ANNUAL REPORT
2020
A B N 1 5 1 1 7 3 3 0 7 5 7
Vertically integrated graphite business
positioned to support the global transition
The Company provides investors with a short to medium term to invest in the
global paradigm shift in e-mobility and energy storage technologies.
to clean energy and E-mobility.
Recovery of battery
anode materials from
lithium-ion batteries
We have spent 3 years and many millions of dollars in
perfecting a new eco-friendly purification process. In
research & development, in process design, feasibility
studies, piloting, product testing and endorsement
by anode manufacturers, and more recently on
engineering and design for a processing facility in
Western Australia to export spherical graphite to
customers in Asia, Europe and America.
EPANKO MINE
The purification process and the spherical graphite
product is trademarked EcoGraf with patent pending.
This project is now development ready. The Western
Scalable mining projects
Australian Government is providing strong support and
for long-term supply of
has allocated EcoGraf land in Kwinana near Perth.
graphite products
Financing discussions are well underway for debt and
equity with both Government and industry groups. This
funding is underpinned by offtake support from major
industrial groups in the sector.
a multi-hub development commencing in Kwinana,
The opportunity to manufacture spherical graphite for
Western Australia that will provide a global new supply
the growing battery market is now a reality.
of environmentally responsible battery graphite for
The Epanko mining project in Tanzania is also ready
lithium-ion batteries.
for development and independent of the EcoGraf
manufacturing business. Bank funding processes
The effective application of the EcoGraf™ process for
are now advancing well as the Tanzanian mining
recycling of production waste and end-of-life battery
regulations are being implemented and the investment
material significantly improves the EcoGraf™ value
climate improves.
proposition for customers, especially in Europe, where
My thanks to the EcoGraf management team and
EU directive 2006/66/EC requires battery manufacturers
directors for their hard work during the year and to you,
to finance the cost of recycling a minimum of 50% of
our shareholders, for your patience and continuing
battery materials.
support. It is our goal to ensure that this is fully
rewarded.
We are all familiar with the narrative on electric vehicles,
battery storage and the growth in demand for battery
minerals. This is the very understandable
rationale for strong market focus on battery minerals in
recent years.
BATTERY PRODUCTS
RECYCLING
We hear a lot about cathode minerals, lithium, cobalt,
nickel and manganese which together make up the
composition of the cathode in a lithium-ion battery. We
hear less about the anode which is 100% graphite and
represents almost half of the total minerals in a lithium-
ion battery.
Kwinana development
Not just any graphite, but a plus 99.95% pure spherical
ready 20,000tpa
graphite product that is refined to meet stringent
processing facility
chemical and physical specifications capable of
withstanding the intense operating conditions of a
battery in an electric vehicle.
Along with electric vehicles and growth in battery
EcoGraf Limited (ASX: EGR) is focused on becoming a
manufacturing, demand for this specialised spherical
major supplier of responsibly produced battery active
graphite product is growing exponentially. Coupled with
anode materials for the rapidly expanding battery
this there is increasing growth in demand for natural
flake graphite, which is the feedstock.
storage and electrical vehicle manufacturing.
To cater to this new demand for quality graphite
It holds 100% interests in a combination of attractive
EcoGraf has developed an integrated graphite
businesses that are poised for development, highly
business.
profitable and scalable.
To produce spherical graphite in Western Australia for
export directly to major anode manufacturers while at
Once established, EcoGraf will operate a diversified
the same time developing an upstream mining
material portfolio, supplying high quality natural flake
business to produce natural flake graphite as feedstock
graphite products through TanzGraphite to established
and for other traditional industrial markets.
markets in Asia and Europe, together with EcoGraf,
Currently all global supply of spherical battery graphite
is produced in China with a very toxic purification
process using hydrofluoric acid.
There is strong demand by anode manufacturers
outside China for an alternative non-Chinese supply
that is environmentally friendly. This is the market
demand that EcoGraf is catering to.
2
ECOGRAF LIMITED ANNUAL REPORT 2020
Robert Pett
Chairman
CONTENTS
Chairman's letter
Review of operations
Directors' report
Auditor's independence declaration
Financial statements
Directors' declaration
Independent auditor’s report
Shareholder information
Corporate directory
02
05
16
28
29
65
66
71
77
01
CHAIRMAN’S LETTER
The importance of batteries in our global future has never been
more apparent. In attacking air pollution with electric vehicles, in
improving efficiency in grid power delivery, in the pivotal transitioning
from fossil fuels to renewable energy, batteries and energy storage
technology has become fundamental to a clean energy future.
As a result, and with weighty public sector intervention
and climate change action globally, there is huge
investment being made in battery development and
manufacturing. This is no more evident than in the
massive and rapid investment in lithium-ion battery
manufacturing, with 115 mega factories currently in the
pipeline. Along with this has been a diversification of
battery cell manufacturing from China and the Asia
Pacific to Europe and America to support locally the
manufacturing of electric vehicles.
Electric vehicle manufacturers don’t just sell motor
cars, they sell a clean and sustainable future. So, it
should not be surprising that the sustainability of the
supply chain would have such importance, particularly
to those selling cars in major American, European
and related markets. These manufacturers are not
only looking for reliable and resilient supply but are
also under pressure to ensure that materials and
components throughout the entire supply chain are
sustainably and ethically produced.
It is no wonder that there is a market fixation on the
supply of battery minerals. To date this has been mainly
focused on the cathode minerals. The lithium, nickel,
copper, manganese and cobalt which make up the
cathode in a lithium-ion battery. But more attention is
now shifting to the anode and the supply of the high
purity spherical graphite that is used in its manufacture.
Indeed, this represents almost half of the total minerals in
a lithium-ion battery, with demand growing exponentially.
Currently all global supply of this battery graphite is
produced in China using a very toxic purification process.
EcoGraf has spent many years and many millions of
dollars in developing its own eco-friendly process to
produce this critical, high purity graphite product. In
research and development, in process design, piloting,
feasibility studies, product testing and endorsement by
customers and more recently in engineering and design
for a processing facility to be built in Western Australia
for export of spherical graphite to customers in Europe,
America and the Asia Pacific.
This facility is expected to be the first built outside of
China and will cater to the strong demand by anode
manufacturers outside of China seeking a price
competitive, reliable long term supply of eco-friendly
battery graphite as an alternative to Chinese supply.
Reliability and diversification of supply are important to
these manufacturers, particularly following the recent
global events and supply disruptions. But of particular
importance is the product’s green and sustainable
credentials.
All these factors bode well for EcoGraf as we gear up
to manufacture our green, battery graphite in Western
Australia. There may be no better time to be entering
the battery supply chain.
The manufacturing facility will be located in the
Kwinana Industrial Area in Perth, Western Australia
and is initially designed to produce 20,000 tonnes per
annum representing 10-12% of the battery graphite
market and with capacity to expand production as
demand increases. The project will be built in two
stages and on completion is currently estimated to
generate a healthy EDITDA of US$35 million per
annum.
Work by the EcoGraf team during the year has had
the single objective of getting this project ready for
development and achieving key milestones for a final
investment decision. This has included; optimisation
of the project design, selection of preferred graphite
feedstock and a supply agreement, support from the
Western Australian Government and Premier with land
allocated in the Kwinana Industrial Area, debt financing
support secured from Export Finance Australia,
arrangement of offtake with German technology
group thyssenkrupp AG and negotiations on an EPC
construction agreement. All this has been the backdrop
and prerequisites for project financing on which our
team is now fully focused.
02
ECOGRAF LIMITED ANNUAL REPORT 2020
ECOGRAF LIMITED ANNUAL REPORT 2020 This year a US$60 million debt financing proposal,
developed in conjunction with KfW IPEX-Bank and
designed to simplify and fast track funding, was
presented to the Government of Tanzania. This
proposal is live with discussions focused on the
structuring of the funding to conform with Tanzanian
legislative requirements.
The work effort at EcoGraf has not slackened and the
board and the team are fully focused on seizing the
battery market opportunities before us, becoming
a significant player in the battery supply chain as a
sustainable graphite product producer and delivering
sustained value to you, our shareholders.
Finally, I would like to thank my fellow directors and
the EcoGraf team for their efforts, support and positive
response to the COVID-19 pandemic challenges
experienced during the year. I also wish to thank our
shareholders, for your enduring support.
Robert Pett
Chairman
Another key element of a clean energy future is
effective recycling. What happens to all these batteries
when they wear out and what happens to all the scrap
material generated in their manufacturing? This has now
become a major issue for those pursuing climate action
and those in the battery and electric vehicle industries.
While considerable effort is being applied by others to
recover cathode metals using hydrometallurgy, EcoGraf
has been applying its proprietary graphite purification
technology to recycling of anode material and anode
production scrap.
Working with customers, EcoGraf has been able to
demonstrate excellent recoveries of high purity anode
material from both anode production scrap and black
mass. Black mass is the remnant graphite material
remaining after hydrometallurgical processing of end
of life batteries. The ability to recover and recycle this
material as a high purity product not only provides
another potent application for the EcoGraf purification
process but also supports electric vehicle and battery
manufacturers to achieve sustainable closed-loop
manufacturing.
This recycling success has generated significant
interest from leading electric vehicle manufacturers,
battery manufacturers and recyclers and with the
battery recycling market expected to reach US$18
billion over the next decade, this will be a major
component of our business development during the
coming year.
EcoGraf has always aspired to develop an integrated
graphite business. Our Epanko mining project in
Tanzania is fundamental to this plan. This project is also
development ready. It is a highly profitable, long life and
sustainable project that will produce high quality flake
graphite, while making a significant contribution to the
regional Tanzanian economy. The project has already
completed bankable feasibility, stringent bank due
diligence and compliance with Equator Principles for
environmental and social standards.
3033
The Kwinana facility will be the first of its kind to be
constructed outside of China and will provide a new
supply of high quality and cost competitive purified
spherical graphite for the lithium-ion battery market.
04ECOGRAF LIMITED ANNUAL REPORT 2020ENGINEERING CLEAN ENERGY REVIEW OF OPERATIONS
BATTERY GRAPHITE MANUFACTURING PROJECT (EGR: 100%)
The first new state-of-the-art EcoGraf ™ processing facility in Western Australia
will manufacture battery graphite products for export to Asia, Europe and
North America using a superior, environmentally responsible purification
technology to provide customers with sustainably produced, high performance
battery anode graphite.
The battery graphite production base is planned to be
expanded to include additional processing facilities in
Europe and North America to support the global transition
to clean, renewable energy in the coming decade.
The Company made significant progress during the year
to achieve key milestones for the development of the
new 20,000tpa battery graphite facility at Kwinana, in
Western Australia.
In February 2020, EcoGraf announced Export Finance
Australia, a corporate entity under the Federal
Department of Foreign Affairs and Trade, had provided
in-principle debt funding support for the development of
EcoGraf's proposed Kwinana battery graphite purification
plant. Export Finance Australia is continuing to undertake
commercial and technical due diligence on the project
before making a funding decision.
GERMAN OFFICE
PILOT PLANT
EPANKO GRAPHITE
PROJECT
HEAD OFFICE
PERTH CITY
Export to
Asia, Europe
and North
America
FREMANTLE
KWINANA
PROCESSING
FACILITY
Transport
Route
KWINANA
INDUSTRIAL
AREA
40km from
Perth City
EcoGraf global locations
505
REVIEW OF OPERATIONS
Commercial terms for the EPC agreement and
pre-development activities were advanced with
GR Engineering for the construction, operation and
maintenance of the Kwinana facility. Preparation of final
contract documentation is underway.
Pre-development activities for the project progressed
to schedule and the Company has executed an option
agreement with the Western Australian Land Authority
(DevelopmentWA) over a 6.7ha site in the highly sought-
after Kwinana Industrial Area, located 40km’s south of
Perth. The Company’s decision to locate its first EcoGraf™
facility in Kwinana was based on the strong European
customer support, including EV manufacturers seeking
responsibly produced, diversified battery graphite supply
and the positive Government support for its development.
The Company has received letters of support from
customers and signed a product sales agreement with
thyssenkrupp Materials Trading GmbH, a subsidiary of
major German technology group thyssenkrupp AG, for
the sale of battery graphite products.
Securing the site provides location certainty, as due
diligence processes continue in relation to in-principle
debt funding support received by Export Finance
Australia.
A Memorandum of Understanding was entered into with
German trading group Technografit GmbH for the supply
of natural flake graphite feedstock for the proposed
facility in Western Australia.
EcoGraf is also working with Water Corporation WA to
access partly treated water from the adjacent wastewater
treatment plant as process water, as an alternative to
utilising the available mains water supply. The water
pipeline passes along an easement on the northern side
of the site which allows construction of a dedicated line
to the EcoGraf™ facility. The initiative of recycling of water
from the treatment plant supports the Company’s strong
sustainability strategy and provides potential recycling
and cost benefits.
Westport Kwinana Development
Potential Location
Tianqi Lithium
Li - Battery market
BHP Nickel West
Ni - Battery market
EcoGraf 6.7ha
Kwinana Site Location
Water Corporation
East Rockingham Waste
Water Treatment Plant
06
ECOGRAF LIMITED ANNUAL REPORT 2020 EcoGraf has signed a battery graphite
sales agreement with major German
technology group thyssenkrupp.
European gigafactory production
07
REVIEW OF OPERATIONS
Independent testwork results from the purification
process flow sheet program confirmed the effectiveness
and eco-friendly nature of the EcoGraf™ proprietary
purification process, with no adverse emissions recorded
for gaseous, aqueous or solid residues. Results of this
testwork provided GR Engineering with the information
required to finalise the detailed design of the process
flow sheet and equipment design data. Studies are
ongoing to finalise the mass balance, process flows and
quantification of wastewater volumes.
Other pre-development technical programs were
undertaken to progress the Kwinana development
including:
• Equipment testing campaigns by suppliers; and
• Feedstock optimisation benchmarking to determine
the preferred feedstocks and finalise purchase
agreements.
• Battery electrochemical testwork for preferred
feedstocks was carried out at a leading German
Research Institute and was undertaken to evaluate the
relationship between electrochemical performance
and individual graphite sources. The results increased
product intelligence and confirmed that feed source
perform differently, with some performing better than
others.
Further opportunities for commercial advantage and
funding support include:
• The positive response from customers to an extensive
18 month qualification process, where EcoGraf’s
product samples of by-product fines
utilising the EcoGraf™ process were evaluated by
European customers, provides the basis for entering
sales arrangements for the value-added high purity
fines and an additional commercial advantage for the
Kwinana Facility.
Testwork confirmed
the effectiveness and
eco-friendly nature of the EcoGraf™
proprietary purification process.
08
ECOGRAF LIMITED ANNUAL REPORT 2020 • In the production of battery (spherical) graphite for
the lithium-ion battery market up to 50% of the initial
graphite feedstock reports as fines. The ability to
further process this low value by-product and sell as
a high value product adds significant further value to
the processing economics for production of battery
(spherical) graphite using the EcoGraf™ proprietary
non-hydroflouric purification process.
Market opportunities for this high purity fine graphite
product are also being pursued in Australia.
• Agreement with the Future Battery Industries
Cooperative Research Centre (“FBI CRC”). The
$135 million FBI CRC, based at Curtin University in
Perth, aims to position Australia as a global leader in
the environmentally, ethically and socially responsible
manufacture, deployment, recycling and supply of
batteries and battery materials. EcoGraf is one of
the FBI CRC industry partners, helping to provide
the technology and resources needed to identify
opportunities for greater efficiency in battery mineral
extraction and processing.
EcoGraf’s proposed manufacturing development is
consistent with FBI CRC goals, which aim to expand
battery minerals and chemicals production and develop
opportunities for manufacturing batteries in Australia.
The Kwinana facility will be the first of its kind to be
constructed outside of China and will provide a new
supply of high quality and cost competitive purified
spherical graphite for the lithium-ion battery market.
EcoGraf’s proposed
manufacturing
development is consistent
with FBI CRC goals.
Proposed EcoGraf Kwinana processing facility
09
REVIEW OF OPERATIONS
REVIEW OF OPERATIONS
BATTERY MANUFACTURERS AND EV - JOINT VENTURES
Over the past year alliances between lithium-ion battery manufacturers and electric vehicle automotive manufacturers
have become apparent. Below are the confirmed joint ventures and potential targets for EcoGraf in the lithium-ion battery
products supply chain.
BATTERY MANUFACTURERS
AUTOMOTIVE MANUFACTURERS
+
+
+
+
+
+
+
+
+
+
Source: After Zenn (Europe)
10
ECOGRAF LIMITED ANNUAL REPORT 2020 The World Bank released a report earlier this year titled 'Minerals for climate change'. The report outlines the future
share of mineral demand for battery manufacturing. Graphite, used for the anode, accounts for nearly 53.8 percent of
mineral demand.
SHARE OF MINERAL DEMAND FROM ENERGY STORAGE
LEAD – 6.0%
LITHIUM – 4.0%
MANGANESE – 6.0%
NICKEL – 18.6%
OTHER – 5.4%
COBALT – 6.2%
OTHER
5.4%
ALUMINIUM
CHROMIUM
COPPER
IRON
VANADIUM
ZINC
Source: World Bank Minerals for Climate Change
GRAPHITE
53.8%
CUMULATIVE GLOBAL DEMAND OF LITHIUM-ION BATTERIES TO 2025
CELL LEVEL
TONNES
5,000,000
3,750,000
2,500,000
1,250,000
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
Electronics
Power tools
Electric cars
Electric buses
Electronics industrial automation
UPS/data centres
Telecom
Ebikes
E-scooters
ESS
Other
Source: H. Melin, Circular Energy Storage, Global Battery Alliance, 2019
11
REVIEW OF OPERATIONS
LITHIUM-ION BATTERY RECYCLING
Significant interest has been received from third parties since the Company
reported that it has successfully trialled its EcoGraf™ proprietary graphite
purification technology to recycle lithium-ion battery anode material in Germany.
During the year, recycling programs commenced with
a range of battery industry participants operating in
Australia, Asia and Europe. The testwork programs are
focused on recycling of lithium-ion battery production
scrap and end-of-life lithium-ion batteries after
hydrometallurgical processes have recovered cathode
metals (Ni, Co, Li, Cu).
Recycling provides an opportunity to support electric
vehicle and battery manufacturers achieve sustainable,
closed-loop manufacturing processes as part of
the global effort to develop a circular economy
through zero-waste batteries to address the growing
environmental costs from end-of-life batteries and to
improve battery manufacturing efficiencies.
LITHIUM-ION BATTERY
ANODE MATERIALS
CARBON SLURRY
HYDROMETALLURGICAL
PROCESS
COATINGS
ANODE AND CATHODE
CELL MANUFACTURING
BATTERY
MANUFACTURING
IN-PROCESS CLOSED LOOP RECYCLING
CARBON ANODE
SCRAP
PRODUCTION
SCRAP
TRADITIONAL
NATURAL
GRAPHITE
MARKET
SYNTHETIC
GRAPHITE
MARKET
HYDROMETALLURGICAL
PROCESS
BLACK
MASS
LITHIUM ION
BATTERY
(New)
ELECTRIC
VEHICLES
LITHIUM ION
BATTERY
(End-of-life)
CATHODE METALS
Ni, Co, Li, Cu
EcoGraf’s recycling strategy for re-use of recovered anode material from Production Scrap and Black Mass materials.
12
ECOGRAF LIMITED ANNUAL REPORT 2020 The Company has lodged a new patent application with
IP Australia (an agency of the Department of Industry,
Innovation and Science) over the Company’s EcoGraf™
proprietary purification process, to include the recovery
of high purity graphite from recycled lithium-ion battery
material and to incorporate improvements to optimise
the battery graphite purification process flowsheet.
Government and industry are actively working to
establish effective recycling processes to improve
waste recovery, with Bloomberg forecasting the battery
recycling market to reach US$18 billion over the next
decade.
RAW MATERIALS
LITHIUM-ION
BATTERY PRODUCTION
L E
CY C
E
R
L E
CY C
E
R
USE
NON RECYCLABLE
WASTE
EcoGraf's closed-loop recycling for a circular economy
13
REVIEW OF OPERATIONS
EPANKO GRAPHITE MINING PROJECT (EGR: 100%)
The Epanko Graphite Project (“Epanko” or the “Project”) is a long life, highly
profitable graphite project located approximately 370km from the city
of Dar es Salaam in Tanzania. It is forecast to produce 60,000 tonnes of
natural flake graphite products each year and during its initial 18 years of
operation Epanko will generate annual EBITDA1 of US$44.5 million, a 38.9%
internal rate of return and pre-tax net present value10 of US$211 million.
Meetings were held with relevant Government
Ministries in Tanzania to discuss the US$60 million
financing proposal made to the Government for the
construction of the Project.
The proposal was developed in conjunction with KfW
IPEX-Bank with the aim of simplifying and fast-tracking
the entire debt financing process in Tanzania.
The financing proposal accommodates the
Government’s requirements under the new mineral
sector legislation and provides an opportunity for
Tanzania to develop a world class graphite mine in
the Ulanga District, Morogoro Region that will operate
under globally leading Equator Principles for social and
environmental planning, including International Finance
Corporation Performance Standards and World Bank
Group Environmental, Health and Safety Guidelines.
Subject to the agreement of the Government of
Tanzania, the Company and KfW IPEX-Bank are ready
to proceed to prepare formal loan documentation that
will enable the proposed financing arrangements to be
implemented.
The on-going support the Company has received from
KfW IPEX-Bank and offtake customers in Germany
and Asia, has been critical to this process and EcoGraf
remains committed to establishing Epanko as a new
supplier of responsibly produced, high-quality natural
flake graphite products.
Key milestones achieved to date include:
• Bankable Feasibility Study ("BFS") completed by
GR Engineering
• Bank appointed Independent Engineer’s Review
completed by SRK Consulting (UK), confirming that
the BFS adequately addresses all technical aspects
of the proposed development and that the social
and environmental planning aspects satisfy IFC
Performance Standards and World Bank Group
Environmental, Health and Safety Guidelines
• Offtake commitments for the planned production
secured in Asia (Sojitz Corporation) and Europe
(thyssenkrupp and European Trader)
• Resettlement Action Plan approved by the Tanzanian
Government
• Granted Mining Licence
• Letter of Intent with GR Engineering for early works
program and EPC construction contract.
The remaining milestone is to finalise debt and equity
funding arrangements to enable construction to
proceed.
During the year, the Company continued to progress
the senior debt financing of the new Epanko graphite
mine with KfW IPEX-Bank and a second financial
institution.
Fast-tracking the debt
financing process.
Note 1 - Earnings Before Interest, Tax, Depreciation and Amortisation
14
ECOGRAF LIMITED ANNUAL REPORT 2020 TANZANIAN ECONOMIC AND SOCIAL DEVELOPMENT
Epanko is forecast to make a significant positive impact
on the Tanzanian economy, with key benefits that include:
• Over US$3 billion in direct financial contributions over
the first 40 years of operation through procurement,
employment, royalties, taxes, interest income,
dividends and inspection fees;
• Direct employment of approximately 300 Tanzanians
(over 95% of all staff), creating an estimated 4,500
indirect jobs through the supply of local goods and
services; and
• Construction of new community housing, school
facilities, Church and medical dispensary, together
with the provision of social supports such as health
insurance and training programs to build lasting local
partnerships.
Epanko is unique in its Equator Principles development
model. The Project has been designed to meet the
strictest standards for social and environmental
sustainability and to be fully compliant with IFC
Performance Standards and the Equator Principles.
These high standards of sustainability provide
assurance to financiers and customers that Epanko
products will be responsibly produced for the benefit
of all stakeholders. The importance of sustainable
development is reflected in the increasing emphasis
globally on transparent supply chains and ethically
sourced minerals.
$3B
Financial
contributions
40 years
Financial
support
300
Direct
employment
4,500
Indirect
employment
Defined, de-risked and ready for construction.
ECOGRAF BATTERY GRAPHITE
MANUFACTURING PROJECT - KWINANA, WA
TANZGRAPHITE
EPANKO GRAPHITE MINING PROJECT
tick
tick
tick
tick
20,000tpa Battery (Spherical Graphite)
US$35m Annual EBITDA
37% Internal Rate of Return
US$141m Pretax NPV10
tick
tick
tick
tick
60,000tpa Natural Flake Graphite
US$44.5m Annual EBITDA
38.9% Internal Rate of Return
US$211m Pretax NPV10
15
DIRECTORS' REPORT
BOARD OF DIRECTORS AND EXECUTIVE MANAGEMENT
Robert Pett
Independent Non-Executive Director and Chairman
Robert Pett is a minerals economist with over 30 years’ experience working in exploration and mining. During this
time, he has worked internationally in the resources sector at senior levels both in Australia and Africa. He has been
involved with listed companies at all levels, from grass-roots exploration through to mine development, production
and financing of more than ten mining projects globally including East and West Africa and the construction of the
Golden Pride Gold Mine in Tanzania.
He was founding Chairman of Resolute Mining Limited (gold mines and exploration Africa and Australia), Sapphire
Mines Limited (gemstone mining and exploration), Reliance Mining Limited (nickel mining Kambalda), Senex Energy
Limited (petroleum production and exploration) and director of several other mining and exploration companies
operating in Africa, Asia and Australia in gold, base metals, petroleum and uranium.
Robert has also had an active involvement in education and community activities including over 10 years’ service to
Murdoch University Western Australia as Senator and Chairman of their Resources (Finance) Committee.
Andrew Spinks
Managing Director
Andrew Spinks is a geologist with over 25 years’ professional experience in Australia, Asia and Africa on a range of
commodities including speciality and industrial minerals.
Andrew has worked in a range of diverse roles across exploration through to successful project developments, and
has held a number of board positions on both ASX and TSX.V listed companies.
Andrew was co-founder of TanzGraphite Pty Ltd and has been Managing Director of EcoGraf since its acquisition.
John Conidi
Independent Non-Executive Director
John Conidi is a Certified Practicing Accountant. He has over 20 years’ experience developing, acquiring and
managing businesses in the technology and healthcare sectors. In his roles as Managing Director of Capitol Health
Limited, Mr Conidi’s role drove its sustained expansion, increasing its market capitalisation.
John has extensive interests in the graphite sector. He is an experienced investor specialising in technology and
resources and is the Chairman of 333D Limited that with EcoGraf, jointly owns 3D Graphtech Industries Pty Ltd.
Howard Rae
Chief Financial Officer and Company Secretary
Howard Rae is a Chartered Accountant with over 20 years’ experience in acquiring, developing, financing and
operating a range of businesses in Australia, Canada, Asia, Africa and Europe.
His career includes Chief Financial Officer roles with a number of successful ASX listed companies active
internationally in the precious and base metals, steel-making materials and industrial minerals sectors, together with
Directorships of several unlisted and not-for-profit organisations.
During this time, he’s been responsible for new business development, joint ventures, structuring and negotiating
corporate, project and infrastructure funding transactions, sales and marketing, risk management and implementing
business improvement programs.
16
ECOGRAF LIMITED ANNUAL REPORT 2020 The directors’ of EcoGraf Limited (“EcoGraf” or “the Company”) and its controlled entities (collectively, the
“consolidated entity”) present their report (including the remuneration report) together with the financial statements
of the Company for the year ended 30 June 2020.
BOARD OF DIRECTORS
The qualifications of the directors are set out on page 16.
DIRECTORS’ INTERESTS AND OTHER DIRECTORSHIPS
As at the date of this report, the interests (directly or indirectly held) of the directors in the shares and options of the
Company are:
Director
Term
of office
Interest in
ordinary
shares1
Interest in
options over
ordinary shares
Australian listed
company
directorships
Former
directorships
(last 3 years):
Independent Non-Executive Director & Chairman
Robert
Pett
Director since
9 November 2015
Chairman since
9 November 2015
Executive Director
Andrew
Spinks
Director since
20 July 2012
Managing Director
since 22 April 2015
3,984,615
13,673,822
Independent Non-Executive Director
John
Conidi
Director since
4 May 2015
5,269,402
-
-
-
None
None
None
Kingsrose Mining
Limited
(resigned 16
August 2017)
333D Limited
(appointed 25
March 2015)
None
1
Securities interest in EcoGraf – as notified by the directors to the Australian Securities Exchange (“ASX”) in accordance with s.205G(1) of the
Corporations Act 2001.
DIRECTORS’ MEETINGS
During the financial year, five meetings of directors were held and attendances by each director were as follows:
Director
Robert Pett
Andrew Spinks
Grant Pierce
John Conidi
Christoph Frey
Directors’ meetings in person and by resolution
Number eligible to attend
Number attended
5
5
4
5
3
5
5
4
5
3
17
DIRECTORS' REPORT
OPERATING AND FINANCIAL REVIEW
The information reported in this operating and financial review should be read in conjunction with the review of
operations on pages 5 to 15.
PRINCIPAL ACTIVITIES
EcoGraf is building a vertically integrated business to produce high purity graphite for the lithium-ion battery market.
The new state-of-the-art processing facility in Western Australia will manufacture spherical graphite products for
export to Asia, Europe and North America using a superior, environmentally responsible purification technology to
provide customers with sustainably produced, high performance battery anode graphite. In time the battery graphite
production base will be expanded to include additional facilities in Europe and North America to support the global
transition to clean, renewable energy in the coming decade.
To complement the battery graphite operations, EcoGraf is also developing the TanzGraphite natural flake graphite
business, commencing with the Epanko Graphite Project, which will supply additional feedstock for the spherical
graphite processing facilities and provide customers with a long term supply of high quality graphite products for
industrial applications such as refractories, recarburisers and lubricants.
OPERATING RESULTS
The loss after income tax incurred by the consolidated entity for the year ended 30 June 2020 was $2,769,000
(2019: loss $3,340,000).
DIVIDENDS
The directors do not recommend the payment of a dividend and no amount has been paid or declared by way of a
dividend to the date of this report.
CORPORATE STRUCTURE
EcoGraf Limited is a public company incorporated and domiciled in Australia, limited by shares. At the date of this
report, the Company had 363,986,768 ordinary shares on issue.
DISCLOSURE NOTICES
Forward looking statements
This report may contain references to forecasts, estimates, assumptions and other forward-looking statements.
Although the Company believes that its expectations, estimates and forecast outcomes are based on reasonable
assumptions, it can give no assurance that they will be achieved. They may be affected by a variety of variables and
changes in underlying assumptions that are subject to risk factors associated with the nature of the business, which
could cause actual results to differ materially from those expressed in this report. Investors should rely upon their
own enquiries before deciding to acquire or deal in the Company’s securities.
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
Significant changes in the state of affairs of the consolidated entity during the year (if any) are contained in the
operating and financial review section of this report.
18
ECOGRAF LIMITED ANNUAL REPORT 2020 SIGNIFICANT EVENTS AFTER THE BALANCE DATE
No matters or circumstances have arisen since 30 June 2020 that have significantly affected or may significantly affect:
• the consolidated entity’s operations in future financial years
• the results of those operations in future financial years; or
• the consolidated entity’s state of affairs in future financial years.
FUTURE DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGIES
Likely future developments in the activities of the Company are referred to in the review of operations section of this
report.
ENVIRONMENTAL ISSUES
The Company’s operations are subject to environmental regulation under the laws of the Commonwealth of
Australia and Republic of Tanzania. The directors believe that the Company has adequate systems in place for
environmental management and are not aware of any breach of environmental requirements as they apply to the
Company.
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings
on behalf of the Company, or to intervene in any proceedings to which the Company is a party, for the purposes of
taking responsibility on behalf of the Company for all or part of those proceedings.
No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under
section 237 of the Corporations Act 2001.
COVID-19 PANDEMIC
In recognition of the impact on shareholders of the COVID-19 containment measures globally, the Company has
implemented a number of actions to preserve shareholder funds, under which the directors agreed to waive their
fees and executives reduced their salaries by up to 50% for the 3 months ended 30 June 2020 and thereafter both
directors and executives agreed to reduce their fees and salaries by 20% for the 6 months to 31 December 2020.
The COVID-19 world-wide pandemic has not significantly affected the operating or financial activities of the
Company at this stage of its development. Significant and prolonged pandemic lockdown conditions may impact
development activities if not dealt with in future years. The Company remains confident that operations and financial
activities will not be significantly affected.
EMPLOYEES
In addition to the directors, the Company has one employee as at the date of this report.
COMPANY SECRETARY
Howard Rae is the company secretary, having been appointed on 18 July 2017. Howard’s qualifications are set out
on page 16.
19
DIRECTORS' REPORT
INDEMNIFYING DIRECTORS AND OFFICERS
The Company has entered into an agreement to indemnify all directors and officers against any liability arising from
a claim brought by a third party against the Company. The Company has paid premiums to insure each director and
officer against liabilities for costs and expenses incurred by them in defending any legal proceedings arising out of
their conduct while acting in the capacity of director and officer of the Company, other than as a result of conduct
involving a willful breach of duty in relation to the Company.
INDEMNIFICATION OF AUDITORS
To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young, as part of the
terms of its audit engagement agreement, against claims by third parties arising from the audit (for an unspecified
amount). No payments have been made to indemnify Ernst & Young to the date of this report.
NON-AUDIT SERVICES
The directors are satisfied that the provision of non-audit services is compatible with the general standard of
independence for auditors imposed by the Corporations Act 2001. The directors ensure that:
• non-audit services are reviewed and approved to ensure that the provision of such services does not adversely
affect the integrity and objectivity of the auditor; and
• audit services do not compromise the general principles relating to auditor independence in accordance with
APES 110: Code of Ethics for Professional Accountants set by the Accounting Professional and Ethical Standards
Board.
The total remuneration for audit and non-audit services provided during the prior and current financial years is set
out in note 17 of the consolidated financial statements.
AUDITOR’S INDEPENDENCE DECLARATION
The auditor’s independence declaration as required under section 307C of the Corporations Act 2001, is set-out on
page 28 of this report.
EXTENSION OF LEAD AUDIT PARTNER
On 24 June 2018, the Board granted approval pursuant to section 324DAC of the Corporations Act 2001 (“the Act”),
for Mr. Gavin Buckingham of Ernst & Young to play a significant role in the audit of the Company for an additional
two financial years ending 30 June 2020.
The Board considered the matters set out in section 324DAB(3) of the Act and is satisfied that the approval:
i)
is consistent with maintaining the quality of the audit provided to the Company; and
ii) would not give rise to a conflict of interest situation.
Reasons supporting this decision include:
• the benefits associated with the continued retention of knowledge regarding key audit matters
• the Board being satisfied with the quality of Ernst & Young and Mr. Buckingham’s work as auditor; and
• the Company’s on-going governance processes to ensure the independence of the auditor is maintained.
20
ECOGRAF LIMITED ANNUAL REPORT 2020 ROUNDING
The amounts contained in this report and in the consolidated financial statements have been rounded to the nearest
$1,000 (unless otherwise stated) under the option available to the Company under ASIC Corporations (Rounding
in Financial/Directors’ Reports) Instrument 2016/191. The Company is an entity to which the legislative instrument
applies.
CORPORATE GOVERNANCE
The directors of EcoGraf are responsible for the corporate governance of the Company and have applied ASX
Corporate Governance Principles in a manner that is appropriate to the Company’s circumstances.
The Company’s corporate governance statement is available on the Company’s website at www.ecograf.com.au.
REMUNERATION REPORT (AUDITED)
1.
INTRODUCTION
The following sections provide details of the remuneration paid to key management personnel by the Company and
its controlled entities for the year ended 30 June 2020. It forms part of the directors’ report and has been audited in
accordance with section 308C of the Corporations Act 2001.
Key management personnel are those persons who, directly or indirectly, have authority and responsibility for
planning, directing and controlling the major activities of the consolidated entity and include:
• non-executive directors; and
• executive directors and senior executives (collectively “executives”).
Key management personnel
Position
Tenure during the year
Non-executive directors
Robert Pett
John Conidi
Christoph Frey
Executive directors
Andrew Spinks
Grant Pierce
Senior executives
Howard Rae
Non-Executive Chair
Non-Executive Director
Non-Executive Director
Full financial year
Full financial year
1 July 2019 - 14 April 2020
Managing Director
Full financial year
Executive Director – Projects
1 July 2019 - 12 June 2020
Chief Financial Officer & Company Secretary
Full financial year
21
DIRECTORS' REPORT
2. EXECUTIVE REMUNERATION
The remuneration structure has been designed to promote alignment between the objectives and interests of
shareholders, directors and executives. Accordingly, as the Company’s key assets have not yet reached the
operational phase, a greater emphasis is placed on rewarding long-term performance through the award of equity in
the Company that preserves cash resources and is directly linked to the creation of shareholder value.
2.1 Principles of executive remuneration
Key principles that guide decisions about executive remuneration are:
• Fairness: provide a fair level of reward to all employees
• Transparency: establish transparent links between reward and performance
• Alignment: promote mutually beneficial outcomes by aligning employee, customer and shareholder interests; and
• Culture: drive leadership performance and behaviours that promote safety, diversity and employee engagement.
2.2 Executive remuneration framework
A combination of fixed and variable reward is provided to executives, based on their responsibility within the
Company in relation to the achievement of its strategic objectives and capacity to contribute to the generation of
long-term shareholder value.
The components of executive remuneration currently consist of:
• a base cash salary
• statutory superannuation contributions; and
• non-cash share-based payments.
The combination of these comprises the executive’s total remuneration.
2.3 Financial performance
The table below sets out information about the Company’s results and movements in shareholder value for the past
five years up to and including the current financial year. The historic numbers have not been assessed and adjusted
for the impact of the new accounting standards.
30 June
2020
30 June
2019
30 June
2018
30 June
2017
30 June
2016
Net loss after tax ($’000)
(2,769)
(3,340)
(3,764)
(4,099)
(4,268)
Share price at end of year ($)
Basic loss per share (cents)
0.07
(0.91)
0.12
(1.19)
0.14
(1.50)
0.18
(1.86)
0.26
(2.46)
22
ECOGRAF LIMITED ANNUAL REPORT 2020 2.4 Remuneration decision making
Due to the current size of the Company, it is more efficient and effective for the functions otherwise undertaken by
a remuneration committee to be performed by the Board. All directors are therefore responsible for determining
and reviewing compensation arrangements for key management personnel, including periodically assessing
the appropriateness of the nature and amount of remuneration by reference to relevant market conditions and
prevailing practices.
From time to time the directors seek independent external advice on the appropriateness of the remuneration
framework and remuneration arrangements for key management personnel.
2.5 Use of remuneration advisors
During the year ended 30 June 2020, the Board did not engage the services of remuneration advisors.
2.6 Employee share and option plan
Under the Employee share and option plans, shares and options are issued at the discretion of the Board. No shares
or options were issue during the year ended 30 June 2020. (2019: Nil).
2.7 Executive employment agreements
The remuneration and other conditions of employment of executives are formalised in employment contracts, a
summary of which is set out below.
Mr. Andrew Spinks, Managing Director, has an employment contract with the Company that specifies duties and
obligations to be fulfilled and provides for an annual review of remuneration. Mr. Spinks receives fixed remuneration
of $355,875 per annum inclusive of statutory superannuation and did not receive an increase in fixed remuneration
during the reporting period. In recognition of the impact of the on-going COVID-19 containment measures, the
directors and management implemented a number of actions to preserve shareholder funds, whilst maintaining
the positive business progress. Mr. Spinks voluntarily reduced his salary by 50% during the June quarter and will
voluntarily reduce his salary by 20% for the remainder of 2020.
Mr. Grant Pierce, Executive Director - Projects, has an employment contract with the Company that specifies
duties and obligations to be fulfilled and provides for an annual review of his remuneration. Mr. Pierce was based
in Tanzania and until he ceased as a director and employee on 12 June 2020, he received fixed remuneration of
$134,400 plus US$50,000 (net of tax) per annum, a maintained vehicle and furnished accommodation in
Dar es Salaam. In recognition of the impact of the on-going COVID-19 containment measures, the directors and
management implemented a number of actions to preserve shareholder funds, whilst maintaining the positive
business progress. Mr. Pierce voluntarily reduced his salary by 50% during the June quarter.
Mr. Howard Rae, Chief Financial Officer and Company Secretary, has an employment contract with the Company
that specifies duties and obligations to be fulfilled and provides for an annual review of remuneration. Mr. Rae
receives fixed remuneration of $355,875 per annum, inclusive of statutory superannuation and did not receive an
increase in fixed remuneration during the reporting period. In recognition of the impact of the on-going COVID-19
containment measures, the directors and management implemented a number of actions to preserve shareholder
funds, whilst maintaining the positive business progress. Mr. Rae voluntarily reduced his salary by 30% during the
June quarter and will voluntarily reduce his salary by 20% for the remainder of 2020.
23
DIRECTORS' REPORT
2. EXECUTIVE REMUNERATION (CONTINUED)
Termination provisions
Executive termination notice periods and payment provisions are as follows:
Resignation
Termination
for cause
Termination in case of death, disablement,
redundancy or notice without cause
Termination
payment
Andrew Spinks
Howard Rae
6 months
3 months
None
1 month
1 month
3 months
3 months
3 months
3. NON-EXECUTIVE DIRECTOR REMUNERATION
3.1 Remuneration policy
Non-executive director remuneration is structured in order to attract and retain persons with the experience and skills
necessary to oversee the Company’s business activities and to guide its growth and development into a successful
mining and manufacturing company. Fees are not linked to the financial performance of the Company. Directors may
be paid additional amounts for special duties or exertions (consultancy services outside of director’s duties) and are
entitled to be reimbursed for reasonable out-of-pocket expenses incurred in the course of their duties.
3.2 Maximum aggregate amount
Total fees payable to all non-executive directors, excluding amounts for special exertion or the reimbursement
of reasonable business expenditures, must not exceed $300,000 per annum, in accordance with the approval
provided by shareholders in 2010.
3.3 Non-executive director share and option plans
Under the non-executive director share and option plans, shares and options are issued at the discretion of the
Board. No shares or options were issue during the year ended 30 June 2020. (2019: Nil).
24
ECOGRAF LIMITED ANNUAL REPORT 2020 4. KEY MANAGEMENT PERSONNEL REMUNERATION
Details of the remuneration of directors and executives of the consolidated entity are set out in the following table.
Short-term
benefits
Post-
employment
Long-term
benefits
Non-executive directors
Salary/
Fees3
54,795
73,059
41,063
54,750
25,000
50,000
2020
2019
2020
2019
2020
2019
2020
292,356
2019
2020
2019
2020
2019
338,321
197,051
330,424
319,501
351,163
Robert Pett
John Conidi
Christoph Frey
Executives
Andrew Spinks
Grant Pierce
Howard Rae
Fees for
special
duties or
exertion
7,7001
15,000
-
-
100,5622
130,638
-
-
-
-
-
-
Long
Service
Leave
expense
Super-
annuation
Total
67,700
95,000
41,063
54,750
125,562
180,638
316,485
379,476
197,051
330,424
343,305
380,096
Equity
% of
compensation
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
-
-
-
-
-
-
(871)
16,155
-
-
(196)
4,933
5,205
6,941
-
-
-
-
25,000
25,000
-
-
24,000
24,000
54,205
55,941
Total
remuneration
2020
929,766
2019
1,197,717
108,262
145,638
(1,067)
1,091,166
21,088
1,420,384
1 Consulting services for additional work undertaken for capital raising activities
2 Consulting services for additional work undertaken for research and development activities
3 In recognition of the impact on shareholders of the COVID-19 containment measures globally, the Company has implemented a number of actions to
preserve shareholder funds, under which the directors agreed to waive their fees and executives reduced their salaries by up to 50% for the 3 months
ended 30 June 2020 and thereafter both directors and executives agreed to reduce their fees and salaries by 20% for the 6 months to 31 December 2020.
Robert Pett is a director and shareholder of the following related party entity which transacted with the consolidated
entity. Represented by invoices related to work performed for the consolidated entity.
Entity
Prevelly Holdings Pty Ltd
Services provided
Consultancy services
2020
$’000
14
2019
$’000
16
Christoph Frey is a director and shareholder of the following related party entity which transacted with the
consolidated entity. Represented by invoices related to work performed for the consolidated entity.
Entity
ProGraphite GmbH
Services provided
Consultancy services
2020
$’000
99
2019
$’000
265
25
DIRECTORS' REPORT
5. SHARE BASED COMPENSATION
Plan shares are issued to directors and employees in recognition of their performance with the Company and
as incentive remuneration under the respective director and employee share plans (together the “Share Plans”).
The terms and conditions of the Share Plans are identical, other than in respect of who is eligible to participate in
each plan. Plan shares are issued at the discretion of the Board.
Under the Share Plans, eligible directors and employees are offered plan shares in the Company at prices
determined by the Board, which has the discretion to impose conditions on the shares issued under the Share
Plans and may also grant a loan, in the form of a non-cash credit facility, to a participant for the purposes of
subscribing for plan shares. Shares issued via loan facility may not be granted at less than the volume weighted
average price of the Company’s shares during the 5 trading days up to and including the date of acceptance and
are escrowed as security until the loan has been fully repaid, via cash payment and/or the sale of the plan shares.
If the loan is repaid by the sale of shares, any surplus on sale is remitted to the participant and any shortfall is
borne by the consolidated entity.
There were no shares issued to non-executive directors or executives, during the year ended 30 June 2020.
6. KEY MANAGEMENT PERSONNEL EQUITY OWNERSHIP
6.1 Shares
Non-executives
Robert Pett
John Conidi
Christoph Frey
Executives
Andrew Spinks
Grant Pierce
Howard Rae
Total
Balance at
1 July 2019
Balance at date
of appointment
Movement
during the year
Balance at
30 June 2020
3,600,000
4,560,000
2,125,000
15,116,130
4,720,000
3,150,000
33,271,130
-
-
-
-
-
-
-
384,6151
709,4021,2
(2,125,000)3,5
3,984,615
5,269,402
-
(1,442,308)1,4
(4,720,000)6
13,673,822
-
-
3,150,000
(7,193,291)
26,077,839
1 Shares purchased under Share Purchase Plan June 2020
2 555,555 Shares acquired via placement September 2019
3 (2,000,000) Shares expired under Director Share Plan April 2020
4 (1,750,000) Shares expired under Employee Share Plan October 2019
5 (125,000) Shares - resigned 14 April 2020 and as a result is no longer considered key management personnel
6 (4,720,000) Shares - resigned 12 June 2020 and as a result is no longer considered key management personnel
26
ECOGRAF LIMITED ANNUAL REPORT 2020 6.2 Shares issued under non-executive director and employee share plans
Included in table 6.1 are plan shares held by key management personnel. The balance and movement during the
reporting period in the number of plan shares held directly, indirectly or beneficially, by each key management
person, including their related parties, is as follows:
Non-executives
Robert Pett
John Conidi
Christoph Frey
Executives
Andrew Spinks
Grant Pierce
Howard Rae
Total
Balance at
1 July 2019
Net Change
Balance at
30 June 2020
3,250,000
3,250,000
2,000,000
6,000,000
4,250,000
3,000,000
-
-
(2,000,000)1
(1,750,000)2
(4,250,000)3
-
21,750,000
(8,000,000)
3,250,000
3,250,000
-
4,250,000
-
3,000,000
13,750,000
1 (2,000,000) Shares expired under Director Share Plan April 2020
2 (1,750,000) Shares expired under Employee Share Plan October 2019
3 (4,250,000) Shares - resigned 12 June 2020 and as a result is no longer considered key management personnel. At the discretion of the Board, Mr. Pierce
retains these plan shares until expiry.
6.3 Loans to key management personnel
There were no loans granted to key management personnel during the year ended 30 June 2020.
6.4 Other transactions with key management personnel
There were no other transactions with key management personnel of the consolidated entity, including their
personally related parties during the year ended 30 June 2020 other than ‘Fees for special duties or exertion’ and
payments to related entities disclosed in the remuneration table in section 4.
Signed in accordance with a resolution of the directors made pursuant to s298 (2) of Corporations Act 2001.
Andrew Spinks
Managing Director
24 September 2020
27
AUDITOR INDEPENDENCE DECLARATION
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Auditor’s independence declaration to the directors of EcoGraf
Limited.
As lead auditor for the audit of the financial report of EcoGraf Limited for the financial year ended
30 June 2020, I declare to the best of my knowledge and belief, there have been:
a)
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b)
no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of EcoGraf Limited and the entities it controlled during the financial year.
Ernst & Young
Gavin Buckingham
Partner
24 September 2020
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
GB:JG:ECOGRAF:008
28
NATURAL GRAPHITE USED IN
BATTERY ANODE IS CURRENTLY
SOURCED FROM CHINA
ECOGRAF LIMITED ANNUAL REPORT 2020
Consolidated statement of profit or loss & comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
30
31
32
33
34
29FINANCIALSTATEMENTS CONSOLIDATED STATEMENT OF
PROFIT OR LOSS & OTHER COMPREHENSIVE INCOME
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 0
REVENUE
Interest income
Other income
EXPENSES
Accounting & audit
Consultants & contractors
Employee benefits
Depreciation
Directors fees
Exploration and evaluation written off
Exploration and evaluation expensed
Information systems & technology
Listing & compliance
Office rental & outgoings
Other
Travel & accommodation
Unrealised foreign exchange differences
Loss before income tax
Income tax expense
Loss after income tax for the year
Note
2020
$’000
2019
$’000
3
4
10
8
3
281
284
(249)
(1,446)
(563)
(41)
(126)
-
(138)
(76)
(74)
(157)
(102)
(79)
(2)
8
243
251
(175)
(1,052)
(541)
(45)
(185)
(964)
-
(59)
(60)
(204)
(133)
(170)
(3)
(3,053)
(3,591)
(2,769)
(3,340)
5
-
-
(2,769)
(3,340)
Total comprehensive loss for the year
Loss attributable to members of EcoGraf Limited
Total comprehensive loss attributable to members of EcoGraf Limited
(2,769)
(2,769)
(2,769)
(3,340)
(3,340)
(3,340)
Loss per share attributable to the members of EcoGraf Limited
Basic loss per share (cents per share)
Diluted loss per share (cents per share)
16
16
(0.91)
(0.91)
(1.19)
(1.19)
The above statement should be read in conjunction with the accompanying notes.
30
ECOGRAF LIMITED ANNUAL REPORT 2020 CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
A S A T 3 0 J U N E 2 0 2 0
ASSETS
Current assets
Cash and cash equivalents
Other receivables
Prepayments
Total current assets
Non-current assets
Property, plant and equipment
Exploration and evaluation assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Employee provisions
Total current liabilities
Non-current liabilities
Employee provisions
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Accumulated losses
Total equity
Note
2020
$’000
2019
$’000
6
7
10
8
9
2,779
76
39
2,894
148
18,039
18,187
1,462
118
29
1,609
189
17,292
17,481
21,081
19,090
349
90
439
20
20
459
602
74
676
22
22
698
20,622
18,392
11
12
13
49,060
3,385
(31,823)
44,852
2,594
(29,054)
20,622
18,392
The above statement should be read in conjunction with the accompanying notes.
31
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 0
Contributed
equity
$’000
Accumulated
losses
$’000
Loan share
reserve
$’000
Share based
payment
reserve
$’000
Balance at 30 June 2018
43,786
Loss for the year
Other comprehensive income
Total comprehensive loss for the year
Transactions with owners in their
capacity as owners
Shares issued during the year
Share plan shares cancelled
Share issue expense
-
-
-
2,168
(994)
(108)
(25,714)
(3,340)
-
(3,340)
-
-
-
(5,049)
6,649
-
-
-
-
994
-
-
-
-
-
-
-
Balance at 30 June 2019
44,852
(29,054)
(4,055)
6,649
Loss for the year
Other comprehensive income
Total comprehensive loss for the year
-
-
-
(2,769)
-
(2,769)
Transactions with owners in their
capacity as owners
Shares issued during the year
Share plan shares cancelled
Share issue expense
Balance at 30 June 2020
5,149
(791)
(150)
-
-
-
-
-
-
-
791
-
-
-
-
-
-
-
Total
$’000
19,672
(3,340)
-
(3,340)
2,168
-
(108)
18,392
(2,769)
-
(2,769)
5,149
-
(150)
49,060
(31,823)
(3,264)
6,649
20,622
The above statement should be read in conjunction with the accompanying notes.
32
ECOGRAF LIMITED ANNUAL REPORT 2020 CONSOLIDATED STATEMENT OF
CASH FLOWS
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 0
OPERATING ACTIVITIES
Research and development tax credit received
Payments to suppliers and employees
Net cash flows used in operating activities
INVESTING ACTIVITIES
Payments for exploration and evaluation
Interest received
Research and development tax credit received
Note
14
2020
$’000
232
(3,123)
(2,891)
2019
$’000
243
(2,477)
(2,234)
(744)
(1,367)
3
-
8
33
Net cash flows from / (used in) investing activities
(741)
(1,326)
FINANCING ACTIVITIES
Proceeds from issue of shares
Capital raising costs for issue of shares
Net cash flows from financing activities
Net increase / (decrease) in cash and cash equivalents held
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the year
6
The above statement should be read in conjunction with the accompanying notes.
5,099
(150)
4,949
1,317
1,462
2,779
2,303
(108)
2,195
(1,365)
2,827
1,462
33
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 0
1. COMPANY INFORMATION
The consolidated financial statements of EcoGraf Limited and its subsidiaries (collectively, “the consolidated entity”)
for the year ended 30 June 2020 were authorised for issue in accordance with a resolution of the directors on
23 September 2020.
EcoGraf Limited (“the Company” or “the parent”) is a for profit company limited by shares incorporated in Australia
whose shares are publicly traded on the Australian Securities Exchange. It has activities in Australia and Tanzania,
with the country of domicile being Australia and the registered office located in Australia.
The nature of the operations and principal activities of the consolidated entity are described in the directors’
report. Information on the consolidated entity’s structure is provided in note 22 and details of other related party
relationships is provided in note 21.
2. BASIS OF PREPARATION
The financial report is a general-purpose financial report, which has been prepared in accordance with
the requirements of the Corporations Act 2001, Australian Accounting Standards, and other authoritative
pronouncements of the Australian Accounting Standards Board.
The financial report has been prepared on a historical cost basis.
The financial report complies with International Financial Reporting Standards (IFRS) as issued by the International
Accounting Standards Board.
Going concern
The directors have prepared the consolidated financial statements on a going concern basis which contemplates
the continuation of normal business activities and the realisation of assets and the settlement of liabilities in the
normal course of business.
During the year, the consolidated entity incurred a net loss of $2,769,000 (2019: loss $3,340,000) and had cash
outflows from operating and investing activities of $3,632,000 (2019: $3,560,000).
The consolidated entity had cash and cash equivalents at 30 June 2020 of $2,779,000 (2019: $1,462,000) and while
this is sufficient to meet its short-term expenditure requirements, the consolidated entity expects to raise additional
working capital funds during the next 12 months in order to develop its graphite mining, purification and recycling
businesses. Based on the consolidated entity’s history of raising working capital funds, the directors are satisfied
that they have a reasonable basis to conclude that further working capital can be raised as required.
In the event that the consolidated entity is unable to obtain sufficient funding to meet its liabilities as required, there
will be a material uncertainty whether it will continue as a going concern and therefore whether it will realise its
assets and discharge its liabilities in the normal course of business and at the amounts stated in the financial report.
The financial statements do not include any adjustment relating to the recoverability or classification of recorded
asset amounts or to the amounts or classification of liabilities, that may be necessary should the consolidated entity
not be able to continue as a going concern.
Functional and presentational currency
These consolidated financial statements are presented in Australian dollars, which is the consolidated entity’s
functional currency. All amounts have been rounded to the nearest thousand, unless otherwise stated in accordance
with ASIC Corporations (Rounding In Financial/Directors’ Reports) Instrument 2016/191.
34
ECOGRAF LIMITED ANNUAL REPORT 2020 3. OTHER INCOME
Research and development tax credit
Government COVID-19 cash boost
4. CONSULTANTS AND CONTRACTORS
Accounting and administrative services
Downstream processing research, development and engineering
Fees to finance advisors
Legal
Public relations
Other
5.
INCOME TAX EXPENSE
2020
$’000
2019
$’000
231
50
281
245
561
263
143
220
14
243
-
243
330
511
-
78
126
7
1,446
1,052
Reconciliation of tax benefit/expense and the accounting loss multiplied by Australia’s domestic tax rate:
Accounting loss before tax
(2,769)
(3,340)
At Australia’s statutory income tax rate of 30.0% (2019: 30.0%)
Tax effect of amounts not deductible
Effect of different tax rates
Benefit of tax losses and timing differences not brought to account as an asset
Income tax expense attributable to entity
Deferred income tax at balance date relates to the following:
Deferred tax assets
Tax losses available to offset against future taxable income
Total deferred tax asset
Deferred tax liabilities
Exploration and evaluation assets
Deferred tax asset used to offset deferred tax liability
Net deferred tax assets not brought to account
The benefit of deferred tax assets not brought to account will only be recognised if:
(831)
(69)
-
900
-
9,271
9,271
(5,412)
5,412
-
3,859
(1,002)
(73)
-
1,075
-
8,147
8,147
(5,188)
5,188
-
2,959
• Future assessable income is derived of a nature and of an amount sufficient to enable the benefit to be realised
• The conditions for deductibility imposed by tax legislation continue to be complied with
• No changes in tax legislation adversely affect the consolidated entity in realising the benefit.
35
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 0
6. CASH AND CASH EQUIVALENTS
Cash at bank and on hand
7. OTHER RECEIVABLES
Goods and services tax receivable (1)
Security deposits
(1) Non-interest bearing and generally on 14-day terms at the end of each quarter.
8. EXPLORATION AND EVALUATION ASSET
Exploration and evaluation expenditure carried forward:
Carrying amount as at 1 July
Capitalised expenditure at cost
Exploration and evaluation expenditure written off
Research and development refund
2020
$’000
2,779
2,779
36
40
76
17,292
747
-
-
2019
$’000
1,462
1,462
38
80
118
16,922
1,367
(964)
(33)
18,039
17,292
Recoverability of the carrying amount of exploration and evaluation assets is dependent on the successful
development and commercial exploitation of areas of interest and the sale of minerals, or the sale of the respective
areas of interest. The Company is in discussion with the Government of Tanzania with respect to regulatory
arrangements and approvals for the development of the Epanko Graphite Project, including mining licence
conditions past due for the commencement of regular production. On 4 September 2018, the Mining Commission
confirmed to the Company that it will be ready to renew the mining licence upon expiry of the licence period in
2025, provided that the requirements of section 53 of the Mining Act 2010 are fulfilled.
The COVID-19 world-wide pandemic has not significantly affected the operating or financial activities of the
Company at this stage of its development. Significant and prolonged pandemic lockdown conditions may impact
development activities if not dealt with in future years. The Company has considered this in its assessment of
impairment indicators for this class of assets and remains confident that operations and financial activities will not be
significantly affected.
A write-off of exploration and evaluation expenditure carried forward for the Merelani and Tanga tenements was
made in the prior financial year.
9. TRADE AND OTHER PAYABLES
Trade payables (1)
Accrued expenses
(1) Trade creditors are non-interest bearing and are normally settled on 30-day terms.
280
69
349
433
169
602
36
ECOGRAF LIMITED ANNUAL REPORT 2020 10. PROPERTY, PLANT AND EQUIPMENT
Plant &
equipment
office
$’000
Plant &
equipment
field
$’000
Motor
Vehicles
$’000
Furniture &
equipment
$’000
Leasehold
assets
$’000
At cost
Accumulated depreciation
Net carrying amount
31
(19)
12
22
(16)
6
261
(147)
114
37
(26)
11
8
(3)
5
Total
$’000
359
(211)
148
Movement in the carrying amounts for each class of property, plant and equipment between the beginning and the
end of the current financial year, is as follows:
Balance at 30 June 2018
Additions
Depreciation expense
Balance at 30 June 2019
Additions
Disposals
Depreciation expense
Balance at 30 June 2020
19
-
(5)
14
2
(1)
(3)
12
11
-
(3)
8
-
-
(2)
6
177
-
(32)
145
-
-
(31)
114
20
-
(4)
16
-
-
(5)
11
7
-
(1)
6
-
(1)
-
5
234
-
(45)
189
2
(2)
(41)
148
2020
$’000
2019
$’000
11. CONTRIBUTED EQUITY
363,986,768 (2019: 292,620,967) fully paid ordinary shares
49,060
44,852
a) Ordinary shares
At 30 June 2018
Share placement
Plan shares expired
Capital raising costs
At 30 June 2019
Share placement - October 2019
Issue of shares to consultant in lieu of cash - November 2019 (1)
Plan shares expired - October 2019
Plan shares expired - April 2020
Share placement - May 2020
Share purchase plan - June 2020
Capital raising costs
No. of shares
$’000
275,680,967
43,786
21,690,000
(4,750,000)
-
2,168
(994)
(108)
292,620,967
44,852
14,537,224
555,556
(2,050,000)
(2,000,000)
24,615,385
35,707,636
-
1,307
50
(489)
(302)
1,600
2,192
(150)
Balance at 30 June 2020
(1) 150,000 shares issued at $0.15 per share to settle an invoice. Refer Note 19 for details.
363,986,768
49,060
Fully paid ordinary shares carry one vote per share and carry a right to dividends.
37
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 0
11. CONTRIBUTED EQUITY (CONTINUED)
b)
Options unissued are as follows:
Year ended 30 June 2020
Grant date
Date of
expiry
Exercise
price
07/03/17
06/03/20
Total
0.23
0.23
Balance at
start of the
year
1,050,000
1,050,000
Granted
Exercised
-
-
Weighted average exercise price of options outstanding at 30 June 2020: $0.00
Year ended 30 June 2019
Grant date
Date of
expiry
Exercise
price
27/06/16
02/06/19
0.228
07/03/17
06/03/20
07/03/17
31/12/18
0.23
0.30
Total
Balance at
start of the
year
1,000,000
1,050,000
1,000,000
3,050,000
Granted
Exercised
-
-
-
-
Weighted average exercise price of options outstanding at 30 June 2019: $0.23
-
-
-
-
-
Expired
unexercised
(1,050,000)
(1,050,000)
Balance at
end of the
year
-
-
Expired
unexercised
(1,000,000)
Balance at
end of the
year
-
-
1,050,000
(1,000,000)
-
(2,000,000)
1,050,000
12. RESERVES
Share based payment reserve
Loan share reserve
Movement in share-based payment reserve
Balance at beginning of year
Share based payments
Balance at end of year
Movement in loan share reserve
Balance at beginning of year
Plan shares expired/(issued)
Balance at end of year
Share based payments reserve
2020
$’000
6,649
(3,264)
3,385
6,649
-
6,649
(4,055)
791
(3,264)
2019
$’000
6,649
(4,055)
2,594
6,649
-
6,649
(5,049)
994
(4,055)
The reserve recognises the value of equity provided as remuneration to employees and also to other parties as
compensation for services provided to the consolidated entity.
38
ECOGRAF LIMITED ANNUAL REPORT 2020 -
Plan share reserve
The reserve represents the non-cash nominal value of loan shares on issue to employees and is deducted from equity.
13. ACCUMULATED LOSSES
Balance at beginning of year
Loss for the year
Balance at end of year
14. CASH FLOW INFORMATION
Reconciliation of cash flow from operations with loss for the year
Loss for the year
Adjustments for:
Interest income
Depreciation
Write off of exploration assets
Issue of shares to consultant in lieu of cash
Unrealised foreign exchange (gains) and losses
Changes in assets and liabilities:
(Increase) / decrease in Other receivables
Increase / (decrease) in Trade and other payables
Increase / (decrease) in Employee provisions
Net cash outflows used in operations
15. EXPENDITURE COMMITMENTS
Mineral tenements
2020
$’000
(29,054)
(2,769)
(31,823)
2019
$’000
(25,714)
(3,340)
(29,054)
(2,769)
(3,340)
(3)
41
-
50
(1)
31
(259)
19
(8)
45
964
-
3
(33)
113
22
(2,891)
(2,234)
In order to maintain current rights of tenure to exploration tenements, the consolidated entity is required to outlay
rentals and to satisfy minimum expenditure requirements of $27,594 (2019: $1,402,673) over the next 12 months, in
accordance with agreed work programs submitted over the Company’s exploration licences. Financial commitments
for subsequent periods are contingent upon future exploration results.
16. LOSS PER SHARE
Data used in the basic loss per share computations:
Loss for the year
Weighted average number of ordinary shares
Basic and diluted loss per share (cents)
(2,769)
(3,340)
304,867,963
280,159,433
(0.91)
(1.19)
Loss per share is calculated by dividing the loss for the year attributable to ordinary equity holders of the Company
by the weighted average number of ordinary shares outstanding during the year.
Share options outstanding at 30 June 2020: Nil (2019: 1,050,000) have not been included in determining the diluted
loss per share as they are not considered to be dilutive due to the loss position of the Company for years ended 30
June 2019 and 2020.
39
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 0
17. AUDITOR’S REMUNERATION
Fees to Ernst & Young (Australia)
Fees for auditing the statutory financial reports of the consolidated entity
42,912
45,600
Fees for assurance services that are required by legislation to be provided by
the auditor.
412
403
2020
$
2019
$
Fees for other services
- Tax compliance
- Project financial modelling
Total fees to Ernst & Young (Australia)
9,854
39,449
92,627
19,194
-
65,197
Fees to other overseas member firms of Ernst & Young (Australia)
Fees for auditing the financial report of any controlled entities
-
9,702
Fees for other services
- Tax compliance
Total fees to overseas member firms of Ernst & Young (Australia)
Total auditor’s remuneration
2,606
2,606
95,233
5,164
14,866
80,063
40
ECOGRAF LIMITED ANNUAL REPORT 2020
18. SEGMENT INFORMATION
The consolidated entity reports one segment, graphite products, to the chief operating decision maker, being the
Managing Director for the purposes of assessing performance and determining the allocation of resources.
Unless otherwise stated, all amounts reported to the chief operating decision maker are determined in accordance
with accounting policies that are consistent with those adopted in this financial report.
Revenue by geographical region
2020 Results
Segment other income
Segment expenses
Accounting and audit
Consultants and contractors
Employee benefits
Depreciation
Directors fees
Exploration & evaluation expensed
Information systems and technology
Listing and compliance
Office rental and outgoings
Other
Travel and accommodation
Unrealised foreign exchange loss
Segment results
Australia
$’000
Tanzania
$’000
Consolidated
$’000
284
-
284
(229)
(970)
(559)
(5)
(126)
-
(64)
(74)
(151)
(83)
(72)
-
(2,333)
(2,049)
(20)
(476)
(4)
(36)
-
(138)
(12)
-
(6)
(19)
(7)
(2)
(720)
(720)
(249)
(1,446)
(563)
(41)
(126)
(138)
(76)
(74)
(157)
(102)
(79)
(2)
(3,053)
(2,769)
41
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 0
18. SEGMENT INFORMATION (CONTINUED)
Revenue by geographical region
2019 Results
Segment other income
Segment expenses
Accounting and audit
Consultants and contractors
Employee benefits
Depreciation
Directors fees
Exploration and evaluation written-off
Information systems and technology
Listing and compliance
Office rental and outgoings
Other
Travel and accommodation
Unrealised foreign exchange loss
Segment results
Assets by geographical region
2020 Assets
Property, plant and equipment
Exploration and evaluation assets
Segment non-current assets
Unallocated assets:
Cash and cash equivalents
Other receivables
Prepayments
Total assets
2020 Liabilities
Segment liabilities
Total liabilities
42
Australia
$’000
Tanzania
$’000
Consolidated
$’000
251
(169)
(830)
(516)
(7)
(185)
-
(43)
(60)
(159)
(107)
(117)
(1)
(2,194)
(1,943)
-
251
(6)
(222)
(25)
(38)
-
(964)
(16)
-
(45)
(26)
(53)
(2)
(1,397)
(1,397)
(175)
(1,052)
(541)
(45)
(185)
(964)
(59)
(60)
(204)
(133)
(170)
(3)
(3,591)
(3,340)
Australia
$’000
Tanzania
$’000
Consolidated
$’000
15
-
15
133
18,039
18,172
(428)
(31)
148
18,039
18,187
2,779
76
39
21,081
(459)
(459)
ECOGRAF LIMITED ANNUAL REPORT 2020 Assets by geographical region
2019 Assets
Property, plant and equipment
Exploration and evaluation assets
Segment non-current assets
Unallocated assets:
Cash and cash equivalents
Other receivables
Prepayments
Total assets
2019 Liabilities
Segment liabilities
Total liabilities
19. SHARE BASED PAYMENTS
Australia
$’000
Tanzania
$’000
Consolidated
$’000
20
-
20
169
17,292
17,461
(613)
(85)
189
17,292
17,481
1,462
118
29
19,090
(698)
(698)
The Company seeks to incentivise staff and consultants to remain with the consolidated entity and to improve the
longer-term performance of the Company and its return to shareholders. This is achieved through the issue of a
combination of shares and options.
There were no options issued during the year ended 30 June 2020 (2019: Nil).
The following table illustrates the number and weighted average exercise prices (WAEP) of, and movements in,
share options during the year.
2020
Number
1,050,000
-
(1,050,000)
-
-
2020
WAEP
0.23
-
0.23
-
-
2019
Number
3,050,000
-
(2,000,000)
1,050,000
1,050,000
2019
WAEP
0.25
-
0.26
0.23
0.23
Outstanding at 1 July
Issued during the year
Exercised/expired during the year
Outstanding at 30 June
Exercisable at 30 June (1)
(1) All exercisable options expired on 6 March 2020.
Employee share plan
Under the plan, eligible employees are offered shares in the Company at prices determined by the Board, which
has the ultimate discretion to impose conditions on the shares issued under the plan and may grant a loan to a
participant for the purposes of subscribing for plan shares. Shares issued under loan facilities are escrowed until the
loan is fully repaid. The loans are limited recourse and interest free and are to be repaid via cash settlement and/or
the sale of the plan shares. Where the loan is repaid by the sale of shares, any remaining surplus is remitted to the
participant and any shortfall is borne by the consolidated entity.
43
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 0
19. SHARE BASED PAYMENTS (CONTINUED)
There were no plan shares issued during the year ended 30 June 2020 (2019: Nil).
The following table illustrates the number and weighted average exercise prices (WAEP) of, and movements in, plan
shares during the year:
Outstanding at 1 July
Granted during the year
Forfeited during the year
Exercised during the year
Expired during the year
Outstanding at 30 June
Shares issued in lieu of cash
2020
Number
22,300,000
-
2020
WAEP
0.1818
-
(2,000,000)
0.1509
-
(2,050,000)
18,250,000
-
0.2384
0.1789
2019
Number
22,300,000
2019
WAEP
0.1818
-
-
-
-
-
-
-
-
22,300,000
0.1818
Where considered appropriate the Company will settle consulting invoices by issue of shares.
During the year 555,556 shares were issued in settling invoices to the value of $50,000. (2019: Nil)
20. DIRECTORS AND KEY MANAGEMENT PERSONNEL DISCLOSURES
a) Names and positions of key management personnel in office at any time during the financial year:
Robert Pett
Non-Executive Chairman
John Conidi
Non-Executive Director
Christoph Frey
Non-Executive Director (resigned 14 April 2020)
Andrew Spinks Managing Director
Grant Pierce
Howard Rae
Executive Director (resigned 12 June 2020)
Chief Financial Officer and Company Secretary
b) Key management personnel remuneration
Aggregate compensation of key management personnel of the consolidated entity:
Short term employee benefits
Post-employment benefits
Long term employee benefits
Share based payments (non-cash)
2020
$’000
1,038
54
(1)
-
2019
$’000
1,343
56
21
-
1,091
1,420
Detailed information about the remuneration received by key management personnel is provided in the
remuneration report on pages 21 to 27.
44
ECOGRAF LIMITED ANNUAL REPORT 2020 21. RELATED PARTY DISCLOSURES
Transactions between related parties are on normal commercial terms.
Ultimate parent
EcoGraf Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 22.
Key management personnel
Disclosures relating to key management personnel are set out in note 20 and the remuneration report in the
directors’ report.
Transactions with related parties
The following transactions were undertaken with key management personnel during the year ended 30 June
2020. The transactions reflected below have been included in ‘Fees for special duties or exertion’ disclosed in the
remuneration table in section 4 of the remuneration report in the director’s report.
Robert Pett is a director and shareholder of the following related party entity which transacted with the consolidated
entity.
Entity
Prevelly Holdings Pty Ltd
Services provided
Consultancy services
2020
$’000
14
2019
$’000
16
Christoph Frey is a director and shareholder of the following related party entity which transacted with the
consolidated entity.
Entity
ProGraphite GmbH
Director Loan Facility
Services provided
Consultancy services
2020
$’000
99
2019
$’000
265
During the year a loan facility of $300,000 was arranged with director related entities to provide the Company with
working capital for the purposes of paying creditors, if required. This loan facility was provided on an unsecured and
interest free basis to support the Company for an indefinite term, subject to cancellation and repayment on receipt
of 30 days written notice.
There were no other significant transactions with related parties entered into during the year.
45
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 0
22. CONSOLIDATED ENTITY INFORMATION
Information about subsidiaries
The financial statements of the consolidated entity include the following subsidiaries:
Country of incorporation
2020
2019
Percentage owned (%)
Tanzanian Exploration Company Pty Ltd
TanzGraphite Pty Ltd
TanzGraphite (AUS) Pty Ltd
EcoGraf (Australia) Pty Ltd
Westoz Technologies Pty Ltd (Australia)
EcoGraf (Mauritius) Limited
EcoGraf (Tanzania) Limited
TanzGraphite Technologies Limited
TanzGraphite (TZ) Limited
TanzGraphite Exploration (TZ) Limited
23. PARENT INFORMATION
Australia
Australia
Australia
Australia
Australia
Mauritius
Tanzania
Tanzania
Tanzania
Tanzania
EcoGraf Limited
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Share option reserve
Accumulated losses
Total equity
Loss of the parent entity
Total comprehensive loss of the parent entity
46
100
100
100
100
100
100
100
100
100
100
2020
$’000
2,874
25,830
28,704
408
20
428
100
100
100
100
100
100
100
100
100
100
2019
$’000
1,552
24,388
25,940
592
21
613
28,276
25,327
49,060
3,385
(24,169)
28,276
(2,049)
(2,049)
44,852
2,594
(22,119)
25,327
(1,943)
(1,943)
ECOGRAF LIMITED ANNUAL REPORT 2020 Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity did not have any guarantees at 30 June 2020 or 30 June 2019.
Contingent liabilities
The parent entity did not have any contingent liabilities at 30 June 2020 or 30 June 2019.
Capital commitments
The parent entity did not have any capital commitments at 30 June 2020 or 30 June 2019.
Significant accounting policies
The parent entity’s financial information has been prepared using the same basis, including the accounting policies,
as the consolidated entity.
24. FINANCIAL INSTRUMENTS
The consolidated entity is exposed to a variety of financial risks, including market risk, credit risk and liquidity risk.
The consolidated entity’s financial instruments consist of cash and deposits with banks, accounts receivable and
accounts payable. No trading in any financial instruments is undertaken.
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis
of measurement and the basis on which income and expense are recognised, in respect of each class of financial
asset, financial liability and equity instrument, are disclosed in note 26. Unless otherwise stated, the carrying
amounts of financial instruments reflect their fair value.
The main risks arising from the consolidated entity’s financial instruments are foreign currency risk, interest rate
risk, liquidity risk and credit risk. The Board determines policies for managing each of these risks and they are
summarised below.
Foreign currency risk
The consolidated entity undertakes certain transactions denominated in foreign currency and is exposed to foreign
currency risk through foreign exchange rate fluctuations. Foreign exchange risk also arises from future commercial
transactions and recognised financial assets and financial liabilities denominated in a currency other than the
consolidated entity’s functional currency. The consolidated entity operates internationally and is exposed to foreign
exchange risk arising from currency exposures to the USD, EUR, TZS and GBP.
The carrying amount, in Australian dollars of the consolidated entity’s foreign currency denominated financial assets
and financial liabilities at the reporting date was as follows:
USD
EUR
TZS
GBP
Total
Cash and cash equivalents
Trade and other payables
2020
$’000
2019
$’000
2020
$’000
2019
$’000
1
-
12
-
13
49
-
9
-
58
-
22
15
86
123
-
11
72
86
169
47
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 0
24. FINANCIAL INSTRUMENTS (CONTINUED)
The financial impact of a 10% change in the Australian dollar exchange rate on the consolidated entity is as follows:
Appreciation in AUD exchange rate
Depreciation in AUD exchange rate
%
change
Effect on loss
before tax
Effect on
equity
%
change
Effect on loss
before tax
Effect on
equity
2020
2019
10%
10%
$10,374
$26,582
$10,374
$26,582
10%
10%
$(10,374)
$(10,374)
$(26,582)
$(26,582)
The assumed percentage change used in the above analysis is the expected overall volatility of the significant
currencies, which is based on management’s assessment of reasonable possible fluctuations, taking into
consideration movements during the year and the spot rate at each reporting date.
Interest rate risk
The consolidated entity’s exposure to market risk for changes in interest rates arises from holding cash and
deposits. Funds held in operating accounts and term deposits earned variable interest at rates ranging between 0%
to 1.35% (2019: 0% to 2.3%), depending on the type of bank account and cash balance. The consolidated entity does
not have interest-bearing loans or borrowings.
The interest-bearing financial instruments held by the consolidated entity are:
Cash and cash equivalents
30 June
2020
$’000
2,779
30 June
2019
$’000
1,462
A change of 1% in the variable interest rate at the reporting date would have an impact on the consolidated entity
profit and loss and equity of $28,000 (2019: $15,000) assuming all other variables remain constant.
Liquidity risk
Liquidity risk is the risk that the consolidated entity will not be able to meet its financial obligations as and when
they fall due. The consolidated entity manages liquidity risk by maintaining adequate cash reserves, by continuously
monitoring actual and forecast cash flows and by matching the maturity profiles of its financial assets and liabilities.
The following table sets out the contractual maturity of the consolidated entity’s financial instrument liabilities based
on undiscounted cash flows.
48
ECOGRAF LIMITED ANNUAL REPORT 2020 Carrying
amount
$’000
Contractual
cash flows
$’000
1 year or
less
$’000
Between 1
and 2 years
$’000
Between 2
and 5 years
$’000 s
Over 5
years
$’000
2020
Trade and other payables
349
2019
Trade and other payables
602
Credit risk management
349
602
349
602
-
-
-
-
-
-
Credit risk is the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the
consolidated entity. The consolidated entity is exposed to credit risk from its bank deposits and other receivables
as disclosed in the statement of financial position. The consolidated entity does not have any significant credit risk
exposure to any single counterparty or any consolidated entity of counterparties having similar characteristics.
The credit risk on liquid funds is limited because the counterparties are banks with high credit-ratings assigned by
international credit-rating agencies. (S+P Australian AA-, Tanzanian B).
Holdings by geographical region
Cash and cash equivalents
Other receivables
Australian
$’000
Tanzanian
$’000
2,767
76
2,843
12
-
12
Total
$’000
2,779
76
2,855
The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets
disclosed in notes 6, 7 and 9.
Fair value measurement
The carrying amounts of Other receivables and Trade and other payables are assumed to approximate their fair
values due to their short-term nature.
25. EVENTS AFTER BALANCE DATE
There have been no events that have arisen between 30 June 2020 and the date of this report or any other item,
transaction or event of a material and unusual nature likely, in the opinion of the directors, to materially affect
the operations of the Company, the results of those operations or the state of affairs of the Company, in future
financial years.
49
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 0
26. SIGNIFICANT ACCOUNTING POLICIES
a) Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated
entity only, and information about the parent entity is disclosed in note 22.
b) Basis of consolidation
The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at
30 June 2020. Subsidiaries are entities that are controlled by the Company. Control is achieved when the Company
is exposed to, or has rights to, variable returns from its involvement with its subsidiaries and has the ability to affect
those returns through its capacity to direct the activities of its subsidiaries.
Specifically, the consolidated entity controls a subsidiary if, and only if, the consolidated entity has:
• power over the subsidiary (i.e., existing rights that give it the current ability to direct the relevant activities of the
subsidiary)
• exposure, or rights, to variable returns from its involvement with the subsidiary
• the ability to use its power over the subsidiary to affect its returns
Generally, there is a presumption that a majority of voting rights results in control. To support this presumption and
when the consolidated entity has less than a majority of the voting or similar rights of an subsidiary, the consolidated
entity considers all relevant facts and circumstances in assessing whether it has power over a subsidiary, including:
• the contractual arrangement(s) with the other vote holders of the subsidiary
• rights arising from other contractual arrangements
• the consolidated entity’s voting rights and potential voting rights.
The consolidated entity re-assesses whether or not it controls an entity if facts and circumstances indicate that there
is a change to the elements of control. Assets, liabilities, income and expenses of a subsidiary acquired or disposed
of during the year are included in the consolidated financial statements from the date the consolidated entity gains
control until the date the consolidated entity ceases to control the subsidiary.
When necessary, adjustments are made to the financial statements of subsidiaries align to their accounting policies
with the consolidated entity. All consolidated entity assets and liabilities, equity, income, expenses and cash flows
relating to transactions between members of the consolidated entity are eliminated in full on consolidation.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity
transaction.
c) Taxes
Current income tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to
the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or
substantively enacted at the reporting date in the countries where the consolidated entity operates and generates
taxable income.
Current income tax relating to items recognised directly in equity is recognised in equity and not in the statement
of profit or loss. Management periodically evaluates positions taken in the tax returns with respect to situations in
which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
50
ECOGRAF LIMITED ANNUAL REPORT 2020 Deferred tax
Deferred tax liabilities are provided using the liability method on temporary differences between the tax bases of
assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax
liabilities are recognised for all taxable temporary differences, except:
• when the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction
that is not a business combination and at the time of the transaction, it affects neither the accounting profit nor
taxable profit or loss; or
• in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests
in joint arrangements, when the timing of the reversal of the temporary differences can be controlled and it is
probable that the temporary differences will not reverse in the foreseeable future.
• Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax
credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable
profit will be available against which the deductible temporary differences and the carry forward of unused tax
credits and unused tax losses can be utilised, except:
• when the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of
an asset or liability in a transaction that is not a business combination and at the time of the transaction, it affects
neither the accounting profit nor taxable profit or loss
• in respect of deductible temporary differences associated with investments in subsidiaries, associates and
interests in joint arrangements, deferred tax assets are recognised only to the extent that it is probable that the
temporary differences will reverse in the foreseeable future and taxable profit will be available against which the
temporary differences 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 tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the
asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively
enacted at the reporting date.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax
assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation
authority.
d) Exploration and development expenditure
Exploration and evaluation expenditure in relation to separate areas of interest for which rights of tenure are current
is carried forward as an asset in the statement of financial position where it is expected that the expenditure will
be recovered through the successful development of an area of interest, or by its sale, or exploration activities are
continuing in an area and activities have not reached a stage which permits a reasonable estimate of the existence
or otherwise of economically recoverable reserves.
Where a project or an area of interest has been abandoned, the expenditure incurred thereon is written-off in the
year in which the decision is made.
When production commences, the accumulated costs for the relevant area of interest are amortised over the life of
the area according to the rate of depletion of the economically recoverable reserves.
A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry
forward costs in relation to that area of interest. (Refer to note 26g).
51
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 0
26. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
d) Exploration and development expenditure (continued)
Costs of site restoration are provided over the life of the facility from when exploration commences and are included
in the costs of that stage. Site restoration costs include the dismantling and removal of plant, equipment and building
structures, waste removal and rehabilitation of the site in accordance with the permits. Such costs are determined
using estimates of future costs, current legal requirements and applicable technology on a discounted basis.
Payments for exploration and evaluation expenditure are recorded net of any government grants.
e) Operating segments
Operating segments are presented on the same basis as the internal reports provided to the chief operating decision
maker who is responsible for the allocation of resources to operating segments and for assessing their performance.
f) Property plant & equipment
Each class of property, plant and equipment is carried at cost less, where applicable, any accumulated depreciation
and impairment losses.
Property plant & equipment is recorded at the value directly attributable to bringing the asset to the location and
condition necessary for it to be capable of operating in the manner intended by management.
Plant and equipment
The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the
amounts recoverable on the basis of net cash flows that are expected to be received from the employment and
subsequent disposal of the assets.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits associated with the item will flow to the consolidated entity
and the cost of the item can be measured reliably. Repairs and maintenance expenses are charged to the profit and
loss component of the statement of comprehensive income during the financial period in which they are incurred.
Depreciation
The depreciable amount of all fixed assets including any buildings and capitalised lease assets, but excluding
freehold land, is depreciated on a straight-line basis over their useful lives, commencing from the time the asset is
held ready for use as follows:
Plant and equipment office
Plant and equipment field
Motor vehicles
Furniture and equipment
Leasehold assets
8 years
2–5 years
5 years
4 years
3 years
Residual values of the assets and their useful lives are reviewed and if necessary adjusted, at each reporting date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is
greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount and are included in
the profit and loss component of the statement of comprehensive income.
52
ECOGRAF LIMITED ANNUAL REPORT 2020 g)
Impairment of non-financial assets
At each reporting date, the consolidated entity reviews the carrying values of its tangible and intangible assets
to determine whether there is any indication that those assets have been impaired. If such an indication exists,
the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use,
is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is
expensed to the profit or loss component of the consolidated statement of profit or loss and other comprehensive
income.
Impairment testing is performed annually for goodwill and intangible assets with indefinite lives.
Where it is not possible to estimate the recoverable amount of an individual asset, the entity estimates the
recoverable amount of the cash-generating unit to which the asset belongs.
h) Foreign currency transactions and balances
Transactions and balances
Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the date of
the transaction and foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items
measured at historical cost continue to be carried at the exchange rate at the date of the transaction and non-monetary
items measured at fair value are reported at the exchange rate at the date when fair values were determined.
Exchange differences arising on the translation of monetary items are recognised in the profit or loss component
of the statement of profit or loss and other comprehensive income, except where they are deferred in equity as a
qualifying cash flow or net investment hedge.
Subsidiaries
On consolidation, the assets and liabilities of foreign operations are translated into Australian dollars at the
exchange rate prevailing at the reporting date and their statements of profit or loss are translated at exchange
rates prevailing at the dates of the transactions. Exchange differences arising on translation for consolidation
are recognised in other comprehensive income. On disposal of a foreign operation, the component of other
comprehensive income relating to that particular foreign operation is recognised in profit or loss.
i)
Employee benefits
Provision is made for the consolidated entity’s liability for employee benefits arising from services rendered by
employees up to reporting date. Short term employee benefits have been measured at the amounts expected to
be paid when the liability is settled, plus related on-costs. Long term employee benefits have been measured at the
present value of the estimated future cash outflows to be made for those benefits.
Share-based payments
Equity-settled share-based compensation benefits are provided to employees and directors.
The cost of equity-settled transactions is measured at fair value on grant date. Fair value is independently
determined using either the binomial or Black-Scholes option pricing model that takes into account the exercise
price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the
underlying share, the expected dividend yield, and the risk-free interest rate for the term of the option, together with
non-vesting conditions that do not determine whether the consolidated entity receives the services that entitle the
employees to receive payment. No account is taken of any other vesting conditions.
The cost of equity-settled transactions is recognised as an expense with a corresponding increase in equity over the
vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award,
the best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The
amount recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less
amounts already recognised in previous periods.
53
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 0
25. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
i)
Employee benefits (continued)
Share-based payments (continued)
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification had not been
made. An additional expense is recognised, over the remaining vesting period, for any modification that increases
the total fair value of the share-based compensation benefit as at the date of modification.
If a non-vesting condition is within the control of the consolidated entity or employee, the failure to satisfy the
condition is treated as a cancellation.
If the condition is not within the control of the consolidated entity or employee and is not satisfied during the vesting
period, any remaining expense for the award is recognised over the remaining vesting period, unless the award is
forfeited.
If an equity-settled award is cancelled, it is treated as if it has vested on the date of cancellation and any remaining
expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the
cancelled and new award are treated as if they were a modification.
j)
Issued capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net
of tax, from the proceeds.
k) Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity
instrument of another entity.
i.
Financial assets
Initial recognition and measurement
Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through
other comprehensive income (OCI), and 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 consolidated entity’s business model for managing them. With the exception of trade
receivables that do not contain a significant financing component or for which the consolidated entity has applied
the practical expedient, the consolidated entity 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 consolidated entity has applied the practical expedient are
measured at the transaction price determined under AASB 15 Revenue from Contracts with Customers.
In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to
give rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on the principal amount outstanding.
This assessment is referred to as the SPPI test and is performed at an instrument level.
The consolidated entity’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.
54
ECOGRAF LIMITED ANNUAL REPORT 2020 Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
• Financial assets at amortised cost (debt instruments)
• Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt instruments)
• Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon
derecognition (equity instruments)
• Financial assets at fair value through profit or loss.
Financial assets at amortised cost (debt instruments)
This category is the most relevant to the consolidated entity. The consolidated entity measures financial assets at
amortised cost if both of the following conditions are met:
• The financial asset is held within a business model with the objective to hold financial assets in order to collect
contractual cash flows and
• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding
Financial assets at amortised cost are subsequently measured using the effective interest rate (EIR) method and are
subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or
impaired.
The consolidated entity’s financial assets at amortised cost includes trade and other receivables.
Impairment of financial assets
Expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss will be recognised
through an allowance. ECLs are based on the difference between the contractual cash flows due in accordance with
the contract and all the cash flows that the consolidated entity expects to receive, discounted at an approximation of
the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or
other credit enhancements that are integral to the contractual terms.
ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit
risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible
within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant
increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the
remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).
For other debt financial assets (i.e., cash on deposit at bank). the ECL is based on the 12-month ECL. The 12-month
ECL is the portion of lifetime ECLs that results from default events on a financial instrument that are possible
within 12 months after the reporting date. However. when there has been a significant increase in credit risk since
origination, the allowance will be based on the lifetime ECL.
The consolidated entity considers a financial asset in default when contractual payments are 90 days past due.
However, in certain cases, the consolidated entity may also consider a financial asset to be in default when internal
or external information indicates that the consolidated entity is unlikely to receive the outstanding contractual
amounts in full before taking into account any credit enhancements held by the consolidated entity. A financial asset
is written-off when there is no reasonable expectation of recovering the contractual cash flows.
55
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 0
25. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
k) Financial instruments (continued)
ii.
Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss,
loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as
appropriate.
All financial liabilities are recognised initially at fair value.
The consolidated entity’s financial liabilities include trade and other payables.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same lender on substantially different terms,
or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the
derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying
amounts is recognised in the statement of profit or loss.
iii. Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the consolidated statement
of financial position if there is a currently enforceable legal right to offset the recognised amounts and there is an
intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
l) Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits held at call with banks and other short-term highly liquid
investments with original maturities of 3 months or less.
m) Revenue
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 consolidated entity expects to be entitled in
exchange for those goods or services.
Other revenue is recognised when it is received or when the right to receive payment is established.
All revenue is stated net of the amount of goods and services tax (GST).
n)
Interest income
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest
rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of
the financial asset to that asset’s net carrying amount.
56
ECOGRAF LIMITED ANNUAL REPORT 2020 o) Goods and services tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred
is not recoverable from the Australian Tax Office (ATO) In these circumstances the GST is recognised as part of the
cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of
financial position are shown inclusive of GST.
The net amount of GST recoverable from, or payable to, the ATO is included as part of receivables or payables.
Cash flows are presented in the cash flow statement on a gross basis, except for the GST component of investing
and financing activities, which are disclosed as operating cash flows.
p) Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit or loss attributable to the owners of EcoGraf Limited,
excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary
shares outstanding during the financial year, adjusted for any bonus elements in ordinary shares issued during the
financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into
account the past tax effect of interest and other financing costs associated with dilutive potential ordinary shares
and the weighted average number of shares assumed to have been issued for no consideration in relation to
dilutive potential ordinary shares.
q) Government grants
Government grants are recognised where they can be reliably measured, it is certain that the grant will be received,
and all attached conditions will be satisfied. When the grant relates to an expense item, it is recognised as income
on a systematic basis over the periods that the related costs for which it is intended to compensate, are expensed.
When the grant relates to an asset, it is offset against the capitalised amount and recognised as income in equal
amounts over the expected useful life of the related asset (when the asset is depreciated).
r) Critical accounting estimates and judgements
The directors evaluate estimates and judgments incorporated into the financial report based on historical
knowledge and best available current information. Estimates assume a reasonable expectation of future events
and are based on current trends and economic data, obtained both externally and generated internally by the
consolidated entity.
Key estimates — impairment
The consolidated entity assesses impairment at each reporting date by evaluating conditions specific to the entity
that may lead to impairment of assets. Where an impairment trigger exists, the recoverable amount of the asset is
determined. Value-in-use calculations performed in assessing recoverable amounts incorporate a number of key
estimates.
57
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 0
25. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
r) Critical accounting estimates and judgements (continued)
Recoverability of exploration and evaluation costs
The consolidated entity assesses the recoverability of the carrying value of capitalised exploration and evaluation costs
at each reporting date (or at closer intervals should the need arise). In completing this assessment, regard is had to
the Company’s intentions with regard to proposed future exploration and development plans for individual exploration
areas, to the success or otherwise of activities undertaken in individual areas in recent times, to the likely success
of future planned exploration activities and to any potential plans for divestment of individual areas. Any required
adjustments to the carrying value of capitalised exploration are completed based on the results of this assessment.
Share-based payment transactions
The consolidated entity measures the cost of shares and options issued to employees and third parties by reference
to the fair value of the equity instruments at the date at which they are granted. The fair value of unlisted options is
determined using either the binomial or Black-Scholes pricing model, taking into account the terms and conditions
upon which the instruments were granted.
s)
Leases policy
The consolidated entity assesses at contract inception whether a contract is, or contains, a lease. That is, if the
contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
Consolidated entity as a lessee
The consolidated entity applies a single recognition and measurement approach for all leases, except for short-term
leases and leases of low-value assets. The consolidated entity recognises lease liabilities to make lease payments
and right-of-use assets representing the right to use the underlying assets.
(i) Right-of-use assets
The consolidated entity 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 right-of-use assets
includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or
before the commencement date less any lease incentives received.
Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated
useful lives. If ownership of the leased asset transfers to the consolidated entity at the end of the lease term or the
cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset.
The right-of-use assets are also subject to impairment. Refer to the accounting policies in section (g) Impairment of
non-financial assets.
ii)
Lease liabilities
At the commencement date of the lease, the consolidated entity 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 lease incentives receivable, variable lease payments that depend on an index or a
rate, 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 consolidated entity and payments of penalties
for terminating the lease, if the lease term reflects the consolidated entity exercising the option to terminate. Variable
lease payments that do not depend on an index or a rate are recognised as expenses (unless they are incurred to
produce inventories) in the period in which the event or condition that triggers the payment occurs.
58
ECOGRAF LIMITED ANNUAL REPORT 2020 t) New accounting standards and interpretations
AASB 16 supersedes AASB 17 Leases. The standard sets out the principles for the recognition, measurement,
presentation and disclosure of leases.
The accounting policies adopted in the preparation of the financial report are consistent with those adopted and
disclosed in the Company's annual financial report for the year ended 30 June 2019, except for the adoption of new
standards and interpretations as of 1 July 2019.
The Company changed its accounting policies as a result of adopting the following standards:
• AASB 16 Leases, and
• AASB Interpretation 23 Uncertainty over Income Tax Treatments.
AASB 16: Leases
AASB 16 replaces AASB17 Leases, AASB Interpretation 4 Determining whether an Arrangement contains a Lease,
AASB Interpretation 115 Operating leases – Incentives, and AASB Interpretation 127 Evaluating the Substance of
Transactions Involving the Legal Form of a Lease.
AASB 16 requires lessees to account for all leases under a single on-balance sheet model in a similar manner to
finance leases under AASB 117 Leases. The standard includes two recognition exemptions for lessees – leases
of ’low-value’ assets (e.g., personal computers) and short-term leases (i.e., leases with a lease term of 12 months
or less). At the commencement date of a lease, a lessee will recognise a liability to make lease payments (i.e., the
lease liability) and an asset representing the right to use the underlying asset during the lease term (i.e., the rightof-
use asset). Lessees will be required to separately recognise the interest expense on the lease liability and the
depreciation expense on the right-of-use asset. Lessees will be required to remeasure the lease liability upon the
occurrence of certain events (e.g., a change in the lease term, a change in future lease payments resulting from a
change in an index or rate used to determine those payments). The lessee will generally recognise the amount of
the remeasurement of the lease liability as an adjustment to the right-of-use asset.
The consolidated entity has assessed the impact on its consolidated financial statements resulting from the
application of AASB 16. The new standard did not significantly impact the consolidated entity as it has not entered
into any significant leasing arrangements.
AASB Interpretation 23 Uncertainty over Income Tax Treatments.
The Interpretation clarifies the application of the recognition and measurement criteria in IAS 12 Income Taxes when
there is uncertainty over income tax treatments. The Interpretation specifically addresses the following:
• Whether an entity considers uncertain tax treatments separately
• The assumptions an entity makes about the examination of tax treatments by taxation authorities
• How an entity determines taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates
• How an entity considers changes in facts and circumstances.
The consolidated entity has assessed the impact on its consolidated financial statements resulting from the
application of AASB Interpretation 23. The new interpretation does not materially impact the consolidated entity.
26. STANDARDS ISSUED BUT NOT YET EFFECTIVE
Certain new accounting standards and interpretations have been published that are not mandatory for 30
June 2020 reporting periods and have not been early adopted by the consolidated entity. The standards and
interpretations that were issued but not yet effective are set out below. The consolidated entity is in the process of
considering the impact of the new standards. Unless stated otherwise below, the potential effects of the following
standards and interpretations have not yet been fully determined.
The list below is considered those relevant to the consolidated entity.
59
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 0
26. STANDARDS ISSUED BUT NOT YET EFFECTIVE (CONTINUED)
Reference
Summary
AASB 2019-3
Amendments
to Australian
Accounting
Standards – Interest
Rate Benchmark
Reform
These amendments to AASB 7 Financial Instruments:
Disclosures, AASB 9 and AASB 139 Financial Instruments:
Recognition and Measurement were issued in response to the
effects of Interbank Offered Rates reform on financial reporting.
They provide mandatory temporary relief enabling hedge
accounting to continue during the period of uncertainty before
the replacement of an existing interest rate benchmark with an
alternative “nearly risk-free” benchmark.
These amendments apply retrospectively. However, any hedge
relationships that have previously been de-designated cannot be
reinstated, nor can any hedge relationships be designated with
the benefit of hindsight. Early application is permitted.
Application
date of
standard
Application
date for
consolidated
entity
1 January
2020
1 July
2020
Conceptual
Framework AASB
2019-1 Conceptual
Framework for
Financial Reporting
Amendments
to Australian
Accounting
Standards –
Reference to
the Conceptual
Framework
The Conceptual Framework for Financial Reporting (Conceptual
Framework) describes the objective of, and the concepts
for, general purpose financial reporting. The purpose of the
Conceptual Framework is to:
1 January
2020
1 July
2020
• Assist in the development of accounting standards;
• Help preparers develop consistent accounting policies where
there is no applicable standard in place; and
• Assist all stakeholders to understand the standards better.
The Conceptual Framework is not a standard, and none of the
concepts override those in any standard or any requirements in
a standard.
The application of the Conceptual Framework is at present
limited to for-profit entities. On the other hand, the Framework
for the Preparation and Presentation of Financial Statements
(July 2004) (Framework) will continue to apply to not-for-profit
entities.
The revised Conceptual Framework includes: a new chapter
on measurement; guidance on reporting financial performance;
improved definitions and guidance - in particular, the definitions
of an asset and a liability; and clarifications in important areas,
such as the roles of stewardship, prudence and measurement
uncertainty in financial reporting.
60
ECOGRAF LIMITED ANNUAL REPORT 2020 Reference
Summary
Application
date of
standard
Application
date for
consolidated
entity
Conceptual
Framework AASB
2019-1 Conceptual
Framework for
Financial Reporting
Amendments
to Australian
Accounting
Standards –
Reference to
the Conceptual
Framework
(continued)
AASB 2020-4
Amendments to
AASs – COVID-19
Related Rent
Concessions
Two exemptions to the application of the Conceptual Framework
were provided:
1 January
2020
1 July
2020
• When developing accounting policies for regulatory account
balances using the previous Framework.
Requiring entities to continue applying the previous
Framework when developing or revising accounting policies
for regulatory account balances prevents unhelpful and
unnecessary disruption for both preparers and users. It
avoids revising accounting policies for regulatory account
balances twice within a short time frame – once for the revised
Conceptual Framework and again when a revised standard on
rate-regulated activities is issued.
• When applying AASB 3 Business Combinations, such that
entities must continue to apply the definitions of an asset and a
liability (and supporting concepts) in the previous Framework,
and not the definitions in the revised Conceptual Framework.
In some cases, applying the revised definitions might change
which assets and liabilities qualify for recognition in a business
combination. As a consequence, post-acquisition accounting
required by other standards could lead to immediate
derecognition of such assets or liabilities, causing ‘day 2 gains
or losses’ to arise, which do not depict economic gains or
losses. The IASB has since assessed how AASB 3 Business
Combinations can be updated for the revised definitions, without
these unintended consequences.
Due to the COVID-19 pandemic, many lessors are granting
rent concessions to lessees that impact lease payments. Rent
concessions granted by a lessor can take many forms, including
any combination of:
• A rent payment holiday;
• A reduction in lease payments for a period of time;
• A deferral of payments to a later date; or
• Other arrangements providing rent relief.
A concession might also include a change to the lease term.
1 June
2020
1 July
2020
61
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 0
26. STANDARDS ISSUED BUT NOT YET EFFECTIVE (CONTINUED)
Reference
Summary
AASB 2020-4
Amendments to
AASs – COVID-19
Related Rent
Concessions
(continued)
From the lessee’s perspective, a change in lease payments that
was contemplated in the original terms and conditions of the
lease would not be accounted for as a lease modification. For
example, it might be treated as a variable lease payment, with
the effect of the rent concession recognised in profit or loss. In
contrast, accounting for a lease modification generally requires a
lessee to remeasure the lease liability by discounting the revised
lease payments using a new discount rate.
Application
date of
standard
Application
date for
consolidated
entity
1 June
2020
1 July
2020
The IASB received feedback that assessing whether COVID-19
rent concessions are lease modifications could be challenging,
compounding the AASB 16 implementation work lessees have
recently undertaken. Consequently, the Board amended IFRS
16, allowing lessees to not account for rent concessions as lease
modifications, provided certain conditions are met.
The practical expedient applies only to rent concessions
occurring as a direct consequence of the COVID-19 pandemic,
and only if all of the following conditions are met:
• The change in lease payments results in revised consideration
for the lease that is substantially the same as, or less than, the
consideration for the lease immediately preceding the change;
• Any reduction in lease payments affects only payments
originally due on or before 30 June 2021; and
• There is no substantive change to other terms and conditions
of the lease.
Once elected, the practical expedient is required to be applied
consistently to all lease contracts with similar characteristics and
in similar circumstances.
The amendment to AASB 16 is applied retrospectively with
the cumulative effect of initial application recognised as an
adjustment to the opening balance of retained earnings or
other component of equity, as appropriate, at the beginning of
the annual reporting period in which the lessee first applies the
amendment.
62
ECOGRAF LIMITED ANNUAL REPORT 2020 Application
date of
standard
Application
date for
consolidated
entity
1 January
2022
1 July
2022
1 January
2022
1 July
2022
Reference
Summary
AASB 2020-3
Amendments to
AASB 3 – Reference
to the Conceptual
Framework
AASB 2020-1
Amendments
to AASs –
Classification of
Liabilities as Current
or Non-current
The IASB’s assessment of applying the revised definitions of
assets and liabilities in the Conceptual Framework to business
combinations showed that the problem of day 2 gains or losses
would be significant only for liabilities that an acquirer accounts
for after the acquisition date by applying AASB 137 Provisions,
Contingent Liabilities and Contingent Assets or IFRIC 21 Levies.
The Board updated AASB 3 in May 2020 for the revised
definitions of an asset and a liability and excluded the application
of the Conceptual Framework to liabilities and contingent
liabilities within the scope of AASB 137 or IFRIC 21.
The AASB released the equivalent amendments to AASB 3 in
June 2020.
These amendments are applied prospectively.
A liability is classified as current if the entity has no right at the
end of the reporting period to defer settlement for at least 12
months after the reporting period. The AASB recently issued
amendments to AASB 101 to clarify the requirements for
classifying liabilities as current or non-current. Specifically:
• The amendments specify that the conditions which exist at the
end of the reporting period are those which will be used to
determine if a right to defer settlement of a liability exists.
• Management intention or expectation does not affect
classification of liabilities.
• In cases where an instrument with a conversion option is
classified as a liability, the transfer of equity instruments
would constitute settlement of the liability for the purpose of
classifying it as current or non-current.
These amendments are applied retrospectively.
63
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 0
26. STANDARDS ISSUED BUT NOT YET EFFECTIVE (CONTINUED)
Reference
Summary
AASB 2018-7
Amendments to
AASs – Definition of
Material
AASB 2019-5
Amendments to
AASs – Disclosure
of the Effect of New
IFRS Standards
Not Yet Issued in
Australia
The amendments align the definition of ‘material’ across
AASB 101 Presentation of Financial Statements and AAS
108 Accounting Policies, Changes in Accounting Estimates
and Errors, and clarify certain aspects of the definition. The
new definition 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 amendments clarify that materiality will depend on the
nature or magnitude of information, or both. An entity will need
to assess whether the information, either individually or in
combination with other information, is material in the context of
the financial statements.
The amendments are applied prospectively.
It is possible that an entity complying with Australian Accounting
Standards cannot assert compliance with IFRS Standards if its
reporting date falls between the issuance date of a new IFRS
Standard and a later release date of an equivalent Australian
Accounting Standard. To enable IFRS compliance assertion
despite such delays, this standard amends AASB 1054 Australian
Additional Disclosures to require disclosure of the possible
impact of initial application of forthcoming IFRS Standards not
yet adopted by the AASB, as specified in paragraphs 30 and
31 of AASB 108. Entities complying with Australian Accounting
Standards can assert compliance with IFRS Standards by making
this additional disclosure.
The amendments are applied prospectively.
Application
date of
standard
Application
date for
consolidated
entity
1 January
2020
1 July
2020
1 January
2020
1 July
2020
64
ECOGRAF LIMITED ANNUAL REPORT 2020 DIRECTORS’ DECLARATION
In the directors’ opinion:
1.
The financial statements, comprising the consolidated statement of profit or loss and other comprehensive
income, consolidated statement of financial position, consolidated statement of cash flows, consolidated
statement of changes in equity and accompanying notes, are in accordance with the Corporations Act 2001 and:
a)
Comply with accounting standards and the Corporations Regulations 2001; and
b)
Give a true and fair view of the financial position at 30 June 2020 and of the performance for the year
ended on that date.
The Company has included in the notes to the financial statements an explicit and unreserved statement of
compliance with International Financial Reporting Standards.
In the directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts
as and when they become due and payable subject to achieving the matters set out in note 2 to the financial
statements.
2.
3.
4.
The directors have been given the declarations by the chief executive officer and chief financial officer required
by section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the directors.
Andrew Spinks
Managing Director
Perth, 24 September 2020
65
AUDITOR’S REPORT
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Independent auditor’s report to the members of EcoGraf Limited
Report on the audit of the financial report
Opinion
We have audited the financial report of EcoGraf Limited (the Company) and its subsidiaries
(collectively the Group), which comprises the consolidated statement of financial position as at
30 June 2020, the consolidated statement of profit or loss and other comprehensive income,
consolidated statement of changes in equity and consolidated statement of cash flows for the year
then ended, notes to the financial statements, including a summary of significant accounting policies,
and the Directors' declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
a)
b)
giving a true and fair view of the consolidated financial position of the Group as at 30 June
2020 and of its consolidated financial performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
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 in the financial report, which describes the principal conditions that raise
doubt about the Group’s ability to continue as a going concern. These conditions indicate the
existence of a material uncertainty that may cast significant doubt about the Group’s ability to
continue as a going concern. Our opinion is not modified in respect of this matter.
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GB:JG:ECOGRAF:007
66
ECOGRAF LIMITED ANNUAL REPORT 2020
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial report of the current year. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, but 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, we have determined the matter described below to be the key audit
matter to be communicated in our report. For the matter below, our description of how our audit
addressed the matter is provided in this context.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report 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 financial report. The results of our audit procedures, including the
procedures performed to address the matter below, provide the basis for our audit opinion on the
accompanying financial report.
1. Carrying value of capitalised exploration and evaluation for the Epanko Project
Why significant
How our audit addressed the key audit matter
As disclosed in Note 8 to the financial report as at
30 June 2020, the Group held capitalised
exploration and evaluation expenditure assets of
$18,039,000 relating to the Epanko Graphite
Project. Note 8 also includes references to the status
of the Group’s Epanko mining licence in Tanzania.
The carrying value of exploration and evaluation
expenditure is assessed for impairment by the
Group when facts and circumstances indicate that
the exploration and evaluation expenditure may
exceed its recoverable amount.
The determination as to whether there are any
indicators to require an exploration and evaluation
asset to be assessed for impairment, involves a
number of judgments including whether the Group
has tenure, intends 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.
During the year the Group determined that there
had been no indicators of impairment for the Epanko
area of interest. Refer to Note 8 in the financial
report for further details.
Our audit procedures included the following:
► Considered the Group’s right to explore in the
relevant area of interest, which included
obtaining and assessing supporting
documentation. We also considered the status
of the Epanko mining licence as it related to
tenure
► Considered the Group’s intention to carry out
significant exploration and evaluation activity
in the relevant exploration area, which included
assessment of the Group’s cash-flow forecast
models, discussions with senior management
and Directors as to the intentions and strategy
of the Group
► Considered whether the exploration activities
within the Epanko area of interest had reached
a stage where a commercially viable resource
estimate could be made, which included
obtaining and assessing supporting
documentation such as exploration reports and
the Group's announcements to the Australian
Stock Exchange in relation to its mineral
resources
► Assessed the adequacy of the disclosure
included in the financial report
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67
AUDITOR’S REPORT
Information other than the financial report and auditor’s report thereon
The Directors are responsible for the other information. The other information comprises the
information included in the Company’s 2020 Annual Report, but does not include the financial report
and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon, with the exception of the Remuneration Report
and our related assurance opinion.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, 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 financial report
The Directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the Directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the Directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters relating to going concern and using the
going concern basis of accounting unless the Directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:
A member firm of Ernst & Young Global Limited
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ECOGRAF LIMITED ANNUAL REPORT 2020
►
►
►
►
►
►
Identify and assess the risks of material misstatement of the financial report, 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
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 financial report 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 financial report, including the
disclosures, and whether the financial report represents 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 financial report. 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 Directors 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 Directors 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 to the Directors, we determine those matters that were of most
significance in the audit of the financial report of the current year 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.
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69
AUDITOR’S REPORT
Report on the audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in the Directors' report for the year ended
30 June 2020.
In our opinion, the Remuneration Report of EcoGraf Limited for the year ended 30 June 2020,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The Directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
Ernst & Young
Gavin Buckingham
Partner
Perth
24 September 2020
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
70
ECOGRAF LIMITED ANNUAL REPORT 2020
SHAREHOLDER INFORMATION
SHAREHOLDER INFORMATION
DISTRIBUTION OF LISTED SECURITIES
Range
100,001 and Over
10,001 to 100,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Total
Units
319,396,705
39,810,547
3,409,800
1,344,522
25,194
% of
holding
Total
holders
% of
issued capital
87.74
10.94
0.94
0.37
0.01
387
1,021
417
390
100
16.72
44.10
18.01
16.85
4.32
363,986,768
100.00
2,315
100.00
TOP 20 HOLDERS OF ORDINARY SHARES
Rank Name
1
2
3
4
5
6
7
7
8
9
10
11
12
13
14
15
16
17
18
19
Citicorp Nominees Pty Limited
J P Morgan Nominees Australia Pty Limited
Dr Peter Dennett Meier & Mrs Lynette Suzanne Meier
GR Engineering Services Limited
RWH Nominees Pty Ltd
Mr Andrew Peter Spinks
Grant Pierce
Andrew Spinks
Cornwall Holdings Pty Ltd
Reindeer Investments Pty Limited
Mr Yung Wing Ho & Mrs Katherine Kam Ling Ho
LAX Consulting Pte Ltd
BCV Nominees Pty Ltd
Mr Gregory Robert Hackshaw
RWH Nominees Pty Ltd
Mr Nicholas Bolger
Mr Kosta Trajkovski & Mrs Susanne Trajkovski
Mr Yingjie Chen
Phelps Hill Investments Pty Ltd
Andrew Spinks
20
Mr Nicola Conidi & Mrs Giannina Conidi
Number of Ordinary
Shares held
% of
issued capital
46,198,541
45,777,141
10,433,340
5,737,807
5,281,970
4,359,538
4,250,000
4,250,000
3,709,615
3,257,692
3,207,324
3,039,318
3,000,000
2,900,000
2,810,386
2,701,681
2,652,818
2,570,000
2,544,095
2,429,434
2,401,417
12.69
12.58
2.87
1.58
1.45
1.20
1.17
1.17
1.02
0.90
0.88
0.84
0.82
0.80
0.77
0.74
0.73
0.71
0.70
0.67
0.66
Total
163,512,117
44.95
71
SHAREHOLDER INFORMATION
MINERAL TENEMENTS
Consolidated entity’s 100% interest:
Licence
ML 548/2015
PL 7907/2012
PL 9306/2013
PL 9331/2013
PL 10092/2014
PL 10388/2014
PL 10390/2014
PL 10869/2016
PL 10872/2016
PL 10972/2016
PL 11081/2017
PL 11082/2017
PL 11143/2017
PL 11196/2018
PL 11386/2019
Area (km2)
9.62
26.42
17.53
2.76
23.23
2.57
2.81
29.95
2.60
3.83
2.08
20.77
2.62
46.72
6.73
Location
Mahenge, Tanzania
Merelani-Arusha, Tanzania
Mahenge, Tanzania
Mahenge, Tanzania
Merelani-Arusha, Tanzania
Mahenge, Tanzania
Mahenge, Tanzania
Merelani-Arusha, Tanzania
Merelani-Arusha, Tanzania
Mahenge, Tanzania
Merelani-Arusha, Tanzania
Merelani-Arusha, Tanzania
Simanjiro, Tanzania
Merelani-Arusha, Tanzania
Simanjiro, Tanzania
MINERAL RESOURCE STATEMENT
Epanko Graphite Project Mineral Resource Estimate
30 June 2020
30 June 2019
Classification
Measured
Indicated
Inferred
Total
Tonnage
(Mt)
Grade
(%TGC)
Contained
Graphite (Kt)
Tonnage
(Mt)
Grade
(%TGC)
Contained
Graphite (Kt)
7.5
12.8
10.4
30.7
9.8
10.0
9.9
9.9
738.9
1,280.0
1,030.6
3,049.5
7.5
12.8
10.4
30.7
9.8
10.0
9.9
9.9
738.9
1,280.0
1,030.6
3,049.5
Merelani–Arusha Graphite Project Mineral Resource Estimate
30 June 2020
30 June 2019
Tonnage
(Mt)
Grade
(%TGC)
Contained
Graphite (Kt)
Tonnage
(Mt)
Grade
(%TGC)
Contained
Graphite (Kt)
7.4
10.3
17.7
6.7
6.3
6.5
500.0
650.0
1,150.0
7.4
10.3
17.7
6.7
6.3
6.5
500.0
650.0
1,150.0
Classification
Measured
Inferred
Total
Notes
• The Epanko and Merelani-Arusha Graphite Projects are located in Tanzania.
• Totals may not sum due to rounding.
• Mt = 1,000,000 tonnes.
• Tonnage figures have been rounded to the nearest 1,000 and % TGC grades have been rounded to 1 decimal place.
• Mineral Resources are quoted from blocks where the TGC grade is greater than 8%.
72
ECOGRAF LIMITED ANNUAL REPORT 2020
Competent Persons’ Statement
The information in this report that relates to Exploration Results is based on information compiled by Mr. Andrew
Spinks, a Competent Person, who is a Member of The Australasian Institute of Mining and Metallurgy and is
employed by EcoGraf Limited. Mr. Spinks has sufficient experience which is relevant to the style of mineralisation
and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent
Person as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves”. Mr. Spinks consents to the inclusion in the report of the matters based on his
information in the form and context in which it appears.
The information in this report that relates to Mineral Resources is based on information compiled by Mr. David
Williams, a Competent Person, who is a Member of The Australasian Institute of Mining and Metallurgy and is
employed by CSA Global Pty Ltd, an independent consulting company. Mr. Williams has sufficient experience which
is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is
undertaking to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian Code for Reporting
of Exploration Results, Mineral Resources and Ore Reserves”. Mr. Williams consents to the inclusion in the report of
the matters based on his information in the form and context in which it appears.
The information in this report that relates to Ore Reserves has been compiled by Mr. Steve O’Grady who is a
Member of The Australasian Institute of Mining and Metallurgy. Mr. O’Grady is employed by Intermine Engineering
and produced the Ore Reserve estimate based on data and geological information supplied by Mr. Williams.
Mr. O’Grady has sufficient experience that is relevant to the estimation, assessment, evaluation, and economic
extraction of the Ore Reserve that he is undertaking to qualify as a Competent Person as defined in the 2012 edition
of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr. O’Grady
consents to the inclusion in the report of the matters based on his information in the form and context in which it
appears.
MINERAL RESOURCE ESTIMATION - GOVERNANCE STATEMENT
EcoGraf Limited ensures that all Mineral Resource Estimates are subject to appropriate levels of governance and
internal controls. Estimation procedures are well established and are subject to systematic internal peer review and
external technical review undertaken by competent and qualified professionals. These reviews have not identified
any material issues. EcoGraf Limited also periodically reviews this governance framework to ensure it remains
appropriate for the requirements of its business activities.
Mineral Resource Estimates are reported on an annual basis in accordance with the 2012 Edition of the “Australasian
Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves” (‘JORC Code’). Mineral Resource
Estimates are quoted inclusive of Ore Reserves. Competent Persons named are Members or Fellows of The
Australasian Institute of Mining and Metallurgy and/or The Australian Institute of Geoscientists and qualify as
Competent Persons as defined under the JORC Code.
73
NOTES
74
ECOGRAF LIMITED ANNUAL REPORT 2020 75
ENGINEERING
CLEAN ENERGY
76
ECOGRAF LIMITED ANNUAL REPORT 2020 CORPORATE DIRECTORY
DIRECTORS
Robert Pett
Andrew Spinks Managing Director
John Conidi
Non-Executive Director
Non-Executive Chairman
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