryan ¹4
Mr. Matthew Wood ²
Dr. Nicholas Lindsay¹
Mr. Scott Funston ²
Mr. Daniel Crennan¹
Mr. Vernon Tidy²
Mr. Mark Arundell³
Mr. Anthony Polglase³
-
-
-
-
-
-
-
-
-
$
$
3,305
-
-
-
3,305
15,000
$
-
70,000
26,600
55,000
-
-
-
108,250
6,250
-
27,860
259,850
$
-
-
-
-
-
-
-
-
-
$
$
%
-
-
-
-
-
-
-
-
-
3,305
70,000
26,600
55,000
3,305
15,000
108,250
6,250
287,710
-
-
-
-
-
-
-
-
-
¹ Mr. William Ryan, Dr. Nicholas Lindsay and Mr. Daniel Crennan were appointed on 21 May 2013.
² Mr. Matthew Wood and Mr. Scott Funston were appointed on 19 November 2012. Mr. Wood and Mr. Vernon Tidy
resigned on 21 May 2013.
³Mr. Mark Arundell and Mr. Anthony Polglase resigned on 19 November 2012.
4Mr. William Ryan resigned on 31 August 2013.
Short term
Options
Post
employment
2012
Base
Directors’ Consulting
Share based
Option
Salary
$
Fees
$
Fees
Payments
Superannuation
Total
Related
Director
Mr. Vernon Tidy
Mr. Mark Arundell
Mr. Anthony Polglase
Company Secretary
Mr. Scott Funston
-
-
-
-
-
-
$
-
23,750
-
129,750
23,750
-
47,500
129,750
-
47,500
47,500
177,250
$
-
-
-
-
-
-
$
-
-
-
-
-
-
$
%
23,750
129,750
23,750
177,250
47,500
224,750
-
-
-
-
-
-
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Castillo Copper Limited - Directors’ Report
There were no other key management personnel of the Group during the financial years ended 30 June 2013 and 30
June 2012. No remuneration is performance related.
Executive Directors
The Managing Director, Dr. Nicholas Lindsay is paid an annual consulting fee on a monthly basis. The agreement
commenced on 20 May 2013 and is for a term of two years unless extended by both parties. Dr. Lindsay may
terminate the agreement by giving three months written notice. The Group may terminate the agreement by giving
three months written notice and by paying an amount equivalent to twelve months fees (based on agreed consulting
fee) or without notice in the case of serious misconduct.
Mr. Scott Funston, Executive Director, is paid an annual consulting fee on a monthly basis. His services may be
terminated by either party at any time.
Non-Executive Director
The Non-Executive Directors, Mr. William Ryan and Mr. Daniel Crennan, are paid an annual consulting fee on a
monthly basis. Their services may be terminated by either party at any time.
The aggregate remuneration for non-executive Directors has been set at an amount not to exceed $500,000 per
annum. This amount may only be increased with the approval of Shareholders at a general meeting.
End of Remuneration Report
Signed in accordance with a resolution of the Directors.
On behalf of the Directors.
Nicholas Lindsay
Managing Director
3 September 2013
The information in this report that relates to Mineral Resources and Exploration Results are based on information compiled by Dr
Nicholas Lindsay who is a Member of the Australian Institute of Geoscientists and the AusIMM. Dr Lindsay is a Director of Castillo
Copper Limited. Dr Lindsay has sufficient experience, which is relevant to the style of mineralisation and type of deposit under
consideration and to the activity, which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the
‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Dr Lindsay consents to the
inclusion in the report of the matters based on his information in the form and context in which it appears.
Castillo Copper Limited
9 2013 Annual Report to Shareholders
Castillo Copper Limited – Corporate Governance Statement
The Board of Directors of Castillo Copper Limited (“Castillo Copper” or “the Group”) is responsible for corporate
governance of the Group. The Board guides and monitors the business and affairs of the Group on behalf of the
shareholders by who they are elected and to whom they are accountable.
The Group has established a set of corporate governance policies and procedures. These were based on the
Australian Securities Exchange Corporate Governance Council’s (the Council’s) “Principles of Good Corporate
Governance and Best Practice Recommendations” (the Recommendations). In accordance with the Council’s
recommendations, the Corporate Governance Statement must now contain certain specific information and must
disclose the extent to which the Group has followed the guidelines during the period. Where a recommendation has
not been followed, that fact must be disclosed, together with the reasons for the departure. For further information on
corporate governance policies adopted by the Group, refer to our website: www.castillocopper.com.
Structure of the Board
The skills, experience and expertise relevant to the position of Director held by each Director in office at the date of
the annual report is included in the Directors’ Report. Directors of the Group are considered to be independent when
they are independent of management and free from any business or other relationship that could materially interfere
with, or could reasonably be perceived to materially interfere with, the exercise of their unfettered and independent
judgment.
The Board has accepted the following definition of an Independent Director:
“An Independent Director is a Director who is not a member of management, is a Non-executive Director and who:
is not a substantial shareholder (under the meaning of Corporations Law) of the Company or an officer of, or
otherwise associated, directly or indirectly, with a substantial shareholder of the Company;
has not within the last three years been employed in an executive capacity by the Company or another
Company member, or been a Director after ceasing to hold any such employment;
is not a principal of a professional adviser to the Company or another Company member;
is not a significant consultant, supplier or customer of the Company or another Company member, or an officer
of or otherwise associated, directly or indirectly, with a significant consultant, supplier or customer;
has no significant contractual relationship with the Company or another Company member other than as a
Director of the Company;
is free from any interest and any business or other relationship which could, or could reasonably be perceived
to, materially interfere with the Director’s ability to act in the best interests of the Company.”
In accordance with the definition of independence above, Mr. Daniel Crennan is considered independent.
Accordingly, a majority of the board is not considered independent.
There are procedures in place, as agreed by the board, to enable Directors to seek independent professional advice
on issues arising in the course of their duties at the Group’s expense. The term in office held by each Director in
office at the date of this report is as follows:
Name
Term in office
Brian McMaster
Nicholas Lindsay
Scott Funston
Daniel Crennan
1 month
4 months
10 months
4 months
Castillo Copper Limited
10 2013 Annual Report to Shareholders
Castillo Copper Limited – Corporate Governance Statement
Nomination Committee
The Board has formally adopted a Nomination Committee Charter but given the present size of the Group, has not
formed a separate Committee. Instead the function will be undertaken by the full Board in accordance with the
policies and procedures outlined in the Nomination Committee Charter. At such time when the Group is of sufficient
size a separate Nomination Committee will be formed.
Audit and Risk Management Committee
The Board has formally adopted an Audit and Risk Management Committee Charter but given the present size of the
Group, has not formed a separate Committee. Instead the function of the Committee will be undertaken by the full
Board in accordance with the policies and procedures outlined in the Audit and Risk Management Committee
Charter. At such time when the Group is of sufficient size a separate Audit and Risk Management Committee will be
formed.
It is the Board’s responsibility to ensure that an effective internal control framework exists within the entity. This
includes both internal controls to deal with both the effectiveness and efficiency of significant business processes, the
safeguarding of assets, the maintenance of proper accounting records, and the reliability of financial and non-
financial information. It is the Board’s responsibility for the establishment and maintenance of a framework of internal
control of the Group.
Performance
The Board of Castillo Copper conducts its performance review of itself on an ongoing basis throughout the year. The
small size of the Group and hands on management style requires an increased level of interaction between Directors
and Executives throughout the year. Board members meet amongst themselves both formally and informally. The
Board considers that the current approach that it has adopted with regard to the review of its performance provides
the best guidance and value to the Group.
Remuneration
It is the Group’s objective to provide maximum stakeholder benefit from the retention of a high quality board by
remunerating Directors fairly and appropriately with reference to relevant employment market conditions. The Group
does not link the nature and amount of executive and directors’ emoluments to the Group’s financial and operational
performance.
For details of remuneration of Directors and Executives please refer to the Directors’ Report.
The Board is responsible for determining and reviewing compensation arrangements for executive directors. The
Board has formally adopted a Remuneration Committee Charter however given the present size of the Group, has
not formed a separate Committee. Instead the function will be undertaken by the full Board in accordance with the
policies and procedures outlined in the Remuneration Committee Charter. At such time when the Group is of
sufficient size a separate Remuneration Committee will be formed.
There is no scheme to provide retirement benefits, other than statutory superannuation, to non-executive Directors.
Diversity Policy
The Group is committed to workplace diversity and to ensuring a diverse mix of skills and talent exists amongst its
directors, officers and employees, to enhance Group performance. The Board has adopted a Diversity Policy which
addresses equal opportunities in the hiring, training and career advancement of directors, officers and employees.
Castillo Copper Limited
11 2013 Annual Report to Shareholders
Castillo Copper Limited – Corporate Governance Statement
In accordance with this policy, the Board provides the following information pertaining to the proportion of women
across the organisation at the date of this report.
Women in the whole organisation
Women in senior executive positions
Women on the board
Trading Policy
Actual
Number
Percentage
-
-
-
-
-
-
Under the Group’s securities trading policy, an executive or director must not trade in any securities of the Group at
any time when they are in possession of unpublished, price-sensitive information in relation to those securities.
Before commencing to trade, an executive must first obtain the approval of the Managing Director to do so and a
Director must first obtain approval of the Chairman. Only in exceptional circumstances will approval be forthcoming
inside of the period commencing on the tenth day of the month in which the Group is required to release its Quarterly
Activities Report and Quarterly Cashflow Report and ending two days following the date of that release.
Assurance
The CEO and CFO (or equivalent) periodically provide formal statements to the Board that in all material aspects:
the Group’s financial statements present a true and fair view of the Group’s financial condition and
operational results; and
the risk management and internal compliance and control systems are sound, appropriate and operating
efficiently and effectively.
This assurance forms part of the process by which the Board determines the effectiveness of its risk management
and internal control systems in relation to financial reporting risks.
Shareholder Communication Policy
Pursuant to Principle 6, the Group’s objective is to promote effective communication with its shareholders at all times.
Castillo Copper Limited is committed to:
Ensuring that shareholders and the financial markets are provided with full and timely information;
Complying with continuous disclosure obligations contained in the ASX listing rules and the Corporations Act in
Australia; and
Communicating effectively with its shareholders and making it easier for shareholders to communicate with the
Group.
To promote effective communication with shareholders and encourage effective participation at general meetings,
information is communicated to shareholders:
Through the release of information to the market via the ASX;
Through the distribution of the annual report and notices of annual general meeting;
Through shareholder meetings and investor relations presentations; and
By posting relevant information on the Group’s website: www.castillocopper.com
The external auditors are required to attend the annual general meeting and are available to answer any shareholder
questions about the conduct of the audit and preparation of the audit report.
Castillo Copper Limited
12 2013 Annual Report to Shareholders
Castillo Copper Limited – Corporate Governance Statement
Corporate Governance Compliance
During the financial year Castillo Copper has complied with each of the 8 Corporate Governance Principles and the
corresponding Best Practice Recommendations, other than in relation to the matters specified below:
Best Practice
Recommendation
Notification of Departure
Explanation of Departure
2.1
2.2
2.4
The Group does not have a
The Directors consider that the current structure and
majority of independent directors
composition of the Board is appropriate to the size
and nature of operations of the Group.
The Chairman is not an
The Directors consider that the current structure and
independent director
composition of the Board is appropriate to the size
The Group does not have a
The role of the Nomination Committee has been
Nomination Committee
assumed by the full Board operating under the
and nature of operations of the Company.
Nomination Committee Charter adopted by the
Board.
3.3
The Group has not disclosed in
The Board continues to monitor diversity across the
its annual report its measurable
organization. Due to the size of the Group, the Board
objectives for achieving gender
does not consider it appropriate at this time, to
diversity and progress towards
formally set measurable objectives for gender
achieving them.
diversity.
4.1 and 4.2
The Group does not have an
The role of the Audit and Risk Management
Audit and Risk Management
Committee has been assumed by the full Board
Committee
operating under the Audit and Risk Management
Committee Charter adopted by the Board.
8.1
The Group does not have a
The role of the Remuneration Committee has been
Remuneration Committee
assumed by the full Board operating under the
Remuneration Committee Charter adopted by the
Board.
Castillo Copper Limited
13 2013 Annual Report to Shareholders
Castillo Copper Limited
Consolidated Statement of Comprehensive Income for the year ended 30 June 2013
Notes
6
4
5
REVENUE
Interest received
TOTAL REVENUE
Listing and public company expenses
Accounting and audit expenses
Consulting and directors’ fees
Impairment of exploration expenditure
Other expenses
LOSS FROM CONTINUING OPERATIONS
BEFORE INCOME TAX
Income tax expense
LOSS FROM CONTINUING OPERATIONS AFTER
INCOME TAX
OTHER COMPREHENSIVE INCOME
Item that may be reclassified subsequently to
operating result
Foreign currency translation
TOTAL OTHER COMPREHENSIVE INCOME
2013
$
2012
$
20,772
60,911
20,772
60,911
(33,287)
(22,886)
(56,616)
(58,474)
(209,688)
(166,327)
(143,206)
(1,208,796)
(211,308)
(192,108)
(633,333)
(1,587,680)
-
-
(633,333)
(1,587,680)
16,276
16,276
-
-
TOTAL COMPREHENSIVE LOSS FOR THE YEAR
(617,057)
(1,587,680)
Loss per share attributable to owners of Castillo
Copper Limited
Basic and diluted loss per share (cents per share)
15
(1.78)
(5.29)
Castillo Copper Limited
14 2013 Annual Report to Shareholders
Castillo Copper Limited
Consolidated Statement of Financial Position as at 30 June 2013
CURRENT ASSETS
Cash and cash equivalents
Other receivables
Notes
13
7
2013
$
2012
$
145,581
133,844
958,392
75,485
TOTAL CURRENT ASSETS
279,425
1,033,877
NON CURRENT ASSETS
Deferred exploration and evaluation
expenditure
Plant and equipment
Other receivables
TOTAL NON CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
TOTAL CURRENT LIABILITIES
NON CURRENT LIABILITIES
Trade and other payables
Borrowings
6
7
8
8
9
3,586,803
413,143
2,325
20,000
1,396
40,000
3,609,128
454,539
3,888,553
1,488,416
174,524
45,049
174,524
45,049
342,843
200,000
-
-
TOTAL NON CURRENT LIABILITIES
542,843
45,049
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
10
11
12
717,367
45,049
3,171,186
1,443,367
5,601,778
1,790,018
3,402,780
1,627,864
(4,220,610)
(3,587,277)
3,171,186
1,443,367
Castillo Copper Limited
15 2013 Annual Report to Shareholders
Castillo Copper Limited
Consolidated Statement of Changes in Equity for the year ended 30 June 2013
Share
based
payment
reserve
$
Foreign
currency
translation
reserve
$
Issued
capital
$
Accumulated
losses
$
Total
$
Balance at 1 July 2012
3,402,780
Loss for the year
Other comprehensive income
Total comprehensive income/
(loss)
Transactions with owners in
their capacity as owners
Shares issued on acquisition
Shares issued as loan fee
Costs of issue
Share based payment
-
-
-
2,200,000
8,800
(9,802)
1,627,864
-
-
-
-
-
-
-
145,878
-
-
(3,587,277)
1,443,367
(633,333)
(633,333)
16,276
16,276
-
16,276
(633,333)
(617,057)
-
-
-
-
-
-
-
-
2,200,000
8,800
(9,802)
145,878
Balance as at 30 June 2013
5,601,778
1,773,742
16,276
(4,220,610)
3,171,186
Balance as at 1 July 2011
3,402,780
1,627,864
Loss for the year
Total comprehensive loss for
the year
Transactions with owners in
their capacity as owners
-
-
-
-
-
Balance as at 30 June 2012
3,402,780
1,627,864
-
-
-
-
-
(1,999,597)
3,031,047
(1,587,680)
(1,587,680)
(1,587,680)
(1,587,680)
-
-
(3,587,277)
1,443,367
Castillo Copper Limited
16 2013 Annual Report to Shareholders
Castillo Copper Limited
Consolidated Statement of Cash Flows for the year ended 30 June 2013
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received
Payments to suppliers and employees
Notes
2013
$
2012
$
20,772
60,911
(166,269)
(488,054)
NET CASH USED IN OPERATING ACTIVITIES
13
(145,497)
(427,143)
CASH FLOWS FROM INVESTING ACTIVITIES
Tenement expenditure guarantees refunded / (paid)
Purchase of plant and equipment
Loans advanced to Castillo Exploration Ltd (pre-acquisition)
Cash acquired on acquisition of subsidiary
Exploration and evaluation expenditure
NET CASH USED IN INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Share issue costs
NET CASH USED IN FINANCING ACTIVITIES
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
10,000
(20,000)
-
(1,718)
(170,000)
12,212
-
-
(509,724)
(919,171)
(657,512)
(940,889)
(9,802)
(9,802)
-
-
(812,811)
(1,368,032)
958,392
2,326,424
CASH AND CASH EQUIVALENTS AT END OF FINANCIAL YEAR
13
145,581
958,392
Castillo Copper Limited
17 2013 Annual Report to Shareholders
Castillo Copper Limited
Notes to the financial statements at and for the year ended 30 June 2013
Corporate Information
1.
The financial report of Castillo Copper Limited and its subsidiaries (“Castillo Copper” or “the Group”) for the year ended
30 June 2013 was authorised for issue in accordance with a resolution of the directors on 3 September 2013.
Castillo Copper Limited is a company limited by shares incorporated in Australia whose shares are publicly traded on
the Australian Securities Exchange. The nature of the operations and the principal activities of the Group are described
in the Directors’ Report.
2.
Summary of Significant Accounting Policies
(a)
Basis of Preparation
The financial report is a general-purpose financial report, which has been prepared in accordance with Australian
Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian
Accounting Standards Board and the Corporations Act 2001. The Group is a for profit entity for financial reporting
purposes under Australian Accounting Standards.
The financial report has been prepared on an accrual basis and is based on historical costs, modified, where
applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities.
Material accounting policies adopted in preparation of this financial report are presented below and have been
consistently applied unless otherwise stated.
The presentation currency is Australian dollars.
Going Concern
This report has been prepared on the going concern basis, which contemplates the continuity of normal business
activity and the realisation of assets and settlement of liabilities in the normal course of business.
As disclosed in the financial statements, the Company and the Group incurred losses after tax for the year ended 30
June 2013 of $617,058 and $633,333 respectively. The Group had net cash outflows from operating activities of
$145,497 and net cash outflows from investing activities of $657,512.
The Directors believe that it is reasonably foreseeable that the Company and the Group will continue as going
concerns and that it is appropriate to adopt the going concern basis in the preparation of the financial report after
consideration of the following factors:
The ability to issue additional shares under the Corporation Act 2001 to raise further working capital. This is
evidenced by a mandate signed with a third party to raise equity capital as disclosed in Note 14; and
The Group has the ability to scale down its operations in order to curtail expenditure, in the event capital
raisings are delayed or insufficient cash is available to meet projected expenditure.
(b)
Statement of Compliance
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).
Castillo Copper Limited
18 2013 Annual Report to Shareholders
Castillo Copper Limited
Notes to the financial statements at and for the year ended 30 June 2013
(c)
New accounting standards and interpretations issued but not yet effective
The following applicable accounting standards and interpretations have been issued or amended but are not yet
effective. These standards have not been adopted by the Group for the year ended 30 June 2013 and no change to
the Group’s accounting policy is required.
Reference Title
Summary
AASB 9
Financial Instruments
AASB 10
Consolidated Financial
Statements
AASB 9 includes requirements for the
classification and measurement of financial
assets. It was further amended by AASB
2010-7 to reflect amendments to the
accounting for financial liabilities.
These requirements improve and simplify the
approach for classification and measurement
of financial assets compared with the
requirements of AASB 139. The main changes
are described below.
(a)
(b)
(c)
Financial assets that are debt
instruments will be classified based on
(1) the objective of the entity’s business
model for managing the financial assets;
(2) the characteristics of the contractual
cash flows.
Allows an irrevocable election on initial
recognition to present gains and losses
on investments in equity instruments
that are not held for trading in other
comprehensive income. Dividends in
respect of these investments that are a
return on investment can be recognised
in profit or loss and there is no
impairment or recycling on disposal of
the instrument.
Financial assets can be designated and
measured at fair value through profit or
loss at initial recognition if doing so
eliminates or significantly reduces a
measurement or recognition
inconsistency that would arise from
measuring assets or liabilities, or
recognising the gains and losses on
them, on different bases.
(d) Where the fair value option is used for
financial liabilities the change in fair
value is to be accounted for as follows:
► The change attributable to changes
in credit risk is presented in other
comprehensive income (OCI)
► The remaining change is presented
in profit or loss
If this approach creates or enlarges an
accounting mismatch in the profit or
loss, the effect of the changes in credit
risk are also presented in profit or loss.
Consequential amendments were also made
to other standards as a result of AASB 9,
introduced by AASB 2009-11 and superseded
by AASB 2010-7 and 2010-10.
AASB 10 establishes a new control model that
applies to all entities. It replaces parts of
AASB 127 Consolidated and Separate
Financial Statements dealing with the
accounting for consolidated financial
statements and UIG-112 Consolidation –
Special Purpose Entities.
Impact on Group’s
financial report
The Group has not yet
determined the impact on the
Group’s financial statements.
Application
date for
Group
1 July 2015
The Group has not yet
determined the impact on the
Group’s financial statements.
1 July 2013
Castillo Copper Limited
19 2013 Annual Report to Shareholders
Castillo Copper Limited
Notes to the financial statements at and for the year ended 30 June 2013
Reference Title
Summary
Impact on Group’s
financial report
Application
date for
Group
AASB 12
Disclosure of Interests in
Other Entities
The new control model broadens the situations
when an entity is considered to be controlled
by another entity and includes new guidance
for applying the model to specific situations,
including when acting as a manager may give
control, the impact of potential voting rights
and when holding less than a majority voting
rights may give control.
Consequential amendments were also made
to other standards via AASB 2011-7.
AASB 12 includes all disclosures relating to an
entity’s interests in subsidiaries, joint
arrangements, associates and structures
entities. New disclosures have been
introduced about the judgments made by
management to determine whether control
exists, and to require summarised information
about joint arrangements, associates and
structured entities and subsidiaries with non-
controlling interests.
The Group has not yet
determined the impact on the
Group’s financial statements.
1 July 2013
AASB 13
Fair Value Measurement AASB 13 establishes a single source of
guidance for determining the fair value of
assets and liabilities. AASB 13 does not
change when an entity is required to use fair
value, but rather, provides guidance on how to
determine fair value when fair value is required
or permitted. Application of this definition may
result in different fair values being determined
for the relevant assets.
The Group has not yet
determined the impact on the
Group’s financial statements.
1 July 2013
AASB 124
Related Party
Disclosures
AASB 13 also expands the disclosure
requirements for all assets or liabilities carried
at fair value. This includes information about
the assumptions made and the qualitative
impact of those assumptions on the fair value
determined.
Consequential amendments were also made
to other standards via AASB 2011-8.
AASB 124 establishes guidance for disclosure
of related party transactions and outstanding
balances that could impact on an entity’s
loss.
financial position and profit or
Amendment AASB 2011-4
the
removes
individual key
for
disclosure requirements
management personnel. The adoption of these
amendments will remove the duplication of
information relating to individual KMP in the
notes to the financial statements and the
directors’ report.
The Group has not yet
determined the impact on the
Group’s financial statements.
1 July 2013
The Group has not elected to early adopt any new Standards or Interpretations.
(d)
Changes in accounting policies and disclosures
In the year ended 30 June 2013, the Group has reviewed all of the new and revised Standards and Interpretations
issued by the AASB that are relevant to its operations and effective for the current annual reporting period.
It has been determined by the Group that there is no impact, material or otherwise, of the new and revised Standards
and Interpretations on its business and, therefore, no change is necessary to Group accounting policies.
Castillo Copper Limited
20 2013 Annual Report to Shareholders
Castillo Copper Limited
Notes to the financial statements at and for the year ended 30 June 2013
(e)
Basis of Consolidation
The consolidated financial statements comprise the financial statements of Castillo Cooper Limited and its subsidiaries
as at 30 June each year (‘the Company’).
Subsidiaries are all those entities (including special purpose entities) over which the Company has the power to govern
the financial and operating policies so as to obtain benefits from their activities. The existence and effect of potential
voting rights that are currently exercisable or convertible are considered when assessing whether a Company controls
another entity.
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-company transactions have been eliminated in full.
Subsidiaries are fully consolidated from the date on which control is obtained by the Company and cease to be
consolidated from the date on which control is transferred out of the Company.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. The acquisition method of
accounting involves recognising at acquisition date, separately from goodwill, the identifiable assets acquired, the
liabilities assumed and any non-controlling interest in the acquiree. The identifiable assets acquired and the liabilities
assumed are measured at their acquisition date fair values.
The difference between the above items and the fair value of the consideration (including the fair value of any pre-
existing investment in the acquiree) is goodwill or a discount on acquisition.
A change in the ownership interest of a subsidiary that does not result in a loss of control, is accounted for as an equity
transaction.
(f)
Foreign Currency Translation
(i) Functional and presentation currency
Items included in the financial statements of each of the Company’s entities are measured using the currency of the
primary economic environment in which the entity operates (‘the functional currency’). The functional and presentation
currency of Castillo Cooper Limited is Australian dollars. The functional currency of the overseas subsidiaries is
Chilean Peso.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the
dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and
from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies
are recognised in the Statement of Comprehensive Income.
(iii) Group entities
The results and financial position of all the Company entities (none of which has the currency of a hyperinflationary
economy) that have a functional currency different from the presentation currency are translated into the presentation
currency as follows:
Castillo Copper Limited
21 2013 Annual Report to Shareholders
Castillo Copper Limited
Notes to the financial statements at and for the year ended 30 June 2013
assets and liabilities for each statement of financial position presented are translated at the closing
rate at the date of that statement of financial position;
income and expenses for each statement of comprehensive income are translated at average
exchange rates (unless this is not a reasonable approximation of the rates prevailing on the
transaction dates, in which case income and expenses are translated at the dates of the
transactions); and
all resulting exchange differences are recognised as a separate component of equity.
On consolidation, exchange differences arising from the translation of any net investment in foreign entities are taken to
foreign currency translation reserve.
When a foreign operation is sold or any borrowings forming part of the net investment are repaid, a proportionate share
of such exchange differences are recognised in the statement of comprehensive income, as part of the gain or loss on
sale where applicable.
(g)
Plant and Equipment
Each class of plant and equipment is carried at cost less, where applicable, any accumulated depreciation and
impairment losses.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item
can be measured reliably. Repairs and maintenance expenditure is charged to the statement of comprehensive income
during the financial period in which it is incurred.
Depreciation
The depreciable amount of all fixed assets is depreciated on a straight line basis over their useful lives to the Group
commencing from the time the asset is held ready for use.
The depreciation rates used for each class of depreciable assets are:
Class of Fixed Asset
Depreciation Rate
Plant and equipment
25% – 50%
Furniture, Fixtures and Fittings
10%
Computer and software
20% - 35%
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each statement of financial
position date.
Derecognition
Additions of plant and equipment are derecognised upon disposal or when no further future economic benefits are
expected from their use or disposal.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and
losses are recognised in the statement of comprehensive income.
Castillo Copper Limited
22 2013 Annual Report to Shareholders
Castillo Copper Limited
Notes to the financial statements at and for the year ended 30 June 2013
(h)
Impairment of non financial assets
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such
indication exists, or when annual impairment testing for an asset is required, the Group 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 of the Group. 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 there is any indication that previously recognised
impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is
estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates used
to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case the
carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the
carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the
asset in prior years. Such reversal is recognised in profit or loss unless the asset is carried at 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.
(i)
Exploration and evaluation expenditure
Exploration and evaluation expenditure incurred by or on behalf of the Group is accumulated separately for each area
of interest. Such expenditure comprises net direct costs and an appropriate portion of related overhead expenditure,
but does not include general overheads or administrative expenditure not having a specific nexus with a particular area
of interest.
Each area of interest is limited to a size related to a known or probable mineral resource capable of supporting a
mining operation.
Exploration and evaluation expenditure for each area of interest is carried forward as an asset provided that one of the
following conditions is met:
such costs are expected to be recouped through successful development and exploitation of the area of
interest or, alternatively, by its sale; or
exploration and evaluation activities in the area of interest have not yet reached a stage which permits a
reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and
significant operations in relation to the area are continuing.
Expenditure which fails to meet the conditions outlined above is impaired; furthermore, the directors regularly review
the carrying value of exploration and evaluation expenditure and make write downs if the values are not expected to be
recoverable.
Castillo Copper Limited
23 2013 Annual Report to Shareholders
Castillo Copper Limited
Notes to the financial statements at and for the year ended 30 June 2013
Identifiable exploration assets acquired are recognised as assets at their cost of acquisition, as determined by the
requirements of AASB 6 Exploration for and evaluation of mineral resources. Exploration assets acquired are
reassessed on a regular basis and these costs are carried forward provided that at least one of the conditions referred
to in AASB 6 is met.
Exploration and evaluation expenditure incurred subsequent to acquisition in respect of an exploration asset acquired,
is accounted for in accordance with the policy outlined above for exploration expenditure incurred by or on behalf of the
entity.
Acquired exploration assets are not written down below acquisition cost until such time as the acquisition cost is not
expected to be recovered.
When an area of interest is abandoned, any expenditure carried forward in respect of that area is written off.
Expenditure is not carried forward in respect of any area of interest/mineral resource unless the Group’s rights of
tenure to that area of interest are current.
(j)
Trade and Other Receivables
Trade receivables, which generally have 30 – 90 day terms, are recognised and carried at original invoice amount less
an allowance for any uncollectible amounts.
Impairment of trade receivables is continually reviewed and those that are considered to be uncollectible are written off
by reducing the carrying amount directly. An allowance account is used when there is objective evidence that the
Group will not be able to collect all amounts due according to the original contractual terms. Factors considered by the
Group in making this determination include known significant financial difficulties of the debtor, review of financial
information and significant delinquency in making contractual payments to the Group. The impairment allowance is set
equal to the difference between the carrying amount of the receivable and the present value of estimated future cash
flows, discounted at the original effective interest rate. Where receivables are short-term, discounting is not applied in
determining the allowance.
The amount of the impairment loss is recognised in the statement of comprehensive income within other expenses.
When a trade receivable for which an impairment allowance had been recognised becomes uncollectible in a
subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously written
off are credited against other expenses in the statement of comprehensive income.
(k)
Cash and Cash Equivalents
Cash and short term deposits in the statement of financial position include cash on hand, deposits held at call with
banks and other short term highly liquid investments with original maturities of three months or less. Bank overdrafts
are shown as current liabilities in the statement of financial position. For the purpose of the statement of cash flows,
cash and cash equivalents consist of cash and cash equivalents as described above.
Castillo Copper Limited
24 2013 Annual Report to Shareholders
Castillo Copper Limited
Notes to the financial statements at and for the year ended 30 June 2013
(l)
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it
is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a
reliable estimate can be made of the amount of the obligation.
Where the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the
reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense
relating to any provision is presented in the statement of comprehensive income net of any reimbursement.
Provisions are measured at the present value or management’s best estimate of the expenditure required to settle the
present obligation at the end of the reporting period.
If the effect of the time value of money is material, provisions are determined by discounting the expected future cash
flows at a pre-tax rate that reflects current market assessments of the time value of money, and where appropriate, the
risks specific to the liability.
Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
(m)
Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience and other factors,
including expectations of future events that may have a financial impact on the entity and that are believed to be
reasonable under the circumstances.
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by
definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are
discussed below.
Capitalised exploration and evaluation expenditure
The future recoverability of capitalised exploration and evaluation expenditure is dependent on a number of factors,
including whether the Group decides to exploit the related lease itself or, if not, whether it successfully recovers the
related exploration and evaluation asset through sale.
Factors which could impact the future recoverability include the level of proved, probable and inferred mineral
resources, future technological changes which could impact the cost of mining, future legal changes (including
changes to environmental restoration obligations) and changes to commodity prices.
To the extent that capitalised exploration and evaluation expenditure is determined not to be recoverable in the future,
this will reduce profits and net assets in the period in which this determination is made.
In addition, exploration and evaluation expenditure is capitalised if activities in the area of interest have not yet reached
a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves.
To the extent that it is determined in the future that this capitalised expenditure should be written off, this will reduce
profits and net assets in the period in which this determination is made.
Castillo Copper Limited
25 2013 Annual Report to Shareholders
Castillo Copper Limited
Notes to the financial statements at and for the year ended 30 June 2013
Share-based payment transactions
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value is determined by using a Black and Scholes model,
using the assumptions detailed in note 24.
(n)
Income Tax
Deferred income tax is provided for on all temporary differences at balance date between the tax base of assets and
liabilities and their carrying amounts for financial reporting purposes.
No deferred income tax will be recognised from the initial recognition of goodwill or of an asset or liability, excluding a
business combination, where there is no effect on accounting or taxable profit or loss. No deferred income tax will be
recognised in respect of temporary differences associated with investments in subsidiaries if the timing of the reversal
of the temporary difference can be controlled and it is probable that the temporary differences will not reverse in the
near future.
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability
is settled. Deferred tax is credited in the statement of comprehensive income except where it relates to items that may
be credited directly to equity, in which case the deferred tax is adjusted directly against equity.
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 future tax profits will be available against which deductible
temporary differences can be utilised.
The amount of benefits brought to account or which may be realised in the future is based on tax rates (and tax laws)
that have been enacted or substantially enacted at the balance date and the anticipation that the Group will derive
sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility
imposed by the law. The carrying amount of deferred tax assets is reviewed at each balance date and only recognised
to the extent that sufficient future assessable income is expected to be obtained. Income taxes relating to items
recognised directly in equity are recognised in equity and not in the statement of comprehensive income.
(o)
Issued capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options
are shown in equity as a deduction, net of tax, from the proceeds.
(p)
Revenue
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the
revenue is capable of being reliably measured. The following specific recognition criteria must also be met before
revenue is recognised:
Interest income
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.
Castillo Copper Limited
26 2013 Annual Report to Shareholders
Castillo Copper Limited
Notes to the financial statements at and for the year ended 30 June 2013
(q)
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Group, excluding any
costs of servicing equity other than dividends, by the weighted average number of ordinary shares, adjusted for any
bonus elements.
Diluted earnings per share
Diluted earnings per share is calculated as net profit attributable to members of the Group, adjusted for:
• costs of servicing equity (other than dividends) and preference share dividends;
• the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been
recognised as expenses; and
• other non-discretionary changes in revenues or expenses during the period that would result from the dilution of
potential ordinary shares; and
divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any
bonus elements.
(r)
Goods and services tax
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. 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 Australian Tax Office is included as part of receivables or
payables in the statement of financial position.
Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of investing
and financing activities, which are disclosed as operating cash flows.
(s)
Trade and other payables
Liabilities for trade creditors and other amounts are measured at amortised cost, which is the fair value of the
consideration to be paid in the future for goods and services received that are unpaid, whether or not billed to the
Group.
(t)
Share based payment transactions
The Group provides benefits to individuals acting as, and providing services similar to employees (including Directors)
of the Group in the form of share based payment transactions, whereby individuals render services in exchange for
shares or rights over shares (‘equity settled transactions’).
The cost of these equity settled transactions with employees is measured by reference to the fair value at the date at
which they are granted. The fair value is determined by using the Black Scholes formula taking into account the terms
and conditions upon which the instruments were granted, as discussed in note 24.
In valuing equity settled transactions, no account is taken of any performance conditions, other than conditions linked
to the price of the shares of Castillo Copper Limited (‘market conditions’).
Castillo Copper Limited
27 2013 Annual Report to Shareholders
Castillo Copper Limited
Notes to the financial statements at and for the year ended 30 June 2013
The cost of the 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 relevant employees 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 the market performance conditions being met as the effect of these conditions
is included in the determination of fair value at grant date. The statement of comprehensive income charge or credit for
a period represents the movement in cumulative expense recognised at the beginning and end of the period.
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 the modification.
Where an equity settled award is cancelled, it is treated as if it had vested on the date of the 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 cost of equity-settled
transactions with non-employees is measured by reference to the fair value of goods and services received unless this
cannot be measured reliably, in which case the cost is measured by reference to the fair value of the equity
instruments granted.
The dilutive effect, if any, of outstanding options is reflected in the computation of loss per share (see note 15).
(u)
Comparative information
When required by Accounting Standards, comparative information has been reclassified to be consistent with the
presentation in the current year. The Group incorporated a subsidiary on 22 October 2012 and acquired subsidiaries
on 20 May 2013. The current period balances reflect the consolidated entity (Group) while the comparatives reflect
only the balances of the parent entity.
3.
Segment Information
Management has determined the operating segments based on the reports reviewed by the board of directors that are
used to make strategic decisions. The entity does not have any operating segments with discrete financial information.
The Board of Directors review internal management reports on a monthly basis that is consistent with the information
provided in the statement of comprehensive income, statement of financial position and statement of cash flows. As a
result no reconciliation is required because the information as presented is what is used by the Board to make strategic
decisions.
Castillo Copper Limited
28 2013 Annual Report to Shareholders
Castillo Copper Limited
Notes to the financial statements at and for the year ended 30 June 2013
4.
Other expenses
Occupancy
Insurance
Travel and accommodation
Legal
Other
Total other expenses
Income Tax
5.
(a) Income tax expense
Major component of tax expense for the year:
Current tax
Deferred tax
(b) Numerical reconciliation between aggregate tax expense
recognised in the statement of comprehensive income and tax
expense calculated per the statutory income tax rate
A reconciliation between tax expense and the product of accounting
result before income tax multiplied by the Group’s applicable tax rate is
as follows:
2010
2013
$
2012
$
120,000
120,000
13,428
4,890
44,009
28,981
14,452
16,467
28,926
12,263
211,308
192,108
-
-
-
-
-
-
Loss from continuing operations before income tax expense
Tax at the company rate of 30%
Equity based payment expense
Income tax benefit not bought to account
Income tax expense
(633,333) (1,587,680)
(190,000)
(476,304)
-
-
190,000
476,304
-
-
Castillo Copper Limited
29 2013 Annual Report to Shareholders
Castillo Copper Limited
Notes to the financial statements at and for the year ended 30 June 2013
The following deferred tax balances have not been bought to account:
Liabilities
Total exploration and evaluation expenditure
Offset by deferred tax assets
Deferred tax liability
Assets
Total losses available to offset against future taxable income
Total accrued expenses
Total share issue costs deductible over five years
Deferred tax assets offset against deferred tax liabilities
Deferred tax assets not brought to account as realisation is not
regarded as probable
Deferred tax asset recognised
(d) Unused tax losses
Unused Tax Losses
Potential tax benefit not recognised at 30%
The benefit for tax losses will only be obtained if:
2013
$
2012
$
1,032,278
123,943
(1,032,278)
(123,943)
-
-
1,835,720
721,779
4,893
4,275
40,260
59,927
(1,032,278)
(123,943)
(848,595)
(662,038)
-
-
2,828,650 2,206,793
848,595
662,038
(i)
the Group derives future assessable income in Australia and Chile of a nature and of an amount
sufficient to enable the benefit from the deductions for the losses to be realised, and
(ii)
the Group continues to comply with the conditions for deductibility imposed by tax legislation in
Australia and Chile and
(iii)
no changes in tax legislation in Australia and Chile, adversely affect the Group in realising the
benefit from the deductions for the losses.
6.
Deferred Exploration and Evaluation Expenditure
At beginning of the year
Exploration expenditure during the year
Acquisition of exploration tenements
Net exchange differences on translation
Impairment expense
Total exploration and evaluation
413,143
857,141
622,517
764,798
2,676,987¹
17,362
-
-
(143,206) (1,208,796)
3,586,803
413,143
¹Acquisition of exploration tenements includes the fair value of the shares issued to vendors of Castillo Exploration
Ltd (refer to note 24 and note 25). The ultimate recoupment of costs carried forward for exploration expenditure is
dependent on the successful development and commercial exploitation or sale of the respective mining areas. The
impairment loss relates to the withdrawal from various tenements held that the Group has made a decision to not
continue exploration work and accordingly wrote down the carrying value to nil.
Castillo Copper Limited
30 2013 Annual Report to Shareholders
Castillo Copper Limited
Notes to the financial statements at and for the year ended 30 June 2013
7.
Other Receivables
Current
GST/VAT Receivable
Tenement guarantees
Other
Non-Current
Tenement guarantees
2013
2012
$
62,139
70,000
1,705
$
11,985
60,000
3,500
133,844
75,485
20,000
40,000
Tenement guarantees are classified as current if expected to be refunded within 12 months upon relinquishment of
exploration tenement.
8.
Trade and other payables
y
Current
Trade creditors
Accruals
158,219
16,305
174,524
30,799
14,250
45,049
Trade and other payables are non-interest bearing and payable on demand. Due to their short term nature, the
carrying value of trade and other payables is assumed to approximate their fair value.
Non-Current
Trade creditors
Non-current trade creditors are payables to related parties that are non-interest bearing.
9.
Borrowings
Non-Current
Loan payable
342,843
-
y
200,000
-
The loan from Garrison Capital Pty Ltd is interest free and has a deferred payment date of at least twelve months.
10.
Issued Capital
(a) Issued and paid up capital
Ordinary shares fully paid
(b) Movements in ordinary shares on issue
Opening Balance
Acquisition of Castillo Exploration Ltd
Shares issued as loan fee
Transaction costs on share issue
5,601,778
3,402,780
2013
2012
Number of
shares
30,000,000
50,000,004
200,000
-
80,200,004
Number of
shares
$
$
3,402,780
2,200,000
8,800
(9,802)
30,000,000
-
-
-
3,402,780
-
-
-
5,601,778
30,000,000
3,402,780
Castillo Copper Limited
31 2013 Annual Report to Shareholders
Castillo Copper Limited
Notes to the financial statements at and for the year ended 30 June 2013
(c) Ordinary shares
The Group does not have authorised capital nor par value in respect of its issued capital. Ordinary shares have the
right to receive dividends as declared and, in the event of a winding up of the Group, to participate in the proceeds
from sale of all surplus assets in proportion to the number of and amounts paid up on shares held. Ordinary shares
entitle their holder to one vote, either in person or proxy, at a meeting of the Group.
(d) Share options
At 30 June 2013 there were 17,100,000 unissued ordinary shares under options (2012: 12,100,000). The details of
the options are as follows:
Number
Exercise Price $
12,100,000
5,000,000
0.20
0.10
Expiry Date
30 June 2014
30 June 2017
During the year 5,000,000 unlisted options, exercisable at 10c before 30 June 2017 were issued as consideration for
corporate advisory services.
No other options were issued during the year, no options were exercised or expired during the year and no options
have been issued or exercised since the end of the financial year.
(e) Capital risk management
The Group’s capital comprises share capital and reserves less accumulated losses. As at 30 June 2013, the Group
has net assets of $3,171,186 (2012: $1,443,367). The Group manages its capital to ensure its ability to continue as a
going concern and to optimise returns to its shareholders. Refer to note 19 for further information on the Group’s
financial risk management policies.
11.
Reserves
Share based payments reserve
Foreign currency translation reserve
Movements in Reserves:
Share based payment reserve
At beginning of the period
Share based payment expense
Balance at the end of the year
2013
$
2012
$
1,773,742
16,276
1,790,018
1,627,864
-
1,627,864
1,627,864
1,627,864
145,878
-
1,773,742
1,627,864
The share based payment reserve is used to record the value of equity benefits provided to directors and
executives as part of their remuneration and non-employees for their services.
Foreign currency translation reserve
At beginning of the period
Foreign currency translation
Balance at the end of the year
-
16,276
16,276
-
-
-
Castillo Copper Limited
32 2013 Annual Report to Shareholders
Castillo Copper Limited
Notes to the financial statements at and for the year ended 30 June 2013
The foreign exchange differences arising on translation of balances originally denominated in a foreign currency into
the functional currency are taken to the foreign currency translation reserve. The reserve is recognised in profit and
loss when the net investment is disposed of.
12.
Accumulated losses
Movements in accumulated losses were as follows:
Opening balance
Loss for the year
As at 30 June
13.
Cash and cash equivalents
2013
$
2012
$
3,587,277
633,333
4,220,610
1,999,597
1,587,680
3,587,277
Reconciliation of operating loss after tax to net the cash flows used in operations
Loss from ordinary activities after tax
Non-cash items
Exploration expenditure written off
Shares issued for loan fee
Depreciation expense
Changes in assets and liabilities:
Increase / (decrease) in trade and other creditors
(Increase) / decrease in trade and other receivables
Net cash flow used in operating activities
(b) Reconciliation of cash
Cash balance comprises:
Cash at bank
$
(633,333)
(1,587,680)
143,206
8,800
501
340,392
(5,063)
1,208,796
-
322
(77,291)
28,710
(145,497)
(427,143)
145,581
958,392
Non-cash financing and investing activities in the current and previous financial year are as follows:
Share-based payments (to directors, employees and suppliers) as discussed in note 24;
Issue of shares to acquire exploration projects as discussed in note 6 and note 25;
Issue of shares for loan fee as discussed in note 10(b) and 17(d).
14.
Subsequent events
On 28 August 2013 the Group announced that it had signed a mandate on a best endeavours basis, to raise $3.5
million (before costs) through the issue of 350 million shares at $0.01 per share. The funds raised will be used to
advance the Company’s copper projects in Chile with drilling programmes planned and allow the Company to
continue to evaluate new opportunities as they arise.
On 31 August 2013 Mr Brian McMaster was appointed as Non-Executive Chairman of the Company following the
resignation of Mr William Ryan.
There were no other known significant events from the end of the financial year to the date of this report.
Castillo Copper Limited
33 2013 Annual Report to Shareholders
Castillo Copper Limited
Notes to the financial statements at and for the year ended 30 June 2013
15.
Loss per Share
Loss used in calculating basic and dilutive EPS
Weighted average number of ordinary shares used in
calculating basic loss per share:
Effect of dilution:
Share options
Adjusted weighted average number of ordinary shares
used in calculating diluted loss per share:
2013
$
2012
$
(633,333)
(1,587,680)
Number of Shares
35,638,905
30,000,000
-
-
35,638,905
30,000,000
There have been no transactions involving ordinary shares or potential ordinary shares that would significantly
change the number of ordinary shares or potential ordinary shares outstanding between the reporting date and the
date of completion of these financial statements.
16.
Auditor’s Remuneration
The auditor of Castillo Copper Limited is RSM Bird Cameron Partners
Amounts received or due and receivable for:
- RSM Bird Cameron Partners an audit or review of the financial report of
2013
$
2012
$
the entity and any other entity in the Group
24,000
-
- non RSM Bird Cameron Partners audit firms an audit or review of the
financial report of the entity and any other entity in the Group
- other assurance related services
-
-
18,350
-
24,000
18,350
17.
Key management personnel disclosures
(a) Details of Key Management Personnel
Mr. William Ryan (Non-Executive Chairman) - Resigned on 31 August 2013
Mr. Brian McMaster (Non-Executive Chairman) – Appointed on 31 August 2013
Dr. Nicholas Lindsay (Managing Director)
Mr. Scott Funston (Executive Director)
Mr. Daniel Crennan (Non-Executive Director)
Mr. Matthew Wood (former Executive Chairman)
Mr. Vernon Tidy (former Non-Executive Director)
Mr. Mark Arundell (former Managing Director)
Mr. Anthony Polglase (former Non-Executive Director)
(b) Compensation of Key Management Personnel
Short term employee benefits
Post employment benefits
Share based payments
Total remuneration
287,710
224,750
-
-
-
-
287,710
224,750
Castillo Copper Limited
34 2013 Annual Report to Shareholders
Castillo Copper Limited
Notes to the financial statements at and for the year ended 30 June 2013
(c) Shareholdings and option holdings of key management personnel
Share holdings
The number of shares in the company held during the financial year held by key management personnel of Castillo
Copper Limited, including their personally related parties, is set out below. There were no shares granted during
the current financial year as compensation.
30 June 2013
Dr. Nicholas Lindsay¹
Mr. William Ryan¹ 6
Mr. Scott Funston²
Mr. Daniel Crennan¹
Mr. Matthew Wood²
Mr. Mark Arundell³
Mr. Anthony Polglase³
Mr. Vernon Tidy²
Balance at
the start of
the year
Granted during
the year as
compensation
On exercise
of share
options
Other
changes
during the
year
Balance at
the end of the
year
-
-
315,000
-
-
3,160,000
175,000
100,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,765,0014
5,765,001
4,500,0014
4,500,001
2,550,0014
2,895,0015
500,0004
500,000
-
(3,160,000)
(175,00)
(100,000)
-
-
-
-
¹ Mr. William Ryan, Dr. Nicholas Lindsay and Mr. Daniel Crennan were appointed on 21 May 2013.
² Mr. Matthew Wood and Mr. Scott Funston were appointed on 19 November 2012. Mr. Wood and Mr. Vernon Tidy resigned on
21 May 2013.
³ Mr. Mark Arundell and Mr. Anthony Polglase resigned on 19 November 2012.
4 This includes shares issued on acquisition of Castillo Exploration Limited.
5 Includes Mr Funston’s interest in shares held by Garrison Capital Pty Ltd, a Company in which he is a director and shareholder.
6 Mr. William Ryan resigned on 31 August 2013
30 June 2012
Balance at
the start of
the year
Granted during
the year as
compensation
On exercise
of share
options
Other
changes
during the
year
Balance at
the end of the
year
Mr. Vernon Tidy
Mr. Mark Arundell
Mr. Anthony Polglase
Mr. Scott Funston
100,000
3,095,000
175,000
315,000
-
-
-
-
-
-
-
-
-
100,000
65,000
3,160,000
-
-
175,000
315,000
Castillo Copper Limited
35 2013 Annual Report to Shareholders
Castillo Copper Limited
Notes to the financial statements at and for the year ended 30 June 2013
Option holdings
The number of options in the company held during the financial year by key management personnel of Castillo
Copper Limited, including their personally related parties, is set out below.
30 June 2013
Balance at
the start of
the year
Granted during
the year as
compensation
On exercise
of share
options
Other
changes
during the
year
Balance at
the end of the
year
Dr. Nicholas Lindsay¹
Mr. William Ryan¹
Mr. Scott Funston²
Mr. Daniel Crennan¹
Mr. Matthew Wood²
Mr. Mark Arundell³
Mr. Anthony Polglase³
-
-
-
-
-
1,000,000
500,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
750,000
750,000
-
-
(1,000,000)
(500,00)
-
-
-
-
Mr. Vernon Tidy²
500,000
¹ Mr. William Ryan. Dr. Nicholas Lindsay and Mr. Daniel Crennan were appointed 21 May 2013
² Mr. Matthew Wood and Mr. Scott Funston were appointed 19 November 2012. Mr. Wood and Mr. Vernon Tidy resigned 21 May
2013
³Mr. Mark Arundell and Mr. Anthony Polglase resigned 19 November 2012
4Includes Mr Funston’s interest in options issued to Garrison Capital Pty Ltd of which Mr Funston is a director and shareholder.
(500,000)
-
-
-
30 June 2012
Balance at
the start of
the year
Granted during
the year as
compensation
Exercised
during the
year
Other
changes
during the
year
Balance at
the end of the
year
Mr. Vernon Tidy
Mr. Mark Arundell
Mr. Anthony Polglase
500,000
1,000,000
500,000
-
-
-
-
-
-
-
-
-
500,000
1,000,000
500,000
Mr. Scott Funston
There were no alterations to the terms and conditions of options granted as remuneration since their grant date.
-
-
-
-
-
There were no forfeitures and no options lapsed during the year ended 30 June 2013.
There were no other key management personnel to disclose for the year ended 30 June 2013.
(d) Other transactions with key management personnel
Lindsay Rueda Services Pty Ltd, a company of which Dr. Lindsay is a director, charged the Group consulting fees
of $26,600 (2012: nil) and reimbursements of expenses, at cost, paid on behalf of the Group of $1,042 (2012: nil)
during the year. The consulting fees are included in Note 17(b) “Remuneration of key management personnel”.
$26,600 (2012: nil) was outstanding at year end.
Resourceful International Consulting Pty Ltd, a company in which Mr. Funston is a director, charged the Group
consulting fees of $55,000 for the year ended 30 June 2013 (2012: $47,500). This amount is included in Note 17(b)
“Compensation of key management personnel”. $57,500 (2012: $2,750) was outstanding at year end.
Mineral Quest Pty Ltd, a company of which Mr. Wood is a director, charged the Group consulting fees of $70,000
(2012: nil) and reimbursement of payments for secretarial expenses, at cost for $3,150 (2012: nil) during the year.
Castillo Copper Limited
36 2013 Annual Report to Shareholders
Castillo Copper Limited
Notes to the financial statements at and for the year ended 30 June 2013
The consulting fees are included in Note 17(b) “Remuneration of key management personnel”. $73,150 (2012: nil)
was outstanding at year end.
Arundell Geoscience Pty Ltd, a company in which Mr. Mark Arundell is a director, charged the Group consulting
fees of $108,250 (2012: $129,750) and reimbursements of expenses, at cost, paid on behalf of the Group of
$16,952 (2012: $89,561). The consulting fee is included in Note 17(b) “Compensation of key management
personnel”. Nil (2012: $4,917) was outstanding at year end.
Mazuma Consulting, a trust in which Mr. Tidy is a trustee, charged the Group director’s fees of $15,000 for the year
ended 30 June 2013 (2012: $23,750). This Director’s fee is included in Note 17(b) “Compensation of key
management personnel”. $15,000 (2012: $2,625) was outstanding at year end.
Kernow Mining Consultants Pty Ltd, a company in which Mr. Polglase is a director, charged the Group director’s
fees of $6,250 for the year ended 30 June 2013 (2012: $23,750). This Director’s fee is included in Note 17(b)
“Compensation of key management personnel”. $7,500 (2012: $1,375) was outstanding at year end.
Garrison Capital Pty Ltd, a company of which Mr. Wood, Mr. McMaster and Mr Funston are directors and
shareholders, provided the Group with a fully serviced office including administration and information technology
support and charged $120,000 for the year ended 30 June 2013 (2012: $120,000) for these services, plus
reimbursement of payment for company secretary fees, accounting services, courier and other minor expenses of
$27,521 (2012: $51,304) were charged during the year. $154,425 (2012: $14,568) was outstanding at year end.
During the year, 5,000,000 unlisted options, exercisable at 10c before 30 June 2017 were issued to Garrison
Capital Pty Ltd as consideration for corporate advisory services. Garrison Capital Pty Ltd loaned Castillo
Exploration Limited $200,000 pre-acquisition by the Company, with the full amount outstanding at year end as
disclosed in Note 9. As part of the loan agreement, there was a loan fee paid during the year of 200,000 shares at
$0.044 per share for an issuance of capital of $8,800 as disclosed in Note 10(b).
Transactions with key management personnel were made at arm’s length at normal market prices and normal
commercial terms.
There were no other transactions with key management personnel for the year ended 30 June 2013.
18.
a)
Related party disclosures
Key management personnel
For Director related party transactions please refer to Note 17 “Key management personnel disclosures”.
b)
Subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of Castillo Copper Limited and
the following subsidiaries:
Name of Entity
Castillo Copper Chile SPA
Castillo Exploration Limited
Atlantica Holdings (Bermuda) Ltd
Country of
Incorporation
Chile
Australia
Bermuda
Equity Holding
2013
100%
100%
75%
2012
-
-
-
There were no other related party disclosures for the year ended 30 June 2013.
Castillo Copper Limited
37 2013 Annual Report to Shareholders
Castillo Copper Limited
Notes to the financial statements at and for the year ended 30 June 2013
19.
Financial Risk Management
Exposure to interest rate, liquidity, and credit risk arises in the normal course of the Group’s business. The Group
does not hold or use derivative financial instruments. The Group’s principal financial instruments comprise mainly
of deposits with banks. The totals for each category of financial instruments are as follows:
Financial Assets
Cash and cash equivalents
Trade and other receivables
Financial Liabilities
Trade and other payables
Borrowings
2013
$
145,581
153,844
517,367
200,000
2012
$
958,392
115,485
45,049
-
The Group uses different methods as discussed below to manage risks that arise from these financial instruments.
The objective is to support the delivery of the financial targets while protecting future financial security.
(a) Liquidity Risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting obligations associated with financial
liabilities.
The Group manages liquidity risk by maintaining sufficient cash facilities to meet the operating requirements of the
business and investing excess funds in highly liquid short term investments. The responsibility for liquidity risk
management rests with the Board of Directors.
Alternatives for sourcing future capital needs include the cash position and future equity raising alternatives. These
alternatives are evaluated to determine the optimal mix of capital resources for our capital needs. The Board
expects that, assuming no material adverse change in a combination of our sources of liquidity, present levels of
liquidity will be adequate to meet expected capital needs.
Maturity analysis for financial liabilities
Financial liabilities of the Group comprise trade and other payables. As at 30 June 2013 any financial liabilities that
are contractually matured within 60 days have been disclosed as current. Trade and other payables that have a
deferred payment date of greater than 12 months have been disclosed as non-current.
Castillo Copper Limited
38 2013 Annual Report to Shareholders
Castillo Copper Limited
Notes to the financial statements at and for the year ended 30 June 2013
(b) Interest Rate Risk
Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows or the fair
value of financial instruments.
The Group’s exposure to changes to interest rate risk relates primarily to its earnings on cash and term deposits.
The Group manages the risk by investing in short term deposits.
Cash and cash equivalents
Interest rate sensitivity
2013
$
2012
$
145,581
958,392
The following table demonstrates the sensitivity of the Group’s statement of comprehensive income to a
reasonably possible change in interest rates, with all other variables constant.
Change in Basis Points
Effect on Post Tax Loss ($)
Effect on Equity including
Increase 100 basis points
Decrease 100 basis points
Increase/(Decrease)
retained earnings ($)
Increase/(Decrease)
2013
1,456
2012
9,584
2013
1,456
2012
9,584
(1,456)
(9,584)
(1,456)
(9,584)
A sensitivity of 100 basis points has been used as this is considered reasonable given the current level of both
short term and long term Australian Dollar interest rates. This would represent two to four movements by the
Reserve Bank of Australia.
(c) Credit Risk Exposures
Credit risk represents the risk that the counterparty to the financial instrument will fail to discharge an obligation
and cause the Group to incur a financial loss. The Group’s maximum credit exposure is the carrying amounts on
the statement of financial position. The Group holds financial instruments with credit worthy third parties.
At 30 June 2013, the Group held cash at bank. These were held with financial institutions with a rating from
Standard & Poors of AA or above (long term). The Group has no past due or impaired debtors as at 30 June 2013.
Castillo Copper Limited
39 2013 Annual Report to Shareholders
Castillo Copper Limited
Notes to the financial statements at and for the year ended 30 June 2013
20.
Parent Entity Information
(a) Parent Financial Information
The following details information related to the parent entity, Castillo Copper Limited, at 30 June 2013. The information
presented here has been prepared using consistent accounting policies as presented in note 2.
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Issued capital
Reserves
Accumulated losses
Total equity
Loss of the parent entity
Other comprehensive income for the year
Total comprehensive income of the parent entity
b) Guarantees
2013
$
2012
$
222,260
1,033,877
3,364,258
454,539
3,586,518
1,488,416
72,489
45,049
342,843
-
415,332
45,049
3,171,186
1,443,367
5,601,778
3,402,780
1,773,743
1,627,864
(4,204,335)
(3,587,277)
3,171,186
1,443,367
(617,058)
(1,587,680)
-
-
(617,058)
(1,587,680)
Castillo Copper Limited has not entered into any guarantees in relation to the debts of its subsidiary.
c) Other Commitments and Contingencies
Castillo Copper Limited has not entered into any commitments and does not have any known contingent liabilities at year
end.
Castillo Copper Limited
40 2013 Annual Report to Shareholders
Castillo Copper Limited
Notes to the financial statements at and for the year ended 30 June 2013
21.
Contingent liabilities
There are no known contingent liabilities as at 30 June 2013 (2012:Nil).
22.
Commitments
At 30 June 2013 the Group has commitments of $670,072 (2012: $1,218,219) relating to exploration expenditure on the
Group’s Australian tenements.
Commitments at balance date but not recognised as liabilities are as follows:
Within one year
After one year but not more than five years
Longer than five years
2013
$
2012
$
600,072
685,219
70,000
533,000
-
-
670,072
1,218,219
The Group has the right to relinquish the tenements at any time which will release the Group from future payments.
These amounts are not recognised in the statement of financial position.
Option Payments
In accordance with option agreements entered into in July 2010 for the Posada project, October 2011 for the Rio Rocin
project and March 2012 for the Resguardo project, the Group has option installment payments amounting to the
following:
Within one year
After one year but not more than five years
Longer than five years
2013
$
793,506
14,534,042
5,354,327
20,681,875
2012
$
-
-
-
-
The Group has the pre-emptive rights to withdraw from the contracts at any time which will release the Group from future
payments. These amounts are not recognised in the statement of financial position.
23.
Dividends
No dividend was paid or declared by the Group in the period since the end of the financial year, and up to the date of this
report. The Directors’ do not recommend that any amount be paid by way of a dividend for the financial year ended 30
June 2013.
The balance of the franking account is Nil at 30 June 2013 (2012: Nil).
Castillo Copper Limited
41 2013 Annual Report to Shareholders
Castillo Copper Limited
Notes to the financial statements at and for the year ended 30 June 2013
24.
(a)
Share based payments
Recognised share based payment transaction
Share based payment transactions recognised either as exploration expenditure on the statement of financial position or
operating expenses on the statement of comprehensive income, were as follows:
Exploration expenditure
Share based payments to vendors
Share based payment to supplier
Operating expenses
Share based payments to supplier
(b) Employee share option plan
2013
$
2012
$
2,200,000
145,878
2,345,878
8,800
-
-
-
The Group has established an employee share option plan (ESOP). The objective of the ESOP is to assist in the
recruitment, reward, retention and motivation of employees of Castillo Copper Limited. Under the ESOP, the Directors may
invite individuals acting in a manner similar to employees to participate in the ESOP and receive shares or options. An
individual may receive the options, or shares, or nominate a relative or associate to receive the options or shares. The plan
is open to executive officers, nominated consultants and employees of Castillo Copper Limited.
The fair value at grant date of options granted during the financial year was determined using the Black Scholes option
pricing model that takes into account the exercise price, the term of the option, the share price at grant date and expected
price volatility of the underlying share and the risk free interest rate for the term of the option.
The table below summarises options granted under the ESOP in the previous financial years:
Grant Date
Expiry date
Exercise
price
Balance at
start of the
year
Number
Granted
during the
year
Number
Exercised
during the
year
Number
Expired
during the
year
Number
Balance at
end of the
year
Number
Exercisable at
end of the year
Number
* 26 June 2010 30 June 2014
$0.20 1,500,000
* 18 October 2010 30 June 2014
$0.20
500,000
# 24 February 2011 30 June 2014
$0.20 1,100,000
3,100,000
# Options were issued under the ESOP
* Options were not issued under the ESOP
Weighted remaining contractual life
(years)
Weighted average exercise price
2
$0.20
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,500,000
1,500,000
500,000
500,000
1,100,000
1,100,000
3,100,000
3,100,000
1
1
$0.20
$0.20
There were no other employee share options granted during the 30 June 2013 or 30 June 2012 financial year.
Castillo Copper Limited
42 2013 Annual Report to Shareholders
Castillo Copper Limited
Notes to the financial statements at and for the year ended 30 June 2013
(c) Share based payment to suppliers and vendors
Exploration Expenditure
During the financial year 50,000,004 shares were issued to the shareholders of Castillo Exploration Limited. The fair
value of the shares of $2,200,000 was determined by reference to the market value on the Australian Securities
Exchange on the date the transaction was approved by shareholders.
During the financial year 5,000,000 options in total were issued to Garrison Capital Pty Ltd for their role as advisors to
the acquisition of Castillo Exploration Limited. The fair value of the options of $145,878 was determined using the
Black Scholes option pricing model. The options are exercisable at $0.10 on or before 30 June 2017. These options
are included in the table below.
Grant Date
Expiry date
Exercise
price
Balance at
start of the
year
Number
Granted
during the
year
Number
Exercised
during the
year
Number
Expired
during the
year
Number
Balance at
end of the
year
Number
Exercisable at
end of the year
Number
21 May 2013 30 June 2017
$0.10
Weighted remaining contractual life
(years)
Weighted average exercise price
-
-
-
-
5,000,000
5,000,000
4
$0.10
-
-
-
-
-
-
-
-
5,000,000
5,000,000
5,000,000
5,000,000
4
4
$0.10
$0.10
The model inputs, not included in the table above, for options granted during the year ended 30 June 2013 included:
(a) options are granted for no consideration and vest immediately;
(b) Expected life of options is four years;
(c) share price at grant date was $0.044;
(d) expected volatility of 113%;
(e) expected dividend yield of Nil; and
(f) a risk free interest rate of 2.717%
Operating expenses
There were 200,000 shares issued to Garrison Capital Pty Ltd as a loan fee on the loan acquired upon acquisition of
Castillo Exploration Limited. The fair value of the shares of $8,800 was determined by reference to the market value
on the Australian Securities Exchange on the date the transaction.
There were no other share based payments made to suppliers during the 30 June 2012 and 30 June 2013 financial
year.
Castillo Copper Limited
43 2013 Annual Report to Shareholders
Castillo Copper Limited
Notes to the financial statements at and for the year ended 30 June 2013
25.
Acquisition of Subsidiary – Castillo Exploration Limited
During the financial year, the Group acquired 100% of the voting shares of Castillo Exploration Limited.
The total cost of the acquisition was $2,200,000 and comprised an issue of equity instruments. The Group issued
securities as described in note 24(c) with an issue price based on the quoted price of ordinary shares at the date the
transaction was approved by shareholders.
The acquisition does not constitute a business combination and the cost of the acquisition has been allocated to
exploration and evaluation assets as disclosed in note 6.
The fair value of the identifiable assets and liabilities of Castillo Exploration Limited and its subsidiary as at the date of
acquisition are:
Cash and cash equivalents
Trade and other receivables
Property, plant and equipment
Tenement interests, exploration and evaluation expenditure
Trade and other payables
Borrowings
Fair value of identifiable net assets
Cost of the acquisition:
Securities issued, at fair value
Total cost of the acquisition
Recognised on
acquisition
$
12,212
45,108
1,430
2,676,987
(189,859)
(200,000)
2,345,878
2,345,878
2,345,878
Castillo Copper Limited
44 2013 Annual Report to Shareholders
Castillo Copper Limited – Director’s Declaration
In accordance with a resolution of the Directors of Castillo Copper Limited, I state that:
1.
In the opinion of the directors:
(a)
the financial statements and notes of the Group are in accordance with the Corporations Act 2001,
including:
(i)
giving a true and fair view of the financial position of the Group as at 30 June 2013 and of its
performance, for the year ended on that date; and
(ii)
complying with Australian Accounting Standards, the Corporations Regulations 2001,
professional reporting requirements and other mandatory requirements; and
(b)
there are reasonable grounds to believe that the Group will be able to pay its debts as and when they
become due and payable; and
(c)
The financial statements and notes thereto are in accordance with International Financial Reporting
Standards issued by the International Accounting Standard Board.
2.
This declaration has been made after receiving the declarations required to be made by the Chief Executive
Officer and Chief Financial Officer in accordance with sections 295A of the Corporations Act 2001.
On behalf of the board
Nicholas Lindsay
Managing Director
3 September 2013
Castillo Copper Limited
45 2013 Annual Report to Shareholders
RSM Bird Cameron Partners
8 St George’s Terrace Perth WA 6000
GPO Box R1253 Perth WA 6844
T +61 8 9261 9100 F +61 8 9261 9101
www.rsmi.com.au
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the financial report of Castillo Copper Limited for the year ended 30 June 2013, I
declare that, to the best of my knowledge and belief, there have been no contraventions of:
(i)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii)
any applicable code of professional conduct in relation to the audit.
RSM BIRD CAMERON PARTNERS
Perth, WA
Dated: 3 September 2013
TUTU PHONG
Partner
Liability limited by a
scheme approved
under Professional
Standards Legislation
Major Offices in:
Perth, Sydney, Melbourne,
Adelaide and Canberra
ABN 36 965 185 036
RSM Bird Cameron Partners is a member of the RSM network. Each member
of the RSM network is an independent accounting and advisory firm which
practises in its own right. The RSM network is not itself a separate legal entity
in any jurisdiction.
RSM Bird Cameron Partners
8 St George’s Terrace Perth WA 6000
GPO Box R1253 Perth WA 6844
T +61 8 9261 9100 F +61 8 9261 9101
www.rsmi.com.au
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
CASTILLO COPPER LIMITED
Report on the Financial Report
We have audited the accompanying financial report of Castillo Copper Limited, which comprises the statement of
financial position as at 30 June 2013, statement of comprehensive income, statement of changes in equity and
statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies
and other explanatory information, and the directors' declaration of the consolidated entity comprising the
company and the entities it controlled at the year’s end or from time to time during the financial year.
Directors’ Responsibility for the Financial Report
The directors of the company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the directors determine is necessary to enable the preparation of the financial report that is free from
material misstatement, whether due to fraud or error. In Note 2(b), the directors also state, in accordance with
Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements comply with
International Financial Reporting Standards.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in
accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant
ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable
assurance about whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial report. The procedures selected depend on the auditor's judgement, including the assessment of the
risks of material misstatement of the financial report, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the
financial report in order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates
made by the directors, as well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinions.
Liability limited by a
scheme approved
under Professional
Standards Legislation
Major Offices in:
Perth, Sydney, Melbourne,
Adelaide and Canberra
ABN 36 965 185 036
RSM Bird Cameron Partners is a member of the RSM network. Each member
of the RSM network is an independent accounting and advisory firm which
practises in its own right. The RSM network is not itself a separate legal entity
in any jurisdiction.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. We
confirm that the independence declaration required by the Corporations Act 2001, which has been given to the
directors of Castillo Copper Limited, would be in the same terms if given to the directors as at the time of this
auditor's report.
Opinion
In our opinion:
(a) the financial report of Castillo Copper Limited is in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2013 and of its
performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 2(b).
Report on the Remuneration Report
We have audited the Remuneration Report contained within the directors’ report for the year ended 30 June 2013.
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.
Opinion
In our opinion the Remuneration Report of Castillo Copper Limited for the year ended 30 June 2013 complies with
section 300A of the Corporations Act 2001.
RSM BIRD CAMERON PARTNERS
Perth, WA
Dated: 3 September 2013
TUTU PHONG
Partner
Castillo Copper Limited
ASX Additional Information
Additional information required by the Australian Stock Exchange Ltd and not shown elsewhere in this report is
as follows. The information is current at 21 August 2013.
Substantial Share Holders
The names of shareholders who have notified the Group in accordance with Section 671B of the Corporations
Act 2001 are:
Shareholder Name
Matthew Wood
Jason Peterson
Nicholas Lindsay
William Ryan
Distribution of Share Holders
No. of
Ordinary
Shares
6,629,001
6,391,357
5,600,001
4,250,001
Percentage
%
8.27
7.97
6.98
5.30
1 - 1,000
1,001
- 5,000
5,001
- 10,000
10,001
- 100,000
100,001
- and over
Ordinary Shares
Number of Holders
Number of Shares
3
3
74
206
95
8
7,771
720,950
9,247,894
70,223,381
TOTAL
There were 94 holders of ordinary shares holding less than a marketable parcel.
80,200,004
381
Top Twenty Share Holders
Name
MS SILVANA ALEXANDRA RUEDA SAEZ
RYTECH PTY LTD
MR JASON PETERSON + MRS LISA PETERSON
MITCHELL GRASS HOLDING SINGAPORE PTE LTD
JODAMA PTY LTD
MITCHELL GRASS HOLDING SINGAPORE PTE LTD
MR TIMOTHY JAMES FLAVEL
TAYCOL NOMINEES PTY LTD
MR FRANCIS SCOTT FUNSTON + MS VICTORIA ALEXIS SUZANNE
FUNSTON
MR DANIEL EDDINGTON + MRS JULIE EDDINGTON
CELTIC CAPITAL PTY LTD
MR FREDY BUSTOS
NEFCO NOMINEES PTY LTD
REEVE VENTURES PTY LTD
MR MICHAEL FOSTER BLACK + MS LYNETTE ROBIN BLACK,
BRIJOHN NOMINEES PTY LTD
MR HUGO ITUCAYASI VELASQUEZ
MS MARNIE JANE EDDINGTON
MR MICHAEL ANDREW WHITING + MRS TRACEY ANNE WHITING
CORPORATE PROPERTY SERVICES PTY LTD
Number of Shares held
5,500,001
4,250,001
3,915,000
3,784,000
3,065,000
3,025,001
2,925,000
2,925,000
2,865,001
2,478,000
2,249,690
2,000,000
1,589,000
1,200,000
1,100,000
1,035,000
1,000,000
900,000
881,250
831,250
%
6.86
5.30
4.88
4.72
3.82
3.77
3.65
3.65
3.57
3.09
2.81
2.49
1.98
1.50
1.37
1.29
1.25
1.12
1.10
1.04
Total
47,518,194
59.26
49
Castillo Copper Limited
Restricted Securities
There are 5,850,002 ordinary shares escrowed until 20 May 2014.
On-Market Buy Back
There is no current on-market buy back.
50
Castillo Copper Limited
Tenement Table
Australia
Tenement
Property Name
Project
Tenure Status
EL 7412
EL 7408
EL 7754
EL 7426
EL 7980
ELA 4639
Chile
Spion Kop
Rose Vale
Apsley
Michelago
Wongoni
Dunedoo
Boorowa
Boorowa
Mullions Range
Michelago
Ordovician
Ordovician
Granted
Granted
Granted
Granted
Granted
Application
RIO ROCIN
HECTARES
NATIONAL ROLL
YEAR
GRANTED
OWNER
CHILON 1 to 11
TRAPICHE 1/60
CONDOR 1/60
MOROCHA 1/60
CHILON 1/60
LEON 1/60
PEÑABLANCA 1/60
RINCONCILLO 1/50
AGUILA 1/38
LOS BAYOS 1/904
2,500
300
299
300
300
300
300
230
190
105
N/A
05604-0304-6
05604-0310-0
05604-0307-0
05604-0303-8
05604-0309-7
05604-0305-4
05604-0306-2
05604-0308-9
05604-0163-9
2001
2001
2001
2001
2001
2001
2001
2001
1982
Castillo Copper Chile SpA
SLM TRAPICHE
SLM CONDOR
SLM MOROCHA
SLM CHILON
SLM LEON
SLM PEÑABLANCA
SLM RINCONCILLO
SLM AGUILA
SLM LOS BAYOS
Note: Castillo Copper Chile SpA has a 63% interest in the property owned by SLM Los Bayos, and 100% interest
in properties owned by SLM Trapiche, SLM Condor, SLM Aquila, SLM Morocha, SLM Chilon, SLM Rnconcillo, SLM
Leon and SLM Penablanca. Castillo Copper Chile SpA also has 100% interest in the properties Chilon 1 to 11.
POSADA
HECTARES NATIONAL ROLL
YEAR
GRANTED
OWNER
POSADA PRIMERA 20
POSADA PRIMERA 19
POSADA PRIMERA 18
POSADA PRIMERA 17
POSADA PRIMERA 16
POSADA PRIMERA 15
POSADA PRIMERA 14
POSADA PRIMERA 13
POSADA PRIMERA 12
POSADA PRIMERA 11
POSADA PRIMERA 10
POSADA PRIMERA 9
POSADA PRIMERA 8
POSADA PRIMERA 7
POSADA PRIMERA 6
POSADA PRIMERA 5
POSADA PRIMERA 4
POSADA PRIMERA 3
POSADA PRIMERA 2
POSADA PRIMERA 1
300
300
300
200
200
100
300
100
300
100
300
300
200
200
200
300
300
300
100
300
03203-A016-3
03203-A015-5
03203-A014-7
03203-A013-9
03203-A012-0
03203-A011-2
03203-9982-3
03203-9981-5
03203-9980-7
03203-9979-3
03203-9978-5
03203-A009-0
03203-A008-2
03203-A007-4
03203-A006-6
03203-9977-7
03203-9976-9
03203-9975-0
03203-9974-2
03203-9973-4
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
Castillo Copper Chile SpA
Castillo Copper Chile SpA
Castillo Copper Chile SpA
Castillo Copper Chile SpA
Castillo Copper Chile SpA
Castillo Copper Chile SpA
Castillo Copper Chile SpA
Castillo Copper Chile SpA
Castillo Copper Chile SpA
Castillo Copper Chile SpA
Castillo Copper Chile SpA
Castillo Copper Chile SpA
Castillo Copper Chile SpA
Castillo Copper Chile SpA
Castillo Copper Chile SpA
Castillo Copper Chile SpA
Castillo Copper Chile SpA
Castillo Copper Chile SpA
Castillo Copper Chile SpA
Castillo Copper Chile SpA
Note: Castillo Copper Limited has a 100% interest in properties owned by Castillo Copper Chile SpA.
51
Castillo Copper Limited
CACHIYUYO (POSADA)
HECTARES
NATIONAL
ROLL
YEAR
GRANTED
OWNER
CACHIYUYO 10
CACHIYUYO 12
CACHIYUYO 1
CACHIYUYO 2
CACHIYUYO 3
CACHIYUYO 4
CACHIYUYO PRIMERA 15
CACHIYUYO PRIMERA 16
CACHIYUYO 2 1/20
300
100
300
300
200
200
300
300
188
03201-A394-5
03201-A563-8
03201-D782-3
03201-D783-1
03201-A095-3
03201-A096-1
N/A
N/A
03201-7760-K
2010
2010
2011
2011
2011
2011
2011
2011
2010
Castillo Copper Chile SpA
Castillo Copper Chile SpA
Castillo Copper Chile SpA
Castillo Copper Chile SpA
Castillo Copper Chile SpA
Castillo Copper Chile SpA
Castillo Copper Chile SpA
Castillo Copper Chile SpA
SCM Cachiyuyo
Note: Castillo Copper Limited has a 100% interest in properties owned by Castillo Copper Chile SpA, and an
80% interest in properties owned by SCM Cachiyuyo (80:20 joint venture with Sociedad Inversiones Gema).
RESGUARDO
HECTARES
FOLIO
NUMBER
YEAR
GRANTED
OWNER
ROSA I
ROSA II
ROSA III
ONCE
DOCE
TRECE
CANDIL 1
CANDIL 2
CANDIL 3
CANDIL 4
CANDIL 5
CANDIL 6
CANDIL 7
CANDIL 8
CANDIL 9
RESGUARDO 1 1/20
RESGUARDO 3 1/20
RESGUARDO 4 1/20
ROSA 1/10
300
300
300
100
200
200
100
300
300
300
200
200
300
300
100
100
100
100
20
6002
6003
6146
10645
10647
10648
12158
12160
12161
12163
12164
12166
12167
12169
12170
164
115
120
4454
4455
4460
7955
7956
7957
9005
9006
9007
9008
9009
9010
9011
9013
9013
274
54
55
5921
4399
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2009
2009
2009
2011
Soc. Inversiones Gema
Soc. Inversiones Gema
Soc. Inversiones Gema
Soc. Inversiones Gema
Soc. Inversiones Gema
Soc. Inversiones Gema
Soc. Inversiones Gema
Soc. Inversiones Gema
Soc. Inversiones Gema
Soc. Inversiones Gema
Soc. Inversiones Gema
Soc. Inversiones Gema
Soc. Inversiones Gema
Soc. Inversiones Gema
Soc. Inversiones Gema
SLM Resguardo 1 de la
Sierra Fraga
SLM Resguardo 3 de la
Sierra Fraga
SLM Resguardo 4 de la
Sierra Fraga
Soc. Inversiones Gema
Note: Castillo Copper Chile SpA has a 100% interest in properties owned by Sociedad Inversiones Gema
Ltda, SLM Resguardo 1 de la Sierra Fraga, SLM Resguardo 3 de la Sierra Fraga and SLM Resguardo 4 de la
Sierra Fraga.
52
Castillo Copper Limited
QUEBRADA HUANTA
(VICUÑA)
HECTARES
FOLIO
NUMBER
YEAR
GRANTED
OWNER
EL PROFETA 1
EL PROFETA 2
EL PROFETA 3
EL PROFETA 4
EL PROFETA 5
PACHI 1
PACHI 2
PACHI 3
CAMILA 1
CAMILA 2
CAMILA 3
CAMILA 4
CAMILA 5
CAMILA 6
CAMILA 7
CAMILA 8
CAMILA 9
HOMERO 1
HOMERO 2
300
300
300
300
300
300
300
300
300
200
300
300
300
300
300
300
300
300
300
450
451
452
453
454
470
471
472
460
461
462
463
464
465
466
467
468
1317
1318
243
244
245
246
247
263
264
265
253
254
255
256
257
258
259
260
261
799
800
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
Castillo Copper Chile SpA
Castillo Copper Chile SpA
Castillo Copper Chile SpA
Castillo Copper Chile SpA
Castillo Copper Chile SpA
Castillo Copper Chile SpA
Castillo Copper Chile SpA
Castillo Copper Chile SpA
Castillo Copper Chile SpA
Castillo Copper Chile SpA
Castillo Copper Chile SpA
Castillo Copper Chile SpA
Castillo Copper Chile SpA
Castillo Copper Chile SpA
Castillo Copper Chile SpA
Castillo Copper Chile SpA
Castillo Copper Chile SpA
Castillo Copper Chile SpA
Castillo Copper Chile SpA
Note: Castillo Copper Limited has a 100% interest in properties owned by Castillo Copper Chile SpA.
53