ANNUAL REPORT
Annual Financial Report For
the year ended 30 June 2023
Element 25 Limited
ABN 46 119 711 929 ASX E25
element25.com.au
2023 ANNUAL REPORT | 1
The future has always
been electric...
2 | 2023 ANNUAL REPORT
2023 TABLE OF CONTENTS
Chairman’s Letter
Principal Activities and Review of Operations
Directors' Report
Audit Independence Declaration
Corporate Governance Statement
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors' Declaration
Independent Auditor’s Report
ASX Additional Information
Corporate Directory
05
06
18
28
29
30
31
32
33
34
64
65
70
73
2023 ANNUAL REPORT | 3
Highlights
Feasibility Study (FS) demonstrates compelling economics for E25’s
proposed first ever US-based battery-grade, high purity manganese
sulphate monohydrate (HPMSM) facility.
HPMSM is required for the production of pre-cathode active materials
(pCAM) used in electric vehicle batteries, with US EV demand expected
to grow 12x by 2030.
HPMSM is an increasingly important critical battery raw material as
global battery technologies make the shift to higher manganese content
to achieve improved cost, safety and performance metrics.
E25’s proposed Louisiana-based facility is positioned to be a leading
US source of HPMSM after commencing production in 2025.
Offtake and financing agreements signed with Stellantis N.V. (Stellantis)
and General Motors LLC (GM), providing US$115M in project financing via
equity, pre-payment and debt.
Stellantis and GM transactions combined offtake commitments cover
approximately 65% of Train 1 plant output.
First tranche of Stellantis funding completed (US$15M at A$1.00 per
share) to take a 10.2% shareholding in Element 25. Stellantis is now the
Company’s largest shareholder.
Pilot plant testing confirms Element 25 flowsheet as technically robust,
delivering high quality HPMSM samples for final product qualification
with offtake partners.
Independent Life Cycle Assessment confirms industry leading ESG
credentials - E25 HPMSM calculated to produce ~1.7kg of CO2 for every
1kg of HPMSM, approximately ~ 67% lower than competitors in China
and ~26% lower than closest non-China optimised case.
Commenced trading on the US-based OTCQX® Best Market under the
symbol “ELMTF” to improve liquidity and provide greater accessibility for
global investors, particularly in the US.
Continued work to optimise manganese production at
Butcherbird Manganese Mine (Butcherbird) in the Pilbara region
of WA in including engineering and design for the proposed plant
expansion to a nominal 1Mtpa.
Dense media separation (DMS) trials confirmed DMS as
the likely technology for final stage beneficiation.
4 | 2023 ANNUAL REPORT
4 | 2023 ANNUAL REPORT
Chairman’s Message
Dear Fellow Shareholders,
It gives me great pleasure to present the 2023 Annual Report
for Element 25 Limited (ASX: E25) as we reflect on our
achievements and our progress towards becoming a high purity
manganese producer over the past year.
Delivering our Feasibility Study examining the viability of the
first United States-based high purity manganese sulphate
production facility was a critical milestone in our journey,
and the results of this were incredibly encouraging. The FS
demonstrated pre-tax cashflow of US$155 million per annum at
full production, with a Net Present Value (NPV) of US$1.66 billion
pre-tax at full production with an 8% discount and an Internal
Rate of Return of 29%. The study’s robust financial outcomes
provide us with a really solid case for becoming a key supplier
to the battery raw materials supply chain in a strategic location.
Our decision to evaluate a US-based location for our initial
facility was driven by increased demand from OEMs in the
automotive industry, as the US Government looks to inject
substantial investment into clean energy initiatives – such as
electric vehicles – through the Inflation Reduction Act. We have
selected a preferred site in Ascension Parish, Louisiana, and
activities are underway with local engineering and construction
contractors as we negotiate agreements and partnerships that
are mutually beneficial, leading up to our Final Investment
Decision.
Core to our strategy is to partner with like-minded stakeholders,
and we have demonstrated this through our offtake and
financing agreements with global automakers Stellantis N.V.
and General Motors LLC which we have executed in the past 12
months. These deals are critical to our ability to develop our
HPMSM capacity, but also to Stellantis and GM to help them
build their aspirations around electric vehicles. Manganese is
one of the key ingredients automakers need to fulfill their targets
in terms of electrifying the global vehicle fleet and we believe
deals with such prominent global manufacturers underlines
just how important our HPMSM development is to this market.
Post year-end, we have completed several important steps in
our agreement with GM and we look forward to finalising this as
we progress our Louisiana plans.
In parallel to our HPMSM development, we have continued
to optimise our operations at Butcherbird mine in Western
Australia. We will use manganese ore from Butcherbird in our
HPMSM strategy, enabling us to deliver a mine-to-market
solution, and as it hosts Australia’s largest onshore manganese
resource of more than 260 million tonnes, it provides opportunity
for a multi-decade expansion pathway.
With the first stage of our strategy complete, we are working
towards expanding production to 1 million tonnes per annum
through optimisation, de-bottlenecking and plant expansion.
We have commenced upgrades to our plant and are assessing
further improvements as well as making key appointments
to our team to ensure we have the knowledge and skillset to
achieve this goal.
I thank our Shareholders for your continued support over the
past 12 months, particularly those who participated in our
A$35 million capital raising in November 2022 which enabled
us to continue our progress. Our share price has unfortunately
not reflected all that we have achieved and the partnerships
we have forged with global brands but I am confident this will
improve as our HPMSM plans continue move ahead.
I also thank the members of our management team for
the continued hard work and dedication each of them has
demonstrated, as well as my fellow Directors for their efforts,
including our new Board additions, Fanie van Jaarsveld and Sam
Lancuba, who have both brought extensive industry knowledge
and business development experience to our Board.
In the year ahead, our priorities are dual pronged as we want to
grow the business through the downstream processing of the
ore into manganese sulphate while also expanding concentrate
improve performance and
production at Butcherbird to
economics of that part of our business. These strategies are
complementary and will help us be a pivotal player as demand
for high purity manganese continues to grow. We have the funds
and partnerships in place to achieve this, and I look forward to
reporting on our progress and achievements in FY24.
Seamus Cornelius
Chairman
Element 25 Limited
2023 ANNUAL REPORT | 5
Review of Operations
KEY OPERATIONAL MILESTONES FOR FY2023
HPMSM Project
•
Feasibility Study (FS) demonstrates compelling economics for the proposed first ever US-based
battery grade high purity manganese sulphate monohydrate (HPMSM) facility.
• Offtake and financing agreements signed with Stellantis N.V. (Stellantis) and General Motors
•
LLC (GM), providing US$115M in project financing via equity, pre-payment and debt.
Independent Life Cycle Assessment (LCA) confirms industry leading ESG credentials - E25 HPMSM calculated to
produce ~1.7kg of CO2 for every 1kg of HPMSM, approximately ~ 67% lower than competitors in China and ~26%
lower than closest non-China optimised case.
• Heavily oversubscribed A$35 million Placement completed to fund HPMSM feasibility,
engineering optimisation works and costs, and working capital.
•
First tranche of Stellantis project funding completed (US$15M) for HPMSM process design and engineering.
Butcherbird Manganese Mine
• Manganese concentrate production of ~223,000 tonnes.
•
•
•
280t bulk processing trial using an established production dense media separation (DMS) plant confirmed
DMS as the preferred processing technology for Butcherbird’s expansion.
Trialling a secondary feeder to significantly debottleneck front end feed rates at Butcherbird which provided
immediate and material throughput improvement.
Successful pilot scale testing of the proprietary E25 process flowsheet as a key Feasibility Study input.
Overview
Element 25 Limited (E25 or the Company) operates the Butcherbird Manganese Mine (Butcherbird) in Western Australia’s Pilbara
region. Butcherbird hosts the Australia’s largest onshore manganese resource with current JORC resources of more than 260Mt of
manganese ore1, and is located 1,050km north of Perth and 130km south of Newman.
The Company plans to integrate renewable energy into Butcherbird’s power solution in Stage 2 operations to target a zero-carbon
footprint, which is expected to also reduce energy costs.
E25’s goal is to become an industry leading, world-class, low-carbon battery materials manufacturer, producing high quality
manganese concentrate and battery grade HPMSM products for traditional and new energy markets. The Company plans to
develop HPMSM production capabilities in multiple global locations and in April 2023, it delivered a FS which delivered compelling
economics for the proposed first ever HPMSM facility in the USA to supply critical battery raw materials to the US electric vehicle
(EV) manufacturing supply chain.
E25 also commissioned an independent LCA for its HPMSM production process which confirmed the mine-to-market carbon
footprint for the production of E25 HPMSM as the lowest in the global manganese industry based on published data2.
The Company’s strategic vision can be summarised in four key stages:
STAGE 1
STAGE 2
STAGE 3
Stage 1
Stage 2
Stage 3
Stage 4
365Kt per annum:
In
1 Mt per annum: Engineering
Battery grade MnSO4:
MnSO4 Expansion:
and
production
cost
optimisation
1 Mt per annum:
Battery grade MnSO4:
Feasibility
completed
study
Engineering optimisation
Feasibility study
Long term – multiple HPMSM modules globally
cost study in progress
completed April 2023
365Kt per annum:
In production and
optimising processes
study
in
optimising
STAGE 4
processes
progress
20233
in
April
MnSO4 Expansion:
Long term – multiple
HPMSM modules
1
2
3
E25 ASX Announcement 17 April 2019
E25 ASX Announcement 21 February 2023
E25 ASX Announcement 12 April 2023
6 | 2023 ANNUAL REPORT
E25’s export business continues to demonstrate the Company’s reliability as a trusted supplier of manganese concentrate
to global markets, at a time when commodity producers are facing extensive disruptions from a complex array of factors.
Butcherbird Operations, WA
Safety
For the 12 months ending 30 June 2023, E25 sustained two Lost Time Injuries (LTI’s) and one Medical Treatment Injuries (MTI’s).
The 12 Month LTI and MTI rates were noted as 63 and 0 respectively.
E25 instigated several proactive programs including an independent audit of the Company’s Safety Management System,
increased first aid training and the engagement of an external safety consultant to review safety systems in accordance with new
legislative requirements.
The Company implemented the WA Department of Mines, Industry Regulations and Safety’s (DMIRS) Safety Audits and is using
outcomes to assist with safety program development going forward.
Mining and processing
Mining and processing operations continued at Butcherbird throughout the period. E25 implemented initiatives to improve
operational performance, including debottlenecking the processing plant and this delivered significant improvements from the
March 2023 quarter.
Since commissioning, Butcherbird production volumes had been negatively impacted by clay-rich material that typifies ROM feed
through the primary grizzly and crusher configuration into the downstream processing stages. The operational team worked to
identify and resolve the root cause of these issues and to devise a solution.
Analysis of the production data generated through plant ramp up concluded that the optimal solution was to install a secondary
feeder into the plant whereby the undersize plant feed material not requiring crushing bypasses the grizzly to minimise the
blockages created by clay-rich feed material.
E25 installed and commissioned the secondary feeder in February 2023, resulting in an immediate and material improvement
in throughput rates. Extensive work was completed on the optimisation of maintenance and uptime rates, and a specialist
maintenance planner was engaged.
2023 ANNUAL REPORT | 7
2023 ANNUAL REPORT | 7
Butcherbird Expansion
E25 business development and production teams are actively investigating optimal processing technologies to expand production
at Butcherbird to improve profitability by reducing unit costs of production as identified in earlier studies. The expansion project
will utilise the past two years of operational data from the existing small-scale Stage 1 processing facility to inform the correct
technology and equipment selection to expand the production of manganese concentrate to a nominal target of 1Mtpa. The base-
case technology selection for the expanded plant is likely to be a DMS circuit, however other technologies are still being assessed.
The technology selection will aim to eliminate any remaining bottlenecks, improve grade and recoveries, with processing data
collected during the Stage 1 plant operation invaluable in guiding this process.
E25 has met with equipment suppliers and engineering consultants to advance the Expansion Project, under the leadership of new
General Manager (Manganese Ore Business) Gideon van Wyk.
Key design parameters for the base case include:
•
•
•
~4Mt per annum of ore feed.
~1Mt per annum of manganese concentrate production.
Processing flowsheet summary:
•
•
•
Dry screening to remove clay waste material.
Dry crushing of material >65mm.
Attrition scrubbing of coarse and fine ore using feed using a log washer to remove further clay waste and further break
down barren shales.
DMS to separate heavies (manganese) from lights (waste shales).
•
In the first half, the Company completed a bulk Dense Media Separation (DMS) processing trial, processing approximately 280
tonnes of Butcherbird manganese ores through a DMS plant at the Bootu Creek Manganese Mine in the Northern Territory, and
results indicated the use of a DMS drum could meaningfully improve manganese product grades by improving waste and gangue
material elimination from the product stream.
E25 will complete further optimisation of the mass balance during the design process and the key deliverables from this work will
include a capital cost estimate to install the expanded facility as well as a project schedule based on lead times as advised by key
equipment vendors.
Team Appointments
E25 made several key appointments to the Butcherbird
operations team as part of its production improvement plan,
including Clint Moxham as General Manager Operations and
Gideon van Wyk as General Manager (Manganese Ore Business).
Clint is responsible for statutory and operational oversight
of Butcherbird; implementation and oversight of improved
operational processes; and targeting improved run times to
increase production.
Logistics
Ocean freight rates returned to pre-Covid levels mid-year and
these are now in line with long-term forecasts.
The use of supra-max vessels contributed to increased load
rates at Utah Point and achieved a reduction in ocean freight
rates.
Increased production volumes in the second half of 2023
required additional road transport capacity and a record of
~30kt of manganese concentrate was transported in March
2023. A record of ~64kt of manganese concentrate was
transported for the quarter.
In the second half of 2023, diesel fuel costs stabilised from
historical highs in 2022.
8 | 2023 ANNUAL REPORT
High Purity Manganese Development
Element 25 plans to produce HPMSM from manganese oxide concentrates currently produced at the Company’s 100%-owned
Butcherbird Project via a vertically integrated battery grade HPMSM facility which will produce a monohydrate manganese sulphate
with the chemical formula MnSO4H2O. The HPMSM will be suitable for use in the manufacture of electric vehicle pCAM. This is
important to continue growth in the electric market vehicle sector, with US EV demand expected to grow 12x by 20304
During the year, E25 completed a FS which used a US location as the base case in favour of a previously proposed Malaysian
location, with the location transition driven by legislative changes in the USA which now offer significant incentives for battery raw
material production in the USA via the Inflation Reduction Act (IRA).
Results of the FS confirmed the feasibility of producing HPMSM at a location in Louisiana, USA for sale to local and international
offtake partners with an environmental impact that is significantly lower than incumbent producers to supply the rapidly growing
electric vehicle supply chain in the United States5. The proposed project is uniquely positioned to benefit from its highly favourable
location, with exceptional infrastructure, a deep local talent pool, low-cost energy, and proximity to local markets for the
repurposing of by-product industrial materials to maximise circular resource use.
The FS reflected conservative costing assumptions and included provisions to take into account recent inflationary pressures
impacting both capital expenditures and operating costs.
Table 1: Feasibility Study summary financial results
Financial Summary
Capital Cost (Construction)
Average Operating Cost/tonne of HPMSM at nameplate production
Pre-Tax Net Present Value at 8% discount rate (NPV8 (real))
Post-Tax Net Present Value at 8% discount rate (NPV8 (real))
IRR Pre-Tax
IRR Post-Tax
Average annual steady state EBITDA at full production
Average annual steady state after tax cashflow at full production
Unit
US$M
US$
US$M
US$M
%
%
US$M
US$M
Value
289
1,188
1,662
1,161
29.4
25.0
178
155
E25 has developed a proprietary flowsheet which is covered by multiple patent applications for the conversion of the Butcherbird
manganese concentrates into HPMSM. The E25 process improves on existing HPMSM processing currently in use by reducing energy
and reagent consumption and producing solid by-products in a form that can be repurposed, maximizing resource utilisation and
minimising local waste and therefore also minimising the environmental impact of the complete operation. This project scope
comprises a production facility capable of producing a nominal 65,000 tonnes per annum of battery grade HPMSM per train.
The FS assumed a start-up production train with a second train to be constructed in subsequent years to increase production
volumes up to 130,000 tonnes per annum. The HPMSM plant will also produce re-usable material in the form of a fertiliser feedstock,
a ferro-silicon (FeSi) smelter feedstock suitable for use in steel production processes and a gypsum by-product for industrial use.
Independent Life Cycle Assessment
An independent LCA for E25’s battery-grade HPMSM production process confirmed the mine-to-market carbon footprint for the
production of E25 HPMSM as the lowest in the global manganese industry based on published data6.
The LCA was based on data from E25’s Butcherbird operations in the Pilbara region of WA and its FS for a proposed HPMSM plant
in Louisiana, USA and was compared to publicly available LCA reports from peers Euro Manganese (ASX: EMN) and Giyani Metals
(TSXV: EMM), which are also developing HPMSM projects as well as independently validated data on the carbon intensity of current
Chinese production methods.
E25’s HPMSM process is estimated to produce just 1.7kg CO2 equivalent per kg of product, which is ~67% lower than competitors in
China, and up to 47% lower than planned projects located outside China.
4
5
6
Benchmark Minerals
Reference: Company ASX Release dated 12 April 2023
https://www.mn25.ca/post/comparative-lca-study-results-show-emn-s-battery-grade-manganese-products-have-lowest-co2-footprint
2023 ANNUAL REPORT | 9
Table 2: HPMSM Life Cycle Assessment published result comparison
LCA Comparison for HPMSM – based on publicly available data
Impact Category
Element 25
Euro Manganese
(Grid)
Euro Manganese
(Renewable)
Giyani Metals
Units per Kg of
HPMSM
Scope 1
Scope 2
Scope 3
Global Warming Potential
0.07
0.38
1.21
1.7
0.4
3.3
1.2
4.8
0.4
0.7
1.2
2.3
0.2
1.2
1.8
3.2
kg CO2 eq.
kg CO2 eq.
kg CO2 eq.
kg CO2 eq.
Perth-based consultancy Super Smart Energy completed the cradle-to-gate study, which means the life cycle has been assessed
from the point of resource extraction (cradle; including pre-extractive removal of overburden and waste rock) to end gate, which is
HPMSM ready for distribution7.
The study aimed to assist in project development and improvement by identifying environmental hotspots, and was completed
in accordance with ISO14040/44:2006 and ISO-14044:2006 standards, with 16 Environmental Footprint 3.0 impact categories
evaluated. Climate change and water scarcity footprint impacts were investigated in more detail via contribution analysis.
Ternary Battery Metal Comparison
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The most significant contributors in
the production of E25’s HPMSM to
climate change impact are the reagents
required for the process and electricity
associated with the plant. The plant is
initially expected to source electricity
from the grid based on natural gas fired
generation, which does not
include
optimisation using renewable energy
(RE) integration.
The LCA recommended that E25 focus
on sourcing RE for the plant, which is
expected to further reduce its carbon
footprint.
intends to
include RE
E25
in pre-
construction optimisation work, either
sourced from the grid via established RE
producers or by utilising on site roof top
solar and other similar technologies.
There is also opportunity to consider
the environmental impact of reagents
by transitioning over time to reagents
produced using RE and/or non-
petrochemical
feedstocks. E25 will
further investigate these opportunities
as part of a longer term decarbonization
strategy.
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7
Supersmart Energy: Prospective Life Cycle Assessment Study of Element 25’s High Purity Manganese Sulphate Monohydrate Manufacturing -
February 2023
10 | 2023 ANNUAL REPORT
As a base case, this LCA has successfully shown the Element 25 process can produce HPMSM with the lowest global warming
potential compared to all available competitors and there remains significant potential to further reduce the carbon intensity of
the E25 HPMSM product.
For this LCA, the functional unit was one kilogram of HPMSM at >32% manganese content and the reference flow is 1kg of HPMSM
at >32% manganese content produced at the HPMSM plant from manganese concentrate extracted and processed at E25’s
Butcherbird mine. The study was performed in accordance with ISO 14040/44:2006 standards8,9.
The study was based on data from the operational E25 Butcherbird mine, and work completed as part of the FS for the production of
HPMSM. Background data was sourced from Ecoinvent 3.9.1 and some global averages were used for reagents, creating associated
limitations to the study.
The LCA study was completed by Super Smart Energy and a subsequent critical review was carried out by two independent external
experts, covering the required competencies relevant to the critical review. The critical review was performed at the end of the LCA
study.
Offtake and funding agreements with Stellantis and General Motors
In January 2023, E25 entered a binding agreement with global automaker Stellantis N.V. to supply HPMSM from E25’s proposed
USA-based processing facility10. The Agreement combines take or pay offtake commitments for 45Kt of HPMSM from the facility
over five years with US$30M in two tranches of project funding towards the facility capital cost. Stellantis owns 14 vehicle brands
including Jeep, Dodge, Chrysler, Maserati and RAM and two mobility brands. More detail on this is included in the Corporate section
of this report.
In June 2023, Element 25 Limited and General Motors Co. (NYSE:GM) announced binding agreements for E25 to supply up to
32,500 metric tons of manganese sulphate annually, which will support GM’s annual production of more than 1 million EVs in North
America11. Under the agreements, GM will provide E25 with a US$85 million loan to partially fund the construction of a new facility
in Louisiana, USA, for production of battery-grade manganese sulphate – a key component in lithium-ion battery cathodes – a key
component in lithium-ion battery cathodes – starting in 202512.
Post year-end, GM completed technical due diligence as a condition of the definitive agreement and samples of E25’s samples of
HPMSM achieved successful product qualification with GM.
E25 expects to invest approximately US$290 million to build the 230,000-square-foot facility. Site preparation is planned to begin in
Q1 CY2024, and the plant is scheduled to open in 2025. The facility is projected to create approximately 200 permanent jobs when
it is fully operational.
8
9
10
11
12
International Standards Organisation (ISO). ISO 14040:2006 - Environmental Management - Life Cycle Assessment -
Principles and Framework. (2006).
International Standard Organization (ISO). ISO 14044: Environmental Management — Life Cycle Assessment —
Requirements and Guidelines. (2006)
E25 ASX Announcement dated 9 January 2023
E25 ASX Announcement dated 26 June 2023
E25 ASX Announcement dated 12 April 2023
2023 ANNUAL REPORT | 11
Manganese market
Global supply chain and other disruptions due to the global COVID pandemic resulted in cost pressures on all manganese ore
producers which put upward pressure on ore prices, however increased shipping costs offset the benefits.
Manganese price fell to cyclical lows in the final months of FY2023. The Company’s view is that a sharp slowdown in construction
activity in China in part due to unusually hot weather has impacted the demand for construction steel and related materials,
including manganese. The impact on the demand for steel has had a flow through effect on manganese ore prices which are at or
near cyclical lows.
Under the terms of the offtake agreement with OM Materials (S) Pte Ltd (OMS), subsidiary of ASX-listed company OM Holdings
Limited (ASX:OMH) (OMH) pricing is set by a formula referenced to the 44% CIF China price.
CORPORATE
Capital Raising
In November 2022, E25 received firm commitments for a A$35 million placement at A$1.12 per share (Placement). The Placement
was heavily oversubscribed with E25 management and the Joint Lead Managers (JLM’s) agreeing to increase the raise to A$35
million (minimum $30M).
Funds raised from the Placement will fund the Company’s battery grade HPMSM project feasibility works, operating cost reduction
capital costs, engineering optimisation works and working capital. Petra Capital and Blackwood Capital acted as Joint Lead
Managers and Joint Bookrunners to the Placement.
Stellantis Placement completed
Conditions precedent for the first investment tranche by global automaker Stellantis N.V. (Stellantis) comprising a US$15 million
share placement in E25 were satisfied in July 2023 and this transaction was completed.
In accordance with the terms of the agreement, E25 issued 22,569,967 shares to Stellantis at A$1.00 per share for total proceeds
of A$22,569,967. E25 will use proceeds for planned engineering and construction activities to advance its proposed HPMSM
processing facility in Louisiana, USA.
E25’s Agreement with Stellantis combines take-or-pay offtake commitments for 45Kt of HPMSM from the facility over five years with
US$30M in two tranches of project funding towards the facility capital cost.
12 | 2023 ANNUAL REPORT
Board Changes
In January 2023, E25 announced the appointment of Fanie van Jaarsveld and Sam Lancuba as Directors. Both new board members
bring a wealth of experience in key disciplines to support the existing board.
Mr van Jaarsveld is an experienced company director and has held numerous senior management and executive positions over a
career spanning more than 40 years. With a demonstrated history of working in the mining and metals industry, Mr van Jaarsveld is
Managing Director for OM Manganese which operates the Bootu Creek manganese mine in the Northern Territory and highly skilled
in mining, mineral processing and operational management. He has strong business development expertise and will be a key asset
in achieving the Company’s production targets at the current manganese operation as well as helping to guide the planning and
implementation of the expanded production plans at the Project and the downstream production of HPMSM.
Mr Lancuba is a chemical engineer with more than 40 years’ experience in the global fertiliser industry. Mr Lancuba has worked in
research and development, process engineering, manufacturing and management. Following 27 years at Incitec Pivot Limited, an
ASX top 50 company, Mr Lancuba has been providing expert consulting services for industry clients in Australia, New Zealand, USA,
South America, Europe, India and China.
Mr Lancuba currently advises fertiliser industry clients in a range of areas including plant design and maintenance, project
management, project evaluation and marketing strategies for fertiliser products. He has extensive experience in chemical
processing, project development and operations in the chemical industry as well. Mr Lancuba will be a valuable asset as the
Company moves toward the construction of the first processing plant globally to produce ethical, traceable HPMSM using the
Company’s proprietary process to convert Australian manganese ore to HPMSM for EV batteries.
OTCQX Listing
E25 commenced trading on the US-based OTCQX® Best Market, upgrading from the Pink® Market, trading under the symbol “ELMTF”
from 24 August 2023. The listing aimed to improve liquidity and provide greater accessibility for global investors, particularly in the
US.
Standby Equity Facility
E25 signed an At-the-Market Subscription Agreement (ATM) with Acuity Capital to provide E25 with up to $30 million of standby
equity capital over a 36-month period. This standby facility may be used to fund the development of the High Purity Manganese
Sulphate Facility Project and working capital.
Details of this agreement can be found in ASX Announcement dated 10 February 2023.
Appointment of Joint Chief Financial Officer and Joint Company Secretary
Errol Turner stepped down as Joint Company Secretary, effective 29 July 2022 as part of the Company’s transition towards
streamlining the corporate functions of the business. Michael Jordon continued as Chief Financial Officer and Company Secretary.
Change of Auditor
Pricewaterhouse Coopers (PwC) was appointed as the Company’s auditors effective 23 June 2023 and this appointment will
continue until the next annual general meeting of the Company13.
The appointment followed the resignation of Rothsay Audit & Assurance Pty Ltd (Rothsay) and the Australian Securities and
Investments Commission’s (ASIC) consent to the resignation in accordance with s329(5) of the Corporations Act 2001.
13
E25 ASX Announcement dated 26 June 2023
2023 ANNUAL REPORT | 13
MINERAL RESOURCES AND ORE RESERVES
Butcherbird Mineral Resource Estimate as at 30 June 2023
Butcherbird Manganese project Mineral Resource Classification as first reported on 17 April 201914. Movements in mineral resource
estimate in the year ended 30 June 2023 is as follows:
Tonnes (Mt)
Mn (%)
Si (%)
Fe (%)
Al (%)
Category
30-Jun-22
Measured
Indicated
Inferred
Total2
Less mining
Measured
Indicated
Inferred
Total
Plus ROM Stocks Movement1
Measured
Total
30-Jun-23
Measured
Indicated
Inferred
Total
Notes:
15.3
40.9
206
262
1.6
0
0
1.6
+0.4
0.4
14.1
40.8
206.0
260.9
11.5
10.0
9.8
9.9
12.1
0.0
0.0
12.1
10.8
10.8
11.4
10.0
9.8
9.9
20.6
20.9
20.8
20.8
20.5
0
0
20.5
20.7
20.7
20.6
20.9
20.8
20.8
11.7
11
11.4
11.4
12.0
0
0
12.0
11.5
11.5
11.7
11.0
11.4
11.4
5.7
5.8
5.9
5.9
5.4
0
0
5.4
5.4
5.4
5.7
5.8
5.9
5.9
1 Closing ROM stocks at 30 June 2023 included in production figure
2 Includes Stocks at 30 June 2022
- Reported at a 7% Mn cut-off for the Measured and Indicated categories and an 8% Mn cut-off for the Inferred categories
- All figures rounded to reflect the appropriate level of confidence (apparent differences may occur due to rounding)
14
Refer ASX Announcement 19 May 2020
14 | 2023 ANNUAL REPORT
Butcherbird Mineral Ore Reserve as at 30 June 2023
Butcherbird Manganese project Mineral Reserve Classification as first reported on 19 May 2020. Movements in mineral reserves in
the year ended 30 June 2023 is as follows
Classification
Tonnes (Mt)
Grade (Mn%)
Contained Mn (Mt)
Recovered Mn (Mt)
30-Jun-22
Proved
Probable
Total2
Less mining
Proved
Probable
Total
Plus ROM Stocks Movement1
Proved
Total
30-Jun-23
Proved
Probable
Total
14.2
36.2
50.4
1.6
0.0
1.6
+0.4
0.4
13.0
36.2
49.2
11.2
9.9
10.3
12.1
0.0
12.1
10.8
10.8
11.1
10.1
10.2
1.6
3.6
3.0
0.2
0.0
19.0
0.4
0.4
1.4
3.6
5.0
1.3
3.0
2.5
0.2
0.0
15.5
0.4
0.4
1.2
3.0
4.1
Notes:
1 ROM stocks movement at 30 June 2022 - 30 June 2023 included in production figure
2 Includes Stocks at 30 June 2022
The Company’s ore reserve and mineral resource estimates for the Butcherbird Operations in accordance with the JORC code,
involve elements of estimation and judgement. The preparation of these estimates involves application of significant judgement
and no guarantee or assurance of mineral recovery levels, or the commercial viability of deposits can be provided. The actual
quality and characteristics of mineral deposits cannot be known until mining takes place and will almost always differ from the
assumptions used to develop resources. Further, ore reserves are valued based on assumed future costs and future commodity
prices and, consequently, the value of actual ore reserves including their economic extraction, and mineral resources may differ
from those estimated, which may result in either a negative or positive effect on operations. E25 takes a medium-term view to these
inputs in the formulation of ore reserves and then monitors operating conditions to allow the Company to respond accordingly
should negative variances occur.
Review of Material Changes
The Company updated its Mineral Resource estimates for the Project on 17 April 2019. Total reported Measured, Indicated and
Inferred Mineral Resource estimates at that date was 263 million tonnes at 10.0% per cent manganese for 26 million tonnes of
contained manganese.
A Maiden Reserve for the Project was announced on 19 May 2020. Total Proved and Probable Reserves are 49.8 million tonnes at
10.2% Mn for 4.2 million tonnes of contained manganese.
Other than mining depletion, shown above, the Company confirms that it is not aware of any new information or data that
materially affects the information included in the original announcements dated 17 April 2019 and 19 May 2020 and that all material
assumptions and technical parameters underpinning the estimates continue to apply and have not materially changed.
2023 ANNUAL REPORT | 15
External Factors and Material Business Risks Affecting Company Results
The Company’s Board and management identify, monitor and manage risks through its Risk Management Framework, and where
possible, attempt to mitigate the risk of adverse outcomes through the adoption of controls and mitigation strategies. The following
factors are all capable of having a material adverse effect on the Company’s business, affecting the Company results and impacting
the Company’s prospects for future financial years.
Commodity Prices
The Company generates revenue from the sale of Manganese concentrate through long-term customer offtake and sales agreements.
The commodity price is determined by external markets which are outside the Company’s control, making it susceptible to
adverse price movements. The Company uses foreign exchange hedging to manage commodity price and currency exchange risk.
Declining commodity prices can impact the financial returns from existing operations. The Company closely monitors Manganese
concentrate pricing and where necessary, can modify operations to minimise exposure to adverse price movements and maximise
upside during times of above average pricing.
Production, Operating and Capital Costs
The Company’s current and future financial performance and position are dependent on production levels achieved, as well as
operating and a lesser extent capital cost outcome. Production activities can be subject to variation due to several factors including
the local mine strip ratio, changes in ore characteristics. The Company’s main operating costs include contractor costs, materials
and diesel, personnel costs, and ore haulage and shipping costs.
Operating costs are subject to external economic conditions (including inflationary pressures both domestically and globally) which
can impact the availability, cost, and quality of procured items. Examples could include the availability of spare parts, changes to
diesel fuel or diesel fuel rebate, ore haulage and shipping prices, the availability of suitably qualified and experienced labour and
maintenance parts and equipment.
Changes in the operating costs of the Company’s mining and processing operations costs could occur due to unforeseen events,
international and local economic and political events, and could result in changes in manganese reserve estimates. Many of
these factors are beyond the Company’s control, therefore E25 may be faced with varied production and higher operating costs
in the future compared to current costs. The Company manages risks associated with costs through a centralised contracts and
procurement function.
Transport Services
The Company’s operations depend on the delivery of finished product to port and the delivery of materials, supplies, services,
and equipment to the Butcherbird mine site. E25 is dependent on third parties for the provision of ore haulage, port, shipping,
and other transportation services. Contractual disputes, port capacity issues, availability of trucks or vessels, labour disruptions,
COVID-19 related travel restrictions, weather problems or other factors could have a material adverse effect on E25’s ability to
transport product and materials to meet schedules, which may in turn impact E25’s business, results of operations and financial
performance.
Governance Controls
The Company reports its Mineral Resources and Ore Reserves on an annual basis, with Mineral Resources inclusive of Ore Reserves.
Reporting is in accordance with the 2012 Edition of the Australasian Code for Report of Exploration Results, Mineral Resources and
Ore Reserves and the ASX Listing Rules. All Competent Persons named by E25 are suitably qualified and experienced as defined in
the JORC Code 2012 Edition.
Competent Persons Statement
The information in this report that relates to Exploration Results, Mineral Resources and Ore Reserves listed in the table below is based
on, and fairly represents, information and supporting documentation prepared by the Competent Person whose name appears
in the same row. Each person named in the table below has sufficient experience which is relevant to the style of mineralisation
and types of deposits under consideration and to the activity which he/she has undertaken to qualify as a Competent Person as
defined in the JORC Code 2012. Each person identified in the list below consents to the inclusion in this announcement of the
material compiled by them in the form and context in which it appears.
16 | 2023 ANNUAL REPORT
Activity
Exploration Results
Competent Person
Membership Institution
Justin Brown
Australian Institute of Mining and Metallurgy
Yanneri Ridge, Coodamudgi, Mundawindi
and Ritchies Mineral Resource Estimates
Bindi, Ilgarrari, and Cadgies
Mineral Resource Estimates
Mining, Metallurgy and Financial
Modelling in relation to Mineral Reserves
Greg Jones
Australian Institute of Mining and Metallurgy
Mark Glassock
Australian Institute of Mining and Metallurgy
Ian Huitson
Australian Institute of Mining and Metallurgy
At the time that the Exploration Results and Exploration Targets were compiled, Mr Brown was an employee of Element 25 Limited.
Mr. Greg Jones, who acts as Consultant Geologist for E25 is a full time employee of IHC Robbins.
At the time that the Mineral Resources were compiled, Mr Glassock was a consultant to Element 25 Limited.
Mr Ian Huitson is employed by Mining Solutions Pty Ltd. Mr Huitson is a shareholder of Element 25 Limited. Mr Huitson has visited
site on a number of occasions as part of the ongoing studies of the Project.
Please note with regard to exploration targets, the potential quantity and grade is conceptual in nature, that there has been
insufficient exploration to define a Mineral Resource and that it is uncertain if further exploration will result in the determination of
a Mineral Resource.
2023 ANNUAL REPORT | 17
2023 ANNUAL REPORT | 17
DIRECTOR’S REPORT
Your Directors submit their report on the consolidated entity (Group, Company or E25) consisting of Element
25 Limited and the entities it controlled at the end of, or during, the year ended 30 June 2023.
DIRECTORS
The names and details of the Company’s directors in office during the financial year and until the date of this report are
as follows. Where applicable, all current and former directorships held in listed public companies over the past three years
have been detailed below. Directors were in office for this entire period unless otherwise stated.
Names, qualifications, experience, and special responsibilities
SEAMUS CORNELIUS
(Non-Executive Chairman, Chairman of Remuneration Committee,
Audit Committee member)
Mr Cornelius is an experienced international corporate lawyer and company director. He was
a partner with a major international law firm from 2000 to 2010 and resided in China from
1993 until 2017. In 2010, Mr Cornelius commenced as a company director and is currently
a Director and Non-Executive Chairman of Buxton Resources Limited and Duketon Mining
Limited and Executive Chairman of Danakali Limited. Mr Cornelius has not held any former
directorships in the past three years.
JUSTIN BROWN
B.Sc. (Hon), (Managing Director, Audit Committee member)
Mr Brown is a geologist with over 25 years of experience in global mineral exploration, mining
and business development. He has been involved in the full spectrum of mineral exploration
from greenfield through to mining and downstream processing in a range of metals.
Mr Brown founded Element 25 in 2006 taking a corporate leadership role as founding
Managing Director, guiding the business through numerous economic cycles and being the
architect of multiple successful value accretive transactions in multiple commodities. In
addition to an executive role with Element 25 Limited since 2006, Mr Brown has also held a
number of board positions, and has a strong track record of closing successful commercial
transactions.
JOHN RIBBONS
B.Bus, CPA, ACIS (Non-Executive Director, Chairman of Audit Committee,
Remuneration Committee member)
Mr Ribbons is an accountant who has worked in the resources industry for more than 20
years in Group Financial Controller, Chief Financial Officer and Company Secretary roles.
Mr Ribbons has extensive knowledge and experience with ASX-listed production and
exploration companies, including experience with operating mines and has also been
involved with ASX listings for several exploration companies. Mr Ribbons has experience in
capital raising, ASX and TSX compliance and regulatory requirements. Mr Ribbons has not
held any former directorships in the past three years.
18 | 2023 ANNUAL REPORT
RUDOLPH (FANIE) VAN JAARSVELD (appointed 30 January 2023)
ND Analytical Chemistry (Non-Executive Director)
Mr Fanie van Jaarsveld is an experienced company director and has held numerous senior
management and executive positions over a career spanning more than 40 years. With
a demonstrated history of working in the mining and metals industry, Mr van Jaarsvelds
Managing Director for OM Manganese which operates the Bootu Creek manganese mine
in the Northern Territory and highly skilled in mining, mineral processing and operational
management. Mr van Jaarsveld has a ND Analytical Chemistry from the Cape Peninsula
University of Technology, Cape Town.
SALVATORE (SAM) LANCUBA (appointed 30 January 2023)
B.Eng (Chem Eng) (Non-Executive Director)
Mr Lancuba is a chemical engineer with more than 40 years’ experience in the global
fertiliser industry across research and development, process engineering, manufacturing
and management. Following 27 years at Incitec Pivot Limited, an ASX top 50 company,
Mr Lancuba has consulted to industry clients in Australia, New Zealand, USA, South
America, Europe, India and China in areas including plant design and maintenance, project
management, project evaluation and marketing strategies. He has extensive experience in
chemical processing, project development and operations in the chemical industry.
COMPANY SECRETARY
MICHAEL JORDON
B.Bus, CPA
Mr Jordon has extensive experience across many industries with a focus on manufacturing
and service delivery sectors. He has held positions of Chief Financial Officer and Chief
Operating Officer most recently and has been responsible for business start-up development,
merger and acquisition and business financing activities across Australia and Europe.
Interests in the shares and options of the Company and related bodies corporate
As at the date of this report, the interests of the Directors in the shares and options of Element 25 Limited were:
Seamus Cornelius
Justin Brown
John Ribbons
Rudolph Van Jaarsveld
Salvatore Lancuba
Ordinary
Shares
6,555,177
8,005,360
1,800,000
-
-
Options over
Ordinary Shares
1,450,000
3,000,000
1,450,000
-
-
2023 ANNUAL REPORT | 19
PRINCIPAL ACTIVITIES
The Element 25 Group is focused on the production of high purity lithium-ion battery grade manganese sulphate monohydrate
(HPMSM), developing the first HPMSM facility in the USA in partnership with global automakers Stellantis NV and General Motors
LLC.
E25 has 100 percent ownership of the Butcherbird Manganese Mine in Western Australia, the largest onshore manganese deposit
in the country. The operation is producing and exporting high-quality manganese concentrate currently used in the manufacture
of manganese alloys.
The Company commenced production with the current pilot processing plant at Butcherbird in 2021 and has process proven
operation as a sound foundation for expansion. Plans are now underway to expand production up to 1 million tonnes per annum
by optimising its engineering processes and installing additional plant and equipment. The large reserves at Butcherbird support
a project life in excess of 40 years on current drilling with room to grow.
Once the HPMSM processing facilities are operational, the concentrate from the Butcherbird operation will be the primary
feedstock for E25’s world-first US HPMSM processing facility to be located in the USA. HPMSM is a critical raw material used in the
manufacture of lithium-ion batteries to power electric vehicles (EVs). The USA based HPMSM project will be the first of its kind and
is being part funded by Stellantis and General Motors who are contributing US$115M towards project finance in return for HPMSM
to supply their EV supply chains.
Dividends
No dividends were paid or declared during the financial year. No recommendation for payment of dividends has been made.
20 | 2023 ANNUAL REPORT
20 | 2023 ANNUAL REPORT
Results
During the year ended 30 June 2023, the Company recognised revenue of $33,469,168 (2022: $21,101,612) in respect to the
shipments of ore from the Group’s 100% owned Butcherbird Manganese Project located in Australia, and other income of
$322,008 (2022: $396,664).
During the year the Company incurred cost of sales of $47,533,950 (2022: $34,360,760) in respect to direct material and production
costs attributable to the extraction, processing, and transportation of manganese ore.
During the year the Company incurred an exploration and pre-feasibility amounted to $6,644,123 (2022: $1,009,110), a general
and administration expenditure amounting to $4,426,197 (2022: $4,152,771), and a finance expense amount to $65,708 (2022:
$79,030). This has resulted in an operating loss after income tax for the year ended 30 June 2023 of $24,878,802 (2022: $18,103,395).
The Group had a cash balance of $28,885,874 as at 30 June 2023.
Risk Management
The Board is responsible for ensuring that risks and opportunities are identified on a timely basis and that activities are aligned
with the risks and opportunities identified by the Board.
The Group believes that it is crucial for all Board members to be a part of this process, and as such the Board has not established
a separate Risk Management committee.
The Board has a number of mechanisms in place to ensure that Management’s objectives and activities are aligned with the
risks identified by the Board. These include the following:
•
•
Board approval of a strategic plan, which encompasses strategy statements designed to meet stakeholders needs and
manage business risk.
Implementation of Board approved operating plans and budgets and Board monitoring of progress.
Significant Changes In The State Of Affairs
In November 2022, the Company completed a A$35 million placement at A$1.12 per share (Placement). The Placement was
heavily oversubscribed with E25 management and the Joint Lead Managers (JLMs) agreeing to increase the raise to A$35 million
(minimum $30M). Funds raised from the Placement will fund the Company’s battery grade HPMSM project feasibility works,
operating cost reduction capital costs, engineering optimisation works and working capital. Petra Capital and Blackwood
Capital acted as Joint Lead Managers and Joint Bookrunners to the Placement.
No other significant changes in the state of affairs of the Group occurred during the financial year
Significant Events After The Balance Date
On 7 July 2023, Stellantis completed a US$15,000,000 first equity investment in Element 25 after conditions of the companies’
agreement announced in January 2023 were satisfied. 22,569,967 fully paid ordinary shares were issued at A$1 per share. The
proceeds will be used to fund the HPMSM project.
No other matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly
affect the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial years.
Likely Developments and Expected Results
The Group expects to continue the mining operations at the Project located in Australia as well as advancing the planned
HPMSM processing facility.
Environmental Regulation and Performance
The Group aims to ensure the appropriate standard of environmental care is achieved, and in doing so, that it is aware of
and is compliant with all environmental legislation. The Directors of the Group are not aware of any breach of environmental
legislation for the year under review.
2023 ANNUAL REPORT | 21
Remuneration Report (Audited)
The information provided in this remuneration report has been audited as required by section 308(3C) of the Corporations
Act 2001.
PRINCIPLES USED TO DETERMINE THE NATURE AND AMOUNT OF REMUNERATION
Remuneration Policy
E25’s remuneration policy was designed to align key management personnel objectives with shareholder and business objectives
by providing a fixed remuneration component and offering specific long-term incentives based on key performance areas
affecting the Group’s financial results. The Board of E25 believes the remuneration policy to be appropriate and effective in its
ability to attract and retain the best key management personnel to run and manage the Group.
The Board’s policy for determining the nature and amount of remuneration for key management personnel of the Group is as
follows:
The remuneration policy, setting the terms and conditions for the Executive Directors and other senior executives (if any), was
developed by the Board. All executives receive a base salary (which is based on factors such as length of service and experience) and
superannuation. The Board reviews executive packages annually by reference to the Group’s performance, executive performance
and comparable information from industry sectors and other listed companies in similar industries.
The Board may exercise discretion in relation to approving incentives, bonuses, and options. The policy is designed to attract
and retain the highest calibre of executives and reward them for performance that results in long term growth in shareholder
wealth.
Executives are also entitled to participate in the employee share and option arrangements.
The Executive Directors and executives (if any) receive a superannuation guarantee contribution required by the government,
which was 10.5% for the 2023 financial year, and do not receive any other retirement benefits. Some individuals may choose to
sacrifice part of their salary to increase payments towards superannuation.
All remuneration paid to Directors and executives is valued at the cost to the Group and expensed. Options are valued using the
“Black & Scholes” methodology.
The Board policy is to remunerate Non-Executive Directors at market rates for comparable companies for time, commitment, and
responsibilities. The Board determines payments to the Non-Executive Directors and reviews their remuneration annually, based
on market practice, duties, and accountability. Independent external advice is sought when required. The maximum aggregate
amount of fees that can be paid to Non-Executive Directors is subject to approval by shareholders at the Annual General Meeting
(currently $350,000). Fees for Non-Executive Directors are not linked to the performance of the Group. However, to align Directors’
interests with shareholder interests, the Directors are encouraged to hold shares in the Company.
Performance based remuneration
The Group currently has no performance-based remuneration components built into key management personnel remuneration
packages.
Group performance, shareholder wealth and key management personnel remuneration
The remuneration policy has been tailored to increase the direct positive relationship between shareholders’ investment objectives
and key management personnel performance. Currently, this is facilitated through the issue of options to the majority of key
management personnel to encourage the alignment of personnel and shareholder interests. The Group believes this policy will be
effective in increasing shareholder wealth.
Use of remuneration consultants
The Group did not employ the services of any remuneration consultants during the financial year ended 30 June 2023.
22 | 2023 ANNUAL REPORT
Details of remuneration
The key management personnel of the Group include only the Directors as per page 18. Details of the remuneration of the key
management personnel of the Group are set out in the following table:
Short-Term
Salary
& Fees
$
Post-
Employment
Superannuation
$
Long-Term
Annual
Leave
$
Long Service
Leave
$
Share-based
Payments
Options
$
Total
$
54,794
54,794
275,000
242,916
42,000
42,000
35,261
-
23,020
-
5,753
5,479
28,875
24,292
-
-
17,981
11,545
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,593
4,573
-
-
-
-
-
-
138,000
-
345,000
-
138,000
-
-
-
-
-
198,547
60,273
671,449
283,326
180,000
42,000
35,261
-
23,020
-
430,075
339,710
34,628
29,771
17,981
11,545
4,593
4,573
621,000
-
1,085,703
385,599
Seamus Cornelius
2023
2022
Justin Brown
2023
2022
John Ribbons
2023
2022
Rudolph van Jaarsveld
2023
2022
Salvatore Lancuba
2023
2022
Total key management
personnel compensation
2023
2022
SERVICE AGREEMENTS
The details of service agreements of the key management personnel of the Group are as follows:
Justin Brown, Managing Director:
Term of agreement – until terminated in accordance with the agreement. The Company may terminate without cause at any time
by giving six months’ written notice, whilst the executive must provide three months’ written notice of termination (unless breach
or agreement by the Company). The agreement contains standard clauses on immediate termination for breach of contract or
misconduct.
•
•
Annual salary of $275,000 (plus statutory superannuation), plus the provision of income protection insurance. Mr Brown’s
salary is reviewed on an annual basis. In addition, the Company has provided the following bonus incentives to Justin Brown:
•
•
Cash bonus of $27,500 upon the Company achieving steady state nameplate production at the Project for a continuous
period of not less than three months; and
Cash bonus of $27,500 upon the Company achieving a cashflow positive quarter as reported in the Company’s Appendix
5B to the ASX.
In the event the Managing Director is terminated as a result of one of the following circumstances the Company will make a
six calendar months termination payment at the base salary and any unvested incentive options will vest immediately:
•
•
•
•
The executive is demoted from his position as Managing Director of the Company;
The executive is terminated by reason of the liquidation of the Company for the purpose of reconstruction or
amalgamation;
The executive is requested to assume responsibilities or perform tasks not reasonably consistent with his position as
Executive Director of the Company; or
The Company is subject to a change of control event as described by the Corporations Act including but not limited to a
takeover, merger or a resolution passed at a general meeting of the Company which results in a change to the majority of
the Board of Directors.
2023 ANNUAL REPORT | 23
SHARE-BASED COMPENSATION
Options
Options are issued to key management personnel as part of their remuneration. The options are not issued based on performance
criteria but are issued to the majority of key management personnel of E25 to increase goal congruence between key management
personnel and shareholders. The following options were granted to or vesting with key management personnel during the year:
Grant Date
Granted
Number
Vesting
Date
Expiry Date
Exercise
Price
Value per option
at grant date (1)
Exercised
Number
Seamus Cornelis
28 November 2022
John Ribbons
28 November 2022
Justin Brown
28 November 2022
200,000
200,000
500,000
-
-
-
28 November 2027
28 November 2027
28 November 2027
1.58
1.58
1.58
$138,000
$138,000
$345,000
-
-
-
% of
Remun-
eration
-
-
-
Details of ordinary shares in the Company provided as a result of the exercise of remuneration options to key management
personnel of the Group are set out below:
Seamus Cornelius
John Ribbons
Justin Brown
Number of ordinary
shares issued on exercise of
options during the year
300,000
300,000
600,000
Amount paid
per ordinary share
$0.355
$0.355
$0.355
No amounts are unpaid on any shares issued on the exercise of options.
Value
exercised ($) (1)
$220,500
$220,500
$441,000
(1) The value at exercise date of the options that were granted as part of remuneration and were exercised during the year has been determined as the intrinsic
value of the options at that date.
Equity instruments held by key management personnel
24 | 2023 ANNUAL REPORT
Share holdings
The number of shares in the Company held during the financial year by each Director of E25 and other key management personnel
of the Group, including their personally related parties, and any nominally held, are set out below. There were no shares granted
during the reporting period as compensation.
Balance at start of
the year
1 July 2022
Acquired during the
year on the
exercise of options
Additions
Disposals
6,255,177
7,405,360
1,500,000
N/A
N/A
300,000
600,000
300,000
-
-
-
-
-
-
-
-
-
-
-
-
Balance at
year end
30 June 2023
6,555,177
8,005,360
1,800,000
-
-
2023
Seamus Cornelius
Justin Brown
John Ribbons
Rudolph van Jaarsveld
Salvatore Lancuba
Option holdings
The options over ordinary shares in the Company held during the financial year by each Director of E25 and other key management
personnel of the Company, including their personally related parties, are set out below:
2023
Seamus Cornelius
Justin Brown
John Ribbons
Rudolph van Jaarsveld
Salvatore Lancuba
Balance at start
of the year
1 July 2022
Granted as
compensation
1,550,000
3,100,000
1,550,000
N/A
N/A
200,000
500,000
200,000
-
-
Balance at
year end
30 June 2023
1,450,000
3,000,000
1,450,000
-
-
Exercised
(300,000)
(600,000)
(300,000)
-
-
Vested and
exercisable
1,450,000
3,000,000
1,450,000
-
-
Unvested
-
-
-
-
-
All vested options are exercisable at the end of the year.
Loans to key management personnel
There were no loans to key management personnel during the year.
-- End of audited Remuneration Report --
2023 ANNUAL REPORT | 25
DIRECTORS’ MEETINGS
During the year, the Company held 11 Board meetings. The attendance of Directors at meetings of the Board were:
Directors Meetings
Audit Committee Meetings
Remuneration Committee Meetings
Meetings
Attended
Meetings Eligible
to Attend
Meetings
Attended
Meetings Eligible
to Attend
Meetings
Attended
Meetings Eligible
to Attend
10
11
11
4
4
11
11
11
4
4
2
3
3
1
1
3
3
3
1
1
1
N/A
1
N/A
N/A
1
N/A
1
N/A
N/A
Seamus Cornelius
Justin Brown
John Ribbons
Rudolph van Jaarsveld
Salvatore Lancuba
SHARES UNDER OPTION
Unissued ordinary shares of E25 under option at the date of this report are as follows:
Expiry date
Exercise price (cents)
Number of options
Date options granted
22 November 2019
22 February 2019 and 26 June 2020
29 November 2018
26 June 2020
4 November 2020
22 December 2020
29 September 2022
25 October 2022
23 December 2022
25 November 2022
29 September 2022
20 November 2024
22 February 2024
28 November 2023
25 June 2025
4 November 2025
13 July 2025
1 July 2027
29 September 2027
23 December 2027
25 November 2027
23 September 2027
27.3
26.0
26.1
50.0
120.9
44.0
65.4
117.47
146.75
158.0
128.06
2,000,000
500,000
2,000,000
500,000
1,980,000
1,000,000
500,000
1,000,000
50,000
900,000
500,000
10,930,000
Total number of options outstanding at the date of this report
No option holder has any right under the options to participate in any other share issue of the Company or any other entity.
INSURANCE OF DIRECTORS AND OFFICERS
During the financial year, E25 paid a premium of $108,225 to insure the Directors of the Company.
The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against
the officers in their capacity as officers of entities in the Group, and any other payments arising from liabilities incurred by the
officers in connection with such proceedings. This does not include such liabilities that arise from conduct involving a wilful breach
of duty by the officers or the improper use by the officers of their position or of information to gain advantage for themselves or
someone else or to cause detriment to the company. It is not possible to apportion the premium between amounts relating to the
insurance against legal costs and those relating to other liabilities.
NON AUDIT SERVICES
There were no non audit services provided by the entity’s auditor, Pricewaterhouse Coopers, or associated entities, during the year.
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the
Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on behalf of
the Company for all or any 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.
26 | 2023 ANNUAL REPORT
AUDITOR’S INDEPENDENCE DECLARATION
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 28.
Signed in accordance with a resolution of the Directors
Justin Brown
Managing Director
29 September 2023
2023 ANNUAL REPORT | 27
Auditor’s Independence Declaration
As lead auditor for the audit of Element 25 Limited for the year ended 30 June 2023, I declare that to
the best of my knowledge and belief, there have been:
(a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
(b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Element 25 Limited and the entities it controlled during the period.
Craig Heatley
Partner
PricewaterhouseCoopers
Perth
29 September 2023
PricewaterhouseCoopers, ABN 52 780 433 757
Brookfield Place, 125 St Georges Terrace, PERTH WA 6000, GPO Box D198, PERTH WA 6840
T: +61 8 9238 3000, F: +61 8 9238 3999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
Corporate Governance Statement
for the year ended 30 June 2023 which reports against ASX
The Company’s Corporate Governance Statement
Corporate Governance Council’s Principles and Recommendations may be accessed from the Company’s website at
www.element25.com.au.
2023 ANNUAL REPORT | 29
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2023
Revenue
Cost of sales
GROSS PROFIT
Other income
Exploration and pre-feasibility expenditure
General and administration expenses
Finance expense
LOSS BEFORE INCOME TAX
Note
2023
2022 (Restated)
$
$
30(ii)* & 4
33,469,168
21,101,612
30(ii)* & 6
(47,533,950)
(34,360,760)
(14,064,782)
(13,259,148)
5
7
30(i) & 8
322,008
396,664
(6,644,123)
(4,426,197)
(65,708)
(1,009,110)
(4,152,771))
(79,030)
(24,878,802)
(18,103,395)
INCOME TAX EXPENSE
LOSS FOR THE YEAR ATTRIBUTABLE TO EQUITY HOLDERS OF THE
COMPANY
9
-
-
(24,878,802)
(18,103,395)
OTHER COMPREHENSIVE INCOME
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations
Other comprehensive income for the year, net of tax
TOTAL COMPREHENSIVE LOSS FOR THE YEAR ATTRIBUTABLE TO
EQUITY HOLDERS OF THE COMPANY
LOSS PER SHARE FOR LOSS ATTRIBUTABLE TO THE ORDINARY
EQUITY HOLDERS OF THE COMPANY
(15,215)
(15,215)
3,802
3,802
(24,894,017)
(18,099,593)
Basic and diluted loss per share (cents per share)
33
(14.26)
(11.98)
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
*See note 30 for details regarding the restatement.
2023 ANNUAL REPORT | 30
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2023
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventory
Financial assets at fair value through profit or loss
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Restricted cash
Property, plant and equipment
Assets under construction
Deferred exploration and evaluation expenditure
Right of use asset
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Deferred Revenue
Provisions
Lease liability
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Lease liability
Provisions
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
Note
10
11
30(ii)* & 12
13
14
30(iii)* & 15
15
16
17
30(ii)* & 18
30(ii)* & 19
20
21
21
30(iii)* & 20
22
23
2023
$
2022 (Restated)
$
28,885,874
975,551
12,135,790
651,440
42,648,655
528,560
22,464,399
1,026,401
890,340
504,549
25,414,249
68,062,904
9,401,012
-
630,633
367,263
10,398,908
180,023
2,057,317
2,237,340
12,636,248
55,426,656
111,448,309
7,156,814
(63,178,467)
55,426,656
14,927,576
6,887,914
11,481,773
2,054,254
35,351,517
628,535
23,529,706
76,109
489,548
842,037
25,565,935
60,917,452
6,533,292
5,831,120
506,402
342,967
13,213,781
547,284
1,878,001
2,425,285
15,639,066
45,278,386
77,691,579
5,838,104
(38,251,297)
45,278,386
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
*See note 30 for details regarding the restatement.
2023 ANNUAL REPORT | 31
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2023
Note
Contributed
Equity
Share-Based
Payments
Reserve
$
76,788,557
-
$
5,874,424
-
30(ii)*
Foreign
Currency
Translation
Reserve
$
(40,122)
-
Accumulated
Losses
Total
$
(20,147,902)
(18,103,395)
$
62,474,957
(18,103,395)
-
-
-
-
3,802
3,802
-
(18,103,395)
3,802
(18,099,593)
22
22
30(ii)*
907,679
(4,657)
77,691,579
-
-
-
5,874,424
-
-
-
(36,320)
-
-
-
(38,251,297)
(24,878,802)
907,679
(4,657)
45,278,386
(24,878,802)
33,153
33,153
(48,368)
(24,927,170)
(15,215)
(24,894,017)
-
-
34,999,999
523,500
-
-
-
-
22
22
22
22
(1,766,769)
111,448,309
1,285,557
-
7,159,981
-
(3,167)
-
(63,178,467)
-
-
-
-
34,999,999
523,500
1,285,557
(1,766,769)
55,426,656
BALANCE AT 1 JULY 2021
Loss for the year (restated)
OTHER COMPREHENSIVE INCOME
Exchange differences on translation
of foreign operations
TOTAL COMPREHENSIVE LOSS
TRANSACTIONS WITH OWNERS IN
THEIR CAPACITY AS OWNERS
Shares issued during the year
Share issue transaction costs
BALANCE AT 30 JUNE 2022 (restated)
Loss for the year
OTHER COMPREHENSIVE INCOME
Exchange differences on translation
of foreign operations
TOTAL COMPREHENSIVE LOSS
TRANSACTIONS WITH OWNERS IN
THEIR CAPACITY AS OWNERS
Shares issued during the year -
placement
Shares issued during the year –
exercise of options
Employee and consultant share-based
payments
Shares issue transaction costs
BALANCE AT 30 JUNE 2023
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
*See note 30 for details regarding the restatement.
2023 ANNUAL REPORT | 32
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2023
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Interest received
Interest and other financing costs paid
Other government grants received
Expenditure on HPMSM
Note
2023
$
2022
(Restated)
$
33,573,516
(48,679,813)
22,414
(49,043)
211,621
(5,707,858)
21,149,000
(41,220,442)
36,010
(50,090)
137,902
-
NET CASH OUTFLOW FROM OPERATING ACTIVITIES
32
(20,629,163)
(19,947,620)
CASH FLOWS FROM INVESTING ACTIVITIES
Movement in cash from restricted to non-restricted
Proceeds on sale of mining interests
Proceeds from disposal of financial assets at fair value through profit or loss
Payments for plant and equipment
NET CASH INFLOW/(OUTFLOW) FROM INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issues of ordinary shares
Payment of share issue transaction costs
Principal elements of lease payments
NET CASH INFLOW FROM FINANCING ACTIVITIES
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
22
22
99,975
30,000
2,416,066
(1,236,837)
1,309,204
35,523,499
(1,766,769)
(266,883)
33,489,847
14,169,888
14,927,576
(211,590)
154,680
330,000
-
(1,514,116)
(1,029,435)
907,679
(4,656)
(368,465)
534,558
(20,442,498)
34,822,585
547,489
CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR
10
28,885,874
14,927,576
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
2023 ANNUAL REPORT | 33
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of the financial statements are set out below. These
policies have been consistently applied to all the years presented, unless otherwise stated. The financial statements
are for the consolidated entity consisting of E25 and its subsidiaries. The financial statements are presented in the
Australian currency. E25 is a company limited by shares, domiciled and incorporated in Australia. The financial
statements were authorised for issue by the Directors on 29 September 2023. The Directors have the power to amend
and reissue the financial statements.
Basis of Preparation
a.
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards
and Interpretations issued by the Australian Accounting Standards Board and the Corporations Act 2001. E25 is a for-
profit entity for the purpose of preparing the financial statements.
Compliance with IFRS
(i)
The consolidated financial statements of the E25 Group also comply with International Financial Reporting Standards
(IFRS) as issued by the International Accounting Standards Board (IASB).
New and amended standards adopted by the Group
(ii)
The Group has reviewed all new, revised or amending Accounting Standards and Interpretations issued by the AASB
that are relevant to its operations and effective for the current annual reporting period. The Group has determined
that there are no new, revised or amending Accounting Standards and Interpretations issued by the AASB that has an
impact on the Group in the current reporting period.
(iii) New standards and interpretations not yet adopted
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2023
reporting periods and have not been early adopted by the Group. The Group’s assessment of the impact of these new
standards and interpretations is that they are not expected to have a material impact on the entity in the current or
future reporting periods and on foreseeable future transactions.
(iv) Historical cost convention
These financial statements have been prepared under the historical cost convention, except for certain financial assets
and liabilities measured at fair value.
b.
Principles of Consolidation
Subsidiaries
(i)
Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is exposed
to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns
through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which
control is transferred to the Group. They are de-consolidated from the date that control ceases.
The acquisition method of accounting is used to account for business combinations by the Group.
2023 ANNUAL REPORT | 34
Intercompany transactions, balances, and unrealised gains on transactions between Group companies are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the transferred
asset. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies
adopted by the Group.
Segment Reporting
c.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the full Board of Directors.
d.
Foreign Currency Translation
Functional and presentation currency
(i)
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary
economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements
are presented in Australian dollars, which is E25 functional and presentation currency.
Transactions and balances
(ii)
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates
of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the
translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are
recognised in profit or loss. They are deferred in equity if they are attributable to part of the net investment in a foreign
operation.
(iii) Group companies
The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary
economy) that have a functional currency different from the presentation currency are translated into the presentation
currency as follows:
• assets and liabilities for each statement of financial position presented are translated at the closing rate at the
date of that statement of financial position;
•
income and expenses for each statement of profit or loss and other comprehensive income are translated at
average exchange rates (unless that is not a reasonable approximation of the cumulative effect of the rates
prevailing on the transaction dates, in which case income and expenses are translated at the dates of the
transactions); and
• all resulting exchange differences are recognised in other comprehensive income.
• On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and
of borrowings and other financial instruments designated as hedges of such investments, are recognised in other
comprehensive income. When a foreign operation is sold or any borrowings forming part of the net investment
are repaid, the associated exchange differences are reclassified to profit or loss, as part of the gain or loss on sale.
e.
Revenue Recognition
Revenue from contracts with customers
(i)
The Group is principally engaged in the business of producing manganese ore. Revenue is measured at the amount the
Group expects to be entitled to in exchange for those goods or services and is recognised at the point at which control
of the goods or services is transferred to the customer.
2023 ANNUAL REPORT | 35
Revenue from the sale of products is recognised when control has passed to the customer, no further work or
processing is required by the Group, the quantity and quality of the products have been determined with reasonable
accuracy, the price can be reasonably estimated and collectability is reasonably assured. The above conditions are
generally satisfied when title passes to the customer, typically on the bill of lading date when manganese ore is
delivered to the vessel.
Shipping revenue is recognised over the period during which the shipping service has been provided.
Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the financial
assets.
Government Grants
f.
Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will
be received, and the Group will comply with all attached conditions.
Income Tax
g.
The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the
applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to
temporary differences and to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of
the reporting period in the countries where the Company’s subsidiaries and associates operate and generate taxable
income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable
tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected
to be paid to the tax authorities.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases
of assets and liabilities and their carrying amounts in the financial statements. However, the deferred income tax is not
accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination
that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined
using tax rates (and laws) that have been enacted or substantively enacted by the reporting date and are expected to
apply when the related deferred income tax asset is realised, or the deferred income tax liability is settled.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that
future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and
liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities
are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise
the asset and settle the liability simultaneously.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other
comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or
directly in equity, respectively.
2023 ANNUAL REPORT | 36
Leases
h.
The Group enters into contractual arrangements for the leases of mining plant and buildings.
The nature of these arrangements can be lease contracts or service contracts with embedded assets. Typically, the
duration of these contracts is for periods of between two and four years, some of which include extension options.
Leases are recognised on the balance sheet as a right of use asset, representing the lessee’s entitlement to the benefits
of the identified asset over the lease term, and a lease liability representing the lessee’s obligation to make the lease
payments. Each lease payment is allocated between its liability and finance cost component. The finance cost is charged
to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining
balance of the liability for each period. The right of use asset is amortised on a straight-line basis over the shorter of the
useful life of the asset and lease term. When the right of use asset is used in the extraction, processing and transportation
of ore, depreciation is included in inventory.
Liabilities arising from contractual arrangements which contain leases are initially measured at the present value of the
future lease payments. These payments include the present value of fixed payments prescribed in the contract; variable
lease payments based on an index or prescribed rate; amounts expected to be payable by the lessor under residual value
guarantees; and exercise price of a purchase option if it is reasonably certain that the option will be exercised.
Right of use assets are initially measured at the amount of the initial lease liability plus any lease payments at or before
commencement date less incentives received, plus any initial direct costs, and any costs required for dismantling and
rehabilitation. Right of use assets are subsequently measured at cost less any accumulated depreciation and
accumulated impairment losses; and any adjustment for remeasurement of the lease liability. Lease liabilities are
subsequently measured at present value, adjusted for any variations to the underlying contract terms.
Lease payments are discounted using the interest rate implicit in the lease. If this rate cannot be determined, the Group’s
incremental borrowing rate is used, which is the rate which the Group would have to pay to borrow the funds necessary
to obtain an asset of a similar value in a similar economic environment over a similar term and security.
Payments for short term leases and low value assets are recognised on a straight-line basis as an expense in the income
statement. Short term leases are for a period of 12 months or less and contracts involving low value assets typically
comprise small items of IT hardware and minor sundry assets.
Impairment of Assets
i.
Assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may
not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its
recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For
the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable
cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating
units). Non-financial assets that suffered an impairment are reviewed for possible reversal of the impairment at the end
of each reporting period.
Cash and Cash Equivalents
j.
For statement of cash flows presentation purposes, cash and cash equivalents includes cash on hand, deposits held at
call with financial institutions, other short term highly liquid investments with original maturities of three months or less
that are readily convertible to known amounts of cash and which are subject to insignificant risk of changes in value, and
bank overdrafts.
2023 ANNUAL REPORT | 37
k.
Investments and Other Financial Assets
Classification
(i)
The Group classifies its financial assets in the following measurement categories:
• Those to be measured subsequently at fair value (either through OCI or through profit or loss); and
• Those to be measured at amortised cost.
The classification depends on the entity’s business model for managing the financial assets and the contractual terms
of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI. For investments in
equity instruments that are not held for trading, this will depend on whether the Company has made an irrevocable
election at the time of initial recognition to account for the equity investment at fair value through other comprehensive
income (FVOCI).
Recognition and derecognition
(ii)
Regular way purchases and sales of financial assets are recognised on trade-date, the date on which the Company
commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the
financial assets have expired or have been transferred and the Company has transferred substantially all the risks and
rewards of ownership.
(iii) Measurement
At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not at
fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial
asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss.
Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows
are solely payment of principal and interest.
Debt instruments
Subsequent measurement of debt instruments depends on the Company’s business model for managing the asset and
the cash flow characteristics of the asset. There are three measurement categories into which the Company classifies its
debt instruments:
• Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent
solely payments of principal and interest are measured at amortised cost. Interest income from these financial
assets is included in finance income using the effective interest rate method. Any gain or loss arising on
derecognition is recognised directly in profit or loss and presented in other income or expenses. Impairment
losses are presented as a separate line item in the statement of profit or loss.
• FVOCI: Assets that are held for collection of contractual cash flows and for selling the financial assets, where the
assets’ cash flows represent solely payments of principal and interest, are measured at FVOCI. Movements in the
carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest income
and foreign exchange gains and losses which are recognised in profit or loss. When the financial asset is
derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss
and recognised in other income or expenses. Interest income from these financial assets is included in finance
income using the effective interest rate method. Foreign exchange gains and losses are presented in other income
or expenses and impairment losses are presented as a separate line item in the statement of profit or loss.
• FVPL: Assets that do not meet the criteria for amortised cost or FVOCI are measured at FVPL. A gain or loss on a
debt investment that is subsequently measured at FVPL is recognised in profit or loss and presented net within
other income or expenses in the period in which it arises.
2023 ANNUAL REPORT | 38
Equity instruments
The Company subsequently measures all equity investments at fair value. Where the Company’s management has
elected to present fair value gains and losses on equity investments in OCI, there is no subsequent reclassification of fair
value gains and losses to profit or loss following the derecognition of the investment. Dividends from such investments
continue to be recognised in profit or loss as other income when the Company’s right to receive payment is established.
Changes in the fair value of financial assets at FVPL are recognised in other income or expenses in the statement of profit
or loss as applicable. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI
are not reported separately from other changes in fair value.
Impairment
(iv)
The Company assesses on a forward-looking basis the expected credit losses associated with its debt instruments carried
at amortised cost and FVOCI. The impairment methodology depends on whether there has been a significant increase in
credit risk.
Inventories
l.
Diesel fuel stock, work in progress and finished goods are stated at the lower of cost and net realisable value. Cost for
raw materials and stores is determined as the purchase price. For partly processed and saleable manganese, cost is
based on the weighted average cost method and includes:
• Material and production costs directly attributable to the extraction, processing and transportation of manganese
to the existing location;
• Production and transportation overheads; and
• Depreciation of property, plant and equipment used in the extraction, processing and transportation of
manganese.
Manganese ore stockpiles represent manganese ore that has been extracted and is available for further processing or
sale. Quantities are assessed primarily through internal and third-party surveys. Where there is an indication that
inventories are obsolete, damaged or recorded above net realisable value, these inventories are written down to net
realisable value. Net realisable value is the estimated selling price in the ordinary course of business less the estimated
costs of completion and the estimated costs necessary to make the sale.
m. Property, Plant and Equipment
Each class of plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure
that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the
item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised
when replaced. All other repairs and maintenance are charged to the statement of comprehensive income during the
reporting period in which they are incurred.
Depreciation of plant and equipment is calculated using the straight-line method over their estimated useful lives or, in
the case of leasehold improvements and certain leased plant and equipment, the shorter lease term. The estimated
useful lives for the principal categories of property, plant and equipment depreciated on a straight-line basis are as
follows:
2023 ANNUAL REPORT | 39
• Buildings – 3 to 20 years
•
IT equipment – 3 years
• Mine properties and development – 10 to 40 years
• Plant and equipment – 1.5 to 20 years
The assets residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.
An assets carrying amount is written down immediately to its recoverable amount if the asset carrying amount is greater
than its estimated recoverable amount (note 1(i)).
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the
statement of comprehensive income. When revalued assets are sold, it is Company policy to transfer the amounts
included in other reserves in respect of those assets to retained earnings.
The process of removing waste materials to access mineral deposits is referred to as stripping. Stripping is necessary to
obtain access to mineral deposits and occurs throughout the life of an open-pit mine. Development and production
stripping costs are classified as Mine properties and development in property, plant and equipment.
Costs required for dismantling and rehabilitation are included in the rehabilitation estimates.
Assets Under Construction
n.
The cost of assets includes the cost of materials and direct labour and any other costs directly attributable to bringing
an asset to a working condition ready for its intended use. Assets under construction are recognised separately in assets
under construction. Upon commissioning, which is the date when the asset is in the location and condition necessary
for it to be capable of operating in the manner intended by management, the assets are transferred into property, plant
and equipment.
Exploration and Evaluation Costs
o.
Exploration and evaluation expenditures in relation to each separate area of interest are recognised as an exploration
and evaluation asset in the year in which they are incurred where the following conditions are satisfied:
•
the rights to tenure of the area of interest are current; and
• at least one of the following conditions is also met:
the exploration and evaluation expenditures are expected to be recouped through successful development
and exploration of the area of interest, or alternatively, by its sale; or
exploration and evaluation activities in the area of interest have not at the balance date reached a stage which
permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and
active and significant operations in, or in relation to, the area of interest are continuing.
Exploration and evaluation assets are initially measured at cost and include acquisition of rights to explore, studies,
exploratory drilling, trenching and sampling and associated activities and an allocation of depreciation and amortised
of assets used in exploration and evaluation activities. General and administrative costs are only included in the
measurement of exploration and evaluation costs where they are related directly to operational activities in a particular
area of interest.
Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying
amount of an exploration and evaluation asset may exceed its recoverable amount. The recoverable amount of the
exploration and evaluation asset (for the cash generating unit(s) to which it has been allocated being no larger than the
2023 ANNUAL REPORT | 40
relevant area of interest) is estimated to determine the extent of the impairment loss (if any). Where an impairment loss
subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount,
but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been
determined had no impairment loss been recognised for the asset in previous years.
Where a decision has been made to proceed with development in respect of a particular area of interest, the relevant
exploration and evaluation asset is tested for impairment and the balance is then reclassified to development.
Trade and Other Payables
p.
These amounts represent liabilities for goods and services provided to the Company prior to the end of the financial year
which are unpaid. The amounts are unsecured, non-interest bearing and are paid on normal commercial terms.
q.
Employee Benefits
(i) Wages and salaries and annual leave
Liabilities for wages and salaries, including non-monetary benefits, and annual leave expected to be settled within 12
months of the reporting date are recognised in other payables in respect of employees’ services up to the reporting date
and are measured at the amounts expected to be paid when the liabilities are settled.
(ii) Other long-term employee benefit obligations
The Group also has liabilities for long service leave that are not expected to be settled wholly within 12 months after the
end of the period in which the employees render the related service. These obligations are therefore measured as the
present value of expected future payments to be made in respect of services provided by employees up to the end of the
reporting period using the projected unit credit method. Consideration is given to expected future wage and salary
levels, experience of employee departures and periods of service. Expected future payments are discounted using
market yields at the end of the reporting period of high-quality corporate bonds with terms that match, as closely as
possible, the estimated future cash outflows. Remeasurements as a result of experience adjustments and changes in
actuarial assumptions are recognised in profit or loss.
The obligations are presented as current liabilities in the balance sheet if the Group does not have an unconditional right
to defer settlement for at least twelve months after the reporting period, regardless of when the actual settlement is
expected to occur.
Share-based payments
(iii)
The Company provides benefits to employees (including Directors) of the Company in the form of share-based payment
transactions, whereby employees render services in exchange for shares or rights over shares (‘equity-settled
transactions’), refer to note 34.
The cost of these equity-settled transactions with employees is measured by reference to the fair value at the date at
which they are granted. The fair value is determined by an internal valuation using a Black-Scholes option pricing model.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period
in which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully
entitled to the award (‘vesting date’).
The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i)
the extent to which the vesting period has expired and (ii) the number of options that, in the opinion of the Directors of
the Company, will ultimately vest. This opinion is formed based on the best available information at balance date. No
2023 ANNUAL REPORT | 41
adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is
included in the determination of fair value at grant date. No expense is recognised for awards that do not ultimately vest.
r.
Rehabilitation Provision
Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events. It
is more likely than not that an outflow of resources will be required to settle the obligation and the amount can be
reliably estimated.
The mining, extraction and processing activities of the Company give rise to obligations for site rehabilitation.
Rehabilitation obligations include decommissioning of facilities, removal or treatment of waste materials, land
rehabilitation and site restoration.
The extent of work required and the associated costs are estimated using current restoration standards and techniques.
The initial measurement of the rehabilitation provision is to discount expected expenditures to settle the obligation by
using Australian Government bond market yields that match the timing of estimates.
The Group has conducted an assessment for estimate of reasonable ‘at present’ expenditure required to restore the
Butcherbird mine site. At each reporting date, the Group will remeasure the rehabilitation liability to account for any new
disturbance, for changes in estimated reserves and lives of operations, new regulatory requirements, environmental
policies and revised discounted rates. The company adjusts the rehabilitation provision accordingly.
Issued Capital
s.
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. Incremental costs directly attributable to the issue of new shares or options for the acquisition
of a business are not included in the cost of the acquisition as part of the purchase consideration.
t.
Earnings Per Share
Basic earnings per share
(i)
Basic earnings per share is calculated by dividing the profit attributable to owners of the Company, excluding any costs
of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during
the financial year.
Diluted earnings per share
(ii)
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account
the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and
the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential
ordinary shares.
u. Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as
part of the expense.
2023 ANNUAL REPORT | 42
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the taxation authority is included with other receivables or payables in the statement
of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing
activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flows.
Critical Accounting Judgements, Estimates and Assumptions
v.
The preparation of these financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a
higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial
statements are:
Share-based payment transactions
(i)
The Company measures the cost of equity-settled transactions with employees by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value is determined by an internal valuation using a Black-
Scholes option pricing model, using the assumptions detailed in note 34.
Taxation
(ii)
Balances disclosed in the financial statements and the notes thereto related to taxation are based on the best estimates
of the Directors. These estimates consider both the financial performance and position of the Group as they pertain to
current income taxation legislation, and the Directors understanding thereof. No adjustment has been made for pending
or future taxation legislation. The current income tax position represents the Directors’ best estimate, pending final
lodgement of Income Tax Returns.
(iii) Rehabilitation estimate
The accounting policy for the recognition of rehabilitation provisions requires significant estimates including the
magnitude of possible works required for the removal of infrastructure and of rehabilitation works, future cost of
performing the work, the inflation and discount rates and the timing of cash flows. These uncertainties may result in
future actual expenditure differing from the amounts currently provided.
2.
FINANCIAL RISK MANAGEMENT
The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and
price risk), credit risk and liquidity risk. The Group’s overall risk management program focuses on the unpredictability of
financial markets and seeks to minimise potential adverse effects on the financial performance of the Group.
Risk management is carried out by the full Board of Directors as the Group believes that it is crucial for all board members
to be involved in this process. The Managing Director, with the assistance of senior management as required, has
responsibility for identifying, assessing, treating and monitoring risks and reporting to the Board on risk management.
a. Market Risk
Foreign exchange risk
(i)
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures,
primarily with respect to the United States Dollar.
2023 ANNUAL REPORT | 43
Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in
a currency that is not the entity’s functional currency. The Group has not formalised a foreign currency risk management
policy however, it monitors its foreign currency expenditure considering exchange rate movements.
Sensitivity Analysis
At 30 June 2023, if the value of the assets held in foreign currency had increased/decreased by 5% with all other variables
held constant, post-tax loss for the Group would have been $924,085 lower/higher, with no changes to other equity
balances, as a result of gains/losses on equity securities classified as financial assets at fair value through profit or loss
(2022: $307,348 lower/higher post-tax loss).
Price risk
(ii)
The Group is exposed to equity securities price risk. This arises from investments held by the Group and classified in the
statement of financial position as financial assets at fair value through profit or loss. Given the current level of operations,
the Group is not currently exposed to commodity price risk.
To minimise the risk, the Group’s investments are of high quality and are publicly traded on the ASX. The investments
are managed on a day-to-day basis to pick up any significant adjustments to market prices.
Sensitivity analysis
At 30 June 2023, if the value of the equity instruments held had increased/decreased by 15% with all other variables held
constant, post-tax loss for the Group would have been $97,716 lower/higher, with no changes to other equity balances,
as a result of gains/losses on equity securities classified as financial assets at fair value through profit or loss (2022:
$308,138 lower/higher post-tax loss).
Interest rate risk
(iii)
The Group is exposed to movements in market interest rates on cash and cash equivalents. The Group policy is to
monitor the interest rate yield curve out to six months to ensure a balance is maintained between the liquidity of cash
assets and the interest rate return. The entire balance of cash and cash equivalents for the Group $28,885,874 (2022:
$14,927,576) is subject to interest rate risk. The proportional mix of floating interest rates and fixed rates to a maximum
of six months fluctuate during the year depending on current working capital requirements. The weighted average
interest rate received on cash and cash equivalents by the Group was 0.08% (2022: 0.15%).
Sensitivity analysis
At 30 June 2023, if interest rates had changed by +/- 50 basis points from the weighted average rate for the year with all
other variables held constant, post-tax profit for the Group would have been $146,000 higher/lower (2022: $117,000
lower/higher post-tax loss on +/- 50 basis points) as a result of higher/lower interest income from cash and cash
equivalents.
b. Credit Risk
The maximum exposure to credit risk at reporting date is the carrying amount (net of provision for impairment) of those
assets as disclosed in the statement of financial position and notes to the financial statements. The group has an
exposure to credit risk arising from cash and cash equivalents held with financial institutions and trade receivables. All
material deposits are held with the major Australian banks for which the Board evaluate credit risk to be minimal.
Liquidity Risk
c.
The Group manages liquidity risk by continuously monitoring forecast and actual cash flows and ensuring sufficient cash
and marketable securities are available to meet the current and future commitments of the Group. Due to the nature of
2023 ANNUAL REPORT | 44
the Group’s activities, being mineral exploration, the Group does not have ready access to credit facilities, with the
primary source of funding being equity raisings. The Board of Directors constantly monitor the state of equity markets
in conjunction with the Group’s current and future funding requirements, with a view to initiating appropriate capital
raisings as required.
The financial liabilities of the Group are confined to trade and other payables as disclosed in the statement of financial
position. All trade and other payables are non-interest bearing and due within 12 months of the reporting date.
Fair Value Estimation
d.
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for
disclosure purposes. The equity investments held by the Group are classified at fair value through profit or loss. The
market value of all equity investments represents the fair value based on quoted prices on active markets (ASX) as at the
reporting date without any deduction for transaction costs. These investments are classified as level 1 financial
instruments.
The carrying amounts and estimated fair values of financial assets and financial liabilities are as follows:
Financial Assets
Cash and cash equivalents
Restricted cash
Trade and other receivables
Financial assets at fair value through profit or loss
Total Financial Assets
Financial Liabilities
Trade and other payables
Unearned revenue
Total Financial Liabilities
2023
$
28,885,874
528,560
975,551
651,440
31,041,425
2023
$
9,401,012
-
9,401,012
2022
$
14,927,576
628,535
6,887,914
2,054,254
24,498,279
2022
(Restated)
$
6,533,292
5,831,120
12,364,412
The methods and assumptions used to estimate the fair value of financial instruments are outlined below:
Cash
The carrying amount is fair value due to the liquid nature of these assets.
Receivables/Payables
Due to the short-term nature of these financial rights and obligations, their carrying amounts are estimated to represent
their fair values.
Fair value measurements of financial assets
The carrying values of financial assets and liabilities of the Group approximate their fair values. Fair values of financial
assets and liabilities have been determined for measurement and / or disclosure purposes.
Fair value hierarchy
The Group classifies assets and liabilities carried at fair value using a fair value hierarchy that reflects the significance of
the inputs used in determining that value. The following table analyses financial instruments carried at fair value by the
valuation method. The different levels in the hierarchy have been defined as follows:
2023 ANNUAL REPORT | 45
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
• Level 2:
inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly (as prices) or indirectly (derived from prices); and
• Level 3:
inputs for the asset or liability that are not based on observable market data (unobservable inputs).
30 June 2023
Financial assets at fair value through profit or loss
30 June 2022
Financial assets at fair value through profit or loss
3.
SEGMENT INFORMATION
Level 1
$
651,440
651,440
2,054,254
2,054,254
Level 2
$
Level 3
$
Total
$
-
-
-
-
-
-
-
-
651,440
651,440
2,054,254
2,054,254
The Group has identified its operating segments based on the internal reports that are reviewed and used by the Board
of Directors (chief operating decision makers) in assessing performance and determining the allocation of resources. The
Group is managed primarily on the basis of geographic location of assets given that the type of work done in each
location is of a similar nature. Operating segments are therefore determined on this basis, with two segments being
identified: Australia and France.
The activities undertaken in each segment are those associated with the determination and assessment of the existence
of commercial economic reserves, from the Group’s mineral assets in the respective geographic location.
Segment performance is evaluated based on the operating profit and loss and cash flows and is measured in accordance
with the Group’s accounting policies.
Australia
2023
2022
(Restated)
$
$
33,469,168
21,101,612
33,469,168
21,101,612
33,469,168
322,008
(2,358,203)
21,101,612
396,664
(2,399,271)
Segment Revenue
Revenue
Total revenue
Segment Results
Revenue
Other income
Depreciation
Other cost of sales and expenses
(56,311,775)
(37,148,927)
Net (loss) before tax
(24,878,802)
(18,049,922)
Operating Assets
Segment operating assets
Total assets
Operating Liabilities
Segment operating Liabilities
Total Liabilities
68,062,904
60,901,607
68,062,904
60,901,607
(12,636,248)
(15,635,269)
(12,636,248)
(15,635,269)
France
2023
2022
Total
2023
2022
(Restated)
$
-
-
-
-
-
-
-
-
-
-
-
$
-
-
-
-
-
$
$
33,469,168
21,101,612
33,469,168
21,101,612
33,469,168
322,008
(2,358,203)
21,101,612
396,664
(2,399,271)
(53,473)
(56,311,775)
(37,202,400)
(53,473)
(24,878,802)
(18,103,395)
15,845
15,845
68,062,904
60,917,452
68,062,904
60,917,452
(3,797)
(12,636,248)
(15,639,066)
(3,797)
(12,636,248)
(15,639,066)
2023 ANNUAL REPORT | 46
4. REVENUE
Sale of manganese
Shipment revenue
Note
30(ii)
2023
$
32,527,217
941,951
2022
(Restated)
$
20,001,082
1,100,530
33,469,168
21,101,612
The Company primarily generates revenue from the sales of manganese ore to customers. Revenue is recognised when
the performance obligations are met and the control of the product has passed to the customer. The material
performance obligations to be met are the delivery of the contracted quantity of manganese ore to the vessel at the
contracted grade.
Customer sales contracts are denominated in United States Dollars with the final pricing determined by product grade
and quantity of the product passed to the customer. The Company has a long-term sales agreement with OM Materials
(Singapore) Pte Ltd for the supply of manganese ore on a Free On Board (FOB) basis.
* The comparative amounts for Shipment revenue has been adjusted upwards by $1,100,530 to reflect the allocation of revenue
between its performance obligations. The net adjustment to Revenue was nil.
5. OTHER INCOME
Net gain on sale of mining interests
Government grant funding
Bank interest and other income
6. COST OF SALES
Mining costs
Processing costs
Site administration costs
Haulage costs
Port and shipping
Sales and marketing costs
Royalty costs
Depreciation of processing equipment
Depreciation of mining equipment
Depreciation of right of use assets
Inventory movement
Note
30(ii)*
*See note 30 for details regarding the restatement.
2023
$
30,000
211,621
80,387
322,008
2022
$
205,000
137,902
53,762
396,664
2023
$
(11,455,356)
(9,926,408)
(4,591,866)
2022
(Restated)
$
(8,865,101)
(8,839,363)
(3,237,202)
(15,209,858)
(11,768,742)
(3,133,838)
(289,076)
(1,723,520)
(1,194,733)
(259,030)
(260,586)
510,321
(4,323,107)
(274,104)
(1,526,868)
(1,117,722)
(197,020)
(260,586)
6,049,055
(47,533,950)
(34,360,760)
2023 ANNUAL REPORT | 47
7.
EXPLORATION AND PRE-FEASIBILITY EXPENDITURE
Exploration
Product Development General
Product Development HPMSM
8. GENERAL AND ADMINISTRATION EXPENSES
Note
30(i)*
Depreciation expense
(Loss)/ Gain of foreign exchange
Gain of sale of asset
Fair value gain/(loss) on remeasurement of financial asset
Share-based payment expense
Director fees, salaries and wages and other staff costs
Consultants
ASX and other compliance costs
Insurance
Occupancy
Investor relation expenses
Depreciation of right of use assets
Other administration expenses
*See note 30 for details regarding the restatement.
9.
INCOME TAX
Income tax benefit
a)
Current tax
Deferred tax
2023
$
(82,640)
(200,525)
(6,360,958)
2022
$
(32,190)
(30,378)
(946,542)
(6,644,123)
(1,009,110)
2023
$
(566,952)
(207,990)
-
1,013,252
(1,285,558)
(1,216,246)
(643,021)
(280,517)
(571,233)
(138,935)
(145,170)
(76,902)
(306,925)
2022
(Restated)
$
(573,446)
461,837
2,631
(1,338,163)
-
(694,805)
(738,885)
(182,938)
(301,332)
(139,512)
(130,966)
(250,497)
(266,695)
(4,426,197)
(4,152,771)
2023
$
-
-
-
2022
(Restated)
$
-
-
-
b) Reconciliation of income tax expense/(benefit) to prima facie tax payable
(Loss) from continuing operations before income tax expense
(24,879,231)
(18,105,080)
Prima facie tax (benefit)/expense at the Australian tax rate of 25.0% (2022: 25.0%)
(6,219,808)
(4,526,270)
Tax effect of amounts which are not deductible/(taxable) in calculating taxable income:
Share-based payments
R&D refund
321,389
(52,905)
105,500
283,451
2023 ANNUAL REPORT | 48
Gains/losses on investments
Others
Movements in unrecognised temporary differences
Tax effect of current year tax losses for which no deferred tax asset has been recognised
Income tax expense/(benefit)
c) Recognising temporary differences
Deferred Tax Assets at 25.0% (2022: 25.0%)
On Income Tax Account
Capital raising expenses
Accruals and provisions
Lease liabilities
Capitalised project expenditure
Australian carry forward tax losses
Rehabilitation provision
Deferred Tax Liabilities at 25.0% (2022: 25.0%)
Unrealised FX on cash balances
Prepayments
Property, Plant & Equipment
Right of use asset
Rehabilitation asset
d) Unrecognising temporary differences
Deferred Tax Assets at 25.0% (2022: 25.0%)
Foreign carry forward tax losses
Australian carry forward tax losses
e) Total Deferred Tax Assets at 25% (2022: 25.0%)
On Income Tax Account
Capital raising expenses
Accruals and provisions
AASB 16 lease liability
Project pool
Foreign carry forward tax losses
Australian carry forward tax losses
Rehabilitation provision
(33,635)
(6,269)
-
-
(5,991,228)
(4,137,319)
1,922,798
4,068,430
-
188,183
3,949,136
-
592,471
199,943
136,821
3,065,781
395,532
514,329
359,059
157,714
222,563
1,243,909
2,487,803
469,500
4,904,877
4,940,548
22,876
16,150
4,225,385
126,137
514,329
156,113
-
4,104,426
210,509
469,500
4,904,877
4,940,548
224,071
13,476,798
224,071
7,183,035
13,700,869
7,407,106
592,471
199,943
136,821
3,065,782
224,071
13,872,330
514,329
359,059
157,714
222,563
1,243,909
224,071
9,670,839
469,500
18,605,747
12,347,654
Total Net Deferred Tax Asset / Deferred Tax Loss
13,700,869
7,407,106
Net deferred tax assets were not brought to account as it was not considered probable within the immediate future that tax profits
would be available against which deductible temporary differences and tax losses could be utilised.
2023 ANNUAL REPORT | 49
The Group’s ability to use losses in the future is subject to each Group company satisfying the relevant tax authority’s criteria for using
these losses.
In April 2017, the Australian Government enacted legislation which reduces the corporate rate for small and medium business (base
rate) entities from 30% to 25% over the next decade. For the 2021 financial year, the tax rate decreased to 26% and then 25% for the
2022 and later financial years. Element 25 Limited satisfies the criteria to be a base rate entity.
10. CASH AND CASH EQUIVALENTS
Cash at bank and in hand
Cash and cash equivalents as shown in the statement of financial position
and the statement of cash flows
2023
$
2022
$
28,885,874
14,927,576
28,885,874
14,927,576
Cash at bank and in hand earns interest at floating rates based on daily bank deposit rates.
Short-term deposits are made for varying periods of between one day and three months depending on the immediate cash
requirements of the Group and earn interest at the respective short-term deposit rates.
11.
TRADE AND OTHER RECEIVABLES
Trade receivables
Sundry receivables
Prepayments
12.
INVENTORY
Raw materials and stores
Finished goods at cost
Finished goods at fair value less costs to sell
Warehouse stores and materials
2023
$
-
348,461
627,090
975,551
2023
$
10,005,448
-
2,019,742
110,600
2022
$
5,831,340
717,029
339,545
6,887,914
2022
(Restated)
$
5,822,691
665,119
4,933,629
60,334
12,135,790
11,481,773
Note
30(ii)*
*See note 30 for details regarding the restatement.
13. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
Australian listed equity securities
2023
$
651,440
651,440
2022
$
2,054,254
2,054,254
2023 ANNUAL REPORT | 50
Changes in fair values of financial assets at fair value through profit or loss are recorded in other income for gains or directly on the
face of the statement of Profit and Loss and Comprehensive Income for losses.
14. RESTRICTED CASH
Bank guarantees and term deposits
2023
$
528,560
528,560
2022
$
628,535
628,535
15. PROPERTY, PLANT AND EQUIPMENT
Carrying amount – at cost
At 30 June 2021
Additions
Disposals
Change in restoration and
rehabilitation estimate
Other
At 30 June 2022 (Restated)
Additions
Disposals
Change in restoration and
rehabilitation estimate
Other
Buildings
IT Equipment
$
$
Mine Properties
and Development
$
Plant and
Equipment
$
Assets Under
Construction
$
Total
$
4,773,729
286,859
6,303,844
11,281,557
176,774
22,822,763
-
-
-
-
902,222
-
352,637
-
81,122
-
1,335,981
-
-
(123,407)
4,650,322
5,346
-
-
-
-
(7,654)
279,205
-
-
-
-
1,878,001
-
9,084,067
370,503
-
179,316
-
-
-
11,634,194
400,243
-
-
(181,787)
76,109
1,031,371
-
1,878,001
(312,848)
25,723,897
1,807,463
-
-
-
-
(81,079)
179,316
(81,079)
At 30 June 2023
4,655,668
279,205
9,633,886
12,034,437
1,026,401
27,629,597
Accumulated depreciation
At 30 June 2021
Depreciation expense
Disposals
At 30 June 2022
Depreciation expense
Disposals
Other
At 30 June 2023
Net book value
At 30 June 2021
Additions
Depreciation expense
Disposals
Change in restoration and
rehabilitation estimate
Other
At 30 June 2022 (Restated)
Additions
(40,978)
(480,269)
-
(521,247)
(475,444)
-
-
(13,228)
(93,177)
-
(106,405)
(91,508)
-
-
(15,925)
(197,020)
-
(212,945)
(259,030)
-
-
(159,763)
(1,117,722)
-
(1,277,485)
(1,194,733)
-
-
(996,691)
(197,913)
(471,975)
(2,472,218)
-
-
-
-
-
-
-
-
(229,894)
(1,888,188)
-
(2,118,082)
(2,020,715)
-
-
(4,138,797)
4,732,751
-
(480,269)
-
-
(123,407)
4,129,075
5,346
273,631
-
(93,177)
-
-
(7,654)
172,800
-
6,287,919
11,121,794
176,774
22,592,869
2,780,223
(197,020)
-
352,637
(1,117,722)
-
81,122
-
-
3,213,982
(1,888,188)
-
1,878,001
-
8,871,122
370,503
-
-
10,356,709
400,243
-
(181,787)
76,109
1,031,371
1,878,001
(312,848)
23,605,815
1,807,463
2023 ANNUAL REPORT | 51
Depreciation expense
Disposals
Change in restoration and
rehabilitation estimate
Other
(475,444)
-
(91,508)
-
(259,030)
-
(1,194,733)
-
-
-
(2,020,715)
-
-
-
-
-
179,316
-
-
-
-
(81,079)
179,316
(81,079)
At 30 June 2023
3,658,977
81,292
9,161,911
9,562,219
1,026,401
23,490,800
Assets under construction at the end of the year of $1,026,401 (2022: $76,109) includes costs directly attributable to
bringing assets to a working condition so they are ready for their intended use. The assets which are currently under
construction mainly include $916,991 for mine properties and development.
*See note 30 for details regarding the restatement.
16. DEFERRED EXPLORATION AND EVALUATION EXPENDITURE
Balance at the beginning of the period
Expenditure incurred
Impairment expense
Balance at the end of the period
2023
$
489,548
400,792
-
890,340
2022
$
94,021
489,548
(94,021)
489,548
The recoupment of costs carried forward in relation to areas of interest in the exploration and evaluation phases is
dependent upon the successful development and commercial exploitation or sale of the respective areas.
17. RIGHT OF USE ASSET
Cost
Accumulated depreciation
Balance as at beginning of year
Acquisition of plant and equipment by means of finance leases
Depreciation of right of use assets
Balance at end of year
2023
$
1,296,105
(791,556)
504,549
842,037
-
(337,488)
504,549
2022
$
1,296,105
(454,068)
842,037
1,122,205
230,915
(511,083)
842,037
Leased assets are capitalised at the commencement date of the lease and comprise of the initial lease liability amount,
initial direct costs incurred when entering into the lease less any lease incentives received. On initial adoption of AASB
16 the Group has adjusted the right-of-use assets at the date of initial application by the amount of any provision for
onerous leases recognised immediately before the date of initial application. Following initial application, an
impairment review is undertaken for any right of use lease asset that shows indicators of impairment and an impairment
loss is recognised against any right of use lease assets that is impaired.
* The comparative amounts for cost and accumulated depreciation have been adjusted down by $1,397,067 to reflect the correct
recording of disposals. The net book value of disposals was nil.
2023 ANNUAL REPORT | 52
18. TRADE AND OTHER PAYABLES
Trade payables
Payroll tax payable
Other payables and accruals
Note
30(i)*
2023
$
5,765,866
39,260
3,595,886
9,401,012
2022
(Restated)
$
4,794,097
31,846
1,707,349
6,533,292
*See note 30 for details regarding the restatement.
19. DEFERRED REVENUE
Opening Balance as at beginning of year
Deferred revenue
Realised deferred revenue during the year
Balance at end of year
20. PROVISIONS
Current
Provision for annual leave
Provision for long service leave
Non-Current
Rehabilitation provision
Note
30(ii)*
2023
$
2022
(Restated)
$
5,831,120
-
-
5,831,120
(5,831,120)
-
-
5,831,120
Note
2023
$
2022
(Restated)
$
506,783
123,850
630,633
391,093
115,309
506,402
30(iii)*
2,057,317
2,057,317
1,878,001
1,878,001
The cost of rehabilitation is recorded at the present value of the estimated future costs of legal and constructive
obligations to restore the Butcherbird mine site. The discount rate used reflects current market assessments of time
value of money and risks. Factors, such as change in discount rate, change in policies or regulations, change in the life of
the mine plan, change in market prices of associated costs, may significantly impact measurement and value of the
rehabilitation cost. The Company reviews the rehabilitation provision on an annual basis and will disclose any material
changes.
*See note 30 for details regarding the restatement
2023 ANNUAL REPORT | 53
21. LEASE LIABILITIES
Current
Lease liabilities
Non-Current
Lease liabilities
22.
ISSUED CAPITAL
Ordinary shares fully paid
Total issued capital
2023
$
367,263
367,263
2022
$
342,967
342,967
180,023
180,023
547,284
547,284
2023
Number of
Shares
194,960,368
2023
$
111,448,309
2022
Number of
Shares
152,710,369
2022
$
77,691,579
194,960,368
111,448,309
152,710,369
77,691,579
2023
Number of
Shares
2023
$
2022
Number of
Shares
2022
$
a) Movement in ordinary share capital
Balance at the beginning of the financial year
−
−
−
Transaction costs
Total issued capital
Controlled placement agreement collateral shares
Placement
Exercise of options
(a)
(b)
(c)
152,710,369
9,500,000
31,249,999
1,500,000
-
194,960,368
77,691,579
-
34,999,999
523,500
(1,766,769)
111,448,309
148,790,369
-
-
3,920,000
-
152,710,369
76,788,557
-
-
907,679
(4,657)
77,691,579
a)
During 2023, 9,500,000 collateral shares were issued pursuant to an At-the-Market Subscription Agreement
(ATM) with Acuity Capital to provide up to $30 million of standby equity capital over a three-year period. This
standby facility may be used to fund the development of the High Purity Manganese Sulphate Facility Project
and working capital. Under the terms of the ATM, the Company has full discretion as to whether or not to utilise
the ATM, the maximum number of shares to be issued, the minimum issue price of shares and the timing of
each subscription (if any). There are no requirements on the Company to utilise the ATM and may terminate
the ATM at any time without cost or penalty. As collateral for the ATM, the Company agreed to place 9,500,000
fully paid ordinary E25 shares at nil cash consideration to Acuity Capital.
b)
Successful A$35 Million Placement
In November 2022, the Company completed a A$35 million placement at A$1.12 per share (Placement). The
Placement was heavily oversubscribed with E25 management and the Joint Lead Managers (JLMs) agreeing
to increase the raise to A$35 million (minimum $30M). Funds raised from the Placement will fund the
Company’s battery grade HPMSM project feasibility works, operating cost reduction capital costs,
engineering optimisation works and working capital. Petra Capital and Blackwood Capital acted as Joint
Lead Managers and Joint Bookrunners to the Placement.
The Placement Price of A$1.12 per share represented a 22.0% discount to the last traded price prior to the
announcement of the Placement and a 13.1% discount to the 10 traded day Volume-Weighted Average
2023 ANNUAL REPORT | 54
Price (VWAP) of the Company’s shares to 15 November 2022. E25 issued a total of 31,249,999 new shares in
connection with the Placement on 23 November 2022.
c)
During the year ending 30 June 2023, the Company issued the following shares upon the exercise of options:
On 18 October 2022 the Company issued 100,000 shares upon the exercise of options of $0.325 per share
which expire on 3 November 2022
On 31 October 2022 the Company issued 200,000 shares upon the exercise of options of $0.325 per share
which expire on 3 November 2022
On 28 November 2022 the Company issued 300,000 shares upon the exercise of options of $0.355 per
share which expire on 28 November 2022
On 28 November 2022 the Company issued 300,000 shares upon the exercise of options of $0.355 per
share which expire on 28 November 2022
On 28 November 2022 the Company issued 600,000 shares upon the exercise of options of $0.355 per
share which expire on 28 November 2022
During the year ending 30 June 2022, the Company issued the following shares upon the exercise of
options:
On 23 November 2021 the Company issued 2,000,000 shares upon the exercise of options of $0.20 per
share which expire on 24 November 2021
On 23 November 2021 the Company issued 500,000 shares upon the exercise of options of $0.20 per
share which expire on 1 April 2025
On 23 November 2021 the Company issued 300,000 shares upon the exercise of options of $0.325 per
share which expire on 3 November 2022
On 23 November 2021 the Company issued 1,000,000 shares upon the exercise of options of $0.26 per
share which expire on 22 February 2024
On 14 January 2022 the Company issued 100,000 shares upon the exercise of options of $0.26 per share
which expire on 22 February 2024
On 14 January 2022 the Company issued 20,000 shares upon the exercise of options of $1.209 per share
which expire on 4 November 2025
b) Movement in options on issue
Beginning of the financial year
Exercisable at $0.6547, on or before 1 July 2027
Issued during the year
−
−
−
−
−
Exercisable at $1.2806, on or before 23 September 2027
Exercisable at $1.1747, on or before 29 September 2027
Exercisable at $1.580, on or before 25 November 2027
Exercisable at $1.4657, on or before 23 December 2027
At $0.325, on or before 3 November 2022
At $0.325, on or before 3 November 2022
Exercised during the year
−
−
−
−
−
At $0.325, on or before 28 November 2022
At $0.325, on or before 28 November 2022
At $0.325, on or before 28 November 2022
Exercised during the year
−
At $0.20, on of before 23 November 2021
2023
$
2022
$
9,480,000
13,400,000
500,000
500,000
1,000,000
900,000
50,000
(100,000)
(200,000)
(300,000)
(300,000)
(600,000)
-
-
-
-
-
-
-
-
-
-
-
(2,000,000)
2023 ANNUAL REPORT | 55
−
−
−
−
−
At $0.26,on or before 23 November 2021
At $0.325, on of before 23 November 2021
At $0.20, on or before 23 November 2021
At $0.26, on or before 18 January 2022
At $1.209, on or before 18 January 2022
-
-
-
-
-
(1,000,000)
(300,000)
(500,000)
(100,000)
(20,000)
10,930,000
9,480,000
c) Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in
proportion to the number of and amounts paid on the shares held.
On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote,
and upon a poll each share is entitled to one vote.
Ordinary shares have no par value and the Company does not have a limited amount of authorised capital.
d) Capital risk management
The Group’s objectives when managing capital are to safeguard their ability to continue as a going concern, so that they
may continue to provide returns for shareholders and benefits for other stakeholders.
Due to the nature of the Group’s activities, the Group does not have ready access to credit facilities, with the primary
source of funding being equity raisings. Therefore, the focus of the Group’s capital risk management is the current
working capital position against the requirements of the Group to meet operating expenditure and corporate overheads.
The Group’s strategy is to ensure appropriate liquidity is maintained to meet anticipated operating requirements. The
working capital position of the Group at 30 June 2023 and 30 June 2022 are as follows:
Cash and cash equivalents
Restricted cash
Trade and other receivables
Financial assets at fair value through profit or loss
Trade and other payables
Unearned revenue
Employee benefit obligations (current)
Working capital position
23. RESERVES
Foreign currency translation reserve
Share-based payments reserve
2023
$
2022
(Restated)
$
28,885,874
14,927,576
528,560
975,551
651,440
(9,401,012)
-
(630,633)
628,535
6,887,914
2,054,254
(6,533,292)
(5,831,120)
(506,402)
21,009,780
11,627,465
(a)
(b)
2023
$
(3,167)
7,159,981
7,156,814
2022
$
(36,320)
5,874,424
5,838,104
2023 ANNUAL REPORT | 56
a)
Foreign currency translation reserve
Exchange differences arising on translation of the foreign controlled entity are recognised in other comprehensive income as
described in note 1(d) and accumulated within a separate reserve within equity. The cumulative amount is reclassified to profit or loss
when the net investment is disposed of.
b)
Share-based payments reserve
The share-based payments reserve is used to recognise the fair value of options and performance rights granted.
24. DIVIDENDS
No dividends were paid during the financial year. No recommendation for payment of dividends has been made.
25. REMUNERATION OF AUDITORS
During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its
related practices and non-related audit firms:
2023
$
95,000
18,000
113,000
2022
$
-
54,000
54,000
PricewaterhouseCoopers - audit and review of financial reports
Rothsay Auditing- audit and review of financial reports
Total remuneration for audit services
26. CONTINGENCIES
There are no material contingent assets or liabilities of the Company at balance date.
27. COMMITMENTS
Exploration Commitments
a.
The Company has certain commitments to meet minimum expenditure requirements on the mineral exploration assets
it has an interest in. Outstanding exploration commitments are as follows:
Within one year
Later than one year but not later than five years
Later than five years
2023
$
192,700
875,800
2,039,800
3,108,300
2022
$
508,700
1,336,800
2,039,800
3,885,300
2023 ANNUAL REPORT | 57
28. RELATED PARTY TRANSACTIONS
Parent Entity
a.
The ultimate parent entity within the Group is Element 25 Limited.
Subsidiaries
b.
Interests in subsidiaries are set out in note 29.
c.
Key Management Personnel Compensation
Short-term benefits
Post-employment benefits
Other long-term benefits
Share-based payments
2023
$
430,075
34,628
22,574
621,000
1,108,277
2022
$
339,710
29,771
16,118
-
385,599
Loans to Related Parties
d.
There were no loans to related parties, including key management personnel, during the year.
29. SUBSIDIARIES
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in
accordance with the accounting policy described in note 1(b):
Name
Country of Incorporation
Element 25 (Malaysia) SDN BHD
Cordier Mines SAS
Element 25 Butcherbird Project Pty Ltd
Element 25 (USA) LLC
Element 25 (Louisiana) LLC
Element 25 (HPMSM) LLC
Malaysia
France
Australia
United States of America
United States of America
United States of America
Class of
Shares
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
2023
Equity Holding
%
100
-
100
100
100
100
2022
Equity Holding
%
-
100
100
-
-
-
30. RESTATEMENT OF PRIOR YEAR
Reclassification of expenses within the Consolidated Statement of Comprehensive Income
(i)
The presentation of the Consolidated Statement of Comprehensive Income has been restated in the current year to
reclassify expenses by function rather than by nature to align to peers in the industry. Share-based payment expense,
Gain/Loss of foreign exchange and other Gain/Loss of sale of asset have now been reclassified to general &
administrative expenses. Depreciation expenses have been re-allocated between cost of sales and general and
administrative expenses. To ensure comparability, amounts disclosed for the comparative period have been
reclassified. The impacts of the reclassification for the Group for FY2022 are as follows:
2023 ANNUAL REPORT | 58
2022 Expenses as reported
Cost of sales
Administration expenses
Depreciation expense
(Gain) / Loss of foreign exchange
(Gain) / loss of sale of asset
Share-based payment expense
Total 2022 comparatives as reported in FY2023
(ii)
Recognition of revenue
2022
As reported
(33,046,018)
(2,705,630)
(1,888,188)
461,837
2,631
-
Allocated to Cost of
sales
(33,046,018)
-
(1,314,742)
-
-
-
(34,360,760)
Allocated to general &
administration expenses
-
(2,705,630)
(573,446)
461,837
2,631
-
(2,814,608)
A shipment of manganese ore to OM Holding in August 2022 was incorrectly recognised as revenue in the year to 30 June
2022. Based on the contractual terms with the customer control does not transfer until the bill of lading date when ore
is delivered to the vessel. This correction of this treatment to align to the contractual terms has resulted in an adjustment
to revenue, shipment revenue, deferred revenue, cost of sales, royalties, port expense and inventory in the prior year.
The following table sets out the impacts of the adjustment to each financial statement line item.
Consolidated Statement of Comprehensive Income (extract)
Revenue
Sale of manganese
Shipment revenue
Cost of Sales
Mining costs
Processing costs
Site administration costs
Haulage costs
Port and shipping
Sales and marketing costs
Royalty costs
Depreciation of processing equipment
Depreciation of mining equipment
Depreciation of right of use assets
Inventory movement
Consolidated Statement of Financial Position (extract)
Inventory
Inventory
2022
$
Increase/
(Decrease)
$
25,832,202
(5,831,120)
1,100,530
-
2022
(Restated)
$
20,001,082
1,100,530
26,932,732
(5,831,120)
21,101,612
2022
$
Increase/
(Decrease)
$
(8,865,101)
(8,839,363)
(3,237,202)
(11,768,742)
(4,854,607)
(274,104)
(1,818,424)
-
-
-
-
531,500
-
291,556
-
(1,117,722)
(260,586)
1,597,617
(197,020)
-
4,451,438
2022
(Restated)
$
(8,865,101)
(8,839,363)
(3,237,202)
(11,768,742)
(4,323,107)
(274,104)
(1,526,868)
(1,117,722)
(197,020)
(260,586)
6,049,055
(38,320,512)
3,959,752
(34,360,760)
2022
$
Increase/
(Decrease)
$
2022
(Restated)
$
6,970,001
4,451,438
11,421,439
2023 ANNUAL REPORT | 59
Deferred Revenue
Deferred revenue
Trade and other Payables
Trade payables
Other payables and accruals
2022
$
-
-
2022
$
4,794,097
2,530,405
Increase/
(Decrease)
$
5,831,120
5,831,120
Increase/
(Decrease)
$
-
(823,056)
2022
(Restated)
$
5,831,120
5,831,120
2022
(Restated)
$
4,794,097
1,707,349
7,324,502
(823,056)
6,501, 446
(iii) Rehabilitation
During the year ended 30 June 2023, the Company recognised a rehabilitation provision for the disturbances incurred at
the Butcherbird mine site amounting to $2,057,317. Of this an estimated value of $1,878,001 was determined to have
been incurred prior to the start of the financial year. A resulting adjustment has been reflected in the prior period balance
sheet to reflect the liability incurred as at 30 June 2022. Disturbance incurred prior to 1 July 2021 was immaterial. The
impact of the adjustment on the prior year financial statement line items was as follows:
Assets
Non-Current Assets
Property, plant and equipment
Non-Current Liabilities
Provisions
2022
$
Increase/
(Decrease)
$
2022
(Restated)
$
21,727,814
21,727,814
1,878,001
1,878,001
23,605,815
23,605,815
-
-
1,878,001
1,878,001
1,878,001
1,878,001
31. SUBSEQUENT EVENTS
On 7 July 2023, Stellantis completed a US$15,000,000 first equity investment in Element 25 after conditions of the
companies’ agreement announced in January 2023 were satisfied. 22,569,967 fully paid ordinary shares were issued at
A$1 per share. The proceeds will be used to fund the HPMSM project.
No other matter or circumstance has arisen since 30 June 2023, which has significantly affected, or may significantly
affect the operations of the Group, the result of those operations, or the state of affairs of the Group in subsequent
financial years.
2023 ANNUAL REPORT | 60
32. CASHFLOW INFORMATION
Reconciliation of (loss)/profit after income tax to net cash outflow from
operating activities
(Loss) for the year
Non-cash items
−
−
−
−
Depreciation of non-current assets
Net exchange differences and other
Impairment of non-current assets
Amortisation of right of use assets
Change in operating assets and liabilities
−
−
−
−
−
−
−
(Increase)/decrease in trade and other receivables
(Increase)/decrease in financial assets at fair value through profit or loss
(Increase)/decrease in restoration
(Increase)/decrease in inventory
Increase/(decrease) in trade and other payables
Increase in restoration obligations
Increase in employee benefit obligations
Note
30*
2023
$
2022
(Restated)
$
(24,878,802)
(18,103,395)
2,020,715
207,273
11,615
337,488
5,912,363
(1,402,814)
(179,316)
(654,017)
(2,307,215)
179,316
124,231
1,888,188
(542,509)
55,236
511,083
(6,010,400)
1,338,163
(1,878,001)
(6,043,075)
6,869,109
1,878,001
89,980
Net cash outflow from operating activities
(20,629,163)
(19,947,620)
*See note 30 for details regarding the restatement.
33. LOSS PER SHARE
a.
Reconciliation of earnings used in calculating loss per share
Loss attributable to the owners of the Company used in calculating basic and
diluted loss per share
(24,878,802)
(18,103,395)
Note
30(ii)*
2023
$
2022
(Restated)
$
*See note 30 for details regarding the restatement.
b. Weighted average number of shares used as the denominator
Weighted average number of ordinary shares used as the denominator in
calculating basic and diluted loss per share
c.
Basic and diluted loss per share
Basic and diluted loss per share (cents per share)
2023
$
2022
$
174,495,121
151,131,743
2023
$
(14.26)
2022
$
(11.98)
2023 ANNUAL REPORT | 61
Information on the classification of options
d.
As the Group made a loss for the year ended 30 June 2023, the options on issue were considered anti-dilutive and were
not included in the calculation of diluted earnings per share. The options currently on issue could potentially dilute
basic earnings per share in the future.
34. SHARE-BASED PAYMENTS
Reconciliation of earnings used in calculating loss per share
a.
The Company provides benefits to employees (including Directors) and contractors of the Company in the form of
share-based payment transactions, whereby employees render services in exchange for options to acquire ordinary
shares. The exercise price of the options granted and on issue at 30 June 2023 range from 26.00 cents to $1.58 per
option, with expiry dates ranging from 28 November 2023 to 23 December 2027.
Options granted carry no dividend or voting rights. When exercisable, each option is convertible into one ordinary
share of the Company with full dividend and voting rights.
Fair value of options granted
The weighted average fair value of the options granted during the year was 47.00 cents (2022: Nil cents). The price was
calculated by using the Black-Scholes European Option Pricing Model applying the following inputs:
Weighted average exercise price
Weighted average life of the option (years)
Weighted average underlying share price (cents)
Expected share price volatility
Risk free interest rate
2023
$
$1.23
5.0
80.60
80%
3.56%
2022
$
-
-
-
-
-
Historical volatility has been used as the basis for determining expected share price volatility as it assumed that this is indicative of
future trends, which may not eventuate.
Set out below is a summary of the share-based payment options granted:
Outstanding at the beginning of the year
Granted
Forfeited
Exercised
Expired
Outstanding at year-end
2023
Number of
options
9,480,000
2,950,000
-
(1,500,000)
-
10,930,000
2023
Weighted
average exercise
price cents
50.70
123.31
-
34.90
-
72.00
2022
Number of
options
13,400,000
-
-
(3,920,000)
-
9,480,000
2022
Weighted average
exercise price
cents
42.60
-
-
23.20
-
50.70
The weighted average remaining contractual life of share options outstanding at the end of the financial year was 2.1 years (2022: 2.1
years), and the exercise prices range from 26.00 cents to $1.580 (2022: 26.00 cents to $1.209).
2023 ANNUAL REPORT | 62
Expenses arising from share-based payment transactions
b.
Total expenses arising from share-based payment transactions recognised during the period were as follows:
Options granted to employees and contractors expensed to profit or loss
2023
$
1,285,558
2022
$
-
35. PARENT ENTITY INFORMATION
The following information relates to the parent entity, Element 25 Limited, at 30 June 2023. The information presented here has been
prepared using accounting policies consistent with those presented in note 1.
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Issued capital
Share-based payments reserve
Accumulated losses
Total equity
Loss for the year
Total comprehensive loss for the year
Note
30(ii)*
2023
$
42,575,088
25,490,555
68,065,643
10,398,908
2,237,340
12,636,248
111,448,309
7,159,982
(63,178,896)
55,429,395
2022
(Restated)
$
35,335,672
25,565,935
60,901,607
13,209,984
2,425,285
15,635,269
77,691,579
5,874,424
(38,299,665)
45,266,338
(24,878,802)
(18,103,395)
(24,878,802)
(18,103,395)
*See note 30 for details regarding the restatement.
2023 ANNUAL REPORT | 63
DIRECTOR’S DECLARATION
In the Directors’ opinion:
(a)
the financial statements and notes set out on pages 30 to 63 are in accordance with the Corporations Act 2001, including:
(i)
(ii)
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional
reporting requirements; and
giving a true and fair view of the consolidated entity’s financial position as at 30 June 2023 and of its performance for
the financial year ended on that date;
(b)
(c)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and
payable; and
a statement that the attached financial statements are in compliance with International Financial Reporting Standards has
been included in the notes to the financial statements.
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.
-----------------------------------------
Justin Brown
Managing Director
Perth, 29 September 2023
2023 ANNUAL REPORT | 64
Independent auditor’s report
To the members of Element 25 Limited
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial report of Element 25 Limited (the Company) and its controlled entities
(together the Group) is in accordance with the Corporations Act 2001, including:
(a) giving a true and fair view of the Group's financial position as at 30 June 2023 and of its financial
performance for the year then ended
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The Group financial report comprises:
●
●
●
●
●
●
the consolidated statement of financial position as at 30 June 2023
the consolidated statement of comprehensive income for the year then ended
the consolidated statement of changes in equity for the year then ended
the consolidated statement of cash flows for the year then ended
the notes to the consolidated financial statements, which include significant accounting policies
and other explanatory information
the directors’ declaration.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
report section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Independence
We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence
Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.
Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
PricewaterhouseCoopers, ABN 52 780 433 757
Brookfield Place, 125 St Georges Terrace, PERTH WA 6000, GPO Box D198, PERTH WA 6840
T: +61 8 9238 3000, F: +61 8 9238 3999
Liability limited by a scheme approved under Professional Standards Legislation.
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an
opinion on the financial report as a whole, taking into account the geographic and management
structure of the Group, its accounting processes and controls and the industry in which it operates.
Materiality
● For the purpose of our audit, we used overall Group materiality of $1,243,000 which represents
approximately 5% of the Group’s loss before tax.
● We applied this threshold, together with qualitative considerations, to determine the scope of our audit and
the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements on the
financial report as a whole.
● Having considered various other benchmarks, we chose Group’s loss before tax because, in our view, it is
the benchmark against which the performance of the Group is most commonly measured.
● We utilised a 5% threshold based on our professional judgement, noting it is within the range of commonly
acceptable thresholds.
Audit Scope
Our audit focused on where the Group made subjective judgements; for example, significant accounting
estimates involving assumptions and inherently uncertain future events.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report for the current period. The key audit matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters. Further, any commentary on the outcomes of a
particular audit procedure is made in that context. We communicated the key audit matters to the Audit
Committee.
Key audit matter
How our audit addressed the key audit matter
Revenue recognition
As per note 4, to the consolidated financial statements,
the group recognised manganese ore revenue of
$32,527,217 and shipping revenue of $941,951 for the
year ended 30 June 2023.
Revenue from the sale of products is recognised when
control has passed to the customer, no further work or
processing is required by the Group, the quantity and
quality of the products have been determined with
reasonable accuracy, the price can be reasonably
estimated, and collectability is reasonably assured. The
above conditions are generally satisfied when title
passes to the customer, typically on the bill of lading
date when manganese ore is delivered to the vessel.
Shipping revenue is recognised over the period during
which the shipping service has been provided.
This is a key audit matter given the significance of
manganese ore and shipping revenue to the
consolidated statement of comprehensive income.
These factors combine to make this area a key audit
matter.
Recoverable Value of Inventory
As per note 12 to the consolidated financial
statements, the Group’s has inventory amounting to
$12,135,790 as at 30 June 2023. The Group is
required to carry its inventory at the lower of cost or net
realisable value in accordance with AASB 102
Inventories.
We considered this as a key audit matter due to the
judgement involved in the valuation of inventory at the
lower of cost or NRV in accordance with the accounting
standards as well as the financial significance to the
Group’s financial statements.
We performed the following procedures amongst
others:
● Evaluated the appropriateness of the revenue
recognition policy against the requirements of
the accounting standards.
● For a sample of sales transactions, tested the
appropriateness of revenue recognised with
reference to the contractual terms of the
associated sales agreement.
● For a sample of sales transactions, tested that
revenue was recognised in the correct period
by agreeing the recognition date to evidence
supporting completion of the associated
performance obligation.
● Assessed the adequacy of the disclosures
made in the financial report in light of the
requirements of Australian Accounting
Standards.
We performed the following procedures amongst
others:
● Evaluated the appropriateness of the
inventory valuation policy in the context of the
requirements of Australian Accounting
Standards.
● Evaluated the accuracy of inputs used in the
inventory valuation model to underlying
supporting evidence.
● Tested the accuracy of the net realisable
value adjustment by comparing unit cost of
inventory to the latest available selling price
based on recent transactions.
● Assessed the adequacy of the disclosures
made in the financial report in light of the
requirements of Australian Accounting
Standards.
Other information
The directors are responsible for the other information. The other information comprises the
information included in the annual report for the year ended 30 June 2023, but does not include the
financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon through our opinion on the financial report. We
have issued a separate opinion on the remuneration report.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of
this auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing
and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our
auditor's report.
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 22 to 25 of the directors’ report for the
year ended 30 June 2023.
In our opinion, the remuneration report of Element 25 Limited for the year ended 30 June 2023
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the remuneration report, based on our audit conducted in accordance with
Australian Auditing Standards.
PricewaterhouseCoopers
Craig Heatley
Partner
Perth
29 September 2023
ASX ADDITIONAL INFORMATION
Additional information required by Australian Stock Exchange Ltd and not shown elsewhere in this report is as follows. The
information is current as at 13 September 2023.
a.
Distribution of equity securities
1
1,001
5,001
10,001
100,001
-
-
-
-
1,000
5,000
10,000
100,000
and over
The number of equity security holders holding less than
a marketable parcel of securities are:
Twenty largest shareholders
b.
The names of the twenty largest holders of quoted ordinary shares are:
1
2
3
4
5
6
7
9
9
10
11
12
13
14
15
16
17
18
19
20
Citicorp Nominees Pty Limited
BNP Paribas Nominees Pty Ltd ACF Clearstream
Acuity Capital Investment Management Pty Ltd
Aradia Ventures Pty Ltd
Ranguta Limited
Mr Liam Raymond Cornelius
HSBC Custody Nominees (Australia) Limited
Duketon Consolidated Pty Ltd
Duketon Mining Limited
P R Perry Nominees Pty Ltd
BNP Paribas Noms Pty Ltd
BNP Paribas Nominees Pty Ltd
Mr Jacobus Gerardus De Jong
Buttonwood Nominees Pty Ltd
Sino West Assets Pty Ltd
Hayes Investments Co Pty Ltd
Hajek Ft Custodians Pty Ltd
Mr Paul Hartley Watts
Mrs Antoinette Janet Ribbons
Jenny-Lynn Properties Pty Ltd
Ordinary shares
Number of
holders
Number of shares
867
1,243
533
969
210
479,402
3,336,365
4,285,325
31,984,159
177,445,085
3,822
217,530,336
977
602,908
Listed ordinary shares
Number of
shares
28,507,097
14,743,179
9,500,000
7,198,215
6,585,440
5,754,006
5,094,230
4,991,170
4,177,974
4,134,208
3,674,006
3,574,242
3,545,781
3,159,500
2,709,629
2,046,429
2,010,000
2,000,000
1,800,000
1,785,715
Percentage of
ordinary shares
13.10
6.78
4.37
3.31
3.03
2.65
2.34
2.29
1.92
1.90
1.69
1.64
1.63
1.45
1.25
0.94
0.92
0.92
0.83
0.82
116,990,821
53.78
Substantial shareholders
c.
There were no substantial shareholders at 30 June 2023 who have notified the Company in accordance with section 671B of the
Corporations Act 2001.
2023 ANNUAL REPORT | 70
Voting rights
d.
All ordinary shares (whether fully paid or not) carry one vote per share without restriction.
e.
Schedule of interests in mining tenements as at 15 September 2023
Tenement reference
E20/659
E46/1366
E52/1529
E52/2350
E52/3606
E52/3706
E52/3735
E52/3769
E52/3779
E52/3858
E52/4064
E52/4149
E52/4153
E52/4155
L52/211
L52/215
L52/216
L52/217
L52/218
L52/220
L52/221
L52/225
M52/1074
E57/1060
E63/2027
Location
Eelya Hill WA
Black Hill WA
Mt Padbury WA
Butcher Bird WA
Yanneri Bore WA
Yanneri Pool WA
Limestone Bore WA
Kumarina WA
Beyondie Bluff WA
Yanneri Well WA
Neds Gap WA
Neds Gap WA
Yanneri Well WA
Weelarrana WA
Limestone Bore WA
Butcherbird East 1 WA
Butcherbird East 2 WA
Butcherbird East 3 WA
Butcherbird East 4 WA
Butcherbird East 5 WA
Butcherbird East 6 WA
Butcherbird East 7 WA
Yaneri Ridge WA
Victory Well WA
Lake Johnston WA
Percentage held/earning
10%
100%
100% (Note 1)
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
20%
100%
(1) 100% interest held in all minerals other than iron ore and manganese.
Unquoted Securities
f.
At 13 September 2023, the Company had the following unlisted securities on issue:
Name
Aradia Ventures Pty Ltd
Mr John George Ribbons
Mrs Antoinette Janet Ribbons
Mr Seamus Cornelius
Kumarina Holdings Pty Ltd
Zoetmelksvlei (Pty) Ltd
Unlisted options
exercisable at
$0.261 expiring
28/11/23
Unlisted options
exercisable at
$0.260 expiring
22/02/24
Unlisted options
exercisable at
$0.273 expiring
20/11/24
Unlisted options
exercisable at
$0.50 expiring
25/06/25
1,000,000
500,000
-
500,000
-
-
-
-
-
-
500,000
1,000,000
500,000
-
500,000
-
-
2,000,000
500,000
2,000,000
-
-
-
-
-
500,000
500,000
2023 ANNUAL REPORT | 71
Karlka Nyiyaparlia Aboriginal Corp. RNTBC
1,000,000
Name
Aradia Ventures Pty Ltd
Mr John George Ribbons
Mr Seamus Cornelius
Duketon Consolidated Pty Ltd
Mr Michael Jordon
Mr Doug Flanagan
Holders < 20%
Name
Aradia Ventures Pty Ltd
Mr John George Ribbons
Mr Seamus Cornelius
Mr Sias Jordan
Ms Andrea Gertrud Graham
Holders < 20%
Unlisted options
exercisable at
$0.44 expiring
13/07/25
Unlisted options
exercisable at
$1.209 expiring
4/11/25
Unlisted options
exercisable at
$0.654 expiring
01/07/27
Unlisted options
exercisable at
$1.281 expiring
23/09/27
-
-
-
-
-
-
-
1,000,000
500,000
250,000
250,000
300,000
-
-
-
680,000
1,980,000
-
-
-
-
-
500,000
-
-
500,000
-
-
-
-
-
-
500,000
-
500,000
Unlisted options
exercisable at
$1.175 expiring
29/09/27
Unlisted options
exercisable at
$1.580 expiring
25/11/27
Unlisted options
exercisable at
$1.467 expiring
23/12/27
-
-
-
500,000
500,000
-
1,000,000
500,000
200,000
200,000
-
-
-
900,000
-
-
-
-
-
50,000
50,000
2023 ANNUAL REPORT | 72
CORPORATE DIRECTORY
Directors
Auditors
Seamus Cornelius (Non-Executive Chairman)
Pricewaterhouse Coopers (PwC)
Justin Brown (Managing Director)
Brookfield Place
John Ribbons (Non-Executive Director)
15/125 St Georges Terrace
Fanie van Jaarsveld (Non-Executive Director)
PERTH WA 6000
Sam Lancuba (Non-Executive Director)
Secretary
Michael Jordon
Principal Place of Business
Level 1, Building B, Garden Office Park
Share Registry
Automic Group
Level 2
267 St Georges Terrace
PERTH WA 6000
Phone: 1300 288 664 (within Australia)
355 Scarborough Beach Road, OSBORNE PARK WA 6017
Phone from overseas: +612 9698 5414 (International)
Email: hello@automicgroup.com.au
Website: www.automicgroup.com.au
Telephone: +61 8 6375 2525
Email: admin@e25.com.au
Website: www.element25.com.au
Registered Office
Level 1, Building B, Garden Office Park
355 Scarborough Beach Road
Osborne Park WA 6017
Solicitors
House Legal
86 First Avenue
MT LAWLEY WA 6050
30 | 2023 ANNUAL REPORT