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Anglo Asian Mining PLCNAVARRE MINERALS LIMITED
ABN 66 125 140 105
Annual Report 2016
Navarre Minerals Limited
ABN 66 125 140 105
Corporate Directory
Contents
Company
Navarre Minerals Limited
ABN 66 125 140 105
and subsidiary:
Black Range Metals Pty Ltd
ABN 31 158 123 687
Directors
Kevin Wilson (Chairman)
Geoff McDermott (Managing Director)
John Dorward
Colin Naylor
Company Secretary
Jane Nosworthy
Registered Office & Principal Operations Office
40-44 Wimmera Street
PO Box 385
Stawell Victoria 3380 Australia
Telephone +61 (3) 5358 8625
Email
info@navarre.com.au
Website www.navarre.com.au
Share Registrar
Boardroom Pty Limited
Level 7, 207 Kent Street
Sydney NSW 2000 Australia
Telephone +61 (2) 9290 9600
+61 (3) 9279 0664
Facsimile
Auditor
RSM Australia Partners
Level 21
55 Collins Street
Melbourne Victoria 3000 Australia
Stock Exchange Listing
ASX Limited
Level 4, North Tower, Rialto
525 Collins Street
Melbourne Victoria 3000 Australia
ASX Code: NML
Incorporated 30 April 2007
Victoria, Australia
Chairman’s Report
Managing Director’s Review of Operations
Directors’ Report
Auditor’s Independence Declaration
Remuneration Report
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors’ Declaration
Independent Auditor’s Review Report
Additional Shareholder Information
2
3
11
18
19
28
29
30
31
32
52
53
55
FORWARD LOOKING STATEMENTS
about
that have been based on
This Financial Report includes certain forward-looking
current
statements
expectations
and
future
circumstances. These forward-looking statements are,
however, subject to risks, uncertainties and assumptions
that could cause those acts, events and circumstances to
differ materially from the expectations described in such
forward-looking statements.
events
acts,
These factors include, among other things, commercial
and other risks associated with the meeting of objectives
and other investment considerations, as well as other
matters not yet known to the Company or not currently
considered material by the Company.
1
Navarre Minerals Limited
ABN 66 125 140 105
CHAIRMAN’S REPORT
Dear Fellow Shareholder,
On behalf of the Directors, it is my pleasure to present Navarre Minerals Limited’s Annual Report for the year ending 30
June 2016.
This year saw a continuation of challenges brought about by global uncertainty in the first half of the year but signs of
improvement towards the end of the year suggest the resources industry is now on an a more positive course.
The review of operations, which follows my report, highlights the advancement of promising gold prospects near Ararat
which form part of our Stawell Corridor Gold Project. Although approximately one million ounces of dominantly alluvial
gold has been extracted from the area historically, there has been minimal modern exploration. Our preliminary
investigations indicate these prospects to be analogous to the Stawell’s Magdala Gold Mine some 15km to the north.
During the year, a program of mapping and geophysics is preparing our Ararat gold prospects for drilling in late 2016 and
2017. The proposed exploration program at Ararat was successful in attracting co-funding under the Victorian
Government’s TARGET financing scheme, a program designed to encourage innovative and technically sound greenfield
exploration in the State. We congratulate the Victorian Government on establishing its visionary TARGET program and
are delighted to receive a co-funding grant of up to $626,150. The TARGET funding has been complemented by funds of
approximately $1.4 million raised in September 2016 through a placement and a fully underwritten entitlement offer.
Elsewhere, our Bendigo North (Tandarra) Gold Project was advanced by Catalyst Metals Limited who are earning into the
project by spending $3 million over four years. Catalyst completed a reconnaissance and infill drilling program at
Tandarra delivering some excellent high-grade intersections. Further drilling is anticipated in the coming year.
In addition to the two gold exploration programs underway in Victoria we continue to examine opportunities to expand
the company’s activities, including gold and other minerals in projects at different levels of maturity.
Finally, on behalf of the Board, I would like to thank our small management team for their commitment during the year
and to thank our shareholders for their support and encouragement. In particular, we thank both the existing
shareholders and the new investors who participated in the recent capital raising.
Kind regards
Kevin Wilson
Chairman
28 September 2016
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Navarre Minerals Limited
ABN 66 125 140 105
MANAGING DIRECTOR’S REVIEW OF OPERATIONS 2016
In the financial year ending 30 June 2016 Navarre Minerals continued its exploration program with a strong focus on gold.
Programs of work were undertaken on Navarre’s Stawell Corridor Gold Project in western Victoria and also at Tandarra as
part of our Bendigo North Gold Project, Victoria in collaboration with project operator Catalyst Metals Limited (earning a
51% interest by spending $3 million over 4 years to September 2018) (see Figure 1).
Figure 1: Location of Navarre’s Victorian mineral projects.
STAWELL CORRIDOR GOLD PROJECT (EL 5476 & EL 5480)
The Stawell Corridor Gold Project comprises two exploration licences, Tatyoon and Ararat, which includes the historic
1Moz Ararat Goldfield. It is located between 10 and 70 kilometres south of the Stawell Gold Mine which is owned by
Navarre’s largest shareholder Newmarket Gold Inc. (Figure 2).
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Navarre Minerals Limited
ABN 66 125 140 105
Figure 2: Stawell Corridor Gold Project location map.
Approximately 6 million ounces of historic and modern gold production has occurred between Ararat and Stawell.
The Irvine and Benno prospects are located 15 kilometres south of Stawell’s Magdala Gold Mine (refer Figure 2) and were
identified in 2015 (NML ASX release 12 June 2015). Both prospects occupy the northern end of the Ararat Goldfield,
which is estimated to have produced approximately one million ounces of gold mainly from alluvial and deep lead
production during the period 1854 to 1925.
Production of primary hard-rock gold from the Ararat Goldfield was low given the richness of the alluvial deposits, in
contrast to the Stawell Goldfield, and is one of the reasons why Navarre is searching for economic primary gold
mineralisation in the vicinity of the richest alluvial gold deposits.
The largest gold mine along the Stawell Corridor is the Magdala Gold Mine, which is producing gold from a deposit that
has been mined to depths in excess of 1,600 metres. Modern gold mining at Stawell has been continuous since 1982 with
the Magdala gold deposit contributing more than 4 million ounces of the total 5 million ounces of gold produced to date
from the Stawell Goldfield.
Gold mineralisation of the Stawell style occurs proximal to the margins of large basalt structures or domes. The basalt
structures are rigid and do not deform as much as the surrounding sediments. The deformation leads to the creation of
voids allowing quartz veining and gold mineralisation to form on the basalt margins.
Ararat (EL 5476)
Irvine & Benno gold prospects
The Company continued to advance exploration on the Stawell-style Irvine and Benno gold prospects.
Work completed during the year included:
prospect-scale geological mapping and rock-chip sampling;
a gravity survey in collaboration with Monash University to aid mapping of the relative dense basalt domes of Irvine
and Benno. Results from the gravity survey show two north-northwest trending gravity highs corresponding to
mapped basalt float, truncated to the north by the Stawell Granite and predicted to extend several kilometres south
of the survey area;
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Navarre Minerals Limited
ABN 66 125 140 105
re-processing and integration of new and vintage gravity survey data into a single model indicates the Irvine Basalt
extends beyond the limits previously mapped and may be up to 7 kilometres long;
re-processing of magnetic data to assist with geological interpretation and target definition;
historical research of alluvial and reef mining of the Ararat Goldfield; and
planning and preparation for an Induced Polarisation (IP) geophysical survey over the Irvine Basalt dome.
Integration of the above geological mapping, geophysical, geochemical and historical mining data is indicating that the
Irvine Basalt dome may be spatially coincident with the source of many east-draining, historically mined alluvial gold
workings (Figure 3).
Reconnaissance field investigation about the margins of the Irvine Basalt has revealed up to four apparent lines of iron-
manganese-rich gossans, mineralised quartzites or laminated quartz veins that are interpreted to occur parallel to the
basalt contact. These observations compare well with the Magdala gold deposit predictive model where over 4 million
ounces of gold has been produced from an area between the basalt contact and the parallel Stawell Fault (Figure 3).
Figure 3: Comparison of Stawell’s Magdala Gold Mine with the Irvine gold prospect (right-hand diagram modified from
diagram obtained from Newmarket Gold Inc. website).
Subsequent to year end, the Company commenced the first stage of its TARGET co-funded exploration program (see
“Corporate” section below) involving an Induced Polarisation (IP) geophysics survey over the Irvine and Benno prospects
with the aim of identifying anomalies potentially associated with gold mineralisation along the margins of the basalt
domes. The IP geophysics program was completed in September 2016 with results to inform drill site selection. Air-core
and diamond drilling (which comprise the second and third milestones of the TARGET-funded program) are planned to
follow.
Tatyoon (EL 5480)
A gravity survey, in collaboration with Monash University researchers, has been acquired over the Grange and Shiraz
basalt dome targets which are located beneath recent cover sequences. The Company is yet to complete its appraisal of
the geology and structure of the prospects to advance to the next stage of exploration.
TANDARRA GOLD PROJECT (EL 4897) (Navarre free carried, Catalyst Metals Ltd earning 51%)
The Tandarra Gold Project is a greenfields gold discovery under shallow cover, 40km north of the 22 million ounce
Bendigo Goldfield (Figures 1 & 4). Under a 2014 Heads of Agreement, project manager Catalyst Metals Limited
(“Catalyst”) has the right to earn a 51% equity interest in the Tandarra Gold Project by incurring exploration expenditure
of $3 million over four years to September 2018.
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Navarre Minerals Limited
ABN 66 125 140 105
Figure 4: Plan of Tandarra Gold Project and licence holdings along the controlling Whitelaw - Tandarra Faults
On 29 July 2015 Catalyst reported that it had completed its first reconnaissance air-core drilling program at Tandarra,
which comprised 3,853 metres of reconnaissance air-core drilling in 31 holes on 3 drill traverses (refer Catalyst ASX
release 29 July 2015).
The highlight of the drilling was an intersection of high-grade gold and another significant zone of mineralisation,
approximately 500 metres apart:
2.0m @ 33.1 g/t Au including 1.0 m @ 65.6g/t Au from 129 metres (ACT221)
5.0m @ 0.5 g/t Au from 78 metres (ACT202)
These intersections are located about seven kilometres north on strike of the main zone of high grade gold mineralisation
at the Tomorrow Prospect and approximately seven kilometres south of Catalyst’s Four Eagles Gold Project (Figure 5).
This new zone of mineralisation is virtually untested over a 14 kilometre strike and will require considerably more air-core
drilling to evaluate the potential.
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Navarre Minerals Limited
ABN 66 125 140 105
Figure 5: Plan of the Tandarra Gold Project showing interpreted gold zones and planned 2016 drilling (figure courtesy of
Catalyst Metals Limited).
In April and May 2016, Catalyst undertook an RC Blade drill program comprising 39 drill holes for a total of 4,000 metres
aimed at testing the continuity of gold mineralisation in the shallow high-grade Tomorrow and Macnaughtan prospects at
Tandarra (Figures 5). Thirty-four holes in eight (east-west orientated) drill traverses were completed across the
Tomorrow prospect over a strike length of 800 metres to test the quartz reef structure down to a vertical depth of
approximately 80 metres.
On 20 July 2016, Catalyst released assay results for 34 drill holes. Each of the eight Tomorrow prospect drill traverses
contained at least one significant high-grade gold intersection (see Figure 6). Six holes on two drill traverses were also
completed over the Macnaughtan prospect and assays for 5 of these holes are yet to be received. The highlights of the
drill program include*:
5m @ 17.0 g/t Au from 106m (RCT107)
11m @ 6.2 g/t Au from 74m & 23m @ 1.92 g/t from 90m (RCT111)
6m @ 6.1 g/t Au from 51m (RCT136)
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Navarre Minerals Limited
ABN 66 125 140 105
4m @ 7.9 g/t Au from 54m (RCT104)
2m @ 14.3 g/t Au from 54m & 5.0m @ 5.9 g/t Au from 84m (RCT132)
2m @ 6.9 g/t Au from 61m (RCT102)
2m @ 13.9 g/t Au from 79m (RCT115)
7m @ 3.2 g/t Au from 73m (RCT119)
1m @ 11.2 g/t Au from 62m (RCT124)
1m @ 34.3 g/t Au from 82m (RCT 126)
3m @ 6.0 g/t Au from 64m (RCT131)
* Refer to Catalyst Metals Ltd ASX release of 20 July 2016 for further details about the latest drill results.
Interpretation and modelling of the gold mineralisation is expected to be finalised in the coming weeks following receipt
of outstanding assays.
Navarre is pleased with the outcome of the program so far and encourages its Tandarra partner to continue to advance
exploration and evaluation in the project area.
Figure 6: Longitudinal Projection of the Tomorrow gold prospect showing location of new 2016 RC drill intercepts in
bold type (diagram courtesy of Catalyst Metals Limited).
WESTERN VICTORIA COPPER PROJECT (ELs 4590, 5425, 5426 & 5497)
Navarre’s 100%-owned Western Victoria Copper Project captures multiple, largely untested targets in 130km of Stavely
Arc volcanics (Figure 1), including the Eclipse, Lexington, Glenlyle and Pollockdale prospects. The Stavely Arc is recognised
as a continental margin arc setting similar to the Andes, host to the world’s largest known copper porphyry deposits.
Navarre is targeting large volcanic massive sulphide, porphyry-copper and gold deposits.
The geology of the Stavely Arc is presently being examined and re-interpreted at a regional scale by the Geological Survey
of Victoria in collaboration with Geoscience Australia. New information collected by this initiative is being prepared for
release to assist explorers understand the geological framework of this prospective terrain.
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Navarre Minerals Limited
ABN 66 125 140 105
No significant activity was undertaken during the year pending the release of the new government data.
CORPORATE
Tandarra Heads of Agreement – final tranche of consideration received from Catalyst
In September 2015, Navarre was issued 250,000 fully paid ordinary Catalyst shares in accordance with the terms of the
Heads of Agreement entered into between Navarre and Catalyst in June 2014, pursuant to which Navarre granted
Catalyst the right to earn a 51% equity interest in the Tandarra Gold Project (EL 4897). The 250,000 Catalyst shares issued
to Navarre in September 2015 comprised the second and final tranche of the shares that Catalyst agreed to issue to
Navarre under the Heads of Agreement. In January 2016, Navarre received $140,109 (before costs) for the sale of its
500,000 Catalyst shares.
Cost management and control
The Company is mindful of the external economic conditions currently affecting the resource industry and is continuing to
implement a range of considered and methodical cost control measures while retaining the ability to undertake further
exploration on its premier exploration assets, in particular the Irvine and Benno prospects. As part of the Company’s
response to these challenging conditions, all staff agreed to reductions in salary or hours of work, including a 40% salary
reduction for the Managing Director, and the Company’s non-executive directors agreed to defer payment of directors’
fees. It is expected that these measures will be in place until such time as the Company’s cash position improves
significantly as the result of improved economic conditions, exploration success and/or better access to equity markets.
In accordance with the Company’s remuneration philosophy, the Company is considering issuing equity, such as shares or
share options, in lieu of salary forgone by senior management or directors. Shareholder approval will be required for any
equity to be granted to directors. The Company also implemented a number of additional cost cutting measures,
including reductions in staffing levels and overheads. As part of these measures, the Company made the position of
Exploration Manager redundant in September 2015 and reassigned the responsibilities of the role within the Company.
Capital raising
In November 2015, the Company completed a Share Purchase Plan (“SPP”) offer to eligible shareholders, which closed on
16 November 2016. The Company issued 5,766,674 new ordinary shares at an issue price of $0.03 per new share, raising
$173,000 before costs.
Conclusion of compliance review of Research & Development Tax Incentive Registration
In May 2016, Navarre was notified that AusIndustry had discontinued its compliance review of the Company’s registration
of research and development (“R&D”) activities conducted in the 2011/12 and 2012/13 tax years, following receipt of
additional information from the Company. AusIndustry is the government agency responsible for administering the
Federal Government’s R&D Tax Incentive program.
Victorian Government’s TARGET Minerals Exploration Initiative– co-funding grant awarded to Navarre
In June 2016, the Victorian Government announced Navarre’s selection as the recipient of a co-funding grant of up to
$626,150 for exploration on the Irvine and Benno prospects. The grant was awarded under the Victorian Government’s
TARGET Minerals Exploration Initiative (“TARGET”), a co-funding scheme designed to stimulate exploration activities in
the State. The TARGET grant funding for Irvine and Benno will contribute approximately 50% towards the total cost of an
expected $1.2 million program comprising geophysics, aircore and diamond drilling. Navarre has signed a funding
agreement with the Victorian Government that includes three milestones that will trigger the staged release of funds to
Navarre on completion of each phase of exploration activity.
Exploration Development Incentive – exploration credits issued to Navarre shareholders
During the year, Navarre participated in a new Federal Government initiative, the Exploration Development Incentive
(“EDI”), which enables eligible exploration companies to create exploration credits by giving up a portion of their tax
losses from eligible exploration expenditure and distributing these exploration credits to equity shareholders. The
scheme is intended to encourage shareholder investment in exploration companies undertaking greenfields mineral
exploration in Australia. Australian resident shareholders issued with exploration credits will generally be entitled to a
refundable tax offset (for individual shareholders or superannuation funds) or franking credits (for companies). Non-
resident shareholders receive the exploration credits but cannot use them.
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Navarre Minerals Limited
ABN 66 125 140 105
Navarre determined that, based on Navarre’s eligible greenfields mineral exploration expenditure during the 2014-15 tax
year, exploration credits of up to $228,003 were available for distribution on a pro rata basis to Navarre shareholders who
were on Navarre’s share register as at 7.00pm (Melbourne time) on Friday 27 May 2016 (“Record Date”). The exploration
credits were issued on 27 June 2016 to eligible shareholders. With 98,346,946 shares on issue at the Record Date, the
final distribution of exploration credits equated to 0.231835 cents per share. A statement of exploration credit
entitlements was mailed to each eligible Navarre shareholder by Navarre’s share registry after the issue was completed
on 27 June 2016.
Geoff McDermott
Managing Director
28 September 2016
Competent Person Declaration
The information in this release that relates to Exploration Targets, Exploration Results, Mineral Resources or Ore Reserves
is based on information compiled by Geoffrey McDermott, who is a Member of The Australian Institute of Geoscientists
and who is Managing Director of Navarre Minerals Limited. Mr McDermott has sufficient experience which is relevant to
the style of mineralisation and type of deposit under consideration, and to the activity which he is undertaking, to qualify
as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves’. Mr McDermott consents to the inclusion in the release of the matters based on his
information in the form and context in which it appears.
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Navarre Minerals Limited
ABN 66 125 140 105
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2016
The directors present their report together with the consolidated financial statements of the group comprising Navarre
Minerals Limited (variously the “Company”, “Navarre” and “Navarre Minerals”) and its subsidiary (together, the “Group”)
for the financial year ended 30 June 2016. Navarre Minerals is a company limited by shares, incorporated and domiciled
in Australia. In order to comply with the provisions of the Corporations Act 2001, the directors report as follows:
1.
DIRECTORS
The names and details of the Company’s directors in office during the financial year and until the date of this report are as
follows. The directors were in office during the entire period unless otherwise stated.
Director
Designation &
independence
status
Kevin Wilson
Chairman
Appointed
30 April 2007
Non-executive
Non-
independent
Geoff
McDermott
Appointed
19 May 2008
Managing
Director
Executive
Qualifications, experience & expertise
Directorships of
other listed
companies
Special
responsibilities
during the year
BSc (Hons), ARSM, MBA
Mr Wilson has over 30 years’ experience in the minerals and finance
industries. He was the Managing Director of Rey Resources Limited, an
Australian energy exploration company, from 2008 to 2016 and
Leviathan Resources Limited, a Victorian gold mining company, from its
initial public offering in 2005 through to its sale in 2006. He has prior
experience as a geologist with the Anglo American Group in Africa and
North America and as a stockbroking analyst and investment banker
with CS First Boston and Merrill Lynch in Australia and USA.
None
BSc (Hons), MAIG
None
Mr McDermott is a geologist with 30 years’ industry experience working
in surface and underground metalliferous mining operations, in mineral
exploration and as a consultant to the minerals industry.
Mr McDermott has a broad range of international experience having
worked as a geologist in Canada, Fiji and Australia for companies such as
Western Mining Corporation and Rio Tinto and with the Government of
the Northwest Territories, Canada. From 2002 until 2007, Mr
McDermott was Chief Geologist and Group Geologist with MPI Mines
Limited and Leviathan Resources Limited.
Chairman of the
Board
Chairman of the
Remuneration &
Nomination
Committee
Member of the
Audit Committee
Member of the
Remuneration &
Nomination
Committee
John Dorward
Director
BComm (Hons), GradDipAppFin, CFA
Appointed
15 August 2008
Non-executive
Non-
independent
Mr Dorward is currently President, Chief Executive Officer and Director
of Roxgold Inc., a TSX listed gold explorer. Mr Dorward was previously
the Vice President Business Development of Fronteer Gold Inc., a TSX
listed gold and uranium developer. Prior to joining Fronteer, he was CFO
of Mineral Deposits Limited where he was responsible for financing the
Sabodala Gold Project in Senegal, West Africa. Preceding this he was
CFO and Company Secretary of Leviathan Resources Limited and
Commercial Executive and Company Secretary of MPI Mines Limited.
Before joining MPI Mines Limited, Mr Dorward had 8 years’ experience
in the banking sector with a number of years spent in a senior resource
project finance role with BankWest.
Roxgold Inc.
(ongoing)
Member of the
Audit Committee
Member of the
Remuneration &
Nomination
Committee
Colin Naylor
Director
B.Bus (Acc), FCPA
None
Appointed
5 November 2010
Non-executive
Independent
Mr Naylor is currently Chief Financial Officer and Company Secretary of
oil and gas explorer, MEO Australia Limited. Before joining MEO, Mr
Naylor held a number of senior roles in major resource companies,
including Woodside Petroleum, BHP Petroleum and Newcrest Mining.
Mr Naylor also worked at MPI Mines Limited and Leviathan Resources
Limited as Financial Controller.
Mr Naylor was previously a member of the Victorian Divisional Council
of the CPA and a previous member of the Group of 100 National
Executive and Victorian State Chapter.
Chairman of the
Audit Committee
Member of the
Remuneration &
Nomination
Committee
11
Navarre Minerals Limited
ABN 66 125 140 105
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2016
1.
DIRECTORS (cont.)
Interests in the shares and options of the company
As at the date of this report, the relevant beneficial and non-beneficial interests of each of the directors in the shares and
share options in the Company were:
Ordinary
Shares
K Wilson
G McDermott
J Dorward
C H Naylor
8,921,404
7,870,929
6,621,599
3,209,584
Options issued
pursuant to
participation in
2016
entitlement
offer
1,274,487
480,876
945,943
129,311
NED Options
MD Options
-
-
-
-
-
100,000
-
-
The terms of these options are set out in Note 21 to the consolidated financial statements.
2.
COMPANY SECRETARY
Ms Jane Nosworthy was appointed as Company Secretary on 16 January 2012. Ms Nosworthy has previously held legal,
commercial and company secretarial roles at Oceana Gold Corporation, Leviathan Resources Limited and MPI Mines
Limited, prior to which she was a Senior Associate in the Melbourne Office of law firm Allens Arthur Robinson. She holds
a Bachelor of Arts and a Bachelor of Laws from the University of Adelaide, and a Certificate in Governance Practice from
Chartered Secretaries Australia.
3.
DIVIDENDS
No dividend has been paid, provided or recommended during the financial year and to the date of this report (2015: nil).
4.
OPERATING AND FINANCIAL REVIEW
4.1
Principal activities
The principal activities during the year were mineral exploration in Victoria, Australia.
The Company had 6 employees at 30 June 2016 including directors (2015: 7).
4.2
Environment, health and safety
The Group conducts exploration activities in Victoria. No mining activity has been conducted by the Group on its
exploration licences.
The Group’s exploration operations are subject to environmental and health and safety regulations under the various
laws of Victoria and the Commonwealth.
While exploration activities to date have had a low level of environmental impact, the Group has adopted a best practice
approach in satisfaction of the regulations of relevant government authorities.
4.3
Review of operations
The Group maintained an active exploration program during the year with the objectives of identifying economic copper
and gold mineral deposits.
Direct exploration expenditure during the 2016 financial year was $210,196.
The following summary of the Company’s exploration activities during the year should be read in conjunction with the
Managing Director’s Review of Operations 2016, which forms part of and is included earlier in this Annual Report.
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Navarre Minerals Limited
ABN 66 125 140 105
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2016
4.
4.3
OPERATING AND FINANCIAL REVIEW (cont.)
Review of operations (cont.)
(a)
Stawell Corridor Gold Project (Ararat (EL 5476) & Tatyoon (EL 5480))
Ararat (EL 5476)
The Company continued to advance exploration on the Ararat Gold Project’s Stawell-style Irvine and Benno gold
prospects.
Work completed during the year included:
prospect-scale geological mapping and rock-chip sampling;
a gravity survey in collaboration with Monash University to aid mapping of the relative dense basalt domes of Irvine
and Benno. Results from the gravity survey show two north-northwest trending gravity highs corresponding to
mapped basalt float, truncated to the north by the Stawell Granite and predicted to extend several kilometres south
of the survey area;
re-processing and integration of new and vintage gravity survey data into a single model indicates the Irvine Basalt
extend beyond the limits previously mapped and may be up to 7 kilometres long;
re-processing of magnetic data to assist with geological interpretation and target definition;
historical research of alluvial and reef mining of the Ararat Goldfield; and
planning and preparation for an Induced Polarisation (IP) geophysical survey over the Irvine Basalt dome.
Subsequent to year end, the Company commenced the planned IP geophysical survey as part of the first stage of its
TARGET co-funded exploration program for the Irvine and Benno gold prospects. The survey is expected to be completed
by the end of September 2016, with air-core and diamond drilling planned to follow.
Tatyoon (EL 5480)
A gravity survey, in collaboration with Monash University researchers, has been acquired over the Grange and Shiraz
basalt dome targets which are located beneath recent cover sequences. The Company is yet to complete its appraisal of
the geology and structure of the prospects to advance to the next stage of exploration.
(b)
Tandarra Gold Project (EL 4897)
Under a 2014 Heads of Agreement, project manager Catalyst Metals Limited (“Catalyst”) has the right to earn a 51%
equity interest in Tandarra by incurring exploration expenditure of $3 million over four years to September 2018.
On 29 July 2015, Catalyst reported that it had completed its first reconnaissance air-core drilling program at Tandarra,
which comprised 3,853 metres of reconnaissance air-core drilling in 31 holes on 3 drill traverses. The highlight of the
drilling was an intersection of high-grade gold and another significant zone of mineralisation, approximately 500 metres
apart (refer Catalyst ASX release 29 July 2015).
In April and May 2016, Catalyst undertook an RC Blade drill program comprising 39 drill holes for a total of 4,000 metres
aimed at testing the continuity of gold mineralisation in the shallow high-grade Tomorrow and Macnaughtan prospects at
Tandarra. Thirty-four holes in eight (east-west orientated) drill traverses were completed across the Tomorrow prospect
over a strike length of 800 metres to test the quartz reef structure down to a vertical depth of approximately 80 metres.
On 20 July 2016, Catalyst released assay results for 34 drill holes (refer Catalyst ASX release 20 July 2016). Each of the
eight Tomorrow prospect drill traverses contained at least one significant high-grade gold intersection. Six holes on two
drill traverses were also completed over the Macnaughtan prospect and assays for 5 of these holes are yet to be received.
Interpretation and modelling of the gold mineralisation is expected to be finalised in the coming weeks following receipt
of outstanding assays.
(c)
Landsborough Fault Gold Project (Kingston) (EL 5280)
Exploration licence EL 5280 was surrendered during the year.
13
Navarre Minerals Limited
ABN 66 125 140 105
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2016
4.
4.3
OPERATING AND FINANCIAL REVIEW (cont.)
Review of operations (cont.)
(d) Western Victoria Copper Project (EL 4590, EL 5425, EL 5426 & EL 5497)
No significant activity was undertaken during the year pending the release of new government data about the Stavely Arc.
The geology of the Stavely Arc is presently being examined and re-interpreted at a regional scale by the Geological Survey
of Victoria in collaboration with Geoscience Australia. New information collected by this initiative is being prepared for
release to assist explorers understand the geological framework of this prospective terrain.
4.4
Review of financial position
(a)
Results for the year
The net loss for the financial year, after provision for income tax, was $2,672,020 (2015: loss after tax of $505,344).
(b)
Review of financial condition at the balance date
At balance date the Group held cash and cash equivalents of $305,872. During the year the Group decreased the cash
balance by $192,167 following net proceeds from share issues of $153,473, interest received of $8,349, proceeds from
sale of available-for-sale financial assets of $141,484 and proceeds from sale of plant and equipment of $15,000 which
was used to partially meet exploration cash outflows of $217,382 and corporate costs of $293,091.
(c)
Share issues
In November 2015, Navarre raised $173,000 (before transaction costs) from issuing 5,766,674 new ordinary shares at a
price of $0.03 per new share through a share purchase plan.
(d)
Significant changes in the state of affairs of the Group during the financial year
(i)
(ii)
(iii)
(iv)
In September 2015, in accordance with the terms of the Heads of Agreement entered into between Navarre and
Catalyst Metals Limited (“Catalyst”) in June 2014, Navarre was issued 250,000 fully paid ordinary shares in Catalyst
(bringing to 500,000 the total number of Catalyst shares issued to Navarre to, as part of the consideration for
Navarre granting Catalyst the right to earn a 51% equity interest in the Tandarra Gold Project (EL 4897)).
In January 2016, Navarre completed the sale of 500,000 fully paid ordinary shares in Catalyst. Navarre received
proceeds of $140,109 (before transaction costs) from the sale of its Catalyst shares.
In May 2016, following receipt of additional information from Navarre, AusIndustry discontinued its compliance
review of the Company’s registration of research and development (“R&D”) activities conducted in the 2011/12
and 2012/13 tax years. AusIndustry is the government agency responsible for administering the Federal
Government’s R&D Tax Incentive program.
In June 2016, the Victorian Government announced Navarre’s selection as the recipient of a co-funding grant of up
to $626,150 for exploration on the Irvine and Benno prospects, part of Navarre’s Stawell Corridor Gold Project.
The grant was awarded under the Victorian Government’s TARGET Minerals Exploration Initiative (“TARGET”), a
co-funding scheme designed to stimulate exploration activities in the State. The TARGET grant funding for Irvine
and Benno will contribute approximately 50% towards the total cost of an expected $1.2 million program
comprising geophysics, aircore and diamond drilling. Navarre has signed a funding agreement with the Victorian
Government that includes three milestones that will trigger the staged release of funds to Navarre.
(e)
Significant events after the balance date
In September 2016, Navarre raised $285,070 (before transaction costs) from a placement to sophisticated and
professional investors, resulting in the issue of 9,830,000 ordinary shares at an issue price of $0.029 per share, together
with 4,915,000 free attaching unlisted options (exercise price $0.05, expiry date 31 March 2018) on the basis of one
option for every two new shares subscribed for and issued. Navarre also raised $1,140,824 (before transaction costs)
from a fully underwritten 2-for-5 non-renounceable pro rata entitlement offer, resulting in the issue of 39,338,779
ordinary shares at an issue price of $0.029 per share, together with 19,669,402 free attaching unlisted options (exercise
price $0.05, expiry date 31 March 2018) on the basis of one option for every two new shares subscribed for and issued.
14
Navarre Minerals Limited
ABN 66 125 140 105
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2016
4.
OPERATING AND FINANCIAL REVIEW (cont.)
4.4
Review of financial position
(e)
Significant events after the balance date
Subsequent to year end, the Company commenced the first stage of its TARGET co-funded exploration program involving
an Induced Polarisation (IP) geophysics survey over the Irvine and Benno prospects with the aim of identifying anomalies
potentially associated with gold mineralisation along the margins of the basalt domes. The IP geophysics program was
completed in September 2016 with results to inform drill site selection. Air-core and diamond drilling (which comprise
the second and third milestones of the TARGET-funded program) are planned to follow.
Other than the above, there has not arisen in the interval between the end of the financial year and the date of this
report any item, transaction or event of a material and unusual nature likely, in the opinion of the directors of the
Company, to affect significantly the operations of the Group, the results of those operations, or state of affairs of the
Group, in future financial years.
(f)
Likely developments and expected results
During the course of the next financial year, the Group will continue its mineral exploration activities and will investigate
additional opportunities in which the Group may wish to participate.
The Group has responded to the external economic conditions affecting the resource industry with a considered and
methodical program of cost reductions. The Group is working to strike a balance between conserving cash resources and
maintaining exploration activities at reduced expenditure levels. Strategies implemented to date include staff reductions,
reduced hours of work, reductions in overheads and cessation of work programs not linked to advancing the Group’s key
prospects.
In June/July 2015, the Company implemented a new program of cost reduction measures including reductions in staffing
levels, notably, termination of the Exploration Manager due to redundancy. All staff have agreed to reductions in salary
or hours of work, including a 40% salary reduction for the Managing Director, and the Company’s non-executive directors
have agreed to defer payment of directors’ fees.
Together, these measures are expected to deliver a significant reduction in corporate overheads and the measures will
remain in place until such time as the Company’s cash position improves significantly as the result of improved economic
conditions, exploration success and/or better access to equity markets.
In accordance with the Company’s remuneration philosophy, the Company is considering issuing equity, such as shares or
share options, in lieu of salary forgone by senior management or directors. Shareholder approval will be required for any
grants of equity to directors.
4.5
Business strategy and prospects for future financial years
(a)
Business strategy
The Group’s mission is to reward shareholders by creating value through mineral discovery.
The Group’s goal is to define a maiden mineral resource and to become a low cost Victorian copper and gold producer
through exploration success. The Group undertakes an active exploration program within emerging and proven mineral
corridors, with the objective of identifying economic copper and gold mineral deposits. The Group’s strategy for the next
twelve months for its existing portfolio of exploration assets is to focus its financial and managerial resources on
development of its most prospective mineral opportunities at or on the Group’s Ararat Exploration Licence (EL 5476).
Opportunities for growth through acquisition are also being considered.
15
Navarre Minerals Limited
ABN 66 125 140 105
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2016
4.
4.5
(b)
OPERATING AND FINANCIAL REVIEW (cont.)
Business strategy and prospects for future financial years
Future prospects of the Group
The key driver of the Group’s future prospects will be the success of its exploration programs. The discovery of an
economic mineral deposit has the potential to significantly increase shareholder wealth.
The key material risks faced by the Group that are likely to have an effect on its future financial prospects include:
(i)
(ii)
exploration risk – the Group’s mineral tenements are in the early stages of exploration, and there can be no
assurance that exploration of the tenements currently held by the Group, or any other tenements that may be
acquired in the future, will result in the discovery of an economic mineral deposit. Until the Group is able to
realise value from its mineral tenements, it is likely to incur ongoing operating losses. If exploration is successful,
there will be additional costs and processes involved in moving to the development phase. By its nature,
exploration risk can never be fully mitigated, but the Group has the benefit of significant exploration expertise
through its management team and of operational and business expertise at both board and management level;
requirements for capital – as exploration costs reduce the Group’s cash reserves, the Group will require additional
capital to support the long term exploration and evaluation of its projects. The past twelve months have
continued to be characterised by poor market sentiment towards the mineral exploration sector, which has limited
the Group’s access to capital. The Group has responded to the external economic conditions affecting the
resources industry with a considered and methodical program of cost reductions, including significant reductions
in executive salaries or hours of work and reductions in staffing levels. The Group continues to work to strike a
balance between conserving cash and maintaining exploration activities at reduced levels. If the Group is unable
to obtain additional financing as needed, through equity, debt or joint venture financing, it may be required to
further scale back its exploration programs. The Group will continue to consider capital raising initiatives, as
required, including possible corporate opportunities; and
(iii)
tenement title – the Group could lose title to its mineral tenements if insufficient funds are available to meet the
relevant annual expenditure commitments, as and when they arise. The Group closely monitors its compliance
with licence conditions, including expenditure commitments and rents, and maintains a dialogue with the relevant
State government representatives who are responsible for enforcing licence conditions.
This is not intended to be an exhaustive list of the risk factors to which the Company is exposed.
Navarre Minerals is also exposed to a range of market, financial and governance risks. The Company has risk
management and internal control systems to manage material business risks which include insurance coverage over
major operational activities and regular review of material business risks by the Board.
5.
SHARE OPTIONS
Options expired during the financial year
350,000 share options held by a senior employee of the Company expired on 18 September 2015. 250,000 share options
held by the Managing Director and 800,000 share options held by non-executive directors expired on 31 December 2015.
Unissued shares under option
At the date of this report, there were 25,434,402 unissued ordinary shares of the Company under option. The terms of
these options are as follows:
Expiry Date
31 December 2016
31 December 2017
31 March 2018
31 December 2018
31 December 2019
Exercise Price
$0.30
$0.15
$0.05
$0.10
$0.04
Number
150,000
300,000
24,584,402
250,000
150,000
These options do not entitle the holder to participate in any share issue of the Company.
Shares issued on the exercise of Options
During or since the end of the financial year, there has been no issue of ordinary shares as a result of the exercise of
options.
16
Navarre Minerals Limited
ABN 66 125 140 105
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2016
6.
INDEMNIFICATION AND INSURANCE OF DIRECTORS
The Company paid a premium in respect of a contract insuring all directors of the Company against legal costs incurred in
defending proceedings as permitted by Section 199B of the Corporations Act 2001.
7.
BOARD AND COMMITTEE MEETINGS
The following table sets out the members of the Board of Directors and the members of the Committees of the Board, the
number of meetings of the Board and of the Committees held during the year and the number of meetings attended
during each director’s period of office.
Board of Directors
Audit Committee
K Wilson
G McDermott
J Dorward
C H Naylor
A
6
7
7
5
B
7
7
7
7
A
4
-
3
4
B
4
-
4
4
Remuneration &
Nomination Committee
A
2
2
2
1
B
2
2
2
2
A – Number of meetings attended
B – Number of meetings held during the time the director held office during the year
8.
AUDITOR INDEPENDENCE AND NON-AUDIT SERVICES
The directors have received the independence declaration from the auditor, RSM Australia Partners, set out on page 18.
Non Audit Services
There were no non-audit services provided during the year by Auditor RSM Australia Partners.
17
RSM Australia Partners
Level 21, 55 Collins Street Melbourne VIC 3000
PO Box 248 Collins Street West VIC 8007
T +61 (0) 3 9286 8000
F +61 (0) 3 9286 8199
www.rsm.com.au
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the financial report of Navarre Minerals Limited for the year ended 30 June 2016,
I declare that, to the best of my knowledge and belief, there have been no contraventions of:
(i)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii)
any applicable code of professional conduct in relation to the audit.
RSM AUSTRALIA PARTNERS
J S CROALL
Partner
Dated: 28 September 2016
Melbourne, Victoria
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING
18
RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the
RSM network is an independent accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.
RSM Australia Partners ABN 36 965 185 036
Liability limited by a scheme approved under Professional Standards Legislation
Navarre Minerals Limited
ABN 66 125 140 105
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2016
9.
REMUNERATION REPORT (Audited)
The Remuneration Report for the year ended 30 June 2016 outlines the remuneration arrangements of the Company, in
accordance with Section 300A of the Corporations Act 2001 and its regulations.
The information provided in this Remuneration Report has been audited as required by Section 308(3C) of the
Corporations Act 2001. This Remuneration Report forms part of the Directors’ Report.
The Remuneration Report details the remuneration arrangements for Key Management Personnel (“KMP”), who are
defined as those persons having authority and responsibility for planning, directing and controlling the activities of the
Company, directly or indirectly, including any director (whether executive or otherwise) of the Company.
9.1
Key Management Personnel for the year ended 30 June 2016
Directors
K Wilson
Chairman (non-executive)
G McDermott
Managing Director
J Dorward
Director (non-executive)
C H Naylor
Director (independent non-executive)
Executives
W Edgar
Exploration Manager (ceased employment 18 September 2015)
J Nosworthy
Company Secretary
9.2
Board oversight of remuneration
The policy for determining the nature and amount of remuneration for directors and executives is set by the Board of
Directors as a whole. The Board established a Remuneration and Nomination (“R&N”) Committee to provide the Board
with a regular, structured opportunity to focus on remuneration and nomination issues. All directors of the Company,
including the Managing Director, are members of the R&N Committee. Any potential for, or perception of, conflict of
interest resulting from the Managing Director’s membership of the R&N Committee is addressed by ensuring that the
Managing Director withdraws from committee meetings during any discussion of his remuneration arrangements or
performance, and takes no part in the discussion or decision-making process in relation to such matters.
The Board may obtain professional advice when appropriate to ensure that the Company attracts and retains talented
and motivated directors and employees who can enhance Company performance through their contributions and
leadership.
9.3
Non-executive director remuneration arrangements
The Board seeks to set non-executive director remuneration at a level that provides the Company with the ability to
attract and retain directors of high calibre, at a cost acceptable to shareholders.
The amount of aggregate remuneration approved by shareholders and the fee structure for non-executive directors is
reviewed annually by the Board against fees paid to non-executive directors of comparable companies.
The Company’s Constitution and the ASX Listing Rules specify that the aggregate remuneration of non-executive directors
must be determined from time to time by members in a general meeting. An amount not exceeding the amount
determined is then divided between the directors as agreed. The maximum aggregate annual remuneration for non-
executive directors is currently set at $300,000 per annum. Any increase in this amount will require shareholder approval
at a general meeting.
19
Navarre Minerals Limited
ABN 66 125 140 105
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2016
9.
REMUNERATION REPORT (Audited) (cont.)
9.3
Non-executive director remuneration arrangements (cont.)
Non-executive directors are remunerated at marketplace levels by way of fixed fees, in the form of cash and statutory
superannuation contributions, and (from time to time, as appropriate) options issued through the Navarre Minerals
Limited Option Plan (“NMLOP”). The Chairman, Mr Wilson, is entitled to receive a base fee of $40,000 per annum
(excluding statutory superannuation) and the other non-executive directors are entitled to receive $30,000 per annum
(excluding statutory superannuation). As part of the Company’s implementation of a range of cost reduction measures in
2015, the non-executive directors have agreed to defer payment of directors’ fees until such time as the Company’s cash
position improves significantly as the result of improved economic conditions, exploration success and/or better access to
equity markets. Accordingly, the non-executive directors’ fees for the years ended 30 June 2015 and 30 June 2016 remain
unpaid to date. In accordance with the Company’s remuneration philosophy, the Company may consider issuing equity in
the Company, such as shares or share options, in lieu of non-executive directors’ unpaid fees. Shareholder approval will
be required for any equity to be issued to non-executive directors.
In addition to directors’ fees, the directors are entitled to be paid all travelling and other expenses they incur in attending
to the Company’s affairs, including attending and returning from general meetings of the Company or meetings of the
Board or of committees of the Board. No additional remuneration is paid to directors for service on board committees or
on the board of the wholly owned subsidiary, but additional remuneration may be paid to directors if they are called upon
to perform extra services or make any special exertion for the purposes of the Company.
The non-executive directors have no leave entitlements and do not receive any retirement benefits, other than statutory
superannuation and salary sacrifice superannuation (if directors wish to exercise their discretion to make additional
superannuation contributions by way of salary sacrifice).
The remuneration of the Company’s non-executive directors for the year ended 30 June 2016 and 30 June 2015 is
detailed in Table 1 and Table 2 of this Remuneration Report.
9.4
Executive remuneration arrangements
The Company aims to reward executives with a level and mix of remuneration commensurate with their position and
responsibilities within the Company and so as to:
ensure total remuneration is competitive by market standards;
reward executives for exceptional individual performance; and
align the interests of executives with those of shareholders.
Executive remuneration consists of fixed remuneration and, where appropriate, variable (at risk) remuneration.
Fixed remuneration
The base salaries of the Managing Director and other executives are fixed. Fixed remuneration is set at a market
competitive level, taking into account an individual’s responsibilities, performance, qualifications and experience, and
current market conditions in the mining industry. Base salaries are reviewed annually, but executive contracts do not
guarantee any increases in fixed remuneration. In light of the financial environment in which the Company is operating,
there were no increases to base salaries for executives for calendar year 2015 and the Company subsequently agreed
with all staff to reduce salaries or hours of work, as part of a range of cost reduction measures designed to ensure that
the Company manages its cash position while retaining the ability to undertake further exploration. These measures
included, with effect from 1 July 2015, salary reductions of 40% for each of the Managing Director and Exploration
Manager (prior to termination of his employment in September 2015). It is expected that these reductions will be in
place until such time as the Company’s cash position improves significantly as the result of improved economic
conditions, exploration success and/or better access to equity markets. In accordance with the Company’s remuneration
philosophy, the Company may consider issuing equity in the Company, such as shares or share options, in lieu of salary
forgone by senior management. Shareholder approval will be required for any equity to be issued to the Managing
Director.
Executives receive statutory superannuation from the Company and may, in their discretion, make additional
superannuation contributions by way of salary sacrifice.
The fixed component of executives’ remuneration is detailed in Table 1 and Table 2 of this Report.
20
Navarre Minerals Limited
ABN 66 125 140 105
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2016
9.
REMUNERATION REPORT (Audited) (cont.)
9.4
Executive remuneration arrangements (cont.)
Variable/at risk remuneration
The performance of executives is measured against criteria agreed annually with each executive and is based
predominantly on the overall success of the Company in achieving its broader corporate goals. Variable remuneration is
linked to predetermined performance criteria.
Short term incentives
In light of the Company’s cash position during the year under review, there is no short term incentive in the form of a
cash payment as part of the Managing Director’s remuneration package for calendar year 2015 or calendar year 2016.
Similarly, prior to the termination of his employment, the Exploration Manager’s remuneration package for calendar year
2015 also did not include a short term incentive in the form of a cash payment.
Long term incentives
The Company considers the retention of high calibre staff to be essential to the growth and success of the Company.
Executives are eligible to participate in the NMLOP, which is used to provide long term performance and retention
incentives, as appropriate, in the form of the grant of share options over unissued shares in the Company.
Managing Director
The Managing Director’s remuneration package for calendar year 2015 included a long term incentive in the form
of a grant of up to 500,000 share options, to be granted subject to achievement of agreed KPIs. The KPIs related to
improvement in the Company’s share price during the 2015 calendar year, relative to the prevailing share price
when the KPIs were set by the Board (excluding the Managing Director) in February 2015. The Managing Director
was eligible to receive 250,000 options if the volume weighted average price (VWAP) of the Company’s shares in
December 2015 was 4 cents or higher, and a further 250,000 options if the VWAP was 6 cents or higher. The
Company obtained shareholder approval for the grant of these options (subject to achievement of the applicable
KPIs) at the Company’s 2015 AGM. In February 2016, the R&N Committee (excluding the Managing Director)
determined that none of the KPIs applicable to the Managing Director’s long term incentive options had been met
and therefore, no options were granted to the Managing Director in respect of calendar year 2015.
In light of the financial position of the Company at the beginning of 2016, although draft KPIs for the year were
considered by the R&N Committee in February 2016, no long-term incentive arrangements were implemented for
the calendar year 2016. Before the Company’s Annual General Meeting in November 2016, the Board will
determine whether it is appropriate to seek shareholder approval for a grant of options to the Managing Director
by way of long-term incentive. No incentive options will be granted to the Managing Director unless shareholder
approval is obtained.
Exploration Manager
The Exploration Manager’s remuneration package for calendar year 2015 included a long term incentive in the
form of a grant of up to 500,000 share options, to be granted subject to achievement of agreed KPIs. As the
Exploration Manager’s employment was terminated in September 2015, none of the options comprising the long-
term incentive for the Exploration Manager were granted.
21
Navarre Minerals Limited
ABN 66 125 140 105
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2016
9.
REMUNERATION REPORT (Audited) (cont.)
9.4
Executive remuneration arrangements (cont.)
Other executives and senior employees
During the financial year, other executives and senior employees have been granted options which have time-based
vesting conditions, therefore requiring them to remain employed with the Company through to the vesting date of the
options.
See page 25 for details of all options granted to the Managing Director and other key management personnel during the
financial year.
The Company prohibits executives from entering into arrangements to protect the value of unvested share options. The
prohibition includes entering into contracts to hedge their exposure to options awarded as part of their remuneration
package.
Subject to the exception noted below, the Managing Director approves the terms and conditions of consultants’
contracts, including fees, taking into account market conditions for the services that are provided. Consulting contracts do
not include any guaranteed fee increases.
9.5
Executive Contractual Arrangements
Remuneration arrangements for Key Management Personnel are formalised in service agreements. Details of these
contracts are provided below.
Managing Director
-
-
-
-
-
Mr Geoff McDermott entered into an executive service agreement dated 10 December 2010 which contains the
following major terms (including amendments made in March 2013 and July 2015):-
Term: From 31 March 2011 until either the Company or Mr McDermott terminates the agreement.
Notice: The Company may terminate the agreement at any time by giving six months’ notice in writing. Mr
McDermott may terminate the agreement at any time by giving six months’ written notice to the Company or on
one month’s written notice to the Company if a ‘fundamental change’ to his employment occurs or the Company
has failed to remedy a notified breach of its obligations under the agreement. The Company may immediately
terminate the agreement by giving written notice in certain circumstances, including if serious misconduct has
occurred. The Company may elect to pay Mr McDermott in lieu of part or all of any notice period.
Base salary: Mr McDermott’s total fixed remuneration comprises a base salary plus statutory superannuation.
This is reviewed by the R&N Committee (excluding the Managing Director) on an annual basis. Effective 1 July
2015, Mr McDermott’s base salary was reduced to $147,562 per annum (plus superannuation of $14,018) as part
of a broader program of cost reduction measures. Mr McDermott’s base salary will revert to its previous level of
$245,936 per annum plus superannuation once the Company’s cash balance returns to $1.5 million for more than
90 days, or sooner if the Board (excluding Mr McDermott) determines that circumstances are appropriate to do so.
Short-term incentive: Mr McDermott is eligible to receive an annual short-term incentive payment on terms
decided by the Board (excluding the Managing Director). However, in light of the Company’s limited cash
resources, no short-term incentive payment was included in Mr McDermott’s remuneration package for calendar
year 2016.
Long-term incentive: Subject to receiving shareholder approval, Mr McDermott is eligible to participate in the
Company’s long-term incentive arrangements (as amended or replaced) on terms decided by the Board. In light of
the financial position of the Company at the beginning of 2016, no long-term incentive arrangements were
implemented for the calendar year 2016.
22
Navarre Minerals Limited
ABN 66 125 140 105
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2016
9.
REMUNERATION REPORT (Audited) (cont.)
9.5
Executive Contractual Arrangements (cont.)
Termination payments: If Mr McDermott’s employment is terminated by the Company for any reason (other than
in circumstances warranting summary dismissal), Mr McDermott is entitled to a retirement benefit calculated as
one month’s total fixed remuneration, plus two weeks’ total fixed remuneration for each completed or part-
completed year of continuous service with the Company. If Mr McDermott resigns within six months of a
‘fundamental change’, Mr McDermott is entitled to a lump sum payment equivalent to six months’ total fixed
remuneration (to be calculated by reference to Mr McDermott’s total fixed remuneration prior to the reduction
effected from 1 July 2015).
Exploration Manager
Mr Wessley Edgar entered into an executive service agreement dated 13 August 2012 (as amended in March 2013
and July 2015). The Company terminated Mr Edgar’s employment due to redundancy.
Other Executives
All executives have standard employment agreements. The Company may terminate the executive’s employment
agreement by written notice (ranging from four weeks to three months’ notice) or providing payment in lieu of the
notice period (based on the fixed component of the executive’s remuneration). The Company may terminate the
agreement at any time without notice if serious misconduct has occurred. The executive may terminate the
agreement by written notice to the Company (ranging from four weeks to three months’ notice). The Company
Secretary is entitled to a retirement benefit calculated as one month’s total fixed remuneration, plus two weeks’
total fixed remuneration for each completed or part-completed year of continuous service with the Company, if
employment is terminated by the Company for any reason (other than in circumstances warranting summary
dismissal), or if the Company Secretary resigns due to a ‘fundamental change’ or a failure by the Company to
remedy a notified breach of its obligations. For all employees, on cessation of employment, any options that have
not vested will be forfeited and any options that have vested must be exercised within 90 days or will be forfeited.
9.6
Remuneration of Key Management Personnel of the Company
Table 1: Remuneration for the year ended 30 June 2016
Short term
Post Employment
Share-
based
Payment
Long term
Total
Performance
Related
Directors
fees2
$
Salary
$
STI cash
bonus
$
Superannuation
benefits
$
Option
plan1
$
Long service
leave
$
Non– executive directors
K Wilson
J Dorward
C H Naylor
Sub-total
non-executive
directors
Executive director
40,000
30,000
30,000
100,000
-
-
-
-
G McDermott
-
132,219
Other key management personnel
W Edgar
J Nosworthy
Sub-total executive
KMP
-
-
-
79,399
33,377
244,995
TOTAL
100,000
244,995
-
-
-
-
-
-
-
-
-
3,800
2,850
2,850
9,500
-
-
-
-
35,000
119
2,888
3,171
41,059
50,559
-
2,194
2,313
2,313
-
-
-
-
-
-
-
-
-
$
43,8002
32,8502
32,8502
109,5002
167,338
82,287
38,742
288,367
397,867
%
-
-
-
-
0.1
-
5.7
0.8
0.6
1Refer Note 21 to the consolidated financial statements for fair value calculation of options.
2As noted in Section 9.3 above, payment of these fees has been deferred as part of the implementation of a range of cost reduction measures.
23
Navarre Minerals Limited
ABN 66 125 140 105
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2016
9.
REMUNERATION REPORT (Audited) (cont.)
9.6
Remuneration of Key Management Personnel of the Company (cont.)
Table 2: Remuneration for the year ended 30 June 2015
Short term
Post Employment
Share-
based
Payment
Long term
Total
Performance
Related
Directors
fees2
$
Salary
$
STI cash
bonus
$
Superannuation
benefits
$
Option
plan1
$
Long service
leave
$
Non– executive directors
K Wilson
J Dorward
C H Naylor
Sub-total
non-executive
directors
Executive director
40,000
30,000
30,000
100,000
-
-
-
-
-
-
-
-
3,800
2,850
2,850
9,500
G McDermott
-
229,719
18,000
35,000
-
-
-
-
-
Other key management personnel
W Edgar
J Nosworthy
Sub-total executive
KMP
-
-
-
TOTAL
100,000
483,097
202,742
12,000
50,636
-
483,097
30,000
30,000
26,545
4,811
66,356
75,856
2,099
6,679
8,778
8,778
-
-
-
-
-
-
-
-
-
$
43,8002
32,8502
32,8502
109,5002
282,719
243,386
62,126
588,231
697,731
%
-
-
-
-
6.4
5.8
10.7
6.6
5.7
1Refer Note 21 to the consolidated financial statements for fair value calculation of options.
2As noted in Section 9.3 above, payment of these fees has been deferred as part of the implementation of a range of cost reduction measures.
9.7
Remuneration Mix
The Company’s executive remuneration is structured as a mix of fixed annual remuneration and variable ‘at risk’
remuneration. The mix of these components varies for different management levels.
Table 3: Relative proportion and components of total remuneration packages for the year ended 30 June 2016
Executives
G McDermott
W Edgar
J Nosworthy
% of Total Remuneration
Performance-based remuneration
Fixed remuneration
%
Short Term Incentive
%
Long Term Incentive
%
99.9
100.0
94.3
-
-
-
0.1
-
5.7
24
Navarre Minerals Limited
ABN 66 125 140 105
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2016
9.
REMUNERATION REPORT (Audited) (cont.)
9.8
Equity instruments
Table 4: Options granted, vested and lapsed during the year
Number of
options
granted
during 2016
Grant date
Fair value
per option
at grant
date ($)
Exercise
price per
option ($)
Expiry Date
Vest Date
Number of
options
vested
during 2016
Number of
options
lapsed
during 2016
Directors
K Wilson
G McDermott
J Dorward
C H Naylor
Executives
W Edgar
W Edgar
W Edgar
-
-
-
-
-
-
-
30 Nov 12
30 Nov 12
30 Nov 12
30 Nov 12
29 Oct 12
31 Jan 14
16 Feb 15
-
-
-
-
-
-
-
-
-
-
-
-
-
-
31 Dec 15
31 Dec 15
31 Dec 15
31 Dec 15
31 Dec 16
31 Dec 17
31 Dec 18
-
-
-
-
-
-
-
-
-
-
-
-
-
-
300,000
250,000
250,000
250,000
150,000
100,000
100,000
All options expire on the earlier of their expiry date or termination of the employee’s employment. These options do not
entitle the holder to participate in any share issue of the Company.
Table 5: Shares issued on exercise of options
There was no exercise of compensation options during the reporting period.
Table 6: Value of options granted, exercised and lapsed during the year
Value of options granted
during the year
$
Value of options exercised
during the year
$
Value of options lapsed
during the year
$
Directors
K Wilson
G McDermott
J Dorward
C H Naylor
Executives
W Edgar
J Nosworthy
-
-
-
-
-
-
-
-
-
-
-
-
10,110
10,892
8,425
8,425
10,957
-
For details on the valuation of options, including models and assumptions used, please refer to Note 21 to the
consolidated financial statements.
25
Navarre Minerals Limited
ABN 66 125 140 105
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2016
9.
REMUNERATION REPORT (Audited) (cont.)
9.9
Additional disclosures relating to shares and options
Movement in shares
The movement during the reporting period in the number of ordinary shares in Navarre Minerals Limited held directly,
indirectly or beneficially, by key management personnel, including their related parties, is as follows:
30 June 2016
Held at 1
July 2015
Purchases
Received on
Exercise of
Options
Sales
Held at 30
June 2016
Shares held in Navarre Minerals Limited (number)
Directors
K Wilson
G McDermott
J Dorward
C H Naylor
Executives
W Edgar
J Nosworthy
5,872,431
6,418,346
4,229,713
2,450,963
500,000
500,000
500,000
500,000
600,000
125,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,372,431
6,909,180 1
4,729,713
2,950,963
600,000
125,000
1 Previously, 18,333 Navarre shares were held by Glenelg Mining Pty Ltd, a company of which Mr McDermott is a director and in which he holds a
beneficial interest. In August 2015, Mr McDermott advised that those shares had been split 50:50 between Glenelg’s two directors, with 9,167 shares
transferred to New Chum Holdings Pty Ltd
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