Essential Metals Limited
ABN 44 103 423 981
Previously named:
Pioneer Resources Limited
ASX: ESS
72 Kings Park Road
West Perth WA 6005
www.essmetals.com.au
for a sustainable future
ABN 44 103 423 981
Previously named:
Pioneer Resources Limited
A N N U A L R E P O R T
Corporate Directory
DIRECTORS
Craig McGown
Independent Non-Executive Chairman
Timothy Spencer Managing Director
Paul Payne
Independent Non-Executive Director
Warren Hallam
Independent Non-Executive Director
COMPANY SECRETARY
Carl Travaglini
PRINCIPAL REGISTERED OFFICE
Ground floor, 72 Kings Park Road, West Perth, Western Australia 6005
PO Box 1787, West Perth, Western Australia 6872
Telephone: +61 8 9322 6974
Email: info@essmetals.com.au
Website: essmetals.com.au
AUDITOR
Deloitte Touche Tohmatsu
Brookfield Place, Tower 2, 123 St Georges Terrace, Perth, Western Australia, 6000
SHARE REGISTRY
Automic Group
Level 2, 267 St Georges Terrace, Perth, Western Australia, 6000
Telephone: 1300 288 664 or +61 2 9698 5414
Email: hello@automic.com.au
SECURITIES EXCHANGE LISTING
The Company’s shares are quoted on the Australian Securities Exchange.
The Home Exchange is Perth.
ASX CODE
ESS - ordinary shares
Essential Metals Limited (previously known as Pioneer Resources Limited) – 2020 Annual Report
Table of Contents
SECTION
Managing Director and Chairman Letters
Operational & Financial Review
Directors’ Report
Auditor’s Independence Declaration
Financial Report
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Additional Shareholder Information
Mineral Resource Statement
Tenement Register
PAGE
1
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89
Essential Metals Limited (previously known as Pioneer Resources Limited) – 2020 Annual Report
Managing Director and Chairman Letters
Letter from the Managing Director-
Letter from the Chairman-
It was an unsettling start to 2020 for the Company
and shareholders alike, as the rapid escalation of
the COVID-19 pandemic wreaked havoc on global
markets and company share prices. But our staff
remained healthy and our operations were
largely unaffected as we continued to deliver
progress on our work programs across the board.
The pandemic further strengthened our strategic
focus towards positioning the Company to be a
part of a mining sector that is essential in
achieving the global transition to cleaner energy
sources as stakeholders increasingly consider a
company’s environmental, social and governance
values and direction.
Shortly following the end of the 2020 financial
year we sought shareholder approval to change
our company name and rebrand to “Essential
Metals for a Sustainable Future” which we
believe better conveys our message and what we
stand for as a company.
As a result of valued feedback from our
shareholders, and to help strengthen the delivery
of this new message and strategy, we completed
a refresh of your Company’s senior leadership
team in the first quarter of this year. I am very
excited by the technical expertise of your
management team and look forward to reporting
an exciting year ahead.
I ask for your continued support and look forward
to keeping you updated on our progress.
Yours faithfully,
Craig McGown
Chairman of the Board of Directors
2020 saw the successful completion of the
Group’s first mining operation at the Sinclair
Caesium Mine with 20,000 tonnes of high and low
grade caesium ore mined and crushed. Sales and
delivery were completed to our offtake partners
over the past year which realised total sales in
excess of US$13.5 million. This impressive effort
has left the Company with an enviable cash
balance and zero debt at the end of the 2020
financial year.
Essential Metals is now well funded and, since
completing operations at the Sinclair Caesium
Mine, have continued to put that funding to work
on exploring our strategically located portfolio of
lithium, caesium, gold, nickel and cobalt assets,
focussed on our next opportunity to deliver
wealth to you, our shareholders.
Late last year we announced a maiden Inferred
Resource estimate for the Cade Deposit of 8.2
million tonnes at a grade of 1.23% lithium oxide.
Cade is part of what is now known as the Dome
North Lithium Project.
More recently, a review of historical data for our
Golden Ridge Project has identified a number of
exciting gold exploration targets. some of which
are considered drill-ready.
Our active Joint Venture partners, three leading
gold companies, Northern Star Resources, Novo
Resources and Black Cat Syndicate continue to
maintain or progress our free-carried gold project
interests. Essential Metals is free-carried until
‘decisions to mine’ are made providing us with
free optionality on these potential large gold
projects during a most favourable gold price
outlook.
My fellow Board Members and I are committed
to seeing your company continue to grow and
deliver returns to our shareholders.
look
forward to discussing our bright future with you
at our 2020 Annual General Meeting.
I
Yours faithfully,
Timothy Spencer
Managing Director
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
1
Operational & Financial Review
Key Group Assets
EXPLORATION PROJECTS (all located in Western Australia)
100% owned
& funded projects
Pioneer Dome
Lithium
Gold
Other metals
- Dome North
-
Sinclair Caesium Mine
Caesium
Juglah Dome
Blair – Golden Ridge
Polymetallic VHMS
targets
Nickel sulphides
(Blair Nickel Mine);
Lateritic cobalt-nickel
Stage
Advanced
Mined
Early stage
Advanced
Joint Venture
interests
Kangan
Group
retaining a
30% interest.
Acra
Group
retaining a
25% interest.
Balagundi
Group
retaining a
25% interest.
Gold
Stage
Structure
Early stage
Under a farmin & JV agreement, Novo Resources Corp
(TSXV.NVO) and Sumitomo Corporation will fully fund
gold exploration programmes until a decision to mine is
made.
Advanced
Northern Star Resources Limited (ASX:NST) has earned a
75% Project Interest and continues to manage and will
fully fund exploration programmes until approval of a
Mining Proposal by DMIRS.
Early stage
Under a farmin & JV agreement, Black Cat Syndicate
Limited (ASX:BC8) is earning a 75% interest in the Project
located at Bulong, near Kalgoorlie. Black Cat will then
fully fund gold exploration programmes until a decision
to mine is made.
JORC 2012 RESOURCE ESTIMATES
LITHIUM:
NICKEL:
Dome North Project
Blair Nickel Mine
8.2Mt @ 1.23% Li2O (lithium oxide)
222,710t at 2.92% Ni (sulphide)
The full Resource Statements are included on page 87 of this report.
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
2
Operational & Financial Review
Key Achievements & Looking Ahead
This financial year was one of completion, review and transition and the coming year will be one of focus
and growth.
Key Achievements…
⇒ CAESIUM: Successful completion of the sale and delivery of remaining stockpiled crushed caesium
bearing pollucite from the Sinclair Mine and delineation of an exploration target along strike from
the main deposit.
⇒ LITHIUM: The Dome North Lithium Project was advanced from a prospect identified through
geochemistry to completion from three drill campaigns which allowed the reporting of a maiden
JORC Resource Estimate in November 2019 of 8.2 million tonnes @ 1.23% Li2O. Metallurgical test
work was initiated on the Cade Deposit.
⇒ GOLD: An in-depth reappraisal of gold prospectivity within the Group’s project portfolio was
undertaken with the Golden Ridge and Juglah Dome Projects near Kalgoorlie being identified as the
highest priorities. Multiple field campaigns were undertaken, with mapping and surface sampling
of numerous targets completed.
⇒ NICKEL: Completion of a drill programme and downhole electromagnetic (DHEM) survey at the Leo
Dam Project located 2km north of the Blair Nickel Mine. Broad disseminated nickel sulphides were
intercepted in the drilling and the DHEM survey identified a conductor that requires drill testing.
Sinclair Caesium Mine
⇒ Exploration:
$3.9 million spent (84% of FY2020
expenditure related to operations and
exploration activities.
22,437 metres drilled.
11,402 samples submitted for assay.
~4,300 days spent by technical
employees/contract individuals on
exploration.
Project portfolio strategic review
conducted with five projects identified to
be surrendered/divested as non-core projects.
New Projects: Multiple potential gold and
lithium project acquisitions/joint ventures assessed.
⇒ Corporate:
Second consecutive year of recording a Net
Profit $1,361,000 (2019: $273,000)
New Management Team – Managing
Director/CEO (promoted from CFO
position), CFO/Company Secretary (new
appointee), Exploration Manager
(promoted from Senior Geologist position).
New Board Members – Two Non-Executive
Directors (appointed January 2020 and
August 2020), replacing two long-serving
Non-Executive Directors (resigned March 2020).
Revenue
$9.1M
Exploration
$3.9M
Cash at Bank
$4.4M
Debt
$Nil
New IT systems: Data sharing/storage; ERP; technical applications.
New Investor & public relations: Appointment of Read Corporate (February 2020).
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
3
Operational & Financial Review
Looking ahead…
The primary focus during the coming year will be on:
GOLD
⇒ Advancing the Group’s two gold exploration projects, namely the Juglah Dome and Golden Ridge
Projects in Western Australia through sole-funded exploration activities. The key objective in the
next 12 months will be discovering and delineating a gold deposit with a JORC Resource Estimate.
⇒ The Group also maintains exposure to gold via three minority stakes in joint ventures with leading
gold companies; Northern Star Resources Limited (Acra JV); Novo Resources Corp (Kangan
Farmin/JV); Black Cat Syndicate (Balagundi Farmin/JV).
LITHIUM
⇒ Continuing to grow lithium Resources at the Dome North Project and to finalise the first stage
metallurgical test work programme. This will then lead into preparation of high level studies to
determine which development option is most suitable for the quality and quantity of material that
will be sourced from the Dome North Project and various resource growth scenarios.
⇒ While the lithium market is currently subdued, the medium to long term fundamental outlook is
very positive and as the Group has an advanced lithium project and in-house expertise in exploring
for LCT pegmatites, it makes strategic sense for lithium to remain a focus.
CAESIUM
⇒ Exploration for extensions to the Sinclair Caesium Resource (depleted during Stage 1 mining
operations). A drill programme in September will test along strike from the northern edge of the
Stage 1 open pit and will also step approximately 800m further north to the PEG007 target. Surface
sampling and mapping identifies it as a pegmatite that shows similar fractionation and mineralogy
to the Sinclair Caesium Deposit with zones of quartz, microcline (potassium feldspar) and lithium
present at surface.
GROWTH OPPORTUNITIES
⇒ Assets and/or partners that are complementary to the above projects will be sought.
Secondary focus will be placed on the lower priority, non-core projects.
The Blair Nickel Mine and its surrounds, including the Leo Dam prospect, will be progressed by further work
on understanding structural and stratigraphical settings and reinterpreting the large volumes of historical
data covering the Project’s history from the 1960s. Activity at the early stage Fairwater Nickel Project,
southeast of Norseman, will consist of shallow auguring and soil sampling.
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
4
Directors’ Report
Your directors present their report on Essential Metals Limited (previously named Pioneer Resources Limited)
(“Company”) and the entities it controlled (“Group”) at the end of and during the year ended 30 June 2020.
DIRECTORS
The following persons were directors of Essential Metals Limited during the whole of the financial year and up to the
date of this report unless otherwise stated.
Current Directors:
Director
Craig McGown
Qualifications
Position
Appointment date
Resignation date
Length of service
Biography
Current ASX listed
directorships
Former ASX listed
directorships in the
last three years
Timothy Spencer
Qualifications
Position
Appointment date
Resignation date
Length of service
Biography
Current ASX listed
directorships
Former ASX listed
directorships in the
last three years
Details
B.Comm
Independent Non-Executive Chairman
13 June 2008
N/A
12 years 3 months
Mr McGown is an investment banker with over 35 years of experience consulting to
companies in Australia and internationally, particularly in the natural resources sector. He
holds a Bachelor of Commerce degree, has been admitted as a Fellow of the Institute of
Chartered Accountants and as an Affiliate of the Financial Services Institute of Australasia.
Mr McGown is an executive director of the corporate advisory business New Holland Capital
Pty Ltd and prior to that appointment was the chairman of DJ Carmichael Pty Limited. Mr
McGown also chairs the Harry Perkins Institute for Respiratory Health, a not-for-profit
organisation focused on prevention and treatment of all forms of respiratory disease. Mr
McGown brings to the Board a comprehensive knowledge of equity and debt markets and
financing of resource projects.
Mr McGown was Chair of the Audit & Risk Committee and a member of the Remuneration
Committee from the beginning of the financial year up until the committees were suspended
on 31 March 2020.
Sipa Resources Limited - 11 March 2015 to present
QMetco Limited (formerly Realm Resources Limited) - 31 May 2018 to present.
None
B.Econ, CPA
Managing Director
31 March 2020
N/A
6 months
Mr Spencer has over 25 years’ experience in the resources sector and precious metals
markets, working in various executive, accounting, treasury and finance roles including with
three mining companies as an executive director and/or Chief Financial Officer and Company
Secretary as well as with a large gold refining and trading enterprise. Mr Spencer joined the
Company in October 2017, and prior to his appointment as Managing Director has served in
the roles of Chief Executive Officer, Chief Financial Officer and Company Secretary.
None
None
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
5
Directors’ Report
Paul Payne
Qualifications
Position
Appointment date
Resignation date
Length of service
Biography
Current ASX listed
directorships
Former ASX listed
directorships in the
last three years
Warren Hallam
Qualifications
Position
Appointment date
Resignation date
Length of service
Biography
Current ASX listed
directorships
Former ASX listed
directorships in the
last three years
B App Sc (Geology) Grad Dip Min Ec
Independent Non-Executive Director
24 January 2020
N/A
9 months
Mr Payne is a Fellow of the Australian Institute of Geoscientists and an experienced geologist
with a strong technical background as well as senior executive and board experience across
a range of commodities in both Australia and internationally. Mr Payne’s experience includes
the role of founding Managing Director of Dacian Gold Limited where he was instrumental
in the major initial gold discoveries at its Mount Morgans project. Mr Payne is currently non-
executive director of a number of ASX listed resource companies and continues to provide
expert technical services to the resources industry through his consultancy PayneGeo.
Dreadnought Resources Limited – 21 December 2017 to present
Carnaby Resources Limited – 1 July 2016 to present
Auteco Resources Limited – 20 March 2018 to 18 January 2019
B. App Sci (Metallurgy), MSc Min. Econ
Independent Non-Executive Director
1 August 2020
N/A
2 months
Mr Hallam is a metallurgist, a mineral economist and holds a Graduate Diploma in Business.
He has over 35 years of technical and commercial experience across numerous commodities
and businesses within the resources industry including with top-tier mining companies
Western Mining Corporation, Metals X Limited, Westgold Resources Limited and is currently
Chairman of ASX listed Nelson Resources Limited.
Mr Hallam was a member of the senior leadership team at Metals X (both as Executive
Director and Managing Director) and played a critical role in the development of Metals X as
a leading global tin producer and top-10 gold producer. Mr Hallam also held a range of senior
operation, strategic and business development roles with diversified ASX-100 resource
company Western Mining Corporation.
Nelson Resources Limited – 1 February 2019 to present
Millennium Minerals Limited – 27 August 2019 to present
Westgold Resources Limited – 18 March 2020 to 2 February 2017
Metals X Limited – 1 March 2005 to 12 November 2018
Capricorn Metals Limited – 19 February 2019 to 6 March 2019
The remainder of this page is intentionally left blank.
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
6
Directors’ Report
Former Directors:
Director
David Crook
Qualifications
Position
Appointment date
Resignation date
Length of service
Biography
Allan Trench
Qualifications
Position
Appointment date
Resignation date
Length of service
Biography
Details
B.Sc, MAusIMM, MAIG, GAICD
Managing Director
11 August 2003
24 January 2020
16 years 5 months
Mr Crook is a geologist with over 35 years of experience in exploration, mining and
management, predominantly within Western Australia.
B.Sc (Hons), Ph.D, M.Sc (Min. Econ), MBA (Oxon), ARSM, AWASM, FAusIMM, FAICD
Independent Non-Executive Director
8 September 2003
31 March 2020
16 years 6 months
Dr Trench is a mineral economist, geophysicist and business management consultant.
Dr Trench was a member of the Audit & Risk Committee and of the Remuneration Committee
until they were suspended on 31 March 2020.
Thomas Wayne Spilsbury
Qualifications
Position
Appointment date
Resignation date
Length of service
Biography
B.Sc (Hons), M.Sc (Applied Geology), MAIG, GAICD
Independent Non-Executive Director
4 January 2010
31 March 2020
10 years 3 months
Mr Spilsbury is a geologist who received his B.Sc. (Honors Geology) in 1973 from the
University of British Columbia and his M.Sc. (Applied Geology) in 1982 from Queens
University in Ontario.
Mr Spilsbury was Chair of the Remuneration Committee and a member of the Audit & Risk
Committee until they were suspended on 31 March 2020.
The remainder of this page is intentionally left blank.
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
7
Directors’ Report
DIRECTORS’ SHAREHOLDINGS
On 7 July 2020 shareholders of Essential Metals Limited approved a capital consolidation, where the number of issued
securities and unissued equity incentives decreased using a fixed ratio of 10:1. The capital consolidation was
completed prior to the date of this report. As at the date of this report, the interests of the directors in the shares,
options and performance rights of Essential Metals Limited on a post consolidation basis were:
Director
Ordinary Shares
Unlisted Share
Options
Unlisted
Performance
Rights
C. McGown
T. Spencer
P. Payne
W. Hallam
1,247,620
360,000
201,158
-
1,000,002
1,800,000
600,000
-
-
873,637
-
-
REMUNERATION OF KEY MANAGEMENT PERSONNEL
Information about the remuneration of key management personnel is set out in the remuneration report section of
this directors’ report. The term ‘key management personnel’ refers to those persons having authority and
responsibility for planning, directing and controlling the activities of the Group, directly or indirectly, including any
director (whether executive or otherwise) of the Group.
SHARE OPTIONS GRANTED TO DIRECTORS AND SENIOR MANAGEMENT
During and since the end of the financial year, the following options and performance rights were granted to the
following directors and senior management of the Company and its controlled entities as part of their remuneration
(on a post-share consolidation basis):
Name
T. Spencer
C. McGown
P. Payne
C. Travaglini
S. Kerr
Unlisted share
options
1,500,000
1,000,000
600,000
-
-
DIRECTORS’ MEETINGS
Unlisted
performance
rights
873,637
-
-
100,000
204,546
Issuing entity
Essential Metals Limited
Essential Metals Limited
Essential Metals Limited
Essential Metals Limited
Essential Metals Limited
Number of ordinary
shares under
option/right
2,373,637
1,000,000
600,000
100,000
204,546
The following table sets out the number of directors’ meetings (including meetings of committees of directors) held
during the financial year and the number of meetings attended by each director (while they were a director or
committee member). During the financial year, eight board meetings, one remuneration committee meeting and one
audit committee meetings was held. The remuneration and audit committees were suspended on 31 March 2020.
Director
C McGown
T Spencer
P Payne
W Hallam
D Crook
A Trench
T Spilsbury
Board of Director’s
Meetings
Audit & Risk Committee
Meetings
Remuneration Committee
Meetings
Eligible
8
2
3
-
5
6
6
Attended
8
2
3
-
5
6
6
Eligible
1
-
-
-
-
1
1
Attended
1
-
-
-
-
1
1
Eligible
1
-
-
-
-
1
1
Attended
1
-
-
-
-
1
1
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
8
Directors’ Report
COMPANY SECRETARIES
Name
Carl Travaglini
Qualifications
Company Secretary
Appointment date
Resignation date
Length of service
Biography
Details
CA, ACG (CS)
31 March 2020
N/A
6 months
Mr Travaglini was appointed Company Secretary on 31 March 2020 and also holds the
position of Chief Financial Officer (appointed 25 February 2020). Mr Travaglini is a Chartered
Accountant and Chartered Company Secretary. Before joining the Company in 2020, Mr
Travaglini worked for a number of WA based lithium and gold producers and explorers. Prior
to that Mr Travaglini worked in assurance services for the mining resources sector and has
more than 12 years’ experience in financial reporting, corporate governance and risk
management.
Timothy Spencer
Qualifications
Company Secretary
Appointment date
Company Secretary
Resignation date
Length of service
B.Econ, CPA
20 November 2017
31 March 2020
2 years 4 months
PRINCIPAL ACTIVITIES
The principal activities of the Group during the financial year consisted of mineral exploration in Western Australia
and mineral exploration in Ontario, Canada.
There were no significant changes in the nature of the Group’s principal activities during the financial year. The
Company ceased mining activities at the Sinclair Mine in Western Australia in the financial year ended 30 June 2019.
RESULTS OF OPERATIONS
The consolidated net profit after income tax for the financial year was $1,361,000 (2019: $273,000) which included a
gross profit of $4,762,000 (2019: $3,788,000) and project exploration write-offs/write-downs of $518,000 (2019:
$413,000).
DIVIDENDS
The directors do not recommend the payment of a dividend and no amount has been paid or declared by way of a
dividend to the date of this report.
REVIEW OF OPERATIONS AND ACTIVITIES
During the financial year the Group incurred a total of $3,890,000 (2019: $1,477,000) on exploration and evaluation
expenditure. The Group’s exploration and evaluation efforts were focussed during the reporting period on:
•
•
•
•
The Dome North Lithium Project in Western Australia including announcing a maiden Mineral Resource
Estimate for the Cade Deposit (see ASX announcement 25 November 2019).
The Blair-Golden Ridge Gold & Nickel Project in Western Australia.
The Juglah Dome Gold Project located in Western Australia.
Joint venture partners, Northern Star Resources Ltd, Novo Resources Corp and Black Cat Syndicate Ltd, were
active in the Acra, Kangan and Balagundi joint ventures, respectively.
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
9
Directors’ Report
Exploration write-downs totalled $518,000 (2019: $413,000) which related to the write-down of capitalised costs on
tenements surrendered and tenements in application during the year.
Corporate and financial position
As at 30 June 2020 the Group had cash reserves of $4,391,000 (2019: $2,713,000). The movement in cash is detailed
in the Statement of Cash Flows on page 29 of this report.
Future developments, business strategies and prospects for future financial years
The Group is advancing the following projects:
(i)
Exploration activities at the Juglah Dome Project, prospective for gold and VHMS deposits, located
approximately 60km east-southeast of Kalgoorlie, WA;
(ii) Exploration activities at the Dome North Lithium Project located approximately 50km north of Norseman,
WA;
(iii) Exploration activities at the Sinclair Caesium Mine, located approximately 35km north of Norseman, WA;
(iv) Exploration activities at the Blair - Golden Ridge Project (gold, nickel sulphides and cobalt) located
approximately 30km east-southeast of Kalgoorlie.
The Group will seek to add value through exploration success, joint ventures and divestment and will continue to
evaluate new mineral opportunities, with particular focus on advanced projects with the potential to deliver early cash
flow opportunities.
Risk management
The Board is responsible for the oversight of the Group’s risk management and control framework. Responsibility for
control and risk management is delegated to the appropriate level of management with the Managing Director and
Chief Financial Officer/Company Secretary having ultimate responsibility to the Board for the risk management and
control framework.
Areas of significant business risk to the Group are highlighted in the Business Plan and the Corporate Risk Register
presented to the Board by the Managing Director and Chief Financial Officer/Company Secretary at each Board of
Directors meeting.
Arrangements put in place by the Board to monitor risk management include monthly reporting to the Board in respect
of operations and the financial position of the Group and ad hoc reporting as required by events which impact the
Group’s business.
CORPORATE GOVERNANCE
The Board is committed to achieving and demonstrating the highest standards of Corporate Governance. The Board
is responsible to its shareholders for the performance of the Company and seeks to communicate extensively with
shareholders. The Board believes that sound Corporate Governance practices will assist in the creation of shareholder
wealth and provide accountability. In accordance with ASX Listing Rule 4.10.3, the Company has elected to disclose its
Corporate Governance policies and its compliance with them on its website, rather than in the Annual Report.
Accordingly, information about the Company's Corporate Governance practices is set out on the Company's website
at https://essmetals.com.au/corporate-governance.php
EMPLOYEES
The Group employed five full-time employees as at 30 June 2020 (2019: five employees) and three casual employees
(2019: three casual employees).
ENVIRONMENTAL REGULATIONS
The Group holds various licences that regulate its activities in Australia and Canada. These licences include conditions
and regulations with respect to the rehabilitation of areas disturbed during the course of its exploration activities.
Rehabilitation costs relating to mining have been provided for in the accounts and are supported by an independent
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
10
Directors’ Report
third-party assessment. So far as the Directors are aware there have been no material breaches of the Group’s licence
conditions and all exploration activities comply with relevant environmental regulations.
CHANGES IN STATE OF AFFAIRS
During the current financial year the Group completed sales and delivery of all pollucite material from the Sinclair
Mine completing the caesium offtake agreement. The Group has continued its focus on exploration programmes on
areas within its project portfolio that have potential to deliver shareholder returns, including evaluation of a potential
stage 2 mining operation at the Sinclair Mine.
The World Health Organisation declared the outbreak of a novel coronavirus (COVID-19) as a pandemic in March 2020.
There is significant uncertainty around the breadth and duration of business disruptions related to COVID-19, which
has resulted in significant volatility in Australian and international markets. While the Group is not able to estimate
the length or severity of this pandemic, it currently anticipates only minimal ongoing disruptions to exploration
activities in relation to its projects in Western Australia and Canada. The Group completed a review of all state and
federal Government assistance measures available to assist small and medium enterprises in Australia during the
emergency period and was deemed eligible to receive the cash flow boost and Job Keeper payments.
There was no other significant change in the state of affairs of the Group during the financial year.
SUBSEQUENT EVENTS
On 7 July 2020 the following resolutions were approved at a General Meeting of shareholders:
• Change of Company name to Essential Metals Limited;
•
•
•
10 for 1 consolidation of shares, share options and performance rights in the Company;
Issue of 10,000,000 pre-consolidation share options to Craig McGown; and
Issue of 6,000,000 pre-consolidation share options to Paul Payne.
Mr Warren Hallam was appointed to the Board of Directors on 1 August 2020 as an independent non-executive
director. Mr Hallam is a metallurgist (B. App Sci (Metallurgy)), a mineral economist (MSc (Min. Econ)), holds a Graduate
Diploma in finance and has over 35 years of technical and commercial experience across numerous commodities and
businesses within the resources industry.
The Group recognises that COVID-19 is a rapidly evolving situation impacting us all. Whilst acknowledging the
disruption to global commerce, the Group finds itself well placed to continue to progress its projects and will continue
to monitor any impacts the pandemic may have on its projects. At this point in time the Group is experiencing minor
delays in project timelines as a result of the pandemic. These delays are not expected to be significant.
Other than the above, there has not been any matter or circumstance occurring subsequent to the end of the financial
year that has 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.
CORPORATE STRUCTURE
Essential Metals Limited (ACN 103 423 981) is a company limited by shares that was incorporated on 17 January 2003
and is domiciled in Australia. The Company has prepared this consolidated financial report including the entities it
controlled during the financial year. The controlled entities were:
• Western Copper Pty Ltd (ACN 114 863 928) (Australia)
• Golden Ridge North Kambalda Pty Ltd (ACN 159 539 983) (Australia)
•
Pioneer Canada Lithium Corp. (BC1082452) (British Columbia, Canada).
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
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Directors’ Report
CAPITAL STRUCTURE
Shares on issue
On 20 July 2020 the Company announced the completion of a capital consolidation on a basis that every 10 shares be
consolidated into 1 share, every 10 options be consolidated into 1 option and every 10 performance rights be
consolidated into 1 performance right, as approved at a General Meeting of shareholders held on 7 July 2020.
As at the date of this report, the Group had 150,876,427 fully paid ordinary shares on issue.
Shares under option or issued on exercise of options
Details of unissued shares or interests under option as at the date of this report are:
Issuing entity
Security type
Number
Essential Metals Limited
Essential Metals Limited
Essential Metals Limited
Essential Metals Limited
Essential Metals Limited
Essential Metals Limited
Essential Metals Limited
Essential Metals Limited
Essential Metals Limited
Essential Metals Limited
Essential Metals Limited
Essential Metals Limited
Essential Metals Limited
Essential Metals Limited
Share Option
Share Option
Share Option
Share Option
Share Option
Share Option
Share Option
Share Option
Share Option
Share Option
Share Option
Performance Right
Performance Right
Performance Right
223,334
223,334
223,334
894,446
894,446
500,000
500,000
500,000
533,334
533,334
533,334
819,548
500,000
100,000
Class of
shares
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Exercise
price of
option
$0.26
$0.50
$0.75
$0.35
$0.45
$0.25
$0.35
$0.45
$0.25
$0.35
$0.25
N/A
N/A
N/A
Expiry
date of
option/right
27-Oct-2020
27-Oct-2020
27-Oct-2020
30-Nov-2021
30-Nov-2022
31-Jan-2024
31-Jan-2024
31-Jan-2024
30-Jun-2024
30-Jun-2024
30-Jun-2024
14-Oct-2024
31-Jan-2024
31-Dec-2023
The holders of these share options and performance rights do not have the right, by virtue of the option or right, to
participate in any share issue or interest issue of the Company or of any other body corporate or registered scheme.
Share options exercised
During the financial year ended 30 June 2020 the Company announced that pursuant to its Incentive Performance
Rights Plan, the Board of Directors determined 1,333,600 performance rights held by Mr David Crook had vested as
at 30 June 2019 due to the respective performance hurdle being achieved and the remainder of the performance
rights totalling 2,666,400 lapsed due to the respective performance hurdles not being achieved. On 25 July 2019,
1,333,600 (pre-consolidation) fully paid ordinary shares in the Company were issued upon the conversion of unlisted
performance rights.
SHAREHOLDER RETURNS (post 10:1 consolidation basis)
Basic earnings per share
Diluted earnings per share
Share price – 30 June
2020
0.90c
0.90c
11c
20191
0.18c
0.18c
11c
Note:
1 – Comparative information has been presented on a post 10:1 share consolidation basis.
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
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Directors’ Report
INDEMNIFICATION OF OFFICERS AND AUDITORS
During the financial year, the Company paid a premium in respect of a contract insuring persons who held the positions
of director, company secretary, executive officer of any Group company and of any related body corporate during the
period against a liability incurred as such a director, secretary or executive officer to the extent permitted by the
Corporations Act. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the
premium.
During or since the end of the financial year the company has not indemnified or made a relevant agreement to
indemnify an auditor of the company or of any related body corporate against a liability incurred as such by an auditor.
In addition, the company has not paid, or agreed to pay, a premium in respect of a contract insuring against a liability
incurred by an auditor.
PROCEEDINGS OF BEHALF OF THE COMPANY
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on
behalf of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking
responsibility on behalf of the Company for all or part of those proceedings.
AUDITOR’S INDEPENDENCE & NON-ASSURANCE SERVICES
A copy of the Auditor’s Independence Declaration as required under section 307C of the Corporations Act 2001 is set
out on page 25. $28,000 was paid or payable to the Group’s auditors Deloitte Touche Tohmatsu, for non-assurance
services performed during the year ended 30 June 2020 (2019: $62,881). Refer to note 35 for further information.
ROUNDING OFF OF AMOUNTS
The Company is of a kind referred to in ASIC Corporations (Rounding in Financials/Directors’ Reports) Instrument
2016/191, dated 24 March 2016, and in accordance with that Corporations Instrument amounts in the directors’
report and the financial statements are rounded off to the nearest thousand dollars, unless otherwise stated.
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Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
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Directors’ Report
AUDITED REMUNERATION REPORT
CONTENTS
Item
A.
B.
C.
D.
E.
F.
G.
H.
I.
Introduction
Remuneration governance
Remuneration framework
Non-executive director remuneration
Executive director remuneration
Details of remuneration
Share-based compensation
Key terms of employment agreements with senior executives
Relationship between the remuneration policy and company performance
A.
Introduction
Page
14
14
15
17
17
20
22
23
24
This remuneration report, which forms part of the directors’ report and has been audited in accordance with section
300A of the Corporations Act 2001, sets out information about the remuneration of the Group’s key management
personnel for the financial year ended 30 June 2020.
Key management personnel
The term ‘key management personnel’ refers to those persons having authority and responsibility for planning,
directing and controlling the activities of the Group, directly or indirectly, including any director (whether executive
or otherwise) of the Group.
The directors and other key management personnel of the Group during or since the end of the financial year were:
Non-executive directors
Mr Craig McGown
Mr Paul Payne
Mr Warren Hallam
Mr Allan Trench
Mr Wayne Spilsbury
Executive officers
Mr Timothy Spencer Managing Director
Independent Non-executive Chairman
Independent Non-executive director
Independent Non-executive director
Independent Non-executive director
Independent Non-executive director
Chief Executive Officer
Chief Financial Officer
Company Secretary
Chief Financial Officer
Company Secretary
Exploration Manager
Managing Director
Mr Carl Travaglini
Mr Stuart Kerr
Mr David Crook
Appointed 24 Jan 2020
Appointed 1 Aug 2020
Resigned 31 Mar 2020
Resigned 31 Mar 2020
Appointed 31 Mar 2020
Appointed 24 Jan 2020, resigned 31 Mar 2020
Resigned 25 Feb 2020
Resigned 31 Mar 2020
Appointed 25 Feb 2020
Appointed 31 March 2020
Appointed 1 Feb 2020
Resigned 24 Jan 2020
Except as noted, the named persons held their current position for the whole of the financial year and since the end
of the financial year.
B. Remuneration governance
The Company had previously established a Remuneration Committee under a formal charter which comprised a
majority of independent directors. The Remuneration Committee was suspended on 31 March 2020 in line with a
reduction in the number of board members on that date to one executive and two non-executive directors.
Subsequent to the end of the current financial year Mr Warren Hallam was appointed to the Board as an additional
non-executive director on 1 August 2020.
The Board has considered the need to re-establish the Remuneration Committee. As at the date of this report the
board has decided to continue to assume the responsibilities of the Remuneration Committee with executive and
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
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Directors’ Report
other directors excusing themselves from matters of personal interest as required. The Board will continue to consider
the need to re-establish the Remuneration Committee in line with the Company’s stage of operations and level of
complexity.
The responsibilities of the Remuneration Committee assumed by the full Board of Directors on 31 March 2020 include
reviewing the remuneration arrangements for the executive and non-executive directors and key management
personnel (KMP) each year in accordance with the Company’s remuneration policy approved by the Board. This
includes an annual remuneration review and performance appraisal for the Managing Director and other executives,
including their base salary, short-term and long-term incentives, superannuation, termination payments and service
contracts.
Further information relating to the role of the Remuneration Committee can be found within the Corporate
Governance Report provided on the Company’s website.
C. Remuneration framework
The Board recognises that the Company’s performance and ultimate success of operational delivery depends very
much on its ability to attract and retain highly skilled, qualified and motivated people in an increasingly competitive
remuneration market. At the same time, remuneration practices must be transparent to shareholders and be fair and
competitive taking into account the nature and size of the organisation and its current stage of development.
The approach to remuneration has been structured with the following objectives:
To attract and retain a highly skilled executive team at a critical stage in the Company’s exploration for new
and development of existing project areas;
To link remuneration with performance, based on long-term objectives and shareholder return, as well as
critical short-term objectives which are aligned with the Company’s business strategy;
To set clear goals and reward for performance in a way which is sustainable, including in respect of health and
safety, environment and cost management objectives;
To be fair and competitive against the market;
To preserve cash where necessary for exploration and project development, by having the flexibility to attract,
reward or remunerate executives with an appropriate mix of equity-based incentives; and
To have flexibility in the mix of remuneration, including offering a balance of conservative long-term incentive
instruments such as options and performance rights to ensure executives are rewarded for their efforts, but
also share in the upside of the Company’s growth and are not adversely affected by tax consequences.
The remuneration framework provides a mix of fixed and variable “at risk” remuneration and a blend of short and
long-term incentives.
The remuneration for executives has three components:
Remuneration
elements
Purpose
Category
Definition of pay category
Fixed
Remuneration
Pay for meeting role
requirements
Fixed Pay
Pay linked to the present value or
market rate of the role.
Short-Term
Incentive (STI)
Incentive for the
achievement of annual
objectives
Short-Term
Incentive Pay
Long-Term
Incentive (LTI)
Incentive for achievement
of sustained business
growth (non-market
measures)
Long-Term
Incentive Pay
Pay for delivering the annual
operational objectives for Essential
Metals. STI pay is linked to the
achievement of short-term
performance goals.
Pay for delivering long-term business
sustainability for Essential Metals. LTI
pay is linked to the achievement of
long-term performance goals.
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Directors’ Report
These three components comprise each executive’s total annual remuneration. To link executive remuneration with
the Company’s performance, the Company’s policy is to endeavour to provide an appropriate portion of each
executive’s total remuneration as “at risk”. The following graph sets out the mix of remuneration for all KMP between
fixed, STIs and LITs for the 2020 financial year.
Annual General Meeting voting results
Voting results at the Company’s 2019 Annual General Meeting (AGM) included more than 25% of shareholders voting
against the Company’s 2019 Remuneration Report resulting in a first ‘strike’. Taking this into account along with other
factors, on 20 January 2020 the Company announced various changes to the board and senior executive team. The
restructured board has reviewed the remuneration policy to ensure that executive remuneration is consistent with
the expectations of our shareholders and linked to the performance and strategy of the Group.
The main objective is to ensure that all executive remuneration is directly and transparently linked with strategy and
performance. This includes aligning short-term incentives (STIs) and long-term incentives (LTIs) with achievement of
the Company’s short-term and long-term strategic objectives and longer-term shareholder return.
The Board is responsible for ensuring that the Group’s remuneration structures are aligned with the long-term
interests of the Company and its shareholders.
The Board assesses the appropriateness of the nature of the amount of remuneration of key management personnel
on an annual basis by reference to relevant employment market conditions with the overall objective of ensuring
maximum stakeholder benefit from the retention of a high quality board and executive team and that each staff
member’s remuneration package properly reflects that person’s duties and responsibilities. The Board may, however,
exercise its discretion in relation to approving incentive bonuses, options and performance rights.
The Company employed the services of remuneration consultants, Aon, during the prior financial year ended 30 June
2019 to benchmark the fixed and variable remuneration of key management personnel and directors but not to
provide recommendations and no other work was performed. The Company did not employ the services of a
remuneration consultant for the current financial year ended 30 June 2020.
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Directors’ Report
D. Non-Executive Director remuneration
The Board policy is to remunerate non-executive directors at market rates for comparable companies for time,
commitment and responsibilities. The Board determines payments to the non-executive directors and reviews their
remuneration annually, based on market practice, duties and accountability. Independent external advice is sought
when required. The maximum aggregate amount of fees that can be paid to non-executive directors is subject to
approval by shareholders at a General Meeting. The annual aggregate amount of remuneration paid to non-executive
directors was approved by shareholders on 19 November 2009 and is not to exceed $400,000 per annum.
Actual remuneration paid to the Company’s non-executive directors is disclosed in Section F below.
Director fees for non-executive directors are not linked to the performance of the Group. However, to align Directors’
interests with shareholder interests, the Directors are encouraged to hold shares in the Company and have on occasion
received unlisted share options.
Non-executive directors are not entitled to termination payments.
E. Executive Director remuneration
The Company aims to reward executives with a level of remuneration commensurate with their position and
responsibilities within the Company so as to:
• Reward executives for Company and individual performance against targets set by reference to appropriate
benchmarks;
• Reward executives in line with the strategic goals and performance of the Company; and
•
Ensure that total remuneration is competitive by market standards.
Remuneration packages contain the following key elements:
•
•
•
Fixed annual remuneration (including salary, leave entitlements, post-employment benefits, ancillary
benefits)
Short-term incentives (cash or equity based)
Long-term incentives (equity based)
Fixed remuneration
Executives receive a fixed base cash salary and other associated benefits. Executives also receive a superannuation
guarantee contribution required by Australian legislation which was 9.5% at 30 June 2020. No executives receive any
other retirement benefits.
Fixed remuneration of executives will be set by the Board each year and is based on market relativity and individual
performance. In setting fixed remuneration for executives, individual performance, skills, expertise and experience
are also taken into account to determine where the executive’s remuneration should sit within the market range.
Where appropriate, external remuneration consultants will be engaged to assist the Board to ensure that fixed
remuneration is set to be consistent with market practices for similar roles.
Fixed remuneration for executives will be reviewed annually to ensure each executive’s remuneration remains fair
and competitive. However, there is no guarantee that fixed remuneration will be increased in any service contracts
for executives.
Short-term incentives
Under the Company’s remuneration policy, all employees, including the Managing Director and other key
management personnel, were eligible to earn short-term bonuses (in cash or equity) upon achievement of significant
performance-based outcomes aligned with the Company’s strategic objectives at that time. These performance based
outcomes are considered to be an appropriate link between executive remuneration and the potential for creation of
shareholder wealth.
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Directors’ Report
The objective of the STI Plan is to provide the opportunity to earn a cash or equity bonus by rewarding those
employees who successfully achieve in the opinion of the Board the critical short-term objectives of the Company over
a twelve month period. Those short-term objectives for each employee are pre-determined and approved by the
Board as being aligned with the Company’s stated strategy to derive shareholder return.
STI’s will generally consist of annual bonuses (cash or equity) paid on the following basis:
(i) Performance will be measured over a 12 month period each year;
(ii) A maximum threshold will apply for each employee expressed as a % of their fixed remuneration depending
on their role and seniority;
(iii) STIs will be paid at the discretion of the Board, but must be demonstrably linked to performance against
critical pre-determined short-term goals of the Company; and
(iv) A combination of group and individual goals may apply for each employee with weightings for each goal
approved by the Board - the number of short-term goals per participant will take into account the employee’s
role, responsibility and seniority - greater weighting is placed on more important goals.
For an employee who resigns or is terminated for cause before the end of the financial year, no STI is awarded for that
year. Similarly, any deferred STI awards are forfeited, unless otherwise determined by the Board.
If an employee ceases employment during the performance period by reason of redundancy, ill health, death, or other
circumstances approved by the Board, the employee will be entitled to a pro-rata cash payment based on assessment
of performance up to the date of ceasing employment for that year and any deferred STI awards will be retained
(subject to Board discretion).
At the end of the financial year the Board assesses the actual performance of the Group and individuals against the
key performance indicators (“KPIs”) previously set. Any awarded incentives require Board approval and, if a director
is a recipient of incentive equity securities such as options or performance rights, shareholder approval is also
required. During the current year, the following performance conditions were developed by the Board for its short-
term incentives:
A. STIs awarded - hurdles met by 30 June 2020:
• Discovery of a suite of spodumene-pegmatites discovered at Dome North (Davy and Cade South) as
announced on 8 November 2019;
Initial Exploration Target identified for the Dome North Area as announced on 25 November 2019;
Initial Inferred Mineral Resource for the Cade Spodumene Deposit as announced on 25 November
2019; and
Joint Venture farm-out agreement signed with Black Cat Syndicate as announced on 25 July 2019.
•
•
•
B. STIs forfeited - hurdles not met by 30 June 2020:
•
•
•
•
Four hurdles linked to new Project generation;
Project advancement resulting in a ‘Reserve’;
Sale of a Project generating a financial benefit for the Company; and
Three hurdles in relation to signing new and binding sales agreements and completing first commercial
shipment.
KMP STIs
A – STIs awarded
B – STIs forfeited
Totals
Maximum
$38,563
$38,563
$77,126
Granted
$32,136
-
$32,136
%
83%
-
42%
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
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Directors’ Report
Long-term incentives
Long-term incentives are issued under the Company’s Employee Incentive Share Option and Incentive Performance
Rights Plans approved by shareholders at the AGM held on 21 November 2017. The purpose of issuing LTIs is to reward
the executive management team in a manner which aligns this element of remuneration with the creation of
shareholder wealth. As such LTIs are made to employees who are able to influence the generation of shareholder
wealth and thus have an impact on the Company’s performance. LTI grants to employees are delivered in the form of
performance rights. The terms of LTIs issued under the Company’s LTI plan are as follows:
(i)
The value and resulting number of LTIs issued is based on a maximum threshold applied to each employee
expressed as a percentage of their fixed remuneration depending on their role and seniority within the
Company;
(ii) Performance will be measured over a three year period from grant date; and
(iii) LTIs will be granted at the discretion of the Board, but must be demonstrably linked:
a. 50% of the granted performance rights will be subject to a vesting condition, whereby the Absolute
Total Shareholder Return (Absolute TSR) must exceed 25%.
b. 50% of the granted performance rights will be subject to a vesting condition based on Relative Total
Shareholder Return (Relative TSR), whereby the Company’s TSR must be greater than TSRs of 7 of
the 10 peer group of companies over the performance period. In FY2020, this vesting condition could
have been met if the Company’s TSR was negative providing it is ‘less negative’ than 70% of the peer
group. This condition has been amended for FY2021, such that this vesting condition can now only
be met if the Company’s absolute TSR is positive.
If an employee resigns or is terminated for cause before the end of the financial year, no LTIs will vest for that year.
Similarly, any vested and unexercised LTI awards are forfeited, unless otherwise determined by the Board.
If an employee ceases employment during the performance period by reason of redundancy, ill health, death, or other
circumstances approved by the Board, the employee will be entitled to receive any vested but unexercised LTIs as at
the date of ceasing employment, subject to Board discretion.
The treatment of vested and unexercised awards in all other circumstances will be determined by the Board with
reference to the circumstances of cessation.
The Company prohibits directors or employees from entering into arrangements to protect the value of any Company
shares, options or performance rights that the director or employee has become entitled to as part of his/her
remuneration package. This includes entering into contracts to hedge their exposure.
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Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
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Directors’ Report
F. Details of remuneration
Fixed remuneration
Variable remuneration
Base
salary
$
Consulting
fees
$
Other
$
Super-
annuation
$
ETPs
$
STIs
Cash
$
LTIs
Non-cash
$
Total
$
Performance
based
2020
Current Disclosed KMP
Non-Executive Directors
C McGown¹
P Payne²
Executive Director
T Spencer³
Senior Management
C Travaglini⁴
S Kerr⁵
Totals
82,500
23,886
-
4,200
9,734
4,213
-
2,269
265,978
-
12,014
27,163
68,980
75,000
516,344
-
-
4,200
4,147
937
31,045
6,553
8,283
44,268
Former Disclosed KMP
Non-Executive Directors
A Trench⁶
W Spilsbury⁷
Executive Director
D Crook⁸
Totals
41,095
41,095
315,471
397,661
-
-
-
-
7,307
7,307
3,904
3,904
9,313
23,927
29,970
37,778
145,000
145,000
-
-
-
-
-
-
-
-
-
-
(21,389)
-
70,845
34,569
0%
0%
19,948
146,662
471,764
35%
-
12,188
32,136
2,244
14,318
141,835
81,924
110,726
769,828
-
-
-
-
(12,639)
(12,639)
39,667
39,667
(37,333)
(62,611)
462,421
541,755
3%
24%
23%
0%
0%
0%
0%
Notes:
1 Mr McGown’s fees were paid to Resource Investment Capital Advisors Pty Ltd. Mr McGown’s ‘other benefits’ relate to an allocation of the cost
of Director’s and Officer’s insurance coverage during the period. Unlisted share options issued to Mr McGown in the financial year ended 30 June
2019 were cancelled in the current financial year resulting in a negative LTI share based payment expense.
2 Mr Payne was appointed on 24 January 2020. Mr Payne’s ‘other benefits’ relate to an allocation of the cost of Director’s and Officer’s insurance
coverage during the period.
3 Mr Spencer’s ‘other benefits’ relate to an allocation of the cost of Director’s and Officer’s insurance coverage during the period and the cost of
car parking at the Company’s premises. Mr Spencer accrued a cash bonus for the current financial year for successfully meeting KPIs as at 30 June
2020 as stated above. Mr Spencer received non-cash LTI benefits in the form of vested share options and performance rights with attached vesting
conditions upon his appointment as Chief Executive Officer on 24 January 2020. Mr Spencer’s base salary includes the provision for accrued
annual leave entitlements.
4 Mr Travaglini commenced on 25 February 2020. Mr Travaglini’s ‘other benefits’ relate to an allocation of the cost of Director’s and Officer’s
insurance coverage during the period and the cost of car parking at the Company’s premises. Mr Travaglini’s base salary includes the provision
for accrued annual leave entitlements.
5 Mr Kerr became a KMP on 1 February 2020. Mr Kerr’s ‘other benefits’ relate to the cost of car parking at the Company’s premises. Mr Kerr accrued
a cash bonus for the current financial year for successfully meeting KPIs as at 30 June 2020 as stated above. Mr Kerr’s base salary includes the
provision for accrued annual leave entitlements.
6 Mr Trench resigned on 31 March 2020. Mr Trench’s ‘other benefits’ relate to an allocation of the cost of Director’s and Officer’s insurance coverage
during the period. Unlisted share options issued to Mr Trench in the financial year ended 30 June 2019 were cancelled in the current financial
year resulting in a negative LTI share based payment expense. Mr Trench was paid $6,850 on each of 25 June 2020 and 25 July 2020 for the
provision of consultancy services to assist with the Group’s transition to a new management team and board of directors.
7 Mr Spilsbury resigned on 31 March 2020. Mr Spilsbury’s ‘other benefits’ relate to an allocation of the cost of Director’s and Officer’s insurance
coverage during the period. Unlisted share options issued to Mr Spilsbury in the financial year ended 30 June 2019 were cancelled in the current
financial year resulting in a negative LTI share based payment expense. Mr Spilsbury was paid $6,850 on each of 25 June 2020 and 25 July 2020
for the provision of consultancy services to assist with the Group’s transition to a new management team and board of directors.
8 Mr Crook’s employment ceased on 24 January 2020. Mr Crook’s ‘other benefits’ relate to an allocation of the cost of Director’s and Officer’s
insurance coverage during the period, the cost of car parking at the Company’s premises and the accrual of long service leave entitlements.
Unlisted share options issued to Mr Crook in the financial year ended 30 June 2019 were cancelled in the current financial year resulting in a
negative LTI share based payment expense. Mr Crook’s base salary includes the provision for accrued annual leave entitlements.
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
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Directors’ Report
F. Details of remuneration (continued)
Fixed remuneration
Variable remuneration
Base
salary
$
Consulting
fees
$
Other
$
Super-
annuation
$
ETPs
$
STIs
Cash
$
LTIs
Non-cash
$
Total
$
Performance
based
2019
Current Disclosed KMP
Non-Executive Directors
C McGown¹
Senior Management
T Spencer²
Totals
Former Disclosed KMP
Non-Executive Directors
A Trench
W Spilsbury³
Executive Director
D Crook⁴
Totals
76,875
277,333
354,208
51,370
53,756
301,581
406,707
-
-
-
-
-
-
-
-
-
1,424
1,424
22,620
22,620
-
-
4,880
2,494
83,101
83,101
25,000
32,374
-
-
-
-
-
-
-
-
79,444
156,319
51%
19,500
19,500
-
79,444
320,877
477,196
-
-
46,944
46,944
103,194
103,194
23,370
23,370
162,671
256,559
595,723
802,111
6%
21%
45%
45%
31%
35%
Notes:
1 Mr McGown’s fees were paid to Resource Investment Capital Advisors Pty Ltd.
2 Mr Spencer’s ‘other benefits’ relates to car parking at the Company premises.
Mr Spencer accrued a cash bonus for the 2019 financial year for the following key performance indicators that were met as at 30 June 2019 in
relation to the Sinclair Mine:
• Exceeding the targeted production quantity of caesium oxide at the Sinclair Mine; and
• Timing of receipt of cash from sales of crushed pollucite; and
• Incurring less than the mining expenditure target.
Mr Spencer’s base salary has been updated to include the provision for accrued annual leave entitlements.
3 Mr Spilsbury’s fees were paid to Geoduck Pty Ltd for the period 1 July 2018 to 31 December 2018 and directly to Mr Spilsbury as an individual for
the remainder of the financial year.
4 Mr Crook’s ‘other benefits’ relates to:
• Long service leave accrued of $54,080 during the current year.
• Fringe benefits (taxable value) of $29,021 in relation to a Company supplied vehicle that was used during the financial year ($4,169) and
then sold to Mr Crook in November 2018 for below market price in lieu of a cash bonus for financial year 2018 ($14,500), total permanent
disability insurance paid by the Company ($8,928) and car parking at the Company premises ($1,424).
Mr Crook accrued a cash bonus for the 2019 financial year for the same key performance indicators that were met as at 30 June 2019 in relation
to the Sinclair Mine as detailed above for Mr Spencer.
Mr Crook’s base salary has been updated to include the provision for accrued annual leave entitlements.
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
21
Directors’ Report
G. Share-based compensation
The following table sets out the type and number (on a pre-consolidation basis) of LTIs granted to the executive
management team during the year:
KMP
T Spencer
S Kerr
T Spencer
T Spencer
T Spencer
T Spencer
C Travaglini
Total
Class
Performance Rights
Performance Rights
Performance Rights
Share Options
Share Options
Share Options
Performance Rights
Grant Date
14-Oct-2019
14-Oct-2019
31-Jan-2020
31-Jan-2020
31-Jan-2020
31-Jan-2020
31-Mar-2020
Number
3,736,364
2,045,455
5,000,000
5,000,000
5,000,000
5,000,000
1,000,000
26,781,819
Exercise Price
N/A
N/A
N/A
$0.025
$0.035
$0.045
N/A
Expiry Date
14-Oct-2024
14-Oct-2024
31-Jan-2024
31-Jan-2024
31-Jan-2024
31-Jan-2024
31-Dec-2023
The movement in (pre-consolidation) equity instruments over shares for KMP in the current year was as follows:
Share Options
Balance at
1 July 2019
Granted as
compensation
Exercised
Expired or
cancelled
Balance at
30 June
2020
Balance
vested &
exercisable at
30 June 2020
Vested
during year
Current Disclosed KMP
C McGown
P Payne
T Spencer
S Kerr1
Former Disclosed KMP
D Crook2
A Trench3
W Spilsbury3
Totals
9,916,666
-
3,000,000
1,500,000
16,000,000
5,416,667
5,416,667
41,250,000
-
-
15,000,000
-
-
-
-
15,000,000
-
-
-
-
-
-
-
-
(3,055,555)
-
-
-
6,861,111
-
18,000,000
1,500,000
6,861,111
-
18,000,000
1,500,000
-
-
15,000,000
-
(5,333,333)
(1,805,556)
(1,805,556)
(12,000,000)
10,666,667
3,611,111
3,611,111
44,250,000
10,666,667
3,611,111
3,611,111
44,250,000
-
-
-
15,000,000
Notes:
1 Mr Kerr became a KMP on 1 February 2020.
2 Mr Crook ceased employment on 24 January 2020.
3 Mr Trench and Mr Spilsbury ceased employment on 31 March 2020.
Performance
Rights
Balance at
1 July 2019
Granted as
compensation
Exercised
Expired or
cancelled
Balance at
30 June 2020
Balance
vested at 30
June 2020
Vested
during year
Current Disclosed KMP
-
C McGown
-
P Payne
-
T Spencer
C Travaglini1
-
S Kerr2
-
Former Disclosed KMP
D Crook3
A Trench4
W Spilsbury4
Totals
4,000,000
-
-
4,000,000
-
-
8,736,364
1,000,000
2,045,455
-
-
-
-
-
-
-
-
-
-
-
-
-
11,781,819
(1,333,600)
-
-
(1,333,600)
(2,666,400)
-
-
(2,666,400)
-
-
8,736,364
1,000,000
2,045,455
-
-
-
11,781,819
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Notes:
1 Mr Travaglini commenced on 25 February 2020.
2 Mr Kerr became a KMP on 1 February 2020.
3 Mr Crook ceased employment on 24 January 2020.
4 Mr Trench and Mr Spilsbury ceased employment on 31 March 2020.
All share options and performance rights issued to key management personnel were made in accordance with the
provisions of the Group’s equity incentive plans.
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
22
Directors’ Report
Further details of the Group’s equity incentive plans and of share option and performance rights granted during the
2020 and 2019 financial years are contained in note 25 to the financial statements.
The number of (pre-consolidation) shares in the Company held during the current reporting period by each key
management personnel, including their related parties, are set out below:
Current Disclosed KMP
C McGown
P Payne1
T Spencer2
C Travaglini
S Kerr3
Former Disclosed KMP
D Crook4
A Trench5
W Spilsbury5
Totals
Balance at
1 July 2019
12,476,189
11,575
-
-
-
12,615,767
4,411,758
17,295,234
46,810,523
Acquired
during the year
Disposed
during the year
Balance at
30 June 2020
-
2,000,000
3,600,000
200,000
-
1,333,600
-
-
7,133,600
-
-
-
-
-
(7,423,842)
-
-
(7,423,842)
12,476,189
2,011,575
3,600,000
200,000
-
6,525,525
4,411,758
17,295,234
46,520,281
Notes:
1 Mr Payne’s shares are held under the nominee account Payne Geological Services Pty Ltd ATF . P Payne has a relevant
interest in Payne Geological Services Pty Ltd and is a beneficiary of the Payne Super Fund A/C. Mr Payne was appointed on 24 January 2020, his
opening balance of shares were held at this date and at 1 July 2019. Mr Payne’s shares that were acquired during the year were purchase on market.
2 Mr Spencer’s shares were purchase on market.
3 Mr Kerr became a KMP on 1 February 2020.
4 Mr Crook’s shares were acquired upon electing to convert vested performance rights. Mr Crook ceased employment on 24 January 2020.
5 Mr Trench and Mr Spilsbury ceased employment on 31 March 2020.
H. Key terms of employment agreements with senior executives
Element of remuneration
Fixed Remuneration
Summary of contractual terms
Refer to the above Remuneration table.
Contract duration
Indefinite subject to termination with or without cause
Notice by individual
Notice by Company
Termination of employment by
the Company (without cause)
Termination of employment by
the Company (with cause) or by
the individual
Managing Director – 3 months
Chief Financial Officer and Company Secretary – 2 months
Exploration Manager – 1 month
Managing Director:
With cause - immediate dismissal to 6 months depending on circumstances
Without cause - 6 months
Chief Financial Officer and Company Secretary:
With cause - immediate dismissal to 4 months depending on circumstances
Without cause - 4 months
Exploration Manager:
With cause - immediate dismissal to 1 month depending on circumstances
Without cause - 1 month
STI entitlement and LTI forfeiture is assessed by the Board
Any benefits due to the Managing Director Chief Financial Officer / Company
Secretary and Exploration Manager under the Company’s STI and LTI plans
except in the circumstance of a change in shareholding or control of the
Company which would render the benefit unable to be conferred under ASX
Listing Rule 10.18
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
23
Directors’ Report
I. Relationship between the remuneration policy and company performance
The Company’s remuneration policy is designed to promote superior performance and long-term commitment to the
Company. The main principles of the policy when considering remuneration are as follows:
•
•
•
Senior executives are motivated to pursue long-term growth and success of the Company within an
appropriate control framework;
interests of key leadership are aligned with the long-term interests of the Company’s shareholders; and
there is a clear correlation between performance and remuneration.
The table below sets out summary information about the Company’s earnings and movements in shareholder wealth
for the 5 years to 30 June 2020 on a post 10:1 share consolidation basis:
Revenue ($’000)
Net profit/(loss) before tax ($’000)
Net profit/(loss) after tax ($’000)
Net earnings/(loss) after tax per share (cents per share)
Share price at start of year (cents per share)
Share price at end of year (cents per share)
2020
9,127
1,361
1,361
0.90
11
11
2019
10,528
273
273
0.18
19
11
2018
243
(3,528)
(3,528)
(2.7)
17
19
2017
843
(2,523)
(2,523)
(2.4)
35
17
2016
583
(1,673)
(1,673)
(2.2)
16
35
END OF THE REMUNERATION REPORT
This report of the Directors incorporating the Remuneration Report is signed in accordance with a resolution of the
Board of Directors, pursuant to section 298(2)(a) of the Corporations Act 2001.
On behalf of the directors
Craig McGown
Chairman of the Board
Perth, Western Australia, 25 September 2020
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
24
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Tower 2
Brookfield Place
123 St Georges Terrace
Perth WA 6000
GPO Box A46
Perth WA 6837 Australia
Tel: +61 8 9365 7000
Fax: +61 8 9365 7001
www.deloitte.com.au
The Board of Directors
Essential Metals Limited
72 Kings Park Rd
WEST PERTH WA 600
25 September 2020
Dear Board Members
EEssential Metals Limited (Formerly known as Pioneer Resources Limited)
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following
declaration of independence to the directors of Essential Metals Limited.
As lead audit partner for the audit of the financial report of Essential Metals Limited for the financial
year ended 30 June 2020, I declare that to the best of my knowledge and belief, there have been no
contraventions of:
(i) The auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii) Any applicable code of professional conduct in relation to the audit.
Yours sincerely
DELOITTE TOUCHE TOHMATSU
Penelope Pink
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte Network.
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
For the year ended 30 June 2020
Notes
30 June 2020
$’000
30 June 2019
$’000
Revenue
Revenue from sale of goods
Costs from sale of goods - Direct
Gross profit
Selling costs
Other costs
Depreciation – Right-of-use assets
Depreciation – Plant, equipment and motor vehicles
Exploration expenditure expensed
Exploration and evaluation expenditure written off
Corporate and other expenses
Other income
Results from operating activities
Financial income
Financial expense
Net financing income/(expense)
Results from operating and financing activities
Profit before tax
Income tax
Profit for the year
6
7
19
20
17
9
8
11
Other comprehensive income/(loss)
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations
Items that will not be reclassified subsequently to profit or loss:
Changes in the fair value of financial assets
Other comprehensive income/(loss) for the year
16
Total comprehensive income for the year
9,127
(4,365)
4,762
(732)
(322)
(72)
(20)
(55)
(518)
(1,918)
210
(3,427)
1,335
57
(31)
26
1,361
1,361
-
1,361
(34)
219
185
1,546
10,528
(6,740)
3,788
(842)
(265)
-
(51)
-
(413)
(2,208)
421
(3,358)
430
46
(203)
(157)
273
273
-
273
75
(273)
(198)
75
Earnings per share
Basic and diluted net profit per share attributable to ordinary equity
holders
10
0.90c
0.18c
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction
with the accompanying notes.
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
26
Consolidated Statement of Financial Position
As at 30 June 2020
CURRENT ASSETS
Cash and cash equivalents
Inventories
Trade and other receivables
Investments
Prepayments
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Investments
Exploration and evaluation expenditure
Right-of-use assets
Plant, equipment and motor vehicles
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Provisions
Lease Liabilities
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Lease liabilities
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Accumulated losses
TOTAL EQUITY
Notes
30 June 2020
$’000
30 June 2019
$’000
13
14
15
16
16
17
19
20
21
22
23
23
24
27
28
4,391
-
397
568
14
5,370
-
13,666
275
210
14,151
2,713
4,295
76
-
114
7,198
306
10,393
-
112
10,811
19,521
18,009
651
752
64
1,467
225
225
1,100
806
-
1,906
-
-
1,692
1,906
17,829
16,102
41,184
489
(23,844)
17,829
41,184
207
(25,288)
16,102
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
27
Consolidated Statement of Changes in Equity
For the year ended 30 June 2020
Balance at 1 July 2018
Profit for the year
Other comprehensive income/(loss):
Fair value adjustment of financial assets
Exchange differences on foreign operations
Total comprehensive income/(loss)
Shares issued for cash (net of transaction costs)
Shares issued not for cash (net of transaction costs)
Options exercised
Director options issued
Transfer of lapsed options to retained earnings
Transfer of expired warrants in ILC to retained earnings
Balance at 30 June 2019
Balance at 1 July 2019
Profit for the year
Other comprehensive income/(loss):
Fair value adjustment of financial assets
Exchange differences on foreign operations
Total comprehensive income/(loss)
Share options and performance rights issued to employees
Transfer of lapsed options to accumulated losses
Balance at 30 June 2020
Contributed
equity
Share-based
payment
reserve
Investment
revaluation
reserve
$’000
$’000
$’000
Foreign
exchange
translation
reserve
$’000
Accumulated
losses
Total
equity
$’000
$’000
39,999
-
-
-
-
1,000
180
4
-
-
-
41,184
41,184
-
-
-
-
-
-
41,184
794
-
-
-
-
-
-
-
336
(822)
-
309
309
-
-
-
-
180
(84)
405
59
-
(268)
-
(268)
-
-
-
-
-
5
(209)
(209)
-
219
-
219
-
-
10
33
-
-
75
75
-
-
-
-
-
-
108
108
-
-
(34)
(34)
-
-
74
(26,378)
273
-
-
273
-
-
-
-
822
(5)
(25,288)
(25,288)
1,361
-
-
1,361
-
84
(23,843)
14,507
273
(268)
75
80
1,000
180
4
336
-
-
16,103
16,103
1,361
219
(34)
1,546
180
-
17,829
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
28
Consolidated Statement of Cash Flows
For the year ended 30 June 2020
Notes
30 June 2020
$’000
30 June 2019
$’000
Cash from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Export Market Development Grant government incentives received
Net cash from/(used in) operating activities
12
Investing activities
Payments for exploration and evaluation
R&D grants and other government incentives received
Payments for plant and equipment
Signing fee from farm out for Novo Joint Operation
Net cash from/(used in) investing activities
Financing activities
Repayment of lease liabilities
Proceeds from the issue of shares
Proceeds from the exercise of options
Proceeds from borrowings
Net cash from/(used in) financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Effect of foreign exchange rate changes
Cash and cash equivalents at the end of the year
13
8,956
(3,294)
48
-
5,710
(3,867)
102
(179)
-
(3,944)
(88)
-
-
-
(88)
1,678
2,713
-
4,391
3,751
(10,113)
56
15
(6,291)
(1,831)
370
(85)
200
(1,346)
-
1,000
4
6,573
7,577
(60)
2,772
2
2,713
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
29
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
CONTENTS
Note
1
2
3
4
Item
General information
Application of new and revised Australian Accounting Standards
Critical accounting judgements and key sources of estimation uncertainty
Summary of significant accounting policies
Performance for the period
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
Operating segments
Revenue
Cost of sales
Other income
Corporate and other expenses
Earnings per share
Income tax expense
Notes to the statement of cash flows
Assets
Cash and cash equivalents
Inventories
Trade and other receivables
Investments
Exploration and evaluation expenditure
Mine properties
Right-of-use assets
Plant, equipment and motor vehicles
Liabilities
Trade and other payables
Provisions
Lease liabilities
Equity
Contributed equity
Equity incentives
Share-based payments
Reserves
Accumulated losses
Financial Instruments
Group composition
Unrecognised items
Contingent liabilities
Commitments
Subsequent events
Other information
Related parties
Remuneration of auditors
Parent entity information
Page
31
32
38
39
55
56
56
56
57
57
58
59
60
60
60
61
61
62
62
63
65
65
66
66
67
68
70
70
71
75
75
75
76
77
78
78
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
30
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
1. GENERAL INFORMATION
Basis of preparation
The financial report covers the Group consisting of Essential Metals Limited and its subsidiaries.
The financial report consists of the financial statements, notes to the financial statements and the directors’
declaration.
The financial report is prepared and presented in Australian dollars.
Essential Metals Limited is a company limited by shares, incorporated and domiciled in Australia. Its registered office
and principal place of business are:
Ground Floor, 72 Kings Park Road
West Perth, Western Australia 6005
A description of the nature of the Group’s operations and its principal activities is included in the directors’ report,
which is not part of the financial report.
The financial statements and notes have been prepared on the basis of historical costs and do not take into account
changing money values except for investments which are carried at fair value through the fair value reserve and other
comprehensive income, or, except where stated, current valuations of non-current assets.
The financial report was authorised for issue, in accordance with a resolution of directors, on 25 September 2020. The
directors have the power to amend and reissue the financial report.
Statement of compliance
These financial statements are general purpose financial statements which have been prepared in accordance with
the Corporations Act 2001, Accounting Standards and other authoritative pronouncements issued by the Australian
Accounting Standards Board (AASB), and comply with other requirements of the law. The consolidated financial
statements of the Group also comply with International Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board (IASB).
The financial statements comprise the consolidated financial statements of the Group. For the purposes of preparing
the consolidated financial statements, the Company is a for-profit entity.
Basis of consolidation
Controlled entity
The consolidated financial statements comprise the financial statements of Essential Metals Limited and its
subsidiaries as at 30 June each year.
The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using
consistent accounting policies.
Control is achieved when the Company:
• has power over the investee;
•
• has the ability to use its power to affect its returns.
is exposed, or has rights, to variable returns from its involvement with the investee; and
The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are
changes to one or more of the three elements of control listed above.
In preparing the consolidated financial statements, all intercompany balances and transactions, income and expenses
and profit and losses resulting from intra-group transactions have been eliminated in full. The subsidiaries are fully
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
31
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
consolidated from the date on which control is transferred to the Group and ceases to be consolidated from the date
on which control is transferred out of the Group.
The acquisition of the subsidiaries has been accounted for using the purchase method of accounting. The purchase
method of accounting involves allocating the cost of the business combination to the fair value of the assets acquired
and the liabilities and contingent liabilities assumed at the date of acquisition. Accordingly, the consolidated financial
statements include the results of the subsidiary for the period from their acquisition.
Changes in the Group’s interests in subsidiaries that do not result in a loss of control are accounted for as equity
transactions. The carrying amount of the Group’s interests and the non-controlling interests are adjusted to reflect
the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-
controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in
equity and attributed to the owners of the Company.
When the Group loses control of a subsidiary, the gain or loss on disposal recognised in profit or loss is calculated as
the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any
retained interest and (ii) the previous carrying amount of the assets (including goodwill), less liabilities of the subsidiary
and any non-controlling interests. All amounts previously recognised in other comprehensive income in relation to
that subsidiary are accounted for as if the Group had directly disposed of the related assets or liabilities of the
subsidiary (i.e. reclassified to profit or loss or transferred to another category of equity as required/permitted by
applicable IFRS Standards). The fair value of any investment retained in the former subsidiary at the date when control
is lost is regarded as the fair value on initial recognition for subsequent accounting under
Presentation and functional currency and rounding
The functional and presentation currencies of these financial statements are both Australian Dollars ($). Foreign
operations are included in accordance with the policies set out in note 4.
The Company is a company of a kind referred to in ASIC Corporations (Rounding in Financials/Directors’ Reports)
Instrument 2016/191, dated 24 March 2016, and in accordance with that Corporations Instrument amounts in the
financial report are rounded off to the nearest thousand dollars, unless otherwise indicated.
2. APPLICATION OF NEW AND REVISED AUSTRALIAN ACCOUNTING STANDARDS
2.1 New and amended Accounting Standards that are effective for the current year
The Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting
Standards Board (AASB) that are relevant to its operations and effective for an accounting period that begins on or
after 1 July 2019.
New and revised Standards and amendments thereof and Interpretations effective for the current year that are
relevant to the Group include:
• AASB 16 Leases
AASB 2017-6 Amendments to Australian Accounting Standards – Prepayment Features with Negative
Compensation
AASB 2017-7 Amendments to Australian Accounting Standards – Long-term Interests in Associates and Joint
Ventures
• AASB 2018-1 Amendments to Australian Accounting Standards – Annual Improvements 2015–2017 Cycle
AASB 2018-2 Amendments to Australian Accounting Standards – Plan Amendment, Curtailment or Settlement
• AASB 2018-3 Amendments to Australian Accounting Standards – Reduced Disclosure Requirements
Interpretation 23 Uncertainty over Income Tax Treatments and AASB 2017-4 Amendments to Australian
Accounting Standards – Uncertainty over Income Tax Treatments
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
32
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
AASB 16 LEASES
In the current year, the Group has applied AASB 16 Leases, which is effective for annual periods that begin on or after
1 January 2019.
AASB 16 introduces new or amended requirements with respect to lease accounting. It introduces significant changes
to lessee accounting by removing the distinction between operating and finance lease and requiring the recognition
of a right-of-use asset and a lease liability at commencement for all leases, except for short-term leases and leases of
low value assets. In contrast to lessee accounting, the requirements for lessor accounting have remained largely
unchanged. The impact of the adoption of AASB 16 on the Group’s consolidated financial statements is described
below.
The date of initial application of AASB 16 for the Group is 1 July 2019.
The Group has applied AASB 16 using the modified retrospective approach, with no restatement of the comparative
information.
Impact of the new definition of a lease
The Group has made use of the practical expedient available on transition to AASB 16 not to reassess whether a
contract is or contains a lease. Accordingly, the definition of a lease in accordance with AASB 117 Leases and
Interpretation 4 Determining whether an Arrangement contains a Lease will continue to be applied to those contracts
entered or modified before 1 January 2019.
The change in definition of a lease mainly relates to the concept of control. AASB 16 determines whether a contract
contains a lease on the basis of whether the customer has the right to control the use of an identified asset for a
period of time in exchange for consideration. This is in contrast to the focus on 'risks and rewards' in AASB 117 and
Interpretation 4.
The Group applies the definition of a lease and related guidance set out in AASB 16 to all contracts entered into or
changed on or after 1 July 2019. In preparation for the first-time application of AASB 16, the Group has carried out an
implementation project. The project has shown that the new definition in AASB 16 will not significantly change the
scope of contracts that meet the definition of a lease for the Group.
Impact on lease accounting
Former operating leases
AASB 16 changes how the Group accounts for leases previously classified as operating leases under AASB 117, which
were off balance sheet.
Applying AASB 16, for all leases (except as noted below), the Group:
• Recognises right-of-use assets and lease liabilities in the consolidated statement of financial position, initially
measured at the present value of the future lease payments
• Recognises depreciation of right-of-use assets and interest on lease liabilities in profit or loss
•
Separates the total amount of cash paid into a principal portion (presented within financing activities) and
interest (presented within operating activities) in the consolidated statement of cash flows.
The application of AASB 16 to leases previously classified as operating leases under IASB 117 resulted in the recognition
of right-of-use assets of $346,000 and lease liabilities of $346,000. It also resulted in a decrease in administrative
expenses of $88,000, an increase in depreciation of $72,000 and an increase in interest expense of $31,000 in the
current year.
The recognition of a lease liability of $346,000 is consistent with the previously reported Lease commitment note from
2019 of $218,000.
Lease incentives (e.g. rent-free period) are recognised as part of the measurement of the right-of-use assets and lease
liabilities whereas under AASB 117 they resulted in the recognition of a lease incentive, amortised as a reduction of
rental expenses generally on a straight-line basis.
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
33
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
Under AASB 16, right-of-use assets are tested for impairment in accordance with AASB 136 Impairment of Assets.
For short-term leases (lease term of 12 months or less) and leases of low-value assets (such as tablet and personal
computers, small items of office furniture and telephones), the Group has opted to recognise a lease expense on a
straight-line basis as permitted by AASB 16. This expense is presented within ‘corporate and other expenses’ in profit
or loss.
Former finance leases
The main differences between AASB 16 and AASB 117 with respect to contracts formerly classified as finance leases
is the measurement of the residual value guarantees provided by the lessee to the lessor. AASB 16 requires that the
Group recognises as part of its lease liability only the amount expected to be payable under a residual value guarantee,
rather than the maximum amount guaranteed as required by AASB 117. This change did not have a material effect on
the Group’s consolidated financial statements.
2.2 Other pronouncements adopted for the first time in the current period
AASB 2017-7 Amendments to Australian Accounting Standards – Long-term Interests in Associates and Joint
Ventures
The Group has adopted the amendments to AASB 128 Investments in Associates and Joint Ventures for the first time
in the current year. The amendment clarifies that AASB 9 Financial Instruments, including its impairment
requirements, applies to other financial instruments in an associate or joint venture to which the equity method is not
applied. These include long-term interests that, in substance, form part of the entity’s net investment in an associate
or joint venture. The Group applies AASB 9 to such long-term interests before it applies AASB 128. In applying AASB
9, the Group does not take account of any adjustments to the carrying amount of long-term interests required by
AASB 128 (i.e., adjustments to the carrying amount of long-term interests arising from the allocation of losses of the
investee or assessment of impairment in accordance with AASB 128).
AASB 2018-1 Amendments to Australia Accounting Standards – Annual Improvements 2015-2017 Cycle
The Group has adopted the amendments included in AASB 2008-1 for the first time in the current year. The Standard
include amendments to four Standards:
• AASB 112 Income Taxes – The amendments clarify that the Group should recognise the income tax
consequences of dividends in profit or loss, other comprehensive income or equity according to where the
Group originally recognised the transactions that generated the distributable profits. This is the case
irrespective of whether different tax rates apply to distributed and undistributed profits.
• AASB 123 Borrowing Costs – The amendments clarify that if any specific borrowing remains outstanding after
the related asset is ready for its intended use or sale, that borrowing becomes part of the funds that an entity
borrows generally when calculating the capitalisation rate on general borrowings.
• AASB 3 Business Combinations – The amendments clarify that when the Group obtains control of a business
that is a joint operation, the Group applies the requirements for a business combination achieved in stages,
including remeasuring its previously held interest in the joint operation at fair value. The previously held
interest to be remeasured includes any unrecognised assets, liabilities and goodwill relating to the joint
operation
• AASB 11 Joint Arrangements - The amendments clarify that when a party that participates in, but does not
have joint control of, a joint operation that is a business obtains joint control of such a joint operation, the
Group does not remeasure its previously held interest in the joint operation.
Interpretation 23 Uncertainty over Income Tax Treatments
The Group has adopted Interpretation 23 Uncertainty over Income Tax Treatments for the first time in the current
year. Interpretation 23 sets out how to determine the accounting tax position when there is uncertainty over income
tax treatments. The Interpretation requires the Group to:
• Determine whether uncertain tax positions are assessed separately or as a group
• Assess whether it is probable that a tax authority will accept an uncertain tax treatment used, or proposed
to be used, by an entity in its income tax filings:
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
34
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
-
-
If yes, the Group should determine its accounting tax position consistently with the tax treatment
used or planned to be used in its income tax filings
If no, the Group should reflect the effect of uncertainty in determining its accounting tax position
using either the most likely amount or the expected value method.
The directors of the Company anticipate that the application of the interpretation will not have an impact on the
Group's consolidated financial statements, as many of the amendments either do not affect the Group’s existing
accounting policies, or apply to situations, transactions and events that the Group does not undertake.
2.3 New and revised Australian Accounting Standards and Interpretations on issue but not yet effective
Standard/amendment
AASB 2014-10 Amendments to Australian Accounting Standards – Sale or
Contribution of Assets between an Investor and its Associate or Joint Venture, AASB
2015-10 Amendments to Australian Accounting Standards – Effective Date of
Amendments to AASB 10 and AASB 128 and AASB 2017-5 Amendments to Australian
Accounting Standards – Effective Date of Amendments to AASB 10 and AASB 128
and Editorial Corrections
AASB 2018-6 Amendments to Australian Accounting Standards - Definition of a
Business
AASB 2018-7 Amendments to Australian Accounting Standards – Definition of
Material
AASB 2019-1 Amendments to Australian Accounting Standards – References to the
Conceptual Framework
AASB 2019-3 Amendments to Australian Accounting Standards – Interest Rate
Benchmark Reform
AASB 2019-5 Amendments to Australian Accounting Standards – Disclosure of the
Effect of New IFRS Standards Not Yet Issued in Australia
AASB 2020-1 Amendments to Australian Accounting Standards – Classification of
Liabilities as Current or Non-Current
AASB 2020-3 Amendments to Australian Accounting Standards – Annual
Improvements 2018-2020 and Other Amendments
AASB 2020-4 Amendments to Australian Accounting Standards – Covid-19-Related
Rent Concessions
Effective for annual
reporting periods
beginning on or after
1 January 2022
(Editorial corrections in
AASB 2017-5 applied from
1 January 2018)
1 January 2020
1 January 2020
1 January 2020
1 January 2020
1 January 2020
1 January 2022
1 January 2022
1 June 2020
In addition, at the date of authorisation of the financial statements the following IASB Standards and IFRS
Interpretations Committee Interpretations were on issue but not yet effective, but for which Australian equivalent
Standards and Interpretations have not yet been issued:
Standard/amendment
Amendment to IFRS 17
Extension of the Temporary Exemption from Applying IFRS 9 (Amendments to IFRS 4)
Effective for annual
reporting periods
beginning on or after
Defers the application of
IFRS 17 to 1 January 2023
Defers the application of
IFRS 9 to 1 January 2023
(eligible insurers only)
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
35
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
AASB 2014-10 Amendments to Australian Accounting Standards – Sale or Contribution of Assets between an
Investor and its Associate or Joint Venture, AASB 2015-10 Amendments to Australian Accounting Standards –
Effective Date of Amendments to AASB 10 and AASB 128 and AASB 2017-5 Amendments to Australian Accounting
Standards – Effective Date of Amendments to AASB 10 and AASB 128 and Editorial Corrections
The amendments to AASB 10 Consolidated Financial Statements and AASB 128 Investment in Associates and Joint
Ventures deal with situations where there is a sale or contribution of assets between an investor and its associate or
joint venture. Specifically, the amendments state that gains or losses resulting from the loss of control of a subsidiary
that does not contain a business in a transaction with an associate or a joint venture that is accounted for using the
equity method, are recognised in the parent’s profit or loss only to the extent of the unrelated investors’ interests in
that associate or joint venture. Similarly, gains and losses resulting from the remeasurement of investments retained
in any former subsidiary (that has become an associate or a joint venture that is accounted for using the equity
method) to fair value are recognised in the former parent’s profit or loss only to the extent of the unrelated investors’
interests in the new associate or joint venture.
The effective date of the amendments was amended by AASB 2015-10 and AASB 2017-5 and now applies for annual
reporting periods beginning on or after 1 January 2022 (however the editorial corrections in AASB 2017-5 apply for
annual reporting periods beginning on or after 1 January 2018). The directors of the Company do not anticipate that
the application of the Standard in the future will have an impact on the Group’s consolidated financial statements.
AASB 2018-6 Amendments to Australian Accounting Standards – Definition of a Business
Amends AASB 3 Business Combinations to clarify the definition of a business, with the objective of assisting entities
to determine whether a transaction should be accounted for as a business combination or as an asset acquisition.
The amendments:
• Clarify that to be considered a business, an acquired set of activities and assets must include, at a minimum,
an input and a substantive process that together significantly contribute to the ability to create outputs
• Remove the assessment of whether market participants are capable of replacing any missing inputs or
processes and continuing to produce outputs
• Add guidance and illustrative examples to help entities assess whether a substantive process has been
acquired
• Narrow the definitions of a business and of outputs by focusing on goods and services provided to customers
and by removing the reference to an ability to reduce costs
• Add an optional ‘concentration test’ that permits a simplified assessment of whether an acquired set of
activities and assets is not a business.
This Standard applies to annual reporting periods beginning on or after 1 January 2020. The directors of the Company
do not anticipate that the application of this Standard will have a material impact on the Group’s consolidated financial
statements, but may have an impact on the assessment and accounting for of future business combinations.
AASB 2018-7 Amendments to Australian Accounting Standards – Definition of Material
Makes amendments intended to address concerns that the wording in the definition of ‘material’ was different in the
Conceptual Framework for Financial Reporting, AASB 101 Presentation of Financial Statements and AASB 108
Accounting Policies, Changes in Accounting Estimates and Errors.
The amendments address these concerns by:
• Replacing the term ‘could influence’ with ‘could reasonably be expected to influence’
•
Including the concept of ‘obscuring information’ alongside the concepts of ‘omitting’ and ‘misstating’
information in the definition of material
• Clarifying that the users to which the definition refers are the primary users of general purpose financial
statements referred to in the Conceptual Framework
• Aligning the definition of material across Australian Accounting Standards and other publications.
This Standard applies to annual reporting periods beginning on or after 1 January 2020. The directors of the Company
do not anticipate that the application of this Standard will have a material impact on the Group’s consolidated financial
statements.
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
36
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
AASB 2019-1 Amendment to Australian Accounting Standards – References to the Conceptual Framework
Makes amendments to various Accounting Standards to reflect the issue of the revised Conceptual Framework for
Financial Reporting. This Standard updates references to, or quotations from, previous versions of the Framework
contained in many Accounting Standards.
This Amending Standard applies to for-profit sector entities that have public accountability and are required by
legislation to comply with Australian Accounting Standards and other for-profit entities that elect to apply the
Conceptual Framework, for annual reporting periods beginning on or after 1 January 2020. The directors of the
Company do not anticipate that the application of this Standard will have a material impact on the Group’s
consolidated financial statements.
AASB 2020-1 Amendments to Australian Accounting Standards – Classification of Liabilities as Current or Non-
current
Amends AASB 101 Presentation of Financial Statements to:
• Clarify that the classification of liabilities as current or non-current is based on rights that in existence at the
•
•
•
end of the reporting period
Specify that classification is unaffected by expectations about whether an entity will exercise its right to defer
settlement of a liability
Explain that rights are in existence if covenants are complied with at the end of the reporting period
Introduce a definition of ‘settlement’ to make clear that settlement refers to the transfer to the counterparty
of cash, equity instruments, other assets or services.
This Amending Standard applies to annual reporting periods beginning on or after 1 January 2022. The directors of the
Company do not anticipate that the application of this Standard will have a material impact on the Group’s
consolidated financial statements.
AASB 2020-3 Amendments to Australian Accounting Standards - Annual Improvements 2018–2020 and Other
Amendments
Amends numerous Standards to effect of number of minor changes, as set out below. The amendments apply to
annual reporting periods beginning on or after 1 January 2022 (apart from the amendments to AASB 16 which affect
the Illustrative Examples which accompanying but are not part of the Standard and so do not have an effective date).
Annual Improvements
The annual improvements amend the following standards:
• AASB 1 First-time Adoption of International Financial Reporting Standards to permit a subsidiary that applies
paragraph D16(a) of IFRS 1 to measure cumulative translation differences using the amounts reported by its
parent, based on the parent’s date of transition to IFRSs
• AASB 9 Financial Instruments to clarify the fees included in the ‘10 per cent’ test in paragraph B3.3.6 of AASB
9 in assessing whether to derecognise a financial liability, explaining that only fees paid or received between
the entity (the borrower) and the lender, including fees paid or received by either the entity or the lender on
the other’s behalf are included
• AASB 16 Leases to amend Illustrative Example 13 to remove the illustration of the reimbursement of
leasehold improvements by the lessor in order to resolve any potential confusion regarding the treatment of
lease incentives that might arise because of how lease incentives are illustrated in that example
• AASB 141 Agriculture to remove the requirement to exclude taxation cash flows when measuring the fair
value of a biological asset using a present value technique.
The directors of the Company anticipate that the application of the amendments will not have an impact on the
Group's consolidated financial statements, as many of the amendments either do not affect the Group’s existing
accounting policies, or apply to situations, transactions and events that the Group does not undertake.
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
37
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
Property, Plant and Equipment — Proceeds before Intended Use
The amendments to AASB 116 Property, Plant and Equipment to prohibit deducting from the cost of an item of
property, plant and equipment any proceeds from selling items produced while bringing that asset to the location and
condition necessary for it to be capable of operating in the manner intended by management. Instead, the proceeds
from selling such items, and the cost of producing those items, is recognised in profit or loss.
The directors of the Company do not anticipate that the application of this Standard will have a material impact on
the Group’s consolidated financial statements.
Onerous Contracts — Cost of Fulfilling a Contract
The amendments to AASB 137 Provisions, Contingent Liabilities and Contingent Assets to specify that the ‘cost of
fulfilling’ a contract comprises the ‘costs that relate directly to the contract’. Costs that relate directly to a contract
can either be incremental costs of fulfilling that contract (e.g. direct labour and materials) or an allocation of other
costs that relate directly to fulfilling contracts (e.g. the allocation of the depreciation charge for an item of property,
plant and equipment used in fulfilling the contract).
The directors of the Company anticipate that the application of the amendments may impact on the Group's
accounting policies in respect of the determination of when contracts are onerous, and the measurement of provision
for onerous contracts recognised. However, the directors have not assessed the financial effect of this change in
accounting policy.
AASB 2020-4 Amendments to Australian Accounting Standards – COVID-19 Related Rent Concessions
Amends AASB 16 Leases to provide practical relief to lessees in accounting for rent concessions arising as a result of
COVID-19, by including an additional practical expedient in the standard.
The practical expedient permits a lessee to elect not to assess whether a COVID-19-related rent concession is a lease
modification. A lessee that makes this election shall account for any change in lease payments resulting from the
COVID-19-related rent concession the same way it would account for the change applying AASB 16 if the change were
not a lease modification.
The practical expedient applies only to rent concessions occurring as a direct consequence of COVID-19 and only if all
of the following conditions are met:
•
The change in lease payments results in revised consideration for the lease that is substantially the same as,
or less than, the consideration for the lease immediately preceding the change
• Any reduction in lease payments affects only payments originally due on or before 30 June 2021 (a rent
concession would meet this condition if it results in reduced lease payments on or before 30 June 2021 and
increased lease payments that extend beyond 30 June 2021)
There is no substantive change to other terms and conditions of the lease.
•
The amendments apply to annual reporting periods beginning on or after 1 June 2020. The directors of the Company
do not anticipate that the amendments will have a material impact on the Group.
3.
CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
The preparation of a financial report in conformity with Australian Accounting Standards requires management or
directors to make judgements, estimates and assumptions that affect the application of policies and reported amounts
of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical
experience and various other factors that are believed to be reasonable under the circumstances, the results of which
form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are
reviewed on an ongoing basis. Revisions are recognised in the period in which the estimate is revised. These
accounting policies have been consistently applied by each entity in the Group.
In particular, information about significant areas of estimation uncertainty and critical judgements in applying
accounting policies that have the most significant effect on the amount recognised in the financial statements are
described in the following notes:
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
38
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
Capitalised Mineral Exploration
The accounting policy for exploration and evaluation expenditure is set out in Note 4.8. The application of this policy
necessarily requires management to make certain estimates and assumptions as to future events and circumstances,
in particular, the assessment of whether economic quantities of reserves have been identified. Any such estimates
and assumptions may change as new information becomes available. If, after having capitalised expenditure under
this policy, it is concluded that the Group is unlikely to recover the expenditure by future exploitation or sale, then the
relevant capitalised amount will be written off to profit and loss.
Mine rehabilitation and site restoration process
The Group assesses its mine rehabilitation and site restoration provision at each reporting date in accordance with
accounting policy note 4.15. Significant judgement is required in determining the provision for mine rehabilitation and
site restoration as there are many transactions and other factors that will affect the ultimate liability payable to
rehabilitate and restore the mine sites and related assets. Factors that will affect this liability include changes in
technology, price increases and changes in interest rates. When these factors change or become known in the future,
such differences will impact the site restoration provision and asset in the period in which they change or become
known.
Determination of ore reserves and mineral resources
The Group estimates its ore reserves and mineral resources based on information compiled by competent persons in
accordance with the Australian Code for Reporting of Mineral Resources and Ore Reserves December 2012 (the JORC
code). Resources determined in this way are used in the assessment of mine lives and for forecasting the timing of the
payment of restoration costs. When a change in estimated recoverable ore tonnes contained in proved and probable
ore reserves, and where applicable, resources, is made, amortisation and depreciation is accounted for prospectively.
Share-based payment transactions
The Group measures the cost of equity-settled transactions by reference to the fair value of the equity instruments at
the date at which they are granted. In the current year, the fair value was determined by the Company using a Black-
Scholes model or other appropriate valuation methods, using the assumptions detailed in Note 26.
Right-of-use assets and lease liabilities
Lease liabilities are discounted using an incremental borrowing rate. The incremental borrowing rate varies depending
on the nature of the leased asset. Lease liabilities have been calculated over the life of the lease term, contractual
extension options are considered within the calculation of the lease term.
Use of estimates
The Directors have considered a number of factors in regard to any forward-looking estimates. The use of estimates
is inherently uncertain and requires a significant level of judgement. Forward looking estimates have been used in the
preparation of the financial report in respect of the impairment of exploration assets and the preparation of the
financial report on a going concern basis.
Management and the Directors have concluded that appropriate assessments have been made with respect to the
use of forecasts in the preparation of the financial report.
4.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
4.1 Income tax
The income tax expense or benefit for the period is the tax payable on the current period’s taxable income based on
the income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences
between the tax bases of assets and liabilities and their carrying amounts in the financial statements, and to unused
tax losses.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when
the assets are recovered or liabilities are settled, based on those tax rates which are enacted. The relevant tax rates
are applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax
asset or liability. An exception is made for certain temporary differences arising from the initial recognition of an asset
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
39
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
or a liability. No deferred asset or liability is recognised in relation to those temporary differences if they arose in a
transaction, other than a business combination, that at the time of the transaction did not affect either accounting
profit or taxable profit or loss.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable
that future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax
bases of investments in controlled entities where the parent entity is able to control the timing of the reversal of the
temporary differences and it is probable that the differences will not reverse in the foreseeable future.
Current and future tax balances attributable to amounts recognised directly in equity are also recognised directly in
equity.
4.1.1 Australian Tax consolidation legislation
The Company and its wholly owned Australian controlled entities implemented the tax consolidation legislation as of
1 July 2014.
The head entity, Essential Metals Limited and the controlled entities in the tax consolidated group continue to account
for their own current and deferred tax amounts. The Group has applied the Group allocation approach in determining
the appropriate amount of current taxed and deferred taxes to allocate to the members of the tax consolidated group.
In addition to its own current and deferred tax amounts, the Company also recognises the current tax liabilities (or
assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled
entities in the tax consolidated group.
4.2 Revenue from contracts with customers
The Group recognises revenue from the sale of pollucite to an offtake partner (“customer”) under an offtake
agreement signed in June 2018, as varied. For all sales of pollucite, revenue is recognised when control has
transferred, being when the pollucite is transferred to the designated collection point at the Sinclair Mine
(“collection point”) in accordance with specified grade and volume requirements. Following notification to the
customer that the pollucite is ready for collection the customer has the responsibility for the pollucite including
transferring and loading the pollucite onto sea containers at the Esperance Port Facility for transportation. A
receivable is recognised by the Group following transfer to the collection point as this represents the point in time
at which the right to consideration becomes unconditional, as only the passage of time is required before payment
is due. Subsequent adjustments to the receivable are recorded once grade and volume requirements have been
verified by the customer.
All revenue is stated net of the amount of goods and services tax (GST).
4.3 Interest income
Interest income is recognised on a time proportionate basis that takes into account the effective yield on the financial
asset.
4.4 Cash and cash equivalents
Cash and short-term deposits in the statement of financial position comprise of cash at bank and on hand and short-
term deposits with an original maturity of 90 days or less.
For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as
defined above, which are readily convertible to cash on hand and which are used in the cash management function
on a day-to-day basis.
4.5 Inventories
Inventories are valued at the lower of cost and net realisable value. Costs, including an appropriate portion of fixed
and variable overhead expenses, are assigned to inventory on hand by the method most appropriate to each particular
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
40
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
class of inventory, with the majority being valued on a weighted average basis. The Group only included pollucite ore
as inventory as at the end of the comparative year.
Net realisable value represents the estimated selling price less all estimated costs of completion and costs necessary
to make the sale.
4.6 Property, plant and equipment – recognition and measurement
Each class of property, plant and equipment is carried at cost less, where applicable, any accumulated depreciation
and impairment losses.
Depreciation methods and useful lives are reviewed at each reporting date and adjusted if appropriate.
Property, plant and equipment is stated at cost less accumulated depreciation and any impairment in value. The
carrying values of plant and equipment are reviewed for impairment when events or changes in circumstances indicate
the carrying value may not be recoverable. For an asset that does not generate largely independent cash flows, the
recoverable amount is determined for the cash-generating unit to which the asset belongs. If any such indication exists
where the carrying values exceed the estimated recoverable amount, the assets or cash generating units are written
down to their recoverable amount.
Depreciation and amortisation
Depreciable non-current assets are depreciated over their expected economic life using the straight-line method.
Profits and losses on disposal of non-current assets are taken into account in determining the operating loss for the
year. The depreciation rate used for each class of assets is as follows:
Plant and equipment
•
• Motor vehicles
Software
•
20 - 33%
22.5%
40%
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are
expected to arise from the continued use of the asset. The gain or loss arising on the disposal or retirement of an asset
is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in
profit or loss.
4.7 Right-of-use (ROU) assets
An ROU asset is recognised at the commencement date of a lease. The ROU asset is measured at cost, which comprises
the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the
commencement date net of any lease incentives received, any initial direct costs incurred, and, except where included
in the cost of inventories, an estimate of costs expected to be incurred for dismantling and removing the underlying
asset, and restoring the site or asset.
ROU assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life
of the asset, whichever is the shorter. Where the Group expects to obtain ownership of the leased asset at the end of
the lease term, the depreciation is over its estimated useful life. ROU assets are subject to impairment or adjusted for
any remeasurement of lease liabilities.
The Group has elected not to recognise ROU assets and corresponding lease liabilities for short-term leases with terms
of twelve months or less and leases of low value assets. Lease payments on these assets are expensed to the profit or
loss as incurred.
Interest expenditure incurred in the current reporting period totalled $31,000. Short-term lease expenditure incurred
in the current reporting period totalled $66,000. There was no low-value lease expenditure incurred in the current
reporting period.
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
41
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
4.8 Exploration and evaluation expenditure
Mineral exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest
and is subject to impairment testing. These costs are carried forward only if they relate to an area of interest for which
rights of tenure are current and in respect of which:
•
•
such costs are expected to be recouped through the successful development and exploitation of the area of
interest, or alternatively by its sale; or
exploration and/or evaluation activities in the area have not reached a stage which permits a reasonable
assessment of the existence or otherwise of economically recoverable reserves and active or significant
operations in, or in relation to, the area of interest and those exploration and/or evaluation activities are
continuing.
In the event that an area of interest is abandoned or if the Directors consider the expenditure to be of reduced value,
accumulated costs carried forward are written off in the year in which that assessment is made. A regular review is
undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation
to that area of interest.
Where a mineral resource has been identified and where it is expected that future expenditures will be recovered by
future exploitation or sale, the impairment of the exploration and evaluation is written back and transferred to
development costs. Once 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.
Costs of site restoration and rehabilitation are recognised when the Group has a present obligation, the future sacrifice
of economic benefits is probable, and the amount of the provision can be reliably estimated.
Exploration and evaluation assets are assessed for impairment if:
i.
ii.
iii.
iv.
the period for which the entity has the right to explore in a specific area has expired during the period or will
expire in the near future, and is not expected to be renewed,
substantive expenditure on further exploration for and evaluation of mineral resources in a specific area is
neither budgeted nor planned,
exploration for and evaluation of mineral resources in a specific area have not led to the discovery of
commercially viable quantities of mineral resources and the Group has decided to discontinue such activities
in that specific area, or
sufficient data exists to indicate that, although development of a specific area is likely to proceed, the carrying
amount of the exploration and evaluation asset is unlikely to be recovered in full from successful
development or by sale (refer impairment accounting policy Note 4.11).
For the purpose of impairment testing, exploration and evaluation assets are allocated to cash-generating units to
which the exploration activity relates. The cash generating unit shall not be larger than the area of interest.
Once the technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are
demonstrable, exploration and evaluation assets attributable to that area of interest are first tested for impairment
and then re-classified from intangible assets to mining property and development assets within property, plant and
equipment.
Exploration related government grants
Government grants (such as the Research and Development Government grant) are not recognised until there is
reasonable assurance that the Company will comply with the conditions attaching to them and that the grants will be
received. Government grants that are receivable as compensation for expenses or losses already incurred or for the
purpose of giving immediate financial support to the Company with no future related costs are recognised in profit or
loss in the period in which they become receivable. This is offset against exploration expenditure incurred and
capitalised.
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
42
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
Any grants approved by the Government of Western Australian under the Exploration Incentive Scheme (“EIS”) Co-
Funded Industry Drilling Program are offset against exploration drilling expenditure incurred at the Group’s approved
designated project.
Farm-outs – exploration and evaluation phase
The Group accounts for the treatment of farm-out arrangements under AASB 6 Evaluation of Mineral Resources under
these arrangements:
The farmor will not capitalise any expenditure settled by the farmee;
•
• Any proceeds received that are not attributable to future expenditure are initially credited against the
•
carrying amount of any existing E&E asset; and
To the extent that the proceeds received from the farmee exceed the carrying amount of any E&E asset that
has already been capitalised by the farmor this excess is recognised as a gain in profit or loss.
4.9 Mine properties and amortisation of mine properties
Mine properties represent the accumulation of all exploration, evaluation and development expenditure incurred in
respect of areas of interest in which mining has commenced or in the process of commencing. When further
development expenditure is incurred in respect of mine property after the commencement of production, such
expenditure is carried forward as part of the mine property only when substantial future economic benefits are
thereby established, otherwise such expenditure is classified as cost of production.
Amortisation is provided on a unit of production of basis which results in a write off of the cost proportional to the
depletion of the proven and probably mineral reserves.
The net carrying value of each area of interest is reviewed regularly and to the extent to which this value exceeds its
recoverable amount, the excess is either fully provided against or written off in the financial year in which this is
determined.
4.10 Financial instruments
Financial assets and financial liabilities are recognised in the Group’s statement of financial position when the Group
becomes a party to the contractual provisions of the instrument.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly
attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and
financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial
assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the
acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in
profit or loss.
Financial assets
All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular
way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame
established by regulation or convention in the marketplace.
All recognised financial assets are measured subsequently in their entirety at either amortised cost or fair value,
depending on the classification of the financial assets.
Classification of financial assets
Debt instruments that meet the following conditions are measured subsequently at amortised cost:
the financial asset is held within a business model whose objective is to hold financial assets in order to collect
contractual cash flows; and
the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding.
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
43
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
Debt instruments that meet the following conditions are measured subsequently at fair value through other
comprehensive income (FVTOCI):
the financial asset is held within a business model whose objective is achieved by both collecting contractual
cash flows and selling the financial assets; and
the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding.
By default, all other financial assets are measured subsequently at fair value through profit or loss (FVTPL).
Despite the foregoing, the Group may make the following irrevocable election/designation at initial recognition of a
financial asset:
the Group may irrevocably elect to present subsequent changes in fair value of an equity investment in other
comprehensive income if certain criteria are met (see (iii) below); and
the Group may irrevocably designate a debt investment that meets the amortised cost or FVTOCI criteria as
measured at FVTPL if doing so eliminates or significantly reduces an accounting mismatch (see (iv) below).
(i) Amortised costs and effective interest method
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating
interest income over the relevant period.
For financial assets other than purchased or originated credit-impaired financial assets (i.e. assets that are credit-
impaired on initial recognition), the effective interest rate is the rate that exactly discounts estimated future cash
receipts (including all fees and points paid or received that form an integral part of the effective interest rate,
transaction costs and other premiums or discounts) excluding expected credit losses, through the expected life of the
debt instrument, or, where appropriate, a shorter period, to the gross carrying amount of the debt instrument on
initial recognition. For purchased or originated credit-impaired financial assets, a credit-adjusted effective interest
rate is calculated by discounting the estimated future cash flows, including expected credit losses, to the amortised
cost of the debt instrument on initial recognition.
The amortised cost of a financial asset is the amount at which the financial asset is measured at initial recognition
minus the principal repayments, plus the cumulative amortisation using the effective interest method of any
difference between that initial amount and the maturity amount, adjusted for any loss allowance. The gross carrying
amount of a financial asset is the amortised cost of a financial asset before adjusting for any loss allowance.
Interest income is recognised using the effective interest method for debt instruments measured subsequently at
amortised cost and at FVTOCI. For financial assets other than purchased or originated credit-impaired financial assets,
interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset,
except for financial assets that have subsequently become credit-impaired (see below). For financial assets that have
subsequently become credit-impaired, interest income is recognised by applying the effective interest rate to the
amortised cost of the financial asset. If, in subsequent reporting periods, the credit risk on the credit-impaired financial
instrument improves so that the financial asset is no longer credit-impaired, interest income is recognised by applying
the effective interest rate to the gross carrying amount of the financial asset.
For purchased or originated credit-impaired financial assets, the Group recognises interest income by applying the
credit-adjusted effective interest rate to the amortised cost of the financial asset from initial recognition. The
calculation does not revert to the gross basis even if the credit risk of the financial asset subsequently improves so
that the financial asset is no longer credit-impaired.
Interest income is recognised in profit or loss and is included in the 'finance income’ line item.
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
44
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
(ii) Debt instruments classified as at FVTOCI
The corporate bonds held by the Group are classified as at FVTOCI. Fair value is determined in the manner described
in note 29. The corporate bonds are initially measured at fair value plus transaction costs. Subsequently, changes in
the carrying amount of these corporate bonds as a result of foreign exchange gains and losses (see below), impairment
gains or losses (see below), and interest income calculated using the effective interest method (see (i) above) are
recognised in profit or loss. The amounts that are recognised in profit or loss are the same as the amounts that would
have been recognised in profit or loss if these corporate bonds had been measured at amortised cost. All other changes
in the carrying amount of these corporate bonds are recognised in other comprehensive income and accumulated
under the heading of investments revaluation reserve. When these corporate bonds are derecognised, the cumulative
gains or losses previously recognised in other comprehensive income are reclassified to profit or loss.
(iii) Equity instruments designated as at FVTOCI
On initial recognition, the Group may make an irrevocable election (on an instrument-by-instrument basis) to
designate investments in equity instruments as at FVTOCI. Designation at FVTOCI is not permitted if the equity
investment is held for trading or if it is contingent consideration recognised by an acquirer in a business combination.
A financial asset is held for trading if:
it has been acquired principally for the purpose of selling it in the near term; or
on initial recognition it is part of a portfolio of identified financial instruments that the Group manages together
and has evidence of a recent actual pattern of short-term profit-taking; or
it is a derivative (except for a derivative that is a financial guarantee contract or a designated and effective
hedging instrument).
Investments in equity instruments at FVTOCI are initially measured at fair value plus transaction costs. Subsequently,
they are measured at fair value with gains and losses arising from changes in fair value recognised in other
comprehensive income and accumulated in the investments revaluation reserve. The cumulative gain or loss is not
reclassified to profit or loss on disposal of the equity investments, instead, it is transferred to retained earnings.
Dividends on these investments in equity instruments are recognised in profit or loss in accordance with IFRS 9, unless
the dividends clearly represent a recovery of part of the cost of the investment. Dividends are included in the ‘finance
income’ line item in profit or loss.
The Group designated all investments in equity instruments that are not held for trading as at FVTOCI on initial
recognition (see note 16).
(iv) Financial assets at FVTPL
Financial assets that do not meet the criteria for being measured at amortised cost or FVTOCI (see (i) to (iii) above)
are measured at FVTPL. Specifically:
Investments in equity instruments are classified as at FVTPL, unless the Group designates an equity investment
that is neither held for trading nor a contingent consideration arising from a business combination as at FVTOCI
on initial recognition (see (iii) above).
Debt instruments that do not meet the amortised cost criteria or the FVTOCI criteria (see (i) and (ii) above) are
classified as at FVTPL. In addition, debt instruments that meet either the amortised cost criteria or the FVTOCI
criteria may be designated as at FVTPL upon initial recognition if such designation eliminates or significantly
reduces a measurement or recognition inconsistency (so called ‘accounting mismatch’) that would arise from
measuring assets or liabilities or recognising the gains and losses on them on different bases. The Group has
not designated any debt instruments as at FVTPL.
Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any fair value gains or
losses recognised in profit or loss. The net gain or loss recognised in profit or loss includes any dividend or interest
earned on the financial asset and is included in the ‘other gains and losses’ line item. Fair value is determined in the
manner described in note 29.
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
45
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
Foreign exchange gains and losses
The carrying amount of financial assets that are denominated in a foreign currency is determined in that foreign
currency and translated at the spot rate at the end of each reporting period. Specifically:
for financial assets measured at amortised cost that are not part of a designated hedging relationship, exchange
differences are recognised in profit or loss in the ‘other gains and losses’ line item;
for debt instruments measured at FVTOCI that are not part of a designated hedging relationship, exchange
differences on the amortised cost of the debt instrument are recognised in profit or loss. Other exchange
differences are recognised in other comprehensive income in the investments revaluation reserve;
for financial assets measured at FVTPL that are not part of a designated hedging relationship, exchange
differences are recognised in profit or loss; and
for equity instruments measured at FVTOCI, exchange differences are recognised in other comprehensive
income in the investments revaluation reserve.
Impairment of financial assets
The Group recognises a loss allowance for expected credit losses on investments in debt instruments that are
measured at amortised cost or at FVTOCI, lease receivables, trade receivables and contract assets, as well as on
financial guarantee contracts. The amount of expected credit losses is updated at each reporting date to reflect
changes in credit risk since initial recognition of the respective financial instrument.
The Group always recognises lifetime ECL (expected credit losses) for trade receivables, contract assets and lease
receivables. The expected credit losses on these financial assets are estimated using a provision matrix based on the
Group’s historical credit loss experience, adjusted for factors that are specific to the debtors, general economic
conditions and an assessment of both the current as well as the forecast direction of conditions at the reporting date,
including time value of money where appropriate.
For all other financial instruments, the Group recognises lifetime ECL when there has been a significant increase in
credit risk since initial recognition. However, if the credit risk on the financial instrument has not increased significantly
since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal to
12-month ECL.
Lifetime ECL represents the expected credit losses that will result from all possible default events over the expected
life of a financial instrument. In contrast, 12-month ECL represents the portion of lifetime ECL that is expected to result
from default events on a financial instrument that are possible within 12 months after the reporting date.
The Group recognises an impairment gain or loss in profit or loss for all financial instruments with a corresponding
adjustment to their carrying amount through a loss allowance account, except for investments in debt instruments
that are measured at FVTOCI, for which the loss allowance is recognised in other comprehensive income and
accumulated in the investment revaluation reserve, and does not reduce the carrying amount of the financial asset in
the statement of financial position.
Derecognition of financial assets
The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or
when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another
entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to
control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for
amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred
financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for
the proceeds received.
On derecognition of a financial asset measured at amortised cost, the difference between the asset’s carrying amount
and the sum of the consideration received and receivable is recognised in profit or loss. In addition, on derecognition
of an investment in a debt instrument classified as at FVTOCI, the cumulative gain or loss previously accumulated in
the investments revaluation reserve is reclassified to profit or loss.
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
46
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
In contrast, on derecognition of an investment in an equity instrument which the Group has elected on initial
recognition to measure at FVTOCI, the cumulative gain or loss previously accumulated in the investments revaluation
reserve is not reclassified to profit or loss, but is transferred to retained earnings.
Financial liabilities and equity
Classification as debt or equity
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance
of the contractual arrangements and the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of
its liabilities. Equity instruments issued by the Group are recognised at the proceeds received, net of direct issue costs.
Repurchase of the Company’s own equity instruments is recognised and deducted directly in equity. No gain or loss is
recognised in profit or loss on the purchase, sale, issue or cancellation of the Company’s own equity instruments.
Compound instruments
The component parts of convertible loan notes issued by the Group are classified separately as financial liabilities and
equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and
an equity instrument. A conversion option that will be settled by the exchange of a fixed amount of cash or another
financial asset for a fixed number of the Company’s own equity instruments is an equity instrument.
At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for
a similar non-convertible instrument. This amount is recorded as a liability on an amortised cost basis using the
effective interest method until extinguished upon conversion or at the instrument’s maturity date.
The conversion option classified as equity is determined by deducting the amount of the liability component from the
fair value of the compound instrument as a whole. This is recognised and included in equity, net of income tax effects,
and is not subsequently remeasured. In addition, the conversion option classified as equity will remain in equity until
the conversion option is exercised, in which case, the balance recognised in equity will be transferred to a reserve.
Where the conversion option remains unexercised at the maturity date of the convertible loan note, the balance
recognised in equity will be transferred to accumulated losses. No gain or loss is recognised in profit or loss upon
conversion or expiration of the conversion option.
Transaction costs that relate to the issue of the convertible loan notes are allocated to the liability and equity
components in proportion to the allocation of the gross proceeds. Transaction costs relating to the equity component
are recognised directly in equity. Transaction costs relating to the liability component are included in the carrying
amount of the liability component and are amortised over the lives of the convertible loan notes using the effective
interest method.
Financial liabilities
All financial liabilities are measured subsequently at amortised cost using the effective interest method or at FVTPL.
However, financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when
the continuing involvement approach applies, and financial guarantee contracts issued by the Group, are measured
in accordance with the specific accounting policies set out below.
Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the financial liability is (i) contingent consideration of an acquirer in
a business combination, (ii) held for trading or (iii) designated as at FVTPL.
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
47
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
A financial liability is classified as held for trading if:
it has been acquired principally for the purpose of repurchasing it in the near term; or
on initial recognition it is part of a portfolio of identified financial instruments that the Group manages together
and has a recent actual pattern of short-term profit-taking; or
it is a derivative, except for a derivative that is a financial guarantee contract or a designated and effective
hedging instrument.
A financial liability other than a financial liability held for trading or contingent consideration of an acquirer in a
business combination may be designated as at FVTPL upon initial recognition if:
such designation eliminates or significantly reduces a measurement or recognition inconsistency that would
otherwise arise; or
the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed
and its performance is evaluated on a fair value basis, in accordance with the Group’s documented risk
management or investment strategy, and information about the grouping is provided internally on that basis;
or
it forms part of a contract containing one or more embedded derivatives, and IFRS 9 permits the entire
combined contract to be designated as at FVTPL.
Financial liabilities at FVTPL are measured at fair value, with any gains or losses arising on changes in fair value
recognised in profit or loss to the extent that they are not part of a designated hedging relationship. The net gain or
loss recognised in profit or loss incorporates any interest paid on the financial liability and is included in the profit or
loss.
However, for financial liabilities that are designated as at FVTPL, the amount of change in the fair value of the financial
liability that is attributable to changes in the credit risk of that liability is recognised in other comprehensive income,
unless the recognition of the effects of changes in the liability’s credit risk in other comprehensive income would
create or enlarge an accounting mismatch in profit or loss. The remaining amount of change in the fair value of liability
is recognised in profit or loss. Changes in fair value attributable to a financial liability’s credit risk that are recognised
in other comprehensive income are not subsequently reclassified to profit or loss; instead, they are transferred to
retained earnings upon derecognition of the financial liability.
Gains or losses on financial guarantee contracts issued by the Group that are designated by the Group as at FVTPL are
recognised in profit or loss.
Fair value is determined in the manner described in note 29.
Financial liabilities measured subsequently at amortised cost
Financial liabilities that are not (i) contingent consideration of an acquirer in a business combination, (ii) held for
trading, or (iii) designated as at FVTPL, are measured subsequently at amortised cost using the effective interest
method.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating
interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future
cash payments (including all fees and points paid or received that form an integral part of the effective interest rate,
transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where
appropriate) a shorter period, to the amortised cost of a financial liability.
Financial guarantee contract liabilities
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the
holder for a loss it incurs because a specified debtor fails to make payments when due in accordance with the terms
of a debt instrument.
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
48
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
Financial guarantee contract liabilities are measured initially at their fair values and, if not designated as at FVTPL and
do not arise from a transfer of an asset, are measured subsequently at the higher of:
the amount of the loss allowance determined in accordance with IFRS 9 (see financial assets above); and
the amount recognised initially less, where appropriate, cumulative amortisation recognised in accordance
with the revenue recognition policies set out above.
Foreign exchange gains and losses
For financial liabilities that are denominated in a foreign currency and are measured at amortised cost at the end of
each reporting period, the foreign exchange gains and losses are determined based on the amortised cost of the
instruments. These foreign exchange gains and losses are recognised in the profit or loss for financial liabilities that
are not part of a designated hedging relationship. For those which are designated as a hedging instrument for a hedge
of foreign currency risk, foreign exchange gains and losses are recognised in other comprehensive income and
accumulated in a separate component of equity.
The fair value of financial liabilities denominated in a foreign currency is determined in that foreign currency and
translated at the spot rate at the end of the reporting period. For financial liabilities that are measured as at FVTPL,
the foreign exchange component forms part of the fair value gains or losses and is recognised in profit or loss for
financial liabilities that are not part of a designated hedging relationship.
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or
have expired. The difference between the carrying amount of the financial liability derecognised and the consideration
paid and payable is recognised in profit or loss.
When the Group exchanges with the existing lender one debt instrument into another one with the substantially
different terms, such exchange is accounted for as an extinguishment of the original financial liability and the
recognition of a new financial liability. Similarly, the Group accounts for substantial modification of terms of an existing
liability or part of it as an extinguishment of the original financial liability and the recognition of a new liability. It is
assumed that the terms are substantially different if the discounted present value of the cash flows under the new
terms, including any fees paid net of any fees received and discounted using the original effective rate is at least 10
per cent different from the discounted present value of the remaining cash flows of the original financial liability. If
the modification is not substantial, the difference between: (i) the carrying amount of the liability before the
modification; and (ii) the present value of the cash flows after modification is recognised in profit or loss as the
modification gain or loss within other gains and losses.
Derivative financial instruments
The Group may enter into a variety of derivative financial instruments to manage its exposure to interest rate and
foreign exchange rate risks, including foreign exchange forward contracts, options and interest rate swaps.
Derivatives are recognised initially at fair value at the date a derivative contract is entered into and are subsequently
remeasured to their fair value at each reporting date. The resulting gain or loss is recognised in profit or loss
immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of
the recognition in profit or loss depends on the nature of the hedge relationship.
A derivative with a positive fair value is recognised as a financial asset whereas a derivative with a negative fair value
is recognised as a financial liability. Derivatives are not offset in the financial statements unless the Group has both a
legally enforceable right and intention to offset. A derivative is presented as a non-current asset or a non-current
liability if the remaining maturity of the instrument is more than 12 months and it is not due to be realised or settled
within 12 months. Other derivatives are presented as current assets or current liabilities.
Embedded derivatives
An embedded derivative is a component of a hybrid contract that also includes a non-derivative host – with the effect
that some of the cash flows of the combined instrument vary in a way similar to a stand-alone derivative.
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
49
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
Derivatives embedded in hybrid contracts with a financial asset host within the scope of IFRS 9 are not separated. The
entire hybrid contract is classified and subsequently measured as either amortised cost or fair value as appropriate.
Derivatives embedded in hybrid contracts with hosts that are not financial assets within the scope of IFRS 9 (e.g.
financial liabilities) are treated as separate derivatives when they meet the definition of a derivative, their risks and
characteristics are not closely related to those of the host contracts and the host contracts are not measured at FVTPL.
If the hybrid contract is a quoted financial liability, instead of separating the embedded derivative, the Group generally
designates the whole hybrid contract at FVTPL.
An embedded derivative is presented as a non-current asset or non-current liability if the remaining maturity of the
hybrid instrument to which the embedded derivative relates is more than 12 months and is not expected to be realised
or settled within 12 months.
4.11 Impairment of assets
Non-financial assets
The carrying amounts of the Group’s non-financial assets, other than deferred tax assets, are reviewed at each
reporting date to determine whether there is any indication of impairment. If any such indication exists, then the
asset’s recoverable amount is estimated.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs
to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest
group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of
other assets or groups of assets (the “cash-generating unit” or “CGU”).
The Group’s corporate assets do not generate separate cash inflows. If there is an indication that a corporate asset
may be impaired, then the recoverable amount is determined for the CGU to which the corporate asset belongs.
An impairment loss is recognised if the carrying amount of an asset or its CGU exceeds its estimated recoverable
amount. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are
allocated to the carrying amounts of the assets in the unit (group of units) on a pro rata basis.
Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has
decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to
determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount
does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no
impairment loss had been recognised.
4.12 Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of goods and services tax (“GST”), except where the
amount of GST incurred is not recoverable from the taxation authority. In these circumstances, the GST is recognised
as part of the cost of acquisition of the asset or as part of an item of the expense.
Receivables and payables are stated with the amount of GST included. GST incurred is claimed from the taxation
authority when a valid tax invoice is provided. The net amount of GST recoverable from, or payable to, the ATO is
included as a current asset or liability in the statement of financial position.
Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows arising
from investing and financing activities which are recoverable from, or payable to, the taxation authority are classified
as operating cash flows.
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
50
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
4.13 Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year
and which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.
4.14 Employee entitlements
A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave and sick leave
in the period the related service is rendered at the undiscounted amount of the benefits expected to be paid in
exchange for that service.
Liabilities recognised in respect of short-term employee benefits are measured at the undiscounted amount of the
benefits expected to be paid in exchange for the related service.
Liabilities recognised in respect of other long-term employee benefits are measured at the present value of the
estimated future cash outflows expected to be made by the Group in respect of services provided by employees up
to the reporting date.
4.15 Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event,
it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and
a reliable estimate can be made of the amount of the obligation.
Provision for site restoration and rehabilitation
In accordance with the Group’s environmental policy and applicable legal requirements, a provision for site restoration
and rehabilitation in respect of disturbed land is recognised when the land is disturbed.
The provision is the best estimate of the present value of the expenditure required to settle the restoration and
rehabilitation obligation at the reporting date, based on current legal requirements and technology. Future restoration
and rehabilitation costs are reviewed at least annually and any changes are reflected in the present value of the
restoration and rehabilitation provision at the end of the reporting period. The unwinding of the effect of discounting
on the provision is recognised as a finance cost.
4.16 Contributed equity
Issued capital is recognised as the fair value of the consideration received by the Company. Any transaction costs
arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds received.
4.17 Leases
The Group has applied IFRS 16 using the modified retrospective approach and therefore comparative information has
not been restated and is presented under IAS 17. The details of accounting policies under both IAS 17 and IFRS 16
are presented separately below.
Current period lease liabilities relate to the Company’s registered office premises in Perth, Western Australia. The
Perth office operating lease is for a prescribed period expiring on 30 April 2021. During the term of the operating
lease the rent is reviewed annually on each successive anniversary date. The annual lease is currently $88,000.
Policies applicable from 1 January 2019
The Group as a lessee
The Group assesses whether a contract is or contains a lease, at inception of the contract. The Group recognises a
right-of-use (ROU) asset and a corresponding lease liability with respect to all lease arrangements in which it is the
lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value
assets (such as tablets and personal computers, small items of office furniture and telephones). For these leases, the
Group recognises the lease payments as an operating expense on a straight-line basis over the term of the lease unless
another systematic basis is more representative of the time pattern in which economic benefits from the leased assets
are consumed.
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
51
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the
lessee uses its incremental borrowing rate.
Lease payments included in the measurement of the lease liability comprise:
Fixed lease payments (including in-substance fixed payments), less any lease incentives receivable;
Variable lease payments that depend on an index or rate, initially measured using the index or rate at the
commencement date;
The amount expected to be payable by the lessee under residual value guarantees;
The exercise price of purchase options, if the lessee is reasonably certain to exercise the options; and
Payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to
terminate the lease.
The lease liability is presented as a separate line in the consolidated statement of financial position.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability
(using the effective interest method) and by reducing the carrying amount to reflect the lease payments made.
The Group remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use asset)
whenever:
The lease term has changed or there is a significant event or change in circumstances resulting in a change in
the assessment of exercise of a purchase option, in which case the lease liability is remeasured by discounting
the revised lease payments using a revised discount rate.
The lease payments change due to changes in an index or rate or a change in expected payment under a
guaranteed residual value, in which cases the lease liability is remeasured by discounting the revised lease
payments using an unchanged discount rate (unless the lease payments change is due to a change in a floating
interest rate, in which case a revised discount rate is used).
A lease contract is modified and the lease modification is not accounted for as a separate lease, in which case
the lease liability is remeasured based on the lease term of the modified lease by discounting the revised
lease payments using a revised discount rate at the effective date of the modification.
The Group did not make any such adjustments during the periods presented.
The ROU assets comprise the initial measurement of the corresponding lease liability, lease payments made at or
before the commencement day, less any lease incentives received and any initial direct costs. They are subsequently
measured at cost less accumulated depreciation and impairment losses.
Whenever the Group incurs an obligation for costs to dismantle and remove a leased asset, restore the site on which
it is located or restore the underlying asset to the condition required by the terms and conditions of the lease, a
provision is recognised and measured under IAS 37. To the extent that the costs relate to a right-of-use asset, the costs
are included in the related right-of-use asset, unless those costs are incurred to produce inventories.
ROU assets are depreciated over the shorter period of lease term and useful life of the underlying asset. If a lease
transfers ownership of the underlying asset or the cost of the ROU asset reflects that the Group expects to exercise a
purchase option, the related ROU asset is depreciated over the useful life of the underlying asset. The depreciation
starts at the commencement date of the lease.
The ROU assets are presented as a separate line in the consolidated statement of financial position.
The Group applies IAS 36 to determine whether an ROU asset is impaired and accounts for any identified impairment
loss as described in the ‘Plant, equipment and motor vehicles’ policy.
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
52
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
Variable rents that do not depend on an index or rate are not included in the measurement of the lease liability and
the ROU asset. The related payments are recognised as an expense in the period in which the event or condition that
triggers those payments occurs and are included in ‘Other expenses’ in profit or loss.
As a practical expedient, IFRS 16 permits a lessee not to separate non-lease components, and instead account for any
lease and associated non-lease components as a single arrangement. The Group has not used this practical expedient.
For a contracts that contain a lease component and one or more additional lease or non-lease components, the Group
allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of
the lease component and the aggregate stand-alone price of the non-lease components.
Policies applicable prior to 1 January 2019
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards
of ownership to the lessee. All other leases are classified as operating leases.
The Group as a lessee
Assets held under finance leases are recognised as assets of the Group at their fair value or, if lower, at the present
value of the minimum lease payments, each determined at the inception of the lease. The corresponding liability to
the lessor is included in the statement of financial position as a finance lease obligation.
Lease payments are apportioned between finance expenses and reduction of the lease obligation so as to achieve a
constant rate of interest on the remaining balance of the liability. Finance expenses are recognised immediately in
profit or loss, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance
with the Group’s general policy on borrowing costs. Contingent rentals are recognised as expenses in the periods in
which they are incurred.
Rentals payable under operating leases are charged to income on a straight-line basis over the term of the relevant
lease except where another more systematic basis is more representative of the time pattern in which economic
benefits from the lease asset are consumed. Contingent rentals arising under operating leases are recognised as an
expense in the period in which they are incurred.
In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a
liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis over
the lease term, except where another systematic basis is more representative of the time pattern in which economic
benefits from the leased asset are consumed.
4.18 Earnings per share
Basic earnings per share (“EPS”) are calculated based upon the net loss divided by the weighted average number of
shares. Diluted EPS are calculated as the net loss divided by the weighted average number of shares and dilutive
potential shares.
4.19 Share-based payment transactions
The Group provides benefits to employees (including Directors) of the Group in the form of share-based payment
transactions, whereby employees render services in exchange for shares or rights over shares (“Equity–settled
transactions”).
There are currently two plans in place to provide these benefits being the Incentive Option Plan and the Incentive
Performance Rights Plan (together the Equity Incentive Plans) which provide benefits to executives and employees.
The cost of these equity-settled transactions with employees is measured by reference to fair value at the date at
which they are granted. For share options the fair value is determined by using the Black-Scholes pricing model. For
performance rights the fair value is determined with reference to the close price of the Company’s securities on the
date the rights are granted.
In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked
to the price of the shares of Essential Metals Limited (“market conditions”).
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
53
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
The cost of equity settled securities is recognised, together with a corresponding increase in equity, over the period
in which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully
entitled to the award (“vesting date”). At the end of each period, the entity revises its estimate of the number of
options that are expected to vest based on the non-vesting market and service conditions. It recognises the impact
of the revision to original estimates, if any, in the profit or loss and comprehensive income statement or retained
earnings with a corresponding adjustment to equity.
Where the Group acquires some form of interest in an exploration tenement or an exploration area of interest and
the consideration comprises share-based payment transactions, the fair value of the equity instruments granted is
measured at grant date. The cost of equity securities is recognised within capitalised mineral exploration and
evaluation expenditure, together with a corresponding increase in equity.
4.20 Foreign currencies
In preparing the financial statements of the Group entities, transactions in currencies other than the entity’s functional
currency (foreign currencies) are recognised at the rates of exchange prevailing on the dates of the transactions. At
each reporting date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the
rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are
translated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are
measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences are recognised in profit or loss in the period in which they arise except for:
• exchange differences on foreign currency borrowings relating to assets under construction for future
productive use, which are included in the cost of those assets when they are regarded as an adjustment to
interest costs on those foreign currency borrowings;
• exchange differences on transactions entered into to hedge certain foreign currency risks (see below under
financial instruments/hedge accounting); and
• exchange differences on monetary items receivable from or payable to a foreign operation for which
settlement is neither planned nor likely to occur in the foreseeable future (therefore forming part of the net
investment in the foreign operation), which are recognised initially in other comprehensive income and
reclassified from equity to profit or loss on disposal or partial disposal of the net investment.
For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign
operations are translated at exchange rates prevailing on the reporting date. Income and expense items are translated
at the average exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which
case the exchange rates at the date of transactions are used. Exchange differences arising, if any, are recognised in
other comprehensive income and accumulated in a foreign exchange translation reserve (attributed to non-controlling
interests as appropriate).
4.21 Contingencies
By their nature, contingencies will only be resolved when one or more future events occur or fail to occur. The
assessment of contingencies inherently involves the exercise of significant judgment and estimates of the outcome of
future events.
4.22 Government grants
Government grants (such as JobKeeper and Cash Boost) are not recognised until there is reasonable assurance that
the Group will comply with the conditions attaching to them and that the grants will be received.
Government grants are recognised in profit or loss on a systematic basis over the periods in which the Group
recognises as expenses the related costs for which the grants are intended to compensate. Specifically, government
grants whose primary condition is that the Group should purchase, construct or otherwise acquire non-current assets
(including property, plant and equipment) are recognised as deferred income in the consolidated statement of
financial position and transferred to profit or loss on a systematic and rational basis over the useful lives of the related
assets. Government grants that are receivable as compensation for expenses or losses already incurred or for the
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
54
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
purpose of giving immediate financial support to the Group with no future related costs are recognised in profit or
loss in the period in which they become receivable.
The benefit of a government loan at a below-market rate of interest is treated as a government grant, measured as
the difference between proceeds received and the fair value of the loan based on prevailing market interest rates.
Government grants towards staff re-training costs are recognised as income over the periods necessary to match them
with the related costs and are deducted in reporting the related expense.
Exploration related government grants are offset against exploration expenditure incurred and capitalised.
5. OPERATING SEGMENTS
(a) Description of segments
Management has determined the operating segments based on the reports reviewed by the chief operating decision
maker that are used to make strategic decisions. For the purposes of segment reporting the chief operating decision
maker has been determined as the Board of Directors.
Based upon the operations of the Group during the current financial period, the Board has identified three operating
segments; being the Sinclair Mine, exploration in Australia and Canada and corporate and unallocated expenditure.
Assets are allocated to a segment based on the operations of the segment and the physical location of the asset.
During the period the Australian and Canadian exploration segments reported in the prior year were combined for
internal reporting to the chief operating decision maker and accordingly are now presented as one segment. The
comparative information has been updated to align to current period presentation.
(b) Measurement of segment information
All information presented above is measured in a matter consistent with that in the financial statements.
(c) Segment information provided to the Board of Directors
The segment information provided to the Board of Directors for the reportable segments is as follows:
Year ended 30 June 2020
Revenue
Profit before tax
Income tax
Profit after tax
Segment assets
Segment liabilities
Sinclair Mine
Exploration
Corporate
$’000
$’000
$’000
Total
$’000
9,127
3,731
-
3,731
297
696
-
-
(508)
(1,862)
-
(508)
14,151
550
-
(1,862)
5,072
444
Sinclair Mine
Exploration
Corporate
Year ended 30 June 2019
$’000
$’000
$’000
Revenue
Operating gain/(loss) before tax
Income tax
Net gain/(loss) after tax
Segment assets
Segment liabilities
10,528
2,478
-
2,478
4,317
995
-
(43)
-
(43)
10,505
367
-
(2,162)
-
(2,162)
3,187
545
9,127
1,361
-
1,361
19,520
1,690
Total
$’000
10,528
273
273
18,009
1,906
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
55
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
6. REVENUE
The Group derives its revenue from the sale of pollucite ore at a point in time. This is consistent with the
revenue information that is disclosed for each reportable segment under AASB 8 (see note 5).
Revenue from contracts with customers – High-grade pollucite ore
Other revenue from contracts with customers – Low-grade pollucite ore1
Total revenue
2020
$’000
7,940
1,187
9,127
2019
$’000
10,528
-
10,528
Note:
1 - Sales of low-grade pollucite ore have been classified as ‘other revenue’ as all incurred cost of sales were previously allocated to and expensed
with the mining and sale of high grade pollucite ore recognised as revenue from contracts with customers shown above.
7. COST OF SALES
Mining
Miner services
Processing
Camp and administrative expenses
Amortisation of mine development and rehabilitation asset
Change in inventory
Total cost of sales
8. OTHER INCOME
Government grants1
Net gain on Kangan Project Farmout Joint Operation
Profit on disposal of asset
Total other income
2020
$’000
2019
$’000
-
-
-
-
70
4,295
4,365
6,183
185
673
503
3,491
(4,295)
6,740
2020
$’000
2019
$’000
210
-
-
210
-
416
6
422
Note:
1 - $66,000 in JobKeeper government grant other income was received during the current reporting period. The Group anticipates eligibility for
JobKeeper 2.0 government grants extending out to 31 March 2021 pending successfully meeting eligibility requirements.
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
56
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
9. CORPORATE AND OTHER EXPENSES
Employee expenses
Non-executive director fees
Share based payment expense
Other expenses
Total corporate and other expenses
10. EARNINGS PER SHARE
2020
$’000
2019
$’000
1,118
1,015
178
180
442
189
336
668
1,918
2,208
On 20 July 2020 the Company announced completion of the consolidation of the Company’s issued capital on the basis
that every ten shares be consolidated into one share, every ten options be consolidated into one option and every ten
performance rights be consolidated into one performance right, as approved at the General Meeting of shareholders
held on 7 July 2020.
The following reflects the earnings and share data used in the calculations of basic and diluted earnings per share on
a post-consolidation basis for current and comparative reporting periods:
Earnings used in calculating basic and diluted earnings per share
Weighted average number of ordinary shares used in calculating basic earnings
per share
Basic earnings per share – cents per share
Effect of dilutive securities
Share options and performance rights1
Adjusted weighted average number of ordinary shares used in calculating
diluted earnings per share
2020
(restated)
$’000
2019
(restated)
$’000
1,361
273
150,867,084
14,919,070
0.90c
0.18c
1,419,546
133,360
151,684,891
149,284,859
Diluted earnings per share – cents per share
0.90c
0.18c
Notes:
1 As at reporting date, 4,570,000 post-consolidation options (30 June 2019: 4,269,960 post-consolidation options) which represent potential
ordinary shares were not dilutive as the weighted average exercise price of the options were higher than the weighted average share price for the
year.
There has not been a material impact on earnings per share as a result of the adoption of AASB 16 Leases in the current
reporting period.
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
57
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
11.
INCOME TAX EXPENSE
No income tax is payable by the Group as it has incurred losses for income tax purposes for the year, so current tax,
deferred tax and tax expense is nil (2019 - Nil). Further deferred tax assets and liabilities will be settled net wherever
possible and are therefore offset.
2020
$’000
2019
$’000
INCOME TAX EXPENSE
(a) Tax expense
Current tax expense
Deferred tax expense
Total income tax expense per profit or loss and other comprehensive income
(b) Numerical reconciliation between tax expense and pre-tax net profit
Net Profit/(loss) before tax
Tax expense /(benefit) at the applicable corporate tax rate of 27.5% (2019: 27.5%)
Increase in income tax due to tax effect of:
Share based payment expense
Non-deductible expenditure
Decrease in income tax expense due to:
Non-assessable income
Unused tax losses and temp differences recognised
Deductible capital raising costs
Income tax expense attributable to entity
DEFERRED TAX ASSETS AND LIABILITIES
(c) Recognised deferred tax assets and liabilities at 27.5% (2019: 27.5%)
Deferred tax assets
Employee provisions
Other provisions and accruals
Rehabilitation assets and liabilities
ROU assets
Tax losses
Set-off of deferred tax liabilities
Net deferred tax assets
Deferred tax liabilities
Prepayments
Exploration and mine properties
Unearned income
Other deferred tax liabilities
Gross deferred tax liabilities
Set-off of deferred tax assets
Net deferred tax liabilities
(d) Unused tax losses and temporary differences for which no deferred tax asset has been
recognised at 26% (2019: 27.5%)
Deductible temporary differences
Tax revenue losses
Tax capital losses
Total unrecognised deferred tax assets
-
-
-
1,361
374
50
3
(49)
(349)
(29)
-
15
11
191
4
2,690
2,912
(2,912)
-
-
(2,887)
(3)
(22)
(2,912)
2,912
-
29
8,151
579
8,759
-
-
-
273
76
92
-
-
(168)
-
-
-
185
-
-
1,790
1,975
(1,975)
-
(21)
(1,953)
-
-
(1,975)
1,975
-
50
8,970
-
9,020
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
58
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
12. NOTES TO THE STATEMENT OF CASH FLOWS
(a) Cash and cash equivalents
Cash at the end of the financial year as shown in the statements of cash flows is reconciled to the related items in the
statement of financial position as follows:
Cash on hand and at bank
Deposits at call
Total cash and cash equivalents
2020
$’000
2019
$’000
391
4,000
4,391
713
2,000
2,713
(b) Reconciliation of the profit/(loss) from ordinary activities after income tax to the net cash flows used in operating
activities
Profit from ordinary activities after income tax
Non-cash items:
Depreciation
Unrealised foreign exchange (gain)/loss
Exploration written off
Share-based payments expense
Repayment of borrowings
Unpaid royalties
Net gain on Kangan Project farm out and joint operations agreement
Net gain on Balagundi Project farm out agreement
Other income (Government SME cash boost incentive)
Change in operating assets and liabilities:
Decrease/(increase) in prepayments
Decrease/(increase) in inventory
Decrease/(increase) in receivables
(Decrease)/increase in current payables
(Decrease)/increase in provisions
Net cash outflows used in operating activities
2020
$’000
2019
$’000
1,361
273
92
(84)
518
180
-
-
-
(41)
50
102
4,295
(323)
(449)
9
5,710
3,543
203
413
336
(6,740)
551
(221)
-
-
(216)
(4,295)
(63)
(1)
(74)
(6,292)
(c) Stand-by credit facilities
As at 30 June 2020 the Group had a business credit card facility available totalling $30,000 (2019: $30,000) of which
$3,000 (2019: $15,000) was utilised.
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
59
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
(d) Reconciliation of financing liabilities to financing cash flows
(Decrease)/increase in lease liabilities
Net cash outflows used in financing activities
2020
$’000
2019
$’000
(88)
(88)
-
-
(e) Non-cash investing activities
During the financial year ended 30 June 2020, the Company had no non-cash investing activities.
13. CASH & CASH EQUIVALENTS
Cash & cash equivalents
Cash at bank & in hand
Term deposits
Total cash & cash equivalents
Further information relating to credit risk and interest rate risk can be found at Note 29.
14.
INVENTORIES
Current
Pollucite ore stockpiles at cost
Total inventory
The cost of inventories recognised as an expense during the year was $4,295,000 (2019: Nil).
15. TRADE & OTHER RECEIVABLES
Trade receivables from the sale of pollucite1
Government grants and incentives receivable
Bonds
Other receivables
Total trade and other receivables
2020
$’000
2019
$’000
391
4,000
4,391
713
2,000
2,713
2020
$’000
2019
$’000
-
-
4,295
4,295
2020
$’000
2019
$’000
297
74
16
10
397
22
-
16
36
76
Notes:
1 – Trade receivables from the sale of pollucite ore at 30 June 2020 include the final amounts receivable from offtake partners for the sale of
high grade pollucite ore relating to the Caesium mining operation undertaken in the prior financial year.
Further information relating to credit risk and interest rate risk can be found at Note 29. Carrying values shown above
also constitutes fair value of all receivable amounts. No amount (2019: Nil) included within current receivables is
greater than 91 days past due. Using the expected credit loss method no loss allowance was required on trade
receivables at reporting date.
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
60
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
16.
INVESTMENTS
(a) Classification of financial assets at fair value through other comprehensive income
Financial assets at fair value through other comprehensive income (FVOCI) comprise of equity securities which are not
held for trading, and which the Group has irrevocably elected at initial recognition to recognise in this category. These
are strategic investments and the Group considers this classification to be more relevant.
(b) Equity Investments at fair value through other comprehensive income
Equity investments at FVOCI comprise the following individual investments:
ASX listed entities1
Canadian listed entities2
Current investments – Equity instruments3
ASX listed entities
Canadian listed entities
Non-current investments – Equity instruments
2020
$’000
2019
$’000
100
468
568
-
-
-
-
-
-
1
305
306
Notes:
1 - During the year ended 30 June 2020, the Group entered into a Farm-in & Joint Venture agreement with Black Cat Syndicate Limited (“Black
Cat”, ASX: BC8) into the 100% owned Balagundi Project located within the Eastern Goldfields of Western Australia. The consideration for entering
into the agreement was 122,820 fully paid common shares in Black Cat, valued at $0.355 per share or $43,601. As at 30 June 2020 the share
price for Black Cat was $0.81 per share valuing the investment at $99,484.
2 - Holdings in Canadian listed entities include:
- Shares issued from Novo Resources Corp (TSXV: NVO.V) valued at A$4.02 per share for a total value of A$401,619 at 30 June 2020.
- Shares issued from International Lithium Corp. (TSXV: ILC) valued at A$0.05 per share for a total value of A$66,581 at 30 June 2020.
3 - Management reclassified all listed investments to current assets during the current reporting period to better represent management’s
intention to dispose of these investments should management be required to meet additional short-term working capital commitments.
(c) Amounts recognised in other comprehensive income
During the full year, the following gains/(losses) were recognised in other
comprehensive income:
Changes in fair values of investments during the year
Gains/(losses) recognised in other comprehensive income
17. EXPLORATION AND EVALUATION EXPENDITURE
Non-current – In the exploration and evaluation phase
Opening balance at 1 July
Expenditure for the period1
R&D incentives received during the period
Foreign currency translation – Mavis Lake
Transfer to mine properties
Farmin arrangement for Kangan JV – carrying value transferred to profit/(loss)
Farmin arrangement for Balagundi JV – carrying value transferred to profit/(loss)
Exploration expenditure written off
Closing balance at 30 June
Note:
1 – Includes capitalised plant, equipment and motor vehicle depreciation expense.
2020
$’000
2019
$’000
219
219
(273)
(273)
2020
$’000
2019
$’000
10,393
3,890
(34)
(25)
-
-
(40)
(518)
13,666
12,254
1,847
(370)
80
(2,796)
(209)
-
(413)
10,393
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
61
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
The ongoing carrying value of the Group’s interest in exploration and evaluation expenditure is dependent upon the
continuance of the Group’s rights to tenure of the areas of interest and the results of future exploration and the
recoupment of costs through successful development and exploitation of the areas of interest, or alternatively, by
their sale.
The Group’s exploration properties may be subjected to claim(s) under native title, or contain sacred sites, or sites of
significance to indigenous people. As a result, exploration properties or areas within the tenements may be subject
to exploration restrictions, mining restrictions and/or claims for compensation. At this time, it is not possible to
quantify whether such claims exist, or the quantum of such claims. Exploration write-downs totalled $518,000 which
related primarily to the write-down of costs pertaining to tenements surrendered during the year.
18. MINE PROPERTIES
Balance at the beginning of the year
Rehabilitation asset
Additions
Amortisation
Impairment
Mine development
Transfers from capitalised mineral exploration
Amortisation
Impairment
Balance at the end of the year
19. RIGHT-OF-USE ASSETS
Non-current
Cost
Opening balance at 1 July
Additions
Recognised on transition to AASB 16
Closing balance at 30 June
Accumulated depreciation
Opening balance at 1 July
Depreciation charge for the period
Closing balance
Carrying amount – opening balance
Carrying amount – closing balance
2020
$’000
2019
$’000
-
-
-
-
-
-
-
-
-
628
(628)
-
2,796
(2,796)
-
-
2020
$’000
-
-
347
347
-
(72)
(72)
-
275
Note: The Group has a non-cancellable office operating lease for a three-year period up to 29 April 2021, including an option to extend the lease
for an additional three years to 30 April 2024. The Group has recognised this lease based on the application of AASB 16. A maturity analysis in
respect to this lease is included under the lease liability note 23. Further to the above-mentioned lease the Group has two separate month-to-
month rolling leases, equating to $4,500, in respect of houses located close to the Group’s projects. These leases contain clauses where either the
Company or the lessor can terminate the lease agreements on short notice and these leases are treated as short-term leases. The lease expenditure
on these two leases are included as corporate and other expenses in the statement of profit or loss and other comprehensive income.
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
62
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
20. PLANT, EQUIPMENT AND MOTOR VEHICLES
Reconciliations of the written down values at the beginning and end of the current reporting are set out below:
Cost or valuation
At 30 June 2019
Additions
Disposals
At 30 June 2020
Accumulated depreciation and impairment
At 30 June 2019
Depreciation charge – P&L
Depreciation charge – E&E
Write-offs/Adjustments
At 30 June 2020
Net book value
At 30 June 2019
At 30 June 2020
Plant & office
equipment
$’000
Computer
equipment
$’000
Software
Motor vehicles
$’000
$’000
Leasehold
improvements
$’000
Total
$’000
188
9
-
198
(158)
(3)
(9)
-
(170)
30
28
194
20
-
214
(182)
(11)
(3)
-
(196)
12
18
68
15
-
83
(21)
-
(26)
-
(47)
47
36
160
102
-
262
(137)
-
(27)
-
(164)
23
98
-
38
-
38
-
(6)
-
-
(6)
-
32
610
183
-
793
(498)
(20)
(65)
-
(583)
112
210
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
63
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
20. PLANT, EQUIPMENT AND MOTOR VEHICLES (continued)
Reconciliations of the written down values at the beginning and end of the previous reporting period are set out below:
Cost or valuation
At 30 June 2018
Additions
Disposals
At 30 June 2019
Accumulated depreciation and impairment
At 30 June 2018
Depreciation charge
Write-offs/Adjustments
At 30 June 2019
Net book value
At 30 June 2018
At 30 June 2019
Plant & office
equipment
$’000
Computer
equipment
$’000
Software
Motor vehicles
$’000
$’000
Total
$’000
167
21
-
188
(140)
(18)
-
(158)
27
30
186
8
-
194
(176)
(6)
-
(182)
10
12
42
26
-
68
(1)
(20)
-
(21)
41
47
178
29
(47)
160
(178)
(7)
47
(137)
-
23
573
84
(47)
610
(495)
(51)
47
(498)
78
112
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
64
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
21. TRADE AND OTHER PAYABLES
Current (Unsecured)
Trade creditors
Other creditors and accruals
Total trade and other payables
2020
$’000
2019
$’000
365
286
651
354
747
1,101
Amounts shown as current are expected to be settled within 12 months. Information relating to the Group’s exposure
to foreign exchange risk is provided in Note 29.
Average payment terms are 30 days from invoice date. There was no interest charged from the late payment of trade
and other payables in the current or prior reporting periods.
22. PROVISIONS
Current
Employee entitlements1
Rehabilitation provision2
Total current provisions
Notes:
2020
$’000
2019
$’000
56
696
752
178
628
806
1 - The current provision for long service leave includes all unconditional entitlements where employees have completed the required period of
service and also those where employees are entitled to pro-rata payments in certain circumstances. As the related employee has completed the
required period of service the entire amount is presented as a current provision.
2 - The provision for rehabilitation of the Sinclair Mine Site is an estimation of work to be carried out such as earthmoving, removal of facilities
and restoring of affected areas. The provision represents the best estimate of the present value of the expenditure required to settle the
restoration obligation at the reporting date. Future restoration costs will be reviewed annually and any changes in the estimate are reflected in
the present value of the restoration provision at each reporting date. The provision was increased from $628,000, recorded at 30 June 2019,
due to a reassessment of post closure management/monitoring activities by an independent third-party specialist.
The remainder of this page is intentionally left blank.
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
65
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
23. LEASE LIABILITIES
The Group’s head office in Western Australia is recognised as a Right-of-use (“ROU”) asset. Refer to Note 19 for assets
recognised in line with the adoption of AASB 16 Leases and amortisation expensed to the Statement of Comprehensive
Profit or Loss and Other Comprehensive Income during the current financial year.
Maturity Analysis
Year 1
Year 2
Year 3
Year 4
Year 5
Onwards
Less unearned interest
Analysed as:
Current
Non-current
Total lease liabilities
2020
$’000
2019
$’000
64
64
64
64
33
-
289
64
225
289
-
-
-
-
-
-
-
-
-
-
The Group does not face a significant liquidity risk with regard to its lease liabilities. Lease liabilities are measured as
part of the Group’s financial risk management.
24. CONTRIBUTED EQUITY
(a) Ordinary shares on issue – fully paid
Total contributed equity
1,508,758,765
1,507,425,165
41,184
2020
Shares
2019
Shares
2020
$’000
2019
$’000
41,184
Ordinary shares
Ordinary shares have the right to receive dividends as declared and, in the event of winding up of the Company, to
participate in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on
shares held. Changes to the then Corporations Law abolished the authorised capital and par value concept in relation
to share capital from 1 July 1998. Therefore, the company does not have a limited amount of authorised capital and
issued shares do not have a par value. Ordinary shares have no par value and entitle their holder to one vote per
share, either in person or by proxy, at a meeting of the Company.
On 20 July 2020 the Company announced completion of the consolidation of the Company’s issued capital on the basis
that every ten shares be consolidated into one share, every ten options be consolidated into one option and every ten
performance rights be consolidated into one performance right, as approved at the General Meeting of shareholders
held on 7 July 2020.
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
66
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
Equity incentives
Information relating to equity incentives including details of equity incentives exercised and lapsed during the financial
year and equity incentives outstanding at the end of the financial year, is set out in note 25.
(b) Share movements during the year
Opening Balance 1 July 2018
Share based payment
Share based payment
Exercise of options
Share issue for prospect acquisition
Share issue per farm-in agreement
Closing balance 30 June 2019
Date
Number of
shares
Issue price
cents
03/07/18
31/08/18
02/08/18
26/03/19
01/10/18
1,448,502,009
3,043,478
2,500,000
66,666
3,313,012
50,000,000
1,507,425,165
2.3
2.1
6.0
1.75
2.0
Share issue upon conversion of rights1
25/07/19
1,333,600
-
Closing balance at 30 June 2020
1,508,758,765
$’000
39,999
70
53
4
58
1,000
41,184
-
41,184
Note:
1 - Pursuant to the Group’s Incentive Performance Rights Plan, a total of pre-consolidation 4,000,000 Performance Rights with vesting conditions
in in the form of performance hurdles related to the 2019 financial year were issued to Mr David Crook, following approval by shareholders at
the Group’s Annual General Meeting held on 20 November 2018. The Board of Directors determined that 1,333,600 pre-consolidation
Performance Rights vested due to the respective performance hurdle being achieved and the remainder of the pre-consolidation Performance
Rights totalling 2,666,400 lapsed due to the respective performance hurdles not being achieved. Mr Crook elected to convert the vested
performance rights into fully paid ordinary shares which were issued on 25 July 2019 for nil consideration.
25. EQUITY INCENTIVES
Set out below are movements in equity incentives on a pre-consolidation basis in the current and prior reporting
periods:
Granted
Exercised
Expired/
cancelled
Closing
balance
2020
Unlisted share options
Exercisable at 2.6 cents on or before 27/10/20
Exercisable at 5 cents on or before 27/10/20
Exercisable at 7.5 cents on or before 27/10/20
Opening
balance
2,233,333
2,233,333
2,233,333
Exercisable at 2.5 cents on or before 30/05/20
12,000,000
Exercisable at 3.5 cents on or before 30/11/21
12,000,000
Exercisable at 4.5 cents on or before 30/11/22
12,000,000
-
-
-
-
-
-
Exercisable at 2.5 cents on or before 31/01/24
Exercisable at 3.5 cents on or before 31/01/24
Exercisable at 4.5 cents on or before 31/01/24
-
-
-
5,000,000
5,000,000
5,000,000
Total unlisted share options
42,699,999
15,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
2,233,333
2,233,333
2,233,333
(12,000,000)
-
-
-
-
-
-
12,000,000
12,000,000
5,000,000
5,000,000
5,000,000
(12,000,000)
45,699,999
Unlisted performance rights
Exercisable on or before 30/06/19
Exercisable on or before 14/10/24
Exercisable on or before 31/01/24
Exercisable on or before 31/12/23
Total unlisted performance rights
1,333,600
-
-
-
-
(1,333,600)
8,195,456
5,000,000
1,000,000
-
-
-
1,333,600
14,195,456
(1,333,600)
-
-
-
-
-
-
8,195,456
5,000,000
1,000,000
14,195,456
Total equity incentives
44,033,599
29,195,456
(1,333,600)
(12,000,000)
59,895,455
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
67
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
25. EQUITY INCENTIVES (continued)
2019
Listed share options
Opening
balance
Granted
Exercised
Expired/
cancelled
Closing
balance
Exercisable at 6 cents on or before 31/07/18
44,339,669
Total listed share options
44,339,669
Unlisted share options
Exercisable at 2.6 cents on or before 27/10/20
Exercisable at 5 cents on or before 27/10/20
Exercisable at 7.5 cents on or before 27/10/20
Exercisable at 5.4 cents on or before 04/09/18
Exercisable at 6 cents on or before 31/07/18
Exercisable at 2.5 cents on or before 30/05/20
Exercisable at 3.5 cents on or before 30/11/21
Exercisable at 4.5 cents on or before 30/11/22
2,233,333
2,233,333
2,233,333
3,270,400
6,000,000
-
-
-
12,000,000
12,000,000
12,000,000
Total unlisted share options
15,970,399
36,000,000
Unlisted performance rights
Vested on or before 30/06/19
Total unlisted performance rights
-
-
4,000,000
4,000,000
-
-
-
-
-
-
-
(66,666)
(44,273,003)
(66,666)
(44,273,003)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,233,333
2,233,333
2,233,333
(3,270,400)
(6,000,000)
-
-
-
-
-
12,000,000
12,000,000
12,000,000
(9,270,400)
42,699,999
(2,666,400)
1,333,600
(2,666,400)
1,333,600
Total equity incentives
60,310,068
40,000,000
(66,666)
(56,209,803)
44,033,599
26. SHARE-BASED PAYMENTS
The expense recognised in the Consolidated Statement of Profit or Loss and Other Comprehensive Income in
relation to share-based payments is disclosed note 9.
(a) Unlisted share options over unissued shares
The following table illustrates the number and weighted average exercise prices of and movements in unlisted share
options during the current and prior financial years:
2020
2019
Outstanding at the beginning of the year
Granted during the year
Exercised during the year
Expired/cancelled during the year
Outstanding at the end of the year
Number
42,699,999
15,000,000
-
(12,000,000)
45,699,999
Vested and exercisable at the end of the year
45,699,999
Weighted
average
exercise price
cents
Number
Weighted
average
exercise price
cents
3.68
3.5
-
2.5
4.0
4.0
60,310,068
36,000,000
(66,666)
(53,543,403)
42,699,999
42,699,999
5.9
3.15
6.0
5.7
3.68
3.68
The range of exercise prices for options outstanding at the end of the current and prior financial years was 2.5 cents
and 7.5 cents (pre-consolidation).
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
68
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
The fair value of unlisted options issued has been determined using a Black-Scholes option pricing model that takes
into account the exercise price, the term of the options, the impact of dilution, the non-tradeable nature of the
options, the share price at grant date and expected price volatility of the underlying shares, the expected dividend
yield and the risk-free interest rate for the term of the options.
The fair value of options granted during the year ended 30 June 2020 was $112,000 (30 June 2019: $312,000). The
following table illustrates the inputs used to calculate the fair value of unlisted share options issued during the current
financial year and their resulting valuations on a pre-consolidation basis:
Item
Underlying security share price
Exercise price
Grant date
Expiry date
Days to expiry
Number of options issued
Volatility
Risk-free interest rate
Valuation per option
Valuation per option class
Unlisted Options
Unlisted Options Unlisted Options
$0.012
$0.025
31/01/2020
31/01/2024
1,461
5,000,000
108.16%
0.66%
$0.0081
$40,500
$0.012
$0.035
31/01/2020
31/01/2024
1,461
5,000,000
108.16%
0.66%
$0.0074
$37,000
$0.012
$0.045
31/01/2020
31/01/2024
1,461
5,000,000
108.16%
0.66%
$0.0069
$34,500
The establishment of the Group’s Equity Incentive Plan (“the Plan”) was approved by ordinary resolution at the Annual
General Meeting of shareholders of the Company held on 29 November 2011. All eligible Directors, executive officers,
employees and consultants of the Group who have been continuously employed by the Group are eligible to
participate in the Plan. The Plan was last approved by Shareholders on 21 November 2017.
The Plan allows the Company to issue options for no consideration to eligible persons. The options can be granted
free of charge and are exercisable at a fixed price calculated in accordance with the Plan. Options issued under the
Plan may have a vesting period prior to exercise, except under certain circumstances whereby options may be capable
of exercise prior to the expiry of the vesting period. All options refer to options over ordinary shares of Essential Metals
Limited, which are exercisable on a one for one basis.
(b) Unlisted Performance Rights
Refer to note 25 for movements in performance rights issued during the current and prior reporting periods.
Performance rights are exercisable for nil consideration. The fair value of performance rights granted during the year
ended 30 June 2020 was $155,000 (30 June 2019: $72,000).
The Company has in place an Incentive Performance Rights Plan (approved by shareholders on 21 November 2017)
which is a long-term incentive plan (“LTIP”) and under the LTIP the Board may issue performance rights to employees
and directors. A performance right is a right to be issued an ordinary share upon the satisfaction of certain
performance conditions that are attached to the performance right, the conditions of which are determined by the
Board.
Performance rights are granted for no consideration and the term of the performance rights are determined by the
Board in its absolute discretion but will ordinarily have a three year term up to a maximum of five years. Performance
rights are subject to lapsing if performance conditions are not met by the relevant measurement date or expiry date
(if no other measurement date is specified) or if employment is terminated. There is no ability to re-test performance
under the LTIP after the performance period. The fair value of performance rights has been calculated at the grant
date and allocated to each reporting period evenly over the period from grant date to vesting date. The value disclosed
is the portion of fair value of the rights allocated to this reporting period.
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
69
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
27. RESERVES
Equity incentive reserve
Financial asset revaluation reserve
Foreign exchange reserve
Total reserves
2020
$’000
2019
$’000
405
10
74
489
309
(210)
108
207
Changes in the fair value and exchange differences arising on translation of investments, including financial assets
held at fair value through equity are recognised in other comprehensive income as described in note 4.10 and
accumulated in a separate reserve in equity. Amounts are reclassified to the statement of profit or loss and other
comprehensive income when the associated assets are sold or impaired.
The foreign exchange reserve records exchange difference arising on translation of the Company’s foreign
controlled subsidiaries. Amounts are recorded in other comprehensive income and are accumulated in a separate
reserve within equity. Upon disposal of the foreign controlled operation the cumulative amount within the reserve
is reclassified to profit or loss.
Equity incentive reserve
Opening balance
Equity incentives issued during the year
Transfer of lapsed options to accumulated losses
Lapsed/cancelled equity incentives
Closing balance
2020
$’000
2019
$’000
309
180
(84)
-
405
794
384
(822)
(47)
309
The equity incentive reserve records items recognised on valuation of director, employee and contractor equity
incentives. Information relating to the Group’s Equity Incentive Plans, including details of equity incentives issued,
exercised and lapsed during the current reporting period and equity incentives outstanding at the end of the current
reporting period, is set out in note 25.
28. ACCUMULATED LOSSES
Accumulated losses at the beginning of the year
Net profit attributable to members
Transfer from equity incentive reserve re: expired options
Transfer from financial asset revaluation reserve – derecognition of investment
2020
$’000
(25,288)
1,361
84
-
2019
$’000
(26,378)
273
822
(5)
Accumulate losses at the end of the year
(23,843)
(25,288)
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
70
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
29. FINANCIAL INSTRUMENTS
The Group’s activities expose it to a variety of financial risks and market risks. The Group’s overall risk management
program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the
financial performance of the Group.
Financial Risk Management
Exposure to key financial risks is managed in accordance with the Group’s risk management policy with the objective
to ensure that the financial risks inherent in exploration activities are identified and then managed and kept as low as
reasonably practicable. The main financial risks that arise in the normal course of business are market risk (primarily
interest rate risk), credit risk and liquidity risk. Different methods are used to measure and manage these risk
exposures. Liquidity risk is monitored through the ongoing review of available cash and future commitments for
exploration expenditure. Exposure to liquidity risk is limited by anticipating liquidity shortages and ensures capital can
be raised in advance of shortages. It is the Board's policy that no speculative trading in financial instruments be
undertaken so as to limit exposure to price risk.
Primary responsibility for identification and control of financial risks rests with the Managing Director and the Chief
Financial Officer, under the authority of the Board. The Board is appraised of these risks from time to time and agrees
any policies that may be undertaken to manage any of the risks identified.
Details of the significant accounting policies and methods adopted, including criteria for recognition, the basis of
measurement and the basis on which income and expenses are recognised, in respect of each financial instrument are
disclosed in Note 4 to the financial statements. The carrying values less the impairment allowance for receivables and
payables are assumed to approximate fair values due to their short-term nature. Cash and cash equivalents are subject
to variable interest rates.
Categories of Financial Instruments
Financial assets at amortised cost
Cash and cash equivalents
Trade and other receivables
Investments in equity instruments designated as at FVOCI
Investments
Total financial assets
Financial liabilities at amortised cost
Trade and other payables
Total financial liabilities
2020
$’000
2019
$’000
4,391
410
568
5,369
601
601
2,713
76
306
3,095
1,100
1,100
Fair value hierarchy
This section explains the judgements and estimates made in determining the fair values of the financial instruments
that are recognised and measured at fair value in the financial statements. To provide an indication about the
reliability of the inputs used in determining fair value, the Group has classified its financial instruments into the three
levels prescribed under the Accounting Standards. An explanation of each level follows underneath the table.
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
71
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
Recurring fair value measurements
At 30 June 2020
Financial assets
Financial assets at fair value through other comprehensive income
Level 1
Level 2
$’000
$’000
Total
$’000
Australian listed equity securities
Canadian listed equity securities
Total financial assets
Recurring fair value measurements at 30 June 2019
Financial assets
Financial assets at fair value through other comprehensive income
Australian listed equity securities
Canadian listed equity securities
Total financial assets
100
468
568
1
305
306
-
-
-
-
-
-
100
468
568
1
305
306
There were no transfers between levels 1 and 2 for recurring value measurements during the current or prior reporting
periods.
Level 1 – The fair value of financial instruments traded in active markets is based on quoted market prices at the end
of the reporting period. The quoted market price used for financial assets held by the Group is the current bid price.
These instruments are included in level 1.
Level 2 – The fair value of financial instruments that are not traded in an active market is determined using valuation
techniques which maximise the use of observable data and rely as little as possible on entity specific estimates. If all
significant inputs required to fair value an instrument are observable, the instrument is included in level 2. Valuation
inputs include underlying spot prices, implied volatility, discount curves and time until expiration, expressed as a
percent of a year.
Specific financial risk exposures and management
(a) Market Risk – Interest rate risk management
The Group’s cash-flow interest rate risk primarily arises from cash at bank and deposits subject to market bank rates.
At reporting date, the Group does not have any borrowings. The Group does not enter into hedges.
The Group has exposure to interest rate risk, which is the risk that a financial instrument’s value will fluctuate as a
result of changes in market, interest rates and the effective weighted average interest rates on those financial assets.
(b) Liquidity risk
Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or otherwise
meeting its obligations related to financial liabilities.
Prudent liquidity risk management implies maintaining sufficient cash reserves to meet the ongoing operational
requirements of the business. It is the Group’s policy to maintain sufficient funds in cash and cash equivalents.
Furthermore, the Group monitors its ongoing exploration cash requirements and raises equity funding as and when
appropriate to meet such planned requirements. The Group has no undrawn financing facilities other than unused
balances on company credit cards. Trade and other payables, the only financial liability of the Group, are due within 3
months.
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
72
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
At the present state of the Group’s operations it has limited liquidity risk due to the level of payables and cash reserves
held. The Group’s objective is to maintain a balance between continuity of exploration funding and flexibility through
the use of available cash reserves.
Liquidity and interest risk table
The following tables detail the Group’s remaining contractual maturity for its non-derivative financial assets and
liabilities and have been prepared on the following basis:
•
•
Financial assets – based on the undiscounted contractual maturities including interest that will be earned on
those assets except where the Group anticipates that the cash flow will occur in a different period; and
Financial liabilities – based on undiscounted cash flows on the earliest date on which the Group can be
required to pay, including both interest and principal cash flows.
2020
Weighted
average
interest rate
Less than
1 month
$’000
1-3
months
$’000
3 months-
>5 years
$’000
No fixed
term
$’000
Total
$’000
-
0.02%
0.80%
Financial assets
Financial assets at amortised cost
Non-interest bearing
Variable interest rate
Fixed interest rate
Investments in equity instruments designated as at FVOCI
Investments
Total financial assets
Financial liabilities at amortised cost
Non-interest bearing
Variable interest rate
Fixed interest rate
Total financial liabilities
-
0.67%
-
-
-
-
397
391
-
568
1,356
1,402
-
-
1,402
-
-
4,000
-
4,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
397
391
4,000
568
5,356
1,402
-
-
1,402
2019
Weighted
average
interest rate
Less than
1 month
$’000
1-3
months
$’000
3 months-
>5 years
$’000
No fixed
term
$’000
Total
$’000
-
0.75%
2.50%
Financial assets
Financial assets at amortised cost
Non-interest bearing
Variable interest rate
Fixed interest rate
Investments in equity instruments designated as at FVOCI
Investments
Total financial assets
Financial liabilities at amortised cost
Non-interest bearing
Variable interest rate
Fixed interest rate
Total financial liabilities
1.98%
-
-
-
-
75
713
-
-
788
1,102
-
-
1,102
-
-
2,000
-
2,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
306
306
-
-
-
-
75
713
2,000
306
3,094
1,102
-
-
1,102
(c) Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to
the Group. The Group has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient
collateral where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group does not have
any significant credit risk exposure to any single counterparty or any group of counterparties having similar
characteristics.
With respect to credit risk arising from financial assets, which comprise cash and cash equivalents and receivables, the
exposure to credit risk arises from default of the counter party, with a maximum exposure equal to the carrying
amount of these instruments. The credit risk on liquid funds is limited because the counterparties are ‘Big Four’
Australian banks.
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
73
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date, is the
carrying amount of the financial assets, net of any expected credit losses, as disclosed in the statement of financial
position and in the notes to the financial statements. Concerning pollucite sales, the offtaker is contractually required
to settle deliveries of product before they are exported.
(d) Commodity price risk
During and at the end of the 12 month reporting period ended 30 June 2020, the Group was potentially subject to
commodity price risk for the sale of its pollucite ore. However, the risk was mitigated by the offtake agreement
containing a fixed price scale in US dollars based on the product’s caesium oxide grade.
(e) Foreign exchange risk
The Group includes a wholly owned Canadian subsidiary. This Canadian subsidiary has a limited number of suppliers
that invoice in foreign currencies and therefore foreign exchange risk is minimal. On 20 June 2018, the Group entered
into an offtake and loan facility agreement where the offtake partner advanced US$4,800,000 to fund the mining
activities at the Sinclair Mine. The offtake agreement resulted in sales denominated in U.S. dollars. During the financial
year ended 30 June 2019, the funds for the loan advance and cash receipt sales were received in U.S. dollars and
converted into Australian dollars, removing the exchange risk. The loan was repaid by the delivery of product (priced
in U.S. dollars) from the Sinclair Mine. During the financial year ended 30 June 2020 cash receipt sales were received
in U.S. dollars and converted into Australian dollars, removing the exchange risk, with the exception of US$194,000 in
customer sales receipts receivable at the end of the current reporting period. This was subsequently received on 1
July 2020.
(f) Price risk on investments
The Group is exposed to equity price risks arising from equity investments. Equity investments are held for strategic
rather than trading purposes. The Group does not actively trade these investments. The Group’s investments are
listed on the Australian Securities Exchange (ASX) and Toronto Stock Exchange Venture (TSXV).
Sensitivity
The sensitivity analyses below has been determined based on the exposure to equity price risks at the reporting date.
The table below summarises the impact of increases/decreases if the investment’s share price had increased or
decreased by 10% with all other variables held constant, and that the Group’s equity instrument moved in line with
the indexes.
Impact on other components of equity
TSXV index – increase 10%
TSXV index – decrease 10%
ASX index – increase 10%
ASX index – decrease 10%
2020
$’000
2019
$’000
47
(47)
10
(10)
15
(15)
-
-
Other components of equity would increase/decrease as a result of gains/losses on equity securities classified as
FVOCI.
(g) Capital risk management
The Group’s objectives when managing capital are to:
safeguard its ability to continue as a going concern, so that it can continue to provide returns for Shareholders
and benefits for other stakeholders, and
maintain an optimal capital structure to reduce the cost of capital and maximise returns to Shareholders and
benefits for other stakeholders.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to
Shareholders, return capital to Shareholders or issue new Shares. No dividends were paid or provided for during the
financial period (2019: Nil).
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
74
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
Total capital is equity, as shown in the Consolidated Statement of Financial Position. The Group is not subject to any
externally imposed capital requirements. There were no changes in the Group’s approach to capital management
during the year.
30. GROUP COMPOSITION
(a) List of subsidiaries
Golden Ridge North Kambalda Pty Ltd
Western Copper Pty Ltd
Pioneer Canada Lithium Corp.
Ownership percentage
Place of
incorporation
Principal
activities
Australia
Australia
Canada
Exploration
Exploration
Exploration
2020
100%
100%
100%
2019
100%
100%
100%
(b) Third party interests
Project
Acra (Gold)
Third party partner or
third party holder
Northern Star Limited (“NST”)
Kangan (Gold)
Novo Resources Corp. (“NOV”)
Third party participating equity
At 30 June 2020
NST hold a 75% interest. Ardea Resources
Limited retains 100% of the nickel laterite rights
on E27/278, E27/520, E28/1746.
Novo may earn a 70% interest in gold and
precious metals rights.
Balagundi (Gold)
Black Cat Syndicate Limited (“BCS”)
BCS may earn a 75% interest.
Larkinville (Gold/Nickel)
Maximus Resources Limited
75% on gold minerals and 80% on nickel minerals
Wattle Dam (Gold/Nickel)
Maximus Resources Limited
100% on gold minerals and 80% on nickel
minerals
Cessna (Nickel)
Milford Resources Pty Ltd (“Milford”)
Essential may earn an 80% interest
Maggie Hays Hill (Nickel)
Poseidon Nickel Ltd
80% all minerals
Fairwater (Nickel)
National Minerals Pty Ltd (“NM”)
NM 25% free carried interest
Ravensthorpe (Royalty)
ACH Minerals Pty Ltd (ACH")
100% (Group retains a royalty)
Ravensthorpe (Royalty)
Galaxy Lithium Australia Limited ("GXY")
GXY 100% lithium & tantalum on E74/379,
E74/399 & E74/406. ACH all other minerals.
Group retains a royalty.
There are no assets owned by the third-party partner or holders and the Group’s expenditure in respect of its
participation is brought to account initially as capitalised exploration and evaluation expenditure under the Group’s
accounting policy in Note 4.8. There were no capital commitments or contingent liabilities arising out of the Group’s
third-party interest activities as at 30 June 2020 (30 June 2019: Nil).
31. CONTINGENT LIABILITIES
There were no material contingent liabilities not disclosed in the financial statements of the Group as at 30 June 2020
(2019: Nil).
32. COMMITMENTS
(a) Exploration
The Group has certain obligations to perform minimum exploration work on mineral leases held. As at the end of the
current financial year, total exploration expenditure commitments on tenements held by the Group have not been
provided for in the financial statements and those which cover the following twelve month period amount to $760,000
(2019: $650,000).
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
75
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
These obligations are subject to variations by farm-out arrangements or sale of the relevant tenements or expenditure
exemptions as permitted under the Mining Act 1978 (amended 2006). This commitment does not include the
expenditure commitments which are the responsibility of the joint venture partners, amounting to $1,633,000 (2019:
$1,301,000).
(b) Capital commitments
There were no ongoing capital commitments as at 30 June 2020 (2019: Nil).
33. SUBSEQUENT EVENTS
A General Meeting was held on 7 July 2020. The following resolutions were passed by poll:
•
•
•
•
as a special Resolution, the change of Company name from Pioneer Resources Limited to Essential Metals
Limited;
as an ordinary Resolution, a capital consolidation, where the number of issued securities and unissued equity
incentives decreased using a fixed ratio of 10:1;
as an ordinary Resolution, the issue of 10,000,000 unlisted pre-consolidation share options to Related Party
Mr Craig McGown; and
as an ordinary Resolution, the issue of 6,000,000 unlisted pre-consolidation share options to Related Party
Mr Paul Payne.
Effective 14 July 2020, the Australian Securities and Investments Commission formally issued a new Certificate of
Registration to complete the name change from Pioneer Resources Limited to Essential Metals Limited.
Mr Warren Hallam was pointed to the Board of Essential Metals Limited as an independent non-executive director
with effect from 1 August 2020.
The Group recognises that COVID-19 is a rapidly evolving situation impacting us all. Whilst acknowledging the
disruption to global commerce, the Group finds itself well placed to continue to progress its projects and will continue
to monitor any impacts the pandemic may have on its projects. At this point in time the Group is experiencing minor
delays in project timelines as a result of the pandemic. These delays are not expected to be significant.
No other matter or circumstance has arisen since 30 June 2020 that has significantly affected, or may significantly
affect the Group’s operations, the results of those operations, or the Group’s state of affairs in future financial years.
The remainder of this page is intentionally left blank.
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
76
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
OTHER INFORMATION
This section of the notes includes other information that must be disclosed to comply with the accounting standards
and other pronouncements, but that is not immediately related to line items in the financial statements.
34. RELATED PARTIES
Parent entity and subsidiaries
The ultimate parent entity of the Group is Essential Metals Limited (formally Pioneer Resources Limited at 30 June
2020). Interests in other entities are set out in note 30.
Key management personnel
Key management personnel compensation comprised the following:
Current disclosed KMP
Short-term employee benefits
Post-employment benefits
Share-based payments
Employment termination payments
Former disclosed KMP
Short-term employee benefits
Post-employment benefits
Share-based payments
Employment termination payments
2020
$’000
2019
$’000
584
44
142
-
770
422
38
(63)
145
542
375
23
79
-
477
513
32
257
-
802
Total key management personnel compensation
1,312
1,279
Other director related party transactions
Mr Payne, a non-executive director of Essential Metals Limited, held a relevant interest in Payne Geo Consultancy Pty
Ltd which received $4,200 from the Group (2019: Nil) for the provision of geological consultancy services received
during the current reporting period.
During the current reporting period payments totalling $14,000 were paid as employee expenses and superannuation
for mining operational assistance work undertaken by Managing Director Timothy Spencer’s son. Mr Spencer was
Chief Financial Officer and Company Secretary at the time the payments were made. In the prior year payments
totalling $4,000 were paid as employee expenses and superannuation for mining operational assistance work
undertaken by both David Crook and Timothy Spencer’s sons.
There were no other transactions with related parties during or outstanding at the end of the current reporting period.
Terms and conditions
Transactions between related parties are on commercial terms and conditions, no more favourable than those
available to other parties unless otherwise stated.
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
77
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
35. REMUNERATION OF AUDITORS
Deloitte and related network firms
Audit services
Audit or review of financial reports
Other services
Taxation compliance services
Total
The auditor of the group is Deloitte Touche Tohmatsu.
36. PARENT ENTITY INFORMATION
Current assets
Total assets
Current liabilities
Total liabilities
Contributed equity
Accumulated losses
Equity incentive reserve
Asset revaluation reserve
Foreign currency revaluation reserve
(Loss)/profit for the period
Total comprehensive loss for the period
2020
$’000
2019
$’000
54
28
82
32
63
95
2020
$’000
2019
$’000
5,362
13,584
1,459
1,684
7,192
18,097
1,906
-
41,184
41,184
(29,699)
(25,008)
405
10
-
(4,691)
(4,423)
309
(209)
-
287
(268)
Other information
The parent entity has not guaranteed any loans for any entity during the current or previous financial years. The
parent entity did not have contingent liabilities at the end of the current or prior financial year other than
disclosed at Note 31. The parent entity did not have contractual commitments at the end of the current or prior
financial year other than disclosed in Note 32.
END OF THE FINANCIAL REPORT
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
78
Directors’ Declaration
For the year ended 30 June 2020
In accordance with a resolution of the directors of Essential Metals Limited, I state that:
In the opinion of the directors:
(a)
The financial report and notes of Essential Metals Limited for the financial year ending 30 June 2020 are in
accordance with the Corporations Act 2001, including:
(i)
(ii)
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory
professional reporting requirements;
giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its performance
for the financial year ended on that date; and
(iii)
The attached financial statements are in compliance with International Financial Reporting Standards as
stated in note 1 to the financial statements.
(b)
There are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable.
The directors have been given the declarations required by s295A of the Corporations Act 2001.
Signed in accordance with a resolution of the directors made pursuant to s.295(5) of the Corporations Act 2001.
On behalf of the Board of Directors
Timothy Spencer
Managing Director
25 September 2020
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
79
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Tower 2
Brookfield Place
123 St Georges Terrace
Perth WA 6000
GPO Box A46
Perth WA 6837 Australia
Tel: +61 8 9365 7000
Fax: +61 8 9365 7001
www.deloitte.com.au
Independent AAuditor’s Report to the
Members of Essential Metals Limited
((formerly known as
Pioneer Resources Limited)
Opinion
We have audited the financial report of Essential Metals Limited (formerly known as Pioneer Resources
Limited) (the “Company”) and its subsidiaries (the “Group”) which comprises the consolidated
statement of financial position as at 30 June 2020, the consolidated statement of profit or loss and
other comprehensive income, the consolidated statement of changes in equity and the consolidated
statement of cash flows for the year then ended, and notes to the financial statements, including a
summary of significant accounting policies and other explanatory information, and the directors’
declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
(i)
giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its financial
performance for the year then ended; 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 auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
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.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte Network.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report for the current period. This matter was 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.
KKey Audit Matter
HHow the scope of our audit responded to the Key
AAudit Matter
CCarrying value of capitalised eexploration and evaluation expenditure
As at 30 June 2020 the Group has $13,664,000 of
capitalised exploration expenditure as disclosed in
Note 17.
Our procedures included, but were not limited:
(cid:120) Obtaining an understanding of
Significant judgement is applied in determining the
treatment of exploration and evaluation expenditure
including:
(cid:120) Whether the conditions for capitalisation are
satisfied;
(cid:120) Which elements of exploration and evaluation
expenditures qualify for recognition; and
(cid:120) Whether the facts and circumstances indicate
that the exploration and expenditure assets
should be tested for impairment.
management’s process to evaluate the
carrying value of capitalised mineral
exploration assets;
(cid:120) Testing on a sample basis, evaluation
expenditure to confirm the nature of the
costs incurred, and the appropriateness of
the classification between asset and
expense;
(cid:120) Obtaining a schedule of the areas of
interest held by the Group and assessing
whether the rights to tenure of those areas
of interest remained current at balance
date and challenging management’s
consideration of the Group’s ability to
recoup the capitalised costs through future
development or sale of the areas of
interest;
(cid:120) Evaluating whether any areas of interest
had reached a stage where a reasonable
assessment of economically recoverable
reserves existed;
(cid:120) Assessing whether any facts or
circumstances existed to suggest
impairment testing was required including
expenditure incurred on areas of interest
during the year ended 30 June 2020 and
planned expenditure for the year ended 30
June 2021; and
(cid:120) Assessing the appropriateness of the
disclosures in Note 17 to the financial
statements.
Other Information
The directors are responsible for the other information. The other information comprises the
Directors’ Report , Additional ASX Disclosures and Shareholder Information which we obtained prior
to the date of this auditor’s report, and also includes the following information which will be included
in the Group’s annual report (but does not include the financial report and our auditor’s report
thereon): Chairman’s Report and Chief Executive Officers report, which is expected to be made
available to us after that date.
Our opinion on the financial report does not cover the other information and we do not and will 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
identified above and, in doing so, consider whether the other information is materially inconsistent
with the financial report or our knowledge obtained in the audit, or otherwise appears to be materially
misstated. If, based on the work we have performed on the other information that we obtained prior
to the date of this auditor’s report, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
When we read the Chairman’s Report and Chief Executive Officers report, if we conclude that there is
a material misstatement therein, we are required to communicate the matter to the directors and use
our professional judgement to determine the appropriate action.
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.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
(cid:120)
Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of
not detecting a material misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations,
or the override of internal control.
(cid:120) Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Group’s internal control.
(cid:120) Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the directors.
(cid:120) Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a
going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the financial report or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions
may cause the Group to cease to continue as a going concern.
(cid:120) Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and
events in a manner that achieves fair presentation.
(cid:120) Obtain sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group’s audit. We remain
solely responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, actions
taken to eliminate threats or safeguards applied.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
RReport on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in on pages 14 to 24 of the Directors’ Report for
the year ended 30 June 2020.
In our opinion, the Remuneration Report of Essential Metals Limited (formerly known as Pioneer
Resources Limited), for the year ended 30 June 2020, complies with section 300A of the Corporations
Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance
with Australian Auditing Standards.
DELOITTE TOUCHE TOHMATSU
Penelope Pink
Partner
Chartered Accountants
Perth, 25 September 2020
Additional Shareholder Information
As at 23 September 2020
The following additional information is required by the Australian Securities Exchange. The information was current
as at 23 September 2020.
(a) Top 20 quoted shareholders
On 7 July 2020 shareholders of Essential Metals Limited approved a capital consolidation, where the number of issued
securities and unissued equity incentives decreased using a fixed ratio of 10:1. The capital consolidation was
completed prior to 19 August 2020. The following table of quoted securities reflects the top 20 quoted shareholders
on a post capital consolidation basis:
Rank
Holder name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
18
19
20
BEATONS CREEK GOLD PTY LTD
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
BNP PARIBAS NOMINEES PTY LTD
XSTRATA NICKEL AUSTRALASIA INVESTMENTS PTY LTD
CITICORP NOMINEES PTY LIMITED
MR THOMAS WAYNE SPILSBURY & MRS MARCEY EVA SPILSBURY
BASILDENE PTY LTD
MR WARREN THOMAS BROWN & MRS ROSLYN UNA BROWN
RAFE PTY LTD
MR MARK KEVIN PROCTOR
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
MR CHRISTOPHER ALLAN EAGLESHAM
MR CEDRIC DESMOND PARKER
SEVENTH VEMALUX PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
MONEX BOOM SECURITIES (HK) LTD
IONIKOS PTY LTD 1
CLAYMORE INVESTMENTS PTY LTD
FRANCIS HOLDINGS (WA) PTY LTD
WIP FUNDS MANAGEMENT PTY LTD
MR PETER GRANT ALLEWAY & MRS COLLEEN GLORIA ALLEWAY
%
3.31%
1.97%
1.44%
1.42%
1.29%
1.15%
1.05%
0.99%
0.93%
0.88%
0.87%
0.83%
0.73%
0.71%
0.71%
0.70%
0.69%
0.66%
0.66%
0.60%
0.57%
Number of
shares
5,000,000
2,975,309
2,173,116
2,139,694
1,984,189
1,729,524
1,580,020
1,488,242
1,400,000
1,332,514
1,317,158
1,250,000
1,100,000
1,074,851
1,065,589
1,058,526
1,040,953
1,000,000
1,000,000
900,000
865,000
Note:
1 - Beneficial owner is Non-Executive Chairman of the Company, Craig McGown, who has a total shareholding of 1,040,943 ordinary shares.
22.16%
33,438,685
(b) Distribution of quoted ordinary shares
Size of parcel
1 – 1,000
1,001 – 5,000
5,001 – 10,000
Number of
share holders
Number of
shares
474
1,053
685
178,257
3,162,659
5,577,136
10,001 – 100,000
1,416
49,589,710
100,000 +
Total
278
92,368,665
3,906
150,876,427
(c) Number of holders with less than a marketable parcel of ordinary shares
The number of shareholders holding less than a marketable parcel of fully paid ordinary shares as at 23 September
2020 was 1,303 (holding 2,252,989 shares).
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
85
Additional Shareholder Information
As at 23 September 2020
(d) Substantial shareholders
No substantial shareholding notices have been provided to Essential Metals Limited
(e) Voting rights
Fully paid ordinary shares carry one vote per ordinary share without restriction. No other securities have voting rights.
(f) Unquoted equity securities
Equity security type
Issued to
Number on issue
Exercise price
Expiry date
Options
Options
Options
Options
Options
Options
Options
Options
Options
Options
Options
Performance Rights
Performance Rights
Performance Rights
Performance Rights
Staff
Staff
Staff
Directors
Directors
Directors
Directors
Directors
Directors
Directors
Directors
Staff
Directors
Directors
Staff
223,334
223,334
223,334
894,446
894,446
500,000
500,000
500,000
533,334
533,334
533,334
445,911
373,637
500,000
100,000
6,978,444
$0.26
$0.50
$0.75
$0.35
$0.45
$0.25
$0.35
$0.45
$0.25
$0.35
$0.45
n/a
n/a
n/a
n/a
27 October 2020
27 October 2020
27 October 2020
30 November 2021
30 November 2022
31 January 2024
31 January 2024
31 January 2024
30 June 2024
30 June 2024
30 June 2024
14 October 2024
14 October 2024
31 January 2024
31 December 2023
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Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
86
Mineral Resource Statements
As at 30 June 2020
MINERAL RESOURCE STATEMENTS
The Group has ensured that the Mineral Resources quoted are subject to thorough governance arrangements and
internal controls.
Category
Inferred
Category
Indicated
Inferred
The Dome North Lithium Project
Project area
Cade Deposit
Blair – Golden Ridge Project
Project area
Blair Nickel Mine
Blair Nickel Mine
Total
Glossary
Li2O – Lithium Oxide
Ni – Nickel Sulphide
Tonnes (Mt)
Grade (Li2O %)
Tonnes Li2O (‘000s)
8.2
1.23
101
Tonnes (t)
Grade (Ni %)
Ni metal (t)
75,560
147,150
222,710
4.37
2.18
2.92
3,300
3,210
6,510
Cade Lithium Deposit: The information in this annual report that relates to lithium Mineral Resources for the Cade
Lithium Deposit was based on information supplied to and compiled by the Competent Persons Mr David Crook and
Mr Lauritz Barnes. This information was originally reported to ASX on 25 November 2019 (JORC 2012) entitled: “Initial
Inferred Mineral Resource for the Cade Spodumene Deposit and Initial Exploration Target for the Dome North Area”.
The Company confirms that it is not aware of any new information or data that materially affects the information
included in the aforementioned announcement and that all material assumptions and technical parameters
underpinning the estimates in the aforementioned announcement continue to apply and have not materially changed.
The Company also confirms that the form and context in which the Competent Persons’ findings are presented have
not been materially modified.
Blair Nickel Mine: The information in this annual report that relates to nickel Mineral Resources for the Blair Nickel
Mine was based on information supplied to and compiled by the Competent Persons Mr David Crook, Mr Don Huntly
and Mr Lauritz Barnes. This information was originally reported to ASX on 28 November 2013 (JORC 2012) entitled:
“Mineral Resource estimate completed for the Blair Nickel Mine”. The Company confirms that it is not aware of any
new information or data that materially affects the information included in the aforementioned announcement and
that all material assumptions and technical parameters underpinning the estimates continue to apply and have not
materially changed. The Company also confirms that the form and context in which the Competent Persons’ findings
are presented have not been materially modified.
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
87
Mineral Resource Statements
As at 30 June 2020
FORWARD-LOOKING STATEMENTS
This document may contain “forward-looking statements” and other forward-looking information based on the
Group’s expectations, estimates and projections as of the date on which the statements were made. This forward-
looking information includes, among other things, statements with respect to the Group’s business strategy, plan,
development, objectives, performance, outlook, growth, cash flow, projections, targets and expectations, Mineral
Resources and results of exploration. Generally, this forward-looking information can be identified by the use of
forward-looking terminology such as ‘outlook’, ‘anticipate’, ‘project’, ‘target’, ‘likely’,’ believe’, ’estimate’, ‘expect’,
’intend’, ’may’, ’would’, ’could’,’ should’, ’scheduled’, ’will’, ’plan’, ’forecast’, ’evolve’ and similar expressions. Persons
reading this document are cautioned that such statements are only predictions, and that the Group’s actual future
results or performance may be materially different. Forward-looking information is subject to known and unknown
risks, uncertainties and other factors that may cause the Group’s actual results, level of activity, performance or
achievements to be materially different from those expressed or implied by such forward-looking information.
Forward-looking information is developed based on assumptions about such risks, uncertainties and other factors,
including but not limited to general business, economic, competitive, political and social uncertainties; the actual
results of current exploration activities; conclusions of economic evaluations; changes in project parameters as plans
continue to be refined; future commodity prices; possible variations of ore grade or recovery rates; failure of plant,
equipment or processes to operate as anticipated; accident, labour disputes and other risks of the mining industry;
and delays in obtaining governmental approvals or financing or in the completion of development or construction
activities. This list is not exhaustive of the factors that may affect our forward-looking information. These and other
factors should be considered carefully and readers should not place reliance on such forward-looking information.
Recipients of this document must make their own investigations and inquiries regarding all assumptions, risks,
uncertainties and contingencies which may affect the future operations of the Group and the Group’s securities. The
Group disclaims any intent or obligations to or revise any forward-looking statements whether as a result of new
information, estimates, or options, future events or results or otherwise, unless required to do so by law.
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
88
Tenement Register
As at 30 June 2020
Tenement Register (Consolidated Basis)
Tenement
Holder
Notes
Status
Essential Metals Limited/ National Minerals Pty Ltd
Essential Metals Limited/ National Minerals Pty Ltd
Essential Metals Limited/ National Minerals Pty Ltd
Golden Ridge North Kambalda Pty Ltd
Golden Ridge North Kambalda Pty Ltd
Golden Ridge North Kambalda Pty Ltd
Golden Ridge North Kambalda Pty Ltd
Golden Ridge North Kambalda Pty Ltd
Golden Ridge North Kambalda Pty Ltd
Golden Ridge North Kambalda Pty Ltd
Golden Ridge North Kambalda Pty Ltd
Golden Ridge Nickel Project Located 30km SE of Kalgoorlie, WA
E26/186
E26/211
E26/212
M26/220
M26/222
M26/284
M26/285
L26/272
Fairwater Nickel Project Located 220km SE of Kalgoorlie, WA
E63/1665
E63/1714
E63/2040
Pioneer Dome Project Located 133km SSE of Kalgoorlie, WA
E15/1515
E15/1522
E15/1725
E63/1669
E63/1782
E63/1783
E63/1785
E63/1825
L63/77
M63/665
Kangan Lithium Project Located 80km S of Port Hedland, (Wodgina) WA
E45/4948
E47/3318-I
E47/3321-I
E47/3945
Donnelly Lithium Project Located 15km SW of Greenbushes, WA
Paul Winston Askins
E70/4826
E70/4829
Paul Winston Askins
Regional Projects, Located in WA
E15/1710
E30/509
E30/510
E27/575
E63/1959
Balagundi
E27/558
Essential Metals Limited
Essential Metals Limited
Essential Metals Limited
Essential Metals Limited
Essential Metals Limited
Essential Metals Limited
Essential Metals Limited
Essential Metals Limited
Essential Metals Limited
Essential Metals Limited
Essential Metals Limited
Essential Metals Limited
Essential Metals Limited
Milford Resources Pty Ltd
Essential Metals Limited
Essential Metals Limited
Essential Metals Limited
Essential Metals Limited
Essential Metals Limited
Essential Metals Limited
1
1
1
1
1, 11
1, 11
1, 11
1
10
10
10
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Under application
Under application
Granted
Granted
Under application
Granted
Granted
Granted
Granted
Granted
Granted
Granted
19
15, 17
15, 17
19
Granted
Granted
Granted
Granted
12
12
Under application
Under application
Granted
Under application
Under application
Granted
Granted
18
19
Granted
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
89
Tenement Register
As at 30 June 2020
Tenement
Holder
Notes
Status
International Lithium Corporation
International Lithium Corporation
International Lithium Corporation
International Lithium Corporation
International Lithium Corporation
International Lithium Corporation
International Lithium Corporation
International Lithium Corporation
International Lithium Corporation
International Lithium Corporation
International Lithium Corporation
International Lithium Corporation
International Lithium Corporation
International Lithium Corporation
International Lithium Corporation
International Lithium Corporation
International Lithium Corporation
International Lithium Corporation
International Lithium Corporation
Mavis Lake Project, Located 10km East of Dryden, Ontario, Canada
4208712
4208713
4208714
4251131
4251132
4251133
4251134
4251135
4251136
4251137
4251138
4251139
4251140
K489140
K498288
K498289
K498290
K498292
K498308
Acra Gold Project Located 60km NE of Kalgoorlie, WA
E27/278
E27/438
E27/491
E27/520
E27/548
E27/579
E28/1746
E28/2483
Wattle Dam Nickel Project Located 65km S of Kalgoorlie, WA
Maximus Resources Limited
M15/1101
Maximus Resources Limited
M15/1263
Maximus Resources Limited
M15/1264
Maximus Resources Limited
M15/1323
Maximus Resources Limited
M15/1338
Maximus Resources Limited
M15/1769
Maximus Resources Limited
M15/1770
Maximus Resources Limited
M15/1771
Maximus Resources Limited
M15/1772
M15/1773
Maximus Resources Limited
Larkinville Lithium, Nickel Project Located 75km S of Kalgoorlie, WA
M15/1449
P15/5912
Maggie Hays Hill JV, Located 140km SE of Southern Cross
Essential Metals Limited / Northern Star Resources Limited
Essential Metals Limited / Northern Star Resources Limited
Essential Metals Limited / Northern Star Resources Limited
Essential Metals Limited / Northern Star Resources Limited
Essential Metals Limited / Northern Star Resources Limited
Essential Metals Limited / Northern Star Resources Limited
Essential Metals Limited / Northern Star Resources Limited
Essential Metals Limited / Northern Star Resources Limited
Essential Metals Limited / Maximus Resources Limited
Essential Metals Limited / Maximus Resources Limited
13
13
13
13
13
13
13
13
13
13
13
13
13
13
13
13
13
13
13
2, 8
2, 8
8
2, 8
8
2, 8
2, 8
8
3, 5
3, 5
3, 5
3, 5
3, 5
3, 5
3, 5
3, 5
3, 5
3, 5
6, 7
6, 7
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
E63/1784
Essential Metals Limited / Poseidon Nickel Limited
14
Granted
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
90
Tenement Register
As at 30 June 2020
Tenement
Holder
Notes
Status
ACH Minerals Pty Limited
Galaxy Lithium Australia Limited
Galaxy Lithium Australia Limited
Galaxy Lithium Australia Limited
ACH Minerals Pty Limited
ACH Minerals Pty Limited
ACH Minerals Pty Limited
ACH Minerals Pty Limited
ACH Minerals Pty Limited
ACH Minerals Pty Limited
Ravensthorpe Copper-Gold Project Located 340km SW of Kalgoorlie, WA
E74/311
E74/379-I
E74/399
E74/406
E74/486
E74/558
E74/559
E74/560
M74/163
P74/349
Katanning Gold Project
E70/5040
E70/5042
E70/5043
E70/5044
Juglah Dome Project
E25/585
Ausgold Exploration Pty Ltd
Ausgold Exploration Pty Ltd
Ausgold Exploration Pty Ltd
Ausgold Exploration Pty Ltd
Western Copper Pty Ltd
9
16
16
16
9
9
9
9
9
9
20
20
20
20
21
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Under application
Note
1
2
3
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
Golden Ridge North Kambalda Pty Ltd is a wholly-owned subsidiary of Essential Metals.
Heron Resources Limited retains nickel laterite ore.
Heron Resources Limited retains pre-emptive right to purchase Nickel Laterite Ore.
Wattle Dam JV Agreement: Title, Mineral Rights held by Maximus Resources Limited, except nickel. Essential
Metals 20% free carried interest in NiS minerals.
Larkinville JV Agreement: Maximus Resources Limited 75% in Gold and Tantalite, Essential Metals 25% free
carried interest.
Larkinville JV Agreement: Maximus has an 80% interest in nickel rights, Essential Metals 20% free carried interest.
Acra JV Agreement Northern Star Resources Limited 75% interest. Essential Metals 25% free carried interest.
Ravensthorpe: Title and rights to all minerals held by ACH Minerals Pty Limited. Essential Metals 1.5% NSR.
Fairwater JV Agreement: Essential Metals 75% Interest, National Minerals P/L 25% free carried interest.
Gold royalty held by Morgan Stanley Finance Pty Limited and Morgan Stanley Capital Group Inc..
Subject to an Option Agreement with P Askins.
Subject to an earn-in Joint Venture with International Lithium Corp.
Maggie Hays Lake JV Agreement: Poseidon Nickel Limited 80%, Essential Metals 20% & free carried interest to
commencement of mining.
FMG Pilbara Pty Ltd 1.5% NSR royalty.
Ravensthorpe: Title and lithium/tantalum rights held by Galaxy Lithium Australia Limited. All other mineral rights
held by ACH Minerals Pty Limited. Essential Metals 1.5% NSR.
Kangan Farmin Agreement: Novo Resources Corp. may earn a 70% Project Interest (excluding lithium and related
minerals).
Cessna Dam JV Agreement. Essential Metals may earn an 80% Interest. Milford 20% free carried interest.
Balagundi Farmin Agreement: Black Cat Syndicate Limited may earn a 75% Project interest.
Katanning Gold Project: Essential Metals 1.5% NSR.
Western Copper Pty Ltd is a 100% owned subsidiary of Essential Metals.
Essential Metals Limited (previously named Pioneer Resources Limited) – 2020 Annual Report
91
Essential Metals Limited
ABN 44 103 423 981
Previously named:
Pioneer Resources Limited
ASX: ESS
72 Kings Park Road
West Perth WA 6005
www.essmetals.com.au
for a sustainable future
ABN 44 103 423 981
Previously named:
Pioneer Resources Limited
A N N U A L R E P O R T