a544ee8ea501b48f70ccc5.pdf
CAPITAL MINING LIMITED
ABN 69 104 551 171
ANNUAL REPORT 2015
Corporate Directory Directors
Peter Torney Non-executive Director
Peter Dykes Non-executive Director (appointed 27 July 2015)
Anthony Dunlop Non-executive Director (appointed 27 July 2015)
Dr James Ellingford Non-executive Director (resigned 7 August 2015)
Robert McCauley Executive Director, Chairman (resigned 5 August 2015)
Company Secretary
Elizabeth Hunt
Principal and Registered Office
Level 11, 216 St George's Terrace, Perth WA 6000 GPO Box 2517, Perth WA 6831
Telephone: 08 9481 0389
Facsimile: 08 9463 6103
Website: www.capitalmining.com.au
Share Registry
Boardroom Pty Limited
GPO Box 3993, Sydney, NSW 2001
Telephone: 02 9290 9600
Auditors
Bentleys (WA) Pty Ltd
Level 1, 12 Kings Park Road West Perth, WA 6005
Stock Exchange Listing
Listed on the Australian Stock Exchange (ASX) ASX code: CMY, CMYO
ABN: 69 104 551 171
TABLE OF CONTENTS
Review of Operations 3
Directors' Report 6
Consolidated Statement of Profit or Loss and other Comprehensive Income 18
Consolidated Statement of Financial Position 19
Consolidated Statement of Cash Flows 20
Consolidated Statement of Changes in Equity 21
Notes to the Consolidated Accounts 22
Directors' Declaration 44
Auditor's Independence Declaration 45
Independent Auditor's Report 46
Shareholder Information 48
Tenement Information 50
Operations over the past year have been focused on the prospects within the Company's key gold and base metal project areas of Chakola and Mayfield, NSW. The Company's other project areas have either expired or been relinquished.
The Company maintains a 51% interest in the Mayfield gold-copper-base metals joint venture project near Braidwood, NSW. A drilling program at Mayfield has been proposed to extend the known gold and copper resource and will entail approximately 860 metres of RC drilling with the objective of increasing the size of the existing resource by drilling projected extensions of the known mineralisation at depth and along strike.
The Company has 100% interest in the gold and base metals project at Chakola NSW. The licence was renewed for a further term of 2 years until 8 March 2017.
CHAKOLA GOLD AND BASE METALS PROJECT, NSW EL5697 - 66 km2
Capital Mining 100%
Exploration in EL5697 is being directed at gold, copper, silver, lead and zinc mineralisation in deposits located along persistent mineralised horizons in altered volcanic host rocks. A gold and base metals resource has been outlined at the Harnett prospect and provides the main impetus for the search for similar deposits within the tenement.
The Harnett Prospect contains a significant gold-base metals sulphide deposit containing:
-
million tonnes with a grade of 0.8g/t gold, 0.5% copper, 8.1g/t silver, 0.4% lead and 0.7% zinc in the Measured, Indicated and Inferred JORC categories. This equates to approximately 31,000 ounces of contained gold, 6,000 tonnes of contained copper and 317,000 ounces of contained silver. A proposal to develop an open cut mine on the deposit with a 5-7 year life has been previously drawn up.
However, further exploration is required prior to definitive feasibility studies being carried out, including:
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conversion of the shallow within-pit oxide and sulphide resources at the Harnett Prospect to ore reserves;
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evaluation of the gold and silver potential along the Harnett North to Stonehenge South segment of the main mineralised horizon;
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search for oxide gold resources along established mineralised corridors within the tenement; and
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search for accumulations of gold bearing massive and disseminated sulphide ore along
the Stonehenge‐Harnett‐Driscolls Hill mineralised horizon at depth.
A proposed exploration program would also incorporate enough flexibility to accelerate the program should positive
results be received. It should also be noted that progression of the above program is subject to the results at each stage meeting the Company's technical expectations.
MAYFIELD GOLD-BASE METALS JOINT VENTURE, NSW EL6358 - 49 km2
Capital Mining 51%, Rutila Resources Ltd 46.5% and Roberts Consulting 2.5%
During the year, the Mayfield Exploration Licence (EL6358) was renewed for a further term of 2 years until 23 December 2016.
The Mayfield project covers a significant gold-copper skarn deposit and is located in an exploration 'hotspot' close to the world-class Majors Creek gold field near Braidwood, NSW. Capital completed almost 600 metres of drilling in 2012 and confirmed the following resources.
Gold-copper dominant mineralization - 4.0 million tonnes at a grade of 0.4% copper, 0.7 g/t gold, 8.8 g/t silver, 0.2%
zinc and 25.4% iron; and
Zinc dominant mineralization - 0.9 million tonnes at a grade of 2.36% zinc, 5.9 g/t silver and 0.1% copper.
Subject to current joint venture deliberations, a program for the completion of 3 inclined RC drill holes for a total of 860
metres is currently proposed. The objective of the drilling is designed to test the down‐dip and along strike extensions of the known mineralisation. Prior to the completion of the above drilling, it is intended to revisit past geophysical surveys in
order to determine whether the known mineralisation had any response. Should that be the case, further magnetic and EM surveys may be conducted to elicit responses from the proposed target zones. Concurrently, environmental and landowner approvals for the program will be sought. It should also be noted that progression of the above program is subject to the results at each stage meeting the Company's technical expectations.
COWARRA - GOLD PROJECT, NSW EL5939 - 28 km2
Capital Mining 50%; Commissioners Gold 50%
As announced on 6 January 2015 Gold Mountain Limited (ASX: GMN) entered into an agreement with CMY to acquire their remaining unearned interest in EL 5939. It is anticipated that this transaction will be finalised in the near future.
Statements contained in this report relating to exploration results and mineral resources are based on information compiled by Mart Rampe, who is a Member of the Australasian Institute of Mining and Metallurgy and is an independent consultant geologist engaged by Capital Mining. He has sufficient relevant experience in relation to the mineralisation styles being reported on, to qualify as a Competent Person as defined in the 2012 edition of the Australasian Code for Reporting of Identified Mineral Resources and Ore Reserves (JORC Code). Mart Rampe consents to the use of applicable information in this report in the form and context in which it appears.
The Company is reporting the historical exploration results and resource statements under the 2004 edition of the Australian Code for the Reporting of Results, Mineral Resources and Ore reserves (JORC Code 2012) on the basis that the information has not materially changed since it was last reported.
Your Directors present the financial report of the Company and its wholly owned subsidiary Capital Mining International Pty Ltd (together referred to hereafter as 'the Group') for the financial year ended 30 June 2015.
The names and details of the Company's directors in office during the financial year and as at the date of this report are as follows. Directors were in office for the entire period unless otherwise stated.
Robert McCauley BSc, MRICS(Aust.UK), MAICD, Chartered Surveyor (Aust.UK), Licensed Surveyor (WA)
Executive Director and Chairman - resigned 5 August 2015
Robert McCauley is a Chartered Surveyor and Management Consultant with over 35 years of experience in the mining, engineering and construction industries with companies such as Worsley Alumina Pty Ltd, Sir Alexander Gibb & Partners (UK), BHP Ltd and Boral Limited on major mining and infrastructure projects including Boddington Gold Mine (WA); Monasavu Hydro Electric Scheme, Fiji and the North West Shelf Liquefied Natural Gas Project (WA).
Mr McCauley was appointed the Executive Chairman & Managing Director of Capital Mining in April 2012. He was appointed Director in November 2004 and was the founding CEO (2006-2010) of Capital Mining Limited. Mr McCauley was instrumental in Capital Mining's successful capital raising and debut on the ASX in March 2007. He was also the founding Managing Director of Commissioners Gold Limited and was pivotal to the successful capital raising & listing of Commissioners Gold on the ASX in September 2011.
He is a graduate of Curtin University, WA; a Member of the Royal Institution of Chartered Surveyors (Aust,UK); a Registered Surveyor and a Licensed Surveyor (WA).
Dr James Ellingford D.Mgt, MBA, Post Grad Corp Man, AICD
Non-Executive Director - resigned 7 August 2015
Dr Ellingford was appointed Non-Executive director on 8 January 2013.
Dr Ellingford's professional life culminated in being President of an international publicly listed billion dollar business with its headquarters in Geneva, Switzerland and New York, USA. He has vast experience in the international arena and has successfully developed close ties with both financial institutions as well as governments throughout the world.
Dr Ellingford holds a Post Graduate in Corporate Management, a Masters in Business Administration as well as a Doctorate in Management. Dr Ellingford also lectures MBA students in Corporate Governance at a leading Sydney University and has a keen interest in ethics and governance.
Dr Ellingford is also currently Non-Executive Chairman of Victory Mines Limited and Dourado Resources Limited.
Peter Torney
Non-Executive Director
Mr Torney was appointed as a Non-Executive director on 11 June 2013.
Mr Torney is a stockbroker with over 10 years experience in the Australian financial services industry during which time he has been involved in a number of successful stockbroking and equity capital markets businesses.
Mr Torney has experience in retail and institutional broking, capital raisings, share placements and initial public offerings in Australia and Asia, as well as assisted in dual listings on the OTCQX (USA).
Prior to entering the Equity market, Mr Torney has been involved in the advertising, real estate, finance, publishing and beef cattle production industries.
Mr Torney has held numerous directorships in both public and private companies. Mr Torney is also a former director of RKS Consolidated Ltd and a current Non-Executive Director of Dourado Resources Limited.
Peter Dykes
Non-Executive Director
Mr Dykes was appointed as a Non-Executive director on 27 July 2015.
Mr Dykes has over 20 years' experience in advising and building ASX-listed companies. He started his career with KPMG in the Taxation Division, later establishing KPMG's Technology Advisory practice in Sydney. There he advised large public and private companies on funding via private equity, government grants and tax incentive programs for research and development. Mr Dykes went on to establish a boutique technology advisory practice, advising many of Australia's largest ASX-listed and foreign corporates - including BHP, Telstra, Boral, General Motors Holden and Ford.
Mr Dykes progressed to executive and board roles with a number of early-stage ASX-listed technology companies, having principally invested in each of these to develop, commercialise and successfully exit. Peter is currently Executive Chairman of ASX listed diversified investment company Chapmans Limited (ASX:CHP) and non-executive director of Exalt Resources Limited (ASX code: ERD).
Mr Dykes holds a Bachelor of Business (Accounting) from Victoria University (RMIT) and is a Fellow of the Tax Institute of Australia.
Anthony Dunlop
Non-Executive Director
Mr Dunlop was appointed as a Non-Executive director on 27 July 2015.
Mr Dunlop as over 20 years of corporate advisory and investment experience in Australia, the US, Hong Kong and mainland China. Beginning his corporate finance career with ABN AMRO, Mr Dunlop has extensive experience in transaction and portfolio analysis and risk management for both debt and equity structured investments. He has advised numerous ASX-listed and private entities in a wide range of sectors including mobile technology, technical & engineering services, resources, finance and agriculture sectors. Mr Dunlop has a well-established private and public capital network in Australia, Hong Kong and mainland China. Mr Dunlop is active in China outbound and inbound investment with Australian businesses.
Mr Dunlop is an executive director of Chapmans Limited, non-executive director of big data market leader SkyFii Limited (ASX:SKF) and is Chapmans' nominee director for mobile technology commercialisation specialist Digital4ge Pty Ltd.
Mr Dunlop holds a Bachelor of Economics from Macquarie University, and is a Graduate of the Australian Institute of Company Directors (GAICD).
Company Secretary
Elizabeth Hunt BSc, MAcc, GIA (Cert), GAICD
Mrs Hunt has over fifteen years corporate and accounting experience with a particular interest in governance. Mrs Hunt has been involved in the IPO management, corporate advisory and company secretarial services, financial accounting and reporting and ASX and ASIC compliance management.
Mrs Hunt holds a BSc degree in Sustainable Development and has completed a Master of Accounting, the Governance Institute of Australia Certificate in Governance and Risk Management, and is a Graduate of the Australian Institute of Company Directors.
Mrs Hunt is currently also Company Secretary of a number of other ASX listed entities.
Directors' Interests in Shares and Options
Directors' interests in shares and options as at 30 June 2015 are set out in the table below. Between the end of the financial year and the date of this report, there has not been any subscriptions for shares.
30 June 2015
|
Director
|
Shares Directly and Indirectly Held
|
Options
|
|
Robert McCauley*
|
3,915,570
|
978,890
|
|
James Ellingford**
|
-
|
-
|
|
Peter Torney
|
-
|
-
|
|
Peter Dykes***
|
-
|
-
|
|
Anthony Dunlop***
|
-
|
-
|
*Mr McCauley resigned on 5 August 2015.
**Dr Ellingford resigned on 7 August 2015.
***Mr Dykes and Mr Dunlop were appointed as Non-Executive Directors on 27 July 2015.
Principal Activities
The continuing principal activity of the Company is the exploration for economic deposits of minerals.
Corporate Governance Statement
The Company has disclosed its Corporate Governance Statement on the company website at www.capitalmining.com.au.
Operating and financial review
Operations review
Details on the Group's exploration projects are included in the Review of Operations on page 3.
Results
The net result of operations after applicable income tax expense was a loss of $4,190,433 (2014: $5,340,135). At 30 June 2015 funds available totalled $7,735 (2014: $94).
Dividends
No dividends were paid or proposed during the period.
Corporate Structure
Capital Mining Limited is a company limited by shares and incorporated and domiciled in Australia. Its shares are publicly traded on the Australian Securities Exchange under the code 'CMY'. On 24 February 2014, the Company incorporated a wholly own subsidiary, Capital Mining International Pty Ltd.
Capital Mining International Pty Ltd was de-registered on 7 January 2015.
Employees
The Company had no employees as at 30 June 2015. The Company uses contract geologists and other consultants as required.
Significant Changes in State of Affairs
The following significant changes in the state of affairs occurred during the year:
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On 1 September 2014 the following Company options expired
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3,000,000 options exercisable at $0.04
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2,000,000 options exercisable at $0.06
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1,500,000 options exercisable at $0.08
Significant Changes in State of Affairs (continued)
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On 5 September 2014 the Company announced that it had withdrawn from the agreement to acquire Cambodian tenements from Indochine Resources Pty Limited.
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On 19 September 2014 the Company announced that it had issued 97,340,907 ordinary fully paid shares as part of the placement raising $265,000 in cash.
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On 30 September 2014 the Company's shareholders approved all the resolutions as per Notice of Meeting announced on 27 August 2014.
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On 7 October 2014 the Company announced that it had signed Memorandum of Understanding (MoU) for potential investment and acquisition of 35% of Chinese Cloud-based learning and education platform HexStudy. On signing of MoU, the Company paid a $50,000 option fee as part of the acquisition agreement. The Company also advised that in the event that the acquisition of an interest proceeds, the acquisition will constitute a change in the nature and scale of the Company's activities from mining exploration to both mining exploration and a supplier of Cloud- based education upon which the Company will be required, pursuant to Listing Rule 11.1.2, to obtain shareholder approval and pursuant to Listing Rule 11.1.3, to recomply with Chapters 1 and 2 of the Listing Rules.
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On 15 October 2014 the Company announced that it had engaged BBY Limited to initiate the research coverage for the HexStudy project announced on 7 October 2014.
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On 27 October 2014 the Company announced amendment for the Company's Executive Director and Chief Executive Officer's remuneration.
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On 11 November 2014 the Company announced that it has entered discussions with Joint Venture partner, Gold Mountain Limited (ASX: GMN), formerly Commissioners Gold Limited to dispose its remaining interest in the Cowarra Gold Project (EL 5939).
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On 6 January 2015 the Company announced that it has entered into an agreement with Gold Mountain Limited (ASX: GMN), formerly Commissioners Gold Limited to dispose its remaining interest of EL 5939 Cowarra Gold Project. GMN has paid a security deposit of $20,000 and a further $20,000 is payable as final settlement upon completion of the registration of transfer with the NSW Department of Trade and Investments, Resources and Energy.
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On 7 January 2015 the Company deregistered its wholly owned subsidiary, Capital Mining International Pty Ltd.
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On 4 February 2015 the Company announced that it had withdrawn from the Memorandum of Understanding to acquire up to 35% of the shares in Beijing Xiangang Zhiyuan Technology Co. Ltd. The Company was unable to complete satisfactory due diligence on the acquisition and consequently terms of the associated capital raising were not settled.
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On 12 February 2015 the Company announced the completion of $2.154 million placement. The placement comprises of $1.2 million cash subscriptions and $954,000 creditor payments. The cash will be used for general working capital, current projects, business development and consultancy fees. The issue of Shares to creditors preserves the Company's cash.
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On 9 March 2015 the Company announced pursuant to the terms of a binding Heads of Agreement dated 4 March 2015, the Company intends to acquire up to 49% of a Canadian licensed grower, manufacturer and distributor of medical cannabis products, Broken Coast Cannabis Ltd (BCC) and 100% of a company that specializes in commercial Cannabis development with an emphasis of Global Legislature, Cannan Growers Inc. (CGI). Upon execution of the BCC agreement CMY will loan CAD$500,000 to BCC, the loan will be unsecured and to be repaid in 12 months' time or converted to shares in BCC.
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On 18 March 2015 the Company announced its continuing investment in the medical cannabis and hemp based products sector with the proposed acquisition of United States based Nutrawex Inc., a company focused on the development and production of hemp related products and cannabinoid science.
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On 17 April 2015 the Company announced that it has entered into a non-binding proposal to acquire 100% of Cannabinoid Extracts Australia Pty Ltd (CEA) from Essential Oils of Tasmania Pty Ltd . The proposed acquisition of CEA is in line with Company's strategy of becoming a turnkey market leader in medical cannabis and hemp based products with expertise to achieve the entire product value chain. The terms of CEA proposal were non-binding and subject to final agreement.
Significant Changes (continued)
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On 15 May 2015 the Company announced change of its share registry's address.
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On 21 May 2015 the Company announced the varied proposed acquisition agreement terms with Broken Coast Cannabis (BCC) where the Company is to be granted an exclusive one-year option to increase the 24%stake that it will acquire upon completion of BCC agreement from 24% to 50.1% for an additional CAD $14 million. Upon exercise of the option the board of BCC will increase to 6 members, of which the Company will have the right to appoint up to 50% of members. The Company also announced that it had withdrawn its interest in the proposed acquisition of Cannabinoid Extracts Australia Pty Ltd as announced on 17 April 2015, as the Company will focus on its proposed acquisitions in Canada and North America.
The Company has continued with its business during the year as detailed above in the Review of Operations and other parts of this report.
Going Concern
Refer to Note 1 in the Notes to the Consolidated Accounts.
Matters Subsequent to the End of the Financial Period
There were at the date of this report no matters or circumstances which have arisen since 30 June 2015 that have significantly affected or may significantly affect the operations of the Company, the results of those operations, or the state of affairs of the Company, except as set out below:
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On 20 July 2015 the Company announced that it has terminated the proposed transactions with Broken Coast Cannabis Ltd and Cannan Growers Inc on the basis that certain conditions precedent were not capable of being satisfied.
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On 21 July 2015 the Company announced that it has terminated its agreement with Nutrawerx Inc.
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On 27 July 2015 the Company announced the appointments of Mr Peter Dykes and Mr Anthony Dunlop as Non-Executive Directors of the Company.
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On 28 July 2015 the Company announced $77,500 investment by Chapmans Limited into Capital Mining Limited via the issue of 155 million fully paid ordinary shares at $0.0005 per share.
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On 29 July 2015 the Company announced that it has entered into a loan deed with a private lender for a facility of $1,000,000 that is secured against all of the assets of the Company. The Company drew down the first $260,000 in August 2015 with the balance of $740,000 being available to be drawn down at the discretion of the lender following the written request by the Company.
The term of the loan is 15 months from the date of first drawdown at 10% interest per annum, with 5% fee being deducted by the lender on each drawdown made by the Company.
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On 31 July 2015 the Company announced a non-renounceable entitlement offer to shareholder at an issue price of $0.001 on the basis of 1 new share for every 1 share held to raise approximately $1.48 million before costs.
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On 5 August 2015 the Company announced Robert McCauley's resignation as Executive Director and CEO of the Company.
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On 7 August 2015 the Company announced Dr James Ellingford's resignation as Non-Executive director of the Company.
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On 12 August 2015 the Company announced the appointment of Chapmans Limited as underwriters of a non-renounceable entitlement offer announced on 31 July 2015.
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On 13 August 2015 the Company announced Notice of General meeting to be held on 15 September 2015, including a resolution seeking shareholder approval for the consolidation of Company's issued capital.
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On 13 August 2015 the Company issued a Non-Renounceable Entitlement Offer Prospectus to eligible shareholders seeking to raise up to $1.48 million at an issue price of $0.001 (0.1 cents) each on the basis of 1 new share for every 1 share held.
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On 11 September 2015 the Company announced that 485 million shares have been issued, representing part of the shortfall to the non-renounceable entitlement offer pursuant to the Prospectus.
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On 14 September 2015 the Company announced that 664 million shares have been issued, representing final issue of the shortfall to the non-renounceable entitlement offer pursuant to the Prospectus.
Likely Developments and Expected Results
As the Company's areas of interest are still at the exploration stage, it is not possible to comment on likely developments and any expected results. The Company is looking to identify other precious and base metal exploration targets.
Share Options
Details of unlisted shares or interests of Capital Mining Limited under option at the date of this report is nil as 6,500,000 unlisted $0.04, $0.06 and $0.08 options expired on 1 September 2014.
Details of listed shares or interest of Capital Mining Limited under option at the date of this report are as follows:
Date options granted
Expiry date
Issue price Number
of shares under option
Brought forward 1 July 2014 31 December 2016 $0.02 269,336,524
Total 269,336,524
The holders of these options do not have any rights under the options to participate in any share issue of the company or of any other entity.
Remuneration Report - Audited
The remuneration report is set out under the following main headings:
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Policy used to determine the nature and amount of remuneration
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Key management personnel
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Details of remuneration
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Cash bonuses
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Share-based payment bonuses
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Option and rights granted as remuneration
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Equity instruments issued on exercise of remuneration options
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Value of options to key management personnel and executives
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Service contracts
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Share options
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Options and rights holdings
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Loans to key management personnel
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Other transaction and balances
(a) Policy used to determine the nature and amount of remuneration
The objective of the Company's remuneration framework is to ensure reward for performance is competitive and appropriate for the results delivered. The framework aligns executive reward with achievement of strategic objectives and the creation of value for shareholders. The Board believes that executive remuneration satisfies the following key criteria:
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competitiveness and reasonableness
-
acceptability to shareholders
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performance linkage / alignment of executive compensation
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transparency
-
capital management.