TOMORROW’S TIN
ANNUAL REPORT
For the year ended 30 June 2020
ASX:ELT | ABN 49 138 468 756
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Annual Report for the year ended 30 June 2020
CONTENTS
Chairman’s Letter to Shareholders
Oropesa Project
Cleveland Project
Tenement Interests
Resources Statement
Cautionary Statements
Directors’ Report
2
4
8
9
10
13
14
Auditor’s Independence Declaration
Shareholder Information
Corporate Governance Statement
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Directors’ Declaration
Independent Auditor’s Report
CORPORATE DIRECTORY
Directors and Company Secretary
Share Registry
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 Brett Smith (Non-executive Director)
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
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
Banker
National Australian Bank Limited
Level 19, 259 Queen Street
Brisbane QLD 4000
Annual Report for the year ended 30 June 2020
2
CHAIRMAN’S LETTER
Dear shareholders
As tomorrow’s world becomes increasingly electrified, it’s
good to be “in tin”.
Currently, tin is primarily used as a solder component for
consumer electronics which accounts for about half of its
global consumption. While demand is expected to remain
subdued in the short term as a result of the coronavirus
pandemic, the long-term outlook remains bright for global
tin consumption.
Consumer electronics are expected to rebound strongly as
global economies recover. New and disruptive
technologies such as robotics, automation, smart home
devices, drones, Internet of Things, 5G, advanced
computing, hydrogen-related applications, carbon capture,
renewable energy, and electric vehicles will be the
strongest new use drivers.
Tin additions to lead-acid batteries and solder used for
joining solar cells have shown strong increases plus the
use of tin in Lithium-ion (Li-ion) batteries has shown some
of the highest growth over the last decade, accounting for
0.4% of refined tin consumption in 2011 and growing to
3% in 2019. Tin and tin compound materials offer
increased stability to Li-ion batteries.
This trend is set to continue, with the degree of vehicle
electrification expected to increase substantially over the
coming decade. Tin was singled out as the market most
favourably impacted by the technology revolution relative
to its size in a 2018 Massachusetts Institute of
Technology study commissioned by Rio Tinto.
Furthermore, in 2017, more than 5,000 scientific papers
and tin technology patents were published, which
demonstrates a strong future for this metal.
With demand economics in our favour, visible tin stocks
are very low, and the consensus is that there’s a real
supply issue going forward, regardless of the EV story.
Data from the International Tin Association clearly
indicates an expected shortfall in the supply of tin. Higher
extraction costs and lower grades are expected to lead to
continued declines in tin production and a market deficit
is anticipated to widen through to 2021, with few new tin
mines in the pipeline.
“
With demand economics in our
favour, visible tin stocks are
very low, and the consensus is
that there’s a real supply issue
going forward, regardless of
the EV story.
“
Elementos is well placed to take advantage of tin’s
supply/demand imbalance. Our flagship Oropesa Project
in southern Spain is one of the best undeveloped tin
resources in the world. Attractions include a large JORC
Annual Report for the year ended 30 June 2020
3
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.
An Economic Study completed in May found that at a tin
price of US$19,750/tonne, the mine could potentially
generate an annual gross revenue of more than US$48
million against a forecast operating cost of US$28 million
per year or cash cost of US$11,534/tonne of metal. The
Study valuation also found a base case pre-tax NPV8% of
approximately US$92m and post tax NPV8% of
approximately US$66m.
The company will move quickly to progress drilling and
environmental permitting at Oropesa after raising
A$773,000 from our oversubscribed Share Purchase Plan
(SPP) in September 2020. This amount is more than
double the original target of A$300,000 and is in addition
to the A$2,552,000 raised in a private placement
completed in August 2020. This represents a great vote of
confidence in the company’s strategy and performance.
Meanwhile, excellent progress continues to be made at
our Cleveland Tin Project in Tasmania following the
release of a new JORC resource estimate. This potentially
paves the way to move towards the development of a
small-scale open cut and tailings retreatment processing
facility. Further exploration and metallurgical testing is
planned to examine opportunities for enhancing the
project economics.
It’s an exciting time to be a Shareholder of Elementos. Our
experienced mining team is working hard to fast-track our
transition from explorer to producer at a time when there
is an increasing global demand for tin and falling supply.
Our vision to be major tin producer has become much
clearer this past financial year and we’re looking forward
to an electric tomorrow with tremendous confidence.
Yours sincerely
Andy Greig
Non-executive Chairman
Approximately US$26 million has been spent to date at the
Oropesa Project including 261 drillholes for a total of 54,026m of
drilling.
Annual Report for the year ended 30 June 2020
4
OROPESA PROJECT
Located in southern Spain, the Oropesa Tin
Project is one of the world’s largest
undeveloped, open-cut mineable tin deposits,
with access to world class infrastructure.
Oropesa is an advanced tin project with near
term development and cash flow potential.
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;
The Company announced on 31 December 2019 the
finalisation of the acquisition of the Oropesa Tin Project with
the transfer of all the shares Minas De Estaño De España
S.L.U.(MESPA) from Eurotin Ltd (TSX_V:TIN) to Elementos.
• 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 positive Economic
Study has been completed;
Oropesa consists of an exploration concession package
(Investigation Permit No. 13.050) covering an area of 13km2,
located approximately 75km north-west of Cordoba and 180km
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.
• Permitting process advanced – A revised Environmental
Impact Study (EIS) is being prepared following a review
of the initial EIA lodged with the Junta de Andalucia
(government) in January 2018 and a Mining Licence
application that has been submitted to the Junta for
approval;
Annual Report for the year ended 30 June 2020
5
• 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.
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 numerous geophysical
and geochemically anomalous regions that could
potentially extend this resource with additional exploration.
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.
Oropesa geological resource model. Highlighted resources (circled)
are not included in the current Production Target for the recently
completed Economic Study (2017 Geological Resource Model).
Annual Report for the year ended 30 June 2020
6
The Oropesa Tin Project contains a JORC compliant
Measured, Indicated and Inferred Resource of 67,520
tonnes of tin.
The Company is actively advancing the Oropesa Tin Project
towards development. The Company has completed an
Economic Study on the project during the reporting period.
The Economic Study is based on the development of an
open-cut mine, processing plant, tailings storage facility
and infrastructure to support a 750,000 tonne per annum
(tpa) mining operation over a mine life of 14 years. The
operation will produce high-quality tin concentrate for sale
to commercial smelters in Europe and Asia.
The Study, based on a tin price of US$19,750 per tonne,
demonstrates a real, pre and post-tax Net Present Value at
an 8% discount rate of approximately US$92 million and
US$66 million, respectively. The pre and post-tax Internal
Rate of Return (IRR) is approximately 25% and 22%,
respectively. The capital payback period is approximately
four years. Capital development costs have been estimated
at US$52.2 million including a 20% contingency.
The Study incorporates additional work completed at
Oropesa since the Initial Preliminary Economic Assessment
was released in 2014 (on SEDAR by Eurotin Ltd). Additional
work includes a pilot plant metallurgical test program, ore
pre-concentration testing, exploration drilling and
development of an updated geological resource model,
hydrogeological and geotechnical studies and advanced
environmental impact assessment studies.
The Study was developed by various independent
consultants:- Optimal Mining Solutions (Brisbane,
Australia), responsible for the final mine design and
schedule, IGAN Consultores, Oviedo, Spain (IGAN),
development of the initial mine plans and schedule,
Wardell Armstrong International UK, metallurgical test work
and Soluciones, Concentradores Y Procesos de Ingeniería,
S.L. (SCYPI), process design, capital and operational costs.
Project economics were carried out by the company.
The Study has been completed to an overall Scoping Study
level of accuracy of +/- 35%.
Annual Report for the year ended 30 June 2020
7
During the course of the Study the company identified
significant areas that have the potential to be optimised
and add significant additional value to the project. The
optimisation works present a strong opportunity to extract
considerably more value from the project. These include;
• Exploration drilling to expand and optimise Oropesa’s
JORC Mineral Resource,
• Reinterpretation of the different styles of tin
mineralisation and geological resource boundaries,
• Re-examining and assay of existing drill cores from the
early exploration phases of the project.
When completed, this new data will be used to adjust
resource boundaries and estimate a new JORC geological
resource.
The Company has been progressing the Environmental
Approvals and Mining Lease (Exploitation Licence)
application process through discussions with
representatives of the Andalucian Government (Junta). The
Mining Lease application was lodged in October 2017 and
the Environmental Impact Study (EIS) was lodged in
February 2018. The EIS has been through an initial review
stage with a number of recommendations made by the
Junta to improve the EIS and overall environmental
outcomes. The re-design of 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 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.
* 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.
Annual Report for the year ended 30 June 2020
8
CLEVELAND PROJECT
The Cleveland Tin Project is located 80km
southwest of Burnie in the mineral-rich
northwest region of Tasmania, Australia. It is
a historic mine boasting excellent power,
water and transport infrastructure.
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 our Resources Statement on page 10.
The Cleveland ore body remains open at depth, along
strike and down dip from the currently defined ore lenses.
The development of new exploration targets at Cleveland
has been derived from the collation of historical
underground geological mapping and the 2018 geological
resource model.
The Cleveland Project is continuing to be steadily
progressed towards development with the next phases of
work including an exploration programme to locate and
define additional resources, 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 prelude to commencing a
detailed feasibility study.
Annual Report for the year ended 30 June 2020
9
TENEMENT INTERESTS
Elementos Limited held the following interests in
tenements as at the date of this report:
Tenement
Name
Tenement
Number
Area
(km²)
ELT
Interest
Tenement
Location
Cleveland
EL7/2005
Oropesa
13.050
55
13
100%
100%
Tasmania,
Australia
Andalucia,
Spain
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 2020 compared to 30
June 2019 and its initial reporting of the Oropesa Tin
Project located in Spain, is set out overleaf. For details
regarding any movement in the Reserve or Resource
between the reporting period refer to the Review of
Operations.
A view of our acreage at the Oropesa Tin Project in southern
Spain with the nearby town of Fuente Obejuna in tha
background
Annual Report for the year ended 30 June 2020
10
RESOURCES STATEMENT
Oropesa Project
Total Tin Metal Resource (at 0.15% Sn cut-off)
30 June 2020 – no comparative as project acquired during the reporting period
Category
Measured
Indicated
Inferred
Tonnage (Mt)
Sn Grade %
Contained Sn (t)
0.33
9.01
3.20
1.09
0.53
0.52
3,585
47,320
16,615
Table subject to rounding errors; Sn = tin
Cleveland Project
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 and 30 June 2020 – unchanged
Category
Indicated
Inferred
Tonnage (Mt)
Sn Grade %
Contained Sn (t)
Cu Grade %
Contained Cu (t)
1.73
0.16
0.93
1.18
16,100
1,900
0.33
0.49
5,700
800
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 and 30 June 2020 – unchanged
Category
Indicated
Inferred
Tonnage (Mt)
Sn Grade %
Contained Sn (t)
Cu Grade %
Contained Cu (t)
4.50
1.08
0.68
0.70
30,600
7,500
0.29
0.25
13,000
2,700
Table subject to rounding errors; Sn = tin, Cu = copper
Annual Report for the year ended 30 June 2020
11
1
Total Tin-Copper Mineral Resource (at 0.35% Sn cut-off)
30 June 2019 and 30 June 2020 – unchanged
Category
Indicated
Inferred
Tonnage (Mt)
Sn Grade %
Contained Sn (t)
Cu Grade %
Contained Cu (t)
6.23
1.24
0.75
0.76
46,700
9,400
0.30
0.28
18,700
3,500
Table subject to rounding errors; Sn = tin, Cu = copper
Underground Tungsten Mineral Resource (at 0.20% WO3 cut-off) 1
30 June 2019 and 30 June 2020 – unchanged
Category
Inferred
Tonnage (Mt)
W03 Grade %
4.00
0.30
Table subject to rounding errors; WO3 = tungsten oxide
Tailings Ore Reserve (at 0% Sn cut-off) 2
30 June 2019 and 30 June 2020 – unchanged
Category
Probable
Tonnage (Mt)
Sn Grade %
Contained Sn (t)
Cu Grade %
Contained Cu (t)
3.70
0.29
11,000
0.13
5,000
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”
Annual Report for the year ended 30 June 2020
12
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.
Annual Report for the year ended 30 June 2020
13
CAUTIONARY STATEMENTS
Forward-looking statements
Mineral Resources, Ore Reserves and Production Targets
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.
For more information on specific risks associated with
forward looking statements refer to the Risk Assessment
section of the ASX announcement “Positive Economic
Study for the Oropesa Tin Project”, 7th May 2020.
The information in this report that relates to the Mineral
Resources and Ore Reserves were last reported by the
company in compliance with the 2012 Edition of the JORC
Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves. The Mineral
Resources, Ore Reserves, production targets and financial
information derived from a production target were
included in market releases dated as follows:
*1 - Cleveland Tailings Ore Reserve, 3 August 2015;
*2 - Cleveland JORC Resource Significantly Expanded, 5
March 2014 (tungsten resource);
*3 - Acquisition of the Oropesa Tin Project, 31st July
2018;
*4 - Substantial Increase in Cleveland Open Pit Project
Resources following revised JORC study, 26th
September 2018;
*5 - Exploration Evaluation at Oropesa tin project, 4th
February 2019;
*6 - Oropesa Ore Sorting Performance Testwork, 9th
August 2019;
*7 - Oropesa Presentation – Seville, Spain, 18th October
2019;
*8 - Positive Economic Study for the Oropesa Tin Project,
7th May 2020; and
*9 - Oropesa optimisation work and drilling to unlock
further value, 13th July 2020
The company confirms that it is not aware of any new
information or data that materially affects the information
included in the market announcements referred above
and further confirms that all material assumptions
underpinning the production targets, forecast financial
information derived from a producation target and all
material assumptions and technical parameters
underpinning the Ore Reserve and Mineral Resource
statements contained in those market releases continue
to apply and have not materially changed.
Annual Report for the year ended 30 June 2020
14
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 2020.
Chris Dunks
Executive Director
BEng (Mech), GAICD
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
Mr Brett Smith (appointed 24 January 2020)
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
GDipBus (Monash); Fellow, ATSE
Mr Greig 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.
Mr Greig has not held any other (ASX listed) directorships
in the last three years.
Mr Dunks 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.
During the past three years, Mr Dunks has also served as
a director of ASX listed company Strategic Minerals
Corporation NL (ASX: SMC) (February 2020 to current).
Corey Nolan
Non-executive Director
B.Com, M.Mineral & Energy Economics, GAICD
Mr Nolan is an accomplished public company director
whose 30-year career in the resources industry started on
the ground in operations before spanning a broad range
of corporate roles from equities analyst and corporate
finance director to a number of senior executive and
board positions.
Annual Report for the year ended 30 June 2020
15
As Managing Director of ASX listed Platina Resources
Limited since August 2018, he has been instrumental in
restructuring the company’s project portfolio, which has
included the acquisition, funding, exploration and
development of new assets.
Prior to Platina, Mr Nolan was Chief Executive Officer at
Sayona Mining Limited where he led the acquisition and
development of the Authier Lithium Project in Canada and
chartered a substantial growth in the company’s market
capitalisation.
Mr Nolan is a member of the Audit and Risk Committee.
Director of Hong Kong listed Dragon Mining which has
operating gold mines and processing plants in both
Finland and Sweden.
Mr Smith is also Deputy Chairman of Hong Kong listed
resources investment company APAC Resources and
Executive Director of Australian Securities Exchange listed
company Metals X.
During the past three years, Mr Smith has also served as
a director of ASX listed companies Metals X (December
2019 to present), Tanami Gold (November 2018 to
present) and Prodigy Gold (May 2016 to present).
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).
Duncan Cornish
Company Secretary
BBus(Acc)
Calvin Treacy
Non-executive Director
(BEng, MBA, MAICD)
Mr Treacy 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 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.
Brett Smith
Non-executive Director
BChE(Hons), MBA, MResearch Methodology
Mr Smith has over 30 years’ experience in the resources,
construction and engineering industries in senior
operational and financial positions. Mr Smith is Executive
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 is a member of the Chartered Accountants
Australia and New Zealand.
Annual Report for the year ended 30 June 2020
16
Interests in Securities
Review of Financial Condition
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
B. Smith
Shares
Options
300,887,439
19,687,505
4,420,428
28,000,004
-
-
-
-
-
-
Principal Activities
The principal activity of the Group during the year was the
finalisation of the Oropesa Tin Project acquisition from
Eurotin Inc. The Group is also developing the Cleveland tin-
low-capital
copper-tungsten Project through a staged,
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 $1,581,484 (2019:
$1,957,377).
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.
Capital Structure
At 30 June 2019, the Company had 1,544,330,961
ordinary shares, 10,000,000 unlisted (ESOP) options,
100,000,000 unlisted (other) options, 23,000,000
performance rights on issue and 1,000,000,000
convertible redeemable preference shares.
On 31 July 2019, 10,000,000 unlisted options
exercisable at 1.215 cents each expired.
On 14 January 2020, 1,000,000,000 convertible
redeemable preference shares converted to
1,000,000,000 ordinary shares on completion of the
Oropesa Tin Project acquisition.
On 26 May 2020, 4,000,000 shares were issued to Chris
Creagh on the exercise of vested performance rights.
On 30 June 2020, 19,000,000 performance rights issued
to Chris Creagh expired.
On 30 June 2020, 100,000,000 unlisted (other) options
exercisable at $0.007 each expired.
At 30 June 2020, the Company had 2,548,330,961
ordinary shares on issue.
On 6 August 2020, the Company announced that it had
received commitments to complete a private placement
of 464,000,017 shares to be issued at 0.55 cents per
share with participants receiving an attaching option on a
one for three basis, with an exercise price of 0.9 cents per
share and expiry date of 31 August 2022. The transaction
will complete in two tranches as follows:
(a) On 14 August 2020 422,727,288 shares were
issued at 0.55 cents per share and 140,909,121
unlisted options with an exercise price of 0.9 cents
per share and expiry date of 31 August 2022 were
issued.
(b) Subject to shareholder approval at the 2020 Annual
General Meeting the Company plans to issue
41,272,729 shares at 0.55 cents per share and
13,757,576 unlisted options with an exercise price
of 0.9 cents per share and expiry date of 31 August
2022.
Annual Report for the year ended 30 June 2020
17
As part of the Capital Raising activity announced on 6
August 2020 detailed above the Company announced
that it had engaged BW Equities to act as lead manager to
the placement. As consideration BW Equities are to be
issued following shareholder approval at the 2020 Annual
General Meeting, 40,000,000 unlisted options with an
exercise price of 0.9 cents per share expiring 31 August
2022.
On 9 September 2020, the Company announced the
successful completion of an oversubscribed Share
Purchase Plan (“SPP”) to existing shareholders raising
$773,000. The SPP will complete as follows:
Throughout the year the Group focussed on:
• finalising the acquisition of the Oropesa Tin Project;
and
• exploring innovative ways of enhancing the value of
the Oropesa Tin Project and Cleveland Project.
The Group’s working capital, being current assets less
current liabilities has decreased from $212,825 in 2019
to ($1,433,783) in 2020, principally due to ongoing
exploration expenditure, acquisition and operating costs
of the Oropesa Tin Project and $1,250,000 loan
outstanding to Chairman Andy Greig.
(a) On 9 August 2020 135,545,486 shares were issued
at 0.55 cents per share.
Treasury Policy
(b) The Company will offer SPP participants up to
45,181,875 unlisted options with an exercise price
of 0.9 cents per share and expiry date of 31 August
2022 subject to a separate offer under a cleansing
prospectus.
(c) Subject to shareholder approval at the 2020 Annual
General Meeting the Company plans to issue
5,000,001 shares at 0.55 cents per share and
1,666,668 unlisted options with an exercise price of
0.9 cents per share and expiry date of 31 August
2022 to Directors that participated in the SPP.
As at the date of this report, the Company had
3,106,603,735 ordinary shares, 140,909,121 unlisted
(other) options. In addition, the Company has agreements
in place to issue the following subject to a cleansing
prospectus and shareholder approval, 137,181,821
ordinary shares and 130,909,151 unlisted (other)
options.
Financial Position
At 30 June 2020, the Group’s net assets totalled
$7,017,848 (2019: $5,656,160) which included cash
assets of $199,176 (2019: $400,812). The movement in
net assets largely resulted from the following factors:
• Operating losses of $1,581,484; and
• Acquisition of the Oropesa Tin Project from Eurotin Inc.
See note 24 for further details of the initial recognition
of the transaction.
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.
Liquidity and Funding
Following the recently completed capital raising in August
2020 and the existing 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. Of the
$1,250,000 loan outstanding to Director Andy Greig,
$500,000 will be converted to equity.
Significant Changes in State of Affairs
Elementos Limited remained relatively unaffected during
the period by COVID-19. Staff worked remotely when
possible and followed enhanced social distancing and
health and safety procedures when at the workplace. The
Company did not receive any subsidies beyond the
universally available ATO cashflow boost scheme
($50,000).
There was no other matter or circumstance during the
financial year that has significantly affected the state of
affairs of the Group.
Annual Report for the year ended 30 June 2020
18
Events After Reporting Date
• On 6 August 2020, the Company announced that it
had received commitments to complete a private
placement of 464,000,017 shares to be issued at
0.55 cents per share with participants receiving an
attaching option on a one for three basis, with and
exercise price of 0.9 cents per share and expiry date of
31 August 2022. The transaction will complete in two
tranches as follows:
(a) On 14 August 2020 422,727,288 shares were
issued at 0.55 cents per share and 140,909,121
unlisted options with an exercise price of 0.9
cents per share and expiry date of 31 August
2022 were issued.
(b) Subject to shareholder approval at the 2020
Annual General Meeting the Company plans to
issue 41,272,729 shares at 0.55 cents per share
and 13,757,576 unlisted options with an
exercise price of 0.9 cents per share and expiry
date of 31 August 2022.
As part of the Capital Raising activity announced on 6
August 2020 detailed above the Company announced
that it had engaged BW Equities to act as lead manager to
the placement. As consideration BW Equities are to be
issued 40,000,000 share options with an exercise price
of 0.9 cents per share expiring 31 August 2022.
• On 6 August 2020, the Company announced that it
had entered into an agreement, subject to shareholder
approval at the 2020 Annual General Meeting, to
convert $500,000 of the outstanding loan balance
with Mr Andy Greig (Chairman). On conversion of the
loan Mr Greig will receive 90,909,091 ordinary shares
with an issue price of 0.55 cents per share and
30,303,030 options with an exercise price of 0.9
cents per share and expiry date of 31 August 2022.
• On 9 September 2020, the Company announced the
successful completion of an oversubscribed Shares
Purchase Plan (“SPP”) to existing shareholders raising
$773,000. The SPP will complete as follows:
(a) On 9 August 2020 135,545,486 shares were
issued at 0.55 cents per share.
(b) The Company will offer SPP participants up to
45,181,875 unlisted options with an exercise
price of 0.9 cents per share and expiry date of 31
August 2022 subject to a separate offer under a
cleansing prospectus.
(c) Subject to shareholder approval at the 2020
Annual General Meeting the Company plans to
issue 5,000,001 shares at 0.55 cents per share
and 1,666,668 unlisted options with an exercise
price of 0.9 cents per share and expiry date of 31
August 2022 to Directors that participated in the
SPP.
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 completion of the Oropesa
Tin Project acquisition the Group is 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.
Annual Report for the year ended 30 June 2020
19
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:
Directors
Position
Andy Greig
Director – Non-executive Chairman
Chris Dunks
Director – Executive
Corey Nolan
Director - Non-executive
Calvin Treacy
Director - Non-executive
Brett Smith
Chris Creagh
Director - Non-executive (appointed
24 January 2020)
Chief Executive Officer (resigned 31
March 2020)
Drew Speedy
Chief Financial Officer (appointed 1
April 2019)
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) until 31 March 2020 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 expired 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 overleaf:
Annual Report for the year ended 30 June 2020
20
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
Tranches 2, 4, 5 and 7 all expired at 30 June 2020
without meeting the vesting conditions.
The Group’s policy for determining the nature and amount
of remuneration of board members and key executives is
set out below.
(3) 3,000,000(a)
On continuous employment with the
Company until 1 January 2019
Directors
(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(b)
On continuous employment with the
Company until 1 January 2020
(7) 10,000,000
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) These 4,000,000 performance rights were exercised into
fully paid ordinary shares on 26 May 2020.
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:
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 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 Treacy received
$2,000 of additional fees in relation to work undertaken
on investor relations.
Performance Rating
% Perfomance Rights
capable of converting
Executives
Excellent
Very Good
Good
Fair
Poor
100%
75%
50%
25%
0%
The remuneration structure for executives is based on a
number of factors, including length of service, particular
experience of the individual concerned, and overall
performance of the Group. The executives receive
payments provided for under an employment or service
agreement, which may include cash, superannuation,
short-term incentives, and equity based performance
remuneration.
Annual Report for the year ended 30 June 2020
21
Chris Creagh was appointed Chief Executive Officer (CEO)
on 1 January 2017 and resigned as CEO on 31 March
2020 and has continued employment with the Company
in the role of Project Geologist. The key terms of the
employment agreement with Chris Creagh were:
• Total Fixed Remuneration of $200,000 per annum
(inclusive of superannuation) which was amended
from October 2020 to $100,000 per annum (inclusive
of superannuation) as a result of a transition of the
role from full-time to part-time;
• 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 2020 or 2019 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:
• Annual cash bonus at the discretion of the board (no
STI was granted during the 2020 or 2019 financial
years); 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
Annual Report for the year ended 30 June 2020
22
Remuneration Details of Key Management Personnel
The remuneration of the key management personnel of Elementos Limited for the year ended 30 June 2020 was as follows:
Year Ended 30 June 2020
Short Term Benefits
Key Management
Personnel
Salary &
Fees
Bonuses
Equity
Settled
Shares
Equity
Settled
Performance
Rights
Post-
Employment
Super-
annuation
Total
Performance
related %
%
consisting
of options
$
$
$
$
$
$
A. Greig
C. Dunks
C. Nolan
C. Treacy(1)
B. Smith(2)
C. Creagh(3)
D. Speedy(4)
-
72,996
22,831
26,819
10,896
155,942
119,424
408,908
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,169
181
-
-
72,996
25,000
27,000
10,896
-
-
-
-
-
25,692
13,014
194,648
13.2%
-
11,345
130,769
-
25,692
26,709
461,309
-
-
-
-
-
-
-
1. During the period Mr Treacy received $2,000 of additional fees in relation to work undertaken on investor relations.
2. Appointed Non-Executive Director on 24 January 2020.
3. Resigned as CEO on 31 March 2020 and ceased to be a KMP.
4. Transitioned from full-time to part-time in October 2019.
Year Ended 30 June 2019
Short Term Benefits
Key Management
Personnel
Salary &
Fees
Bonuses
Equity
Settled
Shares
Equity
Settled
Performance
Rights
Post-
Employment
Super-
annuation
Total
Performance
related %
%
consisting
of options
A. Greig
$
-
C. Dunks(1)
144,996
C. Nolan
C. Treacy
C. Creagh
D. Speedy(2)
D. Cornish(3)
22,831
24,396
182,648
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 $80,000 of additional fees in relation to work undertaken on the Oropesa Tin Project acquisition and investor
relations.
2. Appointed CFO on 1 April 2019.
3. Resigned as CFO on 31 March 2019 and ceased to be a KMP.
Annual Report for the year ended 30 June 2020
23
The percentage of equity-based remuneration for persons who were key management personnel of the Group during the
year ended 30 June 2020 is set out below:
Key Management
Personnel
Proportion of Remuneration
Equity Based
Salary and Fees
A. Greig
C. Dunks
C. Nolan
C. Treacy
B. Smith
n/a
-
-
-
-
C. Creagh
13.2%
D. Speedy
D. Cornish
-
-
n/a
100%
100%
100%
100%
86.8%
100%
100%
Company Performance, Shareholder Wealth, and Director and Executive Remuneration
During the financial year, the Company has generated losses as its principal activity was mineral exploration.
The following table shows the share price of the Company since 2016.
30 June 2020
30 June 2019
30 June 2018
30 June 2017
30 June 2016
Share Price at year
end ($)
0.005
0.006
0.006
0.0084
0.008
As the Company is still in the exploration and development stage, the link between remuneration, company performance
and shareholder wealth is tenuous. Share prices are subject to the influence of metal prices and market sentiment
towards the sector, and as such, increases and decreases might occur independent of executive performance and
remuneration.
Options Granted as Remuneration
As noted above, there were no options issued to key management personnel during the year ended 30 June 2020.
Annual Report for the year ended 30 June 2020
24
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 2020 were as
follows:
Key Management
Personnel
Balance at 1 July
2019
Granted as
Compensation
Exercised
Expired
Balance at 30
June 2020
Total Vested and
Exercisable 30
June 2020
C. Creagh
23,000,000
-
4,000,000
19,000,000
-
-
The value of performance rights exercised was $32,000 which was determined to be the intrinsic value of the options at that date.
Shares Held by Key Management Personnel
Details of shares held directly, indirectly or beneficially by key management personnel during the year ended 30 June 2020
were as follows:
Key Management
Personnel
Balance at 1 July
2019
Granted as
Compensation
Received on Exercise
of Options / Rights
Net change other
Balance at 30 June
2020
A. Greig
C. Dunks
C. Nolan
C. Treacy
B. Smith
C. Creagh
D. Speedy
300,887,439
19,687,505
4,420,428
28,000,004
-
8,363,637
-
361,359,013
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,000,000
(12,363,637)1
-
-
300,887,439
19,687,505
4,420,428
28,000,004
-
-
-
4,000,000
(12,363,637)
352,995,376
1Chris Creagh’s shareholding as at the date he ceased being a KMP is shown above.
Annual Report for the year ended 30 June 2020
25
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 2020 the Company had drawn $1,250,000
on the loan facility.
End of Remuneration Report (Audited)
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.
Directors’ Meetings
The meetings attended by each director during the
financial year were:
Directors
A. Greig
C. Dunks
C. Nolan
C. Treacy
B. Smith
Board
Audit & Risk Committee
Meetings
Attended Meetings
Attended
6
6
6
6
4
6
6
6
6
4
2*
0*
2
2
2
2
2
2
1*
0*
* Mr Greig and Mr Smith are not members of the Audit & Risk
Committee.
Options
Corporate Governance
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
14 August
2020
31 August
2022
0.9 cents
140,909,121
Performance Rights
At the date of this report there are no Performance Rights
on issue. During the year ended 30 June 2020, no
performance rights were issued and 4,000,000
performance rights issued on 9 February 2018 were
exercised into ordinary shares by Key Management
Personnel. On 30 June 2020 the remaining 19,000,000
performance rights expired.
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
Annual Report for the year ended 30 June 2020
26
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 (2019: Nil).
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 28 September 2020
Brisbane, Queensland
Annual Report for the year ended 30 June 2020
27
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 2020, 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, 28 September 2020
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.
Annual Report for the year ended 30 June 2020
28
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 16 September
2020.
(b) Twenty Largest Shareholders
The names of the twenty largest holders of Quoted
Ordinary Shares are:
(a) Distribution of equity securities
The number of holders, by size of holding, in each class of
security are:
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
Total
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
Total
Ordinary Shares
No. Holders
No. Shares
59
70
69
252
535
985
12,751
210,954
559,674
11,338,830
3,094,481,526
3,106,603,735
Share Option
No. Holders
No. Options
60
60
140,909,121
140,909,121
The number of shareholders holding less than a
marketable parcel is 408.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Registered Name
No. of Shares
% of total
shares
CITICORP NOMINEES PTY
LIMITED
BOND STREET CUSTODIANS
LIMITED
HSBC CUSTODY NOMINEES
(AUSTRALIA) LIMITED
KEO PROJECTS PTY LTD
UBS NOMINEES PTY LTD
ZCR CORP
TR NOMINEES PTY LTD
JAMES CALAWAY*
SANGWILL PTY LTD
327TH P & C NOMINEES PTY
LTD
TD WATERHOUSE CANADA
GOM PROPERTIES PTY LTD
MR JOSEPH IGNATIUS D'SOUZA
THREE ZEBRAS PTY LTD
LIONS BAY CAPITAL INC
BOURSE SECURITIES PTY LTD
OCKLESTON NOMINEES PTY
LTD
CALVIN PATRICK TREACY*
PAN ANDEAN CAPITAL PTY LTD
MR JOHN DOUGLAS JEFFERY &
MRS ELSPETH LOUISE JEFFERY
Top 20 Total
485,568,975
15.63%
300,887,439
9.69%
289,679,105
9.32%
112,141,558
3.61%
90,909,091
86,363,637
68,181,818
60,020,768
2.93%
2.78%
2.19%
1.93%
51,386,945
1.65%
48,193,038
1.55%
42,536,475
1.37%
40,901,394
1.32%
40,000,000
1.29%
36,636,365
1.18%
35,689,305
32,821,213
1.15%
1.06%
28,108,780
0.90%
28,000,004
28,000,000
0.90%
0.90%
27,349,575
0.88%
1,933,375,485
62.23%
Total of Securities
3,106,603,735
* Merged holding
Annual Report for the year ended 30 June 2020
29
(c) Substantial Shareholders
(e) Restricted securities
The Company notes that, as at the date of this report, the
following shareholders own substantial shareholdings (>=
5.0%) in Elementos Limited:
The Group currently has no restricted securities on issue.
(f) On-market buy back
Name of Shareholder
Ordinary Shares
% of total Shares
There is not a current on-market buy-back in place.
MARK WELLINGS
437,268,686
14.08%
(g) Business objectives
BOND STREET CUSTODIANS
LIMITED
300,887,439
9.69%
(d) Voting rights
All ordinary shares carry one vote per share without
restriction.
Options do not carry voting rights.
The Group has used its cash and assets that are readily
convertible to cash in a way consistent with its business
objectives.
Annual Report for the year ended 30 June 2020
30
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
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;
A copy of the eight Corporate Governance Principles and
Recommendations can be found on the ASX’s website.
• Monitoring senior executive’s performance and
implementation of strategy;
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.
• Ensuring appropriate resources are available to senior
executives;
• Approving and monitoring the progress of major capital
expenditure, capital management and acquisitions and
divestitures;
Roles and Responsibilities of the Board and Management
ASX CGC Principle 1
Lay solid foundations for management and oversight.
• Approving and overseeing Committees where
appropriate to assist in the Board’s function and
powers.
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 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.
Annual Report for the year ended 30 June 2020
31
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 2020, the proportion of women in the whole
organisation is a follows:
Male
Female
Board Members
Officers
Employees
5
1
4
Performance Evaluation
-
-
2
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
2020.
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.
Annual Report for the year ended 30 June 2020
32
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 except for those listed below
are considered independent therefore the Group does
currently comply with Recommendation 2.4:
Name
Position
Reason for non-
compliance
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.
A. Greig
Non-Executive Chairman
Director is a substantial
(>5%) shareholder
The Corporate Ethics Policy sets out rules binding Directors
in respect of:
C. Dunks
Executive Director
Director is engaged by the
Company in an executive
capacity
• a Directors’ legal duties as an officer of the Company;
• a Directors’ obligations to make disclosures to the ASX
and the market generally; and
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
B. Smith
Term in Office
4 years, 11 months
4 years, 11 months
11 years 2 months
6 years 11 months
8 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.
• 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.
Annual Report for the year ended 30 June 2020
33
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 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.
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:
Continuance Disclosure
ASX CGC Principle 5
Make timely and balanced disclosure
Audit & Risk Management Committee
Number of meetings
held while in office
Meetings attended
C. Nolan
C. Dunks
C. Treacy
2
2
2
2
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 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.
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.
Annual Report for the year ended 30 June 2020
34
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.
The number of meetings of the Audit & Risk Management
Committee held during the year and the number of
meetings attended by each Director was as follows:
Audit & Risk Management Committee
Number of meetings
held while in office
Meetings attended
2
2
2
2
2
2
C. Nolan
C. Dunks
C. Treacy
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.
Annual Report for the year ended 30 June 2020
35
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.
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 into 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.
Annual Report for the year ended 30 June 2020
36
CONSOLIDATED FINANCIAL
STATEMENTS
Consolidated Statement of Profit or Loss and Other Comprehensive Income
for the Year Ended 30 June 2020
Interest income
Other income
Note
30 June 2020
30 June 2019
$
$
341
50,000
10,400
-
Corporate and administrative expenses
2
(1,641,250)
(1,967,777)
Foreign Currency Gain
9,425
-
Loss before income tax expense
(1,581,484)
(1,957,377)
Income tax expense
3
-
-
Loss for the period attributable to members of the parent entity
(1,581,484)
(1,957,377)
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
(51,093)
(51,093)
-
-
Total comprehensive loss attributable to members of the parent
entity
(1,632,577)
(1,957,377)
Basic and diluted loss per share (cents per share)
12
(0.08)
(0.13)
The accompanying notes form part of these financial statements.
Annual Report for the year ended 30 June 2020
37
Consolidated Statement of Financial Position
as at 30 June 2020
Note
30 June 2020
30 June 2019
$
$
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Total Current Assets
NON-CURRENT ASSETS
Exploration and evaluation assets
Right of use assets
Other non-current assets
Total Non-Current Assets
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Lease liability
Borrowings
Total Current Liabilities
NON-CURRENT LIABILITIES
Lease liability
Borrowings
Total Non-Current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Accumulated losses
TOTAL EQUITY
The accompanying notes form part of these financial statements.
4
5
6
8
7
8
7
9
199,176
138,267
337,443
400,812
257
401,069
9,438,708
5,436,336
14,487
80,000
21,910
7,000
9,533,195
5,465,246
9,870,638
5,866,315
515,576
5,651
1,250,000
1,771,227
16,260
1,065,303
1,081,563
182,754
-
5,490
188,244
-
21,911
21,911
2,852,790
210,155
7,017,848
5,656,160
19,699,725
(51,093)
16,667,725
430,935
(12,630,784)
(11,442,500)
7,017,848
5,656,160
Annual Report for the year ended 30 June 2020
38
Consolidated Statement of Changes in Equity
For the Year Ended 30 June 2020
Note
Issued
Capital
Accumulated
Losses
Share-Based
Payments
Reserve
Foreign
Currency
Translation
Reserve
$
$
$
$
Total
$
6,212,845
(1,957,377)
(1,957,377)
1,231,908
(198,302)
-
367,086
5,656,160
(1,581,484)
-
-
-
-
-
-
-
-
-
Balance at 1 July 2018
15,578,119
(9,485,123)
119,849
Loss for the period
Total comprehensive income
-
-
(1,957,377)
(1,957,377)
Issue of shares
Transaction costs
8
8
1,231,908
(198,302)
Transfer of exercised performance
rights
Issue options and performance rights
56,000
-
-
-
-
-
-
-
-
-
(56,000)
367,086
Balance at 30 June 2019
16,667,725
(11,442,500)
430,935
Loss for the period
Other comprehensive loss
Total comprehensive income
-
-
-
(1,581,484)
-
(1,581,484)
Issue of shares
8
3,000,000
Transfer of exercised performance
rights
Issue and expiry of performance rights
Transfer of expired options
32,000
-
-
-
-
-
-
(32,000)
(5,735)
-
-
-
393,200
(393,200)
(51,093)
(51,093)
(51,093)
(1,632,577)
-
-
-
-
3,000,000
-
(5,735)
-
Balance at 30 June 2020
19,699,725
(12,630,784)
-
(51,093)
7,017,848
The accompanying notes form part of these financial statements.
Annual Report for the year ended 30 June 2020
39
Consolidated Statement of Cash Flows
For the Year Ended 30 June 2020
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received
Government COVID Assistance
Payments to suppliers and employees
Payments in relation to Oropesa Tin Project
30 June 2020
30 June 2019
$
$
341
50,000
12,017
-
(1,022,864)
(1,258,705)
(413,305)
(317,138)
Net cash used in operating activities
11
(1,385,828)
(1,563,826)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for exploration and evaluation assets
Research and development refunds
Proceeds received on acquisition of Oropesa Tin Project
(255,288)
-
186,988
(250,982)
148,479
-
Net cash used in investing activities
(68,300)
(102,503)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares
Costs associated with share issues
Proceeds from loan
Lease payments
-
-
1,250,000
(6,933)
1,227,255
(89,743)
-
(6,933)
8
8
Net cash provided by financing activities
1,243,067
1,130,579
Net increase/(decrease) in cash held
Net foreign exchange difference
Cash at Beginning of Year
(211,061)
9,425
400,812
(535,750)
-
936,562
Cash at End of Year
4
199,176
400,812
The accompanying notes form part of these financial statements.
Annual Report for the year ended 30 June 2020
40
Notes to the Consolidated Financial
Statements
for the Year Ended 30 June 2020
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 28 September 2020 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 22.
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. Subsequent to
the reporting period, the Group raised $3,325,000 of cash
through equity raisings (before costs). The Group has
entered into an agreement with the Group’s Non-Executive
Chairman to convert $500,000 of the balance of the Loan
Facility entered into in the previous financial period into
equity.
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 that may cast significant
doubt over 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.
COVID-19 Impacts
Elementos Limited remained relatively unaffected during
the period by COVID-19. Staff worked remotely when
possible and followed enhanced social distancing and
health and safety procedures when at the workplace. The
Company did not receive any subsidies beyond the
universally available ATO cashflow boost scheme
($50,000).
The Company is not expecting any significant impacts in
the coming year.
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 2020,
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 20. All
subsidiaries are accounted for by the parent entity at cost.
Annual Report for the year ended 30 June 2020
41
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
Principles of Consolidation (continued)
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.
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.
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 Executive Director.
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.
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
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.
Annual Report for the year ended 30 June 2020
42
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
Impairment of Non-Financial Assets
Exploration and Evaluation Assets (continued)
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.
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.
Restoration Costs
Cash and Cash Equivalents
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.
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.
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
Annual Report for the year ended 30 June 2020
43
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
Share Based Payments and Performance Rights
(continued)
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.
Interest income
Interest income 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).
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.
Annual Report for the year ended 30 June 2020
44
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
Government grants (continued)
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.
New and Amended Standards and Interpretations Adopted
During the Year
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 AASB 16 Leases. The impact of the adoption of
this standard 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 16 Leases
This standard and its consequential amendments are
applicable to annual reporting periods beginning on or after
1 January 2019. This standard replaces the 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. This
means that for most leases, a right-to-use asset and a
liability will be recognised, with the right-to-use asset being
depreciated and the liability being unwound in principal
and interest components over the life of the lease.
Upon adoption of this standard, the Consolidated Entity’s
transitioned using the modified retrospective approach,
where the right-of-use asset is recognised at the date of
initial application at an amount equal to the lease liability,
using the entity’s current incremental borrowing rate.
Comparative figures are not restated. Based on the
transition approach and the entity’s current leasing
arrangements, there were no material impacts in the
current or future reporting periods and on foreseeable
future transactions.
There are no other standards that are not yet effective and
that would be expected to have a material impact on the
entity in the current or future reporting periods and on
foreseeable future transactions.
Accounting policy adopted from 1 July 2019
Lease Liabilities
Lease liabilities include the net present value of the
following lease payments:
•
fixed payments (including in-substance fixed payments),
less any lease incentives receivable;
• variable lease payment that are based on an index or a
rate, initially measured using the index or rate as at the
commencement date;
• amounts expected to be payable by the Group under
residual value guarantees;
•
the exercise price of a purchase option if the group is
reasonably certain to exercise that option; and
• payments of penalties for terminating the lease, if the
lease term reflects the group exercising that option.
Lease payments to be made under reasonably certain
extension options are also included in the measurement of
the liability. The lease payments are discounted using the
interest rate implicit in the lease. If that rate cannot be
readily determined, which is generally the case for leases
that relate to building premises, the entity’s incremental
borrowing rate is used, being the rate that the individual
lessee would have to pay to borrow the funds necessary to
obtain an asset of similar value to the right-of-use asset in
a similar economic environment with similar terms,
security and conditions.
Annual Report for the year ended 30 June 2020
45
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
Fair Values
Accounting policy adopted from 1 July 2019 (continued)
The Group is exposed to potential future increases in
variable lease payments based on an index or rate, which
are not included in the lease liability until they take effect.
When adjustments to lease payments based on an index or
rate take effect, the lease liability is reassessed and
adjusted against the right-of-use asset.
Lease payments are allocated between principal and
finance cost. The finance cost is charged to profit or loss
over the lease period so as to produce a constant periodic
rate of interest on the remaining balance of the liability for
each period.
Right-of-use Assets
Right-of-use assets are measured at cost comprising the
following:
•
the amount of the initial measurement of lease liability
• any lease payments made at or before the
commencement date less any lease incentives received
• any initial direct costs, and
•
restoration costs.
Right-of-use assets are generally depreciated over the
shorter of the asset's useful life and the lease term on a
straight-line basis. If the Group is reasonably certain to
exercise a purchase option, the right-of-use asset is
depreciated over the underlying asset’s useful life.
Fair values may be used for financial asset and liability
measurement as well as for sundry disclosures. Fair value
is the price that would be received to sell an asset or paid
to transfer a liability in an orderly transaction between
market participants at the measurement date. It is based
on the presumption that the transaction takes place either
in the principal market for the asset or liability or, in the
absence of a principal market, in the most advantageous
market. The principal or most advantageous market must
be accessible to, or by, the Group.
Fair value is measured using the assumptions that market
participants would use when pricing the asset or liability
assuming that market participants act in their best
economic interest. The fair value measurement of a non-
financial asset takes into account the market participant's
ability to generate economic benefits by using the asset at
its highest and best use or by selling it to another market
participant that would use the asset at its highest and best
use. In measuring fair value, the Group uses valuation
techniques that maximise the use of observable inputs and
minimise the use of unobservable inputs.
Critical Accounting Estimates and Judgements
The directors evaluate estimates and judgments
incorporated into the financial statements based on
historical knowledge and best available current
information. Estimates assume a reasonable expectation
of future events and are based on current trends and
economic data, obtained both externally and within the
economic entity.
Key Judgements:
New Standards and Interpretations not yet adopted
Exploration and Evaluation Assets
Certain new accounting standards and interpretations have
been published that are not mandatory for 30 June 2020
reporting periods. The consolidated entity has decided
against early adoption of these standards. The
Consolidated Entity’s has assessed the impact of these
new standards that are not yet effective and determined
that they are not expected to have a material impact on the
entity in the current or future reporting periods and on
foreseeable future transactions.
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 2020 were
$9,438,708 (2019: $5,436,336).
Annual Report for the year ended 30 June 2020
46
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
deferred income tax assets and liabilities in the period in
which such determination is made.
Critical Accounting Estimates and Judgements (continued)
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
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 2020 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.
Annual Report for the year ended 30 June 2020
47
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 on loans
Employee benefits expense comprises:
Salaries and wages
Consulting fees
Contributions to defined contribution plans
Equity settled securities
Annual leave expensed
30 June 2020
30 June 2019
$
$
7,423
58,559
120,472
62,333
413,305
42,612
97,619
69,519
431,610
108,215
37,122
(5,735)
(4,037)
2,619
53,184
227,814
240,440
393,432
34,782
97,507
-
232,699
245,024
34,952
37,086
6,406
Annual Report for the year ended 30 June 2020
48
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
30% (2019: 30%)
Adjust for tax effect of:
Non-deductible amounts
Tax loss not recognised (current year and true up)
Temporary differences recognised
Under/Over
Income tax expense/(benefit)
30 June 2020
30 June 2019
$
$
(474,445)
(587,213)
262,992
321,538
-
209,993
272,421
-
(110,084)
104,799
-
-
-
-
4,749,120
4,437,673
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
The Group has carried forward tax losses of $20,874,305 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 2020
30 June 2019
$
189,176
10,000
199,176
$
390,812
10,000
400,812
Annual Report for the year ended 30 June 2020
49
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
9,438,708
5,436,336
30 June 2020
30 June 2019
$
$
Movement in exploration and evaluation assets:
Opening balance - at cost
Capitalised exploration expenditure
Capitalised exploration on initial recognition
of Oropesa Tin Project
Foreign exchange differences
Total exploration and evaluation assets
Less research and development refunds
Carrying amount at the end of the year
5,436,336
284,275
3,798,330
(80,233)
9,438,708
-
9,438,708
5,326,936
257,879
-
-
5,584,815
(148,479)
5,436,336
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 2020
30 June 2019
$
$
503,982
11,594
515,576
167,123
15,631
182,754
The average credit period on purchases of goods and services is 30 days. No interest is paid on trade payables.
Annual Report for the year ended 30 June 2020
50
NOTE 7: BORROWINGS
Current:
Unsecured:
Hire purchase lease
Loan (a)
Total unsecured current liability
Non-Current:
Unsecured:
Hire purchase lease
Loan (b)
Total unsecured non-current liability
30 June 2020
30 June 2019
$
-
1,250,000
1,250,000
-
1,065,303
1,065,303
$
5,490
-
5,490
21,911
-
21,911
(a)
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 2020 the Company had drawn $1,250,000 on the loan facility.
(b)
As part of the Oropesa Tin Project acquisition the Company acquired a loan owing from its newly acquired wholly
owned subsidiary MESPA to the Eurotin Inc. chairman Mr Mark Wellings, with the following key terms:
•
•
•
•
•
•
•
Loan amount = CAD$1,000,000
Loan term = 2 years from grant date being 14 January 2020
Interest rate = 5.0% on drawn funds
Unsecured
Conversion rights: subject to the Company’s prior written consent (which may be given or refused in the
Company’s sole discretion) the principal amount and accrued interest may be converted into fully paid
ordinary shares of Elementos Ltd. The conversion price is the higher of $0.004 or the 20 trading day
volume weighted average price of Elementos shares traded on the ASX.
No requirement to repay principal or pay interest during the loan term
Repayable by the Company at any time (during the loan term)
Annual Report for the year ended 30 June 2020
51
NOTE 8: LEASE LIABILITIES
Current:
Unsecured:
Lease liability
Total unsecured non-current liability
Non-Current:
Unsecured:
Lease liability
Total unsecured non-current liability
30 June 2020
30 June 2019
$
5,651
5,651
16,260
16,260
$
-
-
-
-
Reconciliation of cash and non-cash movements in borrowings from financing activities
2019
Cash flows
Interest
accrued
Acquired through
acquisition
Foreign
exchange
movements
2020
Lease liability
27,401
(6,932)
1,442
-
-
21,911
Borrowings
Total
-
1,250,000
-
1,096,000
(30,697)
2,315,303
27,401
1,243,068
1,442
1,096,000
(30,697)
2,337,280
Hire purchase
lease
Total
2018
Cash flows
Interest
accrued
2019
32,583
(6,933)
1,751
27,401
32,583
(6,933)
1,751
27,401
Annual Report for the year ended 30 June 2020
52
NOTE 9: CONTRIBUTED EQUITY
Fully paid ordinary shares
Balance as at 1 July
Share issues:
4 July 2018
26 October 2018
14 November 2018
17 April 2019
14 January 2020
26 May 2020
Balance as at 30 June
No. of Shares
$
No. of Shares
2020
2019
$
1,544,330,961
16,667,725
1,332,012,910
15,578,119
(a)
(b)
(b)
(c)
(d)
(e)
-
-
-
-
-
-
-
-
1,000,000,000
3,000,000
5,318,052
149,999,999
50,000,000
7,000,000
7,000,000
4,000,000
32,000
-
31,908
900,000
300,000
56,000
56,000
-
2,548,330,961
19,699,725
1,544,330,961
16,866,027
Total transaction costs associated with share
issues
Net issued capital
-
19,699,725
(198,302)
16,667,725
Ordinary shareholders are entitled to participate in dividends and the proceeds on the winding up of the company in
proportion to the number of and amount paid on the shares held. Every ordinary shareholder present at a meeting in
person or by proxy is entitled to one vote on a show of hands or by poll. Ordinary shares have no par value.
Notes for the above table, relating to the year ended 30 June 2020, are:
(a)
(b)
(c)
(d)
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:
(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
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.
On 14 January 2020, the Company announced completion of the transaction with Eurotin Inc. for the
acquisition of the Oropesa Tin Project. As a result of completion 1,000,000,000 convertible redeemable
preference shares converted to 1,000,000,000 ordinary shares.
(e)
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.
Annual Report for the year ended 30 June 2020
53
NOTE 9: CONTRIBUTED EQUITY (continued)
(Incentive) Options
Note
Weighted
average
exercise price
(cents)
30 June 2020
No. of Options
Weighted average
exercise price
(cents)
30 June 2019
No. of Options
-
1.21
-
1.21
-
-
1.21
10,000,000
10,000,000
-
(10,000,000)
-
1.21
-
1.16
1.21
11,000,000
-
(1,000,000)
10,000,000
Note
Weighted
average
exercise price
(cents)
-
30 June 2020
No. of Options
-
0.70
100,000,000
-
-
0.70
-
-
-
(100,000,000)
-
Weighted
average
exercise price
(cents)
0.70
0.60
0.70
0.60
-
0.70
30 June 2019
No. of Options
100,000,000
5,318,052
100,000,000
(5,318,052)
-
100,000,000
Unlisted Share Options
Balance at the beginning of the
reporting period
Options issued during the period
Options expired during the period
Exercisable at end of year(i)
(Other) Options
Unlisted Share Options
Balance at the beginning of the
reporting period
Options issued during the period:
Options exercised during the period
Expired
Exercisable at end of year
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.
Annual Report for the year ended 30 June 2020
54
NOTE 10: RESERVES
Foreign Currency Translation Reserve
The foreign currency translation reserve recorded exchange differences arising on translation of foreign controlled
subsidiaries.
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 11: 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
Changes in operating assets and liabilities:
(Increase)/Decrease in receivables
(Decrease)/Increase in payables
30 June 2020
$
30 June 2019
$
(1,581,484)
(1,957,377)
7,423
(5,735)
(40,123)
234,091
2,619
255,202
-
135,730
Cash flows from operations
(1,563,826)
Options and performance rights issued to employees and consultants for no cash consideration are disclosed in note 9.
(1,385,828)
NOTE 12: LOSS PER SHARE
Net loss used in the calculation of basic and diluted LPS
Weighted average number of ordinary shares outstanding during the period
used in the calculation of basic LPS
30 June 2020
$
(1,581,484)
30 June 2019
$
(1,957,377)
2,004,988,495
1,472,013,279
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 2020 are also
not dilutive. If the 422,727,288 shares issued on 14th August 2020 were issued on 1 July 2019, the loss per share for
30 June 2020 would have been (0.07) cents per share.
Annual Report for the year ended 30 June 2020
55
NOTE 13: 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.
30 June 2020
$
400,000
-
400,000
30 June 2019
$
850,000
-
850,000
Not later than 1 year
Later than 1 year but not later than 5 years
Total commitment
NOTE 14: CONTINGENT LIABILITIES
There were no contingent liabilities at the end of the reporting period.
NOTE 15: 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 2020.
Subsidiaries
Interest in subsidiaries are disclosed in Note 20.
Key Management Personnel
Short-term employee benefits
Post-employment benefits
Equity-based payments
30 June 2020
30 June 2019
$
408,908
26,709
25,692
461,309
$
490,384
25,694
42,916
558,994
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 drawn $1,250,000 under the loan at 30 June 2020. Further
details are contained in Note 7 (Borrowings).
Annual Report for the year ended 30 June 2020
56
NOTE 16: SHARE-BASED PAYMENTS
Director and Employee Share-based Payments
Share based payment expense recognised during the year:
30 June 2020
30 June 2019
Share based payment expense recognised during the period:
Performance Rights issued to an employee under performance rights plan
Options movement schedule
Balance at 1
July 2019
Granted as
Compensation
Exercised
Expired
Balance at 30
June 2020
Total Vested
30 June 2020
$
42,916
42,916
$
25,692
25,692
Total Vested
and
Exercisable 30
June 2020
10,000,000
10,000,000
-
-
-
-
10,000,000
10,000,000
-
-
-
-
-
-
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 2020 were as
follows:
Key
Management
Personnel
Balance at 1
July 2019
Granted as
Compensation
Exercised
Expired
Balance at 30
June 2020
Total Vested and
Exercisable 30 June
2020
C. Creagh
23,000,000
-
4,000,000
19,000,000
-
-
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.
Annual Report for the year ended 30 June 2020
57
NOTE 16: SHARE-BASED PAYMENTS (CONTINUED)
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
(1) 4,000,000(a)
(2) 2,000,000
(3) 3,000,000(a)
(4) 3,000,000
(5) 4,000,000
(6) 4,000,000(b)
(7) 10,000,000
Column 2
On continuous employment with the Company until 31 March 2018
On successful completion of the Definitive Feasibility Study
On continuous employment with the Company until 1 January 2019
On final approval of Environmental Permitting by any relevant authority
On completion of a capital raising (debt or equity, or a combination) sufficient to fund
construction of a project and Elementos' corporate costs
On continuous employment with the Company until 1 January 2020
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) These 4,000,000 performance rights were exercised into fully paid ordinary shares on 26 May 2020.
Tranches 2, 4, 5 and 7 all expired at 30 June 2020 without meeting the vesting conditions.
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%
Annual Report for the year ended 30 June 2020
58
NOTE 17: AUDITOR’S REMUNERATION
Remuneration for the auditor of the parent entity:
BDO Audit Pty Ltd and its related entities:
Auditing or reviewing the financial reports
NOTE 18: FINANCIAL RISK MANAGEMENT
(a) Financial Risk Management Policies
30 June 2020
30 June 2019
$
47,648
47,658
$
41,443
41,443
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
(2019: 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.
Annual Report for the year ended 30 June 2020
59
NOTE 18: FINANCIAL RISK MANAGEMENT (CONTINUED)
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.
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 2020, there was no concentration of credit risk, other than bank balances and on geographical basis with
most financial assets in Australia (2019: nil).
(b) Financial Instrument Composition and Contractual Maturity Analysis
Financial assets:
Within 6 months:
cash & cash equivalents
receivables (i)
Financial liabilities:
Within 6 months:
payables (i)
Within 12 months:
Borrowings (ii)
Lease liabilities
Greater than 12 months:
Borrowings (ii)
Lease liabilities
30 June 2020
30 June 2019
$
$
199,176
138,267
337,443
400,812
257
401,069
(515,575)
(182,754)
(1,250,000)
(6,932)
(1,065,303)
(16,957)
(2,854,767)
(6,932)
-
(23,890)
-
(213567)
(i) Non-interest bearing. The contractual cash flows do not differ to the carrying amount.
(ii) Interest bearing with a weighted average interest rate of 6% per annum.
(c) Fair Values
Fair values of financial assets and financial liabilities are materially in line with carrying values due to their
short term nature.
Annual Report for the year ended 30 June 2020
60
NOTE 19: SEGMENT REPORTING
Operating segments have been determined on the basis of reports reviewed by the board of directors (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 and Spain.
Operating segments are determined on the basis of financial information reported to the board of directors.
Accordingly, management currently identifies the Group as having two reportable segments, being Australia and Spain.
This has changed from previous reporting periods as a result of the completion of the Oropesa Tin Project acquisition.
Basis of accounting for purposes of reporting by operating segments.
(a) Accounting policies adopted
Unless stated otherwise, all amounts reported to the Board of Directors, being the chief decision maker with respect to
operating segments, are determined in accordance with accounting policies that are consistent to those adopted in the
annual financial statements of the Group.
(b) Segment Assets
Where an asset is used across multiple segments, the asset is allocated to that segment that receives majority economic
value from that asset. In the majority of instances, segment assets are clearly identifiable on the basis of their nature
and physical location.
(c) Segment Liabilities
Liabilities are allocated to segments where there is a direct nexus between the incurrence of the liability and the
operations of the segment. Segment liabilities include trade and other payables, lease liabilities and borrowings.
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
Total comprehensive income
for the period
Australia
$
193,952
5,499,444
5,693,396
1,543,695
16,260
1,559,955
16,699,725
-
(12,566,285)
4,133,440
(1,516,985)
Spain
$
143,491
4,033,751
4,177,242
227,532
1,065,303
1,292,834
3,000,000
(51,093)
(64,499)
2,884,408
(64,499)
Total
$
337,443
9,533,195
9,870,638
1,771,226
1,081,563
2,852,789
19,699,725
(51,093)
(12,630,784)
7,017,848
(1,581,484)
-
(51,093)
(51,093)
(1,516,985)
(115,592)
(1,632,577)
Annual Report for the year ended 30 June 2020
61
NOTE 20: 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:
Country of incorporation
Rockwell Minerals Pty Ltd
Rockwell Minerals (Tasmania) Pty Ltd
Elementos Minerales S.A.
Elementos Chile Limitada
Elementos Spain Pty Ltd
Minas de Estano de Espana, S.L.U
Australia
Australia
Argentina
Chile
Australia
Spain
NOTE 21: EVENTS AFTER REPORTING PERIOD
Ownership interest
2019
100%
100%
100%
100%
100%
-%
2020
100%
100%
100%
100%
100%
100%
• On 6 August 2020, the Company announced that it had received commitments to complete a private placement of
464,000,017 shares to be issued at 0.55 cents per share with participants receiving an attaching option on a one for
three basis, with and exercise price of 0.9 cents per share and expiry date of 31 August 2022. The transaction will
complete in two tranches as follows:
(a) On 14 August 2020 422,727,288 shares were issued at 0.55 cents per share and 140,909,121 unlisted
options with an exercise price of 0.9 cents per share and expiry date of 31 August 2022 were issued.
(b) Subject to shareholder approval at the 2020 Annual General Meeting the Company plans to issue 41,272,729
shares at 0.55 cents per share and 13,757,576 unlisted options with an exercise price of 0.9 cents per share
and expiry date of 31 August 2022.
As part of the Capital Raising activity announced on 6 August 2020 detailed above the Company announced that it
had engaged BW Equities to act as lead manager to the placement. As consideration BW Equities are to be issued
40,000,000 share options with an exercise price of 0.9 cents per share expiring 31 August 2022.
• On 6 August 2020, the Company announced that it had entered into an agreement, subject to shareholder approval
at the 2020 Annual General Meeting, to convert $500,000 of the outstanding loan balance with Mr Andy Greig
(Chairman). On conversion of the loan Mr Greig will receive 90,909,091 ordinary shares with an issue price of 0.55
cents per share and 30,303,030 options with an exercise price of 0.9 cents per share and expiry date of 31 August
2022.
• On 9 September 2020, the Company announced the successful completion of an oversubscribed Shares Purchase
Plan (“SPP”) to existing shareholders raising $773,000. The SPP will complete as follows:
(a) On 9 August 2020 135,545,486 shares were issued at 0.55 cents per share.
(b) The Company will offer SPP participants up to 45,181,875 unlisted options with an exercise price of 0.9 cents
per share and expiry date of 31 August 2022 subject to a separate offer under a cleansing prospectus.Subject
to shareholder approval at the 2020 Annual General Meeting the Company plans to issue 5,000,001 shares at
0.55 cents per share and 1,666,668 unlisted options with an exercise price of 0.9 cents per share and expiry
date of 31 August 2022 to Directors that participated in the SPP.
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.
Annual Report for the year ended 30 June 2020
62
NOTE 22: PARENT ENTITY INFORMATION
The following information relates to the parent entity, Elementos Limited at 30 June 2020. 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
Total comprehensive income for the period
30 June 2020
30 June 2019
$
193,826
12,141,209
12,335,035
1,553,286
16,095
1,569,381
35,595,256
-
(24,829,602)
10,765,654
(1,039,149)
-
$
400,943
5,398,504
5,799,447
121,376
21,911
143,287
32,563,256
430,935
(27,338,031)
5,656,160
(1,555,239)
-
(1,039,149)
(1,555,239)
The Company has no contingent liabilities, nor has it entered into any guarantees in relation to the debts of its
subsidiaries (2019: nil).
The Company has not entered into any contractual commitments for the acquisition of property, plant and equipment
(2019: nil).
NOTE 23: 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.
Annual Report for the year ended 30 June 2020
63
NOTE 24: ASSET ACQUISITION
As announced on 14 January 2020 the Company completed the acquisition of the Oropesa Tin Project from Eurotin Inc.
The completion of the transaction represents the acquisition of the Oropesa Tin Project which includes the tenement and
all historical exploration information including drilling results, core samples, environmental and development
applications. No goodwill is recognised on the transaction.
As part of the acquisition Elementos assumed a CAD$1m loan owed from MESPA to Eurotin’s Chief Executive officer and
Eurotin and subsequently Elementos’ largest shareholder, Mark Wellings. The Loan is unsecured, accrues interest at a
rate of 5.0% p.a. and is to be repaid by the second anniversary of the Final Completion. In support of the Loan
Agreement, Elementos has issued to Mark Wellings a convertible debenture, pursuant to which Mark Wellings shall have
the right to convert, from time to time, up to the principal amount and all accrued interest into Elementos shares at a
price equal to the higher of the 20 day VWAP of Elementos shares preceding the date that Mark Wellings provides notice
of his intention to convert and $0.004 per share. Conversion during the term of the Convertible Debenture will be subject
to Elementos’ prior consent, other than during a 10 business day period at the end of the Convertible Debenture’s terms.
At interim completion the Company issued 1,000,000,000 convertible redeemable preference shares to Eurotin Inc.
shareholders. On 14 January 2020 the Company confirmed that final completion had occurred and the CRPS had
converted on a 1 for 1 basis to 1,000,000,000 fully paid ordinary shares of Elementos Ltd.
The Group has determined that the assets acquired did not include the sufficient inputs, processes and outputs to meet
the definition of a business defined in the Australian Accounting Standards as at the date of acquisition and therefore is
not a business combination. The acquisition has been accounted for as an asset acquisition.
Details of the relative fair value of the assets acquired and liabilities assumed at 14 January 2020 being the date control
of MESPA was obtained, are as follows:
Purchase Consideration
Elementos Ltd ordinary shares
Total Purchase Consideration
Net assets acquired
Cash
Trade and other receivables
Other assets
Exploration and Evaluation assets
Trade and other payables
Borrowings
Net identifiable assets acquired
14 January 2020
$
3,000,000
3,000,000
186,988
97,887
74,557
3,798,330
(61,762)
(1,096,000)
3,000,000
Annual Report for the year ended 30 June 2020
64
DIRECTOR’S 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 2020 and of its
performance for the financial year ended on that
date.
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.
2. The executive director and chief financial officer have
each declared under section 295A that:
Chris Dunks
Director
a. the financial records of the Company for the financial
year have been properly maintained in accordance
with section 286 of the Corporations Act 2001;
28 September 2020
Brisbane, Queensland
b. the financial statements and notes for the financial
year comply with the Australian Accounting Standards
and Interpretations; and
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GPO Box 457 Brisbane QLD 4001
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65
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 2020, 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 2020 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 (including Independence Standards) (the Code)
that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
We 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.
66
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 2020 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.
67
Accounting for the acquisition of Oropesa Tin Project
Key audit matter
How the matter was addressed in our audit
Refer to Note 24 in the financial report.
Our procedures included, amongst others:
The Group disclosures about the acquisition of
Oropesa Tin Project includes details of the key
events that occurred in the transaction including
the consideration transferred and the assets and
liabilities acquired.
The acquisition of Oropesa Tin Project is
considered a significant transaction for the group.
The presentation, measurement and disclosures
around this transaction are important in the
users’ understanding of the financial statements.
The transaction is material in the context of the
audit and involved significant auditor effort, and
was therefore key to our audit.
•
•
•
Assessing management’s determination of
whether the acquisition was a business
combination or an asset acquisition
Evaluating management’s assessment of the
fair value of the identifiable assets and
liabilities acquired
Assessing the disclosures related to the
acquisition to ensure they are in compliance
with applicable accounting standards.
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 2020, 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.
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.
68
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:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 19 to 25 of the directors’ report for the
year ended 30 June 2020.
In our opinion, the Remuneration Report of Elementos Limited, for the year ended 30 June 2020,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
BDO Audit Pty Ltd
D P Wright
Director
Brisbane, 28 September 2020
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.
Annual Report for the year ended 30 June 2020
66