ANNUAL REPORT
For the year ended 30 June 2014
Crater Gold Mining Limited (ASX: CGN) ABN 75 067 519 779
Contents
Review of Operations
Directors' Report
Corporate Governance Statement
Auditor's Independence Declaration
Consolidated Statement of Profit and Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Directors' Declaration
Independent Auditor's Report
ASX Additional Information
Corporate Directory
Page
5
22
32
35
36
37
38
39
40
67
68
70
73
Photographs on the front and inside covers are of:
Front cover: Ore crusher at "HGZ”, part of gold production plant
Inside front cover (L to R): Core tray samples from drill hole at HGZ, concentrate from test runs of the production plant, view of gold mining plant at
HGZ
This page (L to R): Underground mine staff, Adit portal at HGZ, helicopter landing pad at Base Camp
Review of Operations
Company Focus – Production from Crater Mountain
The year ending 30 June 2014 was one of great progress for Crater Gold Mining Limited (“CGN” or the “Company”) and its subsidiary
companies (“the Group”). The Company made excellent progress at the HGZ project as demonstrated by drilling results and
underground development sampling results as outlined in the various announcements to the Australian Securities Exchange during
the past year.
A Mining Lease application (“MLA 510”) was submitted for the High Grade Zone (“HGZ”) project. Whilst the timing of the grant of
the Mining Lease for the HGZ project is subject to many factors, we are hopeful of gold production in the 4th quarter of 2014. Gold
production is expected to generate a positive cash flow for the Company enabling it to become self‐sustaining for the very first time.
Crater Mountain, PNG (100%)
Key Points
HGZ Project Mining lease application lodged
Gold Mining Plant being Commissioned at HGZ project
Excellent high grade gold results from HGZ Project drilling programme
High grade mineralised structures continue down dip at least 90m and on strike by at least 60m and remain open
Assessment of HGZ and broader Crater Mountain area by independent consultants Mining Associates
Aeromagnetics and drill hole petrology highlights possible source intrusion of Nevera porphyry Cu‐Au mineralisation at
Crater Mountain
Activities
High Grade Zone Project
HGZ Development
The HGZ is an area of recent artisanal gold mining in which an estimated 15,000 ounces of gold was produced by local miners largely
from shallow underground workings and simple gravity processing between 2005 and early 2013.
A decision was made by the Company early in 2013 to assess the potential of the HGZ for fast‐tracking small to medium‐scale gold
production, with the strategy of reinvesting profit into the on‐going exploration of the Nevera Prospect’s larger‐scale potential. Fast
tracking gold production in the HGZ remains the Company’s priority, as this will generate strong cashflow.
The Company has been developing the HGZ since August 2013 through the development of an underground adit and cross cuts and
an ongoing drilling programme. This development has passed through a wide zone of intense brecciation containing several narrow
gold bearing mineralised structures correlating well with surface artisanal gold workings.
Sampling included both channel sampling of walls and face as well as character sampling of veins and enveloping wallrock to assess
average grades and thicknesses.
A broad 15 metre wide zone of intense brecciation and alteration trending roughly north south has been identified. This zone hosts
numerous narrow (up to 30cm wide) auriferous structures of intense clay, limonite, hematite and pyrite alteration with quartz and
frequent coarse visible free gold. Refer to Figure 1.
Within this zone there are several discrete well developed gold‐bearing structures containing increased clay, hematite alteration with
manganese traced over 5 – 10 metres strike in the development to date. Bonanza gold grades up to 847g/t (27.2 oz/t) Au have been
recorded from channel samples taken where these structures cut through the walls of the adit and cross cut development. Figure 1
shows the location of the significant structures intersected to date with their respective assay results and widths.
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Figure 1 ‐ Plan of Current Drill Hole Traces and Historic Drill Holes
The predominant trend is approximately N‐S. There are also a number of steeply dipping cross cutting mineralised structures with
an approximate EW orientation. Underground observations have also been made of relatively shallow dipping structures noted to
be link structures between the NS and EW sets. All of these sets of structures have returned high gold values. The intersection of
the steeply dipping NS and EW structures together with the occurrence of shallow dipping link structures is considered to play an
important role in the control to mineralisation resulting in bonanza gold grades.
The intersection of these structures correlates very well with previous artisanal mining in shallow surface workings directly above the
current exploration development. There is also good correlation with previous surface diamond drilling which included an
intersection of 2m at 98g/t Au approximately 70m below the development. Results to date provide confirmation of reports of
significant quantities of gold being extracted by local artisanal miners from shallow surface workings.
The focus of the exploration development is to intersect these narrow mineralised structures and to individually evaluate them with
channel sampling. The veins of relevant interest are those recording significant grades and which can be extracted using small scale,
highly selective, narrow vein mining techniques.
Drilling Programme at HGZ
A drilling programme commenced in February of this year at the HGZ.
The objective of the drilling programme is to further delineate the gold mineralised zone to generate a measured gold resource prior
to the commencement of gold production. The drilling programme is designed to confirm immediate strike and dip continuity of
narrow high grade structures encountered within a coherent zone in the underground exploration development (refer to the plan
diagram in Figure 1 and the sections diagrams in Figures 2, 3, 4 ,5 and 6 which show the drill hole positions relative to the underground
development).
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Figure 2 ‐ Cross Section of planned drilling on Bearing 110°
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Figure 3 ‐ Section of Drill Holes and Intercepts on 85° Bearing
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Figure 4 ‐ Section of Drill Holes and Intercepts on 134° Bearing
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Figure 5 ‐ Section of Drill Holes and Intercepts on 96° Bearing
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Figure 6 ‐ Section of Drill Holes and Intercepts on 126° Bearing
14 drill holes totalling 1,146.7m have been fully reported with gold assay results. These holes have been drilled from a single drill
platform on surface approximately 25m from the portal of the underground drive that has been developed through the known zone
of mineralisation. Refer to Table 1 Significant Drilling Intercepts.
Interval (m)
grade (g/t)
depth (m)
Section Diagram
Reason for Interval Significance
Nev34a
1.0
Figure 2
20.90
20.0
0.81
Nev34b
30.0
including
1.0
Nev 35
0.5
Figure 2
0.81
5.85
Figure 2
10.10
14.5
42.0
28.0
33.0
27.0
110 Deg Section
A new structure outside the interpreted
mineralised zone
Zone of mineralisation confirming depth extension
110 Deg Section
Twin hole to Nev34a.
110 Deg Section
A new structure outside the interpreted
mineralised zone
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Interval (m)
grade (g/t)
depth (m)
Section Diagram
29.0
3.39
43.0
Reason for Interval Significance
Zone of mineralisation confirming depth extension
including
2.0
2.5
0.5
4.30
16.53
43.0
47.0
Correlates with underground development
24.70
56.5
Correlates with underground development
Nev 36
0.5
Figure 3
14.80
4.0
1.5
9.0
6.20
34.96
2.72
Nev38
55.0
Figure 3
1.02
including
1.0
1.0
Nev39
3.5
including
0.5
5.21
11.6
Figure 4
31.56
191.00
Nev40
1.0
Figure 4
25.00
2.0
1.0
3.0
2.5
4.92
4.31
5.75
4.52
Nev42
Figure 3
1.0
0.5
1.0
Nev43
3.5
incl 1.0
and 0.5
1.0
13.3
14.0
16.3
Figure 2
9.4
21.5
15.4
9.8
15.5
27.0
49.0
65.0
17.0
51.0
71.0
48.5
48.5
35.0
50.0
63.5
66.5
76.5
49.5
65.5
79.0
59.5
59.5
62.5
70.0
85 Deg Section
A new structure outside the interpreted
mineralised zone
Zone of mineralisation confirming depth extension
Further confirmation of high grade and in HGZ
planned mining zone
Indication of possible width extension of
mineralised zone
85 Deg Section
Broad zone correlating with interpreted
mineralised target
Correlates with Nev36 and Nev22
134 Deg Section
Narrow bonanza grade structure typical of the
target zone. Confirms southerly extension of high
grade structure in Nev35 20m to the north
134 Deg Section
Confirmation of continuity to south and depth
Several zones of mineralisation
85 Deg Section
Correlates with Nev22
Correlates with Nev22, Nev36 & Nev38
110 Deg Section
Correlates with Nev35
Discrete mineralised structure
Discrete mineralised structure
Correlates with Nev35
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Interval (m)
grade (g/t)
depth (m)
Section Diagram
Reason for Interval Significance
Nev44
Figure 4
134 Deg Section
Review of Operations
1.0
7.0
Incl 1.0
8.3
5.3
18.7
Nev45
Figure 5
1.0
5.0
incl 2.0
8.7
8.7
14.0
Nev46
Figure 5
1.0
0.0
3.0
incl 0.5
3.0
incl 1.0
Nev47
1.5
incl 1.0
11.5
5.4
16.5
40.7
6.0
10.5
Figure 6
46.8
64.2
Nev48
Figure 6
1.0
1.0
1.0
5.2
7.0
7.9
Historical Results
Nev 22
4.0
4.0
including
2.0
4.0
Figure 2, 4
8.90
51.00
98.20
4.10
41.0
45.0
49.0
25.0
53.5
55.5
19.5
44.0
67.0
67.0
78.5
79.5
37.5
38.0
35.5
38.5
53.0
44.0
74.0
74.0
118.0
Correlates with Nev40
096 Deg Section
Infill Drill Section
096 Deg Section
Infill Drill Section
High grade intercept of narrow vein
126 Deg Section
Infill Drill Section
Correlates with Nev35 on Sect 110 Deg & Nev40 on
134 Deg
Bonanza grade intercept of narrow vein
126 Deg Section
Infill Drill Section
Correlates with Nev47
Correlates with Nev47
Good correlation with Nev 36
Good correlation with Nev 36
Confirmation of depth continuity
Table 1 ‐ Significant Drilling Intercepts
The key outcome of the drilling results received to date is that they highlight the very strong correlation with the geology and grades
encountered directly above in the underground development. Excellent results are all in the planned mining zone. Drilling confirms
a broad 15m brecciated mineralised zone hosting narrow high grade structures over a strike currently of at least 60m and down dip
of approximately 90m which remains open.
The sequence of drill holes is currently being completed with up‐holes to be drilled above the underground development in order to
complete the data required for detailed resource estimation and mine planning.
Mining Lease Application
An application for a Mining Lease (MLA) with a Proposal For Development application was formally lodged with the Papua New
Guinea Mineral Resources Authority (“MRA”) at the beginning of May 2014. The HGZ is earmarked to commence gold production
subject to the outcome of the mining lease application.
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The regulatory process for the MLA is progressing with ongoing consultations with the MRA. A site visit by the Chief Mining Warden
to consult with and inform the local communities and landowners was undertaken Friday 11 July 2014. At the same time the MRA’s
newly appointed Technical Assessment officer conducted a site visit and inspection.
10,000 high grade ozs gold production targeted in first year of mining
The very high grades of coarse free gold mineralisation (ASX Release 19 November 2013 ‐ “Bonanza gold grades intersected at High
Grade Zone”) will support a small, highly selective narrow vein mining operation requiring simple mining infrastructure and recovery
of gold by gravity separation without the need for complex processing technology. Mining will be carried out underground by hand
held mining methods at a rate of approximately 1,000 tonnes per month.
The Company believes that gold can be extracted from the HGZ via a simple process that requires modest capital with low operating
costs. The Company believes that in the first year of production, 10,000 gold ounces is achievable.
Gold Mining Plant Commissioned
A gravity concentration process plant has been acquired and is on site currently being installed and commissioned. Rail and
underground rail trucks are on site ready to be installed ahead of mining.
The plant is of such a scale that in the initial phase it will be used for bulk sampling individual parcels of mineralised material currently
stored on surface from the rock extracted during development of the drive and cross cuts.
High Grade Zone and Crater Mountain potential ‐ Independent Consultant Review
An independent report by Mining Associates (“MA”) commissioned by the Company after only 4 holes totalling 1,246m of
drilling into the HGZ (there have been a further 23 holes drilled totalling 1,853m) highlighted the following:
Mining Associates (“MA”), suggests a target for the High Grade Zone prospect based on selective underground mining of: HGZ
Target ‐ 50,000 to 250,000 tonnes at 13 to 30 g/t Au for 60,000 to 100,000 ounces of contained Au (ASX Release 17 October
2013:High Grade Zone – Independent Consultant Target Review, Crater Mountain, PNG). MA cautions that the potential
quantity and grade is conceptual in nature, that there has been insufficient exploration to define a Mineral Resource and that
it is uncertain if further exploration will result in the determination of a Mineral Resource
MA confirmed the Company’s expectations that the HGZ has the potential to be a rich source of gold which could be developed
at low cost and in a short period of time
MA also stated that it is likely that similar independent high grade gold deposits may be repeated at several places as splays off
key structures over a potential area of at least 1400m by 700m
MA further observed that the HGZ target zone is currently under active exploration development by the Company with surface
mapping and sampling, adit development and both surface and underground close spaced drilling. The visit was commissioned
following the initial opening of the adit and the commencement of underground development into the zone. MA confirmed that the
HGZ has the potential to be a rich source of gold which could be developed at low cost and in a short period of time
The HGZ Target is defined by a 100m radius circle centred on the area of artisanal workings. The initial target is within 150m of the
surface. The area lies well outside the current resource estimates for the Nevera Mixing Zone Prospect (Richmond, 2011). See
Figure 7 below.
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Figure 7 ‐ Red circle is HGZ Target; yellow outline on right is Richmond 2011 Mixing Zone resource limits; blue circle is geophysical
target; dark lines are drill holes; background is 2012 surface geology map; area outlined in white is area of known gold mineral
Notes to accompany the HGZ Target estimate by MA:
1.
2.
3.
4.
5.
6.
7.
8.
9.
The initial target is for highly selective narrow underground mining
Target Area 100m radius and to 150m below surface centred on Artisanal workings
Area is not included in current resource estimates
Block model using blocks 5x5x5m
Screened for topography
206 x 5m down‐hole drill composites from holes 4, 9, 22, 23, and 26 and 87 x 5 m bench samples
Averaging of grades and dilution by using 5m composites of diamond core and bench samples
Nearest Neighbour grade allocation to blocks using 100m omnidirectional search
Appropriate rounding of numbers to reflect targeting
10.
A bulk density of 2.5 t/m3 was used for reporting
MA concluded that mineralisation is likely controlled by a number of key structures allowing mineralising fluids to be introduced
adjacent to them. The host breccia zones are controlled by a combination of structures running north, north‐east and north‐west.
Limited surface drilling targeting the HGZ had indicated potential for high grade gold to a depth of at least 100m ‐ drill hole NEV022
intersected 2.0m at 98.0 g/t Au approximately 100m below the artisanal workings being tested by the current adit development.
Geological mapping of remnant surface exposures and several drill intersections have identified mineralisation as steeply dipping
high‐grade quartz‐pyrite‐gold veining and related steeply plunging ore shoots which have been impacted by intense near‐surface
acid leaching and deposition of clays and iron oxides with free gold in fractures. It is this material that has been exploited by the
artisanal miners in the past. Alteration associated with the mineralisation shows it to be high sulphidation epithermal in nature,
related to a separate phase of mineralisation from the widespread low sulphidation Mixing Zone event. There is a strong potential
for the high gold values worked near surface to extend to depth in the primary zone.
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Mixing Zone
While the current focus remains on the HGZ project, the Company also has the JORC compliant inferred resource of 24Mt @ 1.0g/t
of Au for 795,000 ounces at the Mixing Zone. (ASX Release 24 November 2011: Crater Mt – Initial Resource Estimate) (This information
was prepared and first disclosed under the JORC Code 2004. It has not been updated since to comply with the JORC Code 2012 on
the basis that the information has not materially changed since it was last reported). Anticipated positive cash flow from mining the
HGZ will be channelled into further testing of the Mixing Zone and into evaluating the porphyry copper‐gold potential at Crater
Mountain.
Mining Associates Report on the Prospectivity of the regional Crater Mountain Tenements
Mining Associates in their independent report also made the following observations on the Crater mountain tenements. These
Tenements are made up of the Nevera (where the HGZ and Mixing Zones are located and has been where 95% of all exploration has
been focussed), Nimi, Awanita and Masi prospects.:
1.
2.
3.
4.
5.
6.
Significant gold and copper (at depth) mineralisation occurs within the tenement area
There are 2 mineralised zones of potential significance identified to date ‐ The Mixing Zone (MZ) and High Grade Zone
(HGZ). In addition widespread deep porphyry Cu‐Au mineralisation has been identified in drill core
The Nevera Prospect is focused around an intrusive/extrusive complex of irregular shape and uncertain limits (possibly
partly gradational) with an area of at least 1400 m by 700 m
The Crater Mountain Volcanic Complex is sub‐elliptical in shape, approximately 20 km across
Recent airborne magnetics and radiometrics have been undertaken and processed over the Crater mountain licenses.
Because surface outcrop is limited due to a widespread volcanic ash cover this will be most helpful in on‐going target
identification. MA notes that commonly more subtle features, or the edges of anomalies, are key targets
It is expected that other hydrothermal systems of similar size to Nevera will occur within the Crater Stratovolcano complex:
typically the overall mineralisation system can cover tens of square kilometres with surface expression as a number of
individual cells, each 2 to 5 km apart, separated by barren zones. Three have been identified by early exploration (Nimi,
Awanita and Masi).
MA is of the opinion that there are four styles of mineralisation seen within the prospect area in a complex interplay over a long
period of build‐up and then collapse of a major stratovolcano, the Crater Mountain Volcanic Complex:
1.
2.
3.
4.
Steeply dipping structurally controlled intense acid leached zones with high grades of gold only, examples being HGZ. Gold
to silver ratio of 3 to 1 or higher. The origin of these is uncertain ‐ they could be due to a high‐sulphidation event or due to
generation of acids from breakdown of unstable sulphides near surface. These at least partly overprint, and are formed
from the breakdown of earlier mineralisation of ‐
Broader lower grade zones of more complex shapes associated with carbonate‐ base metal sulphides with moderate grades
of gold and silver, like the MZ. Gold to silver ratio of about 1 to 1 with significant levels of base metals (copper, lead and
zinc); which both partially overprint the ‐
Main low sulphidation epithermal quartz gold‐silver event associated with collapse of the Stratovolcano and formation of
the major breccia zones and emplacement of the andesite to dacite porphyry dykes and small intrusions; which all overprint
the ‐
Primary, older, porphyry copper‐gold mineralisation seen at depth and emplaced within the original stratovolcano. It is
possible small stocks of this type will occur at higher levels, as seen at Wafi where these are significant ore bodies. A target
has been identified to the east of the MZ.
The four types are of course related to the same overall mineralisation system, which is large and complex in detail, and long lived,
with the higher grade gold zones being later. The difference between the various epithermal gold styles relates to different settings,
and results in the varied intensity and metal ratios.
MA concluded the Crater Mountain hydrothermal mineralised system has the potential for hosting deposits with short term,
medium term and long term production
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Airborne magnetics and radiometrics analysed and integrated with Nevera Prospect drill hole petrology
The Company received very positive results from the integrating of magnetic and radiometric data derived from a detailed helicopter‐
borne geophysical survey conducted over its Crater Mountain tenements early in 2013. Combined with earlier petrological analysis
of core from the Nevera Prospect diamond drilling programme by consultant Mr Anthony Coote of APSAR in New Zealand, the results
identify the possible location of a porphyry copper‐gold intrusion immediately east of the area that was drilled at Nevera in 2011/12
and which delineated a large volume of carbonate‐base metal sulphide‐gold Mixing Zone mineralisation in which 790,000oz gold has
to date been classified in an inferred resource category.
APSAR’s Mr Coote concluded that the mostly intrusion‐breccia hosted, low‐sulphidation epithermal/mesothermal‐style base and
precious metal mineralisation of the Mixing Zone is flanked in the east by a NE‐SW trending and possibly southwest plunging quartz
diorite/ tonalite porphyry intrusion or intrusive complex, located immediately to the east of the drilled area and identified in the
geophysical consultant ExploreGeo’s Mr Frankcombe’s report as a strong magnetics target of considerable vertical extent. He
concluded that this intrusion could be the source of the porphyry Cu‐Au mineralisation identified at depth in a number of drill holes.
The regional geophysical results reported by Mr Frankcombe outline magnetic intrusions and areas of magnetite destruction or non‐
magnetic cover, as well as magnetic lineaments, and highlight multiple targets for follow up that are considered likely to be intrusion‐
related, including the one immediately east of the drilled area in the Nevera Prospect noted above. Other targets include one in the
southwest of the Nevera Prospect, as well as 3 in the Masi prospect. They are interpreted as being largely intrusion‐related with
several possibly skarn‐related in origin, and may host associated mineralisation.
The main points from the analysis highlight the following:
Airborne geophysics combined with drill hole petrology identifies possible location of porphyry copper‐gold intrusion inferred
from Nevera Prospect drilling at Crater Mountain
Porphyry copper‐gold target interpreted as NE‐SW trending intrusion with a possible SW plunge that lies immediately east of
and borders the Nevera drilled area
Aeromagnetic data indicates potential for the copper and gold mineralisation to be preserved closer to surface in the east
The Mixing Zone inferred gold resource flanks the identified porphyry target on the northwest
It is expected that the source intrusion for the porphyry mineralisation is also responsible for the Mixing Zone mineralisation
7 additional major magnetic targets identified regionally requiring ground follow up, including 1 in southwest Nevera Prospect
and 3 in Masi Prospect
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Figure 8‐ Possible source intrusion for porphyry Cu‐Au and Mixing Zone mineralisation
(Note: The Nevera Breccia Complex is a linear predominately intrusive breccia complex along the NW margin of the APSAR
interpreted intrusion)
Future strategy
The Company’s strategy at Crater Mountain is to bring the HGZ Project into production. Whilst the timing of the grant of the Mining
Lease for the HGZ project is subject to many factors, we are hopeful of gold production in the last quarter of 2014. Gold production
is expected to generate a positive cash flow for the Company enabling it to become self sustaining and to further develop its other
prospects.
Fergusson Island Gold Project, PNG (100%)
EL 2180 Wapolu project
The Company’s application for the area containing the Wapolu gold deposit on Fergusson Island was successful, with a new
exploration license EL 2180 being granted. The Wapolu exploration license, EL 2180, was lodged following expiry of the original
tenement EL 1025, in early 2012.
EL 1972, Gameta
On EL 1972, Gameta, fieldwork commenced, the field camp was rebuilt and historic drill sites, trenches and tracks were located.
The Gameta and Wapolu gold deposits, located in close proximity to each other on the north coast of Fergusson Island in PNG,
comprise the Company’s Fergusson Island Project, upon which over $15M has been spent since 1996. The Company previously
announced its first resource estimate reported in accordance with the JORC Code for the Gameta deposit, an Inferred Resource of
5.1 million tonnes at 1.8 g/t for 295,000 ounces of gold at a cut‐off grade of 1.0 g/t gold.
Future strategy
The Company’s strategy at Fergusson Island is to review latest technology in refractory gold processing techniques to evaluate if the
overall capital cost of the project can be reduced. One process being considered is the Albion process. This process relies on
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floatation followed by ultrafine grinding to expose fine refractory gold. Much of the ore at Gameta and Wapolu is of a refractory
nature (fine gold locked entirely within fine‐grained sulphide or silicate grains and so not accessible to cyaniding). The Company
plans to generate fresh ore for further floatation testing followed by Albion Process testing.
Early desktop analysis of the Albion process is encouraging. In addition, the potential to generate geothermal power from the
Lamalele thermal field on southeast Fergusson Island is being assessed by the PNG government, presenting a possibility of reduced
power costs for development projects on the Island. This would impact favourably on any feasibility to develop the Wapolu and
Gameta deposits as power costs are the most significant operating cost in mining and processing operations.
Golden Gate Graphite project, Croydon, Queensland, Australia (100%)
Golden Gate project
The Company announced in July last year that it had entered into an agreement with Global Resources Corporation Limited (“Global”)
to acquire from Global a 94% interest in an Exploration Permit for Minerals (EPM) in the Croydon District in North Queensland. At
the time the relevant Exploration Permit was under application by Global. EPM 18616 was granted to Global by the Queensland
Department of Natural Resources and Mines and the transfer of EPM 18616 to CGN has been completed. Global retain a 6% interest
in the tenement.
Graphite at Golden Gate
In July 2004, the Company, when named Gold Aura Ltd, undertook preliminary assessment of a large graphite deposit located at the
Golden Gate mine. The graphite deposit was systematically drilled as part of a regional gold exploration programme in the late 1980’s
by Central Coast Exploration (CCE). Three vertical reverse circulation holes were drilled by the Company between 2005 and 2007
that confirmed the graphite mineralisation as reported by earlier exploration was present at Golden Gate.
Since the Golden Gate graphite deposit is reasonably well defined by past drilling future exploration to be conducted by the Company
will involve collection of fresh drill core samples for testwork. Should a commercial graphite deposit be proven at Golden Gate, the
area is well served by infrastructure with the port of Karumba on the Gulf of Carpentaria that services the Century Pb‐Zn mine being
within 150 kilometres from the town of Croydon.
EPM18616 covers an area of 97.2 square kilometres of the historical Croydon Goldfield, which recorded production of 844,000 ounces
of gold and 900,000 ounces of silver in two periods of mining between 1885‐1935 and 1987‐90. The largest producer, the Golden
Gate Lode (480,000 ounces of gold) is located within EPM18616 and EPM9438, tenements now owned 100% by the Company.
The area of land covered by the relevant Exploration Permit is contiguous to land covered by the Company’s Exploration Permits
nos. 8795 & 9438, north of the town of Croydon.
Future strategy
An exploration programme will be conducted by the Company at Golden Gate that will involve collection of fresh drill core samples
to be submitted for testwork.
Corporate
Change of the Company’s name to “Crater Gold Mining Limited”.
At the Company’s general meeting held on the 9th July last year the shareholders approved that the name of the Company be
changed to “Crater Gold Mining Limited “ The resolution was passed and the name change took effect on 15 July 2013.
Share consolidation
At the Company’s general meeting held on the 26th September 2013, the shareholders voted in favour of the consolidation of every
one hundred Shares into one Share. The consolidation subsequently took effect on 14 October 2013.
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Appointment of Director
The Company announced the appointment of Mr Lawrence Lee as a Director of the Company. Mr Lee has over 25 years of experience
in finance, corporate finance, management, auditing and accounting. He worked in an international accounting firm for several years
and has worked as group financial controller, chief financial officer and director of listed companies on the Hong Kong Stock Exchange
for over 10 years.
Mr Lee is a member of the Hong Kong Institute of Certified Public Accountants and a member of CPA Australia.
Freefire Technology Limited loan
The Company’s major shareholder, Freefire Technology Limited (“Freefire”) continued to support the Company by entering into a
Loan Agreement with the Company aimed to finance the company through to a granting of a Mining Lease for its Crater Mountain
project. Freefire is controlled by the Company’s Chairman of Directors, Sam Chan.
Under the Loan Agreement Freefire advanced $1.5 million to the Company. The loan plus accrued interest was repaid out of the
proceeds of the issue of Convertible Notes (see below).
Underwritten Non‐Renounceable 1 for 4 Rights Issue
The Company undertook a non‐renounceable pro rata rights issue of one for four Rights Issue which closed on 16 December 2013.
The issue was fully underwritten for $2,182,965.
Subsequent to end of period
Underwritten Non‐Renounceable 1 Convertible Note for 1,000 Shares Rights Issue
The Company undertook a non‐renounceable pro rata rights issue of one convertible note for every one thousand shares held at
A$25 per convertible note which raised $3,454,750 before costs. Funds raised from the Rights Issue will be used to progress the
development of the High Grade Zone project and to repay approximately $1,537,500 of debt and for working capital generally.
The convertible notes are unsecured and will each be convertible to fully paid ordinary shares in the capital of the Company at the
rate of one hundred (100) shares per convertible note at a conversion price of $25.00 per convertible note. The maturity date of the
convertible notes is three years from the date of issue and interest is payable on the convertible notes at the rate of 10% per annum
paid six monthly in arrears until and including the maturity date. Accrued interest will also be paid in the event of an early
redemption. The Company may, on giving ten days’ written notice to noteholders, redeem all notes on issue upon paying to
noteholders the outstanding principal, a 25% premium on the outstanding principal, and any outstanding accrued interest. The
convertible notes may be converted into shares by noteholders on the last day of each quarter and at maturity.
Crater Gold Mining Limited
20
Review of Operations
Schedule of Tenements
Set out below is the schedule of tenements that the Company and its subsidiaries hold as at 18 September 2014:
Particulars
Project Name
EPM 8795
Croydon
EPM 9438
Mount Angus
EPM 10302
Gilded Rose
EPM 13775
Wallabadah
EPM 16002
Foote Creek
EPM 18616
Black Mountain
EPM 25186
Croydon Gold
Registered
Holder
CGN
CGN
CGN
CGN
CGN
CGN
CGN
EL 1115
Crater Mountain
Anomaly Ltd 2
EL 1353
EL 2249
EL 1972
EL 2180
Crater Mountain
Anomaly Ltd 2
Crater Mountain
Anomaly Ltd 2
Fergusson Island
Anomaly Ltd 2
Fergusson Island
Anomaly Ltd 2
% Owned
Status
Expiry
Area (Km2)
100
100
100
100
100
94 1
100
100
100
90
100
100
Granted
Granted
Granted
Granted
Granted
Renewal lodged
Granted 3
Application
Granted
Renewal lodged
6/09/2016
14/07/2016
31/12/2015
5/03/2017
30/01/2013
18/06/2018
25/09/2014
Renewal lodged
20/06/2012
Granted 4
Granted
Granted
11/11/2015
20/12/2014
27/06/2015
19.2
19.2
6.4
32
28.8
96
60.8
41
113
10
67
37
1 6% owned by Global Resources Corporation Limited
2 Anomaly Limited is CGN’s 100% owned PNG subsidiary
3 Transfer of CGN’s 94% share of this tenement occurred in January 2014
4 EL2249 is a replacement EL for previous EL1384 and was granted to Anomaly Ltd on 11 November 2013
The information contained on pages 2 to 21 of this report relating to exploration results and mineral resources at Crater Mountain,
PNG is based on information compiled by Mr P Macnab, Non‐Executive Director of Crater Gold Mining Limited. Mr Macnab is a Fellow
of The Australian Institute of Geoscientists and has the relevant experience in relation to the mineralisation being reported upon to
qualify as a Competent Person as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves. Mr Macnab consents to the inclusion in the report of the matters based on his information in the form
and context in which it appears.
The information contained on pages 2 to 21 of this report that relates to exploration results at Croydon, Queensland is based on
information compiled by Mr J V McCarthy, MAusIMM, Consulting Geologist. Mr McCarthy is a Member of The Australasian Institute
of Mining and Metallurgy and has the relevant experience in relation to the mineralisation being reported upon to qualify as a
Competent Person as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and
Ore Reserves. Mr McCarthy consents to the inclusion in this report of the matters based on his information in the form and context
in which it appears.
“An application for a Mining Lease with a Proposal For Development
application was formally lodged with the Papua New Guinea Mineral
Resources Authority at the beginning of May 2014”
“The Company believes that gold can be extracted from the HGZ via a
simple process that requires modest capital with low operating costs”
Crater Gold Mining Limited
21
Directors’ Report
The Directors present their report on the consolidated entity (referred to hereafter as "the Group") consisting of Crater Gold Mining
Limited (referred to hereafter as "the Company") and its controlled entities for the year ended 30 June 2014.
Directors
The following persons were Directors of Crater Gold Mining Limited during the whole of the financial year and up to the date of this
report:
S W S Chan (Non‐executive Chairman)
G B Starr (Managing Director)
T M Fermanis (Non‐executive Director)
J D Collins‐Taylor (Alternate Director to T M Fermanis)
R P Macnab (Non‐executive Director)
R D Parker (Non‐executive Director)
D T Y Sun (Non‐executive Director)
Mr Lawrence Lee was appointed a Non‐executive Director of the Company on 6 June 2014.
Mr Collins‐Taylor resigned as an Alternate Director to Mr Fermanis on 16 September 2014.
Activities
The principal activities of the Group consist of the exploration, evaluation and exploitation of potential world class gold and other
base metal projects. Further details of the Group’s activities are included in the Review of Operation on pages 2 – 21 of this report.
Review of Operations and Results
The Group incurred a loss of $2,236,315 for the year ended 30 June 2014 (2013: loss of $3,060,824). Further details of the Group’s
operations are included on pages 2‐21 of this report.
Dividends
No dividends of the Company or any entity of the Group have been paid, declared or recommended since the end of the preceding
year. The Directors do not recommend the payment of any dividend for the year ended 30 June 2014.
Significant Changes in the State of Affairs
The Directors are not aware of any significant change in the state of affairs of the Company that occurred during the financial year
other than as reported elsewhere in the Annual Report.
Events Subsequent To Balance Date
As announced to the Market on 20 July 2014, the Company has undertaken a fully underwritten non‐renounceable pro rata Rights
Issue of one (1) convertible note for every one thousand (1,000) shares held at A$25.00 per convertible note to raise up to $3,454,750
before costs. Amongst other things, the funds raised from the Rights Issue were used to repay the Freefire loan plus accrued interest.
The Rights Issue was fully underwritten.
Likely Developments
Likely developments in the Group’s operations in future financial years and the expected results of those operations are referred to
on pages 2– 21.
Future financial performance and outcomes depend on a number of things such as the Group’s ability to continue attract funding
and/or one or more joint venture partners, or alternatively to be bought out by a suitor.
Material business risks that could adversely affect the Company’s financial performance include unavailability of funding and/or
inability to attract one or more joint venture partners; political risk in the Company’s overseas country of operation.
Crater Gold Mining Limited
22
Information on Directors and Secretary
The Directors and Secretary of the Company in office at the date of this report and their qualifications, experience and special
responsibilities are as follows:
Directors’ Report
S W S Chan (Non‐Executive Chairman), age 66
Mr Chan has been a Director of the Company since 29 January 2013 and was appointed
as Non‐Executive Chairman on 11 March 2013.
Mr Chan is a director and the controller of Freefire Technology Limited (“Freefire”), the
major shareholder in the Company.
Mr Chan received a Bachelor’s degree from the University of Manchester, UK in 1970
and qualified as a chartered accountant in 1973. He was the company secretary of
Yangtzekiang Garment Limited from 1974 to 1988 and has been a director of
Yangtzekiang Garment Limited since 1977. Mr Chan was appointed the Managing
Director of YGM Trading Limited from 1987 to 2006 and the Chief Executive Officer of
YGM Trading Limited from 2006 to 2010. He has been the Vice Chairman of the board
of YGM Trading Limited since 2010.
Mr Chan was formerly a Director of Hang Ten Group Holdings Limited (listed in Hong
Kong) from January 2003 to March 2012.
Mr Chan has an interest of 83,004,984 ordinary shares in the Company through his
control of Freefire Technology Limited and 500,000 options over ordinary shares in the
Company.
G B Starr BBus, CPA (Managing Director), age 49
Mr Starr has been a Director of the Company since 19 February 2008, initially as
Executive Chairman. On 11 March 2013 Mr Starr resigned as Executive Chairman and
was appointed Managing Director.
Mr Starr has over 30 years’ experience in corporate and operational financial
management, with the last 21 years focused on the resources and mining sector.
He is also currently a Non Executive Director of KBL Mining Limited (since November
2013). He has previously been Chief Executive Officer/Managing Director of Golden
China Resources Corporation, Michelago Limited and Emperor Mines Limited.
Mr Starr is a member of the Australian Society of Certified Practising Accountants and
a member of the Australian Institute of Company Directors.
Mr Starr was a director of Kenai Resources Limited from March 2011 to June 2013.
Mr Starr has an interest of 301,000 ordinary shares and 800,000 options over ordinary
shares in the Company.
T M Fermanis F Fin, MSAA (Non‐executive Director), age 51
Mr Fermanis has been a Director of the Company since 2 November 2009. Mr Fermanis
has extensive experience in stockbroking and has been an advisor since 1985 with
extensive experience in the resource sector. He has been involved in gold exploration
in PNG for a number of years.
Mr Fermanis is a member of the Audit Committee and of the Remuneration and
Nomination Committee.
Mr Fermanis has an interest in 587,000 ordinary shares and 500,000 options over
ordinary shares in the Company.
L K K Lee MCom, MAppFin, CPA (Non‐executive Director), age 54
Mr Lee was appointed a Non‐Executive Director on 6 June 2014.
Mr Lee received a Bachelor of Commerce degree and a Master of Commerce degree
from the University of New South Wales, Australia. He also holds a Master of Applied
Finance degree from the Macquarie University, Australia. He has over 25 years of
experience in finance, corporate finance, management, auditing and accounting. He
worked in an international accounting firm for several years and has worked as group
financial controller, chief financial officer and director of listed companies on the Hong
Kong Stock Exchange for over 10 years.
Mr Lee is a member of the Hong Kong Institute of Certified Public Accountants and a
member of CPA Australia.
Crater Gold Mining Limited
23
Directors’ Report
R P Macnab BSc (Geology) (Non‐executive Director), age 72
Mr Macnab has been a Director of the Company since 2 November 2009. Mr Macnab
has had a lifetime geological association with PNG including roles as the country’s
Government Geologist, and an independent geological contractor and consultant. He
discovered, or participated in the discovery of a long list of PNG minerals resources the
most significant of which is the world‐class Ladolam gold mine on Lihir Island. Mr
Macnab has had extensive worldwide experience in mineral exploration as well as
financing and developing mineral resource exploitation. Mr Macnab has maintained
his close links with PNG and continues to live on Buka Island, Autonomous Region of
Bougainville, PNG.
Mr Macnab has an interest in 800,000 options over ordinary shares in the Company.
R D Parker (Non‐executive Director), age 44
Mr Parker has been a Director of the Company since 12 March 2013.
Mr Parker lives in Hong Kong. He is a qualified Marine Engineer and Marine Industries
Manager having graduated from Southamptom Institute of Higher Education, Marine
Division, in Warsash, United Kingdom. Mr Parker is a professional Company Director.
Mr Parker has an interest in 85,365 ordinary shares and 500,000 options over ordinary
shares in the Company.
D T Y Sun (Non‐executive Director), age 67
Mr Sun has been a Director of the Company since 29 January 2013.
Mr Sun obtained a Bachelor of Economics from the University of Tasmania and held
management positions with the Ford Motor Company in Melbourne and in Brisbane,
as well as with Citibank NA and Lloyds Bank Plc in Hong Kong. He has been an executive
director of several listed companies in Hong Kong and has been engaged in advisory
services on strategic planning and corporate development, mainly in corporate finance,
since 1991.
Mr Sun has an interest in 500,000 options over ordinary shares in the Company.
J D Collins‐Taylor BA Bus, ACA (Alternate Director to Mr Fermanis), age 57
Mr Collins‐Taylor has been a Director since 20 October 2005. He is a Chartered
Accountant and was formerly with Deloitte Touche Tohmatsu for 12 years. Mr Collins‐
Taylor has worked in the private equity and venture capital fields in Asia since 1992.
He has extensive finance experience, and has been involved in a number of major
transactions involving companies listed on the London and Hong Kong Stock Exchanges.
Mr Collins‐Taylor is Chairman of the Audit Committee and of the Remuneration and
Nomination Committee.
Mr Collins‐Taylor has an interest of 172,364 ordinary shares and 500,000 options over
ordinary shares in the Company.
J A Lemon BA LLB (Hons), Grad Dip App Fin (Finsia), Grad Dip App Corp Gov, ACSA (Company Secretary)
Mr Lemon has been Company Secretary since 13 February 2006. Mr Lemon is a qualified solicitor and has held a number of positions
as Company Secretary and/or Legal Counsel with various companies, including roles with MIM Holdings Limited, General Electric
Company and Bank of Queensland Limited. Mr Lemon is currently company secretary of several ASX‐listed and other companies and
a director of another company. He was also formerly a director of several ASX‐listed companies.
Mr Lemon has an interest of 45,700 ordinary shares and 500,000 options over ordinary shares in the Company.
Directors’ Interests in Shares and Options
The Directors’ interests in shares and options of the Company are set out in section (d) of the Remuneration Report and in Note 24
in the financial report.
Crater Gold Mining Limited
24
Directors’ Report
Directors’ Meetings
The Company held 15 Board meetings, 2 Audit Committee meetings and 2 Remuneration and Nomination Committee meetings
during the year. The number of meetings attended by each Director was:
Name
S W S Chan
G B Starr
T M Fermanis
L K K Lee
R P Macnab
R D Parker
D T Y Sun
J D Collins‐Taylor *
Board
Audit Committee
Remuneration and Nomination
Committee
Eligible to
Attend
Attended
Eligible to
Attend
Attended
Eligible to
Attend
Attended
10
10
10
1
10
10
10
‐
10
10
10
1
7
10
10
‐
‐
‐
2
‐
‐
‐
‐
2
‐
‐
2
‐
‐
‐
‐
2
‐
‐
2
‐
‐
‐
‐
2
‐
‐
2
‐
‐
‐
‐
2
The Eligible to Attend column represents the number of meetings held during the time the Director held office or was a member of
the Committee during the year.
* Alternate Director, member and Chairman of both the Audit Committee and the Remuneration and Nomination Committee.
Resigned from all positions on 16 September 2014.
Environmental Regulation and Performance
The Group is subject to environmental regulation in relation to its former mining activities in North Queensland by the Environmental
Protection Agency of Queensland. The Company complies with the Mineral Resources Act (1989) and Environmental Protection Act
(1994). It is also subject to the Environmental Act (2000) (Papua New Guinea) on its activities in PNG.
Shares under Option
Unissued ordinary shares of the Company under option at the date of this report are as follows:
Expiry date
05 October 2014
08 May 2015
30 June 2015
30 June 2015
30 September 2015
30 September 2015
Issue price of shares ($)
$3.37
$1.81
$3.50
$4.50
$0.25
$0.25
Number of shares under option
6,223
130,000
42,500
85,000
3,600,000
2,600,000
Type
Unlisted
Unlisted
Unlisted
Unlisted
Unlisted
Unlisted
Option holders do not have any rights under the options to participate in any share issue of the Company.
Shares Issued on the Exercise of Options
No shares have been issued on the exercise of options during the course of the year (2013: 51,846) or subsequent to the year end.
Indemnification and Insurance of Directors
During the year, the Company paid premiums of $17,506 (2013: $15,915) to insure the Directors and Officers of the Company in
relation to all liabilities and expenses arising as a result of the performance of their duties in their respective capacities to the extent
permitted by law.
Indemnity and insurance of auditor
The company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the company
or any related entity against a liability incurred by the auditor.
During the financial year, the company has not paid a premium in respect of a contract to insure the auditor of the company or any
related entity.
Crater Gold Mining Limited
25
Directors’ Report
Proceedings on behalf of the company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the
company, or to 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 part of those proceedings.
Non‐Audit Services
The Company may decide to engage the auditor of the Company, BDO, on assignments additional to their statutory audit duties
where the auditor’s expertise and experience with the Company are important.
No amounts were paid or are payable to BDO for non‐audit services provided during the year.
Remuneration Report (Audited)
The information provided under headings (a) ‐ (d) is provided in accordance with section 300A of the Corporations Act 2001. These
disclosures have been audited.
a) Principles used to determine the nature and amount of remuneration
The Company has a Remuneration and Nomination Committee. The Board has adopted a Remuneration and Nomination Policy
which provides advice on remuneration and incentive policies and practices and specific recommendations on remuneration
packages and other terms of employment for executive Directors, other senior executives and Non‐executive Directors. The
Corporate Governance Statement provides further information on the role of this Committee.
Executive Remuneration
The remuneration policy ensures that contracts for services are reviewed on a regular basis and properly reflect the duties and
responsibilities of the individuals concerned. The executive remuneration structure is based on a number of factors including relevant
market conditions, knowledge and experience with the industry, organisational experience, performance of the Company and that
the remuneration is competitive in retaining and attracting motivated people. There is no guaranteed pay increases included in the
senior executives' contracts.
Non‐executive Directors
Fees and payments to Non‐executive Directors reflect the demands which are made on, and the responsibilities of, the Directors.
Non‐executive Directors’ fees and payments are reviewed annually by the Board.
Additional information
The earnings of the consolidated entity for the five years to 30 June 2014 are summarised below:
Sales revenue
EBITDA
EBIT
Profit / (loss) after income tax
2014
$‘000
2013
$‘000
2012
$‘000
2011
$‘000
2010
$‘000
Nil
(2,249)
(2,236)
(2,236)
Nil
(3,053)
(3,061)
(3,061)
Nil
(3,079)
(3,087)
(3,087)
Nil
(4,929)
(4,937)
(4,937)
Nil
(1,277)
(1,280)
(1,280)
The factors that are considered to affect total shareholders return ('TSR') are summarised below:
Share price at financial year end ($)
Total dividends per share (cents per share)
2014
$0.08
Nil
2013
$0.001
Nil
2012
$0.007
Nil
2011
$0.034
Nil
2010
$0.023
Nil
Basic earnings per share (cents per share)
(1.806)
(7.099)
(0.212)
(0.474)
(0.823)
Directors' Fees
The current base remuneration was last reviewed with effect from 26 March 2009.
Non‐executive Director’s fees are determined within an aggregate Directors’ fee pool limit, which is periodically recommended for
approval by shareholders. The maximum currently stands at $200,000 per annum and was approved by shareholders at the Annual
General Meeting on 23 November 2010.
The following fees have applied for the year ended 30 June 2014:
Non‐executive Director’s base fee ‐ $35,000 per annum.
Work undertaken by the Non‐executive Directors, in addition to that provided in their role as Non‐executive Directors is
charged at $1,200 per day or pro‐rata for part thereof.
Audit Committee and the Remuneration and Nomination Committee – no additional fees payable.
Except for retirement benefits provided by the superannuation guarantee legislation, there are no retirement benefits for the Non‐
executive Directors.
Crater Gold Mining Limited
26
Directors’ Report
b) Details of remuneration
Directors and the key management personnel (as defined in section 300A Corporations Act 2001) of the Company and the Group are
set out in the following tables. The key management personnel of the Company and the Group includes the Directors as per page 23
and 24 and the following executive officers who have authority and responsibility for the planning, directing and controlling the
activities of the Group.
Director / key management
person
2014
Non‐executive Directors
S W S Chan
T M Fermanis
L K K Lee 9
R P Macnab
R D Parker
D T Y Sun
J D Collins‐Taylor 2
Subtotal
Executive Directors
G B Starr, Managing
Director
Other key management
personnel
G R Boyce
R Johnson
J A Lemon 6
J McCarthy
Total
2013
Non‐executive Directors
S W S Chan 1
J D Collins‐Taylor 2
T M Fermanis
R P Macnab
R D Parker 3
J S Spence 4
D T Y Sun 5
Subtotal
Executive Directors
G B Starr, Managing
Director
Other key management
personnel
G R Boyce
R Johnson
J A Lemon 6
J McCarthy
T Shelley 7
Total
Short‐term
Base
Fees/salary
35,000
35,000
2,301
35,000
35,000
35,000
35,000
212,301
Post‐
employment
Share‐based payments
Total
Other 8
Superannuation
Options
‐
144,000
‐
102,016
‐
‐
‐
246,016
‐
‐
‐
‐
‐
‐
‐
‐
25,611
25,611
‐
40,978
25,611
25,611
25,611
169,033
% of
total
42.3%
12.5%
‐
23.0%
42.3%
42.3%
42.3%
60,611
204,611
2,301
177,994
60,611
60,611
60,611
627,350
300,000
‐
27,750
40,978
11.1%
368,728
200,059
245,190
63,278
14,500
1,035,328
14,778
35,000
35,000
35,000
10,694
24,111
14,778
169,361
‐
‐
‐
‐
246,016
‐
18,600
156,000
85,496
‐
44,846
‐
304,942
‐
‐
‐
‐
27,750
15,367
25,611
15,367
‐
266,356
7.1%
9.5%
19.5%
‐
215,426
270,801
78,645
14,500
1,575,450
‐
‐
‐
‐
‐
‐
‐
‐
5,900
5,900
9.9%
3.0%
5,900
7.9%
17,700
14,778
59,500
196,900
120,496
10,694
74,857
14,778
492,003
300,000
‐
27,000
15,734
4.6%
342,734
182,497
104,165
86,666
45,318
49,500
937,507
‐
‐
‐
‐
‐
304,942
‐
‐
‐
‐
‐
27,000
‐
‐
‐
‐
‐
33,434
‐
‐
‐
‐
‐
182,497
104,165
86,666
45,318
49,500
1,302,883
1. Mr S W S Chan was appointed a Director on 29 January 2013.
2. Mr J D Collins‐Taylor resigned as a Director on 9 March 2013 and was appointed as an Alternate Director to Mr Fermanis on 11 March 2013. He
resigned as an Alternate Director to Mr Fermanis on 16 September 2014.
3. Mr R D Parker was appointed a Director on 11 March 2013.
4. Mr J S Spence resigned as a Director on 9 March 2013.
Crater Gold Mining Limited
27
Directors’ Report
5. Mr D T Y Sun was appointed a Director on 29 January 2013.
6. Mr Lemon acts in a part‐time capacity.
7. Mr T Shelley was appointed Country Manager Papua New Guinea on 25 May 2012 and resigned on 30 September 2012.
8. Other relates to services provided by Directors. Refer to Note 24 for details.
9. Mr Lee was appointed a Director on 6 June 2014.
No other Directors, officers or executives of the Company received any share‐based payments, other than those shown in the
remuneration table above.
All remuneration is on fixed rates. Refer section (c) of this remuneration report. There were no performance based payments made
during the year.
A summary of Director and key management personnel remuneration follows.
Remuneration component
Short term
Post‐employment benefits
Share‐based payments
Total
2014
$
2013
$
1,281,344
1,242,449
27,750
266,356
27,000
33,434
1,575,450
1,302,883
c) Service agreements
On appointment to the Board, all Non‐executive Directors enter into a service agreement with the Company in the form of a letter
of appointment. The letter summarises the Board policies and terms, including compensation, relevant to the office of Director.
Remuneration and other terms of employment for the Executive Directors and other key management personnel are also formalised
in service agreements. Major provisions of the agreements relating to remuneration are set out below. There are no current service
agreements that contain incentive clauses and so future remuneration is not necessarily dependent on the performance results of
the Company:
Key management personnel
Commencement date
26 March 2010
Term of
agreement
No fixed term
Base salary
Superannuation
$300,000 pa 9.25% of base salary
G B Starr
Managing Director
G Boyce
Chief Financial Officer
R Johnson
General Manager – PNG
J A Lemon
Company Secretary
J McCarthy
Project Manager ‐ Croydon
1 November 2011
No fixed term
$925 pd
1 January 2013
No fixed term
$250,000 pa
13 February 2006
No fixed term
$165 ph
23 September 2011
No fixed term
$1,000 pd
‐
‐
‐
‐
Period of
notice
12 months
4 weeks
4 weeks
4 weeks
4 weeks
d) Equity based compensation
Options granted as part of remuneration for the year ended 30 June 2014
The Employee Share Option Plan (“Plan”) is designed to provide long term incentives for executives to deliver long term shareholder
returns. Participation in the plan is at the Board’s discretion and no individual has a contractual right to participate in the Plan or to
receive any guaranteed benefits.
Share‐based compensation for the year ended 30 June 2014
No shares were issued to Directors and other key management personnel as part of compensation during the year ended 30 June
2014 (2013: Nil)
Crater Gold Mining Limited
28
Options and rights over equity instruments
The number of options over ordinary shares in the Company held during the financial year by each Director and key management
personnel of the Group, including their personally related parties are set out below:
Directors’ Report
Name
2014
Directors
S W S Chan
G B Starr
T M Fermanis
L K K Lee
R P Macnab
R D Parker
D T Y Sun
J D Collins‐Taylor
Key management personnel
G R Boyce
R Johnson
J A Lemon
J V McCarthy
2013
Directors
S W S Chan
G B Starr
J D Collins‐Taylor
T M Fermanis
R P Macnab
R D Parker
J S Spence
D T Y Sun
Key management personnel
G R Boyce
R Johnson
J A Lemon
J V McCarthy
T Shelley
Balance at the
start of the
year
Granted during
the year as
compensation
Exercised
during the year
Other changes
during the year
Balance at the
end of the year
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
10,000,000
3,000,000
1,500,000
‐
‐
1,500,000
‐
‐
‐
2,500,000
‐
‐
500,000
800,000
500,000
‐
800,000
500,000
500,000
500,000
300,000
500,000
300,000
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
(10,000,000)
(3,000,000)
(1,500,000)
‐
‐
(1,500,000)
‐
‐
‐
(2,500,000)
‐
‐
500,000
800,000
500,000
‐
800,000
500,000
500,000
500,000
300,000
500,000
300,000
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
Options granted carry no dividend or voting rights.
Crater Gold Mining Limited
29
Share holdings
The number of shares in the Company held during the financial year by each Director and key management personnel of the Group,
including their personally related parties are set out below:
Directors’ Report
Name
2014
Directors
S W S Chan
G B Starr
T M Fermanis
L K K Lee
R P Macnab
R D Parker
D T Y Sun
J D Collins‐Taylor
Key management personnel
G R Boyce
R Johnson
J A Lemon
J V McCarthy
2013
Directors
S W S Chan
G B Starr
J D Collins‐Taylor
T M Fermanis
R P Macnab
R D Parker
J S Spence
D T Y Sun
Key management personnel
G R Boyce
R Johnson
J A Lemon
J V McCarthy
T Shelley
Balance at the
start of the
year
Granted during
the year as
compensation
Received during
the year on
exercise of
options
Other changes
during the year
Balance at the
end of the year
64,531,868
301,000
571,952
‐
‐
‐
‐
134,864
‐
‐
45,700
‐
‐
107,500
34,864
563,312
‐
‐
577,500
‐
‐
‐
5,700
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
18,473,116
‐
15,048
‐
‐
85,365
‐
37,500
58,823
‐
‐
‐
64,531,868
193,500
100,000
8,640
‐
‐
189,600
‐
‐
40,000
‐
‐
83,004,984
301,000
587,000
‐
‐
85,365
‐
172,364
58,823
‐
45,700
‐
64,531,868
301,000
134,864
571,952
‐
‐
767,100
‐
‐
45,700
‐
‐
In October 2013 the Company consolidated its issued share capital on a 1 for 100 basis. Both the opening balance of equity securities
issued as at 1 July 2013 and the comparative figures for the full year ended 30 June 2013 have been restated to reflect the 1 for 100
share consolidation
This concludes the Remuneration Report, which has been audited.
Crater Gold Mining Limited
30
Directors’ Report
Auditor’s Independence Declaration
A copy of the auditors’ independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 35.
Corporate Governance
The Board of Directors is responsible for the Corporate Governance of the Group. The Board is committed to achieving the highest
standards of corporate behaviour and accountability. The Company's corporate governance statement is contained in the following
section of this report.
Signed for and on behalf of the Board in accordance with a resolution of the Directors.
On behalf of the Directors
G B Starr
Managing Director
Sydney
18 September 2014
T M Fermanis
Director
“The key outcome of the drilling results received to date is that they
highlight the very strong correlation with the geology and grades
encountered directly above in the underground development. Excellent
results are all in the planned mining zone”
Crater Gold Mining Limited
31
Corporate Governance Statement
The Listing Rules of the Australian Securities Exchange require that the Company’s Annual Report contain a statement
disclosing the extent to which the Company has followed the ASX Corporate Governance Council’s Corporate
Governance Recommendations (“Recommendations”) during the financial year. There are 30 Recommendations,
contained within 8 Corporate Governance “Principles”, and all are addressed in this Statement.
The Recommendations are guidelines rather than prescriptions, and a company has the flexibility not to adopt a
particular Recommendation if the company considers it inappropriate to the company’s particular circumstances,
provided the company explains why it has not followed the particular Recommendation.
Principle 1 – Lay solid foundations for management and oversight
The Corporate Governance Charter adopted by the Board (which can be found on the Company’s website) (“the Corporate
Governance Charter”) provides that the Board’s broad functions are to:
chart strategy and set financial and other targets for the Company and its controlled entities (“the Group”);
monitor the implementation and execution of strategy and performance against financial and other targets;
appoint and oversee the performance of executive management; and
generally take an effective leadership role in relation to the Group.
The Board evaluates the performance of senior executives on an ongoing basis.
The Company’s executive management is charged with managing and directing the day‐to‐day operations of the Company’s business.
Principle 2 – Structure the Board to add value
For the majority of the year the Board consisted of six members comprises five non‐executive directors and one executive director.
In the latter part of the year an additional non‐executive director was appointed. The names, skills and experience of the Directors
in office at the date of this Statement and the period of office of each Director are set out in the Directors' Report. The Directors
believe that the composition of the Board is appropriate for its functions and responsibilities.
Based on the guidelines accompanying the Recommendations, for the majority of the reporting period the Board comprised two
independent directors (Messrs Sun and Parker) and four non‐independent directors. Of the four non‐independent directors,
Chairman Sam Chan is the sole director and shareholder of a substantial shareholder of the Company (and therefore not considered
independent according to the guidelines accompanying the Recommendations), Greg Starr is the Company’s Managing Director,
employed in an executive capacity, and Peter Macnab and Tom Fermanis are material suppliers of professional consulting services
to the Company. In the latter part of the year a third independent director, Mr Lawrence Lee, was appointed to the Board. The
Company recognises that during the year a majority of its directors were not independent but believe that the Board composition
was appropriate given the size and nature of the Company’s operations and also in the case of Messrs Macnab and Fermanis the
particular skills and experience with the Company which they bring to bear in providing non‐Director services to the Company.
During the reporting period the Company’s chair (Sam Chan) was not an independent director for the reason given above, however
the Company believes that it is appropriate in the Company’s circumstances that Mr Chan is Chair given the size of his shareholding
in the Company, the financial commitment he has made to and financial stake he has in the Company, and the breadth of business
experience and contacts he brings to the role.
During the reporting period the Company had a Remuneration & Nomination Committee which consisted of two members, the
Committee’s chair non‐Director James Collins‐Taylor (a former non‐executive, independent director of the Company), and non‐
independent Director Tom Fermanis. The Committee has less than the three members recommended in the Recommendations
because it believes the smaller number is appropriate given the Company’s size and the nature of the Company’s operations. The
Committee has a charter which appears on the Company's website (www.cratergold.com.au).
The Board evaluates the performance of itself, its committees and individual Directors. The Remuneration and Nomination
Committee is also charged with making recommendations to the Board in this regard. During the reporting period the Board
undertook a formal evaluation of its performance.
Crater Gold Mining Limited
32
Corporate Governance Statement
Principle 3 – Promote ethical and responsible decision making
The Company is firmly committed to ethical business practices, a safe workplace and compliance with the law. Fair dealing with the
Company’s suppliers, advisors, customers, employees and competitors is expected at all levels of the organisation. All Directors,
executive management and employees are expected to act with integrity to enhance the performance of the Company.
The Company’s Corporate Governance Charter contains a code of conduct which provides a guide to the Company’s Directors as to
the practices necessary to maintain confidence in the Company’s integrity and ethical practices.
The Company is a stated equal opportunity employer, however has not established a policy concerning diversity as such as the
Company does not believe it would be appropriate for the Company at this time given the Company’s stage of development, the
industry in which the Company operates, the Company’s size, and the Company’s circumstances generally. The Board has not either
set measurable objectives for achieving gender diversity in accordance with a diversity policy for the foregoing reasons. During the
reporting period there were no women on the Company’s board or in a senior executive position. The proportion of women
employees in the whole organisation was 0% during the reporting period, although to put things in perspective the Company had
only one employee during the reporting period, the other personnel being contractors to the Company.
Principle 4 – Safeguard integrity in financial reporting
The Board requires that prior to adoption of the annual accounts the Chief Executive Officer and any Chief Financial Officer state in
writing to the Board that the consolidated financial statements of the Company and its controlled entities present a true and fair
view in all material respects of the Group’s financial condition and operational results and are in accordance with applicable
accounting standards.
The Audit Committee is a committee of the Board. It is the Audit Committee’s responsibility to ensure that an effective internal
control framework exists within the Company. This includes internal controls to deal with both the effectiveness and efficiency of
significant business processes, the safeguarding of assets, the maintenance of proper accounting records, and the reliability of
financial information, as well as non‐financial considerations such as the benchmarking of operational key performance indicators.
During the reporting period the Audit Committee consisted of two members, the Committee’s chair non‐Director James Collins‐Taylor
(a former non‐executive, independent director of the Company), and non‐independent Director Tom Fermanis. The Chairman of the
Audit Committee was not Chairman of the Board. The Board believes that, given the Company’s size and the financial acumen of the
two Committee members, two is an adequate number for the Committee at this time.
The Audit Committee has a formal written charter which sets out the Committee’s role and responsibilities, composition, structure
and membership requirements.
Details of the names and qualifications of the Audit Committee members and meetings attended by them are contained in the
Directors’ Report. The Audit Committee Charter is published on the Company’s website. The Audit Committee Charter charges the
Audit Committee with responsibility for recommending to the Board the appointment, evaluation and termination of the external
auditor, and reviewing and discussing with the external auditor all significant relationships the auditor has with the Company in order
to ensure independence of the auditor.
The Company’s current auditor complies with its obligations under the Corporations Act 2001 s324DA and consequently an individual
who plays a significant role in the audit of the Company will rotate off the audit after five years and will not participate in the audit
again for a further two years.
Principle 5 – Make timely and balanced disclosure
The Company has established policies and procedures designed to ensure compliance with the ASX Listing Rule requirements so that
announcements are made in a timely manner, are factual, do not omit material information, are balanced, and are expressed in a
clear and objective manner so as to allow investors to assess the information when making investment decisions. The Managing
Director and Company Secretary are responsible for interpreting and monitoring the Company's disclosure policy and the Company
Secretary is responsible for all communications with the ASX.
The Company's Corporate Governance Charter contains procedures relating to timely and balanced disclosure.
ASX announcements are also published on the Company's website.
Principle 6 – Respect the rights of shareholders
The Company aims to keep shareholders informed of the Company's performance and all major developments on an ongoing basis.
The Company regularly communicates to its shareholders in a timely manner through a communications strategy that consists of:
relevant disclosures made in accordance with ASX Listing Rule disclosure requirements;
making documents that have been released publicly available on the Company's website; and
communicating with shareholders electronically through the Company's web‐based application.
The Company’s website contains a corporate governance section that includes copies of charters adopted by the Company.
The Company routinely requests that the external auditor attend the Company's annual general meeting and be available to answer
shareholder questions about the conduct of the audit and the preparation and content of the auditor’s report.
Crater Gold Mining Limited
33
Corporate Governance Statement
Principle 7 – Recognise and manage risk
The Company recognises that it is necessary to undertake activities that involve a level of risk in order to achieve high levels of
performance. The Board and Audit Committee are responsible for the oversight of the Group's risk management and control
framework.
The size of the Company and the comprehensive nature of its reporting systems have led the Board to conclude that a formal internal
audit process would not be cost effective nor reduce risk. The Company has established policies for:
the oversight of material business risks; and
the Management of material business risks.
The Board believes that there are adequate controls to ensure that financial reports provide a truthful and factual position for the
Company.
The Managing Director and the Chief Financial Officer are required to make an annual written statement to the Board in accordance
with section 295A of the Corporations Act that the section 295A declaration is founded on a sound system of risk management and
internal control, and that the system is operating effectively in all material aspects in relation to financial risk.
Principle 8 – Remunerate fairly and responsibly
The Company had a Remuneration & Nomination Committee during the reporting period which consisted of two members, the
Committee’s chair non‐Director James Collins‐Taylor (a former non‐executive, independent director of the Company), and non‐
independent Director Tom Fermanis. Details of the names and qualifications of the Committee members and meetings attended by
them are contained in the Directors’ Report. The Committee has a charter which is published on the Company's website.
It is the objective of Crater Gold Mining Limited to provide maximum stakeholder benefit from the retention of a high quality Board
and executive team by remunerating Directors and key executives fairly and appropriately with reference to relevant employment
market conditions. The expected outcomes of the remuneration policy are:
retention and motivation of key executives;
attraction of quality management to the Company; and
performance incentives which allow executives to share the rewards of the success of the Company.
The Company’s non‐executive Directors receive Director’s fees. Non‐executive Directors are not entitled to any retiring allowance
payable upon their retirement as a Director of the Company. The details of the Directors’ and senior executives’ remuneration are
set out in the Directors’ Report.
Crater Gold Mining Limited
34
Auditor’s Independence Declaration
Crater Gold Mining Limited
35
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
For the Financial Year ended 30 June 2014
Continuing Operations
Revenue
Profit on sale of other financial assets
Interest income
Total income
Less:
Administration expense
Corporate compliance expense
Exploration and evaluation costs written off
Other expense
Financing expense
Loss before income tax expenses from continuing operations
Income tax expense
Loss for the year after income tax expense
Other comprehensive income
Notes
5
5
5
6
6
14
6
7
June
2014
$
‐
438,251
39,164
477,415
June
2013
$
‐
‐
25,547
25,547
(1,776,094)
(1,581,756)
(103,678)
(129,627)
(793,100)
‐
(9,724)
(925,359)
(31,134)
(449,629)
(2,236,315)
(3,060,824)
‐
‐
(2,236,315)
(3,060,824)
Exchange differences on translating foreign operations
21
(2,474,075)
112,739
Total comprehensive income for the year
(4,710,390)
(2,948,085)
Loss per share from continuing operations attributable to the ordinary equity holders of the Company:
Basic loss ‐ cents per share
Diluted loss ‐ cents per share
8
8
(1.806)
(1.806)
(7.099)
(7.099)
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the
accompanying notes.
Crater Gold Mining Limited
36
Consolidated Statement of Financial Position
As at 30 June 2014
Notes
June
2014
$
June
2013
$
10
11
12
13
14
15
16
17
18
19
20
21
21
333,986
3,422,826
‐
1,041,501
172,200
50,951
506,186
4,515,278
45,437
33,854
30,212,032
27,664,200
836,418
326,163
31,093,887
28,024,217
31,600,073
32,539,495
718,566
129,278
1,500,000
1,075,849
48,270
‐
51,101
38,398
2,398,945
1,162,517
2,398,945
1,162,517
29,201,128
31,376,978
50,768,612
48,565,624
1,278,317
3,420,840
(22,845,801)
(20,609,486)
29,201,128
31,376,978
ASSETS
Current assets
Cash and cash equivalents
Other financial assets
Trade and other receivables
Total current assets
Non‐current assets
Other financial assets
Exploration and evaluation
Plant and equipment
Total non‐current assets
Total Assets
LIABILITIES
Current liabilities
Trade and other payables
Related party payables
Interest‐bearing liabilities
Employee benefits
Total current liabilities
Total liabilities
Net Assets
EQUITY
Contributed equity
Reserves
Accumulated losses
Total Equity
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
Crater Gold Mining Limited
37
Consolidated Statement of Changes in Equity
For the Financial Year ended 30 June 2014
Contributed
equity
$
Reserves
$
Accumulated
losses
$
Notes
Total
$
Balance at 1 July 2013
48,565,624
3,420,840
(20,609,486)
31,376,978
Movement in share based payment reserve
Issue of share capital
Transaction costs
Transactions with owners
Profit (loss) for the period
Other comprehensive income
Exchange differences on translating foreign operations
Total comprehensive income for the period
21
20
20
‐
331,552
2,382,965
(179,977)
‐
‐
2,202,988
331,552
‐
‐
‐
‐
331,552
2,382,965
(179,977)
2,534,540
‐
‐
‐
‐
(2,236,315)
(2,236,315)
(2,474,075)
‐
(2,474,075)
(2,474,075)
(2,236,315)
(4,710,390)
Balance at 30 June 2014
50,768,612
1,278,317
(22,845,801)
29,201,128
Balance at 1 July 2012
37,030,487
3,217,270
(17,548,662)
22,699,095
Movement in share based payment reserve
Issue of share capital
Transaction costs
Transactions with owners
Profit (loss) for the period
Other comprehensive income
Exchange differences on translating foreign operations
Total comprehensive income for the period
21
20
20
‐
90,831
12,730,197
(1,195,060)
‐
‐
11,535,137
90,831
‐
‐
‐
‐
90,831
12,730,197
(1,195,060)
11,625,968
‐
‐
‐
‐
(3,060,824)
(3,060,824)
112,739
‐
112,739
112,739
(3,060,824)
(2,948,085)
Balance at 30 June 2013
48,565,624
3,420,840
(20,609,486)
31,376,978
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
Crater Gold Mining Limited
38
Consolidated Statement of Cash Flows
For the Financial Year ended 30 June 2014
June
2014
$
June
2013
$
Notes
‐
‐
(1,926,169)
(1,394,906)
39,164
(31,134)
25,547
(256,458)
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Interest paid
Net cash used in operating activities
30
(1,918,139)
(1,625,817)
Cash flows from investing activities
Purchases of property plant and equipment
Payments for exploration and evaluation
Proceeds from sale of other financial assets
Refunds of and payments for security deposit
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of ordinary shares and options
Share issue costs
Proceeds from borrowings
Repayment of convertible notes
Net cash provided by financing activities
Net increase/(decrease) in cash held
Cash at the beginning of the period
Effects of foreign exchange movements on cash transactions and balances
Cash at the end of the period
(788,628)
(211,776)
(5,195,107)
(5,104,552)
1,479,751
(11,583)
‐
2,770
(4,515,567)
(5,313,558)
2,182,965
11,430,563
(179,978)
(1,195,060)
1,500,000
‐
‐
(315,000)
3,502,987
9,920,503
(2,930,719)
2,981,128
3,422,826
(158,121)
479,067
(37,369)
333,986
3,422,826
10
10
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
Crater Gold Mining Limited
39
Notes to the Financial Statements
1
Summary of Significant Accounting Policies
Crater Gold Mining Limited (the “Company”) and its legal subsidiaries together are referred to in this financial report as the Group or
the Consolidated Entity.
Details of the principal accounting policies adopted in the preparation of the financial report are set out below. These policies have
been consistently applied to all years presented, unless otherwise stated.
Crater Gold Mining Limited is a for profit public company, limited by shares and domiciled in Australia.
a. Basis of preparation
This general purpose financial report has been prepared in accordance with Australian Accounting Standards (AASB), Australian
Accounting Interpretation, and other authoritative pronouncements of the Australian Accounting Standards Board and the
Corporations Act 2001. These Financial Statements also comply with International Reporting Standards as issued by the International
Accounting Standards (IASB).
New, revised or amending Accounting Standards and Interpretations adopted
The consolidated entity has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the
Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.
Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early adopted
Any significant impact on the accounting policies of the consolidated entity from the adoption of these Accounting Standards and
Interpretations are disclosed below. The adoption of these Accounting Standards and Interpretations did not have any significant
impact on the financial performance or position of the consolidated entity.
The following Accounting Standards and Interpretations are most relevant to the consolidated entity:
AASB 10 Consolidated Financial Statements
The consolidated entity has applied AASB 10 from 1 July 2013, which has a new definition of 'control'. Control exists when
the reporting entity is exposed, or has the rights, to variable returns from its involvement with another entity and has the
ability to affect those returns through its 'power' over that other entity. A reporting entity has power when it has rights that
give it the current ability to direct the activities that significantly affect the investee's returns. The consolidated entity not
only has to consider its holdings and rights but also the holdings and rights of other shareholders in order to determine
whether it has the necessary power for consolidation purposes.
AASB 11 Joint Arrangements
The consolidated entity has applied AASB 11 from 1 July 2013. The standard defines which entities qualify as joint
arrangements and removes the option to account for joint ventures using proportional consolidation. Joint ventures, where
the parties to the agreement have the rights to the net assets are accounted for using the equity method. Joint operations,
where the parties to the agreements have the rights to the assets and obligations for the liabilities, will account for its share
of the assets, liabilities, revenues and expenses separately under the appropriate classifications.
AASB 12 Disclosure of Interests in Other Entities
The consolidated entity has applied AASB 12 from 1 July 2013. The standard contains the entire disclosure requirement
associated with other entities, being subsidiaries, associates, joint arrangements (joint operations and joint ventures) and
unconsolidated structured entities. The disclosure requirements have been significantly enhanced when compared to the
disclosures previously located in AASB 127 'Consolidated and Separate Financial Statements', AASB 128 'Investments in
Associates', AASB 131 'Interests in Joint Ventures' and Interpretation 112 'Consolidation ‐ Special Purpose Entities'.
AASB 13 Fair Value Measurement and AASB 2011‐8 Amendments to Australian Accounting Standards arising from AASB 13
The consolidated entity has applied AASB 13 and its consequential amendments from 1 July 2013. The standard provides a
single robust measurement framework, with clear measurement objectives, for measuring fair value using the 'exit price' and
provides guidance on measuring fair value when a market becomes less active. The 'highest and best use' approach is used
to measure non‐financial assets whereas liabilities are based on transfer value. The standard requires increased disclosures
where fair value is used.
AASB 119 Employee Benefits (September 2011) and AASB 2011‐10 Amendments to Australian Accounting Standards arising
from AASB 119 (September 2011)
The consolidated entity has applied AASB 119 and its consequential amendments from 1 July 2013. The standard eliminates
the corridor approach for the deferral of gains and losses; streamlines the presentation of changes in assets and liabilities
arising from defined benefit plans, including requiring remeasurements to be presented in other comprehensive income; and
enhances the disclosure requirements for defined benefit plans. The standard also changed the definition of short‐term
employee benefits, from 'due to' to 'expected to' be settled within 12 months. Annual leave that is not expected to be wholly
settled within 12 months is now discounted allowing for expected salary levels in the future period when the leave is expected
to be taken.
Crater Gold Mining Limited
40
Notes to the Financial Statements
AASB 2012‐2 Amendments to Australian Accounting Standards ‐ Disclosures ‐ Offsetting Financial Assets and Financial
Liabilities
The consolidated entity has applied AASB 2012‐2 from 1 July 2013. The amendments enhance AASB 7 'Financial Instruments:
Disclosures' and requires disclosure of information about rights of set‐off and related arrangements, such as collateral
agreements. The amendments apply to recognised financial instruments that are subject to an enforceable master netting
arrangement or similar agreement.
AASB 2012‐5 Amendments to Australian Accounting Standards arising from Annual Improvements 2009‐2011 Cycle
The consolidated entity has applied AASB 2012‐5 from 1 July 2013. The amendments affect five Australian Accounting
Standards as follows: Confirmation that repeat application of AASB 1 'First‐time Adoption of Australian Accounting Standards'
is permitted; Clarification of borrowing cost exemption in AASB 1; Clarification of the comparative information requirements
when an entity provides an optional third column or is required to present a third statement of financial position in
accordance with AASB 101 'Presentation of Financial Statements'; Clarification that servicing of equipment is covered by AASB
116 'Property, Plant and Equipment', if such equipment is used for more than one period; clarification that the tax effect of
distributions to holders of equity instruments and equity transaction costs in AASB 132 'Financial Instruments: Presentation'
should be accounted for in accordance with AASB 112 'Income Taxes'; and clarification of the financial reporting requirements
in AASB 134 'Interim Financial Reporting' and the disclosure requirements of segment assets and liabilities.
AASB 2012‐10 Amendments to Australian Accounting Standards ‐ Transition Guidance and Other Amendments
The consolidated entity has applied AASB 2012‐10 amendments from 1 July 2013, which amends AASB 10 and related
standards for the transition guidance relevant to the initial application of those standards. The amendments clarify the
circumstances in which adjustments to an entity's previous accounting for its involvement with other entities are required
and the timing of such adjustments.
AASB 2011‐4 Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel Disclosure
Requirement
The consolidated entity has applied 2011‐4 from 1 July 2013, which amends AASB 124 'Related Party Disclosures' by removing
the disclosure requirements for individual key management personnel ('KMP'). Corporations and Related Legislation
Amendment Regulations 2013 and Corporations and Australian Securities and Investments Commission Amendment
Regulation 2013 (No.1) now specify the KMP disclosure requirements to be included within the directors' report.
Historical cost convention
The financial report has been prepared under the historical cost convention, as modified by the revaluation of available‐for‐sale
financial assets, financial assets and liabilities at fair value through the statement of comprehensive income and certain classes of
plant and equipment.
Critical accounting estimates
The preparation of the financial report in conformity with Accounting Standards requires the use of certain critical accounting
estimates. It also requires management to exercise its judgment in the process of applying the Group’s accounting policies. The
areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial
statements are disclosed in note 2.
b. Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated entity only.
Supplementary information about the parent entity is disclosed in note 29.
c. Principles of consolidation
Subsidiaries
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of the Company or parent entity as at
30 June 2014 and the results of all subsidiaries for the year then ended.
Subsidiaries are all those entities over which the consolidated entity has control. The consolidated entity controls an entity when
the consolidated entity 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 to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which
control is transferred to the consolidated entity. They are de‐consolidated from the date that control ceases.
A list of consolidated entities is contained in note 28 to the financial statements.
Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated entity are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting
policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the consolidated
entity.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest, without
the loss of control, is accounted for as an equity transaction, where the difference between the consideration transferred and the
book value of the share of the non‐controlling interest acquired is recognised directly in equity attributable to the parent.
Crater Gold Mining Limited
41
Notes to the Financial Statements
Non‐controlling interest in the results and equity of subsidiaries are shown separately in the statement of profit or loss and other
comprehensive income, statement of financial position and statement of changes in equity of the consolidated entity. Losses incurred
by the consolidated entity are attributed to the non‐controlling interest in full, even if that results in a deficit balance.
Where the consolidated entity loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non‐
controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The consolidated
entity recognises the fair value of the consideration received and the fair value of any investment retained together with any gain or
loss in profit or loss.
d. Segment reporting
A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns
that are different to those of other business segments. Segment information is provided on the same basis as information used for
internal reporting purposes by the chief executive and the Board. In identifying its operating segments, management generally
follows the Group's project activities. Each of these activities is managed separately.
e.
Foreign currency translation
Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic
environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in
Australian dollars, which is The Company’s functional and presentation currency.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year
end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Statement of
Consolidated Income, except when deferred in equity as qualifying cash flow hedges and qualifying net investment hedges.
Translation differences on non‐monetary items, such as equities held at fair value through profit or loss, are reported as part of the
fair value gain or loss. Translation differences on non‐monetary items, such as equities classified as available‐for‐sale financial assets,
are included in the fair value reserve in equity.
Group companies
The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have
a functional currency different from the presentation currency are translated into the presentation currency as follows:
assets and liabilities for each Statement of Financial Position presented are translated at the closing rate at the date of that
Statement of Financial Position;
income and expenses for each income statement are translated at average exchange rates (unless this is not a reasonable
approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses
are translated at the dates of the transactions); and
all resulting exchange differences are recognised as a separate component of equity.
On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of borrowings and
other currency instruments designated as hedges of such investments, are taken to shareholders’ equity. When a foreign operation
is sold or borrowings repaid a proportionate share of such exchange differences are recognised in the Statement of Profit or Loss and
Other Consolidated Income as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of foreign entities are treated as assets and liabilities of the foreign
entities and translated at the closing rate.
f. Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns,
trade allowances and duties and taxes paid.
Interest revenue is recognised using the effective interest rate method, which, for floating rate financial assets, is the rate inherent
in the instrument.
g.
Income Tax
The income tax expense or revenue for the year comprises current income tax expense or income and deferred tax expense or
income.
Current income tax expense or revenue is the tax payable on the current period’s taxable income based on the applicable income tax
rate adjusted by changes in deferred tax assets and liabilities.
Current and deferred income tax expense (income) is charged or credited directly to equity instead of the income statements when
the tax relates to items that are credited or charged directly to equity.
Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the financial statements. Deferred tax assets also result where amounts have been fully
expensed but future tax deductions are available. No deferred income tax will be recognised from the initial recognition of an asset
or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.
Crater Gold Mining Limited
42
Notes to the Financial Statements
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is realised
or the liability is settled, based on tax rates enacted or substantively enacted at reporting date. Their measurement also reflects the
manner in which management expects to recover or settle the carrying amount of the related asset or liability.
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that
future taxable profit will be available against which the benefits of the deferred tax asset can be utilised.
Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint ventures, deferred tax
assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be controlled and it is not
probable that the reversal will occur in the foreseeable future.
Current tax assets and liabilities are offset where a legally enforceable right of set‐off exists and it is intended that net settlement or
simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and liabilities are offset
where a legally enforceable right of set‐off exists, the deferred tax assets and liabilities relate to income taxes levied by the same
taxation authority on either the same taxable entity or different taxable entities where it is intended that net settlement or
simultaneous realisation and settlement of the respective asset and liability will occur in future periods in which significant amounts
of deferred tax assets or liabilities are expected to be recovered or settled.
Tax Consolidation
Crater Gold Mining Limited and its wholly‐owned Australian subsidiaries have formed an income tax consolidated group under tax
consolidation legislation. Each entity in the group recognises its own current and deferred tax assets and liabilities. Such taxes are
measured using the ‘stand‐alone taxpayer’ approach to allocation. Current tax liabilities (assets) and deferred tax assets arising from
unused tax losses and tax credits in the subsidiaries are immediately transferred to the head entity.
The tax consolidated group has entered a tax funding arrangement whereby each company in the group contributes to the income
tax payable by the group in proportion to their contribution to the group’s taxable income. Differences between the amounts of net
tax assets and liabilities derecognised and the net amounts recognised pursuant to the funding arrangement are recognised as either
a contribution by, or distribution to the head entity.
h.
Leases
Leases of property, plant and equipment where the Group has substantially all the risks and rewards of ownership are classified as
finance leases.
Finance leases are capitalised at the lease’s inception at the lower of the fair value of the leased property and the present value of
the minimum lease payments.
The corresponding rental obligations, net of finance charges, are included in other long term payables. Lease payments are allocated
between the reduction of the lease liability and the lease interest expense for the period.
The property, plant and equipment acquired under finance leases are depreciated over the shorter of the asset’s useful life and the
lease term.
i. Acquisition of assets
The purchase method of accounting is used for all acquisitions of assets (including business combinations) regardless of whether
equity instruments or other assets are acquired. Cost is measured as the fair value of the assets given up, shares issued or liabilities
undertaken at the date of acquisition. Incidental costs directly attributable to the acquisition are taken to Profit and Loss under
AASB 3.
Where equity instruments are issued in an acquisition, the value of the instruments is their market price as at acquisition date, unless
the notional price at which they could be placed in the market is a better indicator of fair value.
Transaction costs arising on the issue of equity instruments are recognised directly in equity.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their
fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the
fair value of the Group's share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the
fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement, but only after a
reassessment of the identification and measurement of the net assets acquired.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present
value as at the date of exchange. The discount rate used is the entity's incremental borrowing rate, being the rate at which a similar
borrowing could be obtained from an independent financier under comparable terms and conditions.
j.
Impairment of assets
Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are
subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable.
An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of an asset’s fair value less costs to sell and value in use.
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash
flows (cash generating units).
Crater Gold Mining Limited
43
Notes to the Financial Statements
k. Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short term, highly liquid
investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current
liabilities on the Statement of Financial Position.
l.
Investments and other financial assets
Management determines the classification of its investments at initial recognition and re‐evaluates this designation at each reporting
date.
Loans and receivables
Loans and receivables are non derivative financial assets with fixed or determinable payments that are not quoted in an active market.
They arise when the Group provides money, goods or services directly to a debtor with no intention of selling the receivable. They
are included in current assets, except for those with maturities greater than 12 months after the Statement of Financial Position date
which are classified as non‐current assets. Loans and receivables are included in receivables in the Consolidated Statement of
Financial Position (note 13). They are subsequently measured at amortised cost using the effective interest rate method.
Available‐for‐sale financial assets
Available for sale financial assets, comprising principally equity securities, are non‐derivatives that are either designated in this
category or not classified in any of the other categories.
Recognition and de‐recognition
Purchases and sales of investments are recognised on trade date ‐ the date on which the Group commits to purchase or sell the asset.
Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through income
statements. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have
been transferred and the Group has transferred substantially all the risks and rewards of ownership.
When securities which are classified as available‐for‐sale are sold, the accumulated fair value adjustments recognised in equity are
included in the income statement as gains and losses from investment securities.
De‐recognition
Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the asset is transferred to another
party whereby the entity no longer has any significant continuing involvement in the risks and benefits associated with the asset.
Financial liabilities are derecognised where the related obligations are either discharged, cancelled or expire. The difference between
the carrying value of the financial liability extinguished or transferred to another party and the fair value of consideration paid,
including the transfer of non‐cash assets or liabilities assumed, is recognised in income statements.
Subsequent measurement
Available for sale financial assets and financial assets at fair value through income statements are subsequently carried at fair value.
Gains and losses arising from changes in the fair value of the financial assets at fair value through income statements category are
included in the income statement in the period in which they arise. Dividend income from financial assets at fair value through
income statements is recognised in the income statement as part of revenue from continuing operations when the Group’s right to
receive payments is established.
Fair value
The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted
securities), the Group establishes fair value by using valuation techniques. These include reference to the fair values of recent arm’s
length transactions, involving the same instruments or other instruments that are substantially the same, discounted cash flow
analysis, and option pricing models refined to reflect the issuer’s specific circumstances.
Impairment
The Group assesses at each balance date whether there is objective evidence that a financial asset or group of financial assets is
impaired.
In the case of equity securities classified as available for sale, a significant or prolonged decline in the fair value of a security below
its cost is considered in determining whether the security is impaired.
If any such evidence exists for available for sale financial assets, the cumulative loss measured as the difference between the
acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in income statements
is removed from equity and recognised in the income statement.
Impairment losses recognised in the income statement on equity instruments are not reversed through the income statement.
m. Comparatives
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in the presentation for the
current financial year.
n. Exploration and evaluation expenditure
Exploration and evaluation expenditure incurred is capitalised in respect of each identifiable area of interest. These costs are only
carried forward to the extent that they are expected to be recouped through the successful development of the area of interest or
when activities in the areas of interest have not yet reached a stage which permit reasonable assessment of the existence of
economically recoverable reserves.
Crater Gold Mining Limited
44
Notes to the Financial Statements
The ultimate recoupment of capitalised costs is dependent on the successful development and commercial exploitation, or sale, of
the respective areas of interest. Accumulated costs in relation to an abandoned area are written off in full against profit/loss in the
year in which the decision to abandon the area is made.
Where costs are capitalised on exploration, evaluation and development, they are amortised over the life of the area of interest to
which they relate once production has commenced. Amortisation charges are determined on a production output basis, unless a
time basis is more appropriate under specific circumstances.
Exploration, evaluation and development assets are assessed for impairment if:
sufficient data exists to determine technical feasibility and commercial viability, and
facts and circumstances suggest that the carrying amount exceeds the recoverable amount. For the purposes of impairment
testing, exploration and evaluation assets are allocated to cash‐generating units to which the exploration activity relates.
A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in
relation to that area of interest.
o. Plant and equipment
Each class of plant and equipment is carried at cost less, where applicable, any accumulated depreciation and impairment losses.
Plant and equipment
Plant and equipment are measured on the cost basis.
The carrying amount of plant and equipment is reviewed annually by Directors to ensure it is not in excess of the recoverable amount
from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the
asset’s employment and subsequent disposal. The expected net cash flows have been discounted to their present values in
determining recoverable amounts.
The cost of fixed assets constructed within the consolidated group includes the cost of materials, direct labour, borrowing costs and
an appropriate proportion of fixed and variable overheads.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured
reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are
incurred.
Depreciation
The depreciable amount of all fixed assets is depreciated on a straight‐line basis over the asset’s useful life to the Group commencing
from the time the asset is held ready for use.
The depreciation rates used for each class of depreciable assets are:
Asset
Depreciation rates
Plant and Equipment
4% – 50%
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each Statement of Financial Position date.
An asset’s carrying amount is written down immediately to its recoverable amount where there are indicators of impairment.
The Company uses the unit‐of‐production basis when depreciating mine specific assets which results in a depreciation/amortisation
charge proportional to the depletion of the anticipated remaining life of mine production.
Amortisation of mine development costs is provided using the unit‐of‐production method.
p. Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of financial year which are unpaid.
The amounts are unsecured and are usually paid within 30 days of recognition.
q. Borrowings
Borrowings are initially recognised at fair value including transaction costs and subsequently at amortised cost.
r.
Employee benefits
Wages and salaries, annual leave and sick leave
Liabilities for wages and salaries, including non‐monetary benefits, annual leave and accumulating sick leave expected to be settled
within 12 months of the reporting date are recognised in other payables in respect of employees' services up to the reporting date
and are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for non accumulating sick leave are
recognised when the leave is taken and measured at the rates paid or payable.
Long service leave
The liability for long service leave expected to be settled more than 12 months from the reporting date is recognised in the provision
for employee benefits and measured as the present value of expected future payments to be made in respect of services provided
by employees up to the reporting date using the projected unit credit method. Consideration is given to expect future wage and
salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market
Crater Gold Mining Limited
45
Notes to the Financial Statements
yields at the reporting date on national government bonds with terms to maturity and currency that match, as closely as possible,
the estimated future cash outflows.
Share‐based payment transactions
The group operates equity‐settled share‐based payment employee share and option schemes. The fair value of the equity to which
employees become entitled is measured at grant date and recognised as an expense over the vesting period, with a corresponding
increase to an equity account. The fair value of shares is ascertained as the market bid price. The fair value of option is ascertained
using a Black‐Scholes pricing model which incorporates all market vesting conditions. The cost of equity‐settled transactions is
recognised as an expense with a corresponding increase in equity over the vesting period. The cumulative charge to profit or loss is
calculated based on the grant date fair value of the award, the best estimate of the number of awards that are likely to vest and the
expired portion of the vesting period. The amount recognised in profit or loss for the period is the cumulative amount calculated at
each reporting date less amounts already recognised in previous periods.
s. Contributed equity
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of GST, from the
proceeds. Incremental costs directly attributable to the issue of new shares or options for the acquisition of a business are not
included in the cost of the acquisition as part of the purchase consideration.
t.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to equity holders 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 bonus elements in ordinary shares issued during the year.
Diluted earnings per share
Diluted earnings 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.
Potential ordinary shares are anti‐dilutive when their conversion to ordinary shares would increase earnings per share or decrease
loss per share from continuing operations. The calculation of diluted earnings per share does not assume conversion, exercise, or
other issue of potential ordinary shares that would have an anti‐dilutive effect on earnings per share.
u. Rounding of amounts
The Company is of a kind referred to in Class order 98/100, issued by the Australian Securities and Investments Commission, relating
to the ''rounding off'' of amounts in the financial report. Amounts in the financial report have not been rounded off in accordance
with that Class Order to the nearest thousand dollars, but to the nearest dollar.
v. Goods and services tax (GST)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from
the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from,
or payable to, the taxation authority is included with other receivables or payables in the Statement of Financial Position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are
recoverable from or payable to the taxation authority are presented as an operating cash flow.
w. Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily take a substantial period
of time to prepare for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially
ready for their intended use or sale.
All other borrowing costs are recognised in the income statement in the period in which they are incurred.
x. Rehabilitation costs
The Company records the present value of the estimated cost of legal and constructive obligations to restore operating locations in
the period in which the obligation is incurred. The nature of restoration activities includes dismantling and removing structures,
rehabilitating mines, dismantling operating facilities, closure of plant and waste sites and restoration, reclamation and revegetation
of afflicted areas.
When the liability is initially recorded, the present value of the estimated cost is capitalised by increasing the carrying amount of the
related mining assets.
Crater Gold Mining Limited
46
Notes to the Financial Statements
y. New Accounting Standards and Interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have
not been early adopted by the consolidated entity for the annual reporting period ended 30 June 2014. The consolidated entity's
assessment of the impact of these new or amended Accounting Standards and Interpretations, most relevant to the consolidated
entity, are set out below.
AASB 9 Financial Instruments and its consequential amendments
This standard and its consequential amendments are applicable to annual reporting periods beginning on or after 1 January
2017 and completes phases I and III of the IASB's project to replace IAS 39 (AASB 139) 'Financial Instruments: Recognition and
Measurement'. This standard introduces new classification and measurement models for financial assets, using a single
approach to determine whether a financial asset is measured at amortised cost or fair value. The accounting for financial
liabilities continues to be classified and measured in accordance with AASB 139, with one exception, being that the portion
of a change of fair value relating to the entity's own credit risk is to be presented in other comprehensive income unless it
would create an accounting mismatch. Chapter 6 'Hedge Accounting' supersedes the general hedge accounting requirements
in AASB 139 and provides a new simpler approach to hedge accounting that is intended to more closely align with risk
management activities undertaken by entities when hedging financial and non‐financial risks. The consolidated entity will
adopt this standard and the amendments from 1 July 2017 but the impact of its adoption is yet to be assessed by the
consolidated entity.
AASB 2012‐3 Amendments to Australian Accounting Standards ‐ Offsetting Financial Assets and Financial Liabilities
The amendments are applicable to annual reporting periods beginning on or after 1 January 2014. The amendments add
application guidance to address inconsistencies in the application of the offsetting criteria in AASB 132 'Financial Instruments:
Presentation', by clarifying the meaning of 'currently has a legally enforceable right of set‐off'; and clarifies that some gross
settlement systems may be considered to be equivalent to net settlement. The adoption of the amendments from 1 July 2014
will not have a material impact on the consolidated entity.
AASB 2013‐3 Amendments to AASB 136 ‐ Recoverable Amount Disclosures for Non‐Financial Assets
These amendments are applicable to annual reporting periods beginning on or after 1 January 2014. The disclosure
requirements of AASB 136 'Impairment of Assets' have been enhanced to require additional information about the fair value
measurement when the recoverable amount of impaired assets is based on fair value less costs of disposals. Additionally, if
measured using a present value technique, the discount rate is required to be disclosed. The adoption of these amendments
from 1 July 2014 may increase the disclosures by the consolidated entity.
AASB 2013‐4 Amendments to Australian Accounting Standards ‐ Novation of Derivatives and Continuation of Hedge
Accounting
These amendments are applicable to annual reporting periods beginning on or after 1 January 2014 and amends AASB 139
'Financial Instruments: Recognition and Measurement' to permit continuation of hedge accounting in circumstances where
a derivative (designated as hedging instrument) is novated from one counter party to a central counterparty as a consequence
of laws or regulations. The adoption of these amendments from 1 July 2014 will not have a material impact on the
consolidated entity.
AASB 2013‐5 Amendments to Australian Accounting Standards ‐ Investment Entities
These amendments are applicable to annual reporting periods beginning on or after 1 January 2014 and allow entities that
meet the definition of an 'investment entity' to account for their investments at fair value through profit or loss. An
investment entity is not required to consolidate investments in entities it controls, or apply AASB 3 'Business Combinations'
when it obtains control of another entity, nor is it required to equity account or proportionately consolidate associates and
joint ventures if it meets the criteria for exemption in the standard. The adoption of these amendments from 1 July 2014 will
have no impact on the consolidated entity.
Crater Gold Mining Limited
47
Notes to the Financial Statements
2
Critical Accounting Estimates and Judgements
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations
of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances.
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom
equal the actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities are set out below.
Exploration and evaluation expenditure
Exploration and evaluation expenditure is reviewed regularly to ensure that the capitalised expenditure is only carried forward to the
extent that it is expected to be recouped through the successful development of the area of interest or when activities in the area of
interest have not yet reached a stage which permits a reasonable assessment of the existence of economically recoverable reserves.
This policy is outlined in note 1.
3
Financial Risk Management
The Group’s major area of risk is managing liquidity and cash balances and embarking on fundraising activities in anticipation of
further projects. The activities expose the Group to a variety of financial risks: market risk (including interest rate risk and price risk),
credit risk and liquidity risk. The Group’s overall risk management program focuses on the unpredictability of financial markets and
seeks to minimise potential adverse effects on the financial performance of the Group. The Group uses different methods to measure
different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate, and other risks,
ageing analysis for credit risk.
Risk management is carried out under policies set by the Managing Director and approved by the Board of Directors.
The Board provides principles for overall risk management, as well as policies covering specific areas, such as, interest rate risk, credit
risk and investment of excess liquidity.
a. Market risk
Foreign exchange risk
Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities are denominated in a currency
that is not the Group’s functional currency. The Group operates internationally and is exposed to foreign exchange risk arising from
currency exposures to the Papua New Guinea Kina. As the Group is still in the development, exploration and evaluation stages, it has
not needed to use forward contracts to manage foreign exchange risk. The Board will continue to monitor the Group’s foreign
currency exposures.
The Group’s exposure to interest‐rate risk is summarised in the following table. Fixed interest rate items mature within 12 months.
Price risk
The Group is exposed to commodity price risk and will be exposed to revenue risk once gold production starts. The commodity prices
impact the Group’s capacity to raise additional funds and will impact its sales of gold once production starts.
b. Credit risk
The credit risk on financial assets of the Group which have been recognised in the consolidated Statement of Financial Position is
generally the carrying value amount, net of any provisions for doubtful debts. No items are considered past due or impaired.
c.
Liquidity risk
Prudent liquidity management implies maintaining sufficient cash and marketable securities and the ability of the Group to raise
funds on capital markets. The Managing Director and the Board continue to monitor the Group’s financial position to ensure that it
has available funds to meet its ongoing commitments (refer to Note 4).
Crater Gold Mining Limited
48
Notes to the Financial Statements
Financial Risk Management (cont.)
3
d. Cash flow interest rate risk
Consolidated
Notes
Floating
interest rate
Fixed interest
rate
Non‐interest
bearing
Total
2014
Financial assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Weighted average interest rate
Financial liabilities
Trade and other payables
Related party payables
Interest bearing liabilities 1
Weighted average interest rate
Net financial assets/(liabilities)
2013
Financial assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Weighted average interest rate
Financial liabilities
Trade and other payables
Related party payables
Weighted average interest rate
Weighted average interest rate
Net financial assets/(liabilities)
10
12
13
16
17
18
10
12
13
16
17
287,254
‐
‐
287,254
3.0%
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
1,500,000
1,500,000
15.0%
46,732
172,200
45,437
264,369
718,566
129,278
‐
847,844
333,986
172,200
45,437
551,623
718,566
129,278
1,500,000
2,347,844
287,254
(1,500,000 )
(583,475)
(1,796,221)
3,069,897
‐
‐
3,069,897
2.5%
‐
‐
‐
‐
3,069,897
‐
‐
‐
‐
‐
‐
‐
‐
‐
352,929
50,951
1,075,355
1,479,235
3,422,826
50,951
1,075,355
4,549,132
1,075,849
48,270
1,124,119
1,075,849
48,270
1,124,119
355,1166
3,425,013
All financial liabilities are due and payable within 12 months.
1 Freefire Technology Limited
As announced to the Market on 9 May 2014, the Company secured a short term, interest bearing loan of $1,500,000 from its major
shareholder, Freefire Technology Limited.
The loan funds are to be used by the Company principally for the purpose of developing the High Grade Zone at the Company's
Crater Mountain, PNG project and for general working capital.
Interest on the Principal Sum is payable by the Company to Freefire at the rate of 15% per annum.
The loan is for a six month term, however (i) the Company may repay the Principal Sum prior to then upon giving 7 days’ written
notice to Freefire; and (ii) the Company may extend the loan term by a further six months upon giving one month’s written
notice to Freefire. If the Company extends the loan term it must pay to Freefire, in addition to any other amount payable under
the Loan Agreement, an extension fee of 5% of the principle amount ($75,000). In this regard however if the Company extends
the loan term it will, in accordance with advice received from the Company’s professional advisors, evaluate market conditions
at the time to ensure that the circumstances are such that payment of the extension fee would not nullify the arm’s length or
better status referred to above.
As announced to the Market on 20 July 2014, the Company has undertaken a fully underwritten non‐renounceable pro rata Rights
Issue of one (1) convertible note for every one thousand (1,000) shares held at A$25.00 per convertible note to raise up to $3,454,750
before costs. Amongst other things, the funds raised from the Rights Issue have been used to repay the Freefire loan plus accrued
interest.
Crater Gold Mining Limited
49
Notes to the Financial Statements
3
e.
Financial Risk Management (cont.)
Fair value estimation
The fair value of assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes. The
carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values due to their
short term nature. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual
cash flows at the current market interest rate that is available to the Group for similar financial instruments.
The Group measures fair values using the following fair value hierarchy that considers and reflects the significance of the inputs used
in making the measurements:
Level 1
Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2
prices) or indirectly (derived from prices).
Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (as
Level 3
Inputs for the asset or liability that are not based on observable market data (significant unobservable inputs).
The determination of what constitutes ‘observable’ requires significant judgment by the Group. The Group considers observable
data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and
provided by independent sources that are actively involved in the relevant market.
The following table analyses within the fair value hierarchy the Group’s financial assets and liabilities at fair value
30 June 2013
Investments ‐ other
Total
f.
Sensitivity analysis
Foreign currency risk sensitivity analysis
Level 1
$
1,041,500
1,041,500
Level 2
$
‐
‐
Level 3
$
‐
‐
Total
$
1,041,500
1,041,500
The Group is exposed to fluctuations in the value of the Australian Dollar to the PNG Kina (PKG). At 30 June 2014, the effect on profit
and equity of the Consolidated Group as a result of changes in the value of the Australian Dollar to the PKG, with all other variables
remaining constant, is as follows:
Movement
AUD
PKG by + 5%
PKG by ‐ 5%
to
Change in profit $
6,957
(6,957)
Change in equity
$
241,550
(241,550)
Crater Gold Mining Limited
50
Notes to the Financial Statements
4 Going Concern
These financial statements are prepared on a going concern basis. The Group has incurred a net loss after tax of $2,236,315 (2013:
$3,060,824) for the year ended 30 June 2014 with cash outflows of $2,930,719 (2013: inflows of $2,981,128). As at 30 June 2014,
the Group had net current liabilities of $1,892,759 (2013: net assets of $3,352,761) including cash on hand of $333,986 (2013:
$3,422,826).
In determining the appropriateness of the accounts being presented on a going concern basis, the Directors note the following:
a) The Company’s key area of expenditure is the Crater Mountain Project in Papua New Guinea. As at the year end, the Company
has lodged a Proposal for Development application for a mining lease with the Mining Resources Authority. This application was
accepted in May 2014.
b) The application for the relevant Environment Permit was accepted on 10 September 2014 by the Department of Environment &
Conservation and subsequent consultation meetings are scheduled to be completed by 23rd September 2014. Management are of
the opinion that there are no foreseeable issues that may arise from the public review and as such expect the Permit to be granted
in October 2014.
c) Management have provided all information in the Mining Lease Application process. Subject to various approvals being granted
by appropriate regulatory authorities, a Mining Lease will be granted within the expected timeframe to enable resources to be
processed and sold in order to generate revenues to meet the liabilities incurred by the Group.
These conditions indicate a material uncertainty which may cast significant doubt over the Group’s ability to continue as a going
concern.
However, the Directors are satisfied that adequate plans are in place for the Group to have positive cash flows for the next twelve
months from signing this report. On this basis, the Directors are of the opinion that the financial statements can be prepared on a
going concern basis and the Group will be able to pay its debts as and when they fall due and payable.
Should the Group be unable to continue as a going concern it may be required to realise its assets and discharge its liabilities other
than in the normal course of business and at amounts different to those stated in the financial statements. The financial statements
do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount of liabilities
that might result should the Group be unable to continue as a going concern and meet its debts as and when they fall due.
Crater Gold Mining Limited
51
Note
5
Income from continuing operations
Profit on sale of other financial assets
Interest received
6
Expenses
Expenses, excluding finance costs, included in the
Statement of Comprehensive Income classified by nature
Audit fees
Accounting
Consulting fees
Director related expenses
‐ Directors’ fees
‐ reimbursable expenses
Total director related expenses
Depreciation and amortisation expense
Employee benefits expense
Employee share option plan costs
Exploration costs written off
General administration expenses
Insurance
‐ Directors & officers indemnity insurance
‐ other
Total insurance
Loss on disposals of fixed assets
Marketing and promotion expenses
Occupancy expenses
Settlement of legal case
Share registry / meeting costs
Telephone
Travel
Write down investment
Notes to the Financial Statements
June
2014
$
June
2013
$
438,251
‐
39,164
25,547
90,507
27,744
521,125
212,301
9,234
221,535
6,869
381,307
275,902
793,100
65,391
17,506
5,569
23,075
9,724
49,697
38,418
‐
103,678
24,546
49,978
‐
81,240
39,891
452,553
169,361
3,365
172,726
8,290
473,780
‐
‐
170,929
15,915
13,659
29,574
1,046
43,731
50,210
325,000
129,627
21,602
39,956
596,587
2,682,596
2,636,742
Crater Gold Mining Limited
52
Note
7
a.
Income Tax
Income tax
Current tax expense
Notes to the Financial Statements
June
2014
$
June
2013
$
‐
‐
b. Numerical reconciliation of income tax revenue to prima facie tax receivable
Loss before income tax
(2,236,315)
(3,060,824)
Tax at the Australian tax rate of 30% (2013 – 30%)
(670,894)
(918,247)
Tax effect of amounts which are not deductible (taxable) in calculating taxable income:
Impairment of foreign investments
Profit on disposal of non‐portfolio interest in foreign companies not taxable
Non‐deductible share based payments
Other
Net adjustment to deferred tax assets and liabilities for tax losses and temporary
differences not recognised
Income tax expense
c.
Tax losses
Unused tax losses for which no deferred tax asset has been recognised
Opening balance
Tax (profit) / loss for the year
Tax losses previously overstated written back
Closing balance
Potential Tax Benefits @ 30%
d. Unrecognised temporary differences
Temporary differences for which deferred tax assets and liabilities have not been
recognised:
Exploration and evaluation
Accruals
Employee Entitlements
Capital Raising Costs
Provision for write off of development
Provision for impairment
Unrealised foreign exchange differences
Provision for write down of investment
Business related capital costs
Subtotal
‐
(131,312)
75,172
12,750
178,976
‐
79,829
(25,168)
(714,284)
(684,609)
714,284
684,609
‐
‐
25,184,866
31,152,574
2,459,507
2,826,988
11,186,412
(8,794,697)
38,830,784
25,184,866
11,649,235
7,555,460
(4,174,875)
54,000
61,827
1,269,092
624,615
3,350,017
‐
‐
17,579
1,202,255
(4,710,845)
37,000
48,843
1,730,759
704,949
3,780,879
734,141
125,000
20,458
2,471,184
Potential Tax effect at 30%
360,677
741,355
Crater Gold Mining Limited
53
Notes to the Financial Statements
June
2014
June
2013
Note
8
Earnings per Share
a. Basic loss per share
Profit/(loss) from continuing operations attributable to the ordinary equity holders of
the Company (cents per share)
(1.806)
(7.099)
b. Diluted loss per share
Profit/(loss) from continuing operations attributable to the ordinary equity holders of
the Company (cents per share)
(1.806)
(7.099)
The calculation of basic earnings per share at 30 June 2014 was based on the continuing operations loss attributable to ordinary
shareholders of $2,236,315 (2013 loss: $3,060,824) and a weighted average number of ordinary shares outstanding during the
financial year ended 30 June 2014 of 123,844,707 (2013: 43,117,392).
c. Weighted average number of shares used as a denominator
Basic loss per share
Diluted loss per share
2014
Shares
2013
Shares
123,844,707
43,117,392
123,844,707
43,117,392
At the year end, the consolidated entity had 6,478,211 options on issue (2013: 387,937), representing:
6,478,211 unlisted options with weighted average exercise price of $0.37 (2013: 387,937 at average $3.06)
In October 2013 the Company consolidated its issued share capital on a 1 for 100 basis. The comparative figures for the full year
ended 30 June 2013 have been restated to reflect the 1 for 100 share consolidation.
Crater Gold Mining Limited
54
Notes to the Financial Statements
9
Segment Result
Croydon
$
Fergusson
Island
$
Crater
Mountain
$
Corporate
$
Elimination
$
Consolidated
$
Full‐year to 30 June
2014
External
revenue
segment
Loss on disposal
‐
‐
Asset write downs
(793,100)
Other expenses
Segment profit (loss)
Segment assets
Segment liabilities
‐
(793,100)
4,174,875
‐
‐
‐
‐
‐
‐
‐
‐
‐
477,415
(9,724)
‐
(139,144)
(1,771,762)
(139,144)
(1,304,071)
‐
‐
‐
‐
‐
213,780
‐
25,164,316
28,678,445
42,077,873
1,948,791
(40,030,771)
(28,228,291)
Full‐year to 30 June
2013
External
revenue
segment
Loss on disposal
Asset write downs
Other expenses
Segment profit (loss)
Segment assets
Segment liabilities
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
(90,325)
(90,325)
4,710,845
‐
103,563
‐
21,694,445
22,485,138
25,547
(1,046)
(596,587)
(2,398,413)
(2,970,499)
39,900,857
745,114
‐
‐
‐
‐
‐
(33,870,215)
(22,067,735)
477,415
(9,724)
(793,100)
(1,910,906)
(2,236,315)
31,600,073
2,398,945
25,547
(1,046)
(596,587)
(2,488,738)
(3,060,824)
32,539,495
1,162,517
Reconciliation of Segment Profit to loss for the period from continuing operations:
Segment profit (loss)
Loss for the period from continuing operations
(2,236,315)
(2,236,315)
Segment information is presented using a “management approach”, i.e. segment information is provided on the same basis as
information used for internal reporting purposes by the chief executive and the Board. In identifying its operating segments,
management generally follows the Group's project activities. Each of these activities is managed separately.
Description of segments
Croydon
This project consists of two sub‐projects in far North West Queensland, the Croydon Polymetallic Project and the Croydon Gold
Project.
Fergusson Island
This project consists of two gold exploration projects at Wapolu and Gameta on Fergusson Island, in Milne Bay province, PNG.
Crater Mountain
This is an advanced exploration project located in the PNG Highlands approximately 50kms southwest of Goroka.
Crater Gold Mining Limited
55
Notes to the Financial Statements
Note
10 Current Assets ‐ Cash and Equivalents
Cash at bank and on hand
The effective (weighted average) interest rate on short term bank deposit was 2.5%
(2013: 5.9%).
11 Current Assets ‐ Other Financial Assets
Investments ‐ other
12 Current Assets ‐ Trade and Other Receivables
GST receivable
Other
13 Non‐Current Assets ‐ Other Financial Assets
Security deposits
Investments – other: see Note 11 above
14 Non‐Current Assets ‐ Exploration and Evaluation
At the beginning of the year
Cost
Provision for impairment
Net book value
Opening net book value
Expenditure capitalised
Exploration costs written off
Effect of movement in exchange rates
Closing net book value
At the end of the year
Cost
Provision for impairment
Net book value
The ultimate recoupment of costs carried forward for exploration and evaluation assets
is dependent on the successful development and commercial exploitation or sale of the
respective areas.
June
2014
$
June
2013
$
333,986
3,422,826
‐
‐
1,041,501
1,041,501
89,184
83,016
172,200
45,795
5,156
50,951
45,437
45,437
33,854
33,854
28,653,373
(989,173)
23,358,871
(989,173)
27,664,200
22,369,698
27,664,200
5,620,830
(793,100)
(2,279,898)
30,212,032
22,369,698
5,143,531
‐
150,971
27,664,200
31,201,205
(989,173)
28,653,373
(989,173)
30,212,032
27,664,200
Crater Gold Mining Limited
56
Note
15 Non‐Current Assets ‐ Plant and Equipment
Plant and equipment
Cost
Accumulated depreciation
Net book value
Notes to the Financial Statements
June
2014
$
June
2013
$
1,182,843
(346,425)
836,418
472,234
(146,071)
326,163
A reconciliation of the carrying amounts of each class of property, plant and equipment at the beginning and end of the current and
prior financial years are set out below.
Carrying amount as at 1 July 2012
Additions
Disposals
Depreciation expense
Depreciation capitalised
Effect of movements in exchange rates
Carrying amount as at 30 June 2013
Additions
Disposals
Depreciation expense
Depreciation capitalised
Effect of movements in exchange rates
Carrying amount as at 30 June 2014
Note
16 Current Liabilities ‐ Trade and Other Payables
Trade payables
Accruals
Other payables
17 Related Party Payables
G R Boyce (Professional‐Edge Pty Ltd)
R Johnson
J A Lemon
J V McCarthy
18 Current Liabilities – Interest bearing liabilities
Freefire Technology Limited loan
Refer to note 3(d) for detailed information on financial instruments.
Plant and
equipment
163,565
211,776
(1,046)
(8,290)
(38,979)
(863)
326,163
788,628
(9,724)
(6,869)
(225,723)
(36,057)
836,418
June
2014
$
June
2013
$
178,911
271,852
267,803
718,566
21,120
104,165
3,993
‐
129,278
281,345
686,588
107,916
1,075,849
21,686
20,833
2,314
3,437
48,270
1,500,000
1,500,000
‐
‐
Crater Gold Mining Limited
57
Notes to the Financial Statements
Note
19 Current Liabilities – Provisions
Employee entitlements
Balance as at 1 July
Entitlements provided
Entitlements taken
Employee entitlements
The Company expects the full entitlement to be used in the next 12 months
20 Contributed Equity
a.
Share capital
Equity Securities Issued
For the financial year ended 30 June 2014
As at 1 July 2013
Shares issued
As at 30 June 2014
For the financial year ended 30 June 2013
As at 1 July 2012
Shares issued
As at 30 June 2013
June
2014
$
June
2013
$
38,398
29,423
(16,720)
51,101
24,597
29,423
(15,622)
38,398
No. of ordinary
shares
Total
$
108,654,916
27,780,404
136,435,320
48,565,624
2,202,988
50,768,612
16,572,635
92,082,281
108,654,916
37,030,487
11,535,137
48,565,624
In October 2013 the Company consolidated its issued share capital on a 1 for 100 basis. Both the opening balance of equity securities
issued as at 1 July 2013 and the comparative figures for the full year ended 30 June 2013 have been restated to reflect the 1 for 100
share consolidation.
All outstanding options on issue were also consolidated on the same basis.
The table of movements in Ordinary Share Capital and the table of movements in Options below have similarly been restated to
reflect a 1 for 100 consolidation.
b. Ordinary Shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the
number of shares and the amounts paid on those shares.
On a show of hands, every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote and upon a
poll, each share is entitled to one vote.
c.
Employee Share Option Plan
Information relating to the Employee Share Option Plan, including details of options issued, exercised, lapsed and outstanding during
the financial year is set out in note 25b.
Crater Gold Mining Limited
58
Notes to the Financial Statements
20 Contributed Equity (cont.)
d. Movements in share capital
Date
Details
For the financial year ended 30 June 2014
01‐Jul‐13
24‐Jul‐13
16‐Dec‐13
Balance 1 July ‐ Ordinary Shares
Global Resources Corporation
Rights Issue
Less: Transaction costs arising on share issues
No. of shares
108,654,916
493,340
27,287,064
136,435,320
Value
$
48,565,624
200,000
2,182,965
(179,977)
50,768,612
In November 2013 the Company raised $2,182,965 at $0.08 (8 cents) per share in a 1 for 4 non‐renounceable Rights Issue. The
Rights Issue was underwritten by Freefire Technology Ltd and Bloomstar Investment Limited.
For the financial year ended 30 June 2013
01‐Jul‐12
05‐Jul‐12
25‐Jul‐12
06‐Aug‐12
22‐Aug‐12
26‐Sep‐12
05‐Oct‐12
12‐Oct‐12
19‐Nov‐12
19‐Dec‐12
03‐May‐13
Balance 1 July ‐ Ordinary Shares
Bergen convertible note loan conversion
Bergen convertible note loan conversion
Bergen convertible note loan conversion
Bergen convertible note loan conversion
Bergen convertible note loan conversion
Freefire Technology Limited
Bergen convertible note termination fee
Rights Issue
Bergen convertible note loan conversion
Rights Issue
Less: Transaction costs arising on share issues
16,572,635
500,000
500,000
600,000
750,000
250,000
2,800,000
500,000
14,982,233
1,350,000
69,850,048
108,654,916
37,030,487
234,146
234,146
234,146
234,146
78,049
700,000
150,000
3,745,558
135,000
6,985,005
(1,195,059)
48,565,624
Crater Gold Mining Limited
59
20 Contributed Equity (cont.)
e. Movement in options
Date
Details
For the financial year ended 30 June 2014
01‐Jul‐13
Opening Balance
29‐Jul‐13
Options expired
30‐Aug‐13 Options expired
22‐Sep‐13
Options expired
29‐Sep‐13
Options expired
19‐Oct‐13
Options expired
31‐Oct‐13
Options expired
01‐Nov‐13 Options expired
22‐Nov‐13 Options expired
30‐Nov‐13 Options expired
20‐Dec‐13
Options expired
20‐Jan‐14
Options expired
23‐Feb‐14
Options expired
30‐Mar‐14 Options expired
03‐May‐14 Options expired
02‐Jun‐14
Options expired
22‐Oct‐13
Director options
22‐Oct‐13
ESOP
For the financial year ended 30 June 2013
01‐Jul‐12
Opening Balance
01‐Apr‐13
Options expired
07‐Apr‐13
Options expired
27‐May‐13 Options expired
05‐Jun‐13
ESOP cancelled
24‐Jun‐13
Options expired
Notes to the Financial Statements
Class of options
Listed
Unlisted
Total
‐
387,937
387,937
(7,008)
(8,378)
(5,680)
(8,107)
(5,049)
(7,280)
(7,387)
(6,549)
(4,901)
(7,574)
(7,885)
(9,327)
(8,896)
(8,801)
(6,904)
(7,008)
(8,378)
(5,680)
(8,107)
(5,049)
(7,280)
(7,387)
(6,549)
(4,901)
(7,574)
(7,885)
(9,327)
(8,896)
(8,801)
(6,904)
‐
‐
3,600,000
3,600,000
2,600,000
2,600,000
6,478,211
6,478,211
736,948
(20,000)
736,948
(20,000)
(110,000)
(110,000)
(25,771)
(25,771)
(185,000)
(185,000)
(8,240)
(8,240)
‐
387,937
387,937
Each option entitles the holder to purchase one share. The names of all persons who currently hold share options, granted at any
time, are entered in the register kept by the Company, pursuant to Section 168 of the Corporations Act 2001, which may be inspected
free of charge. Persons entitled to exercise these options have no right, by virtue of the options, to participate in any share issue by
the parent entity or any other body corporate.
The model inputs for options granted during the year ended 30 June 2014 included:
Options were granted for no consideration;
Exercise prices of 25 cents;
Grant date 22 October 2013;
Expiry date of 30 September 2017;
Immediately vesting
Share price at grant date of 9.5 cents;
Expected volatility of the company’s shares 100%;
Expected dividend yield of 0%; and
Risk free rates of 3.97%.
Crater Gold Mining Limited
60
Notes to the Financial Statements
June
2014
$
June
2013
$
1,773,168
30,000
(524,851)
1,441,616
30,000
1,949,225
1,278,317
3,420,841
1,441,616
331,552
1,350,785
90,831
1,773,168
1,441,616
30,000
30,000
30,000
30,000
1,949,224
(2,474,075)
1,836,485
112,739
(524,851)
1,949,224
(20,609,486)
(2,236,315)
(17,548,662)
(3,060,824)
(22,845,801)
(20,609,486)
Note
21 Reserves and Accumulated Losses
Reserves
Share based payment reserve
Share cancellation reserve
Foreign currency translation reserve
Movements
Share‐based Payments Reserve
Balance 1 July 2013
Fair value of Employee Share Option Plan share options
Balance 30 June 2014
Share Cancellation Reserve
Balance 1 July 2013
Balance 30 June 2014
Foreign currency translation reserve
Balance 1 July 2013
Currency translation differences
Balance 30 June 2014
Accumulated Losses
Movements in accumulated losses were as follows:
Balance 1 July 2013
Loss for the year
Balance 30 June 2014
Nature and purpose of reserves
Share‐based payments reserve
The share‐based payments reserve is used to recognise:
The fair value of options issued to employees and Directors; and
The fair value of options issued as consideration for goods or services rendered.
Foreign currency translation reserve
Exchange differences arising on translation of the foreign controlled entity are taken to the foreign currency translation reserve. The
reserve is recognised in the Consolidated Statement of Profit or Loss and Other Comprehensive Income when the net investment is
disposed.
Crater Gold Mining Limited
61
Notes to the Financial Statements
Note
22 Commitments
Operating leases
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
Later than one year but not later than five years
23 Guarantees and Deposits
Non‐Current
Deposits lodged with the Queensland Department of Mines
Accommodation and rental bonds
Deposits lodged with PNG Department of Mining and Petroleum
24 Related Party transaction
a. Parent entity
Crater Gold Mining Limited is the parent entity.
b. Key management personnel
June
2014
$
June
2013
$
44,892
46,688
91,580
27,500
5,165
12,772
45,437
34,632
‐
34,632
27,500
6,355
‐
33,855
Disclosures relating to key management personnel are set out below and the remuneration report in the Directors' Report. The
aggregate compensation made to directors and other members of key management personnel of the consolidated entity is set out
below:
Remuneration component
Short term
Post‐employment benefits
Share‐based payments
Total
2014
$
1,281,344
27,750
266,356
2013
$
1,242,449
27,000
33,434
1,575,450
1,302,883
c.
Transactions with Related Parties
Mr S W S Chan is a director and the controller of Freefire Technology Limited (“Freefire”), the major shareholder in the Company.
During the year the Company paid Freefire $31,134 in interest (2013: $36,262), $109,148 in underwriting fees (2013: $1,023,056)
and nil in loan establishment fees (2013: $220,000). During the course of the year Freefire loaned the Company $1,500,000 at an
annual interest rate of 15% (see note 3d for further information on the loan). Freefire also underwrote the 1 for 4 Rights Issue in
December 2013 and earned a 5% underwriting commission for this. The Board considers that the terms under which these payments
were made are reasonable and no more favourable than the alternative arrangements available or reasonably expected to be
available.
Mr J S Spence is a Director of Sinton Spence Chartered Accountants PNG, a firm that provides accounting services to the Company in
PNG. The Board considers that the terms under which these services are provided are reasonable and no more favourable than the
alternative arrangements available or reasonably expected to be available.
d. Receivable from and payables to Related Parties
Details can be found at note 17.
Crater Gold Mining Limited
62
Notes to the Financial Statements
25 Share Option Based Payments
a. Recognised share option based payment expenses
The expense recognised for share options granted for employee services received during the year is shown in the table below:
Expense arising from equity settled share‐based payment transactions
June
2014
$
June
2013
$
275,902
275,902
72,927
72,927
b. Employee Share Option Plan
The establishment of the Crater Gold Mining Employee Share Option Plan (“the Plan”) was approved by shareholders on 22 June
2007. The Plan is designed to provide long term incentives for executives, staff and contractors to deliver long term shareholder
returns. Participation in the Plan is at the Board’s discretion and no individual has a contractual right to participate in the Plan or to
receive any guaranteed benefits. Options granted under the Plan carry no dividend or voting rights.
Summary of options granted under the Employee Share Option Plan
The following table illustrates the number and weighted average exercise prices (“WAEP”) of, and movements in, share options issued
during the year:
Outstanding at the beginning of the year
Granted
Cancelled
Forfeited
Exercised
Expired
Outstanding at the end of the year
Exercisable at the end of the year
2014
2013
No.
WAEP $
No.
WAEP $
127,500
6,200,000
‐
‐
‐
‐
6,327,500
6,327,500
$4.13
$0.25
‐
‐
‐
‐
$0.33
$0.33
312,500
‐
(185,000)
‐
‐
‐
127,500
114,167
$4.13
‐
$4.10
‐
‐
‐
$4.17
$4.13
Employee Share Options outstanding at 30 June 2013 expire on 15 June 2015. Employee Share Options granted during the course of
the year to 30 June 2014 expire on 30 September 2017.
Option pricing model – Employee Share Option Plan
The fair value of the equity‐settled share options granted under the Employee Share Option Plan is estimated as at the date of grant
using a Black‐Scholes option pricing Model taking into account the terms and conditions upon which the options were granted. The
model takes into account the historic dividends and share price volatilities and each comparator company to produce a predicted
distribution of relative share performance.
Historical volatility of 95.25% has been the basis for determining expected share price volatility as it is not expected that this volatility
will change significantly over the life of the options. The expected life of the options is taken to be the full period of time from grant
date to expiry date as there is no expectation of early exercise of the options. The options are options to subscribe for ordinary
shares in the capital of the Company. The options are issued for no consideration. A risk free rate of 3.97% was used in the model.
Shares issued on exercise of the option will rank pari passu with all existing shares of the Company from the date of issue.
Crater Gold Mining Limited
63
Notes to the Financial Statements
25 Share Option Based Payments (cont.)
c.
Share option based payments made to unrelated party
The Company did not issue any options over ordinary shares to extinguish its liabilities (2013: Nil).
The following table illustrates the number and weighted average exercise prices (“WAEP”) of, and movements in, share options on
issue to unrelated parties in settlement of liabilities:
Outstanding at the beginning of the year
Granted
Forfeited
Exercised
Expired
Outstanding at the end of the year
2014
2013
No.
WAEP $
No.
WAEP $
260,437
‐
‐
‐
(109,726)
150,711
$2.70
‐
‐
‐
$3.51
$2.12
404,479
‐
‐
‐
(144,042)
260,437
$3.20
‐
‐
‐
$4.11
$2.70
Exercisable at the end of the year
150,711
$2.12
260,437
$2.70
The exercise price for options on issue ranges from $1.81 to $4.68 per option.
26 Equity settled liabilities
a.
Share based payments
Date
Creditor
No. of
shares
Value per
share
Valuation
Total
$
2014
24 July 2013
Global Resources Corporation
493,340
493,340
$0.41
$0.41
200,000 Value of principal
200,000
The payment to Global Resources Corporation was for a 94% share of EPM18616 in Croydon, Queensland.
2013
5 July 2012
25 July 2012
6 August 2012
22 August 2012
26 September 2012
12 October 2012
19 December 2012
Bergen
Bergen
Bergen
Bergen
Bergen
Bergen
Bergen
500,000
500,000
600,000
750,000
250,000
500,000
1,350,000
4,450,000
$0.60
$0.60
$0.50
$0.40
$0.40
$0.30
$0.10
$0.356
300,000 Value of principal
300,000 Value of principal
300,000 Value of principal
300,000 Value of principal
100,000 Value of principal
150,000 Value of termination fee
135,000 Value of principal
1,585,000
b. Option based payments
The Company did not issue any options over ordinary shares to extinguish its liabilities (2013: Nil).
Crater Gold Mining Limited
64
Notes to the Financial Statements
Note
27 Remuneration of Auditors
BDO
Audit and review of financial reports
Non‐audit services
Smiths Chartered Accountants
(Auditors of Anomaly Limited)
Audit and review of financial reports
Non‐audit services
28 Subsidiaries
a. Ultimate controlling entity
Crater Gold Mining Limited is the ultimate controlling entity for the Group.
b. Subsidiaries
June
2014
$
June
2013
$
79,000
‐
79,000
11,507
‐
11,507
78,650
‐
78,650
2,590
‐
2,590
Name of entity
Country of
Incorporation
Class of shares
Percentage ownership
Anomaly Resources Limited
Australia
Ordinary
Anomaly Limited
Papua New Guinea
Ordinary
The proportion of ownership interest is equal to the proportion of voting power held.
Note
29 Parent Entity information
Statement of Comprehensive Income
Loss after income tax
Total Comprehensive Income
Statement of Financial Position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Contributed equity
Reserves
Accumulated losses
Total Equity
2014
%
100
100
June
2014
$
2013
%
100
100
June
2013
$
(2,097,171)
(2,097,171)
(2,971,251)
(2,971,251)
287,654
4,312,127
46,252,748
44,611,702
1,948,792
1,948,792
745,115
745,115
73,056,696
70,853,709
2,980,372
2,648,820
(31,733,112)
(29,635,942)
44,303,956
43,866,587
Crater Gold Mining Limited
65
Notes to the Financial Statements
Guarantee
The parent company had no bank guarantees in respect of its subsidiaries as at 30 June 2014 (2013: Nil)
Contingent liabilities
The parent company had no contingent liabilities as at 30 June 2014 (2013: Nil).
Note
30 Reconciliation of loss for the period from continuing operations to net cash
inflow/(outflow) from operating activities
Loss for the period from continuing operations
Adjustments for non‐cash income and expense items:
Depreciation and amortisation
Written down value of fixed asset disposals
Non‐cash interest transactions
Write down investment
Profit on disposal of other financial assets
Exploration costs written off
Payables settled by equity payments
Change in operating assets and liabilities:
Decrease/(increase) in trade and other receivables
(Decrease)/increase in trade creditors and accruals
(Decrease)/increase in employee entitlements
Net cash (outflow) from operating activities
31 Unincorporated Joint Ventures
June
2014
$
June
2013
$
(2,236,315)
(3,060,824)
6,869
9,724
‐
‐
(438,251)
793,100
331,552
(121,248)
(276,273)
12,703
8,290
1,047
193,171
596,587
‐
‐
90,831
29,390
501,890
13,801
(1,918,139)
(1,625,817)
The Company previously had an unincorporated Joint Venture agreement with Triple Plate Junction plc (“TPJ”) in relation to the
Crater Mountain licences. These Joint Ventures were held as Jointly Controlled Operations. In April 2013 the Company, TPJ and
Celtic Minerals (“Celtic”) contracted for the Company to acquire TP’s and Celtic’s respective 8% and 2% interests in the Crater
Mountain Project. From that date the Company and TPJ have regarded themselves as not operating in a joint venture relationship.
32 Post Balance Date Events
Rights Issue
The Company has undertaken a fully underwritten non‐renounceable pro rata Rights Issue of one (1) convertible note for every one
thousand (1,000) shares held at A$25.00 per convertible note which raised $3,454,750 before costs. Funds raised from the Rights
Issue will be used:
to progress the development of the Company’s Crater Mountain, PNG Project’s High Grade Zone with the objective of
commencing production by the 4th quarter of 2014;
to repay approximately $1,537,500 of debt;
to cover the costs of the Rights Issue; and
for working capital generally.
The Rights Issue was fully underwritten.
Freefire Technology Limited loan
The $1,500,000 Freefire Technology Limited loan (Note 18) was repaid out of the proceeds of the post balance date Rights Issue
noted above.
33 Contingent Liabilities
The Group does not have any contingent liabilities (2013: Nil).
Crater Gold Mining Limited
66
Directors’ Declaration
1)
2)
the financial statements and notes set out on pages 36 to 66 are in accordance with the Corporations Act 2001, including:
a)
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting
requirements; and
b) giving a true and fair view of the Company’s and Group's financial position as at 30 June 2014 and of their performance, as
represented by the results of their operations, changes in equity and cash flows, for the year ended on that date; and
the Managing Director has declared that:
a)
the financial records of the Company for the financial year have been properly maintained in accordance with section 286
of the Corporations Act 2001; and
b)
c)
the financial statements and notes for the financial year comply with the Accounting Standards; and
the financial statements and notes for the financial year give a true and fair view;
3)
in the Directors’ opinion there are reasonable grounds to believe that the Company will be able to pay its debts as and when
they become due and payable.
The financial statements and notes set out on pages 36 to 66 are in accordance with International Financial Reporting Standards.
The audited remuneration disclosures set out on pages 26 to 30 of the Directors’ report comply with International Financial Reporting
Standards and Section 300A of the Corporations Act 2001.
The Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer required by section 295A of
the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Directors.
G B Starr
Managing Director
18 September 2014
Crater Gold Mining Limited
67
Independent Auditor’s Report
Crater Gold Mining Limited
68
Independent Auditor’s Report
Crater Gold Mining Limited
69
ASX Additional Information
The following information is required to be disclosed under ASX Listing Rule 4:10 and is not disclosed elsewhere in this Report.
This information is correct as at 18 September 2014.
Substantial Shareholders
The following substantial shareholders are recorded in the Company’s register of substantial shareholders.
Name
Freefire Technology Ltd
Voting Rights
Number of shares
82,440,484
% holding
60.42
Ordinary shares – on a show of hands, are one vote for every registered holder and on a poll, are one vote for each share held by
registered holders. Options holders have no voting rights.
Holders of Each Class of Equity Security
Name
Fully paid ordinary Shares
Unlisted Options (exercisable at $3.50 per option on or before 30 June 2015) (ESOP)
Unlisted Options (exercisable at $4.50 per option on or before 30 June 2015) (ESOP)
Unlisted Options (exercisable at $3.37 per option on or before 5 October 2014)
Unlisted Options (exercisable at $1.81 per option on or before 8 May 2015)
Unlisted Options (exercisable at $0.25 per option on or before 30 September 2017) (ESOP)
Unlisted Options (exercisable at $0.25 per option on or before 30 September 2017) (ESOP)
Code
CGN
CGNO25
CGNO26
CGNO35
CGNO36
CGNO37
CGNO38
Number of
holders
4,240
2
3
3
1
6
6
Convertible Notes
CGNG
260
Top 20 Holders of Ordinary Shares
Name
Freefire Technology Ltd
HSBC Custody Nominees (Australia) Limited
Mr Joe Holloway
Bloom Star Investment Limited
M Chung Pty Ltd
IAE Study In Australia Pty Ltd
J P Morgan Nominees Australia Limited
Mr James Sinton Spence
Mr Paul Thomas Mcgreal
Mr Vineet Jindal
Mr Thomas Mark Fermanis
G & W Aust Pty Ltd
Mr Paul Henley
Mr Barry Rowland Butler & Mrs Julie Butler
Mojeli Pty Ltd
Mr Michael Patrick Lawry
Mr Peter Lawry
Ms Maureen Kiau
Mr Michael Nam Soon Chung
ABN Amro Clearing Sydney Nominees Pty Ltd
Number of shares
% holding
82,440,484
60.42
5,788,677
2,643,524
1,775,649
1,354,040
1,000,000
844,001
767,100
648,273
625,000
570,200
536,667
530,089
454,225
400,000
393,208
382,240
375,000
360,000
354,914
4.24
1.94
1.30
0.99
0.73
0.62
0.56
0.48
0.46
0.42
0.39
0.39
0.33
0.29
0.29
0.28
0.27
0.26
0.26
102,243,291
74.92
Crater Gold Mining Limited
70
Top 20 Holders of Convertible Notes
Name
Freefire Technology Ltd
Bloom Star Investment Limited
HSBC Custody Nominees (Australia) Limited
Mr Mark Andrew Tkocz & Ms Susan Elizabeth Evans
De Luca Superannuation Fund Pty Ltd
N & P Superannuation Pty Limited
J G Dunn Superannuation Fund Pty Ltd
Mr Derek Lloyd Nettleton 15 Cunliffe Road
Bagmer Pty Ltd
Mr Kenneth Macnab
J P Morgan Nominees Australia Limited
Mr Anthony John Andreatta & Mrs Helen Marion Andreatta
Mr William Max Blacker & Mrs Simangele Maria Blacker
Mr Graham Ronald Boyce
Ms Ping Zhou
Mrs Joan Lesley Rybalka
Mr Peter Richard Roth
Mrs Audrey Irving Butchart & Mr Bill Erskine Butchart
Mr Tony Howes
EW & PD Pty Ltd
Grand Total
Holders of Unlisted Options
Name
EZH Holdings (DE) Two LLC
Vladimir Efros
Jeffrey Easton + Pegah Easton
Bergen Global Opportunity Fund LP
Distribution of Equity Securities
Class of Security
Security Code
Fully paid ordinary
Shares
CGN
Unlisted Options
Unlisted Options
Unlisted Options
Unlisted Options
Unlisted Options
Unlisted Options
CGNO25
CGNO26
CGNO35
CGNO36
Convertible Notes
CGNG
256
ASX Additional Information
Number of shares
% holding
100,241
19,575
6,676
2,400
600
400
320
300
261
260
256
250
211
200
200
200
180
168
160
160
72.54
14.17
4.83
1.74
0.43
0.29
0.23
0.22
0.19
0.19
0.19
0.18
0.15
0.14
0.14
0.14
0.13
0.12
0.12
0.12
133,018
96.26
Code
CGNO35
CGNO35
CGNO35
CGNO36
Number of unlisted
options
2,334
2,022
1,867
130,000
% holding
37.51
32.49
30.00
100.00
1 to
1,000
1,001 to
5,000
5,001 to
10,000
10,001 to
100,000
100,001
and Over
Total
1,569
1,028
422
576
84
3,679
‐
‐
‐
‐
‐
‐
1
1
3
‐
‐
‐
1
‐
‐
‐
‐
‐
‐
1
1
2
‐
‐
‐
‐
1
‐
‐
‐
1
6
6
1
2
3
3
1
6
6
260
Crater Gold Mining Limited
71
ASX Additional Information
Number of holders holding less than a marketable parcel of shares
A marketable parcel is defined by the Market Rule Procedures of the ASX as a parcel of securities with a value of not less than $500.
The number of ordinary shareholders holding less than a marketable parcel of shares is 2,425.
On market buy‐back
There is no current on market buy‐back
Crater Gold Mining Limited
72
Corporate Directory
Directors:
S W S Chan (Non‐executive Chairman)
G B Starr (Managing Director)
T M Fermanis (Non‐executive Director)
L K K Lee (Non‐executive Director)
R P Macnab (Non‐executive Director)
D T Y Sun (Non‐executive Director)
R D Parker (Non‐executive Director)
J D Collins‐Taylor (Alternate to T.M. Fermanis)
Company Secretary:
J A Lemon
ABN:
75 067 519 779
Registered Office:
Postal Address:
Share Registry:
Auditors:
Level 4,
15 – 17 Young Street,
Sydney NSW 2000
Australia
Telephone: +61 2 9241 4224
Email:
info@cratergold.com.au
Level 4,
15 – 17 Young Street,
Sydney NSW 2000
Australia
Link Market Services Limited
Level 15, 324 Queen Street
Brisbane QLD 4000
Australia
Telephone: 1300 554 474
Facsimile: +61 7 3228 4999
BDO East Coast Partnership
Level 11
1 Margaret Street
Sydney NSW 2000
Australia
Telephone: +61 2 9251 4100
ASX Listing:
Crater Gold Mining Limited shares are quoted on the Australian Securities Exchange under
the code “CGN”.
Website address:
www.cratergold.com.au
Crater Gold Mining Limited
73