CASTILLO COPPER LIMITED
ABN 52 137 606 476
Annual Report
30 June 2017
Corporate Directory
Directors
Mr. David Wheeler (Non-Executive Chairman)
Mr. Alan Armstrong (Executive Director)
Mr. Neil Hutchison (Technical 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
10
11
12
13
14
35
36
37
41
48
50
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 2017. 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 Alan Armstrong – appointed 1 August 2017
Executive Director
Mr Armstrong has a Bachelor of Business (Accounting/Finance) from Charles Sturt University and is a member of the
Institute of Australian Chartered Accountants. Additionally, Mr Armstrong is a graduate and member of the Australian
Institute of Company Directors. He has spent most of his career focused on developing resources companies. From
late 2014 to mid-2016, as managing director, Mr Armstrong was instrumental in transforming graphite explorer, Volt
Resources Ltd (ASX: VRC), from a start-up with an initial fully-diluted market capitalisation of $600,000 to $180 million
at the time of his departure.
Mr Neil Hutchison – appointed 1 August 2017
Technical Director
Mr Hutchison graduated from the University of Southern Queensland with First Class Honours in Geology and has
been a member of the Australasian Institute of Geoscientists since 2004. Moreover, he is an experienced qualified
Competent Person in many minerals including nickel, copper, cobalt, gold and uranium. Mr Hutchison trained as a
geologist and has been working in the mining industry for nearly 25 years including senior positions with Jubilee Mines
NL, Troy Resources Ltd and Pegasus Gold Inc. Since 2007 Mr Hutchison has been Poseidon Nickel Ltd’s (Poseidon
or POS) General Manager – Geology. He will continue his role at POS at a reduce capacity and will alternate his time
between POS and CCZ as the Company is developed.
Mr Giuseppe (Joe) Graziano – resigned 1 August 2017
Non-Executive Director
Ms Nicole Fernandes – resigned 1 August 2017
Non-Executive Director
DIRECTORS’ MEETINGS
During the financial year, in addition to regular Board discussions, the number of meetings of Directors held and the
number of meetings attended by each director were as follows:
Director
Mr. David Wheeler
Mr. Alan Armstrong
Mr. Neil Hutchison
Mr. Joe Graziano
Ms. Fernandes
Number of Meetings Eligible
Number of Meetings
to Attend
Attended
1
-
-
1
1
1
-
-
1
1
1
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
333D Limited
Antilles Oil and Gas NL
Period of Directorship
From
To
15 April 2011
12 February 2016
Current
Current
Auscann Group Holdings Limited
18 November 2014
19 January 2017
Ausmex Mining Group Limited
1 October 2014
2 August 2017
Premiere Eastern Energy Limited
24 August 2014
30 April 2017
Protean Energy Limited
16 May 2017
Current
The Carajas Copper Company Limited
17 March 2016
10 May 2016
UltraCharge Limited
1 December 2015
Current
Weststar Industrial Limited
12 August 2015 21 November 2016
Alan Armstrong
Volt Resources Limited
1 December 2014
22 August 2016
Neil Hutchison
Kairos Minerals Limited
15 April 2014
Current
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.
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
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.
2
Castillo Copper Limited – Directors’ Report
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)
2017
(0.24)
2016
(0.07)
2015
(4.14)
2014
(0.58)
2013
(1.78)
Details of Remuneration
Details of Key Management Personnel
Mr. David Wheeler (Non-Executive Director)
Mr Alan Armstrong (Executive Director) – appointed 1 August 2017
Mr Neil Hutchison (Technical Director) – appointed 1 August 2017
Mr. Joe Graziano (Non-Executive Director) – resigned 1 August 2017
Ms. Nicole Fernandes (Non-Executive Director) – resigned 1 August 2017
Details of the nature and amount of each element of the emolument of each Director and Executive of the Group for
the financial year are as follows:
Short term
Options
Post employment
2017
Directors’
Consulting
Share-
Superannuation
Total Remuneration
linked to
performance
$
%
65,022
-
-
65,022
65,022
195,066
-
-
-
-
-
-
$
-
-
-
-
-
-
Fees
Fees
based
Payments
$
$
Director
Mr. David Wheeler
Mr. Alan Armstrong1
Mr. Neil Hutchison1
Mr. Joe Graziano2
Ms. Nicole Fernandes2
$
-
-
-
-
-
48,000
17,022
-
-
48,000
48,000
144,000
-
-
17,022
17,022
51,066
1 Mr. Alan Armstrong and Mr Neil Hutchison were appointed 1 August 2017.
2 Mr. Joe Graziano and Ms Nicole Fernandes resigned on 1 August 2017.
3
Castillo Copper Limited – Directors’ Report
Short term
Options
Post employment
2016
Directors’
Consulting
Share-
Superannuation
Total 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
$
-
-
-
-
-
-
-
-
-
linked to
performance
$
$
%
-
-
-
-
-
-
-
-
-
42,000
42,000
7,000
42,000
8,000
-
2,500
1,793
145,293
-
-
-
-
-
-
-
-
-
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.
There were no other key management personnel of the Group during the financial years ended 30 June 2017 and 30
June 2016. No remuneration is performance related.
Service Agreements
Non-Executive Directors’ remuneration
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 shares issued to Directors and other key management personnel as part of compensation during the
year ended 30 June 2017.
Options
On 28 June 2017, Messrs’ Wheeler, Graziano and Ms Fernandes were each issued 2 million options exercisable at
$0.03 (3 cents) each before 30 June 2020 in recognition of their services to the Company and to further incentivise
their performance. These options were issued for nil cash consideration, were valued at $51,066 in total and were
recognised as share based payments for the year ended 30 June 2017.
No options have been granted since the end of the financial year.
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 on the next page.
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Castillo Copper Limited – Directors’ Report
Balance at
the start of
the year
Balance at
appointment
-
-
-
-
-
-
-
-
-
-
Granted
during the
year as
compensation
2,000,0001
-
-
2,000,0001
2,000,0002
On exercise
of share
options
Other
changes
during the
year
Balance at
resignation
Balance at
the end of
the year
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Mr. David Wheeler
Mr. Alan Armstrong
Mr. Neil Hutchison
Mr. Joe Graziano
Ms. Nicole Fernandes
Note:
(1)
Pathways Corporate Pty Ltd, a company of which Mr Joe Graziano and Mr David Wheeler are Directors and substantial shareholders, holds
4,000,000 Options over Ordinary Shares.
NFIC Services Pty Ltd, a company of which Ms Nicole Fernandes is a Director holds 2,000,000 Options over Ordinary Shares.
(2)
Key Management Personnel Shareholdings
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. David Wheeler
125,000
Mr. Alan Armstrong
Mr. Neil Hutchison
Mr. Joe Graziano
Ms. Nicole Fernandes
-
-
262,500
-
-
-
-
-
-
Other transactions with key management personnel
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
125,000
-
-
262,500
-
Pathways Corporate Pty Ltd, a company of which Mr. Wheeler and Mr. Graziano are directors, charged the Group director
fees of $96,000 (2016: $84,000), in relation to Messrs Wheeler and Graziano. There was no amount outstanding at 30
June 2017 ($Nil: 2016). Pathways Corporate Pty Ltd was issued 4 million options (‘Incentive Options’) exercisable at $0.03
(3 cents) each before 30 June 2020 in recognition of Messrs Graziano and Wheeler’s services to the Company and to
further incentivise their performance. The Incentive Options may be exercisable at any time after the date of issue and
prior to the Expiry Date. After this time, any unexercised Incentive Options will automatically lapse. These options were
issued for nil cash consideration, were valued at $34,044 and were recognised as share based payments for the year
ended 30 June 2017.
NFIC Services Pty Ltd, a company of which Ms Fernandes is a director, charged the Group director fees of $48,000 (2016:
$7,000). There was no amount outstanding at 30 June 2017 ($Nil: 2016). NFIC Services Pty Ltd was issued 2 million
options (‘Incentive Options’) respectively exercisable at $0.03 (3 cents) each before 30 June 2020 recognition of her
services to the Company and to further incentivise her performance. The Incentive Options may be exercisable at any
time after the date of issue and prior to the Expiry Date. After this time, any unexercised Incentive Options will
automatically lapse. These options were issued for nil cash consideration, were valued at $17,022 and were recognised
as share based payments for the year ended 30 June 2017.
Transactions with key management personnel were made at arm’s length at normal market prices and normal commercial
terms.
END OF REMUNERATION REPORT
5
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. Alan Armstrong
Mr. Neil Hutchison
125,000
600,000
-
Unlisted Options
4,000,000
-
-
RESULTS OF OPERATIONS
The net loss of the Group for the year after income tax was $529,642 (2016: $434,291) and the net assets of the Group
at 30 June 2017 were $322,921 (2016: net liabilities of $211,041).
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 Queensland and New South Wales in Australia as well as
copper concessions in Chile.
EMPLOYEES
Other than the Directors, the Group had no employees at 30 June 2017 (2016: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:
1. On 22 March 2017, Castillo Copper Limited announced it has entered into a binding heads of agreement to acquire
100% of the issued capital of Australian copper and cobalt company Qld Commodities Pty Ltd (QComm) (QComm
Acquisition).
Consideration for the QComm Acquisition, the Company is as follows:
(a)
(b)
(c)
(d)
(e)
$150,000 cash payments (paid prior to balance date); and
issue of 10,000,000 CCZ consideration shares (issued in March 2017);
issue of 76,666,668 CCZ deferred consideration shares – to be issued on completion of the QComm Acquisition;
$200,000 cash payment upon tenements being granted;
enter into a royalty agreement with the QComm vendors (or their nominee) pursuant to which CCZ will pay a 1% net
smelter return royalty in respect of the area covered by the applications.
Subsequent to year end, as announced on 4 July 2017, the Company satisfied the conditions precedent.
2. Additionally, as announced on 21 July 2017, the Company announced that it had signed a binding Heads of Agreement
with Total Minerals Pty Ltd (Total Minerals), which owns three cobalt & copper assets in NSW and Queensland
(including the historic Cangai Copper Cobalt Mine in northeast NSW), to acquire all its outstanding issued shares (Total
Minerals Acquisition).
In consideration for the Total Minerals Acquisition, the Company agreed to:
(a)
issue 55,000,000 CCZ shares to the holders of Total Mineral; and
(b) enter into a royalty agreement pursuant to which the vendors will be entitled to a net smelter return royalty of 3%
in respect of the tenements.
The Company completed the Total Minerals Acquisition on 11 August 2017.
6
Castillo Copper Limited – Directors’ Report
3. Additionally, as announced on 21 July 2017, the Company) announced that it had signed a binding Heads of Agreement
with Total Iron Pty Ltd (Total Iron), which owns five highly prospective cobalt-copper-zinc-nickel project areas – one in
NSW and four in QLD – to acquire all its outstanding issued shares (Total Iron Acquisition).
In consideration for the Total Iron Acquisition, the Company agreed to:
issue 15,000,000 CCZ shares to the holders of Total Iron; and
(a)
(b) enter into a royalty agreement pursuant to which the vendors will be entitled to a net smelter return royalty of 3%
in respect of the tenements.
The Company completed the Total Iron Acquisition on 5 September 2017.
Following completion of the QComm, Total Minerals and Total Iron acquisitions, the Company holds 11 highly
prospective project areas in New South Wales and Queensland, detailed briefly as follows:
Jackaderry Project – comprises three prospects (two in the south that are contiguous) in the New England
Orogen in NSW which are highly prospective for copper-cobalt-zinc. Of significance is the historic Cangai
Copper Cobalt Mine (within Jackaderry South) as legacy data confirms the presence of supergene ore with
up to 35% copper and 10% zinc which implies direct shipping ore is potentially feasible.
Broken Hill Project – consists of two contiguous tenements that are located within a 20km radius of Broken
Hill, NSW, that are prospective for copper-cobalt-zinc. A key feature of the project is an area in the southern
part of the tenure, which exhibits significant high-grade zinc mineralisation.
Mt Oxide Project – made up of three prospects (two are contiguous) in the Mt Isa region, northwest
Queensland, and are well known for copper-cobalt systems.
Marlborough Project – includes three prospects that are located north-west of Gladstone (adjacent to
Queensland Nickel mining leases) in an area, which is made up of proven high-grade cobalt-nickel systems.
On 6 September 2017, subsequent to year end, the Board was delighted to announce a high-grade maiden JORC
Inferred Resource for Cangai Copper Mine (Cangai Mine) achieved from analysing and 3D modelling legacy data for
the Cangai Mine in unmined working sections of 3.2Mt @ 3.35% Cu which implies circa 108,000 tonnes of contained
copper (see Figure 1).
Figure 1: JORC Inferred Resource – Cangai Copper Mine
CANGAI COPPER MINE - INFERRED RESOURCE
Mass
(Tonnes)
814,267
2,397,342
Cu
(%)
4.1
3.1
3,211,609
3.35
Co
(%)
0.010
0.003
0.005
Zn
(%)
0.63
0.28
0.37
Au
(g/t)
0.06
0.89
0.8
Ag
Cu
Co
Zn
Au
(g/t)
(Tonnes) (Tonnes) (Tonnes)
(Oz)
Ag
(Oz)
27.34
33,391
17.74
74,198
78
75
5,165
14,550
715,667
6,762
68,349
1,367,456
20.17
107,589
153
11,927
82,899
2,083,123
Oxide
Fresh
Total
Note: Totals may sum exactly due to rounding. Cut-off grade used: 1.0% Cu with top-cut applied: 10.0% Cu.
Chilean Copper Projects
The Company continues to hold title of its Trueno mining concessions. The Company did not perform any material
exploration work on this project.
Corporate
Capital Raising
On 11 April 2017, the Company undertook a placement of 33,333,333 CCZ shares at an issue price of $0.015 to raise
$500,000 (before costs).
Subsequent to year end, the Company issued the following securities:
•
5 July 2017, issued 66,666,667 CCZ shares at an issue price $0.015 pursuant to a capital raising to raise a
further $1,000,000 (before costs).
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Castillo Copper Limited – Directors’ Report
•
•
•
5 July 2017, issued 4,333,333 CCZ shares and 15 million options to acquire CCZ shares at an exercise price
of $0.03 and expiring on the date that is 36 months after the issue of the options to CPS Capital Group Pty Ltd
and Armada Capital and Equities Pty Ltd (together, the Advisors).
5 July 2017, issued to each of the CZZ directors 2,000,000 options to acquire CCZ shares at an exercise price
of $0.03 and expiring on the date that is 36 months after the issue of the options.
31 August 2017, issued to C3 Consortium Pty Ltd 970,588 shares at an issue price of $0.034 as consideration
for promotion and news circulation services rendered.
Board Changes
On 1 August 2017, the Company advised Mr Alan Armstrong and Mr Neil Hutchison were appointed as Executive
Director and Technical Director respectively, and Mr Giuseppe Graziano and Ms Nicole Fernandes resigned from their
positions of Non-Executive Directors.
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
Other than as set out in the Review of Operations, 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 States of Queensland and 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 6,000,000 unissued ordinary shares under options (Nil at the reporting date).
The details of the unlisted options at the date of this report are as follows:
Number
Exercise Price $
Expiry Date
6,000,000
0.03
30 June 2020
No option holder has any right under the options to participate in any other share issue of the Group or any other entity.
1,250,000 options which were exercisable at $0.40 expired unexercised on 30 June 2017.
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
The Group has made an agreement indemnifying all the Directors and Officers of the Group against all losses or
liabilities incurred by each Director or Officer in their capacity as Directors or Officers of the Group to the extent
permitted by the Corporation Act 2001. The indemnification specifically excludes wilful acts of negligence. The Group
paid insurance premiums in respect of Directors’ and Officers’ Liability Insurance contracts for current officers of the
Group. The liabilities insured are damages and legal costs that may be incurred in defending civil or criminal
proceedings that may be brought against the Officers in their capacity as Officers of entities in the Group. The total
amount of insurance premiums paid has not been disclosed due to confidentiality reasons.
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.
8
Castillo Copper Limited – Directors’ Report
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 on page 36.
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.
Alan Armstrong
Executive Director
26 September 2017
Competent Person’s Statement
The information in this report that relates to Exploration Targets, Exploration Results, Mineral Resources or Ore Reserves is based
on information compiled by Neil Hutchison, a Competent Person who is a Member of the Australian Institute of Geoscientists. Neil
Hutchison is an executive director of Castillo Copper Ltd.
Neil Hutchison has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to
the activity being undertaken 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’. Neil Hutchison consents to the inclusion in the report of the matters
based on his information in the form and context in which it appears.
9
Castillo Copper Limited
Consolidated Statement of Comprehensive Income
for the year ended 30 June 2017
REVENUE
Interest received
TOTAL REVENUE
Listing and public company expenses
Accounting and audit expenses
Consulting and Directors’ fees
Impairment of exploration expenditure
Exploration expenditure incurred
Impairment of receivables
Share based payments
Other expenses
LOSS BEFORE INCOME TAX EXPENSE FROM
CONTINUING OPERATIONS
Income tax expense
Notes
7
4
5
2017
$
416
416
2016
$
2,124
2,124
(30,955)
(136,812)
(34,025)
(83,823)
(208,121)
(141,563)
-
(11,976)
(28,996)
-
-
(99,890)
(51,066)
-
(74,108)
(65,138)
(529,642)
(434,291)
-
-
LOSS AFTER INCOME TAX EXPENSE FOR THE YEAR
(529,642)
(434,291)
OTHER COMPREHENSIVE INCOME / (LOSS)
Item that may be reclassified subsequently to profit or loss
Foreign currency translation
TOTAL OTHER COMPREHENSIVE INCOME / (LOSS)
(3,544)
(3,544)
775
775
TOTAL COMPREHENSIVE LOSS FOR THE YEAR
(533,186)
(433,516)
Loss per share attributable to owners of Castillo Copper
Limited
Basic and diluted loss per share (cents per share)
13
(0.24)
(0.07)
The accompanying notes form part of these financial statements.
Castillo Copper Limited
10 2017 Annual Report to Shareholders
Castillo Copper Limited
Consolidated Statement of Financial Position
as at 30 June 2017
Notes
12
6
6
7
8
9
10
11
CURRENT ASSETS
Cash and cash equivalents
Other receivables
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Other receivables
Deferred exploration and evaluation expenditure
Other non-current assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
The accompanying notes form part of these financial statements.
2017
$
58,712
28,956
2016
$
216,777
18,021
87,668
234,798
20,000
-
350,000
370,000
-
-
-
-
457,668
234,798
124,747
23,757
124,747
23,757
124,747
23,757
332,921
211,041
10,224,254
1,693,139
9,620,254
1,645,617
(11,584,472)
(11,054,830)
332,921
211,041
Castillo Copper Limited
11 2017 Annual Report to Shareholders
Castillo Copper Limited
Consolidated Statement of Changes in Equity
for the year ended 30 June 2017
Issued
capital
$
9,620,254
-
-
-
700,000
Share
based
payment
reserve
$
Foreign
currency
translation
reserve
$
Accumulated
losses
$
Total
$
1,773,742
-
-
-
-
(128,125)
(11,054,830)
211,041
(529,642)
(529,462)
(3,544)
-
(3,544)
(3,544)
(529,642)
(533,186)
-
-
-
-
-
-
700,000
51,066
(96,000)
-
51,066
(96,000)
-
Balance at 1 July 2016
Loss for the year
Other comprehensive loss
Total comprehensive loss
Transactions with owners in their
capacity as owners
Shares issued during the year
Options issued during the year
Costs of issue
Balance as at 30 June 2017
10,224,254
1,824,808
(131,669)
(11,584,472)
332,921
Balance at 1 July 2015
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
8,836,027
-
-
-
845,995
(61,768)
1,773,742
-
-
-
-
-
(128,900)
(10,620,539)
(139,670)
-
775
775
-
-
(434,291)
(434,291)
-
775
(434,291)
(433,516)
-
-
845,995
(61,768)
Balance as at 30 June 2016
9,620,254
1,773,742
(128,125)
(11,054,830)
211,041
The accompanying notes form part of these financial statements.
Castillo Copper Limited
12 2017 Annual Report to Shareholders
Castillo Copper Limited
Consolidated Statement of Cash Flows
for the year ended 30 June 2017
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received
Payments to suppliers and employees
Notes
2017
$
2016
$
416
2,124
(367,280)
(599,516)
NET CASH USED IN OPERATING ACTIVITIES
12
(366,864)
(597,392)
CASH FLOWS FROM INVESTING ACTIVITIES
Tenement expenditure guarantees
Tenement expenditure guarantees refunded
Initial cash consideration - QComm
Exploration and evaluation expenditure
NET CASH USED IN INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from share issue
Share issue costs
NET CASH FROM FINANCING ACTIVITIES
(20,000)
-
-
10,000
8
(150,000)
-
(25,201)
(17,623)
(195,201)
(7,623)
10
10
500,000
(96,000)
845,995
(61,768)
404,000
784,227
Net (decrease) / increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
(158,065)
216,777
179,212
37,565
CASH AND CASH EQUIVALENTS AT END OF FINANCIAL YEAR
12
58,712
216,777
The accompanying notes form part of these financial statements.
Castillo Copper Limited
13 2017 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2017
Corporate Information
1.
The financial report of Castillo Copper Limited and its subsidiaries (“Castillo Copper” or “the Group”) for the year
ended 30 June 2017 was authorised for issue in accordance with a resolution of the Directors on 26 September 2017.
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 2017
In the year ended 30 June 2017, 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 2017. 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
14 2017 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2017
(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 2017 of $529,642 and experienced net cash outflows from
operating activities of $366,864, net cash outflows from investing activities of $195,201 and net cash inflows from
financing activities of $404,000. At 30 June 2017, the Group had a net asset position of $332,921. The cash and cash
equivalents balance at 30 June 2017 was $58,712.
Subsequent to year end, on 5 July 2017, the Company issued 66,666,667 CCZ shares at an issue price $0.015
pursuant to a capital raising to raise a further $1,000,000 (before costs). Furthermore, as announced on 14 September
2017, the Company has received firm commitments to raise $3,400,000 (before costs) via a share placement of
106,250,000 CCZ shares at an issue price of $0.032 per share (‘Placement’). The Placement will require shareholder
approval. The Company is seeking shareholder approval at a General Meeting of Shareholders on 18 October 2017.
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 Group.
The financial statements of the subsidiaries are prepared for the same reporting period as the parent Company, using
consistent accounting policies.
In preparing the consolidated financial statements, all intercompany balances and transactions, income and expenses
and profit and losses resulting from intra-company transactions have been eliminated in full.
Castillo Copper Limited
15 2017 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2017
Subsidiaries are fully consolidated from the date on which control is obtained by the Company and cease to be
consolidated from the date on which control is transferred out of the Company.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. The acquisition method of
accounting involves recognising at acquisition date, separately from goodwill, the identifiable assets acquired, the
liabilities assumed and any non-controlling interest in the acquiree. The identifiable assets acquired and the liabilities
assumed are measured at their acquisition date fair values.
The difference between the above items and the fair value of the consideration (including the fair value of any pre-
existing investment in the acquiree) is goodwill or a discount on acquisition.
A change in the ownership interest of a subsidiary that does not result in a loss of control, is accounted for as an equity
transaction.
(f)
Foreign Currency Translation
(i) Functional and presentation currency
Items included in the financial statements of each of the Company’s entities are measured using the currency of the
primary economic environment in which the entity operates (‘the functional currency’). The functional and presentation
currency of Castillo Cooper Limited is Australian dollars. The functional currency of the overseas subsidiaries is Chilean
Peso.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the
dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and
from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies
are recognised in the statement of comprehensive income.
(iii) Group entities
The results and financial position of all the Company entities (none of which has the currency of a hyperinflationary
economy) that have a functional currency different from the presentation currency are translated into the presentation
currency as follows:
•
•
•
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.
Castillo Copper Limited
16 2017 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2017
(g)
Plant and Equipment
Each class of plant and equipment is carried at cost less, where applicable, any accumulated depreciation and
impairment losses.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item
can be measured reliably. Repairs and maintenance expenditure is charged to the statement of comprehensive income
during the financial period in which it is incurred.
Depreciation
The depreciable amount of all fixed assets is depreciated on a straight line basis over their useful lives to the Group
commencing from the time the asset is held ready for use.
The depreciation rates used for each class of depreciable assets are:
Class of Fixed Asset
Depreciation Rate
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
Castillo Copper Limited
17 2017 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2017
to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case the
carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying
amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset
in prior years. Such reversal is recognised in profit or loss unless the asset is carried at revalued amount, in which case
the reversal is treated as a revaluation increase.
After such a reversal the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying
amount, less any residual value, on a systematic basis over its remaining useful life.
(i)
Exploration and evaluation expenditure
Exploration and evaluation expenditure incurred by or on behalf of the Group is accumulated separately for each area
of interest. Such expenditure comprises net direct costs and an appropriate portion of related overhead expenditure,
but does not include general overheads or administrative expenditure not having a specific nexus with a particular area
of interest.
Each area of interest is limited to a size related to a known or probable mineral resource capable of supporting a mining
operation.
Exploration and evaluation expenditure for each area of interest is carried forward as an asset provided that one of the
following conditions is met:
•
such costs are expected to be recouped through successful development and exploitation of the area of
interest or, alternatively, by its sale; or
•
exploration and evaluation activities in the area of interest have not yet reached a stage which permits a
reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and
significant operations in relation to the area are continuing.
Expenditure which fails to meet the conditions outlined above is impaired; furthermore, the Directors regularly review
the carrying value of exploration and evaluation expenditure and make write downs if the values are not expected to
be recoverable.
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.
Castillo Copper Limited
18 2017 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2017
(j)
Trade and Other Receivables
Trade receivables, which generally have 30 – 90 day terms, are recognised and carried at original invoice amount less
an allowance for any uncollectible amounts.
Impairment of trade receivables is continually reviewed and those that are considered to be uncollectible are written off
by reducing the carrying amount directly. An allowance account is used when there is objective evidence that the
Group will not be able to collect all amounts due according to the original contractual terms. Factors considered by the
Group in making this determination include known significant financial difficulties of the debtor, review of financial
information and significant delinquency in making contractual payments to the Group. The impairment allowance is set
equal to the difference between the carrying amount of the receivable and the present value of estimated future cash
flows, discounted at the original effective interest rate. Where receivables are short-term, discounting is not applied in
determining the allowance.
The amount of the impairment loss is recognised in the statement of comprehensive income within other expenses.
When a trade receivable for which an impairment allowance had been recognised becomes uncollectible in a
subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously written
off are credited against other expenses in the statement of comprehensive income.
(k)
Cash and Cash Equivalents
Cash and short term deposits in the statement of financial position include cash on hand, deposits held at call with
banks and other short term highly liquid investments with original maturities of three months or less. Bank overdrafts
are shown as current liabilities in the statement of financial position. For the purpose of the statement of cash flows,
cash and cash equivalents consist of cash and cash equivalents as described above.
(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.
Castillo Copper Limited
19 2017 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2017
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by
definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing
a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
Capitalised exploration and evaluation expenditure
The future recoverability of capitalised exploration and evaluation expenditure is dependent on a number of factors,
including whether the Group decides to exploit the related lease itself or, if not, whether it successfully recovers the
related exploration and evaluation asset through sale.
Factors which could impact the future recoverability include the level of proved, probable and inferred mineral
resources, future technological changes which could impact the cost of mining, future legal changes (including changes
to environmental restoration obligations) and changes to commodity prices.
To the extent that capitalised exploration and evaluation expenditure is determined not to be recoverable in the future,
this will reduce profits and net assets in the period in which this determination is made.
In addition, exploration and evaluation expenditure is capitalised if activities in the area of interest have not yet reached
a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves.
To the extent that it is determined in the future that this capitalised expenditure should be written off, this will reduce
profits and net assets in the period in which this determination is made.
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.
Castillo Copper Limited
20 2017 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2017
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability
is settled. Deferred tax is credited in the statement of comprehensive income except where it relates to items that may
be credited directly to equity, in which case the deferred tax is adjusted directly against equity.
Deferred income tax assets are recognised for all deductible temporary differences, carry forward of unused tax assets
and unused tax losses to the extent that it is probable that future tax profits will be available against which deductible
temporary differences can be utilised.
The amount of benefits brought to account or which may be realised in the future is based on tax rates (and tax laws)
that have been enacted or substantially enacted at the balance date and the anticipation that the Group will derive
sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility
imposed by the law. The carrying amount of deferred tax assets is reviewed at each balance date and only recognised
to the extent that sufficient future assessable income is expected to be obtained. Income taxes relating to items
recognised directly in equity are recognised in equity and not in the statement of comprehensive income.
(o)
Issued capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options
are shown in equity as a deduction, net of tax, from the proceeds.
(p)
Revenue
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue
is capable of being reliably measured. The following specific recognition criteria must also be met before revenue is
recognised:
Interest income
Revenue is recognised as the interest accrues (using the effective interest method, which is the rate that exactly
discounts estimated future cash receipts through the expected life of the financial instrument) to the net carrying amount
of the financial asset.
(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.
Castillo Copper Limited
21 2017 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2017
(r)
Goods and services tax
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred
is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of
acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of financial
position are shown inclusive of GST.
The net amount of GST recoverable from, or payable to, the Australian Tax Office is included as part of receivables or
payables in the statement of financial position.
Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of investing
and financing activities, which are disclosed as operating cash flows.
(s)
Trade and other payables
Liabilities for trade creditors and other amounts are measured at amortised cost, which is the fair value of the
consideration to be paid in the future for goods and services received that are unpaid, whether or not billed to the
Group.
(t)
Share-based payment transactions
The Group provides benefits to individuals acting as, and providing services similar to employees (including Directors)
of the Group in the form of share based payment transactions, whereby individuals render services in exchange for
shares or rights over shares (‘equity settled transactions’).
The cost of these equity settled transactions with employees is measured by reference to the fair value at the date at
which they are granted. The fair value is determined by using the Black Scholes formula taking into account the terms
and conditions upon which the instruments were granted, as discussed in note 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.
Castillo Copper Limited
22 2017 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2017
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).
(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.
Castillo Copper Limited
23 2017 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2017
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.
Segment Information
3.
Management has determined the operating segments based on the reports reviewed by the Board of Directors that are
used to make strategic decisions. The entity does not have any operating segments with discrete financial information.
The Board of Directors 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:
Loss from continuing operations before income tax expense
Tax at the company rate of 27.5% (PY: 30%)
Income tax benefit not bought to account
Income tax expense
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
2017
$
-
18,129
39,299
16,680
74,108
2016
$
37,000
-
17,255
10,883
65,138
-
-
-
-
-
-
(529,462)
(434,291)
(145,602)
(130,287)
145,602
130,287
-
-
-
-
-
-
-
-
Castillo Copper Limited
24 2017 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2017
Assets
Total losses available to offset against future taxable income
Total accrued expenses
Total share issue costs deductible over five years
Deferred tax assets offset against deferred tax liabilities
Deferred tax assets not brought to account as realisation is not regarded
as probable
Deferred tax asset recognised
(d) Unused tax losses
Unused tax losses
Potential tax benefit not recognised at 27.5% (PY: 30%)
The benefit for tax losses will only be obtained if:
2017
2016
$
$
3,182,700
2,925,399
9,624
13,428
(96,250)
4,200
29,885
(3,593)
(3,109,502) (2,955,891)
-
-
10,365,005
9,751,331
2,850,376
2,925,399
(i)
the Group derives future assessable income in Australia and Chile of a nature and of an amount
sufficient to enable the benefit from the deductions for the losses to be realised;
(ii)
the Group continues to comply with the conditions for deductibility imposed by tax legislation in Australia
and Chile; and
(iii)
no changes in tax legislation in Australia and Chile, adversely affect the Group in realising the benefit
from the deductions for the losses.
6.
Other Receivables
Current
GST/VAT receivable
Other
Non-Current
Tenement guarantees
There are no current tenement guarantees.
7.
Deferred Exploration and Evaluation Expenditure
Exploration and evaluation phase:
At beginning of the year
Exploration expenditure during the year
Impairment expense1
Total exploration and evaluation
23,199
5,757
28,956
7,484
10,537
18,021
20,000
-
-
-
-
-
-
11,976
(11,976)
-
1 The impairment expense in the prior year 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.
Castillo Copper Limited
25 2017 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2017
8.
Other non-current assets
Initial consideration – acquisition of QComm
2017
$
350,000
350,000
2016
$
-
-
On 22 March 2017, Castillo Copper Limited announced it has entered into a binding heads of agreement to acquire
100% of the issued capital of Australian copper and cobalt company Qld Commodities Pty Ltd (QComm) (QComm
Acquisition).
Consideration for the QComm Acquisition is as follows:
(a)
(b)
(c)
(d)
(e)
$150,000 cash payment (paid prior to balance date).
issue of 10,000,000 CCZ consideration shares at a deemed issue price of $0.02 (issued in March 2017).
issue of 76,666,668 CCZ deferred consideration shares – to be issued on completion of the QComm Acquisition.
$200,000 cash payment – payable upon tenements being granted.
enter into a royalty agreement with the QComm vendors (or their nominee) pursuant to which CCZ will pay a 1% net
smelter return royalty in respect of the area covered by the applications.
Subsequent to year end, as announced on 4 July 2017, the Company satisfied the conditions precedent. Items (a) and
(b) above occurred prior to balance date and comprise the balance of $350,000 above. The consideration represented
by items (c), (d) and (e) will be valued and appropriately recorded subsequent to balance date.
9.
Trade and other payables
Current
Trade creditors
Accruals
2017
$
89,752
34,995
124,747
2016
$
7,515
16,242
23,757
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.
10.
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
Shares issued to sophisticated investors
Shares issued per QComm acquisition (Note 8)
Transaction costs on share issue
10,224,254
9,620,254
2017
Number of
shares
2016
Number of
shares
$
$
211,498,885
-
-
33,333,333
10,000,000
-
422,997,732
9,620,254
-
422,997,732
- (634,496,579)
-
-
-
500,000
200,000
(96,000)
8,836,027
845,995
-
-
-
(61,768)
254,832,218
10,224,254
211,498,885
9,620,254
(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 Company, to participate in the proceeds
Castillo Copper Limited
26 2017 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2017
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 Company.
(d) Share options
At 30 June 2017 there were 6,000,000 (2016: 1,250,000) unissued ordinary shares under unlisted options.
Set out below are the summaries of options granted as share based payments and expired during the previous
period:
The following share-based payment arrangements were entered into during the year:
Expiry date
Grant date
Number
Exercise price
$
Fair value at grant
date
Vesting date
6,000,000
28 June 2017
30 June 2020
$0.03
$0.0085
28 June 2017
1,250,000 options over ordinary shares in the Company expired unexercised on 30 June 2017.
There were no other share-based payment options on issue during the year.
Options were granted as equity compensation benefits to Key Management Personnel during the year are set out in
the audited remuneration report.
(b) Weighted average fair value
The fair value of the equity-settled options granted is estimated as at the date of grant using the Black and Scholes
model taking into account the terms and conditions upon which they were granted.
Expected volatility (%)
Risk-free interest rate (%)
Expected life of option (years)
Exercise price (cents)
Grant date share price (cents)
120
2
3
3
1.9
The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that
may occur. The expected volatility reflects the assumption that the historical volatility is indicative of future trends,
which may also not necessarily be the actual outcome. No other features of options granted were incorporated into
the measurement of fair value.
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.
11.
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.
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.
Castillo Copper Limited
27 2017 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2017
12.
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 impaired
Share based payments
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
2017
$
2016
$
(529,642)
(434,291)
23,569
51,066
-
(3,544)
-
11,976
-
99,890
(3,644)
205
86,905
(266,270)
4,781
(5,258)
(366,864)
(597,392)
58,712
216,777
Cash at bank earns interest at floating rates based on daily bank deposit rates.
13.
Loss per Share
Loss used in calculating basic and dilutive EPS
(526,642)
(434,291)
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:
Number of Shares
221,517,150
600,137,792
-
-
221,517,150
600,137,792
Basic and diluted loss per share (cents per share)
(0.24)
(0.07)
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 2017 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2017
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
b)
Subsidiaries
2017
$
2016
$
23,000
23,000
22,000
22,000
144,000
145,293
-
51,066
195,066
-
-
145,293
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
2017
100%
100%
75%
2016
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.
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
2017
$
2016
$
4,649,893
1,561,697
4,818,940
2,155,592
2017
$
-
373,772
2016
$
-
373,772
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 2017.
Castillo Copper Limited
29 2017 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2017
Financial Risk Management
16.
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
2017
$
58,712
48,956
2016
$
216,777
18,021
124,747
23,757
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 2017, the Group has
net assets of $332,921 (2016: $211,041). 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 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 2017 any financial liabilities that are
contractually maturing 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
2017
$
2016
$
58,712
216,777
Castillo Copper Limited
30 2017 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2017
Interest rate sensitivity
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)
2017
587
(587)
2016
2,168
(2,168)
2017
587
(587)
2016
2,168
(2,168)
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 2017, 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 2017.
(e) Fair Value Measurement
There were no financial assets or liabilities at 30 June 2017 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.
Castillo Copper Limited
31 2017 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2017
17.
Parent Entity Information
(a) Parent Financial Information
The following details information related to the parent entity, Castillo Copper Limited, at 30 June 2017. 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
2017
$
2016
$
84,391
222,067
370,000
-
451,391
222,067
118,470
18,246
-
-
118,470
18,246
332,921
203,821
10,224,254
9,620,254
1,824,810
1,773,743
(11,718,393)
(11,190,176)
332,921
203,821
(528,217)
(327,679)
-
-
Total comprehensive loss of the parent entity
(528,217)
(327,679)
(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
On 22 March 2017, Castillo Copper Limited announced it has entered into a binding heads of agreement to acquire
100% of the issued capital of Australian copper and cobalt company Qld Commodities Pty Ltd (QComm) (QComm
Acquisition).
Under the terms of the binding heads of agreement, the Company would:
Issue 76,666,668 CCZ deferred consideration shares – to be issued on completion of the QComm Acquisition;
(a)
(b) pay the QComm vendors $200,000 pro-rata to their QComm shareholding payable as soon as practicable
following grant of all applications;
(c) enter into a royalty agreement with the QComm vendors (or their nominee) pursuant to which CCZ will pay a 1%
net smelter return royalty in respect of the area covered by the applications.
Castillo Copper Limited
32 2017 Annual Report to Shareholders
Castillo Copper Limited
Notes to the consolidated financial statements at and for the year ended 30 June 2017
Subsequent to year end, as announced 4 July 2017, the Company completed the QComm Acquisition. Furthermore,
in August 2017, the Company received notice that all applications had been granted. Following the notice, the
Company paid the QComm vendors $200,000.
There are no known contingent liabilities as at 30 June 2017 (2016: Nil).
Commitments
19.
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
2017
$
-
-
-
-
2016
$
120,000
-
-
120,000
Dividends
20.
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 2017.
The balance of the franking account is Nil at 30 June 2017 (2016: Nil).
21.
Share based payments 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 were exercisable at $0.40 on or before 30 June 2017. These options are included in the table
below.
2016
Grant Date
Expiry date
Exercise
price
Balance at start
of the year
Number
Granted during
the year
Number
Exercised
during the
year
Number
Expired
during the
year
Number
Balance at
end of the
year
Number
Exercisable
at end of the
year
Number
21 May 2013 30 June 2017
$0.40
1,250,000
1,250,000
Weighted remaining contractual life (years)
-
Weighted average exercise price
$0.10
-
-
-
-
-
-
-
-
(1,250,000)
(1,250,000)
-
-
-
-
-
-
-
-
$0.10
$0.10
Operating expenses
There were no share based payments made to suppliers during the 30 June 2016 and 30 June 2017 financial year.
22.
Subsequent events
On 22 March 2017, Castillo Copper Limited announced it has entered into a binding heads of agreement to acquire
100% of the issued capital of Australian copper and cobalt company Qld Commodities Pty Ltd (QComm) (QComm
Acquisition).
Castillo Copper Limited
33 2017 Annual Report to Shareholders
Castillo Copper Limited – Directors’ Declaration
Under the terms of the binding heads of agreement, the Company would:
(a)
Issue 76,666,668 CCZ deferred consideration shares – to be issued on completion of the QComm
Acquisition;
(b) pay the QComm vendors $200,000 pro-rata to their QComm shareholding payable as soon as practicable
following grant of all applications;
(c) enter into a royalty agreement with the QComm vendors (or their nominee) pursuant to which CCZ will pay
a 1% net smelter return royalty in respect of the area covered by the applications.
Subsequent to year end, as announced 4 July 2017, the Company completed the QComm Acquisition.
Furthermore, in August 2017, the Company received notice all applications had been granted. Following the
notice, the Company paid the QComm vendors $200,000.
Additionally, as announced on 21 July 2017, the Company announced that it had signed a binding Heads of
Agreement with Total Minerals Pty Ltd (Total Minerals), which owns three cobalt & copper assets in NSW and
Queensland (including the historic Cangai Copper Cobalt Mine in northeast NSW), to acquire all its outstanding
issued shares (Total Minerals Acquisition).
In consideration for the Total Minerals Acquisition, the Company agreed to issue 55,000,000 CCZ shares to the
holders of Total Mineral and enter into a royalty agreement pursuant to which the vendors will be entitled to a net
smelter return royalty of 3% in respect of the tenements.
The Company completed the Total Minerals Acquisition on 11 August 2017.
Additionally, as announced on 21 July 2017, the Company) announced that it had signed a binding Heads of
Agreement with Total Iron Pty Ltd (Total Iron), which owns five highly prospective cobalt-copper-zinc-nickel project
areas – one in NSW and four in QLD – to acquire all its outstanding issued shares (Total Iron Acquisition).
In consideration for the Total Iron Acquisition, the Company agreed to issue 15,000,000 CCZ shares to the holders
of Total Iron and enter into a royalty agreement pursuant to which the vendors will be entitled to a net smelter
return royalty of 3% in respect of the tenements.
The Company completed the Total Iron Acquisition on 5 September 2017.
The Company issued the following securities:
•
•
•
5 July 2017, issued 66,666,667 CCZ shares at an issue price $0.015 pursuant to a capital raising to
raise a further $1,000,000 (before costs).
5 July 2017, issued 4,333,333 CCZ shares and 15 million options to acquire CCZ shares at an exercise
price of $0.03 and expiring on the date that is 36 months after the issue of the options to CPS Capital
Group Pty Ltd and Armada Capital and Equities Pty Ltd (together, the Advisors).
31 August 2017, issued to C3 Consortium Pty Ltd 970,588 shares at an issue price of $0.034 as
consideration for promotion and news circulation services rendered.
On 1 August 2017, the Company advised Mr Alan Armstrong and Mr Neil Hutchison were appointed as Executive
Director and Technical Director respectively, and Mr Giuseppe Graziano and Ms Nicole Fernandes resigned from
their positions of Non-Executive Directors.
Other than set out above, 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.
Castillo Copper Limited
34 2017 Annual Report to Shareholders
Castillo Copper Limited – Directors’ Declaration
The directors of the company declare that:
1.
in the directors’ opinion, the financial statements and accompanying notes set out on pages 10 to 34 are in
accordance with the Corporations Act 2001 and:
a.
comply with Accounting Standards and the Corporations Regulations 2001, professional reporting
requirements and all other mandatory requirements; and
b.
give a true and fair view of the Group’s financial position as at 30 June 2017 and of its performance
for the year ended on that date;
2.
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;
3.
the directors have been given the declarations by the Chief Executive Officer (or equivalent) and Chief
Financial Officer (or equivalent) required by section 295A.
This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on behalf
of the directors by:
Alan Armstrong
Executive Director
26 September 2017
Castillo Copper Limited
35 2017 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 2017, I declare that to the best of my knowledge and belief, there have been no
contraventions of:
a)
b)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
any applicable code of professional conduct in relation to the audit.
Perth, Western Australia
26 September 2017
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 WA 6849 | Telephone +61 (08) 9227 7500 | Fax +61 (08) 9227 7533
Email: mailbox@hlbwa.com.au | Website: 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 world-wide organisation of accounting firms and business advisers
36
INDEPENDENT AUDITOR’S REPORT
To the members of Castillo Copper Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Castillo Copper Limited (“the Company”) and its controlled
entities (“the Group”), which comprises the consolidated statement of financial position as at 30 June
2017, 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 to the financial
statements, including a summary of significant accounting policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
a)
giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its financial
performance for the year then ended; and
b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (“the Code”) that are relevant to our audit of the financial report in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Material uncertainty related to going concern
We draw attention to Note 2(d) in the financial report, which indicates the existence of a material
uncertainty that may cast significant doubt on the Group’s ability to continue as a going concern. Our
opinion is not modified in respect of this matter.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters. In addition to the matter described in the Material Uncertainty
Related to Going Concern section, we have determined the matters described below to be the key audit
matters to be communicated in our report.
HLB Mann Judd (WA Partnership) ABN 22 193 232 714
Level 4 130 Stirling Street Perth WA 6000 | PO Box 8124 Perth BC WA 6849 | Telephone +61 (08) 9227 7500 | Fax +61 (08) 9227 7533
Email: mailbox@hlbwa.com.au | Website: 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 world-wide organisation of accounting firms and business advisers
37
Key Audit Matter
How our audit addressed the key audit matter
Acquisition of QLD Commodities Pty Ltd
Refer to Note 8 of the financial statements.
the year ended 30 June 2017,
the
During
Company entered
into a binding heads of
agreement to acquire 100% of the issued capital
of Qld Commodities Pty Ltd. The Company paid
an initial consideration comprising a cash payment
of $150,000 and the issue of 10,000,000 fully paid
shares in the Company at a deemed price of $0.02
per share (total initial consideration of $350,000).
We considered this acquisition to be a key audit
matter as it is material and required significant
judgement in relation to whether the balance of the
consideration should have been recorded at
balance date.
Our procedures included but were not limited to
the following:
We
read
the heads of agreement
to
understand its key terms and conditions;
We considered
the conditions precedent
contained in the heads of agreement to
determine whether
the
consideration was required to be recorded at
balance date;
the balance of
We assessed the adequacy of the Group’s
disclosures in the financial report with respect
to this acquisition.
Information other than the financial report and auditor’s report thereon
The directors are responsible for the other information. The other information comprises the information
included in the Group’s annual report for the year ended 30 June 2017, but does not include the financial
report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and
for such internal control as the directors determine is necessary to enable the preparation of the financial
report that gives a true and fair view and is free from material misstatement, whether due to fraud or
error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with Australian Auditing Standards will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of this financial report.
38
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial report, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override
of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in
our auditor’s report to the related disclosures in the financial report or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up
to the date of our auditor’s report. However, future events or conditions may cause the Group to
cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events
in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on the Remuneration Report
Opinion on the remuneration report
We have audited the remuneration report included in the directors’ report for the year ended 30 June
2017.
In our opinion, the remuneration report of Castillo Copper Limited for the year ended 30 June 2017
complies with section 300A of the Corporations Act 2001.
39
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the remuneration
report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express
an opinion on the remuneration report, based on our audit conducted in accordance with Australian
Auditing Standards.
HLB Mann Judd
Chartered Accountants
L Di Giallonardo
Partner
Perth, Western Australia
26 September 2017
40
Castillo Copper Limited – Corporate Governance
This Corporate Governance Statement is current as at 26 September 2017 and has been approved by the Board
of the Company.
This Corporate Governance Statement discloses the extent to which the Company will follow the
recommendations set by the ASX Corporate Governance Council in its publication Corporate Governance
Principles and Recommendations 3rd Edition (Recommendations). The Recommendations are not mandatory,
however the Recommendations that will not be followed have been identified and reasons for not following them,
along with what (if any) alternative governance practices have been adopted in lieu of the Recommendation.
The Company has adopted Corporate Governance Policies which provide written terms of reference for the
Company’s corporate governance practices. The Board of the Company has not yet formed an audit committee,
nomination committee, risk management committee or remuneration committee.
The Company’s Corporate Governance Policies are available on the Company’s website at
www.castillocopper.com
Principle 1: Lay solid foundations for management and oversight
Roles of the Board & Management
The Board is responsible for evaluating and setting the strategic direction for the Company, establishing goals for
management and monitoring the achievement of these goals. The Managing Director (or equivalent) is
responsible to the Board for the day-to-day management of the Company.
•
•
•
•
•
•
•
•
•
•
•
•
The principal functions and responsibilities of the Board include, but are not limited to, the following:
•
Appointment, evaluation and, if necessary, removal of the Managing Director, any other executive directors,
the Company Secretary and the Chief Financial Officer and approval of their remuneration;
Determining, in conjunction with management, corporate strategy, objectives, operations, plans and
approving and appropriately monitoring plans, new investments, major capital and operating expenditures,
capital management, acquisitions, divestitures and major funding activities;
Establishing appropriate levels of delegation to the Managing Director to allow the business to be managed
efficiently;
Approval of remuneration methodologies and systems;
Monitoring actual performance against planned performance expectations and reviewing operating
information at a requisite level to understand at all times the financial and operating conditions of the
Company;
Monitoring the performance of senior management, including the implementation of strategy and ensuring
appropriate resources are available;
Identifying areas of significant business risk and ensuring that the Company is appropriately positioned to
manage those risks;
Overseeing the management of safety, occupational health and environmental issues;
Satisfying itself that the financial statements of the Company fairly and accurately set out the financial
position and financial performance of the Company for the period under review;
Satisfying itself that there are appropriate reporting systems and controls in place to assure the Board that
proper operational, financial, compliance, risk management and internal control processes are in place and
functioning appropriately;
Ensuring that appropriate internal and external audit arrangements are in place and operating effectively;
Authorising the issue of any shares, options, equity instruments or other securities within the constraints of
the Corporations Act and the ASX Listing Rules; and
Ensuring that the Company acts legally and responsibly on all matters and assuring itself that the Company
has adopted, and that its practice is consistent with, a number of guidelines including:
− Code of Conduct;
− Continuous Disclosure Policy;
− Diversity Policy;
− Performance Evaluation Policy;
− Procedures for Selection and Appointment of Directors;
− Remuneration Policy;
− Risk Management and Internal Compliance and Control Policy.
− Securities Trading Policy; and
− Shareholder Communications Policy.
41
Castillo Copper Limited – Corporate Governance
Subject to the specific authorities reserved to the Board under the Board Charter, the Board delegates to the
Managing Director responsibility for the management and operation of Castillo Copper. The Managing Director is
responsible for the day-to-day operations, financial performance and administration of Castillo Copper within the
powers authorised to him from time-to-time by the Board. The Managing Director may make further delegation
within the delegations specified by the Board and will be accountable to the Board for the exercise of those
delegated powers.
Further details of Board responsibilities, objectives and structure are set out in the Board Charter on the Castillo
Copper website.
Board Committees
The Board considers that the Company is not currently of a size, nor are its affairs of such complexity to justify
the formation of separate committees at this time including audit, risk, remuneration or nomination committees,
preferring at this stage of the Company’s development, to manage the Company through the full Board of
Directors. The Board assumes the responsibilities normally delegated to the audit, risk, remuneration and
nomination Committees.
If the Company’s activities increase, in size, scope and nature, the appointment of separate committees will be
reviewed by the Board and implemented if appropriate.
Board Appointments
The Company undertakes comprehensive reference checks prior to appointing a director, or putting that person
forward as a candidate to ensure that person is competent, experienced, and would not be impaired in any way
from undertaking the duties of director. The Company provides relevant information to shareholders for their
consideration about the attributes of candidates together with whether the Board supports the appointment or re-
election.
The terms of the appointment of a non-executive director, executive directors and senior executives are agreed
upon and set out in writing at the time of appointment.
The Company Secretary
The Company Secretary is accountable directly to the Board, through the Chairman, on all matters to do with the
proper functioning of the Board, including agendas, Board papers and minutes, advising the Board and its
Committees (as applicable) on governance matters, monitoring that the Board and Committee policies and
procedures are followed, communication with regulatory bodies and the ASX and statutory and other filings.
Diversity
The Board has adopted a Diversity Policy which provides a framework for the Company to establish and achieve
measurable diversity objectives, including in respect to gender, age, ethnicity and cultural diversity. The Diversity
Policy allows the Board to set measurable gender diversity objectives (if considered appropriate) and to assess
annually both the objectives (if any have been set) and the Company’s progress towards achieving them.
The Board considers that, due to the size, nature and stage of development of the Company, setting measurable
objectives for the Diversity Policy at this time is not appropriate. The Board will consider setting measurable
objectives as the Company increases in size and complexity.
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%
0%
The Company’s Diversity Policy is available on its website.
Board & Management Performance Review
On an annual basis, the Board conducts a review of its structure, composition and performance.
The annual review includes consideration of the following measures:
• comparing the performance of the Board against the requirements of its Charter;
• assessing the performance of the Board over the previous 12 months having regard to the corporate
strategies, operating plans and the annual budget;
42
Castillo Copper Limited – Corporate Governance
•
•
•
•
reviewing the Board’s interaction with management;
reviewing the type and timing of information provided to the Board by management;
reviewing management’s performance in assisting the Board to meet its objectives; and
identifying any necessary or desirable improvements to the Board Charter.
The method and scope of the performance evaluation will be set by the Board and may include a Board self-
assessment checklist to be completed by each Director. The Board may also use an independent adviser to
assist in the review.
The Chairman has primary responsibility for conducting performance appraisals of Non-Executive Directors, in
conjunction with them, having particular regard to:
• contribution to Board discussion and function;
• degree of independence including relevance of any conflicts of interest;
• availability for and attendance at Board meetings and other relevant events;
• contribution to Company strategy;
• membership of and contribution to any Board committees; and
• suitability to Board structure and composition.
Given, the size of the Board, the substantial changes to the composition of the Board in December 2016 and the
current level of operations of the Company, no formal appraisal of the Board was conducted during the financial
year.
The Board conducts an annual performance assessment of the Managing Director against agreed key
performance indicators.
Independent Advice
Directors have a right of access to all Company information and executives. Directors are entitled, in fulfilling their
duties and responsibilities, to obtain independent professional advice on any matter connected with the discharge
of their responsibilities, with prior notice to the Chairman, at Castillo Copper’ expense.
Principle 2: Structure the board to add value
Board Composition
During the financial year and to the date of this report the Board was comprised of the following members:
Mr. David Wheeler (Non-Executive Director)
Mr Alan Armstrong (Executive Director) – appointed 1 August 2017
Mr Neil Hutchison (Technical Director) – appointed 1 August 2017
Mr. Joe Graziano (Non-Executive Director) – resigned 1 August 2017
Ms. Nicole Fernandes (Non-Executive Director) – resigned 1 August 2017
The Board currently consists of two Executive and one Non-Executive Directors.
Castillo Copper has adopted a definition of 'independence' for Directors that is consistent with the
Recommendations.
Two of the Board members are not considered to be independent as they are executives of the Company.
Board Selection Process
The Board considers that a diverse range of skills, backgrounds, knowledge and experience is required in order
to effectively govern Castillo Copper. The Board believes that orderly succession and renewal contributes to
strong corporate governance and is achieved by careful planning and continual review.
The Board is responsible for the nomination and selection of directors. The Board reviews the size and
composition of the Board regularly and at least once a year as part of the Board evaluation process.
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
43
Castillo Copper Limited – Corporate Governance
Induction of New Directors and Ongoing Development
New Directors are issued with a formal Letter of Appointment that sets out the key terms and conditions of their
appointment, including Director's duties, rights and responsibilities, the time commitment envisaged, and the
Board's expectations regarding involvement with any Committee work.
An induction program is in place and new Directors are encouraged to engage in professional development
activities to develop and maintain the skills and knowledge needed to perform their role as Directors effectively.
Principle 3: Act ethically and responsibly
The Company has implemented a Code of Conduct, which provides guidelines aimed at maintaining high ethical
standards, corporate behaviour and accountability within the Company.
All employees and Directors are expected to:
•
respect the law and act in accordance with it;
• maintain high levels of professional conduct;
•
•
•
•
respect confidentiality and not misuse Company information, assets or facilities;
avoid real or perceived conflicts of interest;
act in the best interests of shareholders;
by their actions contribute to the Company’s reputation as a good corporate citizen which seeks the respect
of the community and environment in which it operates;
perform their duties in ways that minimise environmental impacts and maximise workplace safety;
exercise fairness, courtesy, respect, consideration and sensitivity in all dealings within their workplace and
with customers, suppliers and the public generally; and
act with honesty, integrity, decency and responsibility at all times.
•
•
•
An employee that breaches the Code of Conduct may face disciplinary action including, in the cases of serious
breaches, dismissal. If an employee suspects that a breach of the Code of Conduct has occurred or will occur,
he or she must report that breach to the Company Secretary. No employee will be disadvantaged or prejudiced
if he or she reports in good faith a suspected breach. All reports will be acted upon and kept confidential.
Principle 4: Safeguard integrity in corporate reporting
The Board as a whole fulfills the functions normally delegated to the Audit Committee as detailed in the Audit
Committee Charter.
The Board is responsible for the initial appointment of the external auditor and the appointment of a new external
auditor when any vacancy arises. Candidates for the position of external auditor must demonstrate complete
independence from the Company through the engagement period. The Board may otherwise select an external
auditor based on criteria relevant to the Company’s business and circumstances. The performance of the external
auditor is reviewed on an annual basis by the Board.
The Board receives regular reports from management and from external auditors. It also meets with the external
auditors as and when required.
The external auditors attend Castillo Copper' AGM and are available to answer questions from security holders
relevant to the audit.
Prior approval of the Board must be gained for non-audit work to be performed by the external auditor. There are
qualitative limits on this non-audit work to ensure that the independence of the auditor is maintained.
There is also a requirement that the audit partner responsible for the audit not perform in that role for more than
five years.
CEO and CFO Certifications
The Board, before it approves the entity’s financial statements for a financial period, receives from its CEO and
CFO (or, if none, the persons fulfilling those functions) a declaration provided in accordance with Section 295A of
the Corporations Act 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
44
Castillo Copper Limited – Corporate Governance
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.
Principle 5: Make timely and balanced disclosure
The Company has a Continuous Disclosure Policy which outlines the disclosure obligations of the Company as
required under the ASX Listing Rules and Corporations Act. The policy is designed to ensure that procedures
are in place so that the market is properly informed of matters which may have a material impact on the price at
which Company securities are traded.
The Board considers whether there are any matters requiring disclosure in respect of each and every item of
business that it considers in its meetings. Individual Directors are required to make such a consideration when
they become aware of any information in the course of their duties as a Director of the Company.
The Company is committed to ensuring all investors have equal and timely access to material information
concerning the Company.
The Board has designated the Company Secretary as the person responsible for communicating with the ASX.
The Chairman, Managing Director and the Company Secretary are responsible for ensuring that:
a) Company announcements are made in a timely manner, that announcements are factual and do not omit
any material information required to be disclosed under the ASX Listing Rules and Corporations Act; and
b) Company announcements are expressed in a clear and objective manner that allows investors to assess
the impact of the information when making investment decisions.
Principle 6: Respect the rights of security holders
The Company recognises the value of providing current and relevant information to its shareholders.
The Company respects the rights of its shareholders and to facilitate the effective exercise of those rights the
Company is committed to:
•
communicating effectively with shareholders through releases to the market via ASX, the company website,
information mailed to shareholders and the general meetings of the Company;
giving shareholders ready access to clear and understandable information about the Company; and
making it easy for shareholders to participate in general meetings of the Company.
•
•
The Company also makes available a telephone number and email address for shareholders to make enquiries
of the Company. These contact details are available on the “contact us” page of the Company’s website.
Shareholders may elect to, and are encouraged to, receive communications from Castillo Copper and Castillo
Copper' securities registry electronically.
The Company maintains information in relation to its Constitution, governance documents, Directors and senior
executives, Board and committee charters, annual reports and ASX announcements on the Company’s website.
Principle 7: Recognise and manage risk
The Board is committed to the identification, assessment and management of risk throughout Castillo Copper'
business activities.
The Board is responsible for the oversight of the Company’s risk management and internal compliance and control
framework. The Company does not have an internal audit function. Responsibility for control and risk
management is delegated to the appropriate level of management within the Company with the Managing Director
having ultimate responsibility to the Board for the risk management and internal compliance and control
framework. Castillo Copper has established policies for the oversight and management of material business risks.
Castillo Copper' Risk Management and Internal Compliance and Control Policy recognises that risk management
is an essential element of good corporate governance and fundamental in achieving its strategic and operational
objectives. Risk management improves decision making, defines opportunities and mitigates material events that
may impact security holder value.
45
Castillo Copper Limited – Corporate Governance
Castillo Copper believes that explicit and effective risk management is a source of insight and competitive
advantage. To this end, Castillo Copper is committed to the ongoing development of a strategic and consistent
enterprise wide risk management program, underpinned by a risk conscious culture.
Castillo Copper accepts that risk is a part of doing business. Therefore, the Company’s Risk Management and
Internal Compliance and Control Policy is not designed to promote risk avoidance. Rather Castillo Copper'
approach is to create a risk conscious culture that encourages the systematic identification, management and
control of risks whilst ensuring we do not enter into unnecessary risks or enter into risks unknowingly.
Castillo Copper assesses its risks on a residual basis; that is it evaluates the level of risk remaining and
considering all the mitigation practices and controls. Depending on the materiality of the risks, Castillo Copper
applies varying levels of management plans.
The Board has required management to design and implement a risk management and internal compliance and
control system to manage Castillo Copper’ material business risks. It receives regular reports on specific business
areas where there may exist significant business risk or exposure. The Company faces risks inherent to its
business, including economic risks, which may materially impact the Company’s ability to create or preserve value
for security holders over the short, medium or long term. The Company has in place policies and procedures,
including a risk management framework (as described in the Company’s Risk Management and Internal
Compliance and Control Policy), which is developed and updated to help manage these risks. The Board does
not consider that the Company currently has any material exposure to environmental or social sustainability risks.
The Company’s process of risk management and internal compliance and control includes:
•
identifying and measuring risks that might impact upon the achievement of the Company’s goals and
objectives, and monitoring the environment for emerging factors and trends that affect those risks.
formulating risk management strategies to manage identified risks, and designing and implementing
appropriate risk management policies and internal controls.
•
• monitoring the performance of, and improving the effectiveness of, risk management systems and internal
compliance and controls, including regular assessment of the effectiveness of risk management and internal
compliance and control.
The Board review’s the Company’s risk management framework at least annually to ensure that it continues to
effectively manage risk.
Management reports to the Board as to the effectiveness of Castillo Copper’ management of its material business
risks on at each Board meeting.
Principle 8: Remunerate fairly and responsibly
The Board as a whole fulfils the functions normally delegated to the Remuneration Committee as detailed in the
Remuneration Committee Charter.
Castillo Copper has implemented a Remuneration Policy which was designed to recognise the competitive
environment within which Castillo Copper operates and also emphasise the requirement to attract and retain high
calibre talent in order to achieve sustained improvement in Castillo Copper’ performance. The overriding objective
of the Remuneration Policy is to ensure that an individual’s remuneration package accurately reflects their
experience, level of responsibility, individual performance and the performance of Castillo Copper.
The key principles are to:
•
•
link executive reward with strategic goals and sustainable performance of Castillo Copper;
apply challenging corporate and individual key performance indicators that focus on both short-term and
long-term outcomes;
• motivate and recognise superior performers with fair, consistent and competitive rewards;
•
•
•
remunerate fairly and competitively in order to attract and retain top talent;
recognise capabilities and promote opportunities for career and professional development; and
through employee ownership of Castillo Copper shares, foster a partnership between employees and other
security holders.
The Board determines the Company’s remuneration policies and practices and assesses the necessary and
desirable competencies of Board members. The Board is responsible for evaluating Board performance,
46
Castillo Copper Limited – Corporate Governance
reviewing Board and management succession plans and determines remuneration packages for the Managing
Director, Non-Executive Directors and senior management based on an annual review.
Castillo Copper’ executive remuneration policies and structures and details of remuneration paid to directors and
senior managers (where appointed) are set out in the Remuneration Report.
Non-Executive Directors receive fees (including statutory superannuation where applicable) for their services, the
reimbursement of reasonable expenses and, in certain circumstances options. They do not receive any
termination or retirement benefits, other than statutory superannuation.
The maximum aggregate remuneration approved by shareholders for Non-Executive Directors is $500,000 per
annum. The Directors set the individual Non-Executive Directors fees within the limit approved by shareholders.
The total fees paid to Non-Executive Directors during the reporting period were $144,000.
Executive directors and other senior executives (where appointed) are remunerated using combinations of fixed
and performance based remuneration. Fees and salaries are set at levels reflecting market rates and
performance based remuneration is linked directly to specific performance targets that are aligned to both short
and long term objectives.
In accordance with the Company’s Securities Trading Policy, participants in an equity based incentive scheme
are prohibited from entering into any transaction that would have the effect of hedging or otherwise transferring
the risk of any fluctuation in the value of any unvested entitlement in the Company’s securities to any other
person.
Further details in relation to the company’s remuneration policies are contained in the Remuneration Report,
within the Directors’ report.
47
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 20 September 2017.
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
22
9
6
185
374
596
1,607
30,025
48,750
9,467,974
463,921,119
473,469,475
There were 39 holders of ordinary shares holding less than a marketable parcel.
Quoted equity securities as at 20 September 2017
Equity Security
Ordinary Shares
Quoted
473,469,475
Voting Rights
Each fully paid ordinary share carries the rights of one vote per share.
Unquoted Securities
The number of unquoted securities on issue at 20 September 2017:
Unquoted Securities
Unquoted Options1
Unquoted Options2
Number on Issue
6,000,000
15,000,000
Exercise Price
3c
3c
Expiry Date
30/06/2020
5/07/2020
Persons holding more than 20% of a given class of unquoted securities as at 20 September 2017:
1. 67% held by Pathways Corporate Pty Ltd, 33% held by NFIC Services Pty Ltd
2. 22% held by Mr Kael Williams
Substantial Shareholders
JBO Assets Pty Ltd holds ordinary shares representing 5.85% of the Company’s equity.
TWW Assets Pty Ltd holds ordinary shares representing 5.56% of the Company’s equity.
Restricted Securities
There are no restricted securities under ASX imposed escrow.
Stock Exchange
The Company is listed on the Australian Securities Exchange and has been allocated the code “CCZ”. The “Home
Exchange” is Perth.
Other information
Castillo Copper Limited, is incorporated and domiciled in Australia, and is a publicly listed company limited by
shares.
On-Market Buy-Back
There is currently no on-market buy-back in place.
48
Castillo Copper Limited
Twenty largest holders of quoted securities as at 20 September 2017
Name
JBO ASSETS PTY LTD
TWW ASSETS PTY LTD
REID MACHINE PTY LTD
TAKA CUSTODIANS PTY LTD
SUNSET CAPITAL MANAGEMENT PTY LTD
MR THOMAS FRITZ ENSMANN
BBD CUSTODIANS PTY LTD
RED MARLIN PTY LTD
JD SQUARED INVESTMENTS PTY LTD
FOUCART PTY LTD
MR MARIO DI LALLO & MRS ALISON VALERIE DI LALLO
INVESCO NOMINEE PTY LTD
AGENS PTY LTD
MR JOHN DELLA BOSCA
VASSAGO PTY LTD
MR FLOYD BARRY AQUINO
CCI SUPER FUND PTY LTD
CELTIC CAPITAL PTY LTD
MR MALCOLM GEOFFREY HERON & MRS MELISSA ANNE HERON
MR THOMAS GUNNERSEN
Total
No. of
Shares
27,692,858
%
5.85%
26,309,524
5.56%
23,393,750
4.94%
22,893,750
4.84%
21,983,632
4.64%
16,000,000
3.38%
8,574,268
1.81%
8,537,502
1.80%
8,120,238
1.72%
7,487,500
1.58%
7,250,000
1.53%
6,892,500
1.46%
6,333,333
1.34%
6,041,667
1.28%
5,391,365
1.14%
4,652,160
0.98%
4,641,622
0.98%
4,133,333
0.87%
4,000,000
0.84%
4,000,000
0.84%
224,329,002 47.38%
49
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.
50