KalNorth Gold Mines Limited and Controlled Entities
ACN 100 405 954
Annual Report
For the year ended 30 June 2019
CONTENTS
Corporate Directory
Directors’ Report
Auditor’s Independence Declaration
Financial Report
Consolidated Statement of Profit or 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
Corporate Governance Statement
Minerals Resources and Ore Reserves Statement
Mineral Interest Summary
Additional Shareholders Information
1
2
10
11
12
13
14
15
33
34
38
46
48
49
KalNorth Gold Mines Limited and Controlled Entities
ed and Controlled Entities For the year ended 30 June 2014
CORPORATE DIRECTORY
For the year ended 30 June 2019
Directors
Jiajun Hu (Executive Chairman)
Yuanguang Yang (Non-Executive Director)
Xiaojing Wang (Non-Executive Director)
Company
Secretary
Jiajun Hu
Registered Office
and Principal
Place of Business
Share Registry
224 Dugan Street
Kalgoorlie, Western Australia 6430
Advanced Share Registry Limited
110 Stirling Highway
Perth WA 6009
Auditor
BDO (Audit) WA Pty Ltd
38 Station Street
Subiaco WA 6008
Stock Exchange
Listing
Australian Securities Exchange (ASX: KGM)
Company Website www.kalnorthgoldmines.com
1
KalNorth Gold Mines Limited and Controlled Entities
For the year ended 30 June 2019
DIRECTORS’ REPORT
The Directors of KalNorth Gold Mines Limited (“the Company”) present their financial report on the
consolidated entity, being the company and its controlled entities, for the financial year ended 30 June
2019.
Directors
The names of directors in office at any time during or since the end of the financial year are listed
hereunder. Directors have been in office from the start of the financial year to the date of this report unless
otherwise stated.
Jiajun Hu
Yuanguang Yang
Xiaojing Wang
Executive Chairman
Non-executive Director
Non-executive Director
Information on Directors
JIAJUN HU
Executive Chairman & Company Secretary
Mr. Jiajun Hu acts as Regional Business Executive of Cross-Strait Common Development Fund Co., Ltd
(hereinafter referred to as “Cross-Strait”). Cross-Strait, with its global headquarters in Hong Kong, is one of
the largest shareholders in the Company.
He is responsible for supervision and administration of Cross-Strait’s investment projects in Oceania and
reports directly to the managing director of Cross-Strait and has gained significant experience in
international investment, financial accounting, commercial contract negotiation and contract dispute
negotiation through corporate transactions in North America, Africa, Asia and Oceania.
He has a Bachelor’s Degree in Commerce in 2008 from the Australian National University majoring in
finance and accounting. Mr. Hu has specialized knowledge of the financial transactions market and
investment capital market, and is familiar with Chinese business and capital market operation. Mr. Hu is
fluent in both English and Chinese.
Mr Hu has held no other directorships of other public companies within the last three years.
Interest in shares and options: Nil
YUANGUANG YANG
Non-Executive Director
Mr. Yang is a Hong Kong CPA (practising) and currently operates a CPA firm in Hong Kong with business
focus in markets of Hong Kong, Mainland China, Australia and New Zealand. Mr. Yang is also a Chartered
Accountant in Australia and New Zealand.
He has over 15 years’ experience in audit and assurance, global tax planning, corporate advisory, family
business and M & A business and also worked with the Industrial and Commercial Bank of China for
several years before running his CPA business.
Mr Yang resides in Hong Kong and is an authorised officer of South Victory Global Limited, a major
shareholder in the Company.
Mr. Yang has held no other directorships of other public companies within the last three years.
Interest in shares and options: 2,375,300 shares
- 2 -
KalNorth Gold Mines Limited and Controlled Entities
For the year ended 30 June 2019
DIRECTORS’ REPORT
Information on Directors (cont’d)
XIAOJING WANG (REBECCA)
Non-Executive Director
Mrs Wang holds a Bachelor of Applied Finance, from Macquarie University, NSW and is currently the
Finance Manager for a Sydney based private company.
Mrs Wang has held no other directorships of other public companies within the last three years.
Interest in shares and options: Nil
Principal Activities
The consolidated entity’s principal activity during the year was gold exploration on its projects in the
Eastern Kalgoorlie region in Western Australia.
Review of Operations
Kurnalpi Project (100 % KGM)
The Kurnalpi project is located approximately 85km north-east of Kalgoorlie with easy road access. It has
been subject to extensive historic small scale gold mining and a number of companies have completed
extensive work on this project previously. A series of small to moderate size mineral resources have been
defined in the project area and KalNorth is focusing on exploration to define additional resources to
increase the potential for development.
During the FY 2019, the Company completed a 15 RC holes program for a total of 1,770 metres to follow
up on the Schiedam prospect which was identified by previous exploration work as a new gold trend as it is
proximal to the Avoca Fault. It has a complex structural framework and zone of magnetic destruction -
coincident gravity low with the latter two features suggesting a zone of significant alteration of the
basement lithologies.
The RC drilling at Schiedam intersected a sequence of variably altered ultramafic units beneath some 30-
50m of transported cover that included fine sands in places at the base of the palaeochannel. The
ultramafic rocks consist of komatiite and high-Mg basalt that transition to quartz carbonate-fuchsite altered
rock with minor quartz veining. Drilling was completed over a 600m strike length with east-west lines
spaced approximately 100m apart and holes at 80m centres. The contact between the basalt and strong
sheared/altered ultramafic rock units with thin quartz vein was intercepted and recognised as a favourable
structure for gold mineralization.
Assay results have been returned from the entire RC drill program and no result above 1.00gpt was
identified. The Company continues reviewing other exploration targets which were identified from previous
works，with further drilling programme to be planned accordingly.
Lindsay’s Project (100 % KGM)
The Lindsay’s project is located approximately 65km to the north east of Kalgoorlie and contains the
Lindsay’s mine site which continues to remain under care and maintenance since August 2013. The Board
was seeking to review its strategy with respect to the Lindsay’s Project which has demonstrated both open-
cut and underground mining potential.
The Company continued its strategic review of the project and conducted discussions with several
interested parties during FY 2019 to redevelop or divest the project in the future.
Operating Results and Financial Performance
The operating loss after income tax of the consolidated entity for the year ended 30 June 2019 was
$825,373 (2018: $357,446).
- 3 -
KalNorth Gold Mines Limited and Controlled Entities
For the year ended 30 June 2019
DIRECTORS’ REPORT
The operating loss for the year was impacted by the following key items:
(i)
Increased exploration expenditure of $0.46 million (2018: $0.39 million) across all project areas and
immediately written-off to the profit or loss account; and
(ii) A reduction in rehabilitation obligation of $0.22 million (2018: $0.22 million).
As at 30 June 2019 the Company had $94,736 (2018: $2,458,022) in cash reserves and an aggregate
liability of $90,000 (2018: $1,469,604) in debt instruments and borrowings.
At 30 June 2019, the consolidated entity had net assets of $4,341,995 (2018: $5,167,368).
Significant Changes in the State of Affairs
There have not been significant changes in the state of affairs of the consolidated entity during the financial
year, other than as noted in this financial report.
Dividends Paid or Recommended
The Directors do not recommend the payment of a dividend and no dividends have been paid or declared
since the end of the last financial year.
Significant Events after the Reporting Date
On 1 August 2019, Cross-Straits Common Development Fund Co., a major shareholder and supporter of
the Company extended a loan of $181,920 for working capital purposes. Subject to regulatory approvals, if
any, this loan will be secured against the Company’s tenements, is interest bearing at 8% pa and repayable
on or before 31 December 2020.
Other than the above, no matter or circumstance has arisen which has significantly affected, or may
significantly affect, the operations of the consolidated entity.
Likely Developments and Expected Results
The Company intends to remain focused on adding value through ongoing exploration activities at its main
projects and may seek alliance partners to fast track development of existing resource assets.
Environmental regulation
The consolidated entity is subject to environmental regulation in respect of its exploration activities.
The consolidated entity aims to ensure the appropriate standard of environmental care is achieved and, in
doing so, comply with National Greenhouse and Energy Reporting Act 2007 (“NGER Act 2007”). The
directors of the consolidated entity are not aware of any breach of environmental legislation for the year
under review.
Meetings of Directors
During the financial year 12 meetings of Directors were held. Attendances by each Director during the year
were as follows:
Jiajun Hu
Yuanguang Yang
Xiaojing Wang
Directors’ Meetings
Number of meetings
eligible to attend
Number
attended
12
12
12
12
12
12
No Audit or Remuneration Committee meetings were held in the year, with all matters dealt with by the
Board as a whole.
- 4 -
KalNorth Gold Mines Limited and Controlled Entities
For the year ended 30 June 2019
DIRECTORS’ REPORT
Options
At the date of this report, there were no unissued ordinary shares of KalNorth Gold Mines Limited under
option (2018: Nil).
During the year ended 30 June 2019 and to the date of this report, no shares were issued on the exercise
of options (2018: nil).
Risk Management
The Board is responsible for ensuring that risks and opportunities are identified in a timely manner and that
activities are aligned with the risks and opportunities identified by the Board.
The consolidated entity believes that it is crucial for all Board members to be a part of this process and, as
such, the Board has not established a separate risk management committee, but considers these matters
at Board meetings.
The Board has a number of mechanisms in place to ensure that management’s objectives and activities
are aligned with the risks identified by the Board. These include Board approval of a strategic plan which
encompasses strategy statements designed to meet stakeholders needs and manage business risk, and
implementation of Board approved operating plans and budgets and the monitoring thereof.
Remuneration Report (Audited)
This report outlines the remuneration arrangements in place for Directors and executives of the
consolidated entity.
The following were Key Management Personnel of the Company during or since the end of the financial
year:
Jiajun Hu
Yuanguang Yang
Xiaojing Wang
Executive Chairman
Non-Executive Director
Non-Executive Director
Remuneration Policy
The remuneration policy of KalNorth Gold Mines Limited has been designed to align Director and executive
objectives with shareholder and business objectives by providing a fixed remuneration component and
offering specific long-term incentives based on key performance areas affecting the consolidated entity’s
ability to attract and retain the best Directors and executives to run and manage the consolidated entity.
The Board’s policy for determining the nature and amount of remuneration for Board members and senior
executives of the consolidated entity is as follows:
The remuneration policy setting out the terms and conditions for executive directors and other senior
executives was developed by the Board. All executives receive a base salary (which is based on factors
such as the length of service and experience) and superannuation. The Board reviews executive packages
annually by reference to the consolidated entity’s performance, executive performance, and comparable
information from industry sectors and other listed companies in similar industries.
The Board may exercise discretion in relation to approving incentives, bonuses, and options. The policy is
designed to attract the highest calibre of executives and reward them for performance that results in long-
term growth in shareholder wealth.
All remuneration paid to Directors and executives is valued at the cost to the consolidated entity and
expensed.
Executives are also entitled to participate in the employee share and option arrangements. Shares given to
Directors and executives are valued as the difference between the market price of those shares and the
- 5 -
KalNorth Gold Mines Limited and Controlled Entities
For the year ended 30 June 2019
DIRECTORS’ REPORT
Remuneration Report (Audited) (cont’d)
amount paid by the Director or executive. Options are valued using the Black-Scholes methodology.
Performance-Based Remuneration
The consolidated entity currently has no compulsory performance-based remuneration component built into
Director and executive remuneration packages. However, performance-based bonuses may be awarded
from time to time at the discretion of the Board, and this will be dependent on individual performance linked
to the consolidated entity’s strategic objectives for that period.
In the current year, no bonuses were paid or declared.
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.
The Board considers the fees paid to non-executive Directors of comparable companies when undertaking
the annual review process. Independent advice is obtained when considered necessary to confirm that
remuneration is in line with market practice. Each Director may receive a fee for being a Director of the
Company.
Non-executive Directors may also receive performance rights (subject to shareholder approval) as it is
considered an appropriate method of providing sufficient reward whilst maintaining cash reserves.
Relationship between Remuneration Policy and Consolidated Entity Performance
The remuneration policy has been tailored to increase goal congruence between shareholders and
Directors and executives. From time to time, this is facilitated through the issue of options to the majority of
directors and executives to encourage the alignment of personal and shareholder interests. The
consolidated entity believes this policy will be effective in increasing shareholder wealth.
Key management personnel service agreements
Details of the key conditions of service agreements for key management personnel in place at the date of
this report are as follows:
Commencement
Date
11/01/2017
Notice Period
Base Salary
One month
Base Salary
$70,0001
Termination
Payments
Provided
-
Jiajun Hu – Executive
Chairman
¹ From 1 June 2019, the base salary was increased from $60,000 to $70,000 per annum plus statutory
superannuation contributions.
There are no other agreements with key management personnel.
Voting and comments made at the Company's 2018 Annual General Meeting ('AGM')
At the 2018 AGM, 95% of the votes received supported the adoption of the remuneration report for the year
ended 30 June 2018. The Company did not receive any specific feedback at the AGM regarding its
remuneration practices.
- 6 -
KalNorth Gold Mines Limited and Controlled Entities
For the year ended 30 June 2019
DIRECTORS’ REPORT
Remuneration Report (Audited) (cont’d)
Remuneration Details
(a)
Key management personnel compensation:
2019
Short-term benefits
Post-employment benefits
Name
Salary and
fees
$
Annual Leave
Entitlements
$
Superannuation
Total
$
$
60,833
30,000
30,000
14,555
-
-
120,833
14,555
5,779
-
2,850
8,629
81,167
30,000
32,850
144,017
2018
Short-term benefits
Post-employment benefits
Name
Salary and
fees
$
Annual Leave
Entitlements
$
Superannuation
Total
$
$
60,000
30,000
30,000
120,000
7,422
-
-
7,422
5,700
-
2,850
73,122
30,000
32,850
8,550
135,972
Directors
Jiajun Hu
Yuanguang Yang
Xiaojing Wang
Total
Directors
Jiajun Hu
Yuanguang Yang
Xiaojing Wang
Total
Share-based payment compensation
To ensure that the consolidated entity has appropriate mechanisms to continue to attract and retain the
services of Directors and Executives of a high calibre, the consolidated entity has a policy of issuing
options that are exercisable in the future at a certain fixed price.
No options were granted to Directors or key management personnel during the year ended 30 June 2019
(2018: nil).
Key management personnel shareholdings
The number of ordinary shares in KalNorth Gold Mines Limited held by each key management personnel of
the consolidated entity during the financial year is as follows:
2019
Directors
Jiajun Hu
Yuanguang Yang
Xiaojing Wang
Total
Balance
1 July 2018
Granted as
Remuneration
Net Change
Other
Balance
30 June 2019
-
-
-
-
-
2,375,300
-
2,375,300
-
2,375,300
-
2,375,300
-
-
-
-
- 7 -
KalNorth Gold Mines Limited and Controlled Entities
For the year ended 30 June 2019
DIRECTORS’ REPORT
Remuneration Report (Audited) (cont’d)
2018
Directors
Jiajun Hu
Yuanguang Yang
Xiaojing Wang
Total
Balance
1 July 2017
Granted as
Remuneration
Net Change
Other
Balance
30 June 2018
-
2,375,300
-
2,375,300
-
-
-
-
-
-
-
-
-
2,375,300
-
2,375,300
Key management personnel option holdings
No options were granted or held by key management personnel in the current or prior year.
Loans to key management personnel and their related parties
There were no loans outstanding at the reporting date (30 June 2018: Nil) to key management personnel and
their related parties.
Other transactions with KMPs
During the year ended 30 June 2019, Jiajun Hu extended a loan of $150,000 to the Company for working
capital purposes. As at 30 June 2019, $90,000 has been drawn down. Refer to note 11 Borrowing for more
details.
There were no other transactions with KMPs for the year ended 30 June 2019 and 2018.
Use of Remuneration Consultants
The Company did not use any remuneration consultants during the year.
Additional information
The earnings of the consolidated entity for the five years to 30 June 2019 are summarised below:
2019
$
2018
$
2017
$
2016
$
2015
$
Sales revenue
EBITDA
EBIT
Loss after income tax
-
(823,513)
(825,373)
(825,373)
-
(235,792)
(251,999)
(357,446)
13,422
1,565,081
66,419 (11,958,266)
34,858 (12,018,044)
(95,951) (12,330,518)
9,295
(95,773)
(210,686)
(774,451)
The factors that are considered to affect total shareholders return ('TSR') are summarised below:
Share price at financial year end ($)
Total dividends declared (cents per
share)
Basic loss per share (cents per
share)
2019
2018
2017
2016
2015
0.008
0.006
0.009
0.023
0.008
-
-
-
-
-
(0.09)
(0.04)
(0.01)
(2.23)
(0.28)
[END OF AUDITED REMUNERATION REPORT]
- 8 -
KalNorth Gold Mines Limited and Controlled Entities
For the year ended 30 June 2019
DIRECTORS’ REPORT
Indemnification and Insurance of Officers and Auditors
The Company’s Constitution requires it to indemnify Directors and officers of any entity within the
consolidated entity against liabilities incurred to third parties and against costs and expenses incurred in
defending civil or criminal proceedings, except in certain circumstances. An indemnity is also provided to
the Company’s auditors under the terms of their engagement. Directors and officers of the consolidated
entity have been insured against all liabilities and expenses arising as a result of work performed in their
respective capacities, to the extent permitted by law. The insurance premium relates to:
costs and expenses incurred by the relevant officers in defending proceedings, whether civil or
criminal and whatever the outcome;
other liabilities that may arise from their position, with the exception of conduct involving a wilful
breach of duty or improper use of information or position to gain a personal advantage.
Proceedings on Behalf of Company
No person has applied for leave of the Court to bring proceedings on behalf of the Company or intervene in
any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the
Company for all or any part of those proceedings. The Company was not a party to any such proceedings
during the year.
Non-Audit Services
The Company may decide to employ the auditors, BDO (Audit) WA Pty Ltd on assignments additional to
their statutory audit duties where their expertise and experience with the Company is important and
relevant.
Details of the amounts paid or payable for audit and non-audit services provided during the year are set out
in Note 17 to the financial statements.
Auditor’s Independence Declaration
The auditor, BDO Audit (WA) Pty Ltd, has provided the Board of Directors with an independence
declaration in accordance with section 307C of the Corporations Act 2001 and this is set out on the
following page.
The Report of Directors, incorporating the Remuneration Report, is signed pursuant to section 298(2) (a) of
the Corporations Act 2001 in accordance with a resolution of the Board of Directors.
Jiajun Hu
Executive Chairman
Dated at Perth 26 September 2019
Review of Operations – Competent Persons Statement
The information within this Annual Report that relates to Exploration results is based on information compiled by Mr Lijun
Yang who is an employee of Gold Geological Consulting Pty Ltd which provides technical consultancy services to
KalNorth Gold Mines Limited. Mr Yang is a member of The Australian Institute of Geoscientists (AIG). Mr Yang has
sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the
activity that he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the “Australian Code for
Reporting of exploration Results, Mineral Resources and Ore Reserves”. Mr Yang consents to the inclusion in this report
of the matters based on his information in the form and context in which it appears in this report.
- 9 -
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
DECLARATION OF INDEPENDENCE BY GLYN O'BRIEN TO THE DIRECTORS OF KALNORTH GOLD MINES
LIMITED
As lead auditor of KalNorth Gold Mines Limited for the year ended 30 June 2019, I declare that, to the
best of my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of KalNorth Gold Mines Limited and the entities it controlled during the
period.
Glyn O'Brien
Director
BDO Audit (WA) Pty Ltd
Perth, 26 September 2019
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275,
an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and
form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation.
KalNorth Gold Mines Limited and Controlled Entities
For the year ended 30 June 2019
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the year ended 30 June 2019
Other income
Gain on sale of tenements
Refundable R&D tax offset
Gain from reduction in rehabilitation obligation
Director and corporate employee costs
Professional fees and consultants
Depreciation expenses
Listing and registry fees
Exploration costs
Interest expense
Other expenses
Loss before income tax
Income tax benefit
Loss after income tax for the year
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Other comprehensive income for the year, net of tax
Note
2019
$
2018
$
3
3
11
7
4
30,349
-
-
215,072
(309,036)
(66,650)
(1,860)
(38,217)
(461,665)
-
(193,366)
(825,373)
-
(825,373)
113,186
110,000
340,327
215,574
(287,177)
(136,409)
(16,207)
(37,985)
(394,089)
(105,447)
(159,218)
(357,446)
-
(357,446)
-
-
-
-
Total comprehensive loss for the year
(825,373)
(357,446)
Loss per share for the year attributable to the members of KalNorth
Gold Mines Ltd:
Basic and diluted loss per share (cents)
16
(0.09)
(0.04)
The accompanying notes form an integral part of these financial statements.
11
KalNorth Gold Mines Limited and Controlled Entities
For the year ended 30 June 2019
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2019
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Other assets
Total Current Assets
Non-Current Assets
Property, plant and equipment
Exploration and evaluation expenditure
Total Non-Current Assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Trade and other payables
Borrowings
Total Current Liabilities
Non-Current Liabilities
Borrowings
Restoration provision
Total Non-Current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Accumulated losses
TOTAL EQUITY
Note
2019
$
2018
$
18(b)
5
6
94,736
21,508
7,500
123,744
2,458,022
21,643
7,500
2,487,165
7
8
9
10
10
11
291,332
5,259,651
5,550,983
293,192
5,259,651
5,552,843
5,674,726
8,040,008
177,856
-
177,856
123,089
1,469,604
1,592,693
90,000
1,064,874
1,154,874
-
1,279,946
1,279,946
1,332,730
2,872,639
4,341,996
5,167,369
12
13
92,438,807
(88,096,811)
92,438,807
(87,271,438)
4,341,996
5,167,369
The accompanying notes form an integral part of these financial statements.
12
KalNorth Gold Mines Limited and Controlled Entities
For the year ended 30 June 2019
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2019
Issued
Capital
$
Accumulated
Losses
$
Total
Equity
$
2018
As at 1 July 2017
92,438,807
(86,913,992)
Loss after income tax for the year
Total comprehensive loss for the year, net of tax
-
-
(357,446)
5,524,815
(357,446)
(357,446)
(357,446)
As at 30 June 2018
92,438,807
(87,271,438)
5,167,369
2019
As at 1 July 2018
Loss after income tax for the year
Total comprehensive loss for the year, net of tax
Issued
Capital
$
Accumulated
Losses
$
Total
Equity
$
92,438,807
(87,271,438)
5,167,369
-
-
(825,373)
(825,373)
(825,373)
(825,373)
As at 30 June 2019
92,438,807
(88,096,811)
4,341,996
The accompanying notes form an integral part of these financial statements.
13
KalNorth Gold Mines Limited and Controlled Entities
For the year ended 30 June 2019
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 June 2019
Note
2019
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Research and development tax refund
Interest received
Net cash used in operating activities
18(a)
Cash flows from investing activities
Proceeds from sale of tenements
Facilitation fee – sale of tenements
Proceeds from sale of plant and equipment
Payment for mineral exploration activities
Net cash used in investing activities
Cash flows from financing activities
Proceeds from borrowings – director loan
Repayment of borrowings and interest
Net cash used in financing activities
$
22,500
(565,373)
-
3,567
(539,306)
-
-
-
(444,376)
(444,376)
2018
$
59,688
(931,152)
340,327
24,378
(506,759)
110,000
(34,033)
60,000
(431,751)
(295,784)
90,000
(1,469,604)
(1,379,604)
-
-
-
Net decrease in cash held
(2,363,286)
(802,543)
Cash and cash equivalents at the beginning of the financial year
2,458,022
3,260,565
Cash and cash equivalents at the end of the financial year
18(b)
94,736
2,458,022
The accompanying notes form an integral part of these financial statements.
14
KalNorth Gold Mines Limited and Controlled Entities
For the year ended 30 June 2019
Notes to the Consolidated Financial Statements
Note 1: Statement of Significant Accounting Policies
The financial statements cover KalNorth Gold Mines Limited (“KalNorth”, “Company”) as a consolidated
entity consisting of KalNorth Gold Mines Limited and the entities it controlled at the end of, or during, the
year. The financial statements are presented in Australian dollars, which is KalNorth's functional and
presentation currency.
The financial report was authorised for issue on 25 September 2019 by the Board of Directors.
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting
Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') and the
Corporations Act 2001, as appropriate for-profit oriented entities. These financial statements also comply
with International Financial Reporting Standards as issued by the International Accounting Standards
Board ('IASB').
Historical cost convention
The financial statements have been prepared under the historical cost convention, except for, where
applicable, the revaluation of available-for-sale financial assets, financial assets and liabilities at fair value
through profit or loss, investment properties, certain classes of property, plant and equipment and
derivative financial instruments.
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of applying the consolidated entity's
accounting policies. The areas involving a higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the financial statements are disclosed in note 2.
New and amended accounting standards and interpretations adopted by the Group
The following standards and interpretations relevant to the operations of the Group and effective from 1
July 2018 have been adopted. The adoption of these standards did not have any impact on the current
period or any prior period and is not likely to affect future periods.
AASB 9: Financial Instruments;
AASB 15: Revenue from Contracts with Customers; and
AASB 2016-5: Amendments to Australian Accounting Standards – Classification and Measurement of
Share-Based Payment Transactions.
The adoption of these Accounting Standards and Interpretations did not have any significant impact on the
financial performance or position of the Group. Details of each standards’ impact, and the new accounting
policies adopted are set out below.
Impact of adoption of AASB 9: Financial Instruments (“AASB 9”)
AASB 9 replaces the provisions of AASB 139: Financial Instruments: Measurement and Recognition, that
relate to the recognition, classification and measurement of financial assets and liabilities, derecognition of
financial instruments, impairment of financial assets and hedge accounting.
The adoption of AASB 9 resulted in minimal changes in accounting policies. There was no impact on the
financial performance or position of the Group on the date of initial application, 1 July 2018, or at the
reporting date, 30 June 2019.
Impact on adoption of AASB 15: Revenue from Contracts with Customers (“AASB 15”)
AASB 15 replaces AASB 118 Revenue. AASB 15 provides a single, principles based five step model to be
applied to all contracts with customers.
15
KalNorth Gold Mines Limited and Controlled Entities
For the year ended 30 June 2019
Notes to the Consolidated Financial Statements
Note 1: Statement of Significant Accounting Policies (cont’d)
The adoption of AASB 15 resulted in minimal changes in accounting policies. There was no impact on the
financial performance or position of the Group on the date of initial application, 1 July 2018, or at reporting
date, 30 June 2019.
New accounting standards and interpretations not yet effective
The following new and amended accounting standards and interpretations relevant to the operations of the
Group have been published but are not mandatory for the current financial year. The Group has decided
against early adoption of these standards, and has not yet determined the potential impact on the financial
statements from the adoption of these standards and interpretations.
AASB 16: Leases
This standard sets out the principles for the recognition, measurement, presentation and disclosure of
leases. The objective is to ensure that lessees and lessors provide relevant information in a manner that
faithfully represents those transactions. This information gives a basis for users of financial statements to
assess the effect that leases have on the financial position, financial performance and cash flows of an
entity.
The Group has yet to undertake a detailed assessment of the impact of AASB 16. However, based on the
Group’s preliminary assessment, the Standard is not expected to have a material impact on the
transactions and balances recognised in the financial statements when it is first adopted for the year ending
30 June 2020.
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 24.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of KalNorth
Gold Mines Limited ('company' or 'parent entity') as at 30 June 2019 and the results of all subsidiaries for
the year then ended. KalNorth Gold Mines Limited and its subsidiaries together are referred to in these
financial statements as the 'consolidated entity'.
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.
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.
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.
16
KalNorth Gold Mines Limited and Controlled Entities
For the year ended 30 June 2019
Notes to the Consolidated Financial Statements
Note 1: Statement of Significant Accounting Policies (cont’d)
Going Concern Basis
As at 30 June 2019, the Group has total liabilities of $1,332,730 and has incurred total comprehensive loss
of $825,373 with cash and cash equivalents balance of $94,736. In the absence of asset sales or future
capital raising noted below, current cash resources are not expected to be sufficient to meet forecast
outgoings for a period of at least 12 months from the date of this report.
These conditions indicate a material uncertainty that may cast significant doubt about the Group’s ability to
continue as a going concern.
The financial statements have been prepared on the basis that the Group is a going concern, which
contemplates the continuity of normal business activity, realisation of assets and settlement of liabilities in
the normal course of business. The Directors believe the Company will be successful in raising the
necessary funding through equity to fund its operational and exploration activities and meet the minimum
expenditure requirements on mineral exploration assets in which it has an interest as disclosed within note
19. The rationale for this is as follows:
In August 2019, the Group entered into a loan agreement with a major shareholder and supporter
of the Company to provide working capital of approximately $181,000;
The Group has a recent proven history of successfully raising capital as a basis that future capital
raising which is required will also be successful; and
Cash spending can be reduced or slowed below its current rate if required.
Should the Group not be able to continue as a going concern, it may be required to realise its assets and
discharge its liabilities other than in the ordinary course of business, and at amounts that differ from those
stated in the financial statements and that the financial report does not include any adjustments relating to
the recoverability and classification of recorded asset amounts or liabilities that might be necessary should
the Group not continue as a going concern.
Operating Segments
Operating segments are presented using the 'management approach', where the information presented is
on the same basis as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The
CODM is responsible for the allocation of resources to operating segments and assessing their
performance.
Income tax
The income tax expense (income) for the year comprises current income tax expense (income) and deferred
tax expense (income).
Current income tax expense charged to the profit of loss is the tax payable on taxable income calculated
using applicable income tax rates enacted, or substantially enacted, as at reporting date. Current tax liabilities
(assets) are therefore measured at the amounts expected to be paid to (recovered from) the relevant taxation
authority.
Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances
during the year as well as unused tax losses.
Current and deferred income tax expense (income) is charged or credited directly to equity instead of profit or
loss when the tax related 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.
17
KalNorth Gold Mines Limited and Controlled Entities
For the year ended 30 June 2019
Notes to the Consolidated Financial Statements
Note 1: Statement of Significant Accounting Policies (cont’d)
Income tax (cont’d)
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 substantially 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 largely 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 related 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.
Mining tenements and exploration and evaluation expenditure
Mining tenements and exploration and evaluation expenditure are carried at cost, less accumulated
impairment losses.
Exploration, evaluation and development expenditure incurred is accumulated 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 or where activities in the area have not yet reached a stage
that permits reasonable assessment of the existence of economically recoverable reserves. Accumulated
costs in relation to an abandoned area are written off in full against profit in the year in which the decision to
abandon the area is made.
When production commences, the accumulated costs for the relevant area of interest are amortised over the
life of the area according to the rate of depletion of the economically recoverable reserves. 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.
Costs of site restoration are provided over the life of the facility from when exploration commences and are
included in the costs of that stage. Site restoration costs include the dismantling and removal of mining plant,
equipment and building structures, waste removal, and rehabilitation of the site in accordance with clauses of
the mining permits. Such costs have been determined using estimates of future costs, current legal
requirements and technology on an undiscounted basis.
Any changes in the estimates for the costs are accounted on a prospective basis. In determining the costs of
site restoration, there is uncertainty regarding the nature and extent of the restoration due to community
expectations and future legislation. Accordingly, the costs have been determined on the basis that the
restoration will be completed within one year of abandoning the site.
Employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave
expected to be settled within 12 months of the reporting date are recognised in current liabilities 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.
18
KalNorth Gold Mines Limited and Controlled Entities
For the year ended 30 June 2019
Notes to the Consolidated Financial Statements
Note 1: Statement of Significant Accounting Policies (cont’d)
Employee benefits (cont’d)
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which they are
incurred.
Property, plant and equipment
Each class of property, plant and equipment is carried at cost or fair value less, where applicable, any
accumulated depreciation and impairment losses.
Property
Freehold land and buildings are measured on the cost basis less depreciation and impairment losses.
Plant and equipment
Plant and equipment are measured on the cost basis less depreciation and impairment losses.
The carrying amount of property, 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 assets employment and subsequent disposal.
The expected net cash flows have been discounted to their present values in determining recoverable
amounts.
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 statement of comprehensive income during the financial period in which they are incurred.
Depreciation
The depreciable amount of all fixed assets including building and capitalised lease assets, but excluding
freehold land, is depreciated on a straight-line basis over the useful lives to the consolidated entity
commencing from the time the asset is held ready for use.
The depreciation rates used for each class of depreciable assets are:
Class of fixed asset
Plant and equipment
Buildings
Motor vehicles
IT assets
Depreciation rate
10-33%
10%
25%
33%
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting
date.
An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying
amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These
gains and losses are included in the statement of comprehensive income or loss. When revalued assets
are sold, amounts included in the revaluation reserve relating to that asset are transferred to retained
earnings.
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current
classification.
An asset is current when: it is expected to be realised or intended to be sold or consumed in normal
operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within twelve
19
KalNorth Gold Mines Limited and Controlled Entities
For the year ended 30 June 2019
Notes to the Consolidated Financial Statements
Note 1: Statement of Significant Accounting Policies (cont’d)
Current and non-current classification (cont’d)
months after the reporting period; or the asset is cash or cash equivalent unless restricted from being
exchanged or used to settle a liability for at least twelve months after the reporting period. All other assets
are classified as non-current.
A liability is current when: it is expected to be settled in normal operating cycle; it is held primarily for the
purpose of trading; it is due to be settled within twelve months after the reporting period; or there is no
unconditional right to defer the settlement of the liability for at least twelve months after the reporting
period. All other liabilities are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
Impairment of non-financial assets
At each reporting date, the group reviews the carrying values of its tangible and intangible assets to
determine whether there is any indication that those assets have been impaired. If such an indication
exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and
value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its
recoverable amount is expensed to the comprehensive statement of income.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in
use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset for which
the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount
of the asset is reduced to its recoverable amount. An impairment loss is recognised in profit or loss
immediately, unless the relevant asset is carried at fair value, in which case the impairment loss is treated
as a revaluation decrease. Where an impairment loss subsequently reverses, the carrying amount of the
asset is increased to the revised estimate of its recoverable amount, but only to the extent that the
increased carrying amount does not exceed the carrying amount that would have been determined had no
impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is
recognised in profit or loss immediately, unless the relevant asset is carried at fair value, in which case the
reversal of the impairment loss is treated as a revaluation increase.
Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits held at call with banks, and other short-term
highly liquid investments with original maturities of three months or less, and bank overdrafts.
Trade and Other Receivables
Trade and other receivables include amounts due from customers for goods sold and services performed in
the ordinary course of business. Receivables expected to be collected within 12 months of the end of the
reporting period are classified as current assets. All other receivables are classified as non-current assets.
Trade and other receivables are initially recognised at fair value and subsequently measured at amortised
cost using the effective interest method, less any provision for impairment.
Trade and Other Payables
Trade and other payables represent the liabilities for goods and services received by the entity that remain
unpaid at the end of the reporting period. The balance is recognised as a current liability with the amounts
normally paid within 30 days of recognition of the liability.
Provision for restoration
Long term environmental obligations are based on the Group’s environmental management plans in
compliance with current environmental and regulatory requirements. Full provision is made based on the
value of the estimated cost restoring the environmental disturbance that has occurred up to the reporting
20
KalNorth Gold Mines Limited and Controlled Entities
For the year ended 30 June 2019
Notes to the Consolidated Financial Statements
Note 1: Statement of Significant Accounting Policies (cont’d)
Provision for restoration (cont’d)
date. The restoration provision relates to exploration and evaluation expenditure and rehabilitation relating
to the exploration and mining lease.
The estimated costs of rehabilitation are reviewed annually and adjusted as appropriate for changes in
legislation, technology or other circumstances.
Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction
costs. They are subsequently measured at amortised cost using the effective interest method. Where there is
an unconditional right to defer settlement of the liability for at least 12 months after the reporting date, the
loans or borrowings are classified as non-current.
Goods and services tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of
GST incurred is not recoverable from the Australian Tax Office. In these circumstances, the GST is
recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables
and payables in the statement of financial position are shown inclusive of GST. Cash flows are presented
in the cash flow statement on a gross basis, except for the GST component of investing and financing
activities, which are disclosed as operating cash flows.
Revenue Recognition
Interest income
Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to
the financial assets.
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 tax, 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.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the consolidated
entity, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of
ordinary shares outstanding during the financial 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.
Comparative figures
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in
presentation for the current financial year.
21
KalNorth Gold Mines Limited and Controlled Entities
For the year ended 30 June 2019
Notes to the Consolidated Financial Statements
Note 1: Statement of Significant Accounting Policies (cont’d)
Finance costs
Finance costs are expensed in the period in which they are incurred.
Note 2: Critical accounting estimates and judgments
The Directors evaluate estimates and judgments incorporated into the financial report based on historical
knowledge and best available current information. Estimates assume a reasonable expectation of future
events and are based on current trends and economic data, obtained both externally and within the group.
The critical accounting estimates and judgments are:
Restoration provision
A provision has been made for the present value of anticipated costs for future rehabilitation of land
explored or mined. The consolidated entity's mining and exploration activities are subject to various laws
and regulations governing the protection of the environment. The consolidated entity recognises
management's best estimate for assets retirement obligations and site rehabilitations in the period in which
they are incurred. Actual costs incurred in the future periods could differ materially from the estimates.
Additionally, future changes to environmental laws and regulations, life of mine estimates could affect the
carrying amount of this provision.
Deferred exploration and evaluation expenditure
Exploration and evaluation costs are carried forward where right of tenure of the area of interest is current.
These costs are carried forward in respect of an area that has not at statement of financial position date
reached a stage that permits reasonable assessment of the existence of economically recoverable reserves,
refer to the accounting policy stated in Note 1.
Note 3: Other income
Interest received
Gain on sale of inventory
Gain on sale of PPE
Rental income
Gain on sale of tenements (i)
2019
$
2018
$
3,567
-
318
26,464
30,349
24,378
28,808
58,000
2,000
113,186
-
110,000
(i)
In the year ended 30 June 2018, the Company sold three non-core tenements within the larger
Kurnalpi Gold Project to Carnavale Resources Limited for $110,000.
The gain on sale consists of the following components;
Proceeds from sale (exclusive of GST)
Total gain on sale of tenements
2019
$
2018
$
110,000
110,000
-
-
22
KalNorth Gold Mines Limited and Controlled Entities
For the year ended 30 June 2019
Note 4: Income tax
(a)
Income tax recognised
No income tax is payable by the consolidated entity for the year as a loss was recorded for income tax
purposes.
(b) Numerical reconciliation between income tax expense and the loss before income tax
Loss before income tax
Income tax benefit at 27.5%
Tax effect of permanent differences
Tax effect of temporary differences
Tax effect of deduction for tax losses not previously recognised
Income tax expense
(c)
Unrecognised deferred tax balances
2019
$
2018
$
(825,373)
(357,446)
(226,978)
126,958
(41,260)
141,280
-
(98,298)
107,234
(321)
(8,615)
-
Tax losses attributable to members of the tax consolidated group
– revenue
Potential tax benefit at 27.5%
78,645,762
21,627,585
77,599,222
21,339,786
A deferred tax asset attributable to income tax losses has not been recognised at reporting date as the
probability criteria disclosed in Note 1 (Income Tax) is not satisfied and such benefit will only be available if
the conditions of deductibility also disclosed in Note 1 (Income Tax) are satisfied.
For the purposes of taxation, KalNorth Gold Mines Limited and its 100% owned Australian subsidiaries are a
tax consolidated group. The head entity of the tax consolidated group is KalNorth Gold Mines Limited. The
group has not entered into a tax sharing agreement.
23
KalNorth Gold Mines Limited and Controlled Entities
For the year ended 30 June 2019
Note 5: Trade and other receivables
Current
Trade receivables (i)
GST receivable
2019
$
2018
$
4,967
16,542
21,508
2,562
19,080
21,643
(i) Trade receivables are non-interest bearing and have payment terms between 30 – 90 days. No
impairment has been provided for.
Note 6: Other assets
Current
Credit card facility - security deposit
Note 7: Property, plant and equipment
Plant and equipment
At cost
Accumulated depreciation
Transfer and movements
Motor vehicles
At cost
Accumulated depreciation
Transfer and movements
IT Assets
At cost
Accumulated depreciation
Transfer and movements
Land and buildings
At cost
Accumulated depreciation
2019
$
2018
$
7,500
7,500
2019
$
167,200
(167,200)
-
-
-
-
-
-
297,681
(297,213)
-
468
380,866
(90,000)
290,866
2018
$
386,121
(385,317)
(66)
738
113,887
(54,600)
(59,287)
-
307,843
(296,092)
(10,163)
1,588
380,866
(90,000)
290,866
Total written down value
291,334
293,192
(a) Movements in carrying amounts
Land &
Buildings
Plant &
Equipment
IT
Assets
3,535
(1,945)
(2)
Total
309,400
(16,140)
(68)
1,588
293,192
1,588
(1,120)
-
293,192
(1,858)
-
13,781
(12,977)
(66)
738
738
(738)
-
-
468
291,334
Balance at 1 July 2017
Disposals
Depreciation expense
Balance at 30 June 2018
Balance at 1 July 2018
Depreciation expense
Transfer and movements
Balance at 30 June 2019
292,084
(1,218)
-
290,866
290,866
-
-
290,866
24
KalNorth Gold Mines Limited and Controlled Entities
For the year ended 30 June 2019
Note 8: Exploration and evaluation expenditure
Cost
Reconciliation
Balance at beginning of year
Exploration expenditure incurred
Exploration expenditure immediately expensed (i)
Disposal of tenements
Additional allowance for rehabilitation
Balance at end of year
2019
$
2018
$
5,259,651
5,259,651
5,259,651
461,665
(461,665)
-
-
5,259,651
394,089
(394,089)
-
-
5,259,651
5,259,651
(i) During the year the company incurred exploration expenditure costs which were immediately
expensed as their recoverability was uncertain.
The ultimate recoupment of costs carried forward for exploration and evaluation phases is dependent on
the successful development and commercial exploitation or sale of the respective mining areas.
Note 9: Trade and other payables
Current
Trade payables (I)
GST and other taxes payable (I)
Sundry payables and accrued expenses (I)
Deposit received
2019
$
2018
$
86,385
43,056
46,415
2,000
177,856
61,948
18,845
40,296
2,000
123,089
(i) There are no amounts included within these balances that are not expected to be settled within the
next 12 months. The average credit terms for services received by the Group are 30 days from invoice
date and are non-interest bearing.
Note 10: Borrowings
Current liabilities
Loan – Cross Straits
Non-current liabilities
Loan – Director
2019
$
2018
$
-
1,469,604
90,000
-
A director loan of $150,000 was extended to the Company for working capital purposes, and as at 30
June 2019, $90,000 has been drawn down. This loan will be secured by the Company’s tenements,
subject to shareholders approval, 8% pa interest chargeable and repayable on or before 31 December
2020.
The Cross Straits loan was a result of the convertible note that expired on 30 April 2018 and is
reclassified as a current liability at 30 June 2018. This loan was unsecured, interest-free and repayable
upon demand. During the year ended 30 June 2019, the full loan amount was repaid.
Note 11: Restoration provision
Non-current
Restoration provision (i)
(i) The provision movement for the year is as follows:
2019
$
2018
$
1,064,874
1,279,946
2019
$
2018
$
Carrying amount at the start of the year
1,279,946
1,495,520
25
KalNorth Gold Mines Limited and Controlled Entities
For the year ended 30 June 2019
Note 11: Restoration provision (cont’d)
Movement during the year
Carrying amount at the end of the year
(215,072)
(215,574)
1,064,874
1,279,946
The reduction in restoration provision during the year was a result of reduced tenement holdings from
sale and/or relinquishment of tenements.
Note 12: Contributed equity
2019
$
2018
$
894,240,060 fully paid ordinary shares (2018: 894,240,060)
92,438,807
92,438,807
Movements in ordinary shares on issue for the year:
Balance 30 June 2018
Balance 30 June 2019
Ordinary shares
No. of
shares
Paid up
capital
$
894,240,060
92,438,807
894,240,060
92,438,807
Ordinary shares have the right to receive dividends as declared and, in the event of winding up of the
consolidated entity, to participate in the proceeds from the sale of all surplus assets in proportion to the
number of and amounts paid up on shares held.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and
upon a poll each share shall have one vote.
Share buy-back
There is no current on-market share buy-back.
Capital risk management
The consolidated entity's objectives when managing capital is to safeguard its ability to continue as a
going concern, so that it can provide returns for shareholders and benefits for other stakeholders and to
maintain an optimum capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the consolidated entity may adjust the amount of
dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce
debt.
The consolidated entity would look to raise capital when an opportunity to invest in a business or
company was seen as value adding relative to the current company's share price at the time of the
investment. The consolidated entity is not actively pursuing additional investments in the short term as it
continues to integrate and grow its existing businesses in order to maximise synergies.
The consolidated entity is subject to certain financing arrangements covenants and meeting these is
given priority in all capital risk management decisions. There have been no events of default on the
financing arrangements during the financial year.
Note 13: Accumulated Losses
Accumulated losses at the beginning of the year
Loss for the year
Accumulated losses at the end of the year
26
2019
$
2018
$
(87,271,438)
(825,373)
(88,096,811)
(86,913,992)
(357,446)
(87,271,438)
KalNorth Gold Mines Limited and Controlled Entities
For the year ended 30 June 2019
Note 14: Key management personnel compensation
Refer to the Remuneration Report contained in the Directors’ Report for details of the remuneration paid to
each member of the consolidated entity’s key management personnel for the year ended 30 June 2019.
The totals of remuneration paid to key management personnel of the consolidated entity during the year are
as follows:
Short-term employee benefits
Termination benefits
Post-employment benefits
Note 15: Related party transactions
2019
$
2018
$
135,388
-
8,629
144,017
127,422
-
8,550
135,972
All transactions were made on normal commercial terms and conditions and at market rates.
Transactions:
During the financial year, other than remuneration paid or payable to key management personnel, the
Company had no other related party transactions (2018: no related party transactions).
The following balances are outstanding at the reporting date in relation to transactions with related parties:
Accrued Directors’ fees
Loans to/from related parties
2019
$
31,425
2018
$
-
During the year, the Company received a $150,000 loan facility from Chairman, Hu Jiajun for working capital
purposes. The loan agreement, subject to regulatory approval, will be secured over the Group’s assets, with
8% per annum interest and repayable on or before 31 December 2020.
Apart from the above, there were no other loans to or from related parties at the current and previous
reporting date.
Note 16: Loss per share
a) Basic loss per share
Loss after income tax
2019
$
2018
$
(825,373)
(357,446)
Weighted average number of ordinary shares on issue during the year
used as the denominator in calculating basic loss per share
894,240,060
894,240,060
Diluted loss per share is the same as basic loss per share as there are no securities to be classified as
dilutive potential ordinary shares on issue.
Note 17: Auditors’ remuneration
Remuneration of the auditor for:
- audit and review of financial reports - BDO Audit (WA) Pty Ltd
- other services- BDO Audit (WA) Pty Ltd
2019
$
2018
$
40,730
1,250
41,980
43,779
1,275
45,054
27
KalNorth Gold Mines Limited and Controlled Entities
For the year ended 30 June 2019
Note 18: Cash flow information
a) Reconciliation of the net loss after income tax to the net cash flows
from operating activities:
Net loss for the year
Non-cash items included in net loss:
Depreciation expense
Exploration expenses expensed
Rehabilitation provision
Others
Changes in assets and liabilities:
Increase / (decrease) in trade and other receivables
Increase / (decrease) in trade and other creditors
2019
$
2018
$
(825,373)
(357,446)
1,860
444,376
(215,072)
-
16,207
394,089
(215,574)
(1,491)
54,768
135
(18,809)
(323,735)
Net cash outflow from operating activities
(539,306)
(506,759)
b) Reconciliation of cash
Cash balance comprises:
- Cash at bank and on hand
c) Non-Cash Financing and Investing Activities
94,736
2,458,022
There were no non-cash financing and investing activities for the year ended 30 June 2019 and 2018.
Note 19: Commitments
(i) Mining tenements
The consolidated entity has certain commitments to meet minimum expenditure requirements on the
mineral exploration assets in which it has an interest. The current annual minimum lease expenditure
commitment on these tenements which covers the Lindsays and Kurnalpi projects is $638,808 (2018:
$603,140).
If the consolidated entity decides to relinquish certain leases and/or does not meet these obligations,
assets recognised in the Consolidated Statement of Financial Position may require review to
determine the appropriateness of carrying values. The sale, transfer, or farm-out of exploration rights
to third parties will reduce or extinguish these obligations.
(ii) Non-cancellable operating lease commitments
During the year ended 30 June 2019 the Company had not entered into any non-cancellable
operating lease commitments (30 June 2018: $nil).
Note 20: Controlled entities
Subsidiaries of KalNorth Gold Mines Limited:
Shannon Resources Pty Ltd
Lusitan Prospecting Pty Ltd
Country of
Incorporation
Percentage Owned (%)
2018
2019
Australia
Australia
100
100
100
100
Shannon Resources Pty Ltd and Lusitan Prospecting Pty Limited are the registered owners of various
tenements. The parent entity owns 100% of both entities. There was no income earned and no expenses
incurred by these entities for the year end 30 June 2019 (2018: nil).
28
KalNorth Gold Mines Limited and Controlled Entities
For the year ended 30 June 2019
Note 21: Segment information
Identification of reportable operating segments
The consolidated entity is organised into two operating segments: mine development and mineral
exploration, both within Australia.
30 June 2019
Revenue
Other income
Gain on reduction in rehabilitation
provision
Total income
EBITDA
Depreciation and amortisation
(Loss) before income tax
Income tax benefit
(Loss) after income tax
30 June 2019
Assets
Segment assets
Exploration assets
Property, plant and equipment
Unallocated assets:
Cash and cash equivalents
Trade and other receivables
Other current assets
Total assets
Liabilities
Segment liabilities
Trade and other payables
Restoration provision
Unallocated liabilities:
Borrowings
Total liabilities
Mine
development
Mineral
Exploration
$
$
Admin
$
Total
consolidated
group
$
-
-
-
-
-
-
-
-
-
30,349
30,349
215,072
215,072
-
30,349
215,072
245,421
(246,593)
-
(576,919)
(1,860)
(823,513)
(1,860)
(246,593)
(578,780)
(825,373)
-
-
-
(246,593)
(578,780)
(825,373)
Mine
Development
$
Mineral
Exploration
$
Admin
$
Total
consolidated
group
$
-
-
-
-
-
-
5,259,651
2
-
291,330
5,259,651
291,332
-
-
-
94,736
21,508
94,736
21,508
7,500
7,500
5,259,653
415,074
5,674,726
-
(1,064,874)
(81,310)
-
(96,546)
-
(177,856)
(1,064,874)
-
(1,064,874)
-
(58,782)
(90,000)
(209,074)
(90,000)
(1,332,730)
29
KalNorth Gold Mines Limited and Controlled Entities
For the year ended 30 June 2019
Note 21: Segment information (cont’d)
30 June 2018
Revenue
Interest revenue
Gain on sale of tenements
Other income
Total income
EBITDA
Depreciation and amortisation
Finance costs
Profit/(Loss) before income tax
Income tax benefit
Profit/(Loss) after income tax
30 June 2018
Assets
Segment assets
Exploration assets
Property, plant and equipment
Unallocated assets:
Cash and cash equivalents
Trade and other receivables
Other current assets
Total assets
Liabilities
Segment liabilities
Trade and other payables
Restoration provision
Unallocated liabilities:
Borrowings
Total liabilities
Mine
development
Mineral
Exploration
$
$
Admin
$
24,378
-
88,808
113,186
(507,605)
(16,207)
(105,447)
Total
consolidated
group
$
24,378
110,000
644,709
779,087
(235,792)
(16,207)
(105,447)
-
110,000
555,901
665,901
271,813
-
-
271,813
(629,259)
(357,446)
-
-
-
271,813
(629,259)
(357,446)
-
-
-
-
-
-
-
-
-
-
Mine
development
Mineral
Exploration
Admin
Total
consolidated
group
-
-
-
-
-
-
5,259,651
-
-
293,191
5,259,651
293,191
-
-
-
2,458,022
21,643
2,458,022
21,643
7,500
7,500
5,259,651
2,780,356
8,040,008
-
(1,279,946)
(58,782)
-
(64,307)
-
(123,089)
(1,279,946)
-
(1,279,946)
-
(58,782)
(1,469,604)
(1,533,911)
(1,469,604)
(2,872,639)
Note 22: Financial risk management objectives and policies
The Consolidated entity’s principal financial instruments comprise cash and short-term deposits.
The main purpose of these financial instruments is to finance the consolidated entity’s operations. The
Consolidated entity has various other financial assets and liabilities such as receivables and payables, which
arise directly from its operations.
The main risks arising from the consolidated entity’s financial instruments are interest rate risks, commodity
price risks, and, indirectly, foreign exchange risk. Other minor risks have been summarised below. The Board
reviews and agrees on policies for managing each of these risks.
30
KalNorth Gold Mines Limited and Controlled Entities
Note 23: Financial risk management objectives and policies (cont’d)
For the year ended 30 June 2019
(a)
Interest rate risk
The Consolidated entity’s exposure to market interest rate relates primarily to the consolidated entity’s cash
and short-term deposits. All other financial assets in the form of receivables and payables are non-interest
bearing. The Consolidated entity does not engage in any hedging or derivative transactions to manage
interest rate risk.
The following tables set out the carrying amount by maturity of the consolidated entity’s exposure to interest
rate risk and the effective weighted interest rate for each class of these financial instruments
Weighted
average
interest
Rate
%
0.54%
Weighted
average
interest
Rate
%
0.91%
-
Floating interest
rate
$
Fixed interest
maturing 1 year or
less
$
94,736
94,736
Floating interest
rate
$
Fixed interest
maturing 1 year or
less
$
2,458,022
2,458,022
-
-
-
-
-
-
-
-
30 June 2019
Cash at bank
Total assets
30 June 2018
Cash at bank
Total assets
Interest bearing liabilities
Total liabilities
Interest rate sensitivity analysis – cash at bank
At 30 June 2019, if interest rates had changed by 1% during the entire year with all other variables held
constant, profit for the year and equity would have been $13,764 higher/lower (2018: $26,692), mainly as a
result of higher/lower interest income from cash and cash equivalents.
(b) Credit risk
The maximum exposure to credit risk at reporting date on financial assets of the consolidated entity is the
carrying amount, net of any provisions for doubtful debts, as disclosed in the statement of financial position
and notes to the financial statements.
(c)
Liquidity risk
The consolidated entity manages liquidity risk by monitoring forecast and actual cash flows and ensuring
that adequate reserves and borrowing facilities are available to meet its financial obligations as they fall
due.
The table below details the Group’s expected maturity for its financial liabilities. These have been drawn
based on undiscounted contractual maturities of the financial liabilities based on the earliest date on
which the Group can be required to pay.
31
KalNorth Gold Mines Limited and Controlled Entities
Note 22: Financial risk management objectives and policies (cont’d)
For the year ended 30 June 2019
30 June 2019
Financial liabilities due
for payment
Trade and other payables
Interest bearing liabilities
Borrowings
30 June 2018
Financial liabilities due
for payment
Trade and other payables
Interest bearing liabilities
Borrowings
(d)
Foreign exchange risk
Less than 12
months
$
12 months
or more
$
Total
$
(177,857)
-
-
(177,857)
-
-
(90,000)
(90,000)
(177,857)
-
(90,000)
(267,857)
(123,089)
-
(1,469,604)
(1,592,693)
-
-
-
-
(123,089)
-
(1,469,604)
(1,592,693)
There were no financial instruments with a foreign currency exposure at the reporting date or at the end of
the preceding financial year.
(e) Net fair value of financial assets and liabilities
The carrying amounts of financial instruments included in the statement of financial position approximate their
fair values due to their short terms of maturity.
Note 23: Contingent liabilities and contingent assets
There are no contingent liabilities or assets at reporting date.
Note 24: Parent Information
As referred to in Note 20, the consolidated entity comprises KalNorth Gold Mines Limited, the parent entity
and two wholly-owned subsidiaries. The Parent entity disclosures are not materially different to the
consolidated entity’s disclosures in the Statement of Financial Position and the Statement of Profit or Loss
and Other Comprehensive Income. In addition, there are:
a) no guarantees entered into by the parent entity in relation to the debts of its subsidiaries.
b) no contingent liabilities of the parent entity as at the reporting date.
c) no contractual commitments by the parent entity for the acquisition of property, plant and
equipment as at the reporting date.
Note 25: Events subsequent to reporting date
On 1 August 2019, Cross Straits extended a $181,920 loan to the Company for working capital purposes.
This loan will be secured by the Company’s tenements(subject to regulatory approval), interest payable at
8% per annum and the loan is repayable on or before 31 December 2020.
Other than the above, no matter or circumstance has arisen which has significantly affected, or may
significantly affect, the operations of the consolidated entity.
32
KalNorth Gold Mines Limited and Controlled Entities
For the year ended 30 June 2019
DIRECTORS’ DECLARATION
In the opinion of the Directors of KalNorth Gold Mines Limited (the ‘Company’):
a.
the accompanying financial statements and notes are in accordance with the Corporations Act
2001 including:
i.
ii.
giving a true and fair view of the Consolidated Entity’s financial position as at 30 June
2019 and of its performance for the year then ended; and
complying with Australian Accounting Standards, the Corporations Regulations 2001,
professional reporting requirements and other mandatory requirements;
b.
c.
there are reasonable grounds to believe that the Company will be able to pay its debts as and
when they become due and payable; and
the financial statements and notes thereto are in accordance with International Financial
Reporting Standards issued by the International Accounting Standards Board.
This declaration has been made after receiving the declarations required to be made to the Directors
in accordance with Section 295A of the Corporations Act 2001 for the financial year ended 30 June
2019.
This declaration is signed in accordance with a resolution of the Board of Directors.
On behalf of the Directors:
Jianjun Hu
Executive Chairman
Dated at Perth 26 September 2019
33
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
INDEPENDENT AUDITOR'S REPORT
To the members of KalNorth Gold Mines Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of KalNorth Gold Mines Limited (the Company) and its subsidiaries
(the Group), which comprises the consolidated statement of financial position as at 30 June 2019, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement
of changes in equity and the consolidated statement of cash flows for the year then ended, and notes
to the financial report, including a summary of significant accounting policies and the directors’
declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(i)
Giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its
financial performance for the year ended on that date; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the Financial
Report section of our report. We are independent of the Group in accordance with the Corporations
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance
with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Material uncertainty related to going concern
We draw attention to Note 1 in the financial report which describes the events and/or conditions which
give rise to the existence of a material uncertainty that may cast significant doubt about the group’s
ability to continue as a going concern and therefore the group may be unable to realise its assets and
discharge its liabilities in the normal course of business. Our opinion is not modified in respect of this
matter.
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275,
an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and
form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters. In addition to the matter described in the Material uncertainty
related to going concern section, we have determined the matters described below to be the key audit
matters to be communicated in our report.
Carrying Value of Exploration and Evaluation Assets
Key audit matter
How the matter was addressed in our audit
As disclosed in note 8, the carrying value of
capitalised exploration and evaluation
expenditure represents a significant asset of the
Group.
In accordance with AASB 6 Exploration for and
Evaluation of Mineral Resources (AASB 6), the
recoverability of exploration and evaluation
expenditure required significant judgement by
management in determining whether there are
any facts or circumstances that exist to suggest
the carrying amount of this asset may exceed
its recoverable amount. As a result, this is
considered a key audit matter.
Our procedures included, but were not limited to:
· Obtaining a schedule of the areas of
interest held by the Group and assessing
whether the rights to tenure of those
areas of interest remained current at
balance date;
· Making enquiries with management with
respect to the status of ongoing
exploration programs in the respective
areas of interest and assessing the Group’s
cash flow budget for the level of budgeted
spend on exploration programs;
·
·
·
Considering whether any such areas of
interest had reached a stage where a
reasonable assessment of economically
recoverable reserves existed;
Considering whether any facts or
circumstances existed to suggest
impairment testing was required; and
Assessing the adequacy of the related
disclosures in Note 8 to the Financial
Statements.
Other information
The directors are responsible for the other information. The other information comprises the
information in the Group’s annual report for the year ended 30 June 2019, but does not include the
financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 5 to 8 of the directors’ report for the year
ended 30 June 2019.
In our opinion, the Remuneration Report of KalNorth Gold Mines Limited, for the year ended 30 June
2019, complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
BDO Audit (WA) Pty Ltd
Glyn O'Brien
Director
Perth, 26 September 2019
KalNorth Gold Mines Limited and Controlled Entities
For the year ended 30 June 2019
Statement of Corporate Governance
Statement of Corporate Governance Practices
The Board of Directors of KalNorth Gold Mines Limited is responsible for the corporate governance of the
Company. The Board guides and monitors the business and affairs of KalNorth Gold Mines Limited on behalf
of the shareholders by whom they are elected and to whom they are accountable. The Company’s
governance approach aims to achieve exploration, development and financial success while meeting
stakeholders’ expectations of sound corporate governance practices by proactively determining and adopting
the most appropriate corporate governance arrangements.
ASX Listing Rule 4.10.3 requires listed companies to disclose the extent to which they have complied with the
ASX Best Practice Recommendations of the ASX Corporate Governance Council (“CGC”) in the reporting
period. A description of the Company’s main corporate governance practices is set out below. The Corporate
Governance Statement is current as at 30 June 2019, and has been approved by the Board of Directors. All
these practices, unless otherwise stated, were in place for the entire year. They comply with the ASX
Corporate Governance Principles and Recommendations (Third Edition).
The Company's directors are fully cognisant of the Corporate Governance Principles and Recommendations
published by CGC and have adopted those recommendations where they are appropriate to the Company's
circumstances. However, a number of those principles and recommendations are directed towards listed
companies considerably larger than KalNorth Gold Mines Limited, whose circumstances and requirements
accordingly differ markedly from the Company's. For example, the nature of the Company's operations and
the size of its staff mean that a number of the board committees and other governance structures
recommended by the CGC are not only unnecessary in the Company's case, but the effort and expense
required to establish and maintain them would, in the directors' view, be an unjustified diversion of
shareholders' funds.
As the Company's activities develop in size, nature and scope, the size of the Board and the implementation
of additional corporate governance structures will be given further consideration.
The Company’s website at www.kalnorthgoldmines.com contains a corporate governance section that
includes copies of the Company’s corporate governance policies.
Principle 1: Lay solid foundations for management and oversight
Recommendation 1.1:
Companies should disclose the respective roles and responsibilities of its board and management and those matters
expressly reserved to the Board and those delegated to management and disclose those functions.
The Board’s role is to govern the Company rather than to manage it. In governing the Company, the Directors
must act in the best interests of the Company as a whole. It is the role of the senior management to manage
the Company in accordance with the direction and delegations of the Board and the responsibility of the
Board to oversee the activities of management in carrying out these delegated duties.
The Board is responsible for:
overseeing the Company’s commitment to the health and safety of employees and contractors, the
environment and sustainable development;
overseeing the activities of the Company, including its control and accountability systems;
appointing and removing the Managing Director, Company Secretary, and other senior executives,
evaluating their performance, reviewing their remuneration and ensuring an appropriate succession
plan;
setting the strategic objectives of the Company and monitoring its progress against those objectives;
reviewing, ratifying and monitoring systems of risk management and internal control;
setting the operational and financial objectives and goals for the Company;
ensuring that there are effective corporate governance policies and practices in place
approving and monitoring budgets, capital management and acquisitions and divestments;
approving and monitoring all financial reporting to the market;
appointing external auditors and principal professional advisors; and
making formal determinations required by the Company’s constitutional documents or by law or other
external regulation.
38
KalNorth Gold Mines Limited and Controlled Entities
For the year ended 30 June 2019
Statement of Corporate Governance
Statement of Corporate Governance Practices (cont’d)
The Managing Director (MD) is normally responsible for running the affairs of the Company under delegated
authority from the Board and to implement the policies and strategy set by the Board. In carrying out those
responsibilities, the Managing Director must report to the Board in a timely manner and ensure all reports to
the Board present a true and fair view of the Company’s financial condition and operational results. Given the
present size and scale of operations, the Company does not have a Managing Director but rather an
Executive Chairman supported by a small management team. Consequently, the Board as a whole takes a
closer interest in the day to day affairs of the Company.
Recommendation 1.2:
Companies should undertake appropriate checks before appointing a person, or putting forward to security holders a
candidate for election, as a director and provide security holders with all material information in its possession relevant to
a decision on whether or not to elect or re-elect a director.
The Company undertakes checks on any person who is being considered as a director. These checks may
include character, experience, education and financial history and background.
All security holder releases will contain material information about any candidate to enable an informed
decision to be made on whether or not to elect or re-elect a director.
Recommendation 1.3:
Companies should have a written agreement with each director and senior executive setting out the terms of their
appointment.
All directors have in place a formal letter of appointment including a director’s interest agreement with respect
to disclosure of security interests.
Recommendation 1.4:
The Company Secretary should be accountable directly to the Board, through the chair, on all matters to do with the
proper functioning of the Board.
Given the present size and scale of operations, the Executive Chairman also serves as the Company
Secretary. In any case the Company Secretary has a direct reporting line to the Board.
Recommendation 1.5:
The Company should establish a policy concerning diversity and disclose the policy or summary of the policy. The policy
should include requirements for the Board to establish measurable objectives for achieving gender diversity and for the
Board to assess annually both the objectives and progress in achieving them.
The Company recognises that a talented and diverse workforce is a key competitive advantage. The
Company is committed to developing a workplace that promotes diversity. The Company’s policy is to recruit
and manage on the basis of competence and performance regardless of age, nationality, race, gender,
religious beliefs, sexuality, physical ability or cultural background. The Company has not yet formalised this
policy into a written document. It is the Board’s intention to formalise the policy at a time when the size of the
Company and its activities warrants such a structure.
The Company has 8 staffs (three directors including one female director, contracted exploration manager,
project geologist, project engineer, contracted corporate accountant and bookkeeper) as at 30 June 2019.
Recommendation 1.6:
The Company should have and disclose a process for periodically evaluating the performance of the Board, its
committees and individual directors and whether a performance evaluation was undertaken in the reporting period in
accordance with that process.
Due to the size of the Board and the nature of its business, it has not been deemed necessary to institute a
formal documented performance review program of individuals. The Chairman conducted an informal review
during the financial year whereby the performance of the Board as a whole and the individual contributions of
each director were discussed. The Board considers that at this stage of the Company’s development an
informal process is appropriate.
Recommendation 1.7:
The Company should have and disclose a process for periodically evaluating the performance of senior executives and
whether a performance evaluation was undertaken in the reporting period in accordance with that process.
39
KalNorth Gold Mines Limited and Controlled Entities
For the year ended 30 June 2019
Statement of Corporate Governance
Statement of Corporate Governance Practices (cont’d)
The Board undertakes a review of the senior executives’ performance annually, including setting the goals for
the coming year and reviewing the achievement of these goals.
Performance has been measured to date by the efficiency and effectiveness of the enhancement of the
Company’s mineral interest portfolio, the designing and implementation of the exploration and development
programme and the securing of ongoing funding so as to continue its exploration and development activities.
This performance evaluation is not based on specific financial indicators such as earnings or dividends as the
Company is at the exploration stage and during this period is expected to incur operating losses.
Due to the size of the Company and the nature of its business, it has not been deemed necessary to institute
a formal documented performance review program of senior executives. The Non-executive directors
conducted an informal review process whereby they discussed with the Executive Director the approach
toward meeting the short and long term objectives of the Company. The Board considers that at this stage of
the Company’s development an informal process is appropriate.
Principle 2: Structure the board to add value
Recommendation 2.1:
The Board should establish a Nomination Committee comprising a majority of independent directors (including the Chair).
The Company established a nomination committee comprising the two non-executive directors, including the
Chairman but no separate meetings of this committee were held in the reporting year. The Board considers
that the Company is not currently of a size, nor are its affairs of such complexity, to justify separate committee
meetings at this time. The Board as a whole is able to address the governance aspects of the full scope of
the Company’s activities and to ensure that it adheres to appropriate ethical standards. In particular, the full
Board considers those matters that would usually be the responsibility of a nomination committee. However,
the Board considers that no efficiencies or other benefits would be gained by having separate nomination
committee meetings.
Directors are appointed under the terms of the Company’s constitution. Appointments to the Board are based
upon merit and against criteria that serves to maintain an appropriate balance of skills, expertise, and
experience of the board. The categories considered necessary for this purpose are a blend of accounting and
finance, business, technical and administration skills. Casual appointments must stand for election at the
next annual general meeting of the Company.
Retirement and rotation of Directors are governed by the Corporations Act 2001 and the Constitution of the
Company. All Directors, with the exception of the Managing Director (if appointed), serve for a period of three
years before they are requested to retire and if eligible offer themselves for re-election.
Recommendation 2.2:
The Company should have and disclose a Board skills matrix setting out the mix of skills and diversity that the Board
currently has or is looking to achieve in its membership.
The Company has a skills or diversity matrix in relation to its Board members which reflects the current size
and scope of the Company’s operations. The Board will adopt a more detailed and comprehensive matrix if
and when there is a significant change in the size and scale of its activities.
Director
Gender
Accounting/
Finance
Communications/
Investor Relations
Corporate
Management
Fund
Raising
Geology
Skills/Qualifications
Experience Based on Skills/Knowledge
Jiajun Hu
(Chairman)
Yuanguang
Yang
Xiaojing
Wang
Male
Male
Female
Finance and
accounting
BSc in Commerce
Accounting
CPA
Bachelor of Applied
Finance
√
√
√
√
√
√
√
√
√
√
√
√
The Board recognises that since January 2017, there are no directors with technical skills in geology and
mining. Given the present size and scale of activities, the Board believes that the risks of not having those
skills at a Board level is manageable. The Company sources such skills on a consulting basis and Mr Lijun
40
KalNorth Gold Mines Limited and Controlled Entities
For the year ended 30 June 2019
Statement of Corporate Governance
Statement of Corporate Governance Practices (cont’d)
Yang has continued to provide geological services to the Company since his resignation as an Executive
Director in January 2017.
Recommendation 2.3:
The Company should disclose the names of the directors considered to be independent directors and length of service of
each director.
The names, position, appointment date and independence classification are set out in the table below:
Director
Position
Date Appointed
Independent
Jiajun Hu
Executive Chairman
Xiaojing Wang
Yuanguang Yang
Non-executive
Director
Non-executive
Director
Appointed as a non-executive
director on 13 December 2013,
then appointed as Non-Executive
Chairman on 14 April 2015, and
subsequently appointed Executive
Chairman on 11 January 2017
11 January 2017
28 August 2014
No
Yes
No
Recommendation 2.4:
A majority of the Board of the Company should be independent directors.
In assessing whether a director is classified as independent, the Board considers the independence criteria
set out in the ASX Corporate Governance Council Recommendation 2.1 and other facts, information and
circumstances deemed by the Board to be relevant. Using the ASX Best Practice Recommendations on the
assessment of the independence of Directors, the Board considers that at present only Mrs Wang can be
considered independent. Mr Jiajun Hu and Mr Yuanguang Yang have been nominated to the Board by major
shareholders of the Company.
The Company considers that each of the directors possesses the skills and experience suitable for building
the Company. Although the Company does not currently have a majority of independent directors, the current
composition of the Board is considered appropriate in the circumstances.
It is the Board’s intention to review its composition on a continual basis and in line with any future changes to
Company’s size and level of activities.
Recommendation 2.5:
The Chair of the Board should be an independent director, and should not be the CEO of the Company.
The Chair of the Board, Mr Jiajun Hu had a non-executive role until January 2017, however since then he
acts in an executive capacity. In the absence of a separate CEO, Mr Hu also effectively fulfils that role since
January 2017. For the further reasons explained in the preceding section, Mr Hu is not an independent
director.
Given the size of the Company and the complexity of its affairs as well as the Board’s desire to maximise
exploration expenditure within the constraints of the Company’s overall working capital, the Company is not
presently in a position to have an independent Chairman.
Recommendation 2.6:
The Company should have a program for inducting new directors and provide appropriate professional development
opportunities for directors to develop and maintain the skills and knowledge needed to perform their role as directors
effectively.
The Company does not currently have a formal induction program for new Directors nor does it have a formal
professional development program for existing Directors. The Board does not consider that a formal induction
program is necessary given the current size and scope of the Company’s operations.
The Board seeks to ensure that all of its members understand the Company’s operations. Directors also
attend, on behalf of the Company and otherwise, technical and commercial seminars and industry
conferences which enable them to maintain their understanding of industry matters and technical advances.
41
KalNorth Gold Mines Limited and Controlled Entities
For the year ended 30 June 2019
Statement of Corporate Governance
Statement of Corporate Governance Practices (cont’d)
Noting the above, the Board considers that a formal induction program is not necessary given the current size
and scope of the Company’s operations, though the Board may adopt such a program in the future as the
Company’s operations grow and evolve.
Principle 3: Act ethically and responsibly
Recommendation 3.1:
Companies should have a Code of Conduct for its directors, senior executives and employees.
The Company has established a Code of Conduct which sets out the Company’s key values and how they
should be applied within the workplace and in dealings with those outside the Company. A copy of the Code
is
(www.kalnorthgoldmines.com/irm/content/corporate-
available
governance.aspx).
the Company’s website
on
Principle 4: Safeguard Integrity in Financial Reporting
Recommendation 4.1
The Board should have an Audit Committee.
The Board established an audit committee comprising the two non-executive directors of the Company but no
separate committee meetings were held during the reporting year. The Board considers that the Company is
not currently of a size, nor are its affairs of such complexity, to justify separate committee meetings at this
time. The Board as a whole is able to address the governance aspects of the full scope of the Company’s
activities and to ensure that it adheres to appropriate ethical standards. In particular, the full Board considers
those matters that would usually be the responsibility of an audit committee. However, the Board considers
that no efficiencies or other benefits would be gained by holding separate audit committee meetings.
The Company requires external auditors to demonstrate quality and independence. The performance of the
external auditor is reviewed and applications for tender of external audit services are requested as deemed
appropriate, taking into consideration assessment of performance, existing value and tender costs.
The external audit firm partner or an appropriate delegate responsible for the Company audit attends
meetings of the Board by invitation.
Recommendation 4.2
The Board of the Company should, before it approves the Company’s financial statements for a financial period, receive
from its CEO and CFO a declaration that, in their opinion, the financial records of the entity have been properly maintained
and that the financial statements comply with the appropriate accounting standards and give a true and fair view of the
financial position and performance of the entity and that the opinion has been formed on the basis of a sound system of
risk management and internal control which is operating effectively.
The Company has in place a procedure whereby prior to approval of financial statements by the Board (in
addition to any formal management representation letter to the Company’s auditor) a declaration is provided
in accordance with Sections 286 and 295(3)(b) of the Corporations Act 2001 (Cth) that financial records have
been properly maintained, the financial statements comply with the accounting standards, and give a true and
fair view of the financial position based on sound risk management and internal controls operating effectively.
Recommendation 4.3
The Company should ensure that the external auditor is present at the AGM and be available to answer questions from
security holders relevant to the audit.
The Company invites the auditor or representative of the auditor to the AGM in accordance of the
requirements of Section 250RA of the Corporations Act 2001 (Cth) and is available to answer questions
relevant to the audit.
Principle 5 – Make timely and balanced disclosure
Recommendation 5.1:
Companies should have a written policy for complying with its continuous disclosure obligations under the Listing Rules.
42
KalNorth Gold Mines Limited and Controlled Entities
For the year ended 30 June 2019
Statement of Corporate Governance
Statement of Corporate Governance Practices (cont’d)
The Company has developed an ASX Listing Rules Disclosure Strategy which has been endorsed by the
Board. The ASX Listing Rules Disclosure Strategy ensures compliance with ASX Listing Rules and
Corporations Act obligations to keep the market fully informed of information which may have a material effect
on the price or value of its securities and outlines accountability at both the Board and (where and when
applicable) senior executive level for that compliance. All ASX announcements are posted to the Company’s
website as soon as possible after confirmation of receipt is received from ASX.
copy
A
available
(www.kalnorthgoldmines.com/irm/content/corporate-governance.aspx).
the Share
Trading
policy
of
is
on
the Company’s website
Principle 6 – Respect the rights of security holders
Recommendation 6.1 and 6.2:
Companies should provide information about itself and its governance to investors via its website.
Companies should design and implement an investor relations program to facilitate two-way communication with
investors.
The Company is committed to maintaining a Company website with general information about the Company
and its operations, information about governance and information specifically targeted at keeping the
Company’s shareholders informed about all major developments affecting the Company’s state of affairs.
The Company has a Shareholder Communication Policy which is available on the Company’s website.
Through this the Board aims to ensure that the shareholders are informed of the Company’s governance and
all major developments affecting the Company’s state of affairs. Information is communicated to shareholders
through the:
Company website;
ASX Company Announcements platform;
Quarterly Operational and Cash flow reports;
Half-year Financial Report;
Annual Report;
Investor Presentations
Shareholder meetings
Other correspondence from time to time regarding matters impacting on shareholders.
Recommendations 6.3 and 6.4:
Companies should disclose the policies and processes in place to facilitate and encourage participation at meetings of
security holders.
Companies should give security holders the option to receive communications from, and send communications to, the
entity and its security registry electronically.
In accordance with the Company’s Shareholder Communications Policy, the Company supports shareholder
participation in general meetings and seeks to provide appropriate mechanisms for such participation. The
Company will use general meetings as a tool to effectively communicate with shareholders and allow
shareholders a reasonable opportunity to ask questions of the Board of Directors and to otherwise participate
in the meeting.
Mechanisms for encouraging and facilitating shareholder participation will be reviewed regularly to encourage
the highest level of shareholder participation.
The Company considers that communicating with shareholders by electronic means is an efficient way to
distribute information in a timely and convenient manner. In accordance with the Shareholder Communication
Policy, the Company has, as a matter of Practice, provided new shareholders with the option to receive
communications from the Company electronically and the Company encourages them to do so. Existing
shareholders are also encouraged to request communications electronically. All shareholders that have opted
to receive communications electronically are provided with notifications by the Company when an
announcement or other communication (including annual reports, notices of meeting etc) is uploaded to the
ASX announcements platform.
43
KalNorth Gold Mines Limited and Controlled Entities
For the year ended 30 June 2019
Statement of Corporate Governance
Statement of Corporate Governance Practices (cont’d)
Principle 7 – Recognise and manage risk
Recommendation 7.1:
The Board should have a committee or committees to oversee risk.
The Board established a risk management committee comprising the two non-executive directors of the
Company but no separate committee meetings were held in the reporting year. The role of the risk
management committee is therefore undertaken by the full Board. The Board considers that, given the
current size and scope of the Company’s operations, efficiencies or other benefits would not be gained by
having separate risk management committee meetings at present.
As the Company’s operations grow and evolve, the Board will reconsider the appropriateness of having
separate risk management committee meetings. However, the Board has adopted a Risk Management Policy
that sets out a framework for a system of risk management and internal compliance and control, and this is
available on the Company’s website.
Recommendation 7.2:
The Board should review the entity’s risk management framework at least annually to satisfy itself that it continues to be
sound and disclose whether such a review has taken place.
As the Board has responsibility for the monitoring of risk management it has not required a formal report
regarding the material risks and whether those risks are managed effectively. The Board believes that the
Consolidated Group is currently effectively communicating its significant and material risks to the Board and
its affairs are not of sufficient complexity to justify the implementation of a more formal system for identifying,
assessing, monitoring and managing risk in the Company.
Recommendation 7.3:
The Company should disclose if it has an internal audit function.
The Company does not have an internal audit function. The Board considers that the Company is not
currently of a size, nor are its affairs of such complexity, to justify the formation of an internal audit function at
this time. The Board as a whole continually evaluates and improves the effectiveness of its risk management
and internal control processes.
Recommendation 7.4:
The Company should disclose whether it has any material exposure to economic, environmental and social sustainability
risks and, if it does, how it manages or intends to manage those risks.
The Company is of the view that it has adequately disclosed the nature of its operations and relevant
information on exposure to economic, environmental and social sustainability risks. Other than general risks
associated with the mineral exploration industry, the Company does not currently have material exposure to
environmental and social sustainability risks.
Principle 8 – Remunerate fairly and responsibly
Recommendation 8.1:
The Board should have a Remuneration Committee.
The Board has established a remuneration committee comprising the two non-executive directors of the
Company but no separate remuneration committee meetings were held in the reporting year. The Board
considers that the Company is not currently of a size, nor are its affairs of such complexity to justify the
separate committee meetings at this time. The Board as a whole is able to address the governance aspects
of the full scope of the Company’s activities and to ensure that it adheres to appropriate ethical standards. In
particular, the full Board considers those matters that would usually be the responsibility of a remuneration
committee. However, the Board considers that no efficiencies or other benefits would be gained by having
separate remuneration committee meetings at this stage.
Recommendation 8.2:
Companies should separately disclose its policies and practices regarding the remuneration of non-executive directors
and the remuneration of executive directors and other senior executives.
44
KalNorth Gold Mines Limited and Controlled Entities
For the year ended 30 June 2019
Statement of Corporate Governance
Statement of Corporate Governance Practices (cont’d)
The Company’s policies and practices regarding the remuneration of Executive and Non-Executive Directors
is set out
the website
its Remuneration committee charter which
(www.kalnorthgoldmines.com/irm/content/corporate-governance.aspx).
is available on
in
This information is also set out in the Remuneration Report contained in the Company’s Annual Report for
each financial year
Recommendation 8.3:
A Company which has an equity based remuneration scheme should have a policy on whether participants are permitted
to enter into transactions (whether through the use of derivatives or otherwise) which limit the economic risk of
participating in the scheme and disclose that policy or summary of it.
The Company does not have an equity based remuneration scheme which is affected by this
recommendation. Recipients of equity-based remuneration (e.g. incentives options) are not permitted to enter
into any transactions that would limit the economic risk of options or other unvested entitlements.
45
KalNorth Gold Mines Limited and Controlled Entities
For the year ended 30 June 2019
Annual Mineral Resources and Ore Reserves Statement
The Company’s reported Mineral Resources are located within two projects that lie in an arc 50-80kms’ to the
north east of Kalgoorlie, Western Australia. The project area is to the north east of Kalgoorlie and comprises
the Kurnalpi and Lindsays project areas which are spread over a 60km arc from west to east.
The Kurnalpi project lies 85km to the east of Kalgoorlie straddling the Kurnalpi-Pinjin road and consists of a
contiguous package of Exploration, Prospecting and Mining leases. The project contains six individual
resources all located on granted Mining leases and centred within 3 kilometres of the more significant Brilliant
deposit. The resource of Brilliant was upgraded from JORC 2004 to JORC 2012 during 2016 financial year,
there has been no change to the mineral resource of other deposits at Kurnalpi during the year ended 30 June
2019.
The Lindsays project consists of a contiguous package of tenements centred around the Lindsays Mine site
which remains under care and maintenance. The Lindsay’s mineral resources are contained within two
granted Mining Leases. As the gold price improved significantly since December 2015, the Company
processed the stockpile ore in early 2016. There has been no change to the mineral resource estimate of other
deposits at Lindsays during the year ended 30 June 2019.
Table 1: Ore Resources
Summary of Mineral Resource Estimates (at 30 June 2019)
Reported according to JORC Category and Deposit (JORC 2004 & 2012 Compliant)
Indicated
Deposit
Tonnes
(t)
Grade
(g/t)
Ounces
(oz.)
Tonnes
(t)
Inferred
Grade
(g/t)
Ounces
(oz.)
Tonnes
(t)
Total
Grade
(g/t)
Kurnalpi Project
0.9
1.1
1.0
1
1.0
0.8
0.9
Discovery Hill
Halfway Hill
Scottish Lass
1
Brilliant
-
-
-
2,620,000
Sparkle
288,900
Dazzle
Total 2
-
-
-
-
1.3
0.9
-
-
-
-
130,000
510,000
84,700
109,300
920,000
8,500
190,000
-
511,000
2,908,900
1.3
117,800
2,345,700
Eastern Structure 1,479,000
1
Parrot Feathers
140,000
Central Structure 1,315,100
Neves Prospect
490,900
Total
3,425,000
Lindsays Project
76,000
203,000
18,000
261,000
46,500
47,900
24,900
37,700
165,400
549,600
1.6
4.3
1.1
1.3
2.8
1.6
4.0
1.1
1.6
1.5
3,600
130,000
18,700
510,000
2,600
84,700
28,300
3,530,000
5,800
478,900
12,600
511,000
71,600
5,244,600
10,500
1,682,000
36,000
401,000
1,700
1,363,000
1,500
528,600
49,700
3,974,600
0.9
1.1
1.0
1.2
0.9
0.8
1.1
1.6
4.2
1.1
1.6
1.7
Ounces
(oz.)
3,600
18,700
2,600
137,600
14,300
12,600
189,400
86,500
54,000
48,200
26,400
215,100
KalNorth Gold Mines Total
Indicated
Tonnes (t)
Grade
(g/t)
Ounces
(oz.)
Tonnes (t)
Inferred
Grade
(g/t)
Ounces
(oz.)
Tonnes (t)
Total
Grade
(g/t)
Total
6,333,900
1.4
283,200
2,895,300
1.3
121,300
9,219,200
1.4
Ounces
(oz.)
404,500
1. Brilliant and Parrot Feathers reported under JORC 2012, all others under JORC 2004.
46
KalNorth Gold Mines Limited and Controlled Entities
For the year ended 30 June 2019
Annual Mineral Resources and Ore Reserves Statement
Governance and Internal Controls
The Company ensures that all resource calculations are undertaken and reviewed by independent industry
consultants.
All drill hole data was imported and stored into a master database managed by engaged professional
company using Datashed and SQL. Data validation and interrogation is performed by KalNorth and
independent resource consultants when required. Any errors in the data are communicated to the
Exploration Manager and on approval rectified. Amendments made to the format of a drill holes, survey data
samples and assay information are recorded in the database for future reference.
Quality control on resource drill programs have been undertaken to industry standards with implementation of
appropriate drilling technique, survey data collection, assay standards, sample duplicates and repeat
analysis. Samples were analysed by independent internationally accredited laboratories with a QAQC
program that reported monthly and showing acceptable levels of accuracy and precision. Regular inspections
of the assay laboratory were made during the course of drilling programs to ensure that the laboratory
maintained strong adherence to QAQC. The company interrogates and validates its internal assay standards
using Datashed QAQC software.
The mineral resource estimate for the Parrot Feathers of Lindsays project as well as Brilliant of Kurnalpi
project were undertaken independently by Ravensgate Mining Industry Consultants.
Except for the Brilliant deposit, other mineral resource estimates for the Kurnalpi Project were undertaken
independently by Snowden Mining Industry Consultants.
Competent Person Statement
The Annual Mineral Resources and Ore Reserves Statement is based on, and fairly represents information
and supporting documentation compiled by the person named below:
The Annual Mineral Resources and Ore Reserves statement as a whole has been approved by Mr Lijun
Yang who is an employee of Gold Geological Consulting Pty Ltd which provides technical consultancy
services to KalNorth Gold Mines Limited. Mr Yang is a member of The Australian Institute of Geoscientists
(AIG). The details within the Mineral Resources and Ore Reserve Statement are consistent with information
previously released and prepared by previous employees and consultants of the company and compiled by
Mr Yang. Mr Yang has sufficient experience which is relevant to the style of mineralisation and type of
deposit under consideration and to the activity that he is undertaking to qualify as a Competent Person as
defined in the 2012 Edition of the “Australian Code for Reporting of exploration Results, Mineral Resources
and Ore Reserves”. Mr Yang consents to the inclusion in this report of the matters based on his information
in the form and context in which it appears in the report.
47
KalNorth Gold Mines Limited and Controlled Entities
For the year ended 30 June 2019
Mining Interests
Mining Tenements held at 2 September 2019
All tenements are located in the Goldfields region of Western Australia.
Holder
Shannon Resources Pty Ltd
Shannon Resources Pty Ltd
Shannon Resources Pty Ltd
Shannon Resources Pty Ltd
Shannon Resources Pty Ltd
Shannon Resources Pty Ltd
Shannon Resources Pty Ltd
Shannon Resources Pty Ltd
Shannon Resources Pty Ltd
Shannon Resources Pty Ltd
Shannon Resources Pty Ltd
Shannon Resources Pty Ltd
Shannon Resources Pty Ltd
KalNorth Gold Mines Ltd
KalNorth Gold Mines Ltd
KalNorth Gold Mines Ltd
KalNorth Gold Mines Ltd
KalNorth Gold Mines Ltd
KalNorth Gold Mines Ltd
KalNorth Gold Mines Ltd
Shannon Resources Pty Ltd
Shannon Resources Pty Ltd
Shannon Resources Pty Ltd
Shannon Resources Pty Ltd
Shannon Resources Pty Ltd
Shannon Resources Pty Ltd
Shannon Resources Pty Ltd
Shannon Resources Pty Ltd
Tenement
E28/2256
E28/2541
M28/0007
M28/0066
M28/0072
M28/0076
M28/0084
M28/0089
M28/0090
M28/0092
M28/0113
M28/0374
M28/0375
P28/1154
P28/1180
P28/1191
P28/1184
P28/1186
P28/1187
P28/1190
P28/1282
M28/0377
M28/0379
M28/0380
M28/0381
M28/0382
M28/0383
M28/0384
M28/0386 KalNorth Gold Mines Ltd
M28/0390 KalNorth Gold Mines Ltd
M28/0391 KalNorth Gold Mines Ltd
M28/0392 KalNorth Gold Mines Ltd
M28/0393 KalNorth Gold Mines Ltd
M28/0394 KalNorth Gold Mines Ltd
KalNorth Gold Mines Ltd
P27/2406
KalNorth Gold Mines Ltd
E27/0517
KalNorth Gold Mines Ltd
L27/0082
L27/0084
KalNorth Gold Mines Ltd
M27/0034 KalNorth Gold Mines Ltd
M27/0169 KalNorth Gold Mines Ltd
M27/0486 KalNorth Gold Mines Ltd
KalNorth Gold Mines Ltd
P28/1335
Heron Resources Ltd
E27/0524
Status
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live (Conversion)
Live (Conversion)
Live (Conversion)
Live (Conversion)
Live (Conversion)
Live (Conversion)
Live (Conversion)
Live
Live
Live
Live
Live
Live
Live
Live
Pending
Pending
Pending
Pending
Pending
Pending
Live
Live
Live
Live
Live
Live
Live
Live
Live
Project
Kurnalpi
Kurnalpi
Kurnalpi
Kurnalpi
Kurnalpi
Kurnalpi
Kurnalpi
Kurnalpi
Kurnalpi
Kurnalpi
Kurnalpi
Kurnalpi
Kurnalpi
Kurnalpi
Kurnalpi
Kurnalpi
Kurnalpi
Kurnalpi
Kurnalpi
Kurnalpi
Kurnalpi
Kurnalpi
Kurnalpi
Kurnalpi
Kurnalpi
Kurnalpi
Kurnalpi
Kurnalpi
Kurnalpi
Kurnalpi
Kurnalpi
Kurnalpi
Kurnalpi
Kurnalpi
Lindsays Find
Lindsays Find
Lindsays Find
Lindsays Find
Lindsays Find
Lindsays Find
Lindsays Find
Kurnalpi
Binti Binti
Interest %
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100% Au rights
48
KalNorth Gold Mines Limited and Controlled Entities
For the year ended 30 June 2019
Shareholder Information
Shareholder Information
The shareholder information set out below was applicable as at 25 September 2019.
A.
Distribution of Equity Securities
Analysis of number of equity holders by size of holding:
Spread of
Holdings
Number of
Holders
Number of
Units
% of Total
Issued Capital
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Total
129
174
134
289
114
838
48,540
554,323
1,080,696
11,018,428
881,538,073
894,240,060
0.01%
0.06%
0.12%
1.23%
98.58%
100%
The number of shareholders holding less than a marketable parcel is 711.
B.
Voting Rights
At a general meeting of shareholders:
a. On a show of hands, each person who is a member or sole proxy has one vote.
b. On a poll, each shareholder is entitled to one vote for each fully paid share.
C.
Equity Security Holders
The names of the twenty largest quoted equity security holders are listed below:
Rank Shareholder
Total Units
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
SOUTH VICTORY GLOBAL LIMITED
RENERGY PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
GOLD FRESH LIMITED
SMARTER GROUP (AUSTRALIA) PTY LTD
FINANCIAL MARKET INFRASTRUCTURE FUND PTY LTD
LINK GROUP
REGALWEST PTY LTD
CITICORP NOMINEES PTY LIMITED
MR JOHN MCKINSTRY
ZAC-ZOOM PTY LTD
DAHT INTERNATIONAL TRADING PTY LTD
INTERNATIONAL TECHNOLOGY GROUP PTY LTD
MR JUSTIN JOHN WOOD & MRS CAROLYN WOOD
MR ANDREW GUTWIRTH
MR ILIAS LEE RISKAS
MR EDWIN PAUL CAYZER & MRS LORAINE HELEN CAYZER
MR GREGORY GERARD RYAN
STEVEN WILLIS SHALLCRASS
JP MORGAN NOMINEES AUSTRALIA PTY LIMITED
260,688,116
188,594,646
108,631,979
86,615,562
65,490,400
55,154,393
30,208,172
14,603,632
6,169,841
5,793,155
5,000,000
5,000,000
3,398,012
2,316,839
2,200,000
2,000,000
1,860,000
1,800,000
1,710,000
1,460,105
Issued
Capital
%
29.15
21.09
12.15
9.69
7.32
6.17
3.38
1.63
0.69
0.65
0.56
0.56
0.38
0.26
0.25
0.22
0.21
0.20
0.19
0.16
Totals
848,694,852
94.91
49
KalNorth Gold Mines Limited and Controlled Entities
For the year ended 30 June 2019
Shareholder Information
D.
Substantial Shareholders
Holdings of substantial shareholders as advised to the Company are set out below:
Rank
Shareholder
1.
2.
3.
4.
SOUTH VICTORY GLOBAL LIMITED
RENERGY PTY LTD
CROSS-STRAIT COMMON DEVELOPMENT FUND CO., LIMITED
GOLD FRESH LIMITED
Total Units
260,688,116
188,594,646
88,703,335
86,615,562
50