More annual reports from Avino Silver & Gold Mines Ltd:
2023 ReportAnnual
Report
2021
Competent Persons
Previously reported information
The Mineral Resources and Ore Reserves Statement
as a whole has been approved by Mr D Ian Chalmers,
FAusIMM, FAIG, (Non-Executive Director), who has
sufficient experience which is relevant to the style of
mineralisation and type of deposit under consideration
and to the activity which he is undertaking to qualify as a
Competent Person as defined in the 2012 Edition of the
‘Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves’. Mr Chalmers has
provided his prior written consent to the inclusion in
this report of the Mineral Resources and Ore Reserves
Statement in the form and context in which it appears.
The information in this report that relates to the Dubbo
Project Mineral Resource estimates is based on, and
fairly represents, information which has been compiled
by Mr Stuart Hutchin, MIAG, and an employee of Mining
One Pty Ltd. Mr Hutchin has sufficient experience that
is relevant to the style of mineralisation and type of
deposit under consideration and to the activity that is
being undertaken to qualify as a Competent Person as
defined in the 2012 Edition of the ‘Australasian Code for
Reporting of Exploration Results, Mineral Resources and
Ore Reserves’.
The information in this report that relates to the Dubbo
Project Ore Reserve estimate is based on, and fairly
represents, information which has been compiled by Mr
Levan Ludjio MAusIMM(CP) and Mr Mark Van Leuven
FAusIMM (CP), employees of Mining One Pty Ltd. Mr
Ludjio and Mr Van Leuven have sufficient experience
that is relevant to the style of mineralisation and type of
deposit under consideration and to the activity that is
being undertaken to qualify as a Competent Person as
defined in the 2012 Edition of the ‘Australasian Code for
Reporting of Exploration Results, Mineral Resources and
Ore Reserves’.
The information in this report that relates to previously
reported exploration results is extracted from the
Company’s ASX announcements noted in the text
of the announcement and are available to view on
the Company’s website. The Company confirms that
it is not aware of any new information or data that
materially affects the information included in the original
announcements and that the form and context in which
the Competent Person’s findings are presented have not
been materially altered.
Disclaimer
This report contains certain forward-looking statements
and forecasts, including possible or assumed reserves
and resources, production levels and rates, costs, prices,
future performance or potential growth of Australian
Strategic Materials Ltd, industry growth or other trend
projections. Such statements are not a guarantee of
future performance and involve unknown risks and
uncertainties, as well as other factors which are beyond
the control of Australian Strategic Materials Ltd. Actual
results and developments may differ materially from
those expressed or implied by these forward-looking
statements depending on a variety of factors. Nothing in
this report should be construed as either an offer to sell
or a solicitation of an offer to buy or sell securities.
This document has been prepared in accordance with
the requirements of Australian securities laws, which may
differ from the requirements of United States and other
country securities laws. Unless otherwise indicated, all
Ore Reserve and Mineral Resource estimates included
or incorporated by reference in this document have
been, and will be, prepared in accordance with the
JORC classification system of the Australasian Institute
of Mining, and Metallurgy and Australian Institute of
Geosciences.
2
2021 Australian Strategic Materials Annual Report Company
information
ACN 168 368 401
Directors
I J Gandel (Non-Executive Chair)
D G Woodall (Managing Director)
N P Earner (Non-Executive Director)
D I Chalmers (Non-Executive Director)
G Smith (Non-Executive Director)
Joint Company Secretaries
J Jones (appointed 2 August 2021)
D Wilkins
J Carter (resigned 2 August 2021)
Registered office and principal place of business
Level 4, 66 Kings Park Road, West Perth WA 6005
Telephone: 61 8 9200 1681
Website
www.asm-au.com
Share registry
Advanced Share Registry Limited
110 Stirling Highway, Nedlands WA 6009
Telephone: 61 8 9389 8033 | Facsimile: 61 8 9262 3723
Auditor
PricewaterhouseCoopers
Brookfield Place, 125 St Georges Terrace,
Perth WA 6000
Securities exchange listing
Australian Securities Exchange (Perth)
Australian Strategic Materials Ltd shares are listed on the
Australian Securities Exchange (ASX code: ASM)
Admitted to the Official List of ASX on 29 July 2020
In the spirit of reconciliation, ASM acknowledges the Traditional Custodians of country throughout Australia and their
connections to land, sea and community. We pay our respect to their Elders past, present and emerging, and extend that
respect to all Aboriginal and Torres Strait Islander peoples today.
3
2021 Australian Strategic Materials Annual Report Contents
Business Review
Chair’s Message
Company
Metals Business
Dubbo Project
ESG
Financial Report
Directors’ Report
Auditor’s Independence Declaration
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Additional Information
Shareholder information
Corporate Governance Statement
Schedule of mining tenements
5
6
8
13
17
21
27
28
42
43
49
77
78
83
83
85
85
4
2021 Australian Strategic Materials Annual Report Business
Review
Business Review / Message from the Chair
Message
from the Chair
I’m delighted to present the 2021
Annual Report for Australian Strategic
Materials Ltd (ASM), marking the end
of a momentous first year as a listed
company.
IAN GANDEL, CHAIR
ASM has experienced a remarkable year since
demerging from Alkane Resources in July 2020, forging
its own identity as an emerging integrated “mine to
metal” producer of critical metals. The outcome has
been extraordinarily successful and beneficial for
shareholders.
Our primary focus for the year has been establishing
our metals business, founded on the innovative low-
energy process for refining high-purity metals from
oxides, developed by our South Korean team. The
resounding success of the pilot program, initially in
joint venture with Ziron Tech, led to ASM’s acquisition
of 95% of Ziron Tech, including the pilot plant and all
related intellectual property. Commercial scalability of
the process was confirmed in November 2020, and in
March this year a scoping study confirmed feasibility
and strong economics for development of a 5,200tpa
commercial metals plant in South Korea.
On behalf of the Board, I welcome and thank our South
Korean team, led by Frank Moon, ASM’s President Asia,
for their excellent work over the past year. The metals
plant in Ochang, South Korea, will initially produce
titanium and rare earth magnet alloys for the South
Korean manufacturing sector. We intend it to be the
first of several metals plants around the world.
Our Dubbo Project, a long-term resource of rare
earths, zirconium, niobium and hafnium, remains
a core component of ASM’s “mine to metal” strategy.
Over the past year, our Australian engineering team
has focused on updating and optimising the project
design, cost and revenues. This includes identifying
opportunities to further reduce the project’s
environmental footprint in support of our goal of
achieving net zero carbon operational emissions.
6
2021 Australian Strategic Materials Annual Report Business Review / Chair’s Message
Business Review / Message from the Chair
In July 2021, ASM signed a conditional framework agreement with a consortium of South Korean investors for the
acquisition of a 20% equity interest in ASM’s Dubbo Project holding company. The signing ceremony was attended by (L
to R): Ms Catherine Raper, Australian Ambassador to the Republic of Korea; Mr David Ko, CEO of ACE Equity Partners LLC;
Mr PS Ra, CEO of Cerritos Holdings Co. Ltd; Mr Jerry Kwak, CEO of Kamur Partners LLC; Mr Ian Gandel, Chair of ASM; The
Honourable Mr Dan Tehan, Australian Minister for Trade, Tourism and Investment; and Mr David Woodall, Managing
Director of ASM.
We are also delighted with the recent steps made
towards financing and securing a strategic partner for
the Dubbo Project. In June, Export Finance Australia
confirmed conditional finance support to secure
$200 million of debt funding. Then in July we were
pleased to announce a conditional framework agreement
with a consortium of South Korean investors for the
acquisition of a 20% equity interest in ASM’s Dubbo
Project holding company.
The year ahead promises to be tremendously exciting,
as ASM transitions into commercial operations with our
South Korean metals plant, and heads towards breaking
ground at the Dubbo Project. This could not be achieved
without the support of a great many people at ASM in
both Australia and South Korea, our consultants and key
partners at Alkane, along with our many shareholders
and stakeholders. My thanks to you all for your ongoing
support.
On behalf of the Board, I extend my sincere thanks to
our Managing Director, David Woodall, for his tireless
and inspirational efforts over the past year, which
involved him spending many months in South Korea
and in quarantine, away from his family. I also take
the opportunity to welcome the members of our new
executive team who joined ASM in July. They are a
diverse team with considerable experience and energy,
hand-picked to help drive ASM through the next phase
of growth and development.
Ian Gandel
Chair, Australian Strategic Materials Ltd
7
2021 Australian Strategic Materials Annual Report Business Review / Company
Company
ASM listed on the ASX in July 2020. In its first year as a listed
company, ASM commenced implementation of its strategy to
become an integrated “mine to metal” producer of critical metals
for use in advanced and clean technologies.
About ASM
Australian Strategic Materials Ltd (ASM) is an emerging
integrated producer of critical metals for advanced
and clean technologies. The Company’s “mine to metal”
strategy is to extract, refine and manufacture high-purity
metals and alloys, supplying direct to global technology
manufacturers.
The two key pillars of ASM’s integrated business are:
1. Establishment of metals plants in strategic global
locations to produce high-purity critical metals, alloys
and powders; and
2. Mining and recovery of critical metal oxides from the
polymetallic Dubbo Project, about 400km northwest of
Sydney, Australia.
ASM is establishing its first commercial-scale metals
plant in Ochang, South Korea (Korean Metals Plant).
Metals production is founded on an innovative, low-
energy metallisation process that has less environmental
impact than conventional methods. The Korean Metals
Plant will produce a range of high-purity metal products
from market-sourced raw materials and, in time, the
Dubbo Project. Key products will include rare earth and
titanium alloys and powders to support clean energy,
electric vehicle, aerospace and med-tech manufacturing
industries.
ASM intends to embed metals plants within key global
technology markets, enabling seamless integration with
manufacturing supply chains. This approach simplifies,
diversifies and de-risks the supply chain for the global
tech industry. It will also maximise the value captured
along the supply chain, adding significant value for
shareholders, strategic partners and Australia.
The Dubbo Project is founded on a large polymetallic
resource containing rare earths, zirconium, niobium, and
hafnium. ASM intends to develop the project to produce
oxides for refining into critical metals at ASM’s proposed
metals plants. The Dubbo Project achieved government
approval in 2015 and has key licences in place. ASM is
progressing optimisation, financing and strategic partner
agreements for the project, which will be a flagship for
clean resource development.
Demerger from Alkane Resources Ltd
ASM was founded in 2000 by Alkane Resources Ltd
(ASX:ALK). Alkane shareholders voted to demerge at an
Extraordinary General Meeting on 16 July 2020. ASM was
admitted to the ASX on 29 July 2020 and first quoted on
30 July 2020 (ASX:ASM).
In the year since listing, ASM has achieved significant
growth.
8
2021 Australian Strategic Materials Annual Report Business Review / Company
Our Core Values
Integrity
We will
Innovation
We will
• act with personal integrity and fairness
• promote continuous improvement
• communicate openly, honestly and constructively
• encourage and value new ideas
• build and maintain trust with our work mates
• assess and provide constructive feedback
• be transparent in approaches to each other
• be prepared to ask “Why?” and challenge boundaries
• act with “walk the talk”
Effectiveness
We will
• be performance- and outcome-orientated
•
focus on business goals and objectives
• assess appropriate allocation of resources, energy
and time when undertaking tasks
• demonstrate constructive and deliberate actions to
ensure delivery of service
• seek out opportunities for personal and professional
growth
Sustainability
We will
• surpass our shareholders’ expectations
•
•
think both short- and long-term
foster business relationships
• deliver on our obligations to environment and
community
Safety and Wellbeing
We will
• operate according to company plans, standards,
policies, procedures and guidelines
• demonstrate a duty of care to self and others
• be vigilant for and promote safety improvements
•
identify hazards and control them in a timely manner
• demonstrate a balance between working and home life
•
regularly benchmark our performance against similar
businesses with the objective to improve
•
think ahead, anticipate obstacles and provide solutions
• demonstrate initiative
• celebrate successes
Professionalism
We will
• be accountable and follow through with
commitments
• volunteer and demonstrate enthusiasm for
challenges
• operate with a bias for action
• strive to exceed the standards and expectations of
the business
•
lead by example, influence others in a positive way
and acknowledge mistakes
Transparency
We will
• seek feedback in order to achieve open
communication and foster collaboration
• offer constructive feedback to others that is timely,
specific and descriptive
• be proactive in communicating outcomes across our
sites and to the corporate team
9
2021 Australian Strategic Materials Annual Report Business Review / Company
Leadership team
The ASM executive team is led by Managing Director,
David Woodall. Post close of the 2021 financial year, ASM
announced its new executive team, hand-picked to take
the Company through the next phase of growth and
development.
The ASM executive team comprises:
• David Woodall – Managing Director
• Rowena Smith – Chief Operating Officer
•
•
Jason Clifton – Chief Financial Officer
Julie Jones – General Counsel and Joint
Company Secretary
• Frank Moon – President Asia
• Tess Lackovic – Chief Culture Officer
• Peter Simko – Chief Information Officer
About critical metals
The building blocks of new technologies are advanced
materials, many of which rely on critical metals. Critical
metals are so-named because they are in high demand,
limited supply, and cannot currently be substituted with
any other element to obtain the required functional
materials properties.
Producing critical metals takes a number of metallurgical
processing steps. Once extracted from the ground, the
ore is crushed and processed through several stages to
recover the metals as oxides. These metal oxides are then
converted into metals using electrorefining techniques.
Titanium
Titanium is the ninth most abundant
element on the planet. However, most
of its mined raw materials are used for
white titanium dioxide pigments, with less
than 5% undergoing intensive processing
to recover titanium metal. The titanium industry stands
to benefit from the rise of 3D printing, which creates
components without the high waste incurred through
metal machining. Titanium metal is used in 3D printing of
components for aerospace, defence, sports equipment
and medical technologies.
ASM’s innovative metallisation process consumes
significantly less energy in producing titanium, which will
also help reduce the costs of titanium manufacturing.
Rare earths
Rare earths are a group of critical metals
with unique beneficial properties, used in
a wide range of modern technologies and
emerging industries. They are not actually
rare, and are usually found together in
geological deposits, requiring advanced metallurgical
processing to recover and separate.
Rare earths comprise the 15 lanthanide elements on
the periodic table, along with scandium and yttrium. The
most abundant rare earths are lanthanum, cerium and
neodymium, all considered light rare earths, along with
praseodymium and samarium. These elements typically
comprise approximately 85-90% of rare earth resources.
The heavy rare earth elements make up the balance
and are significantly less abundant. These comprise
europium, gadolinium, terbium, dysprosium, holmium,
erbium, thulium, ytterbium, lutetium and yttrium.
Rare earths each have their own individual demand
drivers, challenges and technology innovations. The key
driver of the rare earths industry in recent decades is
their application in permanent rare earth magnets, where
neodymium, praseodymium, dysprosium and terbium
are used.
Titanium
10
2021 Australian Strategic Materials Annual Report Business Review / Company
Rare earth magnets (e.g. neodymium-iron-boron
NdFeB magnets) are essential for a growing number
of applications involving electric motors, especially
sustainable technologies and industries, where they
are a vital component of wind turbine generators and
electric vehicles. The high energy-to-weight ratio of rare
earth magnets has also facilitated the miniaturisation
of computers, portable consumer electronics and
smart devices. Other uses include medical imaging and
diagnostic equipment, such as MRIs.
ASM will produce high-purity rare earth metals (including
neodymium, praseodymium, terbium and dysprosium)
and alloys (such as neodymium-iron-boron) suitable for
the rare earth magnet industry. Upon development, the
Dubbo Project has the potential to produce the full range
of rare earths.
Hafnium
Global demand for hafnium is on the
rise, as its unique properties make
hafnium important for a diverse range of
applications in key emerging industries.
Hafnium metal is currently highly desired
for certain aerospace and industrial alloys, while
hafnium oxide is emerging as a material of choice in
semiconductors and data storage devices.
Most of the world’s hafnium is produced as a by-product
of the nuclear industry, which needs hafnium-free
zirconium. (Hafnium is found with zirconium, from which
it needs to be extracted using advanced metallurgical
processing.) ASM has the potential to separate hafnium
and zirconium to become a new source of hafnium.
Zirconium
Zirconium has long been used in many
advanced materials and technologies relied
upon every day, as well as being a critical
element for many emerging industries
including clean energy, health and
aerospace. Today, zirconium-based ceramics are used in
solid oxide fuel cells, special alloys, dental replacements
and jet turbine coatings. Zirconium is also used in the
nuclear power industry, kidney dialysis and smartphones.
Nuclear-grade zirconium metal requires advanced
metallurgical processing to remove the small amounts of
hafnium that naturally occur with zirconium. (Hafnium is
a neutron absorber, whereas zirconium is used for its
low neutron absorption properties, along with high
resistance to heat and chemical corrosion.)
ASM has the potential to produce nuclear-grade
zirconium metal (99.9% purity), by separating
zirconium and hafnium prior to metallisation.
Niobium
The Dubbo Project will be a source of
niobium, which is mainly used as an
alloying element in high-strength
low-alloy (HSLA) steels for the construction
and automotive sectors. Niobium enables
smaller, lighter steel components for applications
including pipelines, bridges and in the transport sector,
where better fuel efficiencies and lower carbon dioxide
emissions result. Niobium alloys are also used in
aerospace rocket engine nozzles, MRIs, capacitors for
electric motors and mobile electronics.
11
2021 Australian Strategic Materials Annual Report Business Review / Company
Highlights
29 July 2020
ASM is admitted to the ASX, following demerger
from Alkane Resources Ltd.
3 November 2020
ASM acquires 95% of Ziron Tech and all the
patents and related intellectual property and
technology that were the subject of the joint
venture, including the metals pilot plant.
19 November 2020
ASM confirms commercial scalability of the
innovative, low-energy metallisation process.
1 December 2020
ASM successfully produces neodymium-
iron-boron (NdFeB) alloy from the FeNd alloy
produced at the pilot plant.
11 February 2021
Tests by KIRAM scientists strongly indicate ASM’s NdFeB
alloy is suitable to produce rare earth permanent
magnets.
2 March 2021
ASM completes a scoping study for a commercial-scale
5,200tpa metals plant in South Korea.
9 March 2021
ASM signs a Memorandum of Understanding with the
Chungcheongbuk-do (Chungbuk) Provincial Government
and Cheongju-si (Cheongju) City Government to locate
the Korean Metals Plant within the Ochang Foreign
Investment Zone in South Korea.
June quarter of 2021
ASM acquires a site in Ochang for development of its
5,200tpa Korean Metals Plant and awards contracts for
key long-lead equipment.
Dubbo Project optimisation study is progressed with the
view to updating earlier studies with the latest pricing
and design improvements.
28 June 2021
Export Finance Australia confirms $200 million
conditional finance support for the Dubbo Project.
12
2021 Australian Strategic Materials Annual Report Business Review / Metals Business
Metals Business
ASM consolidated its metals strategy with the acquisition and
successful piloting of an innovative metallisation process. The
Company progressed the development of its first commercial
metals plant in South Korea by acquiring a site within the Ochang
Foreign Investment Zone.
ASM held a “safety encouraging ceremony” at its new Ochang site in South Korea to promote good will for
construction to proceed safely. Pictured, following the ceremony, are: ASM Chair, Mr Ian Gandel; Managing
Director David Woodall; President Asia Frank Moon; and ASM’s team in South Korea.
Metallisation process development
ASM’s metals production is founded on an innovative
metallisation process for refining high-purity metals and
alloys from oxides. The process has less environmental
impact than conventional methods, and was developed
by Ziron Tech, a company established to commercialise
the process invented by scientists at Chungnam National
University in Daejeon, South Korea.
Acquisition of Ziron Tech
ASM initially entered into a joint venture partnership
with Ziron Tech to progress the final stages of research
and feasibility of the metallisation process, including
construction of a pilot plant in Daejeon.
The pilot plant was commissioned in June 2020 (Alkane
ASX Announcement 2 July 2020), successfully producing
30 kilograms of titanium alloy.
Following a number of successful production runs on the
pilot plant, ASM announced its intention to acquire 95%
of Ziron Tech in September 2020 and completed the deal
in November (ASX Announcement 3 November 2020).
Ziron Tech is now known as KSM Metals Co. Ltd. ASM
now owns all the patents and related intellectual property
and technology that were the subject of the joint venture,
including the pilot plant.
13
2021 Australian Strategic Materials Annual Report Business Review / Metals Business
ASM’s pilot plant in
Daejeon, South Korea.
Pilot plant test work
From July to December 2020, the ASM team conducted multiple production test runs on the pilot plant to prove
commercial feasibility of the process.
Through these tests, the pilot plant successfully produced high-purity neodymium, praseodymium, neodymium-
praseodymium alloy, dysprosium and zirconium – all from raw materials that could be sourced from ASM’s Dubbo
Project. Additional test runs produced titanium metal and alloys from market-sourced raw materials. Refer to the
table for a list of key test runs.
The pilot plant test work also facilitated process improvements and refinements, which improved the production
efficiency in terms of metals yield and power consumption. In the case of titanium metal, the process consumed 70%
less energy than the conventional Kroll process (ASX Announcement 27 August 2020).
ASM confirmed commercial scalability of the process with the production of two 60kg “continuous-flow” batches of
titanium copper alloy at a rate equivalent to approximately 1,000kg per day (ASX Announcement 19 November 2020).
Key outcome
Production
High-purity neodymium (Nd) metal
produced 7.6kg of neodymium metal assaying
99.8% Nd
High-purity titanium (Ti) metal
powder
produced 9.16kg titanium metal powder
assaying 99.83% Ti
ASX
ASX 30 Jul 2020
ASX 10 Aug 2020
High-purity praseodymium (Pr)
metal
produced 5.3kg praseodymium metal assaying
99.3% Pr
ASX 19 Aug 2020
produced 20.8kg titanium metal assaying
99.83% Ti
ASX 27 Aug 2020
High-purity Ti metal, and consumed
70% less energy than conventional
methods
High-purity NdPr
produced 9kg of neodymium praseodymium
(NdPr) alloy assaying 99.65%
High-purity dysprosium (Dy) metal
(heavy rare earth)
produced 7.5kg dysprosium metal assaying
99.53% Dy
High-purity industrial zirconium (Zr)
(hafniated) metal powder
produced 8.6kg zirconium metal powder,
assaying 98% Zr, 1.5% Hf
Permanent magnet alloy FeNd
produced 200kg of ferro-neodymium alloy
(FeNd - 80.3% Nd, 19.9% Fe)
ASX 8 Sep 2020
ASX 1 Oct 2020
ASX 15 Oct 2020
ASX 11 Nov 2020
Confirmed commercial scalability of
process, and doubled yield efficiency
from earlier tests
produced 120kg of titanium copper alloy
ASX 19 Nov 2020
14
2021 Australian Strategic Materials Annual Report Business Review / Metals Business
ASM’s first commercial-scale metals plant will be located in Ochang, South Korea.
NdFeB alloy development
Dehafniated zirconium
Working at the facilities of the Korean Institute of
Rare Metals (KIRAM), ASM successfully produced
neodymium-iron-boron (NdFeB) alloy from the FeNd
alloy produced at the pilot plant. NdFeB is a key alloy
used in the manufacture of rare earth permanent
magnets. KIRAM certified the metallic structure and
ratio of key metals (32%Nd, 67%Fe, 1%B) within the alloy
(ASX Announcement 1 December 2020).
KIRAM scientists then produced and evaluated
pre-sintered permanent magnets from ASM’s NdFeB
alloy powder (ASX Announcement 11 February 2021).
The testing confirmed that the microstructure and
magnetic properties of the pre-sintered magnets were
consistent with commercially available alloys. This
indicates the suitability of ASM’s NdFeB alloy to produce
rare earth permanent magnets.
Titanium powders
ASM progressed development of high-purity titanium
powders, completing a 75kg “continuous-flow”
production run at the pilot plant in January 2021.
The Company supplied 20kg of the titanium powder
for assessment to HANA AMT, a South Korean company
that produces metal parts using 3D printing.
HANA AMT performed a detailed analysis of ASM’s
titanium powder, confirming a purity of 99.918%. The
independent assay analysis demonstrated ASM’s powder
has higher purity than industry standards and is suitable
for 3D printing (ASX Announcement 9 February 2021).
The Korean Atomic Energy Institute (KAERI) confirmed
a laboratory sample of dehafniated zirconium
metal, produced from Dubbo Project ore, meets its
standards for nuclear applications (ASX Announcement
15 October 2020).
Commercial-scale metals plant
Following the successful metallisation pilot program, ASM
completed a scoping study for a commercial-scale metals
plant in South Korea (ASX Announcement 2 March 2021).
The study confirmed feasibility and showed strong
economics for the proposed 5,200tpa Korean Metals
Plant, which is intended to initially produce high-purity
NdFeB, titanium and zirconium metals and alloys,
sourced from market-available raw materials.
The proposed commercial-scale plant will comprise
multiple parallel production lines, replicating the
operating units of the pilot plant. ASM is progressing
detailed design engineering, which will provide a fully
engineered scope of works and further refine capital
estimates. A final investment decision is expected later
in 2021.
Scoping study economics
US$35–45
million
US$180–190
million
South Korean Offices
US$45–50
million
Estimated
capital
Estimated
annual revenue
Estimated
annual EBITDA
15
2021 Australian Strategic Materials Annual Report Business Review / Metals Business
South Korean metals plant
In March 2021, ASM signed a memorandum of
understanding (MoU) with the Chungcheongbuk-do
(Chungbuk) Provincial Government and Cheongju-si
(Cheongju) City Government to locate the Korean Metals
Plant within the Ochang Foreign Investment Zone
in South Korea (ASX Announcement 9 March 2021).
The town of Ochangjungang-ro (Ochang) is located 115
kilometres south of the South Korean capital, Seoul, and
20 kilometres north of Daejeon, the site of the pilot plant.
Following Board approval to progress the first phase
of development, with estimated capital outlay of
US$9.9 million, ASM acquired a site in Ochang for its
South Korean metals plant. The Company commenced
upgrading the site to accommodate the proposed
5,200tpa capacity metals plant and awarded contracts for
key long-lead equipment.
ASM also commenced relocating the pilot plant to the
Ochang site, where it will become the first operational
production lines of the commercial plant. The Company
intends to start small-scale production of titanium and
NdFeB alloys for the South Korean manufacturing sector
in the second half of 2021.
Pending the final investment decision on the commercial-
scale metals plant, the project is on target to ramp up
to 5,200tpa production by mid-2022. There is potential
to expand the capacity of the plant to over 16,000tpa
by the end of 2024, to meet the potential South Korean
demand.
Offtake and supply agreements
During the year, ASM progressed metal offtake
agreements with titanium product consumers and rare
earth permanent magnet producers in South Korea.
In July 2021, post close of the 2021 reporting period,
the Company signed a conditional framework agreement
with a consortium of South Korean investors that
includes provision for a ten-year offtake agreement
for up to 2,800tpa of NdFeB (neodymium-iron-boron)
alloy from the Korean Metals Plant (ASX Announcement
21 July 2021).
ASM also progressed discussions with the view to
obtaining agreements for supply of key raw materials for
critical metals production. In addition, ASM intends for
most Dubbo Project products to be supplied to its own
metals plants, including the Korean Metals Plant.
Seoul
Ochang
Daejon
Daegu
Gwangju
Busan
16
2021 Australian Strategic Materials Annual Report Business Review / Dubbo Project
Dubbo Project
Mining and recovery of critical metal oxides from the polymetallic
Dubbo Project forms an important part of ASM’s “mine to metal”
strategy. The Company is finalising an optimisation study to pave
the way towards construction.
Project overview
The Dubbo Project is founded on a large polymetallic
resource containing rare earths, zirconium, niobium,
and hafnium, located 25 kilometres south of Dubbo
in central western New South Wales. ASM intends to
develop the project to produce critical metal oxides for
refining into metals at ASM’s proposed metals plants.
The development will comprise open cut mining,
a mineral processing plant, liquid and solid waste
transport and storage systems, transport infrastructure
and utilities (water, electricity and gas). The minerals
processing plant will process crushed ore using
sulphuric acid leach and solvent extraction refining to
recover zirconium, hafnium, niobium and rare earth
oxides. At a processing rate of 1Mtpa, the existing
resource gives the project a potential life of at least
75 years.
Melbourne
The project achieved government approval in 2015,
based on a substantial body of environmental,
engineering and process development work. Mining
Lease 1724 was granted by the NSW Department of
Primary Industries, Mining, Exploration and Geoscience
in December 2015. Also in place are an Environment
Protection Licence (March 2016) and a Conservation
Property Vegetation Plan (PVP00199) to protect and
conserve 1,021 hectares of biodiversity offsets in
perpetuity.
Dubbo
Dubbo
Project
Canberra
Newcastle
Sydney
Dubbo
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2021 Australian Strategic Materials Annual Report Business Review / Dubbo Project
Business Review / Dubbo Project
The Dubbo Project resource is located near Toongi, 25km south of Dubbo in central western NSW.
ASM is undertaking an optimisation study to update
earlier studies with the latest pricing and design
improvements. The Company intends the Dubbo
Project to be a flagship for clean resource development,
with the optimisation study identifying several
design opportunities to further reduce the project’s
environmental footprint.
Dubbo Project offtake
With the establishment of ASM’s metals business,
the Company intends for the majority of Dubbo Project
products to be supplied to its own metals plants,
including the proposed Korean Metals Plant in Ochang,
South Korea.
Offtake and finance
Financing and strategic partner
ASM continued discussions with potential strategic
partners and funding agencies throughout the year.
This led to the announcement of conditional finance
support for the Dubbo Project from Export Finance
Australia to secure A$200 million of debt funding
(ASX Announcement 28 June 2021). The Dubbo Project
closely aligns to the Australian Government’s initiative
to develop the critical minerals sector, announced in
November 2019.
Following close of the reporting period, the Company
announced it had signed a conditional framework
agreement with a consortium of South Korean investors
for the acquisition of a 20% equity interest in ASM’s
holding company for the project for US$250 million
(ASX Announcement 21 July 2021).
The South Korean conditional framework agreement
includes provision for a ten-year offtake agreement for
up to 2,800tpa of NdFeB (neodymium-iron-boron) alloy
from the Korean Metals Plant (ASX Announcement 21 July
2021). The volumes outlined in the proposed offtake
agreement anticipate that 100% of the neodymium oxide
planned to be produced at the Dubbo Project will be
processed at the Korean Metals Plant post construction.
Optimisation study
In 2020, ASM engaged Hatch Engineering to undertake
an optimisation study of the Dubbo Project. Its goal is to
update earlier studies, in particular the 2018 Engineering
and Financials Update (ASX Announcement 4 June
2018), targeting updated pricing, improved process
efficiency and optimised design. The optimisation study
incorporates updates to the process design criteria,
flowsheet, utilities, reagents, consumables and logistics,
contributed by a number of independent consultants,
culminating in an update to the capital and operating
costs for the project.
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2021 Australian Strategic Materials Annual Report Business Review / Dubbo Project
Optimised flowsheet
Plant equipment
To reflect ASM’s focus on producing high-purity metals
from Dubbo Project offtake, the Company undertook
testwork to further optimise the process flowsheet, to
enhance the economics of the project and incorporate
the latest rare earth technological advancements. The
resulting simplified product range comprises mainly
oxides to feed ASM’s metals plants. Oxide products
include zirconia, dehafniated zirconia (DHZ), hafnium
oxide, niobium oxide and various rare earth oxides and
crystallised chlorides.
Hatch proceeded with the optimisation study based on
the optimised flow sheet. Design improvements that
were incorporated included: simplification of the zirconia
circuits, reduced reagent consumptions, enhanced
product recoveries, maximisation of water recovery,
co-generation of power from the sulphuric acid steam,
simplification of the rare earth recovery areas and
ratification of rare earth products.
Update of operating costs
ASM engaged a number of consultants to update the
costs for utilities, reagents, and consumables. Potential
suppliers provided quotes for supply, capital costs and
delivery. An updated review of project logistics was also
undertaken, taking into account sourcing, pricing, mode
of transport, materials handling, storage and safety.
Updated labour personnel numbers and salaries were
also incorporated.
ASM progressed discussions with companies regarding
engineering and equipment manufacture for the
Dubbo Project. This included exploring opportunities
to leverage the full breadth and depth of South Korean
manufacturing capabilities.
The Company also continued discussions with several
South Korean companies regarding potential build, own,
operate (BOO) opportunities for renewable power and
a chlor-alkali plant to produce hydrochloric acid and
caustic soda onsite.
Project execution plans
ASM progressed work on detailed operational readiness
and project execution plans during the year as part of
the larger optimisation study. This included drafts of the
project charter, governance and execution guidelines.
Project budget and schedule confirmation will be
finalised as part of the optimisation study deliverables.
ASM expects to complete the optimisation study in
Q3 2021 and announce the outcomes post review.
As a next step, ASM intends to transition to Front End
Engineering Design (FEED) with Board approval.
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2021 Australian Strategic Materials Annual Report Business Review / Dubbo Project
Mineral Resources and Ore Reserves
As at 30 June 2021, the Mineral Resources and Ore Reserves for the Toongi deposit, which is the basis of the
Dubbo Project, are the same as those stated at 30 June 2020. These estimates were provided by independent
industry consultants Mining One Pty Ltd and are reported by ASM in accordance with the Australasian Code
for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC 2012). Mineral Resources are
wholly inclusive of Ore Reserves, which are based on economic parameters applied to the Mineral Resources,
reflecting an initial project horizon of 20 years.
Dubbo Project Mineral Resources (as at 30 June 2021)
Resource
Category
Measured
Inferred
Total
Tonnes
(Mt)
42.81
32.37
75.18
ZrO2
(%)
1.89
1.90
1.89
HfO2
(%)
0.04
0.04
0.04
Nb2O5
(%)
Ta2O5
(%)
0.45
0.44
0.44
0.03
0.03
0.03
Y2O3
(%)
0.14
0.14
0.14
TREO*
(%)
0.74
0.74
0.74
*TREO% is the sum of all rare earth oxides excluding ZrO2 , HfO2 , Nb2O3 , Ta2O5 , Y2O3
Dubbo Project Ore Reserves (as at 30 June 2021)
Reserve
Category
Proved
Total
Tonnes
(Mt)
18.90
75.18
ZrO2
(%)
1.85
1.89
HfO2
(%)
0.04
0.04
Nb2O5
(%)
Ta2O5
(%)
Y2O3
(%)
TREO*
(%)
0.440
0.029
0.136
0.735
0.44
0.03
0.14
0.74
*TREO% is the sum of all rare earth oxides excluding ZrO2 , HfO2 , Nb2O3 , Ta2O5 , Y2O3
Governance and internal controls
ASM has governance arrangements and internal controls with respect to its estimates of Mineral Resources
and Ore Reserves for the Dubbo Project, including:
• Oversight and approval of each annual statement by the Director – Technical;
• Establishment of internal procedures and controls to meet JORC Code 2012 compliance in all external
reporting;
•
Independent review of new and materially changed estimates;
• Annual reconciliation with internal planning to validate reserve estimates; and
• Board approval of new and materially changed estimates.
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2021 Australian Strategic Materials Annual Report Business Review / ESG
ESG
ASM has strong Environmental, Social and Governance (ESG)
foundations. The Company is environmentally responsible, with
a focus on practices that nurture conservation. ASM cultivates
innovation, equal opportunity, integrity and safety.
Approach
ASM’s purpose is to more sustainably produce critical
metals that are essential for advanced and clean
technologies, such as wind turbines, solar panels,
electric vehicles and battery storage. It is critical that
the materials used in these clean technologies are
responsibly sourced from manufacturers that adhere
to the highest Environmental, Social and Governance
(ESG) standards.
ASM understands the importance of managing
environmental impacts, respecting human rights,
minimising greenhouse gas emissions and
supporting local communities.
The Company recently appointed an executive
team (see page 10) that has specific accountability
for ESG. Over the next year, ASM will develop an
ESG framework, taking into account the key risks
and opportunities as the Company transitions
into operations.
ASM’s first commercial metals plant is expected to
be commissioned in South Korea during the 2022
financial year. The Company is also progressing the
polymetallic Dubbo Project (in development since
2000), which will produce rare earths, zirconium,
niobium and hafnium from a resource in NSW,
Australia.
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2021 Australian Strategic Materials Annual Report Business Review / ESG
Environment
ASM strives to minimise the disturbance footprint of its
operations in Australia and South Korea, and considers
the principles of a circular economy to minimise waste
and use of energy and consumables.
The Company’s metals plants will be founded on an
innovative, low-energy metallisation process that has
less environmental impact than conventional methods.
In developing the Dubbo Project, ASM’s environmentally
responsible approach to design and operations will
help minimise the environmental impact of the project.
In the time since the project was approved in May 2015,
ASM has completed studies to optimise key project
environmental areas, including disturbance footprint,
utility requirements, water and waste management,
materials handling and transportation activities. The
plant will also feature a power cogeneration plant to
utilise the heat and steam produced by the process.
ASM continues to seek opportunities to support its goal
of achieving net zero carbon operational emissions.
Dubbo Project Environmental Management
Strategy
Although the Dubbo Project has not commenced
construction on site, ASM prepares an annual review
of environmental activities in accordance with the
requirements of the Mining Lease (ML 1724) and
Project Approval (SSD-5251), obtained in 2015.
The annual environmental reports describe the
environmental performance, baseline monitoring
activities, rehabilitation activities and community
engagement undertaken for the year.
The annual environmental reports are available
on ASM’s website, along with a comprehensive
Environmental Management Strategy (EMS) and
associated management plans. (View environmental
reports and management plans)
Conservation and land management
Since 2016, ASM’s wholly owned subsidiary, the Toongi
Pastoral Company (TPC), has managed the agricultural
land, farm assets and offset areas associated with the
Dubbo Project – a total of approximately 3,715 hectares.
TPC applies the latest farming technologies and practices
to ensure sustainable land management, increasing
biodiversity, soil health and farm productivity.
Registration of carbon farming project
In the 2021 financial year, ASM commenced registration
of the property as a carbon farming project under the
Australian Government’s Emissions Reduction Fund
(ERF). Under the ERF, measured increases of in-soil
carbon content earn Australian carbon credit units
(ACCU), with one ACCU earned for each tonne of carbon
dioxide equivalent (tCO2-e) stored. Earned ACCUs have
the potential to contribute to the carbon offsets for the
Dubbo Project.
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2021 Australian Strategic Materials Annual Report Business Review / ESG
Biodiversity
Water management
ASM’s Biodiversity Management Plan (BMP) provides
a framework for managing and monitoring biodiversity,
including the designated biodiversity offset areas
(1,021ha) associated with the Dubbo Project. The
biodiversity offset areas are designated for the
restoration and maintenance of native habitats, especially
for vulnerable species. They are managed by TPC and
protected in perpetuity under a Conservation Property
Vegetation Plan negotiated with Local Land Services.
Management activities during the reporting period
include:
• Annual survey of four “control” sites, comprising
Grey Box, Fuzzy Box, White Cypress Pine and White
Box woodlands;
• Management of existing native grasslands, particularly
in designated biodiversity offset areas;
• Ongoing pest animal control programs;
• Ongoing fence maintenance around biodiversity
offset areas to protect from pest animals;
• Ongoing control of noxious weeds; and
• Ongoing White Cypress Pine thinning to increase
native grass cover and understory, improve
biodiversity.
Pink-tailed Worm-lizard
An important component of ASM’s biodiversity
management activities surround protection
and enhancement of habitat for the Pink-tailed
Worm-lizard (PTWL) (Aprasia parapulchella),
a vulnerable local species listed by both
the state of NSW and Commonwealth. The
Company’s PTWL Management Plan and a
PTWL Biodiversity Offset Management Plan
were approved by DPE on 8 February 2017
and are available on the ASM website.
ASM holds sufficient river and groundwater licences
(including some high security licences) to develop
the Dubbo Project as a 1Mtpa operation at Toongi.
The project has been designed to minimise water
consumption and maximise water recycling.
The Dubbo Project is within the Cockabroo Creek and
Wambangalang Creek sub-catchments of the Macquarie
River Catchment. The river water licences are in the
Cudgegong-Macquarie Water Sharing Plan regulated
by the NSW Department of Planning, Industry and
Environment (DPIE) – Water.
ASM understands its role in undertaking responsible
natural resource management within the catchment, and
takes a holistic approach to managing soils, biodiversity
and water. The Company appreciates the need for water
in the catchment to be shared between the environment,
towns, irrigators and industry. ASM also engages with the
Macquarie-Cudgegong Customer Advisory Group, which
provides a forum for community consultation.
A Stage 1 (construction phase) Water Management Plan,
approved by the (then) NSW Department of Planning and
Environment (DPE) on 12 October 2016, is available on
the ASM website.
Water management activities during the reporting period
include:
• Addition of a brine concentrator to the plant design,
which will further reduce water consumption;
• Continued stakeholder discussions regarding water
use and temporary trade of ASM’s water to agriculture
and manufacturing businesses;
• Periodic monitoring of bores and surface water,
particularly given above average rainfall since early
2020; and
• Engagement of consultants to commence design
and construction of erosion and sediment control
structures for the site, as part of preparations for
protection of surface water quality and progressive
rehabilitation.
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2021 Australian Strategic Materials Annual Report Business Review / ESG
Social
Culture
ASM lives its values (see page 9) by fostering a culture
of innovation, equal opportunity and integrity amongst
its workforce, partners and supply chain. The Company
recognises that attracting, retaining, and developing
the right people is critical to achieving its vision and
strategic plan.
This year the Company recruited its experienced
executive team through a blind hiring process, which
was used specifically to minimise potential unconscious
bias throughout the recruitment process.
Over the next year, ASM’s executive team will build
their functions focusing on delivery of the South Korean
Metals Plant, progressing the Dubbo Project and
creating a high-performance culture.
The South Korean team of 30 team members will
continue to grow as construction and production ramp
up to approximately 150 team members. ASM’s team
based in Dubbo manages the Toongi Pastoral Company
and Dubbo Asset, whilst the team in Brisbane has been
progressing the Dubbo Project optimisation study.
Health and Safety
ASM is committed to improving the health, safety and
wellbeing of its team members and providing a safe
workplace. No reportable injuries occurred during the
2021 financial year.
As with all businesses, COVID-19 has impacted ASM’s
employees and the communities in which it operates.
The Company responded by supporting its employees
with their unique circumstances, reinforcing safety
and hygiene protocols in offices and facilities, and
moving office employees to remote work as required.
ASM will continue to monitor the changing COVID-19
environment and strongly supports local and
government initiatives, including testing, masks and
social distancing, as well as encouraging vaccinations to
keep all employees, their families and communities in
which the Company operates safe.
First Nations engagement
Since 2001, when the initial heritage assessments were
undertaken at Toongi, the local Aboriginal community has
been consulted in relation to the Dubbo Project. Over the
past two decades, consultation has continued with Elders
and Aboriginal organisations, including Dubbo Aboriginal
Community Working Party, Three Rivers Regional
Assembly, Dubbo Local Aboriginal Land Council.
Consultation and engagement were undertaken during
preparation of the Environmental Impact Statement (EIS)
in 2013, when local Aboriginal people surveyed 2,864ha
of the project study area to identify heritage sites.
Following project approval, measures to manage these
heritage sites were included in the Heritage Management
Plan (HMP) approved by DPE on 8 February 2017.
24
2021 Australian Strategic Materials Annual Report Business Review / ESG
In the spirit of reconciliation, ASM acknowledges
the Traditional Custodians of country throughout
Australia and their connections to land, sea and
community. We pay our respect to their Elders
past, present and emerging, and extend that
respect to all Aboriginal and Torres Strait Islander
peoples today.
In Australia:
Wilay Wiradjuri people – Dubbo and Toongi
Noongar Whadjuk people – Perth
Turrbal and Jagera/Yuggera peoples – Brisbane
ASM continues to review cultural heritage sites within
the project footprint and ensures traditional owners
are engaged and consulted on heritage issues, as
per the codes and guidelines established by Heritage
NSW (which comply with the NSW National Parks and
Wildlife Service Act 1974). ASM has identified heritage
sites (outside of the project footprint) additional to
those described in the EIS (2013); these sites have been
protected from farming activities.
Activities during the reporting period include:
• Meetings between ASM’s Managing Director and
representatives from Aboriginal organisations
and Elders to listen to their priorities and grow
relationships (May 2021);
•
Invitation to Traditional Custodians to walk
“On Country”; and
• Two Aboriginal representatives nominated for the
Dubbo Project Community Consultative Committee.
Native Secrets
Five years ago, local First Nations company Native
Secrets began distilling natural oils from White
Cypress Pine (Callitris glaucophylla) trees being
thinned from the TPC property. The oils extracted
from White Cypress Pine wood and leaves have
unique pharmaceutical properties. In July 2021,
Native Secrets’ products were exhibited at a
trade exhibition in Seoul, South Korea.
Dubbo community
ASM is an active and engaged member of the Dubbo
community and continues to build strong relationships
with government, commercial and community
stakeholders.
ASM supports Dubbo community development through
the establishment of permanent infrastructure,
sponsorship of local events and organisations, provision
of training and career opportunities, and the creation
of local economic opportunities for service providers.
The Company takes an active part on the Dubbo Project
Community Consultative Committee and nurtures its
community relationships through clear and regular
communications about its activities.
The Dubbo Project is centred on a unique ore body
that will require a large processing plant to recover and
separate the contained metals. This will establish a new
manufacturing business in regional NSW, providing
many jobs for highly skilled people. It is anticipated the
project will retain local talent and attract others to Dubbo
with their families as they establish careers with ASM.
There will also be employment opportunities during
construction for locals who embrace ASM’s culture and
are seeking additional skills training.
Sponsorships & engagement
During the reporting period, ASM continued to engage
with various interest groups and schools, newsletters
(October 2020 and March 2021), and maintenance of
a 24-hour community information line. In May 2021,
ASM Managing Director David Woodall met with a range
of government stakeholders, community and business
leaders, local Aboriginal groups and potential local
suppliers in the Dubbo region.
During the year, ASM donated 10ML of water to Taronga
Western Plains Zoo for watering the grounds and animal
habitats, and supported the Western Region Schools
Science and Engineering Challenge.
25
2021 Australian Strategic Materials Annual Report Business Review / ESG
Local Land Services workshops
The Toongi Pastoral Company continues
to grow relationships with local businesses
and organisations, and in April 2021 hosted
a workshop run by Central West Local Land
Services. Around 30 local farmers and interested
people attended this practical workshop, which
focused on the identification and management
of Threatened Ecological Communities (TECs)
that include Grey Box grassy woodlands. The
workshop was part of a project that is partnering
with landholders in the region to improve the
condition of TECs and raise awareness of how
best to manage remnant patches as part of a
farming enterprise.
Governance
ASM’s actions are governed by an experienced Board
committed to administering the Company’s policies and
procedures with openness and integrity. In establishing
its corporate governance framework, the Company has
referred to the recommendations set out in the ASX
Corporate Governance Council’s Corporate Governance
Principles and Recommendations 4th edition (Principles
& Recommendations).
The Company’s Corporate Governance Statement is
available on the ASM website, along with the Board
charter and details of Board sub-committees.
Also listed are key policies and procedures, including
those pertaining to appointment and independence of
directors, diversity, code of conduct, risk management,
and anti-bribery and corruption. (View Corporate
Governance Statement, policies and procedures).
Diversity Policy
The Board has adopted a Diversity Policy that outlines
the Company’s commitment to ensuring a diverse mix
of skills and talent exists amongst its directors, officers
and employees, to enhance Company performance.
The Diversity Policy addresses equal opportunities in
the hiring, training and career advancement of directors,
officers and employees.
The Diversity Policy outlines the process by which the
Board, in its capacity as the Nomination Committee,
will set measurable objectives to achieve the aims of
its Diversity Policy, with particular focus on gender
diversity within the Company. The Board is responsible
for monitoring Company performance in meeting the
Diversity Policy requirements, including the achievement
of diversity objectives.
Anti-Bribery and Corruption (ABC) Policy
ASM is committed to maintaining a high standard of
integrity and to operating fairly, honestly and legally,
in order to ensure that it complies with international
regulations with regards to anti-bribery and corruption.
The Company is committed to an open and transparent
management approach in order to avoid potential
conflicts of interest.
The Company is committed to maintaining a high
standard of ethical conduct in all business dealings.
ASM does not obtain or retain business through any
unethical or illegal means. The Company has developed
this policy to prohibit inappropriate conduct associated
with bribery and corruption.
Risk Management Policy
ASM is committed to the implementation and
maintenance of an integrated risk management program
for all its activities in accordance with the Australian /
New Zealand Standard on Risk Management AS/NZS
ISO 31000:2009 Risk management – Principles and
guidelines.
This policy promotes an understanding and create an
awareness and culture of Risk Management within ASM.
26
2021 Australian Strategic Materials Annual Report Financial
Report
Directors’ report
The directors present their report, together with the financial
statements, on the Consolidated Entity (also referred to hereafter
as the ‘Consolidated Entity’ or ‘the Group’) consisting of Australian
Strategic Materials Ltd (referred to hereafter as the ‘Company’ or
‘Parent Entity’) and the entities it controlled at the end of,
or during, the year ended 30 June 2021.
Directors
The following persons were directors of Australian Strategic Materials Ltd during the whole of the financial year and
up to the date of this report, unless otherwise stated:
I J Gandel
D G Woodall
N P Earner
D I Chalmers
G M Smith
A D Lethlean – resigned 28 July 2020
Principal activities
The Consolidated Entity (“ASM”) is an emerging integrated producer of critical metals for advanced and clean
technologies. The Group’s principal activities in the year were:
• Progression of an optimisation study and financing for the Dubbo Project, which is 100% owned by ASM. Located
in central western NSW, the Dubbo Project is founded on a long-term resource of rare earths, zirconium, niobium
and hafnium.
• Confirmation of feasibility and commercial scalability of the innovative metallisation process developed by KSM
Metals Co Ltd (formerly named Zirconium Technology Corporation). The innovative process for producing
high-purity critical metals and alloys from oxides has less environmental impact than conventional methods and
consumes less energy.
• Acquisition of 100% or RMR Tech (“RMR”) and 95% of KSM Metals Co. Ltd (“KSM”).
• Progression of scoping and engineering of a commercial-scale 5,200tpa Korean Metals Plant in Ochang, South Korea.
28
2021 Australian Strategic Materials Annual ReportFinancial Report / Directors’ Report The Consolidated Entity is advancing the metallisation of critical metal oxides to create a range of value-added metals
(including neodymium-iron-boron, titanium and zirconium) at its proposed Korean Metals Plant from market-available
precursors and, in time, the Dubbo Project.
Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Review of operations
The loss for the Consolidated Entity after providing for income tax and non-controlling interest amounted to $783,000
(30 June 2020: $4,265,000).
This result included a profit before tax and non-recurring item of $4,731,000 (30 June 2020: nil) in relation to
loan forgiveness.
In July 2021, ASM was demerged with its cash reserves and no bank debt from Alkane Resources Ltd (ASX:ALK). All
interests in the Dubbo Project and associated assets (including land and water rights), together with the Company’s
investment in South Korean metals technology company Rare Metals Resources Technology Corporation (“RMR Tech”),
were owned by the Consolidated Entity following the demerger. On 17 July 2020, ASM entered into a restructure deed
with Alkane Resources Ltd (the Ultimate Parent Company of the Consolidated Entity before demerger), to capitalise
$113,000,000 and forgive $4,731,000 of the shareholder loans as part of the demerger.
The shareholders of Alkane Resources Ltd approved the demerger of ASM, with relevant resolutions tabled at the
Extraordinary General Meeting (EGM) passed on 16 July 2020. ASM was admitted to the ASX on 29 July 2020 and first
quoted on 30 July 2020 (ASX: ASM).
The Dubbo Project (DP) has all key environmental approvals and is construction ready, with the mineral deposit and
surrounding land wholly owned, all material state and federal approvals in place, an established flowsheet and a
solid business case.
On 21 April 2021, the Company finalised a $91,919,000 (before costs) capital raising which provided funding to focus
on advanced key workstreams including engineering and development of the Korean Metals Plant and the FEED study
for the Dubbo Project while also providing additional working capital and funding of corporate costs.
At the start of the reporting period, ASM and KSM commenced a series of test runs on the metallisation pilot plant
commissioned in June 2020. Developed by KSM, the process refines high-purity metals and alloys from oxides with less
environmental impact than conventional methods, as it consumes less energy. The pilot program successfully produced
high-purity neodymium, praseodymium, neodymium-praseodymium alloy, dysprosium, zirconium and titanium.
On 19 November 2020, ASM announced the pilot program had confirmed commercial scalability of the process.
On 3 September 2020, ASM entered into a binding heads of agreement (“HOA”) with RMR (the joint venture company
that owned the metallisation pilot plant) and KSM, which owns the innovative low-energy metallisation process.
On 3 November 2020, the KSM and RMR restructure was completed. ASM became the 100% owner of RMR and
indirect owner of 95% of KSM. ASM has also acquired the pilot plant constructed in 2020 to confirm the technology.
As consideration for the transaction, ASM has:
•
Issued 1,306,417 ASM shares to current KSM shareholders (via a holding entity). These shares are subject to
voluntary escrow for 12 months; and
• Granted existing KSM shareholders (via a holding entity) a Net Smelter Return of 5% from any global commercial
metallisation facility established using the technology, subject to a 50% step-down of the royalty after payments of
US$20,000,000 have been made.
29
2021 Australian Strategic Materials Annual ReportFinancial Report / Directors’ Report The Consolidated Entity now owns all of KSM’s patents and related intellectual property and technology that were the
subject of RMR Tech, as well as any intellectual property rights or interests that may be developed by KSM in the future.
On 2 March 2021, ASM announced a scoping study for a commercial-scale 5,200tpa Korean Metals Plant. The study
confirmed feasibility and showed strong economics for the proposed plant, which would initially produce high-purity
NdFeB, titanium and zirconium metals and alloys, sourced from market-available raw materials.
In March 2021, ASM signed a memorandum of understanding (MoU) with the Chungcheongbuk-do (Chungbuk)
Provincial Government and Cheongju-si (Cheongju) City Government to locate its Korean Metals Plant within the
Ochang Foreign Investment Zone in South Korea. Upgrades to the Ochang site have commenced to accommodate
the 5,200tpa capacity commercial-scale metals plant.
On 28 June 2021 Export Finance Australia (EFA) issued a non-binding letter of conditional finance support for
A$200,000,000 of debt funding for the Dubbo Project. EFA will commence a detailed due diligence of the Dubbo
Project and is contingent on a number of conditions, summarised below:
• Securing offtake commitments for metal products, which diversify critical metal supply chains;
• Execution of a lump sum turnkey fixed date contract with an acceptable engineering contractor for the engineering,
construction and commissioning of the Project;
• Finalising the Project’s funding plan including the raising of equity and securing funding from other lenders;
• Meeting eligibility criteria, credit and risk requirements, including, but not limited to, EFA’s “know your customer”
and anti-bribery requirements and checks; and
• The Project receiving the required regulatory and environmental approvals.
Management continues to consider the potential impacts of the COVID-19 pandemic, which may include delaying
the construction and commissioning of the Dubbo Project, and other Dubbo Project optimisation work in progress
focused on further improving the project economics.
As at the date these financial statements were authorised, Management was not aware of any material adverse effects
on the financial statements as a result of coronavirus.
Significant changes in the state of affairs
On 17 July 2020, ASM entered into a restructure deed with Alkane Resources Ltd, as part of the demerger to capitalise
$113,000,000 and forgive $4,731,000 of the shareholder loans.
On 29 July 2020, ASM was demerged with its cash reserves and no bank debt. All interests in the Dubbo Project and
associated assets (including land and water rights), together with ASM’s investment in South Korean metals technology
company RMR Tech was 100% owned by ASM following the demerger.
On 3 September 2020, ASM entered into a HOA with RMR and KSM, which own innovative low-energy, high-purity
metallisation process. As part of the RMR and KSM restructure, ASM has become the 100% owner of RMR and
indirect owner of 95% of KSM with the acquisitions completed on 3 November 2020. ASM also acquired the pilot plant
constructed in 2020.
On 21 April 2021, the Company finalised a $91,919,000 (before costs) capital raising which provided funding to focus on
advancing key workstreams including engineering and development of the Korean Metals Plant and the optimisation
study for the Dubbo Project, while also providing additional working capital and funding of corporate costs.
There were no other significant changes in the state of affairs of the Consolidated Entity during the financial year.
30
2021 Australian Strategic Materials Annual ReportFinancial Report / Directors’ Report Matters subsequent to the end of the financial year
On 21 July 2021, ASM signed a $US250,000,000 framework agreement with a South Korean consortium for 20% in the
Dubbo Project and offtake from the Korean Metals Plant. The key points are:
• ASM has signed a conditional framework agreement with a consortium of South Korean investors for the
acquisition of a 20% equity interest in ASM’s Dubbo Project holding company.
• Under the Agreement a consortium fund will invest $US250,000,000 for the 20% equity interest.
• The Investing Partnership intends to establish a second fund to develop a domestic Korean permanent magnet
manufacturing business that will enter into an offtake agreement for NdFeb (neodymium-iron-boron) alloy from
ASM’s Korean Metals Plant.
• The Agreement creates a pathway for ASM to develop the Dubbo Project and execute its “mine to metal” strategy.
No other matter or circumstance has arisen since 30 June 2021 that has significantly affected, or may significantly
affect, the Consolidated Entity’s operations, the results of those operations, or the Consolidated Entity’s state of affairs
in future financial years.
Likely developments and expected results of operations
ASM was demerged on 29 July 2020. The Consolidated Entity continues the execution of its integrated business plan for
the Dubbo Project, which aims to deliver value adding clean metals, and the optimisation of the June 2018 FEED Study.
The Consolidated Entity intends to continue evaluation activities in relation to the Dubbo Project and progress the
development of the Company’s first commercial metals plant in South Korea in line with details provided in the Review
of Operations.
Environmental regulation
The Consolidated Entity is subject to significant environmental regulation in respect of its Dubbo Project exploration
and evaluation activities.
The Consolidated Entity aspires to the highest standards of environmental management and insists its entire staff and
contractors maintain that standard. A significant environmental incident is considered to be one that causes a major
impact or impacts to land biodiversity, ecosystem services, water resources or air, with effects lasting greater than one
year. There were no significant environmental incidents reported at any of the Consolidated Entity’s operations.
31
2021 Australian Strategic Materials Annual ReportFinancial Report / Directors’ Report Information on directors
Ian Jeffrey Gandel – Non-Executive Chair
LLB, BEc, FCPA, FAICD
Appointed Non-Executive Chair 18 March 2014.
Mr Gandel is a successful Melbourne based business person with extensive experience in retail management and
retail property. He has been a director of the Gandel Retail Trust and has had an involvement in the construction and
leasing of Gandel shopping centres. He has previously been involved in the Priceline retail chain and the CEO chain of
serviced offices.
Mr Gandel has been an investor in the mining industry since 1994. Mr Gandel is currently a substantial holder in a
number of publicly listed Australian companies and, through his private investment vehicles, now holds and explores
tenements in his own right in Western Australia. Mr Gandel is currently Non-Executive Chair of Alliance Resources
Ltd (appointed as a director on 15 October 2003 and in June 2016 was appointed Non-Executive Chair). He is Non-
Executive Chair of Alkane Resources Ltd. He is also the Non-Executive Chair of Octagonal Resources Ltd (appointed
10 November 2010) (this company sought delisting from the ASX in February 2016 and converted to Pty Ltd status in
April 2016).
David Graham Woodall – Managing Director
MSc (Mineral Economics) and Graduate Diploma (Business)
Appointed Managing Director 12 February 2020.
Mr Woodall is a mining engineer with over 30 years’ experience in senior and corporate and executive roles in
operations, project development and evaluations in the mineral resources industry including gold, copper, iron
ore, and nickel.
He has held senior positions in Australia, Fiji, Central Asia, Indonesia, China, PNG and North America.
Prior to joining ASM, he was the CEO of an ASX listed Canadian-focused base metals development company. Prior to
that, Mr Woodall ran his own consultancy company, was the Executive General Manager, International Operations for
Newcrest Mining and was the Director of Operations for Fortescue Metals Group.
Mr Woodall is a member of the Australian Institute of Mining and Metallurgy (AusIMM) and a member of the Australian
Institute of Company Directors (AICD).
Nicholas Paul Earner – Non-Executive Director
BEng (hons)
Appointed Non-Executive Director 1 September 2017.
Mr Earner is a chemical engineer and graduate of University of Queensland with over 25 years’ experience in technical
and operational optimisation and management, and has held a number of executive roles in mining and processing.
Mr Earner joined the Alkane group as Chief Operations Officer in August 2013, with responsibility for the safe
and efficient management of Alkane Resources Ltd’s operations at Tomingley and the Dubbo Project. Under his
supervision, the successful development of Tomingley transitioned to profitable and efficient operations. His guidance
also drove engineering and metallurgical aspects of the Dubbo Project, prior to its transition into the separately listed
Australian Strategic Materials Ltd.
32
2021 Australian Strategic Materials Annual ReportFinancial Report / Directors’ Report Prior to his appointment as Alkane Resources Ltd’s Chief Operations Officer in August 2013, he had roles at Straits
Resources Ltd, Rio Tinto Coal Australia’s Mount Thorley Warkworth coal mine and BHP/WMC Olympic Dam
copper-uranium-gold operations.
Mr Earner is the Managing Director of Alkane Resources Ltd and a Non-Executive Director of Genesis Minerals
Ltd (Genesis).
David Ian Chalmers – Non-Executive Director
MSc, FAusIMM, FAIG, FIMM, FSEG, MSGA, MGSA, FAICD
Appointed Non-Executive Director 18 March 2014.
Mr Chalmers is a geologist and graduate of the Western Australia Institute of Technology (Curtin University) and has
a Master of Science degree from the University of Leicester in the United Kingdom. He has worked in the mining and
exploration industry for over 50 years, during which time he has had experience in all facets of exploration and mining
through feasibility and development to the production phase. Mr Chalmers has had a 30-year involvement in the rare
metal and rare earth industry, and he managed the geology, process development and global marketing effort for the
Dubbo Project, advancing it to the threshold of development.
Mr Chalmers is also currently the Technical Director of Alkane Resources Ltd and has held that role since 2017.
Prior to that, he held the role of Managing Director.
Gavin Murray Smith – Non-Executive Director
B.Com, MBA, MAICD
Appointed Non-Executive Director 12 December 2017.
Mr Smith is an accomplished senior executive and non-executive director within multinational business environments.
He has more than 35 years’ experience in information technology, business development, and general management
in a wide range of industries and sectors. As Non-Executive Director of Bosch Subsidiaries and Joint Ventures in
Australia and New Zealand, Mr Smith has led the restructuring and transformation of the local Bosch subsidiary.
Mr Smith is a member of the industry advisory boards of the CSIRO and Monash University, and a Non-Executive
Director of Alkane Resources Ltd.
Dennis Wilkins – Joint Company Secretary
B.Bus, ACIS, AICD
Appointed Company Secretary 29 March 2018.
Mr Wilkins is the founder and principal of DWCorporate Pty Ltd, a corporate advisory firm servicing the natural
resources industry.
Since 1994 he has been a director of, and involved in the executive management of, several publicly listed resource
companies with operations in Australia, PNG, Scandinavia and Africa. Since July 2001 Mr Wilkins has been running
DWCorporate Pty Ltd, where he advises on the formation of, and capital raising for, emerging companies in the
Australian resources sector.
Mr Wilkins is currently a director of Key Petroleum Limited.
James Carter – Joint Company Secretary
Appointed joint Company Secretary 20 May 2020, resigned 2 August 2021.
Mr Carter is a CPA and Chartered Company Secretary with over 20 years’ international experience in the resources
industry. He has held senior finance positions across listed resources companies since 2001.
Ms Julie Jones replaced Mr Carter as joint Company Secretary on 2 August 2021.
33
2021 Australian Strategic Materials Annual ReportFinancial Report / Directors’ Report Meetings of directors
The number of meetings of the Company’s Board of Directors (‘the Board’) and of each Board committee held during
the year ended 30 June 2021, and the number of meetings attended by each director were:
Full Board
Audit Committee
Remuneration Committee
Attended
Held
Attended
Held
Attended
Held
I J Gandel
D G Woodall
D I Chalmers
G M Smith
N P Earner
A D Lethlean*
13
13
13
13
13
1
13
13
13
13
13
1
2
-
-
2
2
-
2
-
-
2
2
-
2
-
2
2
2
-
2
-
2
2
2
-
Held: represents the number of meetings held during the time the director held office or was a member of the relevant committee.
* A D Lethlean resigned as director on 28 July 2020.
Remuneration report (audited)
The remuneration report details the key management personnel remuneration arrangements for the Consolidated
Entity, in accordance with the requirements of the Corporations Act 2001 and its regulations.
The remuneration report is set out under the following main headings:
• Principles used to determine the nature and amount of remuneration;
• Details of remuneration;
• Service agreements; and
• Additional disclosures relating to key management personnel.
Remuneration governance
The Company has established a Remuneration Committee to assist the Board in fulfilling its corporate governance
responsibilities with respect to remuneration by reviewing and making appropriate recommendations to the Board on:
• The overall remuneration strategy and framework for the Company;
• The operation of the incentive plans, which apply to the executive team, including the appropriateness of key
performance indicators and performance hurdles; and
• The assessment of performance and remuneration of the executive directors, non-executive directors and other
key management personnel.
The Remuneration Committee is a committee of the Board. At the date of this report the members were
non-executive directors and included G M Smith (Chair), I J Gandel, N P Earner and D I Chalmers.
Their objective is to ensure that remuneration policies and structures are fair, competitive and aligned with the
long-term interests of the Company and its shareholders.
The Company’s annual Corporate Governance Statement provides further information on the role of this committee.
The full statement is available at URL: www.asm-au.com.au/company/governance.
34
2021 Australian Strategic Materials Annual ReportFinancial Report / Directors’ Report Statutory performance indicators
The Company aims to align executive remuneration to the Company’s strategic and business objectives and the
creation of shareholder wealth. The table below shows measures of the Group’s financial performance for the
current year as required by the Corporations Act 2001. However, these are not necessarily consistent with the specific
measures in determining the variable amounts of remuneration to be awarded to key management personnel. As a
consequence, there may not always be a direct correlation between the statutory key performance measures and the
variable remuneration rewarded.
Loss for the year attributable to owners ($’000)
Basic loss per share (cents)*
Dividend payments ($’000)
Share price at period end ($)*
* The Company was admitted to the Official List of ASX on 29 July 2020.
30 June 2021
(783)
(1)
-
7.80
Principles used to determine the nature and amount of remuneration
The objective of the Consolidated Entity’s executive reward framework is to ensure reward for performance is
competitive and appropriate for the results delivered. The framework aligns executive reward with the achievement
of strategic objectives and the creation of value for shareholders, and it is considered to conform to the market best
practice for the delivery of reward. The Board ensures that executive reward satisfies the following key criteria for
good reward governance practices:
• Are competitive and reasonable, enabling the Company to attract and retain key talent while building a diverse,
sustainable and high-achieving workforce;
• Are aligned to the Company’s strategic and business objectives and the creation of shareholder value;
• Promote a high-performance culture regarding that leadership at all levels is a critical element in this regard;
• Are transparent; and
• Are acceptable to shareholders.
The Remuneration Committee is responsible for determining and reviewing remuneration arrangements for its directors
and executives. The performance of the Consolidated Entity depends on the quality of its directors and executives.
The remuneration philosophy is to attract, motivate and retain high-performance and high-quality personnel.
In consultation with external remuneration consultants (refer to the section ‘Use of remuneration consultants’ below),
the Remuneration Committee has structured an executive remuneration framework that is market competitive and
complementary to the reward strategy of the Consolidated Entity.
Non-executive directors remuneration
Fees and payments to non-executive directors reflect the demands and responsibilities of their role. Non-executive
directors (NEDs) fees and payments are reviewed annually by the Remuneration Committee. The Remuneration
Committee may, from time to time, receive advice from independent remuneration consultants to ensure
non-executive directors’ fees and payments are appropriate and in line with the market. The Chair’s fees are
determined independently to the fees of other non-executive directors, based on comparative roles in the external
market. The Chair is not present at any discussions relating to the determination of his own remuneration.
Non-executive directors do not receive share options or other incentives.
35
2021 Australian Strategic Materials Annual ReportFinancial Report / Directors’ Report ASX listing rules require the aggregate non-executive directors’ remuneration be determined periodically by a general
meeting. In accordance with ASM’s Constitution, the remuneration of the non-executive directors of ASM in each
financial year will not exceed the maximum aggregate amount determined by ASM shareholders in general meeting
from time to time. The maximum aggregate amount is currently $500,000, inclusive of superannuation and exclusive
of reimbursement of expenses (with the Company proposing to put a resolution to shareholders at the 2021 Annual
General Meeting to increase this maximum aggregate to $950,000).
This remuneration may be divided among the ASM NEDs in such proportions as they decide. The maximum aggregate
remuneration amount has been set so as to enable the appointment of additional ASM NEDs if required.
Executive remuneration
The Consolidated Entity aims to reward executives based on their position and responsibility, with a level and mix of
remuneration which has both fixed and variable components.
The executive remuneration and reward framework has four components:
• base pay and non-monetary benefits;
• short-term performance incentives;
• share-based payments; and
• other remuneration such as superannuation and long service leave.
The combination of these comprises the executive’s total remuneration.
Fixed remuneration, consisting of base salary, superannuation and non-monetary benefits, are reviewed annually by
the Remuneration Committee based on individual and business unit performance, the overall performance of the
Consolidated Entity and comparable market remunerations.
Executives may receive their fixed remuneration in the form of cash or other fringe benefits (for example motor
vehicle benefits) where it does not create any additional costs to the Consolidated Entity and provides additional value
to the executive.
The long-term incentives (‘LTI’) include share-based payments. Shares are awarded to executives over a period
of three years based on long-term incentive measures as well as performance-related milestones. These include
increase in shareholders’ value relative to the entire market. The Remuneration Committee reviewed the long-term
equity-linked performance incentives specifically for executives during the year ended 30 June 2021.
Use of remuneration consultants
During the financial year ended 30 June 2021, the Consolidated Entity, through the Remuneration Committee,
engaged Godfrey Remuneration Group Pty Limited, remuneration consultants, to provide details of market
remuneration practices for specific key management personnel roles in the market capitalisation ranges relevant
to the Company and to review its existing remuneration policies and provide recommendations on structuring
STI and LTI programs. This has resulted in share-based payments remuneration in the form of options (LTI) being
implemented. Godfrey Remuneration Group Pty Limited was paid $3,500 for these services.
An agreed set of protocols were put in place to ensure that the remuneration recommendations would be free
from undue influence from key management personnel. These protocols include requiring that the consultant not
communicate with affected key management personnel without a member of the Remuneration Committee being
present, and that the consultant not provide any information relating to the outcome of the engagement with the
affected key management personnel. The Board is also required to make inquiries of the consultant’s processes at the
conclusion of the engagement to ensure that they are satisfied that any recommendations made have been free from
undue influence. The Board is satisfied that these protocols were followed and as such there was no undue influence.
At the 2020 AGM, 99% of the votes received supported the adoption of the remuneration report for the year ended
30 June 2020. The Company did not receive any specific feedback at the AGM regarding its remuneration practices.
36
2021 Australian Strategic Materials Annual ReportFinancial Report / Directors’ Report Details of remuneration
Amounts of remuneration
Details of the remuneration of key management
personnel of the Consolidated Entity are set out in
the following tables.
The key management personnel of the Consolidated
Entity consisted of the following directors of Australian
Strategic Materials Ltd:
•
I J Gandel
• D G Woodall
• N P Earner
• D I Chalmers
• G M Smith
And the following persons:
• F Moon – President Asia
• A MacDonald – General Manager, Marketing
(resigned 12 March 2021)
•
J Carter – Joint Company Secretary
Since the end of the reporting period, the following
changes to key management personnel are as follows:
•
•
•
J Carter resigned as joint Company Secretary on
2 August 2021.
J Jones was appointed as joint Company Secretary
on 2 August 2021.
J Clifton was appointed as Chief Financial Officer on
12 July 2021.
• A D Lethlean (resigned upon Demerger on
• R Smith was appointed as Chief Operations Officer
28 July 2020)
on 5 July 2021.
There have been no other changes to Directors or
key management personnel since the end of the
reporting period.
Cash salary
and fees
Post-
employment
benefits
Annual and
long service
provision1
Performance
rights2
2021
$
$
$
$
Total
$
Non-Executive Directors:
I J Gandel
G M Smith
D I Chalmers
N P Earner
Executive Directors:
D G Woodall
112,508
85,900
67,213
71,094
10,688
-
6,386
6,754
-
-
-
-
-
-
-
-
123,196
85,900
73,599
77,848
452,637
20,442
54,643
661,409
1,189,131
Other key management personnel:
F Moon3
A MacDonald4
425,980
263,239
1,478,571
277
14,941
59,488
-
(30,485)
24,158
-
-
426,257
247,695
661,409
2,223,626
(1) The amounts disclosed in this column represent the movements in the associated provisions. They may be negative where a key management
personnel has taken more leave than accrued during the year.
(2) Performance rights have been granted and valued, however vesting is subject to performance hurdles.
(3) F Moon was paid through Soon Hyun Huh, a company in which he has a controlling interest. From 1 June 2021, F Moon was employed directly by
the Group.
(4) Resigned 12 March 2021.
(5) J Carter’s services were provided to the Company via the intercompany services agreement between the Company and Alkane Resources Ltd as part
of the demerger.
(6) Post-employment benefits are provided through superannuation contributions and national pension scheme.
37
2021 Australian Strategic Materials Annual ReportFinancial Report / Directors’ Report 2020
Executive Directors:
D G Woodall
Cash salary
and fees
Post-
employment
benefits
Annual and
long service
provision
Performance
rights**
$
$
$
$
Total
$
121,180
11,512
10,720
255,503
398,915
Other key management personnel:
S Messiter*
A MacDonald
91,324
47,469
259,973
8,676
4,389
24,577
-
72,938
83,658
-
-
255,503
100,00
124,796
623,711
* S. Messiter ceased to be a key management personnel from 1 July 2020.
** Prior period vesting period for performance rights remuneration for D Woodall has been reassessed during the current financial year and an
amount of $255,503 has been included in the above table.
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Name
Non-Executive Directors:
I J Gandel
G M Smith
D I Chalmers
N P Earner
Executive Directors:
D G Woodall
Other key management personnel:
F Moon
A MacDonald
Fixed remuneration
At risk – LTI
2021
2020
2021
2020
100%
100%
100%
100%
-
-
-
-
-
-
-
-
-
-
-
-
44%
36%
56%
64%
100%
100%
100%
100%
-
-
-
-
On 19 May 2020, 3,000,000 performance rights were granted to Executive Director, D Woodall, with a total
shareholder return and milestone performance hurdles.
The performance rights with total shareholder return performance hurdles (1,800,000 performance rights) were
valued at $0.59/performance right based on the Monte Carlo valuation model using the following assumptions:
• $1.14 starting share price;
• 3 year performance period;
• 0.26% risk-free interest rate; and
• 71.75% volatility.
38
2021 Australian Strategic Materials Annual ReportFinancial Report / Directors’ Report
Vesting occurs after the end of the performance period ended 30 July 2023, with a nil exercise price with performance
targets as per below:
Absolute total shareholder return
% Performance rights vesting
Final share price <150% of starting share price
Final share price >= 150% and less than 200% of starting share price
Final share price >=200% and less than 300% of starting share price
Final share price >= 300% of starting share price
Nil
33.33%
66.67%
100%
The performance rights (1,200,000 performance rights) that are milestone based have the performance metrics
provided in the table below.
Performance metrics
Weighting
Vested
Performance period
In the event a strategic partner organised by
ASM buys >15% of ASM/Project
In the event off-take agreement >40% of
project revenue is signed
In the event debt >40% of project capital
is signed
In the event a Korean metals plant is
successfully commissioned on a positive cash
flow basis
Service agreements
25%
25%
25%
0%
0%
0%
Performance period ends 30 July 2023
Performance period ends 30 July 2023
Performance period ends 30 July 2023
25%
0%
Performance period ends 30 July 2023
Remuneration and other terms of employment for key management personnel are formalised in service agreements.
Details of these agreements are as follows:
Name:
Title:
Agreement commenced:
D G Woodall
Managing Director
10 February 2020
Term of agreement:
Ongoing
Details:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Total fixed remuneration:
$600,000
Notice period:
3 months
F Moon
President Asia
1 June 2021
Ongoing
Total fixed remuneration:
$365,000
Notice period:
3 months
Key management personnel have no entitlement to termination payments in the event of removal for misconduct.
39
2021 Australian Strategic Materials Annual ReportFinancial Report / Directors’ Report Additional disclosures relating to key management personnel
Shareholding
The number of shares in the Company held during the financial year by each director and other members of key
management personnel of the Consolidated Entity, including their personally related parties, is set out below:
Balance at the
start of the
year
Received
as part of
remuneration
Additions
Disposals/
other
Balance at
the end of the
year
Ordinary shares
I J Gandel
G M Smith
N P Earner
D I Chalmers
D Woodall
J Carter
A MacDonald
(resigned 12 March 2021)
Performance rights holding
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
31,584,110
71,117
725,499
1,218,833
7,500
83,318
595,327
-
-
-
-
-
(83,173)
(595,327)
31,584,110
71,117
725,499
1,218,833
7,500
145
-
34,285,704
(678,500)
33,607,204
The number of performance rights over ordinary shares in the Company held during the financial year by each
director and other members of key management personnel of the Consolidated Entity, including their personally
related parties, is set out below:
Balance at the
start of the
year
Granted
Vested
Expired/
forfeited/
other
Balance at
the end of the
year
Performance rights over
ordinary shares
D Woodall
-
-
3,000,000
3,000,000
-
-
-
-
3,000,000
3,000,000
This concludes the remuneration report, which has been audited.
Indemnity and insurance of officers
ASM Ltd (the Parent Company) has entered into deeds of indemnity, access and insurance with each of the directors.
These deeds remain in effect as at the date of this report. Under the deeds, the Ultimate Parent Company indemnifies
each director to the maximum extent permitted by law against legal proceedings or claims made against or incurred
by the directors in connection with being a director of the Consolidated Entity, or breach by the Consolidated Entity of
its obligations under the deed.
During the financial year, the Company paid a premium in respect of a contract to insure the directors and executives
of the Company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance
prohibits disclosure of the nature of the liability and the amount of the premium.
No liability has arisen under this indemnity as at the date of this report.
40
2021 Australian Strategic Materials Annual ReportFinancial Report / Directors’ Report Australian Strategic Materials Ltd
Directors' report
30 June 2021
Indemnity and insurance of officers
ASM Ltd (the Parent Company) has entered into deeds of indemnity, access and insurance with each of the Directors. These deeds
remain in effect as at the date of this report. Under the Deeds, the Ultimate Parent Company indemnifies each Director to the maximum
extent permitted by law against legal proceedings or claims made against or incurred by the Directors in connection with being a
Director of the Consolidated Entity, or breach by the Consolidated Entity of its obligations under the Deed.
During the financial year, the Company paid a premium in respect of a contract to insure the directors and executives of the Company
against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of
the liability and the amount of the premium.
Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on
No liability has arisen under this indemnity as at the date of this report.
behalf of the Company, or to intervene in any proceedings to which the Company is a party for the purpose of taking
Proceedings on behalf of the Company
responsibility on behalf of the Company for all or part of those proceedings.
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the
Company, or to intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the
Non-audit services
Company for all or part of those proceedings.
The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the
Non‐audit services
auditor’s expertise and experience with the Group is important.
The company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor's expertise
and experience with the group is important.
The directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by
another person or firm on the auditor’s behalf), is compatible with the general standard of independence for auditors
The directors are satisfied that the provision of non‐audit services during the financial year, by the auditor (or by another person or
imposed by the Corporations Act 2001.
firm on the auditor's behalf), is compatible with the general standard of independence for auditors imposed by the Corporations Act
2001.
The directors, in accordance with advice provided by the Audit Committee, are of the opinion that the services
as disclosed in note 19 to the financial statements do not compromise the external auditor’s independence
The directors, in accordance with advice provided by the audit committee, are of the opinion that the services as disclosed in note 19
requirements of the Corporations Act 2001 for the following reasons:
to the financial statements do not compromise the external auditor's independence requirements of the Corporations Act 2001 for the
following reasons:
• all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and
● all non‐audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of the
auditor; and
• none of the services undermine the general principles relating to auditor independence as set out in APES 110
● none of the services undermine the general principles rela�ng to auditor independence as set out in APES 110 Code of Ethics for
Professional Accountants.
Code of Ethics for Professional Accountants.
objectivity of the auditor; and
Rounding of amounts
Rounding of amounts
The Company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities and Investments
The Company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities and
Commission, relating to 'rounding‐off'. Amounts in this report have been rounded off in accordance with that Corporations Instrument
Investments Commission, relating to ‘rounding-off’. Amounts in this report have been rounded off in accordance with
to the nearest thousand dollars, or in certain cases, the nearest dollar.
that Corporations Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.
Auditor’s independence declaration
Auditor's independence declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out immediately
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set
after this directors' report.
out immediately after this directors’ report.
This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the
This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act 2001.
Corporations Act 2001.
On behalf of the directors
On behalf of the directors
___________________________
D G Woodall
D G Woodall
Director
Director
14 September 2021
14 September 2021
13
41
2021 Australian Strategic Materials Annual ReportFinancial Report / Directors’ Report
Auditor’s Independence Declaration
As lead auditor for the audit of Australian Strategic Materials Limited for the year ended 30 June 2021,
I declare that to the best of my knowledge and belief, there have been:
(a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit, and
(b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Australian Strategic Materials Limited and the entities it controlled
during the period.
Helen Bathurst
Partner
PricewaterhouseCoopers
Perth
14 September 2021
PricewaterhouseCoopers, ABN 52 780 433 757
Brookfield Place, 125 St Georges Terrace, PERTH WA 6000, GPO Box D198, PERTH WA 6840
T: +61 8 9238 3000, F: +61 8 9238 3999, www.pwc.com.au
42
Liability limited by a scheme approved under Professional Standards Legislation.
2021 Australian Strategic Materials Annual ReportFinancial Report / Auditor’s Independence Declaration
Financial Statements
Consolidated financial statements
Consolidated statement of profit or loss and other comprehensive income
Consolidated balance sheet
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
Note 1. Significant accounting policies
Note 2. Critical accounting judgements, estimates and assumptions
Note 3. Revenue
Note 4. Other income
Note 5. Income tax
Note 6. Cash and cash equivalents
Note 7. Receivables
Note 8. Biological assets
Note 9. Property, plant and equipment
Note 10. Exploration and evaluation
Note 11. Intangibles
Note 12. Investments accounted for using the equity method
Note 13. Trade and other payables
Note 14. Borrowings
Note 15. Provisions
Note 16. Issued capital
Note 17. Reserves
Note 18. Accumulated losses
Note 19. Remuneration of auditors
Note 20. Contingent liabilities
Note 21. Commitments
Note 22. Related party transactions
Note 23. Parent entity information
Note 24. Asset acquisition
Note 25. Interests in subsidiaries
Note 26. Events after the reporting period
Note 27. Reconciliation of loss after income tax to net cash used in operating activities
Note 28. Key management personnel disclosures
Note 29. Operating segments
Note 30. Financial risk management
Note 31. Earnings per share
Note 32. Capital risk management
43
2021 Australian Strategic Materials Annual ReportFinancial Report / Financial Statements General information
The financial statements cover Australian Strategic Materials Ltd as a Consolidated Entity consisting of Australian
Strategic Materials Ltd and the entities it controlled at the end of, or during, the year. The financial statements are
presented in Australian dollars, which is Australian Strategic Materials Ltd’s functional and presentation currency.
Australian Strategic Materials Ltd is a listed public company limited by shares, incorporated and domiciled in Australia.
Its registered office and principal place of business are:
Registered office
Principal place of business
Australian Strategic Materials Ltd
Level 4, 66 Kings Park Road, West Perth, Western Australia
A description of the nature of the Consolidated Entity’s operations and its principal activities are included in the
directors’ report, which is not part of the financial statements.
The financial statements were authorised for issue, in accordance with a resolution of directors, on 14 September
2021. The directors have the power to amend and reissue the financial statements.
44
2021 Australian Strategic Materials Annual ReportFinancial Report / Financial Statements Consolidated statement of profit or loss and other comprehensive income
For the year ended 30 June 2021
Note
Consolidated
2021
$’000
2020
$’000
Revenue
Other income
Expenses from continuing operations
Professional fees and consulting services
Employee remuneration
Directors’ fees and salaries
General and administration expenses
Pastoral company expenses
Finance charges
Depreciation and amortisation expense
Share of loss of RMR Tech
Loss before income tax benefit
Income tax benefit
Loss after income tax benefit for the year
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation
Other comprehensive income for the year, net of tax
Total comprehensive loss for the year
3
4
5
Loss for the year is attributable to:
Non-controlling interest
Owners of Australian Strategic Materials Ltd
18
Total comprehensive loss for the year is attributable to:
Non-controlling interest
Owners of Australian Strategic Materials Ltd
1,377
5,237
(1,915)
(1,829)
(581)
(2,316)
(978)
-
(970)
-
212
861
(624)
-
-
(439)
(848)
(3,585)
(80)
(10)
(1,975)
(4,513)
1,166
(809)
248
(4,265)
9
9
-
-
(800)
(4,265)
(26)
(783)
(809)
-
(800)
(800)
-
(4,265)
(4,265)
-
(4,265)
(4,265)
Basic loss per share
Diluted loss per share
Note
Cents
Cents
Consolidated
31
31
(1)
(1)
(85,300,000)
(85,300,000)
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes
45
2021 Australian Strategic Materials Annual ReportFinancial Report / Financial Statements Consolidated balance sheet
As at 30 June 2021
Assets
Current assets
Cash and cash equivalents
Receivables
Consumables
Biological assets
Total current assets
Non-current assets
Property, plant and equipment
Exploration and evaluation
Intangibles
Investments accounted for using the equity method
Receivables
Biological assets
Other financial assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Borrowings
Provisions
Other
Total current liabilities
Non-current liabilities
Deferred tax
Provisions
Other
Total non-current liabilities
Total liabilities
Net assets/(liabilities)
Equity
Issued capital
Reserves
Accumulated losses
Equity/(deficiency) attributable to the owners of Australian
Strategic Materials Ltd
Non-controlling interest
Total equity/(deficiency)
The above consolidated balance sheet should be read in conjunction with the accompanying notes
Note
Consolidated
2021
$’000
2020
$’000
6
7
8
9
10
11
12
7
8
13
14
15
5
15
16
17
18
93,324
18,544
739
243
581
107
4
403
94,887
19,058
31,451
96,742
4,668
-
-
663
224
133,748
228,635
1,202
-
159
22
27,567
90,665
-
1,721
127
380
20
120,480
139,538
344
117,731
145
-
1,383
118,220
24,561
26,043
27
59
24,647
26,030
202,605
207,162
12,250
(16,866)
202,546
59
202,605
33
-
26,076
144,296
(4,758)
1
11,324
(16,083)
(4,758)
-
(4,758)
46
2021 Australian Strategic Materials Annual ReportFinancial Report / Financial Statements Consolidated statement of changes in equity
For the year ended 30 June 2021
Contributed
equity
Capital
contribution
Accumulated
losses
Total
deficiency in
equity
$’000
$’000
$’000
$’000
Consolidated
Balance at 1 July 2019
Loss after income tax benefit for the year
Other comprehensive income for the year, net of tax
Total comprehensive loss for the year
Adjustment for reclassification
Balance at 30 June 2020
1
-
-
-
-
1
39,873
-
-
-
(11,818)
(4,265)
-
28,056
(4,265)
-
(4,265)
(4,265)
(28,549)
-
(28,549)
11,324
(16,083)
(4,758)
Contributed
equity
Capital
contribution
Translation
reserve
Other
reserves
Accumulated
losses
Non-
controlling
interests
Total
equity
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Consolidated
Balance at 1 July 2020
Loss after income tax
benefit for the year
Other comprehensive
income for the year, net
of tax
Total comprehensive
income for the year
Transactions with owners
in their capacity as
owners:
Contributions of equity,
net of transaction costs
(note 16)
Share-based payments
Deferred tax recognised
in equity
Non-controlling interests
1
-
-
-
206,845
-
316
-
11,324
-
-
-
-
-
-
-
-
-
9
9
-
-
-
-
-
-
-
-
-
917
-
-
(16,083)
-
(4,758)
(783)
(26)
(809)
-
-
9
(783)
(26)
(800)
-
-
-
-
-
-
-
85
206,845
917
316
85
Balance at 30 June 2021
207,162
11,324
9
917
(16,866)
59
202,605
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes
47
2021 Australian Strategic Materials Annual ReportFinancial Report / Financial Statements Consolidated statement of cash flows
For the year ended 30 June 2021
Note
Consolidated
2021
$’000
2020
$’000
Cash flows from operating activities
Receipts from customers (inclusive of goods and services tax)
Payments to suppliers (inclusive of goods and services tax)
Interest received
Other income
Finance costs paid
1,145
(6,676)
(5,531)
75
242
(1)
Net cash used in operating activities
27
(5,215)
Cash flows from investing activities
Payments for investments
Payments for property, plant and equipment
Payments for exploration and evaluation
Payments for biological assets
Proceeds from sale of biological assets
Net cash acquired with subsidiaries
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
(Payments for)/Proceeds from borrowings from related party
Share issue transaction costs
Net cash from/(used in) financing activities
16
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
215
(1,508)
(1,293)
338
734
(1)
(222)
(1,730)
(223)
(2,474)
(457)
117
-
(414)
(2,955)
(5,840)
(196)
-
114
(9,291)
(4,767)
91,919
-
(2,633)
89,286
74,780
18,544
-
(3,435)
-
(3,435)
(8,424)
26,968
Cash and cash equivalents at the end of the financial year
93,324
18,544
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes
48
2021 Australian Strategic Materials Annual ReportFinancial Report / Financial Statements Financial Report / Notes to the Consolidated Financial Statements / Note 1
Note 1. Significant accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out either in the
respective notes or below. These policies have been consistently applied to all the years presented, unless
otherwise stated.
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards
and Interpretations issued by the Australian Accounting Standards Board (‘AASB’) and the Corporations Act 2001,
as appropriate for for-profit oriented entities. These financial statements also comply with International Financial
Reporting Standards as issued by the International Accounting Standards Board (‘IASB’).
New or amended Accounting Standards and Interpretations adopted
The Consolidated Entity has adopted all of the new or amended Accounting Standards and Interpretations issued by
the Australian Accounting Standards Board (‘AASB’) that are mandatory for the current reporting period.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
The adoption of these Accounting Standards and Interpretations did not have any significant impact on the financial
performance or position of the Consolidated Entity.
New standards and interpretations not yet adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet
mandatory, have not been early adopted by the Consolidated Entity for the annual reporting period ended 30 June
2021. The Consolidated Entity has not yet assessed the impact of these new or amended Accounting Standards
and Interpretations.
Going concern
As at 30 June 2021, the Group made a net loss after tax of $809,000 (2020 net loss: $4,265,000). The net asset
position of the Group increased from a net asset deficiency of $4,758,000 at 30 June 2020 to a net asset position of
$202,605,000 as at 30 June 2021.
The Group is continuing with exploration and evaluation activities in relation to the Dubbo Project, as well as
progressing the development of the Group’s first commercial metals plant in South Korea. As a result, the Group is
not yet generating commercial levels of revenue and will therefore rely on funding from its shareholders or other
sources to continue as a going concern.
The directors have prepared a cash flow forecast, and are satisfied that at the date of signing of the financial report,
there are reasonable grounds to believe that the Group will be able to continue to settle its liabilities and meet its
debts as and when they fall due. As a result the directors consider it appropriate for the financial statements to be
prepared on a going concern basis.
Biological Assets
The Company recognises biological assets when, and only when, the Company controls the assets as a result of past
events, it is probable that future economic benefits associated with such assets will flow to the Company and the fair
value or cost of the assets can be measured reliably. Expenditure incurred on biological assets are measured on initial
recognition and at the end of each reporting period at its fair value less costs to sell in terms. The gain or loss arising
on initial recognition of such biological assets at fair value less costs to sell and from a change in fair value less costs
to sell of biological assets are included in Statement of Comprehensive Income for the period in which it arises.
49
2021 Australian Strategic Materials Annual Report Financial Report / Notes to the Consolidated Financial Statements / Note 1
Historical cost convention
The financial statements have been prepared under the historical cost convention, except for, where applicable,
the revaluation of financial assets and liabilities at fair value through profit or loss, financial assets at fair value
through other comprehensive income, investment properties, biological assets, certain classes of property, plant and
equipment and derivative financial instruments.
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the Consolidated Entity
only. Supplementary information about the Parent Entity is disclosed in note 23.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Australian Strategic
Materials Ltd (‘Company’ or ‘Parent Entity’) as at 30 June 2021 and the results of all subsidiaries for the year then
ended. Australian Strategic Materials Ltd and its subsidiaries together are referred to in these financial statements as
the ‘Consolidated Entity’.
Subsidiaries are all those entities over which the Consolidated Entity has control. The Consolidated Entity controls
an entity when the Consolidated Entity 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 Consolidated Entity. They are de-consolidated
from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the Consolidated Entity
are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of
the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency
with the policies adopted by the Consolidated Entity.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership
interest, without the loss of control, is accounted for as an equity transaction, where the difference between the
consideration transferred and the book value of the share of the non-controlling interest acquired is recognised
directly in equity attributable to the parent.
Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of profit or
loss and other comprehensive income, balance sheet and statement of changes in equity of the Consolidated Entity.
Losses incurred by the Consolidated Entity are attributed to the non-controlling interest in full, even if that results in a
deficit balance.
Where the Consolidated Entity loses control over a subsidiary, it derecognises the assets including goodwill, liabilities
and non-controlling interest in the subsidiary together with any cumulative translation differences recognised in
equity. The Consolidated Entity recognises the fair value of the consideration received and the fair value of any
investment retained together with any gain or loss in profit or loss.
Foreign currency translation
The financial statements are presented in Australian dollars, which is Australian Strategic Materials Ltd’s functional
and presentation currency.
Foreign currency transactions
Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of
the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the
translation at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies
are recognised in profit or loss.
50
2021 Australian Strategic Materials Annual Report Financial Report / Notes to the Consolidated Financial Statements / Note 1
Foreign operations
The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the
reporting date. The revenues and expenses of foreign operations are translated into Australian dollars using the average
exchange rates, which approximate the rates at the dates of the transactions, for the period. All resulting foreign
exchange differences are recognised in other comprehensive income through the foreign currency reserve in equity.
The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed of.
Current and non-current classification
Assets and liabilities are presented in the balance sheet based on current and non-current classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the
Consolidated Entity’s normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised
within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being
exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are classified
as non-current.
A liability is classified as current when: it is either expected to be settled in the Consolidated Entity’s normal operating
cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period;
or there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting
period. All other liabilities are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
Investments and other financial assets
Investments and other financial assets are initially measured at fair value. Transaction costs are included as part of
the initial measurement, except for financial assets at fair value through profit or loss. Such assets are subsequently
measured at either amortised cost or fair value depending on their classification. Classification is determined based
on both the business model within which such assets are held and the contractual cash flow characteristics of the
financial asset unless an accounting mismatch is being avoided.
Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred
and the Consolidated Entity has transferred substantially all the risks and rewards of ownership. When there is no
reasonable expectation of recovering part or all of a financial asset, its carrying value is written off.
Financial assets at amortised cost
A financial asset is measured at amortised cost only if both of the following conditions are met: (i) it is held within a
business model whose objective is to hold assets in order to collect contractual cash flows; and (ii) the contractual
terms of the financial asset represent contractual cash flows that are solely payments of principal and interest.
Impairment of financial assets
The Consolidated Entity recognises a loss allowance for expected credit losses on financial assets which are either
measured at amortised cost or fair value through other comprehensive income. The measurement of the loss
allowance depends upon the Consolidated Entity’s assessment at the end of each reporting period as to whether
the financial instrument’s credit risk has increased significantly since initial recognition, based on reasonable and
supportable information that is available, without undue cost or effort to obtain.
Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month
expected credit loss allowance is estimated. This represents a portion of the asset’s lifetime expected credit losses
that is attributable to a default event that is possible within the next 12 months. Where a financial asset has become
credit impaired or where it is determined that credit risk has increased significantly, the loss allowance is based on
51
2021 Australian Strategic Materials Annual Report Financial Report / Notes to the Consolidated Financial Statements / Note 1
the asset’s lifetime expected credit losses. The amount of expected credit loss recognised is measured on the basis of
the probability weighted present value of anticipated cash shortfalls over the life of the instrument discounted at the
original effective interest rate.
For financial assets mandatorily measured at fair value through other comprehensive income, the loss allowance is
recognised in other comprehensive income with a corresponding expense through profit or loss. In all other cases,
the loss allowance reduces the asset’s carrying value with a corresponding expense through profit or loss.
Impairment of non-financial assets
At each balance sheet date, the Consolidated Entity reviews the carrying amounts of its non-current assets to
determine whether there is any indication that those assets have suffered an impairment loss. If any such indication
exists, the recoverable amount of the asset is estimated in order to determine the extent, if any, of the impairment
loss. Where it is not possible to estimate the recoverable amount of an individual asset, the Consolidated Entity
estimates the recoverable amount of the cash-generating unit (CGU) to which the asset belongs.
If the recoverable amount of an asset or CGU is estimated to be less than its carrying amount, the carrying amount of
the asset or CGU is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.
Where an impairment loss subsequently reverses the carrying amount of the asset or CGU is increased to the revised
estimate of its recoverable amount, not to exceed the carrying amount that would have been determined had no
impairment loss been recognised for the asset or cash generating unit in prior years. A reversal of an impairment loss
is recognised immediately in profit or loss.
The recoverable amount of a CGU is the higher of its fair value less costs to dispose (FVLCTD) and its value-in-use
(VIU). FVLCTD is the best estimate of the amount obtainable from the sale of a CGU in an arm’s length transaction
between knowledgeable willing parties, less the costs of disposal. This estimate is determined on the basis of available
market information taking into account specific circumstances.
VIU is the present value of the future cash flows expected to be derived from the assets or group of assets (CGUs).
Cash flow projections are based on economic and regulatory assumptions and forecast trading conditions prepared
by management.
Goods and Services Tax (‘GST’) and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as
part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the tax authority is included in other receivables or other payables in the balance sheet.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing
activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the
tax authority.
Subsidiaries
Subsidiaries are all entities over which the Consolidate Entity has control. The Consolidated Entity controls an entity
when the Consolidated Entity 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 Consolidated Entity. They are deconsolidated from
the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between Consolidated Entity companies
are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of
52
2021 Australian Strategic Materials Annual Report Financial Report / Notes to the Consolidated Financial Statements / Note 1
the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency
with the policies adopted by the Group.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated
statement of comprehensive income, statement of comprehensive income, statement of changes in equity and
balance sheet respectively.
Rounding of amounts
The Company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities and
Investments Commission, relating to ‘rounding-off’. Amounts in this report have been rounded off in accordance with
that Corporations Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.
Note 2. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions
that affect the reported amounts in the financial statements. Management continually evaluates its judgements
and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its
judgements, estimates and assumptions on historical experience and on other various factors, including expectations
of future events, management believes to be reasonable under the circumstances. The resulting accounting
judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions
that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to
the respective notes) within the next financial year are discussed below.
Impairment of capitalised exploration and evaluation expenditure
Exploration and evaluation costs have been capitalised on the basis that the Consolidated Entity will commence
commercial production in the future, from which time the costs will be amortised in proportion to the depletion of
the mineral resources. Key judgements are applied in considering costs to be capitalised which includes determining
expenditures directly related to these activities and allocating overheads between those that are expensed and
capitalised. In addition, costs are only capitalised that are expected to be recovered either through successful
development or sale of the relevant mining interest. Factors that could impact the future commercial production
at the mine include the level of reserves and resources, future technology changes, which could impact the cost of
mining, future legal changes and changes in commodity prices.
Where economic recoverable reserves for an area of interest have been identified, and a decision to develop has
occurred, capitalised expenditure is classified as mine development.
To the extent that capitalised costs are determined not to be recoverable in the future, they will be written off in the
period in which the determination is made.
Goodwill and other indefinite life intangible assets
The Consolidated Entity tests annually, or more frequently if events or changes in circumstances indicate impairment,
whether goodwill and other indefinite life intangible assets have suffered any impairment, in accordance with the
accounting policy stated in note 1. The recoverable amounts of cash-generating units have been determined based
on value-in-use calculations. These calculations require the use of assumptions, including estimated discount rates
based on the current cost of capital and growth rates of the estimated future cash flows.
Impairment of non-financial assets other than goodwill
The Consolidated Entity assesses impairment of non-financial assets other than goodwill and other indefinite life
intangible assets at each reporting date by evaluating conditions specific to the Consolidated Entity and to the
particular asset that may lead to impairment. If an impairment trigger exists, the recoverable amount of the asset is
determined. This involves fair value less costs of disposal or value-in-use calculations, which incorporate a number of
key estimates and assumptions.
53
2021 Australian Strategic Materials Annual Report Financial Report / Notes to the Consolidated Financial Statements / Note 2
Income tax
The Consolidated Entity is subject to income taxes in the jurisdictions in which it operates. Significant judgement
is required in determining the provision for income tax. There are many transactions and calculations undertaken
during the ordinary course of business for which the ultimate tax determination is uncertain. The Consolidated Entity
recognises liabilities for anticipated tax audit issues based on the Consolidated Entity’s current understanding of the
tax law. Where the final tax outcome of these matters is different from the carrying amounts, such differences will
impact the current and deferred tax provisions in the period in which such determination is made.
The income tax expense or credit for the period is the tax payable on the current period’s taxable income based
on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities
attributable to temporary differences and to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end
of the reporting period in the countries where the company and its subsidiaries and associates operate and generate
taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which
applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of
amounts expected to be paid to the tax authorities.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the
tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However,
deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred income tax is
also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business
combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income
tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the
reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred
income tax liability is settled.
Deferred tax assets are recognised only if it is probable that future taxable amounts will be available to utilise those
temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and
tax bases of investments in foreign operations where the Company is able to control the timing of the reversal of the
temporary differences and it is probable that the differences will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset where there is a legally enforceable right to offset current tax assets
and liabilities and where the deferred tax balances relate to the same taxation authority. Current tax assets and tax
liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis,
or to realise the asset and settle the liability simultaneously
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in
other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive
income or directly in equity, respectively.
54
2021 Australian Strategic Materials Annual Report Financial Report / Notes to the Consolidated Financial Statements / Note 3
Note 3. Revenue
Pastoral company revenue
Note 4. Other income
Net foreign exchange loss
Net gain on loan forgiveness
Interest income
Pastoral company income
Lease income
Sundry income
Other income
Net gain on loan forgiveness
Consolidated
2021
$’000
2020
$’000
1,377
212
Consolidated
2021
$’000
2020
$’000
(46)
4,731
69
-
151
332
5,237
(2)
-
404
338
121
-
861
On 17 July 2020, the Company entered into a restructure deed with Alkane Resources Ltd as part of the demerger to
capitalise $113,000,000 and forgive $4,731,000 of the loans to Australian Strategic Materials Ltd.
55
2021 Australian Strategic Materials Annual Report Financial Report / Notes to the Consolidated Financial Statements / Note 5
Note 5. Income tax
Income tax (benefit)/expense
Current tax
Deferred tax - origination and reversal of temporary differences
Aggregate income tax benefit
Deferred tax included in income tax benefit comprises:
Increase/(decrease) in deferred tax liabilities
Consolidated
2021
$’000
2020
$’000
-
(1,166)
(1,166)
(417)
169
(248)
(1,166)
169
Numerical reconciliation of income tax (benefit)/expense and tax at the statutory rate
Loss before income tax benefit
(1,975)
(4,513)
Tax at the statutory tax rate of 30% (2020: 30%)
(593)
(1,354)
Tax effect amounts which are not deductible/(taxable) in calculating taxable
income:
Non-deductible expenses
Tax rate differential on foreign income
Non-assessable income
Deductible equity raising costs
Income tax benefit
Amounts credited directly to equity
Deferred tax liabilities
836
88
(1,419)
(78)
1,106
-
-
-
(1,166)
(248)
Consolidated
2021
$’000
2020
$’000
(316)
-
56
2021 Australian Strategic Materials Annual Report Financial Report / Notes to the Consolidated Financial Statements / Note 5
Deferred tax asset
Deferred tax asset comprises temporary differences attributable to:
Tax losses
Accruals and provisions
Borrowing costs
Blackhole expenses
Property, plant and equipment
Other
Offset against deferred tax liabilities
Deferred tax asset
Deferred tax liability
Deferred tax liability comprises temporary differences attributable to:
Prepayments
Exploration
Set-off of deferred tax asset
Deferred tax liability
Movements:
Opening balance
Charged/(credited) to profit or loss
Credited to equity
Closing balance
Consolidated
2021
$’000
2020
$’000
2,086
103
-
317
3
36
-
67
36
12
35
-
(2,545)
(150)
-
-
Consolidated
2021
$’000
2020
$’000
3
27,103
(2,545)
3
26,190
(150)
24,561
26,043
26,043
(1,166)
(316)
25,874
169
-
24,561
26,043
57
2021 Australian Strategic Materials Annual Report Financial Report / Notes to the Consolidated Financial Statements / Note 5
Accounting policy for income tax
The income tax expense or benefit for the period is the tax payable on that period’s taxable income based on the
applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable
to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied
when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively
enacted, except for:
• When the deferred income tax asset or liability arises from the initial recognition of goodwill or 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 nor taxable profits; or
• When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and
the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the
foreseeable future.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable
that future taxable amounts will be available to utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date.
Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will
be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to
the extent that it is probable that there are future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets
against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same
taxable authority on either the same taxable entity or different taxable entities which intend to settle simultaneously.
Note 6. Cash and cash equivalents
Current assets
Cash at bank
Consolidated
2021
$’000
2020
$’000
93,324
18,544
Accounting policy for cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term,
highly liquid investments with original maturities of three months or less that are readily convertible to known
amounts of cash and which are subject to an insignificant risk of changes in value.
58
2021 Australian Strategic Materials Annual Report Financial Report / Notes to the Consolidated Financial Statements / Note 7
Note 7. Receivables
Current assets
Accounts receivables
Prepayments
Non-current assets
Receivable from related party
Consolidated
2021
$’000
2020
$’000
392
347
739
-
739
97
10
107
127
234
Accounting policy for trade and other receivables
Due to the short-term nature of the current receivables, their carrying amount is considered to be the same as their
fair value. For the majority of the non-current receivables, the fair values are also not significantly different to their
carrying amounts.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable are
written off by reducing the carrying amount directly. A provision for impairment of trade receivables is raised when
there is objective evidence that the Consolidated Entity will not be able to collect all amounts due according to the
original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter
bankruptcy or financial reorganisation and default or delinquency in payments (more than 60 days overdue) are
considered indicators that the trade receivable may be impaired. The amount of the impairment allowance is the
difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted
at the original effective interest rate. Cash flows relating to short-term receivables are not discounted if the effect of
discounting is immaterial.
Note 8. Biological assets
Current assets
Biological assets
Non-current assets
Biological assets
Consolidated
2021
$’000
2020
$’000
581
403
663
1,244
380
783
Biological assets comprise sheep and cattle owned by subsidiary Toongi Pastoral Company Pty Ltd as part of farming
operations on the surrounding land to the Dubbo Project mining lease.
Livestock are classified as current assets if they are to be sold within one year.
59
2021 Australian Strategic Materials Annual Report Financial Report / Notes to the Consolidated Financial Statements / Note 9
Note 9. Property, plant and equipment
Non-current assets
Land and buildings - at cost
Less: Accumulated depreciation
Plant and equipment - at cost
Less: Accumulated depreciation
Capital Work in Progress
Reconciliations
Consolidated
2021
$’000
2020
$’000
28,895
(49)
28,846
2,922
(346)
2,576
29
27,060
(26)
27,034
534
(199)
335
198
31,451
27,567
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set
out below:
Land &
Buildings
$’000
Plant &
Equipment
$’000
Work in
Progress
$’000
Right of Use
Asset
$’000
Total
$’000
Consolidated
Balance at 1 July 2019
Additions
Transfers between classes
Depreciation expense
26,448
-
604
(19)
Balance at 30 June 2020
27,033
Additions
Disposals
Additions through asset
acquisition (note 24)
Transfers between classes
Depreciation expense
-
-
-
1,835
(22)
391
-
6
(61)
336
1,027
(5)
1,214
117
(230)
119
689
(610)
-
198
1,783
-
-
(1,952)
-
29
-
-
-
-
-
122
-
-
-
(5)
117
26,958
689
-
(80)
27,567
2,932
(5)
1,214
-
(257)
31,451
Balance at 30 June 2021
28,846
2,459
All property, plant and equipment is stated at historical cost less accumulated depreciation and impairment charges.
Historical cost includes:
• expenditure that is directly attributable to the acquisition of items;
•
the present value of the estimated costs of dismantling and removing the asset and restoring the site on which
it is located.
60
2021 Australian Strategic Materials Annual Report Financial Report / Notes to the Consolidated Financial Statements / Note 9
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to the Consolidated Entity and the
cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset
is derecognised when replaced. All other repairs and maintenance are charged to profit or loss during the reporting
period in which they are incurred. Land is not depreciated.
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting
period. An assets carrying value amount is written down immediately to its recoverable amount if the assets carrying
amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in
the statement of comprehensive income.
Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost
includes expenditure that is directly attributable to the acquisition of the items.
Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and
equipment (excluding land) over their expected useful lives as follows:
Buildings
40 years
Plant and equipment
3-7 years
Note 10. Exploration and evaluation
Opening balance
Expenditure capitalised during the year
Closing balance
Consolidated
2021
$’000
2020
$’000
90,665
6,077
88,783
1,882
96,742
90,665
Exploration and evaluation costs are carried forward on an area of interest basis. Costs are recognised and carried
forward where rights to tenure of the area of interest are current and either:
•
the expenditures are expected to be recouped through successful development and exploitation of the area of
interest; or
• activities in the area of interest have not at the reporting date, reached a stage which permits a reasonable
assessment of the existence or otherwise of economically recoverable resources, and active and significant
exploration and evaluation activities in, or in relation to, the area of interest continuing.
Exploration and evaluation assets are assessed for impairment if sufficient data exists to determine technical feasibility
and commercial viability, and facts and circumstances suggest that the carrying amount exceeds the recoverable
amount. For the purposes of impairment testing, exploration and evaluation assets are allocated to cash-generating
units to which the exploration activity relates. The cash generating unit is not larger than the area of interest.
Once the technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are
demonstrable, exploration and evaluation assets attributable to that area of interest are first tested for impairment
and then reclassified to mine properties under development. No amortisation is charged during the exploration and
evaluation phase.
61
2021 Australian Strategic Materials Annual Report Financial Report / Notes to the Consolidated Financial Statements / Note 10
Recoverability of the carrying amount of the exploration and evaluation assets is dependent on successful development
and commercial exploitation, or alternatively, sale of the respective areas of interest.
Costs carried forward in respect of an area of interest that is abandoned are written off in the period in which the
decision to abandon is made.
There may exist, on the Consolidated Entity’s exploration properties, areas subject to claim under native title or
containing sacred sites or sites of significance to Aboriginal people. As a result, exploration properties or areas within
tenements may be subject to exploration or mining restrictions.
Note 11. Intangibles
The intangible assets are related to the internally generated intellectual property, which was part of the acquisition of
the Korean entities. Refer to note 24 for further information on the acquisition.
Non-current assets
Intellectual property (IP)
Less: Accumulated amortisation
Consolidated
2021
$’000
2020
$’000
5,380
(712)
4,668
-
-
-
Accounting policy for intangible assets
Intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for
impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. An
impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use. For the purposes
of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash
inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating
units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the
impairment at the end of each reporting period.
Intellectual property
Significant costs associated with intellectual property are deferred and amortised on a straight-line basis over the
period of their expected benefit, being their finite life of 5 years.
62
2021 Australian Strategic Materials Annual Report Financial Report / Notes to the Consolidated Financial Statements / Note 12
Note 12. Investments accounted for using the equity method
Non-current assets
Interest in associate
Reconciliation
Reconciliation of the carrying amounts at the beginning and end of the current
and previous financial year are set out below:
Opening carrying amount
Additions
Share of loss of Joint Venture
Reclassification to subsidiary
Closing carrying amount
Consolidated
2021
$’000
2020
$’000
-
1,721
1,721
-
-
(1,721)
-
-
1,730
(9)
-
1,721
During the year, ASM entered into a Heads of Agreement (“HOA”) with RMR and KSM. ASM has become the 100%
owner of RMR after completing the transactions listed in the HOA. RMR became a subsidiary of ASM, therefore, the
accounting for investment in RMR changed from equity method to consolidation accounting.
Note 13. Trade and other payables
Current liabilities
Trade payables
Other payables
Consolidated
2021
$’000
2020
$’000
221
981
1,202
344
-
344
Trade and other payables represent liabilities for goods and services provided to the Consolidated Entity prior to the
end of the financial period which are unpaid. Trade payables are unsecured and are usually paid within 30 days of
recognition. Trade and other payables are presented in current liabilities unless payment is not due within 12 months
from the reporting date.
63
2021 Australian Strategic Materials Annual Report Financial Report / Notes to the Consolidated Financial Statements / Note 14
Note 14. Borrowings
Current liabilities
Loans from related party
Consolidated
2021
$’000
2020
$’000
-
117,731
The loans in the prior year were AUD denominated and repayable to Alkane Resources Ltd (the Ultimate Parent
Company of the Consolidated Entity before demerger) on demand and attracted no interest.
On 17 July 2020, Alkane Resources Ltd and Australian Strategic Materials Ltd entered into a restructure deed as part
of the demerger to capitalise $113,000,000 and forgive $4,731,000 of loans to Australian Strategic Materials Ltd.
Note 15. Provisions
Current liabilities
Employee benefits
Non-current liabilities
Employee benefits
Consolidated
2021
$’000
2020
$’000
159
145
27
186
33
178
Amounts not expected to be settled within the next 12 months
The current provision for employee benefits includes all unconditional entitlements where employees have
completed the required period of service and also those where employees are entitled to pro-rata payments in
certain circumstances. The entire amount is presented as current, since the Consolidated Entity does not have an
unconditional right to defer settlement. However, based on past experience, the Consolidated Entity does not expect
all employees to take the full amount of accrued leave or require payment within the next 12 months.
The following amounts reflect leave that is not expected to be taken within the next 12 months:
Consolidated
2021
$’000
2020
$’000
Employee benefits obligation expected to be settled after 12 months
25
22
Accounting policy for employee benefits
The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting
date are measured at the present value of expected future payments to be made in respect of services provided
by employees up to the reporting date using the projected unit credit method. Consideration is given to expected
future wage and salary levels, experience of employee departures and periods of service. Expected future payments
are discounted using market yields at the reporting date on high quality corporate bonds with terms to maturity and
currency that match, as closely as possible, the estimated future cash outflows.
64
2021 Australian Strategic Materials Annual Report Financial Report / Notes to the Consolidated Financial Statements / Note 16
Note 16. Issued capital
Ordinary shares - fully paid
Movements in ordinary share capital
Details
Balance
Balance
Consolidated
2021
Shares
139,506,006
2020
Shares
Date
Shares
1 July 2019
30 June 2020
5
5
5
2021
$’000
207,162
2020
$’000
Issue price
$’000
1
1
1
Issue of shares as part of demerger
Consideration for purchase of RMR group
Share placement
Rights issue
Less: Transactions costs arising on share issue
Deferred tax credit recognised directly into equity
119,049,773
1,306,417
13,541,666
5,608,145
-
-
$0.95
$3.49
$4.80
$4.80
Balance
30 June 2021
139,506,006
113,000
4,559
65,000
26,919
(2,633)
316
207,162
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in
proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value
and the Company does not have a limited amount of authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll
each share shall have one vote.
On 17 July 2020, Alkane Resources Ltd and Australian Strategic Materials Ltd entered into a restructure deed as part
of the demerger to capitalise $113,000,000 and forgive the loans of $4,731,000 to Australian Strategic Materials Ltd.
The amount capitalised to share capital ($113,000,000) represents the management’s valuation of the ASM business.
On 3 November 2020, as part of the acquisitions of RMR and KSM, 1,306,417 shares were to be issued for consideration
of $4,559,000 to current KSM shareholders (via a holding entity) at an issue price of $3.49 per share based on the share
price of ASM on 3 November 2020. These shares will be subject to voluntary escrow for 12 months.
On 21 April 2021, the Company finalised $91,919,000 (before costs) capital raising which provided funding to focus on
advanced key workstreams including engineering and development of the Korean Metals Plant and the FEED study for
the Dubbo Project while also providing additional working capital and funding of corporate costs.
65
2021 Australian Strategic Materials Annual Report Financial Report / Notes to the Consolidated Financial Statements / Note 17
Note 17. Reserves
Foreign currency reserve
Share-based payments reserve
Capital contributions reserve
Foreign currency reserve
Consolidated
2021
$’000
2020
$’000
9
917
-
-
11,324
11,324
12,250
11,324
The reserve is used to recognise exchange differences arising from the translation of the financial statements of
foreign operations to Australian dollars. It is also used to recognise gains and losses on hedges of the net investments
in foreign operations.
Capital contributions reserve
This reserve has been used to recognise the discounted value of a loan from Alkane Resources Ltd prior to the
demerger in accordance with AASB 9.
Share-based payments reserve
The reserve is used to recognise the value of equity benefits provided to employees and directors as part of their
remuneration, and other parties as part of their compensation for services.
Note 18. Accumulated losses
Accumulated losses at the beginning of the financial year
Loss after income tax benefit for the year
Consolidated
2021
$’000
2020
$’000
(16,083)
(783)
(11,818)
(4,265)
Accumulated losses at the end of the financial year
(16,866)
(16,083)
66
2021 Australian Strategic Materials Annual Report Financial Report / Notes to the Consolidated Financial Statements / Note 19
Note 19. Remuneration of auditors
During the financial year the following fees were paid or payable for services provided by PricewaterhouseCoopers,
the auditor of the Company, and its network firms:
Audit services - PricewaterhouseCoopers
Audit or review of the financial statements
Other services - PricewaterhouseCoopers
Taxation services
Note 20. Contingent liabilities
Consolidated
2021
$’000
2020
$’000
92
41
121
-
The Consolidated Entity has contingent liabilities estimated at up to $5,375,000 for the potential acquisition of parcels
of land surrounding the Dubbo Project (2020: $3,670,000). The landholders have the right to require the Consolidated
Entity to acquire their property when the development consent conditions for the Dubbo Project have been met.
Note 21. Commitments
Mineral tenement leases
In order to maintain current rights of tenure to exploration and mining tenements, the Consolidated Entity will be
required to outlay amounts of approximately $179,000 within the next twelve months (2020: $169,000). These costs
are discretionary, however if the expenditure commitments are not met then the associated exploration and mining
leases may be relinquished.
Capital commitments
The Consolidated Entity has capital commitments estimated at $2,623,000 for the acquisition of parcels of land
surrounding the Dubbo Project (2020: $3,200,000). The amount to be paid is based upon a multiple of market values
and is subject to movement. The landholders have the right to require Australian Strategic Materials (Holdings)
Limited to acquire their property as provided for under the agreement with Australian Strategic Materials (Holdings)
Limited as development consent conditions have been met for the Dubbo Project. In addition, $2,610,000 has been
committed regarding activities for the Dubbo Project.
67
2021 Australian Strategic Materials Annual Report Financial Report / Notes to the Consolidated Financial Statements / Note 22
Note 22. Related party transactions
Parent entity
Australian Strategic Materials Ltd is the parent entity of the Group.
Subsidiaries
Interests in subsidiaries are set out in note 25.
Key management personnel
Disclosures relating to key management personnel are set out in note 28 and the remuneration report included in the
directors’ report.
Transactions with related parties
The following transactions occurred with related parties:
Payment for goods and services:
Purchase of goods from other related party
Consolidated
2021
$’000
2020
$’000
4
-
Nuclear IT, a director related entity, provides information technology consulting services to the Consolidated Entity
which includes the coordination of the purchase of information technology hardware and software.
Related party payables
As at 30 June 2021, committee fees totalling $3,750 remained payable to the group’s Non-Executive Director, Mr D I
Chalmers (2020: nil).
Note 23. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Profit/(loss) after income tax
Total comprehensive income
Parent
2021
$’000
2020
$’000
4,631
4,631
(680)
(680)
68
2021 Australian Strategic Materials Annual Report Financial Report / Notes to the Consolidated Financial Statements / Note 23
Balance sheet
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Share-based payments reserve
Capital contributions reserve
Accumulated losses
Parent
2021
$’000
2020
$’000
90,613
112,973
208,288
112,973
333
338
207,162
917
11,323
(11,452)
117,731
117,731
1
-
11,324
(16,083)
Total equity/(deficiency)
207,950
(4,758)
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity had no guarantees in relation to the debts of its subsidiaries as at 30 June 2021 and 30 June 2020.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2021 and 30 June 2020.
Capital commitments – Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2021 and 30 June 2020.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the Consolidated Entity, as disclosed in note
1, except for the following:
•
•
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity
Investments in JV are accounted for at cost, less any impairment, in the parent entity; and
• Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an
indicator of an impairment of the investment.
69
2021 Australian Strategic Materials Annual Report Financial Report / Notes to the Consolidated Financial Statements / Note 24
Note 24. Asset acquisition
On 3 September 2020, ASM entered into a Heads of Agreement (“HOA”) with RMR and KSM. ASM has become the
100% owner of RMR, and RMR has become 95% owner of KSM after completing the restructure arrangements
as stated in the HOA on 3 November 2020. RMR became a subsidiary of ASM, therefore, the accounting for the
investment in RMR changed from the equity method to consolidation accounting.
Through the acquisitions, the ASM group now owns all of KSM’s patents and related intellectual property and
technology that were the subject of the RMR joint venture, as well as any intellectual property rights or interests that
may be developed by KSM in the future. Professor Jonghyeon Lee holds the remaining 5% of KSM.
Details of the purchase consideration are as follows:
Purchase consideration
Acquisition date fair value of investment previously held
Ordinary shares to be issued
Convertible Note and associated interest
Transaction costs
Cash paid by RMR to purchase KSM Metals shares
$’000
1,721
4,559
123
414
7
6,824
The fair value consideration of $4,559,000 for the 1,306,417 shares issued as part of the consideration paid for RMR
was based on published share price on 3 November 2020 of $3.49 per share.
The transaction meets the asset concentration test criteria. The fair value of the gross assets acquired is concentrated
in a single identifiable asset, which is the patents and related intellectual property and technology. The fair value
of the purchase consideration has been allocated to the assets acquired and liabilities assumed as the date of the
acquisition as per the table below:
Cash and cash equivalents
Other current assets
Plant and equipment
Intellectual property
Other non-current assets
Other payables
Less: non-controlling interests
Net assets acquired
Fair value
$’000
114
339
1,214
5,342
158
(258)
(85)
6,824
70
2021 Australian Strategic Materials Annual Report Financial Report / Notes to the Consolidated Financial Statements / Note 25
Note 25. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in
accordance with the accounting policy described in note 1:
Name
Australian Strategic Materials (Holdings) Ltd (name
changed from Australian Strategic Materials Ltd on
14 February 2020)
Toongi Pastoral Company Pty Ltd
Rare Metals Resources Technology Corporation*
KSM Technology Co. Ltd (previously named
Zirconium Technology Corporation)
ASM Metals Corporation Pty Ltd
ASM Technology Corporation Pty Ltd
Korea Strategic Metal Co
Note Principal place of
business / Country of
incorporation
Ownership interest
2021
%
2020
%
Australia
Australia
South Korea
100.00%
100.00%
100.00%
100.00%
100.00%
10.07%
South Korea
95.00%
Australia
Australia
South Korea
100.00%
100.00%
100.00%
-
-
-
-
* Rare Metals Resources Technology Corporation name changed to ASM Korea Co. Ltd on the 17 August 2021.
Note 26. Events after the reporting period
On 21 July 2021, ASM signed a $US250,000,000 framework agreement with a South Korean consortium for 20% in the
Dubbo Project and offtake from the Korean Metals Plant. The key points are:
• ASM has signed a conditional framework agreement with consortium of South Korean investors for the acquisition
of a 20% equity interest in ASM’s Dubbo Project holding company.
• Under the Agreement a consortium fund will invest $US250,000,000 for the 20% equity interest.
• The Investing Partnership intends to establish a second fund to develop a domestic Korean permanent magnet
manufacturing business that will enter into an offtake agreement for NdFeB (neodymium-iron-boron) alloy from
ASM’s Korean Metals Plant.
• The Agreement creates a pathway for ASM to develop the Dubbo Project and execute its “mine to metal” strategy.
No other matter or circumstance has arisen since 30 June 2021 that has significantly affected, or may significantly
affect the Consolidated Entity’s operations, the results of those operations, or the Consolidated Entity’s state of affairs
in future financial years.
71
2021 Australian Strategic Materials Annual Report Financial Report / Notes to the Consolidated Financial Statements / Note 27
Note 27. Reconciliation of loss after income tax to net cash used in
operating activities
Loss after income tax benefit for the year
Adjustments for:
Depreciation and amortisation
Finance charges
Equity accounted movement
Share based payments
Loan forgiveness income
Change in operating assets and liabilities:
Decrease/(increase) in receivables
Increase in inventory
Increase in trade and other payables
Decrease in deferred tax liabilities
Increase in other provisions
(Increase)/decrease in biological assets
Net cash used in operating activities
Net debt reconciliation
Consolidated
2021
$’000
2020
$’000
(809)
(4,265)
970
70
-
917
(4,731)
(633)
(239)
858
(1,165)
7
(460)
(5,215)
80
3,585
10
-
-
220
(247)
143
(248)
160
340
(222)
This section sets out an analysis of net debt and the movements in net debt for each of the periods presented.
Cash and cash equivalents
Related party borrowings - repayable within one year *
Net debt
Consolidated
2021
$’000
2020
$’000
93,324
-
18,544
(117,731)
93,324
(99,187)
72
2021 Australian Strategic Materials Annual Report Financial Report / Notes to the Consolidated Financial Statements / Note 27
Opening net debt
Cash flows
Cash
$’000
18,544
74,780
Related party borrowings
repayable within one year *
$’000
(117,731)
-
Total
$’000
(99,187)
74,780
Other non-cash movements
-
117,731
117,731
Closing net debt
93,324
-
93,324
* The loans in the prior year were AUD denominated and repayable to Alkane Resources Ltd (the Ultimate Parent Company of the Consolidated Entity
before demerger) on demand and attracted no interest. Refer note 14.
Note 28. Key management personnel disclosures
Directors
The following persons were directors of Australian Strategic Materials Ltd during the financial year:
I J Gandel
N P Earner
D I Chalmers
A D Lethlean - resigned 28 July 2020
G M Smith
D G Woodall
Other key management personnel
The following persons also had the authority and responsibility for planning, directing and controlling the major
activities of the Consolidated Entity, directly or indirectly, during the financial year:
F Moon
J Carter
A MacDonald (resigned 12 March 2021)
Compensation
The aggregate compensation made to directors and other members of key management personnel of the
Consolidated Entity is set out below:
Short-term employee benefits
Post-employment benefits
Long-term benefits
Share-based payments
Consolidated
2021
$’000
2020
$’000
1,478
60
24
661
2,223
260
24
84
256
624
73
2021 Australian Strategic Materials Annual Report
Financial Report / Notes to the Consolidated Financial Statements / Note 29
Note 29. Operating segments
The Group comprises a single business segment predominately in the critical metals industry and a single geographical
location being Australia. During the period, acquisitions of subsidiaries in Korea were completed, but at this stage it is not
considered a material segment separate from the Australian operations. The segment details are therefore fully reflected
in the results and balances reported in the statement of comprehensive income and statement of financial position.
Note 30. Financial risk management
Financial risk management objectives
The Group’s activities expose it to a variety of financial risks: market risk (including foreign currency risk, price risk and
interest rate risk), credit risk and liquidity risk. The Consolidated Entity’s overall risk management program focuses on
the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance
of the Consolidated Entity.
This note presents information about the Group’s exposure to each of the above risks, their objectives, policies and
processes for measuring and managing risk, and the management of capital.
The Board of Directors has overall responsibility for the establishment and oversight of the risk management
framework. Management monitors and manages the financial risks relating to the operations of the Group through
regular reviews of the risks and mitigating strategies.
The Consolidated Entity undertakes certain transactions denominated in foreign currency and is exposed to foreign
currency risk through foreign exchange rate fluctuations.
Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial
liabilities denominated in a currency that is not the entity’s functional currency. The risk is measured using sensitivity
analysis and cash flow forecasting.
Market risk
Foreign currency risk
The majority of the Group’s expenditure are in Australian dollars as such the risk is not significant and is not currently
required to be managed through the use of derivatives.
Price risk
The Consolidated Entity is currently not in production and has minimal income so there is no current requirement to
mitigate commodity risk through the use of derivatives.
Interest rate risk
The Group’s main interest rate risk arises through its cash and cash equivalents and other financial assets held within
financial institutions. The Group minimises this risk by utilising fixed rate instruments where appropriate.
Summarised market risk sensitivity analysis:
30 June 2021
30 June 2020
Carrying
Amount
$’000
+100BP
-100BP
Carrying
Amount
+100BP
-100BP
$’000
$’000
$’000
$’000
$’000
Financial assets
Cash and cash equivalents
93,324
373
(373)
18,544
130
(130)
Receivables (current)*
Receivables (non-current)*
Other financial assets
Trade and other payables
393
-
20
1,202
94,939
-
-
-
5
378
-
-
-
(5)
(378)
97
127
20
(334)
18,454
-
1
1
-
-
(1)
(1)
-
132
(132)
* The receivables balance excludes prepayments and tax balances which do not meet the definition of financial assets and liabilities.
74
2021 Australian Strategic Materials Annual Report Financial Report / Notes to the Consolidated Financial Statements / Note 30
There is no exposure to foreign exchange risk or commodity price risk for the above financial assets and liabilities.
Credit risk
The Consolidated Entity has adopted a lifetime expected loss allowance in estimating expected credit losses to trade
receivables through the use of a provisions matrix using fixed rates of credit loss provisioning. These provisions are
considered representative across all customers of the Consolidated Entity based on recent sales experience, historical
collection rates and forward-looking information that is available.
In determining the recoverability of a trade or other receivable using the expected credit loss model, the Group
performs a risk analysis considering the type and age of the outstanding receivables, the creditworthiness of the
counterparty, contract provisions, letter of credit and timing of payment.
Credit risk arises from cash and cash equivalents, deposits with banks and financial institutions, as well as credit
exposure to customers, including outstanding receivables and committed transactions.
(i) Risk management
The Group limits its exposure to credit risk in relation to cash and cash equivalents and other financial assets by only
utilising banks and financial institutions with acceptable credit ratings.
(ii) Credit quality
Tax receivables and prepayments do not meet the definition of financial assets. The Group assesses the credit quality
of the customer, taking into account its financial position, past experience and other factors.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial liabilities as they fall due. The Group’s
approach to managing liquidity risk is to ensure, as far as possible, that it will always have sufficient liquidity to meet
its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking
damage to the Group’s reputation. The Board of Directors monitors liquidity levels on an ongoing basis.
The Group’s financial liabilities generally mature within 3 months, therefore the carrying amount equals the cash flow
required to settle the liability.
Note 31. Earnings per share
Loss after income tax
Non-controlling interest
Loss after income tax attributable to the owners of Australian Strategic
Materials Ltd
Basic loss per share
Diluted loss per share
Consolidated
2021
$’000
2020
$’000
(809)
26
(783)
(4,265)
-
(4,265)
Cents
Cents
(1)
(1)
(85,300,000)
(85,300,000)
Number
Number
Weighted average number of ordinary shares used in calculating basic earnings
per share
Weighted average number of ordinary shares used in calculating diluted
earnings per share
114,644,807
114,644,807
5
5
75
2021 Australian Strategic Materials Annual Report Financial Report / Notes to the Consolidated Financial Statements / Note 31
The number of potential ordinary shares not considered dilutive are as follows:
Performance rights
3,000,000
-
Accounting policy for earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of Australian Strategic Materials
Ltd, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary
shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the
financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into
account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary
shares and the weighted average number of shares assumed to have been issued for no consideration in relation to
dilutive potential ordinary shares.
Note 32. Capital risk management
The Group’s objectives when managing capital are to safeguard the ability to continue as a going concern, so that
it can continue to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal
capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may
return capital to shareholders, pay dividends to shareholders, issue new shares or sell assets.
76
2021 Australian Strategic Materials Annual Report Financial Report / Directors’ declaration
Directors’ declaration
•
the financial statements and notes set out on pages 45 to 76 are in accordance with the Corporations Act 2001
including:
(i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional
reporting requirements; and
(ii) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2021 and of its
performance for the financial year ended on that date; and
•
•
the financial statements and notes comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board as described in note 1 to the financial statements;
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 required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the directors
D G Woodall
Director
14 September 2021
77
2021 Australian Strategic Materials Annual Report
Independent auditor’s report
To the members of Australian Strategic Materials Limited
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial report of Australian Strategic Materials Limited (the Company) and its
controlled entities (together the Group) is in accordance with the Corporations Act 2001, including:
(a) giving a true and fair view of the Group's financial position as at 30 June 2021 and of its financial
performance for the year then ended, and
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The Group financial report comprises:
•
•
•
•
•
•
the consolidated balance sheet as at 30 June 2021
the consolidated statement of changes in equity for the year then ended
the consolidated statement of cash flows for the year then ended
the consolidated statement of profit or loss and other comprehensive income for the year then
ended
the notes to the consolidated financial statements, which include significant accounting policies
and other explanatory information, and
the directors’ declaration.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
report section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Independence
We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence
Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.
Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
PricewaterhouseCoopers, ABN 52 780 433 757
Brookfield Place, 125 St Georges Terrace, PERTH WA 6000, GPO Box D198, PERTH WA 6840
T: +61 8 9238 3000, F: +61 8 9238 3999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
78
We tailored the scope of our audit to ensure that we performed enough work to be able to give an
opinion on the financial report as a whole, taking into account the geographic and management
structure of the Group, its accounting processes and controls and the industry in which it operates.
Materiality
Audit scope
Key audit matters
• Our audit focused on where
the Group made subjective
judgements; for example,
significant accounting
estimates involving
assumptions and inherently
uncertain future events.
•
The accounting processes are
structured around a Group
finance function at its head
office in Perth.
•
• Amongst other relevant topics,
we communicated the following
key audit matters to the Audit
Committee:
−− Carrying value of exploration
and evaluation assets
−− Basis of preparation
These are further described in
the Key audit matters section
of our report.
•
For the purpose of our audit
we used overall Group
materiality of $2,286,000
which represents
approximately 1% of the
Group’s total assets.
• We applied this threshold,
together with qualitative
considerations, to determine
the scope of our audit and the
nature, timing and extent of
our audit procedures and to
evaluate the effect of
misstatements on the
financial report as a whole.
• We chose total assets of the
Group because, in our view, it
is the benchmark against
which the performance of the
Group is most commonly
measured.
• We utilised a 1% threshold
based on our professional
judgement, noting it is within
the range of commonly
acceptable thresholds.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report for the current period. The key audit matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters. Further, any commentary on the outcomes of a
particular audit procedure is made in that context.
79
Key audit matter
How our audit addressed the key audit matter
Carrying value of exploration and evaluation
assets
(Refer to note 10 of the financial statements)
The Group’s Dubbo Project is a large exploration
asset that is subject to the impairment indicators
assessment required by AASB 6 Exploration for and
Evaluation of Mineral Resources. Due to the relative
size of this balance in the consolidated balance sheet,
as well as the judgemental application of AASB 6 this
has been considered a key audit matter.
Judgement was required by the Group to assess
whether there were indicators of impairment of the
capitalised exploration and evaluation assets due to
the need to make estimates and assumptions about
future events and circumstances, such as whether the
mineral resources may be economically viable to
mine in the future.
We performed the following procedures:
• Assessed whether the Group retained right of
tenure for all of its exploration licence areas by
obtaining licence status records from relevant
government databases.
•
•
•
For a sample of additions to exploration and
evaluation assets during the year, inspected
relevant supporting documentation such as
invoices, and compared the amounts to accounting
records.
For a sample of additions to exploration and
evaluation assets during the year, tested the nature
of the expense being capitalised and whether this
was in accordance with AASB 6.
Inquired of management and directors as to the
future plans for the capitalised exploration and
evaluation assets and assessed plans for future
expenditure to meet minimum licence
requirements.
Basis of preparation
(Refer to note 1 of the financial statements)
As described in Note 1 to the financial report, the
financial statements have been prepared by the
Group on a going concern basis, which contemplates
that the Group will continue to meet its commitments,
realise its assets and settle its liabilities in the normal
course of business.
The Group is continuing with exploration and
evaluation activities in relation to the Dubbo project,
as well as progressing the development of the
Group’s first commercial metals plant in South Korea.
As a result, the Group is not yet generating
commercial levels of revenue and will therefore rely
on funding from its shareholders or other sources to
continue as a going concern. These funds will be
used to meet expenditure requirements in relation to
the Dubbo Project and continue the construction of
the Korean commercial metals plant.
Assessing the appropriateness of the Group’s basis of
preparation for the financial report was a key audit
matter due to its importance to the financial report and
the level of judgement involved in assessing future
funding and operational status, in particular with
respect to the Group forecasting future cash flows for
a period of at least 12 months from the audit report
date (cash flow forecasts).
In assessing the appropriateness of the Group’s going
concern basis of preparation for the financial report, we
performed the following procedures, amongst others:
•
evaluated the appropriateness of the Group's
assessment of its ability to continue as a going
concern, including whether the level of analysis is
appropriate given the nature of the Group, the
period covered is at least 12 months from the date
of our auditor’s report and relevant information of
which we are aware as a result of the audit has
been included,
•
•
•
•
enquired of management and the directors as to
their knowledge of events or conditions that may
cast significant doubt on the Group's ability to
continue as a going concern,
evaluated selected data and assumptions used in
the Group’s cash flow forecasts, including agreeing
assumptions to external and internal data, where
available,
developed an understanding of what forecast
expenditure in the cash flow forecast is committed,
and what could be considered discretionary, and
evaluated whether, in view of the requirements of
Australian Accounting Standards, the financial
report provides adequate disclosures about these
events or conditions.
80
Other information
The directors are responsible for the other information. The other information comprises the
information included in the annual report for the year ended 30 June 2021, but does not include the
financial report and our auditor’s report thereon. Prior to the date of this auditor's report, the other
information we obtained included the Corporate directory and Directors’ report. We expect the
remaining other information to be made available to us after the date of this auditor's report.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of
this auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing
and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our
auditor's report.
81
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 34 to 40 of the directors’ report for the
year ended 30 June 2021.
In our opinion, the remuneration report of Australian Strategic Materials Limited for the year ended 30
June 2021 complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the remuneration report, based on our audit conducted in accordance with
Australian Auditing Standards.
PricewaterhouseCoopers
Helen Bathurst
Partner
Perth
14 September 2021
82
Financial Report / Additional Information
Additional
Information
Additional information required by Australian
Securities Exchange Ltd and not shown elsewhere
in this report is as follows. The information is
current as at 21 September 2021.
Shareholder information
Additional information required by Australian Securities Exchange Ltd and not shown elsewhere in this report is as
follows. The information is current as at 21 September 2021.
Distribution of Equity Securities
Analysis of numbers of equity security holders by size of holding:
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
The number of equity security holders holding less than a marketable
parcel of securities are:
Ordinary shares
Number of
holders
Number of
shares
5,593
3,491
872
938
98
2,382,280
8,471,551
6,381,869
24,731,433
97,538,873
10,992
139,506,006
279
5,795
83
2021 Australian Strategic Materials Annual Report Financial Report / Additional Information
Twenty Largest Shareholders
The names of the 20 largest holders of quoted ordinary shares are:
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
ABBOTSLEIGH PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CITICORP NOMINEES PTY LIMITED
CHAPELGREEN PTY LTD
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