Gold Mountain Limited
Annual Report 2015

Plain-text annual report

CORPORATE DIRECTORY GOLD MOUNTAIN LIMITED ABN 95 112 425 788 ASX: GMN Directors Share Register Graham Kavanagh Non-Executive Chairman Boardroom Pty Limited Matthew Morgan Non-Executive Director Sin Pyng “Tony” Teng Non-Executive Director Grosvenor Place, Level 12, 225 George Street, SYDNEY NSW 2000, GPO Box 3993, SYDNEY NSW 2001 Management Eric Kam Company Secretary David Clark Chief Financial Officer Registered and Principal Office Suite 2501, Level 25 31 Market Street SYDNEY NSW 2000 Australia Telephone: +61 2 9283 3880 Facsimile: +61 2 9477 5565 info@goldmountainltd.com.au www.goldmountainltd.com.au Telephone: 1300 737 760 Facsimile: 1300 653 459 Solicitor HWL Ebsworth Lawyers Level 14, Australia Square 264 – 278 George Street SYDNEY NSW 2000 Banker Australia and New Zealand Banking Group Limited Westpac Banking Corporation Limited Auditor KS Black & Co. Chartered Accountants Level 6, 350 Kent Street, SYDNEY NSW 2000 GOLD MOUNTAIN LIMITED ANNUAL REPORT 1 TABLE OF CONTENTS CORPORATE DIRECTORY ............................................................................................................................................... 1 LETTER TO SHAREHOLDERS .......................................................................................................................................... 2 DIRECTORS’ REPORT ...................................................................................................................................................... 4 INTERESTS IN THE SHARES AND OPTIONS OF THE COMPANY ............................................................................ 5 OPERATIONS REPORT ................................................................................................................................................ 8 REMUNERATION REPORT (Audited) ......................................................................................................................... 15 SCHEDULE OF TENEMENTS ......................................................................................................................................... 21 AUDITOR’S INDEPENDENCE DECLARATION ............................................................................................................... 22 STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME .......................................................... 23 STATEMENT OF FINANCIAL POSITION ......................................................................................................................... 24 STATEMENT OF CHANGES IN EQUITY ......................................................................................................................... 25 STATEMENT OF CASHFLOWS ....................................................................................................................................... 26 NOTES TO THE FINANCIAL STATEMENTS ................................................................................................................... 27 DIRECTORS’ DECLARATION .......................................................................................................................................... 52 INDEPENDENT AUDITORS REPORT ............................................................................................................................. 53 ADDITIONAL SHAREHOLDER INFORMATION .............................................................................................................. 55 GOLD MOUNTAIN LIMITED ANNUAL REPORT 3 DIRECTORS’ REPORT Your Directors submit the annual financial report of Gold Mountain Limited for the financial year ended 30 June 2015. In order to comply with the provisions of the Corporations Act, the Directors’ report as follows: KEY MANAGEMENT PERSONNEL DISCLOSURES DIRECTORS The names of Directors who held office during or since the end of the year and until the date of this report are as follows. Directors were in office for this entire period unless otherwise stated. Graham Kavanagh (appointed 5 June 2014) Matthew Morgan (appointed 3 July 2014) Sin Pyng “Tony” Teng (appointed 9 July 2014) Robert J Waring (appointed 29 November 2010, resigned 11 July 2014) Bill Richie Yang (appointed 2 June 2014, resigned 18 July 2014) Eric Kam (appointed 5 June 2014, resigned 18 July 2014) Names, qualifications, experience and special responsibilities Graham Kavanagh Non Executive Director from 5 June 2014, Non Executive Chairman from 9 July 2014 Qualifications B Comm ASIA Experience Interest in shares and Options Directorships held in other listed entities Mr Kavanagh has an extensive background over more than 25 years in securities and fund management, property investment and development as well as earlier experience in the Department of Mines. He has held senior positions as securities analyst, general manager and director in fund management and property investment. None Enhanced Oil & Gas Recovery Limited (ASX:EOR) Matthew Morgan Non Executive Director Qualifications BSc (Geology) Experience Interest in shares and Options Directorships held in other listed entities Mr Morgan brings over twenty years of experience in exploration and mine development with companies including, inter alia, BHP Billiton, Rio Tinto and Theiss. Mr Morgan has filled CEO and senior management roles in both listed and unlisted companies. His technical experience has included exploration and mine geology, resource estimation, mine engineering and operational management in minerals such as gold, iron ore and coal. In addition to his experience in Australia, Mr Morgan has had international experience including Malaysia and Mongolia, and has negotiated off-take mineral contracts with several foreign governments 750,000 ordinary shares No directorships held of ASX listed entities in the past three years GOLD MOUNTAIN LIMITED ANNUAL REPORT 4 Sin Pyng “Tony” Teng Non Executive Director, appointed 9 July 2014 Qualifications B. Econ. Dip. Fin. Mangt. CPA, FAICD, AFAIM Experience Mr Teng has had experience as a management consultant and with merger and acquisitions, corporate restructuring and public company capital raising. He was co-founder and former director of Coalworks Limited that was acquired by Whitehaven in 2012 in a $200m takeover bid. Interest in shares and Options 510,000 ordinary shares 7,610,000 ordinary shares (indirect interest) Directorships held in other listed entities Icash Payment Systems Limited (ASX:ICP) (resigned 2012) MANAGEMENT Eric Kam Company Secretary (appointed 9 July 2014) Qualifications: FCPA, FCMA, MBA, MAICD Mr Kam has extensive experience in finance and operations management across diverse businesses and industries in engineering, construction, mining & resources, technology, finance, marketing and distribution. He is involved in corporate change and listing of companies, and is on the board of several other companies. Mr Kam has had extensive experience as Company Secretary in several public listed and unlisted companies. David Clark Chief Financial Officer Qualifications: CA, CPA, AGIS, B Comm. (UNSW), MBA Executive (AGSM), Registered Tax Agent Mr Clark is a Chartered Accountant, Chartered Secretary and Registered Tax Agent of over fifteen (15) years standing and holds a Bachelor of Commerce degree from UNSW and a Master of Business of Administration (Executive) from the Australian Graduate School of Management. Mr Clark is principal of D.W. Clark & Co., Chartered Accountant, an innovative, results-driven chartered accounting practice providing corporate financial, taxation and secretarial services and advice to listed and unlisted companies in the mineral exploration and oil and gas industries. INTERESTS IN THE SHARES AND OPTIONS OF THE COMPANY DIRECTORS’ SHAREHOLDINGS As at the date of this report, the interests of the Directors in the securities of Gold Mountain Limited were:- Shares and Options Shares and Options Director Name Direct Graham Kavanagh Nil Indirect Nil Matthew Morgan Nil 850,000 shares Sin Pyng “Tony” Teng 510,000 shares 7,610,000 shares GOLD MOUNTAIN LIMITED ANNUAL REPORT 5 MOVEMENT IN EQUITY INSTRUMENTS (OTHER THAN OPTIONS AND RIGHTS) Details of the movement in equity instruments (other than options and rights) held directly, indirectly or beneficially by Directors and Key Management Personnel and their related parties are as follows: 30 June 2015 Graham Kavanagh 1 Matthew Morgan 2 Sin Pyng “Tony” Teng 3 Chris Battye 4 Wesley Harder 4 Robert Waring 5, 6 Keith Taylor David Clark Total 30 June 2014 Graham Kavanagh 1 Matthew Morgan 2 Sin Pyng “Tony” Teng 3 Chris Battye 4 Wesley Harder 4 Robert Waring 5, 6 Keith Taylor David Clark Total Balance at beginning of the Year Granted as remuneration during the Year - 500,000 1,020,000 - 3,012,044 2,337,820 2,469,999 1,250,000 10,589,863 - - - - - - - - - Issued on Exercise of Options during the Year - 250,000 - - - - - - Other changes during the Year Balance at end of the Year - - - 750,000 6,600,000 7,620,000 - (3,012,044) (2,337,820) (2,469,999) (1,250,000) - - - - - 250,000 (2,469,863) 8,370,000 Balance at beginning of the Year Granted as remuneration during the Year Issued on Exercise of Options during the Year - - - - - - 8,005,000 1,425,933 561,111 1,425,933 741,666 849,764 388,888 - 54,444 694,407 10,211,985 3,935,161 - - - - - - - - - Other changes during the Year Balance at end of the Year - - 500,000 500,000 1,020,000 1,020,000 (9,430,933) - 1,025,000 3,012,044 1,207,266 2,337,820 1,620,235 2,469,999 501,149 1,250,000 (3,557,283) 10,589,863 1 GE Kavanagh was appointed a non executive director at the general meeting of memebers held on 5 June 2014 2 M Morgan was appointed a non executive director on 3 July 2014 3 Sin Pyng “Tony” Teng was appointed a non executive director on 9 July 2014 4 C Battye was removed as a non exeutive director at the general meeting of memebers held on 5 June 2014 4 WM Harder was removed as a non exeutive director at the general meeting of memebers held on 5 June 2014 5 RJ Waring resigned as a non executive director on 11 July 2014; 6 In addition, RJ Waring is a Director and substantial shareholder in, but he does not have a relevant interest in, Oakhill Hamilton Pty Ltd, a company which holds 20,000 ordinary shares in Gold Mountain Limited. Exercise of Options 250,000 ordinary shares were issued by the Company during and/or since the end of the financial year as a result of the exercise of options. There are no unpaid amounts on the shares issued. GOLD MOUNTAIN LIMITED ANNUAL REPORT 6 Options and Rights Holdings Details of movements in options and rights held directly, indirectly or beneficially by Directors and Key Management Personnel and their related parties are as follows: Net change Other Balance at end of period 30 June 2015 Balance at beginning of period Granted as remuneration Graham Kavanagh - Matthew Morgan 250,000 Sin Pyng “Tony” Teng Wesley Harder Robert Waring Keith Taylor Jason Needham Total - 437,500 490,832 437,500 1,000,000 2,615,832 - - - - - - - - Options exercised or vested - (250,000) - - - - - - - - (437,500) (490,832) (437,500) (500,000) (250,000) (1,865,832) - - - - - - 500,000 500,000 30 June 2014 Graham Kavanagh Matthew Morgan Sin Pyng “Tony” Teng Wesley Harder Robert Waring Keith Taylor Jason Needham Total Balance at beginning of period Granted as remuneration Options exercised or vested Net change Other Balance at end of period - - - - - - 1,000,000 1,000,000 - - - - - - - - - - - - - - - - - - 250,000 250,000 - 437,500 490,832 437,500 - 1,615,832 - 437,500 490,832 437,500 1,000,000 2,615,832 Options on issue at the date of this report are:- Grant Date 16 Mar 2011 16 Mar 2012 Dividends Number 750,000 500,000 Expiry Date 31 Dec 2015 31 Dec 2016 Exercise price $0.30 $0.07 Number of holders 1 1 No dividends have been paid or declared since the start of the financial year and/or the Directors do not recommend the payment of a dividend in respect of the financial year. GOLD MOUNTAIN LIMITED ANNUAL REPORT 7 OPERATIONS REPORT Principal Activities The principal activity of the Company during the financial period was to acquire, explore and develop areas that are highly prospective for gold and other precious and base metals and minerals in Australia, Papua New Guinea and elsewhere. Operating and Financial Review (i) Operations Gold Mountain is an exploration company operating in Australia and Papua New Guinea to acquire, explore and develop areas that are highly prospective for gold and other precious and base metals and minerals. The Company creates value for shareholders, through exploration activities which develop and quantify mineral assets. Once an asset has been developed and quantified within the framework of the JORC guidelines the Company may elect to move to production, to extract and refine ore which is then sold as a primary product. The Company is actively exploring and developing gold projects in Australia and Papua New Guinea. Please refer to the Review of Operations for more information on the status of the projects. (ii) Financial Performance & Financial Position The Company listed on the Australian Securities Exchange (ASX) on 2 September 2011 as Commissioners Gold Limited. Following shareholder approval at the 2014 AGM, the Company changed its name to Gold Mountain Limited on 16 December 2014. The financial results of the Company for the five (5) years to 30 June 2015 are: 30 June 2015 30 June 2014 30 June 2013 30 June 2012 30 June 2011 Cash and cash equivalents 759,938 200,070 51,406 513,888 1,343,844 Net assets 2,460,399 1,371,820 567,107 1,333,159 521,815 Revenue & financial income 5,046 38,151 13,293 28,627 12,114 Net loss after tax (847,685) (526,993) (1,559,101) (935,084) (298,175) EBITDA (659,879) (468,681) (742,346) (598,035) (180,091) Share price at 30 June Loss per share (cents) $0.039 (0.57) $0.023 (0.69) $0.034 (3.58) $0.044 Not applicable (2.80) (1.62) a) Financial Performance The net loss after tax of the Company for the financial year after tax amounted to $847,685 (2014: Loss $526,993). The Company is creating value for shareholders through its exploration expenditure and currently has no revenue generating operations. Revenue and financial income are generated from interest income from funds held on deposit and miscellaneous income. As the average funds held on deposit have increased during the year, accordingly interest income has increased from no interest income when compared to the prior year. During the year, the operations relating to the Papua New Guinea gold project expanded as the Company undertook a rapid exploration program, accordingly capitalised exploration increased from $626,376 in the 2014 FY to $1,210,941 in the 2015 FY. Personnel and external consulting requirements increased, which resulted in an increase of legal and professional costs from $163,662 in the 2014 FY to $314,225 in the 2015 FY. The Company also had an increase in GOLD MOUNTAIN LIMITED ANNUAL REPORT 8 travel expenses from $2,017 in the 2014 FY to $24,744 in the 2015 FY arising from the Papua New Guinea gold exploration program and the capital raising and promotion activities undertaken by the Mr Matthew Morgan and Mr Sin Pyng “Tony” Teng. There has been a decrease in public and investor relations expense from $15,139 in the 2014 FY to $12,233 in the 2015 FY. b) Financial Position The Company’s main activity during the year was the investment of cash of $759,938 (2014: $200,070). The carrying value of the exploration assets and the capitalised exploration assets increased 130% to $1,443,522 (2014: $626,376). The 30 June 2015 financial report has been prepared on the going concern basis that contemplates the continuity of normal business activities and the realisation of assets and extinguishment of liabilities in the ordinary course of business. For the year ended 30 June 2015, the Company recorded a loss after tax of $846,545 (2014: $526,993) and had a net working capital surplus of $579,996 (30 June 2014: Surplus of $170,733). On 28 May, 2015 the Company announced that an Underwriting Agreement had been entered into with Mr Seah Gak San of Malaysia in respect of 27,733,455 unlisted options which were due to expire on 29 May, 2015. On 4 June 2015, 8,530,555 new fully paid ordinary shares were issued at $0.04 each upon the exercise of these options to raise $341,222. Subsequent to the end of the year, on 15 July, 2015, 19,510,000 ordinary shares were issued to sophisticated investors at $0.04 each pursuant to the Underwriting Agreement to raise $780,400. As the Company is an exploration and development entity, ongoing exploration and development activities are reliant on future capital raisings. Based on these facts, the Directors consider the going concern basis of preparation to be appropriate for this financial report. (iii) Business Strategies and Prospects for future financial years The Company actively evaluates the prospects of each project as results from each program become available, these results are available via the ASX platform for shareholders information. The Company then assesses the continued exploration expenditure and further asset development. The Company will continue the evaluation of its mineral projects in the future and undertake generative work to identify and acquire new resource projects. There are specific risks associated with the activities of the Company and general risks which are largely beyond the control of the Company and the Directors. The risks identified below, or other risk factors, may have a material impact on the future financial performance of the Company and the market price of the Company’s shares. a) Operating Risks The operations of the Company may be affected by various factors, including failure to locate or identify mineral deposits, failure to achieve predicted grades in exploration and mining, operational and technical difficulties encountered in mining, sovereign risk difficulties in commissioning and operating plant and equipment, mechanical failure or plant breakdown, unanticipated metallurgical problems which may affect extraction costs, adverse weather conditions, industrial and environmental accidents, industrial disputes and unexpected shortages or increases in the costs of consumables, spare parts, plant and equipment. b) Environmental Risks The operations and proposed activities of the Company are subject to the laws and regulations of Australia and Papua New Guinea concerning the environment. As with most exploration projects and mining operations, the Company’s activities are expected to have an impact on the environment, particularly if advanced exploration or mine development proceeds. It is the Company’s intention to conduct its activities to the highest standard of environmental obligation, including compliance with all environmental laws. c) Economic General economic conditions, movements in interest and inflation rates and currency exchange rates may have an adverse effect on the Company’s exploration, development and production activities, as well as on its ability to fund those activities. GOLD MOUNTAIN LIMITED ANNUAL REPORT 9 d) Market conditions Share market conditions may affect the value of the Company’s quoted securities regardless of the Company’s operating performance. Share market conditions are affected by many factors such as: (i) (ii) (iii) (iv) (v) (vi) general economic outlook; introduction of tax reform or other new legislation; interest rates and inflation rates; changes in investor sentiment toward particular market sectors; the demand for, and supply of, capital; and terrorism or other hostilities. The market price of securities can fall as well as rise and may be subject to varied and unpredictable influences on the market for equities in general and resource exploration stocks in particular. Neither the Company nor the Directors warrant the future performance of the Company or any return on an investment in the Company. e) Additional requirements for capital The Company’s capital requirements depend on numerous factors. Depending on the Company’s ability to generate income, the Company will require further financing. Any additional equity financing will dilute shareholdings, and debt financing, if available, may involve restrictions on financing and operating activities. If the Company is unable to obtain additional financing as needed, it may be required to reduce the scope of its operations and scale back its exploration programs as the case may be. There is however no guarantee that the Company will be able to secure any additional funding or be able to secure funding on terms favourable to the Company. f) Speculative investment The above list of risk factors ought not to be taken as exhaustive of the risks faced by the Company or by investors in the Company. The above factors, and others not specifically referred to above, may in the future materially affect the financial performance of the Company and the value of the Company’s shares. Potential investors should consider that the investment in the Company is speculative and should consult their professional advisers before deciding whether to invest. 5. Significant Changes in the State of Affairs On 3 July, 2014, the Company appointed Mr Matthew Morgan as a Non Executive Director. On 9 July, 2014, the Company appointed Mr Sin Pyng “Tony” Teng as a Non Executive Director. On the same day, Non Executive Director Mr Graham Kavanagh was appointed Chairman by the Board of Directors. On 11 July, 2014, Non Executive Director Mr Robert Waring resigned as a Director of the Company. On 18 July, 2014, Non Executive Directors Mr Bill Richie Yang and Eric Kam resigned as Directors of the Company. On 1 August 2014, the Company completed a successful capital raising of $390,000 through the issue of 13,000,000 ordinary shares at $0.03 per share by way of a private placement to professional and sophisticated investors. On 15 December 2014, the Company completed a successful capital raising of $300,000 through the issue of 10,000,000 ordinary shares at $0.03 per share by way of a private placement to professional and sophisticated investors. On 15 December 2014, the Company announced the results of the Company’s Annual General Meeting where shareholders ratified the issue of securities during the period. The Company changed its name from Commissioners Gold Limited to Gold Mountain Limited following the approval of Resolution 4 in the Notice of Annual General Meeting. On 19 December 2014, 8,000,000 ordinary shares were issued when 8,000,000 convertible notes were converted to ordinary shares at the conversion price of $0.025 per share following shareholder approval of Resolution 10 of the Annual General Meeting held on 15 December 2014. The Company raised $200,000 in cash when the convertible notes were first issued in June 2014. On 6 January 2015, the Company announced it had entered into an agreement to acquire the remaining unearned interest in the Cowarra Gold Project EL5939 from the current tenement holder and joint venture partner Capital Mining GOLD MOUNTAIN LIMITED ANNUAL REPORT 10 Limited (ASX: CMY). GMN paid a security deposit of $20,000 and a further $20,000 is payable as final settlement upon completion of the registration of transfer with the NSW Department of Trade and Investments, Resources and Energy. On 27 February 2015, the Company completed a successful capital raising of $843,099 through the issue of 28,103,300 ordinary shares at $0.03 per share by way of a private placement to professional and sophisticated investors. On 2 March 2015 and 9 March 2015, the Company released Stage 1 exploration results from the Sak Creek and Crown Ridge prospects respectively, within EL1966, Enga Province, Papua New Guinea. On 30 April 2015, the Company announced Goldsmith Resources SAC (GRSAC) has entered into a Binding Agreement with Montan Mining Corporation of Vancouver Canada to acquire processing facility in Peru subject to conditions precedent for a total consideration of USD $3,300,000. GMN holds an 18.75% minority interest in GRSAC. On 12 May 2015, the Company released Stage 2 exploration results from the Crown Ridge prospects within EL1966, Enga Province, Papua New Guinea. On 20 May 2015, the Company announced Stage 3 exploration had commenced at the Crown Ridge prospects within EL1966, Enga Province, Papua New Guinea under the supervision of senior geologist, Mr Douglas Smith. On 27 May 2015, the Company announced it had completed the due diligence enquiries in relation to Viva No. 20 Limited (Viva) and the three (3) exploration licences and the exploration licence application in Papua New Guinea held by Viva. The Company also announced it was now proceeding to finalise completion of its acquisition of shares comprising 20% of the issued capital of Viva. On 5 June 2015 8,530,555 shares were issued from the exercise of 8,530,555 unlisted options at an exercise price of $0.04 which were exercised prior to the expiry date of 29 May 2015. On 12 June 2015, the Company received $10,000 from Mr Matthew Morgan through the exercise of unlisted options which were converted to 250,000 shares at $0.04 per share. Review of Operations Wabag Gold Project - Papua New Guinea On 30 June 2014, GMN entered into a binding Heads of Agreement with the shareholders of Viva No.20 Limited (Viva), a company incorporated in PNG, to acquire a 20% interest and an option to acquire a further 50% interest together with all relevant information, data and all geological records held by Viva in relation to three granted exploration licences subject to certain independent due diligence requirements and other conditions precedent. Under the agreement, Viva granted GMN a five month exclusive dealing period in which to undertake due diligence, satisfy various conditions precedent, and complete a transaction to acquire shares in Viva. GMN has paid to Viva a non- refundable fee of A$75,000. In May 2015, the Company completed due diligence requirements and is now proceeding to finalise completion of its acquisition of shares comprising 20% of the issued capital of Viva. Subsequent to the end of the financial year, on 31 July 2015, the Company entered into a share purchase agreement with Viva and its shareholders to acquire a further 50% interest in Viva through the acquisition of shares from the Viva shareholders as contemplated by the Notice of AGM issued by the Company in November 2014. The project is located in the highlands province of Enga, immediately adjacent to the township of Wabag and 75km NW of the regional centre of Mt Hagen. The project covers a suite of Miocene intermediate intrusive rocks, related volcanics and younger metasediments of the New Guinea Thrust Belt, a strongly mineralised structural zone which dominates the central-northern highlands of PNG. Intermediate intrusives at Wabag were emplaced during the Maramuni event, a Belt- wide igneous and mineralising event. The geology at Wabag has similar characteristics to the geology hosting notable high grade prospects such as Frieda River, Trukai, North Dlbom and Nena. Previous exploration has identified high grade gold and platinum anomalies in stream sediments. The most notable being around Timun in the south where approximately 100 kg of alluvial gold has been previously recovered. Timun and Kompiam are accessible by road from Wabag enabling exploration of that part of the licenced area. The exploration results completed during the financial year and to date are extremely encouraging. In March 2015, the Company released Stage 1 exploration results from the Sak Creek and Crown Ridge prospects, within EL1966, Enga Province, Papua New Guinea. On 12 May 2015, the Company released Stage 2 exploration results from the Crown GOLD MOUNTAIN LIMITED ANNUAL REPORT 11 Ridge prospects within EL1966, Enga Province, Papua New Guinea. On 20 May 2015, the Company announced Stage 3 exploration had commenced at the Crown Ridge prospects within EL1966, Enga Province, Papua New Guinea under the supervision of senior geologist, Mr Douglas Smith. The Board is of the belief the Wabag PNG acquisition may offer an opportunity to ultimately deliver a material project for the benefit of the Company and shareholders. Goldsmiths Resources SAC-Peru Goldsmith Resources SAC is a Peruvian company in which Gold Mountain holds an 18.75% shareholding. Goldsmith is focussed on a gold project in southern Peru, centred on a mineral processing plant at Mollehuaca, satellite mining operations at Eladium and additional prospective exploration and mining ground within the Nazca-Ocoña metallogenic belt a well-established mining region which hosts a number of medium-sized, high-grade operating gold mines. On 30 April, 2015, the Company announced Goldsmith Resources SAC (“GRSAC”) entered into a Binding Agreement on behalf of its shareholders’ interest with Montan Mining Corporation of Vancouver Canada (TSXV: MNY) (“Montan”) to acquire the Peruvian Project subject to conditions precedent for a total consideration of USD $3,300,000. Further details of this transaction are disclosed at Note 10 in the Notes to the Financial Statement. GMN Director Matthew Morgan represents the Company on the board of Goldsmith Resources SAC. NSW Gold Exploration Projects Cowarra NSW-Exploration Licence 5939 GMN holds a 50% interest and can earn up to 85% under a farm-in agreement on expenditure of a further $350,000. On 6 January 2015, the Company announced it had entered into an agreement to acquire the remaining unearned interest in the Cowarra Gold Project EL5939 from the current tenement holder and joint venture partner Capital Mining Limited (ASX: CMY). GMN paid a security deposit of $20,000 and a further $20,000 is payable as final settlement upon completion of the registration of transfer with the NSW Department of Trade and Investments, Resources and Energy. Cowarra is a gold mineralisation project 2.8 km by 300-400m and to date a JORC inferred resource of 38,000 ozs in open pittable oxides has been identified. Good access, power and water is readily available. Further exploration will be required to establish an economic reserve and progress it to project status. Oberon NSW Under a farm-in agreement with Central West Gold NL (ASX: CWG) GMN could earn a 70% interest in the EL by funding exploration to $350,000. Exploration expenditure of $150,000 had been expended to 30 June 2014 and the remaining $200,000 was required to be expended by November 2014 unless the farm-in agreement was extended. This tenement was considered low priority and GMN notified CWG that GMN will not be providing further funding for exploration. As a result, CWG have allowed the exploration licence to expire at the end of the current term. Dalton NSW-Exploration Licence 6922 This Exploration Licence in which GMN has a 100% interest consists of a regional shear zone hosting gold mineralisation. Shallow rotary core drilling has returned a high gold value of 32g/t over 1 metre. Follow up work is planned along strike in a northerly direction. The licence covers a number of historic workings. Expenditure commitments to 2015 total $154,500. Grenfell NSW The Company holds a 100% interest in Exploration Licence 8263 granted on 16 May 2014 and covers the historic Grenfell gold field in Central NSW. EL 8263 embraces 22 shallow gold quartz reefs which were worked a century ago to produce approximately 150,000 ozs of gold. The exploration plan is to focus on possible extensions on the line of strike from the old gold workings and subsequently at depth. GOLD MOUNTAIN LIMITED ANNUAL REPORT 12 Capital Raisings During the reporting period, the Company conducted several rounds of capital raisings. In total, the Company raised $1,874,321 to fund ongoing operations in Papua New Guinea and Australia. Capital Raising Date Shares Issued Price Amount Raised Placement Placement 1 August 2014 18 December 2014 Convertible note conversion 18 December 2014 Placement 27 February 2015 Exercise of unlisted options 4 June 2015 13,000,000 10,000,000 8,000,000 28,103,300 8,530,555 87,143,855 $0.030 $0.030 $0.025 $0.030 $0.040 $390,000 $300,000 ** $843,099 $341,222 $1,874,321 ** Funds of $200,000 from the convertible notes were received on 30 June 2014 when the notes were first issued. On 1 August 2014, the Company completed a successful capital raising of $390,000 through the issue of 13,000,000 ordinary shares at $0.03 per share by way of a private placement to professional and sophisticated investors. On 15 December 2014, the Company completed a successful capital raising of $300,000 through the issue of 10,000,000 ordinary shares at $0.03 per share by way of a private placement to professional and sophisticated investors. On 19 December 2014, 8,000,000 ordinary shares were issued when 8,000,000 convertible notes were converted to ordinary shares at the conversion price of $0.025 per share following shareholder approval of Resolution 10 of the Annual General Meeting held on 15 December 2014. The Company raised $200,000 in cash when the convertible notes were first issued in June 2014. On 27 February 2015, the Company completed a successful capital raising of $843,099 through the issue of 28,103,300 ordinary shares at $0.03 per share by way of a private placement to professional and sophisticated investors. On 5 June 2015 8,530,555 shares were issued from the exercise of 8,530,555 unlisted options at an exercise price of $0.04 which were exercised prior to the expiry date of 29 May 2015. Risk management Details of the Company’s Risk Management policies are contained within the Corporate Governance Statement. Corporate Governance A statement disclosing the extent to which the Company has followed the best practice recommendations set by the ASX Corporate Governance Council during the period is displayed on the Company’s website. Subsequent events after balance date On 15 July, 2015, 19,510,000 ordinary shares were issued to sophisticated investors at $0.04 each pursuant to the Underwriting Agreement to raise $780,400. Previously, on 28 May, 2015 the Company announced that an Underwriting Agreement had been entered into with Mr Seah Gak San of Malaysia in respect of 27,733,455 unlisted options which were due to expire on 29 May, 2015. On 31 July 2015, the Company announced it had entered into a share purchase agreement with Viva No. 20 Limited (Viva) and its shareholders (Viva shareholders) to acquire a further 50% interest in Viva through the acquisition of shares from the Viva shareholders as contemplated by the Notice of AGM issued by the Company in November 2014. There has not been any other matter or circumstance that has arisen after balance date that has significantly affected, or may significantly affect, the operations of the Company, the results of those operations, or the state of affairs of the Company in future financial periods. GOLD MOUNTAIN LIMITED ANNUAL REPORT 13 Environmental legislation The Company is subject to significant environmental and monitoring requirements in respect of its natural resource exploration activities. The Directors are not aware of any significant breaches of these requirements during the period. Indemnification and insurance of Directors and Officers The Company has agreed to indemnify all the Directors of the Company for any liabilities to another person (other than the Company or related entity) that may arise from their position as Directors of the Company, except where the liability arises out of conduct involving a lack of good faith. During the financial year, GMN paid a premium in respect of a contract insuring the Directors and officers of the Company against any liability incurred in the course of their duties to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium. Options No options over issued shares or interest in the Company were granted during or since the end of the financial year. GOLD MOUNTAIN LIMITED ANNUAL REPORT 14 REMUNERATION REPORT (AUDITED) The Board, in consultation with the Remuneration Committee, is responsible for determining and reviewing compensation arrangements for the directors and executive management. The Board assesses the appropriateness of the nature and amount of remuneration of key personnel on an annual basis. In determining the amount and nature of officers’ packages, the Board takes into consideration the Company’s financial and operational performance along with industry and market conditions. The Committee has the authority to retain any outside advisor at the expense of the Company, without the Board’s approval, at any time and has the authority to determine any such advisor’s fees and other retention terms. In setting corporate goals and objectives relevant to Senior Executives’ compensation, the Committee considers both short-term and long-term compensation goals and the setting of criteria around this. In relation to setting Directors’ remuneration the Committee looks at and considers comparative data from similar companies. This report outlines the remuneration arrangements in place for Directors and Key Management Personnel of Gold Mountain Limited (the “company”) for the financial year ended 30 June 2015. The following persons acted as Directors during or since the end of the financial year: Graham Kavanagh Matthew Morgan Sin Pyng “Tony” Teng Robert J Waring Bill Richie Yang Eric Kam The term ‘Key Management Personnel’ is used in this remuneration report to refer to the following persons. Except as noted, the named persons held their current position for the whole of the financial year and since the end of the financial year: Graham Kavanagh Matthew Morgan Sin Pyng “Tony” Teng Remuneration Philosophy Robert J Waring Bill Richie Yang Eric Kam David Clark The performance of the Company depends upon the quality of the Directors and executives. The philosophy of the Company in determining remuneration levels is to:    set competitive remuneration packages to attract and retain high calibre employees; link executive rewards to shareholder value creation; and establish appropriate, demanding performance hurdles for variable executive remuneration Remuneration Committee The Remuneration Committee of the Board of Directors of the Company is responsible for determining and reviewing compensation arrangements for the Directors and the Senior Management team. The Remuneration Committee assesses the appropriateness of the nature and amount of remuneration of Directors and senior executives on a periodic basis by reference to relevant employment market conditions with an overall objective of ensuring maximum stakeholder benefit from the retention of a high quality Board and executive team. GOLD MOUNTAIN LIMITED ANNUAL REPORT 15 Remuneration Structure In accordance with best practice Corporate Governance, the structure of Non-Executive Director and executive remuneration is separate and distinct. Non-Executive Director Remuneration The Board seeks to set aggregate remuneration at a level that provides the Company with the ability to attract and retain Directors of the highest calibre, whilst incurring a cost that is acceptable to shareholders. Each Director is entitled to such remuneration from the Company as the Directors decide, but the total amount provided to all non-executive directors must not exceed in aggregate the amount fixed by the Company in a general meeting. The aggregate remuneration for all non-executive directors has been set at an amount of $300,000 per annum. The ASX Listing Rules specify that the aggregate remuneration of Non-Executive Directors shall be determined from time to time by a general meeting. The amount of aggregate remuneration sought to be approved by shareholders and the manner in which it is apportioned amongst Directors is reviewed annually. The Board considers advice from external shareholders as well as the fees paid to Non-Executive Directors of comparable companies when undertaking the annual review process. Each Director is entitled to receive a fee for being a Director of the Company. The remuneration of Non-Executive Directors for the year ended 30 June 2015 is detailed in the Remuneration of Directors and named executives section of this report on the following pages of this report. Senior Manager and Executive Director Remuneration Remuneration consists of fixed remuneration and Company options (as determined from time to time). In addition to the Company employees and Directors, the Company has contracted key consultants on a contractual basis. These contracts stipulate the remuneration to be paid to the consultants. Fixed Remuneration Fixed remuneration is reviewed annually by the Independent Directors’ Committee (which assumes the role of the Remuneration Committee). The process consists of a review of relevant comparative remuneration in the market and internally and, where appropriate, external advice on policies and practices. The Committee has access to external, independent advice where necessary. Fixed remuneration is paid in the form of cash payments. The fixed remuneration component of the six most highly remunerated Company executives is detailed in Table 1. Employment Contracts During the year and to the date of this report there are no employment contracts with the Company. GOLD MOUNTAIN LIMITED ANNUAL REPORT 16 Remuneration of Directors and named executives Table 1: Directors’ and named executives remuneration for the year ended 30 June 2015 Short-term employee benefits Salary & Fees Bonuses Non- Monetary Benefits Post-employment benefits Equity Other Total % Super- annuation Prescribed Benefits Options Shares Deferred Benefits Performance Related Graham Kavanagh 1 39,600 Matthew Morgan 2 Sin Pyng “Tony” Teng 3 Robert J Waring Bill Richie Yang Eric Kam 4 Keith Taylor Jason Needham 5 David Clark 6 Total 100,000 100,000 - - 72,000 - 4,900 24,405 340,905 - - - - - - - - - - - - - - - - - - - - - - 1,140 - - - - - - 1,140 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 39,600 100,000 100,000 - - 72,000 - 4,900 24,405 342,045 0% 0% 0% - - 0% - 0% 0% - 1. Paid to Drumcliffe Investments Pty Ltd for corporate advisory services of which Mr Kavanagh is a director and shareholder. 2. Paid to Mineral X Pty Ltd for corporate advisory services of which Mr Morgan is a director and shareholder. 3. Paid to Rodby Holdings Pty Ltd for corporate advisory services of which Mr Teng is a director and shareholder. 4. Paid to Useful Ways Pty Ltd for corporate advisory services of which Mr Kam is a director and shareholder. 5. Paid to Double Felix Pty Ltd for corporate advisory services of which Mr Needham is a director and shareholder. 6. Paid to D.W. Clark & Co., Chartered Accountant for corporate advisory services of which Mr Clark is principal. GOLD MOUNTAIN LIMITED ANNUAL REPORT 17 Table 2: Directors’ and named executives remuneration for the year ended 30 June 2014 Short-term employee benefits Post-employment benefits Equity Other Total % Salary & Fees Bonuses Non- Monetary Benefits Super- annuation Prescribed Benefits Options Shares Deferred Benefits Performance Related Graham Kavanagh Matthew Morgan Sin Pyng “Tony” Teng - - - Christopher Battye 35,000 Wesley Harder Robert J Waring 1 Bill Richie Yang Eric Kam Keith Taylor 2 35,000 65,376 2,916 - 35,000 Jason Needham 100,000 David Clark 3 30,966 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 7,888 - - - - - - - - - - - - Total 304,258 - - 7,888 - - - - - - - - - - - - - - - - - - - - - - - 7,206 7,206 - - - - - - - - - - - - - - - 35,000 35,000 65,376 2,916 - 35,000 107,888 38,172 319,352 1. Salary & Fees component paid to Oakhill Hamilton Pty Ltd for corporate advisory services of which Mr Waring is a director and shareholder. 2. Paid to Davington Advisory Pty Ltd for secretarial services of which Mr Taylor is a director and shareholder. 3. Paid to D.W. Clark & Co., Chartered Accountant for corporate advisory services of which Mr Clark is principal. - - - - - - - - - - - - GOLD MOUNTAIN LIMITED ANNUAL REPORT 18 Other Key Management Personnel Transactions The Company has established the Gold Mountain Limited Employee Share Option Plan (ESOP) and a summary of the terms and conditions of the Plan are set out below: i. ii. iii. iv. All employees (full time and part time) will be eligible to participate in the Plan. Options are granted under the Plan at the discretion of the board and if permitted by the board, may be issued to an employee's nominee. Each option is to subscribe for one ordinary share in the Company and will expire 5 years from its date of issue. An option is exercisable at any time from its date of issue provided all relevant vesting conditions, if applicable, have been met. Options will be issued free. The exercise price of options will be determined by the board. The total number of shares the subject of options issued under the Plan, when aggregated with issues during the previous 5 years pursuant to the Plan and any other employee share plan, must not exceed 5% of the Company's issued share capital. If, prior to the expiry date of options, a person ceases to be an employee of the Company for any reason other than retirement at age 60 or more (or such earlier age as the board permits), permanent disability, redundancy or death, the options held by that person (or that person's nominee) automatically lapse on the first to occur of a) the expiry of the period of 30 days from the date of such occurrence, and b) the expiry date. If a person dies, the options held by that person will be exercisable by that person's legal personal representative. v. Options cannot be transferred other than to the legal personal representative of a deceased option holder. vi. The Company will not apply for official quotation of any options. vii. Shares issued as a result of the exercise of options will rank equally with the Company's previously issued shares. viii. Option holders may only participate in new issues of securities by first exercising their options. ix. Options are granted under the plan for no consideration. x. Each share options converts into one ordinary shares of Gold Mountain Limited. The Board may amend the terms and conditions of the plan subject to the requirements of the Listing Rules. There have been no other transactions involving equity instruments other than those described in the tables above. For details of other transactions with Key Management Personnel, refer to Note 18: Related Party Disclosures. GOLD MOUNTAIN LIMITED ANNUAL REPORT 19  

Continue reading text version or see original annual report in PDF format above