ELEMENTOS LIMITED
ABN 49 138 468 756
CONSOLIDATED FINANCIAL REPORT
FOR THE YEAR ENDED
30 JUNE 2019
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
Contents
Cautionary Statements
Corporate Information
Review of Operations
Interests in Tenements (and Annual Mineral Resources and Ore Reserves Statement)
Directors’ Report
Auditor’s Independence Declaration
Shareholder Information
Corporate Governance Statement
Consolidated Statement of Profit or Loss and Other Comprehensive Income for the
Year Ended 30 June 2019
Consolidated Statement of Financial Position as at 30 June 2019
Consolidated Statement of Changes In Equity for the Year Ended 30 June 2019
Consolidated Statement of Cash Flows for the Year Ended 30 June 2019
Notes To The Consolidated Financial Statements for the Year Ended 30 June 2019
Directors’ Declaration
Independent Auditor’s Report
2
3
4
9
12
25
26
29
37
38
39
40
41
64
65
Page 1
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
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, Exploration Targets and
results of Metallurgical Test Work programs 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.
Mineral Resources, which are not Ore Reserves, do not have demonstrated economic viability.
Economic, environmental, permitting, legal, title taxation, socio-political, marketing or other relevant
issues may materially affect the estimate of Mineral Resources.
Elementos confirms that it is not aware of any new information or data that materially affects the
Mineral Resource or Ore Reserve information, Exploration Targets or Metallurgical Test Work
information included in the following announcements:
*1 - “Acquisition of the Oropesa Tin Project” released on the 31st July 2018;
*2 – “Substantial Increase in Cleveland Open Pit Project Resources following revised JORC study”
released 26th September 2018
*3 - “Oropesa Exploration Target released 1st February 2019”
*4 - ASX announcement “Ore Sorting Performance Testing – Positive Results at Oropesa” dated 7th
August 2019
The Company also confirms that all material assumptions and technical parameters underpinning
the estimates in the Cleveland Mineral Resources and Reserves and the Oropesa Mineral Resources
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.
Page 2
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
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, Chairman of the Audit and Risk Committee)
Mr Duncan Cornish (Company Secretary)
Head Office and Registered Office
Elementos Limited
Level 6, 10 Market Street
Brisbane QLD 4000
Tel: +61 7 3212 6299
Fax: +61 7 3212 6250
www.elementos.com.au
Auditor
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
Solicitor
HopgoodGanim Lawyers
Level 8, Waterfront Place
1 Eagle Street
Brisbane QLD 4000
Tel: +61 7 3024 0000
Fax: +61 7 3024 0300
www.hopgoodganim.com.au
Banker
National Australian Bank Limited
Level 19, 259 Queen Street
Brisbane QLD 4000
Page 3
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
Review of Operations
The Company’s strategy is to create sustainable shareholder value through the development of a
portfolio of tin assets. The Company implemented its new corporate strategy to create a robust
portfolio of tin assets, at various stages of development, through the acquisition of the Oropesa tin
project in Spain. The Company believes Oropesa is one of the best undeveloped tin resources in the
Western World. Attractions include, a large JORC Mineral Resource based on more than 54,000
metres of drilling, open-cut mining potential, simple metallurgy and processing, access to
development infrastructure, support from local stakeholders and in a secure mining jurisdiction. A
Mining Lease application and Environmental Impact Study has been lodged with the regulatory
authorities and are currently undergoing review.
Excellent progress was made at Cleveland with a new JORC resource estimate being reported,
potentially paving the way to move towards the development of a small-scale open cut and tailings
retreatment processing facility. Further metallurgical testing is planned to examine opportunities for
enhancing the project economics.
The fundamentals for the global tin industry remain robust, and this has translated into steady LME tin
pricing of between US$18,400 and US$21,900 per tonne during the reporting period. The price outlook
remains robust with tin playing an important role in the strongly growing energy storage, electric
vehicle and tin chemicals industries. New global supply is constrained by the lack of new high-quality
development projects.
It’s an exciting time to be a Shareholder of Elementos. The Oropesa Tin Project in Spain provides a
solid platform from which the Company can move from explorer to producer, with additional
production potential from the Cleveland Project in Tasmania. The company’s project portfolio places
it well to meet the future increasing global demand for tin.
OROPESA TIN PROJECT - SPAIN
The Company announced on the 31st July 2018 the acquisition of 100% of the Oropesa Tin Project in
Spain from Eurotin Inc.(TSX-V: TIN) (Eurotin). The acquisition to occur by way of a plan of arrangement
under Canadian laws which provides for Eurotin Inc.(TSX-V: TIN) (Eurotin) to transfer to Elementos 100%
of the shares currently on issue in Minas De Estaño De España S.L.U.(MESPA), a wholly owned
subsidiary of Eurotin and the holder of the Oropesa Tin Project (Oropesa). Interim Completion of the
Arrangement Agreement was announced on the 4th January 2019.
At Interim Completion the Company issued to Eurotin 1,000,000,000 convertible redeemable
preference shares (CRPS) which were distributed to Eurotin shareholders.
Following Interim Completion of the Arrangement Agreement, the Company submitted to the Junta
de Andalucia (Spanish Regional Mining Authority) in January 2019 all the relevant documentation
required to authorise the transfer to Elementos of all the shares in MESPA. Final authorisation of the
transfer of the shares was still pending at the time of writing this report.
The acquisition of Oropesa represents an excellent opportunity to create value-uplift potential for
shareholders as the project is advanced towards development. Attractions of the Oropesa project
include:
Large, well-defined resource - A globally significant, undeveloped resource with strong
opportunities for resource expansion;
Open-cut mining potential –The deposit is amendable to simple drill and blast, truck and shovel
open cut mining operations;
Simple metallurgy - extensive metallurgical testing and process flowsheet designed to produce
a 62.4% tin concentrate at a 74.2% metallurgical recovery;
Near-term production potential – A Definitive Feasibility Study has commenced;
Page 4
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
Review of Operations
Permitting process advanced – A base-line Environmental Impact Assessment was lodged with
the Junta de Andalucia (government) in January 2018 and a Mining Licence application has
been submitted to the Junta for approval;
Located close to development infrastructure - Located close to major highways which link to
export ports, water supply and power supply. The region has a skilled mining workforce;
Low sovereign risk - The Andalucia region of Spain is home to some of the country’s most
significant mining operations and part of the European Union which provides a safe investment
environment;
Large sunk cost – significant investment in drilling, geophysics, metallurgical testing and
development studies; and
Local community support - The local government and community is extremely supportive of the
project moving ahead.
Oropesa consists of a 14.51 square kilometre
concession package located approximately 75
kilometres north-west of Cordoba and 180
kilometres north-east of Seville, in the region of
Andalucía, in southern Spain. The Oropesa district
has historically been a mining district for base
metals with coal mining ceasing in recent times.
Tin mineralisation was first recognised at Oropesa in
1982. Intensive exploration activity since 2010,
including 261 drill holes, has resulted in the definition
of the current mineral resource. The project area
contains
and
geophysical
regions that could
geochemically anomalous
potentially extend this resource with additional
exploration.
numerous
Figure 2. Oropesa Tin Project Location Plan
The tin mineralisation (cassiterite with minor stannite) occurs as a replacement style orebody
associated with sulphides, predominantly pyrite and pyrrhotite within a sedimentary sequence at the
contact between sandstone and conglomerate units. Widespread folding of the sedimentary
sequence has resulted in the mineralised sequence being overturned and repeated in places.
The Oropesa tin project contains a JORC compliant Measured, Indicated and Inferred Resource of
67,520 tonnes of tin.
Oropesa Global Mineral Resource Estimate (0.15% Sn cut‐off grade)
Category
Measured
Indicated
Total M & I
Inferred
Tonnes
330,000
9,010,000
9,340,000
3,200,000
Grades % Sn Contained Tin (tonnes)
1.09
0.53
0.55
0.52
3,585
47,320
50,905
16,615
Table 2. Oropesa JORC Mineral Resources*¹
The Company is actively advancing the Oropesa Tin Project towards development. This includes
optimising the scale of the project development to maximise project value and create a
manageable and fundable project development budget. This will include a re-designed open-cut
mining operation that will be targeted towards reducing the overall footprint of the operation with a
positive impact on the timing and completion of rehabilitation activities over the life of the operation.
A summary of the objectives of the revised mine plan is shown below:
Page 5
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
Review of Operations
A reduction in the footprint of the open cut and waste rock activities during operations;
Progressive and earlier final rehabilitation of the open cut void and waste rock dumps;
A reduction in the footprint of the processing plant;
Potential for co-disposal of clean tailings – resulting in a greatly reduced volume and footprint
of the tailings dam and more efficient final rehabilitation;
Lower power and water consumption during processing; and
More effective utilisation of the current resource.
The Company has been progressing the Environmental Approvals and Mining Lease (Exploitation
Licence) application process through discussions with
representatives of the Andalucian
Government. The Mining Lease application was lodged in October 2017 and the Environmental
Impact Study (EIS) was lodged in February 2018. The plan to re-design the proposed open-cut mining
operation will have an impact on the EIS and as such a decision has been made to revise the original
EIS to better align with the Company’s newly proposed mining operation.
The Company has successfully completed an ore sorting pre-concentration performance test on a
bulk sample of ore from Oropesa by TOMRA Sorting Solutions-Mining (TOMRA) engineers based in
Hamburg, Germany. The tests were carried out to establish whether TOMRA products are capable
of sorting tin ore from waste material. The large sample size (three one tonne samples) permitted the
TOMRA engineers to test the material using the COM Tertiary XRT, a full-scale sorting system.
Results from TOMRA test program indicated that with a total tin recovery of 92% there would be an
overall reduction in feed mass to a processing plant of 25% with an increase in processing plant feed
grade of 24%. Higher recoveries can be expected with an increased sensitivity settings on the XRT
ore sorter.
The TOMRA results indicate that ore sorting could provide the following significant benefits to the
proposed development of Oropesa;
Reduced feed to the processing plant
Higher feed grade to the processing plant
Improved tin recoveries from the processing plant
Lower process plant capital and operating costs
Smaller tailings dam
Greater opportunities to optimise the overall mine plan and improve project economics
The Company has defined an Exploration Target* for the Oropesa Tin Project in Spain of between
35.5mt and 51.0mt at a grade ranging between 0.46% to 0.62% tin. The Oropesa JORC resource is
defined geophysically by an Induced Polarisation (IP) chargeability anomaly identified in an IP survey
carried out in 2011. The Oropesa Project area contains a number of parallel IP anomalies, of which
only the central IP anomaly has undergone intensive diamond drilling. Detailed drilling of the central
IP anomaly has provided sufficient data to build a geological model on which the current Oropesa
resource is based, but also provides sufficient data to be able to assess the potential of the Oropesa
Project to host additional tin resources.
Oropesa Exploration Target (0.15% Sn cut‐off grade)
Range
Upper
Lower
Grade % Sn
0.62
0.46
Tonnes
51,000,000
35,500,000
Table 3. Oropesa Exploration Target*³
Page 6
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
Review of Operations
* The potential quantity and grade of the Exploration Target is conceptual in nature and therefore is
an approximation. There has been insufficient exploration to estimate a Mineral Resource and it is
uncertain if further exploration will result in the estimation of a Mineral Resource.
CLEVELAND PROJECT – TASMANIA
The Cleveland Project is located at Luina approximately 80 kilometres from Burnie in north-western
Tasmania. The tin province in northwest Tasmania hosts some of the world’s highest grade and most
productive tin mines, including Renison Bell, Mt. Bischoff and Cleveland. The region has well-
developed infrastructure and a strong mining culture. The site is linked to Burnie Port by sealed roads.
Accessible power runs through the Cleveland exploration licence area.
Cleveland hosts tin and copper mineralisation in tailings,
open cut and underground Mineral Resources, and
includes a separate tungsten Mineral Resource. The
Company has completed a number of studies assessing
the potential of developing these resources.
In 2018 the Company completed an update to the JORC
Resource Estimate for hard rock resources for the
Cleveland tin-copper and tungsten projects in Tasmania.
The total contained tin within the revised 2018 JORC
Resource Estimate increased by 15.8% and contained
copper increased by 20.0%. There has been no change
to the existing 2015 estimate for the tailings resource at
Cleveland. The results for the 2018 hard rock resource
estimate are reported in accordance with the JORC
Code (2012). The significant upgrade in the revised JORC
Resource Estimate for the Cleveland Project can be
viewed in Table 1.
Figure 1. Cleveland Project Location Plan
The review was undertaken following the completion of a diamond drilling exploration programme
at Cleveland that was specifically targeting extensions and limits to the potential open pit resources.
The 2018 open pit resource contained tin estimate has increased by 168% from the previous estimate
announced in 2015. The open pit resource potential has been assessed to a depth of 150m from
surface with pit boundaries positioned with no impact on existing natural water courses and minimal
interference with any future underground re-development.
The mineral resource upgrade resulted from modelling near surface ore lenses that were not included
in the previous resource estimate, extensions to near surface resources resulting from the results of
the diamond drilling programme and reducing the dilution along the margins of the ore lenses. The
Cleveland ore body remains open at depth, along strike and down dip from the currently defined
ore lenses.
The Cleveland Project is continuing to be steadily progressed towards development with the next
phases of work including completion of a metallurgical test work programme on hard rock samples
(last carried out in 1986), the assessment of the potential for a larger initial open pit operation, the
design and location of a new tailings storage facility and detailed financial modelling of a ‘life of
mine’ combined open pit – tailings – underground operation as a preclude to commencing a
detaied feasibility study.
Page 7
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
Review of Operations
Table 1. Cleveland Mineral Resources and Ore Reserves*²
TEMENGOR TIN PROJECT – MALAYSIA
On the 9th July 2019 the Company was notified by its partner, Ipoh-based Empire Tin Mining Sdn Bhd,
that the Perak State Government had determined that a moratorium is to be put in place on the
granting of any Exploration Licence applications for potential mining projects in the State for the
foreseeable future. This outcome is the result of the Government’s concerns that natural
environmental conditions in the waterways located in the northern region of the State of Perak are
not being managed. The existing waterway conditions that are of concern to the Perak Government
are not located near nor associated with the Temengor Project area. The Government has advised
that it requires time to formulate suitable remediation and monitoring measures that will provide a
managed solution to the problem moving forward.
The decision by the Perak State Government to apply a moratorium on all new exploration licences
in the northern region of the state applies to all applicants. No schedule has been advised for when
this situation may revert. The Company is currently assessing if there are any alternative options to
move the project forward.
Page 8
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
Interests in Tenements
(and Annual Mineral Resources and Ore Reserves Statement)
Elementos Limited held the following interests in tenements as at the date of this report:
Tenement Name
Tenement Number
Area (Hectares)
Elementos Interest
Cleveland
EL7/2005
5,993
100%
Location of
Tenements
Tasmania
The Company has entered into an agreement to acquire the Oropesa Tin Project from Eurotin Inc.
For details of the transaction and Mineral Resources relating to the project refer to the Review of
Operations.
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 2019 compared to 30 June 2018 is set out below. For details
regarding any movement in the Reserve or Resource between the reporting period refer to the
Review of Operations.
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 below
30 June 2019
Category
Tonnage
Sn Grade
Contained Sn Cu Grade
Contained Cu
Indicated
1.73 Mt
Inferred
0.16 Mt
0.93%
1.18%
16,100t
1,900t
0.33%
0.49%
5,700t
800t
30 June 2018
Category
Tonnage
Sn Grade
Contained Sn Cu Grade
Contained Cu
Indicated
0.80 Mt
Inferred
0.01 Mt
0.81%
0.99%
6,500t
140t
0.27%
0.34%
2,300t
50t
Table subject to rounding errors; Sn = tin, Cu = copper
Underground Tin-Copper Mineral Resource (at 0.35% Sn cut-off)
NOTE: this Underground Tin-Copper Mineral Resource is a sub-set of the Total Tin-Copper Mineral Resource noted below
30 June 2019
Category
Tonnage
Sn Grade
Contained Sn Cu Grade
Contained Cu
Indicated
4.50 Mt
Inferred
1.08 Mt
0.68%
0.70%
30,600t
7,500t
0.29%
0.25%
13,000t
2,700t
30 June 2018
Category
Tonnage
Sn Grade
Contained Sn Cu Grade
Contained Cu
Indicated
4.20 Mt
Inferred
2.43 Mt
0.67%
0.56%
28,140t
13,610t
0.28%
0.19%
11,760t
4,620t
Table subject to rounding errors; Sn = tin, Cu = copper
Page 9
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
Interests in Tenements
(and Annual Mineral Resources and Ore Reserves Statement)
Total Tin-Copper Mineral Resource (at 0.35% Sn cut-off)
30 June 2019
Category
Tonnage
Sn Grade
Contained Sn
Cu Grade
Contained Cu
Indicated
Inferred
30 June 2018
6.23 Mt
1.24 Mt
0.75%
0.76%
46,700t
9,400t
0.30%
0.28%
18,700t
3,500t
Category
Tonnage
Sn Grade
Contained Sn
Cu Grade
Contained Cu
Indicated
Inferred
5.00 Mt
2.40 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
Underground Tungsten Mineral Resource (at 0.20% WO3 cut-off) 1
30 June 2018 and 30 June 2019 – unchanged
Category
Inferred
Tonnage
4.00 Mt
Table subject to rounding errors; WO3 = tungsten oxide
Tailings Ore Reserve (at 0% Sn cut-off) 2
30 June 2018 and 30 June 2019 – unchanged
WO3 Grade
0.30%
Category
Tonnage
Sn Grade
Contained Sn Cu Grade
Contained Cu
Probable
3.70 Mt
0.29%
11,000t
0.13%
5,000t
Table subject to rounding errors; Sn = tin, Cu = copper
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.
1 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.
2 Announced per the JORC Code 2012 on 3 August 2015 “Cleveland Tailings Ore Reserve”
Page 10
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
Interests in Tenements
(and Annual Mineral Resources and Ore Reserves Statement)
Competent Persons Statement:
The information in this report that relates to the Annual Mineral Resources and Ore Reserves
Statement, Exploration Results and Exploration Targets is based on information and supporting
documentation compiled by Mr Chris Creagh, who is a full-time employee of Elementos Ltd. Mr
Creagh is a Competent Person who is a Member of the Australasian Institute of Mining and Metallurgy
and who consents to the inclusion in the report of the matters based on his information in the form
and context in which it appears.
Chris Creagh has sufficient experience that is relevant to the style of mineralisation and type of
deposit under consideration and to the activity being undertaken 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 (JORC Code 2012).
The information in this report that relates to Processing and Metallurgy for the Oropesa Tin Project is
based on and fairly represents information and supporting documentation compiled by Chris
Creagh, who is a full-time employee of Elementos Ltd. Mr Creagh is a Competent Person who is a
Member of the Australasian Institute of Mining and Metallurgy and who consents to the inclusion in
the report of the matters based on his information in the form and context in which it appears.
Chris Creagh has sufficient experience that is relevant to the style of mineralisation and type of
deposit under consideration and to the activity being undertaken 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 (JORC Code 2012).
The Australian Securities Exchange has not reviewed and does not accept responsibility for the
accuracy or adequacy of this release.
Page 11
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
Directors’ 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 2019.
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
Mr Chris Dunks
Mr Corey Nolan
Mr Calvin Treacy
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
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
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’ 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’ 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 continued the Company’s
permitting and partnering process in an Executive Director capacity.
Mr Dunks is a member of the Audit and Risk Committee.
Mr Dunks has not held any other (ASX listed) directorships in the last three years.
Page 12
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
Directors’ Report
Corey Nolan
Non-executive Director
Mr Nolan (BCom, MMEE, Graduate of AICD) has 20 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 ASX listed companies Leyshon
Resources Limited (February 2014 to August 2018) and Platina Resources Limited (August 2018 to
current).
Calvin Treacy
Non-executive Director
Mr Treacy (BEng, MBA, MAICD) has over 20 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
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 Chartered
Accountants Australia and New Zealand.
Page 13
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
Directors’ Report
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
A. Greig
C. Dunks
C. Nolan
C. Treacy
Principal Activities
Shares
Options
300,887,439
19,687,505
4,737,486
28,000,004
-
-
-
-
The principal activity of the Group during the year was the acquisition of the Oropesa Tin Project from
Eurotin Inc. The Group is also developing the Cleveland tin-copper-tungsten Project through a
staged, low-capital development strategy, which minimises upfront capital, with cash flow funding
future stages.
Operating Results
The Group’s operating loss for the financial year, after applicable income tax was $1,957,377 (2018:
$819,933).
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
At 30 June 2018, the Company had 1,332,012,910 ordinary shares, 11,000,000 unlisted (ESOP) options
and 30,000,000 performance rights on issue.
On 4 July 2018, 5,318,052 unlisted options (exercisable at 0.60 cents per option expiring on 30 June
2018) were exercised in to 5,318,052 shares. An option exercise form, plus the required exercise funds
for the options exercised, were received prior to 30 June 2018 (the expiry date of the options).
On 31 July 2018, 1,000,000 unlisted options exercisable at 1.165 cents each expired.
On 31 July 2018, the Company announced that it had received commitments to complete a private
placement of 199,999,999 shares to be issued at 0.60 cents per share to raise a total of $1,200,000
(before costs). The transaction completed in two tranches as follows:
(a) On 26 October 2018 149,999,999 shares issued at 0.60 cents per share
(b) On 14 November 2018 50,000,000 shares issued at 0.60 cents per share
Page 14
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
Directors’ Report
As part of the Capital Raising activity on 31 July 2018 detailed above the Company announced that
it had engaged Lions Bay Capital to arrange the placement and provide corporate advisory services
in relation to the acquisition of the Oropesa project. As consideration Lions Bay Capital were issued
100,000,000 share options with an exercise price of 0.70 cents per share expiring 30 June 2020.
On 17 April 2019, 7,000,000 shares were issued to Chris Creagh, CEO on the exercise of vested
performance rights.
At 30 June 2019, the Company had 1,544,330,961 ordinary shares, 11,000,000 unlisted (ESOP) options,
100,000,000 unlisted (other) options and 23,000,000 performance rights on issue.
On 31 July 2019, 10,000,000 unlisted options exercisable at 1.215 cents each expired.
As at the date of this report, the Company had 1,544,330,961 ordinary shares, 100,000,000 unlisted
(other) options and 23,000,000 performance rights on issue.
Financial Position
At 30 June 2019, the Group’s net assets totalled $5,656,160 (2018: $6,212,845) which included cash
assets of $400,812 (2018: $936,562). The movement in net assets largely resulted from the following
factors:
Operating losses of $1,957,377; and
Equity raisings totalling $1,227,255 (before costs) and receipt of ATO R&D refunds of $148,479
during the period were offset by cash outflows from operating activities ($1,563,826) and cash
outflows on exploration and evaluation assets ($250,982).
Throughout the year the Group focussed on:
progressing the acquisition of the Oropesa Tin Project; and
exploring innovative ways of enhancing the value of the Oropesa Tin Project and Cleveland
Project.
This focus resulted in sourcing additional equity funding to undertake the acquisition of the Oropesa
Tin Project from Eurotin Inc. and the ongoing operating costs of the project following interim
completion.
The Group’s working capital, being current assets less current liabilities has decreased from $874,884
in 2018 to $212,825 in 2019, principally due to ongoing exploration expenditure and acquisition and
operating costs of the Oropesa Tin Project.
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
Following the establishment of the loan facility, 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.
Page 15
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
Directors’ Report
Events After Reporting Date
On 31 July 2019, 10,000,000 unlisted options exercisable at 1.215 cents each expired.
On 7 August 2019, the Company announced to the ASX that it had received positive results in
relation to the performance ore sorting test program completed by TOMRA Sorting Solutions
Mining on the Oropesa Tin Project in Spain. For further details on the results see the review of
operations.
On 22 August 2019, the Company received $500,000 upon a drawdown of the loan facility with
the Non-Executive chairman Mr Andy Greig, see Note 7 for further details of the terms of the
loan facility.
Other than the events noted above, there are no other 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.
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 currently operates. Following the completion
of the Oropesa Tin Project acquisition the Group will be subject to the environmental regulations of
the Central Government of Spain, Cordoba Province of Andalucia, Fuente Obejuna municipality
and to a lesser extent the European Union.
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
Chris Dunks
Director – Executive
Corey Nolan
Director - Non-executive
Calvin Treacy
Director - Non-executive
Chris Creagh
Chief Executive Officer
Drew Speedy
Chief Financial Officer (appointed 1 April 2019)
Duncan Cornish
Chief Financial Officer (resigned 31 March 2019) and Company Secretary
Page 16
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
Directors’ Report
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. 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.
Chris Creagh (CEO) was issued with 30,000,000 Performance Rights for nil consideration on 9 February
2018, pursuant to Board approval and the shareholder approved Performance Rights Plan. Each
Performance Right carries the right to one Elementos Limited ordinary share, subject to satisfaction
of certain performance hurdles/vesting conditions. The performance period for the performance
rights expires on 30 June 2020.
Performance Rights shall be divided into tranches of the amounts set out in Column 1, vesting on
satisfaction of conditions set out in Column 2:
Column 1
Column 2
(1)
4,000,000(a) On continuous employment with the Company until 31 March 2018
(2)
2,000,000
On successful completion of the Definitive Feasibility Study
(3) 3,000,000(a) On continuous employment with the Company until 1 January 2019
(4) 3,000,000
On final approval of Environmental Permitting by any relevant authority
(5) 4,000,000
On completion of a capital raising (debt or equity, or a combination)
sufficient to fund construction of a project and Elementos' corporate costs
(6) 4,000,000
On continuous employment with the Company until 1 January 2020
Page 17
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
Directors’ Report
(7) 10,000,000(b) On the commissioning of a process plant that uses the low concentrate,
roasting, leaching and electrowinning technology introduced to Elementos
and reaching 80% of planned monthly production rate for a period of 3
months at any site operated by Elementos
(a) These 7,000,000 performance rights were exercised into fully paid ordinary shares on 17 April 2019.
(b) If the technology referred to in Tranche 7 is not implemented, Tranche 7 is subject to change by
Elementos at its sole discretion.
If a vesting condition is satisfied after the Employee's employment ends, the Board may in its absolute
discretion (acting reasonably) assess and rate the Employee's performance or contribution toward
the satisfaction of a vesting condition ('Performance Rating') in which event the Performance Rights
for that Tranche will convert in the limited proportion set out in the table below ('Determined Rights'),
and otherwise do not convert to ordinary Shares:
Performance Rating
% Performance Rights
capable of converting
Excellent
Very Good
Good
Fair
Poor
100%
75%
50%
25%
0%
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.
The Company currently believes it is prudent it continues to maintain a very low-cost corporate
overhead and preserve its cash resources. Consequently, non-executive director fees are $25,000
per annum (including superannuation) to each non-executive director. The Company’s chairman,
Andy Greig has chosen to not accept a (director) fee. Chris Dunks was appointed as an executive
director and his fee was increased to $73,000 per annum (including superannuation) from 1 August
2016. If directors perform services for the Company that, in the opinion of the other directors, is outside
the scope of the ordinary duties of the director, the Company may pay that director for those
services in addition to the remuneration outlined above. During the current Financial Year Mr Dunks
received $80,000 of additional fees in relation to work undertaken on the Oropesa Tin Project
acquisition and investor relations.
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.
Page 18
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
Directors’ Report
The executives receive payments provided for under an employment or service agreement, which
may include cash, superannuation, short-term incentives, and equity based performance
remuneration.
Chris Creagh was appointed Chief Executive Officer (CEO) on 1 January 2017, having previously held
the position of Operations Manager since August 2016. The key terms of the employment agreement
with Chris Creagh are:
Total Fixed Remuneration of $200,000 per annum (inclusive of superannuation);
Annual cash bonus at the discretion of the board (no STI was granted during the 2019 or 2018
financial years);
Incentive package of 30,000,000 performance rights (issued on 9 February 2018); and
90 days’ notice of termination by either party.
Drew Speedy was appointed Chief Financial Officer (CFO) on 1 April 2019. The key terms of the
employment agreement with Drew Speedy are:
Total Fixed Remuneration of $200,000 per annum (inclusive of superannuation);
Annual cash bonus at the discretion of the board (no STI was granted during the 2019
financial year); and
90 days’ notice of termination by either party.
The Company has a services agreement with Corporate Administration Services Pty Ltd (“CAS”) and
Duncan Cornish, the Company’s CFO until 31 March 2019 and Company Secretary. Under the
agreement, CAS also provided 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 which reduced to
$33,000 from 1 April 2019 for Company Secretary services.
Remuneration Details of Key Management Personnel
The remuneration of the key management personnel of Elementos Limited for the year ended 30
June 2019 was as follows:
Key
Management
Personnel
Short Term Benefits
Salary &
Fees
Bonuses
Year Ended 30 June 2019
Equity
Settled
Shares
Equity
Settled
Performa
nce
Rights
Post-
Employment
Super-
annuation
Total
Performance
related %
%
consisting
of options
$
$
$
$
$
$
A. Greig
-
C. Dunks(1)
144,996
C. Nolan
C. Treacy
22,831
24,396
C. Creagh
182,648
D. Speedy(2)
D. Cornish(3)
42,150
73,363
490,384
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,169
2,169
-
144,996
25,000
26,565
-
-
-
-
42,916
17,352
242,916
17.7%
-
-
4,004
46,154
-
73,363
-
-
42,916
25,694
558,994
-
-
-
-
-
-
-
1. During the period Mr Dunks received $80,000 of additional fees in relation to work undertaken on the Oropesa Tin Project
acquisition and investor relations.
2. Appointed CFO on 1 April 2019.
3. Resigned as CFO on 31 March 2019 and ceased to be a KMP.
Page 19
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
Directors’ Report
Year Ended 30 June 2018
Short Term Benefits
Key
Management
Personnel
Salary &
Fees
Bonuses
Equity
Settled
Shares
Equity
Settled
Performa
nce
Rights
Post-
Employment
Super-
annuation
Total
Performance
related %
%
consisting
of
options/
rights
A. Greig
C. Dunks
C. Nolan
C. Treacy
C. Creagh
D. Cornish
$
$
$
$
$
$
-
72,996
22,831
25,831
182,648
120,000
424,306
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,169
2,169
-
72,996
25,000
28,000
-
-
-
-
50,819
17,352
250,819
20.3%
-
-
120,000
-
50,819
21,690
496,815
-
-
-
-
-
-
The percentage of equity-based remuneration for persons who were key management personnel of
the Group during the year ended 30 June 2019 is set out below:
Key Management Personnel
Proportion of Remuneration
Equity Based
Salary and Fees
A. Greig
C. Dunks
C. Nolan
C. Treacy
C. Creagh
D. Speedy
D. Cornish
n/a
-
-
-
17.7%
-
-
n/a
100%
100%
100%
82.3%
100%
100%
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 2015.
30 June
2019
30 June
2018
30 June
2017
30 June
2016
30 June
2015
Share Price at
year end ($)
0.006
0.006
0.0084
0.008
0.010
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
Page 20
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
Directors’ Report
of metal prices and market sentiment towards the sector, and as such, increases and decreases
might occur independent of executive performance and remuneration.
Options Held by Key Management Personnel
Details of options held directly, indirectly or beneficially by key management personnel during the
year ended 30 June 2019 were as follows:
Key
Management
Personnel
Balance at 1
July 2018
Granted as
Compen-
sation
Exercised
Expired
Balance at
30 June 2019
Total Vested
30 June 2019
Total Vested
and
Exercisable
30 June 2019
D. Cornish
10,000,000
10,000,000
-
-
-
-
-
-
10,000,000
10,000,000
10,000,000
10,000,000
10,000,000
10,000,000
Options Granted as Remuneration
As noted above, there were no options issued to key management personnel during the year ended
30 June 2019.
Performance Rights Held by Key Management Personnel
Chris Creagh (CEO) is the only key management personnel who has been issued performance rights
Details of the performance rights held directly, indirectly or beneficially by Chris Creagh during the
year ended 30 June 2019 were as follows:
Key
Management
Personnel
Balance at 1
July 2018
Granted as
Compensation
Exercised
Expired
Balance at
30 June 2019
Total Vested and
Exercisable 30
June 2019
C. Creagh
30,000,000
-
7,000,000
-
23,000,000
-
Shares Held by Key Management Personnel
Details of shares held directly, indirectly or beneficially by key management personnel during the
year ended 30 June 2019 were as follows:
Key
Management
Personnel
Balance at 1
July 2018
Granted as
Compensation
Received on
Exercise of
Options / Rights
Acquisitions
Balance at 30
June 2019
272,226,820
19,687,505
4,737,486
28,000,004
1,363,637
-
3,127,189
329,142,641
-
-
-
-
-
-
-
-
-
-
-
-
7,000,000
-
-
28,660,619
300,887,439
-
-
-
-
-
-
19,687,505
4,737,486
28,000,004
8,363,637
-
3,127,189
7,000,000
28,660,619
364,803,260
A. Greig
C. Dunks
C. Nolan
C. Treacy
C. Creagh
D. Speedy
D. Cornish
Page 21
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
Directors’ Report
Other transactions with Key Management Personnel
On 17 April 2019, the Company executed a loan facility with the Company’s Non-Executive
Chairman Mr Andy Greig, a related party, with the following key terms:
Loan amount = $2,000,000
Loan term = 2 years
Interest rate = 6.0% on drawn funds
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)
As at 30 June 2019 the Company had not drawn on the loan facility.
End of Remuneration Report (Audited)
Options
At the date of this report, the unissued ordinary shares of the Company under options are as follows:
Unlisted Options
Grant Date/s
Expiry Date
Exercise Price
No. Under Option
26 October 2018
30 June 2020
0.07 cents
100,000,000
Performance Rights
At the date of this report, the number of Performance Rights on issue is as follows:
Grant Date/s
Expiry Date
Exercise Price
9 February 2018
30 June 2020
Nil
No. Rights
23,000,000
During the year ended 30 June 2019, no performance rights were issued and 7,000,000 performance
rights issued on 9 February 2018 were exercised into ordinary shares by Key Management Personnel.
There have been no unissued shares or interests under option of any controlled entity within the
economic entity during or since reporting date. Option and Performance Right holders do not have
any rights to participate in any share issue or other interests in the Company or any other entity.
Page 22
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
Directors’ Report
Directors’ Meetings
The meetings attended by each director during the financial year were:
Directors
A. Greig
C. Dunks
C. Nolan
C. Treacy
Board
Audit & Risk Committee
Meetings
Attended
Meetings
Attended
5
5
5
5
4
5
4
5
2*
2
2
2
0*
2
1
2
* Mr Greig is not a member of the Audit & Risk Committee.
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.
Indemnification and Insurance of Directors and Auditors
The Company has entered into a Deed with each of the directors whereby the Company has agreed
to provide certain indemnities to each director to the extent permitted by the Corporations Act and
to use its best endeavours to obtain and maintain directors’ and officers’ indemnity insurance,
subject to such insurance being available at reasonable commercial terms.
The economic entity has paid premiums to insure each of the directors of the Company against
liabilities for costs and expenses incurred by them in defending any legal proceedings arising out of
their conduct while acting in the capacity of director of the Company, other than conduct involving
a wilful breach of duty in relation to the Company. The contracts include a prohibition on disclosure
of the premium paid and nature of the liabilities covered under the policy.
The Company has not given an indemnity or entered into an agreement to indemnify, or paid or
agreed to pay insurance premiums in respect of any person who is or has been an auditor of the
Company or a related entity during the year and up to the date of this report.
Proceedings on Behalf of the Company
No person has applied for leave of Court to bring proceedings on behalf of the Company or
intervene in any proceedings to which the Company is a party for the purpose of taking responsibility
on behalf of the Company for all or any part of those proceedings. The Company was not a party
to any such proceedings during the year.
Non-Audit Services
The auditors did not provide any non-audit services during the year (2018: Nil).
Page 23
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
Directors’ Report
Future Developments and Likely Outlook
Planned developments in the operations of the Group and the expected results of those operations
in subsequent financial years has been discussed where appropriate in the Annual Report under
Review of Operations.
There are no further developments of which the Directors are aware which could be expected to
affect the results of Group's operations and plans, other than information which the Directors believe
comment on, or disclosure of, would prejudice the interests of the Group.
Auditor’s Independence Declaration
The lead auditor’s independence declaration under section 307C of the Corporations Act 2001 is
attached to this financial report.
Signed in accordance with a resolution of the board of directors.
Chris Dunks
Director
Dated 16 September 2019
Brisbane, Queensland
Page 24
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
Auditor’s Independence Declaration
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 D P WRIGHT TO THE DIRECTORS OF ELEMENTOS LIMITED
As lead auditor of Elementos Limited for the year ended 30 June 2019, 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 year.
D P Wright
Director
BDO Audit Pty Ltd
Brisbane, 16 September 2019
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.
Page 25
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
Shareholder Information
Additional information required by the Australian Securities Exchange and not shown elsewhere in
this report is as follows. The information is current as at 11 September 2019.
(a) Distribution of equity securities
The number of holders, by size of holding, in each class of security are:
Ordinary Shares
Convertible Redeemable
Preference Shares
No. Holders
No. Shares
No. Holders
No. CRPS
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and
over
Total
65
75
70
243
430
883
14,216
229,376
567,962
10,716,611
1,532,802,796
1,544,330,961
-
1
2
18
46
-
2,811
11,242
854,552
999,131,395
67
1,000,000,000
The Company notes that 399,968,205 of the Convertible Redeemable Preference Shares are held by ZCR
Corporation.
Performance Rights
Share Options
No. Holders
No. Rights
No. Holders
No. Options
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and
over
Total
-
-
-
-
1
1
-
-
-
-
23,000,000
23,000,000
1
1
100,000,000
100,000,000
The Company notes that 87,500,000 of the share options are held by TR Nominees Pty Ltd.
The number of shareholders holding less than a marketable parcel is 474.
Page 26
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
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
BOND STREET CUSTODIANS LIMITED
300,887,439
19.48%
79,505,195
61,258,853
60,020,768
59,366,667
50,000,000
45,100,000
28,000,004
28,000,000
27,299,095
5.15%
3.97%
3.89%
3.84%
3.24%
2.92%
1.81%
1.81%
1.77%
25,300,000
1.64%
25,000,000
23,000,000
19,687,505
19,050,762
17,200,000
16,768,693
16,659,095
16,500,000
15,050,000
1.62%
1.49%
1.28%
1.23%
1.11%
1.09%
1.08%
1.07%
0.98%
933,654,076
60.46%
1,544,330,961
1
2
3
4
5
6
7
8
9
KEO PROJECTS PTY LTD
MERRILL LYNCH (AUSTRALIA) NOMINESS PTY LIMITED
JAMES CALAWAY*
BOURSE SECURITIES PTY LTD
TR NOMINEES PTY LTD
SANGWILL PTY LTD
MR CALVIN PATRICK TREACY*
PAN ANDEAN CAPITAL PTY LTD
10 MR MICHAEL DAVID ADAMS*
11 MR JOHN DOUGLAS JEFFERY & MRS ELSPETH LOUISE
JEFFERY
12
ILWELLA PTY LTD
13
THREE ZEBRAS PTY LTD
14 MR CHRISTOPHER JAMES DUNKS*
15 MR CHRISTOPHER JOHN STAPLES*
16
1514341 ONTARIO INC
17
KOKONG HOLDINGS PTY LIMITED
18 MR WILLIAM RICHARDS GOODALL
19 MR JOHN JOSEPH BYRNE & MRS MARITZA IVONNE BYRNE
20
HUMBER HAWKE PTY LTD
Top 20 Total
Total of Securities
* Merged holding
Page 27
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
Shareholder Information
(c) Substantial Shareholders
The Company notes that, as at the date of this report, the following shareholders own substantial
shareholdings (>= 5.0%) in Elementos Limited:
Name of Shareholder
Ordinary Shares
% of total Shares
300,887,439
79,505,195
19.48%
5.15%
BOND STREET CUSTODIANS LIMITED
KEO PROJECTS PTY LTD
(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 28
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
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 29
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
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 2019, the proportion of women in the whole organisation is a follows:
Male
Female
Board Members
Officers
Employees
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.
No formal performance evaluation of the CEO has been undertaken to date.
No formal performance evaluation of the non-executive directors was undertaken during the year
ended 30 June 2019.
Page 30
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
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 Directors’ 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
Page 31
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
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
3 years, 11 months
3 years, 11 months
10 years 2 months
5 years 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 Directors’ legal duties as an officer of the Company;
a Directors’ 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.
Page 32
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
Corporate Governance Statement
The members of the Audit & Risk Management Committee are Corey Nolan, Calvin Treacy and Chris
Dunks. The Committee is chaired by an independent director (Corey Nolan). While Messrs Nolan and
Treacy are both non-executive directors, Chris Dunks is engaged in an executive capacity. The
majority of the Committee are independent directors, with only Chris Dunks not considered as being
independent (based on the Council’s definition). The Company does not presently comply fully with
Recommendation 4.1 having not met point i above.
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:
C. Nolan
C. Dunks
C. Treacy
Audit & Risk Management Committee
Number of meetings
held while in office
Meetings attended
2
2
2
1
2
2
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 auditor is 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
shareholder interests and other events which are identified to be material. All ASX announcements
are available on the Group’s website.
Page 33
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
Corporate Governance Statement
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. The Committee is chaired by an independent director (Corey Nolan). While Messrs Nolan and
Treacy are both non-executive directors, Chris Dunks is engaged in an executive capacity. The
majority of the Committee are independent directors, with only Chris Dunks not considered as being
independent (based on the Council’s definition). The Company does not presently comply fully with
Recommendation 7.1 having not met point i above.
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 34
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
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:
C. Nolan
C. Dunks
C. Treacy
Audit & Risk Management Committee
Number of meetings
held while in office
Meetings attended
2
2
2
1
2
2
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 Directors’ 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 35
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
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 Directors’ 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 36
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the Year Ended 30 June 2019
Note
30 June 2019
30 June 2018
$
$
Interest Revenue
10,400
22,658
Corporate and administrative expenses
2
(1,967,777)
(842,591)
Loss before income tax expense
(1,957,377)
(819,933)
Income tax expense
3
-
-
Loss for the period attributable to members of the parent
entity
(1,957,377)
(819,933)
Other comprehensive income
Items that may be reclassified to profit or loss:
Exchange gains on translation of foreign operations
Other comprehensive income for the period, net of tax
-
-
-
-
Total comprehensive loss attributable to members of the
parent entity
(1,957,377)
(819,933)
Basic and diluted loss per share (cents per share)
11
(0.13)
(0.07)
The accompanying notes form part of these financial statements.
Page 37
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
Consolidated Statement of Financial Position
As at 30 June 2019
Note
30 June 2019
30 June 2018
$
$
4
400,812
257
401,069
936,562
5,834
942,396
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Total Current Assets
NON-CURRENT ASSETS
Exploration and evaluation assets
5
5,436,336
5,326,936
Plant and equipment
Other non-current assets
Total Non-Current Assets
21,910
7,000
31,426
7,000
5,465,246
5,365,362
TOTAL ASSETS
5,866,315
6,307,758
CURRENT LIABILITIES
Trade and other payables
Borrowings
Total Current Liabilities
NON-CURRENT LIABILITIES
Borrowings
Total Non-Current Liabilities
6
7
7
182,754
5,490
188,244
21,911
21,911
62,330
5,182
67,512
27,401
27,401
TOTAL LIABILITIES
210,155
94,913
NET ASSETS
EQUITY
Contributed equity
Reserves
Accumulated losses
TOTAL EQUITY
5,656,160
6,212,845
8
16,667,725
15,578,119
430,935
119,849
(11,442,500)
(9,485,123)
5,656,160
6,212,845
The accompanying notes form part of these financial statements.
Page 38
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
Consolidated Statement of Changes in Equity
For the Year Ended 30 June 2019
Note
Issued
Capital
Accumulated
Losses
Share-
Based
Payments
Reserve
Total
$
$
$
$
Balance at 30 June 2017
13,391,701
(8,729,360)
133,200
4,795,541
Loss for the period
Total comprehensive income
Issue of shares
Transaction costs
Transfer of expired options
Issue performance rights
-
-
(819,933)
(819,933)
8
8
2,296,291
(109,873)
-
-
-
-
-
-
(819,933)
(819,933)
2,296,291
(109,873)
-
-
64,170
(64,170)
-
-
50,819
50,819
Balance at 30 June 2018
15,578,119
(9,485,123)
119,849
6,212,845
Loss for the period
Total comprehensive income
-
-
(1,957,377)
(1,957,377)
Issue of shares
Transaction costs
8
8
Transfer
performance rights
of
exercised
Issue options and performance
rights
1,231,908
(198,302)
56,000
-
-
-
-
-
-
-
-
-
(1,957,377)
(1,957,377)
1,231,908
(198,302)
(56,000)
-
367,086
367,086
Balance at 30 June 2019
16,667,725
(11,442,500)
430,935
5,656,160
The accompanying notes form part of these financial statements.
Page 39
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
Consolidated Statement of Cash Flows
For the Year Ended 30 June 2019
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received
Payments to suppliers and employees
Payments in relation to Oropesa Tin Project
30 June 2019
30 June 2018
$
$
12,017
11,144
(1,258,705)
(751,565)
(317,138)
-
Net cash used in operating activities
10
(1,563,826)
(740,421)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for exploration and evaluation assets
(250,982)
(719,461)
Refunds of security deposits
Research and development refunds
Purchase of property, plant and equipment
-
148,479
-
11,934
144,641
-
Net cash used in investing activities
(102,503)
(562,886)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares
Costs associated with share issues
Lease payments
Repayment of loan
1,227,255
(89,743)
(6,933)
-
1,751,837
(158,331)
(4,516)
(4,989)
Net cash provided by financing activities
1,130,579
1,584,001
Net increase/(decrease) in cash held
(535,750)
280,694
Cash at Beginning of Year
936,562
655,868
Cash at End of Year
4
400,812
936,562
The accompanying notes form part of these financial statements.
Page 40
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2019
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 Interpretations,
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 and Interpretation 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. The financial
report was authorised for issue on 16 September 2019 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 21.
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 ended 30 June 2019, the Group raised $1,227,255 of cash through equity raisings and option
exercises (before costs). The Group has also entered into a Loan Facility with the Group’s Non-
Executive Chairman for $2,000,000.
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.
Page 41
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
Notes to the Consolidated Financial Statements for the Year Ended 30 June 2019
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 2019, 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 consolidated entity”.
The names of the subsidiaries are contained in Note 19. 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 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 as 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.
Page 42
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
Notes to the Consolidated Financial Statements for the Year Ended 30 June 2019
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Income Tax (continued)
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.
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.
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.
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.
Page 43
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
Notes to the Consolidated Financial Statements for the Year Ended 30 June 2019
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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.
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 Non-Financial 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. No impairment existed at
reporting date.
Trade and other payables
These amounts represent liabilities for goods and services provided to the consolidated entity prior to
the end of the financial year and which are unpaid. Due to their short-term nature they are measured
at amortised cost and not discounted. The amounts are unsecured and are usually paid within 30
days of recognition.
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.
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.
Page 44
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
Notes to the Consolidated Financial Statements for the Year Ended 30 June 2019
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Share Based Payments and Performance Rights
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 Black Scholes option pricing model. 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 45
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
Notes to the Consolidated Financial Statements for the Year Ended 30 June 2019
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.
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 statement of financial position.
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 2019
Notes to the Consolidated Financial Statements for the Year Ended 30 June 2019
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
New and Amended Standards and Interpretations Adopted During the Year
The consolidated entity has adopted all new and amended Australian Accounting Standards and
AASB Interpretations as of 1 July 2018. The consolidated entity did not have to change its accounting
policies or make retrospective adjustments as a result of adopting these standards.
A number of new or amended standards became applicable for the current reporting period and
the group had to change its accounting policies as a result of adopting the following standards:
AASB 9 Financial Instruments; and
AASB 15 Revenue from Contracts with Customers.
The impact of the adoption of these standards and the new accounting policies are disclosed below.
The other standards did not have any impact on the group’s accounting policies and did not require
retrospective adjustments.
AASB 15 Revenue from Contracts with Customers – Impact of adoption
The group has adopted AASB 15 Revenue from Contracts with Customers from 1 July 2018. In
accordance with the transition provisions in AASB 15, the group has adopted the new rules
retrospectively however there was no material impact on the amounts disclosed previously and as a
result there has been no restatement required as a result of reclassification or remeasurement and
no change to the previously disclosed accounting policies.
AASB 9 Financial Instruments – Impact of adoption
AASB 9 replaces the provisions of AASB 139 that relate to the recognition, classification and
measurement of financial assets and financial liabilities, derecognition of financial instruments,
impairment of financial assets and hedge accounting.
The adoption of AASB 9 Financial Instruments from 1 July 2018 resulted in changes in accounting
policies. The new accounting policies are set out in note below. In accordance with the transitional
provisions in AASB 9, comparative figures have not been restated.
(i) Classification and Measurement
On 1 July 2018 (the date of initial application of AASB 9), the Group’s management has assessed
which business models apply to the financial assets held by the group and has classified its financial
instruments into the appropriate AASB 9 categories. There were no changes to the classification and
measurement of financial assets. The Group has cash and cash equivalents and trade and other
receivables that continue to be measured at amortised cost under AASB 9.
(ii) Impairment of financial assets
The Group has one type of financial asset that is subject to AASB 9’s new expected credit loss model,
being trade and other receivables.
The group was required to revise its impairment methodology under AASB 9. There was no material
impact of the change in impairment methodology on the group’s accumulated losses and equity.
While cash and cash equivalents are also subject to the impairment requirements of AASB 9, there
was no material impairment loss identified.
Page 47
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
Notes to the Consolidated Financial Statements for the Year Ended 30 June 2019
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
AASB 9 Financial Instruments – Accounting policies applied
Classification
From 1 July 2018, the group classifies its financial assets in the following measurement categories:
those to be measured subsequently at fair value (either through OCI, or through profit or
loss); and
those to be measured at amortised cost.
The classification depends on the entity’s business model for managing the financial assets and the
contractual terms of the cash flows.
Measurement
At initial recognition, the group measures a financial asset at its fair value plus, in the case of a
financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly
attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at
FVPL are expensed in profit or loss.
Financial assets with embedded derivatives are considered in their entirety when determining
whether their cash flows are solely payment of principal and interest.
Debt instruments
Subsequent measurement of debt instruments depends on the group’s business model for managing
the asset and the cash flow characteristics of the asset. The Group’s financial assets (cash and cash
equivalents and trade and other receivables) are under this measurement category:
Amortised cost: Assets that are held for collection of contractual cash flows where those cash
flows represent solely payments of principal and interest are measured at amortised cost.
Interest income from these financial assets is included in finance income using the effective
interest rate method. Any gain or loss arising on derecognition is recognised directly in profit
or loss and presented in other gains/(losses), together with foreign exchange gains and losses.
Impairment losses are presented as separate line item in the statement of profit or loss.
Impairment
From 1 July 2018, the group assesses on a forward-looking basis the expected credit losses associated
with its debt instruments carried at amortised cost. The impairment methodology applied depends
on whether there has been a significant increase in credit risk.
For trade receivables, the group applies the simplified approach permitted by AASB 9, which requires
expected lifetime losses to be recognised from initial recognition of the receivables.
Page 48
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
Notes to the Consolidated Financial Statements for the Year Ended 30 June 2019
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
New Standards and Interpretations not yet adopted
Certain new accounting standards and interpretations have been published that are not mandatory
for 30 June 2019 reporting periods. The consolidated entity has decided against early adoption of
these standards. The consolidated entity's assessment of the impact of these new standards and
interpretations is set out below:
AASB 16: Leases
This standard is applicable to annual reporting periods beginning on or after 1 January 2019. When
effective, this Standard will replace the current accounting requirements applicable to leases in
AASB 117: Leases and related Interpretations. AASB 16 introduces a single lessee accounting model
that eliminates the requirement for leases to be classified as operating or finance leases.
The main changes introduced by the new Standard include:
recognition of a right-to-use asset and liability for all leases (excluding short-term leases with
less than 12 months of tenure and leases relating to low-value assets);
depreciation of right-to-use assets in line with AASB 116: Property, Plant and Equipment in
profit or loss and unwinding of the liability in principal and interest components;
variable lease payments that depend on an index or a rate are included in the initial
measurement of the lease liability using the index or rate at the commencement date;
by applying a practical expedient, a lessee is permitted to elect not to separate non-lease
components and instead account for all components as a lease; and
additional disclosure requirements.
The transitional provisions of AASB 16 allow a lessee to either retrospectively apply the Standard to
comparatives in line with AASB 108 or recognise the cumulative effect of retrospective application
as an adjustment to opening equity on the date of initial application.
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.
Page 49
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
Notes to the Consolidated Financial Statements for the Year Ended 30 June 2019
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 2019 were $5,436,336 (2018: $5,326,936).
Deferred Tax Assets
The Company is subject to income taxes in Australia and jurisdictions where it has foreign operations.
Significant judgement is required in determining the worldwide provision for income taxes. There are
certain transactions and calculations undertaken during the ordinary course of business for which
the ultimate tax determination is uncertain. The consolidated entity estimates its tax liabilities based
on the consolidated entity’s understanding of the tax law. Where the final tax outcome of these
matters is different from the amounts that were initially recorded, such differences will impact the
current and deferred income tax assets and liabilities in the period in which such determination is
made.
In addition, the consolidated entity has recognised deferred tax assets relating to carried forward
tax losses to the extent there are sufficient taxable temporary differences (deferred tax liabilities)
relating to the same taxation authority and the same subsidiary against which the unused tax losses
can be utilised. However, utilisation of the tax losses also depends on the ability of the entity, which
is not part of the tax consolidated group, to satisfy certain tests at the time the losses are recouped.
Due to the parent entity acquiring the entity that holds the losses it is expected that the entity will fail
to satisfy the continuity of ownership test and therefore has to rely on the same business test. As at 30
June 2019 the consolidated entity has not received advice that the losses are unavailable, however
should this change in the future the consolidated entity may be required to derecognise these losses.
Page 50
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
Notes to the Consolidated Financial Statements for the Year Ended 30 June 2019
NOTE 2: EXPENSES
Included in expenses are the following items:
Depreciation
ASX, ASIC, share registry expenses
Business development and investor relations costs
Legal fees
Oropesa Tin Project operating costs
Insurances
Audit, tax and external accounting fees
Interest
Employee benefits expense comprises:
Salaries and wages
Consulting fees
Contributions to defined contribution plans
Equity settled securities
Annual leave expensed
30 June 2019
30 June 2018
$
$
2,619
53,184
227,814
240,440
393,432
34,782
97,507
-
232,699
245,024
34,952
37,086
6,406
2,774
58,413
167,155
6,611
-
30,682
88,025
3,785
149,534
183,396
29,249
50,819
1,535
Page 51
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
Notes to the Consolidated Financial Statements for the Year Ended 30 June 2019
NOTE 3: 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 27.5% (2018: 27.5%)
Adjust for tax effect of:
Non-deductible amounts
Tax loss not recognised
Temporary differences recognised
Under/Over
Income tax expense/(benefit)
30 June 2019
30 June 2018
$
$
(587,213)
(245,980)
209,993
272,421
-
(21,211)
167,109
-
104,799
100,082
-
-
Deferred tax assets and liabilities not recognised, the net benefit of which will only be realised if the
conditions for deductibility as set out in Note 1 occur:
Temporary differences
Tax losses
-
-
4,437,673
4,117,690
The Group has carried forward tax losses of $19,062,422 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 4: CASH AND CASH EQUIVALENTS
Cash at bank and on hand
Short term deposits
30 June 2019
30 June 2018
$
$
390,812
10,000
400,812
425,819
510,743
936,562
Page 52
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
Notes to the Consolidated Financial Statements for the Year Ended 30 June 2019
NOTE 5: EXPLORATION AND EVALUATION ASSETS
Exploration and evaluation expenditure carried forward in respect
of areas of interest are:
Exploration and evaluation phase - at cost
5,436,336
5,326,936
30 June 2019
30 June 2018
$
$
Movement in exploration and evaluation assets:
Opening balance - at cost
Capitalised exploration expenditure
Exploration and evaluation assets written off
Total exploration and evaluation assets
Less research and development refunds
Carrying amount at the end of the year
5,326,936
257,879
-
5,584,815
(148,479)
5,436,336
4,745,500
726,077
-
5,471,577
(144,641)
5,326,936
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 6: TRADE AND OTHER PAYABLES
Current:
Trade payables and accrued expenses
Short term employee benefits
Total payables (unsecured)
30 June 2019
30 June 2018
$
$
167,124
15,631
182,754
53,105
9,225
62,330
The average credit period on purchases of goods and services is 30 days. No interest is paid on trade
payables.
NOTE 7: BORROWINGS
Current:
Unsecured:
Hire purchase lease
Total unsecured non-current liability
Non-Current:
Unsecured:
Hire purchase lease
Total unsecured non-current liability
Page 53
30 June 2019
30 June 2018
$
$
5,490
5,490
5,182
5,182
21,911
21,911
27,401
27,401
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
Notes to the Consolidated Financial Statements for the Year Ended 30 June 2019
NOTE 7: BORROWINGS (CONTINUED)
Hire purchase
lease
2018
Cash flows
Interest
accrued
2019
32,583
(6,933)
1,751
27,401
32,583
(6,933)
1,751
27,401
On 17 April 2019, the Company executed a loan facility with the Company’s Non-Executive
Chairman Mr Andy Greig, a related party, with the following key terms:
Loan amount = $2,000,000
Loan term = 2 years
Interest rate = 6.0% on drawn funds
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)
As at 30 June 2019 the Company had not drawn on the loan facility.
NOTE 8: CONTRIBUTED EQUITY
Fully paid ordinary shares
Balance as at 1 July
1,332,012,910
15,578,119
949,297,823
13,391,701
2019
2018
No. of Shares
$
No. of Shares
$
Share issues:
9 August 2017
21 August 2017
21 August 2017
Various
4 July 2018
26 October 2018
14 November 2018
17 April 2019
Balance as at 30 June
(a)
(b)
(c)
(d)
(e)
(f)
(f)
(g)
-
-
-
-
-
-
-
-
153,985,709
83,338,933
45,371,137
100,019,308
5,318,052
149,999,999
50,000,000
7,000,000
31,908
900,000
300,000
56,000
-
-
-
-
923,914
500,034
272,227
600,116
-
-
-
-
1,544,330,961
16,866,027 1,332,012,910
15,687,992
Total transaction costs associated with
share issues
Net issued capital
(198,302)
16,667,725
(109,873)
15,578,119
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.
Page 54
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
Notes to the Consolidated Financial Statements for the Year Ended 30 June 2019
NOTE 8: CONTRIBUTED EQUITY (CONTINUED)
Notes for the above table, relating to the year ended 30 June 2019, are:
(a)
(b)
(c)
(d)
(e)
(f)
Issued at 0.60 cents each, pursuant to a rights issue
Issued at 0.60 cents each, pursuant to a rights issue
Issued at 0.60 cents each upon the exercise of options
Between 30 August 2017 and 27 June 2018 - issued at 0.60 cents each upon the exercise
of options
Issued at 0.60 cents each upon the exercise of options
On 31 July 2018, the Company announced that it had received commitments to
complete a private placement of 199,999,999 shares to be issued at 0.60 cents per share
to raise a total of $1,200,000 (before costs). The transaction completed in two tranches as
follows:
(c) On 26 October 2018 149,999,999 shares issued at 0.60 cents per share
(d) On 14 November 2018 50,000,000 shares issued at 0.60 cents per share
(g)
Issued on the exercise of vested performance rights, no funds were raised as this amount
reflects the valuation of performance rights at the time of grant.
(Incentive) Options
Note
Weighted
average
exercise price
(cents)
30 June 2019
No. of Options
Weighted
average
exercise
price (cents)
30 June 2018
No. of Options
Unlisted Share Options
1.21
10,000,000
1.21
11,000,000
Balance at the beginning of the
reporting period
Options issued during the period
Options expired during the period
Exercisable at end of year(i)
1.21
11,000,000
-
1.16
1.21
-
(1,000,000)
10,000,000
2.01
-
2.96
1.21
20,300,000
-
(9,300,000)
11,000,000
(i)
The 10,000,000 incentive options expired subsequent to year end on 31 July 2019.
(Other) Options
Note
Weighted
average
exercise price
(cents)
30 June 2019
No. of Options
Weighted
average
exercise
price (cents)
30 June 2018
No. of Options
Unlisted Share Options
0.70
100,000,000
Balance at the beginning of the
reporting period
Options issued during the period:
Options exercised during the
period
Expired
Exercisable at end of year
-
-
-
-
0.60
0.70
5,318,052
100,000,000
0.60
337,324,642
0.60
(5,318,052)
0.60
(145,390,445)
-
-
0.70
100,000,000
0.60
0.60
(186,616,145)
5,318,052
The weighted average remaining contractual life of the other options was 1 year.
Page 55
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
Notes to the Consolidated Financial Statements for the Year Ended 30 June 2019
NOTE 8: CONTRIBUTED EQUITY (CONTINUED)
Terms and Conditions
Inputs used to value the share options on issue are as follows:
30,000,000
Reference
9/11/18
Grant date
125
Expected volatility (%)
1.99
Risk-free interest rate (%)
1.64
Expected life of (years)
Black Scholes Black Scholes
Model used
70,000,000
26/10/18
125
1.99
1.68
Capital Management
Exploration companies such as Elementos Limited are funded almost exclusively by share capital. In
April 2019, the Group also entered in to a loan facility set out in more detail in Note 7 (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 9: 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
and consultants. This reserve can be reclassified as retained earnings if options lapse.
NOTE 10: CASH FLOW INFORMATION
Reconciliation of Cash Flow from Operations with Loss after Income
Tax:
Loss after income tax
Non-cash flows in loss from ordinary activities:
Depreciation
Equity settled compensation
Deposit refund
Changes in operating assets and liabilities:
(Increase)/Decrease in receivables
(Increase)/Decrease in prepayments and other assets
30 June 2019
30 June 2018
$
$
(1,957,377)
(819,933)
2,619
255,202
-
-
-
2,774
50,819
(11,934)
(5,550)
(630)
44,033
(Decrease)/Increase in payables
135,730
Cash flows from operations
(740,421)
Options and performance rights issued to employees and consultants for no cash consideration are
disclosed in note 8.
(1,563,826)
Page 56
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
Notes to the Consolidated Financial Statements for the Year Ended 30 June 2019
NOTE 11: LOSS PER SHARE
30 June 2019
30 June 2018
$
$
Net loss used in the calculation of basic and diluted LPS
(1,957,377)
(819,933)
Weighted average number of ordinary shares outstanding during
the period used in the calculation of basic LPS
1,472,013,279
1,229,332,530
Options are considered potential ordinary shares. Options issued are not presently dilutive and were
not included in the determination of diluted loss per share for the period. Shares and options issued
subsequent to 30 June 2019 are also not dilutive.
NOTE 12: 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 reporting 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.
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 (2018: nil).
NOTE 13: CONTINGENT LIABILITIES
30 June 2019
30 June 2018
$
$
850,000
1,000,000
-
-
850,000
1,000,000
There were no contingent liabilities at the end of the reporting period.
NOTE 14: 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 2019.
Subsidiaries
Interest in subsidiaries are disclosed in Note 19.
Page 57
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
Notes to the Consolidated Financial Statements for the Year Ended 30 June 2019
NOTE 14: RELATED PARTY TRANSACTIONS (continued)
Key Management Personnel
Short-term employee benefits
Post-employment benefits
Equity-based payments
30 June 2019
30 June 2018
$
$
490,384
25,694
42,916
558,994
421,306
21,690
50,819
493,815
On 17 April 2019, the Company executed a loan facility with the Company’s Non-Executive
Chairman Mr Andy Greig, a related party, for up to $2,000,000. The Company had not drawn on the
loan at 30 June 2019. Further details are contained in Note 7 (Borrowings).
The Company has a services agreement with Corporate Administration Services Pty Ltd (“CAS”) and
Duncan Cornish, the Company’s CFO (resigned 31 March 2019) and Company Secretary
(continuing). 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
which reduced to $30,000 for Company Secretary services from 1 April 2019.
NOTE 15: 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:
Performance Rights issued to an employee under performance
rights plan
30 June 2019
30 June 2018
$
$
42,916
42,916
50,819
50,819
During the year ended 30 June 2018, 30,000,000 performance rights were granted to the Company’s
Chief Executive Officer, Chris Creagh, one of the Group’s key management personnel, under the
(shareholder approved) Performance rights Plan. The performance rights have seven tranches that
each have difference test dates, vesting dates and vesting conditions. All of the Performance Rights
have an expiry date of 30 June 2020.
The Company obtained an independent valuation of the Performance Rights, who took into
account the share price at grant date and the (director) estimated probability of achieving each
vesting condition. These values were then spread evenly (for each tranche) over the period to the
test date for each tranche.
Performance Rights shall be divided into tranches of the amounts set out in Column 1, vesting on
satisfaction of conditions set out in Column 2:
Page 58
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
Notes to the Consolidated Financial Statements for the Year Ended 30 June 2019
NOTE 15: SHARE-BASED PAYMENTS (CONTINUED)
Column 1
Column 2
(1) 4,000,000(a) On continuous employment with the Company until 31 March 2018
(2) 2,000,000
On successful completion of the Definitive Feasibility Study
(3) 3,000,000(a) On continuous employment with the Company until 1 January 2019
(4) 3,000,000
On final approval of Environmental Permitting by any relevant authority
(5) 4,000,000
On completion of a capital raising (debt or equity, or a combination)
sufficient to fund construction of a project and Elementos' corporate costs
(6) 4,000,000
On continuous employment with the Company until 1 January 2020
(7) 10,000,000(b) On the commissioning of a process plant that uses the low concentrate,
roasting, leaching and electrowinning technology introduced to Elementos
and reaching 80% of planned monthly production rate for a period of 3
months at any site operated by Elementos
(a) These 7,000,000 performance rights were exercised into fully paid ordinary shares on 17 April 2019.
(b) If the technology referred to in Tranche 7 is not implemented, Tranche 7 is subject to change by
Elementos at its sole discretion.
If a vesting condition is satisfied after the Employee's employment ends, the Board may in its absolute
discretion (acting reasonably) assess and rate the Employee's performance or contribution toward
the satisfaction of a vesting condition ('Performance Rating') in which event the Performance Rights
for that Tranche will convert in the limited proportion set out in the table below ('Determined Rights'),
and otherwise do not convert to ordinary Shares:
Performance Rating
% Performance Rights
capable of converting
Excellent
Very Good
Good
Fair
Poor
100%
75%
50%
25%
0%
NOTE 16: 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
Page 59
30 June 2019
30 June 2018
$
$
41,443
41,443
43,443
43,443
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
Notes to the Consolidated Financial Statements for the Year Ended 30 June 2019
NOTE 17: FINANCIAL RISK MANAGEMENT
(a) Financial Risk Management Policies
The Elementos Group's financial instruments comprises cash balances, receivables and payables,
loans to and from subsidiaries. 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, 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 from
interest 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 careful placement of surplus funds in interest bearing
bank accounts.
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 (2018: immaterial).
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 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.
Credit Risk
The maximum exposure to credit risk, excluding the value of any collateral or other security, at
reporting 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.
Page 60
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
Notes to the Consolidated Financial Statements for the Year Ended 30 June 2019
NOTE 17: FINANCIAL RISK MANAGEMENT (CONTINUED)
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 2019, there was no concentration of credit risk, other than bank balances and on
geographical basis with most financial assets in Australia (2018: nil).
(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 2019
30 June 2018
$
$
400,812
257
401,069
936,562
5,834
942,396
(182,754)
(62,330)
(5,490)
(188,244)
(7,888)
(70,218)
(i) Floating interest rates, with weighted average effective interest rate 0.14%, with an average
maturity of 1 day.
(ii) Non-interest bearing. The contractual cash flows do not differ to the carrying amount.
(c) Fair Values
Fair values of financial assets and financial liabilities are materially in line with carrying values due to
their short term nature.
Page 61
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
Notes to the Consolidated Financial Statements for the Year Ended 30 June 2019
NOTE 18: 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 Group 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.
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. As detailed in the Review of Operations the Company
is in the process of acquiring the Oropesa Tin Project based in Spain, following completion of the
acquisition the Board of Directors and Chief Executive Officer will review the operating segments
moving forward.
NOTE 19: 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
Elementos Minerales S.A.
Elementos Chile Limitada
Elementos Spain Pty Ltd
NOTE 20: EVENTS AFTER REPORTING PERIOD
Country of
incorporation
Australia
Australia
Argentina
Chile
Australia
Ownership interest
2019
100%
100%
100%
100%
100%
2018
100%
100%
100%
100%
-
On 31 July 2019, 10,000,000 unlisted options exercisable at 1.215 cents each expired.
On 7 August 2019, the Company announced to the ASX that it had received positive results in
relation to the performance ore sorting test program completed by TOMRA Sorting Solutions
Mining on the Oropesa Tin Project in Spain. For further details on the results see the review of
operations.
On 22 August 2019, the Company received $500,000 upon a drawdown of the loan facility with
the Non-Executive chairman Mr Andy Greig, see Note 7 for further details of the terms of the
loan facility.
Other than the events noted above, there are no other 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.
Page 62
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
Notes to the Consolidated Financial Statements for the Year Ended 30 June 2019
NOTE 21: PARENT ENTITY INFORMATION
The following information relates to the parent entity, Elementos Limited at 30 June 2019. 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 2019
30 June 2018
$
400,943
5,398,504
5,799,447
121,376
21,911
143,287
$
939,506
5,377,077
6,316,583
76,337
27,401
103,738
32,563,256
31,473,650
430,935
119,849
(27,338,031)
(25,380,654)
5,656,160
(1,555,239)
-
6,212,845
(823,168)
-
Total comprehensive income for the period
(1,555,239)
(823,168)
The Company has no contingent liabilities, nor has it entered into any guarantees in relation to the
debts of its subsidiaries (2018: nil).
The Company has not entered into any contractual commitments for the acquisition of property,
plant and equipment (2018: nil).
NOTE 22: 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 63
ELEMENTOS LIMITED - ABN 49 138 468 756
ANNUAL REPORT 2019
Directors’ Declaration
The directors of the Company declare that:
1.
The attached financial statements and notes are in accordance with the Corporations Act
2001, including:
a. complying with Australian Accounting Standards and Interpretations which, as stated
in accounting policy note 1 to the financial statements, constitutes explicit and
unreserved compliance with International Financial Reporting Standards (IFRS); and
b. giving a true and fair view of the consolidated entity’s financial position as at 30 June
2019 and of its performance for the financial year ended on that date.
2.
The chief executive officer and chief financial officer have each declared under section
295A that:
a.
b.
the financial records of the Company for the financial year have been properly
maintained in accordance with section 286 of the Corporations Act 2001;
the financial statements and notes for the financial year comply with the Australian
Accounting Standards and Interpretations; and
c.
the financial statements and notes for the financial year give a true and fair view.
3.
In the directors' opinion there are reasonable grounds to believe that the Company will be
able to pay its debts as and when they become due and payable.
This declaration is made in accordance with a resolution of the board of directors.
Chris Dunks
Director
16 September 2019
Brisbane, Queensland
Page 64
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 Audit of the Financial Report
Opinion
We have audited the financial report of Elementos Limited (the Company) and its subsidiaries (the
Group), which comprises the consolidated statement of financial position as at 30 June 2019, 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, and notes
to the financial report, including a summary of significant accounting policies and the directors’
declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(i)
Giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its
financial performance for the year ended on that date; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the Financial
Report section of our report. We are independent of the Group in accordance with the Corporations
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance
with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Material uncertainty related to going concern
We draw attention to Note 1 in the financial report which describes the events and/or conditions which
give rise to the existence of a material uncertainty that may cast significant doubt about the group’s
ability to continue as a going concern and therefore the group may be unable to realise its assets and
discharge its liabilities in the normal course of business. Our opinion is not modified in respect of this
matter.
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.
Page 65
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters. In addition to the matter described in the Material uncertainty
related to going concern section, we have determined the matters described below to be the key audit
matters to be communicated in our report.
Carrying value of exploration and evaluation assets
Key audit matter
How the matter was addressed in our audit
Refer to Note 5 in the financial report.
The Group carries exploration and evaluation
assets as at 30 June 2019 in relation to the
application of the Group’s accounting policy
for exploration and evaluation assets.
The recoverability of exploration and
evaluation asset is a key audit matter due
to:
•
•
The significance of the total balance;
and
The level of procedures undertaken to
valuate management’s application of
the requirements of AASB 6 Exploration
for and Evaluation of Mineral Resources
(‘AASB 6’) in light of any indicators of
impairment that may be present.
Our procedures included, but were not limited to,
the following:
•
•
•
Obtaining evidence that the Group has valid
rights to explore in the areas represented by
the capitalised exploration and evaluation
expenditure by obtaining supporting
documentation and considering whether the
Group maintains the tenements in good
standing.
Making enquiries of management with respect
to the status of ongoing exploration programs
in the respective areas of interest, assessing
the Group's cashflow budget for the level of
budgeted spend on exploration projects, and
held discussions with Directors of the Group as
to their intentions and strategy.
Enquiring of management, reviewing ASX
announcements, and reviewing directors'
minutes to ensure that the Group had not
decided to discontinue activities in any
applicable areas of interest and to assess
whether there are any other facts or
circumstances that existed to indicate
impairment testing was required.
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.
Page 66
Other information
The directors are responsible for the other information. The other information comprises the
information in the Group’s annual report for the year ended 30 June 2019, but does not include the
financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf
This description forms part of our 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.
Page 67
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included on pages 16 to 22 of the directors’ report for the
year ended 30 June 2019.
In our opinion, the Remuneration Report of Elementos Limited, for the year ended 30 June 2019,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
BDO Audit Pty Ltd
D P Wright
Director
Brisbane, 16 September 2019
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.
Page 68