C
H
A
L
I
C
E
G
O
L
D
M
I
N
E
S
L
I
M
I
T
E
D
A
N
N
U
A
L
R
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P
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2
0
0
8
P rinciPal Place of Business
& re g ist ered office
Level 2, 1292 H ay Street West Per th WA 6005
Tel: + 61 8 9322 3960 Fax: +618 9322 5800
We b: www.cha licegold.com Email: info@chalicegold.com
A N N U A L R E P O R T 2 0 0 8
TW E N Ty L A R G E S T OR D I N A R y FU L L y P A I D SH A R E H O L D E R S
A S AT 4 SE P T E M B E R 2 0 0 8
name
Plato Prospecting Pty Ltd
Resolute Limited
Nefco Nominees Pty Ltd
Define Consulting Pty Ltd (The Define Consulting A/C)
Colbern Fiduciar y Nominees Pty Ltd
Balfes (QLD) Pty Ltd (Balfes Super Fund A/C)
Lost Ark Nominees Pty Limited
Mr Philip Button & Ms Philipa Anne Nicol (Christopher Jordan A/C)
Tara Management Pty Ltd
Toltec Holdings Pty Ltd
Clodene Pty Ltd
Mr Terrence Peter Williamson & Ms Jonine Maree Jancey (The Wiljan
Super Fund A/C)
Mr Arnold Olschyna
Calm Holdings Pty Ltd (Tide A/C)
Penally Management Limited
Mrs Helen Joy Alexander
Zarzal Pty Ltd (D T & W M Johns Family A/C)
Ledge Finance Limited
Piat Corp Pty Ltd
Wersman Nominees Pty Ltd
total
number of
ordinary shares
held
14,018,452
7,624,546
3,412,004
2,391,772
2,200,000
1,500,000
1,200,000
1,199,876
1,132,012
1,127,145
1,069,657
1,044,082
1,000,000
970,000
881,338
805,200
800,000
773,334
700,248
700,000
Percentage of
capital held %
19.26
10.47
4.69
3.29
3.02
2.06
1.65
1.65
1.55
1.55
1.47
1.43
1.37
1.33
1.21
1.11
1.10
1.06
0.96
0.96
44,549,666
61.19
69
DI R E C T O R S
A U D I T O R S
HLB Mann Judd
A R Bantock - Non-executive Chairman
15 Rheola Street
T R B Goyder - Executive Director
WEST PERTH WA 6005
A W Kiernan - Non-executive Director
CO M P A Ny SE C R E TA R y
R K Hacker
P R I N C I P A L P L A C E
O F B U S I N E S S
SO L I C I T O R S
Pullinger Readhead Lucas
Level 2, For tescue House
50 Kings Park Road
WEST PERTH WA 6005
HO M E E xC H A N G E
& RE G I S T E R E D OF F I C E
SH A R E RE G I S T R y
Australian Securities Exchange Limited
Level 2, 1292 Hay Street
WEST PERTH WA 6005
Tel: +618 9322 3960
Fax: +618 9322 5800
Web: www.chalicegold.com
Email:
info@chalicegold.com
Computershare Investor Ser vices
Pty Limited
Level 2, Reser ve Bank Building
45 St Georges Terrace
PERTH WA 6000
Tel: 1300 557 010
Exchange Plaza
2 The Esplanade
PERTH WA 6000
A Sx CO D E
Share Code: CHN
C o n t e n t s
Letter to sharehol der s
Highlights
Revi ew and resul ts o f oper ations
Schedul e of tenements
D irector s’ repor t
02
03
04
15
18
Auditor’s indepe ndence declar ati o n 26
Stat eme nt o f c han ge s in eq uity
Cas h flow s tate ment
No te s to the fi na nc ial st ate me nt s
Dire c tor s ’ de c lar a ti on
Ind e p end e nt aud ito r’s re po r t
Income statement
B alance sheet
27
28
Co r po r ate gove r nance s tat eme nt
ASx ad d i ti onal info r mati on
29
30
31
54
55
57
68
Let ter to sha rehoLders
Dear Shareholder
Chalice Gold Mines Limited continued the financial year in a relatively well capitalised position, firmly focused on the same
business – seeking discoveries across our portfolio of Western Australian gold projects and new project opportunities.
Exploration continued at our three gold projects during the year.
• At the large Yandeearra Gold Project in the West Pilbara a detailed mapping and sampling program was completed at
the Nevada Prospect to follow up on anomalous gold and uranium mineralisation in previous reconnaissance rock chip
sampling.
We also successfully negotiated a joint venture agreement with De Grey Mining Limited (“De Grey”) to fund exploration
of tenements generally to the southeast of the Central Shear Zone that runs through the project area.
We are pleased to have seen an active field program by De Grey, who commenced with a compilation of data from
previous explorers and moved on to geological reconnaissance, rock chip sampling, multi-element soil sampling and
substantial stream sediment sampling programs; identifying a number of new prospects and target areas.
• At the Gnaweeda Gold Project in the Murchison, our joint venture partner Teck Cominco (“Teck”) completed a further six
RC drill holes at the Turnberry and St Anne’s Prospects.
Assays results were encouraging, including a number of near surface high grade hits.
Teck has now earned an initial 51% interest in the project by spending over $750,000 and has advised that it intends to
push on with exploration, with further drilling planned in 2008 to define the extent of mineralisation encountered to date.
We will continue to progress these projects, dealing with our partners and other external parties where this can provide
ongoing exploration funding and continuing upside exposure for shareholders.
As I outlined last year, we have continued our Prospectus objectives of seeking new exploration and development projects. We
were unable to conclude any such acquisition opportunities during the financial year, but have since continued our search to
identify potential new resources and growth opportunities.
I am pleased that on 10 September 2008 we were ultimately successful in this search and concluded a Heads of Agreement
with Perilya Limited (“Perilya”) to acquire the Mount Oxide Project in Queensland, Australia.
As detailed in the subject ASx announcement, we see the Mount Oxide Project as offering a great opportunity for growth and
potential future production from a base of over 200,000 tonnes of JORC compliant copper resources and with an extensive
800 km2 tenement package lying on a major mineralised structure in a proven production area.
Further details of the Mount Oxide Project acquisition and the associated option acquired by the Company over Perilya’s
50% interest in the Tampang Porphyry Copper-Gold Project in Sabah, Malaysia are to be despatched to shareholders for their
consideration and approval at our forthcoming Annual General Meeting. We are delighted to present this opportunity to
shareholders and commend the proposed transaction for your approval.
The past year was important for your Company. I look forward to completing the acquisition of the Mount Oxide Project and
an exciting future as we push on with its exploration and potentially development.
My thanks to the Board and shareholders for their continuing support.
Yours faithfully
Andrew Bantock
Chairman
2
C H A L I C E G O L D M I N E S L T D A N N U A L R E P O R T 2 0 0 8
hiGhLiGhts
Yandeearra
• A detailed mapping and sampling program was completed at the Nevada Prospect to follow up on anomalous gold and
uranium mineralisation in a previous reconnaissance rock chip sampling program.
•
Implemented Yandeearra Joint Venture with De Grey Mining Limited (“De Grey”) and the Atlas Iron Limited (“Atlas”)
Option Agreement (see below).
• A geological reconnaissance and rock chip sampling program by De Grey identified new gold and base metals targets. De
Grey also commenced a stream sediment sampling program over 13km of strike in the northeast of the Project.
Gnaweeda
• Teck Cominco (“Teck”) continued its joint venture exploration program, completing six RC drill holes for a total of 1,546
metres drilled at the Turnberry and St Anne’s Prospects, delivering encouraging results.
• Teck achieved its 51% earn-in expenditure requirement under the Gnaweeda Project Joint Venture Agreement, by spending
over $750,000.
• Teck has advised that it intends to proceed under the second stage joint venture earn-in provisions, ie. to an overall 70%
interest, by increasing its total project spend to $1.5 million. Further RC and diamond drilling is planned at the Turnberry
and St Anne’s Prospects during the coming year.
wiLGa
•
Sought expressions of interest from potential joint venture partners to fund future exploration at the Project.
Corporate
•
Funding secured for the Yandeearra Gold Project by way of:
-
a joint venture agreement with De Grey; De Grey to spend $1.67 million over three years to earn 80% of rights to
all minerals over tenements covering approximately the southeast portion of the Project, other than iron ore and
uranium; and
-
an option agreement with Atlas Iron Limited (“Atlas ”), whereby for a fee of $250,000, payable in cash or shares, Atlas
may undertake $200,000 of exploration in the first year to be in a position to acquire the iron ore rights over the
Yandeearra Gold Project for a total of $1.25 million.
•
•
Sold 3.5 million Avoca Resources Limited (“Avoca”) shares for net proceeds of $6.9 million.
Exercised 2 million $1.79, 3-year unlisted Avoca options and realised the shares thereby acquired for net proceeds of
$1.5M.
• Continued to actively search for new project opportunities.
3
reView and res uL ts of o per atio ns
1 Yandeearra project (100% Chalice Gold Mines Limited)
neVada prospeCt
A detailed mapping and sampling program was completed at the Nevada Prospect to follow up on anomalous gold and
uranium mineralisation in reconnaissance rock chip sampling undertaken in the previous year.
A total of 24 rock chip samples were taken from the prospect area. Assay results are detailed in Table 1.
Six rock chip samples were collected from the area of a discrete radiometric and aeromagnetic anomaly which has been
interpreted to represent a volcanic vent or feeder for the voluminous Mt Roe Basalts present in the area. The best gold results
of 1.91g/t and 1.57g/t were returned from sample numbers 114543 and 114541, respectively. The best uranium result was
45ppm from sample number 114538. The gold mineralisation appears to be preferentially associated with clasts of ferruginous
quartz pebble conglomerate within the volcanic vent area.
Twelve rock chip samples were also taken to further test the extent of gold mineralisation in an area of gold-in-soil anomalism,
which is located approximately 700m to the north of the volcanic vent. Rock chip sampling of the conglomerate matrix
adjacent to the gold-in-soil anomaly returned the best result of 215ppb gold.
It was concluded that the soil anomaly is most likely derived from detrital gold in the conglomerates of the Hardey Formation.
Numerous old dryblower workings on creeks draining the conglomerates support this conclusion. The conglomerates are
extremely immature, comprising angular and rounded, polymict clasts ranging in size from sub-centimetre scale to in excess of 1
metre in diameter.
Additional sampling targeting chert horizons and several gossanous zones within basalts returned a best result of 164ppb gold.
A geology plan of Nevada Prospect showing the location of the sampling is shown in Figure 1.
Hardey Conglomerate
4
C H A L I C E G O L D M I N E S L T D A N N U A L R E P O R T 2 0 0 8
Au 2
(ppm)
U
(ppm)
45.24
28.2
30.23
4.39
18.37
8.77
1.99
0.20
sample
number
easting
(GDA 94)
northing
(GDA94)
Description
Au Average
(ppb)
114536
629123
7652209
114537
629101
7652198
Chert
Chert
114538
628015
7651547
Volcanic vent
114539
628002
7651532
Volcanic vent
114540
627983
7651513
Volcanic vent
114541
628022
7651545
Volcanic vent
114542
628069
7651567
Volcanic vent
114543
628073
7651564
Volcanic vent
114544
628592
7652525
Conglomerate
114545
628442
7652520
Conglomerate
114546
628119
7652266
Conglomerate
114547
628420
7652029
Conglomerate
114548
628427
7652019
Gossan - Basalt
114549
628105
7651881
Gossan - Basalt
114550
628388
7652018
Conglomerate
114551
628321
7651996
Conglomerate
114552
628021
7652004
Conglomerate
114553
628185
7651899
Sandstone
114554
628181
7651929
Conglomerate
114555
628255
7652027
Conglomerate
114556
628295
7652014
Conglomerate
114557
628617
7652492
Conglomerate
114558
628600
7652425
Conglomerate
114559
628572
7652340
Conglomerate
164
25
4
69
46
1567
57
1911
32
8
6
215
10
8
4
4
5
6
12
16
5
7
3
3
Au 1
(ppb)
164
25
4
69
46
1567
57
1833
32
8
6
230
10
8
4
4
5
6
12
16
5
7
3
3
Analyses on 2 - 3kg surface rock chip samples by Genalysis Laboratory Services, Perth. Gold assays were carried out by Method
FA25/MS to a detection limit of 1 ppb. Gold repeats were carried out by Method FA25/AASF to a detection limit of 0.01ppm.
Uranium assays were carried out by Method A/MS to a detection limit 0.01 ppm (U).
Table 1: Rock Chip Sample Results – Nevada Prospect
5
reView and res uL ts of o per atio ns
Continued
Figure 1: Geology Plan – Nevada Prospect
6
C H A L I C E G O L D M I N E S L T D A N N U A L R E P O R T 2 0 0 8
expLoration pursuant to Joint Venture aGreeMent with de GreY MininG LiMited
In November 2007, Chalice Gold negotiated a joint venture agreement with De Grey whereby De Grey is to spend $1.67
million over five years to earn 80% of rights to all minerals other than iron ore and uranium, over a number of tenements to the
southeast of the Central Shear Zone, which runs roughly diagonally through the Yandeearra project area (see Figure 2).
Under the terms of the joint venture, De Grey will make an initial payment comprising the issue of 2 million shares and 2 million,
3-year 20 cent options, upon executing a formal joint venture agreement and is required to spend $835,000 over a two year
period to earn 60% of the rights to all minerals other than iron ore and uranium. De Grey may then elect to spend a further
$835,000 over a further 3 years to increase this interest to 80%. A minimum expenditure requirement of $417,000 applies for
the first year. Chalice may then elect to contribute pro rata or covert its 20% interest to a 10% interest free carried through to
completion of a bankable feasibility study.
De Grey commenced work under the joint venture during the year and has reported that geological reconnaissance and rock-
chip sampling, along with compilation of data from previous explorers, has highlighted at least two areas with potential for VMS-
style base metals mineralisation and three project-scale structures prospective for gold. Mapping and soil sampling programs
were undertaken to define future drill targets.
Figure 2 : De Grey Joint Venture Tenements – Yandeearra Project
7
reView and res uL ts of o per atio ns
Continued
Yandeearra VMs targets
De Grey’s geological reconnaissance in the southwestern Yandeearra area (the Western Pride area) identified a sequence of
bimodal volcanic rocks, prospective for VMS-style base metals mineralisation.
The alternating sequence of basalt, rhyolite and felsic volcaniclastic units occurs in sub-crop over a width of up to 950m, with
a potential strike length of 7km and is covered to the north and south by younger Fortescue Group basalt and sediments Soil
sampling for base metals in the 1970’s of part of this extent located a copper-in-soil anomaly of up to 825ppm over a 700m
strike length of altered felsic volcaniclastic rocks. The soil anomalism remains open to the west and north under transported
cover.
In the central project area, an orientation sampling traverse was sited over an area of known elevated lead-in-soil values (up
to 346 ppm) located by previous explorers. The traverse confirmed the lead-in-soils anomaly and also returned significantly
elevated values of barium, silver, mercury and antimony, metals commonly associated with volcanogenic massive sulphide (VMS)
style mineralisation.
Follow-up field investigation by De Grey identified a limited area of sub-cropping felsic volcanic rock at the peak of the soil
anomaly, further supporting the possibility of a VMS geological environment. The interpreted strike extensions of the anomalous
area are covered by a veneer of transported overburden and the area has never been tested by drilling.
Figure 3: Rock sampling results and VMS prospective bimodal volcanic sequence in the Western Pride area, Yandeearra Project
8
C H A L I C E G O L D M I N E S L T D A N N U A L R E P O R T 2 0 0 8
Yandeearra Gold targets
Samples collected in the Western Pride area from sulphide rich quartz-carbonate veins exposed in shallow prospecting pits over
an 80m strike length returned assays up to 108g/t gold, 1.26% copper and 9g/t silver. The area is surrounded by alluvial gravel
cover. A single sample of a previously unrecorded gossanous quartz-carbonate vein sub-cropping through the transported cover
100m to the north of the pits assayed 15.0g/t gold with anomalous copper and silver.
High grade rock samples up to 71.4g/t and 33.2g/t gold were returned from sampling at the Princess May and John Bull historic
workings (Figure 4). No drilling has been undertaken at any of these workings.
A 530m portion of the John Bull Shear Zone along strike from the historical workings was drill tested in 2003 and yielded gold
intercepts:
• BYRC013:
9m at 1.99g/t gold from 42m;
• BYRC014:
4m at 2.67g/t gold from 75m; and
• BYRC015:
7m at 1.84g/t gold from 35m.
Figure 4: Location of VMS and gold targets identified by De Grey Mining at the Yandeearra Project
9
reView and res uL ts of o per atio ns
Continued
Coherent and high tenor gold-in-soil anomalies yielding up to 920ppb gold, located directly over the John Bull Shear and its
second order splays remain untested, as do the northern and southern strike extensions of these anomalies beneath shallow
gravel cover.
In the Pilbara Well Shear Zone, lying to the south of the John Bull Shear Zone, samples of quartz vein collected from old
workings on the south side of Sandy Creek returned assays up to 14.4g/t gold and 2.67% copper. The workings have not been
drill tested. At Pilbara Well East, sampling of a copper occurrence returned 6.73% copper, 50.2g/t silver and 1.01g/t gold within
quartz veined chlorite schist.
In June 2008, De Grey reported that new gold and base metals targets had been generated at Yandeearra from geological
reconnaissance programs, including rock chip and soil sampling surveys and an initial multi-element soil sampling program (see
Tables 2 and 3).
Anomaly
Anomalous Metal Highest Value Background Value
Comments
Pilbara Well
Gold
200ppb gold
40ppb gold
Western Pride
Gold
269ppb gold
40ppb gold
Hardey
Gold
859ppb gold
40ppb gold
Central
Gold
416ppb gold
40ppb gold
Pilbara Well
Lead, zinc, copper,
silver
180ppm Pb,
206ppm Zn,
253ppm Cu,
0.5g/t Ag
Lead Anomaly 1*
Lead, silver,
antimony, barium
& mercury
375ppm Pb,
37ppm Sb,
1,260ppm Ba
25ppm Pb,
90ppm Zn,
90ppm Cu,
0.1g/t Ag
25ppm Pb,
2ppm Sb,
300ppm Ba
Gold anomalism on outcropping leached
saprolite coincident with base metal
anomalism
Previously reported rock sampling returned up
to 108g/t gold. Additional quartz-sulphide vein
located this quarter – new rock sample result
of 11.6g/t gold.
Anomaly covers an 800m x 200m area at
>100ppb gold. 43 new rock samples returned
up to 0.41g/t gold.
Single line gold anomaly of 3 samples >120ppb
gold. Rock samples of pyritic vein quartz in
ultramafic collected, results awaited.
Multi-element anomalism on 3 consecutive
400m spaced sample traverses. Siliceous
gossan returned 1.48g/t silver and 26g/t silver.
‘VMS’ geochemical signature in an area of felsic
volcanics and ultramafic rocks.
Lead Anomaly 2
Lead, zinc, copper
595ppm Pb,
368ppm Zn,
124ppm Cu
25ppm Pb,
90ppm Zn,
90ppm Cu
Sample of pyritic felsic volcanic returned
835ppm lead and 794ppm zinc. Soil anomalism
open along strike to east.
* Reported previously by De Grey
Table 2: Gold and base metals targets defined by soil geochemistry, Yandeearra Project, June 2008
10
C H A L I C E G O L D M I N E S L T D A N N U A L R E P O R T 2 0 0 8
Project
sample ID
east
north
Gold g/t Copper % silver g/t
Prospect
Yandeearra
550301
624,528
7,648,575
550094
637,604
7,657,544
550406
636,891
7,656,453
550359
635,612
7,653,662
11.6
1.24
1.21
4.20
0.04
0
0
0.01
3
0
0
1
Pride NNE Extended
Arizona
John Bull South
Note: Samples are surface in situ rocks. Coordinates are MGA zone 50. Analyses are by Ultra Trace Laboratories Perth using an
Aqua Regia digest and Inductively Coupled Plasma (ICP) Mass or Optical Emission Spectrometry finish.
Table 3: Reconnaissance Rock Sampling Results –Yandeearra Gold Project >1.00g/t gold or 1% copper
Follow-up field inspection and future drilling programs will be designed to test high priority targets.
option aGreeMent with atLas iron LiMited
In November 2007, Chalice entered into an option agreement with Atlas whereby Atlas may acquire the iron ore rights over
the Yandeearra Project.
The key terms of the option require Atlas to make an initial payment of $250,000 in cash or Atlas shares to Chalice (value
based on the Volume Weighted Average Price (VWAP) for the 5 days prior to the agreement), within 60 days of signing the
formal agreement between the parties.
Atlas may then elect to make a further payment of $1,000,000 in cash or Atlas shares (valued at a 5 day WVAP) to exercise its
option to purchase the iron ore rights, which will occur no later than 12 months after the date of the formal agreement.
Atlas agreed to spend $200,000 on exploration for iron ore at the Yandeearra Project during the option period.
Further terms of the agreement are that on definition of an iron ore resource exceeding 5 million tonnes, at the Yandeearra
Project, Chalice will have a one-off right to “claw-back” a 30% interest in this resource at a cost of four times total exploration
expenditure across the subject tenements. In the absence of a claw-back, Chalice retains a 2% Gross Sales Royalty and Atlas
retains a first right of refusal to acquire the royalty.
The option is subject to terms and conditions typical of such agreements including that the subject tenements remain in good
standing during and at the end of the option period.
Atlas commenced work under the option agreement during the year.
11
reView and res uL ts of o per atio ns
Continued
2 Gnaweeda Gold project (teck Cominco earning 70%)
Chalice’s joint venture partner, Teck Cominco, completed six RC holes for 1,546 metres of drilling at the Turnberry and St Anne’s
prospects at the Gnaweeda Gold Project during the year (see Figure 5).
The holes were designed to follow up results from Teck Cominco’s previous four RC holes (GNRC001 to GNRC004) and to
test open zones in the north of the prospect. Three of these holes returned narrow high grade gold intercepts, including the
best result of 1m @ 37.60g/t gold from 50m in GNRC003.
Gold results from the five new holes are summarised in Table 4.
The holes encountered a mixed package of foliated mafic volcanics, dolerite, shale, ultramafic schist and minor feldspar porphyry
(GNRC005). Nearly all holes encountered zones of strong carbonate, quartz, pyrite veining and wallrock alteration
The strongest gold mineralisation was encountered in foliated fine-grained mafic volcanics that have been strongly carbonated
and contain disseminated pyrite and quartz veining (GNRC005), and a shale/fine mafic volcanic unit with abundant quartz
veining, chlorite and sericite alteration, and minor pyrite (GNRC009).
Shallow 5m composite samples returned 11.64g/t gold from 15 to 20m in GNRC007 from lateritised clays directly beneath the
transported cover and 13.49g/t gold from 80 to 85m in GNRC008 from red-brown weathered saprolite.
A single RC hole, GNRC010, was drilled at St Anne’s Prospect to test for down-dip extensions of shallower gold anomalism in
AC/RAB drilling but it had to be terminated early at 174m due to excessive ground water. The hole encountered mostly massive
dolerite with minor quartz veining. No significant gold results were returned from this hole, however, potential still exists for
deeper mineralisation at St Anne’s as the hole did not reach the target zone.
Hole no.
easting
(MGA 94)
northing
(MGA 94)
Azimuth
(Mag)
GNRC005
678070
7087735
085
Inclin.
-57.5o
GNRC007
678200
7087135
GNRC008
677970
7086750
087
090
-60o
-60o
GNRC009
677965
7086640
090
-60o
From
(m)
91
277
278
279
15
55
80
70
151
152
168
169
170
171
223
231
to
(m)
92
278
279
280
20
60
85
75
152
153
169
170
171
172
224
232
Interval (m)
1
1
1
1
5
5
5
5
1
1
1
1
1
1
1
1
Au
(g/t)
1.02
23.02
8.07
4.54
11.64
2.35
13.49
0.91
1.93
2.34
59.27
8.60
1.88
1.34
2.63
3.17
Analysis of composite (5m) and Individual (1m) samples by 50g fire assay.
Table 4: Turnberry Prospect gold assay results
12
C H A L I C E G O L D M I N E S L T D A N N U A L R E P O R T 2 0 0 8
Figure 5: Gnaweeda project RC drillhole locations
13
reView and res uL ts of o per atio ns
Continued
In July 2008 Teck confirmed it had spent approximately $1M since the inception of the joint venture in January 2006 and that
it intends to continue exploration at the Gnaweeda Gold Project. Under the first stage requirement Teck has earned a 51%
interest by expending a minimum of $750,000.
Teck has the right under the second stage to earn a further 19% interest in the project, to an overall 70% interest, by increasing
its total project spend to $1.5 million.
Teck has advised that it will undertake further RC and diamond drilling at the Turnberry and St Anne’s Prospects in the second
half of 2008 to:
•
•
test the extent of known mineralisation following high-grade results achieved in the previous RC drilling program; and
provide important structural information about the system to aid understanding of controls on mineralisation for future
targeting of thicker high-grade zones.
The proposed program will include:
•
•
5 holes comprising RC pre-collars with diamond tails at Turnberry, for an estimated total of 1,500 metres; and
1 diamond tail on a pre-existing RC hole (GNRC010) at St Anne’s to properly test the target zone (below 150 metres).
RC Drilling at the Turnberry Prospect
Competent persons statement
The information in this report that relates to Exploration Results is based on information compiled by Mr Roger Thompson, a
full-time employee of Chalice Gold Mines Limited, who is a Member of the Australian Institute of Geoscientists. Mr Thompson
has sufficient experience in the field of activity being reported to qualify as a Competent Person as defined in the 2004 edition
of the Australasian Code for Reporting of Exploration Results, Minerals Resources and Ore Reserves, and consents to the
release of information in the form and context in which it appears here.
14
C H A L I C E G O L D M I N E S L T D A N N U A L R E P O R T 2 0 0 8
sC hed uLe of teneMents
as at 30 June 2008
Yandeearra
tenement #
nature of Interest
Current equity
E47/590
E47/591
E47/755
E47/1041
E47/1161
E47/1162
E47/1163
E47/1164
E47/1165
E47/1166
M47/561
P47/1298
P47/1299
P47/1223
P47/1224
P47/1225
P47/1226
P47/1227
P47/1245
P47/1246
E47/1207
E47/1318
E47/1459
M47/560
M47/783
M47/784
M47/785
M47/994
M47/995
M47/996
M47/997
M47/998
M47/999
M47/1000
M47/1001
M47/1002
M47/1003
M47/1004
M47/1005
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Application
Application
Application
Application
Application
Application
Application
Application
Application
Application
Application
Application
Application
Application
Application
Application
Application
Application
Application
Application
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
15
sC hed uLe of teneMents
Continued
tenement #
nature of Interest
Current equity
M47/1114
M47/1115
M47/1116
M47/1117
M47/1118
M47/1119
M47/1120
M47/1121
M47/1122
M47/1123
M47/1124
M47/1125
E47/1748
E47/1749
Gnaweeda
tenement #
E51/926
E51/927
P51/2514
P51/2515
E51/1027
wilga
tenement #
E39/1003
P39/4890
Meekatharra
tenement #
E51/1250
Chalice
tenement #
P15/4608
P15/4610
P15/4611
P63/1248
P63/1249
P63/1250
Application
Application
Application
Application
Application
Application
Application
Application
Application
Application
Application
Application
Application
Application
nature of Interest
Right to earn 100% subject to royalty
Right to earn 100% subject to royalty
Owned
Owned
Owned
nature of Interest
Owned
Application
nature of Interest
Application
nature of Interest
Sold to Avoca Resources – Tranche 2
Sold to Avoca Resources – Tranche 2
Sold to Avoca Resources – Tranche 2
Sold to Avoca Resources – Tranche 2
Sold to Avoca Resources – Tranche 2
Sold to Avoca Resources – Tranche 2
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
Current equity
0%
0%
49%
49%
49%
Current equity
100%
0%
Current equity
0%
Current equity
100%
100%
100%
100%
100%
100%
Note: All Chalice tenements have been sold to Avoca Resources Limited under a sale agreement. Tranche 2 tenements above,
which comprises a package of tenements south of the Chalice Gold Mine, will complete upon grant of an Exploration Licence
(EL) and then amalgamation of the same with certain Prospecting Licences (PL) already held by Chalice Gold Mines, as well
as the achievement of other conditions precedent typical of such sale agreements (such as receipt of relevant Department of
Industry and Resources approvals).
16
C H A L I C E G O L D M I N E S L T D A N N U A L R E P O R T 2 0 0 8
ChaLiCe GoLd Mines LiMited
finanCiaL report
for the Year ended 30 Jun e 2008
17
direCto rs’ rep ort
The Directors present their report together with the financial report of Chalice Gold Mines Limited (‘Chalice Gold Mines’ or
‘the Company’) for the financial year ended 30 June 2008 and the independent auditor’s report thereon. In order to comply
with the provisions of the Corporations Act, the Directors report as follows:
1. directors
The Directors of the Company at any time during or since the end of the financial year are:
A R Bantock
B.Com, ACA
Non-executive Chairman
Andrew has extensive professional, corporate and commercial experience in the resources, resource contracting and
infrastructure sectors. He is currently a Director and chairs the Audit Committee of Water Corporation, Western Australia’s
water utility.
t R B Goyder
Executive Director
Tim has over thirty years experience in the resource industry. Tim has been involved in the formation and management of a
number of publicly-listed companies and is currently a Director of Uranium Equities Limited and Liontown Resources Limited.
A W Kiernan
LLB
Non-executive Director
(Independent Director)
Tony is a Solicitor with considerable experience in the administration and operation of listed public companies. He practises
extensively in the areas of media, resources and information technology law. In addition to his legal practice Tony provides
commercial and corporate advice to various entities. Tony is Chairman of Anglicare (WA) and BC Iron Limited. He is also a
Director of Uranium Equities Limited and Liontown Resources Limited.
B A Alexander
BSc, MAusIMM
Non-executive Director
(resigned 30 November 2007)
Bryan is a qualified geologist with over 16 years experience in the exploration and mining industry. Bryan is the principal of
a geological contracting and consulting services practice, Archaean Exploration Services Pty Ltd (‘Archaean’). Most recently
Archaean has been responsible for directing the exploration, underground mine geology and acquisition activities for a private
exploration and mining syndicate.
2. Company secretary
R K Hacker
B.Com, ACA, ACIS
(resigned 7 April 2008, re-appointed 1 August 2008)
Richard has 15 years professional and corporate experience in the energy and resources sector in Australia and the United
Kingdom. Richard has previously worked in senior finance roles with global energy companies including Woodside Petroleum
Limited and Centrica Plc. Prior to this, Richard worked with leading accounting practices. Richard is both a Chartered
Accountant and Chartered Secretary and is also Company Secretary of Liontown Resources Limited and Uranium Equities
Limited.
A M Reynolds
BCom, CFTP, SAFin
(appointed 7 April 2008, resigned 1 August 2008)
18
C H A L I C E G O L D M I N E S L T D
A N N U A L R E P O R T 2 0 0 8
3. directors’ meetings
During the year, nine Directors’ meetings were held. The number of meetings attended by each of the Directors of the
Company during the year are:
Director
A R Bantock
T R B Goyder
A W Kiernan
B W Alexander
number of board
meetings attended
number of meetings held
during the time the director
held office during the year
9
9
8
4
9
9
9
4
4. principal activities
The principal activities of the Company during the course of the period were mineral exploration and evaluation.
5. review of operations
During and since the end of the financial year, Chalice Gold Mines continued exploration for gold and other minerals at its
Yandeearra, Gnaweeda and Wilga gold projects.
Highlights included:
•
through the Company’s joint venture with De Grey Mining, highlighting at least two areas with potential VMS-style base
metals mineralisation and three project-scale structures prospective for gold at its Yandeearra Gold Project; and
•
receiving encouraging results from drilling at the Gnaweeda Gold Project (Teck Cominco earning 70% interest). Teck
Cominco intends to proceed to advance exploration under the second stage earn-in provisions of the joint venture
agreement by spending a total of $1.5 million.
The Company entered into arrangements to fund these exploration activities by:
•
reaching an agreement with De Grey Mining Limited to enter into a joint venture to explore for gold and base metals at
the Yandeearra Gold project in the West Pilbara. De Grey may spend $1.67 million over three years to earn 80% of all
minerals other than iron ore and uranium; and
•
entering into an option agreement with Atlas Iron Limited whereby Atlas Iron may acquire the iron ore rights over the
Yandeearra Gold project for a total of $1.25 million.
The Company realised a profit of approximately $2.5 million from the sale and exercise of the Avoca Resources Limited shares
and options received as proceeds from the sale of the Company’s Chalice and Higginsville Project. At 30 June the Company had
cash at bank of $10.0 million.
The Company continues to actively assess new exploration and development asset opportunities.
6. significant changes in the state of affairs
Other than referred to in section 5, there are no significant changes in the state of affairs of the Company.
19
direCto rs’ rep ort
Continued
7. remuneration report - audited
This report outlines remuneration arrangements in place for Directors and executives of Chalice Gold Mines.
7.1 prinCipLes of CoMpensation
The broad remuneration policy of the Company is to ensure that remuneration levels for executive Directors, secretaries and
other key management personnel are set at competitive levels to attract and retain appropriately qualified and experienced
personnel. This is particularly important in view of the strong demand for experienced technical and financial personnel
currently being experienced in the Australian and international resources industry, driven by increased world demand for
commodities, and the significant impact that each individual can make within a small executive team for an exploration and
development company such as at Chalice Gold Mines. In short, the labour market is tight and key people make a difference to
exploration and growth outcomes.
Remuneration offered by Chalice Gold Mines is therefore geared to attracting talented employees through a combination of
fixed remuneration and long term incentives, calibrated and individually tailored to be competitive in the external market to
offer incentive to join and remain with the Company.
Fixed compensation
Fixed remuneration consists of base remuneration (which is calculated on a total cost basis and includes any FBT charges related
to employee benefits, including motor vehicles), as well as employer contributions to superannuation funds.
Remuneration levels are reviewed annually through a process that considers the person’s responsibilities, expertise, duties and
personal performance.
Long-term incentives
Options may be issued under the Employee Share Option Plan to Directors, employees and consultants of the Company and
must be exercised within 3 months of termination. The ability to exercise the options is usually based on the option holder
remaining with the Company for at least one year. Other than the vesting period, there is no performance hurdle required to
be achieved by the Company to enable the options to be exercised.
The Company believes that the issue of share options in the Company aligns the interests of Directors, employees and
shareholders alike.
Performance related compensation
The Company currently has no formal performance related remuneration policy which governs the payment of annual
cash bonuses upon meeting pre-determined performance targets. However, the Board may consider performance related
remuneration in the form of cash or share options when they consider these to be warranted.
non-executive directors
The Board recognises the importance of attracting and retaining talented non-executive Directors and aims to remunerate
these Directors in line with fees paid to Directors of companies in the mining and exploration industry of a similar size and
complexity.
Total compensation for all non-executive Directors is not to exceed $150,000 per annum.
20
C H A L I C E G O L D M I N E S L T D
A N N U A L R E P O R T 2 0 0 8
7.2 direCtors’ and exeCutiVe offiCers’ reMuneration (audited)
short-term payments
salary &
fees
$
non-
monetary
benefits
$
total
$
Post-
employ-
ment
payments
super-
annuation
benefits
$
share-based
payments
options (A)
$
total
$
Value of
options as
proportion
of remun-
eration
(%)
Key Management
Personnel
Directors
A R Bantock
2008
114,679
3,364
3,540
3,364
3,540
3,364
1,319
118,043
10,321
-
128,364
118,219
10,321
114,388
242,928
49,236
49,412
30,887
11,558
4,128
4,128
2,477
922
-
53,364
114,388
167,928
54,929
-
88,293
12,480
42,908
1,115
44,023
3,862
1,284
49,169
-
-
-
-
2008
2007
2008
11,468
27,523
-
1,401
3,540
-
12,869
31,063
-
1,032
2,477
-
2007
85,265
12,614
97,879
8,574
57,194
163,647
-
-
28,597
-
13,901
62,137
-
-
2007
114,679
2008
2007
2008
45,872
45,872
27,523
2007
10,239
2008
2007
T R B Goyder
A W Kiernan
executive
A M Reynolds
(Commenced
employment 17
March 2008)
Former Director
B W Alexander
(Resigned 30
November 2007)
J R McIntyre
(Resigned 15
February 2007)
Former executive
-%
47%
-%
68%
62%
-
3%
-
-%
46%
-
35%
R K Hacker
(Resigned 11 April
2008)
2008
131,679
2007
146,789
2,369
3,540
134,048
150,329
11,337
13,211
-
145,385
-%
14,299
177,839
8%
total
Compensation
2008
374,129
14,977
389,106
33,157
56,213
478,476
2007
430,367
28,093
458,460
39,633
328,866
826,959
notes in relation to the table of directors’ and executive officers’ remuneration
A. The fair value of the options are calculated at the date of grant using a binomial option-pricing model and allocated to each
reporting period evenly over the period from grant date to vesting date. The value disclosed is the portion of the fair value
of the options allocated to this reporting period. In valuing the options, market conditions have been taken into account.
The following factors and assumptions were used in determining the fair value of options on grant date:
21
direCto rs’ rep ort
Continued
Grant
Date
expiry
Date
Fair value per
option
exercise
price
01.12 07
01.12.12
23.04.08
23.04.11
$0.11
$0.06
$0.25
$0.20
Details of performance related remuneration
Price of
ordinary
shares on
grant date
$0.17
$0.14
expected
volatility
Risk free
interest rate
Dividend
yield
85%
85%
6.3%
6.3%
Nil
Nil
Details of the Company’s policy in relation to the proportion of remuneration that is performance related are discussed at 7.1
above.
7.3 equitY instruMents
7.3.1 options and rights over ordinary shares granted as compensation
Details of options over ordinary shares in the Company that were granted as compensation to key management personnel
during the reporting period and details of options that vested during the reporting period are as follows:
number of
options granted
during 2008
Grant date
number of
options vested
during 2008
Fair value per
option at grant
date
$
exercise price
$
expiry date
Directors
A W Kiernan
500,000
01.12.07
500,000
0.11
0.25
01.12.12
Former executive
A M Reynolds
150,000
23.04.08
-
0.06
0.20
23.04.11
The options were provided at no cost to the recipients. Andrew Reynolds options were forfeited on termination of his
employment contract on 1 August 2008.
7.3.2
exercise of options granted as compensation
During the reporting year and the prior year, no shares were issued on the exercise of options previously granted as
compensation.
Analysis of options and rights over ordinary shares granted as compensation
Details of the vesting profile of the options granted as remuneration to each Director of the Company and each of the named
Company executives are outlined below.
number granted
Date granted
% vested in year
Forfeited in year
Period in which
grant vests
Directors
A W Kiernan
executive
A M Reynolds
500,000
01.12.07
100%
75,000
75,000
23.04.08
23.04.08
-
-
-
-
-
2008
2009
2010
Andrew Reynolds options were forfeited on termination of his employment contract on 1 August 2008.
22
C H A L I C E G O L D M I N E S L T D
A N N U A L R E P O R T 2 0 0 8
The movement during the reporting period, by value, of options over ordinary shares in the Company held by each Company
Director and each of the named Company executives is detailed below.
Value of options
Granted in year
$ (A)
exercised in year
$ (B)
Forfeited in year
$ (C)
total option value in
year
$
Directors
A W Kiernan
executive
A M Reynolds
54,928
8,813
–
–
–
–
54,928
8,813
(A) The value of options granted in the year is the fair value of the options calculated at grant date using a binomial
option-pricing model. The total value of the options granted is included in the table above. This amount is allocated to
remuneration over the vesting period.
(B) The value of options exercised during the year is calculated as the market price of shares of the Company on ASx as at
close of trading on the date the options were exercised after deducting the price paid to exercise the option.
(C) The value of options that lapsed during the year represents the benefit foregone and is calculated at the date the option
lapsed using a binomial option-pricing model with no adjustments for whether the performance criteria have or have not
been achieved.
8. dividends
No dividends were declared or paid during the period and the Directors recommend that no dividend be paid.
9. Likely developments
The Company will continue activities in the exploration and evaluation of minerals tenements with the objective of developing a
significant minerals business.
10. subsequent events
There were no significant events occurring after balance sheet date.
11. directors’ interests
The interest of each Director in the shares, rights or options over such instruments issued by the Company and other related
bodies corporate, as notified by the Directors to the ASx in accordance with S205G(1) of the Corporations Act 2001, at the
date of this report is as follows:
A R Bantock
T R B Goyder
A W Kiernan
ordinary shares
options over ordinary shares
2,431,772
15,056,458
270,074
2,000,000
2,000,000
500,000
23
direCto rs’ rep ort
Continued
12. share options
options granted to directors and officers of the company
During or since the end of the financial year, the Company granted options for no consideration over unissued ordinary shares
in the Company to the following directors and officers of the Company as part of their remuneration.
Directors
A W Kiernan
executives
R K Hacker
A M Reynolds
number of options granted
500,000
500,000
150,000
Andrew Reynolds options were forfeited on termination of his employment contract on 1 August 2008.
Unissued shares under options
At the date of this report 7,075,000 unissued ordinary shares of the Company are under option on the following terms and
conditions:
expiry date
exercise price
number of shares
21.03.11
01.12.12
11.12.12
31.07.13
$0.25
$0.25
$0.20
$0.20
5,825,000
500,000
250,000
500,000
These options do not entitle the holder to participate in any share issue of the Company or any other body corporate.
shares issued on exercise of options
During or since the end of the period, the Company has not issued any ordinary shares as a result of the exercise of options.
13. indemnification and insurance of directors and officers
The Company has agreed to indemnify all the Directors and officers who have held office of the Company during the year,
against all liabilities to another person (other than the Company or a related body corporate) that may arise from their position
as Directors and officers of the Company, except where the liability arises out of conduct involving a lack of good faith. The
agreement stipulates that the Company will meet the full amount of any such liabilities, including costs and expenses.
During the year the Company paid insurance premiums of $14,977 in respect of Directors and officers indemnity insurance
contracts, for current and former Directors and officers. The insurance premiums relate to:
•
costs and expenses incurred by the relevant officers in defending proceedings, whether civil or criminal and whatever their
outcome; and
•
other liabilities that may arise from their position, with the exception of conduct involving a wilful breach of duty or
improper use of information or position to gain a personal advantage.
The amount of insurance paid is included in Directors and executives remuneration on page 21.
24
C H A L I C E G O L D M I N E S L T D
A N N U A L R E P O R T 2 0 0 8
14. non-audit services
During the year HLB Mann Judd, the Company’s auditors, performed no other services in addition to their statutory duties.
15. auditor’s independence declaration
The auditor’s independence declaration is set out on page 26 and forms part of the Directors’ report for the year ended 30
June 2008.
This report is made in accordance with a resolution of the Directors:
timothy R B Goyder
executive Director
Dated at Perth this 5th day September 2008
25
auditor’s independenCe deCLa rat io n
As lead auditor for the audit of the financial report of Chalice Gold Mines Limited for the year ended 30 June 2008, I declare
that to the best of my knowledge and belief, there have been no contraventions of:
a)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
b) any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Chalice Gold Mines Limited.
L Di Giallonardo
Partner, HLB Mann Judd
Perth, Western Australia
5 September 2008
26
C H A L I C E G O L D M I N E S L T D
A N N U A L R E P O R T 2 0 0 8
inCoMe stateMent
for the Year ended 30 Jun e 2008
note
2008
$
2007
$
Net gain/ (loss) on sale of exploration and evaluation assets
Net gain on sale of securities
Changes in fair value of available-for-sale investments
Other income
total income
Impairment losses on exploration and evaluation expenditure
Exploration costs not capitalised
Corporate administrative expenses
Finance costs
Profit/ (loss) before tax
Income tax expense/benefit
Profit/ (loss) for the period
Basic earnings/ (loss) per share attributable to ordinary equity
holders
Diluted earnings/ (loss) per share attributable to ordinary equity
holders
3
4
5
6
9
10
11
11
(1,681)
1,581,271
556,852
1,996,631
-
-
748,586
452,305
3,300,388
2,033,576
(1,355,640)
(1,556,950)
(41,783)
(68,211)
(1,168,055)
(1,593,107)
(64)
(2,784)
734,846
(1,187,476)
-
-
734,846
(1,187,476)
0.01
0.01
(0.02)
(0.02)
The income statement is to be read in conjunction with the notes to the financial statements set out on pages 31 to 53.
27
B aLanCe sheet
as at 30 June 2008
Current assets
Cash and cash equivalents
Trade and other receivables
Financial assets
Assets held for sale
total current assets
non-current assets
Financial assets
Exploration and evaluation assets
Property, plant and equipment
total non-current assets
total assets
Current liabilities
Trade and other payables
Employee benefits
total current liabilities
non-current liabilities
Other
total non-current liabilities
total liabilities
net assets
equity
Issued capital
Accumulated losses
Reserves
total equity
note
12
13
14
15
14
16
17
18
19
20
21
21
21
2008
$
9,972,766
84,085
-
164,064
2007
$
2,323,949
5,919,204
20,701
153,189
10,220,915
8,417,043
74,698
2,033,937
207,781
70,193
3,134,600
208,491
2,316,416
3,413,284
12,537,331
11,830,327
60,782
19,565
80,347
51,976
51,976
152,179
22,688
174,867
54,326
54,326
132,323
229,193
12,405,008
11,601,134
13,974,454
(2,140,356)
570,910
13,974,454
(2,875,202)
501,882
12,405,008
11,601,134
The balance sheet is to be read in conjunction with the notes to the financial statements set out on pages 31 to 53.
28
C H A L I C E G O L D M I N E S L T D
A N N U A L R E P O R T 2 0 0 8
stat eMent o f C hanGes in eq ui tY
as at 30 June 2008
note
share capital
$
Accumulated
losses
$
share based
payments reserve
$
Balance at 1 July 2007
13,974,454
(2,875,202)
Employee share options vested
Profit for the period
-
-
-
734,846
501,882
69,028
-
total equity
$
11,601,134
69,028
734,846
Balance at 30 June 2008
21
13,974,454
(2,140,356)
570,910
12,405,008
Balance at 31 July 2006
13,974,454
(1,687,726)
Employee share options vested
Loss for the period
-
-
share capital
$
Accumulated
losses
$
share based
payments reserve
$
133,153
368,729
-
total equity
$
12,419,881
368,729
(1,187,476)
-
(1,187,476)
Balance at 30 June 2007
21
13,974,454
(2,875,202)
501,882
11,601,134
The statement of changes in equity is to be read in conjunction with the notes to the financial statements set out on pages 31
to 53.
29
C as h fLow stateMent
for the Year ended 30 Jun e 2008
note
2008
$
2007
$
Cash flows from operating activities
Cash receipts from operations
Cash paid to suppliers and employees
Interest paid
Interest received
net cash from operating activities
24
Cash flows from investing activities
Payments for mining exploration and evaluation
Acquisition of property, plant and equipment
Proceeds from sale of investments
Amounts paid to exercise options
275,180
228,106
(1,060,139)
(1,046,185)
(64)
476,546
(308,477)
(360,083)
(87,809)
11,960,176
(3,580,000)
(2,315)
248,982
(571,412)
(2,408,849)
(102,737)
-
-
Proceeds from sale of property, plant and equipment
5,010
43,812
net cash from (used in) investing activities
7,937,294
(2,467,774)
Cash flows from financing activities
Lodgement of bank guarantee and security deposits
Repayment of borrowings
net cash from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at 30 June
12
20,000
-
20,000
7,648,817
2,323,949
9,972,766
(45,701)
(18,414)
(64,115)
(3,103,301)
5,427,250
2,323,949
The cash flow statement is to be read in conjunction with the notes to the financial statements set out on pages 31 to 53.
30
C H A L I C E G O L D M I N E S L T D
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note s to the finanCiaL stat eMent s
for the Year ended 30 Jun e 2008
1. significant accounting policies
Chalice Gold Mines is an ASX listed public company domiciled in Australia at Level 2, 1292 Hay Street, Perth, Western Australia.
The financial report of the Company is for the year ended 30 June 2008.
The financial report was authorised for issue by the Directors on the 5th day of September 2008.
(a) 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’).
(B) Basis of preparation
The financial report is a general-purpose financial report, which has been prepared in accordance with the requirements of
the Corporations Act 2001, Accounting Standards and Interpretations and complies with other requirements of the law. The
financial report has also been prepared on a historical cost basis, except for derivative financial instruments and available-for-sale
investments, which have been measured at fair value. The financial report is presented in Australian dollars.
In the year ended 30 June 2008, the Company has reviewed all of the new and revised Standards and Interpretations issued
by the AASB that are relevant to its operations and effective for annual reporting periods beginning on or after 1 July 2007. It
has been determined by the Company that there is no impact, material or otherwise, of the new and revised Standards and
Interpretations on its business and, therefore, no change is necessary to its accounting policies.
(C) siGnifiC ant aCCountinG JudGeMents, estiMates and assuMptions
The preparation of a financial report in conformity with Australian Accounting Standards requires management to make
judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities,
income and expenses. The estimates and associated assumptions are based on historical experience and various other factors
that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about
carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these
estimates. These accounting policies have been consistently applied by the Company.
The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of
certain assets and liabilities within the next annual reporting period are:
(i) Recoverability of exploration expenditure
The carrying amount of exploration and evaluation expenditure is dependent on the future successful outcome from
exploration activity or alternatively the sale of the respective areas of interest.
(ii) Share-based payment transactions
The Company measures the cost of equity-settled share-based payments at fair value at the grant date using a binomial
formula taking into account the terms and conditions upon which the instruments were granted.
(d) seGMent reportinG
A segment is a distinguishable component of the Company that is engaged either in providing products or services (business
segment), or in providing products or services within a particular economic environment (geographical segment), which is
subject to risks and rewards that are different from those of other segments.
31
note s to the finanCiaL stat eMent s
for the Year ended 30 Jun e 2008
(e) reVenue reCoGnition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue
can be reliably measured.
(i) sale of goods
Revenue is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer and the
costs incurred or to be incurred in respect of the transaction can be reliably measured. Risks and rewards of ownership
are considered passed to the buyer at the time of delivery of the goods to the buyer.
(ii) services rendered
Revenue from services rendered is recognised in the income statement in proportion to the stage of completion of the
transaction at t he balance sheet date. The stage of completion is assessed by reference to surveys of work performed. No
revenue is recognised if there are significant uncertainties regarding recovery of the consideration due, the costs incurred
or to be incurred cannot be measured reliably.
(iii) Interest received
Interest income is recognised in the income statement as it accrues, using the effective interest method. The interest
expense component of finance lease payments is recognised in the income statement using the effective interest method.
(f) expenses
(i) operating lease payments
Payments made under operating leases are recognised in the income statement on a straight-line basis over the term of the
lease. Lease incentives received are recognised in the income statement as an integral part of the total lease expense and
spread over the lease term.
(ii) Finance lease payments
Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The
finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on
the remaining balance of the liability.
(iii) Financing costs
Financing costs comprise interest payable on borrowings calculated using the effective interest method and interest
receivable on funds invested.
(G) depreCiation
Depreciation is charged to the income statement on a diminishing value basis over the estimated useful lives of each part of
an item of property, plant and equipment. Land is not depreciated. The estimated useful lives in the current and comparative
periods are as follows:
•
•
plant and equipment
7%-40%
fixtures and fittings
11%-22%
• motor vehicles
18.75%
The residual value, if not insignificant, is reassessed annually.
32
C H A L I C E G O L D M I N E S L T D
A N N U A L R E P O R T 2 0 0 8
(h) inCoMe tax
Income tax in the income statement comprises current and deferred tax. Income tax is recognised in the income statement
except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at
the balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount
of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and
liabilities, using tax rates enacted or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which
the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit
will be realised.
(i) Goods and serViCes tax
Revenue, expenses and assets are recognised net of the amount of goods and services tax (‘GST’), except where the amount of
GST incurred is not recoverable from the taxation authority. In these circumstances, the GST is recognised as part of the cost of
acquisition of the asset or as part of the expense.
Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to,
the Australian Taxation Office (‘ATO’) is included as a current asset or liability in the balance sheet.
Cash flows are included in the cash flow statement on a gross basis. The GST components of cash flows arising from investing
and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows.
(J)
iMpairMent
At each reporting date, the Company assesses whether there is any indication that an asset may be impaired. Where an
indicator of impairment exists, the Company makes a formal estimate of recoverable amount. Where the carrying amount of an
asset exceeds its recoverable amount the asset is considered impaired and is written down to its recoverable amount.
Recoverable amount is the greater of fair value less costs to sell and value in use. Value in use is the present value of the future
cash flows expected to be derived from the asset or cash generating unit. In estimating value in use, a pre-tax discount rate is
used which reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that
does not generate largely independent cashflows, the recoverable amount is determined for the cash generating unit to which
the asset belongs.
Impairment losses are recognised in the income statement unless the asset has previously been revalued, in which case the
impairment loss is recognised as a reversal to the extent of that previous revaluation with any excess recognised through the
income statement. Receivables with a short duration are not discounted.
(k) Cash and C ash equiVaLents
Cash and cash equivalents comprise cash balances and call deposits with an original maturity of six months or less. Bank
overdrafts that are repayable on demand and form an integral part of the Company’s cash management are included as a
component of cash and cash equivalents for the purpose of the cash flow statement.
(L) trade and other reCeiV aBLes
Trade and other receivables are stated at cost less impairment losses (see accounting policy (j)).
33
note s to the finanCiaL stat eMent s
for the Year ended 30 Jun e 2008
(M) non-Current assets heLd for saLe and disContinued operations
Immediately before classification as held for sale, the measurement of the assets (and all assets and liabilities in a disposal group)
is brought up to date in accordance with applicable AIFRS. Then, on initial classification as held for sale, non-current assets and
disposal groups are recognised at the lower of carrying amount and fair value less costs to sell.
Impairment losses on initial classification as held for sale are included in profit or loss, even when there is a revaluation. The same
applies to gains and losses on subsequent re-measurement.
A discontinued operation is a component of the Company’s business that represents a separate major line of business or
geographical area of operations or is a subsidiary acquired exclusively with a view to resale.
(n) pLant and equipMent
Plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. Such cost includes
the cost of replacing parts that are eligible for capitalisation when the cost of replacing the parts is incurred.
The assets’ residual values, useful lives and amortisation methods are reviewed, and adjusted if appropriate, at each financial year
end.
An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are
expected from its use or disposal.
Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the
carrying amount of the asset) is included in profit or loss in the year the asset is derecognised.
(o) finanCiaL assets
Financial assets in the scope of AASB 139 Financial Instruments: Recognition and Measurement are classified as either financial
assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, or available-for-sale investments, as
appropriate. When financial assets are recognised initially, they are measured at fair value, plus, in the case of investments not at
fair value, through profit or loss, directly attributable transactions costs. The Company determines the classification of its financial
assets after initial recognition and, when allowed and appropriate, re-evaluates this designation at each financial year end.
(i) Financial assets at fair value through profit or loss
Financial assets classified as held for trading are included in the category ‘financial assets at fair value through profit or loss’.
Financial assets are classified as held for trading if they are acquired for the purpose of selling in the near term. Derivatives
are also classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on
investments held for trading are recognised in profit or loss.
(ii) Held-to-maturity investments
If the Company has the positive intent and ability to hold debt securities to maturity, then they are classified as held-
to-maturity. Held-to-maturity investments are measured at amortised cost using the effective interest method, less any
impairment losses.
(iii) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market. Such assets are carried at amortised cost using the effective interest method. Gains and losses are recognised
in profit or loss when the loans and receivables are derecognised or impaired, as well as through the amortisation process.
34
C H A L I C E G O L D M I N E S L T D
A N N U A L R E P O R T 2 0 0 8
(iv) Available-for-sale investments
Available-for-sale investments are those non-derivative financial assets that are designated as available-for-sale or are not
classified as any of the three preceding categories. After initial recognition available-for sale investments are measured at
fair value with gains or losses being recognised as a separate component of equity until the investment is derecognised or
until the investment is determined to be impaired, at which time the cumulative gain or loss previously reported in equity is
recognised in profit or loss.
The fair value of investments that are actively traded in organised financial markets is determined by reference to quoted
market bid prices at the close of business on the balance sheet date. For investments with no active market, fair value is
determined using valuation techniques. Such techniques include using recent arm’s length market transactions; reference
to the current market value of another instrument that is substantially the same; discounted cash flow analysis and option-
pricing models.
(p) expLoration, eV aLuation, deVeLopMent and teneMent a Cquisition Costs
Exploration, evaluation, development and tenement acquisition costs in relation to separate areas of interest for which rights of
tenure are current, are capitalised in the period in which they are incurred and are carried at cost less accumulated impairment
losses. The cost of acquisition of an area of interest and exploration expenditure relating to that area of interest is carried
forward as an asset in the balance sheet so long as the following conditions are satisfied:
1)
the rights to tenure of the area of interest are current; and
2) at least one of the following conditions is also met:
(i)
the exploration and evaluation expenditures are expected to be recouped through successful development and
exploitation of the area of interest, or alternatively, by its sale; or
(ii) exploration and evaluation activities in the area of interest have not at the reporting date reached a stage which
permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and
significant operations in, or in relation to, the area of interest are continuing.
Exploration and evaluation expenditure is assessed for impairment when facts and circumstances suggest that their carrying
amount exceeds their recoverable amount and where this is the case an impairment loss is recognised. Should a project or
an area of interest be abandoned, the expenditure will be written off in the period in which the decision is made. Where
a decision is made to proceed with development, accumulated expenditure will be amortised over the life of the reserves
associated with the area of interest once mining operations have commenced.
(q) trade and other paYaBLes
Trade and other payables are stated at cost.
(r) interest-BearinG Loans and BorrowinGs
All loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable
transaction costs.
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective
interest method.
Gains and losses are recognised in profit and loss when the liabilities are derecognised.
35
note s to the finanCiaL stat eMent s
for the Year ended 30 Jun e 2008
(i) Leases
Finance leases, which transfer substantially all the risks and benefits incidental to ownership of the leased item, are
capitalised at the inception of the lease at the fair value of the leased property or, if lower, at the present value of minimum
lease payments.
(s) eMpLo Yee Benefits
(i) superannuation
Obligations for contributions to defined contribution pension plans are recognised as an expense in the income statement
as incurred.
(ii) share-based payment transactions
The Company provides benefits to employees (including Directors) in the form of share-based payment transactions,
whereby employees render services in exchange for shares or rights over shares (‘equity-settled transactions’).
The Company currently provides benefits under an Employee Share Option Plan.
The cost of these equity-settled transactions with employees and Directors is measured by reference to the fair value at
the date at which they are granted.
In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to
the price of the shares of the Company (‘market conditions’). The cost of equity-settled transactions is recognised, together
with a corresponding increase in equity, over the period in which the performance conditions are fulfilled, ending on the
date on which the 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, will ultimately vest. This opinion is formed based on the
best available information at balance date. No adjustment is made for the likelihood of market performance conditions
being met as the effect of these conditions is included in the determination of fair value at grant date.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a
market condition.
Where the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had
not been modified. In addition, an expense is recognised for any increase in the value of the transaction as a result of the
modification, as measured at the date of modification.
Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not
yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award, and
designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a
modification of the original award, as described in the previous paragraph.
The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of earnings per
share.
36
C H A L I C E G O L D M I N E S L T D
A N N U A L R E P O R T 2 0 0 8
(iii) Wages, salaries, annual leave, sick leave and non-monetary benefits
Liabilities for employee benefits for wages, salaries, annual leave and sick leave represent present obligations resulting
from employees’ services provided to reporting date, calculated at undiscounted amounts based on remuneration wage
and salary rates that the Company expects to pay as at reporting date including related on-costs, such as, workers
compensation insurance and payroll tax.
(t) pro Visions
A provision is recognised in the balance sheet when the Company has a present legal or constructive obligation as a result
of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect 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, when appropriate, the risks specific to the liability.
(u) share C apitaL
(i) ordinary share capital
Ordinary shares and partly paid shares are classified as equity.
(ii) transaction costs
Transaction costs of an equity transaction are accounted for as a deduction from equity, net of any related income tax
benefit.
2. segment reporting
The Company currently only operates in one business segment and one geographical segment being the mining and exploration
industry in Australia.
3. net gain on sale of exploration and evaluation assets
2008
$
2007
$
Net (loss)/gain on sale of exploration and evaluation assets
(1,681)
1,581,271
On 30 April 2007, Chalice Gold Mines reached an agreement for the sale of its Chalice and Higginsville gold projects to Avoca
Resources, for shares in Avoca Resources to a value of $5,841,000 and 2,000,000 unlisted options over ordinary shares in Avoca
Resources.
The sale was to be completed in two tranches as follows:
tranche 1
Tranche 1, which settled on 25 July 2007, comprised of the sale of Chalice Gold’s Higginsville tenements, the Chalice Gold Mine
and areas north thereof.
Consideration for completion of Tranche 1 was $5,000,000 of Avoca Resources shares, at $1.43 per share, for a total of
3,496,503 Avoca Resources shares, based on the 5 day ASX Volume Weighted Average Price (VWAP) prior to the date of
agreement, plus 2 million 3-year Avoca options, each with an exercise price of $1.79. The unlisted options were valued at $0.41
per option at the date of grant.
The total consideration value for Tranche 1 is therefore valued in the financial statements at $5,826,693, comprising $5,000,000
of share consideration value and $826,693 for the unlisted options, valued using a binomial option-pricing model.
37
note s to the finanCiaL stat eMent s
for the Year ended 30 Jun e 2008
tranche 2
Tranche 2, which comprises a package of tenements south of the Chalice Gold Mine, will complete upon grant of an Exploration
Licence (EL) and then amalgamation of the same with certain Prospecting Licences (PL) already held by Chalice Gold Mines, as
well as the achievement of other conditions precedent typical of such sale agreements (such as receipt of relevant Department
of Industry and Resources approvals).
Grant of the EL and amalgamation with the PL’s is expected within the next 12 months, allowing for relevant public notice
requirements.
Consideration for completion of Tranche 2 is $841,000 of Avoca Resources shares, with pricing of these shares to be based on
the 5 day VWAP at the time of the amalgamation of the PL’s within the EL.
At 30 June 2008 and subsequent to balance sheet date, the Company had not completed Tranche 2 of the sale agreement to
sell the remaining Chalice Gold Mines tenements. Pending completion of Tranche 2, the remaining Chalice tenements will be
transferred to Avoca Resources for consideration of $841,000.
No net gain or loss on sale of exploration and evaluation assets for Tranche 2 has been recorded during the year and the
Tranche 2 tenements are classified as assets held for sale (refer to Note 14).
4. fair value of available-for-sale investments
2008
$
2007
$
Net change in fair value of available-for-sale investments
1,996,631
–
During the year, the Company exercised 2,000,000 Avoca Resources Limited options at an exercise price of $1.79. A change in
fair value until the date of exercise of each option of $1,996,681 (2007: nil) has been recorded through profit and loss.
5. other income
Interest received
Gain on sale of plant and equipment
Corporate and administration service fees
Other
2008
$
488,479
2,107
258,000
-
748,586
2007
$
199,906
614
251,435
350
452,305
38
C H A L I C E G O L D M I N E S L T D
A N N U A L R E P O R T 2 0 0 8
6. Corporate administrative expenses
Accounting fees
Annual report costs
ASIC fees
ASx fees
Audit fees
Consulting fees
Depreciation and amortisation
Insurance
Legal fees
Loss on sale of plant and equipment
Make good provision – office premises
Marketing
Personnel expenses
Printing and stationery
Rent and outgoings
Share registry
Travel and accommodation
Other
7. personnel expenses
Wages and salaries
Directors’ fees
Other associated personnel expenses
Defined contribution superannuation fund contributions
(Decrease)/increase in liability for annual leave
Equity-settled transactions
21
note
2008
$
2007
$
8
17
13,450
16,550
1,000
21,969
19,360
1,707
74,213
27,924
47,181
-
5,288
2,060
14,600
20,891
1,605
28,864
23,315
12,800
56,458
36,167
30,295
3,293
35,868
2,250
7
745,742
1,096,732
10,177
72,448
14,011
2,593
92,382
15,622
89,576
21,068
12,112
91,591
1,168,055
1,593,107
428,598
84,862
67,440
98,937
(3,123)
69,028
493,162
95,000
63,568
85,379
(9,106)
368,729
745,742
1,096,732
39
note s to the finanCiaL stat eMent s
for the Year ended 30 Jun e 2008
8. auditor’s remuneration
Audit services
HLB Mann Judd:
Audit and review of financial reports
9. finance costs
Interest expense
10. income tax
Current tax expense
Deferred tax expense relating to the origination and reversal of
temporary differences
Tax losses not brought to account as deferred tax assets
Total income tax expense reported in the income statement
numerical reconciliation of income tax expense to
prima facie tax payable
Profit/ (Loss) from continuing operations before income tax
expense
Tax at the Australian corporate rate of 30%
Tax effect of amounts which are not tax deductible (taxable) in
calculating taxable income:
Non–deductible expenses
Blackhole expenditure tax deductible
Origination and reversal of temporary differences
Current year tax benefits not recognised
Income tax expense reported in the income statement
2008
$
2007
$
19,360
23,315
64
2,784
257,593
(227,038)
2,060,329
(2,317,922)
–
(560,148)
787,186
–
734,846
220,454
(1,187,476)
(356,243)
37,139
(35,133)
2,060,329
2,282,789
(2,282,789)
–
129,205
(35,133)
(560,148)
(822,319)
822,319
–
40
C H A L I C E G O L D M I N E S L T D
A N N U A L R E P O R T 2 0 0 8
Deferred income tax
Deferred tax liabilities
Delayed revenue recognition for tax purposes
Exploration and evaluation expenditure
Deferred tax assets
Revenue (profits)/losses available for offset against future
taxable income
Current receivables
Employee benefits
Accrued expenses
Net deferred tax assets recognised
tax Losses
Unused tax losses for which no deferred tax asset has been
recognised
Potential tax benefit at 30% tax rate
11. earnings per share
Basic and diluted earnings per share
2008
$
2007
$
(2,438)
326,936
15,381
1,166,411
(2,060,329)
1,748,008
(937)
(11,240)
–
560,148
(1,748,008)
(4,873)
10,941
–
3,931,332
1,179,400
9,663,253
2,898,976
The calculation of basic and diluted earnings per share for the year ended 30 June 2008 was based on the profit attributable
to ordinary shareholders of $734,846 [2007: loss $1,187,476] and a weighted average number of ordinary shares outstanding
during the year ended 30 June 2008 of 72,800,000 [2007: 72,800,000].
Profit/(loss) attributable to ordinary shareholders
(diluted)
Profit/(loss) attributable to ordinary shareholders
Profit/(loss)attributable to ordinary shareholders (diluted)
Weighted average number of ordinary shares
(diluted)
2008
$
734,846
734,846
2007
$
(1,187,476)
(1,187,476)
Weighted average number of ordinary shares at 30 June
72,800,000
72,800,000
Effect of share options on issue
–
–
Weighted average number of ordinary shares (diluted)
at 30 June
72,800,000
72,800,000
41
note s to the finanCiaL stat eMent s
for the Year ended 30 Jun e 2008
12. Cash and cash equivalents
Bank balances
Bank bills
Term deposits
Petty cash
note
2008
$
1,541,571
1,185,135
7,245,860
200
2007
$
354,533
1,969,216
–
200
Cash and cash equivalents in the cash flow statement
9,972,766
2,323,949
13. trade and other receivables
Current
Other trade receivables
Prepayments
Other current receivable – sale of exploration and evaluation
assets
3
14. financial assets
Current
Bank guarantee and security deposits
non–current
Bond in relation to office premises
Bank guarantee and security deposits
15. assets held for sale
Exploration and evaluation expenditure
51,416
32,669
–
84,085
63,210
29,301
5,826,693
5,919,204
–
20,701
48,094
26,604
74,698
45,193
25,000
70,193
164,064
153,189
During the 2007 year, Chalice Gold Mines reached an agreement to sell its Chalice and Higginsville gold projects to Avoca
Resources. The sale is to be completed in 2 tranches with Tranche 1 completed in July 2007.
At 30 June 2008, the Company had not completed Tranche 2 of the sale agreement to sell the remaining Chalice Gold Mines
tenements, although a legally enforceable contract (subject to mining ministerial approvals) has been executed. Pending
achievement of certain conditions precedent to the Tranche 2 sale (including the grant of an Exploration Licence and then
amalgamation of the same with certain Prospecting Licences already held by Chalice Gold Mines, as well as the achievement
of other conditions precedent typical of such sale agreements), the remaining Chalice tenements will be transferred to Avoca
Resources for consideration of $841,000.
Exploration and evaluation assets, the subject of Tranche 2 under the sale agreement, have therefore been classified as assets
held for sale.
42
C H A L I C E G O L D M I N E S L T D
A N N U A L R E P O R T 2 0 0 8
16 exploration and evaluation expenditure
Costs carried forward in respect of areas of interest in the
exploration and evaluation phase (at cost)
Acquisition of tenements – stamp duty and other
Expenditure incurred during the year
note
2008
$
2007
$
3,134,600
–
307,635
7,175,824
374,009
1,608,539
Impairment of exploration and evaluation expenditure
(1,355,640)
(1,556,950)
Exploration costs not capitalised
Disposals of tenements
Transfer to assets held for sale
15
(41,783)
–
(10,875)
2,033,937
(68,211)
(4,245,422)
(153,189)
3,134,600
The recoupment of costs carried forward in relation to areas of interest in the exploration and evaluation phases are dependent
on the successful development and commercial exploitation or sale of the respective areas.
17. property, plant and equipment
At cost
Less: accumulated depreciation
Plant and equipment
Carrying amount at beginning of financial year
Additions
Depreciation
Transfers from plant and equipment under hire purchase
Disposals/write offs
Carrying amount at end of period
Plant and equipment under hire purchase
Carrying amount at beginning of financial year
Additions
Amortisation
Transfers to plant and equipment
Disposals/write offs
Carrying amount at end of period
2008
$
332,281
(124,500)
207,781
208,491
76,147
(74,213)
–
(2,644)
207,781
–
–
–
–
–
–
2007
$
263,460
(54,969)
208,491
181,338
112,228
(54,290)
532
(31,317)
208,491
17,869
–
(2,169)
(532)
(15,168)
–
43
note s to the finanCiaL stat eMent s
for the Year ended 30 Jun e 2008
18. trade and other payables
Trade payables
Accrued expenses
19. employee benefits
Liability for annual leave
share based payments
(a) employee share option Plan
2008
$
46,402
14,380
60,782
19,565
19,565
2007
$
99,602
52,577
152,179
22,688
22,688
The Company has an Employee Share Option Plan (‘ESOP’) in place. Under the terms of the ESOP, the Board may offer options
for no consideration to full-time or part-time employees (including persons engaged under a consultancy agreement), executive
and non-executive Directors.
Each option entitles the holder, on exercise, to one ordinary fully paid share in the Company. There is no issue price for the
options. The exercise price for the options is determined by the Board.
An option may only be exercised after that option has vested and any other conditions imposed by the Board on exercise
satisfied. The Board may determine the vesting period, if any.
The number and weighted average exercise prices of share options is as follows:
Outstanding at the beginning of the period
Forfeited during the period
Exercised during the period
Granted during the period
Outstanding at the end of the period
Exercisable at the end of the period
Weighted average
exercise price
$
2008
0.25
–
–
0.23
0.25
0.25
number
of options
2008
5,825,000
–
–
900,000
6,725,000
500,000
44
C H A L I C E G O L D M I N E S L T D
A N N U A L R E P O R T 2 0 0 8
Outstanding at the beginning of the period
Forfeited during the period
Exercised during the period
Granted during the period
Outstanding at the end of the period
Exercisable at the end of the period
Weighted average
exercise price
$
2007
0.25
0.25
–
–
0.25
0.25
number
of options
2007
6,575,000
750,000
–
–
5,825,000
5,825,000
The options outstanding at 30 June 2008 have an exercise price of $0.25 [2007: $0.25] and a weighted average contractual life
of 5 years.
During the period, no share options were exercised.
The fair value of the options is estimated at the date of grant using the binomial option-pricing model.
The following table gives the assumptions made in determining the fair value of the options granted in the year to 30 June 2008.
Fair value of share options and assumptions
Share price at grant date
Exercise price
Expected volatility (expressed as weighted average volatility used in the
modelling under binominal option–pricing model)
Option life (expressed as weighted average life used in the modelling under
binomial option–pricing model)
Expected dividends
Risk–free interest rate
2008
$0.19
$0.23
81%
5 years
–
5.43%
2007
–
–
–
–
–
–
Share options are granted under service conditions. Non-market performance conditions are not taken into account in the
grant date fair value measurement of the services received.
Share options granted in 2008 - equity settled
total expense recognised as personnel expenses
2008
$
69,028
69,028
2007
$
368,729
368,729
45
note s to the finanCiaL stat eMent s
for the Year ended 30 Jun e 2008
20. other non-current liabilities
Lease incentive
Make good provision
2008
$
10,820
41,156
51,976
2007
$
18,457
35,869
54,326
21. Capital and reserves
Reconciliation of m ovement in capital and reserves attributable to equity holders of the parent
2008
share capital (a)
$
Accumulated
losses
$
share based
payments reserve
$
Balance at 1 July 2007
13,974,454
(2,875,202)
Employee share options vested
Profit for the period
Balance at 30 June 2008
–
–
–
734,846
total equity
$
11,601,134
69,028
734,846
501,882
69,028
–
13,974,454
(2,140,356)
570,910
12,405,008
2007
share capital (a)
$
Accumulated
losses
$
share based
payments reserve
$
133,153
368,729
–
total equity
$
12,419,881
368,729
(1,187,476)
–
(1,187,476)
13,974,454
(2,875,202)
501,882
11,601,134
–
–
Balance at 1 July 2006
13,974,454
(1,687,726)
Employee share options vested
Loss for the period
Balance at 30 June 2007
(a) share capital
There were 72,800,000 shares on issue at 30 June 2008 and 30 June 2007.
ordinary shares
Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per
share at shareholders’ meetings. In the event of winding up of the Company, the ordinary shareholders rank after all other
shareholders and creditors and are fully entitled to any proceeds on liquidation.
46
C H A L I C E G O L D M I N E S L T D
A N N U A L R E P O R T 2 0 0 8
(b) share options
On issue at 1 July
Options forfeited
Options issued during the year
On issue at 30 June
2008
no.
5,825,000
–
900,000
6,725,000
2007
no.
6,575,000
(750,000)
–
5,825,00 0
At 30 June 2008 the Company had 6,725,000 unlisted options on issue under the following terms and conditions:
number
5,825,000
500,000
150,000
250,000
expiry Date
exercise Price
21.03.11
01.12.12
23.04.11
11.12.12
$0.25
$0.25
$0.20
$0.20
22. financial instruments
(a) Capital risk management
The Company manages its capital to ensure that it will be able to continue as a going concern while maximising the return to
shareholders.
The capital structure of the Company consists of equity attributable to equity holders, comprising issued capital, reserves and
accumulated losses as disclosed in note 21.
The Board reviews the capital structure on a regular basis and considers the cost of capital and the risks associated with each
class of capital. The Company will balance its overall capital structure through new share issues as well as the issue of debt, if the
need arises.
(b) Market risk exposures
Market risk is the risk that changes in market prices such as foreign exchange rates, equity prices and interest rates will affect the
Company’s income or value of its holdings of financial instruments.
Foreign exchange rate risk
The Company currently has no significant exposure to foreign exchange rates.
equity prices
The Company currently has no significant exposure to equity price risk.
47
note s to the finanCiaL stat eMent s
for the Year ended 30 Jun e 2008
Interest rate risk
The Company’s exposure to interest rate risk and the effective weighted average interest rate for classes of financial assets and
financial liabilities is set out below:
1 year
or less
$
over 1
to 5 years
$
Floating
interest
$
non–interest
bearing
$
total
$
Weighted
average
int. rate
note
30 June 2008
Financial assets
Bank balances
Bank bills
Term deposits
Bank guarantees and security
deposits
Petty cash
Trade and other receivables
Financial liabilities
Trade payables and accrued
expenses
Employee benefits
30 June 2007
Financial assets
Bank balances
Bank bills
Bank guarantees and security
deposits
Petty cash
Trade and other receivables
Financial liabilities
Trade payables and accrued
expenses
Employee benefits
12
12
12
14
12
13
18
19
–
1,185,135
7,245,860
74,698
–
–
–
–
–
–
–
–
–
–
–
–
1,541,571
–
–
–
–
–
–
–
–
–
–
–
1,541,571
1,185,135
7,245,860
1.04%
7.26%
7.71%
74,698
8.05%
200
200
51,416
51,416
60,782
19,565
60,782
19,565
total
$
–
–
–
Weighted
average
int. rate
1 year
or less
$
over 1
to 5 years
$
Floating
interest
$
non–interest
bearing
$
note
12
12
14
12
13
18
19
–
1,969,216
90,894
–
–
–
–
–
–
–
–
–
–
–
354,533
–
–
–
–
–
–
–
–
–
354,533
1,969,216
1.43%
6.17%
90,894
6.40%
200
200
5,889,903
5,889,903
152,179
152,179
22,688
22,688
–
–
–
–
A change of 100 basis points in interest rates on bank balances and term deposits at the reporting date would have increased/
(decreased) profit and loss by $99,726.
48
C H A L I C E G O L D M I N E S L T D
A N N U A L R E P O R T 2 0 0 8
(c) Credit risk exposure
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its
contractual obligations. The Company’s exposure to credit risk is not significant and currently arises principally from sundry
receivables (see note13) which represent an insignificant proportion of the Company’s activities.
The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance sheet date to recognised
financial assets is the carrying amount, net of any provision for doubtful debts, as disclosed in the notes to the financial
statements.
(d) Liquidity risk exposure
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Board actively
monitors the Company’s ability to pay its debts as and when they fall due by regularly reviewing the current and forecast cash
position based on the expected future activities.
The Company has non-derivative financial liabilities which include trade and other payables of $60,782 (2007: $152,179) all of
which are due within 60 days.
(e) net fair values of financial assets and liabilities
The carrying amounts of all financial assets and liabilities approximate the net fair values.
23. Capital and other commitments
exploration expenditure commitments
In order to maintain current rights of tenure to exploration tenements, the Company is required to perform minimum
exploration work to meet the minimum expenditure requirements specified by various State governments. These obligations
are subject to renegotiation when application for a mining lease is made and at other times. The amounts stated are based on
the maximum commitments. The Company may in certain situations apply for exemptions under relevant mining legislation
or enter into joint venture arrangements which significantly reduce working capital commitments. These obligations are not
provided for in the financial report and are payable:
Within 1 year
Within 2 – 5 years
Later than 5 years
2008
$
1,012,820
1,748,180
-
2007
$
692,860
1,299,113
-
2,761,000
1,991,973
49
note s to the finanCiaL stat eMent s
for the Year ended 30 Jun e 2008
Remuneration commitments
Commitments for the payment of salaries and other remuneration under long-term employment contracts in existence at
balance date but not recognised as liabilities:
Within 1 year
Within 2-5 years
operating lease commitments
Non-cancellable operating lease rentals are payable as follows:
within 1 year
within 2-5 years
24. reconciliation of cash flows from operating activities
Profit/(loss) for the period
Adjustments for:
Depreciation and amortisation
(Profit)/loss on sale of exploration and evaluation assets
Net gain on sale of securities
Loss on sale of other assets
Profit on sale of other assets
Changes in fair value of available-for-sale investments
Provision for make good lease fit out (office premises)
Impairment losses on exploration and evaluation expenditure
Exploration costs not capitalised
Interest on finance leases
Equity-settled share-based payment expenses
2008
$
125,000
-
125,000
82,596
36,016
118,612
2007
$
125,000
-
125,000
80,873
144,736
225,609
734,846
(1,187,476)
74,213
1,681
(556,852)
-
(2,108)
(1,996,631)
5,289
1,355,640
41,783
-
69,028
56,458
(1,581,271)
-
3,294
(614)
-
35,868
1,556,950
68,211
470
368,729
(679,381)
154,215
(46,268)
2,215
(2,193)
operating loss before changes in working capital and provisions
(273,111)
(Increase)/decrease in trade and other receivables
Increase/(decrease) in trade creditors and accruals
Increase/(decrease) in provisions
Increase/(decrease) in non-current financial assets
15,126
(35,927)
(10,761)
(3,804)
net cash used in operating activities
(308,477)
(571,412)
50
C H A L I C E G O L D M I N E S L T D
A N N U A L R E P O R T 2 0 0 8
25. key management personnel
The following were key management personnel of the Company at any time during the reporting period and unless otherwise
indicated were key management personnel for the entire period:
executive Directors
A R Bantock (Executive Chairman)
non-executive Directors
T R B Goyder
B W Alexander
A W Kiernan
executives
(resigned 30 November 2007)
R K Hacker (Company Secretary)
(resigned 11 April 2008)
A M Reynolds (Company Secretary)
(appointed 17 March 2008)
The key management personnel compensation included in ‘personnel expenses’ (see note 7) are as follows:
Short-term employee benefits
Post-employment benefits
Equity settled transactions
2008
$
389,106
33,157
56,213
478,476
2007
$
458,460
39,633
328,866
826,959
Individual directors’ and executives’ compensation disclosures
The Company has transferred the detailed remuneration disclosures to the Directors’ Report in accordance with Corporations
Amendment Regulations 2006 (No. 4). These remuneration disclosures are provided in the Remuneration Report section of
the Directors’ Report under Details of Remuneration and are designated as audited.
Loans to key management personnel and their related parties
No loans were made to key management personnel and their related parties.
other key management personnel transactions with the Company
A number of key management persons, or their related parties, hold positions in other entities that result in them having control
or significant influence over the financial or operating policies of those entities.
A number of these entities transacted with the Company in the reporting period. The terms and conditions of the transactions
with management persons and their related parties were no more favourable than those available, or which might reasonably be
expected to be available, on similar transactions to non-Director related entities on an arm’s length basis.
51
note s to the finanCiaL stat eMent s
for the Year ended 30 Jun e 2008
The aggregate amounts recognised during the year relating to key management personnel and their related parties were as
follows:
Key management persons
transaction
note
B W Alexander
A W Kiernan
Geological consulting services
Legal services
other related parties
Liontown Resources Limited
Corporate services
Uranium Equities Limited
Corporate services
(i)
(ii)
(iii)
(iv)
2008
$
20,960
37,005
2007
$
44,520
15,277
(258,000)
-
(96,500)
(154,935)
(i) The Company engaged Archaean Exploration Pty Ltd, a company of which Mr Alexander is a Director, to provide geological
consulting services to the Company during the 2008 financial year. Amounts were billed based on normal market rates for
such services and were due and payable under normal payment terms.
(ii) The Company used the legal services of Mr Kiernan and Christensen Vaughan (a company of which Mr Kiernan is a
consultant) during the course of the financial year. Amounts were billed based on normal market rates for such services
and were due and payable under normal payment terms.
(iii) The Company supplies corporate services including accounting and company secretarial services under a Corporate
Services Agreement with Liontown Resources Limited. Messrs Bantock, Goyder and Kiernan were all Directors of
Liontown Resources Limited during the year and Mr Hacker and Mr Reynolds were the Company Secretary. Amounts
were billed on a proportionate share of the cost to the Company of providing the services and are due and payable under
normal payment terms.
(iv) The Company supplied corporate services including accounting and company secretarial services under a Corporate
Services Agreement with Uranium Equities Limited (until May 2007). Messrs Bantock, Goyder and Kiernan are all Directors
of Uranium Equities Limited and Mr Hacker and Mr Reynolds were the Company Secretary. Amounts were billed on a
proportionate share of the cost to the Company of providing the services and are due and payable under normal payment
terms.
Amounts payable to key management personnel at reporting date arising from these transactions were as follows:
Assets and liabilities arising from the above transactions
Current payables
Trade debtors
2008
$
(6,110)
21,500
15,390
2007
$
(13,657)
31,900
18,243
52
C H A L I C E G O L D M I N E S L T D
A N N U A L R E P O R T 2 0 0 8
options and rights over equity instruments granted as compensation
The movement during the reporting period in the number of options over ordinary shares in the Company held, directly,
indirectly or beneficially, by each key management person, including their related parties, is as follows:
Held at
1 July 2007
Granted as
compensation
exercised
Held at
30 June 2008
Vested during
the year
Vested and
exercisable at
30 June 2008
2008
A R Bantock
T R B Goyder
A W Kiernan
Former Director
B W Alexander
J R McIntyre
executive
A M Reynolds
Former executive
2,000,000
2,000,000
–
–
–
500,000
500,000
1,000,000
–
–
–
150,000
R K Hacker
250,000
–
Movements in ordinary shares
2008
Directors
A R Bantock
2,531,772
–
T R B Goyder
11,804,008
2,670,483
A W Kiernan
270,074
–
Former Director
B W Alexander
455,336
1,222,121
executive
A M Reynolds
Former executive
–
R K Hacker
137,535
–
–
–
–
–
–
–
–
–
2,000,000
2,000,000
–
–
500,000
500,000
500,000
1,000,000
150,000
250,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2,531,772
14,474,491
270,074
437,669
1,239,788
–
137,535
–
–
The movement during the reporting period in the number of ordinary shares in the Company held, directly, indirectly or
beneficially, by each key management person, including their related parties, is as follows:
Held at
1 July 2007
Additions
Received on
exercise of options
sales
Held at
30 June 2008
No shares were granted to key management personnel during the reporting period as compensation.
53
direCto rs’ deC La ration
1
In the opinion of the Directors of Chalice Gold Mines Limited (‘the Company’):
(a) the financial statements and notes including the remuneration disclosures that are contained in sections 7.1, 7.2 and 7.3
of the Remuneration report in the Directors’ report, are in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the financial position of the Company as at 30 June 2008 and of its performance, as
represented by the results of its operations and its cash flows, for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and
payable.
2 The Directors have been given the declarations by the Chief Executive Officer (or equivalent) and Chief Financial Officer
(or equivalent) for the year ended 30 June 2008 pursuant to Section 295A of the Corporations Act 2001.
Dated at Perth the 5th day of September 2008.
Signed in accordance with a resolution of the Directors:
tIMotHY R B GoYDeR
executive Director
54
C H A L I C E G O L D M I N E S L T D
A N N U A L R E P O R T 2 0 0 8
independent audit repo rt
report on the finanCiaL report
We have audited the accompanying financial report of Chalice Gold Mines Limited (“the company”), which comprises the
balance sheet as at 30 June 2008, the income statement, statement of changes in equity, cash flow statement and notes to the
financial statements for the year ended on that date, and the directors’ declaration.
direCtors’ responsiBiLitY for the finanCiaL report
The directors of the company are responsible for the preparation and fair presentation of the financial report in accordance
with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001.
This responsibility includes establishing and maintaining internal controls relevant to the preparation and fair presentation of
the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate
accounting policies; and making accounting estimates that are reasonable in the circumstances. In Note 1 (a), the directors
also state, in accordance with Accounting Standard AASB101 Presentation of Financial Statements, that compliance with the
Australian equivalents to International Financial Reporting Standards ensures that the financial report, comprising the financial
statements and notes, complies with International Financial Reporting Standards.
auditor’s responsiBiLitY
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance
with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating
to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from
material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The
procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the
financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant
to the entity’s preparation and fair presentation of the financial report in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal controls. An
audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates
made by the directors, as well as evaluating the overall presentation of the financial report.
Our audit did not involve an analysis of the prudence of business decisions made by directors or management.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
independenCe
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
55
independent audit repo rt
Continued
auditor’s opinion
In our opinion:
(a) the financial report of Chalice Gold Mines Limited is in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the company’s financial position as at 30 June 2008 and of its performance for the year
ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the
Corporations Regulations 2001; and
(b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1 (a).
report on the reMuneration report
We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2008. The directors
of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section
300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our
audit conducted in accordance with Australian Auditing Standards.
auditor’s opinion
In our opinion the Remuneration Report of Chalice Gold Mines Limited for the year ended 30 June 2008, complies with section
300A of the Corporations Act 2001.
HLB Mann Judd
Chartered Accountants
L Di Giallonardo
Partner
Perth, Western Australia
5 September 2008
56
C H A L I C E G O L D M I N E S L T D
A N N U A L R E P O R T 2 0 0 8
Co rpo rate GoVer nanCe stateMent
Corporate Governance is a matter of high importance in the Company and is undertaken with due regard to all of the
Company’s stakeholders and its role in the community. The key corporate governance practices of the Company are
summarised below.
1. Board of directors
1.1 roLe of the Board and Mana GeMent
The Board represents shareholders’ interests in continuing a successful business, which seeks to optimise medium to long-term
financial gains for shareholders. The Board believes that this focus will ultimately result in the interests of all stakeholders being
appropriately addressed when making business decisions.
The Board is responsible for ensuring that the Company is managed in such a way to best achieve this desired result. Given the
current size and operations of the business, the Board currently undertakes an active, not passive, role.
The Board is responsible for evaluating and setting the strategic directions for the Company, establishing goals for management
and monitoring the achievement of these goals. The Executive Director is responsible to the Board for the day-to-day
management of the Company.
The Board has sole responsibility for the following:
•
•
•
•
appointing and removing the Executive Director and approving senior executive remuneration;
determining the strategic direction of the Company and measuring performance of management against approved
strategies;
review of the adequacy of resources for management to properly carry out approved strategies and business plans;
adopting operating and capital expenditure budgets at the commencement of each financial year and monitoring the
progress against them;
• monitoring capital and cash flow requirements;
•
•
•
approving and monitoring financial and other reporting to regulatory bodies, shareholders and other organisations;
determining that satisfactory arrangements are in place for auditing the Company’s financial affairs; and
ensuring that risk management and internal controls, policies and compliance systems consistent with the Company’s
objectives, external best practice and the Company’s size and scope of operations are in place and that the Company and
its officers act legally, ethically and responsibly on all matters.
The Board’s role and the Company’s corporate governance practices are being continually reviewed and improved as required.
1.2 CoMposition of the Board and new appointMents
The Company’s Constitution provides that the number of Directors shall not be less than three. There is no requirement for any
share holding qualification.
The Board considers that the Company is not currently of a size, nor are its affairs of such complexity to justify the appointment
and further expense of an independent Non-executive Chairman and additional independent Non-executive Directors. The
Board believes that the individuals on the Board can make, and do make, quality and independent judgments in the best interests
of the Company on all relevant issues.
57
Co rpo rate GoVer nanCe stateMent
Continued
The composition of the Board is reviewed periodically in view of the underlying scale, scope and complexity of the Company’s
operations. Changes are made where appropriate.
The membership of the Board and its activities are subject to periodic review. The criteria for determining the identification
and appointment of a suitable candidate for the Board shall include quality of the individual, background of experience and
achievement, compatibility with other Board members, credibility within the Company’s scope of activities, intellectual ability to
contribute to Board’s duties and physical ability to undertake the Board’s duties and responsibilities.
Directors are initially appointed by the full Board subject to election by shareholders at the next general meeting. Under
the Company’s Constitution the tenure of Directors (other than Managing Director (or equivalent), and only one Managing
Director (or equivalent) where the position is jointly held) is subject to reappointment by shareholders not later than the third
anniversary following his last appointment. Subject to the requirements of the Corporations Act 2001, the Board does not
subscribe to the principle of retirement age and there is no maximum period of service as a Director. A Managing Director may
be appointed for any period and on any terms the Directors think fit and, subject to the terms of any agreement entered into,
the Board may revoke any appointment.
1.3 CoMMittees of the Board
The Board considers that the Company is not currently of a size, nor are its affairs of such complexity to justify the formation of
separate or special committees at this time. The Board as a whole is able to address the governance aspects of the full scope of
the Company’s activities and to ensure that it adheres to appropriate ethical standards.
The full Board currently holds meetings at such times as may be necessary to address any general or specific matters as
required.
If the Company’s activities increase in size, scope and nature, the appointment of separate or special committees will be
reviewed by the Board and implemented if appropriate.
1.4 ConfLiCts of interest
In accordance with the Corporations Act and the Company’s Constitution, Directors must keep the Board advised, on an
ongoing basis, of any interest that could potentially conflict with those of the Company. Where the Board believes that a
significant conflict exists, the Director concerned does not receive the relevant board papers and is not present at the meeting
whilst the item is considered.
1.5 independent professionaL adViCe
The Board has determined that individual Directors have the right in connection with their duties and responsibilities as
Directors, to seek independent professional advice at the Company’s expense. The engagement of an outside adviser is subject
to prior approval of the Chairman and this will not be withheld unreasonably. If appropriate, any advice so received will be made
available to all Board members.
2. ethical standards
The Board acknowledges the need for continued maintenance of a professional standard of corporate governance practice and
ethical conduct by all Directors and employees of the Company.
2.1 Code of ConduCt for direCtors
The Board has adopted a Code of Conduct for Directors to promote ethical and responsible decision-making by the Directors.
The code is based on a code of conduct for Directors prepared by the Australian Institute of Company Directors.
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The principles of the code are:
•
•
•
•
•
•
•
a Director must act honestly, in good faith and in the best interests of the Company as a whole;
a Director has a duty to use due care and diligence in fulfilling the functions of office and exercising the powers attached to
that office;
a Director must use the powers of office for a proper purpose, in the best interests of the Company as a whole;
a Director must recognise that the primary responsibility is to the Company’s shareholders as a whole but should, where
appropriate, have regard for the interest of all stakeholders of the Company;
a Director must not make improper use of information acquired as a Director;
a Director must not take improper advantage of the position of Director;
a Director must not allow personal interests, or the interests of any associated person, to conflict with the interests of the
Company;
•
a Director has an obligation to be independent in judgment and actions and to take all reasonable steps to be satisfied as
to the soundness of all decisions taken as a Board;
•
confidential information received by a Director in the course of the exercise of directorial duties remains the property of
the Company and it is improper to disclose it, or allow it to be disclosed, unless that disclosure has been authorised by the
•
•
Company, or the person from whom the information is provided, or is required by law;
a Director should not engage in conduct likely to bring discredit upon the Company; and
a Director has an obligation at all times, to comply with the spirit, as well as the letter of the law and with the principles of
the Code.
The principles are supported by guidelines as set out by the Australian Institute of Company Directors for their interpretation.
Directors are also obliged to comply with the Company’s Code of Ethics and Conduct, as outlined below.
2.2 Code of ethiCs and ConduCt
The Company has implemented a Code of Ethics and 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;
respect confidentiality and not misuse Company information, assets or facilities;
value and maintain professionalism;
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;
59
Co rpo rate GoVer nanCe stateMent
Continued
•
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 Ethics and Conduct may face disciplinary action. If an employee suspects that a breach
of the Code of Ethics and Conduct has occurred or will occur, he or she must notify that breach to management. 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.
2.3 deaLinGs in CoMpanY seCurities
The Company’s share trading policy imposes basic trading restrictions on all employees of the Company with ‘inside information’,
and additional trading restrictions on the Directors of the Company and employees who possess inside information.
‘Inside information’ is information that:
•
•
is not generally available; and
if it were generally available, it would, or would, be likely to influence investors in deciding whether to buy or sell the
Company’s securities.
If an employee possesses inside information, the person must not:
•
•
•
trade in the Company’s securities;
advise others or procure others to trade in the Company’s securities; or
pass on the inside information to others – including colleagues, family or friends – knowing (or where the employee or
Director should have reasonably known) that the other persons will use that information to trade in, or procure someone
else to trade in, the Company’s securities.
This prohibition applies regardless of how the employee or Director learns the information.
In addition to the above, Directors must notify the Company Secretary as soon as practicable, but not later than 5 business
days, after they have bought or sold the Company’s securities or exercised options. In accordance with the provisions of the
Corporations Act and the Listing rules of the ASx, the
Company on behalf of the Directors must advise the ASx of any transactions conducted by them in the securities of the
Company.
Breaches of this policy will be subject to disciplinary action, which may include termination of employment.
2.4 interests of o ther stakehoLders
The Company’s objective is to maximise returns to shareholders through the continued exploration and development of
current projects and the identification and acquisition of quality mining and/or exploration projects.
To assist in meeting its objective, the Company conducts its business within the Code of Ethics and Conduct, as outlined in 2.2
above.
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3. disclosure of information
3.1 Continuous disCLosure to asx
The continuous disclosure policy requires all executives and Directors to inform the Executive Director or in his absence the
Company Secretary of any potentially material information as soon as practicable after they become aware of that information.
Information is material if it is likely that the information would influence investors who commonly acquire securities on ASx in
deciding whether to buy, sell or hold the Company’s securities.
Information is not material and need not be disclosed if:
a) a reasonable person would not expect the information to be disclosed or is material but due to a specific valid commercial
reason is not to be disclosed; and
b) the information is confidential; or
one of the following applies:
•
•
•
•
•
•
•
•
it would breach a law or regulation to disclose the information;
the information concerns an incomplete proposal or negotiation;
the information comprises matters of supposition or is insufficiently definite to warrant disclosure;
the information is generated for internal management purposes;
the information is a trade secret;
it would breach a material term of an agreement, to which the company is a party, to disclose the information;
it would harm the Company’s potential application or possible patent application; or
the information is scientific data that release of which may benefit the Company’s potential competitors.
The Executive Director is responsible for interpreting and monitoring the Company’s disclosure policy and where necessary
informing the Board. The Company Secretary is responsible for all communications with ASx.
3.2 CoMMuniC ation with sharehoLders
The Company places considerable importance on effective communications with shareholders.
The Company’s communication strategy requires communication with shareholders and other stakeholders in an open, regular
and timely manner so that the market has sufficient information to make informed investment decisions on the operations and
results of the Company. The strategy provides for the use of systems that ensure a regular and timely release of information
about the Company to shareholders.
Mechanisms employed include:
•
announcements lodged with ASX;
• ASX Quarterly Cash Flow Reports;
• Half Yearly Report;
•
presentations at the Annual General Meeting/General Meetings; and
• Annual Report.
61
Co rpo rate GoVer nanCe stateMent
Continued
The Board encourages full participation of shareholders at the Annual General Meeting to ensure a high level of accountability
and understanding of the Company’s strategy and goals.
The Company also posts all reports, ASx and media releases and copies of significant business presentations on the Company’s
website.
4. risk Management
4.1 identifiC ation of risk
The Board is responsible for overseeing the Company’s risk management and control framework.
Responsibility for control and risk management is delegated to the appropriate level of management within the Company with
the Executive Director having ultimate responsibility to the Board for the risk management and control framework.
Arrangements put in place by the Board to monitor risk management include:
•
an annual risk assessment and review of mitigating controls to manage key risks;
• monthly reporting to the Board in respect of operations and the financial position of the Company;
•
budgetary expenditure controls;
• monthly reporting to the Board on status of tenure to tenements; and
•
regular reporting on adherence to health and safety guidelines and policies.
4.2 inteGritY of finanCiaL reportinG
From the date the Company listed on the ASx, the Company’s Executive Director and Chief Financial Officer (or equivalent)
will report in writing to the Board that:
•
the financial statements of the Company for each half and full year present a true and fair view, in all material aspects, of the
Company’s financial condition and operational results and are in accordance with accounting standards;
•
the above statement is founded on a sound system of risk management and internal compliance and control which
implements the policies adopted by the Board; and
•
the Company’s risk management and internal compliance and control framework is operating efficiently and effectively in all
material respects.
4.3 roLe of auditor
The Company’s practice is to invite the auditor to attend the annual general meeting and be available to answer shareholder
questions about the conduct of the audit and the preparation and content of the auditor’s report.
5. performance review
The Board has adopted a self-evaluation process to measure its own performance during each financial year. Ongoing review is
undertaken in relation to the composition and skills mix of the Directors of the Company.
Arrangements put in place by the Board to monitor the performance of the Company’s executives include annual performance
appraisal meetings with each individual to ensure that the level of reward is aligned with respective responsibilities and individual
contributions made to the success of the Company.
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6. remuneration arrangements
The broad remuneration policy of the Company is to ensure that remuneration levels for executive Directors, secretaries and
senior managers are set at competitive levels to attract and retain appropriately qualified and experienced personnel. This is a
particularly important policy in view of the strong demand for experienced technical and financial personnel currently being
experienced in the Australian and international resources industry, driven by increased world demand for commodities, and the
significant impact that each individual can make within a small executive team for an exploration and development company
such as at Chalice Gold Mines. In short, the labour market is tight and key people make a difference to exploration and growth
outcomes.
Remuneration packages offered by Chalice Gold Mines are therefore geared to attracting talented employees through a
combination of fixed remuneration and long term incentives, calibrated and individually tailored to be competitive in the
external market to offer good incentive to join and remain with the Company.
The remuneration of Non-executive Directors is determined by the Board as a whole having regard to the level of fees paid to
Non-executive Directors by other companies of similar size in the industry.
The aggregate amount payable to the Company’s Non-executive Directors must not exceed the maximum annual amount
approved by the Company’s shareholders.
Options may be issued under the Employee Share Option Plan to Directors, employees and consultants of the Company and
must be exercised within 3 months of termination. The ability to exercise the options is usually based on the option holder
remaining with the Company for at least one year. Other than the vesting period, there is no performance hurdle required to
be achieved by the Company to enable the options to be exercised.
The Company believes that the issue of share options in the Company aligns the interests of Directors, employees and
shareholders alike.
AsX Corporate Governance Council: Principles of Good Corporate Governance and Best Practice
Recommendations
Council Principle 1:
Lay solid foundations for management and oversight
Council Recommendation 1.1:
Formalise and disclose the functions reserved to the board and those delegated to management.
The Company complies with this recommendation. Refer Section 1.1 of Corporate Governance Statement.
Council Principle 2
structure the board to add value
Council Recommendation 2.1:
A majority of the board should be independent Directors.
The Board considers that Mr Kiernan is an independent Director in accordance with Recommendation 2.1. Whilst the
remainder of the Board are not independent, the Board believes that all the individuals on the Board can make, and do make,
quality and independent judgments in the best interests of the Company on all relevant issues. Directors having a conflict of
interest in relation to a particular item of business must absent themselves from the Board Meeting before commencement of
discussion on the topic.
Refer Section 1.2 of Corporate Governance Statement.
63
Co rpo rate GoVer nanCe stateMent
Continued
Council Recommendation 2.2:
The chairperson should be an independent Director.
Council Recommendation 2.3:
The roles of the Chairperson and Chief Executive Officer should not be exercised by the same individual.
The Company complies with this recommendation.
Refer Section 1.2 of Corporate Governance Statement.
Council Recommendation 2.4:
The board should establish a nomination committee.
The Board considers that the Company is not currently of a size to justify the formation of a nomination committee. The Board
as a whole undertakes the process of reviewing the skill base and experience of existing Directors to enable identification
or attributes required in new Directors. Where appropriate, an independent consultant is engaged to identify possible new
candidates for the Board.
The Board acknowledges this does not comply with recommendation 2.4 of the ASX Corporate Governance Guidelines. If the
Company’s activities increase in size, scope and nature, the appointment of a nomination committee will be reviewed by the
Board and implemented if appropriate.
Refer Section 1.3 of Corporate Governance Statement.
Council Principle 3:
Promote ethical and responsible decision-making
Council Recommendation 3.1:
Establish a code of conduct to guide the Directors, the Chief Executive Officer (or equivalent), the Chief Financial Officer (or
equivalent) and any other key executives as to:
3.1.1
the practices necessary to maintain confidence in the Company’s integrity;
3.1.2
the responsibility and accountability of individuals for reporting and investigating reports of unethical practice.
The Company complies with this recommendation. Refer Sections 2.1 and 2.2 of Corporate Governance Statement.
Council Recommendation 3.2:
Disclose the policy concerning trading in Company securities by Directors, officers and employees.
The Company complies with this recommendation. Refer Section 2.3 of Corporate Governance Statement.
64
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Council Principle 4:
safeguard integrity in financial reporting
Council Recommendation 4.1:
Require the Chief Executive Officer (or equivalent) and the Chief Financial Officer (or equivalent) to state in writing to the
board that the Company’s financial reports present a true and fair view, in all material respects, of the Company’s financial
condition and operational results and are in accordance with relevant accounting standards.
The Company complies with this recommendation.
Council Recommendation 4.2:
The board should establish an audit committee.
The Board considers that the Company is not currently of a size to justify the formation of an audit committee. The Board as a
whole undertakes the selection and proper application of accounting policies, the identification and management of risk and the
review of the operation of the internal control systems.
The Board acknowledges this does not comply with recommendation 4.2 of the ASX Corporate Governance Guidelines. If the
Company’s activities increase in size, scope and nature, the appointment of a audit committee will be reviewed by the Board and
implemented if appropriate. Refer to section 1.3 of the Corporate Governance Statement.
Council Recommendation 4.3:
Structure the audit committee so that it consists of:
-
-
-
-
only non-executive Directors;
a majority of independent Directors;
an independent chairperson, who is not chairperson of the board;
at least three members.
Refer Recommendation 4.2.
Council Recommendation 4.4
The audit committee should have a formal operating charter.
Refer Recommendation 4.2.
Council Principle 5:
Make a timely and balanced disclosure
Council Recommendation 5.1:
Establish written policies and procedures designed to ensure compliance with ASx Listing Rule disclosure requirements and to
ensure accountability at a senior management level for that compliance.
The Company complies with this recommendation. Refer Section 3.1 of Corporate Governance Statement.
65
Co rpo rate GoVer nanCe stateMent
Continued
Council Principle 6:
Respect the rights of shareholders
Council Recommendation 6.1:
Design and disclose a communications strategy to promote effective communication with shareholders and encourage effective
participation at general meetings.
The Company complies with this recommendation. Refer Section 3.2 of Corporate Governance Statement.
Council Recommendation 6.2:
Request the external auditor to attend the annual general meeting and be available to answer shareholder questions about the
conduct of the audit and the preparation and content of the auditor’s report.
The Company complies with this recommendation. Refer Section 4.3 of Corporate Governance Statement.
Council Principle 7:
Recognise and manage risk
Council Recommendation 7.1:
The Board or appropriate board committee should establish policies on risk oversight and management.
The Company complies with this recommendation. Refer Section 4.1 of Corporate Governance Statement.
Council Recommendation 7.2
The Chief Executive Officer (or equivalent) and the Chief Financial Officer (or equivalent) should state in writing that:
7.2.1
the statement given in accordance with best practice recommendation 4.1 is founded on a sound system of risk
management and internal compliance and control which implements the policies adopted by the board;
7.2.2
the Company’s risk management and internal compliance and control system is operating efficiently and effectively in
all material respects.
The Company complies with this recommendation. Refer Section 4.1 of Corporate Governance Statement.
Council Principle 8:
encourage enhanced performance
Council Recommendation 8.1:
Disclose the process for performance evaluation of the board, its committees and individual Directors, and key executives.
The Company complies with this recommendation. Refer Section 5 of Corporate Governance Statement.
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Council Principle 9:
Remunerate fairly and responsibly
Council Recommendation 9.1:
Provide disclosure in relation to the Company’s remuneration policies to enable investors to understand (i) the costs and
benefits of those policies and (ii) the link between remuneration paid to Directors and key executives and corporate
performance.
The Company complies with this recommendation. Refer Section 6 of Corporate Governance Statement.
Council Recommendation 9.2:
The board should establish a remuneration committee.
The Board considers that the Company is not currently of a size, nor are its affairs of such complexity to justify the formation
of a remuneration committee. The Board as a whole is responsible for the remuneration arrangements for Directors and
executives of the Company.
The Board acknowledges that this does not comply with recommendation 9.2 of the ASX Corporate Governance Guidelines. If
the Company’s activities increase in size, scope and nature, the appointment of a remuneration committee will be reviewed by
the Board and implemented if appropriate. Refer Section 1.3 of Corporate Governance Statement.
Council Recommendation 9.3
Clearly distinguish the structure of Non-executive Directors’ remuneration from that of executives.
The Company complies with this recommendation. Refer Section 6 of Corporate Governance Statement.
Council Recommendation 9.4
Ensure that payment of equity-based executive remuneration is made in accordance with thresholds set in plans approved by
shareholders.
The Company complies with this recommendation. The Company currently has in place an Employee Share Option Plan. Any
issue of options made to eligible participants is made in accordance with that plan.
Council Principle 10:
Recognise the legitimate interests of stakeholders
Council Recommendation 10.1:
Establish and disclose a code of conduct to guide compliance with legal and other obligations to legitimate stakeholders.
The Company complies with this recommendation. Refer Section 2.4 of Corporate Governance Statement.
67
asx additionaL inforMation
Additional information required by the Australian Stock Exchange Limited Listing Rules and not disclosed elsewhere in this
report is set out below.
sharehoLdinGs
suBstantiaL sharehoLders
The number of shares held by substantial shareholders advised to the Company and their associated interests as at 4 September
2008 were:
shareholder
Timothy R B Goyder
Resolute Limited
number of ordinary shares held
Percentage of capital held %
15,056,458
7,624,546
20.68
10.47
CLass of shares and VotinG riGhts
At 4 September 2008 there were 884 holders of the ordinary shares of the Company.
The voting rights to the ordinary shares set out in the Company’s Constitution are:
“Subject to any rights or restrictions for the time being attached to any class or Classes of shares -
a) at meetings of members or classes of members each member entitled to vote in person or by proxy or attorney: and
b) on a show of hands every person who is a member has one vote and on a poll every person in person or by proxy
or attorney has one vote for each ordinary share held.”
Holders of options do not have voting rights.
distriBution of equitY seCuritY hoLders as at 4 septeMBer 2008:
Category
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,000 – 100,000
100,001 and over
total
number of equity security holders
ordinary shares
Unlisted share options
66
261
181
284
92
884
–
–
–
1
5
6
The number of shareholders holding less than a marketable parcel at 4 September 2008 was 319.
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A N N U A L R E P O R T 2 0 0 8
TW E N Ty L A R G E S T OR D I N A R y FU L L y P A I D SH A R E H O L D E R S
A S AT 4 SE P T E M B E R 2 0 0 8
name
Plato Prospecting Pty Ltd
Resolute Limited
Nefco Nominees Pty Ltd
Define Consulting Pty Ltd (The Define Consulting A/C)
Colbern Fiduciar y Nominees Pty Ltd
Balfes (QLD) Pty Ltd (Balfes Super Fund A/C)
Lost Ark Nominees Pty Limited
Mr Philip Button & Ms Philipa Anne Nicol (Christopher Jordan A/C)
Tara Management Pty Ltd
Toltec Holdings Pty Ltd
Clodene Pty Ltd
Mr Terrence Peter Williamson & Ms Jonine Maree Jancey (The Wiljan
Super Fund A/C)
Mr Arnold Olschyna
Calm Holdings Pty Ltd (Tide A/C)
Penally Management Limited
Mrs Helen Joy Alexander
Zarzal Pty Ltd (D T & W M Johns Family A/C)
Ledge Finance Limited
Piat Corp Pty Ltd
Wersman Nominees Pty Ltd
total
number of
ordinary shares
held
14,018,452
7,624,546
3,412,004
2,391,772
2,200,000
1,500,000
1,200,000
1,199,876
1,132,012
1,127,145
1,069,657
1,044,082
1,000,000
970,000
881,338
805,200
800,000
773,334
700,248
700,000
Percentage of
capital held %
19.26
10.47
4.69
3.29
3.02
2.06
1.65
1.65
1.55
1.55
1.47
1.43
1.37
1.33
1.21
1.11
1.10
1.06
0.96
0.96
44,549,666
61.19
69
DI R E C T O R S
A U D I T O R S
HLB Mann Judd
A R Bantock - Non-executive Chairman
15 Rheola Street
T R B Goyder - Executive Director
WEST PERTH WA 6005
A W Kiernan - Non-executive Director
CO M P A Ny SE C R E TA R y
R K Hacker
P R I N C I P A L P L A C E
O F B U S I N E S S
SO L I C I T O R S
Pullinger Readhead Lucas
Level 2, For tescue House
50 Kings Park Road
WEST PERTH WA 6005
HO M E E xC H A N G E
& RE G I S T E R E D OF F I C E
SH A R E RE G I S T R y
Australian Securities Exchange Limited
Level 2, 1292 Hay Street
WEST PERTH WA 6005
Tel: +618 9322 3960
Fax: +618 9322 5800
Web: www.chalicegold.com
Email:
info@chalicegold.com
Computershare Investor Ser vices
Pty Limited
Level 2, Reser ve Bank Building
45 St Georges Terrace
PERTH WA 6000
Tel: 1300 557 010
Exchange Plaza
2 The Esplanade
PERTH WA 6000
A Sx CO D E
Share Code: CHN
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2
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8
P rinciPal Place of Business
& re g ist ered office
Level 2, 1292 H ay Street West Per th WA 6005
Tel: + 61 8 9322 3960 Fax: +618 9322 5800
We b: www.cha licegold.com Email: info@chalicegold.com
A N N U A L R E P O R T 2 0 0 8