chalice
Annual
Financial
30 JUNE 2019
Report
CHALICE
GOLD MINES LIMITED
Contents
Chairman’s Letter
Operating and Financial Review
Mineral Resource Statement
Tenement Schedules
Directors’ Report
Corporate Governance Statement
Auditor’s Independence Declaration
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Contents of the Notes to the Financial Statements
Notes to the Consolidated Financial Statements
Directors’ Declaration
Independent Auditor’s Report
ASX Additional Information
1
3
15
17
19
36
37
38
39
40
41
42
43
70
71
75
Directors
Tim Goyder
Alex Dorsch
Morgan Ball
Stephen Quin
Executive Chairman
Managing Director
Independent Non-executive Director
Independent Non-executive Director
Company Secretary
Jamie Armes
Principal Place of Business & Registered Office
Level 2, 1292 Hay Street
WEST PERTH WA 6005
Tel:
Fax:
Web: www.chalicegold.com
Email: info@chalicegold.com
(+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
130 King Street West,
Toronto, Ontario M5X 1J2
OTCQB
300 Vesey Street, 12th Floor
New York, NY 10282
Share Registry Australia
Computershare Investor Services Pty Limited
Level 11, 172 St Georges Terrace
PERTH WESTERN AUSTRALIA 6000
Tel: 1300 850 505
Share Registry Canada
Computershare Investor Services
100 University Avenue, 8th Floor
Toronto, Ontario M5J 2Y1
Tel: +1 416 263 9200
ASX Share Code: CHN
TSX Share Code: CXN
OTCQB Share Code: CGMLF
The Pyramid Hill Gold Project is now firmly on the map
in the hotly contested Bendigo Zone of Victoria – a
region that has produced more than 60Moz of high-
grade gold. During the year, we continued to expand
the Project, with Chalice now having over 5,000km2
under licence, all 100% owned. This district-scale
exploration footprint sits adjacent to one of the world’s
most profitable gold mines, Kirkland Lake Gold’s
Fosterville Mine, and
represents an outstanding
opportunity for high-grade gold discovery in Australia
under shallow cover.
Chalice has made rapid progress on the Project in a
short timeframe, successfully completing over 39km of
drilling since November 2018. While exploration is still in
its early stages, we are very encouraged by the large-
scale targets we have defined thus far. We are
currently preparing for the next phase of drilling which
is due to start in late September, and I look forward to
providing further updates in the months ahead.
Our exploration progress at Pyramid Hill has coincided
with a period of strength for the gold sector, with the
Australian Dollar gold price recently touching record
highs. I believe Chalice’s proven business model in
successful gold exploration and development positions
the Company well to capitalise on this supportive
environment.
While gold continues to remain a key focus, Chalice
has also been active in identifying and securing growth
opportunities in nickel. The successful acquisition of the
Ruins Nickel Sulphide Project in the west Kimberley
region of WA was an example of this, forming the
cornerstone of our new King Leopold Nickel Project,
which gives us a district-scale 1,800km2 footprint in this
largely unexplored, frontier province.
The project represents an exciting new nickel sulphide
discovery opportunity and we have already made
great progress in advancing the project to drill-ready
status.
front, the board was
On the corporate
further
strengthened with the appointment of Alex Dorsch as
Managing Director in November 2018. Alex previously
held the role of Chief Executive Officer and the refined
strategic direction for Chalice and growing market
profile is a testament to his hard work. I would like to
thank him and his excellent team of hard-working staff
for their efforts during the year, and to congratulate
them for the success they have achieved.
I would also like to take this opportunity to thank all our
shareholders and my fellow directors and executives for
their continued and valued support.
Underpinned by a strong balance sheet, some quality
assets and a clear strategic direction, Chalice is in a
for
great position to continue to deliver value
shareholders into next year and beyond.
Yours faithfully,
Tim Goyder
Executive Chairman
Tim Goyder
Executive Chairman
Dear Fellow Shareholder,
I am pleased to report on what has been a very active
and positive year for Chalice, both operationally and
financially.
High impact exploration along with timely project
acquisitions and divestments remain at the core of our
strategy for continued business growth. The significant
advances made in both respects during 2019 have
started to be reflected in our market capitalisation
which, in our view, still undervalues the Company when
considering our strong financial position.
Our business model has a strong track record of value-
creation, and Chalice delivered on this once again in
2019 with a capital return to shareholders of ~$10.7
million in December 2018.
The subsequent sale of our Canadian Projects to O3
Mining Inc for ~3.1 million shares and a partial 1% royalty
in July 2019 marked another milestone
for the
Company – further strengthening our balance sheet
while also allowing Chalice to simplify and refine its
focus on home soil.
The global deficit in tier-1 scale mineral discoveries
(those with an NPV of >US$1bn) continues to present a
challenge for the industry. Worldwide, these major
discoveries now represent less than 2% of all discoveries,
and I believe there is a compelling long-term value
proposition in hunting for the next major find. As a result,
our focus for the year ahead will remain firmly on
exploring for greenfield discoveries in frontier high-
grade gold and nickel provinces.
for discovery and value creation
Our Australian portfolio now includes two district-scale
exploration projects, both of which present significant
potential
for
shareholders. We have continued our refined business
strategy and are not afraid of undertaking large scale
exploration in greenfield, underexplored terranes in tier-
1 jurisdictions.
Over the 2019 financial year, Chalice made significant
progress towards achieving the Company Vision – to
discover and grow to become a globally recognised
specialist explorer and developer. Chalice’s primary
business activities are mineral exploration, where it aims
to deliver superior returns for shareholders utilising its
proven business model. The Company’s three-part
strategy set in the 2018 financial year continued to yield
positive results.
Our growth strategy remains focused on tier-1 scale
(>US$1bn NPV), high-grade gold and nickel exploration
opportunities. Our flagship Pyramid Hill Gold Project in
Victoria and recent acquisition of the King Leopold
Nickel Project in the west Kimberley region of WA have
the potential to meet this targeted portfolio mix.
strong
The Company continues
to evaluate acquisition
opportunities, given its advantageous financial position
and
The business
technical capabilities.
development approach remains focused on internally
driven opportunities with an owner’s mindset in project
evaluation. Chalice continues to have a strong
emphasis on commercial feasibility and low-cost, high
reward exploration in world-class jurisdictions.
On delivering value from existing assets, the Company’s
active portfolio management strategy has continued
to deliver positive outcomes. The Company’s strategy
of optioning or acquiring projects, testing for large-
scale discoveries, in as short a timeframe as possible
and then reaching a commercial decision point
remains on track.
Chalice’s exploration portfolio has seen several major
changes over the year, most notably the sale of the
Company’s two Canadian gold projects to O3 Mining
Inc. (TSX-V: OIII), a new venture led by major Quebec
based gold company Osisko Mining Inc. (TSX: OSK). The
sale of the East Cadillac and Kinebik Gold Projects
marked a successful exit from Canada and allows
Chalice to focus on its growing portfolio of opportunities
in Australia.
Our two district-scale gold and nickel projects in
Victoria and Western Australia remain the focus over
the coming year. Significant progress has been made
in early stage targeting and reconnaissance work at
both projects in 2019 and this provides an ideal
platform for potential discoveries in the year ahead. A
substantial exploration budget has been approved for
the upcoming year, with a staged expenditure
approach, based on results. The Company’s strong
balance sheet ensures it is well funded for the next
phases of exploration.
The Company cautions key risks associated with
external factors (movements in commodity prices,
foreign exchange rates, interest rates and equity
markets) may adversely impact the achievement of
the aforementioned Company objectives.
A U S T R A L I A
King Leopold
Nickel Project
(85-100%)
Warrego North
Copper-Gold Project
(70-100%)
Flinders River
Vanadium Project
(100%)
Barrabarra
Nickel Project
(100%)
Julimar Nickel
Project (100%)
SW Nickel
Project (100%)
Mt Jackson Gold
Project (100%)
Auralia Nickel-Copper-
Gold Project (100%)
Nulla South & Gibb Rock Gold
JVs (Ramelius earning 75%)
Pyramid Hill
Gold Project
(100%)
Royalties
Strategic Investments
•
•
•
•
•
Nyanzaga, Tanzania – A$5 million payment
receivable upon commercial production
•
•
~3.1 million shares (~7%) in O3 Mining Inc. (TSX-V: OIII)
~72 million shares (~5%) in Spectrum Metals (ASX: SPX)
from Orecorp Limited (ASX: ORR)
East Cadillac, Quebec – 1.0% NSR (partial)
Kinebik, Quebec – 1.0% NSR
Ardeen, Ontario – 0.12-1.0% NSR (partial)
Cameron, Ontario – 1.0% NSR (partial)
Key Project
Generative Project (reconnaissance and targeting)
Non-Operated Joint Venture
Figure 1: Chalice’s Project, Royalty and Investment Portfolio.
Pyramid Hill Gold Project, VIC
Generative Projects
• Chalice’s
portfolio
several
generative exploration opportunities, non-
operated
strategic
investments and royalties (Figure 1).
ventures,
includes
joint
•
Company
completed
geochemistry
several
The
reconnaissance
and
geophysical programs on our Generative
Projects in 2019, with the aim of maintaining
a pipeline of future greenfield discovery
opportunities.
Corporate
• Chalice maintains a
financial
position, with ~$21.2 million
in working
capital and liquid investments at 30 June
2019 (~$0.08 per share).
strong
•
•
•
•
•
Subsequent to year-end, Chalice was issued
~3.1 million shares in O3 Mining Inc. (TSX-V:
OIII) and purchased ~72 million shares in
Spectrum Metals Limited (ASX: SPX).
In November 2018, Alex Dorsch was
appointed to the Board as Managing
Director. Mr Dorsch was previously
appointed Chief Executive Officer in March
2018.
In December 2018, Chalice completed a
capital return to shareholders of $0.04 per
share, for a total of ~$10.7 million.
In June 2019, the Australian Taxation Office
published a final Class Ruling (CR 2019/37) in
relation to the Company’s December 2018
equal capital return and reduction. The
Class Ruling confirms that no portion of the
capital return will be deemed to be a
dividend for the class of entities to which the
Class Ruling applies.
In 2019, Chalice spent ~$9.0 million on
exploration
on
administration, business development and
corporate costs.
~$3.1 million
and
• Maiden ~39,000m
reconnaissance AC
drilling program successfully completed, as
well as regional scale soil sampling and
ground gravity surveys.
• Drilling to date has defined three large-scale
targets outlined on wide-spaced drill lines
under shallow cover.
• Multiple anomalous gold intersections in the
highly weathered top of basement over
these targets indicate the gold is from a
primary bedrock source.
•
This successful first phase of exploration has
now provided the Company several areas
of interest for the next phase of drilling to
commence in late Q3 2019.
• Chalice has continued
to significantly
expand our licence holding in the region,
now a district-scale 5,140km2 area.
King Leopold Nickel Project, WA
•
•
Successful acquisition of the Ruins Nickel
Sulphide Project expands the King Leopold
Project to a district-scale 1,800km2 in the
frontier west Kimberley region of WA.
The Project represents an exciting new
nickel
sulphide exploration opportunity
along strike from an isolated high-grade Ni-
Cu-Co discovery.
• Ground based and airborne EM surveys
were completed
in July-August 2019,
providing drill targets for the upcoming
maiden drill program to commence in late
Q3 2019.
East Cadillac Gold Project, Quebec
•
•
•
East Cadillac and Kinebik Gold Projects in
Quebec sold to O3 Mining Inc. (TSX-V: OIII)
for 3.1 million shares, a partial 1.0% NSR
royalty and ~C$1.3 million in cash (payable
at end CY 2019).
The O3 Mining
further
strengthens Chalice’s balance sheet and
allows
its
opportunities in Australia.
the company
transaction
focus on
to
The sale follows two successful regional
geochemistry, geophysics and diamond
drilling campaigns totalling ~35,000m, which
resulted in the expansion of two existing
advanced prospects along strike and down
plunge, as well as
three new gold
discoveries.
• Given the relatively high cost of exploration
and new focus on exploration opportunities
in Australia, the decision was made to sell
the Quebec Projects and retain upside
exposure through shares and royalties.
Project Background
Exploration Activities
further
strengthened
Chalice
the
Company’s position as a major player in
the Bendigo Zone following the grant of 5
additional Exploration Licences over the
course of the year, making the Pyramid Hill
Gold Project a truly district-scale project
with a total area of ~5,140km2.
In November 2018,
the Company
commenced a maiden reconnaissance
aircore (AC) drilling program designed to
initial shallow test of soil
provide an
geochemical, gravity and
structural
identify areas of
targets, and
anomalous
associated
pathfinder elements – providing potential
vectors to large-scale mineralised gold
systems (Figure 3).
to
gold
and
The Company completed ~39,000m of
AC drilling from November 2018 to June
2019, successfully outlining three new
large-scale targets under shallow cover
(Figure 4).
The 100%-owned Pyramid Hill Gold Project was staked in 2017 and now
covers an area of ~5,140km2 in the Central Goldfields region of Victoria;
one of the most exciting, underexplored high-grade gold provinces
worldwide. The Project encompasses three key districts within the Murray
Basin covered North Bendigo and North Stawell Zones: Muckleford, Mt
William and Percydale (Figure 2).
The central Muckleford Area extends to the north-west of the high-grade
historic >22Moz Bendigo Goldfield. The Mt William Area extends to the
north-east of one of the world’s highest-grade and lowest cost
producing gold mines, the >8Moz Fosterville Gold Mine owned by
Kirkland Lake Gold (NYSE / TSX: KL | ASX: KLA). The Percydale Area is
located north-west of the historical St Arnaud Goldfield within the Stawell
Zone.
The ‘Gold Undercover1’
initiative by the Victorian Government
estimated a potential ~32Moz (P50 mean case) of undiscovered gold
beneath Murray Basin cover in the Bendigo Zone, where Chalice holds
~60% of the total ~7,000km2 prospective area.
Figure 2. Pyramid Hill Gold Project tenure, regional land holders, gold
deposits and occurrences.
Figure 3. Conceptual cross section of Phase 1 AC drilling approach, mineralised halo and secondary dispersion
targeting (representative scale) 2.
Figure 4. Muckleford Area Phase 1 AC drilling results over 1VD gravity geophysics.
The newly defined Ironbark, Karri and Beech
Targets are defined by anomalous gold
intersections in highly weathered Castlemaine
Group sediments, directly beneath the Murray
Basin cover interface, indicating the gold is from
a primary bedrock source.
• Ironbark Target shallow gold intersections up to
1.1g/t Au under 25-75m of Murray Basin cover,
within a ~380m diameter diorite intrusion, co-
incident with a large >5ppb gold-in-soil anomaly
(Walhalla-Woods Point style target).
• Karri Target shallow gold intersections up to
0.66g/t Au over ~15km of strike, under 50-70m of
Murray Basin cover, ~20km west of Four Eagles
(typical Bendigo style target) .
• Beech Target outlined by highly anomalous As
and Sb (gold pathfinders) in basement, ~25km
north-west of Bendigo (~22Moz Au) along the
Sebastian Fault.
Similar shallow, anomalous gold intercepts on
wide-spaced drill lines has led to significant gold
discoveries undercover by other explorers in the
region.
Figure 5. Ironbark Target Phase 1 AC drilling and soil geochemistry
results over 1VD RTP aeromagnetics.
Future Exploration
A ~25,000m Phase 2 AC drilling program is
planned at the Karri, Ironbark and Beech
Targets, which aims to further refine the multi-
kilometre Target areas. AC drilling at Karri will be
on a grid pattern at a
line spacing of
approximately 0.5 to 1.0km and a hole spacing
of 100 to 200m.
AC drilling at the Ironbark diorite as well as on a
second identified magnetic anomaly aims to
refine the target for deeper RC/diamond drilling.
The Phase 2 drilling program is scheduled to
commence in late September 2019, with all
access agreements in place and all statutory
approvals received.
1) Lisitsin, V., Olshina, A., Moore, D.H. & Willman, C.E.,
2007. Assessment of undiscovered mesozonal
orogenic gold endowment under cover
in the
northern part of the Bendigo Zone. GeoScience
Victoria Gold Undercover Report 2, Department of
primary Industries.
2) Adapted from Arne, D.C., House, E. & Lisitsin, V.,
2008. Lithogeochemical haloes surrounding central
Victorian gold deposits: Part 1 – Primary alteration
systems, Gold Undercover Report 4. Department of
Primary Industries, Victoria.
Figure 6. Karri Target Phase 1 AC drilling results over 1VD gravity
geophysics.
Project Background
Acquisition
the
acquired
Chalice
highly
prospective Ruins Nickel Project from
private nickel explorer North West Nickel
Pty Ltd (“NWN”) in late June 2019, which
now forms a central part of the King
Leopold Project.
The Ruins Project is located immediately
south-east of the Merlin Prospect, owned
by Buxton Resources (ASX: BUX) and
Independence Group (ASX: IGO) and is
considered highly prospective for nickel
sulphides as well as other associated
metals (Cu, Co and PGEs). The Merlin
Prospect
includes several high-grade
nickel sulphide drill intercepts (up to 8%
Ni), which indicates a fertile and highly
prospective magmatic source in the
area.
An airborne electromagnetic (EM) survey
conducted over the south-west part of
the Project (E04/1169) by NWN identified
several
late-time EM anomalies co-
incident with known Ruins Dolerite
geology, along strike to the south-east of
the Merlin Prospect (Figure 8)
The King Leopold Nickel Project covers an area of ~1,800km2 in the west
Kimberley region of WA (Figure 7). The Project covers several known
areas of Ruins and Hart Dolerite, which are both considered highly
prospective for magmatic nickel sulphides as well as other related
metals (Cu, Co and PGEs).
The Ruins Dolerite has been demonstrated to host high-grade nickel
sulphides (drill intercept grades up to 8% Ni) following the Merlin
discovery in 2015 of Buxton Resources (ASX: BUX). Buxton has since
executed two option and earn-in joint venture agreements with
Independence Group (ASX: IGO) in late 2018 and exploration activities
are currently ramping up in the region. The JV has also substantially
increased its licence holding in the frontier province.
The Project is a combination of several 100%-owned exploration licence
applications, 100%-owned hard rock rights, as well as an earn-in
agreement (earning up to 85%).
Figure 7. King Leopold Project tenure and Buxton-IGO tenure over
geological domains.
Any future issuance of Chalice shares to
NWN remains subject to shareholder
approval, as required. All shares issued
by Chalice are subject to a separate 12-
month escrow period.
Exploration Activities
on
the
activity
Field
Project
on
commenced in late June 2019, initially
immediately
focusing
areas
adjacent to the Merlin Prospect. In
August, Chalice identified several highly
prospective EM conductors following
the completion of a maiden ground-
based and airborne geophysics
program.
Figure 8. Ruins Area tenure and nickel occurrences over
regional geology.
Under the NWN acquisition agreement, which was completed in July
2019, Chalice acquired all of the outstanding shares in NWN by issuing
7.5 million fully paid ordinary Chalice shares to NWN, effectively
reimbursing NWN for costs incurred to date.
The agreement also included a contingent deferred consideration
whereby, subject to the following milestones being achieved at the Ruins
Project, Chalice will pay to NWN:
•
•
$1.75 million in cash or Chalice shares, at Chalice’s election,
within 60 days of Chalice releasing to the ASX a Mining Scoping
Study or Feasibility Study in relation to the Ruins tenure;
$4.5 million in cash or Chalice shares, at Chalice’s election,
within 60 days of commencement of commercial production
and cumulative gross sales exceeding $300 million from the Ruins
tenure.
Figure 9. Ephesus Target MLEM conductors over mapped geology
and satellite imagery.
A Moving-Loop
Electromagnetic
(MLEM) survey was completed over the
King Sound area, where NWN had
completed an airborne EM survey. The
MLEM survey successfully generated
nine conductive plates. A cluster of
EM
strong,
discrete,
conductors were
the
Ephesus Target. The shallow conductors
identified
Siemens
conductance, and are overlying Ruins
Dolerite outcrop (Figure 9).
late-time
identified at
~5,000
have
over
E04/2299
A SkyTEM airborne EM survey was also
and
completed
E04/2325, where Chalice is earning an
85% JV interest. This survey is the first
geophysical program to be completed
over this area, which includes an ~8km
outcropping strike length of prospective
Ruins Dolerite.
Several discrete and strong mid-to-late
time EM anomalies were
identified,
coincident with the outcropping ridge
of Ruins Dolerite, which will be followed
up with field checking in Q3 2019.
Future Exploration
Field
further
reconnaissance and
ground EM will commence in late Q3
2019 at the King Sound Area, as well as
at two additional targets on E04/1169.
and
Target
A maiden RC drilling program at the
Ephesus
potentially
additional King Sound ground EM
targets is expected to commence in Q3
2019. The program may be expanded
subject to the results of the next phase
of reconnaissance and geophysics.
East Cadillac Gold Project
Quebec, Canada (formerly 80-100%)
Julimar Nickel Project
Western Australia (100%)
The Company undertook an initial reconnaissance
geochemical program on the Julimar Project in Q2
2019, designed to map and improve understanding
of the
local geology as well as to test the
effectiveness of this exploration technique.
Sub-crop and scree after gabbro was located
proximal to the southern magnetic anomaly (an
interpreted feeder zone of the Julimar mafic-
ultramafic intrusion) and, while not anomalous in
the
nickel-copper,
rock-types
geological
associated with the southern magnetic anomaly.
interpretation of mafic
rock-types
support
these
A 9.5 line km moving loop EM programme was
completed in May 2019. The ground EM survey
covered the southern magnetic anomaly associated
with intrusive gabbroic which is potentially a feeder
zone to the strike extensive Julimar mafic-ultramafic
intrusion. Results are currently being reviewed, with
the aim of defining drill targets prospective for nickel
sulphide mineralisation.
Flinders River Vanadium Project
Queensland, Australia (100%)
The Company is planning a maiden reconnaissance
AC drilling program at the Project, which aims to
define any areas of shallow, vanadium-bearing
mineralisation within oxidised Toolebuc Shale. The
program will involve drilling wide-spaced shallow
holes to delineate any potential mineralisation in a
low cost and rapid manner, and is expected to be
completed in Q3 2019.
In July 2019, Chalice entered into a binding share
purchase agreement to sell its East Cadillac and
Kinebik Gold Projects in Quebec to O3 Mining Inc.
(“O3 Mining” TSX-V: OIII) for ~3.1 million shares plus a
partial 1.0% NSR royalty over 577 claims. The sale
allows Chalice to maintain upside exposure to the
Val-d’Or gold district and to focus on its high profile
portfolio of opportunities in Australia.
O3 Mining is a new Osisko Mining Inc. (TSX: OSK) led
venture, with a portfolio of resource stage gold
projects with significant exploration in the Val-d’Or
district. Osisko Mining is a leading Canadian gold
exploration and development company based in
Quebec, Canada.
regional
Prior to the sale, Chalice conducted
geochemistry, geophysics and
reconnaissance
diamond drilling over new target areas from Q3 2018
to Q2 2019. Targeting and planning activities were
completed in Q2 2019 on five prospects on the
Project; North Contact, Lac Rapides, Simon West,
Nordeau West and Legrand, however due to the sale
of the Project, no further exploration was completed.
No field activities were completed on the Auralia,
SW Nickel, Barrabarra, Jericho, Bunjarra Well, Mt
Jackson and Kurrajong Bore Projects in 2019.
Warrego North Copper-Gold Project
Northern Territory, Australia (70-100%)
In August 2018, Chalice completed a 4 hole RC drill
program to test the Emu IOCG Target. Drilling
intersected sporadic and
in
magnetite-bearing dolerite and the results effectively
downgraded the target.
low-grade copper
Chalice considers the Parakeet prospect to have
good exploration potential and other targets on the
Project remain untested. Previous drilling on the
Parakeet IOCG Prospect intersected mineralised
Ironstones.
Nulla South Gold Project
Western Australia (Ramelius Resources earning 75%)
In July 2018, the Company agreed to farm-out the
Nulla South Project to Ramelius Resources Limited
(“Ramelius”, ASX: RMS). Ramelius may earn a 75%
interest in the Project for $50,000 in cash and by
spending $2 million on exploration within three years
(Ramelius may withdraw at any time). Upon earning
a 75% interest, Ramelius are required to sole fund all
expenditures through to a decision to mine.
In December 2018, Ramelius announced exploration
results from the drilling at the historical Felstead’s Find
workings. 11,175m of AC drilling was completed
along with 5 shallow RC drill holes for 385m. Several
encouraging gold intercepts were made.
Ramelius then completed a total of 3,490m of AC
drilling to test areas of weak soil anomalism over
prospective greenstone belt stratigraphy away from
the historical Felstead’s Find workings. No anomalous
results were returned, and no further work is planned
for these target areas.
Gibb Rock Gold Project
Western Australia (Ramelius Resources earning 75%)
On 14 November 2018, the Company executed a
conditional farm-out agreement of the Gibb Rock
Project with Ramelius Resources Limited. Ramelius
may earn a 75% interest in the Project for $50,000 in
cash and by spending $2 million on exploration within
three years (Ramelius may withdraw at any time).
Upon earning a 75% interest, Ramelius are required to
sole fund all expenditures through to a decision to
mine.
its
In March 2019, Ramelius elected to waive
Condition Precedent over
the Project, having
successfully negotiated land access agreements.
Ramelius is now advancing work programs over
selected target areas within the Project.
O3 Mining Inc. (TSX-V: OIII)
Subsequent to year end, the Company was issued
~3.1 million fully paid ordinary shares in O3 Mining Inc.
(“O3 Mining”, TSX-V: OIII), in consideration for the sale
of its subsidiary Chalice Gold Mines (Quebec) Inc. As
at the date of this report, the Company holds a ~7%
interest in O3 Mining.
Spectrum Metals Limited (ASX: SPX)
Subsequent to year end, the Company acquired
~71.9 million fully paid ordinary shares in Spectrum
Metals Limited (“Spectrum”, ASX: SPX) on-market and
via participation in a share placement for a total
consideration of ~$3.2 million. As at the date of this
report, the Company holds a ~5.2% interest in
Spectrum.
–
Tanzania
Nyanzaga Gold
Project,
OreCorp Limited (ASX: ORR)
Following Chalice’s merger with
Sub-Sahara
Resources NL in 2009, the Company became entitled
to a payment of $5 million upon commercial
production at the Nyanzaga Project in Tanzania.
During the year, OreCorp Limited (ASX: ORR) signed
a binding Heads of Agreement to advance to a
100% interest in the Project, and has commenced a
Definitive Feasibility Study.
GeoCrystal Limited
Chalice has a ~19.4% interest in unlisted diamond
explorer GeoCrystal Ltd (“GeoCrystal”). GeoCrystal
has several diamond exploration projects in northern
Australia, and is considering its options in relation to
an Initial Public Offering (IPO).
Other Investments
Chalice has other minor shareholdings in ASX and TSX
listed entities with a combined value of $0.9 million as
of 30 June 2019.
Financial performance
The Group reported a net loss after income tax from
continuing operations of $6.8 million predominately
due to exploration and evaluation expenditure being
expensed against profit and loss as incurred. The loss for
the year ended 30 June 2019 was lower as compared
to a net loss of $9.3 million for the year ended 30 June
2018. This decrease in loss is largely related to a net
foreign exchange gain of $1 million, compared to a net
foreign exchange loss of $0.4 million in 2018, which is
from deconsolidation of
also offset by the
subsidiaries of $2.5 million in 2018.
loss
Net loss from discontinued operations has reduced
from a net loss of $6.7 million in 2018 to a net loss of $3.4
million, as a result of higher exploration evaluation costs
incurred in the prior year compared to 2019.
Statement of cash flows
Cash and cash equivalents at 30 June 2019 were $18.6
million (30 June 2018: $35.7 million). The decrease in
cash of $17.1 million is predominately due to a capital
return of $0.04 per share to shareholders for a total of
$10.7 million.
In comparison to the 2018 financial year, net cash flows
used in operating activities decreased by 46% from
$14.6 million to $7.8 million primarily due to a reduction
in exploration and evaluation expenditure of $4.4
million and as a result of the receipt of $2 million in
exploration tax credits.
Net cash flows from investing activities decreased
significantly during the year from a net inflow of $2.8
million in 2018 to a net inflow of $0.4 million in 2019 as a
result of higher proceeds received from sale of financial
assets in 2018.
Net cash used in financial activities in the current year
represents the capital return that was completed in
December 2018.
Financial position
At balance date the Group had net assets of $21.8
million and an excess of current assets over current
liabilities of $21.2 million. Current assets decreased by
46.6% to $22.1 million (2018: $41.5 million) mainly due to
a decrease in cash on hand as a result of the capital
return to shareholders of $0.04 per share that was
completed in December 2018. Refer to the statement
of cash flows discussion above for further details
regarding the movements in the 2018 cash balance.
Non-current assets decreased by $0.5 million due to the
Company’s investment in unlisted GeoCrystal Limited
being re-classified as a financial asset at 30 June 2019.
The Company reviews and reports its mineral resources at least annually. The date of reporting is 30 June each year,
to coincide with the Company’s end of financial year balance date. If there are any material changes to its mineral
resources over the course of the year, the Company is required to report these changes.
An updated National Instrument 43-101 Technical Report (“Technical Report”) was completed in April 2019 on the
East Cadillac Gold Project, and as a result of the updated Technical Report, no material changes were made to
the mineral resource statement.
Historical resource factors were also reviewed and found to be relevant and current.
In July 2019, The Company sold the East Cadillac Gold Project, (which included the Nordeau West deposit) via the
sale of its wholly owned subsidiary Chalice Gold Mines (Quebec) Inc. and as a result, the Company no longer holds
a mineral resource.
Table 1. Nordeau West Mineral Resource Estimate
JORC Category
Indicated
Inferred
Total Indicated & Inferred
Cut-Off
(g/t Au)
Tonnage
(t)
Grade
(g/t Au)
Contained Metal
(oz Au)
2.75
2.75
2.75
226,000
1,271,900
1,497,900
4.19
4.14
4.15
30,400
169,400
199,800
1. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability. These Mineral
Resource estimates include Inferred Mineral Resources that are considered too speculative geologically to
have economic considerations applied to them that would enable them to be categorised as mineral
reserves. There is also no certainty that these Inferred Mineral Resources will be converted to the Measured
and Indicated categories through further drilling, or into mineral reserves, once economic considerations are
applied.
2. All figures are rounded to reflect the relative accuracy of the estimate and therefore numbers may not
appear to add precisely.
3. The independent Mineral Resource estimate for the Nordeau West deposit was prepared by MRB &
Associates, (“MRB”) of Val d’Or, Quebec and is reported and classified in accordance with the guidelines of
the 2012 Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the
JORC Code 2012) and the Canadian National Instruments 43-101.
Governance Arrangements and Internal Controls
The Company has ensured that the mineral resources quoted are subject to good governance arrangements and
internal controls. The mineral resources reported have been based on information compiled by Mr John Langton,
P.Geo., Principal, MRB & Associates. Mr John Langton is a consultant to the Company and has sufficient experience
in the field of activity being reported to qualify as a Competent Person as defined in the 2012 edition of the
Australasian Code for Reporting of Exploration Results, Mineral Resource and Ore Reserves and is a Qualified Person
under National Instrument 43-101 – ‘Standards of Disclosure for Mineral Projects’.
The consultant has also undertaken reviews of the quality and suitability of the underlying information used to
generate the resource estimation. In addition, Chalice’s management carries out regular reviews and audits of
internal processes and external consultants that have been engaged by the Company.
The information in this annual report that relates to
Mineral Resources in relation to the East Cadillac Gold
project is based on information compiled by Mr John
Langton, P.Geo., Principal, MRB & Associates, a
Competent Person who is a member of Ordre des
the Association of
Géologues du Québec and
Professional Engineers and Geoscientists of New
Brunswick. Mr John Langton is a consultant to the
company and has sufficient experience in the style of
mineralisation and to the activity undertaken to qualify
as a Competent Person as defined in the 2012 edition of
the Australasian Code for Reporting of Exploration
Results, Mineral Resource and Ore Reserves and is a
Qualified Person under National Instrument 43-101 –
‘Standards of Disclosure for Mineral Projects’. Mr Langton
consents to the inclusion in the annual report of the
matters based on his information in the form and context
in which it appears.
Information
relates to the
in this report that
The
exploration results for the Pyramid Hill Project is extracted
from ASX announcement entitled “Shallow drilling hits
gold in basement and outlines three high priority targets
for follow-up at the Pyramid Hill Gold Project, Victoria”
released on 8 July 2019 and “Drilling to recommence at
Pyramid Hill Gold Project in late September” released 2
September 2019.
The Information in this report that relates to exploration
results for the King Leopold Project is extracted from ASX
announcement entitled “Chalice acquires highly
prospective nickel sulphide project in west Kimberley
region of WA” and “Strong, shallow EM conductors
identified ahead of maiden drill program at King Leopold
Nickel Sulphide Project, WA” released on 18 June 2019
and 20 August 2019.
The above announcements are available to view on the
Company’s website at chalicegold.com. The Company
confirms that it is not aware of any new information or
data that materially affects the information included in
the original market announcement and 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 announcements.
Forward Looking Statements
This document may contain forward-looking information
within the meaning of Canadian securities legislation and
forward-looking statements within the meaning of the
United States Private Securities Litigation Reform Act of
1995 (collectively, forward-looking statements). These
forward-looking statements are made as of the date of
this
report and Chalice Gold Mines Limited (the
Company) does not intend, and does not assume any
obligation, to update these forward-looking statements.
and
reflect
performance
Forward-looking statements relate to future events or
Company
future
management’s expectations or beliefs regarding future
events and include, but are not limited to, the likelihood
of exploration success at the Company’s exploration
projects, the timing of future exploration activities on the
Company’s exploration projects, planned expenditures
and budgets and the execution thereof, the timing and
availability of drill results, potential sites for drilling, the
timing and amount of estimated future production, costs
of projection, capital expenditures, success of mining
operations,
unanticipated
reclamation expenses, title disputes or claims and
limitations on insurance coverage.
environmental
risks,
In certain cases, forward-looking statements can be
identified by the use of words such as “plans”, “planning”
“expects” or “does not expect”, “is expected”, “will”,
“may”, “would”, “potential”, “budget”, “scheduled”,
“estimates”, “forecasts”, “intends”, “anticipates” or “does
not anticipate”, “believes”, “occur” or “be achieved” 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 or planned exploration activities;
changes in project parameters as plans continue to be
refined; changes in exploration programmes based upon
the
results of exploration; 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;
movements in the price of O3 Mining Inc. and Specturm
Metals Limited securities and future proceeds from
potential sale of those securities, the timing and receipt of
exploration tax credits 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, on ASX at asx.com.au
and OTC markets at otcmarkets.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
such
differ materially
statements. Accordingly, readers should not place undue
reliance on forward-looking statements.
those anticipated
from
in
Location
Project
Tenement No.
Registered Holder
Nature of interest
Jericho
E39/1914
CGM (WA) Pty Ltd
P39/5600 to
P39/5601
CGM (WA) Pty Ltd
Bunjarra Well
E39/1976
CGM (WA) Pty Ltd
95%
100%
95%
Gibb Rock
Nulla South
Kurrajong Bore
E70/4869
CGM (WA) Pty Ltd
E70/5194
CGM (WA) Pty Ltd
E77/2353 to
E77/2354
P37/8702 to
P37/8711
P37/9016 to
P37/9017
CGM (WA) Pty Ltd
CGM (WA) Pty Ltd
CGM (WA) Pty Ltd
P37/9021
CGM (WA) Pty Ltd
P37/9028
CGM (WA) Pty Ltd
CGM (WA) Pty Ltd
CGM (WA) Pty Ltd
North West Nickel Pty Ltd
Waterford Bay Pty Ltd
Waterford Bay Pty Ltd
95% - Farm-out agreement, Ramelius Resources Ltd
has the right to earn up to 75% interest
100% - Farm-out agreement, Ramelius Resources Ltd
has the right to earn up to 75% interest
95% - Farm-out agreement, Ramelius Resources Ltd
has the right to earn up to 75% interest
95%
100%
100%
100%
100%
100%
100%
100% hard-rock mineral right (subject to an
agreement held with North West Nickel Pty Ltd)
100% hard-rock mineral right (subject to an
agreement held with North West Nickel Pty Ltd)
Strategic Metals Pty Ltd
0% - Right to earn up to 85% interest
Strategic Metals Pty Ltd
0% - Right to earn up to 85% interest
CGM (WA) Pty Ltd
CGM (WA) Pty Ltd
CGM (WA) Pty Ltd
CGM (WA) Pty Ltd
Aaron Peter Banks (40%)
Michael Kiel (30%)
Roseberry Holdings Pty Ltd
(30%)
100%
100%
100%
100%
100% (subject to a purchase agreement held with
Nebula Resources Pty Ltd)
Western
Australia
Julimar
King Leopold
Barrabarra
Auralia
Mt Jackson
E70/5118
E70/5119
E04/2562
E04/2405
E04/1169
E04/2299
E04/2325
E70/5263
E69/3636
E69/3637
E77/2577
SW Nickel
E70/5086
Victoria
Pyramid Hill
Northern
Territory
Warrego North
Queensland
Flinders River
EL006661
CGM (WA) Pty Ltd
EL006737 to
EL006738
EL006669
EL006805
EL006864
EL006898
EL006901
EL006960
EL23764
EL31608
EL31610
CGM (WA) Pty Ltd
CGM (WA) Pty Ltd
CGM (WA) Pty Ltd
CGM (WA) Pty Ltd
CGM (WA) Pty Ltd
CGM (WA) Pty Ltd
CGM (WA) Pty Ltd
CGM (WA) Pty Ltd (51%) &
Meteoric Resources NL
(49%)
CGM (WA) Pty Ltd
CGM (WA) Pty Ltd
EPM26858
CGM Lithium Pty Ltd
EPM26863
CGM Lithium Pty Ltd
EPM26861
CGM Lithium Pty Ltd
EPM26864 to
EPM26866
CGM Lithium Pty Ltd
100%
100%
100%
100%
100%
100%
100%
100%
Farm-in agreement, right to earn up to 70% interest
100%
100%
100%
100%
100%
100%
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 2019 and the independent
auditor’s report thereon.
The names and details of the Company’s directors in office during the financial year and until the date of this report are
as follows. Directors were in office for the entire period unless otherwise stated.
1.
DIRECTORS
Timothy (Tim) R B Goyder
Executive Chairman
Tim has considerable experience in the resource industry as an executive and
investor. He has been involved in the formation and management of a number of
publicly-listed and private companies and is currently Chairman of DevEx Resources
Limited (since 2002) and Liontown Resources Limited (since 2006). Tim was previously a
Director of Strike Energy Limited (2017 – 2018).
Tim has been a director since 2005 (14 years) and was appointed Executive Chairman
on 23 March 2018. Tim previously held the position of Managing Director.
Alexander (Alex) C Dorsch
BEng (Hons), BFin
Managing Director
(appointed 13 November
2018)
Alex is an experienced consultant, engineer and corporate advisor in the energy and
resource sectors. Prior to joining Chalice, Alex was a specialist consultant with the global
management consultancy McKinsey & Company. Prior to this he worked for over six
years as an engineer in the oil and gas industry. Alex has a thorough understanding of
corporate strategy, business development, financial markets, project development and
operations.
Alex was appointed Managing Director on 13 November 2018 and previously held the
position of Chief Executive Officer.
Morgan S Ball
B.Com, CA, FFin
Lead Independent Non-
executive Director
Morgan is a Chartered Accountant with more than 27 years of Australian and
international experience in the resources, logistics and finance industries. Morgan is
currently Chief Financial Officer of ASX Listed Saracen Mineral Holdings Limited and a
Director of Arrow Minerals Limited (ASX: AMD). During the past three years, Morgan was
Managing Director (2013 to 2016), and prior to that Finance Director (2011 to 2013) of
ASX listed BC Iron Limited.
Stephen P Quin
PGeo, FGAC, FSEG, MIOM3
Independent Non-executive
Director
Morgan is Chairman of the Audit and Risk Committee, a member of the Remuneration
Committee and was appointed to the Board as an Independent Non-executive Director
on 24 June 2016 (3 years).
Stephen is a geologist with more than 38 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 Chairman of the Remuneration Committee and a member of the Audit and
Risk Committee. Stephen has been an Independent Non-executive Director since 2010
(9 years).
Anthony (Tony) W Kiernan
LLB, AM
Independent Non-executive
Director (resigned 13
September 2018)
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 ASX
listed Pilbara Minerals Limited, Saracen Mineral Holdings Limited and Venturex Resources
Limited. Tony was a director of the Company from February 2007 to 13 September 2018.
2.
OFFICERS AND COMPANY SECRETARY
Richard K Hacker
B.Com, CA, 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 Non-executive Director of DevEx Resources Limited, and Chief Financial
Officer of Liontown Resources Limited, both ASX listed.
Jamie is a Chartered Accountant who has over 20 years’ experience within the
accounting profession and the administration of public listed companies in the mining
and exploration industry.
Leanne is a Chartered Accountant and Chartered Secretary who has over 17 years of
accounting and governance experience within the mining and energy industries.
Jamie Armes
Company Secretary
B.Bus, CA
(appointed 16 August 2019)
Leanne Stevens
B.Com, CA, ACIS
Company Secretary
(resigned 16 August 2019)
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 & Risk
Committee
Remuneration
Nomination
Number of meetings held:
Number of meetings attended:
T R B Goyder
A C Dorsch
S P Quin
M S Ball
A W Kiernan
9
9
9
9
9
3
2
-
-
2
2
2
2
-
-
2
2
1
-
-
-
-
-
-
The Company has an audit and risk 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 and Risk
M S Ball (Chairman)
A W Kiernan
S P Quin
Remuneration(1)
S P Quin (Chairman)
A W Kiernan
M S Ball
Nomination
Full Board
(1)Mr Kiernan resigned from the Board on 13 September 2018 and Mr Ball was appointed Chairman of the Remuneration
Committee. Subsequent to 30 June 2019, Mr Quin was appointed to Chair of the Remuneration Committee and Mr Ball
remained a member of the Remuneration Committee.
4.
PRINCIPAL ACTIVITIES
The principal activities of the Group during the year were mineral exploration. There has been no significant change in
the nature of the principal activities during the year.
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 2019. 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 3 for further details.
6.
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
Other than the progress documented above, the state of affairs of the Company was not affected by any other significant
changes during the year.
7.
REMUNERATION REPORT – AUDITED
This report for the year ended 30 June 2019 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
Objectives
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 Key Management Personnel (KMP) and staff.
7.2
Introduction
The remuneration report details the remuneration arrangements for KMP who are defined as those individuals who have
the authority and responsibility for planning, directing and controlling the activities of the Company and the Group directly
or indirectly. The following were the KMP for the Group at any time during the year:
Executive Directors
Tim Goyder
Alex Dorsch
Executive Chairman
Managing Director (appointed 13 November 2018, previously Chief Executive Officer)
Non-executive Directors
Stephen Quin
Morgan Ball
Anthony Kiernan
Non-executive Director
Non-executive Director
Non-executive Director (resigned 13 September 2018)
Executives
Richard Hacker
Kevin Frost
Patrick Lengyel
Chief Financial Officer
General Manager – Exploration
Exploration Manager – Canada
Other than disclosed above, there were no changes in KMP after the reporting date and before the financial report was
authorised for issue.
7.3
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 that consisted of the following directors during the reporting period:
•
Stephen Quin (Chair) – appointed to Chair on 12 July 2019
• Morgan Ball (member) – appointed to Chair on 13 September 2018 and resigned as Chair on 12 July 2019.
• Anthony Kiernan (resigned 13 September 2018)
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 (“LTIP”),
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.
The Remuneration Committee meets through the year when appropriate. The Managing Director and Executive
Chairman may attend certain Remuneration Committee meetings by invitation, where management input is required.
The KMP are not present during any discussions related to their own remuneration arrangements.
Further information on the Remuneration Committee’s role, responsibilities and membership can be seen at
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 KMP and other executives. During the
financial year, the Remuneration Committee did not seek specific advice or recommendations from external consultants.
Remuneration report approval at 2018 Annual General Meeting
The Remuneration Report for the financial year ended 30 June 2018 received positive shareholder support at the 2018
Annual General Meeting (“AGM”) with a vote of 92.9% in favour.
7.4
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
KMP 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 (if applicable) and long term incentives linked to the
strategic goals and performance of the Company;
demonstrating a clear relationship between individual performance and remuneration; and
The following table is an overview of the components of remuneration:
Non-executive directors
Executives
Fixed remuneration
Element
Base salary
Base fee
Committee fees
Superannuation
Consultancy fees
Other benefits
×
✓
✓
✓(1)
×
✓(2)
Variable remuneration
Share options
Performance rights
✓(3)
×
Short term incentives (STI)
×
✓
×
×
✓
×
✓(2)
✓
✓
✓
(1)Only applies to Australian non-executives.
(2)Other benefits relates to directors and officers insurance and income protection for executives.
(3)Non-executive directors are eligible to participate in the share option plan at the discretion of the Board and subject to
shareholder approval where required (refer below for further details).
7.4.1 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 2019 Annual General Meeting.
The fee structure for non-executive directors is reviewed annually and the Remuneration Committee and the Board may
consider advice from external consultants, and undertake comparative analyses of the fees paid to non-executive
directors of comparable companies in the resources sector with similar market capitalisations.
For the 2019 financial year, a non-executive director received a fee of $60,000 (30 June 2018: between $60,000 and
$80,000) (inclusive of superannuation, where applicable) and members of Board Committees received an additional
$5,000 (inclusive of superannuation where applicable) for their roles on each of those Committees.
In June 2019, the Remuneration Committee reviewed the fee structure for non-executive directors and determined that
in light of reducing corporate overheads and to reflect the Company’s current strategy, it was agreed that non-executive
director fees would be reduced to $40,000 (inclusive of superannuation where applicable), plus members of the Board
Committees shall receive an additional $4,000 (inclusive of superannuation) and a Chair of Board Committees shall
receive $6,000 (inclusive of superannuation). To compensate non-executive directors for the reduction in fees, the Board
resolved in July 2019 to grant, subject to shareholder approval at the Company’s 2019 AGM, 500,000 share options each
to Mr Ball and Mr Quin.
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”).
The remuneration of non-executive directors for the years ended 30 June 2019 and 30 June 2018 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. No consultancy fees were received by non-executive directors in the year ended 30 June
2019 (2018: nil).
7.4.2
Executive remuneration
Executive remuneration consists of fixed remuneration and may also comprise variable remuneration in the form of
performance based cash bonuses (STIP), share options and performance rights (issued under the terms of the ESOP and
LTIP respectively). The LTIP was approved by the Company’s shareholders at the 2017 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 in accordance with market rates and the Board may use its
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.
The Board has suspended the STIP and moved 100% of eligible KMP’s incentive entitlements exclusively to the LTIP. The
justification for this is 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. During the year, a one-off cash bonus was paid to Mr P Lengyel
in lieu of performance rights vesting in July 2018. No cash bonuses were paid to KMP or employees during the year.
The Board reserves the right to pay discretionary cash bonuses to employees and executives to reward individual efforts
and/or outstanding performance.
(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
Design
All full-time employees and permanent part-time employees (including executive
directors and the CEO) of the Company are eligible participants. Shareholder approval
is required before any director or related party of the Company can participate in the
LTIP.
The award quantum will be determined in consideration of total remuneration of the
individual, market relativities and business affordability. The LTIP does not set out a
maximum number of shares that may be issuable to any one person, other than the 5%
limit of the total number of issued shares.
Performance conditions
The performance conditions that must be satisfied in order for the performance rights to
vest are determined by the Board. The performance conditions may include one or more
of the following:
•
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, total shareholder
return and other major long term milestone targets; or
•
Such other performance objectives as the Board may determine.
Key Design Feature
Vesting
Term and lapse
Design
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, however
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
Cessation of Employment
No consideration.
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.
In July 2019, the Company undertook a review of the current LTIP and ESOP and as a result of the review a new plan has
been developed to replace both the LTIP and ESOP and will be put to Shareholders at the upcoming 2019 AGM. Therefore,
the 2019/2020 grant of performance rights to KMP and employees is subject to Shareholders approving the new plan.
Annual grant of performance rights – 2019/2020
In August 2019, the Board resolved to grant performance rights to KMP as per the table below:
Annual Award
KMP
Number of Rights
Measurement Date
Vesting Date
Tim Goyder(1)
Alex Dorsch(1)
2019/2020
Richard Hacker
Kevin Frost
Patrick Lengyel
735,294 30 June 2022
1,074,402 30 June 2022
700,606 30 June 2022
827,593 30 June 2022
628,676 30 June 2022
30 June 2022
30 June 2022
30 June 2022
30 June 2022
30 June 2022
(1)Performance rights to be issued to Mr Goyder and Mr Dorsch are subject to shareholder approval at the Company’s
2019 AGM.
As the Company shall adopt a new plan, to be approved by shareholders at the upcoming 2019 AGM, the above
performance rights to KMP are also subject to shareholders approving the new plan.
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 at the measurement date. For the 2019/2020 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 25% of the LTIP is to be based on meeting absolute Total Shareholder Return (“TSR”), 25%
based on meeting relative TSR objectives 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
Percentage of granted
performance rights that
will vest if performance
conditions are met
50%
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 internal rate of return (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;
•
•
substantially increasing the Company’s resource base;
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.
Absolute TSR objectives
If the volume weighted average price of the Company’s Shares
traded on ASX over the 30 trading days (30-Day VWAP) up to and
including 30 June 2022 is:
•
•
•
below $0.18 per Share;
between $0.18 and $0.20 per Share; and
at or above $0.20 per Share.
0%
Pro rata between 8.25%
and 25%
25%
By way of example, if the 30-Day VWAP as at 30 June 2022 is $0.19
per Share, 16.625% of the Performance Rights would vest, calculated
as follows:
8.25% + (($0.19 - $0.18)/($0.20-$0.18)*(25%-8.25%)) = 16.625%
In the event of a corporate action including a demerger, special
dividend or reorganisation of capital (including a consolidation, sub-
division, return of capital, or reduction of capital), the above
thresholds are to be amended to account for that corporate action,
provided that such amendment must not provide the Performance
Rights holder with a benefit that holders of Shares do not receive.
Comparison of the Company’s total shareholder return (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 30 June 2022. The Performance Rights will
vest depending on the Company’s percentile ranking within the
comparator group on the relevant vesting date as follows:
Relative TSR objectives
•
•
Below 50th percentile
Between 50th and 75th percentile
• At or above 75th percentile
0%
Pro rata between
8.25% and 25%
25%
The test date for the performance rights are set at 30 June 2022, being approximately 3 years from the date of grant.
Annual grant of performance rights – 2018/2019
The table below outlines the performance rights granted to KMP for the 2018/2019 financial year and have not yet vested:
Annual Award
KMP
Number of Rights
Measurement Date
Tim Goyder
Alex Dorsch
2018/2019
Richard Hacker
Kevin Frost
Patrick Lengyel
871,751
1,045,931
762,514
847,738
543,973
30 June 2021
30 June 2021
30 June 2021
30 June 2021
30 June 2021
Vesting Date
30 June 2021
30 June 2021
30 June 2021
30 June 2021
30 June 2021
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 at the measurement date. For the 2018/2019 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 25% of the LTIP is to be based on meeting absolute Total Shareholder Return (“TSR”), 25%
based on meeting relative TSR objectives 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:
Percentage of granted
performance rights that
will vest if performance
conditions are met
50%
Overall Performance
Condition
Strategic objectives
Specific Performance Conditions
Undertake a significant acquisition 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.
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 share price (which to the
extent reasonable takes into account value generated through
demerger and special dividends) with an absolute share price at
the end of the financial year that is 3 years after that date (vesting
date). The performance rights will vest on a pro-rata basis as follows:
Absolute TSR objectives
•
Share price below 15% p.a. increase (equates to CHN
share price <21c in 3 years)
0%
•
Between 15% p.a. and 20% p.a. (21c – 24c)
Pro rata between 8.25%
and 25%
• At or above 20% p.a. (>24c)
25%
Relative TSR objectives
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:
Overall Performance
Condition
Specific Performance Conditions
•
•
Below 50th Percentile
Between 50th and 75th percentile
Percentage of granted
performance rights that
will vest if performance
conditions are met
0%
Pro rata between 8.25%
and 25%
• At or above 75th percentile
25%
The test date for the performance rights are set at 30 June 2021, being approximately 3 years from the date of grant.
Annual grant of performance rights – 2017/2018
The table below outlines the performance rights granted to KMP for the 2017/2018 financial year and have not yet vested:
Annual Award
KMP
Number of Rights
Measurement Date
2017/2018
Tim Goyder
Alex Dorsch
Richard Hacker
Kevin Frost
Patrick Lengyel
1,217,989
339,076
764,921
815,607
415,365
30 June 2020
30 June 2020
30 June 2020
30 June 2020
30 June 2020
Vesting Date
30 June 2020
30 June 2020
30 June 2020
30 June 2020
30 June 2020
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 at the measurement date. For the 2017/2018 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
Percentage of granted
performance rights that
will vest if performance
conditions are met
50%
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.
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.
Overall Performance
Condition
TSR objectives
Specific Performance Conditions
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:
Percentage of granted
performance rights that
will vest if performance
conditions are met
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 2020, being approximately 3 years from the date of grant.
Annual grant of performance rights - 2016/2017
The table below outlines the performance rights granted to KMP for the 2016/2017 financial year:
Annual Award
KMP
Number of Rights
Measurement Date
2016/2017
Tim Goyder
Richard Hacker
Kevin Frost
Patrick Lengyel
1,200,738
754,087
804,058
389,594
30 June 2019
30 June 2019
30 June 2019
30 June 2019
Vesting Date
30 June 2019
30 June 2019
30 June 2019
30 June 2019
In July 2019, the Remuneration Committee determined that, at the measurement date of 30 June 2019, the performance
conditions as set by the Board during the measurement period of 1 July 2016 until 30 June 2019 (inclusive) were not met,
therefore the above performance rights did not vest, and lapsed on 12 July 2019.
(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 2016 and shall be put to Shareholders for
approval at the Company’s 2019 AGM. 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.
Generally, it is the Board’s preference to issue performance rights under the LTIP to KMP rather than share options, however
in the current year 1,000,000 unlisted options were granted to Mr A Dorsch, subject to Shareholder approval at the
Company’s 2019 AGM under the Company’s share option plan as part of a sign on incentive for his appointment to
Managing Director.
7.4.3 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 $0.04 per share in December
2018, is as follows:
Share price
30 June 2015
$0.07
30 June 2016
$0.14
30 June 2017
$0.11
30 June 2018
$0.10
30 June 2019
$0.12
7.5
Key Management Personnel remuneration
Short-term benefits
Post-employment
benefits
Salary &
fees
Non-
monetary
benefits
Cash
Bonus(3)
Superannuation
Share-
based
payments
Long Term
Incentives
(4)
Total
Proportion of
remuneration
performance
related
$
$
$
$
$
$
%
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
324,078
369,951
299,468
179,210
16,779
82,191
70,000
70,000
63,927
63,927
285,365
285,847
269,644
266,561
200,645
193,060
5,268
5,460
4,461
1,139
905
3,849
8,388
7,608
4,461
3,849
6,759
5,919
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
13,357
12,325
61,068
-
26,381
20,049
20,531
13,285
1,594
7,808
-
-
6,073
6,073
20,531
20,049
23,215
23,614
-
-
158,127
102,464
141,426
119,911
-
-
-
-
-
-
101,719
76,489
119,736
81,558
64,510
40,409
513,854
497,924
465,886
313,545
19,278
93,848
78,388
77,608
74,461
73,849
414,374
388,304
412,595
371,733
339,580
245,794
2019
1,529,906
43,599
61,068
98,325
585,518
2,318,416
2018
1,510,747
40,149
-
90,878
420,831
2,062,605
31
21
30
38
-
-
-
-
-
-
25
20
29
22
19
16
-
-
Key Management
Personnel
Directors
T R B Goyder
A C Dorsch (1)
A W Kiernan (2)
S P Quin
M S Ball
Executives
R K Hacker
K M Frost
P Lengyel(3)
Total
Compensation
(1)On 13 November 2018, Mr Dorsch was appointed Managing Director. Prior to this date, Mr Dorsch held the role of Chief
Executive Officer.
(2)Mr Kiernan resigned from the Board on 13 September 2018.
(3)Mr Lengyel received a cash bonus of $61,068 in lieu of the issue of shares on vesting of performance rights granted to
Mr Lengyel in 2016.
(4)The fair value of the options is calculated at the date of grant using a Black-Scholes Option-pricing model and allocated
to each reporting period evenly over the period from grant date to vesting date. The value disclosed is the portion of the
fair value of the options allocated to this reporting period. The fair value of the performance rights is calculated at the
date of grant using a binomial option-pricing model. In valuing the options and performance rights, market based vesting
conditions have been taken into account.
7.6
Equity instruments
7.6.1 Employee share options
During the reporting period, subject to shareholder approval at the Company’s 2019 AGM, 1,000,000 share options were
granted to Mr Dorsch on his appointment as Managing Director. The options have an exercise price of 21 cents per share,
with an expiry date of 30 November 2021. No further options over ordinary shares in the Group were granted or vested as
compensation to KMP.
On 30 June 2019, 500,000 options over ordinary shares granted to KMP lapsed.
7.6.2 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 2019
Grant date
Fair value of
rights at grant
date (A)
$
Weighted
average Fair
value per right
$
Expiry date
Number of
rights vested
during 2019
Directors
T R B Goyder
871,751
28 November 2018
A C Dorsch
1,045,931
31 July 2018
Executives
R K Hacker
K M Frost
P Lengyel
762,514
31 July 2018
847,738
31 July 2018
543,973
31 July 2018
112,457
137,017
99,889
111,054
71,260
0.13
0.13
0.13
0.13
0.13
30 June 2022
30 June 2022
30 June 2022
30 June 2022
30 June 2022
-
-
-
-
-
(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.
The above performance rights were issued at no cost and expire on the earlier of their date or termination of the KMP’s
employment.
During the reporting period, 2,048,216 shares were issued to KMP on the exercise of performance rights granted as
compensation in the 2016 financial year.
Details of the vesting profile of performance rights granted as remuneration to each KMP of the Group are outlined below.
Number of
rights
Grant date
% vested in
year
%
forfeited/lapsed
in year
Measurement Date
Directors
T R B Goyder
1,664,707
25 November 2015
68.9
31.1
1,200,738
1,217,989
871,751
22 November 2016
29 November 2017
28 November 2018
A C Dorsch
339,076
9 November 2017
1,045,931
31 July 2018
-
-
-
-
-
-
-
-
-
-
Executives
R K Hacker
K M Frost
P Lengyel
1,306,837
25 June 2015
68.9
31.1
754,087
764,921
762,514
804,058
815,607
847,738
648,809
389,594
415,365
543,973
15 July 2016
28 July 2017
31 July 2018
15 July 2016
28 July 2017
31 July 2018
25 June 2015
15 July 2016
28 July 2017
31 July 2018
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
100
-
-
-
30 June 2018
30 June 2019
30 June 2020
30 June 2021
30 June 2020
30 June 2021
30 June 2018
30 June 2019
30 June 2020
30 June 2021
30 June 2019
30 June 2020
30 June 2021
30 June 2018
30 June 2019
30 June 2020
30 June 2021
-
-
500,000
500,000
-
-
-
-
7.6.3 Equity holdings of key management personnel
Option holdings and performance rights of key management personnel
The movement during the reporting period in the number of options and performance rights over ordinary shares in the
Group held, directly, indirectly or beneficially, by each KMP, including their related parties, is as follows:
Equity Type
Held at
1 July 2018
Granted as
compensation
Exercised/
Forfeited
Held at
30 June
2019
Vested
during the
year
Vested and
exercisable
at 30 June
2019
Directors
T Goyder
A Dorsch(1)
Performance Rights
4,083,434
871,751
(1,664,707)
3,290,478
1,147,444
Performance Rights
339,076
1,045,931
1,385,007
-
Options
A W Kiernan Options
Options
S P Quin
M S Ball
Options
Executives
4,000,000
500,000
500,000
500,000
-
-
-
-
-
-
-
-
(500,000)
4,000,000
2,666,666
2,666,666
500,000
500,000
-
-
-
-
R K Hacker
Performance Rights
2,825,845
762,514
(1,306,837)
2,281,522
900,772
K M Frost
Performance Rights
1,619,665
P Lengyel
Performance Rights
1,453,768
847,738
543,973
-
2,467,403
(648,809)
1,348,932
-
-
(1)On Mr Dorsch’s appointment to Managing Director, the Board resolved, subject to shareholder approval to grant Mr
Dorsch 1,000,000 options with an exercise price of 21 cents (adjusted for the capital return of 4 cents), expiring 30
November 2021 and with the following vesting conditions:
500,000 options shall vest immediately; and
500,000 options shall vest 30 November 2019.
•
•
Shareholdings of key management personnel
The movement during the reporting period in the number of ordinary shares in the Group held, directly, indirectly or
beneficially, by each KMP, including their related parties, is as follows:
Held at 1 July
2018
Additions
Received on exercise of
Options / Performance
rights
Sales
Held at 30 June
2019
Directors
T R B Goyder
A Dorsch
A W Kiernan
S P Quin
M B Ball
Executives
R K Hacker
K M Frost
P Lengyel
44,827,765
1,430,000
2,152,040
26,321
30,000
50,000
-
-
-
-
-
-
-
-
-
-
1,147,444
-
-
-
-
900,772
-
-
-
-
-
-
-
(350,772)
-
-
45,975,209
1,430,000
2,152,040
26,321
30,000
600,000
-
-
7.7
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.
The aggregate expense/(income) recognised during the year relating to KMP or their related parties was as follows:
KMP
Transaction
Note
2019
$
2018
$
Other related parties
Liontown Resources Limited
Corporate and KMP services
DevEx Resources Limited
Corporate and KMP services
PhosEnergy Limited
Corporate and KMP services
(i)
(i)
(i)
(249,107)
(114,000)
(21,600)
(88,000)
(68,000)
(21,600)
(i)
The Group supplied corporate services such as accounting, administration and office rent facilities under a
Corporate Services Agreement to Liontown Resources Limited (“LTR”), DevEx Resources Limited (“DEV”) and
PhosEnergy Limited (“PEL”) and corporate services of KMP. Mr Goyder is a director of LTR, DEV and 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
7.8
Executive contracts
2019
$
-
109,998
109,998
2018
$
-
29,600
29,600
Remuneration arrangements for KMP are formalised in employment agreements. Details of these contracts are provided
below.
Executive Chairman
The Executive Chairman, Mr Tim Goyder, is employed under an ongoing contract which can be terminated with notice
by either the Group or the Executive Chairman.
Under the terms of the present contract (as applicable from 1 July 2019):
•
•
The Executive Chairman receives fixed remuneration of $219,000 per annum (inclusive of superannuation).
The Executive Chairman may participate in incentive plans that are in place from time to time subject to the
Board’s discretion and any shareholder approvals required.
•
The Executive Chairman’s termination provisions are as follows:
Resignation
Termination for cause
Notice Period
Payment in
lieu of notice
3 months
3 months
None
None
Termination in cases of death, disablement, redundancy or notice without cause
3 months
3 months
Diminution of responsibility
12 months
N/A
In July 2019, the fixed remuneration of Mr Goyder was reduced from $273,750 to $219,000 per annum (inclusive of
superannuation), effective 1 July 2019.
Managing Director
The Managing Director (“MD”), Mr Alex Dorsch, 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 on 13 November 2018:
•
•
The MD receives fixed remuneration of $320,000 per annum (inclusive of superannuation).
The MD is entitled to participate in both the Employee Share Option Plan and LTIP as determined by the Board.
•
The MD’s termination provisions are as follows:
Resignation
Termination for cause
Notice
Period
Payment in lieu of
notice
3 months
3 months
None
None
Termination in cases of death, disablement, redundancy or notice without cause
3 months
3 months
Diminution of responsibility
6 months
N/A
•
The Company has the discretion to impose a restraint (non-compete) period of up to a maximum of 12 months
following cessation of employment.
Other Executives
Other Executives are employed on individual ongoing contracts that set out the terms of their employment. The following
table outlines the termination provisions contained within those employment agreements held by other KMP:
Resignation
Termination for cause
Notice Period
Payment in
lieu of notice
3 months
3 months
None
None
Termination in cases of death, disablement, redundancy or notice without cause
3 months
3 months
Diminution of responsibility
* Mr Hacker only
8.
DIVIDENDS
6 months*
N/A
No dividends were declared or paid during the year and the directors recommend that no dividend be paid.
9.
CAPITAL RETURN
In November 2018 at the Company’s 2018 AGM, Shareholders approved an equal capital return and reduction of $0.04
per share totalling $10.7 million. The return of capital was completed in early December 2018.
10.
LIKELY DEVELOPMENTS
There are no likely developments that will impact on the Company other than as disclosed elsewhere in this report.
11.
SIGNIFICANT EVENTS AFTER BALANCE DATE
In June 2019, the Company entered into a binding agreement to acquire the ordinary shares of North West Nickel Pty Ltd
(“NWN”) by issuing 7,500,000 fully paid ordinary shares in the Company. The completion of the acquisition was subject to
a number of conditions precedent, such as the approval of NWN’s shareholder’s capital return. All conditions precedent
were subsequently satisfied on 17 July 2019 and the Company issued 7,500,000 shares to the shareholders of NWN.
On 2 July 2019, the Group entered into a Share Purchase Agreement (“SPA”) with O3 Mining Inc. (“O3 Mining”, TSX-V: OIII),
whereby O3 Mining purchased the Company’s wholly-owned subsidiary Chalice Gold Mines (Quebec) Inc. (“CGMQ”).
CGMQ is the registered holder of the East Cadillac and Kinebik Gold Projects in Quebec, Canada.
In consideration for the acquisition of CGMQ, Chalice received 3,092,784 common shares in O3 Mining, which are subject
to a statutory trading restriction in Canada for a period of four months from the date of issuance. In addition, Chalice will
receive cash consideration for existing tax credits upon receipt from Canadian tax authorities totalling ~C$1.3 million and
a net smelter returns (“NSR”) royalty of 1.0% on certain mining claims which are not encumbered by pre-existing royalties.
In July 2019, the Company acquired 71.9 million shares in listed Spectrum Minerals Limited (ASX: SPX, “Spectrum”) for a
total consideration of $3.2 million. As at the date of this report, the Company holds a ~5.2% interest in Spectrum.
Subsequent to 30 June 2019, the Board resolved, subject to shareholder approval at the Company’s AGM to issue 500,000
unlisted options to each Mr Ball and Mr Quin and to grant a total of 6,348,611 performance rights to KMP and employees,
subject to shareholder approval (where applicable) at the upcoming AGM.
Other than disclosed above or elsewhere in this report, there have been no other material post balance date events
which have impacted the Company.
12.
DIRECTORS’ INTERESTS
The relevant interest of each director in the shares, rights or options over such instruments issued by Chalice and other
related bodies corporate, as notified by the directors to the ASX in accordance with S205G(1) of the Corporations Act
2001, at the date of this report is as follows:
T R B Goyder(3)
A C Dorsch(1) (3)
S P Quin(2)
M B Ball(2)
Ordinary shares
Options over ordinary shares
Performance rights
45,975,209
1,430,000
26,321
30,000
-
4,000,000
500,000
-
3,290,478
1,385,007
-
-
(1)On Mr Dorsch’s appointment to Managing Director, the Board resolved, subject to shareholder approval at the
Company’s 2019 AGM to issue Mr Dorsch 1,000,000 share options as disclosed previously in this Report.
(2)In July 2019, the Board resolved, subject to shareholder approval at the Company’s 2019 AGM to issue 500,000 share
options to Mr Ball and 500,000 share options to Mr Quin as disclosed previously in this Report.
(3)In August 2019, the Board resolved, subject to shareholder approval at the Company’s 2019 AGM to issue 1,074,402 and
735,294 performance rights to Mr Dorsch and Mr Goyder respectively.
13.
SHARE OPTIONS AND PERFORMANCE RIGHTS
Unissued shares under option
At the date of this report 6,200,000 unissued ordinary shares of the Company are under option on the following terms and
conditions:
Expiry date
Exercise price ($)
Number of options
30 November 2019
31 March 2021
31 March 2021
18 December 2021
10 June 2022
0.21
0.16
0.18
0.20
0.25
1,000,000
2,000,000
2,000,000
700,000
500,000
Unless exercised, these options do not entitle the holder to participate in any share issue of Chalice or any other body
corporate.
In addition to the above, the Board has resolved, subject to shareholder approval at the Company’s 2019 AGM, to grant
Mr Quin and Mr Ball 500,000 share options each, in accordance with the terms and conditions of the Company’s ESOP.
The options will have an exercise price of 21 cents, with an expiry date of 30 November 2022.
On Mr Dorsch’s appointment of Managing Director, the Board resolved, subject to shareholder approval at the
Company’s 2019 AGM to issue Mr Dorsch 1,000,000 share options, under the terms and conditions of the Company’s ESOP,
with an exercise price of 21 cents (adjusted for the capital return of 4 cents), expiring 30 November 2021.
Performance rights
At the date of this report 10,852,699 performance rights (have been issued on the following terms and conditions:
Exercise price ($)
Number of rights
Nil
Nil
4,550,895
6,301,804
Expiry date
30 June 2021
30 June 2022
In addition to the above, the Board resolved, subject to shareholder approval at the Company’s 2019 AGM to grant Mr
Dorsch and Mr Goyder 1,074,402 and 735,294 performance rights respectively.
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.
14.
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 and Australia.
The Company is not aware of any breach of any environmental regulations to which it is subject.
15.
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.
16.
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 $32,134 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 7.5 of the Remuneration Report.
17.
NON-AUDIT SERVICES
During the year HLB Mann Judd, the Company’s auditors provided taxation compliance services in addition to their
statutory duties. Refer to note 24.
18.
AUDITOR’S INDEPENDENCE DECLARATION
The auditor’s independence declaration is set out on page 37 and forms part of the Directors’ Report for the year ended
30 June 2019.
This Report is made in accordance with a resolution of the Directors:
Alex Dorsch
Managing Director
Dated at Perth the 5th day of September 2019
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
chalicegold.com, under the section marked “Corporate 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.
The ASX Corporate Governance Council has released the fourth edition of its Corporate Governance Principles and
Recommendations applicable to financial years commencing 1 July 2020. The Company has elected to not early adopt
the new fourth edition for the 30 June 2019 financial year.
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 2019, 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
5 September 2019
M R Ohm
Partner
Continuing operations
Revenue
Net loss on sale of available-for- sale financial assets
Net gain on sale of exploration and evaluation assets
Foreign exchange gain/(loss)
Share of net loss of associate
Derecognition of investment in associate
Impairment of financial assets
Exploration and evaluation expenditure
Corporate administrative expenses
Business development
Share based payments
Depreciation and amortisation expense
Loss from deconsolidation of subsidiaries
Loss before tax from continuing operations
Income tax benefit/(expense)
Loss for the year from continuing operations
Discontinued operations
Net loss for the year from discontinued operations
Income tax benefit
Loss for the year from discontinued operations
Note
5(a)
5(b)
5(c)
15
15
7
6(a)
6(c)
17
23
8
8
9
2019
$
670,522
-
-
1,087,262
-
148,828
-
(4,671,073)
(2,268,553)
(825,778)
(785,083)
(75,731)
-
(6,719,606)
(49,247)
(6,768,853)
(4,308,185)
910,654
(3,397,531)
2018
$
762,599
(1,080,026)
489,647
(400,585)
(148,828)
-
(20,729)
(3,429,220)
(1,938,651)
(739,724)
(482,991)
(76,557)
(2,474,433)
(9,539,498)
272,552
(9,266,946)
(9,219,145)
2,536,900
(6,682,245)
Loss for the year attributed to owners of the parent
(10,166,384)
(15,949,191)
Other comprehensive income/(loss)
Items that may be reclassified to profit or loss
Foreign exchange on deconsolidation of subsidiaries
Items that will not be reclassified to profit or loss
Net fair value gain on fair value of equity investments, net
of tax
Exchanges differences on translation of foreign operations
Other comprehensive income for the year
-
2,529,571
(300,956)
137,508
(163,448)
1,150,268
1,303,882
4,983,721
Total comprehensive loss for the year
(10,329,832)
(10,965,470)
Total comprehensive loss for the year attributable to owners
of the parent
(10,329,832)
(10,965,470)
Basic and diluted loss per share from continuing operations
Basic and diluted loss per share from discontinued
operations
Basic and diluted loss per share from continuing and
discontinued operations
10
9
(0.03)
(0.01)
(0.04)
(0.03)
(0.03)
(0.06)
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying
notes.
Current assets
Cash and cash equivalents
Trade and other receivables
Financial assets
Income tax receivable
Assets held for sale
Total current assets
Non-current assets
Financial assets
Investment accounted for using the equity method
Property, plant and equipment
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Income tax payable
Employee benefits
Liabilities directly associated with the assets held for sale
Total current liabilities
Non-current liabilities
Other
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Retained earnings/(accumulated losses)
Reserves
Total equity
Note
11
12
13
8
9
13
15
14
18
8
16
9
19
20(a)
20(b)
2019
$
18,620,857
472,936
1,469,956
-
1,584,349
22,148,098
349,272
-
328,530
677,802
2018
$
35,739,484
619,930
2,646,670
2,497,597
-
41,503,681
375,111
435,339
378,372
1,188,822
22,825,900
42,692,503
730,840
-
217,466
12,831
961,137
45,685
45,685
1,006,822
21,819,078
29,807,308
(9,132,908)
1,144,678
21,819,078
500,684
259,951
256,657
-
1,017,292
42,303
42,303
1,059,595
41,632,908
39,836,041
956,081
840,786
41,632,908
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
Balance at 1 July 2018
Loss for the year
Other comprehensive income for
the period
Net change in fair value of
equity investments
Exchange differences on
translation of foreign operations
Total comprehensive
income/(loss) for the year
Modified retrospective standard
application (AASB 9)
Share issue costs
Capital return
Shares issued to acquire a Joint
Venture interest
Performance rights vested
Share-based payments
Transfers between equity items
Balance at 30 June 2019
Restated Balance at 1 July 2017
Loss for the year
Other comprehensive income for
the period
Net change in fair value of
available for sale financial assets
Exchange differences on
deconsolidation of subsidiaries
Exchange differences on
translation of foreign operations
Total comprehensive income/(loss)
for the year
Share buy-back
Share-based payments
Transfers between equity items
Balance at 30 June 2018
Retained
earnings/
(Accumulated
Losses)
$
956,081
(10,166,384)
Issued
capital
$
39,836,041
-
Share based
payments
reserve
$
977,078
-
Investment
revaluation
reserve
$
243,572
-
Foreign
currency
translation
reserve
$
(379,864)
-
Total
$
41,632,908
(10,166,384)
-
-
-
-
(21,470)
(10,662,725)
415,114
240,348
-
-
29,807,308
-
-
(10,166,384)
552,368
-
-
-
-
-
-
-
-
(300,956)
-
(300,956)
-
137,508
137,508
(300,956)
137,508
(10,329,832)
(552,368)
-
-
-
-
-
-
(21,470)
(10,662,725)
-
-
-
(474,973)
(9,132,908)
-
(240,348)
785,083
(60,289)
1,461,524
-
-
-
535,262
(74,490)
-
-
-
-
(242,356)
415,114
-
785,083
-
21,819,078
Share
based
payments
reserve
$
Investment
revaluation
reserve
$
Retained
earnings
$
16,890,681
(15,949,191)
508,678
-
(906,696)
-
Foreign
currency
translation
reserve
$
(4,213,317)
-
Issued
capital
$
39,836,164
-
Total
$
52,115,510
(15,949,191)
-
-
-
-
-
-
-
-
-
1,150,268
-
1,150,268
-
-
2,529,571
2,529,571
1,303,882
1,303,882
-
(123)
-
-
39,836,041
(15,949,191)
-
-
14,591
956,081
-
-
482,991
(14,591)
977,078
1,150,268
-
-
-
243,572
3,833,453
-
-
-
(379,864)
(10,965,470)
(123)
482,991
-
41,632,908
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
Note
2019
$
2018
$
Cash flows from operating activities
Cash receipts from operations
Cash paid to suppliers and employees
Payments for mineral exploration and evaluation
Income tax received/(paid)
Exploration tax credits
Interest received
Net cash used in operating activities
Cash flows from investing activities
Payments for business development activities
Acquisition of property, plant and equipment
Proceeds from sale of fixed assets
Proceeds from sale of financial assets
Payment for acquisition of financial assets
Net cash from investing activities
Cash flows from financing activities
Security deposits
Capital return
Share issue costs
Net cash used in financing activities
11
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at 30 June
11
234,315
(2,176,047)
(8,422,012)
16,099
2,127,227
384,274
(7,836,144)
(807,610)
(58,415)
15,589
1,313,993
-
463,557
(75,000)
(10,662,725)
(21,470)
(10,759,195)
(18,131,782)
35,739,484
1,013,155
18,620,857
190,312
(1,898,587)
(12,847,286)
(1,077,222)
453,270
563,447
(14,616,066)
(635,423)
(261,225)
-
4,889,431
(1,168,931)
2,823,852
(8,871)
-
(123)
(8,994)
(11,801,208)
46,819,151
721,541
35,739,484
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
BASIS OF PREPARATION
Note 1:
Note 2:
Note 3:
Corporate information
Reporting entity
Basis of preparation
PERFORMANCE FOR THE YEAR
Note 4:
Note 5:
Note 6:
Note 7:
Note 8:
Note 9:
Note 10:
Segment reporting
Revenue
Expenses
Exploration and evaluation expenditure
Income tax
Discontinued operations
Loss per share
ASSETS
Note 11:
Note 12:
Note 13:
Note 14:
Note 15:
Cash and cash equivalents
Trade and other receivables
Financial assets
Property, plant and equipment
Investments accounted for using the equity method
EMPLOYEE BENEFITS AND SHARE-BASED PAYMENTS
Note 16:
Note 17:
Employee benefits
Share-based payments
LIABILITIES AND EQUITY
Note 18:
Note 19:
Note 20:
Trade and other payables
Issued capital
Retained earnings/(accumulated losses) and reserves
FINANCIAL INSTRUMENTS
Note 21:
Financial instruments
GROUP COMPOSITION
Note 22:
Note 23:
Parent entity
List of subsidiaries
OTHER INFORMATION
Note 24:
Note 25:
Note 26:
Note 27:
Auditor’s remuneration
Related parties
Commitments and contingencies
Events subsequent to reporting date
ACCOUNTING POLICIES
Note 28:
Note 29:
Note 30:
Goods and Services Taxes (GST)
Changes in accounting policies
Adoption of new and revised accounting standards
BASIS OF PREPARATION
This Section of the financial report sets out the Group’s (being Chalice Gold Mines Limited and its controlled entities)
accounting policies that relate to the Financial Statements as a whole. Where the accounting policy is specific to one
Note, the policy is described in the Note to which it relates.
The Notes include information which is required to understand the Financial Statements and is material and relevant to
the operations and the financial position and performance of the Group.
Information is considered relevant and material if:
•
•
•
•
The amount is significant due to its size or nature
The amount is important in understanding the results of the Group
It helps to explain the impact of significant changes in the Group’s business
It relates to an aspect of the Group’s operations that is important to its future performance.
1. Corporate information
The consolidated financial report of Chalice Gold Mines Limited for the year ended 30 June 2019 was authorised for issue
in accordance with a resolution of Directors on 5 September 2019.
Chalice Gold Mines Limited is listed on the Australian Securities Exchange (“ASX”), Toronto Stock Exchange (“TSX”), OTCQB
Venture Market (“OTCQB”) and is domiciled in Australia at Level 2, 1292 Hay Street, West Perth, Western Australia. The
nature of the operations and principal activities are disclosed in the Directors’ Report.
2. Reporting entity
The consolidated financial report comprises the financial statements of Chalice Gold Mines Limited (“Company” or
“Parent”) and its subsidiaries (“the Group”) for the year ended 30 June 2019. A list of the Group’s subsidiaries is provided
at note 23.
3. 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 also complies with International Financial Reporting Standards (IFRS) as
issued by the International Accounting Standards Board.
The financial report has been prepared on a historical cost basis, except for financial assets, 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 indicated.
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.
(a) Significant accounting judgements, estimates and assumptions
The preparation of a financial report in conformity with Australian Accounting Standards requires management to make
judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities,
income and expenses. The estimates and associated assumptions are based on historical experience and various other
factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the
judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results
may differ from these estimates. These accounting policies have been consistently applied by the Group.
Uncertainty about these assumptions and estimates could result in comes that require a material adjustment to the
carrying amount of assets or liabilities affected in future periods. The Group also discloses its exposure to risks and
uncertainties in note 21. 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)
Share-based payment transactions
The Group measures the cost of equity-settled share-based payments of options at fair value at the grant date
using a Black-Scholes Option model and performance rights are measured using a binomial 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 17.
(ii)
Non-market vesting conditions
At each reporting period non-market vesting conditions in relation to performance rights are assessed in order to
determine the probability of the likelihood that the non-market vesting conditions are met.
(b) 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 Group’s consolidated financial statements are presented in Australian Dollars (AUD), which
is also the parent company’s functional currency. 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 functional currency spot rates of exchange 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 statement 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.
(c) Impairment of assets other than financial assets
At each reporting date, the Group assesses whether there is any indication that an asset may be impaired. Where an
indicator of impairment exists, or when annual impairment testing for an asset is required, the Group makes a formal
estimate of recoverable amount. An asset’s recoverable amount is the higher of an asset’s or CGU’s fair value less costs
of disposal and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not
generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying
amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its
recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount
rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining
fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be
identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted
share prices for publicly traded companies or other available fair value indicators. For an asset that does not generate
largely independent cash flows, the recoverable amount is determined for the cash generating unit to which the asset
belongs.
Impairment losses are recognised in the statement of profit and loss in expense categories consistent with the function of
the impaired asset 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 profit and loss.
Receivables with a short duration are not discounted.
For assets excluding goodwill, an assessment is made at each reporting date to determine whether there is an indication
that previously recognised impairment losses no longer exist or have decreased. If such indication exists, the Group
estimates the asset’s or CGU’s recoverable amount. A previously recognised impairment loss is reversed only if there has
been a change in the estimates and assumptions used to determine the asset’s recoverable amount since the last
impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its
recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no
impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit or loss unless the asset is
carried at revalued amount, in which case the reversal is treated as a revaluation increase. After such a reversal the
depreciation charge is adjusted in future periods to allocate the asset’s revised carrying amount, less any residual value,
on a systematic basis over its remaining useful life.
PERFORMANCE FOR THE YEAR
This section provides additional information about those line items in the Statement of Comprehensive Income that the
directors consider most relevant in the context of the operations of the entity.
4. Segment reporting
The Group has identified its operating segments based on internal reports that are reviewed and used by the Board of
Directors in assessing performance and in determining the allocation of resources. The operating segments are identified
by management based on the allocation of costs; whether they are exploration and evaluation costs, or corporate
related costs. Results of those segments are reported to the Board of Directors at each Board meeting. The exploration
and evaluation segment includes all of the Company’s exploration projects grouped into one combined segment.
Revenue
Net gain on sale of exploration and
evaluation assets
Exploration and evaluation
expenditure
Depreciation
Business development
Share based payments
Corporate administrative expenses
Exploration and Evaluation
Corporate
Total
2019
$
-
-
2018
$
-
2019
$
308,438
2018
$
203,412
2019
$
308,438
2018
$
203,412
489,647
-
-
-
489,647
(4,671,073)
-
-
-
-
(3,429,220)
-
-
-
-
-
(75,731)
(825,778)
(785,083)
(2,268,553)
-
(76,557)
(739,724)
(482,991)
(1,938,651)
(4,671,073)
(75,731)
(825,778)
(785,083)
(2,268,553)
(3,429,220)
(76,557)
(739,724)
(482,991)
(1,938,651)
(5,974,084)
Segment loss before tax
(4,671,073)
(2,939,573)
(3,646,707)
(3,046,581)
(8,317,780)
Unallocated income/(expenses)
Net financing income
Net (loss)/gain on sale of available-
for- sale financial assets
Foreign exchange gain/(loss)
Income tax benefit/(expense)
Share of net loss of associate
Loss on deconsolidation of
subsidiaries
Derecognition of investment in
associate
Impairment of financial assets
Loss from discontinued operations
Loss attributable to owners of the parent
362,084
559,187
-
1,087,262
(49,247)
-
(1,080,026)
(400,585)
272,552
(148,828)
-
(2,474,433)
148,828
-
(3,397,531)
-
(20,729)
(6,682,245)
(10,166,384)
(15,949,191)
Segment assets:
Investments accounted for using the
equity method
Assets held for sale
Other
Unallocated assets
Total assets
Segment liabilities
Unallocated liabilities
Total Liabilities
Exploration and Evaluation
Corporate
Total
30 June 2019
30 June 2018
30 June 2019
30 June 2018
30 June 2019
30 June 2018
$
$
$
$
$
$
-
1,584,349
230,499
1,814,848
435,339
-
4,107,586
4,542,925
-
-
676,840
676,840
-
-
447,117
447,117
-
1,584,349
907,339
2,491,688
435,339
-
4,554,703
4,990,042
20,334,212
37,702,461
22,825,900
42,692,503
(260,059)
(260,059)
(572,477)
(572,477)
(746,763)
(746,763)
(487,118)
(1,006,822)
(1,059,595)
(487,118)
(1,006,822)
(1,059,595)
-
-
(1,006,822)
(1,059,595)
Geographical information
Revenues from external customers
Australia
Canada
Non-current assets
Australia
Canada
5.
Revenue
(a) Revenue
Corporate and administration services
Net finance income
Other
(b) Net loss on sale of available for sale financial assets
Net loss on sale of available for sale financial assets
2019
$
291,600
16,468
308,068
2019
$
249,169
79,361
328,530
2019
$
291,600
362,084
16,838
670,522
2019
$
-
-
2018
$
203,418
-
203,418
2018
$
707,812
105,899
813,711
2018
$
177,600
559,187
25,812
762,599
2018
$
(1,080,026)
(1,080,026)
Net loss on sale of available for sale financial assets at 30 June 2018 represents the net loss position incurred as a result
of the sale of shares held in various ASX and TSX entities.
(c) Net gain on sale of exploration and evaluation assets
Net gain on sale of exploration and evaluation assets
2019
$
-
-
2018
$
489,647
489,647
Net gain on sale of exploration and evaluation assets for the prior financial year ended 30 June 2018 relates to the sale
of Dumbleyung tenements to ASX Listed Ausgold Ltd (“Ausgold”) in September 2017.
Accounting policy
Revenue is measured at fair value of the consideration received or receivable. Amounts disclosed as revenue are net
of returns, trade allowances, rebates and amounts collected on behalf of third parties.
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the
Group and the amount of revenue can be reliably measured. Interest income is accrued on a time basis, by reference
to the Principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts
estimated future cash receipts through the expected life of the financial asset to that assets’ net carrying amount on
initial recognition.
6.
Expenses
(a) Corporate administrative expenses
Insurance
Investor relations
Legal fees
Travel and conferences
Head office costs
Regulatory and compliance
Personnel expenses (note 6(b))
Other
(b)
Personnel expenses
Wages and salaries
Directors’ fees
Other associated personnel expenses
Superannuation contributions
Increase in liability for annual leave
Increase in liability for long service leave
(c) Business development costs
Personnel expenses
Head office costs
Consultants
Travel and conferences
Other
7.
Exploration and evaluation expenditure
Pyramid Hill, Victoria
Julimar, Western Australia
King Leopold, Western Australia
Flinders River, Queensland
West Pilbara, Western Australia
Latitude Hill, Western Australia
Warrego North, Northern Territory
Yilgarn Projects, Western Australia
Other(1)
2019
$
45,014
119,798
4,509
148,789
72,854
427,750
1,425,317
24,522
2,268,553
2019
$
752,306
162,542
274,555
205,161
18,502
12,251
1,425,317
2019
$
384,049
109,814
95,520
187,389
49,006
825,778
2019
$
2,981,093
127,951
83,316
142,224
24,407
-
174,299
146,361
991,422
4,671,073
2018
$
39,238
51,717
6,946
140,187
84,250
345,849
1,206,239
64,225
1,938,651
2018
$
568,537
233,755
177,427
177,277
36,301
12,942
1,206,239
2018
360,092
104,221
175,989
95,046
4,376
739,724
2018
$
85,406
6,113
-
-
843,192
621,682
427,276
322,736
1,122,815
3,429,220
(1)Other includes generative opportunity evaluations within existing or in close proximity to the Group’s current
exploration projects.
(2)Costs associated with the East Cadillac and Kinebik Gold Projects has been included in note 9, discontinued
operations as these projects are registered to the wholly owned subsidiary, Chalice Gold Mines (Quebec) Inc. that was
sold subsequent to reporting date (refer note 9).
Accounting policy
Costs incurred in the exploration and evaluation stages of specific areas of interest are expensed against the profit or
loss as incurred. All exploration expenditure, including acquisition costs, general permit activity, geological and
geophysical costs, project generation and drilling costs, is expensed as incurred. Once the technical feasibility and
commercial viability of extracting a mineral resource are demonstrable in respect of an area of interest, development
expenditure is capitalised to the Statement of Financial Position.
8.
Income tax
The major components of income tax expense are as follows:
Current income tax:
Over/(under) provision for income tax
Foreign exploration incentive tax credits
Deferred tax:
Temporary differences relating to financial assets
Total income tax benefit reported in the statement of comprehensive
income
2019
$
249,909
935,172
1,185,081
2018
$
66,461
2,474,645
2,541,106
(323,674)
268,346
861,407
2,809,452
The prima facie income tax expense on pre-tax accounting result on operations reconciles to the income tax
expense in the financial statements as follows:
Accounting loss from continuing operations
Accounting loss from discontinued operations
Income tax calculated at the Australian corporate rate of 27.5%
Non-deductible expenses
Share based payments
Loss on sale of equity investments
Non-assessable income
Deferred tax assets and liabilities not recognised
Foreign exploration incentive tax credits
Income tax benefit on financial assets
Effect of different tax rates of subsidiaries operating in other jurisdictions
Under provision for income tax
Income tax benefit reported in the statement of comprehensive
income
2019
$
(6,719,606)
(4,308,185)
(11,027,791)
(3,032,643)
37,456
215,898
(100,997)
(40,928)
2,877,211
(935,172)
323,674
52,517
(258,423)
2018
$
(9,539,498)
(9,219,145)
(18,758,643)
(5,158,627)
1,937,497
132,823
-
(216,847)
3,110,350
(2,474,645)
(92,389)
18,847
(66,461)
861,407
2,809,452
The tax rate used in the above reconciliation is the corporate rate of 27.5% payable by Australian corporate entities
on taxable profits under Australian tax law.
Current tax assets comprise:
Income tax receivable attributable to:
Parent Entity
Group’s subsidiaries/discontinued operations
Current tax liabilities comprise:
Income tax payable/(receivable) attributable to:
Parent Entity
Group’s subsidiaries/discontinued operations
2019
$
-
1,412,434
1,412,434
2019
$
-
-
-
2018
$
-
2,497,597
2,497,597
2018
$
259,951
-
259,951
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:
Other deferred tax liabilities
Income tax benefit not recognised directly in equity during the year:
Share issue costs
2019
$
8,670,145
444,326
9,114,471
350,326
350,326
2018
$
6,109,309
1,097,343
7,206,652
17,296
17,296
2019
$
2018
$
5,905
33
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.
Accounting Policy
The income tax expense or benefit for the period is the tax payable or receivable 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.
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.
Unrecognised deferred income tax assets at each reporting 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.
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 if a legally enforceable right exists to set off current tax assets against
current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
Tax Consolidation
Chalice and its 100% owned Australian resident subsidiaries implemented the tax consolidation legislation from 1 July
2017. The accounting policy for the implementation of the tax consolidation legislation is set out above.
9.
Discontinued operations
On 2 July 2019, the Group entered into a binding Share Purchase Agreement (“SPA”) to sell its wholly owned
subsidiary Chalice Gold Mines (Quebec) Inc. to Chantrell Ventures Corp. (now known as “O3 Mining Inc.”).
Chalice Gold Mines (Quebec) Inc. is the registered holder of the Group’s East Cadillac and Kinebik Project in
Quebec, Canada.
Under the SPA, O3 Mining Inc. (“O3 Mining”) acquired all outstanding shares in Chalice Gold Mines (Quebec) Inc.
in consideration for 3,092,784 common shares of O3 Mining. In addition, the Group will retain a partial 1% Net
Smelter Return Royalty and receive outstanding tax credits owing to Chalice Gold Mines (Quebec). The sale was
completed on 26 July 2019 (refer note 27).
At 30 June 2019, the wholly owned subsidiary Chalice Gold Mines (Quebec) Inc. was classified as a disposal group
held for sale and as a discontinued operation. The results of Chalice Gold Mines (Quebec) Inc. for the year is
presented below:
Revenue
Exploration and evaluation expenditure
Corporate administrative expenses
Loss before tax from discontinued operations
Income tax benefit
Loss for the year from discontinued operations
2019
$
370
(4,305,993)
(2,562)
(4,308,185)
910,654
(3,397,531)
2018
$
244
(9,207,319)
(12,070)
(9,219,145)
2,536,900
(6,682,245)
The major classes of assets and liabilities of Chalice Gold Mines (Quebec) Inc. as held for sale at 30 June 2019 are
as follows:
Assets
Trade and other receivables
Income tax receivable
Assets held for sale
Liabilities
Trade and other payables
Liabilities directly associated with assets held for sale
Net assets directly associated with disposal group
The net cash flows incurred by Chalice Gold Mines (Quebec) Inc. are as follows:
2019
$
171,915
1,412,434
1,584,349
(12,831)
(12,831)
1,571,518
Operating cash flows
Investing cash flows
Financing cash flows
Net cash inflows
Earnings per share
Basic earnings, profit/(loss) for the year from discontinued operations
Diluted earnings profit/(loss) for the year from discontinued operations
2019
$
34,442
-
-
34,442
2019
$
(0.01)
(0.01)
2018
$
589,469
-
-
589,469
2018
$
(0.03)
(0.03)
Accounting policy
Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered
principally through a sale transaction rather than through continuing use. This condition is regards as met only when
an asset (or disposal group) is available for immediate sale in its present condition subject only to terms that are
usual and customary for sales for such asset (or disposal groups) and the sale is highly probable. Management must
be committed to the sale, which should be expected to qualify for recognition as a complete sale within one year
from the date of classification.
When the Group is committed to a sale plan involving disposal of an investment, or a portion of an investment, in
an associate or joint venture, the investment or the portion of the investment that will be disposed of is classified as
held for sale when the criteria described above are met, and the Group discontinues the use of the equity method
in relation to the portion that is classified as held for sale. Any retained portion of an investment in an associate or
joint venture that has not been classified as held for sale continues to be accounted for using the equity method.
The Group discontinues the use of the equity method at the time of disposal when the disposal results in the Group
losing significant influence over the associate or joint venture.
After the disposal takes place, the Group accounts for any retained interest in the associate or joint venture in
accordance with AASB 9 unless the retained interest continues to be an associate or a joint venture, in which case
the Group uses the equity method
10.
Loss per share
Basic and diluted loss per share
The calculation of basic loss per share for the year ended 30 June 2019 was based on the loss attributable to
ordinary equity holders of the parent of $10,166,384 (2018: loss of $15,949,191) and a weighted average number of
ordinary shares outstanding during the year ended 30 June 2019 of 265,944,054 (2018: 261,210,294).
Loss attributable to ordinary shareholders
Loss attributable to ordinary equity holders of the parent from
continuing operations
Loss attributable to ordinary equity holders of the parent from
discontinued operations
Net loss attributable to ordinary equity holders of the parent for basic
earnings
Net loss attributable to ordinary equity holders of the parent adjusted
2019
$
2018
$
(6,768,853)
(9,266,946)
(3,397,531)
(6,682,245)
(10,166,384)
(15,949,191)
for the effect of dilution
(10,166,384)
(15,949,191)
Diluted loss per share has not been disclosed as the impact from options and performance rights is anti-dilutive.
Accounting policy
Basic loss per share is calculated as net profit attributable to members of the parent, adjusted to exclude any costs
servicing equity (other than dividends) and preference share dividends, divided by the weighted average number
of ordinary shares, adjusted for any bonus element.
Diluted loss per share is calculated as net profit attributable to members of the parent, adjusted for:
• costs of servicing equity (other than dividends) and preference share dividends;
•
the affect tax effect of dividends and interest associated with dilutive potential ordinary shares that have been
recognised as expenses; and
• other non-discretionary changes in revenues or expenses during the period that would result from the dilution of
potential ordinary shares; divided by the weighted average number of ordinary shares and dilutive potential
ordinary shares, adjusted for any bonus element.
ASSETS
This section provides additional information about those individual line items in the Statement of Financial Position that the
Directors consider most relevant in the context of the operations of the entity.
11. Cash and cash equivalents
Bank balances and cash on hand
Term deposits
2019
$
9,293,083
9,327,774
18,620,857
2018
$
9,812,278
25,927,206
35,739,484
Reconciliation of cash flows from operating activities
2019
$
2018
$
Loss for the year attributed to owners of the parent
(10,166,384)
(15,949,191)
Adjustments for:
Depreciation and amortisation
Fixed assets written off
Gain on sale of fixed assets
Income tax benefit
Net loss/(gain) on sale of available of equity investments
Net gain on sale of exploration and evaluation assets
Foreign exchange (gains)/loss
Business development and project acquisition costs
Impairment of financial assets
Derecognition of investment in associate
Deconsolidation of subsidiaries
Share of associate’s loss
Acquisition of 30% JV interest
Equity-settled share-based payment expenses
Operating loss before changes in working capital and provisions
(Increase)/decrease in trade and other receivables
Increase in financial assets
(decrease)/Increase in trade creditors and other liabilities
(decrease)/increase in provisions
Net cash used in operating activities
107,652
5,987
(15,524)
(861,407)
-
-
(1,087,262)
825,778
-
(148,828)
-
-
415,114
785,083
(10,139,791)
2,237,803
(3,771)
70,667
(1,052)
(7,836,144)
113,768
30,897
-
(2,809,452)
1,080,026
(489,647)
400,585
739,724
20,729
-
2,474,433
148,828
-
482,991
(13,756,309)
(142,657)
(2,663)
(739,107)
24,670
(14,616,066)
Non-cash financing and investing activities
During the year the Company completed the acquisition of the remaining 30% interest in a JV property within the
East Cadillac Gold Project in Quebec, Canada. The interest was acquired through the issue of 3,000,000 shares in the
Company to Monarques Gold Corporation (refer note 19).
Accounting policy
Cash and cash equivalents in the statement of financial position comprise cash balances and call deposits with an
original maturity of six months or less, which are subject to an insignificant risk of changes in value. The carrying value
of cash and cash equivalents is considered to approximate fair value.
12.
Trade and other receivables
Other trade receivables
Prepayments
2019
$
299,182
173,754
472,936
2018
$
466,668
153,262
619,930
Accounting Policy
Trade and other receivables are recognised at fair value which is usually the value of the invoice sent to the
counterparty and subsequently at the amounts considered recoverable. Trade receivables are generally due for
settlement within periods ranging from 30 to 60 days.
13.
Financial assets
Current
Equity instruments designated at fair value through other comprehensive
income:
Listed equity investments
Unlisted equity investments
2019
$
2018
$
885,789
584,167
1,469,956
2,646,670
-
2,646,670
Listed equity investments represents investments in various companies listed on the ASX and TSX. Unlisted equity
investments represents the Company’s investment in GeoCrystal Limited (“GeoCrystal”), which was previously
recognised as an investment in associate (refer note 15).
Non-current
Bond in relation to office premises
Bank guarantee and security deposits
Options and warrants in listed entities
2019
$
70,829
244,444
33,999
349,272
2018
$
69,912
166,590
138,609
375,111
Accounting Policy
Initial recognition and measurement
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provision
of the financial instrument.
Financial assets are derecognised when the contractual right to the cash flows from the financial asset expire, or
when the financial asset and substantially all the risks and rewards are transferred.
A financial liability is derecognised when it is extinguished, discharged, cancelled or expires.
Except for those trade receivables that do not contain a significant financing component and are measured at the
transaction price in accordance with AASB 15, all financial assets are initially measured at fair value adjusted for
transaction costs (where applicable). For the purpose of subsequent measurement, financial assets, other than those
designated and effective as hedging instruments, are classified into the following categories:
fair value through profit and loss (“FVTPL”).
• amortised cost.
•
• equity instruments at fair value through other comprehensive income (“FVOCI”).
• debt instruments at fair value through other comprehensive income (“FVOCI”).
All income and expenses relating to financial assets that are recognised in profit or loss are presented with finance
costs, finance income or other financial items, except for impairment of trade receivables which is presented within
other expenses.
The classification is determined by both:
•
•
the entity’s business model for managing the financial asset.
the contractual cash flow characteristics of the financial asset.
All income and expenses relating to the financial assets that are recognised in profit or loss are presented within
finance costs, finance income or other financial items, except for impairment of trade receivables which is
presentenced within other expenses.
Subsequent measurement
(a) Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets meet the following conditions (and are not designated
as FVTPL):
(i) they are held within a business model whose objective is to hold the financial assets to collect its contractual cash
flows.
(ii) the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and
interest on the principal amount outstanding.
After initial recognition, these are measured at amortised cost using the effective interest method. Discounting is
omitted where the effect of discounting is immaterial. The Group’s cash and cash equivalents, trade and most other
receivables fall into this category of financial instruments.
Financial assets at fair value through profit or loss include financial assets held-for-trading and financial assets
designated upon initial recognition 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. Gains or losses on investments held-for-trading are
recognised in profit or loss.
(b) Equity instruments at fair value through other comprehensive income (Equity FVOCI)
Investments in equity instruments that are not held for trading are eligible for an irrevocable election at inception to
be measured at FVOCI.
Under Equity FVOCI, subsequent movements in fair value are recognised in other comprehensive income and are
never reclassified to profit or loss. Dividend from these investments continue to be recorded as other income within
the profit or loss unless the dividend clearly represents return of capital.
This category includes unlisted equity securities that were previously classified as ‘available-for-sale’ under AASB 139.
Any gains or losses recognised in other comprehensive income (OCI) are not recycled upon derecognition of the
asset.
Impairment of financial assets
AASB 9’s impairment requirements use more forward-looking information to recognise expected credit losses – the
‘expected credit loss (ECL) model’. This has replaced AASB 139’s ‘incurred loss model’.
Instruments within the scope includes loans and other debt-type financial assets measured at amortised cost and
FVOCI, trade receivables, contract assets recognised and measured under AASB 15 and loan commitments and
some financial guarantee contracts (for the issuer) that are not measured at fair value through profit or loss.
Trade and other receivables and contract assets
The Group makes use of a simplified approach in accounting for trade and other receivables as well as contract
assets and records the loss allowance as lifetime expected credit losses. These are the expected shortfalls in
contractual cash flows, considering the potential for default at any point during the life of the financial instrument. In
calculating, the Group uses its historical experience, external indicators and forward-looking information to calculate
the expected credit losses using a provision matrix. The Group assess impairment of trade receivables on a collective
basis as they possess shared credit risk characteristics they have been grouped based on the days past due.
14.
Property, plant and equipment
2019
$
2018
$
Cost
Accumulated depreciation and impairment
Net carrying amount
Movements in property, plant and equipment:
At 1 July net of accumulated depreciation
Additions
Disposals
Exchange differences
Depreciation charge for the year
At 30 June net of accumulated depreciation and impairment
874,397
(545,867)
328,530
378,372
58,414
(3,828)
3,465
(107,893)
328,530
969,787
(591,415)
378,372
308,600
211,894
(30,897)
2,543
(113,768)
378,372
Accounting Policy
Property, plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment
losses, if any.
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 assets' residual values, useful lives and amortisation methods are reviewed, and adjusted if appropriate, at
each financial year end.
An item of plant and equipment and any significant part initially recognised 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 the statement of profit or loss when 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.
15.
Investments accounted for using the equity method
During the year ended 30 June 2019, the Company’s investment in GeoCrystal Ltd reduced from 20.46% to 19.4%
due to a dilutionary event and therefore, the Company no longer has significant influence over GeoCrystal. As
a result of the dilution, the Company’s investment is now accounted for as an equity instrument through other
comprehensive income rather than as an associate (refer note 13).
Reconciliation of movements in investments in associates:
Balance at 1 July
Share placement
Derecognition of investment in associate
Share of associate’s loss
Reclassification to equity instruments through other comprehensive
income
Balance at 30 June
Summary of financial information of associate:
Financial Position
Total assets
Total liabilities
Net assets
Share of associate’s net assets
Financial Performance
Total revenue
Total loss for the year
Share of associate’s loss
2019
$
435,339
-
148,828
-
(584,167)
-
2019
$
-
-
-
-
-
-
-
2018
$
484,167
100,000
-
(148,828)
-
435,339
2018
$
2,238,888
(111,131)
2,127,757
435,339
343
(727,242)
(148,828)
Accounting Policy
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 is initially recognised 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 tested for impairment separately. 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. At each reporting date, the Group determines whether there is objective evidence
that the impairment in the associate is impaired. If there is such evidence, the Group calculates the amount of the
impairment as the difference between the recoverable amount of the associate and its carrying value, and then
recognises the loss as ‘Share of profit of an associate’ in the statement of profit or loss.
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.
Upon loss of significant influence over the associate, the Group measures and recognised any retained investment
at its fair value. Any difference between the carrying amount of the associate upon loss of significant influence and
the fair value of the retained investment and proceeds from disposal is recognised in profit or loss.
EMPLOYEE BENEFITS AND SHARE-BASED PAYMENTS
This section of the Notes includes information that must be disclosed to comply with accounting standards and other
pronouncements relating to the remuneration of employees and consultants of the Group, but that is not immediately
related to individual line items in the Financial Statements.
16.
Employee benefits
Annual leave accrued
Provision for long service leave
2019
$
166,549
50,917
217,466
2018
$
150,563
106,094
256,657
Accounting Policy
Liabilities for employee benefits for wages, salaries, annual leave and sick leave expected to be settled within 12
months of the reporting date are recognised in employee benefits in respect of employees’ services up to the
reporting date. They are measured at the amounts expected to be paid when the liabilities are settled.
The provision for long service leave represents the vested long service leave entitlements accrued.
17.
Share-based payments
(a) Employee share option plan
The Group has an Employee Share Option Plan (“ESOP”) in place. Under the terms of the ESOP, the Board may offer
options for no consideration to full-time or part-time employees (including persons engaged under a consultancy
agreement), executive and non-executive directors. In the case of the directors, the issue of options under the
ESOP requires shareholder approval.
Each option entitles the holder, on exercise, to one ordinary fully paid share in the Company. There is no issue price
for the options. The exercise price for the options is determined by the Board.
An option may only be exercised after that option has vested and any other conditions imposed by the Board on
exercise satisfied. The Board may determine the vesting period, if any.
(b) Other share based payments – Options
In December 2018 and June 2019, the Company issued 700,000 and 500,000 unlisted share options respectively to
corporate advisors of the Company as partial consideration for services pursuant to contractual terms and
conditions between the Company and the corporate advisors. The share options were issued separately to the
Company’s ESOP, however details of the issue are outlined below.
The number and weighted average exercise prices of share options is as follows:
30 June 2019
Outstanding at the beginning of the year
Exercised during the year
Lapsed during the year
Granted during the year
Outstanding at the end of the year
Exercisable at the end of the year
30 June 2018
Outstanding at the beginning of the year
Exercised during the year
Lapsed during the year
Granted during the year
Outstanding at the end of the year
Exercisable at the end of the year
Weighted average
exercise price
$
2019
0.22
-
0.21
0.22
0.19
0.19
Weighted average
exercise price
$
2018
0.25
-
0.25
0.21
0.22
0.23
Number
of options
2019
5,500,000
-
(500,000)
1,200,000
6,200,000
4,866,666
Number
of options
2018
2,250,000
-
(750,000)
4,000,000
5,500,000
2,833,332
The options outstanding at 30 June 2019 have a weighted average exercise price of $0.19 (2018: $0.22) and a
weighted average contractual life of 3 years (2018: 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 (expressed as weighted average)
2019
0.12
0.22
64.88%
3
-
1.56%
2018
0.175
0.21
57.31%
3
-
2.12%
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.
(c) 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, however 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 2019 was 13.1 cents per
performance right (2018: 12.7 cents).
A summary of performance rights is as follows:
30 June 2019:
Grant date
25 June 2015
25 November 2015
15 July 2016
22 November 2016
27 July 2017
9 November 2017
29 November 2017
31 July 2018
28 November 2018
Opening
balance
2,404,847
1,664,707
2,271,452
1,200,738
2,825,590
507,316
1,217,989
-
-
12,092,639
Granted
-
-
-
-
-
-
-
5,430,053
871,751
6,301,804
Vested
(1,210,396)
(1,147,444)
-
-
-
-
-
-
Lapsed/Forfeited
(1,194,451)
(517,263)
-
-
-
-
-
-
(2,357,840)
(1,711,714)
Share
price at
date of
issue
($)
0.11
0.11
0.19
0.16
0.16
0.205
0.18
0.155
0.155
Closing
balance
-
-
2,271,452
1,200,738
2,825,590
507,316
1,217,989
5,430,053
871,751
14,324,889
30 June 2018:
Grant date
25 June 2015
25 November 2015
15 July 2016
22 November 2016
19 June 2017
27 July 2017
9 November 2017
29 November 2017
Opening
balance
2,404,847
1,664,707
2,271,452
1,200,738
1,000,000
-
-
-
8,541,744
Granted
-
-
-
-
-
3,711,302
615,056
1,217,989
5,544,347
Vested
-
-
-
-
-
-
-
-
-
Lapsed/Forfeited
-
-
-
-
(1,000,000)
(885,712)
(107,740)
-
(1,993,452)
Share
price at
date of
issue
($)
0.11
0.11
0.19
0.16
0.16
0.16
0.205
0.18
Closing
balance
2,404,847
1,664,707
2,271,452
1,200,738
-
2,825,590
507,316
1,217,989
12,092,639
The fair values of performance rights granted 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.
The following table gives the assumptions made in determining the fair values of the performance rights granted.
Weighted share price at grant date
Exercise price
Expected volatility
Weighted average performance period (years)
Weighted average 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 – equity settled
Performance rights granted in 2018
Performance rights granted in 2019
Total expenses recognised as share based payments
2019
$0.155
Nil
50%
2.75
2.75
-
2.10%
2019
$
103,877
-
681,206
785,083
2018
$0.17
Nil
50%
2.83
2.83
-
1.92%
2018
$
105,446
377,545
-
482,991
Accounting Policy
The cost of share- based payments is recognised in employee benefits expense, together with a corresponding
increase in Share-based Payments Reserve in equity, over the period in which the performance and/or service
conditions are fulfilled (the vesting period). 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. No adjustment is made for the likelihood of
market performance conditions being met as the effect of these conditions is included in the determination of fair
value at grant date. The Statement of Comprehensive Income charge or credit for a period represents the
movement in cumulative expense recognised as at the beginning and end of that period.
Service and non-market performance conditions are not taken into account when determining the grant date fair
value of awards, but the likelihood of the conditions being met is assessed as part of the Group’s best estimate of the
number of equity instruments that will ultimately vest. Market performance conditions are reflected within the grant
date fair value. Any other conditions attached to an award, but without an associated service requirement, are
considered to be non-vesting conditions. Non-vesting conditions are reflected in the fair value of an award and lead
to an immediate expensing of an award unless there are also service and/or performance conditions.
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.
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 modification that increases the total fair value of
the share-based payment arrangement, or is otherwise beneficial to the employee, as measured at the date of
modification.
Where an equity-settled award is cancelled by the entity or by the counterparty, 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 through
profit or loss. 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.
LIABILITIES AND EQUITY
This section provides additional information about those individual line items in the Statement of Financial Position that the
Directors consider most relevant in the context of the operations of the entity.
18.
Trade and other payables
Trade payables
Other payables
Accrued expenses
2019
$
139,616
83,164
508,060
730,840
2018
$
23,759
81,044
395,881
500,684
Accounting Policy
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.
19.
Issued Capital
There were 266,568,134 shares on issue at 30 June 2019 (2018: 261,210,294).
(a) Movements in ordinary shares on
issue
Balance at beginning of financial year
Shares issued on vesting of performance
rights
Shares issued to acquire a JV interest(1)
Capital return(2)
Share issue costs
Balance at end of financial year
2019
2018
No.
$
No.
$
261,210,294
39,836,041
261,210,294
39,836,164
2,357,840
3,000,000
-
-
266,568,134
240,348
415,114
(10,662,725)
(21,470)
29,807,308
-
-
-
261,210,294
-
-
-
(123)
39,836,041
(1)On 10 September 2018, the Company issued 3,000,000 fully paid ordinary shares to Monarques Gold Corporation
to acquire the remaining 30% interest in a joint venture property within the East Cadillac Gold Project.
(2)Following Shareholder approval at the Company’s 2018 Annual General Meeting, the Company completed a
capital return to shareholders amounting to $0.04 per share. Payment was made to Shareholders registered at the
close of business on 30 November 2018.
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
2019
No.
5,500,000
-
(500,000)
1,200,000
6,200,000
2018
No.
2,250,000
-
(750,000)
4,000,000
5,500,000
At 30 June 2019 the Company had 6,200,000 unlisted options on issue under the following terms and conditions:
Number
Expiry Date
1,000,000
2,000,000
2,000,000
700,000
500,000
30 November 2019
31 March 2021
31 March 2021
18 December 2021
10 June 2022
Exercise Price
$
0.21
0.16
0.18
0.20
0.25
(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
2019
No.
12,092,639
6,301,804
(2,357,840)
(1,711,714)
14,324,889
2018
No.
8,541,744
5,544,347
-
(1,993,452)
12,092,639
At 30 June 2019 the Company had 14,324,889 performance rights on issue under the following terms and conditions:
Number
3,472,190
4,550,895
6,301,804
Terms
the Company’s
The number of performance rights that will vest will be solely
dependent on the Company meeting the outlined strategy
Total
objectives and by comparing
Shareholder Return with that of a comparator group, as at the
measurement date of 30 June 2019, as outlined in the
Remuneration Report.
The number of performance rights that will vest will be solely
dependent on the Company meeting the outlined strategy
objectives and by comparing
Total
Shareholder Return with that of a comparator group, as at the
measurement date of 30 June 2020, as outlined in the
Remuneration Report.
The number of performance rights that will vest will be solely
dependent on the Company meeting the outlined strategy
objectives, absolute
(“TSR”)
objectives and by comparing the Company’s TSR with that of
a comparator group, as at the measurement date of 30 June
2021, as outlined in the Remuneration Report.
Total Shareholder Return
the Company’s
Expiry Date
Exercise Price
$
30 June 2020
Nil
30 June 2021
Nil
30 June 2022
Nil
20. Retained earnings/(accumulated losses) and reserves
(a) Movements in retained earnings/(accumulated losses) attributable
to owners of the parent:
Balance at beginning of financial year
Loss for the year attributable to owners of the parent
Modified retrospective adjustment for change in accounting policy
Net loss on fair value of equity investments transferred between equity
items
Transfers between equity items
Balance at end of financial year
(b) Nature and purpose of reserves
2019
$
956,081
(10,166,384)
552,368
(535,262)
60,289
(9,132,908)
2018
$
16,890,681
(15,949,191)
-
-
14,591
956,081
(i) Share-based payments reserve
The share-based payments reserve is used to recognise the value of equity-settled share-based payment transactions
provided to employees, including key management personnel, as part of their remuneration. Refer to note 17 for
further details of these plans.
(ii) Foreign currency translation reserve
The foreign currency reserve is used to record exchange differences arising from the translation of the financial
statements of foreign subsidiaries. It is also used to record the effect of exchange variances resulting from net
investments in foreign operations.
(iii) Investment revaluation reserve
The investment revaluation reserve comprises the cumulative net change in the fair value of equity investments.
All movements in the above reserves are as stated in the consolidated statement of changes in equity.
FINANCIAL INSTRUMENTS
This section of the Notes discusses the Group’s exposure to various risks and shows how these could affect the Group’s
financial position and performance.
21.
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/(accumulated losses) as disclosed in notes 19 and 20.
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 United States Dollar (“USD”), Australian dollar (“AUD”) and Canadian dollar (“CAD”) 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 2019, Chalice had
approximately US$5.2 million (A$7.4 million) cash on hand in US$ denominated bank accounts and C$0.7 million
(A$0.8 million) cash on hand in C$ 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%
2019
$
(676,762)
744,439
(676,762)
744,439
2018
$
(1,247,023)
1,371,756
(1,247,023)
1,371,756
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 sensitivity 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%
2019
$
(212,347)
233,582
(212,347)
233,582
2018
$
(1,048,087)
1,152,951
(1,048,087)
1,152,951
(ii) Equity prices
The Group has exposure to equity prices through its holdings in various listed entities. The following table outlines
the impact of increases/decreases in the value of the Company’s investment holding on the components of
equity. The sensitivity analysis uses a variance of 10% movement upwards and down on the year end closing share
prices.
Impact on equity
Share price +10%
Share price -10%
2019
$
88,579
(80,526)
2018
$
264,667
(240,606)
(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
2019
$
2018
$
18,620,857
35,739,484
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 2019, 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
2019
$
183,768
(183,768)
183,768
(183,768)
2018
$
350,855
(350,855)
350,855
(350,855)
(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.
(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 $730,840 (2018:
$500,684) 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, equity investments designated at fair
value through other comprehensive income are 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.
Accounting Policy
The Group measures financial instruments at fair value at each balance sheet date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. The fair value is based on the presumption that the
transaction to sell the asset or transfer the liability takes place either:
•
•
In the principal market for the asset or liability; or
In the absence of a principal market, the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Group.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are
available to measure fair value, maximise the use of relevant observable inputs and minimising the use of
unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised
within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair
value measurement as a whole:
•
•
•
Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement
is directly or indirectly observable.
Level 3 - Valuation technique for which the lowest level input that is significant to the fair value measurement
is unobservable.
For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of
the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy, as explained
above.
GROUP COMPOSITION
This section of the Notes includes information that must be disclosed to comply with accounting standards and other
pronouncements relating to the structure of the Group, but that is not immediately related to individual line items in the
Financial Statements.
22.
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
2019
$
2018
$
19,689,200
8,798,044
28,487,244
37,152,979
18,059,613
55,212,592
605,530
45,685
651,215
704,764
30,600,745
31,305,509
27,836,029
23,907,083
29,807,308
39,836,042
(26,943,668)
24,972,389
(17,241,997)
1,313,038
27,836,029
23,907,083
2019
$
2018
$
(9,853,835)
(9,853,835)
(3,471,738)
(3,471,738)
Commitments and contingencies
(i) Contingencies
Other than as disclosed in note 26, the parent entity has no contingent assets or liabilities.
(ii) Operating lease commitments
Within 1 year
Within 2-5 years
Later than 5 years
2019
$
2018
$
255,364
45,546
-
300,910
240,751
298,567
-
539,318
Accounting Policy
The financial information for the parent entity, Chalice Gold Mines Limited, has been prepared on the same basis
as the consolidated financial statements, except as set out below.
Investments in subsidiaries, associates and joint venture entities are accounted for at cost in the parent entity’s
financial statements. Dividends received from associates are recognised in the parent entity’s profit or loss, rather
than being deducted from the carrying amount of these investments.
23.
List of subsidiaries
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
2019
2018
Name
Parent entity
Chalice Gold Mines Limited
Subsidiaries
Chalice Operations Pty Ltd (i)
Chalice Gold Mines (Eritrea) Pty Ltd(1)
Western Rift Pty Ltd (ii)
CGM Minerals Pty Ltd
CGM (Lithium) Pty Ltd
(i) Subsidiaries of Chalice Operations Pty Ltd
Keren Mining Pty Ltd(1)
Universal Gold Pty Ltd(1)
Sub-Sahara Resources (Eritrea) Pty Ltd(1)
(ii) Subsidiaries of Western Rift Pty Ltd
Chalice Gold Mines (Ontario) Inc.(iii)
Coventry Rainy Inc.
Coventry Ontario Inc.
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Canada
Canada
Canada
(iii) Subsidiaries of Chalice Gold Mines (Ontario) Inc.
Chalice Gold Mines (Quebec) Inc.(2)
Chalice Gold Mines (Exploration) Inc.
Canada
Canada
100
-
100
100
100
-
-
-
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
(1) Chalice Gold Mines (Eritrea) Pty Ltd, Keren Mining Pty Ltd, Universal Gold Pty Ltd and Sub-Sahara Resources
(Eritrea) Pty Ltd were voluntarily deregistered in August 2018.
(2) In July 2019, the Company sold its wholly owned subsidiary, Chalice Gold Mines (Quebec) Inc. to O3 Mining
and has been classified as a discontinued operation. Refer to note 9 for further details.
Accounting Policy
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.
OTHER INFORMATION
This section of the Notes includes other information that must be disclosed to comply with accounting standards and other
pronouncements, but that is not immediately related to individual line items in the Financial Statements.
24.
Auditor’s remuneration
Audit services
HLB Mann Judd:
Audit and review of financial reports
Other services
25.
Related parties
Key management personnel
Executive Directors
2019
$
48,892
4,000
52,892
2018
$
48,500
5,500
54,000
T R B Goyder (Executive Chairman)
A C Dorsch (Managing Director appointed 13 November 2018, previously Chief Operating Officer)
Non-executive Directors
A W Kiernan (resigned 13 September 2018)
S P Quin
M S Ball
Executives
R K Hacker (Chief Financial Officer)
K M Frost (General Manager – Exploration)
P Lengyel (Exploration Manager – Canada)
The KMP compensation is as follows:
Short-term benefits
Post-employment benefits
Termination benefits
Share-based payments
2019
$
1,634,573
98,325
-
585,518
2,318,416
2018
$
1,550,896
90,878
-
420,831
2,062,605
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 KMP or their related parties was as follows:
KMP
Transaction
Liontown Resources Limited Corporate services
Corporate services
DevEX Resources Limited
Corporate services
PhosEnergy Limited
Note
(i)
(i)
(i)
2019
$
(249,107)
(114,000)
(21,600)
2018
$
(88,000)
(68,000)
(21,600)
(i) The Group supplied corporate services such as accounting, administration and corporate office facilities under
a Corporate Services Agreement to Liontown Resources Limited (“LTR”), DevEx Resources Limited (“DEV”) and
PhosEnergy Limited (“PEL”) and corporate services of KMP. Mr Goyder is a director of LTR, DEV and 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
2019
$
-
109,998
109,998
2018
$
-
29,600
29,600
26. 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 as specified by various governments in order to
maintain exploration tenements in good standing. Therefore, amounts stated are based on the minimum
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
2019
$
366,891
-
-
366,891
2019
$
269,283
45,546
-
314,829
2018
$
232,760
-
-
232,760
2018
$
274,848
359,886
-
634,734
Contingent asset
There are no contingent assets at 30 June 2019 (30 June 2018: nil).
27.
Events subsequent to reporting date
In June 2019, the Company entered into a binding agreement to acquire the ordinary shares of North West Nickel
Pty Ltd (“North West”) by issuing 7,500,000 fully paid ordinary shares (subject to a 12 month voluntary escrow) in the
Company. The completion of the acquisition was subject to a number of conditions precedent. All conditions
precedent were satisfied on 17 July 2019 and the Company issued 7,500,000 shares to the shareholders of North
West.
On 2 July 2019, the Group entered into a Share Purchase Agreement (“SPA”) with O3 Mining Inc. (“O3 Mining” TSX-
V:OIII), whereby O3 Mining purchased the Company’s wholly-owned subsidiary Chalice Gold Mines (Quebec) Inc.
(“CGMQ”). CGMQ is the registered holder of the East Cadillac and Kinebik Gold Projects in Quebec, Canada. In
consideration for the acquisition of CGMQ, Chalice received 3,092,784 common shares in O3 Mining, which are
subject to a statutory trading restriction in Canada for a period of four months from the date of issuance.
In addition, Chalice will receive cash consideration for existing tax credits upon receipt from Canadian tax
authorities totalling ~C$1.3 million and a net smelter returns (“NSR”) royalty of 1% on certain mining claims which
are not encumbered by pre-existing royalties.
In July 2019, the Company acquired 71.9 million shares in listed Spectrum Minerals Limited (ASX: SPX, “Spectrum”)
for a total of $3.2 million. Chalice now holds a 5.21% interest in Spectrum.
Subsequent to 30 June 2019, the Board resolved, subject to shareholder approval at the Company’s AGM, to issue
500,000 unlisted options to each Mr Ball and Mr Quin and to grant a total of 6,348,611 performance rights to KMP
and employees, subject to shareholder approval (where applicable) at the upcoming AGM.
ACCOUNTING POLICIES
This section of the Notes includes information that must be disclosed to comply with accounting standards and other
pronouncements and information relating to new and revised accounting standards and their impact.
28. Goods and Services Taxes (GST)
Revenue, expenses and assets are recognised net of the amount of goods and services tax (‘GST’), except where
the amount of GST incurred is not recoverable from the taxation authority. In these circumstances, the GST is
recognised as part of the cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated at 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 current liability in the statement
of financial position.
Cash flows are included in the statement of cash flows on a gross basis. The GST component of cash flows arising
from investing and financing activities which are recoverable from, or payable to the ATO are classified as
operating cash flows.
29. Changes in accounting policies
In the year ended 30 June 2019, the Directors have reviewed all of the new and revised Standards and
Interpretations issued by the Australian Accounting Standards Board that are relevant to the Group and effective
for the current annual reporting period. As a result of this review, the Group has initially applied AASB 9 from 1 July
2018. Due to the transition methods chosen by the Group in applying AASB 9, comparative information throughout
the financial statements has not been restated to reflect the requirements of the new standards.
Other than the above, the Directors have determined that there is no material impact of the other new and revised
Standards and Interpretations on the Group and therefore no material change is necessary to Group accounting
policies.
(i) AASB 9 Financial Instruments
AASB 9 replaces AASB 139 Financial Instruments: Recognition and Measurement and makes changes to a number
of areas including classification of financial instruments, measurement, impairment of financial assets and hedge
accounting model.
Financial instruments are classified as either held at amortised cost or fair value. Financial instruments are carried at
amortised cost if the business model concept can be satisfied.
All equity instruments are carried at fair value and the cost exemption under AASB 139 which was used where it
was not possible to reliably measure the fair value of an unlisted entity has been removed. Equity instruments which
are non-derivative and not held for trading may be designated as fair value through other comprehensive income
(FVOCI) on initial recognition or date of initial application of AASB 9. Previously classified available-for-sale
investments, now carried at fair value are exempt from impairment testing and gains or losses on sale are no longer
recognised in profit or loss.
The AASB 9 impairment model is based on the expected credit loss on day 1 rather than needing the evidence of
an incurred loss, which is likely to cause earlier recognition of bad debt expenses. Most financial instruments held
at fair value are exempt from impairment testing.
The Group has applied the modified retrospective approach under AASB 9 and has elected not to restate
comparative information. Accordingly, the information presented for 30 June 2018 has not been restated.
On initial application date, an election has been made to designate available-for-sale equity instruments that are
non-derivative equity instruments not held for trading as fair value through other comprehensive income (FVOCI).
Previously recognised impairment losses in profit or loss are transferred from retaining earnings/(accumulated losses)
to the investment revaluation reserve. As from the initial application date further gains or losses will be recognised
in the investment revaluation reserve. Where applicable, individually immaterial FVOCI equity instruments have
been aggregated for disclosure purposes.
An adjustment of $552,368 in relation to formerly booked impairment losses has been made to retained
earnings/(accumulated losses) and investment revaluation reserve as at 1 July 2018 and has been recognised in
the Statement of Changes in Equity for the year ended 30 June 2019.
30.
Adoption of new and revised accounting standards
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet
effective and have not been adopted by the Group for the year ended 30 June 2019 are outlined below.
(i) AASB 16 Leases (effective from 1 July 2019)
AASB 16 Leases replaces the current AASB 117 leases standard. AASB 16 removes the classification of leases as
either operating leases or finance leases- for the lessee- effectively treating all leases as finance leases. Most leases
will be capitalised on the balance sheet by recognising a ‘right-of-use’ asset and a lease liability for the present
value obligation. This will result in an increase in the recognised assets and liabilities in the statement of financial
position as well as a change in expense recognition, with interest and depreciation replacing operating lease
expense. Lessor accounting remains similar to current practice, i.e. lessors continue to classify leases as finance
and operating leases.
This Standard will primarily affect the accounting for the Group’s operating lease commitments predominately
relating to the Group’s corporate office leases and storage leases. The Group is considering available options to
account for this transition which may result in a decrease in reported losses before tax and increase in lease assets
and liabilities recognition. The Standard may also have an impact on deferred tax balances. This will however be
dependent on the lease arrangements in place when the new Standard is effective. The Group has commenced
the process of evaluating the impact of the new Standard.
AASB 16 is effective for annual reporting periods on or after 1 July 2019. A lessee can choose to apply the Standard
using a full retrospective or modified retrospective approach.
Other than the above, there is no material impact of the new and revised Standards and Interpretations on the
Company and therefore, no material change is necessary to Group accounting policies.
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 2019 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 2019.
This declaration is signed in accordance with a resolution of the Board of Directors.
Dated at Perth the 5th day of September 2019
Signed in accordance with a resolution of the Directors:
Alex Dorsch
Managing Director
INDEPENDENT AUDITOR’S REPORT
To the members of Chalice Gold Mines Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Chalice Gold Mines Limited (“the Company”) and its
controlled entities (“the Group”), which comprises the consolidated statement of financial position
as at 30 June 2019, 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, and notes to the financial statements, including a summary of significant accounting
policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the
Corporations Act 2001, including:
a)
b)
giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its
financial performance for the year then ended; and
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report. We are independent of the Group in accordance with the
auditor independence requirements of the Corporations Act 2001 and the ethical requirements of
the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (“the Code”) that are relevant to our audit of the financial report in
Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the financial report of the current period. These matters were addressed in the context
of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters. We have determined the matters described below to
be the key audit matters to be communicated in our report.
Key Audit Matter
How our audit addressed the key audit
matter
Accounting for discontinued operation
(Note 9 of the financial report)
On 2 July 2019, the Group entered into a binding
Share Purchase Agreement (“SPA”) to sell its
wholly owned subsidiary Chalice Gold Mines
(Quebec) Inc.
Our procedures included but were not
limited to the following:
- Consideration of the requirements of
AASB 5 in relation to the disposal of
the subsidiary;
Accordingly, at 30 June 2019 the subsidiary was
classified as a disposal group held for sale and as
a discontinued operation.
We considered this to be a key audit matter due
to the materiality of the impact on the financial
statements and its importance to users of the
financial statements.
- Determining whether classification as
a disposal group held for sale and a
discontinued
was
operation
appropriate at balance date;
- Ensuring
the disposal group was
correctly treated in accordance with
the measurement requirements of
AASB 5;
- Reviewing the calculation of the loss
from discontinued operations
to
ensure this was materially correct; and
- Ensuring the disclosures within the
financial report were consistent with
the
requirements of accounting
standards.
Valuation of unlisted equity investments
(Note 13 of the financial report)
As at 30 June 2019, the Group held unlisted
equity investments valued at $584,167.
Our procedures included but were not
limited to the following:
We focused on this area due to the inherent
judgement involved in determining the fair value
of unlisted investments.
- We assessed management’s valuation
of investments. For investments where
there was less or little observable
market data we obtained and
assessed other relevant valuation data
including recent equity transactions of
the company; and
- We critically
reviewed any key
assumptions used in the valuation of
these investments.
Information other than the financial report and auditor’s report thereon
The directors are responsible for the other information. The other information comprises the
information included in the Group’s Annual Financial Report for the year ended 30 June 2019 but
does not include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives
a true and fair view in accordance with Australian Accounting Standards and the Corporations Act
2001 and for such internal control as the directors determine is necessary to enable the preparation
of the financial report that gives a true and fair view and is free from material misstatement, whether
due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group
to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors either intend to liquidate the Group
or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with Australian Auditing Standards will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
-
-
-
-
-
Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a
going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the financial report or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions
may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and
events in a manner that achieves fair presentation.
We communicate with the directors regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included within the Directors’ Report for the year ended
30 June 2019.
In our opinion, the Remuneration Report of Chalice Gold Mines Limited for the year ended 30 June
2019 complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted
in accordance with Australian Auditing Standards
HLB Mann Judd
Chartered Accountants
Perth, Western Australia
5 September 2019
M R Ohm
Partner
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 4
September 2019 were:
Shareholder
Timothy Rupert Barr Goyder
Franklin Resources Inc
Number of ordinary
shares held
45,975,209
31,107,008
Percentage of
capital held
%
16.78
11.35
Class of shares and voting rights
At 4 September 2019 there were 2,267 holders of the ordinary shares of the Company, 4 holders of unlisted share options
and 14 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 4 September 2019:
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
Unlisted Share
Options
Performance
Rights
114
336
516
1,040
261
2,267
-
-
-
-
4
4
-
-
-
1
13
14
The number of shareholders holding less than a marketable parcel at 4 September 2019 was 159.
Restricted securities
At 4 September 2019, the following securities on issue are subject to voluntary escrow:
Class of securities
Number of securities
Fully paid ordinary shares
Fully paid ordinary shares
3,000,000
7,500,000
Escrow period end
date
8 September 2019
18 July 2020
Name
Timothy R B Goyder
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Limited
Canadian Registry Control
BNP Paribas Nominees Pty Ltd
Claw Pty Ltd
Citicorp Nominees Pty Limited
Jetosea Pty Ltd
Mr Anthony Kiernan
Curious Capital Group Pty Ltd
Mr Nigel Burgess + Mrs Yukari Burgess
ESM Limited
Cospiqua Pty Ltd
BNP Paribas Noms Pty Ltd
Neweconomy Com Au Nominees Pty Ltd <900 Account>
Mr Julian Rodney Stephens
Dorsch Consultants Pty Ltd
Metheun Holdings Pty Ltd
Teragoal Pty Ltd
Mr Philip Scott Button + Ms Philippa Ann Nicol
Number of
ordinary shares
held
45,975,209
42,706,937
20,778,065
16,367,419
6,590,412
4,000,000
3,449,444
3,055,330
2,152,040
2,100,000
1,600,000
1,600,000
1,579,000
1,573,181
1,535,710
1,451,612
1,430,000
1,413,616
1,400,000
1,348,261
Percentage of
capital held
%
16.78
15.58
7.58
5.97
2.40
1.46
1.26
1.11
0.79
0.77
0.58
0.58
0.58
0.58
0.56
0.53
0.52
0.52
0.51
0.49
Total
162,106,236
59.15
chalice
ABN 47 1 16 648 956
Level 2, 1 292 Hay Street
West Perth WA 6005, Australia
T: +61 8 9322 3960
F: +61 8 9322 5800
E: info@chalicegold.com
W: www.chalicegold.com
CONNECT WITH CHALICE