ELEMENTOS LIMITED
ABN 49 138 468 756
CONSOLIDATED FINANCIAL REPORT
FOR THE YEAR ENDED
30 JUNE 2016
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2016
Contents
Cautionary Statements
Corporate Information
Review of Operations
Director’s Report
Auditor’s Independence Declaration
Shareholder Information
Interests in Tenements (and Annual Mineral Resources and Ore Reserves Statement)
Corporate Governance Statement
Consolidated Statement of Profit or Loss and Other Comprehensive Income for the
Year Ended 30 June 2016
Consolidated Statement of Financial Position as at 30 June 2016
Consolidated Statement of Changes In Equity for the Year Ended 30 June 2016
Consolidated Statement of Cash Flows for the Year Ended 30 June 2016
Notes To The Consolidated Financial Statements for the Year Ended 30 June 2016
Director’s Declaration
Independent Auditor’s Report
2
3
4
6
20
21
24
27
35
36
37
38
39
60
61
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ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2016
Cautionary Statements
Forward-looking statements
This document may contain certain forward-looking statements. Such statements are only predictions,
based on certain assumptions and involve known and unknown risks, uncertainties and other factors,
many of which are beyond the company’s control. Actual events or results may differ materially from the
events or results expected or implied in any forward-looking statement.
The inclusion of such statements should not be regarded as a representation, warranty or prediction with
respect to the accuracy of the underlying assumptions or that any forward-looking statements will be or
are likely to be fulfilled.
Elementos undertakes no obligation to update any forward-looking statement to reflect events or
circumstances after the date of this document (subject to securities exchange disclosure requirements).
The information in this document does not take into account the objectives, financial situation or particular
needs of any person or organisation. Nothing contained in this document constitutes investment, legal,
tax or other advice.
Mineral Resources and Ore Reserves
Elementos confirms that Mineral Resource and Ore Reserve estimates used in this document were
estimated, reported and reviewed in accordance with the guidelines of the Australian Code for the
Reporting of Exploration Results, Mineral Resources and Ore Reserves (The JORC Code) 2012 edition.
Elementos confirms that it is not aware of any new information or data that materially affects the Mineral
Resource or Ore Reserve information included in the following announcements:
“Cleveland Tailings Ore Reserve” released on the 3 August 2015;
“Cleveland JORC Resource Significantly Expanded” announced to the ASX on 5 March 2014; and
“Cleveland Open Pit - High-Grade Mineral Resource Defined” announced on 3 March 2015.
The Company also confirms that all material assumptions and technical parameters underpinning the
estimates in the Cleveland Mineral Resources and Reserves continue to apply and have not materially
changed. Elementos also confirms the form and context in which the Competent Person’s findings are
presented have not been materially modified from the date of announcement.
A separate Competent Person sign-off for the Annual Mineral Resources and Ore Reserves Statement is
set out on page 26.
Scoping study results and mining inventories
The scoping studies referred to in this document are based on a low-level technical and economic
assessment, which is insufficient to support estimation of Ore Reserves, or to provide assurance of an
economic development case at this stage, or to provide certainty that the conclusions of the scoping
studies will be realised.
Elementos advises that the scoping study results are partly drawn from Inferred Resources. There is a low
level of geological confidence associated with Inferred Mineral Resources and there is no certainty that
further exploration work will result in the conversion of Inferred Mineral Resources to Indicated Mineral
Resources or that the production target itself will be realised.
The term “mining inventory” is used to describe Indicated and Inferred Mineral Resource within the mine
design. Whereas an Ore Reserve, as defined by the JORC code (2012 Edition), must be based on a study
at pre-feasibility study level or better and must not include Inferred Mineral Resources. As such, no Ore
Reserve can be publicly declared on the basis of these scoping studies.
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ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2016
Corporate Information
Directors and Company Secretary
Mr Andy Greig (Non-executive Chairman)
Mr Christopher Dunks (Executive Director)
Mr Calvin Treacy (Non-executive Director)
Mr Corey Nolan (Non-executive Director)
Mr Duncan Cornish (Company Secretary)
Head Office and Registered Office
Elementos Limited
Level 10, 110 Market Street
Brisbane QLD 4000
Tel: +61 7 3212 6299
Fax: +61 7 3212 6250
www.elementos.com.au
Auditors
BDO Audit Pty Ltd
Level 10, 12 Creek Street
Brisbane QLD 4000
Tel: +61 7 3237 5999
Fax: +61 7 3221 9227
www.bdo.com.au
Share Registry
Boardroom Pty Limited
Level 12, 225 George Street
Sydney NSW 2000
Tel: 1300 737 760
Fax: 1300 653 459
www.boardroomlimited.com.au
Stock Exchange Listing
Australian Securities Exchange Ltd
ASX Code: ELT
Australian Business Number
49 138 468 756
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ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2016
Review of Operations
Exploration and development activities at the Group’s projects during the year are detailed below.
Cleveland
The Group continued to progress its Cleveland Project in North-western Tasmania toward
development. Early in the year the Company completed Pre-feasibility and Scoping Studies on the
Project at Cleveland, summaries of which are set out below:
Tailings Reprocessing PFS
A Pre-feasibility Study1 (“PFS”) for the reprocessing of the Tailings Mineral Resource was completed.
The PFS resulted in an estimated an Ore Reserve of 3.7 million tonnes @ 0.29% Tin 2 (0% cut-off grade).
The PFS demonstrated that the reprocessing of tailings is both technically and financially viable.
Open Pit Mining Scoping Study
In the first quarter, the Company received the results of an Open Pit Scoping Study, prepared by
AMC Consultants Pty Ltd (AMC). The study was based on the previously announced Mineral Resource
of 0.8Mt at 0.81% Tin and 0.27% Copper3.
The study identified five viable open pits and concluded the open-pit project to be financially robust
and technically low-risk; with over 98% of the ore being in the Indicated Mineral Resource category.
Underground Mining Scoping Study
AMC also completed an Underground Scoping Study in the first quarter, which examined the
technical and economic viability of mining and processing the previously developed tin-copper
deposit and a separate but large tungsten porphyry deposit. The viability of the underground
operation was assessed as an extension to the proposed tailings and open-pit operations with shared
services, plant and infrastructure.
The study provided a high-level mine design, mining inventory, production schedule, process plant
flowsheet, and cost estimate for the potential underground operation. Based on the previously
announced Mineral Resource4, the study identified a potential mining inventory5 of 1.9Mt of tin-
copper ore grading 0.61% Tin and 0.22% Copper, and 1.7Mt of tungsten ore grading 0.31% WO3.
The findings demonstrate that known underground resources could extend the Cleveland mine life
by up to eight years and significantly add to the project’s cash flows.
Environmental
The Cleveland environmental permitting process and Mining License Application are progressing.
The Tasmanian government remains very supportive and is working with the Company to progress
the Cleveland Project towards development. The Company’s objective is to move to production
and cash flow, through a low-capital, development strategy as quickly as possible.
A number of initiatives for reducing the initial capital cost of the tailings retreatment project were
accessed during the year, including moving the Tailings Storage Facility (TSF) to a new location. A
Scoping Study on the conceptual TFS plan is complete and has indicated a meaningful cost saving
per cubic meter of tailing stored is achievable.
Also during the year Elementos has undertaken column leach tests to access the NAG (Net Acid
Generation) or NAP (Net Acid Production) characteristics of the waste material generated from
1 Announced per the JORC Code 2012 on 3 August 2015 “Cleveland Tailings PFS”.
2 Announced per the JORC Code 2012 on 3 August 2015 “Cleveland Tailings Ore Reserve”.
3 Announced per the JORC Code 2012 on 3 March 2015 “Cleveland Open Pit - High-Grade Mineral Resource Defined”
4 Announced per the JORC Code 2012 on 3 March 2015 “Cleveland Open Pit - High-Grade Mineral Resource Defined”
5 A mining inventory is not an Ore Reserve. Refer to Cautionary Statements attached to this announcement.
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ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2016
Review of Operations
tailings. Also the Company has continued a water-monitoring program on site. Both of these
activities are required to ensure relevant approvals will be granted.
Conclusion
Since the completion of the positive Pre-Feasibility and Scoping Studies, the equity and commodity
markets have been depressed, creating a difficult environment for raising new equity capital.
Therefore the appropriate development strategy was to identify potential funding or off-take
partners for the Cleveland project, before moving to the next phase.
Despite the operating environment, the Company is encouraged by the over 30% increase in the
LME tin price from a low of US$13,810 in January 2016. Also the recent increase in successful equity
capital raisings in the junior resources sector bodes well for Elementos in 2016/17.
Other Projects
Selwyn
At the Selwyn Range project in the Mt Isa district, the Company’s Joint Venture partner, Jason
Resources, completed a XRF geochemical line survey. The survey comprised 7 lines 400m apart at
Sandy Creek, 5 lines at Mt Ulo, 2 lines at Perisher, 2 lines at the A1 magnetic anomaly and 5 lines at
Wallaby. 502 XRF soil and 38 XRF rock samples were assayed.
Non-prospective sub-blocks were relinquished across the tenement package as required by
government regulations and the agreed schedule. Later in the year Jason Resources, withdrew from
the joint venture agreement. The Company is considering its options in regard to the project.
Millennium
During the year Elementos announced that it had relinquished its Millennium Project exploration
permits in order to reduce holding costs, plus the dissolution of its joint venture with Chinalco Yunnan
Copper Resources Ltd (ASX:CYU) and the subsequent sale of its Millennium Project leases to Hammer
Metals Limited (ASX:HMX).
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ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2016
Director’s Report
The directors submit their report on the consolidated entity (“Group”) consisting of Elementos Limited
and the entities it controlled at the end of, and during, the financial year ended 30 June 2016.
Directors
The following persons were directors of Elementos Limited during the financial year and up to the
date of this report, unless otherwise stated:
Mr Andy Greig (appointed 30 October 2015)
Mr Chris Dunks (appointed 4 November 2015)
Mr Corey Nolan
Mr Calvin Treacy
Mr Rick Anthon (resigned 30 October 2015)
Mr Richard Seville (resigned 26 October 2015)
Information on Directors
The board has a strong combination of technical, managerial and capital markets experience.
Expertise and experience includes operating and mineral exploration in Australia. The names and
qualifications of the current directors are summarised as follows:
Andy Greig (appointed 30 October 2015)
Non- Executive Chairman
Mr Greig (GDipBus (Monash); Fellow, ATSE) recently retired from a 35 year career with Bechtel Group,
Inc., the globally renowned engineering, construction and project management company. Mr Greig
was a director of Bechtel Group, Inc., and for 13 years through 2014 the President of its Mining and
Metals Global Business Unit.
Mr Greig has deep experience in the engineering and construction of large mining and minerals
processing projects around the world. He is a business graduate of Monash University, and a Fellow
of the Australian Academy of Technological Sciences and Engineering.
Mr Greig has not held any other (ASX listed) directorships in the last three years.
Chris Dunks (appointed 4 November 2015)
Executive Director
Mr Dunks (BEng (Mech), GAICD) is currently the Managing Director of Synergen Met Pty Ltd, a
Brisbane-based company that is commercialising novel minerals processing technology.
Mr Dunks was a Founder and Managing Director of Rockwell Minerals Pty Ltd, the company that
merged with Elementos in 2013, and negotiated the original deal to purchase the Cleveland
Project. Mr Dunks’s experience over the last 20 years has been dominated by working on major
minerals processing, refining and power projects both in Australia and the USA.
Mr Dunks’s experience has been in mechanical design, construction management and supervision,
project controls, project management, contract negotiation, business development and new
technology commercialisation. He has worked extensively with Bechtel, Worley Parsons, SNC Lavalin
and Jacobs (Aker Kvaerner).
Mr Dunks was originally appointed as a Non-Executive Director of Elementos in November 2015.
Following the resignation of the Company’s CEO in July 2016, Mr Dunks is continuing the Company’s
permitting and partnering process in an Executive Director capacity.
Mr Dunks is a member of the Audit and Risk Committee.
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ELEMENTOS LIMITED - ABN 49 138 468 756
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Mr Dunks has not held any other (ASX listed) directorships in the last three years.
Corey Nolan
Non-executive Director
Mr Nolan (BCom, MMEE, Graduate of AICD) has twenty years of diverse experience in the resources
sector. This has included experience in mining operations, global resource evaluation, and the
financing and development of new opportunities in Australia, South Africa, Asia and South America.
Mr Nolan is a qualified mineral economist. He has held specialist roles as an equities analyst in the
mining and natural resources sector of stock broking firms Morgan Stanley and Wilson HTM. During
this period, he undertook detailed coverage of the Australian and global resources sector including
the commodities market.
Mr Nolan has been a Director at PWC in the corporate finance and valuations practice, specialising
in resources industry valuations for Australian and global resources firms.
Mr Nolan is a member of the Audit and Risk Committee.
During the past three years, Mr Nolan has also served as a director of the following ASX listed
company:
Leyshon Resources Limited * (since 14 February 2014)
*denotes current directorship
Calvin Treacy
Non-executive Director
Mr Treacy (BEng, MBA, MAICD) has over twenty years senior management experience in mining,
mining technology and manufacturing. He has a strong track record of founding and growing
companies, and brings a wealth of experience in the areas of strategic planning and capital raising.
Mr Treacy is a qualified Mechanical Engineer and holds a Masters of Business Administration, with
extensive experience across a range of industries and positions.
Mr Treacy has worked in a range of roles including Non-executive Director, Chief Executive Officer,
Chief Operating Officer and Production Manager, providing a blend of experience from hands-on
management through to executive oversight and strategic management.
Mr Treacy is a member of the Audit and Risk Committee.
Mr Treacy has not held any other (ASX listed) directorships in the last three years.
Company Secretary
Duncan Cornish held the position of Company Secretary during the financial year and up to the date
of this report. Mr Cornish is a Chartered Accountant with significant experience as public company
CFO and Secretary, focused on junior resource companies, as well as financial, administration and
governance.
Mr Cornish is an accomplished and highly efficient corporate administrator and manager. Duncan
has more than 20 years’ experience in the accountancy profession both in England and Australia,
mainly with the accountancy firms Ernst & Young and PricewaterhouseCoopers.
He has extensive experience in all aspects of company financial reporting, corporate regulatory and
governance areas, business acquisition and disposal due diligence, capital raising and company
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ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2016
Director’s Report
listings and company secretarial responsibilities, and serves as corporate secretary and chief
financial officer of several Australian and Canadian public companies.
Mr. Cornish holds a Bachelor of Business (Accounting) and is a member of the Australian Institute of
Chartered Accountants.
Interests in Securities
As at the date of this report, the interests of each director in shares and options issued by the
Company are shown in the table below:
Directors
Shares
Unlisted Options
Unlisted Options
($0.03 @ 20-Mar-18)
($0.06 @ 20-Jan-17)
A. Greig
C. Dunks
C. Nolan
C. Treacy
Principal Activities
164,000,001
15,750,004
3,853,400
26,850,004
-
-
-
6,200,000
-
-
800,000
-
The principal activity of the Group during the year was project development in Australia. The Group
is developing the Cleveland tin-copper-tungsten Project through a staged, low-capital development
strategy, which minimises upfront capital, with cash flow funding future stages. This ensures maximum
benefit from capital expenditure, delivering optimal value to shareholders.
Operating Results
The Group’s operating loss for the financial year, after applicable income tax was $1,757,780 (2015:
$2,692,540). Exploration and evaluation expenditure during the year totalled $459,006 (2015:
$1,352,157).
Dividends Paid or Recommended
There were no dividends paid or recommended during the financial year.
Review of Operations
Information on the operations of the Group during the financial year and up to the date of this
report is set out separately in the Annual Report under Review of Operations.
Review of Financial Condition
Capital Structure
No shares were issued during the financial year (or subsequent to 30 June 2016).
On 26 August 2015, 1,000,000 unlisted options exercisable at $0.012 per option on or before 31 July
2018 were issued to an employee.
On 26 August 2015, 10,000,000 unlisted options exercisable at $0.0125 per option on or before 31 July
2019 and 10,000,000 unlisted options exercisable at $0.015 per option on or before 31 July 2019 were
issued to the Company’s then CEO.
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ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2016
Director’s Report
On 21 December 2015, 10,000,000 unlisted options exercisable at $0.0125 per option on or before 31
July 2019 were issued to management.
During the year 5,000,000 options exercisable at $0.226 expired.
At 30 June 2016, the Company had 767,479,642 ordinary shares and 43,850,000 unlisted options on
issue.
Subsequent to 30 June 2016, the 20,000,000 unlisted options issued to management on 26 August
2015 (noted above) lapsed following the resignation of the CEO.
As at the date of this report, the Company had 767,479,642 ordinary shares and 23,850,000 unlisted
options on issue.
Financial Position
At 30 June 2016, the Group’s net assets totalled $4,580,715 (2015: $5,502,726) which included cash
assets of $467,268 (2015: $761,828). The movement in net assets largely resulted from the following
factors:
Operating losses of $1,757,780;
Cash outflows from operating activities ($698,149) were partially offset by the receipt of
$500,000 of loan funding (an increase in liabilities); and
Cash outflows on exploration and evaluation assets ($459,006) were mostly offset by the
receipt for R&D refunds ($320,684) and proceeds from the sale of a subsidiary ($57,950).
Throughout the year the Group focussed on:
progressing environment approvals and mining licences;
completing
technical studies
required
to attract suitable project partner/s and
corporate/project funding;
exploring innovative ways of enhancing the value of the Group’ Cleveland Project
This focus resulted in:
reduced ‘on-the-ground’ project expenditure (from 2015);
lower overall corporate and administration overheads following Board and management
restructures throughout the year; and
seeking additional funding that the Board chose to take in the form of an unsecured loan
from a related party.
The Group’s working capital, being current assets less current liabilities has decreased from $625,420
in 2015 to $407,257 in 2016.
Treasury policy
The Group does not have a formally established treasury function. The Board is responsible for
managing the Group’s finance facilities. The Group does not currently undertake hedging of any
kind and is not directly exposed to material currency risks.
Liquidity and funding
The Group has sufficient funds to finance its operations and exploration activities, and to allow the
Group to take advantage of favourable business opportunities, not specifically budgeted for, or to
fund unforeseen expenditure.
Significant Changes in State of Affairs
There were no significant changes in the state of affairs of the Group in the financial year.
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ANNUAL REPORT 2016
Director’s Report
Subsequent Events
There are no matters or circumstances that have arisen since the end of the year which significantly
affected or may significantly affect the operations of the Group, the results of those operations, or
the state of affairs of the Group in future financial years.
Business Results
The prospects of the Group in progressing their exploration projects in Tasmania may be affected by
a number of factors. These factors are similar to most exploration companies moving through
exploration phase and attempting to get projects into development. Some of these factors include:
Exploration - the results of the exploration activities may be such that the estimated resources
are insufficient to justify the financial viability of the projects. Elementos undertakes extensive
exploration and product quality testing prior to establishing JORC compliant resource
estimates and to (ultimately) support mining feasibility studies. The Company engages
external experts to assist with the evaluation of exploration results where required and utilises
third party competent persons to prepare JORC resource statements or suitably qualified
senior management of the Company. Economic feasibility modelling of projects will be
conducted in conjunction with third party experts and the results of which will usually be
subject to independent third party peer review
Regulatory and Sovereign - the Company operates in Australia and deals with local
regulatory authorities in relation to the exploration of its properties. The Company may not
achieve the required local regulatory approvals to continue exploration or properly assess
development prospects. The Company takes appropriate legal and technical advice to
ensure it manages its compliance obligations appropriately.
Social Licence to Operate – the ability of the Company to secure and undertake exploration
and development activities within prospective areas is also reliant upon satisfactory resolution
of native title and (potentially) overlapping tenure. To address this risk, the Company
develops strong, long term effective relationships with landholders with a focus on developing
mutually acceptable access arrangements. The Company takes appropriate legal and
technical advice to ensure it manages its compliance obligations appropriately.
Environmental - All phases of mining and exploration present environmental risks and hazards.
Elementos’s operations in Australia are subject to environmental regulation pursuant to a
variety of state and municipal laws and regulations. Environmental legislation provides for,
among other things, restrictions and prohibitions on spills, releases or emissions of various
substances produced in association with mining operations. Compliance with such legislation
can require significant expenditures and a breach may result in the imposition of fines and
penalties, some of which may be material. Environmental legislation is evolving in a manner
expected to result in stricter standards and enforcement, larger fines and liability and
potentially increased capital expenditures and operating costs. Environmental assessments
of proposed projects carry a heightened degree of responsibility for companies and
directors, officers and employees. The Company assesses each of its projects very carefully
with respect to potential environmental issues, in conjunction with specific environmental
regulations applicable to each project, prior to commencing field exploration. Periodic
reviews are undertaken once field exploration commences.
Safety - Safety is of critical importance in the planning, organisation and execution of
Elementos’s exploration and development activities. Elementos is committed to providing
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ANNUAL REPORT 2016
Director’s Report
and maintaining a working environment in which its employees are not exposed to hazards
that will jeopardise an employee’s health, safety or the health and safety of others associated
with our business. Elementos recognise that safety is both an individual and shared
responsibility of all employees, contractors and other persons involved with the operation of
the organisation. The Company has a comprehensive Safety and Health Management
system which is designed to minimise the risk of an uncontrolled safety and health event and
to continuously improving safety culture within the organisation.
Funding - the Company will require additional funding to continue exploration and potentially
move from the exploration phase to the development phases of its projects. There is no
certainty that the Company will have access to available financial resources sufficient to
fund its exploration, feasibility or development costs at those times.
Market - there are numerous factors involved with exploration and early stage development
of its projects, including variance in commodity price and labour costs which can result in
projects being uneconomical.
Environmental Issues
The Group is subject to significant environmental regulations under the laws of the Commonwealth
of Australia and states of Australia in which the Group operates.
The directors monitor the Group’s compliance with environmental obligations. The directors are not
aware of any compliance breach arising during the year and up to the date of this report.
Native Title
Mining tenements that the Group currently holds, are subject to Native Title claims. The Group has a
policy that is respectful of the Native Title rights and is continuing to negotiate with relevant
indigenous bodies.
Remuneration Report (Audited)
This report details the nature and amount of remuneration for each director and other key
management personnel.
The names of key management personnel of Elementos Ltd who have held office during the financial
year are:
Andy Greig
Director – Non-executive Chairman (appointed 30 October 2015)
Chris Dunks
Director – Non-executive (appointed 4 November 2015, ceased 6 July 2016)
Director – Executive (commenced 6 July 2016)
Corey Nolan
Director - Non-executive
Calvin Treacy
Director - Managing Director (ceased 9 June 2015)
Director - Non-executive (commenced 9 June 2015)
Rick Anthon
Director – Non-executive Chairman – (resigned 30 October 2015)
Richard Seville
Director - Non-executive (resigned 26 October 2015)
Duncan Cornish
Chief Financial Officer (appointed 16 June 2015)
Company Secretary (appointed 1 December 2015)
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Director’s Report
Tim McManus
Chief Operating Officer (appointed 29 September 2014, ceased 9 June 2015)
Chief Executive Officer (commenced 9 June 2015, resigned 6 July 2016)
The Group’s remuneration policy seeks to align director and executive objectives with those of
shareholders and business, while at the same time, recognising the early development stage of the
Group and the criticality of funds being utilised to achieve development objectives. The board
believes the current policy has been appropriate and effective in achieving a balance of these
objectives.
The Group’s remuneration policy provides for long-term incentives to be offered through a director
and employee share option plan and also through a performance rights plan (approved at the
Company’s 2015 AGM). Options may be granted under these plans to align directors’, executives’,
employees’ and shareholders’ interests. Two methods may be used to achieve this aim, the first being
performance rights and options that vest upon reaching or exceeding specific predetermined
objectives, and the second being options granted with higher exercise prices (than the share price
at issue) rewarding share price growth.
The board of directors is responsible for determining and reviewing the Group’s remuneration policy,
remuneration levels and performance of both executive and non-executive directors. Independent
external advice will be sought when required. No independent external advice was sought during
the current year.
Performance-Based Remuneration
Performance-based remuneration includes both short-term and long-term incentives and is designed
to reward key management personnel for reaching or exceeding specific objectives or as
recognition for strong individual performance. Short-term incentives are available to eligible staff of
the Group and may be comprised of cash bonuses, determined on a discretionary basis by the
board. No short-term incentives were made available during the year.
Long-term incentives are comprised of share options and performance rights, which are granted
from time-to-time to encourage sustained strong performance in the realisation of strategic
outcomes and growth in shareholder value.
The exercise price of the options is determined after taking into account the underlying share price
performance in the period leading up to the date of grant and if applicable, performance conditions
attached to the share options. Subject to specific vesting conditions, each option is convertible into
one ordinary share.
The Group’s policy for determining the nature and amount of remuneration of board members and
key executives is set out below.
Directors
Board policy is to remunerate non-executive directors at market rates for comparable companies
for time, commitment and responsibilities. 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 and
is not linked to the performance of the Group. The maximum aggregate amount of fees that can be
paid to non-executive directors approved by shareholders is currently $250,000. One-third, by
number, of non-executive directors retires by rotation at the Company’s Annual General Meeting.
Retiring directors are eligible for re- election by shareholders at the Annual General Meeting of the
Company. The appointment conditions of the non-executive directors are set out and agreed in
letters of appointment.
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Director’s Report
Given the protracted negotiations of the partnering and funding process, the Company believes it
is prudent it continues to maintain a very low-cost corporate overhead and preserve its cash
resources. Consequently, following a board restructure at the end of October 2015 the board
resolved to reduce non-executive director fees (from $27,500 per annum plus superannuation) to
$25,000 per annum (including superannuation)(to Messrs Dunks, Nolan and Treacy) and Andy Greig
chose to not accept a (director) fee. Following the resignation of the Company’s CEO on 6 July 2016,
Chris Dunks was appointed as an executive director and his fee was increased to $70,000 per annum
(including superannuation) from 1 August 2016.
Executives
The remuneration structure for executives is based on a number of factors, including length of service,
particular experience of the individual concerned, and overall performance of the Group.
The executives receive payments provided for under an employment or service agreement, which
incentives, and equity based performance
may include cash, superannuation, short-term
remuneration.
The key terms of the employment agreement with Tim McManus (CEO during the year ended 30
June 2016 and until 6 July 2016) were:
Total Fixed Remuneration of $200,000 per annum;
Annual cash bonus at the discretion of the board;
Short term incentive of 20.0m performance rights;
Long term incentive of 20.0m unlisted options expiring on or before 31 July 2019 (10.m @
$0.0125 and 10.m @ $0.0150), issued on 26 August 2015; and
Three months’ notice of termination by the Company and no notice required by Tim
McManus.
As noted above, Tim McManus resigned on 6 July 2016. None of the performance rights were issued
and all of the unlisted options have since lapsed unexercised.
The Company has a services agreement with Corporate Administration Services Pty Ltd (“CAS”) and
Duncan Cornish, the Company’s CFO (since 1 December 2015) and Company Secretary (since 15
June 2015). Under the agreement, CAS also provides accounting, bookkeeping and administrative
services. Both Elementos and CAS are entitled to terminate the agreement upon giving not less than
three months’ written notice. The base fee under the services agreement is $120,000 per annum, in
effect from 1 December 2015. Prior to the CFO appointment, the base fee for company secretarial
services was $30,000 per annum (from 15 June 2015 to 30 November 2015). On 21 December 2015
Duncan Cornish was issued with 10.0 million unlisted options exercisable at $0.0125 each on or before
31 July 2019 (vested immediately on issue).
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Director’s Report
Remuneration Details of Key Management Personnel
The remuneration of the key management personnel of Elementos Limited for the year ended 30
June 2016 was as follows:
Year Ended 30 June 2016
Key
Management
Personnel
Short Term Benefits
Salary &
Fees
Bonuses
Equity
Settled
Shares
Equity
Settled
Options
Post-
Employment
Super-
annuation
Total
Performance
related %
%
consisting
of options
$
$
$
$
$
$
A. Greig
C. Dunks
C. Nolan
C. Treacy
R. Anthon
R. Seville
D. Cornish
-
16,664
24,221
24,221
13,367
9,000
82,500
T. McManus
183,714
353,687
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,301
2,301
-
16,664
26,522
26,522
-
13,367
855
9,855
63,200
-
145,700
128,100
17,453
329,267
-
191,300
22,910
567,897
-
-
-
-
-
-
-
-
-
-
-
-
-
-
42.8%
38.9%
The remuneration of the key management personnel of Elementos Limited for the year ended 30
June 2015 was as follows:
Year Ended 30 June 2015
Key
Management
Personnel
R. Anthon
C. Treacy
C. Nolan
R. Seville
Short Term Benefits
Salary &
Fees
Bonuses
Equity
Settled
Shares
Equity
Settled
Options
Post-
Employment
Super-
annuation
Total
Performance
related %
%
consisting
of options
$
$
$
$
$
$
25,000
217,422
20,696
20,696
-
-
-
-
-
-
-
-
18,510
18,510
-
37,020
-
-
-
-
-
-
-
25,000
15,449
232,871
3,725
42,931
3,725
42,931
12,733
146,769
35,632
490,502
-
-
-
-
-
-
-
-
-
-
T. McManus
134,036
417,850
Page 14
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2016
Director’s Report
The percentage of equity based remuneration for persons who were key management personnel of
the Group during the year ended 30 June 2016 is set out below:
Key Management Personnel
Proportion of Remuneration
Equity Based
Salary and Fees
A. Greig
C. Dunks
C. Nolan
C. Treacy
R. Anthon
R. Seville
T. McManus
D. Cornish
n/a
-
-
-
-
-
38.9%
42.8%
n/a
100%
100%
100%
100%
100%
61.1%
57.2%
Company Performance, Shareholder Wealth, and Director and Executive Remuneration
During the financial year, the Company has generated losses as its principal activity was mineral
exploration.
The following table shows the share price of the Company since 2011.
30 June
2016
30 June
2015
30 June
2014
30 June
2013
30 June
2012
30 June
2011
Share Price at year
end ($)
0.008
0.010
0.02
0.015
0.079
0.225
As the Company is still in the exploration and development stage, the link between remuneration,
company performance and shareholder wealth is tenuous. Share prices are subject to the influence
of metal prices and market sentiment towards the sector, and as such, increases and decreases
might occur independent of executive performance and remuneration.
Page 15
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2016
Director’s Report
Options Held by Key Management Personnel
Details of options held directly, indirectly or beneficially by key management personnel during the
year ended 30 June 2016 were as follows:
Key
Management
Personnel
Balance at
1 July 2015
Granted as
Compensat
ion
Exercised
Expired
Balance at
30 June
2016
Total Vested
30 June
2016
Total Vested
and
Exercisable
30 June
2016
A. Greig
C. Dunks
-
-
C. Nolan
3,300,000
C. Treacy
6,200,000
R. Anthon
R. Seville
D. Cornish
T. McManus
-
-
-
-
-
-
-
-
-
-
10,000,000
20,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,500,000
800,000
800,000
800,000
-
-
-
-
-
6,200,000
6,200,000
6,200,000
-
-
-
-
-
-
10,000,000
10,000,000
10,000,000
20,000,000
20,000,000
20,000,000
9,500,000
30,000,000
- 2,500,000
37,000,000
37,000,000
37,000,000
Details of options held directly, indirectly or beneficially by key management personnel during the
year ended 30 June 2015 were as follows:
Key
Management
Personnel
Balance at
1 July 2014
Granted as
Compensat
ion
Exercised
Other
Changes
Balance at
30 June
2015
Total Vested
30 June
2015
Total Vested
and
Exercisable
30 June
2015
C. Nolan
3,300,000
C. Treacy
6,200,000
R. Anthon
R. Seville
-
-
9,500,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,300,000
3,300,000
3,300,000
6,200,000
6,200,000
6,200,000
-
-
-
-
-
-
9,500,000
9,500,000
9,500,000
Page 16
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2016
Director’s Report
Options Granted as Remuneration
As noted above, 30,000,000 options were issued to key management personnel during the year
ended 30 June 2016.
Key
Management
Personnel
Number of
Options
Exercise Price
Grant Date
Expiry Date
Value per
Option
D. Cornish
10,000,000
$0.0125
21-Dec-15
31-Jul-19
$0.00632
T McManus(1)
Note:
10,000,000(1)
10,000,000(1)
$0.0125
$0.0150
26-Aug-15
26-Aug-15
31-Jul-19
31-Jul-19
$0.00656
$0.00625
(1) The options issued to Tim McManus noted above have lapsed subsequent to 30 June 2016.
Further information regarding the terms and valuation of the options shown above is included in Note
20 (Share Based Payments).
Shares Held by Key Management Personnel
Details of shares held directly, indirectly or beneficially by key management personnel during the
year ended 30 June 2016 were as follows:
Key
Management
Personnel
Balance at 1
July 2015
Granted as
Compensation
Received on
Exercise of
Options
Other Changes
Balance at 30
June 2016
A. Greig
C. Dunks
C. Nolan
C. Treacy
R. Anthon
R. Seville
D. Cornish
-
-
3,853,400
26,850,004
4,664,678
26,290,598
-
T. McManus
300,000
61,958,680
Notes:
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
164,000,001(1)
164,000,001
15,750,004(1)
15,750,004
-
-
3,853,400
26,850,004
(4,664,678)(2)
(26,290,598)(2)
-
(300,000)
-
-
-
-
148,494,729
210,453,409
(1) The Shares added (shown in ‘Other Changes’) for A. Greig and C. Dunks represent their respective holdings
when they were appointed as directors of the Company during the year.
(2) The Shares deducted (shown in ‘Other Changes’) for R. Anthon and R. Seville represent their respective
holdings when they resigned as directors of the Company during the year.
Other transactions with Key Management Personnel
On 23 December 2015, the Company executed a loan deed with the Company’s Non-Executive
Chairman Mr Andy Greig, a related party, for up to $500,000. Further details are contained in Note
12 (Borrowings).
At 30 June 2016, the amount recognised as a non-current liability was $515,658 (including $15,658 of
accrued interest).
Page 17
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2016
Director’s Report
End of Remuneration Report
Options
At the date of this report, the unissued ordinary shares of the Company under options are as follows:
Unlisted Options
Grant Date
Expiry Date
Exercise Price
No. Under Option
28 March 2011
18 January 2017
4 December 2012
3 December 2016
8 February 2013
20 January 2017
20 March 2014
20 March 2018
26 August 2015
26 August 2015
31 July 2019
31 July 2019
$0.326
$0.06
$0.06
$0.03
$0.012
$0.0125
1,000,000
200,000
2,350,000
9,300,000
1,000,000
10,000,000
23,850,000
There have been no unissued shares or interests under option of any controlled entity within the
economic entity during or since reporting date. Option holders do not have any rights to participate
in any share issue or other interests in the Company or any other entity.
Directors’ Meetings
The meetings attended by each director during the financial year were:
Directors
A. Greig (appointed 30 October 2015)
C. Dunks (appointed 4 November 2015)
C. Nolan
C. Treacy
R. Anthon (resigned 30 October 2015)
R. Seville (resigned 26 October 2015)
Board
Audit & Risk Committee
Meetings
Attended
Meetings
Attended
4
4
7
7
3
3
4
4
6
7
3
2
1*
1
1
1*
-
-
1*
1
1
1*
-
-
* These directors attended the Audit & Risk Committee meeting (by invitation) despite not being members of the
Audit & Risk Committee or appointed members of the Audit & Risk Committee at that time.
Corporate Governance
In recognising the need for the highest standards of corporate behaviour and accountability, the
directors of Elementos Limited support and, where practicable or appropriate, have adhered to the
ASX Principles of Corporate Governance. The Company’s corporate governance statement is set
out in this Annual Report.
Page 18
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2016
Director’s Report
AUDITOR’S DECLARATION OF INDEPENDENCE
Tel: +61 7 3237 5999
Fax: +61 7 3221 9227
www.bdo.com.au
Level 10, 12 Creek St
Brisbane QLD 4000
GPO Box 457 Brisbane QLD 4001
Australia
DECLARATION OF INDEPENDENCE BY A J WHYTE TO THE DIRECTORS OF ELEMENTOS LIMITED
As lead auditor of Elementos Limited for the year ended 30 June 2016, I declare that, to the best of my
knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Elementos Limited and the entities it controlled during the period.
A J Whyte
Director
BDO Audit Pty Ltd
Brisbane, 29 September 2016
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050
110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited
by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional
Standards Legislation, other than for the acts or omissions of financial services licensees.
20
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2016
Shareholder Information
Additional information required by the Australian Securities Exchange Ltd and not shown elsewhere
in this report is as follows. The information is current as at 19 September 2016.
(a) Distribution of equity securities
The number of holders, by size of holding, in each class of security are:
Ordinary Shares
Unlisted Options ($0.06 @ 3-Dec-16)
No. Holders
57
78
88
290
315
828
No. Shares
11,954
243,519
723,859
12,239,370
754,260,940
767,479,642
No. Holders
No. Options
-
-
-
-
1
1
-
-
-
-
200,000
200,000
Unlisted Options ($0.326 @ 18-Jan-17)
Unlisted Options ($0.06 @ 20-Jan-17)
No. Holders
No. Options
No. Holders
No. Options
-
-
-
-
1
1
-
-
-
-
1,000,000
1,000,000
-
-
-
-
4
4
-
-
-
-
2,350,000
2,350,000
Unlisted Options ($0.03 @ 20-Mar-18)
Unlisted Options ($0.012 @ 31-Jul-18)
No. Holders
No. Options
No. Holders
No. Options
-
-
-
-
2
2
-
-
-
-
9,300,000
9,300,000
-
-
-
-
1
1
-
-
-
-
1,000,000
1,000,000
Unlisted Options ($0.0125 @ 31-Jul-19)
No. Holders
No. Options
-
-
-
-
1
1
-
-
-
-
10,000,000
10,000,000
The number of shareholders holding
less than a marketable parcel is 47.
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
Total
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
Total
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
Total
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
Total
Page 21
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2016
Shareholder Information
(b) Twenty Largest Shareholders
The names of the twenty largest holders of Quoted Ordinary Shares are:
#
Registered Name
Number of
Shares
% of total
Shares
1
2
3
4
5
6
7
8
9
BOND STREET CUSTODIANS LIMITED
164,000,001
21.37%
BOURSE SECURITIES PTY LTD
ANDES INVESTORS LLC
MR MICHAEL DAVID ADAMS & MRS CAROL ADAMS
SEAFOUR INVESTMENTS PTY LIMITED
1514341 ONTARIO INC
LEET INVESTMENTS PTY LIMITED*
MR PHILLIP GERRARD BERRY
68,366,667
56,826,208
22,890,004
17,450,004
17,200,000
17,145,512
16,544,748
MR WILLIAM RICHARDS GOODALL
15,750,004
8.91%
7.40%
2.98%
2.27%
2.24%
2.23%
2.16%
2.05%
10 MR JOHN DOUGLAS JEFFERY & MRS ELSPETH LOUISE JEFFERY
15,000,000
1.95%
11
KOKONG HOLDINGS PTY LIMITED
14,950,511
1.95%
12 CHRISTOPHER JOHN STAPLES & ANNA CLAIRE STAPLES
14,350,004
1.87%
13
14
15
J P MORGAN NOMINEES AUSTRALIA LIMITED
13,346,876
THE WELL BENEATH PTY LIMITED
12,250,004
1.74%
1.60%
RICHARD SEVILLE & ASSOCIATES PTY LTD
11,340,087
1.48%
16
HOMEMINSTER PTY LTD
17 ONE MANAGED INVT FUNDS LTD <1 A/C>
18 CALVIN PATRICK TREACY
19 MR DAMIAN CHARLES WILLS
20 MR TIMOTHY NEWTON
TOP 20 TOTAL
Total of Securities
* Merged holding
10,531,303
10,000,000
7,000,000
6,000,000
5,600,000
1.37%
1.30%
0.91%
0.78%
0.73%
516,541,933
67.30%
767,479,642
Page 22
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2016
Shareholder Information
(c) Substantial Shareholders
Substantial shareholders as shown in substantial shareholder notices received by Elementos Limited
are:
Name of Shareholder
Ordinary Shares
BOND STREET CUSTODIANS LIMITED
164,000,001
BOURSE SECURITIES PTY LTD
JAMES CALAWAY
68,366,667
60,020,768
(d) Voting rights
All ordinary shares carry one vote per share without restriction.
Options do not carry voting rights.
(e) Restricted securities
The Group currently has no restricted securities on issue.
(f) On-market buy back
There is not a current on-market buy-back in place.
(g) Business objectives
The Group has used its cash and assets that are readily convertible to cash in a way consistent with
its business objectives.
Page 23
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2016
Interests in Tenements
Elementos Limited held the following interests in tenements as at the date of this report:
Tenement Name
Tenement
Number
Cleveland
EL7/2005
Selwyn Range
EPM 19371
Selwyn Range
EPM 19375
Selwyn Range
EPM 19426
Area (Hectares)
Elementos Interest
5993
3732
6220
622
100%
100%
100%
100%
Location of
Tenements
Tasmania
Queensland
Queensland
Queensland
Page 24
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2016
Annual Mineral Resources and Ore Reserves Statement
A summary of the Group’s annual review of its ore reserves and mineral resources of its Cleveland
project located in Tasmania at 30 June 2016 compared to 30 June 2015 is set out below.
Tailings (at 0% Sn cut-off) 6
30 June 2015 – Mineral Resource
Category
Tonnage
Sn Grade
Cu Grade
Indicated
3.8 Mt
0.30%
0.13%
30 June 2016 – Ore Reserve
Category
Tonnage
Sn Grade
Contained Sn
Cu Grade
Contained Cu
Probable
0.29%
Tables subject to rounding errors; Sn = tin, Cu = copper
3.7 Mt
11,000t
0.13%
5,000t
Total Tin-Copper Mineral Resource (at 0.35% Sn cut-off)
30 June 2015 and 30 June 2016 – unchanged
Category
Tonnage
Sn Grade
Contained Sn
Cu Grade
Contained Cu
Indicated
Inferred
5.0 Mt
2.4 Mt
0.69%
0.56%
34,500t
13,700t
0.28%
0.19%
14,000t
4,600t
Table subject to rounding errors; Sn = tin, Cu = copper
Open Pit Tin-Copper Mineral Resource (at 0.35% Sn cut-off)
NOTE: this Open Pit Tin-Copper Mineral Resource is a sub-set of the Total Tin-Copper Mineral
Resource noted above
30 June 2015 and 30 June 2016 – unchanged
Category
Tonnage
Sn Grade
Contained Sn
Cu Grade
Contained Cu
Indicated
Inferred
0.8 Mt
0.01 Mt
0.81%
0.99%
Table subject to rounding errors; Sn = tin, Cu = copper
6,500t
140t
0.27
0.34
2,300t
50t
Underground Tungsten Mineral Resource (at 0.20% WO3 cut-off) 7
30 June 2015 and 30 June 2016 – unchanged
Category
Inferred
Tonnage
4 Mt
Table subject to rounding errors; WO3 = tungsten oxide
WO3 Grade
0.30%
The only change during the financial year was the Cleveland Tailings Mineral (Indicated) Resource
being re-classified as an Ore Reserve. The Group confirms that it is not aware of any new information
or data (since 30 June 2015) that materially affects the other Mineral Resources set out above.
6 Announced per the JORC Code 2012 on 3 August 2015 “Cleveland Tailings Ore Reserve”
7 This information was prepared and first disclosed under the JORC Code 2004. It has not been updated since to comply
with the JORC Code 2012 on the basis that the information has not materially changed since it was last reported.
Page 25
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2016
Annual Mineral Resources and Ore Reserves Statement
The Group regularly reviews its Mineral Resources and Reserves to assess their reasonableness,
engaging suitably qualified competent person/s where required. A summary of the governance
and controls applicable to the Group’s Mineral Resources and Reserves processes is as follows:
Review and validation of drilling and sampling methodology and data spacing, geological
logging, data collection and storage, sampling and analytical quality control;
Geological interpretation — review of known and interpreted structure, lithology and
weathering controls;
Estimation methodology — relevant to mineralisation style and proposed mining
methodology;
Comparison of estimation results with previous mineral resource models, and with results
using alternate modelling methodologies;
Visual validation of block model against raw composite data; and
Peer review by senior company personnel and independent consultants as required.
This Annual Mineral Resources and Ore Reserves Statement:
is based on, and fairly represents, information and supporitng documentation prepared by
competent persons (referred to on page 2); and
has been approved by Mr Chris Creagh who is a Member of the Australasian Institute of
Mining and Metallurgy and is a part-time consultant to Elementos Ltd. Mr Creagh is qualified
geologist with sufficient experience which is relevant to the style of mineralisation and type
of deposit under consideration and to the activity which he is undertaking, to qualify as a
Competent Person as defined in the 2012 Edition of the “Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves”. Mr Creagh has approved this
Annual Mineral Resources and Ore Reserves Statement as a whole as the form and context
in which it appears in this Annual Report.
Page 26
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2016
Corporate Governance Statement
The board of directors of Elementos Limited is responsible for the corporate governance of the
consolidated entity. The Board guides and monitors the business and affairs of Elementos Limited on
behalf of the shareholders by whom they are elected and to whom they are accountable.
Elementos Limited’s Corporate Governance Statement (which can be found on the Company’s
website www.elementos.com.au) is structured with reference to the Australian Securities Exchange
(“ASX”) Corporate Governance Council’s (the “Council”) “Corporate Governance Principles and
Recommendations, 3rd Edition”, which are as follows:
Principle 1
Principle 2
Principle 3
Principle 4
Principle 5
Principle 6
Principle 7
Principle 8
Lay solid foundations for management and oversight
Structure the board to add value
Act ethically and responsibly
Safeguard integrity in corporate reporting
Make timely and balanced disclosure
Respect the rights of security holders
Recognise and manage risk
Remunerate fairly and responsibly
A copy of the eight Corporate Governance Principles and Recommendations can be found on the
ASX’s website.
The Board is of the view that, during the reporting period, with the exception of the departures from
the ASX Guidelines as set out below, it otherwise complies with all of the ASX Guidelines.
Roles and Responsibilities of the Board and Management
ASX CGC Principle 1
Lay solid foundations for management and oversight.
Role of the Board
The Board of Directors is pivotal in the relationship between shareholders and management and the
role and responsibilities of the Board underpin corporate governance.
The Board is committed to administering the policies and procedures with openness and integrity,
pursuing the true spirit of corporate governance commensurate with the Group’s needs.
Generally, the powers and obligations of the Board are governed by the Corporations Act and the
general law.
Without limiting those matters, the Board expressly considers itself responsible for the following:
Ensuring compliance with the Corporations Act, ASX Listing Rules (where appropriate) and all
relevant laws;
Oversight of the Group including its framework of control and accountability systems to
enable risk to be assessed and managed;
Appointing and removing the chief executive officer;
Ratifying the appointment and, where appropriate, removal of senior executives including
the chief financial officer and the Group secretary;
Input into and final approval of management’s development of corporate strategy and
performance objectives;
Monitoring senior executive’s performance and implementation of strategy;
Ensuring appropriate resources are available to senior executives;
Approving and monitoring the progress of major capital expenditure, capital management
and acquisitions and divestitures;
Page 27
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2016
Corporate Governance Statement
Approving and overseeing Committees where appropriate to assist in the Board’s function
and powers.
The Functions, Powers and Responsibilities of the Board are set out in the Company’s Corporate
Governance Charter which is available from the corporate governance section of the Group’s
website.
The board meets on a regular basis to review the performance of the Company against its goals
both financial and non-financial. In normal circumstances, prior to the scheduled board meetings,
each board member
is provided with a formal board package containing appropriate
management and financial reports.
Appropriate background checks are conducted on proposed new directors and material
information about a director being re-elected is provided to security holders.
Written agreements are entered in to with directors and senior management clearly setting out their
roles and responsibilities.
The company secretary works directly with the chair and the executive director on the functioning
of all board and committee procedures.
Diversity
The Group is committed to workplace diversity and ensuring a diverse mix of skills amongst its
directors, officers and employees.
Recommendation 1.5 requires that listed entities should establish a policy concerning diversity. Whilst
the Group does not currently have a Diversity policy due to its size and nature of its operations, it
strives to attract the best person for the position regardless of gender, age, ethnicity or cultural
background.
As at 30 June 2016, the proportion of women in the whole organisation is a follows:
Male
Female
Board Members
Officers
Other
4
2
-
-
-
1
Performance Evaluation
The Board (in carrying out the functions of the Remuneration and Nomination Committees) considers
remuneration and nomination issues annually and otherwise as required in conjunction with the
regular meetings of the Board.
As the CEO resigned subsequent to the year end, no performance evaluation was undertaken.
No formal performance evaluation of the non-executive directors was undertaken during the year
ended 30 June 2016.
Page 28
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2016
Corporate Governance Statement
Board Composition
ASX CGC Principle 2
Structure of the Board to add value
Nomination Committee
Recommendation 2.1 requires the Board to establish a nomination committee.
Although the Board has adopted a Nominations Committee Charter, the Board has not formally
established a Nominations Committee as the Directors consider that the Company is currently not of
a size nor are its affairs of such complexity as to justify the formation of this Committee. The Board as
a whole is able to address these issues and is guided by the Nominations Committee Charter. The
Company will review this position annually and determine whether a Nominations Committee needs
to be established.
The Nomination Committee Charter is set out in the Company’s Corporate Governance Charter
which is available from the corporate governance section of the Group’s website.
The Company is developing an appropriate board skills matrix. The skills, experience and expertise
relevant to the position of each director who is in office at the date of the Annual Report is detailed
in the director’s report.
Corporate Governance Council Recommendation 2.4 requires a majority of the Board to be
independent Directors. The Corporate Governance Council defines independence as being free
from any interest, position, association or relationship that might influence, or reasonably be
perceived to influence, in a material capacity to bring independent judgement to bear on issues
before the board and to act in the best interests of the entity and its security holders generally.
In the context of Director independence, “materiality” is considered from both the Group and the
individual Director perspective. The determination of materiality requires consideration of both
quantitative and qualitative elements. An item is presumed to be material (unless there is qualitative
evidence to the contrary) if it is equal to or greater than 10% of the appropriate base amount.
Qualitative factors considered included whether a relationship is strategically important, the
competitive landscape, the nature of the relationship and the contractual or other arrangements
governing it and other factors which point to the actual ability of the Director in question to shape
the direction of the Group.
In accordance with the Council’s definition of independence above and the materiality thresholds
set, all of the Company’ s directors are not considered to be independent and therefore the Group
does not currently comply with Recommendation 2.4:
Name
A. Greig
C. Dunks
Position
Reason for non-compliance
Non-Executive Chairman
Director is a substantial (>5%) shareholder
Executive Director
Director is engaged by the Company in an executive
capacity
C. Nolan
Non-Executive Director
C. Treacy
Non-Executive Director
Director was employed by the Company in an
executive capacity within the last three years
Director was employed by the Company in an
executive capacity within the last three years
Page 29
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2016
Corporate Governance Statement
Elementos Limited considers industry experience and specific expertise, as well as general corporate
experience, to be important attributes of its Board members. The Directors noted above have been
appointed to the Board of Elementos Limited due to their considerable industry and corporate
experience.The term in office held by each Director in office at the date of this report is as follows:
Name
A. Greig
C. Dunks
C. Nolan
C. Treacy
Term in Office
11 months
11 months
7 years 2 months
2 year 11 months
Directors have the right to seek independent professional advice in the furtherance of their duties as
directors at the Group’s expense. Written approval must be obtained from the chair prior to incurring
any expense on behalf of the Group. Informal induction is provided to any new directors.
Act Ethically and Responsibly
ASX CGC Principle 3
Code of Conduct
The Directors are subject to certain stringent legal requirements regulating the conduct both in terms
of their internal conduct as directors and in their external dealings with third parties both on their own
and on behalf of the Group.
To assist directors in discharging their duty to the Group and in compliance with relevant laws to
which they are subject, the Group has adopted a Corporate Ethics Policy and Corporate Code of
Conduct within its Corporate Governance Charter.
The Corporate Ethics Policy sets out rules binding Directors in respect of:
a Director’s legal duties as an officer of the Company;
a Director’s obligations to make disclosures to the ASX and the market generally; and
dealings by Directors in shares in the Company.
The Corporate Ethics Policy, as set out in the Company’s Corporate Governance Charter is available
from the corporate governance section of the Group’s website.
Safeguard Integrity in Corporate Reporting
ASX CGC Principle 4
Audit Committee
The Board has established an Audit and Risk Management Committee which operates under a
charter approved by the Board.
Recommendation 4.1 states that an audit committee should be structured so that it:
i. consists only non-executive directors;
ii. consists of a majority of independent directors;
iii.
is chaired by an independent chair, who is not the chair of the Board; and
iv. has at least three members.
The members of the Audit & Risk Management Committee are Corey Nolan, Calvin Treacy and Chris
Page 30
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2016
Corporate Governance Statement
Dunks. While Messrs Nolan and Treacy are both non-executive directors, Chris Dunks is engaged in
an executive capacity. As the Company’s Audit and Risk Management Committee includes an
executive director, none of the Committee are considered independent (based on the Council’s
definition), and the Committee is not chaired by an independent director, the Company does not
presently comply with Recommendation 4.1.
All members of the Audit & Risk Management Committee are considered financially literate in the
context of the Company’s affairs. The Company believes that given the size and nature of its
operations, non-compliance by the Company with Recommendation 4.1 will not be detrimental to
the Company.
The number of meetings of the Audit & Risk Management Committee held during the year and the
number of meetings attended by each Director was as follows:
Audit & Risk Management Committee
Number of meetings
held while in office
Meetings attended
C. Nolan
C. Dunks (appointed 4 November 2015)
C. Treacy
1
1
1*
1
1
1*
* Calvin Treacy attended the Audit & Risk Committee meeting (by invitation) despite not being appointed to the
Audit & Risk Committee at that time.
The Audit Committee Charter is set out in the Company’s Corporate Governance Charter which is
available from the corporate governance section of the Group’s website.
Certification of financial reports
The Executive Director has made the following certifications to the Board:
That the Group’s financial reports are complete and present a true and fair view, in all
material respects, of the financial position and performance of the Group and are in
accordance with relevant accounting standards;
The integrity of the reports is founded on a sound system of financial risk management and
internal compliance and control.
The Chief Financial Officer has made the following certifications to the Board:
That the Group’s financial reports are complete and present a true and fair view, in all
material respects, of the financial position and performance of the Group and are in
accordance with relevant accounting standards;
The integrity of the reports is founded on sound system of financial risk management and
internal compliance and control.
The Group ensures that its external auditors are present at the AGM to answer any questions with
regard to the efficacy of the financial statement audit and the associated independent audit report.
Continuance Disclosure
ASX CGC Principle 5
Make timely and balanced disclosure
The Group duly complies with ASX and ASIC requirements for the timely and accurate reporting of
the Group’s financial activities, thus ensuring that the Group has disclosed all information which has
a material impact on shareholders. This includes the Annual Financial Report, Interim Financial
Report, quarterly cash flows, new and relinquished tenements and changes in directors and
Page 31
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2016
Corporate Governance Statement
shareholder interests and other events which are identified to be material. All ASX announcements
are available on the Group’s website.
The Company Secretary is responsible for communication with the ASX, including responsibility for
ensuring compliance with the continuous disclosure requirements of the ASX Listing Rules and
oversight of information distributed to the ASX.
Respect The Rights of Security Holders
ASX CGC Principle 6
The Board of directors undertakes to ensure that shareholders are informed of all major developments
affecting the Group. Information is communicated to shareholders through the annual report, interim
financial report, announcements made to the ASX, notices of Annual General and Extraordinary
General Meetings, the AGM and Extraordinary General Meetings.
The Board encourages full participation of shareholders at Annual and Extraordinary General
Meetings to ensure a high level of accountability and identification with the Group’s direction,
strategy and goals. In particular, shareholders are responsible for voting on the re-election of
directors.
The Group also offers shareholders the option to receive ASX announcements and other notices from
the Company electronically.
Risk Management
ASX CGC Principle 7
Recognise and manage risk
The Board has established an Audit and Risk Management Committee which operates under a
charter approved by the Board.
Recommendation 7.1 states that an audit committee should be structured so that it:
i. consists only non-executive directors;
ii. consists of a majority of independent directors;
iii.
is chaired by an independent chair, who is not the chair of the Board; and
iv. has at least three members.
The members of the Audit & Risk Management Committee are Corey Nolan, Calvin Treacy and Chris
Dunks. While Messrs Nolan and Treacy are both non-executive directors, Chris Dunks is engaged in
an executive capacity. As the Company’s Audit and Risk Management Committee includes an
executive director, none of the Committee are considered independent (based on the Council’s
definition), and the Committee is not chaired by an independent director, the Company does not
presently comply with Recommendation 7.1.
All members of the Audit & Rick Management Committee are considered to have sufficient
technical, legal and industry experience in the context of the Company’s affairs to properly assess
the risks facing the Group. The Company believes that given the size and nature of its operations,
non-compliance by the Company with Recommendation 7.1 will not be detrimental to the
Company.
Page 32
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2016
Corporate Governance Statement
The number of meetings of the Audit & Risk Management Committee held during the year and the
number of meetings attended by each Director was as follows:
Audit & Risk Management Committee
Number of meetings
held while in office
Meetings attended
C. Nolan
C. Dunks (appointed 4 November 2015)
C. Treacy
1
1
1*
1
1
1*
* Calvin Treacy attended the Audit & Risk Committee meeting (by invitation) despite not being appointed to the
Audit & Risk Committee at that time.
The Company has developed a basic framework for risk management and internal compliance and
control systems which cover organisational, financial and operational aspects of the Company’s
affairs. Further detail of the Company’s risk management policies can be found within the Audit and
Risk Management Committee Charter.
Recommendation 7.2 requires that the Board review the Company’s risk management framework
and disclose whether such a review has taken place. Business risks are considered regularly by the
Board and management at management and Board meetings. A formal report to the Board as to
the effectiveness of the management of the Company’s material business risks has not been formally
undertaken.
The Audit and Risk Management Committee Charter is set out in the Company’s Corporate
Governance Charter which is available from the corporate governance section of the Group’s
website.
The Company does not have a separate internal audit function. The board considers that the
Company is not currently of the size or complexity to justify a separate internal audit function, and
that appropriate internal financial controls are in place. Such controls are monitored by senior
financial management and the Audit and Risk Committee.
The Director’s Report sets out some of the key risks relevant to the Company and its operations.
Although not specifically defined as such, the risks include economic, environmental and social
sustainability risks. As noted above, the Company regularly reviews risks facing the Company and
adopts appropriate mitigation strategies where possible.
Remuneration
ASX CGC Principle 8
Remunerate fairly and responsibly
Remuneration Committee
The Board has not established a Remuneration Committee which operates under a charter
approved by the Board.
Although the Board has adopted a Remuneration Committee Charter, the Board has not formally
established a Remuneration Committee as the Directors consider that the Company is currently not
of a size nor are its affairs of such complexity as to justify the formation of this Committee. The Board
as a whole considers themselves to have sufficient legal, corporate, commercial and industry
experience in the context of the Company’s affairs to properly assess the remuneration issues
required by the Group and is able to address these issues while being guided by the Remuneration
Committee Charter. The Company will review this position annually and determine whether a
Remuneration Committee needs to be established.
Page 33
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2016
Corporate Governance Statement
The Company believes that given the size and nature of its operations, non-compliance by the
Company with Recommendation 8.1 will not be detrimental to the Company.
It is the Company’s objective to provide maximum stakeholder benefit from the retention of a high
quality Board and Executive team by remunerating directors and key executives fairly and
appropriately with reference to relevant employment market conditions. To assist in achieving this
objective, the Board links the nature and amount of executive director’s and officer’s remuneration
to the Group’s financial and operations performance. The expected outcomes of the remuneration
structure are:
retention and motivation of key Executives
attraction of quality management to the Group
performance incentives which allow executives, management and staff to share the rewards
of the success of Elementos Limited.
For details on the amount of remuneration and all monetary and non-monetary components for Key
Management Personnel during the period, please refer to the Remuneration Report within the
Directors’ Report. In relation to the payment of bonuses, options and other incentive payments,
discretion is exercised by the Remuneration Committee and the Board, having regard to the overall
performance of Elementos Limited and the performance of the individual during the period.
There is no scheme to provide retirement benefits to directors other than statutory superannuation.
The Remuneration Committee Charter is set out in the Company’s Corporate Governance Charter
which is available from the corporate governance section of the Group’s website.
Remuneration Policy
The Group’s remuneration policy is also further detailed in the Remuneration Report in the Directors
Report.
Non-Executive Director Remuneration
Non-executive directors are remunerated at market rates for time, commitment and responsibilities.
Non-executive directors are remunerated by fees as determined by the Board with the aggregate
directors’ fee pool limit of $250,000. 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.
Independent consultancy sources provide advice, as required; ensuring remuneration is in
accordance with market practice. Fees for non-executive Directors are not linked to the
performance of the Group. However, to align Directors’ interests with shareholders interests, the
Directors are encouraged to hold shares in the Company and are, subject to approval by
shareholders, periodically offered options and/or performance rights.
The Company has adopted a Trading Policy that includes a prohibition on hedging, aimed at
ensuring participants do not enter in to arrangements which would have the effect of limited their
exposure to rick relating to an element of their remuneration.
Other Information
Further information relating to the Group’s corporate governance practices and policies has been
made publicly available on the Group’s web site.
Page 34
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2016
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the Year Ended 30 June 2016
Revenue
Corporate and administrative expenses
Write-off of exploration assets
Reclassify foreign currency reserve
Note
30 June 2016
30 June 2015
$
$
2
3
8
14
10,648
96,706
(860,157)
(944,903)
(240,447)
(1,844,343)
(667,824)
-
Loss before income tax expense
(1,757,780)
(2,692,540)
Income tax expense
4
-
-
Loss for the period attributable to members of the parent
entity
(1,757,780)
(2,692,540)
Other comprehensive income
Items that may be reclassified to profit or loss:
Exchange differences on
operations
translation of
foreign
Reclassify foreign currency reserve
Other comprehensive income/(loss) for the period, net
of tax
810
(73,705)
667,824
-
668,634
(73,705)
Total comprehensive
members of the parent entity
income/(loss) attributable
to
(1,089,146)
(2,766,245)
Basic and diluted earnings/(loss) per share (cents per
share)
(0.2)
(0.4)
The accompanying notes form part of these financial statements.
Page 35
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2016
Consolidated Statement of Financial Position
As at 30 June 2016
Note
30 June 2016
30 June 2015
$
$
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Other current assets
Total Current Assets
NON-CURRENT ASSETS
Exploration and evaluation assets
Plant and equipment
Other non-current assets
Total Non-Current Assets
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Total Current Liabilities
NON-CURRENT LIABILITIES
Borrowings
Total Non-Current Liabilities
5
6
7
8
9
10
11
12
467,268
2,020
708
469,996
761,828
19,380
10,917
792,125
4,681,891
4,859,170
1,225
6,000
4,186
13,950
4,689,116
4,877,306
5,159,112
5,669,431
62,739
62,739
166,705
166,705
515,658
515,658
-
-
TOTAL LIABILITIES
578,397
166,705
NET ASSETS
EQUITY
Contributed equity
Reserves
Accumulated losses
TOTAL EQUITY
4,580,715
5,502,726
13
12,407,382
12,437,377
261,300
(604,464)
(8,087,967)
(6,330,187)
4,580,715
5,502,726
The accompanying notes form part of these financial statements.
Page 36
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2016
Consolidated Statement of Changes in Equity
For the Year Ended 30 June 2016
Note
Issued
Capital
Accumulated
Losses
Share-
Based
Payments
Reserve
Foreign
Currency
Translation
Reserve
Total
$
$
$
$
$
Balance at 30 June 2014
10,924,168
(3,637,647)
64,170
(594,929)
6,755,762
Loss for the period
Other comprehensive income for the
period
14
Total comprehensive income
-
-
-
(2,692,540)
-
(2,692,540)
Shares issued due to capital raising
Equity settled compensation
Transaction costs
13
13
13
1,543,948
37,021
(67,760)
-
-
-
-
-
-
-
-
-
-
(2,692,540)
(73,705)
(73,705)
(73,705)
(2,766,245)
-
-
-
1,543,948
37,021
(67,760)
Balance at 30 June 2015
12,437,377
(6,330,187)
64,170
(668,634)
5,502,726
Loss for the period
Other comprehensive income for the
period
14
Reclassify foreign currency reserve
14
-
-
-
(1,757,780)
-
-
Total comprehensive income
-
(1,757,780)
-
-
-
-
-
(1,757,780)
810
810
667,824
667,824
668,634
(1,089,146)
Equity settled compensation
Transaction costs
20
13
-
(29,995)
-
-
197,130
-
Balance at 30 June 2016
12,407,382
(8,087,967)
261,300
-
-
-
197,130
(29,995)
4,580,715
The accompanying notes form part of these financial statements.
Page 37
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2016
Consolidated Statement of Cash Flows
For the Year Ended 30 June 2016
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received
Other receipts
Payments to suppliers and employees
30 June 2016
30 June 2015
$
$
10,195
-
51,125
45,581
(708,344)
(818,863)
Net cash used in operating activities
15
(698,149)
(722,157)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for exploration and evaluation assets
(459,006)
(1,352,157)
Refunds of security deposits
Research and development refunds
Cash disposed of on disposal of subsidiary
Purchase of property, plant and equipment
Proceeds from the sale of a subsidiary
15,005
320,684
(183)
(866)
57,950
-
682,268
-
(5,844)
-
Net cash used in investing activities
(66,416)
(675,733)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares
Costs associated with share issues
Proceeds from loan
-
1,543,948
(29,995)
500,000
(67,760)
-
Net cash provided by financing activities
470,005
1,476,188
Net increase/(decrease) in cash held
(294,560)
78,298
Cash at Beginning of Year
761,828
682,689
Effect of exchange rates on cash holdings in foreign
currencies
-
841
Cash at End of Year
5
467,268
761,828
The accompanying notes form part of these financial statements.
Page 38
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2016
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2016
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements are general purpose financial statements that have been prepared in
accordance with the Corporations Act 2001, Australian Accounting Standards, and other
authoritative pronouncements of the Australian Accounting Standards Board. Elementos Limited is a
for-profit entity for the purpose of preparing the financial statements. The financial statements are
presented in Australian dollars.
Compliance with Australian Accounting Standards ensures that the financial statements and notes
also comply with International Financial Reporting Standards.
The financial statements are for the consolidated entity consisting of Elementos Limited and its
Controlled Entities. Elementos Limited is a public company, incorporated and domiciled in Australia.
The financial statements have been prepared on an accruals basis and are based on historical cost
modified by the measurement at fair value of selected non-current assets, financial assets and
liabilities. The financial report was authorised for issue on 29 September 2016 by the directors of the
Company.
Separate financial statements for Elementos Limited as an individual entity are no longer presented
following a change to the Corporations Act 2001. However, financial information required for
Elementos Limited as an individual entity is included in Note 26.
Material accounting policies adopted in the preparation of these financial statements are presented
below. They have been consistently applied unless otherwise stated.
Going Concern
The financial statements have been prepared on a going concern basis which contemplates the
continuity of normal business activities and the realisation of assets and discharge of liabilities in the
ordinary course of business. The ability of the Group to maintain continuity of normal business activities
and to pay its debts as and when they fall due is dependent on the ability of the Group to successfully
raise additional capital and/or successful exploration and subsequent exploitation of areas of interest
through sale or development. The Group has not generated any revenues from operations. During
the year, the Group did not raise any equity capital, however borrowed $0.5 million (unsecured, non-
recourse) from a related party.
Should the Group not be able to raise further capital, dispose of assets when required or manage its
expenditure so as to conserve cash over the coming 12 months, there exists a material uncertainty
regarding the Group’s ability to continue as a going concern and realise its assets and settle its
liabilities and commitments in the normal course of business and at the amounts stated in the
financial statements. The financial report does not include any adjustments relating to the
recoverability or classification of recorded asset amounts, or to the amounts or classification of
liabilities which might be necessary should the Group not be able to continue as a going concern.
Principles of Consolidation
Subsidiaries
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of
Elementos Limited ("Company" or "parent entity") as at 30 June 2016, and the results of all subsidiaries
for the year then ended. Elementos Limited and its subsidiaries together are referred to in these
financial statements as the Group or the economic entity.
Page 39
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2016
Notes to the Consolidated Financial Statements for the Year Ended 30 June 2016
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Principles of Consolidation (continued)
The names of the subsidiaries are contained in Note 24. All subsidiaries have a 30 June financial year
end and are accounted for by the parent entity at cost.
Subsidiaries are all entities over which the Group has control. The Group has control over an entity
when the Group is exposed to, or has a right to, variable returns from its involvement with the entity,
and has the ability to use its power to affect those returns. 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.
Intercompany transactions, balances and unrealised gains on transactions between Group
companies are eliminated. Unrealised losses are also eliminated unless the transaction provides
evidence of the impairment of the asset transferred. Accounting policies of controlled entities have
been changed where necessary to ensure consistency with the policies adopted by the Group.
Changes in ownership interests
When the Group ceases to have control, joint control or significant influence, any retained interest in
the entity is remeasured to its fair value, with the change in the carrying amount recognised in profit
or loss.
The fair value is the initial carrying amount for the purposes of subsequently accounting for the
retained interest as an associate, joint venture or financial asset. In addition, any amounts previously
recognised in other comprehensive income in respect of that entity are accounted for as if the Group
had directly disposed of the related assets or liabilities. This may mean that amounts previously
recognised in other comprehensive income are reclassified to profit or loss.
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
Managing Director/Chief Executive Officer.
Income Tax
The income tax expense/(income) for the year comprises current income tax expense/(income) and
deferred tax expense/(income). Current income tax expense charged to profit or loss is the tax
payable on taxable income calculated using applicable income tax rates enacted, or substantially
enacted, as at reporting date. Current tax liabilities/(assets) are therefore measured at the amounts
expected to be paid to/(recovered from) the relevant taxation authority. Deferred income tax
expense reflects movements in deferred tax asset and deferred tax liability balances during the
period as well unused tax losses. Current and deferred income tax expense/(income) is charged or
credited directly to equity instead of profit or loss when the tax relates to items that are credited or
charged directly to equity.
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the
period when the asset is realised or the liability is settled, based on tax rates enacted or substantively
enacted at reporting date. Their measurement also reflects the manner in which management
expects to recover or settle the carrying amount of the related asset or liability.
Page 40
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2016
Notes to the Consolidated Financial Statements for the Year Ended 30 June 2016
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Income Tax (continued)
Deferred tax assets and liabilities are ascertained based on temporary differences arising between
the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred
tax assets also result where amounts have been fully expensed but future tax deductions are
available. No deferred income tax will be recognised from the initial recognition of an asset or liability,
excluding a business combination, where there is no effect on accounting or taxable profit or loss.
The Company and its Australian 100% owned controlled entities have formed a tax consolidated
group.
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to
the extent that it is probable that future taxable profit will be available against which the benefits of
the deferred tax asset can be utilised. The amount of benefits brought to account or which may be
realised in the future is based on the assumption that no adverse change will occur in income
taxation legislation and the anticipation that the economic entity will derive sufficient future
assessable income to enable the benefit to be realised and comply with the conditions of
deductibility imposed by the law.
Exploration and Evaluation Assets
Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area
of interest. Such expenditures comprise net direct costs and an appropriate portion of related
overhead expenditure but do not include overheads or administration expenditure not having a
specific nexus with a particular area of interest. These costs are only carried forward to the extent
that they are expected to be recouped through the successful development of the area or where
activities in the area have not yet reached a stage which permits reasonable assessment of the
existence of economically recoverable reserves and active or significant operations in relation to the
area are continuing.
A regular review has been undertaken on each area of interest to determine the appropriateness of
continuing to carry forward costs in relation to that area of interest.
A provision is raised against exploration and evaluation assets where the directors are of the opinion
that the carried forward net cost may not be recoverable or the right of tenure in the area lapses.
The increase in the provision is charged against the results for the year. Accumulated costs in relation
to an abandoned area are written off in full against profit or loss in the year in which the decision to
abandon the area is made.
When production commences, the accumulated costs for the relevant area of interest are amortised
over the life of the area according to the rate of depletion of the economically recoverable reserves.
Restoration Costs
Costs of site restoration are provided over the life of the facility from when exploration commences
and are included in the costs of that stage. Site restoration costs include the dismantling and removal
of mining plant, equipment and building structures, waste removal, and rehabilitation of the site in
accordance with clauses of the exploration and mining permits. Such costs have been determined
using estimates of future costs, current legal requirements and technology on an undiscounted basis.
Page 41
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2016
Notes to the Consolidated Financial Statements for the Year Ended 30 June 2016
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Restoration Costs (continued)
Any changes in the estimates for the costs are accounted for on a prospective basis. In determining
the costs of site restoration, there is uncertainty regarding the nature and extent of the restoration
due to community expectations and future legislation. Accordingly, the costs have been determined
on the basis that the restoration will be completed within one year of abandoning the site.
The economic entity currently has no obligation for any restoration costs in relation to discontinued
operations, nor is it currently liable for any future restoration costs in relation to current areas of
interest. Consequently, no provision for restoration has been deemed necessary.
Impairment of Assets
At each reporting date, the economic entity reviews the carrying values of its tangible and intangible
assets to determine whether there is any indication that those assets have been impaired. If such an
indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less
costs to sell and value in use, is compared to the asset's carrying value. Any excess of the asset's
carrying value over its recoverable amount is expensed to profit or loss.
Financial Instruments
Recognition and Initial Measurement
Financial instruments, incorporating financial assets and financial liabilities, are recognised when the
entity becomes a party to the contractual provisions of the instrument. Trade date accounting is
adopted for financial assets.
Financial instruments are initially measured at fair value plus transactions costs where the instrument
is not classified as at fair value through profit or loss. Transaction costs related to instruments classified
as at fair value through profit or loss are expensed to profit or loss immediately.
Derecognition
Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the
asset is transferred to another party whereby the entity no longer has any significant continuing
involvement in the risks and benefits associated with the asset.
Financial liabilities are derecognised where the related obligations are either discharged, cancelled
or expire. The difference between the carrying value of the financial liability extinguished or
transferred to another party and the fair value of consideration paid, including the transfer of non-
cash assets or liabilities assumed, is recognised in profit or loss.
Classification and Subsequent Measurement
Financial instruments are subsequently measured at fair value, amortised cost using the effective
interest rate method, or cost.
Page 42
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2016
Notes to the Consolidated Financial Statements for the Year Ended 30 June 2016
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Financial Instruments (continued)
Fair value is the price that would be received to sell an asset or paid to transfer an assets. Amortised
cost is calculated as:
(a) the amount at which the financial asset or financial liability is measured at initial recognition;
(b) less principal repayments;
(c) plus or minus the cumulative amortisation of the difference, if any, between the amount
initially recognised and the maturity amount calculated using the effective interest method;
and
(d) less any reduction for impairment.
The effective interest method is used to allocate interest income or interest expense over the relevant
period and is equivalent to the rate that exactly discounts estimated future cash payments or
receipts (including fees, transaction costs and other premiums or discounts) through the expected
life (or when this cannot be reliably predicted, the contractual term) of the financial instrument to
the net carrying amount of the financial asset or financial liability. Revisions to expected future net
cash flows will necessitate an adjustment to the carrying value with a consequential recognition of
an income or expense in profit or loss.
The economic entity does not designate any interests in subsidiaries, associates or joint venture
entities as being subject to the requirements of accounting standards specifically applicable to
financial instruments.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that
are not quoted in an active market and are subsequently measured at amortised cost.
Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that are either designated as
such or that are not classified in any of the other categories. They comprise investments in the equity
of other entities where there is neither a fixed maturity nor fixed or determinable payments.
Financial Liabilities
Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at
amortised cost.
Impairment
At each reporting date, the economic entity assesses whether there is objective evidence that a
financial instrument has been impaired. In the case of available-for-sale financial instruments, a
significant or prolonged decline in the value of the instrument is considered to determine whether an
impairment has arisen. Impairment losses are recognised in profit or loss.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, deposits held at call with banks and other short-
term highly liquid investments with original maturities of less than 3 months.
Page 43
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2016
Notes to the Consolidated Financial Statements for the Year Ended 30 June 2016
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Issued Capital
Ordinary shares are classified as equity. Transaction costs (net of tax where the deduction can be
utilised) arising on the issue of ordinary shares are recognised in equity as a reduction of the share
proceeds received.
Share Based Payments
The economic entity makes equity-settled share based payments to directors, employees and other
parties for services provided or the acquisition of exploration assets. Where applicable, the fair value
of the equity is measured at grant date and recognised as an expense over the vesting period, with
a corresponding increase to an equity account. The fair value of shares is ascertained as the market
bid price. The fair value of options is ascertained using a binomial lattice pricing model which
incorporates all market vesting conditions. Where applicable, the number of shares and options
expected to vest is reviewed and adjusted at each reporting date such that the amount recognised
for services received as consideration for the equity instruments granted shall be based on the
number of equity instruments that eventually vest.
Where the fair value of services rendered by other parties can be reliably determined, this is used to
measure the equity-settled payment.
Revenue
Interest revenue is recognised on a proportional basis taking into account the interest rates
applicable to the financial assets.
Employee Benefits
Short-term employee benefit obligations
Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating
sick leave expected to be settled wholly within 12 months after the end of the reporting period are
recognised in liabilities in respect of employees' services rendered up to the end of the reporting
period and are measured at amounts expected to be paid when the liabilities are settled.
Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST (or overseas VAT), except
where the amount of GST incurred is not recoverable. In these circumstances the GST (or overseas
VAT) is recognised as part of the cost of acquisition of the asset or as part of an item of the expense.
Receivables and payables in the statement of financial position are shown inclusive of GST. Cash
flows are presented in the statement of cash flows on a gross basis except for the GST component of
investing and financing activities which are disclosed as operating cash flows.
Foreign Currency Transactions and Balances
Functional and presentation currency
The functional and presentation currency of Elementos Ltd and its Australian subsidiaries is Australian
dollars ($A).
Page 44
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2016
Notes to the Consolidated Financial Statements for the Year Ended 30 June 2016
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Foreign Currency Transactions and Balances (continued)
Transactions and balances
Foreign currency transactions are translated into functional currency using the exchange rates
prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-
end exchange rate. Non-monetary items measured at historical cost continue to be carried at the
exchange rate at the date of the transaction. Non-monetary items measured at fair value are
reported at the exchange rate at the date when fair values were measured. Exchange differences
arising on the translation of monetary items are recognised in profit or loss, except where deferred in
equity as a qualifying cash flow or net investment hedge.
Group Companies
The financial results and position of foreign operations whose functional currency is different from the
economic entity’s presentation currency are translated as follows:
assets and liabilities are translated at period-end exchange rates prevailing at that reporting
date;
income and expenses are translated at average exchange rates for the period;
retained earnings are translated at the exchange rates prevailing at the date of the
transaction.
Exchange differences arising on translation of foreign operations are recognised in other
comprehensive income.
Plant and Equipment
Each class of property, plant and equipment is carried at cost or fair value less, where applicable,
any accumulated depreciation and impairment losses.
Plant and equipment are measured on the cost basis and therefore carried at cost less accumulated
depreciation and any accumulated impairment. In the event the carrying amount of plant and
equipment is greater than the estimated recoverable amount, the carrying amount is written down
immediately to the estimated recoverable amount and impairment losses are recognised either in
profit or loss or as a revaluation decrease if the impairment losses relate to a revalued asset. A formal
assessment of recoverable amount is made when impairment indicators are present.
The carrying amount of plant and equipment is reviewed periodically by directors to ensure it is not
in excess of the recoverable amount from these assets. The recoverable amount is assessed on the
basis of the expected net cash flows that will be received from the asset’s employment and
subsequent disposal. The expected net cash flows have been discounted to their present values in
determining recoverable amounts.
The cost of fixed assets constructed within the Consolidated Entity includes the cost of materials,
direct labour, borrowing costs and an appropriate proportion of fixed and variable overheads.
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 benefits associated with the item will flow to the
Consolidated Entity and the cost of the item can be measured reliably. All other repairs and
maintenance are charged to the statement of comprehensive income during the financial period
in which they are incurred.
Page 45
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2016
Notes to the Consolidated Financial Statements for the Year Ended 30 June 2016
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Plant and Equipment (continued)
Depreciation
The depreciable amount of all fixed assets is depreciated on a straight-line basis over the asset’s
useful life to the Consolidated Entity commencing from the time the asset is held ready for use.
Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease
or the estimated useful lives of the improvements.
The depreciation rates used for plant and equipment is 33%.
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each
balance date.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount.
These gains and losses are included in the statement of comprehensive income. When revalued
assets are sold, amounts included in the revaluation surplus relating to that asset are transferred to
retained earnings.
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.
Government grants relating to costs are deferred and recognised in the profit or loss over the period
necessary to match them with the costs that they are intended to compensate.
Government grants relating to exploration and evaluation assets that have been capitalised are
recognised by deducting the grant received from the carrying amount of the exploration and
evaluation asset recognised on the balance sheet.
Earnings Per Share (EPS)
Basic earnings per share is calculated by dividing the loss attributable to equity holders of the
Company, excluding any costs of servicing equity other than ordinary shares, by the weighted
average number of ordinary shares outstanding during the financial period adjusted for any bonus
elements in ordinary shares issued during the period.
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.
Page 46
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2016
Notes to the Consolidated Financial Statements for the Year Ended 30 June 2016
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
New and Amended Standards and Interpretations
None of the new standards and amendments to standards that are mandatory for the first time for
the financial year beginning 1 July 2015 affected any of the amounts recognised in the current period
or any period prior and are not likely to affect future periods.
A number of new standards and amendments to the standards are effective for financial reporting
periods beginning and after 1 July 2016 and have not been applied in preparing these financial
statements. None of these are expected to have a significant effect on the financial statements
when they are first applied.
Fair Values
Fair values may be used for financial asset and liability measurement as well as for sundry disclosures.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. It is based on the presumption
that the transaction takes place either in the principal market for the asset or liability or, in the
absence of a principal market, in the most advantageous market. The principal or most
advantageous market must be accessible to, or by, the Group.
Fair value is measured using the assumptions that market participants would use when pricing the
asset or liability assuming that market participants act in their best economic interest. The fair value
measurement of a non-financial asset takes into account the market participant's ability to generate
economic benefits by using the asset at its highest and best use or by selling it to another market
participant that would use the asset at its highest and best use. In measuring fair value, the Group
uses valuation techniques that maximise the use of observable inputs and minimise the use of
unobservable inputs.
Critical Accounting Estimates and Judgements
The directors evaluate estimates and judgments incorporated into the financial statements based
on historical knowledge and best available current information. Estimates assume a reasonable
expectation of future events and are based on current trends and economic data, obtained both
externally and within the economic entity.
Key Judgements:
Exploration and Evaluation Assets
The economic entity performs regular reviews on each area of interest to determine the
appropriateness of continuing to carry forward costs in relation to that area of interest. These reviews
are based on detailed surveys and analysis of drilling results performed to reporting date. Exploration
and evaluation assets at 30 June 2016 were $4,681,891 (2015: $4,859,170).
Page 47
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2016
Notes to the Consolidated Financial Statements for the Year Ended 30 June 2016
NOTE 2: REVENUE
Revenue from operating activities:
Interest received from other persons
Consulting fees
Gain on sale of subsidiary(see note below)
30 June 2016
30 June 2015
$
$
10,195
-
453
10,648
51,125
45,581
-
96,706
During the period, Elementos Limited sold one of its 100% owned subsidiaries Elementos Minerals
Australia Pty Ltd:
Consideration received
Carrying amount of net assets sold
Gain on sale
NOTE 3: EXPENSES
Included in expenses are the following items:
Depreciation
Foreign currency translation loss/(profit)
ASX, ASIC, share registry expenses
Business development and investor relations costs
Legal fees
Insurances
Audit and external accounting fees
Employee benefits expense comprises:
Salaries and wages
Consulting fees
Contributions to defined contribution plans
Equity settled options
Annual leave expensed
Less capitalised as exploration assets
57,950
(57,497)
453
30 June 2016
30 June 2015
$
$
3,783
(676)
42,043
120,679
46,991
39,950
74,927
91,242
82,835
23,799
197,130
7,743
-
730,446
37,790
(98)
59,336
81,910
18,735
29,945
74,909
651,099
25,000
50,401
-
7,386
(370,764)
665,649
Page 48
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2016
Notes to the Consolidated Financial Statements for the Year Ended 30 June 2016
NOTE 4: INCOME TAX EXPENSE
The prima facie tax on the operating loss is reconciled to income
tax expense as follows:
Prima facie tax/(benefit) on loss from ordinary activities before
income tax at 30% (2015: 30%)
30 June 2016
30 June 2015
$
$
(527,334)
(807,762)
Adjust for tax effect of:
Non-deductible amounts
Tax loss not recognised
Temporary differences recognised
R&D adjustment (for 2015 claim)
Income tax expense/(benefit)
156,606
153,340
-
217,388
-
Deferred tax assets and liabilities not recognised, the net benefit of which will only be realised if the
conditions for deductibility set out in Note 1 occur:
Temporary differences
Tax losses
-
3,804,013
3,650,673
81,841
488,425
237,496
-
-
-
The Group has carried forward tax losses of $14,094,217 in Australia, which must satisfy the Continuity
of Ownership Test, or failing that, the Same Business Test, in order to be utilised in the future.
NOTE 5: CASH AND CASH EQUIVALENTS
Cash at bank and on hand
Short term deposits
NOTE 6: TRADE AND OTHER RECEIVABLES
Current:
Other receivables
30 June 2016
30 June 2015
$
$
154,605
312,663
467,268
307,426
454,402
761,828
30 June 2016
30 June 2015
$
$
2,020
19,380
There are no balances within other receivables that contain assets that are impaired or are past due.
It is expected these balances will be received when due. There are no balances with terms that have
been renegotiated, but which would otherwise be past due or impaired.
These amounts are non-interest bearing and generally on 30 day terms. No collateral is held over
receivables.
Page 49
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2016
Notes to the Consolidated Financial Statements for the Year Ended 30 June 2016
NOTE 7: OTHER CURRENT ASSETS
Current:
Other Deposits
Prepayments
NOTE 8: EXPLORATION AND EVALUATION ASSETS
30 June 2016
30 June 2015
$
$
708
-
708
790
10,127
10,917
30 June 2016
30 June 2015
$
$
Exploration and evaluation expenditure carried forward in
respect of areas of interest are:
Exploration and evaluation phase - at cost
4,681,891
4,859,170
Movement in exploration and evaluation assets:
Opening balance - at cost
Security deposit refunds
Capitalised exploration expenditure
Exploration and evaluation assets disposed of
4,859,170
6,456,348
(14,956)
448,172
(49,364)
-
1,003,138
-
Foreign currency translation movement
-
(73,705)
Exploration and evaluation assets written off
Total exploration and evaluation assets
Less research and development refunds
(240,447)
5,002,575
(320,684)
(1,844,343)
5,541,438
(682,268)
Carrying amount at the end of the year
4,681,891
4,859,170
Recoverability of the carrying amount of exploration assets is dependent on the successful
development and commercial exploitation of projects, or alternatively, through the sale of the areas
of interest.
NOTE 9: PLANT AND EQUIPMENT
At cost
Accumulated depreciation
Total plant and equipment
Page 50
30 June 2016
30 June 2015
$
13,727
(12,502)
1,225
$
38,542
(34,356)
4,186
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2016
Notes to the Consolidated Financial Statements for the Year Ended 30 June 2016
NOTE 9: PLANT AND EQUIPMENT (CONTINUED)
Reconciliation of the carrying amounts for property, plant and
equipment is set out below:
Balance at the beginning of year
Additions during the year
Depreciation expense
Foreign currency translation movement
Carrying amount at the end of year
NOTE 10: OTHER NON-CURRENT ASSETS
Mining Lease Deposits
NOTE 11: TRADE AND OTHER PAYABLES
Current:
Trade payables and accrued expenses
Short term employee benefits
Total payables (unsecured)
4,186
866
(3,783)
(44)
1,225
36,060
5,844
(37,790)
72
4,186
30 June 2016
30 June 2015
$
$
6,000
6,000
13,950
13,950
30 June 2016
30 June 2015
$
$
53,695
9,044
62,739
165,404
1,301
166,705
The average credit period on purchases of goods and services is 30 days. No interest is paid on trade
payables.
NOTE 12: BORROWINGS
Non-Current:
Unsecured:
Loan from related party
Accrued interest
Total unsecured non-current liability
30 June 2016
30 June 2015
$
$
500,000
15,658
515,658
-
-
-
Loan amount = $500,000
Loan term = 2 years
Interest rate = 6.0%
On 23 December 2015, the Company executed a loan deed with the Company’s Non-Executive
Chairman Mr Andy Greig, a related party, with the following key terms:
Unsecured
No conversion rights
No requirement to repay principal or pay interest during the loan term
Repayable by the Company at any time (during the loan term)
Page 51
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2016
Notes to the Consolidated Financial Statements for the Year Ended 30 June 2016
NOTE 13: CONTRIBUTED EQUITY
Fully paid ordinary shares
Balance as at 1 July
Other share issues:
25 July 2014
11 August 2014
11 August 2014
2 October 2014
23 December 2014
23 December 2014
5 March 2015
Balance as at 30 June
Total transaction costs associated
with share issues
2016
2015
No. of
Shares
$
No. of
Shares
$
767,479,642
12,437,377
633,310,868
10,924,168
(a)
(b)
(c)
(d)
(e)
(f)
(g)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
83,186,790
998,240
40,315,384
483,785
2,000,230
1,403,366
2,402,372
3,160,000
1,700,632
24,003
14,174
14,174
37,920
8,673
767,479,642
12,437,377 767,479,642
12,505,137
(29,995)
(67,760)
Net issued capital
12,407,382
12,437,377
Ordinary shareholders are entitled to participate in dividends and the proceeds on the winding up
of the company in proportion to the number of and amount paid on the shares held. Every ordinary
shareholder present at a meeting in person or by proxy is entitled to one vote on a show of hands or
by poll. Ordinary shares have no par value.
Notes for the above table, relating to the year ended 30 June 2015, are:
(a)
Issued at 1.2 cents each, pursuant to a rights issue.
(b)
Issued at 1.2 cents each, shortfall placement of the rights issue.
(c)
Issued at 1.2 cents each, pursuant to a private placement.
(d)
Issued at 1.01 cents each, pursuant to directors and executive staff salary sacrifice plan.
(e)
Issued at 0.059 cents each, pursuant to directors and executive staff salary sacrifice plan.
(f)
Issued at 1.2 cents each, pursuant to shareholder approval at AGM held on 26 November
2014.
(g)
Issued at 0.051 cents each, pursuant to directors and executive staff salary sacrifice plan.
Options
Note
Weighted
average
exercise price
(cents)
30 June 2016
No. of Options
Weighted
average
exercise
price (cents)
30 June 2015
No. of Options
Unlisted Share Options
2.67
43,850,000
10.58
17,850,000
Balance at the beginning of the
reporting period
Options issued during the period:
Issued to staff and consultants
20
Lapsed
Exercisable at end of year
Page 52
10.58
17,850,000
10.94
18,400,000
1.33
22.6
2.67
31,000,000
(5,000,000)
43,850,000
-
22.6
10.58
-
(550,000)
17,850,000
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2016
Notes to the Consolidated Financial Statements for the Year Ended 30 June 2016
NOTE 13: CONTRIBUTED EQUITY (continued)
Capital Management
Exploration companies such as Elementos Limited are funded almost exclusively by share capital.
The Group has recently however entered in to a loan agreement set out in more detail in Note 12
(Borrowings).
Management controls the capital of the Group to ensure it can fund its operations and continue as
a going concern. Capital management policy is to fund its exploration activities principally by way
of equity, and where required, debt and/or project finance. No dividend will be paid while the Group
is in exploration stage. There are no externally imposed capital requirements.
There have been no other changes to the capital management policies during the year.
NOTE 14: RESERVES
Foreign Currency Translation Reserve
The foreign currency translation reserve recorded exchange differences arising on translation of
foreign controlled subsidiaries. Amounts were reclassified during the period to profit or loss as the
foreign operations have been abandoned.
Share-Based Payments Reserve
The share-based payment reserve is used to recognise the fair value of options issued to employees.
This reserve can be reclassified as retained earnings if options lapse.
NOTE 15: CASH FLOW INFORMATION
Reconciliation of Cash Flow from Operations with Loss after Income
Tax:
Loss after income tax
(1,757,780)
(2,692,540)
30 June 2016
30 June 2015
$
$
Non-cash flows in loss from ordinary activities:
Depreciation
Exploration expenditure written off
Equity settled compensation
Gain on disposal of subsidiary
Reclassify foreign currency reserve
Changes in operating assets and liabilities:
(Increase)/Decrease in receivables
(Increase)/Decrease in prepayments and other assets
(Decrease)/Increase in payables
3,783
240,447
197,130
(453)
667,824
12,847
10,127
(72,074)
37,790
1,844,343
37,021
-
-
5,020
4,103
42,106
Cash flows from operations
(698,149)
(722,157)
Page 53
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2016
Notes to the Consolidated Financial Statements for the Year Ended 30 June 2016
NOTE 16: EARNINGS PER SHARE
30 June 2016
30 June 2015
$
$
Net loss used in the calculation of basic and diluted EPS
(1,757,780)
(2,692,540)
Weighted average number of ordinary shares outstanding during
the period used in the calculation of basic EPS
767,479,642
752,713,682
Options are considered potential ordinary shares. Options issued are not presently dilutive and were
not included in the determination of diluted earnings per share for the period.
NOTE 17: COMMITMENTS
(a) Exploration Commitments
The Group has certain obligations to expend minimum amounts on exploration in tenement areas.
These obligations may be varied from time to time and are expected to be fulfilled in the normal
course of operations of the Group.
The following commitments exist at balance date but have not been brought to account. If the
relevant option to acquire a mineral tenement is relinquished the expenditure commitment also
ceases. The Group has the option to negotiate new terms or relinquish the tenements and also to
meet expenditure requirements by joint venture or farm-in arrangements.
30 June 2016
30 June 2015
$
1,000,000
212,838
$
1,739,675
1,102,401
1,212,838
2,842,076
Not later than 1 year
Later than 1 year but not later than 5 years
Total commitment
(b) Operating Lease Commitments
The Group has no operating leases (2015: nil).
NOTE 18: CONTINGENT LIABILITIES
There were no contingent liabilities at the end of the reporting period.
NOTE 19: RELATED PARTY TRANSACTIONS
Parent Entity
Elementos Limited is the legal parent and ultimate parent entity of the Group, owning 100% of all
subsidiaries at 30 June 2016.
Subsidiary
Interest in subsidiaries are disclosed in Note 24.
Page 54
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2016
Notes to the Consolidated Financial Statements for the Year Ended 30 June 2016
NOTE 19: RELATED PARTY TRANSACTIONS (continued)
Key Management Personnel
Short-term employee benefits
Post-employment benefits
Equity-based payments
30 June 2016
30 June 2015
$
353,687
22,910
191,300
567,897
$
417,850
35,632
37,020
490,502
On 23 December 2015, the Company executed a loan deed with the Company’s Non-Executive
Chairman Mr Andy Greig, a related party, for up to $500,000. Further details are contained in Note
12 (Borrowings).
NOTE 20: SHARE-BASED PAYMENTS
Director and Employee Share-based Payments
Share based payment expense recognised during the year:
Share based payment expense recognised during the period:
Options issued to employees under employee share option plan
Options issued to consultant
30 June 2016
30 June 2015
$
$
133,930
63,200
197,130
-
-
-
During the year, 31million options were granted, 21million to employees (includes 20million options
issued to the then chief executive officer, Tim McManus, one of the Group’s key management
personnel) under the employee share option plan and 10million to a consultant. The options vested
on grant date and expire on 31 July 2019, except for 1million which expire 31 July 2018.
The weighted average fair value of options granted during the year was 0.64 cents. The fair values
at grant date were determined by an independent valuator using a Black-Scholes option pricing
model that takes into account the share price at grant date, exercise price, expected volatility,
option life, expected dividends, the risk free rate, the impact of dilution, the fact that the options
are not tradeable. The inputs used for the Black-Scholes option pricing model for options granted
during the year ended 30 June 2016 were as follows:
grant dates: 26 August 2015 (for 21million options) and 21 December 2015 (for 10million options)
share price at grant date: 1.0 cent (for the 21million options issued on 26 August 2015) and 0.9
cents (for the 10million options issued on 21 December 2015)
exercise prices: 1.25 cents to 1.50 cents
expected volatility: 100%
expected dividend yield: nil%
risk free rates: 1.91% (for 1million options expiring 31 July 2018) and 2.12% (for 30million options
expiring 31 July 2019)
Expected volatility was determined based on the historic volatility (based on the remaining life of
the option), adjusted for any expected changes to future volatility based on publicly available
information.
Page 55
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2016
Notes to the Consolidated Financial Statements for the Year Ended 30 June 2016
NOTE 21: AUDITOR’S REMUNERATION
Remuneration for the auditor of the parent entity:
BDO Audit Pty Ltd and its related entities:
Auditing or reviewing the financial reports
NOTE 22: FINANCIAL RISK MANAGEMENT
(a) Financial Risk Management Policies
30 June 2016
30 June 2015
$
$
42,324
42,324
36,092
36,092
The Elementos Group's financial instruments comprises cash balances, receivables and payables,
loans to and from subsidiaries and a loan from a related party. The main purpose of these financial
instruments is to provide finance for Group operations.
Treasury Risk Management
Key executives of the Company meet on a regular basis to analyse exposure and to evaluate
treasury management strategies in the context of the most recent economic conditions and
forecasts.
The board of directors has overall responsibility for the establishment and oversight of the Group's risk
management framework. Management is responsible for developing and monitoring the risk
management policies and reports to the board.
Financial Risks
The main risks the Group is exposed to through its financial instruments are interest rate risk, foreign
currency risk, credit risk and liquidity risk. These risks are managed through monitoring of forecast cash
flows, interest rates, economic conditions and ensuring adequate funds are available.
Interest Rate Risk
The Group's exposure to interest rate risk, which is the risk that a financial instrument's cash flows or
fair value will fluctuate as a result of changes in market interest rates, arises in relation to the Group's
bank balances. This risk is managed through the use of variable rate bank accounts.
Liquidity Risk
Liquidity risk is the risk that the Group will not be able meet its financial obligations as they fall due.
This risk is managed by ensuring, to the extent possible, that there is sufficient liquidity to meet liabilities
when due, without incurring unacceptable losses or risking damage to the Group's reputation.
The economic Group's activities are funded from equity and where required and available debt
and/or project finance. There is no requirement to repay principal or pay interest on the related party
loan during the loan term.
Page 56
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2016
Notes to the Consolidated Financial Statements for the Year Ended 30 June 2016
NOTE 22: FINANCIAL RISK MANAGEMENT (CONTINUED)
Credit Risk
The maximum exposure to credit risk, excluding the value of any collateral or other security, at
balance date to recognised financial assets, is their carrying amount, net of any provisions for
impairment of those assets, as disclosed in the statement of financial position and notes to the
financial statements.
Credit risk arises from exposures to deposits with financial institutions and sundry receivables.
Credit risk is managed and reviewed regularly by key executives. The key executives monitor credit
risk by actively assessing the rating quality and liquidity of counter parties:
only banks and financial institutions with an ‘A’ rating are utilised; and
all other entities are rated for credit worthiness taking into account their size, market position
and financial standing.
At 30 June 2016, there was no concentration of credit risk, other than bank balances and on
geographical basis with most financial assets in Australia (2015: nil).
Foreign Currency Risk
The Group is exposed to fluctuations in foreign currencies arising from the purchase of goods and
services in currencies other than the relevant entity's functional currency.
Financial assets and liabilities exist for the Group's Argentine operations, and thus there is exposure to
the Argentine Peso. As this risk is minor, it is not hedged. At reporting date, the net foreign currency
risk (stated in $AUD) was $389 (2015: $836).
(b) Financial Instrument Composition and Contractual Maturity Analysis
Financial assets:
Within 6 months:
cash & cash equivalents (i)
receivables (ii)
Financial liabilities:
Within 6 months:
payables (ii)
Within 18 months:
loan
30 June 2016
30 June 2015
$
$
467,268
2,020
469,288
761,828
19,380
781,208
(62,739)
(166,705)
(515,658)
(578,397)
-
(166,705)
(i) Floating interest rates, with weighted average effective interest rate 1.79%, with an average
maturity of 10 days.
(ii) Non-interest bearing. The contractual cash flows do not differ to the carrying amount.
(c) Net Fair Values
Fair values of financial assets and financial liabilities are materially in line with carrying values.
Page 57
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2016
Notes to the Consolidated Financial Statements for the Year Ended 30 June 2016
NOTE 22: FINANCIAL RISK MANAGEMENT (CONTINUED)
(d) Sensitivity Analysis
The Company has performed sensitivity analysis relating to its exposure to interest rate risk. At year
end, the effect on profit and equity as a result of a 1% change in the interest rate, with all other
variables remaining constant, is immaterial (2015: $7,610).
NOTE 23: SEGMENT REPORTING
Operating segments have been determined on the basis of reports reviewed by the board of
directors and the Chief Executive Officer (chief operating decision makers) in assessing
performance and determining the allocation of resources. The Group is managed primarily on a
geographic basis, that is, the location of the respective areas of interest (tenements) in Australia.
Operating segments are determined on the basis of financial information reported to the board of
directors which is at the consolidated entity level. The Group does not have any products or
services that it derives revenue from. The Group's exploration and development activities in
Australia is the Group’s sole focus, primarily focused around tin and copper. The Group's previous
exploration activities in Argentina and Chile have been discontinued and/or sold.
Accordingly, management currently identifies the Group as having only one reportable segment,
being the exploration of mineral assets in Australia. There have been no changes in the operating
segments during the year. Accordingly, all significant operating decisions are based upon analysis of
the consolidated entity as one segment. The financial results from this segment are equivalent to the
financial statements of the Group as a whole.
NOTE 24: SUBSIDIARIES
The consolidated financial statements incorporate the assets, liabilities and results of the following
wholly-owned subsidiaries in accordance with the accounting policy described in Note 1:
Rockwell Minerals Pty Ltd
Rockwell Minerals (Tasmania) Pty Ltd
Element Minerals Australia Pty Ltd (see
note below)
Elementos Minerales S.A.
Elementos Chile Limitada
Country of
incorporation
Australia
Australia
Australia
Argentina
Chile
Ownership interest
2016
100%
100%
-
100%
100%
2015
100%
100%
100%
100%
100%
During the period, Elementos Limited sold one of its 100% owned subsidiaries Element Minerals
Australia Pty Ltd. Further details can be found in Note 2 (Revenue).
NOTE 25: SUBSEQUENT EVENTS
There were no subsequent events after year end.
Page 58
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2016
Notes to the Consolidated Financial Statements for the Year Ended 30 June 2016
NOTE 26: PARENT ENTITY INFORMATION
The following information relates to the parent entity, Elementos Limited at 30 June 2016. This
information has been prepared using consistent accounting policies as presented in Note 1.
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Contributed equity
Reserves
Accumulated losses
Total equity
Loss for the period
Other comprehensive income for the period
30 June 2016
30 June 2015
$
$
467,131
777,286
7,426,918
7,833,324
7,894,049
8,610,610
59,257
515,658
574,915
130,338
-
130,338
28,302,914
28,332,909
1,270,522
1,073,392
(22,254,302)
(20,926,029)
7,319,134
8,480,272
(1,328,273)
(10,710,560)
-
-
Total comprehensive income for the period
(1,328,273)
(10,710,560)
The Company has no contingent liabilities, nor has it entered into any guarantees in relation to the
debts of its subsidiaries (2015: nil).
The Company has not entered into any contractual commitments for the acquisition of property,
plant and equipment (2015: nil).
The Company and its Australian 100% owned controlled entities have formed a tax consolidated
group.
Members of the Group entered into a tax sharing arrangement. The agreement provides for the
allocation of income tax liabilities between the entities in proportion to their contribution to the
Group's taxable income. The head entity of the tax consolidated Group is Elementos Ltd.
NOTE 27: COMPANY DETAILS
The registered office and principal place of business is:
Level 10, 110 Mary Street
Brisbane, Queensland, 4000 Australia
NOTE 28: DIVIDENDS & FRANKING CREDITS
There were no dividends paid or recommended during the financial year. There are no franking
credits available to the shareholders of the Company.
Page 59
Tel: +61 7 3237 5999
Fax: +61 7 3221 9227
www.bdo.com.au
Level 10, 12 Creek St
Brisbane QLD 4000
GPO Box 457 Brisbane QLD 4001
Australia
INDEPENDENT AUDITOR’S REPORT
To the members of Elementos Limited
Report on the Financial Report
We have audited the accompanying financial report of Elementos Limited, which comprises the
consolidated statement of financial position as at 30 June 2016, the consolidated statement of profit or
loss and other comprehensive income, the consolidated statement of changes in equity and the
consolidated statement of cash flows for the year then ended, notes comprising a summary of
significant accounting policies and other explanatory information, and the directors’ declaration of the
consolidated entity comprising the company and the entities it controlled at the year’s end or from
time to time during the financial year.
Directors’ Responsibility for the Financial Report
The directors of the company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101
Presentation of Financial Statements, that the financial statements comply with International
Financial Reporting Standards.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
audit in accordance with Australian Auditing Standards. Those standards require that we comply with
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
reasonable assurance about whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial report. The procedures selected depend on the auditor’s judgement, including the
assessment of the risks of material misstatement of the financial report, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the company’s
preparation of the financial report that gives a true and fair view in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the company’s internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of accounting estimates made by the directors, as
well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations
Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, which
has been given to the directors of Elementos Limited, would be in the same terms if given to the
directors as at the time of this auditor’s report.
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050
110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited
by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional
Standards Legislation, other than for the acts or omissions of financial services licensees.
61
Opinion
In our opinion:
(a) the financial report of Elementos Limited is in accordance with the Corporations Act 2001,
including:
(i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2016
and of its performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b) the financial report also complies with International Financial Reporting Standards as disclosed in
Note 1.
Emphasis of matter
Without modifying our opinion, we draw attention to Note 1 in the financial report, which indicates
that the ability of the consolidated entity to continue as a going concern is dependent upon the future
successful raising of necessary funding through equity, successful exploration and subsequent
exploitation of the consolidated entity’s tenements, and/or sale of non-core assets. These conditions,
along with other matters as set out in Note 1, indicate the existence of a material uncertainty that
may cast significant doubt about the consolidated entity’s ability to continue as a going concern and
therefore, the consolidated entity may be unable to realise its assets and discharge its liabilities in the
normal course of business.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 11 to 17 of the directors’ report for the
year ended 30 June 2016. 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.
Opinion
In our opinion, the Remuneration Report of Elementos Limited for the year ended 30 June 2016
complies with section 300A of the Corporations Act 2001.
BDO Audit Pty Ltd
A J Whyte
Director
Brisbane, 29 September 2016
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050
110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited
by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional
Standards Legislation, other than for the acts or omissions of financial services licensees.
62