AVZ Minerals Limited
AVZ Minerals Limited
ABN 81 125 176 703
ABN 81 125 176 703
AAnnnnuuaall RReeppoorrtt
AAnnnnuuaall RReeppoorrtt
30 June 2020
30 June 2020
AVZ Minerals Limited | 1
AVZ Minerals Limited | 1
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John Clarke (Non-Executive Chairman)
John Clarke (Non-Executive Chairman)
Nigel Ferguson (Managing Director)
John Clarke (Non-Executive Chairman)
Nigel Ferguson (Managing Director)
Graeme Johnston (Technical Director)
Nigel Ferguson (Managing Director)
Graeme Johnston (Technical Director)
Rhett Brans (Non-Executive Director)
Graeme Johnston (Technical Director)
Rhett Brans (Non-Executive Director)
Peter Huljich (Non-Executive Director)
Rhett Brans (Non-Executive Director)
Peter Huljich (Non-Executive Director)
Peter Huljich (Non-Executive Director)
Leonard Math
Leonard Math
Leonard Math
Level 2, 8 Colin Street
Level 2, 8 Colin Street
West Perth WA 6005
Level 2, 8 Colin Street
West Perth WA 6005
Telephone: +61 8 6117 9397
West Perth WA 6005
Telephone: +61 8 6117 9397
Facsimile: +61 8 6118 2106
Telephone: +61 8 6117 9397
Facsimile: +61 8 6118 2106
Facsimile: +61 8 6118 2106
Automic Registry Services
Automic Registry Services
Level 2, 267 St George’s Terrace
Automic Registry Services
Level 2, 267 St George’s Terrace
Perth WA 6000
Level 2, 267 St George’s Terrace
Perth WA 6000
Telephone: 1300 288 664 (within Australia)
Perth WA 6000
Telephone: 1300 288 664 (within Australia)
Telephone: 1300 288 664 (within Australia)
Email: hello@automic.com.au
Email: hello@automic.com.au
Email: hello@automic.com.au
Bentleys Audit & Corporate (WA) Pty Ltd
Bentleys Audit & Corporate (WA) Pty Ltd
Level 3, 216 St Georges Tce
Bentleys Audit & Corporate (WA) Pty Ltd
Level 3, 216 St Georges Tce
Perth WA 6000
Level 3, 216 St Georges Tce
Perth WA 6000
Telephone: +61 8 9226 4500
Perth WA 6000
Telephone: +61 8 9226 4500
Telephone: +61 8 9226 4500
Australian Securities Exchange
Australian Securities Exchange
(Home branch: Perth, Western Australia)
Australian Securities Exchange
(Home branch: Perth, Western Australia)
ASX Code: AVZ
(Home branch: Perth, Western Australia)
ASX Code: AVZ
ASX Code: AVZ
www.avzminerals.com.au
www.avzminerals.com.au
www.avzminerals.com.au
+61 8 9324 2099 (outside Australia)
+61 8 9324 2099 (outside Australia)
+61 8 9324 2099 (outside Australia)
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Chairman’s letter to Shareholders
Chairman’s letter to Shareholders
Chairman’s letter to Shareholders
Chairman’s letter to Shareholders
On behalf of all shareholders and our Non-executive Directors, I
On behalf of all shareholders and our Non-executive Directors, I
On behalf of all shareholders and our Non-executive Directors, I
congratulate AVZ Minerals’ hard-working team for the substantial
On behalf of all shareholders and our Non-executive Directors, I
congratulate AVZ Minerals’ hard-working team for the substantial
congratulate AVZ Minerals’ hard-working team for the substantial
progress they have achieved during the past financial year in
congratulate AVZ Minerals’ hard-working team for the substantial
progress they have achieved during the past financial year in
progress they have achieved during the past financial year in
progressing the Company’s world-class Manono Lithium and Tin
progress they have achieved during the past financial year in
progressing the Company’s world-class Manono Lithium and Tin
progressing the Company’s world-class Manono Lithium and Tin
Project. To deliver a successful project of the size and scale of
progressing the Company’s world-class Manono Lithium and Tin
Project. To deliver a successful project of the size and scale of
Project. To deliver a successful project of the size and scale of
Manono requires an incredible team effort.
Project. To deliver a successful project of the size and scale of
Manono requires an incredible team effort.
Manono requires an incredible team effort.
Manono requires an incredible team effort.
Amid a global pandemic, the team has delivered a ‘highly positive’
Amid a global pandemic, the team has delivered a ‘highly positive’
Amid a global pandemic, the team has delivered a ‘highly positive’
Definitive Feasibility Study for the Manono Project and are now
Amid a global pandemic, the team has delivered a ‘highly positive’
Definitive Feasibility Study for the Manono Project and are now
Definitive Feasibility Study for the Manono Project and are now
working diligently towards securing future multiple off-take
Definitive Feasibility Study for the Manono Project and are now
working diligently towards securing future multiple off-take
working diligently towards securing future multiple off-take
agreements and project financing.
working diligently towards securing future multiple off-take
agreements and project financing.
agreements and project financing.
agreements and project financing.
project. The
Once these contracts are executed, the Board will be ready to
Once these contracts are executed, the Board will be ready to
Once these contracts are executed, the Board will be ready to
consider a Financial Investment Decision to mine the flagship
Once these contracts are executed, the Board will be ready to
consider a Financial Investment Decision to mine the flagship
consider a Financial Investment Decision to mine the flagship
that has been
project. The
consider a Financial Investment Decision to mine the flagship
that has been
project. The
demonstrated by the Company’s Managing Director Nigel
that has been
project. The
demonstrated by the Company’s Managing Director Nigel
demonstrated by the Company’s Managing Director Nigel
Ferguson and his senior management team should be widely
demonstrated by the Company’s Managing Director Nigel
Ferguson and his senior management team should be widely
Ferguson and his senior management team should be widely
applauded.
Ferguson and his senior management team should be widely
applauded.
applauded.
focus, direction and
focus, direction and
focus, direction and
tenacity
tenacity
tenacity
focus, direction and
that has been
applauded.
tenacity
Well done and congratulations to the entire AVZ Minerals team –
Well done and congratulations to the entire AVZ Minerals team –
Well done and congratulations to the entire AVZ Minerals team –
your efforts have been truly outstanding.
Well done and congratulations to the entire AVZ Minerals team –
your efforts have been truly outstanding.
your efforts have been truly outstanding.
your efforts have been truly outstanding.
Dr John Clarke
Dr John Clarke
Dr John Clarke
Non-Executive Chairman
Dr John Clarke
Non-Executive Chairman
Non-Executive Chairman
Non-Executive Chairman
AVZ Minerals Limited | 2
AVZ Minerals Limited | 2
AVZ Minerals Limited | 2
AVZ Minerals Limited | 2
Managing Director’s letter to Shareholders
Managing Director’s letter to Shareholders
“The Definitive Feasibility Study has proven that the
Manono Lithium and Tin Project is a robust project
with strong financial metrics as is demonstrated by the
key metrics of the DFS base case scenario on a 100%
ownership basis.”
“The Definitive Feasibility Study has proven that the
Manono Lithium and Tin Project is a robust project
with strong financial metrics as is demonstrated by the
key metrics of the DFS base case scenario on a 100%
ownership basis.”
DFS, April 2020
DFS, April 2020
Dear Shareholders
Dear Shareholders
The 2020 financial year has been transformative for the Company’s Manono Lithium and Tin Project (“Manono
Project”).
The 2020 financial year has been transformative for the Company’s Manono Lithium and Tin Project (“Manono
Project”).
We attained a significant milestone in April 2020. The metallurgical work undertaken and the multitude of
project studies completed to date, underpinned the public release of a ‘highly positive’ Definitive Feasibility
Study (“DFS”) for the Manono Project.
We attained a significant milestone in April 2020. The metallurgical work undertaken and the multitude of
project studies completed to date, underpinned the public release of a ‘highly positive’ Definitive Feasibility
Study (“DFS”) for the Manono Project.
In short, the DFS confirmed the Manono Project has ‘outstanding project metrics’ and has delivered a ‘higher
level of confidence with respect to engineering design, construction requirements, logistics, project finance
and risk assessments.’ We were intentionally conservative in terms of the financial metrics for the project and
therefore, firmly believe the DFS numbers can be considerably improved upon.
In short, the DFS confirmed the Manono Project has ‘outstanding project metrics’ and has delivered a ‘higher
level of confidence with respect to engineering design, construction requirements, logistics, project finance
and risk assessments.’ We were intentionally conservative in terms of the financial metrics for the project and
therefore, firmly believe the DFS numbers can be considerably improved upon.
Since the release of the DFS, we have been in advanced discussions with multiple potential offtake partners
for significant volumes of Spodumene Concentrate (SC6), Primary Lithium Sulphate and Tin. Detailed
negotiations with several entities in Europe, the Middle East and South Africa around financing options were
also advanced. Our data room has been opened to multiple parties for several months to allow their due
diligence of the Manono Project, with the view to making an investment and/or providing debt financing. I
look forward to updating shareholders once offtake and financing contracts are in place.
Since the release of the DFS, we have been in advanced discussions with multiple potential offtake partners
for significant volumes of Spodumene Concentrate (SC6), Primary Lithium Sulphate and Tin. Detailed
negotiations with several entities in Europe, the Middle East and South Africa around financing options were
also advanced. Our data room has been opened to multiple parties for several months to allow their due
diligence of the Manono Project, with the view to making an investment and/or providing debt financing. I
look forward to updating shareholders once offtake and financing contracts are in place.
During the past 12 months we have undertaken substantial pre-development works including early
infrastructure facilities at Manono’s Camp Colline and the release of approximately US$300 million of pre-
mining tenders. In addition, excellent progress has been achieved in discussions on the creation of a Special
Economic Zone in Manono and the potential refurbishment of the Mpiana Mwanga Hydro-Electric Power Plant
on the Luvua River. We also completed pit dewatering at Roche Dure. This provides the opportunity to
undertake further infill drilling on approximately 10 million tonnes of current Inferred Resources with the
intention to upgrade these to Indicated Resources.
During the past 12 months we have undertaken substantial pre-development works including early
infrastructure facilities at Manono’s Camp Colline and the release of approximately US$300 million of pre-
mining tenders. In addition, excellent progress has been achieved in discussions on the creation of a Special
Economic Zone in Manono and the potential refurbishment of the Mpiana Mwanga Hydro-Electric Power Plant
on the Luvua River. We also completed pit dewatering at Roche Dure. This provides the opportunity to
undertake further infill drilling on approximately 10 million tonnes of current Inferred Resources with the
intention to upgrade these to Indicated Resources.
AVZ Minerals Limited | 3
AVZ Minerals Limited | 3
On the corporate front, we welcomed Yibin Tianyi Lithium Industry Co., as a strategic investor in mid-May on
On the corporate front, we welcomed Yibin Tianyi Lithium Industry Co., as a strategic investor in mid-May on
completion of a A$10.7 million placement. We also raised A$5.3 million (before costs) through the exercise
completion of a A$10.7 million placement. We also raised A$5.3 million (before costs) through the exercise
of more than 180 million listed options in a clear signal of strong support from our shareholders. An additional
of more than 180 million listed options in a clear signal of strong support from our shareholders. An additional
A$3.6 million was raised via another strategic investor, Lithium Plus together with other sophisticated and
A$3.6 million was raised via another strategic investor, Lithium Plus together with other sophisticated and
professional investors. These funds strengthened the Company’s balance sheet and together with existing
professional investors. These funds strengthened the Company’s balance sheet and together with existing
cash, ensures AVZ is well positioned to advance the development of our flagship Manono Project.
cash, ensures AVZ is well positioned to advance the development of our flagship Manono Project.
In what has been globally uncertain and stressful times, I would like to pay special thanks to our management
In what has been globally uncertain and stressful times, I would like to pay special thanks to our management
team, staff and consultants both in Australia and the DRC for their outstanding efforts to advance our world-
team, staff and consultants both in Australia and the DRC for their outstanding efforts to advance our world-
class lithium and tin project. We are firmly committed to developing the Manono Project and fully intend to
class lithium and tin project. We are firmly committed to developing the Manono Project and fully intend to
be a major contributor to the global supply chain of lithium which is forecast to double in demand by 2024,
be a major contributor to the global supply chain of lithium which is forecast to double in demand by 2024,
as the production of electric vehicle batteries grows substantially.
as the production of electric vehicle batteries grows substantially.
Nigel Ferguson
Nigel Ferguson
Managing Director
Managing Director
AVZ Minerals Limited | 4
AVZ Minerals Limited | 4
Review of Operations
Review of Operations
Review of Operations
Review of Operations
AVZ Minerals Limited | 5
AVZ Minerals Limited | 5
Review of Operations
Manono Lithium and Tin Project
“Manono Project”, DRC
Highlights:
Definitive Feasibility Study (“DFS”) confirmed outstanding project metrics and provided a higher level of
confidence with respect to engineering design, construction requirements, logistics, project finance and risk
assessments
A$10.7M placement to emerging lithium chemical producer, Yibin Tianyi Lithium Industry Co., Ltd was
completed, along with strong investor support for the exercise of listed AVZ options (contributing A$5.3M
before costs) and A$3.6M raised from existing shareholder, Lithium Plus, and other sophisticated and
professional investors including a global institutional investor
US$1M Convertible Note was repaid
Final payment of US$1M was completed under original Acquisition Agreement to acquire 60% interest in the
Manono Lithium and Tin Project
Successful talks with minority project shareholder Dathomir Mining Resources SARLU to purchase a further 15%
equity in the project
Early project development works were advanced including construction of the initial camp “Colline” and its
expansion to accommodate the plant construction workforce
Approximately US$300M of pre-mining request for tenders were issued including process plants EPC package
MOU signed with the Congolese Government to create a Special Economic Zone in Manono, Tanganyika
Province
MOU signed with the Ministry of Hydraulic Resources and Energy to investigate refurbishment of the Mpiana
Mwanga Hydro Electric Power Plant on the Luvua River
Successful early talks held with the residents and local authorities at Kabondo Dianda for the establishment of
the Intermodal Staging Site at the railhead
Preparation of the Permis d’Exploitation (Mining Licence) application continued
Roche Dure pit dewatering was completed to allow additional infill drilling
Extension to known mineralisation to South West of Roche Dure was confirmed
Phase 2 metallurgical test work (Dense Media Separation and Flotation) completed with exceptional lithia
recovery being achieved with concentrate grades all above the Company’s target of 6% Li2O spodumene
concentrate (“SC6)
Positive heavy mineral recovery of tin and tantalum as part of the Phase 2 flotation test work
EmiAfrica commenced environmental and social impact studies
Highly experienced mining veteran Dr. John Clarke appointed as Non-Executive Chairman, strengthening the
Board as the Manono Project moved into a financing and development phase
Discussions with multiple, potential offtake partners for significant volumes of SC6, PLS and tin well advanced
Negotiations around financing options with several entities in Europe, Middle East and South Africa well
progressed
AVZ Minerals Limited | 6
Review of Operations
Definitive Feasibility Study
In April 2020, the Company released its Definitive Feasibility Study for the Manono Lithium and Tin Project.
Key highlights included:
US$2,348M pre-tax NPV10 and US$1,028M post-tax NPV10
Internal Rate of Return of 53% (pre-tax) and 33% (post-tax)
Net Profit After Tax - Life of Mine of US$3,779 M
Payback period of 1.50 years (pre-tax) and 2.25 years (post-tax)
The Ore Reserve contain 44.6 Mt of Proved Category and 48.5 Mt of Probable category
Life of Mine beyond 20 years based on a 4.5 Mt/a operation under pinned by the Ore Reserves
Conventional open pit mining with low ore waste strip ratio of 1:0.48
LOM lithia recoveries of 60% using only conventional DMS
CAPEX of US$545.5M includes a contingency of US$49.59M (10%)
US$380M average annual EBITDA for LOM
Two transport routes solution at US$229 per tonne cost to Lobito port and US$275 per tonne cost to Dar es
Salaam port
20-year mine life producing 700,000 tonnes per annum high grade of SC6 lithium and 45,375 tonnes per annum
of Primary Lithium Sulphate
Pre-production capital expenditure of US$545.5M includes transport upgrade and rehabilitation of the Mpiana
Mwanga Hydroelectric Power Plant
The DFS confirmed outstanding project metrics and provided a higher level of confidence with respect to engineering
design, construction requirements, logistics, project finance and risk assessments.
The DFS indicated the Manono project to be robust and viable with a product mix of Spodumene Concentrate (SC6) for
700,000 t/a and Primary Lithium Sulphate (PLS) for 46,000 t/a. PLS will be produced using 153,000 t/a of the SC6 product
as feedstock.
The processing flow sheet also allows for the recovery of tin and tantalum from hard rock ore as well as smaller amounts
of alluvial tin and tantalum secured from local alluvial areas.
The Manono Project has a substantial ore body capable of extending the Life of Mine well past the current 20 years, as
modelled. It has a robust, workable transport solution for securing delivery of products to the export ports and a clear
plan to work with the community for social development and environmental compliance.
The Company has been intentionally conservative in its interpretation of financial impacts on the project and therefore,
believes the DFS numbers can be improved in the future despite having included significant, non-project infrastructure
items such as rehabilitation of roads and, the Mpiana Mwanga Hydro Electric Power Plant and has taken an adverse
opinion on any potential VAT refund, amounting to some US$658M over the Life of Mine, which has been totally
excluded from the cash flow.
Further upside for the Manono Project comes in the nature of significant upside resource potential from Carriere de
L’Este, added cash flow from tin and tantalum credits, additional negotiations on a reduction in pricing for transport, the
roll out of electric powered mining equipment and the establishment of the Special Economic Zone at Manono, which
will potentially provide discounted rates on tax, duties, VAT and further significant benefits for the project.
AVZ Minerals Limited | 7
Review of Operations
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The Company confirms in the subsequent public report that all the material assumptions underpinning the production
target, or the forecast financial information derived from a production target, in the initial public report referred to in
rule 5.16 or rule 5.17 (as the case may be) continue to apply and have not materially changed.
The Company confirms that it is not aware of any new information or data that materially affects the information included
in the original market announcements and, in the case of estimates of Mineral Resources and Ore Reserves, all material
assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to
apply and have not materially changed. The Company confirms that the form and context in which the Competent
Person’s findings are presented have not materially changed from the original market announcement.
AVZ Minerals Limited | 8
Review of Operations
Review of Operations
Metallurgical Sampling Test Work
Metallurgical Sampling Test Work
PPhhaassee 11::
PPhhaassee 11::
The metallurgical test work for Phase 1 was completed during the first half of
the financial year.
The metallurgical test work for Phase 1 was completed during the first half of
the financial year.
Chairman’s letter to Shareholders
Chairman’s letter to Shareholders
Initial characterisation test work was completed using HLS (“Heavy Liquid
Separation”) to determine the theoretical maximum spodumene liberation at
various crush sizes. Additionally, mineral species were also investigated to
examine if they could be readily separated with minimal mineral inter-growth to
ensure spodumene itself did not contain excessive concentrations of iron
bound in its structure. Examination of Roche Dure pegmatite samples indicated
almost no inter-growth between spodumene and gangue minerals exists. Also,
the spodumene contained very low iron percentages and was well inside
specified limits for spodumene concentrate.
Initial characterisation test work was completed using HLS (“Heavy Liquid
Separation”) to determine the theoretical maximum spodumene liberation at
various crush sizes. Additionally, mineral species were also investigated to
examine if they could be readily separated with minimal mineral inter-growth to
ensure spodumene itself did not contain excessive concentrations of iron
bound in its structure. Examination of Roche Dure pegmatite samples indicated
almost no inter-growth between spodumene and gangue minerals exists. Also,
the spodumene contained very low iron percentages and was well inside
specified limits for spodumene concentrate.
HLS testing at three crush sizes: 10.0mm, 5.56mm and 3.35mm (Table 1) was
conducted to identify crush size with maximum lithium recovery and lithium
grade. Current convention states that lithium grade be reported as lithia (Li2O)
instead of lithium. The Manono HLS results (refer to ASX announcement dated
13th August 2019) demonstrate that lithium recovery improves with decreasing
crush size and lithia grade also improves with decreasing crush size. HLS results
On behalf of all shareholders and our Non-executive Directors, I
presented in Table 1 below are inclusive of lithium losses to <0.5mm size
congratulate AVZ Minerals’ hard-working team for the substantial
On behalf of all shareholders and our Non-executive Directors, I
fraction.
HLS testing at three crush sizes: 10.0mm, 5.56mm and 3.35mm (Table 1) was
conducted to identify crush size with maximum lithium recovery and lithium
grade. Current convention states that lithium grade be reported as lithia (Li2O)
instead of lithium. The Manono HLS results (refer to ASX announcement dated
13th August 2019) demonstrate that lithium recovery improves with decreasing
crush size and lithia grade also improves with decreasing crush size. HLS results
presented in Table 1 below are inclusive of lithium losses to <0.5mm size
fraction.
progress they have achieved during the past financial year in
congratulate AVZ Minerals’ hard-working team for the substantial
progressing the Company’s world-class Manono Lithium and Tin
progress they have achieved during the past financial year in
Project. To deliver a successful project of the size and scale of
progressing the Company’s world-class Manono Lithium and Tin
RReeccoovveerryy
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Manono requires an incredible team effort.
Project. To deliver a successful project of the size and scale of
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Manono requires an incredible team effort.
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Amid a global pandemic, the team has delivered a ‘highly positive’
11
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HHLLSS:: 33..3355mmmm
HHLLSS:: 33..3355mmmm
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7700..44
Definitive Feasibility Study for the Manono Project and are now
Amid a global pandemic, the team has delivered a ‘highly positive’
working diligently towards securing future multiple off-take
Definitive Feasibility Study for the Manono Project and are now
22
agreements and project financing.
working diligently towards securing future multiple off-take
HHLLSS:: 55..5566mmmm
HHLLSS:: 55..5566mmmm
6655..99
6655..99
agreements and project financing.
Once these contracts are executed, the Board will be ready to
33
HHLLSS:: 1100..00mmmm
HHLLSS:: 1100..00mmmm
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6611..77
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consider a Financial Investment Decision to mine the flagship
Once these contracts are executed, the Board will be ready to
Table 1: Heavy Liquid Separation met test work results
Table 1: Heavy Liquid Separation met test work results
tenacity
project. The
that has been
consider a Financial Investment Decision to mine the flagship
focus, direction and
tenacity
focus, direction and
demonstrated by the Company’s Managing Director Nigel
that has been
project. The
Comminution testing was conducted using DMS. Three 5.56mm crush DMS
Ferguson and his senior management team should be widely
demonstrated by the Company’s Managing Director Nigel
tests were conducted, one to a test SG of 2.9 which failed to achieve 6% lithia in
applauded.
Ferguson and his senior management team should be widely
the concentrate and two tests; one without and the other with a pre-treatment
process to remove mica prior to testing (designated with an RC “Reflux
Classifier” in the description). Both the 2.95 SG tests at 5.56mm could produce
Well done and congratulations to the entire AVZ Minerals team –
a concentrate lithia grade of 6% at 59% recovery.
Comminution testing was conducted using DMS. Three 5.56mm crush DMS
tests were conducted, one to a test SG of 2.9 which failed to achieve 6% lithia in
the concentrate and two tests; one without and the other with a pre-treatment
process to remove mica prior to testing (designated with an RC “Reflux
Classifier” in the description). Both the 2.95 SG tests at 5.56mm could produce
a concentrate lithia grade of 6% at 59% recovery.
applauded.
your efforts have been truly outstanding.
Well done and congratulations to the entire AVZ Minerals team –
your efforts have been truly outstanding.
Dr John Clarke
Non-Executive Chairman
Dr John Clarke
Non-Executive Chairman
AVZ Minerals Limited | 2
AVZ Minerals Limited | 2
AVZ Minerals Limited | 9
AVZ Minerals Limited | 9
Review of Operations
Table 2 below includes iron oxide, mica and fluorine contaminant concentration where assayed, otherwise depicted with
a “NA”, in the DMS100 test spodumene concentrates.
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((%%))
FFee22OO33
MMiiccaa
FF
((%%))
((%%))
((gg//tt))
1
2
3
DMS100: 5.56mm, 2.95SG
59.8
5.8
0.50
2.7
59
DMS100: 5.56mm, RC, 2.9SG
60.9
5.9
0.45
2.1
82
DMS100: 3.35mm, RC, 2.9SG
62.8
6.0
0.44
1.7
NA
TTaabbllee 22:: DDeennssee MMeeddiiaa SSeeppaarraattiioonn 110000 mmeett tteesstt wwoorrkk rreessuullttss
A large scale DMS test was conducted in a DMS circuit containing a 250mm cyclone, approximately 2.5 times the
diameter of the pilot scale DMS100 cyclone.
A sample was prepared to a crush size of 5.56mm, which presently appears to be the most economic crush size. The
DMS250 test result is graphically presented in the Figure 1 below, with all other 5.56mm DMS test results for comparison.
FFiigguurree 11:: DDMMSS110000 aanndd DDMMSS220000 –– GGrraaddee RReeccoovveerryy tteesstt rreessuullttss
AVZ Minerals Limited | 10
Review of Operations
Only iron oxide impurity in the DMS250 test spodumene concentrate is presently available for reporting and is presented
at Test Description ‘4’ with other 5.56mm crush DMS test spodumene concentrate assays in Table 3 below.
TTeesstt DDeessccrriippttiioonn
1
2
3
4
DMS100: 5.56mm, 2.95SG
DMS100: 5.56mm, RC, 2.9SG
DMS100: 3.35mm, RC, 2.9SG
DMS250: 5.56mm, 2.9SG
RReeccoovveerryy
GGrraaddee
LLii22OO
((%%))
59.8
60.9
62.8
59.6
LLii22OO
((%%))
5.8
5.9
6.0
5.8
FFee22OO33
MMiiccaa
FF
((%%))
((%%))
((gg//tt))
0.50
2.7
0.45
2.1
59
82
0.44
1.7
NA
0.49
NA
NA
TTaabbllee 33 -- DDMMSS110000 aanndd DDMMSS225500 BBeenneeffiicciiaattiioonn RReessuullttss
A two-tonne bulk sample was crushed and homogenised to 32mm for further test work material supply. The resulting
10 variability subset samples were crushed and homogenised to 12.5mm with head assays received and aligning well
with estimated assays from previous core assay determinations. All screened undersize materials were also assayed and
provided further positive confirmation of assay work completed to date with the reported numbers aligning very well.
These samples are now pending Heavy Liquid Separation (“HLS”) test work.
High Pressure Grinding Rolls (“HPGR”) performance test work has been undertaken on initial prepared material. The
analysis indicates a 6mm screen would be suitable to produce a 3mm p80 product. However, it has been decided to
relax this target for test purposes given the benefit of 5% additional mass to the Dense Media Separation (“DMS”) feed
if screened at 8mm. A head assay received for the bulk composite aligns perfectly to assay estimates by interval. The
head lithia assay is 1.66% lithia and 0.6% Fe2O3.
PPhhaassee 22::
In March 2020, the Dense Media Separation (DMS) and Flotation test work within the Phase 2 metallurgical testing
program was completed, delivering exceptional results in terms of lithia recovery and concentrate grades all above the
Company’s target of 6% Li2O spodumene concentrate.
In addition, the Company reported positive heavy mineral tin and tantalum recoveries from its flotation test work results.
The tin grades are highly saleable products which could potentially contribute to reducing overall operating costs and
to supply a significant and growing demand from the electronics market.
Some test work on the substantial alluvial tin fields was included in the DFS, however, the Company purposely left any
detailed work on the alluvial tin fields until a later stage in the project.
In late April 2020, the Company reported an outstanding set of results with regards to recovery of Tin, Tantalum and
Niobium. They indicated:
•
Effective liberation and separation show amenability to conventional metallurgical processing methods for tin
and tantalum
• A high-grade, low impurity cassiterite concentrate can be produced grading 71.7% to 73.2% Sn (equating to
91% to 93% cassiterite)
• A separate high-grade tantalum product of between 17% to 21% Ta2O5 was also produced
•
Tantalum product streams are predominantly coltan (columbite-tantalite) returning niobium grades of between
17% to 21% Nb2O5
Tantalum product recoveries are between 62% to 67%, however a high proportion (20% to 31%) of tantalum
and niobium reports to the cassiterite product stream which is expected to attract additional credits from tin
smelters
•
AVZ Minerals Limited | 11
Review of Operations
Review of Operations
Review of Operations
Review of Operations
Extension of surface mineralisation to the
Extension of surface mineralisation to the
Extension of surface mineralisation to the
South West of Roche Dure confirmed
Extension of surface mineralisation to the
South West of Roche Dure confirmed
South West of Roche Dure confirmed
South West of Roche Dure confirmed
In May 2020, results from surface
In May 2020, results from surface
In May 2020, results from surface
exploration and sampling to the
exploration and sampling to the
exploration and sampling to the
In May 2020, results from surface
immediate south-west of Roche
immediate south-west of Roche
immediate south-west of Roche
exploration and sampling to the
Dure, which involved soil sampling
Dure, which involved soil sampling
Dure, which involved soil sampling
immediate south-west of Roche
on wide spaced lines 400 metres
on wide spaced lines 400 metres
on wide spaced lines 400 metres
Dure, which involved soil sampling
apart, provided early positive results
apart, provided early positive results
apart, provided early positive results
on wide spaced lines 400 metres
for the likely extension of the Roche
for the likely extension of the Roche
for the likely extension of the Roche
apart, provided early positive results
Dure pegmatitic orebody along
Dure pegmatitic orebody along
Dure pegmatitic orebody along
for the likely extension of the Roche
strike from the open pit (Figure 2).
strike from the open pit (Figure 2).
strike from the open pit (Figure 2).
Dure pegmatitic orebody along
strike from the open pit (Figure 2).
FFiigguurree 22:: SSuurrffaaccee ssaammpplliinngg ggrriidd ttoo tthhee
FFiigguurree 22:: SSuurrffaaccee ssaammpplliinngg ggrriidd ttoo tthhee
ssoouutthh--wweesstt ooff RRoocchhee DDuurree
ssoouutthh--wweesstt ooff RRoocchhee DDuurree
FFiigguurree 22:: SSuurrffaaccee ssaammpplliinngg ggrriidd ttoo tthhee
ssoouutthh--wweesstt ooff RRoocchhee DDuurree
FFiigguurree 22:: SSuurrffaaccee ssaammpplliinngg ggrriidd ttoo tthhee
ssoouutthh--wweesstt ooff RRoocchhee DDuurree
AArreeaass ooff IInntteerreesstt ((eelleevvaatteedd LLii IIDDXX vvaalluueess))
AArreeaass ooff IInntteerreesstt ((eelleevvaatteedd LLii IIDDXX vvaalluueess))
AArreeaass ooff IInntteerreesstt ((eelleevvaatteedd LLii IIDDXX vvaalluueess))
AArreeaass ooff IInntteerreesstt ((eelleevvaatteedd LLii IIDDXX vvaalluueess))
The samples were collected across
The samples were collected across
The samples were collected across
the concession boundary between
the concession boundary between
the concession boundary between
The samples were collected across
PR13359 onto AVZ’s 100% owned
PR13359 onto AVZ’s 100% owned
PR13359 onto AVZ’s 100% owned
the concession boundary between
PR4030 and this has provided extra
PR4030 and this has provided extra
PR4030 and this has provided extra
PR13359 onto AVZ’s 100% owned
information on a 4.8m long corridor
information on a 4.8m long corridor
information on a 4.8m long corridor
PR4030 and this has provided extra
from Roche Dure along strike to the
from Roche Dure along strike to the
from Roche Dure along strike to the
information on a 4.8m long corridor
western edge of PR4030 (Figure 1).
western edge of PR4030 (Figure 1).
western edge of PR4030 (Figure 1).
from Roche Dure along strike to the
western edge of PR4030 (Figure 1).
The results have indicated at least
The results have indicated at least
The results have indicated at least
five areas of elevated Lithium Index
five areas of elevated Lithium Index
five areas of elevated Lithium Index
The results have indicated at least
values (Li-IDX) (Figure 3), which also
values (Li-IDX) (Figure 3), which also
values (Li-IDX) (Figure 3), which also
five areas of elevated Lithium Index
correspond with high Niobium
correspond with high Niobium
correspond with high Niobium
values (Li-IDX) (Figure 3), which also
five areas, which
values. These
five areas, which
values. These
values. These
five areas, which
correspond with high Niobium
extend to the western edge of
extend to the western edge of
extend to the western edge of
values. These
five areas, which
PR4030, have generated new areas
PR4030, have generated new areas
PR4030, have generated new areas
extend to the western edge of
of potential mineralisation requiring
of potential mineralisation requiring
of potential mineralisation requiring
PR4030, have generated new areas
soil
inspection and
field
soil
inspection and
field
field
soil
of potential mineralisation requiring
sampling.
sampling.
sampling.
soil
inspection and
field
sampling.
inspection and
infill
infill
infill
infill
FFiigguurree 33 :: SSuurrffaaccee aannoommaalliieess ttoo tthhee
FFiigguurree 33 :: SSuurrffaaccee aannoommaalliieess ttoo tthhee
ssoouutthh--wweesstt ooff RRoocchhee DDuurree
ssoouutthh--wweesstt ooff RRoocchhee DDuurree
FFiigguurree 33 :: SSuurrffaaccee aannoommaalliieess ttoo tthhee
ssoouutthh--wweesstt ooff RRoocchhee DDuurree
FFiigguurree 33 :: SSuurrffaaccee aannoommaalliieess ttoo tthhee
ssoouutthh--wweesstt ooff RRoocchhee DDuurree
AVZ Minerals Limited | 12
AVZ Minerals Limited | 12
AVZ Minerals Limited | 12
AVZ Minerals Limited | 12
Review of Operations
Transport Studies
The Company has finalised and priced two preferred routes for transport of Manono products to port for export - at
Lobito in Angola and Dar es Salaam in Tanzania – in that order of preference.
The two routes provide flexibility to ship product either way and mitigate situations such as a derailment on one allowing
the operation to swap product to the other in the interim. This strategy also optimises marine shipping for Americas and
Europe-based clients.
The studies have considered shipment of SC6 in dry loose bulk format and Primary Lithium Sulphate in 20-foot GP marine
containers using a combination of truck road freight and rail and then ultimately marine shipping.
FFiigguurree 44:: RRoouutteess iinnvveessttiiggaatteedd ffoorr pprroodduucctt ttrraannssppoorrttaattiioonn dduurriinngg DDFFSS
AVZ Minerals Limited | 13
Review of Operations
Special Economic Zone
In February 2020, the Company executed a Memorandum of Understanding (“MOU”) with the Ministry of Industry for
the development of a Special Economic Zone (“SEZ”) in Manono, located in the Tanganyika Province in the Democratic
Republic of Congo.
In essence, an SEZ provides for an “investor to enjoy exemptions or reductions, either permanently or temporarily, in a
degressive or non-degressive manager, with or without the possibility of renewal or extension, on direct or indirect taxes,
domestic duties and taxes, national, provincial and municipal royalties, import or export duties payable in the
Democratic Republic of Congo”.
AVZ has provided the DRC’s Ministry of Industry with its proposed terms of reference for the Manono SEZ and its
rationale for the project including the Mpiana Mwanga Hydro Electric Power Plant, the Manono to Kabondo Dianda road
development and the Lualaba River crossing which are all anchor activities for the Manono SEZ. AVZ’s proposed
framework of tax incentives have also been submitted to the DRC Government for its review and consideration, and for
inclusion within the proposed Manono SEZ regional development framework.
Progressing discussions on the Manono SEZ provided some challenges during the early part of the June 2020 quarter
due to travel bans imposed in the DRC due to the global COVID-19 pandemic. However, discussions with the DRC
government are now progressing well and AVZ expects some of the applied taxes, customs and duties in the modelling
to be waived or significantly reduced under the Manono SEZ agreement that is currently being negotiated.
FFiigguurree 55:: MMeemmbbeerrss ooff AAVVZZ aanndd DDaatthhccoomm’’ss MMaannaaggeemmeenntt tteeaamm aanndd GGoovveerrnnmmeenntt OOffffiicciiaallss iinn KKiinnsshhaassaa,, DDRRCC.. LLeefftt ttoo RRiigghhtt:: MMrr.. CChhrriissttiiaann
LLuukkuussaa;; MMrr.. SSeerrggee NNggaanndduu;; MMrr.. BBaalltthhaazzaarr TTsshhiisseekkee rreepprreesseennttiinngg AAVVZZ aanndd DDaatthhccoomm aanndd tthheenn HHoonnoouurraabbllee MMrr.. JJuulliieenn PPaalluukkuu,, HHiiss
EExxcceelllleennccyy tthhee MMiinniisstteerr ooff IInndduussttrryy;; MM.. AAlleexxyy KKaayyeebbee,, TThhee IInnffrraassttrruuccttuurree PPrreessiiddeennttiiaall SSppeecciiaall AAddvviissoorr;; MMrr.. JJeeaann DDiieeuuddoonnnnéé KKaavveessee,, tthhee
CChhiieeff ooff SSttaaffff ooff tthhee MMiinniissttrryy ooff IInndduussttrryy aanndd MMrr.. AAuugguuyy BBoollaannddaa,, CChhaarrggéé ddee mmiissssiioonn ooff tthhee SSppeecciiaall EEccoonnoommiicc ZZoonnee AAggeennccyy
AVZ Minerals Limited | 14
Review of Operations
Review of Operations
AVZ Power
AVZ Power
In early January 2020, the Company signed a Memorandum of
Understanding with the Democratic Republic of the Congo’s
Ministry of Hydraulic Energy and Water Resources to investigate
refurbishment of the Mpiana Mwanga Hydro Electric Power
Plant (HEPP) on the Luvua River and associated power grids in
the Manono Territory.
In early January 2020, the Company signed a Memorandum of
Understanding with the Democratic Republic of the Congo’s
Ministry of Hydraulic Energy and Water Resources to investigate
refurbishment of the Mpiana Mwanga Hydro Electric Power
Plant (HEPP) on the Luvua River and associated power grids in
the Manono Territory.
The Mpiana Mwanga Hydro Electric Power Plant is located
some 85km east-south-east of the proposed Manono mine site.
It was originally built in 1933 to service the historic tin mine but
closed in 1984 when mining operations ceased.
The Mpiana Mwanga Hydro Electric Power Plant is located
some 85km east-south-east of the proposed Manono mine site.
It was originally built in 1933 to service the historic tin mine but
closed in 1984 when mining operations ceased.
At present, power is generated at the Manono town site using
diesel generators and a recently commissioned 1.5Mw solar
power system, while at AVZ’s camp it is powered by a smaller
20Kva solar system with a diesel-powered back-up generator.
Based on a positive outcome of the feasibility studies into re-
commissioning the power plant, it is AVZ Powers’ intention at
this stage to acquire from the DRC Government a long-term,
100% exclusive lease to rehabilitate the HEPP.
At present, power is generated at the Manono town site using
diesel generators and a recently commissioned 1.5Mw solar
power system, while at AVZ’s camp it is powered by a smaller
20Kva solar system with a diesel-powered back-up generator.
Based on a positive outcome of the feasibility studies into re-
commissioning the power plant, it is AVZ Powers’ intention at
this stage to acquire from the DRC Government a long-term,
100% exclusive lease to rehabilitate the HEPP.
A tender for the rehabilitation of the power plant was issued in
July 2020, while Environmental and Social Impact Assessments
(ESIA) for the HEPP, access road and power transmission lines
are also completed.
A tender for the rehabilitation of the power plant was issued in
July 2020, while Environmental and Social Impact Assessments
(ESIA) for the HEPP, access road and power transmission lines
are also completed.
It is estimated up to approximately ~54KMw of electricity can
be generated from the rehabilitated power station – sufficient to
power AVZ’s lithium plant and mining camp, as well as
associated infrastructure and any future expansion of the mine
site, including a 25Ktpa hydroxide plant.
It is estimated up to approximately ~54KMw of electricity can
be generated from the rehabilitated power station – sufficient to
power AVZ’s lithium plant and mining camp, as well as
associated infrastructure and any future expansion of the mine
site, including a 25Ktpa hydroxide plant.
Ultimately, the electricity generated from the power station
could be used for operating all AVZ’s mining equipment,
making the Manono Project a 100% ‘green’ mine, as well as
providing sufficient electricity to power the entire Manono town
site and rehabilitate the associated power grids in the Manono
Territory.
Ultimately, the electricity generated from the power station
could be used for operating all AVZ’s mining equipment,
making the Manono Project a 100% ‘green’ mine, as well as
providing sufficient electricity to power the entire Manono town
site and rehabilitate the associated power grids in the Manono
Territory.
FFiigguurreess 66--99:: TThhee MMppiiaannaa MMwwaannggaa HHyyddrroo EElleeccttrriicc
PPoowweerr PPllaanntt oonn tthhee LLuuvvuuaa RRiivveerr
FFiigguurreess 66--99:: TThhee MMppiiaannaa MMwwaannggaa HHyyddrroo EElleeccttrriicc
PPoowweerr PPllaanntt oonn tthhee LLuuvvuuaa RRiivveerr
AVZ Minerals Limited | 15
AVZ Minerals Limited | 15
Review of Operations
Review of Operations
Review of Operations
Review of Operations
Roche Dure Pit Dewatering Program
Roche Dure Pit Dewatering Program
Roche Dure Pit Dewatering Program
Roche Dure Pit Dewatering Program
In early February 2020, pit dewatering at Roche Dure was completed which gives
In early February 2020, pit dewatering at Roche Dure was completed which gives
In early February 2020, pit dewatering at Roche Dure was completed which gives
AVZ the opportunity to undertake further infill drilling of material underneath the
AVZ the opportunity to undertake further infill drilling of material underneath the
AVZ the opportunity to undertake further infill drilling of material underneath the
In early February 2020, pit dewatering at Roche Dure was completed which gives
pit floor (previously undrilled as it was water covered) to upgrade some Inferred
pit floor (previously undrilled as it was water covered) to upgrade some Inferred
pit floor (previously undrilled as it was water covered) to upgrade some Inferred
AVZ the opportunity to undertake further infill drilling of material underneath the
Resources to at least an Indicated Resource status.
Resources to at least an Indicated Resource status.
Resources to at least an Indicated Resource status.
pit floor (previously undrilled as it was water covered) to upgrade some Inferred
Resources to at least an Indicated Resource status.
FFiigguurreess 99--1100:: TThhee fflloooorr ooff tthhee RRoocchhee DDuurree ppiitt,, ppoosstt ddeewwaatteerriinngg
FFiigguurreess 99--1100:: TThhee fflloooorr ooff tthhee RRoocchhee DDuurree ppiitt,, ppoosstt ddeewwaatteerriinngg
FFiigguurreess 99--1100:: TThhee fflloooorr ooff tthhee RRoocchhee DDuurree ppiitt,, ppoosstt ddeewwaatteerriinngg
FFiigguurreess 99--1100:: TThhee fflloooorr ooff tthhee RRoocchhee DDuurree ppiitt,, ppoosstt ddeewwaatteerriinngg
FFiigguurree 1111:: TThhee ssuummpp oonn tthhee fflloooorr ooff tthhee RRoocchhee DDuurree ppiitt,, ppoosstt ddeewwaatteerriinngg
FFiigguurree 1111:: TThhee ssuummpp oonn tthhee fflloooorr ooff tthhee RRoocchhee DDuurree ppiitt,, ppoosstt ddeewwaatteerriinngg
FFiigguurree 1111:: TThhee ssuummpp oonn tthhee fflloooorr ooff tthhee RRoocchhee DDuurree ppiitt,, ppoosstt ddeewwaatteerriinngg
FFiigguurree 1111:: TThhee ssuummpp oonn tthhee fflloooorr ooff tthhee RRoocchhee DDuurree ppiitt,, ppoosstt ddeewwaatteerriinngg
AVZ Minerals Limited | 16
AVZ Minerals Limited | 16
AVZ Minerals Limited | 16
AVZ Minerals Limited | 16
Review of Operations
Review of Operations
Review of Operations
Review of Operations
Review of Operations
Review of Operations
Environmental and Social Impact Studies
Environmental and Social Impact Studies
Environmental and Social Impact Studies
Environmental and Social Impact Studies
Environmental and Social Impact Studies
Environmental and Social Impact Studies
In Q4 2019, EmiAfrica was appointed to
In Q4 2019, EmiAfrica was appointed to
In Q4 2019, EmiAfrica was appointed to
In Q4 2019, EmiAfrica was appointed to
In Q4 2019, EmiAfrica was appointed to
impact
conduct environmental and social
conduct environmental and social
impact
conduct environmental and social
impact
conduct environmental and social
impact
conduct environmental and social
In Q4 2019, EmiAfrica was appointed to
studies as part of the formal process to obtain
studies as part of the formal process to obtain
studies as part of the formal process to obtain
studies as part of the formal process to obtain
studies as part of the formal process to obtain
impact
conduct environmental and social
the Manono Project.
for
mining permits
mining permits
the Manono Project.
the Manono Project.
for
mining permits
for
mining permits
for
mining permits
the Manono Project.
studies as part of the formal process to obtain
EmiAfrica consultants and senior members of
EmiAfrica consultants and senior members of
EmiAfrica consultants and senior members of
EmiAfrica consultants and senior members of
EmiAfrica consultants and senior members of
the Manono Project.
for
mining permits
local
team briefed key
technical
AVZ’s
AVZ’s
local
local
team briefed key
AVZ’s
local
AVZ’s
AVZ’s
technical
EmiAfrica consultants and senior members of
stakeholders and dignitaries to appraise them
stakeholders and dignitaries to appraise them
stakeholders and dignitaries to appraise them
stakeholders and dignitaries to appraise them
stakeholders and dignitaries to appraise them
local
team briefed key
AVZ’s
of the Company’s intention to mine the Roche
of the Company’s intention to mine the Roche
of the Company’s intention to mine the Roche
of the Company’s intention to mine the Roche
of the Company’s intention to mine the Roche
stakeholders and dignitaries to appraise them
Dure deposit, to obtain their input and address
Dure deposit, to obtain their input and address
Dure deposit, to obtain their input and address
Dure deposit, to obtain their input and address
Dure deposit, to obtain their input and address
of the Company’s intention to mine the Roche
any concerns they had about future mining
any concerns they had about future mining
any concerns they had about future mining
any concerns they had about future mining
any concerns they had about future mining
Dure deposit, to obtain their input and address
activities.
activities.
activities.
activities.
activities.
any concerns they had about future mining
activities.
impact
for
the Manono Project.
team briefed key
local
technical
technical
team briefed key
team briefed key
technical
technical
EmiAfrica also commenced a flora and fauna
EmiAfrica also commenced a flora and fauna
EmiAfrica also commenced a flora and fauna
EmiAfrica also commenced a flora and fauna
EmiAfrica also commenced a flora and fauna
study of Roche Dure which is required under
study of Roche Dure which is required under
study of Roche Dure which is required under
study of Roche Dure which is required under
study of Roche Dure which is required under
EmiAfrica also commenced a flora and fauna
Impact
Social
and
the Environmental
Impact
the Environmental
Impact
the Environmental
Social
and
the Environmental
Social
Impact
Social
and
and
the Environmental
study of Roche Dure which is required under
In addition,
(EISA) program.
Assessment
Assessment
(EISA) program.
In addition,
In addition,
(EISA) program.
Assessment
(EISA) program.
Assessment
In addition,
Assessment
Impact
Social
and
the Environmental
hydrogeological studies are being undertaken
hydrogeological studies are being undertaken
hydrogeological studies are being undertaken
hydrogeological studies are being undertaken
hydrogeological studies are being undertaken
In addition,
(EISA) program.
Assessment
for inclusion in the ESIA reports.
for inclusion in the ESIA reports.
for inclusion in the ESIA reports.
for inclusion in the ESIA reports.
for inclusion in the ESIA reports.
hydrogeological studies are being undertaken
for inclusion in the ESIA reports.
(EISA) program.
In addition,
Impact
Social
and
FFiigguurreess 1122--1133:: KKeeyy ssttaakkeehhoollddeerr bbrriieeffiinnggss wwiitthh llooccaall cchhiieeffss aanndd ddiiggnniittaarriieess wweerree
FFiigguurreess 1122--1133:: KKeeyy ssttaakkeehhoollddeerr bbrriieeffiinnggss wwiitthh llooccaall cchhiieeffss aanndd ddiiggnniittaarriieess wweerree
FFiigguurreess 1122--1133:: KKeeyy ssttaakkeehhoollddeerr bbrriieeffiinnggss wwiitthh llooccaall cchhiieeffss aanndd ddiiggnniittaarriieess wweerree
FFiigguurreess 1122--1133:: KKeeyy ssttaakkeehhoollddeerr bbrriieeffiinnggss wwiitthh llooccaall cchhiieeffss aanndd ddiiggnniittaarriieess wweerree
uunnddeerrttaakkeenn aass ppaarrtt ooff tthhee pprroocceessss ttoo oobbttaaiinn mmiinniinngg ppeerrmmiittss ffoorr tthhee MMaannoonnoo
uunnddeerrttaakkeenn aass ppaarrtt ooff tthhee pprroocceessss ttoo oobbttaaiinn mmiinniinngg ppeerrmmiittss ffoorr tthhee MMaannoonnoo
uunnddeerrttaakkeenn aass ppaarrtt ooff tthhee pprroocceessss ttoo oobbttaaiinn mmiinniinngg ppeerrmmiittss ffoorr tthhee MMaannoonnoo
uunnddeerrttaakkeenn aass ppaarrtt ooff tthhee pprroocceessss ttoo oobbttaaiinn mmiinniinngg ppeerrmmiittss ffoorr tthhee MMaannoonnoo
FFiigguurreess 1122--1133:: KKeeyy ssttaakkeehhoollddeerr bbrriieeffiinnggss wwiitthh llooccaall cchhiieeffss aanndd ddiiggnniittaarriieess wweerree
PPrroojjeecctt..
PPrroojjeecctt..
PPrroojjeecctt..
PPrroojjeecctt..
uunnddeerrttaakkeenn aass ppaarrtt ooff tthhee pprroocceessss ttoo oobbttaaiinn mmiinniinngg ppeerrmmiittss ffoorr tthhee MMaannoonnoo
PPrroojjeecctt..
FFiigguurreess 1122--1133:: KKeeyy ssttaakkeehhoollddeerr bbrriieeffiinnggss wwiitthh llooccaall cchhiieeffss aanndd ddiiggnniittaarriieess wweerree
uunnddeerrttaakkeenn aass ppaarrtt ooff tthhee pprroocceessss ttoo oobbttaaiinn mmiinniinngg ppeerrmmiittss ffoorr tthhee MMaannoonnoo
PPrroojjeecctt..
AVZ Minerals Limited | 17
AVZ Minerals Limited | 17
AVZ Minerals Limited | 17
AVZ Minerals Limited | 17
AVZ Minerals Limited | 17
AVZ Minerals Limited | 17
Review of Operations
Review of Operations
Review of Operations
Review of Operations
Government Engagement
Government Engagement
AVZ undertook extensive government engagement during the year including a formal
briefing with the President of the Democratic Republic of the Congo, His Excellency,
President Tshisekedi Tshilombo, as well as several meetings with Government officials
and Presidential advisors.
Government Engagement
Government Engagement
AVZ undertook extensive government engagement during the year including a formal
AVZ undertook extensive government engagement during the year including a formal
briefing with the President of the Democratic Republic of the Congo, His Excellency,
AVZ undertook extensive government engagement during the year including a formal
briefing with the President of the Democratic Republic of the Congo, His Excellency,
President Tshisekedi Tshilombo, as well as several meetings with Government officials
briefing with the President of the Democratic Republic of the Congo, His Excellency,
President Tshisekedi Tshilombo, as well as several meetings with Government officials
and Presidential advisors.
President Tshisekedi Tshilombo, as well as several meetings with Government officials
and Presidential advisors.
and Presidential advisors.
AVZ briefed the President around its decision to fast track the Definitive Feasibility Study
AVZ briefed the President around its decision to fast track the Definitive Feasibility Study
for the Manono Project as well as answering questions relating to taxation, logistics,
AVZ briefed the President around its decision to fast track the Definitive Feasibility Study
for the Manono Project as well as answering questions relating to taxation, logistics,
energy supply, industrialisation and economic and social development in the Tanganyika
for the Manono Project as well as answering questions relating to taxation, logistics,
energy supply, industrialisation and economic and social development in the Tanganyika
Province.
energy supply, industrialisation and economic and social development in the Tanganyika
Province.
Province.
AVZ briefed the President around its decision to fast track the Definitive Feasibility Study
for the Manono Project as well as answering questions relating to taxation, logistics,
energy supply, industrialisation and economic and social development in the Tanganyika
Province.
FFiigguurree 1144:: LL –– RR.. MMrr.. TToonnyy KKaannkkuu ((AAddvviissoorr)),, MMrr.. GGrraaeemmee JJoohhnnssttoonn ((AAVVZZ TTeecchhnniiccaall
FFiigguurree 1144:: LL –– RR.. MMrr.. TToonnyy KKaannkkuu ((AAddvviissoorr)),, MMrr.. GGrraaeemmee JJoohhnnssttoonn ((AAVVZZ TTeecchhnniiccaall
FFiigguurree 1144:: LL –– RR.. MMrr.. TToonnyy KKaannkkuu ((AAddvviissoorr)),, MMrr.. GGrraaeemmee JJoohhnnssttoonn ((AAVVZZ TTeecchhnniiccaall
DDiirreeccttoorr)),, MMrr.. BBaalltthhaazzaarr TTsshhiisseekkee ((DDaatthhccoomm CChhiieeff AAddmmiinniissttrraattoorr)),,
FFiigguurree 1144:: LL –– RR.. MMrr.. TToonnyy KKaannkkuu ((AAddvviissoorr)),, MMrr.. GGrraaeemmee JJoohhnnssttoonn ((AAVVZZ TTeecchhnniiccaall
DDiirreeccttoorr)),, MMrr.. BBaalltthhaazzaarr TTsshhiisseekkee ((DDaatthhccoomm CChhiieeff AAddmmiinniissttrraattoorr)),,
DDiirreeccttoorr)),, MMrr.. BBaalltthhaazzaarr TTsshhiisseekkee ((DDaatthhccoomm CChhiieeff AAddmmiinniissttrraattoorr)),,
HHiiss EExxcceelllleennccyy MMrr.. FFeelliixx TTsshhiisseekkeeddii,, PPrreessiiddeenntt ooff tthhee DDRRCC,,
DDiirreeccttoorr)),, MMrr.. BBaalltthhaazzaarr TTsshhiisseekkee ((DDaatthhccoomm CChhiieeff AAddmmiinniissttrraattoorr)),,
HHiiss EExxcceelllleennccyy MMrr.. FFeelliixx TTsshhiisseekkeeddii,, PPrreessiiddeenntt ooff tthhee DDRRCC,,
HHiiss EExxcceelllleennccyy MMrr.. FFeelliixx TTsshhiisseekkeeddii,, PPrreessiiddeenntt ooff tthhee DDRRCC,,
MMrr.. CChhrriissttiiaann LLuukkuussaa aanndd MMrr.. JJoohhnn KKaanniinnddaa ((DDaatthhccoomm lleeggaall aaddvviissoorrss))..
HHiiss EExxcceelllleennccyy MMrr.. FFeelliixx TTsshhiisseekkeeddii,, PPrreessiiddeenntt ooff tthhee DDRRCC,,
MMrr.. CChhrriissttiiaann LLuukkuussaa aanndd MMrr.. JJoohhnn KKaanniinnddaa ((DDaatthhccoomm lleeggaall aaddvviissoorrss))..
MMrr.. CChhrriissttiiaann LLuukkuussaa aanndd MMrr.. JJoohhnn KKaanniinnddaa ((DDaatthhccoomm lleeggaall aaddvviissoorrss))..
MMrr.. CChhrriissttiiaann LLuukkuussaa aanndd MMrr.. JJoohhnn KKaanniinnddaa ((DDaatthhccoomm lleeggaall aaddvviissoorrss))..
In October 2019, AVZ met with high ranking officials from the Tanzanian Port Authority,
In October 2019, AVZ met with high ranking officials from the Tanzanian Port Authority,
In October 2019, AVZ met with high ranking officials from the Tanzanian Port Authority,
Tanzania Railways Corporation, Tanzania Zambia Railways Authority, Tanzania Revenue
In October 2019, AVZ met with high ranking officials from the Tanzanian Port Authority,
Tanzania Railways Corporation, Tanzania Zambia Railways Authority, Tanzania Revenue
Tanzania Railways Corporation, Tanzania Zambia Railways Authority, Tanzania Revenue
Authority and Tanzania’s Export Processing Zones Authority, which is the principal
Tanzania Railways Corporation, Tanzania Zambia Railways Authority, Tanzania Revenue
Authority and Tanzania’s Export Processing Zones Authority, which is the principal
Authority and Tanzania’s Export Processing Zones Authority, which is the principal
government agency for promoting investments in Tanzania’s special economic zones.
Authority and Tanzania’s Export Processing Zones Authority, which is the principal
government agency for promoting investments in Tanzania’s special economic zones.
government agency for promoting investments in Tanzania’s special economic zones.
government agency for promoting investments in Tanzania’s special economic zones.
Project issues focused around the available capacity, laydown and storage areas at the
Project issues focused around the available capacity, laydown and storage areas at the
port of Dar es Salaam and a further range of benefits for AVZ such as tax incentives and
Project issues focused around the available capacity, laydown and storage areas at the
port of Dar es Salaam and a further range of benefits for AVZ such as tax incentives and
exemptions and planned rail and port upgrades should further beneficiation in Tanzania
port of Dar es Salaam and a further range of benefits for AVZ such as tax incentives and
exemptions and planned rail and port upgrades should further beneficiation in Tanzania
be investigated.
exemptions and planned rail and port upgrades should further beneficiation in Tanzania
be investigated.
be investigated.
The Tanzanian Government officials offered every possible assistance to facilitate the
The Tanzanian Government officials offered every possible assistance to facilitate the
Company’s objectives of being able to efficiently and cost effectively transport Roche
The Tanzanian Government officials offered every possible assistance to facilitate the
Company’s objectives of being able to efficiently and cost effectively transport Roche
Dure concentrate via the port of Dar es Salaam. The Company is working towards
Company’s objectives of being able to efficiently and cost effectively transport Roche
Dure concentrate via the port of Dar es Salaam. The Company is working towards
securing Letters of Intent with the Tanzania Railways Corporation, Tanzania Zambia
Dure concentrate via the port of Dar es Salaam. The Company is working towards
securing Letters of Intent with the Tanzania Railways Corporation, Tanzania Zambia
Railways Authority and Tanzania’s Export Processing Zones Authority around the
securing Letters of Intent with the Tanzania Railways Corporation, Tanzania Zambia
Railways Authority and Tanzania’s Export Processing Zones Authority around the
movement of Roche Dure concentrate.
Railways Authority and Tanzania’s Export Processing Zones Authority around the
movement of Roche Dure concentrate.
movement of Roche Dure concentrate.
The Tanzanian Government officials offered every possible assistance to facilitate the
Company’s objectives of being able to efficiently and cost effectively transport Roche
Dure concentrate via the port of Dar es Salaam. The Company is working towards
securing Letters of Intent with the Tanzania Railways Corporation, Tanzania Zambia
Railways Authority and Tanzania’s Export Processing Zones Authority around the
movement of Roche Dure concentrate.
Project issues focused around the available capacity, laydown and storage areas at the
port of Dar es Salaam and a further range of benefits for AVZ such as tax incentives and
exemptions and planned rail and port upgrades should further beneficiation in Tanzania
be investigated.
AVZ Minerals Limited | 18
AVZ Minerals Limited | 18
AVZ Minerals Limited | 18
AVZ Minerals Limited | 18
Review of Operations
Review of Operations
Review of Operations
Review of Operations
Review of Operations
Review of Operations
Review of Operations
Early Works Program
Early Works Program
Early Works Program
Early Works Program
Roche Dure Pit Dewatering Program
Roche Dure Pit Dewatering Program
Roche Dure Pit Dewatering Program
In early February 2020, pit dewatering at Roche Dure was completed which gives
The Company advanced its plans to develop the Manono Project issuing tenders
In early February 2020, pit dewatering at Roche Dure was completed which gives
AVZ the opportunity to undertake further infill drilling of material underneath the
for approximately US$300 million worth of pre-mining infrastructure packages.
AVZ the opportunity to undertake further infill drilling of material underneath the
In early February 2020, pit dewatering at Roche Dure was completed which gives
pit floor (previously undrilled as it was water covered) to upgrade some Inferred
The tenders included the process plants EPC package, the Kabondo Dianda
pit floor (previously undrilled as it was water covered) to upgrade some Inferred
AVZ the opportunity to undertake further infill drilling of material underneath the
Resources to at least an Indicated Resource status.
Intermodal Staging Site, mine-site buildings, diesel storage facilities and camp
Resources to at least an Indicated Resource status.
pit floor (previously undrilled as it was water covered) to upgrade some Inferred
catering services packages. Contracts will be awarded once the AVZ Board
Resources to at least an Indicated Resource status.
makes a Final Investment Decision (FID) to mine Manono.
The Company advanced its plans to develop the Manono Project issuing tenders
The Company advanced its plans to develop the Manono Project issuing tenders
The Company advanced its plans to develop the Manono Project issuing tenders
for approximately US$300 million worth of pre-mining infrastructure packages.
for approximately US$300 million worth of pre-mining infrastructure packages.
for approximately US$300 million worth of pre-mining infrastructure packages.
The tenders included the process plants EPC package, the Kabondo Dianda
The tenders included the process plants EPC package, the Kabondo Dianda
The tenders included the process plants EPC package, the Kabondo Dianda
Intermodal Staging Site, mine-site buildings, diesel storage facilities and camp
Intermodal Staging Site, mine-site buildings, diesel storage facilities and camp
Intermodal Staging Site, mine-site buildings, diesel storage facilities and camp
catering services packages. Contracts will be awarded once the AVZ Board
catering services packages. Contracts will be awarded once the AVZ Board
catering services packages. Contracts will be awarded once the AVZ Board
makes a Final Investment Decision (FID) to mine Manono.
makes a Final Investment Decision (FID) to mine Manono.
makes a Final Investment Decision (FID) to mine Manono.
Early in 2020, construction of more sustainable “single-man” accommodation
quarters occurred at Manono, along with associated kitchen, mess, laundry and
recreational facilities. The early works program at Manono’s Camp Colline also
included a sewage treatment facility, a RO water treatment plant and additional
power facilities.
Early in 2020, construction of more sustainable “single-man” accommodation
Early in 2020, construction of more sustainable “single-man” accommodation
Early in 2020, construction of more sustainable “single-man” accommodation
quarters occurred at Manono, along with associated kitchen, mess, laundry and
quarters occurred at Manono, along with associated kitchen, mess, laundry and
quarters occurred at Manono, along with associated kitchen, mess, laundry and
recreational facilities. The early works program at Manono’s Camp Colline also
recreational facilities. The early works program at Manono’s Camp Colline also
recreational facilities. The early works program at Manono’s Camp Colline also
included a sewage treatment facility, a RO water treatment plant and additional
included a sewage treatment facility, a RO water treatment plant and additional
included a sewage treatment facility, a RO water treatment plant and additional
power facilities.
power facilities.
power facilities.
Review of Operations
Early Works Program
The Company advanced its plans to develop the Manono Project issuing tenders
for approximately US$300 million worth of pre-mining infrastructure packages.
The tenders included the process plants EPC package, the Kabondo Dianda
Intermodal Staging Site, mine-site buildings, diesel storage facilities and camp
catering services packages. Contracts will be awarded once the AVZ Board
makes a Final Investment Decision (FID) to mine Manono.
FFiigguurreess 99--1100:: TThhee fflloooorr ooff tthhee RRoocchhee DDuurree ppiitt,, ppoosstt ddeewwaatteerriinngg
FFiigguurreess 99--1100:: TThhee fflloooorr ooff tthhee RRoocchhee DDuurree ppiitt,, ppoosstt ddeewwaatteerriinngg
FFiigguurreess 99--1100:: TThhee fflloooorr ooff tthhee RRoocchhee DDuurree ppiitt,, ppoosstt ddeewwaatteerriinngg
Early in 2020, construction of more sustainable “single-man” accommodation
quarters occurred at Manono, along with associated kitchen, mess, laundry and
recreational facilities. The early works program at Manono’s Camp Colline also
included a sewage treatment facility, a RO water treatment plant and additional
power facilities.
FFiigguurree 1155:: SSiinnggllee--mmaann aaccccoommmmooddaattiioonn qquuaarrtteerrss aatt CCaammpp CCoolllliinnee
FFiigguurree 1155:: SSiinnggllee--mmaann aaccccoommmmooddaattiioonn qquuaarrtteerrss aatt CCaammpp CCoolllliinnee
FFiigguurree 1155:: SSiinnggllee--mmaann aaccccoommmmooddaattiioonn qquuaarrtteerrss aatt CCaammpp CCoolllliinnee
FFiigguurree 1155:: SSiinnggllee--mmaann aaccccoommmmooddaattiioonn qquuaarrtteerrss aatt CCaammpp CCoolllliinnee
FFiigguurree 1111:: TThhee ssuummpp oonn tthhee fflloooorr ooff tthhee RRoocchhee DDuurree ppiitt,, ppoosstt ddeewwaatteerriinngg
FFiigguurree 1111:: TThhee ssuummpp oonn tthhee fflloooorr ooff tthhee RRoocchhee DDuurree ppiitt,, ppoosstt ddeewwaatteerriinngg
FFiigguurree 1111:: TThhee ssuummpp oonn tthhee fflloooorr ooff tthhee RRoocchhee DDuurree ppiitt,, ppoosstt ddeewwaatteerriinngg
AVZ Minerals Limited | 16
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AVZ Minerals Limited | 19
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AVZ Minerals Limited | 19
AVZ Minerals Limited | 16
FFiigguurree 1155:: SSiinnggllee--mmaann aaccccoommmmooddaattiioonn qquuaarrtteerrss aatt CCaammpp CCoolllliinnee
AVZ Minerals Limited | 19
Review of Operations
Corporate
SSttrraatteeggiicc iinnvveessttoorr YYiibbiinn TTiiaannyyii && eexxeerrcciissee ooff AAVVZZ lliisstteedd ooppttiioonnss
In mid-May 2020, AVZ successfully completed a A$10.7M placement to Yibin Tianyi Lithium Industry Co., (“Yibin Tianyi”)
through the issue of 237,500,000 shares at 4.5 cents per share.
Yibin Tianyi is an emerging lithium chemical producer in China that is aligned and backed by China’s largest EV battery
manufacturer, CATL, and the Shenzen-listed company, Suzhou TA&A Ultra Clean Technology Co., Ltd. Yibin Tianyi is
targeting production of up to 25,000 tonnes of lithium hydroxide per annum, with future staged expansions expected
to increase production to approximately 100,000 tonnes per annum, making Yibin Tianyi’s plant one of the largest
hydroxide suppliers in China.
Funds from the Yibin Tianyi placement enabled AVZ to repay a US$1M Convertible Note to N-Resource Limited (a
company associated with Yibin Tianyi), undertake early development works at the Manono Project and provide ongoing
working capital.
In late May 2020, AVZ received approximately A$5.3M (before costs) after more than 180,241, 837 listed options were
exercised by option holders and Canaccord Genuity (Australia) Limited. At the same time, AVZ completed its final
payment of US$1 million under the original Acquisition Agreement to acquire its 60% interest in the Manono Project.
Earlier in Q2 2020, the Company raised A$3.6M from an existing strategic investor, Lithium Plus, and other sophisticated
and professional investors, including a global institutional investor, for the purposes of progressing the DFS and for
general working capital.
BBooaarrdd aanndd MMaannaaggeemmeenntt CChhaannggeess
Highly experienced mining veteran Dr. John Clarke was appointed Non-Executive Chairman of
AVZ Minerals on 2 December 2019. Dr. Clarke’s appointment further strengthened the Board
of Directors as the Company prepared to move into the financing and development phase of
the Manono Project.
Dr. Clarke brings an impressive depth of resources industry experience to AVZ, having started
his career in 1972 as a metallurgist at Goldfield’s Kloof Gold Mine. Most of his career has focused
on the operation, development or management of African mining projects and activities, from
junior operating roles to the most senior Executive and Board level appointments.
DDrr.. JJoohhnn CCllaarrkkee
MMrr.. MMiicchhaaeell HHuugghheess
In October 2019, Mr. Michael Hughes was appointed as Project Director for the Manono Project.
Mr. Hughes has more than 35 years’ experience in Engineering, Procurement and Construction
in the minerals and metals market, having worked for both engineering companies and clients
to execute studies and projects.
His experience covers all metals and minerals commodities plant design and construction in
Africa, India, France and Australia. He has also worked in many African countries, including
Malawi, Mozambique, Namibia, Botswana, Madagascar and Ethiopia.
In May 2020, Mr. Hongliang Chen resigned as a Non-Executive Director of AVZ Minerals. Mr. Chen was a nominee of
Huayou Cobalt Group, which had provided early support to the Manono Project with a A$13M placement in August
2017.
AVZ Minerals Limited | 20
Review of Operations
List of current mining and exploration tenements (as of 30 June 2020):
CCoouunnttrryy // PPrroojjeecctt
TTeenneemmeenntt
IInntteerreesstt
DDRRCC –– MMaannoonnoo PPrroojjeecctt
DDRRCC –– MMaannoonnoo EExxtteennssiioonn PPrroojjeecctt
PR 13359
PR 4029
PR 4030
60%*
100%
SSttaattuuss
Granted
Granted
*AVZ Minerals Limited has secured a further 15% rights from Dathomir Mining Resources SARL. Upon completion of the
acquisition, AVZ Minerals will have 75% interest in the Manono Project.
Roche Dure Main Pegmatite Ore Reserve Estimate (as of 30 June 2020):
RReesseerrvvee ccaatteeggoorryy
TToonnnneess
((MMtt))
GGrraaddee LLii22OO
((%%))
CCoonnttaaiinneedd LLii22OO
((MMtt))
GGrraaddee SSnn
((gg//tt))
CCoonnttaaiinneedd SSnn
((kktt))
Proved
Probable
TToottaall
44.6
48.5
9933..00
1.62
1.54
11..5588
0.72
0.75
11..4477
958
1016
998888
42.7
49.3
9922..00
Notes: Figures above may not sum due to rounding applied.
Mining dilution by elevation has been applied to represent the changing quantities of waste dilution existing on each
bench of the pit:
Surface to the 565RL has 5% mining dilution applied
565RL to the 505RL has 2% mining dilution applied
505RL to the 435RL has 1% mining dilution applied
Below the 435 RL has 0% mining dilution applied, as the whole bench is ROM.
A variable mining recovery has also been applied:
Surface to 565RL has 98% mining recovery applied
Below the 565RL has 99% mining recovery applied
The Ore Reserve estimate has been based on a cut-off of > US$0.00 block value comprising an economic block by
block calculation.
Roche Dure Main Pegmatite Mineral Resource at a 0.5% Li2O cut-off (as of 30 June 2020):
CCaatteeggoorryy
Measured
Indicated
Inferred
TToottaall
TToonnnneess
((MMiilllliioonnss))
107
162
131
440000
LLii22OO
%%
1.68
1.63
1.66
11..6655
SSnn
ppppmm
836
803
509
771155
TTaa
ppppmm
FFee22OO33
%%
36
36
30
3344
0.93
0.96
1.00
00..9966
PP22OO55
%%
0.31
0.29
0.28
00..2299
AVZ Minerals Limited | 21
Review of Operations
Review of Operations
Review of Operations
Review of Operations
Review of Operations
CCoommppeetteenntt PPeerrssoonnss SSttaatteemmeenntt
CCoommppeetteenntt PPeerrssoonnss SSttaatteemmeenntt
The information that relates to Ore Reserves is based on information compiled by Mr.
Daniel Grosso and reviewed by Mr. Karl van Olden, both employees of CSA Global Pty
The information that relates to Ore Reserves is based on information compiled by Mr.
Ltd. Mr. van Olden takes overall responsibility for the Report as Competent Person. Mr.
Daniel Grosso and reviewed by Mr. Karl van Olden, both employees of CSA Global Pty
van Olden is a Fellow of The Australasian Institute of Mining and Metallurgy and has
Ltd. Mr. van Olden takes overall responsibility for the Report as Competent Person. Mr.
sufficient experience, which is relevant to the style of mineralisation and type of deposit
van Olden is a Fellow of The Australasian Institute of Mining and Metallurgy and has
under consideration, and to the activity he is undertaking, to qualify as Competent
sufficient experience, which is relevant to the style of mineralisation and type of deposit
Person in terms of the JORC (2012 Edition). The Competent Person, Mr. Karl van Olden
under consideration, and to the activity he is undertaking, to qualify as Competent
has reviewed the Ore Reserve statement and given permission for the publication of
Person in terms of the JORC (2012 Edition). The Competent Person, Mr. Karl van Olden
this information in the form and context within which it appears. The estimated ore
has reviewed the Ore Reserve statement and given permission for the publication of
reserves underpinning the production target have been prepared by a competent
this information in the form and context within which it appears. The estimated ore
person, Mr. Karl van Olden from CSA Global, in accordance with the requirements in
reserves underpinning the production target have been prepared by a competent
Appendix 5A of the (JORC Code) 2012.
person, Mr. Karl van Olden from CSA Global, in accordance with the requirements in
Appendix 5A of the (JORC Code) 2012.
The Mineral Resource estimate has been completed by Mrs. Ipelo Gasela (BSc Hons,
MSc (Eng.)) who is a geologist with 14 years’ experience in mining geology, Mineral
The Mineral Resource estimate has been completed by Mrs. Ipelo Gasela (BSc Hons,
Resource evaluation and reporting. She is a Senior Mineral Resource Consultant for The
MSc (Eng.)) who is a geologist with 14 years’ experience in mining geology, Mineral
MSA Group (an independent consulting company), is registered with the South African
Resource evaluation and reporting. She is a Senior Mineral Resource Consultant for The
Council for Natural Scientific Professions (SACNASP) and is a Member of the Geological
MSA Group (an independent consulting company), is registered with the South African
Society of South Africa (GSSA). Mrs. Gasela has the appropriate relevant qualifications
Council for Natural Scientific Professions (SACNASP) and is a Member of the Geological
and experience to be considered a Competent Person for the activity being undertaken
Society of South Africa (GSSA). Mrs. Gasela has the appropriate relevant qualifications
as defined in the 2012 edition of the JORC Code. Mrs. Gasela consents to the inclusion
and experience to be considered a Competent Person for the activity being undertaken
in the report of the matters based on this information in the form and context in which
as defined in the 2012 edition of the JORC Code. Mrs. Gasela consents to the inclusion
it appears.
in the report of the matters based on this information in the form and context in which
it appears.
The information in this report that relates to metallurgical test work results is based on,
and fairly represents information compiled and reviewed by Mr. Nigel Ferguson, a
The information in this report that relates to metallurgical test work results is based on,
Competent Person who is a Fellow of The Australasian Institute of Mining and Metallurgy
and fairly represents information compiled and reviewed by Mr. Nigel Ferguson, a
and Member of the Australian Institute of Geoscientists. Mr. Ferguson is a Director of
Competent Person who is a Fellow of The Australasian Institute of Mining and Metallurgy
AVZ Minerals Limited. Mr. Ferguson has sufficient experience that is relevant to the style
and Member of the Australian Institute of Geoscientists. Mr. Ferguson is a Director of
of mineralisation and type of deposit under consideration and to the activity being
AVZ Minerals Limited. Mr. Ferguson has sufficient experience that is relevant to the style
undertaken to qualify as a Competent Person as defined in the 2012 Edition of the
of mineralisation and type of deposit under consideration and to the activity being
“Australasian Code for Reporting of Exploration Results, Mineral Resource and Ore
undertaken to qualify as a Competent Person as defined in the 2012 Edition of the
Reserves”. Mr. Ferguson consents to the inclusion in this report of the matters based on
“Australasian Code for Reporting of Exploration Results, Mineral Resource and Ore
this information in the form and context in which it appears.
Reserves”. Mr. Ferguson consents to the inclusion in this report of the matters based on
this information in the form and context in which it appears.
CCoommppeetteenntt PPeerrssoonnss SSttaatteemmeenntt
CCoommppeetteenntt PPeerrssoonnss SSttaatteemmeenntt
CCoommppeetteenntt PPeerrssoonnss SSttaatteemmeenntt
The information that relates to Ore Reserves is based on information compiled by Mr.
Daniel Grosso and reviewed by Mr. Karl van Olden, both employees of CSA Global Pty
The information that relates to Ore Reserves is based on information compiled by Mr.
Ltd. Mr. van Olden takes overall responsibility for the Report as Competent Person. Mr.
Daniel Grosso and reviewed by Mr. Karl van Olden, both employees of CSA Global Pty
The information that relates to Ore Reserves is based on information compiled by Mr.
van Olden is a Fellow of The Australasian Institute of Mining and Metallurgy and has
Ltd. Mr. van Olden takes overall responsibility for the Report as Competent Person. Mr.
Daniel Grosso and reviewed by Mr. Karl van Olden, both employees of CSA Global Pty
sufficient experience, which is relevant to the style of mineralisation and type of deposit
van Olden is a Fellow of The Australasian Institute of Mining and Metallurgy and has
Ltd. Mr. van Olden takes overall responsibility for the Report as Competent Person. Mr.
under consideration, and to the activity he is undertaking, to qualify as Competent
sufficient experience, which is relevant to the style of mineralisation and type of deposit
van Olden is a Fellow of The Australasian Institute of Mining and Metallurgy and has
Person in terms of the JORC (2012 Edition). The Competent Person, Mr. Karl van Olden
under consideration, and to the activity he is undertaking, to qualify as Competent
sufficient experience, which is relevant to the style of mineralisation and type of deposit
has reviewed the Ore Reserve statement and given permission for the publication of
Person in terms of the JORC (2012 Edition). The Competent Person, Mr. Karl van Olden
under consideration, and to the activity he is undertaking, to qualify as Competent
this information in the form and context within which it appears. The estimated ore
has reviewed the Ore Reserve statement and given permission for the publication of
Person in terms of the JORC (2012 Edition). The Competent Person, Mr. Karl van Olden
reserves underpinning the production target have been prepared by a competent
this information in the form and context within which it appears. The estimated ore
has reviewed the Ore Reserve statement and given permission for the publication of
person, Mr. Karl van Olden from CSA Global, in accordance with the requirements in
reserves underpinning the production target have been prepared by a competent
this information in the form and context within which it appears. The estimated ore
Appendix 5A of the (JORC Code) 2012.
person, Mr. Karl van Olden from CSA Global, in accordance with the requirements in
reserves underpinning the production target have been prepared by a competent
Appendix 5A of the (JORC Code) 2012.
person, Mr. Karl van Olden from CSA Global, in accordance with the requirements in
The Mineral Resource estimate has been completed by Mrs. Ipelo Gasela (BSc Hons,
Appendix 5A of the (JORC Code) 2012.
MSc (Eng.)) who is a geologist with 14 years’ experience in mining geology, Mineral
The Mineral Resource estimate has been completed by Mrs. Ipelo Gasela (BSc Hons,
Resource evaluation and reporting. She is a Senior Mineral Resource Consultant for The
MSc (Eng.)) who is a geologist with 14 years’ experience in mining geology, Mineral
The Mineral Resource estimate has been completed by Mrs. Ipelo Gasela (BSc Hons,
MSA Group (an independent consulting company), is registered with the South African
Resource evaluation and reporting. She is a Senior Mineral Resource Consultant for The
MSc (Eng.)) who is a geologist with 14 years’ experience in mining geology, Mineral
Council for Natural Scientific Professions (SACNASP) and is a Member of the Geological
MSA Group (an independent consulting company), is registered with the South African
Resource evaluation and reporting. She is a Senior Mineral Resource Consultant for The
Society of South Africa (GSSA). Mrs. Gasela has the appropriate relevant qualifications
Council for Natural Scientific Professions (SACNASP) and is a Member of the Geological
MSA Group (an independent consulting company), is registered with the South African
and experience to be considered a Competent Person for the activity being undertaken
Society of South Africa (GSSA). Mrs. Gasela has the appropriate relevant qualifications
Council for Natural Scientific Professions (SACNASP) and is a Member of the Geological
as defined in the 2012 edition of the JORC Code. Mrs. Gasela consents to the inclusion
and experience to be considered a Competent Person for the activity being undertaken
Society of South Africa (GSSA). Mrs. Gasela has the appropriate relevant qualifications
in the report of the matters based on this information in the form and context in which
as defined in the 2012 edition of the JORC Code. Mrs. Gasela consents to the inclusion
and experience to be considered a Competent Person for the activity being undertaken
it appears.
in the report of the matters based on this information in the form and context in which
as defined in the 2012 edition of the JORC Code. Mrs. Gasela consents to the inclusion
it appears.
in the report of the matters based on this information in the form and context in which
The information in this report that relates to metallurgical test work results is based on,
it appears.
and fairly represents information compiled and reviewed by Mr. Nigel Ferguson, a
The information in this report that relates to metallurgical test work results is based on,
Competent Person who is a Fellow of The Australasian Institute of Mining and Metallurgy
and fairly represents information compiled and reviewed by Mr. Nigel Ferguson, a
The information in this report that relates to metallurgical test work results is based on,
and Member of the Australian Institute of Geoscientists. Mr. Ferguson is a Director of
Competent Person who is a Fellow of The Australasian Institute of Mining and Metallurgy
and fairly represents information compiled and reviewed by Mr. Nigel Ferguson, a
AVZ Minerals Limited. Mr. Ferguson has sufficient experience that is relevant to the style
and Member of the Australian Institute of Geoscientists. Mr. Ferguson is a Director of
Competent Person who is a Fellow of The Australasian Institute of Mining and Metallurgy
of mineralisation and type of deposit under consideration and to the activity being
AVZ Minerals Limited. Mr. Ferguson has sufficient experience that is relevant to the style
and Member of the Australian Institute of Geoscientists. Mr. Ferguson is a Director of
undertaken to qualify as a Competent Person as defined in the 2012 Edition of the
of mineralisation and type of deposit under consideration and to the activity being
AVZ Minerals Limited. Mr. Ferguson has sufficient experience that is relevant to the style
“Australasian Code for Reporting of Exploration Results, Mineral Resource and Ore
undertaken to qualify as a Competent Person as defined in the 2012 Edition of the
of mineralisation and type of deposit under consideration and to the activity being
Reserves”. Mr. Ferguson consents to the inclusion in this report of the matters based on
“Australasian Code for Reporting of Exploration Results, Mineral Resource and Ore
undertaken to qualify as a Competent Person as defined in the 2012 Edition of the
this information in the form and context in which it appears.
Reserves”. Mr. Ferguson consents to the inclusion in this report of the matters based on
“Australasian Code for Reporting of Exploration Results, Mineral Resource and Ore
this information in the form and context in which it appears.
Reserves”. Mr. Ferguson consents to the inclusion in this report of the matters based on
this information in the form and context in which it appears.
AVZ Minerals Limited | 22
AVZ Minerals Limited | 22
AVZ Minerals Limited | 22
AVZ Minerals Limited | 22
AVZ Minerals Limited | 22
Directors’ Report
Your directors submit their report on the consolidated entity consisting of AVZ Minerals Limited (‘AVZ’) and the entities
it controlled (the ‘Group’ or the ‘consolidated entity’) for the financial year ended 30 June 2020. In order to comply with
the provisions of the Corporations Act 2001, the directors report as follows:
11..
DDiirreeccttoorrss
The names of directors who held office during or since the end of the year and until the date of this report are as follows.
Directors were in office for the entire period unless otherwise stated.
John Clarke
Nigel Ferguson
Graeme Johnston
Rhett Brans
Peter Huljich
Hongliang Chen
Non-Executive Chairman (appointed 2 December 2019)
Managing Director (appointed 2 February 2017)
Technical Director (appointed 30 July 2018)
Non-Executive Director (appointed 5 February 2018)
Non-Executive Director (appointed 1 May 2019)
Non-Executive Director (appointed 21 August 2017, resigned 12 May 2020)
22..
CCFFOO && CCoommppaannyy SSeeccrreettaarryy
Leonard Math (appointed 9 July 2018)
33..
PPrriinncciippaall AAccttiivviittiieess
The principal activity of the consolidated entity during the financial year was mineral exploration. There were no
significant changes in the nature of the consolidated entity’s principal activities during the financial year.
44..
OOppeerraattiinngg RReessuullttss
The loss of the consolidated entity after income tax amounted to $5,299,858 (2019: $5,263,570).
55..
DDiivviiddeennddss PPaaiidd oorr RReeccoommmmeennddeedd
The directors do not recommend the payment of a dividend and no amount has been paid or declared by way of a
dividend to the date of this report.
66..
RReevviieeww ooff OOppeerraattiioonnss
Refer pages 5 – 22 for a detailed review of the Group’s operations during the year.
The Group’s financial position, financial performance and use of funds information for the financial year is provided in
the financial statements that follow this Directors’ Report.
As an exploration entity, the Group has no operating revenue or earnings and consequently the Group’s performance
cannot be gauged by reference to those measures. Instead, the Directors’ consider the Group’s performance based on
the success of exploration activity, acquisition of additional prospective mineral interests and, in general, the value added
to the Group’s mineral portfolio during the course of the financial year.
Whilst performance can be gauged by reference to market capitalisation, that measure is also subject to numerous
external factors. These external factors can be specific to the Group, generic to the mining industry and generic to the
stock market as a whole and the Board and management would only be able to control a small number of these factors.
The Group’s activities are also subject to numerous risks, mostly outside the Board’s and management’s control. These
risks can be specific to the Group, generic to the mining industry and generic to the stock market as a whole. The key
risks, expressed in summary form, affecting the Group and its future performance include but are not limited to:
AVZ Minerals Limited | 23
Directors’ Report
geological and technical risk posed to exploration and commercial exploitation success;
security of tenure including licence renewal (no assurance can be given that the licence renewals and licence
applications that have been submitted will be successful), and inability to obtain regulatory or landowner consents;
change in commodity prices and market conditions;
environmental and occupational health and safety risks;
retention of key staff;
capital requirement and lack of future funding; and
Coronavirus (COVID-19) and the impact it may have on the Group’s operations and fundraising activities.
This is not an exhaustive list of risks faced by the Group or an investment in it. There are other risks generic to the stock
market and the world economy as whole and other risks generic to the mining industry, all of which can impact on the
Group.
77..
SSiiggnniiffiiccaanntt CChhaannggeess iinn tthhee SSttaattee ooff AAffffaaiirrss
There have been significant changes in the state of affairs of the Group to the date of this report and these are referred
to in the Review of Operations.
88..
EEvveennttss OOccccuurrrriinngg aafftteerr tthhee RReeppoorrttiinngg DDaattee
On 21 September 2020, AVZ announced on ASX that it has executed a Share Sale Purchase Agreement (“Agreement”)
for an additional 10% equity stake in Dathcom Mining SA (“Dathcom Mining”) from its joint venture partner, Dathomir
Mining Resources SARLU (“Dathomir Mining”). Under the Agreement, AVZ has paid US$500,000 to Dathomir Mining as
an advance payment. The remaining US$15,000,000 will be paid to Dathomir Mining at any time within 12 months of
the Agreement being executed, or as soon as AVZ secures a minimum of US$50,000,000 project financing. Should
payment not be made within 12 months of executing the Agreement, AVZ will forego its US$500,000 advance payment
and lose the rights to secure the additional 10% equity in the Manono Project. Alternatively, the Agreement provides for
AVZ to secure a minimum 2.5% equity shareholding in Dathcom Mining and thereafter in pro rata amounts up to the
maximum 10% stake during the 12-month period.
Other than the abovementioned, no other matter or circumstance has arisen that has significantly affected, or may
significantly affect:
the Group’s operations in future financial years, or
the results of those operations in future financial years, or
the Group’s state of affairs in future financial years.
99..
LLiikkeellyy DDeevveellooppmmeennttss aanndd EExxppeecctteedd RReessuullttss ooff OOppeerraattiioonnss
The Group will continue its mineral exploration and development activity at and around its principal exploration projects,
being the Manono Lithium and Tin Project and the Manono Extension Project.
1100..
EEnnvviirroonnmmeennttaall RReegguullaattiioonn
The Group is aware of its environmental obligations with regards to its exploration activities and ensures that it complies
with all regulations when carrying out any exploration work including with the national Greenhouse and Energy
Reporting Act 2007.
AVZ Minerals Limited | 24
Directors’ Report
1111..
IInnffoorrmmaattiioonn oonn DDiirreeccttoorrss aanndd CCoommppaannyy SSeeccrreettaarryy ((iinncclluuddiinngg DDiirreeccttoorr’’ss iinntteerreessttss aatt tthhee ddaattee ooff tthhiiss rreeppoorrtt))
JJoohhnn CCllaarrkkee
Non-Executive Chairman (appointed on 2 Dec 2019)
Qualifications
Experience
Ph.D. in Metallurgy (Cambridge University), B.Sc. in Metallurgy (Cardiff University),
MBA (Middlesex University)
Dr. Clarke started his career 48 years ago as a metallurgist at Goldfield’s Kloof Gold
Mine in 1972. Most of his career has focused on the operation, development or
management of African mining projects and activities, from junior operating roles to
the most senior Executive and Board level appointments.
In 1994, he was appointed to the Board of Ashanti Goldfields as Executive Director,
responsible for Strategic Planning and Business Development. In 1997, he was
appointed President and CEO of Nevsun Resources, a gold explorer and developer
listed on the Toronto Stock Exchange. Most recently, after joining the Board of Banro
Corporation in 2004 as a Non-Executive Director, he became President and CEO in
2013 until 2018. Banro was listed on the TSX and NYSE and was focused on the
development of gold projects in eastern DRC. Banro brought the Twangiza and
Namoya gold mines into production.
Interest in Securities
Fully Paid Ordinary Shares
1,000,000
Directorships in last 3 years
Great Quest Fertilizer Limited (listed on Toronto Stock Exchange) (since 17 June 2009)
NNiiggeell FFeerrgguussoonn
Managing Director (appointed on 2 Feb 2017)
Qualifications
BSc (University of Tasmania), F AusIMM, MAIG
Experience
Mr. Ferguson is a geologist with 32 years of experience having worked in senior
management positions for the past 19 years in a variety of locations. He has experience
in the exploration and definition of precious and base metal mineral resources
throughout the world, including DRC, Zambia, Tanzania, Saudi Arabia, South East Asia
and Central America. He has been active in the DRC since 2004 in gold and base
metals exploration and resource development.
Interest in Securities
Fully Paid Ordinary Shares
Performance Rights
43,478,070
6,000,000
Directorships in last 3 years
Okapi Resources Ltd (29 May 2017 to 30 June 2020)
AJN Resources Inc. (listed on Canadian Securities Exchange) (since 15 October 2016)
GGrraaeemmee JJoohhnnssttoonn
Technical Director (appointed 30 July 2018)
Qualifications
Experience
BSc in Geology (Glasgow University), M.Sc in Structural Geology (Royal School of
Mines, London)
Mr. Johnston is a geologist with over 32 years’ experience operating mostly in Australia
and also the Middle East, Romania and Malaysia. Graeme was the Principal Geologist
with Midwest Corporation in 2005 during its sale to Sinosteel Corporation and was
their first local Chief Geologist. In mid 2006, Graeme assisted in founding ASX listed
Ferrowest Limited where he was the Technical Director for 9 years until the end of
2016. During this time, he contributed to the successful completion of the Feasibility
Study for the Yalgoo Pig Iron Project. Graeme joined the AVZ team in May 2017 as
Project Manager in charge of the day to day operations at the Manono Project.
Interest in Securities
Fully Paid Ordinary Shares
Performance Rights
7,849,737
6,100,000
Directorships in last 3 years
Nil
AVZ Minerals Limited | 25
Directors’ Report
RRhheetttt BBrraannss
Non-Executive Director (appointed on 5 February 2018)
Qualifications
Dip. Engineering (Civil)
Experience
Mr. Brans is an experienced director and civil engineer with over 47 years’ experience
in project developments. Throughout his career, Mr. Brans has been involved in the
management of feasibility studies and the design and construction of mineral
treatment plants across a range of commodities and geographies including for gold in
Ghana, copper in the DRC and graphite in Mozambique. He has extensive experience
as an owner’s representative for several successful mine feasibility studies and project
developments.
Interest in Securities
Fully Paid Ordinary Shares
Performance Rights
3,463,158
3,000,000
Directorships in last 3 years
Australian Potash Limited (since 9 May 2017)
Carnavale Resources Ltd (since 17 September 2013)
Syrah Resources Ltd (12 June 2013 to 31 December 2017)
PPeetteerr HHuulljjiicchh
Non-Executive Director (appointed 1 May 2019)
Qualifications
BCom/LLB, GD-AppFin, GAICD
Experience
Mr. Huljich has over 25 years’ experience in the legal, natural resources and banking
sectors with a particular expertise in capital markets, mining, commodities and
African related matters. He has worked in London for several prestigious
investment banks, including Goldman Sachs, Barclays Capital, Lehman Brothers
and Macquarie Bank with a focus on Commodities and Equity and Debt Capital
Markets and has extensive on-the-ground African mining, oil and gas and
infrastructure experience as the Senior Negotiator and Advisor for Power, Mining
and Infrastructure at Industrial Promotion Services, the global infrastructure
development arm of the Aga Khan Fund for Economic Development (AKFED) whilst
resident in Nairobi, Kenya. Mr. Huljich holds Bachelor of Commerce and an LLB
from the University of Western Australian and is a Graduate of the Securities Institute
of Australia with National Prizes in Applied Valuation and Financial Analysis. Mr.
Huljich is also a graduate of the AICD Company Directors Course.
Interest in Securities
Fully Paid Ordinary Shares
Performance Rights
1,500,000
3,000,000
Directorships in last 3 years
Kogi Iron Limited (appointed on 7 May 2019)
LLeeoonnaarrdd MMaatthh
CFO & Company Secretary (appointed 9 July 2018)
Qualification
B.Com, CA
Experience
Mr. Math a Chartered Accountant with more than 15 years’ of resources industry
experience. He previously worked as an auditor at Deloitte and is experienced with
public company responsibilities including ASX and ASIC compliance, control and
implementation of corporate governance, statutory
reporting and
shareholder relations.
financial
Interest in Securities
Fully Paid Ordinary Shares
Performance Rights
2,630,487
2,000,000
AVZ Minerals Limited | 26
Directors’ Report
1122..
AAuuddiitteedd RReemmuunneerraattiioonn RReeppoorrtt
This report details the nature and amount of remuneration for all key management personnel of AVZ Minerals Limited
and its subsidiaries. The information provided in this remuneration report has been audited as required by section
308(C) of the Corporations Act 2001. For the purposes of this report, key management personnel of the Group are
defined as those persons having authority and responsibility for planning, directing and controlling the major activities
of the Company and the Group, directly or indirectly, including any Director (whether executive or otherwise) of the
Group.
The individuals included in this report are:
Appointment date:
John Clarke
Nigel Ferguson
Graeme Johnston
Rhett Brans
Peter Huljich
Michael Hughes
Leonard Math
Hongliang Chen
Non-Executive Chairman
Managing Director
Technical Director
Non-Executive Director
Non-Executive Director
Project Director
CFO and Company Secretary
Non-Executive Director
(a)
Remuneration Policy
2 December 2019
2 February 2017
30 July 2018
5 February 2018
1 May 2019
14 August 2019
9 July 2018
21 August 2017, resigned 12 May 2020
The remuneration policy of AVZ Minerals Limited has been designed to align director objectives with shareholder and
business objectives by providing a fixed remuneration component which is assessed on an annual basis in line with
market rates. By providing components of remuneration that are indirectly linked to share price appreciation (in the
form of options and/or performance rights), executive, business and shareholder objectives are aligned. The board of
AVZ Minerals Limited believes the remuneration policy to be appropriate and effective in its ability to attract and retain
the best directors to run and manage the company, as well as create goal congruence between directors and
shareholders. The Board’s policy for determining the nature and amount of remuneration for Board members is as
follows:
i.
Executive Directors & Other Key Management Personnel
The remuneration policy and the relevant terms and conditions has been developed by the Remuneration
Committee. In determining competitive remuneration rates, the Comittee reviews local and international trends
among comparative companies and industry generally. It examines terms and conditions for employee incentive
schemes, benefit plans and share plans. Reviews are performed to confirm that executive remuneration is in line
with market practice and is reasonable in the context of Australian executive reward practices.
The Company is an exploration and development entity, and therefore speculative in terms of performance.
Consistent with attracting and retaining talented executives, directors and senior executives are paid market rates
associated with individuals in similar positions, within the same industry.
Mr. Ferguson – Managing Director
Mr. Ferguson provides management services via Ridgeback Holdings Pty Ltd as trustee for the Ferguson
Family Trust (Ridgeback). Mr. Ferguson was appointed Managing Director effective 5 February 2018 and
receives a monthly fee of $29,166 (plus GST) (increased from $25,000) effective 1 July 2020. The current
agreement has a 6-month termination period unless there is a breach or unremedied continued neglect of
the terms of the agreement by Ridgeback in which there is a one-month termination period.
The other service or consulting agreements in place with key management personnel are summarised below:
Dr. Clarke - Chairman
Receives a monthly fee of $10,000 (plus GST)
Will be issued 9,000,000 Performance Rights with vesting conditions subject to shareholders’ approval
Appointment will not exceed 3 years from the date of re-election at the annual general meeting
12-month termination period in the event of a takeover, scheme of arrangement or change of control of
AVZ Minerals Limited
Mr. Johnston - Technical Director
No term of agreement
Receives a monthly fee of $25,000 (plus GST) (increased from $20,833) effective 1 July 2020
AVZ Minerals Limited | 27
Directors’ Report
6-month termination period unless there is a breach or unremedied continued neglect of the terms of the
agreement in which there is a one-month termination period
Mr. Hughes - Project Director
No term of agreement
Receives a monthly base salary of $27,083 plus statutory superannuation
3-month notice period to terminate employment by either party
Mr. Math - Chief Financial Officer and Company Secretary
No term of agreement
Receives a monthly fee of $14,312 (plus GST) (increased from $13,000) effective 1 July 2020
6-month termination period unless there is a breach or unremedied continued neglect of the terms of the
agreement in which there is a one-month termination period
The Remuneration Committee has used remuneration consultants as part of the executive remuneration review
process. The Board’s remuneration policies are outlined below:
Fixed Remuneration
All executives receive a base cash salary which is based on factors such as length of service and experience as
well as other fringe benefits. If entitled, all executives also receive a superannuation guarantee contribution
required by the government, which is currently 9.50% and do not receive any other retirement benefits.
Short-term Incentives (STI)
Under the Group’s current remuneration policy, executives can from time to time receive short-term incentives in
the form of cash bonuses. No short term incentives were paid in the current financial year. The Board is
responsible for assessing whether Key Performance Indicators (“KPI’s”) are met. The Board considers market rates
of salaries for levels across the Group, which have been based on industry data provided by a range of
employment agencies.
Long-term Incentives (LTI)
Executives are encouraged by the Board to hold shares in the company and it is therefore the Group’s objective
to provide incentives for participants to partake in the future growth of the Group and, upon becoming
shareholders in the Company, to participate in the Group’s profits and dividends that may be realised in future
years.
Performance rights
Performance rights in AVZ Minerals Limited are granted by the Board under the AVZ Mineral Limited Rights Share
Trust (RST). Performance rights are issued for no consideration and vest according to a set of performance criteria
being met. The vesting of the performance rights is determined at the Board’s discretion.
ii.
Non-Executive Directors
The Board’s policy is to remunerate non-executive directors at market rates for comparable companies for time,
commitment and responsibilities. In determining competitive remuneration rates, the Board review local and
international trends among comparative companies and the industry generally. Typically, the Company will
compare non-executive remuneration to companies with similar market capitalisations in the exploration and
resource development business Group.
Non-executive directors’ fees are determined within an aggregate directors’ fee pool limit, which will be
periodically recommended for approval by shareholders. The maximum currently stands at $650,000 per annum
which was approved by shareholders at the 30 November 2018 annual general meeting. Fees for non-executive
directors are not linked to the performance of the Company. However, to align directors’ interests with
shareholder interests, the directors are encouraged to hold shares in the company and from time to time, non-
executives may receive options or performance rights subject to shareholder approval, to further align directors’
interests with shareholders.
AVZ Minerals Limited | 28
Directors’ Report
(b)
Company Performance, Shareholder Wealth and Directors’ and Executives’ Remuneration
Performance rights issued during the years are detailed in Note 24 of the financial statements.
Voting and comments made at the Company’s 2019 Annual General Meeting
At the 2019 Annual General Meeting the Company remuneration report was passed by the requisite majority of
shareholders.
(c)
Details of Key Management Personnel Remuneration
2020
Short term employee
benefits
Post employment
benefit
Name
Salary
Consulting
fees
Superannuation
Share based
payments
Total
NNoonn--EExxeeccuuttiivvee CChhaaiirrmmaann::
John Clarke1
EExxeeccuuttiivvee DDiirreeccttoorr::
Nigel Ferguson
TTeecchhnniiccaall DDiirreeccttoorr
Graeme Johnston
NNoonn--EExxeeccuuttiivvee DDiirreeccttoorrss::
Rhett Brans
Hongliang Chen2
Peter Huljich
SSeenniioorr EExxeeccuuttiivvee::
Michael Hughes3
CCFFOO && CCoommppaannyy SSeeccrreettaarryy
Leonard Math
TTOOTTAALL
$
-
-
-
54,794
-
-
287,083
-
334411,,887777
$
70,000
300,000
250,000
19,500
-
60,000
$
-
-
-
$
-
$
70,000
354,816
654,816
325,664
575,664
5,205
-
-
177,408
-
291,391
256,907
-
351,391
-
19,869
138,000
444,952
156,000
885555,,550000
-
2255,,007744
118,271
11,,440055,,555500
274,271
22,,662288,,000011
Remuneration
consisting of
share based
payments
Fixed
remune-
ration
%
-
54
57
69
-
83
31
43
%
100
46
43
31
-
17
69
57
1: John Clarke was appointed on 2 December 2019.
2: Hongliang Chen resigned on 12 May 2020.
3: Michael Hughes was appointed on 14 August 2019.
2019
Name
Short term employee
benefits
Post employment
benefit
Salary
Consulting
fees
Superannuation
Share based
payments
Total
EExxeeccuuttiivvee DDiirreeccttoorr::
Nigel Ferguson
TTeecchhnniiccaall DDiirreeccttoorr::
Graeme Johnston1
NNoonn--EExxeeccuuttiivvee DDiirreeccttoorrss::
Hongliang Chen
Rhett Brans
Peter Huljich3
Guy Loando4
CCFFOO && CCoommppaannyy SSeeccrreettaarryy
Leonard Math2
TTOOTTAALL
$
-
-
-
54,795
-
-
-
5544,,779955
$
300,000
225,333
-
139,500
10,000
45,000
113,935
883333,,776688
$
-
-
-
5,205
-
-
-
55,,220055
$
$
338,7395
638,739
519,511
744,844
-
194,4156
26,145
-
-
393,915
36,145
45,000
179,701
11,,225588,,551111
293,636
22,,115522,,227799
Remuneration
consisting of
share based
payments
Fixed
remun-
eration
%
53
70
-
49
72
-
61
%
47
30
-
51
28
100
39
AVZ Minerals Limited | 29
Directors’ Report
1: Graeme Johnston was appointed on 30 July 2018.
2: Leonard Math was appointed on 9 July 2018.
3: Peter Huljich was appointed on 1 May 2019. No fees were paid to Mr. Huljich during the year however fees of
$10,000 due to him have been accrued.
4: Guy Loando resigned on 1 May 2019.
5: This figure is reduced by $200,364 relating to 12,000,000 performance rights which were cancelled during the
period.
6: This figure is reduced by $75,136 relating to 4,500,000 performance rights which were cancelled during the
period.
SShhaarree--bbaasseedd ccoommppeennssaattiioonn
There are no performance rights granted to key management personnel as part of compensation during the year ended
30 June 2020.
The number of performance rights converted by key management personnel into fully paid ordinary shares during the
year ended 30 June 2020 are set out below:
Name
Nigel Ferguson
Graeme Johnston
Rhett Brans
Peter Huljich
Michael Hughes
Leonard Math
Number of rights converted
during the year 2020
6,000,0001,3
6,000,0001,2,3
3,000,0001,3
1,500,0004
3,000,0005
2,000,0001,3
1. The vesting conditions for Tranche 1 of Class E Performance Rights were met during 2019 upon the Company
defining a JORC measured and indicated resource of 150mt with at least 1% Li2O. These performance rights were
converted into fully paid ordinary shares on 11 July 2019.
2. The vesting conditions for Class C Performance Rights were met during 2019 upon the Company defining a JORC
measured and indicated resource of 100mt with at least 1% Li2O. These performance rights were converted into
fully paid ordinary shares on 11 July 2019.
3. The vesting condition for Tranche 2 of Class E Performance Rights were met during 2020 upon the completion of
Definitive Feasibility Study. These performance rights were converted into fully paid ordinary shares on 12 June
2020.
4. The vesting condition for Tranche 1 of Class H Performance Rights were met during 2020 upon the completion of
Definitive Feasibility Study on the Manono Project. These performance rights were converted into fully paid
ordinary shares on 12 June 2020.
5. The vesting conditions for Tranches 1 and 2 of Class J performance rights were met during 2020 upon delivery of
a positive and definitive transport route(s) for export of product to be included in the Definitive Feasibility Study on
the Manono Project and upon completion of Definitive Feasibility Study on the Manono Project respectively. These
performance rights were converted into fully paid ordinary shares on 12 June 2020.
AVZ Minerals Limited | 30
Directors’ Report
Values of rights over ordinary shares granted, exercised and lapsed for key management personnel as part of
compensation during the year ended 30 June 2020 are set out below:
NNaammee
Nigel Ferguson
Graeme Johnston
Rhett Brans
Peter Huljich
Michael Hughes
Leonard Math
VVaalluuee ooff rriigghhttss ggrraanntteedd
dduurriinngg tthhee yyeeaarr
VVaalluuee ooff rriigghhttss ccoonnvveerrtteedd
dduurriinngg tthhee yyeeaarr
$$
$$
-
-
-
-
138,000
-
480,000
570,000
240,000
126,000
138,000
160,000
(d)
Key Management Personnel Compensation – other transactions
(i)
No options were provided as remuneration during the year.
Options provided as remuneration and shares issued on exercise of such options.
Loans and amount owing to key management personnel
(ii)
No loans were made to any director or other key management personnel of the Group, including related parties
during the financial year. Amount owing to related parties at 30 June 2020 was $48,417 (2019: Nil).
Other transactions with key management personnel
(iii)
During the year ended 30 June 2020, the Company received office sublet rental of $16,498 + GST and admin
charges of $11,044 + GST from Okapi Resources Ltd, a company where Nigel Ferguson was a director. He
resigned as the director of Okapi Resources Ltd on 30 June 2020.
No other transactions were made to any director or other key management personnel of the Group, including
related parties during the financial year.
(e)
Ordinary shareholdings
The number of shares in the company held during the financial year by each director of AVZ Minerals Limited and
other key management personnel of the Group, including related parties, are set out below. There were no
shares granted during the year as remuneration, apart from those issued as a result of performance rights vesting.
Ordinary shares
2020
Balance at the
start of the year
Received as
remuneration
Conversion
of performance
rights
Purchased during
the year
Balance at
the end of
the year
Key Management Personnel:
John Clarke
Nigel Ferguson
Graeme Johnston
Rhett Brans
Peter Huljich
Michael Hughes7
Leonard Math
Hongliang Chen5
-
37,478,070
1,849,737
463,158
-
-
630,487
-
-
-
-
-
-
-
-
-
-
1,000,0006
1,000,000
6,000,0001,3
6,000,0001,2,3
3,000,0001,3
1,500,0004
3,000,0008
2,000,0001,3
-
-
-
-
-
-
-
-
43,478,070
7,849,737
3,463,158
1,500,000
3,000,000
2,630,487
-
AVZ Minerals Limited | 31
Directors’ Report
(f)
Performance Rights
The number of performance rights held during the financial year by each director of AVZ Minerals Limited and
other key management personnel of the Group, including related parties, are set out below. There were no
performance rights granted during the year as remuneration, apart from those issued as a result of performance
rights vesting.
Performance rights
Balance at
the start of
the year
Granted
during the
year
Vested and
Exercised
during the
year
Balance at
the end of
the year
Performance
Rights
vested
% Vested
2020
Key Management Personnel
John Clarke
-
Nigel Ferguson
12,000,000
Graeme Johnston
12,100,000
Rhett Brans
Peter Huljich
6,000,000
4,500,000
-
-
-
-
-
-
-
(6,000,000)1,3
6,000,000
(6,000,000)1,2,3
6,100,000
(3,000,000)1,3
3,000,000
(1,500,000)4
3,000,000
Michael Hughes7
-
3,000,000
(3,000,000)8
-
Leonard Math
4,000,000
Hong Liang Chen5
-
-
-
(2,000,000)1,3
2,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1. The vesting conditions for Tranche 1 of Class E Performance Rights were met during 2019 upon the Company
defining a JORC measured and indicated resource of 150mt with at least 1% Li2O. These performance rights were
converted into fully paid ordinary shares on 11 July 2019.
2. The vesting conditions for Class C Performance Rights were met during 2019 upon the Company defining a JORC
measured and indicated resource of 100mt with at least 1% Li2O. These performance rights were converted into
fully paid ordinary shares on 11 July 2019.
3. The vesting condition for Tranche 2 of Class E Performance Rights were met during 2020 upon the completion of
Definitive Feasibility Study. These performance rights were converted into fully paid ordinary shares on 12 June
2020.
4. The vesting condition for Tranche 1 of Class H Performance Rights were met during 2020 upon the completion of
Definitive Feasibility Study on the Manono Project. These performance rights were converted into fully paid
ordinary shares on 12 June 2020.
5. Resigned on 12 May 2020.
6. On market trade.
7. Appointed on 14 August 2019.
8. The vesting conditions for Tranches 1 and 2 of Class J performance rights were met during 2020 upon delivery of
a positive and definitive transport route(s) for export of product to be included in the Definitive Feasibility Study on
the Manono Project and upon completion of Definitive Feasibilty Study on the Manono Project respectively. These
performance rights were converted into fully paid ordinary shares on 12 June 2020.
There have been no options issued to current Directors and executives as part of their remuneration in the current
period.
TThhiiss iiss tthhee eenndd ooff tthhee aauuddiitteedd rreemmuunneerraattiioonn rreeppoorrtt..
AVZ Minerals Limited | 32
Directors’ Report
1133.. MMeeeettiinnggss ooff DDiirreeccttoorrss
The number of directors' meetings held during the financial year and the number of meetings attended by each
director is:
Board
Remuneration
and
Nomination Committee
Number Eligible
to Attend
Meetings
Attended
Number Eligible
to Attend
Meetings
Attended
5
9
9
9
9
7
5
9
9
9
9
3
1
N/A
N/A
1
1
N/A
1
N/A
N/A
1
1
N/A
Director
John Clarke
Nigel Ferguson
Graeme Johnston
Rhett Brans
Peter Huljich
Hongliang Chen
1144..
IInnssuurraannccee ooff OOffffiicceerrss
During the financial year, AVZ Minerals Limited paid a premium of $45,058 + GST (2019: $41,634) to insure the
directors and secretary of the Company and its controlled entities.
The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be
brought against the officers in their capacity as officers of entities in the Group, and any other payments arising
from liabilities incurred by the officers in connection with such proceedings. This does not include such liabilities
that arise from conduct involving a wilful breach of duty by the officers or the improper use by the officers of their
position or of information to gain advantage for themselves or someone else or to cause detriment to the
company. It is not possible to apportion the premium between amounts relating to the insurance against legal
costs and those relating to other liabilities.
1155..
SShhaarreess uunnddeerr OOppttiioonn
Unissued ordinary shares of AVZ Minerals Limited under option as at the date of this report are as follows:
Expiry date
Exercise
price
Balance at start
of year
Exercised
during the year
24-May-2020
3.0 cents
203,649,049
(203,649,049)
28-Feb-2020
30.5 cents
30,000,000
5-Mar-2021
4.75 cents
1,000,000
5-Sep-2021
5.7 cents
5,000,000
5-Mar-2022
6.65 cents
5,000,000
8-Apr-2022
6.0 cents
-
-
-
-
-
-
Granted
during
the year
Lapsed
during the
year
Balance at
end of the
period
-
-
-
-
-
120,000,002
-
(30,000,000)
-
-
-
-
-
-
1,000,000
5,000,000
5,000,000
120,000,002
No option holder has any right under the options to participate in any other share issue of the Company or any
other entity.
AVZ Minerals Limited | 33
Directors’ Report
1166..
PPrroocceeeeddiinnggss oonn bbeehhaallff ooff tthhee CCoommppaannyy
No person has applied for leave of court to bring proceedings on behalf of the Company or 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 any part of
those proceedings.
1177..
AAuuddiittoorr’’ss IInnddeeppeennddeennccee DDeeccllaarraattiioonn
Section 307c of the Corporations Act 2001 requires our auditors, Bentleys Audit & Corporate (WA) Pty Ltd, to provide
the directors of the Company with an Independence Declaration in relation to the audit of the financial report. This
Independence Declaration is set out on page 35 and forms part of this directors’ report for the year ended 30 June 2020.
1188.. NNoonn--AAuuddiitt SSeerrvviicceess
During the years ended 30 June 2020 and 30 June 2019 there were no non-audit services provided by the Company’s
external auditor Bentleys Audit & Corporate (WA) Pty Ltd and the previous auditor BDO Audit (WA) Pty Ltd.
Signed in accordance with a resolution of the Board of Directors.
NNiiggeell FFeerrgguussoonn
MMaannaaggiinngg DDiirreeccttoorr
Perth, Western Australia
30 September 2020
AVZ Minerals Limited | 34
Auditor’s Independence Declaration
AVZ Minerals Limited | 35
Auditor’s Independence Declaration
Auditor’s Independence Declaration
Auditor’s Independence Declaration
Auditor’s Independence Declaration
TTHHEE
TTHHEE
TTHHEE
TTHHEE
FFIINNAANNCCIIAALL
FFIINNAANNCCIIAALL
FFIINNAANNCCIIAALL
FFIINNAANNCCIIAALL
SSTTAATTEEMMEENNTTSS
SSTTAATTEEMMEENNTTSS
SSTTAATTEEMMEENNTTSS
SSTTAATTEEMMEENNTTSS
AVZ Minerals Limited | 36
AVZ Minerals Limited | 36
AVZ Minerals Limited | 36
AVZ Minerals Limited | 36
Consolidated Statement of Profit or Loss and Other Comprehensive Income
CCoonnssoolliiddaatteedd SSttaatteemmeenntt ooff PPrrooffiitt oorr LLoossss aanndd OOtthheerr CCoommpprreehheennssiivvee
FFoorr tthhee YYeeaarr EEnnddeedd 3300 JJuunnee 22002200
RReevveennuuee
Other income
Foreign currency (loss)/gain
EExxppeennsseess
Administrative costs
Directors and consultancy expenses
Share-based payment expense
Occupancy expenses
Compliance and regulatory expenses
Insurance expenses
Depreciation expense
Depreciation expense of right-of use asset
Movement in fair value of financial liabilities
Interest expense
LLoossss bbeeffoorree iinnccoommee ttaaxx
Income tax expense
Note
Consolidated
2020
$
2019
$
3
24
9
10
13
5
217,276
(42,518)
117,562
56,123
(1,600,545)
(374,178)
(2,029,407)
-
(185,569)
(78,108)
(379,143)
(72,149)
(722,552)
(32,965)
(1,228,951)
(817,423)
(2,336,178)
(90,688)
(181,344)
(64,464)
(300,281)
-
(417,926)
-
((55,,229999,,885588))
((55,,226633,,557700))
-
-
LLoossss aafftteerr iinnccoommee ttaaxx ffoorr tthhee yyeeaarr
((55,,229999,,885588))
((55,,226633,,557700))
OOtthheerr ccoommpprreehheennssiivvee iinnccoommee::
IItteemmss tthhaatt mmaayy bbee rreeccllaassssiiffiieedd ttoo pprrooffiitt oorr lloossss
Exchange differences arising on translation of foreign operations
Other comprehensive income
1,113,712
1,113,712
3,092,572
3,092,572
TToottaall ccoommpprreehheennssiivvee lloossss ffoorr tthhee yyeeaarr
((44,,118866,,114466))
((22,,117700,,999988))
LLoossss ffoorr tthhee yyeeaarr iiss aattttrriibbuuttaabbllee ttoo:
Owners of AVZ Minerals Limited
Non-controlling interests
TToottaall ccoommpprreehheennssiivvee lloossss ffoorr tthhee yyeeaarr aattttrriibbuuttaabbllee ttoo::
Owners of AVZ Minerals Limited
Non-controlling interests
(5,134,821)
(165,037)
((55,,229999,,885588))
(5,144,410)
(119,160)
((55,,226633,,557700))
(4,260,747)
74,601
((44,,118866,,114466))
(2,677,637)
506,639
((22,,117700,,999988))
Basic and diluted loss per share attributable to owners of AVZ
Minerals Limited (cents per share)
18
(0.22)
(0.26)
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with
the accompanying notes.
AVZ Minerals Limited | 37
Consolidated Statement of Financial Position
CCoonnssoolliiddaatteedd SSttaatteemmeenntt ooff FFiinnaanncciiaall PPoossiittiioonn
AAss aatt 3300 JJuunnee 22002200
CCuurrrreenntt AAsssseettss
Cash and cash equivalents
Trade and other receivables
TToottaall CCuurrrreenntt AAsssseettss
NNoonn--CCuurrrreenntt AAsssseettss
Mineral exploration and evaluation
Property, plant and equipment
Right-of-use asset
TToottaall NNoonn--CCuurrrreenntt AAsssseettss
TToottaall AAsssseettss
CCuurrrreenntt LLiiaabbiilliittiieess
Trade and other payables
Provisions
Financial liabilities
Lease liability
TToottaall CCuurrrreenntt LLiiaabbiilliittiieess
NNoonn--CCuurrrreenntt LLiiaabbiilliittiieess
Financial liabilities
Lease liability
TToottaall NNoonn--CCuurrrreenntt LLiiaabbiilliittiieess
TToottaall LLiiaabbiilliittiieess
NNeett AAsssseettss
EEqquuiittyy
Share capital
Reserves
Accumulated losses
Capital and reserves attributable to owners of AVZ Minerals Ltd
Non-controlling interests
TToottaall EEqquuiittyy
Note
Consolidated
2020
$
2019
$
6
7
8
9
10
11
12
13
10
13
10
14
16
22
14,202,294
395,980
8,750,641
207,100
14,598,274
8,957,741
84,896,432
1,092,204
120,248
74,184,250
1,348,416
-
86,108,884
110000,,770077,,115588
75,532,666
8844,,449900,,440077
393,576
36,714
-
72,881
278,946
3,423
2,138,357
-
503,171
2,420,726
5,796,838
51,351
5,074,286
-
5,848,189
66,,335511,,336600
9944,,335555,,779988
5,074,286
77,,449955,,001122
7766,,999955,,339955
103,495,333
9,332,520
(30,162,109)
82,665,744
11,690,054
81,097,191
9,630,639
(25,347,888)
65,379,942
11,615,453
9944,,335555,,779988
7766,,999955,,339955
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
AVZ Minerals Limited | 38
Consolidated Statement of Changes in Equity
CCoonnssoolliiddaatteedd SSttaatteemmeenntt ooff CChhaannggeess iinn EEqquuiittyy
FFoorr tthhee YYeeaarr EEnnddeedd 3300 JJuunnee 22002200
Contributed
Equity
Accumulated
Losses
Share
Options
Reserve
Foreign
Currency
Reserve
Total
Non-
controlling
Interests
Total Equity
$
$
$
$
$
$
$
BBaallaannccee aatt 11 JJuullyy 22001199
8811,,009977,,119911
((2255,,334477,,888888))
66,,336611,,776699
33,,226688,,887700
6655,,337799,,994422
1111,,661155,,445533
7766,,999955,,339955
Loss for the year
Exchange differences on
translation of foreign
operations
Total comprehensive
income/(loss)
for the year
-
-
-
(5,134,821)
-
(5,134,821)
Transactions with owners in their capacity as owners:
Issue of shares
14,287,570
Share issue transaction costs
Share-based payments
(1,020,748)
141,000
-
-
-
-
-
-
-
-
2,029,407
-
6,109,320
320,600
-
(320,600)
-
2,881,000
-
(2,881,000)
Performance rights lapsed
Exercise of Options
Conversion of Performance
Rights
Total transactions with
owners in their capacity as
owners
-
(5,134,821)
(165,037)
(5,299,858)
874,074
874,074
239,638
1,113,712
874,074
(4,260,747)
74,601
(4,186,146)
-
-
-
-
-
-
14,287,570
(1,020,748)
2,170,407
-
6,109,320
-
-
-
-
-
-
-
14,287,570
(1,020,748)
2,170,407
-
6,109,320
-
22,398,142
320,600
(1,172,193)
-
21,546,549
-
21,546,549
BBaallaannccee aatt 3300 JJuunnee 22002200
110033,,449955,,333333
((3300,,116622,,110099))
55,,118899,,557766
44,,114422,,994444
8822,,666655,,774444
1111,,669900,,005544
9944,,335555,,779988
BBaallaannccee aatt 11 JJuullyy 22001188
Loss for the year
6666,,997733,,001144
-
((2200,,220033,,447788))
(5,144,410)
44,,002255,,559911
-
880022,,009977
-
5511,,559977,,222244
(5,144,410)
1111,,110088,,881144
(119,160)
6622,,770066,,003388
(5,263,570)
Exchange differences on
translation of foreign
operations
Total comprehensive
income/(loss)
for the year
-
-
-
(5,144,410)
-
-
2,466,773
2,466,773
625,799
3,092,572
2,466,773
(2,677,637)
506,639
(2,170,998)
Transactions with owners in their capacity as owners:
Contributions of equity
(net of transaction costs)
Share-based payments
Exercise of Options
Conversion of Performance
Rights
13,934,177
-
190,000
-
-
-
-
-
-
2,336,178
-
-
-
-
-
-
13,934,177
2,336,178
190,000
-
-
-
-
-
13,934,177
2,336,178
190,000
-
Total transactions with
owners in their capacity as
owners
14,124,177
-
2,336,178
-
16,460,355
-
16,460,355
BBaallaannccee aatt 3300 JJuunnee 22001199
8811,,009977,,119911
((2255,,334477,,888888))
66,,336611,,776699
33,,226688,,887700
6655,,337799,,994422
1111,,661155,,445533
7766,,999955,,339955
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
AVZ Minerals Limited | 39
Consolidated Statement of Cash Flows
CCoonnssoolliiddaatteedd SSttaatteemmeenntt ooff CCaasshh FFlloowwss
FFoorr tthhee YYeeaarr EEnnddeedd 3300 JJuunnee 22002200
CCaasshh FFlloowwss ffrroomm OOppeerraattiinngg AAccttiivviittiieess
Payments to suppliers and employees (inclusive of GST)
Interest received
Interest expense
COVID-19 cashflow boost government incentive
Note
Consolidated
2020
$
2019
$
(1,921,203)
76,524
(13,839)
42,234
(2,316,115)
110,744
-
-
NNeett ccaasshh oouuttffllooww ffrroomm ooppeerraattiinngg aaccttiivviittiieess
19
((11,,881166,,228844))
((22,,220055,,337711))
CCaasshh FFlloowwss ffrroomm IInnvveessttiinngg AAccttiivviittiieess
Payments for exploration and evaluation
Payments for property, plant and equipment
Payment of deferred consideration
(9,448,589)
(89,240)
(2,162,731)
(16,749,727)
(639,950)
(2,115,075)
NNeett ccaasshh oouuttffllooww ffrroomm iinnvveessttiinngg aaccttiivviittiieess
((1111,,770000,,556600))
((1199,,550044,,775522))
CCaasshh FFlloowwss ffrroomm FFiinnaanncciinngg AAccttiivviittiieess
Proceeds from issue of shares and other equity securities
Proceeds from exercise of options
Share issue transaction costs
Proceed from convertible note
Payment of convertible note
Payment of lease liablity
NNeett ccaasshh iinnffllooww ffrroomm ffiinnaanncciinngg aaccttiivviittiieess
14,136,815
6,109,320
(1,020,748)
1,530,531
(1,555,529)
(68,165)
15,000,000
190,000
(1,065,823)
-
-
-
1199,,113322,,222244
1144,,112244,,117777
NNeett iinnccrreeaassee//((ddeeccrreeaassee)) iinn ccaasshh aanndd ccaasshh eeqquuiivvaalleennttss
5,615,380
((77,,558855,,994466))
Exchange rate adjustments
(163,727)
71
Cash and cash equivalents at the start of the year
8,750,641
16,336,516
CCaasshh aanndd ccaasshh eeqquuiivvaalleennttss aatt tthhee eenndd ooff tthhee yyeeaarr
6
1144,,220022,,229944
88,,775500,,664411
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
AVZ Minerals Limited | 40
Notes to the Consolidated Financial Statements for the year ended 30 June 2020
11..
SSuummmmaarryy ooff SSiiggnniiffiiccaanntt AAccccoouunnttiinngg PPoolliicciieess
The principal accounting policies adopted in the preparation of these financial statements are set out below. These
policies have been consistently applied to all the years presented, unless otherwise stated. These financial
statements present the financial information for AVZ Minerals Limited as a consolidated entity consisting of AVZ
Minerals Limited and the entities is controlled throughout the year (Group or consolidated entity). The Group is a
for-profit entity for the purpose of this financial report.
(a)
Basis of Preparation
The financial report is a general purpose financial report which has been prepared in accordance with the
requirements of Australian Accounting Standards, other authoritative pronouncements of the Australian
Accounting Standards Board, Accounting Interpretations and the Corporations Act 2001.
i.
Statement of Compliance
The financial report complies with Australian Accounting Standards which include International Financial Reporting
Standards as adopted in Australia. Compliance with these standards ensures that the consolidated financial
statements and notes as presented comply with International Financial Reporting Standards (IFRS).
ii.
Historical cost convention
These financial statements have been prepared under the historical cost convention.
(b)
Going concern
The financial report has been prepared on the going concern basis, which contemplates the continuity of normal
business activity and the realisation of assets and the settlement of liabilities in the ordinary course of business.
The Group incurred a loss for the year of $5,299,858 (2019: $5,263,570) and net cash outflows from operating
activities of $1,816,284 (2019: $2,205,371). As at 30 June 2020, the Group has a working capital surplus of
$14,095,103.
The directors have prepared a cash flow forecast, which indicates that the Group will have sufficient cash flows to
meet all commitments and working capital requirements for the 12-month period from the date of signing this
financial report.
Based on the cash flow forecasts, the directors are satisfied that the going concern basis of preparation is
appropriate. In determining the appropriateness of the basis of preparation, the Directors have considered the
impact of the COVID-19 pandemic on the position of the Group at 30 June 2020 and its operations in future
periods.
(c)
Basis of Consolidation
i.
Subsidiaries
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of AVZ Minerals
Limited as at 30 June 2020 and the results of all subsidiaries for the year then ended. AVZ Minerals Limited and its
subsidiaries together are referred to in this financial report as the Group or the consolidated entity.
Subsidiaries are all entities (including structured 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.
Minority interests, being that portion of the profit or loss and net assets of subsidiaries attributable to equity
interests held by persons outside the Consolidated Entity, are shown separately within the Equity section of the
consolidated Statement of Financial Position and in the consolidated Statement of Profit or Loss and Other
Comprehensive Income.
AVZ Minerals Limited | 41
Notes to the Consolidated Financial Statements for the year ended 30 June 2020
11..
SSuummmmaarryy ooff SSiiggnniiffiiccaanntt AAccccoouunnttiinngg PPoolliicciieess ((ccoonnttiinnuueedd))
Intercompany transactions, balances and unrealised gains on transactions between Group companies
are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the
impairment of the asset transferred. Accounting policies of subsidiaries have been changed where
necessary to ensure consistency with the policies adopted by the Group.
ii.
Control over subsidiaries
In determining whether the consolidated Group has control over subsidiaries that are not wholly owned, judgement
is applied to assess the ability of the consolidated Group to control the day to day activities of the partly owned
subsidiary and its economic outcomes. In exercising this judgement, the commercial and legal relationships that
the consolidated Group has with other owners of partly owned subsidiaries are taken into consideration.
Whilst the consolidated Group is not able to control all activities of a partly owned subsidiary, the partly owned
subsidiary is consolidated within the consolidated Group where it is determined that the consolidated Group
controls the day to day activities and economic outcomes of a partly owned subsidiary. Changes in agreements
with other owners of partly owned subsidiaries could result in a loss of control and subsequently de-consolidation.
During 30 June 2017, AVZ Minerals Limited acquired 60% of the issued shares of Dathcom Mining SA (previously
known as Dathcom Mining SAS) by the issue of shares and cash. Under the terms of shareholders agreements the
Company is at this stage solely responsible for funding exploration activities and therefore has control over the day
to day activities and economic outcomes of Dathcom Mining SA. Future changes to the shareholders agreements
may impact on the ability of the Company to control Dathcom Mining SA.
(d)
Share-based payment transactions for the acquisition of goods and services
Share-based payment arrangements in which the Group receives goods or services as in exchange for its own
equity instruments are accounted for as equity-settled share-based payment transactions. The Group measures the
value of equity instruments granted at the fair value of the goods and services received, unless that fair value cannot
be measured reliably.
If the fair value of the goods or services received cannot be reliably measured, the transaction is measured by the
by reference to the fair value of the instruments granted.
The calculation of the fair value of equity instruments at the date at which they are granted is determined using a
Black-Scholes option pricing model, calculation of the fair value involves estimations of the relevant inputs to the
pricing model.
(e)
Financial Instruments
Financial assets and financial liabilities are recognised in the statement of financial position when the Group
becomes a party to the contractual provisions of the instrument.
Financial Assets
Trade receivables are held in order to collect the contractual cash flows and are initially measured at the transaction
price (excludes estimates of variable consideration) as defined in AASB 15 Revenue, as the contracts of the Group
do not contain significant financing components. Impairment losses are recognised based on lifetime expected
credit losses in profit or loss.
Other receivables are held in order to collect the contractual cash flows and accordingly are measured at initial
recognition at fair value, which ordinarily equates to cost and are subsequently measured at cost less impairment
due to their short term nature. A provision for impairment is established based on 12-month expected credit losses
unless there has been a significant increase in credit risk when lifetime expected credit losses are recognised. The
amount of any provision is recognised in profit or loss.
Financial Liabilities and Equity
Financial liabilities and equity instruments issued by the Group are classified in accordance with the substance of
the contractual arrangements entered into and the definitions of a financial liability and an equity instrument. An
equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of
its liabilities. Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue
costs.
AVZ Minerals Limited | 42
Notes to the Consolidated Financial Statements for the year ended 30 June 2020
11..
SSuummmmaarryy ooff SSiiggnniiffiiccaanntt AAccccoouunnttiinngg PPoolliicciieess ((ccoonnttiinnuueedd))
All other loans including convertible loan notes are initially recorded at fair value, which is ordinarily equal to the
proceeds received net of transaction costs. These liabilities are subsequently measured at amortised cost, using
the effective interest rate method.
Effective Interest Rate Method
The effective interest rate method is a method of calculating the amortised cost of a financial asset or liability and
allocating interest income or expense over the relevant period. The effective interest rate is the rate that exactly
discounts estimated future cash flows through the expected life of the financial asset or liability, or, where
appropriate, a shorter period, to the net carrying amount on initial recognition.
(f)
Segment reporting
Operating segments are reported in a manner that is consistent with the internal reporting provided to the chief
operating decision maker. The chief operating decision maker, who is responsible for allocating resources and
assessing performance of the operating segments, has been identified as the board of directors.
(g)
Revenue recognition
Revenue is recognised when or as the Group transfers control of goods or services to a customer at the amount to
which the Group expected to be entitled. If the consideration promised includes a variable amount, the Group
estimates the amount of consideration to which it will be entitled.
COVID-19 revenue is recognised when it is received or when the right to receive payment is established.
(h)
Income tax
The income tax expense or benefit for the period is the tax payable on the current period’s taxable income based
on the national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities
attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in
the financial statements, and to unused tax losses.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when
the assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantively
enacted for each jurisdiction. The relevant tax rates are applied to the cumulative amounts of deductible and
taxable temporary differences to measure the deferred tax asset or liability. An exception is made for certain
temporary differences arising from the initial recognition of an asset or a liability. No deferred tax asset or liability
is recognised in relation to these temporary differences if they arose in a transaction, other than a business
combination, that at the time of the transaction did not affect either accounting profit or taxable profit or loss.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable
that future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax assets
and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when
the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where
the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset
and settle the liability simultaneously. Current and deferred tax balances attributable to amounts recognised
directly in equity are also recognised directly in equity.
(i)
Impairment of assets
At each reporting date the Group assesses whether there is any indication that an asset may be impaired. An
impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of
assessing impairment, assets are Grouped at the lowest levels for which there are separately identifiable cash
inflows which are largely independent of the cash inflows from other assets or Groups of assets (cash-generating
units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of
the impairment at each reporting date.
(j)
Cash and cash equivalents
For the purpose of presentation of the statement of cash flows, 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, and bank overdrafts.
AVZ Minerals Limited | 43
Notes to the Consolidated Financial Statements for the year ended 30 June 2020
11..
SSuummmmaarryy ooff SSiiggnniiffiiccaanntt AAccccoouunnttiinngg PPoolliicciieess ((ccoonnttiinnuueedd))
(k)
Exploration and evaluation expenditure
Exploration, evaluation and development expenditure incurred is accumulated in respect of each identifiable area
of interest. These costs are carried forward only if they relate to an area of interest for which rights of tenure are
current and in respect of which:
•
•
Such costs are expected to be recouped through successful development and exploitation or from sale of the
area: or
Exploration and evaluation activities in the area have not, at reporting date, reached a stage which permits a
reasonable assessment of the existence or otherwise of economically recoverable reserves, and active
operations in, or relating to, the area are continuing.
Accumulated costs in respect of areas of interest which are abandoned are written off in full against profit in the
year in which the decision to abandon the area is made. A regular review is undertaken of each area of interest to
determine the appropriateness of continuing to carry forward costs in relation to that area of interest.
(l)
Trade and other payables
These amounts represent liabilities for goods and services provided to the company prior to the end of financial
year which are unpaid. Trade and other payables are presented as current liabilities unless payment is not due
within 12 months.
(m)
Property, plant and equipment
Plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. The
assets' residual values, useful lives and amortisation methods are reviewed, and adjusted if appropriate, at each
financial year end. Depreciation is calculated on a diminishing value basis over the estimated useful life of the assets
as follows:
Vehicles, IT equipment and furniture – 5 years
(n)
Provisions
Provisions are recognised when the company has a present legal or constructive obligation as a result of past
events, it is probable that an outflow of resources will be required to settle the obligation and the amount has been
reliably estimated. Provisions are not recognised for future operating losses. Provisions are measured at the present
value of management’s best estimate of the expenditure required to settle the present obligation at the reporting
date. The discount rate used to determine the present value reflects current market assessments of the time value
of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised
as interest expense.
(o)
Employee benefits
i.
Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled within
12 months of the reporting date are recognised in respect of employee’s services up to the end of the reporting
period and are measured at the amounts expected to be paid when liabilities are settled. The liability for annual
leave is recognised in the provision for employee benefits. All other short-term employee benefit obligations are
presented as other payables.
ii.
Share-based payments
The company provides benefits to employees (including directors) of the company in the form of share-based
payment transactions, whereby employees render services in exchange for shares or rights over shares (‘equity-
settled transactions’). The cost of these equity-settled transactions with employees is measured by reference to the
fair value at the date at which they are granted.
The fair value is determined using an appropriate option pricing model that takes into account the exercise price,
the term of the option, the impact of dilution, the share price at grant date and expected volatility of the underlying
share, the expected dividend yield and the risk-free interest rate for the term of the option. In valuing equity-settled
transactions, no account is taken of any performance conditions, other than conditions linked to the price of shares
of AVZ Minerals Limited (‘market conditions’).
AVZ Minerals Limited | 44
Notes to the Consolidated Financial Statements for the year ended 30 June 2020
11..
(p)
SSuummmmaarryy ooff SSiiggnniiffiiccaanntt AAccccoouunnttiinngg PPoolliicciieess ((ccoonnttiinnuueedd))
Contributed equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown
in equity as a deduction, net of tax, from the proceeds. Incremental costs directly attributable to the issue of new
shares for the acquisition of a business are not included in the cost of the acquisition as part of the purchase
consideration.
(q)
Earnings per share
i.
Basic earnings per share
Basic earnings per share is calculated by dividing the profit/loss attributable to equity holders 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.
ii. Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into
account the after-tax effect of interest and other financing costs associated with the dilutive potential ordinary
shares and the weighted average number of shares assumed to have been issued for no consideration in relation
to dilutive potential ordinary shares.
(r)
Goods and services tax (GST) and Value added tax (VAT)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or
as part of the expense. Revenue, expenses and assets incurred in overseas are recorded inclusive of VAT and no
receivable or payable is recorded as the recoverability of the VAT from the relevant taxation authority is uncertain.
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 taxation authority is included with other receivables or payables in the
statement of financial position. 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 taxation authority, are
presented as operating cash flows.
(s)
Foreign currency translation
i.
Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the
primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial
statements are presented in Australian dollars, which is AVZ Mineral’s functional and presentation currency.
ii.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the
dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions
and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign
currencies are recognised in the statement of profit or loss and other comprehensive income, except when they
are deferred in equity as qualifying cash flow hedges and qualifying net investment hedges or are attributable to
part of the net investment in a foreign operation.
Translation differences on financial assets and liabilities carried at fair value are reported as part of the fair value
gain or loss. Translation differences on non-monetary financial assets and liabilities such as equities held at fair value
through profit or loss are recognised in profit or loss as part of the fair value gain or loss. Translation differences on
non-monetary financial assets such as equities classified as available for sale financial assets are included in the fair
value reserve in equity.
AVZ Minerals Limited | 45
Notes to the Consolidated Financial Statements for the year ended 30 June 2020
11..
SSuummmmaarryy ooff SSiiggnniiffiiccaanntt AAccccoouunnttiinngg PPoolliicciieess ((ccoonnttiinnuueedd))
(s)
Foreign currency translation (continued)
iii.
Group companies
The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary
economy) that have a functional currency different from the presentation currency are translated into the
presentation currency as follows:
• Assets and liabilities for each statement of financial position presented are translated at the closing rate at
•
the date of that statement of financial position;
Income and expenses for the statement of profit or loss and other comprehensive income are translated
at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the
rates prevailing on the transaction dates, in which case income and expenses are translated at the dates
of the transactions); and
• All resulting exchange differences are recognised as a separate component of comprehensive income.
On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and
of borrowings and other financial instruments designated as hedges of such investments, are recognised in other
comprehensive income. When a foreign operation is sold or any borrowings forming part of the net investment
are repaid, a proportionate share of such exchange differences are recognised in the statement of profit or loss
and other comprehensive income, as part of the gain or loss on sale where applicable. Goodwill and fair value
adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entities
and translated at the closing rate.
(t)
Share based payments
Equity settled transactions
The Group provides benefits to employees (including senior executives) of the Group in the form of share-based
payments, whereby employees render services in exchange for shares or rights over shares (equity-settled
transactions).
The cost of these equity-settled transactions with employees is measured by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value is determined by using an appropriate valuation
technique, further details of which are given in the remuneration report.
In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions
linked to the price of the shares of AVZ Minerals Limited.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the
period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant
employees become fully entitled to the award (the vesting period).
The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects:
(i)
(ii)
the extent to which the vesting period has expired; and
the Group’s best estimate of the number of equity instruments that will ultimately vest. No adjustment is
made for the likelihood of market performance conditions being met as the effect of these conditions is
included in the determination of fair value at grant date. The Statement of Profit or Loss and Other
Comprehensive Income charge or credit for a period represents the movement in cumulative expense
recognised as at the beginning and end of that period.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is only conditional
upon a market condition.
AVZ Minerals Limited | 46
Notes to the Consolidated Financial Statements for the year ended 30 June 2020
11..
SSuummmmaarryy ooff SSiiggnniiffiiccaanntt AAccccoouunnttiinngg PPoolliicciieess ((ccoonnttiinnuueedd))
(t)
Share based payments (continued)
If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had
not been modified. In addition, an expense is recognised for any modification that increases the total fair value of
the share-based payment arrangement, or is otherwise beneficial to the employee, as measured at the date of
modification.
If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense
not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled
award and designated as a replacement award on the date that it is granted, the cancelled and new award are
treated as if they were a modification of the original award, as described in the previous paragraph.
(u)
New accounting standards and interpretations
Adoption of new and revised standards
In the year ended 30 June 2020, the Directors have reviewed all of the new and revised Standards and
Interpretations issued by the AASB that are relevant to the Company and effective for the current reporting periods
beginning on or after 1 July 2019.
As a result of this review, the Group has applied AASB 16 from 1 July 2019.
AASB 16 Leases
AASB 16 replaces the provisions of AASB 117 Leases that relate to the recognition, classification and measurement
of leases. This note explains the impact of the adoption of AASB 16 Leases on the Company’s financial statements
and discloses the new accounting policies that have been applied from 1 July 2019.
On 1 July 2019, the Company held one lease, for the office based in West Perth. The Company assessed which
business model applied to the lease and classified its lease into the appropriate AASB 16 category. The Company
entered into an additional lease on 1 September 2019.
The Company has elected to apply AASB 16 utilising the modified retrospective approach from 1 July 2019, and
therefore has not restated comparatives for the 2018 reporting period, as permitted under the specific transitional
provisions in the standard. The reclassifications and the adjustments arising from the new leasing rules are therefore
recognised in the opening balance sheet on 1 July 2019.
Reclassification from administration expense to a lease liability and right-of-use (“ROU”) asset
The office lease was reclassified from an operating lease which was recorded as an administrative expense in the
consolidated statement of profit or loss, as payments were made each month under the previous AASB 117, to
recognising a lease liability and a ROU asset in its balance sheet under the new AASB 16. The lease payments are
discounted using the Company’s incremental borrowing rate of 6.66%. See Note 10 for further details.
(v)
New accounting standards and interpretations not yet adopted
The Directors have also reviewed all Standards and Interpretations in issue not yet adopted for the year ended 30
June 2020. As a result of this review the Directors have determined that there is no material impact of the Standards
and Interpretations in issue not yet adopted on the Group and, therefore, no change is necessary to Group
accounting policies.
(w)
Parent Entity Financial Information
The financial information for the parent entity, AVZ Minerals Limited, disclosed in Note 25 has been prepared on
the same basis as the consolidated financial statements.
AVZ Minerals Limited | 47
Notes to the Consolidated Financial Statements for the year ended 30 June 2020
22..
CCrriittiiccaall aaccccoouunnttiinngg eessttiimmaatteess aanndd jjuuddggeemmeennttss
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including
expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under
the circumstances. The Group makes estimates and assumptions concerning the future. The resulting accounting
estimates and judgements may differ from the related actual results and may have a significant effect on the carrying
amount of assets and liabilities within the next financial year and on the amounts recognised in the financial statements.
The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year are discussed below.
a)
Impairment of deferred exploration and evaluation expenditure
Exploration and evaluation costs are carried forward where right of tenure of the area of interest is current. These costs
are carried forward in respect of an area that has not at reporting date reached a stage that permits reasonable assessment
of the existence of economically recoverable reserves. The Board and Management have assessed the carrying value of
the Exploration and Evaluation Expenditure to be impaired. Refer to the accounting policy stated in Note 1(k) and to Note
8 for movements in the exploration and evaluation expenditure balance.
b)
Share based payment transactions
The Group measures the cost of equity-settled transactions with employees and consultants by reference to the fair value
of the equity instruments at the date at which they are granted. The fair value for options is determined by an internal
valuation using a Black-Scholes option pricing model. The fair value of Performance Rights is determined by using the
underlying share price at grant date.
c)
Tax in foreign jurisdictions
The consolidated entity operates in overseas jurisdictions and accordingly is required to comply with the taxation
requirements of those relevant countries. This results in the consolidated entity making estimates in relation to taxes
including but not limited to income tax, goods and services tax, withholding tax and employee income tax. The
consolidated entity estimates its tax liabilities based on the consolidated entity’s understanding of the tax law. Where the
final outcome of these matters is different from the amounts that were initially recorded, such differences will impact profit
or loss in the period in which they are settled.
d) Deferred consideration
Deferred consideration is required to be paid at any time over a three year period. As such management have made
judgements around the financing component associated with the deferred consideration, and an estimated repayment
date to assess the present value of the deferred consideration.
e) Estimation of the Group's borrowing rate
The lease payments used to determine the lease liability and rignt-of-use of asset at 1 July 2019 under AASB 16 Leases
are discounted using the Group’s incremental borrowing rate of 6.6%.
33..
RReevveennuuee
Interest received
Rental income
Admin on charges
COVID-19 cashflow boost government incentive
Other income
Sale of equipment
Total revenue and other income
Consolidated
2020
$
2019
$
86,058
16,498
11,044
100,000
3,676
110,744
-
-
-
-
-
6,818
217,276
117,562
AVZ Minerals Limited | 48
Notes to the Consolidated Financial Statements for the year ended 30 June 2020
44..
AAuuddiittoorr’’ss RReemmuunneerraattiioonn
Remuneration of the auditors of the consolidated entity for:
Auditing and reviewing the financial statements:
-
-
BDO Audit (WA) Pty Ltd
Bentleys Audit & Corporate (WA) Pty Ltd
Total remuneration of auditors
Consolidated
2020
$
2019
$
-
45,405
85,000
85,000
-
45,405
Consolidated
2020
$
2019
$
55..
IInnccoommee TTaaxx EExxppeennssee
(a)
Numerical reconciliation of income tax expense to prima facie tax payable
Loss from continuing operations before income tax expense
Tax at the tax rate of 30% (2019: 30%)
(5,299,858)
(5,263,570)
(1,589,957)
(1,579,071)
Tax effect of amounts which are not deductible in calculating taxable
income:
Non-deductible expenses
Unrecognised tax losses
Movement in unrecognised temporary differences
Deductible equity raising costs
Income tax expense
(b)
Deferred tax asset not recognised*
Tax losses
Exploration and expenditure
Other
Net deferred tax not recognised
953,162
776,716
166,304
925,518
697,989
(566)
(306,225)
(43,871)
-
-
3,981,456
3,165,963
494,977
211,811
-
-
4,476,433
3,377,774
*The deferred tax asset attributable to tax losses does not exceed taxable amounts arising from the reversal
of existing assessable temporary differences.
66..
CCaasshh && CCaasshh EEqquuiivvaalleennttss
Cash at bank & in hand
Total cash & cash equivalents
Consolidated
2020
$
2019
$
14,202,294
8,750,641
14,202,294
8,750,641
Cash on hand is non-interest bearing. Cash at bank bears interest rates between 0.01% and 2.9% (2019:
0.01% and 2.7%). Refer to Note 17 for the Group’s exposure to interest rate and credit risk.
AVZ Minerals Limited | 49
Notes to the Consolidated Financial Statements for the year ended 30 June 2020
77..
TTrraaddee aanndd OOtthheerr RReecceeiivvaabblleess
Advances to employees for field work purposes
Accrued interest income
GST receivable
Deposits and securities
COVID-19 cashflow boost government incentive receivable
Prepayments
Other receivables
Total trade and other receivables
88..
EExxpplloorraattiioonn && EEvvaalluuaattiioonn EExxppeennddiittuurree
Opening balance
Acquisition during the year (i)
Exploration costs
Net exchange differences on translation
Closing balance
Consolidated
2020
$
66,912
9,534
179,603
47,302
57,766
18,352
16,511
395,980
2019
$
55,790
-
68,102
46,164
-
17,095
19,949
207,100
Consolidated
2020
$
2019
$
74,184,250
-
9,456,611
1,255,571
84,896,432
49,690,995
5,860,721
18,833,154
(200,620)
74,184,250
(i) On 24 June 2019, the company announced that it has executed a Share Sale Purchase Agreement with
Dathomir Mining Resources SARL to increase the Group’s equity in the Manono Lithium and Tin Project for
a total consideration of US$5,500,000. The total consideration converted to Australian dollars at 24 June
2019 was AU$5,860,721.
The value of the Group’s interest in exploration expenditure is dependent upon:
The continuance of the company’s rights to tenure of the areas of interest;
-
The results of future exploration; and
-
The recoupment of costs through successful development and exploration of the areas of interest, or
alternatively, by their sale.
99..
PPrrooppeerrttyy,, ppllaanntt aanndd eeqquuiippmmeenntt
At cost
Less: accumulated depreciation
Reconciliation
Opening balance
Additions
Depreciation expense
Foreign currency translation difference movement
Closing balance
Consolidated
Consolidated
2020
$
2019
$
1,991,258
(899,054)
1,092,204
1,872,271
(523,855)
1,348,416
1,348,416
89,240
(379,143)
33,691
1,092,204
954,577
641,530
(300,281)
52,590
1,348,416
AVZ Minerals Limited | 50
Notes to the Consolidated Financial Statements for the year ended 30 June 2020
1100..
LLeeaasseess
((aa))
AAmmoouunnttss rreeccooggnniisseedd iinn tthhee bbaallaannccee sshheeeett
RRiigghhttss--ooff--uussee aasssseett
Balance as at 1 July
Right-of-use assets recognised as at 1 July
Less: Depreciation
Closing balance
LLeeaassee lliiaabbiilliittiieess
Balance as at 1 July
Lease liabilities recognised as at 1 July
Add: Interest
Less: Payment per Consolidated Statement of Cash Flows
Closing balance
Current
Non-current
Closing balance
((bb))
AAmmoouunnttss rreeccooggnniisseedd iinn tthhee ccoonnssoolliiddaatteedd ssttaatteemmeenntt ooff pprrooffiitt oorr lloossss
Depreciation of right-of-use asset
Interest expense on lease liabilities
((cc))
LLeeaassiinngg AAccttiivviittiieess
Consolidated
2020
$
2019
$
-
192,397
(72,149)
120,248
-
192,397
10,364
(78,529)
124,232
72,881
51,351
124,232
72,149
10,364
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
The Company leases the office property at Level 2, 8 Colin Street, West Perth. The lease of the property
commenced on 1 March 2019 and remains in force until 28 February 2022.
The lease is recognised as a right-of-use asset and a corresponding liability at the date at which the leased
asset is available for use by the Company. Each lease payment is allocated between the liability and finance
cost. The finance cost is charged to profit or loss over the lease period as to produce a constant periodic rate
of interest on the remaining balance of the liability for each period. The right-of-use asset is amortised over
the shorter of the asset’s useful life and the lease term on a straight-line basis.
IInniittiiaall mmeeaassuurreemmeenntt
Assets and liabilities from a lease are initially measured on a present value basis. The lease liability includes
the present value of the fixed payments and variable lease payments that depend on an index, initially
measured using the index as at the commencement date (reconciled and adjusted for actual index each year).
The lease payments are discounted using the Company’s incremental borrowing rate of 6.66%.
The right-of-use asset is measured at cost comprising of the initial measurement of the lease liability.
AVZ Minerals Limited | 51
Notes to the Consolidated Financial Statements for the year ended 30 June 2020
1111..
TTrraaddee && OOtthheerr PPaayyaabblleess
Current
Trade payables
Employee benefits and related payables
Accrued expenses
Others
Total current trade & other payables
The Group’s exposure to liquidity risk is noted in Note 17.
Consolidated
2020
$
2019
$
320,935
19,894
35,000
17,747
393,576
216,412
6,925
50,700
4,909
278,946
Consolidated
2020
$
2019
$
1122..
PPrroovviissiioonnss
Current
Employee benefits
Total current provisions
The Group’s provision for employee benefits represents annual leave payable.
36,714
36,714
3,423
3,423
Consolidated
2020
$
2019
$
1133..
FFiinnaanncciiaall LLiiaabbiilliittiieess
Acquisition of a 60% interest in Dathcom Mining SA (previously
known as Dathcom Mining SAS) on 23 May 2017
DDeeffeerrrreedd CCoonnssiiddeerraattiioonn
CCuurrrreenntt LLiiaabbiilliittyy
Principal
Principal repayments (i)
Realised foreign exchange loss on repayments
Fair value decrease taken to profit or loss
Transfer between current/non-current
AAtt 3300 JJuunnee
NNoonn--CCuurrrreenntt LLiiaabbiilliittyy
Principal
Transfer between current/non-current
Fair value increase taken to profit or loss
AAtt 3300 JJuunnee
TToottaall
-
1,425,456
(1,450,241)
24,785
-
-
-
-
-
-
-
-
2,027,027
(2,115,075)
73,535
(152,079)
1,592,048
1,425,456
1,022,043
(1,592,048)
570,005
-
1,425,456
(i) Paid to La Congolaise D’Exploittaion Miniere SA in deferred consideration under the terms of the Joint
Venture Agreement. The key terms of the Joint Venture Agreement were disclosed in the Company’s ASX
announcement dated 2 February 2017.
AVZ Minerals Limited | 52
Notes to the Consolidated Financial Statements for the year ended 30 June 2020
1133..
FFiinnaanncciiaall LLiiaabbiilliittiieess ((CCoonnttiinnuueedd))
Acquisition of 5% interest in Dathcom Mining SA on 24 June 2019
DDeeffeerrrreedd CCoonnssiiddeerraattiioonn
CCuurrrreenntt LLiiaabbiilliittyy
Principal
Principal repayments received per Consolidated Statement of Cash
Flows
Realised foreign exchange loss on repayments
AAtt 3300 JJuunnee
NNoonn--CCuurrrreenntt LLiiaabbiilliittyy
Opening balance
Fair value increase taken to profit or loss
AAtt 3300 JJuunnee
TToottaall
Consolidated
2020
$
2019
$
712,901
712,901
(712,490)
(411)
-
-
-
712,901
5,074,286
722,552
5,796,838
5,796,838
5,074,286
-
5,074,286
5,787,187
On 24 June 2019, the Company announced that it had executed a Share Sale Purchase Agreement
(“Agreement”) with Dathomir Mining Resources SARL to increase the Group’s equity in the Manono Lithium
and Tin Project for a total consideration of US$5,500,000. Under the Agreement, the first tranche payment of
US$500,000 is to be paid within 14 days of execution and the balance of the consideration can be paid at any
time within 36 months from execution of the Agreement. The first tranche payment of US$500,000 was paid
in July 2019.
The value of the deferred consideration is the board’s assessment of the value of contracted future payments
issued under the agreement for the acquisition of Dathcom Mining SA. The fair value is based on assumptions
to present value the future payments based on a discount rate of 12%. The principal payments are
contractually required in U.S. dollars and have been converted to Australian dollars at 30 June 2020.
TToottaall DDeeffeerrrreedd CCoonnssiiddeerraattiioonn
Total current liability
Total non-current liability
TToottaall LLiiaabbiilliittyy
-
5,796,838
5,796,838
2,138,357
5,074,286
7,212,643
1144..
SShhaarree ccaappiittaall
Consolidated
Consolidated
2020
Shares
2019
Shares
2020
$
2019
$
Ordinary shares - fully paid
2,838,498,508
2,287,198,459
103,495,333
81,097,191
Total Share Capital
2,838,498,508
2,287,198,459
103,495,333
81,097,191
Ordinary shares participate in dividends and the proceeds on winding up of the company in proportion to the
number of shares held and in proportion to the amount paid up on the shares held. At shareholders meetings,
each ordinary share is entitled to one vote in proportion to the paid-up amount of the share when a poll is
called, otherwise each shareholder has one vote on a show of hands.
AVZ Minerals Limited | 53
Notes to the Consolidated Financial Statements for the year ended 30 June 2020
1144.. SShhaarree ccaappiittaall ((CCoonnttiinnuueedd))
MMoovveemmeennttss iinn sshhaarree ccaappiittaall
Opening Balance 1 July 2018
Conversion of Performance Rights1
Share Purchase Plan
Placement
Exercise of Listed Options during the year
Less: Transaction costs arising on share issues
CClloossiinngg BBaallaannccee aatt 3300 JJuunnee 22001199
Opening Balance 1 July 2019
Conversion of Performance Rights1
Share based payment2
Conversion of Performance Rights3
Exercise of Listed Options4
Issue of shares
Share placement5
Share placement6
Share placement7
Conversion of Performance Rights8
Less: Transaction costs arising on share issues
CClloossiinngg BBaallaannccee aatt 3300 JJuunnee 22002200
Date
Number of
Shares
Fair Value
Total
$
$
$
19 Jul 18
25 Feb 19
4 Mar 19
7 Jun 19
19 Jul 18
5 Jul 19
11 Jul 19
Various
11 Feb 20
8 Apr 20
24 Apr 20
14 May 20
12 Jun 20
1,868,461,449
20,000,000
137,250,166
257,486,844
4,000,000
-
2,287,198,459
2,287,198,459
-
3,000,000
13,950,000
203,649,049
1,000
40,000,000
40,000,000
237,500,000
13,200,000
-
2,838,498,508
0.029
0.038
0.038
0.048
0.029
0.047
0.10
0.03
0.07
0.045
0.045
0.045
0.072
66,973,014
-
5,215,507
9,784,500
190,000
(1,065,830)
81,097,191
81,097,191
580,000
141,000
1,341,000
6,109,320
70
1,800,000
1,800,000
10,687,500
960,000
(1,020,748)
103,495,333
1On 19 July 2018, 20,000,000 Performance Rights vested and were converted to Ordinary Shares. The fair value of the
Performance Rights of $580,000 was transferred from Share based payment reserve to Share Capital during the year
ended 30 June 2020.
2On 5 July 2019, 3,000,000 shares were issued to a supplier in lieu of cash payments for investor relations services
received.
3On 11 July 2019 5,000,000 Class C Performance Rights and 8,950,000 Class E Performance Rights vested and
converted to Ordinary Shares. The fair value of the Performance Rights of $1,341,000 was transferred from Share based
payment reserve to Share Capital.
4During the year ended 30 June 2020 a total of 203,649,049 Listed Options (exercisable at $0.03 on or before 24 May
2020) were exercised.
5On 8 April 2020, the Company completed a $1.8 million placement through the issue of 40,000,000 shares at $0.0045
per share and 60,000,002 free-attaching options exercisable at $0.06 expiring on 8 April 2022 to Lithium Plus and
other sophisticated and professional investors, all of whom are non-related parties.
6On 24 April 2020, the Company completed a $1.8 million placement through the issue of 40,000,000 shares at
$0.0045 per share and 60,000,002 free-attaching options exercisable at $0.06 expiring on 8 April 2022 to Lithium Plus
and other sophisticated and professional investors, all of whom are non-related parties.
7On 14 May 2020, the Company completed a $10.7 million placement through the issue of 237,500,000 shares at
$0.0045 per share to Yibin Tianyi Lithium Industry Co,Ltd.
8On 12 June 2020 the Company issued 13,200,000 fully paid ordinary shares following the vesting of Class E and Class
H Performance Rights (Completion of the Definitive Feasibility Study on the Manono Project.
AVZ Minerals Limited | 54
Notes to the Consolidated Financial Statements for the year ended 30 June 2020
1155..
SShhaarree OOppttiioonnss aanndd PPeerrffoorrmmaannccee RRiigghhttss
Expiry date
Exercise
price
(cents)
Balance at
start of year
Granted during
the year
Exercised
during the year
Lapsed
during
the year
Balance at
end of the
year
SShhaarree OOppttiioonnss
((aa))
22002200
Unlisted
28 Apr 2020
Listed
24 May 2020
Unlisted
5 Mar 2021
Unlisted
5 Sep 2021
Unlisted
5 Mar 2022
Unlisted
8 Apr 2022
22001199
Unlisted
28 Apr 2020
Unlisted
15 Apr 2019
Listed
24 May 2020
Unlisted
5 Mar 2021
Unlisted
5 Sep 2021
Unlisted
5 Mar 2022
30.5
3.0
4.75
5.7
6.65
6.0
30.5
10.0
3.0
4.75
5.7
6.65
30,000,000
203,649,049
1,000,000
5,000,000
5,000,000
-
-
-
-
-
-
120,000,0021
-
(30,000,000)
(203,649,049)
-
-
-
-
-
-
-
-
-
-
-
1,000,000
5,000,000
5,000,000
120,000,002
244,649,049
120,000,002
(203,649,049)
(30,000,000)
131,000,002
30,000,000
207,428,573
203,649,049
-
-
-
-
-
-
-
-
-
5,000,000
5,000,000
5,000,000
(4,000,000)
-
-
-
30,000,000
(207,428,573)
-
-
-
-
-
203,649,049
1,000,000
5,000,000
5,000,000
441,077,622
15,000,000
(4,000,000)
(207,428,573)
244,649,049
1On 8 April 2020 and 24 April 2020, the Company completed a $3.6 million placement through the issue of 80,000,000 shares
at $0.0045 per share and 120,000,002 free-attaching options exercisable at $0.06 expiring on 8 April 2022 to Lithium Plus and
other sophisticated and professional investors, all of whom are non-related parties.
Expiry date
Exercise
price
Balance at
start of year
Granted
during the
year
Converted
during the
year
Cancelled/
lapsed during the
year
Balance at end of
the year
PPeerrffoorrmmaannccee RRiigghhttss
((bb))
22002200
Class B
Class C
Class D
Class E
Class F
Class G
Class H
Class I
Class J
Class K
30 Nov 2021
12 Oct 2018
Various
3 Dec 2021
2 Jun 2022
2 Jun 2022
3 Dec 2021
11 Nov 2020
1 Nov 2022
3 Dec 2021
22001199
Class A
Class B
Class C
Class D
Class E
Class F
Class G
Class H
22 May 2018
30 Nov 2021
12 Oct 2018
Various
3 Dec 2021
3 Jun 2022
2 Jun 2022
3 Dec 2021
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7,500,000
5,000,000
14,850,000
35,800,000
8,000,000
3,000,000
4,500,000
-
-
-
78,650,000
-
-
-
-
-
-
-
3,000,000
3,000,000
1,600,000
7,600,000
-
(5,000,000)
-
(17,650,000)
-
-
(1,500,000)
-
(3,000,000)
-
(27,150,000)
(7,500,000)
-
(11,250,000)
(750,000)
-
(3,000,000)
-
-
-
-
(22,500,000)
20,000,000
7,500,000
5,000,000
14,850,000
-
-
-
-
47,350,000
-
-
-
-
35,800,000
8,000,000
3,000,000
4,500,000
51,300,000
(20,000,000)
-
-
-
-
-
-
-
(20,000,000)
-
-
-
-
-
-
-
-
-
-
-
3,600,000
17,400,000
8,000,000
-
3,000,000
3,000,000
-
1,600,000
36,600,000
-
7,500,000
5,000,000
14,850,000
35,800,000
8,000,000
3,000,000
4,500,000
78,650,000
AVZ Minerals Limited | 55
Notes to the Consolidated Financial Statements for the year ended 30 June 2020
1166..
RReesseerrvveess
Share Options Reserve (a)
Foreign currency translation reserve (b)
Total reserves
(a)
Share Options Reserve (i)
Opening balance
Unlisted Options issued during the year
Share-based payment expense during the year
Less: Conversion of Performance Rights
Less: Performance Rights lapsed
Closing balance
(b)
Foreign Currency Translation Reserve (ii)
Opening balance
Exchange difference arising on translation of foreign operations
Closing balance
Consolidated
2020
$
2019
$
5,189,576
4,142,944
9,332,520
6,361,769
3,268,870
9,630,639
6,361,769
-
2,029,407
(2,881,000)
(320,600)
5,189,576
4,025,591
587,718
1,748,460
-
-
6,361,769
3,268,870
874,074
4,142,944
802,097
2,466,773
3,268,870
Nature and purpose of reserves
(i) Share Options Reserve
The Share Options Reserve contains amounts received on the issue of options over unissued capital of the
company. It is used to recognise the fair value of options and performance rights issued to employees and
consultants but not exercised.
(ii) Foreign currency translation reserve
The foreign currency translation reserve records exchange differences arising on translation of foreign
controlled entities. The exchange differences arising are recognised in other comprehensive income as detailed
in Note 1(s) and accumulated within a separate reserve within equity. The cumulative amount is reclassified to
the statement of profit or loss and other comprehensive income when the net investment is disposed of.
1177..
FFiinnaanncciiaall IInnssttrruummeennttss,, RRiisskk MMaannaaggeemmeenntt OObbjjeeccttiivveess aanndd PPoolliicciieess
The consolidated entity’s principal financial instruments comprise cash and cash equivalents. The main purpose of
the financial instruments is to earn the maximum amount of interest at a low risk to the company. The consolidated
entity also has other financial instruments such as trade debtors and creditors which arise directly from its
operations. For the year under review, it has been the consolidated entity’s policy not to trade in financial
instruments. The main risks arising from the consolidated entity’s financial instruments are interest rate risk and
credit risk. The Board reviews and agrees policies for managing each of these risks and they are summarised below:
(a)
Interest Rate Risk
The Group’s exposure to interest rate risk, which is the risk that a financial instrument’s value will fluctuate as a result
of changes in market interest rates and the effective weighted average interest rate for each class of financial assets
and financial liabilities comprises:
Consolidated
22002200
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Trade and other payables
Financial liabilities
Weighted
Average
Interest Rate
%
1.11%
-
-
-
Floating
Interest Rate
Fixed Interest Non-interest
bearing
Total
$
$
$
$
9,182,294
-
9,182,294
5,020,000
-
5,020,000
-
377,628
377,628
14,202,294
377,628
14,579,922
-
-
-
-
-
-
393,576
5,796,838
6,190,414
393,576
5,796,838
6,190,414
AVZ Minerals Limited | 56
Notes to the Consolidated Financial Statements for the year ended 30 June 2020
1177..
FFiinnaanncciiaall IInnssttrruummeennttss,, RRiisskk MMaannaaggeemmeenntt OObbjjeeccttiivveess aanndd PPoolliicciieess ((ccoonnttiinnuueedd))
Consolidated
22001199
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Trade and other payables
Financial liabilities
Floating
Interest Rate
Fixed
Interest
Weighted
Average
Interest
Rate
%
$
1.71%
8,750,641
-
-
-
-
8,750,641
-
-
-
Non-
interest
bearing
$
-
207,100
207,100
278,946
7,212,643
7,491,589
Total
$
8,750,641
207,100
8,957,741
278,946
7,212,643
7,491,589
$
-
-
-
-
-
-
The maturity date for cash included in the above tables is one year or less from reporting date.
(i)
Sensitivity analysis
The Group’s main interest rate risk arises from cash equivalents with variable and fixed interest rates. At 30
June 2020 and 30 June 2019, the Group’s exposure to interest rate risk is not deemed material.
(b)
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to
the Group. The Group has adopted the policy of only dealing with credit worthy counterparties and obtaining
sufficient collateral or other security where appropriate, as a means of mitigating the risk of financial loss from
defaults. The Group does not have any significant credit risk exposure to any single counterparty or any Group of
counterparties having similar characteristics. The carrying amount of financial assets recorded in the financial
statements, net of any provisions for losses, represents the Group’s maximum exposure to credit risk. All cash
equivalents are held with financial institutions with a credit rating of -AA or above.
(c)
Foreign Currency Risk
The Group is exposed to fluctuations in foreign currencies arising from exploration commitments in currencies
other than the Group’s presentational currency (Australian Dollars).
The Group operates internationally and is exposed to foreign exchange risk arising from currency exposure to the
US Dollar (USD). The Group has not formalised a foreign currency risk management policy, however it monitors its
foreign currency expenditure in light of exchange rate movements, and retains the right to withdraw from the
foreign exploration commitments.
Sensitivity analysis
(i)
The Group’s main foreign currency risk arises from cash equivalents held in foreign currency denominated bank
accounts and other payable amounts denominated in USD. At 30 June 2020 and 30 June 2019, the Group’s
exposure to foreign currency risk at the end of the reporting period, expressed in Australian dollar, was as follows:
Cash and cash equivalents
Trade & other receivables - current
Trade and other payables
Financial liabilities
Consolidated
2020
$
2,589,013
58,094
2,647,107
2019
$
173,370
55,398
228,768
(24,912)
(5,796,838)
-
(7,212,643)
(5,821,750)
(7,212,643)
AVZ Minerals Limited | 57
Notes to the Consolidated Financial Statements for the year ended 30 June 2020
1177..
FFiinnaanncciiaall IInnssttrruummeennttss,, RRiisskk MMaannaaggeemmeenntt OObbjjeeccttiivveess aanndd PPoolliicciieess ((ccoonnttiinnuueedd))
A reasonably possible strengthening (weakening) of the AUD against USD at 30 June 2020 would have affected
the measurement of financial instruments denominated in a foreign currency and affected equity and profit or loss
for the Group by the amounts shown below, expressed in Australian dollar. This analysis assumes all other variables
remain constant.
Cash and cash equivalents
Trade & other receivables - current
Trade and other payables
Financial liabilities
2020
2019
Increase (Decrease) in Equity and Profit or Loss
AUD to USD
AUD to USD
+10%
$
-10%
$
+10%
$
-10%
$
(235,365)
235,365
(15,771)
(5,281)
5,281
(5,039)
(240,646)
240,646
(20,810)
15,771
5,039
20,810
2,265
(2,265)
-
-
526,986
(526,986)
655,755
(655,755)
529,251
(529,251)
655,755
(655,755)
(d)
Liquidity risk
The Group manages liquidity risk by continuously monitoring forecast and actual cash flows and matching the
maturity profiles of financial assets and liabilities. Due to the dynamic nature of the underlying businesses, the
Group aims at ensuring flexibility in its liquidity profile by maintaining the ability to undertake capital raisings.
Contractual maturities
of financial
assets/(liabilities)
Less than 6
months
6-12 months
Between
1 and 2
years
Between 2 and
5 years
$
$
$
At 30 June 2020
Cash and cash
equivalents
Trade and other
receivables
Trade and other
payables
Financial liabilities
At 30 June 2019
Cash and cash
equivalents
Trade and other
receivables
Trade and other
payables
14,202,294
377,628
(393,576)
-
14,186,346
8,750,641
207,100
(278,946)
-
-
-
-
-
-
-
-
Financial liabilities
-
(2,138,357)
8,678,795
(2,138,357)
-
-
-
-
-
-
-
-
-
-
Total
contractual
cash inflows
/(outflows)
$
Carrying
amount
$
14,202,294
14,202,294
377,628
377,628
(393,576)
(393,576)
$
-
-
-
(7,271,553)
(7,271,553)
(7,271,553)
(7,271,553)
6,914,793
6,914,793
-
-
-
8,750,641
8,750,641
207,100
207,100
(278,946)
(278,946)
(7,129,007)
(9,267,364)
(9,267,364)
(7,129,007)
(588,569)
(588,569)
AVZ Minerals Limited | 58
Notes to the Consolidated Financial Statements for the year ended 30 June 2020
1177..
FFiinnaanncciiaall IInnssttrruummeennttss,, RRiisskk MMaannaaggeemmeenntt OObbjjeeccttiivveess aanndd PPoolliicciieess ((ccoonnttiinnuueedd))
(e)
Net fair value
The carrying value and net fair values of financial assets and liabilities at reporting date are:
Consolidated
Financial assets:
Cash and cash equivalents
Trade and other receivables - current
Financial liabilities:
Trade and other payables - current
Financial liabilities - current
Financial liabilities - non-current
2020
Carrying
Amount
$
Net fair
Value
$
2019
Carrying
Amount
$
Net fair
Value
$
14,202,294
377,628
14,202,294
377,628
8,750,641
207,100
8,750,641
207,100
14,579,922
14,579,922
8,957,741
8,957,741
393,576
-
5,796,838
393,576
-
5,796,838
278,946
2,138,357
5,074,286
278,946
2,138,357
5,074,286
6,190,414
6,190,414
7,491,589
7,491,589
(f)
Fair value measurements
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for
disclosure purposes. AASB 7 Financial Instruments: Disclosures requires disclosure of fair value measurements by
level of the following fair value measurement hierarchy:
i) Quoted prices in active markets for identical assets or liabilities (level 1)
ii)
Inputs other than quoted prices included within level 1 that are observable for the asset or liability,
either directly (as prices) or indirectly (level 2); and
Inputs for the asset or liability that are not based on observable market data (unobservable inputs)
(level 3).
iii)
Due to their short-term nature, the carrying amount of the current receivables and current payables is assumed to
approximate their fair value. Refer to Note 13 for assumptions made in relation to determining fair value of financial
liabilities.
Consolidated
2020
$
2019
$
1188..
LLoossss ppeerr SShhaarree
(a)
Loss
Loss used in the calculation of basic and diluted EPS ($)
(5,134,821)
(5,263,570)
(b) Weighted average number of ordinary shares (‘WANOS’)
WANOS used in the calculation of basic and diluted loss per share:
2,379,675,452 2,017,918,212
Basic and diluted loss per share
cents per
share
(0.22)
cents per
share
(0.26)
Diluted earnings per share is equal to basic loss per share as the Group is in a loss position.
AVZ Minerals Limited | 59
Notes to the Consolidated Financial Statements for the year ended 30 June 2020
1199.. CCaasshh FFllooww IInnffoorrmmaattiioonn
Reconciliation of cash flows from operating activities with loss
from ordinary activities after income tax:
Loss for the year
Depreciation
Share-based payment
Movement in fair value of financial liabilities
Interest income accrued
Interest expense on convertible note
Unrealised foreign exchange loss on convertible note
Net realised and unrealised foreign exchange losses
Depreciation expense of right-of-use asset
Changes in assets and liabilities:
(Increase)/Decrease in operating receivables and prepayments
Increase/(Decrease) in trade and other payables
Consolidated
2020
$
2019
$
(5,299,858)
(5,263,570)
379,143
2,170,407
722,552
(9,534)
19,126
(238)
42,756
72,149
(169,916)
257,129
300,281
2,336,178
417,926
-
-
-
-
-
5,011
(1,197)
Net cash outflows from operating activities
(1,816,284)
(2,205,371)
NNoonn--ccaasshh iinnvveessttiinngg aanndd ffiinnaanncciinngg aaccttiivviittiieess
Issue of ordinary shares for investor relations services
Issue of ordinary shares from conversion of performance Rights
141,000
2,881,000
3,022,000
-
-
-
Changes in financial liabilities arising from financing activities are disclosed in Note 13. Changes in lease
liabilities arising from financing activities are disclosed in Note 10.
2200..
SSeeggmmeenntt IInnffoorrmmaattiioonn
The Group is organised into one operating segment, being exploration in the DRC. This is based on the internal
reports that are being reviewed and used by the Board of Directors (who are identified as the Chief Operating
Decision Makers (CODM) in assessing performance and in determining the allocation of resources. As a result, the
operating segment information is as disclosed in the statements and notes to the financial statements throughout
the report.
Geographical information
All non-current assets are based in the DRC.
2211.. CCoommmmiittmmeennttss aanndd CCoonnttiinnggeenncciieess
There are no other commitments or contingent liabilities outstanding at the end of the year.
2222..
SSuubbssiiddiiaarriieess aanndd nnoonn--ccoonnttrroolllliinngg eennttiittiieess
(a)
Subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in
accordance with the accounting policy described in Note 1(c):
Name of entity
AVZ International Pty Ltd
AVZ Minerals Congo SARL
AVZ Power
Dathcom Mining SA
Country of
incorporation
Australia
DRC
DRC
DRC
Class
of shares
Ordinary
Ordinary
Ordinary
Ordinary
Equity holding1
2020
100
100
100
60
2019
%
100
100
100
60
1 The proportion of ownership interest is equal to the proportion of voting power held.
AVZ Minerals Limited | 60
Notes to the Consolidated Financial Statements for the year ended 30 June 2020
2222.. SSuubbssiiddiiaarriieess aanndd nnoonn--ccoonnttrroolllliinngg eennttiittiieess ((ccoonnttiinnuueedd))
(b) Non-controlling entities
The following table sets out the summarised financial information for each subsidiary that has non-controlling
interests. Amounts disclosed are before intercompany eliminations (AASB 12.B11).
Summarised statement of Financial Position
Current Assets
Non-current Assets
Total Assets
Current Liabilities
Non-current Liabilities
Total Liabilities
Net Assets
Accumulated NCI
2233..
RReellaatteedd PPaarrttyy IInnffoorrmmaattiioonn
(a)
(b)
(c)
Parent entity
The ultimate parent entity within the Group is AVZ Minerals Limited.
Subsidiaries
Interests in subsidiaries are set out above.
Key management personnel
The key management personnel compensation is as follows:
KKeeyy MMaannaaggeemmeenntt PPeerrssoonnnneell CCoommppeennssaattiioonn
Summary remuneration
Short-term benefits
Post-employment benefits
Share-based payments
Total key management personnel compensation
Dathcom Mining SA
30 June 2020
30 June 2019
565,217
71,893,672
72,458,889
7,480
44,654,926
44,662,406
27,796,483
11,690,054
122,715
74,176,652
74,299,367
3,042
34,665,203
34,668,245
39,631,122
11,615,453
Consolidated
2020
$
2019
$
1,197,377
25,074
1,405,550
2,628,001
888,563
5,205
1,258,511
2,152,279
Details of remuneration disclosures are provided within the audited remuneration report which can be found on pages 27
to 32 of the Directors’ report. Refer page 31 for transactions with related parties.
AVZ Minerals Limited | 61
Notes to the Consolidated Financial Statements for the year ended 30 June 2020
2244..
SShhaarree BBaasseedd PPaayymmeennttss
Options (a)
Performance Rights (b)
Total share based payments
(a) Options
Consolidated
2020
$
2019
$
-
2,029,407
2,029,407
587,718
1,748,460
2,336,178
SShhaarree bbaasseedd ppaayymmeenntt aarrrraannggeemmeenntt dduurriinngg tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002200
No options were issued to current directors and executives as part of their remuneration during year ended 30
June 2020.
SShhaarree bbaasseedd ppaayymmeenntt aarrrraannggeemmeenntt ggrraanntteedd iinn pprriioorr yyeeaarrss aanndd ssttiillll iinn eexxiisstteennccee aatt 3300 JJuunnee 22002200
During the year ended 30 June 2019, 15,000,000 unlisted options were issued to Patersons Securities Limited for
being an advisor and underwriter for the February 2019 capital raising. The total fair value of the options was
estimated at $587,718 as at the date of grant using the Black-Scholes model taking into account the terms and
conditions upon which the options were granted.
Number granted
Expected volatility (%)
Risk-free interest rate (%)
Expected life of option (years)
Exercise price (cents)
Share price at grant date (cents)
Fair value at grant date (cents)
TTrraanncchhee 11
5,000,000
103
1.75
2.13
4.75
6.5
3.78
TTrraanncchhee 22
5,000,000
103
1.72
2.63
5.7
6.5
3.8
TTrraanncchhee 33
5,000,000
110
1.69
3.13
6.65
6.5
4.1
4,000,000 of Tranche 1 unlisted options were exercised during the year ended 30 June 2019. The remaining
11,000,000 unlisted options have a weighted average remaining contractual life of 498 days.
(b) Performance Rights
SShhaarree bbaasseedd ppaayymmeenntt aarrrraannggeemmeenntt dduurriinngg tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002200
3,000,000 Class I Performance Rights were issued to a consultant of the Company on 11 November 2019. These
Performance Rights are split into three equal tranches with the following vesting conditions:
1.
Tranche 1 – 1,000,000 shall vest if the volume weighted average share price (“VWAP”) for AVZ shares on the
ASX is $0.10 or higher for a period of consecutive 15 trading days.
Tranche 2 – 1,000,000 shall vest if the volume weighted average share price (“VWAP”) for AVZ shares on the
ASX is $0.15 or higher for a period of consecutive 15 trading days.
Tranche 3 – 1,000,000 shall vest if the volume weighted average share price (“VWAP”) for AVZ shares on the
ASX is $0.20 or higher for a period of consecutive 15 trading days.
2.
3.
Number
Issued
Grant Date
Exercise
Price
Expiry Date of
Milestone
Achievements
Total Fair
Value ($)
%
Vested
Value per
Performance
Right on
Grant Date
($)
Class I
3,000,000
11/11/2019
Nil
11/11/2020
0.016
47,000
Nil
The 3,000,000 Class I Performance Rights were valued using the underlying share price at grant date.
Share based payment of $29,793 in relation to Class I Performance Rights has been expensed to statement of profit
or loss and other comprehensive income over its vesting period.
AVZ Minerals Limited | 62
Notes to the Consolidated Financial Statements for the year ended 30 June 2020
2244..
SShhaarree BBaasseedd PPaayymmeennttss ((CCoonnttiinnuueedd))
(b)
Performance Rights (continued)
SShhaarree bbaasseedd ppaayymmeenntt aarrrraannggeemmeenntt dduurriinngg tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002200 ((ccoonnttiinnuueedd))
3,000,000 Class J Performance Rights were issued to an employee of the Company on 1 November 2019. These
Performance Rights are split into two equal tranches with the following vesting conditions:
1.
shall vest upon delivering a positive and definitive transport route(s) for export of product to be included in
the Definitive Feasibility Study – Manono Project.
shall vest upon completion and delivery of a positive Definitive Feasibility Study – Manono Project.
2.
Number
Issued
Grant Date
Exercise
Price
Expiry Date of
Milestone
Achievements
Underlying
Share Price
on Grant
Date ($)
Total Fair
Value ($)
% Vested
Class J
3,000,000
1/11/2019
Nil
1/11/2022
0.046
$138,000
100%
The Class J Performance Rights vested and converted into ordinary shares on 12 June 2020. Share based payment
of $138,000 has been fully expensed to statement of profit or loss and other comprehensive income.
1,600,000 Class K Performance Rights were issued to employees of the Company on 12 June 2020. These
Performance Rights are split into two equal tranches with the following vesting conditions:
1.
800,000 shall vest upon upon executing an offtake agreement for at least 25% of the product from the Manono
Project.
800,000 shall vest upon the completion of the Manono Project financing.
2.
Number
Issued
Grant Date
Exercise
Price
Expiry Date of
Milestone
Achievements
Underlying
Share Price
on Grant
Date ($)
Total Fair
Value ($)
% Vested
Class K
1,600,000
12/06/2020
Nil
3/12/2021
0.058
$92,800
Nil
Share based payment of $12,477 in relation to Class K Performance Rights has been expensed to statement of
profit or loss and other comprehensive income over its vesting period at a 100% probability of meeting vesting
conditions.
During the year ended 30 June 2020, 27,150,000 Performance Rights vested and were converted to Ordinary
Shares following the satisfaction of various vesting conditions as below:
1.
5,000,000 Class C Performance Rights vested upon the Company defining a 100Mt Measured Mineral
Resource in accordance with JORC Guidelines.
17,650,000 Class E Performance Rights vested on the Company defining 150mt JORC measured indicated
resource with at least 1% Li2O being delineated within the Manono Project area and the completion of a
Defenitive Feasibility Study.
1,500,000 Class H Performance Rights vested upon the completion of a Defenitive Feasibility Study on
Manono Project.
3,000,000 Class J Performance Rights vested upon delivering a positive and definitive transport route(s) for
export of product to be included in the Definitive Feasibility Study – Manono Project and the completion of a
positive Definitive Feasibility Study.
2.
3.
4.
AVZ Minerals Limited | 63
Notes to the Consolidated Financial Statements for the year ended 30 June 2020
2244..
SShhaarree BBaasseedd PPaayymmeennttss ((CCoonnttiinnuueedd))
(b)
Performance Rights (continued)
During the year ended 30 June 2020, 22,500,000 Performance Rights lapsed/cancelled due to the following:
1.
7,500,000 Class B Performance Rights issued to Airguide International Pte Limited which vest upon execution
of the first binding offtake partnership, development finance or prepayment finance agreement with an
Airguide introduced party lapsed when the contract with Airguide was terminated.
10,500,000 Class D Performance Rights which vest if the 10-day VWAP for the Shares on the ASX is $0.34-
$0.44 or higher for the period commencing 6 months from the date of issue lapsed when the vesting
conditions were not met.
750,000 Class D Performance Rights were cancelled when an employee resigned.
750,000 Class E Performance Rights were cancelled when an employee resigned.
3,000,000 Class G Performance Rights were cancelled when an employee resigned.
2.
3.
4.
5.
SShhaarree bbaasseedd ppaayymmeenntt aarrrraannggeemmeenntt ggrraanntteedd iinn pprriioorr yyeeaarrss aanndd ssttiillll iinn eexxiisstteennccee aatt 3300 JJuunnee 22002200
The remaining 3,600,000 Class D Performance Rights were granted on 6 February 2018 to employees. 4,350,000
Performance Rights were issued and they have the following vesting conditions:
1.
Tranche 1 – 1,450,000 shall vest if the volume weighted average share price (“VWAP”) for AVZ shares on the
ASX is $0.34 or higher for a period of consecutive 10 trading days.
Tranche 2 – 1,450,000 shall vest if the volume weighted average share price (“VWAP”) for AVZ shares on the
ASX is $0.40 or higher for a period of consecutive 10 trading days.
Tranche 3 – 1,450,000 shall vest if the volume weighted average share price (“VWAP”) for AVZ shares on the
ASX is $0.44 or higher for a period of consecutive 10 trading days.
2.
3.
Number
Issued
Grant
Date
Exercise
Price
Expiry Date of
Milestone
Achievements
Fair Value
on Grant
Date ($)
Total Fair
Value ($)
%
Vested
Tranche 1
1,450,000
6 Feb-18
Tranche 2
1,450,000
6 Feb-18
Tranche 3
1,450,000
6 Feb-18
Nil
Nil
Nil
5-Feb-21
5-Feb-21
5-Feb-21
0.134
0.126
0.121
194,010
182,555
175,740
Nil
Nil
Nil
750,000 Class D Performance Rights were cancelled on 11 July 2019 when an employee resigned.
Share based payment of $152,777 (2019: $139,837) in relation to Class D Performance Rights has been expensed
to statement of profit or loss and other comprehensive income over its vesting period.
On 30 November 2018, 35,800,000 Class E Performance Rights were granted to directors, employees and
contractors of the Company, with the vesting terms as below:
1.
Tranche 1 – 8,950,000 Performance Rights shall vest upon the Company defining a 150Mt measured and
indicated mineral resource in accordance with the JORC Guidelines with a minimum 1% Li2O being
delineated within the Manono Project area;
Tranche 2 – 8,950,000 Performance Rights shall vest upon completion of a Feasibility Study on the Manono
Project;
Tranche 3 – 8,950,000 Performance Rights shall vest upon executing an offtake agreement for at least 25% of
the product from Manono Project; and
Tranche 4 – 8,950,000 Performance Rights shall vest upon the completion of the Manono Project financing.
2.
3.
4.
Number
Issued
Grant
Date
Exercise
Price
Expiry Date of
Milestone
Achievements
Underlying
Share Price
on Grant
Date ($)
Total Fair
Value ($)
% Vested
Tranche 1 8,950,000 30 Nov-18
Tranche 2 8,950,000 30 Nov-18
Tranche 3 8,950,000 30 Nov-18
Tranche 4 8,950,000 30 Nov-18
Nil
Nil
Nil
Nil
3-Dec-21
3-Dec-21
3-Dec-21
3-Dec-21
0.08
716,000
0.08
0.08
0.08
716,000
716,000
716,000
100%
100%
Nil
Nil
AVZ Minerals Limited | 64
Notes to the Consolidated Financial Statements for the year ended 30 June 2020
2244..
SShhaarree BBaasseedd PPaayymmeennttss ((ccoonnttiinnuueedd))
(b)
Performance Rights (continued)
SShhaarree bbaasseedd ppaayymmeenntt aarrrraannggeemmeenntt ggrraanntteedd iinn pprriioorr yyeeaarrss aanndd ssttiillll iinn eexxiisstteennccee aatt 3300 JJuunnee 22002200 ((ccoonnttiinnuueedd))
8,950,000 Tranche 1 Class E Performance Rights vested and converted on 11 July 2019. 750,000 of Tranche 2, 3
and 4 Performance Rights were cancelled when an employee resigned. 8,700,000 Tranche 2 Performance Rights
vested and converted on 12 June 2020.
The share based payments in relation to Class E Performance Rights of $1,028,965 (2019: $1,569,595) were
expensed to the statement of profit or loss and other comprehensive income over its vesting period at a 100%
probability of meeting vesting conditions.
On 3 June 2019, 8,000,000 Class F Performance Rights were issued to a contractor of the Company, with the vesting terms
as below:
1.
Tranche 1 – 2,000,000 Performance Rights shall vest upon successfully converting the Manono Project licence from
PR to PE and lodgement of the Bankable Feasibility Study with the DRC and Provincial Government;
Tranche 2 – 2,000,000 Performance Rights shall vest on completion and acceptance of the Mining Convention by
the DRC Government, ensure Manono Project licence remains in good standing with the relevant government
departments,
Tranche 3 – 4,000,000 Performance Rights shall vest upon the issue of a legally binding exoneration on corporate
and regional tax and import duty on major capital items for a period of 3 years from start-up – in event that the
company secures a longer period a further tranche will be awarded pro-rata, i.e. 6 years a further 2 million.
2.
3.
Number
Issued
Grant Date
Exercise
Price
Expiry Date of
Milestone
Achievements
Underlying
Share Price
on Grant
Date ($)
Total Fair
Value ($)
% Vested
Tranche 1
2,000,000
3-Jun-19
Tranche 2
2,000,000
3-Jun-19
Tranche 3
4,000,000
3-Jun-19
Nil
Nil
Nil
3-Jun-22
3-Jun-22
3-Jun-22
0.08
0.08
0.08
160,000
160,000
320,000
Nil
Nil
Nil
The share based payments in relation to Class F Performance Rights of $376,004 (2019: $63,764) were expensed to the
statement of profit or loss and other comprehensive income over its vesting period at a 100% probability of meeting
vesting conditions.
On 3 June 2019, 3,000,000 Class G Performance Rights were issued to an employee of the Company, with the vesting
terms as below:
1.
Tranche 1 – 1,500,000 Performance Rights shall vest upon delivering a positive and definitive transport route(s) for
export of product to be included in the Definitive Feasibility Study – Manono Project and completing the 3 months
probationary period;
Tranche 2 – 1,500,000 Performance Rights shall vest on completion and delivery of a positive Definitive Feasibility
Study – Manono Project and completing the 3 months probationary period.
2.
The employee resigned in July 2019 and the Performance Rights were cancelled as a consequence.
On 3 June 2019, 4,500,000 Class H Performance Rights were issued to a director of the Company, with the vesting terms
as below:
1.
Tranche 1 – 1,500,000 Performance Rights shall vest upon Performance Rights shall vest upon the completion of
Feasibility Study on the Manono Project;
Tranche 2 – 1,500,000 Performance Rights shall vest executing an offtake agreement for at least 25% of the product
from the Manono Project;
Tranche 3 – 1,500,000 Performance Rights shall vest upon the completion of the Manono Project financing.
2.
3.
AVZ Minerals Limited | 65
Notes to the Consolidated Financial Statements for the year ended 30 June 2020
2244..
SShhaarree BBaasseedd PPaayymmeennttss ((ccoonnttiinnuueedd))
(b)
Performance Rights (continued)
SShhaarree bbaasseedd ppaayymmeenntt aarrrraannggeemmeenntt ggrraanntteedd iinn pprriioorr yyeeaarrss aanndd ssttiillll iinn eexxiisstteennccee aatt 3300 JJuunnee 22002200 ((ccoonnttiinnuueedd))
Number
Issued
Grant Date
Exercise
Price
Expiry Date of
Milestone
Achievements
Tranche 1
Tranche 2
Tranche 3
1,500,000
1,500,000
1,500,000
3-Jun-19
3-Jun-19
3-Jun-19
Nil
Nil
Nil
3-Jun-22
3-Jun-22
3-Jun-22
Underlying
Share Price
on Grant
Date ($)
0.08
0.08
0.08
Total Fair
Value ($)
% Vested
120,000
120,000
120,000
100%
Nil
Nil
1,500,000 Tranche 1 of Class H Performance Rights vested and were converted on 12 June 2020.
The share based payments in relation to Class H Performance Rights of $291,391 (2019: $27,401) were expensed to the
statement of profit or loss and other comprehensive income over its vesting period at a 100% probability of meeting
vesting conditions.
All remaining 36,600,000 Performance Rights at 30 June 2020 have a weighted average remaining contractual life of
499 days.
(c) Shares issued as share based payments
During the year ended 30 June 2020, the Company settled payments for investor relation services received through the
issue of ordinary shares. On 5 July 2019, the Company issued 3,000,000 shares to a supplier in lieu of cash payments for
investor relation services received. The share-based payment was valued at the fair value of the services received. The
shares were issued at the share price of 4.7c. Expenses of $141,000 were recognised as investor relations fees in the
statement of profit or loss and other comprehensive income.
There were no shares issued as share based payments for the year ended 30 June 2019.
2255..
PPaarreenntt EEnnttiittyy IInnffoorrmmaattiioonn
(a)
(b)
(c)
(d)
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current Liabilities
Total liabilities
Net Assets
Equity
Contributed equity
Accumulated losses
Reserves
Total equity
Total comprehensive loss for the year
Loss for the year
Other comprehensive income for the year
Total comprehensive loss for the year
Company
2020
$
2019
$
14,024,919
71,148,634
85,173,553
8,660,943
60,933,316
69,594,259
495,691
5,848,189
6,343,880
2,349,584
5,074,286
7,423,870
78,829,673
62,170,389
103,495,333
(29,855,236)
5,189,576
78,829,673
81,097,191
(25,288,571)
6,361,769
62,170,389
(4,887,265)
-
(4,887,265)
(4,965,669)
-
(4,965,669)
The parent entity has not guaranteed any loans for any entity during the year. The parent entity does not have any
contingent liabilities, or capital commitments.
AVZ Minerals Limited | 66
Notes to the Consolidated Financial Statements for the year ended 30 June 2020
2266..
EEvveennttss OOccccuurrrriinngg aafftteerr tthhee RReeppoorrttiinngg DDaattee
On 21 September 2020, AVZ announced on ASX that it has executed a Share Sale Purchase Agreement
(“Agreement”) for an additional 10% equity stake in Dathcom Mining SA (“Dathcom Mining”) from its joint venture
partner, Dathomir Mining Resources SARLU (“Dathomir Mining”). Under the Agreement, AVZ has paid
US$500,000 to Dathomir Mining as an advance payment. The remaining US$15,000,000 will be paid to Dathomir
Mining at any time within 12 months of the Agreement being executed, or as soon as AVZ secures a minimum of
US$50,000,000 project financing. Should payment not be made within 12 months of executing the Agreement,
AVZ will forego its US$500,000 advance payment and lose the rights to secure the additional 10% equity in the
Manono Project. Alternatively, the Agreement provides for AVZ to secure a minimum 2.5% equity shareholding
in Dathcom Mining and thereafter in pro rata amounts up to the maximum 10% stake during the 12-month period.
Other than the abovementioned, no other matter or circumstance has arisen that has significantly affected, or
may significantly affect:
the Group’s operations in future financial years, or
the results of those operations in future financial years, or
the Group’s state of affairs in future financial years.
The impact of the Coronavirus (COVID-19) pandemic is ongoing and while it has been financially positive for the
consolidated entity up to 30 June 2020, it is not practicable to estimate the potential impact, positive or negative,
after the reporting date. The situation is rapidly developing and is dependent on measures imposed by the
Australian Government and other countries, such as maintaining social distancing requirements, quarantine,
travel restrictions and any economic stimulus that may be provided.
AVZ Minerals Limited | 67
Directors’ Declaration
In the directors’ opinion:
(a)
(b)
(c)
(d)
the financial statements and notes set out on pages 36 to 67 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 2020 and of its performance for the
financial year ended on that date; and
the audited remuneration disclosures set out on pages 27 to 32 of the directors’ report comply with section 300A
of the Corporations Act 2001; and
at the date of this declaration, there are reasonable grounds to believe that the Company will be able to pay its
debts as and when they become due and payable; and
the financial statements and notes thereto are in accordance with International Financial Reporting Standards
issued by the International Accounting Standards Board.
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Board of Directors.
NNiiggeell FFeerrgguussoonn
MMaannaaggiinngg DDiirreeccttoorr
Perth, Western Australia
AVZ Minerals Limited | 68
Independent Auditor’s Report
AVZ Minerals Limited | 69
Independent Auditor’s Report
AVZ Minerals Limited | 70
Independent Auditor’s Report
AVZ Minerals Limited | 71
Independent Auditor’s Report
AVZ Minerals Limited | 72
Independent Auditor’s Report
AVZ Minerals Limited | 73
Independent Auditor’s Report
AVZ Minerals Limited | 74
ASX Additional Information
SShhaarreehhoollddiinngg
The distribution of members and their holdings of equity securities in the holding company as at 2 October 2020 is as
follows:
Number Held
1- 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
TToottaall
Number of Holders
Number of Shares
Fully Paid Ordinary Shares
100
285
1,055
4,615
2,230
88,,228855
5,994
955,346
9,416,777
182,933,167
2,645,187,224
22,,883388,,449988,,550088
Holders of less than a marketable parcel: 527 with a total of 1,898,207 shares amounting to 0.07% of the Issued Capital.
TTwweennttyy LLaarrggeesstt SShhaarreehhoollddeerrss
The names of the twenty largest ordinary fully paid shareholders are as follows:
Shareholder
Number
%
Yibin Tianyi Lithium Industry Co Ltd
J P Morgan Nominees Australia Pty Limited
Huayou International Mining (Hongkong) Limited
Lithium Plus Pty Ltd
Citicorp Nominees Pty Limited
Bnp Paribas Nominees Pty Ltd
Hsbc Custody Nominees (Australia) Limited
Ridgeback Holdings Pty Ltd
Mr Kevin Griffiths
Mrs Liyun Huang
Hsbc Custody Nominees (Aus) Ltd
Smartequity Eis Pty Ltd
Mr Kai Guo
Stecol Consulting Pty Ltd
Top Class Holdings Pty Ltd
Bnp Paribas Noms Pty Ltd
Mr John H Manson & Mrs Karen A M Manson
Mr Darren Jeffery Hargreaves
Mr Phillip Rich
Jeremy James Dunlop
TToottaall
SSuubbssttaannttiiaall SShhaarreehhoollddeerrss
The names of the substantial shareholders:
Shareholder
Yibin Tianyi Lithium Industry Co Ltd
Huayou International Mining (Hongkong) Limited
OOnn--MMaarrkkeett BBuuyy--BBaacckk
There is no current on-market buy-back.
237,500,000
232,429,922
216,615,790
118,947,369
76,023,063
53,266,838
48,640,649
37,478,070
27,122,200
23,409,000
22,390,216
22,150,000
21,996,788
20,800,000
16,400,000
13,160,995
13,070,000
13,000,000
10,423,141
9,660,000
8.37%
8.19%
7.63%
4.19%
2.68%
1.88%
1.71%
1.32%
0.96%
0.82%
0.79%
0.78%
0.77%
0.73%
0.58%
0.46%
0.46%
0.46%
0.37%
0.34%
11,,223344,,448844,,004411
4433..4499%%
Number
%
237,500,000
216,615,790
8.37%
7.63%
AVZ Minerals Limited | 75
ASX Additional Information
RReessttrriicctteedd SSeeccuurriittiieess
There are no restricted ordinary shares in escrow.
UUnnqquuootteedd eeqquuiittyy sseeccuurriittiieess –– OOppttiioonnss
Unlisted options exercisable at $0.0475 expiring on,
or before 5 March 2021
Unlisted options exercisable at $0.057 expiring on,
or before 5 September 2021
Unlisted options exercisable at $0.0665 expiring on,
or before 5 March 2022
Unlisted options exercisable at $0.06 expiring on,
or before 8 April 2022
UUnnqquuootteedd eeqquuiittyy sseeccuurriittiieess –– ppeerrffoorrmmaannccee rriigghhttss
Performance rights expiring 5 February 2021
Performance rights expiring 3 December 2021
Performance rights expiring 2 June 2022
Performance rights expiring 3 December 2021
Performance rights expiring 11 November 2020
Performance rights expiring 3 December 2021
NNuummbbeerr oonn iissssuuee
1,000,000
5,000,000
5,000,000
120,000,002
NNuummbbeerr ooff hhoollddeerrss
1
2
2
5
NNuummbbeerr oonn iissssuuee
3,600,000
17,400,000
8,000,000
3,000,000
3,000,000
1,600,000
NNuummbbeerr ooff hhoollddeerrss
2
8
1
1
1
2
VVoottiinngg RRiigghhttss
The voting rights attaching to each class of equity securities are set out below:
(i) Ordinary Shares
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.
(ii) Performance Rights and Unlisted Options
These securities have no voting rights.
CCoorrppoorraattee GGoovveerrnnaannccee
The Board of AVZ Minerals Limited is committed to Corporate Governance. The Board is responsible to its Shareholders
for the performance of the Company and seeks to communicate with Shareholders. In accordance with ASX Listing Rule
4.10.3, the Company has elected to disclose its Corporate Governance policies and its compliance with them on its
website, rather than in the Annual Report. Accordingly, information about the Company's Corporate Governance
practices is set out on the Company's website at hhttttppss::////aavvzzmmiinneerraallss..ccoomm..aauu//ccoorrppoorraattee--ggoovveerrnnaannccee.
AApppplliiccaattiioonn ooff FFuunnddss
During the financial year, AVZ Minerals Limited confirms that it has used its cash and assets (in a form readily convertible
to cash) in a manner which is consistent with the Company’s business objectives.
IInnffoorrmmaattiioonn rreeqquuiirreedd uunnddeerr AASSXX LLiissttiinngg RRuullee 55..33..33
LLiisstt ooff ccuurrrreenntt mmiinniinngg aanndd eexxpplloorraattiioonn tteenneemmeennttss::
Country / Project
DRC – Manono Project
Tenement
PR 13359
DRC – Manono Extension Project
PR 4029, PR 4030
Interest
Status
60%*
100%
Granted
Granted
*Upon completion of the acquisition of a further 15% from Dathomir Mining Resources SARL, AVZ Minerals Limited
will hold 75% interest in the Project.
AVZ Minerals Limited | 76
AVZ Minerals Limited | 77
AVZ Minerals Limited | 78