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2
ANNUAL REPORT
0
1
3 2013
CHALICE GOLD MINES LIMITED
Level 2, 1292 Hay Street
WEST PERTH, WESTERN AUSTRALIA 6005
Tel:
Fax:
(+61) (8) 9322 3960
(+61) (8) 9322 5800
Web: www.chalicegold.com
Email: info@chalicegold.com
CORPORATE DIRECTORY
CHALICE GOLD MINES LIMITED
ABN 47 116 648 956
Annual Financial Report
30 June 2013
DIRECTORS
SHARE REGISTRY
Timothy Goyder
Executive Chairman
William Bent
Managing Director
Douglas Jones
Executive Director
Anthony Kiernan Non-executive Director
Stephen Quin
Non-executive Director
JOINT COMPANY SECRETARIES
Richard Hacker
Leanne Forgione
PRINCIPAL PLACE OF BUSINESS
& REGISTERED OFFICE
Level 2, 1292 Hay Street
WEST PERTH WA 6005
Tel:
(+61)(8)9322 3960
Fax:
(+61)(8)9322 5800
Web: www.chalicegold.com
Email: info@chalicegold.com
AUDITORS
HLB Mann Judd
Level 4, 130 Stirling Street
PERTH WESTERN AUSTRALIA 6000
Australia
Computershare Investor Services Pty Limited
Level 2, Reserve Bank Building
45 St Georges Terrace
PERTH WESTERN AUSTRALIA 6000
Tel: 1300 557 010
Canada
Computershare Investor Services
100 University Avenue, 9th Floor
TORONTO ONTARIO M5J 2Y1
HOME EXCHANGE
Australian Securities Exchange Limited
Exchange Plaza
2 The Esplanade
PERTH WESTERN AUSTRALIA 6000
TORONTO STOCK EXCHANGE
The Exchange Tower
P.O Box 421
130 King Street West
TORONTO ONTARIO M5X 1J2
ASX
Share Code:
TSX
Share Code:
CHN
CXN
DESIGNED BY DASH DIGITAL
Contents
Chairman and managing direCtors report
operating and FinanCiaL reVieW
sChedULe oF tenements
direCtors’ report
aUditor’s independenCe deCLaration
ConsoLidated statement oF ComprehensiVe inCome
ConsoLidated statement oF FinanCiaL position
ConsoLidated statement oF Changes in eqUity
ConsoLidated statement oF Cash FLoWs
notes to the ConsoLidated FinanCiaL statements
direCtors’ deCLaration
independent aUditor’s report
Corporate goVernanCe report
asX additionaL inFormation
Page
2
4
6
7
21
22
23
24
25
26
61
62
64
72
Chairman and managing direCtors report
With a cash balance of $55 million, Chalice remains focused
on securing high quality mining projects with strong cash flow
generation potential.
We are pleased to report on the progress Chalice has made
during the last 12 months where we have focused on securing
a cornerstone asset or assets to leverage off our cash position of
approximately $55 million following settlement of the sale of the
Zara Gold Project in Eritrea late last year and a return of capital
of $25 million (10 cents per share).
Our primary focus has been, and continues to be on targeting
high quality mining projects globally with strong cash flow
generation potential. Our experienced technical team has
made good progress in reviewing primarily gold and copper
projects globally and prioritising robust, lower risk projects for
further evaluation.
The Board also approved a second leg to Chalice’s strategy,
targeting a limited number of high quality “drill ready” exploration
opportunities, in low risk mining jurisdictions on a deal by deal
basis. The rationale being to take advantage of both the ongoing
tightness in the equity markets for junior exploration companies
and the significant decline in drilling costs.
The FirsT sTePs in imPlemenTing
Our sTraTegy
eXpLoration opportUnities:
“driLL ready targets”
Due to the softening market conditions, particularly in the
exploration sector, we were pleased to be able to close two
exciting exploration deals within the second leg of our strategy
during September 2013.
The first deal gives Chalice significant exposure to GeoCrystal
Limited’s Webb Diamond Project in the West Arunta region
of the Gibson Desert in Western Australia, via a 10.1%
placement in GeoCrystal. Chalice has an option to acquire
an interest of up to 19.9% of GeoCrystal and further rights
to participate in all capital raisings such that Chalice may
acquire an interest of up to 51% in the company. The Webb
Diamond Project shows potential to be a large kimberlite field,
with more than 80 discrete aeromagnetic anomalies with the
potential to be diamond bearing kimberlite pipes.
The second deal gives Chalice the right to earn up to 70% of
both the Oodnadatta and Marla Projects in South Australia,
by funding $5.5 million. Both projects are in a province with
high iron oxide-copper-gold-uranium (IOCGU) endowment
that hosts deposits such as Olympic Dam, Prominent Hill
and Carrapateena. The initial commitment is $800,000 to
undertake the first phase of exploration at Oodnadatta and
Marla IOCGU Projects.
Both transactions provide Chalice shareholders exposure to
high quality exploration plays, with potential to host world
class deposits. Drilling is expected to commence on both
projects in the December quarter 2013.
In Eritrea, our Phase 2 drilling program at Mogoraib North
identified similar widths and grades of mineralisation to
those obtained in the Phase 1 drilling. Whilst confirming
the presence of a new VMS system with promise to find an
economic deposit, the mineralisation discovered in our two
drilling programmes remains uneconomic due to the low
grades and thicknesses identified. Our focus over the next six
months will be on renewing our exploration license, followed
by working with our JV partner ENAMCO (40%) to assess the
best way forward for the Mogoraib North JV.
PrOPOsed merger WiTh COvenTry
resOurCes inC
In late September 2013, Chalice announced a proposed merger
with Coventry Resources Limited, owner of the Cameron Gold
Project in Canada by way of a Statutory Plan of Arrangement
(“Merger”) under the British Columbia Business Corporations Act.
The Cameron Project is a quality exploration and development
asset, with a solid resource, in a low-risk, favourable mining
jurisdiction. The Project has good grades, excellent exploration
upside potential and access to good infrastructure with a local
labour force with strong mining experience.
At the time of writing the transaction is still subject to due
diligence and Coventry shareholder approval. Key attractions
of the Coventry deal are the ability to preserve our strong cash
balance and the low holding costs of the Cameron Project. If
we are successful in closing the deal this will provided us with
plenty of flexibility as we look to add value to the Coventry
assets and at the same time continue to look at further
complementary transactions.
2 |
The year ahead
We are confident we are well positioned to execute our
growth strategy, with a strong Board, an experienced
technical team and a strong balance sheet. We look forward
building on our successful start to securing a portfolio of high
quality assets with the potential to create significant value for
our shareholders.
TIM GOYDER
BILL BENT
ChaliCe gOld mines annual rePOrT 2013 | 3
operating and FinanCiaL reVieW
1 OPeraTing highlighTs
1.2 FinanCiaL perFormanCe
The Group reported a net profit after income tax of $43.7
million for the year (2012: net loss of $4.1 million) which was
predominantly related to the sale of the Zara Project in Eritrea.
The net profit from the sale of the Zara Project in Eritrea to
ENAMCO and SFECO was $43.8 million after taxes. Total
disposal consideration was $110.9 million, which was made
up of $76.9 million attributable to the sale of the 60 per cent
interest to SFECO and $33 million was attributable to the sale
of the 30 per cent interest to ENAMCO. Costs associated
with the sale of the Zara Project included taxes payable in
Eritrea of $25.5 million, transaction costs of $0.7 million and
the carrying value of net assets disposed of $39.4 million.
In addition, the Company also discharged its contractual
obligation (arising from the earlier purchase by the Company
of Dragon’s interest in the project) to Dragon Mining Limited by
a payment of $1.5 million.
The Group recorded $4.9 million in foreign exchange
gains (2012: $0.02 million) which represents the impact of
movements in the Australian Dollar against the US Dollar on
the Company’s US Dollar cash balances. At 30 June 2013,
the Group had approximately US$52.2 million cash on hand.
Corporate administrative expenses of $3.6 million (2012:
$3.6 million) were predominately made up of personnel
expenses of $1.6 million (2012: $1.5 million) and costs
associated with business development costs of $0.7 million
(2012: nil).
During the year, exploration and evaluation costs associated
with the Hurum Exploration Licence in Eritrea were written
off following relinquishment and the Group also booked an
impairment of the carrying value of the Gnaweeda Project and
its investment held in Arabian Nubian Resources Limited. Total
write offs were $1.7 million (2012: $0.2 million).
1.1 saLe oF the Zara projeCt, eritrea
During the year, the Company completed the sale of its interest
in the Zara Gold Project in Eritrea to China SFECO Group
(‘SFECO’) and the Eritrean National Mining Corporation
(‘ENAMCO’). The consideration for the SFECO transaction
(for a 60 per cent interest in Zara) was US$78 million
($76.9 million) and a further US$2 million is payable upon
commencement of commercial production at the Koka Gold
Mine. The ENAMCO transaction (for a 30 per cent interest in
Zara, in addition to a 10 per cent free carried interest) was
US$34 million ($33.1 million).
1.2 CapitaL redUCtion and retUrn
Following completion of the sale of the Zara Project in
September 2012 and payment of profits tax in Eritrea,
Chalice had approximately $81 million cash on hand.
Following this, the Board determined those funds exceeded the
Company’s capital requirements, and resolved to return some
of the capital to shareholders.
Shareholder approval was obtained at the Company’s 2012
Annual General Meeting for a return of capital of 10 cents per
share totalling approximately $25 million. Prior to the return
of capital, the Company had received a Class Ruling from the
Australian Taxation Office advising that the distribution would
be treated as a return of capital.
1.3 eXpLoration - eritrea
Chalice’s exploration activities in Eritrea at the Mogoraib
North Project are operated under an agreement between
Chalice and ENAMCO, where exploration expenditure
is funded two thirds Chalice and one-third ENAMCO (as
ENAMCO has a 10% free carry).
During the year, the Company completed approximately
8,099 metres of diamond drilling at the Mogoraib North
Project. The Project is located 15km north of the Bisha
polymetallic VMS deposit, currently operated by Bisha Mining
Share Company (60% Nevsun Resources (TSX: NSU) and
40% ENAMCO). The exploration program undertaken during
the second half of 2012 intersected a zone of massive
sulphides with highly anomalous copper and zinc values at
Mogoraib River, which prompted a further drilling campaign
during the first half of 2013.
This follow-up drilling confirmed the presence of a VMS system
of substantial dimensions; however, economic grades and
widths have not yet been intersected.
4 |
1.3 statement oF Cash FLoWs
1.5 BUsiness strategy and oUtLook
With a significant cash balance of $56.4 million at year end,
Chalice moved into the business development and acquisition
mode. The emphasis has been principally on targeting
advanced exploration or development-stage opportunities
within the gold, copper and coking coal sectors having
the potential to generate significant long term cash flow.
Opportunities introduced to the Company in other commodities
are considered on a case-by-case basis.
As a secondary focus, the Company is also evaluating earlier
stage exploration opportunities where high value drill targets
have been identified. The Company believes that there are
significant opportunities to participate in quality exploration
projects due to tight financial markets, particularly in relation to
junior explorers. Subsequent to year end, Chalice entered into
two such transactions. The risks which could adversely impact
the achievement of these objectives primarily include foreign
exchange fluctuations between the Australian Dollar and US
Dollar along with commodity price fluctuations.
1.6 appointment oF a neW managing
direCtor
During the year, the Company appointed Mr William (Bill) Bent
as Managing Director (commencing on 1 February 2013).
Mr Bent’s details are included in section 1 of the Directors’ Report.
The previous Managing Director, Dr Jones, remains on the
Company’s Board as an Executive Director, focusing on the
geological and technical development of the Company.
Cash and cash equivalents at 30 June 2013 were $56.4
million. This compares to a net cash balance of $3.1 million
at 30 June 2012. Cash outflows for operating activities
increased by 11% to $3.1 million (2012: $2.8 million).
Net cash flows from investing activities increased from a
net out flow of $4.2 million in 2012 to a net inflow of
$76.5 million in 2013. This was mainly due to the sale of
the Zara Project in Eritrea, whereby net cash received was
approximately $80.1 million. Payments for mining, exploration
and evaluation decreased by 48% to $4.5 million (2012:
$8.6 million) and payments for property, plant and equipment
decreased by 76% to $0.6 million (2012: $2.5 million) due
to reduced exploration activities following the sale of the Zara
Project during the year.
Financing cash flows for the year include a capital return of
$25 million to shareholders of 10 cents per share.
The effect of exchange rates on cash and cash equivalents
at 30 June 2013 was an increase of $4.9 million (2012:
$0.02 million). The Company held approximately US$52.2
million at 30 June 2013.
1.4 FinanCiaL position
At balance date the Group had net assets of $61,764,356,
and an excess of current assets over current liabilities of
$55,910,837.
Current assets increased by 9% to $56.8 million (2012:
$52.0 million). Cash and cash equivalents increased by
1719% to $56.4 million (2012: $3.1 million) due to the
receipt of proceeds from the sale of the Zara Project in Eritrea.
As the sale of the Zara Project was realised in 2013, the
Company had a nil balance in assets held for sale (2012:
$48.5 million).
Non-current assets increased by 64% to $5.9 million (2012:
$3.6 million) due to an increase in the exploration and
evaluation activities at the Company’s Mogoraib North
Project in Eritrea. During the year approximately $3.3 million
(Chalice’s share) was spent on exploration activities which
included two drilling programs and geophysical analysis.
Current liabilities decreased by 90% to $0.9 million (2012:
$8.6 million). Following the sale of the Zara Project, liabilities
held for sale (2012: $4.7 million) and unearned income
(2012: $3.0 million) were realised during the year.
ChaliCe gOld mines annual rePOrT 2013 | 5
sChedULe oF tenements
PrOjeCTs – eriTrea
PROJECT NAME
LICENCE TYPE STATUS
REGISTERED HOLDER
CURRENT EqUITY
Mogoraib North
Exploration
Licence
PrOjeCTs – ausTralia
Owned
Sub-Sahara Resources (Eritrea) Pty Ltd
60%
PROJECT NAME
TENEMENT # STATUS
REGISTERED HOLDER
CURRENT EqUITY
Gnaweeda Project E51/0926
Owned
E51/0927
Owned
Chalice Gold Mines Limited
and Teck Australia Pty Ltd
Chalice Gold Mines Limited
and Teck Australia Pty Ltd
12.03%
12.03%
Marla
Oodnadatta
EL4655
EL4656
EL4657
EL4658
EL4659
EL4660
EL4661
EL4679
EL4682
EL4683
EL4684
EL4686
EL4687
EL4688
EL4959
EL5144
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
GE Resources Pty Ltd
GE Resources Pty Ltd
GE Resources Pty Ltd
GE Resources Pty Ltd
GE Resources Pty Ltd
GE Resources Pty Ltd
GE Resources Pty Ltd
GE Resources Pty Ltd
GE Resources Pty Ltd
GE Resources Pty Ltd
GE Resources Pty Ltd
GE Resources Pty Ltd
GE Resources Pty Ltd
GE Resources Pty Ltd
GE Resources Pty Ltd
GE Resources Pty Ltd
0% - earning up to 70%.
0% - earning up to 70%.
0% - earning up to 70%.
0% - earning up to 70%.
0% - earning up to 70%.
0% - earning up to 70%.
0% - earning up to 70%.
0% - earning up to 70%.
0% - earning up to 70%.
0% - earning up to 70%.
0% - earning up to 70%.
0% - earning up to 70%.
0% - earning up to 70%.
0% - earning up to 70%.
0% - earning up to 70%.
0% - earning up to 70%.
6 |
DIRECTORS’ REPORT
The Directors present their report together with the financial report of the Chalice Gold Mines Limited (‘Chalice’) and its subsidiaries
(together ‘the Group’) for the financial year ended 30 June 2013 and the independent auditor’s report thereon. The names and
details of the Company’s directors in office during the financial year and until the date of this report is as follows. Directors were in
office for the entire period unless otherwise stated.
1. DIRECTORS
TIMOTHY R B GOYDER
Executive Chairman
Tim has considerable experience in the resource industry as an executive and investor. He has been involved in the formation and
management of a number of publicly-listed and private companies and is currently a director of Uranium Equities Limited, Strike Energy
Limited and Chairman of Liontown Resources Limited, all listed on ASX. Director since 2005 and appointed Chairman in 2008.
WILLIAM B BENT
MBA, AusIMM, IChemE
Managing Director
Bill joined Chalice in February 2013, and has over 22 years of industry and consulting experience. Prior to joining Chalice, Bill
held a senior executive role with Mirabela Nickel and was Director of Strategy with PriceWaterHouseCoopers Advisory and an
Associate Director at Mainsheet Corporate for a combined period of five years. Bill holds a BSc in Chemical Engineering and an
MBA. Managing Director since February 2013.
DOUGLAS A JONES
PhD, AusIMM, CPGeo
Executive Director
Doug is a geologist with over 35 years experience in mineral exploration, having worked extensively in Australia, Africa, South
America and Europe. His career has covered exploration for gold in a wide range of geological settings, volcanic and sediment-
hosted zinc-copper-lead, and IOCG style copper-gold. He is also a director of TSX and AIM-listed Minera IRL Limited and
Serabi Mining Plc and was previously a director of Liontown Resources Limited. Doug held the position of Managing Director
up to February 2013 and was appointed Executive Director on the appointment of Mr Bent. Doug has been a director of the
Company since 2008.
ANTHONY W KIERNAN
LLB
Non-executive Director
Tony, previously a practising lawyer, is a corporate advisor with extensive experience in the administration and operation of listed
public companies. He is Chairman of BC Iron Limited, Uranium Equities Limited, Venturex Resources Limited and is a director of
Liontown Resources Limited and South Boulder Mines Limited, all listed on ASX. Tony is Chairman of the Audit Committee and
Remuneration Committee and has been a director since 2007.
STEPHEN P QUIN
PGeo, FGAC, FSEG, MIOM3
Independent Non-executive Director
Stephen is a mining geologist with over 30 years’ experience in the mining and exploration industry. Stephen is based in
Vancouver, Canada, and has been the President & CEO of Midas Gold Corp. and its predecessor since January 2011.
Stephen was, until December 2010, President and COO of Capstone Mining Corp. and President & CEO of its predecessor,
Sherwood Mining Corp. from 2005 until the combination with Capstone in 2008. He is also a director of TSX-listed Mercator
Minerals Ltd., TSX Venture-listed Troon Ventures and NASDAQ-listed Blue Wolf Mongolia Holdings Corp. Stephen has extensive
experience in the resources sector, and in the financing, development and operation of production companies. Stephen is a
member of the Audit and Remuneration Committees and has been a director since 2010.
CHALICE GOLD MINES ANNUAL REPORT 2013 | 7
DIRECTORS’ REPORT (CONTINUED)
2. CHIEF FINANCIAL OFFICER AND JOINT COMPANY SECRETARIES
RICHARD K HACKER
B.Com, ACA, ACIS
Chief Financial Officer/Joint Company Secretary
Richard is a Chartered Accountant and Chartered Secretary with 20 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 was in private practice with major
accounting practices. Richard is also joint Company Secretary of Liontown Resources Limited. Company Secretary since 2005.
LEANNE FORGIONE
B.Com, CA
Joint Company Secretary
Leanne is a Chartered Accountant who has over 10 years of accounting and governance experience within the mining and
energy industries. Leanne is also joint Company Secretary of Liontown Resources Limited. Joint Company Secretary since 2012.
3. DIRECTORS’ MEETINGS
The number of meetings of directors (including meetings of committees of directors) held during the year and the number of
meetings attended by each director were as follows:
DIRECTORS’ MEETINGS
AUDIT
REMUNERATION
NOMINATION
Number of meetings held:
Number of meetings attended:
T R B Goyder
W B Bent
D A Jones
A W Kiernan
S P Quin
5
5
2
5
5
5
3
-
-
-
3
3
2
-
-
-
2
2
-
-
-
-
-
-
The Company has an audit committee, a remuneration committee and a nomination committee of the board of directors.
Members acting on the committees during the year were:
AUDIT
REMUNERATION
A W Kiernan (Chairman)
A W Kiernan (Chairman)
NOMINATION
Full Board
S P Quin
S P Quin
8 |
DIRECTORS’ REPORT (CONTINUED)
4. OPERATING AND FINANCIAL REVIEW
The directors of Chalice Gold Mines Limited present the Operating and Financial Review of the consolidated entity, prepared in
accordance with section 299A of the Corporations Act 2001 for the year ended 30 June 2013. The information provided in this
review forms part of the Directors’ Report and provides information to assist users in assessing the operations, financial position
and business strategies of the Company. Please refer to page 4 for further details.
5. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Other than the progress documented above, the state of affairs of the Company was not affected by any other significant
changes during the year.
6. REMUNERATION REPORT - AUDITED
This report for the year ended 30 June 2013 outlines remuneration arrangements in place for directors and executives of Chalice
Gold Mines Limited in accordance with the requirements of the Corporations Act 2001 (the “Act”) and its regulations. This
information has been audited as required by section 308 (3c) of the Act.
The Remuneration Report is presented under the following sections:
6.1 Message from the Board
6.2 Introduction
6.3 Principles of compensation
6.4 Key management personnel remuneration
6.5 Equity instruments
6.6 Service agreements
6.1 MESSAGE FROM THE BOARD
Last year, the Company reviewed its remuneration policy and structure to ensure the same was aligned to business strategy,
shareholder interests and effective executive remuneration and retention. These objectives are designed to be achieved through the
implementation of both a short term and long term incentive plan. With the sale of the Zara Project in the second half of 2012,
the appointment of a new Managing Director in early 2013, and the Group moving more to an acquisition mode, the Board and
Remuneration Committee needed to ensure the suitability and application of the plans in driving future direction and strategy.
The plans link the achievement of these objectives to the variable compensation of the Managing Director and staff. Further
details are provided in this report.
6.2
INTRODUCTION
The remuneration report details the remuneration arrangements for Key Management Personnel (‘KMP’) who are defined as those
individuals who have the authority and responsibility for planning, directing and controlling the activities of the Company and the
Group directly or indirectly. The following were the KMP for the Group at any time during the year:
Tim Goyder
Executive Chairman
William Bent
Managing Director (appointed 1 February 2013)
Douglas Jones
Technical Director
Anthony Kiernan Non-executive Director
Stephen Quin
Non-executive Director
Richard Hacker Chief Financial Officer and Joint Company Secretary
Michael Kelly
General Manager – Zara Mining Share Company (ceased employment 4 September 2012,
following the sale of the Zara Project in Eritrea).
There were no changes in KMP after the reporting date and before the financial report was authorised for issue.
CHALICE GOLD MINES ANNUAL REPORT 2013 | 9
DIRECTORS’ REPORT (CONTINUED)
6.3 PRINCIPLES OF COMPENSATION
6.3.1 Remuneration governance
Remuneration committee
The Board is responsible for ensuring Chalice’s remuneration strategy is aligned with Company performance and shareholder
interests and is equitable for participants. To assist with this, the Board has established a Remuneration Committee consisting of
the following directors:
Anthony Kiernan
(Chair)
Stephen Quin
Use of remuneration consultants
To ensure the Remuneration Committee is fully informed when making remuneration decisions, the Remuneration Committee may
seek external advice, as required, on remuneration policies and practices. During the financial year, the Remuneration Committee
did not seek specific advice and recommendations from external consultants although independent salary and benchmarking
data was utilised in setting remuneration packages for executives.
Remuneration report approval at 2012 Annual General Meeting
The Remuneration Report for the financial year ended 30 June 2012 received positive shareholder support at the 2012 Annual
General Meeting (‘AGM’) with a vote of 97.5% in favour.
6.3.2 Remuneration principles and components of remuneration
The Company has adopted the following principles in its remuneration framework:
1.
Seeking aggregate remuneration at a level which provides the Company with the ability to attract and retain directors and
executives of the highest calibre at a cost which is acceptable to shareholders; and
2. Key management personnel interest needing to be aligned with shareholder value and Company performance by:
• providing fair, consistent and competitive compensation and rewards to attract and retain appropriate employees;
• ensuring that total remuneration is competitive with its peers by market standards;
• incorporating in the remuneration framework both short and long term incentives linked to the strategic goals and
performance of the individuals and the Company and shareholder returns;
• demonstrating a clear relationship between individual performance and remuneration; and
• motivating employees to pursue and achieve the long term growth and success of the Company.
The following table is an overview of the components of remuneration:
ELEMENT
NON-EXECUTIVE
DIRECTORS
EXECUTIVES
Fixed remuneration
Base salary
Base fee
Committee fees
Superannuation
Consultancy fees
Other benefits
Variable remuneration
Short term incentives (STI)
Share options
Performance rights
# Only applies to Australian non-executives.
## Some directors are paid consultancy fees on an arm’s length basis (refer below).
×
#
##
×
###
×
×
×
×
### Non-executive directors are eligible to participate in the share option plan at the discretion of the Board and subject to shareholder approval where required
(refer below for further details).
10 |
DIRECTORS’ REPORT (CONTINUED)
6.3.3 Non-executive director remuneration
The Company’s Constitution and the ASX Listing Rules specify that the aggregate fees to be paid to non-executive directors for
their roles as directors are to be approved by shareholders at a general meeting. The latest determination was at the 2011
AGM, whereby Shareholders approved an aggregate amount of $450,000 per year (including superannuation). The Board will
not seek any increase for the non-executive director pool at the upcoming 2013 Annual General Meeting.
The fee structure for non-executive directors is reviewed annually and the Remuneration Committee and the Board may consider
advice from external consultants, and undertake comparative analyses of the fees paid to non-executive directors of comparable
companies in the resources sector with similar market capitalisations. Generally, the Company will position itself within the 50th
and 75th percentile band of the comparative market data.
For the 2013 financial year, non-executive directors received a fee of $45,000 (inclusive of superannuation, where applicable).
Members of the Audit Committee and Remuneration Committee also received an additional $5,000 for their roles on each of those
Committees. The additional payments recognise the additional time commitment by non-executive directors who serve on committees.
The non-executive directors are not entitled to receive retirement benefits. Non-executive directors, at the discretion of the Board,
may participate in the Employee Share Option Plan (“ESOP”), subject to the usual approvals required by shareholders. The Board
is conscious of the issue of share options to non-executive directors and will continue to balance the cost benefit of issuing share
options to attract and retain quality directors against paying higher fixed directors’ fees.
Non-executive directors are not eligible to participate in the Company’s Long Term Incentive Plan (“LTIP”).
Apart from their duties as directors, some non-executive directors may undertake additional work for the Company on a
consultancy basis on market terms. The use of consultancy by non-executive directors in addition to their duties as directors
enables the Company to better utilise the skills offered by the Board particularly in light of the Company’s current small
management team. Under the terms of these consultancy agreements, non-executive directors typically receive a daily rate
or monthly retainer for the work performed at a rate comparable to market rates that they would otherwise receive for their
consultancy services.
The remuneration of non-executive directors for the years ended 30 June 2013 and 30 June 2012 is detailed further in this
Remuneration Report. The amounts listed under ‘Salary & Fees’ includes both director fees and consultancy fees received by
non-executive directors.
6.3.4 Executive remuneration
Executive remuneration consists of fixed remuneration and may also comprise variable remuneration in the form of performance
based cash bonuses (Short Term Incentive Plan (“STIP”)), share options and performance rights (issued under the terms of the ESOP
and Long Term Incentive Plan (“LTIP”) respectively). The LTIP was approved by the Company’s shareholders at the 2011 AGM
and the structure of the plan is detailed below.
Fixed remuneration
The level of fixed remuneration is set to provide a base level of remuneration which is both appropriate for the position and
competitive in the market. The Company aims to pay within the 50th and 75th percentile band of benchmark data, but the
Board has the discretion to pay above this to attract and retain key employees in achieving the Company’s strategic goals.
Fixed remuneration is reviewed at appropriate times (and no less than on an annual basis) by the Remuneration Committee and
approved by the Board having regard to the Company and individual performance, relevant comparable remuneration for
similarly capitalised companies in the mining industry and independently compiled market data. Executives receive their fixed
remuneration in the form of cash.
The fixed remuneration for executives is detailed further in this Report.
CHALICE GOLD MINES ANNUAL REPORT 2013 | 11
DIRECTORS’ REPORT (CONTINUED)
Variable remuneration - STIP
Until 2013, the Board had not implemented a formal Short Term Incentive Plan (“STIP”); instead, it retained the discretion to
reward individual performance subject to the Company’s cash position and financial outlook.
Following the sale of the Zara Project and the appointment of Mr Bent as the Managing Director of the Company, the Board
implemented a formal STIP which is to include cash bonuses to executives upon achievement of predefined targets. The maximum
bonus percentage (“MBP”) ranges between 10% and 50% of an executive’s fixed annual salary depending on the position held.
The STIP is based on achieving “Base” and “Stretch” targets for the year. Achieving the base target attracts 50% of the relevant
MBP and achieving the stretch target or better attracts up to 100% of the relevant MBP.
The targets set by the Remuneration Committee and the Board in relation to STIP targets for KMP are broadly aligned with the
following key strategic objectives for the period ended 30 June 2014:
(i)
the acquisition by the Company of a significant project. In relation to the acquisition of a project, the Board has discretion
and needs to be satisfied that the acquisition is “significant” in the context of the Company. Stretch targets are based on the
price and quality of any asset acquired by the Company;
(ii) successful exploration at the Company’s projects. The entitlement ranges from no bonus, where exploration does not add
value through various stages up to 100% for a stretch target where exploration defines potential for an economic stand-alone
or satellite development; and
(iii) meeting of defined personnel objectives. These relate to matters such as safety, the environment, costs, meeting regulatory
matters and the like.
During the year, the Remuneration Committee approved a once off discretionary cash bonus amounting to $427,000 (inclusive
of superannuation) to certain directors and executives to recognise the significant efforts in completing the sale of the Zara Project
to SFECO and ENAMCO. The quantum and the discretionary nature of the bonuses were considered by the Company’s lead
independent director, Mr Stephen Quin and determined to be fair and reasonable in all the circumstances. Mr Quin was not a
beneficiary of the discretionary cash bonus.
Variable remuneration – share option plan
Equity grants to executives have previously been delivered in the form of employee share options under the Company’s Employee
Share Option Plan which was approved by shareholders in 2010. Options are issued at an exercise price determined by the
Board at the time of issue.
Generally, no performance hurdles were set on options issued to executives. The Company believed that as options were issued
at a price in excess of the Company’s current share price at the date of issue of those options, there was an inherent performance
hurdle as the share price of the Company’s shares had to increase before any reward could accrue to the executive.
The vesting period for share options is at the discretion of the Board and the expiry date of share options is usually between
3 and 5 years.
Upon cessation of employment, participants have 3 months from the date of cessation to exercise the share options. This
requirement may be waived at the Board’s discretion.
It is the Board’s preference to issue Performance Rights under the new LTIP to KMP rather than share options.
Variable remuneration – employee long term incentive plan (LTIP)
Under the LTIP, the Board has the discretion to make annual awards of performance rights (which is a right to convert into ordinary
Shares after achievement of applicable conditions) to executives and employees. The level of the award of performance rights
is dependent on an employee’s position within the Company. Subject to the performance criteria set out in the terms of the LTIP,
performance rights held by an employee may convert into ordinary fully paid shares in the Company. In the event performance
criteria are not achieved by the measurement date, the employee’s performance rights lapse with no shares being issued.
At the Company’s general meeting held on 5 June 2013 the performance rights issued to Mr Bent and Dr Jones, as directors of
the Company, were approved by shareholders with 97% of proxies voting in favour of the issue. Details of performance rights
granted to KMP during the year are shown below:
EXECUTIVE
W Bent
D Jones
R Hacker
NUMBER OF RIGHTS
MEASUREMENT DATE
1,453,444
655,000
402,139
1 January 2015
1 January 2015
1 January 2015
12 |
DIRECTORS’ REPORT (CONTINUED)
The performance rights as shown above will not vest (and the underlying Shares will not be issued) unless the performance
conditions set by the Board for each cycle of the LTIP have been satisfied. It is the intention of the Company to use the “standard”
measure of Total Shareholder Return (TSR) as the performance measure for the LTIP, where the Company’s TSR will be compared
against that of a comparator group of companies over the selected performance period for each cycle of the LTIP. However,
given the Company recently sold its primary asset and is in the process of looking for a new asset, a comparator group of
companies cannot yet be determined. The Board therefore selected absolute share price as the most appropriate measure for the
first tranche of performance rights issued under the LTIP for the period 1 February 2013 until 30 June 2015 (29 months).
The number of performance rights that will vest will be solely dependent on the Company’s share price as at the measurement (or
test) date of 1 January 2015 as compared to the Share price hurdles outlined in the following table. The Company’s share price
will be calculated on its 30 day VWAP.
IF THE 30 DAY VWAP AS AT 1 JANUARY 2015 IS
PERCENTAGE OF PERFORMANCE RIGHTS WHICH WILL VEST
Below 25 cents
25 cents
0%
33%
Between 25 cents and 38 cents
Pro rata between 33% and 100%
Above 38 cents
100%
Following the measurement date on 1 January 2015, it is a condition that an additional 6 month service period must be
completed by the executives meaning that any vested performance rights which are converted to shares after the measurement
date will be subject to a holding lock until 30 June 2015. It is also a condition the executives be an employee of the Company
at 30 June 2015.
A summary of the LTIP is set out below:
KEY DESIGN FEATURE
Eligibility
Award quantum
DESIGN
All full-time employees and permanent part-time employees (including executive directors and the
managing director) of the Company are eligible participants. Shareholder approval is required
before any director or related party of the Company can participate in the LTIP.
The award quantum will be determined in consideration of total remuneration of the individual,
market relativities and business affordability. The LTIP does not set out a maximum number of shares
that may be issuable to any one person, other than the 5% limit of the total number of issued shares.
Performance conditions
The performance conditions that must be satisfied in order for the performance rights to vest are
determined by the Board. The performance conditions may include one or more of the following:
Vesting
Term and lapse
• Employment of a minimum period of time;
• achievement of specific objectives by the participant and/or the Company. This may include
the achievement of share price targets and other major long term milestone targets; or
• such other performance objectives as the Board may determine.
Vesting will occur at the end of a defined period, usually three years, and upon the achievement of
the performance conditions.
The term of the performance rights is determined by the Board in its absolute discretion, but will
ordinarily have a three year term up to a maximum of five years. Performance Rights are subject to
lapsing if performance conditions are not met by the relevant measurement date or expiry dates
(if no other measurement date is specified) or if employment is terminated for cause or in
circumstances as described below.
Price Payable by Participant No consideration.
Cessation of Employment
If an employee leaves the Company prior to the expiration of the relevant vesting period for a
particular award of performance rights, generally such performance rights would lapse except in
certain limited situations such as disability, redundancy or death.
CHALICE GOLD MINES ANNUAL REPORT 2013 | 13
DIRECTORS’ REPORT (CONTINUED)
6.3.5 Link between performance and executive remuneration
The focus of executive remuneration over the financial year was fixed remuneration and performance rights under the LTIP
(i.e. growing the value of the Company as reflected through share price) which seeks to ensure that executive remuneration is
appropriately aligned with the business strategy and shareholder interests.
The share price performance over the last 5 years, adjusted to reflect the capital return of 10 cents per share in 2012, is as follows:
30 JUNE 2009
30 JUNE 2010
30 JUNE 2011
30 JUNE 2012
30 JUNE 2013
Share price
$0.15
$0.29
$0.23
$0.10
$0.16 (1)
(1) The Company’s cash backing at 30 June 2013 is approximately $0.23 per share.
6.4 KEY MANAGEMENT PERSONNEL REMUNERATION (AUDITED)
SHORT-TERM PAYMENTS
POST-EMPLOYMENT PAYMENTS
SHARE-
BASED
PAYMENTS
Key Management
Personnel
Salary &
fees
Cash
bonus(4)
Non-
monetary
benefits
Superannuation
benefits
$
$
$
Other
$
Termination
benefits
Long Term
Incentives (5)
$
$
Total
$
Proportion of
remuneration
performance
related
Directors
T R B Goyder
2013
281,422
100,000
2012
263,761
W B Bent(1)
2013
149,083
2012
-
-
-
-
D A Jones
2013
284,404
100,000
2012
284,404
-
A W Kiernan
2013
188,459
100,000
2012
203,196
M R Griffiths
2013
-
2012
49,331
S P Quin
2013
55,000
2012
42,083
J Jeffery (2)
2013
-
2012
218,056
Executive
-
-
-
-
-
-
-
R K Hacker
2013
241,858
100,000
2012
229,358
M P Kelly (3)
2013
49,336
2012
341,235
-
-
-
2,557
2,445
1,041
-
2,898
6,235
2,557
2,445
-
27,578
23,739
13,417
-
34,596
25,596
4,541
3,888
-
-
-
-
-
-
-
-
-
-
955
5,701
50,459
2,557
2,445
-
-
-
-
1,490
25,536
3,796
3,599
454
-
30,767
20,642
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
81,250
-
-
411,557
289,945
2,329
165,870
-
-
1,050
422,948
-
316,235
46,866
342,423
-
-
209,529
-
11,800
118,246
38,028
95,585
56,085
100,613
-
-
-
326,332
-
-
33,539
409,960
36,753
290,352
69,573
-
-
-
119,363
341,235
24%
-%
1%
-%
24%
-%
43%
-%
-%
10%
40%
56%
-%
-%
33%
13%
-%
-%
Total Compensation 2013 1,249,562
400,000
15,860
110,899
-
69,573
121,812 1,967,706
2012 1,631,424
-
19,614
105,102
50,459
81,250
104,638 1,992,487
(1) Mr Bent commenced on 1 February 2013. At the Company’s General Meeting held on 5 June 2013, shareholder’s approved the issue of 1,453,444 performance
rights to Mr Bent.
(2)Mr Jeffery resigned on 15 February 2012.
(3)Following the sale of the Zara Project in September 2013, Mr Kelly was no longer an employee of Chalice Gold Mines Limited.
(4) On completion of the sale of the Zara Project, certain Key Management Personnel were granted a discretionary cash completion bonus in recognition of their efforts
in completing the sale of the Zara Project to SFECO.
(5) The fair value of the options is calculated at the date of grant using a Black-Scholes 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. The fair value of the performance rights is
calculated at the date of grant using a trinomial model. In valuing the options and performance rights, market based vesting conditions have been taken into account.
14 |
DIRECTORS’ REPORT (CONTINUED)
6.5 EQUITY INSTRUMENTS (AUDITED)
6.5.1 Employee share options
Details of options over ordinary shares in the Group 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 2013
FAIR VALUE PER
OPTION AT
GRANT DATE
$
EXERCISE PRICE
$
EXPIRY DATE
NUMBER OF
OPTIONS
VESTED
DURING 2013
GRANT DATE
Directors
A W Kiernan
S P Quin
750,000
300,000
5 June 2013
5 June 2013
0.06
0.06
0.30
0.30
30 June 2016
750,000
30 June 2016
487,500
During the reporting period, 500,000 fully paid ordinary shares were issued to Mr Kiernan on the exercise of 500,000 options
at 25 cents per share.
Details of the vesting profile of the options granted as remuneration to each KMP of the Group are outlined below.
NUMBER
GRANTED/
VESTED
DATE GRANTED
% VESTED IN YEAR
% FORFEITED IN
YEAR
DATE ON WHICH
GRANT VESTS
Directors
T R B Goyder (1)
2,500,000
22 November 2011
M Griffiths
S Quin
375,000
16 November 2009
187,500
25 November 2010
A W Kiernan
300,000
750,000
5 June 2013
5 June 2013
-
-
100%
100%
100%
100%
100%
-
-
-
-
-
30 April 2013
5 June 2013
5 June 2013
(1) The options granted to Mr Goyder lapsed during the reporting period as the vesting conditions set were no longer able to be achieved due to the sale of the Zara
Project in Eritrea.
The movement during the reporting period, by value of options over ordinary shares in the Group held by each KMP is detailed below:
VALUE OF OPTIONS GRANTED
IN YEAR (A)
VALUE OF OPTIONS EXERCISED
IN YEAR (B)
VALUE OF OPTIONS LAPSED IN
YEAR(C)
A W Kiernan
S P Quin
$
46,866
18,746
$
30,000
-
$
-
-
(A) The value of options granted in the year is the fair value of options calculated at grant date using the Black Scholes 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 represent the benefit foregone and is calculated at the date the option
lapsed using the Black Scholes option-pricing model with no adjustments for whether performance criteria have or have not
been achieved.
CHALICE GOLD MINES ANNUAL REPORT 2013 | 15
DIRECTORS’ REPORT (CONTINUED)
b) Employee long term incentive plan - performance rights
Details of performance rights granted as compensation to KMP during the reporting period and details of performance rights that
vested during the reporting period are as follows:
NUMBER OF
RIGHTS GRANTED
DURING 2013
1,453,444
655,000
402,139
GRANT DATE
5 June 2013
5 June 2013
6 June 2013
FAIR VALUE PER
RIGHT AT GRANT
DATE
$
0.048
0.048
0.048
EXPIRY DATE
30 June 2016
30 June 2016
30 June 2016
NUMBER OF
RIGHTS VESTED
DURING 2013
-
-
125,000
Executives
W B Bent
D Jones
R Hacker
During the reporting period, 125,000 shares were issued to Mr Hacker on the exercise of performance rights granted as
compensation on 16 December 2011. Refer below.
Details of the vesting profile of performance rights granted as remuneration to each KMP of the Group are outlined below.
NUMBER GRANTED DATE GRANTED % VESTED IN YEAR
% FORFEITED IN
YEAR
DATE ON WHICH
GRANT VESTS
Executives
W B Bent
D Jones
M Kelly(2)
R Hacker
1,453,444
655,000
500,000
125,000
125,000
402,139
5 June 2013
5 June 2013
16 December 2011
-
-
-
16 December 2011
100%
16 December 2011
6 June 2013
-
-
-
-
100%
-
-
-
1 January 2015
1 January 2015
-
1 October 2012
1 October 2013
1 January 2015
The movement during the reporting period, by value of performance rights over ordinary shares in the Group held by each KMP
is detailed below:
VALUE OF PERFORMANCE
RIGHTS GRANTED IN YEAR(A)
VALUE OF PERFORMANCE
RIGHTS EXERCISED IN YEAR(B)
VALUE OF PERFORMANCE
RIGHTS LAPSED IN YEAR(C)
W B Bent
D Jones
M Kelly(2)
R Hacker
$
70,347
31,702
-
19,343
$
-
-
-
27,500
$
-
-
(125,000)
-
(2) Mr Kelly’s performance rights lapsed on 7 September 2012.
(A) The value of performance rights granted in the year is the fair value of performance rights calculated at grant date using a
trinomial model. The total value of the performance rights granted is included in the table above. This amount is allocated to
remuneration over the vesting period.
(B) The value of performance rights 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 performance rights were exercised after deducting the price paid to exercise the
performance right.
(C) The value of performance rights that lapsed during the year represents the benefit foregone and is calculated at the date the
performance right lapsed using the Black Scholes option-pricing model with no adjustments for whether performance criteria
have or have not been achieved.
16 |
DIRECTORS’ REPORT (CONTINUED)
6.6 SERVICE AGREEMENTS
Remuneration arrangements for KMP are formalised in employment agreements. Details of these contracts are provided below.
Tim Goyder
(Executive Chairman)
William Bent
(Managing Director)
TERMINATION
DIMINUTION OF RESPONSIBILITY
OTHER PROVISIONS
Mr Goyder’s
employment agreement
may be terminated by
the Company or Mr
Goyder upon giving
three months’ notice.
If Mr Goyder‘s role in the Company undergoes a
material variation or diminution of responsibilities,
including a material change in authority or in his
reporting relationship to the Board, he may terminate
his employment and would then receive a payment
equal to 12 months’ salary.
Standard Chalice
terms and conditions of
employment.
Mr Bent’s employment
agreement may be
terminated by the
Company or Mr Bent
upon giving at least six
months’ notice or such
lesser period as agreed
between the parties.
In the event of a material change in Mr Bent’s status,
remuneration, benefits, title, work location, duties or
responsibilities including but not limited to a material
change in Mr Bent’s direct reporting line or reporting
structure, to which Mr Bent has not agreed and as a
result of which Mr Bent’s employment is terminated or
he resigns from his employment with the Company,
Mr Bent shall be entitled to a severance payment
equal to 12 months’ worth of the Annual Salary.
Standard Chalice
terms and conditions of
employment.
Douglas Jones
(Technical Director)
Dr Jones’ employment
agreement may be
terminated by the
Company or Dr Jones
upon giving three
months’ notice.
If Dr Jones’ role in the Company undergoes a
material variation or diminution of responsibilities,
including a material change in authority or in
his reporting relationship to the Board, he may
terminate his employment and would then receive a
payment equal to 12 months’ salary.
Standard Chalice
terms and conditions of
employment.
Other Key Management
Personnel
Nil
All other Key
Management Personnel
employment agreements
may be terminated by
the Company or the
employee upon giving
three months’ notice.
Standard Chalice
terms and conditions of
employment.
Non-Executive Directors Nil
Nil
Nil
7. DIVIDENDS
No dividends were declared or paid during the year and the directors recommend that no dividend be paid.
8. CAPITAL RETURN AND EQUAL CAPITAL REDUCTION
Following the completion of the sale of the Zara Project in September 2012, shareholder approval was obtained at the
Company’s 2012 Annual General Meeting for a return of capital and equal capital reduction of 10 cents per share totalling
$25 million.
LIKELY DEVELOPMENTS
9.
Following the sale of the Company’s major asset, the Zara Project, the Company is focused on the evaluation of resource projects
for acquisition.
CHALICE GOLD MINES ANNUAL REPORT 2013 | 17
DIRECTORS’ REPORT (CONTINUED)
10. EVENTS SUBSEQUENT TO REPORTING DATE
On 24 September 2013, Chalice entered into an agreement with unlisted public company, GeoCrystal Limited (“GeoCrystal”) to
subscribe for 3,333,333 shares and 3,333,333 free attaching options in GeoCrystal at an issue price of $0.15 ($500,000).
Following the placement, Chalice owns a 10.1 per cent of the issued and outstanding shares of GeoCrystal. The options are
exercisable at $0.20 each and expire on 30 September 2015. In addition, GeoCrystal granted Chalice an option to acquire
a further 2.1 million shares at $0.20 per share on or before 29 March 2014, which if exercised would increase Chalice’s stake
to 19.9 per cent on a fully diluted basis. Chalice has been granted a conditional first right of refusal on future financing until its
stake has reached 51 per cent of GeoCrystal.
In addition, Chalice has entered into a farm-in joint venture agreement with Uranium Equities Limited over its Oodnadatta and
Marla Projects in South Australia (the “O&M Projects”). The farm-in agreement gives Chalice the right to earn up to 70 per cent of
both projects by sole funding a total of $5.5 million in exploration expenditure. Chalice may earn an initial 51 per cent by sole
funding $2.5 million, but there is no minimum spend required before withdrawal.
11. DIRECTORS’ INTERESTS
The relevant interest of each director in the shares, rights or options over such instruments issued by Chalice and other related
bodies corporate, as notified by the directors to the ASX in accordance with S205G(1) of the Corporations Act 2001, at the
date of this report is as follows:
T R B Goyder
W B Bent
D A Jones
S P Quin
A W Kiernan
ORDINARY SHARES
OPTIONS OVER ORDINARY
SHARES
PERFORMANCE RIGHTS
41,059,389
646,350
296,278
26,321
1,662,041
-
-
2,500,000
1,050,000
750,000
-
1,453,444
655,000
-
-
12. SHARE OPTIONS AND PERFORMANCE RIGHTS
Unissued shares under option
At the date of this report 5,150,000 unissued ordinary shares (5,650,000 at reporting date) of the Company are under option
on the following terms and conditions:
EXPIRY DATE
EXERCISE PRICE
($)
NUMBER OF SHARES
31 March 2014
31 March 2014
30 April 2014
30 April 2014
30 April 2014
14 September 2014
30 November 2014
30 June 2016
0.35
0.45
0.55
0.65
0.75
0.45
0.45
0.30
1,250,000
1,250,000
187,500
187,500
375,000
750,000
100,000
1,050,000
These options do not entitle the holder to participate in any share issue of Chalice or any other body corporate.
18 |
DIRECTORS’ REPORT (CONTINUED)
Performance rights
At the date of this report 2,954,149 performance rights (2,954,149 at reporting date) have been issued on the following terms
and conditions:
EXPIRY DATE
30 June 2015
30 June 2016
EXERCISE PRICE
($)
Nil
Nil
NUMBER OF SHARES
200,000
2,754,149
Shares issued on exercise of options or performance rights
1,200,000 shares were issued during or since the end of the year as a result of the exercise of 1,000,000 options and
200,000 performance rights.
13. ENVIRONMENTAL LEGISLATION
The Group is subject to environmental legislation and obligations within the jurisdictions in which it operates, which during the
period has been primarily in Eritrea.
14. PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied for leave of court to bring proceedings on behalf of the Company or intervene in any proceedings to which
the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings.
15. INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
Chalice has agreed to indemnify all the directors and officers who have held office during the year, against all liabilities
to another person (other than Chalice or a related body corporate) that may arise from their position as directors and officers of
Chalice, except where the liability arises out of conduct involving a lack of good faith. The agreement stipulates that Chalice will
meet the full amount of any such liabilities, including costs and expenses.
During the year the Group paid insurance premiums of $14,282 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 KMP remuneration on page 14.
16. NON-AUDIT SERVICES
During the year HLB Mann Judd, the Company’s auditors, performed taxation advisory services amounting to $3,500 in addition
to their statutory duties.
17. AUDITOR’S INDEPENDENCE DECLARATION
The auditor’s independence declaration is set out on page 21 and forms part of the Directors’ Report for the year ended 30 June 2013.
This Report is made in accordance with a resolution of the Directors:
William Bent
Managing Director
Dated at Perth the 27th day of September 2013
CHALICE GOLD MINES ANNUAL REPORT 2013 | 19
DIRECTORS’ REPORT (CONTINUED)
COMPETENT PERSONS AND QUALIFIED PERSON STATEMENT
The information in this report that relates to Exploration Results is based on information compiled by Dr Doug Jones, a full-time employee and Director of Chalice Gold
Mines Limited, who is a Member of the Australasian Institute of Mining and Metallurgy and is a Chartered Professional Geologist. Dr Jones 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 is a Qualified Person under National Instrument 43-101 – ‘Standards of Disclosure for Mineral Projects’. The Qualified
Person has verified the data disclosed in this release, including sampling, analytical and test data underlying the information contained in this release. Dr Jones
consents to the release of information in the form and context in which it appears here.
FORWARD LOOKING STATEMENTS
This document may contain forward-looking information within the meaning of Canadian securities legislation and forward-looking statements within the meaning of
the United States Private Securities Litigation Reform Act of 1995 (collectively, forward-looking statements). These forward-looking statements are made as of the date
of this document and Chalice Gold Mines Limited (the Company) does not intend, and does not assume any obligation, to update these forward-looking statements.
Forward-looking statements relate to future events or future performance and reflect Company management’s expectations or beliefs regarding future events and may
include, but are not limited to, statements with respect to the estimation of mineral reserves and mineral resources, the realization of mineral reserve estimates, the likelihood
of exploration success, future business development opportunities, the timing and amount of estimated future production, costs of production, capital expenditures, success
of mining operations, environmental risks, unanticipated reclamation expenses, title disputes or claims and limitations on insurance coverage. In certain cases, forward-
looking statements can be identified by the use of words such as plans, expects or does not expect, is expected, will, may would, budget, scheduled, estimates, forecasts,
intends, anticipates or does not anticipate, or believes, or variations of such words and phrases or statements that certain actions, events or results may, could, would,
might or will be taken, occur or be achieved or the negative of these terms or comparable terminology. By their very nature forward-looking statements involve known
and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any
future results, performance or achievements expressed or implied by the forward-looking statements. Such factors may include, among others, risks related to actual results
of current exploration activities; changes in project parameters as plans continue to be refined; future prices of mineral resources; possible variations in ore reserves,
grade or recovery rates; accidents, labour disputes and other risks of the mining industry; delays in obtaining governmental approvals or financing or in the completion
of development or construction activities; as well as those factors detailed from time to time in the Company’s interim and annual financial statements and management’s
discussion and analysis of those statements, all of which are filed and available for review on SEDAR at sedar.com. Although the Company has attempted to identify
important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that
cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as
actual results and future events could differ materially from those anticipated in such statements.
Accordingly, readers should not place undue reliance on forward-looking statements.
20 |
AUDITOR’S INDEPENDENCE DECLARATION
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the consolidated financial report of Chalice Gold Mines
Limited for the year ended 30 June 2013, I declare that to the best of my knowledge and
belief, there have been no contraventions of:
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 and the entities it controlled
during the year.
Perth, Western Australia
27 September 2013
W M Clark
Partner
HLB Mann Judd (WA Partnership) ABN 22 193 232 714
Level 4, 130 Stirling Street Perth WA 6000. PO Box 8124 Perth BC 6849 Telephone +61 (08) 9227 7500. Fax +61 (08) 9227 7533.
Email: hlb@hlbwa.com.au. Website: http://www.hlb.com.au
Liability limited by a scheme approved under Professional Standards Legislation
HLB Mann Judd (WA Partnership) is a member of
International, a worldwide organisation of accounting firms and business advisers.
CHALICE GOLD MINES ANNUAL REPORT 2013 | 21
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2013
Continuing operations
Other income
Foreign exchange gains/(losses)
Impairment of financial assets
Loss on sale of exploration and evaluation assets
Exploration and evaluation assets written off
Impairment of exploration and evaluation assets
Corporate administrative expenses
Depreciation and amortisation expense
Loss before tax from continuing operations
Income tax expense
Loss for the year from continuing operations
Discontinued operations
Net profit/(loss) from discontinued operations
Profit/(loss) for the year from discontinued operations
NOTE
3(a)
10
10
3(b)
6
2013
$
2012
$
374,137
4,873,790
(686,442)
-
(595,676)
(375,000)
369,678
(18,235)
-
(147,091)
(96,820)
(126,431)
(3,632,238)
(3,600,368)
(83,449)
(99,454)
(124,878)
(3,718,721)
-
-
(124,878)
(3,718,721)
4
43,783,106
43,783,106
(416,493)
(416,493)
Total profit/(loss) for the year
43,658,228
(4,135,214)
Total profit/(loss) for the year attributable to:
Owners of the parent
Non-controlling interests
Other comprehensive income/(loss)
Items that may be reclassified to profit or loss
Net change in fair value of available for sale investments
Exchanges differences on translation of foreign operations
Other comprehensive income/(loss) for the year
43,663,861
(4,093,565)
(5,633)
(41,649)
43,658,228
(4,135,214)
17(b)
17(b)
(12,000)
(34,000)
(455,386)
2,562,582
(467,386)
2,528,582
Total comprehensive income/(loss) for the year
43,190,842
(1,606,632)
Total comprehensive income/(loss) for the year attributable to:
Owners of the parent
Non-controlling interests
Basic and diluted loss per share from continuing operations (cents)
Basic and diluted loss per share from discontinued operations (cents)
Basic and diluted earnings/(loss) per share from continuing and discontinued
operations (cents)
7
7
7
43,196,475
(1,564,983)
(5,633)
(41,649)
43,190,842
(1,606,632)
(0.01)
17.5
17.4
(1.5)
(0.1)
(1.6)
The above statement of comprehensive income should be read in conjunction with the accompanying notes.
22 |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED 30 JUNE 2013
Current assets
Cash and cash equivalents
Trade and other receivables
Assets held for sale – Zara Project
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
Unearned income
Employee benefits
Liabilities held for sale – Zara Project
Total current liabilities
Non-current liabilities
Other
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Retained earnings/(accumulated losses)
Reserves
Total equity attributable to the owners of the parent
Non-controlling interests
Total equity
21
8
4
9
10
11
12
13
14
4
15
2013
$
2012
$
56,443,226
3,074,530
375,152
486,635
-
48,483,409
56,818,378
52,044,574
185,613
862,640
5,202,613
2,482,857
502,270
275,419
5,890,496
3,620,916
62,708,874
55,665,490
829,890
859,855
-
2,979,441
77,651
93,883
-
4,670,319
907,541
8,603,498
36,977
36,977
25,463
25,463
944,518
8,628,961
61,764,356
47,036,529
16
17(a)
17(b)
39,239,790
64,200,112
24,632,124
(16,202,389)
(2,107,558)
(4,636,037)
61,764,356
43,361,686
-
3,674,843
61,764,356
47,036,529
The above statement of financial position should be read in conjunction with the accompanying notes.
CHALICE GOLD MINES ANNUAL REPORT 2013 | 23
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2013
9
2
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24 |
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2013
Cash flows from operating activities
Cash receipts from operations
Cash paid to suppliers and employees
Interest received
NOTE
2013
$
2012
$
148,276
155,134
(3,438,468)
(3,171,481)
177,091
265,079
Net cash used in operating activities
21
(3,113,101)
(2,751,268)
Cash flows from investing activities
Payments for mining exploration and evaluation
Share of joint venture cash calls
Acquisition of property, plant and equipment
Repayment of loan by non-controlling interests
Interim payment received
Proceeds from sale of exploration and evaluation assets
Net proceeds from disposal of subsidiary
Net cash from/(used in) investing activities
Cash flows from financing activities
Payment of capital return
Payments for capital return costs
Options exercised
Share issue costs
Net cash used in financing activities
(4,473,836)
(8,590,119)
1,320,961
-
(594,156)
(2,457,989)
-
-
3,126,262
2,979,441
53,434
695,203
13
4(c)(iii)
80,148,232
-
76,454,635
(4,247,202)
(25,073,087)
(9,127)
125,000
(3,106)
(24,960,320)
-
-
-
-
-
Net increase/(decrease) in cash and cash equivalents
48,381,214
(6,998,470)
Cash and cash equivalents at the beginning of the year
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at 30 June
3,177,131
10,193,836
4,884,881
(18,235)
21
56,443,226
3,177,131
The above statement of cash flows should be read in conjunction with the accompanying notes.
CHALICE GOLD MINES ANNUAL REPORT 2013 | 25
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
1. SIGNIFICANT ACCOUNTING POLICIES
Chalice Gold Mines Limited is a dual listed Australian Securities Exchange (‘ASX’) and Toronto Stock Exchange (‘TSX’) listed
public company domiciled in Australia at Level 2, 1292 Hay Street, Perth, Western Australia. The consolidated financial report
comprises the financial statements of Chalice Gold Mines Limited (‘Company’) and its subsidiaries (‘the Group’) for the year
ended 30 June 2013.
(a) Basis of preparation and statement of compliance
These financial statements are general purpose financial statements, which have been prepared in accordance with the requirements
of the Corporations Act 2001, Accounting Standards and Interpretations and comply with other requirements of the law.
The accounting policies detailed below have been consistently applied to all of the years presented unless otherwise stated.
The financial report has also been prepared on a historical cost basis, except for available-for-sale investments, which have been
measured at fair value. Cost is based on the fair values of the consideration given in exchange for assets. Chalice is domiciled in
Australia and all amounts are presented in Australian dollars, unless otherwise noted.
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 of the consolidated financial
statements and notes thereto, complies with International Financial Reporting Standards (IFRS).
The financial report was authorised for issue by the directors on 27 September 2013.
(b) Adoption of new and revised standards
(i) Standards and Interpretations application to 30 June 2013
In the year ended 30 June 2013, the Directors have reviewed all of the new and revised Standards and Interpretations
issued by the AASB that are relevant to the Group and effective for the current annual reporting period.
As a result of the review, the Directors have determined that there is no material impact of the new and revised Standards
and Interpretations on the Group and, therefore, no material change is necessary to the Group accounting policies.
(ii) Accounting Standards and Interpretations issued but not yet effective
Certain new accounting standards and interpretations have been published that are not mandatory for the 30 June 2013
reporting periods. The consolidated entity has not elected to early adopt any pronouncements before their operative date in
the current reporting period ended 30 June 2013. The consolidated entity’s assessment of the impact of these new standards
and interpretations are set out below.
TITLE OF STANDARD
AND APPLICATION
DATE
AASB 10
Consolidated Financial
Statements
This standard has an
effective application date
of 1 July 2013.
NATURE AND AMENDMENT AND IMPACT ON CHALICE GOLD MINES LIMITED
AASB 10 establishes a new control model that applies to all entities. It replaces parts of AASB
127 Consolidated and Separate Financial Statements dealing with the accounting for consolidated
financial statements and UIG-112 Consolidation – Special Purpose Entities.
The new control model broadens the situations when an entity is considered to be controlled by
another entity and includes new guidance for applying the model to specific situations, including
when acting as a manager may give control, the impact of potential voting rights and when
holding less than a majority voting rights may give control.
Consequential amendments were also made to this and other standards via AASB 2011-7 and AASB
2012-10.
The Group does not expect the new standard to have a significant impact on its composition.
26 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2013
TITLE OF STANDARD
AND APPLICATION
DATE
AASB 11
Joint Arrangements
This standard has an
effective application date
of 1 July 2013.
AASB 12
Disclosure of interest in
other entities
This standard has an
effective application date
of 1 July 2013.
AASB 13
Fair Value Measurement
This standard has an
effective application date
of 1 July 2013.
AASB 127
Separate Financial
Statements
This standard has an
effective application date
of 1 July 2013.
NATURE AND AMENDMENT AND IMPACT ON CHALICE GOLD MINES LIMITED
AASB 11 replaces AASB 131 Interests in Joint Ventures and UIG-113 Jointly-controlled Entities –
Non-monetary Contributions by Ventures.
AASB 11 uses the principle of control in AASB 10 to define joint control, and therefore the
determination whether joint control exists may change. In addition it removes the option to account
for jointly controlled entities (JCEs) using proportionate consolidation. Instead, accounting for a joint
arrangement is dependent on the nature of the rights and obligations arising from the arrangement.
Joint operations that give the venturers a right to the underlying assets and obligations themselves is
accounted for by recognising the share of those assets and obligations. Joint ventures that give the
venturers a right to the net assets is accounted for using the equity method.
Consequential amendments were also made to this and other standards via AASB 2011-7,
AASB 2010-10 and amendments to AASB 128.
The above standard may impact on the disclosures and presentation of the financial report but
won’t have a material impact on the entity’s financial position.
AASB 12 includes all disclosures relating to an entity’s interests in subsidiaries, joint arrangements,
associates and structured entities. New disclosures have been introduced about the judgments made
by management to determine whether control exists, and to require summarised information about
joint arrangements, associates, structured entities and subsidiaries with non-controlling interests.
Where appropriate, additional disclosures will be provided in 2014 annual financial report about
judgements made in relation to the determination of control.
The Group does not expect the new standard to have a significant impact on its composition.
AASB 13 establishes a single source of guidance for determining the fair value of assets and
liabilities. AASB 13 does not change when an entity is required to use fair value, but rather provides
guidance on how to determine fair value when fair value is required or permitted. Application of this
definition may result in difference fair values being determined for the relevant assets.
AASB 13 also expands the disclosure requirements for all assets or liabilities carried at fair
value. This includes information about the assumptions made and the qualitative impact of those
assumptions on the fair value determined.
Consequential amendments were also made to other standards via AASB 2011-8.
This revised standard is not expected to have a significant impact on fair value assumptions and
calculations for the consolidated entity.
Amended version AASB 127 which now only deals with the requirements for separate financial
statements, which have been carried over largely unamended from AASB 127 Consolidated
and Separate Financial Statements. Requirements for consolidated financial statements are now
contained in AASB 10 Consolidated Financial Statements.
The Standard requires that when an entity prepares separate financial statements, investments
in subsidiaries, associates and jointly controlled entities are accounted for either at cost, or in
accordance with AASB 9 Financial Instruments.
The Standard also deals with the recognition of dividends, certain group reorganisations and
includes a number of disclosure requirements.
The Group does not expect the new standard to have a significant impact on its composition.
AASB 128
Investments in Associates
and Joint Ventures.
This Standard supersedes AASB 128 Investments in Associates and prescribes the accounting for
investments in associates and sets out the requirements for the application of the equity method
when accounting for investments in associates and joint ventures.
This standard has an
effective application date
of 1 July 2013.
The Standard defines ‘significant influence’ and provides guidance on how the equity method of
accounting is to be applied (including exemptions from applying the equity method in some cases).
It also prescribes how investments in associates and joint ventures should be tested for impairment.
The Group does not expect the new standard to have a significant impact on its composition.
CHALICE GOLD MINES ANNUAL REPORT 2013 | 27
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2013
TITLE OF STANDARD
AND APPLICATION
DATE
AASB 119
Employee Benefits
This standard has an
effective application date
of 1 July 2013.
AASB 2012- 2
Amendments to Australian
Accounting Standards –
Disclosures – Offsetting
Financial Assets and
Financial Liabilities
This standard is applicable
from 1 July 2013.
AASB 2012-5
Amendments to
accounting standards
arising from
Annual Improvements
2009-2011 Cycle
This standard is applicable
from 1 July 2013.
AASB 1053
Application of Tiers
of Australian Accounting
Standards
This standard is applicable
from 1 July 2013.
NATURE AND AMENDMENT AND IMPACT ON CHALICE GOLD MINES LIMITED
The main change introduced by this standard is to revise the accounting for defined benefit plans.
The amendment removes the options for accounting for the liability, and requires that the liabilities
arising from such plans is recognised in full with actuarial gains and losses being recognised in
other comprehensive income. It also revised the method of calculating the return on plan assets.
The revised standard changes the definition of short-term employee benefits. The distinction
between short-term and other long-term employee benefits is now based on whether the benefits
are expected to be settled wholly within 12 months after the reporting date. Consequential
amendments were also made to other standards via AASB 2011-10.
The amendments related to defined benefit plans are not relevant to the Company since it does not
have such plans in place.
The amendments related to the definition of short term employee benefits are not expected to have
a significant impact on the consolidated entity as short term employee benefits are generally settled
within 12 months after reporting dates.
AASB 2012-2 principally amends AASB 7 Financial Instruments: Disclosures to require disclosure
of the effect or potential effect of netting arrangements. This includes rights of set-off associated
with the entity’s recognised financial assets and liabilities on the entity’s financial position, when the
offsetting criteria of AASB 132 are not all met.
The revised standard is not expected to have a significant impact since the consolidated entity has
not set off financial assets and liabilities.
AASB 2012-5 makes amendments resulting from the 2009-2011 Annual Improvements Cycle.
The standard addresses a range of improvements, including the following:
- Repeat application of AASB 1 is permitted (AASB 1)
- Clarification of the comparative information requirements when an entity provides a third balance
sheet (AASB 101 Presentation of financial statements).
The Group does not expect the new standard to have a significant impact on its composition.
This standard establishes a differential financial reporting framework consisting of two tiers of
reporting requirements for preparing general purpose financial statements:
(a) Tier 1: Australian Accounting Standards
(b) Tier 2: Australian Accounting Standards – Reduced Disclosure Requirements
Tier 2 comprises the recognition, measurement and presentation requirements of Tier 1 and
substantially reduced disclosures corresponding to those requirements.
Consequential amendments to other standards to implement the regime were introduced by
AASB 2010-2, 2011-6, 2011-11, 2012-1, 2012-7 and 2012-11.
As a public company, Chalice Gold Mines Limited is required to apply Tier 1 requirements in
preparing general purpose financial statements. Therefore, the Company does not expect that new
standard to have a significant impact on the preparation of its financial report.
28 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2013
TITLE OF STANDARD
AND APPLICATION
DATE
AASB 9
Financial Instruments
NATURE AND AMENDMENT AND IMPACT ON CHALICE GOLD MINES LIMITED
AASB 9 includes requirements for the classification and measurement of financial assets. It was
further amended by AASB 2010-7 to reflect amendments to the accounting for financial liabilities.
This standard is applicable
from 1 January 2015.
These requirements improve and simplify the approach for classification and measurement of financial
assets compared with the requirements of AASB 139. The main changes are described below:
(a) Financial assets that are debt instruments will be classified based on:
a. The objective of the entity’s business model for managing financial assets;
b. The characteristics of the contractual cash flows.
(b) Allows an irrevocable election on initial recognition to present gains and losses on investments
in equity instruments that are not held for trading in other comprehensive income. Dividends in
respect of these investments that are a return on investment can be recognised in profit or loss
and there is no impairment or recycling on disposal of the instrument.
(c) Financial assets can be designated and measured at fair value through profit or loss
at initial recognition if doing so eliminates or significantly reduces a measurement or
recognition inconsistency that would arise from measuring assets or liabilities, or recognising
the gains and losses on them, on different bases.
(d) Where the fair value option is used for financial liabilities the change in fair value is to be
accounted for as follows:
a. The change attributable to changes in credit risk are presented in other comprehensive
income (OCI)
b. The remaining change is presented in profit or loss
If this approach creates or enlarges an accounting mismatch in the profit or loss, the effect of the
changes in credit risk are also presented in profit or loss.
Further amendments were made by AASB 2012-6 which amends the mandatory effective date
to annual reporting periods beginning on or after 1 January 2015. AASB 2012-6 also modifies
the relief from restating prior periods by amending AASB 7 to require additional disclosures on
transition to AASB 9 in some circumstances.
Consequential amendments were also made to other standards as a result of AASB 9, introduced
by AASB 2009-11 and superseded by AASB 2010-7 and 2010-10.
The revised standard is not expected to have a significant impact on the classification and
measurement of financial assets or financial liabilities.
(c) Basis of consolidation
The consolidated financial statements comprise the financial statements of Chalice Gold Mines Limited (‘Company’ or ‘Parent’)
and its subsidiaries as at 30 June each year (the ‘Group’). Interests in associates are equity accounted and are not part of the
consolidated Group.
Subsidiaries are all those entities over which the Company has the power to govern the financial and operating policies so as to
obtain benefits from their activities. The existence and effect of potential voting rights that are currently exercisable or convertible
are considered when assessing whether a group controls another entity.
Special purpose entities are those entities over which the Group has no ownership interest but in effect the substance of the
relationship is such that the Group controls the entity so as to obtain the majority of benefits from its operation.
The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent
accounting policies. In preparing the consolidated financial statements, all intercompany balances and transactions, income and
expenses and profit and losses resulting from intra-group transactions have been eliminated in full.
Subsidiaries and special purpose entities are fully consolidated from the date on which control is transferred to the Company and
cease to be consolidated from the date on which control is transferred out of the Group.
CHALICE GOLD MINES ANNUAL REPORT 2013 | 29
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2013
Investments in subsidiaries held by Chalice Gold Mines Limited are accounted for at cost in the financial statements of the parent
entity less any impairment charges.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. The acquisition method of accounting
involves recognising at acquisition date, separately from goodwill, the identifiable assets acquired, the liabilities assumed and
any non-controlling interest in the acquired. The identifiable assets acquired and the liabilities assumed are measured at their
acquisition date fair values.
The difference between the above items and the fair value of consideration (including the fair value of any pre-existing investment
in the acquiree) is goodwill or a discount on acquisition.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment
testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-
generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquire
are assigned to those units.
Where goodwill forms part of a cash-generating unit and part of the operation within that unit disposal of, the goodwill
associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss
on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation
disposed of and the portion of the cash-generating unit retained.
Non-controlling interest are allocated their share of net result after tax in the statement of comprehensive income and are
presented in equity in the consolidated statement of financial position, separately from the equity of the owners of the Parent.
Total comprehensive income within a subsidiary is attributed to the non-controlling interest even if that results in a deficit balance.
A change in ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group
loses control over a subsidiary it:
• Derecognises the assets (including goodwill) and liabilities of the subsidiary
• Derecognises the carrying amount of any non-controlling interest
• Derecognises the cumulative translation differences recorded in equity
• Recognises the fair value of the consideration received
• Recognises the fair value of any investment retained
• Recognises any surplus or deficit in profit or loss
• Reclassifies the Parent’s share of components previously recognised in other comprehensive income to profit or loss or
retained earnings, as appropriate.
(d) Significant 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, 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 Group.
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 recoverability of the carrying amount of exploration and evaluation expenditure carried forward and it is dependent
on the future successful outcome from exploration activity or alternatively the sale of the respective areas of interest.
Where exploration results are unsuccessful, or no further work is to be undertaken, the directors will then assess whether
an impairment write-down is required, which will be recognised in the statement of comprehensive income.
(ii)
Share-based payment transactions
The Group measures the cost of equity-settled share-based payments at fair value at the grant date using a Black-
Scholes Option model taking into account the terms and conditions upon which the instruments were granted. The
details and assumptions used in determining the value of these transactions are detailed in note 14.
30 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2013
(e) Foreign currency translation
The functional currency of the Company is Australian dollars, and the functional currency of subsidiaries based in Eritrea is United
States dollars (US$). The presentation currency of the Group is Australian dollars.
Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates ruling at the
date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of the
exchange ruling at the reporting date.
All exchange differences in the consolidated financial report are taken to profit or loss as incurred. Non-monetary items that are
measured in terms of historical cost in a foreign currency are translated at exchange rates as at the date of the initial transaction.
As at the balance date the assets and liabilities of these subsidiaries are translated into the presentation currency of Chalice
Gold Mines Limited at the rate of exchange ruling at the balance date and their income statements are translated at the average
exchange rate for the year.
The exchange differences arising on the translation are taken directly to a separate component of recognised foreign currency
translation reserve in equity.
On disposal of a foreign entity, the deferred cumulative amount recognised in equity relating to that particular foreign operation is
recognised in profit or loss.
(f) Segment reporting
An operating segment is a component of an entity that engages in business activities from which it may earn revenues and incur
expenses (including revenues and expenses relating to transactions with other components of the same entity, whose operating
results are regularly reviewed by the entity’s chief operating decision maker to make decisions about resources to be allocated to
the segment and assess its performance and for which discrete financial information is available. This includes start up operations
which are yet to earn revenues. Management will also consider other factors in determining operating segments such as the
existence of a line manager and the level of segment information presented to the board of directors.
Operating segments have been identified based on the information provided to the chief operating decision makers – being the board.
(g) Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can
be reliably measured. Revenue is measured at the fair value of the consideration received or receivable, net of returns, trade
allowances, rebates and amounts collected on behalf of third parties.
(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 statement of comprehensive income in proportion to the stage of
completion of the transaction at balance 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 and
the costs incurred or to be incurred cannot be measured reliably.
(iii) Interest received
Interest income is recognised in the statement of comprehensive income as it accrues, using the effective interest method. The
interest expense component of finance lease payments is recognised in the statement of comprehensive income using the
effective interest method.
CHALICE GOLD MINES ANNUAL REPORT 2013 | 31
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2013
(h) Expenses
(i) Operating lease payments
Payments made under operating leases are recognised in the statement of comprehensive income on a straight-line basis
over the term of the lease. Lease incentives received are recognised in the statement of comprehensive income as an integral
part of the total lease expense and spread over the lease term.
(ii) Depreciation
Depreciation is calculated 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 depreciation rates used in the current and comparative periods are
as follows:
• plant and equipment 7%-40%
• fixtures and fittings
11%-22%
• motor vehicles
18.75%- 25%
The residual value, if not insignificant, is reassessed annually.
Income tax and other taxes
(i)
The income tax expense for the period is the tax payable on the current period’s taxable income based on the applicable income
tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to
unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantially enacted at the end of the
reporting period in the country where the company’s subsidiaries operate and generate taxable income. Provisions are
established where appropriate on the basis of amounts expected to be paid to the tax authorities.
Current tax liabilities for the current period and prior periods are measured at the amount expected to be recovered from or paid
to taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantially enacted
by the balance date.
Income tax in the statement of comprehensive income comprises current and deferred tax. Income tax is recognised in the
statement of comprehensive income except to the extent that it relates to items recognised directly in equity, in which case it is
recognised in equity.
Deferred income tax is provided on all temporary differences at reporting date between the tax bases of assets and liabilities and
their carrying amounts for financial reporting 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
reporting date.
Deferred income tax liabilities are recognised for all taxable temporary differences except:
• when the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction
that is not a business combination and that, at the time of the transaction, affects neither the accounting profit nor taxable profit
or loss; or
• when the taxable temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures,
and the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will
not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax
losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and
the carry-forward of unused tax credits and unused tax losses can be utilised, except:
• when the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset
or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting
profit nor taxable profit or loss; or
• when the deductible temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures,
in which case a deferred tax asset is only recognised to the extent that it is probable that the temporary difference will reverse
in the foreseeable future and taxable profit will be available against which the temporary difference can be utilised.
32 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2013
The carrying amount of deferred income tax assets is reviewed at each balance date and reduced to the extent that it is no
longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed at each balance date and are recognised to the extent that it has
become probable that future taxable profit will allow the deferred tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset
is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantially enacted at the
balance date.
Income taxes relating to items recognised directly in equity are recognised in equity and not profit or loss.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against
current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority.
(j) Other taxes
Revenue, expenses and assets are recognised net of the amount of goods and services tax (’GST’) or other taxes, except where
the amount of GST or other taxes incurred are not recoverable from the taxation authority. In these circumstances, the GST or
other taxes incurred, are 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 statement of financial position.
Other taxes payable in foreign jurisdictions are included as a current payable in the statement of financial position.
Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows arising from
investing and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows.
Taxes paid in foreign jurisdictions are classified as investing cash flows in the statement of cash flows.
(k) Impairment
At each reporting date, the Group assesses whether there is any indication that an asset may be impaired. Where an indicator
of impairment exists, the Group 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 statement of comprehensive income 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 statement of comprehensive income. Receivables with a short duration are not discounted.
A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s
recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased
to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net
of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit or
loss unless the asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase. After such a
reversal the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying amount, less any residual
value, on a systematic basis over its remaining useful life.
(l) Cash and cash 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 Group’s cash management are included as a
component of cash and cash equivalents for the purpose of the statement of cash flows.
(m) Trade and other receivables
Trade and other receivables are stated at cost less impairment losses (see accounting policy (k)).
CHALICE GOLD MINES ANNUAL REPORT 2013 | 33
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2013
(n) 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. Non-current assets and disposal
groups are classified as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than
through continuing use. This condition is regarded as met only when the sale is highly probable and the asset or disposal group
is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to
qualify for recognition as a completed sale within one year from the date of classification.
In the statement of comprehensive income, income and expenses from the discontinued operations are reported separately from
income and expenses from continuing operations, down to the level of profit after taxes, even when the Group retains a non-
controlling interest in the subsidiary after the sale. The resulting profit or loss (after taxes) is reported separately in the statement of
comprehensive income.
Property, plant and equipment and tangible assets once classified as held for sale are not depreciated or amortised.
(o) 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.
The carrying values of plant and equipment are reviewed for impairment at each balance date in line with the Group’s
impairment policy (see accounting policy (k)).
(p) 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 Group determines the classification of its financial
assets at 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 Group 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.
(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.
34 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2013
(q) Derecognition of financial assets and financial liabilities
(i) Financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) are
derecognised when:
• the rights to receive cash flows from the asset have expired; and/or
• the Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the
received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a)
the Group has transferred substantially all the risk and rewards of the asset, or (b) the Group has neither transferred
nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through
arrangement, it evaluates if and to what extent it has retained the risk and rewards of ownership.
When it has neither transferred nor retained substantially all of the risk and rewards of the asset, nor transferred control of
the asset, the asset is recognised to the extent of the Group’s continuing involved in the asset. In that case, the Group also
recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the
rights and obligations that the Group has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original
carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay.
(ii) Financial liabilities
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms
of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the
original liability and the recognition of a new liability, and the difference in the respective carrying amounts 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 reporting 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.
(r) Impairment of financial assets
The Group assesses, at each reporting date, whether there is any objective evidence that a financial asset or a group of financial
assets is impaired. A financial asset or a group of a financial assets is deemed to be impaired if, and only if, there is objective
evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred
’loss event’) and that loss event has an impact on estimated future cash flows of the financial asset or the group of financial
assets that can be reliably estimated. Evidence of impairment may include indications that debtors or a group of debtors is
experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will
enter bankruptcy or other financial reorganisation and when observable data indicate that there is a measurable decrease in the
estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.
(i) Financial assets carried at amortised cost
For financial assets carried at amortised cost, the Group first assess whether objective evidence of impairment exists
individually for financial assets that are individually significant, or collectively for financial assets that are not individually
significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial
asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and
collectively assess them for impairment. Assets that are individually assessed for impairment and for which an impairment loss
is or continues to be, recognised are not included in a collective assessment of impairment.
If there are objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the
difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future
expected credit losses that have not yet been incurred). The present value of the estimated future cash flows is discounted at
the financial asset’s original effective interest rate.
CHALICE GOLD MINES ANNUAL REPORT 2013 | 35
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2013
(ii) Financial assets carried at cost
If there is objective evidence that an impairment loss has been incurred on an unquoted equity instrument that is not carried
at fair value (because its fair value cannot be reliably measured), or on a derivative asset that is linked to and must be settled
by delivery of such an unquoted equity instrument, the amount of the loss is measured as the difference between the asset’s
carrying amount and the present value of estimated future cash flows, discounted at the current market rate of return for a
similar financial asset. Such impairment loss shall not be reversed in subsequent periods.
(iii) Available-for-sale investments
If there is objective evidence that an available-for-sale investment is impaired, an amount comprising the difference between
its cost (net of any principal repayment and amortisation) and its current fair value, less any impairment loss previously
recognised in profit or loss, is transferred from equity to the statement of comprehensive income. Reversals of impairment
losses for equity instruments classified as available-for-sale are not recognised in profit. Reversals of impairment losses for
debt instruments are reversed through profit or loss if the increase in an instrument's fair value can be objectively related to an
event occurring after the impairment loss was recognised in profit or loss.
(s) Exploration, evaluation, development and tenement acquisition 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 statement of financial position 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)
(ii)
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
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 initially measured at cost and include acquisition of rights to explore, studies,
exploratory drilling, trenching and sampling and associated activities. General and administrative costs are only included in the
measurement of exploration and evaluation expenditures where they are related directly to operational activities in a particular
area of interest.
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.
(t) Trade and other payables
Trade and other payables are stated at amortised cost. Trade and other payables are presented as current liabilities unless
payment is not due within 12 months.
(u) Provisions and employee benefits
A provision is recognised when the Group 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.
36 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2013
(v) Employee benefits
(i) Wages, salaries and annual leave
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 Group expects to pay as at reporting date including related on-costs, such as superannuation, workers’
compensation insurance and payroll tax.
(ii) Long service leave and other long term employee benefits
The Group’s net obligation in respect of long-term employee benefits other than defined benefit plans is the amount of future
benefit that employees have earned in return for their service in the current and prior periods plus related on-costs. This
benefit is discounted to determine its present value, and the fair value of any related assets is deducted. The discount rate
is the yield at the reporting date on government bonds that have maturity dates approximating the terms of the Group’s
obligations. The calculation is performed using the projected unit cost method.
(iii) Superannuation
Obligations for contributions to defined contribution pension plans are recognised as an expense in the statement of
comprehensive income as incurred.
(iv) Share-based payment transaction
The Group 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. The fair value is determined using a Black-Scholes model and further details are provided at
note 14.
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:
(a)
the extent to which the vesting period has expired; and
(b)
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 reporting 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, 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.
(w) Share capital
(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.
CHALICE GOLD MINES ANNUAL REPORT 2013 | 37
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2013
(x) Investments in associates
The Group’s investment in associates is accounted for using the equity method of accounting in the consolidated financial
statements and at cost in the parent. The associates are entities over which the Group has significant influence and that are
neither subsidiaries nor joint ventures.
The Group generally deems it has significant influence if it has over 20% of the voting rights.
Under the equity method, investments in associates are carried in the consolidated statement of financial position at cost plus post
acquisition changes in the Group’s share of net assets of the associates. Goodwill relating to an associate is included in the carrying
amount of the investment and is not amortised. After application of the equity method, the Group determines whether it is necessary
to recognise any impairment loss with respect to the Group’s net investment in associates. Goodwill included in the carrying amount
of the investment in the associate is not tested separately; rather the entire carrying amount of the investment is tested for impairment
as a single asset. If an impairment is recognised, the amount is not allocated to the goodwill of the associate.
The Group’s share of its associates’ post acquisition profits or losses is recognised in the statement of comprehensive income, and
its share of post-acquisition movements are adjusted against the carrying amount of the investment. Dividends receivable from the
associates are recognised in the parent entity’s statement of comprehensive income as a component of other income.
When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any unsecured long
term receivables and loans, the Group does not recognise further losses unless it has incurred obligations or made payments on
behalf of the associate.
(y) Joint venture interests
The Group has an interest in a joint venture, which is a jointly controlled entity, whereby the venturers have a contractual
arrangement that establishes joint control over the economic activities of the entity. The agreement requires unanimous agreement
for financial and operating decisions among the venturers. The Group recognises its interest in the joint venture using the
proportionate consolidation method. The Group combines its proportionate share of each of the assets, liabilities, income and
expenses of the joint venture with similar items, line by line, in its consolidated financial statements.
Adjustments are made in the Group’s consolidated financial statements to eliminate the Group’s share of intragroup balances,
transactions and unrealised gains and losses on such transactions between the Group and its joint venture. Losses on transactions
are recognised immediately if the loss provides evidence of a reduction in the net realisable value of current assets or an
impairment loss. The joint venture is proportionately consolidated until the date on which the Group ceases to have joint control
over the joint venture.
Upon loss of joint control, the Group measures and recognises its remaining interest at its fair value. Any difference between
the carrying amount of the former jointly controlled entity upon loss of joint control and the fair value of the remaining investment
and proceeds from disposal is recognised in profit or loss. When the remaining investment constitutes significant influence, it is
accounted for as an investment in an associate.
38 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2013
2. SEGMENT REPORTING
The Group has identified its operating segments based on internal reports that are reviewed and used by the Board of Directors
in assessing performance and in determining the allocation of resources.
The operating segments are identified by management based on the allocation of costs; whether they are corporate related costs
or exploration and evaluation costs. Results of both segments are reported to the Board of Directors at each Board meeting.
Exploration expenditure is reflected as a segment as exploration expenditure occurs in one geographical area – Eritrea.
EXPLORATION AND
EVALUATION
CORPORATE
TOTAL
2013
$
2012
$
2013
$
2012
$
2013
$
2012
$
-
175,276
171,911
175,276
171,911
Other Income
Loss on sale of exploration and
evaluation assets
-
-
(147,091)
Exploration costs not capitalised
(595,676)
(96,820)
Impairment of exploration and
evaluation assets
Depreciation
Corporate administrative expenses
(375,000)
(126,431)
-
-
-
-
-
-
-
-
-
-
-
(147,091)
(595,676)
(96,820)
(375,000)
(126,431)
(83,449)
(99,454)
(83,449)
(99,454)
(3,632,238)
(3,600,368)
(3,632,238)
(3,600,368)
Segment loss before tax
(970,676)
(370,342)
(3,540,411)
(3,428,457)
(4,511,087)
(3,898,253)
Unallocated income/(expenses)
Net financing income
Foreign exchange gains/(losses)
Impairment of financial assets
Gain/(loss) from discontinued
operations
Loss before income tax
198,861
197,767
4,873,790
(18,235)
(686,442)
-
43,783,106
(416,493)
43,658,228
(4,135,214)
EXPLORATION AND
EVALUATION
CORPORATE
TOTAL
30 JUNE
2013
30 JUNE
2012
30 JUNE
2013
30 JUNE
2012
30 JUNE
2013
30 JUNE
2012
$
$
$
$
$
$
Segment assets:
Exploration and evaluation assets
5,202,612
2,482,857
657,619
371,349
5,860,231
2,854,206
Other
Unallocated assets
Assets held for sale
Total assets
-
560,537
560,537
-
5,202,612
2,482,857
390,705
1,218,156
762,054
390,705
6,420,768
3,244,911
56,288,106
3,937,170
-
48,483,409
62,708,874
55,665,490
Segment liabilities
(309,369)
(3,544,485)
(635,149)
(414,157)
(944,518)
(3,958,642)
Liabilities held for sale
Total liabilities
-
(4,670,319)
(944,518)
(8,628,961)
CHALICE GOLD MINES ANNUAL REPORT 2013 | 39
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2013
2013
$
2012
$
175,276
198,861
374,137
7,788
719,946
-
84,466
107,392
145,240
465,327
317,190
171,911
197,767
369,678
105,752
-
539,691
100,227
111,940
388,253
199,127
434,455
1,596,263
1,525,680
188,626
195,243
3,632,238
3,600,368
966,292
110,000
213,382
156,304
(17,294)
1,062
1,018,393
107,796
81,721
135,755
(39,272)
6,007
166,517
215,280
3. REVENUE AND EXPENSES
(a) Other income
Corporate and administration service fees
Net finance income
(b) Corporate administrative expenses
Consultants
Business development costs
Costs associated with assets held for sale
Insurance
Legal fees
Travel
Head office costs
Regulatory and compliance
Personnel expenses (note 3(c))
Other
(c) Personnel expenses
Wages and salaries
Directors’ fees
Other associated personnel expenses
Superannuation contributions
(Decrease)/increase in liability for annual leave
(Decrease)/increase in liability for long service leave
Equity-settled share- based payment transactions
40 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2013
4. SALE OF THE ZARA PROJECT IN ERITREA
On 4 September 2012, Chalice completed the sale of the Zara Project in Eritrea to China SFECO Group and the Eritrean
National Mining Corporation (“ENAMCO”). The Company sold its 60 per cent interest in the Zara Project to China SFECO
Group for US$78 million ($76.9 million) plus a deferred consideration of US$2 million which is payable upon commencement
of first commercial production at the Koka Gold Mine. In addition, the sale of Chalice’s 30 per cent interest (plus a 10 per cent
free carried interest) to ENAMCO for US$34 million ($33.1 million) was settled. All associated profit taxes in Eritrea on both the
China SFECO Group transaction and the ENAMCO transaction were paid during the year ended 30 June 2013.
At 30 June 2012, the Zara Project was classified as a discontinued operation and an asset held for sale.
(a) Assets classified as held for sale
Cash at bank
Trade and other receivables
Property, plant and equipment
Exploration and evaluation expenditure
(b) Liabilities classified as held for sale
Trade and other payables
Loans and borrowings
(c) Financial performance and cash flow information
Net gain on disposal
Expenses – depreciation
Gain/(loss) for the year from discontinued operation
Net cash flows from (used in) discontinued operations
Net cash used in operating activities
Net cash from/(used in) investing activities
Net cash from/(used in) financing activities
Net cash flows for the year
(d) Details of the sale
(i) Consideration received
Proceeds from sale – China SFECO group
Proceeds from sale – Eritrean National Mining Corporation
Interim payment received – Eritrean National Mining Corporation(1)
Funds outstanding – Eritrean National Mining Corporation
Interest on sale – Eritrean National Mining Corporation
Total disposal consideration
Less:
Net assets disposed of – Zara Project (refer 4(d)(ii))
Transaction costs
Contract termination payment – Dragon Mining Limited
Gain on disposal before income tax
2013
$
2012
$
-
-
-
-
-
-
-
-
102,601
783,963
33,582,082
14,014,763
48,483,409
707,271
3,963,048
4,670,319
43,839,433
(56,327)
43,783,106
-
(416,493)
(416,493)
-
-
80,148,232
(5,175,709)
-
-
80,148,232
(5,175,709)
76,929,574
30,090,898
2,924,780
115,689
873,882
110,934,823
(39,404,476)
(697,112)
(1,500,000)
69,333,235
-
-
-
-
-
-
-
-
-
-
CHALICE GOLD MINES ANNUAL REPORT 2013 | 41
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2013
Income tax expense(2)
Gain on disposal after tax
2013
$
(25,493,802)
43,839,433
2012
$
-
-
Share of net loss on subsidiary up to date of disposal (depreciation)
Net profit/(loss) from discontinued operation
(56,327)
43,783,106
(416,493)
(416,493)
(1)On 27 January 2012, Chalice received US$3 million from ENAMCO as an interim payment for ENAMCO’s acquisition of a 30 per cent interest in the Zara Project.
(2)Income tax expense represents the profits taxes settled with the Eritrean Government as a result of the sale of the Company’s interest in the Zara Project.
(ii) Net assets at date of sale
The carrying amount of assets and liabilities as at date of sale at 4 September 2012 were:
Cash at bank
Trade and other receivables
Property, plant and equipment
Exploration and evaluation expenditure
Total assets
Trade and other payables
Loans and borrowings
Total liabilities
Net assets
Less minority interest
Total net assets of subsidiary
(iii) Net cash inflow on disposal
The cash inflow on disposal is as follows:
Total consideration on disposal
Less:
Interim funds received
Funds outstanding
Net cash outflows
Net cash disposed of
Net cash inflow on disposal (refer statement of cash flows)
55,208
145,998
33,232,839
13,727,618
47,161,663
57,058
4,030,919
4,087,977
43,073,686
(3,669,210)
39,404,476
110,934,823
(2,924,780)
(115,689)
(27,690,914)
(55,208)
80,148,232
42 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2013
5. AUDITORS’ REMUNERATION
Audit services
HLB Mann Judd:
Audit and review of financial reports
Other services
2013
$
2012
$
65,300
3,500
68,800
51,500
-
51,500
INCOME TAX
6.
The prima facie income tax expense on pre-tax accounting result on operations and discontinued operations reconciles to the
income tax benefit in the financial statements as follows:
Accounting loss from continuing operations
Accounting loss before income tax
(124,878)
(3,718,721)
(124,878)
(3,718,721)
Income tax calculated at the Australian corporate rate of 30%
(37,463)
(1,115,616)
Non-deductible expenses
Deferred tax assets and liabilities not recognised
Income tax expense reported in the statement of comprehensive income
440,057
(402,594)
-
181,489
934,127
-
The tax rate used in the above reconciliation is the corporate rate of 30% payable by Australian corporate entities on taxable
profits under Australian tax law. There has been no change in this tax rate since the previous reporting period.
Unrecognised deferred tax balances
The following deferred tax assets and liabilities have not been brought to account:
Deferred tax assets comprise:
Revenue losses available for offset against future taxable income
Share issue expenses
Accrued expenses and liabilities
Deferred tax liabilities comprise:
Exploration costs capitalised
Unrealised FX gain
Accrued income
Net deferred tax assets recognised
4,335,314
4,157,557
274,892
67,419
457,721
73,115
4,677,625
4,688,393
-
(112,500)
(1,416,616)
(665)
-
(559)
(1,417,281)
(113,059)
Income tax benefit not recognised directly in equity during the year:
Share issue costs
5,663
47,218
Deferred tax liabilities have not been recognised in respect of these taxable temporary differences as the entity is able to control
the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the
foreseeable future.
CHALICE GOLD MINES ANNUAL REPORT 2013 | 43
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2013
7. EARNINGS PER SHARE
Basic and diluted earnings per share
The calculation of basic earnings per share for the year ended 30 June 2013 was based on the profit attributable to ordinary
equity holders of the parent of $43,663,861 [2012: loss of $4,093,565] and a weighted average number of ordinary shares
outstanding during the year ended 30 June 2013 of 250,435,544 [2012: 250,030,886].
2013
$
2012
$
Profit/(loss) attributable to ordinary shareholders
Profit/(loss) attributable to ordinary equity holders of the parent from continuing operations
(124,878)
(3,718,721)
Profit/(loss) attributable to ordinary equity holders of the parent from a discontinued operation
43,788,739
(374,844)
Net profit/(loss) attributable to ordinary equity holders of the parent for basic earnings
43,663,861
(4,093,565)
Net profit/(loss) attributable to ordinary equity holders of the parent adjusted for the
effect of dilution
43,663,861
(4,093,565)
Diluted earnings per share have not been disclosed as the impact from options and performance rights is anti-dilutive.
8. TRADE AND OTHER RECEIVABLES
Other trade receivables
Asset sale proceeds receivable
Prepayments
9. FINANCIAL ASSETS
Non-current
Available for sale investments
Bond in relation to office premises
Bank guarantee and security deposits
10. EXPLORATION AND EVALUATION EXPENDITURE
Costs carried forward in respect of:
Exploration and evaluation phase – at cost
Balance at beginning of year
Transferred to property, plant and equipment (note 11)
Expenditure incurred
Impairment of exploration and evaluation assets
Exploration and evaluation assets written off
Sale of exploration and evaluation assets
Effects of movements in exchange rate
Transferred to assets held for sale – Zara Project (note 4)
Total exploration expenditure
284,428
357,417
-
90,724
375,152
54,523
74,695
486,635
12,000
63,114
110,499
185,613
710,442
60,063
92,135
862,640
2,482,857
36,492,204
-
(27,412,053)
3,294,935
7,970,928
(375,000)
(595,676)
-
395,497
(126,431)
(96,820)
(900,172)
569,964
-
(14,014,763)
5,202,613
2,482,857
The recoupment of costs carried forward in relation to areas of interest in the exploration and evaluation phases is dependent on
the successful development and commercial exploitation or sale of the respective areas.
44 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2013
11. PROPERTY, PLANT AND EQUIPMENT
OFFICE
FURNITURE
AND
EQUIPMENT
COMPUTER
EQUIPMENT
AND
SOFTWARE
PLANT AND
EQUIPMENT
MOTOR
VEHICLES
DEVELOPMENT
ASSETS
$
$
$
$
$
Year ended 30 June 2013
At 1 July 2012 net of accumulated
depreciation and impairment
Additions
Exchange differences
52,643
74,950
(446)
114,273
108,503
-
9,390
87,746
145,428
-
-
14,140
(8,802)
Depreciation charge for the year
(19,818)
(17,705)
(58,032)
At 30 June 2013 net of accumulated
depreciation and impairment
107,329
105,958
138,217
150,766
At 30 June 2013
Cost
Accumulated depreciation and
impairment
181,929
396,198
524,948
160,481
(74,600)
(290,240)
(386,731)
(9,715)
Net carrying amount
107,329
105,958
138,217
150,766
TOTAL
$
275,419
317,514
13,694
(104,357)
502,270
1,263,556
(761,286)
502,270
1,508,705
-
-
-
-
-
-
-
-
-
Depreciation charge for the year
(244,158)
(31,529)
(86,443)
(153,817)
Year ended 30 June 2012
At 1 July 2011 net of accumulated
depreciation and impairment
Reclassification from exploration and
evaluation expenditure (note 10)
Additions
Exchange differences
Disposals
Reclassification to assets held for sale
(note 4)
At 30 June 2012 net of accumulated
depreciation and impairment
At 30 June 2012
Cost
Accumulated depreciation and
impairment
567,047
160,568
180,587
600,503
-
360,581
24,461
-
-
8,103
(708)
-
-
- 27,412,053
27,412,053
54,977
36,121
3,222,250
3,682,032
(2,575)
28,213
1,734,131
1,783,522
-
(12,864)
-
-
(12,864)
(515,947)
(655,288)
(22,161)
(38,043)
(498,156)
(32,368,434)
(33,582,082)
52,643
114,273
108,503
105,834
386,808
437,202
(53,191)
(272,535)
(328,699)
-
-
-
-
-
-
-
-
275,419
929,844
(654,425)
275,419
Net carrying amount
52,643
114,273
108,503
CHALICE GOLD MINES ANNUAL REPORT 2013 | 45
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2013
12. TRADE AND OTHER PAYABLES
Trade payables
Services and withholding tax payable
Accrued expenses
13. UNEARNED INCOME
Asset sale interim payment
2013
$
309,408
322,379
198,103
829,890
2012
$
237,353
234,183
388,319
859,855
-
-
2,979,441
2,979,441
On 27 January 2012, Chalice received US$3 million from the Eritrean National Mining Corporation (‘ENAMCO’) as an interim
payment for ENAMCO’s acquisition of a 30 per cent interest in the Zara Project in Eritrea. On 4 September 2012, the sale to
ENAMCO was completed with the balance of US$31 million being received (refer to note 4).
14. EMPLOYEE BENEFITS
Annual leave accrued
Provision for long service leave
Share based payments
38,734
38,917
77,651
56,028
37,855
93,883
(a) Employee share option plan
The Group 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. In the case of the directors, the issue of options under the ESOP requires shareholder approval.
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:
WEIGHTED
AVERAGE
EXERCISE PRICE
$
NUMBER
OF OPTIONS
2013
2013
0.45
0.50
0.25
0.30
0.33
0.33
8,350,000
(3,250,000)
(500,000)
1,050,000
5,650,000
5,650,000
Outstanding at the beginning of the year
Forfeited during the year
Exercised during the year
Granted during the year
Exercisable at the end of the year
Outstanding at the end of the year
46 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2013
Outstanding at the beginning of the year
Forfeited during the year
Exercised during the year
Granted during the year
Exercisable at the end of the year
Outstanding at the end of the year
WEIGHTED
AVERAGE
EXERCISE PRICE
$
NUMBER
OF OPTIONS
2012
2012
0.42
0.40
-
0.48
0.41
0.45
5,000,000
(500,000)
-
3,850,000
4,812,500
8,350,000
The options outstanding at 30 June 2013 have a weighted average exercise price of $0.33 [2012: $0.45] and a weighted
average contractual life of 4 years [2012: 4 years].
The fair value of the options is estimated at the date of grant using a Black-Scholes option-pricing model. The following table
gives the assumptions made in determining the fair value of the options granted during the year.
Weighted average share price at grant date
Weighted exercise price
Expected volatility (expressed as weighted average volatility)
Option life (expressed as weighted average life)
Expected dividends
Risk-free interest rate
2013
$0.16
$0.30
81%
3 years
-
2.57%
2012
$0.29
$0.48
62%
3 years
-
3.02%
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.
(b) Employee long term incentive plan
The Company has in place an Employee Long Term Incentive Plan (‘LTIP’) which was approved by shareholders at the 2011
Annual General Meeting. Under the LTIP, the Board may issue performance rights to employees and directors. A performance
right is a right to be issued an ordinary share upon the satisfaction of certain performance conditions that are attached to the
performance right, the conditions of which are determined by the Board.
Performance rights are granted for no consideration and the term of the performance rights are determined by the Board in its
absolute discretion, but will ordinarily have a three year term up to a maximum of five years. Performance rights are subject to
lapsing if performance conditions are not met by the relevant measurement date or expiry date (if no other measurement date is
specified) or if employment is terminated. There is no ability to re-test performance under the LTIP after the performance period.
The fair value of performance rights has been calculated at the grant date and allocated to each reporting period evenly over the
period from grant date to vesting date. The value disclosed is the portion of fair value of the rights allocated to this reporting period.
The weighted average fair value of the performance rights outstanding at 30 June 2013 was 6.5 cents per performance right
(2012: 30 cents).
CHALICE GOLD MINES ANNUAL REPORT 2013 | 47
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2013
A summary of performance rights in the Group and the Company is as follows:
30 June 2013:
GRANT DATE
5 June 2013
6 June 2013
16 December 2011
16 December 2011
16 December 2011
30 June 2012:
GRANT DATE
15 December 2011
16 December 2011
16 December 2011
16 December 2011
OPENING
BALANCE
GRANTED
VESTED
LAPSED
CLOSING
BALANCE
SHARE PRICE AT
DATE OF ISSUE
-
-
2,108,444
645,705
500,000
250,000
150,000
-
-
-
-
-
-
(125,000)
(75,000)
-
-
(500,000)
-
-
2,108,444
645,705
-
125,000
75,000
$0.16
$0.17
$0.30
$0.30
$0.30
900,000
2,754,149
(200,000)
(500,000)
2,954,149
OPENING
BALANCE
GRANTED
VESTED
LAPSED
CLOSING
BALANCE
SHARE PRICE AT
DATE OF ISSUE
-
-
-
-
-
750,000
500,000
250,000
150,000
1,650,000
-
-
-
-
-
(750,000)
-
-
-
-
500,000
250,000
150,000
(750,000)
900,000
$0.29
$0.30
$0.30
$0.30
The fair value of performance rights granted during 2013 were determined using a trinomial model which takes into account
the impact of vesting conditions and the fact that the Rights may never vest. The following table gives the assumptions made in
determining the fair value of the performance rights granted during the year.
Weighted average share price at grant date
Weighted exercise price
Expected volatility (expressed as weighted average volatility)
Performance period (years)
Vesting period (years)
Expected dividends
Risk-free interest rate
2013
$0.16
nil
60%
1.58
2.08
-
2.59%
The fair value of performance rights granted in 2012 were determined by the share price at grant date and recognised as an
expense based on the extent to which vesting conditions have been met.
Share based payment transactions
The expense recognised during the year is shown in the following table:
Share options granted in 2012 – equity settled
Share options granted in 2013 – equity settled
Performance rights granted in 2012
Performance rights granted in 2013
2013
$
43,860
65,613
52,676
4,368
2012
$
156,376
-
58,904
-
Total expenses recognised as personnel expenses
166,517
215,280
48 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2013
15. OTHER LIABILITIES
Non-current
Lease make good provision
2013
$
2012
$
36,977
36,977
25,463
25,463
16. ISSUED CAPITAL
There were 250,730,886 shares on issue at 30 June 2013 (2012: 250,030,886).
(a) Movements in ordinary shares on issue
2013
2012
NO.
$
NO.
$
Balance at beginning of financial year
250,030,886
64,200,112
250,030,886
64,200,112
Capital return(1)
-
(25,073,089)
Shares issued on exercise of unlisted options
Shares issued on vesting of performance rights
Share issue and capital return costs
500,000
200,000
125,000
-
-
(12,233)
-
-
-
-
-
-
-
-
Balance at end of financial year
250,730,886
39,239,790
250,030,886
64,200,112
(1)Following shareholder approval at the Company’s 2012 Annual General Meeting, the Company completed a capital return to Shareholders amounting to 10 cents
per share.
Issuance of 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.
(b) Share options
On issue at 1 July
Options forfeited or cancelled
Options exercised during the year
Options issued during the year
On issue at 30 June
2013
NO.
2012
NO.
8,350,000
7,000,000
(3,250,000)
(2,500,000)
(500,000)
-
1,050,000
3,850,000
5,650,000
8,350,000
CHALICE GOLD MINES ANNUAL REPORT 2013 | 49
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2013
At 30 June 2013 the Company had 5,650,000 unlisted options on issue under the following terms and conditions:
NUMBER
500,000
1,250,000
1,250,000
187,500
187,500
375,000
750,000
100,000
1,050,000
(c) Performance rights
On issue at 1 July
EXPIRY DATE
31 July 2013
31 March 2014
31 March 2014
30 April 2014
30 April 2014
30 April 2014
14 September 2014
30 November 2014
30 June 2016
EXERCISE PRICE
$
0.10
0.25
0.35
0.45
0.55
0.65
0.35
0.35
0.30
2013
NO.
900,000
2012
NO.
-
Issue of performance rights under the Employee Long Term Incentive Plan
2,754,149
1,650,000
Performance rights vested
Performance rights lapsed
On issue at 30 June
(200,000)
(500,000)
2,954,149
-
(750,000)
900,000
At 30 June 2013 the Company had 2,954,149 performance rights options on issue under the following terms and conditions:
NUMBER
TERMS
EXPIRY DATE
EXERCISE
PRICE
$
125,000
Retention – Service period only
75,000
Retention – Service period only
2,754,149
The number of performance rights that will vest will be solely
dependent on the Company’s share price as at the measurement date
of 1 January 2015 as compared to the Share price hurdles outlined
on page 13 of the Remuneration Report.
1 October 2014
1 October 2014
30 June 2016
-
-
-
17. ACCUMULATED LOSSES AND RESERVES
(a) Movements in accumulated losses attributable to owners of the parent:
Balance at beginning of financial year
Profit/(loss) for the year attributable to owners of the parent
Transfers between equity items
Balance at end of financial year
2013
$
2012
$
(16,202,389)
(12,108,824)
43,663,861
(4,093,565)
(2,829,348)
-
24,632,124
(16,202,389)
50 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2013
(b) Nature and purpose of reserves
Other capital reserves
(i) Share-based payment transactions
The share-based payment transaction reserve is used to recognise the value of equity-settled share-based payment
transactions provided to employees, including key management personnel, as part of their remuneration. Refer to note
14 for further details of these plans.
All other reserves as stated in the consolidated statement of changes in equity
(ii) Foreign currency translation reserve
The foreign currency reserve is used to record exchange differences arising from the translation of the financial
statements of foreign subsidiaries. It is also used to record the effect of exchange variances resulting from net investments
in foreign operations.
(iii) Investment revaluation reserve
The investment revaluation reserve comprises the cumulative net change in the fair value of available-for-sale financial
assets until the investments are derecognised or impaired.
(iv) Non-controlling interest reserve
The non-controlling interest reserve records differences between the carrying value of non-controlling interests and the
consideration paid/received where there has been a transaction involving non-controlling interests that do not result in a
loss of control. The reserve is attributable to the equity of the parent.
18. FINANCIAL INSTRUMENTS
(a) Capital risk management
The Group 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 Group consists of equity attributable to equity holders, comprising issued capital, reserves and
accumulated losses as disclosed in notes 16 and 17.
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 Group 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 have on
the Group’s income or value of its holdings of financial instruments.
(i) Foreign exchange rate risk
The Group undertakes certain transactions denominated in foreign currencies, hence exposures to exchange rate fluctuations
arise. The Group does not hedge this exposure. The cash at bank held by the Company currently comprises predominately
US dollar funds. The Group manages its foreign exchange risk by constantly reviewing its exposure and ensuring that there
are appropriate cash balances in order to meet its likely future commitments in each currency.
At 30 June 2013, Chalice had the following exposures to USD foreign currency:
Financial Assets
Cash and cash equivalents
Trade and other receivables
Financial Liabilities
Trade and other payables
2013
$
2012
$
56,093,028
1,914,895
77,490
-
309,369
566,436
CHALICE GOLD MINES ANNUAL REPORT 2013 | 51
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2013
The following tables summarises the impact of increases/decreases in the relevant foreign exchange rates on the Group’s post-tax result
for the year and on the components of equity. The sensitivity analysis uses a variance of 10% movement in the USD against AUD.
AUD/USD +10%
AUD/USD -10%
AUD/USD +10%
AUD/USD -10%
Impact on gain/(loss)
Impact on equity
(ii) Equity prices
The Group currently has no significant exposure to equity price risk.
(iii) Interest rate risk
2013
$
(5,081,556)
5,589,712
(5,081,556)
5,589,712
2012
$
174,081
(191,490)
174,081
(191,490)
At reporting date the Group’s exposure to market risk for changes in interest rates relates primarily to the Group’s short term
cash deposits. The Group is not exposed to cash flow volatility from interest rate changes on borrowings, as it does not have
any short or long term borrowings.
Chalice constantly analyses its exposures to interest rates, with consideration given to potential renewal of existing positions
and the period to which deposits may be fixed.
At reporting date, the following financial assets were exposed to fluctuations in interest rates:
Cash and cash equivalents
2013
$
2012
$
56,443,226
3,074,530
The following sensitivity analysis is based on the interest rate risk exposures in existence at reporting date. The sensitivity is
based on a change of 100 basis points in interest rates at reporting date.
In the year ended 30 June 2013, if interest rates had moved by 100 basis points, with all other variables held constant, the
post-tax result for the Group would have been affected as follows:
Impact on gain/(loss)
Impact on equity
(c) Credit risk exposure
100 bp increase
100 bp decrease
100 bp increase
100 bp decrease
IMPACT ON PROFIT
2013
$
588,356
(533,503)
588,356
(533,503)
2012
$
11,515
(11,515)
11,515
(11,515)
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its
contractual obligations.
The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to recognised financial
assets is the carrying amount, net of any allowance for doubtful debts, as disclosed in the notes to the financial statements.
It is not the Company’s policy to securitise its trade and other receivables, however, receivable balances are monitored on
an ongoing basis.
52 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2013
(d) Liquidity risk exposure
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Board of Directors
actively monitors the Group’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 Group has non-derivative financial liabilities which include trade and other payables of $829,890 (2012: $859,855) 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.
19. PARENT ENTITY
Financial position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Accumulated losses
Reserves
Total equity
Financial performance
Loss for the year
Total comprehensive income
Commitments and contingencies
2013
$
2012
$
55,800,895
43,612,739
17,831,968
9,119,742
73,632,863
52,732,481
334,435
47,625,349
47,959,784
388,388
25,462
413,850
25,673,079
52,318,631
39,239,790
64,200,112
(15,058,665)
(14,106,062)
1,491,954
2,224,581
26,673,079
52,318,631
(1,839,746)
(3,553,803)
(1,839,746)
(3,553,803)
(i) Contingencies
Other than as disclosed in note 20, the parent entity has no contingent assets or liabilities.
(ii) Operating lease commitments
Within 1 year
Within 2-5 years
Later than 5 years
344,106
999,401
-
300,761
1,555,573
-
1,343,507
1,856,334
CHALICE GOLD MINES ANNUAL REPORT 2013 | 53
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2013
20. COMMITMENTS AND CONTINGENCIES
Exploration expenditure commitments
In order to maintain current rights of tenure to exploration tenements, the Group is required to perform minimum exploration work
to meet the minimum expenditure requirements specified by various 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
Group 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
Office lease commitments
Within 1 year
Within 2-5 years
Later than 5 years
2013
$
-
-
-
-
2012
$
562,642
382,631
-
945,273
344,106
999,401
-
300,761
1,555,573
-
1,343,507
1,856,334
Contingent asset
On 27 April 2012, Chalice agreed to sell a 60 per cent interest in the Zara Project to China SFECO Group for US$78 million
plus a deferred consideration of US$2 million contingent upon the achievement of first gold pour at the Koka Gold Mine in
Eritrea. The deferred payment has not been recorded as income in the financial statements as it is contingent upon the outcome of
a possible future event.
21. CASH AND CASH EQUIVALENTS
Bank balances
Term deposits
Petty cash
56,427,612
2,208,187
-
15,614
858,451
7,892
56,443,226
3,074,530
54 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2013
For the purpose of the statement of cash flows, cash and cash equivalents comprise of the following at 30 June:
Bank balances
Term deposits
Petty cash
Cash at banks and short term deposits attributable to a discontinued operation (note 4(a))
2013
$
2012
$
56,427,612
2,208,187
-
15,614
-
858,451
7,892
102,601
Cash and cash equivalents in the statement of cash flows
56,443,226
3,177,131
Reconciliation of cash flows from operating activities
Loss before tax from continuing operations
Profit/(loss) before tax from discontinuing operations
Profit/(loss) before tax
Adjustments for:
Depreciation and amortisation
Profit/(loss) from discontinued operations
Foreign exchange (gains)/losses
Exploration assets written off
Loss on sale of exploration and evaluation assets
Impairment of exploration and evaluation assets
Impairment of financial assets
Equity-settled share-based payment expenses
(124,878)
(3,718,721)
43,783,106
(416,493)
43,658,228
(4,135,214)
83,449
(43,783,106)
(4,873,790)
595,676
-
375,000
686,442
166,517
99,454
416,493
18,235
96,820
147,091
126,431
-
215,280
Operating loss before changes in working capital and provisions
(3,091,584)
(3,015,410)
(Increase) in trade and other receivables
(Increase)/decrease in financial assets
Increase in trade creditors and other liabilities
(decrease)/increase in provisions
(decrease)/increase in non-current financial assets
Net cash used in operating activities
(25,884)
(21,415)
30,500
(4,718)
-
240,540
22,497
104,458
(83,724)
(19,629)
(3,113,101)
(2,751,268)
CHALICE GOLD MINES ANNUAL REPORT 2013 | 55
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2013
22. RELATED PARTIES
Key management personnel
The following were key management personnel of the Group at any time during the reporting period and unless otherwise
indicated were Key Management Personnel (‘KMP’) for the entire period:
Executive Directors
T R B Goyder (Executive Chairman)
W B Bent (Managing Director, appointed 1 February 2013)
D A Jones (Executive Director)
Non-executive Directors
A W Kiernan
S P Quin
Executives
R K Hacker (Chief Financial Officer)
M Kelly (General Manager – Zara Mining Share Company)(ceased employment 4 September 2012)
The KMP compensation included in ‘personnel expenses’ (see note 3(c)) is as follows:
Short-term employee benefits
Post-employment benefits
Termination benefits
Share-based payment
Other
2013
$
2012
$
1,665,422
1,651,038
110,899
69,573
121,812
-
105,102
81,250
104,638
50,459
1,967,706
1,992,487
Individual director’s and executive’s compensation disclosures
The Group 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 Key Management Personnel remuneration and are designated as audited.
Loans to key management personnel and their related parties
No loans were made to KMP or their related parties.
56 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2013
Other key management personnel transactions with the Group
A number of KMP, 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 Group in the reporting period. The terms and conditions of the transactions with
management persons or 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.
The aggregate expense/(income) recognised during the year relating to key management personnel or their related parties was
as follows:
KEY MANAGEMENT PERSONNEL
TRANSACTION
NOTE
A W Kiernan
Other related parties
Legal and consulting services
Liontown Resources Limited
Corporate services
Uranium Equities Limited
Corporate services
(i)
(ii)
(iii)
2013
$
2012
$
238,000
160,000
(144,000)
(132,000)
(84)
(2,628)
(i)
The Group used the consulting and legal services of Mr Kiernan 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.
(ii) The Group supplied corporate services including accounting and company secretarial services under a Corporate Services
Agreement to Liontown Resources Limited. Messrs Goyder and Kiernan are directors of Liontown Resources Limited. Amounts
were billed on a proportionate share of the cost to the Group of providing the services and are due and payable under
normal payment terms.
(iii) The Group supplied minor corporate services during the year to Uranium Equities Limited. Messrs Goyder and Kiernan are
both directors of Uranium Equities Limited. Amounts were billed at cost to the Group and are due and payable under normal
payment terms.
Amounts outstanding (to)/from the above related parties at reporting date arising from these transactions were as follows:
Assets and liabilities arising from the above transactions
Current payables
Trade debtors
2013
$
2012
$
(6,000)
24,000
18,000
(9,000)
12,000
3,000
Options and performance rights over equity instruments granted as compensation
The movement during the reporting period in the number of options and performance rights over ordinary shares in the Group
held, directly, indirectly or beneficially, by each KMP, including their related parties, is as follows:
HELD AT
1 JULY 2012
GRANTED AS
COMPENSATION
EXERCISED/
FORFEITED
HELD AT
30 JUNE 2013
VESTED DURING
THE YEAR
VESTED AND
EXERCISABLE AT
30 JUNE 2013
Director
T R B Goyder
2,500,000
-
(2,500,000)
-
W B Bent
A W Kiernan
D A Jones
S P Quin
Executive
R K Hacker
M P Kelly
-
1,453,444
500,000
2,500,000
750,000
750,000
500,000
750,000
655,000
300,000
402,139
-
-
(500,000)
-
-
(125,000)
(500,000)
1,453,444
750,000
3,155,000
1,050,000
-
-
750,000
-
487,500
-
-
750,000
2,500,000
1,050,000
1,027,139
125,000
625,000
-
-
-
CHALICE GOLD MINES ANNUAL REPORT 2013 | 57
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2013
HELD AT
1 JULY 2011
GRANTED AS
COMPENSATION
EXERCISED/
FORFEITED
HELD AT
30 JUNE 2012
VESTED DURING
THE YEAR
VESTED AND
EXERCISABLE AT
30 JUNE 2012
Director
T R B Goyder
A W Kiernan
D A Jones
M R Griffiths
S P Quin
J Jeffery
Executive
R K Hacker
M P Kelly
-
2,500,000
500,000
2,500,000
750,000
750,000
-
-
-
-
-
-
-
-
-
2,500,000
500,000
2,500,000
750,000
750,000
-
750,000
(750,000)
-
500,000
-
250,000
500,000
-
-
750,000
500,000
-
-
-
375,000
187,500
-
-
-
-
500,000
2,500,000
750,000
562,500
-
500,000
-
Movements in ordinary shares
The movement during the reporting period in the number of ordinary shares in the Group held, directly, indirectly or beneficially,
by each KMP, including their related parties, is as follows:
HELD AT
1 JULY 2012
ADDITIONS
RECEIVED ON
EXERCISE OF
OPTIONS
HELD AT
30 JUNE 2013
SALES
HELD AT 30 JUNE
2013
Director
T R B Goyder
33,724,342
500,000
-
34,224,342
A W Kiernan
1,162,041
-
500,000
1,662,041
W B Bent
D A Jones
S P Quin
Executive
R K Hacker
M P Kelly
Director
-
496,350
296,278
26,321
231,334
-
-
-
-
-
-
-
-
496,350
296,278
26,321
125,000
356,334
(356,334)
-
-
HELD AT
1 JULY 2011
ADDITIONS
RECEIVED ON
EXERCISE OF
OPTIONS
HELD AT
30 JUNE 2011
SALES
T R B Goyder
27,257,249
6,467,093
A W Kiernan
1,062,041
100,000
D A Jones
M R Griffiths
S P Quin
J Jeffery
Executive
R K Hacker
M P Kelly
296,278
600,960
26,321
-
-
-
-
47,000
98,334
133,000
-
-
-
-
-
-
-
-
-
-
33,724,342
1,162,041
296,278
600,960
26,321
47,000
231,334
-
58 |
-
-
-
-
-
34,224,342
1,662,041
496,350
296,278
26,321
-
-
HELD AT 30 JUNE
2012
33,724,342
1,162,041
296,278
600,960
26,321
47,000
231,334
-
-
-
-
-
-
-
-
-
-
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2013
23. RELATED PARTY DISCLOSURE
(a) Significant investments in subsidiaries
The consolidated financial statements include the financial statements of Chalice Gold Mines Limited and its subsidiaries listed in
the following table:
NAME
Parent entity
COUNTRY OF
INCORPORATION
% EQUITY INTEREST
INVESTMENT
$
2013
2012
2013
2012
Chalice Gold Mines Limited
Australia
Subsidiaries
Chalice Operations Pty Ltd (i)
Australia
Yolanda International Limited
British Virgin Islands
Chalice Gold Mines (Eritrea) Pty Ltd (ii)
Australia
(i) Subsidiaries of Chalice Operations Pty Ltd
Western Rift Pty Ltd
Keren Mining Pty Ltd
Universal Gold Pty Ltd
Sub-Sahara Resources (Eritrea) Pty Ltd
Australia
Australia
Australia
Australia
100
100
100
100
100
100
100
100
100
100
100
100
100
100
(ii) Subsidiaries of Chalice Gold Mines (Eritrea) Pty Ltd
Zara Mining Share Company
Eritrea
0%
90%
6,802,388
6,802,388
1,210,000
1,210,000
-
-
-
-
-
-
1,358,223
1,358,223
-
-
-
37,772,732
CHALICE GOLD MINES ANNUAL REPORT 2013 | 59
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2013
24. JOINT VENTURE INTERESTS
(a) At the end of the financial year the Group held the following interest in exploration licences:
Mogoraib North Exploration Licence
COUNTRY
Eritrea
2013
%
60
(b)
Included in the assets and liabilities of the Group are the following items which represent the Group’s interest
in the assets and liabilities of the joint venture:
2012
%
60
2012
$
-
201,479
201,479
2013
$
340,733
77,490
418,223
5,187,183
2,106,444
239,396
21,779
5,426,579
2,128,223
5,844,802
2,329,702
309,369
309,369
332,818
332,818
309,369
332,818
Current assets
Cash at bank
Trade and other receivables
Non-current assets
Exploration and evaluation assets
Property, plant and equipment
Total assets
Current liabilities
Trade and other payables
Total liabilities
Refer to note 20 for details of commitments of the joint venture. The joint venture has no contingent liabilities as at 30 June 2013
(30 June 2012: nil).
25. SUBSEQUENT EVENTS
On 24 September 2013, Chalice entered into an agreement with unlisted public company, GeoCrystal Limited (“GeoCrystal”) to
subscribe for 3,333,333 shares and 3,333,333 free attaching options in GeoCrystal at an issue price of $0.15 ($500,000).
Following the placement, Chalice owns a 10.1 per cent of the issued and outstanding shares of GeoCrystal. The options are
exercisable at $0.20 each and expire on 30 September 2015. In addition, GeoCrystal granted Chalice an option to acquire
a further 2.1 million shares at $0.20 per share on or before 29 March 2014, which if exercised would increase Chalice’s stake
to 19.9 per cent on a fully diluted basis. Chalice has been granted a conditional first right of refusal on future financing until its
stake has reached 51 per cent of GeoCrystal.
In addition, Chalice has entered into a farm-in joint venture agreement with Uranium Equities Limited over its Oodnadatta and
Marla Projects in South Australia (the “O&M Projects”). The farm-in agreement gives Chalice the right to earn up to 70 per cent of
both projects by sole funding a total of $5.5 million in exploration expenditure. Chalice may earn an initial 51 per cent by sole
funding $2.5 million, but there is no minimum spend required before withdrawal.
60 |
DIRECTORS’ DECLARATION
1.
In the opinion of the directors of Chalice Gold Mines Limited (the ‘Company’):
a.
the financial statements, notes and the additional disclosures in the directors’ report designated as audited, of the
Group are in accordance with the Corporations Act 2001 including:
i. giving a true and fair view of the Group’s financial position as at 30 June 2013 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.
b.
c.
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable.
the financial statements and notes thereto are in accordance with International Financial Reporting Standards issued by
the International Accounting Standards Board.
2.
This declaration has been made after receiving the declarations required to be made to the directors in accordance with
Section 295A of the Corporations Act 2001 for the financial year ended 30 June 2013.
This declaration is signed in accordance with a resolution of the Board of Directors.
Dated at Perth the 27th day of September 2013
Signed in accordance with a resolution of the Directors:
William Bent
Managing Director
CHALICE GOLD MINES ANNUAL REPORT 2013 | 61
INDEPENDENT AUDITOR’S REPORT
INDEPENDENT AUDITOR’S REPORT
To the members of Chalice Gold Mines Limited
Report on the Financial Report
We have audited the accompanying financial report of Chalice Gold Mines Limited (“the company”),
which comprises the consolidated statement of financial position as at 30 June 2013, the
consolidated statement of comprehensive income, the consolidated statement of changes in equity
and the consolidated statement of cash flows for the year then ended, notes comprising a summary
of significant accounting policies and other explanatory information, and the directors’ declaration for
the consolidated entity. The consolidated entity comprises the company and the entities it controlled
at the year’s end or from time to time during the financial year.
Directors’ responsibility for the financial report
The directors of the company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act
2001 and for such internal control as the directors determine is necessary to enable the preparation
of the financial report that is free from material misstatement, whether due to fraud or error.
In Note 1(a), the directors also state, in accordance with Accounting Standard AASB 101:
Presentation of Financial Statements, that the financial report 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. Those 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 control relevant to the
company’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 internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of accounting estimates made by the directors,
as well as evaluating the overall presentation of the financial report.
Our audit did not involve an analysis of the prudence of business decisions made by directors or
management.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations
Act 2001.
HLB Mann Judd (WA Partnership) ABN 22 193 232 714
Level 4, 130 Stirling Street Perth WA 6000. PO Box 8124 Perth BC 6849 Telephone +61 (08) 9227 7500. Fax +61 (08) 9227 7533.
Email: hlb@hlbwa.com.au. Website: http://www.hlb.com.au
Liability limited by a scheme approved under Professional Standards Legislation
HLB Mann Judd (WA Partnership) is a member of
International, a worldwide organisation of accounting firms and business advisers.
62 |
INDEPENDENT AUDITOR’S REPORT
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 consolidated entity’s financial position as at 30 June
2013 and of its performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations
2001; and
(b) the financial report also complies with International Financial Reporting Standards as
disclosed in Note 1(a).
Report on the Remuneration Report
We have audited the remuneration report included in the directors’ report for the year ended 30 June
2013. The directors of the company are responsible for the preparation and presentation of the
remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the remuneration report, based on our audit conducted in accordance
with Australian Auditing Standards.
Auditor’s opinion
In our opinion the remuneration report of Chalice Gold Mines Limited for the year ended 30 June
2013 complies with section 300A of the Corporations Act 2001.
HLB Mann Judd
Chartered Accountants
Perth, Western Australia
27 September 2013
W M Clark
Partner
CHALICE GOLD MINES ANNUAL REPORT 2013 | 63
CORPORATE GOVERNANCE REPORT
Approach to Corporate Governance
Chalice Gold Mines Limited (Company) has established a corporate governance framework, the key features of which are
set out in this statement. In establishing its corporate governance framework, the Company has referred to ASX Corporate
Governance Council Principles and Recommendations 2nd edition (Principles & Recommendations). The Company has followed
each recommendation where the Board has considered the recommendation to be an appropriate benchmark for its corporate
governance practices. Where the Company's corporate governance practices follow a recommendation, the Board has made
appropriate statements reporting on the adoption of the recommendation. In compliance with the "if not, why not" reporting
regime, where, after due consideration, the Company's corporate governance practices do not follow a recommendation,
the Board has explained it reasons for not following the recommendation and disclosed what, if any, alternative practices the
Company has adopted instead of those in the recommendation.
The following governance-related documents can be found on the Company's website at:
http://chalicegold.com/corporate, under the section marked “Corporate”, "Corporate Governance":
Charters
Board
Audit Committee
Nomination Committee
Remuneration Committee
Policies and Procedures
Policy and Procedure for Selection and (Re) Appointment of Directors
Process for Performance Evaluations
Policy on Assessing the Independence of Directors
Policy for Trading in Company Securities
Diversity Policy
Code of Conduct
Policy on Continuous Disclosure (summary)
Compliance Procedures (summary)
Procedure for the Selection, Appointment and Rotation of External Auditor
Shareholder Communication Policy
Risk Management Policy (summary)
Whistleblower Policy
The Company reports below on whether it has followed each of the recommendations during the 2012/2013 financial year
(Reporting Period). The information in this statement is current at 27 September 2013.
Board
Roles and responsibilities of the Board and Senior Executives
(Recommendations: 1.1, 1.3)
The Company has established the functions reserved to the Board, and those delegated to senior executives and has set out these
functions in its Board Charter, which is disclosed on the Company’s website.
The Board is collectively responsible for promoting the success of the Company through its key functions of overseeing the
management of the Company, providing overall corporate governance of the Company, monitoring the financial performance
of the Company, engaging appropriate management commensurate with the Company's structure and objectives, involvement
in the development of corporate strategy and performance objectives, and reviewing, ratifying and monitoring systems of risk
management and internal control, codes of conduct and legal compliance.
Senior executives are responsible for supporting the Managing Director and assisting the Managing Director in implementing
the running of the general operations and financial business of the Company in accordance with the delegated authority of the
Board. Senior executives are responsible for reporting all matters which fall within the Company's materiality thresholds at first
instance to the Managing Director or, if the matter concerns the Managing Director, directly to the Chair or the lead independent
director, as appropriate.
64 |
CORPORATE GOVERNANCE REPORT (CONTINUED)
Skills, experience, expertise and period of office of each Director
(Recommendation: 2.6)
A profile of each Director setting out their skills, experience, expertise and period of office is set out in the Directors' Report on
page 7.
The Board considers that its current composition is appropriate for the Company’s current size and operations, and the following
mix of skills and expertise which the directors possess is relevant to the Company’s business: public company management
experience; resource industry experience; geological qualifications; and legal qualifications; and business development
experience. As the Company’s has sold its major asset, the Zara Gold Project, the Board’s composition will be assessed as part
of the future direction of the Company, once an appropriate opportunity is identified.
Director independence
(Recommendations: 2.1, 2.2, 2.3, 2.6)
The Board does not have a majority of directors who are independent. Notwithstanding this, the Board considers that its current
composition is adequate for the Company’s current size and operations, and includes an appropriate mix of skills and expertise
relevant to the Company’s business. The Board will continue to monitor its composition as the Company’s activities evolve, and
will appoint further independent directors when considered appropriate.
The Board considers the independence of directors having regard to the relationships listed in Box 2.1 of the Principles &
Recommendations and the Company's materiality thresholds. The Board has agreed on the following guidelines, as set out in the
Company's Board Charter for assessing the materiality of matters:
• Statement of Financial Position items are material if they have a value of more than 1% of pro-forma net asset.
• Statement of Comprehensive Income items are material if they will have an impact on the current year operating result of 5% or more.
• Items are also material if they impact on the reputation of the Company, involve a breach of legislation, are outside the
ordinary course of business, could affect the Company’s rights to its assets, if accumulated would trigger the quantitative
tests, involve a contingent liability that would have a probable effect of 1% or more on the Statement of Financial Position
or Statement of Comprehensive Income items, or will have an effect on operations which is likely to result in an increase or
decrease in net income or dividend distribution of more than 5%.
• Contracts will be considered material if they are outside the ordinary course of business, contain exceptionally onerous
provisions in the opinion of the Board, impact on income or distribution in excess of the quantitative tests, there is a likelihood
that either party will default, and the default may trigger any of the quantitative or qualitative tests, are essential to the activities
of the Company and cannot be replaced, or cannot be replaced without an increase in cost which triggers any of the
quantitative tests, contain or trigger change of control provisions, are between or for the benefit of related parties, or otherwise
trigger the quantitative tests.
The sole independent director of the Company is Stephen Quin. Mr Quin is independent as he is a non-executive director who is
not a member of management and who is free of any business or other relationship that could materially interfere with, or could
reasonably be perceived to materially interfere with, the independent exercise of his judgement.
The non-independent directors of the Company are Tim Goyder, Doug Jones, Bill Bent and Anthony Kiernan. Messrs Goyder,
Jones and Bent are executive directors. Mr Kiernan is a non-executive director.
The non-independent Chair of the Board is Tim Goyder. Tim Goyder is an executive director and therefore does not satisfy
paragraph 2 of Box 2.1 of the Principles and Recommendations. The Board believes that Tim Goyder is the most appropriate
person for the position as Chair because of his seniority and industry expertise. However, the Board has appointed Stephen Quin
to act as lead independent director when any conflicts of interest arise.
The Managing Director is Bill Bent who is not Chair of the Board.
Independent professional advice
(Recommendation: 2.6)
To assist directors with independent judgement, it is the Board's policy that if a director considers it necessary to obtain
independent professional advice to properly discharge the responsibility of their office as a director then, provided the director
first obtains approval from the Chair for incurring such expense, the Company will pay the reasonable expenses associated with
obtaining such advice.
CHALICE GOLD MINES ANNUAL REPORT 2013 | 65
CORPORATE GOVERNANCE REPORT (CONTINUED)
Selection and (Re) Appointment of Directors
(Recommendation: 2.6)
In determining candidates for the Board, the Nomination Committee (or equivalent) follows a prescribed process whereby it
evaluates the mix of skills, experience and expertise of the existing Board. In particular, the Nomination Committee (or equivalent)
is to identify the particular skills that will best increase the Board's effectiveness. Consideration is also given to the balance of
independent directors. Potential candidates are identified and, if relevant, the Nomination Committee (or equivalent) recommends
an appropriate candidate for appointment to the Board. Any appointment made by the Board is subject to ratification by
shareholders at the next general meeting.
The Board recognises that Board renewal is critical to performance and the impact of Board tenure on succession planning. An
election of directors is held each year. Each director other than the Managing Director, must not hold office (without re-election)
past the third annual general meeting of the Company following the director's appointment or three years following that director's
last election or appointment (whichever is the longer). However, a director appointed to fill a casual vacancy or as an addition to
the Board must not hold office (without re-election) past the next annual general meeting of the Company. At each annual general
meeting a minimum of one director or one third of the total number of directors must resign. A director who retires at an annual
general meeting is eligible for re-election at that meeting. Re-appointment of directors is not automatic.
The Company’s Policy and Procedure for the Selection and Re (Appointment) of Directors is disclosed on the Company’s website.
Board committees
Nomination Committee
(Recommendations: 2.4, 2.6)
The Board has not established a separate Nomination Committee. Given the current size and composition of the Board, the
Board believes that there would be no efficiencies gained by establishing a separate Nomination Committee. Accordingly,
the Board performs the role of the Nomination Committee. Items that are usually required to be discussed by a Nomination
Committee are marked as separate agenda items at Board meetings when required. When the Board convenes as the
Nomination Committee it carries out those functions which are delegated to it in the Company’s Nomination Committee Charter.
The Board deals with any conflicts of interest that may occur when convening in the capacity of the Nomination Committee by
ensuring that the director with conflicting interests is not party to the relevant discussions.
As noted above, the full Board carries out the role of the Nomination Committee. The full Board did not officially convene in its
capacity as a Nomination Committee during the Reporting Period, however nomination-related discussions occurred from time to
time during the year as required.
The Board has adopted a Nomination Committee Charter which describes the role, composition, functions and responsibilities of
the full Board in its capacity as the Nomination Committee.
The Company’s Nomination Committee Charter is disclosed on the Company’s website.
Audit Committee
(Recommendations: 4.1, 4.2, 4.3, 4.4)
The Board has established an Audit Committee.
The Audit Committee is not structured in compliance with Recommendation 4.2. The formation of an Audit Committee in
accordance with Recommendation 4.2 is not possible as the Board only has only one independent director. The Audit Committee
is comprised of Anthony Kiernan (Chair) and Stephen Quin. The Board considers this structure is the best mix of skills and
expertise to carry out the function of an Audit Committee available to the Company and appropriate for its current needs. The
Board has adopted an Audit Committee Charter which describes the role, composition, functions and responsibilities of the Audit
Committee and which the Audit Committee applies to assist it to fulfil its function. The Audit Committee Charter makes provision
for the Audit Committee to meet with the external auditor as required.
The Audit Committee held three meetings during the Reporting Period. Details of director attendance at Audit Committee meetings
during the Reporting Period are set out in a table in the Directors’ Report on page 8.
Details of each of the director’s qualifications are set out in the Directors’ Report on page 7. Neither member of the Audit
Committee has formal accounting nor financial qualifications however, each member is financially literate, has an understanding
of the industry in which the Company operates and has considerable ‘on board’ experience.
66 |
CORPORATE GOVERNANCE REPORT (CONTINUED)
The Company has established a Procedure for the Selection, Appointment and Rotation of its External Auditor. The Board is
responsible for the initial appointment of the external auditor and the appointment of a new external auditor when any vacancy
arises, as recommended by the Audit Committee (or its equivalent). Candidates for the position of external auditor must
demonstrate complete independence from the Company through the engagement period. The Board may otherwise select an
external auditor based on criteria relevant to the Company's business and circumstances. The performance of the external auditor
is reviewed on an annual basis by the Audit Committee (or its equivalent) and any recommendations are made to the Board.
The Company’s Audit Committee Charter and Procedure for Selection, Appointment and Rotation of External Auditor are
disclosed on the Company’s website.
Remuneration Committee
(Recommendations: 8.1, 8.2, 8.3, 8.4)
The Board has established a Remuneration Committee.
The Remuneration Committee is not structured in accordance with Recommendation 8.2. The formation of a Remuneration
Committee in accordance with Recommendation 8.2 is not possible as the Board has only two non-executive directors, only one
of whom is independent. Accordingly, the Board has established a Remuneration Committee comprising its two non-executive
directors; Anthony Kiernan (Chair) and Stephen Quin.
The Remuneration Committee held two meetings during the Reporting Period. Details of director attendance at Remuneration
Committee meetings during the Reporting Period are set out in a table in the Directors’ Report on page 8.
The Board has adopted a Remuneration Committee Charter which describes the role, composition, functions and responsibilities
of the Remuneration Committee.
Details of remuneration, including the Company’s policy on remuneration, are contained in the “Remuneration Report” which
forms of part of the Directors’ Report and commences on page 9. The Company's policy on remuneration clearly distinguishes the
structure of non-executive directors’ remuneration from that of executive directors and senior executives. Non-executive directors
are remunerated at a fixed fee for time, commitment and responsibilities. Remuneration for non-executive directors is not linked
to individual performance, however, non-executive directors, at the discretion of the Board may participate in the Company’s
Employee Share Option Plan (subject to shareholder approval). Pay and rewards for executive directors and senior executives
consists of a base salary and may comprise performance incentives. Long term performance incentives may include options and
performance rights granted at the discretion of the Board and subject to obtaining the relevant approvals. Executives are offered
a competitive level of base pay at market rates and are reviewed annually to ensure market competitiveness.
There are no termination or retirement benefits for non-executive directors (other than for superannuation).
The Company's Remuneration Committee Charter includes a statement of the Company's policy on prohibiting transactions in
associated products which limit the risk of participating in unvested entitlements under any equity based remuneration schemes.
The Company’s Remuneration Committee Charter is disclosed on the Company’s website.
Performance evaluation
Senior executives
(Recommendations: 1.2, 1.3)
The Managing Director and Executive Chairman are responsible for evaluating the performance of senior executives. This is
conducted by informal interviews, and via ongoing contact between the Managing Director, the Executive Chairman and the
senior executives. As the Company grows, it will review the need for a formal evaluation process.
During the Reporting Period a performance evaluation of senior executives took place in accordance with the process disclosed.
Board, its committees and individual directors
(Recommendations: 2.5, 2.6)
The Chair evaluates the performance of the Board, individual directors, the Managing Director and any applicable committees of
the Board. These evaluations are undertaken by each director completing a questionnaire which is then evaluated by the Chair.
Any issues arising are addressed by the Chair with the Board.
During the Reporting Period, an evaluation of the Board, applicable committees, the Managing Director and individual directors
took place in accordance with the process disclosed.
The Company’s Process for Performance Evaluation is disclosed on the Company’s website.
CHALICE GOLD MINES ANNUAL REPORT 2013 | 67
CORPORATE GOVERNANCE REPORT (CONTINUED)
Ethical and responsible decision making
Code of Conduct
(Recommendations: 3.1, 3.5)
The Company has established a Code of Conduct as to the practices necessary to maintain confidence in the Company's
integrity, the practices necessary to take into account its legal obligations and the reasonable expectations of its stakeholders and
the responsibility and accountability of individuals for reporting and investigating reports of unethical practices.
The Company also adopted a Fraud Reporting and Investigation Policy (Whistleblower Policy) on 16 May 2013. The policy is
designed to set forth the requirements for reporting and investigating fraudulent activity or related misconduct within the Company
and its operating companies involving fraud, or violations of laws, policies, procedures and rules that involve the financial results
and reporting by the operating companies.
The Company’s Code of Conduct and Whistleblower Policy are disclosed on the Company’s website.
Diversity
(Recommendations: 3.2, 3.3, 3.4, 3.5)
The Company has established a Diversity Policy. However, the Diversity Policy provides that the Board may establish measurable
objectives for achieving gender diversity that are appropriate for the Company. If established, the Board will assess annually both
the objectives and progress towards achieving them. The Company’s Diversity Policy is disclosed on the Company’s website.
The Board has not set measurable objectives for achieving gender diversity. The Board revisited the establishment of measurable
objectives for achieving gender diversity during the Reporting Period. The Board does not consider that it is in a position to set out
meaningful objectives for achieving gender diversity until the future direction of the Company is determined. The Board will revisit
the establishment of measurable objectives when the future direction of the Company is known.
The proportion of women employees in the whole organisation, women in senior executive positions and women on the Board
are set out in the following table:
PROPORTION OF WOMEN
Whole organisation
13 out of 39 (33.3%)
Senior Executive positions
1 out of 3 (33.3%)
Board
0 out of 5 (0%)
Continuous Disclosure
(Recommendations: 5.1, 5.2)
The Company has established written policies and procedures designed to ensure compliance with ASX Listing Rule disclosure
requirements and accountability at a senior executive level for that compliance.
A summary of the Company’s Policy on Continuous Disclosure and Compliance Procedures are disclosed on the Company’s website.
Shareholder Communication
(Recommendations: 6.1, 6.2)
The Company has designed a communications policy for promoting effective communication with shareholders and encouraging
shareholder participation at general meetings.
The Company’s Shareholder Communication Policy is disclosed on the Company’s website.
68 |
CORPORATE GOVERNANCE REPORT (CONTINUED)
Risk Management
Recommendations: 7.1, 7.2, 7.3, 7.4)
The Board has adopted a Risk Management Policy, which sets out the Company's risk profile. Under the policy, the Board is
responsible for approving the Company's policies on risk oversight and management and satisfying itself that management has
developed and implemented a sound system of risk management and internal control.
Under the policy, the Board delegates day-to-day management of risk to the Managing Director, who is responsible for
identifying, assessing, monitoring and managing risks. The Managing Director is also responsible for updating the Company's
material business risks to reflect any material changes, with the approval of the Board.
In fulfilling the duties of risk management, the Managing Director may have unrestricted access to Company employees,
contractors and records and may obtain independent expert advice on any matter they believe appropriate, with the prior
approval of the Board.
The Board has established a separate Audit Committee to monitor and review the integrity of financial reporting and the
Company's internal financial control systems and risk management systems.
In addition, the following risk management measures have been adopted by the Board to manage the Company's material
business risks:
• the Board has established authority limits for management, which, if proposed to be exceeded, requires prior Board approval;
• the Board has adopted a compliance procedure for the purpose of ensuring compliance with the Company's continuous
disclosure obligations; and
• the Board has adopted a corporate governance manual which contains other policies to assist the Company to establish and
maintain its governance practices.
The Board has also implemented a formalised and documented system for the management of its material business risks. This
system includes a risk register used by management to identify the Company’s material business risks. In addition, the process
of managing material business risks is allocated to members of senior management. The risk register is reviewed regularly and
updated, as required.
The categories of risk to be reported on or referred to as part of the Company’s systems and processes for managing material
business risk include market-related, financial reporting, operational, environmental, human capital, sustainability, occupational
health and safety, political, strategic, economic cycle/marketing, and legal and compliance.
The Board has required management to design, implement and maintain risk management and internal control systems to
manage the Company's material business risks. The Board also requires management to report to it confirming that those risks
are being managed effectively. The Board has received a report from management as to the effectiveness of the Company's
management of its material business risks for the Reporting Period.
The Managing Director and the Chief Financial Officer have provided a declaration to the Board in accordance with section
295A of the Corporations Act and have assured the Board that such declaration is founded on a sound system of risk
management and internal control and that the system is operating effectively in all material respects in relation to financial
reporting risks.
A summary of the Company’s Risk Management Policy is disclosed on the Company’s website.
CHALICE GOLD MINES ANNUAL REPORT 2013 | 69
CORPORATE GOVERNANCE REPORT (CONTINUED)
ASX Corporate Governance Council recommendations checklist
The following table sets out the Company’s position with regard to adoption of the Principles & Recommendations as at the date
of this statement:
RECOMMENDATION
COMPLY
Principle 1:
Lay solid foundations for management and oversight
1.1
1.2
1.3
Companies should establish the functions reserved to the board and those delegated to senior
executives and disclose those functions.
Companies should disclose the process for evaluating the performance of senior executives.
Companies should provide the information indicated in the Guide to reporting on Principle 1.
Principle 2: Structure the board to add value
2.1
2.2
2.3
2.4
2.5
A majority of the board should be independent directors.
The chair should be an independent director.
The roles of chair and chief executive officer should not be exercised by the same individual.
The board should establish a nomination committee.
Companies should disclose the process for evaluating the performance of the board, its committees
and individual directors.
2.6
Companies should provide the information indicated in the Guide to reporting on Principle 2.
Principle 3: Promote ethical and responsible decision-making
3.1
Companies should establish a code of conduct and disclose the code or a summary of the code as to:
• the practices necessary to maintain confidence in the company’s integrity;
• the practices necessary to take into account their legal obligations and the reasonable
expectations of their stakeholders; and
• the responsibility and accountability of individuals for reporting and investigating reports of
unethical practices.
3.2
3.3
3.4
Companies should establish a policy concerning diversity and disclose the policy or a summary of
that policy. The policy should include requirements for the board to establish measurable objectives
for achieving gender diversity for the board to assess annually both the objectives and progress in
achieving them.
Companies should disclose in each annual report the measurable objectives for achieving gender
diversity set by the board in accordance with the diversity policy and progress towards achieving them.
Companies should disclose in each annual report the proportion of women employees in the whole
organisation, women in senior executive positions and women on the board.
3.5
Companies should provide the information indicated in the Guide to reporting on Principle 3.
Principle 4: Safeguard integrity in financial reporting
4.1
4.2
4.3
4.4
The board should establish an audit committee.
The audit committee should be structured so that it: consists only of non-executive directors; consists
of a majority of independent directors; is chaired by an independent chair, who is not chair of the
board; and has at least three members.
The audit committee should have a formal charter.
Companies should provide the information indicated in the Guide to reporting on Principle 4.
Principle 5: Make timely and balanced disclosure
5.1
Companies should establish written policies designed to ensure compliance with ASX Listing Rule
disclosure requirements and to ensure accountability at senior executive level for that compliance
and disclose those policies or a summary of those policies.
5.2
Companies should provide the information indicated in the Guide to reporting on Principle 5.
×
×
×
×
×
70 |
CORPORATE GOVERNANCE REPORT (CONTINUED)
RECOMMENDATION
COMPLY
Principle 6: Respect the rights of shareholders
6.1
Companies should design a communications policy for promoting effective communication with
shareholders and encouraging their participation at general meetings and disclose their policy or a
summary of the policy.
6.2
Companies should provide the information indicated in the Guide to reporting on Principle 6.
Principle 7: Recognise and manage risk
7.1
7.2
7.3
Companies should establish policies for the oversight and management of material business risks
and disclose a summary of those policies.
The board should require management to design and implement the risk management and internal
control system to manage the company’s material business risks and report to it on whether those
risks are being managed effectively. The board should disclose that management has reported to it
as to the effectiveness of the company’s management of its material business risks.
The board should disclose whether it has received assurance from the chief executive officer (or
equivalent) and the chief financial officer (or equivalent) that the declaration provided in accordance
with section 295A of the Corporations Act is founded on a sound system of risk management and
internal control and that the system is operating effectively in all material respects in relation to
financial reporting risks..
7.4
Companies should provide the information indicated in the Guide to reporting on Principle 7.
Principle 8: Remunerate fairly and responsibly
8.1
8.2
8.3
The board should establish a remuneration committee.
The remuneration committee should be structured so that it: consists of a majority of independent
directors; is chaired by an independent chair; and has at least three members.
Companies should clearly distinguish the structure of non-executive directors’ remuneration from that
of executive directors and senior executives.
8.4
Companies should provide the information indicated in the Guide to reporting on Principle 8.
×
CHALICE GOLD MINES ANNUAL REPORT 2013 | 71
ASX ADDITIONAL INFORMATION
Additional information required by the Australian Securities 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 25 September
2013 were:
SHAREHOLDER
Timothy Rupert Barr Goyder
Franklin Resources Inc
Lujeta Pty Ltd
Paradice Investment Management Pty Ltd
NUMBER OF
ORDINARY SHARES
HELD
PERCENTAGE OF
CAPITAL HELD
%
41,059,389
31,107,008
20,182,750
13,784,174
16.34
12.38
8.03
5.51
Class of shares and voting rights
At 25 September 2013 there were 2,530 holders of the ordinary shares of the Company, 6 holders of unlisted share options
and 5 holders of performance rights. The share options and performance rights have been granted under the Company’s
Employee Share Option Plan and Employee Long Term Incentive Plan.
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 or performance rights do not have voting rights.
Distribution of equity security holders as at 25 September 2013:
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
PERFORMANCE
RIGHTS
417
762
422
760
169
2,530
-
-
-
1
5
6
-
-
-
-
5
5
The number of shareholders holding less than a marketable parcel at 25 September 2013 was 808.
72 |
ASX ADDITIONAL INFORMATION (CONTINUED)
Twenty largest Ordinary Fully Paid Shareholders as at 25 September 2013
NAME
National Nominees Limited
Timothy R B Goyder
Lujeta Pty Ltd
HSBC Custody Nominees (Australia) Limited
JP Morgan Nominees Australia Limited
Merrill Lynch (Australia) Nominees Pty Limited
Claw Pty Ltd
Calm Holdings Pty Ltd
UBS Nominees Pty Ltd
Sundowner International Limited
Nefco Nominees
Citicorp Nominees Pty Ltd
CDS & CO
Clement Pty Ltd
Piat Corp Pty Ltd
Greenslade Holdings Pty Ltd
Jetosea Pty Ltd
Super Seed Pty Ltd
Teragoal Pty Ltd
Mr Philip Scott Button + Ms Philippa Ann Nicol
NUMBER OF
ORDINARY SHARES
HELD
PERCENTAGE OF
CAPITAL HELD
%
45,583,409
41,059,389
20,182,750
14,428,248
13,062,995
5,120,288
4,000,000
3,850,000
3,477,362
3,244,782
3,100,000
3,090,140
2,158,402
1,810,681
1,782,266
1,516,667
1,500,000
1,500,000
1,400,000
1,348,261
18.14
16.34
8.03
5.74
5.20
2.04
1.59
1.53
1.38
1.29
1.23
1.23
0.86
0.72
0.71
0.60
0.60
0.60
0.56
0.54
Total
173,215,640
68.33
CHALICE GOLD MINES ANNUAL REPORT 2013 | 73
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74 |
CORPORATE DIRECTORY
CHALICE GOLD MINES LIMITED
ABN 47 116 648 956
Annual Financial Report
30 June 2013
PRINCIPAL PLACE OF BUSINESS
HOME EXCHANGE
DIRECTORS
Timothy Goyder
Executive Chairman
William Bent
Managing Director
Douglas Jones
Executive Director
Anthony Kiernan Non-executive Director
Stephen Quin
Non-executive Director
JOINT COMPANY SECRETARIES
Richard Hacker
Leanne Forgione
& REGISTERED OFFICE
Level 2, 1292 Hay Street
WEST PERTH WA 6005
Tel:
(+61)(8)9322 3960
Fax:
(+61)(8)9322 5800
Web: www.chalicegold.com
Email: info@chalicegold.com
AUDITORS
HLB Mann Judd
Level 4, 130 Stirling Street
PERTH WESTERN AUSTRALIA 6000
SHARE REGISTRY
Australia
Computershare Investor Services Pty Limited
Level 2, Reserve Bank Building
45 St Georges Terrace
PERTH WESTERN AUSTRALIA 6000
Tel: 1300 557 010
Canada
Computershare Investor Services
100 University Avenue, 9th Floor
TORONTO ONTARIO M5J 2Y1
Australian Securities Exchange Limited
Exchange Plaza
2 The Esplanade
PERTH WESTERN AUSTRALIA 6000
TORONTO STOCK EXCHANGE
The Exchange Tower
P.O Box 421
130 King Street West
TORONTO ONTARIO M5X 1J2
ASX
TSX
Share Code:
CHN
Share Code:
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CHALICE GOLD MINES LIMITED
Level 2, 1292 Hay Street
WEST PERTH, WESTERN AUSTRALIA 6005
Tel:
Fax:
(+61) (8) 9322 3960
(+61) (8) 9322 5800
Web: www.chalicegold.com
Email: info@chalicegold.com