AVZ Minerals Limited | 1
Corporate Directory
Directors
John Clarke (Non-Executive Chairman)
Nigel Ferguson (Managing Director)
Graeme Johnston (Technical Director)
Rhett Brans (Non-Executive Director)
Chief Financial Officer
Jan de Jager
Joint Company Secretaries
Jan de Jager
Benjamin Cohen
Principal Place of Business &
Registered Office
Level 2, 1 Walker Avenue
West Perth WA 6005
T: +61 8 6186 7600
F: +61 8 6118 2106
Share Registry
Auditors
Securities Exchange Listing
Automic Registry Services
Level 5, 191 St. George’s Terrace
Perth WA 6000
T: 1300 288 664 (within Australia)
: +61 8 9698 5414 (outside Australia)
E: hello@automic.com.au
Hall Chadwick WA Audit Pty Ltd
283 Rokeby Road
Subiaco WA 6008
T: +61 8 9426 0666
Australian Securities Exchange (ASX)
(Home Exchange: Perth, Western Australia)
Code: AVZ
OTC Markets Group
Code: AZZVF
Website Address
www.avzminerals.com.au
Contents
Review of Operations
Directors’ Report
Auditor’s Independence Declaration
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
3
17
32
34
35
36
37
Notes to the Consolidated Financial Statements
38
Directors’ Declaration
Independent Auditor’s Report
ASX Additional Information
66
67
73
Chairman’s Statement
AVZ Minerals has delivered some key
milestones during the 2022 financial year
while also experiencing some unexpected
delays – over which the Company has had no
control.
We eagerly await the granting of our Mining
Licence for our world-class Manono Lithium
the Congolese
and Tin Project
Government and are 100% confident of
securing our Collaboration Development
Agreement and Manono Special Economic
Zone Agreement.
from
The strategic cornerstone
investment by
Suzhou CATH Energy Technologies in AVZ
Minerals will deliver to the Company the
financial capacity, technical expertise and
credibility with the lithium conversion and lithium-ion battery industry to complement
our Manono Project.
In addition, our current drilling program has the potential to add significant value with
respect to expanding the reserve life of our Roche Dure deposit while also identifying
high-grade ore zones for initial feedstock for our plant, thereby providing increased
SC6 production volumes from the start of our operations.
On behalf of your Board, I thank our dedicated and hard-working staff and consultants
in Australia and the DRC for their continued efforts in progressing the Manono Project
during the last 12 months.
I also want to pay special thanks to our Managing Director Nigel Ferguson and his
senior executive team who have worked tirelessly during this past year – especially over
the latter half of FY22 – to defend our world-class asset and ensure we remain on track
to develop our flagship Manono Project.
Dr John Clarke
Non-Executive Chairman
AVZ Minerals Limited | 1
Managing Director’s Statement
I want to thank everyone for their support of the Company during the past
year. It has certainly been a year of many highlights. The Company secured
a world class, Tier 1 cornerstone investor in Suzhou CATH Energy
Technologies (“CATH”). It successfully navigated the mining laws of the
Democratic Republic of the Congo (DRC) and obtained a positive Ministerial
decree from the Minister of Mines to mine our world-class lithium resource
at Manono. We expect the Mining Licence which should follow from this
Ministerial decree
in due course. These events together with the
unprecedented demand for lithium resulted in record high lithium prices
boosting AVZ’s share price to an all-time high during FY22.
Despite the many highlights and unprecedented success, the Company had
to suspend its shares in May 2022 from being traded on the ASX. Our
success did not go unnoticed with other mining companies and ex-partners
in Dathcom Mining, suddenly wanting to again be part of the project but had
no legal basis for acquiring new shares or had already sold their shares
legally to AVZ. Claims from these companies are spurious of nature and hold
no legal basis. AVZ continues to engage at the highest levels within the DRC
government and is positive that the suspension of the Company’s shares trading will be lifted soon.
During FY22, we progressed an early works program aimed at upgrading existing local roads and bridges around
Manono to support the transport infrastructure required for the mine site, as well as purchasing critical mobile
equipment for the initial project development. We are targeting a potential upgrade of our confirmed 2012 JORC
resources (401 million tonnes @ 1.65% lithium oxide) with a further drilling program at Roche Dure, whilst additional
drilling at Carriere de l’Este confirmed further high-grade lithium and tin mineralisation, approximately 1.2km long and
open along strike and down-dip.
I am proud to have released our first Sustainability Report in FY22 which highlighted the Company’s Environmental,
Social and Governance (ESG) advancement since commencing the Manono Project. The Manono Project will
contribute significantly to the global green energy transition with the lithium produced consumed in the production
of lithium-ion batteries powering electric vehicles, hand-held appliances and battery storage systems. The Company’s
ambition to achieve ‘net zero’ emissions by 2030 is realistic and will be underpinned by the ‘green power’ produced
from the Mpiana Mwanga hydro-electric power plant and other renewable initiatives being investigated by AVZ. The
Manono Project will also deliver significant socio-economic benefits to the Manono region, preserve environmental
values and establish a transparent, ethical supply chain.
I want to thank all AVZ’s staff and consultants – as well as my senior executive team - who have worked tirelessly during
the last 12 months to progress the Manono Project. I am proud to lead such a focussed, dedicated and
committed team and I am confident the coming 12 months will deliver great success for the Company, our
shareholders and our external stakeholders in the DRC. I believe AVZ is perfectly positioned to develop what
we say is “the largest global undeveloped hard rock lithium deposit” at a time when the world’s ‘Green
Energy’ transition is underway in earnest, EV sales are skyrocketing, leading to insatiable lithium demand
and buoyant long term pricing forecasts for spodumene concentrate and downstream lithium products.
Nigel Ferguson
Managing Director
AVZ Minerals Limited | 2
AVZ Minerals Limited | 3
Review of Operations
Review of
Operations
Coreyard at Manono
AVZ Minerals Limited | 4
Review of Operations
Manono Lithium and Tin Project (“Manono Project”)
Democratic Republic of the Congo (DRC)
Highlights
DRC Minister of Mines signed a Ministerial Decree to award the Permit d’Exploitation (PE or Mining Licence) for
the Manono Project to Dathcom Mining SA (Dathcom), following receipt of the favourable technical opinion for
the Manono DFS
AVZ agreed to join the newly formed DRC Battery Council to develop a sustainable battery value chain in the
DRC and across Africa
AVZ remained actively engaged with the DRC Government authorities regarding the award of the Collaboration
Development Agreement, Mpiana Mwanga Hydro Electric Power Plant (HEPP) Agreement and Manono Special
Economic Zone (MSEZ) Agreement
In May 2022, AVZI received a request for arbitration before the International Chamber of Commerce in Paris
(ICC) from Jin Cheng Mining Company (Jin Cheng), a subsidiary of Zijin Mining Group Company Limited (Zijin)
to pursue claims that Jin Cheng be recognised as a shareholder of Dathcom, The Company has considered Jin
Cheng’s claims in detail and considers them to be spurious in nature, without merit, containing fundamental
and material errors, and having no substance or foundation in fact or law
AVZI increased its direct interest in the Manono Project from 60% to 75% in August 2021, paying the final
instalments required over a 5% and 10% interest in Dathcom, worth US$21 million, under the two Sale and
Purchase Agreements (SPAs) signed by Dathomir Mining Resources SARL (Dathomir) in 2019 and 2020
AVZ Minerals Limited | 5
Review of Operations
Suzhou CATH Energy Technologies (CATH) signed on as a major cornerstone investor to develop the Manono
Project, through its execution of a Transaction Implementation Agreement (TIA) with AVZ’s wholly owned entity,
AVZ International Pty Ltd (AVZI)
CATH and AVZI mutually agreed to extend the US$240 million payment and completion date for the TIA on
several occasions during the 2022 financial year, with both parties remaining committed to finalising the TIA
A$115 million in capital raisings completed (before costs) during the financial year ending 30 June 2022
A$25 million committed to early works development and exploration drilling program for the Manono Project
Front End Engineering Design (FEED) Study completed in July 2021
Primary Lithium Sulphate (PLS) conversion to Lithium Hydroxide (LiOH) Pre-Feasibility Study (PFS) completed
Manono Project 2012 JORC Proved and Probable Ore Reserves Estimate was upgraded to 131.7Mt – an
increase of 41.6% from the 93Mt reported in the April 2020 Definitive Feasibility Study (DFS)
Manono Project’s Life of Mine (LoM) was extended to 29.5 years based on a 4.5 Mtpa operation (underpinned
by the Ore Reserves) – an increase of 47.5% from the April 2020 DFS
Drilling confirmed further high-grade lithium and tin mineralisation at Carriere de l’Este deposit, approximately
1.2km long and open at both ends and down-dip
AVZ released its inaugural Sustainability Report in June 2022
In January 2022, AVZ was admitted to United States (US) domiciled OTCQX Best Market
AVZ’s securities on the Australian Stock Exchange (ASX) were placed in a voluntary suspension on 11 May 2022,
following the Company’s request for a trading halt on 9 May 2022, pending the finalisation of the mining and
exploration rights for the Manono Project
AVZ Minerals Limited | 6
Review of Operations
Operational Events after Reporting Date
On 25 August 2002, AVZ announced that a diamond drilling program was progressing smoothly at the Roche
Dure extension area northeast of the current open pit mine design
As of the date of this report, the Company’s securities remained in voluntary suspension pending
finalisation of its mining and exploration rights for the Manono Project
Overview
The 2022 financial year has delivered multiple milestones for the Manono Lithium and Tin Project (Manono Project) –
as well as a considerable level of frustration.
Signing on Suzhou CATH Energy Technologies (CATH) as a major cornerstone investor to contribute US$240 million
to project development upon completion of the Transaction Implementation Agreement (TIA) for a 24% direct
ownership and to contribute its pro-rata equity funding to develop the Manono Project, as well as raising a total of
A$115 million in equity capital in the space of just five months, certainly highlighted the significant global interest in
AVZ’s flagship project.
Technically, the Manono Project continued to deliver positive outcomes during the 2022 financial year, with an upgrade
to the 2012 JORC Ore Reserves Estimate leading to an extension of the project Life of Mine (LoM), while separately the
completion of the Manono FEED Study, process plant design and site geotechnical investigation studies in July 2021
were all significant achievements.
Drilling programs confirmed further high-grade lithium and tin mineralisation at the Carriere de l’Este deposit, whilst
advancing the extension drilling program at the Roche Dure deposit.
AVZ was invited by the Congolese Government to join its new DRC Battery Council, which is being led by His Excellency
Mr. Felix Antoine Tshisekedi Tshilombo, President of the DRC, with the aim of developing a sustainable battery value
chain in the DRC and across Africa.
Furthermore, the DRC Minister for Mines signed off on the all-important Ministerial Decree to award a Mining Licence
(PE) for the Manono Project to Dathcom per the Company’s ASX Announcement of 4 May 2022.
However, since the middle of May 2022, the Company’s debt funding and development timetable has, for the most
part, been put on hold, while senior executives continue to deal with the spurious claims and suspected illegal
interference with respect to its legal ownership interest in the Manono Project1.
During this period, the Company has been actively engaged with the highest levels of the Congolese Government with
respect to the granting of the Mining Licence and regarding its ownership and exploration rights for the Manono
Project.
The Company is confident of a positive outcome in relation to the award of the Mining Licence and positive FID to
develop what is believed to be the largest global undeveloped hard rock lithium deposit.
1 Refer to ASX Announcement dated 9 September 2022 – “Arbitration Proceedings and Investigations Update”.
Further information on sub-sections of the Manono Project is provided below:
Ministerial Decree to Award Mining Licence
The Company announced on 4 May 2022 that the DRC Minister for Mines signed a Ministerial Decree to award the
Mining Licence (PE) for the Manono Project to Dathcom Mining SA (Dathcom), in which AVZ holds a 75% interest via its
wholly owned subsidiary AVZ International Pty Ltd (AVZI).
AVZ Minerals Limited | 7
Review of Operations
The DRC Mining Code requires the Cadastre Minier (CAMI), operating under the supervision of the Minister of Mines,
to calculate the surface rights fee and then, following receipt of payment, to officially award the Mining Licence to
Dathcom.
The Mining Licence to be issued for the Manono Project, covers the entirety of the Roche Dure JORC Mineral Resource
(401 million tonnes at Li2O 1.65%) and the Carriere de l’Este exploration target.
The Ministerial Decree excludes a portion of the landholding to the north, which will be required to be renewed under
a 5-year Permit de Research (PR or Exploration Licence) to Dathcom, with discussions regarding the terms of the
ongoing joint venture agreement on the PR to be finalised with the DRC Government, in addition to finalising
discussions for the Collaboration Development Agreement, providing wide ranging support for the Manono Project.
AVZ’s Majority Interest in the Manono Project
AVZ confirms it retains legal title to a 75% interest in the Manono Project, after exercising its option(s) in August 2021
over a 5% and 10% equity interest in Dathcom paying the final instalment of US$20 million (~A$27 million) under the
two Sale and Purchase Agreements (Dathomir SPAs) signed with Dathomir Mining Resources SARL (Dathomir) back in
2019 and 2020, with the remaining 25% held by La Congolaise d’Exploitation Minière SA (Cominiere).
Following the official award of the Mining Licence, Cominiere will cede a free carried 10% of its remaining interest in
the Manono Project to the DRC Government under the terms of the Joint Venture Agreement.
AVZI is in advanced discussions with the DRC Government regarding the purchase of Cominiere’s remaining 15%
interest in Dathcom, under its pre-emptive right provided under the existing Dathcom Shareholder Agreement.
AVZ and AVZI are progressing the sale of a 24% equity interest in the Manono Project to CATH under the multi-faceted
TIA signed in September 2021. Post completion of the TIA, AVZ will hold an indirect interest in 51% in the project,
excluding the Cominiere’s 15% equity interest, which is subject to its existing perpetual pre-emptive right and is
currently under discussion with the DRC Government.
Voluntary Suspension
The Company requested a Trading Halt on 9 May 2022 and on 11 May 2022, requested its securities be placed in
voluntary suspension pending the finalisation of its mining and exploration rights for the Manono Project.
Arbitration Proceedings
On 11 May 2022, AVZI received a request for arbitration and related correspondence regarding the proposed
commencement of arbitration proceedings by Jin Cheng Mining Company Limited (Jin Cheng) before the International
Chamber of Commerce in Paris (ICC) to pursue claims by Jin Cheng to be recognised as a shareholder of Dathcom
Mining SA (Dathcom).
The request for arbitration was lodged by Jin Cheng, a subsidiary of Zijin Mining Group Company Limited (Zijin) to
press the allegation that it acquired a 15% shareholding in Dathcom from La Congolaise d’Exploitation Minière SA
(Cominiere).
The Company notes any such transfer would be subject to the terms and conditions of the existing Articles of
Association of Dathcom as well as the Dathcom Shareholders Agreement dated 27 January 2017 (as amended
from time to time) (Shareholders Agreement). AVZ confirms that Cominière breached the pre-emptive rights of
AVZI under the Shareholders Agreement by purporting to transfer a 15% interest to Jin Cheng, making it
invalid and of no force or effect.
The Company has considered Jin Cheng’s claims in detail and considers them to be spurious in nature,
without merit, containing fundamental and material errors, and having no substance or foundation in fact or
law. The Company is continuing to take all necessary action to resist these vexatious and meritless claims
and to protect its and Dathcom’s interests.
As at the date of this report, the Company’s securities remain in suspension.
AVZ Minerals Limited | 8
Review of Operations
CATH signs as cornerstone investor to develop Manono Project
In September 2021, AVZI entered into a Transaction Implementation Agreement (TIA) with Suzhou CATH Energy
Technology (CATH) to invest and develop the Manono Project.
CATH is a private investment entity jointly owned by Mr. Pei Zhenhua and Contemporary Amperex Technology Co.
Limited (CATL), who are both significant participants in the global lithium conversion and lithium-ion battery industry.
Under the terms of the TIA, CATH will invest into the development of the project US$240 million cash for a 24% equity
interest in the Manono Project, as well as their pro rata portion of project development capital. Completion of the TIA
is subject to the satisfaction or waiver of several conditions’ precedent.
Proceeds from the transaction will fund the majority of the total project financing required for the Manono Project, with
AVZ retaining a controlling interest and its position as lead developer and manager of the project.
Capital Raising/ Project Financing
AVZ completed two highly successful share placements during the 2022 financial year, raising a total of A$115 million
(before costs). In early July 2021, the Company raised A$40 million (before costs) via the issue of 307,692,308 shares
at an issue price of $0.13 per share while in early December, the Company raised A$75 million (before costs) with the
issue of 150,000,000 shares at an issue price of $0.50 per share.
The share placements were well supported by several Tier 1 North American and Australian institutions along with
global institutions in Europe, Singapore, Malaysia and the Middle East, as well as existing sophisticated shareholders,
including CATH.
Proceeds from the share placements allowed AVZ to (i) increase AVZ’s equity in the Manono Project from 60% to 75%;
(ii) undertake an early works program including the upgrade of roads, bridges and progress camp construction ahead
of a decision on the Mining Licence; (iii) progress various technical studies with respect to LiOH conversion and
infrastructure initiatives that further enhance the Project; (iv) negotiate final project financing requirements from a
position of enhanced balance sheet; and (v) provide necessary working capital for corporate requirements, including
potential new exploration opportunities.
In terms of project funding, the Company continued working towards the appointment of a “Mandated Lead Arranger”
(MLA) to lead a syndicated debt funding facility of Pan-African Development Finance Institutions (DFIs) for the balance
of project capital required for the Manono Project. The key conditions precedent for securing the debt funding are the
award of the Mining Licence and the release of the Manono Bankable Feasibility Study (BFS).
Upgraded JORC Ore Reserves Estimate
On 14 July 2021, the Company announced an upgraded 2012 JORC Ore Reserves at Roche Dure.
2012 JORC Proved and Probable Ore Reserves are now estimated at 131.7Mt – an increase of 41.6% from the 93Mt
reported in the April 2020 DFS. The Ore Reserves estimate contains 65.0Mt in the Proved Category and 66.6Mt in the
Probable Category.
The average lithium grade increased by 3.1% from 1.58% to 1.65% Li2O, while the tin grade of 990 ppm
remained the same but reported a 41% increase in contained tin metal to 130.3kt.
The Life of Mine (LoM) was extended to 29.5 years based on a 4.5Mtpa operation underpinned by the Ore
Reserves – representing an increase of 47.5% from the April 2020 DFS.
The Roche Dure ore deposit continued to impress as potentially the largest standalone global hard rock
lithium asset based on Proved and Probable Ore Reserves.
AVZ Minerals Limited | 9
Review of Operations
The Ore Reserve Estimate for the Manono Project per the Company’s 14 July 2021 ASX Announcement, is outlined in
Table 1 below:
Reserve category
(July 2021)
Tonnes
(Mt)
Grade Li2O
(%)
Contained Li2O
(Mt)
Grade Sn
(g/t)
Contained
Sn (kt)
Proved
Probable
65.0
66.6
Total
131.7
1.64
1.61
1.63
1.07
1.07
2.14
942
1,037
990
61.2
69.1
130.3
Reserve category
(April 2020)
Tonnes
(Mt)
Grade Li2O
(%)
Contained Li2O
(Mt)
Grade Sn
(g/t)
Contained
Sn (kt)
Proved
Probable
Total
44.6
48.5
93.0
1.62
1.54
1.58
0.72
0.75
1.47
958
1,016
988
42.7
49.3
92.0
Table 1: Roche Dure Ore Reserves Statement
Permitting & Licensing
During the 2022 financial year, the Company remained actively engaged with DRC Government authorities that are
undertaking the award of the Manono Mining Licence, as well as the Collaboration Development Agreement, Mpiana
Mwanga HEPP Agreement and the MSEZ Agreement. The Company continued to enjoy an extremely good working
relationship with stakeholders at all levels within the DRC Government and the wider community.
A$25M committed to early works & exploration program
In February 2022, AVZ announced it had committed to invest A$25 million to advance its drilling program on the Roche
Dure deposit and to fund an early works program for the Manono Project, using funds received from its A$75 million
capital raise in December 2021.
The A$25 million investment was aimed at maintaining the Manono Project development schedule as well as funding
an extension drilling program at Roche Dure, which has the potential to significantly expand the previously reported
2012 JORC Mineral Resource and Ore Reserves (July 2021).
The early works program – comprising approximately A$19 million – was allocated to:
Upgrading existing roads and bridges to assist with the transport of equipment to and from site;
Purchasing critical mobile equipment required for the initial Manono Project development;
Progressing camp construction and entering key service contracts; and
Progressing various technical studies with respect to metallurgical test-work, downstream processing and
infrastructure projects.
The remaining A$6 million was allocated for additional resource drilling at Roche Dure.
AVZ Minerals Limited | 10
Review of Operations
Engineering
A Pre-Feasibility Study (PFS) to produce lithium hydroxide (LiOH) from primary
lithium sulphate (PLS) generated from Manono SC6 concentrate was completed
by Noram Engineering and Constructors Ltd during the period. The information
from the PFS will assist to identify the preferred global location for a LiOH
conversion facility or facilities, fed with PLS product from Manono.
Early-stage discussions occurred with interested parties in various jurisdictions
wishing to partner with AVZ in the development of a LiOH facility, where it is
intended that AVZ will maintain a controlling interest.
studies.
The Manono Front End Engineering Design (FEED) Study was completed by
Mincore Pty Ltd in July 2021, along with additional process plant design and site
geotechnical
The
Manono FEED Study improved
the confidence level in Capital
and Operational Costs of the
Project to an AACEI Class 2 (+/-
10%) from the April 2020 DFS
which was to a Class 3 (+/- 20%)
level of estimation.
Technical
Resource drilling of four new,
widely spaced ‘step-out’ holes at
the Carriere de l’Este deposit
confirmed
further high-grade
lithium and tin mineralisation
directly beneath thin (<3m) soil
and laterite cover.
of
The drill data established the
presence
sub-cropping
spodumene mineralisation at
Carriere de
l’Este up to 1.2
long at average
kilometres
widths of 200 metres in places,
confirming the deposit as a likely rival to Roche Dure in size and grade.
In early July 2022, a diamond drilling campaign began at Roche Dure with an
objective to significantly increase lithium resources and reserves. The diamond
drilling campaign is focused on areas identified as highly prospective which were
inaccessible at the time of the last round of drilling but remain open at depth and
along strike. The program will extend the knowledge of the orebody by
approximately another 800 metres from section 7600mN to 8,400mN (Figure 1).
The campaign will see 48 drillholes, for a total of 14,905 metres, intersect the
Roche Dure orebody to an average depth of approximately 200 metres below
ground level which will require an updated JORC 2021 compliant Mineral
Resource Estimate (MRE) to be generated once the assay results have been
received2.
Locations of planned drillholes versus existing
holes at Roche Dure
2 Refer to ASX announcement dated 15 July 2022 – “Site
Operational Update”
AVZ Minerals Limited | 11
Review of Operations
Corporate
Equity Interest in Manono Project
During the 2022 financial year, AVZ, through its wholly owned subsidiary
AVZI, increased its direct equity interest in the Manono Project from 60% to
75% by AVZI exercising the two options under the legally binding Sale and
Purchase Share Agreements with Dathomir Mining Resources SARL
(“Dathomir”) signed in 2019 and 2020.
At-the-Market Subscription Agreement (ATM Facility)
In December 2021, AVZ entered into an “At-the-Market Subscription
Agreement” (ATM Facility) with Acuity Capital Investment Management Pty
Ltd (Acuity Capital) to access up to A$50 million of standby equity capital over
a 27-month period.
AVZ has full control of all aspects of the subscription process, having sole
discretion to utilise the ATM Facility or not, the maximum number of shares
to be issued, the minimum issue price of shares and the timing of each
subscription (if any).
the
There are no requirements
on AVZ to utilise the ATM
and AVZ may
facility
ATM
terminate
Subscription Agreement at
any time. As security of the
ATM facility, the Company
issued 60 million AVZ
shares under its ASX LR7.1
15% Capacity
to Acuity
Capital at a nil cash
The
consideration.
Company may, however, at
any time cancel the ATM
facility as well as buy back
(and cancel) those shares
for no cash consideration
(subject
shareholder
approval).
to
Dignitaries attending the DRC-Africa
Business Forum held in Kinshasa in
November 2021
DRC Battery Council
In November 2021, AVZ actively participated in the DRC-Africa Business
Forum which was aimed at fostering the development of a battery, electric
vehicle and renewable energy industrial value chain and market in the DRC
and across Africa. AVZ was invited to join the DRC Battery Council, led by His
Excellency, Mr. Felix Antoine Tshisekedi Tshilombo, President of the DRC.
Hosted by the DRC Government in Kinshasa, the DRC-Africa Business Forum
was led by its Ministry of Industry and the United Nations Economic
Commission for Africa (ECA), in collaboration with the African Export-Import
Bank (Afreximbank), the African Development Bank (AfDB), the Africa
Finance Corporation (AFC), the Arab Bank for Economic Development in
Africa (BADEA), the African Legal Support Facility (ALSF) and the United
Nations Global Compact.
AVZ Minerals Limited | 12
Review of Operations
Inaugural Sustainability Report
AVZ released its inaugural Sustainability Report in June 2022, highlighting the Environmental Social and Governance
work undertaken by the Company in relation to the Manono Project which will contribute significantly to the global
green transition.
The Manono Project will also deliver significant socio-economic benefits to the region, preserve environmental values
and establish a transparent, ethical supply chain.
AVZ admitted to OTCQX Best Market
In January 2022, AVZ was admitted to the OTCQX Best Market (ticker code “AZZVF”), thereby enhancing the
Company’s market visibility and appeal to its North American shareholder base.
The OTCQX Best Market is the highest market tier of the OTC Markets on which some 11,000 United States (US) and
global securities trade.
The OTCQX Market will provide value and convenience to US investors, brokers and institutions seeking to trade
AZZVF.
Issue of Performance Rights, Expiration of Performance Rights, Issue of Shares
During the 2022 financial year, the Company issued 20,175,000 performance rights to employees and consultants
under its Performance Rights Plan and 31,750,000 performance rights to Directors (with various vesting conditions),
while a total of 10,660,000 performance rights lapsed.
A total of 23,890,400 fully paid shares were issued during the period following the vesting of performance rights.
As at 30 June 2022, the Company confirmed its current securities on issue were as follows:
Quoted Securities
Number
Ordinary Fully Paid
3,528,729,748
Unquoted Securities
Number
Performance Rights
62,174,600
Refer to Note 24 for terms of these issuances.
AVZ Minerals Limited | 13
Review of Operations
Information required under ASX Listing Rule 5.3.3
List of current mining and exploration tenements (as at 30 June 2022):
Country / Project
Tenement
Interest
Status
DRC – Manono Project
DRC – Manono Extension Project
PR 13359
PR 4029
PR 4030
75%*
100%
Granted
Granted
Reserve
Category
Proved
Probable
Total
Category
Measured
Indicated
Inferred
Total
*In August 2021, AVZ acquired a further 15% equity in the Manono Project from Dathomir Mining
Resources SARL and.now has a 75% interest in the Manono Project.. On 27 September 2021, AVZ
Minerals announced Suzhou Cath Energy Technologies (“CATH”) will earn a 24% equity interest in
the Manono Project, subject to the satisfaction or waiver of several conditions’ precedent. CATH
and AVZ mutually agreed to extend the Transaction Implementation Agreement (TIA) on several
occasions during the 2022 financial year.
Roche Dure Main Pegmatite Ore Reserve Estimate
as at 30 June 2022
Tonnes
(Mt)
Grade
Li2O
%
Contained
Li2O
(Mt)
Grade Sn
(g/t)
Contained Sn
(kt)
65.0
1.64
1.07
942
61.2
66.6
1.61
1.075
1,037
69.1
131.7
1.63
2.14
990
130.3
Note: The Ore Reserve estimate has been based on a cut-off > US$0.00 block value comprising an
economic block by block calculation. Figures may not sum due to rounding.
Roche Dure Main Pegmatite Mineral Resource
at a 0.5% Li2O cut-off (as at 30 June 2022):
Tonnes
(Millions)
Li2O
%
Sn
ppm
Ta
ppm
Fe2O3
%
P2O5
%
100
1.67
870
174
1.65
807
128
1.65
585
35
35
31
0.93
0.30
0.97
0.29
1.01
0.28
401
1.65
752
34
0.97
0.29
AVZ Minerals Limited | 14
Review of Operations
Competent Person Statement
The technical information in the document that relates to the geology of the Roche Dure pegmatite is based upon information
compiled by Mr Michael Cronwright, who is a fellow of The Geological Society of South Africa (GSSA) and is a registered professional
with the South African Council for Natural Professions (SACNASP). Mr Cronwright was a Principal Consultant with The MSA Group
(Pty) Ltd (an independent consulting company). Mr Cronwright has sufficient experience relevant to the style of mineralisation and
type of deposit under consideration and to the activity he is undertaking to qualify as a Competent Person as defined in the 2012
edition of the JORC Code. Mr Cronwright consents to the inclusion in this report of the matters based on this information in the form
and context in which it appears.
The Roche Dure pegmatite Mineral Resource estimate has been completed by Mr Anton Geldenhuys (BSc Hons, MEng) who is a
geologist with 20 years’ experience in exploration and mining as well as Mineral Resource evaluation and reporting. He is a Principal
Resource Consultant for CSA Global Pty Ltd (an independent consulting company), is a member in good standing with the South
African Council for Natural Scientific Professions (SACNASP) and is a Member of the Geological Society of South Africa (GSSA). Mr
Geldenhuys has the appropriate relevant qualifications and experience to be considered a Competent Person for the activity being
undertaken as defined in the 2012 edition of the JORC Code.
The information that relates to Roche Dure pegmatite Ore Reserves is based on information compiled by Mr. Daniel Grosso who is an
employee of CSA Global Pty Ltd. Mr Grosso takes overall responsibility for the Report as Competent Person. Mr. Grosso is a Member
of the Australian Institute of Mining and Metallurgy and has sufficient experience, which is relevant to the style or mineralisation and
type of deposit under consideration, and to the activity he is undertaking, to qualify as a Competent Person in terms of the JORC
(2012 Edition). The Competent Person, Daniel Gross, has review the Ore Reserve statement and given permission for the publication
of this information in the form and context within which it appears.
The information in this report that relates to geology and the exploration results is based on information compiled by Mr. Nigel
Ferguson (BSc) FAusIMM MAIG, a Competent Person who is a Fellow of the Australian Institute of Mining and Metallurgy and a
Member of the Australia Institute of Geoscientists. Mr. Ferguson is the Managing Director of AVZ Minerals Limited and has sufficient
experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken
to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves’. Mr. Ferguson consents to the inclusion in the report of the matters based on his information in the form
and context in which it appears.
No new information
This document may include references to information that relates to Mineral Resources and Ore Reserves prepared and first disclosed
under the JORC Code (2012 Edition). The information was extracted from the Company’s previous ASX Announcements as follows:
“JORC Ore Reserves increase by 41.6% at Roche Dure” released on 14 July 2021; and
“Updated Mineral Resource Estimate Includes Pit Floor “Wedge” Drill Results” released on 24 May 2021.
These announcements are available on the Company’s website at www.avzminerals.com.au
The Company confirms it is not aware of any new information or data that materially affects the information included in the relevant
market announcements and, in the case of estimates of Mineral Resources and Ore Reserves, that all material assumptions and
technical parameters underpinning the estimates in the relevant market announcement continue to apply and have not
materially changed.
The Company confrms that the form and context in which the Competent Persons’ findings are presented have not been
materially modified from the relevant original market announcements.
AVZ Minerals Limited | 15
Review of Operations
Forward Looking Information
This announcement contains certain forward-looking statements and comments about future events, including the Company’s
expectations about the Manono Project and the performance of its businesses. Forward looking statements can generally be identified
by the use of forward-looking words such as ‘expect’, ‘anticipate’, ‘likely’, ‘intend’, ‘should’, ‘could’, ‘may’, ‘predict’, ‘plan’, ‘propose’,
‘will’, ‘believe’, ‘forecast’, ‘estimate’, ‘target’ and other similar expressions within the meaning of securities laws of applicable
jurisdictions. Indications of, and guidance on, future earnings or financial position or performance are also forward-looking statements.
Forward looking statements involve inherent risks and uncertainties, both general and specific, and there is a risk that such predictions,
forecasts, projections and other forward-looking statements will not be achieved. Forward looking statements are provided as a
general guide only and should not be relied on as an indication or guarantee of future performance. Forward looking statements
involve known and unknown risks, uncertainty and other factors which can cause the Company’s actual results to differ materially from
the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements and many of these factors
are outside the control of the Company. As such, undue reliance should not be placed on any forward-looking statement. Past
performance is not necessarily a guide to future performance and no representation or warranty is made by any person as to the
likelihood of achievement or reasonableness of any forward-looking statements, forecast financial information or other forecast.
Nothing contained in this announcement, nor any information made available to you is, or shall be relied upon as, a promise,
representation, warranty or guarantee as to the past, present or the future performance of the Company. Except as required by law
or the ASX Listing Rules, the Company assumes no obligation to provide any additional or updated information or to update any
forward-looking statements, whether as a result of new information, future events or results, or otherwise.
Location of the Manono Lithium and Tin Project
AVZ Minerals Limited | 16
Directors’
Report
AVZ Minerals Limited | 17
Directors’ Report
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 2022. In order to comply with
the provisions of the Corporations Act 2001, the directors report as follows:
1. Directors
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
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 2 May 2019, resigned 3 August 2022)
2. Chief Financial Officer
Jan de Jager (appointed 15 April 2021)
3.
Joint Company Secretaries
Jan de Jager (appointed 15 April 2021)
Benjamin Cohen (appointed 30 April 2021)
4.
Principal Activities
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.
5. Operating Results
The loss of the consolidated entity after income tax amounted to $20,402,730 (2021: $5,537,632).
6. Dividends Paid or Recommended
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.
7.
Review of Operations
Refer pages 3 – 16 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
AVZ Minerals Limited | 18
Directors’ Report
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:
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.
8.
Significant Changes in the State of Affairs
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.
9.
Events Occurring after the Reporting Date
On 29 July 2022, AVZ announced to the market that wholly owned entity, AVZ International Pty Ltd, and Suzhou CATH
Energy Technologies, the parties to the Transaction Implementation Agreement (TIA) executed on 24 September 2021,
have agreed to amend the end date to 30 September 2022 to provide for completion of closure formalities.
On 3 August 2022, Mr Peter Huljich resigned as Non-Executive Director of the Company.
On 24 August 2022, 4,133,000 unlisted Performance Rights lapsed.
On 25 August 2002, AVZ announced diamond drilling was progressing smoothly at the Roche Dure extension area
northeast of the current open pit mine design. Eight new diamond drillholes had been completed for a total of
approximately 1,500 metres drilled out of a planned 15,000 metre drill programme. All eight holes had been logged
showing visual spodumene was present.
On 2 September 2022, AVZ was removed from S&P/ASX 200 index.
On 9 September 2022, the Company provided an update with respect to the arbitration proceedings before the ICC
instigated by Jin Cheng and its investigation into Boatman Capital, a London-based short-focused hedge fund research
firm.
AVZ Minerals Limited | 19
Directors’ Report
As of 30 September 2022, AVZ’s securities remained in voluntary suspension pending finalisation of its mining and
exploration rights for the Manono Project.
During the financial year, AVZ, through its wholly owned subsidiary AVZ International Pty Ltd, completed two Share
Purchase Agreements to acquire an additional 15% ownership in Dathcom Mining SA (“Dathcom”) from Dathomir
Mining Resources SARL (“Dathomir”). The contractual agreed price of US$20 million (excluding the US$1 million first
tranche payments) was paid to Dathomir in August 2021 within the contractual agreed terms following the successful
A$40 million (before costs) capital raise in July 2021. AVZ International obtained proof of good legal standing of its legal
rights of owning 75% in Dathcom from the courts in the Democratic Republic of the Congo (“DRC”) on 1 September
2021. Following the successful transfer of shares to AVZ International, Dathomir initiated court proceedings claiming
that the US$21 million shares transfer be re-valued. This action in the court is deemed spurious and meritless in nature
with a limited chance of success as the shares were purchased via valid legal agreements at specified prices.
On 30 September 2022, AVZ announced that wholly owned entity, AVZ International Pty Ltd, and Suzhou CATH Energy
Technologies, the parties to the Transaction Implementation Agreement (TIA) executed on 24 September 2021, have
agreed to amend the end date to 31 December 2022 to provide for completion of closure formalities.
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.
10. Likely Developments and Expected Results of Operations
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.
11. Environmental Regulation
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.
12.
Information on Directors and Company Secretaries (including Directors’ interests at the date of this report)
John Clarke
Non-Executive Chairman (appointed 2 December 2019)
Qualifications
Experience
Ph.D. in Metallurgy (Cambridge University), B.Sc. in Metallurgy (Cardiff University), MBA
(Middlesex University)
Dr. Clarke started his career 50 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. More 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.
AVZ Minerals Limited | 20
Directors’ Report
Interest in Securities
Fully Paid Ordinary Shares
Performance Rights
8,053,333
9,048,000
Directorships in last 3 years Great Quest Fertilizer Limited (listed on Toronto Stock Exchange) (since 17 June 2009)
Nigel Ferguson
Managing Director (appointed 2 February 2017)
Qualifications
BSc (University of Tasmania), F AusIMM, MAIG
Experience
Mr. Ferguson is a geologist with over 36 years of experience having worked in senior
management positions for the past 26 years in a variety of locations. He has experience
in the exploration, 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
51,013,404
10,000,000
Directorships in last 3 years Okapi Resources Limited (29 May 2017 to 30 June 2020)
AJN Resources Inc. (listed on Canadian Securities Exchange) (15 October 2016 to 8 May
2022)
Graeme Johnston
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 30 years’ experience in Australia, the Middle East,
Romania, Malaysia and the DRC. Mr. Johnston worked on various gold projects before
joining Rio Tinto and then with Midwest Corporation where he was the Principal
Geologist during its sale to Sinosteel Corporation. Following this, Mr. Johnston was a
founding director of Goldstar Resources and then Ferrowest Limited where he was
Technical Director for nine years and contributed to the successful completion of the
Feasibility Study for the Yalgoo Pig Iron Project. Mr. Johnston’s technical experience is
focused on the transition between orebody delineation and mine opening and has
worked on over five projects that resulted in new mines being commissioned. Mr
Johnston initially joined the AVZ team in May 2017 as Project Manager for the Manono
Project before stepping into the role of Technical Director.
Fully Paid Ordinary Shares
Performance Rights
11,398,070
7,500,000
Interest in Securities
Directorships in last 3 years
Mount Ridley Mines Limited (1 December 2020 to 18 July 2022)
Rhett Brans
Non-Executive Director (appointed 5 February 2018)
Qualifications
Dip. Engineering (Civil)
Experience
Mr. Brans is an experienced director and civil engineer with over 48 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
AVZ Minerals Limited | 21
Directors’ Report
experience as an owner’s representative for several successful mine feasibility studies
and project developments.
Interest in Securities
Fully Paid Ordinary Shares
Performance Rights
7,064,158
5,000,000
Directorships in last 3 years Australian Potash Limited (since 9 May 2017)
Carnavale Resources Limited (since 17 September 2013)
Peter Huljich
Non-Executive Director (appointed 2 May 2019, resigned 3 August 2022)
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
a Bachelor of Commerce degree 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
5,101,000
5,000,000
Directorships in last 3 years Kogi Iron Limited (appointed 7 May 2019)
Amani Gold Limited (appointed 27 May 2021)
GoldOz Limited (appointed 14 September 2021)
Jan de Jager
CFO & Joint Company Secretary (appointed 15 April 2021)
Qualifications
B.Com(Hons), CA (SA)
Experience
Mr. de Jager is a Chartered Accountant in Australia with more than 25 years of
experience who has worked in senior management positions for the past 20 years
in a variety of locations. His experience includes executive finance roles for listed
companies and exposure to a variety of commodities (including Coal, Nickel,
Gold, Iron Ore and Lithium) in South Africa and Australia. Mr de Jager possesses
a wide range of prior experience in corporate finance, treasury, ERP system
implementation, risk management, project controls, new business development
and commercial. His previous positions include CFO for Covalent Lithium (Joint
Venture company of Kidman Resources), prior to it being bought out by
Wesfarmers; General Manager, Treasury and Reporting for Roy Hill Australia and
General Manager, Finance for Xstrata Nickel Australia.
Interest in Securities
Fully Paid Ordinary Shares
Performance Rights
-
5,082,500
AVZ Minerals Limited | 22
Directors’ Report
Benjamin Cohen
Commercial Manager & Joint Company Secretary (appointed 30 April 2021)
Qualifications
B.Com, CPA
Experience
Mr. Cohen is a commercially focused CPA with more than 20 years’ experience in
the bulk commodity, shipping, mining and corporate sectors. He has an intimate
knowledge of the challenging environment of offtake agreements, bulk shipping
and the commercial aspects of commodity trading.
Interest in Securities
Fully Paid Ordinary Shares
Performance Rights
2,306,900
1,668,100
13. Audited Remuneration Report
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 (KMP) 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:
Non-Executive Directors
John Clarke
Rhett Brans
Peter Huljich
Non-Executive Chairman
Non-Executive Director
Non-Executive Director
Executive Directors
Nigel Ferguson
Managing Director
Graeme Johnston Technical Director
Other Key Management Personnel (Executives)
Appointed 2 December 2019
Appointed 5 February 2018
Appointed 2 May 2019, resigned 3 August 2022
Appointed 2 February 2017
Appointed 30 July 2018
Michael Hughes
Jan de Jager
Benjamin Cohen
Appointed 14 August 2019, resigned 24 May 2022
Project Director
CFO & Joint Company Secretary
Appointed 15 April 2021
Commercial Manager & Joint Company Secretary Appointed 30 April 2021
AVZ Minerals Limited | 23
Directors’ Report
(a) Remuneration Policy
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 Committee 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.
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 or fixed consulting fee 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 10% during the financial year 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 Performance Rights Plan (Plan) and
issued and held by the AVZ Mineral Limited Rights Share Trust (RST). The Plan was approved by shareholders at the 25
November 2021 Annual General Meeting for a term of three years. 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
AVZ Minerals Limited | 24
Directors’ Report
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.
(b) Service Agreements
The agreements relating to remuneration and other terms of employment for the key management personnel for the
financial year are set out below:
Dr. Clarke - Non-Executive Chairman
Receives a monthly fee of $10,000
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 the
Company
Mr. Ferguson - Managing Director
No specified fixed term
Receives a monthly fee of $33,333 plus GST
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
12-month termination period in the event of a takeover, scheme of arrangement or change of control of the
Company
Mr. Johnston - Technical Director
No specified fixed term
Receives a monthly fee of $29,167 plus GST (effective 1 October 2021)
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
12-month termination period in the event of a takeover, scheme of arrangement or change of control of the
Company
Mr. Hughes - Project Director (resigned 24 May 2022)
No specified fixed term
Receives a monthly base salary of $27,083 plus statutory superannuation
3-month notice period to terminate employment by either party
Mr. de Jager - Chief Financial Officer & Joint Company Secretary
No specified fixed term
Receives a monthly fee of $27,500 plus GST
3-month notice period to terminate employment by either party
AVZ Minerals Limited | 25
Directors’ Report
Mr. Cohen - Commercial Manager & Joint Company Secretary
No specified fixed term
Receives a monthly base salary of $18,750 plus statutory superannuation (effective 1 October 2021)
3-month notice period to terminate employment by either party
(c) Company Performance, Shareholder Wealth and Directors’ and Executives’ Remuneration
The Company’s Performance for the past five years up to and including the current financial year:
2022
2021
2020
2019
2018
Net loss after tax ($)
(20,402,730)
(5,537,632)
(5,299,858)
(5,263,570)
(5,616,964)
Share Price at year
end ($)
Basic EPS (cents per
share) ($)
0.780*
0.160
0.052
0.051
0.105
(0.61)
(0.19)
(0.22)
(0.26)
(0.34)
* Share price prior to AVZ’s trading halt on 9 May 2022 and voluntary suspension on 11 May 2022.
Performance Rights issued during the year are detailed in Note 24 of the financial statements.
Voting and comments made at the Company’s 2021 Annual General Meeting
At the 2021 Annual General Meeting the Company remuneration report was passed by the requisite majority.
(d) Details of Key Management Personnel Remuneration
2022
Short term employee
benefits
Salary
Consulting
fees
Post
employment
Share
based
payments
Total
Remuneration
consisting of
share-based
payments
Fixed
remuneration
$
$
$
$
$
%
%
Non-Executive Chairman
John Clarke
Executive Directors
Nigel Ferguson
Graeme Johnston
Non-Executive Directors
Rhett Brans
Peter Huljich
Executives
Michael Hughes1
Jan de Jager
Benjamin Cohen
-
-
-
120,000
400,000
337,500
-
-
-
2,127,818
2,247,818
2,810,412
2,197,490
3,210,412
2,534,990
54,545
-
-
60,000
5,455
-
1,405,206
1,408,445
1,465,206
1,468,445
95
88
87
96
96
5
12
13
4
4
439,870
-
220,195
-
330,000
-
37,328
-
22,020
415,422
881,962
295,518
892,620
1,211,962
537,733
47
73
55
53
27
45
TOTAL
714,610
1,247,500
64,803
11,542,273
13,569,186
1 Michael Hughes resigned on 24 May 2022.
AVZ Minerals Limited | 26
Directors’ Report
2021
Short term employee
benefits
Post
employment
Share
based
payments
Total
Remuneration
consisting of
share-based
payments
Fixed
remuneration
$
$
$
$
%
%
Consulting
fees
Salary
$
Non-Executive Chairman
John Clarke
Executive Directors
Nigel Ferguson
Graeme Johnston
Non-Executive Directors
Rhett Brans
Peter Huljich
Executives
Michael Hughes
Jan de Jager1
Benjamin Cohen2
Leonard Math3
-
-
-
120,000
375,000
300,000
-
-
-
640,357
760,357
262,898
228,835
637,898
528,835
54,794
-
-
60,000
5,205
-
131,449
152,297
191,448
212,297
325,000
-
35,564
-
-
68,438
-
134,538
21,695
-
3,379
-
144,022
4,301
1,204
123,208
490,717
72,739
40,147
257,746
TOTAL
415,358
1,057,976
30,279
1,688,571
3,192,184
84
41
43
69
72
29
6
3
48
16
59
57
31
28
71
94
97
52
1 Jan de Jager was appointed on 15 April 2021.
2 Benjamin Cohen was appointed on 30 April 2021.
3 Leonard Math resigned on 12 April 2021.
(e) Share-based compensation
i. Options
There have been no options issued to current Directors and executives as part of their remuneration during the year.
ii.
Performance Rights
The number of Performance Rights granted to key management personnel as part of compensation during the year
ended 30 June 2022 are set out below.
John Clarke
Nigel Ferguson
Graeme Johnston
Rhett Brans
Peter Huljich
Michael Hughes
Jan de Jager
Benjamin Cohen
Class O
Class P
Total
-
-
-
-
-
2,000,000
4,500,000
1,575,000
6,750,000
9,000,000
7,000,000
4,500,000
4,500,000
-
-
-
6,750,000
9,000,000
7,000,000
4,500,000
4,500,000
2,000,000
4,500,000
1,575,000
Details on Performance Rights Class O and P above are included in Note 24 Share Based Payments.
AVZ Minerals Limited | 27
Directors’ Report
The number of Performance Rights held by key management personnel converted into fully paid ordinary shares during
the year ended 30 June 2022 are set out below.
John Clarke
Nigel Ferguson
Graeme Johnston
Rhett Brans
Peter Huljich
Michael Hughes
Jan de Jager
Benjamin Cohen
Number of rights converted during
the year 2022
3,702,000
4,202,000
2,968,000
2,101,000
2,101,000
867,000
1,917,500
1,606,900
Values of rights over ordinary shares granted, exercised and lapsed for key management personnel as part of
compensation during the year ended 30 June 2022 are set out below.
John Clarke
Nigel Ferguson
Graeme Johnston
Rhett Brans
Peter Huljich
Michael Hughes
Jan de Jager
Benjamin Cohen
Value of rights
granted during
the year
$
3,555,750
4,741,000
3,699,500
2,370,500
2,370,500
407,000
926,500
324,275
Value of rights
converted
during the year
$
752,796
892,160
654,440
446,080
450,484
128,220
285,800
169,754
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.
Performance Rights
2022
John Clarke
Nigel Ferguson
Graeme Johnston
Rhett Brans
Peter Huljich
Michael Hughes
Jan de Jager
Benjamin Cohen
Balance at
the start of
the year
Granted
during the
year
Other
Lapsed/
Cancelled
during the
year
Vested and
Exercised
during the
year
Balance at
the end of
the year
6,000,000
6,000,000
4,000,000
3,000,000
3,000,000
3,000,000
2,500,000
1,700,000
6,750,000
9,000,000
7,000,000
4,500,000
4,500,000
2,000,000
4,500,000
1,575,000
-
-
-
-
-
(4,133,000) 1
-
-
-
(3,702,000)
9,048,000
(798,000)
(4,202,000)
10,000,000
(532,000)
(2,968,000)
(399,000)
(2,101,000)
(399,000)
(2,101,000)
-
-
-
(867,000)
(1,917,500)
(1,606,900)
7,500,000
5,000,000
5,000,000
-
5,082,500
1,668,100
1 Michael Hughes resigned on 24 May 2022.
(f) 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.
AVZ Minerals Limited | 28
Directors’ Report
Ordinary
shares
Balance at the
start of the year
Received as
remuneration
Other
Conversion of
performance
rights
Purchased /
(sold) during
the year
Balance at
the end of
the year
2022
John
Clarke
Nigel
Ferguson
Graeme
Johnston
4,000,000
46,478,070
9,849,737
Rhett Brans
4,963,158
Peter
Huljich
Michael
Hughes
Jan de
Jager
Benjamin
Cohen
3,000,000
1,000,000
-
500,000
-
-
-
-
-
-
-
-
-
-
-
-
-
3,702,000
333,333
8,035,333
4,202,000
333,334
51,013,404
2,968,000
(1,419,667)
11,398,070
2,101,000
2,101,000
-
-
7,064,158
5,101,000
(2,760,617) 1
867,000
893,617
-
-
1,917,500
(1,917,500)
1,606,900
200,000
2,306,900
-
-
1 Michael Hughes resigned on 24 May 2022.
(g) Other transactions with Key Management Personnel
Loans and amount owing to key management personnel
i.
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 2022 was $nil (2021: nil).
ii. Other transactions with key management personnel
During the year ended 30 June 2022, the Company paid $105,067 plus GST to Corad Pty Ltd, a company controlled by
Mr. Graeme Johnston, for the provision of technical consultancy services and reimbursement of business expenses
(2021: $56,749).
No other transactions were made to any director or other key management personnel of the Group, including related
parties during the financial year.
This is the end of the audited remuneration report.
AVZ Minerals Limited | 29
Directors’ Report
14. Meetings of Directors
The number of Board and Committee meetings held during the financial year and the number of meetings attended
by each director is:
Director
Board
Nomination and
Remuneration
Committee
Audit and Risk (AR)
Committee
Sustainability
Committee
Eligible
to Attend
Attended
Eligible to
Attend
Attended
Eligible
to Attend
Attended
Eligible
to Attend
Attended
John Clarke
Nigel Ferguson
Graeme
Johnston
Rhett Brans
Peter Huljich
10
10
10
10
10
15.
Insurance of Officers
10
10
10
10
10
2
-
-
2
2
2
-
-
2
2
2
-
-
2
2
2
2
1
2
2
2
-
-
2
2
2
-
-
2
2
During the financial year, AVZ Minerals Limited paid a premium of $513,259 plus GST (2021: $89,915) to insure the
directors and officers 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.
16. Shares under Option
At the date of this report, there are no unissued ordinary shares of AVZ Minerals Limited under options.
17. Shares issued on exercise of Options
No options were exercised during the year.
18. Proceedings on behalf of the Company
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.
19. Auditor’s Independence Declaration
Section 307c of the Corporations Act 2001 requires our auditors, Hall Chadwick WA Audit 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 32 and forms part of this directors’ report for the year ended 30 June 2022.
AVZ Minerals Limited | 30
Directors’ Report
20. Non-Audit Services
During the year, Hall Chadwick WA Audit Pty Ltd, the Company’s external auditor, did not perform any services other
than their statutory audits (2020: $Nil). Details of remuneration paid or payable to the auditor can be found within the
financial statements at Note 4 Auditor’s Remuneration.
In the event that non-audit services are provided by Hall Chadwick WA Audit Pty Ltd, the Board has established certain
procedures to ensure that the provision of non-audit services are compatible with, and do not compromise, the auditor
independence requirements of the Corporations Act 2001. These procedures include: non-audit services will be subject
to the corporate governance procedures adopted by the Company and will be reviewed by the Board to ensure they do
not impact the integrity and objectivity of the auditor; and ensuring non-audit services do not involve reviewing or
auditing the auditor’s own work, acting in a management or decision-making capacity for the Company, acting as an
advocate for the Company or jointly sharing risks and rewards.
Signed in accordance with a resolution of the Board of Directors.
Nigel Ferguson
Managing Director
Perth, Western Australia
30 September 2022
AVZ Minerals Limited | 31
Auditor’s Independence Declaration
AVZ Minerals Limited | 32
Auditor’s Independence Declaration
The
Financial
Statements
AVZ Minerals Limited | 33
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the Year Ended 30 June 2022
Revenue
Other income
R&D Tax Incentive
Expenses
Administrative costs
Directors and consultancy expenses
Share-based payment expense
Compliance and regulatory expenses
Insurance expenses
Depreciation expense
Depreciation expense of right-of use asset
Movement in fair value of financial liabilities
Interest expense
Impairment – relinquishment of tenements
Foreign currency (loss)/gain
Loss before income tax
Income tax expense
Note
3
24
9
10
13
8
5
Consolidated
2022
$
2021
$
385,061
-
45,347
926,507
(7,184,158)
(180,000)
(13,645,990)
(404,705)
(552,931)
(332,332)
(119,508)
2,738,705
(23,519)
(643,339)
(440,014)
(1,768,769)
(332,840)
(2,561,150)
(201,080)
(131,262)
(355,022)
(72,149)
(864,437)
(8,266)
-
(214,511)
(20,402,730)
(5,537,632)
-
-
Loss after income tax for the year
(20,402,730)
(5,537,632)
Other comprehensive income:
Items that may be reclassified to profit or loss
Exchange differences arising on translation of foreign operations
Other comprehensive income
11,044,726
11,044,726
(7,571,376)
(7,571,376)
Total comprehensive loss for the year
(9,358,004)
(13,109,008)
Loss for the year is attributable to:
Owners of AVZ Minerals Limited
Non-controlling interests
Total comprehensive loss for the year attributable to:
Owners of AVZ Minerals Limited
Non-controlling interests
(20,140,740)
(261,990)
(5,401,290)
(136,342)
(20,402,730)
(5,537,632)
(10,310,185)
952,181
(11,946,710)
(1,162,298)
(9,358,004)
(13,109,008)
Basic and diluted loss per share attributable to owners of AVZ
Minerals Limited (cents per share)
18
(0.61)
(0.19)
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with
the accompanying notes.
AVZ Minerals Limited | 34
Consolidated Statement of Financial Position
Consolidated Statement of Financial Position
As at 30 June 2022
Current Assets
Cash and cash equivalents
Trade and other receivables
Note
Consolidated
2022
$
2021
$
6
7
60,726,221
1,713,135
2,463,632
390,174
Total Current Assets
62,439,356
2,853,806
Non-Current Assets
Mineral exploration and evaluation
Property, plant and equipment
Right-of-use asset
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Provisions
Financial liabilities
Lease liability
Total Current Liabilities
Non-Current Liabilities
Lease liability
8
9
10
11
12
13
10
145,670,930
2,319,138
1,356,774
90,525,946
732,585
48,099
149,346,842
91,306,630
211,786,198
94,160,436
640,575
78,183
-
238,467
469,151
72,227
6,661,275
51,343
957,225
7,253,996
10
1,133,008
-
-
Total Non-Current Liabilities
1,133,008
Total Liabilities
Net Assets
Equity
Share capital
Reserves
Accumulated losses
Capital and reserves attributable to owners of AVZ Minerals Ltd
Non-controlling interests
2,090,233
7,253,996
209,695,965
86,906,440
14
16
22
226,455,235
21,247,125
(53,613,316)
194,089,044
15,606,921
107,916,233
3,439,770
(34,977,319)
76,378,684
10,527,756
Total Equity
209,695,965
86,906,440
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
AVZ Minerals Limited | 35
Consolidated Statement of Changes in Equity
Consolidated Statement of Changes in Equity
For the Year Ended 30 June 2022
Contributed
Equity
Accumulated
Losses
Share
Options
Reserve
Foreign
Currency
Reserve
Total
Non-
controlling
Interests
Total Equity
$
$
$
$
$
$
$
Balance at 1 July 2020
103,495,333
(30,162,109)
5,189,576
4,142,944
82,665,744
11,690,054
94,355,798
-
-
-
-
-
2,561,150
Loss for the year
Exchange differences on
translation of foreign
operations
Total comprehensive
income/(loss) for the year
-
-
-
(5,401,290)
-
(5,401,290)
Transactions with owners in their capacity as owners:
Contributions of equity
Transaction costs
Share-based payments
Performance Rights lapsed
Exercise of Options
Conversion of Performance
Rights
Total transactions with
owners in their capacity as
owners
-
-
-
-
3,098,500
1,322,400
586,080
(586,080)
-
-
-
(1,322,400)
4,420,900
586,080
652,670
-
(5,401,290)
(136,342)
(5,537,632)
(6,545,420)
(6,545,420)
(1,025,956)
(7,571,376)
(6,545,420)
(11,946,710)
(1,162,298)
(13,109,008)
-
-
-
-
-
-
-
-
-
2,561,150
-
3,098,500
-
5,659,650
-
-
-
-
-
-
-
-
-
2,561,150
-
3,098,500
-
5,659,650
Balance at 30 June 2021
107,916,233
(34,977,319)
5,842,246
(2,402,476)
76,378,684
10,527,756
86,906,440
Balance at 1 July 2021
107,916,233
(34,977,319)
5,842,246
(2,402,476)
76,378,684
10,527,756
86,906,440
Loss for the year
Exchange differences on
translation of foreign
operations
Total comprehensive
income/(loss) for the year
-
(20,140,740)
-
-
-
(20,140,740)
Transactions with owners in their capacity as owners:
Contributions of equity
115,313,221
Transaction costs
(5,705,166)
-
-
-
-
-
13,645,990
Share-based payments
Options lapsed
Performance Rights lapsed
Exercise of Options
Conversion of Performance
Rights
Non-controlling interests
on acquisition of subsidiary
Total transactions with
owners in their capacity as
owners
-
-
-
4,766,500
4,164,447
-
637,481
(637,481)
867,262
(867,262)
-
-
-
-
(4,164,447)
-
118,539,002
1,504,743
7,976,800
-
(20,140,740)
(261,990)
(20,402,730)
9,830,555
9,830,555
1,214,171
11,044,726
9,830,555
(10,310,185)
952,181
(9,358,004)
-
-
-
-
-
-
-
-
-
115,313,221
(5,705,166)
13,645,990
-
-
4,766,500
-
-
-
-
-
-
-
-
-
115,313,221
(5,705,166)
13,645,990
-
-
4,766,500
-
4,126,984
4,126,984
128,020,545
4,126,984
132,147,529
Balance at 30 June 2022
226,455,235
(53,613,316)
13,819,046
7,428,079
194,089,044
15,606,921
209,695,965
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
AVZ Minerals Limited | 36
-
-
-
-
-
-
Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows
For the Year Ended 30 June 2022
Note
Consolidated
2022
$
2021
$
Cash Flows from Operating Activities
Payments to suppliers and employees
Payments for exploration and evaluation
Interest received
Interest expense
COVID-19 cashflow boost government incentive
R&D Tax Incentive
(8,455,136)
-
385,061
(23,519)
-
-
(2,556,182)
-
54,880
(8,266)
37,500
926,507
Net cash outflow from operating activities
19
(8,093,594)
(1,545,561)
Cash Flows from Investing Activities
Payments for exploration and evaluation
Payments for property, plant and equipment
Payment of deferred consideration
Payment to Dathomir - additional 15% (2021:
additional 10%)
(18,283,389)
(1,911,615)
(160,686)
(11,940,729)
(82,048)
-
(27,045,299)
(685,235)
Net cash outflow from investing activities
(47,400,989)
(12,708,012)
Cash Flows from Financing Activities
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 liability
115,000,000
-
4,766,500
(5,705,166)
-
-
(108,051)
3,098,500
-
-
-
(72,889)
Net cash inflow from financing activities
113,953,283
3,025,611
Net increase/(decrease) in cash and cash
equivalents
Exchange rate adjustments
Cash and cash equivalents at the start of the year
58,458,700
(11,227,962)
(196,111)
(510,700)
2,463,632
14,202,294
Cash and cash equivalents at the end of the
year
6
60,726,221
2,463,632
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
AVZ Minerals Limited | 37
Notes to the Consolidated Financial Statements for the year ended 30 June 2022
1.
Summary of Significant Accounting Policies
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 $20,402,730 (2021: $5,537,632) and net cash outflows from
operating activities of $8,093,594 (2021: $1,545,561). As at 30 June 2022, the Group has a working capital
surplus of $61,482,131.
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 2022 and its operations in
future periods.
AVZ Minerals Limited | 38
Notes to the Consolidated Financial Statements for the year ended 30 June 2022
1.
Summary of Significant Accounting Policies (continued)
(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 2022 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.
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 entity has control over subsidiaries that are not wholly owned,
judgement is applied to assess the ability of the consolidated entity 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 entity has with other owners of partly owned subsidiaries are taken into
consideration.
Whilst the consolidated entity is not able to control all activities of a partly owned subsidiary, the partly owned
subsidiary is consolidated within the consolidated entity where it is determined that the consolidated entity
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 the 2017 financial year, 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.
*Upon completion of a further acquisition of 15% interest from Dathomir Mining Resources SARL in August
2021, AVZ Minerals has a 75% interest in the Manono Project. Subject to the completion of the Transaction
Implementation Agreement (“TIA”) between AVZ and Suzhou CATH Energy Technologies, the Company’s
direct interest in the Manono Project will be reduced to 51%.
(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.
AVZ Minerals Limited | 39
Notes to the Consolidated Financial Statements for the year ended 30 June 2022
1.
Summary of Significant Accounting Policies (continued)
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.
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.
AVZ Minerals Limited | 40
Notes to the Consolidated Financial Statements for the year ended 30 June 2022
1.
Summary of Significant Accounting Policies (continued)
(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.
(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.
AVZ Minerals Limited | 41
Notes to the Consolidated Financial Statements for the year ended 30 June 2022
1.
(l)
Summary of Significant Accounting Policies (continued)
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’).
(p)
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.
AVZ Minerals Limited | 42
Notes to the Consolidated Financial Statements for the year ended 30 June 2022
1.
Summary of Significant Accounting Policies (continued)
(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 | 43
Notes to the Consolidated Financial Statements for the year ended 30 June 2022
1.
Summary of Significant Accounting Policies (continued)
(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 | 44
Notes to the Consolidated Financial Statements for the year ended 30 June 2022
1.
Summary of Significant Accounting Policies (continued)
(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 2022, 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 2021.
As a result of this review, the Directors have determined that there is no material impact of new Standards
and Interpretations issued and, therefore, no change is necessary to the Group’s accounting policies.
(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 2022. 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 | 45
Notes to the Consolidated Financial Statements for the year ended 30 June 2022
2.
Critical accounting estimates and judgements
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) Estimation of the Group's borrowing rate
The lease payments used to determine the lease liability and right-of-use of asset at 1 July 2021 under AASB 16
Leases are discounted using the Group’s incremental borrowing rate of 6.57%. The new lease borrowing rate was
an estimate of 6.51% on 1 April 2022.
3. Revenue
Interest received
Total revenue and other income
Consolidated
2022
$
2021
$
385,061
385,061
45,347
45,347
AVZ Minerals Limited | 46
Notes to the Consolidated Financial Statements for the year ended 30 June 2022
4. Auditor’s Remuneration
Hall Chadwick (WA) Pty Ltd
Audit and review of financial statements
Other services
Total remuneration of auditors
Consolidated
2022
$
2021
$
93,940
-
93,940
80,510
440
80,950
Consolidated
2022
$
2021
$
5. Income Tax Expense
(a) Numerical reconciliation of income tax expense to prima facie tax payable
Loss from continuing operations before income tax expense
(20,402,730)
(5,537,632)
Tax at the tax rate of 30% (2021: 30%)
(6,120,819)
(1,661,290)
Tax effect of amounts which are not deductible in calculating taxable
income:
Non-deductible expenses
Non-assessable amounts
Unrecognised tax losses
Movement in unrecognised temporary differences
Income tax expense
(b) Deferred tax asset not recognised*
Tax losses
Exploration and expenditure
Net deferred tax not recognised
4,478,249
1,140,012
(821,611)
(277,697)
2,569,681
932,085
(105,500)
(133,110)
-
-
7,457,319
4,881,180
267,025
378,248
7,724,344
5,259,428
*The deferred tax asset attributable to tax losses does not exceed taxable amounts arising from the reversal of
existing assessable temporary differences.
AVZ Minerals Limited | 47
Notes to the Consolidated Financial Statements for the year ended 30 June 2022
Consolidated
2022
$
2021
$
6. Cash & Cash Equivalents
Cash at bank & in hand
Total cash & cash equivalents
60,726,221
2,463,632
60,726,221
2,463,632
Cash on hand is non-interest bearing. Cash at bank bears interest rates between 0.25% and 1.77% (2021: 0.01%
and 1.6%). Refer to Note 17 for the Group’s exposure to interest rate and credit risk.
7. Trade and Other Receivables
Advances to employees for field work purposes
GST receivable
Deposits and securities
Prepayments
Other receivables
Total trade and other receivables
8. Exploration & Evaluation Expenditure
Opening balance
Acquisition of further interest (i)
Exploration costs
Impairment (ii)
Net exchange differences on translation
Closing balance
Consolidated
2022
$
2021
$
723,271
177,978
203,008
604,192
4,686
1,713,135
119,382
117,180
47,378
104,236
1,998
390,174
Consolidated
2022
$
2021
$
90,525,946
84,896,432
27,045,299
685,235
19,075,932
12,122,357
(643,339)
-
9,667,092
(7,178,078)
145,670,930
90,525,946
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 exploitation of the areas of interest, or alternatively,
by their sale.
In August 2021, the Company increased its interest in the Manono Project from 60% to 75% by exercising
(i)
options to purchase Dathomir’s minority shareholding of 15% equity in Dathcom Mining for US$20 million.
(ii)
Impairment due to 50% relinquishment of tenements comprising PR 4029 and PR 4030.
AVZ Minerals Limited | 48
Notes to the Consolidated Financial Statements for the year ended 30 June 2022
9. Property, plant and equipment
At cost
Less: accumulated depreciation
Reconciliation
Opening balance
Additions
Depreciation expense
Foreign currency translation difference movement
Closing balance
10. Right-of-use Assets and Leases
(a) Amounts recognised in the balance sheet
Rights-of-use asset
Balance as at 1 July
Right-of-use assets recognised
Less: Depreciation
Closing balance
Lease liabilities
Balance as at 1 July
Lease liabilities recognised
Add: Interest
Less: Payment per Consolidated Statement of Cash Flows
Closing balance
Current
Non-current
Closing balance
Consolidated
2022
$
2021
$
4,102,739
1,921,485
(1,783,601)
(1,188,900)
2,319,138
732,585
732,585
1,092,204
1,937,846
82,048
(332,332)
(355,022)
(18,961)
2,319,138
(86,645)
732,585
Consolidated
2022
$
2021
$
48,099
120,248
1,428,183
(119,508)
1,356,774
-
(72,149)
48,099
51,343
124,232
1,428,183
23,519
(131,570)
1,371,475
238,467
1,133,008
1,371,475
-
5,640
(78,529)
51,343
51,343
-
51,343
(b) Amounts recognised in the consolidated statement of profit or loss
Depreciation of right-of-use asset
Interest expense on lease liabilities
119,508
23,519
72,149
5,640
AVZ Minerals Limited | 49
Notes to the Consolidated Financial Statements for the year ended 30 June 2022
10. Right-of-use Assets and Leases (continued)
In April 2022, the Company vacated the office property at Level 2, 8 Colin Street, West Perth and relocated to its
new office at Level 2, 1 Walker Avenue, West Perth. The new office lease commenced on 1 April 2022 and remains
in force until 31 March 2027.
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.
Initial measurement
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.
Subsequent measurement
The right-of-use asset is subsequently measured at cost less any accumulated amortisation and any accumulated
impairment losses and adjusted for any re-measurement of the lease liability.
The lease liability is subsequently measured to reflect the interest on the lease liability, the lease payments made
and any reassessment of the variable payments.
11. Trade & Other Payables
Current
Trade payables
Employee benefits and related payables
Accrued expenses
FBT Payable
Others
Consolidated
2022
$
2021
$
141,464
75,222
412,639
5,896
5,354
42,792
44,218
368,221
4,204
9,716
Total current trade & other payables
640,575
469,151
The Group’s exposure to liquidity risk is noted in Note 17.
12. Provisions
Current
Employee benefits
Total current provisions
The Group’s provision for employee benefits represents annual leave payable.
Consolidated
2022
$
2021
$
78,183
78,183
72,227
72,227
AVZ Minerals Limited | 50
Notes to the Consolidated Financial Statements for the year ended 30 June 2022
13. Financial Liabilities
Acquisition of 5% interest in Dathcom Mining SA* on 24 June 2019
Deferred Consideration
Current Liability
Principal
Principal repayments
Fair value increase / (decrease) on repayment
Unwinding of interest on discounting
Fair value increase
At 30 June
Non-Current Liability
Opening balance
Fair value increase taken to profit or loss
At 30 June
Total
Total Deferred Consideration
Total current liability
Total non-current liability
Total Liability
Consolidated
2022
$
2021
$
6,661,275
(6,761,325)
535,142
(2,738,705)
2,303,613
5,796,838
-
-
-
864,437
-
6,661,275
-
-
-
-
-
-
-
-
-
-
6,661,275
6,661,275
-
6,661,275
*SAS corporation was converted to SA corporation in August 2019.
On 24 June 2019, the Company announced that it had executed a Share Sale Purchase Agreement (“Agreement”)
with Dathomir Mining Resources SARL to purchase a 5% equity in Dathcom Mining for a total consideration of
US$5,500,000. Under the Agreement, the first tranche payment of US$500,000 was to be paid within 14 days of
execution and the balance of the consideration was to 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 balance of US$5 million was paid
in August 2021.
Consolidated
Consolidated
2022
Shares
2021
Shares
2022
$
2021
$
14. Share capital
Ordinary shares - fully paid
3,528,729,748
2,906,165,175
226,455,235
107,916,233
Total Share Capital
3,528,729,748
2,906,165,175
226,455,235
107,916,233
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 | 51
Notes to the Consolidated Financial Statements for the year ended 30 June 2022
14.
Share capital (continued)
Movements in share capital
Date
Number of
Shares
Fair
Value
Total
per share
$
Opening Balance 1 July 2020
2,838,498,508
103,495,333
Exercise of unlisted options1
Exercise of unlisted options1
Exercise of unlisted options1
Exercise of unlisted options2
Exercise of unlisted options3
Exercise of unlisted options3
Exercise of unlisted options4
Exercise of unlisted options5
Exercise of unlisted options2
21-Oct-20
10,000,000
24-Nov-20
5,000,000
10-Dec-20
10,000,000
14-Dec-20
4-Jan-21
13-Jan-21
18-Jan-21
18-Jan-21
19-Jan-21
4,000,000
5,000,000
11,666,667
4,000,000
1,000,000
1,000,000
Conversion of Performance Rights6
30-Mar-21
16,000,000
Closing Balance at 30 June 2021
2,906,165,175
Opening Balance 1 July 2021
2,906,165,175
Issue of shares7
Issue of shares8
Exercise of unlisted options9
Exercise of unlisted options10
7-Jul-21
307,692,308
15-Jul-21
15-Jul-21
9-Aug-21
1,648,530
1,000,000
1,666,667
Conversion of Performance Rights11
30-Nov-21
13,450,400
Issue of shares12
Issue of shares13
3-Dec-21
60,000,000
17-Dec-21
150,000,000
Conversion of Performance Rights14
13-Jan-22
10,440,000
Exercise of unlisted options15
7-Apr-22
76,666,668
Less: transaction cost
-
Closing Balance at 30 June 2022
3,528,729,748
$0.060
$0.060
$0.060
$0.057
$0.060
$0.060
$0.067
$0.048
$0.057
$0.083
$0.130
$0.190
$0.067
$0.060
$0.088
-
$0.500
$0.286
$0.060
600,000
300,000
600,000
228,000
300,000
700,000
266,000
47,500
57,000
1,322,400
107,916,233
107,916,233
40,000,000
313,221
66,500
100,000
1,180,287
-
75,000,000
2,984,160
4,600,000
(5,705,166)
226,455,235
1 During the year ended 30 June 2021, a total of 25,000,000 Unlisted Options (exercisable at $0.06 per share on or
before 8 April 2022) were exercised.
2 During the year ended 30 June 2021, a total of 5,000,000 Unlisted Options (exercisable at $0.057 per share on or
before 5 September 2021) were exercised.
3 During the year ended 30 June 2021, a total of 16,666,667 Unlisted Options (exercisable at $0.06 per share on or
before 8 April 2022) were exercised.
4 During the year ended 30 June 2021, a total of 4,000,000 Unlisted Options (exercisable at $0.0665 per share on or
before 5 March 2022) were exercised.
5 During the year ended 30 June 2021, a total of 1,000,000 Unlisted Options (exercisable at $0.0475 per share on or
before 5 March 2022) were exercised.
6 On 31 March 2021, the Company issued 16,000,000 fully paid ordinary shares following the vesting of Class E, Class
L and Class M Performance Rights (executing an offtake agreement for at least 25% and 50% of the product (Lithium
and Tin) in the Manono Lithium Project).
AVZ Minerals Limited | 52
Notes to the Consolidated Financial Statements for the year ended 30 June 2022
14.
Share capital (continued)
7 On 7 July 2021, the Company completed a $40 million (before transaction cost) Placement through the issue of
307,692,308 shares at $0.13 per share to institutional, professional and sophisticated investors.
8 On 15 July 2021, 1,648,530 shares were issued to Mincore Pty Ltd as part consideration for the completion of the
Manono Lithium and Tin Project FEED Study.
9 On 15 July 2021, 1,000,000 Unlisted Options (exercisable at $0.0665 on or before 5 May 2022) were exercised.
10 On 9 August 2021, 1,666,667 Unlisted Options (exercisable at $0.06 on or before 8 April 2022) were exercised.
11 On 30 November 2021, 5,651,800 Class E Performance Rights, 1,101,000 Class H Performance Rights, 587,200
Class K Performance Rights, 2,000,000 Class L Performance Rights, 2,202,000 Class M Performance Rights, and
1,908,400 Class N Performance Rights vested and converted to Ordinary Shares. The fair value of the Performance
Rights of $1,180,287 was transferred from the Share Based Payment Reserve to Issued Capital.
12 On 3 December 2021, 60,000,000 shares were issued as Collateral shares at nil cash consideration under an At-
the-Market (ATM) Subscription Deed with Acuity Capital. The Company may, however, at any time cancel the ATM as
well as buy back (and cancel) those shares for no cash consideration (subject to shareholder approval). The ATM
facility limit is $50,000,000 and matures on 20 March 2024.
13 On 17 December 2021, the Company completed a $75 million (before transaction cost) Placement through the
issue of 150,000,000 shares at $0.50 per share to institutional and sophisticated investors.
14 On 13 January 2022, 3,440,000 Class O Performance Rights, 7,000.000 Class P Performance Rights, vested and
converted to Ordinary Shares. The fair value of the Performance Rights of $2,984,160 was transferred from the Share
Based Payment Reserve to Issued Capital.
15 On 7 April 2022, 76,666,668 Unlisted Options (exercisable at $0.06 on or before 8 April 2022) were exercised.
15.
Share Options and Performance Rights
(a) Share Options
Expiry
date
Exercise
price
Balance at
start of year
Granted
during the
year
Exercised
during the
year
Lapsed
during the
year
Balance at
end of the
year
(cents)
5-Mar-22
8-Apr-22
6.65
6.00
1,000,000
78,333,335
-
-
(1,000,000)
(78,333,335)
79,333,335
-
(79,333,335)
5-Mar-21
5-Sep-21
5-Mar-22
8-Apr-22
4.75
5.70
6.65
1,000,000
5,000,000
5,000,000
6.00 120,000,002
-
-
-
-
(1,000,000)
(5,000,000)
(4,000,000)
(41,666,667)
131,000,002
-
(51,666,667)
-
-
-
-
-
-
-
-
-
-
-
1,000,000
- 78,333,335
- 79,333,335
2022
Unlisted
Unlisted
2021
Unlisted
Unlisted
Unlisted
Unlisted
AVZ Minerals Limited | 53
Notes to the Consolidated Financial Statements for the year ended 30 June 2022
15.
Share Options and Performance Rights (continued)
(b) Performance Rights
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
2022
Class E
Class F
Class H
Class K
Class L
Class M
Class N
Class O
Class P
Class Q
Total
2021
Class D
Class E
Class F
Class H
Class I
Class K
Class L
Class M
Class N
Total
3-Dec-21
2-Jun-22
3-Dec-21
3-Dec-21
3-Dec-21
9-Dec-23
29-Jun-24
7-Sep-24
7-Sep-24
7-Oct-22
Various
3-Dec-21
2-Jun-22
3-Dec-21
11-Nov-20
3-Dec-21
3-Dec-21
9-Dec-23
29-Jun-24
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7,700,000
8,000,000
1,500,000
800,000
2,000,000
- 19,600,000
5,200,000
-
-
-
-
-
-
-
(5,651,800)
(2,048,200)
-
(8,000,000)
(1,101,000)
(399,000)
(587,200)
(212,800)
(2,000,000)
(2,202,000)
(1,908,400)
-
-
-
-
-
-
- 17,398,000
-
3,291,600
- 13,235,000
- 24,750,000
-
3,500,000
- 16,675,000
(3,440,000)
- 31,750,000
(7,000,000)
-
3,500,000
-
44,800,000
51,925,000
(23,890,400)
(10,660,000)
62,174,600
3,600,000
- 17,400,000
8,000,000
3,000,000
3,000,000
1,600,000
-
-
-
-
-
-
(3,600,000)
-
(8,700,000)
(1,000,000)
7,700,000
-
(1,500,000)
-
-
8,000,000
1,500,000
-
(3,000,000)
-
-
4,000,000
(800,000)
(2,000,000)
-
-
800,000
2,000,000
- 24,100,000
(3,000,000)
(1,500,000)
19,600,000
-
5,200,000
-
-
5,200,000
36,600,000
33,300,000
(16,000,000)
(9,100,000)
44,800,000
AVZ Minerals Limited | 54
Notes to the Consolidated Financial Statements for the year ended 30 June 2022
16. Reserves
Share Options and Performance Rights Reserve (a)
Foreign Currency Translation Reserve (b)
Total reserves
(a) Share Options and Performance Rights Reserve (i)
Opening balance
Share-based payment expense during the year
Less: Conversion of Performance Rights
Less: Options exercised
Less: Performance Rights lapsed
Closing balance
Consolidated
2022
$
2021
$
13,819,046
5,842,246
7,428,079
(2,402,476)
21,247,125
3,439,770
5,842,246
5,189,576
13,645,990
2,561,150
(4,164,447)
(1,322,400)
(637,481)
(867,262)
-
(586,080)
13,819,046
5,842,246
(b) Foreign Currency Translation Reserve (ii)
Opening balance
(2,402,476)
4,142,944
Exchange difference arising on translation of foreign operations
9,830,555
(6,545,420)
Closing balance
7,428,079
(2,402,476)
Nature and purpose of reserves
(i) Share Options and Performance Rights Reserve
The Share Options and Performance Rights Reserve contains amounts received (if any) on the issue of Options
and Performance Rights over unissued capital of the Company. It is also used to recognise the fair value of
Options and Performance Rights issued to eligible 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.
17.
Financial Instruments, Risk Management Objectives and Policies
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:
AVZ Minerals Limited | 55
Notes to the Consolidated Financial Statements for the year ended 30 June 2022
17.
Financial Instruments, Risk Management Objectives and Policies (continued)
(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
2022
Financial assets
Weighted
Average
Interest
Rate
%
Floating
Interest
Rate
Fixed
Interest
Non-interest
bearing
Total
$
$
$
$
Cash and cash equivalents
0.65%
1,453,381 59,272,840
- 60,726,221
Trade and other receivables
Financial liabilities
Trade and other payables
Lease liabilities
Financial liabilities
-
-
6.51%
-
-
-
930,965
930,965
1,453,381 59,272,840
930,965 61,657,186
-
-
-
640,575
640,575
1,371,475
-
-
-
1,371,475
-
-
1,371,475
640,575
2,012,050
Consolidated
2021
Financial assets
Weighted
Average
Interest
Rate
%
Floating
Interest
Rate
Fixed
Interest
Non-
interest
bearing
$
$
$
Total
$
Cash and cash equivalents
0.86%
2,443,457
20,175
-
2,463,632
Trade and other receivables
Financial liabilities
Trade and other payables
Lease liabilities
Financial liabilities
-
-
6.66%
-
-
-
285,938
285,938
2,443,457
20,175
285,938
2,749,570
-
-
-
-
-
469,151
469,151
51,343
-
51,343
-
6,661,275
6,661,275
51,343
7,130,426
7,181,769
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 2022 and 30 June 2021, the Group’s exposure to interest rate risk was 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.
AVZ Minerals Limited | 56
Notes to the Consolidated Financial Statements for the year ended 30 June 2022
17.
Financial Instruments, Risk Management Objectives and Policies (continued)
(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 (AUD).
The Group operates internationally and is exposed to foreign exchange risk arising from currency exposure
to the United States 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.
(i) Sensitivity analysis
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 2022 and 30 June 2021, 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
2022
$
1,273,885
877,373
2,151,258
(14,871)
-
(14,871)
2021
$
192,240
121,379
313,619
(4,187)
(6,661,275)
(6,665,462)
A reasonably possible strengthening (weakening) of the AUD against USD at 30 June 2022 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 AUD. This analysis assumes all
other variables remain constant.
2022
2021
Increase (Decrease) in Equity and Profit or Loss
AUD to USD
AUD to USD
10%
$
10%
$
10%
$
-10%
$
Cash and cash equivalents
Trade & other receivables - current
(87,787)
(60,462)
87,787
60,462
(17,478)
(11,034)
(148,249)
148,249
(28,512)
17,478
11,034
28,512
Trade and other payables
Financial liabilities
1,025
(1,025)
380
(380)
-
-
605,570
(605,570)
1,025
(1,025)
605,950
(605,950)
(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.
AVZ Minerals Limited | 57
Notes to the Consolidated Financial Statements for the year ended 30 June 2022
17.
Financial Instruments, Risk Management Objectives and Policies (continued)
(d)
Liquidity risk (continued)
Contractual
maturities of
financial
assets/(liabilities)
At 30 June 2022
Cash and cash
equivalents
Trade and other
receivables
Trade and other
payables
Lease liabilities
Financial
liabilities
At 30 June 2021
Cash and cash
equivalents
Trade and other
receivables
Trade and other
payables
Lease liabilities
Financial
liabilities
Less than 6
months
6-12
months
Between
1 and 2
years
Between
2 and 5
years
Total
contractual
cash inflows
/(outflows)
Carrying
amount
$
$
$
$
$
$
60,726,221
-
-
-
60,726,221
60,726,221
930,965
(640,575)
-
-
-
-
-
930,965
930,965
(640,575)
(640,575)
(158,431)
(160,609)
(327,814)
(947,806)
(1,594,660)
(1,371,475)
-
-
-
-
-
-
60,858,180
(160,609)
(327,814)
(947,806)
59,421,951
59,645,136
2,463,632
-
-
-
2,463,632
2,463,632
285,938
(469,151)
-
-
(39,265)
(13,088)
-
(6,661,275)
2,241,154
(6,674,363)
-
-
-
-
-
-
-
-
-
-
285,938
285,938
(469,151)
(469,151)
(52,353)
(51,343)
(6,661,275)
(6,661,275)
(4,433,209)
(4,432,199)
(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
Lease liabilities
Financial liabilities -
current
2022
2021
Carrying
Amount
$
Net fair
Value
$
Carrying
Amount
$
Net fair
Value
$
60,726,221
60,726,221
2,463,632
2,463,632
930,965
930,965
285,938
285,938
61,657,186
61,657,186
2,749,570
2,749,570
640,575
640,575
469,151
469,151
1,371,475
1,371,475
51,343
51,343
-
- 6,661,275
6,661,275
2,012,050
2,012,050
7,181,769
7,181,769
AVZ Minerals Limited | 58
Notes to the Consolidated Financial Statements for the year ended 30 June 2022
17.
Financial Instruments, Risk Management Objectives and Policies (continued)
(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
2022
$
2021
$
18. Loss per Share
(a) Loss
Loss used in the calculation of basic and diluted EPS ($)
(20,402,730)
(5,401,290)
(b) Weighted average number of ordinary shares (‘WANOS’)
WANOS used in the calculation of basic and diluted loss per share
3,357,835,239
2,870,608,398
Basic and diluted loss per share
cents per share
cents per share
(0.61)
(0.19)
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 2022
19. Cash Flow Information
Reconciliation of cash flows from operating activities with loss
from ordinary activities after income tax:
Loss for the year
Depreciation
Depreciation expense of right-of-use asset
Share-based payment
Movement in fair value of financial liabilities
Interest income accrued
Impairment
Net realised and unrealised foreign exchange losses
Business development costs
Changes in assets and liabilities:
(Increase)/Decrease in operating receivables and prepayments
Increase/(Decrease) in trade and other payables
Increase/(Decrease) in provisions
Consolidated
2022
$
2021
$
(20,402,730)
(5,537,632)
332,332
119,508
13,645,990
(2,738,705)
-
643,339
440,010
320,780
(607,542)
147,469
5,955
355,022
72,149
2,561,150
864,437
9,534
-
214,507
-
(8,941)
(75,787)
-
Net cash outflows from operating activities
(8,093,594)
(1,545,561)
Non-cash investing and financing activities
Issue of ordinary shares for investor relations services
-
-
Issue of ordinary shares from conversion of Performance Rights
4,164,447
1,322,400
4,164,447
1,322,400
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.
20.
Segment Information
The Group is organised into one operating segment, being exploration in the Democratic Republic of the Congo (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.
AVZ Minerals Limited | 60
Notes to the Consolidated Financial Statements for the year ended 30 June 2022
21. Commitments and Contingencies
No matters or events have arisen since the end of the half-year which have significantly affected or may significantly
affect the operations of the Group, the results of those operations or the state of affairs of the Group in subsequent
financial periods.
22. Subsidiaries and non-controlling entities
(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
Country of
incorporation
Class
of shares
Equity holding1
2022
2021
AVZ International Pty Ltd
AVZ Minerals Congo SARL
AVZ Power
Dathcom Mining SA1
Maji Bora Ya Manono2
Nyuki Logistics Company2
Green Lithium Holdings Pte Ltd3
Australia
DRC
DRC
DRC
DRC
DRC
Singapore
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
1 The proportion of ownership interest is equal to the proportion of voting power held.
2 Incorporated on 7 October 2020.
3 Incorporated on 8 March 2022.
(b) Non-controlling entities
%
100
100
100
75
100
100
100
%
100
100
100
60
100
100
-
The following table sets out the summarised financial information for each subsidiary that has a non-controlling
interests (NCI). 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
23. Related Party Information
(a)
(b)
Parent entity
The ultimate parent entity within the Group is AVZ Minerals Limited.
Subsidiaries
Interests in subsidiaries are set out above.
Dathcom Mining SA
30-Jun-22
30-Jun-21
1,812,933
182,622
127,395,288
76,683,367
129,208,221
76,865,989
77,666,125
4,187
-
51,736,429
77,666,125
51,740,616
51,542,096
25,125,373
15,606,921
10,527,756
AVZ Minerals Limited | 61
Notes to the Consolidated Financial Statements for the year ended 30 June 2022
23. Related Party Information (continued)
(c)
Key management personnel
The key management personnel compensation is as follows:
Key Management Personnel Compensation
Summary remuneration
Short-term benefits
Post-employment benefits
Share-based payments
Total key management personnel compensation
Consolidated
2022
$
2021
$
1,962,110
64,803
11,542,273
13,569,186
1,473,334
30,279
1,688,571
3,192,184
Details of remuneration disclosures are provided within the audited remuneration report which can be found on
pages 23 to 29 of the Directors’ report. Refer page 29 for transactions with related parties.
24.
Share Based Payments
Options (a)
Performance Rights (b)
Total share-based payment expense
(a) Options
Consolidated
2022
$
-
13,645,990
13,645,990
2021
$
-
2,561,150
2,561,150
Share based payment arrangement during the year ended 30 June 2022
No options were issued to directors and executives as part of their remuneration during year ended 30 June
2022.
There are no options on issue at 30 June 2022.
(b) Performance Rights
Share based payment arrangement granted during the year ended 30 June 2022
On 7 September 2021, 16,675,000 Class O Performance Rights were issued to employees and consultants of
the Company. These Performance Rights are split into five tranches with the following vesting conditions:
1. Tranche 1 - 3,765,000 shall vest on signature of a binding EPC contract for the construction of the operating
plant for the Manono Lithium and Tin Project.
2. Tranche 2 - 2,340,000 shall vest on designation of a standalone JORC indicated and inferred tin resource of
10,000 tonnes of contained Cassiterite.
3. Tranche 3 - 3,690,000 shall vest on designation of a JORC indicated and inferred resource at Carriere de l’Este
of 150m tonne grading at least 1.5% lithium.
4. Tranche 4 - 3,440,000 shall vest on operation of the plant at 4.5 million tonnes per annum capacity for three
consecutive months.
5. Tranche 5 - 3,440,000 shall vest when market capitalisation of the Company exceeds $2 Billion for a period of
20 consecutive trading days.
AVZ Minerals Limited | 62
Notes to the Consolidated Financial Statements for the year ended 30 June 2022
24.
Share Based Payments (continued)
(b) Performance Rights (continued)
Class O
Number
Issued
Grant Date
Exercise
Price
Expiry Date of
Milestone
Achievements
Tranche 1
3,765,000
Tranche 2
2,340,000
Tranche 3
3,690,000
Tranche 4
3,440,000
Tranche 5
3,440,000
26-Aug-21
26-Aug-21
26-Aug-21
26-Aug-21
26-Aug-21
Nil
Nil
Nil
Nil
Nil
07-Sep-24
07-Sep-24
07-Sep-24
07-Sep-24
07-Sep-24
Underlying
Share Price
on Grant
Date
($)
0.225
0.225
0.225
0.225
0.139
Total Fair
Value
%
Vested
($)
847,125
526,500
830,250
774,000
478,160
Nil
Nil
Nil
Nil
100%
3,440,000 Tranche 5 of Class O Performance Rights vested and were converted on 13 January 2022.
During the 2022 financial year, the share based payment expense recognised in relation to Class O Performance
Rights was $2,201,337 over its vesting period at a 100% probability of meeting vesting conditions.
On 18 November 2021, 31,750,000 Class P Performance Rights were issued to directors of the Company
following shareholder approval at the 2021 Annual General Meeting. These Performance Rights are split into
five tranches with the following vesting conditions:
1. Tranche 1 – 7,000,000 shall vest on signature of a binding EPC contract for the construction of the operating
plant for the Manono Lithium and Tin Project.
2. Tranche 2 – 3,750,000 shall vest on designation of a standalone JORC indicated and inferred tin resource of
10,000 tonnes of contained Cassiterite.
3. Tranche 3 - 7,000,000 shall vest on designation of a JORC indicated and inferred resource at Carriere de l’Este
of 150m tonne grading at least 1.5% lithium.
4. Tranche 4 - 7,000,000 shall vest on operation of the plant at 4.5 million tonnes per annum capacity for three
consecutive months.
5. Tranche 5 - 7,000,000 shall vest when market capitalisation of the Company exceeds $2 Billion for a period of
20 consecutive trading days.
Class P
Number
Issued
Grant Date
Exercise
Price
Expiry Date of
Milestone
Achievements
Tranche 1
7,000,000
Tranche 2
3,750,000
Tranche 3
7,000,000
Tranche 4
7,000,000
Tranche 5
7,000,000
18-Nov-21
18-Nov-21
18-Nov-21
18-Nov-21
18-Nov-21
Nil
Nil
Nil
Nil
Nil
7-Sep-24
7-Sep-24
7-Sep-24
7-Sep-24
7-Sep-24
Underlying
Share Price
on Grant
Date
($)
0.575
0.575
0.575
0.575
0.358
Total Fair
Value
%
Vested
($)
4,025,000
2,156,250
4,025,000
4,025,000
2,506,000
Nil
Nil
Nil
Nil
100%
7,000,000 Tranche 5 of Class P Performance Rights vested and were converted on 13 January 2022.
During the 2022 financial year, the share based payment expense recognised in relation to Class P Performance
Rights was $9,619,291 over its vesting period at a100% probability of meeting vesting conditions.
On 7 October 2021, 3,500,000 Class Q Performance Rights were issued to consultants of the Company. These
Performance Rights shall vest upon all of the following items being delivered:
1. Mining Licence being granted to Dathcom Mining SA;
2. Execution of the Collaboration Agreement;
3. Signing of the MOU agreement; and
4. Approval of MSEZ.
AVZ Minerals Limited | 63
Notes to the Consolidated Financial Statements for the year ended 30 June 2022
24. Share Based Payments (continued)
(b) Performance Rights (continued)
Class Q
Number
Issued
Grant Date
Exercise
Price
Expiry Date of
Milestone
Achievements
Underlying
Share Price on
Grant Date
3,500,000
14-Sep-21
Nil
7-Oct-22
($)
0.255
Total Fair
Value
($)
892,500
During the 2022 financial year, the share based payment expense recognised in relation to Class Q Performance
Rights was $664,774 over its vesting period at a 100% probability of meeting vesting conditions.
During the year 2022 financial year, 23,890,400 Performance Rights vested and were converted to Ordinary
Shares following the satisfaction of various vesting conditions as below:
1. 5,651,800 Class E, 1,101,000 Class H, 587,200 Class K, 2,202,000 Class M and 1,908,400 Class N
Performance Rights partially vested upon securing the equity component of project finance.
2. 2,000,000 Class L Performance Rights vested upon executing an offtake agreement for 75% and 100% of
the product (Lithium and Tin) in the Manono Lithium Project.
3. 3,440,000 Class O and 7,000,000 Class P Performance Rights vested upon the market capitalisation of the
Company exceeding $2 Billion for a period of 20 consecutive trading days.
(c) Shares issued as share based payments
On 15 July 2021, 1,648,530 shares were issued to a Mincore Pty Ltd as part consideration for the completion
of the Manono Lithium and Tin Project FEED study . Refer to Note 14.
25. Parent Entity Information
(a) Assets
Current assets
Non-current assets
Total assets
(b) Liabilities
Current liabilities
Non-current Liabilities
Total liabilities
Net Assets
(c) Equity
Contributed equity
Accumulated losses
Reserves
Total equity
(d) Total comprehensive loss for the year
Loss for the year
Company
2022
$
2021
$
60,288,098
2,547,511
129,858,570
84,008,007
190,146,668
86,555,518
942,350
7,249,805
1,133,008
-
2,075,358
7,249,805
188,071,310
79,305,713
226,455,235
107,916,233
(52,202,971)
(34,452,767)
13,819,046
5,842,247
188,071,310
79,305,713
(19,254,949)
(5,183,611)
AVZ Minerals Limited | 64
Notes to the Consolidated Financial Statements for the year ended 30 June 2022
25. Parent Entity Information (continued)
Other comprehensive income for the year
Company
2022
2021
$
-
$
-
Total comprehensive loss for the year
(19,254,949)
(5,183,611)
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
26. Events Occurring after the Reporting Date
On 29 July 2022, AVZ announced to the market that wholly owned entity, AVZ International Pty Ltd, and Suzhou CATH
Energy Technologies, the parties to the Transaction Implementation Agreement (TIA) executed on 24 September 2021,
have agreed to amend the end date to 30 September 2022 to provide for completion of closure formalities.
On 3 August 2022, Mr Peter Huljich resigned as Non-Executive Director of the Company.
On 24 August 2022, 4,133,000 unlisted Performance Rights lapsed.
On 25 August 2002, AVZ announced diamond drilling was progressing smoothly at the Roche Dure extension area
northeast of the current open pit mine design. Eight new diamond drillholes had been completed for a total of
approximately 1,500 metres drilled out of a planned 15,000 metre drill programme. All eight holes had been logged
showing visual spodumene was present.
On 2 September 2022, AVZ was removed from S&P/ASX 200 index.
On 9 September 2022, the Company provided an update with respect to the arbitration proceedings before the ICC
instigated by Jin Cheng and its investigation into Boatman Capital, a London-based short-focused hedge fund research
firm.
As of 30 September 2022, AVZ’s securities remained in voluntary suspension pending finalisation of its mining and
exploration rights for the Manono Project.
During the financial year, AVZ, through its wholly owned subsidiary AVZ International Pty Ltd, completed two Share
Purchase Agreements to acquire an additional 15% ownership in Dathcom Mining SA (“Dathcom”) from Dathomir
Mining Resources SARL (“Dathomir”). The contractual agreed price of US$20 million (excluding the US$1 million first
tranche payments) was paid to Dathomir in August 2021 within the contractual agreed terms following the successful
A$40 million (before costs) capital raise in July 2021. AVZ International obtained proof of good legal standing of its
legal rights of owning 75% in Dathcom from the courts in the Democratic Republic of the Congo (“DRC”) on 1
September 2021. Following the successful transfer of shares to AVZ International, Dathomir initiated court proceedings
claiming that the US$21 million shares transfer be re-valued. This action in the court is deemed spurious and meritless
in nature with a limited chance of success as the shares were purchased via valid legal agreements at specified prices.
On 30 September 2022, AVZ announced that wholly owned entity, AVZ International Pty Ltd, and Suzhou CATH Energy
Technologies, the parties to the Transaction Implementation Agreement (TIA) executed on 24 September 2021, have
agreed to amend the end date to 31 December 2022 to provide for completion of closure formalities.
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.
AVZ Minerals Limited | 65
Directors’ Declaration
In the Directors’ opinion:
(a) the financial statements and notes set out on pages 33 to 65 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 2022 and of its performance for
the financial year ended on that date; and
(b) the audited remuneration disclosures set out on pages 23 to 29 of the directors’ report comply with section 300A
of the Corporations Act 2001; and
(c) 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
(d) 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.
Nigel Ferguson
Managing Director
Perth, Western Australia
30 September 2022
AVZ Minerals Limited | 66
Independent Auditor’s Report
AVZ Minerals Limited | 67
Independent Auditor’s Report
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
ASX
Additional
Information
AVZ Minerals Limited | 73
ASX Additional Information
Shareholding
The distribution of members and their holdings of equity securities in the holding company as at 11 October 2022 is as
follows:
Holding Ranges
Number of Holders
Number of Shares
% Issued Share Capital
Fully Paid Ordinary Shares
1- 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
Total
2,541
5,798
3,284
7,171
2,316
1,744,402
16,173,171
26,082,860
250,176,627
3,234,552,688
21,110
3,528,729,748
0.05%
0.46%
0.74%
7.09%
91.66%
100.00%
Holders of less than a marketable parcel: 1,032 with a total of 438,336 shares amounting to 0.012% of the Issued
Capital.
Twenty Largest Shareholders
The names of the twenty largest ordinary fully paid shareholders are as follows:
Shareholder
Number
%
YIBIN TIANYI LITHIUM INDUSTRY CO LTD & SUZHOU CATH ENERGY
TECHNOLOGIES CO LTD*
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
HUAYOU INTERNATIONAL MINING (HONGKONG) LIMITED
BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM
LITHIUM PLUS PTY LTD
CITICORP NOMINEES PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
BNP PARIBAS NOMINEES PTY LTD
BNP PARIBAS NOMS PTY LTD
ACUITY CAPITAL INVESTMENT MANAGEMENT PTY LTD
CERTANE CT PTY LTD
EQUITY PLAN SERVICES PTY LTD
RIDGEBACK HOLDINGS PTY LTD
MRS LIYUN HUANG
MR CRAIG ALAN DORAN
NATIONAL NOMINEES LIMITED
MR KEVIN GRIFFITHS
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
MR KAI GUO
MR LAWRENCE EDWARD DORAN
Total
*Related entities
251,500,000
7.13%
237,206,295
216,615,790
184,706,721
176,247,369
135,068,439
126,520,418
81,799,905
64,230,980
60,000,000
47,439,460
33,614,766
51,013,404
27,086,625
22,572,388
20,573,285
17,220,000
17,099,197
16,000,000
15,621,794
6.72%
6.14%
5.23%
4.99%
3.83%
3.59%
2.32%
1.82%
1.70%
1.34%
0.95%
1.45%
0.77%
0.64%
0.58%
0.49%
0.48%
0.45%
0.44%
1,802,136,836
51.07%
AVZ Minerals Limited | 74
ASX Additional Information
Substantial Shareholders
The names of the substantial shareholders:
Shareholder
Number
%
YIBIN TIANYI LITHIUM INDUSTRY CO LTD & SUZHOU CATH ENERGY
TECHNOLOGIES CO LTD*
HUAYOU INTERNATIONAL MINING (HONGKONG) LIMITED
251,500,000
7.13%
216,615,790
6.14%
*Related entities
On-Market Buy-Back
There is no current on-market buy-back.
Restricted Securities
There are no restricted ordinary shares in escrow.
Unquoted equity securities – Options
Nil
Unquoted equity securities – Performance Rights
Performance rights expiring 9 December 2023
Performance rights expiring 29 June 2024
Performance rights expiring 7 September 2024
Number on issue
0
Number of holders
0
Number on issue
15,398,000
2,658,600
36,485,000
Number of holders
12
3
18
Voting Rights
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.
Corporate Governance
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 https://avzminerals.com.au/corporate-governance.
Application of Funds
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.
Information required under ASX Listing Rule 5.3.3
List of current mining and exploration tenements:
Country / Project
Tenement
Interest
Status
DRC – Manono Project
PR 13359
DRC – Manono Extension Project
PR 4029, PR 4030
75%*
100%
Granted
Granted
*Upon completion of the acquisition of a further 15% from Dathomir Mining Resources SARL in August 2021, AVZ
Minerals Limited now holds 75% interest in the Project.
AVZ Minerals Limited | 75
ASX Additional Information
AVZ Minerals Limited | 76
AVZ Minerals Limited
Level 2, 1 Walker Avenue
West Perth WA 6005
ABN: 81 125 176 703