2024 ANNUAL REPORT | 1
ANNUAL REPORT
ANNUAL FINANCIAL REPORT FOR
THE YEAR ENDED 30 JUNE 2024
Element 25 Limited
ABN 46 119 711 929 ASX E25
element25.com.au
2 | 2024 ANNUAL REPORT
The future has always
been electric...
2023
The future has always
been electric...
2024
2024 ANNUAL REPORT | 3
TABLE OF CONTENTS
Message From The Chair
5
Review of Operations
6
Directors' Report
26
Auditor’s Independence Declaration
36
Consolidated Statement of
Comprehensive Income
37
Consolidated Statement of Financial Position
38
Consolidated Statement of Changes in Equity
39
Consolidated Statement of Cash Flows
40
Notes to the Consolidated
Financial Statements
41
Consolidated Entity Disclosure Statement
67
Directors' Declaration
68
Independent Auditor’s Report
69
ASX Additional Information
74
Corporate Directory
77
4 | 2024 ANNUAL REPORT
Butcherbird Expansion Feasibility Study targeting 1.1 million
tonnes per annum (Mtpa) manganese production
demonstrated robust economics.
Butcherbird: Pre-tax Net Present Value (NPV) of A$228 million
(8% discount), Internal Rate of Return (IRR) of 113% and
Annual cashflow of A$57.3M.
Acceleration of activities for Butcherbird expansion, focusing
on process optimisation, Front-End Engineering and Design
(FEED) activities, project finance and permitting.
Resource infill drilling of 216 percussion drill holes for 6,203m
completed at Butcherbird, targeting Mineral Resource
re-estimation and subsequent Ore Reserve update.
Northern Australia Infrastructure Facility (NAIF) proceeded to
detailed due diligence after completing a strategic assessment
of Butcherbird Stage 2 Expansion Project.
Element 25 progressed plans for its proposed High Purity Manganese
Sulphate Monohydrate (HPMSM) facility in Louisiana, USA in
partnership with General Motors (GM) and Stellantis N.V. (Stellantis)
under binding financing and offtake agreements.
Binding term sheet signed with Veolia North America (Veolia)
to secure a site for Element 25's planned HPMSM refinery in
Louisiana, USA. Title V Air Permit received for HPMSM refinery
at the Veolia Burnside site.
Selected for award negotiations for a US$166m grant from the
US Department of Energy (DoE) under their Battery Minerals
Processing and Battery Manufacturing Program which will fund
the construction of the planned HPMSM facility.
Approval of US$57 million of tax incentives under Louisiana
State’s Industrial Tax Exemption Program (ITEP).
Two international HPMSM patents lodged under the Patent
Co-Operation Treaty to provide protection for key manganese
processing steps in Element 25's flowsheet.
Share Purchase Plan (SPP) completed, raising $643,145 to support
Butcherbird Stage 2 Expansion and Louisiana HPMSM project.
4 | 2024 ANNUAL REPORT
HIGHLIGHTS
2024 ANNUAL REPORT | 5
On the HPMSM front, we agreed terms for a preferred
processing facility site in Louisiana. We have been selected for
award negotiations by the US Department of Energy (DoE) for a
US$166 million grant from the from the US Department of
Energy under their Battery Minerals Processing and Battery
Manufacturing Program which will contribute to funding the
construction of the planned HPMSM facility. A Title V Air Permit
has since been granted, and we are finalising agreements for a
land sale and essential utilities.
Our agreements with GM and Stellantis, combining offtake and
funding, remain active, providing an additional US$115 million
of construction capital. We will progress the DoE grant
negotiations and continue to work with our advisor, Jett
Capital, on private-sector funding options to secure the
remaining funds for construction and commissioning, with
multiple financing proposals under review.
We also made strides in exploring our Lake Johnson lithium
project in Western Australia, identifying several high-priority
targets. While an application for forfeiture has been lodged
against tenement E63/2027, we are defending it vigorously.
I would like to acknowledge my predecessor, Seamus
Cornelius, who resigned as Chairman before last year’s AGM. I
sincerely thank Seamus for his leadership, leaving a strong
legacy. I also extend my gratitude to our Directors and
Management team for their dedication over the past year. We
look forward to continuing our work towards creating
shareholder value.
The Board is excited about Element 25’s future as we strive to
build a global manganese business, supplying in-demand, low-
carbon sustainable manganese ore and battery-grade HPMSM
worldwide. On behalf of the Board, we thank our shareholders
for their ongoing support.
John Ribbons
Non-Executive Chair
Element 25 Limited
MESSAGE FROM
THE CHAIR
Dear Fellow Shareholders
I am pleased to present Element 25 Limited’s 2024 Annual
Report, my first as Chair since my appointment in late 2023.
This year has been marked by significant progress, and I want
to highlight some key achievements in our journey to build a
global manganese business.
Our Butcherbird Manganese Mine in Western Australia, home
to Australia’s largest onshore manganese resource, remains
the cornerstone of our operations. This year, we completed
a Feasibility Study (FS) to expand manganese concentrate
production to 1.1 million tonnes annually. The FS results were
compelling, with an NPV of A$228 million (pre-tax, real) and an
IRR of 113%, alongside a rapid payback period of just 1.2 years.
Expanding production at Butcherbird would establish
Element 25 as a low-cost producer, capable of operating during
the lowest price points in the market cycles. This expansion
also aligns with our plans to produce high-purity manganese
sulphate monohydrate (HPMSM) at a proposed facility in
Louisiana, USA, in partnership with General Motors LLC (GM)
and Stellantis NV (Stellantis) and potentially in Japan in the
future, in partnership with Nissan Chemical Corporation.
In the past six months, we advanced our expansion plans,
including process optimisation, Front-End Engineering and
Design (FEED), project finance, and permitting . In early 2024,
we suspended production at Butcherbird to focus resources on
the expansion. However, due to shifting market dynamics and
disruptions in Africa, we began exploring the possibility of
resuming operations to sell lower-grade stockpiles. This
parallel opportunity is under review as we continue our
expansion efforts.
Additionally, our Butcherbird Expansion Project has
successfully passed a strategic assessment by the Northern
Australia Infrastructure Fund (NAIF), and is now in the due
diligence phase. Given NAIF’s history of investing in significant
minerals projects, we are closely monitoring progress and will
keep shareholders informed.
6 | 2024 ANNUAL REPORT
BUTCHERBIRD MANGANESE MINE, WA
•
Butcherbird Expansion Feasibility Study targeting 1.1 million
tonnes per annum (Mtpa) manganese production, pre-tax Net
Present Value of A$228 million (8% discount) with an Internal
Rate of Return of 113% and annual cashflow of A$57.3M.
•
Acceleration of activities for the planned expansion of
Butcherbird, focusing on process optimisation, Front-End
Engineering and Design (FEED) activities, project finance and
permitting.
•
Northern Australia Infrastructure Facility (NAIF) completed
a strategic assessment of Butcherbird Stage 2 Expansion
Project.
•
Investigations commenced into potential restart of operations
at Butcherbird to take advantage of the recent movement in
manganese ore prices caused by market factors, including
disruptions at South 32 Limited’s Groote Eylandt (GEMCO)
operations.
•
Resource infill drilling completed at Butcherbird, with 216
percussion drill holes completed for a total of 6,203m,
targeting infill of existing inferred resources1.
•
Resource upgrade commenced to evaluate the conversion of
inferred resources to measured and indicated to support an
upgraded reserve estimate.
HPMSM REFINERY, LOUISIANA, USA
•
Binding term sheet (TS) with Veolia North America (Veolia)
to secure a site for Element 25's planned HPMSM refinery in
Louisiana, USA.
•
Title V Air Permit received for HPMSM refinery at the Veolia
Burnside site.
•
Approval of US$57 million of tax incentives under Louisiana
State’s Industrial Tax Exemption Program (ITEP).
•
Two key international patents lodged under the Patent
Co-Operation Treaty, expected to be processed in 2024 2.
•
Selected for award negotiations by the US Department of
Energy under their Battery Minerals Processing and Battery
Manufacturing Program for a US$166M to fund construction of
the planned refinery3.
REVIEW OF OPERATIONS
1.
E25 ASX Announcement dated 19 June 2024
2.
E25 ASX Announcement dated 27 November 2023
3.
E25 ASX Announcement dated 24 September 2024
KEY OPERATIONAL MILESTONES FOR FINANCIAL YEAR 2024
6 | 2024 ANNUAL REPORT
7
2024 ANNUAL REPORT | 7
COMPANY OVERVIEW
Element 25 Limited (E25, Element 25 or Company) (ASX: E25 |
OTCQX: ELMTF) is the operator of the Butcherbird Manganese
Project (Butcherbird or the Project) which hosts Australia’s largest
onshore manganese (Mn) resource with current JORC resources
of over 260Mt of manganese ore4. Butcherbird is 1,050km north of
Perth and 130km south of Newman in the Pilbara region of Western
Australia (WA).
Element 25's goal is to become an industry leading low-carbon
battery materials manufacturer, producing high quality manganese
concentrate and battery grade High Purity Manganese Sulphate
Monohydrate (HPMSM) products for traditional and new energy
markets.
The Company plans to construct a HPMSM facility (Facility), in
Louisiana, USA, having completed a Feasibility Study (FS)5 for this
project in April 2023 and selected for award negotiations by the US
Department of Energy for a US$166m grant6. The Facility will use
concentrate from Element 25's existing mine at the Butcherbird
Project in Western Australia as feedstock.
The Facility is supported by key offtake and funding agreements in
place with General Motors LLC (GM) and Stellantis N.V. (Stellantis),
which are contributing a combined US$115M in project funding
through equity, pre-payment and senior debt alongside offtake for
~65% of planned HPMSM production from the first production train.
4.
E25 ASX Announcement dated 17 April 2019
5.
E25 ASX Announcement dated 12 April 2023
6.
E25 ASX Announcement dated 24 September 2024
Payback
1.2
(years)
Cashflow
AU$57.3M
(annual)
IRR
113%
Capital Cost
AU$49.8
(incl. contingency)
NPV
AU$228M
(pre-tax, real)
BUTCHERBIRD FEASIBILITY STUDY SUMMARY
2024 ANNUAL REPORT | 7
8 | 2024 ANNUAL REPORT
SAFETY
For the 12 months ending 30 June 2024, the Butcherbird minesite sustained 2 Lost Time Injuries (LTIs) and 0 Medical Treatment Injuries
(MTIs). The 12-month LTI and MTI rates were noted as 28 and 0 respectively.
BUTCHERBIRD EXPANSION STRATEGY
BUTCHERBIRD OPERATIONS, WESTERN AUSTRALIA
The BB FS results confirm that the economics of the mine are improved under the planned expansion scenario, which benefit from the
inherent economies of scale achieved in the larger-scale production operations. This results in better utilisation of mining and processing
equipment, improved operational efficiencies and better utilisation of the large resource/reserve base underpinning the Project.
The seven-year project utilises 86% of the Measured resources and 61% of the Indicated resources available within the Butcherbird
resource base.
If viable, restarted activities will occur in parallel with and will not impact the expansion plans for the Butcherbird Project. A potential
restart requires several critical steps with respect to operational readiness and an assessment of re-start and production costs, and it is
not guaranteed that this will be commercially feasible.
7.
E25 ASX Announcement dated 23 January 2024
In January 2024, Element 25 released the Butcherbird (BB) Expansion Feasibility Study (FS)7 on the proposed expansion of the
Butcherbird Mine to produce 1.1 million tonnes per annum (Mtpa) of manganese concentrate.
The BB FS demonstrated strong economics with robust economic returns and rapid capital payback.
•
Expansion to 1.1Mtpa manganese concentrate
production using expanded open-cut mining methods,
a modified primary comminution circuit and a dense
media separation (DMS) back-end solution to optimise
grade and recoveries.
•
Expanded operation will establish Butcherbird as a
low-cost Mn operation with a US$2.76/dmtu C1 (direct
production cost) FOB (Free on Board) cost – which will
ensure sustainable profitability at lower manganese
prices compared to the current pilot operation.
•
The BB FS utilises all the available Measured and
Indicated resources within the mine plan. The Company
plans to undertake infill drilling in areas containing
inferred resources, outside the current mine plan, within
the next 12 months, targeting an additional 20-25 years
of mine reserves at the proposed production levels.
•
The BB FS indicated a modest capital cost of A$49.8M.
•
Measured, Indicated and Inferred Mineral Resources
used to support the 7.2 years mine life from 2024 to
2031 represents approximately 36.0% of the total
mineral resource inventory within granted mining lease
M52/1074.
•
Average base case annual operating cashflow of
A$57.3M at full production.
•
Payback period of 14 months from start of operations
based on forecast cashflows.
•
Process plant commissioning is currently estimated to be
achievable within approximately 11 months from a final
investment decision (FID).
•
The base case contemplates annual production and sale
of 1.1Mtpa of manganese ore grading 32% Mn.
•
Expanded concentrate production strategy complements
and enhances Element 25's plan to develop a HPMSM
plant in Louisiana.
Highlights included:
2024 ANNUAL REPORT | 9
MINING AND PROCESSING
With manganese prices at cyclical lows during the reporting
period, Element 25 restructured production at Butcherbird to
reduce ore production and costs to align with this lower-priced
environment. This helped to preserve cash and allow the team to
focus on Element 25's downstream project. In-pit mining ceased
and production shifted focus to processing stockpiles to minimise
operational costs.
With the release of Element 25's expansion study for Butcherbird,
the Company subsequently suspended Butcherbird’s production
operations in early calendar year 2024 to re-focus resources
and available cash on implementing the mining and processing
expansion plan. Stockpiles were depleted in line with care and
maintenance activities on site, with haulage winding back and
ceasing in early March 2024.
In June 2024, Element 25 commenced investigations into the
potential to recommence operations at Butcherbird to take
advantage of movement in manganese ore prices caused by market
factors, including disruptions at the GEMCO operations, which is
expected to be out of operation until quarter three calendar year
2025. Restarted Element 25 operations may include the sale of
stockpiles and/or recommencing processing of run-of-mine (ROM)
stockpiles at site, which have been mined but not yet processed.
If viable, Element 25 restart activities will occur in parallel with
and will not impact the expansion plans for the Butcherbird
Project. A potential restart requires several critical steps with
respect to operational readiness and an assessment of re-start
and production costs, and it is not guaranteed that this will be
commercially feasible.
LOGISTICS
Element 25 completed a shipment of 50,540mt of manganese
concentrate on 27 January 2024, and ~15,000mt of manganese
concentrate was later transported to Port Hedland.
Plans to cooperate with a small iron ore exporter were reviewed to
optimise the use of trucks and bunker space in Port Hedland. The
use of ultra-quad combinations was also investigated to reduce
overall haulage costs in the future, particularly in relation to the
planned mining expansion.
PLANT DESIGN OPTIMISATION
Element 25 accelerated activities for the expansion of Butcherbird,
focusing on key areas, including process optimisation, FEED
activities, project finance and permitting.
There have been important advancements, particularly in the
FEED phase of the Butcherbird expansion, where the Company
has optimised the plant’s delivery while minimising design, cost,
delivery and processing risks and improving energy efficiency and
emission profiles.
2024 ANNUAL REPORT | 9
10 | 2024 ANNUAL REPORT
ENGINEERING DESIGN AND
PROJECT MANAGEMENT
Element 25 engaged local specialist engineering firm Aspect Engineering
Solutions (Aspect) to manage the engineering design phase and serve
as owner’s engineer throughout project execution. Aspect will assist with
engineering, procurement and construction management activities to
ensure a streamlined and well-managed project implementation plan.
OPERATIONAL IMPROVEMENTS
The project team has made strategic improvements to the initial plant
design, enhancing operational efficiency and maximising productivity.
Integrating a second-stage crushing system will process larger materials
directly into the primary circuit. The feed bin and apron feeder were
upsized to optimise truck cycling times and minimise feed disruptions,
which has the potential to increase plant utilisation and reduce
bottlenecks.
The secondary crushing stage was optimised to handle specific material
sizes, ensuring a seamless process flow and eliminating the need for
additional screening and material re-handling, a key focus of the design
methodology.
Mining equipment sizing optimisation modelling has confirmed
equipment selection to minimise unit mining costs, rehandling and ensure
continuous plant feed availability. Further studies will investigate the
potential to introduce electrified mining equipment and mine site light
vehicles to reduce carbon emissions.
Process controls are being designed to ensure that each principal
processing stage can operate as close to maximum performance as
possible whilst allowing for in-process surge points and redundancy
to allow for scheduled maintenance without interrupting production.
Automation is being implemented at each stage to optimise equipment
set points and performance.
Water consumption reduction through the potential introduction of a
thickener and intelligent recycling will reduce the impact on the local
water resources while reducing bore field operational costs. Inline
analysers will enable dynamic feedback to process control systems based
on desired product specifications and allow for the optimisation
of product blends and sales pricing based on customer requirements.
Element 25 has identified numerous improvements across
various aspects of the plant including:
•
Crushing and screening circuit;
•
Logwashing system;
•
Incorporating a new Dense Media Separation (DMS) circuit;
•
Dust suppression and containment systems; and
•
Incorporating control optimisation and industrial
internet of things (IIoT).
Each of these improvements and their benefits is outlined in detail in
Element 25's June 2024 Quarterly Report8.
10 | 2024 ANNUAL REPORT
8.
E25 ASX Announcement dated 16 July 2024
2024 ANNUAL REPORT | 11
PROJECT SCHEDULING, PROCUREMENT AND COST MANAGEMENT
The Company is initiating the FEED design stage before the final funding allocation, which allows Element 25 to control initial costs
and avoid timeline delays. This proactive strategy ensures that plant design advances efficiently to 3D modelling, effectively managing
equipment selection risks, ordering long-lead items, layout design, and permitting.
Detailed project scheduling has identified several long-lead procurement requirements, particularly the vendor selection and ordering
of the principal equipment for the crushing circuit. The project team has confirmed mineral sizers as the technology of choice, and a bid
package has been prepared to source crushing equipment from reputable suppliers who can provide ongoing support and maintenance
services. Other long-lead items are being approached similarly to minimise project execution schedules.
INDIGENOUS ENGAGEMENT
As part of the Company’s commitment to ongoing engagement with Traditional Owners, an Indigenous Engagement Plan (IEP) is being
developed to provide a strategy to enhance Indigenous groups’ participation, procurement, and employment in relation to the project.
The IEP will include processes for engaging with local Indigenous groups to assess their capabilities and capacity to participate and ensure
that they have an opportunity to participate in procurement and contracting opportunities as they arise throughout project execution.
Element 25 has agreements in place with Traditional Owners on whose lands the project will operate, but the intention is to expand the
level of Indigenous engagement into other opportunities through construction and operations.
COMMITMENT TO EXCELLENCE AND SUSTAINABILITY
Element 25's commitment to building a state-of-the-art processing plant that sets new standards in performance, reliability, emission
reduction, safety and operational efficiency is unwavering. By leveraging industry-leading expertise and lessons learned from the
Butcherbird pilot plant, the Company targets a high level of operational readiness and smooth project execution and commissioning.
The Stage 2 Butcherbird Expansion Project aims to harness lessons learned from the Stage 1 Pilot Plant to extract the maximum value from
the process-proven resource at the Butcherbird Project, deploying cutting-edge technologies with a view to generating shareholder returns
whilst demonstrating a core focus on safety, sustainability, Indigenous engagement and operational excellence.
The expanded Butcherbird Mine has the potential to supply high-quality, low-carbon, sustainable manganese ore over many years to the
Company’s planned HPMSM refineries to provide a critical raw material for the electrification of energy systems as the world looks to reduce
its dependency on fossil fuels and fight climate change.
“generating
shareholder returns
whilst demonstrating a
core focus on safety,
sustainability, Indigenous
engagement and
operational excellence.”
12 | 2024 ANNUAL REPORT
BUTCHERBIRD INFILL DRILLING
In June 2024, Element 25 completed resource infill drilling at Butcherbird, with 207 percussion drill holes for 6,202m targeting infill of
existing inferred resources. All samples were dispatched to Bureau Veritas for assay with results pending.
Current Butcherbird reserves are based around mineral resources within granted mining lease M52/1074, of which less than half has been
drilled to a sufficient density to meet the requirements for Measured and Indicated resource classifications. The balance is classified
as inferred. The additional drilling will provide infill data to better define and potentially convert these areas to Indicated or Measured
categories to support the re-estimation of mine reserves. The increase in the “reserve tail” will support project financing activities with NAIF
and other potential financiers who are currently undertaking project expansion due diligence.
NORTHERN AUSTRALIA INFRASTRUCTURE FACILITY STRATEGIC ASSESSMENT
The Northern Australia Infrastructure Facility (NAIF) successfully completed a strategic assessment of the Butcherbird Stage 2 Expansion
Project during the March 2024 quarter and proceeded to detailed due diligence under the NAIF assessment process.
NAIF is a Commonwealth Government financier providing concessional loans for the development of infrastructure projects in northern
Australia and the Australian Indian Ocean Territories to deliver economic and social growth.
Completion of a strategic assessment by NAIF does not represent a formal decision to offer or commit finance. NAIF has not yet made
any decision to offer finance or made any commitment to provide any financial support to the Project, and there is no certainty that an
agreement will be reached between the parties.
The NAIF assessment process has moved into a detailed project review by an independent technical expert (ITE). Element 25 has appointed
RPM Global to act as the ITE during the review process. The results of this phase will be announced as soon as the process is completed.
2024 ANNUAL REPORT | 13
HPMSM PROJECT, USA
Element 25 is progressing with plans for construction of an integrated
battery grade high purity manganese sulphate (HPMSM) facility in
Louisiana, USA to produce battery-grade HPMSM, a critical raw material
used in the construction of lithium-ion battery cathode precursor materials
to power the electrification of the global vehicle fleet. The HPMSM produced
in Louisiana will be used in the manufacture of electric vehicle Pre-Cathode
Active Materials (pCAM).
The Facility will utilise concentrate produced from Element 25's existing
operations at the Butcherbird Manganese Mine which exports high silica
manganese concentrate for use in the steel industry. The concentrate
produced at Butcherbird is uniquely suited for conversion to HPMSM
using Element 25’s proprietary process, which has a number of unique
advantages over existing processes used in China.
Element 25's HPMSM Facility is supported by key offtake and funding
agreements with GM and Stellantis, which are contributing a combined
US$115M in project funding through a combination of equity, pre-payment
and senior debt alongside offtake for approximately 65% of the planned
HPMSM production from the first production train.
LOUISIANA SITE SECURED
In May 2024, the Company signed a binding term sheet (TS) with Veolia
North America (Veolia) to secure a site for Element 25's planned high-purity
manganese sulphate monohydrate (HPMSM) refinery in Louisiana, USA.
The TS contemplates several parallel definitive agreements, and completion
is conditional on the execution of these contract documents as well
as securing project financing and the Company’s Board reaching final
investment decision (FID) before 30 October 2024 (or such later date as the
parties may agree).
Definitive agreements in the TS include:
•
Land Purchase Agreement;
•
Sulphuric Acid Supply Agreement;
•
Road Easement Agreement;
•
Utilities and Services Agreement; and
•
Temporary Lease Agreement.
Element 25 has based civil engineering works for the HPMSM project
on the Veolia site. It brings together a number of important synergies to
support the long-term competitiveness of the Element 25 Facility. Under
the Sulphuric Acid Supply Agreement, Veolia will provide long-term secure
sulphuric acid supply and agreed tariffs.
The Veolia site was chosen following a rigorous process which included
numerous surveys, including a cultural survey, a wetland delineation survey
and geotechnical, boundary and topographical surveys, which did not
highlight any issues or concerns.
2024 ANNUAL REPORT | 13
14 | 2024 ANNUAL REPORT
ENGINEERING DEVELOPMENT
Equipment vendors have generated basic engineering packages for specific sections of the plant, with design development of the balance
of the processing facility progressing. The project engineers developed an initial project execution plan, procurement plan and other
foundational elements, which are being reviewed, with controls to manage cost and schedule.
The schedule incorporates all facets of the project, including engineering, permitting, project financing and construction. It provides for
approximately 80 weeks of project build time, based on the current critical path.
PILOT-SCALE METALLURGICAL TEST PROGRAM
Early in the year, Element 25 completed a final pilot-scale process verification test program for its flowsheet at Veolia HPD’s North America
facility, utilising the purified leach solution (PLS) previously produced and processed it through the Veolia pilot scale crystalliser facility
using optimised conditions established in previous tests.
This was successful, producing HPMSM well within the required specifications for battery applications and well inside the Element 25
Standard Specification stipulated in the agreements with both Stellantis and GM. The results exceeded expectations and confirmed the
Element 25 process is able to deliver into existing requirements and offer opportunities to supply higher purity product options into the
future as battery technology develops and higher purities are required.
The program yielded significant quantities of HPMSM which was packaged and dispatched to Element 25's existing offtake partners as well
as potential future offtake and funding partners to assist in discussions.
SUPPLY AGREEMENTS
Apart from negotiating a Sulphuric Acid Supply Agreement with Veolia, Element 25 also commenced discussions with utility, service and
reagent suppliers, covering other essential components for the facility, including natural gas, water and power.
KEY PERMIT SECURED
In May 2024, Element 25 was issued a Title V Air Permit for the construction of its HPMSM refinery via its subsidiary Element 25 (Louisiana)
LLC (E25LA).
As part of the process, Element 25 completed a detailed assessment of expected emissions from the HPMSM refinery and provided this
information along with supporting documentation to the Louisiana Department of Environmental Quality (LDEQ).
The Element 25 HPMSM refinery was defined as a “minor source” for New Source Review9 federal hazardous air pollutant (HAP), Louisiana
toxic air pollutant, or Title V (Part 70) purposes. Any source, including a temporary source, which emits or has the potential to emit any
air contaminant (defined as particulate matter, dust, fumes, gas, mist, smoke, or vapour, or any combination thereof produced by the
process(es) other than natural) requires an air permit.
LDEQ issued the draft Air Permit to Element 25 in early February 2024 and the final stage of the permitting process, prior to issuance, was
a statutory public consultation period. This included a public meeting held in the local community on 18 April 2024, where feedback was
supportive of the Project, with the permit issued soon after.
Reference: https://www.epa.gov/sites/default/files/2015-12/documents/nsrbasicsfactsheet103106.pdf
2024 ANNUAL REPORT | 15
Prior to construction commencement, the project site also requires the US Army Corps of Engineers (USACE) to issue a Nationwide Permit
39, which allows minor impacts of wetlands/waters for industrial developments. The application for this permit was submitted to USACE in
November 2023. Element 25 awaits its approval.
LOGISTICS
Element 25's logistics and marketing team commenced commercial discussions with Associated Terminals, the leading stevedore and
terminal operator on the Lower Mississippi River. Associated Terminals handles between 25 - 30 million tons of bulk and project cargoes
annually and operates the Port of South Louisiana (POSL), including existing bulk cargo handling facilities.
Commercial negotiations with Associated Terminals cover the provision of manganese ore handling services with respect to inbound
manganese ore. Associated Terminals also has existing facilities available to store material as an intermediate staging point. This may
minimise the need for storage facilities at the refinery site and provide flexibility with respect to ore shipments. The parties are working to
agree competitive commercial terms for the provision of these services.
PROJECT FINANCING
OFFTAKE AND FUNDING AGREEMENTS
Element 25 has binding agreements in place with GM and Stellantis respectively, which provide for combined offtake and funding
arrangements10. Both agreements remain on plan and Element 25 has achieved all milestones in relation to the Stellantis agreement
schedule.
Two milestones with respect to the GM agreements which relate to the signing of the site lease and the delivery of a final project budget and
plan are being revisited with revised dates under discussion, based on the current level of project development. It is anticipated these dates
will be varied as a result of the discussions.
The two transactions provide a total of U$115M in addition to the US$166M grant from the US Department of Energy in financing support
for the Louisiana HPMSM project and the Company is co-ordinating a process to secure funding for the balance of total construction costs.
Jett Capital Advisors is assisting the Company during the financing process and exploring funding options including:
•
Bank debt via a range of tier-one lenders;
•
Joint venture development of the project and or project-level equity investment;
•
Royalty and streaming arrangements; and
•
Government sponsored funding via loan programs.
Multiple potential financers have conducted due diligence including the detailed review of financial and technical information relating to
the project and one group has undertaken a site visit to Louisiana as part of their process. In the course of the process, the Company has
received a number of term sheets. Various proposals are under review by Element 25 in conjunction with the Company’s advisors.
E25 ASX Announcements dated 9 January 2023 and 26 June 2023
16 | 2024 ANNUAL REPORT
U.S. DEPARTMENT OF ENERGY
Element 25 (Louisiana) LLC has applied for funding under the US Government’s Advanced Technology Vehicles Manufacturing Loan
Program (ATVM), which provides loans to support the manufacture of eligible advanced technology vehicles and qualifying components
from the Bipartisan Infrastructure Law. Through the ATVM program, the Department of Energy Loan Programs Office (LPO) can support the
manufacturing of qualifying components for eligible vehicles. These projects can be along the automotive value chain after material has
been mined, such as manufacturing of battery cell components, battery cells, battery modules, and battery packs for EVs or manufacturing
of EV charging infrastructure components9.
LPO supports projects to onshore and re-shore the production of the critical materials including projects that process critical minerals
using innovative technology for end use in a variety of eligible clean energy technologies, or for projects that manufacture eligible advanced
technology vehicles or their components. The Element 25 application has resulted in a number of requests for information (RFI) as it
proceeds through the intake process with the next stage being detailed due diligence.
MANUFACTURING AND ENERGY SUPPLY CHAINS (MESC) GRANT APPLICATION
In January 2024, Element 25's project financing team prepared and submitted a concept paper as the first stage of assessment for project
funding under Funding Opportunity Announcement Number DE-FOA-0003099, Bipartisan Infrastructure Law: Battery Materials Processing
and Battery Manufacturing Grants. The grant programme has funding of US$3B over 5 years11.
Under the application process the Company subsequently received a letter of encouragement to proceed with a full application. The full
application was submitted as the next stage in the process and subsequent follow up queries were addressed as the application moved
through the proscribed process. In September 2024, the Company was notified that it was selected for award negotitions for US$166m
under the grant to fund the construction of the planned HPMSM refinery facility12.
“LPO supports projects to onshore and re-shore the
production of the critical materials including projects
that process critical minerals using innovative
technology for end use in a variety of eligible clean
energy technologies”
https://www.energy.gov/mesc/battery-materials-processing-grants
E25 ASX Announcement dated 24 September 2024
2024 ANNUAL REPORT | 17
GOVERNMENT INCENTIVES
In December 2023, Element 25 announced it had achieved all milestones for the Louisiana State Industrial Tax Exemption Program (ITEP)
incentive package to support Element 25's planned HPMSM processing facility in Ascension Parish, Louisiana. Governor Jon Bel Edwards
approved the incentive agreement between E25, the Louisiana Department of Economic Development, and the Louisiana Board of
Commerce and Industry13.
This concluded several months of active stakeholder engagement with multiple levels of state and local government and local community
members to explain the benefits that will flow from the proposed Facility. The total benefits available to the Project from State Incentives
estimated by Ernst & Young (EY) at US$57M.
The incentive package agreed with the State includes direct and indirect measures of financial support for the Project, which will reduce the
required funding to construct the Facility.
To meet the requirements of the incentive agreement, Element 25 has committed to:
•
Construct the Facility with a minimum expenditure of US$211,640,709 on fixed plant and equipment and buildings/fixed
structures.
•
Where feasible and practical, consider using local labour and manufacturing capability in the construction of the Facility.
•
Operate the Facility in order to provide employment in the State of Louisiana.
•
Create and maintain sixty-five (65) jobs with payroll totalling US$5.85M per annum for the duration of the incentive agreement.
In all cases, the current development plan for the Facility meets or exceeds all required thresholds to secure the State’s support under the
agreement. Element 25's Louisiana project is expected to create 220 new direct jobs with average annual salaries of more than US$90,000.
Louisiana Economic Development estimates the Project will result in an additional 408 new indirect jobs, for a total of 628 new jobs in the
Capital Region.
PATENT APPLICATIONS
Element 25 uses a proprietary processing flowsheet to convert Butcherbird manganese concentrate into HPMSM, which reduces energy
consumption, targets zero waste and delivers the lowest carbon intensity HPMSM globally based on publicly available information. The
process offers a pathway to the delivery of expanding volumes of ethically sourced, traceable, transparent HPMSM supply to US and global
markets.
Element 25 is developing a first-of-its-kind processing facility in Louisiana to produce up to 135Kt per annum of HPMSM for US electric
vehicle (EV) supply chains, using this technology.
In November 2023, Element 25 finalised and lodged two key international patent applications in relation to its battery grade HPMSM
production process, lodging these under the Patent Co-Operation Treaty (PCT), claiming priority from Australian Patent Application(s)
2022903576 & 2022903573. The patent applications are expected to provide protection for two key manganese processing steps in the
Element 25 flow sheet, which are critical to delivering the advantages of its HPMSM process compared to existing processes currently in
production, namely:
•
Reduced energy consumption compared to roast reduction processing; and
•
Reduced reagent consumption compared to traditional neutralisation.
Separation of waste residues in forms that can be used in existing industrial processes, thereby minimising or eliminating waste disposal
requirements. These innovations in relation to the Element 25 process can claim industry-leading low carbon intensity and compete on
cost in target markets when compared with existing producers.
E25 ASX Announcement dated 19 December 2023
18 | 2024 ANNUAL REPORT
CORPORATE GOVERNANCE
The Company’s Corporate Governance Statement which reports against ASX Corporate Governance Council’s Principles and
Recommendations may be accessed from the Company’s website at www.element25.com.au.
Good corporate governance is critical to the long term, sustainable success of the Company and is the collective responsibility of the Board,
all levels of management and employees. Element 25 seeks to adopt contemporary governance standards and apply these through best
practice in a manner that is consistent with its core values and culture.
The key elements of the Company’s corporate governance are:
EMPOWERMENT
Everyone at Element 25 is empowered to make decisions that support the Company objectives and are in the best interests
of the Company and its stakeholders. Management and employees are encouraged to think strategically and innovatively.
When making decisions, these must align with the Company’s risk appetite and are to be conducted in a manner that is
consistent with corporate expectations and standards.
INTEGRITY
Developing and maintaining a culture committed to compliance with the law and ethical behaviour at all times.
TRANSPARENCY
Being clear about the Company’s structure, operations and performance, both externally and internally, and maintaining
genuine open dialogue with, and providing insight to, stakeholders and the market generally.
CORPORATE ACCOUNTABILITY
Ensuring that there are processes in place to ensure clarity of decision making including those which authorise the right people to make
effective and efficient decisions with appropriate consequences when these processes are not followed.
STEWARDSHIP
Developing and maintaining company wide recognition that Element 25 is managed for the benefit of its shareholders whilst taking into
account the interests of other stakeholders.
18 | 2024 ANNUAL REPORT
2024 ANNUAL REPORT | 19
ENVIRONMENTAL, SOCIAL
AND GOVERNANCE
Element 25 are aware of the unique challenges and responsibilities associated with operating in the mining industry and conducting
global business. The Element 25 business strategy is to support a global transition to a low-carbon future and in doing so to create
positive social impacts and minimise environmental harm whilst generating shareholder returns.
The Company’s commitment to environment, social and governance (ESG) outcomes is a principle that guides its operations and is critical
to its success. It is integrated into all aspects of the business. As part of the Company’s ESG commitment, the Board has established an
ESG committee to formulate strategies and to ensure that ESG leadership is at the forefront of its purpose and corporate culture.
The ESG framework guides the Company to be a responsible, transparent and accountable business when managing the economic,
environmental and social impacts of the Company’s projects and operations. The ESG strategy is based on the premise that ESG is at the
fore of the Company’s decision making and operations – committed to doing the right thing for the right reasons.
The key objectives of our ESG strategy are to:
•
Clearly define with ESG means to Element 25;
•
Embed ESG across all business functions and locations;
•
Ensure stakeholders are aligned with the ESG strategy;
•
Create sustainable and positive value for all stakeholders; and
•
Review the strategy to ensure critical areas are addressed and focussed on and reporting is meaningful.
ESG RATING
In July 2024, the Company engaged external agency Digbee, who are the mining sector’s foremost independent assessment platform for
ESG disclosure, to determine an independently assessed baseline ESG score for the Company’s current and planned activities.
The outcome of the submission was an overarching score based on Corporate and Project (Butcherbird and HPMSM) elements and potential
opportunities, risks, actions and positive and negative scorecards. The independent panel of globally recognised ESG experts at Digbee
awarded Element 25 an inaugural ESG score of BB for its 2024 activities.
FIGURE 1: A graphic representation of Element 25’s overall ESG risks and opportunities assessed by Digbee ESG. The top five rating bands of AAA
to BB give credit for present positives/opportunities. The bottom five rating bands of B to D reflect present negatives/threats.
20 | 2024 ANNUAL REPORT
ENVIRONMENTAL
Recognising the potential impacts of
mining operations on the environment,
the Company is committed to responsibly
managing and respecting the land and
resources that are shared with Traditional
Owners and other stakeholders. The
Company continues work to minimise
environmental harm in a variety of ways
including minimisation of waste and
water usage, preventing contamination of
water resources, ensuring waste is safely
disposed of and prioritising the health
of the surrounding environment and our
stakeholders when making operational
decisions.
Element 25 are also seeking to reduce
the carbon emissions generated from
its operations through the adoption
of renewable energy sources, and by
including energy-efficient technologies
when making design decisions.
HUMAN RIGHTS
Respect for human rights, the rights
and liberties we are all entitled to as
human beings, is an essential aspect of
the Company’s business. The Company’s
commitment to human rights includes
ensuring fair treatment of employees,
avoiding discrimination, and promoting
ethical practices throughout operations,
business relationships and the supply
chain. The Company has processes in
place to ensure its policies and practices
are reflective of broader community
standards and expectations with respect to
inclusiveness and diversity.
To continue our commitment to human
rights, Element 25 has recently reviewed
and implemented changes to the terms
and conditions for contracting parties.
Suppliers must respect and uphold the
same level of the safeguarding of human
rights and dignity of all workers and
stakeholders involved in their business
activities. This includes:
•
Working to implement core
international business and human
rights expectations and standards,
including the United Nation’s Guiding
Principles on Business and Human
Rights.
•
Not using any form of modern slavery
such as forced or compulsory labour
and preventing the use of child labour.
•
Ensuring that fair remuneration and
work conditions are provided for
all workers, equitable treatment
of all workers and harassment and
discrimination in any form and on any
basis is prevented.
•
Respecting the privacy of employees
and stakeholders and complying with
all laws in relation to the collection, use
and protection of personal information.
WORKPLACE HEALTH
AND SAFETY
The safety and well-being of the Company’s
workforce, both direct and indirect are
paramount. Rigorous safety protocols,
regular training sessions and health
initiatives are implemented to ensure our
employees are able to work in a safe and
supportive environment.
The Company continually works to create
a safe work environment so that everyone
is supported and goes home safely every
day. All practical and reasonable measures
are taken by the Company to eliminate
workplace fatalities, injuries and disease, to
provide training to ensure people have the
skills required to work safely and to comply
with applicable health and safety laws,
regulations and contract requirements.
The Company takes steps to ensure that
its suppliers share this commitment
to providing a safe and healthy
working environment for employees
and subcontractors and can actively
demonstrate compliance.
The following sections outline the Company’s current areas of focus and
form the interconnected pillars of the ESG strategy.
2024 ANNUAL REPORT | 21
PARTNERSHIPS
The Company seeks to create sustainable
social and economic value for the
Nyiyaparli people, Gingirana people
and Ngarlawangga people who are the
Traditional Owners of the land where the
Butcherbird mine is situated. Through
meaningful employment and contracting
opportunities and the creation of long
term relationships, the Company believes
that value can be created and sustained.
At all times Element 25 treats partners
and stakeholders with respect, care and
decency.
The Company seeks to engage with
stakeholders and suppliers whose ESG
values and practices align with its own
and who have a clear commitment to
responsible environmental and social
practice and to achieving positive ESG
outcomes
Partners and suppliers are prioritised
based on their ability to demonstrate
strong environmental credentials and
sustainability in their operations and who
have:
•
a formal commitment to environmental
responsibility.
•
a culture that values the environment
and acts to protect the environment in
which they operate.
•
actively sought ways to minimise any
adverse environmental impact across
their operations and supply chain,
including in relation to biodiversity,
waste, water, energy and emissions.
ETHICAL GOVERNANCE
AND ANTI-CORRUPTION
Element 25 operates with the highest
standards of integrity and transparency
with governance structures designed to
assist with the detection and prevention
of bribery, corruption, and other unethical
practices, ensuring that the Company
remains accountable to stakeholders and
provides opportunities for grievances to
be appropriately addressed. The Company
maintains policies and practices to allow
violations, misconduct, or grievances
to be reported by workers and other
stakeholders and addressed without
fear of retaliation. The Whistleblower
and Stakeholder Feedback Policy can be
accessed on the Company’s website at
www.element25.com.au.
Rigorous corporate governance is essential
for developing and maintaining the trust of
stakeholders and ensuring that business is
conducted in a transparent and sustainable
manner. The Company is committed to
maintaining a culture of accountability,
integrity and transparency so that there are
no conflicts of interest between personal
activities and interests of employees and
subcontractors and those of the Company,
bribery or corruption in any form is not
accepted or committed and fairness is
instilled in all operating practices.
Element 25 believes that ethical corporate
governance practices are an important
aspect of long-term success and the
Company expects that suppliers are
committed to the same values and
compliance with ethical, legal and
statutory obligations.
2024 ANNUAL REPORT | 21
22 | 2024 ANNUAL REPORT
MINERAL RESOURCES AND ORE RESERVES
BUTCHERBIRD MINERAL RESOURCE ESTIMATE AS AT 30 JUNE 2024
The Butcherbird Manganese project Mineral Resource Estimate was first reported on 17 April 2019. The mining depleted mineral resource
estimate as at 30 June 2024 is as follows:
Category
Tonnes (Mt)
Mn (%)
Si (%)
Fe (%)
Al (%)
30-JUN-23
Measured
12.99
11.3
20.6
11.6
5.7
Indicated
40.80
10.0
20.9
11.0
5.8
Inferred
206.00
9.8
20.8
11.4
5.9
Total1
259.79
9.9
20.8
11.3
5.9
Less mining
Measured
0.22
11.8
20.7
12.2
5.6
Indicated
0.01
12.0
20.9
11.5
5.7
Inferred
0.00
0.0
0.0
0.0
0.0
Total
0.23
11.8
20.7
12.2
5.6
Plus ROM Stocks Movement2
Measured
+0.016
28.6
23.3
12.0
3.1
Total
+0.016
28.6
23.3
12.0
3.1
30-JUN-2024
Measured
12.8
11.3
20.6
11.6
5.7
Indicated
40.8
10.0
20.9
11.0
5.8
Inferred
206.0
9.8
20.8
11.4
5.9
Total
259.6
9.9
20.8
11.3
5.9
NOTES
1.
Closing ROM stocks at 30 June 2023 included in opening stock figure
2.
Includes Stocks at 30 June 2024
•
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)
22 | 2024 ANNUAL REPORT
2024 ANNUAL REPORT | 23
BUTCHERBIRD MINERAL ORE RESERVE AS AT 30 JUNE 2024
The Butcherbird Manganese project Mining Reserve Classification was first reported on 19 May 2020. The depleted mineral reserves as at 30
June 2024 is as follows:
Classification
Tonnes (Mt)
Grade (Mn%)
Contained Mn (Mt)
Recovered Mn (Mt)
30-JUN-23
Proved
13.0
11.1
1.4
1.2
Probable
36.2
10.1
3.6
3.0
Total1
49.2
10.2
5.0
4.1
Less mining
Proved
0.22
11.8
0.03
0.02
Probable
0.01
12.0
0.00
0.00
Total
0.23
11.8
0.03
0.02
Plus ROM Stocks Movement2
Proved
+0.016
28.6
0.005
0.005
Total
+0.016
28.6
0.005
0.005
30-Jun-24
Proved
12.8
11.1
1.4
1.2
Probable
36.2
10.1
3.7
3.0
Total
49.0
10.2
5.0
4.1
NOTES
1.
Includes Stocks at 30 June 2023
2.
ROM stocks movement at 1 July 2023 - 30 June 2024 included in production figure
The Company’s ore reserve and mineral resource estimates for the Butcherbird Operations in accordance with the 2012 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. Element 25 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.
2024 ANNUAL REPORT | 23
24 | 2024 ANNUAL REPORT
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. The Depleted Proved and Probable Reserves at 30 June 2024 are 49.0
million tonnes at 10.2% Mn for 5.0 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.
The Company has completed a Mineral Resource infill drilling program in May/June 2024 with the aim of increasing the Indicated Mineral
Resource base at Butcherbird to sustain the Butcherbird expansion. The assays results or this program were reported in August 2024.
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 and 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 Element 25 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.
2024 ANNUAL REPORT | 25
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. Element 25 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 Element 25's ability to
transport product and materials to meet schedules, which may in turn impact Element 25'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 Element 25 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.
Activity
Competent Person
Membership Institution
Exploration Results
Justin Brown
Australian Institute of Mining and Metallurgy
Yanneri Ridge, Coodamudgi, Mundawindi and
Ritchies Mineral Resource Estimates
Greg Jones
Australian Institute of Mining and Metallurgy
Bindi, Ilgarrari, and Cadgies Mineral Resource
Estimates
Mark Glassock
Australian Institute of Mining and Metallurgy
Mining, Metallurgy and Financial Modelling in
relation to Mineral Reserves
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 Element 25 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.
26 | 2024 ANNUAL REPORT
DIRECTOR’S REPORT
Your Directors submit their report on the consolidated entity (Group, Company, Element 25 or E25) consisting of Element 25 Limited and the
entities it controlled at the end of, or during, the year ended 30 June 2024.
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.
Audit and Risk
Committee Member
Remuneration
Committee Member
Audit and Risk
Committee Member
Audit and Risk
Committee Chair
Remuneration
Committee Member
Mr Brown is a geologist with over 25 years of experience in global mineral exploration, mining and business
development. Mr Brown has a keen interest in the role that ethically sourced critical raw materials can play
in the decarbonisation efforts to reverse global warming. 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.
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.
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 was the 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.
JUSTIN BROWN
B.SC. (HONS.)
Managing Director
JOHN RIBBONS
B.BUS, CPA, ACIS
Non-Executive Chair
(November 2023 onward)
RUDOLPH (FANIE) VAN JAARSVELD
ND ANALYTICAL CHEMISTRY
Non-Executive Director
2024 ANNUAL REPORT | 27
Audit and Risk
Committee Member
Remuneration
Committee Chair
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.
SALVATORE (SAM) LANCUBA
B.ENG (CHEM ENG)
Non-Executive Director
CHANGES TO YOUR ELEMENT 25 BOARD
COMPANY SECRETARY
“On behalf of Element 25, I would like to extend our thanks to Seamus for this tremendous contribution to the
Company over the years, and his wise counsel which is greatly appreciated and has helped shape Element 25
during our biggest growth phase to date. The team and I wish Seamus every success with his future endeavours”
JUSTIN BROWN, MANAGING DIRECTOR
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 and has been responsible for business start-up development, merger as well
as acquisition and business financing activities across Australia and Europe.
MICHAEL JORDON
B.BUS, CPA
Element 25’s long-serving Chair, Seamus Cornelius, resigned from the Board with his resignation effective at the conclusion of the
Company’s Annual General Meeting (AGM) on 28 November 202314. Mr Cornelius commenced as a Company director in 2010.
John Ribbons assumed the role of Chair for the Element 25 Board following his successful re-election as a Director at the Company’s AGM.
E25 ASX Announcements dated 22 and 30 November 2023
28 | 2024 ANNUAL REPORT
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:
Ordinary Shares
Options Over Ordinary Shares
John Ribbons
2,300,000
950,000
Justin Brown
9,005,360
2,500,000
Rudolph van Jaarsveld
-
-
Salvatore Lancuba
-
-
PRINCIPAL ACTIVITIES
The Element 25 Group is focused on building a global, vertically integrated manganese business formed around the 100% owned
Butcherbird Manganese Mine in Western Australia, supplying manganese ore to a proposed high purity, battery grade manganese sulphate
monohydrate (HPMSM) facility in development in Louisiana, USA.
Butcherbird hosts the largest onshore manganese deposit in Australia, which commenced production and export of high-quality
manganese concentrate in 2021.
Element 25 has completed a Feasibility Study (FS) to expand production at Butcherbird to 1.1 million tonnes per annum15 of concentrate
product, to supply feedstock to the proposed Louisiana HPMSM facility16 Process optimisation, Front-End Engineering and Design (FEED),
project financing and permitting activities are underway to expedite the delivery of the expanded processing facility.
Element 25 is developing its HPMSM facility in partnership with global automakers General Motors (GM) and Stellantis N.V. (Stellantis) and
has secured a site for the facility in Louisiana. HPMSM is a critical raw material used in the manufacture of lithium-ion batteries to power
electric vehicles (EVs). Its Louisiana HPMSM project will be the first of its kind in the USA.
Stellantis and GM are contributing US$115 million towards financing the project as part of binding offtake agreements in place with
Element 25.
DIVIDENDS
No dividends were paid or declared during the financial year. No recommendation for payment of dividends has been made.
RESULTS
During the year ended 30 June 2024, the Company recognised revenue of $13,296,901 (2023: $33,469,168) in respect to the shipments of ore
from the Group’s 100% owned Butcherbird Manganese Project located in Australia, and other income of $611,273 (2023: $322,008).
During the year the Company incurred cost of sales of $30,442,802 (2023: $47,533,950) in respect to direct material and production costs
attributable to the extraction, processing, and transportation of manganese ore.
During the year the Company incurred exploration and feasibility expenses of $189,674 (2023: $6,644,123), general and administration
expenditure amounting to $4,726,449 (2023: $4,426,197), and a finance expense amount of $64,012 (2023: $65,708). This has resulted in
an operating loss after income tax for the year ended 30 June 2024 of $21,514,951 (2023: $24,878,802). The Group had a cash balance of
$11,326,929 as at 30 June 2024.
E25 ASX Announcements dated 23 January 2024
E25 ASX Announcement dated 22 November 2023
2024 ANNUAL REPORT | 29
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 July 2024, the Company completed a Share Purchase Plan (SPP) at A$0.27 per share. The SPP raised $643,145 and 2,382,066 new Shares
in the Company were issued in July 2024. Funds raised from the SPP will be used to assist with funding activities for the Butcherbird Stage 2
Expansion Project as well as continuing to support the high purity manganese sulphate monohydrate project to be built in Louisiana, USA in
partnership with General Motors and Stellantis.
In September 2024, the Company was advised that they have been selected for award negotiations by the US Department of Energy under
the Battery Materials Processing and Battery Manufacturing Program in relation to a US$166m grant in support of the construction of the
planned HPMSM refinery facility in Lousiaina, USA.
No other significant changes in the state of affairs of the Group occurred during the financial year.
SIGNIFICANT EVENTS AFTER THE BALANCE DATE
No other matters or circumstances have arisen since the end of the financial year that 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 progressing the Butcherbird expansion project to recommence mining operations at the Butcherbird mine
site as well as advancing plans for the HPMSM processing facility in the U.S.A.
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 compliant with
all environmental legislation. The Directors of the Group are not aware of any breach of environmental legislation for the year under review.
2024 ANNUAL REPORT | 29
E25 ASX Announcements dated 3 July 2024
E25 ASX Announcements dated 24 September 2024
30 | 2024 ANNUAL REPORT
REMUNERATION REPORT (AUDITED)
The information provided in this remuneration report has been audited as required by section 308(3C) of the Corporations Act 2001.
GOVERNANCE
The Board is responsible for the Company’s remuneration framework and policy. Under a formal charter, the Board has established a
Remuneration Committee who make recommendations to the Board on the nature and amount of remuneration for key management
personnel to ensure remuneration arrangements align with and reflect the Company’s strategic objectives, values and risk appetite.
REMUNERATION POLICY
The Company’s remuneration policy has been tailored to increase the direct positive relationship between shareholders’ investment
objectives and key management personnel performance.
EXECUTIVES AND KEY MANAGEMENT PERSONNEL
The remuneration policy of Element 25 has been designed to align executive interests and key management personnel objectives with
shareholder and business objectives by providing a fixed remuneration component and offering specific short term and long-term
incentives based on key performance areas affecting the Group’s operational and financial results. The Board of Element 25 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 ensures that the executive reward framework satisfies the following key criteria in line with appropriate corporate governance
practices:
•
Attract, retain and motivate key executives at important stages of the Group’s development linked to strategy and performance;
•
Ensure effective benchmarking for total annual remuneration in accordance with market practices and clearly defined peer groups of
similar companies to ensure remuneration is fair and competitive;
•
Align executive interests with those of the Company’s shareholders; and
•
Comply with applicable legal requirements and appropriate standards of governance.
The Company has structured an executive remuneration that is market-competitive and complementary to the reward strategy for the
organisation. The Board reviews executive packages annually by reference to the Group’s performance, executive performance, key
objectives 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. 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
11.0% for the 2024 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.
NON-EXECUTIVE DIRECTORS
Non-Executive Director remuneration is reviewed on an annual basis with the aim of assessing the performance of each Director,
identifying areas where improvements can be made and takes into consideration:
•
currency of a Director’s knowledge and skills; and
•
whether a Director’s performance has been impacted by other commitments.
The Chair of the Board provides each Director with confidential feedback on their performance, which is then used to create development
and action plans. The Chair of the Audit and Risk Committee undertakes the review of the Chair of the Board. 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. 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.
2024 ANNUAL REPORT | 31
PERFORMANCE BASED REMUNERATION
Performance based remuneration for the Managing Director and employees of the Company became effective from 1 July 2024, in
accordance with the Performance Rights plan which was approved at 2023 Annual General Meeting.
Performance Rights to be assigned to the Managing Director are subject to Shareholder approval at the 2024 Annual General Meeting.
USE OF REMUNERATION CONSULTANTS
The Group employed the services of Remsmart Pty Ltd during the financial year ended 30 June 2024 in an advisory capacity to assist in
preparing a remuneration structure.
VOTING AND COMMENTS MADE AT THE COMPANY’S 2023 ANNUAL
GENERAL MEETING
The Company received approximately 83% of “yes” votes on its remuneration report for the 2023 financial year. The Company did not
receive any specific feedback at the Annual General Meeting or throughout the year on its remuneration practices.
DETAILS OF REMUNERATION
Details of the remuneration of the key management personnel of the Group are set out in the following table:
Short Term
Post-
Employment
Long Term
Share Based
Payments
Total
Salary & Fees
Superannuation
Annual Leave
Long
Service Leave
Options
$
$
$
$
$
$
Seamus Cornelius (resigned 28 November 2023)
2024
22,410
2,465
-
-
-
24,875
2023
54,794
5,753
-
-
138,000
198,547
Justin Brown
2024
312,500
34,375
14,684
5,776
56,716
424,051
2023
275,000
28,875
17,981
4,593
345,000
671,449
John Ribbons
2024
76,641
6,544
-
-
-
83,185
2023
42,000
-
-
-
138,000
180,000
Rudolph van Jaarsveld
2024
78,959
3,621
-
-
-
82,580
2023
35,261
-
-
-
-
35,261
Salvatore Lancuba
2024
55,248
-
-
-
-
55,248
2023
23,020
-
-
-
-
23,020
Total key management personnel compensation
2024
545,758
47,005
14,684
5,776
56,716
669,939
2023
430,075
34,628
17,981
4,593
621,000
1,108,277
32 | 2024 ANNUAL REPORT
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:
o
The Company may terminate without cause at any time by giving six months’ written notice;
o
Executive must provide three months’ written notice of termination; and
o
Standard clauses on immediate termination for breach of contract or misconduct.
•
Annual salary of $350,000 effective 1 January 2024 (plus statutory entitlements), reviewed annually.
SHARE-BASED COMPENSATION
OPTIONS
To facilitate goal congruence between shareholders’ investment objectives and key management personnel performance, options are
issued to the majority of key management personnel to encourage the alignment of personal and shareholder interests. Options are issued
to key management personnel as part of their remuneration with associated performance criteria.
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
% of Remu-
neration
Justin Brown
28 Nov 2023
500,000
-
27 Nov 2028
0.67
$153,000
-
-
The following performance conditions are attached to the granted options above:
1)
50% of the options (250,000 options) will vest upon completion of Final Investment Decision for the HPMSM project; and
2)
50% of the options (250,000 options) will vest upon successful completion of financial close for the HPMSM project.
Details of ordinary shares in the Company provided as a result of the exercise of remuneration options to key management personnel of the
Group are set out as follows:
Number of ordinary shares issued on
exercise of options during the year
Amount paid
per ordinary share
Value
exercised ($) (1)
John Ribbons
500,000
$0.261
$99,500
Justin Brown
1,000,000
$0.261
$199,000
Seamus Cornelius
(resigned 28 Nov 2023)
500,000
$0.261
$99,500
No amounts are unpaid on any shares issued on the exercise of options.
(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.
2024 ANNUAL REPORT | 33
EQUITY INSTRUMENTS HELD BY KEY MANAGEMENT PERSONNEL
SHARE HOLDINGS
The number of shares in the Company held during the financial year by each Director of Element 25 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 2023
Acquired during
the year on the
exercise of options
Additions
Disposals
Balance at
year end
30 June 2024
John Ribbons
1,800,000
500,000
-
-
2,300,000
Justin Brown
8,005,360
1,000,000
-
-
9,005,360
Rudolph van Jaarsveld
N/A
-
-
-
-
Salvatore Lancuba
N/A
-
-
-
-
Seamus Cornelius
(resigned 28 Nov 2023)
6,555,177
500,000
-
-
7,055,177
OPTION HOLDINGS
The options over ordinary shares in the Company held during the financial year by each Director of Element 25 and other key management
personnel of the Company, including their personally related parties, are set out below:
Balance at start
of the year
1 July 2023
Granted as
compensation
Exercised
Balance at
year end
30 June 2024
Vested and
exercisable
Unvested
John Ribbons
1,450,000
-
(500,000)
950,000
950,000
-
Justin Brown
3,000,000
500,000
(1,000,000)
2,500,000
2,000,000
500,000
Rudolph van Jaarsveld
N/A
-
-
-
-
-
Salvatore Lancuba
N/A
-
-
-
-
-
Seamus Corneluis
(resigned 28 Nov 2023)
1,450,000
-
(500,000)
950,000
950,000
-
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 –
34 | 2024 ANNUAL REPORT
DIRECTORS MEETINGS
During the year the Company held the following meetings of Directors. The attendance of Directors at meetings of the Board were:
Directors
Meetings
Audit and Risk
Committee Meetings
Remuneration
Committee Meetings
Meetings
Attended
Meetings
Eligible to Attend
Meetings
Attended
Meetings
Eligible to Attend
Meetings
Attended
Meetings
Eligible to Attend
Justin Brown
14
14
2
3
N/A
N/A
John Ribbons
14
14
3
3
3
3
Rudolph van Jaarsveld
14
14
3
3
3
3
Salvatore Lancuba
13
14
2
3
3
3
Seamus Corneluis
(resigned 28 Nov 2023)
4
4
1
1
N/A
N/A
SHARES UNDER OPTION
Unissued ordinary shares of Element 25 under option at the date of this report are as follows:
Date options granted
Expiry date
Exercise price (cents)
Number of options
22 November 2019
20 November 2024
27.30
2,000,000
26 June 2020
25 June 2025
50.00
500,000
4 November 2020
4 November 2025
120.90
1,980,000
22 December 2020
13 July 2025
44.00
1,000,000
29 September 2022
1 July 2027
65.40
500,000
25 October 2022
29 September 2027
117.47
1,000,000
23 December 2022
23 December 2027
146.75
50,000
25 November 2022
25 November 2027
158.00
900,000
29 September 2022
23 September 2027
128.06
250,000
28 November 2023
27 November 2028
67.00
500,000
22 December 2023
21 December 2028
60.00
500,000
Total number of options outstanding
at the date of this report
9,180,000
No option holder has any right under the options to participate in any other share issue of the Company or any other entity.
2024 ANNUAL REPORT | 35
INSURANCE OF DIRECTORS AND OFFICERS
During the financial year, Element 25 paid a premium of $107,884 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 Company’s auditor, PricewaterhouseCoopers, 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.
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 36.
Signed in accordance with a resolution of the Directors.
Justin Brown
Managing Director
27 September 2024
PricewaterhouseCoopers, ABN 52 780 433 757
Brookfield Place, Level 15, 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.
Auditor’s Independence Declaration
As lead auditor for the audit of Element 25 Limited for the year ended 30 June 2024, 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.
Adam Thompson
Perth
Partner
PricewaterhouseCoopers
27 September 2024
2024 ANNUAL REPORT | 37
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2024
Note
2024
2023
$
$
Revenue
4
13,296,901
33,469,168
Cost of sales
6
(30,442,802)
(47,533,950)
GROSS LOSS
(17,145,901)
(14,064,782)
Other income
5
611,273
322,008
Exploration and feasibility expenditure
7
(189,674)
(6,644,123)
General and administration expenses
8
(4,726,449)
(4,426,197)
Finance expense
(64,012)
(65,708)
LOSS BEFORE INCOME TAX
(21,514,763)
(24,878,802)
INCOME TAX EXPENSE
9
(188)
-
LOSS FOR THE YEAR ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY
(21,514,951)
(24,878,802)
OTHER COMPREHENSIVE INCOME
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations
1,706
(15,215)
Other comprehensive income for the year, net of tax
1,706
(15,215)
TOTAL COMPREHENSIVE LOSS FOR THE YEAR ATTRIBUTABLE TO EQUITY
HOLDERS OF THE COMPANY
(21,513,245)
(24,894,017)
LOSS PER SHARE FOR LOSS ATTRIBUTABLE TO THE ORDINARY EQUITY HOLDERS
OF THE COMPANY
Basic and diluted loss per share (cents per share)
31
(9.86)
(14.26)
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
38 | 2024 ANNUAL REPORT
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2024
Note
2024
2023
$
$
CURRENT ASSETS
Cash and cash equivalents
10
11,326,929
28,885,874
Trade and other receivables
11
854,035
975,551
Inventory
12
7,945,620
12,135,790
Financial assets at fair value through profit or loss
13
243,158
651,440
TOTAL CURRENT ASSETS
20,369,742
42,648,655
NON-CURRENT ASSETS
Restricted cash
14
528,560
528,560
Property, plant and equipment
15
21,432,262
22,464,399
Assets under construction
15
20,955,253
1,026,401
Deferred exploration and evaluation expenditure
16
1,737,058
890,340
Right of use asset
17
166,138
504,549
TOTAL NON-CURRENT ASSETS
44,819,271
25,414,249
TOTAL ASSETS
65,189,013
68,062,904
CURRENT LIABILITIES
Trade and other payables
18
5,566,671
9,401,012
Provisions
19
627,857
630,633
Lease liability
20
180,023
367,263
TOTAL CURRENT LIABILITIES
6,374,551
10,398,908
NON-CURRENT LIABILITIES
Lease liability
20
-
180,023
Provisions
19
1,683,000
2,057,317
TOTAL NON-CURRENT LIABILITIES
1,683,000
2,237,340
TOTAL LIABILITIES
8,057,551
12,636,248
NET ASSETS
57,131,462
55,426,656
EQUITY
Issued capital
21
134,533,276
111,448,309
Reserves
22
7,291,604
7,156,814
Accumulated losses
(84,693,418)
(63,178,467)
TOTAL EQUITY
57,131,462
55,426,656
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
2024 ANNUAL REPORT | 39
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2024
Note
Contributed
Equity
Share-Based
Payments
Reserve
Foreign Currency
Translation
Reserve
Accumulated
Losses
Total
$
$
$
$
$
BALANCE AT 1 JULY 2022
77,691,579
5,874,424
(36,320)
(38,251,297)
45,278,386
Loss for the year
-
-
(24,878,802)
(24,878,802)
OTHER COMPREHENSIVE INCOME
Exchange differences on translation
of foreign operations
-
-
33,153
(48,368)
(15,215)
TOTAL COMPREHENSIVE LOSS
-
-
33,153
(24,927,170)
(24,894,017)
TRANSACTIONS WITH OWNERS IN THEIR
CAPACITY AS OWNERS
Shares issued during the year - placement
21
34,999,999
-
-
-
34,999,999
Shares issued during the year -
exercise of options
21
523,500
-
-
-
523,500
Employee and consultant share-based
payments
32
-
1,285,557
-
-
1,285,557
Shares issue transaction costs
21
(1,766,769)
-
-
-
(1,766,769)
BALANCE AT 30 JUNE 2023
111,448,309
7,159,981
(3,167)
(63,178,467)
55,426,656
Loss for the year
-
-
-
(21,514,951)
(21,514,951)
OTHER COMPREHENSIVE INCOME
Exchange differences on translation
of foreign operations
-
-
1,706
-
1,706
TOTAL COMPREHENSIVE LOSS
-
-
1,706
(21,514,951)
(21,513,245)
TRANSACTIONS WITH OWNERS IN THEIR
CAPACITY AS OWNERS
Shares issued during the year - placement
21
22,569,967
-
-
-
22,569,967
Shares issued during the year -
exercise of options
21
522,000
-
-
-
522,000
Employee and consultant share-based
payments
32
-
133,084
-
-
133,084
Shares issue transaction costs
21
(7,000)
-
-
-
(7,000)
BALANCE AT 30 JUNE 2024
134,533,276
7,293,065
(1,461)
(84,693,418)
57,131,462
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
40 | 2024 ANNUAL REPORT
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2024
Note
2024
2023
$
$
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
13,002,630
33,573,516
Payments to suppliers and employees
(33,510,265)
(48,679,813)
Interest received
529,018
22,414
Interest and other financing costs paid
(26,791)
(49,043)
Other government grants received
-
211,621
Expenditure on HPMSM
-
(5,707,858)
NET CASH OUTFLOW FROM OPERATING ACTIVITIES
30
(20,005,408)
(20,629,163)
CASH FLOWS FROM INVESTING ACTIVITIES
Movement in cash from restricted to non-restricted
-
99,975
Proceeds on sale of mining interests
-
30,000
Proceeds from disposal of financial assets at fair value through profit or loss
-
2,416,066
Proceeds from disposal of plant and equipment
111,530
-
Payments for plant and equipment
(20,484,355)
(1,236,837)
NET CASH (OUTFLOW)/INFLOW FROM INVESTING ACTIVITIES
(20,372,825)
1,309,204
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issues of ordinary shares
21
23,091,967
35,523,499
Payment of share issue transaction costs
21
(7,000)
(1,766,769)
Principal elements of lease payments
(389,221)
(266,883)
NET CASH INFLOW FROM FINANCING ACTIVITIES
22,695,746
33,489,847
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS
(17,682,487)
14,169,888
Cash and cash equivalents at the beginning of the financial year
28,885,874
14,927,576
Effects of exchange rate changes on cash and cash equivalents
123,542
(211,590)
CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR
10
11,326,929
28,885,874
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
2024 ANNUAL REPORT | 41
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
1. SUMMARY OF MATERIAL 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.
A) BASIS OF PREPARATION
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.
During the financial year ended 30 June 2024, the Group has seen historical low manganese market sell prices which has been a
factor in the suspension of its Butcherbird operations. Management's decision to suspend the production at Butcherbird has
enabled cash to be preserved whilst the completion of the funding of the initiatives of the Butcherbird upgrade and the HPMSM
project can be implemented.
The Group has completed cash flow forecasts showing the Group will have sufficient cash flows for at least 12 months to continue
operations. In addition, the Group expects to be successful in financing the HPMSM and Butcherbird expansion projects based on
the current funding opportunities which include being selected for award negotiations by the US Department of Energy (DoE) for a
US$166m grant under the Battery Minerals Processing and Battery Manufacturing Program, the offtake and funding agreements
with GM and Stellantis remaining active which provide US$115m, the Northern Australia Infrastructure Fund proceeding to detailed
due diligence after completing a strategic assessment of the Butcherbird Stage 2 Expansion Project and multiple financing
proposals for private sector funding from advisor Jett Capital.
The directors believe the Group will be successful in securing the funding required to support its strategic plans and accordingly
have prepared the financial report on a going concern basis.
(I)
COMPLIANCE WITH IFRS
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).
(II)
NEW AND AMENDED STANDARDS ADOPTED BY THE GROUP
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 applied the following standards and
amendments for the first time for its annual reporting period commencing 1 July 2023:
•
AASB 17 Insurance Contracts
•
AASB 2023-2 Amendments to Australian Accounting Standards - Definition of Accounting Estimates International Tax Reform –
Pillar Two Model Rules [AASB 112]
•
AASB 2021-5 Amendments to Australian Accounting Standards - Deferred Tax related to Assets and Liabilities arising from a
Single Transaction [AASB 112]
•
AASB 2021-2 Amendments to Australian Accounting Standards – Disclosure of Accounting Policies Definition of Accounting
Estimates [AASB 7, AASB 101, AASB 108, AASB 134 & AASB Practice Statement 2].
•
AASB 2020-1 Amendments to Australian Accounting Standards – Classification of Liabilities as Current or Non-current [AASB
101]
42 | 2024 ANNUAL REPORT
•
AASB 2022-6 Amendments to Australian Accounting Standards – Non-current Liabilities with Covenants [AASB 101 and AASB
Practice Statement 2].
The Group has determined that the amendments listed above did not have any impact on the amounts recognised in prior periods
and are not expected to significantly affect the current or future periods.
(III)
NEW STANDARDS AND INTERPRETATIONS NOT YET ADOPTED
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2024 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
(I)
SUBSIDIARIES
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.
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.
C) SEGMENT REPORTING
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
(I)
FUNCTIONAL AND PRESENTATION CURRENCY
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic
environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in
Australian dollars, which is E25 functional and presentation currency.
(II)
TRANSACTIONS AND BALANCES
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year
end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss. They are
deferred in equity if they are attributable to part of the net investment in a foreign operation.
2024 ANNUAL REPORT | 43
(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 AND OTHER INCOME RECOGNITION
(I)
REVENUE FROM CONTRACTS WITH CUSTOMERS
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.
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.
(II)
FINANCE INCOME FROM INTEREST
Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the financial assets.
F)
GOVERNMENT GRANTS
Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received,
and the Group will comply with all attached conditions.
G) INCOME TAX
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.
44 | 2024 ANNUAL REPORT
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.
H)
LEASES
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.
I)
IMPAIRMENT OF ASSETS
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.
2024 ANNUAL REPORT | 45
J)
CASH AND CASH EQUIVALENTS
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.
K)
INVESTMENTS AND OTHER FINANCIAL ASSETS
(I)
CLASSIFICATION
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).
(II)
RECOGNITION AND DERECOGNITION
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.
46 | 2024 ANNUAL REPORT
•
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.
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.
(IV) IMPAIRMENT
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.
L)
INVENTORIES
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) 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 during the
operation 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:
•
Buildings – 3 to 20 years
•
IT equipment – 3 years
•
Mine, property and development – 10 to 40 years
•
Plant and equipment – 1.5 to 20 years
2024 ANNUAL REPORT | 47
The assets nature, conditions, residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date to
reflect the underlying physical, commercial and, where appropriate, legal facts.
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.
N) ASSETS UNDER CONSTRUCTION
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.
O) EXPLORATION AND EVALUATION COSTS
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 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.
P)
TRADE AND OTHER PAYABLES
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.
48 | 2024 ANNUAL REPORT
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.
(III)
SHARE-BASED PAYMENTS
The Company provides benefits to employees (including Directors) of the Company in the form of share-based payment
transactions, whereby employees render services in exchange for shares or rights over shares (‘equity-settled transactions’), refer to
note 32.
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 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 Company 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.
2024 ANNUAL REPORT | 49
S)
ISSUED CAPITAL
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the
proceeds. 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
(I)
BASIC EARNINGS PER SHARE
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.
(II)
DILUTED EARNINGS PER SHARE
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after
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.
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.
V)
CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
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:
(I)
SHARE-BASED PAYMENT TRANSACTIONS
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 32.
(II)
TAXATION
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.
50 | 2024 ANNUAL REPORT
(IV)
IMPAIRMENT OF NON-CURRENT ASSETS
The Group performs the impairment test for the non-current assets at the end of each reporting period. The impairment test is
conducted based on the estimation and judgements of the management by assessing the market capitalisation of the Group, the
industry environment and the market trend, discount rate and other factors that affect the non-current assets obsolescence.
At the end of financial year 2024, the Group has used Fair Value Less Cost of Disposal (FVLCD) approach to assess the recoverable
amount of Butcherbird operation CGU when the Group has completed an impairment test. The FVLCD is based on discounted
cashflows using market-based factors and assumptions.
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
(I)
FOREIGN EXCHANGE RISK
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with
respect to the United States Dollar.
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 2024, 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 $413,001 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 (2023: $924,085 lower/higher post-tax
loss).
(II)
COMMODITY RISK
The Group is exposed to commodity risk arising from fluctuations of the Manganese market price and sales volume. The Group has
entered into long-term customer offtake and sales agreements for supplying Manganese Ore to its major customer to minimise the
risk caused by unexpected reduction of the market demand. The group closely monitors Manganese price and modify operations if
necessary.
Sensitivity analysis
At 30 June 2024, if the value of the Manganese stock held had increased / decreased by 15% with all other variables held constant,
post-tax loss For the Group would have been $1,266,387 lower/higher with no changes to other equity balances, as a result of gross
profit from sales of Manganese (2023: $5,032,525 lower/higher post-tax loss).
(III)
PRICE RISK
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.
2024 ANNUAL REPORT | 51
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 2024, 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 $36,474 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 (2023: $97,716 lower/higher post-tax loss).
(IV) INTEREST RATE RISK
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 $11,326,929 (2023: $28,885,874) 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 4.67%
(2023: 0.08%).
Sensitivity analysis
At 30 June 2024, 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 $56,635 higher/lower (2023: $146,000 higher/lower 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.
C) LIQUIDITY RISK
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 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 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 2024 and 30 June 2023 are as follows:
2024
2023
$
$
Cash and cash equivalents
11,326,929
28,885,874
Restricted cash
528,560
528,560
Trade and other receivables
854,035
975,551
Financial assets at fair value through profit or loss
243,158
651,440
Trade and other payables
(5,566,671)
(9,401,012)
Employee benefit obligations (current)
(627,857)
(630,633)
Working capital position
6,758,154
21,009,780
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.
52 | 2024 ANNUAL REPORT
D)
FAIR VALUE ESTIMATION
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:
2024
2023
$
$
Financial Assets
Cash and cash equivalents
11,326,929
28,885,874
Restricted cash
528,560
528,560
Trade and other receivables
854,035
975,551
Financial assets at fair value through profit or loss
243,158
651,440
Total Financial Assets
12,952,682
31,041,425
2024
2023
$
$
Financial Liabilities
Trade and other payables
5,566,671
9,401,012
Total Financial Liabilities
5,566,671
9,401,012
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:
•
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).
2024 ANNUAL REPORT | 53
Level 1
Level 2
Level 3
Total
$
$
$
$
30 June 2024
Financial assets at fair value through profit or loss
243,158
-
-
243,158
243,158
-
-
243,158
30 June 2023
Financial assets at fair value through profit or loss
651,440
-
-
651,440
651,440
-
-
651,440
3. SEGMENT INFORMATION
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 one segment being identified: Australia. The segment details are therefore fully
reflected in the results and balances reported in the Statement of Profit or Loss and Other Comprehensive Income and Statement of
Financial Position.
4. REVENUE
2024
2023
$
$
Sale of manganese
13,209,178
32,527,217
Shipment revenue
87,723
941,951
13,296,901
33,469,168
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. Shipment revenue is
recognised separately to reflect the allocation of revenue between its performance obligations.
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.
5. OTHER INCOME
2024
2023
$
$
Net gain on sale of mining interests
-
30,000
Government grant funding
-
211,621
Bank interest and other income
611,273
80,387
611,273
322,008
54 | 2024 ANNUAL REPORT
6.
COST OF SALES
2024
2023
$
$
Mining costs
(3,381,948)
(11,455,356)
Processing costs
(9,637,692)
(9,926,408)
Site administration costs
(2,996,893)
(4,591,866)
Haulage costs
(5,974,314)
(15,209,858)
Port and shipping
(1,931,831)
(3,133,838)
Sales and marketing costs
(207,949)
(289,076)
Royalty costs
(769,670)
(1,723,520)
Depreciation of processing equipment
(822,438)
(1,194,733)
Depreciation of mining equipment
(175,730)
(259,030)
Depreciation of restoration
(102,866)
-
Depreciation of right of use assets
(261,300)
(260,586)
Inventory movement
(4,180,171)
510,321
(30,442,802)
(47,533,950)
Inventory movement mainly includes inventory movement and net realisable value (NRV) adjustment on Manganese held by Element
25. Where there is an indication that inventories are obsolete, damaged or recorded above NRV, these inventories are written down
to NRV. NRV is the estimated selling price in the ordinary course of business less the estimated costs of completion and estimated
costs necessary to make the sale. E25 revalue Manganese stock monthly and adjusts accordingly at the end of the month.
7.
EXPLORATION AND FEASIBILITY EXPENDITURE
2024
2023
$
$
Exploration
(5,299)
(82,640)
Product Development General
(184,375)
(200,525)
Product Development HPMSM
-
(6,360,958)
(189,674)
(6,644,123)
8.
GENERAL AND ADMINISTRATION EXPENSES
2024
2023
$
$
Plant, Property and Equipment depreciation expense
(465,008)
(566,952)
Gain / (Loss) of foreign exchange
309,109
(207,990)
Loss of sale of assets
(437,843)
-
Fair value (loss)/gain on remeasurement of financial assets
(408,283)
1,013,252
Share-based payment expense
(133,084)
(1,285,558)
Director fees, salaries and wages and other staff costs
(1,260,887)
(1,216,246)
Consultants
(785,159)
(643,021)
ASX and other compliance costs
(271,322)
(280,517)
Insurance
(467,125)
(571,233)
Occupancy
(128,962)
(138,935)
Investor relation expenses
(74,547)
(145,170)
Depreciation of right of use assets
(58,017)
(76,902)
Other administration expenses
(545,321)
(306,925)
(4,726,449)
(4,426,197)
2024 ANNUAL REPORT | 55
9.
INCOME TAX
2024
2023
$
$
a)
Income tax benefit
Current tax
(188)
-
Deferred tax
-
-
(188)
-
2024
2023
$
$
b)
Reconciliation of income tax expense/(benefit) to prima facie tax payable
(Loss) from continuing operations before income tax expense
(21,514,763)
(24,879,231)
Prima facie tax (benefit)/expense at the Australian tax rate of 25.0% (2022: 25.0%)
(5,378,691)
(6,219,808)
Difference in overseas tax rate
336
-
Tax effect of amounts which are not deductible/(taxable) in calculating taxable income:
Share-based payments
33,271
321,389
R&D refund
39,399
(52,905)
Gains/losses on investments
102,071
(33,635)
Others
-
(6,269)
(5,203,614)
(5,991,228)
Movements in unrecognised temporary differences
66,598
1,922,798
Tax effect of current year tax losses for which no deferred tax asset has been recognised
5,136,828
4,068,430
Income tax expense/(benefit)
(188)
-
c)
Recognising temporary differences
Deferred Tax Assets at 25.0% (2023: 25.0%)
On Income Tax Account
Capital raising expenses
385,590
592,471
Accruals and provisions
164,916
199,943
Lease liabilities
45,006
136,821
Capitalised project expenditure
1,156,615
3,065,781
Australian carry forward tax losses
6,984,468
395,532
Rehabilitation provision
420,750
514,329
9,157,345
4,904,877
Deferred Tax Liabilities at 25.0% (2023: 25.0%)
Unrealised FX on cash balances
69,464
22,876
Prepayments
10,426
16,150
Property, Plant & Equipment
8,640,887
4,225,385
Right of use asset
41,534
126,137
Rehabilitation asset
395,034
514,329
9,157,345
4,904,877
Unrecognising temporary differences
Deferred Tax Assets at 25.0% (2023: 25.0%)
Foreign carry forward tax losses
224,071
224,071
Australian carry forward tax losses
12,158,255
13,476,798
12,382,326
13,700,869
56 | 2024 ANNUAL REPORT
d)
Total Deferred Tax Assets at 25% (2023: 25.0%)
2024
2023
$
$
On Income Tax Account
Capital raising expenses
385,590
592,471
Accruals and provisions
164,916
199,943
AASB 16 lease liability
45,006
136,821
Project pool
1,156,615
3,065,782
Foreign carry forward tax losses
224,071
224,071
Australian carry forward tax losses
19,142,723
13,872,330
Rehabilitation provision
420,750
514,329
21,539,671
18,605,747
Total Net Deferred Tax Asset / Deferred Tax Loss
12,382,326
13,700,869
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.
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
2024
2023
$
$
Cash at bank and in hand
11,326,929
28,885,874
Cash and cash equivalents as shown in the statement of financial position and the
statement of cash flows
11,326,929
28,885,874
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
2024
2023
$
$
Trade receivables
190,035
-
Sundry receivables
426,400
348,461
Prepayments
237,600
627,090
854,035
975,551
2024 ANNUAL REPORT | 57
12. INVENTORY
2024
2023
$
$
Manganese ore stockpiles
7,110,820
10,005,448
Finished goods at fair value less costs to sell
734,154
2,019,742
Warehouse stores and materials
100,646
110,600
7,945,620
12,135,790
Manganese ore stockpiles represent manganese ore that has been extracted and is available for further processing or sale. 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 and depreciation of
property, plant and equipment used in the extraction, processing and transportation of manganese. Warehouse stock and Manganese
inventory are recorded at the lower of cost and net realised value (NRV). NRV is determined using the estimated selling price in the
ordinary course of business less estimated costs of completion and estimated costs necessary to make the sale. NRV is estimated
using the most reliable evidence available at the time reflecting the amount that the inventories are expected to be realised at. The
Company reviews and adjusts NRV if required at each end of reporting date or earlier if indicators of impairment exist.
13. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
2024
2023
$
$
Australian listed equity securities
243,158
651,440
243,158
651,440
14. RESTRICTED CASH
2024
2023
$
$
Bank guarantees and term deposits
528,560
528,560
528,560
528,560
15. PROPERTY, PLANT AND EQUIPMENT
Buildings
IT Equipment
Mine Properties and
Development
Plant and
Equipment
Assets Under
Construction
Total
$
$
$
$
$
$
Carrying amount – at cost
At 30 June 2022
4,650,322
279,205
9,084,067
11,634,194
76,109
25,723,897
Additions
5,346
-
370,503
400,243
1,031,371
1,807,463
Disposals
-
-
-
-
-
-
Change in restoration and
rehabilitation estimate
-
-
179,316
-
-
179,316
Other
-
-
-
-
(81,079)
(81,079)
At 30 June 2023
4,655,668
279,205
9,633,886
12,034,437
1,026,401
27,629,597
Additions
76,631
22,181
922,130
417,525
20,955,210
22,393,677
Disposals
-
(3,999)
(605,025)
(94,813)
-
(703,837)
Change in restoration and
rehabilitation estimate
-
-
(374,317)
-
-
(374,317)
Other
-
-
-
-
(1,026,358)
(1,026,358)
At 30 June 2024
4,732,299
297,387
9,576,674
12,357,149
20,955,253
47,918,762
58 | 2024 ANNUAL REPORT
Buildings
IT Equipment
Mine Properties and
Development
Plant and
Equipment
Assets Under
Construction
Total
$
$
$
$
$
$
Accumulated depreciation
At 30 June 2022
(521,247)
(106,405)
(212,945)
(1,277,485)
-
(2,118,082)
Depreciation expense
(475,444)
(91,508)
(259,030)
(1,194,733)
-
(2,020,715)
Disposals
-
-
-
-
-
-
Change in restoration and
rehabilitation estimate
-
-
-
-
-
-
Other
-
-
-
-
-
-
At 30 June 2023
(996,691)
(197,913)
(471,975)
(2,472,218)
-
(4,138,797)
Depreciation expense
(379,602)
(85,407)
(278,596)
(822,438)
-
(1,566,043)
Disposals
-
3,999
100,837
68,757
-
173,593
Change in restoration and
rehabilitation estimate
-
-
-
-
-
-
Other
-
-
-
-
-
-
At 30 June 2024
(1,376,293)
(279,321)
(649,734)
(3,225,899)
-
(5,531,247)
Net book value
At 30 June 2022
4,129,075
172,800
8,871,122
10,356,709
76,109
23,605,815
Additions
5,346
-
370,503
400,243
1,031,371
1,807,463
Depreciation expense
(475,444)
(91,508)
(259,030)
(1,194,733)
-
(2,020,715)
Disposals
-
-
-
-
-
-
Change in restoration and
rehabilitation estimate
-
-
179,316
-
-
179,316
Other
-
-
-
-
(81,079)
(81,079)
At 30 June 2023
3,658,977
81,292
9,161,911
9,562,219
1,026,401
23,490,800
Additions
76,631
22,181
922,130
417,525
20,955,210
22,393,677
Depreciation expense
(379,602)
(85,407)
(278,596)
(822,438)
-
(1,566,043)
Disposals
-
-
(504,188)
(26,056)
-
(530,244)
Change in restoration and
rehabilitation estimate
-
-
(374,317)
-
-
(374,317)
Other
-
-
-
-
(1,026,358)
(1,026,358)
At 30 June 2024
3,356,006
18,066
8,926,940
9,131,250
20,955,253
42,387,515
Depreciation for Mine Properties and Development and Plant and Equipment is up to February 2024 align with Butcherbird production
operation.
In accordance with AASB - 136 Impairment of Assets, the Group assessed whether there were any indicators of impairment. The
assessment considered the Group’s statement of financial position, historically low manganese prices, the suspension of the
Butcherbird operations and the market capitalisation in comparison to its net asset value. As a result of this assessment, management
determined that indicators of impairment exist.
For the purposes of impairment testing, management identified the Group’s wholly owned Butcherbird project as a single cash-
generating unit (“CGU”). The estimated recoverable amount was determined using the Fair Value Less Cost of Disposal (FVLCD)
method with reference to the Butcherbird expansion feasibility study. Management determined that the recoverable value of the CGU
is greater than the carrying value and therefore no impairment has been recognised.
Assets under construction at the end of the year of $20,955,253 (2023: $1,026,401) 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
$19,759,268 for HPMSM Project and $1,161,050 for Butcherbird Expansion.
2024 ANNUAL REPORT | 59
16. DEFERRED EXPLORATION AND EVALUATION EXPENDITURE
2024
2023
$
$
Balance at the beginning of the period
890,340
489,548
Expenditure incurred
846,718
400,792
Impairment expense
-
-
Balance at the end of the period
1,737,058
890,340
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
2024
2023
$
$
Cost
1,296,105
1,296,105
Accumulated depreciation
(1,129,967)
(791,556)
166,138
504,549
Balance as at beginning of year
504,549
842,037
Acquisition of plant and equipment by means of finance leases
-
-
Depreciation of right of use assets
(338,411)
(337,488)
Balance at end of year
166,138
504,549
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.
18. TRADE AND OTHER PAYABLES
2024
2023
$
$
Trade payables
4,488,497
5,765,866
Other payables and accruals
1,078,174
3,635,146
5,566,671
9,401,012
19. PROVISIONS
2024
2023
$
$
Current
Provision for annual leave
473,595
506,783
Provision for long service leave
154,262
123,850
627,857
630,633
Non-Current
Rehabilitation provision
Estimate balance as at beginning of year
2,057,317
1,878,001
Changes in restoration and rehabilitation estimate
(374,317)
179,316
1,683,000
2,057,317
60 | 2024 ANNUAL REPORT
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.
20. LEASE LIABILITIES
2024
2023
$
$
Current
Lease liabilities
180,023
367,263
180,023
367,263
Non-Current
Lease liabilities
-
180,023
-
180,023
21. ISSUED CAPITAL
2024
2024
2023
2023
Number of Shares
$ Number of Shares
$
Ordinary shares fully paid
219,530,335
134,533,276
194,960,368
111,448,309
Total issued capital
219,530,335
134,533,276
194,960,368
111,448,309
2024
2024
2023
2023
Number of Shares
$ Number of Shares
$
a)
Movement in ordinary share capital
Balance at the beginning of the financial year
194,960,368
111,448,309
152,710,369
77,691,579
Controlled placement agreement collateral shares
-
-
9,500,000
-
Placement
(i)
22,569,967
22,569,967
31,249,999
34,999,999
Exercise of options
(ii)
2,000,000
522,000
1,500,000
523,500
Transaction costs
-
(7,000)
-
(1,766,769)
Total issued capital
219,530,335
134,533,276
194,960,368
111,448,309
(i)
During the year ending 30 June 2024, the Company issued the following shares upon the placement:
•
On 11 July 2023, the Company issued 22,569,967 fully paid ordinary shares at an issue price of A$1.00 upon the placement.
(ii)
During the year ending 30 June 2024, the Company issued the following shares upon the exercise of options:
•
On 24 November 2023, the Company issued 2,000,000 shares upon the exercise of options of A$0.261 per share which expire on
28 November 2023.
2024 ANNUAL REPORT | 61
2024
2023
Number of Options
Number of Options
b)
Movement in options on issue
Beginning of the financial year
10,930,000
9,480,000
Issued during the year
−
Exercisable at $0.6700, on or before 27 November 2028
−
Exercisable at $0.6000, on or before 21 December 2028
−
Exercisable at $0.6547, on or before 1 July 2027
500,000
-
500,000
-
-
500,000
−
Exercisable at $1.2806, on or before 23 September 2027
-
500,000
−
Exercisable at $1.1747, on or before 29 September 2027
-
1,000,000
−
Exercisable at $1.580, on or before 25 November 2027
-
900,000
−
Exercisable at $1.4657, on or before 23 December 2027
-
50,000
Exercised during the year
−
At $0.2610, on or before 28 November 2023
(2,000,000)
-
−
At $0.3250, on or before 3 November 2022
-
(100,000)
−
At $0.3250, on or before 3 November 2022
-
(200,000)
−
At $0.3250, on or before 28 November 2022
-
(300,000)
−
At $0.3250, on or before 28 November 2022
-
(300,000)
−
At $0.3250, on or before 28 November 2022
-
(600,000)
Forfeited during the year
−
At $1.2806, on or before 23 September 2027
(250,000)
-
Expired during the year
−
At $0.2600, on or before 22 February 2024
(500,000)
-
9,180,000
10,930,000
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.
22. RESERVES
2024
2023
$
$
Foreign currency translation reserve
(a)
(1,461)
(3,167)
Share-based payments reserve
(b)
7,293,065
7,159,981
7,291,604
7,156,814
A) FOREIGN CURRENCY TRANSLATION RESERVES
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.
62 | 2024 ANNUAL REPORT
B)
SHARE-BASED PAYMENTS RESERVE
The share-based payments reserve is used to recognise the fair value of options and performance rights granted.
23. DIVIDENDS
No dividends were paid during the financial year. No recommendation for payment of dividends has been made.
24. 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:
2024
2023
$
$
PricewaterhouseCoopers - audit and review of financial reports
143,192
95,000
Rothsay Auditing- audit and review of financial reports
-
18,000
Total remuneration for audit services
143,192
113,000
25. CONTINGENCIES
There are no material contingent assets or liabilities of the Company at balance date.
26. COMMITMENTS
A) EXPLORATION COMMITMENTS
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:
2024
2023
$
$
Within one year
372,700
192,700
Later than one year but not later than five years
985,800
875,800
Later than five years
1,894,100
2,039,800
3,252,600
3,108,300
27. RELATED PARTY TRANSACTIONS
A) PARENT ENTITY
The ultimate parent entity within the Group is Element 25 Limited.
B)
SUBSIDIARIES
Interests in subsidiaries are set out in note 28.
2024 ANNUAL REPORT | 63
C) KEY MANAGEMENT PERSONNEL COMPENSATION
2024
2023
$
$
Short-term benefits
545,758
430,075
Post-employment benefits
47,005
34,628
Other long-term benefits
20,460
22,574
Share-based payments
56,716
621,000
669,939
1,108,277
D)
LOANS TO RELATED PARTIES
There were no loans to related parties, including key management personnel, during the year.
28. 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):
2024
2023
Name
Country of Incorporation
Class of Shares
Equity Holding
%
Equity Holding
%
Element 25 (Malaysia) SDN. BHD.
Malaysia
Ordinary
100
100
Element 25 Butcherbird Project Pty Ltd
Australia
Ordinary
100
100
Element 25 (USA) LLC
United States of America
Ordinary
100
100
Element 25 (Louisiana) LLC
United States of America
Ordinary
100
100
Element 25 (HPMSM) LLC
United States of America
Ordinary
100
100
29. SUBSEQUENT EVENTS
On 3 July 2024, the Company completed a A$643,145 Share Purchase Plan placement with a total of 2,382,066 new fully paid ordinary
shares issued at A$0.27 per share. Funds raised from the Share Purchase Plan will fund the Company to progress its current prime
project at the Butcherbird mine site as Butcherbird Stage 2 expansion, as well as continuing to support the high purity manganese
sulphate monohydrate (HPMSM) project to be built in Louisiana, USA in partnership with General Motors LLC and Stellantis NV.
In September 2024, the Company was advised by the US Department of Energy (DoE) that it had been selected for award negotiation
for a US$166m grant under the DoE’s Battery Minerals Processing Program. The funding of US$166m will support the construction of
the Company’s proposed battery grade HPMSM facility in Louisiana.
No other matter or circumstance has arisen since 30 June 2024, 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.
64 | 2024 ANNUAL REPORT
30. CASHFLOW INFORMATION
2024
2023
$
$
Reconciliation of (loss)/profit after income tax to net cash outflow from operating activities
Loss for the year
(21,514,951)
(24,878,802)
Non-cash items
−
Depreciation of non-current assets
1,566,043
2,020,715
−
Net exchange differences and other
(140,124)
207,273
−
Impairment of non-current assets
-
11,615
−
Loss on sale of assets
437,843
-
−
Amortisation of right of use assets
338,411
337,488
−
Decrease/(Increase)/ in fair value movement on remeasurement of financial
assets at fair value through profit or loss
408,282
(1,402,814)
−
Decrease/(Increase) in restoration
374,317
(179,316)
−
(Decrease)/Increase in restoration obligations
(374,317)
179,316
Change in operating assets and liabilities
−
Decrease in trade and other receivables
121,516
5,912,363
−
Decrease/(Increase) in inventory
4,190,170
(654,017)
−
Decrease in trade and other payables
(5,332,917)
(2,307,215)
−
(Decrease)/Increase in employee benefit obligations
(79,681)
124,231
Net cash outflow from operating activities
(20,005,408)
(20,629,163)
31. LOSS PER SHARE
A) RECONCILIATION OF EARNINGS USED IN CALCULATING LOSS PER SHARE
2024
2023
$
$
Loss attributable to the owners of the Company used in calculating basic and diluted loss
per share
(21,514,951)
(24,878,802)
B)
WEIGHTED AVERAGE NUMBER OF SHARES USED AS THE DENOMINATOR
2024
2023
Weighted average number of ordinary shares used as the denominator in calculating basic
and diluted loss per share
218,111,980
174,495,121
C) BASIC AND DILUTED LOSS PER SHARE
2024
2023
$
$
Basic and diluted loss per share (cents per share)
(9.86)
(14.26)
D)
INFORMATION ON THE CLASSIFICATION OF OPTIONS
As the Group made a loss for the year ended 30 June 2024, 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.
2024 ANNUAL REPORT | 65
32. SHARE-BASED PAYMENTS
A) RECONCILIATION OF OPTIONS USED IN CALCULATING SHARE-BASED
PAYMENTS
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 2024 range from 27.30 cents to $1.58 per option, with expiry dates ranging from 20
November 2024 to 21 December 2028.
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 24.25 cents (2023: 47.00 cents). The price was calculated
by using the Black-Scholes European Option Pricing Model applying the following inputs:
2024
2023
$
$
Weighted average exercise price
$0.6350
$1.23
Weighted average life of the option (years)
4.46
5.0
Weighted average underlying share price (cents)
43.50
80.60
Expected share price volatility
80%
80%
Risk free interest rate
4.10%
3.56%
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:
2024
2024
2023
2023
Number of options
Weighted average
exercise price cents
Number of options
Weighted average
exercise price cents
Outstanding at the beginning of the year
10,930,000
72.00
9,480,000
50.70
Granted
1,000,000
63.50
2,950,000
123.31
Forfeited
(250,000)
128.06
-
-
Exercised
(2,000,000)
26.10
(1,500,000)
34.90
Expired
(500,000)
26.00
-
-
Outstanding at year-end
9,180,000
84.83
10,930,000
72.00
The weighted average remaining contractual life of share options outstanding at the end of the financial year was 1.9 years (2023: 2.1
years), and the exercise prices range from 27.30 cents to $1.58 (2023: 26.00 cents to $1.58).
B)
EXPENSES ARISING FROM SHARE-BASED PAYMENT TRANSACTIONS
Total expenses arising from share-based payment transactions recognised during the period were as follows:
2024
2023
$
$
Options granted to employees and contractors expensed to profit or loss
133,084
1,285,557
66 | 2024 ANNUAL REPORT
33. PARENT ENTITY INFORMATION
The following information relates to the parent entity, Element 25 Limited, at 30 June 2024. The information presented here has been
prepared using accounting policies consistent with those presented in note 1.
2024
2023
$
$
Current assets
20,341,806
42,575,088
Non-current assets
44,920,350
25,490,555
Total assets
65,262,156
68,065,643
Current liabilities
6,444,380
10,398,908
Non-current liabilities
1,683,000
2,237,340
Total liabilities
8,127,380
12,636,248
Issued capital
134,533,276
111,448,309
Share-based payments reserve
7,293,065
7,159,982
Accumulated losses
(84,691,565)
(63,178,896)
Total equity
57,134,776
55,429,395
Loss for the year
(21,512,669)
(24,878,802)
Total comprehensive loss for the year
(21,512,669)
(24,878,802)
2024 ANNUAL REPORT | 67
CONSOLIDATED ENTITY DISCLOSURE STATEMENT
AS AT 30 JUNE 2024
Name of entity
Type of entity
Trustee,
partner, or
participant in
joint venture
% of share
capital held
Country of incorporation
Australian
resident or
foreign resident
Foreign
jurisdiction(s)
of foreign
residents
Element 25 Limited
Body corporate
-
100
Australia
Australian
N/A
Element 25 Butcherbird Project Pty Ltd
Body corporate
-
100
Australia
Australian
N/A
Element 25 (Malaysia) SDN. BHD.
Body corporate
-
100
Malaysia
Australian
N/A*
Element 25 (USA) LLC
Body corporate
-
100
United States of America
Australian
N/A*
Element 25 (Louisiana) LLC
Body corporate
-
100
United States of America
Australian
N/A*
Element 25 (HPMSM) LLC
Body corporate
-
100
United States of America
Australian
N/A*
* These entities are also a tax resident in their respective countries of incorporation. However, they are assessed as an Australian resident under the Income
Tax Assessment Act 1997 and therefore not classified as a foreign resident under that Act.
BASIS OF PREPARATION
This Consolidated Entity Disclosure Statement (CEDS) has been prepared in accordance with the Corporations Act 2001 and includes
information for each entity that was part of the consolidated entity as at the end of the financial year in accordance with AASB 10
Consolidated Financial Statements.
Determination of tax residency
Section 295(3A)(vi) of the Corporation Act 2001 defines tax residency as having the meaning in the Income Tax Assessment Act 1997.
The determination of tax residency involves judgement as there are different interpretations that could be adopted, and which give
rise to a different conclusion of residency.
In determining tax residency, the consolidated entity has applied the following interpretations:
A) AUSTRALIAN TAX RESIDENCY
The consolidated entity has applied current legislation and judicial precedent, including having regard to the Tax Commissioner’s
public guidance in Tax Ruling TR 2018/5.
B)
FOREIGN TAX RESIDENCY
Where necessary, the consolidated entity has used independent tax advisers in foreign jurisdictions to assist in its determination of
tax residency to ensure applicable foreign tax legislation has been complied with (see section 295(3A)(vii) of the Corporations Act 2001).
68 | 2024 ANNUAL REPORT
DIRECTOR’S DECLARATION
In the Directors' opinion:
(a)
the financial statements and notes set out on pages 37 to 66 are in accordance with the Corporations Act 2001, including:
i.
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional
reporting requirements; and
ii.
giving a true and fair view of the consolidated entity’s financial position as at 30 June 2024 and of its performance for
the financial year ended on that date;
(b)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and
payable; and the Consolidated Entity Disclosure Statement on page 67 is true and correct; and
(c)
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
27 September 2024
PricewaterhouseCoopers, ABN 52 780 433 757
Brookfield Place, Level 15, 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.
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 2024 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 financial report comprises:
•
the consolidated statement of financial position as at 30 June 2024
•
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, including material accounting policy
information and other explanatory information
•
the consolidated entity disclosure statement as at 30 June 2024
•
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
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.
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
and Risk Committee.
Key audit matter
How our audit addressed the key audit matter
Basis of preparation of financial report
(Refer to note 1(A))
As described in note 1(A) to the financial report,
the financial statements have been prepared by
the Group on a going concern basis, which
contemplates that the Group will have sufficient
cash flows for at least 12 months to continue
operations and will be successful in securing the
funding requirements to support it’s strategic
plans.
Assessing the appropriateness of the Group’s
basis of preparation for the financial report was a
key audit matter due to its importance to the
financial report as a whole and the level of
judgement involved in assessing future funding, in
particular with respect to the Group forecasting
future cash flows for a period of at least 12
months from the audit report date.
In assessing the appropriateness of the Group’s
going concern basis of preparation for the
financial report, we performed the following
procedures, amongst others:
•
Evaluated the appropriateness of the
Group's assessment of their ability to
continue as a going concern, including
whether the level of analysis is
appropriate given the nature of the
Group, the period covered is at least 12
months from the date of our auditor’s
report and relevant information of which
we are aware as a result of the audit has
been included.
•
Enquired of management and the board
of directors as to their knowledge of
events or conditions that may cast
significant doubt on the Group's ability to
continue as a going concern.
Key audit matter
How our audit addressed the key audit matter
•
Evaluated selected data and
assumptions used in the Group’s cash
flow forecasts for at least 12 months from
the date of signing the auditor’s report.
•
Requested written representations from
management and the board of directors
regarding their plans for future action and
their intent and ability to take actions
necessary to continue as a going
concern.
•
Evaluated whether, in view of the
requirements of Australian Accounting
Standards, the financial report provides
adequate disclosures about these events
or conditions.
Impairment assessment of the Butcherbird
project Cash Generating Unit (CGU)
(Refer to note 15)
In accordance with Australian Accounting
Standards, the Group determined that indicators
of impairment existed in relation to the
Butcherbird project CGU. Accordingly, an
impairment assessment was performed, and the
recoverable value of the CGU was determined to
be greater than the carrying value and therefore
no impairment was recognised.
The impairment assessment of the Butcherbird
project CGU was a key audit matter given the
financial significance of the CGU’s assets to the
consolidated statement of financial position and
the level of judgement involved by the Group in
determining the recoverable amount of the CGU,
including key assumptions.
Our audit procedures, amongst others included
the following:
•
Assessing the reasonableness of the
CGU determination based on our
knowledge of the Group’s operations and
the requirements of the Australian
Accounting Standards.
•
Considering whether the model used to
estimate the recoverable value of the
CGU was consistent with the
requirements of the Australian
Accounting Standards.
•
Assessing the Group’s ability to forecast
future cash flows for the business by
comparing historical budgets with
reported actual results.
•
With the assistance of PwC valuation
experts, assessing the appropriateness of
significant assumptions used in
determining the recoverable amount of
the CGU.
•
Agreeing the mathematical accuracy, on
Key audit matter
How our audit addressed the key audit matter
a sample basis, of the impairment model
calculations.
•
Evaluating the reasonableness of
disclosures made in the financial
statements against 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 2024, 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 in accordance
with Australian Accounting Standards and the Corporations Act 2001, including giving a true and fair
view, and for such internal control as the directors determine is necessary to enable the preparation of
the financial report that 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 the directors’ report for the year ended 30 June
2024.
In our opinion, the remuneration report of Element 25 Limited for the year ended 30 June 2024
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
Adam Thompson
Perth
Partner
27 September 2024
74 | 2024 ANNUAL REPORT
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 17 September 2024.
A. DISTRIBUTION OF EQUITY SECURITIES
Ordinary shares
Number of
holders
Number of shares
1
-
1,000
758
404,665
1,001
-
5,000
1,159
3,154,052
5,001
-
10,000
475
3,789,656
10,001
-
100,000
929
30,860,224
100,001
and over
217
183,703,805
3,538
221,912,402
The number of equity security holders holding less than
a marketable parcel of securities are:
1,355
1,424,050
B. TWENTY LARGEST SHAREHOLDERS
The names of the twenty largest holders of quoted ordinary shares are:
Listed ordinary shares
Number of
shares
Percentage of
ordinary shares
1
CITICORP NOMINEES PTY LIMITED
29,390,669
13.24
2
BNP PARIBAS NOMINEES PTY LTD
16,060,398
7.24
3
ACUITY CAPITAL INVESTMENT MANAGEMENT PTY LTD
9,500,000
4.28
4
ARADIA VENTURES PTY LTD
6,698,215
3.02
5
RANGUTA LIMITED
6,585,440
2.97
6
MR LIAM RAYMOND CORNELIUS
5,754,006
2.59
7
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
4,999,437
2.25
9
DUKETON CONSOLIDATED PTY LTD
4,991,170
2.25
9
DUKETON MINING LIMITED
4,177,974
1.88
10
BNP PARIBAS NOMS PTY LTD
4,129,779
1.86
11
BNP PARIBAS NOMINEES PTY LTD
4,084,406
1.84
12
BUTTONWOOD NOMINEES PTY LTD
3,136,015
1.41
13
MR JACOBUS GERARDUS DE JONG
2,966,489
1.34
14
MR SEAMUS IAN CORNELIUS
2,845,548
1.28
15
NO WEST ASSETS PTY LTD
2,528,586
1.14
16
HAJEK FT CUSTODIANS PTY LTD
2,141,000
0.96
17
HAYES PASTORAL CORPORATION PTY LTD
2,038,917
0.92
18
MRS ANTOINETTE JANET RIBBONS
1,911,112
0.86
19
MR ROHAIN IAN CORNELIUS
1,770,000
0.80
20
BRAZIL FARMING PTY LTD
1,663,678
0.75
117,372,839
52.88
2024 ANNUAL REPORT | 75
C. SUBSTANTIAL SHAREHOLDERS
There were no substantial shareholders at 30 June 2024 who have notified the Company in accordance with section 671B of the
Corporations Act 2001.
D. VOTING RIGHTS
All ordinary shares (whether fully paid or not) carry one vote per share without restriction.
E. SCHEDULE OF INTERESTS IN MINING TENEMENTS
As at 17 September 2024:
Tenement reference
Location
Percentage held/earning
E20/659
Eelya Hill WA
10%
E52/1529
Mt Padbury WA
100% (Note 1)
E52/2350
Butcher Bird WA
100%
E52/3606
Yanneri Bore WA
100%
E52/3706
Yanneri Pool WA
100%
E52/3735
Limestone Bore WA
100%
E52/3769
Kumarina WA
100%
E52/3779
Beyondie Bluff WA
100%
E52/3858
Yanneri Well WA
100%
E52/4064
Neds Gap WA
100%
E52/4149
Neds Gap WA
100%
E52/4153
Yanneri Well WA
0%
E52/4155
Weelarrana WA
100%
E52/4358
Butcherbird North WA
100%
L52/211
Limestone Bore WA
100%
L52/215
Butcherbird East 1 WA
100%
L52/216
Butcherbird East 2 WA
100%
L52/217
Butcherbird East 3 WA
100%
L52/218
Butcherbird East 4 WA
100%
L52/220
Butcherbird East 5 WA
100%
L52/221
Butcherbird East 6 WA
100%
L52/225
Butcherbird East 7 WA
100%
L52/254
Butcherbird North WA
100%
L52/255
Butcherbird North WA
100%
L52/256
Butcherbird North WA
100%
L52/257
Butcherbird North WA
100%
L52/258
Butcherbird East WA
100%
M52/1074
Yaneri Ridge WA
100%
E57/1060
Victory Well WA
20%
E63/2027
Lake Johnston WA
100%
E63/2429
Lake Johnston WA
100%
Notes:
1) 100% interest held in all minerals other than iron ore and manganese.
76 | 2024 ANNUAL REPORT
F. UNQUOTED SECURITIES
At 17 September 2024, the Company had the following unlisted securities on issue:
Name
Unlisted options
exercisable at
$0.273 expiring
20/11/24
Unlisted options
exercisable at
$0.50 expiring
25/06/25
Unlisted options
exercisable at
$0.44 expiring
13/07/25
Unlisted options
exercisable at
$1.209 expiring
4/11/25
Aradia Ventures Pty Ltd
1,000,000
-
-
500,000
Mr John George Ribbons
500,000
-
-
250,000
Mr Seamus Cornelius
500,000
-
-
250,000
Zoetmelksvlei (Pty) Ltd
-
500,000
-
-
Duketon Consolidated Pty Ltd
-
-
-
300,000
Karlka Nyiyaparlia Aboriginal Corp. RNTBC
-
-
1,000,000
-
Mr Sias Jordaan
-
-
-
160,000
Holders < 20%
-
-
-
520,000
2,000,000
500,000
1,000,000
1,980,000
Name
Unlisted options
exercisable at
$0.654 expiring
01/07/27
Unlisted options
exercisable at
$1.281 expiring
23/09/27
Unlisted options
exercisable at
$1.1747 expiring
29/09/27
Unlisted options
exercisable at
$1.58 expiring
25/11/27
Aradia Ventures Pty Ltd
-
-
-
500,000
Mr John George Ribbons
-
-
-
200,000
Mr Seamus Cornelius
-
-
-
200,000
Mr Michael Jordon
500,000
-
-
-
Mr Sias Jordaan
-
-
500,000
-
Ms Andrea Gertrud Graham
-
-
500,000
-
Holders < 20%
-
250,000
-
-
500,000
250,000
1,000,000
900,000
Name
Unlisted options
exercisable at
$1.4675 expiring
23/12/27
Unlisted options
exercisable at
$0.67 expiring
27/11/28
Unlisted options
exercisable at
$0.60 expiring
21/12/28
Aradia Ventures Pty Ltd
-
500,000
-
Mr Michael Jordon
-
-
500,000
Holders < 20%
50,000
-
-
50,000
500,000
500,000
36 | 2024 ANNUAL REPORT
DIRECTORS
John Ribbons (Non-Executive Chair)
Justin Brown (Managing Director)
Fanie van Jaarsveld (Non-Executive Director)
Sam Lancuba (Non-Executive Director)
SECRETARY
Michael Jordon
PRINCIPAL PLACE OF BUSINESS
Level 1, Building B, Garden Office Park
355 Scarborough Beach Road,
Osborne Park, Western Australia 6017
Australia
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, Western Australia 6017
Australia
SOLICITORS
HFW Australia
Level 15, Brookfield Place
Tower 2, 123 St Georges Terrace
Perth, Western Australia 6000
Australia
AUDITORS
Pricewaterhouse Coopers (PwC)
Brookfield Place
15/125 St Georges Terrace
PERTH, Western Australia 6000
Australia
SHARE REGISTRY
Automic Group
Level 5 / 191 St Georges Terrace
PERTH , Western Australia 6000
Australia
Phone: 1300 288 664 (within Australia)
Phone from overseas: +612 9698 5414 (International)
Email: hello@automicgroup.com.au
Website: www.automicgroup.com.au
CORPORATE DIRECTORY
77 | 2024 ANNUAL REPORT