Annual Report
2022
rare earths,
critical minerals &
high-tech metals
Disclaimer
Competent Persons
The Mineral Resources and Ore Reserves Statement has
been approved by Mr D Ian Chalmers, FAusIMM, FAIG, a
technical consultant to the Company. 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 is based on information
which has been compiled by Mr Stuart Hutchin, MIAG, an
employee of Mining One Pty Ltd. The information in this
report is based on information which has been compiled
by Mr Levan Ludjio MAusIMM(CP) and Mr Mark Van Leuven
FAusIMM (CP), employees of Mining One Pty Ltd.
While these forward-looking statements reflect the
Company’s expectations at the date of this report, they
are not guarantees or predictions of future performance
or statements of fact. The information is based on the
Company forecasts and as such is subject to variation
related to, but not restricted to, economic, market demand/
supply and competitive factors.
Forward-looking statements are only predictions and
are subject to known and unknown risks, uncertainties,
assumptions, and other important factors that could
cause the actual results, performances or achievements
of the Company to differ materially from future results,
performances or achievements expressed, projected or
implied by such forward-looking statements. Readers are
Each of Mr Chalmers, Mr Hutchin, Mr Ludjio and Mr Van
cautioned not to place undue reliance on these forward-
Leuven has sufficient experience that is relevant to the style
looking statements, which speak only as of the date thereof.
of mineralisation and type of deposit under consideration
Except as required by applicable laws or regulations, the
and to the activity that is being undertaken to qualify as
Company does not undertake to publicly update or review
a Competent Person as defined in the 2012 Edition of the
any forward-looking statements, whether as a result of new
‘Australasian Code for Reporting of Exploration Results,
information or future events. The Company cautions against
Mineral Resources and Ore Reserves’ (JORC Code).
reliance on any forward-looking statements or guidance,
Previously reported information
particularly in light of the current economic climate and the
significant volatility, uncertainty and disruption arising in
Information prepared and disclosed under the JORC Code
connection with COVID-19.
Information on likely developments in the Group’s
business strategies, prospects and operations for future
financial years and the expected results that could result
in unreasonable prejudice to the Group (for example,
information that is commercially sensitive, confidential
or could give a third party a commercial advantage) has
not been included below in this report. The categories of
information omitted include forward-looking estimates and
projections prepared for internal management purposes,
information regarding the Company’s operations and
projects, which are developing and susceptible to change,
and information relating to commercial contracts.
has not materially changed since last reported in Company’s
ASX announcements available to view on the Company’s
website. The Company is not aware of any new information
or data that materially affects the information included
in this Annual Report and confirms that the material
assumptions and technical parameters underpinning the
estimates in the relevant market announcement continue to
apply and have not materially changed.
Forward-looking statements
This document contains certain statements which constitute
“forward-looking statements”.
Often, but not always, forward-looking statements can
generally be identified by the use of forward-looking
words such as “may”, “will”, “expect”, “plan”, “believes”,
“estimate”, “anticipate”, “outlook” and “guidance”, or
similar expressions, and may include, without limitation,
statements regarding plans; strategies and objectives of
management; anticipated production and production
potential; estimates of future capital expenditure or
construction commencement dates; expected costs or
production outputs; estimates of future product supply,
demand and consumption; statements regarding future
product prices; and statements regarding the expectation of
future Mineral Resources and Ore Reserves.
Contents
Company Information
Acknowledgement of Country
Message from the Chair
About us
Building our mine to metals business
Dubbo Project
Korean Metals Plant
Sustainability
Corporate Governance Statement
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
Schedule of mining tenements
02
03
04
08
10
12
22
30
38
39
41
56
58
62
96
97
102
102
103
Overview | ASM Annual Report 2022 01
Company
Information
Company
Information
ACN 168 368 401
Directors
IJ Gandel (Non-Executive Chair)
NP Earner (Non-Executive Director)
KJ Gleeson (Non-Executive Director)
GM Smith (Non-Executive Director)
Joint Company Secretaries
J Jones
D Wilkins
Registered office and principal
place of business
Level 4, 66 Kings Park Road
West Perth WA 6005
Telephone:
+61 8 9200 1681
Share registry
Advanced Share Registry Services
110 Stirling Highway
Nedlands WA 6009
Telephone:
Facsimile:
+61 8 9389 8033
+61 8 9262 3723
Auditor
PricewaterhouseCoopers
Brookfield Place, 125 St Georges Terrace
Perth WA 6000
Website
asm-au.com
Security exchange listing
ASX: ASM
Acknowledgement
of Country
Australian Strategic Materials 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.
Specifically, we acknowledge the Traditional
Custodians in the areas where we have our
offices and operations:
• The Nyoongar Whadjuk people - Perth
• The Wilay Wiradjuri people - Dubbo
and Toongi
• The Turrbal and Jagera/Yuggera
people - Brisbane
02 ASM Annual Report 2022 | Overview
Overview | ASM Annual Report 2022 03
Message
from the Chair
On behalf of the Board of Australian Strategic Materials Ltd (ASM), I am pleased to present the
Company’s Financial Year 2022 (FY22) Annual Report.
FY22 has been another busy year. There have been many notable highlights as ASM continued
to build its global rare earths and critical minerals business to provide the high-tech metals needed
to solve the challenges of today and the future.
Dubbo Project
ASM continued with the development of its
Dubbo Project - a rare earths and critical
minerals project in NSW, Australia.
We completed the Project’s Optimisation Study,
which confirmed the project’s strong financials.
The Optimisation Study Work also included
design improvements that enhanced the
project’s ESG performance, including reducing
trucks on community roads, creating local jobs
and reducing water consumption.
The Optimisation Study Work was a substantial
and crucial piece of foundational work
that confirms the compelling case for the
development of the Dubbo Project.
Throughout the year, to advance project
financing, ASM engaged with Australian and
Korean government funding agencies and
commenced discussions with Australian,
Korean and global project finance banks. ASM
is encouraged by the support received to date,
especially from the Australian and Korean
Governments, as we continue to pursue
these exciting opportunities.
ASM also progressed toward securing a strategic
investor, and acquiring offtake agreements
for the Dubbo Project, meeting with industrial
conglomerates, product end-users, engineering
companies and financial investors in Korea, the
USA, Europe and Japan. I am confident these
discussions will enable the Company to secure
an aligned strategic partner for the Dubbo
Project, and we look forward to progressing
these discussions into FY23.
In June 2022, the Dubbo Project took a major
step forward, with Hyundai Engineering
Corporation Co., Ltd (HEC) awarded the
contract to provide Engineering Procurement
and Construction Definition (EPCD) work. We
are thrilled to have HEC, one of the world’s
leading EPC firms, seeking to partner with us
on this project.
Over the past two decades, we have developed
a strong relationship with local Elders and
Aboriginal organisations associated with the
land on which the Dubbo Project is located.
This year it was a real pleasure to have Peter
Peckham, Wiradjuri Elder, participate in the
opening of our Korean Metals Plant, celebrating
the connection between Australia and Korea.
Having been an advocate for the Dubbo
Project for many years, I find it exciting to
see traction on the activities fundamental to
delivering the Dubbo Project, and I thank the
talented Project team for their hard work over
the past 12 months.
I am especially pleased that after this
extraordinary effort, the first sale and delivery
of neodymium praseodymium metal from the
Plant occurred in September 2022. Securing
the first sale was a key milestone for ASM and,
as we ramp up further, we look forward to
announcing further agreements.
This year, the technology team focussed on
commercial scale process development of ASM’s
innovative metallisation technology to produce
copper titanium alloy products. I am excited
about the remarkable opportunity scaling this
technology presents for ASM to innovatively
produce titanium products. Further work is
planned to continue through FY23 on this
exciting technology.
The Korean Metals Plant and ASM’s presence
in Korea have generated support and interest
from government and industry. Having travelled
to Korea several times during the year, I believe
ASM’s relationship in Korea is strong, and look
forward to harnessing ongoing opportunities
for collaboration.
Korea
In Korea, ASM’s primary focus has been
the construction of the Korean Metals
Plant, together with the installation and
commissioning of the Phase 1 neodymium
praseodymium and titanium furnaces, and
ancillary equipment.
ASM commenced and completed the
refurbishment of the existing main factory
and the construction of five additional buildings
at the Korean Metals Plant in under 10
months - an incredible feat by the focussed
and hardworking team.
To celebrate the completion of the
refurbishment and construction, the Korean
Metals Plant hosted an official opening
ceremony in May 2022. We were delighted
to be joined by key representatives from
the Australian and Korean government and
business community, as we celebrated the
significance of the plant for the global critical
metals supply chain.
Installation and commissioning of Phase
1 equipment to produce neodymium
praseodymium and titanium fell behind
schedule due to the ongoing impacts of
COVID-19 and supply chain disruptions,
however our team overcame these challenges
with the installation of the neodymium
praseodymium and titanium furnaces
completed before the year end, with
commissioning well underway. I extend my
thanks to our dedicated team for their ability
to navigate through these tough circumstances
and produce a critical outcome for our business.
04 ASM Annual Report 2022 | Overview
Overview | ASM Annual Report 2022 05
Message
from the Chair
Environmental Social and Governance
As ASM continues to build its business, it will do
so adhering to its commitments to community
and the highest sustainability standards. ASM
continues to undertake the solid groundwork
required to meet the standards expected of
an ethical and sustainable company. As shown
in the Sustainability section of this report, this
year ASM further strengthened its governance
regime to ensure it operates with high ESG
standards across all its operations.
Board and Management
Following the close of the financial year,
Managing Director and CEO David Woodall
stepped down. I would like to acknowledge
David’s contribution to ASM over the past
two years.
In July, the Board was delighted to appoint
Rowena Smith, as Chief Executive Officer.
Rowena has almost 30 years of global mining
experience and had been ASM’s Chief Operating
Officer since July 2021. The Board believes
Rowena is the right person to lead ASM with her
strong leadership, technical and commercial
skills, and tremendous experience and energy.
We welcome her appointment, which will see
ASM through this next stage of its development
and beyond.
In March, we were saddened to announce the
retirement of Ian Chalmers as Non-Executive
Director from the Board. Ian was one of the
founding directors of ASM before its demerger
from Alkane Resources Ltd and was responsible
for bringing the Dubbo Project into the
Company. Ian’s expertise and experience has
provided significant value to the Company since
its inception and I wish to extend my profound
gratitude for his service.
In February the Board welcomed Kerry Gleeson
as Non-Executive Director. Kerry has two
decades of experience as a director, senior
executive and board advisor of various ASX
listed companies and I believe Kerry will be
a valuable addition to the ASM team as we
progress our mine to metals strategy.
The year ahead
ASM will be focused on securing funding for
the Dubbo Project, including attracting the
right strategic investor and associated offtake
agreements for Dubbo’s products.
In Korea, ASM intends to complete
commissioning and secure further sales for
products from the Korean Metals Plant.
Concluding remarks
Global markets need both the Dubbo Project
and Korean Metals Plant products. Megatrends
such as decarbonisation, clean energy and
automation, are driving industry demand and
growth for rare earths, critical minerals and
high-tech metals and ASM has the capability to
provide these products.
Looking forward, I believe ASM is well
positioned for the medium to long term, as we
build a global rare-earths and critical minerals
business to provide the high-tech metals
required for a sustainable world, both for
today and tomorrow.
I acknowledge that we have faced challenges
over the past year, but I believe in our talented
ASM team and our business objectives. I also
remain actively committed to supporting
the Company.
I wish to reiterate my thanks to all of the ASM
and KSM teams for their outstanding efforts
over the year and I look forward to our future
achievements planned for FY23.
To all ASM’s shareholders, I say thank
you for your belief in ASM throughout
the year. The Board, management
and staff recognise your support
and are committed to delivering
strong returns to you as we grow.
I look forward to updating you
again next year.
Ian Gandel
Chair
06 ASM Annual Report 2022 | Overview
Overview | ASM Annual Report 2022 07
About us
Australian Strategic Materials (ASM) is building
a global rare earths and critical minerals
business to provide the high-tech metals needed
to solve the challenges of today and the future.
ASM’s cornerstone project is its Dubbo Project,
located 25kms from Dubbo in NSW, Australia.
This is a rare earths and critical minerals project
with a resource that includes neodymium,
praseodymium, dysprosium, terbium,
zirconium, niobium and hafnium. The Dubbo
Project has strong financials, all major approvals
in place, and compelling ESG credentials.
ASM intends to develop the Dubbo Project to
produce a range of metal oxides and mixed
chlorides. Over the past 16 years, ASM has
worked in partnership with the Australian
Nuclear Science and Technology Organisation
(ANSTO) to complete significant successful test
work and to develop a flowsheet design. ASM
and ANSTO will continue this work to further
maximise recoveries.
When the Dubbo Project is constructed, the
products will be metallised at ASM’s Metals
Plants, the first of which is in Ochang, Korea.
The Korean Metals Plant will produce high-tech
metals and alloys needed for sustainable energy
industries, advanced manufacturing and other
growth industries.
The Korean Metals Plant opened in 2022 and
is currently in commissioning, with an initial
focus on neodymium praseodymium and
titanium products. As part of the titanium
commissioning process, ASM is progressing with
the commercial-scale process development of
its innovative metallisation technology.
ASM wants to leave a legacy that delivers
enduring benefits to the communities and
regions where it operates and will work to
ensure it manages environmental impacts,
respects human rights, minimises greenhouse
gas emissions, and supports local communities.
08 ASM Annual Report 2022 | Overview
Overview | ASM Annual Report 2022 09
Building our mine to metals business
10 ASM Annual Report 2022 | Overview
Overview | ASM Annual Report 2022 11
Dubbo
Project
The right project,
in the right place,
at the right time.
Key Facts
Dubbo Project
Rare Earths and
critical minerals
resource
Includes neodymium,
praseodymium, dysprosium,
terbium, zirconium, niobium
and hafnium.
Strong
Financials
Forecast 23.5% Pre-tax IRR.
Forecast CapEx estimate
AUD 1,678 million.
Refer ASX release 7 December 2021: Dubbo
Project Delivers Strong Financials.
20 year life
of mine
Potential for further 50 years
based on resources and subject
to approvals.
Construction
readiness
All major approvals in place.
Land and water licences owned.
Advanced
flowsheet
Developed in partnership with
ANSTO over 16 years.
Close to
established
infrastructure
25kms from Dubbo, NSW Australia
400kms northwest of Sydney.
Workforce
opportunities
Up to 1,000 local jobs during the
construction period.
Approximately 270 local jobs
when operational.
Compelling ESG
credentials
Biodiversity offsets.
Exploring use of renewable energy.
Commitment to community.
12 ASM Annual Report 2022 | Overview
Overview | ASM Annual Report 2022 13
Dubbo Project Year in Review
Summary
ASM continued to progress development of
the Dubbo Project throughout the year. Key
achievements included:
• Completion of the Optimisation Study Work
• Completion and submission of all
requirements for a licencing approvals
Modification Report (MOD1) to the
NSW Government
• Awarding the Engineering Procurement and
Construction Definition Work contract to
Hyundai Engineering Co., Ltd
• Completion of the on-site project
office construction
Over the year, ASM worked toward securing
finance for the Dubbo Project. As ASM’s finance
strategy is to deliver the project through a
mix of equity and debt supported by export
credit finance, this involved engagements with
Australian and Korean government funding
agencies, and engagement with Australian,
Korean and global project finance banks. To
assist with the procurement of government
agency and commercial bank debt, ASM
appointed the Australian and New Zealand
Banking Group Limited (ANZ) as debt
financial advisors.
ASM also worked on securing a strategic
investor in the Dubbo Project, meeting with
government agencies, industrial conglomerates,
product end-users, engineering companies and
financial investors. A successful outcome of this
work was the investment of USD 15 million by
KCF Energy Co. Ltd (KCF).
Furthermore, ASM continued to advance
discussions with various parties seeking to
secure long-term supply of rare earths and
critical minerals. These discussions led to the
signing of a `Joint Statement of Cooperation
on Critical Metals’ with the Korean Mine
Rehabilitation and Resource Corporation
(KOMIR). This aims to enable the supply of
critical minerals and metals to Korea.
With potential customers interested in products
that can meet specific technical requirements,
ASM’s technical team progressed sample testing
and qualification programs. The team has
continued to work collaboratively with ANSTO
to further refine ASM’s technology and
flowsheet for processing materials from
the Dubbo Project.
ASM continued to work with local Elders and
Aboriginal organisations associated with the
land on which the Dubbo Project is located.
This includes the Dubbo Aboriginal Community
Working Party, Three Rivers Regional Assembly,
and the Dubbo Local Aboriginal Land Council.
Dubbo Project
Optimisation Study work completed
In December 2021, ASM completed Optimisation Work for the Dubbo Project, releasing its
Optimisation Study and Enhanced Project Addendum.
For full details of Optimisation Work for the Dubbo Project, refer ASX release 7 December 2021:
Dubbo Project Delivers Strong Financials.
Strong financials
Diversified revenue
Enhanced ESG outcomes
AUD 425
million
Free Cash Flow per
year at full production
23.5%
Pre-tax IRR
AUD 1,678
million
Capital cost estimate
44%
Rare earth oxides
33%
Zirconium
19%
Niobium
4%
Hafnium
Exchange Rate (A$:US$) 0.75;
Discount Rate (real, post-tax %p.a.)
8.0%; Corporate Tax Rate (%) 30%
The Dubbo resource offers
a diversified product suite,
de-risking exposure to single
commodity price volatility.
Reduced water
consumption
270 permanent
local jobs to
be created
Reduced trucks on
community roads
14 ASM Annual Report 2022 | Overview
Overview | ASM Annual Report 2022 15
Dubbo Project
Hyundai Engineering Corporation
awarded EPCD contract
Signing ceremony with Hyundai Engineering Corporation for Dubbo Project EPCD contract
In June 2022, ASM awarded Hyundai Engineering Corporation Co., Ltd. (HEC) a conditional contract
to provide Engineering, Procurement and Construction Definition work (EPCD) for the Dubbo Project,
allowing for additional services beyond FEED.
The EPCD work is expected to take 14 months to complete and will commence after ASM issues a
Notice to Proceed to HEC.
Refer ASX release 9 June 2022: Hyundai Engineering Co., Ltd. awarded conditional contract for design work for the Dubbo Project.
Equity funding of USD 15 million
In May 2022, ASM received an equity investment of USD 15 million at an issue price
of AUD 8.90 per share from KCF Energy Co. Ltd (KCF). KCF is a company owned by a
South Korean consortium comprising Cerritos Holdings Co., Ltd, Polo Equity Partners
LLC and ACE Equity Partners LLC.
Refer ASX release 16 May 2022 : USD 15 million Subscription Agreement at AUD 8.90 per ASM share
Dubbo Project
Modification Report
The Dubbo Project Optimisation
Work completed in December 2021
led to several design improvements
in plans already approved for the
Dubbo Project. As a result, ASM
submitted a Modification Report
(MOD1) to the NSW government
to reflect the improvements and
maintain the status of its approval.
The Dubbo Project team completed
numerous environmental studies
including noise, air quality and
emissions. Following completion of
this work, ASM submitted the MOD1
to the NSW government in early
2022. The MOD1 was placed on the
NSW Department of Planning and
Environment (DPE) website for public
access. During the public access
period, DPE received six public
submissions and nine submissions
from government agencies.
After the financial year end, ASM
submitted its response to the public
and government submissions. A
determination from the DPE
on MOD1 is expected in FY23.
NSW Deputy Premier, the Member for Dubbo
and ASM Chair at NSW strategy launch
Launch of NSW Critical Minerals
and High-Tech Metals Strategy
ASM was proud to host the launch
of the NSW Critical Minerals and
High-Tech Metals Strategy at its Dubbo
Project site in December 2021. The strategy
was launched by the Hon. Paul Toole MP,
NSW Deputy Premier and the Minister
responsible for Resources at the time.
ASM welcomed this demonstration of
commitment by the NSW government,
which further highlighted that the Dubbo
Project is in the right place at the right time.
Dubbo Project site office completed
ASM completed construction of the onsite Dubbo Project Office and received its
Occupation Certificate.
16 ASM Annual Report 2022 | Overview
Overview | ASM Annual Report 2022 17
Process and Outputs
Dubbo Project
Research and Development
with ANSTO
The Dubbo Project’s Demonstration Pilot Plant (DPP) is located at ANSTO’s Lucas Heights facility in
Sydney. During the year, ANSTO and ASM worked collaboratively to run the DPP to provide further
updates and confirmation to the design criteria and flowsheet for the Dubbo Project. This also
provided feedstock for the preparation of product samples to offtake customers.
ASM and ANSTO successfully identified improvements encompassing roasting, counter-current
decantation, zirconium and hafnium solvent extraction, and zirconium precipitation. Bench scale
testing of an alternative rare earth purification circuit was also conducted, showing significant
increases in rare earth recoveries.
Rare earths solvent extraction research & development at ANSTO
18 ASM Annual Report 2022 | Overview
Overview | ASM Annual Report 2022 19
Funding
Resources and Reserves
Dubbo Project
To develop the Dubbo Project, ASM is targeting a project financing funding strategy based on a mix of equity and
debt, supported by export credit finance.
During FY22, ASM targeted debt providers,
including Australian and Korean government
funding agencies and Australian, Korean, and global
project finance banks regarding the provision
of project finance. To assist, the Australian and
New Zealand Banking Group Limited (ANZ) was
appointed debt financial advisor in October 2021.
Funding Progress builds upon the existing AUD 200
million conditional letter of support ASM received
from Export Finance Australia in 2021.
(Refer ASX release 28 June 2021: Export Finance Australia
issues letter of support for the Dubbo Project)
To secure the equity required to develop the Dubbo
Project, ASM met with government agencies,
industrial conglomerates, product end-users,
engineering companies and financial investors
regarding potential collaboration and investment
in the project. An investment of USD 15 million was
made by KCF Energy Co. Ltd (KCF). This investment
followed the conditional framework agreement
entered with KCF in July 2021.
(Refer ASX release 21 July 2021: ASM signs $US250M
framework agreement with South Korean consortium for
20% in Dubbo Project and offtake from Korean Metals Plant)
Market Outlook
This was a turbulent year for all global markets.
However, the long-term outlook remains positive for
ASM, given the potential use of Dubbo products in
industries focused on advanced technologies that
support mega trends such as decarbonisation, clean
energy and automation.
Prices for rare earth elements reached multi-year
highs in February 2021 due to increased demand
for permanent magnets. While prices for magnetic
rare earths have retraced from these peaks, amid
a broader sell-off in metals markets that gathered
pace in the June quarter, they remain well above
five-year averages.
Despite falling global vehicle sales due to COVID-19
lockdowns in China, supply chain constraints in
Europe and the US, and broader global economic
concerns, electric vehicle sales in major markets
nevertheless increased to nearly 5 million units in
the year to July. This is compared to 6.6 million in
the whole of 2021.
According to industry consultants Adamas
Intelligence, this has driven a more than 60%
year-to-date lift in global NdFeB magnet deployment
in electric vehicle traction motors in the first seven
months of 2022.
In the medium term, expectations from the
International Energy Agency (IEA) for electric vehicle
sales to reach 15.9 million in 2025 and 27.7 million
units in 2030, together with solid growth in wind
power generation, could see demand for magnetic
rare earth oxides, metals and magnet alloys alike
outpace supply. As a result, these markets may
experience significant shortages before the end of
the decade.
Similarly, market dynamics for other key
commodities from the Dubbo Project are
experiencing favourable demand shifts as the global
community looks to develop sustainable solutions to
meet collective decarbonisation goals.
Both zirconium and hafnium are benefitting from
renewed interest in developing Small Modular
Reactors (SMRs). At the same time, the latter’s use
in nickel-based superalloys, critical to efficiencies in
aerospace and industrial gas turbine engines, offers
further growth potential.
Meanwhile, research into niobium-based lithium-ion
battery technologies could establish a new end-use
application for the element’s oxides.
Mineral Resources
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, Nb2O5, Ta2O5 and Y2O3
Ore Reserves
Reserve
Category
Proved
Total
Tonnes
(Mt)
18.90
18.90
ZrO2
(%)
1.85
1.85
HfO2
(%)
0.040
0.040
Nb2O5
(%)
Ta2O5
(%)
Y2O3
(%)
TREO*
(%)
0.44
0.44
0.029
0.136
0.735
0.029
0.136
0.735
* TREO is the sum of all rare earth oxides excluding ZrO2, HfO2, Nb2O5, Ta2O5 and Y2O3
Note:
As at 30 June 2022, the Mineral Resources and Ore Reserves for the Toongi deposit, which is the basis of the Dubbo Project, are
the same as those stated in Company’s Information Memorandum and Demerger Booklet dated 29 July 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.
Governance and internal controls
ASM has governance arrangements and internal controls concerning its estimates of Mineral
Resources and Ore Reserves for the Dubbo Project, including:
• Oversight and approval of each annual
• Annual reconciliation with internal planning
statement by a competent person
to validate reserve estimates
• Establishment of internal procedures and
• Board approval of new and materially
controls to meet JORC Code 2012 compliance
in all external reporting
changed estimates
•
Independent review of new and materially
changed estimates
Overview | ASM Annual Report 2022 20
Overview | ASM Annual Report 2022 21
Korean
Metals Plant
Producing
high-tech metals
Key Facts
Rare earths and
critical minerals
metallisation
facility
Located in
Ochang Foreign
Investment Zone
Approximately 115 kms south
of Seoul, Korea
Opened
12 May 2022
ISO accredited
ISO 14001:2015
ISO 9000
Neodymium
products
initial focus
NdPr metal & NdFeB alloy
20,000m2
Area of site facility
Titanium alloys in
development
CuTi allloy
Operational
workforce
70-100 people
22 ASM Annual Report 2022 | Overview
Overview | ASM Annual Report 2022 23
Korean Metals Plant Year in Review
Summary
This year ASM made significant progress at the
Korean Metals Plant in Ochang, Korea.
ASM commenced development of the 20,000m2
plant site in July 2021 with the refurbishment of
the existing main factory and the construction of
five additional buildings. This included relocation
of the research and development pilot plant
and establishment of an on-site Korean national
accredited laboratory for product quality
assessment. The facility was completed in April
2022, and ASM celebrated this milestone with an
official opening ceremony in May 2022.
Installation of phase 1 equipment for the
production of neodymium praseodymium
and titanium products was progressed
through the year and completed in June 2022.
Completion of installation was delayed due to
the ongoing impacts of COVID-19 and supply
chain disruptions.
Concurrently to installation, ASM progressed
commissioning of the plant facility, focussing on
neodymium praseodymium and titanium furnace
commissioning. Process commissioning for
neodymium praseodymium metal progressed,
with successful saleable metal production
occurring after the end of the financial year.
Following commissioning of the titanium furnace,
ASM commenced commercial-scale process
development of its innovative metallisation
technology. The initial focus was on copper-
titanium alloy products and this work is planned
to continue through FY23. Successful scaling of
this technology presents a major opportunity
for ASM, as it may be applied in the future to the
production of zirconium and hafnium products
from its Dubbo Project.
ASM conducted commercial-in-confidence
discussions with potential customers in Korea,
Japan and the USA for products from the
Korean Metals Plant. ASM also conducted
commercial-in-confidence discussions with
potential suppliers of raw materials. Following
the end of the financial year, the Korean Metals
Plant celebrated the first sale and delivery of
neodymium praseodymium metal to a Korean
magnet manufacturer.
Korean Metals Plant
Ribbon cutting at Korean Metals Plant opening ceremony
Korean Metals Plant officially opened
ASM’s Korean Metals Plant officially opened in May 2022.
The attendees at the opening ceremony reflected the level of interest ASM’s presence in Korea had
attracted from both government and industry, across Korea. Attendees included H.E. Ms Catherine
Raper, Australian Ambassador to the Republic of Korea, Mr Si-jong Lee, Governor of Chungbuk
Province, and Mr Se-dong Oh, Vice Mayor of Cheongju, as well as representatives from many Korean
organisations important to Australia’s strategic trade partnership.
“ASM’s ambitions align well with the objectives of the Australian Government’s Critical
Minerals Strategy, which include diversifying global critical mineral supply chains and
creating value add downstream.”
H.E. Ms Catherine Raper, Australian Ambassador to the Republic of Korea
24 ASM Annual Report 2022 | Overview
Overview | ASM Annual Report 2022 25
Korean Metals Plant timeline of development
Korean Metals Plant
March
MOU signed with
Chungcheongbuk-do
province
June
KSM corporation
established
September
Laboratory
Accreditation
received
2021
October
ISO Accreditations
received
July
Groundbreaking and construction
of six site buildings commenced
January
March
Construction completion
(Buildings B & E)
Total refurbishment of
factory completed
April
February
Construction completion
(Buildings A, C, D & F)
2022
June
Phase 1 equipment
installation completed and
commissioning underway
Plant registration
certificate received
September
First sale of
NdPr metal
May
Official opening
ceremony
November
Hot commissioning of
neodymium furnaces
commenced & first
ingots cast
26 ASM Annual Report 2022 | Overview
Overview | ASM Annual Report 2022 27
Korean Metals Plant
Wiradjuri elder Peter Peckham conducting smoking
ceremony at Korean Metals Plant opening
Korean Deputy Prime Minister, Mr Hong Nam-ki
views Korean Metals Plant samples
Sharing cultural connections
between countries
Hot commissioning draws special
VIP visit
ASM respects and recognises the Wiradjuri
indigenous peoples and their culture and
connection to Country where the Dubbo
Project is located.
Wiradjuri elder Peter Peckham attended the
Korean Metals Plant’s opening and conducted
a smoking ceremony to deepen the connection
between the Dubbo Project and Korean
Metals Plant.
Hot commissioning of the neodymium furnaces
at the Korean Metals Plant commenced in
November 2021.
Then Deputy Prime Minister of South Korea,
Mr Hong Nam-ki visited the plant to witness
the casting of the plant’s first neodymium
metal ingots.
28 ASM Annual Report 2022 | Overview
Overview | ASM Annual Report 2022 29
Sustainability
ESG
ASM seeks to contribute positively to
the efforts needed to solve the global
challenges of today and the future. Its
suite of rare earths, critical minerals
and high-tech metals products can be
used in green technology solutions
such as wind turbines, electric vehicles,
and battery storage.
ASM understands the importance of
managing environmental impacts,
respecting human rights, minimising
greenhouse gas emissions, and
supporting local communities. ASM
wants to leave a legacy that delivers
enduring benefits to the communities
and regions where it operates.
As ASM matures, so will the design and
refinement of its whole-of-company
ESG approach.
30 ASM Annual Report 2022 | ESG
Overview | ASM Annual Report 2022 30
ESG | ASM Annual Report 2022 31
Environment
ASM strives to minimise the disturbance footprint of its operations in Australia and South Korea.
ASM’s Safety, Health and Sustainability Policy describes its commitment and principles in relation
to environmental management. ASM’s Korean Metals Plant is also ISO 14001:2015 and ISO 9000
accredited, demonstrating a commitment to safe and environmentally responsible operation. In
addition, all works planned and conducted undergo appropriate risk assessment using
the ALARP (As Low As Reasonably Practicable) principle.
Climate Change
ASM supports the initiatives of the
Task Force on Climate-related Financial
Disclosures (TCFD) and will consider their
application to the Company as it grows.
Material and strategic risks associated
with climate change have been reviewed
and noted, recognising the stage of
development of both the Dubbo Project
and the Korean Metals Plant.
ASM also continues registration of a
section of its Dubbo Project property
as a carbon farming project under the
Australian Government’s Emissions
Reduction Fund (ERF). This process
began in FY21. Under the ERF, measured
increases of in-soil carbon content earn
Australian carbon credit units (ACCU).
These can potentially contribute to the
Dubbo Project’s carbon offsets.
Biodiversity
ASM’s Dubbo Project has a Biodiversity
Management Plan (BMP), that provides a
framework for managing and monitoring
biodiversity. This incorporates the
designated biodiversity offset areas
(1,021ha) associated with the Dubbo
Project, which are designated for the
restoration and maintenance of native
habitats, especially vulnerable species.
Under a Conservation Property Vegetation
Plan negotiated with Local Land Services,
these areas are protected in perpetuity.
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 totalling approximately
3,715 hectares.
Management activities during the reporting
period included:
• 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
• Ongoing thinning of White Cypress
Pine to increase native grass cover and
understory, improving biodiversity.
Water management
ASM holds sufficient river and groundwater
licences (including some high security
licences) to develop the Dubbo Project
as a 1Mtpa operation. During the year,
optimisation work on the water treatment,
reagent recovery and water recovery
systems has been completed. This has
resulted in additional savings in raw water
and reagent consumption for the project.
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 and Environment – Water.
ASM understands its role in responsible
natural resource management within the
catchment, and takes a holistic approach
to managing soils, biodiversity and water.
ASM also understands the need for water
in the catchment to be shared between
the environment, towns, irrigators and
industry. As such, ASM engages with the
Macquarie-Cudgegong Customer Advisory
Group, which provides a forum for
community consultation.
Energy and Emissions
ASM’s Korean Metals Plant has entered
Phase 1 commissioning. The plant has
adopted a continuous improvement
approach to energy efficiency and is
committed to aligning with the South
Korean government’s strategy and target
of generating 35% of its electricity from
renewables (e.g. solar power) by 2040.
Initiatives adopted at the plant to reduce
emissions include the use of a fleet of
electric forklifts and vehicles.
A Stage 1 (construction phase) Water
Management Plan, approved by the NSW
governing authority, is available on the
ASM website.
Water management activities during the
reporting period included:
• 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 agricultural and
manufacturing businesses
• Periodic monitoring of bores and
surface water, particularly given above
average rainfall since early 2020
• Engagement of consultants to
commence design and construction
of erosion and sediment control
structures for the site, in preparation
for protection of surface water quality
and progressive rehabilitation
The Dubbo Project has not commenced
construction. However, several
opportunities for emissions reduction are
being investigated. The project is located
in the NSW government’s designated
Central-West Renewable Energy Zone.
This provides an opportunity to source
renewable energy options.
As ASM continues to develop its
operations, it will publish emission
reduction targets.
32 ASM Annual Report 2022 | ESG
ESG | ASM Annual Report 2022 33
Social
People and Culture
ASM seeks to foster a culture of innovation,
equal opportunity and integrity among its
workforce, partners and supply chain.
ASM has its headquarters in Perth, where
most of the Executive Management Team
is located. The remaining employees are
dispersed across Australia and in Korea.
The Korean team comprises 80 employees
(as at 30 June 2022), and will continue to
grow as the plant’s commissioning and
production ramps up.
ASM’s team based in Dubbo manages
the Toongi Pastoral Company and Dubbo
Project, while the team in Brisbane
has progressed the Dubbo Project
Optimisation Study and ongoing project
development work.
Diversity figures for reporting
ASM’s Australian operations have achieved
strong gender diversity results.
ASM’s focus for FY23 will be on gender
representation in its South Korean
operations, where much of the operational
workforce is male.
ASM Gender diversity
20%
BOARD
80%
Female
Male
11%
50%
EXECUTIVE
MANAGEMENT
50%
55%
AUSTRALIA
45%
KOREA
89%
Data represents permanent and fixed term ASM employees 30 June 2022
After the financial year ended, the Board was 25% female and 75% male.
Health and Safety
ASM is committed to safeguarding
the health, safety and wellbeing of its
team members.
During the year, along with key policies
and procedures, a HSSE Management
System was designed and is progressively
being implemented.
As with all businesses, COVID-19
impacted ASM’s employees and the
communities in which it operates.
ASM 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. To minimise impact
on the Korean Metals Plant, operational
planning and alternating shift patterns
were implemented.
ASM continues to monitor the changing
COVID-19 environment, to keep employees
and their families safe.
HSE metrics
No reportable injuries or environmental incidents occurred during the 2022 financial year.
World Safety Day at
the Korean Metals Plant
The team at the Korean Metals Plant
acknowledged World Safety Day on
28 April, by posting a safety banner
at the plant and conducting additional
training to raise awareness of the
importance of safety.
34 ASM Annual Report 2022 | ESG
ESG | ASM Annual Report 2022 35
Social
Community and Social Responsibility
ASM wants to leave a legacy that delivers enduring benefits to the communities and
regions where it operates. ASM knows that having strong and positive relationships
with local communities is critical to being a responsible and sustainable company.
First Nations engagement
Over the past two decades, ASM has
consulted with local Elders and Aboriginal
organisations, associated with the land on
which the Dubbo Project is located. This
includes the Dubbo Aboriginal Community
Working Party, Three Rivers Regional
Assembly, and the Dubbo Local Aboriginal
Land Council.
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.
ASM has also identified heritage sites
(outside of the project footprint) additional
to those described in the Dubbo Project’s
Environmental Impact Statement (EIS
2013); these sites have been protected
from farming activities.
Activities during the reporting
period included:
• Meetings between ASM Management
Team and representatives from
Aboriginal organisations and Elders
to listen to their priorities and grow
relationships
•
Invitation to Traditional Custodians
to walk “On Country”
• Two Aboriginal representatives
nominated for the Dubbo Project
Community Consultative Committee
• An Aboriginal elder invited to Korea
to conduct a traditional smoking
ceremony as part of the opening of
the Korean Metals Plant
Dubbo Project Community Consultative Committee
Toongi Pastoral Company Manager talking with Year 7
MAP program cohort
Partnered with Macquarie
Anglican Grammar School for
their Macquarie Agricultural
Pathways Program
ASM and our subsidiary Toongi
Pastoral Company (TPC) partnered
with Macquarie Anglican Grammar
School for their Macquarie Agricultural
Pathways (MAP) program.
The program provides for a targeted
group of Year 7 students at the school
to engage in weekly farm visits to TPC
sites. Here they will develop the skills
necessary for employment in the
Agriculture sector directly, or to prepare
for entry into Tertiary-based programs.
This is at the core of what we are
striving to achieve at Macquarie,
the development of resilient young
people who are ready and willing
to make a difference in the world.
Craig Mansour, Headmaster
The first group of students started the
program in July 2022.
Macquarie Anglican Grammar School Headmaster and Toongi
Pastoral Company Farm Manager
Sponsorships &
engagement
During the year, ASM continued to
engage with the local community in
Dubbo through regular Community
newsletter distribution and via the
community information line.
ASM management and
representatives also met with
various government stakeholders,
community and business leaders,
local Aboriginal groups and
potential local suppliers.
Key activities included:
• Participated in the Dubbo
Project Community
Consultative Committee
• Supported the Western
Region Schools Science and
Engineering Challenge
• Partnered with Macquarie
Anglican Grammar School for
their Macquarie Agricultural
Pathways Program
In Korea, representatives from
the Korean Metals Plant have also
joined the Chemical Compliance
Committee for Cheongju City.
The representatives will provide
specialist advice to ensure
compliance with regulation and
use of chemicals within the area
and local business operations. This
is an initiative to ensure low risk to
the community and environment.
36 ASM Annual Report 2022 | ESG
ESG | ASM Annual Report 2022 37
ESG | ASM Annual Report 2022 37
Financial
Report
Governance
ASM’s actions are governed by an experienced
Board committed to administering our policies
and procedures with openness and integrity.
This year, ASM strengthened its governance
framework, focussing on Environment and
Sustainability. As a result, it commenced work
on a Health, Safety, Security and Environment
management system. ASM also established
several new policies, which can all be viewed
on the ASM website.
These provide the ESG context that ASM will
work from and set out strong principles for
ASM to sustainably and ethically process and
produce rare earths, critical minerals and
high-tech metals.
ESG data including diversity figures, health and
safety metrics, and environmental information
were also collected and reviewed.
Corporate Governance Statement
The Company’s annual Corporate Governance
Statement has been published and released
to the ASX separately. It is available on the
Company’s website at:
asm-au.com/about-asm-home/governance
ESG | ASM Annual Report 2022 38
Financial | ASM Annual Report 2022 39
Australian Strategic Materials Ltd
Corporate directory
30 June 2022
Directors
I J Gandel
D G Woodall (resigned 15 July 2022)
N P Earner
D I Chalmers (resigned 1 March 2022)
G M Smith
K J Gleeson (appointed 1 February 2022)
Joint Company secretaries
Dennis Wilkins
Julie Jones (appointed 2 August 2021)
Registered office & Principal place of
business
Level 4, 66 Kings Park Road West Perth WA 6005
Telephone: 61 8 9200 1681 Facsimile: 61 8 9200 1682
Share register
Auditor
Stock exchange listing
Advanced Share Registry Limited 110 Stirling Highway, Nedlands WA 6009
PricewaterhouseCoopers
Brookfield Place, 125 St Georges Terrace, Perth WA 6000
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
Website
http://www.asm‐au.com
Australian Strategic Materials Ltd
Directors' report
30 June 2022
The Directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the
'Consolidated entity' or 'the Group', or 'ASM') 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 2022.
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 (resigned 15 July 2022)
N P Earner
D I Chalmers (resigned 1 March 2022)
G M Smith
K J Gleeson (appointed 1 February 2022)
Principal activities
Australian Strategic Materials (ASM) is an emerging producer of rare earths, critical minerals and high‐tech metals. These materials
are vital inputs for an array of applications across advanced manufacturing, new growth, and sustainable energy industries. ASM has
its cornerstone rare earths and critical minerals project in Dubbo, NSW, and its flagship high‐tech metals plant in Ochang, South
Korea. The Group's principal activities in the year were:
●
Completion of construction of the Korean Metals Plant, with permit to operate received and Phase 1 equipment installation
complete. Commenced commissioning of the Phase 1 Neodymium and Copper Titanium furnaces, with first ingots cast.
Equipment and process commissioning continues in the second half of calendar year 2022.
Completion of the Optimisation Study and Enhanced Project Addendum (Optimisation Work) for the Dubbo Project which
provides a foundation for Front End Engineering Design (FEED) and is a key component of obtaining financing for the Dubbo
project.
Completion of share placement to KCF Energy Co. Ltd for USD$15,000,000 ($8.90 per share).
The signing of the Joint Statement of Cooperation on Critical Metals with the Korean Mine Rehabilitation and Resource
Corporation (KOMIR), to enable the supply of critical minerals and metals into Korea.
Awarding the conditional contract to provide Engineering, Procurement and Construction Definition (EPCD) work for the Dubbo
Project to Hyundai Engineering Co., Ltd.
Execution of debt facilities agreement with the Korea Development Bank for facilities up to $24,600,000 (KRW 22,000,000,000)
for operating and capital expenditure at the Korean Metals Plant.
●
●
●
●
●
Dividends
There were no dividends paid, recommended nor declared during the current or previous financial year.
Review of financial conditions
The loss for the Consolidated entity after providing for income tax and non‐controlling interest amounted to $24,275,000 (30 June
2021: $783,000).
The Group had cash outflows from operating and investing activities of $71,126,000 (30 June 2021: $14,506,000) for the year ended
30 June 2022. At 30 June 2022, the Group had cash on hand of $60,220,000 (30 June 2021: $93,324,000). These funds will be used for
the construction of the Korean Metals Plant, Dubbo Project FEED, exploration obligations and associated corporate expenses.
Going Concern
Based on the Group's cash flow forecast, the Group may require additional funding to enable the Group to continue to realise its
strategic business activities and meet all associated corporate, exploration, construction and development commitments over the
period.
As a result of the above, there is a material uncertainty that may cast significant doubt on the entity's ability to continue as a going
concern and therefore, the entity may be unable to realise its assets and discharge its liabilities in the normal course of business.
The Directors are satisfied that there are reasonable grounds to believe that the Group will be able to continue to meet its debts as
and when they fall due and that it is appropriate for the financial statements to be prepared on a going concern basis.
1
2
40 ASM Annual Report 2022 | Financial Report
Financial Report | ASM Annual Report 2022 41
Australian Strategic Materials Ltd
Directors' report
30 June 2022
Australian Strategic Materials Ltd
Directors' report
30 June 2022
The Directors have based this determination on the demonstrated ability of the Group to raise capital, the intention to raise new
capital and their assessment of the probability of progressing project financing.
The attached annual report for the year ended 30 June 2022 contains an independent auditor’s report which highlights the existence
of a material uncertainty that may cast significant doubt about the Group’s ability to continue as a going concern. For further
information, refer to note 1 to the financial statements, together with the auditor’s report.
Review of operations
Korea
The ground‐breaking for the Korean Metals Plant (KMP) took place in July 2021 after signing the Memorandum of Understanding with
Chungcheongbuk‐do province and acquiring the KMP site in Ochang Foreign Investment Zone in the prior quarter. The construction
of six buildings on the KMP site, including total refurbishment of the existing main factory, was completed by end of Q1 2022, with
the plant registration certificate received on 7th April 2022.
Phase 1 equipment installation and commissioning for Nd metal, NdFeB strip alloy and CuTi alloy ingot progressed throughout the
year despite significant disruptions from COVID‐19. The Deputy Prime Minister of South Korea, Mr Hong Nam‐ki, visited the site in
November 2021 as commissioning commenced and the first Nd metal ingot was cast.
Phase 1 equipment installation was completed in Q4 2022 with commissioning and ramp up planned to continue over the second half
of calendar year 2022. To celebrate this achievement, ASM held the KMP official opening ceremony in May 2022 with key
representatives of the Australian and Korean governments and business community.
During the year, ASM received a cash grant from the South Korean government of $6,737,000. The purpose of the cash grant received
was to support the development of the Korean Metals Plant. Further in June 2022, ASM executed debt facilities with Korea
Development Bank for up to $24,600,000 to fund operating and capital expenditure.
Dubbo
In December 2021, ASM completed the Optimisation Study and Enhanced Project Addendum (Optimisation Work) for the Dubbo
Project. The Optimisation Work simplified the Dubbo Project process flow sheet and incorporates new operating strategies that will
reduce operating costs and improve the Environmental, Social & Governance (ESG) performance. These strategies now include
increasing the brine concentrator capacity (reducing water consumption), refurbishment of the railway line (which simplifies project
logistics and will provide opportunities for local jobs) and development of a chlor‐alkali plant (which reduces the cost of reagents and
their handling and transportation). These strategies facilitate ESG benefits by reducing water consumption, reducing the handling and
quantum of process chemicals, and reducing the number of trucks on local roads.
In June 2022, ASM awarded Hyundai Engineering Co., Ltd (HEC) the contract to provide Engineering, Procurements and Construction
Definition work for the Dubbo Project. The EPCD includes an Association for the Advancement of Cost Engineering standardised
estimate (AACE Class 2 capital cost estimate), an operating cost estimate, a detailed project schedule, major project plans, and early‐
stage engineering documentation. Completion of the EPCD will allow HEC to produce an open book cost estimate for the Dubbo
Project. This will form the basis of an EPC offer by HEC to deliver the Dubbo Project.
The Dubbo Project has been optimised to produce neodymium, praseodymium, zirconium, hafnium, dysprosium, terbium and
niobium oxides that can all be refined into high‐purity alloys, metals and powders at ASM’s metals plants.
Corporate
Corporate activities during the period ended 30 June 2022 include:
●
ASM’s appointment of the Australian and New Zealand Banking Group Limited (ANZ) as the financial advisor for the debt financing
of the Dubbo Project. ANZ has strong ties with Korean export credit agencies and financial institutions.
Continued efforts to advance negotiations to secure long‐term sales agreements for the Korean Metals Plant and Dubbo
production.
Progression of discussions with suppliers of key raw materials to obtain binding and committed long‐term supply agreements.
Completion of a share placement with KCF Energy Co. Ltd for USD 15,000,000 at an issue price of AUD $8.90 per share.
●
●
●
COVID‐19
During the year ended 30 June 2022, delays caused by the ongoing impacts of COVID‐19 and supply chain disruptions impacted the
installation of equipment at the Korean Metals Plant. Installation of equipment is now complete with NdFeB commissioning
commencing in the second half of calendar year 2022. Throughout the year, ASM continued to observe COVID‐19 management
protocols across our office and site locations in Australia and South Korea. These protocols are in line with our commitment to ensure
safe operations for our staff and contractors.
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
There were no significant changes in the state of affairs of the Group during the financial year.
Matters subsequent to the end of the financial year
During July 2022, Rowena Smith was appointed Chief Executive Officer and David Woodall resigned from his position as Managing
Director.
On 19 July 2022, David Woodall held 3,000,000 performance rights, of these performance rights 2,000,000 were forfeited and 1,000,000
vested through the issue of ordinary shares in the Company.
On 8 September 2022, the Company announced it signed a binding agreement for the sale of neodymium praseodymium metal
produced at its Korean Metals Plant with Korean company NS World Co., Ltd. The agreement is for the sale and delivery of 10 tonnes
of neodymium praseodymium metal ingot from September 2022 to December 2022.
No other matter or circumstance has arisen since 30 June 2022 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
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 Group is subject to significant environmental regulation and monitoring requirements in respect of its natural resource's
exploration and development activities.
The Group 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. The Directors' are not aware of any significant
breaches of these requirements during the period.
Indemnity and insurance of auditor
The Company has agreed to indemnify its auditors, PricewaterhouseCoopers, to the extent permitted by law, against any claim by a
third party arising from the Company’s breach of their agreement. The indemnity stipulates that the Company will meet the full amount
of any such liabilities including a reasonable amount of legal costs.
Auditor
PricewaterhouseCoopers continues in office in accordance with section 327 of the Corporations Act 2001.
3
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42 ASM Annual Report 2022 | Financial Report
Financial Report | ASM Annual Report 2022 43
Australian Strategic Materials Ltd
Directors' report
30 June 2022
Information on Directors
Ian Jeffrey Gandel ‐ Non‐Executive Chairman
LLB, BEc, FCPA, FAICD
Appointed Non‐Executive Chairman 18 March 2014
Mr Gandel is a successful Melbourne based businessman 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 was the CEO of a 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 Chairman of Alliance Resources Ltd (appointed as a director on 15 October 2003 and in
June 2016 was appointed Non‐Executive Chairman). He is Non‐Executive Chairman of Alkane Resources Ltd. He is also the Non‐
Executive Chairman of Octagonal Resources Ltd (appointed 10 November 2010).
Nicholas Paul Earner ‐ Non‐Executive Director
BEng (hons)
Appointed Non‐Executive Director 1 September 2017
Australian Strategic Materials Ltd
Directors' report
30 June 2022
Ms Gleeson’s other current roles include Non‐Executive Director of St Barbara Limited, New Century Resources Ltd and Chrysos
Corporation Ltd. She is also the Chair of Trinity College at the University of Melbourne.
Key Management Personnel
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.
Julie Jones ‐ Joint Company Secretary & General Counsel
LLB (Law)
Appointed General Counsel and joint Company Secretary 2 August 2021.
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 Australia Strategic Materials Ltd.
Ms Jones has more than 18 years of legal, commercial, strategic and corporate governance experience, underpinned by a strong
background in mining and manufacturing.
Prior to joining ASM, Ms Jones’ held the role of General Counsel and Company Secretary for Matrix Composites and Engineering Ltd.
Her other past roles include General Counsel and Director of People at the Chamber of Commerce and Industry WA, and Corporate
Counsel at Iluka Resources and Solicitor at the State Solicitor’s Office.
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.
Rowena Smith – Chief Executive Officer
B.Com, MAICD
Mr Earner is the Managing Director of Alkane Resources Ltd.
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 member of the industry advisory boards of the CSIRO and
the Victorian Skills Authority, and is a Non‐Executive Director of Alkane Resources Ltd.
Kerry Jo‐Anne Gleeson ‐ Non‐Executive Director
LLB (Hons), FAICD
Appointed Non‐Executive Director 1 February 2022
Ms Gleeson is an experienced independent Non‐Executive Director, Chair and Committee Member with over two decades of experience
as a director, senior executive and board advisor of various ASX listed companies. Ms Gleeson has worked nationally and internationally
across broad and complex industry sectors, including mining and resources, industrial and agri‐chemicals, manufacturing, transport and
distribution and international education. Ms Gleeson is a qualified lawyer in both the UK and Australia, and spent 15 years in private
practice, including as a partner of an English law firm, before emigrating to Melbourne and joining Blake Dawson Waldron (now
Ashurst).
Appointed Chief Executive Officer 6 July 2022. Prior to her appointment, Ms Smith held the role of Chief Operating Officer appointed 5
July 2021.
Ms Smith has over 30 years’ experience in the mining and minerals processing sector holding senior roles in strategy, operations and
commercial.
Prior to joining ASM, she was Chief Sustainability Officer at South32, accountable for sustainability strategy, risk management and HSE
business processes. Her other past roles include Vice President Supply at South32, General Manager of BHP’s Kwinana Nickel Refinery,
and operational leadership roles within Rio Tinto’s aluminium smelting business.
Ms Smith is currently a member of the Australian Institute of Company Directors (AICD).
Jason Clifton – Chief Financial Officer
B.Com, MAICD, FCA
Appointed Chief Financial Officer 12 July 2021.
Mr Clifton has over 20 years’ of financial, commercial, capital and strategic experience.
Prior to joining ASM, he was Senior Vice President Financial Service at Woodside Energy Ltd, where he was responsible for treasury,
tax, group finance and business finance. His other past roles include Chief Financial Officer of Bankwest and Chief Financial Officer of
Westpac New Zealand.
Mr Clifton is a Fellow of the Institute of Chartered Accountants and a Fellow of the Financial Services Institute of Australia.
5
6
44 ASM Annual Report 2022 | Financial Report
Financial Report | ASM Annual Report 2022 45
Australian Strategic Materials Ltd
Directors' report
30 June 2022
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 2022, and the number of meetings attended by each Director were:
I J Gandel
D G Woodall1
D I Chalmers2
G M Smith
N P Earner
K J Gleeson3
Full Board
Attended
Held
Nomination
Committee
Attended
Risk
Committee
Attended
Audit
Committee
Attended
Remuneration
Committee
Attended
17
17
7
17
15
10
17
17
7
17
17
11
1
1
1
1
1
‐
2
2
1
2
2
1
3
‐
3
3
3
‐
3
‐
3
3
3
‐
Held: represents the number of meetings held during the time the Director held office or was a member of the relevant committee.
1 D Woodall resigned as Managing Director effective 15 July 2022.
2 D I Chalmers resigned as a director on 1 March 2022 and attended all meetings held prior to resignation.
3 K J Gleeson was appointed as a director on 1 February 2022 and attended all meetings held from appointment.
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 of executive KMPs
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 KMP.
The Remuneration Committee is a committee of the Board and at the date of this report the members were non‐executive directors
and included G M Smith (Chair), I J Gandel and K J Gleeson.
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, and the full stat
ement is available at URL: asm-au.com/about-asm-home/governance
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 KMP. As a consequence, there may not always be a direct correlation between the statutory
key performance measures and the variable remuneration rewarded.
Australian Strategic Materials Ltd
Directors' report
30 June 2022
Loss for the year attributable to owners ($'000)
Basic loss per share (cents)
Share price at period end ($)
Consolidated
2022
2021
(24,275.00)
(17.00)
3.45
(783.00)
(1.00)
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 of
Directors ('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 Chairman's fees are determined independently of the fees of other Non‐Executive Directors based on
comparative roles in the external market. The Chairman 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.
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 $950,000 (as approved at the AGM dated 30 November 2021), inclusive of superannuation and exclusive of reimbursement
of expenses.
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.
Board1
$A
Audit
Committee
$A
Risk
Committee
$A
Remuneration
Committee
$A
Nominations
Committee
$A
190,000
103,000
‐
‐
‐
‐
14,400
8,500
‐
‐
14,400
8,500
‐
‐
15,000
7,500
‐
‐
15,000
7,500
Chairman of the Board2
Non‐Executive Directors3
Committee Chair
Committee Member
1 NEDs receive Board and Committee fees inclusive of superannuation.
2 Inclusive of committee work.
3 Board fees paid to NEDs other than Chairman.
7
8
46 ASM Annual Report 2022 | Financial Report
Financial Report | ASM Annual Report 2022 47
Australian Strategic Materials Ltd
Directors' report
30 June 2022
Australian Strategic Materials Ltd
Directors' report
30 June 2022
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
other remuneration such as pension, superannuation and long service leave in line applicable jurisdictions requirements.
The combination of these comprises the executive's total remuneration.
Fixed Remuneration
The components of executives' fixed remuneration are determined individually and may include cash remuneration, pension,
superannuation, motor vehicle and parking benefits and reimbursement of telephone expenses. The executives' remuneration is
reviewed on an annual basis by the Remuneration Committee.
In determining the remuneration package, the Remuneration Committee reviews the individual's remuneration with the use of market
data for positions with comparable companies. Where appropriate, the package is adjusted so as to align with market trends and ensure
continued remuneration competitiveness. In conducting a comparative analysis, the Company's expected performance for the year is
considered in the context of the Company's capacity to fund remuneration budgets.
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.
Variable Remuneration
Short‐term Incentives
Executives may receive variable remuneration in the form of short‐term incentives ('STI') of up to 30% of their annual salary package.
STI payments are based on the Board's assessment of the executives' performance towards achieving key Company objectives over the
relevant period. Annually the Remuneration Committee reviews the performance of each executive prior to or after the reporting date.
The Remuneration Committee then determines the amount of STI to be allocated to each executive with approval from the Board. The
total potential STI available for award is at the Board's discretion. STI's are made through the issue of performance rights after the
reporting period. Where an executive resigns during or after the relevant financial year, it remains at the discretion of the Board as to
whether any of the STI is payable for the relevant financial year.
The focus of the 2021/22 financial year was on the Company's progress towards the further development of the Korean Metals Plant
and the Dubbo project.
2021/2022 STI
The 2021/22 STI targets and outcomes are summarised below:
An amount of 81,148 performance rights were granted to KMP's. Vesting occurs up until the end of the measurement period, being 30
June 2022, with a nil exercise price, if the following performance conditions are met:
●
●
●
●
●
●
●
20% of the performance rights will vest if the Korean Metals plant saleable production rate is 1,254 tpa
20% of the performance rights will vest if an offtake is secured for 75% of the KMP saleable product
10% of the performance rights will vest if the ESG performance is viewed as 'excellent' by the Board
10% of the performance rights will vest if the Executives personal performance is viewed as 'performing' by the Board
for the Chief Operating Officer 10% of the performance rights will vest if the Korea Metals plant capex is less than $17m
for the Chief Operating Officer 20% of the performance rights will vest if the Dubbo FEED contract commences prior to end Feb
2022
for the Chief Financial Officer 20% of the performance rights will vest if an offtake is secured for 80% of the Dubbo saleable product
by 30 June 2022
Further, the Board has discretion to abandon the incentive opportunity should the Company’s overall performance be substantially
lower than expectations.
The KPI's were selected to encourage and support business growth and deliver ASM's mine to metals strategy.
The Board exercised its discretion to abandon the incentive program and as a result all 81,148 performance rights were cancelled on 8
August 2022.
Long‐term Incentives
The long‐term incentives ('LTI') include performance rights awarded to executives. Executives may participate in the Executive Incentive
Plan to receive variable remuneration of up to 30% of their annual salary package. Shares are awarded to executives over a period of
three years based on long‐term incentive measures.
2021/2022 LTI
The 2021/22 LTI targets and outcomes are summarised below:
An amount of 81,148 performance rights were granted to KMP's. Vesting occurs up until the end of the measurement period, being 30
June 2022, with a nil exercise price, if the following performance conditions are met:
●
●
50% of the performance rights will vest if the 30 June 2022 Total Metal Production of Saleable Quantity is 545t
50% of the performance rights will vest if the percentage total of Dubbo Financing committed and delivered is 100% at 30 June
2022
The KPI's were selected to encourage and support business growth and deliver ASM's mine to metals strategy.
Further, the Board has discretion to abandon the incentive opportunity should the Company’s overall performance be substantially
lower than expectations.
The Board exercised its discretion to abandon the incentive program and as a result all 81,148 performance rights were cancelled on 8
August 2022.
Sign on rights
LTI's were issued to the Chief Operating Officer and Chief Financial Officer as sign‐on incentives for the commencement of their
employment.
The Chief Financial Officer received 125,248 options with 50% vesting after 3 years and 50% vesting after 5 years. The options had a
service condition only and there were no performance conditions associated with these options.
The Chief Operating Officer received 54,714 performance rights with 50% vesting after 3 years and 50% vesting after 5 years. The
performance had a service condition only and there were no performance conditions associated with these options.
Assessing performance and claw‐back of remuneration
While there is no formal malus/clawback policy, the Board has ultimate discretion to adjust the STI and LTI outcomes upwards or
downwards (including zero), in exception circumstances, where the STI and LTI generated outcomes are inconsistent with the
Company's performance or resulted in misalignment with Shareholders (eg. fatality, financial misstatement, misconduct, reputational
damage, etc.).
Use of remuneration consultants
During the financial year ended 30 June 2022, the Consolidated entity, through the Remuneration Committee, engaged Godfrey
Remuneration Group Pty Limited and BDO Reward (WA) Pty Ltd, remuneration consultants, to provide details of market remuneration
practices for specific key management personnel (KMP) 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 STI and LTI's
in the form of performance rights being implemented. Godfrey Remuneration Group Pty Limited was paid $3,500 for these services
and BDO Reward (WA) Pty Ltd was paid $27,500.
9
10
48 ASM Annual Report 2022 | Financial Report
Financial Report | ASM Annual Report 2022 49
Australian Strategic Materials Ltd
Directors' report
30 June 2022
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.
Voting and comments made at the Company's 30 June 2021 Annual General Meeting ('AGM')
At the 2021 AGM, 99% of the votes received supported the adoption of the remuneration report for the year ended 30 June 2021. The
Company did not receive any specific feedback at the AGM regarding its remuneration practices.
Details of remuneration of executive KMPs
Amounts of remuneration
Details of the remuneration of key management personnel of the Consolidated entity are set out in the following tables.
Since the end of the reporting period, the following changes to KMP are as follows:
●
●
R Smith was appointed as Chief Executive Officer on 6 July 2022.
D Woodall resigned as Managing Director on 15 July 2022.
There have been no other changes to Directors or KMP since the end of the reporting period.
Total Fixed
Remuneration Position
Date
Commenced
Contract
Duration
Termination
notice period
‐ Company
Termination
notice period
‐ Executive
Termination Payment
$600,000
Managing
Director
10 February
2020
Ongoing
3 months
3 months
KMP
David
Woodall1
Frank Moon2 $388,000
President Asia 1 June 2021
Ongoing
3 months
3 months
Rowena
Smith3
$500,000
Jason Clifton $500,000
Chief
Operating
Officer
Chief Financial
Officer
5 July 2021
Ongoing
3 months
3 months
12 July 2021
Ongoing
3 months
3 months
1 David Woodall resigned as Managing Director effective 15 July 2022.
2 Frank Moon's total fixed remuneration is KRW 333,200,000 and converted at the foreign exchange rate on 1 June 2021 ($388,000).
3 Rowena Smith was appointed as Chief Executive Officer effective 6 July 2022.
If terminated by ASM ‐ 3
months payment in
additional to termination
notice by Company
If terminated by ASM ‐ 3
months payment in
additional to termination
notice by Company
If terminated by ASM ‐ 3
months payment in
additional to termination
notice by Company
If terminated by ASM ‐ 3
months payment in
additional to termination
notice by Company
Australian Strategic Materials Ltd
Directors' report
30 June 2022
2022
Non‐Executive Directors
I J Gandel
G M Smith
N P Earner
K J Gleeson1
D I Chalmers2
D Woodall3
Other KMP
R Smith4
J Clifton
F Moon
Total
Cash salary
and fees
$
Non‐monetary
benefits
$
Annual and
long service
provision
$
Post‐
employment
benefits5
$
Performance
Rights
$
Total
$
172,727
146,800
115,909
42,917
75,530
576,431
473,378
460,347
354,111
2,418,150
‐
‐
‐
‐
‐
6,976
2,303
3,901
65,485
78,665
‐
‐
‐
‐
‐
61,995
17,273
‐
11,591
4,292
7,553
23,570
‐
‐
‐
‐
‐
659,597
190,000
146,800
127,500
47,209
83,083
1,328,569
42,518
37,798
‐
142,311
23,570
23,570
3,234
114,653
90,928
125,975
‐
876,500
632,697
651,591
422,830
3,630,279
1 K J Gleeson was appointed as a director effective 1 February 2022.
2 D I Chalmers resigned as a director effective 1 March 2022.
3 D Woodall resigned as Managing Director effective 15 July 2022.
4 R Smith was appointed as Chief Executive Officer effective 6 July 2022.
5 Post‐employment benefits are provided through superannuation contributions and national pension scheme.
2021
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 3
A MacDonald 4
Cash salary
and fees
$
Post‐
employment
benefits5
$
Annual and
long service
provision1
$
Performance
Rights2
$
Total
$
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
425,980
263,239
1,478,571
277
14,941
59,488
‐
(30,485)
24,158
‐
‐
661,409
426,257
247,695
2,223,626
1 The amounts disclosed in this column represent the movements in the associated provisions. They may be negative where a KMP 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 Post‐employment benefits are provided through superannuation contributions and national pension scheme.
11
12
50 ASM Annual Report 2022 | Financial Report
Financial Report | ASM Annual Report 2022 51
Australian Strategic Materials Ltd
Directors' report
30 June 2022
Australian Strategic Materials Ltd
Directors' report
30 June 2022
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Performance metrics
Weighting
Vested
Performance period
Name
Non‐Executive Directors:
I J Gandel
G Smith
N Earner
K J Gleeson
D I Chalmers
Executive Directors:
D Woodall
Other Key Management Personnel:
R Smith
J Clifton
F Moon
Fixed remuneration
2021
2022
At risk ‐ LTI
2022
2021
100%
100%
100%
100%
100%
100%
100%
100%
‐
100%
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
51%
44%
49%
56%
86%
81%
100%
‐
‐
100%
14%
19%
‐
‐
‐
‐
Details of Performance Rights and Options of KMP are as follows:
Performance
period start
date
Grant date
Fair value at
grant date
$
Total Fair
value at
grant date2
Vesting
period
Number
D Woodall1
D Woodall1
R Smith
1,800,000
1,200,000
54,714
10/02/2020
10/02/2020
5/07/2021
19/05/2020
19/05/2020
22/06/2021
0.59
1.14
6.40
R Smith2
R Smith2
J Clifton
22,210
22,210
125,248
5/07/2021
5/07/2021
12/07/2021
28/02/2022
28/02/2022
16/06/2021
8.14
8.14
3.90
J Clifton2
J Clifton2
20,520
20,520
12/07/2021
12/07/2021
25/03/2022
25/03/2022
8.13
8.13
1,062,000 3 years
1,368,000 3 years
352,090
50% 3 years
50% 5 years
1 year
1 year
50% 3 years
50% 5 years
1 year
1 year
180,789
180,789
488,467
166,828
166,828
Vesting date
Valuation
method
13/10/2023
13/10/2023
5/07/2024
5/07/2026
30/06/2022
30/06/2022
12/07/2024
12/07/2026
30/06/2022
30/06/2022
Monte Carlo
Monte Carlo
Black‐Scholes
Black‐Scholes
Black‐Scholes
Black‐Scholes
Monte Carlo
Monte Carlo
Black‐Scholes
Black‐Scholes
1 D Woodall resigned as Managing Director effective 15 July 2022. Of the 3,000,000 performance rights, 2,000,000 performance rights were forfeited and 1,000,000 vested and were issued on 19 July 2022.
2 The performance rights were determined to have a 0% probability of vesting at grant date and at 30 June 2022 and no share‐based payments expense was recognised during FY22. These performance rights
were cancelled on 8 August 2022.
For David Woodall's performance rights 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.
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 25%
25%
In the event if debt >40% of project capital is signed
In the event if a Korean metals plant is successfully commissioned
25%
on a positive cash flow basis
25%
Additional disclosures relating to key management personnel
0%
0%
0%
0%
Performance period ends 30 July 2023
Performance period ends 30 July 2023
Performance period ends 30 July 2023
Performance period ends 30 July 2023
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
Disposals/
Additions
other
Balance at
the end of
the year
Directors
I J Gandel
G M Smith
N P Earner
D I Chalmers1
K J Gleeson
D Woodall2
Other key management personnel
R Smith
J Clifton
F Moon
31,584,110
71,117
725,499
1,218,833
‐
7,500
‐
‐
‐
‐
‐
33,607,059
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
(575,499)
(122,484)
‐
‐
‐
‐
‐
‐
‐
(697,983)
31,584,110
71,117
150,000
1,096,349
‐
7,500
‐
‐
‐
‐
‐
32,909,076
1 These were the number of shares held by D I Chalmers when he resigned from the Board on 1 March 2022.
2 These were the numbers of shares held by D Woodall when he resigned from the Board on 15 July 2022.
Performance rights and Options holdings
The number of performance rights and options 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, for the year ended
30 June 2022 is set out below:
Performance rights and Options over ordinary
shares
D Woodall1
R Smith
J Clifton
Balance at
the start of
the year
Granted
Vested
Expired/
forfeited/
other
Balance at
the end of
the year
3,000,000
‐
‐
3,000,000
‐
99,434
166,288
265,422
‐
‐
‐
‐
‐
‐
‐
‐
3,000,000
99,434
166,288
3,265,722
1 D Woodall resigned as Managing Director effective 15 July 2022. Of the 3,000,000 performance rights, 2,000,000 performance rights were forfeited and 1,000,000 vested and were issued on 19 July 2022.
13
14
52 ASM Annual Report 2022 | Financial Report
Financial Report | ASM Annual Report 2022 53
Australian Strategic Materials Ltd
Directors' report
30 June 2022
Australian Strategic Materials Ltd
Directors' report
30 June 2022
The Directors, in accordance with advice provided by the audit committee, are of the opinion that the services as disclosed in note 22
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 objectivity of the
auditor; and
none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for
Professional Accountants.
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.
The Financial Report has been prepared in Australian dollars and all values are rounded to the nearest thousand dollars ($’000) unless
otherwise stated.
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
after this Directors' report.
This report is made in accordance with a resolution of Directors, pursuant to section 298(2)(a) of the Corporations Act 2001.
On behalf of the Directors
___________________________
I Gandel
Chairman
21 September 2022
The following table lists the key variables used in the valuation of each performance rights and options granted to key management
personnel during the year ended 30 June 2022:
Grant date
Expiry date
22/06/2021
16/06/2021
22/06/2021
16/06/2021
28/02/20221
28/02/20221
25/03/20221
25/03/20221
05/07/2024
12/07/2024
05/07/2026
12/07/2026
30/06/2022
30/06/2022
30/06/2022
30/06/2022
Share price at
grant date
$
Exercise price
Expected
volatility
Dividend yield
Risk‐free
interest rate
Fair value at
grant date
$
6.40
6.21
6.40
6.21
8.14
8.14
8.13
8.13
‐
$6.38
‐
$6.38
‐
‐
‐
‐
70.00%
70.00%
70.00%
70.00%
70.00%
70.00%
70.00%
70.00%
‐
‐
‐
‐
‐
‐
‐
‐
1.09%
1.09%
1.09%
1.09%
1.02%
1.02%
1.54%
1.54%
6.40
3.90
6.40
3.90
8.14
8.14
8.13
8.13
1 The performance rights were determined to have a 0% probability of vesting at grant date and at 30 June 2022 and no share‐based payments expense was recognised during FY22. These performance
rights were cancelled on 8 August 2022.
The following table lists the key variables used in the valuation of each performance right granted to key management personnel during
the year ended 30 June 2021:
Grant date
Expiry date
Share price at
grant date
$
Exercise price
Expected
volatility
Dividend yield
Risk‐free
interest rate
Fair value at
grant date
$
19/05/2020
19/05/2020
13/10/2023
13/10/2023
1.14
1.14
‐
‐
71.75%
71.75%
‐
‐
0.26%
0.26%
0.59
0.59
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.
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 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
Company for all or part of those proceedings.
Non‐audit services
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 imposed by the Corporations Act
2001.
15
16
54 ASM Annual Report 2022 | Financial Report
Financial Report | ASM Annual Report 2022 55
Auditor’s Independence Declaration
As lead auditor for the audit of Australian Strategic Materials Limited for the year ended 30 June 2022,
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
21 September 2022
Australian Strategic Materials Ltd
Contents
30 June 2022
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
Directors' declaration
Independent auditor's report to the members of Australian Strategic Materials Ltd
Shareholder information
General information
58
59
60
61
62
96
97
102
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 21 September 2022. The Directors
have the power to amend and reissue the financial statements.
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.
56 ASM Annual Report 2022 | Financial Report
17
18
Financial Report | ASM Annual Report 2022 57
Australian Strategic Materials Ltd
Consolidated statement of profit or loss and other comprehensive income
For the year ended 30 June 2022
Australian Strategic Materials Ltd
Consolidated balance sheet
As at 30 June 2022
Revenue
Other income
Expenses
Operating expenses
Net foreign exchange loss
Professional fees and consulting services
Employee remuneration
Share based payments
Directors' fees and salaries
General and administration expenses
Pastoral company expenses
Depreciation and amortisation expense
Fair value movement in biological assets
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
Loss for the year is attributable to:
Non‐controlling interest
Owners of Australian Strategic Materials Ltd
Total comprehensive loss for the year is attributable to:
Non‐controlling interest
Owners of Australian Strategic Materials Ltd
Basic loss per share
Diluted loss per share
Note
Consolidated
2022
$'000
2021
$'000
3
4
5
6
34
1,870
306
(5,826)
(1,413)
(5,745)
(8,227)
(876)
(1,263)
(3,604)
(2,124)
(1,857)
535
1,377
5,283
‐
(46)
(1,915)
(912)
(917)
(581)
(2,316)
(1,408)
(970)
430
(28,224)
(1,975)
7
3,967
1,166
(24,257)
(809)
21
(790)
(790)
9
9
(25,047)
(800)
18
(24,275)
(24,257)
‐
(25,047)
(25,047)
(26)
(783)
(809)
‐
(800)
(800)
Cents
Cents
32
32
(17)
(17)
(1)
(1)
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Biological assets
Total current assets
Non‐current assets
Inventories
Property, plant and equipment
Intangibles
Exploration and evaluation
Biological assets
Other
Total non‐current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Interest bearing liabilities
Provisions
Unearned revenue
Other
Total current liabilities
Non‐current liabilities
Interest bearing liabilities
Deferred tax
Provisions
Other
Total non‐current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Equity attributable to the owners of Australian Strategic Materials Ltd
Non‐controlling interest
Total equity
Note
Consolidated
2022
$'000
2021
$'000
8
9
10
11
10
12
14
13
11
15
16
17
18
16
7
17
19
20
21
60,220
2,266
13,117
451
76,054
984
64,177
3,616
104,225
1,346
298
174,646
93,324
739
243
581
94,887
‐
31,451
4,668
96,742
663
224
133,748
250,700
228,635
3,479
176
479
6,554
‐
10,688
17,095
20,609
2,611
‐
40,315
1,202
‐
159
‐
22
1,383
‐
24,561
27
59
24,647
51,003
26,030
199,697
202,605
228,425
12,336
(41,141)
199,620
77
207,162
12,250
(16,866)
202,546
59
199,697
202,605
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
19
58 ASM Annual Report 2022 | Financial Report
The above consolidated balance sheet should be read in conjunction with the accompanying notes
20
17
Financial Report | ASM Annual Report 2022 59
(783)
(26)
(800)
Net cash used in operating activities
28
(37,594)
(5,215)
Australian Strategic Materials Ltd
Consolidated statement of changes in equity
For the year ended 30 June 2022
Australian Strategic Materials Ltd
Consolidated statement of cash flows
For the year ended 30 June 2022
Consolidated
Contributed
equity
$'000
Capital
contribution
$'000
Foreign
currency
reserve
$'000
Share‐based
payment
reserve
$'000
Accumulated
losses
$'000
Non‐
controlling
interest
$'000
Total equity
$'000
Balance at 1 July 2020
1
11,324
‐
‐
(16,083)
‐
(4,758)
Cash flows from operating activities
Receipts from customers (inclusive of goods and services tax)
Payments to suppliers (inclusive of goods and services tax)
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 19)
Share‐based payments (note 34)
Deferred tax recognised in equity
Non‐controlling interests
‐
‐
‐
206,845
‐
316
‐
‐
‐
‐
‐
‐
‐
‐
Balance at 30 June 2021
207,162
11,324
‐
9
9
‐
‐
‐
‐
9
‐
‐
‐
‐
917
‐
‐
(783)
(26)
(809)
‐
‐
9
Interest received
Other income
Finance costs paid
‐
‐
‐
‐
‐
‐
‐
85
206,845
917
316
85
Cash flows from investing activities
Payments for investments
Payments for property, plant and equipment
Payments for exploration and evaluation
Payments for biological assets
Net cash acquired with subsidiaries
Proceeds of government grants received
917
(16,866)
59
202,605
Net cash used in investing activities
Consolidated
Contributed
equity
$'000
Capital
contribution
$'000
Foreign
currency
reserve
$'000
Share‐based
payment
reserve
$'000
Accumulated
losses
$'000
Non‐
controlling
interest
$'000
Total equity
$'000
Cash flows from financing activities
Proceeds from issue of shares
Proceeds from borrowings
Share issue transaction costs
917
(16,866)
59
202,605
Net cash from financing activities
Balance at 1 July 2021
207,162
11,324
Profit/(loss) after income tax
benefit for the year
Other comprehensive loss 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 19)
Share‐based payments (note 34)
Deferred tax recognised in equity
‐
‐
‐
21,278
‐
(15)
‐
‐
‐
‐
‐
‐
9
‐
(790)
(790)
‐
‐
‐
(24,275)
18
(24,257)
‐
‐
(790)
(24,275)
18
(25,047)
‐
‐
‐
‐
876
‐
‐
‐
‐
‐
‐
‐
21,278
876
(15)
Note
Consolidated
2022
$'000
2021
$'000
1,414
(39,212)
(37,798)
29
246
(71)
1,145
(6,676)
(5,531)
75
242
(1)
12
13
19
16
19
‐
(31,464)
(8,410)
(1,140)
‐
7,482
(414)
(2,955)
(5,840)
(196)
114
‐
(33,532)
(9,291)
21,816
16,758
(538)
91,919
‐
(2,633)
38,036
89,286
(33,090)
93,324
(14)
74,780
18,544
‐
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at the end of the financial year
8
60,220
93,324
Balance at 30 June 2022
228,425
11,324
(781)
1,793
(41,141)
77
199,697
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes
21
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes
22
60 ASM Annual Report 2022 | Financial Report
Financial Report | ASM Annual Report 2022 61
Australian Strategic Materials Ltd
Notes to the consolidated financial statements
30 June 2022
Note 1. Significant accounting policies
Note 2. Critical accounting judgements, estimates and assumptions
Note 3. Revenue
Note 4. Other income
Note 5. Operating expenses
Note 6. Net foreign exchange loss
Note 7. Income tax
Note 8. Cash and cash equivalents
Note 9. Trade and other receivables
Note 10. Inventories
Note 11. Biological assets
Note 12. Property, plant and equipment
Note 13. Exploration and evaluation
Note 14. Intangibles
Note 15. Trade and other payables
Note 16. Interest bearing liabilities
Note 17. Provisions
Note 18. Unearned revenue
Note 19. Issued capital
Note 20. Reserves
Note 21. Accumulated losses
Note 22. Remuneration of auditors
Note 23. Contingent liabilities
Note 24. Commitments
Note 25. Related party transactions
Note 26. Parent entity information
Note 27. Interests in subsidiaries
Note 28. Reconciliation of loss after income tax to net cash used in operating activities
Note 29. Key management personnel disclosures
Note 30. Operating segments
Note 31. Financial risk management
Note 32. Earnings per share
Note 33. Capital risk management
Note 34. Share‐based payments
Note 35. Events after the reporting period
63
72
73
73
74
74
74
76
76
76
77
77
78
78
79
79
80
81
81
82
82
82
83
83
83
84
85
85
86
87
89
92
93
93
96
Australian Strategic Materials Ltd
Notes to the consolidated financial statements
30 June 2022
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.
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 Accounting Standards and Interpretations not yet mandatory or early 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 2022. The Consolidated entity has not
yet assessed the impact of these new or amended Accounting Standards and Interpretations.
The following Accounting Standards and Interpretations are most relevant to the Consolidated entity:
Reclassifications of items in the financial statements
Minor reclassifications of items in the financial statements of the previous period have been made in accordance with the classification
of items in the financial statements for the year ended 30 June 2022.
Going concern
The consolidated financial statements have been prepared on a going concern basis which contemplates the realisation of assets and
settlement of liabilities in the normal course of business.
The Group has cash outflows from operating and investing activities of $71,126,000 for the year ended 30 June 2022. At 30 June 2022,
the Group had cash on hand of $60,220,000 (30 June 2021: $93,324,000). The Group has net working capital as at 30 June 2022 of
$65,366,000 and outstanding commitments of $23,023,709 relating to construction of the Korean Metals Plant, Dubbo Project FEED,
Dubbo land acquisitions, and exploration obligations all due within 12 months (Refer Note 24).
Based on the Group's cash flow forecast, the Group may require additional funding to enable the Group to continue to realise its
strategic business activities and meet all associated corporate, exploration, construction, and development commitments over the
period.
The continuing viability of the Group and its ability to continue as a going concern and meet its debts and commitments as they fall due
are dependent upon the Group:
23
24
62 ASM Annual Report 2022 | Financial Report
Financial Report | ASM Annual Report 2022 63
Australian Strategic Materials Ltd
Notes to the consolidated financial statements
30 June 2022
Note 1. Significant accounting policies (continued)
●
●
●
●
Continuing to source new customers for sale of product produced from the Korean Metals Plant.
Raising additional equity capital. The Directors are of the view that the Group will be able to raise further equity capital as they
were successful in raising approximately $91.9 million in equity (before costs) during April 2021 and $21.8m during May 2022.
Raising debt financing for the Dubbo Project. ASM has appointed the Australian and New Zealand Banking Group Limited (ANZ)
as a debt financial advisor based on ANZ's experience and strong relationships in Australia and Korea, including with Australian
and Korean export finance agencies. ASM is currently working closely with ANZ to secure funding for the development of the
Dubbo Project financing commitments; and/or
Satisfying Export Finance Australia (EFA) conditions precedent to access $200 million in finance support for the Dubbo Project as
announced on 28 June 2021.
As a result of the above, there is a material uncertainty that may cast significant doubt on the entity's ability to continue as a going
concern and therefore, that the entity may be unable to realise its assets and discharge its liabilities in the normal course of business.
However, the Directors believe that the Group will be able to continue as a going concern and that it is appropriate to adopt the going
concern basis in the preparation of the financial report.
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 the Consolidated Statement of profit or loss and
other comprehensive Income for the period in which it arises.
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.
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, 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 26.
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 2022 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.
Australian Strategic Materials Ltd
Notes to the consolidated financial statements
30 June 2022
Note 1. Significant accounting policies (continued)
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.
Property Plant and Equipment
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.
● expenditure that is directly a�ributable to the acquisi�on and commissioning of items;
● the present value of the estimated costs of dismantling and removing the asset and restoring the site on which it is located
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
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the
Consolidated entity. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.
25
26
64 ASM Annual Report 2022 | Financial Report
Financial Report | ASM Annual Report 2022 65
Australian Strategic Materials Ltd
Notes to the consolidated financial statements
30 June 2022
Note 1. Significant accounting policies (continued)
Exploration and Evaluation
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 exploita�on of the area of interest; or
● ac�vi�es in the area of interest have not at the repor�ng 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.
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.
Australian Strategic Materials Ltd
Notes to the consolidated financial statements
30 June 2022
Note 1. Significant accounting policies (continued)
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.
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.
Deferred tax assets and liabilities are always classified as non‐current.
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.
Intangible Assets
Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair value at the date
of the acquisition. Intangible assets acquired separately are initially recognised at cost. Indefinite life intangible assets are not amortised
and are subsequently measured at cost less any impairment. Finite life intangible assets are subsequently measured at cost less
amortisation and any impairment. The gains or losses recognised in profit or loss arising from the derecognition of intangible assets are
measured as the difference between net disposal proceeds and the carrying amount of the intangible asset. The method and useful
lives of finite life intangible assets are reviewed annually. Changes in the expected pattern of consumption or useful life are accounted
for prospectively by changing the amortisation method or 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.
Trade and other payables
These amounts represent liabilities for goods and services provided to the Consolidated entity prior to the end of the financial year and
which are unpaid. Due to their short‐term nature they are measured at amortised cost and are not discounted. The amounts are
unsecured and are usually paid within 30 days of recognition.
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.
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 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.
27
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66 ASM Annual Report 2022 | Financial Report
Financial Report | ASM Annual Report 2022 67
Australian Strategic Materials Ltd
Notes to the consolidated financial statements
30 June 2022
Note 1. Significant accounting policies (continued)
Australian Strategic Materials Ltd
Notes to the consolidated financial statements
30 June 2022
Note 1. Significant accounting policies (continued)
Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings,
payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
●
●
the Group is able to control the reversal of the temporary difference
the temporary difference is not expected to reverse in the foreseeable future. Deferred tax assets and liabilities are measured at
the tax rates that are expected to apply in the year in which the liability is settled or the asset is realised, based on tax rates (and
tax laws) that have been enacted or substantially enacted by the end of the reporting year.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly
attributable transaction costs. The Group’s financial liabilities include trade and other payables and loans and borrowings including
bank overdrafts.
Subsequent measurement ‐ financial liabilities at amortised cost
This is the category most relevant to the Group. After initial recognition, interest‐bearing loans and borrowings are subsequently
measured at amortised cost using the Effective Interest Rate (EIR) method. Gains and losses are recognised in profit or loss when the
liabilities are derecognised as well as through the EIR amortisation process. Amortised cost is calculated by taking into account any
discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance
costs in the statement of profit or loss.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing
financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are
substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of
a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss.
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.
Provisions
Provisions are recognised when the Consolidated entity has a present (legal or constructive) obligation as a result of a past event, it is
probable the Consolidated entity will be required to settle the obligation, and a reliable estimate can be made of the amount of the
obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at
the reporting date, taking into account the risks and uncertainties surrounding the obligation. If the time value of money is material,
provisions are discounted using a current pre‐tax rate specific to the liability. The increase in the provision resulting from the passage
of time is recognised as a finance cost.
Taxes
Recognition and measurement
The income tax expense or revenue for the year is the tax payable on the current year’s taxable income based on the national income
tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between
the tax bases of assets and liabilities and their carrying amounts in the financial statements, and by unused tax losses (if appropriate).
Deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised for deductible temporary
differences, unused tax losses and unused tax credits only if it is probable that sufficient future taxable income will be available to utilise
those temporary differences and losses.
Deferred tax is not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business
combination) of assets and liabilities in a transaction that affects neither taxable profit or loss; or the accounting profit or loss arising
from taxable differences related to investment in subsidiaries, associates and interests in joint ventures to the extent that:
Deferred tax assets and liabilities are offset only if certain criteria are met. Income taxes relating to items recognised directly in equity
are recognised in equity.
Tax consolidation
ASM and its wholly‐owned Australian controlled entities implemented the tax consolidation legislation as of 21 July 2020 and the
entities in the tax consolidated group entered into a tax sharing agreement, which limits the joint and several liability of the wholly‐
owned entities in the case of a default by the head entity, Australian Strategic Materials Limited. The entities have also entered into a
tax funding agreement under which the wholly‐owned entities fully compensate Australian Strategic Materials Limited for any current
tax payable assumed and are compensated by Australian Strategic Materials Limited for any current tax receivable.
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.
Finance costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in the period in
which they are incurred.
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.
29
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68 ASM Annual Report 2022 | Financial Report
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Australian Strategic Materials Ltd
Notes to the consolidated financial statements
30 June 2022
Note 1. Significant accounting policies (continued)
Reserves
Foreign currency reserve
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.
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 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.
Government grants
Government grants are recognised where there is reasonable assurance that the grant will be received, and all attached conditions will
be complied with. When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods that the
related costs, for which is intended to compensate, are expensed. When the grant relates to an asset, it is recognised as an offset to
the asset and is recognised in the income statement on a systematic basis over the life of the asset. Where grant criteria are not fully
satisfied a portion of the grant may be repaid subject to performance condition requirements.
Decommissioning liability
Decommissioning costs are provided for at the present value of expected costs to settle restoration obligations using estimated cash
flows and are recognized as part of the cost of the relevant asset. The cash flows are discounted at a current pre‐tax rate that reflects
the risks specific to the decommissioning liability. The unwinding of the discount is expensed as incurred and recognized in the
statement of profit or loss as a finance cost. The estimated future costs of decommissioning are reviewed annually and adjusted as
appropriated. A corresponding decommissioning asset is recognised, whereby it is added to the cost of the plant and will be amortised
over the plants useful life following commissioning.
Inventories
Raw materials are physically measured and are valued at the lower of cost or net realisable value. Cost of raw materials comprises the
direct purchase costs. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of
completion and the estimated costs necessary to make the sale.
Consumables relating to plant and equipment and farm supplies are recognised as inventory and measured at cost.
Any provision for obsolescence is determined by reference to specific items of stock. A regular review is undertaken to determine the
extent of any provision for obsolescence.
Australian Strategic Materials Ltd
Notes to the consolidated financial statements
30 June 2022
Note 1. Significant accounting policies (continued)
Share‐based payments
Equity‐settled and cash‐settled share‐based compensation benefits are provided to employees.
Equity‐settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for the rendering
of services. Cash‐settled transactions are awards of cash for the exchange of services, where the amount of cash is determined by
reference to the share price.
The cost of equity‐settled transactions are measured at fair value on grant date. Fair value is independently determined using either
the Binomial or Black‐Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of
dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free
interest rate for the term of the option, together with non‐vesting conditions that do not determine whether the Consolidated entity
receives the services that entitle the employees to receive payment. No account is taken of any other vesting conditions.
The cost of equity‐settled transactions are recognised as an expense with a corresponding increase in equity over the vesting period.
The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate of the number
of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit or loss for the period is
the cumulative amount calculated at each reporting date less amounts already recognised in previous periods.
The cost of cash‐settled transactions is initially, and at each reporting date until vested, determined by applying either the Binomial or
Black‐Scholes option pricing model, taking into consideration the terms and conditions on which the award was granted. The cumulative
charge to profit or loss until settlement of the liability is calculated as follows:
●
●
during the vesting period, the liability at each reporting date is the fair value of the award at that date multiplied by the expired
portion of the vesting period.
from the end of the vesting period until settlement of the award, the liability is the full fair value of the liability at the reporting
date.
All changes in the liability are recognised in profit or loss. The ultimate cost of cash‐settled transactions is the cash paid to settle the
liability.
Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market conditions are
considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are satisfied.
If equity‐settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An additional
expense is recognised, over the remaining vesting period, for any modification that increases the total fair value of the share‐based
compensation benefit as at the date of modification.
If the non‐vesting condition is within the control of the Consolidated entity or employee, the failure to satisfy the condition is treated
as a cancellation. If the condition is not within the control of the Consolidated entity or employee and is not satisfied during the vesting
period, any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited.
If equity‐settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense is
recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award is treated as
if they were a modification.
If the non‐vesting condition is within the control of the Consolidated entity or employee, the failure to satisfy the condition is treated
as a cancellation. If the condition is not within the control of the Consolidated entity or employee and is not satisfied during the vesting
period, any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited.
If equity‐settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense is
recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award is treated as
if they were a modification.
31
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70 ASM Annual Report 2022 | Financial Report
Financial Report | ASM Annual Report 2022 71
Australian Strategic Materials Ltd
Notes to the consolidated financial statements
30 June 2022
Note 1. Significant accounting policies (continued)
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.
Exploration and evaluation costs
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. 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 this determination is made.
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.
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.
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.
Australian Strategic Materials Ltd
Notes to the consolidated financial statements
30 June 2022
Note 2. Critical accounting judgements, estimates and assumptions (continued)
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.
Note 3. Revenue
Pastoral company revenue
Note 4. Other income
Net gain on loan forgiveness
Interest income
Property and Rental income
Sundry income
Other income
Consolidated
2022
$'000
2021
$'000
1,870
1,377
Consolidated
2022
$'000
2021
$'000
‐
29
120
157
306
4,731
69
151
332
5,283
33
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72 ASM Annual Report 2022 | Financial Report
Financial Report | ASM Annual Report 2022 73
Australian Strategic Materials Ltd
Notes to the consolidated financial statements
30 June 2022
Note 5. Operating expenses
Inventory write off
Service fees
Supplies expenses
Export fee
Electricity
Insurance expense
Rental expenses
Other
Operating expenses
Note 6. Net foreign exchange loss
Realised foreign exchange loss
Unrealised foreign exchange loss
Note 7. Income tax
Income tax benefit
Deferred tax ‐ origination and reversal of temporary differences
Aggregate income tax expense
Deferred tax included in income tax benefit comprises:
Decrease in deferred tax assets
Numerical reconciliation of income tax benefit and tax at the statutory rate
Loss before income tax benefit
Tax at the statutory tax rate of 30%
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Non‐deductible expenses
Tax rate differential on foreign income
Under Provision in Prior Year
Non‐assessable income
Non‐Deductible equity raising costs
Income tax benefit
Consolidated
2022
$'000
2021
$'000
2,392
799
542
295
300
189
61
1,248
5,826
Consolidated
2022
$'000
2021
$'000
38
1,375
1,413
Consolidated
2022
$'000
2021
$'000
‐
‐
‐
‐
‐
‐
‐
‐
‐
45
1
46
3,967
1,166
3,967
1,166
3,967
1,166
(28,224)
(1,975)
(8,467)
(593)
3,029
1,002
842
(278)
(95)
836
88
‐
(1,419)
(78)
(3,967)
(1,166)
Australian Strategic Materials Ltd
Notes to the consolidated financial statements
30 June 2022
Note 7. Income tax (continued)
Amounts credited directly to equity
Deferred tax assets
Deferred tax asset
Deferred tax asset comprises temporary differences attributable to:
Amounts recognised in profit or loss:
Tax losses
Accruals and provisions
Blackhole expenses
Property, plant and equipment
Other
Offset against deferred tax liabilities
Deferred tax asset
Movements:
Opening balance
Charged to profit or loss
Credited/(charged) to equity
Closing balance
Deferred tax liability
Deferred tax liability comprises temporary differences attributable to:
Amounts recognised in profit or loss:
Prepayments
Property, plant and equipment
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
2022
$'000
2021
$'000
(15)
316
Consolidated
2022
$'000
2021
$'000
8,787
499
301
‐
159
(9,746)
2,086
103
317
3
36
(2,545)
‐
‐
24,561
(3,967)
15
26,043
(1,166)
(316)
20,609
24,561
Consolidated
2022
$'000
2021
$'000
4
113
30,238
(9,746)
3
‐
27,103
(2,545)
20,609
24,561
24,561
(3,967)
15
26,043
(1,166)
(316)
20,609
24,561
35
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74 ASM Annual Report 2022 | Financial Report
Financial Report | ASM Annual Report 2022 75
Australian Strategic Materials Ltd
Notes to the consolidated financial statements
30 June 2022
Note 8. Cash and cash equivalents
Current assets
Cash at bank
Note 9. Trade and other receivables
Current assets
Trade receivables
Prepayments
Non trade receivables
Australian Strategic Materials Ltd
Notes to the consolidated financial statements
30 June 2022
Note 11. Biological assets
Current assets
Biological asset
Non‐current assets
Biological asset
Consolidated
2022
$'000
2021
$'000
451
581
1,346
663
1,797
1,244
Biological assets comprise sheep and cattle owned by ASM's wholly owned 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.
Note 12. Property, plant and equipment
Consolidated
2022
$'000
2021
$'000
60,220
93,324
Consolidated
2022
$'000
2021
$'000
528
1,505
233
2,266
392
347
‐
739
Allowance for expected credit losses
The Group has assessed the credit risk on the receivables using life‐time expected credit losses. In this regard, the Group has concluded
that the probability of default on the receivables is low. Accordingly, no impairment allowance has been recognised for expected credit
losses on the receivables.
Note 10. Inventories
Current assets
Toongi Pastoral Company supplies
Korea Materials [i]
Non‐current assets
Korea Materials ‐ at cost
Consolidated
2022
$'000
2021
$'000
193
12,924
13,117
984
14,101
243
‐
243
‐
243
[i] Of the Korean materials inventory recorded at 30 June 2022, $9,217,000 is recorded at net realisable value.
Amounts recognised in the profit or loss
Write‐downs of inventories to net realisable value amounts to $2,392,000 (30 June 2021: nil). These were recognised as an operating
expense during the year ended 30 June 2022 in the consolidated statement of profit or loss and other comprehensive income.
Non‐current assets
Land and buildings ‐ at cost
Less: Accumulated depreciation
Decommissioning asset
Plant and equipment ‐ at cost
Less: Accumulated depreciation
Right of use
Less: Accumulated depreciation
Capital Work in Progress
Consolidated
2022
$'000
2021
$'000
46,423
(234)
2,140
48,329
3,101
(594)
2,507
638
(128)
510
12,831
28,895
(49)
‐
28,846
2,800
(341)
2,459
122
(5)
117
29
64,177
31,451
37
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76 ASM Annual Report 2022 | Financial Report
Financial Report | ASM Annual Report 2022 77
Australian Strategic Materials Ltd
Notes to the consolidated financial statements
30 June 2022
Note 12. Property, plant and equipment (continued)
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:
Consolidated
Balance at 1 July 2020
Additions
Additions through business combinations
Disposals
Transfers between classes
Depreciation expense
Balance at 30 June 2021
Additions
Disposals
Exchange differences
Transfers between classes
Decommissioning asset
Depreciation expense
Land &
Buildings
$'000
Plant &
Equipment
$'000
Work in
Progress
$'000
Right of Use
Asset
$'000
Total
$'000
27,033
‐
‐
‐
1,835
(22)
28,846
12,951
‐
(73)
4,650
2,140
(185)
336
1,027
1,214
(5)
117
(230)
2,459
389
(22)
(88)
187
‐
(418)
198
1,783
‐
‐
(1,952)
‐
29
17,639
‐
‐
(4,837)
‐
‐
‐
122
‐
‐
‐
(5)
117
521
‐
(6)
‐
‐
(122)
27,567
2,932
1,214
(5)
‐
(257)
31,451
31,500
(22)
(167)
‐
2,140
(725)
Balance at 30 June 2022
48,329
2,507
12,831
510
64,177
Note 13. Exploration and evaluation
Opening balance
Expenditure capitalised during the year [i]
R&D Tax Incentives on capitalised costs [ii]
Closing balance
Consolidated
2022
$'000
2021
$'000
96,742
8,410
(927)
90,665
6,077
‐
104,225
96,742
[i] Additions during the year‐ended 30 June 2022 relate to the Optimised Feasibility Study and metallurgical, engineering and test work.
[ii] During the year the group received R&D Tax Incentives of $927,387 on costs capitalised to exploration and evaluation.
Note 14. Intangibles
The intangible assets are related to the internally generated intellectual property, which was part of the acquisition of the Korean
entities.
Non‐current assets
Intellectual property (IP)
Less: Accumulated amortisation
Consolidated
2022
$'000
2021
$'000
5,397
(1,781)
5,380
(712)
3,616
4,668
Australian Strategic Materials Ltd
Notes to the consolidated financial statements
30 June 2022
Note 15. Trade and other payables
Current liabilities
Trade payables
Accruals
Other payables
Consolidated
2022
$'000
2021
$'000
157
3,090
232
154
973
75
3,479
1,202
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.
Note 16. Interest bearing liabilities
On 10 June 2022, ASM executed two loan facilities with the Korean Development Bank in South Korea. The facilities executed were an
Industrial Facility for operating and capital expenditure and an Overdraft Facility. The Industrial Facility is comprised of an operating
facility of KRW 15.0bn ($16.7m) and a capital facility of KRW 4.0bn ($4.5m). Additionally, ASM entered into a KRW 3.0 bn ($3.4m)
overdraft facility under the same terms as the Loan Facility.
At 30 June 2022, $16.7m of the Loan Facility has been drawn down and is classified as non‐current liabilities as contractual repayment
is not within 12 months ($16.7m contractually repayable in June 2024).
Current liabilities
Lease Liability [i]
Non‐current liabilities
Bank loan [ii]
Lease liability [i]
[i] Leases
Consolidated
2022
$'000
2021
$'000
176
16,758
337
17,095
17,271
‐
‐
‐
‐
‐
As at 30 June 2022, the Group leased various assets under leases expiring within 1 to 9 years. The interest rates are fixed and payable
over a period of the lease term from the inception of the lease. These leases are effectively secured as the rights to the leased assets
recognised in the financial statements revert to the lessor in the event of default.
[ii] Bank loans
Secured liabilities and assets pledged as security
The Korea Development Bank loan facility is not secured against any Group assets.
Fair value
For the majority of the borrowings, the fair values approximate their carrying amounts, since the interest payable on those borrowings
is either close to current market rates or the borrowings are of a short‐term nature.
39
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78 ASM Annual Report 2022 | Financial Report
Financial Report | ASM Annual Report 2022 79
Australian Strategic Materials Ltd
Notes to the consolidated financial statements
30 June 2022
Note 16. Interest bearing liabilities (continued)
As at the year‐ended 30 June 2022, the Group had:
●
●
$24.6m Industrial Loan Facility, $16.7m is drawn representing the operating portion of the facility, the capital facility of $4.5m is
undrawn
$3.4m overdraft facility is undrawn
The interest rate on these loans are fixed upon draw down. The interest on the operating Industrial Facility loan is 4.22% being the
KDB 2‐year industrial financial debenture rate (on date of transfer) + 1.05% p.a.
Debt covenants
There are no debt covenants associated with the Korea Development Bank loan facility.
Australian Strategic Materials Ltd
Notes to the consolidated financial statements
30 June 2022
Note 17. Provisions (continued)
The following amounts reflect leave that is not expected to be taken within the next 12 months:
Employee benefits obligation expected to be settled after 12 months
224
25
Note 18. Unearned revenue
Consolidated
2022
$'000
2021
$'000
Note 17. Provisions
Current liabilities
Annual leave
Long service leave
Other
Non‐current liabilities
Long service leave
Provision for decommissioning 1
Consolidated
2022
$'000
2021
$'000
Current liabilities
Unearned revenue [i]
445
22
12
479
471
2,140
2,611
3,090
95
‐
64
159
27
‐
27
186
Consolidated
2022
$'000
2021
$'000
6,554
‐
[i] Unearned revenue relates to a cash grant from the South Korean government to support the development of the Korean Metals
Plant. The grant will be recognised as an offset to the assets that it relates to and will be recognised in the income statement on a
systematic basis over the life of the asset through a reduced depreciation expense. Should any grant criteria not be fully satisfied by 31
December 2022 a portion of the grant may be required to be repaid.
Note 19. Issued capital
Consolidated
2022
Shares
2021
Shares
2022
$'000
2021
$'000
Ordinary shares ‐ fully paid
141,956,062
139,506,006
228,425
207,162
Movements in ordinary share capital
Details
Balance
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
Date
1 July 2020
Balance
Issue of shares in accordance with subscription agreement
Less: Transactions costs arising on share issue
Deferred tax credit recognised directly into equity
30 June 2021
Shares
Issue price
$'000
5
119,049,773
1,306,417
13,541,666
5,608,145
‐
‐
139,506,006
2,450,056
‐
‐
$0.95
$3.49
$4.80
$4.80
‐
‐
$8.90
‐
‐
1
113,000
4,559
65,000
26,919
(2,633)
316
207,162
21,816
(538)
(15)
228,425
Balance
30 June 2022
141,956,062
1 During the period, ASM subsidiary Korean Strategic Metals (KSM) executed a land lease which included an obligation to restore its
site to its original state on completion, ASM has recognised this restoration liability as a provision for decommissioning at 31 December
2021. This provision for decommissioning represents the discounted value of the present obligation to decommission, dismantle and
rehabilitate certain items of property, plant and equipment. The discounted value reflects a combination of management's assessment
of the nature and extent of the work required, estimates of the future cost of performing the work required, the expected timing of
cash flows and the discount rate applied. Changes to one or more of these assumptions is likely to result in a change to the carrying
value of the provision and the related asset or a change to profit and loss in accordance with the Group's accounting policy stated in
Note 1.
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.
41
42
80 ASM Annual Report 2022 | Financial Report
Financial Report | ASM Annual Report 2022 81
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.
Australian Strategic Materials Ltd
Notes to the consolidated financial statements
30 June 2022
Note 19. Issued capital (continued)
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 16 May 2022, the Company finalised $21,816,000 (before costs) subscription with KCF Energy Co. Ltd through the issue of 2,450,056
shares at an issue price of $8.90 per share.
Note 20. Reserves
Foreign currency reserve
Share‐based payments reserve
Capital contribution reserve
Consolidated
2022
$'000
2021
$'000
(781)
1,793
11,324
9
917
11,324
12,336
12,250
Foreign currency reserve
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.
Note 21. Accumulated losses
Accumulated losses at the beginning of the financial year
Loss after income tax benefit for the year
Accumulated losses at the end of the financial year
Note 22. Remuneration of auditors
Consolidated
2022
$'000
2021
$'000
(16,866)
(24,275)
(16,083)
(783)
(41,141)
(16,866)
Australian Strategic Materials Ltd
Notes to the consolidated financial statements
30 June 2022
Note 23. Contingent liabilities
The Consolidated Entity has contingent liabilities estimated at up to $4,247,801 for the potential acquisition of parcels of land
surrounding the Dubbo Project (2021: $5,375,000). 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.
In June 2022, ASM and Hyundai Engineering signed an agreement to provide the Engineering, Procurement, Construction and Design
for the Dubbo project. The contract is for $46,200,000 after an initial non‐refundable payment of A$500,000 is paid to Hyundai. This
payment was included in payables at 30 June 2022. ASM must issue a Notice to Proceed for the remainder of the contract to come into
effect. If the Notice to Proceed is not provided within 12 months the parties can terminate with no obligation. As at 30 June 2022, a
notice to proceed has not been issued.
Note 24. 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 $100,000 within the next twelve months (2021: $179,000). 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 $1,419,177 for the acquisition of parcels of land surrounding the Dubbo
Project (2021: $2,623,000). 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, $1,306,949 has been committed regarding activities for the Dubbo Project.
Commitments related to capital purchases related to the Korean Metallisation Plant are $5,745,583 and inventory commitments of
$14,452,000.
Note 25. Related party transactions
Parent entity
Australian Strategic Materials Ltd is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 27.
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:
Key management personnel
Disclosures relating to key management personnel are set out in note 29 and the remuneration report included in the Directors' report.
Audit services ‐ PricewaterhouseCoopers
Audit or review of the financial statements
Other services ‐ PricewaterhouseCoopers
Tax compliance services
Tax advisory services
Consulting services
Consolidated
2022
$
2021
$
119,210
92,000
76,540
18,870
10,060
‐
41,000
‐
105,470
41,000
Transactions with related parties
The following transactions occurred with related parties:
Purchase of goods and services from other related parties:
Nuclear IT1
Alkane Resources
Gandel Metals Pty Ltd
1 From 1 March 2022 Nuclear IT ceased to be a related entity upon resignation of Director.
Consolidated
2022
$
2021
$
114,277
430,156
152,974
4,371
‐
‐
43
44
82 ASM Annual Report 2022 | Financial Report
Financial Report | ASM Annual Report 2022 83
Australian Strategic Materials Ltd
Notes to the consolidated financial statements
30 June 2022
Note 25. Related party transactions (continued)
Australian Strategic Materials Ltd
Notes to the consolidated financial statements
30 June 2022
Note 26. Parent entity information (continued)
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.
Capital commitments ‐ Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2022 and 30 June 2021.
Alkane Resources, a Director related entity, for personnel and office services under its ongoing Trade Service Agreement with ASM.
Gandel Metals Pty Ltd, a Director related entity, for travel related services.
Receivable from and payable to related parties
As at 30 June 2022, amounts totalling $24,531 remained payable to Gandel Metals Pty Ltd for travel related services (2021: nil).
Loans to/from related parties
There were no loans to or from related parties at the current and previous reporting date.
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
Note 26. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
(Loss)/Profit after income tax
Total comprehensive (Loss)/Profit
Balance sheet
Total current assets
Total Assets
Total current liabilities
Total liabilities
Equity
Issued capital
Share‐based payments reserve
Capital contributions reserve
Accumulated losses
Total equity
Parent
2022
$'000
2021
$'000
(10,699)
(10,699)
4,631
4,631
Parent
2022
$'000
2021
$'000
48,515
211,483
1,727
(7,909)
228,425
1,793
11,324
(22,150)
90,613
208,288
333
(338)
207,162
917
11,323
(11,452)
219,392
207,950
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 2022 and 30 June 2021.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2022 and 30 June 2021.
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 associates are accounted for at cost, less any impairment, in the parent entity.
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.
Note 27. 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
Toongi Pastoral Company Pty Ltd
ASM Korea Co. Ltd
KSM Technology Co. Ltd
ASM Metals Corporation Pty Ltd
ASM Technology Corporation Pty Ltd
KSM Metals Limited
Principal place of business /
Country of incorporation
Australia
Australia
South Korea
South Korea
Australia
Australia
South Korea
Note 28. 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
Share‐based payments
Loan forgiveness income
Inventory ‐ Non‐cash movement
Gain / loss on disposal of assets
Unrealised FX gains
Change in operating assets and liabilities:
Increase in receivables
Increase in inventory
Increase in deferred tax asset
Increase in trade and other payables
Increase in other provisions
Increase in biological assets
Net cash used in operating activities
Ownership interest
2021
2022
%
%
100%
100%
100%
95%
100%
100%
100%
100%
100%
100%
95%
100%
100%
100%
Consolidated
2022
$'000
2021
$'000
(24,257)
(809)
1,857
138
876
‐
(535)
(2)
1,314
(1,735)
(14,222)
(3,952)
2,224
570
130
970
70
917
(4,731)
‐
‐
‐
(633)
(239)
(1,165)
858
7
(460)
(37,594)
(5,215)
45
46
84 ASM Annual Report 2022 | Financial Report
Financial Report | ASM Annual Report 2022 85
Australian Strategic Materials Ltd
Notes to the consolidated financial statements
30 June 2022
Australian Strategic Materials Ltd
Notes to the consolidated financial statements
30 June 2022
Note 28. Reconciliation of loss after income tax to net cash used in operating activities (continued)
Note 30. Operating segments
Net debt reconciliation
Cash and cash equivalents
Borrowings ‐ repayable within one year (note 16)
Borrowings ‐ repayable after one year [i]
Net debt
Consolidated
2022
$'000
2021
$'000
60,220
(176)
(17,095)
93,324
‐
‐
42,949
93,324
[i] Includes long term portion of a lease liability expiring within 1 to 9 years and a industrial loan facility with the Korea Development
Bank (drawn portion of the loan facility is $16.7m)
Note 29. Key management personnel disclosures
Directors
The following persons were Directors of Australian Strategic Materials Ltd during the financial year:
I J Gandel
D G Woodall (resigned 15 July 2022)
N P Earner
D I Chalmers (resigned 1 March 2022)
G M Smith
K J Gleeson (appointed 1 February 2022)
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
R Smith (appointed 6 July 2021)
J Clifton (appointed 12 July 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
2022
$
2021
$
2,627,098
114,653
12,028
876,500
1,478,571
59,488
24,158
661,409
3,630,279
2,223,626
Identification of reportable operating segments
The Group has identified its operating segments based on the internal reports that are reviewed and used by the executive management
team (the chief decision makers) in assessing performance and in determining the allocation of resources.
Previously, the Group had identified a single segment being the Australian segment. For the year ended 30 June 2022, the Company
has reassessed its operating segments and has organised them into three segments as follows:
●
●
●
Korea: which includes the construction and commissioning of the Korean Metals Plant.
Dubbo: which includes the evaluation and feasibility of the Dubbo project.
Corporate: which includes corporate activities and the Pastoral company.
The comparative information has been restated to reflect this.
Intersegment transactions
Any Intersegment transactions were made at market rates. Intersegment transactions are eliminated on consolidation.
Intersegment receivables, payables and loans
Intersegment loans are initially recognised at the consideration received. Intersegment loans receivable and loans payable that earn or
incur non market interest are not adjusted to fair value based on market interest rates. Intersegment loans are eliminated on
consolidation.
Operating segment information
Consolidated 30 June 21
Revenue
Interest income
Other Income
Expenses
Professional fees and consulting services
Employee remuneration
Depreciation and Amortisation
Unrealised foreign exchange loss
Other unallocated
Income tax benefit
Corporate
$'000
Dubbo
Project
$'000
Korea
$'000
Consolidated
$'000
1,377
69
5,167
6,613
(1,698)
(1,565)
(87)
(1)
(3,261)
1,166
1,167
‐
‐
‐
‐
(217)
‐
‐
‐
‐
‐
(217)
‐
‐
47
47
‐
(264)
(883)
‐
(659)
‐
1,377
69
5,214
6,660
(1,915)
(1,829)
(970)
(1)
(3,920)
1,166
(1,759)
(809)
47
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86 ASM Annual Report 2022 | Financial Report
Financial Report | ASM Annual Report 2022 87
Australian Strategic Materials Ltd
Notes to the consolidated financial statements
30 June 2022
Note 30. Operating segments (continued)
Consolidated 30 June 21
Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Property, plant and equipment1
Intangibles1
Exploration and evaluation1
Biological assets1
Other
Total assets
Liabilities
Trade and other payables
Deferred tax
Provisions
Other
Total liabilities
1Additions to non‐current assets
Property, plant and equipment (note 12)
Exploration and evaluation (note 13)
Biological assets
Intangible (note 14)
Consolidated 30 June 22
Revenue
Interest income
Other income
Expenses
Operating expenses
Professional fees and consulting services
Employee remuneration
Share based payments
Depreciation and Amortisation
Unrealised foreign exchange loss
Other unallocated
Income tax benefit
Corporate
$'000
Dubbo
Project
$'000
Korea
$'000
Consolidated
$'000
93,222
457
243
387
‐
‐
1,244
‐
95,553
387
24,561
132
‐
25,080
40
‐
326
‐
366
‐
‐
‐
28,873
‐
96,742
‐
20
125,635
509
‐
54
‐
563
1,743
6,077
‐
‐
7,820
102
282
‐
2,191
4,668
‐
‐
204
7,447
306
‐
‐
81
387
1,149
‐
‐
5,342
6,491
93,324
739
243
31,451
4,668
96,742
1,244
224
228,635
1,202
24,561
186
81
26,030
2,932
6,077
326
5,342
14,677
Corporate
$'000
Dubbo
Project
$'000
Korea
$'000
Consolidated
$'000
1,870
14
230
2,114
‐
(5,191)
(4,302)
(876)
(108)
(410)
(6,175)
3,967
‐
‐
‐
‐
‐
(554)
‐
‐
‐
‐
(200)
‐
‐
15
47
62
(5,825)
‐
(3,925)
‐
(1,749)
(965)
(120)
‐
1,870
29
277
2,176
(5,825)
(5,745)
(8,227)
(876)
(1,857)
(1,375)
(6,495)
3,967
(10,981)
(754)
(12,522)
(24,257)
Australian Strategic Materials Ltd
Notes to the consolidated financial statements
30 June 2022
Note 30. Operating segments (continued)
Consolidated 30 June 22
Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Property, plant and equipment1
Intangibles
Exploration and evaluation1
Biological assets1
Other
Total assets
Liabilities
Trade and other payables
Borrowings
Deferred tax
Provisions
Unearned revenue
Total liabilities
1Additions to non‐current assets
Property, plant and equipment (note 12)
Exploration and evaluation (note 13)
Biological assets
Note 31. Financial risk management
Corporate
$'000
Dubbo
Project
$'000
Korea
$'000
Consolidated
$'000
40,574
872
193
585
‐
‐
1,797
‐
44,021
1,419
‐
20,609
502
‐
22,530
187
‐
659
846
‐
‐
‐
33,484
‐
104,225
‐
20
137,729
1,054
‐
‐
‐
‐
1,054
4,731
8,410
‐
13,141
19,646
1,394
13,908
30,108
3,616
‐
‐
278
68,950
1,006
17,271
‐
2,588
6,554
27,419
26,582
‐
‐
26,582
60,220
2,266
14,101
64,177
3,616
104,225
1,797
298
250,700
3,479
17,271
20,609
3,090
6,554
51,003
31,500
8,410
659
40,569
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, which is Australian Dollars (AUD). The risk is measured using sensitivity analysis
and cash flow forecasting.
49
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88 ASM Annual Report 2022 | Financial Report
Financial Report | ASM Annual Report 2022 89
Australian Strategic Materials Ltd
Notes to the consolidated financial statements
30 June 2022
Note 31. Financial risk management (continued)
Market risk
Foreign currency risk
The group operated internationally and is exposed to foreign exchange risk arising from currency exposures with respect to changes in
USD/AUD, KRW (Korean Won) /AUD and KRW / USD exchange rates. The Group is exposed to currency risk on purchases that are
denominated in a currency other the respective functional currency of Group entities, primarily the United States Dollar (USD) and
Korean Won (KRW).
Australian Strategic Materials Ltd
Notes to the consolidated financial statements
30 June 2022
Note 31. Financial risk management (continued)
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.
The Groups expenditure obligations in Korea are primarily in KRW. Funding requirements in Korea are met by transfer of USD from the
Australian based parent and converted into KRW or deposited into USD accounts. As a result, the Group is exposed to fluctuations in
the USD / KRW to Australian currency. These exposures are not subject to a hedging programme.
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.
The Consolidated Group’s risk from movements in foreign currency rates, relates to USD held within Australia and Korea and KRW held
in Korean Won (KRW).
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.
The risk exposure is minimized by only holding sufficient funds in KRW to meet the immediate cash requirements of the
subsidiaries. Once funds are converted to KRW, they are only used to pay expenses in KRW.
The financial assets and liabilities that are exposed to foreign exchange risk at the ends of the reporting period, expressed in Australian
dollars are:
Cash and cash equivalents ‐ USD
Cash and cash equivalents ‐ KRW
Trade Receivables ‐ KRW
Trade Payables ‐ KRW
Borrowings ‐ KRW
2022
$'000
2021
$'000
11,073
19,646
1,156
(74)
(17,095)
14,565
‐
102
240
(65)
‐
277
Price risk
Commodity price risk in the group primarily results from price fluctuations and the availability of rare earth oxides required by the
Korean operations. The Group considers the outlook for rare earths regularly in considering the need for active financial risk
management. As the Group continues to progress towards production of a saleable product the Group will monitor and develop a policy
to mitigate its exposure to price risk.
Interest rate risk
Interest rate risk is the risk that fair values and cash flows of the Group’s financial instruments will be affected by changes in the market
interest rates. The group's main interest rate risk arises through its cash and cash equivalents, other financial assets and financial
liabilities held within financial institutions. The group minimises this risk by utilising fixed rate instruments where appropriate.
Summarised market risk sensitivity analysis:
30 June 2022
30 June 2021
Carrying
Amount
$'000
+100BP
$'000
‐100BP
$'000
Carrying
Amount
$'000
+100BP
$'000
‐100BP
$'000
Financial assets
Cash‐and cash equivalents
Receivables (current)1
Other financial assets
Trade and other payables
(120)
(2)
‐
(15)
(137)
1The receivables balance excludes prepayments and tax balances which do not meet the definition of financial assets and liabilities.
60,220
952
20
7,685
68,877
120
2
‐
15
137
93,324
393
22
1,202
94,941
187
‐
‐
2
189
(187)
‐
‐
(2)
(189)
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. The Groups cash deposits are all on call or in term deposits and attract a rate of
interest at normal short‐term money market rates.
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.
Liquidity risk management involves maintaining sufficient cash on hand or undrawn credit facilities to meet the operating and capital
requirements of the business.
Maturity analysis of financial assets and liabilities based on management expectation
The risk implied from the values shown in the table below, reflects a balanced view of cash inflows and outflows:
Liquidity Risk
Year ended 30 June 2022
Financial Assets
Cash & cash equivalents
Trade & Other Receivables
Financial Liabilities
Trade & Other payables
Borrowings
Net Maturity
Within 1 year 1 to 5 years
$
$
Over 5 years
$
Total
$
60,220
2,266
62,486
‐
‐
‐
(10,033)
(176)
(10,209)
‐
(17,802)
(17,802)
52,277
(17,802)
‐
‐
‐
‐
‐
‐
‐
60,220
2,266
62,486
(10,033)
(17,978)
(28,011)
34,475
51
52
90 ASM Annual Report 2022 | Financial Report
Financial Report | ASM Annual Report 2022 91
Australian Strategic Materials Ltd
Notes to the consolidated financial statements
30 June 2022
Note 31. Financial risk management (continued)
Year ended 30 June 2021
Financial Assets
Cash & cash equivalents
Trade & Other Receivables
Financial Liabilities
Trade & Other payables
Net Maturity
Within 1 year 1 to 5 years
$
$
Over 5 years
$
Total
$
93,324
739
94,063
(1,202)
92,861
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
93,324
739
94,063
(1,202)
92,861
The group's financial liabilities generally mature within 3 months, therefore the carrying amount equals the cash flow required to settle
the liability.
Note 32. 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
2022
$'000
2021
$'000
(24,257)
(18)
(24,275)
(809)
26
(783)
Cents
Cents
(17)
(17)
(1)
(1)
Number
Number
Weighted average number of ordinary shares used in calculating basic earnings per share
139,808,068
114,644,807
Weighted average number of ordinary shares used in calculating diluted earnings per share
139,808,068
114,644,807
The number of potential ordinary share not considered dilutive are as follows:
Performance rights
Accounting policy for earnings per share
3,204,928
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.
Australian Strategic Materials Ltd
Notes to the consolidated financial statements
30 June 2022
Note 33. 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.
Note 34. Share‐based payments
Share‐based payments are‐based compensation benefits are provided to employees via the group's incentive plans. The incentive plans
consist of short‐term and long‐term incentive plans for the Group's Executives. Information relating to these plans is set out in the
remuneration report and below.
The fair value of rights granted under the short‐term and long‐term incentive plans is recognised as an employee benefits expense with
corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the rights granted,
which includes any market performance conditions and the impact of any non‐vesting conditions but excludes the impact of any service
non‐market performance vesting conditions.
Non ‐market vesting conditions and the impact of service conditions are included in assumptions about the number of rights that are
expected to vest. The total expense is recognised over the vesting period, which is the period over which all of the specified vesting
conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of rights that are expected to
vest based on the non‐market vesting and service conditions. It recognises the impact of the revision to original estimates, if any, in the
statement of profit or loss and other comprehensive income, with a corresponding adjustment to equity.
The initial estimate of fair value for market based and non‐vesting conditions is not subsequently adjusted for differences between the
number of rights granted and number of rights that vest.
When the rights are exercised, the appropriate number of shares are transferred to the employee. The proceeds received are net of
any directly attributable transaction costs are credited directly to equity.
The fair value of deferred shares granted to employees for nil consideration under the employee share scheme is recognised as an
expense over the relevant service period, being the year to which the incentive relates and the vesting period of the shares. The fair
value is measured using the Monte Carlo valuation method for long‐term incentive plans and Black‐Scholes valuation method for short‐
term incentive plans at the grant date of the shares and is recognised in equity in the share‐based payment reserve.
The number of shares expected to vest is estimated based on the non‐market vesting conditions. The estimates are revised at the end
of each reporting period and adjustments are recognised in profit or loss and the share‐based payment reserve.
Executives
The Company's remuneration framework is set out in the remuneration report, including all details of the performance rights plans,
the associated performance hurdles and vesting criteria. Participation in the plans is at the discretion of the Board of Directors and no
individual has a contractual right to participate in the plans or to receive any guaranteed benefits.
Participation is currently restricted to Executives within the group. The following tables illustrate the number and weighted average
fair value of, and movements in, share rights during the year.
53
54
92 ASM Annual Report 2022 | Financial Report
Financial Report | ASM Annual Report 2022 93
Australian Strategic Materials Ltd
Notes to the consolidated financial statements
30 June 2022
Note 34. Share‐based payments (continued)
Set out below are summaries of performance rights and options granted under the plan:
Outstanding at the beginning of the financial year
Granted [i]
Forfeited
Exercised
Expired
Outstanding at the end of the financial year [ii]
Number of rights
2022
2021
3,000,000
342,258
‐
‐
‐
‐
3,000,000
‐
‐
‐
3,342,258
3,000,000
[i] Of the 342,258 granted during the year, 125,248 related to options and 217,010 related to performance rights. The options
granted have a weighted average exercise price of $6.38. On and from the vesting date, each option entitles the holder to be issued
with one share upon the payment of the exercise price and the transition rights will lapse upon cessation of employment. For the
purpose of valuation, the contractual life is determined as 5 to 7 years.
[ii] At 30 June 2022, 3,342,258 of the performance rights and options granted have not vested and are not exercisable. The weighted
average remaining contractual life of performance rights is 1.39 years (30 June 2021: 2.28 years).
2022
Grant date
Expiry date
19/05/2020
19/05/2020
07/02/2022
07/02/2022
07/02/2022
07/02/2022
24/02/2022
24/02/2022
28/02/2022
28/02/2022
25/03/2022
25/03/2022
13/10/2023
13/10/2023
05/07/2024
[i]
05/07/2026
[ii]
30/06/2022
30/06/2022
30/06/2022
30/06/2022
30/06/2022
30/06/2022
Exercise
price
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
‐
‐
‐
$6.38
‐
$6.38
‐
‐
‐
‐
‐
‐
1,800,000
1,200,000
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
3,000,000
‐
‐
27,357
62,624
27,357
62,624
14,057
14,057
46,571
46,571
20,520
20,520
342,258
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
1,800,000
1,200,000
27,357
62,624
27,357
62,624
14,057
14,057
46,571
46,571
20,520
20,520
3,342,258
[i] These options can be exercised at any point between the end of the service condition, being 12 July 2024 and the end of the employment period which for the purpose of valuation was considered to be
between 5 and 7 years.
[ii] These options can be exercised at any point between the end of the service condition, being 12 July 2026 and the end of the employment period which for the purpose of valuation was considered to be
between 5 and 7 years.
2021
Grant date
Expiry date
Exercise
price
Balance at
the start of
the year
19/05/2020
19/05/2020
13/10/2023
13/10/2023
$0.00
$0.00
‐
‐
‐
55
Granted
Exercised
1,800,000
1,200,000
3,000,000
‐
‐
‐
Expired/
forfeited/
other
Balance at
the end of
the year
‐
‐
‐
1,800,000
1,200,000
3,000,000
Australian Strategic Materials Ltd
Notes to the consolidated financial statements
30 June 2022
Note 34. Share‐based payments (continued)
FY21/22 Executive STI and LTI
Executives may receive variable remuneration in the form of short‐term incentives ('STI') of up to 30% of their annual salary package.
STI payments are based on the Board's assessment of the executives' performance towards achieving key Company objectives over the
relevant period. Annually the Remuneration Committee reviews the performance of each executive prior to or after the reporting date.
The Remuneration Committee then determines the amount of STI to be allocated to each executive with approval from the Board. The
total potential STI available for award is at the Board's discretion. STI's are made through the issue of performance rights after the
reporting period. Where an executive resigns during or after the relevant financial year, it remains at the discretion of the Board as to
whether any of the STI is payable for the relevant financial year.
The focus of the 2021/22 financial year was on the Company's progress towards the further development of the Korean Metals Plant
and the Dubbo project.
The long‐term incentives ('LTI') include performance rights awarded to executives. Executives may participate in the Executive
Incentive Plan to receive variable remuneration of up to 30% of their annual salary package. Shares are awarded to executives over a
period of three years based on long‐term incentive measures.
LTI and STI awards for the Executive team in the 2022 financial year FY22 STI were based on non‐market scorecard measures and
weighting, with the estimated value of the grant determined at the reporting date.
Performance
Hurdle
Non‐market
Non‐market
Non‐market
Non‐market
Non‐market
Non‐market
Grant date
24/02/2022
24/02/2022
28/02/2022
28/02/2022
25/03/2022
25/03/2022
Share price
at grant date
$7.20
$7.20
$8.14
$8.14
$8.13
$8.13
Exercise
price
Fair value
at grant date1
Valuation
Model
‐
‐
‐
‐
‐
‐
$7.20 Black‐Scholes
$7.20 Black‐Scholes
$8.14 Black‐Scholes
$8.14 Black‐Scholes
$8.13 Black‐Scholes
$8.13 Black‐Scholes
1 The performance rights were determined to have a 0% probability of vesting at grant date and at 30 June 2022 and no share‐based payments expense was recognised during FY22. These performance
rights were cancelled on 8 August 2022.
Sign‐on Rights
LTI's were issued to the Chief Operating Officer and Chief Financial Officer as sign‐on incentives for the commencement of their
employment. These sign‐on rights had a service condition only and there were no performance conditions associated with these
options.
Performance
Hurdle
Share price Exercise Expected Dividend Risk‐free
Fair value
interest rate at grant date
Valuation
Model
Service condition 16/06/2021
Service condition 16/06/2021
Service condition 22/06/2021
Service condition 22/06/2021
Grant date at grant date price volatility
$6.21 $6.38 70.00%
$6.21 $6.38 70.00%
‐ 70.00%
$6.40
‐ 70.00%
$6.40
Expenses arising from share‐based payment transactions
Performance rights
Options
1.09%
1.09%
1.09%
1.09%
$3.90 Monte Carlo
$3.90 Monte Carlo
$6.40 Black‐Scholes
$6.40 Black‐Scholes
2022
$’000
2021
$’000
751
125
876
917
‐
917
yield
‐
‐
‐
‐
56
94 ASM Annual Report 2022 | Financial Report
Financial Report | ASM Annual Report 2022 95
Australian Strategic Materials Ltd
Notes to the consolidated financial statements
30 June 2022
Note 35. Events after the reporting period
During July 2022, Rowena Smith was appointed Chief Executive Officer and David Woodall resigned from his position as Managing
Director.
On 19 July 2022, David Woodall held 3,000,000 performance rights, of these performance rights 2,000,000 were forfeited and 1,000,000
vested through the issue of ordinary shares in the Company.
On 8 September 2022, the Company announced it signed a binding agreement for the sale of neodymium praseodymium metal
produced at its Korean Metals Plant with Korean company NS World Co., Ltd. The agreement is for the sale and delivery of 10 tonnes
of neodymium praseodymium metal ingot from September 2022 to December 2022.
No other matter or circumstance has arisen since 30 June 2022 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.
Australian Strategic Materials Ltd
Directors' declaration
30 June 2022
In the Directors' opinion:
●
●
●
●
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the Corporations
Regulations 2001 and other mandatory professional reporting requirements;
the attached 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;
the attached financial statements and notes give a true and fair view of the Consolidated entity's financial position as at 30 June
2022 and of its performance for the financial year ended on that date; and
subject to the matters set out in note 1 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
___________________________
I Gandel
Chairman
21 September 2022
96 ASM Annual Report 2022 | Financial Report
57
58
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 2022 and of its
financial performance for the year then ended
(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 2022
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
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.
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.
Financial Report | ASM Annual Report 2022 97
Material uncertainty related to going concern
We draw attention to Note 1 in the financial report, which indicates that the Group has cash outflows
from operating and investing activities of $71.1 million for the year ended 30 June 2022. At 30 June
2022, the Group had cash on hand of $60.2 million. The Group has net working capital as at 30 June
2022 of $65.4 million and outstanding commitments of $23.0 million. The ongoing operation of the
Group will remain dependent upon raising further additional funding from shareholders or other
parties. These conditions, along with other matters set forth in Note 1, indicate that a material
uncertainty exists that may cast significant doubt about the Group’s ability to continue as a going
concern. Our opinion is not modified in respect of this matter.
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.
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 matter to the Audit
Committee:
−− Carrying value of exploration
and evaluation assets
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 $2,540,000,
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.
Key audit matter
How our audit addressed the key audit matter
Carrying value of exploration and evaluation assets
(Refer to note 13 of the financial statements)
We performed the following procedures:
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.
• 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.
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 2022, 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 Director's Report, Shareholders’ Information and Company
Directory. We expect the remaining other information to be made available to us after the date of this
auditor's report.
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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.
When we read the other information not yet received, if we conclude that there is a material
misstatement therein, we are required to communicate the matter to the directors and use our
professional judgement to determine the appropriate action to take.
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.
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 46 to 54 of the directors’ report for the
year ended 30 June 2022.
In our opinion, the remuneration report of Australian Strategic Materials Limited for the year ended 30
June 2022 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
21 September 2022
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4
3
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 10
October 2022.
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 holdingless than a
marketable parcel of securities are:
Twenty Largest Shareholders
The names of the 20 largest holders of quoted ordinary shares are:
Ordinary shares
Number of
holders
Number of
shares
6,111
3,992
1,003
2,665,647
9,679,950
7,405,450
1,095
28,829,246
110
94,375,769
12,311
142,956,062
2,128
263,718
13
LILYCREEK PTY LTD
14 MAGNABAY PTY LTD
15
16
17
18
19
ILG ESTATE CO 2 PTY LTD
ILG ESTATE CO 1 PTY LTD
ILG ESTATE CO 3 PTY LTD
ILG ESTATE CO 4 PTY LTD
LEEFAB PTY LTD
20 MR PATRICK JOHN MCHALE
Substantial Shareholders
The names of substantial
shareholders who have notified
the Company in accordance with
section 671B of the Corporations
Act 2001 are:
Listed ordinary shares
Number of shares % of shares on issue
1,430,194
1,430,194
1,127,689
1,127,688
1,127,688
1,127,688
1,000,000
932,500
1.00
1.00
0.79
0.79
0.79
0.79
0.7
0.65
75,076,785
52.52
Number of
shares
Abbotsleigh Pty Ltd and Mr Ian Jeffrey Gandel
31,584,110
Chapelgreen Pty Ltd
9,990,582
Listed ordinary shares
Number of shares % of shares on issue
Voting Rights
All ordinary shares (whether fully paid or not) carry one vote per share without restriction.
Unquoted Securities
At 10 October 2022, the Company had the following unlisted securities on issue:
1
2
3
4
5
6
7
8
9
10
11
12
ABBOTSLEIGH PTY LTD
CITICORP NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA)
LIMITED
CHAPELGREEN PTY LTD
BNP PARIBAS NOMINEES PTY LTD
J P MORGAN NOMINEES AUSTRALIA PTY
LIMITED
HOME IDEAS SHOW PTY LTD
25,335,888
10,453,991
7,171,968
5,699,999
3,749,177
3,747,659
1,883,623
ABBOTSLEIGH PTY LTD
1,737,468
BNP PARIBAS NOMINEES PTY LTD ACF
CLEARSTREAM
MILFORD PARK SUPERANNUATION PTY LTD
FYVIE PTY LTD
AUBURNVALLEY PTY LTD
1,526,176
1,525,000
1,512,000
1,430,195
17.72
7.31
5.02
3.99
2.62
2.62
1.32
1.22
1.07
1.07
1.06
1.00
Holders of 20% or more of the class
Number of
Securtities
Number of
Holders
Holder
Name
Employee Performance Rights Sign On Incentive
54,714
Transition Rights (Options) $6.38
125,248
1
1
Rowena Smith
Jason Clifton
Schedule of mining tenements
as at 30 June 2022
Tenement location
Tenement
Interest
Nature of interest
Dubbo, NSW
Dubbo, NSW
EL 5548
EL 7631
Dubbo, NSW
ML 1724
100%
100%
100%
Equity
Equity
Equity
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