Financial Statements for year ended 31 Dec 2016
CHATHAM ROCK PHOSPHATE LIMITED
(incorporated in Canada)
(A DEVELOPMENT STAGE COMPANY)
PLEASE NOTE:
These are the Consolidated Financial Statements of
Antipodes Gold Limited
(as it was then named)
for the
TWELVE MONTH PERIOD
ENDED DECEMBER 31, 2016
(Stated in Canadian Dollars)
That is, the Antipodes Gold group BEFORE the reverse takeover
and name change to Chatham Rock Phosphate.
NOTICE OF NO AUDITOR REVIEW OF INTERIM FINANCIAL STATEMENTS
Under National Instrument 51-102, Part 4, subsection 4.3(3)(a), if an auditor has not performed a
review of the interim financial statements; they must be accompanied by a notice indicating that
the financial statements have not been reviewed by an auditor.
The Company’s independent auditor has not performed a review of these financial statements in
accordance with standards established by the Canadian Institute of Chartered Accountants for a
review of interim financials by an entity’s auditor.
CONTENTS Page
Statement of Financial Position 2
Statement of Changes in Equity 3
Statement of Comprehensive Income 4
Statement of Cash Flows 5
Notes to the Financial Statements 6 - 25
Page 2 of 25
ANTIPODES GOLD LIMITED (A Development Stage Company)
Statement of Financial Position
(in thousands of Canadian Dollars)
December 31
2016
(Unaudited)
December 31
2015
(Audited)
ASSETS
$
$
Current assets
Cash and cash equivalents (Note 6)
297
4
Trade and other receivables (Note 7)
11
11
Prepayments
1
1
Exploration and Mineral properties held for sale
(Note 8)
-
2,195
Total current assets 309
2,211
Total assets 309
2,211
LIABILITIES
Current liabilities
Trade and other payables (Note 9)
103
1,004
Payables to be settled in AXG shares (Note14(c)&(d))
147
-
Joint venture obligations
-
766
Accrued liabilities
-
43
Total current liabilities 250
1,813
Total liabilities 250
1,813
EQUITY
Common Shares (Note 10(a))
29,186
29,186
Contributed Surplus (Note 10(b))
9,946
9,946
Deficit Accumulated through
Development Stage (39,073)
(38,734)
Total equity 59
398
Total liabilities and equity 309
2,211
APPROVED ON BEHALF OF THE BOARD
“signed” Christopher Castle “signed” Justin Cochrane
Christopher Castle, Director Justin Cochrane, Director
(The accompanying notes are an integral part of these financial statements.)
Page 3 of 25
ANTIPODES GOLD LIMITED
(A Development Stage Company)
Statement of Changes in Equity
(in thousands of Canadian Dollars except for share issuance costs)
Common
Shares
Common
Shares
Contributed
Surplus
Share
Purchase
Warrants
Deficit
accumulated
during the
development
stage
Shareholders’
equity
total
# $ $ $ $ $
Balance – January 1, 2015 10,566,578 29,186 9,872 74 (38,982) 150
Expiration of warrants - - 74 (74)
Total comprehensive profit for
the period
-
-
-
-
248
248
Balance – January 1, 2016 10,566,578 29,186 9,946 - (38,734) 398
Total comprehensive loss for
the period
-
-
-
-
(339)
(339)
Balance – December 31, 2016 10,566,578 29,186 9,946 - (39,073) 59
(The accompanying notes are an integral part of these financial statements.)
Page 4 of 25
ANTIPODES GOLD LIMITED
(A Development Stage Company)
Statement of Comprehensive Income
(in thousands of Canadian Dollars, except per share amounts)
For the For the
Three months ended Twelve months ended
December 31
December 31
December 31
December 31
2016
2015
2016
2015
(Unaudited)
(Unaudited)
(Unaudited)
(Audited)
Revenue
-
-
-
-
Cost of sales
-
-
-
-
Gross (Loss)/Profit
-
-
-
-
Administrative and Personnel
expenses (Note 11 and 12)
(117)
(141)
(295)
(443)
Mineral properties adjustment
(Note 8)
-
479
-
741
Results from operating activities
(117)
338
(295)
298
Finance expense (Note 13)
(9)
(118)
(44)
(50)
(Loss)/Profit before Income Taxes
(continuing operations) (126)
220
(339)
248
Income tax recovery/(expense)
-
-
-
-
Net (Loss)/Profit for the period
from continuing operations (126)
220
(339)
248
Total Comprehensive (loss)/profit
for the period
(126)
220
(339)
248
cents cents cents cents
Basic (loss)/profit per share (Note
10 c)
1.19
-
(3.21)
2.35
Diluted profit/( loss) per share
(Note 10 c)
-
-
-
2.22
(The accompanying notes are an integral part of these financial statements).
Page 5 of 25
ANTIPODES GOLD LIMITED
(A Development Stage Company)
Statement of Cash Flows
(in thousands of Canadian Dollars)
12 months ended
12 months ended
December 31, 2016
December 31, 2015
(Unaudited)
(Audited)
$
$
Cash flows from (used in) :
Operating Activities
Interest received
-
-
Cash receipts from customers
-
-
Payments to suppliers and employees
(1,049)
(200)
Net cash used in Operating Activities
(Note 19)
(1,049)
(200)
Financing Activities
(Repayment)/Loans from Directors,
Management & other (Note 14)
(301)
200
Net cash used by Financing Activities (301)
200
Investing Activities
Proceeds from sale of mineral properties
1,643
-
Net cash from Investing Activities 1,643
-
Net increase/(decrease) in cash and cash
equivalents 293
-
Cash and cash equivalents - beginning of
year 4
4
Cash and cash equivalents - end of period 297
4
(The accompanying notes are an integral part of these financial statements)
ANTIPODES GOLD LIMITED
(A Development Stage Company)
Notes to Financial Statements
(Tabular amounts in thousands of Canadian dollars)
For the twelve months ended December 31, 2016
Page 6 of 25
1. Reporting entity
Antipodes Gold Limited changed its name from Glass Earth Gold Limited, on
March 24, 2014. On 24 February 2017, Antipodes Gold completed the reverse
takeover of the New Zealand based company, Chatham Rock Phosphate
Limited and renamed Antipodes Gold as Chatham Rock Phosphate.
The New Zealand based subsidiary acquired in the reverse takeover has been
renamed Chatham Rock Phosphate (NZ) Limited.
Antipodes Gold Limited, renamed Chatham Rock Phosphate Limited (the
“Company”), is incorporated under the Business Corporations Act (British
Columbia) and listed on the Toronto Stock Exchange’s Venture Exchange
(“TSX-V”). The Company is also registered under the New Zealand
Companies Act 1993 and listed on the New Zealand Stock Exchange’s
Alternative Market (“NZAX”). The Company is an FMC reporting entity
under part 7 of the Financial Markets Conduct Act 2013 (New Zealand) and
Financial Reporting Act 2013 (New Zealand). Both of these acts have become
effective for financial year beginning on or after 1 April 2014, and the
Financial Reporting Act 1993 was repealed with the effect from this date. The
Company is a tier 1 entity in accordance with XRB Standard A1 Accounting
Standards Framework.
The Company’s registered offices are:
∑ Suite 1750, 1185 West Georgia Street
Vancouver, B.C., Canada V6E 4E6
∑ 3a Douglas Avenue, Auckland 1025, New Zealand
Accordingly, the Company has reporting obligations in both the Canadian
and New Zealand jurisdictions.
The consolidated group financial statements presented as at and for the
twelve months ended December 31, 2016 comprise only Antipodes Gold
and its then subsidiaries (together referred to as the “Group”).
That is, the Antipodes Gold group BEFORE the reverse takeover and name
change to Chatham Rock Phosphate.
The Company, through its wholly owned legal subsidiary Glass Earth (New
Zealand) Limited (“GENZL”), was engaged in the acquisition and
exploration of mineral properties in New Zealand.
2. Basis of Preparation
(a) Statement of Compliance
ANTIPODES GOLD LIMITED
(A Development Stage Company)
Notes to Financial Statements
(Tabular amounts in thousands of Canadian dollars)
For the twelve months ended December 31, 2016
Page 7 of 25
The Company prepares its annual financial statements under the
principles of the International Financial Reporting Standards (“IFRS”).
The accompanying interim financial statements of the Company have
been prepared in accordance with International Accounting Standard 34
(“IAS 34”) using accounting policies consistent with IFRS as approved by
the International Accounting Standards Board (“IASB”) and follow the
same accounting policies and methods as noted in Note 2 of the
Company‘s audited financial statements for the year ended December 31,
2015.
These financial statements should be read in conjunction with the audited
financial statements for the year ended December 31, 2015.
They have also been prepared in accordance with the Financial Reporting
Act 2013 which requires compliance with generally accepted accounting
practice in New Zealand. They comply with New Zealand equivalents to
International Financial Reporting Standards and other applicable
Financial Reporting Standards, as appropriate for profit-oriented entities.
The financial statements were approved by the Board of Directors on
February 28, 2017.
(b) Basis of measurement
The financial statements have been prepared on the historical cost basis
except for the following which are measured at fair value:
∑ Share based payment transactions
∑ Valuation of warrants
(c) Segment reporting
The Company used to operate in a single segment: gold exploration
(d) Functional and presentation currency
These financial statements are presented in Canadian dollars ($), which is
the Company’s functional currency. All financial information presented in
Canadian dollars has been rounded to the nearest thousand.
(e) Use of estimates and judgements
The preparation of financial statements in conformity with IFRS requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, the disclosure of any contingent assets
and liabilities as at the date of the financial statements, as well as the
reported amounts of revenue and expenses during the reporting period.
The Group regularly reviews these estimates and assumptions that affect
the financial statements and actual results could differ from those
estimates.
ANTIPODES GOLD LIMITED
(A Development Stage Company)
Notes to Financial Statements
(Tabular amounts in thousands of Canadian dollars)
For the twelve months ended December 31, 2016
Page 8 of 25
Significant areas where management estimates and judgments are applied
are:
∑ the recoverability of exploration expenditures on mineral
properties;
∑ the valuation of tax accounts;
∑ share based payments; and
∑ going concern
In the opinion of management, all adjustments considered necessary for
fair presentation of the results for the periods presented are reflected in
the financial statements.
3. Going Concern Assumption
These financial statements have been prepared using the assumption of going
concern.
Post the sale of its gold exploration assets, refer Note 8, the directors are
satisfied the company has sufficient funds to meet all of its liabilities and
obligations as it pursues the successful completion of the takeover offer
from/of Chatham Rock Phosphate Limited, refer Note 20.
For the twelve months ended December 31, 2016, the Group had a net loss of
$339,000 (twelve months ended December 31, 2015: net profit of $248,000),
working capital surplus
*
of $206,000 (December 31, 2015: working capital
surplus of $398,000) with an accumulated deficit at December 31, 2016 of
$39,073,000 (December 31, 2015: $38,734,000).
4. Significant Accounting Policies
The accounting policies set out below have been applied consistently to all
periods presented in these financial statements, and have been applied
consistently by Group entities.
a) Basis of Consolidation
Business combinations
Business combinations are accounted for using the acquisition method as at
the acquisition date, which is the date on which control is transferred to the
Group. Control is the power to govern the financial and operating policies of
an entity so as to obtain benefits from its activities. In assessing control, the
Group takes into consideration potential voting rights that currently are
exercisable.
*
Working capital constitutes cash and cash equivalents, trade and other receivables, prepayments, trade
and other payables and accrued liabilities
ANTIPODES GOLD LIMITED
(A Development Stage Company)
Notes to Financial Statements
(Tabular amounts in thousands of Canadian dollars)
For the twelve months ended December 31, 2016
Page 9 of 25
Transactions costs, other than those associated with the issue of debt or equity
securities, that the Group incurs in connection with a business combination
are expensed as incurred.
Any contingent consideration payable is measured at fair value at the
acquisition date. If the contingent consideration is classified as equity, then it
is not remeasured and settlement is accounted for within equity.
Otherwise, subsequent changes in the fair value of the contingent
consideration are recognised in profit or loss. The Group recognises the fair
value of all identifiable assets, liabilities and contingent liabilities of the
acquired business.
Subsidiaries
Subsidiaries are entities controlled by the Group. The financial statements of
subsidiaries are included in the consolidated financial statements from the
date that control commences until the date that control ceases.
Investments in jointly controlled operations
Joint operations are those arrangements over whose activities the Group has
joint control, established by contractual agreement and requiring unanimous
consent for strategic financial and operating decisions.
Transactions eliminated on consolidation
Intra-group balances are eliminated in preparing the consolidated financial
statements.
b) Mineral Properties
Direct property acquisition costs, holding costs, field exploration and field
supervisory costs relating to specific properties are capitalized as mineral
properties and deferred until the properties are brought into production, at
which time they are amortized on a unit of production basis, or until the
properties are abandoned, sold or considered to be impaired in value, at
which time an appropriate charge to profit and loss will be made.
Costs include the cash consideration paid and the fair market value of the
shares issued, if any, on the acquisition of exploration properties. Properties
acquired under option agreements whereby payments are made at the sole
discretion of the Group are recorded in the accounts at such time as the
payments are made. Costs incurred for administration and general
exploration that are not project specific, are charged to profit and loss. The
recorded amounts for acquisition costs of properties and their related
capitalized exploration expenses represent actual expenditures incurred and
are not intended to reflect present or future values.
ANTIPODES GOLD LIMITED
(A Development Stage Company)
Notes to Financial Statements
(Tabular amounts in thousands of Canadian dollars)
For the twelve months ended December 31, 2016
Page 10 of 25
The Group reviews the capitalized costs on its properties on a periodic, or at
least annual, basis and will recognize an impairment in value based upon the
stage of exploration work programs proposed, current exploration results
and upon management’s assessment of the future probability of profitable
revenues from each property, or from the sale of the relevant property.
Management’s assessment of a property’s estimated current fair value may
also be based upon a review of other property transactions that have occurred
in the same geographic area as that of the property under review.
The recovery of costs of mining claims and deferred exploration is dependent
upon the existence of economically recoverable reserves, the ability of the
Group to obtain the necessary financing to complete exploration and
development and future profitable production or proceeds from disposition
of such properties.
Exploration and evaluation expenditure incurred by or on behalf of the
Group is accumulated separately for each area of interest. Each area of
interest is limited to an individual geological area which is related to a known
or probable mineral resource and is considered to constitute a favourable
environment for the presence of mineral deposits.
Exploration and evaluation expenditure for each area of interest is capitalised
and carried forward provided that one of the following conditions is met:
ß such costs are expected to be recouped through successful
development and exploitation of the area of interest or, alternatively, by its
sale; or
ß exploration activities in the area of interest have not yet reached a
stage which permits a reasonable assessment of the existence or otherwise of
economically recoverable reserves, and active and significant operations in
relation to the area are continuing.
Expenditure is not carried forward in respect of any area of interest unless the
company's rights of tenure to that area of interest are current.
Mining assets
Mining assets were recorded at cost of acquisition less sales, recoupment and
losses. Cost included pre-production expenditure incurred during the
development of the mine.
c) Property and Equipment
Recognition and measurement
Items of property and equipment are measured at cost less accumulated
depreciation and any impairment.
ANTIPODES GOLD LIMITED
(A Development Stage Company)
Notes to Financial Statements
(Tabular amounts in thousands of Canadian dollars)
For the twelve months ended December 31, 2016
Page 11 of 25
Subsequent Costs
The cost of replacing part of an item of property and equipment is recognised
in the carrying amount of the item if it is probable that the future economic
benefits embodied within the part will flow to the Group and its cost can be
measured reliably. The costs of the day-to-day servicing of property and
equipment are recognised in profit or loss as incurred.
Depreciation
Depreciation is recognised in profit or loss on a straight line basis over the
estimated useful lives of each part of an item of property and equipment as
follows:
Computer Equipment 3 years
Mining Equipment 4 to 10 years
Motor Vehicles 5 years
Office Furniture & Equipment 10 years
d) Intangible assets
Software costs have a finite useful life. Software costs are capitalized and
amortized on a straight line basis over the estimated economic life of three
years.
e) Foreign Currency Transactions
Transactions in foreign currencies are translated to the respective functional
currencies of Group entities at exchange rates at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies at reporting
date are retranslated to the functional currency at the exchange rate at that
date. The foreign currency gain or loss on monetary items is the difference
between amortised cost in the functional currency at the beginning of the
period, adjusted for effective interest and payments during the period, and
the amortised cost in foreign currency translated at the exchange rate at the
end of the period. Non-monetary assets and liabilities denominated in foreign
currencies that are measured at fair value are retranslated to the functional
currency at the exchange rate at the date that the fair value was determined.
Foreign currency differences arising on retranslation are recognised in profit
or loss.
f) Financial instruments
The Company classified its cash and cash equivalents and amounts receivable
as loans and receivables, which are measured at amortized cost. Accounts
payable and accrued liabilities are classified as other financial liabilities,
which are measured at amortized cost. The carrying amounts related to Trade
and other receivables, Trade and other payables and Accrued Liabilities
approximate their fair value due to the relatively short periods to maturity of
these financial instruments.
ANTIPODES GOLD LIMITED
(A Development Stage Company)
Notes to Financial Statements
(Tabular amounts in thousands of Canadian dollars)
For the twelve months ended December 31, 2016
Page 12 of 25
g) Leased assets
Group entities lease certain land and buildings. Operating lease payments,
where the lessors effectively retain substantially all the benefits of ownership
of the leased items, are recognised in profit and loss in the statement of
comprehensive income in equal installments over the lease term.
h) Mineral Property Impairment
The Group reviews its long-lived assets for impairment whenever events or
changes in circumstances indicate that the carrying amount may not be
recoverable, but at least annually.
An impairment loss is recognised if the carrying amount of an asset or its
cash-generating unit (“CGU”) exceeds its recoverable amount. A CGU is the
smallest identifiable asset group that generates cash flows that are largely
independent from other assets and groups. Impairment losses are recognised
in profit or loss. Impairment losses recognised in respect of CGUs are
allocated to reduce the carrying amount of the other assets in the unit (group
of units) on a pro rata basis.
The recoverable amount of an asset or CGU is the greater of its value in use
and its fair value less costs to sell. In assessing value in use, the estimated
future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset.
Exploration and Evaluation expenditure accumulated and carried forward (as
Mineral Properties) is assessed based on recoverable amount.
i) Income Taxes
Income tax expense comprises current and deferred tax. Income tax expense
is recognised in profit or loss except to the extent that it relates to items
recognised directly in other comprehensive income, in which case it is
recognised in other comprehensive income.
Current tax is the expected tax payable on the taxable income for the year,
using tax rates enacted or substantively enacted at the reporting date, and
any adjustment to tax payable in respect of previous years.
Deferred tax is recognised in respect of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and
the amount used for taxation purposes. Deferred tax is not recognised for the
following temporary differences: the initial recognition of goodwill, the initial
recognition of assets or liabilities in a transaction that is not a business
combination and that affects neither accounting nor taxable profit, and
ANTIPODES GOLD LIMITED
(A Development Stage Company)
Notes to Financial Statements
(Tabular amounts in thousands of Canadian dollars)
For the twelve months ended December 31, 2016
Page 13 of 25
differences relating to investments in subsidiaries and jointly controlled
entities to the extent that they probably will not reverse in the foreseeable
future. Deferred tax is measured at the tax rates that are expected to be
applied to the temporary differences when they reverse, based on the laws
that have been enacted or substantively enacted by the reporting date.
A deferred tax asset is recognised for unused tax losses, tax credits and
deductible temporary differences to the extent that it is probable that future
taxable profits will be available against which temporary difference can be
utilized. Deferred tax assets are reviewed at each reporting date and are
reduced to the extent that it is no longer probable that the related tax benefit
will be realized.
j) Joint Arrangements
Joint arrangements are a contractual agreement whereby two or more parties
undertake an economic activity that is subject to unanimous consent.
When a member of the group participates in a joint arrangement classified as
a joint operation, that member recognises its proportionate interest in the
individual assets, liabilities, revenue and expenses of the joint operationin the
financial statements under the appropriate headings.
k) Payables
Trade and other payables are recognised when the group becomes obliged to
make future payments resulting from the purchase of goods and services.
l) Common Shares
Common shares are classified as equity. Incremental costs directly
attributable to the issue of common shares and share options are recognised
as a deduction from equity.
m) Employee benefits
Employee entitlements to salaries and wages, annual leave, bonuses and
other benefits are recognised when they accrue as a result of services
rendered prior to balance date.
n) Stock-based Compensation
The Company’s shareholders have approved a stock option plan. Under the
plan, stock based compensation awards will be available to officers, directors,
employees and non-employees. All stock-based payments made to employees
have been accounted for using a fair value-based method of accounting. The
fair value of each stock option is accounted for in profit and loss, over the
vesting period thereof, and the related credit is included in contributed
surplus. The amount recognised as an expense is adjusted to reflect the
number of awards for which related service and non-market verifying
ANTIPODES GOLD LIMITED
(A Development Stage Company)
Notes to Financial Statements
(Tabular amounts in thousands of Canadian dollars)
For the twelve months ended December 31, 2016
Page 14 of 25
conditions are expected to meet such that the amount ultimately recognised
as an expense is based on the number of awards that meet the related service
and non-market performance conditions at the vesting date. If and when the
stock options are ultimately exercised and are issued, the applicable units of
additional paid-in capital and contributed surplus will be transferred to share
capital.
The fair value is calculated based on the Black-Scholes option pricing model.
This model was developed for use in estimating the fair value of traded
options that have no vesting restrictions and are fully transferable.
The fair value of stock options granted to non-employees is recognised as the
fair value of the goods or services received.
The Company’s stock-based compensation plan is described in Note 10 (c).
o) Earnings per Share
The Company presents basic and diluted earnings per share for its ordinary
shares. Basic earnings per share is calculated by dividing the profit or loss
attributable to ordinary shareholders of the Company by the weighted
average number of ordinary shares outstanding during the period. Diluted
earnings per share is determined by adjusting the profit or loss attributable to
ordinary shareholders of the Company and the weighted average number of
ordinary shares outstanding for the effects of all dilutive potential ordinary
shares, which comprise share warrants and options.
p) Determination of fair value
Share based payment transactions
The fair values of employee stock options are measured using a Black-Scholes
model. Measurement inputs include share price on measurement date,
exercise price of the instrument, expected volatility (based on historic
volatility adjusted for changes expected due to publicly available
information), weighted average expected life of the instruments (based on
historical experience and general option holder behavior), expected
dividends, and the risk-free interest rate (based on government bonds).
Service and non-market performance conditions attached to the transactions
are not taken into account in determining fair value.
q) Revenue
Revenue from the sale of goods is measured at the fair value of consideration
received or receivable, net of returns and allowances. Revenue is recognised
when the significant risks and rewards of ownership have been transferred to
the buyer and recovery of the consideration is probable.
ANTIPODES GOLD LIMITED
(A Development Stage Company)
Notes to Financial Statements
(Tabular amounts in thousands of Canadian dollars)
For the twelve months ended December 31, 2016
Page 15 of 25
r) Interest
Interest income is recognised as it accrues, using the effective interest method.
s) Farm-In Expenditure
Expenditures incurred on exploration “farm-in” projects are capitalized while
the farm-in obligations are being undertaken.
Should an equity interest in the project not vest due to non-compliance of the
farm-in obligations or otherwise, accumulated expenditures are written off to
profit or loss in the statement of comprehensive income.
t) Segment Reporting
The determination of the Company’s operating segments and the information
reported for the operating segments is based on the management approach.
The Company’s President and Chief Executive Officer, has been identified as
the Company’s chief decision maker for the purpose of segment reporting.
The Company only operates in New Zealand and reports internally using the
same reports and accounting policies as used in the annual financial
statements. The Company operates in a single segment: gold exploration.
u) Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with
maturities of three months or less from the acquisition date that are subject to
insignificant risk of changes in their fair value. Monies held in escrow by
Trust are also included in cash and cash equivalents.
v) New standards and interpretations not yet adopted
The following standards and interpretations, which are considered relevant
to the group but not yet effective for the period ended December 31, 2016,
have not been applied in preparing the financial statements:
IFRS 9, Financial Instruments: Classification and Measurement
IFRS 9 (2009), IFRS 9 (2010) and IFRS 9 (2013) together will replace parts of
IAS 39, Financial Instruments: Recognition and Measurement. The new
standard simplifies the measurement model and establishes two primary
measurement categories for financial assets (amortised cost and fair value)
and adds requirements related to the classification and measurement of
financial liabilities, and derecognition of financial assets and liabilities. The
effective date is annual periods beginning on or after 1 January 2018. It is not
expected to have a material impact on the group’s financial statements.
ANTIPODES GOLD LIMITED
(A Development Stage Company)
Notes to Financial Statements
(Tabular amounts in thousands of Canadian dollars)
For the twelve months ended December 31, 2016
Page 16 of 25
IFRS 15, Revenue from Contracts with Customers
This standard was issued in May 2014, and will replace all existing guidance
for revenue recognition, including IAS 11, Construction Contracts and IAS 18,
Revenue. The effective date is annual periods beginning on or after 1 January
2017. It is not expected to have a material impact on the group’s financial
statements.
5. Segment Information - Identification of reportable segments
The Group has identified its operating segments based on the internal reports
reviewed and used by the Company’s President and Chief Executive Officer,
(the Company’s chief operating decision maker), in assessing performance
and in determining the allocation of resources.
The Company had one segment, being Gold Exploration and was primarily
focused on the location and definition of a large hard-rock gold deposit.
6. Cash and cash equivalents
7. Trade and other receivables
8. Exploration and Mineral Properties
Twelve months
December 31,
2016
Twelve months
December 31,
2015
$ $
Balance – beginning of period 2,195
1,436
Expenditure on Projects:
Geological consulting, mapping
and modeling
-
18
License rental
-
-
Total project expenditure for the
period
-
18
Reversal of provision of Mineral
Properties
-
741
Sale of Mineral Properties
(2,195)
-
Balance – end of period -
2,195
December 31, 2016
December 31, 2015
$
$
Bank balances
297
4
297
4
December 31, 2016
December 31, 2015
$
$
Other receivables
11
11
11
11
ANTIPODES GOLD LIMITED
(A Development Stage Company)
Notes to Financial Statements
(Tabular amounts in thousands of Canadian dollars)
For the twelve months ended December 31, 2016
Page 17 of 25
On February 26, 2016, the Company’s wholly owned subsidiary, Glass Earth (New
Zealand) Limited (“GENZL”), settled the sale of all of its gold exploration assets to
its joint venture partners (“OceanaGold Waihi”) for NZ$1.5m (C$1.43m) in cash
and the assumption of joint venture liabilities associated with the permits (as more
particularly set out below).
∑ OceanaGold Waihi assumed responsibility for all unpaid cash calls owed by
GENZL;
∑ GENZL transferred and OceanaGold Waihi assumed responsibility for all
GENZL’s royalty obligations associated with the permits.
Region
Opening
Balance
January
1, 2015
Expenditure
to December
31, 2015
Amortisation
to December
31, 2015
Reversal of
provision
impairment
& Provisions
to December
31, 2015
Disposals
to December
31, 2015
Closing
Balance
December
31, 2015
Hard Rock
$ $ $ $ $
$
Hauraki 1,331 18 - 741 -
2,090
Waihi West 105 - - - -
105
1,436 18 - 741 - 2,195
9. Trade and other payables
10. Shareholders’ Equity
a) Common Shares
Authorized: Unlimited number of common shares with no par value.
Issued and Outstanding (Group):
Common Shares
Amount
# $
Outstanding January 1, 2015
10,566,578
29,186
Outstanding December 31, 2015 & 2016
10,566,578
29,186
The holders of common shares are entitled to an equal share in distributions and to
one vote per share at meetings of the Company.
December 31, 2016
December 31, 2015
$
$
Current Liabilities
Trade payables
43
154
Other payables
60
850
Payables to be settled with AXG shares
147
-
Current Payables 250
1,004
ANTIPODES GOLD LIMITED
(A Development Stage Company)
Notes to Financial Statements
(Tabular amounts in thousands of Canadian dollars)
For the twelve months ended December 31, 2016
Page 18 of 25
b) Contributed Surplus
The following summarizes contributed surplus activity during the year for the
company and group.
December 31, 2016
December 31,2015
$
$
Balance, beginning of period
9,946
9,872
Expiration of Share Purchase
Warrants
-
74
Exercise of Share Purchase Warrants
-
-
Balance, end of period 9,946
9,946
c) Earnings per share (cents)
The calculation of basic and fully diluted earnings per share at December 31,
2016 was based on the loss attributable to ordinary shareholders of $339,000
(December 31, 2015: Profit of $248,000) and a weighted average number of
ordinary shares on issue as at the date of these financial statements of
10,566,578 (December 31, 2015: 10,566,578).
Reconciliation of shares outstanding to weighted average shares
December 31,
2016
December 31,
2015
Shares Outstanding – January 1 (Note 10a))
10,566,578
10,566,578
Weighted Average Shares used for basic
EPS 10,566,578
10,566,578
Potential shares from convertible debt
-
600,000
Weighted Average Shares used for diluted
EPS 10,566,578
11,166,578
11. Administrative expenses
Three months ended Twelve months ended
December 31 December 31
2016
2015
2016
2015
Auditors Remuneration
(KPMG)
-
27
5
27
Non audit fees paid to KPMG
6
18
25
18
Consultancy fees
-
6
-
20
Depreciation
-
1
-
1
Directors fees
-
-
-
34
General and administration
-13
29
-22
56
Professional fees
64
24
166
107
Registry and filing
19
28
52
47
76
133
226
310
ANTIPODES GOLD LIMITED
(A Development Stage Company)
Notes to Financial Statements
(Tabular amounts in thousands of Canadian dollars)
For the twelve months ended December 31, 2016
Page 19 of 25
12. Personnel expenses
Three months ended Twelve months ended
December 31 December 31
2016
2015
2016
2015
Wages and salaries
(accrued but unpaid)
23
(34)
69
125
23
(34)
69
125
13. Finance income and expense
Three months ended Twelve months ended
December 31 December 31
2016
2015
2016
2015
Foreign exchange
gains/(Losses)
(9)
(118)
(44)
(50)
Net finance expense
(9)
(118)
(44)
(50)
14. Related Party Transactions
Related party transactions are in the normal course of business and are
measured at the exchange amount, which is the fair value as agreed between
management and the related parties.
a) Remuneration of $2,313 has been paid to Simon Henderson (CEO) for the
twelve months to December 31, 2016 (twelve months to December 31, 2015:
accrued $54,562. The outstanding balance for Mr. Henderson is $39,973
(twelve months to December 31, 2015: $115,713).
b) Remuneration of $20,413 has been paid and $36,260 has been accrued for
Peter Liddle (CFO) for the twelve months to December 31, 2016 (twelve
months to December 31, 2015: accrued $45,070). The outstanding balance for
Mr. Liddle is $76,190 (twelve months to December 31, 2015: $123,562).
c) Remuneration of $10,230 has been accrued for Thomas Rabone (former CEO)
for the twelve months to December 31, 2016 (twelve months to December 31,
2015: accrued $32,922). The outstanding balance for Mr. Rabone is $19,986
(twelve months to December 31: $57,866).
∑ Messrs. Henderson, Liddle and Rabone have agreed to accept
payment of remuneration owed as at 31 December 2015 in Antipodes
Gold shares (subject to TSX approval).
d) No directors’ fees were accrued or paid for the twelve months to December
31, 2016. Directors’ fees of $33,750 were accrued for non-executive directors
(Adrian Fleming $18,750 and Justin Cochrane $15,000) for the period
1 January 2015 to 31 December 2015. No directors’ fees were accrued or paid
for in 2013 or 2014. These directors have agreed to accept payment of this
accrued remuneration in Antipodes Gold shares (subject to TSX approval).
ANTIPODES GOLD LIMITED
(A Development Stage Company)
Notes to Financial Statements
(Tabular amounts in thousands of Canadian dollars)
For the twelve months ended December 31, 2016
Page 20 of 25
e) All outstanding loans totaling $40,000 from directors and management were
repaid in March 2016. No further loans were received for the twelve months
to December 31, 2016.
f) Group entities
Legal subsidiaries Country of
incorporation
Ownership
Interest (%)
2016
2015
Glass Earth (New Zealand) Limited New Zealand
100
100
HPD New Zealand Limited New Zealand
100
100
Glass Earth Geothermal Limited New Zealand
100
100
Glass Earth Mining Limited New Zealand
100
100
Goldmines New Zealand Limited New Zealand
100
100
15. Income Taxes
The Group has tax operating losses available to be applied against future
years’ income amounting to $9.6 million, which can only be retained by
continuing compliance with the usual shareholder ownership continuity
rules. In order to record a future income tax benefit, it must be more likely
than not that the future tax asset resulting from the tax losses available for
carry forward will be realized. Given the Group’s classification as a
development stage company and uncertainty regarding future profitability,
no future income tax benefit is recognized (except as an offset to a deferred
tax liability as set out in the note below).
16. Financial Risk Factors and Management
The group has exposure to the following risks arising from financial instruments:
∑ Market risk
∑ Credit risk
∑ Liquidity risk
The Board of Directors has overall responsibility for the establishment and
oversight of the Company’s risk management framework. A summary of the
Group’s risk exposures as it relates to financial instruments is reflected below:
a) Market Risk
Interest rate risk – The Group held $297,000 in cash and cash equivalents at
twelve months to December 31, 2016. The Group invests cash surplus to its
operation in interest bearing accounts held in a major New Zealand chartered
bank. The Group periodically assesses the quality of its investment with the
bank and is satisfied with the credit rating of the bank.
ANTIPODES GOLD LIMITED
(A Development Stage Company)
Notes to Financial Statements
(Tabular amounts in thousands of Canadian dollars)
For the twelve months ended December 31, 2016
Page 21 of 25
At reporting date the cash and cash equivalents were the only financial
instruments with interest rate risk exposure. The Group’s cash is held
primarily in interest bearing accounts, the rates of which are not fixed. A 100
basis point change in the interest rate would affect the Company by an
annualized amount of interest equal to approximately $2,970.
Foreign currency risk – The Group’s operational activities are all within New
Zealand and 97% of all cash transactions are in New Zealand Dollars (NZD).
As at twelve months to December 31, 2016 the Group held all of its cash and
equivalents in NZD.
b) Credit Risk and Concentrations of Credit Risk
The Group is not exposed to major credit risks attributable to customers.
The Group monitors the credit worthiness of its joint operation partners.
The Group’s cash is held in a major New Zealand chartered bank and the
Group has no investments in non-bank asset- backed commercial paper.
c) Liquidity risk
Liquidity risk represents the Group’s ability to meet its contractual
obligations. As a gold explorer with no current mining revenue the Group
ensures that its expenditure rate is commensurate with its cash position.
Given that the majority of all non-derivative financial liabilities are classified
as current, the carrying amount represents the contractual cash flows that are
due in less than twelve months.
d) Financial instrument classification
With the exception of investments in subsidiaries that are treated as available
for sale, all other financial assets are classified as loans and receivables and all
financial liabilities are classified at amortised cost under IFRS 7.
17. Management of Capital
The Group defines the capital that it manages as its shareholder equity.
The Group’s objectives with respect to managing capital are to safeguard the
Group’s ability to continue as a going concern so that it can provide future
returns to shareholders and benefits for other stakeholders. As at twelve
months to December 31, 2016 total managed capital was $59,000 (twelve
months to December 31, 2015: $398,000).
The Group’s capital structure reflects a company focused on mineral
exploration and financing both internal and external growth opportunities.
The exploration for and development of mineral deposits involves significant
risk which even a combination of careful evaluation, experience and
knowledge may not adequately mitigate.
ANTIPODES GOLD LIMITED
(A Development Stage Company)
Notes to Financial Statements
(Tabular amounts in thousands of Canadian dollars)
For the twelve months ended December 31, 2016
Page 22 of 25
In order to maintain or adjust its capital structure, the Group may issue new
shares or sell assets to fund ongoing operations.
The Group manages its capital structure by performing the following:
∑ Preparing budgets and cash-flow forecasts which are reviewed and
approved by the Board of Directors;
∑ Regular internal reporting and Board of Directors meetings to review
actual versus budgeted spending and cash-flows; and
∑ Detailed project analysis to assess and determine new funding
requirements.
There were no changes in the Company’s approach to capital management
during the period ended twelve months to December 31, 2016. The Company
is not subject to externally imposed capital requirements.
18. Commitments and Contingencies
a) As at December 31, 2016 the Group had no capital commitments (December
31, 2015: Nil)
b) In December 2014 Glass Earth (New Zealand) Limited (Company’s wholly
owned subsidiary) received a notice of claim of $300k from the owner of a
property, at which the subsidiary undertook mining activity over the years
2010-12, in relation to a land access agreement. Whilst it is the intention of the
subsidiary to defend this claim, a $37,000 provision has been recognized in
these financial statements (no changes from the prior year) to reflect the
Company’s best estimate of any potential legal and other costs associated
with defending this claim.
19. Reconciliation of net loss for the year with net cash from operating
activities
December 31,
2016
December 31,
2015
$
$
Net (Loss)/Profit for period (339)
428
Adjustment for non-cash items:
Depreciation
1
Impairment and provision of Mineral
Properties (Note 8)
-
(741)
Income tax expense /(recovery)
-
-
Exchange translation
44
(50)
Changes in non-cash working capital items:
Amounts receivable
(2)
-
Trade and other payables
(752)
242
Net cash used in Operating Activities
(1,049)
(200)
ANTIPODES GOLD LIMITED
(A Development Stage Company)
Notes to Financial Statements
(Tabular amounts in thousands of Canadian dollars)
For the twelve months ended December 31, 2016
Page 23 of 25
20 Restructuring
As announced in the news release dated 22 July 2015, the Company reached
agreement on revised terms with Chatham Rock Phosphate Limited (“CRP”) to
undertake the step subsequent to the sale of the Company’s gold exploration assets,
being a takeover offer to acquire all of the issued shares of CRP. The Pre-Bid
Agreement had certain terms, all of which were met before the Company made a full
takeover offer for all shares on issue in CRP under the New Zealand Takeovers
Code. This offer was made December 23, 2016. The key terms of the offer were:
∑ The consideration for CRP shareholders will be satisfied in full by an issue of
AXG shares.
∑ Acceptance by CRP shareholders representing 90% of the CRP shares on
issue (unless waived by Antipodes Gold).
∑ The offer will value the companies:
o Antipodes Gold to be valued at the aggregate of NZ$300,000 and Net
Cash held, as at the day immediately preceding the Takeover Notice
for the Takeover offer being issued.
o CRP to be valued at the aggregate of NZ$0.007 per CRP share issued
in respect of all CRP shares on issue as at the date of this Agreement
and any CRP shares issued under the Option Exchange; and
o In respect of any CRP shares otherwise issued from the date of this
Agreement until the date a Takeover Notice is issued by Antipodes
Gold for the Takeover Offer, the aggregate issue price at which CRP
issues such shares.
For clarity, these respective values are to be reflected in the proportions that the
shares of Antipodes Gold will be held by CRP shareholders and Antipodes Gold
shareholders, following completion of the Takeover Offer.
Based on the foregoing valuation methodology, immediately preceding the
Takeover Notice, Antipodes Gold was valued at approximately NZ$573,000 and
CRP was valued at approximately NZ$5,351,000. With the completion of the
compulsory acquisition portion of the Takeover offer in March 2017, this will result
in existing CRP shareholders holding approximately 90.3% of the issued share
capital of Antipodes Gold and the existing shareholders of Antipodes Gold holding
approximately 9.7% of the issued share capital.
21 Subsequent Events
Chatham Rock Reverse Takeover Offer
ANTIPODES GOLD LIMITED
(A Development Stage Company)
Notes to Financial Statements
(Tabular amounts in thousands of Canadian dollars)
For the twelve months ended December 31, 2016
Page 24 of 25
By 17 February 2017, Antipodes Gold had received over 93% acceptances of the offer
from Chatham Rock shareholders. Accordingly, the offer was declared
unconditional and Antipodes Gold initiated procedures to compulsorily acquire the
balance of the Chatham Rock shares. This will be completed by mid-March 2017.
The following actions occurred on Friday 24 February 2017:
1. Antipodes Gold consolidated its existing shares on a one (1) new share for
each ten (10) old shares;
2. Antipodes Gold issued shares to Chatham Rock shareholders in respect of
their initial 93% of acceptances;
3. Antipodes Gold changed its name to Chatham Rock Phosphate Limited (the
new subsidiary in New Zealand, Chatham Rock Phosphate Limited, changed
its name to Chatham Rock Phosphate (NZ) Limited)
4. There were changes in regard to directors and management;
a. Messrs Fleming (Chairman of directors), Henderson (director,
President and C.E.O.) and Liddle (C.F.O.) resigned;
b. Mr Christopher Castle (an existing Antipodes Gold director) was
appointed as President, Managing Director and C.E.O;
c. Mesdames Linda Sanders and Jill Hatchwell were appointed directors
(as approved by shareholders at the last Annual General Meeting).
Mr Goodden and Mr Falconer were appointed as additional directors;
d. Ms Robyn Hamilton was appointed as C.F.O.
e. Mr Justin Cochrane (an existing Antipodes Gold director), continues
in office.
Change of Financial Year End
Antipodes Gold has an existing financial year-end of 31 December.
Chatham Rock Phosphate (NZ) Limited has a financial year-end of 31 March.
The Company has given notice of its intention to change its financial year end from
December 31 to March 31 in order to coincide with the year-end of Chatham Rock
Phosphate (NZ) Limited.
ANTIPODES GOLD LIMITED
(A Development Stage Company)
Notes to Financial Statements
(Tabular amounts in thousands of Canadian dollars)
For the twelve months ended December 31, 2016
Page 25 of 25
The financial reporting will change to:
∑ Antipodes Gold Limited reports for the 12 month (unaudited) period to 31
December 2016;
∑ Chatham Rock Phosphate Limited will report:
o for the 15 month (audited) period to 31 March 2017 (including the
results of its new, New Zealand subsidiary since 24 February 2017);
o for Q1 to 30 June 2017, by 29 August 2017;
o for Q2 to 30 September 2017, by 29 November 2017;
o for Q3 to 31 December 2017, by 1 March 2018;
and so on.
---
Chatham Rock Phosphate - Management’s Discussion and Analysis
For the twelve months ended December 31, 2016
AGL MD&A Report for Q4 2016 Page 1
CHATHAM ROCK PHOSPHATE LIMITED
(incorporated in Canada)
(A DEVELOPMENT STAGE COMPANY)
PLEASE NOTE:
This is the Management’s Discussion & Analysis
of Antipodes Gold Limited
(as it was then named)
for the
TWELVE MONTH PERIOD
ENDED DECEMBER 31, 2016
(Stated in Canadian Dollars)
That is, the Antipodes Gold group BEFORE the reverse takeover
and name change to Chatham Rock Phosphate.
Chatham Rock Phosphate - Management’s Discussion and Analysis
For the twelve months ended December 31, 2016
AGL MD&A Report for Q4 2016 Page 2
ANTIPODES GOLD LIMITED (“AXG”)
MANAGEMENT’S DISCUSSION & ANALYSIS
For the twelve months ended December 31, 2016
(All amounts stated in Canadian dollars, unless otherwise indicated)
Attention is called to a caution in respect of Forward-Looking Statements - included at page 20
2015 Overview
AXG had an interesting year whereby restructuring efforts started to pay off. By mid-year, the
Company had arranged to sell all its remaining gold exploration assets and subsequent to
shareholder approval in November 2015, the sale was settled in late February 2016.
2016 Overview
The settlement of the assets sale allowed the company to focus on the reverse takeover (“RTO”)
of Chatham Rock Phosphate Limited (“Chatham Rock” or “CRP”).
AXG launched its takeover offer to CRP shareholders on December 23, 2016. By 17 February
2017, Antipodes Gold had received over 93% acceptances of the offer from Chatham Rock
shareholders. Accordingly, the offer was declared unconditional and Antipodes Gold initiated
procedures to compulsorily acquire the balance of the Chatham Rock shares. This will be
completed by mid-March 2017.
Subsequent Events
The following actions occurred on Friday 24 February 2017:
1. Antipodes Gold consolidated its existing shares on a one (1) new share for each ten (10)
old shares;
2. Antipodes Gold issued shares to Chatham Rock shareholders in respect of their initial
93% of acceptances;
3. Antipodes Gold changed its name to Chatham Rock Phosphate Limited (the new
subsidiary in New Zealand, Chatham Rock Phosphate Limited, changed its name to
Chatham Rock Phosphate (NZ) Limited)
4. There were changes in regard to directors and management;
a. Messrs Fleming (Chairman of directors), Henderson (director, President and
C.E.O.) and Liddle (C.F.O.) resigned;
b. Mr Robert Goodden was appointed as an independent chairman;
Chatham Rock Phosphate - Management’s Discussion and Analysis
For the twelve months ended December 31, 2016
AGL MD&A Report for Q4 2016 Page 3
c. Mr Chris Castle (an existing Antipodes Gold director) was appointed as
President, Managing Director and C.E.O;
d. Mesdames Linda Sanders and Jill Hatchwell were appointed directors (as
approved by shareholders at the last Annual General Meeting). Mr Robin
Falconer was appointed as an additional director;
e. Ms Robyn Hamilton was appointed as C.F.O.
f. Mr Justin Cochrane (an existing Antipodes Gold director), continues in office.
Change of Financial Year End
Antipodes Gold has an existing financial year-end of 31 December.
Chatham Rock Phosphate (NZ) Limited has a financial year-end of 31 March.
The Company has given notice of its intention to change its financial year end from December 31
to March 31 in order to coincide with the year-end of Chatham Rock Phosphate (NZ) Limited.
The financial reporting will change to:
∑ Antipodes Gold Limited reports for the 12 month (unaudited) period to 31 December
2016;
∑ Chatham Rock Phosphate Limited will report:
o for the 15 month (audited) period to 31 March 2017 (including the results of its
new, New Zealand subsidiary since 24 February 2017);
o for Q1 to 30 June 2017, by 29 August 2017;
o for Q2 to 30 September 2017, by 29 November 2017;
o for Q3 to 31 December 2017, by 1 March 2018;
and so on.
The following information mainly pertains to Antipodes Gold’s historical
activities, except where forward looking information now includes reference to
Chatham Rock Phosphate’s planned activities in seeking a marine consent to
allow undersea mining of phosphate.
Chatham Rock Phosphate - Management’s Discussion and Analysis
For the twelve months ended December 31, 2016
AGL MD&A Report for Q4 2016 Page 4
INTRODUCTION
This discussion and analysis of the operating results and financial condition of Antipodes Gold Limited
(“Antipodes Gold”) for the twelve months ended December 31, 2016 as prepared on February 28, 2017
should be read in conjunction with the unaudited financial statements and related notes for the same
period and is intended to provide the reader with a review of the factors that affected Antipodes Gold’s
performance during that year and the factors reasonably expected to impact Chatham Rock Phosphate’s
future operations and results.
The unaudited financial statements and related notes of Antipodes Gold have been prepared in
accordance with accounting principles that comply with International Financial Reporting Standards
(“IFRS”) as issued by the International Accounting Standards Board. The financial statements and all
amounts in this report are expressed in Canadian dollars, except where otherwise indicated.
Qualified Person
The Antipodes Gold exploration programs were carried out under the supervision of Antipodes Gold’s
Exploration Manager, Simon Henderson. Mr Henderson (MSc Geology (CODES), is an AusIMM Chartered
Professional under the Discipline of Geology and is a Qualified Person as defined by National Instrument
43-101 and is an independent contractor to the Company.
CORPORATE HISTORY AND NATURE OF THE BUSINESS
Until early 2015, the principal activity of Antipodes Gold was exploration for gold and silver in New
Zealand. Large airborne geophysics campaigns in 2005 (Hauraki & Central Volcanic Regions) and 2007
(Otago Region) had been followed up with ground-based exploration and drilling.
As all exploration assets were sold in 2015 and the proceeds received in early 2016, the history of
Antipodes Gold’s exploration activities is now irrelevant. Accordingly, they are not included here but
may be accessed by referring to earlier reporting.
As from February 24, 2017, the business activities are those of Chatham Rock Phosphate Limited. The
history of these activities and projected expenditures and goals are included in the updated Filing
Statement lodged on SEDAR on 14 November 2016.
BOARD OF DIRECTORS AND MANAGEMENT (as from 24 February 2017)
∑ Robert Goodden (independent non-executive Chairman);
∑ Chris Castle (President and CEO, Managing Director);
∑ Jill Hatchwell (independent non-executive director)
∑ Linda Sanders (non-executive director)
∑ Robin Falconer (Principal Scientist)
All based in New Zealand except for Mr Gooden, who is based in England, and
∑ Justin Cochrane (independent non-executive director - Toronto, Canada)
Chatham Rock Phosphate - Management’s Discussion and Analysis
For the twelve months ended December 31, 2016
AGL MD&A Report for Q4 2016 Page 5
CAPITAL TRANSACTIONS AND SIGNIFICANT EVENTS
Capital Transactions
Antipodes Gold has not raised any equity financing in the twelve months ended December 31, 2016.
Significant Events
Antipodes Gold sold all its gold exploration interests and has undertaken and completed a reverse
takeover of a listed New Zealand based phosphate development company (Chatham Rock Phosphate
Limited). Both these transactions received shareholder approval in November 2015.
FINANCIAL COMMENTARY
Antipodes Gold prepares and files its financial statements and related notes in accordance with
accounting principles that comply with International Financial Reporting Standards (“IFRS”) as issued by
the International Accounting Standards Board.
Selected Annual Information
Year ended December 31
2016 2015 2014
$000s except for per share
Total revenue - - -
Net profit/(loss) (339) 248 (250)
Profit/(Loss) per share – basic and diluted (cents) 3.21 2.35 (2.37)
Total assets 309 2,211 1,452
Total long-term liabilities - - -
Distribution or cash dividend declared per share - - -
In 2012 and 2013, Antipodes Gold was involved in placer mining but discontinued this in August
2013. Since 2014 Antipodes Gold has been in a holding pattern as it sought equity funding and
then restructuring options.
Summary of Quarterly Results
Quarterly results for the past eight quarters ending December 31, 2016 are as follows:
2016 2015
$000s Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1
Cash 297 413 531 849 4 6 13 3
Working capital 59 328 277 287 398 (1,540) (1,484) (1,403)
Total assets 309 425 545 859 2,211 1,735 1,660 1,571
Profit/(Loss) for period
(126)
(92)
(10)
(111)
220
28
-
-
Profit/(Loss) per share (cents)
(1.2)
(0.9)
(0.1)
(1.0)
2.0
0.3
-
-
Mineral exploration - - - - 460 84 81 116
Chatham Rock Phosphate - Management’s Discussion and Analysis
For the twelve months ended December 31, 2016
AGL MD&A Report for Q4 2016 Page 6
Cash flow from financing (net) - - - (301) 49 60 75 16
Weighted average shares (millions) 10.6 10.6 10.6 10.6 10.6 10.6 10.6 10.6
Antipodes Gold records losses each quarter/year arising from the expensing of its general and
administration expenses as well as any write-off of exploration expenditures and other non-cash
expense items. Periodic reviews of capitalized exploration expenditures are undertaken and write-offs
and provisions are expensed to the Consolidated Statement of Comprehensive Income.
Exploration Expenditures
Gold exploration costs used to form the bulk of Antipodes Gold’s expenditures.
Exploration activities, predominantly at WKP – part of the Hauraki JV with
Newmont (Antipodes Gold 35%) were halted due to lack of cash.
All gold exploration assets and associated liabilities were sold in 2015, with
settlement of the transaction in late February 2016.
Significant Expenses of a Corporate Nature
For the twelve months ended December 31, 2016 Antipodes Gold group recorded a Net Loss before
income taxes of $339,000 (twelve months ended December 31, 2015: Profit of $248,000). Antipodes
Gold’s only function has been to complete the RTO of CRP, using the office holder CEO and CFO. This
was accomplished on 24 February 24, 2017.
Significant expense categories are discussed as per below:
Expenditure
2016
Note
2015
General and administration -22 1 56
Professional fees 193 2 152
Net salaries 69 3 133
Directors fees - 34
Registry, Filing and Listing 52 47
Consulting fees 3 20
Depreciation - 1
Total 295 443
Chatham Rock Phosphate - Management’s Discussion and Analysis
For the twelve months ended December 31, 2016
AGL MD&A Report for Q4 2016 Page 7
Notes
1. General and Administration represents the reversal of provisions from previous years
together with the costs for Accounting services, Insurance and New Zealand office costs.
2. Professional fees are audit and legal fees incurred during the period, more recently in
connection with the documentation relating to the CRP RTO.
3. Net salaries are principally composed of the accrued costs of the part time Chief Financial
Officer and part time Chief Executive Officer who completed the successful RTO.
Liquidity and Capital Resources
When operating as a gold exploration and mining company, Antipodes Gold’s operations were
dependent on its ability to raise financing and its ability to realize assets and discharge liabilities.
The restructuring proposal involving the sale of Antipodes Gold’s remaining gold exploration assets and a
Reverse Take Over of Chatham Rock Phosphate Limited were approved by shareholders in November
2015.
The settlement of the gold exploration assets sale in February 2016 meant that NZ$1.5m (C$1.43m) was
received in cash and a further C$0.766m in liabilities assumed by the purchaser.
In April 2014, Antipodes Gold borrowed NZ$40,000 (approximately C$36,570) from a third party. This is
in addition to loans provided by directors and management, in March/April 2014, of C$40,000. Further
funding has been provided by CRP in 2015. All loans were interest free and were repaid in March 2016
from the proceeds of the gold exploration assets sale.
Antipodes Gold’s cash position as at December 31, 2016 was $297,000 (December 31, 2015: $4,000) with
Trade and other Payables of $250,000 of which $147,000 has been satisfied by the issuance of Antipodes
fully paid shares (December 31, 2015: $1,768,000).
Subsequent to the RTO of CRP, the newly renamed Chatham Rock Phosphate has the existing share and
warrant capital structure as set out at the end of this report under the heading of “Supplemental to the
Financial Statements”.
TSX final approval of the CRP RTO involved the TSX being satisfied that the combined
Antipodes/Chatham Rock group had sufficient cash resources to meet its G&A and other operational
expenditures for the next 12 months. That is the case, with over C$1m in funds. Of course, further funds
will be required to advance CRP’s Chatham Rise project located off the eastern coast of New Zealand.
Related Party Transactions
Related party transactions are in the normal course of business and are measured at the exchange
amount, which is the fair value as agreed between management and the related parties.
a) Remuneration of $2,313 has been paid to Simon Henderson (CEO) for the twelve
months ended December 31, 2016 (twelve months ended December 31, 2015: accrued
$54,562).
b) Remuneration of $20,413 has been paid and $36,260 has been accrued for Peter Liddle
(CFO) for the twelve months ended December 31, 2016 (twelve months ended
December 31, 2015: accrued $45,070).
Chatham Rock Phosphate - Management’s Discussion and Analysis
For the twelve months ended December 31, 2016
AGL MD&A Report for Q4 2016 Page 8
c) Remuneration of $10,230 has been accrued for Thomas Rabone (former CEO) for the
twelve months ended December 31, 2016 (twelve months ended December 31, 2015:
accrued $32,922).
d) No Directors fees were accrued or paid for the twelve months ended December 31,
2016. Directors fees of $33,750 have been accrued for non-executive directors (Adrian
Fleming $18,750 and Justin Cochrane $15,000) for the period 1 January 2015 to 31
December 2015. No directors’ fees were accrued or paid for in 2013 or 2014. These
directors have agreed to accept payment of their accrued remuneration in Antipodes
Gold shares (subject to TSX approval).
e) All outstanding loans of $40,000 from directors and management were repaid in March
2016. No further loans were received for the twelve months ended December 31, 2016.
SUBSEQUENT EVENTS
Antipodes Gold launched its takeover offer to CRP shareholders on December 23, 2016. By 17
February 2017, Antipodes Gold had received over 93% acceptances of the offer from Chatham
Rock shareholders. Accordingly, the offer was declared unconditional and Antipodes Gold
initiated procedures to compulsorily acquire the balance of the Chatham Rock shares. This will
be completed by mid-March 2017.
The following actions occurred on Friday 24 February 2017:
1. Antipodes Gold consolidated its existing shares on a one (1) new share for each ten (10)
old shares;
2. Antipodes Gold issued shares to Chatham Rock shareholders in respect of their initial
93% of acceptances;
3. Antipodes Gold changed its name to Chatham Rock Phosphate Limited (the new
subsidiary in New Zealand, Chatham Rock Phosphate Limited, changed its name to
Chatham Rock Phosphate (NZ) Limited)
4. There were changes in regard to directors and management;
a. Messrs Fleming (Chairman of directors), Henderson (director, President and
C.E.O.) and Liddle (C.F.O.) resigned;
b. Mr Robert Goodden was appointed as an independent chairman;
c. Mr Chris Castle (an existing Antipodes Gold director) was appointed as
President, Managing Director and C.E.O;
Chatham Rock Phosphate - Management’s Discussion and Analysis
For the twelve months ended December 31, 2016
AGL MD&A Report for Q4 2016 Page 9
d. Mesdames Linda Sanders and Jill Hatchwell were appointed directors (as
approved by shareholders at the last Annual General Meeting). Mr Robin
Falconer was appointed as an additional director;
e. Ms Robyn Hamilton was appointed as C.F.O.
f. Mr Justin Cochrane (an existing Antipodes Gold director), continues in office.
Use of Financial Instruments
For the twelve months ended December 31, 2016 Antipodes Gold did not enter into any specialized
financial agreements to minimize its investment risk, currency risk or commodity risk. The principal
financial instruments affecting Antipodes Gold’s financial condition and results of operations are
currently its cash, accounts receivable and prepayments, and accounts payable and accrued liabilities.
Contractual Obligations and Commitments
a) At December 31, 2016 the Group had no capital commitments. (December 31, 2015 Nil).
b) Antipodes Gold has no further commitments under the terms of non-cancellable operating
leases, (2015: Nil).
Off-Balance Sheet Arrangements and Contingent Liabilities
Antipodes Gold has no off-balance sheet arrangements.
∑ In December 2014 Glass Earth (New Zealand) Limited (Company’s wholly owned subsidiary)
received a notice of claim of $300,000 from the owner of a property, at which the subsidiary
undertook mining activity over the years 2010-12, in relation to a land access agreement. Whilst
it is the intention of the subsidiary to defend this claim, a $37,000 provision has been
recognized in these financial statements to reflect Antipodes Gold’s best estimate of any
potential legal and other costs associated with defending this claim.
Critical Accounting Policies and Estimates
Preparing financial statements requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of any contingent assets and liabilities as at
the date of the financial statements, as well as the reported amounts of revenues earned and expenses
incurred during the period. These estimates are based on historical experience and other assumptions
that are believed to be reasonable under the circumstances.
Antipodes Gold’s significant accounting policies are those that affect its financial statements, and are
summarized in Note 4 of the audited financial statements for the year ended December 31, 2015.
Critical accounting policies and estimates in the year included capitalization of the costs relating to the
acquisition, exploration and development of non-producing resource properties and the recognition of
impairment of those assets, the allocation of proceeds on the purchase or sale of assets, the valuation of
stock based compensation and tax accounts, and contingent liabilities.
Actual results could differ from these estimates.
Chatham Rock Phosphate - Management’s Discussion and Analysis
For the twelve months ended December 31, 2016
AGL MD&A Report for Q4 2016 Page 10
Asset Retirement Obligations
The Company is required to record a liability for the estimated future costs associated with legal
obligations relating to the reclamation and closure of its exploration, development or mining properties.
This amount is initially recorded with subsequent annual recognition of an accretion amount. An
equivalent amount is recorded as an increase to mineral properties and deferred exploration costs and
amortized over the useful life of the properties.
The Company has provided for a potential obligation relating to the reclamation of its properties.
OUTLOOK
As from February 24, 2017, following the successful takeover of Chatham Rock Phosphate Limited,
Antipodes Gold has been renamed Chatham Rock Phosphate Limited. All future activities relate to the
phosphate industry.
For additional information, please refer to Chatham Rock Phosphate’s website at
www.rockphosphate.co.nz and for regulatory filings, including news releases, please refer to
www.SEDAR.com under the new name Chatham Rock Phosphate.
RISKS, UNCERTAINTIES AND OTHER ISSUES
Antipodes Gold had no current business activities apart for the pursuit of the RTO of CRP, which has,
from February 24, 2017, resulted in Antipodes Gold becoming a rock phosphate developer.
The following comments relate to the new business of Chatham Rock Phosphate Limited (“Chatham”)
RISK FACTORS
Chatham’s business of exploring and developing for Mineral Resources involves a variety of operational,
financial and regulatory risks that are typical in the natural resource industry. Chatham attempts to
mitigate these risks and minimize their effect on its financial performance, but there is no guarantee that
Chatham will be profitable in the future. Chatham’s common shares should be considered speculative.
Investors should carefully consider the following risk factors:
a. Marine Consent
Chatham cannot commence mining operations without the Marine Consent. Chatham filed for
the Marine Consent on May 14, 2014 but was declined on February 11, 2015. While Chatham
considers that it has a good case to receive the Marine Consent on re-application, there is no
guarantee that the Marine Consent will be granted. If Marine Consent is not granted or is
granted subject to economically unfeasible conditions, Chatham will not be able to proceed with
mining operations in respect of the Mining Permit, which could have a material adverse effect on
the financial condition, operations, and prospects of Chatham.
The Environmental Protection Authority (“EPA”) has advised that the Marine Consent decision-
Chatham Rock Phosphate - Management’s Discussion and Analysis
For the twelve months ended December 31, 2016
AGL MD&A Report for Q4 2016 Page 11
making process will typically be completed within a six-month period, however, there is
provision for the EPA to extend the prescribed timeframes within the Exclusive Economic Zone
(“EEZ”) ACT. The EPA can extend the timeframes to a maximum of twice the limit specified in
the EEZ Act. Timeframes can only be extended beyond this if Chatham requests, or agrees to, it.
Any delay in the Marine Consent decision-making process could delay the entering into of a
mining contract and the commencement of mining operations and production, which could have
a material adverse effect on the financial condition, operations, and prospects of the Chatham.
b. Uncertainty Relating to Mineral Resources
Resource estimates are a product of the skill, experience and judgements of the person carrying
out the resource estimation and no assurances can be given that the estimated grade and
tonnes will be realized or that Chatham will receive the prices assumed in determining its
resources. Valid estimates made at a given time may significantly change when new information
becomes available. While Chatham believes that the resource estimates included in this
Document are reasonable, resource estimates by their nature are imprecise and depend on the
quality of the sampling data and to a certain extent, upon statistical inferences that may
ultimately prove unreliable.
All of Chatham's resources are reported as Inferred Mineral Resources. Inferred Mineral
Resources have a great deal of uncertainty associated with them as to their existence (both
quantity and ultimately recovered grade). Generally, Inferred Mineral Resources cannot form
the basis of a feasibility study or bankable feasibility study. Owing to the nature of Chatham's
phosphate deposit, and its accessibility, it is not guaranteed that the deposit will ever be
converted to the measured and indicated resource categories. As such, there can be no
assurance that third parties will find Chatham's resource categorization acceptable for future
funding purposes or capital investment decisions, which could have a material adverse effect on
the financial condition, operations, and prospects of Chatham.
c. Mining Contract and Mining Process Risk
The technical ability of Chatham to extract phosphorite from the seabed is unproven and will
require the development of a novel mining technique in order to accommodate the depth of the
sea in the Chatham Rise area. Therefore, there are no assurances that the proposed mining
method will perform at the necessary water depths as intended or at all.
d. Requirement for Future Funding
Chatham is likely to require access to further funding in the future and prior to commencement
of production for a variety of reasons, including working capital, expansion of the business, new
developments relating to existing operations or new acquisitions. General market conditions,
volatile phosphorite markets, the lack of any necessary permit or contract to mine, a claim
against Chatham or other factors may make it difficult to secure funding. There is no assurance
that Chatham will be successful in obtaining required funding as and when needed on
commercially acceptable terms. While Chatham has contracted for future funding with the Drip
Investors and expects that those funding commitments from the Drip Investors will be satisfied,
as with any arrangement of this type, Chatham does have a risk of default on those
commitments being satisfied.
Chatham Rock Phosphate - Management’s Discussion and Analysis
For the twelve months ended December 31, 2016
AGL MD&A Report for Q4 2016 Page 12
e. Work Program Commitments
The Mining Permit issued by the New Zealand Petroleum and Minerals (“NZPAM”) department,
currently requires that mining operations commence on or before December 6, 2017 at a mining
rate of not less than 800,000 tonnes of phosphorite per annum. Chatham has not met this
deadline and will be seeking a change to the terms of the Mining Permit to reflect that mining
operations will not commence before 2019. Chatham believes that the specified mining rate can
be achieved with the currently contemplated mining processes, many of the steps needed to
reach commencement of mining are beyond the control of Chatham and as such there can be no
guarantee that Chatham will be able to meet this target production within the required deadline
or at all. There can be no guarantee that Chatham will receive Marine Consent and such other
permits as may be required for mining operations, nor that it will enter into a mining contract
should Marine Consent be granted or that a suitable mining vessel will be available in the
timescale required to allow Chatham to satisfy the Mining Permit requirements.
The failure of Chatham to commence mining at a rate of not less than 800,000 tonnes of
phosphorite per annum would result in a breach of the Mining Permit and give rise to the power
of the appropriate Minister, as defined in the Crown Minerals Act 1991 of New Zealand, to
revoke the Mining Permit. Whilst Chatham believes that the appropriate Minister would likely
amend the terms of the Mining Permit in such circumstances, provided he or she was satisfied
that Chatham was making good progress to commence mining operations as soon as practicable,
there can be no assurance that such discretion would be exercised and any such failing could
have a material adverse effect on the financial condition, operations, and prospects of Chatham.
The Mining Permit imposes other conditions upon Chatham as well, including the requirement to
complete a study within 24 months of the permit being granted (i.e. by 6 December 2017) in
support of a final investment decision. Chatham believes that most of the work and studies have
been completed to satisfy the preparation of such a study, however, no assurance can be given
that NZPAM will accept Chatham's study in satisfaction of this condition, when completed and
presented. Any such failing could result in the termination or modification of the Mining Permit,
which could have a material adverse effect on the financial condition, operations, and prospects
of Chatham.
Chatham must also complete appropriate sampling, geophysical and geotechnical surveys
required to define mining blocks within 48 months of the permit being granted (i.e. by 6
December 2017) and spend a minimum of NZD2 million per annum (C$1.9m) in carrying out its
activities. Various circumstances, including the financial resources available to Chatham,
manpower, equipment availability, and other circumstances beyond Chatham's control or
influence may result in the failure to satisfy the minimum work requirement and/or other
conditions. Failure to comply with any of these conditions could result in the termination or
modification of the Mining Permit, which could have a material adverse effect on the financial
condition, operations, and prospects of Chatham.
f. Market Risk
Whilst Chatham has engaged in market research and identified a number of potential buyers and
markets in relation to the product to be mined from Chatham Rise, Chatham has not yet entered
into any marketing, sales or offtake agreements that are in markets considered material to
Chatham Rock Phosphate - Management’s Discussion and Analysis
For the twelve months ended December 31, 2016
AGL MD&A Report for Q4 2016 Page 13
Chatham. In addition, Chatham cannot be assured of the quality of product that it intends to
produce given the nature of Chatham's resource, which could affect anticipated demand.
Further, the market may develop and change prior to the commencement of mining operations
and impact negatively on anticipated demand, whether as a result in a change in technology, a
new source of phosphate production or otherwise. There can be no assurance, therefore, that
Chatham will be in a position to sell all of its mining output, if any, at profitable prices, nor at all.
g. Mining Contract and Mining Process Risk
The technical ability of Chatham to extract phosphorite from the seabed is unproven and will
require the development of a novel mining technique in order to accommodate the depth of the
sea in the Chatham Rise area. Chatham intends to use a vessel that is specially modified and
equipped with a trailing suction unit. Whilst this solution relies on a compilation of existing,
proven technology, the compilation of those techniques is novel and the use of the process in its
proposed form and at the depths of the Chatham Rise area is untried and may require further
work. Therefore, there are no assurances that the proposed mining method will perform at the
necessary water depths as intended or at all.
Modification of a vessel for such purpose will only take place if Chatham is granted the Marine
Consent and enters into a mining contract. There can be no assurance that Chatham will be able
to enter into such a contract on acceptable terms, nor at all, and the failure to do so could delay
the development of Chatham's project, alter Chatham's mining cost assumptions and impair the
ability of Chatham to carry out future fund raises. Whilst the Directors believe that there is
competition for the award of the mining contract on competitive terms, there is no certainty
that any alternative contractors to Boskalis would be able to use the design work completed by
Boskalis, nor that any alternative contractor would be able to provide an independently
engineered processing solution on a timely basis and at a similar anticipated cost.
Work on funding strategies for vessel modification or charter is currently being considered by
Chatham. The present idea is to establish a special purpose vehicle to own the vessel and to fund
the modifications by way of a combination of debt and equity. A consortium of investors would
be sought to contribute equity. There is a risk that the required funding may not be secured at
all or on terms unfavourable to Chatham or the mining operator. Subject to finalization of the
financing strategy, Chatham may need to contribute equity into the special purpose vehicle
which may require that Chatham secures further funds. It is not Chatham's intention to make a
significant equity contribution. It is also possible, however, that the vessel could be owned by a
third party marine investor and chartered.
h. Intellectual Property Risk
In addition to the above, while the proposed mining system comprises a compilation of existing
technology, freedom-to-operate searches have not been undertaken. Some intellectual
property rights associated with the mining system design could be proprietary to other parties.
This could require licensing arrangements to be negotiated with such parties or alternative
designs to be developed (where any such proprietary rights exist). There can be no assurance
that such licensing arrangements will be negotiated on terms favourable or acceptable to
Chatham or at all.
Chatham Rock Phosphate - Management’s Discussion and Analysis
For the twelve months ended December 31, 2016
AGL MD&A Report for Q4 2016 Page 14
i. Production Risks
The future development of any mineral deposit involves significant risks that even a combination
of careful evaluation, experience and knowledge may not eliminate. This is particularly the case
in an offshore deposit such as that at Chatham Rise, which is subject to additional risks related to
its marine location. For example, production will be affected by weather patterns and sustained
periods of bad weather could adversely impact mining activity and reduce tonnages of the rock
phosphate mined. No assurance can be given that Chatham will meet its annual target
production rates of 1.5Mt per annum once production starts.
Chatham has no operating history upon which to base estimates of future cash flow. Chatham's
estimates of resources and cash operating costs are, to a large extent, based upon geological,
engineering and market analyses. Estimates of capital and operating costs are necessarily
preliminary at this stage of Chatham's development. It is possible that actual costs and
economic returns may differ materially from Chatham's best estimates. It is not unusual in the
mining industry for new mining operations to experience unexpected problems during the pre-
production phase, take much longer than originally anticipated to bring into a producing phase,
and to require more capital than anticipated.
j. Changes in Law and Policy
The laws, regulations, and authorities governing Chatham and its operations may change, and
may result in additional material expenditures or time delays. Exploration and mining permits
may be susceptible to revision or cancellation by new laws or changes in direction by the
government of the day. In addition, the Exclusive Economic Zone and Continental Shelf
(Environmental Effects) Act 2012 is new and, as with any new legislation, has not been tested by
the Courts and could be subject to uncertainty as to its interpretation or application.
Whilst the Directors believe that the Government and population of New Zealand generally
support the development of natural resources in the manner contemplated by Chatham, there is
no assurance that future political and economic conditions will not result in the adoption of
different policies or attitudes affecting ownership of assets, land tenure and mineral
concessions, taxation, royalties, environmental protection, labour relations and return of capital.
This may affect Chatham's ability to undertake exploration, development and mining activities
on its projects.
k. Regulatory Compliance Risks
Chatham's future expected mining operations and exploration activities, as well as the
transportation and handling of any products mined, are or will be subject to extensive
regulations and laws. Such regulations relate to production, development, exploration, exports,
imports, taxes and royalties, labour standards, occupational health, waste disposal, protection
and remediation of the environment, decommissioning and reclamation, toxic substances,
transportation safety and emergency response, and other matters. Compliance with such
regulations and laws increases the costs of Chatham's operations.
It is possible that, in the future, the costs, delays and other effects associated with such laws and
regulations may impact Chatham's decision as to whether to operate existing projects, or, with
Chatham Rock Phosphate - Management’s Discussion and Analysis
For the twelve months ended December 31, 2016
AGL MD&A Report for Q4 2016 Page 15
respect to exploration and development properties, whether to proceed with exploration or
development, or that such laws and regulations may result in Chatham incurring significant costs
to remediate or decommission properties that do not comply with applicable environmental
standards at such time.
Chatham expends significant financial and managerial resources to comply with such laws and
regulations and anticipates the need for even greater resources if production is commenced.
Because legal requirements are subject to change and to interpretation, Chatham is unable to
predict the ultimate cost of compliance with these requirements or their effect on operations.
Furthermore, future changes in governments, regulations and policies, such as those affecting
Chatham's mining operations and phosphorite transport, could materially and adversely affect
Chatham's results of operations and financial condition in a particular period or its long term
business prospects.
Failure to comply with applicable laws, regulations and permitting requirements may result in
enforcement actions. These actions may result in orders issued by regulatory or judicial
authorities causing operations to cease or be curtailed, and may include corrective measures
requiring capital expenditures, installation of additional equipment or remedial actions.
Chatham may be required to compensate others who suffer loss or damage by reason of its
activities and may have civil or criminal fines or penalties imposed for violations of applicable
laws or regulations.
l. Reliance on Key Equipment
The ability of Chatham to extract the phosphorite from the seabed will be dependent on unique
mining equipment, including a specialized vessel and trailing suction unit. Should this unique
equipment become unavailable once commissioned, Chatham will likely have no alternative
access to its Mineral Resource. The equipment may become temporarily or permanently
unavailable to Chatham due to factors beyond Chatham's control, including adverse weather
conditions, labour stoppages, technical failures, government regulations, failure to secure any
necessary intellectual property licenses or decisions of the equipment operator. The
unavailability of such equipment could have a material adverse effect on the financial condition,
operations, and prospects of Chatham.
m. Phosphate Demand and Pricing
The profitability of Chatham's operations, and its Ordinary Share price, will be highly dependent
upon the market price of phosphate rock. Chatham's net earnings and operating cash flow will
be closely related and sensitive to fluctuations in the long and short term market price of
phosphorite. Commodity prices fluctuate widely and are affected by numerous factors beyond
the control of Chatham. The world supply of and demand for fertilizers and the stability of
exchange rates can all cause significant fluctuations in prices. These factors cannot be accurately
predicted. The price of fertilizers has fluctuated widely in recent years and future price declines
could cause commercial production to be impracticable, which could have a material adverse
effect on the financial condition, operations, and prospects of Chatham.
Chatham Rock Phosphate - Management’s Discussion and Analysis
For the twelve months ended December 31, 2016
AGL MD&A Report for Q4 2016 Page 16
n. Reliance on Key Personnel
Chatham's success will largely depend on the efforts and abilities of certain senior officers and
key personnel. Chatham is committed to providing attractive working conditions to assist in
retaining its key senior management personnel. However, there can be no assurance Chatham
will be able to retain these key personnel. Furthermore, the number of individuals with relevant
mining and operational experience in this industry is small. The loss of key personnel or the
inability to recruit and retain high-calibre staff could have a material adverse effect on Chatham.
The addition of new personnel or employees and the departure of existing contractors,
particularly in key positions, can be disruptive and may have a material adverse effect on the
financial condition, operations, and prospects of Chatham.
Personnel requirements of Chatham will also change. At present, Chatham has a particular need
for scientific and communications expertise as it pursues the Marine Consent. If granted, those
needs will reduce and there will be increased need for engineering and sales and marketing
capabilities. There can be no assurance that additional personnel with such capabilities, fit for
Chatham's purpose, will be secured.
o. Property Title Risk
The Mining Permit covers an offshore area in the EEZ of New Zealand. The Mining Permit and
Marine Consent (if issued) can be considered utilization rights to that offshore area. These rights
may be subject to defects or challenges. If such defects or challenges cover a material portion of
Chatham's offshore area, they could materially and adversely affect Chatham's reported Mineral
Resources or its long term business prospects. As well, any prolonged challenge to Chatham's
rights could result in substantial delays in its development timetable, which could have a
material adverse effect on the financial condition, operations, and prospects of Chatham.
Ambiguity can arise in the interpretation of mining legislation regulations, permits and policy,
including whether or not conditions have or have not been satisfied (either at the time of
satisfaction or subsequent thereto). For example, the precise form of study that is required to
be delivered in support of a decision to mine and in satisfaction of Mining Permit is not subject
to any further detailed guidance or definition. Interpretations, whether at the relevant time or
subsequent thereto, could result in claims or losses that have a material adverse impact on the
business, operations, assets or prospects of Chatham.
Maori customary rights, as well as requirements to consult with Maori under applicable New
Zealand law, are relevant to Chatham's rights. Managing relations with local Maori communities
is a matter of paramount importance to Chatham. Notwithstanding that Maori interests do not
carry with them a form of "veto" or similar right in relation to the Mining Permit or the potential
grant of the Marine Consent, there can be no assurance that customary rights claims, as well as
related consultation issues, will not arise on or with respect to Chatham's rights and impact on
Chatham's exploration, development and mining activities, which could have a material adverse
effect on the financial condition, operations, and prospects of Chatham.
p. Environmental Risk
Chatham's projects are subject to New Zealand environmental laws. These laws include laws
generally applying to the protection of the environment, as well as specific regulation relating to
Chatham Rock Phosphate - Management’s Discussion and Analysis
For the twelve months ended December 31, 2016
AGL MD&A Report for Q4 2016 Page 17
areas in which Chatham operates. Exploration and mining projects cause a variety of
environmental impacts and Chatham is conscious of a number of potential impacts in respect of
its proposed mining operations, including:
∑ impact on fish stocks on the Chatham Rise;
∑ pollution risks from the vessel (e.g. oil spills);
∑ impact on benthic communities; and
∑ effects of plume (where silt and seabed materials are separated from the rock
phosphate and returned to the ocean floor, but do not settle on the seabed immediately
and then go into the lower levels of the water column).
Chatham has collected and analyzed extensive data on these potential effects to develop and
mitigation strategies, as well as contracted scientific organizations in New Zealand and The
Netherlands (including NIWA and Deltares) to assess the environmental impacts of its
operations. This information comprises a significant part of the Marine Consent application.
Chatham intends to carry out its operations in compliance with all applicable environmental laws
and in compliance with any conditions imposed upon it, as well as in a responsible manner. In
the event that Chatham does not operate in compliance with all applicable laws and conditions
there is a risk that the Mining Permit and/or Marine Consent, if granted, could be forfeited or
other adverse consequences could arise.
q. NGO Risk
Mining companies are often the target of actions by non-governmental organizations and
environmental groups in the countries in which they operate. Such organizations and groups
may take actions that are illegal, unauthorized or dangerous, without the support of
government, to disrupt commercial operations. There can be no guarantee that any future
action will not be taken by any non-governmental organization or environmental group to
disrupt Chatham's mining operations. They may also apply pressure to local, regional and
national government officials, or local aboriginal groups, to take actions that are adverse to
Chatham's operations. Such actions could have an adverse effect on Chatham's ability to
produce and sell its products, which could have a material adverse effect on the financial
condition, operations, and prospects of Chatham.
r. Profitability and Operating History
Chatham has no history or earning revenue or profits and no assurance can be given by Chatham
that it will have future revenues or profits, since these are dependent on the future
development and success of any mining operation. Chatham has no history of mining operations
and is in a pre-revenue stage of development. As such, Chatham is subject to many risks
common to such enterprises, including under-capitalization, cash shortages, limitations with
respect to personnel, financial and other resources and the lack of revenue. There is no
assurance that Chatham will be successful in achieving a return on Shareholders' investment.
s. Competition and Customer Strength
The fertilizer and mining industries are intensely competitive in all phases of exploration,
Chatham Rock Phosphate - Management’s Discussion and Analysis
For the twelve months ended December 31, 2016
AGL MD&A Report for Q4 2016 Page 18
development and production. Competition in the mining industry is primarily for properties that
can be developed and produced economically; technical and commercial expertise; and capital.
Many competitors not only explore for and mine phosphate rock, but conduct beneficiation and
marketing operations on a global basis. Such competition may result in embedded relationships
with customers that make it difficult for Chatham to negotiate offtake or other supply
arrangements. As well, many potential phosphate customers are better capitalized than
Chatham and may engage in tactical order delays and other behaviour that could cause Chatham
to suffer cash flow difficulties and induce it to execute transactions that do not reflect market
conditions, which could have a material adverse effect on the financial condition, operations,
and prospects of Chatham.
t. Conflicts of Interest
Certain of the Chatham’s directors, officers and significant shareholders are or may become
shareholders, directors and/or officers of other natural resource companies, and, to the extent
that such other companies may participate in ventures with Chatham, these individuals may
have a conflict of interest in negotiating and concluding terms respecting the extent of such
participation.
In the event that such a conflict of interest arises at a meeting of the directors, a director who
has such a conflict will abstain from voting for or against the approval of such participation or of
its terms. In appropriate cases the Chatham will establish a special committee of independent
directors to review a matter in which one or more directors or officers may have a conflict.
From time to time, the Chatham, together with other companies, may be involved in a joint
venture opportunity where several companies participate in the acquisition, exploration and
development of natural resource properties, thereby permitting Chatham to be involved in a
greater number of larger projects with an associated reduction of financial exposure in any given
project. Chatham may also assign all or a portion of its interest in a particular project to any of
these companies due to the financial position of the other Company or companies.
In accordance with the laws of the province of British Columbia, the directors are required to act
honestly and in good faith with a view to furthering the best interest of Chatham. In
determining whether or not the Chatham will participate in a particular program or transaction
and the terms of such participation, the directors will primarily consider the potential benefits to
Chatham, the degree of risk to which the Chatham may be exposed and its financial position at
that time. Other than as indicated, the Chatham has no procedures or mechanisms to deal with
conflicts of interest.
u. Dependence on General Economic
Conditions
The operating and financial performance of Chatham is influenced by a variety of general
economic and business conditions, including levels of consumer spending, inflation, interest
rates and exchange rates, access to debt and capital markets, and government fiscal, monetary
and regulatory policies. Prolonged deterioration in general economic conditions, including an
increase in interest rates or a decrease in consumer and business demand, could have a material
adverse effect on Chatham's business and financial condition.
Chatham Rock Phosphate - Management’s Discussion and Analysis
For the twelve months ended December 31, 2016
AGL MD&A Report for Q4 2016 Page 19
v. Exchange Rates
Chatham is exposed to movements in exchange rates. Chatham's historical (New Zealand)
financial statements are expressed and maintained in New Zealand dollars. Exchange rate
movements between New Zealand and other countries may impact the profit and loss account
or assets and liabilities of Chatham, to the extent the foreign exchange rate risk is not hedged or
not appropriately hedged.
w. Insurance Risk
Although Chatham may obtain insurance to cover some of these risks and hazards in amounts it
believes to be reasonable, such insurance may not provide adequate coverage in the event of
certain circumstances. No assurance can be given that such insurance will continue to be
available or that it will be available at economically feasible premiums or that it will provide
sufficient coverage for losses related to these or other risks and hazards. Furthermore, there are
risks that Chatham cannot insure against, or may elect not to insure against, any such risks and
hazards and Chatham may be subject to liability or sustain loss in such circumstances, which
could have a material adverse effect on the financial condition, operations, and prospects of
Chatham.
x. Dividends
There can be no assurance as to the level of future dividends. The declaration, payment and
amount of any future dividends of Chatham are subject to the discretion of the Shareholders or,
in the case of interim dividends to the discretion of the directors, and will depend upon, amongst
other things, Chatham's earnings, financial position, cash requirements, availability of profits, as
well as provisions for relevant laws or generally accepted accounting principles from time to
time.
Under New Zealand law the board of directors may declare dividends from time to time from
distributable profits provided that the board of directors first resolves and certifies that following
the dividend being paid, Chatham will satisfy the solvency test under the Companies Act 1993.
This solvency test requires that the board of directors believes on reasonable grounds that
Chatham will be able to meet its debts as they fall due and that its assets exceed liabilities,
including contingent liabilities.
y. Taxation
The tax rules, including stamp duty provisions and their interpretation, relating to an investment
in Chatham may change during the life of Chatham. The levels of, and reliefs from, taxation may
also change and vary in respect of a given investor's circumstances.
z. Dual Regulation
Chatham’s New Zealand subsidiary, Chatham Rock Phosphate (NZ) Limited is primarily regulated
by the Companies Act 1993. As a company listed on the NZAX, Chatham has the Toronto
Venture Exchange as its home exchange, with a copy of each document filed in Canada, to also
be filed with the NZAX.
Chatham Rock Phosphate - Management’s Discussion and Analysis
For the twelve months ended December 31, 2016
AGL MD&A Report for Q4 2016 Page 20
aa. Litigation
Chatham Rock Phosphate (NZ) Limited is currently engaged in New Zealand High Court
proceedings with the EPA. If Chatham (NZ) is wholly unsuccessful in these proceedings, Chatham
(NZ) could be liable for up to NZ$800,000 plus interest and legal costs. The Chatham Directors
do not believe that such an outcome is likely, however litigation is inherently uncertain and this
level of exposure remains a risk. Chatham has taken up the full amount as a liability.
SUPPLEMENTAL TO THE FINANCIAL STATEMENTS
Outstanding Share and Warrant Data
The renamed Chatham Rock Phosphate’s shares trade on the TSX Venture Exchange under the symbol
“NZP” and on the New Zealand Alternative Exchange (“NZAX”) under the symbol “AXG” (until the
existing symbol “CRP” is released for use, once Chatham Rock Phosphate (NZ) Limited is delisted in mid-
March 2017). The Company is authorized to issue an unlimited number of common shares without par
value. On February 24, 2017 the Company (Antipodes Gold, as it was then named) announced the
completion of a consolidation of its share capital on a ten (10) old for one (1) new share basis.
As at February 28 2017, 12,794,217 common shares were issued and outstanding. In addition, there
were 379,215 Mandatory Warrants on issue, exercisable in March and April 2017 at NZ$0.3935
(C$0.3739) per warrant and 1,524,618 Discretionary Warrants, exercisable until 24 February 2018 at
NZ$0.3935 (C$0.3739) per warrant (assumes current conversion of NZD1.00 = CAD0.95).
The 278,359 shares issued pursuant to debt settlement agreements are subject to usual TSX Venture
escrow provisions of four months and one day (after their issue on February 24, 2017).
The Company drew down a loan of NZ$40,000 (approximately C$33,900) from Mr Chris Castle, under an
agreement dated April 29, 2014 which was repaid in March 2016. On February 24, 2017, the Company
issued 20,000 consolidated common shares to Mr Castle under this arrangement.
FORWARD-LOOOKING STATEMENTS
These audited consolidated financial statements and this Management’s Discussion and Analysis,
contains certain “Forward-Looking Statements” that are prospective and reflect management’s
expectations regarding Antipodes Gold Limited’s future growth, results of operations, performance and
business prospects and opportunities. Forward-looking information can often be identified by forward-
looking words such as “anticipate”, “believe”, “expect”, “goal”, “plan”, “intend”, “estimate”, “may” and
“will” or similar words suggesting future outcomes, or other expectations, beliefs, plans, objectives,
assumptions, intentions or statements about future events or performance.
All statements, other than statements of historical fact, included herein, including without limitation,
statements regarding potential mineralization and reserves, estimates of future production, unit costs,
costs of capital projects and timing of commencement of operations, exploration results and future plans
and objectives of the Antipodes Gold are forward-looking statements that involve various risks and
uncertainties. There can be no assurance that such statements will prove to be accurate, and actual
results and future events could differ materially from those anticipated in such statements.
Chatham Rock Phosphate - Management’s Discussion and Analysis
For the twelve months ended December 31, 2016
AGL MD&A Report for Q4 2016 Page 21
Important factors that could cause actual results to differ materially from Antipodes Gold’s expectations
are disclosed in its documents filed from time to time with the TSX Venture Exchange and other
regulatory authorities and include, but are not limited to, failure to establish estimated resources and
reserves, the grade and recovery of ore to be mined varying from estimates, capital and operating costs
varying significantly from estimates, delays in obtaining or failure to obtain required governmental,
environmental or other project approvals, inflation, changes in exchange rates, fluctuations in
commodity prices, delays in the development of projects and other factors.
Shareholders and prospective investors should be aware that these statements are subject to known and
unknown risks, uncertainties and other factors that could cause actual results to differ materially from
those suggested by the forward-looking statements. Readers are cautioned not to place undue reliance
on forward-looking information. By its nature, forward-looking information involves numerous
assumptions, inherent risks and uncertainties, both general and specific, that contribute to the possibility
that the predictions, forecasts, projections and various future events will not occur.
Antipodes Gold undertakes no obligation to update publicly or otherwise revise any forward-looking
information whether as a result of new information, future events or other such factors which affect this
information, except as required by law.
---
1
Form 52-109FV2
Certification of Interim Filings
Venture Issuer Basic Certificate
I, Robyn Hamilton, Chief Financial Officer of Chatham Rock Phosphate Limited, certify the following:
1. Review: I have reviewed the interim financial report and interim MD&A (together, the “interim
filings”) of Chatham Rock Phosphate Limited (the “issuer”) for the interim period ended
December 31, 2016.
2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the
interim filings do not contain any untrue statement of a material fact or omit to state a material
fact required to be stated or that is necessary to make a statement not misleading in light of the
circumstances under which it was made, with respect to the period covered by the interim filings.
3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim
financial report together with the other financial information included in the interim filings fairly
present in all material respects the financial condition, financial performance and cash flows of
the issuer, as of the date of and for the periods presented in the interim filings.
Date: February 28, 2017
Robyn Hamilton
Chief Financial Officer
NOTE TO READER
In contrast to the certificate required for non-venture issuers under National Instrument 52-109 Certification of Disclosure in
Issuers’ Annual and Interim Filings (NI 52-109), this Venture Issuer Basic Certificate does not include representations relating to
the establishment and maintenance of disclosure controls and procedures (DC&P) and internal control over financial reporting
(ICFR), as defined in NI 52-109. In particular, the certifying officers filing this certificate are not making any representations
relating to the establishment and maintenance of
i) controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the
issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded,
processed, summarized and reported within the time periods specified in securities legislation; and
ii) a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with the issuer’s GAAP.
The issuer’s certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge
to support the representations they are making in this certificate. Investors should be aware that inherent limitations on the ability
of certifying officers of a venture issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52-
109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other
reports provided under securities legislation.
---
1
Form 52-109FV2
Certification of Interim Filings
Venture Issuer Basic Certificate
I, Chris Castle, Chief Executive Officer of Chatham Rock Phosphate Limited, certify the following:
1. Review: I have reviewed the interim financial report and interim MD&A (together, the “interim
filings”) of Chatham Rock Phosphate Limited (the “issuer”) for the interim period ended
December 31, 2016.
2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the
interim filings do not contain any untrue statement of a material fact or omit to state a material
fact required to be stated or that is necessary to make a statement not misleading in light of the
circumstances under which it was made, with respect to the period covered by the interim filings.
3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim
financial report together with the other financial information included in the interim filings fairly
present in all material respects the financial condition, financial performance and cash flows of
the issuer, as of the date of and for the periods presented in the interim filings.
Date: February 28, 2017
______________________
Chris Castle
Chief Executive Officer
NOTE TO READER
In contrast to the certificate required for non-venture issuers under National Instrument 52-109 Certification of Disclosure in
Issuers’ Annual and Interim Filings (NI 52-109), this Venture Issuer Basic Certificate does not include representations relating to
the establishment and maintenance of disclosure controls and procedures (DC&P) and internal control over financial reporting
(ICFR), as defined in NI 52-109. In particular, the certifying officers filing this certificate are not making any representations
relating to the establishment and maintenance of
i) controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the
issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded,
processed, summarized and reported within the time periods specified in securities legislation; and
ii) a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with the issuer’s GAAP.
The issuer’s certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge
to support the representations they are making in this certificate. Investors should be aware that inherent limitations on the ability
of certifying officers of a venture issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52-
109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other
reports provided under securities legislation.
Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.