Annual Report
2023
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
advisor 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.
Each of Mr Chalmers, Mr Hutchin, Mr Ludjio and Mr Van
Leuven has sufficient experience that is relevant to the style
of mineralisation and type of deposit under consideration
and to the activity that is being undertaken to qualify as
a Competent Person as defined in the 2012 Edition of the
‘Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves’ (JORC Code).
Previously reported information
Information prepared and disclosed under the JORC Code
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
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
cautioned not to place undue reliance on these forward-
looking statements, which speak only as of the date thereof.
Except as required by applicable laws or regulations, the
Company does not undertake to publicly update or review
any forward-looking statements, whether as a result of new
information or future events. The Company cautions against
reliance on any forward-looking statements or guidance,
particularly in light of the current economic climate and the
significant volatility, uncertainty and disruption arising in
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
This document contains certain statements which constitute
commercial contracts.
“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.
2 ASM Annual Report 2023
Contents
Company Information
Acknowledgement of Country
Message from the Chair
ASM’s Mine to Metals Business
About ASM
CEO Statement
ASM Values
Dubbo Project
Korean Metals Plant
Market Outlook
Risk
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
4
5
6
10
12
14
18
20
28
34
36
42
56
57
59
85
87
91
126
127
133
133
134
ASM Annual Report 2023 3
| ASM Annual Report 2022 3
Company
Information
ACN 168 368 401
Directors
IJ Gandel (Non-Executive Chair)
R Smith (Managing Director & CEO)
NP Earner (Non-Executive Director)
KJ Gleeson (Non-Executive Director)
GM Smith (Non-Executive Director)
Joint Company Secretaries
A Eames
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: +61 8 9389 8033
Facsimile: +61 8 9262 3723
Auditor
PricewaterhouseCoopers
Brookfield Place,
125 St Georges Terrace,
Perth WA 6000
Website
asm-au.com
Security exchange listing
ASX: ASM
4 ASM Annual Report 2023
Acknowledgement
of Country
In the spirit of reconciliation 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
and present and extend that respect to
all Aboriginal and Torres Strait Islander
peoples today.
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
The Toongi deposit at the Dubbo Project.
ASM Annual Report 2023 5
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 2023 (FY23)
Annual Report.
As the significance of rare earth elements and
critical minerals continues to grow in a world
embarking on a clean energy transition, ASM
is positioning itself to deliver the materials
required to support this mission.
Rare earths & critical minerals
In June 2023 the Australian Government
released its much anticipated Critical
Minerals Strategy 2023-2030. The Strategy
sets out to be “an enduring framework which
will guide the Government’s future policy
decisions to maximise the national benefits
of Australia’s internationally significant
critical minerals endowments.”
I, along with many in the resources sector,
welcomed the Strategy. It highlighted the
themes and focus areas that the industry has
been discussing and advocating for some
time. With this Strategy, and the continued
geopolitical challenges we are witnessing,
the vital role that rare earths and critical
minerals will play in all our futures is clear
to see.
As The Hon Madeleine King MP wrote in the
Strategy document, “With our rich geological
endowment and track record as a reliable
exporter of energy and resources, Australia
can play a pivotal role in delivering the
processed minerals the world needs for
a clean energy future.”
I could not agree more. The challenge
now is how we harness this incredible
opportunity in Australia; to support industry,
benefit communities, drive international
partnerships and contribute to the
sustainable energy transition.
ASM – a unique opportunity
ASM’s mine to metals strategy represents
a unique opportunity in Australia’s national
interest. Our end-to-end, alternative
supply chain goes from mining our globally
significant rare earths and critical minerals
resource in Dubbo, Central West New
South Wales, refining the materials on site,
processing the oxides at our Korean Metals
Plant and selling the high-tech metals and
alloys to a global customer base.
Now, more than ever before, this vertically
integrated approach addresses many of
the challenges we see identified in not
just Australia’s strategic outlook, but from
jurisdictions around the globe, from Japan
and Korea to the US and the European Union.
6 ASM Annual Report 2023 | Message from the Chair
ASM represents a secure, sustainable
alternative to help meet the world’s
increasing demand for rare earths, critical
minerals and high-tech metals and alloys.
Korean Metals Plant
In May 2022, we opened our first metals
plant in Ochang, Korea. Delivery of this
major strategic milestone was welcomed
by government officials from Korea and
Australia, who joined the ASM team at our
opening ceremony.
Since that ceremony, it has been pleasing
to witness the progress of the Korean
Metals Plant (KMP) . Our neodymium
praseodymium metal and neodymium
iron boron alloy production lines have
been commissioned and are ramping up
production aligned to demand. That demand
is now coming from three new customers:
NS World (Korea), Noveon Magnetics
(US) and USA Rare Earth (US), the latter
representing our first long-term binding
sales agreement.
We are in production and delivering metals
and alloys to a global customer base. This
customer base manufactures products
such as permanent magnets that are being
applied into clean energy technologies
including electric vehicles and wind turbines.
The capability we have developed – utilising
an alternative supply chain – is a rarity in
our sector but it is what we are focused on
delivering, and we will continue to grow this
integral aspect of our business.
The Dubbo Project
While the KMP represents a wonderful
capability and much needed alternative
supply of metals and alloys, the cornerstone
of ASM’s mine to metals strategy remains
our prized Dubbo Project in NSW.
The Dubbo Project is a globally significant
resource of light and heavy rare earth
elements, zirconium, niobium and hafnium.
It currently has a life of mine of 20 years in
reserves and a further 50 years in it’s drilled
resource. It is a world class project that
the ASM team is committed to taking into
production.
Message from the Chair | ASM Annual Report 2023 7
Funding
To ensure the successful development of
the Dubbo Project, ASM is targeting a project
financing funding strategy based on a mix of
equity, supported by offtakes and debt, with
further support from export credit finance in
relevant jurisdictions.
Over the past 12 months, the Company has
broadened its potential offtake and strategic
partner discussions to include new parties and
jurisdictions. This move aligns with the significant
pronouncements made by government(s) in the
US, European Union, Japan and Korea regarding
the security of rare earth and critical minerals.
The policy shift we have seen from governments
in this regard, and the narratives that have
accompanied them, further highlight the
strategically significant role the Dubbo Project
can play for Australia and the world.
Participating at the Australian Chamber of Commerce in Korea
and Investment NSW business breakfast in Seoul.
The progress we have made in this regard
over the past year has been positive and we
are targeting final investment decision by the
end of calendar year 2024. There have been
many significant milestones achieved but I was
particularly pleased to see the State Significant
Development Modification Report 1 receive
Development Consent approval from the NSW
Department of Planning and Environment in
March. This was a critical approval that identified
key improvements to the project, including
opportunities to optimise ESG activities.
In addition, the Board would like to express its
gratitude to both the NSW State Government and
the Australian Federal Government for the strong
support they have shown the Dubbo Project via
the award of several grants, totalling $17 million,
over the past year. This funding has contributed
to early establishment activities and the latest
non-process infrastructure work.
The positive sentiment for the Dubbo Project
within the community and from State and
Federal governments continues to underline the
integrity and credentials of this project.
8 ASM Annual Report 2023 | Message from the Chair
Over the past 12 months, the Company has broadened its potential
offtake and strategic partner discussions to include new parties and
jurisdictions. This move aligns with the significant pronouncements
made by government(s) in the US, European Union, Japan and Korea
regarding the security of rare earth and critical minerals. The policy
shift we have seen from governments in this regard, and the narratives
that have accompanied them, further highlight the strategically
significant role the Dubbo Project can play for Australia and the world.
Environment, Social, Governance
Concluding remarks
As the ASM team continue to progress the
multiple strands of our financing strategy,
I am confident that we have the compelling
investment proposition required to secure the
funding and partnerships needed to develop the
Dubbo Project and ramp-up our metals output.
Part of that compelling proposition is the strong
approach ASM takes to its ESG responsibilities
and the credentials we have already established
in this area. This year we have continued to go
further, and I am proud to confirm that we have
now put in place Scope 1 and 2 greenhouse gas
emission targets for 2030.
These, along with our comprehensive
sustainability approach, are outlined in this
report (see page 42).
In March, I was delighted to welcome Rowena
Smith as Managing Director to the ASM Board.
This was a natural progression following
Rowena’s appointment as CEO in July 2022.
As demonstrated above, Rowena’s first year at
the helm of ASM has seen significant progress
across the business. I would like to take this
opportunity to commend and thank her, her
management group and the entire ASM team
in Australia and Korea for their commitment
and efforts in delivering on our strategy and
progressing our opportunity.
I would also like to thank all shareholders for
their continued support during the year. The
Board, management and staff are committed
to delivering sustainable returns to all our
shareholders and benefits to our many
stakeholder groups. I am confident the year
ahead will show further progress in our many
areas of endeavour.
Ian Gandel
Chair
Message from the Chair | ASM Annual Report 2023 9
ASM’s mine to metals business
Products:
Products:
Neodymium praseodymium oxide
Neodymium praseodymium metal
Terbium oxide
Dysprosium oxide
Zirconium
Hafnium
Ferro Niobium
Neodymium iron boron alloy
Titanium alloys
Terbium metal
Dysprosium metal
Zirconium metal
Hafnium metal
10 ASM Annual Report 2023 | Mine to Metals
Mine to Metals | ASM Annual Report 2023 11
About ASM
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 Dubbo Project is the Company’s cornerstone rare
earths and critical minerals mining and processing project.
Located in Central West New South Wales, Australia, this
globally significant resource of rare earths, zirconium,
niobium and hafnium has a 20-year life of mine based on
reserves and a potential further 50 years of mine life based
on resources. 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
develop an advanced 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 plant(s), the first of
which is in Ochang, Korea. The Korean Metals Plant (KMP)
opened in 2022 and is producing high-tech metals and
alloys needed for sustainable energy industries, advanced
manufacturing and other growth industries.
In addition to now ramping up production of its
neodymium praseodymium products, the KMP is also
developing its titanium alloy processing. As part of this
work, the Company is progressing with the commercial
scale development of its innovative metallisation
technology, the LK process.
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.
12 ASM Annual Report 2023 | About ASM
KMP Representative Director
KMP Representative Director
Mr Sung-Lea Cho (left) and
Mr Sung-Lea Cho (left) and
ASM Managing Director & CEO
ASM Managing Director & CEO
Ms Rowena Smith at the Korean
Ms Rowena Smith at the Korean
Metals Plant with first NdPr metal
Metals Plant, on shipment of
for shipment.
first NdPr metal.
About ASM | ASM Annual Report 2023 13
Chief Executive
Statement
During the 2023 financial year (FY23), ASM
made strong progress against its mine to metals
strategy. Delivering on strategic and operational
milestones, we have laid the foundations for
critical next steps at our Dubbo Project and
Korean Metals Plant (KMP) that will drive our
momentum in the year ahead.
Korean Metals Plant commences operation
The commissioning of our neodymium product
lines at KMP during the year represented a
fundamental step change in ASM’s market
position. We are now producing neodymium
praseodymium (NdPr) metal consistently to
customer specifications and delivering at the
targeted daily rate.
In the 12 months from 1 July 2022 to 30 June 2023,
we produced 47 tonnes of NdPr metal. Having
officially opened the plant in May 2022, this has
been a truly impressive feat by the team, and
I am very proud of their efforts.
I have been equally proud to announce new
customer offtake agreements in Korea and
the United States for our NdPr metal and
neodymium iron boron (NdFeB) alloy products.
These contracts demonstrate the global
reputation ASM is building as a producer of
high-tech metals and alloys for advanced and
clean technologies, and the growing demand
for the products our materials enable, including
permanent magnets.
The current nameplate production capacity at
the KMP is 600 tpa of NdFeB alloy, with ramp-
up planned in alignment to customer demand.
This capacity is sufficient to meet our existing
agreements. Customer qualification processes
continue with a number of global magnet
producers, and as further sales agreements
are concluded we will consider when Phase 2
expansion to 3,600 tpa will occur.
14 ASM Annual Report 2023 | CEO Statement
I look forward to delivering further customer
opportunities in the year ahead.
Safety & Health
Assets, once operational, present increased
risks to our people. With more than 30 years’
experience in the resources industry, I have seen
the devastation that workplace safety incidents
can cause – to individuals, teams and families.
The safety and health of our people is
non-negotiable. As we build our business –
developing a world class mining and processing
asset, building global metal production plants,
and cultivating partnerships across jurisdictions
– the wellbeing of our people will remain
foundational to our success.
I am pleased to advise that the group had zero
Lost Time Injuries for the year ending 30 June
2023, with 154,382 hours worked, and no
reportable safety, health or environment events
for the year.
Throughout the year we had a strong focus
on the establishment of the Health and Safety
Management System, obtaining the formal
ISO 45001 accreditation in April 2023. In
addition, the foundation for the ASM System
of Risk Management was also strengthened,
as highlighted in the Risk section of this
Annual Report (page 36).
Sustainability
Sustainability and our approach to
Environmental, Social and Governance (ESG)
activities are core to ASM’s strategy. As a global
business, we expect to be benchmarked and
held to account against the highest international
standards. By adopting the appropriate
frameworks and standards from the outset
and progressively establishing the systems and
processes required to meet them, we are setting
ASM up for sustainable success in the future.
We are already making progress in this space,
across many areas. Significantly, I am pleased
to report that the KMP has achieved its target
of being carbon net zero in Scope 1 and 2
emissions in its first year of operation. This has
been delivered through operational emissions
reduction initiatives and supplemented by the
purchase of carbon credits. This is an important
benchmark that we will strive to maintain.
In addition, we have released our Scope 1 and 2
emissions targets for 2030 at the Dubbo Project,
with a 2040 target currently in development.
Ultimately, we are targeting carbon net zero at the
Dubbo Project by 2050 but these early milestones
provide us with an important pathway.
During FY23, we received our first comprehensive
Sustainalytics ESG Risk Rating, putting us in the
top quartile of best performing diversified metals
businesses. We will use this annual assessment
to continue our progress and drive further
improvements in relation to our ESG activities.
This year’s Annual Report highlights the
significant ESG work we have already conducted
and sets out our targets and commitments as
we move forward. I look forward to reporting
against this critical part of our business in the
coming months and years, and I know that all
our stakeholders – employees, communities,
investors, customers, suppliers and government
– will continue to follow with interest.
The Dubbo Project
During FY23, the Dubbo Project team delivered
on a number of milestones for both the process
flowsheet and the project site.
ASM’s advanced flowsheet has been developed
in collaboration with the Australian Nuclear
Science and Technology Organisation (ANSTO)
over the past 16 years. During the year, efforts
have been focused on work to develop our
range of other products for potential customer
engagement. This included producing samples
of hafnia (Hf), zirconium basic sulphate filtercake
calcined to zirconia (ZrO2) and de-hafniated
zirconia (DHZ).
In addition, during 2023, we conducted
separation work on the heavy rare elements of
terbium (Tb) and dysprosium (Dy). The two pilot
plant campaigns, conducted by ANSTO, produced
excellent results to provide further confidence
in the design of the Dubbo Project’s process
flowsheet. The results showed that the pilot plant
is capable of producing Tb and Dy oxide product
streams that meet or exceed target specifications
of >99.99% and >99.95%, respectively.
This highly technical work is demonstration of
ASM’s commitment to innovation and continuous
improvement. With the support of ANSTO, our
Dubbo Project team continue to explore and
identify the optimum processes to deliver
high-purity, industry leading products that will
support the clean energy transition.
Other significant milestones achieved, include:
• Development consent approval from
the NSW Department of Planning and
Environment for the project’s SSD Modification
Report (March 2023);
• Completion by Hyundai Engineering Co. Ltd
of Stage 1 Engineering, Procurement and
Construction Definition (July 2023); and
• Non-process infrastructure study work
awarded to Bechtel Australia Pty Ltd
(August 2023).
These positive steps support our targeted
timeline of commencing production by 2027.
Financial funding strategy
ASM is committed to developing the
Dubbo Project – a unique orebody positioned to
meet global demand. While we continue to target
and engage with Korean offtake partners and
strategic investors, an increased level of interest
from the US, Europe and Japan saw us broaden
our geographical search for potential funding
partners during FY23.
Our funding structure encompasses offtake
partners, equity and debt and we have
made good progress in our engagement and
conversations across these three pillars.
CEO Statement | ASM Annual Report 2023 15
In November 2022, we successfully raised
$41.1 million via an institutional placement of
$30 million and a share purchase plan (SPP)
of $11.1 million. The placement saw strong
interest from domestic and international
institutional investors, with demand significantly
exceeding shares available. The SPP was also
oversubscribed, with an original target of
$10 million.
All ASM Directors participated in the capital raise,
with our Chair and major shareholder Mr Ian
Gandel and Non-Executive Director Ms Kerry
Gleeson subscribing for $4 million and $50,000
respectively in the placement. All other Directors
participated in the SPP.
Funds raised have provided support for ramp-up
at KMP and development progress at the Dubbo
Project, and I would like to thank the Board and
all our shareholders for their support in this
endeavour.
I am confident that the positive engagement we
have enjoyed across our funding activities and
the growing strategic significance of the Dubbo
Project to Australia and the world, will combine
to support our target of final investment decision
by December 2024.
Building an industry in partnership
ASM is building an alternative rare earths
and critical minerals supply chain to deliver
the metals and alloys required for the clean
energy transition. It will be necessary to work
in partnership across all points of that supply
chain as we continue to develop it. Notably for
ASM, we are working hard to identify secure,
supplementary rare earth oxide supply while
we concurrently develop the Dubbo Project
and ramp-up metal production at the KMP.
The binding agreement we signed with Vietnam
Rare Earth JSC (VTRE) in May provides a second
source of supply and we are continuing to
explore the longer-term opportunities of that
partnership. Part of that exploration falls under
the three-way memorandum of understanding
we signed with VTRE and ASX-listed miner
Blackstone Minerals in July.
In addition, we must see the next steps of
the Australian Government’s Critical Minerals
Strategy come into action, with further guidance
on identifying strategically relevant projects that
16 ASM Annual Report 2023 | CEO Statement
are in the national interest and that will address
the Strategy’s key objectives, namely:
• Create diverse, resilient and sustainable
supply chains through strong and secure
international partnerships.
• Build sovereign capability in critical minerals
processing.
• Use our critical minerals to help become
a renewable energy superpower.
• Extract more value onshore from our
resources, creating jobs and economic
opportunity, including for regional and First
Nations communities.
With the foundations we have in place, ASM’s
unique mine to metals model is well positioned
to support the delivery of these objectives and
I look forward to continuing the dialogue and
collaboration with government to progress this
important work.
A team focused on delivery
I’d like to take this opportunity to thank our
Board for their support and counsel since my
appointment as CEO in July last year. Since that
time, we have strengthened our management
team (see panel) and I am confident we have the
right team in place to execute on our plan and
deliver on shareholder expectations.
With a clear purpose and strategy, we have made
significant progress over the past 18 months.
However, it is important to recognise that we are
not just building a business, we are helping to
build an entire industry – providing the materials
and products that will drive new growth
industries and sustainable energy solutions.
I am excited by this opportunity and that
excitement was reflected across the entire
ASM team – in Australia and Korea – as we
collaborated to redefine the ASM values earlier
this year (see page 18). It was a motivating
exercise and the values and behaviours we are
embedding will set us up for further success.
Finally, I’d like to thank the ASM team for their
commitment and efforts in moving our Company
forward. I look forward to continuing to lead us
on our journey.
Rowena Smith
Managing Director & CEO
Management Team
Clockwise from left: Chris Jordaan, Agata Krupa, Jason Clifton,
Rowena Smith, Peter Finnimore and Annaliese Eames.
Jason Clifton
Chief Financial Officer
Jason joined ASM as Chief Financial Officer in
July 2021, bringing over 20 years of financial,
commercial, capital and strategic experience.
In his previous role as Senior Vice President
Financial Services at Woodside Energy
Limited, he was responsible for treasury, tax,
group finance and business finance. Jason
has also worked in the banking industry,
including roles as Chief Financial Officer
of Bankwest and Chief Financial Officer of
Westpac New Zealand.
Annaliese Eames
General Counsel and Joint
Company Secretary
Annaliese joined ASM as General Counsel
and Joint Company Secretary in January 2023,
bringing over 15 years’ of legal, commercial,
strategic and corporate governance
experience. Her depth of knowledge covers
large scale project contracting, corporate,
finance and intellectual property law. Before
joining ASM, Annaliese was Managing
Counsel with BHP, and prior to this held a
variety of roles with a range of companies in
the mining industry.
Peter Finnimore
Vice President Sales and Marketing
Peter is a sales and marketing executive with
over 30 years’ experience in the mining and
metals sector. Prior to his appointment at
ASM, he was the Chief Commercial Officer
at South 32 and held various senior roles at
BHP. During his career, Peter has worked in
various marketing roles in Japan, Australia,
Russia, Cyprus and Switzerland, including for
Rio Tinto and Rusal. He was a director of the
International Aluminium Institute and the
International Nickel Institute.
Chris Jordaan
Chief Operating Officer
Chris joined ASM in August 2023 with more
than 30 years’ in operational and corporate
leadership roles in the petrochemical,
processing and mining industries in South
Africa, Australia and Papua New Guinea.
Prior to accepting the COO role, he was
President and CEO of Superior Gold, a gold
mining company listed on the Toronto Stock
Exchange. He has also held senior leadership
roles within Newcrest Mining, BHP and
several South African based companies.
Agata Krupa
Vice President Risk & Corporate Services
Agata joined ASM in December 2022. Prior
to this appointment, she was the Global GM
Risk & Compliance for South 32 for over four
years and has held significant leadership
positions within global organisations such as
BHP and Bankwest. Originally working within
the banking sector in the UK, Agata brings
over 20 years’ experience in enterprise-wide
risk management and corporate services.
CEO Statement | ASM Annual Report 2023 17
ASM Values
At ASM, we’re building a
global business that has the
opportunity to make a positive
and lasting difference to the
world we all live in.
Through the extraction,
refining and processing of
our rare earths and critical
minerals, our mine to
metals strategy will supply
the high-tech metals and
alloys that enable new
clean energies, electric
vehicles, and advanced
aerospace, electronics and
communication technologies
– solving the challenges of
today and the future.
To deliver on our purpose,
we require ‘one team’ guided
by shared values.
ASM has identified its values
with the collaboration and
input of employees and
stakeholders. What we have
embedded will serve as a
compass for our decision
making and help us achieve
our goals more effectively.
Our core values create a
foundation for how we
interact with each other,
our customers, suppliers,
investors, government, and
the communities we serve.
They are more than just
words; they are the principles
that define us and we are
proud to stand by them.
18 ASM Annual Report 2023 | ASM Values
Care
• We act with care and respect
• We safeguard the well-being of
each other and the communities
we operate in
• We listen and respond with
compassion
• We do our part for a more
sustainable future
Integrity
• We do what we say we are
going to do
• We act honestly, fairly
and ethically
• We are trustworthy
• We hold each other accountable
on our commitments and speak
up on our mistakes
Excellence
• We have the courage to pursue
new ways of doing things
• We foster simplicity and
creativity to stay competitive
• We explore ideas for a low cost
and low carbon future
• We strive for continuous
improvement
Team
• We are inspired by our common
purpose
• We work together and back
each other
• We create a culture of belonging
and collaboration
• We reflect on our learnings and
celebrate our wins
ASM Values | ASM Annual Report 2023 19
Dubbo Project
The Dubbo Project is the cornerstone
of ASM’s vertically integrated business,
providing a long-term resource of rare
earths and critical minerals.
Throughout the year, ASM continued
to progress development of the project,
with a key focus on:
• Securing project finance through a
broadened search for offtake partners
and strategic investors.
• State and Federal government
engagement and support, receiving
$17 million in grants.
• Undertaking further flowsheet testing
work to refine the product suite, support
sales and marketing activities and drive
customer engagement.
• Completing the first phase of the
EPC Definition study with Hyundai
Engineering Co.
• Securing MOD1 Development Consent.
FY23
Highlights
Jan 2023
Hyundai Engineering
Co. commence EPC
Definition work
(see page 25)
May 2023
Federal Government
Critical Minerals Fund
grant received for
$6.5m (see page 22)
Mar 2023
Approval of Project
Development
Consent Modification 1
(see page 24)
Nov / Dec 2022
NSW Government Critical
Minerals Fund grants
received for $500k and
$10m (see page 22)
20 ASM Annual Report 2023 | Dubbo Project
20 ASM Annual Report 2022 |
Key Facts
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.1
20-year life of mine based on reserves
Potential for further 50 years based on
resources and subject to approvals.
An aerial view of the Dubbo Project.
Construction readiness
Jun 2023
Revised Framework
Agreement with KCF
Energy extended
Jun 2023
Throughout FY23
Terbium and
dysprosium
separation
work conducted
at ANSTO (see
page 23)
Active
discussions
with potential
strategic
investors and
offtake partners
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.
Greenhouse gas emissions
Scope 1 – targeting 40% reduction by 2030,
and carbon net zero by 2050.
Scope 2 – targeting carbon net zero by 2030.
1Refer to ASX release 7 December 2021:
Dubbo Project Delivers Strong Financials
Dubbo Project | ASM Annual Report 2023 21
Funding & Grants
Three successful grant applications were submitted to support the Dubbo Project during the year,
two with the NSW State Government and one with the Federal Government.
The successful grants are:
NSW Government’s Critical Minerals &
High-Tech Metals Activation Fund - Stream 1
Australian Government’s Critical Minerals
Development Program – Tranche 2
Value: $500,000
Value: $6,500,000
Activity: For studies to finalise the process
flowsheet for the Dubbo Project’s Heavy Rare
Earths (terbium and dysprosium) solvent
extraction circuit. Developed in collaboration
with the Australian Nuclear Science and
Technology Organisation (ANSTO).
Activity: To progress the Dubbo Project’s
environmental, procurement and construction
(EPC) Definition activities with respect to non-
process infrastructure. Activities will advance the
project design maturity of key areas outside of
the process plant, including:
Date: Work commenced June 2023
• Residue storage & handling facilities;
NSW Government’s Critical Minerals &
High-Tech Metals Activation Fund - Stream 2
• Site water management;
• Utility design and supply;
Value: $10,000,000
Activity: To support early establishment activities
for the Dubbo Project. Activities involve the
upgrade of local roads and bridges to ensure
high-standard road access for the project’s
development and operation.
Date: Work scheduled to commence July 2024
• Greenhouse gas emission reduction
studies; and
• Site establishment planning.
Date: Work commenced 30 June 2023
Contract awarded August 2023
Pilot plant separation work at ANSTO
achieved terbium and dysprosium oxide
purity of >99.99% and >99.95% respectively.
22 ASM Annual Report 2023 | Dubbo Project
Dubbo Project & ANSTO
significant test work
ASM has worked with the Australian Nuclear Science and Technology Organisation (ANSTO) in
the development of the Dubbo Project’s process flowsheet over the past 16 years. The project’s
Demonstration Pilot Plant is located at ANSTO’s Lucas Heights facility in Sydney.
During the year, process engineering and
metallurgical test work was completed to
support product marketing activities and
continue process plant flowsheet confirmation.
A significant number of activities were
concluded, including:
• Development of the METSIM® mass and
energy model completed for the current
base case flowsheet for the Dubbo
Project. Model framework and hierarchy
independently audited and verified by
METSIM® International.
• ANSTO dehafinated zirconia (DHZ) pilot plant
campaign completed and reported to ASM.
• Bench scale testing of rare earth
precipitation completed at ANSTO.
• Wastewater treatment and reagent recovery
options review completed by third party.
• Plant filtration third party review and
supporting test work completed by ANSTO.
• Hafnium recovery improvement options
reviewed and modelled.
• Magnesium Oxide (MgO) Neutralisation pilot
plant campaign and Hafnium (Hf) desk top
modelling exercise completed and reported
to ASM.
• Product specification flexibility within the
current processing flowsheet has been
investigated to support customer
offtake discussions.
Heavy rare earth separation success
Separation work conducted by ANSTO on the heavy rare earth elements of terbium (Tb) and
dysprosium (Dy) produced excellent results during 2023, providing further confidence in the
design capability of the Dubbo Project’s advanced process flowsheet.
Two pilot plant campaigns were conducted
(June and August) using synthetic samples,
with the objective of confirming the adjusted
flowsheet requirements for separation and
targeting production of Tb and Dy oxides at
>99.9% purity.
The work was funded via a $500,000
grant secured under Stream 1 of the NSW
Government’s Critical Minerals and High-Tech
Metals Activation Fund (see page opposite).
Following the second campaign, results showed
that the pilot plant is capable of producing Tb
and Dy oxide product streams that meet or
exceed target specifications of >99.99% for Tb
and > 99.95% for Dy, at steady state.
The results demonstrate ASM’s strong technical
capability and the long-term opportunity to
deliver high-purity heavy rare earth oxides,
critical for the growing global permanent
magnet market.
Dubbo Project | ASM Annual Report 2023 23
Overview | ASM Annual Report 2023 23
SSD Modification Report 1 approval
After a thorough submission and review process,
the Dubbo Project State Significant Development
(SSD) Modification Report 1 (MOD1) received
Development Consent approval from the NSW
Department of Planning and Environment (DPE)
on 2 March 2023.
This MOD1 determination followed ASM’s
December 2021 Optimisation Study, which
delivered several environmental and social
design improvements in plans already approved
for the Dubbo Project.
The Optimisation Study design
improvements included:
•
Increasing the project’s brine concentrator
capacity: increasing the recycling of
water and reagents, and halving water
consumption at the project.
• Refurbishment of the local railway line:
simplifying project logistics
and significantly reducing the number
of truck movements through the Dubbo
community. This will also provide new
categories of local entry-level jobs.
•
Inclusion of a chlor-alkali plant: reducing the
transport of hazardous goods on the roads of
Dubbo and NSW. This will allow the production
of reagents at the project site, reducing
production, storage and handling costs.
• Adjustment to the site layout: to accommodate
additional plant, as well as the relocation of
infrastructure areas, decreasing the overall
disturbance footprint by 5.4 Ha.
•
Increase of personnel for processing plant
operations to approximately 270.
Throughout the approvals process, ASM’s Dubbo
Project team completed numerous environmental
studies, including noise, air quality and emissions,
to submit the MOD1 in early 2022 and then
provided written responses to submissions made
during the public exhibition process.
Approval was granted at the end of this process
after the DPE considered that the Dubbo Project
development, as modified, would remain
substantially the same development as initially
approved in 2015.
See page 44 for more details.
MOD1 consent will enable
several ESG-related
improvements to the
Dubbo Project.
24 ASM Annual Report 2023 | Dubbo Project
Hyundai Engineering Co. completes
Stage 1 EPC work
Following the issue of a notice to proceed in
January 2023, Stage 1 of the Dubbo Project’s
Engineering Procurement and Construction
(EPC) Definition work commenced with Hyundai
Engineering Co. Ltd (HEC).
Work undertaken within Stage 1, included:
• Review of historical project documentation.
• Development of HEC understanding
of the project and strategy for further
development.
• Production of key engineering design criteria
and standards for the following engineering
intensive phases in separable portions
2 and 3.
• Development of procurement packages
and specifications for key equipment,
including review of an advance work
packaging approach and identification
of long lead items.
• Update of process plant 3D model to confirm
alignment with processing flowsheet.
Stage 1 activities were completed in
July 2023 and identified additional areas of
non-process infrastructure (NPI) work to be
completed ahead of Stage 2 commencement.
This includes progressing the maturity of design
of areas outside of the process plant, including:
residue storage and handling facilities, site
water management, greenhouse gas emission
reduction studies, and site establishment
planning. Funding to undertake this NPI
work will, in part, be provided by the
Australian government’s CMDP grant
(see Funding & Grants on page 22).
ASM commenced a tender process for this
work in June 2023, with the contract awarded
to Bechtel Australia in August 2023.
Stage 2 of the EPC Definition work will further
develop engineering design to allow for
identification and selection of technology
requirements at the Dubbo Project. ASM will
evaluate when Stage 2 will commence as the
additional areas of NPI work progress.
Stage 1 of the EPC Definition
work was completed by Hyundai
Engineering Company in 2023.
Dubbo Project | ASM Annual Report 2023 25
Environmental,
Social, Governance
Commodities from the Dubbo Project’s unique
orebody will be separated and refined using
innovative technologies and processes at an
on site processing facility. ASM acknowledges
the potential environmental and social impacts
associated with its operations and is committed
to actively managing and minimising them.
ASM’s journey into responsible environmental,
social and governance (ESG) practices is an
ongoing commitment and during the year ASM
has taken significant steps in many key areas.
Notably, in support of ASM’s 2050 carbon net
zero target, the Company has this year set out
Scope 1 and 2 carbon emission targets for 2030
and continues to develop its 2040 target (see
page 48). In addition, the Company also provides
in this report a comprehensive sustainability
approach and overview of activities across the
business (see page 42).
Specific ESG projects undertaken at the Dubbo
Project over the past year, include:
• Greenhouse gas reduction opportunities
strategy implemented, studies commenced,
with initial opportunities identified and
necessary trade-off studies included in
financial year 2024 work plan and budget.
• Process plant reagent substitution
investigations in progress to minimise
fugitive emissions from processing reactions.
•
Investigations into replacement of
diesel-powered mobile equipment with
electric commenced.
• Planning commenced to install solar and
battery storage on relevant ASM properties
and the project site office facility.
Solar panels are already in use at ASM’s
wholly owned subsidiary, Toongi Pastoral
Company (TPC). TPC manages the
agricultural land surrounding the Dubbo
Project’s mining and processing areas.
26 ASM Annual Report 2023 | Dubbo Project
Resources and Reserves
Mineral Resources
Resource
Category
Tonnes
(Mt)
Measured
42.81
Inferred
Total
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
Tonnes
(Mt)
Proved
Total
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 2023, 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 Optimisation Study dated 7 December 2021.
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
Dubbo Project | ASM Annual Report 2023 27
Korean Metals Plant
The Korean Metals Plant (KMP) in Ochang, South Korea is an
integral part of ASM’s mine to metals business, producing
high-tech metals and alloys for sustainable energy, new
growth and advanced manufacturing industries.
Following its official opening in May 2022, the KMP team
has successfully commissioned the plant’s neodymium
praseodymium (NdPr) metal and neodymium iron boron
(NdFeB) alloy production lines. In addition, the KMP
continued commercial scale commissioning and process
development of ASM’s metallisation technology (the LK
Process), with positive results achieved in producing copper
titanium alloy.
Significantly, the KMP has achieved its target of being
carbon net zero in Scope 1 and 2 emissions from
commencement of operations. In FY23, Scope 1 and 2
emissions were fully offset through the purchase of 1,127
tonnes of carbon credits.
With production underway, ASM was pleased to announce
two new customer offtake agreements for the sale of
neodymium products during the year and continues its
production ramp-up in line with customer demand.
FY23
Highlights
Dec 2022
Agreement signed with
Chungcheongbuk Province
and Vietnam Rare Earth JSC
(see page 32)
Mar 2023
Commissioning of
the NdFeB strip alloy
caster complete
(see page 31)
Sep 2022
First sale of NdPr metal
to NS World Co., Ltd
(see page 30)
Dec 2022
Commissioning of (NdPr)
metal completed
(see page 31)
28 ASM Annual Report 2023 | KMP
ASM’s Korean Metals Plant was
formally opened in May 2022
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
Scope 1 & 2 carbon net zero
Purchase of 1,127
tonnes of CO2e certified
carbon credits to fully
offset FY23 Scope
1 & 2 emissions
ISO accredited
ISO 14001:2015
ISO 9001:2015
ISO 45001:2018
Neodymium products
initial focus
NdPr metal
& NdFeB alloy
Titanium alloys
in development
CuTi alloy
20,000m2
Area of site facility
Employees
>70
KMP | ASM Annual Report 2023 29
May 2023
Binding supply agreement
signed with Vietnam Rare
Earth JSC (see page 32)
May 2023
Binding sale
agreement signed with
Noveon Magnetics Inc.
(see page 30)
Members of
the USA Rare
Earth team at
ASM’s Korean
Metals Plant.
After significant engagement during FY23 but
subsequent to 30 June 2023, ASM announced a
long-term binding sales agreement with USA
Rare Earth, LLC (USARE). The five-year sales and
tolling framework agreement is for the supply
of NdFeB alloy to support USARE’s production
ramp-up of high-performance rare earth
magnets, with delivery anticipated to commence
in 2024.
ASM continues to work with all companies in
the schedule and delivery of agreed volumes,
while also seeking to identify further long-term
opportunities.
In addition, ASM is exploring new sales
opportunities in multiple geographies as the
Company seeks to grow its customer portfolio.
First sale of
metal & alloy
During the year, ASM achieved a major
milestone by announcing its first global
customers for the high-tech metals and alloys
produced at the KMP.
In September 2022, ASM signed a binding
sales agreement for the sale of neodymium
praseodymium (NdPr) metal with NS World Co.,
Ltd. The agreement with the Korean company
was for the delivery of up to 10 tonnes of
NdPr metal, for use in the production of
bonded magnets for the automotive and
electronics industries.
NS World took full delivery of the order during
financial year 2023 and also signed a further
agreement for the sale of an additional six
tonnes of the metal - to be delivered in the
first half of financial year 2024.
ASM announced a second customer
agreement in May 2023, with US-based rare
earth magnet manufacturer Noveon Magnetics
Inc. (Noveon). The initial agreement for the
sale of 100 tonnes of neodymium iron boron
(NdFeB) alloy represents the foundation to
build a strategic partnership relating to
long-term offtake for rare earth materials
supporting magnet production.
30 ASM Annual Report 2023 | KMP
ASM team
at NS World
offices in Korea.
Commissioning
update
Metallisation
technology
Commissioning of neodymium praseodymium
(NdPr) metal was completed at the KMP in the
second Quarter of FY22, with commissioning
of the neodymium iron boron (NdFeB) strip
alloy caster successfully completed during the
following Quarter.
With commissioning of both the NdPr metal
furnaces and the NdFeB strip alloy caster
complete, ramp-up progressed in alignment
with customer demand and the completion
of sales agreements. The KMP continues to work
with customers on the product qualification
process, ensuring the product specifications for
each individual customer are met.
The current nameplate production for NdFeB alloy
of 600 tpa is sufficient to meet ASM’s confirmed
binding sales agreements for the KMP. Our efforts
continue to focus on securing the sales to meet
this current nameplate production and beyond.
ASM will consider when Phase 2 expansion
to 3,600tpa will occur to align with customer
demand. This is currently anticipated to happen
in 2024, to meet the expected increase in demand.
ASM’s innovative metallisation technology
(the LK Process) is capable of producing
high-grade metal alloys without the need for
chlorination, thus reducing the subsequent
chlorine gas hazards. This is an alternative to the
Kroll Process for production of titanium, zirconium
and hafnium metals.
The technology also presents an alternative to the
traditional production methods for dysprosium
and terbium metals. There are potential synergies
to add further value to zirconium, hafnium,
dysprosium and terbium oxides produced at
the Dubbo Project and these opportunities
continue to be explored.
ASM continues its efforts to achieve
commercial scale commissioning of its
metallisation technology in the production
of copper titanium (CuTi) at the KMP. The
nameplate capacity of the titanium furnace to
produce CuTi is 1,600 tpa. Ramp-up to 1,600 tpa
will occur on commissioning, establishment of
commercial viability and establishing sufficient
customer demand.
KMP | ASM Annual Report 2023 31
ASM continues to explore alternative feedstock options to provide security of supply for the KMP.
Securing our supply chain
ASM remains committed to developing the
Dubbo Project and processing Dubbo Project
materials through the KMP. However, until the
project is operational, ASM will continue to
explore alternative feedstock options to provide
security of supply for its metallisation plant. In
turn, this supports ASM to broaden its options
for offtake partners for the Dubbo Project.
During the year, ASM took significant steps
to secure its supply of rare earth oxides into
the KMP, via the development of a strategic
partnership with Vietnam Rare Earth JSC (VTRE).
An initial binding agreement was signed with
VTRE in April 2023 for the purchase of 100
tonnes of rare earth oxides to ensure the
KMP has the required feedstock to continue
its production ramp-up of neodymium
praseodymium products.
As part of the agreement, both parties also
committed to good faith negotiations for a
longer term supply agreement and, subsequent
to 30 June, the companies announced a
three-way, non-binding memorandum of
understanding between ASM, VTRE and
Blackstone Minerals Ltd, an ASX listed company
with established mining and beneficiation
operations in Vietnam.1 This three-way
partnership will explore further opportunities
to develop Vietnam’s rare earth mining and
refining opportunities to create an alternative
secure supply.
1Refer ASX announcement 26 July 2023: ASM signs three-way MOU with VTRE and Blackstone
32 ASM Annual Report 2023 | KMP
The team at the Korean
Metals Plant celebrating
World Safety Day.
Environmental, Social, Governance
Our journey into responsible environmental,
social and governance (ESG) practices is an
ongoing commitment. During its first year
of operation, the KMP has continued to
demonstrate its progress in this area.
Notably, the KMP has obtained the following
formal ISO accreditations:
• October 2021: ISO 14001: 2015
Environmental Management Systems
• October 2021: ISO 9001: 2015
Quality Management Systems
• April 2023: ISO 45001: 2018
Occupational Health and Safety
Management Systems
The KMP’s strong governance and revised
approach to risk management was recognised
in June 2023 when ASM subsidiary Korean
Strategic Materials was named one of the
top five companies at the Risk Assessment
Excellence Case Competition in the
Chungcheongbuk Province. The award was
endorsed by the Cheongju Branch of the
Daejeon Regional Office of the Ministry of
Employment and Labor for the implementation
of industry leading risk assessment practices.
This formal recognition is an important step
in embedding the foundations of another
international standard - the ISO 31000:2018
in Risk Management.
In its first year of operation, the KMP delivered
on its target of carbon net zero for Scope 1 and
2 emissions. Two key drivers for this significant
achievement were:
• Adopting a continuous improvement
approach to energy efficiency and
committing to aligning with the South
Korean government’s strategy and target
of generating 35% of its electricity from
renewables by 2040.
• The purchase of carbon credits to offset
Scope 1 and 2 carbon emissions. The carbon
credits were invested in a local South
Korean project by Hyundai Greenpower
Co. Ltd, Steel Waste Energy Co-generation
Project (Steel). The project utilises surplus
waste gases produced by Steel to generate
electricity, which would otherwise be emitted
to the atmosphere after incineration. The
investment in 1,127 tonnes of greenhouse
gas emissions credits fully offset the Scope
1 and 2 emissions generated at the KMP
processing plant during FY23.1
Read more about our approach to sustainability
from page 42.
1The purchase of carbon credits to offset FY23 emissions was
completed in August 2023.
KMP | ASM Annual Report 2023 33
Market Outlook
ASM’s mine to metals business
model will provide a diverse range
of products critical to supporting
advanced manufacturing, the
sustainable energy transition and
new growth industries.
Market Review
The Dubbo Project
Financial Year 2023 (FY23) saw a step change
in Australian government support for critical
mineral supply chains, with the signing of
important bi-lateral agreements and the
release of the Critical Minerals Strategy 2023
– 2030. In October 2022, Australia and Japan
signed The Critical Minerals Partnership
to support the adoption of clean energy
technologies through the joint advancement
of the supply chains on which they depend.
This was followed in May by the signing
of the Climate, Critical Minerals and Clean
Energy Compact between Australia and the
US to promote the sustainable supply and
processing of critical minerals.
In addition, the signing of the EU’s Critical
Raw Materials Act in March further served to
highlight the paramount importance being
placed on securing critical minerals’ supply
chains by governments around the world.
This has been a theme at the forefront of
discussions with potential counterparties
across the suite of ASM’s products, as large
users downstream seek to secure long term
partnerships with independent suppliers of
critical raw materials in stable jurisdictions.
Prices for rare earth oxides fell back
over the course of FY23 as the market
continued to feel the effects of supply chain
disruptions resulting from COVID-19 and
the semiconductor shortage that marked
the first years of the decade. This has led to
an accumulation of some raw materials and
components in the automotive midstream,
while a slump in the consumer electronics
segment has also weighed on demand.
However, in recent months there have
been signs that conditions in the automotive
market are normalising and with wait
times for electric vehicles (EVs) falling,
this should in turn lead to restocking
activity at drive system assemblers and
magnet manufacturers alike before the
end of the year.
Conversely, prices for other Dubbo products
including ferroniobium and hafnium have
risen over the last 12 months. For the latter
in particular, burgeoning end user demand
from the aerospace, industrial gas turbine
(IGT), semiconductor and nuclear sectors
is being at least partially met by historical
stocks, so that it is likely prices throughout
the value chain could rise further as these
are exhausted. The zirconia market, where
end user demand is more closely linked to
the business cycle, is currently experiencing
a downturn in line with weaker consumer
sentiment in the world’s largest economies.
34 ASM Annual Report 2023 | Market Outlook
The Korean Metals Plant achieved first
shipment of NdPr metal in September 2022.
Korean Metals Plant
Outlook
Sales agreements for neodymium iron boron
(NdFeB) alloy were signed with US companies
Noveon and USA Rare Earths in May and August
respectively, while the Company continues
to hold discussions with a number of other
counterparties relating to long-term offtake
agreements. With intent turning to action in the
development of regional supply chains to better
serve the major demand centres of north Asia,
North America, and Europe, ASM is well placed
to cement further partnerships for the delivery
of metal and alloys from its Korean Metals
Plant (KMP).
Resilient demand for magnets to satisfy
burgeoning consumer appetite for EVs in China,
Europe and the US, has helped support prices
for high grade magnet alloys in comparison to
lower grades, where the slump in demand for
consumer electronics has weighed more heavily.
Together with a 40% year to date rise in EV car
registrations globally in the first six months of
2023, magnet deployment has increased by 53%1
as loadings per vehicle rise with the trend for
larger models.
The long-term outlook remains positive for
ASM, given the potential use of Dubbo Project
and KMP products in industries focused on
advanced technologies that support mega trends
such as decarbonisation, clean energy and
automation. The outlook for rare earths used in
EVs is particularly positive as continuing growth
in EV sales will come off an increasingly higher
base. The International Energy Agency recently
upgraded its projections for EV deployment
under its Stated Policies Scenario to 20 million
vehicles in 2025 and 40 million in 2030, up
from 15.9 million and 27.7 million respectively
last year.
Simultaneously, growing demand for hafnium
units from semiconductor manufacturers,
combined with established usage from the
nuclear, IGT and aerospace industries has
led the market to experience a period of
significant supply constraint, not least because
units in China are being internalised. This
serves to further highlight the importance for
governments and industry alike of securing
independent, stable sources of supply – not just
for hafnium but for all critical minerals.
1 Figures derived from Adamas Intelligence’ EV Motor Materials Monthly Reports
Market Outlook | ASM Annual Report 2023 35
Risk
Our Risk Management approach is
designed to support ASM’s critical short- and
long-term business activities, achieving the
desired level of risk management maturity
and improved business performance.
Managing our risks to maintain
sustainable growth
The minimum mandatory requirements
for the management of risks that can
materially impact our ability to achieve our
purpose, strategy and business plans are
defined in our risk management standard.
The approach and standard are delivered
through our system of risk management
which is aligned to the principles of the
International Standard for Risk Management
AS/NZS ISO 31000:2018.
At ASM, we are committed to a continuous
enhancement journey to mature our risk
management practices, capability and
building a risk-aware culture. Financial
Year 2023 strengthened risk management
foundations and transparency across our
site-based workforce, management team
and Board of directors, demonstrating
our commitment to addressing potential
challenges, while safeguarding our
stakeholders’ interests.
Members of the Korean Metals Plant team
conduct a safety walk through of the operation.
36 ASM Annual Report 2023 | Risk
ASM System of Risk Management
(proposed 2027 End State)
Our system of risk management
enables everyone at ASM to identify,
manage and respond to threats and
opportunities, to support the delivery
of our goals and business outcomes.
We report transparent and complete
real-time risk data, easily accessed
from a single platform.
• Single administration platform for risks,
events, hazards, obligations and actions.
•
Integrated reporting from single source.
• Mobile application functionality for infield
verifications and observations.
• Continuous learning routines.
We all understand our risk management
roles and accountabilities, and keep
building our skills to make informed
risk-based decisions.
• Effective risk management capability
training programs for all ASM employees.
• Regular refresher and new starter risk
and compliance training.
• Highly capable on site/off site risk
management support.
We have a mature, clearly defined and
understood three lines model, providing
regular quality assurance over our controls.
We have simple risk processes and fit for
purpose tools, enabling continuous and
dynamic risk management activities.
• 1st line verifications performed regularly.
• Documented risk and compliance
• 2nd line stewardship health checks,
assessing control effectiveness and
ongoing compliance to our standards.
• 3rd line assurance assessing systems over
1st and 2nd line execution.
• Co-ordinated plan across 2nd and 3rd
lines activities.
processes and procedures.
• Toolbox guiding on a range of
risk techniques.
• Core risk rhythms and routines for all
operations and functions established
and operating.
• Governance in place for improvements
to risk standard and processes.
We understand the regulations that apply
to our business, and we have processes to
manage and monitor our compliance.
We identify and prioritise our risks and
continuously address gaps in our controls.
• Comprehensive risk registers in place
• Regulatory obligations registers in place
at each operation and function.
at each operation.
• Risk and control owners assigned
• Ongoing monitoring program for
for material risks.
obligations management effectively
escalating non - compliance.
• Real-time update of obligations registers
with external regulatory changes.
• Regular assessments of all risks
and controls.
• Organisation risk appetite and tolerance
levels established and monitored.
Risk | ASM Annual Report 2023 37
Risk Appetite
Top Company Level Risks
Our risks are managed within the context of the
Board-approved risk appetite statement, which
outlines the level of risk that ASM considers in
the pursuit of its goals. We are governed by a
Board of directors and we are committed to
conduct all our activities legally and ethically.
The Risk Management Committee is established
to oversee ASM’s system of risk management
and reports to the Board on matters
involving risk, including recommending a
risk appetite level.
ASM has developed policies and procedures
to guide its employees, whilst ensuring there
are clear parameters for risk appetite tolerance
with respect to essential outcomes from
areas of activities and jurisdictional impacts
and influences.
Core Risks in Practice
Our risks are regularly assessed and managed
at both a Company-wide strategic level and
at a tactical level for operational activities,
project developments and corporate functions
risks. Our dual top-down and bottom-up risk
management approach enables an effective
escalation of emerging signals and risks,
which helps us stay proactive and immediate
in our response.
1 Safety & Security incident
2 Cyber security incident
3 ESG readiness
4 Achieving appropriate offtakes and
funding for Dubbo and KMP
5 Failure to secure feedstock for KMP
6 Bribery and Corruption
7 Cashflow management
8 Fraud
9 Legal & regulatory breaches
10 Shaping our culture and managing
our people talent
11 Commercialisation of KMP
- quality and quantity of NdFeB alloy
12 Logistics and supply chain (VTRE specific)
ASM is exploring multiple jurisdictions
to secure project financing for the
Dubbo Project, including Korea,
the US, Japan and the EU.
38 ASM Annual Report 2023 | Risk
Our strategic business risks, as well as company level
and material operational risks are regularly reported
to the management team and the Board of directors
to ensure appropriate channels of communication and
transparency in support of risk-based decisions.
Strategic Business Risks
Strategic risks are those that have the potential to impact delivery of
the Company’s long-term strategy. Management of our strategic risks
applies a forward long-term looking approach that involves scenario
planning, thorough analysis of industry trends and clear understanding
of our strengths and weaknesses. By acknowledging, understanding
and addressing strategic risks, we position ourselves to capitalise on
opportunities and maintain a competitive advantage in the market.
Our strategic risk assessments inform our risk appetite and shape our
strategy in response to internal and external challenges.
Company Level Risks
Company risks are those that have the potential to impact on annual
company objectives and financial performance. Management of our company
level risks applies an annual assessment and verification process to analyse
internal and external factors that can impact our annual business goals and
profitability. Managing these material exposures is essential to maintain
stability, resilience and growth, as well as navigate uncertainties in our
dynamic business landscape.
These risks are material in nature and inform the Key Risk Indicators used for
regular monitoring of strategic risks and risk appetite tolerance movements.
Operational Risks
Operational risks are those that can lead to disruptions in daily operations,
financial losses, injuries or even fatalities and tend to be short-term or
immediate in nature. These can be material or non-material, as guided
by our risk management standard. Management of our operational level
risks involves a regular risk management process embedded within our
workforce to identify, assess and manage exposures arising from internal
processes and regular operational activities.
Risk | ASM Annual Report 2023 39
Strategic Business Risks
1 Keeping our people and communities safe
and well
2 Global economic uncertainty and liquidity
3 Maintaining competitive advantage
through business innovation and pricing
mechanisms
4 Capital and funding
5 Building and sustaining supply chains for
critical goods and services
6 Consistent operational performance
7 Delivering on contractual relationships
8 Maintaining our license to operate
9 Political risks, actions by government and/
or authority
10 Technology
11 Climate Change
12 Business resilience (pandemic, natural
disasters, strikes/people action)
13 Optimising our asset mix
14 Access to people and talent
For full details on our Strategic Business Risks – including
management’s responses – please go to page 65.
40 ASM Annual Report 2023 | Risk
Metals furnaces at the
Korean Metals Plant.
Risk | ASM Annual Report 2023 41
Sustainability
ASM seeks to contribute
positively to the efforts needed
to solve the global challenges
of today and the future. Our
portfolio of rare earths, critical
minerals and high-tech metal
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. The Company
intends to leave a legacy that
delivers enduring benefits to the
communities and regions where
it operates.
Our ESG
Journey
Feb 2022
Increased gender
diversity on Board
Oct 2022
1st Annual Report with
GRI Index
Nov 2022
Joined UN Global Compact
Jan 2022
Sustainalytics Private
Assessment
Jan 2022
Joined Diversity
Council of Australia
Jun 2023
Set 2030 Scope
1 & 2 targets
Jun 2023
Scope 1 & 2 GHG
inventory
June 2021
Set 2050 carbon
net zero target
Oct 2021
ISO 14001 Environment
ISO 9001 Quality Mgt
Oct 2021
2nd Annual Report with
sustainability reporting
Mar 2022
Policies developed:
• Health, Safety & Security
Sep 2022
• Human Rights
• Modern Slavery
• Diversity
• Risk Management
• Code of Conduct
• Anti-Bribery & Corruption
Our Approach documents:
• Safety, Health & Wellbeing
• Biodiversity
• Water
• Climate Change
• Community & Social
Responsibility
• People & Culture
42 ASM Annual Report 2023 | Sustainability
Our approach
ASM acknowledges the potential environmental impacts
associated with its operations and is committed to actively
managing and minimising greenhouse gas emissions.
To achieve this, ASM acknowledges the need for ongoing
advancements in technology, which the Company plans to
integrate throughout its operations to continuously improve
its carbon footprint and sustainability efforts targeting 2030
emission reductions and 2050 net zero carbon.
Sustainability reporting continues to evolve at pace, as a global
standard for the financial impacts of ESG risk are introduced
(International Sustainability Standards Board (ISSB) IFRS S1
& S2). Alongside these, mandatory sustainability-related
financial reporting in Australia and other global jurisdictions
is emerging. Further, there are continued stakeholder and
regulatory expectations of a transparent and responsible
supply chain, which are driving site-based assurance against
standards, such as the Initiative for Responsible Mining
Assurance (IRMA), and Towards Sustainable Mining (TSM).
ASM considers all these developments and requirements
in its planning and implementation of ESG standards
and disclosure.
Aug 2023
KMP Scope 1& 2
carbon net zero
Oct 2023
1st Annual Report with
GHG reporting
2024
Climate risks
scenarios developed
2024
Develop 2040
Scope 1 target
2027
Dubbo Operation
commences
2050
Dubbo Project
Scope 1 carbon
net zero
Jan 2023
1st Sustainalytics
Public Assessment
Apr 2023
ISO 45001 OH&S
May 2023
Submitted TPC Carbon
Farming project registration
2024
2nd Sustainalytics
Public Assessment
2024
Develop TSM
Compliance pathway
2025
Dubbo Project
Construction
commences
2025
TSM Standard
Compliance
2030
Dubbo Project
Scope 2 carbon net zero
Scope 1 40% reduction
2030
IRMA Standard Compliance
ESG targets
Completed activities
Future activities
Sustainability | ASM Annual Report 2023 43
• Storage facilities for liquid residue reduced
from 413 Hectares (Ha) to 21 Ha.
• Rail transport of reagents brought forward
to align with project commencement.
• Overall land disturbance area reduced
by 5.4 Ha.
• Net reduction of impacts to native vegetation
by 10.7 Ha with unlikely impacts on
biodiversity values in comparison to the
approved project.
Dubbo Project Environmental Management
plans are now being revised to incorporate
MOD1 changes. Some plans are required to be
completed prior to construction of the project.
Environmental Monitoring
An environmental monitoring system was
installed near the Toongi Hall, the nearest
sensitive receptor, in March 2022. The system
has provided a full year of meteorological and
air quality data up to 30 June 2023. This baseline
data will be added to the nearly 20 years of
environmental data collected around the
project site.
The results of surface and groundwater
monitoring are compiled in an Annual Review,
along with ecological data collected from
analogue vegetation monitoring sites and the
biodiversity offset areas.
To ensure comprehensive monitoring,
additional monitoring equipment will
be installed prior to the commencement
of construction.
Environment
Dubbo Project
Modification 1
In 2021, ASM identified opportunities to optimise
the design of the Dubbo Project to maximise
operational efficiencies at the mine and deliver
social and environmental benefits. The key
changes included adjustments to the site layout
to accommodate additional plant and the
relocation of infrastructure areas.
A Modification Report was publicly exhibited
in March-April 2022. The NSW Department of
Planning and Environment (DPE) received advice
from seven agencies, Dubbo Regional Council
and Siding Springs Observatory. DPE received
one submission from a special interest group
(comment) and four from members of the
general public – one in support, one objection
and two comments. The one public submission
in objection raised concerns regarding amenity
impacts in relation to the proposed extended
construction hours and consequent noise
impacts. The DPE imposed strict noise limits
and restricted out of hours operations to
ensure there would be no significant increase
in noise impacts.
The Dubbo Project received approval of the
Modification Report, SSD-5251 (MOD1), from the
DPE on 2 March 2023.
MOD1 will deliver significant social and
environmental benefits when compared to the
original approved project. Key features of the
revised design include:
• Annual project water consumption reduced
by more than 50%.
• Transportation of dangerous goods by
road or rail decreased by adding of a
chlor-alkali plant.
• Volume of liquid waste reduced and process
water recycled through adding a brine
concentrator.
44 ASM Annual Report 2023 | Sustainability
Biodiversity
ASM is currently working towards its ambition
of employing a nature-positive approach on
biodiversity. The Company is committed to
promoting biodiversity and protecting native
species through applying the mitigation
hierarchy during planning and rehabilitating
where impact is unavoidable.
ASM’s Dubbo Project has a Biodiversity
Management Plan (BMP) that provides a
framework for managing and monitoring
biodiversity. This incorporates the fenced
biodiversity offset areas (1,021 Ha) 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 registered on title and protected
in perpetuity. To accommodate the MOD 1
reconfiguration of the approved disturbance
areas, which will achieve an overall net
reduction in biodiversity impacts, the BMP
will be updated and made available on the
ASM website.
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 Ha.
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.
• Annual survey of Pink-tailed
Worm-lizard distribution across six artificial
habitat monitoring sites combined with
opportunistic searches under rocks.
• Management of existing native grasslands,
particularly in biodiversity offset areas.
• Ongoing pest animal control programs.
Feral pig numbers are significantly
increasing across western NSW after
three favourable seasons.
• Ongoing fence maintenance around
biodiversity offset areas to protect such
areas from livestock and pest animals.
• Ongoing control of noxious weeds.
• Ongoing thinning of White Cypress Pine to
increase native grass cover and understorey,
improving biodiversity.
The biodiversity offset areas, which are fenced
off from livestock, have experienced natural
regeneration of native vegetation following
three years of above average rainfall from
2020 to 2022. The dense Cypress Pine
woodlands were affected by natural die-back,
possibly induced by a change in climate, during
the severe drought in 2019. As a result, these
areas are now more light-filled with abundant
native tree and shrub regeneration.
ASM’s Dubbo Project has a Biodiversity Management Plan that
provides a framework for managing and monitoring biodiversity.
Sustainability | ASM Annual Report 2023 45
ASM acknowledges the need for ongoing
advancements in technology, which the Company plans to
integrate throughout its operations to continuously improve its
carbon footprint and sustainability efforts.
Water Management
ASM holds sufficient river and groundwater
licences – including some high security licences
– to develop the Dubbo Project as a 1Mtpa
operation.
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.
As the Dubbo Project has not commenced
construction, ASM takes advantage of the
opportunity to trade water on the temporary
market. That water can then be used in the
Macquarie Valley for irrigation of crops or
industrial uses.
A Stage 1 (construction phase) Water
Management Plan (2016), approved by the
NSW governing authority, is available on the
ASM website. This plan will be updated to
accommodate minor project design changes
described in MOD1. The DPE considered that
the proposed modification would provide
considerable improvement to overall water
efficiency and a substantial reduction in water
use for the Dubbo Project’s operations.
Water management activities during the
reporting period included:
• Approval of a brine concentrator in the plant
design, which would allow for beneficial
re-use of water on site and almost halve the
project’s water use from external sources to
about 2GL/year.
• 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.
46 ASM Annual Report 2023 | Sustainability
Soil coring at Toongi
Pastoral Company for
baseline carbon estimation.
Climate Change
ASM supports the Task Force on Climate-related
Financial Disclosures (TCFD) and the new
International Financial Reporting Standards
Standard 2 (IFRS S2) and will progressively apply
their recommendations as the Company grows.
ASM is committed to evaluating, assessing,
and managing both physical (catastrophic
and natural disaster events) and transition
(low carbon economy) risks of climate change,
recognising the stage of development of the
Dubbo Project and operation of the Korean
Metals Plant.
As part of the FY24 reporting, ASM will
commence an assessment against a low carbon
scenario and a rapidly warming scenario to test
both potential transition and physical risks and
opportunities. Supplementary to this, ASM plans
to consider the Scope 3 requirements and to
conduct formal Board training on the nature,
timing and magnitude of climate-related risks
in FY24.
To demonstrate this commitment, ASM has
initiated the development of a comprehensive
roadmap to achieve net zero carbon emissions
by 2050. This year, ASM has established Scope
1 and 2 targets for the Korean Metals Plant and
the Dubbo Project to continuously improve their
carbon footprint and sustainability efforts. (see
page 48 for more details).
ASM also continues registration of Carbon
Estimation Areas within 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). ASM is exploring
how these can contribute to the Dubbo
Project’s carbon offsets.
Sustainability | ASM Annual Report 2023 47
Greenhouse Gas Emissions
In line with ASM’s focus on
understanding the impact of its
current operations, the Company
has developed a greenhouse gas
(GHG) inventory for FY23 for Scope
1 (direct emissions) and Scope 2
(indirect emissions), in alignment
with the Greenhouse Gas Protocol.
This marks the first time ASM has
reported energy and emissions data
and is a significant milestone in
understanding the potential impact
of its operations.
The GHG inventory for FY23
includes the operations of the
Korean Metals Plant, Toongi
Pastoral Company, and the Perth
Corporate Office. This is inclusive
of our Scope 1 emissions from
direct energy use (diesel, natural
gas), use of industrial gases,
livestock emissions, refrigerants
and Scope 2 emissions from
grid electricity usage. When
the Dubbo Project is operational,
it is anticipated that the overall
emissions will increase due
to its inclusion within
operational activities.
Total Greenhouse Gas Emissions
(Scope 1 and Scope 2 - t CO2e) in FY23
25%
1060
75%
3166
Scope 1
Scope 2
Scope 1 Emissions by Activity (t CO2e)
107.3
96
6.9
0.1
2955.3
Livestock
Refrigerant Consumption
Fuel Usage Transport
Gas Usage
Fuel Usage - Non-Transport
Greenhouse Gas Emissions by Operation in FY231
Korean Metals
Plant (KMP)
Toongi Pastoral
Company (TPC)
Perth Corporate
Office (PCO)
Scope 1 Emissions (t CO2e)
Scope 2 Emissions (t CO2e)
Total Emissions – Scope 1 and
Scope 2 (t CO2e)
132
995
1,127
3,034
61
3,094
-
4
4
Total
3,166
1,060
4,225
1 Due to rounding to the nearest whole number, some totals may not correspond with the sum of separate figures.
48 ASM Annual Report 2023 | Sustainability
Korean Metals Plant
ASM has set a target for the Korean Metals Plant (KMP) to achieve carbon net zero for Scope 1
and 2 emissions from commencement of operation. During its first year of operation, the KMP
implemented, various initiatives to decrease its carbon footprint and was successful in fully offsetting
its emissions in FY23.
Greenhouse Gas (GHG) Emissions Targets
2023
2040
Scope 1 and Scope 2 - Net Zero
35% electricity from renewables
New Technologies: The KMP has a highly
credentialed research & development team,
developing innovative low-emission technology
for the metallisation processes.
Renewable Energy Integration: The KMP 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.
Purchasing Carbon Credits: Where appropriate,
the KMP will look to offset carbon emissions
through the purchase of carbon credits. For
the period 1 July 2022 to 30 June 2023, KMP
purchased 1,127 tonnes of greenhouse gas
emissions credits. The carbon credits were
invested in a local South Korean project by
Hyundai Greenpower Co. Ltd, Steel Waste
Energy Co-generation Project (Steel). The project
utilises surplus waste gases produced by Steel
to generate electricity, which would otherwise
be emitted to the atmosphere after incineration.
ASM has set a target for the KMP to
achieve carbon net zero for Scope 1
and Scope 2 emissions from 2023.
Sustainability | ASM Annual Report 2023 49
Dubbo Project
The Dubbo Project is located in the NSW government’s designated Central-West Renewable Energy
Zone, which provides an opportunity to source renewable energy options. In addition, and as ASM
continues to develop its operations, several targets and opportunities for emissions reduction are
being investigated. Despite not being operational, ASM has also conducted the life of mine emissions
calculations for the Dubbo Project to better understand the Company’s emissions footprint.
Greenhouse Gas GHG Emissions Targets
2030
2040
2050
Scope 1 - Target currently
Scope 1 - Net Zero
in development
Scope 1 - 40% Emissions
Reduction (Alignment with
NSW Government Net Zero
Plan Stage 1: 2020 -2030)
Scope 2 - Net Zero optimising
the use of renewable energy
Net Zero (Scope 1) by 2050: ASM has set
targets for Scope 1 emissions at the Dubbo
Project, aiming for a 40% reduction by 2030
and net zero emissions by 2050.
ASM is currently developing a 2040 target
and the pathway to achieve the 2030
and 2050 targets, in support of
becoming a key contributor to a sustainable
low-carbon economy.
Net Zero (Scope 2) by 2030: ASM is currently
developing its pathway to achieve its Scope
2 2030 targets. To achieve the target of net
zero Scope 2 emissions by 2030, the Dubbo
Project will focus on emissions associated with
electricity generation, intending to optimise the
use of renewable energy.
Greenhouse Gas Management Plan: Prior to
construction, the Dubbo Project will develop a
comprehensive Greenhouse Gas Management
Plan. This will ensure effective management
and reduction of GHG emissions during its
operations. The GHG Management Plan will
implement best practices to minimise GHG
emissions and improve energy efficiency. It may
consider conducting regular maintenance of the
Company’s light vehicles, dump trucks, loaders,
drills, graders, and other mobile equipment to
optimise energy usage and reduce emissions,
exploring electrification options of our fixed
plant options (i.e. converting gas to electricity)
and increasing the integration of renewable
energy sources like hydrogen, alongside
investigating the possibility of transitioning to
an electric mining fleet.
Research Into Emission Reduction
Opportunities: ASM will continue to explore
innovative ways to minimise GHG emissions
through various means, including management
plans, studies, research, and grants. This will
include active review of schemes that may
provide additional opportunities to reduce
GHG emissions and increase productivity in
alignment with the NSW Government Net Zero
Plan Stage 1: 2020-2030.
Assessment, Tracking and Reporting: ASM will
facilitate thorough assessment and reporting
of GHG emissions and energy consumption
against the set targets for GHG reduction at the
Dubbo Project to promote accountability and
progress monitoring towards these targets.
50 ASM Annual Report 2023 | Sustainability
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
management team is located. The remaining
employees are dispersed across Australia and
in Korea.
ASM’s team based in Dubbo manages the
Toongi Pastoral Company (TPC) and Dubbo
Project, while the team in Brisbane has
progressed the ongoing project development
and delivery work. During 2023, ASM has
introduced a remuneration policy for
non-executive employees to further attract
and retain employees. Community engagement
and investment programs are in place, ensuring
active involvement of the local community
in the planning for operation. This includes
collaboration with local indigenous people, the
protection of cultural heritage sites and how
we all work towards Free, Prior and Informed
Consent (FPIC).
Diversity
ASM’s Australian operations have continued to
deliver strong gender diversity results. Between
2022 and 2023, gender diversity remained
strong across the Board, management team
and Australia.
1Mr Chris Jordaan was appointed ASM’s Chief Operating Officer
effective 24 August 2023. With the addition of Mr Jordaan, the ASM
management team has a 50% female, 50% male split.
40%
Female
60%
Female
35%
Female
15%
Female
Data represents permanent
and fixed term ASM Group
employees at 30 June 2023
Board
Management
Team1
Australia
Korea
60%
Male
40%
Male
65%
Male
85%
Male
Sustainability | ASM Annual Report 2023 51
Health and Safety
ASM is focused on the safety, health and
well-being of its people, environment and
communities. The Company has continued
to build and strengthen a culture of caring
and promoting a safe working environment
through the promotion of trust, care and
self-responsibility. This includes proactive work
in risk identification, assessment, controls and
verification. ASM encourages and supports
all employees to become safety leaders at
work and hold each other responsible for the
expected behaviours and safe work practices
required to reduce the potential for occurrences
of occupational illness and injury, and promote
healthy lifestyles.
COVID-19 continued to have an impact on
ASM’s operations over the year. Through strong
contingency plans and controls, these impacts
were kept to a minimum with no direct impact
to operational output.
Health and Safety Figures
ASM continued to maintain its focus on safety
over the year and is pleased to report that the
group recorded the milestone of one year Lost
Time Injury free at 30 June 2023, with 154,382
hours worked and had zero reportable safety,
health or environment events for the year.
There were four recordable injuries sustained
during the year, three related to soft tissue
hand injuries at the Korean Metals Plant
(KMP) and one injury of knee ligament tear
sustained to one of the farm workers at
TPC. ASM is pleased to report all workers
have made a full return to health and work
duties, with engineered corrective solutions
implemented to prevent recurrence
of these incidents.
Health and Safety
Management Systems
ASM is committed to enhancing its health and
safety management systems through proactive
efforts in risk identification, assessment,
controls and verification. In the short time
since its operation, ASM has achieved
accreditation with ISO 45001:2018 Health and
Safety Management System for the KMP. This
accomplishment adds to the KMP’s existing
accreditations against ISO standards: ISO
14001:2015 – Environmental Management
Systems and ISO 9001:2015 – Quality
Management Systems, which establishes the
Company’s commitment to high standards of
management and operations.
ASM’s commitment to safety was recognised
when it was selected as one of the five category
winners in an awards program held by the
Cheongju Regional Office of the Ministry of
Employment and Labour in South Korea with
a focus on creating a safety management
system centered around risk assessment
to prevent major accidents effectively. The
awards aimed to recognise companies that
have established exemplary systems where
employers and workers collaborate to identify
hazardous and risk factors in the workplace.
The companies were also evaluated based
on their ability to develop and implement
improvement measures. With competition
from 213 other companies, ASM’s achievement
is commendable, considering the quality of
competitors and the relatively short time that
the KMP has been in operation.
To ensure a proactive approach to safety,
ASM’s leadership conducts monthly joint site
inspections involving both the management
team and workers. This integrated approach
allows for open discussions and the exchange of
views on safety-related matters.
52 ASM Annual Report 2023 | Sustainability
Emergency Response Management
First Nations Engagement
ASM prioritises effective emergency response
management to ensure the safety and well-being
of its employees and stakeholders. To validate
the preparedness and response capabilities,
regular audits are conducted, evaluating
the implementation and understanding of
the emergency response procedures and
the readiness of first responders to address
potential emergencies.
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. The Dubbo Project
Community Consultative Committee has two
Aboriginal members.
ASM continues to review cultural heritage
sites within the project footprint and ensures
traditional owners are engaged and consulted on
heritage issues, as per Part of the National Parks
and Wildlife Act (1974).
ASM continues to identify 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”.
• Dubbo Project Community Consultative
Committee meetings.
• Engaging with the local Aboriginal community
to provide welcome to country, smoking
ceremonies and cultural awareness lessons
for all significant site visits and functions.
Recognising the importance of psychological
support during workplace accidents or
disasters, ASM leadership has entered into a
memorandum of understanding (MOU) with the
Chungbuk disaster counselling support centre,
represented by the Red Cross. Through this
collaboration, KMP employees have access to
psychological counselling services in the event
of workplace accidents or disasters. In addition,
employees received training on emergency
response measures and the use of automated
external defibrillators (AEDs) and are able to
participate in community volunteering activities
organised by the Red Cross. In unison, these
actions foster a sense of preparedness within
the community.
ASM’s Fatality Risk Control Programme (FRCP)
constitutes a fundamental aspect of its
emergency response management approach.
This programme was developed to mandate
critical controls aimed at preventing fatalities,
serious incidents and injuries arising from
common hazards and associated risks in
operational activities. By focusing on nine
high-risk activities within the industry,
ASM actively improves safety measures and
mitigates potential risks, ensuring a safer
working environment for everyone involved.
Community and Social Responsibility
ASM intends 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.
Sustainability | ASM Annual Report 2023 53
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 initiatives supported include:
• NSW Mining and Exploration Conference
(Orange);
• Resources Energy Environment Foundation
Forum (Dubbo);
• Association of Independent Schools Years
7-9 Careers Exploration Event;
• Little River Landcare/Local Land Services Soil
Biology Workshop (TPC);
• Careers Information Day (Dubbo College
Other highlights during the reporting
period include:
• Engagement with government agencies
through the consultation and assessment
phase of MOD1.
• ASM’s Brisbane-based project delivery team
hosting a site visit from Transport for NSW to
Toongi siding to examine the complexities of
a rail pathway around the newly constructed
Mindyarra Maintenance Facility in Dubbo.
• Hosting staff from the Biodiversity Credit
Supply Taskforce at Toongi to promote what
has been a successful demonstration of
biodiversity conservation within an active
agricultural enterprise.
• Hosting a team of geophysicists from the
Korean Institute of Geoscience and Mineral
Resources (KIGAM) to carry out drone
surveys across the Toongi ore body.
Senior Campus);
• Publication of two research papers by a
PhD candidate in collaboration with Mining,
Exploration and Geoscience (Geological
Survey of NSW).
• Clontarf Foundation Employment Forum;
• Dubbo Show;
• NSW Minerals Council – Mining Careers
Dinner (Dubbo);
• Dubbo Field Naturalist & Conservation
Society field trip to Toongi;
• Dubbo Project Community Consultative
Committee; and
• NSW Minerals Council ESG Working Group.
Christian Munge from the Toongi Pastoral
Company (right) at the 2023 Dubbo Show.
54 ASM Annual Report 2023 | Sustainability
Students from the MAP program help
with fence building on Toongi farmland.
Macquarie Anglican
Grammar School partnership
for MAP Program
ASM and its subsidiary Toongi Pastoral
Company (TPC) partnered with Macquarie
Anglican Grammar School for its 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.
The first group of students started the program
in July 2022.
“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
Participation & Memberships
In November 2022, ASM became a participant
of the United Nations Global Compact (UNGC)
in support of the Ten Principles on human
rights, labour, environment and anti-
corruption. ASM commits to making the UNGC
and principles part of the strategy, culture
and day-to-day operations of the Company,
and to engage in collaborative projects that
advance the broader development goals of the
United Nations, particularly the Sustainable
Development Goals. ASM will provide an
annual submission of a Communication on
Progress (CoP) that describes the Company’s
efforts to implement the Ten Principles.
In addition, ASM is proud to be a member of the
Diversity Council of Australia: an independent
not-for-profit peak body leading diversity and
inclusion in the workplace. The membership
and network with the UNGC and the Diversity
Council of Australia allows ASM to assess and
benchmark the impact of its business practices,
fostering continuous improvement and
exemplifying its commitment to be accountable
to its ESG commitments.
Sustainability | ASM Annual Report 2023 55
Governance
Governance
ASM’s actions are governed by an experienced
Board committed to administering our policies
and procedures with openness and integrity.
This year, ASM continued to strengthen
its governance framework, focusing 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.
To demonstrate commitment to responsible
mining, ASM’s long-term intention is to comply
with the Initiative for Responsible Mining
Assurance (IRMA)’s standard when the Dubbo
Project is fully established and operating.
Over the next five to seven years, the nature
of ASM’s activities presents an opportunity to
work towards readiness for IRMA by 2030. As an
interim step, ASM aims to integrate the Towards
Sustainable Mining (TSM) certification and
assurance scheme by 2025.
Since 2020, ASM has been providing
sustainability content within the Annual
Reports. In addition, ASM has reported the
information cited in the Global Reporting
Initiative (GRI) content index with reference to
the GRI Standards since 2022. The GRI Index is
available on ASM’s website.
ASM is also rated by external ESG Risk Rating
agencies such as Sustainalytics, which has
provided public ratings on its website. In Q1
2023, ASM’s inaugural public assessment
was completed. The Company was assessed
as having high exposure to ESG issues while
having strong management of ESG material risk,
contributing to an overall ESG risk rating of high
risk (32.6) and placing ASM in the top quartile of
Diversified Metals companies assessed.
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
56 ASM Annual Report 2023 | Governance
Financial
Report
Overview | ASM Annual Report 2023 57
Australian Strategic Materials Limited
Corporate directory
30 June 2023
Directors
Ian Gandel
Rowena Smith
Gavin Smith
Kerry Gleeson
Nic Earner
David Woodall
Joint company secretaries
Non-Executive Chair
Managing Director – appointed 6 March 2023
Non-Executive Director
Non-Executive Director
Non-Executive Director
Managing Director – resigned 15 July 2022
Dennis Wilkins
Annaliese Eames – appointed 30 January 2023
Julie Jones – resigned 2 February 2023
Principal registered office in
Australia
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 Limited 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
Front cover image: neodymium praseodymium (NdPr) metal produced at ASM’s Korean Metals Plant in FY23.
1
58 ASM Annual Report 2023 | Financial Report
Australian Strategic Materials Limited
Directors' report
30 June 2023
The Board of Directors (the “Board” or the “Directors”) of Australian Strategic Materials Limited (“ASM” or the “Company”)
and its controlled entities (the “Group”) are pleased to present their Directors’ Report together with the consolidated financial
statements of the Group for the year ended 30 June 2023.
Directors
The following persons were Directors of the Company during the whole of the financial year and up to the date of this report,
unless otherwise stated:
I Gandel
R Smith
G Smith
K Gleeson
N Earner
D Woodall
Non-Executive Chair
Managing Director – appointed 6 March 2023
Non-Executive Director
Non-Executive Director
Non-Executive Director
Managing Director – resigned 15 July 2022
Information on Directors and Company Secretaries
The following information is current at the date of this report.
Ian Jeffrey Gandel LLB, BEc, FCPA, FAICD - Non-Executive Chairman
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 several
publicly listed Australian companies and, through his private investment vehicles, now holds and explores tenements in his
own right in Western Australia.
Mr Gandel has been a Non-Executive Director of ASM since 2014 and Non-Executive Chair since 2017, and is a member of
ASM’s Audit Committee, Remuneration Committee and Risk Committee.
Current listed Directorships also include Non-Executive Chair of Alkane Resources Ltd (Director since 2006). Past listed
Directorships (previous 3 years) include Non-Executive Chairman of Alliance Resources Ltd (2003 to 2022).
Rowena Jane Smith B.Com, MAICD – Managing Director and Chief Executive Officer
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 has been Managing Director of ASM since March 2023, and is a member of ASM’s Audit Committee and Risk
Committee. Ms Smith was appointed as Chief Executive Officer in July 2022, and prior to her appointment, Ms Smith joined
ASM as the Chief Operating Officer in July 2021.
Nicholas Paul Earner BEng (Hons) - Non-Executive Director
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 was
employed by Straits Resources Ltd for a four-year period, including two years as Executive General Manager – Operations,
supervising up to 1,000 employees in open cut and underground gold mines and an underground copper mine. During the
eleven years before that he had various roles at Rio Tinto Coal Australia’s Mount Thorley Warkworth coal mine and
BHPB/WMC Olympic Dam copper-uranium-gold operations. Mr Earner’s eight years at Olympic Dam included roles managing
the Concentrator and Hydromet functions which included substantial milling, leaching and solvent extraction circuits. His
other positions included Production Superintendent – Smelting, and Senior Engineer – Process Control, Instrumentation and
Communications.
2
Financial Report | ASM Annual Report 2023 59
Australian Strategic Materials Limited
Directors' report
30 June 2023
Mr Earner has been a Non-Executive Director of ASM since 2017 and is a member of ASM’s Remuneration Committee and
Nomination Committee.
Current listed Directorships also include Managing Director of Alkane Resources Ltd (since 2017). Past listed Directorships
(previous 3 years) include Non-Executive Director of Genesis Minerals Ltd (2019 to 2021).
Gavin Murray Smith B.Com, MBA, MAICD - Non-Executive Director
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 subsidiaries. Mr Smith is member of the
industry advisory boards of the CSIRO and the Victorian Skills Authority.
Mr Smith has been a Non-Executive Director of ASM since 2017 and is Chair of ASM’s Remuneration Committee and Audit
Committee, in addition to being a member of ASM’s Risk Committee and Nomination Committee.
Current listed Directorships also include Non-Executive Director of Alkane Resources Ltd (since 2017).
Kerry Jo-Anne Gleeson LLB (Hons), FAICD - Non-Executive Director
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).
Ms Gleeson has been a Non-Executive Director of ASM since 2022 and is Chair of ASM’s Risk Committee and Nomination
Committee, in addition to being a member of ASM’s Audit Committee and Remuneration Committee.
Current listed Directorships include Non-Executive Director of St Barbara Ltd (since 2015), Chair of St Barbara Ltd (since 2023)
and Non-Executive Director of Chrysos Corporation Ltd (since 2021). Past listed Directorships (previous 3 years) include Non-
Executive Director of New Century Resources Ltd (2020 to 2023).
David Graham Woodall B.Eng, MSc (Mineral Economics), AICD – Managing Director
Mr Woodall is a mining engineer with over 30 years’ experience in senior executive roles in operations, project development
and evaluations in the mineral resource industry including gold, copper, iron ore and nickel. He has held senior positions in
Australia, Fiji, Central Asis, Indonesia, China, PNG and North America.
Mr Woodall resigned in July 2022.
Dennis Wilkins B.Bus, ACIS, AICD - Joint Company Secretary
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 has served as a Company Secretary of ASM since 2018. Current listed Directorships include Non-Executive Director
of Key Petroleum Limited (since 2007).
3
60 ASM Annual Report 2023 | Financial Report
Australian Strategic Materials Limited
Directors' report
30 June 2023
Annaliese Eames LLB (Law) - Joint Company Secretary and General Counsel
Ms Eames has more than 15 years of legal, commercial, strategic, and corporate governance experience. Her depth of
knowledge covers large scale project contracting, corporate, finance and intellectual property law. Before joining ASM,
Annaliese was Managing Counsel with BHP, and prior to this held a variety of roles with a range of companies in the mining
industry.
Ms Eames has served as Joint Company Secretary since January 2023.
Julie Jones LLB (Law) - Joint Company Secretary and General Counsel
Ms Jones has more than 18 years of legal, commercial, strategic and corporate governance experience, underpinned by a
strong background in mining and manufacturing.
Ms Jones resigned in February 2023.
Principal activities
During the year the principal and continuing activities of the Group consisted of:
• Refining and manufacture of neodymium metal and alloy products including equipment commissioning and further
product development at our Korean Metals Plant (KMP) located in Ochang, South Korea.
The exploration and evaluation of the Dubbo Project located in Dubbo, New South Wales, Australia.
Funding activities including a successful capital raise in November 2022.
•
•
For further detail, please refer to our Operating and Financial Review on pages 4 to 7 of this report.
Dividends
There were no dividends paid, recommended nor declared during the current or previous financial year.
OPERATING AND FINANCIAL REVIEW
Review of Operations
Dubbo Project
ASM intends to develop the Dubbo Project to produce oxides and mixed chlorides of rare earths, zirconium, niobium and
hafnium, which can either be metallised at the KMP, or distributed to other global manufacturing customers.
Dubbo Project evaluation activities have continued to progress well during the year, focusing on technical flowsheet
enhancements, engineering design, approvals and early establishment activities which are important milestones building
towards ASM’s final investment decision (FID) targeted by December 2024.
The Dubbo Project was awarded three government grants during the year, providing support to finalise our heavy rare earth
extraction process flowsheet, early road establishment activities and non-process infrastructure design including residue
storage, water management, green house gas emission reduction studies and site establishment planning. This included
technical process flowsheet work with the Australian Nuclear Science and Technology Organisation (ANSTO) on our heavy
rare earth terbium (Tb) and dysprosium (Dy) extraction with preliminary Dy results achieving 99.95% quality.
ASM’s team also negotiated a variation to the Dubbo Project Engineering, Procurement and Construction Definition (EPCD)
contract with Hyundai Engineering Co., Ltd. (HEC). This allowed Stage 1 contracted works commenced in January 2023.
Pleasingly during March 2023, ASM also received NSW government approval for the Dubbo Project SSD Modification Report 1
(MOD1), which determined several improvements to the existing approved plan. This included improvements in recycling of
water and reagents, halving water consumption at the project, inclusion of rail to minimise truck movement, on site chlor-
alkali plant to reduce the cost of reagents and their handling and transportation and increased plant employment
4
Financial Report | ASM Annual Report 2023 61
Australian Strategic Materials Limited
Directors' report
30 June 2023
opportunities to approximately 270. Throughout the MOD1 approvals process, ASM's Dubbo Project team completed
numerous environmental studies, including noise, air quality and emissions.
Key milestones during the year included:
June 2022
September 2022
December 2022
December 2022
January 2023
March 2023
May 2023
Award of EPCD contract to HEC.
Signed Memorandum of Understanding (MoU) with Korean Development Bank (KDB) to establish rare
earths supply chain.
Awarded $500,000 under Stream 1 of the NSW Government’s Critical Minerals and High-Tech Metals
Activation Fund (CMAF) to support finalising our heavy rare earth process flowsheet.
Awarded $10,000,000 under Stream 2 of NSW Government’s CMAF for early road establishment
activities.
Commenced HEC EPCD stage 1.
MOD1 received NSW government approval.
Awarded $6,5000,000 under Tranche 2 of the Australian Government’s Critical Minerals Development
program to support non-process infrastructure work.
Dubbo Project strategic milestones for the next financial year include continued evaluation and design activities, securing
bankable offtakes, progressing equity from strategic partners (including governments), ongoing early establishment activities
and commencement of Export Credit Agency (ECA) covered debt process with Australia and other relevant jurisdictions.
Korean Metals Plant
ASM’s Korean Metals Plant (KMP) is strategically located in Korea to service the rising global demand for permanent magnets
in electric vehicles and wind turbines.
In Korea, ASM’s primary focus during the year was the development and commercial production capacity optimisation of
neodymium praseodymium (NdPr) metal, neodymium magnet (NdFeB) alloy and copper titanium (CuTi) alloy. The plant
commenced first sales of NdPr metal in September 2022 to Korean customer NS World, secured its first NdFeB alloy sales
contract in May 2023 to US customer Noveon Magnetics Inc and commissioned its NdFeB alloy strip caster. During June 2023,
the KMP received ISO 45001 (OHS Management) accreditation, adding to existing accreditation for ISO 9001 (Quality) and
ISO 14001 (Environment) demonstrating our ongoing commitment to safety and quality in our operations.
The year ended 30 June 2023 was the KMP’s first year of production with the plant producing 47 tonnes of NdPr metal
(30 June 2022: nil) of which 10 tonnes were sold to foundation customer NS World. NdFeB alloy and Titanium alloy production
during the year was solely related to testing, commissioning and delivery of customer sample requirements.
Key milestones during the year included:
July 2022
September 2022
September 2022
December 2022
December 2022
December 2022
May 2023
May 2023
Commenced NdPr metal production and ramp-up.
Signed first NdPr metal sales agreement for 10 tonnes and commenced delivery.
Successfully produced 466 kilograms of copper titanium (CuTi) ingot using the LK process. With process
development continuing.
Signed a non-binding business agreement with Chungcheongbuk Province in Korea and Vietnam Rare
Earth Company (VTRE) to co-operate to build a global rare earths supply chain.
Distributed samples of NdFeB strip alloy to a US magnet maker for inspection.
Signed Memorandum of Understanding (MoU) with Japanese trading house Marubeni Corporation to
explore mutually beneficial opportunities, including Japanese distribution of ASM products.
Signed binding agreement with VTRE for metal plant feedstock supply.
Signed NdFeB alloy sales agreement with US-based rare earth magnet manufacturer Noveon
Magnetics Inc.
KMP strategic milestones next financial year include expanding NdPr metal and NdFeB alloy customer base, continuing
technical validation of the NdFeB strip alloy to customer requirements, first delivery of NdFeB alloy and ramp-up of NdFeB
alloy towards name plate production of 600 tonnes per annum (tpa), aligned to sales. As further sales are concluded and
delivery schedules determined, ASM will consider when Phase 2 expansion to 3,600 tpa will occur to align with customer
demand.
5
62 ASM Annual Report 2023 | Financial Report
Australian Strategic Materials Limited
Directors' report
30 June 2023
Review of Financial Position
During the year ended 30 June 2023, the Group’s overall loss increased by 8%. This increase resulted from the continuation
of business development activities focusing on evaluation of the Dubbo Project, commercialisation of the Korean Metals
Plant and funding activities. The overall loss includes a $7,490,000 write down of Korean raw materials to net realisable value
which was partially offset by first NdPr metals sales and sales of surplus inventory in Korea.
Sales revenue
Cost of sales
Gross Profit
Net loss before tax
Net loss after tax
30 June 2023
$’000
4,441
(4,268)
173
(28,701)
(26,303)
30 June 2022
$’000
1,870
-
1,870
(28,224)
(24,257)
Movement
$’000
2,571
(4,268)
(1,697)
(477)
(2,046)
%
137
(100)
(91)
(2)
(8)
The Group's net assets increased by 8%, principally due to ASM’s November 2022 capital raising and ongoing investment in
Korean commissioning and ramp-up, along with Dubbo Project technical flowsheet enhancements, engineering design and
early establishment activities.
Cash
Net Assets
Issued Capital
30 June 2023
$’000
56,655
215,962
268,316
30 June 2022
$’000
60,220
199,697
228,425
Movement
$’000
(3,565)
16,265
39,891
%
(6)
8
17
The Group’s 17% movement in issued share capital for the year included ASM’s November 2022 capital raising and vesting
of performance rights (refer note 18 of the financial statements).
Cash and Cashflows
Net operating cash outflows decreased by 9%, principally due to receipts from first sales of NdPr metal sales and bank interest
offsetting raw materials purchased to support the KMP ramp-up activities. Net investing cash outflows decreased by 76%
following construction of key Korean infrastructure in 2021. Financing cash inflows were on par with prior year due to ASM’s
November 2022 capital raising, which strengthened the balance sheet to support ongoing KMP and Dubbo Project
commercialisation, development and evaluation activities.
Net operating cash outflows
Net investing cash outflows
Net financing cash inflows
Net cash flows
Closing cash
30 June 2023
$’000
(34,305)
(7,977)
39,061
(3,221)
56,655
30 June 2022
$’000
(37,594)
(33,532)
38,036
(33,090)
60,220
Movement
$’000
3,289
25,555
1,025
29,869
(3,565)
%
(9)
(76)
3
(90)
(6)
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, production, evaluation and development commitments
over the period.
As a result of the above, there is a material uncertainty that may cast significant doubt on the Group's ability to continue as
a going concern and therefore, the Group may be unable to realise its assets and discharge its liabilities in the normal course
of business.
6
Financial Report | ASM Annual Report 2023 63
Australian Strategic Materials Limited
Directors' report
30 June 2023
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.
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 financial report for the year ended 30 June 2023 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 of the financial statements, together with the auditor’s report.
Business strategy
Our primary objective is to deliver value to shareholders and the communities in which we operate through the development
and commercialisation of our rare earths and critical minerals, mine to metals business strategy, which we will achieve by:
•
•
Leveraging our core competency in asset management and development to drive value;
Securing strategic partnerships and funding to develop our Dubbo Project and expand our metals plant value
chain;
• Building a strong balance sheet within a disciplined cost and capital allocation risk to return framework; and
•
Leveraging our customer and community value proposition to deliver products that exceed expectations and
support the evolution of the global renewable energy industry, nurturing a more sustainable way to live.
Our mine to metals business strategy plans to integrate our Dubbo Project rare earths and critical minerals with downstream
processing into high-value metals and alloys via the KMP or parties in the critical minerals value chain.
Our priorities include offtakes and expanding our customer base for the KMP, continuing the evaluation and design of our
Dubbo Project, and progressing our strategic funding opportunities to support our development whilst managing our strategic
business risks and opportunities outlined on pages 8 to 16 of this report.
Our strategy clearly articulates our priorities for the Group. Importantly, underpinning this is the awareness that decisions
made to improve short-term performance also consider the long-term sustainability of our business and the communities in
which we operate.
Project Finance, Offtakes and Marketing
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 and secure bankable offtakes.
During the year, ASM broadened its potential offtake and strategic partner discussions to include new parties and
jurisdictions. These parties included global industrial conglomerates, product end-users and financial investors across the
USA, European Union (EU), Japan and Korea. ASM also continued discussions with potential debt providers to explore project
finance options supported by our debt financial adviser Australian and New Zealand Banking Group Limited (ANZ). These
parties included Australian and other government funding agencies along with global project finance banks including existing
conditional support from Export Finance Australia (EFA) to secure $200 million subject to satisfying conditions precedent as
announced in June 2021.
Furthermore, ASM continued to advance broader funding strategy activities via a successful capital raising along with grant
applications. Importantly, management remain strategically focused on engagement with a range of parties that are aligned
with our offtake and investment strategies. This was underpinned by marketing activities which included the distribution of
neodymium praseodymium (NdPr) metal, neodymium iron boron (NdFeB) alloy product samples, zirconia and copper
titanium samples to prospective Korean, Japanese, EU and US customers. These activities are planned to continue into 2024.
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GOVERNANCE AND RISK
The Group takes a pragmatic approach to risk management. The Directors provide oversight for risks and opportunities on a
regular basis, ensuring that the Group’s objectives and activities are aligned with our approach on how we manage these
exposures.
ASM has a Risk Management Policy in place that guides the management of key business risks. In October 2022, the Directors
approved a detailed System of Risk Management design and approach, RMS. The RMS framework sets the appropriate
governance and provides a methodology for regular routines and tools to enable enterprise-wide management of threats
and opportunities relevant to ASM’s development, operations and strategic activities. The approach includes an
implementation of an integrated technology platform to administer risks and event data. The platform will enable improved
risk data transparency and reporting to management and the Board, for oversight and direction, as well as supporting an
annual review of ASM’s risk appetite.
The Group believes it is crucial for Directors to be part of this process and has an established Audit Committee and a Risk
Management Committee with oversight of governance and risk activities.
Risks and Uncertainties
Our strategic business risks are risk exposures and uncertainties that could have a material effect on ASM’s financial and
operating prospects and our ability to achieve our strategic objectives as described in this report. These risks and
uncertainties arise from a range of factors, including the Company’s international operations, the current status of the Dubbo
Project, the nature of the rare earths and critical minerals industry and changing economic factors. These risks have the
potential to impact our entire organisation or a substantial portion of it, resulting in notable consequences, which can be
either positive or negative – and subsequently trigger changes to our strategy.
These risks are overseen by the Board on recommendations from the Risk Committee, Audit Committee and the executive
team. ASM responds to these risks by implementing strategies which are regularly reviewed by management, to ensure we
remain within the Board approved risk appetite.
STRATEGIC BUSINESS RISKS
Keeping our people and communities safe and well
Opportunity
Keeping our people and community safe and well underpins
the culture we aspire to and sets our expectations of each
other. Caring for our workforce and always considering the
impact our activities can have on the environments we
operate in, positions us well for local communities’ support,
as well as potential customers and investors.
Threat
The impact of not having a safe working environment and best
practices, can be devastating for our employees, communities,
and retention of personnel. It can alter lives and impact
shareholder returns, business continuity, financial
performance, growth and ultimately ASM’s license to operate.
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Our Response
- We proactively engage with our people and community
Our Response
- We have a clear focus on health, safety and wellbeing in
to understand concerns and nurture valued
relationships.
everything we do.
- We have robust Emergency Response Plans in place at all
- We monitor developments in practices and
sites.
technologies to ensure we proactively implement best
practices to keep our people and communities safe and
well. We have a documented and tested Corporate
Emergency Management Plan that provides our
support to Crisis Management involving local
communities in Korea and Dubbo.
- We have assistance programs for our employees in case
of disasters and hardship.
- Operating with care and compassion is one of our core
values.
Global economic uncertainty and liquidity
Opportunity
By investing selectively in our existing operations and
growth options, external opportunities, or by making
returns to shareholders, we aim to maximise total
shareholder returns over time.
- We have a system of risk management program that
guides us on how to effectively manage potential health
and safety exposures.
- We actively and regularly assess our operational risks and
controls at each site, integrating risk management
routines and conversations in day to day activities.
- We have a suite of comprehensive HSS policies, standards
and systems designed to prevent potential fatality and
injury threats; or help manage actual events if they occur.
- We engage, develop, and train our people so that our
work is well designed, monitored and executed.
- We investigate actual and potential significant events and
share our learnings across the organisation, so we all learn
from controls that fail.
- We perform regular audits to check how well designed
our controls are, and whether they operate effectively.
- We quickly adopt appropriate best practices and
technologies in safety and environmental protection.
Threat
Any deterioration in economic conditions including any
increase in inflation and interest rates or decrease in demand
may have an adverse impact on ASM’s financial performance
or growth. It can also have consequences on ASM’s ability to
obtain project financing funding in timely manner or on terms
acceptable to it.
Our Response
- We monitor market opportunities to diversify
Our Response
- We have various commercial strategies, including
customers and supply chains whilst considering
opportunities and partnerships to optimise our
investment portfolio.
contracts with mechanisms that provide protection in the
event of price fluctuations (e.g., fixed prices, defined price
reviews, caps and floors on pricing) and ongoing
monitoring of market conditions.
- We adjust our capital allocation plans according to market
conditions whilst maintaining minimum liquidity buffer.
- We mostly sell our products with reference to floating,
market-based prices, which are broadly correlated with
floating global currency markets and the input costs we
are exposed to but that also include other contractual
mechanisms to ensure protection in the event of price
fluctuations or significant market movements.
- We carry out reviews of commodity prices and exchange
rates, which we use to inform our operational plans.
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Maintaining competitive advantage through business innovation and pricing mechanisms
Opportunity
To stay competitive, we position our organisation to
effectively identify, develop and adopt sustainable business
models for pricing across our rare earth and critical mineral
portfolio.
Threat
Critical minerals production and derived demand and pricing is
nascent and rapidly evolving. The pricing for the critical
minerals will depend on the availability of markets offering
acceptable prices. Other factors such as government
intervention in markets, stockpiling, new trade policies,
barriers and sanctions can also significantly impact pricing.
Subsequent price volatility could adversely impact on financial
performance and growth if ASM is unable to adapt.
To secure funding to develop the Dubbo Project ASM will need
to enter into contracts for the sale of the critical minerals on
terms that are bankable. There is no guarantee that contracts
will be secured on such favourable terms or there may be a
delay in obtaining such contracts.
Our Response
- We proactively engage with existing and prospective
customers and suppliers to understand their product
requirements and objectives.
Our Response
- We have a dedicated marketing function engaging with
prospective customers whilst monitoring and potentially
developing market pricing innovations.
- We monitor broader market developments for
- We continue to monitor market commodity volumes for
emerging sale or supply opportunities.
both sales and supply opportunities.
- We actively engage with price reporting agencies
(PRAs) and other industry stakeholders to continually
assess our pricing mechanisms to ensure alignment
with market conditions and actively seek to develop
improved market-based mechanisms.
- We have a clearly defined approach to pricing, innovation,
and improvement which includes industry engagement on
enhancing pricing mechanisms.
- We analyse and monitor market trend and customer
-
relationships.
At KMP, we are progressing development of new in-house
technologies.
Capital and funding
Opportunity
By investing selectively in our existing operations and
growth options, external opportunities, or by making
returns to shareholders, we aim to maximise total
shareholder returns over time.
Threat
Our projects require substantial capital investment going
forward, particularly the Dubbo Project, which may be
challenging for traditional funding. Offtake agreements if
secured on economic terms may assist in obtaining funding on
acceptable terms.
Nonetheless the quantum of export credit finance, commercial
debt and/or equity funding available to us may not be
sufficient; not available in a timely manner; or on acceptable
terms to execute our strategy and therefore impacting on
ASM’s financial performance and growth.
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Our Response
- We continue to focus on capital options by considering
a diverse mix of equity and debt including available
government support mechanisms across all
jurisdictions.
Our Response
- We target a project financing funding mix of equity and
debt, supported by export credit finance and secure
bankable offtakes.
- We seek strategic investors and relationships, for example
offtakes, such that financing is de-risked for investors and
debt providers.
- We create strong relationships with our brokers,
financiers and investors.
- We provide adequate resourcing in finance and marketing
functions to monitor the finances and performance of the
business.
- We can sell down interests in Dubbo or KMP to release
equity.
Building and sustaining supply chains for critical goods and services
Opportunity
Optimal and sustainable management of supply chain risk
positions our business to operate safely and reliably, at the
lowest possible cost and in a manner that meets or exceeds
the expectations of our stakeholders.
It also provides us with the ability to influence how others in
our industry approach sustainable sourcing and to position
us to benefit as trade flows respond to rising protectionism,
social consciousness, and general trends to de-risk value
chains.
Of particular note, the supply chain for rare earth oxides
(REOs) is developing which provides us with a genuine
opportunity to establish ourselves as a credible non-Chinese
supplier of both REOs and metal/alloy material.
Our Response
- We build strong strategic partnerships with key
suppliers on a long-term, mutually beneficial basis.
This involves working collaboratively (and
contractually) to ensure risks are appropriately
shared and mutual support is provided as we work
to establish robust and sustainable supply chains.
- We have local procurement initiatives designed to
increase opportunities for local suppliers including
payment terms that support local and small business.
Threat
We are dependent on contractors, suppliers and key personnel
for vital goods and services to our operations, including raw
materials, services and equipment. Compounding this threat is
reality that the supply chain for many of our key raw materials
(particularly REOs) is still in development stage ex-China. Any
supply or service disruption may have an adverse effect on
financial performance, growth and return to shareholders.
Our Response
- We have a system of procurement management and
approval authority in place that guides us on how to
effectively select and manage our goods and services
including multi-source supply where required; optimising
inventory levels; flexing commercial terms and
maintaining up-to-date business continuity plans.
- We understand, assess and continually monitor the risks
in our supply chains, including the supply of critical goods
and services, potential shortages, critical suppliers, vendor
liquidity, logistics, climate change and decarbonisation,
and modern slavery.
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Consistent operational performance
Opportunity
- We look to continuously improve our operations and
product range to deliver stable and consistent
performance meeting the requirements of our
customers.
- We invest in developing processes to sustain and
improve our production performance to deliver a
broader range of products for current and future
customers.
Our Response
- We actively and regularly assess our operational risks
and controls at each site, integrating risk management
routines and conversations in day to day activities.
- We continuously assess and enhance the efficiency of
our operations by integrating our operational
procedures, which encompass operational planning,
work design and standards, as well as process control
enhancement.
- We build strong relationships with our customers to
ensure that we understand their requirements and work
to meet those.
Delivering on contractual relationships
Opportunity
Realising our strategic objectives and financial prospects will
be dependent on contracts with a variety of parties in
differing jurisdictions. We manage those contracts to build
positive relationships, deliver in line with our Purpose and
meet our strategic commitments.
Threat
-
-
-
-
ASM has recently commissioned the Korean Metals Plant
which is currently undergoing ramp up and technical
product validation with initial customers.
Consistent operational performance may be affected by
supply chain constraints, as well as shifts in regulatory
environment.
ASM may encounter difficulties in meeting and
consistently fulfilling customer requirements which will
impact on the ramp up schedule and cash flow.
If ASM cannot reliably and securely meet profitability
goals, it may have an adverse impact on the capacity to
accomplish the strategic goals, disrupt the supply chain
and harm shareholder returns.
Our Response
- We work collaboratively with customers to understand
their technical specifications.
- We operate in line with ISO certified requirements in
Quality, Environment, Occupational Health, Safety and
Risk Management.
- We carry out regular quality assurance processes over
our operation and production.
Threat
-
-
There is a possibility that ASM’s contracts are not
honoured or not extended, or that memoranda of
understanding with parties do not result in binding
contracts.
ASM’s contracts are exposed to the possibility of
disruptions caused by a range of factors, some of which
may be outside of either our or our counterparties’
control. Disruptions to contractual performance could
potentially have a significant adverse impact on the
business, reputation, financial performance, and overall
financial health.
- Many of ASM’s contracts are or will be for longer terms
and in a variety of jurisdictions. ASM may encounter
difficulties managing issues that emerge over that term.
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Our Response
- We seek to enter into contracts with parties and in
jurisdictions that are aligned with our strategic
objectives, purpose and values.
Our Response
- We obtain formal advice on our contractual commitments
and the jurisdictional requirements that may apply to
them.
- We actively build relationships with our counterparties
to ensure we understand the issues faced by them and
to ensure successful delivery of contractual obligations.
Maintaining our license to operate
Opportunity
Proactive, collaborative and transparent engagement with
our stakeholders builds relationships based on trust and
shared understanding. Our stakeholders include
communities, traditional owners and governments we
operate in. Our ongoing license to operate is built on our
contribution to our stakeholders and broader society.
Our Response
- Our purpose and strategy expressly balance economic
outcomes with social and environmental outcomes,
now and into the future. In the decisions we take, we
look to minimise impact, respect human rights, and
create enduring social, environmental, and economic
value for all our stakeholders.
- We are working with industry bodies to obtain
responsible mining certification and align our
environmental, social and governance (ESG) reporting
and monitoring to industry standards.
- We apply our risk management practices to identify
potential issues that may impact on contractual
performance and introduce measure to address or
minimise the impact.
- We establish open and transparent communication with
our contractual counterparties to resolve issues amicably
before escalation.
- We continuously monitor and evaluate the performance
of the parties throughout the contract term and address
any deviations from the agreed upon obligations
promptly.
Threat
Failure to maintain our reputation with some or all
stakeholders and communities, as well as appropriately
consider our impacts on environment and compliance with
regulation may have a negative effect on financial
performance and growth.
ASM relies on Government and government agencies to grant
appropriate permits and approvals to allow the development
and the ongoing operation of the Dubbo Project. If permits,
licences or approvals are revoked, not granted, or are delayed,
or the terms are onerous, this may delay or hinder the
development of the Dubbo project, increase costs and impact
the supply chain.
Our Response
- We undertake formal risk analysis on all risks that can
impact our license to operate.
- We use Sustainalytics ratings to benchmark our ESG
progress and identify areas we can improve.
- We have fit for purpose ESG commitments and strategies.
- We work to build strong, positive, and meaningful
relationships with local communities and with the
traditional owners.
- We monitor and audit our compliance with relevant
regulatory and legislative requirements.
- We proactively monitor legislative changes to ensure we
continue to comply.
- We have appropriately resourced our teams to respond to
ongoing commitments, changing environments and
external pressures.
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Political risks, actions by government and/or authority
Opportunity
Proactive engagement leading to strong relationships with
governments, regulators, industry bodies and authorities
provides a mutual understanding of drivers for decision-
making. This increases clarity around policy and regulatory
environments, enables appropriate and tailored responses
to issues and provides investment certainty.
Threat
Any change in the legislative and administrative regimes,
taxation laws, interest rates and other legal and government
policies may have an adverse effect on the assets, operations
and financial performance.
Our Response
- We monitor global political activity, policy, and
Our Response
- We have specialised knowledge through in-house
legislative and regulatory changes both globally and in
the jurisdictions in which we operate. We engage with
relevant authorities to understand and mitigate
potential impacts on our business performance.
expertise or the use of external experts, including tax,
legal, sustainability, regulatory and external affairs advice
where appropriate.
- We use a system of risk management with respect to
- We partner with selected industry associations to
provide insights and views to help shape regulations
impacting the industry in which we operate.
regulatory compliance to anticipate and analyse risks, to
design and implement plans that aims to ensure ongoing
compliance with changing legislative and regulatory
frameworks.
Technology
Opportunity
To stay competitive, we position our organisation to
effectively identify, develop and adopt sustainable
improvements for technology and innovation in our
operations and projects.
Threat
Critical minerals technology and consumer trends are evolving
rapidly, which could adversely impact on financial
performance and growth if we are unable to adapt.
Our Response
- We proactively engage with existing and prospective
customers to ascertain requirements and objectives.
Our Response
- We focus dedicated investment on research and
development whilst monitoring market innovations.
- We monitor broader market developments for
- We have a clearly defined approach to innovation,
emerging opportunities.
improvement and technology.
- We continually assess our operations for area of
- We proactively engage with government research and
technical improvement via the implementation of new
technology or testing of processes improvements.
- We have highly credentialed dedicated research and
development team, that is focussed on identifying
improvements and innovations to our processes and is
developing our own innovative low carbon technology
for the metallisation process, the LK Process.
- We recognise that the intellectual property we develop
is an important asset and therefore we invest in and
develop processes and procedures designed to
maintain and protect our intellectual property.
development organisations (including Australian Nuclear
Science and Technology Organisation (ANSTO), Korean
Ministry of Trade, Industry and Energy (MOTIE), Korea
Institute of Geoscience and Mineral Resource (KIGIM))
where appropriate.
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Climate Change
Opportunity
Aligning our business strategy, including how we operate
and what we produce, with stakeholder expectations, future
technologies and evolving climate and environmental
policies and regulations, contributes to a resilient and high
performing portfolio, and assists in addressing the physical
risks of climate change.
Threat
Failure to manage environmental risks may impact our ability
to secure development approvals, permits or licences and
increase legal exposures adversely impacting on financial
performance and growth, as well as our ability to operate.
Our Response
- We are transparent in our disclosure of environment
related opportunities and threats in our annual
reporting.
- We focus on our sustainability approach, inclusive of
our environmental requirements, aligned with best
practice goals and standards and work to proactively
identify ways in which we can reduce our carbon
emissions.
- We are working with industry bodies to obtain
Our Response
- We engage with stakeholders to ensure our operations
are well designed, monitored and executed.
- We have a fit for purpose companywide ESG approach,
with established targets and a forward workplan.
- We seek to manage water resources to promote better
water use and effective catchment management.
- We integrate biodiversity land management, carbon
farming and rehabilitation processes into our business
planning to minimise impacts on surrounding ecosystems.
responsible mining certification and align our ESG
reporting to industry standards.
- We are aware of our greenhouse gas emissions and are
actively working on reducing our carbon footprint.
Business resilience (pandemic, natural disasters, strikes/people action)
Opportunity
Achieving stable and predictable performance enhances the
value proposition to our shareholders, other stakeholders,
and the communities in which we operate. The better we
prepare for and learn from events, the better we are placed
to respond and aim to reduce the impact of future events –
strengthening our organisational resilience.
Threat
Failure to manage major events or natural catastrophes could
result in a significant event or other long-term damage that
could harm the company’s access to logistics chains and critical
goods and services, financial performance, and license to
operate.
Our Response
- We have business continuity and disaster response
Our Response
- When facing potential catastrophes, we put safety and
plans in place with trigger action response scenarios.
- We have trained and competent persons and
equipment to respond to emergency incidents,
including large scale community emergencies.
wellbeing at the heart of everything we do.
- We use a system of risk management in design,
construction, and operation phases to anticipate and
analyse risks, to design and implement plans that aim to
prevent or limit business impacts.
- We purchase capped insurance coverage against many,
but not all, potential losses or liabilities arising from major
events or natural catastrophes.
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Optimising our asset mix
Opportunity
Our mine to metals strategy positions us well to be an
alternative integrated producer of critical metals that will
enable the development of clean and advanced
technologies. Development and acquisitions of critical
minerals projects, including non-operating/operating and
non-controlling/controlling interests in these operations and
projects, present us with opportunities to increase our
participation and strengthen the end-to-end supply chain.
Partnering with other critical minerals stakeholders also
creates opportunities for us in early-stage development and
expansion into current and new jurisdictions.
Threat
Rapidly changing global sentiment presents a threat to the
sustainability of our current portfolio mix if we do not act. In
responding to stakeholder expectations, we could make
decisions to dispose of operations, projects, and investments
at less than market value, or miss critical opportunities.
Increasing demand for critical minerals may drive higher
valuations of operations and projects that we want to acquire,
making acquisitions challenging. Geopolitical developments
may limit those jurisdictions in which we can operate or those
counterparties with which we can partner or transact.
Our Response
- We will be flexible on opportunistic acquisitions and
divestments including non-controlling/controlling and
non-operating/operating shareholdings in incorporated
or unincorporated joint ventures across our value
chain.
If a Joint Venture arrangement is pursued, we will seek
to partner with like-minded organisations who see the
strategic long-term value of establishing a robust and
sustainable mine to metals supply chain.
-
Our Response
- We are actively shaping our critical minerals portfolio
cognisant of the emerging global critical mineral value
chain across jurisdictions that impact on our ability to
achieve our goals.
- We understand the importance of economies of scale in
the processing end of our business and will focus on
ensuring our cost structures are globally competitive.
- We will develop world-class capability in all aspects of
rare earth processing from mine through to metals and
alloys.
Access to people and talent
Opportunity
Our position as an emerging global leader in critical rare
earths minerals with a reputation for diversity, innovation,
sustainability and safety enhances our ability to attract and
retain talent.
Threat
Inability to attract the right expertise, as well as engage and
retain key talent may adversely impact reputation, financial
performance, ability to execute our commitments and
strategic growth.
Our global operating model provides greater access to
talent which can be positioned across the company to
better meet business challenges and capture opportunities
to develop our succession planning.
In an emerging skill market for critical minerals specialists and
teamed with growing competition for such specialists there
may be a shortage of appropriately skilled talent to deliver on
our objectives which may impact on our reputation, financial
performance and growth.
Our Response
- We have a leadership and talent management model
Our Response
- We design our reward program to position ourselves
which aligns our personnel to our preferred culture and
behaviours.
- We proactively engage with our people and
stakeholders to build a trusted value proposition to
current and prospective employees.
- We have a strong values model that represents our
culture ambition as well as guiding the talent
recruitment and people decisions.
relative to the market, enabling us to competitively
attract appropriate skills and experience, motivate
engagement and loyalty from employees and improve
business performance.
- We review our reward proposition every year to ensure
we remain competitive.
- We actively manage this retention risk by routinely
reviewing our strategy against capability requirements,
including retention programs.
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Environmental and Social Initiatives
In November 2022, ASM joined the United Nations Global Compact, a voluntary leadership platform for the development,
implementation and disclosure of responsible business practices. As a participant of the United National Global Compact,
ASM is committed to aligning its business with universal principles on human rights, labour, environment, and anti-bribery
and corruption and take actions that advance societal goals.
During December 2022, ASM engaged Morningstar Sustainalytics to undertake a public assessment of the Group’s ESG risk
rating. This assessment measured the Group’s exposure to, and management of, material ESG issues across all global entities
and was made publicly available on Sustainalytics website during January 2023. In June 2023, ASM formally set its ESG
approach, targets and a forward workplan.
Environment Regulation
The Group is bound by the requirements and guidelines of the relevant environmental protection authorities for the
management and rehabilitation of mining tenements owned or previously owned by the Group. Mining tenements are being
maintained and rehabilitated in accordance with these guidelines. The Group is also bound by the requirements of its
operating license in Korea. There have been no known breaches of any of these requirements and guidelines.
We continue to focus on ensuring positive relationships with regulators and local communities, and compliance with
regulatory requirements in all jurisdictions in which we operate.
Corporate
Capital Raising
On 2 November 2022 the Company successfully completed a $30.0 million share placement (before costs) to institutional
investors at $1.73 per share. In December 2022 the Company completed a share purchase plan (SPP) with subscriptions
totalling approximately $11.1 million, ahead of the original $10 million target. Given the strong support shown by
shareholders, ASM used its discretion under the terms of the SPP to accept all shareholder applications.
ASM’s Directors Mr Gandel and Ms Gleeson participated in the Placement subscribing for $4,000,000 and $50,000
respectively. The total of 23,749,165 shares were issued with 15,000,159 shares issued pursuant to the institutional
placement on 8 November 2022 and 8,749,006 shares issued pursuant to the SPP on 5 December 2022.
Appointment of Chief Executive Officer and Managing Director
On 18 July 2022 the Company announced that it had appointed highly experienced mining executive Ms Rowena Smith to
the position of Chief Executive Officer. Subsequently, on 6 March 2023 the Company announced Ms Smith’s appointment as
Managing Director. Ms Smith has previously served the Group as ASM’s Chief Operations Officer and prior to joining ASM
was South32’s Chief Sustainability Officer and Vice President Supply, leading teams across Australia, South Africa,
Mozambique, Columbia and the United States. She has also held leadership roles with Rio Tinto and BHP for Nickel West,
including as Head of Resource Planning, Development and Projects, Manager Strategy and Acquisitions, and General Manager
Kwinana Nickel Refinery.
Appointment of General Counsel and Joint Company Secretary
Ms Annaliese Eames was appointed to the position of General Counsel and Joint Company Secretary on 30 January 2023. Ms
Eames has over 15 years of legal, commercial, strategic and corporate governance experience. Ms Eames brings a depth of
knowledge in large scale project contracting, corporate, finance and intellectual property law. Immediately prior to accepting
the General Counsel role, Ms Eames was Managing Counsel with BHP and prior to this had held a variety of roles with a
diverse range of companies in the mining industry. Ms Eames succeeded Ms Julie Jones, who resigned in November 2022 to
pursue a new opportunity and completed her valued contribution to ASM on 2 February 2023.
Significant changes in the state of affairs
There were no significant changes in the state of affairs of the Group during the financial year.
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Events since the end of the financial year
On 26 July 2023, ASM announced the signing of a three-way non-binding memorandum of understanding (MOU) with
Blackstone Minerals Limited (Blackstone) and rare earth element (REE) refiner Vietnam Rare Earth Company (VTRE). This
MOU provides a framework for the companies to collaborate across several areas including REE mining opportunities,
strengthen capability to secure REE mining concessions, potential for co-investment and securing long-term offtake of REE
oxides.
On 3 August 2023, ASM announced the signing of a long-term metal sales and tolling agreement with USA Rare Earth LLC. The
agreement is binding for a term of five years and provides for the supply of neodymium iron boron (NdFeB) alloy to support
USA Rare Earth’s production ramp-up of high performance rare earth magnets.
On 17 August 2023, ASM announced the award of a consultancy services agreement to Bechtel Australia Pty Ltd for the
provision of engineering services for non-process infrastructure to support advancing the Company’s Dubbo Project.
On 21 August 2023, ASM announced the appointment of Mr Chris Jordaan as Chief Operating Officer effective from
24 August 2023 and the resignation of Mr Jason Clifton Chief Financial Officer effective from 10 November 2023.
No other matter or circumstance has arisen since 30 June 2023 that has significantly affected or may significantly affect the
Group's operations, the results of those operations, or the Group's state of affairs in future financial years.
Likely developments and expected results of operations
The Group intends to continue evaluation activities in relation to the Dubbo Project and progress the commercialisation of
the Company's first metals plant in South Korea, in line with details provided in the Review of Operations.
Refer to the Operations and Financial Review on pages 4 to 7 for further detail on planned developments.
Auditor
PricewaterhouseCoopers continues in office in accordance with section 327 of the Corporations Act 2001.
Meetings of Directors
The number of meetings of the Company's Board of Directors and of each Board committee held during the year ended 30
June 2023, and the number of meetings attended by each Director were:
Full Board
Nomination
Committee
Risk
Committee
Attended
Held
Attended3 Held3 Attended
Held
Audit
Committee
Attended Held
Remuneration
Committee
Attended Held
I Gandel
R Smith1
D Woodall2
G Smith
N Earner
K Gleeson
17
4
-
17
17
17
17
4
-
17
17
17
-
-
-
-
-
-
-
-
-
-
-
-
4
2
-
4
4
4
4
2
-
4
4
4
3
-
-
3
3
3
3
-
-
3
3
3
4
2
-
4
4
4
4
2
-
4
4
4
Held: represents the number of meetings held during the time the Director held office or was a member of the relevant
committee.
1 R Smith was appointed as Managing Director effective 6 March 2023.
2 D Woodall resigned as Managing Director effective 15 July 2022.
3 There were no Nomination Committee meetings held during the year ended 30 June 2023. However, a number of matters within the scope of the Nomination Committee such as review of
skills matrix and executive and board nominations were addressed by the Board during the year.
18
Financial Report | ASM Annual Report 2023 75
Australian Strategic Materials Limited
Directors' report
30 June 2023
REMUNERATION REPORT (AUDITED)
The directors present the Australian Strategic Materials Limited 2023 remuneration report, outlining key aspects of our
remuneration policy, framework and remuneration awarded this year.
The report is structured as follows:
Elements of remuneration
Link between remuneration and performance
a) Key management personnel (KMP) covered in this report
b) Remuneration policy and link to performance
c)
d)
e) Remuneration expenses for executive KMP
f)
g) Non-executive director arrangements
h) Other statutory information
Contractual arrangements with executive KMP
a) Key management personnel covered in this report
Details of KMP of the Company and their movements during the year ended 30 June 2023 are set out below:
Name
Non-Executive Directors
I Gandel
G Smith
N Earner
K Gleeson
Executive Directors and other KMP
R Smith
J Clifton
D Woodall
F Moon
Position
Non-executive Chairman
Non-executive Director
Non-executive Director
Non-executive Director
Term as KMP
Full financial year
Full financial year
Full financial year
Full financial year
Managing Director and Chief Executive Officer
Chief Financial Officer
Managing Director
President Asia
Full financial year
Full financial year
Resigned 15 July 2022
Resigned 28 February 2023
On 21 August 2023, ASM announced the appointment of Mr Chris Jordaan as Chief Operating Officer effective from 24 August
2023 and the resignation of Mr Jason Clifton Chief Financial Officer effective from 10 November 2023.There have been no
other changes to Directors or KMP since the end of the reporting period.
b) Remuneration policy and link to performance
Our remuneration committee is made up of non-executive directors. The committee reviews and determines our
remuneration policy and structure annually to ensure it remains aligned to the business needs and meets our remuneration
principles. From time to time, the committee also engages external consultants to assist with this review, see page 26 for
further information. In particular, the Board aims to ensure that remuneration practices are:
Competitive and reasonable, enabling the Company to attract and retain key talent;
Align to the Company’s strategic and business objectives and the creations of shareholder value;
Transparent and easily understood; and
Acceptable to shareholders.
•
•
•
•
The remuneration committee at the date of this report included G Smith (Chair), I Gandel, K Gleeson, and N Earner with
R Smith as an invitee. The committee operates in accordance with our charter which is available on our website: asm-au.com
Element
Purpose
Performance metrics
Potential value
Total Fixed
remuneration
(TFR)
Short term
incentive (STI)
Long term
incentive (LTI)
Provide competitive market salary including
superannuation and non-monetary benefits
Nil
Positioned at
market rate
Reward for in-year performance, retention
via STI Performance Rights which vest subject
to performance conditions being met per the
annual performance scorecard
Alignment to long-term shareholder value
Aligned with weighted
performance scorecard
set for the financial year
CEO: 30% of TFR
Execs: 30% of
TFR
3-year relative total
shareholder return (TSR)
performance
CEO: 80% of TFR
Execs: 30% of
TFR
Changes for
FY2024
No change
No change
No change
19
76 ASM Annual Report 2023 | Financial Report
Australian Strategic Materials Limited
Directors' report
30 June 2023
Balancing shot-term and long-term performance
Balancing short-term and long-term performance annual incentives are set at a maximum of 30% of fixed remuneration, in
order to drive performance without encouraging undue risk-taking. This also encourages talent retention.
Long-term incentives are assessed over a three-year period and are designed to promote long-term stability in shareholder
returns. The target remuneration mix for FY2023 is shown in table below. It reflects the STI opportunity for the current year
that will be available if the performance conditions are satisfied at target, and the value of the LTI performance rights granted
during the year, as determined at the grant date.
Managing Director and CEO
Other KMP
0%
20%
Total remuneration mix for FY2023
81%
76%
40%
Fixed remuneration
3%
16%
3%
21%
STI
LTI
60%
80%
100%
Assessing performance and claw-back of remuneration
The remuneration committee is responsible for assessing performance against KPIs and determining the STI and LTI to be
paid. To assist in this assessment, the committee receives detailed reports on performance from management which are
based on independently verifiably data such as financial measures, market share and data from independently run surveys.
In the event of serious misconduct or a material misstatement in the Company’s financial statements, the remuneration
committee can recommend to the Board that it cancel or defer performance-based remuneration and the Board may also
claw back performance-based remuneration paid in previous financial years.
c)
Elements of remuneration
i) Total Fixed annual remuneration (TFR)
Executives may receive their fixed remuneration as cash, or cash with non-monetary benefits such as health insurance, car
allowances and advisory services. TFR is reviewed annually, or on promotion. It is benchmarked against market data for
comparable roles in companies in a similar industry and with similar market capitalisation. The remuneration committee aims
to position executives at or near the median, with flexibility to take into account capability, experience, value to the
organisation and performance of the individual.
Superannuation was included in TFR in FY2023. Fixed remuneration was increased for 1 executive, with an average increase
of 17%. This was done to align the remuneration with the median level for comparative on promotion to Managing Director
and CEO. No fixed remuneration increase was given to any other executive KMP.
ii) Short term incentives (STI) FY2023
Feature
Maximum
opportunity
Performance
metrics
Description
CEO and other executives: 30% of fixed remuneration.
The STI metrics align with our strategic priorities being market competitiveness, operational excellence,
shareholder value and fostering talented and engaged people.
Metric and Targets Band
Cash management 30 June cash balance
Executed NdFeB alloy sales agreements
Average saleable tonnes per month of alloy and metal by June
Percentage of revenue covered by offtake progress to at least MOU
and due diligence
Notice of proceed issued for Dubbo Project EPCD
100%
>$40m
End September
2023
40 tonnes
40%
End January
2023
Weighting
20%
15%
25%
25%
15%
Delivery of STI
Award issued as vested shares based on weight performance during FY2023.
Board discretion
The Board has discretion to adjust remuneration outcomes up or down to prevent any inappropriate reward
outcomes, including reducing (down to zero, if appropriate) any STI award.
20
Financial Report | ASM Annual Report 2023 77
Australian Strategic Materials Limited
Directors' report
30 June 2023
iii) Long term incentives (LTI)
Executive KMP participate, at the Board’s discretion, in the LTI plan comprising annual grants of performance rights which are
subject to a 3-year relative Total Shareholder Return (TSR) performance condition. Structure of long-term incentive plan is
shown in the table below.
Feature
Maximum
opportunity
Description
CEO: up to 80% of fixed remuneration; other executives: up to 30% of fixed remuneration.
Performance metrics
Vesting of LTI performance rights is linked to the long-term share price in 2025 and weighted based
on share price performance at that time.
Metric - Weighting Band
FY2025 Share Price
0%
$1.73
50%
$3.46
100%
$6.92
This is designed to focus executives on delivering sustainable long-term shareholder returns.
Share price
measurement
Forfeiture and
termination
Volume weighted average share price calculated over 10 trading days immediately following the
release of the 2025 Full Year Statutory Financial Report.
Performance rights will lapse if performance conditions are not met. Performance rights will be
forfeited on cessation of employment unless the Board determines that there is a qualifying reason.
d)
Link between remuneration and performance
FY2023 performance and impact on remuneration
The Group’s performance in FY2023 remained steady despite challenges faced by resource development companies in the
global critical minerals markets. Management continued to progress Korean sales opportunities, commenced Dubbo EPCD
and continued to build our presence in prospective Dubbo offtake markets whilst delivering a cash balance well above target.
However, production and sales were slower than anticipated and whilst prospective offtake discussions progressed no MOU
was executed. For more information on strategic priorities and FY2023 results, see page 7 of the operating and financial
review.
As a result of the continued strategic development, the Board awarded management 35% of their maximum short-term
incentives. Senior management received the benefits after satisfying the required service and performance conditions. These
equity instruments had been granted during FY2023 under the short-term incentive schemes.
Performance against key measures and impact on variable remuneration
Metric
STI
Cash management 30 June cash
balance
Executed NdFeB alloy sales
agreements
Average saleable tonnes per month
of alloy and metal by June
Percentage of revenue covered by
offtake progress to at least MOU
and due diligence
Notice of proceed issued for Dubbo
Project EPCD
100%
Target
Weighting
Performance
Impact on incentive
award
>$40m
20%
35% of maximum STI awarded
Group cash forecast >$40m at
year end
Above target
End
September
2022
15%
Sales agreement executed 16
May 2023
Below target
40 tonnes
25%
Average saleable tonnes <15t
Below target
40%
25%
End
January
2023
15%
Offtake discussions
progressed throughout the
year, and binding MOU
remains a key target
Notice to proceed was issued
on 9 January 2023
commencing Stage 1 of EPCD
Below target
Above target
21
78 ASM Annual Report 2023 | Financial Report
Australian Strategic Materials Limited
Directors' report
30 June 2023
Statutory performance indicators
We aim to align our executive remuneration to our strategic and business objectives and the creation of shareholder wealth.
The table below shows measures of the Group’s financial performance over the last five years as required by the Corporations
Act 2001. However, these are not necessarily consistent with the measures used in determining the variable amounts of
remuneration to be awarded to KMP disclosed in the table above. As a consequence, there may not always be a direct
correlation between the statutory key performance measures and the variable remuneration awarded.
Loss for the year attributable to owners of Australian Strategic
Materials Limited ($’000)
Basic loss per share (cents)
Increase / (decrease) in share price (%) on prior year
1 ASM was first listed on ASX in July 2020 therefore only three years disclosed in the table above.
e) Remuneration expenses for executive KMP
2023
(26,303)
2022
(24,257)
(8)
(68)
(17)
(56)
20211
(809)
(1)
458
The following table shows details of the remuneration expense recognised for the Group’s non-executive directors and
executive key management personnel for the current and previous financial year measured in accordance with the
requirements of the accounting standards.
Cash
salary and
fees
$
Non-
monetary
benefits
$
Annual and
long
service
provision
$
Post-
employment
benefits6
$
Other7
$
Performance
rights
$
Year
G Smith
Name
Non-Executive Directors
I Gandel
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
D Chalmers2
K Gleeson1
N Earner
171,946
172,727
140,899
146,800
100,000
115,909
134,299
42,917
-
75,530
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Executive Directors and other KMP
R Smith3
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
563,540
473,378
474,707
460,347
47,892
576,431
238,220
354,111
1,871,503
2,418,150
91,900
2,303
7,049
3,901
1,487
6,976
48,401
65,485
148,837
78,665
54,325
42,518
18,841
37,798
-
61,995
-
-
73,166
142,311
J Clifton
D Woodall4
F Moon5
Total KMP
remuneration
expensed
Total
$
190,000
190,000
140,899
146,800
110,500
127,500
148,400
47,209
-
83,083
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
191,126
-
63,025
-
254,151
-
174,112
90,928
170,226
125,975
1,065,154
659,597
-
-
1,409,492
876,500
909,173
632,697
696,119
651,591
1,311,982
1,328,569
351,869
422,830
3,858,942
3,630,279
18,054
17,273
-
-
10,500
11,591
14,101
4,292
-
7,553
25,296
23,570
25,296
23,570
6,323
23,570
2,223
3,234
101,793
114,653
1 K Gleeson was appointed as a director effective 1 February 2022.
2 D Chalmers resigned as a director effective 1 March 2022.
3 R Smith was appointed as Chief Executive Officer effective 6 July 2022 and became a Managing Director effective from 6 March 2023.
4 D Woodall resigned as Managing Director effective 15 July 2022.
5 F Moon resigned as President Asia effective 28 February 2023.
6 Post-employment benefits are provided through superannuation contributions and national pension scheme.
7 Other benefits include termination benefits paid to D Woodall and F Moon.
22
Financial Report | ASM Annual Report 2023 79
Australian Strategic Materials Limited
Directors' report
30 June 2023
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Fixed remuneration
Non-Executive Directors
I Gandel
G Smith
N Earner
K Gleeson
D Chalmers
Executive Directors and other KMP
R Smith
J Clifton
D Woodall
F Moon
2023
100%
100%
100%
100%
-
81%
76%
100%
100%
2022
100%
100%
100%
100%
100%
86%
81%
51%
100%
At risk – STI and LTI
2022
2023
-
-
-
-
-
19%
24%
-
-
-
-
-
-
-
14%
19%
49%
-
f)
Contractual arrangements with executive KMP
KMP
R Smith1
Total Fixed
Remuneration
$610,000
J Clifton
$500,000
Position
Managing
Director and
Chief Executive
Officer
Chief Financial
Officer
D
Woodall2
$600,000
Managing
Director
F Moon3
$388,000
President Asia
Notice by
individual /
company
3 months
3 months
3 months
3 months
Date
commenced
and duration
5 July 2021,
ongoing
contract
12 July 2021,
ongoing
contract
10 February
2020, ongoing
contract
1 June 2021,
ongoing
contract
Termination (without
cause)
Additional 3 months
payment;
STI and LTI become
vested and exercisable
Additional 3 months
payment;
STI and LTI become
vested and exercisable
Additional 3 months
payment;
STI and LTI become
vested and exercisable
Additional 3 months
payment;
STI and LTI become
vested and exercisable
Termination
(with cause) or
by individual
Subject to the
Board
Payment up to
the date of
termination
Payment up to
the date of
termination
Payment up to
the date of
termination
1 R Smith was appointed as Chief Executive Officer effective 6 July 2022 and became a Managing Director effective from 6 March 2023.
2.D Woodall resigned as Managing Director effective 15 July 2022.
3 F Moon resigned as President Asia effective 28 February 2023. F Moon's total fixed remuneration is KRW 333,200,000 and converted at the foreign exchange rate on 1 June 2021 ($388,000).
Different contractual terms apply to the following individuals:
•
R Smith’s inception contract included a sign on issue of performance rights, these rights were issued on 5 July 2021 and
included in remuneration disclosure on page 25.
J Clifton’s inception include a sign on issue of options, these options were issued on 5 July 2021 and included in
remuneration disclosure on page 25.
•
g) Non-executive director arrangements
Non-executive directors receive a board fee and fees for chairing or participating on board committees, see table below. They
do not receive performance-based pay or retirement allowances. The fees are inclusive of superannuation. The chairman
does not receive additional fees for participating in or chairing committees.
Fees are reviewed annually by the Board taking into account comparable roles and market data provided by the Board’s
independent remuneration adviser. The current base fees did not change from the previous financial year.
The maximum annual aggregate directors’ fee pool limit is $950,000 and was approved by shareholders at the annual
general meeting on 30 November 2021.
23
80 ASM Annual Report 2023 | Financial Report
Australian Strategic Materials Limited
Directors' report
30 June 2023
Chairman of the Board1
Other Non-Executive Directors
Committee Chair
Committee Member
1 Inclusive of committee work.
Board
$
190,000
103,000
-
-
Audit
Committee
$
Risk
Committee
$
Remuneration
Committee
$
Nominations
Committee
$
-
-
14,400
8,500
-
-
14,400
8,500
-
-
15,000
7,500
-
-
15,000
-
All non-executive directors enter into a service agreement with the Company in the form of a letter of appointment. The
letter summarises the board policies and terms, including remuneration, relevant to the office of director.
h) Other statutory information
i)
Performance based remuneration granted and forfeited during the year
Table below shows for each KMP the value of performance rights that were granted, exercised and forfeited during FY2023.
The number of options and deferred shares and percentages vested/forfeited for each grant are disclosed in section (iii) on
page 25 below.
2023
R Smith
J Clifton
F Moon3
Total
Total STI
Awarded
%
35%2
35%2
-
Total
opportunity
$
71,529
62,064
46,204
179,797
LTI Performance Rights
Forfeited
%
65%2
65%2
100%
Value granted1
$
169,850
55,491
41,312
266,653
Value exercised
$
-
-
-
-
1 The value at grant date calculated in accordance with AASB 2 Share-based Payment of performance rights granted during the year as part of remuneration.
2 STI granted for 2023 were measured based on performance criteria subsequent to the year end with 35% vesting and 65% forfeiture during July 2023.
3 F Moon resigned as President Asia on 28 February 2023. STI and LTI performance rights which were granted during the year has been forfeited on the resignation date.
ii)
Terms and conditions of the share-based payment arrangements
Options of KMP
Grant date
Vesting and
exercise date
Expiry date
Exercise price
16/06/2021
16/06/2021
12/07/2024
12/07/2026
12/07/2024
12/07/2026
$6.36
$6.36
Value per
option at
grant date
$3.90
$3.90
Performance
achieved
% Vested
to be determined
to be determined
n/a
n/a
The number of options over ordinary shares in the Company provided as remuneration to key management personnel is
shown in section (iii) below. The options carry no dividend or voting rights.
The exercise price of options is based on the weighted average price at which the Company’s shares are traded on the
Australian Securities Exchange during the 30 trading days prior to the date of commencement of employment.
Performance Rights of KMP
Rights to deferred shares under the executive STI and LTI scheme are granted during the year. Shares vest proportionally
subject to performance conditions after one year (for STI) or relative to TSR after three years (for LTI) from the grant date. On
vesting, each right is convertible into one ordinary share. The executives do not receive any dividends and are not entitled to
vote in relation to the rights during the vesting period. If an executive ceases employment before the rights vest, the rights
will be forfeited, except in limited circumstances that are approved by the Board on a case-by-case basis.
24
Financial Report | ASM Annual Report 2023 81
Australian Strategic Materials Limited
Directors' report
30 June 2023
The fair value is measured using the Monte Carlo valuation method for LTI and Black-Scholes valuation method for STI at the
grant date of the performance rights. Refer to the disclosure in Note 26 for the key variables used in the valuation for each
performance rights and options granted to key management personnel during the year ended 30 June 2023.
Grant date
19 May 2020
19 May 2020
22 June 2021
22 June 2021
19 December 2022
19 December 2022
Vesting date
13 October 2023
13 October 2023
12 July 2024
12 July 2026
30 June 2023
30 June 2025
Grant date value
$0.59
$0.14
$6.40
$6.40
$1.50
$0.64
iii) Reconciliation of options, performance rights and ordinary shares held by KMP
The table below shows a reconciliation of options held by KMP from the beginning to the end of FY2023. There were no vested
options as at 1 July 2023. All vested options were exercisable.
Balance at the
start of the
year
Vested
Forfeited
Unvested
Granted as
compensation
Number %
Exercised
Number %
Balance at the end of the
year
Other
changes
Vested and
exercisable Unvested
62,6241
62,6241
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
62,624
62,624
2023
Name and
Grant dates
J Clifton
16 June 2021
16 June 2021
1 LTI's options were issued to J Clifton as sign-on incentives for the commencement of his employment. 50% will vest and exercisable after 3 years and 50% will vest and exercisable after 5
years. The options had a service condition only and there were no performance conditions associated with these options.
The table below shows how many performance rights were granted, vested and forfeited during the year.
Balance at
the start of
the year
Number
Granted
during
the year
Number
Year
granted
2021
2022
2023
2022
2023
54,7144
44,420
-
-
-
313,234
41,040
-
-
128,217
Performance rights
Vested
Number
%
Forfeited / Lapsed
%
Number
Balance at
the end of
the year
(unvested)
Number
Maximum
value yet
to vest2
$
-
-
-
-
-
-
-
-
-
-
-
(44,420)3
-
(41,040)3
-
-
100
-
100
-
54,714
-
313,234
350,170
-
241,379
-
128,217
-
117,555
2020
3,000,000
-
1,000,000
33
(2,000,000)
67
2023
-
95,454
-
-
(95,454)
100
-
-
-
-
Name
R Smith
J Clifton
D Woodall1
F Moon
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. Refer to Note 26 for further details.
2 The maximum value of the performance rights yet to vest has been determined as the amount of the grant date fair value of the rights that is yet to be expensed. The minimum value of
performance rights yet to vest is nil, as the shares will be forfeited if the vesting conditions are not met.
3 The Board exercised its discretion to abandon the incentive program and as a result all 85,460 performance rights were cancelled on 8 August 2022.
4 LTI's performance rights were issued to R Smith as sign-on incentives for the commencement of her employment. 50% will vest after 3 years and 50% will vest after 5 years. The
performance rights had a service condition only and there were no performance conditions associated with these rights.
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 exceptional 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.).
25
82 ASM Annual Report 2023 | Financial Report
Australian Strategic Materials Limited
Directors' report
30 June 2023
Use of remuneration consultants
The Company did not engage any external remuneration consultants during the financial year.
Voting and comments made at the Company's 30 June 2022 Annual General Meeting ('AGM')
At the 2022 AGM, 93% of the votes received supported the adoption of the remuneration report for the year ended 30 June
2022. The Company did not receive any specific feedback at the AGM regarding its remuneration practices.
iv) 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 Company, including their personally related parties, is set out below:
Balance at the
start of the year
Received as part of
remuneration
Net change
other
Balance at the
end of the year
Non-Executive Directors
I Gandel
G Smith
N Earner
K Gleeson
Executive Directors and other KMP
R Smith
J Clifton
D Woodall1
F Moon2
31,584,110
71,117
150,000
-
-
-
7,500
-
-
-
-
-
-
-
-
-
2,312,138
17,342
17,342
28,902
33,896,248
88,459
167,342
28,902
-
-
(7,500)
-
-
-
n/a
n/a
1 D Woodall resigned as Managing Director on 15 July 2022. “Net change other” reflects the number of shares held at this date.
2 F Moon resigned as President Asia on 28 February 2023.
This concludes the remuneration report, which has been audited.
Indemnity and insurance of officers
During the financial year, the Company paid a premium in respect of a contract to insure the Directors, officers and company
secretaries 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.
The Company has entered into deeds of indemnity, access and insurance (Deeds) with each of the Directors. These Deeds
remain in effect as at the date of this report. Under the Deeds, the Company indemnifies each Director to the maximum
extent permitted by law against legal proceedings or claims made against or incurred by a Director in connection with being
a Director of the Group or breach by the Group of its obligations under a Deed.
No liability has arisen under this indemnity as at the date of this report.
26
Financial Report | ASM Annual Report 2023 83
Australian Strategic Materials Limited
Directors' report
30 June 2023
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.
Audit and 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.
The Directors, in accordance with advice provided by the Audit Committee, are of the opinion that the services as disclosed
in note 27 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.
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.
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,
unless otherwise stated.
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
Rowena Smith
Managing Director and CEO
29 September 2023
27
84 ASM Annual Report 2023 | Financial Report
Auditor’s Independence Declaration
As lead auditor for the audit of Australian Strategic Materials Limited for the year ended 30 June 2023,
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
29 September 2023
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.
28
Financial Report | ASM Annual Report 2023 85
Australian Strategic Materials Limited
Contents
30 June 2023
Annual financial report
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 Limited
General information
The financial statements cover Australian Strategic Materials Limited as a Group consisting of Australian Strategic Materials
Limited 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 Limited's functional and presentation currency.
Australian Strategic Materials Limited is a listed public company limited by shares, incorporated and domiciled in Australia.
Its registered office and principal place of business is:
Australian Strategic Materials Limited
Level 4, 66 Kings Park Road, West Perth, Western Australia
A description of the nature of the Group'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 by the directors on 29 September 2023. The directors have the power to
amend and reissue the financial statements.
29
86 ASM Annual Report 2023 | Financial Report
Australian Strategic Materials Limited
Consolidated statement of profit or loss and other comprehensive income
For the year ended 30 June 2023
Revenue
Cost of sales
Gross profit
Other income
Expenses
Operating expenses
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
Finance costs
Net foreign exchange gain/(loss)
Loss before income tax benefit
Income tax benefit
Loss after income tax benefit for the year
Other comprehensive income/(loss)
Items that may be reclassified to profit or loss
Gain/(Loss) on translation of foreign operations
Items that will not be reclassified to profit or loss
Remeasurements of net defined benefit plan
Other comprehensive income/(loss) for the year, net of tax
Total comprehensive loss for the year
(Loss)/income for the year is attributable to:
Non-controlling interest
Owners of Australian Strategic Materials Limited
Total comprehensive (loss)/income for the year is attributable to:
Non-controlling interest
Owners of Australian Strategic Materials Limited
Note
3
4
26
5
6
Consolidated
2023
$'000
2022
$'000
4,441
(4,268)
173
1,870
-
1,870
1,754
306
(8,936)
(1,798)
(8,166)
(1,529)
(1,234)
(4,633)
(1,209)
(1,799)
(1,007)
(884)
567
(5,826)
(5,745)
(8,227)
(876)
(1,263)
(3,514)
(2,124)
(1,857)
535
(90)
(1,413)
(28,701)
(28,224)
2,398
3,967
(26,303)
(24,257)
1,113
(790)
35
-
1,148
(790)
(25,155)
(25,047)
(31)
(26,272)
18
(24,275)
(26,303)
(24,257)
(31)
(25,124)
18
(25,065)
(25,155)
(25,047)
Basic loss per share
Diluted loss per share
28
28
Cents
Cents
(8)
(8)
(17)
(17)
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
30
Financial Report | ASM Annual Report 2023 87
Australian Strategic Materials Limited
Consolidated balance sheet
As at 30 June 2023
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
Intangible assets
Exploration and evaluation assets
Biological assets
Other assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Interest bearing liabilities
Provisions
Unearned revenue
Total current liabilities
Non-current liabilities
Interest bearing liabilities
Deferred tax
Provisions
Unearned revenue
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Equity attributable to the owners of Australian Strategic Materials Limited
Non-controlling interest
Total equity
Consolidated
Note
2023
$'000
2022
$'000
7
8
9
10
9
11
13
12
10
14
15
16
17
15
6
16
17
18
19
56,655
4,251
25,447
962
87,315
-
66,700
2,538
109,340
1,089
238
179,905
60,220
2,266
13,117
451
76,054
984
64,177
3,616
104,225
1,346
298
174,646
267,220
250,700
3,394
17,295
464
2,525
23,678
410
18,096
2,842
6,232
27,580
3,479
176
479
6,554
10,688
17,095
20,609
2,611
-
40,315
51,258
51,003
215,962
199,697
268,316
15,013
(67,413)
215,916
46
228,425
12,336
(41,141)
199,620
77
215,962
199,697
The above consolidated balance sheet should be read in conjunction with the accompanying notes
31
88 ASM Annual Report 2023 | Financial Report
Australian Strategic Materials Limited
Consolidated statement of changes in equity
For the year ended 30 June 2023
Consolidated
Note
Issued
capital
$'000
Reserves
$'000
Accumulated
losses
$'000
Non-
controlling
interest
$'000
Total equity
$'000
Balance at 1 July 2021
Profit/(loss) after income tax
benefit for the year
Other comprehensive loss for
the year, net of tax
Total comprehensive
income/(loss) for the year
Transactions with owners in
their capacity as owners:
Contributions of equity, net of
transaction costs
Share-based payments
Deferred tax recognised in
equity
207,162
12,250
(16,866)
-
-
-
-
(24,275)
(790)
-
(790)
(24,275)
18
26
21,278
-
(15)
-
876
-
-
-
-
59
18
-
18
-
-
-
202,605
(24,257)
(790)
25,047
21,278
876
(15)
Balance at 30 June 2022
228,425
12,336
(41,141)
77
199,697
Consolidated
Note
Balance at 1 July 2022
Loss after income tax benefit
for the year
Other comprehensive income
for the year, net of tax
Total comprehensive
income/(loss) for the year
Transactions with owners in
their capacity as owners:
Contributions of equity, net of
transaction costs
Share-based payments
Deferred tax recognised in
equity
-
-
-
18
26
39,776
-
115
Issued
capital
$'000
Reserves
$'000
Accumulated
losses
$'000
228,425
12,336
(41,141)
-
(26,272)
-
Non-
controlling
interest
$'000
Total equity
$'000
77
(31)
-
199,697
(26,303)
1,148
1,148
1,148
-
1,529
-
(26,272)
(31)
(25,155)
-
-
-
-
-
-
39,776
1,529
115
Balance at 30 June 2023
268,316
15,013
(67,413)
46
215,962
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes
32
Financial Report | ASM Annual Report 2023 89
Australian Strategic Materials Limited
Consolidated statement of cash flows
For the year ended 30 June 2023
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Other income
Finance costs paid
Consolidated
Note
2023
$'000
2022
$'000
4,218
(40,036)
(35,818)
1,414
(39,212)
(37,798)
1,161
378
(26)
29
246
(71)
Net cash outflow from operating activities
20
(34,305)
(37,594)
Cash flows from investing activities
Payments for property, plant and equipment
Payments for exploration and evaluation
Payments for the purchase of biological assets
Proceeds from government grants received
Net cash outflow from investing activities
Cash flows from financing activities
Proceeds from issue of shares
Proceeds from borrowings
Share issue transaction costs
Payments of interest
Net cash inflow from financing activities
Net decrease 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
18
(3,220)
(7,517)
(1,532)
4,292
(31,464)
(8,410)
(1,140)
7,482
(7,977)
(33,532)
41,085
-
(1,309)
(715)
21,816
16,758
(538)
-
39,061
38,036
(3,221)
60,220
(344)
(33,090)
93,324
(14)
Cash and cash equivalents at the end of the financial year
7
56,655
60,220
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes
33
90 ASM Annual Report 2023 | Financial Report
Australian Strategic Materials Limited
Notes to the consolidated financial statements
30 June 2023
Note 1. Basis of preparation
Note 2. Operating segments
Note 3. Revenue
Note 4. Operating expenses
Note 5. Finance costs
Note 6. Income tax
Note 7. Cash and cash equivalents
Note 8. Trade and other receivables
Note 9. Inventories
Note 10. Biological assets
Note 11. Property, plant and equipment
Note 12. Exploration and evaluation assets
Note 13. Intangible assets
Note 14. Trade and other payables
Note 15. Interest bearing liabilities
Note 16. Provisions
Note 17. Unearned revenue
Note 18. Issued capital
Note 19. Reserves
Note 20. Cash flow information
Note 21. Risk management
Note 22. Contingent liabilities
Note 23. Commitments
Note 24. Events after the reporting period
Note 25. Related party transactions
Note 26. Share-based payments
Note 27. Remuneration of auditors
Note 28. Loss per share
Note 29. Parent entity financial information
Note 30. Interests in subsidiaries
Note 31. Deed of cross guarantee
92
95
95
96
96
97
100
100
100
101
102
105
106
107
107
108
110
111
112
113
113
116
117
117
118
119
121
121
122
123
123
Financial Report | ASM Annual Report 2023 91
Australian Strategic Materials Limited
Notes to the consolidated financial statements
30 June 2023
Note 1. 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 (IFRS)
as issued by the International Accounting Standards Board (IASB).
Accounting policies
Significant and other accounting policies that summarise the measurement basis used and are relevant to an understanding
of the financial statements are provided throughout the notes to the financial statements. Where possible, wording has been
simplified to provide clearer commentary on the financial report of the Group. Accounting policies determined non-significant
are not included in the financial statements. There have been no changes to the Group’s accounting policies that are no longer
disclosed in the financial statements.
Key estimates and judgements
In the process of applying the Group’s accounting policies, management has made a number of judgements and applied
estimates of future events. Judgements and estimates which are material to the financial report are found in the following
notes:
Note 6 'Income tax'
Note 9 'Inventories'
Note 11 'Property, plant and equipment'
Note 12 'Exploration and evaluation assets'
Note 16 'Provisions'
New or amended Accounting Standards and Interpretations
The Group 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 any new or amended Accounting Standards and Interpretations did not have any significant impact on the
financial performance or position of the Group.
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 2023.
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 activities of $34.3 million and investing activities of $8 million for the year ended
30 June 2023 (30 June 2022: cash outflows included operating activities of $37.6 million and investing activities of
$33.5 million). At 30 June 2023, the Group had cash on hand of $56.7 million (30 June 2022: $60.2 million). The Group has
net working capital as at 30 June 2023 of approximately $63.6 million and outstanding commitments of $17.7 million relating
to Korean Metals Plant feedstock supply and equipment, Dubbo Engineering, Procurement and Construction Definition
(EPCD) activities, Dubbo land acquisitions, and exploration obligations (refer Note 23).
35
92 ASM Annual Report 2023 | Financial Report
Australian Strategic Materials Limited
Notes to the consolidated financial statements
30 June 2023
Note 1. Basis of preparation (continued)
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.
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:
●
Continuing to source new customers for sale of product produced from the Korean Metals Plant and offtake
agreements for the Dubbo Project;
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 $41.1 million in equity (before costs) during November 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 with ANZ to secure funding
for the development of the Dubbo Project financing commitments; and
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 Group's ability to continue as
a going concern and therefore, that the Group 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 successful in the above matters and that it is appropriate to adopt the
going concern basis in the preparation of the financial report.
Historical cost convention
The financial statements have been prepared under the historical cost convention, except for the biological assets and Korean
pensions benefit which are measured at fair value.
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the Group only.
Supplementary information about the parent entity is disclosed in note 29.
Principles of consolidation
Subsidiaries are all those entities over which the Group has control. The Group controls an entity when the Group is exposed
to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through
its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred
to the Group. They are de-consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the Group are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the transferred asset.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by
the Group.
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 consolidated statement of profit
or loss and other comprehensive income, balance sheet and statement of changes in equity of the Group. Losses incurred by
the Group are attributed to the non-controlling interest in full, even if that results in a deficit balance.
Where the Group 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 Group 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.
36
Financial Report | ASM Annual Report 2023 93
Australian Strategic Materials Limited
Notes to the consolidated financial statements
30 June 2023
Note 1. Basis of preparation (continued)
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 Group
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 Group 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 Group'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.
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.
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.
37
94 ASM Annual Report 2023 | Financial Report
Australian Strategic Materials Limited
Notes to the consolidated financial statements
30 June 2023
Note 2. Operating segments
Description of segments
The Group identified its operating segments based on the internal reports that are reviewed and used by the executive
management team (the chief operating decision makers) in assessing performance in determining the allocation of the
resources. The operating segments of the Group are:
●
●
●
Corporate: which includes corporate activities.
Dubbo: which includes the evaluation and feasibility of the Dubbo project and the Pastoral company.
Korea: which includes the Korean Metals Plant.
Recognition and measurement
The accounting policies used by the Group in reporting segments internally are the same as those contained throughout the
notes to the financial statements and in the prior period.
Intersegment transactions were made at market rates. 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 and transactions are eliminated on consolidation.
Operating segment information
The table below shows segment information provided to the executive management team for the reportable segments for
the year ended 30 June 2023:
Consolidated 30 June 2023
Total segment revenue
Total segment result
Total segment assets
Total segment liabilities
Additions to non-current segment assets
Consolidated 30 June 2022
Total segment revenue
Total segment result
Total segment assets
Total segment liabilities
Additions to non-current segment assets
Note 3. Revenue
Corporate
$'000
Dubbo
$'000
Korea
$'000
Consolidated
$'000
-
(8,008)
52,699
19,328
-
-
(10,707)
36,856
19,529
-
1,447
(1,888)
148,676
3,918
9,208
1,870
(1,028)
144,894
4,055
13,987
2,994
(16,407)
65,845
28,012
3,653
-
(12,522)
68,950
27,419
26,582
4,441
(26,303)
267,220
51,258
12,861
1,870
(24,257)
250,700
51,003
40,569
Recognition and measurement
The Group derives revenue from the sale of metal products and biological assets, which is governed by sales contracts with
customers. Revenue is recognised in relation to sales at the time control transfers to the customers at the date of
loading/shipment. Sales are made under ex works incoterms, where the buyer is responsible for freight and shipping, and
generally recognised at the point in time when the metals products are loaded onto a vehicle or vessel for shipment. For
those sales not made under ex works incoterms, the revenue timing is upon the delivery of the products into the customer's
control.
38
Financial Report | ASM Annual Report 2023 95
Australian Strategic Materials Limited
Notes to the consolidated financial statements
30 June 2023
Note 3. Revenue (continued)
Metal sales - Korea
Pastoral sales
Note 4. Operating expenses
Inventory write off
Other [i]
Consolidated
2023
$'000
2022
$'000
2,994
1,447
4,441
-
1,870
1,870
Consolidated
2023
$'000
2022
$'000
7,490
1,446
8,936
2,392
3,434
5,826
[i] Other operating expenses include administration and general expenditure not capitalised with respect to the construction
and operation of the Korean Metals Plant.
Note 5. Finance costs
Recognition and measurement
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.
Finance costs for interest bearing liabilities
Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the
lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
Refer note 15 for further details.
Borrowing costs are expensed as part of finance costs in the period incurred. Borrowing costs consist of interest and other
costs that an entity incurs in connection with the borrowing of funds. Refer note 15 for further details.
Provisions: unwinding of discount
The unwinding of the discount is recognised as a finance cost. Refer to note 16.
Interest expense
Provisions: unwinding of discount
Finance charges for lease liabilities
Consolidated
Note
2023
$'000
2022
$'000
15
16
15
780
73
31
884
71
-
19
90
39
96 ASM Annual Report 2023 | Financial Report
Australian Strategic Materials Limited
Notes to the consolidated financial statements
30 June 2023
Note 6. Income tax
ASM and its wholly-owned Australian controlled entities implemented a tax consolidation group as of 21 July 2020 and the
entities in the tax consolidated group have 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 Parent 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.
Recognition and Measurement
Current taxes
The income tax expense/benefit for the year comprises current income tax expense/income and deferred income tax
expense/income. Current income tax expense charged to the profit or loss is the tax payable on taxable income calculated
using applicable income tax rates enacted at reporting date. Deferred income tax expense reflects movements in deferred
tax asset and deferred tax liability balances during the year as well as unused tax losses if recognised.
Current and deferred income tax (expense)/benefit is charged or credited directly to equity instead of the profit or loss when
the tax relates to items that are credited or charged directly to equity.
Deferred taxes
Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the financial statements. Deferred tax assets also result where amounts have been
fully expensed but future tax deductions are available.
No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination,
where there is no effect on accounting or taxable profit or loss.
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised, or liability is
settled. Deferred tax is credited in the consolidated statement of profit or loss and other comprehensive income except where
it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.
Deferred income tax assets are recognised to the extent that it is probable that future taxable profits will be available against
which deductible temporary differences can be utilised. The amount of benefits brought to account or which may be realised
in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation
that ASM will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions
of deductibility imposed by the law.
ASM determines whether to consider each uncertain tax treatment separately or together with one or more other uncertain
tax treatments and uses the approach that better predicts the resolution of the uncertainty.
Offsetting deferred tax balances
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.
(a) Income tax benefit
Increase in deferred tax assets
Increase in deferred tax liabilities
Total deferred tax benefit
Consolidated
2023
$'000
2022
$'000
(4,096)
1,698
(7,216)
3,249
(2,398)
(3,967)
40
Financial Report | ASM Annual Report 2023 97
Australian Strategic Materials Limited
Notes to the consolidated financial statements
30 June 2023
Note 6. Income tax (continued)
(b) Numerical reconciliation of income tax benefit to prima facie tax payable.
Loss before income tax benefit
Tax at the Australian tax rate of 30% (2022: 30%)
Tax effect of 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
Deductible equity raising costs
Income tax benefit
(c) Deferred tax asset
Deferred tax asset comprises temporary differences attributable to:
Tax losses
Accruals and provisions
Equity raising costs
Other
Offset against deferred tax liabilities
Consolidated
2023
$'000
2022
$'000
(28,701)
(28,224)
(8,610)
(8,467)
3,905
1,498
1,646
(690)
(147)
3,029
1,002
842
(278)
(95)
(2,398)
(3,967)
Consolidated
2023
$'000
2022
$'000
13,172
240
505
40
(13,957)
8,787
499
301
159
(9,746)
-
-
Deferred tax asset
Movements
Tax losses
Accruals and
provisions
Equity raising
costs
Other
Total
At 1 July 2021
(Charged)/credited to profit or loss
(Charged)/credited to equity
At 30 June 2022
(Charged)/credited to profit or loss
(Charged)/credited to equity
At 30 June 2023
2,086
6,701
-
8,787
4,385
-
13,172
103
396
-
499
(259)
-
240
317
(1)
(15)
301
89
115
505
39
120
-
159
(119)
-
40
2,545
7,216
(15)
9,746
4,096
115
13,957
41
98 ASM Annual Report 2023 | Financial Report
Australian Strategic Materials Limited
Notes to the consolidated financial statements
30 June 2023
Note 6. Income tax (continued)
(d) Deferred tax liability
Deferred tax liability comprises temporary differences attributable to:
Exploration
Property, plant and equipment
Other
Set-off of deferred tax asset
Deferred tax liability
Consolidated
2023
$'000
2022
$'000
31,775
207
71
(13,957)
30,238
113
4
(9,746)
18,096
20,609
Movements
Exploration
Property, plant and
equipment
Other
Total
At 1 July 2021
Charged to profit or loss
Charged to equity
At 30 June 2022
Charged to profit or loss
Charged to equity
At 30 June 2023
27,103
3,135
-
30,238
1,537
-
31,775
-
113
-
113
94
-
207
(e) Unused tax losses and temporary differences for which no deferred tax asset has been
recognised
Deferred tax assets have not been recognised in respect of the following and are stated at the
tax rates applicable to the relevant statutory authority:
Deductible temporary differences
Tax revenue losses
Total unrecognised deferred tax assets
3
1
-
4
67
-
71
27,106
3,249
-
30,355
1,698
-
32,053
Consolidated
2023
$'000
2023
$'000
3,133
1,848
4,981
381
1,542
1,923
Key judgements, estimates and assumptions
The Group 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 Group recognises liabilities for anticipated tax audit issues based
on the Group'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.
42
Financial Report | ASM Annual Report 2023 99
Australian Strategic Materials Limited
Notes to the consolidated financial statements
30 June 2023
Note 7. Cash and cash equivalents
Recognition and measurement
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.
Current assets
Cash at bank
Note 8. Trade and other receivables
Consolidated
2023
$'000
2022
$'000
56,655
60,220
Recognition and measurement
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business.
They are generally due for settlement within 30 days and are therefore all classified as current. Trade receivables are
recognised initially at the amount of consideration that is unconditional unless they contain significant financing components,
when they are recognised at fair value. Subsequently receivables are recognised at the amounts considered receivable
(financial assets at amortised cost).
Current assets
Trade receivables
Prepayments
Non trade receivables [i]
Consolidated
2023
$'000
2022
$'000
1,095
649
2,507
4,251
528
1,505
233
2,266
[i] Non trade receivables includes R&D Tax Incentives of $2,301,356. Refer to note 12 for further details.
The Group’s exposure to various risks associated with the financial instruments is discussed in note 21. The maximum
exposure to credit risk at the end of the reporting period is the carrying amount of each class of financial assets mentioned
above.
Note 9. Inventories
Recognition and measurement
Inventory raw materials are physically measured and are valued at the lower of cost and 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 the estimated costs of completion and 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.
43
100 ASM Annual Report 2023 | Financial Report
Australian Strategic Materials Limited
Notes to the consolidated financial statements
30 June 2023
Note 9. Inventories (continued)
Current assets
Toongi Pastoral Company supplies
Korea Materials [i]
Non-current assets
Korea Materials - at cost
Consolidated
2023
$'000
2022
$'000
156
25,291
193
12,924
25,447
13,117
-
984
25,447
14,101
[i]Of the Korean materials inventory recorded at 30 June 2023, $23,748,000 (30 June 2022: $9,217,000) is recorded at net
realisable value.
Amounts recognised in the profit or loss
Inventories recognised as an expense during the year ended 30 June 2023 amounted of $4,268,000 (30 June 2022: nil). These
were included in cost of sales in the consolidated statement of profit or loss and other comprehensive income.
Key judgements, estimates and assumptions
The Group’s assessment of the net realisable value and classification of its inventory holdings requires the use of estimates,
including the cost to complete. During the year, inventory writedowns of $7,490,000 occurred for raw materials or work in
progress (30 June 2022: $2,392,000). These were recognised as an operating expense in the consolidated statement of profit
or loss and other comprehensive income.
Note 10. Biological assets
Recognition and measurement
The Group recognises biological assets when, and only when, the Group controls the assets as a result of past events, it is
probable that future economic benefits associated with such assets will flow to the Group 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.
Biological assets are classified as current assets if they are to be sold within one year.
Biological assets comprise sheep and cattle owned by the Group's wholly owned subsidiary Toongi Pastoral Company Pty Ltd
as part of farming operations on land surrounding the Dubbo Project mining lease.
Current assets
Biological asset
Non-current assets
Biological asset
Consolidated
2023
$'000
2022
$'000
962
451
1,089
2,051
1,346
1,797
44
Financial Report | ASM Annual Report 2023 101
Australian Strategic Materials Limited
Notes to the consolidated financial statements
30 June 2023
Note 10. Biological assets (continued)
Reconciliation of carrying amount:
Opening carrying amount
Purchase of livestock
Sale of livestock
Births
Losses
Transfers
Fair value movement of biological assets
Closing carrying amount
Fair value movement in biological assets:
Market value movement [i]
Biological transformation [ii]
Births
Attrition
Other
Consolidated
2023
$'000
2022
$'000
1,797
1,380
(1,006)
452
(55)
(19)
(498)
1,243
1,019
(1,331)
467
(59)
(367)
825
2,051
1,797
Consolidated
2023
$'000
2022
$'000
(1,505)
(19)
452
(55)
120
(1,007)
(506)
(367)
467
(59)
(57)
(522)
[i] As a biological asset, AASB 141 Agriculture requires the livestock to be valued at fair value less costs to sell at all times prior
to sale.
[ii] Biological transformation in accordance with AASB 141 Agriculture, includes reclassification of an animal as it moves from
being a newborn calf, grows, ages, and progresses through the various stages to become a trading animal.
Note 11. Property, plant and equipment
Recognition and measurement
Buildings, plant and equipment are stated at historical cost less accumulated depreciation and impairment. Land and other
infinite useful life assets are stated at historical cost less any impairment. Historical cost includes expenditure that is directly
attributable to the acquisition of the items.
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 Group 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.
Right of use assets
The Group leases various land, buildings, plant and equipment resulting in a right-of-use asset (ROU). Right-of-use assets are
measured at cost and subsequently depreciated inline with the Group’s accounting policy of like assets. Cost comprising the
following:
45
102 ASM Annual Report 2023 | Financial Report
Australian Strategic Materials Limited
Notes to the consolidated financial statements
30 June 2023
Note 11. Property, plant and equipment (continued)
●
●
●
●
The amount of the initial measurement of the lease liability;
Any lease payments made at or before the commencement date less any lease incentives received;
Any initial direct costs;
Any restoration costs.
Depreciation
Depreciation is calculated using straight-line method over estimated useful life as follows:
Buildings
Plant and equipment
40 years
3-10 years
Depreciation is expensed as incurred, unless it relates to an asset or operation in the construction phase, in which it is
capitalised.
Derecognition
An item of plant and equipment is derecognised when it is sold or otherwise disposed of, or when its use is no longer expected
to bring about future economic benefits to the Group.
Any gain or loss from derecognising the asset is included in the profit or loss in the period the item is derecognised. The assets’
residual values and useful lives are reviewed, and adjusted if appropriate, at the end of the reporting period.
Work in progress
The value of assets under construction is measured at the cost of the asset less impairment. The cost of the asset also includes
the cost of assembly and replacement parts that are eligible for capitalisation. Depreciation does not commence until the
asset is in the location and condition necessary for it to be capable of operating in the manner intended by management.
46
Financial Report | ASM Annual Report 2023 103
Australian Strategic Materials Limited
Notes to the consolidated financial statements
30 June 2023
Note 11. Property, plant and equipment (continued)
Non-current assets
Balance at 1 July 2021
Additions
Disposals
Exchange differences
Transfers between classes
Changes in restoration and rehabilitation
estimate
Depreciation expense
Land &
Buildings
$'000
Plant &
Equipment
$'000
Work in
Progress
$'000
Right of Use
Asset
$'000
Total
$'000
28,846
12,951
-
(73)
4,650
2,140
(185)
2,459
389
(22)
(88)
187
-
(418)
29
17,639
-
-
(4,837)
-
-
117
521
-
(6)
-
-
(122)
31,451
31,500
(22)
(167)
-
2,140
(725)
Balance at 30 June 2022
48,329
2,507
12,831
510
64,177
Cost or fair value
Accumulated depreciation
48,563
(234)
3,101
(594)
12,831
-
638
(128)
65,133
(956)
Balance at 30 June 2022
48,329
2,507
12,831
510
64,177
Balance at 1 July 2022
Additions
Disposals
Exchange differences
Transfers between classes
Changes in restoration and rehabilitation
estimate
Depreciation expense
48,329
43
(118)
345
358
51
(766)
2,507
154
(8)
116
4,399
-
(743)
12,831
3,477
(307)
260
(4,757)
-
-
510
391
(254)
12
-
-
(130)
64,177
4,065
(687)
733
-
51
(1,639)
Balance at 30 June 2023
48,242
6,425
11,504
529
66,700
Cost or fair value
Accumulated depreciation
49,259
(1,017)
7,780
(1,355)
11,504
-
797
(268)
69,340
(2,640)
Balance at 30 June 2023
48,242
6,425
11,504
529
66,700
47
104 ASM Annual Report 2023 | Financial Report
Australian Strategic Materials Limited
Notes to the consolidated financial statements
30 June 2023
Note 11. Property, plant and equipment (continued)
Key judgements, estimates and assumptions
The estimations of useful lives, residual value and depreciation methods require management judgement and are reviewed
annually. If they need to be modified, the change is accounted for prospectively from the date of reassessment until the end
of the revised useful life (for both the current and future years). Such revisions are generally required when there are changes
in economic circumstances impacting specific assets or groups of assets, such as changes to contract length or when an asset
designation from idle to non-idle occurs. These changes are limited to specific assets and as such, any reasonably possible
change in the estimate is unlikely to have a material impact on the estimations of useful lives, residual value or amortisation
methods.
Impairment of property, plant and equipment
For the year ended 30 June 2023, the Group assessed whether there were any indicators of impairment. The Group’s market
capitalisation at 30 June 2023 was below its net assets and management considered this factor as an impairment indicator at
30 June 2023. Subsequent to 30 June 2023, the Group market capitalisation recovered and is above the Group’s net assets as
at the date of this financial report.
The recoverable amount of the Group’s cash generating units (CGUs) was determined by calculating the higher of fair value
less cost of disposal (FVLCD) and value in use (VIU).
Summary of the impairment and method used to assess the impairment
The following table summarises the outcomes from impairment testing conducted across the Group’s material non-current
assets under AASB 136.
CGU
Korea
Dubbo
Indicator for impairment testing
2023
Yes
Yes
2022
No
No
Valuation method used
2022
2023
-
FVLCD
-
FVLCD
Key assumptions used
At 30 June 2023, estimates of recoverable amounts for non-current assets within the Korea CGU were prepared using the
FVLCD method to assess whether impairments were required. Given the recent construction and commissioning of the KMP
the Group has determined FVLCD by reference to the depreciated replacement cost of the assets, the Group has considered
the risks of both technological and economic obsolescence.
Separately, estimates of recoverable amounts for the Dubbo CGU were prepared using the FVLCD method and the Group
sourced independent valuations at 30 June 2023 to support the FVLCD estimates required for the applicable assets.
At 30 June 2023, no impairment expense was recognised (30 June 2022: Nil).
Note 12. Exploration and evaluation assets
Recognition and measurement
Exploration and evaluation costs include acquisition of rights to explore, and costs associated with exploration and evaluation
in relation to separate areas of interest for which rights of tenure are current. The balance is carried as a non-current asset
on the consolidated balance sheet where it is expected that the expenditure will be recovered through the successful
development and exploitation of an area of interest, or by its sale; or exploration activities are continuing in an area and
activities have not reached a stage which permits a reasonable estimate of the existence or otherwise of economically
recoverable ore reserve. Costs incurred before the Group has obtained the legal rights to explore an area are recognised in
the consolidated statement of profit or loss and other comprehensive income.
No amortisation is charged during the exploration and evaluation phase. Payments for exploration and evaluation
expenditure are recorded net of any government grants and partner contributions.
48
Financial Report | ASM Annual Report 2023 105
Australian Strategic Materials Limited
Notes to the consolidated financial statements
30 June 2023
Note 12. Exploration and evaluation assets (continued)
Opening balance
Expenditure capitalised during the year [i]
R&D tax incentives on capitalised costs [ii]
Closing balance
Consolidated
2023
$'000
2022
$'000
104,225
7,416
(2,301)
96,742
8,410
(927)
109,340
104,225
[i] Additions during the year ended 30 June 2023 relate to Engineering, Procurement and Construction (EPC) Definition work,
metallurgical, engineering and project management.
[ii] During the year the Group received R&D Tax Incentives of $2,301,356 (2022: $927,387) on costs capitalised to exploration
and evaluation.
Key judgements, estimates and assumptions
Key judgements are applied to make certain estimates as to future events and circumstances, in particular whether an
economically viable extraction operation can be established. Any such estimates and assumptions may change as new
information becomes available. To the extent that capitalised exploration and evaluation expenditure is determined not to
be recoverable in the future, profits and net assets will be reduced in the period in which the determination is made.
Note 13. Intangible assets
Recognition and measurement
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. 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.
Non-current assets
Intellectual property (IP)
Less: Accumulated amortisation
Consolidated
2023
$'000
2022
$'000
5,387
(2,849)
5,397
(1,781)
2,538
3,616
The intangible assets are related to the internally generated intellectual property, which was part of the acquisition of the
Korean entities.
49
106 ASM Annual Report 2023 | Financial Report
Australian Strategic Materials Limited
Notes to the consolidated financial statements
30 June 2023
Note 14. Trade and other payables
Recognition and measurement
Trade and other payables represent the liability outstanding at the end of the reporting period for goods and services received
by the Group during the period which remains unpaid. Trade and other payables are presented as current liabilities unless
payment is not due within 12 months from the reporting date. They are recognised initially at their fair value and subsequently
measured at amortised cost.
Current liabilities
Trade payables
Accruals
Other payables
Consolidated
2023
$'000
2022
$'000
479
2,201
714
3,394
157
3,090
232
3,479
Note 15. Interest bearing liabilities
Recognition and measurement
Initial recognition and measurement
Interest bearing liabilities are recognised initially at fair value, net of directly attributable transaction costs.
Subsequent measurement - financial liabilities at amortised cost
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
consolidated statement of profit or loss and other comprehensive income.
Derecognition
An interest bearing 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
consolidated statement of profit or loss and other comprehensive income.
Current liabilities
Lease Liability [i]
Borrowings [ii]
Non-current liabilities
Lease liability [i]
Borrowings [ii]
Consolidated
2023
$'000
2022
$'000
137
17,158
17,295
410
-
410
176
-
176
337
16,758
17,095
17,705
17,271
50
Financial Report | ASM Annual Report 2023 107
Australian Strategic Materials Limited
Notes to the consolidated financial statements
30 June 2023
Note 15. Interest bearing liabilities (continued)
[i]As at 30 June 2023, the Group leased various assets under leases expiring within 1 to 8 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]On 10 June 2022, ASM executed two loan facilities with the Korean Development Bank (KDB) in South Korea which are
denominated Korean Won (₩). The KDB facilities executed included an Industrial Facility for operating and capital
expenditure and an Overdraft Facility. The Industrial Facility is comprised of an operating facility of ₩15.0 billion
(30 June 2023: equivalent to $17.2 million) and capital facility of ₩4.0 billion (30 June 2023: equivalent to $4.6 million).
Additionally, ASM entered into ₩3.0 billion (30 June 2023: equivalent to $3.4 million) Overdraft Facility under the same terms
as the Loan Facility.
At 30 June 2023, only the operating facility had been drawn totalling ₩15.0 billion (equivalent to $17.2 million) (30 June 2022:
₩15.0 billion equivalent to $16.8 million), this debt is due for full repayment in June 2024 and has been classified as current
liability.
Secured liabilities and assets pledged as security
The KDB operating Industrial Facility loan 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.
The interest rate on these loans are fixed upon draw down. The interest on the operating Industrial Facility loan is 4.23%.
Debt covenants
There are no debt covenants associated with the Korea Development Bank loan facility.
Note 16. Provisions
Recognition and measurement
Provisions
Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is
probable that an outflow of economic benefits will results, and that outflow can be reliably measured.
Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the
present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate
that reflects current market assessments of the time value of money and the risks specific to the liability.
Employee leave benefits
Provision is made for the Groups expected liability for future employee benefits arising from services rendered by employees
up to reporting date.
Short-term employee benefits are expected to be settled wholly within 12 months after the end of the period in which
employees render the related service, are recognised in respect of the employee’s services up to the end of the reporting
period and are measured at the amounts expected to be paid when the liabilities are settled. The amounts are presented as
current employee entitlements in the consolidated balance sheet.
The liability for long service leave is measured at the present value of the estimated future cash outflows to be made by the
Group for those employees with greater than 5 years of service up to the reporting date. Long-term benefits not expected to
be settled within 12 months are discounted by using rates attached to high quality corporate bonds at the end of the reporting
period with terms that match, as closely as possible, the estimated future cash outflows. Related on-costs are also included
in the liability.
51
108 ASM Annual Report 2023 | Financial Report
Australian Strategic Materials Limited
Notes to the consolidated financial statements
30 June 2023
Note 16. Provisions (continued)
Decommissioning and restoration
In accordance with the applicable legal and constructive obligations, a provision for site rehabilitation in respect of returning
the land to its original state is recognised when land is disturbed. Decommissioning and restoration costs are recognised in
full based on the net present value of the estimated cost of decommissioning and restoring the environmental disturbance
that has occurred up to the reporting date. To the extent that future economic benefits are expected to arise, these costs are
capitalised and amortised over the remaining life of the mine and the provision is accreted periodically as the discounting of
the liabilities unwinds. The unwinding of the discount is recorded as a finance cost.
Any changes in the estimates for the costs or other assumptions against the cost of relevant assets are accounted for on a
prospective basis. In determining the costs for site restoration there is uncertainty regarding the nature and extent of
restoration due to community expectations and future legislation.
Korean pensions benefit
The Group operates defined benefit pensions plan in Korea. Defined benefit plan determines the amount of pension benefits
an employee will receive when they retire. The level of benefits provided depends on members’ age, length of service and
their salary up to retirement. The liability recognised in the consolidated balance sheet in respect of defined benefit plans is
the present value of the defined benefit liability as of the end of the reporting period less the fair value of plan assets. The
defined benefit liability is calculated annually by an independent actuary using the projected unit credit method. The present
value of the defined benefit liability is calculated by discounting the expected future cash outflows at the rate of interest for
high quality corporate bonds with similar payout timing and maturities.
The remeasurement component of the net defined benefit liability is recognised in the statement of other comprehensive
income. When a scheme amendment, curtailment or settlement occurs, any gain or loss on past service cost or settlement is
recognised in the consolidated statement of profit or loss.
Current liabilities
Annual leave [i]
Long service leave
Other
Non-current liabilities
Long service leave
Korean pensions benefit
Provision for decommissioning
Consolidated
2023
$'000
2022
$'000
434
30
-
464
49
476
2,317
2,842
3,306
445
22
12
479
32
439
2,140
2,611
3,090
52
Financial Report | ASM Annual Report 2023 109
Australian Strategic Materials Limited
Notes to the consolidated financial statements
30 June 2023
Note 16. Provisions (continued)
[i]The current portion of annual leave liability includes all of the accrued annual leave. The provision amount of $434,000
(2022: $445,000) is presented as current, since the Group does not have an unconditional right to defer settlement for any of
these obligations. However, based on past experience, the Group does not expect all employees to take the full amount of
accrued leave or require payment within the next 12 months. The following amounts reflect leave that is not expected to be
taken or paid within the next 12 months.
Consolidated
2023
$'000
2022
$'000
Current leave obligations expected to be settled after 12 months
217
224
Key judgements, estimates and assumptions
The Group assesses its decommissioning and restoration provision annually. Significant judgement is required in determining
the provision for plant site rehabilitation and closure as there are many factors that could impact the ultimate liability payable
to rehabilitate the Korean plant site including changes in legislation, technology or other circumstances. When these factors
change or become known in the future, such differences will impact the decommissioning and restoration in the period in
which the change becomes known.
Note 17. Unearned revenue
Recognition and measurement
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 consolidated statement of profit or loss and other
comprehensive income 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.
Current liabilities
Unearned revenue [i]
Non-current liabilities
Unearned revenue [ii]
Consolidated
2023
$'000
2022
$'000
2,525
6,554
6,232
8,757
-
6,554
[i]During the year ended 30 June 2023, cash grants were received from Federal and State governments for the following
exploration and evaluation programs:
●
●
Critical Minerals Development Program – ASM was awarded a contributory grant of $6,500,000 (net of GST) to progress
the Dubbo Project’s Engineering, Procurement and Construction (EPC) Definition activities with respect to non-process
infrastructure. An initial payment of $2,275,000 (net of GST) was received in June 2023. ASM must comply with the terms
of the agreement or will have to repay all funds received.
Critical Minerals and High-Tech Metals Activation Fund – ASM was awarded a contributory grant of $500,000 (net of
GST) to finalise the process flowsheet for the Dubbo Project’s Heavy Rare Earths solvent extraction circuit. The first
instalment of $250,000 (net of GST) was received in March 2023. ASM must comply with the terms of the agreement or
will have to repay all funds received.
53
110 ASM Annual Report 2023 | Financial Report
Australian Strategic Materials Limited
Notes to the consolidated financial statements
30 June 2023
Note 17. Unearned revenue (continued)
[ii]Unearned revenue relates to a cash grant received from the South Korean government to support the development of the
Korean Metals Plant. Should any criteria not be fully satisfied by 31 December 2024 a portion of the grant may be required to
be repaid. During the year ended 30 June 2023 the South Korean government revised this grant’s completion date from
31 December 2022 to 31 December 2024 resulting in the reclassification of unearned revenue from current to non-current.
Note 18. Issued capital
Recognition and measurement
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax,
from the proceeds.
Consolidated
2023
Shares
2022
Shares
2023
$’000
2022
$’000
Ordinary shares – fully paid
166,705,227
141,956,062
268,316
228,425
Movements in ordinary shares
Opening balance 1 July 2021
Issue of shares in accordance with subscription agreement
Less: Transactions costs arising on share issue
Deferred tax credit recognised directly into equity
Balance 30 June 2022
Issue of shares on vesting of performance rights
Issue of shares for institutional placement
Issue of shares in accordance with share purchase plan
Less: transaction costs arising on share issue
Deferred tax credit recognised directly into equity
Number of
shares
Total
$’000
139,506,006
2,450,056
-
-
141,956,062
1,000,000
15,000,159
8,749,006
-
-
207,162
21,816
(538)
(15)
228,425
-
25,950
15,135
(1,309)
115
Balance 30 June 2023
166,705,227
268,316
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in
proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the
Company does not have a limited amount of authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share
shall have one vote.
On 8 November 2022, the Company issued 15,000,159 institutional shares, and on 5 December 2022, the Company issued
8,749,006 Share Purchase Plan shares.
54
Financial Report | ASM Annual Report 2023 111
Australian Strategic Materials Limited
Notes to the consolidated financial statements
30 June 2023
Note 19. Reserves
Recognition and measurement
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 Financial Instruments.
Share-based payments reserve
The reserve is used to recognise the grant date fair value of options and performance rights issued to employees and executive
directors.
Retirement benefit obligation reserve
The reserve is used to recognise the actuarial gains and losses on the retirement benefit obligation that are recognised outside
of profit or loss.
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. The foreign currency reserve is recognised in the profit or loss when the foreign operation
or net investment is disposed of.
Capital contribution reserve
Share-based payments reserve
Retirement benefit obligation reserve
Foreign currency reserve
Consolidated
2023
$'000
2022
$'000
11,324
3,322
35
332
11,324
1,793
-
(781)
15,013
12,336
55
112 ASM Annual Report 2023 | Financial Report
Australian Strategic Materials Limited
Notes to the consolidated financial statements
30 June 2023
Note 20. Cash flow information
(a) Reconciliation of loss after income tax to net cash outflow from operating activities
Loss after income tax benefit for the year
Adjustments for:
Depreciation and amortisation
Finance charges
Share-based payments
Inventory - non-cash movement
Inventory – write off
Provision for decommissioning – unwind of discount
Gain / loss on disposal of assets
Unrealised FX gain/(loss)
Change in operating assets and liabilities:
Increase in receivables
Increase in inventory
(Increase)/decrease in biological and other assets
Increase in deferred tax asset
(Decrease)/increase in trade and other payables
Increase in other provisions
Consolidated
2023
$'000
2022
$'000
(26,303)
(24,257)
1,799
79
1,529
1,007
7,490
(241)
(1)
(567)
(4,360)
(12,030)
(413)
(2,513)
(62)
281
1,857
138
876
(535)
-
-
(2)
1,314
(1,735)
(14,222)
130
(3,952)
2,224
570
Net cash outflow from operating activities
(34,305)
(37,594)
(b) Net debt reconciliation
Cash and cash equivalents (note 7)
Interest bearing liabilities - repayable within one year (note 15)
Interest bearing liabilities - repayable after one year (note 15)
Net debt
Consolidated
2023
$'000
2022
$'000
56,655
(17,295)
(410)
60,220
(176)
(17,095)
38,950
42,949
Includes lease liability expiring within 1 to 8 years and an Industrial facility loan with the Korea Development Bank (drawn
portion of the loan facility is $17.2 million).
Note 21. Risk management
Capital risk management
The Group's objectives when managing capital are to safeguard their ability to continue as a going concern, so that they 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.
56
Financial Report | ASM Annual Report 2023 113
Australian Strategic Materials Limited
Notes to the consolidated financial statements
30 June 2023
Note 21. Risk management (continued)
Financial risk management
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 Group'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 Group.
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 Group 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 Group's functional currency. The risk is measured using sensitivity analysis and cash
flow forecasting.
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/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).
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 entity and converted into KRW or deposited into USD bank account. As a result, the Group
is exposed to fluctuations in the USD/KRW to Australian currency. These exposures are not subject to a hedging instrument.
The Group’s risk from movements in foreign currency rates, relates to USD held within Australia and Korea and KRW held in
Korea. The risk exposure is minimised by 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 currency risk at the end 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
Interest bearing liabilities - KRW
2023
$'000
2022
$'000
2,471
4,135
1,270
(1,270)
(17,705)
11,073
19,646
1,156
(74)
(17,095)
(11,099)
14,706
57
114 ASM Annual Report 2023 | Financial Report
Australian Strategic Materials Limited
Notes to the consolidated financial statements
30 June 2023
Note 21. Risk management (continued)
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 progressed 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 2023
30 June 2022
Carrying
Amount
$'000
+100BP
$'000
-100BP
$'000
Carrying
Amount
$'000
+100BP
$'000
-100BP
$'000
Cash-and cash equivalents
Receivables (current) [i]
Other financial assets
Trade and other payables
56,655
3,603
238
11,985
72,481
567
36
2
120
725
(567)
(36)
(2)
(120)
(725)
60,220
952
20
7,685
68,877
602
10
-
77
689
(602)
(10)
-
(77)
(689)
[i] The receivables balance excludes prepayments and tax balances which do not meet the definition of financial assets and
liabilities.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial asset fails to meet its contractual
obligations and arises principally from the Group’s receivables from customers and related entities. The Group’s exposure to
credit risk is primarily in its trade and other receivables and is influenced mainly by the individual characteristics of the
customer based on recent sales experience, historical loss rates and forward-looking information that is available. In
accounting for credit risk the Group applies the simplified approach to measuring expected credit losses, determining a
lifetime expected loss allowance for all trade receivables.
In determining the recoverability of a trade or other receivable using the expected credit loss model, the Group performs a
risk analysis considering the type and age of the outstanding receivables, the creditworthiness of the counterparty, contract
provisions, letter of credit and timing of payment.
Credit risk arises from cash and cash equivalents, deposits with banks and financial institutions, as well as credit exposure to
customers, including outstanding receivables and committed transactions.
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 Group's 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.
58
Financial Report | ASM Annual Report 2023 115
Australian Strategic Materials Limited
Notes to the consolidated financial statements
30 June 2023
Note 21. Risk management (continued)
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 tables below reflect an
undiscounted contractual maturity analysis for financial liabilities:
Year ended 30 June 2023
$'000
$'000
$'000
Within 1 year
1 to 5 years
Over 5 years
Financial liabilities due for payment
Trade and other payables
Unearned revenue
Interest bearing liabilities
(3,394)
(2,525)
(17,295)
(23,214)
-
(6,232)
(410)
(6,642)
Year ended 30 June 2022
$'000
$'000
$'000
Within 1 year
1 to 5 years
Over 5 years
Financial Liabilities due for payment
Trade and other payables
Unearned revenue
Interest bearing liabilities
(3,479)
(6,554)
(176)
(10,209)
-
-
(17,802)
(17,802)
Total contractual
outflows
$'000
(3,394)
(8,757)
(17,705)
(29,856)
Total contractual
outflows
$'000
(3,479)
(6,554)
(17,978)
(28,011)
-
-
-
-
-
-
-
-
The Group's financial liabilities generally mature within 3 months, therefore the carrying amount equals the cash flow
required to settle the liability.
Note 22. Contingent liabilities
The Group has contingent liabilities estimated at up to $7,398,421 for the potential acquisition of parcels of land surrounding
the Dubbo Project (30 June 2022: $4,247,801). The landholders have the right to require the Group to acquire their property
when the development consent conditions for the Dubbo Project have been met.
On 9 June 2022, ASM and Hyundai Engineering Co., Ltd (HEC) signed an agreement to provide engineering, procurement and
construction definition work (EPCD). On 9 January 2023, ASM executed a variation to the EPCD which allowed this to
commence. At 30 June 2023, $41,200,000 remains contingent on commencement of staged activities which includes:
●
●
Stage 2 further develops engineering design to allow for identification and selection of technology requirements for
$7,000,000; and
Stage 3 provides for the remainder of the EPCD services to all HEC to provide an open book estimate and offer to
implement the Dubbo Project under an engineering, procure and contract (EPC) for $34,200,000 (net of $500,000
deposit paid in July 2022).
The Group will evaluate when Stage 2 will commence as the additional areas of non-process infrastructure work progresses.
59
116 ASM Annual Report 2023 | Financial Report
Australian Strategic Materials Limited
Notes to the consolidated financial statements
30 June 2023
Note 23. Commitments
a) Capital commitments
Year ended 30 June 2023
Mineral tenement leases
Dubbo Project - parcels of land
Dubbo Project – engineering and design activities
Korean Metals Plant – construction equipment
Year ended 30 June 2022
Mineral tenement leases
Dubbo Project - parcels of land
Dubbo Project – engineering and design activities
Korean Metals Plant – construction equipment
Within 1 year 1 to 5 years Over 5 years
$'000
$'000
$'000
100
1,996
2,307
1,410
5,813
100
1,419
1,307
5,746
8,572
-
-
2,500
-
2,500
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
$'000
100
1,996
4,807
1,410
8,313
100
1,419
1,307
5,746
8,572
Mineral tenement leases
In order to maintain current rights of tenure to exploration and mining tenements, the Group has certain obligations for
payment. These costs are discretionary, however if the expenditure commitments are not met then the associated
exploration and mining leases may be relinquished.
Parcels of land
The Group has capital commitments for the acquisition of parcels of land surrounding the Dubbo Project. The amount to be
paid is market value contractual terms 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.
b) Other commitments
On 30 April 2023, the Group signed binding agreement with Vietnam Rare Earth Company (VTRE) for metals plant feedstock
supply. Under the terms of the agreement, VTRE will deliver 100 tonnes of product within the next 12 months.
At 30 June 2023, the Group estimated commitment amount based on the product price at the reporting date was $9,426,000.
Note 24. Events after the reporting period
On 26 July 2023, ASM announced the signing of a three-way non-binding memorandum of understanding (MOU) with
Blackstone Minerals Limited (Blackstone) and rare earth element (REE) refiner Vietnam Rare Earth Company (VTRE). This
MOU provides a framework for the companies to collaborate across several areas including REE mining opportunities,
strengthen capability to secure REE mining concessions, potential for co-investment and securing long-term offtake of REE
oxides.
On 3 August 2023, ASM announced the signing of long-term metal sales and tolling agreement with USA Rare Earth LLC. The
agreement is binding for five years and includes the supply of neodymium iron boron (NdFeB) alloy.
On 17 August 2023, ASM announced the award of a consultancy services agreement to Bechtel Australia Pty Ltd for the
provision of engineering services for non-process infrastructure to support advancing the Company’s Dubbo Project.
On 21 August 2023, ASM announced the appointment of Mr Chris Jordaan as Chief Operating Officer effective from
24 August 2023 and the resignation of Mr Jason Clifton Chief Financial Officer effective from 10 November 2023.
No other matter or circumstance has arisen since 30 June 2023 that has significantly affected, or may significantly affect the
Group's operations, the results of those operations, or the Group's state of affairs in future financial years.
60
Financial Report | ASM Annual Report 2023 117
Australian Strategic Materials Limited
Notes to the consolidated financial statements
30 June 2023
Note 25. Related party transactions
Parent entity
Australian Strategic Materials Limited is the parent entity of the Group.
Subsidiaries
Interests in subsidiaries are set out in note 30.
Key management personnel compensation
The aggregate compensation made to Directors and other members of key management personnel of the Group is set out
below:
Short-term employee benefits
Post-employment benefits
Long-term benefits
Termination benefits
Share-based payments
Detailed remuneration disclosures are provided in the remuneration report on pages 19 to 26.
Transactions with other related parties
The following transactions occurred with other related parties:
Purchase of goods and services from other related parties:
Nuclear IT [i]
Alkane Resources Ltd
Gandel Metals Pty Ltd
Consolidated
2023
$
2022
$
2,085,377
101,793
8,129
254,151
1,409,492
2,627,098
114,653
12,028
-
876,500
3,858,942
3,630,279
Consolidated
2023
$
2022
$
-
356,400
97,268
114,277
430,156
152,974
[i] From 1 March 2022 Nuclear IT ceased to be a related entity upon resignation of Director.
Alkane Resources Ltd, 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 2023, no outstanding payable to Gandel Metals Pty Ltd for travel related services (2022: $24,531).
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.
61
118 ASM Annual Report 2023 | Financial Report
Australian Strategic Materials Limited
Notes to the consolidated financial statements
30 June 2023
Note 26. Share-based payments
Recognition and measurement
Share-based payments
Share-based compensation benefits are provided to employees via the Group’s incentive plans. The objective of the plans is
to assist in the recruitment, reward, retention and motivation of eligible persons of the Group. The incentive plans consist of
short-term and long-term incentive plans. Information relating to these plans is set out in the remuneration report and below.
The fair value of performance rights and options 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 performance rights and options 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. 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.
Non-market 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 consolidated statement of profit or loss and other comprehensive income, with a
corresponding adjustment to equity.
Market conditions
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 binominal tree
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 Group'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.
Options
No options granted or expired during the year. Share options outstanding at the end of the year have the following expiry
dates and exercise price:
Grant date
16 June 2021
16 June 2021
Expiry date
Exercise price
12 July 2024
12 July 2026
$6.36
$6.36
2023
Number
2022
Number
62,624
62,624
62,624
62,624
125,248
125,248
At 30 June 2023, 125,248 of the options granted have not vested and are not exercisable.
62
Financial Report | ASM Annual Report 2023 119
Australian Strategic Materials Limited
Notes to the consolidated financial statements
30 June 2023
Note 26. Share-based payments (continued)
Set out below are summaries of performance rights granted under the plan:
Outstanding as at 1 July
Granted [i]
Forfeited/lapsed [ii]
Vested [ii]
Weighted
average fair
value at grant
date
2022
Number
Weighted
average fair
value at grant
date
$1.28
$0.91
$1.28
$2.64
3,000,000
217,010
-
-
$0.81
$7.82
$0.00
$0.00
2023
Number
3,217,010
744,442
(2,257,750)
(1,000,000)
Outstanding as at 30 June
703,702
$1.33
3,217,010
$1.28
Vested and exercisable as at 30 June
45,410
$1.43
-
$0.00
[i] During the year ended 30 June 2023, 223,934 short term and 520,508 long term performance rights were granted to
employees and key management personnel. The fair value at grant date of the performance rights, which have non-market-
based performance conditions, was estimated using a binominal tree methodology. The fair value at grant date of the
performance rights, which have market-based performance conditions, was estimated using a Monte Carlo simulation.
[ii] On 19 July 2022, of the 3,000,000 performance rights hold by David Woodall, 2,000,000 were forfeited and 1,000,000 vested
through the issue of ordinary shares in the Company. The fair value of the performance rights at the date of modification was
determined to be $2.64. The incremental fair value of $1,065,154 recognised as an expense for the year ended 30 June 2023.
The fair value of the modified performance rights was determined using the stock price of the separation date. The expense
related to the modified portion accelerated immediately.
The table below details the terms and conditions of the grants and the assumptions used in estimating fair value:
Grant date
Value of the underlying security at
grant date
Exercise price
Dividend yield
Risk free rate
Volatility
Performance period (years)
Commencement of the measurement
period
Test date
Remaining performance period
(years)
19/10/22 19/12/22 19/12/22
14/03/23
14/03/23
1/06/23
1/06/23
$2.04
nil
nil
3.14%
n/a
1
$0.64
nil
nil
3.17%
65%
3
$1.50
nil
nil
3.16%
n/a
1
$0.64
nil
nil
3.17%
65%
3
$1.28
nil
nil
3.16%
n/a
1
$0.64
nil
nil
3.17%
65%
3
$1.08
nil
nil
3.16%
n/a
1
1/07/22
1/07/23
1/07/22
1/07/22
30/06/25 30/06/23
1/07/22
30/06/25
1/07/22
1/07/22
1/07/22
30/06/23 30/06/25 30/06/23
0
2
0
2
0
2
0
The weighted average remaining contractual life of performance rights and options is 1.5 years (30 June 2022: 1.4 years).
Total expenses arising from share-based payment transactions recognised during the period as share-based payment expense
in the consolidated statement of profit of loss and other comprehensive income:
Options
Performance rights
63
120 ASM Annual Report 2023 | Financial Report
2023
$'000
2022
$'000
130
1,399
1,529
125
751
876
Australian Strategic Materials Limited
Notes to the consolidated financial statements
30 June 2023
Note 27. Remuneration of auditors
During the financial year the following fees were paid or payable for services provided by PricewaterhouseCoopers, the
auditor of the Company, and its network firms:
Audit services - PricewaterhouseCoopers
Audit or review of the financial statements
Other services - PricewaterhouseCoopers
Tax compliance services
Tax advisory services
Consulting services
Total other non-audit services
Consolidated
2023
$
2022
$
233,527
119,210
-
-
66,103
76,540
18,870
10,060
66,103
105,470
Total services provided by PricewaterhouseCoopers
299,630
224,680
Note 28. Loss per share
Recognition and measurement
Basic loss per share
Basic earnings per share is calculated by dividing:
●
●
the profit attributable to owners of the company, 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 year.
Diluted loss 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 additional ordinary shares that would have been outstanding assuming the conversion
of all dilutive potential ordinary shares.
Loss after income tax
Non-controlling interest
Consolidated
2023
$'000
2022
$'000
(26,303)
31
(24,257)
(18)
Loss after income tax attributable to the owners of Australian Strategic Materials Limited
(26,272)
(24,275)
Basic loss per share
Diluted loss per share
Cents
Cents
(8)
(8)
(17)
(17)
64
Financial Report | ASM Annual Report 2023 121
Australian Strategic Materials Limited
Notes to the consolidated financial statements
30 June 2023
Note 28. Loss per share (continued)
2023
Number
2022
Number
Weighted average number of ordinary shares used in calculating basic loss per share
Weighted average number of ordinary shares used in calculating diluted loss per share
312,396,979
312,396,979
139,808,068
139,808,068
The number of potential ordinary share not considered dilutive are as follows:
Performance rights and options
828,950
3,204,928
Potential ordinary shares
Performance rights and options granted to employees are considered to be potential ordinary shares. Details relating to
options and performance rights are set out in Note 26. They have not been included in the determination of basic loss per
share. Performance rights and options outstanding are not included in the calculation of diluted loss per share because they
are antidilutive for the years ended 30 June 2023 and 30 June 2022. These options could potentially dilute basic earnings per
share in the future.
Note 29. Parent entity financial information
Recognition and measurement
The financial information for the parent entity has been prepared on the same basis as the consolidated financial statements,
other than investments in subsidiaries, which have been recorded at cost less any impairments.
The individual financial statements for the parent entity, Australian Strategic Materials Limited, show the following aggregate
amounts:
Statement of profit or loss and other comprehensive income
Loss after income tax
Total comprehensive loss
Balance sheet
Current assets
Total assets
Current liabilities
Total liabilities
Equity
Issued capital
Share-based payments reserve
Capital contributions reserve
Accumulated losses
Total equity
Parent
2023
$'000
2022
$'000
(47,263)
(47,263)
(10,699)
(10,699)
Parent
2023
$'000
2022
$'000
64,207
200,994
1,196
(12,554)
268,316
3,321
11,324
(69,413)
48,515
211,483
1,727
(7,909)
228,425
1,793
11,324
(22,150)
213,548
219,392
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity did not have any guarantees in relation to the debts of its subsidiaries as at 30 June 2023 and 30 June 2022.
65
122 ASM Annual Report 2023 | Financial Report
Australian Strategic Materials Limited
Notes to the consolidated financial statements
30 June 2023
Note 29. Parent entity financial information (continued)
Contingent liabilities
The parent entity did not have any contingent liabilities as at 30 June 2023 and 30 June 2022.
Capital commitments - Property, plant and equipment
The parent entity did not have any capital commitments for property, plant and equipment as at 30 June 2023 and
30 June 2022.
Note 30. Interests in subsidiaries
Recognition and measurement
Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is exposed to, or
has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power
to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the
Group. They are deconsolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains and losses on transactions between Group companies are
eliminated unless the transaction provides evidence of the impairment of the asset transferred.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statement of profit
or loss and other comprehensive income, consolidated balance sheet, and consolidated statement of changes in equity
respectively.
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries:
Name
Australian Strategic Materials (Holdings) Ltd
Toongi Pastoral Company Pty Ltd
ASM Metals Corporation Pty Ltd
ASM Technology Corporation Pty Ltd
ASM Korea Co. Ltd
KSM Technology Co. Ltd
KSM Metals Co., Ltd
Note 31. Deed of cross guarantee
Principal place of business /
Country of incorporation
Australia
Australia
Australia
Australia
South Korea
South Korea
South Korea
Ownership interest
2022
2023
%
%
100%
100%
100%
100%
100%
95%
100%
100%
100%
100%
100%
100%
95%
100%
The following entities are parties to a deed of cross guarantee made on 28 June 2023 under which each company guarantees
the debts of the others:
Holding entity - Australian Strategic Materials Limited
Group entity - Australian Strategic Materials (Holdings) Limited
By entering into the deed, the wholly-owned entities have been relieved from the requirement to prepare financial
statements and Directors' report under ASIC Corporations (Wholly-owned Companies) Instrument 2016/785 issued by the
Australian Securities and Investments Commission.
The above companies represent a 'Closed Group' for the purposes of the Instrument, and as there are no other parties to the
deed of cross guarantee that are controlled by Australian Strategic Materials Limited, they also represent the 'Extended Closed
Group'.
66
Financial Report | ASM Annual Report 2023 123
Australian Strategic Materials Limited
Notes to the consolidated financial statements
30 June 2023
Note 31. Deed of cross guarantee (continued)
Set out below is a consolidated statement of profit or loss and other comprehensive income and balance sheet of the 'Closed
Group'.
Consolidated statement of profit or loss and other comprehensive income of the 'Closed Group'
Revenue
Other income
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
Net foreign exchange gain
Intercompany impairment
Loss before income tax benefit
Income tax benefit
Loss after income tax benefit
Other comprehensive income for the year, net of tax
Total comprehensive loss for the year
Equity - accumulated losses
Accumulated losses at the beginning of the financial year
Loss after income tax benefit
Accumulated losses at the end of the financial year
2023
$'000
1,447
1,673
(1,798)
(5,188)
(1,529)
(1,234)
(4,633)
(1,209)
(165)
(1,007)
390
(32,914)
(46,167)
2,686
(43,481)
-
(43,481)
2023
$'000
(26,789)
(43,481)
(70,270)
67
124 ASM Annual Report 2023 | Financial Report
Australian Strategic Materials Limited
Notes to the consolidated financial statements
30 June 2023
Note 31. Deed of cross guarantee (continued)
Balance sheet
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Biological assets
Non-current assets
Property, plant and equipment
Exploration and evaluation assets
Biological assets
Other assets
Total assets
Current liabilities
Trade and other payables
Provisions
Unearned revenue
Non-current liabilities
Deferred tax
Provisions
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
2023
$'000
2022
$'000
52,520
2,982
156
962
56,620
34,306
109,340
1,089
34,583
179,318
40,574
872
193
451
42,090
34,069
104,225
1,346
56,606
196,246
235,938
238,336
2,125
452
2,525
5,102
18,096
49
18,145
2,472
470
-
2,942
20,609
32
20,641
23,247
23,583
212,691
214,753
268,316
14,645
(70,270)
228,425
13,117
(26,789)
212,691
214,753
68
Financial Report | ASM Annual Report 2023 125
Australian Strategic Materials Limited
Directors' declaration
30 June 2023
In the Directors' opinion:
(a)
the financial statements and notes set out on pages 30 to 68 are in accordance with the Corporations Act 2001,
including:
(i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting
requirements, and
(ii) giving a true and fair view of the Group's financial position as at 30 June 2023 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 and Group will be
able to pay its debts as and when they become due and payable, and
at the date of this declaration, there are reasonable grounds to believe that the members of the Extended Closed Group
identified in note 31 will be able to meet any liabilities to which they are, or may become, subject by virtue of the deed
of cross guarantee described in note 31.
(b)
(c)
The financial statements also comply with International Financial Reporting Standards as issued by the International
Accounting Standards Board.
The directors have been given the declarations by the chief executive officer and chief financial officer required by section
295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the directors.
___________________________
Rowena Smith
Managing Director and CEO
29 September 2023
Perth
69
126 ASM Annual Report 2023 | Financial Report
Independent auditor’s report
To the members of Australian Strategic Materials Limited
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial report of Australian Strategic Materials Limited (the Company) and its
controlled entities (together the Group) is in accordance with the Corporations Act 2001, including:
(a)
giving a true and fair view of the Group's financial position as at 30 June 2023 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 2023
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
Liability limited by a scheme approved under Professional Standards Legislation.
70
Financial Report | ASM Annual Report 2023 127
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 activities of $34.3 million and investing activities of $8 million for the year ended 30
June 2023 and that the Group is dependent on sourcing new customers for product sales and raising
further funding. 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 matters to the Audit
Committee:
−− Carrying value of property,
plant and equipment
−− 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 $2,671,000 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
71
128 ASM Annual Report 2023 | Financial Report
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.
In addition to the matter described in the Material uncertainty related to going concern section, we
have determined the matters described below to be the key audit matters to be communicated in our
report.
Key audit matter
How our audit addressed the key audit matter
Carrying value of property plant and equipment (refer
to note 11 of the Consolidated Financial Statements)
We performed the following procedures, amongst
others:
As at 30 June 2023, the Group recognised $66.7
million of Property, Plant and Equipment. As the
Group’s market capitalisation was less than its net
assets at reporting date this was considered an
indicator of impairment requiring assessment under
AASB 136 Impairment of assets.
As required by Australian Accounting Standards, the
Group has performed an assessment to determine the
recoverable amount of property plant and equipment
using the fair value less cost of disposal method. No
impairment was recognised as a result of this
assessment.
The assessment of impairment was a key audit matter
because of the significant judgement involved in
estimating the recoverable amount of the assets and
the material impact on the financial report.
•
•
•
•
Assessed the reasonableness of the division of
assets into cash generating units and the
appropriateness of the allocated assets and
liabilities to each CGU.
Assessed, together with PwC valuation experts,
the reasonableness of the valuation methodology
against the requirements of Australian Accounting
Standards.
Examined the independent valuation reports
obtained by the Group to assist their estimation of
the recoverable value of certain property, plant and
equipment assets
Assessed the competency, qualification,
experience and objectivity of the Group’s external
72
Financial Report | ASM Annual Report 2023 129
Key audit matter
How our audit addressed the key audit matter
valuer
•
Considered the adequacy of the disclosure made
in note 11 of the Consolidated Financial
Statements in light of the requirements of
Australian Accounting Standards.
Carrying value of exploration and evaluation assets
(Refer to note 12 of the Consolidated Financial
Statements)
We performed the following procedures, amongst
others:
•
•
Evaluated the Group’s assessment that there had
been no indicators of impairment for its exploration
and evaluation assets, including performing
inquiries with management and directors to
develop an understanding of the current status and
future intentions for the Group’s exploration
projects.
Assessed whether the Group retained right of
tenure for all of its exploration licence areas by
obtaining licence status records from relevant
government databases.
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 the accounting standard
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.
This was a key audit matter because of the size of the
balance and judgement in considering the risk of
impairment of the assets, should results of exploration
activities indicate these costs will not be recoverable.
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 2023, 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.
73
130 ASM Annual Report 2023 | Financial Report
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon through our opinion on the financial report.
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.
74
Financial Report | ASM Annual Report 2023 131
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 19 to 26 of the directors’ report for the
year ended 30 June 2023.
In our opinion, the remuneration report of Australian Strategic Materials Limited for the year ended 30
June 2023 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
29 September 2023
75
132 ASM Annual Report 2023 | Financial Report
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
6 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
5,466
3,934
1,180
Number of
shares
2,413,043
9,800,354
8,778,244
1,412
37,861,068
142
107,922,527
12,134
166,775,236
2,615
263,718
ABBOTSLEIGH PTY LTD
27,648,027
16.58
Listed ordinary shares
Number of shares % of shares on issue
1
2
3
4
5
6
7
8
9
HSBC CUSTODY NOMINEES (AUSTRALIA)
LIMITED
CITICORP NOMINEES PTY LIMITED
LILYCREEK PTY LTD
MAGNABAY PTY LTD
AUBURNVALLEY PTY LTD
MR JUNSHI WANG
BNP PARIBAS NOMS PTY LTD
BNP PARIBAS NOMINEES PTY LTD ACF
CLEARSTREAM
11,547,603
10,518,694
4,526,000
4,526,000
4,526,000
3,241,400
2,461,874
2,192,546
10
ABBOTSLEIGH PTY LTD
1,737,468
11
12
13
14
J P MORGAN NOMINEES AUSTRALIA PTY
LIMITED
MILFORD PARK SUPERANNUATION PTY LTD
ILG ESTATE CO 2 PTY LTD
ILG ESTATE CO 3 PTY LTD
1,705,701
1,330,000
1,127,689
1,127,688
6.92
6.31
2.71
2.71
2.71
1.94
1.48
1.31
1.04
1.02
0.8
0.68
0.68
Additional Information | ASM Annual Report 2023 133
15
16
17
ILG ESTATE CO 4 PTY LTD
ILG ESTATE CO 1 PTY LTD
LEEFAB PTY LTD
18 MR PATRICK JOHN MCHALE
19
20
LNL TRUST CO LTD
GW TRUST CO LTD
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
1,127,688
1,127,688
955,000
932,500
658,956
647,460
0.68
0.68
0.57
0.56
0.4
0.39
83,665,982
50.17
Number of
shares
Abbotsleigh Pty Ltd and Mr Ian Jeffrey Gandel
33,896,248
Chapelgreen Pty Ltd
13,578,000
Voting Rights
All ordinary shares (whether fully paid or not) carry one vote per share without restriction.
Distribution of employee options/performance rights
As at 6 October 2023, there are 652,666 unlisted employee options /performance rights.
The number of beneficial holders, by size of holding, of employee options / performance rights are:
Holding Ranges
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
Total
Holders
0
0
0
3
2
5
Schedule of mining tenements
as at 30 June 2023
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
134 ASM Annual Report 2023 | Additional Information