More annual reports from Australian Vanadium Limited:
2023 Report2019
ANNUAL REPORT
ACN 116 221 740
ASX: AVL
Australian Vanadium Limited 2019 Annual Report
Contents
Corporate Directory
Letter from the Chairman
Directors’ Report
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Auditors’ Independence Declaration
Independent Auditors’ Report
Annual Mineral Resource Statement
ASX Additional Information
2
3
4
25
26
27
28
29
55
56
57
62
66
1
Australian Vanadium Limited 2019 Annual Report
Corporate Directory
Directors
Vincent Algar (Managing Director)
Leslie Ingraham (Executive Director)
Brenton Lewis (Non-Executive Chairman)
Daniel Harris (Non-Executive Director)
Company Secretary
Neville Bassett
Registered Office
Level 1, 85 Havelock Street
West Perth WA 6005
Telephone
08 9321 5594
Facsimile
08 6268 2699
Share Registry
Automic Pty Ltd
Level 2
267 St Georges Terrace
Perth WA 6000
Telephone
1300 288 664
Auditors
Armada Audit & Assurance Pty Ltd
18 Sangiorgio Ct, Osborne Park WA 6017
Securities Exchange Listing
Australian Vanadium Limited shares (AVL) are quoted on the Australian Securities Exchange
(ASX).
2
Australian Vanadium Limited 2019 Annual Report
Letter from The Chairman
Dear Fellow Shareholders,
On behalf of your Board of Directors, I have pleasure in presenting the 2019 Annual Report of
Australian Vanadium Limited (“AVL” or the “Company”) for the 30 June 2019 financial year.
The year saw big changes to the core markets for vanadium. Changes to Chinese steel
standards which required more vanadium to be used in rebar steel, along with shortages of
supply, saw vanadium prices increase to a peak of over US$29/lb V2O5 in 2018, before settling to
nearer the long-term average price of US$8.50 by mid-2019. A new and ongoing level of higher
pricing and demand seems to have commenced and is highly supportive of the Company’s efforts
to bring The Australian Vanadium Project into production.
The last 12 months have seen the Company achieve major milestones in its efforts to bring The
Australian Vanadium Project in Western Australia closer to development, specifically the
completion of a financially and technically robust Pre-Feasibility Study. The study showed that the
Project could achieve an operating cost of US$4.15/lb, approaching that of the lowest cost
primary vanadium mines around the world, with opportunities for further reduction.
This year has also seen another sale of a vanadium redox flow battery (VRFB) through VSUN
Energy, highlighting the versatility of the resource through multiple applications. This sale will
undoubtedly act as a catalyst for future sales and validates the Company’s belief in VRFBs as a
valuable technology in the renewable energy space.
The Company has been actively upgrading the Project resource base, with drilling results
incorporated into a Mineral Resource released in November 2018. The economically significant
massive magnetite horizon underlying the Project was converted to a Maiden Ore Reserve,
providing a high quality, low risk initial Reserve to support the Project’s initial 17-year life.
AVL’s highly experienced vanadium team, led by Managing Director Vincent Algar, has further
advanced the Project through pilot studies, bench scale research, processing innovations and
environmental approval progress. The Project received recognition of its potential with the grant
of Federal Government Major Project status in September 2019.
The year ahead for AVL will continue to be focused and busy, as the team completes the
Definitive Feasibility Study and submits final environmental approvals. These outcomes support
ongoing offtake and finance discussions. AVL’s aim is to cement the Project’s status as a world-
class vanadium resource, with excellent prospects for near-term development.
I wish to thank shareholders for their continuing support throughout the year and extend my
sincere thanks to the Board, management and colleagues for their contributions and efforts.
Yours faithfully,
Brenton Lewis, Chairman
3
Australian Vanadium Limited 2019 Annual Report
Director’s Report
CORPORATE HIGHLIGHTS
The Australian Vanadium Project
• The Project was awarded Major Project Status by the Australian Federal Government in
September 2019.
• The total Mineral Resource was updated in November 2018 to 183.6Mt at 0.76% V2O5
from massive and disseminated zones. The revised Mineral Resource included a distinct
massive magnetite high-grade zone of 7Mt at 1.00% V2O5.
• A robust Pre-Feasibility Study was released in December 2018, including a Maiden Ore
Reserve of 18.24Mt at 1.04% V2O5 comprised of a Proved Reserve of 9.82Mt at 1.07%
V2O5 and a Probable Reserve of 8.42Mt at 1.01% V2O5.
Infill drilling confirmed thickness and grade of the main vanadium magnetite horizon along
strike of the existing Measured and Indicated Resources.
•
• A Pilot Study on 30 tonnes of material produced from drill work commenced in mid 2019.
• High-purity 99.4% V2O5 was produced from pre-pilot testwork. Roast-leach process
testing demonstrated the dual benefits of pelletising and increased roasting temperatures.
• A new strategic tenement was pegged at the southern end of the vanadium deposit.
• An MOU was signed with Westgold Resources Limited to support mine water
requirements.
VSUN Energy
• AVL and VSUN Energy are members of the successfully awarded Future Battery Industry
Cooperative Research Centre. VSUN’s role will revolve around vanadium redox flow
battery (VRFB) expertise, AVL’s interest is in processing vanadium for VRFB use.
• A Letter of Intent was signed with SCHMID to offer the EverFlow large scale and telecom
VRFB to potential clients; AVL signed a letter of intent to explore the supply of V2O5
and/or electrolyte.
• An order was secured for a 20kW/80kWh VRFB for an orchard in Victoria.
• An MOU was signed with Nomads Charitable & Educational Foundation regarding the
potential installation of a VRFB and solar PV system at Strelley Community School in the
Pilbara.
Coates and Nowthanna Hill
• A Joint Venture Agreement was signed with Ultra Power Systems to evaluate AVL's
Coates Vanadium Project.
• The Nowthanna Hill Mineral Resource estimate for uranium and titanium was updated to
comply with JORC Code 2012 guidelines.
Corporate Matters
• Vanadium expert Todd Richardson was promoted to the role of Chief Operating Officer.
In December 2018, $5,927,871 was raised through an option conversion. In addition,
•
62,750,000 options were underwritten, raising and additional $1,255,000 before costs for
a total of $7,182,871
• AVL received $113,660 from the Australian Federal Government’s Research and
Development Tax Incentive Scheme for the 2016/2017 tax year.
4
Australian Vanadium Limited 2019 Annual Report
• AVL received $249,643 from the Australian Federal Government’s Research and
Development Tax Incentive Scheme for the 2017/2018 tax year. This was received in
September 2019
In September 2019, $5,194,975 was raised through a Share Purchase Plan and
$1,400,000 was raised through a Placement for a total of $6,594,975.
•
• The Company undertook a change of share registry to Automic Registry Services.
REVIEW OF OPERATIONS
The Australian Vanadium Project
The Australian Vanadium Project is located approximately 40km south of Meekatharra within the
northern Murchison region of Western Australia. Access from Perth is via the Great Northern
Highway and the Meekatharra-Sandstone Road (Figure 1).
Figure 1 Location of The Australian Vanadium Project
The following is a summary of activities undertaken on The Australian Vanadium Project during
the period to the date of this report.
Major Project Status
On 6 September 2019, The Australian Vanadium Project was awarded Major Project Status by
the Federal Government. The award provides formal recognition of the national strategic
significance of the Project, through its contribution to economic growth, employment and
contribution to regional Western Australia. The award gives AVL a single point of contact for
assistance with navigating the approval process and relevant Government legislation.
Major Project Status designation is expected to promote international investment by providing
increased confidence in the permitting pathway. Major Project Status recognises the strategic
significance of The Australian Vanadium Project to Australia, with only 15 other projects in
Australia currently holding this status, none of which are vanadium projects.
Infill Drilling
On 30 October 2018, AVL announced that infill drilling had confirmed the thickness, grade and
continuity of the main vanadium magnetite horizon along the strike of existing Measured and
Indicated Resources. A consistent internal high-grade zone over 1.2% V2O5 was identified.
5
Australian Vanadium Limited 2019 Annual Report
The best intersections included:
• 17m at 1.03% V2O5, 61.9% Fe2O3 from 38m in 18GERC003 including 7m at 1.29% V2O5
from 41m
• 17m at 1.14% V2O5, 66.5% Fe2O3 from 81m in 18GERC011 including 10m at 1.28% V2O5
from 82m
• 12m at 1.12% V2O5, 68.5% Fe2O3 from 47m in 18GERC010 including 8m at 1.24% V2O5
from 48m
• 26m at 0.94% V2O5, 59% Fe2O3 from 47m in 18GERC007 including 9m at 1.27% V2O5
from 58m
Mineral Resource Update
A Mineral Resource update was announced on 28 November 2018. The update brought the total
Mineral Resource to 183.6Mt at 0.76% V2O5 from massive and disseminated zones consisting of:
• Measured Mineral Resource of 10.2Mt at 1.11% V2O5,
•
•
Indicated Mineral Resource of 40.7Mt at 0.66% V2O5, and
Inferred Mineral Resource of 132.7Mt at 0.77% V2O5.
The revised Mineral Resource included a distinct massive magnetite high-grade zone of 96.7Mt
at 1.00% V2O5 consisting of:
• Measured Mineral Resource of 10.2Mt at 1.11% V2O5,
•
•
Indicated Mineral Resource of 12.1Mt at 1.05% V2O5, and
Inferred Mineral Resource of 74.5Mt at 0.97% V2O5.
Included in the Resource update was an estimation of cobalt, nickel and copper following drilling
of diamond hole 18GEDH003, which successfully intersected a deep high-grade V2O5 and base
metals intercept showing 18.6m at 1.10% V2O5, 220 ppm Co, 757 ppm Ni and 173 ppm Cu, from
168.5 metres down hole. The updated base metals Inferred Mineral Resource is 14.3Mt at 208
ppm Co, 666 ppm Ni and 217 ppm Cu.
Pre-Feasibility Study (PFS) and Maiden Ore Reserve
On 19 December 2018, AVL announced the Pre-Feasibility Study (PFS) results and the release
of a Maiden Ore Reserve for The Australian Vanadium Project. The results of the PFS indicate a
Project with a well-defined resource base, robust economics and utilising an industry standard,
low-risk method of beneficiation and refining to produce a vanadium pentoxide (V2O5) flake
product. The Maiden Ore Reserve of 18.24Mt at 1.04% V2O5 is comprised of a Proved Reserve
of 9.82Mt at 1.07% V2O5 and a Probable Reserve of 8.42Mt at 1.01% V2O5.
Table 1 Ore Reserve Statement as at December 2018, at a cut-off grade of 0.8% V2O5
Reserve
Classification
Proved
Probable
Total
Tonnes
V2O5 %
9,820,000
8,420,000
18,240,000
1.08
1.01
1.04
Co
ppm
172
175
173
Ni
ppm
571
628
597
Cu
ppm
230
212
222
S
%
0.06
0.08
0.07
SiO2
%
9.47
10.07
9.75
Fe2O3
%
V2O5
Produced t
58.7
59.5
59.1
65,000
56,000
121,000
The Project is based on a proposed open pit mine; crushing, milling and beneficiation plant
(CMB) and processing plant for final conversion and sale of high-quality V2O5 for use in steel,
specialty alloys and energy storage markets. The PFS results highlight AVL’s potential to become
a new low-cost vanadium producer.
6
Australian Vanadium Limited 2019 Annual Report
The Project consists of 11 tenements covering 760 sq km and is held 100% by Australian
Vanadium Limited. Mining Lease Application M 51/878 is currently awaiting approval and covers
about 70% of the Mineral Resource, with the balance of the Inferred Mineral Resource located on
E 51/843, owned 100% by AVL.
Capital and operating cost estimates were developed to the level of accuracy of ±25% and
include mine and processing circuit designs, a detailed financial model and supporting bodies of
work. The additional work has identified a reduction in capital costs and confirmed the low,
industry comparative, C1 operating costs with further opportunities identified.
The PFS consists of:
• A vanadium pentoxide (V2O5) refinery at the Australian Vanadium Project site with an
annual production rate of approximately 22.5 million pounds of V2O5 per annum (5,600
MTV) with an initial mine life of 17 years based on existing Measured, Indicated and a
portion of the Inferred Mineral Resources.
• An open pit mining and beneficiation operation producing an estimated 900,000t of
magnetic concentrate at a planned grade of 1.4% V2O5 and a low 1.75% SiO2 content.
• Average mass yield from the concentrator is estimated at 60% for the life of mine. This is
exceptionally high versus other current operating vanadium operations, allowing for a
compact and effective crushing and milling operation.
• Vanadium recovery from the refinery is 80.4% for an overall V2O5 recovery of 64.1%.
• A base metals circuit installed in year 3 will recover an estimated 1,775t/a sulphide
concentrate containing cobalt, nickel, and copper in years 3-17. The Project viability is
not dependent on the mining and sale of base metals contained in the schedule.
• Base metal sales account for less than 1% of estimated overall gross revenues for the life
of the project.
• C1 operating expenses are currently estimated at US$4.15/lb V2O5 (±25%), assuring a
low-cost operation that will be healthy throughout the vanadium business cycles.
Initial indicative capital costs of US$354M (±25%) includes an investment in a natural gas
pipeline to the site, that will be partially owned by AVL.
•
• The current Project scenario utilises 43% Measured Resources, 37% Indicated
Resources, and 21% Inferred Resources. The Inferred Resources are not a determining
factor for project viability.
In the PFS, the Net Present Value (NPV) and Internal Rate of Return (IRR) are reported at
various V2O5 pricing assumptions, (see Table 2). Assuming a V2O5 price of US$13/lb, post-tax
NPV is US$616M, with an IRR of 27.2%. Using US$8.67/lb V2O, which is the current 15-year
long-term average price, the post-tax NPV of US$125M highlights that the Project is robust and
offers returns even at conservative pricing assumptions. The Project’s fully allocated cost (C3) is
US$6.05/lb V2O5 over the life of the Project.
7
Australian Vanadium Limited 2019 Annual Report
Table 2 Key Financial Outcomes (US$)
Pricing Year 1-5
Pricing Year 7-17
Pre-tax NPV8%
Post-tax NPV8%
IRR
Pre-tax UDCF
Post-tax UDCF
$8.67/lb V2O5
$8.67/lb V2O5
$230M
$125M
12.4%
$1,232M
$867M
V2O5 Product Pricing Scenarios
$13/lb V2O5
$13/lb V2O5
$13/lb V2O5
$8.67/lb V2O5
$912M
$444M
$616M
$280M
27.2%
19.7%
$3,166M
$1,634M
$2,221M
$1,148M
$20/lb V2O5
$20/lb V2O5
$2,013M
$1,410M
47.5%
$6,292M
$4,409M
Geology and Mineral Resources
The overall geology of the Project formation is a layered sequence of granitoids, ultramafic rocks,
gabbros and dolerites/amphibolites, felsic tuffs and banded iron and cherts.
The mineral deposit consists of a basal massive magnetite zone (10m - 15m in drilled thickness,
>0.7% V2O5), overlain by up to five magnetite bearing banded gabbro units between 5 and 30m
thick, separated by thin very low-grade mineralisation (<0.3% V2O5) waste zones. The westerly
dipping sequence is overlain in places by a lateritic domain, a transported domain (occasionally
mineralised) and a thin barren surface cover domain. The deposit is affected by a number of
regional scale faults which break the deposit into a series of kilometre scale blocks. The larger
blocks show relatively little sign of internal deformation, with strong consistency in the layering
being visible in drilling and over long distances between drillholes.
Mining and Scheduling
Mining at the Project will be from an open pit that extends for 3,250m along strike. The mining
sequence will include a first stage that extends 1,100m along strike. Due to the length of the pit,
mining will be divided into 200 m wide benches along strike which are aimed at delivering a
reasonable blend of oxidised, transitional and fresh ore to the processing plant.
The rate of mining will build up to about 550,000 Bank Cubic Metres (BCM)/month, equivalent to
two or three excavators working on double shift depending on the size of the excavators. From
year 1 to year 9 the mining rate will vary from around 480,000 BCM/month to 580,000
BCM/month, and then gradually reduce to the end of planned mining in year 14. The current
estimated production schedule is 17 years, with mining taking place for the first 14 years.
The pit designs contain approximately 23.0Mt of ore at an average grade of 1.03% V2O5 and is
expected to be mined along with 149Mt of waste for an overall strip ratio of 6.5. The optimisation
of the pit shells uses a base vanadium price of US$8/lb. The pit design on which the base case
is considered contains 43% Measured Resources, 37% Indicated Resources and 21% Inferred
Resources.
The PFS flowsheet is based on standard industry proven processes and includes a magnetic
beneficiation flowsheet (concentrator) and an alkaline roast leach and AMV extract refinery
flowsheet. A notable difference for The Australian Vanadium Project PFS flowsheet design to
other similar global vanadium projects is that the average LOM vanadium ore grade to the
concentrator (1.03% V2O5) is high relative to the concentrate grade (1.4% V2O5), thereby realising
a high concentrate mass yield; possibly the highest of all current operations worldwide. Average
vanadium yield to concentrate over the mine schedule is 79.8%. Average refinery recovery of
V2O5 from concentrate is 80.4%, giving an overall average LOM recovery of 64.1%. The other
unique features are the elevated base metals sulphides associated with the main titaniferous
magnetite horizon.
8
Australian Vanadium Limited 2019 Annual Report
Infrastructure
The remote and greenfields nature of the Project requires all infrastructure will need to be
constructed. The major non-process infrastructure required for the Project includes:
Natural gas supply via pipeline
• Power supply and distribution via island power station
• Water supply
• Regional road access
• Personnel accommodation
Social and Environmental Sustainability, Community, Heritage & External Relations
AVL is proactively managing sustainability of the Project through the prefeasibility phase, with
consideration of potential risks and benefits relating to people (social), planet (environmental) and
profit (economic) aspects. Outcomes from the study show that the proposed Project has a low
likelihood of significant impacts to the social surroundings.
The proposed Project area is subject to the Yugunga-Nya native title claim (WC1999/46). A draft
mining agreement has been developed between AVL and the Yugunga-Nya Native Title Claim
Group and discussions are ongoing.
Key environmental baseline studies have been undertaken for the Project, including two-season
detailed ecological surveys. There were no conservation-significant flora or vertebrate fauna
species detected in the proposed Project area. Locations of potential short-range endemic (SRE)
terrestrial invertebrates will be avoided by selective placement of infrastructure.
Potential SRE subterranean fauna (troglofauna and stygofauna) were detected within the study
area. If these species are determined to be restricted in distribution and if the Project will
significantly impact on their known habitat, the Project will require assessment by the
Environmental Protection Authority (EPA).
Work programs have been undertaken regarding social surroundings and impact; Aboriginal
heritage; external engagement; landforms; soil quality; inland waters; flora and vegetation; fauna
– both terrestrial and sub-terranean vertebrates, invertebrates, troglofauna and stygofauna; air
quality; energy use and greenhouse gas emissions and closure planning.
Pilot Scale Study
Between January and April 2019, AVL collected 30 tonnes of oxide, transitional and fresh core
samples from the Project. The drilling was undertaken to provide samples for a pilot scale
metallurgical test program and to support a resource update.
The pilot study has so far utilised one third of the allocated sample and results have been used to
refine the process for the second phase of piloting. The benefits of undertaking such a study have
already validated the decision to undertake this exercise. Crushing, milling, and beneficiation pilot
work will provide magnetic concentrate for bench and pilot work downstream.
9
Australian Vanadium Limited 2019 Annual Report
Figure 2 AVL's Pilot Scale Testwork
Pre-Pilot Testwork
High-purity 99.4% V2O5 was produced from pre-pilot testwork, confirming the outstanding quality
of AVL’s standard mine product when in operation.
The initial benchscale metallurgical testwork program was undertaken to optimise the refinery
flowsheet for the Australian Vanadium Project. Results identified improvements to the PFS
design and showed that higher vanadium recoveries and lower reagent usage can be anticipated
in the planned pilot scale testing, which will be used to support the final DFS design.
Figure 3 AVL’s V2O5 product (right hand side image of product under microscope)
The standard AVL process commences with physical crushing, milling and magnetic separation
of ore to make a concentrated product, followed by a soda ash roast and further refining to
produce a high quality V2O5 product. This constitutes typical alkaline roast leach refining for
vanadium processing.
Roasting tests have been performed on pelletised magnetic concentrate. Roasting at optimised
temperature and reagent conditions resulted in a vanadium roast leach extraction of 94%, a
substantial increase from the previous figure of 88% applied in the PFS.
An alternative vanadium production route known as APV (ammonium polyvanadate) was tested
on the leachate produced by roasting and generated a final product quality of 99.4% V2O5, which
was independently verified by an accredited laboratory (see Figure 3). The APV process showed
reduced reagent consumption and the potential to eliminate the desilication step required in the
AMV (ammonium metavanadate) process which was the route chosen in the PFS.
10
Australian Vanadium Limited 2019 Annual Report
These encouraging results are guiding the overall design of the refinery circuit and are expected
to have positive impacts on project economics. AVL is currently undertaking refinery bench
testwork to finalise changes to the flowsheet. Refinery piloting will begin in Q4 of 2019 based on
parameters established in bench testing.
Definitive-Feasibility Study (DFS)
Further evaluation and exploration activities will be undertaken by the Company over the coming
year as part of the DFS program, which will further refine the commercial and technical
assumptions contained in the PFS. Once completed, the DFS will determine the development
pathway in respect of the Project along with the Exploration Assets.
New Strategic Tenement
On 10 September 2018 AVL announced that it had pegged a new exploration licence adjacent to
its vanadium mineral resource near Meekatharra, further strengthening the Company’s dominant
mineral rights position in the area. The new tenement covers an area of 49.7 square kilometres.
AVL now holds over 240 square kilometres in 8 exploration licences over the area. The tenement
is prospective for gold and copper, in extensions to the Gabanintha Gold-Copper trend on the
east side of the licence; vanadium in potential extensions under cover of the Lady Alma layered
mafic intrusion and uranium in Eastern extensions of the Lake Nowthanna sediments in the South
West of the licence.
MoU with Westgold Resources
AVL entered into an agreement with Westgold Resources, announced on 25 June 2019, which
serves to allow the two companies to co-operate on supply of Life-of-Mine (LOM) water
requirements for The Australian Vanadium Project. The MOU paves the way for AVL and
Westgold to enter into a formal and binding water access agreement within six months, subject to
statutory conditions.
Accessing this water has the potential to streamline water abstraction approvals by providing
reduced groundwater and environmental impacts. It also provides the potential for access to
funding assistance from NAIF (Northern Australian Infrastructure Fund) during construction, by
meeting their condition to provide community benefits.
VSUN Energy
VSUN Energy Pty Ltd is the Company’s 100% owned subsidiary with the sole focus of the
development of the Australian market for vanadium redox flow batteries (VRFB). The expansion
of the Australian and Global VRFB market opens up significant new opportunities for high-purity
vanadium products used in the vanadium electrolyte.
VRFB Installation at Priest Bros Orchard, Victoria
VSUN Energy secured the sale of a 20kW/80kWh VRFB to be installed at an orchard in
Pakenham, Victoria. The system will be attached to an existing 60kW solar array which will be
expanded by a further 100kW of solar generation. The system will provide a minimum of four
hours of stored renewable energy with its designed configuration and will allow the client to
increase their onsite renewable generation and consumption, far in excess of what would be
capable with a standalone solar array. The sale is subject to the award of the Victorian on-farm
energy grant under the Agriculture Investment Energy Plan which has been applied for.
11
Australian Vanadium Limited 2019 Annual Report
Solar and VRFB Installation at Strelley Community School
VSUN Energy signed an MOU for a period of 12 months with Nomads Charitable & Educational
Foundation (Nomads). VSUN has applied for a grant from the Western Australian State
Government to fund the installation of a renewable energy solution at Strelley Community School
in the Pilbara region of Western Australia on behalf of Nomads.
SCHMID Letter of Intent
On 28 August 2018 AVL announced that it had signed a Letter of Intent with German VRFB
manufacturer, SCHMID to explore the supply of vanadium and/or vanadium electrolyte. The letter
has been signed on a non-binding basis and is subject to commercial competitiveness. In
parallel, AVL’s 100% owned subsidiary, VSUN Energy, has signed a Letter of Intent to offer
SCHMID’s EverFlow®’s large scale and telecom VRFB to its potential clients.
Future Battery Industry Research Centre
On 20th November 2018 AVL announced that the Company and its 100% owned subsidiary,
VSUN Energy, had signed an agreement to offer in-kind services to the Future Batteries Industry
Cooperative Research Centre (FBI CRC).
AVL’s expertise in the extraction and processing of vanadium will help the group to leverage
Australia’s vast vanadium mineral resources. Having successfully produced vanadium electrolyte
in Australia, the Company’s pilot plant resource will be of great use to the FBI CRC. VSUN
Energy’s role will revolve around its vanadium redox flow battery expertise and connections.
In April 2019 the Federal Government named Western Australia as the host of the $53m
FBICRC. Since then AVL and VSUN Energy have been involved in meetings and project
proposals.
Coates Project
The Coates vanadium deposit is situated approximately 35km east of metropolitan Perth in the
Shire of Wundowie. Exploration at Coates was undertaken in the 1970s after its discovery in the
early 1960s. Mining plans have previously been produced by Agnew Clough Ltd on the Coates
vanadium deposit, although no significant mining was undertaken.
In May 2019 AVL signed a Joint Venture Agreement with Ultra Power Systems (UPS) to evaluate
the Coates Vanadium Project. UPS aims to produce vanadium electrolyte using a combination of
a unique processing route and high-density vanadium electrolyte production. The JV will create
shareholder value by monetising a secondary asset and testing processing technology focused
on enhancing the uptake of VRFBs in Australia. The agreement allows UPS the exclusive right to
earn a 49% legal and beneficial interest in the tenement on a $5,000 signing fee, followed by
$50,000 being spent on exploration on the tenement within the first 12 months of the agreement
and $150,000 being spent during the first 24 months. When the obligations outlined above have
been fulfilled, the agreement allows for UPS to acquire AVL’s Joint Venture interest for a sum of
$500,000 or shares in UPS, at the election of AVL.
12
Australian Vanadium Limited 2019 Annual Report
Nowthanna Hill Project
The Nowthanna Hill uranium-vanadium deposit is located 50km south of Meekatharra in Western
Australia and is hosted within calcrete and clay deposits, formed within the inland drainage as a
result of the weathering of granites containing high background radiation.
The deposit is similar to the Cogla Downs and Yeelirrie uranium deposits of the Murchison and
Northern Goldfields.
The Nowthanna Hill Mineral Resource estimate was updated in 2018 to comply with JORC Code
2012 guidelines. SRK Consulting (Australasia) Pty Ltd completed the new mineral resource
estimate for uranium (U3O8) and vanadium (V2O5) on AVL tenements M51/771 and E51/1899.
The estimate was completed using all data on AVL’s tenements as well as the adjacent and
surrounding data from the latest Toro Energy 2011 resource (with permission). There has been
no material change to the Toro database since the 2011 resource estimation.
Vanadium and uranium are co-mineralised at Nowthanna Hill. Using a 250 ppm V2O5 cut-off the
project has an Inferred Mineral Resource of 3.60 million tonnes at 337ppm V2O5 (2Mlbs) on the
AVL tenements and is not additive to the uranium mineral resource estimate. Using a 200ppm
U3O8 cut-off the project has an Inferred Mineral Resource of 4.73 million tonnes at 404ppm U3O8
(4.2Mlbs) on the AVL tenements and is not additive to the vanadium mineral resource estimate.
The Nowthanna Hill project is available for sale or joint venture.
Table 3 V2O5 Inferred Mineral Resource by OK at Nowthanna (globally within AVL tenure)
U3O8 cut-off (ppm )
0
50
100
150
200
250
300
Metal (U3O8 t)
2559.4
2533.1
2399.0
2169.3
1910.0
1654.2
1418.0
Metal (U3O8 klb)
5642.4
5584.6
5288.9
4782.4
4210.8
3646.9
3126.2
Tonnes (Mt)
10.63
9.82
8.06
6.22
4.73
3.58
2.72
Note: The tonnages for the vanadium and uranium mineral resources are not additive in nature
and are required to be reported separately.
Table 4 U3O8 Inferred Mineral Resources by Cutoff at Nowthanna Hill (globally within AVL tenure)
U3O8 cut-off
(ppm )
0
50
100
150
200
250
300
350
400
450
500
Metal (U3O8 t)
Metal (U3O8 klb)
Tonnes (Mt)
2559.4
2533.1
2399.0
2169.3
1910.0
1654.2
1418.0
1208.7
1028.9
878.2
753.4
5642.4
5584.6
5288.9
4782.4
4210.8
3646.9
3126.2
2664.7
2268.3
1936.1
1660.9
10.63
9.82
8.06
6.22
4.73
3.58
2.72
2.07
1.59
1.24
0.97
U3O8 Grade
(ppm)
241
258
297
349
404
462
521
583
646
710
773
13
Australian Vanadium Limited 2019 Annual Report
Note: The tonnages for the vanadium and uranium mineral resources are not additive in nature
and are required to be reported separately.
Bryah Resources Limited
AVL presently holds 7.5 million shares and 1.25 million listed options (expiry 31 October 2020,
exercise price $0.30) in Bryah, which represents a 11.76% holding in that company.
DIRECTORS
The names of the Directors of the Company in office during or since the end of the financial year
and up to the date of this report are as follows. Directors were in office for this entire period
unless otherwise stated.
Name
Vincent Algar
Leslie Ingraham
Brenton Lewis
Daniel Harris
Position
Managing Director
Executive Director
Non-Executive Chairman
Non-Executive Director
The qualifications, experience and special responsibilities of each Director are as follows:
Vincent Algar – BSC (Hons) Geology MAusIMM
Mr Vincent Algar is a geologist by profession with over 28 years of experience in the mining
industry spanning underground and open cut mining operations, greenfields exploration, project
development and mining services in Western Australia and Southern Africa. He has significant
experience in the management of publicly listed companies, which includes the entire
compliance, marketing and management process and encompasses the development of internal
geological and administrative systems, exploration planning and execution, plus project
acquisition and deal completion.
During the past three years, Mr Algar was also a director of the following ASX listed companies:
Nil.
Leslie Ingraham
Mr Ingraham has been in private business for over 25 years and is an experienced mineral
prospector and professional investor. He has successfully worked as a consultant for both private
companies and companies listed on the ASX. Core competencies include capital raising and
shareholder liaison.
During the past three years, Mr Ingraham was also a director of the following ASX listed
companies: Bryah Resources Limited – appointed 15 November 2017
Brenton Lewis – BBSc (Hons), MBSc
Mr Lewis is an academic who has spent the past 20 years in the tertiary education sector. He has
held management positions including Head of Department and Head of Post-Graduate Studies.
He has published, taught and researched in areas including ethics and psychopathology. He has
been a consultant to various health agencies including the Hong Kong Hospital Authority and the
WA Health Department. He has served on numerous boards of management including academic
and non-government organisations.
14
Australian Vanadium Limited 2019 Annual Report
During the past three years, Mr Lewis was also a director of the following ASX listed companies:
Nil.
Daniel Harris
Mr Harris brings with him a vast amount of expertise in the vanadium industry and an
understanding of the resource sector from both a technical and financial perspective. Recent
roles include the interim CEO and Managing Director at Atlas Iron Limited; CEO & Chief
Operating Officer at Atlantic Ltd; Vice President & Head of Vanadium Assets at Evraz Group;
Managing Director at Vametco Alloys; General Manager of Vanadium Operations at Strategic
Minerals Corporation and as an independent technical and executive consultant to GSA
Environmental Limited in the United Kingdom.
During the past three years, Mr Harris was a director of the following ASX listed companies:
Atlas Iron Limited - appointed 6 May 2016; Paladin Energy Limited – appointed 1 February 2018;
QEM (Queensland Energy Minerals) – appointed 19 March 2018.
COMPANY SECRETARY
Neville Bassett
Mr Bassett is a Chartered Accountant with over 35 years of experience. He has been involved
with a diverse range of Australian public listed companies in directorial, company secretarial and
financial roles.
Interests in the shares and options of the company and related bodies corporate
As at the date of this report, the interests of the Directors and executives in the shares and
options of Australian Vanadium Limited were:
Shares
Vincent Algar 1
Leslie Ingraham 2
Brenton Lewis 3
Daniel Harris 4
Todd Richardson 5
Number of
Ordinary Shares
Number of Options
Over Ordinary
7,663,436
30,478,774
15,028,600
-
380,000
-
-
-
-
-
1 Mr Algar also holds 21,000,000 performance rights. Refer to Remuneration Report for further details.
2 Mr Ingraham also holds 21,000,000 performance rights. Refer to Remuneration Report for further
details.
3 Mr Lewis also holds 12,000,000 performance rights. Refer to Remuneration Report for further details.
4 On 8 July 2019, Mr Harris acquired 2,500,000 AVL shares on market at 1.4 cents per share. Mr Harris
also holds 6,000,000 performance rights. Refer to Remuneration Report for further details.
5 Mr Richardson holds 1,219,512 performance rights. Refer to Remuneration Report for further details.
15
Australian Vanadium Limited 2019 Annual Report
MEETINGS OF DIRECTORS
The number of meetings of Directors (including meetings of committees of Directors) held during
the year and the number of meetings attended by each Director were as follows:
Directors
Vincent Algar
Leslie Ingraham
Brenton Lewis
Daniel Harris
Number Eligible
to Attend
Number
Attended
5
5
5
5
5
5
5
5
INSURANCE OF OFFICERS
The Company has in place an insurance policy insuring Directors and Officers of the Company
against any liability arising from a claim brought by a third party against the Company or its
Directors and Officers, and against liabilities for costs and expenses incurred by them in
defending any legal proceedings arising out of their conduct whilst acting in their capacity as a
Director or Officer of the Company, other than conduct involving a wilful breach of duty in relation
to the Company.
In accordance with a confidentiality clause under the insurance policy, the amount of the premium
paid to the insurers has not been disclosed. This is permitted under Section 300(9) of the
Corporations Act 2001.
ENVIRONMENTAL REGULATIONS
The Group’s operations are subject to various environmental laws and regulations under
government legislation. The exploration tenements held by the Group are subject to these
regulations and there have not been any known breaches of any environmental regulations
during the year under review and up until the date of this report.
CORPORATE INFORMATION
Nature of Operations and Principal Activities
The principal continuing activities during the year of entities within the consolidated entity were
exploration for vanadium/titanium and other economic resources, the development of vanadium
electrolyte production and the sale of VRFB systems.
Corporate Structure
Australian Vanadium Limited is a limited liability company that is incorporated and domiciled in
Australia. The Company has prepared a consolidated financial report incorporating the entities
that it controlled during the financial year as follows:
Australian Vanadium Limited
VSUN Energy Pty Ltd
Formerly Australian Vanadium Resources Pty Ltd
South African Lithium Pty Ltd
Australian Uranium Pty Ltd
Cabe Resources Limited
Parent entity
100% owned controlled entity
100% owned controlled entity
100% owned controlled entity
100% owned controlled entity
16
Australian Vanadium Limited 2019 Annual Report
OPERATING AND FINANCIAL REVIEW
Operating Review
A review of operations for the financial year is contained within this Directors’ Report. The
consolidated loss after income tax for the financial year was $5,216,688 (2018: $2,486,071).
Financial Position
At 30 June 2019, the Group had cash reserves of $4,417,373 (2018: $5,152,782). The net assets
of the Group have increased by $1,847,996. The increase is largely due to the following factors:
the conversion of 359,143,538 listed options into new shares, raising $7,182,871;
•
• ongoing exploration and evaluation of The Australian Vanadium Project;
• advancement of the vanadium in energy storage strategy;
•
•
incurring overheads and running costs consistent with operating a listed company; and
remuneration of key management personnel essential to the continued success of the
Group.
Refer to Note 1 (b) for further disclosures regarding the Group’s financial position.
Dividends
No dividends were paid during the year and no recommendation is made as to dividends.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Significant changes in the state of affairs of the Company during the financial year are detailed in
the Company’s review of operations. In the opinion of the Directors, there were no other
significant changes in the state of affairs of the Company that occurred during the financial year
under review not otherwise disclosed in this Annual Report.
EVENTS SUBSEQUENT TO REPORTING DATE
On 23 September 2019, the Company announced that a total of $6,594,975 had been raised
from a successful Share Purchase Plan (SPP), first announced on 21 August 2019, and a
supplementary placement of new shares at the same price as the SPP. Subsequently,
450,250,404 new shares were issued under the SPP and commenced trading on 27 September
2019. A further 123,226,087 new shares were issued for the Placement making it a combined
total of 573, 476,491 new shares issued.
No other matters or circumstances have arisen since the end of the financial year which
significantly affected, or may significantly affect, the operations of the Company, the results of
those operations, or the state of affairs of the Company in subsequent financial years, other than
as outlined in the Company’s review of operations which is contained in this Annual Report.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
The Company will continue to pursue its principal activity of exploration and evaluation, and
associated activities as outlined in the Company’s review of operations. The Company will also
continue to pursue other potential investment opportunities to enhance shareholder value.
17
Australian Vanadium Limited 2019 Annual Report
REMUNERATION REPORT (AUDITED)
This report details the nature and amount of remuneration for each director and executive of
Australian Vanadium Limited. The information provided in the remuneration report includes
remuneration disclosures that are audited as required by section 308(3C) of the Corporations Act
2001.
For the purposes of this report Key Management Personnel of the Group are defined as those
persons having authority and responsibility for planning, directing and controlling the major
activities of the Group, directly or indirectly, including any director (whether executive or
otherwise) of the parent company.
For the purposes of this report the term “executive” includes those key management personnel
who are not Directors of the parent company.
Remuneration Committee
The full Board carries out the role and responsibilities of the Remuneration Committee and is
responsible for determining and reviewing the compensation arrangements for the Directors
themselves, the Managing Director and any Executives.
Executive remuneration is reviewed annually having regard to individual and business
performance, relevant comparative remuneration and internal and independent external advice.
Remuneration Policy
The board policy is to remunerate Directors at market rates for time, commitment and
responsibilities. The board determines payments to the Directors and reviews their remuneration
annually, based on market practice, duties and accountability. Independent external advice is
sought when required. The maximum aggregate amount of Directors’ fees that can be paid is
subject to approval by shareholders in a general meeting, from time to time. Fees for non-
executive directors are not linked to the performance of the consolidated entity. However, to align
Directors’ interests with shareholders’ interests, the Directors are encouraged to hold shares in
the Company.
The Company’s aim is to remunerate at a level that will attract and retain high-calibre directors
and employees. Company Directors and officers are remunerated to a level consistent with the
size of the Company.
The executive Directors and full-time executives receive a superannuation guarantee contribution
required by the government, which is currently 9.5%, and do not receive any other retirement
benefits. Some individuals, however, may choose to sacrifice part of their salary to increase
payments towards superannuation.
All remuneration paid to Directors and executives is valued at the cost to the Company and
expensed. The Board believes that it has implemented suitable practices and procedures that are
appropriate for an organisation of its size and maturity. During the year the Company included a
performance-based component of remuneration for the Directors.
18
Australian Vanadium Limited 2019 Annual Report
Remuneration Structure
In accordance with best practice corporate governance, the structure of non-executive director
and executive compensation is separate and distinct.
Non-executive Director Compensation
Objective
The Board seeks to set aggregate compensation at a level that provides the company with the
ability to attract and retain directors of the highest calibre, whilst incurring a cost that is
acceptable to shareholders.
Structure
The Constitution and the ASX Listing Rules specify that the aggregate compensation of non-
executive directors shall be determined from time to time by a general meeting. An amount not
exceeding the amount determined is then divided between the Directors as agreed. The latest
determination approved by shareholders was an aggregate compensation of $500,000 per year.
The amount of aggregate compensation sought to be approved by shareholders and the manner
in which it is apportioned amongst Directors is reviewed annually. The Board considers advice
from external consultants as well as the fees paid to non-executive directors of comparable
companies when undertaking the annual review process. Non-Executive Directors’ remuneration
may include an incentive portion consisting of options, as considered appropriate by the Board,
which may be subject to Shareholder approval in accordance with ASX Listing Rules.
Separate from their duties as Directors, the Non-Executive Directors may undertake work for the
Company directly related to the evaluation and implementation of various business opportunities,
including mineral exploration/evaluation and new business ventures, for which they receive a
daily rate. These payments are made pursuant to individual agreement with the non-executive
Directors and are not taken into account when determining their aggregate remuneration levels.
Executive Compensation
Objective
The entity aims to reward executives with a level and mix of compensation commensurate with
their position and responsibilities within the entity so as to:
•
reward executives for company and individual performance against targets set by
appropriate benchmarks;
• align the interests of executives with those of shareholders;
•
• ensure total compensation is competitive by market standards.
link rewards with the strategic goals and performance of the company; and
Structure
In determining the level and make-up of executive remuneration, the Board negotiates a
remuneration to reflect the market salary for a position and individual of comparable responsibility
and experience. Due to the limited size of the Company and of its operations and financial
affairs, the use of a separate remuneration committee is not considered appropriate.
Remuneration is regularly compared with the external market by participation in industry salary
surveys and during recruitment activities generally. If required, the Board may engage an external
consultant to provide independent advice in the form of a written report detailing market levels of
remuneration for comparable executive roles.
19
Australian Vanadium Limited 2019 Annual Report
Remuneration consists of a fixed remuneration and a long-term incentive portion as considered
appropriate. Compensation may consist of the following key elements:
• Fixed Compensation;
• Variable Compensation;
• Short Term Incentive (STI); and
• Long Term Incentive (LTI).
Fixed Remuneration
The level of fixed remuneration is set so as to provide a base level of remuneration which is both
appropriate to the position and is competitive in the market. Fixed remuneration is reviewed
annually by the Board having regard to the Company and individual performance, relevant
comparable remuneration in the mining exploration sector and external advice. The fixed
remuneration is a base salary or monthly consulting fee.
Variable Pay - Long Term Incentives
The objective of long-term incentives is to reward Directors/executives in a manner which aligns
this element of remuneration with the creation of shareholder wealth. The incentive portion is
payable based upon attainment of objectives related to the director’s/executive’s job
responsibilities. The objectives vary, but all are targeted to relate directly to the Company’s
business and financial performance and thus to shareholder value.
Long term incentives (LTIs) granted to Directors and executives are delivered in the form of
options or performance rights. LTI grants to executives are delivered in the form of employee
share options or performance rights. Options are issued at an exercise price determined by the
Board at the time of issue. The employee share options generally vest over a selected period.
The objective of the granting of options or rights is to reward executives in a manner which aligns
the element of remuneration with the creation of shareholder wealth. As such LTI’s are made to
executives who are able to influence the generation of shareholder wealth and thus have an
impact on the Company’s performance.
The level of LTI granted is, in turn, dependent on the Company’s recent share price performance,
the seniority of the executive, and the responsibilities the executive assumes in the Company.
Typically, the grant of LTIs occurs at the commencement of employment or in the event that the
individual receives a promotion and, as such, is not subsequently affected by the individual’s
performance over time.
Employment Contracts of Directors and Senior Executives
The employment arrangements of the non-executive chairman and executive directors are not
formalised in a contract of employment. Remuneration and other terms of employment for the
Chief Executive Officer/Managing Director are formalised in an employment contract. Major
provisions are set out below.
Vincent Algar, Managing Director:
• Annual base salary of $300,000 plus superannuation
• Notice period required to be given by the Company or employee for termination of one
month, except in the case of gross misconduct
• Payment of termination benefit on termination by either party equal to the amount in lieu
of the notice period
20
Australian Vanadium Limited 2019 Annual Report
• 21,000,000 performance rights (granted on 12 July 2017) that will each convert into one
ordinary share upon the satisfaction of certain milestones to advance the Blesberg Lithium
Project in South Africa as follows:
(a) In respect to one-third of the Performance Rights, upon certification by an independent
competent person, on or before 19 December 2019, of a JORC Reported resource or
reserve on the Blesberg Lithium-Tantalum Project of 2,000,000 tonnes at a grade of at
least 0.8% Li2O or Lithium equivalent in Beryl, Feldspar of Tantalum (reported in
accordance with clause 50 of the JORC Code); and
(b) In respect to one-third of the Performance Rights, upon certification by an independent
competent person, on or before 19 December 2020, of a JORC Reported resource or
reserve on the Blesberg Lithium-Tantalum Project of 4,000,000 tonnes at a grade of at
least 0.8% Li2O or Lithium equivalent in Beryl, Feldspar of Tantalum (reported in
accordance with clause 50 of the JORC Code); and
(c) In respect to one-third of the Performance Rights, upon certification by an independent
competent person, on or before 19 December 2021, of a JORC Reported resource or
reserve on the Blesberg Lithium-Tantalum Project of 6,000,000 tonnes at a grade of at
least 0.8% Li2O or Lithium equivalent in Beryl, Feldspar of Tantalum (reported in
accordance with clause 50 of the JORC Code).
The performance rights contain standard terms and conditions relevant to lapse of entitlement or
right to conversion on cessation of employment.
In respect to the 21,000,000 Performance Rights granted to Mr Algar, the Directors have taken
the decision to fully impair the carrying value of AVLs investment in the Blesberg Project in the
2019 Financial Year. Accordingly, it is highly probable that the future vesting conditions pertaining
to these rights will not materialise.
No expense has been recognised in the financial statements in relation to these performance
rights.
Compensation Options Granted to Key Management
Personnel
No options were granted to Directors or executives during the year ended 30 June 2019.
Shares Issued to Key Management Personnel on Exercise of
Compensation Options
No shares were issued to Directors or executives on exercise of compensation options during the
year.
Compensation Options Lapsed During the Year
No options previously issued to Key Management Personnel lapsed during the year.
21
Australian Vanadium Limited 2019 Annual Report
Details of Remuneration for the Year
Details of the remuneration of Directors and specified executives of Australian Vanadium
Limited are set out in the following table. There are no other employees who are required to
have their remuneration disclosed in accordance with the Corporations Act 2001.
Short-Term
Benefits
Post
Employment
Salary &
Fees
Super-
annuation
Share-
Based
Payments
Options &
Rights
Total Performance
Based
Remun-
eration
%
0
44
0
51
0
56
0
0
$
278,313
467,343
197,100
401,005
67,890
147,152
70,000
58,485
$
-
205,000
-
205,000
-
82,000
-
-
-
492,000
613,303
1,073,985
$
254,167
239,583
180,000
180,330
62,000
59,500
70,000
58,485
566,167
537,898
254,167
30,000
-
$
24,146
22,760
17,100
15,675
5,890
5,652
-
-
47,136
44,087
-
-
Directors
Vincent Algar 1
Leslie Ingraham 2
Brenton Lewis 3
Daniel Harris 4
Total Directors
Executives
Todd Richardson
(Project Manager)
Iain Ross
(Exploration Manager)
Total Executives
Key Management
Personnel
Year
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
24,146
34,146
312,459
-
-
-
30,000
-
20,531
18,750
1,781
254,167
48,750
820,334
586,648
24,146
1,781
71,282
45,868
34,146
-
312,459
50,531
34,146
492,000
925,762
1,124,516
0
46
11
0
0
0
11
0
4
44
1 Mr Algar was granted 21,000,000 performance rights on 12 July 2017, which may convert into ordinary
shares upon the satisfaction of operating milestones. Refer to his employment contract details in this
Remuneration Report for further information (Note 13). Refer to Remuneration Report for further details.
2 Mr Ingraham was granted 21,000,000 performance rights on 12 July 2017, which may convert into
ordinary shares upon the satisfaction of operating milestones (Refer to Note 13)
3 Mr Lewis was granted 12,000,000 performance rights on 12 July 2017, which may convert into ordinary
shares upon the satisfaction of operating milestones (Refer to Note 13).
4 Mr Harris was granted 6,000,000 performance rights on 12 July 2017, which may convert into ordinary
shares upon the satisfaction of operating milestones (Refer to Note 13)
5 Mr Richardson was granted 1,219,512 performance rights, which vested on 31 March 2019 upon
satisfying the vesting condition, being continuous employment from grant date to 31 March 2019.
No other performance-related payments were made during the year. Performance hurdles are
not attached to remuneration options if issued, however the Board determines appropriate
vesting periods to provide rewards over a period of time to Key Management Personnel.
22
Australian Vanadium Limited 2019 Annual Report
Share holdings of Key Management Personnel
Balance
1 July 2018
Received
as Remun-
eration
Options
Exercised
Acquired/
(Disposed)
Net
Change/
Other
Balance
30 June
2019
Directors
Vincent
Algar 1
Leslie
Ingraham 2
Brenton
Lewis 3
Daniel
Harris 4
Todd
Richardson 5
10,571,129
30,478,774
12,028,600
-
-
-
-
-
-
-
692,307
(3,600,000)
(2,907,693)
7,663,436
-
-
-
-
-
3,000,000
-
380,000
-
-
-
-
30,478,774
15,028,600
-
380,000
1 Mr Algar holds 21,000,000 performance rights (2018: 21,000,000) which may convert into ordinary
shares upon the satisfaction of operating milestones.
2 Mr Ingraham holds 21,000,000 performance rights (2018: 21,000,000) which may convert into ordinary
shares upon the satisfaction of operating milestones.
3 Mr Lewis holds 12,000,000 performance rights (2018: 4,000,000) which may convert into ordinary
shares upon the satisfaction of operating milestones. On 13 February 2018, Mr Lewis converted
2,000,000 performance rights into ordinary shares following the satisfaction of operating milestones.
4 On 8 July 2019, Mr Harris acquired 2,500,000 AVL shares on market at 1.4 cents per share. Mr Harris
also holds 6,000,000 performance rights (2018: 6,000,000) which may convert into ordinary shares
upon the satisfaction of operating milestones.
5 Mr Richardson holds 1,219,512 performance rights, which expire on 31 December 2019.
Option Holdings of Key Management Personnel
Balance
1 July
2018
Granted
as
Remun-
eration
Options
Exercised
Options
Expired/
Cancelled
Net
Change/
Other
Balance
30 June
2019
Number
Vested &
Exercis-
able
Directors
Vincent
Algar
Leslie
Ingraham
Brenton
Lewis
Daniel
Harris
Todd
Richardson
692,307
-
-
-
-
-
-
-
-
-
692,307
-
-
-
-
-
-
-
-
-
(692,307)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
All equity transactions with Key Management Personnel have been entered into under terms
and conditions no more favourable than those the Group would have adopted if dealing at arm’s
length.
23
Australian Vanadium Limited 2019 Annual Report
Loans and Other Transactions with Key Management
Personnel
There were no loans to or from, or other transactions with, key management personnel.
SHARE OPTIONS
At the date of this report options were outstanding for the following unissued ordinary shares:
• Nil listed options.
AUDITOR
Armada Audit & Assurance Pty Ltd continues in office in accordance with Section 327 of the
Corporations Act 2001.
NON-AUDIT SERVICES
No non-audit services were provided by our auditors, Armada Audit & Assurance Pty Ltd during
the year.
AUDITOR’S DECLARATION OF INDEPENDENCE
The auditor’s independence declaration for the year ended 30 June 2019, as required under
section 307C of the Corporations Act 2001, has been received and is included within the
financial report.
Signed in accordance with a resolution of Directors.
Brenton Lewis
Chairman
27 September 2019
24
Australian Vanadium Limited 2019 Annual Report
Consolidated Statement of Profit or Loss and
Other Comprehensive Income
For the year ended 30 June 2019
Other income
Impairment of exploration and evaluation asset
Depreciation
Share-based payments
Directors’ fees and benefits expenses
Other expenses
Loss before income tax expense
Income tax expense
Net loss for year
Other comprehensive income
Other comprehensive income for the year, net of tax
Items that cannot be subsequent reclassified to
profit and loss
Movement in fair value of investment classified as fair
value through OCI
Total comprehensive loss attributable to
members of Australian Vanadium Limited
Basic/diluted earnings per share
2019
$
232,940
(3,296,846)
(62,661)
(206,466)
(137,890)
(1,745,765)
Consolidated
2018
$
219,325
-
(44,426)
(630,680)
(1,073,986)
(956,304)
Note
2(a)
9
8(a)
2(b)
2(c)
(5,216,688)
-
(2,486,071)
-
3
(5,216,688)
(2,486,071)
10
(240,000)
(562,500)
(5,456,688)
(3,048,571)
5
Cents
(0.29)
Cents
(0.17)
The accompanying notes form part of these financial statements.
25
Australian Vanadium Limited 2019 Annual Report
Consolidated Statement of Financial Position
As at 30 June 2019
ASSETS
Current assets
Cash and cash equivalent
Trade and other receivables
Total current assets
Non-current assets
Plant and equipment
Exploration and evaluation expenditure
Investments
Total non-current assets
TOTAL ASSETS
LIABILITIES
Current liabilities
Trade and other payables
Provisions
Total current liabilities
NON-LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
CONSOLIDATED
2018
$
2019
$
Note
6
7
4,417,373
374,678
5,152,782
192,901
4,792,051
5,345,683
8
9
10
278,477
21,750,919
457,500
278,288
17,940,501
697,500
22,486,896
18,916,289
27,278,947
24,261,972
11
12
1,286,637
53,885
140,271
31,273
1,340,522
171,544
1,340,522
171,544
25,938,425
24,090,428
13
13
83,411,527
(732,009)
(56,741,093)
76,177,333
(562,500)
(51,524,405)
25,938,425
24,090,428
The accompanying notes form part of these financial statements.
26
Australian Vanadium Limited 2019 Annual Report
Consolidated Statement of Changes in Equity
For the year ended 30 June 2019
Balance as at 1 July 2017
Loss for the year
Total loss for the year
Movement in fair value of
investments recognised in equity
Total comprehensive loss
Shares issued pursuant to
placements
Shares issued on conversion of
options
Shares issued as consideration
Securities issued on conversion of
performance rights
Share based payments
Capital raising costs
Issued
Capital
$
67,960,815
Accumulated
Losses
$
(49,038,334)
Other
Reserves
$
-
CONSOLIDATED
Total
$
18,922,481
-
-
-
(2,486,071)
-
(2,486,071)
(2,486,071)
-
-
(562,500)
(2,486,071)
(562,500)
5,505,000
1,256,439
500,000
1,382,860
-
(427,781)
-
-
-
-
-
-
-
-
-
-
-
-
(3,048,571)
5,505,000
1,256,439
500,000
1,382,860
-
(427,781)
Balance as at 30 June 2018
76,177,333
(51,524,405)
(562,500)
24,090,428
Loss for the year
Total loss for the year
Movement in fair value of
investments recognised in equity
Total comprehensive loss
Securities issued pursuant to
placements
Shares issued on conversion of
options
Shares issued as consideration
Securities issued on conversion of
performance rights
Share based payments
Capital raising costs
-
-
-
-
7,182,871
105,000
30,975
-
(84,652)
(5,216,688)
-
(5,216,688)
(5,216,688)
-
-
(240,000)
(5,216,688)
(240,000)
-
-
-
-
-
-
-
-
-
-
70,491
-
(5,456,688)
7,182,871
105,000
30,975
70,491
(84,652)
Balance as at 30 June 2019
83,411,527
(56,741,093)
(732,009)
25,938,425
The accompanying notes form part of these financial statements.
27
Australian Vanadium Limited 2019 Annual Report
Consolidated Statement of Cash Flows
For the year ended 30 June 2019
Cash flows from operating activities
Payments to suppliers and employees
Interest received
Research and development and other receipts
Net cash provided by/
(used) in operating activities
Cash flows from investing activities
Expenditure on mining interests
Payment for Investments
Payment for property plant & equipment
Net cash (used) in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Payment of capital raising costs
Net cash provided by financing activities
Net increase in cash held
Cash at beginning of the financial year
Cash at end of financial year
CONSOLIDATED
2018
$
2019
$
Note
(1,894,039)
124,991
124,547
(1,669,080)
44,526
159,795
6(a)
(1,644,501)
(1,464,759)
(6,126,233)
-
(62,850)
(724,769)
(500,000)
(18,443)
(6,189,083)
(1,243,212)
7,182,871
(84,696)
6,761,439
(424,857)
7,098,175
6,336,582
(735,409)
3,628,611
5,152,782
1,524,171
4,417,373
5,152,782
The accompanying notes form part of these financial statements.
28
Australian Vanadium Limited 2019 Annual Report
Notes to The Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These consolidated financial statements and notes represent those of Australian Vanadium
Limited (the “Company”) and Controlled Entities (the “Consolidated Entity” or “Group”) for the
year ended 30 June 2019.
Australian Vanadium Limited is a company limited by shares incorporated in Australia whose
shares are publicly traded on the Australian Securities Exchange. The Company is domiciled in
Western Australia. The nature of operations and principal activities of the Group are described
in the Directors' Report.
1(a) Basis of Preparation
The financial statements are general purpose financial statements that have been prepared in
accordance with Australian Accounting Standards, Australian Accounting Interpretations, other
authoritative pronouncements of the Australian Accounting Standards Board (AASB) and the
Corporations Act 2001. The Group is a for-profit entity for financial reporting purposes under
Australian Accounting Standards.
The financial statements have been prepared on an accruals basis and are based on historical
costs modified, where applicable, by the measurement at fair value of selected non-current
assets, financial assets and financial liabilities. Material accounting policies adopted in
preparation of these financial statements are presented below and have been consistently
applied unless otherwise stated.
The Group’s financial statements are presented in Australian dollars.
1(b) Financial Position
The financial report has been prepared on the going concern basis, which contemplates the
continuation of normal business activity and the realisation of assets and the settlement of
liabilities in the normal course of business. The Group’s primary source of funding is from capital
raisings and equity funding. For the year ended 30 June 2019 the Group incurred a net loss of
$5,216,688 (2018: $2,486,071) and had a working capital surplus of $3,451,529 at 30 June
2019. The Group has a listed investment of $457,500 (Note 10) that can be sold to generate
further funds. On 23rd September 2019 the Group raised $6,594,975 in funds before costs via
capital raising (Refer to subsequent events Note 22). The Group also has the ability to cut back
and reduce discretionary costs as necessary.
Based on the working capital surplus at 30 June 2019, the cash flow forecast prepared by
management, the $6,594,975 in funds raised on 23 September 2019 and the Group’s ability to
reduce discretionary costs, the directors consider the going concern basis of preparation to be
appropriate.
29
Australian Vanadium Limited 2019 Annual Report
1(c) Adoption of New and Revised Standards
In the current year, the Group has adopted all of the new and revised Standards and
Interpretations issued by the Australian Accounting Standards Board (the AASB) that are
relevant to its operations and effective for the current annual reporting period. The following new
standards came into effect on 1 July 2018:
AASB 15 Revenue from Contracts with Customers
AASB 15 came into effect from 1 July 2018. AASB 15 stipulates how and when revenue is
recorded, requiring entities to provide users of financial statements with more information and
reporting disclosures. Its core principle is the recognition of revenue for the transfer of goods or
services, at a value that reflects the consideration to which the entity expects to be entitled, in
return for meeting performance obligations. The Group did not have any revenue from contracts
with customers and hence AASB 15 did not have a material impact on the Group’s financial
report in Current and prior years.
AASB 9 Financial Instruments
The adoption of AASB 9 has resulted in changes in accounting policies and disclosures in the
financial statements but has had no significant impact on the financial statements. Refer below
for the new financial instruments accounting policy. The Company has adopted AASB 9 with a
date of initial application of 1 July 2018 and has elected not to restate its comparatives. As a
result, the Company has changed its accounting policy for financial instruments from 1 July
2018 as detailed below. Financial assets are classified according to their business model and
the characteristics of their contractual cash flows and are initially measured at fair value
adjusted for transaction costs (where applicable).
Subsequent Measurement of Financial Assets
For the purpose of subsequent measurement, financial assets, other than those designated and
effective as hedging instruments, are classified into the following four categories:
• Financial assets at amortised cost
• Financial assets at fair value through profit or loss (FVTPL)
• Debt instruments at fair value through other comprehensive income (FVTOCI)
• Equity instruments at FVTOCI
The Group applied the standard effective 1 July 2018 being the date of initial application The
Company financial instruments include Cash at Bank, Trade Debtors and Trade Payables.
These financial instruments are measured and reported at amortised cost under AASB 9. There
is no change to the classification and measurement of these instruments from the previous
AASB 139 Financial Instruments.
The Group has an equity investment in listed shares (Not held for trading) classified at fair
value. The Group has elected to classify the equity instrument at FVTOCI (Refer to Note 1(k).
All gains and losses (except dividend income) will be presented in equity. Refer to Note 10 for
further disclosure.
1(d) Statement of Compliance
The financial report was authorised for issue on 27 September 2019.
Australian Accounting Standards set out accounting policies that the AASB has concluded
would result in a financial report containing relevant and reliable information about transactions,
events and conditions. Compliance with Australian Accounting Standards ensures that the
30
Australian Vanadium Limited 2019 Annual Report
financial statements and notes also comply with International Financial Reporting Standards
(IFRS).
1(e) Basis of Consolidation
The consolidated financial statements comprise the financial statements of Australian Vanadium
Limited (“Company” or “Parent Entity”) and its subsidiaries as at 30 June each year
(“Consolidated” or “Group”). Subsidiaries are all entities over which the Group has control. The
Group controls an entity when it is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those returns through its power to direct
the activities of the entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group
and cease to be consolidated from the date on which control is transferred out of the Group.
Investments in subsidiaries are accounted for at cost in the individual financial statements of
Australian Vanadium Limited.
The financial statements of the subsidiaries are prepared for the same reporting period as the
parent company, using consistent accounting policies.
In preparing the consolidated financial statements, all intercompany balances and transactions,
income and expenses and profit and losses resulting from intra-group transactions have been
eliminated in full.
1(f) Other Income
Interest earned is recognised as it accrues, taking into account the effective yield on the
financial asset. Income derived from successful R&D claims is recognised on receipt of
payment.
1(g) Cash and Cash Equivalents
Cash comprises cash at bank and in hand. Cash equivalents are short term, highly liquid
investments that are readily convertible to known amounts of cash and which are subject to an
insignificant risk of changes in value.
For the purposes of the statement of cash flows, cash and cash equivalents consist of cash and
cash equivalents as described above, net of outstanding bank overdrafts.
1(h) Trade and Other Receivables
Trade receivables, which generally have 30-90 day terms, are recognised and carried at original
invoice amount less an allowance for any uncollectible amounts. Impairment losses in respect
of debtors is calculated on an expected credit losses method as required by AASB 9 Financial
Instruments
Income Tax
1(i)
Current tax assets and liabilities for the current and prior periods are measured at the amount
expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws
used to compute the amount are those that are enacted or substantively enacted by the
reporting date.
Deferred income tax is provided on all temporary differences at the reporting date between the
tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
31
Australian Vanadium Limited 2019 Annual Report
Deferred income tax liabilities are recognised for all taxable temporary differences except:
• when the deferred income tax liability arises from the initial recognition of goodwill or of an
asset or liability in a transaction that is not a business combination and that, at the time of
the transaction, affects neither the accounting profit nor taxable profit or loss; or
• when the taxable temporary difference is associated with investments in subsidiaries,
associates or interests in joint ventures, and the timing of the reversal of the temporary
difference can be controlled and it is probable that the temporary difference will not reverse
in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carry-
forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable
profit will be available against which the deductible temporary differences and the carry-forward
of unused tax credits and unused tax losses can be utilised, except:
• when the deferred income tax asset relating to the deductible temporary difference arises
from the initial recognition of an asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects neither the accounting profit nor
taxable profit or loss; or
• when the deductible temporary difference is associated with investments in subsidiaries,
associates or interests in joint ventures, in which case a deferred tax asset is only
recognised to the extent that it is probable that the temporary difference will reverse in the
foreseeable future and taxable profit will be available against which the temporary
difference can be utilised.
The carrying amount of deferred income tax assets is reviewed at each reporting date and
reduced to the extent that it is no longer probable that sufficient taxable profit will be available to
allow all or part of the deferred income tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed at each reporting date and are
recognised to the extent that it has become probable that future taxable profit will allow the
deferred tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to
apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax
laws) that have been enacted or substantively enacted at the reporting date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in
profit or loss.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists
to set off current tax assets against current tax liabilities and the deferred tax assets and
liabilities relate to the same taxable entity and the same taxation authority.
The amount of benefits brought to account or which may be realised in the future is based on
the assumption that no adverse change will occur in income legislation and the anticipation that
the Group will derive sufficient future assessable income to enable the benefit to be realised and
comply with the conditions of deductibility imposed by the law.
1(j) Other Taxes
Revenues, expenses and assets are recognised net of the amount of GST except:
32
Australian Vanadium Limited 2019 Annual Report
• when the GST incurred on a purchase of goods and services is not recoverable from the
taxation authority, in which case the GST is recognised as part of the cost of acquisition of
the asset or as part of the expense item as applicable; and
receivables and payables, which are stated with the amount of GST included.
•
The net amount of GST recoverable from, or payable to, the taxation authority is included as
part of receivables or payables in the statement of financial position.
Cash flows are included in the statement of cash flows on a gross basis and the GST
component of cash flows arising from investing and financing activities, which is recoverable
from, or payable to, the taxation authority are classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or
payable to, the taxation authority.
1(k) Financial Assets
A financial instrument is recognised if the Company becomes a party to the contractual
provisions of the instrument. Financial assets are derecognised if the Company's contractual
rights to the cash flows from the financial assets expire or if the Company transfers the financial
asset to another party without retaining control or substantially all risks and rewards of the
asset. Regular way purchases and sales of financial assets are accounted for at trade date, i.e.
the date that the Company commits itself to purchase or sell the asset.
(i) Financial Assets at Fair Value
Financial assets classified as held for trading are included in the category ‘financial assets at fair
value through profit or loss’. Financial assets are classified as held for trading if they are
acquired for the purpose of selling in the near term. Derivatives are also classified as held for
trading unless they are designated as effective hedging instruments. The Group classifies
financial assets that meet the definition of equity instruments (and not held for trading) at Fair
Value through Other Comprehensive Income (FVOTCI). All gains and losses are recognised in
equity. Dividend income is recognised in statement of profit and loss.
(ii) Loans and Receivables
Financial assets with contractual cash flows representing solely payments of principal and
interest and held within a business model of 'hold to collect' contractual cash flows are
accounted for at amortised cost using the effective interest method. The Company's trade and
most other receivables fall into this category of financial instruments. Gains and losses are
recognised in the statement of profit or loss and other comprehensive income when the loans
and receivables are derecognised or impaired, as well as through the amortisation process.
1(l) Exploration and Evaluation Expenditure
Exploration and evaluation expenditures in relation to each separate area of interest are
recognised as an exploration and evaluation asset in the year in which they are incurred where
the following conditions are satisfied:
(i)
(ii) at least one of the following conditions is also met:
the rights to tenure of the area of interest are current; and
(a)
the exploration and evaluation expenditures are expected to be recouped through
successful development and exploitation of the area of interest, or alternatively, by its
sale; or
33
Australian Vanadium Limited 2019 Annual Report
(b) exploration and evaluation activities in the area have not, at the reporting date,
reached a stage which permits a reasonable assessment of the existence, or
otherwise, of economically recoverable reserves and active and significant operations
in, or relation to, the area of interest are continuing.
Exploration and evaluation assets are initially measured at cost and include acquisition of rights
to explore, studies, exploratory drilling, trenching and sampling and associated activities and an
allocation of depreciation and amortisation of assets used in exploration and evaluation
activities. General and administrative costs are only included in the measurement of exploration
and evaluation costs where they are related directly to operational activities in a particular area
of interest.
Exploration and evaluation assets are assessed for impairment when facts and circumstances
suggest that the carrying amount of an exploration and evaluation asset may exceed its
recoverable amount. The recoverable amount of the exploration and evaluation asset (for the
cash generating unit(s) to which it has been allocated being no larger than the relevant area of
interest) is estimated to determine the extent of the impairment loss (if any). Where an
impairment loss subsequently reverses, the carrying amount of the asset is increased to the
revised estimate of its recoverable amount, but only to the extent that the increased carrying
amount does not exceed the carrying amount that would have been determined had no
impairment loss been recognised for the asset in previous years.
Where a decision has been made to proceed with development in respect of a particular area of
interest, the relevant exploration and evaluation asset is tested for impairment and the balance
is then reclassified to development.
Impairment of Assets
1(m)
The Group assesses at each reporting date whether there is an indication that an asset may be
impaired. If any such indication exists, or when annual impairment testing for an asset is
required, the Group makes an estimate of the asset’s recoverable amount. An asset’s
recoverable amount is the higher of its fair value less costs to sell and its value in use and is
determined for an individual asset, unless the asset does not generate cash inflows that are
largely independent of those from other assets or groups of assets and the asset’s value in use
cannot be estimated to be close to its fair value. In such cases the asset is tested for impairment
as part of the cash-generating unit to which it belongs. When the carrying amount of an asset or
cash-generating unit exceeds its recoverable amount, the asset or cash-generating unit is
considered impaired and is written down to its recoverable amount.
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. Impairment losses relating to continuing operations
are recognised in those expense categories consistent with the function of the impaired asset
unless the asset is carried at a revalued amount (in which case the impairment loss is treated as
a revaluation decrease).
An assessment is also made at each reporting date as to whether there is any indication that
previously recognised impairment losses may no longer exist or may have decreased. If such
indication exists, the recoverable amount is estimated. A previously recognised impairment loss
is reversed only if there has been a change in the estimates used to determine the asset’s
recoverable amount since the last impairment loss was recognised. If that is the case the
34
Australian Vanadium Limited 2019 Annual Report
carrying amount of the asset is increased to its recoverable amount. That increased amount
cannot exceed the carrying amount that would have been determined, net of depreciation, had
no impairment loss been recognised for the asset in prior years. Such reversal is recognised in
profit or loss unless the asset is carried at a revalued amount, in which case the reversal is
treated as a revaluation increase. After such a reversal, the depreciation charge is adjusted in
future periods to allocate the asset’s revised carrying amount, less any residual value, on a
systematic basis over its remaining useful life.
1(n) Trade and Other Payables
Trade payables and other payables are carried at amortised costs and represent liabilities for
goods and services provided to the Group prior to the end of the financial year that are unpaid
and arise when the Group becomes obliged to make future payments in respect of the purchase
of these goods and services.
1(o) Share-Based Payment Transactions
The Group may provide benefits to employees (including senior executives) of the Group in the
form of share-based payments, whereby employees render services in exchange for shares or
rights over shares (equity-settled transactions).
When provided, the cost of these equity-settled transactions with employees is measured by
reference to the fair value of the equity instruments at the date at which they are granted. The
fair value is determined by an external valuer using a Black-Scholes model.
In valuing equity-settled transactions, no account is taken of any performance conditions, other
than conditions linked to the price of the shares of Australian Vanadium Limited (market
conditions) if applicable.
The cost of equity-settled transactions is recognised, together with a corresponding increase in
equity, over the period in which the performance and/or service conditions are fulfilled, ending
on the date on which the relevant employees become fully entitled to the award (the vesting
period).
The cumulative expense recognised for equity-settled transactions at each reporting date until
vesting date reflects
(i)
(ii)
the extent to which the vesting period has expired, and
the Group’s best estimate of the number of equity instruments that will ultimately vest.
No adjustment is made for the likelihood of market performance conditions being met as the
effect of these conditions is included in the determination of fair value at grant date. The amount
charged or credited to the statement of profit or loss and other comprehensive income for a
period represents the movement in cumulative expense recognised as at the beginning and end
of that period.
No expense is recognised for awards that do not ultimately vest, except for awards where
vesting is only conditional upon a market condition.
If the terms of an equity-settled award are modified, as a minimum an expense is recognised as
if the terms had not been modified. In addition, an expense is recognised for any modification
that increases the total fair value of the share-based payment arrangement, or is otherwise
beneficial to the employee, as measured at the date of modification.
35
Australian Vanadium Limited 2019 Annual Report
If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation,
and any expense not yet recognised for the award is recognised immediately. However, if a new
award is substituted for the cancelled award and designated as a replacement award on the
date that it is granted, the cancelled and new award are treated as if they were a modification of
the original award, as described in the previous paragraph.
The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the
computation of earnings per share.
Issued Capital
1(p)
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of
new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
1(q) Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to
the chief operating decision maker. The chief operating decision maker, who is responsible for
allocating resources and assessing performance of the operating segments, has been identified
as the Board of Directors of the Company. The Group operates in two segments, being mineral
exploration within Australia and the sale of VRB systems.
1(r) Earnings Per Share
Basic earnings per share is calculated as net profit attributable to members of the parent,
adjusted to exclude any costs of servicing equity (other than dividends) and preference share
dividends, divided by the weighted average number of ordinary shares, adjusted for any bonus
element.
Diluted earnings per share is calculated as net profit attributable to members of the parent,
adjusted for:
• costs of servicing equity (other than dividends) and preference share dividends;
•
the after-tax effect of dividends and interest associated with dilutive potential ordinary
shares that have been recognised as expenses; and
• other non-discretionary changes in revenues or expenses during the period that would
result from the dilution of potential ordinary shares; divided by the weighted average
number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus
element.
Investments in Associates
1(s)
An associate is an entity over which the consolidated entity has significant influence. Significant
influence is the power to participate in the financial and operating policy decisions of the
investee, but is not control or joint control over those policies.
Investments in associates are accounted for in the parent entity using the cost method and in
the consolidated entity using the equity method of accounting. Under the equity method, the
investment in an associate is initially recorded at cost. The carrying amount of the investment is
adjusted to recognise changes in the consolidated entity's share of net assets of the associate
since the acquisition date. The consolidated entity’s share of post-acquisition profits or losses is
recognised in the statement of profit or loss and its share of post-acquisition movements in other
comprehensive income is presented as part of the consolidated entity's other comprehensive
income.
36
Australian Vanadium Limited 2019 Annual Report
Unrealised gains or transactions between the Group and its associates are eliminated to the
extent of the Group’s interests in the associates. Unrealised losses are also eliminated unless
the transaction provides evidence of an impairment of the asset transferred. Accounting policies
of associates have been changed where necessary to ensure consistency with the policies
adopted by the Group.
1(t) Plant and Equipment
Plant and equipment is stated at cost less accumulated depreciation and any accumulated
impairment losses.
Depreciation is calculated on a straight-line basis over the estimated useful life of the assets as
follows:
Plant and equipment
Motor vehicles
5 to 10 years
8 years
The assets’ residual values, useful lives and amortisation methods are reviewed, and adjusted if
appropriate, at each financial year end.
Impairment
(i)
The carrying values of property, plant and equipment are reviewed for impairment at each
reporting date, with recoverable amount being estimated when events or changes in
circumstances indicate that the carrying value may be impaired.
The recoverable amount of plant and equipment is the higher of fair value less costs to sell and
value in use. In assessing value in use, the estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset.
For an asset that does not generate largely independent cash inflows, recoverable amount is
determined for the cash-generating unit to which the asset belongs, unless the asset’s value in
use can be estimated to be close to its fair value.
An impairment exists when the carrying value of an asset or cash-generating units exceeds its
estimated recoverable amount. The asset or cash-generating unit is then written down to its
recoverable amount. Impairment losses are recognised in the statement of profit or loss and
other comprehensive income.
Derecognition and Disposal
(ii)
An item of plant and equipment is derecognised upon disposal or when no further future
economic benefits are expected from its use or disposal.
Any gain or loss arising on derecognition of the asset (calculated as the difference between the
net disposal proceeds and the carrying amount of the asset) is included in the statement of
profit or loss and other comprehensive income in the year the asset is derecognised.
37
Australian Vanadium Limited 2019 Annual Report
1(u) Significant Accounting Estimates and Judgments
Significant Accounting Judgments
In the process of applying the Group’s accounting policies, management has made the following
judgments, apart from those involving estimations, which have the most significant effect on the
amounts recognised in the financial statements.
Exploration and Evaluation Assets
The Group’s accounting policy for exploration and evaluation expenditure is set out at Note 1(l).
The application of this policy necessarily requires management to make certain estimates and
assumptions as to future events and circumstances. Any such estimates and assumptions may
change as new information becomes available. If, after having capitalised expenditure under the
policy, it is concluded that the expenditures are unlikely to be recovered by future exploitation or
sale, then the relevant capitalised amount will be written off to the statement profit or loss and
other comprehensive income.
Significant Accounting Estimates and Assumptions
The carrying amounts of certain assets and liabilities are often determined based on estimates
and assumptions of future events. The key estimates and assumptions that have a significant
risk of causing a material adjustment to the carrying amounts of certain assets and liabilities
within the next annual reporting period are:
Impairment of Assets
(i)
In determining the recoverable amounts of assets, in the absence of quoted market prices,
estimations are made regarding the present value of future cash flows using asset-specific
discount rates and the recoverable amount of the asset is determined. Value-in-use calculations
performed in assessing recoverable amounts incorporate a number of key estimates.
ii) Share-Based Payment Transactions
The Group measures the cost of equity-settled transactions with employees by reference to the
fair value of the equity instruments at the date at which they are granted. The fair value is
determined from market value.
1(v) New Standards Not Yet Effective
AASB 16 Leases
AASB 16 Leases became mandatorily effective for annual reporting periods beginning on or
after 1 July 2019 and brings significant change to lease accounting for lessees as most leases
will now need to be recognised on a lessee’s balance sheet in the form of right-of-use assets
with corresponding lease liabilities. Management are currently assessing the impact of this
standard.
38
Australian Vanadium Limited 2019 Annual Report
2. REVENUE AND EXPENSES
2(a) Other Income
Interest received
Gain/(loss) on asset sale
Lease income
R&D concession
2(b) Share-Based Payments
Conversion of performance rights to shares during the period
Shares issued as consideration to a third party
Performance rights issued fully vested during the period
Options exercised during the period
2(c) Other Expenses
Salaries and wages
Superannuation
Stock exchange and registry fees
Rent and office facility expenses
Legal fees
Auditor’s fees
Travel and accommodation
Other corporate and administrative expenses
2019
$
CONSOLIDATED
2018
$
108,392
4,545
6,343
113,660
232,940
30,975
105,000
70,491
-
206,466
431,977
130,257
111,512
85,408
23,845
15,300
192,113
755,353
1,745,765
59,065
-
1,601
158,659
219,325
492,000
-
-
138,680
630,680
292,316
24,725
113,156
83,586
2,208
15,000
122,008
303,305
956,304
39
Australian Vanadium Limited 2019 Annual Report
3. INCOME TAX
3(a)
Major components of income tax expense for the Years ended 30 June 2019 and 30 June 2018 are:
Income Tax Expense
2019
$
CONSOLIDATED
2018
$
Income statement
Current income
Current income tax charge (benefit)
Current income tax not recognised
Research and development concession
Deferred income tax
Relating to origination and reversal of temporary differences
Deferred tax benefit not recognised
2,681,786
(2,681,786)
-
14,310,355
(14,310,355)
Income tax expense (benefit) reported in income statement
-
639,143
(639,143)
-
523,260
(523,260)
-
A reconciliation of income tax expense (benefit) applicable to accounting profit before income tax
at the statutory income tax rate to income tax expense at the company’s effective income tax rate
for the Years ended 30 June 2019 and 30 June 2018 is as follows:
Accounting profit (loss before tax from continuing operations
Accounting profit (loss before income tax
At the statutory income rate of 30% (2018: 27.5%)
Add:
Non-deductible expenses
Temporary differences and losses not recognised
Less:
R&D tax offset
At effective income tax rate of 0% (2018: 0%)
Income tax expense reported in income statement
Total income tax expense
2019
$
(5,216,688)
(5,216,688)
(1,565,006)
393,798
1,205,306
(34,098)
-
-
-
CONSOLIDATED
2018
$
(2,486,071)
(2,486,071)
(683,669)
311,420
415,880
(43,631)
-
-
-
40
Australian Vanadium Limited 2019 Annual Report
3(b) Deferred Tax Assets
Deferred tax assets/(liabilities) have not been recognised in respect of the following items:
Liabilities:
Receivables
Capitalised exploration expenditure
Assets:
Investments
Trade and other payables
Provisions
Business related costs
Tax losses
Net Deferred Tax
2019
$
CONSOLIDATED
2018
$
(419)
(6,259,922)
(6,260,341)
240,750
13,616
20,930
114,885
23,140,375
23,530,556
17,270,215
(4,949)
(166,206)
(171,155)
-
2,750
9,382
253,827
2,853,507
3,119,466
2,948,311
The tax losses do not expire under current legislation. Deferred tax assets have not been
recognised in respect of these items because it is not probable that future taxable profit will be
available against which the Company can utilise the benefits.
4. AUDITORS’ REMUNERATION
Amounts paid or due and payable to Armada Audit & Assurance Pty Ltd for:
Audit and review
5. EARNINGS PER SHARE
Basic earnings per share
The earnings and weighted average number of ordinary
shares used in the calculated of basic earnings per share
is as follows:
2019
$
15,300
15,300
CONSOLIDATED
2018
$
15,000
15,000
Cents
(0.29)
CONSOLIDATED
Cents
(0.17)
Net loss for the year
(5,216,688)
(2,486,071)
Weighted average number of ordinary shares used in the
calculation of basic EPS
1,807,558,351
1,444,996,859
41
Australian Vanadium Limited 2019 Annual Report
6. CASH AND CASH EQUIVALENTS
Cash at bank
Short-term deposits
2019
$
3,503,605
913,768
4,417,373
CONSOLIDATED
2018
$
96,425
5,056,357
5,152,782
Cash at bank earns interest at floating rates based on daily deposit rates. Cash and cash equivalents for
the purpose of the statement of cash flows are comprised of cash at bank and short-term deposits.
6(a) Reconciliation of Loss for the Year to Net Cash Flows from Operating Activities
Loss for the year
Non-cash flows in profit/loss
Depreciation
Impairment of exploration and evaluation
Gain/loss on sale of asset
Share based payments
Changes in operating assets and liabilities
(Increase)/decrease in trade and other receivables
Increase/(decrease) in trade and other payables
Increase/(decrease) in provisions
(5,216,688)
(2,486,071)
62,661
3,296,846
(4,545)
206,466
(197,658)
169,924
38,493
44,426
-
-
1,122,680
(87,289)
(58,505)
-
Net cash flows from operating activities
(1,644,501)
(1,464,759)
6(b) Non-Cash Financing and Investing Activities
In the year the following non-cash financing and investing activities occurred: Nil.
7. TRADE AND OTHER RECEIVABLES
Current
GST receivable
Other receivables
Trade debtors
2019
$
CONSOLIDATED
2018
$
237,493
33,499
103,686
374,678
50,411
53,833
88,657
192,901
Other receivables are non-interest bearing and generally repayable within 12 months. Due to the
short-term nature of these receivables, their carrying value is assumed to approximate their fair
value.
42
Australian Vanadium Limited 2019 Annual Report
8. PLANT & EQUIPMENT
Plant and equipment
At cost
Accumulated depreciation
Motor vehicles
At cost
Accumulated depreciation
Total
At cost
Accumulated depreciation
CONSOLIDATED
2018
$
2019
$
386,550
(141,275)
245,275
60,600
(27,398)
33,202
357,300
(89,968)
267,332
27,000
(16,044)
10,956
447,150
(168,673)
384,300
(106,012)
278,477
278,288
8(a) Movements in Carrying Amounts
Movements in the carrying amounts for each class of plant and equipment during the financial year:
Balance at 1 July 2017
Additions
Depreciation expense
Balance at 30 June 2018
Additions
Depreciation expense
Balance at 30 June 2019
Plant &
Equipment
290,362
18,443
(41,473)
267,332
29,250
(51,307)
245,275
Motor
Vehicles
13,909
-
(2,953)
10,956
33,600
(11,354)
33,202
Total
304,271
18,443
(44,426)
278,288
62,850
(62,661)
278,477
43
Australian Vanadium Limited 2019 Annual Report
9. DEFERRED EXPLORATION EXPENDITURE
Expenditure brought forward1
Less expenditure recouped on sale of asset
Add expenditure incurred on purchase of asset
Expenditure incurred during the year
Impairment during the period*
2019
$
17,940,501
-
-
7,107,264
(3,296,846)
CONSOLIDATED
2018
$
17,071,746
(600,000)
760,000
708,755
-
Expenditure carried forward
21,750,919
17,940,501
1 The expenditure above relates principally to the exploration and evaluation phase. The ultimate
recoupment of this expenditure is dependent upon the successful development and commercial
exploration, or alternatively, sale of the respective areas of interest, at amounts at least equal to the
carrying value.
* The Directors have taken the decision to fully impair the carrying value of AVLs investment in the
Blesberg Project in the 2019 Financial Year. The directors considered that there is limited potential for the
carrying amount to be fully recoverable as the resource potential of this area of interest is very limited.
10. FINANCIAL ASSETS
Purchase Price of Investment in Bryah Resources
Fair value movement
Investments at fair value
Name
Principal
Activities
Country of
Incorporation
Shares
Bryah
Resources
Limited 2
Mineral
Exploration
Australia
Listed:
Ordinary
2019
$
1,260,000
(802,500)
457,500
CONSOLIDATED
2018
$
1,260,000
(562,500)
697,500
Ownership
Interest
2018
%
13.31
2019
%
11.76
Carrying Amount
of Investment
2018
2019
%
%
457,500 697,500
1 South African exploration assets of 1,649,171 represented acquisition of mining tenements and not
2
investments in associates, These costs were shown as Investments in Associates at 30 June 2018 have
subsequently been reclassified to Exploration Assets and have been fully impaired at 30 June 2019.
Investments in Bryah Resources Limited has been classified as an equity instrument at FVTOCI in
accordance with AASB 9 Financial Instruments. The movements are presented Other Comprehensive
Income. The fair value movement of $240,000 has been recognised in Equity in accordance with AASB 9
Financial Instruments.
44
Australian Vanadium Limited 2019 Annual Report
11. TRADE AND OTHER PAYABLES
Current
Trade payables and accruals
Payroll tax
Fringe benefits tax
2019
$
CONSOLIDATED
2018
$
1,137,811
117,618
31,208
1,286,637
140,271
-
-
140,271
Trade creditors are non-interest bearing and are normally settled on 30-day terms. Due to the short-
term nature of trade payables and accruals, their carrying value is assumed to approximate their fair
value.
12. PROVISIONS
Current
Employee entitlements
2019
$
53,885
53,885
CONSOLIDATED
2018
$
31,273
31,273
45
Australian Vanadium Limited 2019 Annual Report
13. ISSUED CAPITAL AND RESERVES
13(a)
Issued and Paid Up Capital
Ordinary shares – fully paid
Ordinary shares – partly paid
Share issue costs written off against issued capital
13(b) Movement in Ordinary Shares on Issue
2019
$
84,641,896
8,000
(1,238,369)
CONSOLIDATED
2018
$
77,323,050
8,000
(1,153,717)
83,411,527
76,177,333
(i) Ordinary shares – fully paid
Balance at beginning of year
Issue of ordinary shares
on conversion of listed options
Issue of ordinary shares via placements
Issue of ordinary shares
as consideration to third party
Issue of ordinary shares
on conversion of performance rights
2019
Number
2019
$
2018
Number
2018
$
1,609,123,019
359,143,538
77,323,050 1,215,734,216
81,196,803
7,182,871
68,678,931
1,256,439
-
5,000,000
-
105,000
242,000,000
15,000,000
5,505,000
500,000
577,320
30,975
55,192,000
1,382,680
Balance at end of year
1,973,843,877
84,641,896 1,609,123,019
77,323,050
(ii) Ordinary shares – partly paid
($0.0389 unpaid)
Balance at beginning of year
80,000,000
8,000
80,000,000
Balance at end of year
80,000,000
8,000
80,000,000
8,000
8,000
Total issued shares
2,053,843,877
84,649,896 1,689,123,019
77,331,050
13(c) Terms and Conditions of Issued Capital
Ordinary shares have the right to receive dividends as declared and, in the event of winding up the
Company, to participate in proceeds from the sale of all surplus assets in proportion to the number
of and amounts paid up on shares held.
Fully paid ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting
of the Company. Options and partly paid ordinary shares do not entitle their holder to any voting
rights.
13(d) Share Options
At 30 June 2019, the following options over unissued ordinary shares were outstanding: Nil
46
Australian Vanadium Limited 2019 Annual Report
13(e) Performance Rights
At 30 June 2019, the following performance rights were outstanding:
Opening performance rights
Performance rights expiring 19 December 20191
Performance rights expiring 19 December 20201
Performance rights expiring 19 December 20211
Performance rights expiring 30 June 20192
Performance rights expiring 31 December 20193
2019
100,769,548
-
-
-
(577,230)
2,517,550
CONSOLIDATED
2018
40,000,000
20,000,000
20,000,000
20,000,000
769,548
-
Closing performance rights
102,709,868
100,769,548
1 Operational hurdles in respect of 60,000,000 rights granted to directors in 2018 are detailed below
(a) In respect to one-third of the Performance Rights, upon certification by an independent competent
person, on or before 19 December 2019, of a JORC Reported resource or reserve on the Blesberg
Lithium-Tantalum Project of 2,000,000 tonnes at a grade of at least 0.8% Li2O or Lithium equivalent
in Beryl, Feldspar of Tantalum (reported in accordance with clause 50 of the JORC Code); and
(b) In respect to one-third of the Performance Rights, upon certification by an independent competent
person, on or before 19 December 2020, of a JORC Reported resource or reserve on the Blesberg
Lithium-Tantalum Project of 4,000,000 tonnes at a grade of at least 0.8% Li2O or Lithium equivalent
in Beryl, Feldspar of Tantalum (reported in accordance with clause 50 of the JORC Code); and
(c) In respect to one-third of the Performance Rights, upon certification by an independent competent
person, on or before 19 December 2021, of a JORC Reported resource or reserve on the Blesberg
Lithium-Tantalum Project of 6,000,000 tonnes at a grade of at least 0.8% Li2O or Lithium equivalent
in Beryl, Feldspar of Tantalum (reported in accordance with clause 50 of the JORC Code).
The performance rights contain standard terms and conditions relevant to lapse of entitlement or right to
conversion on cessation of employment. The Directors have taken the decision to fully impair the carrying
value of AVLs investment in the Blesberg Project in the 2019 Financial Year. Accordingly, it is highly
probable that the future vesting conditions pertaining to these rights will not materialise. No expense has
been recognised to date as it is not probable that the conditions pertaining to these rights will be satisfied.
2 Converted to ordinary shares during the period.
3 Vesting condition in respect of rights granted to staff required continuous employment from grant date of
rights to 31 March 2019.
13(f) Fair Value Reserve
The fair value reserve records movements in financial assets classified as fair value through Other
Comprehensive Income in accordance with AASB 9 Financial Instruments.
.
Fair value reserve
2019
(802,500)
(802,500)
CONSOLIDATED
2018
(562,500)
(562,500)
13(g) Share-Based Payment Reserve
The share-based payments reserve is used to recognise the fair value of options or performance
rights issued.
Share-based payment reserve
2019
70,491
70,491
CONSOLIDATED
2018
-
-
47
Australian Vanadium Limited 2019 Annual Report
The Share Based Payment Reserve records the cumulative value of services received for the
issue of share options and/or performance rights. When the securities are exercised the amount in
the share option reserve is transferred to share capital.
On the 17 December 2018, following Board approval, a total of 2,517,550 Performance Rights
were granted to certain eligible employees of the Company. The securities can be exercised for nil
consideration and have the following vesting conditions: (i) Performance Rights vest on completion
of continuous employment with the Company on vesting date being 31 March 2019.
The performance right issued have been valued using a Black-Scholes model with the following
parameters:
• Underlying Share Price at issue: $0.028
• Option Exercise Price: $nil
• Volatility: 97%
• Effective Interest Rate: 1.52%
• Expiry date: 31 December 2019
14. COMMITMENTS
The Group has certain obligations to perform minimum exploration work and to expend minimum
amounts of money on such work on mining tenements. These obligations may be varied from time
to time subject to approval and are expected to be fulfilled in the normal course of the operations of
the Group. These commitments have not been provided for in the accounts.
14(a) Exploration Commitments
Minimum expenditure commitment on the tenements is:
Payable no later than 1 year
Payable between 1 year and 5 years
14(b) Operating Lease Commitments
Minimum lease payments payable for non-cancellable
operating leases contracted for but not recognised in the
financial statements:
Payable no later than 1 year
Payable between 1 year and 5 years 1
2019
$
CONSOLIDATED
2018
$
329,460
1,687,840
2,017,300
254,460
295,400
549,860
57,685
-
57,685
93,410
57,685
151,095
The non-cancellable lease is for office premises.
1 The current office lease is due to expire on 29 February 2020. Management expects that the lessor will
agree to an extension of the current lease arrangements on reasonable commercial terms. However, at
the date of this report the lease rental terms have not been concluded and therefore, the future financial
obligation is uncertain.
48
Australian Vanadium Limited 2019 Annual Report
15. CONTINGENT LIABILITIES
It is possible that native title, as defined in the Native Title Act 1993, might exist over land in which
the Group has an interest. It is impossible at this stage to quantify the impact (if any) that the
existence of native title may have on the operations of the Group. However, at the date of this
report, the Directors are aware that applications for native title claims have been accepted by the
Native Title Tribunal over Group tenements.
16. SEGMENT INFORMATION
AASB 8 requires a ‘management approach’ under which segment information is presented on the
same basis as that used for internal reporting purposes. The Board as a whole will regularly review
the identified segments in order to allocate resources to the segment and to assess its
performance.
The Group has identified two operating segments for 2019 being:
Exploration
Energy storage
Consisting of The Australian Vanadium Project and
other exploration projects
VSUN Energy Pty Limited’s vanadium redox flow
battery marketing and sales activities.
Segment revenues, assets and liabilities are those that are directly attributable to a segment and
the relevant portion that can be allocated to the segment on a reasonable basis. Segment assets
include all assets used by a segment and primarily consist of plant and equipment and project
tenements. Segment Liabilities consist primarily of trade and other creditors and employee
entitlements.
The following tables present revenue, expenditure and asset information regarding operating
segments for the year ended 30 June 2019.
Sales to external customers
Other revenue
Exploration
Consolidated
$
-
123,606
Energy
Storage
$
942
-
Unallocated
$
-
108,392
Total segment revenue
123,606
942
108,392
$
942
231,998
232,940
Total segment results
(231,563)
(110,389)
(4,874,736)
(5,216,688)
Total segment assets
21,750,922
141,823
5,386,202
27,278,947
Total segment liabilities
Impairment of assets
Depreciation and amortisation
Interest income
1,197,681
(3,296,846)
-
-
9,421
-
(23,695)
-
133,420
-
(38,966)
108,392
1,340,522
(3,296,846)
(62,661)
108,392
49
Australian Vanadium Limited 2019 Annual Report
17. RELATED PARTY TRANSACTIONS
17(a) Subsidiaries
The consolidated financial statements include the financial statements of Australian Vanadium
Limited and the subsidiaries listed in the following table.
Country of
Incorporation
Australian Uranium Pty Ltd
Cabe Resources Ltd
VSUN Energy Pty Ltd 1
South African Lithium Pty Ltd
Australia
Australia
Australia
South Africa
1 Formerly Australian Vanadium Resources Pty Ltd.
Equity
2019
%
100
100
100
100
Holding
2018
%
100
100
100
100
Principal Activities
Mineral exploration
Mineral exploration
Energy storage
Mineral exploration
17(b) Director-Related Entities
The Group engaged the following entities during the financial year for the following services on
normal commercial terms: Nil.
18. PARENT ENTITY DISCLOSURES
18(a) Summary Financial Information
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Total Liabilities
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Financial performance
Loss for the year
Other comprehensive income
Total comprehensive loss
2019
$
PARENT
2018
$
4,566,572
22,481,343
5,289,132
19,186,217
27,047,915
24,475,349
1,109,490
1,109,490
129,834
129,834
83,411,483
(732,009)
(56,741,049)
76,177,289
(562,500)
(51,269,274)
25,938,425
24,345,515
(4,011,043)
(240,000)
(2,401,874)
(562,500)
(4,251,043)
(2,964,374)
18(b) Guarantees
Australian Vanadium Limited has not entered into any guarantees.
50
Australian Vanadium Limited 2019 Annual Report
18(c) Other Commitments and Contingencies
Australian Vanadium Limited (parent entity) has exploration commitments and operating lease
commitments as described in Note 14. It has no contingent liabilities other than those discussed in
Note 15.
19. KEY MANAGEMENT PERSONNEL DISCLOSURES
19(a) Compensation of Key Management Personnel
Refer to the remuneration report contained in the Directors’ Report for details of the
remuneration paid or payable to each member of the Group’s key management personnel.
Director and executive disclosures
Compensation of key management personnel
Short-term personnel benefits
Post-employment benefits
Share based payments
2019
$
CONSOLIDATED
2018
$
820,334
71,282
34,146
925,762
586,648
45,868
492,000
1,124,516
19(b) Loans and Other Transactions with Key Management Personnel
There were no loans to key management personnel or their related entities during the financial
year. Other transactions with key management personnel are described in Note 17(b).
20. SHARE-BASED PAYMENTS
20(a) Share-Based Payments Expensed
A total of $206,466 was expensed as share-based payments for the period ended 30 June 2019
(30 June 2018: $630,680). Refer to Note 2(b) for an analysis of the beneficiaries in respect of
rights granted during the period. Refer to Note 13(e) for disclosure of the vesting conditions and
Note 13(g) for disclosure on the method of valuing the rights.
20(b) Summary of Options Granted as Share-Based Payments
No options were issued as share-based payments during the year ended 30 June 2019 (30 June
2018: nil).
20(c) Performance Rights
No Performance Rights were granted to Directors during the year ended 30 June 2019 (30 June
2018: nil). Refer to the Remuneration Report for the terms and conditions of previously issued
rights.
21. FINANCIAL RISK MANAGEMENT
The consolidated entity’s principal financial instruments comprise receivables, payables, cash and
short-term deposits. The consolidated entity manages its exposure to key financial risks in
accordance with the consolidated entity’s financial risk management policy. The objective of the
policy is to support the delivery of the consolidated entity’s financial targets while protecting future
financial security.
51
Australian Vanadium Limited 2019 Annual Report
The main risks arising from the consolidated entity’s financial instruments are interest rate risk,
credit risk and liquidity risk. The consolidated entity does not speculate in the trading of derivative
instruments. The consolidated entity uses different methods to measure and manage different
types of risks to which it is exposed. These include monitoring levels of exposure to interest rates
and assessments of market forecasts for interest rates. Ageing analysis of and monitoring of
receivables are undertaken to manage credit risk, liquidity risk is monitored through the
development of future rolling cash flow forecasts.
The Board reviews and agrees policies for managing each of these risks as summarised below.
Primary responsibility for identification and control of financial risks rests with the Board. The Board
reviews and agrees policies for managing each of the risks identified below, including for interest
rate risk, credit allowances and cash flow forecast projections.
Details of the significant accounting policies and methods adopted, including the criteria for
recognition, the basis of measurement and the basis on which income and expenses are
recognised, in respect of each class of financial asset and financial liability are disclosed in note 1
to the financial statements.
Interest Rate Risk
21(a)
The consolidated entity’s exposure to risks of changes in market interest rates relates primarily to
the consolidated entity’s cash balances. The consolidated entity constantly analyses its interest
rate exposure. Within this analysis consideration is given to potential renewals of existing
positions, alternative financing positions and the mix of fixed and variable interest rates. As the
consolidated entity has no interest-bearing borrowings its exposure to interest rate movements is
limited to the amount of interest income it can potentially earn on surplus cash deposits. The
following sensitivity analysis is based on the interest rate risk exposures in existence at the
reporting date.
At the reporting date, the consolidated entity had the following financial assets exposed to variable
interest rates that are not designated in cash flow hedges:
Financial assets
Cash and cash equivalents (interest bearing accounts)
2019
$
CONSOLIDATED
2018
$
4,417,373
4,417,373
5,152,782
5,152,782
The following sensitivity analysis is based on the interest rate risk exposures in existence at the
reporting date.
52
Australian Vanadium Limited 2019 Annual Report
At the reporting date, if interest rates had moved as illustrated in the table below, with all other
variables held constant, post-tax profit and equity relating to financial assets of the consolidated
entity would have been affected as follows:
Estimates of reasonably possible movements:
Post tax profit – higher/(lower)
+0.5%
-0.5%
Equity – higher/(lower)
+0.5%
-0.5%
2019
$
CONSOLIDATED
2018
$
24,739
(24,739)
24,739
(24,739)
13,133
(13,133)
13,133
(13,133)
21(b) Liquidity Risk
The consolidated entity has no significant exposure to liquidity risk as there is effectively no debt.
The consolidated entity manages liquidity risk by monitoring immediate and forecast cash
requirements and ensuring adequate cash reserves are maintained.
21(c) Credit Risk
Credit risk arises from the financial assets of the consolidated entity, which comprise deposits with
banks and trade and other receivables. The consolidated entity’s exposure to credit risk arises
from potential default of the counter party, with the maximum exposure equal to the carrying
amount of these instruments. The carrying amounts of financial assets included in the statement of
financial position represents the consolidated entity’s maximum exposure to credit risk in relation to
those assets.
The consolidated entity does not hold any credit derivatives to offset its credit exposure. The
consolidated entity trades only with recognised, creditworthy third parties and as such collateral is
not requested nor is it the consolidated entity’s policy to securitise its trade and other receivables.
Receivable balances are monitored on an ongoing basis with the result that the consolidated entity
does not have a significant exposure to bad debts.
There are no significant concentrations of credit risk within the consolidated entity.
21(d) Capital Management Risk
Management controls the capital of the consolidated entity in order to maximise the return to
shareholders and ensure that the Group can fund its operations and continue as a going concern.
Management effectively manages the Group’s capital by assessing the consolidated entity’s
financial risks and adjusting its capital structure in response to changes in these risks and in the
market. These responses include the management of expenditure and debt levels and share and
option issues.
The consolidated entity has no external loan debt facilities other than trade payables. There have
been no changes in the strategy adopted by management to control capital of the consolidated
entity since the prior year.
53
Australian Vanadium Limited 2019 Annual Report
21(e) Commodity Price and Foreign Currency Risk
The consolidated entity’s exposure to price and currency risk is minimal given the consolidated
entity is still in the exploration phase.
21(f) Fair Value
The methods of estimating fair value are outlined in the relevant notes to the financial statements.
All financial assets and liabilities recognised in the statement of financial position, whether they are
carried at cost or fair value, are recognised at amounts that represent a reasonable approximation
of fair values unless otherwise stated in the applicable notes.
22. EVENTS SUBSEQUENT TO THE REPORTING DATE
On 23 September 2019, the Company announced that a total of $6,594,975 had been raised from
a successful Share Purchase Plan (SPP), first announced on 21 August 2019, and a
supplementary placement of new shares at the same price as the SPP. Subsequently,
450,250,404 new shares were issued under the SPP and commenced trading on 27 September
2019. A further 123,226,087 new shares were issued for the Placement making it a combined total
of 573, 476,491 new shares issued.
No other matters or circumstances have arisen since the end of the financial year which
significantly affected, or may significantly affect, the operations of the Company, the results of
those operations, or the state of affairs of the Company in subsequent financial years, other than
as outlined in the Company’s review of operations which is contained in this Annual Report.
54
Australian Vanadium Limited 2019 Annual Report
Directors’ Declaration
The Directors of the Company declare that:
1.
the financial statements and notes set out on pages 25 to 54 are in accordance with the
Corporations Act 2001 including:
a.
complying with Accounting Standards, the Corporations Regulations 2001 and other
mandatory professional reporting requirements, and
giving a true and fair view of the consolidated entity’s financial position as at 30 June
2019 and of the performance for the year ended on that date, and;
b.
2.
in the Directors’ opinion, there are reasonable grounds to believe that the Company will be
able to pay its debts as and when they become due and payable.
The Directors have been given the declarations by the Managing Director and chief financial
officer pursuant to Section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Board of Directors.
Brenton Lewis, Chairman
27 September 2019
55
Australian Vanadium Limited 2019 Annual Report
56
Australian Vanadium Limited 2019 Annual Report
57
Australian Vanadium Limited 2019 Annual Report
58
Australian Vanadium Limited 2019 Annual Report
59
Australian Vanadium Limited 2019 Annual Report
60
Australian Vanadium Limited 2019 Annual Report
61
Australian Vanadium Limited 2019 Annual Report
Annual Mineral Resource Statement
1.
THE AUSTRALIAN VANADIUM PROJECT - MINERAL
RESOURCE STATEMENT
A summary of the Mineral Resources at The Australian Vanadium Project as at 30 June 2019 is
shown in Table 5 below.
The updated Mineral Resource estimation was carried out Trepanier Pty Ltd, resulting in the
estimation of Measured, Indicated, and Inferred Mineral Resources. All mineralised domains, are
reported above 0.4% V2O5 for the low-grade ore zones and above 0.7% V2O5 within the high-grade
zones.
The Mineral Resource estimate consists of:
•
•
183.6 million tonnes at 0.76% V2O5 containing 1,399,900 tonnes of V2O5;
A discrete massive high-grade zone of 96.7 million tonnes at 1.00% V2O5 containing 964,300
tonnes of V2O5;
Discrete low-grade zones of 82.5 million tonnes at 0.49% V2O5 containing 407,200 tonnes of
V2O5, and
Combined Measured and Indicated Mineral Resources of 50.8 Million tonnes at 0.75% V2O5 in
low and high-grade zones containing 382,400t V2O5.
•
•
Table 5 The Australian Vanadium Project Mineral Resources Statement (as at 30 June 2019)
Zone
Classification
Measured
Indicated
Inferred
MT
10.2
12.1
74.5
V2O5
%
1.11
1.05
0.97
Fe
%
42.7
43.8
42.1
TiO2
%
12.6
11.9
11.2
SiO2
%
10.2
10.6
11.6
Al2O3
%
8.0
7.6
7.6
LOI
%
3.9
3.5
3.4
Sub-total
96.7
1.00
42.4
11.4
11.3
7.7
3.5
HG 10
LG 2-5
Measured
Indicated
Inferred
-
28.6
53.9
-
0.50
0.49
-
24.6
25.3
-
6.9
6.7
-
27.5
27.5
-
17.9
16.4
Sub-total
82.5
0.49
25.1
6.8
27.5
16.9
Transported
6-8
Measured
Indicated
Inferred
-
-
4.4
-
-
0.65
-
-
28.2
-
-
7.2
-
-
24.7
-
-
16.7
Sub-total
4.4
0.65
28.2
7.2
24.7
16.7
Total
Measured
Indicated
Inferred
10.2
40.7
132.7
1.11
0.66
0.77
42.7
30.3
34.8
12.6
8.3
9.2
10.2
22.5
18.5
8.0
14.8
11.5
Sub-total
183.6
0.76
34.3
9.2
18.9
12.1
62
-
8.6
7.3
7.7
-
-
8.5
8.5
3.9
7.1
5.1
5.5
Australian Vanadium Limited 2019 Annual Report
2. MATERIAL CHANGES AND RESOURCE STATEMENT
COMPARISON
A comparison between the 2018 and 2019 Mineral Resource Estimates for The Australian
Vanadium Project is shown in Table 2 below.
Table 6 The Australian Vanadium Project Comparison Between 2018 and 2019 Mineral Resource Estimates
JORC Resource
Class
Tonnes
Million
V2O5
%
Fe
%
TiO2
%
SiO2
%
Al2O3
%
LOI
%
Estimate as at
30 June 2019
Measured
Indicated
Inferred
10.2
40.7
132.7
1.11
0.66
0.77
42.7
30.3
34.8
12.6
8.3
9.2
10.2
22.5
18.5
8.0
14.8
11.5
Total
183.6
0.76
34.3
9.2
18.9
12.1
Estimate as at
30 June 2018
Measured
Indicated
Inferred
10.1
24.0
141.4
1.11
0.63
0.77
42.7
27.9
35.0
12.6
8.0
9.2
10.3
24.2
18.5
8.0
16.0
11.5
Total
175.5
0.77
34.5
9.3
18.8
11.9
3.9
7.1
5.1
5.5
4.0
7.7
5.2
5.5
The updated estimation represented a 4.6% increase in the overall Resource, a 1% increase in the
Measured Resource, a 69% increase in the Indicated Resource and a 6% decrease in the Inferred
Resource categories for the Project compared to the 2018 estimation.
The revised estimate was produced following a further drill campaign of 19 RC holes for 1,863m
and three diamond holes for 368.2m of HQ diamond core.
The Group is not aware of any new information or data that materially affects the information as
previously released and all material assumptions and technical parameters underpinning the
estimates continue to apply and have not materially changed.
3. GOVERNANCE ARRANGEMENTS AND INTERNAL
CONTROLS
The Group has appropriate systems in place and suitably qualified and competent geological
consultants to complete any resource estimation or review to the required standards as shown in
the 2012 JORC Code Guidelines. The Quality Assurance, Sampling Systems, Assay Procedures,
Data Recording, Interpretation Standards and Resource Estimation Methods and other parameters
as set out in Table 1 of the JORC Code 2012 Guidelines are closely followed. The mineral
resources reported have been generated by independent external consultants where appropriate
who are experienced in best practices in modelling and estimation methods. The consultants have
also undertaken reviews of the quality and suitability of the underlying information used to
determine the resource estimate. In addition, management carries out regular reviews and audits
of internal processes and external contractors that have been engaged by the group.
63
Australian Vanadium Limited 2019 Annual Report
The Company policy is that all steps are recorded during the resource drilling program and then
the estimation stage. All results from field logs and assays to database entries and modelling data
are validated, reviewed and checked by independent and qualified geological personnel.
Competent Person Statement – Mineral Resource Estimation
The information in this report relating to The Australian Vanadium Project Mineral Resource
estimate reported is based on and fairly represents information compiled by Mr Lauritz Barnes,
(Consultant with Trepanier Pty Ltd) and Mr Brian Davis (Consultant with Geologica Pty Ltd). Mr
Davis is a shareholder of Australian Vanadium Limited. Mr Barnes and Mr Davis are members of
the Australasian Institute of Mining and Metallurgy and have sufficient experience of relevance to
the styles of mineralisation and types of deposits under consideration, and to the activities
undertaken to qualify as Competent Persons as defined in the 2012 Edition of the Joint Ore
Reserves Committee (JORC) Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves. Specifically, Mr Barnes is the Competent Person for the estimation
and Mr Davis is the Competent Person for the database, geological model and site visits. Mr
Barnes and Mr Davis consent to the inclusion in this report of the matters based on their
information in the form and context in which they appear.
Competent Person Statement – Exploration Results and Exploration Targets
The information in this report that relates to Exploration Results and Exploration Targets is based
on and fairly represents information and supporting documentation prepared by Mr Brian Davis
(Consultant with Geologica Pty Ltd). Mr Davis is a shareholder of Australian Vanadium Limited. Mr
Davis is a member of the Australasian Institute of Mining and Metallurgy and has sufficient
experience of relevance to the styles of mineralisation and types of deposits under consideration,
and to the activities undertaken to qualify as Competent Persons as defined in the 2012 Edition of
the Joint Ore Reserves Committee (JORC) Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves. Specifically, Mr Davis consents to the inclusion in
this report of the matters based on his information in the form and context in which they appear.
Competent Person Statement – Metallurgical Results
The information in this announcement that relates to Metallurgical Results is based on
information compiled by independent consulting metallurgist Brian McNab (CP. B.Sc Extractive
Metal-lurgy), Mr McNab is a Member of AusIMM. Brian McNab is employed by Wood Mining
and Metals. Mr McNab has sufficient experience which is relevant to the style of mineralisation
and type of deposit under consideration and to the activity which is undertaken, to qualify as a
Competent Person as defined in the JORC 2012 Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves. Mr McNab consents to the inclusion in the
announcement of the matters based on the information made available to him, in the form and
context in which it appears.
64
Australian Vanadium Limited 2019 Annual Report
4. SCHEDULE OF INTERESTS IN MINING TENEMENTS
AS AT 23 SEPTEMBER 2019
Project
Tenement
Area
Equity
Australian Vanadium E51/843
Australian Vanadium E51/1396
Australian Vanadium E51/1534
Australian Vanadium E51/1576
Australian Vanadium E51/1685
Australian Vanadium E51/1694
Australian Vanadium E51/1695
Australian Vanadium P51/2566
Australian Vanadium P51/2567
Australian Vanadium P51/2634
Australian Vanadium MLA 51/878
Australian Vanadium E51/1899
E70/4924
Coates
M51/771
Nowthanna Hill
(NC) 940 PR
Blesberg
Total
18 blocks
1 block
8 blocks
10 blocks
15 blocks
14 blocks
2 blocks
147.66 ha
111.66 ha
171.85 ha
3,563.0 ha
16 blocks
1 block
301.0 ha
887 ha
100%1
100%1
100%1
100%1
100%1
100%1
100%1
100%1
100%1
100%1
100%1
100%
100%
100%
Nil 2
Annual
Expenditure
Commitment
$70,000
$20,000
$30,000
$30,000
$20,000
$20,000
$15,000
$5,920
$4,480
$3,960
Application
Application
$15,000
$30,100
-
$264,460
1 Mineral Rights for V/U/Co/Cr/Ti/Li/Ta/Mn & iron ore only.
Bryah Resources Limited retains 100% rights all minerals except V/U/Co/Cr/Ti/Li/Ta/Mn & iron ore on The
Australian Vanadium Project.
2 AVL has the right to acquire up to 50.03% interest in the holding company that owns 100% interest in
Prospecting Right (NC) 940 PR
65
Australian Vanadium Limited 2019 Annual Report
ASX Additional Information
Additional information required by the ASX Listing Rules not disclosed elsewhere in this Annual
Report is set out below. The information is current as at 23 September 2019.
1. DISTRIBUTION OF EQUITY SECURITIES
Analysis of numbers of equity security holders by size of holding:
Listed Shares,
Fully Paid Ordinary
Range
No of Holders
Number of shares
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001+
Total
154
165
300
3,624
2,395
6,639
31,328
500,847
2,737,033
166,772,960
1,803,801,619
1,973,843,787
Unlisted Shares,
Partly Paid Ordinary
Range
No of Holders
Number of shares
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001+
Total
-
-
-
-
5
5
-
-
-
-
80,000,000
80,000,000
Unmarketable Parcels
There were 2,316 holders of less than a marketable parcel of ordinary shares.
2. UNQUOTED SECURITIES
Holders of more than 20% of the abovementioned unquoted securities are:
Holder Name
Woolmaton Pty Ltd
Continue reading text version or see original annual report in PDF format above