Brockman Mining Limited
Annual Report 2021

Plain-text annual report

CONTENTs ANNUAL REPORT 2021 Corporate Information ..................................................................................................................................................................2 Chairman’s Message .....................................................................................................................................................................3 Management Discussion and Analysis .........................................................................................................................................4 Directors and Management .......................................................................................................................................................14 Corporate Governance Report ..................................................................................................................................................16 Environment, Social and Governance Report ...........................................................................................................................30 Directors’ Report ..........................................................................................................................................................................43 Independent Auditor’s Report ....................................................................................................................................................50 Consolidated Statement of Comprehensive Income ...............................................................................................................56 Consolidated Balance Sheet ......................................................................................................................................................57 Consolidated Statement of Changes in Equity .........................................................................................................................58 Consolidated Statement of Cash Flows .....................................................................................................................................60 Notes to the Consolidated Financial Information .....................................................................................................................61 Financial Summary .......................................................................................................................................................................93 ASX Additional Information .........................................................................................................................................................94 1 CORPORATE INfORmATION BOARD Of DIRECTORs AUDITOR Non-executive Directors Kwai Sze Hoi (Chairman) Liu Zhengui (Vice Chairman) Ross Stewart Norgard Executive Directors Chan Kam Kwan, Jason Kwai Kwun, Lawrence Colin Paterson Independent non-executive Directors Yap Fat Suan, Henry Choi Yue Chun, Eugene David Rolf Welch COmPANY sECRETARY Chan Kam Kwan, Jason REGIsTERED OffICE (BERmUDA) Clarendon House 2 Church Street Hamilton HM11 Bermuda PRINCIPAL PLACE Of BUsINEss IN AUsTRALIA Level 2, 679 Murray Street West Perth WA 6005 Australia Ernst and Young Chartered Accountants 11 Mounts Bay Road Perth WA 6000 Australia PRINCIPAL sHARE REGIsTRAR AND TRANsfER OffICE MUFG Fund Services (Bermuda) Limited 4th Floor North Cedar House 41 Cedar Avenue Hamilton HM 12 Bermuda BRANCH sHARE REGIsTRARs AND TRANsfER OffICE IN HONG KONG Tricor Secretaries Limited Level 54 Hopewell Centre 183 Queen’s Road East Hong Kong BRANCH sHARE REGIsTRARs AND TRANsfER OffICE IN AUsTRALIA Computershare Investor Services Pty Ltd Level 11, 172 St Georges Terrace Perth WA 6000 PRINCIPAL BANKER Hang Seng Bank Limited Industrial and Commercial Bank of China (Asia) Limited Westpac Banking Corporation PRINCIPAL PLACE Of BUsINEss IN HONG KONG WEBsITE Unit 3903B, Far East Finance Centre 16 Harcourt Road Admiralty Hong Kong www.brockmanmining.com www.irasia.com/listco/hk/brockmanmining sTOCK CODE 159 Main Board of The Stock Exchange of Hong Kong Limited BCK Australian Securities Exchange CHAIRmAN’s mEssAGE ANNUAL REPORT 2021 Dear Shareholders, I would like to thank the Brockman family for their continued hard work and commitment in advancing During the year, the Company achieved a historical all the projects, and fellow shareholders for their milestone for the Marillana Project with the formation of unwavering support for the Company. Such support has joint venture with Mineral Resources Limited (“MRL”). The proven to be pivotal for the Company’s advancement. Company and MRL also agreed that upon satisfaction of certain farm-in obligations, a joint venture for the Ophthalmia Project will also be established. Presently the joint venture parties, through the joint venture management committee, the project manager Kwai sze Hoi and relevant contractors, are working diligently on Chairman all project aspects to advance the Marillana and Ophthalmia projects into production in the shortest 17 September 2021 time-frame. Initial development works at the Marillana and Ophthalmia Project sites are being advanced while awaiting the conclusion of MRL’s logistics solution to transport the ore from the mines to the port stockyard at Port Hedland for further loading onto the ocean-going vessels. I am excited with the prospect of the Marillana and Ophthalmia projects, and looking forward for these projects to contribute value to the shareholders. 3 mANAGEmENT DIsCUssION AND ANALYsIs OVERVIEW During the year, the Group continued to focus on the development of its iron ore tenements in Western A u s t r a l i a w h i c h a re p ro g re s s i n g s t e a d i l y t o w a rd s construction and production. Loss for the year before income tax from continuing operations was HK$28.3 million, compared to the previous year HK$22.6 million. The operating loss of HK$22.8 million (2020: HK$21.3 million) was marginally higher by 7%, due to an increase in exploration and evaluation expenditure expensed. IRON ORE OPERATIONs – WEsTERN AUsTRALIA This segment of the business comprises the 100% owned The increase in the loss before tax was largely due to Marillana Iron Ore Project (“Marillana”), the Ophthalmia HK$5.4 million in additional finance costs arising from Iron Ore Project (“Ophthalmia”) and other regional the treatment of the loans advanced by Polaris to the exploration projects. Group in the previous and current year. The Group recorded a loss after tax from continuing joint venture for the year for this segment attributable operations of approximately HK$14.2 million (2020: to the Group was HK$15.1 million (2020: HK$9.5 million). HK$21.0 million). The reduction in the loss after tax was Total expenditure associated with mineral exploration partially due to the recognition of an income tax credit for the year ended 30 June 2021 amounted to HK$5.5 The loss before income tax and share of losses of the of HK$14.1 million (2020: HK$1.6 million). This income tax million (2020: HK$4.5 million). credit was mainly from the result of the recognition of a deferred tax asset in respect of certain of the Group’s Total expenditure associated with mineral exploration Australian tax losses. and evaluation for each of the projects in Western Australia for the financial years is summarised as follows: Project Marillana Ophthalmia Regional Exploration Year ended 30 June 2021 HK$’000 2020 HK$’000 2,582 1,490 1,422 5,494 1,988 1,155 1,378 4,521 No development expenditure has been recognised in Total capital expenditure for each of the projects in the financial statements during the year ended 30 June Western Australia for the financial years is summarised as 2021 (2020: Nil). Project Marillana Ophthalmia follows: 2021 HK$’000 Year ended 30 June 2020 HK$’000 Additions to Additions Additions to property, plant & to mining property, plant Additions to mining equipment properties & equipment properties 19 — 19 — — — 137 — 137 — — — ANNUAL REPORT 2021 Impairment internal sources of information. As at 30 June 2021, The Group has assessed whether any indicators of the Group assessed and concluded there were no impairment exist with reference to both external and indicators of impairment present, refer to note 17 of the consolidated financial statements. figure 1: Project location map – Brockman tenements mARILLANA PROJECT OVERVIEW The 100% owned Marillana project is Brockman’s flagship project located within mining lease M47/1414 in the Hamersley Iron Province within the Pilbara region of Western Australia. It is located approximately 100 km north-west of the township of Newman (Figures 1 and 2). The project area covers 82 square km bordering the Hamersley Range, where extensive areas of supergene iron ore mineralisation, the source of hematite detrital mineralisation at Marillana, have developed within the dissected Brockman Iron Formation that caps the Range. 5 mANAGEmENT DIsCUssION AND ANALYsIs figure 2: Location of marillana Project tenements marillana Development Joint Venture Formation and scope On 22 April 2021 Brockman Iron and Polaris signed a n A m e n d e d a n d R e s t a t e d F J V A g r e e m e n t a n d Deed of Amendment and Restatement (collectively On 26 July 2018 Brockman Iron Pty Ltd (“Brockman Iron”) the “Agreement”). Both Brockman Iron and Polaris (a wholly-owned subsidiary of the Company) and Polaris concluded that the Far m-in Obligations under the Metals Pty Ltd (“Polaris”) (a wholly-owned subsidiary A g r e e m e n t h a v e b e e n s a t i s f i e d a n d t h e p a r t i e s of MRL) entered into a Farm-in Joint Venture (“FJV”) shall form the Joint Venture. As such, a 50% interest Agreement (see announcements dated 27 July 2018 in the Marillana Project (“the Farm-in interest”) will on the HKEX and ASX platforms) pursuant to which and be transferred to Polaris and the Joint Venture will subject to the terms and conditions therein, Polaris may be established according to the ter ms of the FJV farm-in and earn a 50% interest in Marillana by satisfying Agreement. certain Farm-in obligations. ANNUAL REPORT 2021 Development Initial development works MRL has submitted an Indicative Development Proposal, Subsequent to the formation of the Joint Venture, MRL (or which includes the following: a subsidiary) will commence initial development works on site for the Marillana and Ophthalmia projects, as 1. Development of the Marillana and Ophthalmia well as on the prospective transport corridor and port projects (refer to the Ophthalmia section below) area. The initial development works are to be funded by into an iron ore mining hub capable of producing MRL and the cost is estimated to be circa A$105 million. a minimum of 25Mtpa of final product for export. Management committee 2. Following the establishment of the Joint Venture, A management committee comprising a total of six MRL (or its Related Party) agrees to provide the representatives shall be established. Each of the Joint Joint Venturers with funding by way of a project Venturers shall appoint three representatives. loan sufficient to allow the Joint Venturers to fund the forecast capital cost for each development. The role of the management committee is to make all strategic decisions relating to the conduct of the 3. A build own operate and arrangement between activities undertaken by the Joint Venture including the the Joint Venturers and MRL for certain non- consideration and approval of any work programme processing infrastructure at Marillana. and budget in the management of the joint venture. 4. A build own and operate arrangement for the Development funding crushing plant at Ophthalmia. The Joint Venturers will respectively fund their capital 5. A proposed logistics system to transport the with loans from MRL. The initial loan to the Joint Venture o r e f r o m t h e r e s p e c t i v e m i n e s t o t h e p o r t is expected to amount to A$790 million (up to a stockyard at Port Hedland. This logistics system maximum of A$676 million for the development of the is to be constructed and operated by MRL (or a Marillana Iron Ore Project and up to a maximum of cost commitments for the development of Marillana subsidiary). A$114 million for the development of the Ophthalmia Iron Ore Project). The terms and conditions under which 6. Construction of a berth at a dedicated location Brockman Iron shall repay its share of the debt financing in Port Hedland (subject to the approval from the are to be determined. State Government of Western Australia). 7. A current market based estimate for project the ore processing facilities and certain parts of non- capital and operating costs, including the logistics process infrastructure. Certain parts of the non-process service cost for transporting the ore from mine to infrastructure may not be funded by the Joint Venturers The Joint Venturers’ capital commitments will fund ship. but will be provided by MRL under build own operate life of mine services agreements. 8. The Venturers have the right to dissolve the Joint Venture when the projects are not able to be Manager progressed due to factors beyond their control. Pursuant to the terms of the FJV Agreement, Polaris has agreed to act as the first manager of the Joint Venture. 7 mANAGEmENT DIsCUssION AND ANALYsIs Loan Agreement During 2018, Brockman updated its Marillana Mineral As part of the FJV Agreement, Polaris has provided an Resources and Ore Reserves to the JORC 2012 Code interest-free, secured loan (in accordance with Deed (refer to announcement dated 25 May 2018). Mineral of Cross Security signed by the Joint Venturers) of A$10 Resources and Ore Reserves were previously reported million (the “Loan”) to Brockman Iron for working capital under the JORC 2004 Code and released to the market purposes. The loan will be repaid from the net revenue on 9 February 2010 and 9 September 2010 respectively received by Brockman Iron from the sale of its share of by Brockman Resources Limited, now a wholly owned Marillana ore sold and transported under the Mine to subsidiary of Brockman Mining Limited. Ship Services Agreement. mINERAL REsOURCEs AND ORE REsERVEs B r o c k m a n r e p o r t s i t s M i n e r a l R e s o u rc e s a n d O r e Reserves on an annual basis, in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves 2012 Edition (the “JORC Code 2012”), unless otherwise noted. Mineral Resources are quoted inclusive of Ore Reserves. Marillana has a very significant Mineral Resource estimate of 1.51 billion tonnes (Bt) of Hematite Detrital Iron (DID) and Channel Iron (CID) mineralisation, comprising 169.5 million tonnes (Mt) of Measured Mineral Resources (DID), 1,046 Mt of Indicated Mineral Resources (DID and CID) and 291 Mt of Inferred Mineral Resources (DID and CID) (see Tables 1 and 2). Table 1: Detrital (beneficiation feed) mineral Resource summary (cut-off grade: 38% fe) mineralisation type Resource classification Tonnes (mt) Grade (% fe) Measured Indicated Inferred GRAND TOTAL Total tonnes may not add up, due to rounding 169.5 961.9 273 1,404.4 41.6 42.3 42.0 42.2 Table 2: CID mineral Resource summary (cut-off grade: 52% fe) Resource classification Indicated Inferred TOTAL Tonnes (mt) 84.2 17.7 101.9 fe (%) 55.8 54.4 55.6 AI2O3 (%) 3.58 4.34 3.71 siO2 (%) 5.0 6.6 5.3 P (%) 0.097 0.080 0.094 LOI (%) 9.76 9.30 9.68 The JORC 2012 Ore Reserve estimate is based on The base case optimisation was determined with cut-off the revised JORC 2012 Mineral Resource model, and grades of 38% Fe for DID and 52% Fe for CIDs within the incorporates a number of factors and assumptions as final pit and tenement boundary limits. outlined in the announcement of 25 May 2018. ANNUAL REPORT 2021 Metallurgical testwork results were used to estimate Based upon dense media separation (DMS) testwork, it is the recoverable fraction from the DID ore component. expected that the final product has an average grade Recoveries of final product and grades (of iron, silica, of at least 60% Fe and 37.3% in mass recovery. alumina and LOI) were estimated in the block model. Table 3: marillana Project - Ore Reserves * Reserve classification Probable Probable TOTAL * # ## Reserves are included within Resources cut-off grade 52% Fe cut-off grade 38% Fe Ore type Tonnes (mt) DID# CID## 967 46 1,013 The Marillana project has total estimated Probable Ore Reserves of 967 Mt of DID plus 46 Mt of direct ship CID (Table 3). The total saleable product from the processed iron ore feed is estimated at 404 Mt averaging 59.8% Fe, 6.1% SiO2, and 3.1% AI2O3 (Table 4). Life of mine strip ratio is 1.0:1 (tonnes of Waste of tonnes of Ore). Table 4: marillana Project – Ore Reserves final product Reserves Class Probable Probable Probable Ore sale Tonnes Type CID Product DID Product Total Ore (mt) 46 358 404 fe (%) 55.5 60.3 59.8 siO2 (%) 5.3 6.2 6.1 Al2O3 (%) 3.7 3.0 3.1 LOI (%) 9.7 2.5 3.3 The Marillana Ore Reserves are based solely on the The Mineral Resource and Reserve estimation (see M e a s u re d a n d I n d i c a t e d M i n e r a l R e s o u rc e s . T h e Tables 1 to 4) was prepared by Golder Associates Pty Mineral Resources also include some 273 Mt of Inferred Ltd and has been classified in accordance with the Mineral Resources (DID), comprising 201 Mt based on Australasian Code for Reporting of Exploration results, wide -spaced drilling to the north of the Indicated Mineral Resources and Ore Reserves (JORC Code, 2012 Mineral Resource boundary and 72 Mt of previously Edition). Indicated Mineral Resources that was downgraded to Inferred classification during the Projection Pursuit Multi- variate Transform (PPMT) process. Based on historical conversion of Inferred to Indicated Mineral Resources, it is anticipated that additional drilling may enable some of the Inferred material to be upgraded to Indicated classification. Marillana represents one of the largest published hematite Ore Reserve positions in the Pilbara, outside the three major producers (BHP, Rio and FMG). The Detrital Ore is upgraded to a high-quality, sinter feed product via simple beneficiation, which is supported by low-cost mining, low waste ratios and large continuous ore zones. OPHTHALmIA PROJECT OVERVIEW The 100% owned Ophthalmia iron ore project, located north of Newman in the East Pilbara region of Western Australia (see figures 1 and 3), is the most significant iron ore project for the Company outside of its flagship Marillana project. Since the discovery of significant occurrences of bedded hematite mineralisation by field reconnaissance mapping and surface sampling in August 2011, major exploration drilling programmes have been completed and JORC compliant Mineral Resources have been estimated and reported for the Sirius, Coondiner, and Kalgan Creek deposits. The total Mineral Resource at Ophthalmia is 341 Mt grading 59.3% Fe (Table 5). 9 mANAGEmENT DIsCUssION AND ANALYsIs figure 3: Location of Ophthalmia Prospects and Resources Development P o l a r i s h a s c o m m e n c e d a p r o g r a m m e o f w o r k s A s p a r t o f t h e A g re e m e n t w i t h M R L ( re f e r t o t h e including mine planning studies, transport corridors, Marillana section above), Brockman Iron and Polaris environmental surveys and approvals, for development have agreed to include the Ophthalmia project in of the project. the farm-in interest, such that a 50% interest in the Ophthalmia project will be transferred to Polaris upon completion of its farm-in obligations. ANNUAL REPORT 2021 Approvals Brockman has established an infrastructure solution to The Native Title Agreement with the Nyiyaparli people facilitate development of the project. that was executed in May 2015 covers all tenements comprising the Ophthalmia project and was based mineral Resources on the existing agreement with the Nyiyaparli people Ophthalmia has a Mineral Resource estimate of 340.9 covering Marillana (signed in 2009). It takes into million tonnes of hematite mineralisation, comprising consideration the Nyiyaparli people’s interests with 280 million tonnes of Indicated Resources and 61 million re g a rd t o t h e m a n a g e m e n t o f C u l t u r a l H e r i t a g e tonnes classified as Inferred Resources (see Table 5). and Protection of the land and environment at the Ophthalmia project, as well as providing education and The resource estimate was classified in accordance with training opportunities for the local Nyiyaparli people. guidelines provided in the JORC Code 2012. Refer to ASX Announcement dated 1 December 2014. The signing of this agreement paves the way for the granting of mining leases over the project area once Table 5: Ophthalmia DsO mineral Resource summary Deposit Class Kalgan Creek Coondiner (Pallas and Castor) Sirius Ophthalmia Project Indicated Inferred sub Total Indicated Inferred sub Total Indicated Inferred sub Total Indicated Inferred Total Tonnes (mt) 34.9 24.4 59.3 140.5 17.1 157.6 105.0 19.0 124.0 280.4 60.5 340.9 fe (%) 59.3 59.5 59.4 58.5 58.1 58.4 60.4 60.2 60.3 59.3 59.3 59.3 30 June 2021 Cafe* (%) 62.7 63.2 62.9 62.0 61.5 62.0 63.7 63.4 63.6 62.7 62.8 62.7 siO2 (%) 4.08 4.38 4.21 5.18 6.06 5.27 3.54 4.09 3.62 4.43 4.73 4.49 AI2O3 (%) 4.57 3.90 4.29 4.46 4.45 4.46 3.97 3.83 3.95 4.29 4.03 4.24 s (%) 0.009 0.007 0.009 0.007 0.008 0.007 0.007 0.009 0.007 0.007 0.008 0.007 P (%) 0.183 0.157 0.173 0.176 0.155 0.174 0.18 0.17 0.18 0.178 0.160 0.175 LOI (%) 5.49 5.81 5.63 5.71 5.47 5.68 5.22 5.14 5.20 5.50 5.50 5.50 * CaFe represents calcined Fe and is calculated by Brockman using the formula caFe = Fe%/((100-LOI)/100). Total tonnes may not add due to rounding. WEsT PILBARA PROJECT Overview The West Pilbara project comprises four tenements centred around Duck Creek, located about 100 -130 km WNW of Paraburdoo in the West Pilbara region. (Refer to Figure 1). At Duck Creek, mineralisation comprises discrete mesas of channel iron deposits (“CID”) 15-30 m above the surrounding plains with stripping ratios expected to be very low for the targets identified. Seven mesas containing ore grade CID mineralisation have been identified from surface sampling, but only six have been drilled due to access limitations. Brockman has completed an Inferred Mineral Resource estimate of 21.6 Mt grading 55.9% Fe, for the channel iron deposit (“CID”) mineralisation at Duck Creek (E47/1725), as detailed in Table 6 below. The Mineral Resource estimate has been classified in accordance with guidelines of the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. The Mineral Resource estimate is based on the results of 45 vertical RC holes drilled on sections varying from approximately 200 to 400 m apart along the long axis of each mesa, supported by sur face sampling to confirm the lateral extent of mineralisation. 11 mANAGEmENT DIsCUssION AND ANALYsIs Table 6: Duck Creek mineral Resource estimate – (at a lower cut-off grade of 52% fe) mesa Classification 1 2 3 4 5 6 Inferred Inferred Inferred Inferred Inferred Inferred All Inferred Tonnes (mt) 4.5 7.9 2.6 1.5 3.0 2.2 21.6 fe (%) 55.5 55.56 55.84 55.31 56.08 58.17 55.91 AI2O3 (%) 2.86 2.97 4.41 3.58 4.16 3.22 3.35 siO2 (%) 4.75 4.19 6.02 7.42 6.54 4.92 5.15 s (%) 0.025 0.058 0.021 0.015 0.020 0.016 0.034 P (%) 0.033 0.037 0.065 0.076 0.068 0.106 0.053 LOI (%) 11.71 11.79 8.85 9.12 8.35 7.62 10.35 Total tonnes may not add due to rounding. mineral Resources and Ore Reserves The information in this report that relates to the Mineral R e s e r v e a n d M i n e r a l R e s o u r c e e s t i m a t e s o f t h e Marillana project was declared as part of a market announcement issued on 25 May 2018. The information in this report that relates to the Mineral Resource of Ophthalmia project was declared as part of a market announcement issued on 1 December 2014. The information in this report that relates to the Inferred Mineral Resource of West Pilbara Project was declared as part of a market announcement issued on 31 August 2020. The Company confir ms that it is not aware of any new information or data that materially affects the information included in the original announcements re f e r re d t o a b o v e . A l l m a t e r i a l a s s u m p t i o n s a n d technical parameters underpinning the estimates in the relevant market announcement continue to apply and have not materially changed. The Company confirms that the form and context in which the Competent Person’s findings are presented have not been materially modified from the original market announcements. Mineral Resources and Ore Reserves Governance of Internal Controls Brockman ensures that the Mineral Resources and Ore Reserve estimates quoted are subject to governance arrangements and internal controls activated at a site level and at the corporate level. Internal and external re v i e w o f M a r i l l a n a R e s o u rc e s a n d O re R e s e r v e s estimation procedures and results are carried out through a technical review team which is comprised of highly competent and qualified professionals. These reviews have not identified any material issues. LIQUIDITY AND fINANCIAL REsOURCEs The Group generally finances its short-term funding requirements with equity funding and borrowings. The Group’s ability to advance its iron ore project developments is reliant, among other things, on access to appropriate and timely funding. The current ratio as at 30 June 2021 is 13.69 (30 June 2020: 16.05). The gearing ratio of the Group (long-term debt over equity and long-term debt) is measured at 0.08 (30 June 2020: 0.05). During the period, the Group did not engage in the use of any financial instruments for hedging purposes, and there was no hedging instrument outstanding as at 30 June 2021. CAPITAL sTRUCTURE At the end of the reporting period, the Company had 9,279,232,000 (2020: 9,279,232,000) shares on issue. PLEDGE Of AssETs AND CONTINGENT LIABILITIEs As at 30 June 2021 the Group has a Deed of Cross Security for the loans advanced by Polaris to Brockman Iron pursuant to the terms of the Marillana Farm-in Joint Venture Agreement, (refer to Note 23). As at 30 June 2021, the Company did not have any material contingent liabilities or financial guarantees. (30 June 2020: Nil) ANNUAL REPORT 2021 RIsK DIsCLOsURE mARKET RIsK The Group is exposed to various types of market risks, including fluctuations in iron ore price and exchange rates. (a) Commodities price risk Iron ore price: The fair value of the Group’s mining exploration properties in Australia is exposed to fluctuations in expected future iron ore price. We have not used any commodity derivative instruments or futures for speculation or hedging p u r p o s e s . M a n a g e m e n t w i l l r e v i e w m a r k e t conditions from time to time and determine the best strategy to deal with the fluctuations of iron ore price as required. (b) Funding risk The commencement of exploration and potential development of the iron ore projects will depend on whether the Group can secure the necessary funding. ENVIRONmENTAL POLICY AND COmPLIANCE WITH RELEVANT LAWs AND REGULATIONs Environmental Protection As a responsible entity, the Group has endeavoured to comply with local laws and regulations in relation to waste disposal and environmental protection. At corporate level, the Group also encourages staff to save energy, minimise the use of natural resources and paper products. We operate effective and sustainable iron ore business work actively through all areas of the business to minimise the actual and potential environmental impact of the Company’s activities, in respect to the rights of the traditional owners. Furthermore, with no mining operations carried out, disturbance to the environment is expected to be minimal. We will continue to ensure that in the future, we are accountable for our environmental footprint. Compliance with Laws and Regulations During the year, the Group has complied with the relevant standards, laws and regulations that have a (c) Risk that the project will not be materialised significant impact on our businesses. At the same time, This risk is largely driven by various factors such the Group always maintains a safe working environment as commodity prices, government regulations, for staff in accordance with relevant safety policies. regulation related to prices, taxes, royalties, land tenure, viable infrastructure solutions, capital Relationship with Employees, Customers and suppliers raising ability etc. The Board will therefore closely The Group believes that human resources are the monitor the development of the project. most important asset for the Group’s sustainable (d) Exchange rate risk The Group is exposed to exchange rate risk primarily in relation to our mineral tenements t h a t a r e d e n o m i n a t e d i n A u s t r a l i a n d o l l a r s . Depreciation in the Australian dollar may adversely affect our net asset value and earnings when the value of such assets is converted to Hong Kong dollars. During the year, no financial instrument was used for hedging purposes. As at 30 June 2021 and 2020, the Group was not exposed to any significant exchange rate risk. sTAff AND REmUNERATION As at 30 June 2021, the Group employed 15 full time employees (30 June 2020: 15), of which 5 were in Australia (includes 2 non-executive directors) (30 June 2020: 5) and 10 in Hong Kong (includes 4 non-executive directors) (30 June 2020: 10). The remuneration policy and packages, including share options for the Group’s employees, senior management and directors are maintained at market levels and are reviewed periodically by the management and the remuneration committee. development. We offer competitive remuneration packages and a high quality working environment for our employees. It is our custom to respect each other and ensure that fairness is applied to everyone. From time to time, we provide relevant on-the-job training to enhance employees’ professional knowledge. The Group also organises different leisure events and frequent group discussions for the participation of employees to enhance the working relationship of the employees and communications with management. We also strive to maintain good working relationships with our suppliers and customers. Remuneration Policy The Group’s compensation strategy is to promote a pay-for-per for mance culture to reward employee performance that will maximise shareholder value in the long term. The Group from time to time reviews remuneration packages provided to its employees to ensure that the total compensation is internally equitable, externally competitive and supports the Group’s strategy. 13 DIRECTORs AND mANAGEmENT As at the date of this report, the Company has the mr. Ross stewart Norgard following directors and senior management: Mr. Ross Stewart Norgard, aged 75. Mr. Norgard joined NON-EXECUTIVE DIRECTORs mr. Kwai sze Hoi Mr. Kwai Sze Hoi, aged 71. Mr. Kwai joined the Company in June 2012. He is the Chairman of the Group. Mr. Kwai graduated from Anhui University in 1975. Mr. Kwai has more than 40 years experience in international shipping and port operation businesses and is a successful entrepreneur. In 1990, he founded Ocean Line Holdings Ltd (“Ocean Line”). Ocean Line wholly owns, operates and manages a fleet of total deadweight tonnage of 4 million metric tonnes, with routes running worldwide. Ocean Line also has investments in infrastructure and operates other shipping related businesses including p o r t s , t e r m i n a l s , w a re h o u s e s , l o g i s t i c s , a n d c re w manning etc. The diversified operations of Ocean Line put it in a highly competitive position globally. In addition, Ocean Line has investments in mining, real estate, financial services, securities, trading and hotel businesses. Mr. Kwai is also the chairman and an executive director of Ocean Line Port Development Limited, which is listed on the GEM of the Hong Kong Stock Exchange. Mr Kwai is the father of Mr. Kwai Kwun, Lawrence, an Executive Director of the Company. the Company as Non-executive Director in August 2012. He is a chartered accountant and former managing director of KMG Hunger fords and its successor firms in Perth, Wester n Australia. For the past 30 years he has worked extensively in the fields of raising venture capital and the financial reorganisation of businesses. He has held numerous positions on industry committees including past chair man of the West Australian Professional Standards Committee of the Institute of Chartered Accountants, a former member of the National Disciplinary Committee, a for mer member of Lionel Bowens National Corporations Law Reform Committee, a former chairman of the Duke of Edinburgh Award Scheme and a former member of the University of Western Australia’s Graduate School of Management (MBA programme). Mr. Norgard is also a director of Nearmap Limited (formerly known as Ipernica Limited) (Chairman since 1987) and was a director of Ammtec Limited from 1994 to November 2010. Prior to his present appointment as Non-executive Director of the Company, he was the non-executive Deputy Chairman of Brockman Resources Limited, a former ASX listed entity which is now a wholly owned subsidiary of Brockman Mining Limited. mr. Liu Zhengui Mr Liu Zhengui, aged 74. Mr. Liu joined the Company EXECUTIVE DIRECTORs mr. Kwai Kwun, Lawrence in April 2012, and became the Vice Chair man of Mr. Kwai Kwun, Lawrence, aged 40, joined the Company the Company in June 2012. Mr. Liu Zhengui has over i n M a rc h 2 0 1 4 . H e i s a m e m b e r o f t h e E x e c u t i v e 40 years of experience in corporate finance and Committee. He has extensive experience in investment capital management. He holds a bachelor’s degree in international shipping, port operations and ship in management engineering from Hefei University of building, mining and finance. Mr Kwai graduated from Technology. He is currently a director of Shandong School of Economics and Social Development (山東 社會經濟發展研究院) and is the chairman of Shandong Dongyin Investment Management Co., Ltd (山東東銀投 資管理有限公司). He is also a financial consultant of the Shandong provincial government. During the period 2004 to 2009, Mr. Liu was the chair man of Bank of China Group Investment Limited (BOCGI). Prior to that, he served as the chief executive of Bank of China’s branches in three different provinces for 16 years. Harvard University in the United States with a Bachelor of Mathematics degree. Mr Kwai is the son of Mr. Kwai Sze Hoi, the Chairman of the Company. ANNUAL REPORT 2021 mr Chan Kam Kwan, Jason mr. Choi Yue Chun, Eugene Mr. Chan Kam Kwan, Jason, aged 48, joined the Mr. Choi Yue Chun, Eugene, aged 49, joined the Company in January 2008. He is the Company Secretary Company in June 2014. He holds a Bachelor of Laws and a member of the Executive Committee. Mr. Chan degree from the University of Hong Kong, and was graduated from the University of British Columbia in admitted as a solicitor of the High Court of Hong Kong Canada with a Bachelor of Commerce Degree and 1997. Currently Mr. Choi is a member of the Law Society he holds a certificate as a Certified Public Accountant of Hong Kong. He has over 20 years of experience in issued by the Washington State Board of Accountancy the legal field, specialising in corporate finance and in the United States of America. Mr. Chan has extensive compliance matters for listed companies in Hong Kong. experience in corporate finance. Mr Choi is currently the senior legal counsel of Rusal Global Management B.V. mr. Colin Paterson Chief Executive Officer of Australian Operations mr. David Rolf Welch M r. C o l i n P a t e r s o n , a g e d 6 0 , h a s o v e r 3 0 y e a r s ’ Mr. David Rolf Welch, aged 55, joined the Company experience in the resources sector covering a diverse in October 2019. He holds a Bachelor of Commerce range of geological environments throughout Australia, degree from the University of Western Australia. Mr but principally in the Pilbara iron ore region as well Welch has held senior executive positions within ASX as gold and nickel exploration in the Archaean of listed Aurizon Holdings Limited from 2007 to 2017. Wester n Australia. He has extensive experience in These positions included Vice President Iron Ore, Vice the technical supervision of exploration projects; President Market Development and Executive Vice resource development, project generation and project President Strategy and Business Development. He has evaluations. He was principal geologist with Asarco experience in strategy, business transformation and Australia Ltd and held a similar position with Mining performance, mergers and acquisitions and business Project Investors Pty Ltd (subsequently MPI Mines development. Mr Welch was previously the managing Limited). Following which he was the founding director director of The Millennium Group from 1998 to 2006 of Brockman Mining Australia Pty Ltd. and was a marketing manager of CSBP Limited (part INDEPENDENT NON-EXECUTIVE DIRECTORs mr. Yap fat suan, Henry Mr. Yap Fat Suan, Henry, aged 75, joined the Company in January 2014. He holds a master’s degree in Business Administration from the University of Strathclyde, Glasgow, in the United Kingdom. He is a fellow member of the Wesfarmers conglomerate) from 1989 to 1994 in the development of mining reagent and agriculture products. Mr. Welch is also a non-executive director of VRX Silica Limited (Stock Code: VRX) which is listed on the Australian Securities Exchange (ASX). sENIOR mANAGEmENT HONG KONG mr. Hendrianto Tee of the Institute of Chartered Accountants in England Business Development Director and Wales and an associate member of the Hong Mr. Hendrianto Tee joined the Company in January 2009 Kong Institute of Certified Public Accountants. He has as the Chief Investment Officer after spending a large extensive experience in finance and accounting. Mr part of his career focusing on debt capital markets with Yap retired as managing director of Johnson Matthey several global financial institutions, among others Fleet Hong Kong Limited in June 2017 and prior to that he Boston (now Bank of America Merrill Lynch) and UBS was the general manager of Sun Hung Kai China AG. In October 2014, Mr. Tee re-joined the Company as Development Limited. He is also an independent non- the Business Development Director overseeing project executive director of Concord New Energy Group funding and development. Prior to re-joining, Mr. Tee Limited (Stock Code: 182) and Frontier Services Group spent 3 years in investment and advisory activities Limited (Stock Code: 500) , which are listed on the Main covering the resources sector in Australia, Canada and Board of the Stock Exchange of Hong Kong Limited. Indonesia. Mr. Tee graduated from Walsh University, USA, with a Bachelor of Arts Degree (Magna Cum Laude). 15 CORPORATE GOVERNANCE REPORT COmPLIANCE Of THE CODE ON CORPORATE GOVERNANCE PRACTICEs The Company is listed on both the Australian Securities BOARD Of DIRECTORs T h e B o a r d i s r e s p o n s i b l e t o s h a r e h o l d e r s f o r t h e overall strategic direction of the Group, including establishing goals for management and monitoring Exchange (“ASX”) and the Stock Exchange of Hong the achievement of those goals with the objective of Kong Limited (“SEHK”). The Company’s Corporate enhancing the Company and shareholders’ value. The Governance policies have been formulated to ensure Board has delegated responsibility for the management that it is a responsible corporate citizen. Unless otherwise of the Company’s business and affairs to the Executive noted, the Company has compiled with all aspects of Committee. The responsibilities reserved for the Board the Corporate Governance Code as set out in Appendix of Directors are set out in the Board Charter, a copy 14 of the Rules Governing the Listing of Securities on of which is available on the website of the Company. the SEHK (“the HK Listing Rules”) and the ASX Corporate The Board Charter is reviewed periodically and each G o v e r n a n c e C o u n c i l ’ s ‘ C o r p o r a t e G o v e r n a n c e Director is provided with a letter of appointment which Principles and Recommendations 4th Edition (“the outlines their key terms and conditions so each Director CGPR”) which applies for year-ends commencing on or clearly understands their responsibilities. after 1 July 2020, (“the ASX Principles”) during the entire year ended 30 June 2021. The exceptions to this are as follows: (i) Appendix 14 Code Provision A.2.1 of the HK Listing Rules, states that the roles of chairman and chief executive should be separate and should not be performed by the same individual. The position of Chief Executive Officer at the Group level has been vacant during the period. Nonetheless, Mr. Colin Paterson, who serves as the Chief Executive Officer of Brockman Mining Australia Pty Ltd (a wholly-owned subsidiary of the Company), is responsible for the oversight of the core iron ore business operation; and (ii) Appendix 14 Code Provision A.6.7 of the HK Listing Rules, states that non-executive Directors should attend general meetings. During the year, due to directors’ other commitments and schedule conflicts, not all of the non-executive directors of the Company attended all the general meetings. CHAIRmAN AND CHIEf EXECUTIVE OffICER The roles of the Chief Executive Officer and Chairman are separate and exercised by different individuals. The position of the chief executive officer at the Group level has been vacant during the period. Nonetheless, Mr. Colin Paterson, an executive director of the Company, also serves as the Chief Executive Officer of Brockman Mining Australia Pty Ltd (a wholly-owned subsidiary of the Company), and is responsible for the oversight of the core iron ore business operations. T h e C h a i r m a n h e l d i n t e re s t s i n t h e s h a re s o f t h e Company, and is not independent as he is a substantial shareholder of the Company. The Board has determined that his commercial experience is more beneficial t o s h a r e h o l d e r s a t t h i s s t a g e o f t h e C o m p a n y ’ s development than the independence requirement outlined in the Principles. ANNUAL REPORT 2021 BOARD mEmBERsHIP composition of executive and non–executive directors. T h e B o a r d h a s b e e n s t r u c t u r e d f o r a n e f f e c t i v e Each of the independent non-executive Directors has composition, with a balance of skills, experience and made an annual confirmation stating compliance with commitment to adequately discharge its responsibilities the independence criteria set out in Rule 3.13 of the HK and duties. During the year ended 30 June 2021, three Listing Rules and Principle 2.4 of the ASX Principles. The of the nine Directors were independent. Whilst this is Directors consider all of the independent non-executive not a majority of Independent non-executive directors, Directors to be independent under the independence it is believed to be a suitable balance between the criteria and all are capable of effectively exercising independent judgment. DIRECTORs IN OffICE DURING THE YEAR ARE As fOLLOWs : Period in office as at the date Board meeting General meeting Date of of Annual Report Attended/Eligible Attended/Eligible Name of Director/role appointment (Years of service) to attend* to attend* Non-Executive Directors Kwai Sze Hoi, Chairman Liu Zhengui, Vice Chairman Ross Stewart Norgard Independent Non-Executive Directors David Rolf Welch Yap Fat Suan, Henry Choi Yue Chun, Eugene Executive Directors Chan Kam Kwan, Jason, Company Secretary Kwai Kwun Lawrence Colin Paterson 15 June 2012 27 April 2012 22 August 2012 15 October 2019 8 January 2014 12 June 2014 2 January 2008 13 March 2014 25 February 2015 9 9 9 2 7 7 13 7 6 4/4 2/4 4/4 4/4 4/4 4/4 4/4 4/4 4/4 1/2 0/2 1/2 2/2 2/2 2/2 2/2 1/2 2/2 * Represents total number of board and general meetings held during the period. Determination of eligibility has taken into account the respective directors’ period in office. A total of 4 board meetings were held during the year ended 30 June 2021. Biographical details of the Directors are stated under the section ‘Directors and Management’. 17 CORPORATE GOVERNANCE REPORT BOARD mEETINGs give them an opportunity to attend. If such notice is The Board conducts meetings on a regular basis not possible, permission to waive is obtained from the as required by business needs. The Bye-Laws of the Directors. Company allow board meetings to be conducted by way of telephone or video-conference. Any resolutions Prior to each meeting of the Board, the Directors are can be passed by way of written resolutions circulated provided with appropriate, complete and reliable to and signed by all Directors from time to time when information to ensure timely consideration before each necessary except for matters in which a substantial Board meeting to enable them to make infor med shareholder or a Director or their respective associates decisions. The Board is provided with the opportunity to has a conflict of interest. The Board held 4 meetings meet independently from Executive Directors as and during the year ended 30 June 2021. when required. Each Director also has separate and independent access to senior management whenever The Company normally provides a reasonable notice necessary. period for every Board meeting to all the Directors to THE BOARD HAs EsTABLIsHED DIffERENT sUB-COmmITTEEs WITH mEmBERs As AT 30 JUNE 2021 As fOLLOWs : Nomination Remuneration sustainability management Executive Committee Audit Committee Committee Committee Committee Committee Health, safety, Environment & Risk Non-Executive Directors Kwai Sze Hoi (Chairman) Liu Zhengui (Vice Chairman) Ross Stewart Norgard Executive Director Cham Kam Kwan Jason (Company Secretary) Kwai Kwun Lawrence Colin Paterson Member Member Member Member Member Member Member Member Member Chairman Independent Non-Executive Directors Yap Fat Suan Henry Choi Yue Chun Eugene David Rolf Welch Chairman Chairman Chairman Member Member Member Member Member Member Member Chairman Member All Committees of the Board have access to professional advice where necessary. Minutes of Committee meetings are kept by the Secretary of the meeting. ANNUAL REPORT 2021 BOARD sKILLs mATRIX The following table summarises the combination of skills and experience of the board: Experience, skills & attributes Board Nomination Audit performance sustainability Risk Executive Remuneration & Total Non-Executive Directors Total Executive Directors Total Independent Non-Executive Directors Experience Corporate leadership Successful experience in CEO and/or other senior corporate leadership International experience Senior experience in multiple international locations Resources industry experience Relevant industry (resources, mining, exploration) experience Other Board level listed experience Membership of other listed entities (last 3 years) Knowledge and skills Finance and capital management Governance Risk and Compliance Gender Male Female 3 3 3 9 4 5 7 7 2 9 0 2 0 3 5 2 2 4 4 1 5 0 0 0 3 3 — 1 2 3 1 3 0 2 0 3 5 2 2 4 4 1 5 0 1 0 2 3 — 1 2 3 1 3 0 1 1 1 3 — 2 2 2 1 3 0 0 3 0 3 — 2 2 2 1 3 0 INDUCTION Of DIRECTORs APPOINTmENT AND RE-ELECTION Of DIRECTORs Following appointment, directors are supported through In accordance with the Bye-Laws of the Company and an induction briefing given by the corporate legal to comply with relevant HK and ASX Listing Rules, every counsel, which seeks to familiarise the directors with Director should be subject to retirement by rotation at listing rules, responsibilities and legal obligations of being least once every three years. Non-Executive Directors appointed as Directors of the Company. Furthermore, are appointed for a fixed term of 3 years. All Directors meetings with senior management are held at times appointed to fill a casual vacancy should be subject to familiarise the directors with the operations of the to re-election by shareholders at the first annual Company. In addition, a written directors’ training general meeting (“AGM”) after their appointment material is circulated at times to keep directors abreast and not less than one-third of the Directors should be of the latest updates in regulations. subject to retirement and re-election every year. Upon appointment, each director and executive defined as a Key Management Personnel (KMP) has a written agreement outlining the terms of their appointment. 19 CORPORATE GOVERNANCE REPORT In accordance with our Bye-Laws 87(1), at each AGM financial year. All Directors reviewed written professional one-third of the directors shall retire from office by development materials during the year ended 30 June rotation so that each Director shall retire at least once 2021. every three years. Messrs. Kwai Sze Hoi, Liu Zhengui and Chan Kam Kwan, Jason will be standing for re-election at the forthcoming AGM. No Directors’ service contract contains a provision requiring greater than one year’s notice or requires compensation greater than one year’s emoluments. CONTINUING PROfEssIONAL DEVELOPmENT Each of the Directors keeps abreast of his responsibilities as a Director of the Company and of the conduct, business activities and development of the Company, as well as the laws and regulations applicable to the Company. Comprehensive inductions are conducted upon appointment and the Company ensures suitable professional development is undertaken by Directors and members of senior management, with an objective to keep them abreast of the listing rules amendments and refresh their knowledge and skills on corporate governance. The Directors provide and the Company maintains, a record of all professional development undertaken during the period. Mr. Chan Kam Kwan, Jason, being an Executive Director and the Company Secretary of the Company received no less than 15 hours of relevant professional training during the Name of member Independent Non-Executive Directors Yap Fat Suan Henry - Chairman Choi Yue Chun, Eugene David Rolf Welch Non-Executive Directors Kwai Sze Hoi Liu Zhengui NOmINATION COmmITTEE Role and function The Board has established a Nomination Committee which carries out its duties in accordance with the Terms of Reference and Nomination Policy, a copy of which is located on the Company’s website. The Committee’s primary functions are: • To identify suitable candidates for nomination to the Board, Board Committees and senior management; • Succession planning for the Board and senior management; • • The appointment and re-election of Directors; and Ensuring appropriate skills are available to the Board to discharge its duties and add value to the Company. COmPOsITION AND ATTENDANCE The Committee consists of a majority of independent Directors and was comprised of the following members during the year ended 30 June 2021: meetings attended/ eligible to attend (*) 1/1 1/1 1/1 1/1 0/1 (*) Represents the total number of meetings held during the year ended 30 June 2021. ANNUAL REPORT 2021 NOmINATION POLICY CRITERIA fOR sELECTION The Company has adopted a Nomination Policy which The selection criteria include but are not limited to the sets out below the nomination procedures and the following: criteria for nomination of board or senior management members. NOmINATION PROCEDUREs • Business experience: The candidate should have significant experience from a senior role in an area of business, public affairs or academia, relevant Subject to the provisions in the Company’s Bye-laws, if to t he C om p a n y . Aw a re nes s of the G roup ’ s the Board recognises the need for an additional Director focusing industry would be an advantage but not or member of senior management: a requirement in all cases. (a) The Board determines the required skilled set, • Public board experience: The candidate should r e l e v a n t e x p e r t i s e a n d e x p e r i e n c e , h a v i n g have relevant expertise and experience earned as consideration of the current Board composition a Board member of a reputable listed company or a n d s i z e a n d s h a r e h o l d e r s t r u c t u r e o f t h e from a senior position in his or her industry, public Company; affairs or academia. (b) The Committee and/or Board identifies potential • Diversity: The candidate should contribute to candidates, possibly with assistance from external the Board being a diverse body, with diversity agencies and/or advisors; reflecting gender, age, cultural and educational background, ethnicity, professional experience, (c) The Company Secretary provides the Board qualifications, skills and length of service. Given with the biographical details and details of the the current composition of the Board, a female relationship between the candidate and the candidate would be an advantage but not a company and/or Directors, directorships held, requirement. skills and experience, other positions which involve s i g n i f i c a n t t i m e c o m m i t m e n t a n d a n y o t h e r • Standing: The candidate should be of the highest particulars required by law for any candidate for ethical character and have a strong reputation appointment to the Board; and standing, both personally and professionally, in his or her fields. (d) The Board develops a short list of candidates; (e) In the case of the appointment of an additional have sufficient time available for the proper independent non-executive Director, the Board performance of his or her duties. Directors should obtains all information in relation to the proposed be sufficiently free of other commitments to be Director to allow the Board to adequately address able to devote the time needed to prepare for the independence of the Director; meetings and participate in induction, training, • T ime commitment: Each Board member must (f) The Board agrees on a preferred candidate; appraisal and other Board associated activities. • Independence: For the candidate who is proposed (g) The Chair man of the Board approaches the as an independent non-executive director, he or p r e f e r r e d c a n d i d a t e t o c a n v a s s i n t e r e s t , she must satisfy all the independence requirements availability and terms of appointment; and as set out in Rule 3.13 of the HK Listing Rules. He or she must always be aware of threats to his (h) The Chairman of the Committee, Chairman of the or her independency and avoid any conflict of Board and the Company Secretary finalise a letter interest with the Company. He or she must be able of appointment for Board approval. to represent and act in the best interest of the Company and its shareholders as a whole. In the case of the appointment of independent non- executive Directors, appointments should be for specific To ensure that the existing policy continues to be terms and subject to re-election, the ASX Listing Rules, implemented in practice, the Company shall undertake the HK Listing Rules and the Companies Act 1981 of regular reviews and reassess this policy having regard Bermuda. t o t h e r e g u l a t o r y r e q u i r e m e n t , g o o d c o r p o r a t e g o v e r n a n c e p r a c t i c e a n d t h e e x p e c t a t i o n s o f shareholders and other stakeholders of the Company. 21 CORPORATE GOVERNANCE REPORT BOARD DIVERsITY POLICY The Board has adopted a board diversity policy setting out the approach to achieve diversity on the Board. The Company considers that diversity of board members can be achieved through consideration of a number of aspects, including but not limited to, gender, age, cultural and educational background, professional experience, skills, knowledge and length of service. A l l b o a rd a p p o i n t m e n t s a re b a s e d o n m e r i t a n d contribution, and candidates are considered against objective criteria, having due regard for the benefits of diversity on the Board. The Nomination Committee reviews the Policy on a regular basis and discusses any revisions that may be required, and recommends any such revisions to the Board for consideration and approval. REmUNERATION AND PERfORmANCE COmmITTEE The Board has a Remuneration and Per for mance Committee to ensure that the Company is able to attract, retain, and motivate a high-calibre team which is essential to the success of the Company. The Committee carries out its duties in accordance with the Terms of Reference, a copy of which is located on the Company’s website. COmPOsITION AND ATTENDANCE The Committee consists of a majority of independent Directors and was compromised of the following members during the year ended 30 June 2021: Name of Director/role Non-Executive Directors Kwai Sze Hoi Liu Zhengui Independent Non-Executive Directors Yap Fat Suan, Henry, Chairman Choi Yue Chun, Eugene David Rolf Welch meetings attended/ eligible to attend (*) 1/1 0/1 1/1 1/1 1/1 (*) Represents the total number of meetings held during the year ended 30 June 2021. T h e p r i n c i p a l d u t i e s o f t h e R e m u n e r a t i o n a n d REmUNERATION AND PERfORmANCE Performance Committee include, inter alia, reviewing The terms of reference in respect of the Remuneration a n d m a k i n g r e c o m m e n d a t i o n s t o t h e B o a r d o n and Performance Committee distinguishes the structure t h e C o m p a n y ’ s r e m u n e r a t i o n p o l i c y ; m a k i n g of the Non-Executive Directors’ remuneration from that recommendations to the Board on the remuneration of Executive Directors and senior executives. o f E x e c u t i v e a n d N o n - E x e c u t i v e D i r e c t o r s , a n d members of the senior management; reviewing and NON-EXECUTIVE DIRECTOR COmPENsATION making recommendations to the Board in respect of The Board is determined to attract and retain high per for mance-based remuneration by reference to calibre Non-Execu tive Directors to wo rk wit h t he corporate goals and objectives resolved; and ensuring Company, whilst at the same time preserving cash no Director or any of his or her associates is involved in flow. Accordingly, the structure of the Non-Executive deciding his own remuneration. Directors’ remuneration allows for remuneration in the form of share options, granted under the share In addition to its remuneration duties, the Committee is option scheme. Whilst this represents a departure from also responsible for the annual performance review of the Code and Principles, the Committee believes it is the Board, Board Committees and individual Directors’ appropriate for the size of the Company, and is satisfied performance. by the fact that all Director participation under the share option scheme is approved by Shareholders and the grant aligns with the long term performance of the Company. The Company’s Bye-laws provide that the Directors’ remuneration shall be determined by the Company in general meeting. The Company has fixed a maximum sum of A$1 million in aggregate for Non- Executive Directors per annum, unless otherwise and approved by the Shareholders. ANNUAL REPORT 2021 PERfORmANCE REVIEW Of THE BOARD T h e e x e c u t i v e p a y a n d r e w a rd f r a m e w o r k h a s 2 B o a r d p e r f o r m a n c e a n d i n d i v i d u a l D i r e c t o r components: base pay and long-ter m incentives p e r f o r m a n c e a r e r e v i e w e d o n a n o n g o i n g b a s i s through participation in the 2012 Share Option Scheme. and evaluated annually by the Remuneration and Details of the 2012 Share Option Scheme can be found Performance Committee. Individual Directors may meet in the financial statements. with the Chairman of the Committee to discuss their views towards their remuneration packages. PERfORmANCE REVIEW – EXECUTIVEs S e n i o r e x e c u t i v e s ’ p e r f o r m a n c e i s r e v i e w e d o n REmUNERATION Of EXECUTIVE DIRECTORs an ongoing basis and evaluated annually by the The Remuneration and Per formance Committee of Remuneration and Per for mance Committee. The the Board of Directors of the Company is responsible evaluation is undertaken by each executive completing for reviewing compensation arrangements for the a q u e s t i o n n a i r e o n p e r f o r m a n c e i s s u e s o r e a c h Executive Directors, including the Chief Executive executive having one-on-one interviews with the Officer (if any) and the senior management team, and chairman of the Committee. Performance evaluations making recommendations to the Board for approval. were completed during the period for senior executives. The Committee assesses the appropriateness of the nature and amount of remuneration of Directors and Individual executives may meet with the chairman of senior managers on a periodic basis by reference to the Committee to discuss their responses. relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefit from REmUNERATION Of DIRECTORs AND sENIOR the retention of a high quality board and executive mANAGEmENT team. For details of the remuneration of each Director in the financial year, refer to the notes to the financial EXECUTIVE COmPENsATION fRAmEWORK statements. The emoluments (includes share-based The Company aims to reward executives with a level compensation) of the directors and members of the and mix of compensation commensurate with their senior management by band for the year ended 30 position and responsibilities within the Company. The June 2021 is set out below: Remuneration and Performance Committee is assisted in the process by the use of independent salary data, if applicable. Number of members 2021 * Number of members 2020 * 6 4 1 11 7 3 1 11 Composition, expertise and attendance The Committee consists of a majority of Independent Directors, none of whom have been employed as previous or current auditors of the Company. HK$0 to HK$1,000,000 HK$1,000,001 – HK$2,000,000 HK$2,000,001 – HK$3,000,000 * All directors and senior management AUDIT COmmITTEE Role and function The Board has established an Audit Committee to carry out its oversight of the Company’s financial reporting system and internal control procedures. The Committee carries out its duties in accordance with the Terms of Reference, a copy of which is located on the Company’s website. 23 CORPORATE GOVERNANCE REPORT The composition and expertise of the Committee was as follows during the year ended 30 June 2021: Name of Director/role Expertise Independent Non-Executive Directors meetings attended/eligible to attend (*) Yap Fat Suan, Henry, Chairman Fellow of the Institute of Chartered Accountants in England and Wales 2/2 and an associate member of the Hong Kong Institute of Certified Public Accountants Choi Yue Chun, Eugene Graduated from the University of Hong Kong with a Bachelor of Laws 2/2 degree, admitted as a solicitor of the High Court of Hong Kong in 1997 and member of the Law Society of Hong Kong David Rolf Welch Graduated from the University of Western Australia with a Bachelor of 2/2 Commence degree, he has held senior executive positions including Vice President of Strategy and Business Development for Aurizon Holdings Limited. (*) Represents the total number of meetings held during the year ended 30 June 2021. REsPONsIBILITIEs Of THE COmmITTEE needed and making recommendations as to the The primary responsibilities of the Audit Committee are, steps to be taken; inter alia, (a) to consider and make recommendations to the of the Company and the Company’s annual Board on the appointment, reappointment and report and accounts, half-yearly report and, if removal of the external auditor (and to approve prepared for publication, quarterly reports, and to the remuneration and ter ms of engagement review significant financial reporting judgements (d) to monitor the integrity of financial statements of the external auditor) and any questions of contained in them; resignation or dismissal of that auditor; (b) to review and monitor the external auditor’s i n d e p e n d e n c e a n d o b j e c t i v i t y a n d t h e effectiveness of the audit process in accordance with applicable standards. The Committee should discuss with the auditor the nature and scope of the audit and reporting obligations before the audit commences; (c) t o d e v e l o p a n d i m p l e m e n t p o l i c y o n t h e engagement of an external auditor or to supply non-audit services. For this purpose, ‘external auditor’ shall include any entity that is under common control, ownership or management of the audit firm, or any entity that a reasonable and infor med third party having knowledge of all relevant infor mation would reasonably conclude as part of the audit firm nationally or internationally. The Committee should report to the Board, identifying any matters in respect of which it considers that action or improvement is (e) to evaluate the adequacy of the Company’s accounting control system by reviewing written reports from the external auditors, and monitor management’s responses and actions to correct any noted deficiencies; (f) to review the adequacy and effectiveness of the Company’s financial controls, and unless expressly addressed by a separate board risk committee, or by the board itself, to review the Company’s internal control and risk management systems through active communication with management and the external auditors; (g) to discuss with management the system of internal control and risk management and ensure that management has discharged its duty to have effective systems. This discussion should include the adequacy of resources, staff qualifications and experience, training programmes and budget of the Company’s accounting and financial reporting function; ANNUAL REPORT 2021 (h) to consider any findings of major investigations of T h e D i re c t o r s e n s u re t h a t t h e p re p a r a t i o n o f t h e risk management and internal control matters as consolidated financial statements of the Company delegated by the Board or on its own initiative and are in accordance with statutory requirements and management’s response to these findings; applicable accounting standards. The Directors also ensure the publication of the financial statements of the (i) where an internal audit function exists, to ensure Company in a timely manner. co-ordination between the internal and external auditors, and to ensure that the internal audit The report of the auditor of the Company about their f u n c t i o n i s a d e q u a t e l y r e s o u r c e d a n d h a s reporting responsibilities on the financial statements of appropriate standing within the Company, and the Company is set out in the Independent Auditor’s to review and monitor the effectiveness of the Report. internal audit function; AUDITORs’ REmUNERATION (j) where an internal audit function exists, to assess The aggregate remuneration in respect of services the performance and objectivity of the internal provided by Ernst and Young Australia for the year audit function and to make recommendations e n d e d 3 0 J u n e 2 0 2 1 w a s H K $ 1 , 5 5 2 , 0 0 0 o f w h i c h for the appointment and dismissal of the Head of H K $ 1 , 1 6 3 , 0 0 0 r e p r e s e n t s a n n u a l a u d i t f e e s , a n d Internal Audit; HK$389,000 for non-audit services. (k) to review the Group’s financial and accounting Ernst and Young, Australia, the auditor of the Company, policies and practices; is a non-Hong Kong audit firm which has obtained approval from the Financial Reporting Counsel as (l) to review the external auditor’s management a recognised public interest entity (“PIE”) auditor to letter, any material queries raised by the auditor conduct PIE engagement of the Company. to management in respect of the accounting records, financial accounts or systems of control and management’s response; (m) t o e n s u r e t h a t t h e B o a r d p r o v i d e s a t i m e l y response to the issues raised in the exter nal auditor’s management letter; (n) t o r e v i e w a r r a n g e m e n t s e m p l o y e e s o f t h e C o m p a n y c a n u s e , i n c o n f i d e n c e , t o r a i s e c o n c e r n s a b o u t p o s s i b l e i m p r o p r i e t i e s i n financial reporting, inter nal control or other matters. The audit committee should ensure that proper arrangements are in place for fair and independent investigation of these matters and for appropriate follow-up action; and (o) t o a c t a s t h e k e y r e p r e s e n t a t i v e b o d y f o r overseeing the issuer’s relations with the external auditor. DIRECTORs’ REsPONsIBILITY fOR THE fINANCIAL sTATEmENTs The financial statements of the Company for the year ended 30 June 2021 have been reviewed by the Board and the Audit Committee and audited by the external auditor, Ernst and Young Australia. The Directors acknowledge their responsibility for preparing the consolidated financial statements of the Company and presenting a balanced, clear and comprehensive assessment of the Group’s performance and prospects. EXECUTIVE COmmITTEE The Board has constituted the Executive Committee and delegated the responsibility of the day-to-day management and has empowered the Executive Committee to implement policies and strategies, for the business activities and operations, internal control and administration of the Group. The Executive Committee carries out all the general powers of management and control of the activities of the Group as vested in the Board, save for those matters which are reserved for the Board’s decision and approval pursuant to the written terms of reference of the Executive. The members include the Executive Directors and certain senior management appointed by the Board from time to time. The Executive Committee meets whenever it is necessary to carry out its obligations. HEALTH, sAfETY, ENVIRONmENT AND sUsTAINABILITY COmmITTEE ROLE AND fUNCTION The Board has established a Committee to oversee the health, safety, environmental and sustainability activities of the Company. The Committee carries out its duties in accordance with the Terms of Reference, a copy of which is located on the Company’s website. 25 CORPORATE GOVERNANCE REPORT COmPOsITION AND ATTENDANCE The Committee consists of a majority of independent Directors and was comprised of the following members during the year ended 30 June 2021: Name of Director/role Independent Non-Executive Directors Choi Yue Chun, Eugene, Chairman Yap Fat Suan, Henry Non-Executive Director Ross Stewart Norgard meetings attended/ eligible to attend (*) 1/1 1/1 1/1 (*) Represents the total number of meetings held during the year ended 30 June 2021. REsPONsIBILITIEs Of THE COmmITTEE The principal duties of the Committee are: (d) ensuring that the Company monitors trends and reviews current and emerging issues in the field of sustainability, environment, health and safety, and (a) revi ewi ng and monitoring the sustainability , evaluates their impact on the Company; and environmental, safety and health policies and activities of the Company; (e) reviewing and making recommendations to the (b) e n c o u r a g i n g , s u p p o r t i n g a n d c o u n s e l l i n g expansions, acquisitions and dispositions with management in developing short and long term material environmental implications. Board with respect to environmental aspects of policies and standards to ensure that the principles set out in the sustainability, environmental, health and safety policies are being adhered to and achieved; (c) regularly reviewing community, environmental, health and safety response compliance issues and incidents to determine, on behalf of the Board, whether the Company is taking all necessary action in respect of those matters and that the Company has been duly diligent in carrying out its responsibilities and activities in that regard; Name of Director/role Executive Director Colin Paterson (Chairman) Non-Executive Director Ross Stewart Norgard Independent Non-Executive Director Choi Yue Chun, Eugene RIsK mANAGEmENT COmmITTEE ROLE AND fUNCTION The Board has established a Committee to oversee risk and the management and internal control of the processes by which risk is considered for both ongoing operations and prospective actions of the Company. The Committee carries out its duties in accordance with the Terms of Reference, a copy of which is located on the Company’s website. COmPOsITION AND ATTENDANCE T h e C o m m i t t e e w a s c o m p r i s e d o f t h e f o l l o w i n g members during the year ended 30 June 2021: meetings attended/ eligible to attend (*) 1/1 1/1 1/1 (*) Represents the total number of meetings held during the year ended 30 June 2021. ANNUAL REPORT 2021 Whilst the risk management committee was not chaired their respective scope of work. Reports from the external by an independent director and it does not comprise auditors on relevant financial reporting matter are of a majority of independent directors, the committee presented to the Audit Committee, and, as appropriate, was mainly composed of non-executive directors to the Board. and independent non-executive directors who do not participate in the daily operation of the Group. INTERNAL AUDIT fUNCTION The Company considers that objectivity can still be The Company has outsourced its internal audit function maintained with such arrangements. and has engaged an independent management REsPONsIBILITIEs Of THE COmmITTEE measures of the Group on a yearly basis. The conclusion R i s k m a n a g e m e n t e n c o m p a s s e s a l l a r e a s o f i s t h a t t h e r e w a s n o s i g n i f i c a n t w e a k n e s s i n t h e the Company’s activities. Once a business risk is Company’s inter nal control and risk management consultancy company to assess the internal control i d e n t i f i e d , t h e r i s k m a n a g e m e n t p r o c e s s e s a n d systems. systems implemented by the Company are aimed at providing the necessary framework to enable the REVIEW PERIOD business risk to be managed. Management has the The Board also reviews at least annually the adequacy key role of identifying risks and enabling processes for of resources, qualifications and experience of staff risk management. Senior management are required of the Group’s accounting and financial reporting to report risks identified to the Risk Management function, and their training programmes and budget. Committee or Chief Executive Officer. REPORTING The Risk Management Committee will meet periodically The Executive Directors of the Company report directly to review and ensure that the Company has in place to the Board and the Audit Committee, and monitor processes to assess and manage specific and general the existence and effectiveness of the controls in the business risks and appropriate mitigation procedures Group’s business operations. where applicable. The overall results of this assessment are presented to the Committee, and management have reviewed the Board, in oral and written form, at every Board meeting G r o u p ’ s f i n a n c i a l , o p e r a t i o n a l , c o m p l i a n c e a n d by the Chairman of the Risk Management Committee, strategic aspects and identified certain risk areas. For risk management, the Board, the Risk Management and updated as needed. Certain types of risks and internal control weaknesses have been identified and the relevant measures The Board reviews the Company’s risk management implemented to mitigate these risks are disclosed under at every Board meeting, and where required, makes the section ‘Management Discussion and Analysis’. improvements to its risk management and internal compliance and control systems. CONfIRmATION Of COmPLIANCE INTERNAL CONTROL AND RIsK mANAGEmENT ROLE AND fUNCTION The Board has overall responsibility for the Group’s system of internal control and for the assessment and management of risk. The Board has conducted a review of and is satisfied with the effectiveness of the system of internal control of the Group. The Executive Directors also discuss the audit plan with the Audit Committee and the external auditors. The audit plan is reassessed during the year as needed to ensure that adequate resources are deployed and the plan’s objectives are met. In addition, regular consultation is undertaken with the Group’s external auditors so they are aware of the significant factors which may affect Although the Company is not required to comply with Section 295A of the Australian Corporations Act 2001 (being a company incorporated in Bermuda), the Board requires the Executive Director to state in writing to the Board that: ‘The financial records of the Company have been properly maintained and the financial statements comply with the appropriate accounting standards and give a true and fair view of the Company’s financial position, and that the opinion has been based on the basis of a sound system of risk management and internal control which is operating effectively’. 27 CORPORATE GOVERNANCE REPORT mODEL CODE fOR sECURITIEs TRANsACTIONs BY DIRECTORs The Company has adopted a Securities Trading Policy which applies, inter alia, to all Directors and Key Management Personnel. The Securities Trading Policy complies with the ASX Listing Rules and the Model Code for Securities Transactions by Directors of Listed Issuers (the “Model Code”) as set out in Appendix 10 of the HK Listing Rules. A copy of the Company’s Securities Trading Policy is available on the website of the Company. All directors have confir med, following a specific enquiry by the Company, that they have complied with the required standard as set out in the Model Code. COmPANY sECRETARY ROLE AND fUNCTION The Company Secretary is responsible and accountable d i r e c t l y t o t h e B o a r d a n d e n s u r i n g t h a t B o a r d procedures are followed and that the activities of the Board are carried out efficiently and effectively. T h e C o m p a n y S e c r e t a r y a s s i s t s t h e C h a i r m a n t o prepare agendas and Board papers for meetings and disseminates such documents to the Directors and Board Committees in a timely manner. The Company Secretary is responsible for ensuring that the Board is fully briefed on all legislative, regulatory and corporate governance developments when making decisions. The Company Secretary is also directly responsible for the Group’s compliance with the continuing obligations of the Listing Rules and The Code on Takeovers and PROfEssIONAL DEVELOPmENT D u r i n g t h e y e a r, M r C h a n K a m K w a n J a s o n , t h e Company Secretary of the Company, has undertaken no less than 15 hours of professional training to update his skills and knowledge. LANGUAGE Of mEETINGs All key corporate and shareholder documents are prepared in both English and Chinese. All board meetings are conducted in English and all directors are capable of communicating in English and are able to contribute to discussions and can discharge their obligations accordingly. Shareholder meetings are conducted bi-lingually, in English and Mandarin. CONTINUOUs DIsCLOsURE The Directors are committed to keeping the market fully infor med of material developments to ensure compliance with the ASX, and the HK Listing Rules. The Directors have observed the disclosure requirements of the ASX and the HK Listing Rules, and to ensure accountability at a senior management level for that compliance. A copy of the Communications Strategy and Continuous Disclosure Policy can be found on the Company’s website. COmmUNICATION WITH sHAREHOLDERs COmmUNICATION sTRATEGY Mergers and Share Repurchases, including publication The Board is committed in providing clear and full and dissemination of the Company’s reports, financial performance information of the Group to shareholders statements and interim reports within the period as and have established a communications strategy, per the Listing Rules. Also, timely dissemination of a copy of which can be found on the Company’s announcements and information relating to the Group website. The strategy is designed to promote effective to the market and ensuring that appropriate notification c o m m u n i c a t i o n w i t h s h a r e h o l d e r s t h r o u g h o u t is made when there are any dealings by Directors in the t h e y e a r a n d e n c o u r a g e e f f e c t i v e p a r t i c i p a t i o n securities of the Group. at general meetings. In addition to the circulars, notices and financial reports sent to shareholders, The Company Secretary also advises the Directors on additional information of the Group is also available to their obligations in respect of disclosure of interests shareholders on the Company’s website. i n s e c u r i t i e s , c o n n e c t e d t r a n s a c t i o n s a n d i n s i d e i n f o r m a t i o n a n d e n s u r e s t h a t t h e s t a n d a rd s a n d As well as ensuring timely and appropriate access to disclosures required by the Listing Rules are observed. information for all investors via announcements to the ASX and SEHK, the Company will also ensure that all With respect to the secretarial function of the Group, relevant documents are released on the website of the Company Secretary maintains formal minutes of the the Company for the purpose of both stakeholders Board meetings and other Board committee meetings. and shareholders. Copies of all corporate governance policies, charters and terms of references are available on the website of the Company. ANNUAL REPORT 2021 ANNUAL GENERAL AND sPECIAL mEETINGs PROCEDUREs fOR DIRECTING sHAREHOLDERs’ ENQUIRIEs Each year the Company’s external auditor attends the TO THE BOARD AGM and is available to answer questions from security S h a r e h o l d e r s e n q u i r i e s c a n b e d i r e c t e d t o holders relevant to the audit. inquiry@brockmanmining.com or by writing to the Company Secretary’s office, whose contact details are Shareholders are encouraged to attend the AGM for as follows: which at least 20 clear business days’ notice is given. The Chairman and Directors are available to answer Unit 3903B, Far East Finance Centre, 16 Harcourt Road, questions on the Group’s business at the meeting. Admiralty, Hong Kong. In accordance with the Bye-Laws of the Company, a minimum of 14 days’ notice is required for every The enquiries would then be assessed and considered (if shareholder meeting and all shareholders shall have appropriate) to put to the Board. Shareholders may also statutory rights to call for special general meetings make enquiries with the Board at the general meetings and put forward agenda items for consideration in the of the Company. general meetings. All resolutions at the general meeting are decided by a poll which is conducted by the PROCEDUREs fOR PUTTING fORWARD PROPOsALs AT A Group’s branch share register in Hong Kong. GENERAL mEETING The Group values feedback from shareholders on its 5% of the total voting rights of the Company on the efforts to promote transparency and foster investor date of the requisition or not less than 100 shareholders relationships. Comments and suggestions are always of the Company are entitled to put forward a proposal Any number of shareholders representing not less than welcomed. sHAREHOLDERs RIGHTs HOW sHAREHOLDERs CAN CONVENE A sPECIAL GENERAL mEETING Subject to Section 74 of the Companies Act 1981 of Bermuda (the “Act”) and the Bye-Law 58 of the Company, the Board may whenever it thinks fit call special general meetings, and members holding at the date of deposit of the requisition not less than one- tenth of the paid up capital of the Company carrying the right of voting at general meetings for the Company for consideration at a general meeting of the Company. Shareholders should follow the procedures as set out in Section 79 of the Act for putting forward such proposals. PROVIsION Of INfORmATION IN REsPECT Of AND BY DIRECTORs Updated information with regard to the change in other Directorships of the Directors of the Company are on our website and in the 2021 Annual Report. CONsTITUTIONAL DOCUmENTs There was no significant change in the memorandum shall at all times have the right, by written requisition to a n d a r t i c l e s o f a s s o c i a t i o n a n d t h e B y e - L a w s o f the Board or the Company Secretary of the Company, the Company during the year. The memorandum to require a special general meeting to be called by and articles of association and the Bye-Laws of the the Board for the transaction of any business specified in Company are available on the Company’s website. such requisition; and such meeting shall be held within two months after the deposit of such requisition. If within 21 days of such deposit the Board fails to proceed to convene such meeting the requisitionists themselves may do so in accordance with the provisions of Section 74(3) of the Act. 29 ENVIRONmENTAL, sOCIAL AND GOVERNANCE REPORT The Directors are pleased to present the Environmental, Social and Governance (“ESG”) Report for the year ended 30 June 2021 in compliance with the applicable code provision of the Environmental, Social and Governance Reporting Guide as set out in Appendix 27 of the Rules Governing the Listing of Securities on the SEHK. REPORTING sCOPE With the delay in development of the Marillana Project and no mining activities undertaken during the year, the scope of the report covers all operations of the Group, mainly the head office in Hong Kong and its subsidiaries in Western Australia. The report presents information relevant to the ESG management approach for the financial year from 1 July 2020 to 30 June 2021 (the “Reporting Period”). The ESG Report complies with the mandatory disclosure requirements and ‘comply or explain’ provisions of the ESG Reporting Guide. The Group’s performance is required annually and reviewed by the Risk Management Committee and Board, details of which are outlined in our ‘Internal Control and Risk Management’ section in the Corporate Governance Report included in the 2021 Annual Report. It is recommended that the ESG report to be read together with the 2021 Annual Report, in particular with the Corporate Governance and Directors’ Reports. This ESG report can be accessed from the ‘Sustainability’ section of the Company’s website and on the HKEx’s website. The compilation of the report follows the principles as suggested by the ESG reporting guidelines: Materiality Opinions of stakeholders were gathered from inter nal and exter nal stakeholders engagement and we have reviewed and determined the material ESG aspects to the Group. Balance To provide an unbiased assessment of the Group and report not only the progress of sustainability development, but also the future plans. Quantitative Quantitative key performance indicators are used to monitor the sustainability progress and results of target implementation. Consistency Unless otherwise stated, the ESG report adopted consistent methodology from time to time. ANNUAL REPORT 2021 sTAKEHOLDERs ENGAGEmENT AND mATERIALITY AssEssmENT Amongst various environmental and social issues based on the ESG Reporting Guide within the scope of sustainability, the following is the list of issues that are considered to be material and relevant to the Group. The priorities are set based on management’s view as well as certain conclusions from our stakeholders’ engagement. Aspects and KPIs relevant to this report’s disclosure are set out as follows: stakeholders material and relevant KPI Engagement channels issues Investors and shareholders Business operations General disclosure Financial reports and announcements Regulators Disclosure Shareholders meetings Environmental Aspects A1-A4 and On-going communications relevant KPIs Compliance with laws and General disclosure on On-going compliance regulations aspects A1, B1, B2, B4, review B6, B7 Anti-Corruption KPI B7.1-3 Training for directors and Labour standards KPI B4.1-2 management Yearly review and monitoring of latest regulatory updates Product Responsibility General disclosure Framework of product Suppliers Supply chain management KPI B5.1-4 quality assurance shall be developed prior to the delivery of first ore Review of suppliers Procurement procedures Employees Remuneration & labour KPI B1.1-2 Yearly review standards Training and development KPI B3.1-2 Trainings for directors and management Occupational health & KPI B2.1-3 safety Community Charity work KPI B8.1-2 Support charity organisations 31 ENVIRONmENTAL, sOCIAL AND GOVERNANCE REPORT statement of the Board of Directors The Board retains the overall responsibility for the Group’s ESG management and is committed to operating in a manner that contributes to the sustainable development of mineral resources through efficient, balanced, protection of the environment while demonstrating due consideration for the wellbeing of people. The Group is focused on the need to work closely with the local communities and the importance on earning the respect and support of the communities. The Group recognises its responsibility for minimising the impact of its activities on, and protecting the environment. The Group is committed to developing and implementing practices in environmental design and management actively operates to: • • • Work within the legal frameworks Identify, monitor, measure, evaluate and minimise our impact on the environment Give environmental aspects due consideration in all phases of the Group’s projects, from exploration to development, eventual operation, and final closure, and • Act systematically to improve the planning, execution, and monitoring, of its environmental performance. Looking forward to the future, the Board will also per form timely review the Group’s strategic planning and performance. The Board also sets out ESG goals and targets based on relevant KPIs and reviews the results on a yearly basis. We strive to provide a supportive environment and incorporate ESG initiatives into our strategy to reduce the Group’s carbon footprint. A. ENVIRONmENTAL A.1 EmIssIONs During the year, the Group was at minimal spend and retained office space to secure an infrastructure solution for the Marillana p r o j e c t . M i n i n g d e v e l o p m e n t i s y e t t o commence and management considers that the emissions and waste generated by any exploration activity would have an insignificant impact on the environment due to the minimal activities undertaken. Hence, there are no relevant laws and regulations applicable to these activities. Greenhouse Gas emissions (“GHG Emissions”) for the reporting period are mainly generated from general direct electricity consumption for office use and indirect emissions resulted from business trips. During the year, due to the global pandemic, business travel was minimised. Going forward, business travel and physical management meetings will be minimised and be substituted with online meetings. Relevant KPls are as shown below: i) Purchased 22,527 kWh electricity consumption ii) GHG Intensity 132.05kg CO2-e/m² (by floor area) iii) Scope 1 GHG Not applicable Emissions iv) Scope 2 GHG 18,082.29kg CO2-e Emissions v) Scope 3 GHG Not applicable Emissions ANNUAL REPORT 2021 Note: Scope 1 emissions come from direct GHG emissions from combustion of fuels in stationary or mobile s o u rc e s ( e x c l u d i n g e l e c t r i c a l e q u i p m e n t ) t o generate electricity, which is not applicable in our case as our developmental and production activities have yet to commence. S c o p e 2 e m i s s i o n s c o m e f r o m i n d i r e c t G H G e m i s s i o n s f ro m t h e g e n e r a t i o n o f p u rc h a s e d electricity. Scope 3 emissions includes other indirect GHG emissions that occur outside the Company such as emissions from business travel of employees and paper waste disposed of at landfill. * Emissions for Nitrogen Oxides (NOx), Sulphur Oxides (SOx) and Respirable suspended particulars (RSP) are not disclosed as the amount is insignificant. T h e s c o p e d u r i n g t h e r e p o r t i n g p e r i o d covered a gross floor area of 136.94m2. The Group continues to operate at minimal s p e n d a n d t a r g e t s a n e t d e c r e a s e i n emissions prior to the commencement of any future developmental activities. Due to the very low emissions of the Group based on current activities, actual emissions are not currently measured or quantified. Emissions w i l l b e m e a s u r e d o n c e d e v e l o p m e n t activities have commenced. During the reporting period, no material hazardous or non-hazardous waste was generated as our operations are office based in nature. Waste generated comprises p r i n t e r t o n e r c a r t r i d g e s , b a t t e r i e s a n d obsolete computer and printing equipment. T h e s e w e r e p r o p e r l y d i s p o s e d o f a n d recycled. Non-hazardous waste such as general domestic refuse and printing paper from office operations were considered minimal. 33 ENVIRONmENTAL, sOCIAL AND GOVERNANCE REPORT T h e C o m p a n y h a s i m p l e m e n t e d t h e Our offices are required to maintain in-door following measures taken to reduce our temperature at 24 degree Celsius to ensure emissions in relation to office activities: efficient use of air conditioning. • Reduction of unnecessary business trips As stated in the above paragraph, the and board meetings organised via Group targets to maintain a net decrease in electronic communications. emissions for the upcoming year. Purchased electricity contributes to the majority of our • Encouraged employees to switch off emissions; hence a target of net decrease in lights and air conditioning. yearly energy consumption is set. • Procure only electrical appliances with The Group promotes initiatives to mitigate ‘Grade1’ or equivalent energy labels if e n v i r o n m e n t a l i m p a c t s b y c h o o s i n g needed to increase energy efficiency. energy-efficient products by comparing A.2 UsE Of REsOURCEs Energy Labels issued by the Electrical and Mechanical Services Department (EMSD)/ The Group is committed to promoting an Energy Rating Labels issued by the Australian environmentally conscious work environment Federal Government. As waste electrical and has focused on measures to minimise and electronic equipment (WEEE) poses waste and electricity consumption, initiate severe harm to the environment, the Group paper and cartridge recycling, and promote encourages all employees to use the WEEE electronic communications and storage. We donation or recycling programs. promote recycling of office equipment and reduce domestic waste as much as possible. All employees are responsible and accountable for operating in an environmentally responsible To reduce consumption of paper, the Group manner. prefers using electronic means to disseminate infor mation via electronic devices and The total purchased electricity for the year electronic communication systems. ended 30 June 2021 was 22,527kWh and the electricity usage intensity by floor area We encourage our office employees to amounted to approximately 132.05kWh/m². switch off idle lights, air conditioners and other office equipment, and we remind our The Group’s existing business operation employees to print and photocopy on both d o e s n o t r e q u i r e a n y s i g n i f i c a n t w a t e r sides of paper if printing is unavoidable. c o n s u m p t i o n , w a t e r u s a g e a n d a n y We also encourage our employees to bring c o n s u m p t i o n r e l a t e s t o d r i n k i n g w a t e r t h e i r o w n l u n c h a n d r e d u c e p u r c h a s e (including bottled water). of takeaway and beverages and hence reduce the use of plastic disposable utensils. The Group encourages its employees to choose public transportation and carpool to reduce car driving and thus the impact on the environment and transportation. The Group’s drinking water consumption for the year amounted to 1.23m 3 with a water consumption intensity amounted to approximately 0.21 m 3 per employee. We require employees to report immediately The Group does not own any vehicles and whenever damage is found on any of the we therefore do not directly produce any water facilities. greenhouse and hazardous gases from cars used. ANNUAL REPORT 2021 There is no issue in sourcing water that is fit Brockman has previously engaged Ecologia for purpose whereas the Group considers its E n v i ro n m e n t ( E c o l o g i a ) t o p re p a re t h e water consumption level is reasonable at the Pre l i m i n a ry D oc u m e n t a t i on re q u i re d t o current operation level. The Group targets to assess the project under the Environmental have a net decrease in water and electricity Protection and Biodiversity Conservation consumption next year by implementing the Act 1999 (Cth). Most key environmental measures as discussed above. a p p r o v a l s a r e i n p l a c e a n d w e s h a l l adhere to our proposed plan in the event Due to the nature of the business, there is o f c o m m e n c e m e n t o f e a r l y w o r k s . We no applicable data of packaging material endeavour to mitigate any environmental as our operation does not involve the use of d i s t u r b a n c e , a n d a p p l y o u r m o n i t o r i n g any packaging material. schedule when the project commercialises. A.3 THE ENVIRONmENT AND NATURAL REsOURCEs Prior to the commencement of our mine T h e C o m p a n y i s c o m m i t t e d t o t h e development, environmental approvals for principles of being a good corporate and mining or exploration activities are required environmental citizen, and takes careful to be sought in accordance with the Mining c o n s i d e r a t i o n o f e n v i r o n m e n t a l , s o c i a l Act 1978 and the following approvals are responsibility and sustainability issues when r e q u i r e d b y t h e D e p a r t m e n t o f M i n e s , choosing its vendors. The Group aims to Industry Regulation and Safety: minimise its environmental footprint and its disturbance to natural resources. We 1. Programme of work – submission has anticipate that fines residue storage and waste rock management, water use and discharge, and land management and rehabilitation would be the most important areas of concern once in production and the t o i n c l u d e d e t a i l s o f m e c h a n i s e d equipment and potential disruption to the ground during exploration or prospecting for minerals. Group shall closely monitor these aspects, 2. M i n i n g p r o p o s a l s – d e t a i l s o f t h e in compliance with its regulatory approvals obtained with key State and Commonwealth go v e r nm e n ts t ha t h a v e b e e n re c e i v e d for the Marillana project. Each year, the proposed mining operation or any changes to be incurred are required to be disclosed. Company undertakes an annual compliance 3. Mine closure plans – such plan must be review and provides a report to the Office of Environmental Protection Authority to declare its compliance status as required. Brockman is proposing to clear up to 3,785 included together with any submission o n m i n i n g p r o p o s a l s , c o v e r i n g a l l aspects of mine decommissioning and rehabilitation. ha of vegetation to mine and transport ore The Group adheres to strict compliance to Port Hedland by a land infrastructure of the Mining Act 1978 and other relevant s o l u t i o n . A f t e r r e h a b i l i t a t i o n , t h e l o n g - e n v i r o n m e n t a l r e g u l a t i o n s s u c h a s t h e term cleared footprint will be around 60 ha Environmental Protection Act 1986, the which represents the final open pit void. All Environmental Protection and Biodiversity other disturbances will be rehabilitated to Conservation Act 1999, the Environmental the satisfaction of the Western Australian Protection (Clearing of Native Vegetation) Environmental Protection Authority (EPA), Regulations 2004, the Rights in Water and Department of Water and Environmental Irrigation Act 1914, and the Native Title Act R e g u l a t i o n a n d D e p a r t m e n t o f M i n e s , 1993. Industry, Resources and Safety. 35 ENVIRONmENTAL, sOCIAL AND GOVERNANCE REPORT A.4 CLImATE CHANGE Significant changes in the pattern of rainfall o v e r We s t e r n A u s t r a l i a h a v e o c c u r r e d over the past 40 years. Most of the state, especially the northwest, has experienced a trend towards a wetter climate. This poses a certain risk for the mining industry. The southwestern part of the state has become drier, with a 15% reduction in rainfall since the mid-1970s. Waste rock and tailings that are created during the mining and ore refining process can release toxins into the environment if not stored or disposed of properly. In many cases, waste rock and tailings are left out in the open where they are exposed, and toxins can be washed into water systems by rainfall, or can leach into the soil. To mitigate such risk, a detailed mine plan with enhanced tailings and erosion control structure will serve as part of the mine’s water management plan. The most likely source of impact to the surface water environment from discharge is from unplanned flooding or spillages at the sewage treatment facility. However, safeguards are in place to minimise this risk, including: • Alarms and flashing beacons to warn of failure of mechanical components (pump and blower); • Alarms to warn of high water levels in the balance tank or irrigation tanks; and • An emergency overflow between the balance tank and the waste water treatment plant. I n a d d i t i o n , f l o o d p r o t e c t i o n w i l l b e implemented, to ensure floodwaters do not adversely impact waste water facilities. B. sOCIAL B.1 EmPLOYmENT AND LABOUR PRACTICEs EMPLOYMENT T h e G r o u p ’ s e m p l o y m e n t p o l i c i e s a r e d o c u m e n t e d i n i t s C o d e o f C o n d u c t (“Code”), which provides clear guidance o n t h e c o n d u c t a n d b e h a v i o u r o f a l l employees, including the Board and senior management. The Code is designed to encourage and foster a culture of integrity a n d r e s p o n s i b i l i t y w i t h t h e f o c u s o n strengthening the Group’s reputation as a valued employer, joint venture partner, and good corporate citizen. Specifically, the Code provides guidance on the following aspects: • C o m p l i a n c e t o a p p l i c a b l e g o v e r n m e n t a l l a w s , r u l e s a n d • • • regulations Conflicts of interest Fair dealing Knowledge and information security (including handling of confidential information and disclose and securities trading ) Recruitment T h e G r o u p h a s a n e s t a b l i s h e d h u m a n resources management function covering various aspects of employment. During our recruitment process, employees are hired based on consideration of their experience, qualifications and knowledge. All employees have entered into a written employment c o n t r a c t t h a t o u t l i n e s c o n d i t i o n s o f employment which includes job title, job duties, working hours, holidays, remuneration, termination process and benefits agreed to by both parties. ANNUAL REPORT 2021 Promotion, compensation and dismissal malpractice in a way that will not be seen as We motivate employees by promotion and being disloyal to colleagues. salary increments based on results of regular per for mance appraisals. Staff dismissal A c o p y o f t h e C o d e o f C o n d u c t a n d is based on the Hong Kong Employment Whistleblower Policy is available in the O r d i n a n c e o r r e l e v a n t l o c a l l a w s a n d c o r p o r a t e g o v e r n a n c e s e c t i o n o f t h e regulations, as well as the requirements Company’s website. stipulated in the employment contracts. Apart from offering employees’ competitive The Company’s recognition of the benefits of salary packages, the Group also provides diversity where people from different gender, annual bonuses and employee share options age, ethnicity and cultural backgrounds to eligible employees as incentives to retain c a n b r i n g f r e s h i d e a s a n d p e rc e p t i o n s our staff. Working hours, rest periods and benefits which make the workplace more efficient is reinforced in the Diversity Policy, a copy o f w h i c h i s a v a i l a b l e i n t h e c o r p o r a t e A f i v e - d a y w o r k w e e k a r r a n g e m e n t i s g o v e r n a n c e s e c t i o n o f t h e C o m p a n y ’ s adopted to facilitate work-life balance. website. This policy outlines specific diversity In addition to all rest days and statutory i n i t i a t i v e s d e s i g n e d t o f a c i l i t a t e e q u a l holidays as specified in local laws and employment opportunities and requires regulations, employees are entitled to paid the Company to set out specific diversity annual, maternity, paternity, marriage and i n i t i a t i v e s a n d t a r g e t s w i t h t h e a i m o f compassionate leave. Employees are also reporting the progress towards the metrics in entitled to benefits such as medical benefits, the annual report. MPF scheme contributions and other benefits subject to the Group’s human resources These key metrics include: management policy. Equal opportunity, diversity and anti- discrimination A l l D i r e c t o r s , s e n i o r m a n a g e m e n t a n d employees of the Company are expected to conduct themselves with integrity, openness, honesty and fairness, and in the best interests of the Company. The Group invests time and resources to fulfil its obligations under the respective laws of Hong Kong and Western Australia. The Group has a Whistleblower Policy that enables an employee to raise concerns about practices and procedures • P r o p o r t i o n o f w o m e n a p p o i n t e d a s N o n - E x e c u t i v e D i r e c t o r s o f t h e Company; • • • • Proportion of women in the workplace; P r o p o r t i o n o f w o m e n i n s e n i o r management; Parental leave return rates; and Employee turnover. in their workplace. It enables employees to The following metrics shows the comparison report concerns of fraud, illegal, immoral, to historical data. The historical data is as i l l e g i t i m a t e p r a c t i c e s , m i s c o n d u c t , o r follows: Proportion of women appointed as Non-Executive Directors Proportion of women in the workplace Proportion of women in senior management Parental leave return rates Employee turnover 2021 2020 2019 2018 2017 0 15% 8% N/A 0% 0 15% 8% N/A 0% 0 15% 8% 100% 15% 0 18% 38% N/A 53% 0 21% 13% 100% 24% 37 ENVIRONmENTAL, sOCIAL AND GOVERNANCE REPORT The Board is continually looking to achieve diversity and will endeavour to appoint individuals who will provide a mix of experience, perspective and skills appropriate for the Company, including appropriate technical and commercial skills relevant to the mining industry. Our human resources function ensures that the Company is free from any form of discrimination on the grounds of age, gender, religion, marital status, family status, sexual orientation, disability, race and nationality. We are committed to creating a culture of equality, respect, diversity and mutual support. In Hong Kong, the Group’s employment regulations are governed by the Employment Ordinance, the Minimum Wage Ordinance, as well as the Employees’ Compensation Ordinance. In Australia, The Fair Work Act 2009 (Cth) (the “FW Act”) governs the employment of the majority of Australian employees, supplemented by other federal, state and territory legislative schemes pertaining to areas such as work, health and safety and non-discrimination. During the year, the Group was not aware of any material breaches of the relevant laws and regulations relating to the Group’s compensation and dismissal, recruitment and promotion, working hours, rest periods, equal opportunity, diversity, anti-discrimination and other benefits and welfare. During the year, there were no fines or sanctions were imposed on us due to non-compliance with the relevant laws and regulations. Performance Data summary Workforce demographics: TOTAL WORKfORCE By nature of work Corporate directors Corporate Services Project Development Exploration By gender Male Female By employee category Directors (Executive) Directors (Non-Executive) Management By age group 31-50 50+ 15 Australia Hong Kong 3 1 — 1 4 1 1 2 2 1 4 6 3 1 — 9 1 2 4 4 5 5 EmPLOYEE TURNOVER RATE ANALYsIs Australia Hong Kong By geographical location By gender By age group 0% male 0% 31-50 0% 0% female 0% 50+ 0% B.2 HEALTH AND sAfETY T h e C o m p a n y i s c o m m i t t e d t o t h e d e v e l o p m e n t o f a s u s t a i n a b l e i r o n o r e business in Western Australia that benefits its employees, contractors, suppliers, partners and the community. We will achieve this through the effective implementation and proactive management o f o u r c o m m i t m e n t s a n d o b l i g a t i o n t o w o r k p l a c e h e a l t h a n d s a f e t y , t h e environment and to the communities in which we operate. To operate an effective and sustainable iron ore business, the Company will: • • • • • • F o c u s o n t h e e l i m i n a t i o n a n d management of workplace hazards and risks. Act ethically and responsibly in all its interactions. Promote a culture which focuses its e m p l o y e e s , c o n t r a c t o r s , s u p p l i e r s and partners in workplace health and safety as the responsibility of all those who work in its business. Provide a workplace free from bullying or discrimination and offering equal opportunity to all employees. Work actively through all areas of its business to minimise the actual and potential environmental impact of the Company’s activities. Respect the rights of the traditional o w n e r s a n d v a l u e t h e i n d i g e n o u s cultural heritage associated with its operations. We will implement systems and ensure that resources are allocated to implement and monitor these commitments and its legal obligations. Our employees, contractors and partners will be updated on the Company’s progress towards these goals. The policy and the system that support it will be routinely measured to ensure the delivery of our commitments and system improvements made where the need arises. The Group shall observe our Operational Health and Safety (“OHS”) Policy for all our activities and our Company’s health and safety objectives are summarised as follows : • A c h i e v e ‘ Z e r o H a r m ’ t o p e o p l e , the community and the workplace environment; ANNUAL REPORT 2021 • • • S u p p o r t , e n c o u r a g e a n d p ro m o t e efforts to achieve industry-leading o c c u p a t i o n a l h e a l t h a n d s a f e t y performance; Eliminate or manage circumstances which may lead to injury, property damage and business interruption; and A c h i e v e h e a l t h a n d s a f e t y performance consistent with the OHS Policy. B r o c k m a n w i l l e m p l o y t h e f o l l o w i n g principles: • • • • Everyone has a responsibility for health and safety Hazards should be identified and their risks eliminated or controlled Every task can be done safely Health and safety standards will not b e l i m i t e d t o o n l y m i n i m u m l e g a l requirements. These objectives will be achieved by: • • • • Providing employees and contractors with the necessary responsibility training and resources to assist them to perform their tasks safely and effectively; E s t a b l i s h i n g a n d e n f o r c i n g a c c o u n t a b i l i t i e s f o r e m p l o y e e s a n d c o n t r a c t o r s r e g a r d i n g h e a l t h a n d s a f e t y p o l i c y , o b j e c t i v e s a n d performance; Complying with all applicable laws, regulations and statutory obligations; Demonstrating effective leadership a n d m a n a g e m e n t o f h e a l t h a n d safety through risk assessment and the development and implementation of safe operational procedures and communication in health and safety issues. COVID-19 Pandemic T h e C O V I D - 1 9 p a n d e m i c h a s h a d a s i g n i f i c a n t i m p a c t o n i n d i v i d u a l s , communities, and business globally, The G r o u p ’ s C O V I D - 1 9 r e s p o n s e p r o t o c o l s reinforce, and operate concurrently with, public health advice. They include: • • Social distancing protocols, Flexible and remote working plans for employees, 39 ENVIRONmENTAL, sOCIAL AND GOVERNANCE REPORT • Increased inventory of hand sanitiser potential. We subsidise our employees for and hygiene supplies, their continuing education, and encourage e m p l o y e e s t o p a r t i c i p a t e i n v a r i o u s • I n c r e a s e d f o c u s o n c l e a n i n g a n d w o r k s h o p s a n d s e m i n a r s a c c o r d i n g t o sanitation, their respective areas of interest and job • Avoid business travel unless necessary. During the reporting period, the Group had no work-related fatality and injury resulting in lost days during the reporting period and in each of the past three years (2020: Nil ). B.3 DEVELOPmENT AND TRAINING Employees are the most important asset of the Company. First-class professionals and description. Types of training to include: • • • Compliance and regulatory; Job specific training; Comprehensive safety induction for all newly hired employees. management team are the guarantee of During the reporting period the percentage successful business, and we are, therefore of trained employees and average hours of eager to provide them with relevant training training received: and encourage them to fully utilise their By employment type: Directors Senior management By gender: Male Female Percentage of Average hours of training trained employees received during the year 60% 40% 87% 13% 35 144 131 48 B.4 LABOUR sTANDARDs B.5 sUPPLY CHAIN mANAGEmENT All our labour-related policies and practices T h e C o m p a n y h a s e s t a b l i s h e d s o u n d comply with the Employment Ordinance, procurement procedures and requirement and relevant local labour laws in Hong Kong for vendors. Upon selection of new vendors, and Australia. Furthermore, the Group strictly the Company will evaluate the vendors’ prohibits the employment of child labour and per for mance, reliability and pricing, but forced labour, and complies with all relevant also the environmental attributes such as laws and regulations. impact to the environment and energy saving functionalities. As part of our internal Prior to on-boarding of any new employees, control on procurement procedures, at t h o r o u g h b a c k g r o u n d c h e c k s a r e l e a s t 2 q u o t a t i o n s w i l l b e o b t a i n e d f o r conducted to ensure the candidate is fit e a c h p r o c u r e m e n t e n g a g e m e n t . A l s o , and proper for the role. If any candidates consideration of previous per for mance were found to be child labourers, their of the vendor, in terms of creditability and employment contract would be immediately c o m p l i a n c e w i t h l o c a l r e g u l a t i o n s a r e terminated. determining factors for supplier selection. Sustainable, fair-trade and environmentally During the year, we did not employ child f r i e n d l y p r o d u c t s a r e p r e f e r r e d a n d labour or forced labour and did not receive procurement decisions are not solely based any complaints or reporting of child labour on price. or forced labour. ANNUAL REPORT 2021 During the reporting period, the number of suppliers by geographical breakdown is as follows: By geographical region Number of suppliers Hong Kong Australia Total 5 61 66 T h e G r o u p e n g a g e s e x t e r n a l p a r t i e s are put in place to protect any leakage i n i t s d a y - t o - d a y o p e r a t i o n s i n c l u d i n g of information and set out the Company’s e n v i r o n m e n t , p r o c e s s c o n s u l t a n t s , p o s i t i o n o n d a t a s e c u r i t y a n d p r i v a c y , laboratories services, drilling services and including: professional services. To assist in maintaining a transparent supply chain, the Group only • Wo r k r e l a t e d d o c u m e n t s a r e t h e procures goods and services from suppliers and contractors whose trade, employment practices and company values are aligned p r o p e r t y o f t h e C o m p a n y u n l e s s otherwise specifically agreed, to the Group. Independent internal control • Destruction of documents containing consultants are engaged yearly to per form reviews on whether internal control processes are being observed. Sample checks on c o n f i d e n t i a l i n f o r m a t i o n m u s t b e carried out reliably. the procurement cycle are performed and The Company manages data protection findings, together with other internal control and privacy as part of its IT processes and related issues are compiled into a report has several policies to manage IT related risks tabled to the Board for review. including off-site backup. C o m p l i a n c e i s a c t i v e l y m o n i t o r e d b y G i v e n t h e n a t u r e o f o u r b u s i n e s s , o u r procurement that identifies and reports any o p e r a t i o n s d o n o t i n v o l v e t h e u s e o f issues to the senior management team via intellectual property right owned by other regularly meetings. Any necessary action will parties. Nevertheless, the Group has set out be actioned in a timely manner. B.6 PRODUCT REsPONsIBILITY the treatment of handling and protecting intellectual property in our Code of Conduct. T h e C o m p a n y w i l l e n s u r e a l l r e q u i r e d B.7 ANTI-CORRUPTION documentation will be implemented prior The Company has established rules against to shipment of iron ore. Sinter testwork b r i b e r y o r c o r r u p t i o n , w h i c h p r o h i b i t conducted has provided positive results and employees from accepting gifts from other confirmation of our product quality and the people in a business relationship. To ensure Group will strive to maintain the product’s effective implementation, every employee quality upon future delivery of ore. has been trained in relation to these rules. Further more, the Company has set up a G i v e n t h a t p r o d u c t i o n h a s y e t t o Whistleblower policy (details of which can commence, no complaints from customers b e f o u n d o n t h e C o m p a n y ’ s w e b s i t e ) , nor product recalls have been received for and Brockman encourages stakeholders the reporting period. Quality assurance and t o p u r s u e a n d r e p o r t a n y m i s c o n d u c t , recall procedures will be duly implemented fraudulent or corrupt practices, breaches upon future delivery of iron ore product. of rules, coercion or harassment. Active channels are in place for employees to The Company upholds the confidentiality report directly in the event of any potential r e g a r d i n g c u s t o m e r s ’ , p r o s p e c t i v e source of bribery/corruption in any business c u s t o m e r s ’ o r b u s i n e s s c o u n t e r p a r t s ’ execution. infor mation. Confidentiality agreements 41 ENVIRONmENTAL, sOCIAL AND GOVERNANCE REPORT Training and circulation of news from the T h e G r o u p o p e r a t e s i n t w o r e g u l a t o r y Independent Commission Against Corruption environments (Hong Kong and Australia). ( I C A C ) h a s a l s o b e e n p r o v i d e d f o r While compliance with these regulatory employees and directors to discourage any environments is the basis of the Group’s form of corruption. environmental management, the Group is committed to the principle of developing Brockman takes a zero tolerance approach and implementing appropriate practices to corruption and bribery and is committed and will actively work to: to acting professionally, fairly and with integrity in all our business dealings. Our • Minimise the actual and potential Whistleblower policy encourages employees t o r e p o r t o n a n y i n c i d e n c e s o f f r a u d , misappropriation of funds or corruption, environmental impact of the Group’s activities; and while the reporters’ privacy is completely • G i v e e n v i r o n m e n t a l a s p e c t s d u e protected. The Whistleblower policy is designed to support and assist the Group to promote a culture of ethical corporate behaviour, c o n s i d e r a t i o n i n a l l p h a s e s o f o u r p r o j e c t s , f r o m e x p l o r a t i o n a n d evaluation, development and final closure, and thereby providing an environment in which • Respect the rights of the traditional stakeholders (internal and external) are able to report any issue they genuinely believe breaches the Group’s Code of Conduct, or any other reportable conduct. o w n e r s a n d v a l u e t h e i n d i g e n o u s culture heritage. The Group is committed to operating in a way which contributes to the sustainable Stakeholders may wish first to discuss the development of mineral resources through a l l e g e d v i o l a t i o n i n f o r m a l l y w i t h t h e i r efficient and long-term management, while manager in order to deter mine whether showing due consideration for the wellbeing serious misconduct has occurred. This is of people, protection of the environment an opportunity to clarify the incident, ask and the communities in which we operate. questions and at all times, it is expected that these discussions will remain confidential. T h e G r o u p ’ s S u s t a i n a b i l i t y P o l i c y s e e k s Where a stakeholder believes that internal to ensure it is a constructive partner to reporting is not appropriate, the Company a d v a n c e t h e s o c i a l , e c o n o m i c , a n d encourages the stakeholder to report his institutional development of the communities or her concern to Brockman’s Company in which it operates. The Group carries S e c r e t a r y a n d d i r e c t l y t o t h e A u d i t out its activities regarding the interests of Committee. The Audit Committee will assess any affected traditional owners and other the situation and if deemed necessary, stakeholders. The Group fully acknowledges will communicate the reports of alleged the rights, cultures, customs, and values of violations to the Group’s legal advisors. people affected by the development and During the reporting period, there were no incidents or legal cases noted regarding any Brockman maintains its community focus on corrupt practices brought against the Group health and sports, and has sponsored charity exploitation of mineral resources. or its employees. B.8 COmmUNITY INVEsTmENT r u n s / m a r a t h o n s f o r e m p l o y e e s , f o r t h e purpose of raising employees’ awareness on health while giving back to the community. The Company is transparent on the need Due to the impact of COVID-19, marathons to ear n the respect and support of the and charity walks were cancelled and we communities in which it is located and will continue to sponsor our employees to also by demonstrating a tangible level of take part in these meaningful activities once commitment to environmental sustainability. they resume. DIRECTORs’ REPORT ANNUAL REPORT 2021 The Directors present their report together with the On March 11, 2020, the World Health Organisation audited consolidated financial statements of the declared a global pandemic related to COVID-19. The Company for the year ended 30 June 2021. impacts on the global economy and commerce have PRINCIPAL ACTIVITIEs AND GEOGRAPHICAL ANALYsIs Of OPERATIONs The Company is an investment holding company. The principal activities of the Company and its subsidiaries (“Group”) are exploration and development of iron ore mining projects in Western Australia. An analysis of the already been significant and are expected to continue in the future. The duration of the pandemic and its impact on global financial markets, has had minimal on the Group; however, appropriate protocols are in place to minimise the associated risks to employees. fINAL DIVIDEND The Board does not recommend the payment of a performance of the Group for the year by operating dividend. segments is set out in Note 7 to the consolidated financial statements. Detailed activities of each of the Company’s subsidiaries are as set out in Note 34 of the consolidated financial statements. REsULTs AND APPROPRIATIONs The results of the Group for the year ended 30 June DIVIDEND POLICY The Company has adopted a dividend policy, pursuant to which the Company may distribute dividends to the shareholders of the Company by way of cash or shares. Any distribution of dividends shall be in accordance with the Hong Kong Laws, the bye-laws of the Company, the Bermuda Companies Act 1981 (as amended from time to time) and any other applicable laws, rules and 2021 are set out in the consolidated statement of regulations. comprehensive income on page 56. REsERVEs Movements in the reserves of the Group during the year are set out in consolidated statement of changes in equity on pages 58 to 59. PROPERTY, PLANT AND EQUIPmENT Details of the movements in property, plant and equipment are set out in Note 18 to the consolidated financial statements. REVIEW Of OPERATIONs It is recommended that the consolidated financial statements be read in conjunction with the 30 June 2021 annual report and any public announcements made by the Company during the period. Further detailed business review as required by Schedule 5 of the Hong Kong Companies Ordinance, including a description of the principal risks and uncertainties facing the Group and an indication of likely future development in the Group’s business, can be found in the Management Discussion and Analysis set out on pages 4 to 13 of this Annual Report. The Group’s environmental policies, relationships with its key stakeholders, and compliance with relevant laws and regulations which have a significant impact on the Group are set out in the Environmental, Social and Governance Report on pages 30 to 42 of this Annual Report. This discussion forms part of this directors’ report. The recommendation of payment of any dividend is subject to the absolute discretion of the Board, and any declaration of dividend will be subject to the approval of shareholders. In proposing any dividend payout, the Board shall also take into account, inter alia: • T h e G ro u p ’ s a c t u a l a n d e x p e c t e d f i n a n c i a l • • performance; Shareholders’ interests; Retained earnings, distributable reserves and contributed surplus of the Company and each of the other members of the Group; • The level of the Group’s debt to equity ratio, return on equity and financial covenants to which the Group is subject to; • • • Possible effects on the Group’s credit worthiness; Any restrictions on payment of dividends or other covenants on the Group’s financial ratios that may be imposed by the Group’s financial creditors; T h e G r o u p ’ s e x p e c t e d w o r k i n g c a p i t a l requirements and future expansion plans; • Liquidity position and future commitments at the time of declaration of dividend; 43 Taxation considerations; In accordance with Clause 87(1) of the Company’s Bye- laws Messrs Kwai Sze Hoi, Liu Zhengui and Chan Kam Statutory and regulatory restrictions; Kwan, Jason shall retire and, being eligible, offer him for re-election at the forthcoming annual general meeting. DIRECTORs’ REPORT • • • • General business conditions and strategies; General economic conditions, business cycle of the Group’s business and other internal or external factors that may have an impact on the business or financial per for mance and position of the Company; and • Other factors that the Board deems appropriate. The dividend policy will be reviewed from time to time and there is no assurance that a dividend will be proposed or declared in any specific periods. DIsTRIBUTABLE REsERVEs As at 30 June 2021, the Company has no reserve available for distribution to the shareholders. PRE-EmPTIVE RIGHTs There are no provisions for pre-emptive rights under the Company’s Bye-laws, or the laws in Bermuda, which would oblige the Company to offer new shares on a pro-rata basis to existing shareholders. CONfIRmATION Of INDEPENDENCE Al l the i ndep endent non-execut i v e di recto rs are appointed for a specific term and will be subject to retirement by rotation and re-election in accordance with the HK Listing Rules and the Bye-Laws of the Company. The Company has received from each of the Independent Non-executive Directors, an annual confirmation of their independence pursuant to Rule 3.13 of the HK Listing Rules. DIRECTORs’ AND sENIOR mANAGEmENT’s BIOGRAPHIEs Biographical details of the directors of the Company and the senior management of the Group are set out on pages 14 to 15. DIRECTOR’s sERVICE CONTRACT No director proposed for re-election at the forthcoming annual general meeting has a service contract with the Company which is not determinable by the Company within one year without payment of compensation, other than statutory compensation. fINANCIAL sUmmARY A summary of the results and from the audited financial statements assets and liabilities of the Group for the last five financial years as extracted is set out on page 93. This summary does not form part of the audited financial statements. DIRECTORs’ REmUNERATION The directors’ fees are subject to shareholders’ approval at general meetings. Other emoluments are determined by the Company’s board of directors with reference to directors’ duties, responsibilities and performance and the results of the Group. DIRECTORs The Directors of the Company during the year and up to the date of this report were: Non-executive Directors: Kwai Sze Hoi (Chairman) Liu Zhengui (Vice Chairman) Ross Stewart Norgard Executive Directors: Colin Paterson Chan Kam Kwan, Jason (Company Secretary) Kwai Kwun, Lawrence Independent Non-executive Directors: Yap Fat Suan, Henry Choi Yue Chun, Eugene David Rolf Welch DIRECTORs’ AND CHIEf EXECUTIVE’s INTEREsTs AND sHORT POsITIONs IN sHAREs AND UNDERLYING sHAREs AND DEBENTUREs As at 30 June 2021, the interests and short positions o f t h e d i r e c t o r s a n d c h i e f e x e c u t i v e a n d t h e i r respective associates in the share, underlying shares and debentures of the Company or its associated corporations (within the meaning of Part XV of the S e c u r i t i e s a n d F u t u re s O rd i n a n c e ( t h e “ S F O ” ) a s recorded in the register required to be kept by the Company pursuant to Section 352 of the SFO, or otherwise required to be notified to the Company and the SEHK, pursuant to the Model Code for Securities Transactions by Directors of Listed Issues were as follows: ANNUAL REPORT 2021 Long positions of ordinary shares of HK$0.10 each of the Company Number of issued ordinary shares held Number of options granted Percentage of the issued share capital of the Company Name of director Capacity Mr Kwai Sze Hoi Jointly (Note) Interests of controlled corporation (Note) Beneficial owner Interest of spouse 60,720,000 2,426,960,137 206,072,000 24,496,000 — — — — Mr Liu Zhengui Beneficial owner — 1,500,000 Mr Ross Norgard Beneficial owner 64,569,834 1,500,000 Interests of controlled 178,484,166 — corporation Mr Colin Paterson Beneficial owner 22,073,004 15,000,000 Interest of spouse Mr Kwai Kwun Lawrence Beneficial owner 13,625,442 63,408,412 — — Mr Chan Kam Kwan Jason Beneficial owner — 10,000,000 Mr Yap Fat Suan Henry Beneficial owner 400,000 1,500,000 Mr Choi Yue Chun Eugene Beneficial owner Mr David Rolf Welch Beneficial owner — — 1,500,000 1,500,000 Note: 0.65% 26.15% 2.22% 0.26% 0.02% 0.71% 1.92% 0.40% 0.15% 0.68% 0.11% 0.02% 0.02% 0.02% The 2,426,960,137 shares were held by Ocean Line Holdings Ltd., a company held 60% by Mr. Kwai Sze Hoi and 40% by Ms Cheung Wai Fung (Mr Kwai’s spouse). In addition, Mr. Kwai and Ms Cheung have a joint direct interest in 60,720,000 shares of the Company. Save as disclosed above, as at 30 June 2021, none of the Directors and Chief Executive, nor their associates had registered an interest or short position in the shares, underlying shares or debentures of the Company or any of its associated corporations that was required to be recorded pursuant to section 352 of the SFO, or as otherwise notified to the Company and the Hong Kong Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers. 45 DIRECTORs’ REPORT sHARE OPTIONs The share option scheme (the “Share Option Scheme”) of the Company was adopted by the Company pursuant to the resolution of the shareholders at the AGM dated 13 November 2012. The binomial option pricing model is a generally accepted method of valuing options. The measurement dates used in the valuation calculations were the dates on which the options were granted. The values of share options calculated using the binomial model are subject to certain fundamental limitations, due to the subjective nature of and uncertainty relating to a number of assumptions of the expected future performance input to the model, and certain inherent limitations of the model itself. The value of an option varies with different variables of certain subjective assumptions. Any change to the variables used may materially affect the estimation of the fair value of an option. The particulars of the Share Option Scheme are set out in Note 25 to the consolidated financial statements and details of the options outstanding as at 30 June 2021 includes the estimated the values of the share options (using the binomial option pricing model) which have been granted to Qualified Persons under the Share Option Scheme are as follows: maximum entitlement of each participant Outstanding as at 1 July 2020 Option type Exercised Lapsed Granted 2021A 2018A 2021A 2018B 2021A 2018A 2021A 2018A 2021A 2021A 2018A 2021B 2018B 2021A 2018A 2021B 2018B Non-Executive Directors Liu Zhengui Ross Stewart Norgard Choi Yue Chun Eugene Yap Fat Suan Henry David Rolf Welch Executive Directors Chan Kam Kwan Jason Colin Paterson sub-total Employees Employees sub-total GRAND TOTAL Weighted average exercise price 1,500,000 — 1,500,000 — 1,500,000 — 1,500,000 — 1,500,000 10,000,000 — 15,000,000 — 32,500,000 71,000,000 — 2,000,000 — 73,000,000 105,500,000 — 2,500,000 — 1,500,000 — 1,500,000 — 1,500,000 — — 10,000,000 — 12,000,000 29,000,000 — 59,500,000 — 1,500,000 61,000,000 90,000,000 0.13 Outstanding as at 30 June 2021 1,500,000 — 1,500,000 — 1,500,000 — 1,500,000 — 1,500,000 10,000,000 — 15,000,000 — 32,500,000 71,000,000 — 2,000,000 — 73,000,000 105,500,000 — — — — — — — — — — — — — — — — — — — — — 2,500,000 — 1,500,000 — 1,500,000 — 1,500,000 — — 10,000,000 — 12,000,000 29,000,000 — 59,500,000 — 1,500,000 61,000,000 90,000,000 1,500,000 — 1,500,000 — 1,500,000 — 1,500,000 — 1,500,000 10,000,000 — 15,000,000 — 32,500,000 71,000,000 — 2,000,000 — 73,000,000 105,500,000 0.13 0.23 0.23 Refer to note 25 for fair value of options granted during the year. As at 30 June 2021, the Company had 105,500,000 share options outstanding under the Scheme. Should they be fully exercised, the Company will receive HK$23,865,000 (before issue expenses). The total number of securities available for issue under the share option scheme amounts to 465,448,213 as at the date of the annual report, representing 5.02% of the issued share capital outstanding. ANNUAL REPORT 2021 DIRECTORs’ RIGHTs TO ACQUIRE sHAREs OR DEBENTUREs Other than as disclosed in the section ‘Directors and mANAGEmENT CONTRACTs N o c o n t r a c t s c o n c e r n i n g t h e m a n a g e m e n t a n d administration of the whole or any substantial part of the Chief Executives’ interests’, at no time during the business of the Company were entered into or existed period was the Company, its holding company, or any during the year. RELATED PARTY TRANsACTIONs Significant related party transactions entered into by the Group during the year ended 30 June 2021 are disclosed in Note 32 to the consolidated financial statements. of its subsidiaries or fellow subsidiaries, a party to any arrangements to enable the Directors of the Company and their associates to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate. DIRECTORs’ INTEREsTs IN COmPETING BUsINEss None of the Directors has any interests in any competing business to the Group. DIRECTORs’/CONTROLLING sHAREHOLDERs’ mATERIAL INTEREsTs IN TRANsACTIONs, ARRANGEmENTs AND CONTRACTs THAT ARE sIGNIfICANT IN RELATION TO THE GROUP’s BUsINEss Details of the related party transactions for the year are set out in Note 32 to the consolidated financial s t a t e m e n t s . O t h e r t h a n a s d i s c l o s e d t h e r e i n , n o director, a related party of a director, nor a controlling shareholder of the Company had a material interest, e i t h e r d i r e c t l y o r i n d i r e c t l y , i n a n y t r a n s a c t i o n s , arrangements or contracts of significance to the business of the Group to which the Company, the holding Company of the Company, or any of the Company’s subsidiaries or fellow subsidiaries was a party during the year. 47 DIRECTORs’ REPORT sUBsTANTIAL sHAREHOLDERs As at 30 June 2021, the register of substantial shareholders maintained by the Company pursuant to Section 336 of the SFO shows that the following shareholders had notified the Company of relevant interests and short positions of 5% or more of the share capital and share option of the Company: Long positions of ordinary shares and underlying shares of HK$0.10 each of the Company Name of shareholder Nature of interest Number of shares or underlying shares Percentage of the issued share capital of the Company Ocean Line Holdings Ltd (“Ocean Line”) (Note 1) Beneficial owner 2,426,960,137 Kwai Sze Hoi (Note 1) Interest held by controlled corporations 2,426,960,137 Interest held jointly with another person 60,720,000 Beneficial owner Interest of spouse 206,072,000 24,496,000 Cheung Wai Fung (Note 1) Interest held by controlled corporations 2,426,960,137 Interest held jointly with another person Beneficial owner Interest of spouse Equity Valley Investments Limited Beneficial owner 60,720,000 24,496,000 206,072,000 515,574,276 The XSS Group Limited (Note 2) Interest held by controlled corporations 515,574,276 Cheung Sze Wai, Catherine (Note 2) Interest held by controlled corporations 515,574,276 Interest of spouse 50,000,000 Luk Kin Peter Joseph (Note 2) Interest held by controlled corporations 515,574,276 Beneficial owner 50,000,000 26.15% 26.15% 0.65% 2.22% 0.26% 26.15% 0.65% 0.26% 2.22% 5.56% 5.56% 5.56% 0.54% 5.56% 0.54% KQ Resources Limited Beneficial owner 1,301,270,318 14.02% Notes: 1. Ocean Line is owned 60% by Mr Kwai Sze Hoi and 40% by Ms Cheung Wai Fung (Mr Kwai’s spouse). In addition, Mr Kwai and Ms Cheung have a joint direct interest in 60,720,000 shares. 2. 515,574,276 shares were held by Equity Valley Investments Limited. Equity Valley Investments Limited is wholly-owned by The XSS Group Limited, of which 50%, 20% and 30% of its issued share capital were held by Mr Luk Kin Peter Joseph, Ms Cheung Sze Wai, Catherine (Mr Luk’s spouse) and Ms Chong Yee Kwan (Mr Luk’s mother) respectively. In addition, Mr Luk was granted a total of 50,000,000 options. Save as disclosed above, as at 30 June 2021, no person, other than the directors of the Company, whose interests are set out in the section ‘Directors’ and Chief Executive Interests and Short Positions in Shares and Underlying Shares and Debentures’ above, had registered an interest or short position in the shares or underlying shares of the Company that was required to be recorded pursuant to section 336 of the SFO. ANNUAL REPORT 2021 sHARE CAPITAL, sHARE OPTIONs, WARRANTs AND CONVERTIBLE BONDs Details of movements in the Company’s share capital PROVIsION Of INfORmATION IN REsPECT Of ANY DIRECTOR Details of change in directorships are disclosed within and share options during the year are set out in notes 24 “Directors and Management” on pages 14 to 15 of and 25 to the consolidated financial statements. this annual report. Other than as disclosed therein, no other change in directorships or the Directors of the Details of the other equity-linked agreements are Company, during the year. including in the section ‘Share Options’. PURCHAsE, REDEmPTION OR sALE Of LIsTED sECURITIEs During the year, neither the Company nor any of its CORPORATE GOVERNANCE The Company is committed to maintain a high standard of corporate governance practices. Information on the corporate governance practices adopted by the subsidiaries purchased, sold or redeemed any of the Company is set out in the Corporate Governance listed securities of the Company. Report on pages 16 to 29 of the annual report. PERmITTED INDEmNITY PROVIsION Pursuant to the Bye-Laws of the Company, the Directors EVENTs AfTER THE REPORTING PERIOD Details of the significant events of the Group after shall be indemnified and secured harmless out of the the reporting period are set out in note 37 to the assets and profits of the Company against all losses and consolidated financial statements. liabilities etc which they may incur or sustain by reason of the execution of their duties, provided that this indemnity shall not extend to any matter in respect of any fraud or dishonesty which may attach to any of the directors. The Company has also arranged appropriate directors and officers insurance coverage for the directors and officers of the Group. mAJOR CUsTOmERs AND sUPPLIERs The aggregate operating and administrative expenses attributable to the Group’s five largest suppliers were less than 24% of total operating and administrative expenses (include exploration and evaluation expenses) for the year. At no time during the year did any Director, or associate of a Director, or any shareholder of the Company, which to the knowledge of the Directors owned more than 5% of the Company’s share capital, have any beneficial interests in these customers or suppliers. CONTRACT Of sIGNIfICANCE No contracts of significance in relation to the Group’s business in which the Company, any of its subsidiaries or fellow subsidiaries, or its parent company was a party to and in which a director of the Company had a material interest in, whether directly or indirectly, subsisted during or at the end of the year. sUffICIENCY Of PUBLIC fLOAT As at the date of this report, based on information that is publicly available to the Company and within the knowledge of the Directors, there was sufficient public float of the Company’s securities as required under the HK Listing Rules. AUDITOR The consolidated financial statements for the financial year ended 30 June 2021 have been audited by Ernst and Young Australia who retire and, being eligible, offer themselves for re-appointment at the forthcoming annual general meeting of the Company. Ernst and Young, Australia, the auditor of the Company, is a non-Hong Kong audit firm which has obtained approval from the Financial Reporting Council as a recognised public interest entity (“PIE”) auditor to conduct PIE engagement of the Company. By order of the Board. Kwai sze Hoi Chairman Hong Kong, 17 September 2021 49 INDEPENDENT AUDITOR’s REPORT Independent auditor’s report to the shareholders of Brockman mining Limited (incorporated in Bermuda with limited liability) OPINION We have audited the consolidated financial statements of Brockman Mining Limited (the “Company”) and its subsidiaries (together the “Group”) set out on pages 56 to 92, which comprise the consolidated balance sheet as at 30 June 2021, and the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 30 June 2021 and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”) and have been properly prepared in compliance with the disclosure requirements of the Hong Kong Companies Ordinance. BAsIs fOR OPINION We conducted our audit in accordance with International Standards on Auditing issued by the International Auditing and Assurance Standards Board (“ISAs”). Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the consolidated financial statements section of our report. We are independent of the Group in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (including Independence Standards) (“IESBA Code”), and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. mATERIAL UNCERTAINTY RELATED TO GOING CONCERN We draw attention to Note 2(a) in the consolidated financial statements, which describes the principal conditions that raise doubt about the Group’s ability to continue as a going concern. These events or conditions indicate that a material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter. KEY AUDIT mATTERs Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the consolidated financial statements of the current period. These matters were addressed in the context of the audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the Material Uncertainty Related to Going Concern section, and for each matter below, our description of how our audit addressed the matter is provided in that context. We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the consolidated financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the consolidated financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying consolidated financial statements. ANNUAL REPORT 2021 1. Carrying value of capitalised mining exploration properties Why significant How our audit addressed the key audit matter At 30 June 2021 the Group held capitalised We considered and challenged the Group’s assessment as mining exploration properties in Australia to whether there were impairment indicators present that of HK$784,933,000, representing 94% of the required the capitalised mining exploration properties to be Group’s total assets. tested for impairment as at 30 June 2021. The carrying value of mining exploration In performing our procedures, we: properties is assessed for impairment by the Group when facts and circumstances indicate • Considered whether the Group’s right to explore t h a t t h e s e p r o p e r t i e s m a y e x c e e d t h e i r was current, which included obtaining and assessing recoverable amount. supporting documentation such as license agreements The determination as to whether there are • Considered the Group’s intention to carry out significant any facts and circumstances to require a ongoing exploration and evaluation activities in the mining exploration property to be assessed for relevant areas of interest which included reviewing the impairment, involves a number of judgments Group’s approved cashflow forecast and enquiring including whether the Group has tenure, will of senior management and the directors as to their be able to perform ongoing expenditure and intentions and the strategy of the Group whether there is sufficient information for a decision to be made that the area of interest • Assessed whether exploration and evaluation data is not commercially viable. The directors did exists to indicate that the carrying value of mining not identify any impairment indicators. exploration properties is unlikely to be recovered through Given the significance of the capitalised mi ni ng explor ation p roperties relative to • Assessed the adequacy of the disclosures in Note 17 of the Group’s total assets and the degree of the consolidated financial statements. development or sale judgement involved in assessing whether any indicators of impairment exist, we consider this a key audit matter. Refer to Note 17 in the consolidated financial statements for capitalised mining exploration property balances and related disclosures. 51 INDEPENDENT AUDITOR’s REPORT 2. Recognition of deferred tax asset Why significant How our audit addressed the key audit matter At 30 June 2021, the Group recognised a We assessed the Group’s decision to carry the DTA at 30 June deferred tax asset (“DTA”) of HK$90,626,000 in 2021 and the methodology for determining the amount of the its consolidated balance sheet for certain of DTA to be carried forward for compliance with IFRS. its Australian carry forward tax losses. This DTA was fully offset against the deferred tax liability Our audit procedures included the following: (“DTL”) in the consolidated balance sheet. This DTA has continued to be carried forward forward tax losses and the impact of any known or a t 3 0 J u n e 2 0 2 1 , t o g e t h e r w i t h a D TA o f potential limitations on their availability for utilisation of HK$10,041,000 recorded in the income tax the estimated tax benefit arising from the carry forward benefit in the consolidated statement of tax losses. This work included consultation with our tax • We assessed the amount of the Group’s available carry comprehensive income arising from further specialists Australian tax losses incurred and offset against the DTL at that date, resulting in a net DTL at 30 • We obtained and considered correspondence: June 2021 of HK$126,706,000 after accounting for the impact of exchange differences during • B e t w e e n t h e G r o u p a n d t h e A u s t r a l i a n t a x the year. authorities The Group’s exploration activities in Australia • Between the Group and external tax advisors have generated significant carry forward tax losses. Australian tax laws covering the We assessed the adequacy of the related disclosures in the availability and recoupment of these carry consolidated financial statements. forward tax losses are complex. Under IFRS, DTAs for available carry forward tax losses are only recognised when their recovery is considered probable. This consideration of carry forward tax loss recognition is reassessed at each reporting period. Given the significant degree of judgement involved in management’s assessment as to the ongoing availability and probability of recoverability of the DTA as at 30 June 2021, we consider this a key audit matter. R e f e r t o N o t e s 4 ( c ) , 1 3 a n d 2 6 i n t h e consolidated financial statements for deferred tax balances and related disclosures. ANNUAL REPORT 2021 3. measurement of Polaris loans Why significant How our audit addressed the key audit matter At 30 June 2021 the Group has recognised the Our audit procedures included the following: two tranches of the loan payable to Polaris Metals Pty Ltd (“Polaris”) of HK$41,697,000 in • We assessed whether the funding from Polaris was the consolidated balance sheet, representing appropriately recognised and measured in accordance 22% of the Group’s total liabilities. with IFRS 9 Financial Instruments (“IFRS 9”) T h e s e l o a n t r a n c h e s t o t a l l e d A $ 5 m i l l i o n • We considered and challenged the Group’s assessment each and were advanced to the Group in r e g a r d i n g t h e r e v i s e d a m o u n t a n d t i m i n g o f t h e November 2019 and May 2021 respectively, expected loan repayments. This included review of pursuant to the Far m-in and Joint Venture correspondence between the Group and Polaris to Agreement (“FJV”) between Brockman Iron assess the likely intention of both parties Pty Ltd (“Brockman Iron”) and Polaris. • We assessed the market rates of interest used in the The loan is secured and bears no interest. measurement of each of these loan tranches U n d e r t h e t e r m s o f t h e F J V A g r e e m e n t , t h e r e p a y m e n t t e r m s o f t h e s e l o a n v a r y • We obtained and reviewed management’s calculation dependent upon a number of conditions of the amortised cost and classification of each tranche relating to the Marillana Project. The Group’s of this loan in accordance with the requirements of IFRS 9, expectation regarding the amount and timing including the remeasurement for the first loan of the loan repayments was revised during the current financial year. This change in the • We assessed the adequacy of the related disclosures in amount and timing of the loan repayments the consolidated financial statements. led to a remeasurement of the first loan tranche advanced in November 2019 and has impacted the measurement of the second loan tranche advanced in May 2021. Given the significant degree of judgement involved in the Group’s assessment of the a m o u n t a n d t i m i n g o f t h e r e v i s e d l o a n repayments as well as the appropriate market rates of interest used in the measurement of these loan tranches, we consider this a key audit matter. Refer to Note 23 in the consolidated financial statements for the loan balances and related disclosures. 53 INDEPENDENT AUDITOR’s REPORT OTHER INfORmATION INCLUDED IN THE ANNUAL REPORT The directors of the Company are responsible for the other information. The other information comprises the information included in the Annual Report, other than the consolidated financial statements and our auditor’s report thereon. Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. REsPONsIBILITIEs Of THE DIRECTORs fOR THE CONsOLIDATED fINANCIAL sTATEmENTs The directors of the Company are responsible for the preparation of the consolidated financial statements that give a true and fair view in accordance with IFRS issued by the IASB and the disclosure requirements of the Hong Kong Companies Ordinance, and for such internal control as the directors determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, the directors of the Company are responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors of the Company either intend to liquidate the Group or to cease operations, or has no realistic alternative but to do so. The directors of the Company are assisted by the Audit Committee in discharging their responsibilities for overseeing the Group’s financial reporting process. AUDITOR’s REsPONsIBILITIEs fOR THE AUDIT Of THE CONsOLIDATED fINANCIAL sTATEmENTs Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Our report is made solely to you, as a body, in accordance with section 90 of the Bermuda Companies Act 1981, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control ANNUAL REPORT 2021 • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors • Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern • Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion We communicate with the Audit Committee regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied. From the matters communicated with the Audit Committee, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. The engagement partner on the audit resulting in this independent auditor’s report is Pierre Dreyer. Ernst & Young Chartered Accountants Perth, Western Australia 17 September 2021 55 CONsOLIDATED sTATEmENT Of COmPREHENsIVE INCOmE For the year ended 30 June 2021 Year ended 30 June Other income Administrative expenses Exploration and evaluation expenses Operating loss Finance income Finance costs Finance costs, net Share of loss of joint ventures Loss before income tax Income tax benefit Loss for the year Other comprehensive income/(loss) Item that may be reclassified to profit or loss Exchange differences arising from translation of foreign operations Other comprehensive income/(loss) for the year Total comprehensive income/(loss) for the year Loss for the period attributable to equity holders of the Company Total comprehensive income/(loss) attributable to equity holders of the Company Loss per share attributable to the equity holders of the Company during the year Basic loss per share Diluted loss per share Note 10 11 11 12 30 13 15 15 2021 HK$’000 162 (17,507) (5,494) (22,839) 88 (5,428) (5,340) (139) (28,318) 14,146 (14,172) 56,632 56,632 42,460 (14,172) 2020 HK$’000 715 (17,513) (4,521) (21,319) 320 (1,482) (1,162) (125) (22,606) 1,590 (21,016) (17,530) (17,530) (38,546) (21,016) 42,460 (38,546) HK cents HK cents (0.15) (0.15) (0.23) (0.23) The notes on pages 61 to 92 form an integral part of these consolidated financial statements. CONsOLIDATED BALANCE sHEET As at 30 June 2021 ANNUAL REPORT 2021 Non-current assets Mining exploration properties Property, plant and equipment Right-of-use assets Interest in joint venture Other non-current assets Current assets Other receivables, deposits and prepayments Cash and cash equivalents Total assets Equity Share capital Reserves Accumulated losses Total equity Non-current liabilities Deferred income tax liability Borrowings Lease liabilities Current liabilities Trade and other payables Lease liabilities Provisions Total liabilities Total equity and liabilities Note 17 18 18 30 21 20 24 26 23 19 22 19 27 As at 30 June 2021 HK$’000 2020 HK$’000 784,933 731,048 167 1,538 703 132 181 1,226 644 121 787,473 733,220 1,033 45,667 46,700 834,173 1,581 34,919 36,500 769,720 927,923 3,855,804 927,923 3,798,031 (4,138,025) (4,123,861) 645,702 602,093 126,706 57,245 1,111 185,062 1,123 828 1,458 3,409 188,471 834,173 128,850 35,393 1,111 165,354 829 382 1,062 2,273 167,627 769,720 The consolidated financial statements on pages 56 to 92 were approved by the Board of Directors on 17 September 2021 and were signed on its behalf. Kwai Kwun, Lawrence Director Chan Kam Kwan, Jason Director The notes on page 61 to 92 form an integral part of these consolidated financial statements. 57 CONsOLIDATED sTATEmENT Of CHANGEs IN EQUITY For the year ended 30 June 2021 Notes Balance at 1 July 2019 Loss for the year Other comprehensive loss Exchange differences arising on translation of foreign operations Total comprehensive loss for the year Transactions with equity holders Issuance of shares Exercise of options Share based compensation Total transactions with equity 24 25 25 holders Balance at 30 June 2020 Share-based Share capital HK$’000 922,123 — Share compensation Translation Accumulated premium HK$’000 4,463,016 — reserve HK$’000 87,700 — reserve HK$’000 (738,024) — losses HK$’000 (4,102,845) (21,016) Total HK$’000 631,970 (21,016) — — 5,800 — — — — — 5,608 — 5,800 927,923 5,608 4,468,624 — — — (4,216) 1,477 (2,739) 84,961 (17,530) — (17,530) (17,530) (21,016) (38,546) — — — — — — 5,800 1,392 1,477 — (755,554) — (4,123,861) 8,669 602,093 ANNUAL REPORT 2021 Notes Balance at 1 July 2020 Loss for the year Other comprehensive loss Exchange differences arising on translation of foreign operations Total comprehensive income/(loss) for the year Transactions with equity holders Share-based compensation Total transactions with equity 25 holders Balance at 30 June 2021 share-based share capital HK$’000 927,923 — share compensation Translation Accumulated premium HK$’000 4,468,624 — reserve HK$’000 84,961 — reserve HK$’000 (755,562) — losses HK$’000 (4,123,853) (14,172) Total HK$’000 602,093 (14,172) — — — — 927,923 — — — — 4,468,624 — — 1,149 1,149 86,110 56,632 — 56,632 56,632 (14,172) 42,460 — — — — (698,930) (4,138,025) 1,149 1,149 645,702 The notes on pages 61 to 92 form an integral part of these consolidated financial statements. 59 CONsOLIDATED sTATEmENT Of CAsH fLOWs For the year ended 30 June 2021 Cash flows from operating activities Loss before tax Adjustments to reconcile profit before tax to net cash flows: Depreciation of property, plant and equipment Depreciation of right-of-use assets Share-based payment expense Finance costs Movements in provisions Other non-cash income and expenses Working capital adjustments: — Increase/decrease in trade receivables & prepayments — Increase in trade and other payables Net cash flows used in operating activities Cash flows from investing activities Purchase of property, plant and equipment Investment in joint venture Interest received Net cash flows (used in)/from investing activities Cash flows from financing activities Proceeds from borrowings Proceeds from issuance of ordinary shares Payment of principal portion of lease liabilities Interest on lease payments Net cash flows from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of the year Effects of foreign exchange rate changes Cash and cash equivalents at end of the year Cash used for exploration and evaluation activities included in operating activities ANALYsIs Of BALANCEs Of CAsH AND CAsH EQUIVALENTs Cash and bank balances Non-pledged time deposits with original maturity of less than three months when acquired Cash and cash equivalents as stated in the statement of cash flows Note 11 11,18 25 12 27 20 20 Year ended 30 June 2021 HK$’000 2020 HK$’000 (28,318) (22,606) 48 478 1,149 5,220 395 345 548 294 (19,841) (19) (198) 106 (111) 29,142 — (369) (208) 28,565 8,613 34,919 2,135 45,667 (5,400) 35,172 10,495 45,667 83 301 1,477 1,518 263 (78) (276) 126 (19,192) (137) (116) 320 67 26,646 7,192 (197) (158) 33,483 14,358 20,906 (345) 34,919 (4,521) 6,668 28,251 34,919 The notes on pages 61 to 92 form an integral part of these consolidated financial statements. NOTEs TO THE CONsOLIDATED fINANCIAL INfORmATION ANNUAL REPORT 2021 1. GENERAL INfORmATION Brockman Mining Limited (the “Company”) and its subsidiaries (collectively, the “Group”) principally engage in the acquisition, exploration and development of iron ore projects in Australia. The Company is a public company incorporated in Bermuda as an exempted company with limited liability and its shares are listed on The Stock Exchange of Hong Kong Limited (the “SEHK”) and Australian Securities Exchange (the “ASX”). The address of its registered office is Clarendon House, 2 Church Street, Hamilton HM11, Bermuda. These consolidated financial statements are presented in Hong Kong dollars (HK$), and all values are rounded to the nearest thousand (HK$’000), except where otherwise indicated. 2. BAsIs Of PREPARATION The consolidated financial statements of Brockman Mining Limited for the year ended 30 June 2021 have been prepared in accordance with all applicable International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. The consolidated financial statements have been prepared under the historical cost convention. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 4. (a) Going concern basis For the year ended 30 June 2021, the Group recorded a net loss before tax of HK$28,318,000 (2020: HK$22,606,000) and had operating cash outflows of HK$19,841,000 (2020: HK$19,192,000). The Group did not record any revenue during the year and the loss before tax for the period was primarily attributable to the exploration and evaluation of the Company’s iron ore exploration projects and corporate overhead costs. As at 30 June 2021, the Group’s cash and cash equivalents amounted to HK$45,667,000 (2020: HK$34,919,000). On the 22 April 2021, Brockman Iron Pty Ltd (a wholly-owned subsidiary of the Company) (“Brockman Iron”) and Polaris Metals Pty Ltd (“Polaris”) established a Joint Operation. Following the establishment of the Joint Operation, Polaris (or its related party) agreed to provide the Joint Operation with funding by way of a project loan (the terms and conditions of the project loan are yet to be finalised) sufficient to allow the joint operation to fund the forecast capital cost for development. The Joint Operators have agreed to initial development works that will be funded by Polaris and the cost is estimated to be circa A$41,000,000 (~HK$237,779,000). Polaris also released the second tranche A$5,000,000 of the A$10,000,000 loan, held in escrow account pursuant to the Farm-in Joint Venture (“FJV”) Agreement. Under the terms of the FJV Agreement, this loan is to be repaid from net revenue received by Brockman Iron from the sale of its share of product produced and sold from the joint operation. The repayment of the loan to Polaris must be in priority to all other payments from net revenue received by Brockman Iron from the sale of its percentage share of product sold from the Project. The Group has taken a number of measures to improve its liquidity position, including, but not limited to, the following: (i) (ii) Extending the repayment date of the existing loans of HK$15,471,000 from the substantial shareholder to 31 October 2022. These loans bear interest at 12% per annum. On 18 September 2018, the Group secured a standby loan facility from its substantial shareholder amounting to HK$10,000,000. If drawn down, the loan will be unsecured, bear interest at 12% per annum and be repayable on 31 October 2022. As at 30 June 2021, the facility of HK$10,000,000 is undrawn. The directors have reviewed the Group’s cash flow projections which cover a period of not less than twelve months from the date of approval of these consolidated financial statements. They are of the opinion that, taking into account the above- mentioned measures, the Group will have sufficient financial resources to satisfy its future working capital requirements and to meet its financial obligations as and when they fall due within the next twelve months from the date of approval of these consolidated financial statements. The directors believe that the Group can continue to access debt and equity funding to meet medium term working capital requirements and has a history of securing such funding as required in the past to support their belief. In the event that funding of an amount necessary to meet the future budgeted operational and investing activities of the Group is unavailable, the directors would undertake steps to curtail these operating and investment activities. Accordingly, the directors of the Company consider that it is appropriate to prepare the Group’s consolidated financial statements on a going concern basis. 61 NOTEs TO THE CONsOLIDATED fINANCIAL INfORmATION 2. BAsIs Of PREPARATION (Continued) (a) Going concern basis (Continued) Notwithstanding the above, there remains material uncertainty as to whether the Group can raise sufficient funding as outlined above which may cast significant doubt about the Group’s ability to continue as a going concern and, therefore whether it will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in these consolidated financial statements. These consolidated financial statements do not include any adjustments relating to the recoverability and classification of the Group’s assets or to the amounts and classification of liabilities which might be necessary should the Group not continue as a going concern. 3. PRINCIPAL ACCOUNTING POLICIEs The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. (a) Changes in accounting policy and disclosures New standards, interpretations and amendments adopted by the Group The Group applied for the first-time certain standards and amendments, which are effective for annual periods beginning on or after 1 July 2020. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective. Several amendments and interpretations apply for the first time in 2021, but do not have an impact on the consolidated financial statements of the Group and, hence, have not been disclosed. The nature and effect of these changes as a result of the adoption of the standards that have an immaterial impact on the consolidated financial statements are described below. Amendments to IFRS 3: Definition of Business The amendment to IFRS 3 clarifies that to be considered a business, an integrated set of activities and assets must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create input. Furthermore, it clarified that a business can exist without including all of the inputs and processes need to create outputs. These amendments had no material impact on the consolidated financial statements of the Group but may impact future periods should the Group enter into any business combinations. Amendments to IAS 1 and IAS 8: Definition of Material The amendments provide a new definition of material which states that ‘information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity’. The amendment clarifies that materiality will depend on the nature or magnitude of information, either individually or in combination with other information, in the context of the financial statements. A misstatement of information is material if it could reasonably be expected to influence decisions made by the primary users. This amendment had no material impact on the Group’s consolidated financial statements. Amendments to IFRS 7, IFRS 9 and IAS 19: Interest Rate Benchmark Reform The amendments to IFRS 9 and IAS 39 Financial Instruments: Recognition and Measurement provide a number of relief measures, which apply to all hedging relationships that are directly affected by interest rate benchmark reform. A hedging relationship is affected if the reform gives rise to uncertainties about the timing and or amount of benchmark-based cash flows of the hedged item or the hedging instrument. These amendments had no material impact on the consolidated financial statements of the Group as it does not have any interest rate hedge relationships. Conceptual Framework for Financial Reporting issued on 28 March 2018 The Conceptual Framework is not a standard, and none of the concepts contained therein override the concepts or requirements in any standard. The purpose of the Conceptual Framework is to assist the IASB in developing standards, to help preparers develop consistent accounting policies where there is no applicable standard in place and to assist all parties to understand and interpret the standards. The revised Conceptual Framework includes some new concepts, provides updated definitions and recognition criteria for assets and liabilities and clarifies some important concepts. ANNUAL REPORT 2021 3. PRINCIPAL ACCOUNTING POLICIEs (Continued) (a) Changes in accounting policy and disclosures (Continued) Standards issued but not yet effective The new and amended standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Group’s financial statements are disclosed below. The Group intends to adopt these new and amended standards and interpretations, if applicable, when they become effective. Amendments to IAS 1: Classification of Liabilities as Current or Non-current In January 2020, the IASB issued amendments to paragraphs 69 to 76 of IAS 1 to specify the requirements for classifying liabilities as current or non-current. The amendments clarify: • • • • What is meant by a right to defer settlement That a right to defer must exist at the end of the reporting period That classification is unaffected by the likelihood that an entity will exercise its deferral right That only if an embedded derivative in a convertible liability is itself an equity instrument would the terms of a liability not impact its classification. The amendments are effective for annual reporting periods beginning on or after 1 January 2023 and must be applied retrospectively. The Group is currently assessing the impact of the amendment on its current practice. Reference to the Conceptual Framework – Amendments to IFRS 3 In May 2020, the IASB issued Amendments to IFRS 3 Business Combinations – Reference to the Conceptual Framework. The amendments are intended to replace a reference to the Framework for the Preparation and Presentation of Financial Statements, issued in 1989, with a reference to the Conceptual Framework for Financial Reporting issued in March 2018 without significantly changing its requirements. The Board also added an exception to the recognition principle of IFRS 3 to avoid the issue of potential ‘day 2’ gains or losses arising for liabilities and contingent liabilities that would be within the scope of IAS 37 or IFRIC 21 Levies, if incurred separately. At the same time, the Board decided to clarify existing guidance in IFRS 3 for contingent assets that would not be affected by replacing the reference to the Framework for Preparation and Presentation of Financial Statements. The Group is currently assessing the impact of these amendments. The amendments are effective for annual reporting periods beginning on or after 1 January 2022 and apply prospectively. Property, Plant and Equipment: Proceeds before Intended Use – Amendments to IAS 16 In May 2020, the IASB issued Property, Plant and Equipment – Proceeds before Intended Use, which prohibits entities deducting from the cost of an item of property, plant and equipment, any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, an entity recognises the proceeds from selling such items, and the costs of producing those items, in profit or loss. The amendments is effective for annual reporting periods beginning on or after 1 January 2022 and must be applied retrospectively to items of property, plant and equipment made available for use on or after the beginning of the earliest period presented when the entity first applies the amendment. The amendments are not expected to have a material impact on the Group. Onerous Contracts – Costs of Fulfilling a Contract – Amendments to IAS 37 In May 2020, the IASB issued amendments to IAS 37 to specify which costs an entity needs to include when assessing whether a contract is onerous or loss-making. The amendments apply a ‘direct related cost approach’. The costs that relate directly to a contract to provide goods or services include both incremental costs and an allocation of costs directly related to contract activities. General and administrative costs do not relate directly to a contract and are excluded unless they are explicitly chargeable to the counterparty under the contract. The amendments are effective for annual reporting periods beginning on or after 1 January 2022. The Group will apply these amendments to contracts for which it has not yet fulfilled all its obligations at the beginning of the annual reporting period in which it first applies the amendments. The Group is currently assessing the impact of these amendments. 63 NOTEs TO THE CONsOLIDATED fINANCIAL INfORmATION 3. PRINCIPAL ACCOUNTING POLICIEs (Continued) (a) Changes in accounting policy and disclosures (Continued) Standards issued but not yet effective (Continued) IFRS 1 First-time Adoption of International Financial Reporting Standards – Subsidiary as a first-time adopter As part of its 2018-2020 annual improvements to IFRS standards process, the IASB issued an amendments to IFRS 1 First- time Adoption of International Financial Reporting Standards. The amendment permits a subsidiary that elects to apply paragraph D16(a) of IFRS 1 to measure cumulative translation differences using the amounts reported by the parent, based on the parent’s date of transition to IFRS. This amendment is also applied to an associate joint venture that elects to apply paragraph D16(a) of IFRS 1. The amendment is effective for annual reporting periods beginning on or after 1 January 2022 with earlier adoption permitted. IFRS 9 Financial Instruments – Fees in the ‘10 percent’ test for derecognition of financial liabilities As part of its 2018-2020 annual improvements to IFRS standards the IASB issued an amendment to IFRS 9. The amendment clarifies the fees that an entity includes when assessing whether the terms of a new or modified financial liability are substantially different from the terms of the original financial liability. These fees include only those paid or received between the borrower and the lender, including fees paid or received by either the borrower or lender on the other’s behalf. An entity applies the amendments to financial liabilities that are modified or exchanged on or after the beginning of the annual reporting period in which the entity first applies the amendment. The amendment is effective for annual reporting periods beginning on or after 1 January 2022 with earlier adoption permitted. The Group will apply the amendments to financial liabilities that are modified or exchanged on or after the beginning of the annual reporting period in which the entity first applies the amendment. The amendments are not expected to have a material impact on the Group. (b) subsidiaries 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 over the entity. Subsidiaries are consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. Intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. When necessary, amounts reported by subsidiaries have been adjusted to conform with the Group’s accounting policies. (i) (ii) Changes in ownership interests in subsidiaries without change of control Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions with equity holders of the Group. The difference between fair value of any consideration paid and the relevant share acquired of the carrying amount of net assets of the subsidiary is recorded in equity. Gains or losses on disposal of non-controlling interests are also recorded in equity. Disposal of subsidiaries If the Group loses control over a subsidiary, it derecognises (i) the assets and liabilities of the subsidiary, (ii) the carrying amount of any non-controlling interest and (iii) the cumulative translation differences recorded in equity; and recognises (i) the fair value of the consideration received, (ii) the fair value of any investment retained and (iii) any resulting surplus or deficit in profit or loss. It means the amounts previously recognised in other comprehensive income are reclassified to profit or loss or transferred to another category of equity or specified/permitted by applicable IFRS. (c) Joint arrangements The Group undertakes a number of business activities through joint arrangements. A joint arrangement is an arrangement over which two or more parties have joint control. Joint control is the contractually agreed sharing of control over an arrangement which exists only when the decisions about the relevant activities (being those that significantly affect the returns of the arrangement) require the unanimous consent of the parties sharing control. The Group’s joint arrangements are of two types: (i) Joint operations A joint operation is a type of joint arrangement in which the parties with joint control of the arrangement have rights to the assets and obligations for the liabilities relating to the arrangement. In relation to its interests in joint operations, the financial statements of the Group includes: • • Assets, including its share of any liabilities incurred jointly Liabilities, including its share of any liabilities incurred jointly ANNUAL REPORT 2021 3. PRINCIPAL ACCOUNTING POLICIEs (Continued) (c) Joint arrangements (Continued) (i) Joint operations (Continued) • Revenue from the sale of its share of the output arising from the joint operation • Expenses, including its share of any expenses incurred jointly. All such amounts are measured in accordance with the terms of each arrangement which are in proportion to the Group’s interest in each asset and liability, income and expense of the relevant joint operation. (ii) Joint Ventures A joint venture is a type of joint arrangement in which the parties with joint control of the arrangement have rights to the net assets of the arrangement. A separate vehicle (not the parties) will have the rights to the assets and obligations for the liabilities, relating to the arrangement. Joint ventures are accounted for using the equity method. Under the equity method of accounting, interests in joint ventures are initially recognised at cost and adjusted thereafter to recognise the Group’s share of the post-acquisition profits or losses and movements in other comprehensive income. When the Group’s share of losses in joint ventures equals or exceeds its interests in the joint ventures (which includes any long-term interests that, in substance, form part of the Group’s net investment in the joint ventures), the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the joint ventures. Unrealised gains on transactions between the Group and its joint ventures are eliminated to the extent of the Group’s interest in the joint ventures. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of the joint ventures have been changed where necessary to ensure consistency with the policies adopted by the Group. (d) (e) segment reporting Operating segments are reported in a manner consistent with internal reports provided to Chief Operating Decision Makers, which comprise the executive directors of the Company who are responsible for allocating resources and assessing performance of the operating segments. 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 Hong Kong dollars, which is the Company’s functional and the Group’s 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 or valuation where items are re-measured. 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 profit and loss. Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the profit and loss. (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 balance sheet presented are translated at the closing rate at the date of that balance sheet; income and expenses for each statement of comprehensive income are translated at average exchange rate (unless this average 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 rates on the dates of the transactions); and — all resulting currency translation differences are recognised in other comprehensive income. 65 NOTEs TO THE CONsOLIDATED fINANCIAL INfORmATION 3. PRINCIPAL ACCOUNTING POLICIEs (Continued) (e) foreign currency translation (Continued) (iv) Disposal of foreign operation and partial disposal On the disposal of a foreign operation (that is, a disposal of the Group’s entire interest in a foreign operation, a disposal involving loss of control over a subsidiary that includes a foreign operation), all of the currency translation differences accumulated in equity in respect of that operation attributable to the owners of the Company are reclassified to profit or loss. In the case of a partial disposal that does not result in the Group losing control over a subsidiary that includes a foreign operation, the proportionate share of accumulated currency translation differences is re-attributed to non- controlling interests and is not recognised in profit and loss. For all other partial disposals (that is, reductions in the Group’s ownership interest in joint ventures that do not result in the Group losing joint control) the proportionate share of the accumulated exchange difference is reclassified to profit and loss. (f) mining exploration properties Mining exploration properties are stated in the balance sheet at cost less subsequent accumulated amortisation and any accumulated impairment losses. Mining exploration properties are amortised using the units of production method based on the proven and probable mineral reserves and starts when commercial production commences. Mining exploration properties acquired in a business combination are identified and recognised as intangible assets separately from goodwill where they satisfy the definition of an intangible asset and their fair values can be measured reliably. The cost of such intangible assets is their fair value at the acquisition date. Impairment reviews of mining exploration properties are undertaken if events or changes in circumstances indicate a potential impairment. The carrying value of mining exploration properties is compared to the recoverable amount, which is the higher of value-in-use and the fair value less costs of disposal. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Mining exploration properties that suffered impairment are reviewed for possible reversal of the impairment at each reporting date. (g) Property, plant and equipment Property, plant and equipment is stated at cost less accumulated depreciation and any impairment losses. The cost of an item of property, plant and equipment comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use. Expenditure incurred after items of property, plant and equipment have been put into operation, such as repairs and maintenance, is normally charged to profit or loss in the period in which it is incurred. In situations where the recognition criteria are satisfied, the expenditure for a major inspection is capitalised in the carrying amount of the asset as a replacement. Where significant parts of property, plant and equipment are required to be replaced at intervals, the Company recognises such parts as individual assets with specific useful lives and depreciates them accordingly. Depreciation is calculated on the straight-line basis to write off the cost of each item of property, plant and equipment to its residual value over its estimated useful life. The principal annual rates used for this purpose are as follows: Plant, furniture, fixtures and equipment 12.5% – 25% per annum Where parts of an item of property, plant and equipment have different useful lives, the cost of that item is allocated on a reasonable basis among the parts and each part is depreciated separately. Residual values, useful lives and the depreciation method are reviewed, and adjusted if appropriate, at least at each financial year end. An item of property, plant and equipment including any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on disposal or retirement is recognised in the profit and loss in the year the asset is derecognised and determined as is the difference between the net sales proceeds and the carrying amount of the relevant asset. (h) Impairment of non-financial assets Assets that are subject to impairment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value-in-use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating unit). Non-financial assets that suffered impairment are reviewed for possible reversal of the impairment at each reporting date. ANNUAL REPORT 2021 3. PRINCIPAL ACCOUNTING POLICIEs (Continued) (i) financial assets (i) Classification and measurement Financial assets are classified, at initial recognition, as subsequently measured at amortised cost or at fair value through profit or loss. The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the Group’s business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient, the Group initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient are measured at the transaction price determined under IFRS 15. In order for a financial asset to be classified and measured at amortised cost, it needs to give rise to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding. Financial assets with cash flows that are not SPPI are classified and measured at fair value through profit or loss, irrespective of the business model. The Group’s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both. Financial assets classified and measured at fair value through other comprehensive income and held within a business model with the objective of both holding to collect contractual cash flows and selling. Financial assets which are not held within the aforementioned business models are classified and measured at fair value through profit or loss. At 30 June 2021, the group does not have any financial assets classified and measured at fair value through other comprehensive income (2020: Nil). (ii) Subsequent measurement Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired. Financial assets at fair value through profit or loss are carried in the balance sheet at fair value with net changes in fair value recognised in the profit and loss. (iii) Offsetting financial instruments Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. (iv) Impairment of financial assets Simplified approach For trade receivables and contract assets that do not contain a significant financing component or when the Group applies the practical expedient of not adjusting the effect of a significant financing component, the Group applies the simplified approach in calculating ECLs. Under the simplified approach, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. (j) financial liabilities (i) Initial recognition and measurement Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, financial liabilities at amortised cost and payables. All financial liabilities are recognised initially at fair value and, in the case of financial liabilities at amortised cost and payables, net of directly attributable transactions costs. The Group’s financial liabilities include trade and other payables, and other borrowings. The subsequent measurement of financial liabilities depends on their classification as follows: (ii) Financial liabilities at amortised cost (loans and borrowings) After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost, using the EIR method unless the effect of discounting would be immaterial, in which case they are stated at cost. Gains and losses are recognised in the statement of profit or loss when the liabilities are derecognised as well as through the effective interest rate amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate. The effective interest rate amortisation is included in finance costs in the statement of profit or loss. 67 NOTEs TO THE CONsOLIDATED fINANCIAL INfORmATION 3. PRINCIPAL ACCOUNTING POLICIEs (Continued) (j) financial liabilities (Continued) (ii) Financial liabilities at amortised cost (loans and borrowings) (Continued) Derecognition of financial liabilities A financial liability is derecognised when the obligation under the liability is discharged or cancelled, or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and a recognition of a new liability, and the difference between the respective carrying amounts is recognised in the statement of profit or loss. (k) Other receivables Other receivables are amounts due from transactions outside the ordinary course of business. If collection of other receivables is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets. Other receivables are recognised initially at fair value and subsequently measured at amortised cost using the EIR method, less provision for impairment. (l) Cash and cash equivalents For the purpose of the consolidated statement of cash flows, cash and cash equivalents include cash in hand and deposits, and have a short maturity of generally within three months. For the purpose of the balance sheet, cash and cash equivalents comprise cash on hand and at banks, including term deposits with a maturity of three months or less. (m) Related parties A party is considered to be related to the Group if: (a) The party is a person or a close member of that person’s family and that person i. Has control or joint control over the Group; ii. Has significant influence over the Group; or iii. Is a member of the key management personnel of the Group or of a parent of the Group; Or (b) The party is an entity where any of the following conditions apply: The entity and the Group are members of the same group; i. ii. One entity is an associate or joint venture of the other entity (or of a parent, subsidiary or fellow subsidiary of the other entity); iii. The entity and the Group are joint ventures of the same third party; iv. One entity is a joint venture of a third entity and the other entity is an associate of the third entity; v. The entity is controlled or jointly controlled by a person identified in (a); vi. vii. A person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity) and The entity, or any member of a group of which it is a part, provides key management personnel services to the Group or to the parent of the Group. (n) (o) share capital Ordinary shares are classified as equity, incremental costs directly attributable to the issue of new shares or options are shown in equity as deduction, net of tax, from the proceeds. Trade and other payables Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities. Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the EIR method. ANNUAL REPORT 2021 3. PRINCIPAL ACCOUNTING POLICIEs (Continued) (p) Borrowings Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; and difference between the proceeds (net of transaction costs) and the redemption value is recognised in the profit and loss over the period of the borrowing using the EIR method. Fees paid on the settlement of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the end of the reporting period. (q) Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, i.e., assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the cost of those assets. The capitalisation of such borrowing costs ceases when the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs capitalised. All other borrowing costs are expensed in the period in which they are incurred. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. (r) Current and deferred income tax Income tax comprises current and deferred tax. Income tax relating to items recognised outside profit or loss is recognised outside profit or loss, either in other comprehensive income or directly in equity. All wholly-owned Australian subsidiaries of the Company form a tax consolidated group under Australian tax law and are taxed as a single entity. Brockman Mining Holdings (Australia) Pty Ltd (“BMHA”), a wholly-owned subsidiary of the Company, is the head entity of the Australian tax consolidated group. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Group operates and generates taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. The initial recognition exception is not applied to deferred income tax related to assets and liabilities arising from a single transaction (i.e. leases). Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the deductible temporary difference can be utilised. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered. Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis. (s) Employee benefits (i) Short-term obligations Salaries, annual bonuses, annual leave entitlement and the cost of non-monetary benefits expected to be settled within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees’ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liability for annual leave is recognised in the provision for employee benefits. All other short-term employee benefit obligations are presented as payables. 69 NOTEs TO THE CONsOLIDATED fINANCIAL INfORmATION 3. PRINCIPAL ACCOUNTING POLICIEs (Continued) (s) Employee benefits (Continued) (ii) Other long term employee benefit obligations The liability for long service leave which is not expected to be settled within 12 months after the end of the period in which the employees render the related service is recognised in the provision for employee benefits and measured as the present value of the expected future payments to be made in respect of services provided by employees up to the end of a reporting period. Consideration is given to expected future wages and salary levels, experience of employee departures and periods of services. Expected future payments are discounted using market yields at the end of the reporting period on high quality corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows. The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting date, regardless of when the actual settlement is expected to occur. (iii) Pension obligations The Group participates in various defined contribution schemes. The schemes are generally funded through payments to insurance companies, trustee-administrated funds or the relevant government authorities. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to the employee services in the current and prior periods. Payments to state-managed retirement benefit and Mandatory Provident Fund retirement schemes are charged as expenses when employees have rendered services entitling them to the contributions. For defined contribution plans, the Group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payment is available. (t) share-based payments (i) Equity-settled share-based payment transactions The Group operates equity-settled, share-based compensation plans, under which the entity receives services from directors, employees or consultants as consideration for equity instruments (share options) of the Group. The fair value of the employee services received in exchange for the grant of the options is recognised as an expense. The fair value is determined by an external valuer using a binomial model, further details of which are given in note 25 to the financial statements. The cost of equity settled transactions is recognised in employee benefit expense, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled. The cumulative expense recognised for equity-settled transactions at the end of each reporting period until the vesting date reflects 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. The total amount to be expensed is determined by reference to the fair value of the option granted: — including any market performance conditions (for example, an entity’s share price); — — excluding the impact of any service and non-market performance vesting conditions (for example, profitability, sales growth targets and remaining as an employee of the entity over a specified time period); and including the impact of any non-vesting conditions (for example, the requirement for employees to save or holding shares for a specified period of time). When the options are exercised, the Company issues new shares. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised. Where 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. The dilutive effect of outstanding options is reflected as additional share dilution in the computation of earnings per share. ANNUAL REPORT 2021 3. PRINCIPAL ACCOUNTING POLICIEs (Continued) (t) share-based payments (Continued) (ii) Share-based payment transactions among group entities The grant by the Company of options over its equity instruments to the employees of subsidiary undertakings in the Group is treated as a capital contribution. The fair value of employee services received, measured by reference to the grant date fair value, is recognised over the vesting period as an increase to investment in subsidiary undertakings, with a corresponding credit to equity in the parent entity accounts. (u) Provisions A provision is recognised when a present obligation (legal and constructive) has arisen as a result of a past event and it is probable that a future outflow of resources will be required to settle the obligation, provided that a reliable estimate can be made of the amount of the obligation. When the effect of discounting is material, the amount recognised for a provision is the present value at the end of the reporting period of the future expenditure expected to be required to settle the obligation. The increase in the discounted present value amount arising from the passage of time is included in finance costs in profit and loss. Revenue recognition Revenue from contracts with customers is recognised when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods or services. Interest income Interest income is recognised on an accrual basis using the EIR method by applying the rate that exactly discounts the estimated future cash receipts over the expected life of the financial instrument or a shorter period, when appropriate, to the net carrying amount of the financial asset. (v) (w) (x) Government grants Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Group will comply with all attached conditions. When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods that the costs, which it is intended to compensate, are expensed. (y) Exploration and evaluation costs Except for acquisition costs for mining exploration properties which are capitalised, the Group has a policy of expensing all exploration and evaluation expenditure, in the financial year in which it incurred, unless its recoupment out of revenue to be derived from the successful development of the prospect, or from sale of that prospect, is assured beyond reasonable doubt. (z) Consumption tax (Goods and services Tax and Value-added Tax) Revenues, expenses and assets are recognised net of the amount of consumption tax except: — where the consumption tax incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the consumption tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and — receivables and payables are stated with the amount of consumption tax included. The net amount of consumption tax recoverable from, or payable to, the taxation authority is included as part of the receivables or payables in the balance sheet. Cash flows are included in the consolidated statement of cash flows on a gross basis and the consumption tax component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority, are classified as operating cash flows. Commitments and contingencies are disclosed net of the amount of consumption tax recoverable from, or payable to, the taxation authority. (aa) Leases The Group assesses at contract inception whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Group as a lease The Group applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Group recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets. 71 NOTEs TO THE CONsOLIDATED fINANCIAL INfORmATION 3. PRINCIPAL ACCOUNTING POLICIEs (Continued) (aa) Leases (Continued) Right-of-use assets The Group recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of the right-of-use asset includes the amount of the initial measurement of the lease liability, any lease payments made at or before the commencement date, less any lease incentives received, any initial direct costs incurred by the lessee, and an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease. Unless the Group is reasonably certain to obtain ownership of the leased asset at the end of lease term, the recognised right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term. Right-of-use assets are subject to impairment. Lease liabilities At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any incentives receivable, variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating the lease, if the lease term reflects the Group exercising the option to terminate. The variable lease payments that do not depend on an index or a rate are recognised as an expense in the period on which the event or condition that triggers that payment occurs. In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of the lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset. Short-term leases and leases of low-value assets The Group applies the short-term lease recognition exemption to its short-term commercial office leases (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low value assets recognition to commercial office leases that are considered of low value (i.e., less than HK$30,000). Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight- line basis over the lease term. 4. 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 are considered to be reasonable under the circumstances. The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. 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 mining exploration properties in Australia Mining exploration properties are reviewed for impairment whenever events or changes in circumstances indicate that an impairment may exist. The Group performs an assessment of impairment indicators to determine when facts and circumstances suggest that the carrying amount of mining exploration properties may exceed its recoverable amount. The assessment of whether there are any impairment indicators in respect of a mining exploration property involves a number of judgments. These include whether the Group has the right to explore in the specific area of interest, whether ongoing expenditure is planned or budgeted and whether there is sufficient information for a decision to be made that the area of interest is not commercially viable. As at 30 June 2021, the carrying amount of the mining exploration properties is HK$784,933,000 (2020: HK$731,048,000). There is no impairment loss recognised for the year ended 30 June 2021 (2020: Nil) as no facts and circumstances suggest that the mining exploration properties may be impaired. See Note 17 for further consideration of impairment indicators by the Group. ANNUAL REPORT 2021 4. CRITICAL ACCOUNTING EsTImATEs AND JUDGEmENTs (Continued) (b) measurement of Polaris loan Estimating the market interest rate Judgement is required to determine the market interest rate used to account for the Polaris loans. The Polaris loans were initially recognised at fair value and subsequently measured at amortised cost using a market interest rates of 12% which the directors believe best reflects the Group’s market interest rate for a borrowing of this quantum and terms. Estimating the repayment dates and amounts The date of repayment for the Polaris loans will depend on the date of commencement of operations and it is expected that full repayment will be made within two – three months of this date. As at 30 June 2021, the carrying amount of these borrowings is HK$41,679,000 (2020: HK$21,242,000). (c) Income taxes Deferred tax assets are recognised for unused tax losses and other deductible temporary differences to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised based upon the likely timing and the level of future taxable profits, together with future tax planning strategies and changes in factors which provide confirmation of the existence and ability to utilise tax losses. At 30 June 2021, the Group’s total tax losses were HK$1,215,000,000 (2020: HK$1,123,000,000). The Group did not recognise a deferred income tax asset in respect of tax losses amounting to approximately HK$869,000,000 (2020: HK$819,000,000) as the utilisation of these tax losses is subject to the satisfaction of the loss recoupment rules in the relevant tax jurisdiction as well as other uncertainties which mean that their realisation is not considered probable. The unrecognised tax losses relate to overseas subsidiaries that have a history of losses, do not expire, and may not be used to offset taxable or other income elsewhere in the Group. The Group has determined that these losses are not expected to be available for utilisation when taxable temporary differences are expected to reverse. On this basis, the Group has determined that it cannot recognise deferred tax assets on these unrecognised tax losses carried forward. Further work continues in respect of assessing whether these unrecognised tax losses may become available. (d) (e) Lease term of contracts with renewal options The Group has a lease contract that includes an extension option. The Group applies judgement in evaluating whether or not to exercise the extension option. That is, it considers all relevant factors that create an economic incentive for it to exercise the extension. After the commencement date, the Group reassesses the lease term if there is a significant event or change in circumstances that is within its control and affects its ability to exercise or not to exercise the option to extend. Leases – Estimating the incremental borrowing rate If or when the lessee cannot readily determine the interest rate implicit in a lease, it uses an incremental borrowing rate (“IBR”) to measure lease liabilities. The IBR is the rate of interest that the lessee would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. The IBR therefore reflects what the Group ‘would have to pay’, which requires estimation when no observable rates are available (such as for subsidiaries that do not enter into financing transactions) or when it needs to be adjusted to reflect the terms and conditions of the lease (for example, when leases are not in the subsidiary’s functional currency). 5. fINANCIAL RIsK mANAGEmENT OBJECTIVEs AND POLICIEs financial risk factors The Group’s activities expose it to a variety of financial risks and management manages and monitors these exposures to ensure appropriate measures are implemented on a timely and effective manner. The Group does not and is prohibited from entering into derivative contracts for speculative purposes. (i) Capital risk management The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximising the return to shareholders through the optimisation of the debt and equity balances. The directors of the Company consider that the capital structure of the Group consists of long-term debt and lease liabilities, and equity attributable to equity holders of the Company comprising issued capital and reserves. The directors of the Company review the capital structure by considering the cost of capital and the risks associated with each class of capital. Based on recommendations of the directors, the Group will balance its overall capital structure through new share issues as well as the issue of the new debt or the repayment of existing debt. Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements. 73 NOTEs TO THE CONsOLIDATED fINANCIAL INfORmATION 5. fINANCIAL RIsK mANAGEmENT OBJECTIVEs AND POLICIEs (Continued) financial risk factors (Continued) (i) Capital risk management (Continued) The gearing ratios at 30 June 2021 and 2020 were as follows: Long-term debt and lease liabilities Total equity Total capital Gearing ratio 2021 HK$’000 58,356 645,702 704,058 8.28% 2020 HK$’000 36,504 602,093 638,597 5.72% The Group has recognised the second tranche of the Loan from Polaris. This resulted in an increase in the Group’s net debt and hence the Group’s gearing rate increased from 5.72% to 8.28% on 30 June 2021 compared with the 30 June 2020. (ii) Liquidity risk The Group’s primary cash requirements have been for the payment for working capital and exploration and evaluation activities. The Group generally finances its short term funding requirements with equity funding and loans from shareholders. The following table details the Group’s remaining contractual maturity for its financial liabilities. The table has been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group could be required to pay. The table includes both interest and principal cash flows. Within 1 year of demand HK$’000 1 to 2 years HK$’000 2 – 3 years HK$’000 Later than 3 years & no later than 5 years HK$’000 Total undiscounted cash flows HK$’000 Carrying amount at year ended date HK$’000 30 June 2021 Non-derivative financial liabilities: Trade and other payables Lease liabilities Borrowings 30 June 2020 Non-derivative financial liabilities: Trade and other payables Lease liabilities Borrowings 1,123 828 — 1,951 829 382 — 1,211 — 499 15,472 15,974 — 392 14,152 14,544 — 314 55,708 56,022 — 404 26,646 27,050 — 441 — 441 — 661 — 661 1,123 2,082 71,259 74,464 829 1,839 40,798 43,466 1,123 1,939 57,245 60,307 829 1,493 35,394 37,716 The date of repayment for the Polaris loan will depend on the date of commencement of operations and it is expected that full repayment will be made within two – three months of this date. (iii) Fair value estimation The fair values of the Group’s financial assets, including other receivables, deposits, amounts due from related parties, and cash and cash equivalents; and the Group’s financial liabilities, including trade and other payables, amounts due to related parties approximate their carrying amounts due to their short-term maturities. The fair value of non-current borrowings is disclosed in note 32. ANNUAL REPORT 2021 5. fINANCIAL RIsK mANAGEmENT OBJECTIVEs AND POLICIEs (Continued) financial risk factors (Continued) Exchange rate risk (iv) The Group is exposed to exchange rate risk primarily in relation to our mineral tenements that are denominated in Australian dollars. Depreciation of the Australian dollar may adversely affect our net asset value and earnings when the value of such assets is converted to Hong Kong dollars. During the year, no financial instrument was used for hedging purposes. As at 30 June 2021 and 2020, the Group was not exposed to any significant exchange rate risk. (v) Credit risk The Group’s maximum exposure to credit risk which could cause a financial loss to the Group due to failure to discharge an obligation by the counterparties arises from the carrying amount of the trade receivables, other receivables and deposits, amount due from a related party, cash and cash equivalents and restricted cash as stated in the consolidated balance sheet. Management reviews the recoverable amount of each individual trade debt at each balance sheet date to ensure that adequate impairment losses are made for expected credit losses. In this regard, the directors of the Company consider that the credit risk of the Group is significantly reduced. The credit risk on cash and cash equivalents is limited for both the Group and the Company because counterparties are mainly the banks with high credit-rating of AA+ assigned by international credit-rating agencies. The Group and the Company have no concentration of credit risk, with exposure spread over a number of counterparties. 6. REVENUE There was no revenue during the year ended 30 June 2021 (2020: nil). 7. sEGmENT INfORmATION Operating segments are reported in a manner consistent with internal reports provided to Chief Operating Decision Makers, being the executive directors of the Company who are responsible for allocating resources and assessing performance of the operating segments. The executive directors consider the performance of the Group from a business perspective. The Group’s reportable operating segment is as follows: Mineral tenements in Australia – tenement acquisition, exploration and towards future development of iron ore projects in Western Australia Others primarily relate to the provision of corporate services for investment holding companies. These activities are excluded from the reportable operating segments and are presented to reconcile to the totals included in the Group’s consolidated statement of comprehensive income and consolidated balance sheet. Executive directors assess and review the performance of the operating segments based on segment results which is calculated as loss before income tax less share of profit/(losses) of joint ventures. Segment assets reported to executive directors of the Company are measured in a manner consistent with that in the consolidated balance sheet. 75 NOTEs TO THE CONsOLIDATED fINANCIAL INfORmATION 7. sEGmENT INfORmATION (Continued) (a) The following is an analysis of the Group’s results by business segment: for the year ended 30 June 2021: Segments results Share of loss of joint ventures Loss before income tax Other information: Depreciation of property, plant, equipment and right-of-use asset Exploration and evaluation expenses Share based payment expense Income tax benefit for the year ended 30 June 2020: Segments results Share of loss of joint ventures Loss before income tax Other information: Depreciation of property, plant, equipment and right-of-use assets Exploration and evaluation expenses Income tax benefit mineral tenements in Australia HK$’000 Others HK$’000 (14,943) (13,236) (377) (5,494) — 14,146 (149) — (1,149) — (9,376) (13,105) (380) (4,521) 1,590 (4) — — Total HK$’000 (28,179) (139) (28,318) (526) (5,494) (1,149) 14,146 (22,481) (125) (22,606) (384) (4,521) 1,590 (b) The following is an analysis of the Group’s total assets by business segment as at 30 June 2021: As at 30 June 2021: segment assets Total segment assets include: Interest in joint ventures Additions to property, plant and equipment Right-of-use assets As at 30 June 2020: segment assets Total segment assets include: Interests in joint ventures Additions to property, plant & equipment Right-of-use assets mineral tenements in Australia HK$’000 Others HK$’000 Total HK$’000 823,358 10,815 834,173 703 19 1,006 — — 532 703 19 1,538 756,141 13,579 769,720 644 137 1,226 — — — 644 137 1,226 (c) Geographical information The mineral tenements are located in Australia, and, the following is an analysis of the carrying amounts of the Group’s mining exploration properties, property plant and equipment, right-of-use assets and interests in joint ventures analysed by geographical area in which the assets are located: Hong Kong Australia 2021 HK$’000 537 786,804 2020 HK$’000 9 733,090 8. EmPLOYEE BENEfIT EXPENsE Salaries and other benefits Post-employment benefits Share-based compensation ANNUAL REPORT 2021 2021 HK$’000 11,917 575 1,149 13,641 2020 HK$’000 11,094 534 1,477 13,105 9. fIVE HIGHEsT PAID EmPLOYEEs Of the five individuals who received the highest emoluments in the Group for the year, three (2020: three) are the directors of the Company whose emoluments are disclosed in Note 14. The emoluments of the remaining two (2020: two) individuals are as follows: Salaries and other benefits Post-employment benefits Share-based compensation The emoluments of the remaining individuals fell within the following bands: HK$1,000,001 – HK$2,000,000 2021 HK$’000 2,900 176 244 3,320 2020 HK$’000 2,780 164 72 3,018 Number of individuals 2021 2 2 2020 2 2 During the year, share options were granted to the highest paid non-director employees in respect to their services to the Group, further details of which are included in the disclosures in note 25 to the consolidated financial statements. The fair value of such options, which has been recognised in the statement of profit or loss over the vesting period, was determined as at the date of grant and the amount included in the financial statements for the current year is included in the above highest paid non-director employees’ remuneration disclosures. 10. OTHER INCOmE Government grant (Note a) 2021 HK$’000 162 162 2020 HK$’000 715 715 Note a: During the year there was a government grant, provided by the Hong Kong Government to retain employees due to the implications caused by COVID-19 (HK$162,000) (2020: HK$162,000 provided by the Hong Kong Government and an incentive of HK$553,000 provided by the Australian Federal Government for research and development activities). 77 NOTEs TO THE CONsOLIDATED fINANCIAL INfORmATION 11. LOss BEfORE TAX The Group’s loss before tax from continuing operations is arrived at after charging: Depreciation of property, plant and equipment Depreciation of right-of-use assets Lease payments not included in the measurement of lease liabilities Auditor’s remuneration: Audit services – EY Non-audit services – EY Staff costs (including directors emoluments (note 14)) Equity-settled share option expense Exploration and evaluation expenses (excluding staff costs and rental expenses) Exchange loss 12. fINANCE COsTs, NET finance income Interest income on bank deposits finance costs Interest on lease liabilities Interest on borrowings finance costs, net 2021 HK$’000 48 478 198 1,163 389 12,492 1,149 4,033 — 2021 HK$’000 88 (208) (5,220) (5,340) 2020 HK$’000 84 301 1,279 940 187 11,628 1,477 2,766 7 2020 HK$’000 320 (158) (1,324) (1,162) 13. INCOmE TAX BENEfIT No provision for Hong Kong Profits tax or overseas income tax has been made in the consolidated financial statements as the Group has no assessable profit for the year (2020: Nil). The applicable corporate income tax rate is 30% (2020: 30%) for subsidiaries in Australia. The income tax on the Group’s loss before income tax differs from the theoretical amount that would arise using the enacted tax rate of the consolidated entities as follows: Loss before income tax Tax calculated at the applicable domestic tax rate of respective companies (note a) Expenses not deductible for tax purposes Recognition of previously unrecognised tax losses Tax losses for which no deferred income tax asset was recognised Income tax benefit Note a: The weighted average applicable tax rate was 23% (2020: 22%). 2021 HK$’000 (28,319) (6,709) 856 (10,041) 1,748 (14,146) 2020 HK$’000 (22,589) (5,010) 341 — 3,079 (1,590) ANNUAL REPORT 2021 14. BENEfITs AND INTEREsTs Of DIRECTORs (a) Directors’ emoluments Directors’ remuneration for the year, disclosed pursuant to the Listing Rules, section 383(1)(a), (b), (c) and (f) of the Hong Kong Companies Ordinance and Part 2 of the Companies (Disclosure of Information amount Benefits of Directors) Regulation. The remuneration of every director for the year ended 30 June 2021 is set out below: Name Kwai Sze Hoi Liu Zhengui Ross Stewart Norgard Yap Far Suan, Henry Choi Yue Chun, Eugene David Rolf Welch Colin Paterson Kwai Kwun, Lawrence Chan Kam Kwan, Jason Total fees HK$’000 salary HK$’000 Discretionary bonuses HK$’000 Housing allowance HK$’000 share based payment expense HK$’000 Retirement benefit scheme HK$’000 — 240 229 228 228 229 — — — 1,154 — — — — — — 2,395 1,000 40 3,435 — — — — — — — — — — — — — — — — — — 960 960 — 1 1 1 1 1 8 — 8 21 — — — — — — 124 50 50 224 The remuneration of every director for the year ended 30 June 2020 is set out below: Name Kwai Sze Hoi Liu Zhengui Ross Stewart Norgard Yap Far Suan, Henry Choi Yue Chun, Eugene David Rolf Welch Colin Paterson Kwai Kwun, Lawrence Chan Kam Kwan, Jason Uwe Henke Von Parpart Total fees HK$’000 salary HK$’000 Discretionary bonuses HK$’000 Housing allowance HK$’000 share based payment expense HK$’000 Retirement benefit scheme HK$’000 — 240 226 228 228 151 — — — 66 1,139 — — — — — — 2,028 1,000 40 — 3,068 — — — — — — — — — — — — — — — — — — — 960 — 960 593 19 9 11 11 — 73 259 74 11 1,060 — — — — — — 110 50 50 — 210 Total HK$’000 — 241 230 229 229 230 2,527 1,050 1,058 5,794 Total HK$’000 593 259 235 239 239 151 2,211 1,309 1,124 77 6,437 During the year, certain directors were granted options, under the share option scheme of the Company, further details of which are set out in note 25 to the financial statements. The fair value of such options, which has been recognised in the statement of profit or loss over the vesting period, was determined as at the date of grant and the amount included in the financial statements for the current year is included in the above directors’ and chief executives’ remuneration disclosures. There was no arrangement under which a director or the chief executive waived or agreed to waive any remuneration during the year. (b) Directors’ retirement benefits No retirement benefits were paid to or receivable by any directors in respect of their other services in connection with the management of the affairs of the Company or its subsidiaries (2020: Nil). (c) Directors’ termination benefits No payment was made to directors as compensation for early termination of their appointment during the year (2020: Nil). (d) Consideration provided to third parties for making available directors’ services No payment was made to any former employer of directors for making available the services of them as a director of the Company (2020: Nil). 79 NOTEs TO THE CONsOLIDATED fINANCIAL INfORmATION 14. BENEfITs AND INTEREsTs Of DIRECTORs (Continued) (e) (f) (g) Information about loans, quasi-loans and other dealings in favour of directors, controlled bodies corporate by and connected entities with such directors As at 30 June 2021, there were no loans, quasi-loans and other dealings in favour of directors, controlled bodies corporate by and connected entities with such directors during the year (2020: Nil). Directors’ material interests in transactions, arrangements or contracts No significant transactions, arrangements or contracts in relation to the Company’s business to which the Company was a party and in which a director of the Company had a material interest, whether directly or indirectly, subsisted at the end of the year or at any time during the year (2020: Nil). Remuneration paid or receivable in respect of accepting office as director There was no remuneration paid or receivable in respect of accepting office as director and other emoluments paid or receivable in respect of director’s other services in connection with the management of the affairs of the Company or its subsidiary undertaking during the year (2020: Nil). 15. LOss PER sHARE Basic loss per share is calculated by dividing the loss attributable to the equity holders of the Company by the weighted average number of ordinary shares on issue during the period. Diluted loss per share is calculated by adjusting the weighted average number of ordinary shares outstanding and to assume conversion of all dilutive potential ordinary shares. Loss for the period attributable to the equity holders of the Company (HK$’000) Weighted average number of ordinary shares for the purpose for 2021 2020 (14,172) (21,016) calculating the loss per share (thousands) 9,279,232 9,241,413 Effects of dilution from: — share options (thousands) 195,500 90,000 Weighted average number of ordinary shares adjusted for the effect of dilution (thousands) 9,334,133 (*) 9,346,796 (*) Loss per share attributable to the equity holders of the Company: Basic (HK cents) Diluted (HK cents) (0.15) (0.15) (*) (0.23) (0.23)(*) Note (*): Because the diluted loss per share amount is decreased when taking share options into account, the share options had an anti-dilutive effect on the basic loss per share for the year and were ignored in the calculation of diluted loss per share. Therefore, the diluted loss per share amounts are based on the loss for the year of HK$14,172,000 (2020: HK$21,016,000), and the weighted average number of ordinary shares 9,334,133,000 (2020: 9,346,796,000) on issue during the year that are considered in the calculation of basic loss per share. 16. DIVIDEND No dividend was paid or proposed during the year ended 30 June 2021, nor has any dividend been proposed since the balance sheet date (2020: Nil). 17. mINING EXPLORATION PROPERTIEs Balance as at 1 July 2019 Recoupment of benefit Exchange differences Balance as at 30 June 2020 Recoupment of benefit Exchange differences Balance as at 30 June 2021 ANNUAL REPORT 2021 mining exploration properties in Australia HK$’000 757,345 (5,404) (20,893) 731,048 (14,763) 68,648 784,933 At 30 June 2021 the Group held capitalised mining exploration properties in Australia of HK$784,933,000 (2020: $731,048,000), representing 94% (2020: 95%) of the Group’s total assets. The determination as to whether there are any indicators to require a mining exploration property to be assessed for impairment, involves a number of judgments including whether the Group has tenure, will be able to perform ongoing expenditure and whether there is sufficient information for a decision to be made that the area of interest is not commercially viable, (refer to note 30(a)). The Group performed an assessment of the impairment indicators at 30 June 2021 in accordance with IFRS 6, taking into account the following factors: 1. 2. 3. 4. 5. 6. The Group still had the right to explore the tenements. To date there have been no adverse findings reported or identified from technical studies undertaken that would affect the advancement of Marillana. Substantial further expenditure is forecast for Marillana at 30 June 2021 and beyond, to continue to advance development of the project. Since 1 January 2019, the iron ore price has increased to levels not seen since 2014 and at 30 June 2021 the price was above A$293 per tonne or US$220 per dry metric tonne (at an exchange rate of US$0.75). At 30 June 2021, the Group’s market capitalisation was HK$2,041,000,000, well in excess of the net assets HK$645,702,000. The Group’s Mineral Resource estimate has not changed since September 2018. As a result of considering these factors, the directors did not identify any impairment indicators. 81 NOTEs TO THE CONsOLIDATED fINANCIAL INfORmATION 18. PROPERTY, PLANT, EQUIPmENT AND RIGHT-Of-UsE AssETs for the year ended 30 June 2021 1 July 2020 Additions Depreciation Exchange differences At 30 June 2021 Cost Accumulated depreciation Net book amount for the year ended 30 June 2020 1 July 2019 Additions Disposals Depreciation Exchange differences At 30 June 2020 Cost Accumulated depreciation Net book amount Plant, furniture, fixtures and equipment HK$’000 Right-of-use asset HK$’000 Total HK$’000 181 19 (48) 15 167 4,904 (4,737) 167 144 137 (12) (84) (4) 181 4,491 (4,310) 181 1,226 676 (478) 114 1,538 1,902 (364) 1,538 — 1,533 — (301) (6) 1,226 1,533 (307) 1,226 1,407 695 (526) 129 1,705 6,806 (5,101) 1,705 144 1,670 (12) (385) (10) 1,407 6,024 (4,617) 1,407 There was no depreciation expense (2020: Nil) included in cost of sales and depreciation of HK$526,000 (2020: HK$385,000) was included in administration expenses. 19. LEAsEs The Group as a lessee The Group has lease contracts for commercial office space. There are several lease contracts that include extension and variable lease payments, which are further discussed below. (a) Right-of-use assets The carrying amounts of the Group’s right-of-use assets and the movements during the year are as follows: Opening balance Additions Depreciation charge Exchange difference 2021 HK$’000 1,226 676 (478) 114 1,538 2020 HK$’000 — 1,533 (301) 6 1,226 ANNUAL REPORT 2021 19. LEAsEs (Continued) The Group as a lessee (Continued) (b) Lease liabilities The carrying amount of lease liabilities and the movements during the year are as follows: Opening balance New leases Accretion of interest recognised during the year Payments Exchange difference Analysed into: Current portion Non-current portion (c) The amounts recognised in profit or loss in relation to leases is as follows: Interest on lease liabilities Depreciation charge of right-of-use assets Expense relating to short-term leases (included in administrative expenses) Total amount recognised in profit or loss 20. CAsH AND CAsH EQUIVALENTs Cash and cash equivalents The balance of cash and cash equivalents is denominated in the following currencies: HK$ A$ US$ 2021 HK$’000 1,493 676 208 (577) 139 1,939 2021 HK$’000 828 1,111 2021 HK$’000 208 478 198 884 2021 HK$’000 45,667 45,677 2021 HK$’000 9,142 36,346 179 45,667 2020 HK$’000 — 1,533 158 (197) (1) 1,493 2020 HK$’000 382 1,111 2020 HK$’000 158 301 1,279 1,738 2020 HK$’000 34,919 34,919 2020 HK$’000 12,448 22,292 179 34,919 Cash at bank earns interest at floating rates based on daily bank deposit rates. Short term time deposits are made for varying periods of between one day and three months depending on the immediate cash requirements of the Group, and earn interest at the respective short term time deposit rates. The bank balances and pledged deposits are deposited with creditworthy banks (AA+) with no recent history of default. 83 NOTEs TO THE CONsOLIDATED fINANCIAL INfORmATION 21. OTHER RECEIVABLEs, DEPOsITs AND PREPAYmENTs Other receivables and deposits Prepayments 2021 HK$’000 28 1,005 1,033 2020 HK$’000 608 973 1,581 The financial assets included in the above balances relate to receivables for which there was no recent history of credit loss. 22. TRADE AND OTHER PAYABLEs Trade payables of the Group principally represent amounts outstanding to suppliers. The normal credit period is between 30 days and 90 days. Trade and other payables 23. BORROWINGs Non-current Loans from Polaris Loans from a substantial shareholder 2021 HK$’000 1,123 1,123 2021 HK$’000 41,774 15,471 57,245 2020 HK$’000 829 829 2020 HK$’000 21,242 14,151 35,393 As at 30 June 2021, the borrowings from a substantial shareholder were unsecured, bore interest at 12% (2020: 12%) per annum and were repayable on 31 October 2022 (2020: 31 October 2021). On 18 November 2019 and 4 May 2021, Polaris advanced the first and second tranche of the loans (total advanced of A$10,000,000) to Brockman Iron pursuant to the terms of the Farm-in Joint Venture Agreement over the Marillana Iron Ore Project. The loans are secured (per a Deed of Cross Security), carried at amortised cost and are repayable to Polaris from net revenue received by Brockman Iron from the sale of its percentage share of product sold from the joint operation. 24. sHARE CAPITAL Ordinary shares of HK$0.1 each Authorised As at 30 June 2021 and 30 June 2020 Issued and fully paid As at 30 June 2019 Issue of shares (Note a) As at 30 June 2021 and 30 June 2020 Number of shares ’000 share capital HK$’000 20,000,000 2,000,000 9,221,232 58,000 9,279,232 922,123 5,800 927,923 Note a: On 24 February 2020, 58,000,000 share options were exercised by directors and employees of the Group. ANNUAL REPORT 2021 25. sHARE OPTION sCHEmE share option scheme of the Company The 2012 share option scheme (the “2012 Share Option Scheme”) of the Company was adopted by the Company pursuant to the approval by shareholders at the Annual General Meeting on 13 November 2012. The 2012 Share Option Scheme replaced the previous share option scheme which expired in August 2012. Its primary purpose was to provide incentives or rewards to selected participants for their contribution to the Group and eligible participants of the scheme 2021A and 2021B include the Company’s directors, including independent non-executive directors and other employees of the Group. The 2012 Share Option Scheme is valid and effective for a period of ten years from the date of its adoption and will expire in August 2022. The maximum number of unexercised share options currently permitted to be granted under the Scheme is an amount equivalent, upon their exercise, to 10% of the shares of the Company on issue at any time. The maximum number of shares issuable under share options to each eligible participant in the Scheme within any 12 month period is limited to 1% of the shares of the Company on issue at any time. Any further grant of share options in excess of this limit is subject to shareholders’ approval in a general meeting. Share options granted to a director, chief executive or substantial shareholder of the Company, or to any of their associates, are subject to approval in advance by the independent non-executive directors. The exercise period of the share options granted is determinable by the directors, and commences after a vesting period and ends on a date which is not later than three years from the date of offer of the share options. The exercise price of share options is determinable by the directors, but may not be less than the higher of (i) the Stock Exchange closing price of the Company’s shares on the date of offer of the share options; and (ii) the average Stock Exchange closing price of the Company’s shares for the five trading days immediately preceding the date of offer. Share options do not confer rights on the holders to dividends or to vote at shareholders’ meetings. The fair value of the employee services received in exchange for the grant of the share options is recognised as an expense, with a corresponding adjustment to employee share-based compensation reserve, over the vesting period. At the end of each reporting period, the Company revises its estimates of the number of options that are expected to vest. It recognises the impact of the revision to original estimate, if any, in the consolidated statement of comprehensive income, with a corresponding adjustment to equity. Details of specific categories of options are as follows: Option type Date of grant Number of share options granted 2021A 29 June 2021 17,500,000 fair value at the grant date Vesting period (HK$’000) 1,378,000 29 June 2021 – 1 January 2022 14 May 2021 71,000,000 5,339,000 14 May 2021 – 1 January 2022 2021B 29 June 2021 15,000,000 723,000 29 June 2021 – 14 May 2021 2,000,000 105,000 14 May 2021 – 105,500,000 7,545,000 1 January 2022 1 January 2022 Exercise period 1 January 2022 – 31 December 2024 1 January 2022 – 31 December 2024 1 January 2022 – 12 May 2024 1 January 2022 – 12 May 2024 Exercise price (HK$) 0.213 0.213 0.295 0.295 The fair values of all the share options were calculated using the Binomial model prepared by an independent valuer. The inputs into the model were as follows: Exercise price Expected volatility Expected option life Annual risk-free rate Expected dividend yield Weighted average share price (per share) HK$0.213 – HK$0.295 51% – 53% 2.9 – 3.5 years 0.272% – 0.416% 0% HK$0.207 85 NOTEs TO THE CONsOLIDATED fINANCIAL INfORmATION 25. sHARE OPTION sCHEmE (Continued) share option scheme of the Company (Continued) The volatility measured at grant date is referenced to the historical volatility of shares of the Company. The values of share options calculated using the binomial model are subject to certain fundamental limitations, due to the subjective nature of and uncertainty relating to a number of assumptions of the expected future performance input to the model, and certain inherent limitations of the model itself. The value of an option varies with different variable of certain subjective assumptions. Any change to the variables used may materially affect the estimation of the fair value of an option. For the year ended 30 June 2021, the Company recognised the total expense of HK$1,148,000 (2020: HK$1,476,000 with regard to the share options previously granted by the Company during the year that expired on the 31 December 2020). Movements in the number of share options outstanding and their related weighted average exercise prices are as follows: 2021 2020 Average exercise price in HK$ per share option 0.13 0.23 — 0.13 0.23 Number of share options (thousands) 90,000 105,500 — 90,000 105,500 Average exercise price in HK$ per share option 0.14 — 0.12 0.12 0.13 Number of share options (thousands) 149,750 — 58,000 1,750 90,000 At 1 July Granted Exercised Lapsed At 30 June As at 30 June 2021, 105,500,000 (2020: 90,000,000 share options previously granted by the company that expired on the 31 December 2020) options were outstanding with a weighted average exercise price of HK$0.23 (2020: HK$0.13), no options were vested (2020: 90,000,000) and no options were exercised (2020: 58,000,000). As at 30 June 2021, the weighted average of the remaining contractual life of the outstanding share options was 2.9 and 3.5 years (30 June 2020: 0.5 years). No share options were exercised during the year (2020: 58,000,000) and there were, no issues of ordinary shares of the Company (2020: 58,000,000) and new share capital (2020: HK$5,800,000 (before issue expenses) was issued, as further detailed in note 24 to the consolidated financial statements). At the end of the reporting period, the Company had 105,500,000 (2020: 90,000,000) share options outstanding the scheme. The exercise in full of the outstanding share options would, under the present capital structure of the Company, result in the issue of 105,500,000 (2020: 58,000,000) additional ordinary shares of the Company and additional share capital of HK$10,550,000 (before issue expense) (2020: $5,800,000). 26. DEfERRED INCOmE TAX LIABILITY The following is the deferred income tax movement recognised by the Group: At 1 July 2019 Deferred tax associated with the Polaris loans Exchange differences At 30 June 2020 Deferred tax associated with the Polaris loans Offset of deferred tax assets for tax losses recognised Exchange differences At 30 June 2021 All deferred tax liabilities are expected to be settled more than 12 months after the balance sheet date. mining exploration properties in Australia HK$’000 (134,172) 1,621 3,701 (128,850) 4,429 10,041 (12,326) (126,706) ANNUAL REPORT 2021 26. DEfERRED INCOmE TAX LIABILITY (Continued) At 30 June 2021, the Group’s total tax losses in Australia and Hong Kong were HK$1,214,000,000 (2020: HK$1,123,000,000) and have no expiry date. The Group did not recognise a deferred income tax asset in respect of tax losses amounting to approximately HK$869,000,000 (2020: HK$819,000,000) as the utilisation of these tax losses is subject to the satisfaction of the loss recoupment rules in the relevant tax jurisdiction as well as other uncertainties which mean that their availability for utilisation or realisation is not considered probable. 27. PROVIsIONs Current Employee benefits 2021 HK$’000 2020 HK$’000 1,458 1,062 Provisions for annual leave and long service leave expected to be settled wholly within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities are settled. The current provision includes amounts for vested long service leave for which the Group does not have an unconditional right to defer settlement, regardless of when the actual settlement is expected to occur. However, based on past experience, the Group does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months. 28. NOTEs TO THE CONsOLIDATED sTATEmENT Of CAsH fLOWs (a) major non-cash transactions During the year, the Group had additions to right-of-use assets and lease liabilities of HK$676,000, in respect of lease arrangements for commercial office (2020: HK$1,533,000). (b) Changes in liabilities from financing activities At 1 July 2020 Changes from financing activities New leases Accretion of the loans from Polaris Recoupment of benefit on recognition of Polaris loans Interest expense on loans from substantial shareholder Interest expense on leases Exchange difference At 30 June 2021 At 1 July 2019 Changes from financing activities New leases Recoupment of benefit on recognition of Polaris loans Interest expense on loans from substantial shareholder Interest expense on leases Exchange difference At 30 June 2020 Borrowings HK$’000 35,393 29,142 — 3,900 (14,763) 1,320 — 2,253 57,245 Borrowings HK$’000 12,828 26,646 — (5,404) 1,324 — (1) 35,393 Lease liabilities HK$’000 1,493 (577) 676 — — — 208 139 1,939 Lease liabilities HK$’000 — (197) 1,533 — — 158 (1) 1,493 87 NOTEs TO THE CONsOLIDATED fINANCIAL INfORmATION 29. COmmITmENTs AND CONTINGENT LIABILITIEs (a) Capital commitments As at 30 June 2021, the Group did not have any capital commitments (2020: Nil). (b) Exploration expenditure commitments As at 30 June 2021, the Group is required to meet or exceed a minimum level of exploration expenditure of A$1,237,000, equivalent to approximately HK$7,212,000 (2020: A$1,235,000 equivalent to approximately HK$6,584,000), over the next year. Obligations are subject to change upon expiry of the existing exploration leases or on application for a new lease. (c) Joint Venture commitments As at 30 June 2021 there were no joint venture commitments (2020: Nil). (d) Contingent liabilities As at 30 June 2021, the Group had no contingent liabilities (2020: Nil). 30. JOINT ARRANGEmENTs (a) Joint operations and farm-out arrangements The Group entered into an agreement with Polaris to share costs and risks associated with exploration activities on the Marillana and Ophthalmia tenements in the East Pilbara of Western Australia. Polaris was required to meet certain farm-in obligations including minimum expenditure of A$250,000 and A$150,000 respectively in exploration and development of the tenements in return for a 50% interest in the tenements. Polaris will contribute 50% of costs and capital expenditure going forward and Polaris has been appointed as operator of the joint operation. The Group does not record any expenditure made by the farmee on its account. It also does not recognise any gain or loss on its exploration and evaluation farm-out. Name of joint operation Marillana Joint Venture (Note (a)) Ownership interest 50% Principal activities Development and operation of the Marillana iron ore project Note a: On the 22 April 2021 an unincorporated joint arrangement was formed with Polaris Metals Pty Ltd in Australia which is seeking to develop the Marillana iron ore project. (b) Joint ventures At 1 July 2020 Contributions to the joint venture Share of loss of joint venture Exchange differences At 30 June 2021 2021 HK$’000 644 138 (139) 60 703 2020 HK$’000 653 137 (125) (21) 644 The following illustrates the aggregate financial information of the Group’s joint ventures that are not individually material: Share of the joint venturers loss for the year Aggregate carrying amount of the Group’s investments in the joint venture Details of the Group’s interest in the joint ventures is as follows: 2021 HK$’000 (139) 2020 HK$’000 (125) 703 644 Name of joint venture NWIOA Ops. Pty Ltd (Note (b)) Ownership interest 37% Principal activities Port and related infrastructure Note b: NWIOA Ops. Pty Ltd is a joint venture incorporated in Australia which is seeking to develop port and related infrastructure on behalf of the North West Iron Ore Alliance (“NWIOA”) members. Management considers the interest in this joint arrangement is not individually material to the Group. ANNUAL REPORT 2021 31. RETIREmENT BENEfITs sCHEmEs The Group operates a defined contribution retirement benefits scheme (the “MPF Scheme”) under the Mandatory Provident Fund Scheme Ordinance for its employees in Hong Kong. The Group contributes at least 5% (2020: 5%) of the employees’ basis salaries to the MPF scheme. The assets of the MPF scheme are held separately from those of the Group in an independently administered fund. The employees of the Group subsidiaries in Australia are entitled to superannuation that is a defined contribution plan under which the Group contributes of 9.5% (2020: 9.5%) of base salary. The total cost is charged to administration expense of approximately HK$575,000 (2020: HK$534,000) represents contributions to these schemes by the Group in respect of the current year. 32. RELATED PARTY DIsCLOsUREs (a) material related party transactions Except as disclosed within these consolidated financial statements, the Group has no material related party transactions during the year (2020: Nil). (b) Related party balances The details of the loans from a substantial shareholder are disclosed in Note 23. (c) Compensation of key management personnel The remuneration of directors and other members of key management during the year were as follows: Salaries and other benefits Post-employment benefits Share-based compensation expenses 2021 HK$’000 8,450 402 267 9,119 2020 HK$’000 7,947 374 1,134 9,455 Further details of directors’ emoluments are included in note 14(a) to the consolidated financial statements. The remuneration of directors and key executives is determined by the remuneration committee having regard to the performance of individuals and market trends. 33. fAIR VALUE AND fAIR VALUE HIERARCHY Of fINANCIAL INsTRUmENTs The following liabilities of the Group are measured or disclosed at fair value, using a three level hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being: Level 1: Quoted prices (unadjusted) in active market for identical assets or liabilities that the entity can access at the measurement date. Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly. Level 3: Unobservable inputs for the asset or liability. The carrying amounts and fair values of the Group’s financial instruments, other than those with carrying amounts that reasonably approximate to fair values, are as follows: Loans from Polaris Loans from a substantial shareholder Carrying amounts 2021 HK$’000 41,774 15,471 57,245 2020 HK$’000 21,242 14,151 35,393 fair values 2021 HK$’000 41,774 15,471 57,245 2020 HK$’000 21,242 14,151 35,393 89 NOTEs TO THE CONsOLIDATED fINANCIAL INfORmATION 33. fAIR VALUE AND fAIR VALUE HIERARCHY Of fINANCIAL INsTRUmENTs (Continued) Management has assessed that the carrying value of cash and cash equivalents, trade receivables, payables, financial assets included in prepayments, other receivables and other current assets are reasonably approximate to their fair values. At each reporting date, the Group analyses the movements in the values of financial instruments and determines the major inputs applied in the valuation. The valuation process and results are discussed with the audit committee twice a year for interim and annual financial reporting. The fair values of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The fair value of other borrowings have been calculated by discounting the expected future cash flows using rates currently available for instruments with similar terms, credit risk and maturity. 34. sUBsIDIARIEs The following is a list of the principal subsidiaries as at 30 June 2021 and 30 June 2020: Name of subsidiary Place of incorporation Place of operation Particular of issued share capital Ownership interest held by the Company Principal activities subsidiaries directly held by the Company: Brockman Mining (Management) Limited Hong Kong Hong Kong Wah Nam Iron Ore Limited BVI Hong Kong subsidiaries indirectly held by the Company: Brockman Mining Australia Pty Ltd Australia Australia Brockman Iron Pty Ltd Australia Australia Brockman Exploration Pty Ltd Australia Australia Brockman East Pty Ltd Australia Australia Yilgarn Mining (WA) Pty Ltd Australia Australia Brockman Infrastructure Pty Ltd Australia Australia Brockman Ports Pty Ltd Australia Australia Brockman Maverick Pty Ltd Australia Australia Brockman Holdings (Australia) Pty Ltd Australia Australia 1 Ordinary share of HK$1 1 Ordinary share of US$1 145,053,151 Ordinary shares of A$1 each 1 Ordinary share of A$1 1 Ordinary share of A$1 1 Ordinary share of A$1 841,001 Ordinary shares of A$1 1 Ordinary share of A$1 76 Ordinary shares of A$1 each 2 Ordinary shares of A$1 12 Ordinary shares of A$1 each 100 100 Investment holding 100 100 Investment holding 100 100 Investment holding 100 100 Exploration & evaluation 100 100 Exploration & evaluation 100 100 Exploration & evaluation 100 100 Exploration & evaluation 100 100 Rail infrastructure 100 100 Port infrastructure 100 100 Exploration & evaluation 100 100 Investment holding ANNUAL REPORT 2021 35. BALANCE sHEET AND REsERVE mOVEmENT Of THE COmPANY As at 30 June Non-current assets Property, plant and equipment Right-of-use asset Current assets Other receivables, deposits and prepayments Amounts due from subsidiaries Cash and cash equivalents Total assets Equity and liabilities Share capital Reserves Total equity Non-current liabilities Borrowings Current liabilities Trade and other payables Amount due to subsidiaries Total liabilities Total equity and liabilities Note (a) 2021 HK$’000 5 532 537 755 815,982 8,931 825,668 826,205 927,923 (364,945) 562,978 15,472 15,472 815 246,940 247,755 263,227 826,205 2020 HK$’000 9 — 9 736 746,080 12,176 758,992 759,001 927,923 (430,324) 497,599 14,152 14,152 290 246,960 247,250 261,402 759,001 The balance sheet of the Company was approved by the Board of Directors on 17 September 2021 and was signed on its behalf. Kwai Kwun, Lawrence Director Chan Kam Kwan, Jason Director 91 NOTEs TO THE CONsOLIDATED fINANCIAL INfORmATION 35. BALANCE sHEET AND REsERVE mOVEmENT Of THE COmPANY (Continued) Note (a) Reserves movement in the Company Balance at 1 July 2019 Comprehensive income: Loss for the year Exercise of options Share-based compensation (Note 25) At 30 June 2020 Comprehensive income: Profit for the year Share-based compensation (Note 25) Balance at 30 June 2021 share premium HK$’000 4,463,016 share-based compensation reserve HK$’000 87,700 Accumulated losses HK$’000 (4,947,094) — 5,608 — 4,468,624 — — 4,468,624 — (4,216) 1,477 84,961 — 1,149 86,110 (36,815) — — (4,983,909) 64,230 — (4,919,679) Total HK$’000 (396,378) (36,815) 1,392 1,477 (430,324) 64,230 1,149 (364,945) 36. sTATEmENT Of CAsH fLOWs fOR THE COmPANY Cash flows from operating activities Profit/(loss) before tax Adjustments to reconcile profit before tax to net cash flows: Depreciation of property, plant and equipment Depreciation of right-of-use assets Share-based payment expense Finance costs Finance income Foreign currency translation Working capital adjustments: — Increase/decrease in trade receivables & prepayments — Increase/decrease in trade and other payables — Increase/decrease in amounts due (from) subsidiaries Net cash flows used in operating activities Investing activities Interest received Net cash flows from investing activities financing activities Proceeds from issuance of ordinary shares Payment of principal portion of lease liabilities Interest on lease payments Net cash flows (used in)/from financing activities Net (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year 37. EVENTs OCCURRING AfTER BALANCE sHEET DATE There are no significant events which have occurred after the balance sheet date. Year ended 30 June 2021 HK$’000 2020 HK$’000 64,230 4 145 1,149 1,381 (13) (257,595) (20) (49) 187,675 (3,093) 13 13 — (104) (61) (165) (3,245) 12,176 8,931 (36,815) 4 — 1,477 1,324 (132) (52,994) (43) 44 74,224 (12,192) 132 132 7,192 — — 7,192 (5,589) 17,765 12,176 fINANCIAL sUmmARY ANNUAL REPORT 2021 REsULTs Revenue Loss before income tax Income tax benefit Profit/(loss) for the year from 2021 HK$’000 Note a — (28,318) 14,146 2020 HK$’000 2019 HK$’000 2018 HK$’000 2017 HK$’000 — (22,606) 1,590 — (25,785) 93,373 — (49,059) — — (37,057) — continuing operations (14,172) (21,016) 67,588 (49,059) (37,057) Profit/(loss) for the year from discontinued operations Profit/(loss) for the year Attribute to: Equity holders of the Company Earnings/(loss) per share (HK cents) — Basic — Diluted AssETs AND LIABILITIEs Total assets Total liabilities Total equity — (14,172) — (21,016) — 67,588 157,145 108,086 (801) (38,308) (14,172) (21,016) 67,588 108,086 (38,308) (0.15) (0.15) (0.23) (0.23) 0.74 0.73 1.27 1.27 2021 HK$’000 834,173 (188,471) 645,702 645,702 2020 HK$’000 769,720 (167,627) 602,093 602,093 2019 HK$’000 780,474 (148,504) 631,970 631,970 2018 HK$’000 838,197 (253,472) 584,725 584,725 (0.46) (0.46) 2017 HK$’000 858,630 (394,667) 463,963 463,963 Note a: The financial figures above were extracted from the consolidated financial statements. 93 AsX ADDITIONAL INfORmATION A. DIsTRIBUTION Of sHAREHOLDINGs As AT 17 sEPTEmBER 2021 Category 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 and over TOTAL Ordinary shares Holders 796 169 128 733 337 2,163 size of holding 188,629 387,078 1,033,446 30,422,749 9,247,200,229 9,279,232,131 Unlisted options @ HK$0.213 Unlisted options @ HK$0.295 Holders size of holding Holders size of holding 10 88,500,000 3 17,000,000 Additional information in accordance with the listing requirements of the Australian Securities Exchange Limited are as follows: Minimum $500.00 parcel cannot be calculated due to no price. Unquoted securities As at 17 September 2021, unlisted options amounted to a total of 105,500,000 units. Among these options, 88,500,000 options have an exercise price of HK$0.213 an expiry date of 31 December 2024 and 17,000,000 options have an exercise price of HK$0.295 an expiry date of 12 May 2024. B. TWENTY LARGEsT sECURITY HOLDERs As AT 17 sEPTEmBER 2021 Name 1 OceanLine Holdings Ltd/Kwai Sze Hoi 2 China Vered Securities Ltd 3 The Hong Kong & Shanghai Banking Corporation Limited 4 Equity Valley Investments Ltd 5 KQ Resources Ltd 6 Sun Hung Kai Investment Services Ltd 7 UBS Securities Hong Kong Ltd 8 Yungfeng Securities Ltd 9 Global Mastermind Securities Ltd 10 Citibank N.A 11 Cornerstone Pacific Limited 12 Ross Norgard/Longfellow Nominees Pty Ltd 13 BNP Paribas Securities Services 14 Barwick Investments Ltd 15 Guoyuan Securities Brokerage (HK) 16 Zhang Li 17 Futu Securities International (Hong Kong) Limited 18 ICBC (Asia) Securities Ltd 19 Luk Fook Securities (HK) Ltd 20 DBS Bank (Hong Kong) Ltd * Δ Δ * * Δ Δ Δ Δ Δ * * Δ * Δ * Δ Δ Δ Δ Number of shares 1,937,743,902 764,904,972 682,136,342 499,972,276 486,485,462 449,675,208 427,306,021 427,100,032 370,444,592 270,371,567 250,000,000 243,054,000 185,701,496 174,668,000 137,806,800 100,000,000 99,414,664 80,172,560 80,000,000 68,917,480 % 20.88% 8.24% 7.35% 5.39% 5.24% 4.85% 4.60% 4.60% 3.99% 2.91% 2.69% 2.62% 2.00% 1.88% 1.49% 1.08% 1.07% 0.86% 0.86% 0.74% The number of shares stated herein are extracted and sorted from the register of shareholders (“*”) and the participant report from the Central Clearing and Settlement System of the Hong Kong Stock Exchange (“CCASS”) (“Δ”). As the Company does not have information in relation to the ultimate beneficial owners of the shares held by the participants of the CCASS, the numbers herein may not reflect the actual number of shares beneficially owned by each of the shareholders. ANNUAL REPORT 2021 C. sUBsTANTIAL sHAREHOLDERs Name of shareholder Capacity Number of shares or underlying shares Percentage of the issued share capital of the Company Ocean Line Holdings Ltd (Note 1) Beneficial owner 2,426,960,137 Kwai Sze Hoi (Note 1) Interest held by controlled corporations 2,426,960,137 Beneficial owner 206,072,000 Interest held jointly with another person 60,720,000 Interest of spouse 24,496,000 Cheung Wai Fung (Note 1) Interest held by controlled corporations 2,426,960,137 Interest held jointly with another person 60,720,000 Interest of spouse Beneficial owner Equity Valley Investments Limited Beneficial owner 206,072,000 24,496,000 515,574,276 The XSS Group Ltd (Note 2) Interest held by controlled corporations 515,574,276 Cheung Sze Wai, Catherine Interest held by controlled corporations 515,574,276 (Note 2) Interest of spouse 50,000,000 Luk Kin Peter Joseph (Note 2) Interest held by controlled corporations 515,574,276 Beneficial owner 50,000,000 26.15% 26.15% 2.22% 0.65% 0.26% 26.15% 0.65% 2.22% 0.26% 5.56% 5.56% 5.56% 0.54% 5.56% 0.54% KQ Resources Limited Beneficial owner 1,301,270,316 14.02% Notes: Please refer to Notes 1 and 2 under section headed: Substantial shareholders on page 48. D. VOTING RIGHTs The voting rights attaching to each class of equity securities are set out below: (a) Ordinary shares Each shareholder present in person or by proxy, attorney or representative in a meeting shall have one vote on a poll for each share held. (b) Options No voting rights E. sTOCK EXCHANGE LIsTING Quotation has been granted for all the ordinary shares of the Company on all member Exchanges of the ASX Limited. 95 AsX ADDITIONAL INfORmATION f. TENEmENT sCHEDULE – As AT 17 sEPTEmBER 2021 Project Duck Creek Duck Creek East Fig Tree Juna Downs Juna Downs Madala Bore Marillana Marillana Marillana Marillana Marillana Mindy Ophthalmia Ophthalmia Ophthalmia Ophthalmia Ophthalmia Ophthalmia Ophthalmia Punda Spring Tom Price Location West Pilbara West Pilbara East Pilbara West Pilbara West Pilbara West Pilbara East Pilbara East Pilbara East Pilbara East Pilbara East Pilbara West Pilbara East Pilbara East Pilbara East Pilbara East Pilbara East Pilbara East Pilbara East Pilbara West Pilbara West Pilbara Tenement Tenement type E E E E E E L M E E E E E E E E R R R E E number 47/1725 47/2994 47/3025 47/3363 47/3364 47/3285 45/0238 47/1414 47/3170 47/3532 47/4293 47/3585 47/1598 47/2280 47/2291 47/3549 47/0013 47/0015 47/0016 47/3575 47/3565 Commodity Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore status Granted Granted Granted Granted Granted Granted Application Granted Granted Granted Application Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Interest held 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 

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