More annual reports from Chalice Mining Limited:
2020 ReportANNUAL FINANCIAL REPORT30 JUNE 2016CHALICE GOLD MINES LIMITED | ANNUAL REPORT 2016CHALICE GOLD MINES LIMITEDABN 47 116 648 956Chalice Gold Mines LimitedLevel 2, 1292 Hay StreetWest Perth, Western Australia 6005T (+618) 9322 3960F (+618) 9322 5800E info@chalicegold.comW chalicegold.com Corporate Directory
Chalice Gold Mines Limited
Corporate Directory
Directors
Anthony Kiernan
Timothy (Tim) Goyder Managing Director
Stephen Quin
Morgan Ball
Non-executive Director
Non-executive Director
Non-executive Chairman
Company Secretary
Leanne Stevens
Principal Place of Business & Registered Office
Level 2, 1292 Hay Street
WEST PERTH WA 6005
Tel:
Fax:
Web: www.chalicegold.com
info@chalicegold.com
Email:
(+61) (8) 9322 3960
(+61) (8) 9322 5800
Auditors
HLB Mann Judd
Level 4, 130 Stirling Street
PERTH WESTERN AUSTRALIA 6000
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
Share Registry
Australia
Computershare Investor Services Pty Limited
Level 11, 172 St Georges Terrace
PERTH WESTERN AUSTRALIA 6000
Tel: 1300 787 272
Canada
Computershare Investor Services
100 University Avenue, 8th Floor
Toronto, Ontario M5J 2Y1
ASX
Share Code:
TSX
Share Code:
CHN
CXN
Chalice Gold Mines Limited
Chalice Gold Mines Limited
Contents
Contents
Contents
Chairman’s letter
Chairman’s letter
Operating and Financial Review
Operating and Financial Review
Tenement Schedules
Tenement Schedules
Directors’ Report
Directors’ Report
Corporate Governance Statement
Corporate Governance Statement
Auditor’s Independence Declaration
Auditor’s Independence Declaration
Consolidated Statement of Comprehensive Income
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Directors’ Declaration
Directors’ Declaration
Independent Auditor’s Report
Independent Auditor’s Report
ASX Additional Information
ASX Additional Information
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Chairman’s Letter
Chalice Gold Mines Limited
Chairman’s letter
Dear Shareholders
I am pleased to report to you on what has been a positive
year for Chalice on several fronts. Achievements include
the successful sale of the Cameron Gold Project in
Ontario, Canada, to emerging North American gold
development company First Mining Finance Corp, the
continued rigorous and disciplined assessment of
numerous cornerstone investment opportunities, and the
establishment of a high-quality portfolio of exploration
projects.
Since acquiring the Cameron Gold Project from Coventry
Resources in 2014, the Company upgraded the Cameron
resource, consolidated a regional tenement position and
identified a number of promising targets both proximal to
the deposit and regionally. As a result of the transaction
with First Mining, the Company received 32.3 million
shares in First Mining and a one percent Net Smelter
Return royalty over certain exploration
licences at
Cameron. This transaction has allowed us to crystallise
significant value from our investment in the Cameron
Project, giving shareholders exposure both to First
Mining’s diversified portfolio of advanced gold
exploration projects in central and eastern Canada and
the upside of the Cameron Project.
In addition to the Company’s cash balance of A$32 million
and the current market value of the shares in First Mining
of approximately A$26.4 million at the time of writing, our
strong balance sheet provides the Company with an
opportunity to deploy its capital at the lower end of the
resource cycle.
is committed to actively managing the
The Board
Company’s capital requirements, and taking into account
the Company’s cash backing per share, the Company
announced a discretionary on-market share buy-back
facility on 16 June 2016. To date, under the share buy-
back facility, the Company has acquired 12.8 million
shares for approximately $2.4 million.
We will continue to apply a disciplined and analytical
approach in the search for new business development
opportunities and, while this process has not yet resulted
in a transaction that meets our investment criteria, we are
determined to ensure that any such transaction provides
shareholders with significant upside while minimizing risk.
With this in mind, the Board has endorsed a strategy
whereby, in addition to targeting more advanced resource
opportunities where Chalice’s capital could provide a
funding solution to development assets, it will also
allocate a small percentage of its overall funds to target
high quality, high potential base and precious metal
exploration assets, preferably
lower risk mining
jurisdictions.
in
As a result of this strategy, Chalice has executed three
exploration joint venture agreements in recent months –
with Meteoric Resources, Red Hill
Iron and Traka
Resources. In combination, these three joint ventures
have minimum obligations to spend A$2 million within
approximately the next 12 months.
A disciplined assessment of exploration results at each key
decision point will be made, ensuring that we remain
focused on our exploration goals and upside potential –
when we see the upside has diminished below our
in-house
expectations, we will withdraw. With our
technical capability, Chalice is able to take advantage of
these types of opportunities as they arise; however, we
will not lose sight of our main objective of securing a
cornerstone asset.
In conclusion, I would like to acknowledge the efforts and
drive of our Managing Director, Tim Goyder – who has
in the pursuit of adding value for
been relentless
shareholders – as well as the Board, management team
and staff for their efforts. To our shareholders generally,
thank you also for your ongoing support.
With a strong balance sheet, a highly skilled and
disciplined team and a clear corporate strategy, I am
confident that Chalice is well placed for growth and
success at a time of renewed opportunity in the resource
sector.
Kind Regards
Anthony (Tony) Kiernan
Chairman
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CHALICE GOLD MINES | ANNUAL REPORT 2016
1
Operating and Financial Review
In selling Cameron to First Mining, the Company is able to
retain its exposure to Cameron through its shareholding in
First Mining, while maintaining a strong cash balance to
pursue other opportunities. Chalice shareholders also gain
exposure to First Mining’s diversified portfolio of advanced
gold exploration projects in central and eastern Canada,
including the Springpole and Pickle Crow projects in Ontario,
the Duquesne project in Quebec, and the Hope Brook Project
in Newfoundland.
The Shares in First Mining are subject to a statutory resale
restriction in Canada until October 2016. In addition, Chalice
agreed to restrict the sale of the shares to not more than
approximately one eighth of the total shares per month over
the eight months following the end of the escrow period
unless the sale is in a single block to a purchaser acceptable
to First Mining.
EXPLORATION
Prior to the sale of Cameron, the Company completed the
first-ever modern, project-wide, systematic exploration
program. Exploration activities completed as part of this
initiative
included a comprehensive surface sampling
program that included channel sampling of 10 new targets
located in priority areas that had been identified from a
previous desktop study, widespread rock chip sampling
across the entire property, six reconnaissance mobile metal
ion soil sampling grids and a structural study of key
mineralised outcrops.
In November 2015, the Company updated the mineral
resource estimate for Cameron, which was based on an
extensive re-logging program of 771 existing diamond drill
holes, assay results from approximately 30,000 new samples
collected from existing core, and the construction of a new
geological model.
Operating and Financial Review
BUSINESS STRATEGY AND OUTLOOK
Chalice’s vision is to grow a multi-asset resource company by
acquiring and developing high quality mineral resource
assets. To deliver this vision the Company is pursuing the
following business strategy:
Targeting more advanced mineral resource project
opportunities, or where Chalice’s strong cash
position may provide a funding solution to the
development of the asset.
Targeting quality base and precious metal
exploration ground, preferably in lower risk mining
jurisdictions.
to
land holdings
forward, Chalice will continue
review
Looking
opportunities to secure prospective
in
favourable geological settings. Maintaining the Company’s
strong cash position and pursuing opportunities for one or
more advanced stage projects will continue to be a key focus
of the Company. However, movements in commodity prices,
foreign exchange rates, equity prices and interest rates may
adversely impact the achievement of these objectives. In
particular, the Company has a material exposure to equity
prices through its holding of 32,260,836 First Mining Finance
Corp common shares (refer to section 5.2 below) and a
material exposure to the movements in the Australian Dollar
against the US dollar, as the Company holds approximately
$18 million denominated in US dollar. The financial impact
of movements in the First Mining Finance Corp share price
and foreign exchanges rates is discussed at note 19.
CAMERON GOLD PROJECT
SALE OF THE CAMERON GOLD PROJECT
On 10 June 2016, the Company completed the sale of the
Cameron Gold Project (“Cameron”) in Ontario, Canada, to
First Mining Finance Corp (“First Mining”), a mineral
property holding company listed on the TSX-V (TSX-V: FF) for
consideration of 32,260,836 First Mining common shares,
which now represents approximately a 6.5% holding in First
Mining. Chalice also has a 1% Net Smelter Return royalty
over certain exploration licences within the Cameron Gold
Project which are not encumbered by pre-existing royalties.
As at 30 June 2016, the value of the First Mining shares was
$25 million which significantly exceeds the value which the
stock market was attributing to Cameron prior to the sale.
CHALICE GOLD MINES | ANNUAL REPORT 2016 2
2
Operating and Financial Review
Operating and Financial Review
WARREGO NORTH, NORTHERN
TERRITORY, AUSTRALIA (RIGHT TO
EARN A 70% INTEREST)
In June 2016, Chalice secured rights to a prospective copper-
gold exploration opportunity adjacent to the historic high-
grade Warrego copper-gold mine in the Tennant Creek
Mineral Field of the Northern Territory after entering into a
farm-in agreement with Meteoric Resources NL (ASX: MEI)
(“Meteoric”) owner of the Warrego North copper-gold
project.
Figure 1: Location map of Warrego North Project (EL23764) in the
Tennant Creek Mineral Field
The farm-in agreement gives Chalice the right to earn up to
a 70% interest by sole funding $800,000 in exploration
expenditure. Chalice may earn an initial 51% by sole funding
$400,000. Chalice is required to drill at least one diamond
drill hole of at least 300m within 12 months before it can
The project contains several high-priority
withdraw.
exploration targets that
include prominent magnetic
anomalies identified by aeromagnetic surveys, and
anomalous copper, bismuth and gold results from historical
drilling.
Chalice plans to undertake an initial 2-hole (800m) Reverse
Circulation/diamond drilling program as soon as relevant
government approvals are obtained to test the Parakeet
target at depth (~300m depth). Drilling is targeted to test an
overlapping magnetic and gravity inversion model where it
is interpreted to intersect an apparent trend of anomalous
low-grade copper-gold-bismuth mineralisation associated
with typical Tennant Creek-style iron oxide copper gold
alterations as defined from previous RC drilling results.
NEW EXPLORATION INITIATIVES
As part of the Company’s strategy of identifying low-cost and
potentially high-impact exploration opportunities in high-
quality jurisdictions, Chalice has applied for extensive
tenement positions in two of the world’s leading gold
provinces, the Yilgarn Craton of Western Australia and the
Abitibi terrane of the Superior Craton, eastern Canada.
This exploration initiative is consistent with one of Chalice’s
core strategies, which is to identify and pursue innovative
and low-cost generative exploration opportunities with the
potential to deliver significant upside. These opportunities,
including the Warrego North farm-in deal, can be advanced
without detracting from the Company’s focus of acquiring a
substantial resource asset.
YILGARN CRATON, WESTERN AUSTRALIA
During year, the Company applied for 13 Exploration
Licenses (“ELAs”) and 13 Prospecting Licenses (“PLAs”) in the
Western Australian goldfields. These tenements are grouped
into 10 projects for a total of 1,480km2 under application in
three main regions in the Yilgarn Craton, Western Australia.
Chalice is currently reviewing previous exploration on the
areas covered by the tenement applications with a view to
being able to initiate field work when the applications are
granted. The tenement applications cover areas with
indications of gold anomalism in the surface sampling
datasets, and inferred extensions and trends in other
GIS datasets
Western Australia Mineral Exploration
(“WAMEX”) – including geology, aeromagnetic, regolith
mapping and digital drill collar-only location datasets.
Figure 2: Parakeet target showing previous drilling and interpreted
mineralised structure on a TMI image.
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CHALICE GOLD MINES | ANNUAL REPORT 2016
3
Operating and Financial Review
Operating and Financial Review
Operating and Financial Review
Operating and Financial Review
Operating and Financial Review
late July, the Company commenced a
late July, the Company commenced a
first-pass
In
In
first-pass
In
first-pass
reconnaissance surface mapping, rock chip sampling and a
reconnaissance surface mapping, rock chip sampling and a
reconnaissance surface mapping, rock chip sampling and a
soil sampling program. Results from this program are
soil sampling program. Results from this program are
soil sampling program. Results from this program are
expected in the second quarter of the 2017 financial year.
expected in the second quarter of the 2017 financial year.
expected in the second quarter of the 2017 financial year.
late July, the Company commenced a
late July, the Company commenced a
In
first-pass
reconnaissance surface mapping, rock chip sampling and a
soil sampling program. Results from this program are
expected in the second quarter of the 2017 financial year.
Figure 3: Location plan of tenement applications, Yilgarn Craton,
Figure 3: Location plan of tenement applications, Yilgarn Craton,
Figure 3: Location plan of tenement applications, Yilgarn Craton,
Figure 3: Location plan of tenement applications, Yilgarn Craton,
Western Australia
Western Australia
Western Australia
Western Australia
ABITIBI TERRANE, QUÉBEC, CANADA
In June 2016, the Company staked a contiguous block of 303
claims totalling 16,930ha and extending over a 30km strike
length of the Casa Berardi fault in the northern Abitibi
terrane of the Superior Province. The land package is located
between several significant gold deposits and was selected
as an area which is considered prospective for orogenic gold
mineralisation.
ABITIBI TERRANE, QUÉBEC, CANADA
In June 2016, the Company staked a contiguous block of 303
claims totalling 16,930ha and extending over a 30km strike
length of the Casa Berardi fault in the northern Abitibi
terrane of the Superior Province. The land package is located
between several significant gold deposits and was selected
as an area which is considered prospective for orogenic gold
mineralisation.
ABITIBI TERRANE, QUÉBEC, CANADA
ABITIBI TERRANE, QUÉBEC, CANADA
In June 2016, the Company staked a contiguous block of 303
In June 2016, the Company staked a contiguous block of 303
claims totalling 16,930ha and extending over a 30km strike
claims totalling 16,930ha and extending over a 30km strike
length of the Casa Berardi fault in the northern Abitibi
length of the Casa Berardi fault in the northern Abitibi
terrane of the Superior Province. The land package is located
terrane of the Superior Province. The land package is located
between several significant gold deposits and was selected
between several significant gold deposits and was selected
as an area which is considered prospective for orogenic gold
as an area which is considered prospective for orogenic gold
mineralisation.
mineralisation.
The geological attributes of this part of the Casa Beradi faults
are interpreted to indicate a prospective setting for orogenic
gold mineralisation including: (i) a significant bend in a late
tectonic fault; (ii) preserved Timiskaming-type sediments in
one or more fault panels; (iii) proximity to late tectonic
intrusions; and (iv) proximity to historical gold deposits and
occurrences.
The geological attributes of this part of the Casa Beradi faults
are interpreted to indicate a prospective setting for orogenic
gold mineralisation including: (i) a significant bend in a late
tectonic fault; (ii) preserved Timiskaming-type sediments in
one or more fault panels; (iii) proximity to late tectonic
intrusions; and (iv) proximity to historical gold deposits and
occurrences.
The geological attributes of this part of the Casa Beradi faults
The geological attributes of this part of the Casa Beradi faults
are interpreted to indicate a prospective setting for orogenic
are interpreted to indicate a prospective setting for orogenic
gold mineralisation including: (i) a significant bend in a late
gold mineralisation including: (i) a significant bend in a late
tectonic fault; (ii) preserved Timiskaming-type sediments in
tectonic fault; (ii) preserved Timiskaming-type sediments in
one or more fault panels; (iii) proximity to late tectonic
one or more fault panels; (iii) proximity to late tectonic
intrusions; and (iv) proximity to historical gold deposits and
intrusions; and (iv) proximity to historical gold deposits and
occurrences.
occurrences.
Figure 5 & 6: Reconnaissance surface mapping, rock chip sampling and
soil sampling program at the Kinebik Project, Quebec Canada.
Figure 5 & 6: Reconnaissance surface mapping, rock chip sampling and
Figure 5 & 6: Reconnaissance surface mapping, rock chip sampling and
Figure 5 & 6: Reconnaissance surface mapping, rock chip sampling and
soil sampling program at the Kinebik Project, Quebec Canada.
soil sampling program at the Kinebik Project, Quebec Canada.
soil sampling program at the Kinebik Project, Quebec Canada.
Figure 4: Simplified geology of the Abitibi terrane showing location of new staking area in Quebec, Canada
CHALICE GOLD MINES | ANNUAL REPORT 2016 4
4
Figure 4: Simplified geology of the Abitibi terrane showing location of new staking area in Quebec, Canada
Figure 4: Simplified geology of the Abitibi terrane showing location of new staking area in Quebec, Canada
Figure 4: Simplified geology of the Abitibi terrane showing location of new staking area in Quebec, Canada
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4
4
Operating and Financial Review
Operating and Financial Review
SALE OF ARDEEN GOLD PROJECT,
ONTARIO, CANADA (51% INTEREST)
In June 2016, the Company entered into an agreement to sell
its 51% interest in the Ardeen Gold Project, located in
Ontario, Canada, to Kesselrun Resources Limited (TSX-V:
KES) (“Kesselrun”). Chalice acquired the Ardeen Project from
Coventry Resources Inc. in 2014 along with the Cameron
Gold Project.
In consideration, Kesselrun agreed to issue the Company
2,040,000 common shares. In July 2016, the sale to
Kesslerun completed, and following completion, Chalice held
approximately 5.5% of the issued and outstanding shares of
Kesselrun. In addition, Chalice has also been granted Net
Smelter Return royalties over certain mining claims ranging
between 0.12% and 1% subject to certain buy-back clauses.
The shares issued by Kesselrun are subject to a statutory
hold period of four months plus a further provision
restricting the sale of shares to not more than approximately
one tenth of the total per month over the following ten
months except where the sale is in a single block to a
purchaser acceptable to Kesselrun.
GNAWEEDA PROJECT, AUSTRALIA
In April 2016, the Company entered into an agreement with
ASX listed Doray Minerals Limited to sell the Company’s 12%
interest, and associated rights, in the Gnaweeda Project for
400,000 ordinary shares in Doray Minerals Limited. The sale
was completed in July 2016.
NYANZAGA PROJECT, TANZANIA
(ENTITLEMENT TO PAYMENT UPON
COMMERCIAL MINING)
Following Chalice’s merger with Sub-Sahara Resources NL in
2009, the Company became entitled to a payment of A$5
million upon commercial production at the Nyanzaga Project
(“Nyanzaga”) in Tanzania. OreCorp Limited (ASX: ORR),
which is currently earning a 51% interest in Nyanzaga, have
recently commenced a Scoping Study. Chalice sees this as a
positive step towards the development of Nyanzaga and
increases the potential for this payment to be made.
CROTEAU EST PROJECT, QUEBEC,
CANADA
Following a strategic review of the Company’s exploration
assets, in December 2015, Chalice withdrew from the farm-
in joint venture with Northern Superior Resources Inc. (TSX-
V: SUP) without earning an interest in the project. Pursuant
to the joint venture agreement, the Company met its
minimum commitment
spend C$500,000. Total
to
exploration and evaluation expenditure written off at 30
June 2016 relating to the Croteau Est Project was $691,557.
GEOCRYSTAL LIMITED – WEBB
DIAMOND PROJECT, AUSTRALIA
(22.95% EQUITY INTEREST)
Chalice has a 22.95% interest in unlisted diamond explorer,
GeoCrystal Ltd (“GeoCrystal”). GeoCrystal has a 78% interest
in the Webb Diamond Project via a joint venture with ASX-
listed explorer Meteoric Resources Ltd.
CORPORATE
SHARE BUYBACK
On 16 June 2016, the Company announced an on-market
share buy-back of up to 28,271,080 ordinary shares as part
of a capital management plan over the next 12 months. As
at the date of this report the Company has acquired
12,430,000 ordinary shares under the on-market buy-back
for a total cost of $2,336,900.
APPOINTMENT OF NON-EXECUTIVE DIRECTOR
On 24 June 2016, the Company appointed experienced and
highly regarded Australian mining executive Mr Morgan Ball
as a non-executive director of the Company. Mr Ball, who is
a Chartered Accountant with more than 25 years of
Australian and International experience in the resources,
logistics and finance industries was most recently the
Managing Director and prior to that, Finance Director of ASX
listed BC Iron Limited.
US$2M DEFERRED CONSIDERATION
January 2016,
received deferred
the Company
In
consideration of US$2 million from China SFECO Group
following first gold pour from the Zara Gold Project in Eritrea.
The US$2 million represented the final tranche for the sale
of Chalice’s interest in the Zara Gold Project.
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CHALICE GOLD MINES | ANNUAL REPORT 2016
5
Operating and Financial Review
TSX DELISTING REVIEW
Following the sale of the Cameron Gold Project, the Toronto
Stock Exchange (“TSX”) commenced a review on the ordinary
shares of the Company in respect to its continued listing
requirements of the TSX. The TSX will normally require that,
following a change in business (i.e. the sale of the Cameron
Gold Project), the relevant company will need to continue to
meet
in the
Company’s case included the ownership of Cameron, an
advanced mineral property. However as noted, this project
is now sold.
listing requirements, which
its original
The Company was granted 120 days in which to regain
compliance with these requirements, pursuant to the TSX’s
Remedial Review Process. If the Company does not regain
compliance by 12 October 2016, the Company’s securities
may be delisted from the TSX 30 days from that date.
The TSX review does not impact the Company’s listing on the
ASX.
FINANCIAL PERFORMANCE
The Group reported a net gain after income tax of $7.4
million for the year compared to a net gain of $0.3 million for
the year ended 30 June 2015. This increase of $7.1 million is
largely related to net profit from discontinued operations of
$13.1 million (i.e. the sale of Cameron) which is offset by
income tax expense ($1.4 million), corporate administrative
expenses ($1.3 million), business development and project
acquisition costs
($1.4 million) and exploration and
evaluation assets written off ($2.2 million).
The $0.9 million net foreign exchange gain (2015: net gain of
$4.9 million) resulted from the impact of movements in the
Australian Dollar against the US Dollar on the Company’s US
Dollar cash balances.
Corporate administrative expenses of $1.3 million (2015:
$2.0 million) decreased due to the inclusion of termination
and redundancy payments made during 2015 of $0.6 million.
Aside from these payments, corporate administrative
expenses decreased significantly due to a concerted effort to
reduce overheads.
STATEMENT OF CASH FLOWS
Cash and cash equivalents at 30 June 2016 were $35.7
million (30 June 2015: $39.9 million). The reduction in cash
of $4.2 million is predominately due to:
exploration costs of $5.2 million;
$1.4 million being spent on business development
activities related to assessing and reviewing
projects for acquisition or investment; and
Operating and Financial Review
costs associated with the sale of the Cameron Gold
Project of $0.5 million.
These items are offset by the deferred consideration of $2.9
million (US$2 million) received from China SFECO Group
from the sale of the Zara Project in Eritrea that took place in
2012.
In comparison to the 2015 financial year, net cash flows used
in operating activities decreased by 44% from $1.6 million in
2015 to $0.9 million.
Net cash flows from investing activities decreased by 41%
from a net outflow of $7.1 million in 2015 to a net outflow of
$4.2 million in 2016. This was primarily due to the receipt of
the deferred consideration of $2.9 million as noted above.
Net cash used in financing activities decreased by $0.5
million (100%) as there were no financing related activities
during the year.
The effect of exchange rates on cash and cash equivalents at
30 June 2016 was a gain of $0.9 million (2015: gain of $4.9
million). The Company held approximately US$18 million in
US$ denominated bank accounts at 30 June 2016 (30 June
2015: US$27 million).
FINANCIAL POSITION
At balance date the Group had net assets of $61.5 million
and an excess of current assets over current liabilities of
$61.1 million. Current assets increased by 54% to $61.9
million (2015: $40.1 million) mainly due to the receipt of
32,260,836 common shares in First Mining received in
consideration for the sale of Cameron. The value of the First
Mining shares at 30 June 2016 was $25,421,978, based on a
closing share price of C$0.76 and converted to Australian
Dollars using an exchange rate of A$1:C$0.9644. Cash and
cash equivalents decreased by 10.5% to $35.7 million (2015:
$39.9 million). Refer to the statement of cash flows
discussion above
the
movements in the 2016 cash balance.
further details
regarding
for
Non-current assets decreased by 89% to $1.7 million (2015:
$16.5 million), as a result of the sale of Cameron which
reduced exploration and evaluation assets by $15.8 million.
Current liabilities decreased by 22% to $0.7 million (2015:
$0.9 million) mainly due to the reduction in net tax payable
at 30 June 2016. Non-current liabilities increased due to the
recognition of a deferred tax liability in respect of the sale of
the Cameron Gold Project in 2016.
CHALICE GOLD MINES | ANNUAL REPORT 2016 6
6
COMPETENT PERSON AND QUALIFYING PERSON STATEMENTS
The information in this report that relates to the Yilgarn Craton and Abitibi Terrane Projects is extracted from the announcement
entitled “Chalice advances gold exploration initiatives in Australia and Canada” dated 4 July 2016 and the information that relates
to the Warrego North Project is extracted from the announcement entitled “Chalice secures prospective copper-gold exploration
opportunity in Tenant Creek Mineral Field, Northern Territory” dated 15 June 2016. Both announcements are 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 announcements and that all material assumptions in the market announcement
continue to apply and have not materially changed. The Company confirms that the form and context in which the Competent
Person’s and Qualifying Persons findings are presented have not been materially modified from the original market
announcement.
FORWARD LOOKING STATEMENTS
This financial report 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 report 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, the results of business development activities which may result
in a corporate transaction or investment, the actual number of shares and price which may be purchased pursuant to the share
buy-back, the future share price performance of First Mining Finance Corp, Kesselrun Resources and Doray Minerals, 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 mineral resources or 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, 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
7
CHALICE GOLD MINES | ANNUAL REPORT 2016
7
Tenement Schedules
Tenement Schedules
AUSTRALIA
Location
Project
Tenement
Registered holder
Nature of interest
Western Australia
No./Claim No.
E37/1250
E39/1914
E77/2353
E77/2354
P39/5600
P39/5601
CGM (WA) Pty Ltd
100%
Northern Territory
Warrego North
EL23764
Meteoric Resources NL
0% - farm-in agreement, right to
Western Australia
West Pilbara
Western Australia
Latitude Hill
CANADA
Location
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Project
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
CHALICE GOLD MINES | ANNUAL REPORT 2016
earn up to 51% interest or 70% as
applicable.
Red Hill Iron Limited – 40%
0% - farm-in agreement, right to
API Management Pty Ltd – 60%
earn up to 51% interest or 70% as
applicable ( in all minerals other
than iron ore).
Traka Resources Limited (application
holder)
0% - farm-in agreement, right to
earn up to 51% interest or 70% as
applicable
E08/1227
E08/1283
E08/1289
E08/1293
E08/1294
E08/1295
E08/1430
E08/1473
E08/1516
E08/1537
E47/1141
E47/1693
ELA69/2817
ELA69/2610
ELA69/2592
ELA69/3421
ELA69/3399
Claim Number
Registered Holder
Nature of interest
2448108
2448109
2448110
2448111
2448112
2448113
2448114
2448115
2448116
2448117
2448118
2448119
2448120
2448121
2448122
2448123
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
8
8
Tenement Schedules
Location
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Project
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Claim Number
Registered Holder
Nature of interest
2448124
2448125
2448126
2448127
2448128
2448129
2448130
2448131
2448132
2448133
2448134
2448135
2448136
2448137
2448138
2448139
2448140
2448141
2448142
2448143
2448144
2448145
2448146
2448147
2448148
2448149
2448150
2448151
2448152
2448153
2448154
2448155
2448156
2448157
2448158
2448159
2448160
2448161
2448162
2448163
2448164
2448165
2448166
2448167
2448168
2448169
2448170
2448171
2448172
2448173
2448174
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
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%
9
CHALICE GOLD MINES | ANNUAL REPORT 2016
9
Tenement Schedules
Claim Number
Registered Holder
Nature of interest
2448175
2448176
2448177
2448178
2448179
2448180
2448181
2448182
2448183
2448184
2448185
2448186
2448187
2448188
2448189
2448190
2448191
2448192
2448193
2448194
2448195
2448196
2448197
2448198
2448199
2448200
2448201
2448202
2448203
2448204
2448205
2448206
2448207
2448409
2448410
2448411
2448412
2448413
2448414
2448415
2448416
2448417
2448418
2448419
2448420
2448421
2448422
2448423
2448424
2448425
2448426
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
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%
Location
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Project
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
CHALICE GOLD MINES | ANNUAL REPORT 2016
10
10
Tenement Schedules
Location
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Project
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Claim Number
Registered Holder
Nature of interest
2448427
2448428
2448429
2448430
2448431
2448432
2448433
2448434
2448435
2448436
2448437
2448438
2448439
2448440
2448441
2448442
2448443
2448444
2448445
2448446
2448447
2448448
2448449
2448450
2448451
2448452
2448453
2448454
2448455
2448456
2448457
2448458
2448459
2448460
2448461
2448462
2448463
2448464
2448465
2448466
2448467
2448468
2448469
2448470
2448471
2448472
2448473
2448474
2448475
2448476
2448477
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
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%
11
CHALICE GOLD MINES | ANNUAL REPORT 2016
11
Tenement Schedules
Claim Number
Registered Holder
Nature of interest
2448478
2448479
2448480
2448481
2448482
2448483
2448484
2448485
2448486
2448487
2448488
2448489
2448490
2448491
2448492
2448493
2448494
2448495
2448496
2448497
2449277
2449278
2449279
2449280
2449281
2449282
2449283
2449284
2449285
2449286
2449287
2449288
2449289
2449290
2449291
2449292
2449293
2449294
2449295
2449296
2449297
2449298
2449299
2449300
2449301
2449302
2449303
2449304
2449305
2449306
2449307
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
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%
Location
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Project
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
CHALICE GOLD MINES | ANNUAL REPORT 2016
12
12
Tenement Schedules
Location
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Project
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Claim Number
Registered Holder
Nature of interest
2449308
2449309
2449310
2449311
2449312
2449313
2449314
2449315
2449316
2449317
2449318
2449319
2449320
2449321
2449322
2449323
2449324
2449325
2449326
2449327
2449328
2449329
2449330
2449331
2449332
2449333
2449334
2449335
2449336
2449337
2449338
2449339
2449340
2449341
2449342
2449343
2449344
2449345
2449346
2449347
2449348
2449349
2449350
2449351
2449352
2449353
2449354
2449355
2449356
2449357
2449358
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
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%
13
CHALICE GOLD MINES | ANNUAL REPORT 2016
13
Tenement Schedules
Location
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Quebec
Project
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Kinebik
Claim Number
Registered Holder
Nature of interest
2449359
2449360
2449361
2449362
2449363
2449364
2449365
2449366
2449367
2449368
2449369
2449370
2449371
2449372
2449373
2449374
2449375
2454112
2454113
2454308
2454309
2454310
2454311
2454312
2454313
2454314
2454315
2454316
2454317
2454318
2454319
2454320
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Quebec) Inc.
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%
CHALICE GOLD MINES | ANNUAL REPORT 2016
14
14
Directors’ Report
Chalice Gold Mines Limited
Directors’ Report
The Directors present their report together with the financial report of Chalice Gold Mines Limited (‘Chalice’ or ‘the Company’)
and its subsidiaries (together ‘the Group’) for the financial year ended 30 June 2016 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
Anthony (Tony) W Kiernan
LLB
Non-executive Chairman
Timothy (Tim) R B Goyder
Managing Director
Stephen P Quin
PGeo, FGAC, FSEG, MIOM3
Independent 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 the Chairman of BC
Iron Limited, Pilbara Minerals Limited, Venturex Resources Limited and is a director of
Danakali Limited (previously South Boulder Mines Limited), all listed on ASX. During the
past three years, Tony was a director of ASX listed Uranium Equities Limited and Liontown
Resources Limited. Tony was appointed Chairman on 10 October 2014, and previously
held the position of Non-executive Director.
Tony is a member of the Audit Committee and Chairman of the Remuneration Committee
and has been a director since 2007 (9 years).
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 (11 years) and was appointed Managing Director on
10 October 2014. Tim previously held the position of Executive Chairman.
Stephen is a 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 previously
President and COO of TSX listed copper producer Capstone Mining Corp. and, up until its
merger with Capstone, President and CEO of TSX listed copper producer Sherwood
Copper Corp. Prior to joining Sherwood, Stephen spent 18 years as Vice President and
subsequently Executive Vice President of TSX listed Miramar Mining Corporation, a
Canadian focused gold producer and developer. 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 an independent non-executive director since 2010 (6 years).
Morgan S Ball
B.Com, CA, FFin
Independent Non-executive
Director
Morgan is a Chartered Accountant with more than 25 years of Australian and
international experience in the resources, logistics and finance industries. During the
past three years, Morgan was Managing Director, and prior to that Finance Director of
ASX listed BC Iron Limited.
Morgan is Chairman of the Audit Committee and a member of the Remuneration
Committee and was appointed to the Board as an independent non-executive director
on 24 June 2016.
15
CHALICE GOLD MINES | ANNUAL REPORT 2016
15
Chalice Gold Mines Limited
Directors’ Report
2.
CHIEF FINANCIAL OFFICER AND COMPANY SECRETARY
Directors’ Report
Richard K Hacker
B.Com, ACA, ACIS
Chief Financial Officer
Richard is a Chartered Accountant and Chartered Secretary with over 20 years of
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 a
director of ASX listed Uranium Equities Limited.
Leanne Stevens
B.Com, CA, ACIS
Company Secretary
Leanne is a Chartered Accountant and Chartered Secretary who has 13 years of
the mining and energy
accounting and governance experience within
industries. Leanne is also Company Secretary of ASX listed Liontown Resources
Limited. Leanne has been 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:
Directors’ Meetings
Audit
Remuneration
Nomination(2)
Number of meetings held:
Number of meetings attended:
A W Kiernan
T R B Goyder
S P Quin
M S Ball(1)
7
7
7
7
-
2
1
2
-
-
1
1
-
1
-
-
-
-
-
-
(1)Mr Ball was appointed to the Board on 24 June 2016, therefore did not attend any meetings that were held during the
financial year.
(2)During the financial year, the full Board met in its capacity as the nomination committee in the appointment of Mr Ball.
The Company has an audit committee and a separate remuneration committee. The nomination committee comprises the full
membership of the board of directors and any matters to be dealt with by the nomination committee are included in board
meetings. Members acting on the committees during the year were:
Audit
M S Ball (Chairman) (1)
Remuneration
A W Kiernan (Chairman)
A W Kiernan
S P Quin
S P Quin
M S Ball
Nomination
Full Board
(1)Mr Ball was appointed Chairman of the Audit Committee on his appointment as a Director. Prior to this, Mr Kiernan was
Chairman of the Audit Committee.
4.
PRINCIPAL ACTIVITIES
The principal activities of the Group during the year were mineral exploration and evaluation. There has been no significant
changes in the nature of these activities during the year.
CHALICE GOLD MINES | ANNUAL REPORT 2016
16
16
Directors’ Report
Chalice Gold Mines Limited
Directors’ Report
5.
OPERATING AND FINANCIAL REVIEW
The directors of Chalice Gold Mines Limited present the Operating and Financial Review of the Group, prepared in accordance
with section 299A of the Corporations Act 2001 for the year ended 30 June 2016. 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 Group. Please refer to page 2 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 2016 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.
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:
Anthony Kiernan
Tim Goyder
Stephen Quin
Morgan Ball
Gary Snow
Richard Hacker
Kevin Frost
Chairman
Managing Director
Non-executive Director
Non-executive Director (appointed 24 June 2016)
Chief Operating Officer (resigned 18 March 2016)
Chief Financial Officer
General Manager – Exploration (appointed 1 March 2016)
There were no changes in KMP after the reporting date and before the financial report was authorised for issue.
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 (Chairman)
Stephen Quin
Morgan Ball (appointed 24 June 2016)
The Remuneration Committee has delegated decision-making authority for some matters related to the remuneration
arrangements for KMP, and is required to make recommendations to the Board on other matters.
Specifically, the Board approves the remuneration arrangements of the Managing Director and other executives including
awards made under the Short Term Incentive Plan (“STIP”) and Employee Long Term Incentive Plan (“ELTIP”), following
recommendations from the Remuneration Committee. The Board also sets the aggregate fee pool for Non-executive Directors
(“NED”) (which is subject to shareholder approval) and NED fee levels.
17
CHALICE GOLD MINES | ANNUAL REPORT 2016
17
Chalice Gold Mines Limited
Directors’ Report
Directors’ Report
The Remuneration Committee meets through the year when appropriate. The Managing Director may attend certain
Remuneration Committee meetings by invitation, where management input is required. The Managing Director is not present
during any discussions related to his own remuneration arrangements.
information on the Remuneration Committee’s role, responsibilities and membership can be seen at
Further
www.chalicegold.com.
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 or recommendations from external consultants.
Remuneration report approval at 2015 Annual General Meeting
The Remuneration Report for the financial year ended 30 June 2015 received positive shareholder support at the 2015 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.
2.
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
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:
Fixed remuneration
Variable remuneration
Element
Base salary
Base fee
Committee fees
Superannuation
Consultancy fees
Other benefits
Short term incentives (STI)
Share options
Performance rights
Non-executive directors
×
#
##
×
###
×
Executives
×
×
×
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).
7.3.3
Non-executive director remuneration
The Company’s Constitution and the ASX Listing Rules specify that the maximum 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 a maximum aggregate amount of $450,000 per year (including
superannuation). The Board does not propose to seek any increase for the non-executive director pool at the upcoming 2016
Annual General Meeting.
CHALICE GOLD MINES | ANNUAL REPORT 2016
18
18
Directors’ Report
Chalice Gold Mines Limited
Directors’ Report
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 2016 financial year, a non-executive director (excluding the Chairman) receives a fee of $60,000 (inclusive of
superannuation, where applicable) and the Chairman receives a fee of $80,000 (inclusive of superannuation). Members of the
Audit Committee and Remuneration Committee also receive an additional $5,000 (inclusive of superannuation) 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, 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 2016 and 30 June 2015 is detailed further in this
Remuneration Report. The amounts listed under ‘Salary & Fees’ include 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 approved by the Company’s shareholders
at the 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 and responsibilities to be undertaken. 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.
In 2014, the Remuneration Committee recommended to the Board to suspend the STIP and move 100% of eligible KMP’s
incentive entitlements exclusively to the LTIP for the foreseeable future. The justification for this recommendation being that
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.
Therefore, during the 2016 and 2015 financial year, no formal cash bonuses were paid to executives pursuant to the STIP,
however as compensation for completing the sale of Cameron, the Remuneration Committee recommended to the Board that
a once off transaction related cash bonus of $50,000 be awarded to Mr Hacker. No other cash bonuses were awarded to KMP
during the year. Please refer to section 7.4 for further details.
19
CHALICE GOLD MINES | ANNUAL REPORT 2016
19
Chalice Gold Mines Limited
Directors’ Report
Directors’ Report
(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
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
Term and lapse
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, such performance rights would, as a general
rule lapse, except in certain limited defined situations such as disability, redundancy or
death.
Annual grant of performance rights - 2016/2017
The table below outlines the performance rights granted to KMP subsequent to 30 June 2016:
Annual Award
KMP
Number of Rights
Measurement Date
Vesting Date
2016/2017
Tim Goyder*
1,200,738
Richard Hacker
Kevin Frost
754,087
804,058
30 June 2019
30 June 2019
30 June 2019
30 June 2019
30 June 2019
30 June 2019
*Those to Mr Goyder being subject to shareholder approval at the Company’s 2016 AGM.
CHALICE GOLD MINES | ANNUAL REPORT 2016
20
20
Directors’ Report
Chalice Gold Mines Limited
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 2016/2017 annual grant of performance rights, the Remuneration
Committee recommended to the Board that 100% of KMP’s incentive entitlements are offered via the LTIP and that 50% of the
LTIP is to be based on meeting Total Shareholder Return (“TSR”) and the remaining 50% is to be based on achieving key business
objectives.
The following table outlines key business objectives and the weightings of the performance condition:
Overall Performance
Condition
Strategic objectives
Specific Performance Conditions
Undertake a significant acquisition or corporate transaction: acquire
one or more assets or undertake a corporate transaction with
potential to generate an IRR of at least 20% using consensus
commodity prices and board approved cost assumptions.
AND/OR
Value generation through:
Making a significant new discovery which shows the
potential to be economic based on consensus commodity
prices and board approved cost assumptions; or
Substantially increasing the Company’s resource base; or
Conducting economic/feasibility studies which show the
potential to generate an IRR of at least 20% using consensus
commodity prices and board approved cost assumptions; or
The sale of an asset(s) at a significant profit.
Percentage of granted
performance rights that
will vest if performance
conditions are met
50%
TSR objectives
NB: The determination as to whether the above objectives have been
met will be done by the Board of the Company in a timely manner,
acting reasonably and in good faith.
The performance conditions for performance rights issued will be
measured by comparing the Company’s TSR with that of an
appropriate comparator group of companies as determined by the
Remuneration Committee over the period from the grant of the
performance rights, to the end of the financial year that is 3 years
after that date (vesting date). The performance rights will vest
depending on the Company’s percentile ranking within the
comparator group on the relevant vesting date as follows:
Below 50th Percentile
Between 50th and 75th percentile
At or above 75th percentile
0%
Pro rata between
16.5% and 50%
50%
The test date for the performance rights are set at 30 June 2019, being 3 years from the date of grant.
Annual grant of performance rights - 2015/2016
The table below outlines the performance rights that were granted for 2015/16 financial year and have not yet vested.
Annual Award
2015/2016
KMP
Tim Goyder
Gary Snow(1)
Number of Rights
1,664,707
Measurement Date
30 June 2017
1,378,826
Richard Hacker
1,306,837
30 June 2017
30 June 2017
Vesting Date
30 June 2018
30 June 2018
30 June 2018
(1)Mr Snow ceased employment on 18 March 2016. The above performance rights lapsed prior to the measurement date.
21
CHALICE GOLD MINES | ANNUAL REPORT 2016
21
Chalice Gold Mines Limited
Directors’ Report
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 2015/2016 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:
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 an
IRR of at least 20% using consensus commodity prices and board
approved cost assumptions.
AND/OR
Value generation at existing assets through:
Making a significant new discovery which shows the potential
to be economic based on consensus commodity prices and
board approved cost assumptions; or
Substantially increasing the Company’s resource base; or
Conducting economic/feasibility studies which show the
potential to generate an IRR of at least 20% using consensus
commodity prices and board approved cost assumptions; or
The sale of an asset(s) at a significant profit.
NB: The determination as to whether the above objectives have been
met will be done by the Board of the Company in a timely manner,
acting reasonably and in good faith.
Share price objectives
Below 15 cents
If the 30 Day VWAP as
at the measurement
date is:
15 cents
Between 15 cents and 30 cents
Above 30 cents
Percentage of granted
performance rights that
will vest if performance
conditions are met
50%
0%
16.5%
Pro rata between
16.5% and 50%
50%
In addition to the measurement period of 1 July 2015 to 30 June 2017, 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 2018 at the earliest.
Annual grant of performance rights - 2014/2015
The following KMP were granted performance rights for 2014/2015:
Annual Award
2014/2015
KMP
Gary Snow(1)
Number of Rights
1,399,775
Measurement Date
30 June 2016
Richard Hacker
1,326,693
30 June 2016
Vesting Date
30 June 2017
30 June 2017
(1)Mr Snow ceased employment on 18 March 2016. The above performance rights lapsed prior to the measurement date.
CHALICE GOLD MINES | ANNUAL REPORT 2016
22
22
Directors’ Report
Chalice Gold Mines Limited
Directors’ Report
The following performance conditions were applicable to those performance rights:
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
Percentage of granted
performance rights that
will vest if performance
conditions are met
50%
0%
16.5%
Pro rata between 16.5%
and 50%
50%
The testing date for the above performance rights was 30 June 2016, and at this date the Remuneration Committee determined
that the above objectives had not been met, and thus the Remuneration Committee recommended to the Board that the above
performance rights lapse (i.e. those performance rights granted to Mr Hacker). These performance rights lapsed on 15 July
2016.
(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 last 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
30 June 2012
$0.10
30 June 2013
$0.16
30 June 2014
$0.15
30 June 2015
$0.11
30 June 2016
$0.18
23
CHALICE GOLD MINES | ANNUAL REPORT 2016
23
Directors’ Report
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t
g
n
u
a
v
n
i
l
I
24
Directors’ Report
Chalice Gold Mines Limited
Directors’ Report
7.5
Equity instruments
7.5.1 Employee share options
During the reporting period, subject to shareholder approval at the Company’s 2016 AGM, 500,000 options were granted to
Mr Ball on his appointment as non-executive director. The options have an exercise price of 25 cents per share, with an expiry
date of 30 June 2019. No further options over ordinary shares in the Group were granted or vested as compensation to key
management personnel.
On 30 June 2016, 1,050,000 options over ordinary shares granted to KMP lapsed.
7.5.2 Employee long term incentive plan - performance rights
During the reporting period the following 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 2016
Grant date
Fair value of
rights at grant
date
$
Expiry date
Number of rights
vested during 2016
Directors
T Goyder
1,664,707
24 November 2015
158,397
30 June 2019
-
During the reporting period, no shares were issued on the exercise of performance rights granted as compensation. Refer
below.
Details of the vesting profile of performance rights granted as remuneration to each KMP of the Group are outlined below.
Directors
T Goyder
Executive
G Snow
R Hacker
Number of
rights
Grant date
% vested in year % forfeited in year
Vesting date
1,664,707 24 November 2015
1,257,425 1 October 2014
142,350 17 November 2014
1,378,826 25 June 2015
1,326,693 1 October 2014
1,306,837 25 June 2015
-
-
-
-
-
-
-
100%
100%
100%
-
-
30 June 2017
-
-
-
30 June 2016
30 June 2017
The movement during the reporting period, by value of performance rights over ordinary shares in the Group held by each
KMP is detailed below:
Directors
T Goyder
Executives
G Snow
Value of performance rights
granted in year(A)
$
Value of performance rights
exercised in year(B)
$
Value of performance
rights lapsed in year(C)
$
158,397
-
-
-
-
333,432
(A) The value of performance rights granted in the year is the fair value of performance rights calculated at grant date
using a binomial option-pricing 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 binomial option-pricing model or market value of shares with no
adjustments for whether performance criteria have or have not been achieved.
25
CHALICE GOLD MINES | ANNUAL REPORT 2016
25
Chalice Gold Mines Limited
Directors’ Report
7.5.3 Equity holdings of key management personnel
Option holdings and performance rights of key management personnel
Directors’ Report
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:
Director
T Goyder
A W Kiernan
S P Quin
M S Ball
Executive
G Snow
K M Frost
R K Hacker
Held at
1 July 2015
Granted as
compensation
Exercised/
Forfeited
Held at
30 June 2016
-
750,000
300,000
-
2,778,601
-
2,633,530
1,664,707
-
-
-
-
(750,000)
(300,000)
-
-
-
-
(2,778,601)
-
-
1,664,707
-
-
-
-
-
2,633,530
Vested
during the
year
Vested and
exercisable
at 30 June
2016
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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:
Director
T R B Goyder
A W Kiernan
S P Quin
M B Ball
Executive
G Snow
K M Frost
R K Hacker
Held at
1 July 2015
Additions
41,733,533
1,662,041
26,321
-
-
-
132,000
2,094,232
-
-
-
-
-
-
Received on
exercise of
Options/
Performance
rights
Held at
30 June 2016
Sales
Held at 30
June 2016
-
-
-
-
-
-
-
43,827,765
1,662,041
26,321
-
-
-
132,000
-
-
-
-
-
-
-
43,827,765
1,662,041
26,321
-
-
-
132,000
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 KMP 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.
CHALICE GOLD MINES | ANNUAL REPORT 2016
26
26
Directors’ Report
Chalice Gold Mines Limited
Directors’ Report
The aggregate expense/(income) recognised during the year relating to key management personnel or their related parties
was as follows:
Key management personnel
Transaction
A W Kiernan
Other related parties
Liontown Resources Limited
Uranium Equities Limited
PhosEnergy Limited
Consulting services
Corporate services
Corporate services
Corporate services
Note
(i)
(ii)
(ii)
(ii)
2016
$
40,500
(66,000)
(66,000)
(24,436)
2015
$
72,500
(66,000)
(49,500)
(10,000)
(i)
(ii)
The Group used the consulting 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.
The Group supplied corporate services including accounting and company secretarial services under a Corporate
Services Agreement to Liontown Resources Limited (“LTR”), Uranium Equities Limited (“UEL”) and PhosEnergy
Limited (“PEL”). Mr Goyder is a director of LTR, UEL and PEL and Mr Kiernan is Chairman of PEL. 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
7.6
Executive contracts
2016
$
(15,000)
12,800
(2,200)
2015
$
(6,000)
19,154
13,154
Remuneration arrangements for KMP are formalised in employment agreements. Details of these contracts are provided
below.
Managing Director:
The Managing Director (“MD”) is employed under an ongoing contract which can be terminated with notice by either the Group
or the MD.
Under the terms of the present contract, as disclosed to the ASX in October 2014:
The MD receives fixed remuneration of $390,000 per annum (inclusive of superannuation).
The MD may participate in incentive plans that may be in place from time to time subject to the Board’s discretion
and any shareholder approvals required.
The MD’s termination provisions are as follows:
Notice Period
Payment in lieu of notice
Resignation
Termination for cause
Termination in cases of death, disablement, redundancy or
notice without cause
Diminution of responsibility
3 months
None
3 months
12 months
3 months
None
3 months
N/A
27
CHALICE GOLD MINES | ANNUAL REPORT 2016
27
Directors’ Report
Chalice Gold Mines Limited
Directors’ Report
Other KMP:
Notice Period
Payment in lieu of notice
Resignation
Termination for cause
Termination in cases of death, disablement, redundancy or
notice without cause
Diminution of responsibility
3 months
None
3 months
6 months
3 months
None
3 months
N/A
8.
DIVIDENDS
No dividends were declared or paid during the year and the directors recommend that no dividend be paid.
9.
LIKELY DEVELOPMENTS
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
On 4 July 2016, the Company commenced acquiring shares via the Company’s on-market share buy-back facility. To date the
Company has acquired 12,430,000 shares on market for a total value of $2.3 million. At the date of this report, the Company’s
total shares on issue was 270,280,802.
On 4 July 2016, the Company completed the sale of the Gnaweeda project and in consideration, the Company received 400,000
shares in Doray Mining Limited. In addition, the sale of the Ardeen Project completed and the Company received 2,050,000
shares in Kesselrun Resources Inc.
11.
DIRECTORS’ INTERESTS
The relevant interest of each director in the shares, rights or options over such instruments issued by Chalice and other related
bodies corporate, as notified by the directors to the ASX in accordance with S205G(1) of the Corporations Act 2001, at the date
of this report is as follows:
T R B Goyder
S P Quin
M B Ball
A W Kiernan
12.
SHARE OPTIONS AND PERFORMANCE RIGHTS
Unissued shares under option
Ordinary shares
43,827,765
26,321
-
1,662,041
Options over
ordinary
shares
Performance
rights
-
-
-
-
1,664,707
-
-
-
At the date of this report 500,000 unissued ordinary shares (500,000 at reporting date) of the Company are under option on
the following terms and conditions:
Expiry date
31 October 2017
Exercise price ($)
0.25
Number of options
500,000
Unless exercised, these options do not entitle the holder to participate in any share issue of Chalice or any other body
corporate.
On 24 June 2016, subject to Shareholder approval at the Company’s 2016 AGM, the Board resolved to grant Mr Ball 500,000
unlisted options with an exercise price of 25 cents, expiring 30 June 2019.
In addition, in July 2016, the Board resolved, subject to shareholder approval at the Company’s 2016 AGM, to grant Mr Quin
and Mr Kiernan 500,000 unlisted options (for a total of 1,000,000) with an exercise price of 25 cents and expiry date of 30
November 2019.
CHALICE GOLD MINES | ANNUAL REPORT 2016
28
28
Directors’ Report
Chalice Gold Mines Limited
Directors’ Report
Performance rights
At the date of this report 6,825,988 performance rights (5,817,236 at reporting date) have been issued on the following terms
and conditions:
Exercise price ($)
Nil
Nil
Number of rights
4,069,554
2,756,434
Expiry date
30 June 2019
30 June 2020
In addition to the above, the Board has resolved, subject to shareholder approval at the Company’s 2016 AGM to grant Mr
Goyder 1,200,738 performance rights, in accordance with the terms and conditions of the Company’s LTIP, and with the same
performance conditions as those granted to KMP (refer to the above section 7.3.4).
Shares issued on exercise of options or performance rights
No shares were issued during or since the end of the year as a result of the exercise of options or 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 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 $13,465 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 in section 7.4 of the Remuneration Report.
16.
NON-AUDIT SERVICES
During the year HLB Mann Judd, the Company’s auditors, provided services in addition to their statutory duties. These
additional services totalled $1,000.
17.
AUDITOR’S INDEPENDENCE DECLARATION
The auditor’s independence declaration is set out on page 31 and forms part of the Directors’ Report for the year ended 30
June 2016.
This Report is made in accordance with a resolution of the Directors:
Tim Goyder
Managing Director
Dated at Perth the 13th day of September 2016
29
CHALICE GOLD MINES | ANNUAL REPORT 2016
29
Chalice Gold Mines Limited
Corporate Governance Statement
Corporate Governance Statement
Chalice Gold Mines Limited ACN 116 648 956 (Company) has established a corporate governance framework, the key features
of which are set out in its Corporate Governance statement which can be found on the Company’s website at
www.chalicegold.com, under the section marked “Governance”.
In establishing its corporate governance framework, the Company has referred to the recommendations set out in the ASX
Corporate Governance Council's Corporate Governance Principles and Recommendations 3rd edition (Principles &
Recommendations). The Company has followed each recommendation where the Board has considered the recommendation
to be an appropriate benchmark for its corporate governance practices. Where the Company's corporate governance practices
follow a recommendation, the Board has made appropriate statements reporting on the adoption of the recommendation. In
compliance with the "if not, why not" reporting regime, where, after due consideration, the Company's corporate governance
practices do not follow a recommendation, the Board has explained it reasons for not following the recommendation and
disclosed what, if any, alternative practices the Company has adopted instead of those in the recommendation.
CHALICE GOLD MINES | ANNUAL REPORT 2016
30
30
Auditor’s Independence Declaration
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the consolidated financial report of Chalice Gold Mines Limited for the
year ended 30 June 2016, I declare that to the best of my knowledge and belief, there have been no
contraventions of:
a)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit;
and
b)
any applicable code of professional conduct in relation to the audit.
Perth, Western Australia
13 September 2016
L Di Giallonardo
Partner
HLB Mann Judd (WA Partnership) ABN 22 193 232 714
Level 4, 130 Stirling Street Perth WA 6000. PO Box 8124 Perth BC 6849 Telephone +61 (08) 9227 7500. Fax +61 (08) 9227 7533.
Email: hlb@hlbwa.com.au. Website: http://www.hlb.com.au
Liability limited by a scheme approved under Professional Standards Legislation
HLB Mann Judd (WA Partnership) is a member of
International, a worldwide organisation of accounting firms and business advisers.
34
31
CHALICE GOLD MINES | ANNUAL REPORT 2016
Chalice Gold Mines Limited
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2016
Consolidated Statement of Comprehensive Income
For the Year Ended 30 June 2016
Continuing operations
Revenue
Foreign exchange gains
Net gain on sale of fixed assets
Share of associate’s gain/(loss)
Impairment of investment in associate
Exploration and evaluation assets written off
Corporate administrative expenses
Business development and project acquisition costs
Depreciation and amortisation expense
(Loss)/profit before tax from continuing operations
Income tax benefit/(expense)
(Loss)/profit for the year from continuing operations
Discontinued operations
Net profit for the year from discontinued operations
Overprovision for income tax expense
Income tax expense
Profit for the year from discontinued operations
Total profit for the year
Total profit for the year attributable to owners of the
parent
Other comprehensive income/(loss)
Items that may be reclassified to profit or loss
Net change in fair value of available for sale investments
Exchange differences on discontinued operations
Exchanges differences on translation of foreign operations
Other comprehensive (loss)/income for the year
Total comprehensive income for the year
Total comprehensive income for the year attributable to
owners of the parent
(loss)/earnings per share
Basic and diluted
continuing operations (cents)
Basic and diluted earnings per share from discontinued
operations
Basic and diluted earnings per share from continuing and
discontinued operations (cents)
from
Note
3(a)
8
8
12
3(b)
3(d)
6
6
4
7
7
7
2016
$
338,455
917,214
-
48,998
(790,050)
(2,201,005)
(1,277,968)
(1,413,600)
(64,197)
(4,442,153)
182,379
(4,259,774)
13,109,976
-
(1,417,703)
11,692,273
7,432,499
2015
$
608,263
4,925,210
270,439
(45,510)
-
(1,207,782)
(2,057,106)
(1,796,800)
(92,694)
604,020
(259,529)
344,491
-
10,958
-
10,958
355,449
7,432,499
355,449
(1,121,101)
(242,331)
(316,127)
(1,679,559)
(96,154)
-
788,764
692,610
5,752,940
1,048,059
5,752,940
1,048,059
(1.5)
4.1
2.6
0.1
0.0
0.1
The above statement of comprehensive income should be read in conjunction with the accompanying notes.
CHALICE GOLD MINES | ANNUAL REPORT 2016
32
32
Consolidated Statement of Financial Position
Chalice Gold Mines Limited
Consolidated Statement of Financial Position
As at 30 June 2016
As at 30 June 2016
Current assets
Cash and cash equivalents
Trade and other receivables
Financial assets
Assets held for sale
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
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Retained earnings
Reserves
Total equity
Note
22
9
11
10
11
8
12
13
14
15
16
6
17
18(a)
18(b)
2016
$
35,733,786
209,932
25,421,978
520,078
61,885,774
202,908
968,333
296,609
274,733
1,742,583
2015
$
39,864,989
231,020
-
-
40,096,009
182,216
1,826,987
13,982,545
554,154
16,545,902
63,628,357
56,641,911
557,608
127,614
59,489
744,711
46,591
1,367,635
1,414,226
2,158,937
61,469,420
43,622,887
22,388,512
(4,541,979)
61,469,420
625,138
259,951
44,522
929,611
43,132
-
43,132
972,743
55,669,168
43,622,887
14,890,400
(2,844,119)
55,669,168
The above statement of financial position should be read in conjunction with the accompanying notes.
33
CHALICE GOLD MINES | ANNUAL REPORT 2016
33
Consolidated Statement of Changes in Equity
For the Year Ended 30 June 2016
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CHALICE GOLD MINES | ANNUAL REPORT 2016
34
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For the Year Ended 30 June 2016
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35
CHALICE GOLD MINES | ANNUAL REPORT 2016
Chalice Gold Mines Limited
Consolidated Statement of Cash Flows
For the year ended 30 June 2016
Consolidated Statement of Cash Flows
For the Year Ended 30 June 2016
Note
2016
$
Cash flows from operating activities
Cash receipts from operations
Cash paid to suppliers and employees
Income tax paid
Research and development tax credit
Interest received
Net cash used in operating activities
Cash flows from investing activities
Payments for mining exploration and evaluation
Payments associated with the sale of the Cameron Gold Project
Payments for business development activities
Deferred consideration received
Acquisition of the Dubenski Gold Project
Buy-back of Cameron Royalty
Acquisition of property, plant and equipment
Proceeds from sale of fixed assets
Net cash used in investing activities
Cash flows from financing activities
Share buy-back
Minimum shareholding buy-back
Net cash used in financing activities
Net 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
22
12
22
208,145
(1,188,498)
-
-
119,980
(860,373)
(5,155,365)
(543,503)
(1,350,974)
2,908,400
-
-
(47,796)
1,194
(4,188,044)
-
-
-
(5,048,417)
39,864,989
917,214
35,733,786
The above statement of cash flows should be read in conjunction with the accompanying notes.
2015
$
125,258
(2,114,343)
(379,043)
259,952
479,068
(1,629,108)
(2,822,084)
-
(1,823,283)
-
(725,321)
(2,075,327)
(120,765)
449,050
(7,117,730)
(311,124)
(206,295)
(517,419)
(9,264,257)
44,204,036
4,925,210
39,864,989
CHALICE GOLD MINES | ANNUAL REPORT 2016
36
36
Notes to the Concolidated Financial Statements
Chalice Gold Mines Limited
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2016
For the year ended 30 June 2016
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, West 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 2016.
(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 13 September 2016.
(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 applicable to 30 June 2016
For the year ended 30 June 2016, the Directors have reviewed all of the new and revised Standards and
Interpretations issued by the AASB that are relevant to the Group’s operations and that are effective for annual
reporting period. It has been determined that there is no impact, material or otherwise, of the new and revised
Standards and Interpretations on the Group and, therefore, no material change is necessary to Group accounting
policies. The Group has adopted the following new and amended Standards and AASB Interpretations as of 1
July 2015:
AASB 1057 Application of Australian Accounting Standards
AASB 2015-9 Amendments to Australian Accounting Standards – Scope and Application Paragraphs
AASB 2015-5 Amendments to Australian Accounting Standards – Investment Entities: Applying the
Consolidation Exception
AASB 2015-5 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB
101
AASB 2015-1 Amendments to Australian Accounting Standards – Annual Improvements to Australian
Accounting Standards 2012-2014 Cycle
AASB 2014-9 Amendments to Australian Accounting Standards – Equity Method in Separate Financial
Statements
AASB 2014-4 Amendments to Australian Accounting Standards – Clarification of Acceptable Methods of
Depreciation and Amortisation
AASB 2014-3 Amendments to Australian Accounting Standards – Accounting for Acquisitions in Joint Venture
Operations
37
37
CHALICE GOLD MINES | ANNUAL REPORT 2016
Chalice Gold Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2016
(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 2016-1 Amendments to Australian Accounting Standards – Recognition of Deferred Tax Assets for
Unrealised Losses
AASB 2016-2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB
107
AASB 9 Financial Instruments
AASB 2014-7 Amendments to Australian Accounting Standards arising from AASB 9
AASB 2014-8 Amendments to Australian Accounting Standards arising from AASB 9
Application of AASB 9 (December 2009) and AASB 9 (December 2010)
AASB 15 Revenue from Contracts with Customers
AASB 2014-5 Amendments to Australian Accounting Standards arising from AASB 15
AASB 2015-8 - Amendments to Australian Accounting Standards – Effective Date of AASB 15
AASB 2014-10 – Amendments to Australian Accounting Standards- Sale or Contribution of Assets between
an Investor and its Associate of Joint Venture
AASB 2015-10 – Amendments to Australian Accounting Standards- Effective Date of Amendments to AASB
10 and AASB 128
AASB 16 Leases
(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 controlled by the Group. The Group controls an entity when it is exposed to, or has rights
to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over
the 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
CHALICE GOLD MINES | ANNUAL REPORT 2016
38
38
Notes to the Consolidated Financial Statements
Chalice Gold Mines Limited
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2016
For the year ended 30 June 2016
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 interests 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.
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)
(ii)
(iii)
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.
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 15.
Impairment of available-for-sale financial assets
The Group follows the guidance of AASB 139 Financial Instruments: Recognition and Measurement to determine
when an available-for-sale asset is impaired. This determination requires significant judgment. In making this
judgement the Group evaluates, among other factors, the duration and extent to which the fair value of an
investment is less than its cost and the financial health of a short-term business outlook for the investee, including
factors such as industry and sector performance, changes in technology and operational and financing cash flows.
39
39
CHALICE GOLD MINES | ANNUAL REPORT 2016
Chalice Gold Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2016
(f) Foreign currency translation
The functional currency of the Company is Australian dollars 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 statements of comprehensive income 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.
(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)
(ii)
(iii)
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.
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.
Interest received
Interest income is recognised in the statement of comprehensive income as it accrues, using the effective interest
method. The interest expense component of finance lease payments is recognised in the statement of
comprehensive income using the effective interest method.
CHALICE GOLD MINES | ANNUAL REPORT 2016
40
40
Notes to the Consolidated Financial Statements
Chalice Gold Mines Limited
For the Year Ended 30 June 2016
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
(i)
Expenses
(i)
(ii)
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.
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
fixtures and fittings
motor vehicles
7%-40%
11%-22%
18.75%-25%
the residual value, if not insignificant, is reassessed annually.
Income taxes 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.
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
41
41
CHALICE GOLD MINES | ANNUAL REPORT 2016
Chalice Gold Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2016
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.
Impairment of assets other than financial assets
(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
CHALICE GOLD MINES | ANNUAL REPORT 2016
42
42
Notes to the Consolidated Financial Statements
Chalice Gold Mines Limited
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2016
For the year ended 30 June 2016
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 (l)).
(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 (l)).
(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.
43
CHALICE GOLD MINES | ANNUAL REPORT 2016
43
Chalice Gold Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2016
(i)
(ii)
(iii)
(iv)
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.
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.
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.
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.
(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.
CHALICE GOLD MINES | ANNUAL REPORT 2016
44
Notes to the Consolidated Financial Statements
Chalice Gold Mines Limited
For the Year Ended 30 June 2016
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
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.
Impairment of financial assets
(s)
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)
(ii)
(iii)
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.
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.
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 and tenement acquisition costs
Exploration, evaluation 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:
45
CHALICE GOLD MINES | ANNUAL REPORT 2016
45
Chalice Gold Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2016
(1)
(2)
the rights to tenure of the area of interest are current; and
at least one of the following conditions is also met:
(i)
the exploration and evaluation expenditures are expected to be recouped through successful
development and exploitation of the area of interest, or alternatively, by its sale; or
(ii) exploration and evaluation activities in the area of interest have not at the reporting date reached a
stage which permits a reasonable assessment of the existence or otherwise of economically recoverable
reserves, and active and significant operations in, or in relation to, the area of interest are continuing.
Exploration and evaluation expenditure is 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)
(ii)
(iii)
(iv)
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.
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.
Superannuation
Obligations for contributions to defined contribution pension plans are recognised as an expense in the
statement of comprehensive income as incurred.
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
CHALICE GOLD MINES | ANNUAL REPORT 2016
46
46
Notes to the Consolidated Financial Statements
Chalice Gold Mines Limited
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2016
For the year ended 30 June 2016
at note 15. 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.
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)
(ii)
Ordinary share capital
Ordinary shares and partly paid shares are classified as equity.
Transaction costs
Transaction costs of an equity transaction are accounted for as a deduction from equity, net of any related
income tax benefit
Investments in associates
(y)
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.
47
CHALICE GOLD MINES | ANNUAL REPORT 2016
47
Chalice Gold Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2016
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) Parent entity financial information
The financial information for the parent entity, Chalice Gold Mines Limited, disclosed in note 20 has been prepared on the
same basis as the consolidated financial statements.
CHALICE GOLD MINES | ANNUAL REPORT 2016
48
48
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2016
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49
CHALICE GOLD MINES | ANNUAL REPORT 2016
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2016
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C
CHALICE GOLD MINES | ANNUAL REPORT 2016
50
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2016
Chalice Gold Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
3.
Revenue and expenses
(a) Revenue
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
Redundancies and terminations
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
2016
$
2015
$
202,445
136,010
338,455
890
31,424
40,345
5,150
90,410
256,788
809,052
43,909
1,277,968
369,484
-
165,329
86,173
131,837
3,478
5,439
47,312
809,052
700,054
271,985
330,674
74,579
36,308
1,413,600
125,758
482,505
608,263
240
49,040
43,470
8,491
119,032
335,130
1,428,597
73,106
2,057,106
309,805
560,825
152,808
170,637
167,315
(927)
4,626
63,508
1,428,597
852,843
297,234
468,606
121,598
56,519
1,796,800
4.
(a)
Discontinued operations
Sale of the Cameron Gold Project, Ontario, Canada
On 10 June 2016, the Company completed the sale of the Cameron Gold Project in Ontario, Canada, through the sale
of its shares in the Company’s wholly owned subsidiary, Cameron Gold Operations Limited to First Mining Finance
Corp (“First Mining”), a mineral property holding company listed on the TSX-V(TSX-V: FF) for consideration of
32,260,836 common shares in First Mining. In addition, the Company also acquired a 1% Net Smelter Return royalty
over certain exploration licences within the Cameron Gold Project which are not encumbered by pre-existing
royalties.
51
CHALICE GOLD MINES | ANNUAL REPORT 2016
51
Chalice Gold Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2016
Consideration received
First Mining shares received
Total consideration
Less:
Net assets disposed of
Transaction costs
Profit on disposal before income taxes
Income tax expense
Profit on disposal after tax
Net assets at date of sale
The carrying amount of assets and liabilities as at date of sale were:
Trade and other receivables
Property , plant and equipment (note 13)
Exploration and evaluation expenditure (note 12)
Total assets
Trade and other payables
Total liabilities
Net assets
2016
$
27,013,950
27,013,950
16,144,308
668,066
10,201,576
(1,367,635)
8,833,941
2,790
167,716
15,973,802
16,144,308
-
-
16,144,308
2015
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(b) Deferred consideration – Sale of the Zara Gold Project, Eritrea
In January 2016, the Company received deferred consideration of US$2 million from China SFECO Group, following
first gold pour at the Zara Gold Project in Eritrea. The US$2 million represents the final tranche for the sale of
Chalice’s interest in the Zara Gold Project which was completed in 2012.
Deferred consideration
Profit on disposal before income tax
Income tax expense
Overprovision for income tax
Profit on disposal after tax
(c)
Total profit after tax from discontinued operations:
Cameron Gold Project
Zara Gold Project
5.
Auditor’s remuneration
Audit services
HLB Mann Judd:
Audit and review of financial reports
Other services
CHALICE GOLD MINES | ANNUAL REPORT 2016
2016
$
2,908,400
2,908,400
(50,068)
-
2,858,332
8,833,941
2,858,332
11,692,273
35,000
1,000
36,000
2015
$
-
-
-
10,958
10,958
-
10,958
10,958
43,000
-
43,000
52
52
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2016
Chalice Gold Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
6.
Income tax
The major components of income tax expense are as follows:
Current income tax:
Current income tax expense
Foreign exploration incentive tax credits
Deferred tax:
Temporary differences relating to available for sale investments
Total income tax reported in the statement of comprehensive income
2016
$
(50,068)
182,379
132,311
(1,367,635)
(1,235,324)
2015
$
(259,529)
-
(259,529)
-
(259,529)
The prima facie income tax expense on pre-tax accounting result on operations and discontinued operations
reconciles to the income tax expense in the financial statements as follows:
Accounting (loss)/profit from continuing operations
Accounting profit from discontinued operations
Income tax calculated at the Australian corporate rate of 30%
Non-deductible expenses
Share based payments
Non-assessable foreign income
Deferred tax assets and liabilities not recognised
Foreign exploration incentive tax credits
Research and development tax claim (payable)/benefit
Effect of differences in tax rates
Income tax expense reported in the statement of comprehensive
income
2016
$
(4,442,153)
13,109,976
8,667,823
2,600,347
815,799
14,194
(2,208,302)
483,216
(182,379)
-
(287,551)
2015
$
604,020
-
604,020
181,206
277,142
19,053
-
(477,401)
-
(259,529)
-
(1,235,324)
(259,529)
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
2016
$
3,785,240
1,209,714
4,994,954
-
(93,465)
(93,465)
2015
$
2,995,094
1,006,136
4,001,230
(338,048)
(1,997)
(340,045)
Income tax benefit not recognised directly in equity during the year:
Share issue costs
-
(3,830)
53
CHALICE GOLD MINES | ANNUAL REPORT 2016
53
Chalice Gold Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2016
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.
7.
Earnings per share
Basic and diluted earnings per share
The calculation of basic earnings per share for the year ended 30 June 2016 was based on the profit attributable to
ordinary equity holders of the parent of $7,432,499 (2015: $355,449) and a weighted average number of ordinary
shares outstanding during the year ended 30 June 2016 of 282,710,802 (2015: 284,997,126).
(Loss)/profit attributable to ordinary shareholders
(Loss)/profit attributable to ordinary equity holders of the parent from
continuing operations
Profit attributable to ordinary equity holders of the parent from
discontinued operations
Net profit attributable to ordinary equity holders of the parent for
basic earnings
Net profit attributable to ordinary equity holders of the parent
adjusted for the effect of dilution
2016
$
2015
$
(4,259,774)
344,491
11,692,273
10,958
7,432,499
355,449
7,432,499
355,449
Diluted earnings per share have not been disclosed as the impact from options and performance rights is anti-dilutive.
8.
Investment in associates
The Company has a 22.95% interest in unlisted Australian based GeoCrystal Limited (“GeoCrystal”). The principal
activity of the company is exploring diamonds in Australia.
Reconciliation of movements in investments in associates
Balance at 1 July
Revaluation of unlisted options
Impairment of investment in associate(1)
Share of associate’s gain/(loss)
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 gain/(loss) for the year
Share of associate’s gain/(loss)
CHALICE GOLD MINES | ANNUAL REPORT 2016
2016
$
1,826,987
(117,602)
(790,050)
48,998
968,333
4,261,213
(41,897)
4,219,316
968,333
181,725
213,500
48,998
2015
$
1,968,651
(96,154)
-
(45,510)
1,826,987
7,981,031
(95,891)
7,885,140
1,826,987
53,156
(196,418)
(45,510)
54
54
Notes to the Consolidated Financial Statements
Chalice Gold Mines Limited
For the Year Ended 30 June 2016
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
The associate had no contingent liabilities or assets at 30 June 2016 (30 June 2015: nil) and exploration commitments
payable within 1 year of $400,000 (2015: $408,000).
(1) At 30 June 2016, the directors reviewed the carrying value of the Company’s interest in unlisted GeoCrystal Limited
and having considered a number of factors, including market conditions and exploration results to date. Whilst
GeoCrystal has continued to identify and confirm the presence of microdiamond occurrences, the company is yet to
recover any macro diamonds in its exploration programs at the Webb Diamond Project. Therefore, the directors
have considered it prudent to impair the carrying value of the Company’s investment in GeoCrystal.
9.
10.
Trade and other receivables
Other trade receivables
Prepayments
Assets held for sale
Exploration and evaluation expenditure – Gnaweeda Project(1)
Exploration and evaluation expenditure – Ardeen Project(2)
2016
$
124,308
85,624
209,932
106,259
413,819
520,078
2015
$
142,971
88,049
231,020
-
-
-
(1)On 19 April 2016, the Company entered into a sale and purchase agreement to sell the Company’s 12% interest in
the Gnaweeda Project, Western Australia, Australia to Doray Minerals Limited (ASX: DRM) (“Doray”). The agreement
was subject to conditions precedent, which were satisfied in July 2016. On completion, in consideration the
Company received 400,000 shares in Doray.
(2)On 28 June 2016, the Company entered into a sale and purchase agreement to sell the Company’s 51% interest in
the Ardeen Project in Ontario, Canada to Kesselrun Resources Ltd (“Kesselrun”). The agreement was subject to
conditions precedent, which were satisfied in July 2016. On completion, in consideration the Company received
2,050,000 shares in Kesselrun.
11.
Financial assets
Current
Available for sale investments(1)
Non-current
Bond in relation to office premises
Bank guarantee and security deposits
2016
$
2015
$
25,421,978
25,421,978
69,912
132,996
202,908
-
-
66,628
115,588
182,216
(1)Available for sale investments represents 32,260,836 shares in First Mining Finance Corp (TSX-V:FFM). The shares
in First Mining were received in consideration for the sale of the Cameron Project on 10 June 2016 to First Mining.
Refer to note 4 for further details.
55
CHALICE GOLD MINES | ANNUAL REPORT 2016
55
Chalice Gold Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2016
12.
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 two thirds of a 3% royalty at the Cameron Project
Sale of the Cameron Gold Project (see note 4(a))
Transferred to assets held for sale (see note 10)
Exploration and evaluation assets written off
Effects of movements in exchange rate
Total exploration expenditure
2016
$
2015
$
13,982,545
5,016,791
-
(15,973,802)
(520,078)
(2,201,005)
(7,842)
296,609
9,056,705
3,383,788
2,075,327
-
-
(1,207,782)
674,507
13,982,545
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.
13.
Property, plant and equipment
Cost
Accumulated depreciation and impairment
Net carrying amount
Movements in property, plant and equipment:
At 1 July net of accumulated depreciation
Additions
Reclassified as discontinued operations (see note 4(a))
Disposals
Exchange differences
Depreciation charge for the year
At 30 June net of accumulated depreciation and impairment
14.
15.
Trade and other payables
Trade payables
Other payables
Accrued expenses
Employee benefits
Annual leave accrued
Provision for long service leave
CHALICE GOLD MINES | ANNUAL REPORT 2016
2016
$
2015
$
1,015,593
(740,860)
274,733
1,561,552
(1,007,398)
554,154
554,154
48,797
(167,716)
(5,442)
(6,243)
(148,817)
274,733
2016
$
7,138
58,739
491,731
557,608
2016
$
53,604
5,885
59,489
771,588
129,764
-
(200,083)
35,619
(182,734)
554,154
2015
$
27,521
47,702
549,915
625,138
2015
$
44,076
446
44,522
56
56
Chalice Gold Mines Limited
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2016
For the year ended 30 June 2016
(a)
Share based payments
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
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
$
2016
0.28
0.30
-
-
0.25
0.25
Weighted average
exercise price
$
2015
0.32
0.35
-
0.25
0.28
0.28
Number
of options
2016
1,550,000
(1,050,000)
-
-
500,000
500,000
Number
of options
2015
1,900,000
(850,000)
-
500,000
1,550,000
1,550,000
The options outstanding at 30 June 2016 have a weighted average exercise price of $0.25 (2015: $0.28) and a
weighted average contractual life of 3 years (2015: 3 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
2016
-
-
-
-
-
-
2015
$0.117
$0.25
38.2%
3 years
-
2.61%
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.
57
57
CHALICE GOLD MINES | ANNUAL REPORT 2016
Chalice Gold Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2016
(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 2016 was 9.2 cents per
performance right (2015: 11.7 cents).
A summary of performance rights in the Group and the Company is as follows:
30 June 2016:
Grant date
1 October 2014
17 November 2014
25 June 2015
25 November 2015
30 June 2015:
Grant date
5 June 2013
6 June 2013
1 October 2014
17 November 2014
25 June 2015
Opening
balance
3,388,357
142,350
3,783,673
-
7,314,380
Opening
balance
2,108,444
645,705
-
-
-
2,754,149
Granted
-
-
-
1,664,707
1,664,707
Vested
-
-
-
-
-
Lapsed/Forfeited
(1,640,675)
(142,350)
(1,378,826)
-
(3,161,851)
Granted
-
-
3,388,357
142,350
3,783,673
7,314,380
Vested
-
-
-
-
-
-
Lapsed/Forfeited
(2,108,444)
(645,705)
-
-
-
(2,754,149)
Share
price at
date of
issue
($)
0.13
0.11
0.11
0.11
Share
price at
date of
issue ($)
0.16
0.17
0.13
0.11
0.11
Closing
balance
1,747,682
-
2,404,847
1,664,707
5,817,236
Closing
balance
-
-
3,388,357
142,350
3,783,673
7,314,380
The fair value of performance rights granted during 2016 were determined using a binomial option pricing model which
takes into account the impact of vesting conditions and the fact that the rights may never vest.
CHALICE GOLD MINES | ANNUAL REPORT 2016
58
58
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2016
Chalice Gold Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
The following table gives the assumptions made in determining the fair value of the performance rights granted during
the year.
16.
17.
Share price at grant date
Exercise price
Expected volatility
Performance period (years)
Vesting period (years)
Expected dividends
Risk-free interest rate
Share based payment transactions
The expense recognised during the year is shown in the following table:
Share options granted in 2015 – equity settled
Performance rights granted in 2015
Performance rights granted in 2016
Total expenses recognised as personnel expenses
Other Liabilities
Non-current
Lease make good provision
2016
$0.11
Nil
47%
3
3
-
2.11%
2016
$
-
-
47,312
47,312
2015
$0.12
Nil
42.7%
3
3
-
2.34%
2015
$
4,593
58,915
-
63,508
46,591
46,591
43,132
43,132
Issued Capital
There were 282,710,802 shares on issue at 30 June 2016 (2015: 282,710,802).
(a) Movements in ordinary shares on issue
2016
2015
Balance at beginning of financial year
Share buy-back
Minimum holding share buy-back
Balance at end of financial year
No.
282,710,802
-
-
282,710,802
$
43,622,887
-
-
43,622,887
No.
287,491,719
(3,000,000)
(1,780,917)
282,710,802
$
44,140,306
(311,124)
(206,295)
43,622,887
Issuance of Ordinary Shares
Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one
vote per share at shareholders’ meetings. In the event of winding up of the Company, the ordinary shareholders rank
after all other shareholders and creditors and are fully entitled to any proceeds on liquidation.
(b) Share options
On issue at 1 July
Options exercised during the year
Options lapsed during the year
Options issued during the year
On issue at 30 June
2016
No.
1,550,000
-
(1,050,000)
-
500,000
2015
No.
1,900,000
-
(850,000)
500,000
1,550,000
At 30 June 2016 the Company had 500,000 unlisted options on issue under the following terms and conditions:
Number
Expiry Date
500,000
31 October 2017
Exercise Price
$
0.25
59
59
CHALICE GOLD MINES | ANNUAL REPORT 2016
Chalice Gold Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2016
(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
2016
No.
7,314,380
1,664,707
-
(3,161,851)
5,817,236
2015
No.
2,754,149
7,314,380
-
(2,754,149)
7,314,380
At 30 June 2016 the Company had 5,817,236 performance rights on issue under the following terms and conditions:
Number
Terms
1,747,682
4,069,554
The number of performance rights that will vest will
be solely dependent on the Company’s share price
as at the measurement date of 30 June 2016 as
compared to the Share price hurdles outlined in the
Remuneration Report.
The number of performance rights that will vest will
be solely dependent on the Company’s share price
as at the measurement date of 30 June 2017 as
compared to the Share price hurdles outlined in the
Remuneration Report.
Expiry Date
30 June 2018
30 June 2019
Exercise Price
$
-
-
18.
Retained earnings and reserves
(a) Movements in retained earnings attributable to owners of the parent:
Balance at beginning of financial year
Profit for the year attributable to owners of the parent
Transfers between equity items
Balance at end of financial year
2016
$
14,890,400
7,432,499
65,613
22,388,512
2015
$
14,421,779
355,449
113,172
14,890,400
Share-based payments reserve
(b) Nature and purpose of reserves
Other capital reserves
(i)
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 15 for
further details of these plans.
Foreign currency translation reserve
All other reserves as stated in the consolidated statement of changes in equity
(ii)
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.
Investment revaluation reserve
(iii)
The investment revaluation reserve comprises the cumulative net change in the fair value of available-for-sale financial
assets and investments in associates until the investments are derecognised or impaired.
CHALICE GOLD MINES | ANNUAL REPORT 2016
60
60
Notes to the Consolidated Financial Statements
Chalice Gold Mines Limited
For the Year Ended 30 June 2016
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
19.
Financial instruments
(a) Capital risk management
The capital structure of the Group consists of equity attributable to equity holders, comprising issued capital, reserves
and retained earnings as disclosed in notes 17 and 18.
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 2016, Chalice had approximately US$18 million (A$23.5 million) cash on hand in US$
denominated bank accounts.
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%
2016
$
(2,138,231)
2,352,054
(2,138,231)
2,352,054
2015
$
(3,205,290)
3,525,819
(3,205,290)
3,525,819
In addition to the above foreign exchange exposure on the Group’s cash balance, the Group is also exposed to
movements in CAD against AUD in relation to its holding in First Mining Shares.
The following table summarises the impact of increases/decrease in the relevant foreign exchange rates on the
Group’s post-tax result for the year and on the components of equity. The sensitive analysis uses a variance of 10%
movement in the CAD against AUD.
Impact on gain/(loss)
Impact on equity
AUD/CAD +10%
AUD/CAD -10%
AUD/CAD +10%
AUD/CAD -10%
2016
$
(2,311,089)
2,542,197
(2,311,089)
2,542,197
2015
$
-
-
-
-
(ii) Equity prices
The Group has exposure to equity prices through its holding of First Mining Finance Corp common shares. The
following table outlines the impact of increases/decreases in the value of the Company’s holding in First Mining
shares 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 upwards and down on the year end closing share price on the Company’s shares in First
Mining.
61
CHALICE GOLD MINES | ANNUAL REPORT 2016
61
Chalice Gold Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2016
Impact on gain/(loss)
Impact on equity
Share price +10%
Share price -10%
Share price +10%
Share price -10%
2016
$
2,542,198
(2,310,298)
2,542,198
(2,310,298)
2015
$
-
-
-
-
(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.
The Group considers preservation of capital as the primary objective as opposed to maximising interest rate yields
by investing in higher risk investments.
At reporting date, the following financial assets were exposed to fluctuations in interest rates:
Cash and cash equivalents
2016
$
35,733,786
2015
$
39,864,989
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 2016, 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
2016
$
356,370
(356,370)
356,370
(356,370)
2015
$
398,079
(398,079)
398,079
(398,079)
(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. In addition, the Company currently diversifies its cash holdings across three of the
main Australian financial institutions.
CHALICE GOLD MINES | ANNUAL REPORT 2016
62
62
Notes to the Consolidated Financial Statements
Chalice Gold Mines Limited
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2016
For the year ended 30 June 2016
(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 $557,608 (2015:
$625,138) all of which are due within 60 days.
In light of the Group’s current financial assets and low expenditures relative to those assets, the Group could continue
to operate as a going concern for a considerable period of time, subject to any changes to the Group structure or
undertaking a material transaction.
(e) Fair value of financial instruments
The Directors consider the carrying value of the financial assets and financial liabilities are recognised in the
consolidated financial statements approximate their fair values. In particular, available for sale investments which
represents 32,260,836 shares in TSX-V listed First Mining Finance Corp (refer note 11) is measured at fair value using
quoted market prices at the reporting date (Level 1 fair value measurement).
The directors have assessed that the fair value of cash and short-term deposits, trade receivables, trade payables and
other current liabilities approximate their carrying amounts largely due to the short-term maturities of these
instruments.
20.
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
2016
$
2015
$
35,908,701
28,278,498
64,187,199
39,955,881
23,365,507
63,321,388
867,041
29,674,415
30,541,456
473,715
28,284,446
28,758,161
33,645,743
34,563,227
43,622,888
(10,156,702)
179,557
33,645,743
43,622,888
(9,257,521)
197,860
34,563,227
2016
$
2015
$
(965,227)
(965,227)
(1,656,610)
(1,656,610)
63
63
CHALICE GOLD MINES | ANNUAL REPORT 2016
Chalice Gold Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2016
Commitments and contingencies
(i) Contingencies
Other than as disclosed in note 21, the parent entity has no contingent assets or liabilities.
(ii) Operating lease commitments
Within 1 year
Within 2-5 years
Later than 5 years
2016
$
184,819
801,744
-
986,563
2015
$
345,567
350,441
-
696,008
21.
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. Due to the
nature of the Group’s operations in exploration and evaluation areas of interests, it is difficult to accurately forecast
the nature or amount of expenditure, and these obligations are subject to renegotiation when application for a mining
lease is made and at other times. Therefore amounts stated are based on the maximum commitments known within
the next 1 to 2 years. 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
There are no contingent assets at 30 June 2016.
22.
Cash and cash equivalents
Bank balances
Term deposits
Petty cash
2016
$
400,000
258,276
-
658,276
2016
$
203,557
801,744
-
1,005,301
2016
$
25,732,027
10,000,000
1,759
35,733,786
2015
$
394,874
630,540
-
1,025,414
2015
$
345,567
350,441
-
696,008
2015
$
18,645,120
21,213,621
6,248
39,864,989
CHALICE GOLD MINES | ANNUAL REPORT 2016
64
64
Notes to the Consolidated Financial Statements
Chalice Gold Mines Limited
For the Year Ended 30 June 2016
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
Reconciliation of cash flows from operating activities
(Loss)/Profit after tax from continuing operations
Profit after tax from discontinuing operations
Profit after tax
Adjustments for:
Depreciation and amortisation
Business development costs
Income tax (benefit)/expense
Profit from discontinued operations
Gain on sale of plant and equipment
Foreign exchange gains
Exploration and evaluation assets written off
Share of associate’s (net gain)/loss
Impairment of investment in associate
Equity-settled share-based payment expenses
Operating loss before changes in working capital and provisions
(Increase)/decrease in trade and other receivables
(Increase)/decrease in financial assets
(decrease)/Increase in trade creditors and other liabilities
(decrease)/increase in provisions
Net cash used in operating activities
2016
$
(4,259,774)
11,692,273
7,432,499
64,197
1,413,600
(182,379)
(11,692,273)
-
(917,214)
2,201,005
(48,998)
790,050
47,312
(892,201)
10,751
(5,140)
13,839
12,378
(860,373)
2015
$
344,491
10,958
355,449
92,694
1,796,800
259,951
(10,958)
(270,439)
(4,925,210)
1,207,782
45,510
-
63,508
(1,373,955)
122,383
47,456
(397,858)
(27,134)
(1,629,108)
23.
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 (Managing Director)
Non-executive Directors
A W Kiernan (Chairman)
S P Quin
M S Ball (appointed 24 June 2016)
Executives
R K Hacker (Chief Financial Officer)
G Snow (Chief Operating Officer) (ceased employment 18 March 2016)
K M Frost (General Manager – Exploration) (commenced 1 March 2016)
The KMP compensation is as follows:
Short-term employee benefits
Post-employment benefits
Termination benefits
Long term benefits
Share-based payment
2016
$
1,224,950
101,632
-
-
121,274
1,447,856
2015
$
1,317,084
147,719
549,609
4,605
98,504
2,117,521
65
65
CHALICE GOLD MINES | ANNUAL REPORT 2016
Chalice Gold Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2016
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2016
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
A W Kiernan
Liontown Resources Limited
Uranium Equities Limited
PhosEnergy Limited
Consulting services
Corporate services
Corporate services
Corporate services
Note
(i)
(ii)
(ii)
(ii)
2016
$
40,500
(66,000)
(66,000)
(24,436)
2015
$
72,500
(66,000)
(49,500)
(10,000)
(i)
(ii)
The Group used the consulting 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.
The Group supplied corporate services including accounting and company secretarial services under a
Corporate Services Agreement to Liontown Resources Limited (“LTR”), Uranium Equities Limited (“UEL”) and
PhosEnergy Limited (“PEL”). Mr Goyder is a director of LTR, UEQ and PEL. Mr Kiernan is a director of PEL.
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
2016
$
(15,000)
12,800
(2,200)
2015
$
(6,000)
19,050
13,050
CHALICE GOLD MINES | ANNUAL REPORT 2016
66
66
Notes to the Consolidated Financial Statements
Chalice Gold Mines Limited
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2016
For the year ended 30 June 2016
24.
Related party disclosure
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:
Country of
Incorporation
% Equity Interest
2015
2016
Investment
$
2016
2015
Name
Parent entity
Chalice Gold Mines Limited
Subsidiaries
Chalice Operations Pty Ltd (i)
Chalice Gold Mines (Eritrea) Pty Ltd
Western Rift Pty Ltd (ii)
CGM Minerals Pty Ltd
CGM (Lithium) Pty Ltd
Australia
Australia
Australia
Australia
Australia
Australia
(i) Subsidiaries of Chalice Operations Pty Ltd
Keren Mining Pty Ltd
Universal Gold Pty Ltd
Australia
Australia
Sub-Sahara Resources (Eritrea) Pty Ltd
Australia
(ii) Subsidiaries of Western Rift Pty Ltd
Chalice Gold Mines (Ontario) Inc.(iii)
Coventry Rainy Inc.
Coventry Ontario Inc.
(iii) Subsidiaries of Chalice Gold Mines
(Ontario) Inc.
Cameron Gold Operations Ltd(1)
Chalice Gold Mines (Quebec) Inc.
Chalice Gold Mines (Exploration) Inc.
Canada
Canada
Canada
Canada
Canada
Canada
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
6,802,388
-
20,000
1
1
6,802,388
-
20,000
-
-
-
1,358,223
-
1,358,223
-
-
5,551,687
1,402,414
415,313
5,551,687
1,402,414
415,313
-
1.04
1.04
5,709,942
1.24
1.24
(1)On 10 June 2016, the Company sold its wholly owned subsidiary, Cameron Gold Operations Ltd, which held the
Cameron Gold Project, to First Mining Finance Corp (refer note 4(a) for further details).
25.
Events subsequent to reporting date
On 4 July 2016, the Company commenced acquiring shares via the Company’s on-market share buy-back facility. To
date the Company has acquired 12,430,000 shares on market for a total value of $2.3 million. At the date of this
report, the Company’s total shares on issue was 270,280,802.
On 4 July 2016, the Company completed the sale of the Gnaweeda project and in consideration, the Company
received 400,000 shares in Doray Mining Limited. In addition, the sale of the Ardeen Project completed and the
Company received 2,050,000 shares in Kesselrun Resources Inc.
67
CHALICE GOLD MINES | ANNUAL REPORT 2016
67
Chalice Gold Mines Limited
Directors’ Declaration
Directors’ Declaration
1.
In the opinion of the directors of Chalice Gold Mines Limited (the ‘Company’):
a.
the financial statements, notes and the additional disclosures in the directors’ report designated as audited,
of the Group are in accordance with the Corporations Act 2001 including:
i. giving a true and fair view of the Group’s financial position as at 30 June 2016 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 be that the Company will be able to pay its debts as and when they become
due and payable.
The 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 2016.
This declaration is signed in accordance with a resolution of the Board of Directors.
Dated at Perth the 13th day of September 2016
Signed in accordance with a resolution of the Directors:
Tim Goyder
Managing Director
CHALICE GOLD MINES | ANNUAL REPORT 2016
68
68
Independent Auditor’s Report
INDEPENDENT AUDITOR’S REPORT
To the members of Chalice Gold Mines Limited
Report on the Financial Report
We have audited the accompanying financial report of Chalice Gold Mines Limited (“the company”), which
comprises the consolidated statement of financial position as at 30 June 2016, the consolidated statement of
comprehensive income, the consolidated statement of changes in equity and the consolidated statement of
cash flows for the year then ended, notes comprising a summary of significant accounting policies and other
explanatory information, and the directors’ declaration of the Group comprising the company and the entities
it controlled at the year’s end or from time to time during the financial year.
Directors’ responsibility for the financial report
The directors of the company are responsible for the preparation of the financial report that gives a true and
fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such
internal control as the directors determine is necessary to enable the preparation of the financial report that
gives a true and fair view and is free from material misstatement, whether due to fraud or error.
In Note 1(b), the directors also state, in accordance with Accounting Standard AASB 101: Presentation of
Financial Statements, the consolidated financial statements comply with International Financial Reporting
Standards.
Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit
in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical
requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance
about whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the
risks of material misstatement of the financial report, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the Group’s preparation of the financial report
that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of 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.
69
CHALICE GOLD MINES | ANNUAL REPORT 2016
72
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 Group’s financial position as at 30 June 2016 and its performance
for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b)
the financial report also complies with International Financial Reporting Standards as disclosed in Note
1(b).
Report on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2016.
The directors of the company are responsible for the preparation and presentation of the Remuneration Report
in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on
the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
Auditor’s opinion
In our opinion, the Remuneration Report of Chalice Gold Mines Limited for the year ended 30 June 2016
complies with section 300A of the Corporations Act 2001.
HLB Mann Judd
Chartered Accountants
Perth, Western Australia
13 September 2016
L Di Giallonardo
Partner
CHALICE GOLD MINES | ANNUAL REPORT 2016
73
70
ASX Additional Information
Chalice Gold Mines Limited
ASX Additional Information
Additional information required by the Australian Securities Exchange Limited Listing Rules and not disclosed elsewhere in
this report is set out below.
Shareholdings
Substantial shareholders
The number of shares held by substantial shareholders advised to the Company and their associated interests as at
12 September 2016 were:
Shareholder
Timothy Rupert Barr Goyder
Franklin Resources Inc
Number of ordinary
shares held
43,827,765
31,107,008
Percentage of
capital held
%
16.22
11.51
Class of shares and voting rights
At 12 September 2016 there were 1,645 holders of the ordinary shares of the Company, 1 holder of unlisted share options
and 6 holders of performance rights. The share options and performance rights have been granted under the Company’s
Employee Share Option Plan and Employee Long Term Incentive Plan.
The voting rights to the ordinary shares set out in the Company’s Constitution are:
“Subject to any rights or restrictions for the time being attached to any class or Classes of shares -
a)
b)
at meetings of members or classes of members each member entitled to vote in person or by proxy or
attorney: and
on a show of hands every person who is a member has one vote and on a poll every person in person or by
proxy or attorney has one vote for each ordinary share held.”
Holders of options or performance rights do not have voting rights.
Distribution of equity security holders as at 12 September 2016:
Category
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Number of equity security holders
Ordinary
Shares
107
219
431
724
164
1,645
Unlisted Share
Options
-
-
-
-
1
1
Performance
Rights
-
-
-
-
6
6
The number of shareholders holding less than a marketable parcel at 12 September 2016 was 183.
71
CHALICE GOLD MINES | ANNUAL REPORT 2016
71
Chalice Gold Mines Limited
ASX Additional Information
ASX Additional Information
Twenty largest Ordinary Fully Paid Shareholders
as at 12 September 2016
Name
Timothy R B Goyder
National Nominees Limited
J P Morgan Nominees Australia Limited
Citicorp Nominees Pty Limited
ABN Amro Clearing Sydney Nominees Pty Ltd
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