More annual reports from Chalice Mining Limited:
2020 Report
CHALICE GOLD MINES LIMITED
Tim Goyder ............ Non-Executive Chairman
Alex Dorsch........................ Managing Director
Morgan Ball ....... Lead Independent Director
Stephen Quin ............ Non-Executive Director
Garret Dixon .............. Non-Executive Director
Australian Securities Exchange Ltd
Level 40, Central Park,
152-158 St Georges Terrace
PERTH WESTERN AUSTRALIA 6000
Jamie Armes
300 Vesey Street, 12th Floor
NEW YORK, NY, UNITED STATES 10282
Level 2, 1292 Hay Street,
WEST PERTH WA 6005
Tel: (+61) (8) 9322 3960
Fax: (+61) (8) 9322 5800
Web: www.chalicegold.com
Email: info@chalicegold.com
HLB Mann Judd
Level 4, 130 Stirling Street,
PERTH WESTERN AUSTRALIA 6000
Computershare Investor Services Pty Ltd
Level 11, 172 St Georges Terrace
PERTH WESTERN AUSTRALIA 6000
Tel: 1300 850 505
Share Code: ............................................... CHN
Share Code: .......................................... CGMLF
TABLE OF CONTENTS
Chairman’s Letter ....................................................... 5
Managing Director’s Letter ...................................... 7
FY2020 Highlights ........................................................ 9
FY2021 Strategy ........................................................ 10
The Chalice Way ...................................................... 11
Sustainability .............................................................. 11
Health and Safety .................................................... 14
Operating and Financial Review .......................... 15
Julimar Nickel-Copper-PGE Project ...................... 17
Pyramid Hill Gold Project ........................................ 22
Hawkstone Nickel-Copper-Cobalt Project.......... 26
Generative Projects ................................................. 29
Financial Review ....................................................... 32
Competent Person and Qualifying
Person Statement ..................................................... 33
Forward Looking Statements ................................. 34
Tenement Schedule ................................................ 35
Directors’ Report ...................................................... 38
Corporate Governance Statement ..................... 60
Auditor’s Independence Declaration ................. 61
Consolidated Statement of Comprehensive
Income ....................................................................... 62
Consolidated Statement of Financial Position ... 63
Consolidated Statement of Changes in Equity . 64
Consolidated Statement of Cash Flows .............. 65
Contents of the Notes to the Financial
Statements ................................................................ 66
Director’s Declaration ............................................. 93
Independent Auditors Report ................................ 94
ASX Additional Information .................................... 98
4 | P a g e
CHAIRMAN’S LETTER
Tim Goyder
Dear Fellow Shareholder,
What an extraordinary year it has been!
Notwithstanding the wider impacts of the COVID-19
pandemic, 2020 has been a truly exceptional year
for Chalice thanks to the discovery at Julimar in
Western Australia.
This major multi-commodity discovery has, in short
order, accelerated our growth trajectory and put
Chalice within the mid-tier ranks on the ASX.
Pleasingly, it has also vindicated our strategy of
pursuing generative exploration opportunities within
Australia.
Over the last few years, I have expressed our
to make major greenfield mineral
aspiration
discoveries in the frontier high-grade gold and
nickel provinces we are active in. We are very
proud to have excelled in this objective, with the
added advantage that the remarkable discovery
at Julimar is located right here in Western Australia –
one of the best mining jurisdictions.
Thanks to the careful and judicious management of
our balance sheet in previous years and having the
right technical team in place, we have been able
to apply the industry-leading geological thinking to
unlock not just a single discovery, but potentially an
entire new mineral province.
It has been very pleasing to see the discovery
capture industry and investor support both within
Australia and internationally, even during these
globally challenging times.
increase
Our success at Julimar has been reflected in a
in the Company’s market
significant
capitalisation, which has increased approximately
700% during the financial year. As a result, Chalice
has been able to attract major new institutional and
sophisticated investors to its register while at the
same
long-term
shareholder base – a significant achievement that
we continue to build on.
time maintaining
loyal
its
While we are justifiably excited about the discovery
itself, and its economic potential, we are also
acutely aware that with a major discovery comes
additional corporate responsibilities in terms or our
environmental, social and governance obligations.
While it is still relatively early days for the Julimar
Project, our team has already demonstrated our
strong Company culture and developed systems
that aim to deliver benefits, not only to shareholders,
but also to the broader community and other
stakeholders as we advance the project.
With a resource drill-out currently underway, we are
transitioning from exploration to resource definition
and the commencement of mining studies is now
fully funded following the successful $30 million
placement in May 2020.
All of this was achieved despite the unprecedented
and unanticipated challenges presented this year
by the COVID-19 pandemic. I am pleased to say
that the Chalice team adapted quickly and, most
importantly, remained safe and fully operational
during this period.
We continue to closely monitor developments in this
regard, however we are very fortunate to be well-
positioned with an all-Australian exploration
portfolio and strong balance sheet.
In addition to the discovery at Julimar, our
exploration campaign within
the world-class
Bendigo Goldfield region of Victoria has continued
to produce very encouraging early results at our
Pyramid Hill Gold Project. Importantly, we believe
we are making steady progress in vectoring in
towards what we hope will be a significant high-
grade gold discovery in this world-class gold district,
as detailed in the body of this report.
An n u a l F i n a n c i a l R e p o r t 2 0 2 0 5
The board and I are also thankful that our timely and
deliberate strategy to focus on home soil has
proven to be the right decision. Our portfolio of
projects across Australia has continued to grow,
with a focus on tier-1 scale greenfield discovery
opportunities across several district-scale
land
holdings – all of which present great opportunities to
create value for shareholders.
In conclusion, I would like to thank my fellow
Directors and the entire Chalice team for their
support, dedication and hard work during the year,
and extend a warm welcome to Garret Dixon, who
joined the Board in August 2020.
The calibre of the growing Chalice team has given
me the confidence to move into a non-executive
Chair role, allowing me to step aside from day-to-
day operations and leave the management of the
Company in the very capable hands of our
Managing Director, Alex Dorsch.
Most importantly, I would like to thank all of our
shareholders for their patience through the years,
that is now being rewarded, and for their continued
support. I look forward to what I believe will be a
very exciting and rewarding year ahead.
Yours faithfully,
Tim Goyder
Non-Executive Chairman
6 An n u a l F i n a n c i a l R e p o r t 2 0 2 0
MANAGING DIRECTOR’S
LETTER
Alex Dorsch
Dear Fellow Shareholder,
Since its inception, Chalice’s long-term aspiration
has been to deliver a company making mineral
discovery for our shareholders.
I am proud to say that our major platinum group
element-nickel-copper-cobalt discovery at Julimar
has not only met this objective, but also uncovered
a brand new mineral province in Western Australia.
The impact of this greenfield discovery in March
2020 has been profound, delivering a step-change
in
the Company’s market capitalisation and
cementing our reputation as one of the leading
explorers in Australia.
The Gonneville discovery at Julimar is a rare find,
having the combination of shallow, high-grade
base and platinum group metals in a layered
intrusive complex. It is shaping up to be the first
major palladium discovery ever in Australia and its
location on the outskirts of Perth in Western Australia
makes it even more remarkable.
Our ability to conceptualise, target, discover and
rapidly advance this world-class discovery is the
result of the outstanding creativity and expertise of
our technical team.
Since drilling the discovery hole in March, Chalice
has made significant progress in delineating the
Gonneville orebody, with resource definition drilling
continuing to grow the high-grade mineralised
zones across the ~1.6km x 0.8km Intrusion. Our
recent airborne electromagnetic (AEM) survey
across
the wider project area has now
demonstrated the potential of the district to host
multiple discoveries, with a major new EM anomaly
extending for ~6.5km directly north and along strike
from Gonneville.
Excitingly, we believe we may have only scratched
the surface at Julimar, which looks to have the
makings of a globally significant mineral province.
Our task for the coming year will be to maintain our
strong exploration momentum and continue de-
risking
full
potential.
to unlock Julimar’s
the discovery
We currently have a 4-rig drilling program underway
at Gonneville with the aim of defining a maiden
Mineral Resource Estimate within the next 12
months. Our geological understanding of the
the wider Julimar
Gonneville discovery and
Complex continues to grow with every drill hole.
In addition, Chalice has moved swiftly to acquire
the most prospective ground surrounding Julimar
and within the new West Yilgarn Nickel-Copper-PGE
Province, leveraging its proprietary knowledge of
the geology and unique competitive advantage.
This early positioning is incredibly important for our
long term growth ambitions.
While Julimar has quickly become our key focus, we
have also maintained activities across the other
projects within our high-quality, district-scale
exploration portfolio that spans some of Australia’s
most exciting mineral provinces.
Leading this generative pipeline is our Pyramid Hill
Gold Project, where our systematic exploration
programs to date have uncovered large-scale gold
targets under cover in the highly prospective
Bendigo Goldfields of Victoria.
Diamond drilling is set to re-commence at Pyramid
Hill in early Q4 2020, and I am eagerly awaiting
results as we narrow in on the >4km gold system
identified at the priority Karri Prospect.
Elsewhere, a maiden drilling program is imminent at
our Hawkstone Project in the frontier West Kimberley
region of WA. The start of drilling at Pyramid Hill and
the beginning of an
Hawkstone will mark
unprecedented level of exploration activity for the
Company, with simultaneous drilling underway
across three large-scale projects in hotly contested
mineral provinces. This intensive program could see
up to eight drill rigs operating across the portfolio in
the coming months, a testament to our drive for
new discoveries.
An n u a l F i n a n c i a l R e p o r t 2 0 2 0 7
to
this acceleration
Fundamental
in our
exploration programs will be our ability to
maintain our commercial discipline and financial
strength. Our successful capital raise in May 2020
was a major step in ensuring this financial security
to fund our ambitious exploration strategies into
the future.
It is a privilege to work with our highly regarded
Board and executive
strong
technical, financial and commercial expertise
will continue to be a key part of our success
moving forward into 2021 and beyond.
team.
Their
Our growth this year has also reinforced the
importance of our Company’s core values and
our commitment
to achieving exceptional
corporate governance and Environmental,
Social and Governance (ESG) outcomes.
Consistent with our presence across the portfolio,
we have been very proactive from the outset at
our flagship Julimar Project, in raising awareness
in the local community about our activities,
listening to specific community interests and
concerns and managing any adverse impacts of
our activities.
Reflecting on the extraordinary year 2020 has
been, I would like to extend my deepest thanks
to all of our shareholders and stakeholders, both
old and new, and I look forward to sharing even
more exciting Company updates as we continue
to advance our exciting portfolio of projects.
I would also like to thank all of my colleagues at
Chalice and
families, who have
demonstrated their dedication and commitment
to the Company. The outstanding successes of
the year are a product of our collective making.
their
the
has
laid
2020
for a
transformational year ahead, and I believe this
next chapter
the
beginning.
for Chalice
foundation
is only
just
Yours faithfully,
Alex Dorsch
Managing Director
8 An n u a l F i n a n c i a l R e p o r t 2 0 2 0
FY2020 HIGHLIGHTS
Chalice made an exceptional greenfield platinum group element (PGE)-
nickel-copper-cobalt discovery at the 100%-owned Julimar Project in WA:
«
First drill hole at Julimar in March 2020 intersected 19m @ 8.4g/t Pd,
2.6% Ni, 1.0% Cu, 0.1% Co from 48m and has transformed the
Company
« Discovery at Julimar established the new West Yilgarn nickel-copper-
PGE province in WA and has triggered an exploration boom in the
region
« Chalice in a commanding position in the new province with the ability
to leverage its competitive advantage to make further discoveries
«
Julimar could become the first major palladium discovery in Australia
The large scale potential of several new rapidly advancing prospects was
confirmed at the Pyramid Hill Gold Project in Victoria:
« Chalice’s position in the world-class and newly invigorated Bendigo
Goldfields of Victoria is unrivalled, with a 100%-owned, >5,000km2
Project
«
The recently defined >4km long Karri Prospect hosts high-grade gold
and has the potential to deliver a large-scale gold discovery under
cover
Chalice’s pipeline of greenfield projects across Australia continues to be
advanced, with a focus on large-scale, high-grade gold and nickel sulphide
discovery opportunities
An oversubscribed A$30 million (before costs) private placement was
completed to major institutional and sophisticated investors to rapidly
advance Julimar to mining feasibility stage
One of the top performing companies on the ASX All Ordinaries index in 2020
Multiple awards received by Chalice and Managing Director Alex Dorsch,
recognising the exceptional Julimar discovery and transformational growth
Chalice has experienced in 2020
9 An n u a l F i n a n c i a l R e p o r t 2 0 2 0
FY2021 STRATEGY
Define a maiden JORC Mineral Resource Estimate and outline the potential
for a commercially viable mining operation for the Gonneville PGE-Ni-Cu-Co
discovery at the Julimar Project:
« Assess potential metallurgical parameters for all mineralisation styles
« Commence preliminary mining, processing, infrastructure and
environmental studies
«
Secure access to the Julimar State Forest and complete non-ground
disturbing reconnaissance exploration activities
Make a significant new discovery (outside of Gonneville), which shows the
potential to be economic
Continue our generative approach to new greenfield projects that maintains
a pipeline of discovery opportunities to complement the current portfolio
Continue to build trust-based and inclusive relationships with our external
stakeholders, including investors, landowners, indigenous peoples, local
communities and governing organisations
Continue to build our team with a focus on internal resourcing and nurture our
culture of ownership, sustainable success and ideation
Maintain our strong financial position and exercise discipline on capital
management
Maintain and expand our activities on sustainability (environmental, social
and governance) to uphold our social licence to operate
10 An n u a l F i n a n c i a l R e p o r t 2 0 2 0
THE CHALICE WAY
SUSTAINABILITY
Chalice has a strong values-based
approach to sustainability, with the
ultimate aim of delivering responsible
environmental, social and governance
practices that lead to the creation of
economic returns for our shareholders
and the creation of shared value for all
of our stakeholders.
Our vision, and the values we adhere to, are
only meaningful if they are acted upon.
With our recent discovery at the Julimar
Project and active exploration programs
ongoing at several other projects around
Australia that increase our presence and
potential effects, we aim to ramp up our focus
11 An n u a l F i n a n c i a l R e p o r t 2 0 2 0
on environment, social and governance (ESG)
in order to meet and exceed our corporate
responsibilities.
life cycle, as we progress
Whilst our projects are at the early stages of the
mining
from
exploration to mining studies and project
development, so too will our commitment to
standards
meeting
appropriate for each stage of development .
leading
industry
Chalice takes its environmental responsibilities
seriously and
is committed to achieving
excellence in environmental management
through understanding the sensitivities of our
operations and minimising the impacts of our
activities to the extent reasonably practicable.
formulation and
The Company has been active on a number
of initiatives over the financial year, including
the
submission of a
(CMP)
Conservation Management Plan
governing our proposed Stage 1 exploration
activities in the Julimar State Forest. These
activities form a key part of our wider Julimar
exploration plan.
The objective of the CMP is to detail our
mitigations to minimise potential adverse
environmental impacts, ensure protection of
Julimar State Forest conservation value
(environment, community and heritage) and
strict
ensure
compliance with
licence
conditions and other relevant legislation.
in place
exploration
systems are
for
In addition to the CMP, Chalice has also
commissioned independent Flora, Fauna and
Heritage Surveys at the Gonneville discovery
(on private land within the Julimar Project) to
ensure we deliver on our commitments to
minimising environmental impact. Early stage
environmental baseline data acquisition has
also commenced on noise and waterways.
Chalice has also formulated and submitted a
number of other environmental management
plans as part of ongoing exploration activities
at the Pyramid Hill (Victoria) and Hawkstone
Projects (Kimberley, Western Australia).
There are
strict provisions governing
exploration and mining in Western Australia
and Victoria, with both states having some of
the most advanced and leading legislative
in the world. There are also
frameworks
the
supporting
commonwealth and
state environment
portfolios, and Chalice will continue to ensure
we meet or exceed our statutory obligations.
regulations
under
Chalice aims to uphold the highest social
standards and recognises the importance of
building respectful and inclusive relationships
with our stakeholders, which includes local
communities, indigenous peoples, businesses
and governing organisations.
Chalice is committed to open communication
with the communities in which it operates. The
Company aims to actively manage the
impact of our activities through the continued
consideration and response to the interests
and concerns of the local community where
its projects are located.
Following our recent discovery at the Julimar
Project, the Company has implemented a
detailed Stakeholder Management and
Advocacy Plan
(SMAP) designed as a
foundation for maintaining Chalice’s ‘Social
Licence to Operate’. The Plan’s objectives are
to
stakeholders, actively
engage with the key stakeholders and build
trust-based and transparent relationships with
those stakeholders in order to derive mutually
beneficial outcomes.
identify Julimar
An n u a l F i n a n c i a l R e p o r t 2 0 2 0 12
The SMAP is structured in three phases, which progress in line with the stage of the
project:
Build trust – during the advanced exploration stage (current phase)
Ensure a pathway to timely access approvals and development.
Build possibilities – during feasibility studies
Build visibility – be seen and felt by supporting local business and
communities.
Demonstrate commitment – during the mine development stage
Realising opportunities in partnership with the region – ensure operations and
policies involve and integrate with the community.
Active engagement has continued with
landowners at the Gonneville discovery, and
Chalice has been adaptive in its exploration
approach to ensure our impact on the primary
land use is minimised.
This increased interaction within the Julimar
region has also provided Chalice with new
opportunities to positively impact the local
community and
to potentially achieve
meaningful social and economic benefits.
To this effect, the Company has commenced
work on our Community Investment Guidelines
in order to best prioritise any future funding.
Forming the basis of this framework is our aim
to focus on community partnering initiatives
which are consistent with our core values of
Integrity, Alignment and Advancement.
Chalice will also continue to prioritise local
employment
procurement
opportunities wherever possible.
local
and
Based on this stage 1 framework, Chalice has
commenced
community
host
engagement initiatives since the discovery in
March 2020.
of
a
for
the
A suite of Fact Sheets have also been
developed, aimed at providing
key
local communities
information
surrounding the Julimar Project. These Fact
Sheets have been readily available and are
designed to offer an accessible reference on
topics
such as environment, community
consultation, exploration licences and drilling
activities.
These fact sheets are available online at
https://chalicegold.com/community-western-
australia.
Chalice has also held meetings with key Shire
and business representatives to introduce the
Julimar Project, and
to establish good
relationships to better facilitate the distribution
of correct information to the communities
which they serve.
13 An n u a l F i n a n c i a l R e p o r t 2 0 2 0
recognises that good corporate
Chalice
governance is integral to how we operate,
and underpins value creation for shareholders
the business.
and
Governance is hence one of the foundations
of the company’s success.
sustainability of
the
leadership on
Our Board provides strong
governance matters, with a culture-driven
approach based on our core values of
integrity, ownership, urgency, alignment and
advancement. The Board has established
that provide
principles and policies
the
framework for the
delivery of the best
standards of corporate governance.
HEALTH AND SAFETY
The health and safety of our employees and
is at the core of Chalice’s
stakeholders
business. Our primary objectives are
to
maintain a culture of integrity and ownership,
provide a safe working environment at all of
our locations and maintain the health and
wellbeing of our employees and stakeholders.
is committed
Chalice
to adopting and
adhering to best practice safety standards,
with the aim to identify health and safety
hazards and to implement and monitor the
controls to reduce risk to as low as reasonably
practicable.
This framework was developed with reference
to the recommendations set out in the ASX
Corporate Governance Council’s Corporate
Governance
and
Recommendations.
Principles
is ultimately
responsible and
Our Board
accountable for our governance, risk and
compliance frameworks, including ensuring
compliance with all policies and procedures,
values, and various legislative and regulatory
requirements.
Our corporate policies and practices are
available online at:
https://chalicegold.com/corporate-
governance
We believe health and safety also requires the
right mindsets and behaviours, which
contribute to our strong safety culture.
line with our commitment to
identify
In
opportunities
improvement,
for continual
health and safety standards and systems will
be reviewed regularly. Chalice understands
that as the business grows, so too does the
need for a comprehensive and integrated
management system, and at the time of
reporting a comprehensive
review of all
Chalice’s policies and systems is underway.
An n u a l F i n a n c i a l R e p o r t 2 0 2 0 14
OPERATING AND FINANCIAL REVIEW
Chalice's portfolio includes three district-scale precious and base metal projects located in premier
terranes of Australia.
The Company also owns several generative exploration projects (including a significant exposure to
the new West Yilgarn Ni-Cu-PGE Province), early-stage gold royalties, listed investments and non-
operated joint ventures (Figure 1).
Royalties
•
•
•
•
•
•
•
Nyanzaga, Tanzania – A$5 million payment receivable upon
commercial production 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
Jericho, WA – 1.0% NSR capped
Bunjarra Well, WA – 1.0% NSR capped
Key Investments
•
~3.1M shares (~5%) in O3 Mining Inc. (TSX-V: OIII)
Figure 1: Chalice’s project, royalty and investment portfolio
Key Project
Generative Project (reconnaissance and targeting)
Non-Operated Joint Ventures
Available for JV / sale
15 An n u a l F i n a n c i a l R e p o r t 2 0 2 0
An n u a l F i n a n c i a l R e p o r t 2 0 2 0 16
JULIMAR NICKEL-COPPER-PGE PROJECT
Location
Avon Region, Western Australia
Development Stage
Advanced Exploration - maiden discovery in March 2020
Acquired
Ownership
Project Area
Staked in 2018, further staking in 2020
100%
>2,000km²
Chalice made a remarkable PGE-Ni-
Cu-Co discovery this year at the
Julimar Project, uncovering a new
mineral province.
The Project is located north-east of Perth on private
land and State Forest (Figure 2).
The Project has direct access to major highway, rail,
power and port infrastructure in one of the world’s
most attractive mining jurisdictions – Western Australia.
Figure 2: Julimar Project tenure over regional magnetics
17 An n u a l F i n a n c i a l R e p o r t 2 0 2 0
The Project was staked in 2018 as part of
Chalice’s global search for high-potential
nickel sulphide exploration opportunities.
Chalice interpreted the possible presence of a
mafic-ultramafic layered intrusive complex
(the ‘Complex’) at Julimar based on high-
resolution airborne magnetics. The Complex is
interpreted to extend over ~26km of strike and
is confirmed to be highly prospective for nickel,
copper and platinum group elements.
Prior to Chalice’s exploration activities the
Complex had never been explored for these
metals, and the lack of any bedrock geology
exposures and widespread development of
laterite and transported cover in the region
hindered the confirmation of the conceptual
geological model.
Chalice interpreted two potential 'feeder'
zones within the Julimar Complex as initial
areas of interest, one situated at the southern
end of the Complex on private land (the
Gonneville Intrsuion) and the other situated
mid-way along the Complex within the Julimar
State Forest. Exploration activities were initially
undertaken on private land with the process to
gain access to the Julimar State Forest now
underway.
Figure 3: Gonneville Intrusion – Magnetic / Gravity Inversion Model, Drilling and new SQUID EM
Conductors
Chalice commenced a systematic greenfield
exploration program over the Gonneville
Intrusion in mid-2019 which included ground
EM geophysics and soil geochemistry on
private land. The program identified multiple
targets with two of the more significant EM
conductors selected for an initial drill test
targeting high-grade nickel, copper and
platinum group elements (PGEs).
The initial RC drill program commenced in Q1
2020 and resulted in the discovery of shallow
high-grade PGE-nickel-copper-cobalt
mineralisation (Figure 5). The first drill hole
(JRC001) intersected 19m @ 8.4g/t Pd, 1.1g/t
Pt, 2.6% Ni, 1.0% Cu and 0.14% Co from 48m.
The Gonneville discovery has since sparked
an exploration rush in the region and has
defined the new West Yilgarn Ni-Cu-PGE
Province.
Since the discovery a total of 20 diamond drill
holes and 90 RC drill holes have been drilled at
Gonneville up to the date of this report
(estimate as of 29-Sep-2020), targeting both
extensions of four currently defined high-grade
zones (G1-4) with 40-80m spaced step-out drill
holes and scoping out the extensive zones of
An n u a l F i n a n c i a l R e p o r t 2 0 2 0 18
disseminated sulphides on a 200m x 80m
spaced grid.
Four high-grade massive / matrix / heavily
disseminated sulphide zones (G1-4) have
been intersected to date over a ~400m x
~350m area.
The discrete high-grade massive and matrix-
rich PGE-Ni-Cu-Co zones comprise sulphide-
rich accumulations (20-100% sulphide).
Massive-matrix sulphide intersections typically
have a grade range of 3-15g/t Pd-Pt-Au, 0.5-
3.3% Ni, 0.4-4.5% Cu and 0.03-0.27% Co.
Widespread disseminated PGE-Cu-Ni
mineralisation has also been intersected in
many drill holes that have tested the broader
footprint of the Gonneville Intrusion and this
mineralisation is typically associated with low
abundance of disseminated sulphides (trace
to 3% on average).
Disseminated sulphide zones intersected to
date typically have a grade range of 0.5-
2.0g/t PGE, 0.1-0.2% Ni, 0.05-0.15% Cu and 0.01-
0.03% Co. Disseminated sulphides have been
intersected down to ~450m below surface,
and the depth extent of the Intrusion is still
unknown.
Weathering extends down to ~30-40m below
surface and a well-developed saprolite profile
after serpentinite contains elevated PGE
grades (typically ranging from 1.2-4.5g/t PGE)
from near surface to a depth of ~25m.
Early stage metallurgical testwork completed
to date on
selected high-grade and
disseminated sulphide mineralisation samples
has returned promising flotation results, giving
initial encouragement
the sulphide-
hosted mineralisation at Gonneville will be
amenable to conventional flotation under
standard conditions.
that
Tests completed on a composite of oxide
mineralisation samples has also
returned
promising results, with the extraction of PGE
and gold achieved
through oxidative
leaching under standard conditions.
An extensive metallurgical testwork program
on the various mineralisation styles is currently
underway and will support future economic
studies.
An airborne electromagnetic (EM) survey was
recently completed over the entire Julimar
Complex. Three new large EM anomalies were
identified - Hartog, Baudin and Jansz. The
Hartog EM Anomaly extends ~6.5km directly
north of the Gonneville Intrusion into the
Julimar State Forest (Figure 7).
Figure 4: General Manager-Exploration, Dr
Kevin Frost, with Julimar core samples
19 An n u a l F i n a n c i a l R e p o r t 2 0 2 0
Figure 5: Gonneville Intrusion Plan View – Key drilling results over TMI-RTP Magnetic
Figure 6: Gonneville G1-G4 Zones 3D View (looking east-north-east)
An n u a l F i n a n c i a l R e p o r t 2 0 2 0 20
is continuing
its approach of
Chalice
simultaneously exploring and evaluating the
zones of high-grade PGE-Ni-Cu-Co+/-Au
mineralisation and the extensive PGE-Cu-Ni
zones associated with disseminated sulphides
within the ~1.6km x 0.8km Gonneville Intrusion.
The Company is aiming to define a maiden
Mineral Resource Estimate for Gonneville by
mid-2021, which will be used in subsequent
preliminary economic modelling.
Ongoing and planned activities at Julimar in
the 2021 financial year include:
« A
~70,000m
resource
definition drilling program with 3-5 drill rigs:
RC/diamond
–
–
80m x 40m or 40m x 40m grid
(pending
geology
resource
assessment) of RC/diamond in high-
grade zones.
100m x 80m across the entire intrusion
(disseminated sulphide zones).
« Detailed mineralogical and metallurgical
representative
testwork program on
samples from all mineralisation styles (G1-4
sulphide, disseminated
sulphide and
oxide).
«
approval
Secure
complete
exploration activities (soil sampling and
ground EM) within the Julimar State Forest.
and
« Downhole EM Geophysics on key drill
identify potential high-grade
holes, to
targets or extensions for follow-up.
Figure 7: Julimar Complex Plan View – Airborne EM survey preliminary mid -time response
21 An n u a l F i n a n c i a l R e p o r t 2 0 2 0
PYRAMID HILL GOLD PROJECT
Location
Bendigo Region, Victoria
Development Stage
Early Exploration
Acquired
Ownership
Project Area
Staked in 2017, further staking in 2018-2020
100%
>5,000km²
The 100%-owned Pyramid Hill Gold
Project was staked in late 2017 and
now covers an area of >5,000km2 in
the Bendigo region of Victoria.
The Project comprises three key districts within
the Murray Basin covered North Bendigo Zone:
Muckleford, Mt William and Percydale (Figure
8: 8).
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 producing gold mines, the
>9Moz Fosterville Gold Mine owned by Kirkland
Lake Gold (NYSE / TSX: KL | ASX: KLA).
Figure 8: Pyramid Hill Gold Project tenure, regional land holders, gold deposits and occurrences
An n u a l F i n a n c i a l R e p o r t 2 0 2 0 22
The Bendigo Zone of Victoria has produced
>60Moz of gold at an average in-situ grade of
~15g/t Au. The region has been mined since
the mid nineteenth century, however is now
capturing global attention once again, largely
due to Kirkland Lake Gold’s new ultra-high-
grade discoveries at its Fosterville mine.
The ‘Gold Undercover”1
initiative by the
Victorian Government in 2006-2009 estimated
a potential ~32Moz
(P50 mid-case) of
undiscovered gold beneath Murray Basin
cover in the Bendigo Zone. However, the vast
majority of the covered area remains sparsely
explored. Given that there is highly variable,
shallow cover over a large portion of the
Project, the Company believes that there is
excellent potential for the discovery of new
commercially viable gold deposits within its
tenements.
Chalice is targeting tier-1 scale (>US$1bn NPV),
high-grade gold discoveries and commenced
a
regional-scale greenfield
exploration program in 2018.
systematic,
The Company is utilising all available targeting
tools at its disposal, including the substantial
pre-existing
regional geophysics database
(including crustal scale 2D seismic), regional-
scale soil sampling and ground geophysics.
Low-cost reconnaissance air-core (AC) drilling
to the top of the target basement on wide-
spaced lines has been used effectively to
narrow the target search space over the very
large Project area. Over 700 AC holes have
to date,
been completed by Chalice
identifying the Karri and Ironbark Prospects as
well as several other secondary targets.
The Company’s first phase of geological
diamond drilling (10 holes for ~3,500m) was
completed
in H1 2020, which confirmed
prospective geology and fertile gold systems
at each of the Karri, Ironbark North and
Ironbark South Prospects.
All six initial diamond drill holes at the Karri
Prospect intersected tightly folded, upright
stratigraphy and primary gold mineralisation,
indicating that the Karri Prospect has the
potential for a tier-1 scale gold system (Figure 9
and Figure 10).
Tightly folded / upright Castlemaine Group
sediments with gently plunging anticlinal fold
hinges are a characteristic feature of all large
high-grade gold deposits in the Bendigo Zone
including Bendigo (>22Moz Au), Fosterville
(>9Moz Au) and Ballarat (>14Moz Au).
1Lisitsin, 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.
23 An n u a l F i n a n c i a l R e p o r t 2 0 2 0
Figure 9: Karri Prospect – Plan View of diamond drill results and AC gold trends over geology
Figure 10: Karri Prospect – 3D perspective view (looking north-west) of diamond drill results,
sectional interpretations over anticlinal axes
An n u a l F i n a n c i a l R e p o r t 2 0 2 0 24
Ongoing and planned activities at Pyramid Hill
in the 2021 financial year include:
« A Phase 2 diamond drill program at the
Karri Prospect will commence in early Q4
2020.
the
is planned at
reconnaissance AC drill
« A Phase 3
program
Ironbark
Prospects to extend coverage between
the diorite intrusions and to the south-west
Ironbark South diorite, where
of
anomalous primary gold remains open
along strike. AC drilling is planned to
commence in early Q4 2020.
the
« A
regional
reconnaissance AC drill
program is planned at new targets within
the Muckleford and Mt William Areas, on 3-
5km spaced drill lines. This program will
commence once AC drilling at Ironbark is
completed.
Chalice is continuing its systematic approach
to gold exploration under cover in central
Victoria, targeting Fosterville / Bendigo style
gold discoveries.
The promising maiden diamond drill results at
the Karri, Ironbark North and Ironbark South
the presence of
Prospects demonstrate
primary gold systems at relatively shallow
depth, paving the way for the next stage of
exploration which will be targeted towards the
discovery of primary gold lodes.
25 An n u a l F i n a n c i a l R e p o r t 2 0 2 0
HAWKSTONE NICKEL-COPPER-COBALT
PROJECT
Location
West Kimberley Region, Western Australia
Development Stage
Early Exploration
Acquired
Ownership
2019
100% (other than King Sound Area where Chalice earning 85%)
Project Area
~1,800km²
The Hawkstone Nickel-Copper-
Cobalt Project (formerly the King
Leopold Nickel Project) covers an
area of ~1,800km2 in the west
Kimberley region of Western
Australia.
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, PGEs, Au, Sn, W).
Chalice’s Hawkstone Project is a combination
of several 100% owned exploration licences,
100% owned hard rock rights as well as an
earn-in agreement (earning up to 85%).
Figure 11: Hawkstone Nickel-Copper-Cobalt Project tenure, nickel occurrences, targets and
regional geology.
An n u a l F i n a n c i a l R e p o r t 2 0 2 0 26
The Ruins Dolerite has been demonstrated to
host high-grade nickel sulphides after the
Merlin discovery in 2015 by Buxton Resources
intersections reported by
(ASX: BUX). Drill
Buxton on their tenements include (refer to ASX
Announcement on 11 March 2019):
«
«
«
14m @ 1.9% NiEq from 304m including 6.6m
@ 3.5% NiEq
6m @ 2.4% NiEq including 2.2m @ 5.2% NiEq
15m @ 1.1% NiEq from 242m including 9.9m
@ 1.5% NiEq
Buxton has since executed two option and
earn-in joint venture agreements with IGO
Limited (ASX: IGO) and large-scale exploration
activities are underway in the region. The JV
has also substantially increased its licence
holding in this frontier province.
Field-based exploration commenced in July
2019, following the acquisition of private
explorer North West Nickel Pty Ltd. Activities
have focused on areas immediately south-
east of the Merlin Prospect within an area of
extensive outcropping Ruins Dolerite.
A maiden ground-based EM survey (MLEM)
was completed in July 2019 over the Waterford
Area (E04/1169) to follow-up on conductors
identified from a 2018 airborne EM survey. In
addition, a maiden airborne EM survey was
completed in early August 2019 over the King
Sound Area (E04/2299 & 2325). The two surveys
have resulted in the delineation of several
highly prospective EM conductors (Figure 11).
A MLEM survey was partially completed over
the Waterford Area in 2019, with the objective
of defining drill-ready, discrete, late-time EM
conductors. Two high priority, strong, discrete
and shallow EM conductors were identified
Target
and modelled at
(Figure 12).
the Ephesus
27 An n u a l F i n a n c i a l R e p o r t 2 0 2 0
Figure 12: Ephesus Target MLEM conductors over mapped geology and satellite imagery
Field activities recommenced in June 2020
and the MLEM survey as well as a program of
soil and rock chip sampling was completed
over the Waterford and King Sound Areas.
The Company
is planning a maiden
RC/diamond drill program in early Q4 2020 to
test several new EM targets, including the high-
priority ~2.5km x 1.5km Ephesus Target.
An n u a l F i n a n c i a l R e p o r t 2 0 2 0 28
GENERATIVE PROJECTS
The Company holds several generative
exploration projects, which are
typically
conceptual or early-stage opportunities where
low-cost prospect generation can contribute
to a diversified pipeline of future projects in the
Chalice portfolio.
Limited exploration activity has been
undertaken at Barrabarra, however planning is
underway for reconnaissance, geochemical
sampling and geophysical
The
Company aims to leverage its knowledge from
its Gonneville discovery to unlock the potential
of the project.
surveys.
In July 2020, Chalice secured a significant new
opportunity
in the South West region of
Western Australia with the potential for nickel-
copper-PGE sulphide discoveries.
The South West Nickel Project includes a
‘Julimar look-alike’ Ni-Cu-PGE target, a ~20km
interpreted mafic-ultramafic complex
long
with a strong magnetic signature and massive
sulphide occurrence (the Thor Target).
Chalice’s immediate focus at the project will
be geological
reconnaissance, systematic
surface geochemistry and ground-based
electromagnetic (EM) geophysics over the
>20km long Thor Target. These activities are
planned to commence in late 2020.
The Company has executed an earn-in
agreement with Venture Minerals (“Venture”,
ASX: VMS), whereby Chalice may earn up to a
70% interest in the project by spending $3.7
million on exploration over 4 years (with a
minimum commitment of $300,000).
The Barrabarrra Nickel-Copper-PGE Project is
located ~150km east of Geraldton, in the
highly prospective West Yilgarn Ni-Cu-PGE
Province discovered by Chalice. The Project
includes a ~15km long unexplored interpreted
mafic-ultramafic complex, with a similar
geophysical signature to the Julimar Complex
and anomalous Ni-Cu in soils.
29 An n u a l F i n a n c i a l R e p o r t 2 0 2 0
In August 2019, Chalice executed a
conditional Option and Earn-in Agreement on
the Viking Gold Project, east-south-east of
Norseman in Western Australia.
The Viking Gold Project
includes several
in
historical high-grade gold
oxide, that have never been followed up.
Chalice is currently progressing the exploration
licence application towards grant.
intersections
The Option and Earn-in Agreement was
executed with Metal Hawk Pty Ltd, whereby
Chalice may earn up to a 70% interest in the
project by
spending $2.75 million on
exploration over 4.5 years (with a minimum
commitment of $200,000, subject to the
exploration licence being granted).
The Mt Jackson Gold Project is located at the
northern end of
Southern Cross
Greenstone Belt in Western Australia.
the
Reconnaissance and
soil geochemistry
programs (~800 samples) were completed
during the year, which identified a coherent,
untested Au-As-Ab anomaly measuring ~2km
x ~0.5km. The Company is currently seeking a
joint venture partner to progress the project.
The Auralia Project is a district-scale ~1,422km²
land holding, 500km east of Kalgoorlie in the
Madura Province of Western Australia.
Limited historical exploration drilling below the
Eucla Basin in this area intersected ultramafic
to mafic intrusive rocks associated with a large
80km strike length magnetic anomaly.
No exploration activity was undertaken on the
Auralia Project during the year, however
Chalice is planning an initial ground based EM
survey in 2021.
Subsequent to year end, Chalice executed an
agreement whereby TC Resources NT Pty Ltd
(a subsidiary of NT Bullion Pty Ltd) may earn up
to a 75% interest in Chalice’s 100%-owned
granted exploration licences and exploration
licence applications at its Warrego North
Project in the Northern Territory, by spending
$1.15 million over six years (with a minimum
commitment of $300,000 within 12 months).
The agreement is conditional on the tenement
applications being granted.
The Company is currently seeking a farm-out
or divestment of the Flinders River Project.
Non-Operated Joint Ventures
Operator Ramelius Resources Ltd (ASX: RMS)
reported that no exploration drilling was
completed during the year.
Operator Ramelius Resources Ltd (ASX: RMS)
reported that a 42-hole, 1,474m aircore drilling
program was completed at the end of the
year to test broad gold-in-soil anomalies along
an interpreted granite-greenstone contact.
Assay results are pending.
Ramelius considers the anomalous Au trend
remains open to the west and additional
aircore and RC drilling is required as follow-up.
An n u a l F i n a n c i a l R e p o r t 2 0 2 0 30
Investments and Royalties
received ~3.1 million
Chalice
fully paid
ordinary shares in O3 Mining Inc. (“O3 Mining”,
TSX-V: OIII) as partial consideration for the sale
of its subsidiary Chalice Gold Mines (Quebec)
Inc. As at the date of this report, the Company
holds a ~5% interest in O3 Mining which is
valued at approximately $10 million at the time
of reporting.
Chalice acquired ~97 million
in
Spectrum Metals Ltd (“Spectrum”, ASX: SPX) in
H2 2019 to gain exposure to the high-grade
Penny West gold discovery
in Western
Australia.
shares
In Q1 2020, Ramelius Resources Limited
(“Ramelius”, ASX: RMS) announced a
recommended takeover offer (“Offer”) to
acquire Spectrum in exchange for 1 Ramelius
share for every 10 Spectrum shares plus cash
consideration of $0.017 per Spectrum share.
Chalice accepted the Offer for its ~97 million
shares held in Spectrum and on 26 March 2020,
the Company received ~9.7 million Ramelius
shares. On 1 April 2020, the Company received
the cash consideration of $1.65 million.
The Company subsequently disposed of the
~9.7 million Ramelius shares for total proceeds
of ~$10.6 million. The disposal resulted in a total
gain of ~$6.5 million.
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.
The Company also holds several early-stage
royalties on gold projects across Canada and
Australia
31 An n u a l F i n a n c i a l R e p o r t 2 0 2 0
FINANCIAL REVIEW
The Group reported a net loss after income tax
from continuing operations of $11.4 million
predominately due
to exploration and
evaluation expenditure being expensed
against profit and loss as incurred. The loss for
the year ended 30 June 2020 was greater than
the net loss of $6.8 million for the year ended
30 June 2019. The increase in loss is largely
related
in exploration
activities at the Julimar and Pyramid Hill
Projects resulting in exploration and evaluation
operations
expenditure
increasing to $9.6 million from $4.7 million
in 2019.
to an expansion
continuing
on
Profit from discontinued operations was $8.7
million (2019: loss $3.4 million) as a result of the
completion of the disposal of Chalice Gold
Mines (Quebec) Inc (“CGMQ”) during July
2020.
in cash of $27.1 million
Cash and cash equivalents at 30 June 2020
were $45.7 million (2019: $18.6 million). The
increase
is
predominately due to a share placement
undertaken in May 2020 to institutional and
sophisticated
raising $30 million
(before costs).
investors
flows used
In comparison to the 2019 financial year, net
cash
in operating activities
increased by 16% from $8.6 million to $10.2
million primarily due to the receipt of $2.1
million in exploration tax credits in 2019.
flows
Net cash
investing activities
from
increased significantly during the year from a
net inflow of $1.3 million in 2019 to a net inflow
of $8.7 million in 2020 as a result of higher
proceeds received from sale of financial assets
received on the
in 2020 and proceeds
completion of
the disposal CGMQ of
$1.6 million.
Net cash inflows from financing activities for
2020 were $28.4 million compared to outflows
of $10.8 million in 2020. The difference is due to
the proceeds from the May 2020 placement
compared to the capital return of $10.7 million
completed in 2019.
At 30 June 2020, the Group had net assets of
$53.4 million (2019: 21.8 million) and an excess
of current assets over current liabilities of $52.9
million (2019: $21.1 million). Current assets
increased by 148% to $54.9 million (2019: $22.1
million) mainly due to an increase in cash on
hand due to the May 2020 placement and the
investment held in O3 Mining Inc. Refer to the
statement of cash flows discussion above for
further details regarding the movements and
cash equivalents at 30 June 2020.
There was no material movement in non-
current assets during the financial year.
An n u a l F i n a n c i a l R e p o r t 2 0 2 0 32
COMPETENT PERSON AND QUALIFYING
PERSON STATEMENT
The information in this Annual Report that relates to
Exploration Results is based on and fairly represents
information and supporting documentation prepared by
Dr. Kevin Frost BSc (Hons), PhD, a Competent Person, who
is a Member of the Australian Institute of Geoscientists. Dr.
Frost is a full-time employee of the company and has
sufficient experience that is relevant to the activity being
undertaken to qualify as a Competent Person as defined
in the 2012 edition of the Australasian Code for Reporting
of Exploration Results, Minerals Resources and Ore
Reserves, and is a Qualified Person under National
Instrument 43-101 – ‘Standards of Disclosure for Mineral
Projects’. The Qualified Person has verified the data
disclosed in this release, including sampling, analytical
and test data underlying the information contained in this
release. Dr. Frost consents to the inclusion in the Annual
Report of the matters based on his information in the form
and context in which it appears.
The Information in this Annual Report that relates to
exploration results for the Julimar Project is extracted from
the following ASX announcements:
« “High-grade
nickel-copper-palladium
sulphide
intersected at Julimar Project in WA”, 23 March 2020
« “Preliminary results from second target at Julimar
Project”, 24 March 2020
« “Significant nickel-palladium discovery confirmed at
Julimar”, 15 April 2020
« “Second diamond hole intersects discovery zone at
Julimar”, 20 April 2020
« “Exciting visual results from deep diamond drill hole at
Julimar”, 5 May 2020
« “Large-scale PGE system further expanded at Julimar”,
11 May 2020
« “High-grade Ni-Cu-PGEs confirmed in discovery zone
at Julimar”, 25 May 2020
«
«
«
«
“Extension of wide, high-grade PGE-Ni-Cu matrix zone
at Julimar”, 15 June 2020
“Chalice discovers new high-grade PGE-Cu-Au zone
at Julimar”, 9 July 2020
“Significant extension of high-grade PGE-Ni-Cu-Co
zones at Julimar”, 17 August 2020
“Positive preliminary metallurgical results at Julimar”,
1 September 2020
«
"Major new 6.5km-long EM anomaly identified at
Julimar", 22 September 2020
The Information in this Annual Report that relates to the
exploration results for the Pyramid Hill Project is extracted
from the following ASX announcements:
« “Discovery of new >2km gold trend in air-core drilling
at Karri Target indicates potential for a significant gold
system”, 12 December 2019
« “Several new gold zones discovered in first drill holes at
Ironbark North Target”, 19 December 2019
« “Karri gold trend expanded to over 3km of strike
extent”, 13 January 2020
« “Infill AC drilling at Karri returns best intercept to date
of 4m at ~4g/t gold”, 3 February 2020
« “New High-Grade Gold Zones at the Large-Scale Karri
Target”, 4 March 2020
« “First diamond drill hole at Karri hits primary gold zone”,
7 April 2020
« “Maiden diamond drill program at the Pyramid Hill
Gold Project confirms a large gold system at the Karri
Prospect”, 29 July 2020
The Information in this Annual Report that relates to
exploration results for the Hawkstone Project (formerly the
King Leopold Project) is extracted from the following ASX
announcements:
«
«
“Chalice acquires highly prospective nickel sulphide
project in west Kimberley region of WA”, 18 June 2019
“Strong EM Conductors Identified at King Leopold
Project”, 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.
33 An n u a l F i n a n c i a l R e p o r t 2 0 2 0
FORWARD LOOKING STATEMENTS
This Annual Report may contain
forward-looking
information within the meaning of Canadian securities
legislation and forward-looking statements within the
meaning of the United States Private Securities Litigation
Reform Act of 1995
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.
(collectively,
the prospectivity of
Forward-looking statements relate to future events or
future performance and reflect Company management’s
expectations or beliefs regarding future events and
include, but are not limited to, the Company’s strategy,
the price of O3 Mining securities, the estimation of mineral
reserve and mineral resources, the realisation of mineral
resource estimates, the likelihood of exploration success at
the Company’s projects,
the
Company’s exploration projects,
the existence of
additional EM anomalies within the project, 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 additional drilling, the timing and
amount of estimated
future production, costs of
production, 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”, “impending”, “likely”,
“indicative” 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
terms or
the negative of
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; assay results of visually
whether
interpreted
to economic
geophysical anomalies are
intersections;
mineralised
related
these
mineralisation or some other feature; obtaining access to
undertake additional exploration access on EM anomalies
located in the Julimar State Forrest; the results from testing
EM anomalies; results of planned metallurgical testwork;
changes in project parameters as plans continue to be
refined; changes in exploration programs 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 share price of O3 Mining securities and future
proceeds and timing of potential sale of O3 Mining
securities, the impact of the COVID 19 epidemic 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, ASX at asx.com.au and OTC Markets at
otcmarkets.com.
identify
Although the Company has attempted to
important factors that could cause actual actions, events
or results to differ materially from those described in
forward-looking statements, there may be other factors
that cause actions, events or results not to be as
anticipated, estimated or intended. There can be no
assurance that forward-looking statements will prove to be
accurate, as actual results and future events could differ
materially from those anticipated in such statements.
Accordingly, readers should not place undue reliance on
forward-looking statements.
The Company listed on the TSX on 26 November 2010 and
upon listing, the Company became a reporting issuer in
the province of Ontario. However, in accordance with
National Instrument 71-102 – Continuous Disclosure and
Other Exemptions Relating to Foreign Issuers (“NI 71-102”),
the Company will be a “designated foreign issuer” (as
defined by NI 71-102) for the balance of the current
financial year and until such time as it ceases to satisfy the
requirements to be a designated foreign issuer. As such,
the Company will not be subject to the same ongoing
reporting requirements as most other reporting issuers in
Canada. Generally, the Company will comply with
Canadian ongoing reporting requirements if it complies
with the regulatory requirements of the ASX, which is a
“foreign regulatory authority” (as defined by NI 71-102)
and files any documents required to be filed with or
furnished to the ASX on SEDAR.
An n u a l F i n a n c i a l R e p o r t 2 0 2 0 34
TENEMENT SCHEDULE
As at 28 September 2020
Location
Project
Tenement
No.
Registered Holder
Nature of Interest
Western
Australia
Hawkstone
E04/1169
Waterford Bay Pty Ltd
100% of the hard-rock mineral rights
E04/2405
Waterford Bay Pty Ltd
100% of the hard-rock mineral rights
E04/2563
Kimberley Alluvials Pty Ltd
100% of the hard-rock mineral rights
E04/2299
Strategic Metals Pty Ltd
E04/2325
Strategic Metals Pty Ltd
0% - Farm-in agreement, right to earn
up to 85% interest
Gibb Rock
E70/4869
CGM (WA) Pty Ltd
E70/5194
CGM (WA) 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
CGM (WA) Pty Ltd
CGM (WA) Pty Ltd
100%
CGM (WA) Pty Ltd
100%
Nulla South
Julimar
Auralia
Barrabarra
E77/2353
to
E77/2354
E70/5118
to
E70/5119
E69/3636
to
E69/3637
P37/8706
to
P37/8707
P37/8710
to
P37/8711
E69/3700
CGM (WA) Pty Ltd
E70/5263
to
CGM (WA) Pty Ltd
E70/5264
CGM (WA) Pty Ltd
Mt Jackson
E77/2577
CGM (WA) Pty Ltd
Kurrajong Bore
P37/8702
CGM (WA) Pty Ltd
CGM (WA) Pty Ltd
100%
100%
100%
100%
95%
95%
CGM (WA) Pty Ltd
95%
P37/9021
CGM (WA) Pty Ltd
P37/9028
CGM (WA) Pty Ltd
South West
E70/5086
Banks, Aaron Peter; Keil,
Michael; Roseberry
Holdings Pty Ltd
100%
100%
100%
E70/4837
Venture Lithium Pty Ltd
E70/5067
Venture Lithium Pty Ltd
0% - Earn-in agreement, right to earn
up to 70% interest
0% - Earn-in agreement, right to earn
up to 70% interest
35 An n u a l F i n a n c i a l R e p o r t 2 0 2 0
Location
Project
Tenement
No.
Registered Holder
Nature of Interest
Victoria
Pyramid Hill
EL006661
CGM (WA) Pty Ltd
CGM (WA) Pty Ltd
EL006737
to
EL006738
EL006669
CGM (WA) Pty Ltd
EL006805
CGM (WA) Pty Ltd
EL006864
CGM (WA) Pty Ltd
EL006898
CGM (WA) Pty Ltd
EL006901
CGM (WA) Pty Ltd
EL006960
CGM (WA) Pty Ltd
EL007121
CGM (WA) Pty Ltd
EL007120
CGM (WA) Pty Ltd
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Northern
Territory
Warrego North
EL23764
CGM (WA) Pty Ltd (51%) &
Meteoric Resources NL
(49%)
Earn-in agreement, right to earn up to
70% interest
EL31608
CGM (WA) Pty Ltd
EL31610
CGM (WA) Pty Ltd
100% - Farm-out agreement, TC
Resources NT Pty Ltd has the right to
earn up to 75% interest
100% - Farm-out agreement, TC
Resources NT Pty Ltd has the right to
earn up to 75% interest
Queensland
Flinders River
EPM26861
CGM Lithium Pty Ltd
EPM26866
CGM Lithium Pty Ltd
100%
100%
An n u a l F i n a n c i a l R e p o r t 2 0 2 0 36
37 An n u a l F i n a n c i a l R e p o r t 2 0 2 0
The Directors present their report together with the consolidated financial statements of Chalice Gold Mines
Limited (“Chalice” or “the Company”) and its subsidiaries (together “the Group”) for the financial year ended
30 June 2020 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
Non-executive Chairman
(previously Executive
Chairman until 31 August
2020)
Alexander (Alex) C Dorsch
BEng (Hons), BFin
Managing Director
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.
Tim has been a director of Chalice since 2005 (15 years) and was appointed
Executive Chairman on 23 March 2018. Tim previously held the position of
Managing Director.
Other current directorships of listed companies:
Chairman of DevEx Resources Limited (since 2002) and Liontown Resources
Limited (since 2006).
Former directorships of listed companies in the last three years:
Strike Energy Limited (2017 to 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.
Other current directorships of listed companies:
None
Former directorships of listed companies in the last three years:
None
Morgan S Ball
B.Com, CA, FFin
Lead Independent Non-
executive Director
Morgan is a Chartered Accountant with more than 30 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.
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 (4 years).
Other current directorships of listed companies:
None
Former directorships of listed companies in the last three years:
Arrow Minerals Limited (2019 to 2020).
An n u a l F i n a n c i a l R e p o r t 2 0 2 0 38
Stephen P Quin
PGeo, FGAC, FSEG, MIOM3
Independent Non-executive
Director
Garret J Dixon
BEng, Civil (Hons), MBA, and
is a member of the AICD
Independent Non-executive
Director
(Appointed 21 August 2020)
2. COMPANY SECRETARY
Jamie Armes
B.Bus, CA,
(appointed 16 August
2019)
Leanne Stevens
B.Com, CA, ACIS
(resigned 16 August
2019)
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 and is a currently a director of Kutcho Copper Corp (since December
2017), a TSX-V listed resource development company. 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-V 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 (10 years).
Other current directorships of listed companies:
Midas Gold Corp. (since 2011) and Kutcho Copper Corp (since 2017).
Former directorships of listed companies in the last three years:
None
Garret has extensive experience in the resources and mining contracting
sectors in Australia and overseas. His work in both private and ASX listed
companies spans more than three decades, having worked in senior
executive roles for major mine owners, mine operators and contractors. Garret
recently held the position of Executive VP Alcoa & President Bauxite where he
was responsible for the global bauxite mining business for the NYSE listed Alcoa
Corporation. His career also includes the role of Executive General Manager
of civil construction and contract mining group Henry Walker Eltin Ltd and
Managing Director of ASX listed Gindalbie Metals Ltd.
Garret is a member of the Remuneration Committee and the Audit and Risk
Committee. Garret has been an Independent Non-executive Director since
21 August 2020.
Other current directorships of listed companies:
BCI Minerals Ltd (since 2020), Fenix Resources Ltd (since 2020) and Dynamic
Drill & Blast Holdings Ltd (since 2020).
Former directorships of listed companies in the last three years:
Watpac Ltd (2014 to 2019).
Jamie is a Chartered Accountant who has over 27 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
18 years of accounting and governance experience within the mining and
energy industries.
39 An n u a l F i n a n c i a l R e p o r t 2 0 2 0
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
8
8
8
8
8
2
-
-
2
2
2
-
-
2
2
-
-
-
-
-
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)
S P Quin
4. PRINCIPAL ACTIVITIES
Remuneration
S P Quin (Chairman)
M S Ball
Nomination
Full Board
The principal activity of the Group during the year was mineral exploration on the Julimar Nickel-Copper-PGE
Project and Pyramid Hill Gold Project. Other than as outlined in the Operating and Financial Review, 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 2020. 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 15 for further details.
Future exploration results, movements in commodity prices, foreign exchange rates and equity prices may
adversely impact the achievement of the Company’s business strategies. In particular, the Company has an
exposure to equity prices and potentially material movements in the Australian dollar to Canadian dollar
through its holding of approximately 3.1 million shares in O3 Mining Inc. Refer to note 22 for further information
on these financial risks.
6. SIGNIFICANT CHANGES IN STATE OF AFFAIRS
Other than the changes documented in the Operating and Financial Review and elsewhere in this Directors’
Report, 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 2020 outlines remuneration arrangements in place for directors and other
Key Management Personnel (KMP) of the Group 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 attract, retain and motivate executives whilst ensuring
alignment to the Company’s strategy and shareholder interests. 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 KMP and staff.
An n u a l F i n a n c i a l R e p o r t 2 0 2 0 40
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 of the Group during the financial year and
unless otherwise indicated were KMP for the entire financial year:
Executive Directors
Tim Goyder
Executive Chairman
Alex Dorsch
Managing Director
Non-executive Directors
Stephen Quin
Non-executive Director
Morgan Ball
Non-executive Director
Executives
Richard Hacker
Chief Financial Officer
Kevin Frost
General Manager – Exploration
Bruce Kendall
General Manager – Corporate Development (appointed 1 October 2019)
Patrick Lengyel
Exploration Manager – Canada (resigned 31 December 2019)
After the reporting date, Mr Garret Dixon was appointed as a Non-executive Director on 21 August 2020 and on
1 September 2020, Mr Tim Goyder transitioned to Non-executive Chairman.
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, under a formal charter, the Board
has established a Remuneration Committee that consisted of the following non-executive directors during the
reporting period:
«
Stephen Quin (Chair) – appointed to Chair on 12 July 2019
« Morgan Ball (member) – resigned as Chair on 12 July 2019.
The Remuneration Committee has been 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 the award of Short-Term Incentives and Long-Term Incentives, following recommendations
from the Remuneration Committee. The Board also sets Non-executive Directors fees and the aggregate fee
pool for Non-executive Directors (which is subject to shareholder approval).
The Remuneration Committee meets through the year when appropriate. The Managing Director may attend
certain Remuneration Committee meetings by invitation, where management input is required. 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 found 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. Given the recent growth of the Company, subsequent to the end of the
financial year, the Remuneration Committee sought advice from external consultants in relation to remuneration
41 An n u a l F i n a n c i a l R e p o r t 2 0 2 0
benchmarking for Executives and Non-executive directors as well as a review of the structure and design
elements of the incentive based remuneration. This did not involve providing the Remuneration Committee with
any remuneration recommendations as defined by the Corporations Act 2001. As a result, the Remuneration
Committee has recommended changes as to the quantum and structure of KMP remuneration which will
become effective retrospectively from 1 July 2020.
Based on the above considerations the target maximum remuneration components for executives calculated
as a percentage of fixed remuneration comprising base salary and superannuation is as follows
Executive Chairman
Managing Director
Other Executives
30 June 2020
From 1 Jul 2020
STI
-
-
-
LTI
45%
45%
30% - 37.5%
STI
N/A
25%
25%
LTI
N/A
75%
50%
Remuneration report approval at 2019 Annual General Meeting
The Remuneration Report for the financial year ended 30 June 2019 received positive shareholder support at
the 2019 Annual General Meeting (“AGM”) with a vote of 98.4% in favour.
7.4 Remuneration principles and components of remuneration
The Company has adopted the following principles in its remuneration framework:
1.
2.
Setting aggregate remuneration at a level which provides the Company with the ability to attract and
retain directors and executives of a high calibre at a cost which is acceptable to shareholders; and
KMP interests 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; and
«
incorporating in the remuneration framework both short and long-term incentives linked to the strategic goals
and performance of the Company.
The following table is an overview of the components of remuneration:
Fixed remuneration
Element
Base salary
Base fees
Committee fees
Superannuation
Consultancy fees
Other benefits
Variable remuneration
Short term incentives (STI)
Share options
Performance rights
Non-executive directors
Executives
×
✓
✓
✓(1)
×
✓(2)
×
✓(3)
×(4)
✓
×
×
✓
×
✓(2)
✓
✓
✓
(1) Only applies to Australian non-executives.
(2) Other benefits relate to directors and officers insurance and income protection for executives.
(3) No performance related hurdles and subject to shareholder approval.
(4) Mr Goyder was awarded performance rights whilst an executive of the Company. On transitioning to a non-
executive role on 1 September 2020, the Board resolved that these performance rights are permitted to be
retained and not forfeited .
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
An n u a l F i n a n c i a l R e p o r t 2 0 2 0 42
amount of $450,000 per year (including superannuation). The Board does not propose to seek any increase to
the non-executive director fee pool at the upcoming 2020 Annual General Meeting.
The fee structure for non-executive directors is reviewed annually. With effect from 1 July 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 at the time, it was agreed that non-
executive director fees would be reduced. To compensate non-executive directors for the reduction in fees,
the Board resolved in July 2019 to grant 500,000 share options each to Mr Ball and Mr Quin. These options were
issued on 28 November 2019 following receipt of shareholder approval at the Company’s 2019 AGM.
Remuneration for non-executive directors is not linked to the performance of the Company.
Other than the payment of statutory superannuation benefits, non-executive directors are not entitled to
receive retirement benefits. Non-executive directors, at the discretion of the Board, may participate in the
Employee Securities Incentive Plan (“ESIP”) through the issue of share options, subject to approval by
shareholders. It is currently the policy of the Company not to award performance rights under the ESIP to non-
executive directors.
Details of directors fees and committee fees, inclusive of superannuation where applicable, are shown in the
table below:
From 1 July 2020
$
From 1 July 2019
$
From 1 July 2018
$
Base Fees (annual)
Non-Executive Chairman (from 1 Sept 2020)
Non-executive Directors
Committee Fees (annual)
Chairperson of Committee
Member of Committee
150,000
60,000
6,000
4,000
-
40,000
6,000
4,000
-
60,000
-
5,000
In addition, subject to shareholder approval at the Company’s upcoming AGM, it is proposed that each non-
executive director will be issued 150,000 unlisted share options under the terms of the Company’s ESIP, with an
exercise price of $2.20 and an expiry date of 30 June 2023. As Non-executive Chairman, Mr Goyder will be issued
250,000 unlisted options on the same terms as other non-executive directors.
As part of the remuneration paid to non-executive directors, it is proposed that each director be issued share
options annually (subject to shareholder approval each year).
The remuneration of non-executive directors for the years ended 30 June 2020 and 30 June 2019 is detailed
further in this Remuneration Report.
7.4.2
Executive remuneration
Executive remuneration consists of fixed remuneration and may also comprise variable performance-based
remuneration in the form of short-term incentives (STIs) comprising of cash bonuses, and long-term incentives
(LTIs) share options and/or performance rights.
(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.
43 An n u a l F i n a n c i a l R e p o r t 2 0 2 0
(b) Variable remuneration – short term incentives (STI)
At the discretion of the Board, executives can be incentivised in the shorter term (12 months) through the
payment of cash bonuses upon achievement of predefined targets, however, until 1 July 2020, the Board had
suspended the use of formal STI’s and moved 100% of eligible executive’s incentive entitlements exclusively to
long-term incentives (LTI). During the financial year, Mr Lengyel, Exploration Manager – Canada, was paid a
cash bonus of $22,215 upon successful completion of the sale of Chalice Gold Mines (Quebec) Inc. No cash
bonuses were paid to any other executive during the year.
Given the recent growth of the Company, effective 1 July 2020, the Remuneration Committee determined that
it is appropriate to recommence a formal STIP. The maximum bonus percentage is 25% of an executive’s fixed
annual remuneration. The STIP is based on achieving “Base” and “Stretch” targets which are aligned with the
objectives set by the Board for the following 12 months. These performance measures include targets related to
(i) a maiden mineral resource for Gonneville – 30%, (ii) a significant new discovery (outside of Gonneville – 15%,
(iii) relative and absolute Total Shareholder Return measures – 15% and (iv) environmental, social, governance
and health and safety objectives – 25%; all with a measurement date of 30 June 2021.
(c) Variable remuneration – long term incentives (LTI)
The Company provides LTI’s to executives in the form of performance rights (which is a right to convert into
ordinary shares after achievement of applicable criteria and targets) under the Employee Securities Incentive
Plan (ESIP). The Board has the discretion to make annual awards of performance rights with the level of the
award dependent on an executive’s position within the Company and their total fixed remuneration. Subject
to the performance criteria set out in the terms of the LTI’s, performance rights may convert into ordinary fully
paid shares in the Company. In the event performance criteria are not achieved by the measurement date,
the performance rights lapse with no shares being issued.
A summary of the ESIP is set out below:
Key Design Feature
Design
Eligibility
Award quantum
Performance conditions
Vesting
Term and lapse
All full-time employees and permanent part-time employees (including executive
directors and non-executive directors) of the Company are eligible participants.
Shareholder approval is required before any director or their related party can
participate in the ESIP. Current Company policy is to not award performance rights to
non-executive directors.
The award quantum will be determined in consideration of total remuneration of the
individual, market relativities and business affordability. The ESIP does not set out a
maximum number of performance rights that may be issuable to any one person,
however, the total number of performance right offers made in reliance on ASIC Class
Order 14/1000 at any time during the previous 3 year period cannot exceed 5% of the
total number of shares on issue at the date of the offer.
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.
Vesting may 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
they will ordinarily have a three year term. 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.
An n u a l F i n a n c i a l R e p o r t 2 0 2 0 44
Key Design Feature
Design
Price Payable by
Participant
Change of Control
Cessation of Employment
No consideration payable.
If a change of control event occurs in relation to the Company, or the Board
determines that such an event is likely to occur, the Board may in its discretion
determine the manner in which any or all of the Participant's Convertible Securities will
be dealt with, including, without limitation, in a manner that allows the Participant to
participate in and/or benefit from any transaction arising from or in connection with
the change of control event.
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.
The Company adopted the ESIP at the 2019 AGM. The ESIP was developed to combine and replace the previous
Employee Share Option Plan (ESOP) and Long Term Incentive Plan (LTIP).
Annual grant of performance rights – 2020/2021
In September 2020, performance rights were granted to KMP as per the table below:
Annual Award KMP
Number of Rights
Measurement Date
2020/2021
Alex Dorsch(1)
Richard Hacker
Kevin Frost
Bruce Kendall
280,081
160,893
160,422
157,792
30 June 2023
30 June 2023
30 June 2023
30 June 2023
Vesting Date
30 June 2023
30 June 2023
30 June 2023
30 June 2023
(1) The performance rights to be issued to Mr Dorsch are subject to shareholder approval at the Company’s 2020
AGM.
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.
The following table outlines performance conditions and the weightings of each condition .
Percentage of
performance rights that
will vest if performance
conditions are met
15%
Overall Performance
Condition
1. ESG and H&S
objectives
Specific Performance Conditions
A proportional LTI payment shall be made according to the
number of conditions below being met between 1 July 2020
and 30 June 2023:
«
«
Lost time injury frequency rate (LTIFR) for Chalice staff of
<1.8
Zero fatalities
«
Zero reportable environmental incidents (including spills,
loss of containment, etc.)
« No material breach of any Programme of Work (POW)
conditions (drilling permits)
«
Zero community or landowner incidents resulting in the
permanent loss of land access on a material private
property or the immediate halting of all operations on
any site
« No material breach of the Company’s Code of Conduct
100% allocation if no breach
67% allocation if one breach
33% allocation if two breaches
0% allocation if more than two breaches
45 An n u a l F i n a n c i a l R e p o r t 2 0 2 0
Overall Performance
Condition
2. Pre-feasibility study
completion
3. Project milestone
achievements
4. 36-month Absolute
TSR measure
5. 36-month Relative
TSR compared to
peer group.
Specific Performance Conditions
Release on the ASX a mining pre-feasibility study (PFS) on an
asset (including Gonneville) which shows the potential to
generate an internal rate of return (IRR) of >20% using
consensus commodity prices and Board approved
assumptions.
Generate significant value, on an existing or new asset (either
operated or non-operated), through achievement of the
below milestones:
a) Define a new JORC Mineral Resource Estimate (for a new
discovery outside of Gonneville) which shows the
potential to be economic (generate an IRR >20% based
on
financial modelling using consensus
commodity prices and Board approved assumptions).
internal
b)
Increase an existing JORC Mineral Resource Estimate by
a factor of 2x, subject to a minimum increase of 0.5Moz
AuEq.
c) Sell a material asset (as part of an asset sale or corporate
transaction) where:
i.
ii.
the total deal value (including royalties retained)
exceeds a threshold determined by the Board using
a published mining feasibility study outcome OR
consensus commodity prices and Board approved
assumptions OR as determined by an Independent
Expert); and
the deal generates a profit after-tax of at least 50%
reflecting costs of acquisition and all project-to-date
expenditure
(whether expensed or
capitalised).
incurred
Achieving NONE of the above conditions
Achieving ONE of the above conditions
Achieving TWO (or more) of the above conditions
For Example: Achieving both a) and or b) on a single asset,
OR achieving a) on two separate assets, would classify as this
condition met.
A proportional LTI payment shall be made which is directly
proportional to the Total Shareholder Return (TSR) from 1 July
2020 to 30 June 2023. The proportion paid is calculated as:
0% allocation if 3-yr TSR <30%
Pro-rata allocation if 3-yr TSR between 30-100%
100% allocation if 3-yr TSR >100%
If the 20-trading day VWAP until 30 June 2023 exceeds 200%
of the 20-trading day VWAP until 1 July 2020, the performance
measure would be deemed to have been met. The 20-day
VWAP of the Company at 1 July 2020 is $0.95. If, for example,
the 20-day VWAP at 30 June 2023 is $1.71 (an 80% increase in
the 20-day VWAP), then 80% of this performance measure
would be deemed to have been met.
A proportional LTI payment shall be made where the TSR
exceeds the median TSR, between 1 July 2020 and 30 June
2023, of the peer group* (refer below).
«
«
0% allocation if TSR below 50th percentile
if TSR between 50th and 75th
Pro-rata allocation
percentile (as detailed below)
Percentage of
performance rights that
will vest if performance
conditions are met
25%
0%
12.5%
25%
17.5%
17.5%
«
100% allocation if TSR above 75th percentile
An n u a l F i n a n c i a l R e p o r t 2 0 2 0 46
Overall Performance
Condition
Specific Performance Conditions
Percentage of
performance rights that
will vest if performance
conditions are met
If the TSR is between the 50th and 75th percentile, then for
each percentile increment above 50, a multiple of 4 times
that increment would have been met. For example: If the
Chalice TSR is at the 55th percentile, 20% of this performance
measure would be deemed to have been met.
*The peer group includes the following ASX listed resource
companies: Panoramic Resources Limited, Finders Mines
Limited, Liontown Resources Limited, New Century Resources
Limited, Emerald Resources NL, Rand Mining Limited, Atrum
Coal Limited, Greenland Minerals Limited, Stavely Minerals
Limited, Lion One Metals Limited, Magnetic Resources NL and
Oklo Resources Limited.
Where required, the Board may, acting reasonably and in good faith, use its discretion to vary the LTI maximum
weightings. For example, where a sale of an asset occurs prior to completion of a PFS (i.e. milestone 1 is unable
to be met), the Board may allocate the attributable weighting to other milestones.
Annual grant of performance rights – 2019/2020
The table below outlines the performance rights granted to KMP for the 2019/2020 financial year and have not
yet vested:
Annual Award
KMP
Number of Rights
Measurement Date
Tim Goyder
Alex Dorsch
2019/2020
Richard Hacker
Kevin Frost
Bruce Kendall
735,294
1,074,402
700,606
827,593
363,221
30 June 2022
30 June 2022
30 June 2022
30 June 2022
30 June 2022
Expiry Date
30 June 2023
30 June 2023
30 June 2023
30 June 2023
30 June 2023
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 conditions:
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 internal rate of
return (IRR) of at least 20% using consensus commodity prices
and board approved cost assumptions.
AND/OR
Value generation through:
Percentage of granted
performance rights that
will vest if performance
conditions are met
« 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;
50%
47 An n u a l F i n a n c i a l R e p o r t 2 0 2 0
Overall Performance
Condition
Specific Performance Conditions
Percentage of granted
performance rights that
will vest if performance
conditions are met
Absolute TSR objectives
Relative TSR objectives
« 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.
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.
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:
«
«
Below 50th percentile
Between 50th and 75th percentile
« At or above 75th percentile
The comparators companies include the following ASX and
TSX listed companies: Probe Metals Inc., Cartier Resources
Inc, QMX Gold Corporation, GFG Resources Inc., Catalyst
Metals Limited, Navarre Minerals Limited, Kalamazoo
Resources Limited, Petratherm Limited, Buxton Resources
Limited, Encounter Resources Limited, Prodigy Gold Limited,
S2 Resources Limited, and Mirasol Resources Ltd.
0%
Pro rata between
8.25% and 25%
25%
0%
Pro rata between
8.25% and 25%
25%
An n u a l F i n a n c i a l R e p o r t 2 0 2 0 48
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
Expiry 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
30 June 2022
30 June 2022
30 June 2022
30 June 2022
30 June 2022
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:
Overall Performance
Condition
Strategic objectives
Absolute TSR 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
to be economic based on consensus
potential
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:
«
«
Share price below 15% p.a. increase (equates to CHN
share price <21c in 3 years)
Between 15% p.a. and 20% p.a. (21c – 24c)
« At or above 20% p.a. (>24c)
49 An n u a l F i n a n c i a l R e p o r t 2 0 2 0
Percentage of granted
performance rights that
will vest if performance
conditions are met
50%
0%
Pro rata between
8.25% and 25%
25%
Overall Performance
Condition
Relative 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:
The comparators companies include the following ASX and
TSX listed companies: Belo Sun Mining Corporation, Equatorial
Resources Limited, Bluestone Resources Inc., Probe Metals
Inc., OreCorp Limited, Intrepid Mines Limited, S2 Resources
Limited, Bauxite Resources Limited, Strategic Metals Ltd.,
Cartier Resources Inc., Torq Resources Inc., NuLegacy Gold
Corporation, Alexandria Minerals Corporation, QMX Gold
Corporation, Catalyst Metals Limited, Navarre Minerals
Limited, and Meteoric Resources NL.
«
«
Below 50th Percentile
Between 50th and 75th percentile
« At or above 75th percentile
Percentage of granted
performance rights that
will vest if performance
conditions are met
0%
Pro rata between
8.25% and 25%
25%
The test date for the 2018/2019 performance rights is 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. In July 2020,
the Remuneration Committee determined that the 2017/2018 Performance Rights vested in full due to the
achievement of the performance conditions measured over the three years ended 30 June 2020.
Upon vesting, the performance rights were exercised into an equivalent number of fully paid ordinary shares in
accordance with their terms. The Board resolved to pay cash in lieu of the exercise of 415,365 Performance
Rights, held by Pat Lengyel.
Annual Award
KMP
Number of Rights
Measurement Date
Tim Goyder
Alex Dorsch
2017/2018
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
Expiry date
30 June 2021
30 June 2021
30 June 2021
30 June 2021
30 June 2021
The following table outlines key business objectives which were determined by the Remuneration Committee
to have been met in full during the measurement period.
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
Percentage of granted
performance rights that
will vest if performance
conditions are met
50%
An n u a l F i n a n c i a l R e p o r t 2 0 2 0 50
Overall Performance
Condition
Specific Performance Conditions
Percentage of granted
performance rights that
will vest if performance
conditions are met
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 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:
TSR objectives
« Below 50th Percentile
« Between 50th and 75th percentile
« At or above 75th percentile
0%
Pro rata between 16.5%
and 50%
50%
Annual grant of performance rights - 2016/2017
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 2016/2017 performance rights did not vest, and lapsed on 12 July 2019.
(d) Variable remuneration – share option plan
The Company has at times exercised its discretion to grant share options to executives. The granting of options
is not subject to specific performance criteria, however, when granting options, the terms of the options are
designed to provide an incentive that will contribute towards increasing shareholder wealth. This is undertaken
by determining an exercise price that exceeds the underlying share price at the date of grant and through
vesting conditions that require a period of continuous employment. 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 as an LTI to KMP rather than share options.
However, in the current year 1,000,000 unlisted options were granted to Mr A Dorsch, following the receipt of
Shareholder approval at the Company’s 2019 AGM. The options were awarded to Mr Dorsch in November 2018
as part of a sign on incentive for his appointment as Managing Director.
7.4.3
Link between performance and executive remuneration
By granting performance rights to executives, the Company aims to align executive remuneration with
shareholder wealth and return. Vesting conditions are designed to be consistent with the Company’s strategic
and business objectives that are set with the ultimate aim of generating shareholders wealth.
51 An n u a l F i n a n c i a l R e p o r t 2 0 2 0
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 as at 30 June
Share price increase
2016
$0.14
100%
2017
$0.11
(21%)
2018
$0.10
(9%)
2019
$0.12
20%
2020
$0.995
729%
7.5 Key Management Personnel remuneration
Short-term Benefits
Post-employment
Benefits
Share-based
Payments
Non-
monetary
Benefits
$
Cash
Bonus
$
Superan
-nuation
$
Termination
Payments
$
Long-term
Incentives(5)
$
Salary &
Fees
$
200,000
324,078
298,997
299,468
-
16,779
50,000
70,000
45,662
63,927
284,893
285,365
271,987
269,644
195,418
-
108,853
200,645
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
B Kendall(3)
P Lengyel(4)
Total
Compensation
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
4,308
5,268
4,308
4,461
-
905
7,746
8,388
4,308
4,461
6,899
6,759
4,308
-
3,225
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,488
13,357
22,215
61,068
19,000
26,381
21,003
20,531
-
1,594
-
-
4,338
6,073
21,003
20,531
21,003
23,215
15,752
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
61,819
-
Proportion of
Remuneration
Performance
Related
%
24
31
21
30
-
-
-
-
-
-
11
25
13
29
5
-
7
19
Total
$
293,351
513,854
496,897
465,886
-
19,278
87,811
78,388
84,373
74,461
349,991
414,374
341,148
412,595
226,275
-
213,443
339,580
2,093,289
2,318,416
70,043
158,127
172,589
141,426
-
-
30,065
-
30,065
-
37,196
101,719
43,850
119,736
11,880
-
15,068
64,510
410,756
585,518
1,455,810
1,529,906
40,590
43,599
22,215
102,099
61,819
61,068
98,325
-
(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 Kendall was appointed General Manager – Corporate Development 1 October 2019.
(4) On 31 December 2019, Mr Lengyel was made redundant following the cessation of exploration and business
development activities in Canada. Mr Lengyel was paid a cash bonus of $22,215 upon successful completion
of the sale of Chalice Gold Mines (Quebec) Inc.
(5) The amount disclosed in the table above relates to the non-cash value ascribed to share options and
performance rights under Australian Accounting Standards using the Black Scholes and Monte Carlo valuation
methodologies 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 and performance rights allocated to this
reporting period. This includes negative amounts where a share-based payment expense is reversed due to a
non-market based performance condition not being met.
An n u a l F i n a n c i a l R e p o r t 2 0 2 0 52
7.6 Equity instruments
7.6.1 Options granted as compensation
During the financial year, options over ordinary shares granted as compensation under the ESOP following
shareholder approval at the Company’s 2019 AGM are as follows:
No. of
options
granted
Grant date
Fair value
per option at
grant date
$
Exercise
price per
option
$
Expiry date
Number of
options
vested
Directors
A C Dorsch
1,000,000
28 November 2019
M S Ball
S P Quin
500,000
28 November 2019
500,000
28 November 2019
0.047
0.060
0.060
0.21
0.21
0.21
30 November 2021
1,000,000
30 November 2022
30 November 2022
500,000
500,000
The value of the options is estimated at the date of grant using a Black-Scholes option-pricing model. Refer to
Note 17 of the financial statements for model inputs for the options granted during the year.
7.6.2
Performance rights granted as compensation
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
performance
rights
granted
Grant date
Fair value of
performance
rights at
grant date
$
Weighted
average
fair value
per right
$
Expiry date
Number of
performance
rights vested
Directors
T R B Goyder
735,294
28 November 2019
A C Dorsch
1,074,402
28 November 2019
Executives
R K Hacker
K M Frost
700,606
28 November 2019
827,593
28 November 2019
B M Kendall
363,221
28 November 2019
105,331
153,908
100,362
118,553
52,031
0.14
0.14
0.14
0.14
0.14
30 June 2023
30 June 2023
30 June 2023
30 June 2023
30 June 2023
-
-
-
-
-
The value of performance rights granted in the year is the fair value of performance rights calculated at grant
date using the Monte Carlo simulation model (market based conditions) and the Black Scholes option valuation
methodology (non-market based conditions) that takes into account the term of performance rights, the share
price at grant date and expected volatility of the underlying performance right, the expected dividend yield,
the risk free rate for the term of the performance right and the correlations and volatilities of the peer companies.
The total value of the performance rights granted is included in the table above. This amount is allocated to
remuneration over the vesting period. Refer to Note 17 of the financial statements for model inputs for the
performance rights granted during the year.
The above performance rights were issued at no cost and expire on the earlier of their expiry date or termination
of the KMP’s employment.
53 An n u a l F i n a n c i a l R e p o r t 2 0 2 0
Details of the vesting profile of performance rights granted as remuneration to each KMP of the Group are
outlined below.
Number of
Performance
Rights
Grant date
% vested in
year
%
forfeited/lapsed
in year
Measurement Date
Directors
T R B Goyder
A C Dorsch
Executives
R K Hacker
K M Frost
B Kendall
P Lengyel
1,200,738
22 November 2016
1,217,989
29 November 2017
871,751
28 November 2018
735,294
28 November 2019
339,076
9 November 2017
1,045,931
31 July 2018
1,074,402
28 November 2019
754,087
764,921
762,514
15 July 2016
28 July 2017
31 July 2018
700,606
28 November 2019
804,058
815,607
847,738
15 July 2016
28 July 2017
31 July 2018
827,593
28 November 2019
363,221
28 November 2019
389,594
415,365
543,973
15 July 2016
28 July 2017
31 July 2018
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
100
-
-
-
-
-
-
100
-
-
-
100
-
-
-
-
100
-
-
30 June 2019
30 June 2020
30 June 2021
30 June 2022
30 June 2020
30 June 2021
30 June 2022
30 June 2019
30 June 2020
30 June 2021
30 June 2022
30 June 2019
30 June 2020
30 June 2021
30 June 2022
30 June 2022
30 June 2019
30 June 2020
30 June 2021
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 2019
Granted as
compensation
Exercised/
Forfeited
Held at
30 June
2020
Vested
during the
year
Vested and
exercisable
at 30 June
2020
Directors
T Goyder
Performance Rights
3,290,478
735,294
(1,200,738)
2,825,034
A Dorsch
Performance Rights
1,385,007
Options
Options
Options
S P Quin
M S Ball
Executives
4,000,000
500,000
-
R K Hacker Performance Rights
2,281,522
K M Frost
Performance Rights
2,467,403
B M Kendall Performance Rights
-
1,074,402
1,000,000
500,000
500,000
700,606
827,593
363,221
-
-
-
(650,000)
-
350,000
500,000
(754,087)
2,228,041
(804,058)
2,490,938
363,221
959,338
P Lengyel
Performance Rights
1,348,932
-
(389,594)
-
-
-
-
-
-
-
-
-
-
350,000
500,000
-
-
-
-
2,459,409
5,000,000
2,333,334
5,000,000
An n u a l F i n a n c i a l R e p o r t 2 0 2 0 54
Shareholdings of key management personnel
The movement during the reporting period in the number of ordinary shares in the Company held, directly,
indirectly or beneficially, by each KMP, including their related parties, is as follows:
Held at
1 July 2019
Received on exercise of
Options / Performance
rights
Other Changes1
Held at
30 June 2020
Directors
T R B Goyder
A Dorsch2
S P Quin3
M B Ball
Executives
R K Hacker
K M Frost
B M Kendall
P Lengyel
45,975,209
-
26,321
30,000
600,000
-
-
-
-
-
150,000
-
-
-
-
-
(10,000,000)
35,975,209
-
-
-
(500,000)
-
-
-
-
176,321
30,000
100,000
-
-
-
(1) Other changes represent shares that were purchased or sold during the year or shares held by KMP who
resigned in the year.
(2) The closing balance disclosed in the 30 June 2019 Directors Report for Mr Dorsch included shares held by
Dorsch Consultants Pty Ltd as trustee for the Dorsch Family Trust (“Trust”). On 6 May 2020, it was identified that
although Mr Dorsch is a beneficiary of the Trust, Mr Dorsch is not a director or shareholder of the trustee of the
Trust and does not have control over the shares held by the Trust.
(3) Subsequent to 30 June 2020, Mr Quin disposed of 120,000 shares on market, see section 11 of this report.
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 income/(expense) recognised during the year relating to KMP or their related parties was as
follows:
Other related parties
Liontown Resources Limited
DevEx Resources Limited
PhosEnergy Limited
Note
(i)
(i)
(i)
2020
$
2019
$
241,844
147,233
21,600
249,107
114,000
21,600
(i) The Group supplied office facilities and corporate services such as accounting and administration to Liontown
Resources Limited (“LTR”), DevEx Resources Limited (“DEV”) and PhosEnergy Limited (“PEL”). Mr Goyder is a
director of LTR, DEV and PEL. Mr Hacker is a director of DEV, alternate director of PEL and was formerly the Chief
Financial Officer of LTR. 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.
55 An n u a l F i n a n c i a l R e p o r t 2 0 2 0
Amounts outstanding 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
2020
$
2019
$
-
30,244
30,244
-
109,998
109,998
Remuneration arrangements for KMP are formalised in employment agreements. Details of these contracts are
provided below.
T Goyder
A Dorsch
Executive
Chairman
Managing
Director
R Hacker
Chief
Financial
Officer
K Frost
B Kendall
General
Manager –
Exploration
General
Manager –
Corporate
Total fixed remuneration incl. of
superannuation (per annum)
Resignation notice
Termination notice for cause
$219,000(1)
3 months
None
$355,000
3 months
None
$305,896
3 months
None
$305,000
3 months
None
$300,000
3 months
None
Termination notice without cause
3 months
3 months
3 months
3 months
3 months
Termination notice in cases of
death or disablement
Diminution of responsibility
3 months
12 months
3 months
6 Months
3 months
6 Months
3 months
3 months
-
-
(1) From 1 September 2020, it was agreed that Mr Goyder become Non-executive Chairman and as such now
receives directors’ fees of $150,000 (incl. superannuation).
8. DIVIDENDS
No dividends were declared or paid during the year and the directors recommend that no dividend be paid.
9.
LIKELY DEVELOPMENTS
There are no likely developments that will impact on the Company other than as disclosed elsewhere in this
report.
10. SIGNIFICANT EVENTS AFTER BALANCE DATE
On 14 July 2020, 4,382,655 2017/2018 Performance Rights that were issued to KMP and employees in 2017 vested
in full due to the achievement of the performance conditions measured over the three years ended 30 June
2020. Upon vesting, 3,967,290 Performance Rights were exercised into an equivalent number of fully paid
ordinary shares. The Board resolved to pay cash in lieu of the exercise for 415,365 Performance Rights, held by a
non-Australian resident. The total payment of cash in lieu of shares was $450,957.
On 21 August 2021, subject to shareholder approval at the Company’s 2020 Annual General Meeting, the Board
resolved that each Non-Executive Director will be issued 150,000 unlisted share options with an exercise price of
$2.20 and an expiry date of 30 June 2023. The Non-Executive Chairman will be issued 250,000 unlisted options
on the same terms as other Non-executive Directors.
On 2 September 2020, the Company issued 820,482 - 2020/2021 Performance Rights to senior executives and
employees of the Company under the terms of the Employee Securities Incentive Plan. In addition to the above
issue, on 21 August 2020, it was resolved that Alex Dorsch, Managing Director, has been awarded 280,081
Performance Rights on the same terms and conditions. The issue of the Performance Rights to Mr Dorsch is
conditional on the receipt of shareholder approval to be sought at the Company’s 2020 Annual General
Meeting.
An n u a l F i n a n c i a l R e p o r t 2 0 2 0 56
Other than disclosed above or elsewhere in this report, there have been no other material post balance date
events which have impacted the Company.
11. DIRECTORS’ INTERESTS
The relevant interest of each director in the shares, rights or options over such instruments issued by Chalice and
other related bodies corporate, as notified by the directors to the ASX in accordance with S205G(1) of the
Corporations Act 2001, at the date of this report is as follows:
Ordinary shares
Options over ordinary shares
Performance rights
T R B Goyder(2)
A C Dorsch(1)
S P Quin(2)
M B Ball(2)
G J Dixon(2)
37,193,198
339,076
56,321
30,000
-
-
5,000,000
350,000
500,000
-
1,607,045
2,120,333
-
-
-
(1) In August 2020, the Board resolved, subject to shareholder approval at the Company’s 2020 AGM to issue
280,081 performance rights to Mr Dorsch.
(2) In August 2020, the Board resolved, subject to shareholder approval at the Company’s 2020 AGM to issue Mr
Ball, Mr Quin and Mr Dixon 150,000 share options each and 250,000 share options to Mr Goyder as disclosed
previously in this Report.
12. SHARE PLACEMENTS AND ISSUES
During the financial year, the Company issued the following fully paid ordinary shares, excluding options
exercised before costs:
Date
18 July 2019(1)
20 May 2020
No. of shares
Price per share ($)
Amount issued ($)
7,500,000
28,619,046
0.145
1.05
1,087,500
30,049,998
(1)On 18 July 2019, the Company issued 7,500,000 fully paid ordinary shares to acquire 100% of the ordinary shares
of North West Nickel Pty Ltd (refer note 7 of the financial statements for further information)
13. SHARE OPTIONS AND PERFORMANCE RIGHTS
Unissued shares under option
At the date of this report 6,350,000 (6,350,000 at reporting date) unissued ordinary shares of the Company are
under option on the following terms and conditions:
Expiry date
31 March 2021
31 March 2021
10 June 2022
30 November 2021
30 November 2022
Exercise price ($)
Number of options
0.16
0.18
0.25
0.21
0.21
2,000,000
2,000,000
500,000
1,000,000
850,000
Unless exercised, these options do not entitle the holder to participate in any share issue of the Company or any
other body corporate.
In addition to the above, the Board has resolved, subject to shareholder approval at the Company’s 2020 AGM,
to grant Mr Ball, Mr Quin and Mr Dixon 150,000 share options each and 250,000 share options to Mr Goyder, in
accordance with the terms and conditions of the Company’s ESIP. The options will have an exercise price of
$2.20, and an expiry date of 30 June 2023.
57 An n u a l F i n a n c i a l R e p o r t 2 0 2 0
Performance rights
At the date of this report 12,043,616 performance rights (15,605,789 at reporting date) have been issued on the
following terms and conditions:
Series
2018/2019
2019/2020
2020/2021
Exercise price ($)
Number of rights
Test date
Expiry date
Nil
Nil
Nil
5,930,787
5,292,347
820,482
30 June 2021
30 June 2022
30 June 2023
30 June 2022
30 June 2023
30 June 2024
In addition to the above, the Board resolved, subject to shareholder approval at the Company’s 2020 AGM to
grant Mr Dorsch 280,081 performance rights with a test date of 30 June 2023, and expiry of 30 June 2024.
Shares issued on exercise of options or performance rights
During the financial year the Company issued the following ordinary shares on the exercise of options:
Date
1 May 2020
29 May 2020
Date options granted
Issue price of shares ($)
No. of shares issued
18 Dec 2018
27 Nov 2019
0.20
0.21
700,000
150,000
No shares were issued since the end of the year as a result of the exercise of options.
No shares were issued during the financial year as a result of the vesting and exercise of performance rights. On
14 July 2020, the Company issued 3,967,290 fully paid ordinary shares to KMP and employees following the
vesting and exercise of 2017/2018 performance rights granted in 2017.
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 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
The Company has agreed to indemnify all the directors and officers who have held office during the year,
against all liabilities to another person (other than the Company or a related body corporate) that may arise
from their position as directors and officers of the Company and its controlled entities, except where the liability
arises out of conduct involving a lack of good faith. The agreement stipulates that the Company will meet the
full amount of any such liabilities, including costs and expenses.
During the year the Group has paid insurance premiums in respect of directors and officers indemnity insurance
contracts, for current and former directors and officers.
The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium.
17. INDEMNIFICATION IF AUDITORS
The Company has not, during or since the financial period, indemnified or agreed to indemnify the auditor of
the Company against a liability incurred as an auditor.
18. 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 25.
An n u a l F i n a n c i a l R e p o r t 2 0 2 0 58
19. AUDITOR’S INDEPENDENCE DECLARATION
The auditor’s independence declaration is set out on page 61 and forms part of the Directors’ Report for the
year ended 30 June 2020.
This Report is made in accordance with a resolution of the Directors:
Alex Dorsch
Managing Director
Dated at Perth the 29th day of September 2020
59 An n u a l F i n a n c i a l R e p o r t 2 0 2 0
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,
in the
recommendation.
if any, alternative practices the Company has adopted
instead of those
The ASX Corporate Governance Council has released the fourth edition of its Corporate Governance Principles
and Recommendations applicable to financial years commencing after 1 January 2020 and shall be utilised by
the Company as a reference for its corporate governance activities during the financial year ended 30 June
2021.
An n u a l F i n a n c i a l R e p o r t 2 0 2 0 60
61 An n u a l F i n a n c i a l R e p o r t 2 0 2 0
Continuing operations
Revenue
Net Finance Income
Net gain on sale of exploration and evaluation assets
Foreign exchange gain
Derecognition of investment in associate
Exploration and evaluation expenditure
Corporate administrative expenses
Business development expenditure
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 gain/(loss) for the year from discontinued operations
Income tax benefit/(expense)
Profit/(loss) for the year from discontinued operations
Note
5(a)
5(b)
5(c)
7
6(a)
6(c)
17
8
8
9
FOR THE YEAR ENDED 30 JUNE 2020
2020
$
2019
$
453,269
35,785
178,147
219,069
-
(9,622,332)
(2,221,597)
(699,162)
(512,414)
(264,098)
(80,944)
(12,514,277)
1,114,618
(11,399,659)
8,740,950
(618)
8,740,332
308,438
362,084
-
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)
Loss for the year attributed to owners of the parent
(2,659,327)
(10,166,384)
Other comprehensive income/(loss)
Items that may be reclassified to profit or loss
Foreign exchange gain on deconsolidation of subsidiaries
Items that will not be reclassified to profit or loss
Net gain/(loss) on fair value of financial assets, net of tax
Exchanges differences on translation of foreign operations
Other comprehensive income/(loss) for the year
21(b)
1,022,310
3,303,249
(264,257)
4,061,302
-
(300,956)
137,508
(163,448)
Total comprehensive income/(loss) for the year
1,401,975
(10,329,832)
Total comprehensive
attributable to owners of the parent
income/(loss)
for
the year
1,401,975
(10,329,832)
loss per share
from continuing
Basic and diluted
operations
Basic and diluted earnings gain/(loss) per share from
discontinued operations
Basic and diluted earnings/(loss) per share from continuing
and discontinued operations
10
9
10
(0.04)
0.03
(0.01)
(0.03)
(0.01)
(0.04)
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying
notes.
An n u a l F i n a n c i a l R e p o r t 2 0 2 0 62
AS AT 30 JUNE 2020
Current assets
Cash and cash equivalents
Receivables
Financial assets
Assets held for sale
Total current assets
Non-current assets
Financial assets
Right-of-use assets
Receivables
Property, plant and equipment
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Lease liabilities
Employee benefits
Liabilities directly associated with assets held for sale
Total current liabilities
Non-current liabilities
Lease liabilities
Other liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Accumulated losses
Reserves
Total equity
Note
2020
$
2019
$
11
12
13
9
13
15
12
14
18
15
16
9
15
19
20
45,693,727
611,401
8,579,785
-
54,884,913
278,536
13,681
14,601
295,946
602,764
18,620,857
472,936
1,469,956
1,584,349
22,148,098
349,272
-
-
328,530
677,802
55,487,677
22,825,900
1,744,566
47,218
207,867
-
1,999,651
11,633
49,351
60,984
730,840
-
217,466
12,831
961,137
-
45,685
45,685
2,060,635
53,427,042
1,006,822
21,819,078
59,500,883
(6,751,967)
678,126
53,427,042
29,807,308
(9,132,908)
1,144,678
21,819,078
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
63 An n u a l F i n a n c i a l R e p o r t 2 0 2 0
FOR THE YEAR ENDED 30 JUNE 2020
Issued
capital
$
Accumulated
losses
$
Share based
payments
reserve
Note 21(a)
$
Investment
revaluation
reserve
Note 21(b)
$
Foreign
currency
translation
reserve
$
Total
$
Balance at 1 July 2019
29,807,308
(9,132,908)
1,461,524
(74,490)
(242,356)
21,819,078
Loss for the year
Other comprehensive
income for the period
Net change in fair value
of equity investments
Exchange differences on
deconsolidation of
subsidiaries
Exchange differences on
translation of foreign
operations
Total comprehensive
income/(loss) for the year
Issue of share capital
(net of costs)
Share-based payments
Transfers between equity
items
-
(2,659,327)
-
-
-
-
-
-
-
(2,659,327)
-
-
-
-
-
-
-
(2,659,327)
3,303,249
-
3,303,249
-
-
1,022,310
1,022,310
(264,257)
(264,257)
3,303,249
758,053
1,401,975
29,693,575
-
-
-
-
512,414
-
-
-
5,040,268
(343,259)
(4,697,009)
-
-
-
29,693,575
512,414
-
Balance at 30 June 2020
59,500,883
(6,751,967)
1,630,679
(1,468,250)
515,697
53,427,042
Retained
earnings/
(accumulated
losses)
$
Share based
payments
reserve
$
Investment
revaluation
reserve
$
Foreign
currency
translation
reserve
$
Total
$
Issued capital
$
Balance at 1 July 2018
39,836,041
956,081
977,078
243,572
(379,864)
41,632,908
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
-
(10,166,384)
-
-
-
-
-
(10,166,384)
-
(21,470)
(10,662,725)
552,368
-
-
-
-
-
-
-
-
-
415,114
240,348
-
-
-
-
-
(240,348)
785,083
-
-
(10,166,384)
(300,956)
-
(300,956)
-
137,508
137,508
(300,956)
137,508
(10,329,832)
(552,368)
-
-
-
-
-
-
-
-
-
-
-
-
-
(21,470)
(10,662,725)
415,114
-
785,083
-
-
(474,973)
(60,289)
535,262
Balance at 30 June 2019
29,807,308
(9,132,908)
1,461,524
(74,490)
(242,356)
21,819,078
The above consolidated statement of changes in equity should be read in conjunction with the accompanying
notes.
An n u a l F i n a n c i a l R e p o r t 2 0 2 0 64
FOR THE YEAR ENDED 30 JUNE 2020
Cash flows from operating activities
Cash receipts from operations
Cash paid to suppliers and employees
Payments for mineral exploration and evaluation
Income tax received
Exploration tax credits
Government incentives received
Interest received
Interest paid
Note
2020
$
2019
$
541,583
(3,258,631)
(7,789,189)
109,990
-
134,000
55,108
(13,420)
234,315
(2,983,657)
(8,422,012)
16,099
2,127,227
-
384,274
-
Net cash used in operating activities
11
(10,220,559)
(8,643,754)
Cash flows from investing 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
Proceeds from disposal of subsidiary
Costs associated with disposal of subsidiary
Net cash from investing activities
Cash flows from financing activities
Payment of principal portion of lease liabilities
Security deposits
Capital return
Proceeds from issue of shares
Share issue and capital return costs
Net cash from/(used) in financing activities
19
19
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
(81,230)
9,185
12,944,043
(5,632,752)
1,572,833
(139,736)
8,672,343
(196,807)
38,274
(58,415)
15,589
1,313,993
-
-
-
1,271,167
-
(75,000)
-
(10,662,725)
30,221,483
(1,615,408)
28,447,542
-
(21,470)
(10,759,195)
26,899,326
(18,131,782)
18,620,857
173,544
45,693,727
35,739,484
1,013,155
18,620,857
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
65 An n u a l F i n a n c i a l R e p o r t 2 0 2 0
FOR THE YEAR ENDED 30 JUNE 2020
Note 1:
Note 2:
Note 3:
Corporate information
Reporting entity
Basis of preparation
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
Note 11:
Note 12:
Note 13:
Note 14:
Note 15:
Cash and cash equivalents
Receivables
Financial assets
Property, plant and equipment
Leases
Note 16:
Note 17:
Employee benefits
Share-based payments
Note 18:
Note 19:
Note 20:
Note 21:
Trade and other payables
Issued capital
Accumulated losses
Reserves
Note 22:
Financial instruments
Note 23:
Note 24:
Parent entity
List of subsidiaries
Note 25:
Note 26:
Note 27:
Note 28:
Auditor’s remuneration
Related parties
Commitments and contingencies
Events subsequent to reporting date
Note 30:
Note 31:
Changes in accounting policies
Adoption of new and revised accounting standards
An n u a l F i n a n c i a l R e p o r t 2 0 2 0 66
FOR THE YEAR ENDED 30 JUNE 2020
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 Consolidated 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.
The amount is significant due to its size or nature
Information is considered relevant and material if:
«
«
«
«
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 2020 was authorised for
issue in accordance with a resolution of Directors on 29th September 2020.
Chalice Gold Mines Limited is listed on the Australian Securities Exchange (“ASX”) (trading under the code CHN) and
OTCQB Venture Market (“OTCQB”) (trading under the code CGMLF) 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 2020. A list of the Group’s subsidiaries is provided
at note 24.
3.
BASIS OF PREPARATION
(a) Statement of compliance
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.
(b) Basis of measurement
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.
(c) 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 outcomes 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 22. The key judgements, estimates and assumptions which are material to the financial report are
found in note 17.
67 An n u a l F i n a n c i a l R e p o r t 2 0 2 0
FOR THE YEAR ENDED 30 JUNE 2020
(d) Foreign currency translation
The functional currency of the Company is Australian dollars and the functional currency of subsidiaries based in
Canada is Canadian Dollars (CAD). 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 is 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.
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 Group considers that it only
operated in one reportable segment, being mineral exploration and evaluation. The segment information is as per the
Group’s consolidated financial statements.
5.
REVENUE
(a) (a) Revenue
Corporate and administration services
Government grants and incentives
Other
2020
$
2019
$
310,100
136,500
6,669
453,269
291,600
-
16,838
308,438
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.
Government Grants are recognised when there is reasonable certainty that the grant will be received, and all
grant conditions are met. Grants relating to expense items are recognised as income over the periods necessary
to match the grant to the costs they are compensating.
Government grants include amounts received or receivable under the Federal Government’s JobKeeper
Payment Scheme ($84,000) and Cashflow Boost Scheme ($50,000), which provide temporary subsidies to eligible
business.
An n u a l F i n a n c i a l R e p o r t 2 0 2 0 68
FOR THE YEAR ENDED 30 JUNE 2020
(b)
(b) Net finance income
Finance Income
Interest income from financial assets
Interest income from lease receivables
Finance costs
Interest on lease liabilities
Accounting policy
2020
$
2019
$
46,207
2,998
49,205
(13,420)
(13,420)
35,785
362,084
-
362,084
-
-
362,084
The Group’s finance income and finance costs include, interest income, interest expense and interest income
and expenses on lease liabilities. The Group receives interest income from monies held in its bank accounts.
Interest revenue is recognised on an accruals basis based on the interest rate, deposited amount and time
which lapses before the reporting period end date.
(c)
(c) Net gain on sale of exploration and evaluation projects
Net gain on sale of exploration and evaluation projects
2020
$
178,147
178,147
2019
$
-
-
Net gain on sale of exploration and evaluation projects represents the gain from the sale of the Company’s
Jericho and Bunjarra Well tenements to OreCorp Limited in November 2019. Consideration received for the sale
was 468,809 fully paid ordinary shares in OreCorp Limited and the retention of a 1% Net Smelter Return (NSR)
royalty capped at $2.5 million.
6.
EXPENSES
(a)
(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)
(b) Corporate personnel expenses
Wages and salaries
Directors’ fees
Other associated personnel expenses
Superannuation contributions
Increase in liability for annual leave
(Decrease)/increase in liability for long service leave
69 An n u a l F i n a n c i a l R e p o r t 2 0 2 0
2020
$
2019
$
42,930
98,740
44,859
102,729
53,816
409,542
1,444,364
24,617
2,221,597
45,014
119,798
4,509
148,789
72,854
427,750
1,425,317
24,522
2,268,553
2020
$
2019a
$
985,513
106,883
238,744
75,221
77,820
(39,817)
901,389
162,542
274,555
56,078
18,502
12,251
1,444,364
1,425,317
(c)
(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
Hawkstone, Western Australia
Acquisition of exploration project – fair value adjustment(1)
Other generative projects
FOR THE YEAR ENDED 30 JUNE 2020
2020
$
2019
$
389,095
84,381
91,014
98,429
36,243
699,162
384,049
109,814
95,520
187,389
49,006
825,778
2020
$
2019
$
4,280,409
3,051,176
571,362
1,086,308
633,077
9,622,332
2,981,093
127,951
83,316
-
1,478,713
4,671,073
(i) On 18 July 2019, the Company acquired 100% of the ordinary shares of North West Nickel Pty Ltd (“North West”).
North West is the holder of the Ruins Nickel Project (“Project”), which now forms a central part of the Hawkstone
Project (previously named King Leopold Project). The Acquisition of exploration project fair value adjustment
represents the difference between the consideration paid and the net assets of North West at the date of
acquisition.
As consideration, the Company issued 7.5 million fully paid ordinary shares to the shareholders of North West
(“Vendors”). The acquisition also includes a contingent deferred consideration whereby, subject to the following
milestones being achieved at the Ruins Nickel Project (“Project”), the Company will pay to the Vendors:
» A$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 Project;
» A$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 A$300 million from the Project.
The transaction has been accounted for as an asset acquisition as North West does not meet the definition of a
business combination under AASB 3 Business Combinations.
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 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
2020
$
2019
$
108,969
-
108,969
249,909
935,172
1,185,081
1,005,031
(323,674)
1,114,000
861,407
An n u a l F i n a n c i a l R e p o r t 2 0 2 0 70
FOR THE YEAR ENDED 30 JUNE 2020
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 profit from discontinued operations
Income tax calculated at the Australian corporate rate of 30% (2019:
27.5%)
Non-deductible expenses
Share based payments
Gain/(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 change in tax rate
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
2020
$
(12,514,277)
8,740,950
(3,773,327)
2019
$
(6,719,606)
(4,308,185)
(11,027,791)
(1,131,998)
(3,032,643)
863,747
153,724
1,967,792
(2,893,583)
2,063,242
-
(1,005,031)
(682,025)
(340,899)
(108,969)
37,456
215,898
(100,997)
(40,928)
2,877,211
(935,172)
323,674
-
52,517
(258,423)
1,114,000
861,407
The tax rate used in the above reconciliation is the corporate rate of 30% (2019:27.5%) 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
2020
$
2019
$
-
-
-
-
1,412,434
1,412,434
The following deferred tax assets and liabilities have not been brought to account:
Unrecognised deferred tax balances
Deferred tax assets comprise:
Revenue losses available for offset against future taxable income
Lease liabilities
Other deferred tax assets
Deferred tax liabilities comprise:
Right-of-use assets
Other deferred tax liabilities
2020
$
2019
$
9,177,844
4,010
665,598
9,847,452
4,104
445,213
449,317
8,670,145
-
444,326
9,114,471
-
350,326
350,326
71 An n u a l F i n a n c i a l R e p o r t 2 0 2 0
FOR THE YEAR ENDED 30 JUNE 2020
Income tax benefit not recognised directly in equity during the year:
Share issue costs
2020
$
391,903
2019
$
5,905
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 have formed an income tax consolidated group
under the tax consolidation regime. Current and deferred tax amounts are accounted for in each individual
entity as if each entity continued to act as a taxpayer on its own.
Chalice recognises its own current and deferred tax amounts and those current tax liabilities, current tax assets
and deferred tax assets arising from unused tax credits and unused tax losses which it has assumed from its
controlled entities within the tax consolidated Group.
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as
amounts payable or receivable from or payable to other entities in the Group. Any difference between the
amounts receivable or payable under the tax funding agreement are recognised as a contribution to (or
distribution from) controlled entities in the tax consolidated Group.
9. DISCONTINUED OPERATIONS
(a) On 26 July 2019, the Group disposed of its wholly owned subsidiary Chalice Gold Mines (Quebec) Inc. (“CGMQ”)
to O3 Mining Inc. (“O3 Mining”) (formerly Chantrell Ventures Corp.) CGMQ was the registered holder of the
Group’s East Cadillac and Kinebik Project in Quebec, Canada. As a consequence of disposing of CGMQ during
the year ended 30 June 2020, the Group discontinued all remaining exploration and business development
activities in Canada.
O3 Mining acquired all outstanding shares in CGMQ 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 received all outstanding tax credits
owing to CGMQ.
The Group has classified the activities of CGMQ and the cessation of exploration and business development
activities in Canada as a discontinued operation. In the previous financial year ended 30 June 2019, CGMQ was
classified as an asset held for sale.
An n u a l F i n a n c i a l R e p o r t 2 0 2 0 72
FOR THE YEAR ENDED 30 JUNE 2020
The results of the discontinued operations for the year are presented below.
(b)
(a) Financial performance and cash flow information
Finance income
Expenses
Net loss on sale of plant and equipment
Loss before tax from discontinued operations
Income tax benefit/(loss)
Loss for the year from discontinued operations
Gain on sale of subsidiary after income tax (see (c) below)
Profit/(loss) from discontinued operations
Exchange differences
Other comprehensive income/(loss) from discontinued operations
2020
$
-
(385,428)
(18,074)
(403,502)
(618)
(404,120)
9,144,452
8,740,332
941,366
9,681,698
The major classes of assets and liabilities of Chalice Gold Mines (Quebec) Inc. at the time of sale:
Assets
Trade and other receivables
Income tax receivable
Total assets
Liabilities
Trade and other payables
Total liabilities
Net assets
The net cash flows from discontinued operations are as follows:
Operating cash flows
Investing cash flows
Financing cash flows
Net cash inflows
(c)
(b) Details of the sale of the subsidiary
Consideration received:
Cash
Fair value of O3 Mining Inc. shares received
Total disposal consideration
Carrying amount of net assets sold
Transactions costs associated with the disposal
Gain on sale before income tax and reclassification of foreign
currency translation reserve
Reclassification of foreign currency translation reserve
Gain on sale after income tax
73 An n u a l F i n a n c i a l R e p o r t 2 0 2 0
2019
$
370
(4,308,555)
-
(4,308,185)
910,654
(3,397,531)
-
(3,397,531)
-
(3,397,531)
2019
$
171,915
1,412,434
1,584,349
2020
$
623,838
967,611
1,591,449
-
-
1,591,449
(12,831)
(12,831)
1,571,518
2020
$
(411,188)
1,442,282
-
1,031,094
2019
$
34,442
-
-
34,442
2020
$
2019
$
1,580,892
10,138,059
11,718,951
(1,591,449)
(41,684)
10,085,818
(941,366)
9,144,452
-
-
-
-
-
-
-
-
Earnings per share
FOR THE YEAR ENDED 30 JUNE 2020
2020
$
2019
$
Basic earnings, profit/(loss) for the year from discontinued operations
Diluted earnings profit/(loss) for the year from discontinued operations
0.03
0.03
(0.01)
(0.01)
Accounting policy
A discontinued operation is a component of the consolidated entity that has been disposed of or is classified as
held for sale and that represents a separate major line of business or geographical area of operations, is part of
a single co-ordinated plan to dispose of such business or area of operations, or is a subsidiary acquired exclusively
with a view to resale. The results of discontinued operations are presented separately on the face of the statement
of profit or loss and other comprehensive income.
10. LOSS PER SHARE
Basic and diluted loss per share
The calculation of basic loss per share for the year ended 30 June 2020 was based on the loss attributable to
ordinary equity holders of the parent of $2,659,327 (2019: loss of $10,166,384) and a weighted average number of
ordinary shares outstanding during the year ended 30 June 2020 of 277,061,780 (2019: 265,944,054).
Loss attributable to ordinary shareholders
Loss attributable to ordinary equity holders of the parent from
continuing operations
Profit/(loss) attributable to ordinary equity holders of the parent from
discontinued operations
Loss attributable to ordinary equity holders of the parent for basic
earnings
Loss attributable to ordinary equity holders of the parent adjusted for
the effect of dilution
2020
$
2019
$
(11,399,659)
(6,768,853)
8,740,332
(3,397,531)
(2,659,327)
(10,166,384)
(2,659,327)
(10,166,384)
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 by dividing the profit attributable to the owners of the Company, excluding any
costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares
outstanding during the financial year, adjusted for any bonus elements in ordinary shares issued during the
financial year.
Diluted loss per share adjusts the figures used in the determination of basic earnings per share to take into account
the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares
and the weighted average number of shares assumed to have been issued for no consideration in relation to
dilutive potential ordinary shares.
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
2020
$
30,600,727
15,093,000
45,693,727
2019
$
9,293,083
9,327,774
18,620,857
An n u a l F i n a n c i a l R e p o r t 2 0 2 0 74
FOR THE YEAR ENDED 30 JUNE 2020
Reconciliation of cash flows from operating activities
2020
$
2019
$
Loss for the year attributed to owners of the parent
(2,659,327)
(10,166,384)
Adjustments for:
Depreciation and amortisation
Fixed assets written off
Loss/(gain) on sale of fixed assets
Income tax benefit
Net gain on sale of exploration and evaluation assets
Foreign exchange gain
Fair value adjustment on acquisition of exploration projects
Derecognition of investment in associate
Deconsolidation of subsidiaries
Acquisition of 30% JV interest
Equity-settled share-based payment expenses
264,098
-
17,252
(1,004,010)
(178,147)
(219,069)
1,086,308
-
(9,063,511)
-
512,411
107,652
5,987
(15,524)
(861,407)
-
(1,087,262)
-
(148,828)
-
415,114
785,083
Operating loss before changes in working capital and provisions
(11,243,995)
(10,965,569)
(Increase)/decrease in trade and other receivables
Increase in financial assets
Increase in trade creditors and other liabilities
Decrease in provisions
Net cash used in operating activities
Non-cash financing and investing activities
(161,876)
(1,536)
1,192,783
(5,935)
2,237,803
(3,771)
88,835
(1,052)
(10,220,559)
(8,643,754)
In July 2019, in consideration for the sale of CGMQ, the Group received 3,092,784 common shares in O3 Mining
and retained a partial 1% NSR royalty (refer note 9 for further information).
On 18 July 2019, the Company issued 7,500,000 fully paid ordinary shares to acquire 100% of the ordinary shares
of North West Nickel Pty Ltd (“North West”) (refer note 7 for further information).
On 31 October 2019, the Company sold its interest in Jericho and Bunjarra Well Gold Projects to OreCorp Limited
(“OreCorp”). The Company received 468,809 fully paid ordinary shares in OreCorp and retains a 1% NSR royalty
capped at $2.5 million as consideration.
During March 2020, the Company accepted the takeover offer by Ramelius Resources Ltd (“Ramelius”)to acquire
the Company’s shareholding in Spectrum Metals Ltd (“Spectrum”) in exchange for 1 Ramelius share for every 10
Spectrum shares plus cash consideration of $0.017 per Spectrum share. On 26 March 2020, the Company received
the equity consideration component consisting of 9,714,802 Ramelius shares.
Accounting policy
Cash and cash equivalents comprise cash balances and call deposits with an original maturity of six months or
less. The carrying value of cash and cash equivalents is considered to approximate fair value.
12. RECEIVABLES
Current
Trade receivables
GST receivable
Lease receivable
Prepayments
Non-Current
Lease receivable
75 An n u a l F i n a n c i a l R e p o r t 2 0 2 0
2020
$
2019
$
61,706
383,337
33,601
132,757
611,401
14,601
14,601
112,747
186,435
-
173,754
472,936
-
-
FOR THE YEAR ENDED 30 JUNE 2020
Accounting Policy
Trade and Other Receivables
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.
Lease receivables represents the present value of lease payments receivable under the sub-lease of the property
leased in Winnipeg, Canada using a discount rate of 8.85%.
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
consolidated statement of financial position.
Cash flows are included in the consolidated 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.
13. FINANCIAL ASSETS
Current
Equity instruments designated at fair value through other
comprehensive income:
Listed equity investments(1)
Unlisted equity investments(2)
2020
$
2019
$
8,579,785
-
8,579,785
885,789
584,167
1,469,956
(1) Listed equity investments represents investments in various companies listed on the ASX and TSX including
3,092,784 ordinary shares in O3 Mining Inc. (Refer to note 9)
During the year ended 30 June 2020, the Company acquired 97,148,016 ordinary shares in Spectrum Metals Ltd
(ASX: SPX) (“Spectrum”) for $5.8 million. In March 2020, Ramelius Resources Ltd (ASX: RMS) (“Ramelius”) acquired
Spectrum Metals and the Company received 1 Ramelius share for every 10 Spectrum shares held plus cash
consideration of $0.017 per Spectrum share.
Following acceptance of the takeover by Ramelius, the Company received cash consideration of $1.65 million
and 9,714,802 shares in Ramelius, which were subsequently sold in April 2020 for net proceeds of $10.6 million. The
disposal resulted in a net gain of $6.5 million from the investment in Spectrum.
(2) Unlisted equity investment represents the Company’s investment in GeoCrystal Limited, the fair value of the
Company’s investment GeoCrystal Limited was reduced to nil for during the year ended 30 June 2020.
Refer to note 21(b) for details of movements in equity instruments (including disposals) and note 22 for further
information in relation to the fair value determination of financial assets.
Non-current
Bank guarantee and security deposits
Options and warrants in listed entities
Accounting Policy
2020
$
2019
$
278,536
-
278,536
315,273
33,999
349,272
Investments and other financial assets are initially measured at fair value. Transaction costs are included as part
of the initial measurement, except for financial assets at fair value through profit or loss. Such assets are
subsequently measured at either amortised cost or fair value depending on their classification. Classification is
determined based on the business model that such assets are held.
An n u a l F i n a n c i a l R e p o r t 2 0 2 0 76
FOR THE YEAR ENDED 30 JUNE 2020
Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred
and the consolidated entity has transferred substantially all the risks and rewards of ownership. When there is no
reasonable expectation of recovering part or all of a financial asset, its carrying value is written off.
Financial assets at fair value through profit or loss
Financial assets not measured at amortised cost or at fair value through other comprehensive income are
classified as financial assets at fair value through profit or loss. Typically, such financial assets will be either: (i) held
for trading, where they are acquired for the purpose of selling in the short-term with an intention of making a
profit, or a derivative; or (ii) designated as such upon initial recognition where permitted. Fair value movements
are recognised in profit or loss.
Financial assets at fair value through other comprehensive income
Financial assets at fair value through other comprehensive income (FVOCI) include equity investments which the
consolidated entity intends to hold for the foreseeable future and has irrevocably elected to classify them as such
upon initial recognition. Under FVOCI, subsequent movements in fair value are recognised in other
comprehensive income and are never reclassified to profit or loss. Any gains or losses recognised in other
comprehensive income are not recycled upon derecognition of the asset.
14. PROPERTY, PLANT AND EQUIPMENT
Cost
Accumulated depreciation and impairment
Net carrying amount
Movements in property, plant and equipment:
At 1 July net of accumulated depreciation
Additions
Disposals
Exchange differences
Depreciation charge for the year
At 30 June net of accumulated depreciation and impairment
Accounting Policy
2020
$
2019
$
772,628
(476,682)
295,946
328,530
126,945
(72,760)
1,762
(88,531)
295,946
874,397
(545,867)
328,530
378,372
58,414
(3,828)
3,465
(107,893)
328,530
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
5%-20%
6%-40%
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.
77 An n u a l F i n a n c i a l R e p o r t 2 0 2 0
15. LEASES
Amounts recognised in statement of financial position
Right-of-use assets
Right-of-use assets
Depreciation
Net carrying amount
Lease liabilities
Current
Non-current
Total liabilities
Amounts recognised in statement of comprehensive income
Deprecation charge of right-of-use assets
Net finance expenses
FOR THE YEAR ENDED 30 JUNE 2020
2020
$
2019
$
177,857
(164,176)
13,681
47,218
11,633
58,851
175,567
10,422
-
-
-
-
-
-
-
-
-
This Note provides information for leases where the Group is lessee. Refer to Note 29 for adjustments recognised
on adoption of AASB 16 Leases on 1 July 2019.
Accounting Policy
Right-of-use leased assets
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at
cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments
made at or before the commencement date net of any lease incentives received, any initial direct costs
incurred, and an estimate of costs expected to be incurred for dismantling and removing the underlying asset,
and restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the
estimated useful life of the asset, whichever is the shorter. Right-of use assets are subject to impairment or
adjusted for any remeasurement of lease liabilities.
The Group has elected not to recognise a right-of-use asset and corresponding lease liability for short-term leases
with terms of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to
profit or loss as incurred.
Lease Liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at
the present value of the lease payments to be made over the term of the lease, discounted using the interest
rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate.
Lease payments comprise of fixed payments less any lease incentives receivable, variable lease payments that
depend on an index or a rate, amounts expected to be paid under residual value guarantees, exercise price
of a purchase option when the exercise of the option is reasonably certain to occur, and any anticipated
termination penalties. The variable lease payments that do not depend on an index or a rate are expensed in
the period in which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are
remeasured if there is a change in the following: future lease payments arising from a change in an index or a
rate used; residual guarantee; lease term; certainty of a purchase option and termination penalties. When a
lease liability is remeasured, an adjustment is made to the corresponding right-of use asset, or to profit or loss if
the carrying amount of the right-of-use asset is fully written down.
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 necessarily
immediately related to individual line items in the Financial Statements.
An n u a l F i n a n c i a l R e p o r t 2 0 2 0 78
FOR THE YEAR ENDED 30 JUNE 2020
16. EMPLOYEE BENEFITS
Annual leave accrued
Provision for long service leave
Accounting Policy
2020
$
2019
$
196,767
11,100
207,867
166,549
50,917
217,466
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) Share based payment transactions
The expense recognised during the year is shown in the following table:
Share options granted – equity settled
Performance rights granted – equity settled
Reversal of expense previously recognised on performance rights
that lapsed during the period
Total expenses recognised as share based payments
2020
$
2019
$
128,486
681,091
(297,163)
512,414
103,877
681,206
-
785,083
(b) Share Options
The number and weighted average exercise prices of share options on issue is as follows:
Weighted
average
exercise price
$
Number
of options
Weighted
average
exercise price
$
Number
of options
2020
2020
2019
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
0.19
0.20
0.21
0.21
0.19
0.19
6,200,000
(850,000)
(1,000,000)
2,000,000
6,350,000
6,350,000
0.22
-
0.21
0.22
0.19
0.19
5,500,000
-
(500,000)
1,200,000
6,200,000
4,866,666
The options outstanding at 30 June 2020 have a weighted average exercise price of $0.19 (2019: $0.19) and a
weighted average contractual life remaining of 1.3 years (2019: 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)
Weighted average valuation per option
2020
2019
$0.165
0.21
65%
2.5
-
0.65%
$0.053
$0.12
0.22
64.88%
3
-
1.56%
$0.024
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.
79 An n u a l F i n a n c i a l R e p o r t 2 0 2 0
FOR THE YEAR ENDED 30 JUNE 2020
On 27 November 2019, the Employee Securities Incentive Plan (“ESIP”) was introduced following approval by
shareholders. The ESIP was developed to combine and replace the previous Employee Share Option Plan
(“ESOP”) and Long Term Incentive Plan (“LTIP”). The options granted during the year are the final award under
the ESOP, all future awards will be under the ESIP. Under the terms of the ESIP and 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 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. Where options are granted with vesting conditions, unless the
Board determines otherwise, unvested options are forfeited when the holder ceases to be employed by the
Group.
(c) Performance Rights
A summary of performance rights on issue is as follows:
30 June 2020:
Grant date
15 July 2016
22 November 2016
27 July 2017
9 November 2017
29 November 2017
31 July 2018
28 November 2018
28 November 2019
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
2,271,452
1,200,738
2,825,590
507,316
1,217,989
5,430,053
871,751
-
-
-
-
-
-
-
-
5,292,347
14,324,889
5,292,347
Granted
Vested
Lapsed/Forfei
ted
Closing
balance
Share price
at date of
issue ($)
-
-
-
-
-
-
-
-
-
(2,271,452)
(1,200,738)
-
(168,240)
-
(371,017)
-
-
(4,011,447)
-
-
2,825,590
339,076
1,217,989
5,059,036
871,751
5,292,347
15,605,789
0.19
0.16
0.16
0.205
0.18
0.155
0.155
0.165
Opening
balance
2,404,847
1,664,707
2,271,452
1,200,738
2,825,590
507,316
1,217,989
-
-
Granted
Vested
Lapsed/Forfei
ted
Closing
balance
-
-
-
-
-
-
-
5,430,053
871,751
(1,210,396)
(1,147,444)
-
-
-
-
-
-
-
(1,194,451)
(517,263)
-
-
-
-
-
-
-
-
-
2,271,452
1,200,738
2,825,590
507,316
1,217,989
5,430,053
871,751
12,092,639
6,301,804
(2,357,840)
(1,711,714)
14,324,889
Share price
at date of
issue ($)
0.11
0.11
0.19
0.16
0.16
0.205
0.18
0.155
0.155
The value of performance rights granted in the year is the fair value of performance rights calculated at grant
date using the Monte Carlo simulation model (market based conditions) and the Black Scholes option valuation
methodology (non-market based conditions).
An n u a l F i n a n c i a l R e p o r t 2 0 2 0 80
FOR THE YEAR ENDED 30 JUNE 2020
The following table provides the assumptions made in determining the fair value of the performance rights
granted.
Share price at grant date
Exercise price
Expected volatility
Performance period (years)
Vesting period (years)
Expected dividends
Risk-free interest rate
Weighted average fair value per right
2020
$0.165
Nil
65%
2.59
2.59
-
0.65%
$0.143
2019
$0.155
Nil
50%
2.75
2.75
-
2.10%
$0.131
On 27 November 2019, the Employee Securities Incentive Plan (“ESIP”) was introduced following approval by
shareholders. The ESIP was developed to combine and replace the previous Employee Share Option Plan
(“ESOP”) and Long Term Incentive Plan (“LTIP”). Under the ESIP, (previously LTIP) the Board may issue performance
rights to eligible employees and directors. Each performance right represents a right to be issued an ordinary
share at a future point in time, subject to the satisfaction of any vesting conditions. Performance rights are subject
to lapsing if the vesting conditions are not met by the relevant measurement date or expiry date (if no other
measurement date is specified) or if employment is terminated.
No exercise price is payable and eligibility to receive Performance Rights under the Plan is at the Board’s
discretion. The Performance Rights cannot be transferred and are not quoted on the Australian Securities
Exchange (ASX). There are no voting rights attached to the Performance Rights. For details regarding the vesting
conditions of the Performance Rights refer to section 7.4 of the Remuneration Report.
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 2020 was 13.9 cents per
performance right (2019: 13.1 cents).
Accounting Policy
The fair value of performance rights and options granted by the Company is recognised as an employee benefits
expense with a corresponding increase in equity. The cost of performance rights and options is measured by
reference to the fair value at the date at which they are granted. The fair value is determined using a Monte-
Carlo simulation model and/or Black Scholes model.
The total amount to be expensed is determined by reference to the fair value of the performance rights and
options granted including any market conditions (eg the company’s share price) and excluding the impact of
any service and non-market performance vesting conditions (eg strategic objectives and service conditions).
The total expense is recognised over the vesting period, which is the period over which all of the specified vesting
conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of
performance rights or options that are expected to vest based on the non-market vesting and service conditions.
It recognises the impact of the revision to original estimates, if any, in profit or loss, with a corresponding
adjustment to equity.
Significant accounting judgements, estimates and assumptions
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 Monte Carlo simulation model
for market based conditions and the Black Scholes option valuation methodology for non-market based
conditions, taking into account the terms and conditions upon which the instruments were granted.
The expected life of the share-based payments is based on historical data and is not necessarily indicative of
exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility is
indicative of future trends, which may also not necessarily be the actual outcome.
The accounting estimates and assumptions relating to equity-settled share-based payments would have no
impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact
profit or loss and equity.
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.
81 An n u a l F i n a n c i a l R e p o r t 2 0 2 0
FOR THE YEAR ENDED 30 JUNE 2020
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
Accounting Policy
2020
$
2019
$
31,931
104,205
1,608,430
1,744,566
139,616
83,164
508,060
730,840
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 303,537,180 shares on issue at 30 June 2020 (2019: 266,568,134).
2020
2019
(a) Movements in ordinary shares on
No.
$
No.
$
issue
Balance at beginning of financial year
266,568,134
29,807,308
261,210,294
39,836,041
Shares issued on vesting of performance
rights
Shares issued to acquire a JV interest
Capital return
Shares issued to acquire subsidiary(1)
Options exercised(2)
Share placement(3)
Share issue costs
-
-
2,357,840
240,348
-
-
7,500,000
850,000
28,619,046
-
-
-
1,087,500
171,485
30,049,998
(1,615,408)
3,000,000
-
-
-
-
-
415,114
(10,662,725)
-
-
-
(21,470)
Balance at end of financial year
303,537,180
59,500,883
266,568,134
29,807,308
(1) On 18 July 2019, the Company issued 7,500,000 fully paid ordinary shares (subject to a 12 month voluntary escrow)
to acquire 100% of the ordinary shares of North West Nickel Pty Ltd (“North West”). North West is the holder of the
Ruins Nickel Project, which now forms a central part of the Hawkestone Project (formerly named King Leopold
Project). Refer note 7.
(2) During the financial year ended 30 June 2020, 150,000 unlisted options were exercised with an exercise price of
21 cents and a further 700,000 unlisted options were exercised with an exercise price of 20 cents.
(3) On 20 May 2020, the Company completed a Share Placement to institutional and sophisticated investors raising
$30 million (before costs).
Issuance of Ordinary Shares
Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one
vote per share at shareholders’ meetings. In the event of winding up of the Company, the ordinary shareholders
rank after all other shareholders and creditors and are fully entitled to any proceeds on liquidation.
(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
2020
No.
6,200,000
(850,000)
(1,000,000)
2,000,000
6,350,000
2019
No.
5,500,000
-
(500,000)
1,200,000
6,200,000
An n u a l F i n a n c i a l R e p o r t 2 0 2 0 82
FOR THE YEAR ENDED 30 JUNE 2020
At 30 June 2020 the Company had 6,350,000 unlisted options on issue under the following terms and conditions:
Number
Expiry Date
Exercise Price
$
2,000,000
2,000,000
500,000
1,850,000
31 March 2021
31 March 2021
10 June 2022
30 November 2022
(c) Performance rights
On issue at 1 July
Performance rights issued
Performance rights vested
Performance rights lapsed
On issue at 30 June
0.16
0.18
0.25
0.21
2020
No.
14,324,889
5,292,347
-
(4,011,447)
15,605,789
2019
No.
12,092,639
6,301,804
(2,357,840)
(1,711,714)
14,324,889
At 30 June 2020 the Company had 15,605,789 performance rights on issue under the following terms and
conditions:
Number
4,382,655
5,930,787
5,292,347
Terms
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 Company’s
Expiry Date
Exercise Price
$
30 June 2021
Nil
Total Shareholder Return
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.
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
2022, as outlined in the Remuneration Report.
Total Shareholder Return
30 June 2022
Nil
30 June 2023
Nil
20. ACCUMULATED LOSSES
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 gain/(loss) on disposal of financial assets transferred between
equity items (see note 21(b))
Transfers between equity items (see note 21(a))
Balance at end of financial year
2020
$
(9,132,908)
(2,659,327)
-
2019
$
956,081
(10,166,384)
552,368
4,697,009
(535,262)
343,259
(6,751,967)
60,289
(9,132,908)
83 An n u a l F i n a n c i a l R e p o r t 2 0 2 0
21. RESERVES
(a) Share based payment reserve
Balance at beginning of financial year
Share based payments
Vesting of performance rights
Transfers to accumulated losses (see note 20)
Balance at end of financial year
FOR THE YEAR ENDED 30 JUNE 2020
2020
$
1,461,524
512,414
-
(343,259)
1,630,679
2019
$
977,078
785,083
(240,348)
(60,289)
1,461,524
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.
(b) Investment revaluation reserve
Balance at beginning of financial year
Realised gains/(losses) on sale of financial assets(1)
Fair value movement on revaluation of financial assets
Tax effect on investment revaluations and disposals
Net gain/(loss) on disposal of financial assets transferred between
equity items (see note 20)
Modified retrospective application
Balance at end of financial year
2020
$
(74,490)
6,243,539
(1,906,857)
(1,033,433)
3,303,249
(4,697,009)
-
(1,468,250)
2019
$
243,572
(367,262)
(257,369)
323,675
(300,956)
535,262
(552,368)
(74,490)
(1) Realised gains on sale of financial assets for the year ended 30 June 2020, primarily includes the net gain on sale
(before tax) of Spectrum and Ramelius shares of approximately $6.5 million. Refer note 13.
The investment revaluation reserve comprises the cumulative net change in the fair value of equity investments.
(c) 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.
All movements in the above reserves are as stated in the consolidated statement of changes in equity.
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.
22. FINANCIAL INSTRUMENTS
(a) Capital risk management
The capital structure of the Group consists of equity attributable to equity holders, comprising issued capital,
reserves and accumulated losses as disclosed in notes 19-21.
The Board reviews the capital structure on a regular basis and considers the cost of capital and the risks
associated with each class of capital. The 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.
An n u a l F i n a n c i a l R e p o r t 2 0 2 0 84
FOR THE YEAR ENDED 30 JUNE 2020
(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 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 2020, Chalice had approximately
CAD$0.4million (A$0.4 million) cash on hand in CAD denominated bank accounts. Previously the Group held
funds in US dollars (“USD”), however these funds were converted into AUD funds during the current financial year.
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 CAD against AUD.
Impact on gain/(loss)
Impact on equity
AUD/CAD +10%
AUD/CAD -10%
AUD/CAD +10%
AUD/CAD -10%
2020
$
2019
$
(37,111)
59,976
(37,111)
59,976
(212,347)
233,582
(212,347)
233,582
In addition to the above foreign exchange exposure on the Group’s cash balance, the Group is also exposed to
movements in CAD against AUD due to its shareholding in O3 Mining.
The following table 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 CAD against AUD.
Impact on gain/(loss)
Impact on equity
(ii) Equity prices
AUD/CAD +10%
AUD/CAD -10%
AUD/CAD +10%
AUD/CAD -10%
2020
$
2019
$
(762,933)
839,226
(762,933)
839,226
-
-
-
-
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.
2020
$
2019
$
Impact on equity
Share price +10%
Share price -10%
857,978
(779,980)
88,579
(80,526)
(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
45,693,727
18,620,857
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 50 basis points in interest rates at reporting date.
2020
$
2019
$
85 An n u a l F i n a n c i a l R e p o r t 2 0 2 0
In the year ended 30 June 2020 if interest rates had moved by 50 basis points, with all other variables held constant,
the post-tax result for the Group would have been affected as follows:
FOR THE YEAR ENDED 30 JUNE 2020
Impact on gain/(loss)
Impact on equity
(c) Credit risk exposure
50 bp increase
50 bp decrease
50 bp increase
50 bp decrease
2020
$
2019
$
219,386
(219,386)
219,386
(219,386)
91,883
(59,320)
91,883
(59,320)
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 and lease liabilities which include trade and other payables of
$1,744,566 (2019: $730,840) all of which are due within 60 days.
In light of the Group’s current financial assets and minimal committed expenditure, 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).
Non-listed equity investments are measured at fair value using unobservable inputs (Level 3 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 absence of a principal market, the most advantageous market for the asset or liability.
In the principal market for the asset or liability; or
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.
An n u a l F i n a n c i a l R e p o r t 2 0 2 0 86
FOR THE YEAR ENDED 30 JUNE 2020
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 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement
is directly or indirectly observable.
Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
«
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.
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.
23. PARENT ENTITY
Financial position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Accumulated losses
Reserves
Total equity
Financial performance
Loss for the year
Total comprehensive loss
Commitments and contingencies
(i) Contingencies
2020
$
2019
$
46,135,622
6,960,523
53,096,145
19,689,200
8,798,044
28,487,244
581,657
49,351
631,008
605,530
45,685
651,215
52,465,137
27,836,029
59,500,883
29,807,308
(31,964,630)
(26,943,668)
24,928,884
52,465,137
24,972,389
27,836,029
2020
$
2019
$
(10,551,066)
(10,551,066)
(9,853,835)
(9,853,835)
Other than as disclosed in note 27 the parent entity has no contingent assets or liabilities.
(ii) Capital commitments
Other than disclosed in note 27, the parent entity has no capital commitments.
87 An n u a l F i n a n c i a l R e p o r t 2 0 2 0
FOR THE YEAR ENDED 30 JUNE 2020
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.
24. 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:
Name
Parent entity
Chalice Gold Mines Limited
Subsidiaries
Chalice Operations Pty Ltd
Western Rift Pty Ltd (i)
CGM Minerals Pty Ltd
CGM (Lithium) Pty Ltd
CGM (WA) Pty Ltd
North West Nickel Pty Ltd(ii)
(ii) Subsidiaries of Western Rift Pty Ltd
Chalice Gold Mines (Ontario) Inc.(iii)
Coventry Rainy Inc.(1)
Coventry Ontario Inc. (1)
(ii) Subsidiaries of North West Nickel Pty Ltd
Nebula Resources Pty Ltd
(iii) Subsidiaries of Chalice Gold Mines (Ontario) Inc.
Chalice Gold Mines (Quebec) Inc.(2)
Chalice Gold Mines (Exploration) Inc.
Country of
Incorporation
% Equity Interest
2020
2019
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Canada
Canada
Canada
Australia
Canada
Canada
100
100
100
100
100
100
100
-
-
100
-
100
100
100
100
100
100
-
100
100
100
-
100
100
(1) Coventry Rainy Inc. and Coventry Ontario Inc. were voluntarily deregistered 20 September 2019.
(2)
In July 2019, the Company sold its wholly owned subsidiary, Chalice Gold Mines (Quebec) Inc. to O3
Mining. 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.
An n u a l F i n a n c i a l R e p o r t 2 0 2 0 88
FOR THE YEAR ENDED 30 JUNE 2020
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.
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.
25. AUDITOR’S REMUNERATION
Audit services
HLB Mann Judd:
Audit and review of financial reports
Other services
26. RELATED PARTIES
Key management personnel
Executive Directors
2020
$
2019
$
51,538
4,700
56,238
48,892
4,000
52,892
T R B Goyder (Executive Chairman) (transitioned to Non-executive Chairman 1 September 2020)
A C Dorsch (Managing Director)
Non-executive Directors
S P Quin
M S Ball
Executives
R K Hacker (Chief Financial Officer)
K M Frost (General Manager – Exploration)
B M Kendall (General Manager – Development) (appointed 1 October 2019)
P Lengyel (Exploration Manager – Canada) (resigned 31 December 2019)
The KMP compensation is as follows:
Short-term benefits
Post-employment benefits
Termination benefits
Share-based payments
2020
$
2019
$
1,518,615
102,099
61,819
410,756
2,093,289
1,634,573
98,325
-
585,518
2,318,416
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.
89 An n u a l F i n a n c i a l R e p o r t 2 0 2 0
FOR THE YEAR ENDED 30 JUNE 2020
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 income recognised during the year relating to KMP or their related parties was as follows:
KMP
Liontown Resources Limited
DevEX Resources Limited
PhosEnergy Limited
Note
(i)
(i)
(i)
2020
$
2019
$
241,844
147,233
21,600
249,107
114,000
21,600
(i) The Group supplied office facilities and corporate services such as accounting and administration to
Liontown Resources Limited (“LTR”), DevEx Resources Limited (“DEV”) and PhosEnergy Limited (“PEL”). Mr
Goyder is a director of LTR, DEV and PEL. Mr Hacker is a director of DEV, alternate director of PEL and was
formerly the Chief Financial Officer of LTR. 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 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
27. COMMITMENTS AND CONTINGENCIES
Exploration expenditure commitments
2020
$
2019
$
-
30,244
30,244
-
109,998
109,998
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 year. 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
2020
$
2019
$
3,086,358
366,891
-
-
-
-
3,086,358
366,891
Contingent asset and Contingent Liabilities
There are no contingent assets or contingent liabilities at 30 June 2020 (30 June 2019: nil).
28. EVENTS SUBSEQUENT TO REPORTING DATE
On 14 July 2020, 4,382,655 2017/2018 Performance Rights that were issued to KMP and employees in 2017 vested
in full due to the achievement of the performance conditions measured over the three years ended 30 June
2020. Upon vesting, 3,967,290 Performance Rights were exercised into an equivalent number of fully paid ordinary
shares. The Board resolved to pay cash in lieu of the exercise for415,365 Performance Rights, held by a non-
Australian resident. The total payment of cash in lieu of shares was $450,957.
On 21 August 2021, subject to shareholder approval at the Company’s 2020 Annual General Meeting, the Board
resolved that each Non-Executive Director will be issued 150,000 unlisted share options with an exercise price of
$2.20 and an expiry date of 30 June 2023. The Non-Executive Chairman will be issued 250,000 unlisted options on
the same terms as other Non-executive Directors.
An n u a l F i n a n c i a l R e p o r t 2 0 2 0 90
FOR THE YEAR ENDED 30 JUNE 2020
On 2 September 2020, the Company issued 820,482 - 2020/2021 Performance Rights to senior executives and
employees of the Company under the terms of the Employee Securities Incentive Plan. In addition to the above
issue, on 21 August 2020, it was resolved that Alex Dorsch, Managing Director, has been awarded 280,081
Performance Rights on the same terms and conditions. The issue of the Performance Rights to Mr Dorsch is
conditional on the receipt of shareholder approval to be sought at the Company’s 2020 Annual General Meeting.
Other than disclosed above or elsewhere in this report, there have been no other material post balance date
events which have impacted the Company.
29. CHANGES IN ACCOUNTING POLICIES
In the year ended 30 June 2020, 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 adopted AASB 16 from 1
July 2019. AASB 16 replaces AASB 117 Leases.
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 16 Leases
The Group has adopted AASB 16 from 1 July 2019. AASB 16 replaces AASB 117 Leases.
The adoption of AASB 16 has resulted in changes in classification, measurement and recognition leases. The
changes result in almost all leases where the Company is the lessee being recognised in the Condensed
Statement of Financial Position and removes the former distinction between ‘operating and ‘finance leases’. The
new standard requires recognition of a right-of-use asset (the leased item) and a financial liability (to pay rentals).
The exceptions are short-term, and low value leases.
Impact on operating leases
The Group has adopted AASB 16 using the modified retrospective approach under which the reclassifications
and the adjustments arising from the new leasing rules are recognised in the opening Condensed Statement of
Financial Position on 1 July 2019. There is no initial Impact on retained earnings under this approach. The Group
has not restated comparatives for the 2019 reporting period.
The Group leases various offices. As at 30 June 2019, leases were classified as operating leases. Payments made
under operating leases were charged to profit or loss on a straight-line basis over the period of the lease.
From 1 July 2019, where the Company is a lessee, the Group recognises a right-of-use asset and a corresponding
liability at the date which the lease asset is available for use by the Group. Each lease payment is allocated
between the liability and the finance cost. The finance cost is charged to profit or loss over the lease period so as
to produce a consistent rate of interest on the remaining balance of the liability for each period.
On adoption of AASB 16, the Group recognised lease liabilities in relation to leases which had previously been
classified as operating leases under the principles of AASB 117. These liabilities were measured at the present
value of the remaining lease payments, discounted using the lessee's incremental borrowing rate as of 1 July
2019. The weighted average lessee's incremental borrowing rate applied to lease liabilities on 1 July 2019 was
8.85%.
The transitional impact at 1 July 2019 is set out below:
Reconciliation
Operating lease commitments disclosed as at 30 June 2019
Discounted using the lessee’s incremental borrowing rate at the date of initial application
Less: Operating costs recognised as lease commitments excluded from capitalisation
Right-of-use-assets as at 1 July 2019
Current lease liabilities
Non-current lease liabilities
Total lease liabilities on the date of transition
$
314,829
(16,616)
(50,566)
249,647
(193,586)
(56,062)
(249,647)
There was no impact on opening accumulated losses at 1 July 2019 on adoption.
91 An n u a l F i n a n c i a l R e p o r t 2 0 2 0
FOR THE YEAR ENDED 30 JUNE 2020
Following adoption, in the condensed statement of cash flows, the Group has recognised cash payments for the
principal portion of the lease liability within financing activities, cash payments for the interest portion of the lease
liability as interest paid within operating activities and short-term lease payments and payments for lease of low-
value assets within operating activities.
No extension options are included in the property leases across the Group. There were no onerous lease contracts
that required an adjustment to the right-of-use assets of initial application.
Refer to Note 15 for further information on the accounting policies for Leases Liabilities and Right of Use Assets.
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 have not been early adopted by the Group for the year ended 30 June 2020.
The Directors have also reviewed all Standards and Interpretations in issue not yet adopted for the period ended
30 June 2020. As a result of this review the Directors have determined that there is no material impact of the
Standards and Interpretations in issue and not yet adopted by the Company.
An n u a l F i n a n c i a l R e p o r t 2 0 2 0 92
FOR THE YEAR ENDED 30 JUNE 2020
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 2020 and of its performance
for the year ended on that date; and
ii. complying with Australian Accounting Standards
Interpretations) and the Corporations Regulations 2001.
(including
the Australian Accounting
b.
there are reasonable grounds to be that the Company will be able to pay its debts as and when they
become due and payable.
c. 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 2020.
This declaration is signed in accordance with a resolution of the Board of Directors.
Dated at Perth the 29th day of September 2020.
Signed in accordance with a resolution of the Directors:
Alex Dorsch
Managing Director
93 An n u a l F i n a n c i a l R e p o r t 2 0 2 0
An n u a l F i n a n c i a l R e p o r t 2 0 2 0 94
95 An n u a l F i n a n c i a l R e p o r t 2 0 2 0
An n u a l F i n a n c i a l R e p o r t 2 0 2 0 96
97 An n u a l F i n a n c i a l R e p o r t 2 0 2 0
Additional information required by the Australian Securities Exchange Limited (“ASX”) Listing Rules and not
disclosed elsewhere in this report is set out below. The information below was applicable as at 28 September
2020.
Substantial shareholders
The names of the substantial shareholders and the number of shares in which they have a relevant interest are:
Shareholder
Number of ordinary shares held
Timothy Rupert Barr Goyder
Franklin Resources Inc
Regal Funds Management Pty Ltd
Class of shares and voting rights
37,193,198
30,102,367
15,593,969
Percentage of
capital held
%
12.10
9.79
5.07
There are 4,741 holders of the fully paid ordinary shares of the Company, 4 holders of unlisted share options and
22 holders of performance rights.
Distribution of equity security holders:
Category
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Fully Paid Ordinary
Shares
Unlisted Share Options
Performance Rights
No.
%
No.
%
No.
%
956
1,303
857
1,375
250
4,741
0.17
1.30
2.25
14.64
81.64
100
-
-
-
-
4
4
-
-
-
-
100
100
-
-
-
6
16
22
-
-
-
2.11
98.89
100
The number of shareholders holding less than a marketable parcel is 183 (based on a share price of $2.50).
Voting Rights
All fully paid ordinary shares carry one vote per share. There are no voting rights attached to options or
performance rights Company until exercised.
Unlisted Employee Performance Rights
There is a total of 12,043,616 unlisted Performance Rights on issue held by 22 different persons. These Performance
Rights have no exercise price and vest between 1 July 2020 and 30 June 2023, subject to the fulfilment of the
relevant vesting conditions.
Unlisted Director Options
There is a total of 5,850,000 unlisted Options on issue held by 3 directors of the Company. These Options have
an exercise price between $0.16 and $0.21 and expiry dates between 31 March 2021 and 30 November 2022.
Holders of 20% or More of Unquoted Securities
The names of holders and number of unquoted equity securities held for each class (but excluding securities
held under an employee incentive scheme) where the holding was 20% or more of each class of security are
set out below:
Name
No. Options
Exercise Price
Expiry Date
% of Class
Red Cloud Klondike Strike Inc.
500,000
$0.25
10 June 2022
100%
An n u a l F i n a n c i a l R e p o r t 2 0 2 0 98
Restricted securities
There are no restricted ordinary shares on issue.
On-market Buyback
There is no on-market buy-back currently being undertaken.
Mineral Resource Statement
At 30 June 2020 and at the date of this report, the Company has no Mineral Resources reported in accordance
with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code
2012) and Canadian National Instrument 43-101. On 25 July 2019 the Company sold the East Cadillac Gold
Project (which included the Nordeau West mineral resource estimate) to O3 Mining Inc.
Name
HSBC Custody Nominees (Australia) Limited
Mr Timothy R B Goyder
Citicorp Nominees Pty Limited
J P Morgan Nominees Australia Pty Limited
CS Third Nominees Pty Limited
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