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2015
Annual
Report
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THAILANDCHILEAUSTRALIACHATREECHALLENGERBOWDENSNUEVA ESPERANZA 1
Contents
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Photo:
In Thailand, the
Chatree gold mine
combined team
Cover Photo:
In Chile, the Nueva
Esperanza Project
looking to the
northern wall of
the Chimberos pit
Contents
Chairman’s Review . . . . . . . . .
CEO’s Review . . . . . . . . . . .
2
4
Five Year Summary . . . . . . . . .
5
Finance Report . . . . . . . . . .
Operations Report . . . . . . . . .
Chatree Gold Mine . . . . . . . . . . .
Challenger Gold Mine . . . . . . . . . .
6
8
8
11
Projects Report . . . . . . . . . . . 13
13
Nueva Esperanza . . . . . . . . . . .
15
Bowdens Silver Project . . . . . . . . .
Auditor’s Independence Declaration . . 46
Financial Statements . . . . . . . . 47
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 . . .
48
49
50
51
Exploration Report . . . . . . . . . 16
Notes to the Financial Statements . . . 52
Ore Reserves and Mineral Resources
18
Directors’ Declaration . . . . . . . . 92
Senior Management . . . . . . . . . 20
Independent Auditor’s Report . . . . . 93
Directors’ Report . . . . . . . . . . 21
Shareholder Information . . . . . . . 95
Remuneration Report . . . . . . . . . .
28
Corporate Information . . . . . . . . 97
2
Chairman’s Review
Chairman’s Review
First things first – we needed a new Captain to
take the helm. I was pleased to announce that
after a thorough search the Kingsgate Board
appointed Mr Greg Foulis, as the new Chief
Executive Officer in June 2015. I don’t want to
steal his thunder but Greg brings to Kingsgate
a strong suite of skills that makes him a good
and logical choice. By way of background Greg
has more than 30 years industry experience,
working both as a geologist and in mining
centric financial markets. Greg understands
value chain creation, and I am confident that
his vision for the company will ensure Kingsgate
continues to be reinvigorated and grow after
enduring a very difficult period.
Additionally, as our theme of regrowth and
regeneration continues, I am very pleased to
welcome two new members to the Kingsgate
Board during the year, Mr Peter Warren and
Ms Sharon Skeggs.
Mr Peter Warren was appointed to the Board
of Kingsgate in July 2014. Peter is a CPA of over
40 years standing, with an extensive involvement
in the resources industry. Peter has over 15 years
operating in a senior financial capacity as CFO
and Company Secretary for a number of public
and private companies. Peter was Kingsgate’s
CFO and safe pair of hands until his retirement
in 2011. It’s his experience and knowledge of
our issues and asset base that makes Peter a
valuable new addition to the Board.
Ms Sharon Skeggs was appointed as a Director
of the company in January 2015. Ms Skeggs has
had a long and distinguished career for over 30
years in advertising and marketing. Sharon was a
Director of advertising agency Saatchi & Saatchi
Australia for 15 years, and a former Director
of the Australian Jockey Club Limited. Sharon
has extensive expertise in a range of corporate
matters including change management,
restructuring, cost savings, implementing
marketing strategies and communications
programs. Sharon’s drive has brought a fresh
approach and dynamism to the company.
I am confident that these new appointments will
stand the company in good stead both now and
in the future.
Let’s now review the operations and projects
for the year. Kingsgate again delivered a strong
result with group gold production for the
year totalling 205,245 ounces with Chatree
contributing 125,094 ounces and Challenger
80,151 ounces. Chatree continued to perform
well despite the impact on production of 44
days temporary suspension. I was particularly
pleased to see the Challenger Mine deliver a
strong finish to the year by producing 80,151
ounces of gold, which was well above the
FY15 guidance range of 65,000 to 75,000
ounces. This operational performance was a
result of higher gold head grade and increased
throughput.
The pre-tax profit for the Group before
significant items was $1.74 million, up from a
loss of $8.03 million in the previous year. EBITDA
before significant items was $70.0 million up
from $64.2 million in the previous year.
Lower metal prices and industry cost pressures
continued this year, and Kingsgate’s after
tax loss of $147.1 million is primarily due to a
non-cash impairment charge of $148.2 million
against the carrying values of the Chatree Gold
Mine, the Bowdens Silver Project and various
exploration areas. The Board believes that the
Chatree Gold Mine remains a world class asset
and still considers that Bowdens is an important
asset in the Kingsgate development portfolio.
Commodity prices also remained under pressure
with the gold price trading in a range of between
US$1,080/oz and US$1,340/oz per ounce and
finishing the year at US$1,171/oz. Subsequently
the price has remained weak around US$1,100/
oz, although a weakening Australian dollar
continues to provide an upside for Australian
based producers.
You may recall my review last
year underscored a particularly
difficult period for Kingsgate,
and more broadly the precious
metals sector. This year I am
heartened by that fact that if
you look closely enough there
are some green shoots of
regrowth and regeneration
emerging from Kingsgate.
www.kingsgate.com.au
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3
Chairman’s Review
This continued volatility and weakness in the
gold price has meant that gold producers and
your company in particular remain focused
on operating efficiencies and cost reduction
initiatives in order to maintain a sustainable
business and build the platform for future
growth. Kingsgate is one of many resource
companies whose earnings and share price
performance has been affected by the weaken-
-ing gold price and the downturn in the global
industry.
Chatree continued to show why it remains a
highly profitable asset in a US$1,100/oz gold
market by producing 125,094 ounces of gold
and 850,003 ounces of silver. The process
plant treated 5.3 million tonnes at a head grade
of 0.91 grams per tonne (“g/t”) gold with a
recovery of 79.3%.
Total cash costs for the year were US$690 per
ounce, down $38 dollars per ounce from the
previous year through our continued commitment
and focus on cost reduction initiatives. Issues
relating to the temporary suspension of Chatree
earlier in 2015 have been satisfactorily resolved.
Notably, it was pleasing to see the Challenger
Mine deliver an excellent finish to the year by
producing an above guidance 80,151 ounces
of gold. The mine plan at Challenger is under
review with the current reserves expected to be
depleted in the March quarter 2016.
Further extensions to the mine life are dependent
on the successful conversion to reserves from
on-going drilling and development within the
extensive resource envelope at Challenger West
and the recently discovered Challenger South
Southwest structure. Challenger’s improved
performance and current Australian dollar gold
value has given the Board reason to reconsider
its future within the company.
The Nueva Esperanza Gold/Silver Project
continues to delight with the discovery during
the year of Chimberos Gold, a gold rich resource
to the west of the historic Chimberos pit.
It is considered to be a continuation of the
Chimberos mineralisation identified in earlier
campaigns in and around the historic pit. The
new mineralisation has added in the order of
250,000 ounces of gold and 5.1 million ounces
of silver to the Chimberos Mineral Resources
Estimate resulting in a significant increase in the
overall Mineral Resource Estimate for Chimberos
to 300,000 ounces of gold and 20.5 million
ounces of silver. The total Mineral Resources
for Nueva Esperanza now stand at 34.6Mt at
0.81g/t gold and 55g/t silver. The relatively
high grade nature of the recently discovered
gold mineralisation has led to a re-evaluation
of agitated leach (milling) for the process route
rather than heap leach.
An optimisation study is being undertaken
to determine design parameters around a
2 million tonnes per annum (Mtpa) agitated
leach operation with indicative capital
and operating cost estimates and relevant
information for amendments to existing
permits. Following the successful exploration
campaign in FY15, further opportunities have
been identified for follow-up in the FY16 field
season including targets at Boulder, Rifle and
Carachitas Central.
I want to reaffirm the point that Nueva
Esperanza is shaping up to be a real
“Bridgehead” project for Kingsgate, as work
steadily continues and more positive results are
realised we will be looking for ways to capitalise
and grow this project.
Work on the Bowdens Silver Project continued
at a reduced rate during the year as a result of
ongoing market volatility in the precious metals
sector and a sustained period of a lower than
anticipated silver price.
Environmental monitoring and field data
collection is onongoing with the NSW
Department of Planning and Environment
granting an extension to lodge the Environmental
Impact Statement (“EIS”) until early 2017.
As the new shoots of regrowth and regeneration
emerge from Kingsgate, the Board remains
more committed than ever to ensure the
company has the right people, the right
measures and a strong resolve firmly in place to
remain competitive despite a difficult external
environment. Rebuilding shareholder wealth via
profits and dividends remains a key priority.
I would also like to thank all the management
and personnel of Kingsgate, Akara, Challenger
and the project teams for their efforts in
delivering the operational performance for the
year. I remain confident that your company
will deliver further improvements and deliver
another strong result in FY16.
Ross Smyth-Kirk
Director
4
CEO’s Review
CEO’s Review
By way of introduction, I’ve spent over 30 years
in and around the mining industry both as a
geologist with success in the Pacific Rim
working on the giant Lihir Project and, more
recently, on the financial side of the mining
sector for industry majors such as Deutsche
Bank and AngloGold. To put it simply, it means
I understand mining and I understand finance.
Importantly, I understand the value drivers in the
mining sector.
Drawing upon those experiences, my strategy
for Kingsgate is straightforward - to get back
to basics across our value chain. I want to:
〉〉
reinvigorate Kingsgate’s core competencies
in exploration, development and operations;
〉〉
〉〉
〉〉
focus on operating performance, efficiencies
and financial metrics;
continue to deleverage the balance sheet
and enhance financial flexibility;
actively promote our outstanding record
of social responsibility and core values;
〉〉
review and enhance our portfolio; and
〉〉 deliver returns and create wealth for
shareholders.
Kingsgate has a great platform to leverage off.
It has two strong assets, Chatree in Thailand and
Nueva Esperanza in Chile, both globally signifi-
cant deposits that can deliver meaningful value
to Kingsgate shareholders.
I realise that much could be said about the
headwinds currently facing the precious metal
sector and the broader resources industry, but
I’m not about excuses, I’m about results. While
the current price volatility does create a chal-
lenging operating environment, I will strive to
ensure that we don’t lose sight of our priorities.
I believe getting back to basics, continuing to
align our cost structure to a leaner operating
environment and de-risking will ensure that we
remain a competitive company.
Now that you have a clearer picture of who I am,
I would like to recap on the highlights of the past
year for Kingsgate. Firstly, it is important to
acknowledge our solid operating performances.
Chatree delivered a very credible 125,094
ounces of gold despite a 44 day temporary
closure and Challenger deserves recognition for
an above budget production of 80,151 ounces
while continuing to deliver an outstanding
performance cost and production efficiencies.
Collectively, our operations delivered a strong
operating cashflow which can simplistically be
expressed as an operating EBITDA of A$70.0
million. At this depressed point of the
commodity cycle, the continuing focus for
Kingsgate is to reduce debt. For the 2014/15
year, Kingsgate reduced its net debt position by
A$40.1 million.
Finally, I want to leave you with a glimpse of our
future – the impressive Nueva Esperanza Project
in Chile. Over the past 10-15 years, South
America has seen the development of some of
the largest and most profitable gold mines in the
world. Kingsgate’s future in Chile is bright. We
are located in a very prospective belt that is
delivering new discoveries. We have enhanced
our resource inventory by a meaningful 20% in
2014/15, and we will continue to progress this
key project in a careful and considered manner
to create value for our shareholders.
I look forward to your support and feedback as
we continue to re-invigorate the Kingsgate
business in 2015/16.
Greg Foulis
Chief Executive Officer
It gives me great pleasure to
introduce myself to you as
the newly appointed CEO of
Kingsgate. Admittedly, I’ve only
had three months in the role
since June this year, but I am
firmly across both the challenges
and opportunities that lie ahead.
www.kingsgate.com.au
Five Year Summary
PRODUCTION – Chatree
Ore mined ('000 bank cubic metres)
Waste mined ('000 bank cubic metres)
Waste to ore ratio
Ore mined ('000 tonnes)
Ore treated ('000 tonnes)
Head grade – Gold grams/tonne
Head grade – Silver grams/tonne
Gold recovery (%)
Gold poured (ounces)
Silver poured (ounces)
PRODUCTION – Challenger
Ore mined ('000 tonnes)
Ore treated ('000 tonnes)
Head grade – Gold grams/tonne
Gold recovery (%)
Gold poured (ounces)
PROFIT & LOSS (A$’000)
Sales revenue
Operating expenses
Administration expenses
Other (expenses)/income
EBITDA
Impairment losses
Depreciation & amortisation
EBIT
Net finance (costs)/income
Profit/(loss) before income tax
Income tax (expense)/benefit
Net profit/(loss) after income tax
Non-controlling interests
Net profit/(loss) attributable to owners of Kingsgate Consolidated Limited
BALANCE SHEET (A$’000)
Current assets – cash
Current assets – other
Non-current assets
Total assets
Total borrowings
Other liabilities
Total liabilities
Shareholders' equity
Non-controlling interests
Equity attributable to equity holders of Kingsgate Consolidated Limited
OTHER INFORMATION
Average realised gold price on physical deliveries (US$/ounce)
Cash cost (US$/ounce)
Total cost (US$/ounce)
Operating cashflow (A$'000)
Dividends paid (Cash & DRP) (A$'000)
Number of issued shares ('000) – Ordinary
Basic earnings per share (A$ Cents)
Dividends per share declared for the year (A$ Cents)
5
Five Year Summary
2011
2012
2013
2014
2015
2,352
6,128
2.6
5,301
2,533
1.1
15.7
87.2
1,947
6,259
3.2
4,986
5,116
0.9
11.6
84.4
2,709
3,521
1.3
7,051
5,699
0.9
11.9
79.9
2,378
2,193
0.9
6,176
6,235
0.9
12.9
79.4
1,831
1,133
0.6
4,768
5,283
0.9
13.1
79.3
76,248
549,699
121,372
918,314
133,681
1,000,569
134,546
992,255
125,094
850,003
(5 months)
(12 months)
(12 months)
(12 months)
(12 months)
232
289
4.3
92.2
607
645
4.6
92.4
502
557
3.9
94.5
500
506
4.8
96.1
509
515
5.0
96.7
36,886
87,388
66,216
74,954
80,151
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172,356
(86,147)
(11,304)
(28,424)
46,481
357,372
(171,505)
(12,737)
(6,398)
166,732
–
–
329,282
(192,538)
(15,516)
(24,804)
96,424
(332,808)
(90,965)
(327,349)
(16,222)
(343,571)
16,504
(327,067)
328,326
(244,366)
(15,304)
(4,449)
64,207
(86,698)
(58,986)
(81,477)
(13,250)
(94,727)
(2,886)
(97,613)
313,162
(224,625)
(13,825)
(4,704)
70,008
(148,181)
(53,950)
(132,123)
(14,319)
(146,442)
(651)
(147,093)
–
–
–
(327,067)
(97,613)
(147,093)
30,494
99,087
628,870
758,451
199,758
95,594
295,352
463,099
53,632
82,170
505,293
641,095
153,632
76,790
230,422
410,673
55,472
75,905
413,633
545,010
142,623
76,691
219,314
325,696
(67,553)
99,179
(7,902)
91,277
(16,271)
75,006
153
75,159
87,031
97,817
856,313
1,041,161
157,544
115,102
272,646
768,515
–
–
–
–
768,515
463,099
410,673
325,696
1,663
721
1,028
165,247
22,025
151,264
52.5
20.0
1,588
869
1,311
92,734
22,738
152,192
(215.0)
1,291
936
1,167
1,208
833
1,023
38,608
76,646
–
–
223,585
(56.7)
223,585
(65.8)
5.0
–
–
(27,772)
18,709
(922)
17,787
3,092
20,879
269
21,148
35,864
70,280
688,919
795,063
99,896
88,243
188,139
606,924
7,109
599,815
1,386
638
813
34,026
33,647
135,275
18.7
15.0
6
Finance Report
Finance Report
Summary
Earnings
Kingsgate has recorded the following financial
performance for the year to 30 June 2015:
〉〉 Revenue of $313.2 million;
〉〉
EBITDA (before significant items) of
$70.0 million;
〉〉 Profit before tax and significant items of
$1.7 million;
〉〉 Non-cash asset impairments of $148.2
million pre-tax, with $115.7 million relating
to Chatree;
〉〉 No dividends have been declared.
The Group achieved a reduction in total cash
costs to US$833 per ounce (2014: US$936 per
ounce), although this was offset by lower gold
sales of 202,489 ounces (2014: 216,887 ounces)
and a lower realised gold price of US$1,208 per
ounce (2014: US$1,291 per ounce).
The decrease in gold sales reflected a 7%
decrease in production at Chatree compared to
the prior year, primarily due to a loss of 44 days
of production following a temporary suspension
notice issued by the Department of Primary
Industries and Mines in Thailand. Production at
Challenger was 7% above that of the prior year,
reflecting increased throughput and grade of
ore processed.
The significant and sustained decline in the gold
price resulted in an impairment to the carrying
value of Chatree of $115.7 million pre-tax. This
impairment was the major contributor to the
after tax loss of $147.1 million for the year.
Cost of Sales
Cost of sales before depreciation decreased by
8% to $224.6 million compared to last year,
which largely reflects lower mining costs at
Chatree and Challenger. The total unit cash cost
for Chatree for the year was US$690 per ounce
(US$595 per ounce excluding royalties), down
from US$728 per ounce in 2014. The total unit
cash costs for Challenger for the year were
US$1,059 per ounce (2014: US$1,310 per
ounce). On a unit cost basis, total cash costs for
the Group were US$833 per ounce, down from
US$936 per ounce last year.
Depreciation and Amortisation
The decrease in depreciation and amortisation
included in cost of sales to $53.7 million (2014:
$58.8 million) reflects lower production at
Chatree and lower capital expenditure compared
to the prior year.
Impairment
The Group recorded non-cash impairments
against the carrying values of Chatree ($115.7
million) and Bowdens ($22.6 million). In accord-
ance with accounting standards, the Group is
required to assess the carrying value of oper-
ating and development projects within a set
valuation framework that reflected the signifi-
cant and sustained decline in the price of both
gold and silver.
The carrying value of the Group’s exploration
assets in South-East Asia was also impaired
($9.9 million) to reflect a change in focus of
Kingsgate’s exploration activities in South
America.
The impairments are non-cash items and have
no impact on the Company’s debt covenants.
Finance Costs
Finance costs were $15.2 million and mainly
comprise interest on borrowings the Group has
in place, unwinding of the discount on provi-
sions as required by Accounting Standards,
foreign currency movements on foreign
currency denominated loans and amortisation
of previously capitalised borrowing establish-
ment fees.
www.kingsgate.com.au
2014/15
A$ million
76.6
(40.3)
(147.1)
76.6
–
7
Finance Report
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Hedging
As at 30 June 2015, the Group had 5,000 ounces
of gold sold forward at an average price of
$1,538 per ounce. Since the year end, an addi-
tional 26,000 ounces of production have been
covered under forward sale contracts at an
average price of $1,542 per ounce. 12,900
ounces have been delivered against these
contracts, leaving a remaining balance of 18,100
ounces at an average price of $1,556 per ounce.
Financial Position
Shareholders’ equity at 30 June 2015 was
$326 million (2014: $411 million). The decrease
of $85 million reflects the year’s loss, including
the impairment of Chatree, offset by foreign
exchange gains on translation of foreign
operations.
Dividends
No dividends were declared for the year ended
30 June 2015 (2014: nil).
Financing Arrangements
Senior Corporate Facility
The balance of the senior corporate loan facility
outstanding at 30 June 2015 was $25 million.
$10 million was repaid against the facility on
31 July with the balance of $15 million restruc-
tured as a Revolving Credit Facility (RCF) repay-
able in three equal instalments commencing on
29 January 2016.
Under the terms of the RCF, Kingsgate is
required to maintain a minimum hedge position
with a rolling three month program covering
30% of forecast group production. As security,
the lender has a fixed and floating charge over
Kingsgate, including shares in its material
subsidiaries.
In addition, Kingsgate has, available over the
tenure of the RCF, an Equity-linked Loan Facility
(ELF) of $15 million. The ELF is currently undrawn.
Multi-currency and Syndicated
Loan Facilities
Akara has an amortising multi-currency loan
facility with 3.5 years remaining following the
commencement of quarterly repayments in
November 2013. At year end, the equivalent of
$104.9 million was owed against this facility.
Since the year end, a further equivalent $8.5
million has been repaid. As security against the
facility, the lender has a fixed and floating charge
over the land, buildings and machinery in Thailand
owned by Akara and its material subsidiaries. In
addition, Akara is required to maintain a debt
service reserve account of US$5 million.
Operating and Investing Cash Flow
Operating cash flow
Investing cash flow
Operating Profit and Cash Flow
Loss after income tax
Operating cash flow
Cash dividend paid
Income Tax
On 18 June 2010, Kingsgate’s Thai subsidiary
company, Akara Resources Public Company
Limited (Akara), received approval from The Royal
Thai Board of Investment (BOI), for a promotion
for the Chatree North gold processing plant.
Based on an annual production limit from the new
processing plant of 185,200 ounces of gold and
1,080,400 ounces of silver, Akara is entitled to:
a) an eight year tax holiday on income
derived from the new processing plant
with tax savings limited to the capital
cost of the new treatment plant;
b) a 25% investment allowance on the
capital cost of certain assets of the new
processing plant; and
c) other benefits.
The taxable loss from the Australian operations
has not been recognised as a deferred tax asset,
although it has been added to the Group’s
brought-forward tax losses, leaving a balance of
$277 million of taxable losses (unrecognised tax
asset of $83 million) to be carried forward to
future years.
Cash Flow
Net operating cash inflow was $76.6 million,
an increase of $38.0 million compared to the
previous year, primarily reflecting lower mining
costs and a reduction in working capital balances.
Net investing cash outflow was $40.3 million,
down $4.6 million from last year due to a reduc-
tion in capital expenditure on plant offset by an
increase in exploration and development at the
Nueva Esperanza Project. Net cash outflow from
financing activities was $37.7 million, including
repayment of $40.1 million of the corporate loan
facility and the multi-currency and syndicated
loan facility.
8
Operations Report
Operations
Report
Chatree
Gold Mine
Thailand
Overview
Kingsgate and its Thai subsidiary, Akara
Resources Public Company Limited(Akara),
operate the Chatree gold mine in central
Thailand, 280 kilometres north of Bangkok.
Chatree is a large scale, low-grade, open pit gold
mining operation located in central Thailand.
Chatree continued as Kingsgate’s primary
production asset throughout the year, producing
125,094 ounces of gold and 850,003 ounces
of silver.
Strong production performance was achieved
despite a 44 day suspension of operations in the
third quarter. Issued by the Thai Department of
Primary Industries and Mines, the temporary
suspension order related to the matter of slightly
elevated arsenic and manganese levels identified
in several local inhabitants during regular
screening. Kingsgate worked closely with Thai
authorities and the local community to satisfy all
requests concerning this community health issue.
This included health checks and lifestyle education
programs and a commitment to continued assis-
tance with ongoing management of the situation.
A major environmental report by independent
international and Thai scientific experts
confirmed that the Chatree mining operation was
not the source or cause of the elevated arsenic
and manganese levels. This report was delivered
to the Department of Primary Industries and
Mines and presented to the local authorities and
communities. The suspension order was lifted
and operations resumed on Friday 27 February.
During the shutdown period, major maintenance
tasks scheduled for later in the year were under-
taken thus reducing future downtime.
www.kingsgate.com.au
No Lost Time Injuries were recorded during the
year. Chatree has achieved four million man-
hours of operations and construction activity
since its last Lost Time Injury. Management
continues to congratulate all employees and
contractors for their attention to safety and
care for each other.
In recognition of our safety standards and
emergency response preparedness, Chatree
mine received the “Thailand National Occupa-
tional Health and Safety Award 2015” on 2nd
July 2015. This is the eighth consecutive year
that Chatree has received the Occupational
Health and Safety Award.
Chatree is operated under strict environmental,
safety and quality standards and is proud to be
ISO14001 (Environmental), OHSAS18001
(Safety) and SA8000 (Social Accountability)
compliant.
Chatree Operational
Performance 2014/15
Production Summary
Ore Mined
Waste Mined
Waste to Ore Ratio
Ore Mined
Ore Treated
Head Grade - Gold
Head Grade - Silver
Gold Recovery
Silver Recovery
Gold Poured
Silver Poured
bcm
bcm
1,831,187
1,132,522
0.6:1
tonnes
4,768,388
tonnes
5,283,366
Au g/t
Ag g/t
%
%
0.91
13.1
79.3
37.1
ounces
ounces
125,094
850,003
Financial Summary
Cost Summary
Mining Cost
Milling Cost
Administration & Other
Stockpile Adjustments
By Product Credit*
Cash Operating Cost
Gold Royalty
Total Cash Cost
Depreciation &
Amortisation – Operating
US$/oz
US$/oz
US$/oz
US$/oz
US$/oz
US$/oz
US$/oz
US$/oz
US$/oz
197
373
46
80
(101)
595
95
690
255
Total Production Cost
US$/oz
973
Total Cash Cost per
Tonne of Ore Treated
US$/tonne
16.34
Revenue Summary
Gold Sold
Silver Sold
Average Gold Price
Received
Average Silver Price
Received
Revenue from Metal
Production
* Net of Silver Royalties
ounces
ounces
US$/oz
121,721
811,765
1,219
US$/oz
17.3
US$m
162.4
9
Operations Report
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Production and Costs
Total mill throughput for the year was 5.3 million
tonnes, 15.3% lower than 2014 and production,
125,094 ounces of gold and 850,003 ounces of
silver, was 7.0% and 14.3% lower respectively.
Total cash costs for the year were $US690 per
ounce ($US595 per ounce exclusive of Thai
royalties). The average royalty paid to the Thai
Government was $US95 per ounce of gold. Total
production costs after depreciation and amorti-
sation were $US973 per ounce of gold produced.
At year end, 9.1 million tonnes of ore was stock-
piled with an average contained gold grade of
0.49 grams per tonne (g/t) representing 144,469
ounces of gold.
Mining
Mine production was improved through better
equipment availability and the implementation
of several joint maintenance improvement
projects between Akara, our mining contractor
LotusHall, and their main maintenance supplier.
During the year, the mining sequence was
modified to focus on the higher-grade ore in
A Pit and 4.77 million tonnes of ore was mined,
with a waste-to-ore strip ratio of 0.6:1. The
average head grade of mined ore was 0.91g/t
gold, and 13.1g/t silver.
The introduction of Blast Monitoring Tech-
nology in September 2014 continued to provide
positive results and reduce the chance of mis-
classification. Work on optimising the drilling
and blasting parameters continued throughout
the year, including design orientation to geolog-
ical structures, varying hole-size and burden-to-
spacing ratios.
Three days of production were lost due to signif-
icant rainfall events during the year.
The reinstatement of the section of Highway
1301 that passes through C North Pit was
completed during the first quarter of the finan-
cial year.
Tailings Storage Facility No. 2 was completed by
April 2015, and will provide additional storage
capacity for the coming year.
Chatree – Sustainability
Chatree adheres to Kingsgate’s Sustainability
Policy. The primary aim of the policy is to manage
the Chatree asset ethically, so the people of
Thailand and the Company prosper together,
enjoying safe, fair and rewarding working rela-
tionships and a healthy living environment.
Processing
Plant No. 2, continues to perform well with an
availability of 97.6% as does Plant No. 1 with an
availability of 98.0%.
Work continued to eliminate processing bottle-
necks and maximise recoveries which were
impacted in the second half of the year by carbo-
naceous material associated with one of the fault
structures identified in the base of the A Pit.
A number of plant operating- and blend-adjust-
ments resolved the problem.
Outlook – 2016
Kingsgate remains confident that Chatree will
deliver another strong performance in the 2016
reporting period. The focus will remain firmly on
further cost reductions and efficiencies to
mitigate the ongoing volatility in the precious
metals market. Chatree guidance for 2015/16 is
in the range of 125,000 to 135,000 ounces with
production expected to be lower in the first half
due to a scheduled cut-back on the south east
wall of A Pit and the processing of lower grade
stockpile ore.
Community
Chatree gold mine is located 280 kilometres north
of Bangkok on the provincial border of Phichit and
Phetchabun Provinces. The villages around
Chatree lead a predominantly agrarian lifestyle
with rice growing as the main activity. It is impor-
tant therefore, that Chatree is a good corporate
citizen for our immediate neighbours and in
Thailand generally. Chatree has as a primary goal,
to minimise the impact of mining operations on
those living and working nearby. We seek to
achieve this through regular meetings and consul-
tation with local government and village groups,
and by assisting the community in times of need.
Community Funds
Corporate Social Responsibility at Chatree is a
continuing commitment to behave ethically and
contribute to economic development in the local
area, improving the quality of life of our work-
force, their families and the local community. In
order to facilitate this, we have established four
funds. These are: an “EIA Fund” for any environ-
mental impact, an “Or Bor Tor Fund” (a sub-
district fund), a “Village Fund” and an “Akara For
Communities Fund”. Committees comprising
government officials, village leaders and
employees from Chatree manage each fund,
ensuring transparency with diligent fund
disbursement and project management.
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Operations Report
Environmental Audit
In April 2015, the fourteenth annual Tailings
Storage Facility Audit was undertaken. Knight
Piésold Consulting found that the tailings
facility continues to be operated and built at
best practice and the Chatree Processing
Department demonstrates a good under-
standing of the facility.
In January 2015, Environ Australia Pty Ltd under-
took the thirteenth “whole of site” environ-
mental audit of the Chatree mine. The audit is
designed to assess compliance with conditions
in the Mining Leases, corporate commitments
made in the current Environmental Impact
Assessment, adherence to corporate environ-
mental policy, observance of the Australian
Minerals Industry Code for Environmental Manage-
ment and Enduring Value, and our environmental
performance overall.
The audit concluded that the operations of the
Chatree Gold Project comply with applicable
statutory requirements as well as voluntary
environmental commitments made by Akara
Resources Public Company Limited. The audit
also indicated that the project operations are
being carried out in accordance with the require-
ments of the Australian Minerals Industry Code
for Environmental Management and that the
responsibilities of Kingsgate, as a Code signa-
tory, are being addressed.
Cyanide Management
Chatree continues to meet all requirements of
The International Cyanide Management Code for
gold mining operations. The Code mandates
strict protocols for the manufacture, transport,
storage and use of cyanide. The last cyanide
code audit was carried out in 2014. The certifica-
tion of Plant No. 2, the new processing plant,
and the re-certification of the old processing
plant were announced on 25th June 2014 by the
International Cyanide Management Institute.
Readings of discharge to the Tailings Storage
Facility are taken every 60 minutes. Of the 8,760
readings taken during the reporting period, a total
of 99% showed the discharge of cyanide did not
exceed the 20mg/L CNTOT standard. The highest
monthly reading obtained was 17.3mg/L CNTOT
with an annual average of 11.2mg/L CNTOT.
Birds continue to nest and breed near the
Tailings Storage Facility, confirming that our
cyanide discharge presents no environmental
hazard. Ongoing cyanide destruction is also
assisted by numerous introduced micro-organ-
isms which are able to degrade free cyanide to
carbon dioxide and ammonia.
Employees
The Chatree workforce totalled 965 at the end
of the year, comprising 345 Akara Resources
employees, 420 LotusHall persons with a further
200 employed as minor contractors. Turnover of
Akara permanent employees during the financial
year was 16.9% comprised of 6.4% voluntary
and 10.5% involuntary. Chatree has also main-
tained its certificate of SA8000 (Social Account-
ability Accreditation) since 2009.
Our business is focused on employee engagement
and our objective is to ensure that our employees
are appropriately placed in roles that are in line
with our commercial goals. Akara offers compre-
hensive training in relevant safety and job-related
areas to all staff and also assists employees to
obtain tertiary education qualifications. To date,
53 employees have been sponsored for higher
education pursuits. One employee was sponsored
for a doctoral degree, 35 for Masters level
degrees, nine for Bachelor level degrees, eight for
Diploma Certificates and one employee was
sponsored for an MBA short course.
Water
While rainfall can occur year round, it is gener-
ally concentrated during the annual monsoon
period (July to October). The responsible
management of water is therefore of utmost
importance to the Chatree mine and to the
surrounding area. Chatree operates on a nil-
release basis and all rain water on the mine lease
is harvested, requiring continuous management
of usage, quality and storage. Twenty seven
surface-water and 88 groundwater quality test
sites have been established, all of which are
regularly monitored and sampled. To date, no
results from any of these sites have caused any
environmental concerns.
To gauge any potential drawdown impact on
local groundwater, the mine regularly monitors
75 water table measuring stations, located on
the mine site and in surrounding villages. Water
levels rise and fall seasonally but no long-term
adverse trends have been identified.
A total of 1,089,749 tonnes of make-up water
(predominantly rainwater stored in pits) was
used to process 5,283,366 tonnes of ore during
the financial year. Water usage per tonne of ore
is reduced by recycling water from the Tailings
Storage Facility.
www.kingsgate.com.au
Incident Reporting
There were 79 environmental events during the
year. All were minor, relating to hydrocarbon
leaks and spills, and were contained. There were
no reportable incidents.
Rehabilitation
No contaminated land issues arose during the
period. The rehabilitation program is ongoing
with areas contoured and planted as soon as
practicable. Trials of various species are under-
taken to ensure the optimal results for each
location and many species of trees and grass
have been sown successfully across the site.
Some 13.55 hectares were rehabilitated last year
and 10.91 hectares of rehabilitation are planned
for the present year.
Blast Vibration and Noise
Akara is mindful of the impacts that noise and
vibration from blasting may have on surrounding
residents of the mine. Blasting is restricted to
certain times of the day and measures are taken
with its blast design to minimise noise and
vibration. Noise and vibration during each blast
are monitored regularly and the data used as
feedback in the blast design process. Effective
noise barriers have been developed around
operations, and in some circumstances opera-
tions have been restricted to daylight hours.
Dust Management
Chatree’s aim is to produce minimal dust and
thereby reduce neighbouring concerns by main-
taining all mine roadways in good order through
regular gravel sheeting and watering. Dust
monitoring stations have been established in
nine surrounding villages. All results from the
regular monitoring and sampling program have
been within required quality standards.
Operations
Report
Challenger
Gold Mine
Australia
Overview
Challenger is a small scale underground gold
mine located in central South Australia.
Ore mined for the year totalled 508,846 tonnes
at 5.01 grams per tonne (g/t) gold for 82,362
mined ounces of gold, and was entirely derived
from Challenger West.
During the year, there were three incidents
resulting in Lost Time Injuries, four restricted
work injuries and two medically treated injuries
– a total of nine recordable injuries compared to
the previous year’s 17. Total injuries reported
have also decreased: 79 injuries reported
compared to the previous year’s total of 104.
Production and Costs
Production for the year was 80,151 ounces gold
at 96.7% recovery.
Along with 508,846 tonnes of ore, some
242,109 tonnes of development waste was
mined throughout the year.
Operating costs at Challenger were US$1,059
per ounce (including US$45 per ounce royalty).
Note that operating costs at Challenger include
all mine development for the site (i.e. no mine
development costs were being capitalised).
Mining
Challenger West remains the primary produc-
tion orebody while drilling of the deeper parts of
Challenger West and Challenger South South
West (SSW) continues to explore further oppor-
tunities to extend the mine life of the Challenger
underground. The Challenger West shoot
provided all the ounces for the year. Byrnecut
Australia Pty Ltd (BAPL) continues to operate as
the mining contractor at site since 1st August
2013.
A total of 6,611 metres of underground mine
development was driven for the year.
The advance rates remained above budget as
efficiencies were improved and more work areas
became available. Over the course of the year,
geological knowledge progressively increased,
allowing drilling and development to target
further extensions to the Challenger lode system.
A total of 161,460 tonnes of development ore
was mined.
Processing
Processing expenditure for the year was 21%
below budget.
The Challenger Mill utilisation was 90.5% for the
financial year. Throughput averaged 64.9 tonnes
per operating hour for the year and was
primarily dependent upon ROM pad stockpiles.
A total of 514,722 dry tonnes of ore at 5.01g/t
was treated. The average mill grade was slightly
higher than budget.
Gold recoveries at 96.7% were above the budget
of 95.0%.
11
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Challenger Operational
Performance 2014/15
Production Summary
Ore Mined
Ore Treated
Head Grade – Gold
Head Grade – Silver
Gold Recovery
Silver Recovery
Gold Poured
Silver Poured
Financial Summary
Cost Summary
Mining Cost^
Milling Cost
Administration & Other
Stockpile Adjustments
By Product Credit*
Cash Operating Cost
Gold Royalty
Total Cash Cost
Depreciation &
Amortisation – Operating
tonnes
tonnes
Au g/t
Ag g/t
%
%
ounces
ounces
US$/oz
US$/oz
US$/oz
US$/oz
US$/oz
US$/oz
US$/oz
US$/oz
US$/oz
508,846
514,722
5.01
–
96.7
–
80,151
1,626
702
204
109
(1)
–
1,014
39
1,059
47
Total Production Cost
US$/oz
1,106
Total Cash Cost per
Tonne of Ore Treated
US$/tonne
164.78
Revenue Summary
Gold Sold
Silver Sold
Average Gold Price
Received
Average Silver Price
Received
Revenue from Metal
Production
ounces
ounces
US$/oz
US$/oz
US$m
80,768
1,626
1,191
17.0
96.2
* Net of Silver Royalties
^ Includes mine development costs
continued
12
Operations Report
Outlook
The mine plan at Challenger is under review, with
the current reserves expected to be depleted in
the March quarter 2016. As Kingsgate continues
to refocus key elements of the business, a
decision in relation to the future of Challenger
either through further optimisation or divest-
ment will be made in the coming year.
Challenger – Sustainability
Employees
The Challenger workforce totalled 221 at the end
of the year, comprising 90 Kingsgate personnel
(employees and casual contractors to fill vacan-
cies) and 131 contractors.
Water Usage
A total of 368,408 tonnes of water was used to
process 514,722 tonnes of ore during the year
with a ratio of 0.72 tonnes of water to one
tonne of ore. Water usage was reduced on-site
via recycling of water from Tailings Storage
Facility (TFS) No. 2.
Water Quality
Challenger’s local and regional groundwater
monitoring network consists of:
〉〉 nine TSF monitoring wells (around the
Tailings Storage Facility);
〉〉
〉〉
〉〉
〉〉
two observation wells (shallow pastoral
aquifers);
four production wells (raw water supply to
the processing pond);
five production observation wells (paleo-
channel monitoring);
three production bores and one dewatering
bore (water supply to the reverse osmosis
treatment plant for potable water); and
〉〉
two pastoral bores.
Monthly, quarterly and bi-annual water moni-
toring was undertaken in accordance with guide-
lines defined in the Program for Environment
Protection and Rehabilitation 2012. The Annual
Groundwater Review, conducted by CDM Smith,
identified the fact that the quality parameters
measured in groundwater samples collected
from the mine-site groundwater monitoring
network (CNWAD, and metals) generally occur
below the relevant guidelines. In many cases, the
measurements were close to, or below, the Limit
of Reporting (LOR). Concentrations of weak acid
dissociable cyanide (CNWAD) analysed from
groundwater samples collected from monitoring
bores surrounding the Tailings Storage Facility
suggest the natural attenuation of cyanide is
www.kingsgate.com.au
occurring and containment measures in place for
process water and tailings slurry are performing
as designed.
Environmental Compliance Audit
An independent Environmental Compliance
Audit was undertaken by environmental consult-
ants MWH Australia Pty Ltd in February 2015.
The Compliance Audit was submitted to the
Department of State Development as part of the
annual Compliance Report in April 2015. The
Compliance Audit identified action tasks which
are in various stages of completion.
Environmental Monitoring Programs
Environmental monitoring was undertaken in
compliance with the commitments stated in the
2012 Program for Environmental Protection and
Rehabilitation. Full details of all environmental
monitoring reports and a detailed review of all
environmental issues are contained within the
2015 Compliance Report.
Tailings Storage Audit and Management
Review
An independent Tailings Storage Audit and
Management Review was undertaken by Worley-
Parsons Ltd in November 2014. The tailings
management practices at Challenger are consid-
ered adequate given the current operating
conditions.
Flora and Fauna
Flora and fauna monitoring was conducted by
MWH Australia Pty Ltd in September and
November 2014. These surveys reported that
mining operations at Challenger have no signifi-
cant impacts on flora and fauna assemblages
and communities surrounding the mine site.
Incidents
A total of 39 environmental incidents were
recorded internally during the 2014/15 reporting
period. There were no environmental incidents
required to be reported to government regula-
tors. All incidents were investigated and were
closed out before the end of the financial year.
Rehabilitation
Ecosystem Function Analysis was conducted by
MWH Australia Pty Ltd in August 2014 across
rehabilitated areas and ‘natural’ analogue sites.
The data collected from these transects
compares landscape function, vegetation estab-
lishment and habitat development of rehabilita-
tion transects against analogue areas. Due to
increased litter and plant cover, both analogue
and rehabilitation sites had increased landscape
function indices. The increase was attributed to
improved climatic conditions, rather than a
general improvement of the rehabilitation.
Rehabilitation of exploration holes is on-going
with light ripping of drill pads which are not
seeded, but left to revegetate naturally.
Air Quality, Noise and Hygiene Monitoring
Dust monitoring is undertaken in two
components:
〉〉 On-site gravimetric dust monitoring,
consisting of respirable and inhalable dust
monitoring which is continuous and reported
quarterly; and
〉〉 Particulate dust monitoring, conducted once
a year, generally in the summer when the
worst dust conditions would be present.
These filters are sent to a laboratory accred-
ited by the National Association of Testing
Authorities for analysis of the amount of
crystalline silica, arsenic and lead.
The majority of the respirable dust results were
below the regulation limit, except for two
exceedances in 2014. Dust mitigation measures
were employed and respirable dust limits
dropped to an acceptable level within a few
days. During January 2015, the dust monitoring
pumps were serviced and calibrated and, as a
result, there are only two complete samples
from the 2015 March quarter. Particulate dust
monitoring was below the regulation limit for
silica, arsenic and lead.
The triennial noise and hygiene monitoring
surveys were undertaken in November 2014. In
regards to noise, the personal sampling results
and the static sampling results indicate that
employees are exposed to noise levels that
exceed the statutory peak noise criteria.
Although workers must not be exposed to noise
above these regulation limits, noise mitigation
measures (e.g. hearing protection) can be imple-
mented to reduce personal exposure. In regards
to hygiene, concentrations of carbon monoxide,
carbon dioxide, nitric oxide, nitrogen dioxide,
ozone and welding fumes are well below the
regulation limits. Diesel particulate emissions
were found to comply with regulatory limits.
Emissions
Data for the National Pollutant Inventory, and the
National Greenhouse and Energy Reporting
(NGER) Act 2007, was collected for the financial
year and sent to Greenbase Consultants who
calculated Challenger’s emissions to water, land
and air.
Projects
Report
Nueva Esperanza
Chile
Summary
Kingsgate firmly believes that Chile, and more
broadly South America, is a preferred mining
investment destination. Chile is ranked thir-
teenth in the world in the Fraser Institute Survey
which considers such factors as mineral endow-
ment and ease of doing business and it is also
the largest global copper producer.
The Nueva Esperanza Project is 100% owned,
acquired by Kingsgate in 2012 through the
consolidation of tenements and resources in
2011. The Project is located in the Maricunga
Gold Belt near Copiapó, a regional mining centre
in Northern Chile. The gold and silver-rich miner-
alisation is hosted by the Esperanza high-sulphi-
dation epithermal alteration system associated
with the Cerros Bravos volcanic complex.
The highly prospective Maricunga Belt, which has
already delivered defined total resources around
100 million ounces, is known for its historic
bonanza silver production and is further charac-
terised by epithermal gold styles in the north.
Kingsgate believes Nueva Esperanza is poten-
tially a +5 million ounce GEO* system and that
Chile, and the Maricunga Belt, will continue to
facilitate some outstanding discoveries and
development projects similar to those of the
past 10 to 15 years.
*
GEO: Gold Equivalent Ounces = gold content
plus (silver content divided by 60), whereas
Silver equivalent = silver content plus (gold
content times 60).
1
AuEq60: Equivalence is based on gold/silver
price ratio of 60.
13
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The Nueva Esperanza Project consists of three
well-defined mineralised deposits and a number
of undeveloped exploration targets. The main
deposits are Arqueros, Chimberos and Teterita.
Arqueros was previously mined on a limited scale
by underground methods and Chimberos was
exploited as an open pit mine delivering about
40 million ounces of silver in 1998/99. All three
deposits have combined Mineral Resources of
approximately 113 million ounces of silver
equivalent or 1.9 million ounces of gold equiva-
lent (AuEq60)1.
Kingsgate has the skills to explore, build and
operate the project. A Feasibility Study
completed in March 2014, demonstrated that
open cut mining at three million tonnes per year
and processing by heap leaching with cyanide is
technically feasible and economically viable.
Follow-up exploration resulted in the significant
discovery of a high-grade gold section at Chim-
beros resulting in a process- and project-review
to optimise the impact of the new discovery on
the resource base.
Some significant upsides to the project have
already been identified, including:
〉〉
Initial permitting already in place;
〉〉 Water rights secured;
〉〉 Power options available;
〉〉
Identified gold potential; and
〉〉
Economics updated via an Optimisation
Study.
Location map of the Nueva Esperanza project
area in northern Chile showing Resource
Endowment (Historic production plus resources)
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Projects Report
Updated Resource Estimates for Chimberos (0.5g/t Gold Equivalent Cut off)
Grade
Contained Metal
Deposit
Category
Tonnes
(Million)
Au
(g/t)
Ag
(g/t)
Au Eq60
(g/t)
Gold
(M oz)
Silver
(M oz)
Au Eq60
(M oz)
Ag Eq60
(M oz)
Chimberos
Silver
Chimberos
Gold
Chimberos
Total
Measured
Indicated
Inferred
Subtotal
Measured
Indicated
Inferred
Subtotal
Measured
Indicated
Inferred
–
3.0
0.6
3.6
–
6.2
1.7
7.9
–
9.2
2.3
Total
11.5
–
0.16
0.10
0.15
–
1.17
0.90
1.11
–
0.84
0.70
0.81
–
76
66
74
–
51
31
47
–
59
40
55
–
1.43
1.20
1.39
–
2.02
1.40
1.89
–
1.83
1.40
1.73
–
0.02
0.00
0.02
–
0.23
0.05
–
7.3
1.3
8.6
–
10.2
1.7
0.28
11.9
–
0.25
0.05
–
17.5
3.0
0.30
20.5
–
0.14
0.02
0.16
–
0.40
0.08
0.48
–
0.54
0.10
0.64
–
8.3
1.4
9.6
–
24.2
4.6
28.8
–
32.4
6.0
38.5
Geology
The silver and gold mineralisation is hosted within
Tertiary volcanic units at Arqueros and Teterita,
and in Paleozoic sediments at Chimberos. The
alteration and mineralisation are all Miocene in
age and associated with hydrothermal activity on
the Cerros Bravos paleovolcano.
Mineralisation comprises two main components:
silver-rich horizontal units termed ’mantos’
(Spanish for blanket) and a series of near-vertical,
cross-cutting gold-rich structures. The mantos
silver mineralisation is hosted by vuggy silica
within dacitic lapilli tuff. Mantos occurs at
Arqueros and Teterita where the mineralising
process has replaced horizontal porous tuffs.
At Chimberos, silver mineralisation is hosted in
vuggy silica hydrothermal breccia superimposed
on folded Paleozoic sediments.
The vertical gold-rich mineralisation, also
characterised by vuggy silica, is well-developed
at Arqueros. It has been interpreted as feeders
for mineralising fluids. Nonetheless, this style of
mineralisation has not yet been observed at
Teterita.
www.kingsgate.com.au
Resources
Upon completion of the 2014/15 exploration
program, Kingsgate was very pleased to provide
a new Mineral Resource estimate for the Nueva
Esperanza Project. A number of significant
outcomes from the program were:
〉〉 Discovery of the Chimberos Gold deposit, to
the west of the current Chimberos pit;
〉〉
〉〉
〉〉
The addition of 250,000 ounces of gold and
5.1 million ounces of silver to the August
2013 Mineral Resource estimate, taking total
Mineral Resources to 34.6 million tonne at
1.7 grams per tonne AuEq60 for 1.9 million
ounces gold equivalent;
The relatively high-grade nature of the
recently discovered gold mineralisation has
now led to reconsideration of agitated leach
(milling) for the process route rather than
heap leach; and,
Further high-potential targets following the
initial results at Boulder, Rifle and Carachitas
Central prospects.
Optimisation Study
Following the discovery of Chimberos Gold and
the substantial upgrade to the total Mineral
Resources, Kingsgate has commenced a project
optimisation study, in conjunction with
Ausenco, which will utilise the comprehensive
technical work completed to date and incorpo-
rate the newly enlarged Mineral Resources. It is
also believed that significant opportunities may
be available to benefit the project within the
current mining landscape.
The study is intended to deliver the following:
〉〉 Design parameters around a 2 million tonne
per annum agitated leach (milling) operation;
〉〉
Indicative capital and operating cost
estimates;
〉〉 Updated Ore Reserve estimates; and,
〉〉 Relevant information for amendments to
existing permits.
While water and power options are currently in
place, there has been a structural shift in the
power generation and distribution market in
Chile that is anticipated to significantly lower
the cost of electricity for the project.
Outlook
Kingsgate maintains that Nueva Esperanza is a
key bridgehead project for the company. While
there is considerable work to be done, the intent
for the financial year 2016, is to move the
project forward in a cost efficient manner in
order to de-risk and maximise the value of the
project in the current metal price environment.
15
Projects Report
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Definitive Feasibility Study
and Environmental Impact
Statement
During 2015, the synchronisation of both the
Definitive Feasibility Study and Environmental
Impact Statement continued in order to
progress the two long-lead items that need
highly detailed, specialist design work before
final completion.
These two remaining areas are the ground- and
surface-water management, and the preferred
route for the 132 kilovolt power transmission
line. Specialist consultants are completing
detailed studies on these areas to include
capital and operating cost estimates, project
water and power supply needs, infrastructure
requirements and mine optimisation.
A notable highlight of the groundwater
studies undertaken during the reporting
period has identified the potential for reduced
off-site water requirements. Additional
groundwater modelling will be required to
ascertain a definitive answer.
The preparation for lodgement of the Environ-
mental Impact Statement to the NSW
Department of Planning and Environment
continues, and it is envisaged that it will be
completed and lodged prior to 2017.
Data collection for flora and fauna, surface
water, groundwater, meteorology, ambient
noise and dust levels continues at regular
intervals. Similar studies of cultural heritage,
socio-economic impact, traffic impact, soil
type and agricultural suitability have also been
undertaken on the project site.
There have been no serious safety incidents
reported to date. At the end of June 2015,
there were over 1,305 days free of Lost Time
Injury since Kingsgate exploration and pre-
development activities began on-site.
Outlook
Kingsgate will continue to consider options on
how to effectively finalise the Environmental
Impact Statement prior to the 2017 lodge-
ment extension in the midst of continuing
market volatility.
Projects
Report
Bowdens
Silver Project
Australia
Summary
Geology
The Bowdens Silver Project (Bowdens) is located
in the Lue/Rylstone area of central western New
South Wales, approximately 240 kilometres
west of Sydney.
Silver mineralisation was discovered at Bowdens
in the mid 1980s. Programs of geophysical and
geochemical exploration have been undertaken
in various forms since that time. Kingsgate
acquired the project from Silver Standard
Resources Inc. in 2011.
During the year, progress stages of the Defini-
tive Feasibility Study and the Environmental
Impact Statement were synchronised to deliver
cost savings in recognition of the ongoing
volatility of the silver price. Work included the
successful application for additional time to
lodge the Environmental Impact Statement
given the current precious metals market condi-
tions. The NSW Department of Planning and
Environment granted Kingsgate-Bowdens until
early 2017 to fulfil this requirement.
The Bowdens Silver Project is located on the
eastern margin of the Lachlan Fold Belt and its
contact with the younger, on-lapping, Late
Permian sedimentary units of the Shoalhaven
Group within the Sydney Basin. Bowdens is
hosted within flat-lying, Early Permian Rylstone
Volcanics which are partially overlain by a
sequence of Shoalhaven Group marine sedi-
ments. The Rylstone Volcanics range from 10 to
200 metres thick and are dominated by silica-
rich, volcanically-derived rocks.
The silver mineralisation occurs as flat-lying to
moderately-dipping zones of disseminations and
silicic fracture-filling and is closely associated
with sulphides of iron, arsenic, lead and zinc.
High-grade silver mineralisation is also hosted in
steeply-dipping fracture zones which contain
banded sulphide veins.
Resource
A resource estimate was completed in October
2012, in line with the JORC 2012 Code and the
total measured, indicated and inferred resource
(at the 30g/t AgEq cut-off grade) is 182 million
ounces of silver equivalent (AgEq).
No changes have been made to the estimation
during 2014/15.
16
16
Exploration Report
Exploration
Report
Brownfields
Exploration
Overview
Kingsgate continued to explore its key ‘brown-
fields’ mine areas at Chatree, Challenger and key
development project Nueva Esperanza.
Kingsgate’s ‘greenfields’ exploration activities
were focused on generative projects in South
East Asia, in particular Laos.
Strategically, Kingsgate is reducing greenfields
exploration budgets in South East Asia, and
awaits a change in government policy in
Thailand before recommitting. Kingsgate
intends to conduct business development
activities in South East Asia and Chile to oppor-
tunistically build our portfolios.
Chatree Exploration
Exploration activities within the Chatree Mining
Leases remained the dominant focus for the
exploration team during the year, albeit at a
reduced level of expenditure. The volatility in
gold price during the year resulted in exploration
activity focusing on the drilling of Inferred
Resources, lying within close proximity of current
pit designs, or high-grade underground targets.
Significant assay results from this drilling
included 23 metres @ 4.45 grams per tonne (g/t)
gold from 23 metres and 8 metres @ 1.52g/t
gold from 98 metres from the same reverse
circulation (RC) drillhole (07617RC) on the
western side of A Pit. This mineralisation lies
within the existing A Pit design and remains open
to the north, where additional drilling is planned.
Drilling on the eastern side of D Prospect also
returned shallow, partially-oxidised gold inter-
cepts including 10 metres @ 1.96g/t gold from
75 metres (drillhole 07629RC) which indicates
additional oxide mineralisation in the D area.
www.kingsgate.com.au
Targeting high-grade underground potential on
the eastern side of the A Pit, drillhole 07619RC
successfully crossed a high-grade quartz reef
with an intersection of 12 metres @ 7.59g/t gold
from 163 metres (including 8 metres @ 11.2g/t
gold). Reassessment of this new drill intercept
and the other high-grade intercepts further to
the north, suggests the possibility of continuous
concentration of high-grade gold mineralisation
within the A East 2 area. The close proximity of
this mineralisation to the eastern A Pit wall
could provide for potential quick access utilising
underground mining techniques.
Exploration drilling activities in the early half of
the coming year will focus on testing under-
ground targets defined on the eastern side of A
Pit and also beneath the C Pit which traditionally
yielded high gold grades within the southern half
of the open pit.
As at end of June 2015, the Mineral Resources at
Chatree mine totalled 3.65 million ounces of
gold and 33.3 million ounces of silver in 172.5
million tonnes of rock using a 0.3g/t gold cut-off
grade. After mining operations are taken into
consideration (removing 140,000 ounces of
Mineral Resources), the June 2015 Mineral
Resource Estimate shows a decrease of 50,000
ounces of gold when compared to the 2014
Chatree Mineral Resource Estimate (June 2014).
Challenger Exploration
Challenger west
Exploration drilling was focused on resource
drilling of Challenger West outside of the
reserve as well as Challenger South South West
(SSW). Three rigs were utilised during the
course of the year.
Two exploration holes were drilled to the north-
west from the 970 level, however no testing of
peripheral lodes was completed.
Aminus
Aminus drilling around the 450 level returned a
peak intersection of 1.70 metres @ 72.24g/t
gold in-filling the resource between 400 and
520 metres.
Challenger SSW
After Leapfrog modelling of the Challenger
system showed that Challenger SSW lies within
a highly prospective closure in the regional
sheath fold, exploration of the shoot became a
priority. Initial drilling from the 970 level defined
two zones of mineralisation analogous to M1
(higher grade) with a peak intercept at 978
metres (0.63 metres @ 31.29g/t gold) and M2
(lower grade) with visible gold noted in both
zones. Continued drilling targeted the plunge
projections of these two zones at 1040, 980,
910 and 810 metres.
The additional drilling showed that these two
zones are identifiable from surface (1,193 metres)
to the current base of drilling for Challenger SSW
(810 metres), approximately 680 metres down
plunge. Peak intercept for this drilling to date has
been returned from 904 metres, coincident with
visible gold in the higher grade ‘M1 style’ zone
(0.30 metres @ 338.95g/t gold).
Approximately 220 metres of development has
been undertaken to provide a drill site with a
better angle to the shoot to allow for closer
spaced drilling, with a view to development of
the first portion of the shoot early in the new
financial year. Significant intercepts are
contained in the following tables.
17
17
Exploration Report
Greenfields
Exploration
Bowdens Regional Exploration
Mapping and sampling have commenced in the
area to the south of Bowdens, within Explora-
tion Licence 8168. The area appears prospective
for further mineralisation in a similar geological
setting to both the Bowdens Project and the
Coomber Prospect west of Rylstone. Current
plans are to continue regional exploration
programs under a staged strategy.
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Midpoint
(mRL)
Sayabouly Project – Lao PDR
978
975
911
910
904
808
1042
953
939
951
At the Nakhan Prospect, air-core drilling was
used to follow up trenching results and defined a
structurally controlled mesothermal gold system
that is continuous for at least 2 kilo metres in
strike at +1g/t gold grades. Air-core results
include 4 metres @ 11.6g/t gold from 14 metres
and numerous +1g/t gold intercepts over 3 to 4
metre widths. This reconnaissance drilling and
results show good continuity along strike albeit
within the oxide portion of the bedrock. With
continuous +1g/t gold intercepts defined in the
first 20 to 30 metres over 2 kilometres in strike,
the prospect is now ready for deeper, fresh-rock
RC drilling.
At the Mouang Pha Prospect, several scout
drillholes targeted geophysics (resistivity)
targets beneath a small outcrop of silicified
limestone breccias. Two remote drillholes inter-
sected 11 metres @ 0.25g/t gold and 7 metres
@ 0.12g/t gold. These grades and results are
considered significant because of their broad
reconnaissance nature and shallow depths.
Challenger Underground Exploration
Diamond Drilling Significant Intersections – Aminus Shoot
Hole ID
15CUD1555
15CUD1556
15CUD1557
From
(m)
54.85
61.00
64.25
To
(m)
55.90
62.70
65.00
Interval
(m)
1.05
1.70
0.75
Au
(g/t)
23.83
72.24
36.73
Midpoint
(mRL)
453
445
438
Challenger Underground Exploration
Diamond Drilling Significant Intersections – Challenger SSW
Hole ID
15CUD1543
15CUD1543
15CUD1587
15CUD1587
15CUD1587
15CUD1599
15CUD1611
15CUD1671
15CUD1673
15CUD1679
From
(m)
244.76
290.69
200.72
203.03
218.58
179.00
209.00
77.07
57.00
85.00
To
(m)
245.39
291.13
201.06
205.06
218.88
180.00
209.49
77.50
58.00
86.00
Interval
(m)
0.63
0.44
0.34
2.03
0.30
1.00
0.49
0.43
1.00
1.00
Au
(g/t)
31.29
16.33
28.89
10.51
338.95
14.35
42.88
17.55
20.18
17.12
2015/16 Targets
Underground diamond drilling for 2015/16 is
planned to continue in-filling of the Challenger
West shoot above the 215 Shear, with the
potential to extend this drilling to below the 215
Shear if results are promising. Underground
exploration drilling focused primarily on the
establishment of Challenger SSW as a resource
to prolong the life of mine.
Nueva Esperanza Exploration
A total of 17,980 metres of reverse circulation
drilling and 3,275 metres of diamond drilling in
93 holes were completed in 2014/15. The drilling
was principally focused in the area west of the
Chimberos pit and resulted in the discovery of the
Chimberos Gold deposit. Chimberos Gold is
considered to be a continuation of the mineralisa-
tion identified in earlier campaigns in and around
the historic Chimberos pit. The new mineralisa-
tion has added in the order of 250,000 ounces of
gold and 5.1 million ounces of silver resulting in a
significant increase in the overall Mineral
Resource Estimate for Chimberos to 300,000
ounces of gold and 20.5 million ounces of silver in
11.5 million tonnes of material, which equates to
640,000 ounces gold equivalent (AuEq60).
With the addition of the additional ounces of
gold and silver at Chimberos, the total Mineral
Resources for Nueva Esperanza have increased
by 21% to 34.6 million tonnes at 1.7g/t AuEq60
for 1.9 million ounces gold equivalent.
Initial drilling results from Boulder, Rifle and
Carachita Central have identified high-potential
gold targets to follow-up in the next field
season.
A revised reserve statement based on the July
2015 resource upgrade is scheduled for the
December Quarter 2015.
18
Ore Reserves and Mineral Resources
Ore Reserves and Mineral Resources
as at 30 June 2015
Challenger, Chatree and Nueva Esperanza Ore Reserves
Source
Challenger
Chatree
Nueva Esperanza
Total
Grade
Contained Metal
Tonnes
(Million)
Gold
(g/t)
Silver
(g/t)
Au Equiv
(g/t)
Ag Equiv
(g/t)
Gold
(M oz)
Silver
(M oz)
Au Equiv
(M oz)
Ag Equiv
(M oz)
0.40
0.19
0.59
34.0
9.5
43.5
–
17.1
17.1
34.4
26.8
61.2
4.28
3.58
4.05
0.80
0.79
0.80
–
0.27
0.27
0.84
0.48
0.68
–
–
–
9.03
7.04
8.60
–
97
97
8.93
64
33
4.28
3.58
4.05
0.87
0.84
0.86
–
1.89
1.89
0.91
1.53
1.18
270
226
255
118
114
117
–
113
113
120
114
117
0.06
0.02
0.08
0.87
0.24
1.12
–
0.15
0.15
0.93
0.41
1.34
–
–
–
9.9
2.2
12.0
–
53.5
53.5
9.9
55.5
65.3
0.06
0.02
0.08
0.95
0.26
1.20
–
1.04
1.04
1.00
1.32
2.32
3.5
1.4
4.8
129
35.0
164
–
62.5
62.5
132
98.6
231
Category
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Challenger, Chatree and Nueva Esperanza Mineral Resources (inclusive of Ore Reserves)
Grade
Contained Metal
Tonnes
(Million)
Gold
(g/t)
Silver
(g/t)
Au Equiv
(g/t)
Ag Equiv
(g/t)
Gold
(M oz)
Silver
(M oz)
Au Equiv
(M oz)
Ag Equiv
(M oz)
0.38
0.37
0.06
0.81
81.8
50.1
40.6
172.5
1.5
26.8
6.3
34.6
83.7
77.3
47.0
207.9
5.15
9.70
8.41
7.47
0.70
0.64
0.59
0.66
0.01
0.47
0.50
0.45
0.71
0.62
0.59
0.65
–
–
–
–
7.00
5.59
4.49
6.00
101
79
52
75
8.65
31.0
10.9
17.5
5.15
9.70
8.41
7.47
0.75
0.68
0.62
0.70
1.69
1.78
1.30
1.70
0.79
1.11
0.72
0.89
324
611
530
471
102
93
85
95
102
107
82
102
103
100
84.9
97.9
0.06
0.12
0.02
0.19
1.84
1.03
0.77
3.64
0.0005
0.41
0.09
0.50
1.90
1.55
0.89
4.34
–
–
–
–
18.4
9.0
5.9
33.3
4.9
67.7
10.6
83.2
23.3
77.1
16.4
116.7
0.06
0.12
0.02
0.19
1.98
1.10
0.81
3.89
0.08
1.54
0.27
1.89
2.12
2.75
1.09
5.96
4.0
7.3
1.0
12.3
269
149
111
529
4.9
92.2
16.2
113
278
249
128
655
Category
Measured
Indicated
Inferred
Total
Measured
Indicated
Inferred
Total
Measured
Indicated
Inferred
Total
Measured
Indicated
Inferred
Total
Source
Challenger
Chatree
Nueva Esperanza
Total
www.kingsgate.com.au
www.kingsgate.com.au 19
Ore Reserves and Mineral Resources
Bowdens Mineral Resources
Source
Bowdens
Category
Measured
Indicated
Inferred
Total
Tonnes
(Million)
Silver
(g/t)
23.6
28.4
36.0
88.0
56.6
48.0
41.0
47.4
Lead
(%)
0.31
0.27
0.30
0.29
Grade
Zinc
(%)
0.41
0.36
0.40
0.39
Au Equiv
(g/t)
Ag Equiv
(g/t)
1.64
1.40
1.27
1.41
74.5
63.6
58.0
64.4
Silver
(M oz)
43.0
43.8
47.5
134.1
Contained Metal
Au Equiv
(M oz)
Ag Equiv
(M oz)
1.25
1.28
1.47
4.00
57
58
68
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Group Total Mineral Resources
Source
Group Total
Mineral Resources
Tonnes
(Million)
Gold
(g/t)
Silver
(g/t)
Lead
(%)
Zinc
(%)
Au Equiv
(g/t)
Ag Equiv
(g/t)
Gold
(M oz)
Silver
(M oz)
Au Equiv
(M oz)
Ag Equiv
(M oz)
Grade
Contained Metal
295.9
0.46
26.4
0.09
0.12
1.05
87.9
4.34
251
9.95
836
Notes to the Ore Reserves and Mineral Resources Table:
Rounding of figures causes some numbers to not add correctly
(1)
(2)
Nueva Esperanza Equivalent factors:
Silver Equivalent: AgEq (g/t) = Ag (g/t) + Au (g/t) x 60.
Gold Equivalent: AuEq (g/t) = Au (g/t) + Ag (g/t) / 60.
Calculated from prices of US$1380/oz Au and US$21.50/oz Ag, and heap leach metal-
lurgical recoveries of 70% Au and 75% Ag estimated from test work by Kingsgate.
Bowdens Equivalent factors:
Silver Equivalent: AgEq (g/t) = Ag (g/t) + 27.5 x Pb (%) + 22.8 x Zn (%).
Calculated from prices of US$26.33/oz Ag, US$1250/oz Au, US$2206/t Pb, US$2111/t Zn
and metallurgical recoveries of 72% Ag, 75% Pb, and 66% Zn estimated from test work by
Kingsgate.
Gold Equivalent: AuEq (g/t) = AgEq (g/t) x 46 calculated from prices of US$1200/oz Au,
US$26.33/oz Ag.
(3) Chatree Equivalent factors:
Chatree Gold Equivalent: AuEq/t = Au (g/t) + Ag (g/t) /136.
Silver Equivalent: AgEq g/t = Au (g/t) x 136 + Ag g/t.
Calculated from prices of US$1200/oz Au and US$19.00/oz Ag and metallurgical recov-
eries of 83.3% Au and 38.7% Ag based on metallurgical testwork and plant performance.
(4) Cut-off grades for Resources are:
Chatree 0.30 g/t Au, Nueva Esperanza 0.5g/t AuEq, Bowdens 30g/t AgEq, Challenger
underground 5.0 g/t Au, Challenger open pit 1.5 g/t Au and Challenger stockpile variable.
(5) Cut-off grades for Reserves are:
Chatree 0.35g/t Au, Nueva Esperanza 0.5g/t AuEq, Bowdens 30g/t AgEq, Challenger
underground 5.0 g/t Au, Challenger open pit 1.5 g/t Au and Challenger stockpile variable.
(6)
It is in the Company’s opinion that all the elements included in the metal equivalent
calculations have a reasonable potential to be recovered.
Competent Persons Statement
The information relating to Nueva Esperanza Ore
Reserves is extracted from an announcement by
Kingsgate titled “Nueva Esperanza, Chile – Definitive
Feasibility Study Delivers Strong Results” from 17
March 2014. The information relating to Nueva Esper-
anza Mineral Resources is extracted from an announce-
ment by Kingsgate titled “Chimberos Gold Discovery
Adds Significantly to Mineral Resources in Chile” from
15 July 2015.
The information relating to Bowdens Mineral
Resources is extracted from an announcement by
Kingsgate titled “Bowdens Mineral Resource Report
2013” from 18 October 2013.
The above-mentioned announcements are available to
view on Kingsgate’s public website (www.kingsgate.
com.au). The Company confirms that it is not aware of
any new information or data that materially affects the
information included in the original market announce-
ment and, in the case of estimates of Mineral
Resources or Ore Reserves, that all material assump-
tions and technical parameters underpinning the
estimates in the relevant market announcements
continue to apply and have not materially changed. The
Company confirms that the form and context in which
the Competent Person’s findings are presented have
not been materially altered from the original
announcement.
In this report, information concerning Chatree Explora-
tion Results, Mineral Resources and Ore Reserve
estimates is based on information compiled by the
following Competent Persons: Ron James, Brendan
Bradley, Maria Munoz, Rob Kinnaird and Suphanit
Suphananthi who are employees of the Kingsgate
Group. All, except Brendan Bradley, are members of The
Australasian Institute of Mining and Metallurgy;
Brendan Bradley is a member of the Australian Institute
of Geoscientists. These people qualify as Competent
Persons as defined in the Australasian Code for
Reporting of Exploration Results, Mineral Resources
and Ore Reserves (the JORC Code, 2012 edition) and
possess relevant experience in relation to the minerali-
sation of being reported herein as Exploration Results,
Mineral Resources and Ore Reserves. Each Competent
Person has consented to the public reporting of these
statements and the inclusion of the material in the
form and context in which it appears.
In this report, information concerning Challenger
Exploration Results, Mineral Resources and Ore
Reserve estimates is based on information compiled by
Stuart Hampton and Luke Phelps who are employees of
the Kingsgate Group. Both are members of The Austral-
asian Institute of Mining and Metallurgy. These people
qualify as Competent Persons as defined in the
Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves (the JORC Code,
2012 edition) and possess relevant experience in
relation to the mineralisation being reported herein as
Exploration Results, Mineral Resources and Ore
Reserves. Each Competent Person has consented to
the public reporting of these statements and the
inclusion of the material in the form and context in
which it appears.
20
Senior Management
Senior
Management
Kingsgate’s executives have a comprehensive range of skills and experience including mine development and operations, exploration, finance
and administration. They are supported by highly qualified specialists, whose backgrounds cover the full scope of mining resources activities.
Senior members of the management team are:
Greg Foulis
BAppSc (Hons), MComm, (Finance)
Ross Coyle
BA, FCPA, FGIA
Ronald James
BSc (Geology), MAusIMM, MAIG
Chief Executive Officer
Greg Foulis joined Kingsgate in June 2015 as Chief
Executive Officer and has over 30 years of diverse
international experience in mining and financial
markets. Prior to Kingsgate, he was SVP Business
Development for AngloGold Ashanti where he was
involved in identifying and delivering opportuni-
ties for growth and improvement from both an
organic and external perspective. Greg has spent
over seventeen years in financial markets in
various roles including mining equity research,
mining and energy specialist sales and funds
management, principally with Deutsche Bank.
Greg is a qualified geologist with extensive experi-
ence in exploration, project evaluation and mining
operations in Australasia and the Americas. This
includes a career highlight with involvement in the
exploration, drill-out and feasibility of the giant
world class Lihir Gold Project in PNG.
Chief Financial Officer
Ross Coyle joined Kingsgate in March 2011
following the Company’s acquisition of Dominion
Mining Limited and was with the Dominion group
for over 25 years. He is a qualified accountant and
has over 32 years’ experience in finance and
accounting within the resource industry. He was
Finance Director of Dominion from 1996. Ross
was appointed Kingsgate’s Chief Financial Officer
in November 2014.
Tim Benfield
Dip CSM (Mining), MBA, MAusIMM
Chief Operating Officer
Tim Benfield joined Kingsgate in February 2012 as
Chief Operating Officer. Tim is a mining engineer
with over 23 years’ underground and open-pit
experience in the mining industry in both opera-
tional and corporate roles. He has operational and
project development experience in Australia,
Africa and Saudi Arabia. This includes 10 years
with Barrick Gold of Australia where he provided
support to four operating mines and two develop-
ment projects. Tim was most recently General
Manager of the Pajingo Gold mine in Queensland
for Evolution Mining Limited.
General Manager Exploration and
Resource Development
Ron James has 32 years of experience in explora-
tion and mining at management level inclusive
of setting up gold mines and exploration
projects from their earliest stages through to
development and sustainability. Before joining
Kingsgate, he was Chief Mine Geologist at the
Gold Ridge Mine in the Solomon Islands and
later Group Exploration Manager for Ross Mining
NL. Ron is familiar with the technical and oper-
ating requirements for emerging projects in a
variety of terrains and environments and has a
strong focus on maximising returns from ore
bodies through optimum waste and ore clas-
sification as well as increasing reserves from
near-mine resource development.
Paul Mason
BE, CA, AGIA
Company Secretary and
Group Accounting Manager
Paul Mason joined Kingsgate in February 2012. He
is a Chartered Accountant and has over 15 years’
experience in finance and accounting within the
resources industry. Paul was formerly Financial
Controller and Joint Company Secretary for
Catalpa Resources Limited. Paul was appointed
Company Secretary in November 2014.
www.kingsgate.com.au
21
Directors’ Report
Directors’ Report
for the year ended 30 June 2015
t
r
o
p
e
R
’
s
r
o
t
c
e
r
i
D
Directors’ Report 22
Remuneration Report . . . . . . . . . . . . . 28
Auditor’s Independence Declaration 46
Corporate
Governance
Statement
Kingsgate Consolidated Limited is
committed to ensuring that its policies
and practices reflect the highest standard
of corporate governance.
The Board has adopted a comprehensive
framework of Corporate Governance
Guidelines which can viewed at www.
kingsgate.com.au/corporate-governance
Directors' Report
22
Directors’
Report
Your Directors’ present their report on the
Group consisting of Kingsgate Consolidated
Limited and the entities it controlled at the end
of, or during the year ended 30 June 2015.
Directors
Except where noted, the following persons were
Directors of Kingsgate Consolidated Limited
during the whole of the financial year and up to
the date of this report.
〉〉 Ross Smyth-Kirk1
Executive Chairman
〉〉 Peter Alexander
Non-Executive Director
〉〉 Craig Carracher2 Non-Executive Director
〉〉 Peter McAleer
Non-Executive Director
〉〉 Sharon Skeggs3
Non-Executive Director
〉〉 Peter Warren
Non-Executive Director
1
2
3
Ross Smyth-Kirk’s role changed from Non-
Executive Chairman to Executive Chairman on
16 October 2014.
Craig Carracher resigned as a Director on
17 October 2014.
Sharon Skeggs became a Director on 1 January
2015.
Principal activities
The principal activities of Kingsgate Consoli-
dated Limited are mining and mineral explora-
tion in Australia, South East Asia and South
America.
Dividends
〉〉 No final dividend was declared for the year
ended 30 June 2014 (30 June 2013: nil).
〉〉 No interim dividend was declared for the year
ended 30 June 2015 (30 June 2014: nil).
Review of operations
and results
Operational Performance
Kingsgate is a gold and silver mining, develop-
ment and exploration company based in Sydney,
Australia. Kingsgate owns and operates two
gold mines; the world-class Chatree Mine in
Thailand and the underground Challenger Gold
Mine in South Australia. In addition, the
Company has two advanced development
projects; the Nueva Esperanza Gold/Silver
Project, in the highly prospective Maricunga
Gold/Silver Belt in Chile, and the Bowdens Silver
Project in New South Wales, Australia.
Group gold production for the year was 205,245
ounces with Chatree contributing 125,094
ounces and Challenger 80,151 ounces.
Chatree continued to perform well despite the
impact on production of 44 days temporary
suspension.
Chatree was issued with a temporary suspen-
sion notice by the Department of Primary
Industry and Mining (“DPIM”), Thailand on
13 January 2015. Due to uncertainty around
the timing of the re-start of the operation, the
Kingsgate Board requested voluntary suspen-
sion of trading in Kingsgate shares on the
Australian Securities Exchange (“ASX”).
The temporary closure of Chatree was ordered
because of unsubstantiated claims that slightly
elevated levels of arsenic and manganese that
had been found in some local inhabitants living
in the region could be attributable to the mining
operation at Chatree. Importantly, Chatree does
not use and has never used arsenic or manga-
nese in any of its operations.
During the suspension period Akara Resources
undertook a series of steps to prove that Chatree
is not the cause of elevated arsenic and manga-
nese in the local community. This included
commissioning an independent study by Mahidol
University, a highly respected and credible
academic institution in Thailand, to examine the
root cause of these elevated readings. The study
findings concluded that these elevated readings
of arsenic and manganese are most likely caused
by lifestyle factors such as diet, as arsenic can be
found in local fish products and rice.
In addition, Akara Resources arranged secondary
health checks for approximately 250 local
villagers, which coincided with the presentation
of a petition to the DPIM containing 2,495
signatures from the local community in support
of the Chatree Mining Operation.
Akara Resources presented a strong case for
lifting the temporary suspension order at two
community meetings, and made the Mahidol
University Study and all health check medical
documentation available to the DPIM. As a result
the DPIM, as an administrative measure,
required that all the Akara documentation be
verified by a DPIM appointed Review
Committee.
The Review Committee verified all relevant
supporting documentation and the DPIM was
satisfied that Akara Resources has complied
with all requests made under the suspension
orders. Therefore on 27 February 2015 the DPIM
rescinded the temporary suspension order,
following which Akara Resources recommenced
operations at Chatree on the same day.
Gold production of approximately 15,000
ounces was effectively deferred by the tempo-
rary shutdown which would otherwise have
added approximately $20 million to $24 million
of revenue to cash flow. Costs incurred during
the shutdown were in the order of $6.3 million
including depreciation and amortisation charges
of $2.7 million.
Directors’ Reportwww.kingsgate.com.au 23
The Thai Government has advised that it intends
to introduce a new Gold Policy which is expected
to be enacted in the next six months. Kingsgate
has engaged with the DPIM regarding the new
policy and does not expect any material impact
to the existing mining operations. It is hoped
that the enactment of the Gold Policy could
result in the granting of Kingsgate’s current
exploration licence applications which were
submitted by its Thai subsidiaries.
Challenger had a strong finish to the year with
gold production 7% higher than the previous
corresponding year and well above the guidance
range of 65,000 to 75,000 ounces. The opera-
tional performance was a result of higher gold
head grade and increased throughput.
Kingsgate’s after tax loss of $147.1 million for
the year is primarily due to a non-cash impair-
ment charge of $148.2 million against the
carrying values of the Chatree Gold Mine, the
Bowdens Silver Project and various exploration
areas. The Board believes that the Chatree Gold
Mine remains a world class asset and considers
that Bowdens is an important asset in the
Kingsgate development portfolio. However, in
accordance with current accounting standards
(AASB 136 - Impairment of Assets) Kingsgate is
required to assess the carrying value of its
operating and development projects within a set
valuation framework (refer to Note 14 for
further details).
Chatree
Chatree continued as Kingsgate’s primary
production asset throughout the year,
producing 125,094 ounces of gold and 850,003
ounces of silver. The process plant treated 5.3
million tonnes at a head grade of 0.91 grams
per tonne (“g/t”) gold with a recovery of 79.3%.
The good production performance was achieved
despite a loss of 44 days of production due to
the temporary closure. This impacted produc-
tion in the June half-year but issues related to
the suspension were satisfactorily resolved.
Total cash costs for the year were US$690 per
ounce (US$595 per ounce exclusive of Thai
royalties). The average royalty paid to the Thai
Government was US$95 per ounce of gold. Total
production costs after depreciation and amorti-
sation were US$973 per ounce of gold produced.
At year end, 9.1 million tonnes of ore was stock-
piled with an average contained gold grade of
0.49g/t representing 144,469 ounces of gold.
Challenger
The Challenger Mine had a strong finish to the
year and produced 80,151 ounces of gold, well
above the FY15 guidance range of 65,000 to
75,000 ounces. The process plant treated
515,000 tonnes at an average head grade of
5.01g/t with gold recovery of 96.7%.
Operating costs at Challenger were US$1,059
per ounce (including US$45 per ounce royalty).
Note that operating costs at Challenger include
all mine development for the site (i.e. no mine
development costs were being capitalised).
The mine plan at Challenger is under review with
the current reserves expected to be depleted in
the March quarter 2016. Further extensions to
the mine life are dependent on the successful
conversion to reserves from on-going drilling
and development within the extensive resource
envelope at Challenger West and the recently
discovered Challenger South Southwest
structure.
Nueva Esperanza Gold/Silver Project
The Nueva Esperanza Gold/Silver Project
advanced during the year with the discovery of
Chimberos Gold, a gold rich resource to the west
of the historic Chimberos pit. It is considered to
be a continuation of the Chimberos mineralisa-
tion identified in earlier campaigns in and around
the historic pit. The new mineralisation has
added in the order of 250,000 ounces of gold
and 5.1 million ounces of silver to the Chimberos
Mineral Resources Estimate resulting in a signifi-
cant increase in the overall Mineral Resource
Estimate for Chimberos to 300,000 ounces of
gold and 20.5 million ounces of silver. The total
Mineral Resources for Nueva Esperanza now
stand at 34.6Mt at 0.81g/t gold and 55g/t silver.
The relatively high grade nature of the recently
discovered gold mineralisation has led to a
re-evaluation of agitated leach (milling) for the
process route rather than heap leach. An optimi-
sation study is being undertaken to determine
design parameters around a 2 million tonnes per
annum (Mtpa) agitated leach operation with
indicative capital and operating cost estimates
and relevant information for amendments to
existing permits.
Following the successful exploration campaign
in FY15, further opportunities have been identi-
fied for follow-up in the FY16 field season at
Boulder, Rifle and Carachitas Central.
Bowdens Silver Project
During the year project work continued to focus
on studies required for the Environmental
Impact Statement (“EIS”). However, as a result
of ongoing market volatility in the precious
metals sector and a sustained period of a lower
than anticipated silver price, Kingsgate has
reduced the activity and expenditure related to
the project.
Environmental monitoring is continuing at the
site and Kingsgate will maintain community
relations and engagement while the project is
progressing at a lower rate.
Exploration
The Group has a portfolio of exploration tene-
ments and applications in Thailand, Chile and
Lao PDR.
Exploration activity was undertaken at a reduced
rate during the year with a refocusing of priorities
that matched corporate context and resources.
Some encouraging results were recorded from
gold exploration at the Sayabouly project in Lao
PDR where gold mineralisation identified in
trenching was followed up by air core drilling.
The drilling has confirmed some continuity of the
high grade quartz veins with results including
4 metres at 11.6g/t gold from 14 metres,
9 metres at 3.23g/t gold from 10 metres and
4 metres at 3.62g/t gold from 12 metres.
continuedu
Directors’ ReportDirectors' Report 24
Financial results
Net (loss)/profit after tax ($’000)
(147,093)
(97,613)
(327,067)
75,006
20,879
EBITDA ($’000)
70,008
64,207
96,424
166,732
46,481
2015
2014
2013
2012
2011
Dividends paid (Cash & DRP) ($’000)
Share price 30 June ($)
Basic (loss) earnings per share (Cents)
Diluted (loss) earnings per share (Cents)
EBITDA before significant items
–
0.70
(65.8)
(65.8)
–
0.86
(56.7)
(56.7)
22,739
22,026
33,647
1.27
(215.0)
(215.0)
4.85
52.5
52.5
8.00
18.7
18.6
The pre-tax profit for the Group before significant items was $1.74 million up from a loss of $8.03 million in the previous year.
EBITDA before significant items was $70.0 million up from $64.2 million in the previous year.
Significant items are detailed below.
Consolidated
Loss after tax
Income tax expense
Significant items
Impairment of Chatree Gold Mine
Impairment of Bowdens Silver Project
Impairment of capitalised exploration
Profit /(loss) before tax and significant items
Net finance costs
Depreciation and amortisation
EBITDA before significant items
2015
$’000
(147,093)
651
115,650
22,643
9,888
2014
$’000
(97,613)
2,886
–
84,586
2,112
1,739
(8,029)
14,319
53,950
70,008
13,250
58,986
64,207
EBITDA before significant items is a financial measure which is not prescribed by International Financial Reporting Standards (“IFRS”) and represents
the profit under IFRS adjusted for specific significant items. The table above summarises key items between statutory loss after tax and EBITDA before
significant items. The EBITDA before significant items has not been subject to any specific auditor review procedures by our auditor but has been
extracted from the accompanying audited financial statements.
Revenue
Total sales revenue for the Group was $313.2
million for the year, down from $328.3 million in
the previous year. Gold revenue decreased by 3%
to $296.3 million and silver revenue decreased
by 27% to $16.9 million.
The decrease in gold revenue reflects the tempo-
rary suspension of operations at Chatree and a
lower gold price.
The average US dollar gold price received was
US$1,208 per ounce (2014: US$1,291 per
ounce).
The decrease in silver revenue also reflects the
temporary shutdown of operations at Chatree
and a lower silver price received of US$17 per
ounce (2014: US$21 per ounce).
Costs
The overall decrease in cost of sales to $278.4
million including royalties and depreciation and
amortisation, reflects decreased throughput
and production from the Chatree Mine due to
the temporary suspension of operation and cost
saving measures implemented during the year.
Directors’ Reportwww.kingsgate.com.au
25
Total cash costs per ounce
Group
Chatree
Challenger
Depreciation and amortisation
The decrease in depreciation and amortisation
to $54.0 million is mainly a result of lower
production at Chatree which impacted deprecia-
tion calculated on a units of production basis.
Cash flow
Net operating cash inflow was $76.6 million
(2014: $38.6 million). The increase of $38.0
million reflects the decrease in operating costs
and a reduction in working capital balances
compared to the prior year. Net investing cash
outflow was $40.3 million (2014: $44.9 million),
down $4.6 million due to a reduction in capital
expenditure on plant offset by an increase in
exploration and development at the Nueva
Esperanza Gold/Silver Project. Net cash outflow
from financing activities was $37.7 million
(2014: inflow of $30.9 million), including repay-
ment of $40.1 million of the corporate loan
facility and convertible revolving credit facility.
Material business risks
The Group uses a range of assumptions and
forecasts in determining estimates of produc-
tion and financial performance. There is uncer-
tainty associated with these assumptions that
could result in actual performance differing from
expected outcomes.
The material business risks that may have an
impact on the operating and financial prospects
of the Group are:
Revenue
Revenue, and hence operating margins, are
exposed to fluctuations in the gold price and to
a degree in the silver price including foreign
currency rate movement affecting US dollar
denominated metal prices. Management contin-
ually monitors operating margins and responds
to changes to commodity prices as necessary to
address this risk, including reviewing mine plans
and entering into forward gold sale contracts.
Changes in the gold and silver price also impact
assessments of the feasibility of exploration and
the Group’s two development projects, Nueva
Esperanza and Bowdens.
2015
US$/oz
833
690
1,059
2014
US$/oz
936
728
1,310
Reduction in unit cost
US$/oz
103
38
251
Mineral resources and ore reserves
Ore reserves and mineral resources are esti-
mates. These estimates are substantially based
on interpretations of geological data obtained
from drill holes and other sampling techniques.
Actual mineralisation or geological conditions
may be different from those predicted and as a
consequence there is a risk that any part, or all
of the mineral resources, will not be converted
into reserves.
Market price fluctuations of gold and silver as
well as increased production and capital costs,
may render ore reserves unprofitable to develop
at a particular site for periods of time.
Replacement of depleted reserves
The Group aims to continually replace reserves
depleted by production to maintain production
levels over the long term. Reserves can be
replaced by expanding known ore bodies,
locating new deposits or making acquisitions.
As a result, there is a risk that depletion of
reserves will not be offset by discoveries or
acquisitions. The mineral base may decline if
reserves are mined without adequate replace-
ment and, as a consequence, the Group may not
be able to sustain production beyond the current
mine lives based on current production rates.
Mining risks and insurance risks
The mining industry is subject to significant
risks and hazards, including environmental
hazards, industrial accidents, unusual or unex-
pected geological conditions, unavailability of
materials and unplanned equipment failures.
These risks and hazards could result in signifi-
cant costs or delays that could have a material
adverse impact on the Group’s financial perfor-
mance and position.
The Group maintains insurance to cover some of
these risks and hazards at levels that are
believed to be appropriate for the circumstances
surrounding each identified risk. However, there
remains the possibility that the level of insur-
ance may not provide sufficient coverage for
losses related to specific loss events.
Reliance on contractors
Some aspects of Kingsgate’s production, devel-
opment and exploration activities are conducted
by contractors. As a result, the Group’s business,
operating and financial performance and results
are impacted upon by the availability and perfor-
mance of contractors and the associated risks.
Production and cost estimates
The Group prepares estimates of future produc-
tion, cash costs and capital costs of production
for each operation, though there is a risk that
such estimates will not be achieved. Failure to
achieve production or cost estimates could have
an adverse impact of future cash flows, profit-
ability, results of operations and financial
position.
Refinancing risk
In addition to cash flows from operating activi-
ties, Kingsgate has debt facilities in place with
external financiers. Although the Group
currently generates sufficient funds to service
its debt requirements, no assurance can be
given that Kingsgate will be able to meet its
financial covenants when required or be able to
refinance the debt prior to its expiry on accept-
able terms to the Company. If Kingsgate is
unable to meet its financial covenants when
required or refinance its external debt on accept-
able terms to the Company, its financial condi-
tion and ability to continue operating may be
adversely affected.
Maintaining title
The Group’s production, development and explo-
ration activities are subject to obtaining and
maintaining the necessary titles, authorisations,
permits and licences, and associated land access
arrangements with the local community, which
authorise those activities under the relevant law
(“Authorisations”). There can be no guarantee
that the Group will be able to successfully obtain
and maintain relevant Authorisations to support
its activities, or that renewal of existing Authori-
sations will be granted in a timely manner or on
terms acceptable to the Group.
continuedu
Directors’ ReportDirectors' Report 26
Authorisations held by or granted to the Group
may also be subject to challenge by third parties
which, if successful, could impact on Kingsgate’s
exploration, development and/or mining
activities.
Political, economic, social and
security risks
Kingsgate’s production, development and
exploration activities are subject to the political,
economic, social and other risks and uncertain-
ties in the jurisdictions in which those activities
are undertaken. Such risks are unpredictable
and have become more prevalent in recent years.
In particular, in recent years there has been an
increasing social and political focus on:
〉〉
the revenue derived by governments and
other stakeholders from mining activities;
and
〉〉
resource nationalism, greater limits on
foreign ownership of mining or exploration
interests and/or forced divestiture (with or
without adequate compensation), and broad
reform agenda in relation to mining legisla-
tion, environmental stewardship and local
business opportunities and employment.
There can be no certainty as to what changes,
if any, will be made to relevant laws in the juris-
dictions where the Company has current inter-
ests, or other jurisdictions where the Company
may have interest in the future, or the impact
that relevant changes may have on Kingsgate’s
ability to own and operate its mining and related
interests and to otherwise conduct its business
in those jurisdictions.
Environmental, health and safety
regulations
The Group’s mining and processing operations
and exploration activities are subject to exten-
sive laws and regulations. Delays in obtaining,
or failure to obtain government permits and
approvals may adversely affect operations,
including the ability to continue operations.
Community relations
The Group has established community relations
functions that have developed a community
engagement framework, including a set of
principles, policies and procedures designed to
provide a structured and consistent approach
to community activities.
A failure to appropriately manage local commu-
nity stakeholder expectations may lead to disrup-
tions in production and exploration activities.
Risk management
The Group manage the risks listed above, and
other day-to-day risks through an established
management framework. The Group has policies
in place to manage risk in the areas of health and
safety, environment and equal employment
opportunity.
Management and the Board regularly review the
risk portfolio of the business and the effective-
ness of the Group’s management of those risks.
average price of $1,542 per ounce. 12,900
ounces have been delivered against these
contracts leaving a remaining balance of 18,100
ounces at an average price of A$1,556 per ounce.
Significant change in the state of affairs
There were no significant changes in the state of
affairs of the Group that occurred during the
financial year not otherwise disclosed in this
report or the consolidated financial statements.
Finance
At the end of the year Kingsgate’s drawn debt
facilities consisted of:
Senior corporate facility
The balance of the senior corporate loan facility
outstanding at 30 June 2015 was A$25 million.
This facility was due to be repaid in full on 31st
July 2015. A$10 million was repaid against the
facility on the due date with the balance of A$15
million restructured as a Revolving Credit Facility
(“RCF”) repayable in three equal instalments
commencing on 29th January 2016.
Under the terms of the RCF Kingsgate is required
to maintain a minimum hedge position with a
rolling three month program covering 30% of
forecast group production. As security the
lender has a fixed and floating charge over Kings-
gate including shares in its material subsidiaries.
Kingsgate, in addition, has available over the
tenure of the RCF an Equity-linked Loan Facility
(“ELF”) of A$15 million. The ELF is currently
undrawn.
Multi-currency, syndicated loan facility
Kingsgate’s Thai operating subsidiary, Akara
Resources PCL (“Akara”), has an amortising
multi-currency loan facility with 3.5 years
remaining following the commencement of
quarterly repayments in November 2013. At year
end the equivalent of A$104.9 million was owed
against this facility. Since the year end a further
equivalent A$8.5 million has been repaid. As
security against the facility the lender has a
fixed and floating charge over the land, buildings
and machinery in Thailand owned by Akara and
its material subsidiaries. In addition Akara is
required to maintain a debt service reserve
account of US$5 million.
Hedging
As at 30 June 2015, the Group had 5,000 ounces
of gold sold forward at an average price of
A$1,538 per ounce. Since the year end an addi-
tional 26,000 ounces of production have been
covered under forward sale contracts at an
Matters subsequent to the end
of the financial year
No other matter or circumstance has arisen
since 30 June 2015 that has significantly
affected, or may significantly affect:
〉〉
〉〉
〉〉
the Group’s operations in future financial
years;
the results of those operations in future
financial years; or
the Group’s state of affairs in future financial
years.
Likely developments and
expected results of operations
The outlook for the Group in fiscal year 2016 is
for gold production to be in the range of 165,000
to 180,000 ounces. At the Chatree Mine in
Thailand, gold production is expected to be
between 125,000 to 135,000 ounces but, due to
the current stripping schedule, will be heavily
weighted to the second half of the year. At the
Challenger Mine in South Australia, under the
current mine plan, Ore Reserves will be
exhausted in the March quarter 2016 with
production for the year expected to be in the
range of 40,000 to 45,000 ounces of gold. Work
continues to explore options to extend the mine
life at Challenger with particular focus on deeper
areas at Challenger West and the recently discov-
ered Challenger South Southwest structure.
Kingsgate remains focused on continuous
improvement and operating efficiencies that
complement ongoing cost saving initiatives. It is
targeting further cost reductions in FY16.
Environmental regulation
The Group is subject to environmental regulations
in respect to its gold mining operations and
exploration activities in Australia, Thailand, Chile
and Lao PDR. For the year ended 30 June 2015, the
Group has operated within all environmental laws.
Directors’ Reportwww.kingsgate.com.au 27
Directors’ meetings
The number of meetings of the Company’s Board of Directors and of each Board Committee held
during the year ended 30 June 2015, and the numbers of meetings attended by each Director were:
Directors
Board
Meetings
Audit Committee
Meetings
Nomination
Committee
Meetings
Remuneration
Committee
Meetings
Held*
Attended
Held*
Attended
Held*
Attended
Held*
Attended
Ross Smyth-Kirk
Peter Alexander
Craig Carracher1
Peter McAleer
Sharon Skeggs2
Peter Warren
14
14
4
14
7
14
14
13
3
14
7
14
2
–
–
2
1
2
2
–
–
2
1
2
2
–
–
2
–
2
2
–
–
2
–
2
1
1
–
1
–
1
1
1
–
1
–
1
*
1
2
Meetings held while in office
Craig Carracher resigned 17 October 2014
Sharon Skeggs appointed 1 January 2015
Information on Directors
Ross Smyth-Kirk
B Com, CPA, F Fin
Executive Chairman
Ross Smyth-Kirk was a founding Director of
the former leading investment management
company, Clayton Robard Management Limited
and has had extensive experience over a number
of years in investment management including a
close involvement with the minerals and mining
sectors. He has been a Director of a number of
companies over the past 35 years in Australia
and the UK. Mr Smyth-Kirk was previously
Chairman of the Australian Jockey Club Limited
and retired in May 2013 as a Director of Argent
Minerals Limited. Mr Smyth-Kirk is a Director of
Kingsgate’s wholly owned subsidiary, Akara
Resources Public Company Limited.
Responsibilities:
Chairman of the Board, member of the Audit
Committee, Chairman of the Nomination and
Remuneration Committees.
Peter Alexander
Ass. Appl. Geol
exploration industry. He was Managing Director
of Dominion Mining Limited for 10 years prior to
his retirement in January 2008. Mr Alexander was
appointed a Non-Executive Director of Dominion
Mining Limited in February 2008 and resigned on
21 February 2011. Mr Alexander is a Non-Execu-
tive Director of the ASX listed companies Doray
Minerals Limited and Caravel Minerals Limited.
He was previously Chairman of Doray Minerals
Limited and a Director of Fortunis Resources
Limited.
Responsibilities:
Member of the Remuneration Committee.
Peter McAleer
B Com (Hons), Barrister-at-Law (Kings Inns –
Dublin Ireland)
Non-Executive Director
Peter McAleer was until the end of May 2013,
the Senior Independent Director and Chairman
of the Audit Committee of Kenmare Resources
PLC (Ireland). Previously, he was Chairman of
Latin Gold Limited, Director and Chief Executive
Officer of Equatorial Mining Limited and was a
Director of Minera El Tesoro (Chile).
Non-Executive Director
Peter Alexander has had 42 years’ experience in
the Australian and offshore mining and
Responsibilities:
Member of the Audit, Remuneration and
Nomination Committees.
Sharon Skeggs
Non-Executive Director
Sharon Skeggs has had a distinguished career in
business management, in London and Australia,
for over 35 years. She is an expert in business
strategy and communications. She was a
Director of advertising agency Saatchi & Saatchi
Australia for 15 years, Managing Director of one
of its divisions and is a previous Director of the
Australian Jockey Club.
For the past five years Ms Skeggs has consulted
to major companies including Westpac, News
Limited, Visa, Woolworths, Telstra and The Just
Group on a variety of corporate matters including
business strategy, change management, restruc-
turing, cost reduction initiatives, implementing
marketing strategies and communications
programs.
Responsibilities:
Member of the Audit, Remuneration and
Nomination Committees.
Peter Warren
B Com, CPA
Non-Executive Director
Peter Warren was Chief Financial Officer and
Company Secretary of Kingsgate Consolidated
Limited for six years up until his retirement in
2011. He is a CPA of over 41 years standing, with
an extensive involvement in the resources
industry. He was Company Secretary and Chief
Financial Officer for Equatorial Mining Limited
and of the Australian subsidiaries of the Swiss
based Alusuisse Group and has held various
financial and accounting positions for Peabody
Resources and Hamersley Iron. Mr Warren is a
Director of Kingsgate’s wholly owned subsidiary,
Akara Resources Public Company Limited.
Responsibilities:
Chairman of the Audit Committee, Member of
the Nomination and Remuneration Committees.
Paul Mason
BE, CA, AGIA
Company Secretary
Paul Mason is currently Group Accounting
Manager for Kingsgate. He commenced with the
Kingsgate Group in February 2012 and is a Char-
tered Accountant and an Associate Member of
the Governance Institute of Australia. Mr Mason
was formerly Financial Controller and Joint
Company Secretary for Catalpa Resources Ltd.
continuedu
Directors’ ReportDirectors' Report 28
Remuneration Report
Dear Shareholder
I am pleased to present our Remuneration Report for 2015.
During the 2015 financial year, the Company’s remuneration practices have reflected the market conditions in which we operate.
The underlying arrangements will remain unchanged, other than senior executives taking a 10% reduction in remuneration
effective from 1 October 2015.
We are confident our remuneration practices are sound, market competitive and demonstrate a clear link between executive and
shareholder returns. Our discipline in this area has been combined with significant change management initiatives to ensure that
cost reductions within our business have been in line with market conditions.
The Group’s framework for awarding long term incentives (“LTI”) and short term incentives (“STI”) will be subject to a
comprehensive review by the Board during the 2016 financial year to ensure that the base and at-risk remuneration of Kingsgate
is aligned with its peer group. No STI or LTI awards were granted during the year.
Benchmarking of salaries for all roles is routinely undertaken to ensure that we remain a competitive employer in the market while
continuing to meet all legislative and regulatory requirements.
We will continue to consider your feedback as shareholders and review our remuneration and incentive policies and framework
to meet future market changes.
Thank you for your interest in this report.
Ross Smyth-Kirk
Chairman
Remuneration Committee
Directors’ Reportwww.kingsgate.com.au 29
Introduction
This Remuneration Report forms part of the
Directors’ Report. It outlines the Remuneration
Policy and framework applied by the Company
as well as details of the remuneration paid to
Key Management Personnel (“KMP”). KMP are
defined as those persons having the authority
and responsibility for planning, directing and
controlling the activities of the Company,
directly or indirectly, including Directors and
members of Executive Management.
The information provided in this report has been
prepared in accordance with s300A and audited
as required by section 308 (3c) of the Corpora-
tions Act 2001.
The objective of the Company’s remuneration
philosophy is to ensure that Directors and senior
staff are remunerated fairly and responsibly at a
level that is competitive, reasonable and appro-
priate, in order to attract and retain suitably
skilled and experienced people.
Remuneration Policy
The Remuneration Policy remains unchanged
from last financial year and has been designed to
align the interests of shareholders, Directors,
and employees. This is achieved by setting a
framework to:
〉〉 help ensure an applicable balance of fixed
and at-risk remuneration, with the at-risk
component linking incentive and perfor-
mance measures to both Group and indi-
vidual performance;
〉〉 provide an appropriate reward for Directors
and Executive Management to manage and
lead the business successfully and to drive
strong, long-term growth in line with the
Company’s strategy and business objectives;
〉〉
encourage executives to strive for superior
performance;
〉〉
facilitate transparency and fairness in execu-
tive remuneration policy and practices;
〉〉 be competitive and cost effective in the
current employment market; and
〉〉
contribute to appropriate attraction and
retention strategies for Directors and
executives.
In consultation with external remuneration
consultants, the Group has structured an execu-
tive remuneration framework that is market
competitive and complementary to the business
strategy of the organisation.
The framework is intended to provide a mix of
fixed and variable remuneration, with a blend of
short and long-term incentives as appropriate.
As executives gain seniority within the Group,
the balance of this mix shifts to a higher propor-
tion of “at risk” rewards (refer to chart – Reward
Mix on page 30).
Remuneration Governance
Role of the Remuneration Committee
The Remuneration Committee is a committee
of the Board and has responsibility for setting
policy for determining the nature and amount
of emoluments of Board members and senior
executives. The Committee makes recommenda-
tions to the Board concerning:
〉〉 Non-Executive Director fees;
〉〉
remuneration levels of Executive Directors
and other Key Management Personnel;
〉〉
〉〉
〉〉
the executive remuneration framework and
operation of the incentive plan;
key performance indicators and performance
hurdles for the executive team; and
the engagement of specialist external
consultants to design or validate method-
ology used by the Company to remunerate
Directors and employees.
In forming its recommendations the Committee
takes into consideration the Group’s stage of
development, remuneration in the industry and
performance. The Corporate Governance State-
ment provides further information on the role of
this committee.
Remuneration consultants
The Group engages the services of independent
and specialist remuneration consultants from
time to time. Under the Corporations Act 2001,
remuneration consultants must be engaged by
the Non-Executive Directors and reporting of
any remuneration recommendations must be
made directly to the Remuneration Committee.
The Remuneration Committee engaged the
services of the Godfrey Remuneration Group Pty
Ltd in the 2013/2014 financial year to review its
remuneration practice revisions and to provide
further validation in respect of both the execu-
tive short-term and long-term incentive plan
design methodology and standards. These
recommendations covered the remuneration of
the Group’s Non-Executive Directors and Key
Management Personnel.
The Godfrey Remuneration Group Pty Ltd
confirmed that the recommendations from that
review were made free from undue influence by
members of the Group’s Key Management
Personnel.
The following arrangements were implemented
by the Remuneration Committee to ensure that
the remuneration recommendations were free
from undue influence:
〉〉
the Godfrey Remuneration Group Pty Ltd
was engaged by, and reported directly to, the
Chair of the Remuneration Committee. The
agreement for the provision of remuneration
consulting services was executed by the
Chair of the Remuneration Committee under
delegated authority on behalf of the Board;
and
〉〉
any remuneration recommendations by the
Godfrey Remuneration Group Pty Ltd were
made directly to the Chair of the Remunera-
tion Committee.
As a consequence, the Board is satisfied that the
recommendations contained in the report were
made free from undue influence from any
members of the Group’s Key Management
Personnel.
Executive Director and Key
Management Personnel
Remuneration
The executive pay and reward framework is
comprised of three components:
〉〉
fixed remuneration including
superannuation;
〉〉
〉〉
short-term performance incentives; and
long-term incentives through participation in
the Executive Rights Plan.
Reward Mix
The chart on the following page represents the
remuneration reward mix for the various Key
Management Personnel based on achievement
of all stretch targets.
Fixed remuneration
Total fixed remuneration (“TFR”) is structured as
a total employment cost package, including
base pay and superannuation. Base pay may be
delivered as a mix of cash, statutory and salary
sacrificed superannuation, and prescribed
non-financial benefits at the executive’s
discretion.
continuedu
Directors’ ReportDirectors' Report 30
Executives are offered a competitive base pay.
Base pay for senior executives is reviewed
annually to ensure their pay is competitive with
the market. An executive’s pay is also reviewed
on promotion.
The AON Hewitt/McDonald survey continues to
be the primary benchmarking tool for assess-
ment payment relativity for all roles throughout
the business with the Godfrey Remuneration
Group used to validate rates for specific roles as
required.
The Board annually reviews and determines the
fixed remuneration for the CEO. The CEO does
the same for his direct reports. The Executive
Management group reviews and recommends
fixed remuneration for other senior manage-
ment, for the CEO’s approval. There are no
guaranteed increases to fixed remuneration
incorporated into any senior executives’
agreements.
The following summarises the performance of
the Group over the last five years:
Revenue (‘000s)
Net profit/(loss) after income tax (‘000s)
EBITDA (‘000s)
Share price at year end ($/share)
Dividends paid (cent/share)
KMP short term employee benefits (‘000s)
Remuneration Reward Mix (based on the achievement of STI / LTI targets)
MD/CEO
COO/CFO
49%
29%
22%
57%
29%
14%
Other Direct Reports to MD/CEO
60%
25%
15%
Total Fixed Remuneration (TFR)
Base salary and superannuation
Short-Term
Incentive (STI)
Long-Term
Incentive (LTI)
*The above reward mix remains unchanged from financial year 2013/14
2011
2012
2013
2014
2015
172,356
20,879
46,481
8.00
15.0
4,459
357,372
75,006
166,732
4.85
20.0
4,456
329,282
(327,067)
96,424
1.27
5.0
4,671
328,326
(97,613)
64,207
0.86
Nil
4,471
313,162
(147,093)
70,008
0.70
Nil
3,425
Directors’ Reportwww.kingsgate.com.au 31
Short-Term Incentives
Linking current financial year earnings of executives to their performance and the performance of the Group is the key objective of our Short Term Incentive
(“STI”) plan. The Board set key performance measures and indicators for individual executives on an annual basis that reinforce the Group’s business plan and
targets for the year.
The Board has discretion to issue cash bonuses to employees for individual performance outside the STI plan.
The structure of the STI Plan remains unchanged from financial year 2013/2014 and its key features are outlined in the table below.
Overview of the STI Plan
What is the STI plan
and who participates?
How much can the
executives earn under
the STI Plan?
The STI Plan is a potential annual reward for eligible Executive Key Management Personnel for achievement of predetermined individual
Key Performance Indicators (KPIs) aligned to the achievement of business objectives for the assessment period (financial year
commencing 1 July).
Threshold – Represents the minimum acceptable level of performance that needs to be achieved before any Individual Award would be
payable in relation to that Performance Measure.
Managing Director / CEO – up to 15% of TFR. COO & CFO – up to 12.5% of TFR. Other Key Management Personnel – up to 10% of
TFR.
Target – Represents a challenging but achievable level of performance relative to past and otherwise expected achievements. It will
normally be the budget level for financial and other quantitative performance objectives.
Managing Director / CEO – up to 30% of TFR. COO & CFO – up to 25% of TFR. Other Key Management Personnel – up to 20% of TFR.
Stretch (Maximum) – Represents a clearly outstanding level of performance which is evident to all as a very high level of achievement.
Managing Director / CEO – up to 60% of TFR. COO & CFO – up to 50% of TFR. Other Key Management Personnel – up to 40% of TFR.
(TFR – Total Fixed Remuneration)
Is there Board discretion
in the payment of an
STI benefit?
Yes, the plan provides for Board discretion in the approval of STI outcomes.
What are the
performance conditions?
For Key Management Personnel between 70% – 80% of potential STI weighting (dependent upon role) is assessed against specific
predetermined KPIs by role with 20% – 30% being based on company performance indicators.
How are performance
targets set and
assessed?
Individual performance targets are set by the identification of key achievements required by role in order to meet business objectives
determined for the upcoming assessment period in advance. The criteria for Key Management Personnel are recommended by the
Managing Director / CEO for sign off by the Remuneration Committee and in the case of the Managing Director / CEO, are recom-
mended by the Chairman by sign off by the Remuneration Committee.
The relative achievement at the end of the financial period is determined by the above authorities with final sign off by the Remuneration
Committee after confirmation of financial results and individual / company performance against established criteria.
The Remuneration Committee is responsible for assessing whether the KPIs are met. To assist in this assessment, the committee
receives detailed reports on performance from management which are verified by independent remuneration consultants if required.
The committee has the discretion to adjust STIs in light of unexpected or unintended circumstances.
How is the STI delivered?
STIs are paid in cash after the conclusion of the assessment period and confirmation of financial results/individual performance and
subject to tax in accordance with prevailing Australian tax laws. The STIs are then in effect paid and expensed in the financial year
subsequent to the measurement year.
What happens in the
event of cessation of
employment?
Executives are required to be employed for the full 12 months of the assessment period before they are eligible to be considered to
receive benefits from the STI plan.
Long-Term Incentives
The Kingsgate Long-Term Incentive (“LTI”) plan is also referred to as the Executive Rights Plan. The objectives of the LTI Plan are to retain key executives
and to align an at-risk component of certain executives’ remuneration with shareholder returns.
Key features of the LTI Plan are outlined in the table on the following page:
continuedu
Directors’ ReportDirectors' Report 32
Overview of the LTI Plan
What is the LTI Plan
and who
participates?
What is awarded
under the LTI Plan?
How much can the
executives earn
under the LTI Plan?
What are the
performance and
vesting conditions?
Kingsgate executives can be granted Kingsgate Consolidated Limited rights each year, although an award of rights does not confer any
entitlement to receive any subsequent awards. In awarding rights the Board takes into account such matters as the position of the
eligible person, the role they play in the Company, their current level of fixed remuneration, the nature of the terms of employment and
the contribution they make to the Group. Currently only members of the Executive Management group and key site based operational
senior management are eligible to participate in the LTI plan.
Two types of rights are offered under the LTI Plan: Deferred Rights and Performance Rights.
Managing Director/CEO – up to 45% of TFR as Performance Rights only.
COO/CFO/Executive Management – up to 12.5% of TFR as Deferred Rights and additionally, up to 12.5% of TFR as Performance Rights.
Deferred Rights – vesting is time based (three years after the granting of the Deferred Right).
Performance rights – refer to Vesting Schedule for Performance Rights later in this report.
Is there a cost to
participate?
The rights are issued for nil consideration and are granted in accordance with performance guidelines established by the Remuneration
Committee and approved by the Board.
What are the
specific perfor-
mance / vesting
criteria?
Deferred Rights are subject to three year vesting periods. There are no performance conditions attached to the Deferred Rights.
Performance Rights are subject to a three year performance measurement period from 1 July in the year when the grant occurs.
How does the LTI
vest?
Performance Rights vest subject to the achievement of a hurdle based on total shareholder return. Further information on the vesting
scale is below.
Is the LTI subject to
retesting?
What criteria are
used for assess-
ment and who
assesses
performance?
How is the LTI
delivered?
What happens in
the event of bonus
shares, rights
issues or other
capital
reconstructions?
There is no retesting of either the Deferred Rights or Performance Rights.
Performance is assessed against a TSR Alpha™ measure for financial years 12/13 and 13/14 executive performance rights. For
financial year 14/15 and going forward, performance rights are measured against the S&P/ASX All Ordinaries Gold (AUD) index (gold
production only and to include dividends paid). The Remuneration Committee signs off performance assessment based on recom-
mendations by the Managing Director/CEO with advice from Godfrey Remuneration Group Pty Ltd in terms of relative performance.
On vesting the first $1,000 value of each of the deferred rights and performance rights awards is paid in cash, e.g. if both deferred and
Performance Rights vested at the same time then the participant would receive two x $1,000 with the remaining value of the award
received as shares in the Company as per below.
Number of shares = (number of vested rights x share price on vesting date – $2,000) ÷ share price on vesting date.
If between the grant date and the date of conversion of vested rights into cash and restricted shares there are bonus shares, rights
issues or other capital reconstructions that affect the value of Kingsgate Consolidated shares, the Board may, subject to the ASX
Listing Rules make adjustments to the number of rights and / or the vesting entitlements to ensure that holders of rights are neither
advantaged or disadvantaged by those changes.
Takeover or Scheme
of Arrangement?
Unvested rights vest in the proportion that the share price has increased since the beginning of the vesting period. All vested rights
need to be exercised within three months of the takeover.
What happens
in the event of
cessation of
employment?
Unvested rights are forfeited on dismissal for cause. In all other termination circumstances any unvested rights granted in the year of
the cessation of employment are forfeited in the proportion that the remainder of the year bears to a full year. Unvested rights that are
not forfeited are retained by the participant and are subsequently tested for vesting at the end of the vesting period.
Directors’ Reportwww.kingsgate.com.au Vesting schedule for Performance Rights issued
after financial year 2013/2014
Following a review by the Remuneration
Committee of recommendations by the Godfrey
Remuneration Group in financial year 2013/2014,
the Board approved the assessment of relative
Total Shareholder Return “TSR” of Kingsgate
against S&P/ASX All Ordinaries Gold (AUD) index
of companies, as represented in Diagram 1. The
Board chose to replace the TSR Alpha™ measure-
ment with this new measure to:
〉〉 provide a genuine measure of performance
by senior management against companies
operating in the same market segment;
〉〉
〉〉
〉〉
retain the key values of the previous TSR
Alpha™ measure which is to only reward
senior management for over performance;
retain a focus on performance from an
investors perspective albeit within a defined
market segment; and
create a simple and easy system to interpret
for management and shareholders alike.
These Performance Rights will be subject to a
three year vesting period.
Vesting schedule for Performance Rights issued
for financial year 2012/2013 and financial year
2013/2014
These Performance Rights continue to be
subject to a hurdle that is derived for the three
year vesting period using the external perfor-
mance measuring metric, TSR Alpha™.
Total Shareholder Return measures the
percentage return received by a shareholder
from investing in a company’s shares over a
period of time. Broadly, it is share price growth
plus dividends over the period. TSR Alpha™
takes into account market movement over the
vesting period and the additional return (risk
premium) that shareholders expect from the
share market performance over the vesting
period. In essence it measures whether share-
holders have received a return over the period
that is consistent with their expectations (TSR
Alpha™ of zero) or more or less.
Executive Performance Rights Vesting Scale
The following diagram provides an overview of
the Performance Rights Vesting Scale to be
applied to performance rights issued after
financial year 2013/2014.
Vesting Scale
100% Vesting
Pro-rata
Vesting
Diagram 1: Overview of Performance Rights Vesting Scale
TSR Performance
75th Percentile of TSR Performance
Stretch Return
Pro-rata vesting between
50th and 75th Percentile
of TSR Performance
e
c
n
a
m
r
o
f
r
e
P
R
S
T
e
v
i
t
a
e
R
l
50th Percentile of TSR Performance
Target Return
50% Vesting
Performance Rights Issue 3 years Vesting Period
0% Vesting
Year 1
Year 2
Year 3
33
continuedu
Directors’ ReportDirectors' Report
34
Directors and Key Management Personnel details
Except where noted, the named persons held their current positions for the whole of the year and up to the date of this report.
Executive Chairman
Ross Smyth-Kirk
Executive Chairman – Role changed from Non-Executive to Executive Chairman 16 October 2014
Non-Executive Directors
Peter Alexander
Non-Executive Director
Craig Carracher
Non-Executive Director – Resigned 17 October 2014
Peter McAleer
Non-Executive Director
Sharon Skeggs
Non-Executive Director – Appointed 1 January 2015
Peter Warren
Non-Executive Director
Senior Executives
Greg Foulis
Tim Benfield
Ross Coyle
Chief Operating Officer – Commenced 1 June 2015
Chief Operating Officer – Acting Chief Executive Officer from 16 October 2014 to 30 April 2015
Chief Financial Officer – Appointed 6 November 2014, previously General Manager Finance & Administration.
Resigned as Company Secretary 6 November 2014.
Ron James
General Manager Exploration and Resource Development
Joel Forwood
General Manager Corporate and Markets
Paul Mason
Company Secretary – Appointed 6 November 2014
Duane Woodbury
Chief Financial Officer – Resigned 2 July 2014
Michael Monaghan
Chief Operating Officer and General Manager – Akara Resources PCL – Resigned 20 March 2015
Geoff Day
Chief Executive Officer – Commenced 8 September 2014 and ceased employment 15 October 2014
Austen Perrin
Chief Financial Officer – Commenced 22 September 2014 and ceased employment 15 October 2014
Brett Dunstone
General Manager Human Resources – Made redundant 20 October 2014
Changes since the end of the reporting period
There have been no changes to Directors and Key Management Personnel since the end of the reporting period.
Directors’ Reportwww.kingsgate.com.au 35
Contract terms of the Executive Directors and Key Management Personnel
Remuneration and other key terms of employment for the Executive Chairman and Senior Executives are summarised in the
following table.
Name
Ross Smyth-Kirk
Greg Foulis
Tim Benfield
Ross Coyle
Ron James
Joel Forwood
Paul Mason
Duane Woodbury
Michael Monaghan
Geoff Day
Austen Perrin
Brett Dunstone
Term of
agreement
Fixed annual remuneration
including superannuation
Notice period by
Executive
Notice period by
the Company14
FY 20151
FY 2014
2$157,680
3$600,000
–
–
4$500,000
13$451,777
5$450,000
13$352,777
$400,000
13$360,000
$330,504
13$298,777
6$210,000
–
7$500,000
13$451,777
8$417,757
$531,525
9$675,000
10$460,000
–
–
11$307,504
13$278,077
Open
Open
Open
Open
Open
Open
Open
Open
Open
Open
Open
Open
12N/A
3 months
3 months
3 months
3 months
3 months
1 month
3 months
3 months
3 months
3 months
3 months
12N/A
12 months
6 months
6 months
6 months
6 months
1 month
6 months
6 months
12 months
6 months
6 months
3
4
1
2
Amount shown are annual salaries as at year end or date ceased employment with the Group.
Amount shown includes a voluntary 10% reduction in fixed remuneration. Role changed from Non-Executive Chairman to Executive Chairman
on 15 October 2014. Refer to “details of remuneration” table on page 37 for remuneration for the period while serving as Non-Executive
Chairman.
Commenced employment 1 June 2015.
Mr Benfield received a temporary increase in salary from $500,000 to $550,000 for period acting as Chief Executive Officer (6 October
2014 to 30 April 2015).
Fixed annual remuneration increased from $390,000 to $450,000 from date of appointment as acting Chief Financial Officer.
5
Annual salary for role as Company Secretary and Group Accounting Manager. Appointed 6 November 2014.
6
Date of resignation 2 July 2014.
7
Date of resignation 20 March 2015. Paid in US dollars at an average exchange rate for the year ended 30 June 2015 of 0.8.
8
9
Date of commencement 8 September 2014. Date employment ceased on 15 October 2014.
10 Date of commencement 22 September 2014. Date employment ceased on 15 October 2014.
11 Date of redundancy 22 October 2014.
12
13 Amount shown includes a voluntary 10% reduction in fixed remuneration effective from 1 October 2013 to 30 June 2014.
14 Notice Period by the Company in respect of benefits payable in the event of an early termination only.
Temporary role as Executive Chairman. Role reverts to Non-Executive Chairman at the discretion of the Board.
Fixed annual remuneration, inclusive of the required superannuation contribution amount is reviewed annually by the Board
following the end of the financial year.
In the event of the completion of a takeover (relevant interest exceeds 50%) certain executives will receive a lump sum gross
payment equal to between six to 12 months of the Total Remuneration Package (Tim Benfield is entitled to 12 months and Ross
Coyle, Joel Forwood and Ron James entitled to six months). If within six months after the completion of the takeover the executive
elects to terminate his employment or his employment is terminated by the Company the executive will not be entitled to any
notice of termination or payment in lieu of notice.
continuedu
Directors’ ReportDirectors' Report
36
Non-Executive Directors fees
Non-Executive Directors are paid fixed fees for their services to the Company plus statutory superannuation contributions the Company is required by law to
make on their behalf. Those fees are inclusive of any salary-sacrificed contribution to superannuation that a Non-Executive Director wishes to make.
The level of Non-Executive Directors fees is set so as to attract the best candidates for the Board while maintaining a level commensurate with boards of
similar size and type. The Board may also seek the advice of independent remuneration consultants, including survey data, to ensure Non-Executive Direc-
tors’ fees and payments are consistent with the current market.
Non-Executive Directors’ base fees inclusive of committee membership but not including statutory superannuation are outlined as follows. Note that from
the period 1 October 2013, all Non-Executive Directors fees were voluntarily reduced by 10% and this reduction is still in place as at the date of this report.
Chairman
Directors
Financial
year ended
30 June 2015 1
$
Financial
year ended
30 June 2014 1
$
41,8192
360,000
148,000
277,500
401,819
425,500
1
2
On an annualised basis for all directors and excludes Director fees paid by subsidiary.
Amount shown is for the period up to 16 October 2014, being the date the Chairman’s role changed from Non-Executive to Executive.
The aggregate remuneration of Non-Executive Directors is set by shareholders in general meeting in accordance with the Constitution of the Company, with
individual Non-Executive Directors remuneration determined by the Board within the aggregate total. The aggregate amount of Non-Executive Directors’
fees approved by shareholders on 13 November 2008 is $1,000,000.
Non-Executive Directors do not receive any additional fees for serving on committees of the Company.
There are no retirement allowances for Non-Executive Directors.
Directors’ Reportwww.kingsgate.com.au 37
Total
$
46,709
70,945
98,550
49,275
14,666
90,000
49,275
98,550
51,696
569,666
529,705
114,130
53,859
756,528
602,713
51,696
578,547
475,582
157,381
(4,030)
881,799
104,304
51,775
Additional statutory disclosures
Details of remuneration
Details of the nature and amount of each major element of the remuneration of the Directors and the Group executive managers are set out
in the following tables:
Short-term benefits
Long-term
benefits
Post-employment
benefits
Share-based
payment
Year ended
30 June 2015
Cash salary
and fees
Cash bonus
Other
benefits2
Non-
monetary
benefits1
Other
benefits2
Super-
annuation
Termination
benefits3
Amortised
value of
rights4
(accounting
expense)
Name
$
$
$
$
$
$
$
$
Non-Executive Directors
Ross Smyth-Kirk
Paid by Company5
Paid by subsidiary5,6
Peter Alexander
Craig Carracher
Paid by Company
Paid by subsidiary6
Peter McAleer7
Sharon Skeggs8
Peter Warren9
Paid by Company
Paid by subsidiary6
Sub-total Non-Executive
Directors Compensation
Executive Chairman
Ross Smyth-Kirk
Paid by Company7
Other KMPs
Greg Foulis10
Tim Benfield11
Ross Coyle12
Paid by Company
Paid by subsidiary6
Ron James
Joel Forwood
Paul Mason13
Duane Woodbury
Michael Monaghan
Geoff Day
Austen Perrin
Brett Dunstone
41,819
70,945
90,000
36,775
14,666
90,000
45,000
90,000
51,696
530,901
102,181
15,000
506,460
395,168
51,696
400,000
295,504
115,858
3,513
417,757
68,305
28,715
96,285
–
–
–
–
–
–
–
–
–
–
–
–
75,00014
58,50014
–
80,00014
44,75014
15,00014
–
59,147
–
–
50,550
Sub-total Executive
Chairman and other KMP
Compensation
2,496,442
382,947
TOTAL
3,027,343
382,947
–
–
–
–
–
–
–
–
–
–
–
3,804
4,057
–
(1,398)
–
(16,730)
3,947
5,061
(3,635)
(7,561)
5,278
2,236
4,268
(673)
(673)
917
–
–
–
–
–
–
–
–
917
2,242
–
–
–
–
–
–
–
1,325
10,588
–
–
–
–
–
–
–
–
–
–
–
–
–
–
55
4,282
–
6,336
–
4,743
4,060
1,247
(5,567)
–
–
–
(1,144)
3,973
–
8,550
12,500
–
–
4,275
8,550
–
37,848
9,707
35,000
18,792
35,000
–
–
35,000
20,215
334
–
4,759
3,132
6,264
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
434,903
25,962
17,692
194,714
–
–
–
–
–
–
–
–
–
–
–
–
147,937
109,107
–
110,534
92,321
–
–
(33,035)15
–
–
(17,094)15
333,843
14,155
14,012
168,203
673,271
409,770
4,158,127
15,072
14,012
206,051
673,271
409,770
4,727,793
continuedu
Directors’ ReportDirectors' Report 38
1
2
3
4
5
Non-monetary benefits relate primarily to car parking.
Represents annual leave (short term) and long service leave (long term) entitlements, measured on an accrual basis, and reflects the movement in the entitlements over the
12 month period.
Benefits paid were in accordance with employment contract.
Amortised value of rights comprises the fair value of performance and deferred rights expensed during the year. This is an accounting expense and does not reflect the
value to the executive of rights that vested in the financial year. Refer to the table on page 42 for the value of rights that have vested.
Total remuneration for the year for Ross Smyth-Kirk for Non-Executive and Executive roles was $231,784, including cash salary and fees of $214,945, non-monetary
benefits of $3,159 and superannuation of $13,680.
Fees paid by subsidiary relate to director fees paid by Akara Resources PCL.
Consulting Fees of $90,000 were paid or payable to Norwest Mining Consultants Ltd, of which Peter McAleer is an officer and director.
Appointed Non-Executive Director 1 January 2015.
Received consulting fees of $90,000 which are not included in the remuneration table (refer to Note 30).
6
7
8
9
10 Appointed Chief Executive Officer 1 June 2015.
11
12
Acting Chief Executive Officer from 16 October 2014 to 30 April 2015.
Appointed Chief Financial Officer from 6 November 2014, previously General Manager Finance & Administration and Company Secretary. Resigned as Company Secretary
6 November 2014.
13 Appointed Company Secretary 6 November 2014.
14
Cash bonuses paid to these executives by the Board during the 2014/2015 financial year include a discretionary component relating to individual performance in the first
half of the 2014/2015 financial year as well as an STI component relating to performance in the 2013/2014 financial year.
15 Amortised value is net of write-back of expense incurred in prior periods relating to unvested rights that were forfeited during the year.
Directors’ Reportwww.kingsgate.com.au 39
Total
$
163,025
57,706
92,500
101,056
39,492
101,056
554,835
Short-term benefits
Long-term
benefits
Post-employment
benefits
Share-based
payment
Cash salary
and fees
Other
benefits2
$
$
Cash
bonus
$
Non-
monetary
benefits1
Other
benefits2
Super-
annuation
Termination
benefits2,3
Amortised
value of
rights4
(accounting
expense)
$
$
$
$
$
148,000
57,706
92,500
79,206
39,492
92,500
509,404
887,0908
40,514
446,061
438,8338
370,0008
327,0718
44,599
281,583
267,536
531,525
–
–
–
–
–
–
–
68,494
–
–
(7,296)
23,482
(8,699)
30,486
–
10,534
(4,687)
34,569
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,335
–
–
–
–
–
1,335
–
–
–
–
–
–
–
13,690
–
–
21,850
–
8,556
44,096
–
–
–
–
–
–
–
–
–
–
–
–
–
–
67,038
–
57,674
–
35,000
–
1,187,999
–
(164,159)7
–
2,139,136
40,514
–
6,419
2,602
–
–
–
–
–
2,802
3,193
3,437
3,307
–
2,971
944
–
17,772
26,673
–
35,012
–
25,000
17,772
–
–
325,000
–
–
–
–
–
–
65,872
18,735
89,840
88,680
–
75,037
17,094
26,185
525,211
842,335
457,180
484,556
44,599
395,125
298,659
694,881
90,967
11,635
Year ended
30 June 2014
(Restated)
Name
Non-Executive Directors
Ross Smyth-Kirk
Paid by Company
Paid by subsidiary5
Peter McAleer6
Craig Carracher
Paid by Company
Paid by subsidiary5
Peter Alexander
Sub-total Non-Executive
Directors Compensation
Executive Director
Gavin Thomas
Paid by Company
Paid by subsidiary5
Other KMPs
Tim Benfield
Duane Woodbury
Ron James
Ross Coyle
Paid by Company
Paid by subsidiary5
Joel Forwood
Brett Dunstone
Michael Monaghan
Sub-total Executive Director
and other KMP
Compensation
3,634,812
146,883
90,967
87,694
74,328
157,229
1,512,999
217,284
5,922,196
TOTAL
4,144,216
146,883
90,967
89,029
74,328
201,325
1,512,999
217,284
6,477,031
1
2
3
4
5
6
7
8
Non-monetary benefits relate to car parking, travel and life insurance.
Represents annual leave (short term) and long service leave (long term) entitlements, measured on an accrual basis, and reflects the movement in the entitlements over the
12 month period. Other benefits were omitted in error in the 2014 Remuneration Report. The above table has been restated to include these amounts. Termination benefits
have also been restated to exclude annual and long service leave entitlements which are now included in “other benefits” or excluded as they related to prior year expense.
Benefits paid were in accordance with employment contract.
Amortised value of rights comprises the fair value of performance and deferred rights expensed during the year. This is an accounting expense and does not reflect the
value to the executive of rights that vested in the financial year.
Fees paid by subsidiary relate to director fees paid by Akara Resources PCL.
Consulting Fees of $92,500 were paid or payable to Norwest Mining Consultants Ltd, of which Peter McAleer is an officer and director.
Amortised value is net of write-back of expense incurred in prior periods relating to unvested rights that were forfeited during the year.
An error was identified during the year resulting in restatement of each of these amounts reducing them by $1,000 each.
continuedu
Directors’ ReportDirectors' Report 40
The relative proportions of remuneration that are linked to performance and those that are fixed are as follows:
Name
Executive Chairman
Ross Smyth-Kirk
Other Key Management Personnel
Greg Foulis
Tim Benfield
Ross Coyle
Ron James
Joel Forwood
Paul Mason
Duane Woodbury
Michael Monaghan3
Geoff Day3
Austen Perrin3
Brett Dunstone3
Fixed remuneration
2015
STI/cash bonus
2015
At risk – LTI2
2015
100%
100%
70%
74%
67%
72%
90%
100%
94%
100%
100%
76%
–
–
10%1
9%1
14%1
9%1
10%1
–
13%
–
–
36%4
–
–
20%
17%
19%
19%
–
–
-7%
–
–
-12%
1
2
3
4
Cash bonuses paid to these executives by the Board during the 2014/2015 financial year include a discretionary component relating to individual performance in the
first half of the 2014/2015 financial year as well as an STI component relating to performance in the 2013/2014 financial year.
Since the long-term incentives are provided by way of deferred rights and performance rights, the percentages disclosed reflect the value consisting of deferred rights
and performance rights, based on the value of deferred rights and performance rights expensed during the year. Where applicable, the expenses include negative
amounts for expenses reversed during the year due to cessation of employment.
Termination benefits are excluded in determining the relative proportion of remuneration.
Proportion of remuneration relatively high as fixed remuneration reflects the cessation of employment on 22 October 2014 and the STI cash bonus based on individual
performance in the previous year, though awarded and paid in the 2014/2015 financial year. Based on annualised remuneration at date of termination proportion would
be 14%.
Directors’ Reportwww.kingsgate.com.au 41
Share rights held by Key Management Personnel
Details of each grant of share rights included in the Key Management Personnel remuneration tables are noted in the following tables.
Note that no deferred or performance rights were granted in the 2014/2015 financial year.
The percentage of rights granted to Key Management Personnel on issue that have vested and the percentage that was forfeited
because the person did not meet the service criteria is set out below:
Share rights
Financial year
granted
Number
granted
Vested
%
Vested
number
Forfeited
%
Forfeited
number
Financial year
that rights
may vest
2014
95,000
2013
2014
2013
2014
2013
2013
2014
2013
2014
2013
2013
2014
2013
2014
2013
2013
2014
2013
2014
2013
2013
2014
2013
2014
2014
2014
2013
2014
14,205
49,407
28,409
98,814
13,736
14,205
49,407
28,409
98,814
10,989
11,364
39,526
22,727
79,051
10,714
11,080
38,538
22,159
77,075
9,066
9,375
32,609
18,750
65,217
30,336
60,672
7,500
42,850
–
–
–
–
–
100
–
–
–
–
100
–
–
–
–
100
–
–
–
–
100
–
–
–
–
–
–
–
–
–
–
–
–
–
13,736
–
–
–
–
10,989
–
–
–
–
10,714
–
–
–
–
9,066
–
–
–
–
–
–
–
–
–
–
–
–
–
–
100
100
100
100
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
100
100
100
100
–
–
–
–
–
–
14,205
49,407
28,409
98,814
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
30,336
60,672
7,500
42,850
2017
2016
2017
2016
2017
2015
2016
2017
2016
2017
2015
2016
2017
2016
2017
2015
2016
2017
2016
2017
2015
2016
2017
2016
2017
2017
2017
2016
2017
Name
P Warren
Performance
T Benfield
Deferred
Deferred
Performance
Performance
D Woodbury
Deferred
Deferred
Deferred
Performance
Performance
R James
Deferred
Deferred
Deferred
Performance
Performance
R Coyle
Deferred
Deferred
Deferred
Performance
Performance
J Forwood
Deferred
Deferred
Deferred
Performance
Performance
B Dunstone
Deferred
Performance
M Monaghan
Deferred
Deferred
continuedu
Directors’ ReportDirectors' Report
42
Directors’ Report
Value of share rights
Name
P Warren
Performance
T Benfield
Deferred
Deferred
Performance
Performance
D Woodbury
Deferred
Deferred
Deferred
Performance
Performance
R James
Deferred
Deferred
Deferred
Performance
Performance
R Coyle
Deferred
Deferred
Deferred
Performance
Performance
J Forwood
Deferred
Deferred
Deferred
Performance
Performance
B Dunstone
Deferred
Performance
M Monaghan
Deferred
Deferred
Financial year
that rights
may vest
Number
granted
Fair value
per right at
grant date2
$
Share rights
Total
fair value at
grant date2
$
Maximum
value yet
to vest3
$
Value at
vesting date4
$
Value at
lapse date5
$
2017
95,000
1.26
119,700
83,790
2016
2017
2016
2017
2015
2016
2017
2016
2017
2015
2016
2017
2016
2017
2015
2016
2017
2016
2017
2015
2016
2017
2016
2017
2017
2017
2016
2017
14,205
49,407
28,409
98,814
13,736
14,205
49,407
28,409
98,814
10,989
11,364
39,526
22,728
79,051
10,714
11,080
38,538
22,159
77,075
9,066
9,375
32,609
18,750
65,217
30,336
60,672
7,500
42,850
5.17
1.47
3.21
0.74
5.57
5.17
1.39
3.21
0.74
5.57
5.17
1.34
3.21
0.74
5.57
5.17
1.47
3.21
0.74
5.57
5.17
1.47
3.21
0.74
1.47
0.74
5.17
1.47
73,438
72,628
91,193
72,628
76,511
73,438
68,676
91,193
73,122
61,209
58,750
52,965
72,955
58,102
59,679
57,281
56,651
71,131
56,650
50,497
48,469
47,935
60,188
47,934
44,594
44,594
38,775
62,990
–
37,525
–
37,525
–
–
–
–
–
–
–
27,365
–
30,020
–
–
29,270
–
29,269
–
–
24,767
–
24,766
–
–
–
–
–
–
–
–
–
12,088
–
–
–
–
9,670
–
–
–
–
9,428
–
–
–
–
7,978
–
–
–
–
–
–
–
–
–
–
–
–
–
–
12,500
43,478
25,000
86,956
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
22,145
44,291
4,875
27,853
1 The minimum value of the rights yet to vest is nil, as the rights will be forfeited if the Key Management Personnel fails to meet a vesting condition.
2 The fair value of the performance rights was estimated using Monte Carlo simulation; taking into account the terms and conditions upon which the awards were granted.
3 The maximum value of the share rights yet to vest has been determined as the fair value of the rights at the grant date that is yet to be expensed.
4
The value at vesting date (1 July 2014) is the number of rights vesting multiplied by the Company’s share price on the vesting date. As rights convert to ordinary shares on the
vesting date, this date is also the exercise date. No payment by the holder of the right is required on vesting of the right.
5 The value at lapse date is the number of rights lapsing multiplied by the Company’s share price at the close of business on that day.
www.kingsgate.com.au
43
Directors’ Report
t
r
o
p
e
R
'
s
r
o
t
c
e
r
i
D
Movement in LTI Rights for the year ended 30 June 2015
Performance rights
The number of performance rights held during the financial year by each Director of Kingsgate and each of the specified executives of the Group,
including their personally-related entities, are set out as follows:
2015
Non-Executive Directors
Peter Warren
Other Key Management Personnel
Tim Benfield
Ross Coyle
Ron James
Joel Forwood
Duane Woodbury
Brett Dunstone
Deferred rights
Balance at start
of year
Granted during
the year
Converted
during the year
Other changes
during the year
Balance at
year end
Vested and
exercisable at
year end
95,000
127,223
99,234
101,779
83,967
127,223
60,672
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(127,223)
(60,672)
95,000
127,223
99,234
101,779
83,967
–
–
–
–
–
–
–
–
–
The number of deferred rights held during the financial year by each Director of Kingsgate and each of the specified executives of the Group,
including their personally-related entities, are set out as follows:
2015
Other Key Management Personnel
Tim Benfield
Ross Coyle
Ron James
Joel Forwood
Duane Woodbury
Michael Monaghan
Brett Dunstone
Balance at start
of year
Granted during
the year
Converted
during the year
Other changes
during the year
Balance at
year end
Vested and
exercisable at
year end
63,612
70,704
72,517
51,050
90,646
50,350
30,336
–
–
–
–
–
–
–
–
(21,086)
(21,627)
(9,066)
–
–
–
–
–
–
–
(90,646)
(50,350)
(30,336)
63,612
49,618
50,890
41,984
–
–
–
–
–
–
–
–
–
–
continuedu
44
Directors’ Report
Share holdings
The number of shares in the Company held during the financial year by each Director of Kingsgate and each of the other Key Management Personnel of the
Group, including their personally-related entities are set out as follows:
2015
Executive Chairman
Ross Smyth-Kirk
Non-Executive Directors
Peter Alexander
Craig Carracher
Peter McAleer
Sharon Skeggs
Peter Warren
Other Key Management Personnel
Ross Coyle
Ron James
Joel Forwood
Paul Mason
Received
during year on
conversion of
deferred rights
Other changes
during the year
Balance at
year end1
–
–
–
–
–
–
19,150
19,691
7,930
–
–
–
–
–
–
–
–
–
–
–
5,076,725
46,487
110,000
100,000
19,347
145,000
36,724
39,491
7,930
15,000
Balance at
start of year
5,076,725
46,487
110,000
100,000
19,347
145,000
17,574
19,800
–
15,000
1
The closing balance represents the balance at year end or at the date of departure from the Group.
Loan to Director
There were no loans made to Directors or other Key Management Personnel at any time during the year.
Insurance of officers
During the financial year, the Group paid premiums to insure Directors and Officers of the Group. The contracts include a prohibition on disclosure of the
premium paid and nature of the liabilities covered under the policy.
Directors’ interest in contracts
No material contracts involving Directors’ interests were entered into since the end of the previous financial year or existed at the end of the financial year
other than the transactions detailed in the note to the accounts.
Non-audit services
Details of amounts paid or payable to the auditor for non-audit services provided during the year are detailed in Note 31: Auditors Remuneration. The Direc-
tors are satisfied that the provision of non-audit services during the period by the auditor is compatible with the general standard of independence for
auditors imposed by the Corporations Act 2001.
The Directors are of the opinion that the services disclosed in Note 31: Auditors Remuneration to the financial statements do not compromise the external
auditor’s independence, based on the Auditor’s representations and advice received from the Audit Committee, for the following reasons:
〉〉
all non-audit services have been reviewed to ensure they do not impact the integrity and objectivity of the auditor; and
〉〉 none of the services undermine the general principles relating to auditor independence as set out in Code of Conduct APES 110 Code of Ethics for Profes-
sional Accountants issued by the Accounting Professional and Ethical Standards Board, including reviewing or auditing the auditor’s own work, acting in
a management or decision-making capacity for the Company, acting as advocate for the Company or jointly sharing economic risks and rewards.
A copy of the Auditor’s Independence Declaration as required under section 307C of the Corporations Act 2001 is set out on page 46.
www.kingsgate.com.au
45
Directors’ Report
Rounding of amounts
The Group is of a kind referred to in Class Order 98/100, issued by the Australian Securities and Investments Commission, relating to the “rounding off” of
amounts in the Directors’ Report. Amounts in the Directors’ Report have been rounded off in accordance with that Class Order to the nearest thousand
dollars, or in certain cases, to the nearest dollar.
Auditors
PricewaterhouseCoopers continues in office in accordance with section 327 of the Corporations Act 2001.
This report is made in accordance with a resolution of Directors.
t
r
o
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e
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s
r
o
t
c
e
r
i
D
Ross Smyth-Kirk
Director
Sydney
17 September 2015
46
Auditor’s Independence Declaration
Auditor’s
Independence
Declaration
Auditor’s Independence Declaration
As lead auditor for the audit of Kingsgate Consolidated Limited for the year ended 30 June 2015,
I declare that to the best of my knowledge and belief, there have been:
a) no contraventions of the auditor independence requirements of the Corporations Act 2001
in relation to the audit; and
b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Kingsgate Consolidated Limited and the entities it controlled during
the period.
Brett Entwistle
Partner
PricewaterhouseCoopers
Sydney
17 September 2015
www.kingsgate.com.au Financial
Statements
for the year ended 30 June 2015
47
Financial Statements
s
t
n
e
m
e
t
a
t
S
l
i
a
c
n
a
n
F
i
Consolidated Statement of Profit or Loss and
Other Comprehensive Income 48
3. Critical accounting estimates, assumptions and
judgements . . . . . . . . . . . . . . . . . 60
Consolidated Statement of Financial Position 49
Consolidated Statement of Changes in Equity
50
Consolidated Statement of Cash Flows 51
Notes to the Financial Statements 52
Basis of preparation . . . . . . . . . . . . . . 52
1.
2.
4.
5.
6.
7.
8.
9.
Segment information . . . . . . . . . . . . . 61
Revenue and expenses . . . . . . . . . . . . .
62
Income tax . . . . . . . . . . . . . . . . . 64
Cash and cash equivalents and restricted cash . . . . 67
Receivables . . . . . . . . . . . . . . . . .
68
Inventories . . . . . . . . . . . . . . . . . 68
Significant accounting policies . . . . . . . . . .
52
10. Other assets . . . . . . . . . . . . . . . . 68
A. Principles of consolidation . . . . . . . . . .
52
B. Foreign currency translation . . . . . . . . . 53
C. Revenue . . . . . . . . . . . . . . . . 53
Income tax . . . . . . . . . . . . . . . 53
D.
E. Leases . . . . . . . . . . . . . . . . . 54
F. Divestment transaction costs . . . . . . . . 54
Impairment of assets . . . . . . . . . . . . 54
G.
54
H. Cash and cash equivalents . . . . . . . . . .
Trade and other receivables . . . . . . . . . 54
I.
J.
Inventories . . . . . . . . . . . . . . . 54
K. Non-derivative financial assets . . . . . . . . 54
L. Derivative financial instruments . . . . . . . .
55
M. Property, plant and equipment . . . . . . . . 55
N. Deferred stripping costs . . . . . . . . . . 56
O. Deferred mining services costs . . . . . . . . 56
P. Exploration, evaluation and feasibility expenditure . 56
Q. Mine properties. . . . . . . . . . . . . . 56
R.
Investment in associates . . . . . . . . . . 57
S. Trade and other payables . . . . . . . . . . 57
T. Borrowings . . . . . . . . . . . . . . . 57
U. Borrowing costs . . . . . . . . . . . . . 57
V. Provisions . . . . . . . . . . . . . . . . 57
W. Restoration and rehabilitation provision . . . . .
57
X. Employee benefits. . . . . . . . . . . . . 58
Y. Dividends . . . . . . . . . . . . . . . .
58
Z. Earnings per share . . . . . . . . . . . . . 59
AA. Contributed equity . . . . . . . . . . . . 59
BB. Goods and services tax (GST) . . . . . . . . .
59
CC. Operating segment reporting. . . . . . . . . 59
DD. New accounting standards and interpretations . . 59
60
EE. Parent entity financial information . . . . . . .
11. Available-for-sale financial assets . . . . . . . . . 69
12. Property plant and equipment . . . . . . . . . . 69
13. Exploration, evaluation and development . . . . . . 70
14.
Impairment assessment . . . . . . . . . . . . 71
15.
Investment in associate . . . . . . . . . . . . 72
16. Payables . . . . . . . . . . . . . . . . . .
17. Borrowings . . . . . . . . . . . . . . . . .
73
73
18. Provisions . . . . . . . . . . . . . . . . . 75
19. Contributed equity . . . . . . . . . . . . . . 75
20. Reserves and accumulated losses . . . . . . . . .
21. Commitments for expenditure . . . . . . . . . .
76
77
22. Controlled entities . . . . . . . . . . . . . . 77
23. Dividends . . . . . . . . . . . . . . . . . 78
24. Related parties . . . . . . . . . . . . . . . 78
25. Employee benefits and share-based payments . . . . 78
26. Reconciliation of loss after income tax to net cash
flow from operating activities . . . . . . . . . . 80
27. Events occurring after reporting date . . . . . . . 80
28. Contingent liabilities . . . . . . . . . . . . . 80
29. Financial risk management and instruments . . . . . 80
30. Key management personnel disclosures. . . . . . . 85
31. Auditors’ remuneration . . . . . . . . . . . . 86
32. Loss per share . . . . . . . . . . . . . . . .
87
33. Parent entity financial information . . . . . . . . 87
34. Deed of cross guarantee . . . . . . . . . . . . 88
35. Correction of prior year error . . . . . . . . . . 90
Directors' Report
48
Financial Statements
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
for the year ended 30 June 2015
Sales revenue
Cost of sales
Gross profit
Exploration expenses
Corporate and administration expenses
Other income and expenses
Foreign exchange gain
Share of loss in associate
Impairment losses – Chatree Gold Mine
Impairment losses – Bowdens Silver Project
Impairment losses – exploration assets
Loss before finance costs and income tax
Finance income
Finance costs
Net finance costs
Loss before income tax
Income tax expense
Loss after income tax
Other comprehensive income
Items that will never be reclassified to profit and loss
Change in fair value of employee provisions (net of tax)
Items that may be reclassified to profit and loss
Exchange differences on translation of foreign operations (net of tax)
Total other comprehensive income/(loss) for the year
Total comprehensive loss for the year
Loss attributable to:
Owners of Kingsgate Consolidated Limited
Total comprehensive loss attributable to:
Owners of Kingsgate Consolidated Limited
Loss per share
Basic loss per share
Diluted loss per share
Note
5 (a)
5 (b)
5c
5d
15a
5e
5e
5e
5f
6
20
20
2015
$’000
2014
*Restated
$’000
313,162
(278,357)
328,326
(303,213)
34,805
25,113
(1,313)
(18,144)
(1,877)
2,699
(112)
(115,650)
(22,643)
(9,888)
(210)
(23,966)
2,102
2,595
(413)
–
(84,586)
(2,112)
(132,123)
(81,477)
859
(15,178)
(14,319)
(146,442)
(651)
(147,093)
838
60,868
61,706
610
(13,860)
(13,250)
(94,727)
(2,886)
(97,613)
–
(26,314)
(26,314)
(85,387)
(123,927)
(147,093)
(97,613)
(85,387)
(123,927)
Cents
Cents
32
32
(65.8)
(65.8)
(56.7)
(56.7)
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.
* Restated comparative information has been restated as a result of the correction of error in respect of prepaid mining services balance (refer to Note 35 for details).
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Consolidated Statement
of Financial Position
as at 30 June 2015
Assets
Current assets
Cash and cash equivalents
Receivables
Inventories
Other assets
Total current assets
Non-current assets
Restricted cash
Inventories
Available-for-sale financial assets
Investment in associate
Property, plant and equipment
Exploration, evaluation and development
Other assets
Deferred tax assets
Total non-current assets
TOTAL ASSETS
Liabilities
Current liabilities
Payables
Borrowings
Derivatives held for trading
Current tax liabilities
Provisions
Total current liabilities
Non-current liabilities
Payables
Borrowings
Deferred tax liabilities
Provisions
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
Equity
Contributed equity
Reserves
Accumulated losses
TOTAL EQUITY
49
Financial Statements
Note
2015
$’000
2014
*Restated
$’000
7
8
9
10
7
9
11
15
12
13
10
6
16
17
18
16
17
6
18
55,472
19,139
47,147
9,619
53,632
13,360
47,917
20,893
131,377
135,802
6,601
55,711
1,350
–
188,494
143,035
18,442
–
5,489
49,805
270
1,072
170,658
255,257
13,537
9,205
413,633
505,293
545,010
641,095
26,281
67,552
–
–
3,625
97,458
7,171
75,071
388
39,226
121,856
219,314
325,696
25,478
42,978
623
1,148
3,115
73,342
4,800
110,654
8,628
32,998
157,080
230,422
410,673
19
20a
20b
677,109
53,793
(405,206)
677,109
(8,323)
(258,113)
325,696
410,673
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
* Restated comparative information has been restated as a result of the correction of error in respect of prepaid mining services balance (refer to Note 35 for details).
50
Financial Statements
Consolidated Statement
of Changes in Equity
for the year ended 30 June 2015
Balance at 1 July 2013 (Restated)
Loss after income tax
Total other comprehensive loss for the year
Total comprehensive loss for the year
Note
20b
Transaction with owners in their capacity as owners:
Contributions of equity, net of transaction costs
Issue of ordinary shares to repay funds drawn down under the convertible
revolving credit facility, net of transaction costs
Share placement and rights issue, net of transaction costs
Movement in share-based payment reserve
20a
Total transactions with owners
Balance at 30 June 2014 (*Restated)
Contributed
equity
$’000
Reserves
$’000
Accumulated
losses
$’000
Total equity
$’000
605,504
18,095
(160,500)
463,099
–
–
–
597
14,548
56,460
–
71,605
–
(26,314)
(97,613)
–
(97,613)
(26,314)
(26,314)
(97,613)
(123,927)
–
–
–
(104)
(104)
–
–
–
–
–
597
14,548
56,460
(104)
71,501
677,109
(8,323)
(258,113)
410,673
Balance at 1 July 2014 (*Restated)
Loss after income tax
Total other comprehensive loss for the year
Total comprehensive loss for the year
Transaction with owners in their capacity as owners:
Movement in share-based payment reserve
Total transactions with owners
Balance at 30 June 2015
20b
20a
677,109
(8,323)
(258,113)
410,673
–
–
–
–
–
–
61,706
61,706
410
410
(147,093)
–
(147,093)
61,706
(147,093)
(85,387)
–
–
410
410
677,109
53,793
(405,206)
325,696
The above consolidated statement of changes in equity should be read in conjunction with the accompanying note.
* Restated comparative information has been restated as a result of the correction of error in respect of prepaid mining services balance (refer to Note 35 for details).
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Consolidated Statement
of Cash Flows
for the year ended 30 June 2015
Cash flows from operating activities
Receipts from customers (net of goods and services tax)
Payments to suppliers and employees (inclusive of goods and services tax)
Interest received
Finance costs paid
Income tax paid
Net cash inflow from operating activities
Cash flows from investing activities
Payments for property, plant and equipment
Payments for exploration, evaluation and development
Interest capitalised to expansion and development projects
Decrease/(increase) in deposits and debt service reserve account
Net cash outflow from investing activities
Cash flows from financing activities
Proceeds from corporate borrowings, net of transaction costs
Repayment of corporate borrowings
Repayment of subsidiary (Akara Resources PCL) borrowings
Proceeds from the issue of shares (net of transaction costs)
Net cash (outflow)/inflow from financing activities
Net (decrease)/increase in cash held
Cash at the beginning of the year
Effects of exchange rate on cash and cash equivalents
Cash at the end of the year
51
Financial Statements
Note
2015
$’000
313,918
(226,980)
859
(9,480)
(1,671)
2014
*Restated
$’000
326,801
(279,861)
610
(7,815)
(1,127)
26
76,646
38,608
(1,828)
(38,048)
–
(455)
(11,465)
(31,755)
(2,185)
504
(40,331)
(44,901)
2,443
(11,379)
(28,741)
–
26,085
(32,000)
(19,671)
56,460
(37,677)
30,874
(1,362)
53,632
3,202
55,472
24,581
30,494
(1,443)
53,632
7
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
* Restated comparative information has been restated as a result of the correction of error in respect of prepaid mining services balance (refer to Note 35 for details)
52
Notes to the
Financial Statements
for the year ended 30 June 2015
The Financial Report of Kingsgate Consolidated
Limited (Kingsgate or the “Company”) for the
year ended 30 June 2015 was authorised for issue
in accordance with a resolution of Directors on
17 September 2015.
Kingsgate is a Company limited by shares incor-
porated in Australia whose shares are publicly
traded on the Australian Securities Exchange
using the ASX code KCN. The consolidated
financial statements of the Company as at and
for the year ended 30 June 2015 comprise the
Company and its subsidiaries (together referred
to as the “Group” and individually as “Group
entities”). A description of the nature of the
Group’s operations and its principal activities is
included in the Directors’ Report.
1. Basis of preparation
The general purpose financial statements have
been prepared in accordance with Australian
Accounting Standards, other authoritative
pronouncements of the Australian Accounting
Standards Board and the Corporations Act 2001.
The Company is a for-profit entity for the
purpose of preparing the financial statements.
Compliance with IFRS
The financial statements comply with Interna-
tional Financial Reporting Standards (IFRS)
adopted by the International Accounting Stand-
ards Board (IASB).
Historical cost convention
The financial statements have been prepared
under the historical cost convention, as
modified by the revaluation of available-for-sale
financial assets and financial instruments
(including derivative instruments) at fair value
through profit or loss.
Functional and presentation currency
The financial statements of the Group entities
are measured using the currency of the primary
economic environment in which the entity
operates (“the functional currency”). The
consolidated financial statements are presented
in Australian dollars, which is the Company’s
functional currency and presentation currency.
Rounding of amounts
The Company is of a kind referred to in ASIC
Class Order 98/100 dated 10 July 1998 and in
accordance with that Class Order, all financial
information presented in Australian dollars has
been rounded to the nearest thousand, or in
certain cases, the nearest dollar.
Critical accounting estimates
The preparation of financial statements requires
the use of certain critical accounting estimates.
It also requires management to exercise its
judgement in the process of applying the
Group’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 3.
2. Significant accounting
policies
The principal accounting policies adopted in the
preparation of the financial statements are set
out below. These policies have been consistently
applied to all the years presented.
a . Principles of consolidation
(i)
Business combinations
Business combinations are accounted for using
the acquisition method as at the acquisition
date, which is the date on which control is
transferred to the Group. Control is the power to
govern the financial and operating policies of an
entity so as to obtain benefits from its activities.
In assessing control, the Group takes into
consideration potential voting rights that
currently are exercisable.
The consideration transferred for the acquisition
of a subsidiary comprises the fair values of the
assets transferred, the liabilities incurred and
the equity interests issued by the Group. The
consideration transferred does not include
amounts related to the settlement of a pre-
existing relationship. Such amounts are gener-
ally recognised in profit or loss.
Costs related to the acquisition other than those
associated with the issue of debt or equity
securities, that the Group incurs in connection
with a business combination are expensed as
incurred. Any contingent consideration payable
is recognised at fair value at the acquisition date.
Acquisitions of non-controlling interests are
accounted for as transactions with owners in their
capacity as owners and therefore no goodwill is
recognised as a result of such transactions. The
non-controlling interest in the acquiree is based
on the fair value of the acquiree’s net identifiable
assets. The adjustments to non-controlling
interests are based on the proportionate amount
of the net assets of the subsidiary.
The acquisition of an asset or group of assets
that is not a business is accounted for by allo-
cating the cost of the transaction to the net
identifiable assets and liabilities acquired based
on their fair values.
(ii) Subsidiaries
Subsidiaries are entities controlled by the Group.
The financial statements of subsidiaries are
included in the consolidated financial state-
ments from the date that control commences
until the date that control ceases.
The accounting policies of subsidiaries have
been changed when necessary to align them
with the policies adopted by the Group. Losses
applicable to the non-controlling interests in a
subsidiary are allocated to the non-controlling
interests even if doing so causes the non-
controlling interests to have a deficit balance.
Intra-group balances and transactions, and any
unrealised gains arising from intra-group trans-
actions, are eliminated in preparing the consoli-
dated financial statements. Unrealised losses
are also eliminated unless the transaction
provides evidence of the impairment of the
asset transferred.
Notes to the Financial Statementswww.kingsgate.com.au 53
b . Foreign currency translation
Transactions and balances
(i)
Foreign currency transactions are translated
into the respective functional currencies of the
Group entities at exchange rates on the dates of
the transactions. Foreign exchange gains and
losses resulting from the settlement of such
transactions and from the translation at
year-end exchange rates of monetary assets and
liabilities denominated in foreign currencies are
recognised in the profit or loss; except when
they are deferred in equity as qualifying cash
flow hedges and qualifying net investment
hedges or, are attributable to part of the net
investment in a foreign operation.
Translation differences on assets and liabilities
carried at fair value are reported as part of the
fair value gain or loss. Translation differences on
non-monetary assets and liabilities such as
equities held at fair value through profit or loss
are recognised in profit or loss as part of the fair
value gain or loss. Translation differences on
non-monetary assets are included in the fair
value reserve in equity.
Exchange gains and losses which arise on
balances between Group entities are taken to the
foreign currency translation reserve where the
intra-group balances are in substance part of the
Group’s net investment. Where as a result of a
change in circumstances, a previously designated
intra-group balance is intended to be settled in
the foreseeable future, the intra-group balance is
no longer regarded as part of net investment. The
exchange differences for such balance previously
taken directly to the foreign currency translation
reserves are recognised in the profit or loss.
(ii)
Foreign operations
The results and financial position of all the
Group entities (none of which has the currency
of a hyperinflationary economy) that have a
functional currency different from the presenta-
tion currency are translated into the presenta-
tion currency as follows:
〉〉
the assets and liabilities of the foreign opera-
tions, including goodwill and fair value
adjustments arising on acquisition, are
translated at the year-end exchange rate;
〉〉
〉〉
the income and expenses of foreign opera-
tions are translated at average exchange
rates (unless this is not a reasonable approxi-
mation of the cumulative effect of the rate
prevailing on the transaction dates, in which
case income and expenses are translated at
the dates of the transactions); and
foreign currency differences are recognised
in other comprehensive income, and
presented in the foreign currency translation
reserve.
c . Revenue
Revenue is measured at the fair value of the
consideration received or receivable. Sales
revenue represents the net proceeds receivable
from the buyer.
Gold and silver sales
Gold and silver revenue is recognised when the
refinery process has been finalised at which
point the sale transaction to a third party is also
completed. Transportation and refinery costs
are expensed when incurred.
Income tax
d .
Income tax expense comprises current and
deferred tax. Current tax and deferred tax is
recognised in profit or loss except to the extent
that it relates to a business combination, or
items recognised directly in equity or in other
comprehensive income.
Current tax is the expected tax payable or
receivable on the taxable income or loss for the
year using tax rates enacted or substantively
enacted at the reporting date, and any adjust-
ment to tax payable in respect of previous years.
Deferred tax is provided using the liability
method, providing for temporary differences
between the carrying amounts of assets and
liabilities for financial reporting purposes and
the amounts used for taxation purposes. The
amount of deferred tax provided is based on the
expected manner of realisation or settlement of
the carrying amount of assets and liabilities,
using tax rates enacted or substantively enacted
at the reporting date.
A deferred tax asset is recognised for unused tax
losses, tax credits and deductible temporary
differences, to the extent that it is probable that
future taxable profits will be available against
which they can be utilised. Deferred tax assets are
reviewed at each reporting date and are reduced
to the extent that it is no longer probable that the
related tax benefit will be realised.
Deferred tax is not recognised for:
〉〉
〉〉
temporary differences on the initial recogni-
tion of assets or liabilities in a transaction
that is not a business combination and that
affects neither accounting nor taxable profit
or loss;
temporary differences related to invest-
ments in subsidiaries where the Company is
able to control the timing of the reversal of
the temporary differences and it is probable
that they will not reverse in the foreseeable
future; and
Deferred tax assets and liabilities are offset if
there is a legally enforceable right to offset
current tax liabilities and assets and, they relate
to income taxes levied by the same tax authority
on the same taxable entity.
Additional income tax expenses that arise from
the distribution of cash dividends are recognised
at the same time that the liability to pay the
related dividend is recognised.
Tax consolidation
The Company and its wholly-owned Australian
resident entities formed a tax-consolidation
group with effect from 1 July 2003 and are
therefore taxed as a single entity from that date.
The head entity within the tax-consolidation
group is Kingsgate Consolidated Limited.
Current tax expense or benefit, deferred tax
assets and deferred tax liabilities arising from
temporary differences of the members of the
tax-consolidation group are recognised in the
separate financial statements of the members of
the tax-consolidation group using the “stand
alone taxpayer” approach by reference to the
carrying amounts in the separate financial
statements of each entity and the tax values
applying under tax consolidation.
Current tax assets or liabilities and deferred tax
assets arising from unused tax losses assumed
by the head entity from the subsidiaries in the
tax-consolidation group, are recognised as
amounts receivable or payable to other entities
in the tax-consolidation group in conjunction
with any tax funding agreement amounts.
The Company recognises deferred tax assets
arising from unused tax losses of the tax-consoli-
dation group to the extent that it is probable
that future taxable profits of the tax-consolida-
tion group will be available against which the
asset can be utilised.
Tax funding and sharing agreements
The members of the tax-consolidation group
have entered into a funding agreement that sets
out the funding obligations of members of the
tax-consolidation group in respect of tax
amounts. The tax funding arrangements require
payments; to or from, the head entity equal to
the current tax liability or asset assumed by the
head entity and any deferred tax asset assumed
by the head entity, resulting in the head entity
recognising an intra-group receivable or payable
in the separate financial statements of the
members of the tax-consolidation group equal in
amount to the tax liability or asset assumed. The
intra-group receivables or payables are at call.
〉〉
taxable temporary differences arising on the
initial recognition of goodwill.
The head entity recognises the assumed current
tax amounts as current tax liabilities or assets
continuedu
Notes to the Financial StatementsNotes to the Financial Statements 54
d .
Income tax continued
adding to its own current tax amounts, since
they are also due to or from the same taxation
authority. The current tax liabilities or assets are
equivalent to the tax balances generated by
external transactions entered into by the tax-
consolidation group.
The amounts receivable or payable under the tax
funding agreement are due upon receipt of the
funding advice from the head entity, which is
issued as soon as practicable after the end of
each financial year. The head entity may also
require payment of interim funding amounts to
assist with its obligations to pay tax instalments.
The members of the tax-consolidation group
have also entered into a tax sharing agreement.
The tax sharing agreement provides for the
determination of the allocation of income tax
liabilities between the entities should the head
entity default on its tax payment obligations.
No amounts have been recognised in the consol-
idated financial statements in respect of this
agreement as payment of any amounts under
the tax sharing agreement is considered remote.
e . Leases
Leases of property, plant and equipment where
the Group as lessee has substantially all the risks
and rewards of ownership are classified as
finance leases. Finance leases are capitalised
at the lease’s inception at the fair value of the
leased property or, if lower, the present value of
the minimum lease payments. The corresponding
rental obligations, net of finance charges, are
included in other short-term and long-term
payables. Each lease payment is allocated
between the liability and finance cost. The
finance cost is charged to the profit or loss over
the lease period so as to produce a constant
periodic rate of interest on the remaining balance
of the liability for each period.
The property, plant and equipment acquired
under finance leases is depreciated over the
asset’s useful life or over the shorter of the
asset’s useful life and the lease term if there is
no reasonable certainty that the Group will
obtain ownership at the end of the lease term.
Leases in which a significant portion of the risks
and rewards of ownership are not transferred to
the Group as lessee are classified as operating
leases. Payments made under operating leases
(net of any incentives received from the lessor)
are charged to the profit or loss on a straight-
line basis over the period of the lease.
f . Divestment transaction costs
Transaction costs directly relating to the partial
divestment of an interest in a subsidiary are
expensed as incurred in the years prior to the
disposal where control is retained.
Impairment of assets
g .
Assets are tested for impairment whenever
events or changes in circumstances indicate that
the carrying amount may not be recoverable. An
impairment loss is recognised for the amount by
which the asset’s carrying amount exceeds its
recoverable amount. The recoverable amount is
the higher of an asset’s fair value less costs of
disposal and value in use. For the purposes of
assessing impairment, assets are grouped at the
lowest levels for which there are separately
identifiable cash inflows which are largely inde-
pendent of the cash inflows from other assets or
groups of assets (cash-generating units). Non-
financial assets other than goodwill that suffered
impairment are reviewed for possible reversal of
the impairment at each reporting date.
h . Cash and cash equivalents
Cash and cash equivalents includes cash on
hand, deposits held at call with financial institu-
tions, other short-term, highly liquid invest-
ments with original maturities of three months
or less that are readily convertible to known
amounts of cash and which are subject to an
insignificant risk of changes in value, and bank
overdrafts. Bank overdrafts are shown within
borrowings in current liabilities in the statement
of financial position.
i . Trade and other receivables
Trade and other receivables are recognised
initially at fair value and subsequently measured
at amortised cost using the effective interest
method, less provision for impairment. Receiva-
bles are due for settlement no more than 90
days from the date of recognition.
Collectability of trade and other receivables is
reviewed on an ongoing basis. Debts which are
known to be uncollectible are written off by
reducing the carrying amount directly. An allow-
ance account is used when there is objective
evidence that the Group will not be able to collect
all amounts due according to the original terms
of the receivables. Significant financial difficulties
of the debtor, probability that the debtor will
enter bankruptcy or financial reorganisation, and
default or delinquency in payments more than 60
days overdue are considered indicators that the
trade and other receivable is impaired. The
amount of the impairment allowance is the
difference between the asset’s carrying amount
and the present value of estimated future cash
flows, discounted at the original effective
interest rate. Cash flows relating to short-term
receivables are not discounted if the effect of
discounting is immaterial.
The amount of the impairment loss is recognised
in the income statement within other expenses.
When a trade and other receivable for which an
impairment allowance had been recognised
becomes uncollectible in a subsequent period, it
is written off against the allowance account.
Subsequent recoveries of amounts previously
written off are credited against other expenses
in the income statement.
Inventories
j .
Raw materials and stores, work in progress and
finished goods (including gold bullion), are
stated at the lower of cost and net realisable
value. Cost comprises direct materials, direct
labour and an appropriate proportion of variable
and fixed overhead expenditure, the latter being
allocated on the basis of normal operating
capacity. Costs are assigned to individual items
of inventory on the basis of weighted average
costs. Costs of purchased inventory are deter-
mined after deducting rebates and discounts.
Net realisable value is the estimated selling price
in the ordinary course of business less the
estimated costs of completion and the esti-
mated costs necessary to make the sale.
Stockpiles represent ore that has been extracted
and is available for further processing. If there is
significant uncertainty as to whether the stock-
piled ore will be processed it is expensed as
incurred. Where the future processing of this ore
can be predicted with confidence, e.g. because it
exceeds the mine’s cut-off grade, it is valued at
the lower of cost and net realisable value. If the
ore will not be processed within the 12 months
after the reporting date, it is included within
non-current assets. Work in progress inventory
includes ore stockpiles and other partly processed
material. Quantities are assessed primarily
through surveys and assays, and truck counts.
k . Non-derivative financial assets
Classification and recognition
The Group classifies its investments and other
financial assets in the following categories:
financial assets at fair value through profit or
loss, loans and receivables and available-for-sale
financial assets. The classification depends on
the purpose for which the investments were
acquired. The Group determines the classification
of its investments at initial recognition and, in
the case of assets classified as held-to-maturity,
re-evaluates this designation at each reporting
date.
Notes to the Financial Statementswww.kingsgate.com.au 55
The Group initially recognises loans and receiva-
bles and deposits on the date that they are
originated. All other financial assets (including
assets designated at fair value through profit or
loss) are recognised initially on the trade date at
which the Group becomes a party to the
contractual provisions of the instrument.
The Group derecognises a financial asset when
the contractual rights to the cash flows from the
asset expire, or it transfers the rights to receive
the contractual cash flows on the financial asset
in a transaction in which substantially all the
risks and rewards of ownership of the financial
assets are transferred.
Financial assets and liabilities are offset and the
net amount presented in the statement of
financial position when, and only when, the
Group has a legal right to offset the amounts
and intends either to settle on a net basis or to
realise the asset and settle the liability
simultaneously.
(i)
Financial assets at fair value through
profit or loss
Financial assets at fair value through profit or
loss are financial assets held for trading if
acquired principally for the purpose of selling in
the short- term. Derivatives are also categorised
as held for trading unless they are designated as
hedges.
Attributable transaction costs are recognised in
the profit or loss when incurred. Assets in this
category are classified as current assets if they
are expected to be settled within 12 months,
otherwise they are classified as non-current.
(ii)
Loans and receivables
Loans and receivables are non-derivative finan-
cial assets with fixed or determinable payments
that are not quoted in an active market. They
are included in current assets, except for those
with maturities greater than 12 months after
the reporting date which are classified as non-
current assets.
Loans and receivables are measured at amor-
tised cost using the effective interest method,
less any impairment losses.
(iii) Available-for-sale financial assets
Available-for-sale financial assets, comprising
principally marketable equity securities, are
non-derivative financial assets that are either
designated in this category or not classified in
any of the other categories. They are included in
non-current assets unless management intends
to dispose of the investment within 12 months
of the reporting date. Investments are desig-
nated as available-for-sale if they do not have
fixed maturities and fixed or determinable
payments and management intends to hold
them for the medium to long term.
Subsequent to initial recognition, available-for-
sale financial assets are measured at fair value
and changes therein, other than impairment
losses, are recognised as a separate component
of equity net of attributable tax. When an asset
is derecognised the cumulative gain or loss in
equity is transferred to the income statement.
Impairment
The Group assesses at each reporting date
whether there is objective evidence that a
financial asset or group of financial assets is
impaired. In the case of equity securities classi-
fied as available-for-sale, a significant or
prolonged decline in the fair value of a security
below its cost is considered as an indicator that
the securities are impaired. If any such evidence
exists for available-for-sale financial assets, the
cumulative loss measured as the difference
between the acquisition cost and the current
fair value, less any impairment loss on that
financial asset previously recognised in profit or
loss, is removed from equity and recognised in
the income statement. Impairment losses recog-
nised in the profit or loss on equity instruments
classified as available-for-sale are not reversed
through the income statement.
If there is evidence of impairment for any of the
Group’s financial assets carried at amortised
cost, the loss is measured as the difference
between the asset’s carrying amount and the
present value of estimated future cash flows,
excluding future credit losses that have not been
incurred. The cash flows are discounted at the
financial asset’s original effective interest rate.
The loss is recognised in the income statement.
l . Derivative financial instruments
Derivative financial instruments are used by the
Group to protect against the Group’s Australian
dollar gold price risk exposures. The Group does
not apply hedge accounting and accordingly all
fair value movements on derivative financial
instruments are recognised in the profit or loss.
Derivative financial instruments are stated at
fair value on the date a derivative contract is
entered into and are subsequently remeasured
to their fair value at each reporting date. The
resulting gain or loss is recognised in the income
statement immediately.
m . Property, plant and equipment
Property, plant and equipment are stated at
historical cost less depreciation. Historical cost
includes expenditure that is directly attributable
to the acquisition of the items.
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. The carrying
amount of any component accounted for as a
separate asset is derecognised when replaced.
All other repairs and maintenance are charged to
the income statement during the reporting
period in which they are incurred.
Depreciation
Depreciation and amortisation of mine build-
ings, plant, machinery and equipment is
provided over the assessed life of the relevant
mine or asset, whichever is the shorter.
Depreciation and amortisation is determined on
a units-of-production basis over the estimated
recoverable reserves from the related area. In
some circumstances, where conversion of
resources into reserves is expected, some
elements of resources may be included. For mine
plant, machinery and equipment, which have an
expected economic life shorter than the life of
the mine, a straight line basis is adopted.
The expected useful lives are as follows:
〉〉 mine buildings – the shorter of applicable
mine life and 25 years;
〉〉 plant, machinery and equipment – the
shorter of applicable mine life and 3–15
years depending on the nature of the asset.
The estimated recoverable reserves and life of
each mine and the remaining useful life of each
class of asset are reassessed at least annually.
Where there is a change in the reserves during
the period, depreciation and amortisation rates
are adjusted prospectively from the beginning of
the reporting period.
Major spares purchased specifically for a
particular plant are capitalised and depreciated on
the same basis as the plant to which they relate.
Impairment
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 (Note 2g).
Notes to the Financial StatementsNotes to the Financial Statementscontinuedu 56
m . Property, plant and equipment continued
Derecognition
An item of property, plant and equipment is
derecognised upon disposal or when no future
economic benefits are expected to arise from
the continued use of the asset.
Any gain or loss arising on derecognition of the
asset (calculated as the difference between the
net disposal proceeds and the carrying amount
of the item) is included in the profit or loss in the
period the item is derecognised.
n . Deferred stripping costs
As part of its mining operations, the Group
incurs stripping (waste removal) costs both
during the development phase and production
phase of its operations.
Stripping costs incurred during the production
phase are generally considered to create two
benefits, being either the production of inven-
tory in the period or improved access to the ore
to be mined in the future. Where the benefits
are realised in the form of inventory produced in
the period, the production stripping costs are
accounted for as part of the cost of producing
those inventories. Where production stripping
costs are incurred and the benefit is improved
access to the ore to be mined in the future, the
costs are recognised as a non-current asset,
referred to as a “production stripping asset”,
if the following criteria are all met:
〉〉
Future economic benefits (being improved
access to the ore body) associated with the
stripping activity are probable;
〉〉
〉〉
The component of the ore body for which
access has been improved can be accurately
identified; and
The costs associated with the stripping
activity associated with that component can
be reliably measured.
The amount of stripping costs deferred is based
on the ratio obtained by dividing the volume of
waste mined by the volume of ore mined for
each component of the mine. Stripping costs
incurred in the period are deferred to the extent
that the actual current period waste to ore ratio
exceeds the life of component expected waste
to ore (“life of component”) ratio.
A component is defined as a specific volume of
the ore body that is made more accessible by the
stripping activity. An identified component of
the ore body is typically a subset of the total ore
body of the mine. It is considered that each mine
may have several components, which are identi-
fied based on the mine plan. The mine plans and
therefore the identification of specific compo-
nents will vary between mines as a result of both
the geological characteristics and location of
the ore body. The financial considerations of the
mining operations may also impact the identifi-
cation and designation of a component.
The identification of components is necessary
for both the measurement of costs at the initial
recognition of the production stripping asset,
and the subsequent depreciation of the produc-
tion stripping asset.
The life of component ratio is a function of an
individual mine’s design and therefore changes
to that design will generally result in changes to
the ratio. Changes in other technical or economic
parameters that impact reserves will also have an
impact on the life of component ratio even if
they do not affect the mine’s design. Changes to
the life of component ratio are accounted for
prospectively from the date of change.
The production stripping asset is initially
measured at cost, which is the accumulation of
costs directly incurred to perform the stripping
activity that improves access to the identified
component of ore. If incidental operations are
occurring at the same time as the production
stripping activity, but are not necessary for the
production stripping activity to continue as
planned, these costs are not included in the cost
of the stripping activity asset.
The production stripping asset is amortised over
the expected useful life of the identified compo-
nent of the ore body that is made more accessible
by the activity, on a units of production basis.
Economically recoverable reserves are used to
determine the expected useful life of the identi-
fied component of the ore body. The production
stripping asset is then carried at cost less accu-
mulated amortisation and any impairment losses.
The production stripping asset is included in
“Exploration, Evaluation and Development”.
These costs form part of the total investment in
the relevant cash generating unit to which they
relate, which is reviewed for impairment in
accordance with the Group’s impairment
accounting policy (Note 2g).
o . Deferred mining services costs
Provisions to the group of mining services by its
contractor do not systematically align with the
billing made by the contractor employed for
these services. When there is a material differ-
ence between the provisions of the mining
services and the amount paid for these services,
a portion of the billing is deferred on the state-
ment of financial position. These amounts are
subsequently recognised in the profit or loss.
Mining services are recognised in the profit or
loss on a systematic basis based on bank cubic
metres mined by the contractor.
p .
Exploration, evaluation and
feasibility expenditure
Exploration and evaluation expenditure
Exploration and evaluation expenditure incurred
by, or on behalf of the Group is accumulated
separately for each area of interest. Such
expenditure comprises direct costs and depre-
ciation and does not include general overheads
or administrative expenditure not having a
specific nexus with a particular area of interest.
Exploration expenditure for each area of interest
is carried forward as an asset provided the rights
to tenure of the area of interest are current and
one of the following conditions is met:
〉〉
the exploration and evaluation expenditures
are expected to be recouped through
successful development and exploitation of
the area of interest, or alternatively by its
sale, or;
〉〉
exploration and evaluation activities in the
area of interest have not at the reporting
date reached a stage which permits a reason-
able assessment of the existence or other-
wise of economically recoverable reserves,
and active and significant operations in, or in
relation to, the area of interest are
continuing.
Exploration expenditure is written off when it
fails to meet at least one of the conditions
outlined above or an area of interest is aban-
doned. The carrying value of exploration and
evaluation assets is assessed in accordance with
AASB 6 Exploration for and Evaluation of Mineral
Resources and the Group’s impairment policy
(Note 2g).
Feasibility expenditure
Feasibility expenditure represents costs related
to the preparation and completion of a feasi-
bility study to enable a development decision to
be made in relation to an area of interest and
capitalised as incurred.
At the commencement of production; all past
exploration, evaluation and feasibility expendi-
ture in respect of an area of interest that has
been capitalised is transferred to mine proper-
ties where it is amortised over the life of the area
of interest to which it relates on a unit-of-
production basis.
q . Mine properties
Mine properties represents the accumulated
exploration, evaluation, land and development
expenditure incurred by or on behalf of the
Group in relation to areas of interest in which
mining of a mineral resource has commenced.
Notes to the Financial Statementswww.kingsgate.com.au 57
When further development expenditure is
incurred in respect of a mine property after
commencement of production, such expenditure
is carried forward as part of the mine property
only when substantial future economic benefits
are thereby established. Otherwise, such expend-
iture is classified as part of the cost of
production.
Amortisation of costs is provided on the units-of-
production method with separate calculations
being made for each component. The units-of-
production basis results in an amortisation charge
proportional to the depletion of the estimated
recoverable reserves. In some circumstances,
where conversion of resources into reserves is
expected, some elements of resources may be
included. Development and land expenditure still
to be incurred in relation to the current recover-
able reserves are included in the amortisation
calculation. Where the life of the assets is shorter
than the mine life, their costs are amortised based
on the useful life of the assets.
The estimated recoverable reserves and life of
each mine and the remaining useful life of each
class of asset are reassessed at least annually.
Where there is a change in the reserves during a
six month period, depreciation and amortisation
rates are adjusted prospectively from the begin-
ning of that reporting period.
Investment in associates
r .
Investments in associates are accounted for using
the equity method. An associate is an entity in
which the Group has significant influence.
Under the equity method, the investment in the
associate is carried on the statement of financial
position at cost plus post-acquisition changes in
the Group’s share of net assets of the associate.
The income statement reflects the Group’s share
of the results of operations of the associate. The
Group recognises its share of any changes and
discloses this when applicable, in the statement
of changes of equity. Unrealised gains and losses
resulting from transactions between the Group
and the associate are eliminated to the extent of
the interest in the associate.
The Group’s share of profit of an associate is
included in the income statement. This is the
profit attributable to equity holders of the
associate and therefore, is profit after tax and
non-controlling interests in the subsidiaries of
the associate. After application of the equity
method, the Group determines whether it is
necessary to recognise an additional impairment
loss on its investment in its associate. The Group
determines at each reporting date whether
there is any objective evidence that the invest-
ment in the associate is impaired. If this is the
case, the Group calculates the amount of the
impairment as the difference between the
recoverable amount of the associate and its
carrying value and recognises the amount in the
income statement.
Upon loss of significant influence over the asso-
ciate, the Group measures and recognises any
remaining investment at its fair value. Any differ-
ence between the carrying amount of the asso-
ciate upon loss of significant influence and the
fair value of the retained investment and proceeds
from disposal is recognised in profit or loss.
s . Trade and other payables
Trade and other payables represent liabilities for
goods and services provided to the Group prior
to the end of financial year which are unpaid. The
amounts are unsecured and are usually paid
within 30 days of recognition.
t . Borrowings
Borrowings are initially recognised at fair value,
net of transaction costs incurred. Borrowings
are subsequently measured at amortised cost.
Any difference between the proceeds (net of
transaction costs) and the redemption amount
is recognised in the profit or loss over the period
of the borrowings using the effective interest
method. Fees paid on the establishment of loan
facilities are recognised as transaction costs to
the extent that it is probable that some or all of
the facility will be drawn down. In this case, the
fee is deferred until the draw down occurs. To
the extent there is no evidence that it is
probable that some or all of the facility will be
drawn down, the fee is capitalised and amor-
tised over the period of the facility to which it
relates.
Preference shares which are mandatorily
redeemable on a specific date are classified as
liabilities. The dividends on these preference
shares are recognised in the profit or loss as
finance costs.
Borrowings are removed from the statement of
financial position when the obligation specified
in the contract is discharged, cancelled or
expired. The difference between the carrying
amount of a financial liability that has been
extinguished or transferred to another party and
the consideration paid, including any non-cash
assets transferred or liabilities assumed, is
recognised in other income or finance costs.
Borrowings are classified as current liabilities
unless the Group has an unconditional right to
defer settlement of the liability for at least 12
months after the reporting date.
u . Borrowing costs
Borrowing costs directly attributable to the
acquisition, construction or production of
qualifying assets are added to the cost of those
assets, until such time as the assets are substan-
tially ready for their intended use.
Where the funds used to finance a qualifying
asset form part of general borrowings, the
amount capitalised is calculated using a weighted
average of rates applicable to the relevant
borrowings during the period. Where funds
borrowed are directly attributable to a qualifying
asset, the amount capitalised represents the
borrowing costs specific to those borrowings.
All other borrowing costs are recognised as
expenses in the period in which they are incurred.
v . Provisions
Provisions for legal claims are recognised when
the Group has a present legal or constructive
obligation as a result of past events, it is
probable that an outflow of resources will be
required to settle the obligation and the amount
has been reliably estimated. Provisions are not
recognised for future operating losses.
Where there are a number of similar obligations,
the likelihood that an outflow will be required in
settlement is determined by considering the
class of obligations as a whole. A provision is
recognised even if the likelihood of an outflow
with respect to any one item included in the
same class of obligations may be small.
Provisions are measured at the present value of
management’s best estimate of the expenditure
required to settle the present obligation at the
reporting date. The discount rate used to deter-
mine the present value reflects current market
assessments of the time value of money and the
risks specific to the liability. The increase in the
provision due to the passage of time is recog-
nised as finance costs.
w .
Restoration and rehabilitation
provision
The estimated costs of decommissioning and
removing an asset and restoring the site are
included in the cost of the asset as at the date
the obligation first arises and to the extent that
it is first recognised as a provision. This restora-
tion asset is subsequently amortised on a units-
of-production basis.
The corresponding provision of an amount equiv-
alent to the restoration asset created is reviewed
at the end of each reporting period. The provision
is measured at the best estimate of the present
value amount required to settle the present
obligation at the end of the reporting period
Notes to the Financial StatementsNotes to the Financial Statementscontinuedu 58
w .
Restoration and rehabilitation provision continued
based on current legal and other requirements
and technology, discounted where material using
national government bond rates at the reporting
date with terms to maturity and currencies that
match, as closely as possible, the estimated
future cash outflows.
Where there is a change in the expected restora-
tion, rehabilitation or decommissioning costs, an
adjustment is recorded against the carrying
value of the provision and any related restoration
asset, and the effects are recognised in the
income statement on a prospective basis over
the remaining life of the operation.
The unwinding of the effect of discounting on
the rehabilitation provision is included within
finance costs in the income statement.
Costs incurred that relate to an existing condition
caused by past operations, but do not have a
future economic benefit are expensed as incurred.
x . Employee benefits
(i)
Wages and salaries, annual leave
and sick leave
Liabilities for wages and salaries (including non-
monetary benefits and annual leave) expected to
be settled within 12 months of the reporting
date are recognised in provisions for employee
benefits in respect of employees’ services up to
the reporting date and are measured at the
amounts expected to be paid when the liabilities
are settled. Liabilities for sick leave are recog-
nised when the leave is taken and are measured
at the rates paid or payable.
(ii)
Long service leave and severance pay
The liability for long service leave and severance
pay is recognised in the provision for employee
benefits and measured as the present value
of expected future payments to be made in
respect of services provided by employees up
to the reporting date. Consideration is given
to the expected future wage and salary levels,
experience of employee departures and periods
of service. Expected future payments are
discounted using market yields at the reporting
date on national government bonds with terms
to maturity and currency that match, as closely
as possible, the estimated future cash outflows.
(iii) Cash bonuses
Cash bonuses are expensed in the income state-
ment at reporting date.
A liability is recognised for the amount expected
to be paid if the Group has a present legal or
constructive obligation to pay this amount as a
result of past service provided by the Directors or
employees and the obligation can be estimated
reliably.
(iv) Retirement benefit obligations
Defined Contribution plan
Contributions to defined contribution superan-
nuation plans are recognised as an expense in
the income statement as they become payable.
Defined benefit plan
The Company’s Thai subsidiary, Akara Resources
Public Company Limited, have a defined benefit
plan which is the amount of pension benefit that
an employee will receive on retirement, usually
dependent on one or more factors such as age,
years of service and compensation.
Retirement benefit
Under Labour laws applicable in Thailand and
Group’s employment policy, all employees
completing 120 days of service are entitled to
severance pay on termination or retrenchment
without cause or upon retirement age of 60. The
severance pay will be at the rate according to
number of years of service as stipulated in the
Labor Law which is currently at a maximum rate
of 300 days of final salary.
The liability recognised in the statement of
financial position in respect of defined benefit
pension plans is the present value of the defined
benefit obligation at the end of the reporting
period, together with adjustments for unrecog-
nised past-service costs. The defined benefit
obligation is calculated annually by independent
actuaries using the projected unit credit method.
The present value of the defined benefit obliga-
tion is determined by discounting the estimated
future cash outflows using market yield of
government bonds that are denominated in the
currency in which the benefits will be paid, and
that have terms to maturity approximating to
the terms of the related pension liability.
Actuarial gains and losses arising from experi-
ence adjustments and changes in actuarial
assumptions are charged or credited to equity
in other comprehensive income in the period in
which they arise.
Past-service costs are recognised immediately in
profit or loss, unless the changes to the pension
plan are conditional on the employees remaining
in service for a specified period of time (the
vesting period). In this case, the past-service
costs are amortised on a straight-line basis over
the vesting period.
Other long-term benefits – Gold
The Company’s Thai subsidiary, Akara Resources
Public Company Limited, has a policy to give
gold to employees who have worked for the
Company for 10 years, 15 years and 20 years, in
the amounts of Baht 0.5, Baht 1 and Baht 1.5
respectively.
The liability recognised in the statement of
financial position in respect of other long-term
benefit plan is the present value of the other
long-term benefit obligation at the end of the
reporting period, together with adjustments
for unrecognised past-service costs. The other
long-term benefit obligation is calculated
annually by independent actuaries using the
projected unit credit method. The present value
of the other long-term benefit obligation is
determined by discounting the estimated future
cash outflows using market yield of government
bonds that are denominated in the currency in
which the benefits will be paid, and that have
terms to maturity approximating to the terms of
the related pension liability.
Actuarial gains and losses arising from experi-
ence adjustments and changes in actuarial
assumptions are charged or credited to the
statement of comprehensive income in the
period in which they arise.
Past-service costs are recognised immediately in
profit or loss.
(v) Share-based payment transactions
The Group provides benefits to employees
(including Directors) in the form of share-based
payments, whereby employees render services
in exchange for shares or rights over shares
(“equity settled transactions”).
The fair value of these equity settled transac-
tions is recognised as an employee benefit
expense with a corresponding increase in equity.
The fair value is measured at grant date and
recognised over the period during which the
employees become unconditionally entitled.
The fair value at grant date is determined using
pricing model that takes into account the
exercise price, the term, the share price at the
grant date, the expected price volatility of the
underlying share, the expected dividend yield
and the risk free interest rate.
Upon the exercise of the equity settled reward,
the related balance of the share-based payments
reserve is transferred to share capital.
y . Dividends
Dividends are recognised as a liability in the
period in which they are declared.
Notes to the Financial Statementswww.kingsgate.com.au 59
z . Earnings per share
Basic earnings per share
(i)
Basic earnings per share is calculated by
dividing:
〉〉
the profit attributable to owners of the
Company, excluding any costs of servicing
equity other than ordinary shares; and
〉〉 by the weighted average number of ordinary
shares outstanding during the financial year,
adjusted for bonus elements in ordinary
shares issued during the year and excluding
treasury shares.
(ii) 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 additional
ordinary shares that would have been
outstanding assuming the conversion of all
dilutive potential ordinary shares.
aa . Contributed equity
Issued ordinary share capital is classified as
equity and is recognised at the fair value of the
consideration received by the Group. Incremental
costs directly attributable to the issue of shares
and share options are recognised as a deduction,
net of tax from the proceeds.
bb . Goods and Services Tax (GST)
Revenues, expenses and assets are recognised
net of the amount of associated GST, unless the
GST incurred is not recoverable from the
taxation authority. In this case it is recognised
as part of the cost of acquisition of the asset or
as part of the expense.
Receivables and payables are stated inclusive of
the amount of GST receivable or payable. The
net amount of GST recoverable from or payable
to, the taxation authority is included with other
receivables or payables in the statement of
financial position.
Cash flows are presented on a gross basis. The
GST components of the cash flows arising from
investing or financing activities which are recov-
erable from, or payable to the taxation authority,
are presented as operating cash flows.
Commitments and contingencies are disclosed
net of the amount of GST recoverable from, or
payable to, the taxation authority.
cc . Operating segment reporting
Operating segments are reported in a manner
consistent with the internal reporting provided
to the chief operating decision maker. The chief
operating decision maker, who is responsible for
allocating resources and assessing performance
of the operating segments, has been identified
as the Board of Directors.
Segment results that are reported to the Board
of Directors include items directly attributable
to a segment as well as those that can be allo-
cated on a reasonable basis. The operating
segments are disclosed in Note 4.
dd . New accounting standards and
interpretations
(i)
New and amended standards adopted
by the Group
The Group has adopted the following new and
revised accounting standards, amendments and
interpretations as of 1 July 2014:
〉〉 AASB 132 – Financial Instruments Presenta-
tion – Offsetting Financial Assets and
Liabilities
〉〉 AASB 136 – Impairment of Assets – Recover-
able Amount Disclosures for Non-Financial
Assets
〉〉
〉〉
classification and measurement of financial
assets and financial liabilities;
expected credit loss impairment model; and
〉〉 hedge accounting.
Financial assets are measured at amortised cost,
fair value through profit or loss, or fair value
through other comprehensive income, based on
both the entity’s business model for managing
the financial assets and the financial asset’s
contractual cash flow characteristics.
Apart from the ‘own credit risk’ requirements,
classification and measurement of financial
liabilities is unchanged from existing
requirements.
When adopted, the standard will affect in
particular the Group’s accounting for its avail-
able-for-sale financial assets, since AASB 9 only
permits the recognition of fair value gains and
losses in other comprehensive income if they
relate to equity investments that are not held
for trading.
There will be no impact on the Group’s
accounting for financial liabilities, as the new
requirements only affect the accounting for
financial liabilities that are designated at fair
value through profit or loss and the Group does
not have any such liabilities.
〉〉
Interpretation 21 – Levies
The application date for the Group is 1 July 2018.
The adoption of these new and revised stand-
ards did not have a material impact on the
Group’s financial statements.
(ii)
New accounting standards and
interpretations not yet adopted
The Group has not elected to early adopt any
new standards, amendments or interpretations
that are issued but are not yet effective. Certain
new accounting standards and interpretations
have been published that are not mandatory for
30 June 2015 reporting periods and have not yet
been applied in the financial statements. The
Group’s assessment of the impact of these new
standards and interpretations is set out below:
〉〉 AASB9 Financial Instruments and AASB
2010-7 and AASB 2012-6 Amendments to
AAS’s arising from AASB 9
AASB 9 includes requirements for the classifica-
tion and measurement of financial assets. It was
further amended by AASB 2010-7 to reflect
amendments to the accounting treatment of
financial liabilities.
The revised IFRS 9 will eventually replace AASB
139 and all previous versions of IFRS 9. The
revised standard includes changes to the:
〉〉
IFRS 15 Revenue from Contracts with
Customers (effective from 1 July 2017)
IFRS 15 establishes principles for reporting
useful information to users of financial state-
ments about the nature, amount, timing and
uncertainty of revenue and cash flows arising
from an entity’s contracts with customers.
IFRS 15 supersedes:
a) IAS 11 Construction Contracts
b) IAS 18 Revenue
The core principle of IFRS 15 is that an entity
recognises revenue to depict the transfer of
promised goods or services to customers in an
amount that reflects the consideration to which
the entity expects to be entitled in exchange for
those goods or services. An entity recognises
revenue in accordance with that core principle
by applying the following steps:
Step 1:
Identify the contract(s) with a customer.
Step 2:
Identify the performance obligations in
the contract.
Step 3: Determine the transaction price.
Step 4: Allocate the transaction price to the
performance obligations in the contract.
Step 5: Recognise revenue when (or as) the
entity satisfies a performance
obligation.
Notes to the Financial StatementsNotes to the Financial Statementscontinuedu 60
The Group does not expect the adoption of this
standard to have a significant impact as gold
and silver sales are only made with reputable
institutions using a market price and on rela-
tively short trading terms.
ee . Parent entity financial information
The financial information for the parent entity
Kingsgate Consolidated Limited, disclosed in
Note 33 has been prepared on the same basis as
the consolidated financial statements except as
set out below:
Investments in subsidiaries
Investments in subsidiaries are accounted for at
cost in the financial statements of Kingsgate.
Share-based payments
The issue by the Company of equity instruments
to extinguish liabilities of a subsidiary under-
taking in the Group is treated as a capital contri-
bution to that subsidiary undertaking.
3. Critical accounting
estimates, assumptions
and judgements
Estimates and judgements are continually
evaluated and are based on historical experience
and other factors, including expectation of
future events that may have a financial impact
on the Group and that are believed to be reason-
able under the circumstances. The Group makes
estimates and assumptions concerning the
future. Actual results may differ from these
estimates under different assumptions and
conditions. The estimates and assumptions that
could materially affect the financial position and
results are discussed below:
(i)
Mineral resources and ore reserves
estimates
The Group determines and reports ore reserves
under the Australian Code for Reporting of
Mineral Resources and Ore Reserves December
2012, known as the JORC Code. The information
on mineral resources and ore reserves was
prepared by or under the supervision of Compe-
tent Persons as defined in the JORC Code.
There are numerous uncertainties inherent in
estimating mineral resources and reserves and
assumptions that are valid at the time of estima-
tion may change significantly when new infor-
mation becomes available.
Changes in reported ore reserves may affect the
Group’s financial position and results, including
asset carrying value, depreciation and
amortisation expenses using units-of-produc-
tion method, provision for restoration and
rehabilitation and deferred stripping costs if the
life of component ratios are revised.
(ii) Exploration and evaluation assets
Exploration and evaluation expenditure for each
area of interest is carried forward as an asset
provided certain conditions are met (Note 2p).
Exploration and evaluation assets are assessed
for impairment when facts and circumstances
suggest that the carrying amount of an
exploration and evaluation asset may exceed
its recoverable amount. These calculations and
reviews require the use of assumptions and
judgement. The related carrying amounts are
disclosed in Note 13.
Production stripping
The Group defers mining costs incurred during
the production stage of its operations which are
calculated in accordance with accounting policy
Note 2n. Changes in an individual mine’s design
will generally result in changes to the life of
component waste to ore (life of component)
ratio. Changes in other technical or economic
parameters that impact reserves will also have
an impact on the life of component ratio even if
they do not affect the mine’s design. Changes to
deferred stripping resulting from a change in life
of component ratios are accounted for
prospectively.
(iii) Impairment of assets
The Group assesses each cash-generating unit
half-yearly, to determine whether there is an
indication of impairment. Where an indicator of
impairment exists, a formal estimate of the
recoverable amount is made, which is deemed as
being the higher of the fair value less costs of
disposal and value in use calculated in accord-
ance with accounting policy Note 2g.
In the current period fair value less costs of
disposal has been used. These assumptions
require the use of estimates and assumptions
such as discount rates (2015: post tax real rates
of 9.3% to 9.9%), exchange rates (2015: balance
date spot rate), commodity prices (2015: gold
US$1,170/oz–US$1,200/oz and silver US$16/
oz–US$22.5/oz), future operating development
and sustaining capital requirements, mineral
resources and reserves and operating perfor-
mance (including the magnitude and time of
related cash flows). For details of impairment
assessment for the current year, refer to Note 14.
(iv) Restoration and rehabilitation
provision
Significant judgement is required in determining
the restoration and rehabilitation provision as
there are many transactions and factors that will
affect the ultimate liability payable to rehabili-
tate the mine site. Factors that will affect this
liability include change in mineral resources and
reserves estimates, changes in technology,
commodity price changes and changes in
interest rates.
A change in any, or a combination of, the key
assumptions used to determine the provisions
could have a material impact on the carrying
value of the provisions (see Note 18). The provi-
sion recognised for each site is reviewed at each
reporting date and updated based on the facts
and circumstances available at the time. Changes
to the estimated future costs for operating sites
are recognised in the statement of financial
position by adjusting both the restoration and
rehabilitation asset and provision.
(v) Units-of-production method
of depreciation
The Group applies the units-of-production
method for depreciation and amortisation of its
mine properties, mine buildings, plant and equip-
ment. These calculations require the use of esti-
mates and assumptions and significant
judgement is required in assessing the estimated
recoverable reserves used in the determination of
the depreciation and amortisation charges.
Factors that must be considered in determining
estimated recoverable reserves (which includes
both reserves and resources) and production
capacity are the history of converting resources
to reserves and the relevant time frames, antici-
pated mining method and costs, the complexity
of metallurgy, markets, and future developments.
Revision of estimated recoverable reserves
and resource
Estimated recoverable reserves and resource are
used as a basis for depreciating assets on a unit
of production basis. During the year the esti-
mated recoverable reserves and resource at
Chatree were revised. The net effect of this
change in the current financial year was an
increase in depreciation expense of $1,632,000.
Assuming no subsequent change to estimated
recoverable reserves and resource it is estimated
that future depreciation expense would increase
by between $4,000,000 and $6,250,000 per
annum until the end of the mine life.
Notes to the Financial Statementswww.kingsgate.com.au 61
4. Segment information
The Group’s operating segments are based on
the internal management reports that are
reviewed and used by the Board of Directors
(chief operating decision maker). The operating
segments represent the Group’s operating
mines and projects and include the following:
〉〉 Chatree Mine, Thailand;
〉〉 Challenger Mine, South Australia, Australia;
〉〉 Bowdens Silver Project, New South Wales,
Australia;
〉〉 Nueva Esperanza Gold/Silver Project, Chile;
and
〉〉
Exploration, South East Asia.
Information regarding the results of each report-
able segment is included as follows:
Operations
Development
Exploration
Corporate
Total Group
(vi) Share-based payments
The Group measures share-based payments at fair
value at the grant date. The fair value is deter-
mined by an external valuer using a Monte Carlo
simulation model or other valuation technique
appropriate for the instrument being valued.
(vii) Deferred tax balances
Deferred tax assets in respect of tax losses for
the Kingsgate tax-consolidation group (Note 6)
are not recognised in the financial statements as
management considers that it is currently not
probable that future taxable profits will be avail-
able to utilise those tax losses. Management
reviews on a regular basis the future profitability
of the entities included in the tax-consolidation
group to consider if tax losses should be recog-
nised and to ensure that any tax losses recog-
nised will be utilised.
Deferred tax balances for temporary differences
in respect of Akara Resources Public Company
Limited are measured based on their expected
rate of reversal which is different for the two
Royal Thai Board of Investment (“BOI”) activities
(Note 6).
2015
External sales revenue
Other income
Finance income
Finance costs
Net finance costs
Loss before tax
Other segment information
Segment assets
Segment liabilities
Chatree
$’000
Challenger
$’000
Bowdens
$’000
Nueva
Esperanza
$’000
194,809
118,353
648
9
Total segment revenue
195,457
118,362
Segment EBITDA
Impairment
Depreciation and amortisation
70,581
(115,650)
(49,354)
14,346
–
(22,643)
(4,378)
–
Profit/(loss) before finance cost and
income tax
(94,423)
9,968
(22,643)
–
–
–
–
–
–
–
–
–
–
–
$’000
$’000
$’000
–
–
–
–
157
157
(1,313)
(9,888)
–
(13,606)1
–
(218)
313,162
814
313,976
70,008
(148,181)
(53,950)
(11,201)
(13,824)
(132,123)
859
(15,178)
(14,319)
(146,442)
386,243
(163,666)
20,771
(19,576)
8,650
(114)
96,234
(6,419)
2,956
(770)
30,156
(28,769)
545,010
(219,314)
1 Includes foreign exchange gain of $2,699,000 for the Group.
Notes to the Financial StatementsNotes to the Financial Statementscontinuedu 62
4. Segment information continued
Operations
Development
Exploration
Corporate
Total Group
2014 Restated
External sales revenue
Other income
Chatree
$’000
221,968
483
106,358
1,292
Total segment revenue
222,451
107,650
Challenger
$’000
Bowdens
$’000
Nueva
Esperanza
$’000
Segment EBITDA
Impairment
85,489
(1,644)
–
–
(84,586)
Depreciation and amortisation
(43,048)
(15,799)
–
–
–
–
–
$’000
$’000
$’000
–
–
–
–
980
980
(210)
(2,112)
–
(19,428)1
–
(139)
328,326
2,755
331,081
64,207
(86,698)
(58,986)
–
–
–
–
–
–
Profit/(loss) before finance cost and
income tax
42,441
(17,443)
(84,586)
–
(2,322)
(19,567)
(81,477)
Finance income
Finance costs
Net finance costs
Loss before tax
Other segment information
Segment assets
Segment liabilities
610
(13,860)
(13,250)
(94,727)
477,491
(160,930)
29,162
(23,444)
30,483
(350)
69,229
(4,462)
3,305
(1,240)
31,425
(39,996)
641,095
(230,422)
1 Includes foreign exchange gain of $2,595,000 for the Group.
Customer A
Customer B
5. Revenue and expenses
a) Sales revenue
Gold sales
Silver sales
Total sales revenue
Revenue
% of External Revenue
2015
$’000
194,809
118,353
2014
$’000
221,968
106,358
2015
%
62
38
2014
%
68
32
2015
$’000
2014
$’000
296,304
16,858
305,163
23,163
313,162
328,326
Notes to the Financial Statementswww.kingsgate.com.au 63
2015
$’000
2014
$’000
194,906
19,445
10,274
53,732
215,447
22,773
6,146
58,847
278,357
303,213
13,825
191
1,261
2,649
218
18,144
(2,691)
–
120
694
(1,877)
115,650
22,643
9,888
148,181
9,830
2,419
1,104
1,825
–
15,304
4,246
1,426
2,851
139
23,966
1,175
(369)
(284)
1,580
2,102
–
84,586
2,112
86,698
10,745
3,107
1,137
1,056
(2,185)
15,178
13,860
b) Cost of sales
Direct costs of mining and processing
Royalties
Inventory movements
Depreciation (operations)
Total cost of sales
c) Corporate and administration expenses
Administration
Divestment transaction costs
Technical support and business development
Statutory and professional fees
Depreciation
Total corporate and administration expenses
d) Other income and expenses
Realised (loss)/gain on delivery against hedge contracts
Change in fair value of undesignated gold contracts held for trading
Change in fair value of available-for-sale assets
Other revenue
Total other income and expenses
e)
Impairment
Chatree Gold Mine
Bowdens Silver Project
Exploration assets
Total impairment
f) Finance costs
Interest and finance charges
Foreign exchange loss on loans
Unwinding of discount
Amortisation of deferred borrowing costs
Less: borrowing costs capitalised
Total finance costs
Notes to the Financial StatementsNotes to the Financial Statementscontinuedu 64
5. Revenue and expenses continued
g) Depreciation and amortisation
Property, plant and equipment
Mine properties
Less: Depreciation capitalised
Total depreciation and amortisation expenses
Included in:
Costs of sales depreciation
Corporate depreciation
h) Employee benefits expenses
Included in:
Cost of sales
Corporate and administration expenses
Total employee benefits expenses
i) Other items
Operating lease rentals
Total other items
j) Significant items
Impairment of Chatree Gold Mine
Impairment of Bowdens Silver Project
Impairment of capitalised exploration
Total significant items (pre-tax)
6. Income tax
a)
Income tax expense
Current tax
Deferred tax
Income tax expense
Deferred tax expense/(benefit) included in tax expense comprises:
Increase in deferred tax assets
Increase in deferred tax liabilities
Deferred tax
2015
$’000
2014
$’000
15,652
38,878
(580)
53,950
53,732
218
20,386
8,503
28,889
583
583
115,650
22,643
9,888
148,181
18,337
40,961
(312)
58,986
58,847
139
22,949
11,694
34,643
625
625
–
84,586
2,112
86,698
2015
$’000
2014
$’000
(704)
1,355
651
(11,196)
12,551
1,355
2,858
28
2,886
(3,320)
3,348
28
Notes to the Financial Statementswww.kingsgate.com.au 65
2015
$’000
2014
*Restated
$’000
(146,442)
(43,933)
(94,727)
(28,418)
1,037
1,762
361
123
34
(1,968)
57
–
33,419
6,793
2,966
–
651
1,606
1,433
322
134
124
(9,087)
398
(19)
–
25,376
–
11,017
2,886
b) Numerical reconciliation of income tax expense to prima facie tax payable
Loss from continuing operations before income tax
Tax at Australian rate of 30%
Tax effect of amounts not deductible/assessable in calculating taxable income
Non-deductible expenses
Non-deductible amortisation
Non-deductible interest expense to preference shareholders
Share-based payment remuneration
Share of loss of associate
Difference in Thailand tax rates
Non-temporary differences affecting the tax expense
Prior year adjustment to tax return
Tax losses and deductible temporary differences not brought to account:
impairment of Chatree Gold Mine
impairment of Bowdens Silver Project
impairment of exploration
tax benefit of tax losses
Income tax expense
Kingsgate’s Thai controlled entity Akara
Resources Public Company Limited (“Akara”)
received on 18 June 2010 approval from The Royal
Thai Board of Investment (“BOI”) for promotion
of the Chatree North gold processing plant.
Based on annual production limit from the new
processing plant of 185,200 ounces of gold and
1,080,400 ounces of silver, Akara is entitled to:
a. an eight year tax holiday on income derived
from the new processing plant with tax
savings limited to the capital cost of the new
treatment plant;
b. 25% investment allowance on the capital
cost of certain assets of the new processing
plant; and
c. other benefits.
The start of the promotion period was
1 November 2012.
Akara had previously received BOI approval for
the promotion of the Chatree Mine with an eight
year tax holiday and a further five years half tax
holiday commencing in November 2001. Both of
these tax benefits have now expired.
c) Tax recognised in other comprehensive income
Foreign exchange losses recognised directly in foreign currency translation reserves
Total tax recognised in other comprehensive income
d) Deferred tax liabilities offset
Deferred tax liabilities amounting to $1,573,000 (2014: $298,000) have been offset against deferred tax assets.
e) Unrecognised deferred tax assets
Tax losses – Australian entities
Tax losses – other entities
Temporary difference
Subtotal
Unrecognised deferred tax assets
2015
$’000
2014
$’000
–
–
–
–
277,098
1,443
38,293
250,948
2,360
112,983
316,834
366,291
95,0501
109,651
1 Amount excludes potential deductible temporary differences in respect of Akara for $3,639,000 arising from an impairment charge recognised during the year.
It is not probable that there will be sufficient future assessable income available against which this deferred tax asset could be unitised.
Notes to the Financial StatementsNotes to the Financial Statementscontinuedu 66
6. Income tax continued
As at 30 June 2015 Akara has undistributed
earnings of $320,916,000 which, if paid out as
dividends, would be subject to withholding tax
in the hands of its Australian parent entity.
f) Tax consolidation group
Kingsgate Consolidated Limited and its wholly-
owned Australian subsidiary have implemented
the tax consolidation legislation as of 1 July 2003.
The accounting policy in relation to this legisla-
tion is set out in Note 2d.
On adoption of the tax consolidation legislation,
the entities in the tax-consolidation group
entered into a tax sharing agreement which, in
the opinion of the Directors, limits the joint and
several liabilities of the wholly-owned entities in
the case of default by the head entity, Kingsgate
Consolidated Limited.
The entities have also entered into a tax funding
agreement under which the wholly-owned entities
fully compensate Kingsgate for any current tax
payable assumed and are compensated for any
current tax receivable and deferred assets relating
to the unused tax losses or unused tax credits
that are transferred to Kingsgate under the tax
legislation. The funding amounts are determined
by reference to the amounts recognised in the
wholly-owned entities’ financial statements.
The amount receivable / payable under the tax
funding agreement are due upon receipt of the
funding advice from the head entity, which is
issued as soon as practicable after the end of each
financial year. The head entity may also require
payment of interim funding amounts to assist
with its obligations to pay tax instalments.
g)
Recognised deferred tax assets
and liabilities
2015
$’000
2014
$’000
2015
$’000
2014
$’000
2015
$’000
2014
$’000
Assets
Liabilities
Net
Deferred tax assets/(liabilities):
Derivatives
Employee benefits
Provision for restoration and rehabilitation
Provision for obsolescence
Unrealised exchange (gains)/losses
Other items
Available-for-sale financial assets
Mine properties and exploration
Total deferred tax assets/(liabilities)
Set off tax
Net deferred tax assets/(liabilities)
Deferred tax assets/(liabilities) expected to be recovered
within 12 months
Deferred tax assets/(liabilities) expected to be recovered
after more than 12 months
–
1,009
2,368
–
5,198
472
417
189
1,814
4,774
348
855
806
419
–
–
–
–
(9,677)
(164)
–
–
–
–
–
(834)
(285)
–
19,331
7,880
(19,342)
(15,389)
28,795
(28,795)
–
131
17,085
(7,880)
9,205
155
(29,183)
28,795
(388)
(23)
(16,508)
7,880
(8,628)
(74)
28,664
16,930
(29,160)
(16,434)
–
1,009
2,368
–
(4,479)
308
417
(11)
(388)
–
(388)
108
(496)
Total deferred tax assets/(liabilities)
28,795
17,085
(29,183)
(16,508)
(388)
189
1,814
4,774
348
21
521
419
(7,509)
577
–
577
81
496
577
Notes to the Financial Statementswww.kingsgate.com.au 67
Balance at
1 July
Recognised in
profit or loss
Recognised
in other
comprehensive
income
Foreign
exchange
Balance at
30 June
189
1,814
4,774
348
21
521
419
(7,509)
577
384
1,789
5,167
309
(755)
680
334
(7,065)
843
(189)
(909)
(2,724)
(390)
(4,500)
(263)
(2)
7,622
(1,355)
(195)
88
(178)
64
776
(126)
85
(542)
(28)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
104
318
42
–
50
–
(124)
390
–
(63)
(215)
(25)
–
(33)
–
98
(238)
–
1,009
2,368
–
(4,479)
308
417
(11)
(388)
189
1,814
4,774
348
21
521
419
(7,509)
577
2015
$’000
2014
$’000
21
55,451
55,472
6,601
6,601
17
53,615
53,632
5,489
5,489
Restricted cash
Under the terms of the loan facilities (see Note
17), the Group is required to maintain a
minimum cash balance of US$5,000,000 in
respect of Akara.
Risk exposure
The Group’s exposure to interest rate risk and a
sensitivity analysis for financial assets and
liabilities are disclosed in Note 29.
Movement in deferred tax balances
2015
Deferred tax assets/(liabilities):
Derivatives
Employee benefits
Provision for restoration and rehabilitation
Provision for obsolescence
Unrealised exchange losses
Other items
Available-for-sale financial assets
Mine properties and exploration
Net deferred tax assets/(liabilities)
2014
Deferred tax assets/(liabilities):
Derivatives
Employee benefits
Provision for restoration and rehabilitation
Provision for obsolescence
Unrealised exchange losses
Other items
Available-for-sale financial assets
Mine properties and exploration
Net deferred tax assets/(liabilities)
Current
Cash on hand
Deposits at call
Total cash and cash equivalents – current
Non-current
Restricted cash
Total restricted cash – non-current
Cash on hand
These are petty cash balances held by
subsidiaries.
Deposits at call
These deposits are at call, interest bearing
and may be accessed daily.
7. Cash and cash equivalents and restricted cash
Notes to the Financial StatementsNotes to the Financial Statementscontinuedu 68
8. Receivables
Trade receivables
Other debtors
Total receivables
2015
$’000
1,448
17,691
19,139
2014
$’000
2,203
11,157
13,360
Trade receivables
Trade receivables represent gold sales at the end
of the financial year, where payment was yet to
be received. No trade receivables were past due
or impaired as at 30 June 2015 (2014: nil).
Other debtors
Other debtors mainly relate to GST/VAT receiva-
bles and diesel fuel tax credits.
Risk exposure
The Group’s exposure to credit and currency is
disclosed in Note 29.
9. Inventories
Current
Raw materials and stores
Livestock
Provision for obsolescence
Stockpiles and work in progress
Gold bullion
Total inventories – current
Non-current
Stockpiles
Total inventories – non-current
10. Other assets
Current
Prepaid mining services
Prepayments
Other deposits
Total other assets – current
Non-current
Prepayments
Other deposits
Total other assets – non-current
2015
$’000
2014
$’000
15,261
82
(2,617)
28,341
6,080
47,147
55,711
55,711
14,130
22
(1,756)
32,790
2,731
47,917
49,805
49,805
2015
$’000
2014
Restated
$’000
1,060
4,982
3,577
9,619
11,345
7,097
18,442
6,042
11,996
2,855
20,893
7,333
6,204
13,537
Restated comparative information has been restated as a result of the correction of error in respect of prepaid mining services balance (refer to Note 35 for details).
Notes to the Financial Statementswww.kingsgate.com.au 69
Prepayments
Non-current prepayments include prepaid
royalties and water rights in respect of the
Nueva Esperanza Gold/Silver Project in Chile.
Other deposits
Other deposits current includes cash held on
deposit with financial institutions that is
restricted to use on community projects in
Thailand.
Other deposits non-current includes $1,860,000
relating to restricted cash deposits against bank
guarantees supporting the rehabilitation bond
requirements against the Group’s mining opera-
tions and $4,419,000 of security deposits.
11. Available-for-sale financial assets
Equity securities
At the beginning of the financial year
Reclassification from investment in associate
Revaluation
Disposal
At the end of the financial year
12. Property, plant and equipment
Opening balance
Cost
Accumulated depreciation and amortisation
Accumulated impairment
Net book amount
Year ended 30 June
Opening net book amount
Additions
Reclassified
Disposals
Depreciation and amortisation expense
Foreign currency differences
Closing net book amount
Cost
Accumulated depreciation and amortisation
Accumulated impairment
Net book amount
2015
$’000
2014
$’000
270
960
120
–
1,350
767
–
(284)
(213)
270
2015
$’000
2014
$’000
320,915
(85,360)
(64,897)
326,684
(71,556)
(64,897)
170,658
190,231
170,658
5,315
(1,214)
(36)
(15,652)
29,423
190,231
12,043
(303)
(16)
(18,337)
(12,960)
188,494
170,658
365,349
(111,958)
(64,897)
320,915
(85,360)
(64,897)
188,494
170,658
Notes to the Financial StatementsNotes to the Financial Statementscontinuedu 70
13. Exploration, evaluation and development
Exploration &
evaluation
$’000
Feasibility
expenditure
$’000
Mine
properties
$’000
Total
$’000
At 30 June 2013 (Restated)
Cost
Accumulated depreciation and amortisation
Accumulated impairment
Net book amount
Year ended 30 June 2014
Opening net book amount
Additions
Reclassified
Disposals
Impairment
Depreciation and amortisation expense
Foreign currency exchange differences
Closing net book amount
At 30 June 2014 (Restated)
Cost
Accumulated depreciation and amortisation
Accumulated impairment
Net book amount
Year ended 30 June 2015
Opening net book amount
Additions
Reclassified
Disposals
Impairment
Depreciation and amortisation expense
Foreign currency exchange differences
Closing net book amount
At 30 June 2015
Cost
Accumulated depreciation and amortisation
Accumulated impairment
Net book amount
46,607
–
(27,526)
142,941
–
–
649,353
(206,634)
(239,848)
838,901
(206,634)
(267,374)
19,081
142,941
202,871
364,893
19,081
1,904
–
–
(12,004)
–
(487)
142,941
11,139
(1,157)
(7)
(74,694)
–
(1,055)
202,871
19,090
303
(448)
–
(40,961)
(11,259)
364,893
32,133
(854)
(455)
(86,698)
(40,961)
(12,801)
8,494
77,167
169,596
255,257
48,024
–
(39,530)
151,861
–
(74,694)
649,556
(240,112)
(239,848)
849,441
(240,112)
(354,072)
8,494
77,167
169,596
255,257
8,494
1,283
–
–
77,167
13,173
1,530
–
(9,888)
(22,643)
–
991
880
–
8,875
78,102
169,596
25,032
(316)
(326)
(115,650)
(38,878)
24,595
255,257
39,488
1,214
(326)
(148,181)
(38,878)
34,461
64,053
143,035
50,298
–
(49,418)
175,439
–
(97,337)
720,474
(300,923)
(355,498)
946,211
(300,923)
(502,253)
880
78,102
64,053
143,035
Notes to the Financial Statementswww.kingsgate.com.au 71
14.
Impairment assessment
For the purposes of assessing impairment,
assets are grouped at the lowest levels for which
there are separately identifiable cash inflows
which are largely independent of the cash
inflows from other assets or groups of assets
(cash generating units “CGUs”).
Methodology
An impairment is recognised when the carrying
amount exceeds the recoverable amount.
The recoverable amount of the Chatree Gold
Mine and the Nueva Esperanza Gold/Silver
Project has been estimated using their fair value
less costs of disposal basis. The costs of disposal
have been estimated by management based on
prevailing market conditions.
The fair value of these CGUs has been estimated
based on discounted cash flows using market
based commodity price and exchange rate
assumptions, estimated quantities of recover-
able minerals, production levels, operating costs
and capital requirements, based on latest life of
mine plans.
The recoverable amount of the Bowdens Silver
Project has been estimated based on the enter-
prise value per ounce resource of equivalent
silver of a peer group.
The fair value estimates are considered to be
level 3 fair value measurements (as defined by
accounting standards) as they are derived from
valuation techniques that include inputs that are
not based on observable market data. The Group
considers the inputs and the valuation approach
to be consistent with the approach taken by
market participants.
The table below summarises the key assumptions used in the carrying value assessments:
Significant judgements and assumptions are
required in making estimates of fair value. This
is particularly so in the assessment of long life
assets. It should be noted that the CGU fair
values are subject to variability in key assump-
tions including, but not limited to, gold and
silver prices, currency exchange rates, discount
rates, production profiles and operating and
capital costs. A change in one or more of the
assumptions used to estimate fair value would
result in a change in a CGU’s fair value.
Key Assumptions
In determining each key assumption, manage-
ment has used external sources of information
and utilised experts within the Group to validate
entity specific assumptions such as reserves and
resources.
Gold (US$ per ounce)
Silver (US$ per ounce)
A$:US$ exchange rate
US$:THB exchange rate
Discount rate (%)
Chatree Gold Mine
Nueva Esperanza Gold/Silver Project
FY 2016 and FY 2017
+FY 2018 Long Term Average
US$1,200
US$20
0.77
33.8
US$1,170
US$16
0.77
33.8
9.3%
9.9%
The Group has applied post-tax real discount
rates to discount the forecast future attribut-
able post-tax real cash flows. The post-tax
discount rate applied to the future cash flow
forecasts represent an estimate of the rate the
market would apply having regard to the time
value of money and the risks specified to the
asset for which the future cash flow estimates
have not been adjusted.
Chatree Gold Mine
In accordance with AASB 136 – Impairment of
Assets an impairment charge of $115,650,000 has
been made against the carrying value of the
Chatree Gold Mine (“Chatree”) as a result of the
significant and sustained decline in the gold price.
The recoverable amount of Chatree at 30 June
2015 was determined based on a fair value less
costs of disposal model. Based on the assump-
tions noted above, the fair value less costs of
disposal of Chatree as at 30 June 2015 is
assessed as being equal to its carrying amount
of $311,100,000 after impairment.
The recoverable amount of this project has been
determined using a discounted cash flow model.
The key assumptions to which the models are
most sensitive include:
〉〉 Gold and silver prices;
〉〉
Foreign exchange rates;
〉〉 Production and capital costs;
〉〉 Discount rate; and
〉〉 Reserves and resources.
Nueva Esperanza Gold/Silver Project
The recoverable amount of Nueva Esperanza at
30 June 2015 was determined based on a fair
value less costs of disposal model. Based on the
assumptions noted above, the fair value of Nueva
Esperanza as at 30 June 2015 is assessed as
being approximately equal to its carrying amount
of $90,000,000 resulting in no impairment.
The recoverable amount has been determined
based on a fair value less costs of disposal
model. The key assumptions to which the
models are most sensitive include:
〉〉 Gold and silver prices;
〉〉
Foreign exchange rates;
〉〉 Production and capital costs;
〉〉 Discount rate; and
〉〉 Reserves and resources.
For both Chatree and Nueva Esperanza, produc-
tion and capital costs are based on the Group’s
estimate of forecast geological conditions,
capacity of existing plant and equipment and
future production levels. This information is
obtained from internally maintained budgets,
mine models and project evaluations performed
by the Group in its ordinary course of business.
Bowdens Silver Project
In accordance with AASB 136 – Impairment of
Assets an impairment charge of $22,643,000 has
been made against the carrying value of the
Bowdens Silver Project (“Bowdens”) as a result
of the significant and sustained decline in the
silver price.
Notes to the Financial StatementsNotes to the Financial Statementscontinuedu 72
14.
Impairment assessment continued
The fair value less costs of disposal of Bowdens
Silver Project as at 30 June 2015 is assessed as
being equal to its carrying amount of
$8,200,000 after impairment. The fair value has
been assessed by calculating the enterprise
value per ounce resource of equivalent silver of
the peer group and applying a value of $0.045/
oz Ag to the Bowdens silver equivalent resource
(detailed in the previously published Ore
Reserves and Mineral Resources Statement) less
estimated transaction costs.
Exploration Assets
Sensitivity Analysis
The Group’s exploration activities for the
year were focused on progressing the Nueva
Esperanza Gold/Silver Project in Chile, with
reduced exploration activity in South East Asia.
Given the increased focus on Nueva Esperanza
and continued delays in renewing exploration
permits in Thailand, South East Asian exploration
assets have been written down to nil resulting in
an impairment charge of $9,888,000 for the year.
After effecting the impairment for the Chatree
Gold Mine CGU, the fair value less costs of
disposal of these assets is assessed as being equal
to their carrying amount as at 30 June 2015.
Any variation in the key assumptions used to
determine fair value would result in a change
of the estimated fair value. If the variation in
assumption had a negative impact on fair value
it could indicate a requirement for additional
impairment of non-current assets.
It is estimated that the following reasonably possible changes in the key assumptions would have the following approximate impact on the fair value
of each CGU as at 30 June 2015:
US$100/oz increase/decrease in gold price
US$1 increase/decrease in silver price
THB1.5 increase/decrease in US$:THB exchange rate
5% increase/decrease in operating costs
Chatree Gold Mine
$’000
Nueva Esperanza
Gold/Silver Project
$’000
81,242
3,890
31,400
38,251
18,500
22,075
n/a
18,650
It must be noted that each of the sensitivities
above assumes that the specific assumption
moves in isolation, whilst all other assumptions
are held constant. In reality, a change in one of
the aforementioned assumptions may accom-
pany a change in another assumption which may
have an offsetting impact. Action is also usually
taken to respond to adverse changes in
economic assumptions that may mitigate the
impact of any such change.
15. Investment in associate
a) Reconciliation of movement in investment accounted for using the equity method
Investment in Caravel Minerals Limited
At the beginning of the year
Share of associate’s loss
Reclassification to available-for-sale financial asset
At the end of the year
2015
$’000
2014
$’000
1,072
(112)
(960)
–
1,485
(413)
–
1,072
b) Summarised financial information of associate
The Group’s share of the results of its associate and its aggregate assets and liabilities are as follows:
Caravel Minerals Limited – 2015
Caravel Minerals Limited – 2014
Group’s share of:
Ownership
Interest %
18.10
27.04
Assets
$’000
n/a
1,839
Liabilities
$’000
Revenue
$’000
n/a
146
n/a
108
Loss
$’000
n/a
413
Notes to the Financial Statementswww.kingsgate.com.au
73
2015
$’000
n/a
2014
$’000
1,485
2015
$’000
2014
$’000
18,095
8,186
26,281
7,171
7,171
15,318
10,160
25,478
4,800
4,800
2015
$’000
2014
$’000
54,971
10,870
398
1,313
67,552
73,427
82
1,562
75,071
128,398
10,952
1,960
1,313
33,514
9,464
–
–
42,978
110,572
82
–
110,654
144,086
9,546
–
–
142,623
153,632
c) Fair value of listed investment in associate
Caravel Minerals Limited
d) Contingent liabilities
At the date of reclassification to an available-for-sale asset, Caravel Minerals Limited had no material contingent liabilities.
16. Payables
Current
Trade payables
Other payables and accruals
Total payables – current
Non-current
Other payables
Total payables – non-current
The Group’s exposure to currency and liquidity risk related to trade and other payables is disclosed in Note 29.
17. Borrowings
This note provides information about the contractual terms of the Group’s interest-bearing loans and borrowings.
For more information about the Group’s exposure to interest rate and liquidity risk, see Note 29.
Current
Secured bank loans
Preference shares in controlled entity
Finance lease liabilities
Other loan
Total borrowings – current
Non-current
Secured bank loans
Preference shares in controlled entity
Finance lease liabilities
Total borrowings – non-current
Borrowings
Secured bank loans
Preference shares in controlled entity
Finance lease liabilities
Other loan
Total borrowings
Notes to the Financial StatementsNotes to the Financial Statementscontinuedu
74
17. Borrowings continued
Secured bank loans
Terms and debt repayment schedule
Terms and conditions of outstanding loans were as follows:
Senior corporate facility
Multi-currency and Syndicated loan facilities
Less capitalised borrowing costs
Total
1
2
3
BBSY means bank bill swap bid rate
THBFIX means Thai Baht interest rate fixing
LIBOR means London interbank offered rate
Currency
Nominal
interest
AUD
BBSY1 + margin
Thai Baht
THBFIX2+ margin
USD
LIBOR3 + margin
Financial
year of
maturity
2016
2018
2018
Face value
$’000
25,000
43,192
61,675
Carrying
amount
$’000
25,000
43,192
61,675
(1,469)
128,398
Senior corporate facility
The balance of the senior corporate loan facility
outstanding at 30 June 2015 was A$25,000,000.
This facility, was due to be repaid in full on
31 July 2015. A$10,000,000 was repaid against
the facility on the due date with the balance of
A$15,000,000 restructured as a Revolving Credit
Facility (“RCF”) repayable in three equal instal-
ments commencing on 29 January 2016.
Under the terms of the RCF Kingsgate is required
to maintain a minimum hedge position with a
rolling three month program covering 30% of
forecast group production. As security the
lender has a fixed and floating charge over
Kingsgate including shares in its material
subsidiaries.
Kingsgate, in addition, has available over the
tenure of the RCF an Equity-linked Loan Facility
(“ELF”) of A$15,000,000. The ELF is currently
undrawn.
Multi-currency, syndicated loan facility
Kingsgate’s Thai operating subsidiary, Akara
Resources PCL (“Akara”), has an amortising
multi-currency loan facility with 3.5 years
remaining following the commencement of
quarterly repayments in November 2013. At year
end the equivalent of A$104,867,000 was owed
against this facility. Since the year end a further
equivalent A$8,534,000 has been repaid. As
security against the facility the lender has a fixed
and floating charge over the land, buildings and
machinery in Thailand owned by Akara and its
material subsidiaries.
Restricted funds
Under the terms of the loan facilities, the Group
is required to maintain a debt service reserve
account of US$5,000,000 (A$6,601,000) in
respect of Akara.
Preference shares in controlled entity
Terms and repayment schedule
Terms and conditions of outstanding preference shares in controlled entity were as follows:
Preference shares in controlled entity
Thai Baht
12%
n/a
10,409
10,952
Currency
Interest rate
Financial year
of maturity
Face value
$’000
Carrying amount
$’000
Notes to the Financial Statementswww.kingsgate.com.au 75
Present value of minimum
lease payments
$’000
398
1,562
1,960
2015
$’000
2014
$’000
3,625
3,625
34,641
4,585
39,226
27,731
2,215
981
3,714
34,641
3,115
3,115
27,731
5,267
32,998
28,180
10
1,102
(1,561)
27,731
2014
$’000
605,504
59,430
15,000
487
113
(3,425)
Finance lease liabilities
The Group has various items of plant and equipment with a carrying amount of $2,392,000 under finance leases.
Finance lease liabilities are payable as follows:
Future minimum
lease payments
$’000
487
1,713
2,200
Interest
$’000
(89)
(151)
(240)
Note
2x, 25
2w
2x, 25
Within 1 year
Later than 1 year but not later than 5 years
Total
18. Provisions
Current
Employee benefits
Total provisions – current
Non-current
Restoration and rehabilitation
Employee benefits
Total provisions – non-current
Movements in the restoration and rehabilitation provision:
Restoration and rehabilitation
At the beginning of the financial year
Revision of rehabilitation provision
Unwind of discount rate for provision
Foreign currency exchange differences
At the end of the financial year
19. Contributed equity
Opening balance
Share placement and rights issue
Issue of ordinary shares to repay funds drawn down under the
convertible revolving credit facility
Issue of ordinary shares related to Executive Rights Plan
Issue of ordinary shares related to consultancy services
Share issue costs
Closing balance
2015
Shares
2014
Shares
2015
$’000
223,584,937
152,191,905
677,109
–
–
–
–
–
59,430,588
11,774,572
92,872
95,000
–
–
–
–
–
–
223,584,937
223,584,937
677,109
677,109
Capital risk management
The Group’s objectives when managing capital
are to safeguard the Group’s ability to continue
as a going concern, so as to maintain a strong
capital base sufficient to maintain future
exploration and development of its projects. In
order to maintain or adjust the capital structure
the Group may return capital to shareholders,
issue new shares or sell assets. The Group’s
focus has been to utilise surplus cash from
operations and raise additional funds to fund
capital investment at Chatree, working capital
and exploration and evaluation activities,
including the Nueva Esperanza Project in Chile
and Bowdens Silver Project in New South Wales
and to repay borrowings.
Notes to the Financial StatementsNotes to the Financial Statementscontinuedu 76
20. Reserves and accumulated losses
(a) Reserves
Foreign currency translation reserve
Share–based payment reserve
General reserve
Total reserves
Movements:
Foreign currency translation reserve
At the beginning of the financial year
Exchange differences on translation of foreign controlled entities (net of tax)
At the end of the financial year
Share–based payment reserve
At the beginning of the financial year
Share–based payment expense
Transfer to share capital (conversion of performance rights)
Transfer to other expenses
At the end of the financial year
General reserve
At the beginning of the financial year
Net change
At the end of the financial year
2015
$’000
48,327
9,008
(3,542)
53,793
(12,541)
60,868
48,327
8,598
410
–
–
9,008
(4,380)
838
(3,542)
2014
Restated
$’000
(12,541)
8,598
(4,380)
(8,323)
13,773
(26,314)
(12,541)
8,702
448
(487)
(65)
8,598
(4,380)
–
(4,380)
Foreign currency translation reserve
Share-based payment reserve
General reserve
Exchange differences arising on translation of
the foreign controlled entities are taken to the
foreign currency translation reserve, as
described in Note 2b.
The share-based payment reserve is used to
recognise the fair value of deferred rights and
performance rights issued but not exercised.
The general reserve represents changes in equity
as a result of changes in non-controlling inter-
ests in prior periods and revaluation of employee
benefit obligations in current year.
(b) Accumulated losses
Accumulated losses at the beginning of the year
Net loss attributable to members of Kingsgate Consolidated Limited
Accumulated losses
2015
$’000
(258,113)
(147,093)
2014
$’000
(160,500)
(97,613)
(405,206)
(258,113)
Notes to the Financial Statementswww.kingsgate.com.au 77
2015
$’000
2014
$’000
465
706
1,171
1,400
–
1,400
553
110
663
1,655
316
1,971
21. Commitments for expenditure
Operating leases
Within 1 year
Later than 1 year but not later than 5 years
Total operating leases
Exploration commitments
Within 1 year
Later than 1 year but not later than 5 years
Total exploration commitments
Operating leases
Commitments for minimum lease payments in relation to non-cancellable operating leases. Operating leases for the current year primarily relates to
Challenger Mine’s power generation operating leases.
Exploration commitments
In order to maintain current rights of tenure to exploration tenements, the Group has exploration expenditure requirements up until expiry of the leases.
These obligations, which are subject to renegotiation upon expiry of the leases, are not provided for in the financial statements.
22. Controlled entities
Entity
Parent Entity
Kingsgate Consolidated Limited
Subsidiaries
Dominion Mining Ltd
Challenger Gold Operations Pty Ltd
Gawler Gold Mining Pty Ltd
Dominion Metals Proprietary Ltd
Kingsgate Treasury Pty Ltd
Kingsgate Bowdens Pty Ltd
Kingsgate Capital Pty Ltd
Kingsgate Chile NL1
Laguna Exploration Pty Ltd
Akara Resources Public Company Limited
Issara Mining Limited
Suan Sak Patana Ltd
Phar Mai Exploration Ltd
Richaphum Mining Ltd
Phar Lap Ltd
Phar Rong Ltd
Dominion (Lao) Co., Ltd
Laguna Chile Ltda
1 Laguna Resources NL changed its name to Kingsgate Chile NL on 12 August 2015.
Equity holding
Country of
Incorporation
Class of
shares
2015
%
2014
%
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Thailand
Thailand
Thailand
Thailand
Thailand
Thailand
Thailand
Laos
Chile
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
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
Notes to the Financial StatementsNotes to the Financial Statementscontinuedu 78
23. Dividends
No final dividend was declared for the year ended 30 June 2014 (30 June 2013: nil).
No interim dividend was declared for the year ended 30 June 2015 (30 June 2014: nil).
24. Related parties
Transaction with related parties
Information on remuneration of Directors and Key Management Personnel is disclosed in Note 30 and the Remuneration Report.
Controlling entity
The ultimate parent entity of the Group is Kingsgate Consolidated Limited.
25. Employee benefits and share-based payments
Employee benefit and related on-costs liabilities
Provision for employee benefits – current
Provision for employee benefits – non-current
Total employee provisions
2015
$’000
2014
$’000
3,625
4,585
8,210
3,115
5,267
8,382
Superannuation
The Group makes contributions on behalf of employees to externally managed defined contribution superannuation funds. Contributions are based on
percentages of employee wages and salaries and include any salary-sacrifice amounts. Contributions to defined contribution plans for 2015 were $1,869,000
(2014: $1,744,000).
Retirement benefit and other long-term benefits (Akara Resources PCL)
Opening balance
Service costs
Interest
Actuarial gain
Benefits paid
Foreign currency exchange differences
Closing balance
The principal actuarial assumptions used were as follows:
Discount rate
Inflation rate
2015
$’000
2014
$’000
4,190
3,967
293
111
(993)
(221)
711
507
149
–-
(127)
(306)
4,091
4,190
4.1%
3%
4.1%
3%
Executive Rights Plan
On 1 July 2012, the Company introduced an
Executive Rights Plan which involves the grant
of two types of rights being performance rights
and deferred rights. Subject to the satisfaction
of the performance condition at the end of a
three year measurement period in respect of
performance rights and the service condition at
the end of the three year vesting period in
respect of deferred rights, the rights will vest.
The first $1,000 of value per individual award is
settled by cash with the balance settled by
shares.
Notes to the Financial Statementswww.kingsgate.com.au 79
Performance rights
Kingsgate issued the following performance rights during financial year 2013/2014:
Type
Performance rights
Performance rights
Grant date
7/13 November 2013
26 November 2013
Vesting date
1 July 2016
1 July 2016
Number
479,643
768,380
The Executives Rights Plan entitles participants to receive rights to fully paid ordinary shares in the Company (Performance Rights). The performance
measures for the Performance Rights issued in the 2013 and 2014 financial years is subject to a hurdle derived from a three year vesting period using the
internal performance measuring metric, TSR Alpha™. This measure is based on total shareholder return over that vesting period.
The fair value of the performance rights was estimated using Monte Carlo simulations, taking into account the terms and conditions upon which the awards
were granted.
The following table lists the inputs to the model used for the performance rights granted for the year:
Number of rights issued
Grant date
Spot price ($)
Risk-free rate (%)
Term (years)
Volatility (%)
Exercise price
Fair value ($)
479,643
7/13 November 2013
768,380
26 November 2013
1.24
2.9
2.6
60 – 65
–
0.72 – 0.75
1.24
2.9
2.6
60 – 65
–
0.72 – 0.75
The volatility above was determined with reference to the historical volatility of the Company’s share price from June 2008 to November 2013.
Deferred rights
Kingsgate issued the following deferred rights during financial year 2013/2014:
Type
Deferred rights
Deferred rights
Deferred rights
Total
Grant date
Vesting date
Fair value
Number
7 November 2013
13 November 2013
4 November 2013
1 July 2016
1 July 2016
1 July 2016
$1.47
$1.34
$1.39
215,874
63,241
49,407
328,522
The fair value of the deferred rights was estimated based on the share price less the present value of projected dividends over the expected term of each
deferred right.
The following table lists the inputs to the model used for the deferred rights granted for the year:
Number of rights issued
Grant date
Spot price ($)
Term (years)
Dividends ($)
215,874
63,241
49,407
7 November 2013
13 November 2013
4 November 2013
$1.47
2.6
–
$1.34
2.6
–
$1.39
2.6
–
Notes to the Financial StatementsNotes to the Financial Statementscontinuedu 80
26. Reconciliation of loss after income tax to net cash flow
from operating activities
Loss for the year
Depreciation and amortisation
Share-based payments
Impairment – Chatree Gold Mine
Impairment – Bowdens Silver Project
Impairment – exploration assets
Unwind of discount rate for provision
Amortisation of deferred borrowing costs
Unrealised losses/(gains)
Share of associate’s loss
Net exchange differences
Change in operating assets and liabilities
(Increase)/decrease in receivables
(Increase)/decrease in prepayments
(Increase)/decrease in inventories
Increase/(decrease) in current tax liabilities
Increase/(decrease) in creditors
Increase/(decrease) in provisions
Increase/(decrease) in deferred tax liabilities
Net cash inflow from operating activities
27. Events occurring after
reporting date
The balance of the senior corporate loan facility
outstanding at 30 June 2015 was A$25,000,000.
This facility was due to be repaid in full on 31 July
2015. A$10,000,000 was repaid against the
facility on the due date with the balance of
A$15,000,000 restructured as a Revolving Credit
Facility (“RCF”) repayable in three equal instal-
ments commencing on 29 January 2016.
Under the terms of the new facility Kingsgate is
required to maintain a minimum hedge position
with a rolling three month program covering
30% of forecast group production. As security
for the RCF the lender has a fixed and floating
charge over Kingsgate Consolidated Limited
including shares in its material subsidiaries.
Kingsgate Consolidated Limited, in addition, has
available over the tenure of the RCF an Equity-
linked Loan Facility (“ELF”) of A$15,000,000.
The ELF is currently undrawn.
No other matter or circumstance has arisen
since 30 June 2015 that has significantly
affected, or may significantly affect:
〉〉
〉〉
〉〉
the Group’s operations in future financial
years;
the results of those operations in future
financial years; or
the Group’s state of affairs in future financial
years.
28. Contingent liabilities
The Group had contingent liabilities at 30 June
2015 in respect of guarantees. Bank guarantees
have been given by Kingsgate’s controlled
entities to participating banks in the syndicated
loan facility and corporate loan facility as
described in Note 17 as part of the security
package. These guarantees may give rise to
liabilities in the parent entity if the controlled
entities do not meet their obligations under the
terms of the loans subject to guarantees. No
material losses are anticipated in respect of the
above contingent liabilities.
Included in non-current other asset is
$1,860,000 relating to restricted cash deposits
against bank guarantees supporting the rehabili-
tation bond requirements against the Group’s
mining operations.
2015
$’000
(147,093)
53,950
410
115,650
22,643
9,888
1,104
1,825
(743)
112
448
(3,263)
14,328
10,875
(1,284)
(2,968)
(201)
965
2014
Restated
$’000
(97,613)
58,986
448
–
84,586
2,112
1,137
1,056
(522)
413
(670)
(4,321)
4,422
1,583
930
(14,163)
43
181
76,646
38,608
29. Financial risk management
and instruments
The Group’s activities expose it to a variety of
financial risks: market risk (including foreign
currency risk, price risk, fair value risk, and
interest rate risk), credit risk, and liquidity risk.
At this point, the Directors believe that it is
in the interest of shareholders to expose the
Group to foreign currency risk, price risk (except
in specific circumstances) and interest rate
risk. Therefore, the Group does not employ
any derivative hedging of foreign currency
or interest rate risks. The Group has entered
into forward gold sale contracts to manage
Australian gold price risk in respect of the
forecast production from the Challenger Mine
(refer “commodity price risk”). The Directors and
management monitor these risks, in particular
market forecasts of future movements in
foreign currency and price movements and, if
it is to be believed to be in the best interests of
shareholders, will implement risk management
strategies to minimise potential adverse effects
on the financial performance of the Group.
Notes to the Financial Statementswww.kingsgate.com.au 81
Risk management is carried out by the senior executive team. The Board provides written principles for overall risk management, as well as policies covering
specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments,
and investment of excess liquidity.
The Group holds the following financial instruments:
Financial assets
Cash and cash equivalents
Receivables
Restricted cash
Available-for-sale financial assets
Other financial assets
Total financial assets
Financial liabilities
Payables
Borrowings
Derivatives held for trading
Total financial liabilities
(a) Market risk
Foreign exchange risk
2015
$’000
2014
$’000
55,472
19,139
6,601
1,350
10,674
93,236
53,632
13,360
5,489
270
9,059
81,810
(33,452)
(144,092)
–
(30,278)
(155,714)
(623)
(177,544)
(186,615)
The Group operates internationally and is exposed to foreign exchange risk arising from currency exposures, primarily with respect to the US dollar and
Thai Baht and as discussed earlier, no financial instruments are employed to mitigate the exposed risks. This is the Group’s current policy and it is reviewed
regularly including forecast movements in these currencies by management and the Board. Currently foreign exchange risks arise primarily from:
〉〉
the sale of gold, which is in US dollars;
〉〉 payables denominated in US dollars; and
〉〉
cash balances in US dollars.
The functional currency of the Thai subsidiaries is Thai Baht. The Company’s functional currency is Australian dollars.
The Group’s exposure to US dollar foreign currency risk at the reporting date was as follows:
Cash and cash equivalents
Restricted cash
Receivables
Payables
Total exposure to foreign currency risk
2015
$’000
2014
$’000
2,074
6,601
38
(3,242)
5,471
2,175
5,489
113
(451)
7,326
The Group’s sale of gold produced from Chatree Gold Mine is in US dollars, however the functional currency of the subsidiary company that owns the Chatree
Gold Mine is Thai Baht and therefore, the Group’s profit is sensitive to movement in those currencies.
If the spot Australian dollar weakened/strengthened by one cent against the US dollar with all other variables held constant, the Group’s revenue for the year
would have been $2,545,000 higher/$2,545,000 lower (2014: $2,357,000 higher/$2,357,000 lower).
The Group’s current exposure to other foreign exchange movements is not material.
Notes to the Financial StatementsNotes to the Financial Statementscontinuedu 82
29. Financial risk management and instruments continued
Commodity price risk
As at 30 June 2015, the Group had 5,000 ounces of gold sold forward at an average price of A$1,538 per ounce.
The following table sets out an aging of forward gold sale contracts in place at year end:
As at 30 June 2015
Within one year
As at 30 June 2014
Within one year
Gold for
physical delivery
ounces
Contracted sales
price
A$/oz
Value of
committed sales
$’000
5,000
1,538
7,693
14,500
1,364
19,779
The following table displays fluctuations in the fair value of the Group’s gold forward contracts due to movements in the spot price of gold with all other
variables held constant. The 10% sensitivity is based on reasonable possible changes, over a financial year, using the observed range of actual historical prices.
Mark to market movement of the fair value of gold forward contracts
10% increase in the spot price of gold (2014: 5%)
10% decrease in the spot price of gold (2014: 5%)
2015
$’000
2014
$’000
(804)
741
(779)
1,240
Equity price risk
The Group is exposed to equity securities price risk, which arises from investments classified on the statement of financial position as available-for-sale
financial assets.
A 10% increase/(decrease) of the share price for the equity securities at 30 June 2015 would have increased/(decreased) profit/equity by the amounts shown
as follows:
Available–for–sale financial asset – 2015
Available–for–sale financial asset – 2014
+10%
-10%
Profit
$’000
Equity
$’000
Profit
$’000
Equity
$’000
135
27
–
–
(135)
(27)
–
–
Notes to the Financial Statementswww.kingsgate.com.au 83
Interest rate risk
The Group’s exposure to interest rate risk for classes of financial assets and financial liabilities, at 30 June 2015 and 30 June 2014 are set out as follows:
Floating
interest rate
$’000
Fixed interest
maturing in
1 year or less
$’000
Fixed interest
maturing in
1–2 years
$’000
Fixed interest
maturing in
2–5 years
$’000
Non-interest
bearing
$’000
Total
$’000
2015
Financial assets
Cash and cash equivalents
Receivables
Restricted cash
Available-for-sale financial assets
Other financial assets
Total financial assets
Financial liabilities
Payables
Borrowings
Total financial liabilities
Net financial liabilities
2014
Financial assets
Cash and cash equivalents
Receivables
Restricted cash
Available-for-sale financial assets
Other financial assets
Total financial assets
Financial liabilities
Payables
Borrowings
Derivatives held for trading
Total financial liabilities
Net financial liabilities
55,451
–
6,601
–
10,268
72,320
–
–
–
–
–
–
–
–
(129,866)
(12,582)
(129,866)
(12,582)
(57,546)
(12,582)
53,614
–
5,489
–
8,664
67,767
–
(146,168)
–
(146,168)
(78,401)
–
–
–
–
–
–
–
(9,464)
–
(9,464)
(9,464)
–
–
–
–
–
–
–
(472)
(472)
(472)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(1,090)
(1,090)
(1,090)
–
–
–
–
–
–
–
–
–
–
–
21
19,139
–
1,350
406
20,916
55,472
19,139
6,601
1,350
10,674
93,236
(33,452)
(82)
(33,452)
(144,092)
(33,534)
(177,544)
(12,618)
(84,308)
18
13,360
–
270
395
14,043
53,632
13,360
5,489
270
9,059
81,810
(30,278)
(82)
(623)
(30,278)
(155,714)
(623)
(30,983)
(186,615)
(16,940)
(104,805)
The weighted average rate on floating rate borrowings was 4.67% for the year ended 30 June 2015 (2014: 4.86%).
A change of 100 basis points (“bps”) in interest rate at the reporting date would have increased/(decreased) profit or loss by the amounts shown below.
This analysis assumes that all other variables, in particular foreign exchange rates remain constant.
Variable rate instrument – 2015
Variable rate instrument – 2014
100 bps increase
Profit
$’000
100 bps decrease
Profit
$’000
1,299
1,462
(1,299)
(1,462)
Notes to the Financial StatementsNotes to the Financial Statementscontinuedu 84
29. Financial risk management and instruments continued
(b) Credit risk
Credit risk arises from cash and cash equivalents, deposits with banks and financial institutions, as well as credit exposures to customers including,
outstanding receivables and committed transactions.
The Group has no significant concentrations of credit risk. The sale of gold and other cash transactions are limited to counterparties with sound
credit ratings.
The maximum exposure to credit risk is represented by the carrying value of the Group’s financial assets in the statement of financial position.
The maximum exposure to credit risk at reporting date was:
Cash and cash equivalents
Receivables
Restricted cash
Other financial assets
Total exposure to credit risk at year end
2015
$’000
55,472
19,139
6,601
10,674
91,886
2014
$’000
53,632
13,360
5,489
9,059
81,540
(c) Liquidity risk
The Group’s liquidity requirements are based upon cash flow forecasts which are based upon forward production, operations, exploration and capital projec-
tions. Liquidity management, including debt/equity management, is carried out under policies approved by the Board and forecast material liquidity changes
are discussed at Board meetings. The following table analyses the Company’s financial assets and liabilities into relevant maturity groupings based on the
remaining period at the reporting date. The amounts disclosed are the contractual undiscounted cash flows.
Carrying
amount
$’000
1 year
or less
$’000
1–2 years
$’000
2–5 years
$’000
More than
5 years
$’000
Total
$’000
2015
Payables
Borrowings
33,452
144,092
26,281
73,379
952
32,502
Total financial liabilities 2015
177,544
99,660
33,454
2014
Payables
Borrowings
Derivatives held for trading
Total financial liabilities 2014
30,278
155,714
623
186,615
25,478
52,720
623
78,821
806
54,464
–
55,270
5,741
47,389
53,130
3,994
64,514
–
68,508
774
–
774
–
–
–
–
33,748
153,270
187,018
30,278
171,698
623
202,599
(d) Fair value measurements
The carrying value of financial assets and liabilities of the Group approximate their fair values. Fair values of financial assets and liabilities have been
determined for measurement and/or disclosure purposes. Refer to Note 14 for details of impairment of Level 3 assets.
Fair value hierarchy
The Group classifies assets and liabilities carried at fair value using a fair value hierarchy that reflects the significance of the inputs used in determining
that value. The table following analyses financial instruments carried at fair value, by the valuation method. The different levels in the hierarchy have been
defined as follows:
〉〉
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
〉〉
Level 2:
inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly
(derived from prices); and
〉〉
Level 3:
inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Notes to the Financial Statementswww.kingsgate.com.au 85
30 June 2015
Available-for-sale financial assets
Total as at 30 June 2015
30 June 2014
Available-for-sale financial assets
Derivatives held for trading
Total as at 30 June 2014
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
1,350
1,350
270
–
270
–
–
–
(623)
(623)
–
–
–
–
–
1,350
1,350
270
(623)
(353)
30. Key Management Personnel disclosures
Executive Chairman
Ross Smyth-Kirk
Executive Chairman – Role changed from Non-Executive to Executive Chairman 16 October 2014
Non-Executive Directors
Peter Alexander
Non-Executive Director
Craig Carracher
Non-Executive Director – Resigned 17 October 2014
Peter McAleer
Non-Executive Director
Sharon Skeggs
Non-Executive Director – Appointed 1 January 2015
Peter Warren
Non-Executive Director
Senior Executives
Greg Foulis
Tim Benfield
Ross Coyle
Chief Executive Officer – Commenced 1 June 2015
Chief Operating Officer – Acting Chief Executive Officer from 16 October 2014 to 30 April 2015
Chief Financial Officer – Appointed 6 November 2014, previously General Manager Finance & Administration.
Resigned as Company Secretary 6 November 2014.
Ron James
General Manager Exploration and Resource Development
Joel Forwood
General Manager Corporate and Markets
Paul Mason
Company Secretary – Appointed 6 November 2014
Duane Woodbury
Chief Financial Officer – Resigned 2 July 2014
Michael Monaghan
Chief Operating Officer and General Manager – Akara Resources PCL – Resigned 20 March 2015
Geoff Day
Chief Executive Officer – Commenced 8 September 2014 and ceased employment 15 October 2014
Austen Perrin
Chief Financial Officer – Commenced 22 September 2014 and ceased employment 15 October 2014
Brett Dunstone
General Manager Human Resources – Made redundant 20 October 2014
Notes to the Financial StatementsNotes to the Financial Statementscontinuedu 86
30. Key Management Personnel disclosures continued
Key Management Personnel Compensation
Short-term employee benefits
Post-employment benefits
Termination benefits
Share-based payments
Other long term benefits
2015
$
3,424,689
206,051
673,271
409,770
14,012
2014
Restated
$
4,471,0951,2
201,325
1,512,9991
217,284
74,3281
Total key management personnel compensation
4,727,793
6,477,031
1
2
These amounts have been restated to include the movement in the accrued annual leave (short term) and long service leave (long term) entitlements over the year which
were omitted in error in the 2014 financial statements. Termination benefits have also been restated to exclude accrued leave entitlements as these amounts are now
included in short term and long term benefits or excluded as they relate to prior year expense.
An error was identified during the year resulting in restatement of short term employee benefits, reducing the expense by $4,000.
Transactions with Key Management Personnel
Peter Warren was paid $90,000 during the year for consulting services provided in relation to the potential listing of Akara Resources PCL
on the Stock Exchange of Thailand.
31. Auditors’ remuneration
Audit and other assurance services
PricewaterhouseCoopers Australian Firm
Audit and review of the financial reports
Related Practices of PricewaterhouseCoopers Australian Firm
Audit and review of the financial statements
Total remuneration for audit services
Other services
PricewaterhouseCoopers Australian Firm
Other services
Related practices of PricewaterhouseCoopers Australian Firm
Transaction services (IPO)
Other services
Total remuneration for non-audit related services
Taxation services
PricewaterhouseCoopers Australian Firm
Tax compliance services
Related practices of PricewaterhouseCoopers Australian Firm
Tax compliance services
Total remuneration for tax related services
2015
$
2014
$
563,300
503,000
338,176
901,476
278,871
781,871
11,325
112,150
68,376
27,075
141,957
21,352
106,776
275,459
45,575
89,345
47,575
93,150
40,316
129,661
Notes to the Financial Statementswww.kingsgate.com.au 32. Loss per share
Basic loss per share
Diluted loss per share
Net loss used to calculate basic and diluted earnings per share
87
2015
Cents
(65.8)
(65.8)
2014
Restated
Cents
(56.7)
(56.7)
$’000
$’000
(147,093)
(97,613)
Number
Number
Weighted average number of shares used as the denominator
Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share
223,584,937
172,237,245
Adjustment for calculation of diluted earnings per share: options
–
–
Weighted average number of ordinary shares and potential ordinary shares used as the denominator
in calculating diluted earnings per share
223,584,937
172,237,245
Diluted loss per share
As the Group made a loss for the year, diluted loss per share is the same as basic loss per share as the impact of dilution would be to reduce the loss per share.
33. Parent entity financial information
As at, and throughout the financial year ending 30 June 2015, the parent entity of the Group was Kingsgate.
Summary of financial information
Results of parent entity
Loss for the year
Other comprehensive loss
Total comprehensive loss
Financial position of parent entity at year end
Current assets
Total assets
Current liabilities
Total liabilities
Total equity of the parent entity comprising:
Issued capital
Reserve
Accumulated losses
Total financial equity
2015
$’000
2014
$’000
(36,777)
(114,951)
–
–
(36,777)
(114,951)
125,219
168,240
88,565
88,607
142,681
212,420
71,021
96,041
677,109
8,329
(605,805)
677,109
8,298
(569,028)
79,633
116,379
Contingent liabilities of the parent entity
Bank guarantees have been given by Kingsgate’s controlled entities to participating banks in the syndicated loan facility as described in Note 17 as part of
the security package.
These guarantees may give rise to liabilities in the parent entity if the controlled entities do not meet their obligations under the terms of the loans subject
to guarantees. No material losses are anticipated in respect of the above contingent liabilities.
Notes to the Financial StatementsNotes to the Financial Statementscontinuedu 88
34. Deed of cross guarantee
Pursuant to ASIC Class Order 98/1418 (as amended) dated 13 August 1998, the wholly-owned subsidiaries listed below are relieved from the Corporations Act
2001 requirements for preparation, audit and lodgement of financial reports, and Directors’ Reports.
It is a condition of the Class Order that the Company and each of the subsidiaries enter into a Deed of Cross Guarantee (“Deed”). The effect of the Deed is
that the Company guarantees to each creditor payment in full of any debt on the event of the winding up of any of the subsidiaries under certain provisions
of the Corporations Act 2001. If a winding up occurs under other provisions of the Corporations Act 2001, the Company will only be liable in the event that
after six months any creditor has not been paid in full. The subsidiaries have also given similar guarantees in the event that the Company is wound up.
The subsidiaries subject to the Deed are:
〉〉 Dominion Mining Limited;
〉〉 Dominion Gold Operations Pty Ltd; and
〉〉 Gawler Gold Mining Pty Ltd.
The above companies represent a ‘closed group’ for the purpose of the Class Order, and as there are no other parties to the Deed of Cross Guarantee that are
controlled by Kingsgate Consolidated Limited, they also represent the ‘extended closed group’.
A consolidated income statement and other comprehensive income, a summary of movements in consolidated accumulated losses, and consolidated state-
ment of financial position, comprising the Company and controlled entities which are a party to the Deed, after eliminating all transactions between parties
to the Deed of Cross Guarantee, is set out as follows:
Income statement and other comprehensive income
Sales revenue
Cost of sales
Gross profit
Exploration expenses
Corporate and administration expenses
Other income and expenses
Foreign exchange gain/(loss)
Impairment losses – investment in Bowdens Silver Project
Impairment losses – investment in Nueva Esperanza Gold/Silver Project
Loss before financial costs and income tax
Finance income
Finance costs
Net finance costs
Loss before income tax
Income tax expense
Loss after income tax
Total comprehensive loss for the year
Loss attributable to:
Owners of Kingsgate Consolidated Limited
Total comprehensive loss attributable to:
Owners of Kingsgate Consolidated Limited
2015
$’000
118,353
(105,697)
2014
$’000
106,357
(124,717)
12,656
(18,360)
(143)
(9,436)
(1,293)
11,924
(23,921)
(19,026)
(164)
(13,895)
4,119
(1,453)
(75,179)
(4,344)
(29,239)
(109,276)
434
(4,480)
(4,046)
2,139
(7,540)
(5,401)
(33,285)
(114,677)
–
–
(33,285)
(114,677)
(33,285)
(114,677)
(33,285)
(114,677)
(33,285)
(114,677)
Notes to the Financial Statementswww.kingsgate.com.au Summary of movements in consolidated retained earnings
Accumulated losses
Accumulated losses at beginning of the financial year
Loss for the year
Accumulated losses at end of the financial year
Statement of financial position as at 30 June 2015
Assets
Current assets
Cash and cash equivalents
Receivables
Inventories
Other assets
Total current assets
Non-current assets
Available-for-sale financial assets
Property, plant and equipment
Exploration, evaluation and development
Investment in subsidiaries
Other assets
Total non-current assets
TOTAL ASSETS
Liabilities
Current liabilities
Payables
Borrowings
Derivatives held for trading
Provisions
Total current liabilities
Non-current liabilities
Borrowings
Provisions
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
Equity
Contributed equity
Reserves
Accumulated losses
TOTAL EQUITY
89
2015
$’000
2014
$’000
(569,957)
(33,285)
(455,280)
(114,677)
(603,242)
(569,957)
37,981
104,888
4,541
725
30,878
125,518
5,831
792
148,135
163,019
-
562
906
39,153
1,559
42,180
270
2,169
3,700
60,774
1,582
68,495
190,315
231,514
71,139
26,140
-
3,100
100,379
-
7,740
7,740
108,119
82,196
70,313
9,847
623
2,502
83,285
24,854
7,925
32,779
116,064
115,450
677,109
8,329
(603,242)
677,109
8,298
(569,957)
82,196
115,450
Notes to the Financial StatementsNotes to the Financial Statementscontinuedu 90
35. Correction of prior year error
During the year the Group reviewed the basis for calculating the balance of prepaid mining services costs and determined that this prepayment balance had
been overstated since July 2010. The majority of that overstatement related to work performed on the construction of a tailings storage facility and as a
result, the corresponding cost of exploration, evaluation and development was understated. The error has been adjusted retrospectively by restating the
comparative amounts for the prior years presented in which the error occurred. The impact of the prior year error on the opening balance sheet at 1 July 2013
is immaterial; hence a third balance sheet has not been included in the financial statements.
The impact of these changes in accounting requirements on the:
〉〉
Income Statement for the year ended 30 June 2014
〉〉 Statement of Financial Position as at 30 June 2014
〉〉 Statement of Financial Position as at 1 July 2013
〉〉 Statement of Cash Flow for the year ended 30 June 2014
〉〉
Earnings per share for the year ended 30 June 2014
is set out as follows:
a .
Income Statement for the year ended 30 June 2014
Sales revenue
Costs of sales
Gross profit
Loss before finance costs and income tax
Loss before income tax
Loss after income tax
Earnings per share (cents per share)
Basic loss per share
Diluted loss per share
b . Statement of Financial Position as at 30 June 2014
Total current assets
Non-current assets
Exploration, evaluation and development
Other non-current assets
Total non-current assets
TOTAL ASSETS
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Accumulated losses
TOTAL EQUITY
As reported year ended
30 June 2014
Correction of error
Restatement
As restated year ended
30 June 2014
$’000
328,326
(301,891)
26,435
(80,155)
(93,405)
(96,291)
(55.9)
(55.9)
$’000
–
(1,322)
(1,322)
(1,322)
(1,322)
(1,322)
(0.8)
(0.8)
As reported at
30 June 2014
Correction of error
Restatement
$’000
141,510
251,633
250,036
501,669
643,179
230,422
412,757
677,109
(8,356)
(255,996)
412,757
$’000
(5,708)
3,624
–
3,624
(2,084)
–
(2,084)
–
33
(2,117)
(2,084)
$’000
328,326
(303,213)
25,113
(81,477)
(94,727)
(97,613)
(56.7)
(56.7)
As restated at
30 June 2014
$’000
135,802
255,257
250,036
505,293
641,095
230,422
410,673
677,109
(8,323)
(258,113)
410,673
Notes to the Financial Statementswww.kingsgate.com.au 91
c . Statement of Financial Position as at 1 July 2013
Total current assets
Non-current assets
Exploration, evaluation and development
Other non-current assets
Total non-current assets
TOTAL ASSETS
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Accumulated losses
TOTAL EQUITY
As reported at
30 June 2013
Correction of error
Restatement
As restated at
1 July 2013
$’000
134,154
361,195
263,977
625,172
759,326
295,352
463,974
605,504
18,175
(159,705)
463,974
$’000
(4,573)
3,698
–
3,698
(875)
–
(875)
–
(80)
(795)
(875)
$’000
129,581
364,893
263,977
628,870
758,451
295,352
463,099
605,504
18,095
(160,500)
463,099
d .
Statement of Cash Flow for the year ended
30 June 2014
Net cash from operating activities
Net cash from investing activities
Net cash from financing activities
Net increase in cash and cash equivalents
As reported year ended
30 June 2014
Correction of error
Restatement
As restated year ended
30 June 2014
$’000
37,163
(43,456)
30,874
24,581
$’000
1,445
(1,445)
–
–
$’000
38,608
(44,901)
30,874
24,581
e . Earnings Per Share for the year ended 30 June 2014
As reported at
30 June 2014
Cents per share
Correction of error
Restatement
Cents per share
As restated at
1 July 2013
Cents per share
Earnings per share
Basic loss per share
Diluted loss per share
Loss after income tax
Weighted average number of shares used as the denominator
Weighted average number of ordinary shares used as the denominator
in calculating basic earnings per share
Adjustment for calculation of diluted earnings per share: options
Weighted average number of ordinary shares and potential ordinary
shares used as the denominator in calculating diluted earnings per share
(55.9)
(55.9)
$’000
(96,291)
Number
172,237,245
–
172,237,245
(0.8)
(0.8)
$’000
(1,322)
Number
–
–
–
(56.7)
(56.7)
$’000
(97,613)
Number
172,237,245
–
172,237,245
continuedu
Notes to the Financial StatementsNotes to the Financial Statements 92
Directors’ Declaration
Directors’
Declaration
In the Directors’ opinion:
a)
b)
c)
the financial statements and notes that are set out on pages 48 to 91 and the Remuneration
Report in the Directors’ Report, are in accordance with the Corporations Act 2001, including:
giving a true and fair view of the Group’s financial position as at 30 June 2015 and of its
(i)
performance for the financial year ended on that date; and
complying with Australian Accounting Standards, the Corporation Regulations 2001 and
other mandatory professional reporting requirements.
(ii)
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
at the date of this declaration, there are reasonable grounds to believe that the members of the
extended closed group identified in Note 34 will be able to meet any obligations or liabilities to
which they are, or may become, subject by virtue of the Deed of Cross Guarantee described in
Note 34.
Note 1 confirms that the financial statements also comply with International Financial Reporting
Standards as issued by the International Accounting Standards Board.
The Directors have been given the declarations required by section 295A of the Corporations Act 2001
from the Chief Executive Officer and Chief Financial Officer for the financial year ended 30 June 2015.
This declaration is made in accordance with a resolution of the Directors.
Ross Smyth-Kirk
Director
Dated at Sydney on 17 September 2015
On behalf of the Board
www.kingsgate.com.au
Independent
Auditor’s Report
Independent auditor’s report to the members
of Kingsgate Consolidated Limited
Report on the financial report
We have audited the accompanying financial report of Kingsgate Consolidated Limited (the company),
which comprises the consolidated statement of financial position as at 30 June 2015, the consolidated
statement of profit or loss and other comprehensive income, consolidated statement of changes in
equity and consolidated statement of cash flows for the year ended on that date, a summary of signifi-
cant accounting policies, other explanatory notes and the directors’ declaration for Kingsgate Group
(the consolidated entity). The consolidated entity comprises the company and the entities it
controlled at year’s end or from time to time during the financial year.
Directors’ responsibility 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 is free from material misstatement, whether due to fraud or error. In Note 1, the
directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial State-
ments, that the financial statements comply with International Financial Reporting Standards.
Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted
our audit in accordance with Australian Auditing Standards. Those standards require that we comply
with relevant ethical requirements relating to audit engagements and plan and perform the audit to
obtain reasonable assurance whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the financial report. The procedures selected depend on the auditor’s judgement, including the
assessment of the risks of material misstatement of the financial report, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the consolidated
entity’s preparation and fair presentation of the financial report in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by the directors, as
well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
93
Independent Auditor’s Report
t
r
o
p
e
R
s
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o
t
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e
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n
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p
e
d
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I
continuedu
94
Independent Auditor’s Report
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations
Act 2001.
Auditor’s opinion
In our opinion:
(a)
the financial report of Kingsgate Consolidated Limited is in accordance with the Corporations Act
2001, including:
(i)
giving a true and fair view of the consolidated entity’s financial position as at 30 June 2015
and of its performance for the year ended on that date; and
complying with Australian Accounting Standards (including the Australian Accounting
Interpretations) and the Corporations Regulations 2001.
(ii)
(b)
the financial report and notes also comply with International Financial Reporting Standards as
disclosed in Note 1.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 29 to 43 of the Directors’ Report for the
year ended 30 June 2015. The directors of the company are responsible for the preparation and presen-
tation 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.
Auditor’s opinion
In our opinion, the remuneration report of Kingsgate Consolidated Limited for the year ended 30 June
2015 complies with section 300A of the Corporations Act 2001.
PricewaterhouseCoopers
Brett Entwistle
Partner
Sydney
17 September 2015
www.kingsgate.com.au
95
Shareholder Information
n
o
i
t
a
m
r
o
f
n
I
l
r
e
d
o
h
e
r
a
h
S
Shareholder
Information
As at 30 September 2015
Substantial shareholders
Substantial shareholders and their associates who have notified the Company are listed below:
Holder
Van Eck Associates Corporation (at 21 July 2015)
Dimensional Fund Advisors LP (at 26 June 2015)
Distribution of equity securities
Size of Holding
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 +
Total
Number of shares
held as disclosed
in notices to the
Company
13,866,746
11,194,732
Percentage
6.2
5.0
Number of
shareholders of
fully paid
ordinary shares
Number of
option holders
Number of
performance
rights holders
Number of
deferred rights
holders
5,293
4,304
1,357
1,640
128
12,722
–
–
–
–
1
1
–
–
–
5
–
5
–
–
–
5
–
5
continuedu
Notes to the Financial Statements
96
Shareholder Information
20 largest shareholders
20 largest shareholders of quoted ordinary shares
Shareholder
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Limited
BNP Paribas Noms Pty Ltd < DRP >
National Nominees Limited
Citicorp Nominees Pty Limited
Merrill Lynch (Australia) Nominees Pty Limited
Arinya Investments Pty Ltd
Silver Standard Australia (BVI) Inc
Bruce Clayton Bird
Rasley (Singapore) Pte Ltd
Lujeta Pty Ltd
Guina Developments Pty Ltd
Rasley (Singapore) Pte Ltd
Elizabeth Aprieska
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