Elementos Limited
ABN 49 138 468 756
ASX: ELT
Annual Report
For the year ending
30 June 2022
elementos.com.au
Elementos Limited Annual Report 30 June 2022
Corporate
Information
Statements
Directors and Company Secretary
Share Registry
Mr Andy Greig (Non-executive Chairman)
M Joe David (Managing Director)
Mr Calvin Treacy (Non-executive Director, Chairman of the
ESG Committee)
Mr Corey Nolan (Non-executive Director, Chairman of the
Audit and Risk Committee)
Mr Brett Smith (Non-executive Director)
Mr Duncan Cornish (Company Secretary)
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
Head Office and Registered Office
Elementos Limited
Level 7, 167 Eagle Street
Brisbane QLD 4000
Tel: +61 7 2111 1110
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
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
1
Elementos Limited Annual Report 30 June 2022
Contents
00
Information
Corporate
02
04
Chairman’s Letter
Review of Operations
13
Tenement Interests
14
Reserves
Resources and
35
Auditor’s
Independence
Declaration
36
Information
Shareholder
17
Statements
Cautionary
39
Statement
Corporate
Governance
47
Consolidated
Statement of
Financial position as
at 30 June 2022
48
Consolidated
Statement of Changes
in Equity for the Year
Ended 2022
49
Consolidated
Statement of Cash
Flows for the Year
Ended 30 June 2022
74
Directors’ Declaration
75
Report
Independent Auditor’s
12
and Governance
Environmental, Social
18
Directors’ Report
46
Consolidated Statement
of Profit or Loss and
Other Comprehensive
Income for the Year
Ended 30 June 2022
50
Notes to the
Consolidated Financial
Statements for the Year
Ended 30 June 2022
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Elementos Limited Annual Report 30 June 2022
Chairman’s
Letter
Dear fellow shareholders
The 2022 financial year has been a particularly busy but
successful period for the company as we continue to
develop our world-class tin projects.
We have positioned our Oropesa Tin Project in Spain to
deliver Europe’s first new significant tin mine in 2025, while
at our Cleveland Tin Project in Tasmania, we are continuing
exploration to assist with evaluating the options to restart
tin, copper and tungsten production.
In March, we released an Optimisation Study (JORC defined
Scoping Study) for Oropesa which confirmed it will deliver a
low capital-intensive project, with a very competitive
operational cost base, a Production Target of 15.5Mt,
producing an average of 5,400t of tin concentrate for at
least 13 years. It demonstrated a robust case for upgrading
the project scale to 1.25Mtpa Run of Mine (ROM) rate, with
average annual contained tin production projected at
3,350tpa.
The study supports the fact that Oropesa is likely to be one
of the world’s next significant tin projects. The project
economics are robust and underlined the potential for it to
supply tin into European supply chains as the world’s
demand for critical electrical components, solder and
electrical contacts – and therefore, tin – continues to grow
well above historic growth rates.
The study was based on the updated Mineral Resource
Estimate completed for Oropesa in November 2021, which
saw Elementos achieve a significant, and material increase
to the geological confidence, tonnage and shallowness of
parts of the deposit. We achieved a 50% increase in the
Total Mineral Resource Estimate to 18.86Mt at 0.40% Sn at a
0.15% Sn cut-off compared to the 2018 estimate, a 78%
increase in the Measured and Indicated Mineral Resource
Estimate and a 1,200% increase to the Measured Mineral
Resource Estimate.
The Optimisation Study was the basis for the regulatory
submissions submitted in April 2022.
These are the key primary submissions required to achieve
the exploitation (mining) licence and environmental
approvals.
Major news for the Oropesa Tin project came in March
when the Junta de Andalucia (Andalucían Government)
publicly announced its high profile support for the project,
assigning it to a Project Accelerator Unit to facilitate
acceleration and the start-up and execution. Oropesa is one
of only seven significant mining projects added to the unit,
and we are confident this will expedite our regulatory
process.
Elementos is now undertaking a Definitive Feasibility Study
for the Oropesa Tin Project to further mature the project
ahead of financing discussions. Thus far, we have executed
a range of contracts to cover the major parts of the study,
as well as completing a vast majority of on-ground and
laboratory data sourcing to the required maturity including:
geological, geotechnical hydrological, geohydrology, water
quality, tailings quality, civil, survey, flora and fauna,
metallurgical and ore sorting test work amongst others. We
have engaged Wave International as Owners Engineer and
DFS Report Author, working very closely with our Spanish
project leads, employees, and consultants. We look forward
to delivering the results of this work in 1H CY2023.
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Elementos Limited Annual Report 30 June 2022
We are continuing to drill the Oropesa Project, with both
infill and exploration programs underway, and this has
confirmed near-surface tin mineralisation. This program
aims to increase the confidence of the remaining Inferred
Resource and identify further mineralised extensions.
At our Cleveland Project, we also completed drilling during
the year, with the first hole intersecting significant tin-
copper and tungsten mineralisation. We continue to await
the remaining results from the program, however the first
hole demonstrated further mineralisation at Cleveland,
closer to the surface and to historical underground mine
production drives. We plan to conduct downhole
geophysical surveys and complete further geological
interpretation before designing a targeted follow-up drill
program.
Cleveland is a historic underground mine with excellent
electrical, water and transport infrastructure, and we are
keen to continue maturation of the asset once we have
adequately defined the mineralisation.
Tin has displayed significant volatility, much like the global
economy, during the year. Despite the recent drops in the
tin price, it continues to be an exciting time to be in tin. The
International Tin Association notes that it is one of the
‘forgotten EV metals’ and models that over the next decade,
tin has many growth opportunities in solder, in lithium ion
and other batteries, solar PV, thermoelectric materials,
hydrogen-related applications and carbon capture.
Global tin demand is currently forecast to increase 3-4%
CAGR to service the technology revolution, and we expect
to see a significant deficit in tin metal markets by 2025,
meaning our development at Oropesa is timed ideally to
enter production. We’ll continue driving its development
over the next 12 months to ensure we can meet this goal.
options from previous capital raises. This further investment
in our company helped provide significant funds to progress
the Oropesa DFS. In addition to the share consolidation, the
company continued to simplify its capital structure,
including settling an outstanding CAD$1.0m debt facility
during the period.
I also thank our dedicated management team, led by Joe
David who transitioned from Chief Executive Officer to
Managing Director during the year and has been superb in
leading Elementos into this critical phase of development at
Oropesa. I also acknowledge Chris Dunks, who resigned as
a Director in November 2021 after six years in the role,
including time as Executive Director, as part of a much
longer involvement with the Company. I thank him for his
guidance, support and contribution over those years.
Elementos operates an integrated owners’ team, and it
would be remiss of me if I didn’t also thank all our staff,
consultants and contractors who work closely together to
ensure we mature our assets in a safe and responsible way,
whilst delivering value for our shareholders. The company
operates across multiple time zones and jurisdictions
around the globe and it’s only with the correct attitude and
leadership that we achieve the many goals we do.
The year ahead promises to be another busy one as we
continue to move through critical development and
approval phases at Oropesa while Cleveland also offers
additional potential. We will be working hard to deliver on
our goals and I look forward to keeping you updated on our
progress.
I thank our shareholders for your ongoing support of
Elementos over the past 12 months, not only through the
share consolidation, but particularly those who exercised
Andy Grieg
Chairman
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Elementos Limited Annual Report 30 June 2022
Review of
Operations
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Elementos Limited Annual Report 30 June 2022
Review of
operations
Elementos Limited’s strategy is to deliver sustainable
shareholder value through the development of its portfolio
of tin assets including Oropesa in Andalucia, Spain and
Cleveland in Tasmania, Australia.
The company is focussed on maturing the Oropesa tin
project through a Definitive Feasibility Study (DFS) after
confirming it is one of the best undeveloped tin Mineral
Resources in the world.
In addition, Elementos continued to develop the Cleveland
Tin Project in Tasmania, with the immediate focus on
determining the potential to increase the mineralisation of
the project through exploration on prospective targets
adjacent and below the existing resource.
Activities at Oropesa included the completion of an updated
Mineral Resource Estimate. The Mineral Resource Update
resulted in a 50% increase to the total Mineral Resource
(18.86Mt ), a 78% increase in the Measured and Indicated
Mineral Resource Estimate to (16.21Mt) resulting in 88% of
the Resources within the Measured and Indicated
Categories. In addition, the project completed a series of
feasibility development programs to further develop key
engineering information to feed into the DFS, which was
announced as the development pathway for the project on
12 July 2021.
Elementos continues to make progress at the Cleveland
Project. Exploration drilling resumed in February 2022, with
a four-hole exploration drilling campaign at its Cleveland
tin-copper and tungsten project in Tasmania. Drilling aimed
to test anomalies along strike northeast of the current
resource and an additional target within the previously
mined area.
The global tin market had an astounding yet volatile year.
The tin price continued to respond strongly out of the
pandemic years to record strong industrial demand,
particularly for solar, semi-conductors and electronics. This
drove the LME tin cash price from US$33,460/t to an un-
precedented tin price of US$50,050/t, before finishing the
year back at US$27,050/t (a -19% yoy reduction).
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Elementos Limited Annual Report 30 June 2022
Oropesa Tin Project
Andalucia, Spain
The Oropesa Tin Project is located in Andalucia, Spain and
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.
Oropesa consists of an exploration concession package
(Investigation Permit No. 13.050) covering an area of
13.0km2, 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 and coal, with coal
mining ceasing in recent times.
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.
Tin mineralisation at Oropesa (>99% cassiterite with
minimal 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 and faulting of the sedimentary sequence has
resulted in the mineralised sequence being overturned
and repeated in places.
Tin mineralisation was first recognised at Oropesa in 1982.
Intensive exploration activity since 2010, including 261
historic drill holes (54,026m), has resulted in the
The Oropesa Tin Project contains a JORC compliant
Measured, Indicated and Inferred Resource of 67,520
tonnes of tin.
Figure 1. Oropesa Tin Project location
Okapi’s Athabasca Uranium Portfolio
7
Elementos Limited Annual Report 30 June 2022
Figure 2. Oropesa 2021 JORC Mineral Resources.
Definitive Feasibility Study
Contract Miner Engagement
The company announced the commencement of the
Oropesa Tin Project Definitive Feasibility Study (DFS) on
12 July 2021.
The DFS is progressing in many parallel workstreams.
Key DFS Contracts awarded
• Appointment of Wave Europe BV (Wave International)
as Owners Engineer and DFS Author for Oropesa
Project
• Geociencia y Exploraciones Maritimas S.L. (GEM) was
contracted to finalise the design of the Tailings Dam &
Waste Dump Design.
• Norvento Ingenieria S.L.U has been contracted to
develop the engineering for power connections to the
local power grid. Elementos is also studying alternate
energy sources on both a stand-alone and hybrid power
model.
Process Plant Contractors
• A detailed Request for Proposal process has been run to
engage suitably qualified Process Plant contractors into
an Early Contractor Involvement process to develop the
engineering to support the DFS. The company continues
to engage with a number of parties and will inform the
market when the selected contractor is awarded.
• Seven contract miners with significant operations in
Spain have been issued the first of a two-phase tender
process to update key economic data in the lead up to
the next phase of DFS mine planning.
Resource Drilling
• The company commenced a 1,590m infill diamond
drilling campaign over nine holes at Oropesa, designed
to convert the remaining Inferred Resources sitting
within the proposed US$30,000/t mining pit shell (6% of
15.5Mt 2022 Production Target2) identified in the
project’s Optimisation Study2
• The company also announced after the infill drilling a
follow-up exploration drilling program will commence to
test mineralised extensions to open ended
mineralisation trends (outside the current Mineral
Resource) identified in the 2021 drilling campaign.
Metallurgical test work
• Pilot scale test work has been completed as of the date
of this report and final balances and reporting are
underway. The company will update the market as soon
as this is peer reviewed and the reports are finalised.
• Variability test work is in the final phases. The final
variability metallurgical results will be used to develop
metallurgical regressions to support mine planning and
process engineering development.
Geotechnical Reporting
• Following a material review and peer assessment the
Geotechnical reporting is in the final stages of
completion to establish the pit slope design criteria to
support DFS mine planning.
Surface and Groundwater
• Meetings have been held with National Water
authorities to further refine modelling inputs.
• Realtime monitoring program on boreholes is ongoing.
•
19 water monitoring bores have been installed across
the project.
• Additional water bore investigations are underway on
site to ascertain contingency sources, with a number
of off-tenement sources being identified as
prospective.
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Elementos Limited Annual Report 30 June 2022
• The company continues to also investigate producing a
separate zinc concentrate from the sulphide tailings.
This has the potential, pending economic confirmation,
to produce a second concentrate and revenue stream
for the project.
Ore Sorting Test Work
• During the period, the company conducted a ‘cascade
test’ to further refine the optimal ore sorting settings at
the TOMRA facilities in Hamburg, Germany.
• Following the quarter, three further bulk samples were
run at revised ore sorting settings. The company is
awaiting the final assays to establish if further
improvements have been realised.
Civil Investigations
•
In addition to designing the tailings dam, GEM has been
contracted to conduct civil, geotechnical and seismic
investigations and assessment for key infrastructure
locations including the process plant pad, crushing hub,
waste dump and water dam locations.
Figure 3: Location of the 2022 infill drilling program holes,
more details see announcement 29 June 2022
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Elementos Limited Annual Report 30 June 2022
Figure 4: Summary of Oropesa Optimisation Study financial
and technical information (forecast numbers are
approximate) 5
Optimisation Study
Regulatory Submissions
The company completed an Optimisation Study in March
2022 (JORC level Scoping Study) which confirmed a robust
1.25Mtpa project, capable of producing 3,350 tonnes of
contained tin per year.
On a base case tin price of US$32,500 per tonne, the Study
has confirmed:
• Pre-tax ungeared NPV8% of approximately A$292m and
post-tax NPV8% of approximately A$198m
• Pre-tax Internal Rate of Return is approximately 46%
• Mine life of at least 13 years, Payback period of ~ 2.5
years
Oropesa’s strong Study economics, are based on a long-
term tin price assumption of US$32,500/t.
The Study underwrites a globally significant tin project, with
a Production Target of 15.5Mt RoM Ore.
Elementos used a 1.25Mtpa mining and 1.0Mtpa processing
rate as the basis of an Oropesa Definitive Feasibility Study
and for Spanish Environmental & Mining licence
applications.
On 6 April 2022, the company submitted three key regulatory
documents to the Junta de Andalucía (Government of
Andalucía, Spain) required to attain a Mining Licence
(Exploitation Licence) and Environmental Authorisation
(Autorización Ambiental Unificada - AAU) for Oropesa.
These lodged documents for assessment include:
1. Exploitation (Mining) Project
2. Restoration Plan
3. Environmental Impact Study.
Elementos has been advised the expected assessment
timeframe for a project of this magnitude is approximately
15 to 18 months. However, following the project’s recent
nomination to the Project Accelerator Unit (Unidad
Aceleradora de Proyectos), the company will work closely
with the Andalucian government to establish whether this
timeframe may be expedited. With approximately 12-months
remaining to complete the Definitive Feasibility Study, to be
delivered H1-2023, the approvals process parallels neatly
with the forecast completion of the study.
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Elementos Limited Annual Report 30 June 2022
Cleveland Tin Project
Tasmania, Australia
The Cleveland Project is located at Luina,
approximately 80km from Burnie in north-western
Tasmania, Australia. 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.
Cleveland hosts tin and copper mineralisation in tailings,
open-cut and underground Mineral Resources, and
includes a separate tungsten Mineral Resource and
Exploration Target. The Ccompany has completed
several 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
Cleveland. The total contained tin within the revised 2018
JORC Resource Estimate increased by 15.8% and
contained copper increased by 20.0%. There was 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 Cleveland ore body remains open at depth, along
strike and down dip from the currently defined ore
lenses.
The Cleveland Project is being steadily progressed
towards development. A 1,130m four-hole exploration
drilling campaign started in February testing anomalies
along strike north-east of the current resource and an
additional target within the previously mined area.
Drilling was supported by the Tasmanian Government’s
$50,000 Exploration Drilling Grant Initiative program.
Figure 5. Cleveland Tin Project location
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Elementos Limited Annual Report 30 June 2022
Figure 6. 3D model of the location of the planned 2022 Cleveland drilling program looking SE towards NW
The company has, as of the date of this report, only
received the assays from one hole - C2119. Drilled to a
depth of 300m, drill hole C2119 targeted an untested zone
between north-east dipping and southwest dipping limbs
of the historical underground mine workings at Cleveland
and its current JORC 2012 compliant Mineral Resource.
Hole C2119, in an area with very little historical
exploration, indicates a significant development at
Cleveland by extending both the Battery Tin Copper Lode
and identifying new tungsten mineralisation 150m above
the existing Foley’s Zone. This appears as firm evidence
that the current Cleveland Mineral Resource and
geological model does not fully encapsulate the
immense potential of the deposit. We’ve shown further
mineralisation exists, close to the current resource,
closer to the surface and in very close proximity to
historical underground mine production drives.
The next stage of the program is to conduct downhole
geophysical surveys and further geological
interpretation before designing a targeted follow-up
drill program.
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Elementos Limited Annual Report 30 June 2022
Environmental, Social
& Governance
Following Elementos’ initial Environmental, Social and
Governance (ESG) Position Statement in 2021 the
company has made further commitments to developing
its global tin assets in a responsible way.
Elementos has subsequently:
✓ Established an ESG sub-committee of the Board
of Directors,
✓ Submitted an Environmental Impact Study and
Restoration Plan for the Oropesa Project in
Spain which is designed to comply with
European regulations and OECD guidance.
✓ Completed a global ESG disclosure framework
review which identified the Tin Code as a
leading and appropriate ESG reporting standard.
✓ Established a plan with the International Tin
Association (ITA) to commence reporting
against the Tin Code whilst still a project
developer (subject to final agreement with ITA).
✓ Improved long-term relationships with the
community and committed to the economic
development of the mine via our application for
the Oropesa Exploitation licence.
Elementos will continue to monitor the evolving ESG
landscape and ensure its ESG commitments remain
relevant and effective in a changing environment.
Tin Code Reporting Plan
During this financial year, Elementos performed a strategic
review on ESG disclosure expectations and frameworks
and found the International Tin Association’s (ITA) Tin Code
to be an effective reporting format to cover the key ESG
issues. The Tin Code is the global ESG reporting framework
specifically designed for the tin sector and used by the
world’s largest tin mining, smelting and recycling
companies. As the Tin Code is not yet formally available to
explorers and developers, Elementos initiated discussions
with the ITA on participation which are moving forward.
Subject to a final agreement with the ITA, Elementos aims
to achieve the first public Tin Code report for a tin mine
developer during 2023.
Background on the Tin Code
The Tin Code ESG reporting tool has 10 Principles supported
by more than 70 Standards. These standards are specific to
various tiers of the supply chain, with many being relevant
to mine operators and others to smelters or secondary
recycling companies and vice-versa. Company evidence for
each standard is independently evaluated by an external
assessor against a range of indicators to demonstrate
progressive improvement with an expectation to achieve
conformance in priority areas and to increasingly make use
of assurance for further validation. This approach has been
adopted to provide an opportunity for positive change
among all operators.
The Tin Code reflects leading ESG standards & international
expectations including;
ISO (14001, 9001, 45001, 37001)
•
• OECD Guidance for responsible supply chains
•
•
•
ILO Convention standards
RMI Risk Readiness Assessment
Investor expectations & more
The Tin Code is accepted and recognised by leading
external organisations:
•
•
•
•
LME passport – listed multi-dimensional ESG
reporting tool
LME Responsible Sourcing – Standard 7.3
conditionally approved for ‘Track A’
Responsible Steel – recognition in progress
ICMM Mining Principles – equivalency in progress
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Elementos Limited Annual Report 30 June 2022
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
60
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 2022 compared to 30 June 2021 and
the Oropesa Tin Project located in Spain at 30 June 2022
compared to 30 June 2021, is set out overleaf. For details
regarding any movement in the Reserve or Resource
between the reporting period refer to the Review of
Operations.
Figure 7. A view of our acreage at the Oropesa Tin Project in
southern Spain with a drill rig in the foreground and the local town
of Fuente Obejuna in the background.
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Elementos Limited Annual Report 30 June 2022
Resources and
Reserves
Oropesa Project
Total Tin Metal Resource (at 0.15% Sn cut-off)
30 June 2022
Category
Measured
Indicated
Sub: Measured & Indicated
Inferred
Total
Tonnage (Kt)
Sn Grade %
Contained Sn (t)
4,295
12,326
16,621
2,237
18,858
0.41
0.38
0.38
0.51
0.40
17,640
46,321
63,961
11,457
75,418
2021 Oropesa Mineral Resource Estimate at a 0.15% Sn cut-off
Table subject to rounding errors; Sn = tin
30 June 2021
Category
Measured
Indicated
Sub: Measured & Indicated
Inferred
Total
Tonnage (Kt)
Sn Grade %
Contained Sn (t)
330
9,010
9,340
3,200
12,540
1.09
0.53
0.55
0.52
0.54
3,585
47,320
50,905
16,615
67,520
July 2018 Oropesa Mineral Resource Estimate at a 0.15% Sn cut-off
Table subject to rounding errors; Sn = tin
Significant changes in the 30 June 2022 Resource Estimate compared to the 2018 Resource Estimate are;
•
•
•
•
•
•
a 50% increase in the Total Mineral Resource Estimate to 18.86Mt from 12.54Mt
a 78% increase in the Measured and Indicated Mineral Resource Estimate to 16.21Mt from 9.34Mt
a 1,200% increase to the Measured Mineral Resource Estimate to 4.30Mt from 0.33Mt
a 37% increase to the Indicated Mineral Resource Estimate to 12.33Mt from 9.01Mt
a 30% reduction to the Inferred Mineral Resource Estimate to 2.24Mt from 3.20Mt
a 25% increase to the Measured and Indicated contained metal tonnes to 63.9kt from 50.8kt
See ASX Release on 8th November 2021 “Oropesa Tin Project – Mineral Resource Estimate”
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Elementos Limited Annual Report 30 June 2022
Cleveland Project
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 2021 and 30 June 2022 – 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
Total Tin-Copper Mineral Resource (at 0.35% Sn cut-off)
30 June 2021 and 30 June 2022 – 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 2021 and 30 June 2022 – 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 2020 and 30 June 2021 – 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.
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Elementos Limited Annual Report 30 June 2022
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 consultant to 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 consultant to 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.
Figure 8. Access road into the Oropesa Tin Project in
Andalucia, Spain with a local farmers shed on the right.
17
Elementos Limited Annual Report 30 June 2022
Cautionary
Statements
Forward-looking statements
This document may contain certain forward-looking
statements. Such statements are only predictions, based on
certain assumptions and involve known and unknown risks,
uncertainties and other factors, many of which are beyond
the company’s control. Actual events or results may differ
materially from the events or results expected or implied in
any forward-looking statement.
The inclusion of such statements should not be regarded as
a representation, warranty or prediction with respect to the
accuracy of the underlying assumptions or that any
forward-looking statements will be or are likely to be
fulfilled. Elementos undertakes no obligation to update any
forward-looking statement to reflect events or
circumstances after the date of this document (subject to
securities exchange disclosure requirements).
The information in this document does not take into account
the objectives, financial situation or particular needs of any
person or organisation. Nothing contained in this document
constitutes investment, legal, tax or other advice.
For more information on specific risks associated with
forward looking statements refer to the Risk Assessment
section of the announcement “Optimisation Study Oropesa
Tin Project”, 29th March 2022.
Mineral Resources, Ore Reserves and Production Targets
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 JORC Resource Significantly Expanded, 5
March 2014 (tungsten resource);
2. Cleveland Tailings Ore Reserve, 3 August 2015;
3. Substantial Increase in Cleveland Open Pit Project
Resources following revised JORC study, 26th
September 2018;
4. Oropesa Tin Project - Mineral Resource Estimate, 8th
November 2021
5. Optimisation Study Oropesa Tin Project, 29th March
2022
References to Previous Releases
1. Optimisation Study Oropesa Tin Project, 29th March
2022
2. Oropesa Tin Project - 2022 Drilling Program, 29 th June
2022
3. Cleveland Tin & Tungsten Mineralisation, 15th June 2022
4. Regulatory Documents Submitted for Oropesa Tin
Project, 7th April 2022
5. Government support for Oropesa Tin Project, 10th
March 2022
6. Elementos CEO Joe David appointed Managing Director,
28th Jan 2022
7. Update - Consolidation/Split – ELT, 1st Dec 2021
8. Director Resignation, 26th Nov 2021
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
production 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.
18
Elementos Limited Annual Report 30 June 2022
Directors’
Report
19
Elementos Limited Annual Report 30 June 2022
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 2022.
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 Joe David (appointed 27 January 2022)
Mr Brett Smith
Mr Corey Nolan
Mr Calvin Treacy
Mr Chris Dunks (resigned 26 November 2021)
Information on Directors
The board has a strong combination of technical, managerial and capital markets experience. Expertise and experience includes
operating and mineral exploration in Australia. The names and qualifications of the current directors are summarised as follows:
Andy Greig
Non-Executive Chairman
Mr Greig (GDipBus (Monash); Fellow, ATSE) retired from the Bechtel Group, Inc., the globally renowned engineering,
construction, and project management company, in 2015 after a 35-year career. Mr Greig was a director of Bechtel Group, Inc.
for 5 years, and for 13 years through until 2014; the President of its Mining and Metals Global Business Unit.
Mr Greig has deep experience in the engineering and construction of large mining and minerals processing projects around the
world. He is a business graduate of Monash University, and a Fellow of the Australian Academy of Technological Sciences and
Engineering.
Mr Greig has not held any other (ASX listed) directorships in the last three years.
Joe David - (appointed 27 January 2022)
Managing Director
Mr David joined Elementos as Chief Executive Officer in April 2021 and was appointed Managing Director in January 2022.
His career has spanned executive roles with private equity, listed and private mining companies, an Associate Director within
M&A advisory as well running his own project development consulting company. He has managed the development of natural
resource projects, bankable feasibility studies, exploration and metallurgical programs, project financing, corporate finance
advisory, corporate strategy, and mergers and acquisitions.
Mr David is a Mining Engineer (AusIMM), Civil Engineer and holds a Commerce Degree in Finance.
20
Elementos Limited Annual Report 30 June 2022
Mr David is a member of the ESG Committee.
Mr David has not held any other (ASX listed) directorships in the last three years.
Brett Smith
Non-executive Director
Mr Smith has over 30 years’ experience in the resources, construction and engineering industries in senior operational and
financial positions. Mr Smith is Executive 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. Mr Smith’s qualifications include a Bachelor’s Degree in Chemical
Engineering (Hons), a Master’s Degree in Business Administration and a Master’s Degree in Research Methodology.
Mr Smith is a member of the Audit and Risk Committee.
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), Prodigy Gold (May 2016 to present) and Nico Resources Limited (January 2022 to
present).
Corey Nolan
Non-executive Director
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.
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’s qualifications include a Bachelor of Commerce, Masters Degree in Mineral and Energy Economics and graduate
diploma from the Australian Institute of Company Directors.
Mr Nolan is a member of the Audit and Risk Committee.
During the past three years, Mr Nolan has also served as a director of ASX listed company Platina Resources Limited (August
2018 to current).
Calvin Treacy
Non-executive Director
Mr Treacy (BEng, MBA, MAICD) has over 20 years senior management experience in mining, mining technology and
manufacturing. He has a strong track record of founding and growing companies, and brings a wealth of experience in the areas
of strategic planning and capital raising.
Mr Treacy is a qualified Mechanical Engineer and holds a Masters of Business Administration, with extensive experience across
a range of industries and positions.
Mr Treacy has worked in a range of roles including Non-executive Director, Chief Executive Officer, Chief Operating Officer and
Production Manager, providing a blend of experience from hands-on management through to executive oversight and strategic
management.
21
Elementos Limited Annual Report 30 June 2022
Mr Treacy is a member of the Audit and Risk Committee and ESG Committee.
Mr Treacy has not held any other (ASX listed) directorships in the last three years.
Chris Dunks - (resigned 26 November 2021)
Non-Executive Director
Mr Dunks (BEng (Mech), GAICD) is currently the Managing Director of Synergen Met Pty Ltd, a Brisbane-based company that is
commercialising novel minerals processing technology.
Mr Dunks was a Founder and Managing Director of Rockwell Minerals Pty Ltd, the company that merged with Elementos in 2013,
and negotiated the original deal to purchase the Cleveland Project. Mr Dunks’ experience over the last 20 years has been
dominated by working on major minerals processing, refining and power projects both in Australia and the USA.
Mr Dunks 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 transitioned into an Executive Director role until 1 July 2021 when his role reverted to a
Non-Executive Director capacity.
Mr Dunks was 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 October 2020).
Company Secretary
Duncan Cornish held the position of Company Secretary during the financial year and up to the date of this report. Mr Cornish is
a Chartered Accountant with significant experience as public company CFO and Secretary, focused on junior resource
companies, as well as financial, administration and governance.
Mr Cornish is an accomplished and highly efficient corporate administrator and manager. Duncan has more than 20 years’
experience in the accountancy profession both in England and Australia, mainly with the accountancy firms Ernst & Young and
PricewaterhouseCoopers.
He has extensive experience in all aspects of company financial reporting, corporate regulatory and governance areas, business
acquisition and disposal due diligence, capital raising and company listings and company secretarial responsibilities, and serves
as corporate secretary and chief financial officer of several Australian and Canadian public companies.
Mr. Cornish holds a Bachelor of Business (Accounting) and is a member of the Chartered Accountants Australia and New
Zealand.
Interests in Securities
As at the date of this report, the interests of each director in shares, options and rights issued by the Company are shown in the
table below:
Directors
A. Greig(1)
J. David
B. Smith(1)
C. Nolan(1)
C. Treacy(1)
Shares
20,748,457
69,742
161,635
249,545
1,363,940
Rights
-
2,200,000
-
-
-
(1) The Company has agreed to issue 360,000 share options to each Non-executive Director subject to shareholder approval at the 2022
Annual General Meeting. The share options have an exercise price of $1.10, expiry date of 31 May 2025 and vest immediately upon grant.
22
Elementos Limited Annual Report 30 June 2022
Principal Activities
The principal activity of the Group during the year was exploration and project development activity in relation to the Oropesa Tin
Project. The Group is also exploring the Cleveland tin-copper-tungsten Project, 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 $2,230,637 (2021: $1,612,387).
Dividends Paid or Recommended
There were no dividends paid or recommended during the financial year.
Review of Operations
Information on the operations of the Group during the financial year and up to the date of this report is set out separately in the
Annual Report under Review of Operations.
Review of Financial Condition
Capital Structure
At 1 July 2021, the Company had 3,861,238,867 ordinary shares and 461,390,657 unlisted options on issue.
On 9 July 2021, the Company issued 82,500,000 performance rights to Executives of the Company with performance based vesting
conditions. 37,500,000 performance rights have an expiry date of 31 July 2023, 37,500,000 performance rights have an expiry date
of 31 January 2024 and 7,500,000 performance rights have an expiry date of 31 January 2026.
On 6 July 2021, following shareholder approval, the following transactions occurred:
•
•
The issue of 66,000,000 shares with an issue price of 1 cent per share and 33,000,000 attaching unlisted options with an
exercise price of 1.5 cents per share and expiry of 30 April 2022 in relation to the capital raising completed in April 2021.
The issue of 56,924,600 shares with an issue price of 1 cent per share and 28,462,300 attaching unlisted options with an
exercise price of 1.5 cents per share and expiry of 30 April 2022 to Mr Andy Greig (Chairman) on conversion of the
outstanding loan principal and interest. The loan facility was closed upon the issue of shares. See Note 7 for further
details in relation to the loan facility.
Between 1 July 2021 and the share consolidation date of 1 December 2021 the following options were exercised:
•
•
8,691,465 options with an exercise price of 0.9 cents per option raising $78,223; and
69,212,300 options with an exercise price of 1.5 cents per option raising $1,038,185.
On 1 December 2021, following shareholder approval, the Company undertook a 25:1 consolidation of the ordinary shares on issue.
The consolidation resulted in the reduction in the number of shares on issue by 3,899,584,015 ordinary shares. As a result of the
share consolidation the share options and performance rights on issue were reconstructed on a like for like basis.
Between the date of the share consolidation and 30 June 2022 the following options were exercised:
2,425,746 options with an exercise price of $0.225 per option raising $545,793; and
12,220,000 options with an exercise price of $0.375 per option raising $4,582,500 (and 40,000 lapsed).
•
•
At 30 June 2022, the Company had 177,128,963 ordinary shares, 3,300,000 performance rights and 4,912,265 unlisted options on
issue.
23
Elementos Limited Annual Report 30 June 2022
From 1 July 2022 to the date of this report the following share options have been exercised into ordinary shares of the Company:
•
1,000,011 options with an exercise price of $0.225 per option raising $225,002 (and 3,912,254 lapsed).
As at the date of this report, the Company had 178,128,974 ordinary shares and 3,300,000 performance rights on issue. The
Company has agreed to issue a total of 1,800,000 share options to Non-executive Directors and Company Secretary subject to
shareholder approval at the 2022 Annual General Meeting.
Financial Position
At 30 June 2022, the Group’s net assets totalled $20,019,846 (2021: $14,576,070) which included cash assets of $6,270,173 (2021:
$5,542,252).
The Group’s working capital, being current assets less current liabilities has increased from $3,106,587 in 2021 to $6,001,367 in
2022, principally due to the exercise of options during the period and ongoing exploration expenditure and operating costs.
Treasury policy
The Group does not have a formally established treasury function. The Board is responsible for managing the Group’s finance
facilities. The Group does not currently undertake hedging of any kind.
Liquidity and funding
The Group has sufficient funds to finance its operations and exploration activities, and to allow the Group to take advantage of
favourable business opportunities, not specifically budgeted for, or to fund unforeseen expenditure.
Significant Changes in State of Affairs
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, including the company providing
rapid antigen tests for staff during site work and travel.
There was no other matter or circumstance during the financial year that has significantly affected the state of affairs of the
Group.
Events After Reporting Date
• Subsequent to the reporting period the following occurred in relation to options on issue:
-
-
1,000,011 options with an exercise price of 22.5 cents per option were exercised raising $225,002; and
3,912,254 options with an exercise price of 22.5 cents per option expired.
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. In addition, 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 in
relation to the Oropesa Tin Project.
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.
24
Elementos Limited Annual Report 30 June 2022
In addition, in 2021 the company established an Environmental, Social and Governance (ESG) Position Statement as part of its
desire to maturing its global tin assets into production in a responsible way. The company has made further commitments to
commence reporting against the Tin Code in 2023, subject to final negotiations with the International Tin Association who
manages the reporting.
Native Title
Mining tenements that the Group currently holds, are not subject to any known Native Title claims. The Group has a policy th at
is respectful of the Native Title rights and therefore surveys sites before disturbance for archaeological items.
25
Elementos Limited Annual Report 30 June 2022
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:
Key Management Personnel
Position
Andy Greig
Joe David
Brett Smith
Corey Nolan
Calvin Treacy
Chris Dunks
Drew Speedy
Director – Non-executive Chairman
Managing Directors (appointed 27 January 2022) previously Chief Executive Officer
(appointed 13 April 2021)
Director - Non-executive
Director - Non-executive
Director - Non-executive
Director – Non-executive (resigned 26 November 2021)
Chief Financial Officer
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 and/or rights 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.
The short-term incentives (‘STI’) program is designed to align the targets of the Company with the performance hurdles of key
management personnel. The STI payments are granted based on specific annual targets and key performance indicators (‘KPI’s’)
being achieved. The KPI’s for the current financial year for the CEO/MD and CFO included delivering the Oropesa DFS strategy,
Oropesa resources upgrade, Cleveland drilling programme, share consolidation, corporate structure activities and capital
management.
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.
Performance rights are issued with performance conditions that align with strategic outcomes of the business.
26
Elementos Limited Annual Report 30 June 2022
The Group’s policy for determining the nature and amount of remuneration of board members and key executives is set out below.
Non-Executive Directors
Board policy is to remunerate non-executive directors at market rates for comparable companies for time, commitment and
responsibilities. The maximum aggregate amount of fees that can be paid to non-executive directors is subject to approval by
shareholders at the Annual General Meeting and is not linked to the performance of the Group. The maximum aggregate amount
of fees that can be paid to non-executive directors approved by shareholders is currently $250,000. One-third, by number, of non-
executive directors retires by rotation at the Company’s Annual General Meeting. Retiring directors are eligible for re-election by
shareholders at the Annual General Meeting of the Company. The appointment conditions of the non-executive directors are set
out and agreed in letters of appointment.
The Company reviewed the fees of Non-Executive Directors during the reporting period and amended annual fees to align with
market peers. Consequently, non-executive director fees as at 30 June 2022 were $55,000 per annum (including superannuation
where applicable) to each non-executive director. In addition, Non- Executive Directors who act as a Director of operational
subsidiaries are paid an annual fee of $15,000 per operating subsidiary.
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 period no fees in relation to additional work were paid to Directors.
Executives
The remuneration structure for executives is based on a number of factors, including length of service, particular experience of
the individual concerned, and overall performance of the Group. The executives receive payments provided for under an
employment or service agreement, which may include cash, superannuation, short-term incentives, and equity based
performance remuneration.
Joe David was appointed Chief Executive Officer (CEO) on 13 April 2021 and subsequently Managing Director on 27 January 2022.
The key terms of the employment agreement with Joe David were:
•
Total Fixed Remuneration of $295,000 per annum (inclusive of superannuation);
• Short term incentive of up to $50,000 (inclusive of superannuation) for the 2022 financial year based on the achievement
of key performance indicators; and
•
6 months’ notice of termination by either party.
Drew Speedy was appointed Chief Financial Officer (CFO) on 1 April 2019. The key terms of the employment agreement with Drew
Speedy are:
•
Total Fixed Remuneration of $120,000 per annum (inclusive of superannuation);
• Short term incentive of up to $25,000 (inclusive of superannuation) for the 2022 financial year based on the achievement
of key performance indicators; and
•
90 days’ notice of termination by either party.
27
Elementos Limited Annual Report 30 June 2022
Remuneration Details of Key Management Personnel
The remuneration of the key management personnel of Elementos Limited for the year ended 30 June 2022 was as follows:
Year Ended 30 June 2022
Short Term Benefits
Key Management
Personnel
Salary & Fees
Bonuses
Equity
Settled
Options(1)
Equity
Settled
Performanc
e Rights
Post-
Employment
Super-
annuation
Total
Performance
related %
%
consisting
of options /
rights
A. Greig(2)
J. David
C. Nolan
C. Treacy
B. Smith
C. Dunks(3)
D. Speedy
$
$
$
$
$
$
4,583
-
37,759
-
-
42,342
279,311
46,364
-
235,103
37,500
42,507
37,500
16,500
-
-
-
-
118,543
22,727
37,759
37,759
37,759
-
-
29,476
3,750
-
3,750
-
590,254
79,009
80,266
79,009
16,500
-
-
-
-
89.2%
47.7%
47.8%
47.0%
47.8%
-
89.2%
39.8%
47.8%
47.0%
47.8%
-
117,552
13,232
272,054
51.6%
43.2%
536,444
69,091
151,036
352,655
50,208
1,159,434
(1) The Company has agreed to issue 360,000 share options to each Non-Executive Director subject to shareholder approval at the 2022
Annual General Meeting
(2) Mr Greig commenced receiving Director fees from 1 June 2022.
(3) Resigned as Non-Executive Director on 26 November 2021 and ceased to be a KMP.
Year Ended 30 June 2021
Short Term Benefits
Key Management
Personnel
Salary & Fees
Bonuses
Equity
Settled
Shares
Equity
Settled
Performanc
e Rights
Post-
Employment
Super-
annuation
Total
Performance
related %
%
consisting
of options
A. Greig
C. Dunks(1)
C. Nolan
C. Treacy(2)
B. Smith
J. David(3)
D. Speedy(4)
$
$
$
$
$
$
-
114,747
22,831
27,400
22,831
55,380
124,810
367,999
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,169
-
2,169
5,261
11,857
21,456
-
114,747
25,000
27,400
25,000
60,641
136,667
389,455
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1) During the period Mr Dunks received $41,751 of additional fees in relation to work undertaken on investor relations and capital raisings.
(2) During the period Mr Treacy received $2,400 of additional fees in relation to work undertaken on investor relations.
(3) Appointed CEO on 13 April 2021.
(4) During the period Mr Speedy received $35,000 of additional fees in relation to work undertaken on investor relations and capital raisings.
28
Elementos Limited Annual Report 30 June 2022
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Key
Management
Personnel
A. Greig
J. David
B. Smith
C. Nolan
C. Treacy
C. Dunks(1)
D. Speedy
Fixed Remuneration
At risk - STI
At risk – LTI
2022
2021
2022
2021
2022
2021
10.8%
52.3%
52.2%
52.2%
53.0%
100%
48.4%
100%
100%
100%
100%
100%
100%
100%
-
7.9%
-
-
-
8.4%
-
-
-
-
-
-
-
89.2%
39.8%
47.8%
47.8%
47.0%
-
43.2%
-
-
-
-
-
-
-
(1) Mr Dunks resigned and ceased being a KMP on 26 November 2021.
Cash bonuses are dependent on meeting defined performance measures. The amount of the bonus is determined having regard
to the satisfaction of performance measures and weightings. The maximum bonus values are established at the start of each
financial year and amounts payable are determined throughout the financial year based on the achievement of the defined
performance conditions.
Key Management Personnel
Cash bonus paid / payable
Cash bonus forfeited
2022
2022
J. David
D. Speedy
Equity-based Remuneration
Options
100%
100%
-
-
The terms and conditions of each grant of options over ordinary shares affecting remuneration of directors and other key
management personnel in this financial year or future reporting years are included in the table below. The Company has agreed
to issue 360,000 share options to each Non-Executive Director subject to shareholder approval at the 2022 Annual General
Meeting.
Key Management
Personnel
Number of
options
Grant date(1)
Vesting date
and exercisable
date
Expiry date
Exercise
price
Fair value per option
at 30 June 2022
Value of options
granted during the
year
A. Greig
B. Smith
C. Nolan
360,000
31-May-2022 Upon issue
31-May-2025
360,000
31-May-2022 Upon issue
31-May-2025
360,000
31-May-2022 Upon issue
31-May-2025
C. Treacy
360,000
31-May-2022 Upon issue
31-May-2025
$1.10
$1.10
$1.10
$1.10
$0.1049
$0.1049
$0.1049
$0.1049
$37,758
$37,758
$37,758
$37,758
(1) The issue of share options is subject to shareholder approval at the 2022 Annual General Meeting. If shareholder approval is not
received the share options will not be issued.
29
Elementos Limited Annual Report 30 June 2022
Performance Rights
The terms and conditions of each grant of performance right over ordinary shares affecting remuneration of directors and other
key management personnel in this financial year or future reporting years are included in the table below.
Tranche
Key
Management
Personnel
Number of
rights
Value of
rights granted
during the
year
Grant date
Vesting date and
exercisable date
Expiry date
Exercise
price
Fair value per
right at grant
1 & 2
J. David
800,000
$168,116
D. Speedy
400,000
$84,058
8-Jul-2021
Completion of Oropesa
DFS and retention to 1-
08-22
31-Jul-2023
Nil
$0.43
J. David
200,000
D. Speedy
100,000
Nil
Nil
8-Jul-2021
Granting of Oropesa
Exploitation License and
retention to 1-08-22
31-Jul-2023
Nil
$0.43
J. David
400,000
$66,987
D. Speedy
200,000
$33,494
8-Jul-2021
Oropesa project funding
package and retention to
1-07-23
31-Jan-2024
Nil
J. David
D. Speedy
J. David
D. Speedy
J. David
400,000
200,000
200,000
100,000
200,000
D. Speedy
100,000
Nil
Nil
Nil
Nil
Nil
Nil
8-Jul-2021
Acquisition or merger
and retention to 1-07-23
31-Jan-2024
Nil
8-Jul-2021
Completion of Cleveland
PFS and retention to 1-
07-23
31-Jan-2024
Nil
8-Jul-2021
First production of
mineral concentrate and
retention to 1-07-25
31-Jan-2026
Nil
$0.43
$0.43
$0.43
$0.43
3
4
5
6
7
There was no equity-based remuneration for persons who were key management personnel of the Group during the year ended
30 June 2021.
Company Performance, Shareholder Wealth, and Director and Executive Remuneration
During the financial year, the Company has generated losses as its principal activity was mineral exploration.
The following table shows the share price of the Company since 2018 (historical comparative prices have been adjusted to reflect
the 25:1 consolidation undertaken in December 2021).
30 June
2022
30 June
2021
30 June
2020
30 June
2019
30 June
2018
Share Price at
year end ($)
0.405
0.425
0.125
0.15
0.15
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.
30
Elementos Limited Annual Report 30 June 2022
Shares Held by Key Management Personnel
Details of shares held directly, indirectly or beneficially by key management personnel during the year ended 30 June 2022 were
as follows, the share balances have been adjusted to reflect the 25:1 share consolidation completed in December 2021:
Key
Management
Personnel
Balance at 1
July 2021
Granted as
Compensation
Received on
Exercise of
Options / Rights
Net change
other
Balance at 30
June 2022
A. Greig
J. David
B. Smith
C. Nolan
C. Treacy
C. Dunks(1)
D. Speedy
16,883,983
-
101,635
231,363
1,265,455
787,501
-
19,269,937
-
-
-
-
-
-
-
-
1,138,492
2,276,984(2)
20,299,459
-
20,000
-
-
-
50,000
40,000
-
50,000
161,635
231,363
50,000
1,315,455
(787,501)
-
40,000
80,000
120,000
1,198,492
1,709,483
22,177,912
(1) Mr Greig received 2,276,984 shares in relation to the loan conversion agreement approved by shareholders at the July 2021 Shareholder
Meeting.
(2) Mr Dunks resigned and ceased being a KMP on 26 November 2021, balance held at resignation.
Unlisted options held by Key Management Personnel
The number of options in Elementos Limited held by each key management person of the consolidated entity during the financial
year is set out below. These figures do not include any options issued post year end. The options balances have been adjusted
to reflect the 25:1 share consolidation completed in December 2021.
Key
Management
Personnel
A. Greig
J. David
B. Smith
C. Nolan
C. Treacy
C. Dunks
D. Speedy
Balance at
1 July 2021
Granted as
compensation
Additions -
other
Expired
-
-
-
18,182
48,485
-
-
360,000(2)
1,138,492(1)
-
360,000(2)
360,000(2)
360,000(2)
-
-
-
20,000(3)
-
-
-
40,000(4)
66,667
1,440,000
1,198,492
-
-
-
-
-
-
-
-
Exercised
Balance at
30 June
2022
Total vested
and
exercisable
at 30 June
2022
(1,138,492)
360,000
-
-
(20,000)
360,000
378,182
408,485
-
-
-
-
(40,000)
-
-
-
18,182
48,485
-
-
(1,198,492)
1,506,667
66,667
31
Elementos Limited Annual Report 30 June 2022
(1) Mr Greig received 1,138,492 attaching options in relation to the loan conversion agreement approved by shareholders at the July 2021
Shareholder Meeting.
(2) The Company has agreed to issue 360,000 share options to each Director subject to shareholder approval at the 2022 Annual General
Meeting.
(3) Mr Smith received 20,000 attaching options as part of his participation in the April 2021 capital raise and following shareholder approval
in July 2021.
(4) Mr Speedy received 40,000 attaching options as part of his participation in the April 2021 capital raise and following shareholder approval
in July 2021.
Unlisted performance rights held by Key Management Personnel
The number of performance rights in Elementos Limited held by each key management person of the consolidated entity during
the financial year is set out below. There were no rights issued post year end. The rights balances have been adjusted to reflect
the 25:1 share consolidation completed in December 2021.
Key
Management
Personnel
J. David
D. Speedy
Balance at 1
July 2021
Granted as
compensation
Exercised
Expired
Balance at 30
June 2022
Total vested
and
exercisable at
30 June 2022
-
-
-
2,200,000
1,100,000
3,300,000
-
-
-
-
-
-
2,200,000
1,100,000
3,300,000
-
-
-
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)
During the current and previous periods the Company undertook the following in relation to the loan facility:
•
In parallel with the August 2020 Capital raising and following shareholder approval, $500,000 of the outstanding loan
balance was converted to equity on the same terms of the capital raising. The conversion resulted in the issue of
3,636,364 ordinary shares and 1,212,122 options with an exercise price of $0.225 per share and expiry of 31 August 2022.
• On 9 April 2021 the Company and Mr Greig agreed to exercise 1,212,122 share options with an exercise price of $0.225
per share through the conversion of $272,727 of the outstanding loan balance.
In parallel with the April 2021 Capital raising and following shareholder approval, $569,246 of the outstanding loan
balance and accrued interest was converted to equity on the same terms of the capital raising. The conversion resulted
in the issue of 2,276,984 ordinary shares and 1,138,492 options with an exercise price of $0.375 per share and expiry of
30 April 2022. The shares and options were issued following shareholder approval on 14 July 2021.
The Loan facility was closed on 14 July 2021.
•
•
End of Remuneration Report (Audited)
32
Elementos Limited Annual Report 30 June 2022
Options
At the date of this report, the unissued ordinary shares of the Company under options are as follows:
Unlisted Options
The Company has agreed to issue 1,800,000 share options in total to Non-Executive Directors and Company Secretary subject to
shareholder approval at the 2022 Annual General Meeting. The shares options have an exercise price of $1.10, expiry date of 3 1
May 2025 and vest immediately. There are no other share options currently on issue.
The following ordinary shares were issued during and since the year ended 30 June 2022 on the exercise of options.
Grant Date/s
14 August 2020
27 April 2021
Performance Rights
Exercise Price
No. of shares issued
$0.225
$0.375
3,773,416
14,988,492
At the date of this report the following Performance Rights were on issue:
Grant Date/s
8 July 2021
8 July 2021
8 July 2021
Expiry Date
Exercise Price
No. of Rights
31 July 2023
31 January 2024
31 January 2026
Nil
Nil
Nil
1,500,000
1,500,000
300,000
Option and Performance Right holders do not have any rights to participate in any share issue or other interests in the Compa ny
or any other entity.
Directors’ Meetings
The meetings attended by each director during the financial year were:
Directors
A. Greig
J. David
B. Smith
C. Nolan
C. Treacy
C. Dunks
Board
Audit & Risk Committee
Meetings
Attended
Meetings
Attended
7
3
7
7
7
3
6
3
7
7
7
3
n/a
n/a
1
2
2
1
n/a
n/a
1
2
2
1
33
Elementos Limited Annual Report 30 June 2022
The Company established an Environmental, Social and Governance committee during the financial period. Mr Treacy is
Chairman of the committee and Messrs. David and Speedy are also members of the committee. The committee held its first
formal meeting following the reporting period on 12 September 2022
Corporate Governance
In recognising the need for the highest standards of corporate behaviour and accountability, the directors of Elementos Limited
support and, where practicable or appropriate, have adhered to the ASX Principles of Corporate Governance. The Company’s
corporate governance statement is set out in this Annual Report.
Indemnification and Insurance of Directors and Auditors
The Company has entered into a Deed with each of the directors whereby the Company has agreed to provide certain indemnities
to each director to the extent permitted by the Corporations Act and to use its best endeavours to obtain and maintain directors’
and officers’ indemnity insurance, subject to such insurance being available at reasonable commercial terms.
The Company has paid premiums to insure each of the directors of the Company against liabilities for costs and expenses incurred
by them in defending any legal proceedings arising out of their conduct while acting in the capacity of director of the Company,
other than conduct involving a wilful breach of duty in relation to the Company. The contracts include a prohibition on disclosure
of the premium paid and nature of the liabilities covered under the policy.
The Company has not given an indemnity or entered into an agreement to indemnify, or paid or agreed to pay insurance premiums
in respect of any person who is or has been an auditor of the Company or a related entity during the year and up to the date of
this report.
Proceedings on Behalf of the Company
No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to which
the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings.
The Company was not a party to any such proceedings during the year.
Non-Audit Services
The auditors did not provide any non-audit services during the year (2021: 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.
34
Elementos Limited Annual Report 30 June 2022
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.
Joe David
Managing Director
Dated 29 September 2022
Brisbane, Queensland
35 Elementos Limited Annual Report 30 June 2022
Auditor’s Independence
Declaration
Tel: +61 7 3237 5999
Fax: +61 7 3221 9227
www.bdo.com.au
Level 10, 12 Creek Street
Brisbane QLD 4000
GPO Box 457 Brisbane QLD 4001
Australia
DECLARATION OF INDEPENDENCE BY A J WHYTE TO THE DIRECTORS OF ELEMENTOS LIMITED
As lead auditor of Elementos Limited for the year ended 30 June 2022, I declare that, to the best of my
knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Elementos Limited and the entities it controlled during the period.
A J Whyte
Director
BDO Audit Pty Ltd
Brisbane, 29 September 2022
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.
36
Elementos Limited Annual Report 30 June 2022
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 20 September 2022.
(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
422
656
265
584
193
2,120
173,756
1,762,611
2,026,113
19,284,556
154,881,938
178,128,974
Performance Rights
No. Holders
No. Rights
-
-
-
-
2
2
-
-
-
-
3,300,000
3,300,000
The number of shareholders holding less than a marketable parcel is 551.
Registered Name
Number of Shares
% of total
Shares
BOND STREET CUSTODIANS LIMITED
20,748,457
11.65%
SANDHURST TRUSTEES LTD
10,571,886
37
Elementos Limited Annual Report 30 June 2022
(b) Twenty Largest Shareholders
The names of the twenty largest holders of Quoted Ordinary Shares are:
#
1
2
3
4
5
6
7
8
9
MCCUSKER HOLDINGS PTY LTD
TR NOMINEES PTY LTD
J P MORGANS NOMINEES AUSTRALIA PTY LIMITED
CITICORP NOMINEES PTY LIMITED
KEO PROJECTS PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
GOM PROPERTIES PTY LTD
10 NATIONAL NOMINEES LIMITED
11
JAMES CALAWAY*
12 Mr CARLO CHIODO
13
GLEN LEWIS PTY LTD
14 MR JOSEPH IGNATIUS D'SOUZA
15
TUWHERA TE RANGI LTD
16 MR CRAIG RONALD TINDALE & MRS GABRIELLE TINDALE
17
18
19
DRAWONE PTY LTD
SANGWILL PTY LTD
TAURUS CORPORATE SERVICES PTY LTD
20 MR JOHN DOUGLAS JEFFERY & MRS ELSPETH LOUISE JEFFERY
Top 20 Total
Total of Securities
* Merged holding
9,664,197
8,247,273
7,154,486
6,936,594
4,030,000
3,522,327
3,366,923
3,124,469
2,400,833
2,190,015
2,160,912
2,080,000
1,905,000
1,800,000
1,785,000
1,699,459
1,630,000
1,500,000
5.93%
5.43%
4.63%
4.02%
3.89%
2.26%
1.98%
1.89%
1.75%
1.35%
1.23%
1.21%
1.17%
1.07%
1.01%
1.00%
0.95%
0.92%
0.84%
96,517,831
54.18%
178,128,974
38
Elementos Limited Annual Report 30 June 2022
(c) Substantial Shareholders
The Company notes that, as at the date of this report, the following shareholders own substantial shareholdings (>= 5.0%) in
Elementos Limited:
Name of Shareholder
Ordinary Shares
% of total Shares
BOND STREET CUSTODIANS LIMITED
SANDHURST TRUSTEES LTD
MCCUSKER HOLDINGS PTY LTD
20,748,457
10,571,886
9,664,197
11.65%
5.93%
5.43%
(d) Voting rights
All ordinary shares carry one vote per share without restriction.
Options and Rights do not carry voting rights.
(e) Restricted securities
The Group currently has no restricted securities on issue.
(f) On-market buy back
There is not a current on-market buy-back in place.
(g) Business objectives
The Group has used its cash and assets that are readily convertible to cash in a way consistent with its business objectives.
39
Elementos Limited Annual Report 30 June 2022
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, 4th Edition”, which are as follows. A copy of the eight Corporate
Governance Principles and Recommendations can be found on the ASX’s website.
The Board is of the view that, during the reporting period, with the exception of the departures from the ASX Guidelines as set
out below, it otherwise complies with all of the ASX Guidelines.
ASX CGC Principle 1
Lay solid foundations for management and oversight.
Role of the Board
The Board of Directors is pivotal in the relationship between shareholders and management and the role and responsibilities of
the Board underpin corporate governance.
The Board is committed to administering the policies and procedures with openness and integrity, pursuing the true spirit of
corporate governance commensurate with the Group’s needs.
Generally, the powers and obligations of the Board are governed by the Corporations Act and the general law.
Without limiting those matters, the Board expressly considers itself responsible for the following:
▪
Ensuring compliance with the Corporations Act, ASX Listing Rules (where appropriate) and all relevant laws;
▪ Oversight of the Group including its framework of control and accountability systems to enable risk to be assessed and
managed;
▪ Appointing and removing the chief executive officer;
▪ Ratifying the appointment and, where appropriate, removal of senior executives including the chief financial officer and
the Group secretary;
▪
Input into and final approval of management’s development of corporate strategy and performance objectives;
▪ Monitoring senior executive’s performance and implementation of strategy;
▪
Ensuring appropriate resources are available to senior executives;
▪ Approving and monitoring the progress of major capital expenditure, capital management and acquisitions and
divestitures;
▪ Approving and overseeing Committees where appropriate to assist in the Board’s function and powers.
The Functions, Powers and Responsibilities of the Board are set out in the Company’s Corporate Governance Charter which is
available from the corporate governance section of the Group’s website.
40
Elementos Limited Annual Report 30 June 2022
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 2022, the proportion of women in the whole organisation is a follows:
Board Members
Officers
Employees
Performance Evaluation
Male
Female
5
1
5
-
-
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 2022.
ASX CGC Principle 2
Structure of the Board to be effective and 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.
41
Elementos Limited Annual Report 30 June 2022
The Company is developing an appropriate board skills matrix. The skills, experience and expertise relevant to the position of
each director who is in office at the date of the Annual Report is detailed in the Directors’ report.
Corporate Governance Council Recommendation 2.4 requires a majority of the Board to be independent Directors. The Corporate
Governance Council defines independence as being free from any interest, position, association or relationship that might
influence, or reasonably be perceived to influence, in a material capacity to bring independent judgement to bear on issues before
the board and to act in the best interests of the entity and its security holders generally.
In the context of Director independence, “materiality” is considered from both the Group and the individual Director perspective.
The determination of materiality requires consideration of both quantitative and qualitative elements. An item is presumed to be
material (unless there is qualitative evidence to the contrary) if it is equal to or greater than 10% of the appropriate base amount.
Qualitative factors considered included whether a relationship is strategically important, the competitive landscape, the nature
of the relationship and the contractual or other arrangements governing it and other factors which point to the actual ability of
the Director in question to shape the direction of the Group.
In accordance with the Council’s definition of independence above and the materiality thresholds set, all of the Company’ s
directors except for those listed below are considered independent therefore the Group does currently comply with
Recommendation 2.4:
Name
A. Greig
J. David
Position
Reason for non-compliance
Non-Executive Chairman
Director is a substantial (>5%) shareholder
Managing Director
Director was engaged in an executive capacity within the
previous 3 years
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
J. David
C. Nolan
C. Treacy
B. Smith
Term in Office
6 years, 11 months
8 months
13 years 2 months
8 years 11 months
2 year 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.
ASX CGC Principle 3
Instil a culture of acting lawfully, ethically and responsibly
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, whistleblower, anti-bribery and corruption policy
within its Corporate Governance Charter.
42
Elementos Limited Annual Report 30 June 2022
The Corporate Ethics Policy sets out rules binding Directors in respect of:
▪
▪
▪
a Directors’ legal duties as an officer of the Company;
a Directors’ obligations to make disclosures to the ASX and the market generally; and
dealings by Directors in shares in the Company.
The Corporate Ethics Policy, as set out in the Company’s Corporate Governance Charter is available from the corporate
governance section of the Group’s website.
ASX CGC Principle 4
Safeguard Integrity in Corporate Reporting
Audit Committee
The Board has established an Audit and Risk Management Committee which operates under a charter approved by the Board.
Recommendation 4.1 states that an audit committee should be structured so that it:
i.
consists only non-executive directors;
ii. consists of a majority of independent directors;
iii.
is chaired by an independent chair, who is not the chair of the Board; and
iv. has at least three members.
The members of the Audit & Risk Management Committee are Corey Nolan, Calvin Treacy and Brett Smith all of whom are
considered non-executive and independent directors. The Committee is chaired by an independent director (Corey Nolan). The
Company does presently comply fully with Recommendation 4.1.
All members of the Audit & Risk Management Committee are considered financially literate in the context of the Company’s
affairs.
The 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:
Member
C. Nolan
B.Smith
C. Treacy
Audit & Risk Management Committee
Number of meetings held
while in office
Meetings attended
2
1
2
2
1
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 Chief Executive 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 a sound system of financial risk management and internal compliance and
control.
43
Elementos Limited Annual Report 30 June 2022
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 Board ensures that management provide sufficient
additional information to ensure the integrity of periodic corporate reports disclosed to the market and, if appropriate, certain
declarations are provided by management regarding the underlying assumptions and procedures that have been implemented to
ensure this integrity.
ASX CGC Principle 5
Make timely and balanced disclosure
The Group has adopted a corporate ethics and continuous disclosure policy which is included in the Corporate Governance
Charter that 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.
ASX CGC Principle 6
Respect The Rights of Security Holders
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.
Information regarding the Group and its governance is available in the Corporate Governance Charter which can be found on the
Group’s website.
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.
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.
ii.
consists of a majority of independent directors;
is chaired by an independent chair, who is not the chair of the Board; and
iii. has at least three members.
The members of the Audit & Risk Management Committee are Corey Nolan, Calvin Treacy and Brett Smith all of whom are
considered independent directors. The Committee is chaired by an independent director (Corey Nolan). The Company does
44
Elementos Limited Annual Report 30 June 2022
presently comply fully with Recommendation 7.1.
All members of the Audit & Rick Management Committee are considered to have sufficient technical, legal and industry
experience in the context of the Company’s affairs to properly assess the risks facing the Group.
The 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:
Member
C. Nolan
B. Smith
C. Treacy
Audit & Risk Management Committee
Number of meetings held
while in office
Meetings attended
2
1
2
2
1
2
The Company has developed a basic framework for risk management and internal compliance and control systems which cover
organisational, financial and operational aspects of the Company’s affairs. Further detail of the Company’s risk management
policies can be found within the Audit and Risk Management Committee Charter.
Recommendation 7.2 requires that the Board review the Company’s risk management framework and disclose whether such a
review has taken place. Business risks are considered regularly by the Board and management at management and Board
meetings. A formal report to the Board as to the effectiveness of the management of the Company’s material business risks has
not been formally undertaken.
The Audit and Risk Management Committee Charter is set out in the Company’s Corporate Governance Charter which is available
from the corporate governance section of the Group’s website.
The Company does not have a separate internal audit function. The board considers that the Company is not currently of the size
or complexity to justify a separate internal audit function, and that appropriate internal financial controls are in place. S uch
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.
ASX CGC Principle 8
Remunerate fairly and responsibly
Remuneration Committee
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:
45
Elementos Limited Annual Report 30 June 2022
▪
▪
▪
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 risk 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.
46
Elementos Limited Annual Report 30 June 2022
Consolidated Statement of Profit or Loss and
Other Comprehensive Income for the Year Ended 30 June 2022
Interest income
Gain on settlement of borrowings
Other income
Corporate and administrative expenses
Foreign Currency Gain / (Loss)
Loss before income tax expense
Income tax expense
Note
30 June 2022
30 June 2021
$
$
1,163
154,905
-
1,768
-
60,650
(2,346,817)
(39,888)
(1,633,858)
(40,947)
(2,230,637)
(1,612,387)
-
-
2
3
Loss for the period attributable to members of the parent entity
(2,230,637)
(1,612,387)
Other comprehensive income
Items that may be reclassified to profit or loss:
Exchange losses on translation of foreign operations
Other comprehensive income for the period, net of tax
(291,813)
(291,813)
(160,625)
(160,625)
Total comprehensive loss attributable to members of the parent
entity
(2,522,450)
(1,773,012)
Basic and diluted loss per share
12
(0.014)
(0.013)
The accompanying notes form part of these financial statements.
47
Elementos Limited Annual Report 30 June 2022
Consolidated Statement of Financial Position
As at 30 June 2022
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Other current assets
Total Current Assets
NON-CURRENT ASSETS
Exploration and evaluation assets
Property, plant and equipment
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
Total Non-Current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Accumulated losses
TOTAL EQUITY
Note
30 June 2022
30 June 2021
$
$
4
5
6
7
8
9
10
6,270,173
563,624
27,685
6,861,482
5,542,252
227,294
-
5,769,546
13,901,380
11,390,716
2,616
47,376
74,199
4,730
7,471
76,497
14,025,571
11,479,414
20,887,053
17,248,960
808,997
51,118
-
860,115
7,092
7,092
1,106,332
6,163
1,550,464
2,662,959
9,931
9,931
867,207
2,672,890
20,019,846
14,576,070
36,165,450
328,204
(16,473,808)
20,019,846
28,740,673
78,568
(14,243,171)
14,576,070
The accompanying notes form part of these financial statements.
48
Elementos Limited Annual Report 30 June 2022
Consolidated Statement of Changes in Equity
For the Year Ended 30 June 2022
Note
Contributed
Equity
Accumulated
Losses
Share-
Based
Payments
Reserve
Foreign
Currency
Translation
Reserve
Total
$
$
$
$
$
Balance at 1 July 2020
19,699,725
(12,630,784)
Loss for the period
Other comprehensive loss
Total comprehensive income
-
-
-
(1,612,387)
-
(1,612,387)
Issue of shares
Transaction costs
9
9
Conversion of loan to equity
8,9
9,426,181
(885,233)
500,000
-
-
-
-
-
-
-
-
290,286
-
(51,093)
7,017,848
-
(160,625)
(160,625)
-
-
-
(1,612,387)
(160,625)
(1,773,012)
9,426,181
(594,947)
500,000
Balance at 30 June 2021
28,740,673
(14,243,171)
290,286
(211,718)
14,576,070
Loss for the period
Other comprehensive loss
Total comprehensive income
-
-
-
(2,230,637)
-
(2,230,637)
Issue of shares
Exercise of options
Transaction costs
Conversion of loan to equity
Issue of options and
performance rights
9
9
9
8,9
16
660,000
6,244,701
(49,170)
569,246
-
-
-
-
-
-
-
-
-
-
-
-
-
541,449
-
(291,813)
(291,813)
-
-
-
-
-
(2,230,637)
(291,813)
(2,522,450)
660,000
6,244,701
(49,170)
569,246
541,449
Balance at 30 June 2022
36,165,450
(16,473,808)
831,735
(503,531)
20,019,846
The accompanying notes form part of these financial statements.
49
Elementos Limited Annual Report 30 June 2022
Consolidated Statement of Cash Flows
For the Year Ended 30 June 2022
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received
Government COVID Assistance
Payments to suppliers and employees
Interest Paid
30 June 2022
30 June 2021
$
$
1,163
-
1,768
60,650
(1,710,130)
(1,545,995)
(99,225)
(698)
Net cash used in operating activities
11
(1,808,192)
(1,484,275)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for exploration and evaluation assets
Payments for property, plant and equipment
(3,629,814)
(1,672,631)
(2,114)
(5,270)
Net cash used in investing activities
(3,631,928)
(1,677,901)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares
Costs associated with share issues
Repayment of loan
Lease payments
9
9
8
6,904,701
(49,170)
(648,569)
(38,117)
9,146,964
(594,948)
-
(5,817)
Net cash provided by financing activities
6,168,845
8,546,199
Net increase/(decrease) in cash held
Net foreign exchange difference
Cash at Beginning of Year
728,725
(804)
5,542,252
5,384,023
(40,947)
199,176
Cash at End of Year
4
6,270,173
5,542,252
The accompanying notes form part of these financial statements.
50
Elementos Limited Annual Report 30 June 2022
Notes to the
Consolidated Financial
Statements
For the Year Ended 30 June 2022
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 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 29
September 2022 by the directors of the Company.
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 Group has not generated any revenues from operations. As at 30 June 2022 the Group had cash reserves of $6,270,173, net
current assets of $6,001,367 and net assets of $20,019,846. The Group incurred a net loss of $2,522,450 for the year ended 30 June
2022 and had an outflow of $1,808,192 of cash from operating activities.
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.
These conditions give rise to material uncertainty which may cast significant doubt over the Group’s ability to continue as a going
concern.
The directors believe that the going concern basis of preparation is appropriate due to the following reasons:
• To date the Group has funded its activities through issuance of equity securities, and it is expected that the Group will be able
to fund its future activities through further issuances of equity securities; and
• The directors believe there is sufficient cash available for the Group to continue operating based on the Company’s cash flow
forecast.
Should the Group be unable to continue as a going concern, it may be required to realise its assets and extinguish its liabilities
other than in the ordinary course of business, and at amounts that differ from those stated in the financial statements. This
financial report does not include any adjustments relating to the recoverability and classification of recorded asset amounts or
51
Elementos Limited Annual Report 30 June 2022
the amounts or classification of liabilities and appropriate disclosures that may be necessary should the Group be unable to
continue as a going concern.
Principles of Consolidation
Subsidiaries
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Elementos Limited ("Company"
or "parent entity") as at 30 June 2022, 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.
Subsidiaries are all entities over which the Group has control. The Group has control over an entity when the Group is expose d
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
income tax expense/(income) for the year comprises current
The
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 rates enacted or substantively enacted at reporting date. Their measurement also reflects
the manner in which management expects to recover or settle the carrying amount of the related asset or liability.
Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the financial statements. Deferred tax assets also result where amounts have been fully
expensed but future tax deductions are available. No deferred income tax will be recognised from the initial recognition of a n
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
52
Elementos Limited Annual Report 30 June 2022
in income taxation legislation and the anticipation that the Group will derive sufficient future assessable income to enable the
benefit to be realised and comply with the conditions of deductibility imposed by the law.
Exploration and Evaluation Assets
Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest. Such
expenditures comprise net direct costs and an appropriate portion of related overhead expenditure but do not include overheads
or administration expenditure not having a specific nexus with a particular area of interest. These costs are only carried forward
to the extent that they are expected to be recouped through the successful development of the area or where activities in the
area have not yet reached a stage which permits reasonable assessment of the existence of economically recoverable reserves
and active or significant operations in relation to the area are continuing.
A regular review has been undertaken on each area of interest to determine the appropriateness of continuing to carry forward
costs in relation to that area of interest.
A provision is raised against exploration and evaluation assets where the directors are of the opinion that the carried forward
net cost may not be recoverable or the right of tenure in the area lapses. The increase in the provision is charged against the
results for the year. Accumulated costs in relation to an abandoned area are written off in full against profit or loss in the year in
which the decision to abandon the area is made.
When production commences, the accumulated costs for the relevant area of interest are amortised over the life of the area
according to the rate of depletion of the economically recoverable reserves.
Restoration Costs
Costs of site restoration are provided over the life of the facility from when exploration commences and are included in the costs
of that stage. Site restoration costs include the dismantling and removal of mining plant, equipment and building structures,
waste removal, and rehabilitation of the site in accordance with clauses of the exploration and mining permits. Such costs have
been determined using estimates of future costs, current legal requirements and technology on an undiscounted basis.
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 Group currently has no obligation for any restoration costs in relation to discontinued operations, nor is it currently liable for
any future restoration costs in relation to current areas of interest. Consequently, no provision for restoration has been deemed
necessary.
Impairment of Non-Financial Assets
At each reporting date, the Group 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 o f the
asset's carrying value over its recoverable amount is expensed to profit or loss. No impairment existed at reporting date.
Other Receivables
Other receivables are recognised at amortised cost less any allowance expected credit losses.
Trade and other payables
These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of the financ ial
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.
53
Elementos Limited Annual Report 30 June 2022
Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at
amortised cost. Any difference between the proceeds and the redemption amount is recognised in profit or loss over the period
of the borrowings using the effective interest method. Borrowing costs on the establishment of loan facilities are recognised as
transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the
fee is deferred until the draw down occurs.
Borrowings are removed from the consolidated statement of financial position when the obligation specified in the contract is
discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished
or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is
recognised in profit or loss as other income or finance costs.
Borrowings are classified as current liabilities unless the consolidated entity has an unconditional right to defer settlement of
the liability for at least 12 months after the reporting period.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, deposits held at call with banks and other short-term highly liquid investments
with original maturities of less than 3 months.
Issued Capital
Ordinary shares are classified as equity. Transaction costs (net of tax where the deduction can be utilised) arising on the issue
of ordinary shares are recognised in equity as a reduction of the share proceeds received.
Share Based Payments and Performance Rights
The Company 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. The fair value of
performance rights with no market conditions is determined by reference to the share price at grant. Where applicable, the
number of shares options and performance rights 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 and annual 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.
54
Elementos Limited Annual Report 30 June 2022
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 Company’s presentation
currency are translated as follows:
▪ assets and liabilities are translated at period-end exchange rates prevailing at that reporting date;
▪
▪ accumulated losses are translated at the exchange rates prevailing at the date of the transaction.
income and expenses are translated at average exchange rates for the period;
Exchange differences arising on translation of foreign operations are recognised in other comprehensive income.
Government grants
Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be
received and the group will comply with all attached conditions.
Government grants relating to costs are deferred and recognised in the profit or loss over the period necessary to match them
with the costs that they are intended to compensate.
Government grants relating to exploration and evaluation assets that have been capitalised are recognised by deducting the
grant received from the carrying amount of the exploration and evaluation asset recognised on the statement of financial position.
Earnings Per Share (EPS)
Basic earnings per share is calculated by dividing the loss attributable to equity holders of the Company, excluding any costs of
servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial
period adjusted for any bonus elements in ordinary shares issued during the period.
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after
income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted
average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.
55
Elementos Limited Annual Report 30 June 2022
New and Amended Standards and Interpretations Adopted During the Year
There were no new or revised accounting standards adopted that had any impact on the Group’s accounting policies and required
retrospective adjustments.
New Standards and Interpretations not yet adopted
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2022 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
to the Group’s financial statements in the current or future reporting periods and on foreseeable future transactions.
Fair Values
Fair values may be used for financial asset and liability measurement as well as for sundry disclosures. Fair value is the price
that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date. It is based on the presumption that the transaction takes place either in the principal market for the asset or
liability or, in the absence of a principal market, in the most advantageous market. The principal or most advantageous market
must be accessible to, or by, the Group.
Fair value is measured using the assumptions that market participants would use when pricing the asset or liability assuming that
market participants act in their best economic interest. The fair value measurement of a non-financial asset takes into account
the market participant's ability to generate economic benefits by using the asset at its highest and best use or by selling it to
another market participant that would use the asset at its highest and best use. In measuring fair value, the Group uses valuation
techniques that maximise the use of observable inputs and minimise the use of unobservable inputs.
Critical Accounting Estimates and Judgements
The directors evaluate estimates and judgments incorporated into the financial statements based on historical knowledge and
best available current information. Estimates assume a reasonable expectation of future events and are based on current trends
and economic data, obtained both externally and within the Group.
Key Judgements:
Exploration and Evaluation Assets
The Group 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 perf ormed
to reporting date. Exploration and evaluation assets at 30 June 2022 were $13,901,380 (2021: $11,390,716). Based on a review
performed as at 30 June 2022, the Directors determined that it is still appropriate to continue capitalising costs in relatio n to the
Group's areas of interest.
Deferred Tax Assets
The Company is subject to income taxes in Australia and jurisdictions where it has foreign operations. Significant judgement is
required in determining the worldwide provision for income taxes. There are certain transactions and calculations undertaken
during the ordinary course of business for which the ultimate tax determination is uncertain. The consolidated entity estimates
its tax liabilities based on the consolidated entity’s understanding of the tax law. Where the final tax outcome of these matters is
different from the amounts that were initially recorded, such differences will impact the current and deferred income tax assets
and liabilities in the period in which such determination is made.
In addition, the consolidated entity has recognised deferred tax assets relating to carried forward tax losses to the extent there
are sufficient taxable temporary differences (deferred tax liabilities) relating to the same taxation authority and the same
subsidiary against which the unused tax losses can be utilised. However, utilisation of the tax losses also depends on the ability
of the entity, which is not part of the tax consolidated group, to satisfy certain tests at the time the losses are recouped. Due to
the parent entity acquiring the entity that holds the losses it is expected that the entity will fail to satisfy the continuity of ownership
56
Elementos Limited Annual Report 30 June 2022
test and therefore has to rely on the same business test. As at 30 June 2022 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.
57
Elementos Limited Annual Report 30 June 2022
NOTE 2: EXPENSES
Included in expenses are the following items:
Depreciation
ASX, ASIC, share registry expenses
Business development and investor relations costs
Legal fees
Insurances
Audit, tax and external accounting fees
Interest on loans
Employee benefits expense comprises:
Salaries and wages
Consulting fees
Superannuation
Share based payment expense
Annual leave expensed
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 25% (2021: 26%)
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 2022
30 June 2021
$
$
44,555
114,770
158,204
44,758
31,981
143,257
6,349
856,842
136,957
84,609
541,449
42,858
7,556
73,423
142,749
19,632
39,457
72,574
113,856
643,873
255,990
45,752
-
18,081
30 June 2022
30 June 2021
$
$
(557,659)
(419,221)
100,228
458,071
-
(640)
-
35,211
385,524
-
(1,514)
-
Deferred tax assets and liabilities not recognised, the net benefit of which will only be realised if the conditions for deductibility
as set out in Note 1 occur:
Temporary differences
Tax losses
-
-
4,904,118
4,668,283
The Group has carried forward tax losses of $25,030,274 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. Elementos Ltd failed the Continuity of Ownership Test on
4 January 2019. As a result, tax losses incurred prior to this date will need to satisfy the Same Business Test of Similar Business
Test, in order for them to be available in future years.
58
Elementos Limited Annual Report 30 June 2022
NOTE 4: CASH AND CASH EQUIVALENTS
Cash at bank and on hand
Short term deposits
NOTE 5: TRADE AND OTHER RECEIVABLES
GST & VAT receivable
30 June 2022
30 June 2021
$
6,225,623
44,550
6,270,173
$
5,532,252
10,000
5,542,252
30 June 2022
30 June 2021
$
563,624
563,624
$
227,294
227,294
As at year end, there were no material receivable balances that were past due and not impaired. All receivables as at 30 June
2022 were due within 60 days (2021: 60 days). The carrying value of trade receivables is considered a reasonable approximation
of fair value.
NOTE 6: EXPLORATION AND EVALUATION ASSETS
Exploration and evaluation expenditure carried forward in respect of areas
of interest are:
Exploration and evaluation phase - at cost
13,901,380
11,390,716
30 June 2022
30 June 2021
$
$
Movement in exploration and evaluation assets:
Opening balance - at cost
Capitalised exploration expenditure
Foreign exchange differences
Carrying amount at the end of the year
11,390,716
2,646,427
(135,763)
13,901,380
9,438,708
1,970,790
(18,782)
11,390,716
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.
59
Elementos Limited Annual Report 30 June 2022
NOTE 7: TRADE AND OTHER PAYABLES
Current:
Trade payables and accrued expenses
Short term employee benefits
Total payables (unsecured)
30 June 2022
30 June 2021
$
$
736,463
72,534
808,997
1,076,657
29,675
1,106,332
The average credit period on purchases of goods and services is 30 days. No interest is paid on trade payables.
NOTE 8: BORROWINGS
Current:
Unsecured:
Loan (a)(b)
Total unsecured current liability
30 June 2022
30 June 2021
$
-
-
$
1,550,464
1,550,464
(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)
During the financial period the Company agreed to convert $569,246 of the loan balance to equity see Note 9 for further
details.
(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.
60
Elementos Limited Annual Report 30 June 2022
•
•
No requirement to repay principal or pay interest during the loan term
Repayable by the Company at any time (during the loan term)
As announced on 8 September 2021, the Company reached an agreement with Mark Wellings to settle the outstanding
loan amount. The Company made a payment of CAD683,642 (AUD737,163) during September 2021, the difference to the
carrying value of the loan related to costs incurred by MESPA following completion of the acquisition which were agreed
to be settled by Mark Wellings, penalties for non-payment of pre-acquisition costs of $78,983 and an early repayment
discount agreed between the parties of $79,365.
NOTE 9: CONTRIBUTED EQUITY
Fully paid ordinary shares
Balance as at 1 July
3,861,238,867
28,740,673
2,548,330,961
19,699,725
2022
2021
No. of Shares
$
No. of Shares
$
Share issues:
Issue of shares
Issue of shares
Issue of shares
Issue of shares
Issue of shares
Issue of shares
Issue of shares
Issue of shares
Issue of shares
Issue of shares
Issue of shares
Issue of shares
Issue of shares
Issue of shares
(a)
(a)
(b)
(b)
(c)
(d)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(j)
66,000,000
56,924,600
8,691,465
660,000
569,246
78,223
69,212,300
1,038,185
(3,899,584,015)
-
2,425,746
545,793
12,220,000
4,582,500
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
464,000,017
2,551,940
140,545,487
90,909,091
2,540,866
773,029
500,000
6,490
544,000,000
5,440,000
68,162,445
2,750,000
613,472
41,250
Balance as at 30 June
177,128,963
36,214,620
3,861,238,867
29,625,906
Total transaction costs associated with
share issues
Net issued capital
(49,170)
36,165,450
(885,233)
28,740,673
Ordinary shareholders are entitled to participate in dividends and the proceeds on the winding up of the company in proportio n
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 2022, are:
(a) On 6 July 2021, following shareholder approval, the following transactions occurred:
•
The issue of 66,000,000 shares with an issue price of 1 cent per share and 33,000,000 attaching unlisted options
with an exercise price of 1.5 cents per share and expiry of 30 April 2022 in relation to the capital raising
completed in April 2021.
61
Elementos Limited Annual Report 30 June 2022
•
The issue of 56,924,600 shares with an issue price of 1 cent per share and 28,462,300 attaching unlisted options
with an exercise price of 1.5 cents per share and expiry of 30 April 2022 to Mr Andy Greig (Chairman) on
conversion of the outstanding loan principal and interest. The loan facility was closed upon the issue of shares.
See Note 8 for further details in relation to the loan facility.
(b) Between 1 July 2021 and the share consolidation date of 1 December 2021 the following options were exercised:
•
•
8,691,465 options with an exercise price of 0.9 cents per option raising $78,223; and
69,212,300 options with an exercise price of 1.5 cents per option raising $1,038,185.
(c) On 1 December 2021, following shareholder approval, the Company undertook a 25:1 consolidation of the ordinary
shares on issue. The consolidation resulted in the reduction in the number of shares on issue by 3,899,584,015 ordinary
shares.
(d) Between the date of the share consolidation and 30 June 2022 the following options were exercised:
2,425,746 options with an exercise price of $0.225 per option raising $545,793; and
12,220,000 options with an exercise price of $0.375 per option raising $4,582,500.
•
•
Notes for the above table, relating to the year ended 30 June 2021, are:
(e) 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 completed in two
tranches as follows:
•
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.
On 2 December 2020, following shareholder approval, 41,272,729 shares were issued at 0.55 cents per share and
13,757,578 unlisted options with an exercise price of 0.9 cents per share and expiry date of 31 August 2022.
•
(f) 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 completed as follows:
•
•
On 9 September 2020 135,545,486 shares were issued at 0.55 cents per share.
Following shareholder approval at the 2020 Annual General Meeting the Company issued 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.
The Company offered 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. On 7 December
2020, the Company issued 35,666,705 options under the cleansing prospectus.
•
(g) 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 2
December 2020, following shareholder approval, Mr Greig received 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.
(h) On 2 December 2020, following shareholder approval, the Company issued 2,540,866 ordinary shares to Mr Brett Smith
(non-executive Director) in lieu of $6,490 of outstanding fees.
(i) On 19 April 2021, the Company announced that it had received commitments to complete a private placement of
544,000,000 shares to be issued at 1 cent per share with participants receiving an attaching option on a one for two basis,
with an exercise price of 1.5 cents per share and expiry date of 30 April 2022.
(j) During the period the following shares were issued on the exercise of options:
•
•
68,162,445 shares were issued on the exercise of options with an exercise price of 0.9 cents per share. Included
in this were 30,303,030 options exercised by Mr Greig for a total of $272,727.
2,750,000 shares were issued on the exercise of options with an exercise price of 1.5 cents per share.
62
Elementos Limited Annual Report 30 June 2022
Other Options
Note
Weighted
average
exercise price
(cents)
30 June 2022
No. of Options
Weighted
average
exercise
price (cents)
30 June 2021
No. of Options
4,912,265
1.25
506,390,657
506,390,657
-
-
Unlisted Share Options
Balance at the beginning of the
reporting period
Options issued during the period:
- Broker Options
-
-
Placement attaching options
Placement attaching options
Options exercised during the period:
-
-
Prior to consolidation
Following the consolidation
Consolidation (a)
Expired
Exercisable at end of year
22.5
1.25
-
-
-
-
1.50
61,462,300
1.43
35.02
-
37.5
22.5
(77,903,765)
(14,645,746)
(470,351,181)
(40,000)
4,912,265
1.22
0.90
1.50
85,000,000
220,303,102
272,000,000
0.92
(70,912,445)
-
-
-
-
-
-
1.25
506,390,657
(a) Following shareholder approval on 23 November 2021 the Company completed a consolidation of its share capital on a
25:1 basis. The share options were reconstructed on a like for like basis which resulted in the following:
31-August-2022 Options
30-April-2022 Options
Pre consolidation
Post Consolidation
Pre consolidation
Post Consolidation
Number of options
Exercise Price
183,449,192
$0.009
7,338,011
$0.225
306,500,000
$0.015
12,260,000
$0.375
The weighted average remaining contractual life of the options was 62 days.
63
Elementos Limited Annual Report 30 June 2022
Director Options
Weighted
average
exercise price
$
Note
30 June 2022
No. of Options
Weighted
average
exercise
price
$
30 June 2021
No. of Options
Unlisted Share Options
Balance at the beginning of the
reporting period
Options issued during the period(a)
16
Options exercised during the period
Expired
1.10
-
1.10
-
-
1,800,000
-
1,800,000
-
-
Exercisable at end of year
1.10
1,800,000
-
-
-
-
-
-
-
-
-
-
-
-
(a) The 1,800,000 options to the Directors and Company Secretary have been agreed to be issued subject to shareholder
approval at the 2022 Annual General Meeting.
The weighted average remaining contractual life of the options was 2.9 years.
Performance Rights
During the financial period the Company issued 3,300,000 performance rights (on a post consolidation basis) to Executives of the
Company. The performance rights have both company milestone and employment retention vesting conditions. A share-based
payment expense of $352,655 was recorded during the period (2020: nil) see Note 16 for further details.
Capital Management
Exploration companies such as Elementos Limited are funded almost exclusively by share capital.
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 changes to the capital management policies during the year.
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 and rights issued to employees and consultants.
This reserve can be reclassified to accumulated losses if options or rights lapse.
64
Elementos Limited Annual Report 30 June 2022
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
Unrealised Foreign exchange
Changes in operating assets and liabilities:
(Increase)/Decrease in receivables
(Decrease)/Increase in payables
Cash flows from operations
30 June 2022
30 June 2021
$
$
(2,230,637)
(1,612,387)
44,555
541,449
39,084
(27,685)
(174,958)
7,556
6,490
40,947
-
73,119
(1,808,192)
(1,484,275)
Options and performance rights issued to employees and consultants for no cash consideration are disclosed in note 16.
Reconciliation of cash and non-cash movements in borrowings from financing activities
2021 Cash flows
Principal
converted to
equity
Loan balance
offset /
discounted
Non-cash
adjustments
2022
Lease liability
16,094
(38,117)
Borrowings
1,550,464
(737,163)
1,566,558
(775,280)
2020 Cash flows
Lease liability
21,911
(5,817)
Borrowings
2,315,303
-
2,337,214
(5,817)
-
(477,273)
(477,273)
Interest
accrued
-
(500,000)
(500,000)
-
80,233
58,210
(336,028)
(336,028)
-
-
80,233
58,210
Acquired
through
acquisition
Foreign
exchange
movements
2021
(272,727)
(272,727)
-
16,094
7,888
1,550,464
7,888
1,566,558
65
Elementos Limited Annual Report 30 June 2022
NOTE 12: LOSS PER SHARE
Net loss used in the calculation of basic and diluted EPS
Weighted average number of ordinary shares outstanding during the period
used in the calculation of basic EPS
30 June 2022
30 June 2021
$
$
(2,230,637)
(1,612,387)
164,987,703
128,730,661
Options and performance rights are considered potential ordinary shares. Options and performance rights 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 2022 are also not dilutive. If the 1,000,011 shares issued since the end of the reporting period were issued
on 1 July 2021, the loss per share for 30 June 2022 would have been (1.34) cents per share.
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.
Not later than 1 year
Total commitment
NOTE 14: CONTINGENT LIABILITIES
30 June 2022
30 June 2021
$
382,500
382,500
$
420,000
420,000
The Company’s wholly owned subsidiary, Minas de Estano De Espana (MESPA is currently involved in a number of legal
proceedings in Spain. While none of the cases are considered material, and do not affect the Company’s title to the Oropesa
Project, the Company is actively monitoring and defending these cases (as required). MESPA has received claims against it by
Sondeos & Perforaciones Industriales Del Bierzo, SA (SPIB) and its principal Mr. José Cereijo Soto.
The first claim relates to invoices of €141,000 relating to Dirección Facultativa (Registered Engineer) services alleged to have
been performed by Mr Soto. Two of the three invoices making up the total amount are related to services alleged to have been
performed from before 2016, with the remaining invoice for services between 2016 - 2021.
MESPA is also defending a second claim for the 2018 appointment and dismissal of Mr Jose Cereijo Soto as MESPA’s
Con.Delegado (CEO) and an alleged €300,000 payment he claims he was entitled to receive if ever terminated as CEO.
There were no other contingent liabilities at the end of the reporting period.
66
Elementos Limited Annual Report 30 June 2022
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 2022.
Subsidiaries
Interest in subsidiaries are disclosed in Note 20.
Key Management Personnel
Short-term employee benefits
Post-employment benefits
Share-based payments
30 June 2022
30 June 2021
$
575,663
50,208
503,691
1,129,562
$
367,999
21,456
-
389,455
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 and during the period made arrangements for the
conversion of the loan to equity of Company and closing of the facility. Further details are contained in Note 8 and Note 9.
NOTE 16: SHARE-BASED PAYMENTS
Options
During the year ended 30 June 2022 the Company agreed to issue 1,800,000 options to the Company’s Director’s and Company
Secretary, subject to shareholder approval at the 2022 Annual General Meeting. The amount recognised for the period under the
share-based payment reserve in relation to share based payments amounts to $188,794.
The fair value of options at grant date is determined using generally accepted valuation techniques that take into account
exercise price, the term of the option, the impact of dilution, the share price at grant date, the expected price volatility of the
underlying share, the expected dividend yield and the risk-free rate for the term of the option and an appropriate probability
weighting to factor the likelihood of the satisfaction of non-vesting conditions. The expected volatility is based on historic
volatility, adjusted for any expected changes to future volatility due to publicly available information.
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Elementos Limited Annual Report 30 June 2022
Inputs used to value the share options are as follows:
Number of options
Grant date(a)
Valuation date
Share price at valuation date
Exercise price
Expected volatility
Risk-free interest rate
Expected life
Model used
Value per option
1,800,000
31-May-2022
30-Jun-2022
$0.405
$1.10
75%
2.81%
3 years
Black Scholes
$0.10489
(a) The 1,800,000 options to the Directors and Company Secretary have been agreed to be issued subject to shareholder
approval at the 2022 Annual General Meeting.
Outstanding Options
The outstanding balance of options as at 30 June 2022 is represented below:
Grant Date/s
Expiry Date
Exercise Price
Share options
Share options
2 December 2020
31 August 2022
13 April 2021
30 April 2022
31 May 2022(c)
31 May 2025
$0.225(a)
$0.375(a)
$1.10
The weighted average remaining contractual life of the options
outstanding at year end:
30 June 2022
30 June 2021
1,600,000(a)
1,600,000(a)
-
1,800,000(a)(b)
1,800,000
-
1.6 years
1 year
(a) The quantity and exercise price of the options have been adjusted to reflect the consolidation of the Company’s share
capital in December 2021 on a 25:1 basis.
(b) The 1,800,000 options were exercised to fully paid ordinary shares during the financial period.
(c) The 1,800,000 options to the Directors and Company Secretary have been agreed to be issued subject to shareholder
approval at the 2022 Annual General Meeting.
Performance Rights
During the year ended 30 June 2022 3,300,000 (post consolidation) rights were issued to the Company’s Executives. The amount
recognised for the period under the share-based payment reserve in relation to share based payments amounts to $352,655.
The fair value of rights at grant date is determined using the share price at the grant date and the estimated probability of
achieving each vesting condition. These values are then recognised over the proposed vesting period.
68
Elementos Limited Annual Report 30 June 2022
Inputs used to value the performance rights are as follows:
Tranche
Number of
rights
Grant/
valuation
date
Vesting date and exercisable date
Expiry date
Exercise
price
Spot price
at grant
1 & 2
1,200,000
8-Jul-2021
Completion of Oropesa DFS and retention to 1-08-22
31-Jul-2023
3
4
5
6
7
300,000
8-Jul-2021
Granting of Oropesa Exploitation License and retention to 1-08-22
31-Jul-2023
600,000
8-Jul-2021
Oropesa project funding package and retention to 1-07-23
31-Jan-2024
600,000
8-Jul-2021
Acquisition or merger and retention to 1-07-23
31-Jan-2024
300,000
8-Jul-2021
Completion of Cleveland PFS and retention to 1-07-23
31-Jan-2024
300,000
8-Jul-2021
First production of mineral concentrate and retention to 1-07-25
31-Jan-2026
Nil
Nil
Nil
Nil
Nil
Nil
$0.43
$0.43
$0.43
$0.43
$0.43
$0.43
Outstanding Rights
The outstanding balance of rights as at 30 June 2022 is represented below:
Grant Date/s
Expiry Date
Exercise Price
Rights
Rights
8 July 2021
31 July 2023
8 July 2021
31 January 2024
8 July 2021
31 January 2026
30 June 2022
30 June 2021
Nil
Nil
Nil
1,500,000
1,500,000
300,000
-
-
-
None of the rights on issue at 30 June 2022 are vested and exercisable. The weighted average remaining contractual life of the
options outstanding at year end is 1.54 years.
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
30 June 2022
30 June 2021
$
$
54,676
54,676
49,490
49,490
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Elementos Limited Annual Report 30 June 2022
NOTE 18: FINANCIAL RISK MANAGEMENT
(a) Financial Risk Management Policies
The Elementos Group's financial instruments comprises cash balances, receivables and payables, loans to and from subsidiaries.
The main purpose of these financial instruments is to provide finance for Group operations.
Treasury Risk Management
Key executives of the Company meet on a regular basis to analyse exposure and to evaluate treasury management strategies in
the context of the most recent economic conditions and forecasts.
The board of directors has overall responsibility for the establishment and oversight of the Group's risk management framework.
Management is responsible for developing and monitoring the risk management policies and reports to the board.
Financial Risks
The main risks the Group is exposed to through its financial instruments are interest rate risk, credit risk and liquidity risk. These
risks are managed through monitoring of forecast cash flows, interest rates, economic conditions and ensuring adequate funds
are available.
Interest Rate Risk
The Group's exposure to interest rate risk, which is the risk that a financial instrument's cash flows from interest will fluctuate as
a result of changes in market interest rates, arises in relation to the Group's bank balances. This risk is managed through careful
placement of surplus funds in interest bearing bank accounts.
The Company has performed sensitivity analysis relating to its exposure to interest rate risk. At year end, the effect on profit and
equity as a result of a 1% change in the interest rate, with all other variables remaining constant, is immaterial (2021: 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.
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 2022, there was no concentration of credit risk, other than bank balances and on geographical basis with most financial
assets in Australia (2021: nil).
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Elementos Limited Annual Report 30 June 2022
(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:
Lease liabilities
30 June 2022
30 June 2021
$
$
6,270,173
563,624
6,833,797
5,542,252
227,294
5,769,546
(808,997)
(1,106,332)
-
(1,550,464)
(52,521)
(6,932)
(7,117)
(868,635)
(10,025)
(2,673,753)
(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.
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.
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.
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Elementos Limited Annual Report 30 June 2022
(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.
2022
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
2021
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
Spain
Intercompany
eliminations
$
12,968,095
6,203,202
19,171,297
347,118
7,092
354,210
33,165,450
831,735
$
743,613
7,822,369
8,565,982
7,363,223
-
7,363,223
3,000,000
(503,531)
(15,180,098)
(1,293,710)
18,817,087
(2,177,939)
1,202,759
(52,698)
-
(291,813)
(2,177,939)
(344,511)
$
(6,850,226)
-
(6,850,226)
(6,850,226)
-
(6,850,226)
-
-
-
-
-
-
-
Australia
Spain
Intercompany
eliminations
$
8,263,912
5,561,979
13,825,891
787,161
9,931
797,092
25,740,673
290,286
$
527,002
5,917,435
6,444,437
4,897,166
-
4,897,166
3,000,000
(211,718)
(13,002,160)
(1,241,011)
13,028,799
(1,242,612)
1,547,271
(369,775)
-
(160,625)
(1,242,612)
(530,400)
$
(3,021,368)
-
(3,021,368)
(3,021,368)
-
(3,021,368)
-
-
-
-
-
-
-
Total
$
6,861,482
14,025,571
20,887,053
860,115
7,092
867,207
36,165,450
328,204
(16,473,808)
20,019,846
(2,230,637)
(291,813)
(2,522,450)
Total
$
5,769,546
11,479,414
17,248,960
2,662,959
9,931
2,672,890
28,740,673
78,568
(14,243,171)
14,576,070
(1,612,387)
(160,625)
(1,773,012)
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Elementos Limited Annual Report 30 June 2022
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
Australia
Australia
Argentina
Chile
Australia
Spain
Ownership interest
2022
100%
100%
100%
100%
100%
100%
2021
100%
100%
100%
100%
100%
100%
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
NOTE 21: EVENTS AFTER REPORTING PERIOD
• Subsequent to the reporting period the following occurred in relation to options on issue:
-
-
1,000,011 options with an exercise price of 22.5 cents per option were exercised raising $225,002; and
3,912,254 options with an exercise price of 22.5 cents per option expired.
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.
NOTE 22: PARENT ENTITY INFORMATION
The following information relates to the parent entity, Elementos Limited at 30 June 2022. 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 2022
30 June 2021
$
6,115,743
14,267,738
20,383,481
356,543
7,092
363,635
$
5,242,417
14,418,375
19,660,792
781,946
24,570
806,517
52,060,981
44,636,204
831,735
290,286
(32,872,870)
(26,072,214)
20,019,846
(6,800,656)
-
18,854,276
(1,242,612)
-
(6,800,656)
(1,242,612)
73
Elementos Limited Annual Report 30 June 2022
The Company has no contingent liabilities, nor has it entered into any guarantees in relation to the debts of its subsidiaries (2021:
nil).
The Company has not entered into any contractual commitments for the acquisition of property, plant and equipment (2021: 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.
74
Elementos Limited Annual Report 30 June 2022
Directors’ Declaration
The directors of the Company declare that:
1. The attached financial statements and notes are in accordance with the Corporations Act 2001, including:
a. complying with Australian Accounting Standards and Interpretations which, as stated in accounting policy note
1 to the financial statements, constitutes explicit and unreserved compliance with International Financial
Reporting Standards (IFRS); and
b. giving a true and fair view of the consolidated entity’s financial position as at 30 June 2022 and of its
performance for the financial year ended on that date.
2. The managing director and chief financial officer have each declared under section 295A that:
a.
b.
the financial records of the Company for the financial year have been properly maintained in accordance with
section 286 of the Corporations Act 2001;
the financial statements and notes for the financial year comply with the Australian Accounting Standards and
Interpretations; and
c.
the financial statements and notes for the financial year give a true and fair view.
3.
In the directors' opinion there are reasonable grounds to believe that the Company will be able to pay its debts as and
when they become due and payable.
This declaration is made in accordance with a resolution of the board of directors.
Joe David
Managing Director
29 September 2022
Brisbane, Queensland
75
Elementos Limited Annual Report 30 June 2022
Tel: +61 7 3237 5999
Fax: +61 7 3221 9227
www.bdo.com.au
Level 10, 12 Creek St
Brisbane QLD 4000
GPO Box 457 Brisbane QLD 4001
Australia
INDEPENDENT AUDITOR'S REPORT
To the members of Elementos Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Elementos Limited (the Company) and its subsidiaries (the
Group), which comprises the consolidated statement of financial position as at 30 June 2022, 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 2022 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.
76
Elementos Limited Annual Report 30 June 2022
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
The Group carries exploration and
evaluation assets in accordance with the
Group’s accounting policy for exploration
and evaluation assets as set out in Note 1
and Note 6 in the financial report.
The recoverability of exploration and
evaluation assets is a key audit matter due
to:
•
•
the significance of the total balance; and
the level of procedures undertaken to
evaluate 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
cash flow 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.
•
•
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 2022, 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.
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.
77
Elementos Limited Annual Report 30 June 2022
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
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 on pages 25 to 31 of the directors’ report for the
year ended 30 June 2022.
In our opinion, the Remuneration Report of Elementos Limited, for the year ended 30 June 2022,
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
A J Whyte
Director
Brisbane, 29 September 2022
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.
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Elementos Limited Annual Report 30 June 2022