CASTILLO COPPER LIMITED
ABN 52 137 606 476
Annual Report
30 June 2016
Corporate Directory
Directors
Mr. David Wheeler (Non-Executive Director)
Mr. Giuseppe (Joe) Graziano (Non-Executive Director)
Ms. Nicole Fernandes (Non-Executive Director)
Company Secretary
Mr. Tim Slate
Registered Office and Principal Place of Business
Level 6
105 St Georges Terrace,
Perth, WA 6000 Australia
Telephone: + 618 6558 0886
Facsimile:
+ 618 6316 3337
Share Registry
Automic Registry Services Pty Ltd
Level 1
7 Ventnor Ave
WEST PERTH WA 6005
Telephone:
1300 288 664
Auditors
HLB Mann Judd
Level 4
130 Stirling Street
Perth, WA 6000 Australia
Stock Exchange Listing
Australian Securities Exchange
(Home Exchange: Perth, Western Australia)
ASX Code: CCZ
Contents
Directors’ Report
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
Corporate Governance Statement
ASX Additional Information
Tenement Table
Page No
1
11
12
13
14
15
34
35
36
38
47
49
Castillo Copper Limited – Directors’ Report
The Directors of Castillo Copper Limited and its subsidiaries (“Castillo”, “CCZ” or the “Group”) submit the financial
report of the Group for the year ended 30 June 2016. 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 David Wheeler
Non-Executive Director
Mr Wheeler has more than 30 years of executive management experience, through general management, CEO and
managing director roles across a range of companies and industries. He has worked on business projects in the USA,
UK, Europe, New Zealand, China, Malaysia, and the Middle East (Iran). David has been a Fellow of the Australian
Institute of Company Directors (FAICD) since 1990.
Mr Giuseppe (Joe) Graziano
Non-Executive Director
Mr Graziano is a Chartered Accountant and has 25 years of experience providing a wide range of business, financial
and taxation advice to small cap unlisted and listed public companies and privately owned businesses in Western
Australia’s resource-driven industries, particularly mining, banking and finance, professional services and logistics.
He has the knowledge and experience in Corporate Advisory and strategic planning with Corporations and Private
Businesses going through a growth phase and restructuring those businesses to assist with the next phase of their
growth strategy. He also has experience in capital raisings, ASX compliance and regulatory requirements.
Ms Nicole Fernandes
Non-Executive Director (appointed 6 May 2016)
Ms Fernandes has 15 years' experience in working in government developing and implementing policies and strategies
to drive performance across agricultural sectors and achieve innovative solutions for industry.
During this time, Nicole has worked in senior advisory roles to State Ministers and in various senior roles in government
including policy, trade, industry and community liaison.
She is a Graduate of the Australian Institute of Company Directors and has been a member since 2010. With a
background in science Ms Fernandes has a BSc (hons) in biotechnology and has worked in government roles assisting
biotech companies and developing State government policy on the commercial use of genetic technologies.
Mr Jack James
Non-Executive Director / Company Secretary (appointed 13 August 2015, resigned 6 May 2016 / resigned 12
July 2016)
Mr. James has a Bachelor of Business from the Queensland University of Technology and is a Chartered
Accountant. Mr. James provides accounting, secretarial and advisory advice to private and public companies,
government and other stakeholders. Mr. James has over fifteen years’ experience in chartered accounting specialising
in corporate advisory and reconstruction. Most recently, he held senior roles in Ernst & Young and KordaMentha.
Mr Brian McMaster
Executive Chairman (resigned 13 August 2015)
Mr McMaster is a Chartered Accountant, and has over 20 years’ experience in the area of corporate reconstruction
and turnaround/performance improvement. Formerly, Mr McMaster was a 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 Matthew Wood
Executive Director (resigned 13 August 2015)
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
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Castillo Copper Limited – Directors’ Report
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 and is a member of the AusIMM. Mr Wood is a founding director
in venture capital and advisory firm Garrison Capital Pty Ltd.
Dr. Nicholas Lindsay
Managing Director (resigned 13 August 2015)
Dr. Lindsay has over 25 years of 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.
Mr. Daniel Crennan
Non-Executive Director (resigned 13 August 2015)
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.
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. David Wheeler
Mr. Joe Graziano
Ms. Fernandes1
Mr. Jack James2
Number of Meetings Eligible
Number of Meetings
to Attend
Attended
4
4
-
4
4
3
-
4
Note:
1) Ms Fernandes was appointed on 6 May 2016, no meetings were held since her appointment.
2) Mr James resigned on 6 May 2016 and attended all meetings up to his resignation.
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Castillo Copper Limited – Directors’ Report
DIRECTORSHIPS IN OTHER LISTED ENTITIES
Directorships of other listed entities held by current Directors of the Company during the last 3 years immediately
before the end of the year are as follows:
Director
Company
David Wheeler
Antilles Oil and Gas NL
Lithex Resources Limited
Eumeralla Resources Limited
Oz Brewing Limited
Premiere Eastern Energy Limited
Period of Directorship
From
To
12 February 2016
1 December 2015
1 October 2014
15 April 2011
24 August 2014
Current
Current
Current
Current
Current
The Carajas Copper Company Limited
17 March 2016
10 May 2016
TW Holdings Limited
Weststar Industrial Limited
Joe Graziano
Oz Brewing Ltd
Weststar Industrial Limited
Lithex Resources Limited
Kin Mining NL
18 November 2014
12 August 2015
15 April 2011
12 August 2015
5 December 2013
30 September 2013
Current
Current
Current
Current
Current
Current
The Carajas Copper Company Limited
17 March 2016
10 May 2016
Nicole Fernandes
Eumeralla Resources Limited
6 May 2016
Current
The Carajas Copper Company Limited
17 March 2016
10 May 2016
COMPANY SECRETARY
Mr. Tim Slate was appointed as Company Secretary on 6 May 2016. Mr. Slate has a Bachelor of Commerce from the
University of Western Australian, is a Chartered Accountant and is an Association Member of the Governance Institute
of Australia. Mr. Slate provides accounting and secretarial advice to private and public companies. Mr Slate has nine
years’ experience in chartered accounting.
Mr Jack Robert James was appointed as Company Secretary on 14 July 2014 and resigned from the position of
Company Secretary on 12 July 2016.
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.
The remuneration report is set out under the following main headings:
Principles used to determine the nature and amount of remuneration
Details of remuneration
Service agreements
Share-based compensation
Additional disclosures relating to key management personnel
Principles used to determine the nature and amount of remuneration
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
3
Castillo Copper Limited – Directors’ Report
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 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.
As at 30 June
Loss per share (cents)
2016
(0.07)
2015
(4.14)
2013
(0.58)
2012
(1.78)
2011
(5.29)
DETAILS OF REMUNERATION
Details of Key Management Personnel
Mr. David Wheeler (Non-Executive Director) – appointed 13 August 2015
Mr. Joe Graziano (Non-Executive Director) – appointed 13 August 2015
Ms. Nicole Fernandes (Non-Executive Director) – appointed 6 May 2016
Mr. Jack James (Non-Executive Director) – appointed 13 August 2015, resigned 6 May 2016
Mr. Brian McMaster (Executive Chairman) – resigned 13 August 2015
Dr. Nicholas Lindsay (Managing Director) – resigned 13 August 2015
Mr. Matthew Wood (Executive Director) – resigned 13 August 2015
Mr. Daniel Crennan (Non-Executive Director) – resigned 13 August 2015
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Castillo Copper Limited – Directors’ Report
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
Relative proportions of
employment
remuneration of KMP that
are linked to performance
2016
Directors’
Consulting
Share-
Superannuat
Total
Fixed
Remuneration
Director
Mr. Joe Graziano1
Mr. David Wheeler1
Ms. Nicole Fernandes3
Mr. Jack James1,4
Mr. Brian McMaster2
Dr. Nicholas Lindsay2
Mr. Matthew Wood2
Mr. Daniel Crennan2
Fees
Fees
based
Payments
$
-
-
-
-
-
-
-
-
-
$
42,000
42,000
7,000
42,000
8,000
-
2,500
1,793
145,293
$
-
-
-
-
-
-
-
-
-
ion
$
-
-
-
-
-
-
-
-
-
Remuner
linked to
ation
performance
$
%
%
42,000
42,000
7,000
42,000
8,000
-
2,500
1,793
145,293
100%
100%
100%
100%
100%
100%
100%
100%
100%
-
-
-
-
-
-
-
-
-
1 Mr. Jack James, Mr. David Wheeler and Mr. Joe Graziano were appointed 13 August 2015.
2 Mr. Brian McMaster, Dr. Nicholas Lindsay, Mr. Matthew Wood and Mr. Daniel Crennan resigned on 13 August 2015.
3 Ms. Nicole Fernandes was appointed on 6 May 2016
4 Mr. Jack James resigned on 6 May 2016.
Short term
Options
Post
Relative proportions of
employment
remuneration of KMP that
are linked to performance
2015
Directors’
Consulting
Share-
Superannuat
Total
Fixed
Remuneration
Director
Mr. Jack James¹
Mr. David Wheeler¹
Mr. Joe Graziano¹
Mr. Brian McMaster2
Dr. Nicholas Lindsay2
Mr. Matthew Wood2
Mr. Daniel Crennan2
Fees
Fees
based
Payments
$
-
-
-
-
-
-
-
-
$
-
-
-
96,000
70,000
30,000
15,000
211,000
$
-
-
-
-
-
-
-
-
ion
$
-
-
-
-
-
-
-
-
$
-
-
-
96,000
70,000
30,000
15,000
211,000
Remuner
linked to
ation
performance
%
%
100%
100%
100%
100%
100%
100%
100%
100%
-
-
-
-
-
-
-
-
1 Mr. Jack James, Mr. David Wheeler and Mr. Joe Graziano were appointed 13 August 2015.
2 Mr. Brian McMaster, Dr. Nicholas Lindsay, Mr. Matthew Wood and Mr. Daniel Crennan resigned on 13 August 2015.
There were no other key management personnel of the Group during the financial years ended 30 June 2016 and 30
June 2015. No remuneration is performance related.
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Castillo Copper Limited – Directors’ Report
Service Agreements
Executive Directors’ Remuneration
The Managing Director, Dr. Nicholas Lindsay was paid an annual consulting fee on a monthly basis. The agreement
commenced on 20 May 2013 and was for a term of two years unless extended by both parties. Dr. Lindsay may have
terminated the agreement by giving three months written notice. The Group may have terminated 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. The agreement was concluded on 13 August 2015.
Mr. Brian McMaster and Mr. Matthew Wood were paid an annual consulting fee on a monthly basis. Their services may
have been terminated by either party at any time. The agreements were concluded on 13 August 2015.
Non-Executive Directors’ remuneration
Mr. Joe Graziano, Mr. David Wheeler and Ms. Nicole Fernandes are paid an annual consulting fee on a monthly basis.
The agreements commenced on 21 June 2016 and are for a term of 12 months unless extended by both parties. The
Group may terminate the agreements by paying an amount equivalent to twelve months fees (based on an agreed
consulting fee) or without notice in the case of serious misconduct.
Mr. Daniel Crennan and Mr. Jack James were paid an annual consulting fee on a monthly basis. Their services may
have been terminated by either party at any time. The agreements were concluded on 13 August 2015 and 6 May 2016
respectively.
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.
Share-based compensation
Issue of shares
There were no share issued to Directors and other key management personnel as part of compensation during the
year ended 30 June 2016.
Options
There were no grants of options over ordinary shares affecting remuneration of Directors and other key management
personnel in this financial year or future reporting years.
Additional disclosures relating to key management personnel
Key Management Personnel Options
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.
Balance at
the start of
the year
Balance at
appointment
Granted
during the
year as
compensation
On exercise
of share
options
Other
changes
during the
year
Balance at
resignation
Balance at
the end of
the year
Mr. Joe Graziano
Mr. David Wheeler
Ms. Nicole Fernandes
Mr. Jack James
Dr. Nicholas Lindsay
Mr. Brian McMaster
Mr. Matthew Wood
Mr. Daniel Crennan
-
-
-
-
-
2,500,000
2,500,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,500,000
2,500,000
-
-
-
-
-
-
-
-
-
Castillo Copper Limited – Directors’ Report
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.
Balance at
the start of
the year
Balance at
appointment
Granted
during the
year as
compensation
On exercise
of share
options
Other
changes
during the
year
Balance at
resignation
Balance at
the end of
the year
Mr. Joe Graziano
1,050,000
Mr. David Wheeler
Ms. Nicole Fernandes
Mr. Jack James
Dr. Nicholas Lindsay
Mr. Brian McMaster
Mr. Matthew Wood
Mr. Daniel Crennan
-
-
-
8,265,001
3,800,000
27,409,001
500,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
500,000
-
-
-
-
-
-
-
-
-
-
8,265,001
3,800,000
27,409,001
500,000
1,050,000
500,000
-
-
-
-
-
-
Other transactions with key management personnel
Palisade Business Consulting Pty Ltd, a company of which Mr. James is a director, charged the Group director fees of
$42,000 (2015: $nil), fees for provision of a fully serviced office including administration and information technology support
of $7,000 (2015: $45,000) plus reimbursement of payment for corporate advisory services, company secretary fees,
accounting services, courier and other minor expenses of $32,535 (2015: $68,900). An amount of $3,583 (2015: $87,032)
was outstanding at year end.
Pathways Corporate Pty Ltd, a company of which Mr. Wheeler and Mr. Graziano are directors, charged the Group director
fees of $84,000 (2015: $Nil). There was no amount outstanding at year end.
Lindsay Rueda Services Pty Ltd, a company of which Dr. Lindsay is a director, is owed $nil (2015: 48,750) at year end.
Vega Funds Pty Ltd, a company of which Mr. McMaster is a director, is owed $nil (2015: $52,800) at year end.
Gemstar Investments Ltd, a company of which Mr. McMaster is a director, is owed $nil (2015: $24,000) at year end.
Garrison Capital Pty Ltd, a company of which Mr. Wood and Mr. McMaster are directors and shareholders, provided the
Group with a fully serviced office including administration and information technology support and charged $5,000 for the
year ended 30 June 2016 (2015: $30,000) for these services, and reimbursement of payment for corporate advisory
services, company secretary fees, accounting services, courier and other minor expenses of $637 (2015: $70,520). $Nil
(2015: $33,880) was outstanding at year end.
Mr. Wood is owed $nil (2015: $17,700) at year end.
Mr. Crennan is owed $nil (2015: $8,250) at year end.
Transactions with key management personnel were made at arm’s length at normal market prices and normal commercial
terms.
END OF REMUNERATION REPORT
7
Castillo Copper Limited – Directors’ Report
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
Mr. David Wheeler
Mr. Joe Graziano
Ms. Nicole Fernandes
500,000
1,050,000
-
RESULTS OF OPERATIONS
The net loss of the Group for the year after income tax was $434,291 (2015: $4,454,154) and the net assets of the
Group at 30 June 2016 were $211,041 (2015: net liabilities of $139,670).
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 of the Group was mineral exploration and examination of new resource
opportunities. The Group currently holds copper projects in Chile and gold projects in Australia.
EMPLOYEES
Other than the Directors, the Group had no employees at 30 June 2016 (2015:Nil).
REVIEW OF OPERATIONS
During the financial year, the Board continued its review of the Company’s future strategy and implemented initiatives
to reduce costs. As a result of the review, the following key matters took place:
Preliminary discussions held with a number of parties regarding future investment opportunities aimed at
improving shareholder value; and
Rationalisation of tenements to reduce expenditure commitments.
Corporate
On 9 October 2015 the Company issued the Entitlement Issue Prospectus for a renounceable entitlements issue of
approximately 422,997,732 Shares at an issue price of $0.002 on the basis of one (1) new Share for every one (1)
Share held by Shareholders on the record date, to raise approximately $845,995 (Offer) before costs. The
renounceable entitlements issue was completed on 3 December 2015.
The Offer was fully underwritten by Lead Manager, Broker, Underwriter and Corporate Advisor, CPS Capital Group Pty
Ltd (CPS). The mandate also engaged CPS to seek to introduce potential assets that CCZ may be interested in
acquiring and to provide general ongoing corporate advice.
On 6 May 2016, the listed and unlisted share capital of the Company was consolidated on the basis that every four (4)
Shares be consolidated into one (1) Share and, where this Consolidation resulted in a fraction of a Share being held,
the Company was authorised to round that fraction up to the nearest whole Share as approved by shareholders at the
General Meeting of shareholders.
The Company continues to appraise new project opportunities both within Australia and overseas.
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Castillo Copper Limited – Directors’ Report
Board Changes
On 13 August 2015, the Company announced the appointment of Messrs David Wheeler, Giuseppe (Joe) Graziano
and Jack James as Non-Executive Directors of the Company. Furthermore, the Company advised that Dr Nicholas
Lindsay and Messrs Brian McMaster, Matt Wood and Dan Crennan resigned from the position of Managing Director,
Executive Chairman, Executive Director and Non-Executive Director respectively.
On 6 May 2016, the Company announced the appointment of Ms Nicole Fernandes as Non-Executive Director and Mr
Tim Slate as Joint Company Secretary of the Company. Furthermore, the Company advised that Mr Jack James
resigned from the position of Non-Executive Director.
On 12 July 2016, the Company advised Mr Jack James resigned from the position of Joint Company Secretary.
Chilean Copper Projects
As announced on 13 November 2015, as part of the rationalisation of tenements, the Company made a decision to
discontinue its Chilean Copper Projects, being the Posada and Rio Rocin Projects. The Company continues to hold
title of its Trueno mining concessions.
The Company did not perform any material exploration work on these projects.
NSW Projects
The Company relinquished its tenement holdings in New South Wales.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
There were no significant changes in the state of affairs of the Group during the year.
SIGNIFICANT EVENTS AFTER THE BALANCE DATE
There were no known material significant events from the end of the financial year to the date of this report that have
significantly affected, or may significantly affect the operations of the Group, the results of those operations, or the state
of affairs of the Group in future financial periods.
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 1,250,000 unissued ordinary shares under options (1,250,000 at the reporting
date). The details of the unlisted options at the date of this report are as follows:
Number
Exercise Price $
Expiry Date
1,250,000
0.40
30 June 2017
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
9
Castillo Copper Limited – Directors’ Report
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.
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.
INDEMNITY AND INSURANCE OF AUDITOR
The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of
the company or any related entity against a liability incurred by the auditor.
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.
Signed in accordance with a resolution of the Directors.
On behalf of the Directors.
David Wheeler
Non-Executive Director
27 September 2016
Competent Person’s Statement
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 2012 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.
10
Castillo Copper Limited
Consolidated Statement of Comprehensive Income for the year ended 30 June 2016
REVENUE
Interest received
TOTAL REVENUE
Listing and public company expenses
Accounting and audit expenses
Consulting and Directors’ fees
Impairment of exploration expenditure
Impairment of receivables
Other expenses
LOSS BEFORE INCOME TAX EXPENSE FROM
CONTINUING OPERATIONS
Income tax expense
Notes
6
4
5
2016
$
2,124
2,124
2015
$
6,118
6,118
(34,025)
(83,823)
(27,169)
(112,843)
(141,563)
(330,544)
(11,976)
(3,875,556)
(99,890)
-
(65,138)
(114,160)
(434,291)
(4,454,154)
-
-
LOSS AFTER INCOME TAX EXPENSE FOR THE YEAR
(434,291)
(4,454,154)
OTHER COMPREHENSIVE INCOME / (LOSS)
Item that may be reclassified subsequently to profit or loss
Foreign currency translation
TOTAL OTHER COMPREHENSIVE INCOME / (LOSS)
775
775
149,328
149,328
TOTAL COMPREHENSIVE LOSS FOR THE YEAR
(433,516)
(4,304,826)
Loss per share attributable to owners of Castillo Copper
Limited
Basic and diluted loss per share (cents per share)
13
(0.07)
(4.14)
The accompanying notes form part of these financial statements.
Castillo Copper Limited
11
2016 Annual Report to Shareholders
Castillo Copper Limited
Consolidated Statement of Financial Position as at 30 June 2016
CURRENT ASSETS
Cash and cash equivalents
Other receivables
Notes
11
7
2016
$
216,777
18,021
2015
$
37,565
107,951
TOTAL CURRENT ASSETS
234,798
145,516
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
6
7
8
-
-
-
-
-
205
10,000
10,205
234,798
155,721
23,757
295,391
TOTAL CURRENT LIABILITIES
23,757
295,391
TOTAL LIABILITIES
23,757
295,391
NET ASSETS / (LIABILITIES)
211,041
(139,670)
EQUITY
Issued capital
Reserves
Accumulated losses
9
10
9,620,254
1,645,617
8,836,027
1,644,842
(11,054,830)
(10,620,539)
TOTAL EQUITY / (DEFICIENCY)
211,041
(139,670)
The accompanying notes form part of these financial statements.
Castillo Copper Limited
12
2016 Annual Report to Shareholders
Castillo Copper Limited
Consolidated Statement of Changes in Equity for the year ended 30 June 2016
Share
based
payment
reserve
$
Foreign
currency
translation
reserve
$
Issued
capital
$
Accumulated
losses
$
Total
$
(139,670)
(434,291)
775
(128,900)
(10,620,539)
(434,291)
-
(434,291)
(433,516)
Balance at 1 July 2015
8,836,027
Loss for the year
Other comprehensive income
Total comprehensive loss
Transactions with owners in
their capacity as owners
Shares issued during the year
Costs of issue
-
-
-
845,995
(61,768)
1,773,742
-
-
-
-
-
-
775
775
-
-
Balance as at 30 June 2016
9,620,254
1,773,742
(128,125)
(11,054,830)
-
-
845,995
(61,768)
211,041
Balance at 1 July 2014
8,857,634
Loss for the year
Other comprehensive income
Total comprehensive loss
Transactions with owners in
their capacity as owners
Shares issued during the year
Costs of issue
-
-
-
(21,607)
-
1,773,742
-
-
-
-
-
(278,228)
(6,166,385)
4,186,763
-
(4,454,154)
(4,454,154)
149,328
-
149,328
149,328
(4,454,154)
(4,304,826)
-
-
-
-
(21,607)
-
Balance as at 30 June 2015
8,836,027
1,773,742
(128,900)
(10,620,539)
(139,670)
The accompanying notes form part of these financial statements.
Castillo Copper Limited
13
2016 Annual Report to Shareholders
Castillo Copper Limited
Consolidated Statement of Cash Flows for the year ended 30 June 2016
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received
Payments to suppliers and employees
Notes
2016
$
2015
$
2,124
9,965
(599,516)
(396,323)
NET CASH USED IN OPERATING ACTIVITIES
11
(597,392)
(386,358)
CASH FLOWS FROM INVESTING ACTIVITIES
Tenement expenditure guarantees refunded
Exploration and evaluation expenditure
NET CASH USED IN INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from share issue
Payment for share buy-back
Share issue costs
NET CASH FROM / (USED) IN FINANCING ACTIVITIES
9
9
9
Net (decrease) / increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Net foreign exchange differences
CASH AND CASH EQUIVALENTS AT END OF FINANCIAL YEAR
11
The accompanying notes form part of these financial statements.
10,000
10,000
(17,623)
(376,973)
(7,623)
(366,973)
845,995
-
-
(21,607)
(61,768)
784,227
-
(21,607)
179,212
(774,938)
37,565
812,266
-
216,777
237
37,565
Castillo Copper Limited
14
2016 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June
2016
1.
Corporate Information
The financial report of Castillo Copper Limited and its subsidiaries (“Castillo Copper” or “the Group”) for the year ended
30 June 2016 was authorised for issue in accordance with a resolution of the Directors on 27 September 2016.
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. 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.
(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).
(c)
New accounting standards and interpretations issued not yet effective
Standards and Interpretations applicable to 30 June 2016
In the year ended 30 June 2016, the Directors have reviewed all of the new and revised Standards and Interpretations
issued by the AASB that are relevant to the Company and effective for the current annual reporting period.
As a result of this review, the Directors have determined that there is no material impact of the new and revised Standards
and Interpretations on the Company and, therefore, no material change is necessary to Group accounting policies.
Standards and Interpretations in issue not yet adopted
The Directors have also reviewed all new Standards and Interpretations that have been issued but are not yet effective
for the year ended 30 June 2016. As a result of this review the directors have determined that there is no material impact,
of the new and revised Standards and Interpretations on the Group and, therefore, no change is necessary to Group
accounting policies.
Castillo Copper Limited
15
2016 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June
2016
(d)
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.
The Group incurred a net loss for the year ended 30 June 2016 of $434,291 and experienced net cash outflows from
operating activities of $597,392, net cash outflows from investing activities of $7,623 and net cash inflows from financing
activities of $784,227. At 30 June 2016, the Group had a net asset position of $211,041. The cash and cash equivalents
balance at 30 June 2016 was $216,777.
The directors have reviewed the Group’s financial position and are of the opinion that the use of the going concern basis
of accounting is appropriate as they believe the Group will be able to secure funds to meet its commitments.
There are a number of inherent uncertainties relating to the Group’s future plans including but not limited to:
whether the Company will be able to raise equity in this current market; and
whether the Group would be able to secure any other sources of funding.
Accordingly, there is a material uncertainty that may cast significant doubt whether the Group will continue as a going
concern and therefore whether it will realise its assets and extinguish its liabilities in the normal course of business and
at the amounts stated in the financial report.
The financial report does not contain any adjustments relating to the recoverability and classification of recorded assets
or to the amounts or classification of recorded assets or liabilities that might be necessary should the Group not be able
to continue as a going concern.
(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 control. The Company
controls an entity when the company is exposed to, or has rights to, variable returns from its involvement with the entity
and has the ability to affect those returns through its power to direct the activities of the 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.
Castillo Copper Limited
16
2016 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June
2016
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:
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
Castillo Copper Limited
17
2016 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June
2016
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
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.
(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.
Castillo Copper Limited
18
2016 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June
2016
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.
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
Castillo Copper Limited
19
2016 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June
2016
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.
(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.
Castillo Copper Limited
20
2016 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June
2016
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.
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 21.
Functional currency translation reserve
Under the Accounting Standards, each entity within the Group is required to determine its functional currency, which is
the currency of the primary economic environment in which the entity operates. Management considers the Chilean
subsidiary to be foreign operations with Chilean Peso as the functional currency. In arriving at this determination,
management has given priority to the currency that influences the labour, materials and other costs of exploration
activities as they consider this to be a primary indicator of the functional currency.
(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.
Castillo Copper Limited
21
2016 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June
2016
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.
(q)
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit/loss 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/loss 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.
Castillo Copper Limited
22
2016 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June
2016
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 21.
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’).
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 13).
Castillo Copper Limited
23
2016 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June
2016
(u)
Comparative information
When required by Accounting Standards, comparative information has been reclassified to be consistent with the
presentation in the current year.
(v)
Operating segments
Operating segments are presented using the 'management approach', where the information presented is on the same
basis as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible for
the allocation of resources to operating segments and assessing their performance.
(w)
Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the
fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date; and assumes that the transaction will take place either: in the
principle market; or in the absence of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or liability,
assuming they act in their economic best interest. For non-financial assets, the fair value measurement is based on its
highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are
available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of
unobservable inputs.
Assets and liabilities measured at fair value are classified, into three levels, using a fair value hierarchy that reflects the
significance of the inputs used in making the measurements. Classifications are reviewed each reporting date and
transfers between levels are determined based on a reassessment of the lowest level input that is significant to the fair
value measurement.
For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either
not available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge
and reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an
analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison,
where applicable, with external sources of data.
(x)
Parent entity financial information
The financial information for the parent entity, Castillo Copper Limited, disclosed in Note 17 has been prepared on the
same basis as the consolidated financial statements, except as set out below.
Investments in subsidiaries, associates and joint venture entities
Investments in subsidiaries, associates and joint venture entities are accounted for at cost in the parent entity’s financial
statements. Dividends received from associates are recognised in the parent entity’s profit or loss, rather than being
deducted from the carrying amount of these investments.
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.
Castillo Copper Limited
24
2016 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June
2016
The Board of Directors reviews internal management reports on a monthly basis that is consistent with the information
provided in the consolidated statement of comprehensive income, consolidated statement of financial position and
consolidated 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.
4.
Other expenses
Occupancy
Travel and accommodation
Legal
Other
Total other expenses
5.
Income Tax
(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:
2011
2016
$
2015
$
37,000
80,000
-
17,255
10,883
6,791
4,358
23,011
65,138
114,160
-
-
-
-
-
-
Loss from continuing operations before income tax expense
Tax at the company rate of 30%
Income tax benefit not bought to account
Income tax expense
(434,291)
(4,454,154)
(130,287)
(1,336,246)
130,287
1,336,246
-
-
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
-
-
-
121,581
(121,581)
-
Castillo Copper Limited
25
2016 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June
2016
Assets
2016
$
2015
$
Total losses available to offset against future taxable income
2,925,399
2,795,517
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:
4,200
29,885
18,525
45,122
(3,593)
(121,581)
(2,955,891) (2,737,583)
-
-
9,751,331
9,318,391
2,925,399
2,795,517
(i)
(ii)
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;
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
Exploration and evaluation phase:
At beginning of the year
Exploration expenditure during the year
Net exchange differences on translation
Impairment expense1
Total exploration and evaluation
-
3,328,152
11,976
405,271
-
142,133
(11,976)
(3,875,556)
-
-
1 The impairment expense relates to the decision to not continue exploration work on Australian and Chilean
tenements and accordingly the carrying value has been written down to $nil. The recoupment of costs carried forward
in relation to areas of interest in the exploration and evaluation phase is dependent on the successful development
and commercial exploration or sale of respective areas.
7.
Other Receivables
Current
GST/VAT receivable
Other
Non-Current
Tenement guarantees
There are no current tenement guarantees.
7,484
102,672
10,537
5,279
18,021
107,951
-
10,000
Castillo Copper Limited
26
2016 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June
2016
8.
Trade and other payables
Current
Trade creditors
Accruals
y 2016
$
2015
$
7,515
230,081
16,242
23,757
65,310
295,391
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.
9.
Issued Capital
(a) Issued and paid up capital
Ordinary shares fully paid
(b) Movements in ordinary shares on issue
Opening balance
Shares issued via rights issue
Consolidation on one (1) for four (4) basis
Share buy-back
Transaction costs on share issue
9,620,254
8,836,027
2016
Number of
shares
2015
Number of
shares
$
$
422,997,732
422,997,732
(634,496,579)
-
-
8,836,027
845,995
-
-
(61,768)
430,200,004
-
-
(7,202,272)
-
8,857,634
-
-
(21,607)
-
211,498,885
9,620,254
422,997,732
8,836,027
(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 2016 there were 1,250,000 (2015: 5,000,000) unissued ordinary shares under unlisted options. The details
of the options are as follows:
Number
Exercise Price $
Expiry Date
1,250,000
0.40
30 June 2017
The unissued ordinary shares under unlisted options were consolidated on a one (1) for four (4) basis during the
financial year.
No other options expired during the year, no options were issued or exercised during the year and no options have
been issued or exercised since the end of the financial year.
10.
Reserves
Share based payment reserve
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.
Castillo Copper Limited
27
2016 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June
2016
Foreign currency translation reserve
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 or
loss when the net investment is disposed of.
11.
Cash and cash equivalents
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
Impairment of receivables
Foreign exchange gain
Depreciation expense
Changes in assets and liabilities:
Increase / (decrease) in trade and other payables
(Increase) / decrease in other receivables
Net cash flow used in operating activities
(b) Reconciliation of cash
Cash balance comprises:
Cash at bank
$
2016
$
2015
$
(434,291)
(4,454,154)
11,976
3,875,556
99,890
(3,644)
205
-
-
960
(266,270)
179,776
(5,258)
11,504
(597,392)
(386,358)
216,777
37,565
Cash at bank earns interest at floating rates based on daily bank deposit rates.
Subsequent events
12.
There were no known material significant events from the end of the financial year to the date of this report that
have significantly affected, or may significantly affect the operations of the Group, the results of those operations,
or the state of affairs of the Group in future financial periods.
13.
Loss used in calculating basic and dilutive EPS
Loss per Share
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:
(434,291)
(4,454,154)
Number of Shares
600,137,792
107,550,001
-
-
600,137,792
107,550,001
Basic and diluted loss per share (cents per share)
(0.07)
(4.14)
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.
There are no potential ordinary shares on issue that are considered to be dilutive, therefore basic earnings per share
also represents diluted earnings per share.
Castillo Copper Limited
28
2016 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June
2016
14.
Auditor’s Remuneration
The auditor of Castillo Copper Limited is HLB Mann Judd.
Amounts received or due and receivable for:
Audit or review of the financial report of the entity and any other entity in
the Group
15.
a)
Related party disclosures
Key management personnel
Compensation of key management personnel
Short term employee benefits
Post-employment benefits
Share-based payments
Total remuneration
2016
$
2015
$
22,000
22,000
22,000
22,000
145,293
211,000
-
-
-
-
145,293
211,000
For Director related party transactions please refer to the Audited Remuneration Report. During the year, the total
aggregate related party transactions for consulting services, office costs and reimbursements as provided by key
management personnel and their related parties was $45,172 (2015: $214,420). The outstanding balance owing
relating to the above transactions at balance date was $3,583 (2015: $120,918).
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
2016
100%
100%
75%
2015
100%
100%
75%
Castillo Copper Limited is the ultimate Australian parent entity and ultimate parent of the Group.
Balances and transactions between the Company and its subsidiaries, which are related parties of the Company,
have been eliminated on consolidation and not disclosed in this note. Details of transactions between the Group and
other related entities are disclosed below.
Castillo Copper Limited
29
2016 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June
2016
Trading transactions
The following balances were outstanding at the end of the reporting period.
Castillo Copper Chile SPA
Castillo Exploration Limited
Consolidated
Amounts owed by related
parties
Amounts owed to related
partied
2016
$
4,818,940
2,155,592
2015
$
4,613,307
2,100,601
2016
$
-
373,772
2015
$
-
372,817
The amounts outstanding are unsecured and will be settled in cash. No guarantees have been given or received. No
expense has been recognised in the current or prior periods for bad or doubtful debts in respect of the amounts owed
by related parties.
There were no other related party disclosures for the year ended 30 June 2016.
16.
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
Other receivables (current and non-current)
Financial Liabilities
Trade and other payables
2016
$
2015
$
216,777
18,021
37,565
117,951
23,757
295,391
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) Capital risk management
The Group’s capital comprises share capital and reserves less accumulated losses. As at 30 June 2016, the Group
has net assets of $211,041 (2015: net liabilities of $139,670). The Group manages its capital to ensure its ability to
continue as a going concern and to optimise returns to its shareholders.
(b) 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
Castillo Copper Limited
30
2016 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June
2016
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 2016 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.
(c)
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
2016
$
2015
$
216,777
37,565
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)
2016
2,168
(2,168)
2015
376
(376)
2016
2,168
(2,168)
2015
376
(376)
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.
(d) 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 2016, 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 2016.
Castillo Copper Limited
31
2016 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June
2016
(e) Fair Value Measurement
There were no financial assets or liabilities at 30 June 2016 requiring fair value estimation and disclosure as they are
either not carried at fair value or in the case for short term assets and liabilities, their carrying values approximate
fair value.
17.
Parent Entity Information
(a) Parent Financial Information
The following details information related to the parent entity, Castillo Copper Limited, at 30 June 2016. The information
presented here has been prepared using consistent accounting policies as presented in note 2.
Current assets
Non-current assets (i)
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 loss of the parent entity
2016
$
222,067
-
222,067
2015
$
22,492
10,107
32,599
18,246
285,326
-
-
18,246
285,326
203,821
(252,727)
9,620,254
8,836,027
1,773,743
1,773,743
(11,190,176)
(10,862,497)
203,821
(252,727)
(327,679)
(4,417,884)
-
-
(327,679)
(4,417,884)
(i)
Non-current assets include intercompany loans owed by subsidiary entities, which are considered recoverable based on
cash flow projections
b) Guarantees
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.
18.
Contingent liabilities
There are no known contingent liabilities as at 30 June 2016 (2015: Nil).
Castillo Copper Limited
32
2016 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June
2016
19.
Commitments
The Group entered a service agreement with Mr. Joe Graziano, Mr. David Wheeler and Ms. Nicole Fernandes for annual
consulting fees for a term of 12 months commencing in June 2016. The Group may terminate the agreements by paying
an amount equivalent to twelve months fees (based on an agreed consulting fee) or without notice in the case of serious
misconduct.
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
20.
Dividends
2016
$
2015
$
120,000
120,000
-
-
30,000
-
120,000
150,000
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 2016.
The balance of the franking account is Nil at 30 June 2016 (2015: Nil).
21.
(a)
Share based payments
Recognised share based payment transaction
Share based payment transactions recognised are either as exploration expenditure on the statement of financial position
or operating expenses on the statement of comprehensive income.
(b) Share based payment to suppliers and vendors
Exploration Expenditure
During the 2013 financial year 5,000,000 unlisted 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. During the year the options were consolidated on a one (1) for four (4)
basis. The resulting 1,250,000 options are exercisable at $0.40 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
Granted
during
the year
Number Number
Exercised
during the
year
Expired
during
the year
Number Number
Consolidation
on a one (1)
for four (4)
basis
Number
Balance
at end of
the year
Number
Exercisable
at end of the
year
Number
21 May 2013 30 June 2017
$0.40 5,000,000
5,000,000
Weighted remaining contractual life (years)
2
Weighted average exercise price
$0.10
-
-
-
-
-
-
-
-
(3,750,000) 1,250,000
1,250,000
(3,750,000) 1,250,000
1,250,000
-
-
1
1
$0.40
$0.40
Operating expenses
There were no share based payments made to suppliers during the 30 June 2015 and 30 June 2016 financial year.
Castillo Copper Limited
33
2016 Annual Report to Shareholders
Castillo Copper Limited – Directors’ Declaration
In accordance with a resolution of the Directors of Castillo Copper Limited (“the Company”), I state that:
1.
in the directors’ opinion, the financial statements and accompanying notes set out on pages 11 to 33 are
in accordance with the Corporations Act 2001 and:
a.
comply with Accounting Standards and the Corporations Regulations 2001; and
b.
give a true and fair view of the group’s financial position as at 30 June 2016 and of its
performance for the year ended on that date;
2.
3.
4.
5.
note 1 confirms that the financial statements also comply with International Financial Reporting
Standards (IFRSs) as issued by the International Accounting Standards Board (IASB);
in the directors’ opinion, there are reasonable grounds to believe that the company will be able to pay its
debts as and when they become due and payable;
the remuneration disclosures included in pages 3 to 7 of the directors’ report (as part of the audited
Remuneration Report), for the year ended 30 June 2016, comply with section 300A of the Corporations
Act 2001; and
the directors have been given the declarations by the Chief Executive Officer (or equivalent) and Chief
Financial Officer required by section 295A of the Corporations Act 2001.
On behalf of the board
David Wheeler
Non-Executive Director
27 September 2016
Castillo Copper Limited
34
2016 Annual Report to Shareholders
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the consolidated financial report of Castillo Copper Limited for the
year ended 30 June 2016, I declare that to the best of my knowledge and belief, there have been no
contraventions of:
a)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit;
and
b)
any applicable code of professional conduct in relation to the audit.
Perth, Western Australia
27 September 2016
L Di Giallonardo
Partner
HLB Mann Judd (WA Partnership) ABN 22 193 232 714
Level 4, 130 Stirling Street Perth WA 6000. PO Box 8124 Perth BC 6849 Telephone +61 (08) 9227 7500. Fax +61 (08) 9227 7533.
Email: hlb@hlbwa.com.au. Website: http://www.hlb.com.au
Liability limited by a scheme approved under Professional Standards Legislation
HLB Mann Judd (WA Partnership) is a member of
International, a worldwide organisation of accounting firms and business advisers.
35
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 (“the company”), which
comprises the consolidated statement of financial position as at 30 June 2016, the consolidated statement of
comprehensive income, the consolidated statement of changes in equity and the consolidated statement of
cash flows for the year then ended, notes comprising a summary of significant accounting policies and other
explanatory information, and the directors’ declaration of the Group 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
gives a true and fair view and 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, the consolidated 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. Those 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 Group’s preparation of the financial report
that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. An audit
also includes evaluating the appropriateness of accounting policies used and the reasonableness of
accounting estimates made by the directors, as well as evaluating the overall presentation of the financial
report.
Our audit did not involve an analysis of the prudence of business decisions made by directors or management.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
HLB Mann Judd (WA Partnership) ABN 22 193 232 714
Level 4, 130 Stirling Street Perth WA 6000. PO Box 8124 Perth BC 6849 Telephone +61 (08) 9227 7500. Fax +61 (08) 9227 7533.
Email: hlb@hlbwa.com.au. Website: http://www.hlb.com.au
Liability limited by a scheme approved under Professional Standards Legislation
HLB Mann Judd (WA Partnership) is a member of
International, a worldwide organisation of accounting firms and business advisers.
36
Auditor’s 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 Group’s financial position as at 30 June 2016 and 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).
Emphasis of Matter
Without qualifying our opinion, we draw attention to Note 2(d) to the financial statements which indicates that
the ability of the Group to continue as a going concern is dependent on the ability to raise equity in the current
market or secure other sources of funding.
Should the Group not be able to raise sufficient equity or secure other sources of funding, there is a material
uncertainty that may cast significant doubt whether the Group will continue as a going concern and therefore,
whether it will realise its assets and extinguish its liabilities in the normal course of business.
Report on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2016.
The directors of the company are responsible for the preparation and presentation of the Remuneration Report
in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on
the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
Auditor’s opinion
In our opinion, the Remuneration Report of Castillo Copper Limited for the year ended 30 June 2016 complies
with section 300A of the Corporations Act 2001.
HLB Mann Judd
Chartered Accountants
Perth, Western Australia
27 September 2016
L Di Giallonardo
Partner
37
Castillo Copper Limited – Corporate Governance
This statement has been approved by the Board.
It is current as at 31 July 2016.
Castillo Copper approach to Corporate Governance
This Statement addresses how Castillo Copper implements the ASX Corporate Governance Council’s, ‘Corporate
Governance Principles and Recommendations – 3rd Edition (referred to as either ASX Principles or
Recommendations).
Principle 1: Lay solid foundations for management and oversight
Recommendation 1.1 – A listed entity should disclose:
a)
b)
the respective roles and responsibilities of its board and management;
those matters expressly reserved to the board and those delegated to
management.
Role of the Castillo Copper Board (‘the Board”)
The Board is responsible for the governance of Castillo Copper. The role of the Board is to provide overall strategic
guidance and effective oversight of management. The Board derives its authority to act from Castillo Copper
Constitution.
The Board's responsibilities are set out in a formal Charter which the Board reviews every two years. The Charter
was most recently reviewed in July 2016.
The major powers the Board has reserved to itself are:
Appointment of the Chief Executive Officer and other senior executives and the determination of their
terms and conditions including remuneration and termination;
Driving the strategic direction of the Company, ensuring appropriate resources are available to meet
objectives and monitoring management’s performance;
Reviewing and ratifying systems of risk management and internal compliance and control, codes of
conduct and legal compliance;
Approving and monitoring the progress of major capital expenditure, capital management and
significant acquisitions and divestitures;
Approving and monitoring the budget and the adequacy and integrity of financial and other reporting;
Approving the annual, half yearly and quarterly accounts;
Approving significant changes to the organisational structure;
Approving the issue of any shares, options, equity instruments or other securities in the Company
(subject to compliance with ASX Listing Rules);
Ensuring a high standard of corporate governance practice and regulatory compliance and promoting
ethical and responsible decision making;
Recommending to shareholders the appointment of the external auditor as and when their appointment
or re-appointment is required to be approved by them (in accordance with the ASX Listing Rules); and
Meeting with the external auditor, at their request, without management being present.
Recommendation 1.2 – A listed entity should disclose:
a) undertake appropriate checks before appointing a person or putting forward to
security holders a candidate for election, as a director;
b) provide security holders with all material information in its possession relevant to a
decision on whether or not to elect or re-elect a director.
The Group does not have a Nomination Committee. The role of the Nomination Committee has been assumed
by the full Board operating under the Nomination Committee Charter adopted by the Board.
When considering the appointment of a new Director, the Board may engage the services of an executive
recruitment firm to assist identify suitable candidates to be shortlisted for consideration for appointment to the
Board and to carry out appropriate reference checks before the Board makes an offer to a preferred candidate.
Newly appointed directors must stand for reappointment at the next subsequent AGM. The Notice of Meeting for
the AGM provides shareholders with information about each Director standing for election or re-election including
details of relevant skills and experience.
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Castillo Copper Limited – Corporate Governance
Recommendation 1.3 – A listed entity should have a written agreement with each director and executive setting
out the terms of their appointment.
New Directors consent to act as a Director and receive a formal letter of appointment which sets out duties and
responsibilities, rights, and remuneration entitlements.
Recommendation 1.4 – The company secretary of a listed entity should be accountable directly to the chair, on
all matters to do with the proper functioning of the board.
Castillo Copper Company Secretary fulfils a broad range of management responsibilities in addition to company
secretarial duties. As a result, the formal reporting line of the Company Secretary is to the Chair. For any matter
relevant to the company secretarial duties or conduct of the Board, the Company Secretary has an indirect
reporting line, and is accountable, to the Chair of the Board.
Recommendation 1.5 – A listed entity should:
a) have a diversity policy which includes requirements for the board to or a relevant
committee of the board to set measurable objectives for achieving gender diversity
and to assess annually both the objectives and the entity’s progress in achieving
them;
b) disclose that police or a summary of it; and
c)
disclose as at the end of each reporting period the measurable objectives for
achieving gender diversity set by the board or a relevant committee of the board in
accordance with the entity’s diversity policy and its progress towards achieving
them and either:
1.
2.
the respective proportions of men and women on the board, in senior
executive positions and across the whole organisation (including how the
entity has defined “senior executive” for these purposes); or
if the entity is a “relevant employer” under the Workplace Gender Equality
Act, the entity’s most recent “Gender Equality Indicators”, as defined in
and published under that Act.
The Company has adopted a formal Diversity Policy and is committed to workplace diversity, with a particular
focus on supporting the representation of women at the senior level of the Company and on the Company Board.
The Company, which currently has no employees, is at a stage of its development such that the application of
measurable objectives in relation to gender diversity, at various levels of the Company’s business, is not
considered to be appropriate nor practical.
The Board will review this position on an annual basis and will implement measurable objectives as and when
they deem the Company to require them.
The participation of women in the Company at the date of this report is as follows:
Women employees in the Company
Women in senior management positions
Women on the Board
0%
0%
33%
The Company’s Diversity Policy is available on its website.
Recommendation 1.6 – A listed entity should:
a) have and disclose a process for periodically evaluating the performance of the
board, its committees and individual directors;
b) disclose, in relation to each reporting period, whether a performance evaluation
was undertaken in the reporting period in accordance with that process.
Evaluation of Board and individual Directors
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 given its size.
39
Castillo Copper Limited – Corporate Governance
Recommendation 1.7 – A listed entity should:
a) have and disclose a process for periodically evaluating the performance of its
senior executives; and
b) disclose, in relation to each reposting period, whether a performance evaluation
was undertaken in the reporting period in accordance with that process.
The Board of Castillo Copper does not conduct performance reviews of senior executives given there are currently
no such roles in the organisation.
Principle 2: Structure the Board to add value
Castillo Copper Constitution provides for a minimum of three directors and a maximum of nine.
The Directors of Castillo Copper at any time during the financial year are listed with a brief description of their
qualifications, appointment date, experience and special responsibilities on pages 1 and 3 of the Annual Report.
The Board met regularly throughout the course of the financial year to discuss the Company’s operational and
financial activities, however only one formal meetings was held.
Recommendation 2.1 – The Board of a listed entity should:
a)
have a nomination committee which:
1. Has at least three members, a majority of whom are independent
directors; and
Is chaired by an independent director;
2.
and disclose:
3.
4.
5.
the charter of the committee;
the members of the committee; and
as at the end of each reporting period, the number of times the committee
met throughout the period and the individual attendances of the members
at those meetings; or
b)
if it does not have a nomination committee, disclose that fact and the processes it
employs to address board succession issues and to ensure that the board has the
appropriate balance of skills, knowledge, experience, independence and diversity
to enable to discharge its duties and responsibilities effectively.
The Group does not have a Nomination committee. The role of the Nomination Committee has been assumed
by the full Board operating under the Nomination Committee Charter adopted by the Board.
Recommendation 2.2 – The listed entity should have and disclose a board skills matrix setting out the mix of
skills and diversity that the board currently has or is looking to achieve in its membership.
The Group does not have an established board skills matrix on the mix of skills and diversity for Board
membership. The Board continues to monitor the mix of skills and diversity on the Board however, due to the size
of the Group, the Board does not consider it appropriate at this time to formally set matrix on the mix of skills and
diversity for Board membership.
Recommendation 2.3 – A listed entity should disclose:
a)
b)
the names of the directors considered by the board to be independent directors;
if a director has an interest, position, association or relationship of the type
described in Box 2.3 but the board is of the opinion that it does not compromise the
independence of the director, the nature of the interest, position, association or
relationship in question and an explanation of why the board is of that opinion and
the length of service of each director.
c)
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 judgement.
The Board has accepted the following definition of an Independent Director:
40
Castillo Copper Limited – Corporate Governance
“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 Act 2001) of the Group or an officer
of, or otherwise associated, directly or indirectly, with a substantial shareholder of the Group;
has not within the last three years been employed in an executive capacity by the Group or another
Group member, or been a Director after ceasing to hold any such employment;
is not a principal of a professional adviser to the Group or another Group member;
is not a significant consultant, supplier or customer of the Group or another Group 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 Group or another Group member other than as a
Director of the Group;
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 Group.”
In accordance with the definition of independence above, one Director is considered independent. Accordingly, a
majority of the Board is not independent. Given the size of the Group the current Board is deemed appropriate.
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
Mr. David Wheeler
Mr. Joe Graziano
Term in office
1 year and 1 month
1 year and 1 month
Ms. Nicole Fernandes
4 months
Recommendation 2.4 – The majority of the Board of a listed entity should be independent Directors.
As at 30 June 2016, the Board comprised three independent, non-executive Directors. In accordance with the
definition of independence above, all Directors are considered independent. Accordingly, a majority of the Board is
independent.
The Group does not have a majority of independent directors. The Directors consider that the current structure and
composition of the Board is appropriate to the size and nature of operations of the Group.
Recommendation 2.5 – The Chair of the Board of a listed entity should be an independent Director and, in
particular, should not be the same person as the CEO of the entity.
Under Castillo Copper Constitution, the Board elects a Chairman from amongst the Directors. If a Chairman ceases
to be an independent Director then the Board will consider appointing a lead independent Director.
Castillo Copper Chairman, David Wheeler is considered an independent Director. The Directors consider that the
current Chairman of the Board is appropriate to the size and nature of operations of the Group.
Recommendation 2.6 – The listed entity should have a program for inducting new directors and provide
appropriate professional development opportunities for directors to develop and maintain the skills and knowledge
needed to perform their role as directors effectively.
The formal letter of appointment and an induction pack provided to Directors contain sufficient information to allow
the new Director to gain an understanding of:
The rights, duties and responsibilities of Directors;
The role of Board Committees;
The Code of Conduct; and
Castillo Copper financial, strategic, and operational risk management position.
Directors are encouraged to take appropriate professional development opportunities approved by the Board.
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Castillo Copper Limited – Corporate Governance
Principle 3: Promote ethical and responsible decision making
Recommendation 3.1 – A listed entity should:
a) have a code of conduct for its directors, senior executives and employees; and
b) disclose that code or a summary of it.
Castillo Copper has a Code of Conduct that applies to Castillo Copper and its Directors, employees and contractors
(all of which are referred to as “employees” in the Code).
The Code of Conduct sets out a number of overarching principles of ethical behaviour which cover:
Personal and Professional Behaviour;
Conflict of Interest;
Public and Media Comment;
Use of Company Resources;
Security of Information;
Intellectual Property/Copyright
Discrimination and Harassment;
Corrupt Conduct;
Occupational Health and Safety;
Legislation;
Fair Dealing;
Insider Trading;
Responsibilities to Investors;
Breaches of the Code of Conduct; and
Reporting Matters of Concern.
Training about the Code of Conduct is part of the induction process for new Castillo Copper Directors.
Castillo Copper Code of Conduct is available on Castillo Copper website.
Principle 4: Safeguard integrity in corporate reporting
Recommendation 4.1 – A board of a listed entity should:
a) have an audit committee which:
2.
and disclose:
3.
4.
1.
has at least three members, all of whom are non-executive directors and
a majority of whom are independent; and
is chaired by an independent director, who is not the chair of the board,
the charter of the committee;
the relevant qualifications and experience of the members of the
committee; and
in relation to each reporting period, the number of times the committee
met throughout the period and the individual attendances of the members
at those meetings; or
5.
b)
if it does not have an audit committee, disclose that fact and the processes it
employs that independently verify and safeguard that integrity of its corporate
reporting, including the processes for the appointment and removal of the external
auditor and the rotation of the audit engagement partner.
The Group does not have an Audit and Risk Management Committee. The role of the Audit and Risk Management
Committee has been assumed by the full Board operating under the Audit and Risk Management Committee
Charter adopted by the Board. The Directors consider this as appropriate to the size and nature of operations of
the Group.
Charter of the 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
42
Castillo Copper Limited – Corporate Governance
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.
Recommendation 4.2 – The board of a listed entity should, before it approves the entity’s financial statements
for a financial period, receive from its CEO and CFO a declaration that, in their opinion, the financial records of
the entity have been properly maintained and that the financial statements comply with the appropriate accounting
standards and give a true and fair view of the financial position and performance of the entity and that the opinion
has been formed on the basis of a sound system of risk management and internal control which is operating
effectively.
The officers of the Company assuming the roles of CEO and CFO have provided the Board with written assurances
that the declaration provided in accordance with section 295A of the Corporations Act is founded on a sound system
of risk management and internal compliance and control and that the system is operating effectively in all material
respects in relation to financial reporting risks.
Recommendation 4.3 – A listed entity that has an AGM should ensure that its external auditor attends its AGM
and is available to answer questions from security holders relevant to the audit.
The external auditor attends Castillo Copper Annual General Meeting. Shareholders may submit written questions
to the auditor to be considered at the meeting in relation to the conduct of the audit and the preparation and content
of the Independent Audit Report by providing the questions to Castillo Copper at least five business days before
the day of the meeting. No questions were sent to the auditor in advance of the 2015 Annual General Meeting.
Shareholders are also given a reasonable opportunity at the meeting to ask the auditor questions relevant to the
conduct of the audit, the Independent Audit Report, the accounting policies adopted by Castillo Copper and the
independence of the auditor.
Principle 5: Make timely and balanced disclosure
Recommendation 5.1 – A listed entity should:
a) have a written policy for complying with its continuous disclosure obligations under
the Listing Rules; and
b) disclose that policy or a summary of it.
Disclosure
Castillo Copper Disclosure Policy describes Castillo Copper continuous disclosure obligations and how they are
managed by Castillo Copper. The Policy is reviewed bi-annually and is published on Castillo Copper website.
It
was most recently reviewed in July 2016.
Accountability
The Company Secretary reports to the Board quarterly on matters that were either notified or not notified to the
ASX. Directors receive copies of all announcements immediately after notification to the ASX. All ASX
announcements are available on the Castillo Copper website.
Financial market communications
Communication with the financial market is the responsibility of the full Board. Communication with the media is the
responsibility of the Chairman. The Disclosure Policy covers briefings to institutional investors and stockbroking
analysts, general briefings, one-on-one briefings, blackout periods, compliance and review as well as media
briefings.
The substantive content of all market presentations about the half year and full year financial results and all
statements relating to Castillo Copper future earnings performance must be referred to, and approved by, the Board
before they are disclosed to the market.
Principle 6: Respect the rights of shareholders
Recommendation 6.1 – A listed entity should provide information about itself and its governance to investors via
its website.
Castillo Copper website at www.castillocopper.com,au provides detailed information about its business and
operations. Details of Castillo Copper Board Members can be found on the website.
43
Castillo Copper Limited – Corporate Governance
The Investor Relations link on Castillo Copper website provides helpful information to shareholder.
It allows
shareholders to view all ASX and media releases for the last year; various investor presentations; a copy of the most
recent Annual Report and Annual Reports for at least the two previous financial years; and the notice of meeting
and accompanying explanatory material for the most recent Annual General Meeting and the Annual General
Meetings for at least the two previous financial years.
Shareholders can find information about Castillo Copper corporate governance on its website at under the
‘Corporate’ link. This includes Castillo Copper Corporate Governance Plan.
The Corporate Governance Plan includes:
Board Charter
Corporate Code of Conduct
Committee Charters
Performance evaluation processes
Continuous disclosure processes
Risk management processes
Trading policy
Diversity policy
Shareholder communications strategy
Recommendation 6.2 – A listed entity should design and implement an investor relations program to facilitate
effective two-way communication with investors.
Castillo Copper is committed to communicating effectively with its shareholders and making it easier for
shareholders to communicate with the Group.
Castillo Copper promotes effective communication with shareholders and encourages effective participation at
general meetings, information is communicated to shareholders:
Through the release of information to the market via the ASX;
Through the Annual Report, half yearly report and quarterly reports;
Through the distribution of the annual report and notices of annual general meeting;
Through shareholder meetings and investor relations presentations; and
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.
Recommendation 6.3 – A listed entity should disclose the policies and processes it has in place to facilitate and
encourage participation at meetings of security holders.
Notices of meeting sent to Castillo Copper shareholders comply with the “Guidelines for notices of meeting” issued
by the ASX in August 2007. Shareholders are invited to submit questions before the meeting and, at the meeting,
the Chairman attempts to answer as many of these as is practical.
The Chairman also encourages shareholders at the meeting to ask questions and make comments about Castillo
Copper operations and the performance of the Board and senior management. The Chairman may respond
directly to questions or, at his discretion, may refer a question to another Director.
New Directors or Directors seeking re-election are given the opportunity to address the meeting and to answer
questions from shareholders.
Recommendation 6.4 – A listed entity should give security holders the option to receive communications from,
and send communications to, the entity and its security registry electronically.
Shareholders have the option of electing to receive all shareholder communications by e-mail. Castillo Copper
provides a printed copy of the Annual Report to only those shareholders who have specifically elected to receive a
printed copy. Other shareholders are advised that the Annual Report is available on the Castillo Copper website.
All announcements made to the ASX are available to shareholders by email notification when a shareholder
provides the Castillo Copper Share Registry with an email address and elects to be notified of all Castillo Copper
ASX announcements.
44
Castillo Copper Limited – Corporate Governance
The Castillo Copper Share Register is managed and maintained by Automic Share Registry Services Pty Ltd.
their current shareholding
Shareholders can access their shareholding details or make enquiries about
electronically by quoting their Shareholder Reference Number (SRN) or Holder Identification Number (HIN), via the
Automic Share Registry Investor Online Login or by emailing info@automic.com.
Principle 7: Recognise and manage risk
Recommendation 7.1 – A board of a listed entity should:
a) have a committee or committees to oversee risk, each of which:
1.
has at least three members, all of whom are non-executive directors and
a majority of whom are independent; and
is chaired by an independent director, who is not the chair of the board,
2.
and disclose:
3.
4.
5.
the charter of the committee;
the members of the committee; and
as at the end of each reporting period the number of times the committee
met throughout the period and the individual attendances of the members
at those meetings; or
b)
if it does not have a risk committee or committees that satisfy (a) above, disclose
that fact and the processes it employs for overseeing the entity’s risk management
framework.
The Group does not have an Audit and Risk Management Committee. The role of the Audit and Risk Management
Committee has been assumed by the full Board operating under the Audit and Risk Management Committee
Charter adopted by the Board.
Details of the structure and Charter of the Audit and Risk Management Committee are set out in Recommendation
4.1.
Recommendation 7.2 – The board or a committee of the board should:
a)
review the entity’s risk management framework at least annually to satisfy itself that
it continues to be sound; and
b) disclose, in relation to each reporting period, whether such a review has taken
place.
Risk Management Policies
Castillo Copper has a number of other policies that directly or indirectly serve to reduce and/or manage risk. These
include, but are not limited to:
Directors and Executive Offices’ Code of Conduct
Code of Business Conduct
Dealing in Company Securities
Communications Strategy
Disclosure Policy
Risk Management and Internal Control Policy
Roles and responsibilities
The Risk Management Policy, and the other policies listed above, describes the roles and responsibilities for
managing risk. This includes, as appropriate, details of responsibilities allocated to the Board.
The Board is responsible for reviewing and approving changes to the Risk Management Policy and for satisfying
itself that Castillo Copper has a sound system of risk management and internal control that is operating effectively.
The Board annually reviews and approves Castillo Copper main risk exposures and the mitigating actions.
Recommendation 7.3 – A listed entity should disclose:
a)
b)
If it has an internal audit function, how the function is structured and what role it
performs; or
If it does not have an internal audit function, that fact and the processes it employs
for evaluating and continually improving the effectiveness of its risk management
and internal control processes.
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Castillo Copper Limited – Corporate Governance
The Group does not have an established internal audit function given the size of its current operations. The risk
management functions of the board are summarised under recommendations 7.1 and 7.2.
Recommendation 7.4 – A listed entity should disclose whether it has any material exposure to economic and
social sustainability risks and, if it does, how it manages or intends to manage those risks.
The Board of Castillo Copper informally monitors and manages the Groups exposure to economic, environment
and social responsibility risks. The Board considers that the current approach that it has adopted with regard to
the sustainability risk management process is appropriate to the size and nature of operations of the Group.
Principle 8: Remunerate fairly and responsibly
Recommendation 8.1 – A board of a listed entity should:
a) have a remuneration committee which:
1.
has at least three members, all of whom are non-executive directors and
a majority of whom are independent; and
is chaired by an independent director,
2.
and disclose:
3.
4.
5.
the charter of the committee;
the members of the committee; and
as at the end of each reporting period the number of times the committee
met throughout the period and the individual attendances of the members
at those meetings; or
b)
if it does not have a remuneration committee, disclose that fact and the processes
it employs for setting the level and composition of remuneration for directors and
senior executives and ensuring that such remuneration is appropriate and not
excessive.
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.
Recommendation 8.2 – A listed entity should separately disclose its policies and practices regarding the
remuneration of non-executive directors and the remuneration of executive directors and other senior executives.
remuneration structure distinguishes between Executive and Non-Executive Directors. A
Castillo Copper
Remuneration Report required under Section 300A(1) of the Corporations Act is provided in the Directors’ Report
on pages 2 to 13 of the Annual Report.
Recommendation 8.3 – A listed entity which has an equity-based remuneration scheme should:
a) have a policy on whether participants are permitted to enter into transactions
(whether through the use of derivatives or otherwise) which limit the economic risk
of participating in the scheme; and
b) disclose that policy or a summary of it.
Castillo Copper does not have a policy on whether participants in equity based remuneration schemes are able to
enter into transactions which limit the economic risk of participating in those schemes as the Group does not have
an equity based remuneration scheme.
46
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 19 September 2016.
(a) Distribution of Share Holders
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - and over
TOTAL
Ordinary Shares
Number of Holders
Number of Shares
10
10
6
69
219
314
587
33,672
48,750
3,588,176
207,827,700
211,498,885
There were 53 holders of ordinary shares holding less than a marketable parcel.
(b) Twenty largest holders of quoted securities as at 19th September 2016
Name
MR JASON PETERSON & MRS LISA PETERSON
WHISTLING KITE EQUITY LIMITED
MR JOHN DELLA BOSCA
MR MARIO DI LALLO & MRS ALISON VALERIE DI LALLO
AGENS PTY LIMITED
MR MATTHEW GADEN WESTERN WOOD
MR JOHN CHARLES VASSALLO & MR SEAN JAMES VASSALLO
DEJUL TRADING PTY LTD
WOBBLY INVESTMENTS PTY LTD
BELL POTTER NOMINEES LTD
PERIZIA INVESTMENTS PTY LTD
LIBERTINE INVESTMENTS PTY LTD
BAITA HOLDINGS PTY LTD
MS NICOLE GALLIN & MR KYLE HAYNES
GOLDNEY PTY LTD
MR DANIEL EDDINGTON & MRS JULIE EDDINGTON
PENTIN PTY LTD
MR JOHN ANTHONY DELLA BOSCA & MRS JONINA GUDBJORG DELLA
BOSCA
MRS GRACE DE VITA
LIBERTINE INVESTMENTS PTY LTD
TOTAL
(c)
Substantial Shareholders
No. of
Shares
19,433,632
6,852,251
5,375,000
5,250,000
5,000,000
5,000,000
4,677,207
4,500,000
3,327,989
3,300,000
3,178,285
3,125,000
2,500,000
2,500,000
2,500,000
2,500,000
2,500,000
2,500,000
2,050,000
2,012,499
%
9.19
3.24
2.54
2.48
2.36
2.36
2.21
2.13
1.57
1.56
1.50
1.48
1.18
1.18
1.18
1.18
1.18
1.18
0.97
0.95
88,081,863
41.65
Jason Peterson & Mrs Lisa Peterson hold ordinary shares representing 9.19% of the Company’s equity.
(d)
Voting Rights
Each fully paid ordinary share carries the rights of one vote per share.
47
Castillo Copper Limited
(e)
Unquoted Securities
The number of unquoted securities on issue at 20 September 2016:
Unquoted Securities
Unquoted Options
Number on Issue
1,250,000
Exercise Price
40c
Expiry Date
30/06/2017
(f)
Restricted Securities
There are no restricted securities under ASX imposed escrow.
(g)
On-Market Buy-Back
There is currently no on-market buy-back in place.
48
Castillo Copper Limited
Tenement Table
Chile
HUANTA (VICUÑA)
HECTARES
NATIONAL ROLL
YEAR
GRANTED
OWNER
TRUENO 1
TRUENO 2
TRUENO 4
TRUENO 5
TRUENO 6
TRUENO 7
300
300
300
300
300
300
04015-7483-7
04015-7484-5
04015-7486-1
04015-7487-K
04015-7488-8
04015-7489-6
In process Castillo Copper Chile SpA
In process Castillo Copper Chile SpA
In process Castillo Copper Chile SpA
In process Castillo Copper Chile SpA
In process Castillo Copper Chile SpA
In process Castillo Copper Chile SpA
Note: Castillo Copper Limited has a 100% interest in properties owned by Castillo Copper Chile SpA. They were
originally granted in 2011, and inscribed as El Profeta 1 to 5, Pachi 1 to 3, Camila 1 to 9 and Homero 1 to 2.
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