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2014
A N N U A L R E P O R T
Corporate Directory
CHALICE GOLD MINES LIMITED
ABN 47 116 648 956
ANNUAL FINANCIAL REPORT
30 JUNE 2014
DIRECTORS
SHARE REGISTRY
Timothy (Tim) 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 Stevens
PRINCIPAL PLACE OF BUSINESS
& REGISTERED OFFICE
Level 2, 1292 Hay Street
WEST PERTH, WESTERN AUSTRALIA 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, 8th Floor
TORONTO ONTARIO M5J 2Y1
HOME EXCHANGE
AUSTRALIAN SECURITIES EXCHANGE LIMITED
Level 40, Central Park
152-158 St Georges Terrace
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
Contents
Chairman’s Letter
Operating and Financial Review
Tenement Schedules
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
3
11
17
32
33
34
35
37
38
70
71
73
81
Chairman’s
Letter
Dear Shareholders
Chalice remains in a strong position with $44m in cash
at year end, plus the promising Cameron Gold Project in
Ontario, Canada.
As a Company, we have worked hard to take advantage of
our privileged cash position and gain exposure to as many
of the best possible acquisition/investment opportunities
available in the mining resources sector by targeting advanced
exploration stage projects through to producing assets and
across most commodities. The fall in commodity prices and
ongoing tightness in the equity markets has increased the
number of potential opportunities to consider and, over the
last 12 months, we have been able to engage and assess a
number of projects in the market place.
Our key challenge, along with other investors in the resources
sector, has not been the number of opportunities available
or the price of the assets, but the scarcity of projects/assets
capable of generating an attractive return for investors, even
with a more optimistic lens over the current consensus forecasts
of commodity prices and the prevailing escalated capital and
operating cost environment.
One of the few assets which did substantially meet our
acquisition criteria was the Cameron Gold Project in Ontario,
which we acquired in January this year. At current gold prices
the project is marginal however, with an acquisition price
of approximately $6.4 million, or just $5 per total resource
ounce, and equally importantly low holding costs, this was
a sensible purchase that in time has potential to generate
significant value through exploration success adding to the
resource base, thereby improving project returns in the current
gold price environment, and/or by providing good leverage
in a higher gold price environment.
The Cameron Project has also given the Company a natural
focal point in Canada, where we are currently focusing on
consolidating our position at Cameron, as well as targeting
additional high potential opportunities in Canada and the
USA. Given that we are currently exiting our Joint Venture
in Eritrea, we now have the opportunity to reposition the
Company in lower risk jurisdictions which, in these times, are
currently more appealing to investors.
With a well-funded and experienced technical team, I believe
we have a distinct competitive advantage. Shareholders can
be assured that we will be giving ourselves the best chance of
success whether it comes through acquisition or exploration.
In conclusion, I would like to sincerely thank both Bill Bent and
Doug Jones, who have recently resigned from the Board, for
their significant contributions to Chalice over the years. I also
express my appreciation to our other employees for their efforts
during the year and our shareholders for their ongoing support
amidst these difficult times.
TONY KIERNAN
2 | Annual Report 2014 Chalice Gold Mines
Operating
And Financial
Review
BUSINESS STRATEGY AND OUTLOOK
Chalice’s vision is to grow a multi-asset resources company by
acquiring and developing high quality mineral resource assets.
To deliver this vision the Company is pursuing the following
business strategy:
• Grow and advance Chalice’s Cameron Gold Project
in Canada Ontario by adding additional high grade
ounces in close proximity to the Cameron deposit whilst
concurrently evaluating future development options.
• Targeting quality base and precious metal exploration
ground, preferably in lower risk mining jurisdictions.
• Targeting more advanced mineral resource project
opportunities on a deal by deal basis, or where Chalice’s
strong cash position may provide a funding solution to the
development of the asset.
Looking forward, Chalice will continue to seek to grow and
enhance the value of the Cameron Gold project and in
parallel look for opportunities to secure good land positions in
highly prospective belts in targeted jurisdictions. Maintaining
the Company’s strong cash position and pursuing opportunities
for one or more advanced stage projects to put alongside
the Cameron Project will continue to be a key focus of the
Company. Movements in commodity prices, foreign exchange
rates and interest rates may adversely impact the achievement
of these objectives.
CAMERON GOLD PROJECT,
ONTARIO, CANADA
HIGHLIGHTS
• Strategic asset in a developing gold belt
• Excellent exploration potential
• Development options: Focus on the open pit potential of
the Cameron and Dubenski deposits with the underground
resource as optional second phase
• NI43-101 and JORC 2012 compliant resources:
> Measured and indicated resource of 675,900 ounces of
gold at 2.09 g/t
> Additional inferred resource of 591,300 ounces of gold
at 2.61 g/t
• Simple metallurgy (recoveries of +90% in a conventional
CIL plant)
• Access to first-world infrastructure and services (roads, low
cost grid power, communications, accommodation and
mining services)
Chalice Gold Mines Annual Report 2014 | 3
ACQUISITION
PROJECT OVERVIEW
In February 2014, Chalice acquired the Cameron Gold
Project, the Rainy River Project, the West Cedartree Project
and the Ardeen Gold Project in Ontario, Canada by
purchasing various subsidiary companies of Coventry
Resources Inc.
The Cameron Gold Project comprises the Cameron Gold
Property, the West Cedartree Property and the Dubenski
Property (collectively, the “Project”) and is located
approximately 80 km to the southeast of Kenora in Western
Ontario, Canada.
The consideration for the acquisition was 46 million ordinary
Chalice shares, which were distributed directly to Coventry
shareholders on a pro rata basis. At transaction completion,
the Projects were effectively valued (based on the Chalice
shares) at $6.4 million, or $10 per measured and indicated
resource ounce ($5 per total resource ounce).
In June 2014, the Company entered into an agreement to
acquire the Dubenski gold deposit in Ontario, Canada for
C$700,000.
The Project has, for all currently assessed deposits, measured
and indicated Resource of 675,000 ounces of gold at 2.09
g/t plus an inferred Resource of 591,000 ounces of gold at
2.61 g/t (refer to page 9 for detailed resource table).
4 | Annual Report 2014 Chalice Gold Mines
800m
80
0
CAMERON PROJECT PIT SHELLS
GEOLOGY
The Cameron Gold Project is located at the western end of the
Archaean Savant Lake-Crow Lake Greenstone Belt in south-
western Ontario. The region is dominated by the crustal-scale,
southeast-striking and northwest-dipping Cameron-Pipestone
Fault which extends over a strike length of greater than 100
kilometres and is associated with a series of large-scale
second-order shear zones and fault splays.
The Cameron gold deposit is associated with, and partially
hosted by, the Cameron Lake Shear Zone (CLSZ) and is
located on the southeastern limb of the large-scale, east-
northeast-trending Shingwak Lake Anticline. The mineralisation
is hosted by mafic volcanic rocks within the northwest-trending
CLSZ, which forms the contact between the volcanics and
intrusive gabbros in the footwall. Minor felsic porphyries and
tuffs are also present within the mine sequence.
The geological setting of the West Cedartree Project deposits
is less well-known. It is believed that the Dubenski gold
deposit is hosted by the Flint Lake Shear Zone a splay from
the Cameron-Pipestone Fault, a zone of highly-foliated and
variably-sheared rocks traceable for about 2 km.
The Cameron Gold Project is covered by unconsolidated
glacial overburden. The thickness of glacial overburden
across the project ranges from less than 1 m up to 20 m.
This, along with the extensive lakes, presents a significant
challenge to exploration.
MINERALISATION
Mineralisation at the Cameron gold deposit comprises
quartz-albite veins and breccia associated with intense silica-
sericite-carbonate-pyrite alteration in a series of zones that
dip moderate-steeply to the north and plunge steeply to the
northwest. Mineralisation has been intersected in drilling over
a strike length of more than 1,000 metres and to a vertical
depth of greater than 700 metres. Mineralisation ranges
in thickness from 5 to more than 50 metres. Disseminated
sulphide replacements makes up the largest component of
the mineralized material, with gold associated with fine-
grained disseminated pyrite, with high sulphide concentrations
generally corresponding with higher gold grades. Despite the
association with fine grained sulphides, the gold is free-milling.
FIGURE 1: CAMERON DEPOSIT CROSS SECTION 50300N
Chalice Gold Mines Annual Report 2014 | 5
800m
Operating and Financial Review CONTINUED REGIONAL EXPLORATION POTENTIAL
EXPLORATION
The Cameron Gold Project has excellent exploration potential,
straddling several major regional structures, including the
Cameron–Pipestone and Monte Christo shear zones.
Although cumulative drilling on the properties exceeds
120,000 metres, until Chalice acquired the property, less than
5,000 metres of that drilling had been conducted outside of
the main deposits.
Geochemical sampling of the glacial tills, a primary
exploration tool in this glaciated terrane where outcrop is
less than 10% has focused along access roads leaving major
prospective structural corridors largely unexplored.
2014 EXPLORATION AT CAMERON
GOLD PROJECT
Since acquiring the Project, Chalice has focussed on its
exploration potential. In this regard, the following have been
completed or is ongoing:
• Approximately 3,000 m of diamond drilling was carried out
at the Juno, Ajax, Hermione, and Jupiter targets, all within
a 5-10 km radius of the Cameron deposit. The drilling
intersected structures, with ‘Cameron-style’ alteration and
gold mineralisation that extend outside of the Cameron
deposit and, within our defined structural corridors.
• Detailed aeromagnetic and electromagnetic (VTEM)
geophysical surveys were completed over the entire project
area to define targets for follow up.
• A detailed structural analysis was completed focusing on
key structural corridors on the property.
• A Mobile Metal Ion (MMI) geochemical survey was
successfully trialled over Cameron, the results of which support
MMI being undertaken in prioritised zones along structural
corridors with the aim of generating additional drill targets.
6 | Annual Report 2014 Chalice Gold Mines
CANADA
RAINY RIVER PROJECT
The Rainy River Project was acquired as part of the Cameron
Project acquisition and consists of a 57 km2 land package
65 km to the southwest of Cameron. Chalice’s Rainy River
is located on the same geological trend and within 10 km
of the large scale Rainy River gold-silver deposit recently
acquired by New Gold Inc. During the year the Company
carried out a 55-hole till sampling drill program, targeting the
Hydra, Conqueror, Leviathan, Naiad, Revenge and Temeraire
prospects. The results of the till sampling are being used in
combination with a reinterpretation of the regional geology
based on public domain geophysical and geochemical
datasets to determine the Company’s future strategy in the
Rainy River area.
AUSTRALIA
GEOCRYSTAL LIMITED – WEBB DIAMOND PROJECT
During the year the Company subscribed for 9,683,333
shares at a cost of $1,770,000 along with 7,583,333 free
attaching options (4,250,000 options have an exercise price
of 25 cents and expire on or before 31 March 2016 and
3,333,333 options have an exercise price of 20 cents and
expire on or before 30 September 2015) in unlisted company
GeoCrystal Limited (“GeoCrystal”). Chalice currently has a
24% interest in GeoCrystal (36% if all options are exercised)
with options and first rights over future funding up to a 51%
interest in GeoCrystal.
GeoCrystal is earning into 70 per cent of Meteoric Resources’
interest in the 400 km2 Webb Diamond Project in Western
Australia, which has the potential to be a large kimberlite
field. To date GeoCrystal has earned a 51% interest and has
elected to continue to sole fund exploration on the project
under the terms of the relevant joint venture.
GeoCrystal has completed a detailed, high resolution
aeromagnetic survey over the main tenement block covering
the Webb kimberlite field and over a tenement covering a
separate target to the north east. Interpretation of this detailed
dataset shows 280 kimberlite targets in the Webb field. A
6,000m Reverse Circulation drilling program commenced in
August 2014, with the objective of obtaining unweathered
samples from a spread of target clusters throughout the field
and from priority targets identified from the aeromagnetic
survey and loam sampling. These samples will then be
analysed for both micro and macro diamonds, with results
expected in the first quarter of 2015.
Following the completion of the current exploration program,
GeoCrystal expects to have met the requirements to sole fund
the first $2 million of expenditure to earn 70% of Meteoric’s
interest in the joint venture.
MARLA AND OODNADATTA
Chalice entered into a joint venture agreement with ASX-listed
exploration company Uranium Equities Limited giving Chalice
the right to earn up to 70% in both the Oodnadatta and
Marla Projects in South Australia, by funding $5.5 million in
exploration expenditure. On 11 June, following a review of
exploration results, Chalice withdrew from the joint venture.
ERITREA
MOGORAIB NORTH PROJECT
During the year, two drilling programs were completed, with
several holes intersecting stringer, semi-massive and massive
sulphide confirming the presence of a stacked VMS system
consisting of at least four separate ‘horizons’. The grades,
however, were considered to be sub-economic, resulting in
Chalice withdrawing from the Mogoraib North JV (subject to
acceptance of any offer to purchase the Company’s interest in
the joint venture).
CORPORATE
SHARE BUYBACK
On 3 March 2014, the Company announced an on-market
share buy-back of up to 25,073,088 ordinary shares as part
of a capital management plan for a 12 month period. To
date, a total of 10,036,591 shares have been acquired at
an average price of 15.28 cents for a total of $1,554,356
(including brokerage costs). The total maximum remaining
shares that can be acquired under the 10%/12 month rule is
15,036,497.
FINANCIAL PERFORMANCE
The Group reported a net loss after income tax of $11.6
million for the year (2013: net profit of $43.7 million), a large
part of which is related to the write off of the Mogoraib North
Project in Eritrea ($5.8 million).
The Group recorded $0.6 million in net foreign exchange
losses (2013: net gain of $4.8 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 2014, the Group had approximately US$41.5 million
cash on hand in US$ denominated bank accounts (2013:
US$52.2 million).
Corporate administrative expenses decreased to $1.9 million
as compared to $2.9 million in 2013.
STATEMENT OF CASH FLOWS
Cash and cash equivalents at 30 June 2014 were $44.2
million (30 June 2013: $56.4 million). The reduction in cash
and equivalents of $12.2 million included spending of $1.5
million on an on-market share buyback, $1.8 million on the
acquisition of a 24% interest in GeoCrystal Limited, $0.9
million on costs associated with the acquisition of the Cameron
Project, $3.5 million on exploration activities at the Cameron
Gold Project and Mogoraib North Project in Eritrea and $2.2
million on people and business development activities related to
assessing and reviewing projects for acquisition or investment.
In comparison to the 2013 financial year, net cash flows used
in operating activities decreased by 28% from $2.4 million in
2013 to $1.7 million.
Net cash flows from investing activities decreased from a net
inflow of $75.7 million in 2013 to a net outflow of $8.4
million in 2014. This was mainly due to the sale of the Zara
Project in Eritrea in 2013, whereby net cash received was
approximately $80.1 million. Payments for mining, exploration
and evaluation decreased by 22.2% to $3.5 million (2013:
$4.5 million) and payments for property, plant and equipment
decreased by 83.3% to $0.1 million (2013: $0.6 million).
Net cash used in financing activities decreased by $23.4
million (93.9%) due to the return of capital carried out in the
2013 financial year of $25 million. Financing cash flows in
2014 includes a share buy-back of $1.5 million.
The effect of exchange rates on cash and cash equivalents
at 30 June 2014 was a decrease of $0.6 million (2013:
increase of $4.9 million). The Company held approximately
US$41.5 million in US$ denominated bank accounts at 30
June 2014 (2013: US$52.2 million).
Chalice Gold Mines Annual Report 2014 | 7
Operating and Financial Review CONTINUED FINANCIAL POSITION
MINERAL RESOURCES STATEMENT
At balance date the Group had net assets of $55,075,020
and an excess of current assets over current liabilities of
$43,090,405.
Current assets decreased by 21.4% to $44.6 million (2013:
$56.8 million). Cash and cash equivalents decreased by
21.6% to $44.2 million (2013: $56.4 million). Refer to the
statement of cash flows discussion above for further details
regarding the movements in the 2014 cash balance.
Non-current assets increased by 103.3% to $12 million
(2013: $5.9 million) mainly due to the increase in exploration
and evaluation assets from $5.2 million in 2013 to $9
million in 2014 and as a result of the acquisition of shares
in GeoCrystal Limited. The increase in exploration and
evaluation assets of 42.5% was mainly attributable to the
acquisition of the Cameron Project in February 2014 which
was offset by the impairment of the Mogoraib North Project
of $5.8 million. Current liabilities increased by 66.6% to
$1.5 million (2013: $0.9 million) due to the recognition of
CAD$700,000 payable for the acquisition of the Dubenski
deposit (at the Cameron Gold Project in Canada).
On 29 July 2014, the Company issued an updated and
revised Technical Report and Mineral Resources statement
on the Company’s Cameron Gold Project in Canada. The
report was prepared in accordance with Canadian National
Instrument 43-101 and JORC Code (2012 Edition). The revised
mineral resource for the Cameron Gold Project updated and
replaced the previously reported mineral resources announced
by the previous project owners, Coventry Resources Inc. for
the Cameron and Dubenksi gold deposits dated 5 July 2012
(JORC 2004 compliant) and the Dogpaw gold deposit dated
13 May 2013 (JORC 2012 compliant).
The Cameron Gold Project mineral resources as at 25 July
2014 are set out in the tables below, along with a summary
of material information.
A summary of the governance and controls applicable to the
Company’s mineral resource processes is as follows:
• Review and validation of drilling and sampling methodology
and data spacing, geological logging, data collection and
storage, sampling and analytical quality control;
• Geological interpretation – review of known and interpreted
structure, lithology and weathering controls;
• Estimation methodology – relevant to mineralisation style
and proposed mining methodology;
• Comparison of estimation results with previous mineral
resource models, and with results using alternate modelling
methodologies;
• Visual validation of block model against raw composite
data; and
• Internal peer review by senior company personnel.
8 | Annual Report 2014 Chalice Gold Mines
Table 1- Cameron Gold Project Mineral Resource
DEPOSIT
DESCRIPTION CUT-OFF GOLD
CLASS
TONNES
GOLD G/T
GOLD OZ
Cameron
Open Cut
RL>=750m
G/T
0.5g/t
Underground
1.75g/t
RL<750m
Dubenski
Open Cut
1.00g/t
RL>=180m
Dogpaw
Open Cut
0.5g/t
RL>=210m
Total
Measured
2,872,000
Indicated
5,417,000
Meas+Indicated
8,289,000
Inferred
Measured
Indicated
881,000
157,000
559,000
Meas+Indicated
716,000
Inferred
5,709,000
Measured
Indicated
806,000
Meas+Indicated
806,000
Inferred
392,000
Measured
Indicated
247,000
Meas+Indicated
247,000
Inferred
64,000
Measured
3,029,000
Indicated
7,029,000
Meas+Indicated 10,058,000
Inferred
7,046,000
2.3
1.76
1.95
2.07
2.77
3.23
3.13
2.78
2.28
2.28
1.44
3.02
3.02
2.26
2.33
1.98
2.09
2.61
212,400
306,600
519,700
58,600
14,000
58,100
72,100
510,300
59,100
59,100
18,200
24,000
24,000
4,700
226,900
447,500
675,900
591,300
Chalice Gold Mines Annual Report 2014 | 9
Operating and Financial Review CONTINUED
Operating And
Financial Review
CONTINUED
QUALIFYING AND COMPETENT PERSON STATEMENTS
The information relating to the Cameron Gold Project is extracted from the ASX announcement entitled “Chalice Files Updated 43-101 Technical Report” released on
29 July 2014 and is available to view on www.chalicegold.com. The Company confirms that it is not aware of any new information or data that materially affects
the information included in the original market announcement and, in the case of estimates of Mineral Resources or Ore Reserves, that all material assumptions and
technical parameters underpinning the estimates in the relevant market announcement continue to apply and have not materially changed. The company confirms that
the form and context in which the Competent Person’s findings are presented have not materially modified from the original market announcement.
The information relating to the Mineral Resource estimates reported herein for the Cameron Gold Project is derived from the sections of the Technical Report dated
28 July 2014 prepared for Chalice Gold Mines Limited by Mr. Peter Ball of Datageo Geological Consultants who is a Chartered Professional and Member of
the Australasian Institute of Mining and Metallurgy. Mr Peter Ball is a consultant to the Company and is an independent Qualified Person as that term is defined in
National Instrument 43-101. Mr. Ball has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity
being undertaken to qualify as a Competent Person as defined in the 2012 edition of the Australasian Code for Reporting of Exploration Results, 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. Mr. Ball consents to the inclusion in the
announcement of the matters based on his information in the form and context in which it appears.
The information in this report that relates to Exploration Results in relation to the Cameron Gold Project (within the Technical Report dated 28 July 2014) 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 2012 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
include, but are not limited to, statements regarding the quantum and price of shares to be acquired under a share buyback, the estimation of mineral reserve and
mineral resources, the realisation of mineral reserve estimates, the likelihood of exploration success, 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.
10 | Annual Report 2014 Chalice Gold Mines
Tenement
Schedules
LOCATION
PROJECT
TENEMENT NO.
REGISTERED HOLDER
NATURE OF INTEREST
Eritrea
Australia
Mogoraib North
Exploration Licence
Sub-Sahara Resources (Eritrea) Pty Ltd
Gnaweeda Project
E51/0926
E51/0927
Chalice Gold Mines Limited
and Teck Australia Pty Ltd
Chalice Gold Mines Limited
and Teck Australia Pty Ltd
60%
12.03%
12.03%
Canada
Refer annexure A.
Chalice Gold Mines Annual Report 2014 | 11
ANNEXURE A
TENEMENTS HELD (CANADA)
PROJECT
TENEMENT TYPE
Cameron
Mining Lease
PATENT, PIN
NUMBER
108400
Cameron
Mining Lease
108400
West Cedar
Mining Lease
107495
Cameron
Cameron
Cameron
Cameron
West Cedar
West Cedar
West Cedar
West Cedar
West Cedar
West Cedar
West Cedar
West Cedar
West Cedar
West Cedar
West Cedar
West Cedar
West Cedar
West Cedar
West Cedar
West Cedar
West Cedar
West Cedar
West Cedar
West Cedar
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
West Cedar
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
Patented mining claim
Patented mining claim
Patented mining claim
Patented mining claim
PA8441,
42185-0720 (LT)
PA8442,
42185-0722 (LT)
PA8443,
42185-0724 (LT)
PA9901,
42185-0726 (LT)
Patented mining claim 42185-0208 (LT)
Patented mining claim 42185-0586 (LT)
Patented mining claim 42185-0585 (LT)
Patented mining claim 42185-0577 (LT)
42185-0587 (LT)
Patented mining claim
Patented mining claim 42185-0578 (LT)
Patented mining claim 42185-0588 (LT)
Patented mining claim 42185-0579 (LT)
Patented mining claim
42185-0581 (LT)
Patented mining claim 42185-0807 (LT)
42185-0583 (LT)
Patented mining claim
Patented mining claim 42185-0584 (LT)
Patented mining claim 42185-0580 (LT)
Patented mining claim 42185-0796 (LT)
Patented mining claim 42185-0799 (LT)
42185-0801 (LT)
Patented mining claim
Patented mining claim 42185-0803 (LT)
42185-0593 (LT)
Patented mining claim
42185-0594 (LT)
Patented mining claim
42185-0595 (LT)
Patented mining claim
10384
MLO
10405
MLO
10406
MLO
MLO
MLO
MLO
MLO
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
10407
3366
3367
11143
1105444
1105445
1161574
1161575
1210120
1210121
1210122
1210123
1210124
1210125
1210126
1210128
1210129
1210130
1210131
1210132
1210133
1210134
1210135
1210136
4254297
4258281
12 | Annual Report 2014 Chalice Gold Mines
CLAIM NUMBER
REGISTERED HOLDER
PERCENTAGE OWNERSHIP
CLM305. Claim
K465069-K465075,
K465351-K465358,
K519950-K519965,
K561022-K561025, K666295
CLM306, Claim
K386816-K386818,
K386888-K386900,
K533901-K533908, K666294
K314926, K351875-K351876,
K314928-K314931, K273821
K2766
K2767
K2768
K4712
K9990
K9991
K9992
K9993
K9994
K9995
K9996
K9997
K9999
K10000
K10010
K10011
K10058
K10024
K10025
K10026
K10027
K10028
K10029
K10030
K4709
K4711
K4710
K4712
K2767
K2768
K9990, K9992, K9993, K9996,
K9999, K10000, K10011, K10058
Cameron Gold Operations Ltd
100%
Cameron Gold Operations Ltd
100%
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
PROJECT
TENEMENT TYPE
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
Cameron
West Cedar
West Cedar
West Cedar
West Cedar
West Cedar
West Cedar
West Cedar
West Cedar
West Cedar
Cameron
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Mining Lease
PATENT, PIN
NUMBER
4258282
4258283
4258284
4258285
4258286
4258287
4258288
4258289
4258290
4258291
4258292
4258421
4258422
4258423
4258424
4258425
4258426
4258427
4258428
4258429
4258430
4258431
4258432
4258433
4258434
4258435
4258436
4258437
4258438
4258439
4258440
4258441
4258442
4258443
4258444
4258445
4258446
4258447
4258448
4258449
4258450
4257392
4255667
4255668
4255669
3000802
3000803
3000804
1149862
1196649
3001240
3001298
3010497
3012199
108466
Cameron
Claim
4248906
West Cedar
Mining Lease
107494
Rainy River
Rainy River
Rainy River
Rainy River
Rainy River
Rainy River
Rainy River
Rainy River
Rainy River
Rainy River
Rainy River
Ardeen
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
CLAIM NUMBER
REGISTERED HOLDER
PERCENTAGE OWNERSHIP
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Ltd
Cameron Gold Operations Inc.
Barkauskas, Edward Anthony
(40%). Bergen, Cindra Lee (60%)
525400 Ontario Inc.
Coventry Resources Ontario Inc.
Coventry Resources Ontario Inc.
Coventry Resources Ontario Inc.
Coventry Resources Ontario Inc.
Coventry Resources Ontario Inc.
Coventry Resources Ontario Inc.
Coventry Resources Ontario Inc.
Coventry Resources Ontario Inc.
Coventry Resources Ontario Inc.
Coventry Resources Ontario Inc.
Coventry Resources Ontario Inc.
Pele Gold Corporation
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Earning in, option agreement
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
51%
Chalice Gold Mines Annual Report 2014 | 13
CLM289. Claims
K527548-K527567, Nucanolan
Property
K314927, K314932, K351873,
K351874, K351877, K351878
4254475
4254476
4254477
4254478
4254479
4254472
4254480
4254481
4254482
4254483
4254484
1022635
Tenement Schedules CONTINUED PROJECT
TENEMENT TYPE
PATENT, PIN
NUMBER
CLAIM NUMBER
REGISTERED HOLDER
PERCENTAGE OWNERSHIP
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
14 | Annual Report 2014 Chalice Gold Mines
1022636
1022637
1135465
1135466
1157496
1157497
1157666
1157667
1157668
1157670
1157671
1164874
1164875
1164876
1164877
1172315
1172316
1172317
1172340
1172345
1172346
1172347
1172348
1172349
1172350
1172355
1172356
1172365
1172366
1172367
1172368
1172369
1172375
1172385
1172386
1172387
1172388
1172395
1172396
1195937
1195940
1196147
1196239
1196240
1196870
1196921
1196923
1196924
1202036
1202264
1202265
1202302
1205201
1205202
1205203
1205204
1205287
1209440
1209441
1209470
1209697
1209698
1209770
1210243
1210245
1210776
1210792
1215147
1215148
1215149
1215450
1215451
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
PROJECT
TENEMENT TYPE
PATENT, PIN
NUMBER
CLAIM NUMBER
REGISTERED HOLDER
PERCENTAGE OWNERSHIP
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
1215452
1215453
1215454
1215751
1215752
1215758
1215760
1215831
1215859
1217105
1224629
3001505
3001506
3001507
677468
677469
677470
677471
677472
677473
677474
677475
677476
677477
677478
677479
786521
786522
786523
786524
786525
786526
786527
786528
786529
786541
786542
786543
786544
786545
813157
813158
813159
813160
813161
813162
813163
813164
813165
813166
835178
835179
835184
835185
835186
835187
835188
835189
835190
835195
835196
835197
835304
835305
835306
835307
835308
835309
835310
835311
835312
835313
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
Chalice Gold Mines Annual Report 2014 | 15
Tenement Schedules CONTINUED PROJECT
TENEMENT TYPE
PATENT, PIN
NUMBER
CLAIM NUMBER
REGISTERED HOLDER
PERCENTAGE OWNERSHIP
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Ardeen
Rainy River
Rainy River
Rainy River
Rainy River
Rainy River
Rainy River
Rainy River
Rainy River
Rainy River
Rainy River
Rainy River
Rainy River
Rainy River
Rainy River
Rainy River
Rainy River
Rainy River
Rainy River
Rainy River
Rainy River
Rainy River
Rainy River
Rainy River
Rainy River
Rainy River
Rainy River
Rainy River
Rainy River
Rainy River
Rainy River
Rainy River
South Cedar
South Cedar
South Cedar
South Cedar
South Cedar
South Cedar
South Cedar
South Cedar
South Cedar
South Cedar
South Cedar
South Cedar
South Cedar
South Cedar
South Cedar
South Cedar
South Cedar
West Cedar
Rainy River
Rainy River
Rainy River
Rainy River
Rainy River
Rainy River
Rainy River
Rainy River
Rainy River
Rainy River
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Claim
Patent
Patent
Patent
Patent
Patent
Patent
Patent
Patent
Patent
Patent
16 | Annual Report 2014 Chalice Gold Mines
863760
873515
873516
873517
873518
873519
873520
873522
4250316
4250319
4265461
4265462
4265463
4274467
4274468
4274469
4274460
4260559
4260560
4260561
4260562
4260563
4260564
4260565
4205809
4205814
4205815
4205816
4205817
4205818
4214438
4214439
4214440
4214441
4214442
4267980
4267981
4267982
4267983
4254638
4257501
4257508
4257510
4257511
4257515
4257516
4257517
4260366
4260515
4260516
4263609
4272273
4266941
4266942
4266943
4266944
4260514
56046-0030
56046-0007
56046-0077
56046-0079
56046-0086
56046-0076
56046-0031
56046-0034
56046-0038
56046-0044
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Pele Gold Corporation
Coventry Rainy River Inc.
Coventry Rainy River Inc.
Coventry Rainy River Inc.
Coventry Rainy River Inc.
Coventry Rainy River Inc.
Coventry Rainy River Inc.
Coventry Rainy River Inc.
Coventry Rainy River Inc.
Coventry Rainy River Inc.
English, Perry Vern
English, Perry Vern
English, Perry Vern
English, Perry Vern
English, Perry Vern
English, Perry Vern
English, Perry Vern
English, Perry Vern
English, Perry Vern
English, Perry Vern
English, Perry Vern
English, Perry Vern
English, Perry Vern
English, Perry Vern
English, Perry Vern
English, Perry Vern
English, Perry Vern
English, Perry Vern
English, Perry Vern
English, Perry Vern
English, Perry Vern
English, Perry Vern
English, Perry Vern
English, Perry Vern
English, Perry Vern
English, Perry Vern
English, Perry Vern
English, Perry Vern
English, Perry Vern
English, Perry Vern
English, Perry Vern
English, Perry Vern
English, Perry Vern
English, Perry Vern
English, Perry Vern
English, Perry Vern
English, Perry Vern
English, Perry Vern
English, Perry Vern
English, Perry Vern
Joan Solomon
Joan Solomon
Shane & Rachel McQuaker
Jan Wullum
Gene Boyce
Stevan Michael
Kip Sharp
Wade Kempka
Wade & Shane Kempka
& Madison
Wade & Shane Kempka
& Madison
51%
51%
51%
51%
51%
51%
51%
51%
100%
100%
100%
100%
100%
100%
100%
100%
100%
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The Directors present their report together with the financial report of Chalice Gold Mines Limited (‘Chalice’) and its subsidiaries
(together ‘the Group’) for the financial year ended 30 June 2014 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 are as follows. Directors were
in office for the entire period unless otherwise stated.
1. DIRECTORS
TIMOTHY (TIM) 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 Chairman of Uranium Equities Limited,
and Liontown Resources Limited, both listed on ASX. During the past three years Tim also served as a director of Strike Energy
Limited. Tim has been a director since 2005 and was appointed Chairman in 2008.
WILLIAM B BENT
MBA, AusIMM, IChemE
Managing Director
Bill has over 23 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 and is currently a director
of unlisted GeoCrystal Limited. Bill has been the Managing Director since February 2013.
DOUGLAS A JONES
PhD, AusIMM, CPGeo
Executive Director
Doug is a geologist with over 36 years of 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, including
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 was previously a director of Liontown Resources Limited and Serabi Mining Plc. 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, Venturex Resources Limited and is a director of South Boulder Mines
Limited, all listed on ASX. Tony was previously a director of ASX listed Uranium Equities Limited and Liontown Resources Limited.
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 35 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 was previously 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 Committee and Remuneration Committee and has been a director since 2010.
Chalice Gold Mines Annual Report 2014 | 17
Directors’ Report 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, and is a director of ASX
listed Uranium Equities Limited and has been Company Secretary since 2005.
LEANNE STEVENS
B.Com, CA, ACIS
Joint Company Secretary
Leanne is a Chartered Accountant who has over 12 years of accounting and governance experience within the mining and
energy industries. Leanne is also joint Company Secretary of Liontown Resources Limited. Leanne has been Joint Company
Secretary of Chalice 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:
Number of meetings held:
Number of meetings attended:
T R B Goyder
W B Bent
D A Jones
A W Kiernan
S P Quin
DIRECTORS’
MEETINGS
6
6
6
6
6
6
AUDIT
2
-
-
-
2
2
REMUNERATION
NOMINATION
1
-
-
-
1
1
-
-
-
-
-
-
The Company has an audit committee and a separate remuneration committee. The nomination committee comprises the full
membership 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
18 | Annual Report 2014 Chalice Gold Mines
Directors’ Report 4. PRINCIPAL ACTIVITIES
The principal activities of the Company during the year were mineral development and exploration and there have been no
significant changes in the nature of those activities during the year.
5. 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 2014. 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 3 for further details
6. SIGNIFICANT CHANGES IN 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.
7. REMUNERATION REPORT – AUDITED
This report for the year ended 30 June 2014 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:
7.1 Message from the Board
7.2 Introduction
7.3 Principles of compensation
7.4 Key management personnel remuneration
7.5 Equity instruments
7.6 Service agreements
7.1 Message from the Board
The Company’s remuneration policy is structured to ensure it is aligned to the business strategy, shareholder interests and to ensure
effective executive remuneration and retention. These objectives are designed to be achieved through the Company’s short term
and long term incentive plans which link the achievement of these objectives to the variable compensation of the Managing
Director and staff. Further details are provided in this report.
7.2 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:
Executive Chairman
Managing Director
Executive Director
Tim Goyder
William Bent
Douglas Jones
Anthony Kiernan Non-executive Director
Stephen Quin
Non-executive Director
Richard Hacker Chief Financial Officer and Joint Company Secretary
There were no changes in KMP after the reporting date and before the financial report was authorised for issue.
Chalice Gold Mines Annual Report 2014 | 19
Directors’ Report
7.3 Principles of compensation
7.3.1 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
Stephen Quin
(Chair)
Use of remuneration consultants
To ensure the Remuneration Committee is fully informed when making remuneration decisions, the Remuneration Committee may
seek external advice, as it requires, on remuneration policies and practices. Remuneration consultants are able to be engaged
by, and report directly to, the Committee. In selecting remuneration consultants, the Committee would consider potential conflicts
of interest and independence from the Group’s key management personnel and other executives. During the financial year, the
Remuneration Committee did not seek specific advice and recommendations from external consultants.
Remuneration report approval at 2013 Annual General Meeting
The Remuneration Report for the financial year ended 30 June 2014 received positive shareholder support at the 2013 Annual
General Meeting (‘AGM’) with a vote of 99.4% in favour.
7.3.2 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 high calibre at a cost which is acceptable to shareholders; and
2. Key management personnel interest being 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:
NON-EXECUTIVE DIRECTORS
EXECUTIVES
Fixed remuneration
ELEMENT
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
subject to shareholder approval where required (refer
below for further details).
20 | Annual Report 2014 Chalice Gold Mines
Directors’ Report 7.3.3 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 2014 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 2014 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 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 2014 and 30 June 2013 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.
7.3.4 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 last approved by the Company’s shareholders at the 2011 AGM
and will be put to shareholders for approval at the Company’s upcoming 2014 AGM. The structure of the plan is detailed below.
(a) 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.
(b) Variable remuneration - STIP
The Board has implemented a formal STIP which includes 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 “Expected” and “Stretch” targets for the year. Achieving the expected target attracts
20% 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 for the 30 June 2014 financial year in relation to STIP targets for
KMP was broadly aligned with the following key strategic objectives:
(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;
Chalice Gold Mines Annual Report 2014 | 21
Directors’ Report (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 2014 financial year, no cash bonuses were paid to executives as the Remuneration Committee has deemed that the
key strategic objectives of the Company had not been achieved to a sufficient level to trigger a bonus payment.
For the financial year ended 30 June 2015, the Remuneration Committee recommended the Company cease the STIP and move
100% of eligible KMP’s incentive entitlements exclusively to the LTIP. The justification for this recommendation being, at this stage
of the Company’s development, all the key business objectives of KMP have longer dated time frames than the STIP’s 12 month
time frame.
(c) 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 criteria and targets) 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.
A summary of the LTIP is set out below:
KEY DESIGN FEATURE
Eligibility
Award quantum
Performance conditions
Vesting
Term and lapse
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.
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:
• 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 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.
22 | Annual Report 2014 Chalice Gold Mines
Directors’ Report Annual grant of performance rights - 2013/2014
The table below outlines the performance rights that were granted for the 2013/2014 financial year and have not yet vested.
ANNUAL AWARD
2013/2014
KMP
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
The performance rights shown above will not vest (and the underlying shares will not be issued) unless the performance conditions
set by the Board have been satisfied. It is the longer term 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 would 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’s current strategy and position (i.e. its most significant asset is cash) a comparator group of companies cannot
yet be determined. The Board therefore selected absolute share price as the most appropriate measure for the above issued
performance rights. The number of performance rights that will vest will be solely dependent on the Company’s share price as at
the measurement (or test) dates as per above as compared to share price hurdles outlined in the following table. The Company’s
share price will be calculated on its 30 day VWAP.
ANNUAL
AWARD
IF THE 30 DAY VWAP AS AT
MEASUREMENT DATE IS:
PERCENTAGE OF PERFORMANCE
RIGHTS THAT WILL VEST
ADDITIONAL CONDITIONS
2013/2014
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,
any vested performance rights
which are converted to shares will
be subject to a holding lock until
30 June 2015.
• KMP must also be an employee of
the Company at 30 June 2015.
Annual grant of performance rights - 2014/2015
Subsequent to reporting date it is proposed that the following performance rights for 2014/2015 be granted to KMP (*subject
to shareholder approval at the Company’s 2014 AGM for directors) as follows:
ANNUAL
AWARD
2014/2015
KMP
W Bent*
D Jones*
R Hacker
NUMBER OF RIGHTS
MEASUREMENT DATE
VESTING DATE
2,611,927
1,349,495
1,326,693
30 June 2016
30 June 2016
30 June 2016
30 June 2017
30 June 2017
30 June 2017
Chalice Gold Mines Annual Report 2014 | 23
Directors’ Report The performance rights shown above will not vest (and the underlying shares will not be issued) unless the performance conditions
set by the Board have been satisfied. For the proposed 2014/2015 annual grant of performance rights, the Remuneration
Committee recommended to the Board that 100% of KMPs incentive entitlements are offered via the LTIP and that 50% of the LTIP
is to be based on share price and remaining 50% to be based on achieving key business objectives. The following table outlines
key business objectives and the weightings of the performance condition:
PERCENTAGE
OF GRANTED
PERFORMANCE
RIGHTS THAT WILL
VEST IF PERFORMANCE
CONDITIONS ARE MET
50%
OVERALL
PERFORMANCE
CONDITION
Strategic objectives
SPECIFIC PERFORMANCE CONDITIONS
Undertake a significant acquisition: acquire one or more assets in
addition to the Cameron Gold Project with potential to generate
returns above the Company’s internal hurdle rates based on consensus
commodity prices and cost assumptions.
AND/OR
Make a significant new discovery: at the Cameron Gold Project or any
other Projects/Joint Venture acquired by the Company which shows
potential to be economic based on consensus commodity prices and
cost assumptions.
Share price objectives
Below 23 cents
If the 60 Day VWAP as at
the measurement date is:
23 cents
Between 23 cents and 38 cents
Above 38 cents
0%
16.5%
Pro rata between
16.5% and 50%
50%
In addition to the measurement period of 1 July 2014 to 30 June 2016, a 12 month service period must also be completed by
each KMP, meaning that performance rights will not vest or convert into shares until 30 June 2017 at the earliest.
(d) 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 2013. 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 considered 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 currently the Board’s preference to issue performance rights under the LTIP to KMP rather than share options.
7.3.5 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:
Share price
$0.29
$0.23
$0.10
$0.16
$0.15
30 JUNE 2010 30 JUNE 2011 30 JUNE 2012 30 JUNE 2013 30 JUNE 2014
24 | Annual Report 2014 Chalice Gold Mines
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Chalice Gold Mines Annual Report 2014 | 25
Directors’ Report
7.5 EQUITY INSTRUMENTS (AUDITED)
7.5.1 Employee share options
During the reporting period no options over ordinary shares in the Group were granted or vested as compensation to key
management personnel.
Details of options granted as remuneration to each KMP of the Group that lapsed during the reporting period are as follows:
NUMBER OF OPTIONS
LAPSED
DATE GRANTED
% FORFEITED IN YEAR
Director
S Quin
D Jones
750,000
2,500,000
25 November 2010
16 November 2009
100%
100%
The movement during the reporting period, by value of options over ordinary shares in the Group held by each KMP is detailed
below. During the financial year 500,000 fully paid ordinary shares were issued to Mr Hacker on the exercise of 500,000
options at 10 cents per share.
VALUE OF OPTIONS
GRANTED IN YEAR (A)
$
VALUE OF OPTIONS
EXERCISED IN YEAR (B)
$
VALUE OF OPTIONS LAPSED
IN YEAR(C)
$
R Hacker
-
31,250
-
(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.
7.5.2 Employee long term incentive plan - performance rights
During the reporting period no performance rights were granted as compensation to KMP and details of performance rights that
vested during the reporting period are as follows:
NUMBER OF RIGHTS
GRANTED DURING
2014
GRANT DATE
FAIR VALUE PER
RIGHT AT GRANT
DATE
$
EXPIRY DATE
NUMBER OF RIGHTS
VESTED DURING
2014
Executives
R Hacker
-
-
-
-
125,000
During the reporting period, 185,890 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
Executive
W B Bent
D Jones
R Hacker
1,453,444
655,000
125,000
402,139
5 June 2013
5 June 2013
-
-
16 December 2011
100%
6 June 2013
-
-
-
-
-
1 January 2015
1 January 2015
1 October 2013
1 January 2015
26 | Annual Report 2014 Chalice Gold Mines
Directors’ Report 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)
$
R Hacker
-
32,937
-
(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.
7.5.3 Equity holdings of key management personnel
Option holdings and performance rights of key management personnel
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 2013
GRANTED AS
COMPENSATION
EXERCISED/
FORFEITED
HELD AT
30 JUNE 2014
VESTED DURING
THE YEAR
VESTED AND
EXERCISABLE AT
30 JUNE 2014
Director
T R B Goyder
-
W B Bent
1,453,444
A W Kiernan
750,000
D A Jones
S P Quin
Executive
3,155,000
1,050,000
R K Hacker
1,027,139
-
-
-
-
-
-
-
-
-
(2,500,000)
(750,000)
-
1,453,444
750,000
655,000
300,000
-
-
-
-
-
-
-
750,000
-
300,000
(625,000)
402,139
125,000
-
Shareholdings of key management personnel
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 2013
ADDITIONS
Director
T R B Goyder
34,224,342
7,509,191
A W Kiernan
1,662,041
496,350
296,278
26,321
-
379,864
82,859
-
W B Bent
D A Jones
S P Quin
Executive
R K Hacker
RECEIVED ON
EXERCISE OF
OPTIONS/
PERFORMANCE
RIGHTS
HELD AT
30 JUNE 2014
SALES
HELD AT 30
JUNE 2014
-
-
-
-
-
41,733,533
1,662,041
876,214
379,137
26,321
-
-
-
-
-
41,733,533
1,662,041
876,214
379,137
26,321
-
130,000
685,890
815,890
(480,000)
335,890
Chalice Gold Mines Annual Report 2014 | 27
Directors’ Report 7.5.4 Other transactions with key management personnel and their related parties
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
A W Kiernan
Other related parties
TRANSACTION
NOTE
Legal and consulting
services
(i)
(ii)
Liontown Resources Limited
Corporate services
2014
$
2013
$
82,500
238,000
(108,000)
(144,000)
(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.
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
2014
$
-
66,296
66,296
2013
$
(6,000)
24,000
18,000
28 | Annual Report 2014 Chalice Gold Mines
Directors’ Report
7.6 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)
Douglas Jones
(Technical Director)
Richard Hacker
TERMINATION
DIMINUTION OF RESPONSIBILITY
Mr Goyder’s
employment agreement
may be terminated by
the Company or Mr
Goyder upon giving
three months’ notice.
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.
Dr Jones’ employment
agreement may be
terminated by the
Company or Dr Jones
upon giving three
months’ notice.
Mr Hacker’s
employment agreement
may be terminated by
the Company or the
employee 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.
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.
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.
If Mr Hacker’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 6 months’ salary.
OTHER PROVISIONS
Standard Chalice
terms and conditions
of employment.
Standard Chalice
terms and conditions
of employment.
Standard Chalice
terms and conditions
of employment.
Standard Chalice
terms and conditions
of employment.
Non-Executive Directors Nil
Nil
8. DIVIDENDS
No dividends were declared or paid during the year and the directors recommend that no dividend be paid.
LIKELY DEVELOPMENTS
9.
There are no likely developments that will impact on the Company other than as disclosed elsewhere in this report.
10. SIGNIFICANT EVENTS AFTER BALANCE DATE
At 30 June 2014, the Company had approximately US$41.5 million in US$ denominated cash bank accounts and during the
first quarter of the 2015 financial year, the Board approved the conversion of US$25,000,000 into Australian Dollars. The
converted funds have been deposited into term deposits earning an average interest rate of 3.43%.
11. DIRECTORS’ INTERESTS
The relevant interest of each director in the shares, rights or options over such instruments issued by Chalice and other related
bodies corporate, as notified by the directors to the ASX in accordance with S205G(1) of the Corporations Act 2001, at the
date of this report is as follows:
ORDINARY SHARES
OPTIONS OVER ORDINARY
SHARES
PERFORMANCE RIGHTS
T R B Goyder
W B Bent
D A Jones
S P Quin
A W Kiernan
41,733,533
876,214
379,137
26,321
1,662,041
-
-
-
300,000
750,000
-
1,453,444
655,000
-
-
Chalice Gold Mines Annual Report 2014 | 29
Directors’ Report 12. SHARE OPTIONS AND PERFORMANCE RIGHTS
UNISSUED SHARES UNDER OPTION
At the date of this report 1,050,000 unissued ordinary shares (1,900,000 at reporting date) of the Company are under option
on the following terms and conditions:
EXPIRY DATE
30 June 2016
EXERCISE PRICE
($)
0.30
NUMBER OF SHARES
1,050,000
Unless exercised, these options do not entitle the holder to participate in any share issue of Chalice or any other body corporate.
Performance rights
At the date of this report 5,976,674 performance rights (2,754,149 at reporting date) have been issued on the following terms
and conditions:
EXERCISE PRICE
($)
Nil
Nil
NUMBER OF RIGHTS
2,588,317
3,388,357
EXPIRY DATE
30 June 2016
30 June 2018
Shares issued on exercise of options or performance rights
797,424 shares were issued during or since the end of the year as a result of the exercise of 500,000 options and 297,424
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 and Canada.
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 $10,106 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 25.
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.
30 | Annual Report 2014 Chalice Gold Mines
Directors’ Report 17. AUDITOR’S INDEPENDENCE DECLARATION
The auditor’s independence declaration is set out on page 32 and forms part of the Directors’ Report for the year ended 30 June 2014.
This Report is made in accordance with a resolution of the Directors:
William Bent
Managing Director
Dated at Perth the 30th day of September 2014.
Chalice Gold Mines Annual Report 2014 | 31
Directors’ Report 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 2014, I declare that to the best of my knowledge and
belief, there have been no contraventions of:
a)
the auditor independence requirements of the Corporations Act 2001 in relation to
the audit; and
b) any applicable code of professional conduct in relation to the audit.
Perth, Western Australia
30 September 2014
L Di Giallonardo
Partner
HLB Mann Judd (WA Partnership) ABN 22 193 232 714
Level 4, 130 Stirling Street Perth WA 6000. PO Box 8124 Perth BC 6849 Telephone +61 (08) 9227 7500. Fax +61 (08) 9227 7533.
Email: hlb@hlbwa.com.au. Website: http://www.hlb.com.au
Liability limited by a scheme approved under Professional Standards Legislation
HLB Mann Judd (WA Partnership) is a member of
International, a worldwide organisation of accounting firms and business advisers.
23
32 | Annual Report 2014 Chalice Gold Mines
Auditor’s Independence Declaration
Continuing operations
Other income
Foreign exchange gains/(losses)
Impairment of financial assets
Net loss on sale of investments
Share of associate’s loss
Exploration and evaluation assets written off
Impairment of exploration and evaluation assets
Corporate administrative expenses
Business development and project acquisition costs
Depreciation and amortisation expense
Loss before tax from continuing operations
Income tax benefit
Loss for the year from continuing operations
Discontinued operations
NOTE
2014
$
2013
$
3(a)
212,204
374,137
(631,276)
4,873,790
-
(686,442)
(40,088)
(15,105)
(6,758,654)
-
-
-
(595,676)
(375,000)
(1,889,160)
(2,912,292)
(2,275,236)
(93,456)
(719,946)
(83,449)
(11,490,771)
(124,878)
8
11
11
3(b)
3(d)
6
259,529
-
(11,231,242)
(124,878)
Net profit/(loss) after tax for the year from discontinued operations
4(a)
(328,422)
43,783,106
Profit/(loss) for the year from discontinued operations
Total profit/(loss) for the year
(328,422)
43,783,106
(11,559,664)
43,658,228
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
(11,559,664)
43,663,861
-
(5,633)
(11,559,664)
43,658,228
17(b)
17(b)
245,756
(348,833)
(103,077)
(12,000)
(455,386)
(467,386)
Total comprehensive income/(loss) for the year
(11,662,741)
43,190,842
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
(11,662,741)
43,196,475
-
(5,633)
(11,662,741)
43,190,842
(4.3)
(0.1)
(4.3)
(0.01)
17.5
17.4
The above statement of comprehensive income should be read in conjunction with the accompanying notes.
Chalice Gold Mines Annual Report 2014 | 33
Consolidated Statement of Comprehensive IncomeFOR THE YEAR ENDED 30 JUNE 2014 Current assets
Cash and cash equivalents
Trade and other receivables
Total current assets
Non-current assets
Financial assets
Investment in associate
Exploration and evaluation assets
Property, plant and equipment
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Income tax payable
Employee benefits
Total current liabilities
Non-current liabilities
Other
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Retained earnings
Reserves
Total equity
21
9
10
8
11
12
13
6
14
15
2014
$
2013
$
44,204,036
56,443,226
416,205
375,152
44,620,241
56,818,378
229,671
185,613
1,968,651
-
9,056,705
5,202,613
771,588
502,270
12,026,615
5,890,496
56,646,856
62,708,874
1,312,052
829,890
130,471
87,313
1,529,836
-
77,651
907,541
42,000
42,000
36,977
36,977
1,571,836
944,518
55,075,020
61,764,356
16
17(a)
17(b)
44,140,306
39,239,790
14,421,779
24,632,124
(3,487,065)
(2,107,558)
55,075,020
61,764,356
The above statement of financial position should be read in conjunction with the accompanying notes.
34 | Annual Report 2014 Chalice Gold Mines
Consolidated Statement of Financial PositionFOR THE YEAR ENDED 30 JUNE 2014 ISSUED
CAPITAL
RETAINED
EARNINGS
SHARE BASED
PAYMENTS
RESERVE
INVESTMENT
REVALUATION
RESERVE
FOREIGN
CURRENCY
TRANSLATION
RESERVE
$
$
$
$
$
TOTAL
$
Balance at 30 June 2013
39,239,790
24,632,124
1,523,954
(32,000)
(3,599,512)
61,764,356
Net change in fair value
of available for sale
investments
Exchange differences
on translation of foreign
operations
Loss for the year
Total comprehensive loss for
the year
Acquisition of the Cameron
Gold Project
Share buy-back
Exercise of share options
Share transaction costs
Share based payments
Transfers between equity
items
-
-
-
-
-
-
(11,559,664)
(11,559,664)
-
-
-
-
-
-
-
-
72,889
245,756
-
245,756
-
-
(348,833)
(348,833)
-
(11,559,664)
245,756
(348,833)
(11,662,741)
-
-
-
-
-
-
-
-
-
-
-
-
6,440,000
(1,549,244)
50,000
(40,240)
72,889
-
6,440,000
(1,549,244)
50,000
(40,240)
-
-
-
-
-
-
-
1,349,319
(1,349,319)
Balance at 30 June 2014
44,140,306
14,421,779
247,524
213,756
(3,948,345)
55,075,020
The above statement of changes in equity should be read in conjunction with the accompanying notes.
Chalice Gold Mines Annual Report 2014 | 35
Consolidated Statement of Changes in EquityFOR THE YEAR ENDED 30 JUNE 2014 $
$
$
$
$
$
$
$
$
-
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36 | Annual Report 2014 Chalice Gold Mines
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d
Consolidated Statement of Changes in EquityFOR THE YEAR ENDED 30 JUNE 2014
Cash flows from operating activities
Cash receipts from operations
Cash paid to suppliers and employees
Interest received
Net cash used in operating activities
Cash flows from investing activities
Payments for mining exploration and evaluation
Payments for business development activities
Costs associated with the acquisition of Cameron Gold Project
Share of joint venture cash calls
Acquisition of property, plant and equipment
Acquisition of associate
Proceeds from sale of exploration and evaluation assets
Proceeds from sale of shares
Net proceeds from disposal of subsidiary
Net cash from/(used in) investing activities
Cash flows from financing activities
Share buy-back costs
Payment of capital return
Payments for capital return costs
Options exercised
Share issue costs
Net cash used in financing activities
NOTE
2014
$
2013
$
129,000
148,276
(1,941,576)
(2,718,522)
94,601
177,091
21
(1,717,975)
(2,393,155)
(3,512,947)
(4,473,836)
(2,244,030)
(719,946)
(929,947)
-
203,203
1,320,961
(117,378)
(594,156)
(1,770,000)
-
3,912
-
53,434
-
4(c)
-
80,148,232
(8,367,187)
75,734,689
(1,549,244)
-
-
-
50,000
(23,508)
(25,073,087)
(9,127)
125,000
(3,106)
(1,522,752)
(24,960,320)
Net increase/(decrease) in cash and cash equivalents
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
(11,607,914)
48,381,214
56,443,226
3,177,131
(631,276)
4,884,881
21
44,204,036
56,443,226
The above statement of cash flows should be read in conjunction with the accompanying notes.
Chalice Gold Mines Annual Report 2014 | 37
Consolidated Statement of Cash FlowsFOR THE YEAR ENDED 30 JUNE 2014 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 2014.
(a) Basis of preparation
The financial report is a general purpose financial report which has been prepared in accordance with the requirements of the
Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting
Standards Board. 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 consolidated financial statements provide comparative information in respect of the previous period. In addition, the
Group presents an additional statement of financial position at the beginning of the earliest period presented when there is a
retrospective application of an accounting policy, a retrospective restatement, or a reclassification of items in financial statements.
The financial report was authorised for issue by the directors on 30 September 2014.
(b) Compliance with IFRS
The financial report also complies with International Financial Reporting Standards (IFRS) as issued by the International Accounting
Standards Board.
(c) Adoption of new and revised standards
(i) Standards and Interpretations application to 30 June 2014
For the year ended 30 June 2014, the Directors have reviewed all of the new and revised Standards and Interpretations
issued by the AASB that are relevant to the Group’s operations and that are effective for annual reporting periods beginning
on or after 1 July 2013. It has been determined that there is no impact, material or otherwise, of the new and revised
Standards and Interpretations on the Group. The Group has adopted the following new and amended Standards and AASB
Interpretations as of 1 July 2013:
• AASB 10 ‘Consolidated Financial Statements’ and AASB 2011-7 ‘Amendments to Australian Accounting Standards arising
from the consolidation and Joint Arrangement Standards’
• AASB 11 ‘Joint Arrangements’ and AASB 2011-7 ‘Amendments to Australian Accounting Standards arising from the
consolidation and Joint Arrangement Standards’
• AASB 12 ‘Disclosure of Interests in Other Entities’ and AASB 2011-7 ‘Amendments to Australian Accounting Standards
arising from the consolidation and Joint Arrangement Standards’
• AASB 127 ‘Separate Financial Statements’ (2011) and AASB 2011-7 ‘Amendments to Australian Accounting Standards
arising from the consolidation and Joint Arrangement Standards’
• AASB 128 ‘Investments in Associates and Joint Ventures’
• AASB 13 ‘Fair Value Measurement’ and AASB 2011-8 ‘Amendments to Australian Accounting Standards arising from AASB 13’
• AASB 119 ‘Employee Benefits’ (2011) and AASB 2011-10 ‘Amendments to Australian Accounting Standards arising from
AASB 119 (2011)
• AASB 2011-4 ‘Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel
Disclosure Requirements.
• AASB 2012-2 ‘Amendments to Australian Accounting Standards – Disclosures – Offsetting Financial Assets and Financial
Liabilities
• AASB 2012-5 ‘Amendments to Australian Accounting Standards arising from Annual Improvements 2009-2011 Cycle’
• AASB 2012-6 ‘Amendments to Australian Accounting Standards – Mandatory Effective Date of AASB 9 and Transition
disclosures’.
• AASB 2012-10 ‘Amendments to Australian Accounting Standards – Transition Guidance and Other Amendments’.
38 | Annual Report 2014 Chalice Gold Mines
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 30 JUNE 2014
(ii) Accounting Standards and Interpretations issued but not yet effective
The following new accounting standards and interpretations which are not yet effective and have not been applied by the
Company, have been assessed to have no material impact on the Company:
• AASB 2012–3 Amendments to Australian Accounting standards – Offsetting Financial Assets and Financial Liabilities
• Interpretation 21 Levies
• AASB 9 Financial Instruments
• AASB 2013-3 Amendments to AASB136 – Recoverable Amount disclosures for Non-Financial Assets
• AASB 2013-4 Amendments to Australian Accounting Standards – Novation of Derivatives and Continuation of Hedge
Accounting (AAS139)
• AASB 2013-5 Amendments to Australian Accounting Standards – Investment Entities Annual Improvements
• 2011-2013 Cycle Annual Improvements to IFRSs 2011-2013 Cycle
• AASB1031 Materiality
• AASB 2013-9 Amendments to Australian Accounting Standards – Conceptual Framework, Materiality and Financial Instruments
(d) 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.
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 consolidated 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.
Chalice Gold Mines Annual Report 2014 | 39
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 30 JUNE 2014
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.
(e) 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 circumstance-s, 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 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.
(f) Foreign currency translation
The functional currency of the Company is Australian dollars, the functional currency of subsidiaries based in Eritrea is United
States dollars (US$) and the functional currency of subsidiaries based in Canada is Canadian Dollars (CAN$). 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.
40 | Annual Report 2014 Chalice Gold Mines
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 30 JUNE 2014
(g) 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 of directors.
(h) 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.
(i) 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
(j)
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.
Chalice Gold Mines Annual Report 2014 | 41
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 30 JUNE 2014
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.
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.
(k) 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.
42 | Annual Report 2014 Chalice Gold Mines
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 30 JUNE 2014
Impairment
(l)
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.
(m) 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.
(n) Trade and other receivables
Trade and other receivables are stated at cost less impairment losses (see accounting policy (e)).
(o) 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.
(p) 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)).
Chalice Gold Mines Annual Report 2014 | 43
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 30 JUNE 2014
(q) 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.
(r) 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.
44 | Annual Report 2014 Chalice Gold Mines
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 30 JUNE 2014
(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.
(s) 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.
(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.
(t) 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:
Chalice Gold Mines Annual Report 2014 | 45
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 30 JUNE 2014
(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 tested for impairment, reclassified to development costs
and then amortised over the life of the reserves associated with the area of interest once mining operations have commenced.
(u) 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.
(v) 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.
(w) 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 transactions
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 an appropriate valuation model and further details are
provided at note 14. The cost is recognised, together with a corresponding increase in other capital reserves in equity, over
the period in which the performance and/or service conditions are fulfilled in employee benefits expense. The cumulative
expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which
the vesting period has expired and the Group’s best estimate of the number of equity instruments that will ultimately vest. The
statement of profit or loss expense or credit for a period represents the movement in cumulative expense recognised as at the
beginning and end of that period and is recognised in employee benefits expense.
46 | Annual Report 2014 Chalice Gold Mines
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 30 JUNE 2014
No expense is recognised for awards that do not ultimately vest, except for equity-settled transactions for which vesting is
conditional upon a market or non-vesting condition. These are treated as vesting irrespective of whether or not the market or
non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied.
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.
(x) 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.
(y) Investments in associates
An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the
financial and operating policy decisions of the investee, but is not control or joint control over those policies. The considerations
made in determining significant influence or joint control are similar to those necessary to determine control over subsidiaries.
The Group’s investment in associates is accounted for using the equity method of accounting in the consolidated financial
statements. 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.
(z) Interest in joint operations
A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets,
and obligations for the liabilities, relating to the arrangement. Joint control is the contractually agreed sharing of control of an
arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.
When a group entity undertakes its activities under joint operations, the Group as a joint operator recognises in relation to its
interest in a joint operation:
(i)
its assets, including its share of any assets held jointly;
(ii)
its liabilities, including its share of any liabilities incurred jointly;
(iii) its revenue from the sale of its share of the output arising from the joint operation;
(iv) its share of the revenue from the sale of the output by the joint operation; and
(v)
its expenses, including its share of any expenses incurred jointly.
The Group accounts for the assets, liabilities, revenues and expenses relating to its interest in a joint operation in accordance with
the AASBs applicable to the particular assets, liabilities, revenues and expenses.
Chalice Gold Mines Annual Report 2014 | 47
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 30 JUNE 2014
When a group entity transacts with a joint operation in which a group entity is a joint operator (such as a sale or contribution
of assets), the Group is considered to be conducting the transaction with the other parties to the joint operation, and gains and
losses resulting from the transactions are recognised in the Group’s consolidated financial statements only to the extent of other
parties’ interests in the joint operation.
When a group entity transacts with a joint operation in which a group entity is a joint operator (such as a purchase of assets), the
Group does not recognise its share of the gains and losses until it resells those assets to a third party.
(aa) Parent entity financial information
The financial information for the parent entity, Chalice Gold Mines Limited, disclosed in note 19 has been prepared on the same
basis as the consolidated financial statements.
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 exploration and
evaluation costs, business development costs or corporate related costs. Results of those segments are reported to the Board of
Directors at each Board meeting. The exploration and evaluation segment includes all of the Company’s exploration projects
grouped into one combined segment.
EXPLORATION AND
EVALUATION
BUSINESS DEVELOPMENT
CORPORATE
TOTAL
2014
$
2013
$
2014
$
2013
$
2014
$
2013
$
2014
$
2013
$
Other income
Exploration costs not
capitalised
Impairment of exploration
and evaluation assets
Depreciation
Business development costs
Corporate administrative
expenses
-
-
(6,758,654)
(595,676)
-
-
-
-
(375,000)
-
-
-
-
-
-
-
-
-
-
-
108,000
175,276
108,000
175,276
-
-
-
-
(6,758,654)
(595,676)
(5,786,625)
(375,000)
(93,456)
(83,449)
(93,456)
(83,449)
(2,275,236)
(719,946)
-
-
(2,275,236)
(719,946)
-
-
(1,889,160)
(2,912,292)
(1,889,160)
(2,912,292)
Segment loss before tax
(6,758,654)
(970,676)
(2,275,236)
(719,946)
(1,874,616)
(2,820,465)
(10,908,506)
(4,511,087)
Unallocated income/
(expenses)
Net financing income
Foreign exchange gains/
(losses)
Net loss on sale of
investments
Share of associate’s net loss
Impairment of financial assets
Gain/(loss) from
discontinued operations
Loss before income tax
48 | Annual Report 2014 Chalice Gold Mines
104,204
198,861
(631,276)
4,873,790
(40,088)
(15,105)
-
-
-
(686,442)
(328,422) 43,783,106
(11,559,664) 43,658,228
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 30 JUNE 2014 EXPLORATION AND
EVALUATION
BUSINESS DEVELOPMENT
CORPORATE
TOTAL
30 JUNE
2014
$
30 JUNE
2013
$
30 JUNE
2014
$
30 JUNE
2013
$
30 JUNE
2014
$
30 JUNE
2013
$
30 JUNE
2014
$
30 JUNE
2013
$
Segment assets:
Exploration and
evaluation assets
9,056,705
5,202,612
Investment in associate
1,968,651
-
Other
675,033
657,619
11,700,389
5,860,231
Unallocated assets
Total assets
-
-
-
-
-
-
-
-
-
-
-
-
9,056,705
5,202,612
1,968,651
-
606,531
560,537
1,281,564
1,218,156
606,531
560,537
12,306,920
6,420,768
44,339,936
56,288,106
56,646,856
62,708,874
Segment liabilities
(1,230,949)
(309,369)
(34,494)
-
(306,393)
(635,149)
(1,571,836)
(944,518)
Total Liabilities
(1,571,836)
(944,518)
Geographical information
Revenues from external customers
Australia
Total
Non-current assets
Australia
Canada
Eritrea
Total
30 JUNE 2014
$
30 JUNE 2013
$
108,000
108,000
175,275
175,275
30 JUNE 2014
$
30 JUNE 2013
$
2,254,992
9,424,010
262,874
-
117,941
5,442,009
11,796,943
5,704,883
Non-current assets for this purpose consist of property, plant and equipment, exploration and evaluation assets, and investment
in associates.
Chalice Gold Mines Annual Report 2014 | 49
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 30 JUNE 2014 3. REVENUE AND EXPENSES
(a) Other income
Corporate and administration service fees
Net finance income
(b) Corporate administrative expenses
Consultants
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
(d) Business development costs
Personnel expenses
Head office costs
Consultants
Travel and conferences
Other
50 | Annual Report 2014 Chalice Gold Mines
2014
$
2013
$
108,000
104,204
212,204
1,125
79,170
93,225
819
192,613
264,211
175,276
198,861
374,137
7,788
84,466
107,392
145,240
465,327
317,190
1,168,318
1,596,263
89,679
188,626
1,889,160
2,912,292
657,716
110,474
123,669
175,369
25,507
2,694
72,889
966,292
110,000
213,382
156,304
(17,294)
1,062
166,517
1,168,318
1,596,263
1,132,109
481,642
329,299
320,198
439,638
53,992
2,275,236
-
224,491
-
13,813
719,946
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 30 JUNE 2014 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. Following completion of the sale, the profit on
disposal was realised as presented below:
(a) 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(b))
Transaction costs
Contract termination payment – Dragon Mining Limited
Gain on disposal before income tax
Income tax expense
Under provision for income tax
Gain on disposal after tax
Share of net loss on subsidiary up to date of disposal (depreciation)
Net profit/(loss) from discontinued operation
(b) Net assets at date of sale
The carrying amount of assets and liabilities as at date of sale 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
2014
$
2013
$
-
-
-
61,578
-
76,929,574
30,090,898
2,924,780
115,689
873,882
61,578
110,934,823
-
-
-
(39,404,476)
(697,112)
(1,500,000)
61,578
69,333,235
(10,958)
(25,493,802)
(379,042)
-
(328,422)
43,839,433
-
(56,327)
(328,422)
43,783,106
-
-
-
-
-
-
-
-
-
-
-
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
Chalice Gold Mines Annual Report 2014 | 51
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 30 JUNE 2014
(c) Net cash inflow on disposal
The cash inflow on disposal is as follows:
Total consideration on disposal
Less:
Interim funds received
Funds held in escrow and outstanding
Net cash outflows
Net cash disposed of
Net cash inflow on disposal (refer statement of cash flows)
5. AUDITORS’ REMUNERATION
Audit services
HLB Mann Judd:
Audit and review of financial reports
Other services
2014
$
2013
$
-
-
-
-
-
-
110,934,823
(2,924,780)
(115,689)
(27,690,914)
(55,208)
80,148,232
50,500
-
50,500
65,300
3,500
68,800
52 | Annual Report 2014 Chalice Gold Mines
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 30 JUNE 2014 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
Income tax calculated at the Australian corporate rate of 30%
Non-deductible expenses
Deferred tax assets and liabilities not recognised
Research and development tax claim
Income tax benefit reported in the statement of comprehensive income
2014
$
(11,490,771)
(11,490,771)
(3,447,231)
2,047,201
1,400,030
(259,529)
(259,529)
2013
$
(124,878)
(124,878)
(37,463)
440,057
(402,594)
-
-
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
Other deferred tax assets
Deferred tax liabilities comprise:
Unrealised foreign exchange gains
Other deferred tax liabilities
Net deferred tax assets recognised
4,504,645
4,335,314
737,934
342,311
5,242,579
4,677,625
(1,323,720)
(1,461,616)
(1,729)
(665)
(1,325,449)
(1,462,281)
Income tax benefit not recognised directly in equity during the year:
Share issue costs
(11,179)
5,663
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 2014 | 53
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 30 JUNE 2014
7. EARNINGS PER SHARE
Basic and diluted earnings per share
The calculation of basic earnings per share for the year ended 30 June 2014 was based on the loss attributable to ordinary
equity holders of the parent of $11,559,664 [2013: gain of $43,663,861] and a weighted average number of ordinary
shares outstanding during the year ended 30 June 2014 of 268,147,888 [2013: 250,435,544].
2014
$
2013
$
Profit/(loss) attributable to ordinary shareholders
Loss attributable to ordinary equity holders of the parent from continuing operations
(11,231,242)
(124,878)
Profit/(loss) attributable to ordinary equity holders of the parent from a discontinued operation
(328,422)
43,788,739
Net profit/(loss) attributable to ordinary equity holders of the parent for basic earnings
(11,559,664)
43,663,861
Net profit/(loss) attributable to ordinary equity holders of the parent adjusted for the
effect of dilution
(11,559,664)
43,663,861
Diluted earnings per share have not been disclosed as the impact from options and performance rights is anti-dilutive.
INVESTMENT IN ASSOCIATES
8.
During the year the Company acquired a 24% interest in unlisted Australian based GeoCrystal Limited (“GeoCrystal”). The
principal activity of the company is exploring and development of diamonds in Australia. The initial interest acquired by the
Group was 10% which was increased to a 24% interest on 14 April 2014.
Reconciliation of movements in investments in associates
Balance at 1 July
Payments made to acquire interest
Unlisted options1
Share of loss of associate
Balance at 30 June
Summary of financial information of associate:
Financial Position
Total assets
Total liabilities
Net assets
Share of associate’s net assets
Financial Performance
Total revenue
Total loss for the year
Share of associate’s loss
-
1,770,000
213,756
(15,105)
1,968,651
8,253,967
(51,255)
8,202,712
1,968,651
13,281
(62,938)
(15,105)
-
-
-
-
-
-
-
-
-
-
-
-
1Chalice acquired 7,583,333 free attaching options through a subscription of 9,683,333 shares in GeoCrystal. 4,250,000
options have an exercise price of 25 cents and expire on or before 31 March 2016 and 3,333,333 options have an exercise
price of 20 cents and expire on or before 30 September 2015
The associate had no contingent liabilities or assets at 30 June 2014 and exploration commitments payable within 1 year of $363,000.
54 | Annual Report 2014 Chalice Gold Mines
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 30 JUNE 2014
9. TRADE AND OTHER RECEIVABLES
Other trade receivables
Prepayments
10. FINANCIAL ASSETS
Non-current
Available for sale investments
Bond in relation to office premises
Bank guarantee and security deposits
11. EXPLORATION AND EVALUATION EXPENDITURE
Costs carried forward in respect of:
Exploration and evaluation phase – at cost
Balance at beginning of year
Expenditure incurred
Acquisition of the Cameron Project
Cost associated with the acquisition of the Cameron Project
Acquisition of the Dubenski Property
Impairment of exploration and evaluation assets
Exploration and evaluation assets written off(1)
Effects of movements in exchange rate
Total exploration expenditure
2014
$
258,686
157,519
416,205
2013
$
284,428
90,724
375,152
-
65,456
164,215
229,671
12,000
63,114
110,499
185,613
5,202,613
2,482,857
3,226,797
3,294,935
6,149,471
877,170
694,960
-
(6,758,654)
(335,652)
-
-
-
(375,000)
(595,676)
395,497
9,056,705
5,202,613
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.
(1)Includes the write down of the carrying value of the Mogoraib North project and the Marla and Oodnadatta projects.
Chalice Gold Mines Annual Report 2014 | 55
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 30 JUNE 2014
12. PROPERTY, PLANT AND EQUIPMENT
PLANT AND
EQUIPMENT
OFFICE
FURNITURE AND
EQUIPMENT
COMPUTER
EQUIPMENT
AND SOFTWARE
$
$
$
MOTOR
VEHICLES
$
TOTAL
$
107,329
45,701
279,339
(6,886)
(65,284)
105,958
-
19,503
(658)
(17,995)
138,217
71,677
-
-
(60,568)
150,766
-
36,013
(2,483)
(29,041)
502,270
117,378
334,855
(10,027)
(172,888)
360,199
106,808
149,326
155,255
771,588
499,375
415,749
596,625
193,195
1,704,944
(139,176)
360,199
(308,941)
106,808
(447,299)
149,326
(37,940)
155,255
(933,356)
771,588
Year ended 30 June 2014
At 1 July 2013 net of accumulated
depreciation and impairment
Additions
Assets acquired from acquisition
of the Cameron Project
Exchange differences
Depreciation charge for the year
At 30 June 2014 net of
accumulated depreciation and
impairment
At 30 June 2014
Cost
Accumulated depreciation and
impairment
Net carrying amount
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
9,390
-
108,503
87,746
-
-
145,428
14,140
(8,802)
275,419
317,514
13,694
(104,357)
Depreciation charge for the year
(19,818)
(17,705)
(58,032)
At 30 June 2013 net of
accumulated depreciation and
impairment
At 30 June 2013
Cost
Accumulated depreciation and
impairment
Net carrying amount
107,329
105,958
138,217
150,766
502,270
181,929
396,198
524,948
160,481
1,263,556
(74,600)
107,329
(290,240)
105,958
(386,731)
138,217
(9,715)
150,766
(761,286)
502,270
56 | Annual Report 2014 Chalice Gold Mines
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 30 JUNE 2014 13. TRADE AND OTHER PAYABLES
Trade payables
Other payables
Services and withholding tax payable
Amount due under contract(1)
Accrued expenses
(1)Represents amounts owing for the acquisition of the Dubenski property (C$700,000)
14. EMPLOYEE BENEFITS
Annual leave accrued
Provision for long service leave
Share based payments
2014
$
14,072
77,933
-
694,960
525,087
1,312,052
2013
$
153,540
155,868
322,379
-
198,103
829,890
86,927
386
87,313
38,734
38,917
77,651
(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:
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
2014
2014
0.33
0.36
0.10
-
0.32
0.32
5,650,000
(3,250,000)
(500,000)
-
1,900,000
1,900,000
Chalice Gold Mines Annual Report 2014 | 57
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 30 JUNE 2014
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
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
The options outstanding at 30 June 2014 have a weighted average exercise price of $0.32 [2013: $0.33] and a weighted
average contractual life of 3 years [2013: 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
2014
-
-
-
-
-
-
2013
$0.16
$0.30
81%
3 years
-
2.57%
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.
No options were granted as compensation during the 2014 financial year.
(b) Employee long term incentive plan
The Company has in place an Employee Long Term Incentive Plan (‘LTIP’) and 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 2014 was 4.8 cents per performance right
(2013: 6.5 cents).
58 | Annual Report 2014 Chalice Gold Mines
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 30 JUNE 2014 A summary of performance rights in the Group and the Company is as follows:
30 June 2014:
GRANT DATE
5 June 2013
6 June 2013
16 December 2011
16 December 2011
30 June 2013:
GRANT DATE
5 June 2013
6 June 2013
16 December 2011
16 December 2011
16 December 2011
OPENING
BALANCE
2,108,444
645,705
125,000
75,000
2,954,149
GRANTED
VESTED
LAPSED
-
-
-
-
-
-
-
(125,000)
(75,000)
(200,000)
OPENING
BALANCE
GRANTED
VESTED
LAPSED
-
-
2,108,444
645,705
-
-
-
(125,000)
(75,000)
-
-
-
500,000
250,000
150,000
900,000
(500,000)
-
-
2,754,149
(200,000)
(500,000)
2,954,149
-
-
-
-
-
-
-
CLOSING
BALANCE
2,108,444
645,705
-
-
2,745,149
CLOSING
BALANCE
2,108,444
645,705
-
125,000
75,000
SHARE PRICE
AT DATE OF
ISSUE ($)
0.16
0.17
0.30
0.30
SHARE PRICE
AT DATE OF
ISSUE
($)
0.16
0.17
0.30
0.30
0.30
No performance rights were granted during 2014.
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%
Chalice Gold Mines Annual Report 2014 | 59
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 30 JUNE 2014
Share based payment transactions
The expense recognised during the year is shown in the following table:
Share options granted in 2013 – equity settled
Share options granted in 2014 – equity settled
Performance rights granted in 2013
Performance rights granted in 2014
Total expenses recognised as personnel expenses
15. OTHER LIABILITIES
Non-current
Lease make good provision
2014
$
-
-
2013
$
109,473
-
72,889
57,044
-
-
72,889
166,517
42,000
42,000
36,977
36,977
16. ISSUED CAPITAL
There were 287,491,719 shares on issue at 30 June 2014 (2013: 250,730,886).
(a) Movements in ordinary shares on issue
2014
2013
NO.
$
NO.
$
Balance at beginning of financial year
250,730,886
39,239,790
250,030,886
64,200,112
Shares issued on exercise of unlisted options
500,000
50,000
500,000
125,000
Capital return
-
Shares issued on vesting of performance rights
297,424
-
-
Shares issued on acquisition of the Cameron
Gold Project1
Share buyback2
Share issue costs
46,000,000
6,440,000
(10,036,591)
(1,549,244)
-
(40,240)
-
(25,073,089)
200,000
-
-
-
-
-
-
(12,233)
Balance at end of financial year
287,491,719
44,140,306
250,730,886
39,239,790
1On 1 November 2013, Chalice agreed to acquire a 100% interest in Coventry Resources Inc.’s (“Coventry”) Cameron Gold
Project for a consideration of 46 million shares in Chalice. On 4 February 2014, all conditions to complete the transaction were
satisfied and 46 million shares were issued and distributed to Coventry shareholders on 7 February 2014.
2On 3 March 2014, the Company announced an on-market share buy-back of up to 25,073,088 ordinary shares as part
of a capital management plan over 12 months. 10,036,591 shares have been acquired to 30 June 2014 for a total of
$1,554,356 (including brokerage costs).
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.
60 | Annual Report 2014 Chalice Gold Mines
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 30 JUNE 2014 (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
2014
NO.
2013
NO.
5,650,000
8,350,000
(3,250,000)
(3,250,000)
(500,000)
(500,000)
-
1,050,000
1,900,000
5,650,000
At 30 June 2014 the Company had 1,900,000 unlisted options on issue under the following terms and conditions:
NUMBER
750,000
100,000
1,050,000
EXPIRY DATE
14 September 2014
30 November 2014
30 June 2016
EXERCISE PRICE
$
0.35
0.35
0.30
(c) Performance rights
On issue at 1 July
Issue of performance rights under the Employee Long Term Incentive Plan
Performance rights vested
Performance rights lapsed
On issue at 30 June
2014
NO.
2013
NO.
2,954,149
900,000
-
2,754,149
(200,000)
-
(200,000)
(500,000)
2,754,149
2,954,149
At 30 June 2014 the Company had 2,754,149 performance rights options on issue under the following terms and conditions:
NUMBER
TERMS
EXPIRY
DATE
EXERCISE
PRICE
$
2,754,149 The number of performance rights that will vest will be solely dependent on the
30 June 2016
-
Company’s share price as at the measurement date of 1 January 2015 as compared
to the Share price hurdles outlined on page 19 of the Remuneration Report.
17. RETAINED EARNINGS/(ACCUMULATED LOSSES) AND RESERVES
(a) Movements in retained earnings/(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
2014
$
2013
$
24,632,124
(16,202,389)
(11,559,664)
43,663,861
1,349,319
(2,829,348)
14,421,779
24,632,124
Chalice Gold Mines Annual Report 2014 | 61
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 30 JUNE 2014 (b) Nature and purpose of reserves
Other capital reserves
(i) Share-based payments reserve
The share-based payments 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.
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 2014, Chalice had the following exposures to USD foreign currency:
2014
$
2013
$
43,973,035
56,093,028
50,350
77,490
4,229
309,369
Financial Assets
Cash and cash equivalents
Trade and other receivables
Financial Liabilities
Trade and other payables
62 | Annual Report 2014 Chalice Gold Mines
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 30 JUNE 2014 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.
Impact on gain/(loss)
Impact on equity
AUD/USD +10%
AUD/USD -10%
AUD/USD +10%
AUD/USD -10%
2014
$
(4,001,741)
4,401,916
(4,001,741)
4,401,916
2013
$
(5,081,556)
5,589,712
(5,081,556)
5,589,712
(ii) Equity prices
The Group currently has no significant exposure to equity price risk.
(iii) Interest rate risk
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
2014
$
2013
$
44,204,036
56,443,226
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 2014, 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
100 bp increase
100 bp decrease
100 bp increase
100 bp decrease
IMPACT ON PROFIT
2014
$
441,060
(441,060)
441,060
(441,060)
2013
$
588,356
(533,503)
588,356
(533,503)
(c) Credit risk exposure
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.
(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 $1,312,052 (2013: $829,890) all
of which are due within 60 days.
Chalice Gold Mines Annual Report 2014 | 63
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 30 JUNE 2014
(e) Net fair values of financial assets and liabilities
The carrying amounts of all financial assets and liabilities approximate their 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 loss
Commitments and contingencies
(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
64 | Annual Report 2014 Chalice Gold Mines
2014
$
2013
$
44,384,819
55,800,895
10,513,974
17,831,968
54,898,793
73,632,863
611,671
334,435
28,989,452
47,625,349
29,601,123
47,959,784
25,297,670
25,673,079
44,140,306
39,239,790
(19,303,915)
(15,058,665)
461,279
1,491,954
25,297,670
26,673,079
(5,594,570)
(1,839,746)
(5,594,570)
(1,839,746)
334,525
605,741
-
344,106
999,401
-
940,266
1,343,507
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 30 JUNE 2014
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
Contingent asset
2014
$
161,718
1,979,248
1,020,340
3,161,306
2013
$
-
-
-
-
334,525
605,741
-
344,106
999,401
-
940,266
1,343,507
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, however it is considered probable that the consideration will be paid.
Chalice Gold Mines Annual Report 2014 | 65
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 30 JUNE 2014
21. CASH AND CASH EQUIVALENTS
Bank balances
Term deposits
Petty cash
RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES
Loss after tax from continuing operations
Profit/(loss) from discontinuing operations
Profit/(loss) before tax
Adjustments for:
Depreciation and amortisation
Net loss on sale of securities
Business development costs
Income tax benefit
Profit/(loss) from discontinued operations
Foreign exchange (gains)/losses
Exploration assets written off
Share of associate’s net loss
Impairment of exploration and evaluation assets
Impairment of financial assets
Equity-settled share-based payment expenses
2014
$
2013
$
22,969,504
56,427,612
21,229,796
-
4,736
15,614
44,204,036
56,443,226
(11,231,242)
(124,878)
(328,422)
43,783,106
(11,559,664)
43,658,228
93,456
40,088
83,449
-
2,275,236
719,946
(259,529)
-
328,422
(43,783,106)
631,276
(4,873,790)
6,758,654
595,676
15,105
-
-
72,889
-
375,000
686,442
166,517
Operating loss before changes in working capital and provisions
(1,604,067)
(2,371,638)
(Increase) in trade and other receivables
(Increase)/decrease in financial assets
Increase in trade creditors and other liabilities
(decrease)/increase in provisions
Net cash used in operating activities
(84,540)
(56,058)
39,578
(12,888)
(25,884)
(21,415)
30,500
(4,718)
(1,717,975)
(2,393,155)
66 | Annual Report 2014 Chalice Gold Mines
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 30 JUNE 2014 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)
D A Jones (Executive Director)
Non-executive Directors
A W Kiernan
S P Quin
Executives
R K Hacker (Chief Financial Officer)
The KMP compensation included in ‘personnel expenses’ (see note 3(c)) is as follows:
Short-term employee benefits
Post-employment benefits
Termination benefits
Long term benefits
Share-based payment
Other
2014
$
2013
$
1,420,361
1,665,422
116,363
-
44,456
64,022
-
110,899
69,573
-
121,812
-
1,645,202
1,967,706
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.
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
(i)
(ii)
2014
$
2013
$
82,500
238,000
(108,000)
(144,000)
Chalice Gold Mines Annual Report 2014 | 67
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 30 JUNE 2014
(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.
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
23. RELATED PARTY DISCLOSURE
2014
$
2013
$
-
66,296
66,296
(6,000)
24,000
18,000
(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
COUNTRY OF
INCORPORATION
% EQUITY INTEREST
INVESTMENT $
2014
2013
2014
2013
Parent entity
Chalice Gold Mines Limited
Australia
Subsidiaries
Chalice Operations Pty Ltd (i)
Australia
Yolanda International Limited
British Virgin Islands
Chalice Gold Mines (Eritrea) Pty Ltd
Western Rift Pty Ltd (ii)
(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
(ii) Subsidiaries of Western Rift Pty Ltd
2234511 Ontario Inc.(iii)
Coventry Rainy Inc.
Coventry Ontario Inc.
Australia
Australia
Australia
Australia
Australia
Australia
Canada
Canada
Canada
100
-
100
100
-
100
100
100
100%
100%
100%
(iii) Subsidiaries of 2234511 Ontario Inc.
Cameron Gold Operations Ltd
Canada
100%
100
100
100
-
100
100
100
100
-
-
-
-
6,802,388
6,802,388
-
-
20,000
-
-
1,210,000
-
-
-
-
1,358,223
1,358,223
-
-
1,402,414
415,313
5,551,687
-
-
-
-
-
68 | Annual Report 2014 Chalice Gold Mines
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 30 JUNE 2014
24. INTEREST IN JOINT OPERATION
(a) At the end of the financial year the Group held the following interest in exploration licences:
Mogoraib North Exploration Licence
COUNTRY
Eritrea
2014
%
60
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 operation:
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
2014
$
2013
$
14,152
50,350
64,502
340,733
77,490
418,223
-
5,187,183
194,135
194,135
239,396
5,426,579
258,637
5,844,802
4,229
4,229
309,369
309,369
4,229
309,369
The joint operation has no contingent liabilities, assets or exploration commitments as at 30 June 2014 (30 June 2014: nil). At
30 June 2014, exploration and evaluation expenditure in relation to the Mogoraib North Project was written down to a nil value.
25. SUBSEQUENT EVENTS
At 30 June 2014, the Company had approximately US$41.5 million in US$ denominated cash bank accounts and during the first
quarter of the 2015 financial year, the Board approved the conversion of US$25,000,000 into Australian Dollars. The converted
funds have been deposited into term deposits earning an average interest rate of 3.43%.
Chalice Gold Mines Annual Report 2014 | 69
Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 30 JUNE 2014
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 2014 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 2014.
This declaration is signed in accordance with a resolution of the Board of Directors.
Dated at Perth the 30th day of September 2014.
Signed in accordance with a resolution of the Directors:
William Bent
Managing Director
70 | Annual Report 2014 Chalice Gold Mines
Directors’ Declaration
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 2014, 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(b),
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.
64
Chalice Gold Mines Annual Report 2014 | 71
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
2014 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(b).
Report on the Remuneration Report
We have audited the remuneration report included in the directors’ report for the year ended 30 June
2014. 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
2014 complies with section 300A of the Corporations Act 2001.
HLB Mann Judd
Chartered Accountants
Perth, Western Australia
30 September 2014
L Di Giallonardo
Partner
72 | Annual Report 2014 Chalice Gold Mines
65
Independent Auditor’s 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 its 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 2013/2014 financial year
(Reporting Period). The information in this statement is current at 30 September 2014.
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.
Chalice Gold Mines Annual Report 2014 | 73
Corporate Governance Report 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 section 1 of the Directors’ Report.
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. The Board’s composition will be assessed as part of the future direction of the Company as it continues to progress its
business development strategy, targeting advanced exploration or development stage acquisition opportunities.
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.
74 | Annual Report 2014 Chalice Gold Mines
Corporate Governance Report 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.
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.
Chalice Gold Mines Annual Report 2014 | 75
Corporate Governance Report 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 two 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 within section 3.
Details of each of the director’s qualifications are set out in section 1 to the Directors’ Report. 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.
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 one meetings during the Reporting Period. Details of director attendance at Remuneration
Committee meetings during the Reporting Period are set out in a table in section 3 of the Directors’ Report.
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 19. 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.
76 | Annual Report 2014 Chalice Gold Mines
Corporate Governance Report 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.
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). 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 as
at 30 June 2014 are set out in the following table:
PROPORTION OF WOMEN
Whole organisation
6 out of 23 (26%)
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.
Chalice Gold Mines Annual Report 2014 | 77
Corporate Governance Report 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.
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, updated and
reported to the Board quarterly.
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.
78 | Annual Report 2014 Chalice Gold Mines
Corporate Governance Report 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
2.6
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.
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
3.5
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.
Companies should provide the information indicated in the Guide to reporting on Principle 3.
×
×
×
×
Chalice Gold Mines Annual Report 2014 | 79
Corporate Governance Report 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.
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
8.4
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.
Companies should provide the information indicated in the Guide to reporting on Principle 8.
×
×
80 | Annual Report 2014 Chalice Gold Mines
Corporate Governance Report 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 29 September
2014 were:
SHAREHOLDER
Timothy Rupert Barr Goyder
Franklin Resources Inc
Lujeta Pty Ltd
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