ANNUAL REPORT
FOR THE YEAR ENDED 30 JUNE 2022
ABN 44 103 423 981
2022 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
Level 3,
1292 Hay Street,
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
BDO Audit (WA) Pty Ltd
Level 9,
Mia Yellagonga Tower 2,
5 Spring Street,
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 and listed share
options are quoted on the Australian
Securities Exchange.
ASX CODE
ESS - ordinary shares
ESSO - listed share options
CONTENTS
Lithium Market Overview
Letter from the Chairman
Letter from the Managing Director
Operational & Financial Review
Environmental, Social
& Governance (ESG) Overview
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
Competent Persons Statements
Forward Looking Statements
Tenement Register
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ESSENTIAL METALS ANNUAL REPORT 2022
LITHIUM MARKET
OVERVIEW
2
ESSENTIAL METALS ANNUAL REPORT 2022
We have now begun our journey into the Battery Age. As a result the booming demand that this has
caused, Lithium is now one of the most sought after commodities in the world.
Global Lithium-Ion Battery Market today and by 2030.
Market forecast to grow at a CAGR of 18.1%1
USD
$182.53
billion
OTHER DEMAND
STATIONARY STORAGE DEMAND
CONSUMER ELECTRONICS DEMAND
E-BUS DEMAND
COMMERCIAL EV DEMAND
PASSENGER EV DEMAND
USD
$48.19
billion
2022
2030
Key Demand Driver
200 new battery mega-factories planned by 20302
TOTAL CAPACITY
450Gwh
2022
TOTAL CAPACITY
2,857Gwh
2030
Electric vehicle battery factory under construction in Austin , Texas , USA
1 Source: IEA analysis based on S&P Global (2021), visualising the Global Demand for Lithium
2 Source: Green Car Reports Not enough battery factories to support EVs’ global rise past ICE vehicles in 2030 (Stephen Edelstein) (2021)
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ESSENTIAL METALS ANNUAL REPORT 2022LITHIUM MARKET OVERVIEW 4
ESSENTIAL METALS ANNUAL REPORT 2022
LETTER FROM THE
CHAIRMAN
The success of any business starts with its people, values,
vision, and commitment to executing that vision. We believe
that the core of our Company’s vision is perfectly aligned with
the forecast growth of the lithium-ion battery sector over the
coming years.
We are in the enviable position of progressing our 100% owned Pioneer Dome Lithium
Project in Western Australia, a tier 1 international mining jurisdiction.
As the effects of the COVID-19 global pandemic continues to deliver uncertainty on a
macro scale, we see a great opportunity for our shareholders to participate as a new force
in lithium and the attendant environmental advantages of its application.
With ever increasing demands from regulators and the focus on our social license to
operate within various local and foreign communities, we see Essential Metals’ portfolio
of projects placing your Company in a position to not just participate in, but to become a
new force in the global lithium supply chain.
The Essential Metals team led by Managing Director, Tim Spencer, has made significant
progress in advancing the Pioneer Dome to development with a scoping study
commencing in the September 2022 quarter with anticipated completion in Q4 of 2022.
The team at Essential Metals is more unified and adaptable than ever before and I
am confident given the committed approach of that team there will be significant
achievements in the year to come for which I thank them. I would also like to thank the
various stakeholders in your Company’s projects, particularly the Ngadju People, the
traditional owners of the land on which Essential Metals operates, our contractors, joint
venture partners and our shareholders.
I look forward to your continued support and keeping you updated on our progress.
Yours faithfully,
Craig McGown
Chairman of the Board of Directors
ESSENTIAL METALS ANNUAL REPORT 2022
5
LETTER FROM THE
MANAGING DIRECTOR
Driven by concern over climate change, the demand outlook for
lithium-ion batteries, particularly for the use in mobility applications
such as electric vehicles, is getting stronger and clearer as each month
passes. Paradoxically, it is also becoming clearer that the supply of
lithium will not be able to keep up with future latent demand and
it is evident that ESG compliant lithium from spodumene hard rock
deposits located in low risk jurisdictions such as Western Australia is
and will be the most sought after lithium supply source.
Essential Metals is very fortunate to own 100% of the Pioneer Dome Lithium Project that contains the
Dome North spodumene lithium Mineral Resource of 11.2Mt @ 1.21% Li2O in the northern part of the
Project area. The Pioneer Dome Project is located in the core of Western Australia’s lithium corridor
in the Eastern Goldfields, approximately 130km south of Kalgoorlie and 275km north of the Port of
Esperance.
As at the date of this report, Dome North is one of only 13 lithium Mineral Resources located in
Australia. This is evidence of the fact that finding spodumene deposits is difficult, adding to the
challenges of meeting future lithium demand expectations.
We are closing in on our objective of becoming a new force in the lithium supply chain as we advance
the Dome North Mineral Resource by improving its quality and confidence. Outstanding drill results
and metallurgical test work carried out this year has demonstrated the potential for taking the Project
forward by undertaking feasibility studies, commencing with a Mineral Resource Update and a Scoping
Study targeted to be completed by the end of 2022.
The Essential Metals team is excited and committed to advancing our projects, particularly our
lithium projects, to continue to create shareholder value.
Yours faithfully,
Timothy Spencer
Managing Director
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ESSENTIAL METALS ANNUAL REPORT 2022
ESSENTIAL METALS ANNUAL REPORT 2022
7
OPERATIONAL AND
FINANCIAL REVIEW
PIONEER DOME
LITHIUM PROJECT
(ESS: 100%)
The Pioneer Dome Lithium Project covers an
area of 450km2 and includes eight exploration
licences, one granted mining lease and one
granted miscellaneous licence. A Mining Lease
application is currently under application to
cover the Dome North Mineral Resource.
The tenement package is located ~150km south
of Kalgoorlie and 275km north of the deep-water
port of Esperance with the Coolgardie-Esperance
Highway adjacent to the eastern edge of the
Project. A gas pipeline and water pipeline are
located alongside the main highway which is
located 10km from the Project with access via
an unsealed access road.
LOCATION, TENURE AND
INFRASTRUCTURE
Essential Metals Limited’s (‘Essential’, or ‘the
Company’) flagship Pioneer Dome Lithium
Project (ESS: 100%) is located in the core of
Western Australia’s lithium belt in the Eastern
Goldfields, part of the Yilgarn Craton. A Mineral
Resource of 11.2Mt @ 1.21% Li2O has been
defined at Dome North within the northern area
of the Project (Refer ASX announcement dated
29 September 2020) and a Mineral Resource
Estimate update is planned to be undertaken
in the December 2022 quarter to underpin a
Scoping Study.
The southern Yilgarn area is recognised as
being well endowed with spodumene deposits,
including the Bald Hill Mine, the Mt Marion Mine,
the Manna Project and the Buldania Project. The
world-class Greenbushes Mine, Mt Holland Mine
and the Mt Cattlin Mine are located further west
of the Pioneer Dome Lithium Project.
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ESSENTIAL METALS ANNUAL REPORT 2022
GEOLOGY AND
MINERALISATION
The core intrusive of the Pioneer Dome is a
monzogranite. The eastern edge is marked
by the 50 Mile Tank Gneiss, an older unit that
has been intruded by the granite that may
represent an inlier of pre-greenstone basement.
Surrounding greenstone units include volcanics
of the Kalgoorlie Group (including the Kambalda
Komatiite), overlain by volcaniclastics and
sediments of the Black Flag Group.
Rare element pegmatites are present within
the Pioneer Dome Project. Dome North
contains spodumene bearing pegmatites and
the pegmatites around the Sinclair area have
pollucite-petalite-lepidolite mineralisation.
Pegmatites have been identified over greater
than 15 km strike length on the eastern side
of the Pioneer Monzogranite. A second group
(Dome North) is present near the northern end
of the monzogranite.
The Dome North pegmatites were discovered
in mid-2019 by geological mapping and rock
chip sampling over geochemical target areas.
Drilling to define the mineralisation commenced
shortly thereafter. The initial Mineral Resource
Estimate (‘MRE’) for the Cade Deposit, of 8.2 Mt @
1.23% Li2O was announced to the market on 25
November 2019.
Further work identified the Davy and Heller
deposits, and following a second drill
programme, an updated MRE, as presented in
Table 1, was reported to ASX on 29 September
2020.
Figure 1.
The location of the tenements
of the Pioneer Dome Lithium
Project relative to major
infrastructure.
ESSENTIAL METALS ANNUAL REPORT 2022
9
OPERATIONAL AND FINANCIAL REVIEW DOME NORTH LITHIUM MINERAL RESOURCE ESTIMATE
The Dome North Lithium Project
Category
Indicated
Inferred
Inferred
Inferred
Project area
Cade Deposit
Davy Deposit
Heller Deposit
Total
TABLE 1.
Dome North MRE
Tonnes
(Mt)
5.4
2.8
2.3
0.7
11.2
Grade
(Li2O %)
1.30
1.18
1.13
1.02
1.21
Tonnes Li2O
70,000
33,000
25,000
8,000
136,000
The Cade Deposit represents approximately three quarters of the Mineral Resource and includes
5.4Mt @ 1.3% lithium (Li2O) classified in the ‘Indicated’ category. The Cade Deposit averages over
20m in thickness with higher grade zones as represented by intersections such as 33m @ 1.63% Li2O.
The Heller and Davy Deposits are generally thinner (averaging around 10m) and are hosted in pre-
existing structures within basalt and pyroxene dominant ultramafic units.
Figure 2.
Cade deposit cross section, looking north demonstrating the high grade nature of the Cade Deposit from surface.
During the Reporting Period, work activities have focussed on improving the confidence and quality
of the Lithium Mineral Resource in order to advance the Project towards development. This has been
achieved by firstly drilling the near-surface upper zones of the Davy and Cade deposits to determine
the extent of weathering and lithium depletion.
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ESSENTIAL METALS ANNUAL REPORT 2022
OPERATIONAL AND FINANCIAL REVIEW On 15 October 2021, Essential announced the assay results from four RC drill holes
completed in the upper zone of the Cade Deposit designed to better understand
the weathering profile and evidence of any lithium depletion. Assay results
included:
21m @ 1.08% Li2O from surface (PDRC589)
24m @ 1.29% Li2O from surface (PDRC590)
15m @ 1.06% Li2O from 47 metres (PDRC591)
26m @ 1.46% Li2O from 51 metres (PDRC592)
The next drill programme was completed in the March 2022 quarter and the assays
were reported in June. The main objectives were to increase confidence in the
Lithium Mineral Resource Estimate by converting a large part of the Davy deposit
and areas across the upper zone of the Cade deposit from the Inferred to Indicated
Resource categories by in-fill drilling, measuring the bulk densities and completing
metallurgical test work. The assays and logged mineralogy indicate that this should
be achievable, subject to metallurgical test work. An update of the Mineral Resource
Estimate is planned for the December quarter. Results from the 2022 drilling are
shown in in Table 2.
Area
Cade
Cade
Cade
Cade
Cade
Cade
Cade
Cade
Davy
Davy
Davy
Davy
Davy
Hole_ID
PDD595
PDD596
PDD596
PDD597
PDD598
PDD599
PDD600
PDD600
PDD601
PDD603
PDD604
PDD605
PDD606
From (m)
11.6
15
51
18.5
14.4
3.6
21.1
46.8
45.4
17
99.2
97.1
72.6
To (m)
26.3
34.2
53.7
28.5
24
27.3
40
52.3
77.35
35.7
110.3
114.1
84.2
Width (m)
14.7
19.2
2.7
10
9.6
23.7
18.9
5.5
31.95
18.7
11.1
17
11.6
Li2O%
0.90
1.44
2.28
1.13
1.42
1.26
1.24
1.19
1.24
1.05
1.70
1.32
0.82
TABLE 2.
Significant lithium intersections from 2022 drilling*
* Intersections calculated using 0.5% Li2O
lower cut-off. All depths and widths are
down-hole measurements. True width may
be less than down hole length (Refer ASX
announcement dated 7 June 2022).
ESSENTIAL METALS ANNUAL REPORT 2022
11
OPERATIONAL AND FINANCIAL REVIEW Figure 3.
Long-section of the Cade deposit with previous drilling (thin black traces), completed HQ3 diamond drilling (thick green traces)
with lithium intersections and Lithium (Li2O) Mineral Resource Estimate (coloured by grade as per the legend).
Figure 4.
Example of drill core taken from the upper zone of the Cade Deposit illustrating the relatively homogenous mineralised
pegmatite and some weathering on fractured sections (Hole ID PDD598).
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ESSENTIAL METALS ANNUAL REPORT 2022
OPERATIONAL AND FINANCIAL REVIEW LITHIUM METALLURGY
In December 2019 Essential first engaged Primero Group Limited (ASX:PGX) to design and conduct
an independent Scoping Study level metallurgical test work programme on two composite samples
from five drill holes from the Cade deposit intended to represent the mean grade and lithology of the
deposit. Intersections from the five holes were previously reported as follows (refer ASX announcement
dated 4 February 2020):
31.6m @ 1.31% Li2O from 72 metres (PDRCD292)
27.4m @ 1.38% Li2O from 131 metres (PDRCD294)
27.2m @ 1.46% Li2O from 209 metres including 11m @ 1.79% Li2O (PDRCD295)
22.2m @ 1.72% Li2O from 128 metres (PDRCD318)
16.5m @ 0.86% Li2O from 166 metres (PDRCD293)
Under the DMS pilot test stage, a concentrate of 5.7% Li2O was achieved. The Secondary DMS floats
were then composited with -0.85mm material and used as feed to flotation test work, containing an
assayed grade of 1.67% Li2O.
The flotation test work based on the DMS feed included a series of tests with each one preceded by
grinding the feed to P80 150µm and de-sliming via screen or cyclone at a cut size of 20 µm before
performing the batch flotation tests.
Concentrate
T12 Flot Con & DMS Con
T15 Flot Con & DMS Con
TABLE 3.
Table 2: Concentrate Summary
Grade
(% Li2O)
5.66
5.65
Grade
(% Fe2O3)
1.3
0.7
Global Recovery
(%Li2O)
82%
74%
Future test work should result in improvements to grades and recoveries, and the work completed to
date shows that there is the potential to produce a marketable concentrate.
In June, metallurgical test work commenced on three composite samples selected from the March
Quarter drill programme, representing the near-surface upper zones of the Cade and Davy deposits
respectively and the fresh rock zone of the Davy deposit. This test work programme will also be
conducted by Nagrom Laboratories and is expected to be completed in September 2022.
ESSENTIAL METALS ANNUAL REPORT 2022
13
OPERATIONAL AND FINANCIAL REVIEW STEPS TOWARDS BEING DEVELOPMENT READY
During the December 2022 quarter, the Company expects to be able to complete an updated
lithium Mineral Resource Estimate, which together with the metallurgical test work results, will
underpin a Scoping Study. This in turn is expected to pave the way for a Feasibility Study commencing
in early 2023.
Steps are being taken to transition the Dome North Resource area to a ‘development ready’ status.
These steps include:
A flora and fauna study was completed with no material issues identified;
A hydrology study has been completed and multiple potential water sources have been identified;
Additional metallurgical test work, focussed on the upper zone of Cade deposit, and on the Davy
deposit, is planned to be completed by the end of September to complement previous successful
test work on Cade;
A mining agreement is in place with NNTAC, the representative body of the Ngadju people, the
custodians of the land on which the project is located; and
A mining lease application was lodged in August 2022.
The Dome North lithium Mineral Resource remains the only Australian lithium Mineral Resource not
yet subject to an offtake commitment.
The Company intends to commence discussions with various local and international lithium
participants interested in off-take and/or investment at the appropriate time.
Figure 5.
2022 Pioneer Dome Activity Timeline
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ESSENTIAL METALS ANNUAL REPORT 2022
OPERATIONAL AND FINANCIAL REVIEW
WORK SUBSEQUENT TO REPORTING PERIOD
Subsequent to the end of the current reporting period, Essential reported preliminary observations
from a drill programme at Dome North, targeting depth extensions at the Cade and Davy deposits, as
well as testing for northern and southern strike extensions at Davy (Refer ASX announcement dated
12 August 2022).
The reported programme consisted of 17 drill holes drilled at the Cade and Davy deposits. Drilling was
a combination of Reverse Circulation (RC) drilling, where the RC drill rig was able to reach the target
area, and RC pre-collars followed by diamond tails (RCD) for the deeper holes.
Pegmatite was intersected in each of the seven deeper holes at Cade, with visual spodumene observed
in three holes (PDRCD704, PDRCD706 and PDRCD708). For the other holes, spodumene was not readily
identifiable. Assays will be required to determine lithium content, as fine grained spodumene could be
present. The presence of mica (muscovite) in the holes tends to suggest that they intersected the lower
periphery zone to the spodumene mineralisation within the Cade pegmatite.
At Davy, each of the six holes drilled to test the northern extent of the Davy deposit intersected
pegmatites with visual spodumene recognised in five of the holes. The three holes drilled down dip
of the Davy deposit intersected pegmatite with no visible spodumene. The two holes drilled in the
southern extent of the Davy deposit did not intersect pegmatite.
Assays for this drill programme are expected to be received by November.
Figure 6.
Drilling to date for the North Dome programme on top of the interpreted regional geology.
ESSENTIAL METALS ANNUAL REPORT 2022
15
OPERATIONAL AND FINANCIAL REVIEW JUGLAH DOME
GOLD PROJECT
(ESS: 100%)
LOCATION, TENURE AND
INFRASTRUCTURE
Juglah Dome comprises of a single ~50
km2 tenement highly prospective for gold
mineralisation located ~60 km ESE of Kalgoorlie
(Figure 7) and is readily accessible from the
Mt Monger haul road and the Trans-Australian
Railway service road. Exploration by previous
owners identified multiple gold targets using
soil geochemistry and drilling. The Project lies in
a similar geological setting to that which hosts
the Majestic and Imperial Deposits located 10km
to the north-west and the Daisy Complex to the
west, which forms part of Silver Lake Resources
Limited’s Mt Monger Operations (Figure 6).
GEOLOGY AND
MINERALISATION
The project is located within the Kurnalpi
Terrane and includes a lower sequence of
chert, intermediate to felsic volcanics and
volcaniclastics, overlain by basalts. The sequence
has been folded and intruded by the Juglah
Monzogranite, which forms the core of the NW-
trending Bulong anticline, of which the project is
at the southern end (Figure 7).
Mineralisation is largely related to NNW to
NW trending shear zones, and also NNE-NE cross
structures. It is also generally hosted within felsic
porphyry dykes and felsic volcanics. The axis of
the anticline is also a control on mineralisation,
with the Moonbaker, John West and Axe Patch
prospects occurring along this NW trend.
In June 2022 Essential announced the
completion of a RC drill campaign carried out
on wide spaced sections up to 240m apart
to test along strike to the south of previous
drilling conducted in 2020, which returned an
intercept of 8m @ 2.18g/t Au from 34m (hole ID
20GDRC034) in the southern-most RC drill hole
of that drill programme.
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ESSENTIAL METALS ANNUAL REPORT 2022
OPERATIONAL AND FINANCIAL REVIEW the section 6,568,340N in holes 22GSRC013 and
22GSRC014 (Figure 7). The RC section spacing
was 160m to the north and south of these holes
with anomalous mineralisation intersected on
the adjacent sections.
Initial assay results were returned from either
three metre composite samples or one metre
rig mounted cone splits (where visual proxies
of gold mineralisation in the felsic porphyry
units were observed). The one metre splits from
anomalous three metre composites samples
were submitted for further gold analysis.
The most significant gold intersections from
this (March 2022) drilling included (refer ASX
announcement dated 30 June 2022):
5m @ 1.08g/t Au from 35m (22GSRC002)
12m @ 0.95g/t Au from 30m (22GSRC013) –
three metre composites
8m @ 1.49g/t Au from 75m including 1m
@ 7.30g/t Au (22GSRC014)
3m @ 0.73g/t Au from 57m (22GSRC003)
Gold anomalism and felsic porphyry units were
intersected on every drill line. Mineralisation
generally occurs within the felsic porphyry
units or at the sheared margins associated with
feldspar-pyrite alteration and quartz veining. The
strongest gold mineralisation was returned on
Figure 7.
Juglah Dome and Golden Ridge projects showing tenements and geology.
ESSENTIAL METALS ANNUAL REPORT 2022
17
OPERATIONAL AND FINANCIAL REVIEW
Figure 8.
Cross section containing holes 22GSRC0013 and 22GSRC0014.
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ESSENTIAL METALS ANNUAL REPORT 2022
OPERATIONAL AND FINANCIAL REVIEW GOLDEN RIDGE
GOLD PROJECT
(ESS: 100%)
LOCATION, TENURE AND
INFRASTRUCTURE
The Golden Ridge Project is located 20km
southeast of Kalgoorlie and is highly prospective
for gold and nickel mineralisation. The project
lies within the well-endowed Menzies-Boorara
Shear Zone that hosts the New Boddington,
Paddington, Boorara and Golden Ridge Deposits
(the latter two are owned by Horizon Minerals
Limited – ASX:HRZ). Exploration at the Project by
previous owners had identified multiple highly
prospective gold and nickel targets. Golden
Ridge comprises four MLs, three ELs and one L
for a total area of 145 km2.
GEOLOGY AND
MINERALISATION
The Golden Ridge tenements straddle the
Boorara Shear Zone (‘BSZ’) and the Mount
Monger Fault. The BSZ is an elongate NNW
trending zone, that extends from Menzies in
the north to south of Golden Ridge, and hosts
several gold deposits, including Paddington/
Broad Arrow and Golden Ridge. The total in-situ
resource at the 1985 commencement of mining
at Paddington was 8.4 Mt @ 3.2 g/t Au for 860,000
oz of contained gold. The Paddington mill is still
operating, treating material from other deposits
in the region.
Horizon Minerals owns and operates the Boorara
Gold Project immediately along strike to the
NNW of the Golden Ridge tenements, with this
project including the 448,000 oz Boorara deposit,
with total project resources of 19.02 Mt @ 1.66 g/t
gold for 1.02 Moz of contained gold.
The gold occurrences in the Golden Ridge project
are largely concentrated in the interpreted
younger volcanic and sedimentary units in the
northern part of the tenement package and are
localised between the Mount Monger Fault and
Boorora Shear Zone.
ESSENTIAL METALS ANNUAL REPORT 2022
19
OPERATIONAL AND FINANCIAL REVIEW In July 2021 Essential announced that it
had received all assays from a 92-hole/6,080m
Air-Core drill programme across three
prospects (Skandia, Maximus and AC75).
The most significant results from this drilling
are summarised below (refer ASX release dated
8 July 2021):
Skandia prospect (25 AC holes) results included:
8m @ 1.01 g/t Au from 96m including
3m @ 2.45g/t Au (hole GRA0454); and
12m @ 0.50 g/t Au from 60m
(hole GRA0388)
Figure 9.
Location of the Golden Ridge Gold Project.
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ESSENTIAL METALS ANNUAL REPORT 2022
OPERATIONAL AND FINANCIAL REVIEW
Figure 10.
Cross-section through the middle line of Skandia AC drilling with the interpreted mineralised primary structures, supergene
dispersion and bedrock lithologies. Note: west of section is prospective untested sediment.
Results from the drilling programme are encouraging and suggest potential for significant gold
mineralisation, especially to the west and along the interpreted strike of mineralisation intersected in
GRA0454. This area is 3km south and along strike of the Golden Ridge Gold Deposit (ASX:HRZ) with a
large coincident >20ppb Au soil anomaly with peak values to 174ppb Au.
Maximus prospect (26 AC holes) results included:
3m @ 3.0 g/t Au from 30m including 1m @ 6.07g/t Au (hole GRA0375);
5m @ 0.75 g/t Au from 57m (hole GRA0369); and
3m @ 0.89g/t Au from 24m and 6m @ 0.17g/t Au from 33m (hole GRA0368)
ESSENTIAL METALS ANNUAL REPORT 2022
21
OPERATIONAL AND FINANCIAL REVIEW Figure 11.
Location of Maximus AC drilling (blue pentagons), maximum Au (ppm) from drilling (coloured as per the legend) and area of
>20ppb Au-in-soil anomalism (yellow polygon), prospective area to the northeast of AC drilling (red dashed shape), interpreted
northwest trending structures (blue lines) and area of Maximus workings (black dashed outline).
The anomalous Au zones intersected in the
drilling correlate with intervals of massive
or brecciated quartz veining and are hosted
within siltstone, ultramafic or ferruginous upper
saprolite units. An interpreted north-west/
south-east trending structure is coincident with
anomalous drill intercepts with no previous
drilling for more than 1km along strike of this
structure to the south-east.
AC75 prospect (41 AC holes) results included:
12m @ 0.49 g/t Au from 51m including 3m
@ 1.01 g/t Au (hole GRA0415); and
9m @ 0.26 g/t Au from 54m
(hole GRA0451)
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ESSENTIAL METALS ANNUAL REPORT 2022
OPERATIONAL AND FINANCIAL REVIEW
Drilling intersected basalt and ultramafic lithologies with minor bands of chert and shale. The identified
mineralisation correlates with a roughly north-south oriented band of weakly brecciated shale and
chert units that are interpreted as narrow interflow sediments. Further interpretive work is required to
determine the future exploration activities, if warranted.
Figure 12.
Cross-section through the southern line of AC75 AC drilling with the interpreted mineralised primary structures, supergene
dispersion and bedrock lithologies.
ESSENTIAL METALS ANNUAL REPORT 2022
23
OPERATIONAL AND FINANCIAL REVIEW JOINT VENTURE
INTERESTS
GOLD: The Acra Project is near Kalgoorlie. Northern Star Resources Limited (‘Northern Star’) (ASX:NST)
has earned a 75% Project Interest and continues to fully fund exploration programmes until approval of
a Mining Proposal by DMIRS is received, with Essential Metals holding a 25% interest.
GOLD: The Kangan Project is in the West Pilbara and is part of a joint venture with Novo Resources Corp
(‘Novo’) (TSX.NVO), who is funding 100% of the gold exploration programmes until a decision to mine is
made, with Essential Metals holding a 30% interest.
GOLD: The Balagundi Project is subject to a farmin & JV agreement where Black Cat Syndicate Limited
(‘Black Cat’) (ASX:BC8) is earning a 75% interest in the Project located at Bulong, near Kalgoorlie.
Black Cat will then fully fund the gold exploration programmes until a decision to mine is made, with
Essential Metals retaining a 25% interest.
GOLD: The Company holds a 25% free-carried interest (20% for nickel rights) in the Larkinville Project
near Kambalda, WA, with Maximus Resources Ltd (‘Maximus’) (ASX:MXR).
NICKEL: The nickel mineral rights on the Blair-Golden Ridge Project, which includes the suspended
Blair Nickel Sulphide Mine, are subject to a farmin/joint venture with Australian Nickel Company
Limited (‘ANCO’), (aka: Crest Investment Group) a nickel exploration specialist which is earning up to a
75% interest. The Company will retain a 25% free-carried interest up to a decision to mine.
NICKEL: The Company holds a 20% free-carried interest (nickel only) in the Wattle Dam Project near
Kambalda, WA, with Maximus Resources Ltd (ASX:MXR).
24
ESSENTIAL METALS ANNUAL REPORT 2022
OPERATIONAL AND FINANCIAL REVIEW CORPORATE
COVID-19
Management continued to monitor the impact
of Government restrictions in response to the
COVID-19 pandemic throughout the current
reporting period and has taken measures to
ensure minimal disruption to the Company’s
operations and employees. With the exception
of industry-wide delays with respect to the
availability of drill rigs and drilling personnel and
time taken for laboratories to complete analysis
drilling and other sample assays, Essential did not
suffer any major operational delays during the
current reporting period. Essential will continue
to monitor the situation and government advice
around the pandemic and will act in accordance
with this advice.
EQUITY INSTRUMENTS
During the current reporting period the
Company issued 45,670,125 ordinary shares
for gross proceeds before share issue costs of
$5,965,000 comprising:
40,000,000 ordinary shares issued under a
Placement at $0.125 per share;
3,889,569 ordinary shares upon exercise
of 3,889,569 listed ESSO share options
exercisable at $0.15 on or before 30
November 2022;
180,556 ordinary shares upon exercise of
180,556 unlisted share options exercisable
at $0.45 on or before 30 November 2022;
1,500,000 ordinary shares upon exercise of
1,500,000 unlisted broker options exercisable
at $0.20 on or before 10 August 2023; and
100,000 ordinary shares upon exercise of
100,000 unlisted performance rights.
DISPOSAL OF SUBSIDIARY
On 4 January 2022 the Company completed
the sale of wholly owned Canadian subsidiary
Pioneer Canada Lithium Corp. to a subsidiary
of Critical Resources Limited (ASX:CRR) for the
following consideration:
$750,000 cash payment ($375,000 withheld
pending a Canadian foriegn income tax
assessment).
34,000,000 shares in Critical Resources
Limited.
Milestone payments:
- $750,000 cash payment following the
definition of a Mineral Resource Estimate
(as defined in the JORC Code 2012) for the
Mavis Lake Lithium Project with a volume of
not less than 5.0 million tonnes containing
not less than 50,000 tonnes of Li2O using a
cut-off grade of not less than 0.4% Li2O.
- $750,000 cash payment following the
definition of a Mineral Resource Estimate
(as defined in the JORC Code 2012) for the
Mavis Lake Lithium Project with a volume of
not less than 10.0 million tonnes containing
not less than 100,000 tonnes of Li2O using a
cut-off grade of not less than 0.4% Li2O.
LISTED INVESTMENTS
During the current reporting period the
Company sold its entire 34 million shareholding
in Critical Resources Limited (ASX:CRR) for
gross proceeds before costs of $2,809,000 at an
average sale price per share of $0.08.
During the current reporting period the
Company sold its entire 785,695 shareholding in
Medallion Metals Limited (ASX:MM8) for gross
proceeds before costs of $161,000 at an average
sale price per share of $0.20.
At the end of the current reporting period the
Company held 1.25 million shares in International
Lithium Corp (TSXV: ILC.V) valued at $110,000
($0.09 per share).
REGISTERED OFFICE AND PRINCIPAL
PLACE OF BUSINESS
On 1 July 2022 the Company announced that it
had changed its registered office and principal
place of business to Level 3, 1292 Hay Street,
West Perth, Western Australia 6005.
ESSENTIAL METALS ANNUAL REPORT 2022
25
OPERATIONAL AND FINANCIAL REVIEW
ENVIRONMENTAL, SOCIAL
ENVIRONMENT, SOCIAL
& GOVERNANCE (ESG)
& GOVERNANCE
ESG AT ESSENTIAL METALS
This is the Company’s inaugural Environmental, Social and
Governance (“ESG”) overview highlighting the relevant sustainability
management approach and initiatives in this financial year. Essential
Metals is focussed on finding and producing of metals essential
for a sustainable, low-carbon future. The Company is committed to
protecting and respecting the environment and local communities
within which it operates and looks forward to enhancing its positive
impact in these areas.
Since Essential Metals is currently at the exploration stage, the World
Economic Forum – Stakeholder Capitalism Index is considered to be
the preferred reporting framework. The Company is committed to align
itself with the Global Reporting Initiative (“GRI”) reporting framework
when the construction stage begins.
26
ESSENTIAL METALS ANNUAL REPORT 2022
ESG STAGED
APPROACH
STAGE 1
Finalise ESG
reporting framework
Allocate resources, roles and
responsibilities for ESG activities
Define material topics
Commence stakeholder
engagement program
Set up ESG data collection system
Prepare inaugural
ESG report
Outline Essential
Metals ESG Strategy
Expand data scope
Set goals for material topics
Conduct ESG policies and
procedures gap analysis
Commence an ESG Discovery Process
for the ESS Board & Management
to define opportunities for
value creation and risks
to manage
STAGE 2
STAGE 3
Monitor, measure and
manage progress on ESG goals
Begin adoption of Taskforce
for Climate Related Disclosures
(‘TCFD’) reporting recommendations
Review ESG opportunities and
risks throughout our wider
value-chain
ESSENTIAL METALS ANNUAL REPORT 2022
27
ENVIRONMENT, SOCIAL & GOVERNANCE ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) STAKEHOLDER ENGAGEMENT
AND MATERIALITY
ASSESSMENT
Essential Metals believes that ongoing and
effective engagement with its stakeholders is
important for the Company to meet expectations
in ESG performance and strategic development.
In the current reporting period, Essential Metals
commenced a materiality assessment with the
Company’s internal and external stakeholders to
guide its sustainability efforts and reporting.
The materiality assessment includes:
IDENTIFICATION
Identification and development of a list of
ESG issues that are relevant to the Company’s
business
Internal and external stakeholders to
complete a survey to rate the importance of
sustainability issues to Essential Metals.
PRIORITISATION
Development of a ranked list of material
topics based on the survey results.
VALIDATION
Determination of a list of material topics for
disclosure as an exploration stage company.
MATERIAL TOPICS
Topics
Environment
Pollution prevention
Biodiversity and rehabilitation
Water management and use
Climate risks and opportunities
Energy and emissions
Waste management
Social
Safety
Employee health and wellbeing
Employee attraction and retention
Diversity and inclusion
Employee development
Community engagement
Governance
Corporate governance
Business ethics
Economic performance
Human rights and modern slavery
Innovation
Supply chain management
Materiality Level
High
High
Medium
Low
Low
Low
High
High
High
High
Medium
Low
High
High
High
Medium
Medium
Low
28
ESSENTIAL METALS ANNUAL REPORT 2022
ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG)
ENVIRONMENT
Essential Metals is committed to environmental sustainability through the diligent management of
the activities it undertakes, including the identification and mitigation of risks to the natural
environment. As stated in our Environmental Policy, as part of our Employee Manual, the Company will
ensure that appropriate environmental management controls are identified and implemented during
the construction, operational, closure and post-closure stages of the projects.
Protecting biodiversity and supporting rehabilitation are integral to responsible mining across the life
of a mining operation. In the current reporting period, Essential Metals completed a flora and fauna
survey over the Dome North area. Desktop review and field surveys were conducted within the survey
area that is approximately 2,682 ha in extent and is located approximately 52 km north of Norseman,
Western Australia. Based on survey results, no threatened, priority or significant ecological communities
were identified within the survey area.
Closure planning is an important part of the Company’s business processes. The Western Australian
Mining Act 1978 requires the development of mine closure plans to ensure mining operations are
closed, decommissioned and rehabilitated in an ecologically sustainable manner. Following successful
completion of the Sinclair Caesium Mine, Essential Metals has developed a Mine Closure Plan which
will require the mine site to be rehabilitated in the future. The Mine Closure Plan adopted a risk-based
management approach to prevent or minimise adverse long-term environmental impacts (i.e. surface
water and groundwater pollution) arising from the project. The company will continue to optimise the
environmental outcomes for the mine closure.
ESSENTIAL METALS ANNUAL REPORT 2022
29
ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) SOCIAL
With our commitment to long-term sustainability, Essential Metals recognises the important roles
played by its people, its customers and the communities in which it operates. This means retaining and
attracting a values-aligned and highly competent workforce, ensuring workplace health and safety,
strengthening customer relationships and contributing to local communities.
EMPLOYMENT PRACTICES
Essential is dedicated to providing an inclusive and rewarding work environment that enables
the Company’s employees to grow and develop their potential. The Company’s Employee Manual
provides management with an approach to employment practices, working hours, rest periods, equal
opportunity, diversity, antidiscrimination, and the provision of other benefits and welfare.
The Company’s Corporate Code of Conduct, Diversity Policy and Employee Manual all provide a
framework for decisions and actions in relation to the ethical conduct in employment.
These documents set out the principles covering the appropriate conduct in a variety of contexts
and outlines the minimum standard of behaviour expected from employees.
HEALTH & SAFETY
The health and safety of our employees and contractors is of paramount importance to Essential
Metals. The Company’s commitment to adopting safe work practices is outlined in our Corporate
Governance Plan, Employee Manual, Emergency Response Management Plan and Occupational Health
and Safety Management Plan. It is the responsibility of the Company’s employees to act in accordance
with the occupational health and safety legislation, regulations and policies and to use the safety
equipment provided. Some of the actions the Company undertakes to maintain health and safety
standards include:
Provide safety information during onsite toolbox meetings and periodic staff meetings
Perform pre-employment medical checks
Established a COVID-19 & Other Infectious Disease Management Plan
Conduct site safety inductions for new starters
Deliver first aid training
Supply protective clothing and safety equipment
Provide travel insurance coverage
During the year the following injury rates were achieved across the Company’s operations:
Employees
Number of fatalities from work related injury
Total Lost time injuries frequency rate
Total recordable injuries
Total recordable injuries frequency rate
*Rate calculation is per 1,000,000 hours of work.
Number / Rate *
0
0
0
0
30
ESSENTIAL METALS ANNUAL REPORT 2022
ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) GOVERNANCE
Essential Metals is committed to operating ethically and with integrity in its business operations.
By operating with a strong focus on corporate governance, Essential Metals will strengthen its
sustainable long-term performance and value creation for all stakeholders.
CORPORATE GOVERNANCE
The Board of Essential Metals (the ‘Board’) is responsible for overseeing its corporate governance
policies and procedures. The Company’s Corporate Governance Plan forms the basis of a
comprehensive system of control and accountability for corporate governance. All Essential Metals’
policies and practices are reported against the 4th Edition of the ASX Corporate Governance Council’s
Corporate Governance Principles and Recommendations. The Board has responsibility to oversee the
sustainability governance by considering environmental and social impact to the Company’s business,
approving policies and monitoring compliance. As shown in the Company’s Board Skills Matrix, the
current mix of skills, experience and expertise of directors possess the desire to, and experience in,
leading Essential Metals to be an industry leader in the areas of environmental, social and corporate
governance.
For additional information on corporate governance, please refer to the Company’s website at
essmetals.com.au/corporate-governance.
ANTI-CORRUPTION
Essential Metals is committed to conducting business activities fairly, honestly with integrity, and
in compliance with all applicable laws, rules and regulations. The Company’s Anti-bribery and Anti-
corruption Policy sets out the responsibilities of our directors, employees, contractors and business
associates in upholding the Company’s commitment to preventing any form of bribery. This policy also
provides information and guidance on how to recognise and deal with any potential corruption issues.
Essential Metals provides anti-corruption training to its staff annually and during new staff induction.
WHISTLEBLOWER PROTECTION
Essential Metals encourages and supports its employees to speak up safely and securely if they
become aware of illegal or improper business conduct. The Company’s Whistleblower Protection
Policy provides information and guidance on how to report such conduct, how reports will be handled
and investigated in a timely manner and the support and protections available if a report is made.
The policy also sets out responsibilities of the Company’s employees, suppliers and associates in
upholding the Company’s commitment to reporting any illegal, unethical or improper conduct.
ESSENTIAL METALS ANNUAL REPORT 2022
31
ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) WORLD ECONOMIC FORUM – STAKEHOLDER CAPITALISM INDEX
WEF key data/question
Current status
The company’s stated purpose, as the expression
of the means by which a business proposes
solutions to economic, environmental and social
issues. Corporate purpose should create value for
all stakeholders, including shareholders.
Focused on finding and producing
metals essential for a sustainable,
low-carbon future. Our strategy is to
become a new force in the lithium
supply chain.
Start date
target
Completed
Disclosure
target
Disclosed FY22
Composition of the highest governance body
and its committees by: competencies relating
to economic, environmental and social topics;
executive or non-executive; independence;
tenure on the governance body; number of
each individual’s other significant positions
and commitments, and the nature of the
commitments; gender; membership of under-
represented social groups; stakeholder
representation.
A list of the topics that are material to key
stakeholders and the company, how the topics
were identified and how the stakeholders were
engaged.
See Board Skill Matrix and diversity
policy of the Essential Metals
Corporate Governance Plan.
Completed
Disclosed FY22
Disclosed in the ESG at Essential
Metals section of this Annual Report.
Completed
Disclosed FY22
Total percentage of governance body members,
employees and business partners who have
received training on the organisation’s anti-
corruption policies and procedures, broken down
by region. a) Total number and nature of incidents
of corruption confirmed during the current year,
but related to previous years; and b) Total number
and nature of incidents of corruption.
Training on Anti-corruption &
Bribery Policy is provided to all
senior managers and other relevant
personnel by the Board each year.
Essential Metals has not had any
incidents of corruption in the current
reporting period or in any prior
reporting periods.
Discussion of initiatives and stakeholder
engagement to improve the broader operating
environment and culture, in order to combat
corruption.
Operating in Australian jurisdiction
there is a low risk of corruption.
The Essential Metals Anti-Bribery and
Corruption policy has guidance on
ethical and lawful behaviour.
Completed
Disclosed FY22
Completed
Disclosed FY22
A description of internal and external mechanisms
for seeking advice about ethical and lawful
behaviour and organisational integrity.
The Essential Metals Anti-Bribery and
Corruption policy has guidance on
ethical and lawful behaviour.
Completed
Disclosed FY22
A description of internal and external mechanisms
for reporting concerns about unethical or unlawful
behaviour and lack of organisational integrity.
The Company’s Whistleblower policy
stipulates mechanisms for reporting
concerns about unethical or unlawful
behaviour and lack of organisational
integrity.
Completed
Disclosed FY22
A description of principal material risks and
opportunities facing the company specifically
(as opposed to generic sector risks)
Risks are outlined in this
Annual Report.
Completed
Disclosed FY22
A description of the company appetite in respect
of these risks, how these risks and opportunities
have moved over time and the response to those
changes.
Risks are outlined in this
Annual Report.
Completed
Disclosed FY22
32
ESSENTIAL METALS ANNUAL REPORT 2022
ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) WORLD ECONOMIC FORUM – STAKEHOLDER CAPITALISM INDEX
WEF key data/question
Current status
Start date
target
For all relevant greenhouse gases (e.g. carbon
dioxide, methane, nitrous oxide, F-gases etc.),
report in tCO2e GHG Protocol Scope 1 and Scope
2 emissions.
Emissions are at an immaterial level
until development and construction
begins.
When
construction
begins
Disclosure
target
When
construction
begins
Fully implement the recommendations of the
TCFD. If necessary, disclose a timeline of at most
three years for full implementation.
Emissions are at an immaterial level
until development and construction
begins.
When
construction
begins
When
construction
begins
Outstanding disclosures:
Implementation or roadmap towards
the recommendations of the TCFD.
Report the number and area (in hectares) of sites
owned, leased or managed in or adjacent to
protected areas and/or key biodiversity
areas (‘KBA’).
No projects are owned, leased or
managed in or adjacent to protected
areas and/or KBA.
Completed
Disclosed FY22
Megalitres of water withdrawn, megalitres of
water consumed and the percentage of each
in regions with high or extremely high baseline
water stress, according to WRI Aqueduct water
risk atlas tool.
Water usage is at an immaterial level
until development and construction
begins.
When
construction
begins
When
construction
begins
Percentage of employees per employee category,
by age group, gender and other indicators of
diversity (e.g. ethnicity).
Essential Metals currently has seven
employees. Diversity will become
material when development and
construction begins.
When
construction
begins
When
construction
begins
Ratio of the basic salary and remuneration for
each employee category by significant locations
of operation for priority areas of equality: women
to men, minor to major ethnic groups, and other
relevant equality areas.
Essential Metals currently has
seven employees. Priority areas of
equality will become material when
development and construction
begins.
When
construction
begins
When
construction
begins
Ratios of standard entry level wage by gender
compared to local minimum wage.
Essential Metals currently has seven
employees. Gender wage ratios will
become material when development
and construction begins.
When
construction
begins
When
construction
begins
Ratio of the annual total compensation of
the CEO to the median of the annual total
compensation of all its employees, except the
CEO.
An explanation of the operations and suppliers
considered to have significant risk for incidents of
child labour, forced or compulsory labour.
Essential Metals currently has seven
employees. The CEO to employee
remuneration ratio will become
material when development and
construction begins.
As Essential Metals only operates in
Australia and uses local suppliers,
there is a very low risk of incidents of
child labour, forced or compulsory
labour.
When
construction
begins
When
construction
begins
When
construction
begins
When
construction
begins
ESSENTIAL METALS ANNUAL REPORT 2022
33
ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) WORLD ECONOMIC FORUM – STAKEHOLDER CAPITALISM INDEX
WEF key data/question
Current status
The number and rate of fatalities as a result of
work-related injury; high-consequence work-
related injuries (excluding fatalities); recordable
work-related injuries; main types of work-related
injury; and the number of hours worked.
There were zero fatalities, injuries,
incidents or accidents in the current
reporting period.
An explanation of how the organisation facilitates
workers’ access to non-occupational medical
and healthcare services, and the scope of access
provided for employees and workers.
Essential Metals does not currently
facilitate workers’ access to non-
occupational medical and healthcare
services.
Start date
target
Disclosure
target
Completed
Disclosed FY22
Completed
Disclosed FY22
Average hours of training per person that the
organisation’s employees have undertaken
during the reporting period, by gender and
employee category (total number of hours of
training provided to employees divided by the
number of employees).
Essential Metals currently has seven
employees. Training hours will
become material when development
and construction begins.
When
construction
begins
When
construction
begins
Average training and development expenditure
per full time employee (total cost of training
provided to employees divided by the number
of employees).
Essential Metals currently has seven
employees. Training expenditure will
become material when development
and construction begins.
When
construction
begins
When
construction
begins
Total number and rate of new employee hires
during the reporting period, by age group,
gender, other indicators of diversity and region.
Essential Metals currently has seven
employees. New hire profiling will
become material when development
and construction begins.
When
construction
begins
When
construction
begins
Total number and rate of employee turnover
during the reporting period, by age group,
gender, other indicators of diversity and region.
Essential Metals currently has seven
employees. Employee turnover will
become material when development
and construction begins.
When
construction
begins
When
construction
begins
Direct economic value generated and distributed
(‘EVG&D’), on an accruals basis, covering the
basic components for the organisation’s global
operations.
Financial assistance received from the
government: total monetary value of financial
assistance received by the organisation from any
government during the reporting period.
Total capital expenditures (‘CapEx’) minus
depreciation, supported by narrative to describe
the company’s investment strategy
Share buybacks plus dividend payments,
supported by narrative to describe the company’s
strategy for returns of capital to shareholders.
To be disclosed in FY23.
FY23
FY23
To be disclosed in FY23.
FY23
FY23
To be disclosed in FY23.
FY23
FY23
To be disclosed in FY23.
FY23
FY23
Total costs related to research and development.
To be disclosed in FY23.
The total global tax borne by the company.
To be disclosed in FY23.
FY23
FY23
FY23
FY23
34
ESSENTIAL METALS ANNUAL REPORT 2022
ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) DIRECTORS’
REPORT
ESSENTIAL METALS ANNUAL REPORT 2022
35
Your directors present their report on Essential Metals Limited
(‘Company’) and the entities it controlled (‘Group’) at the end of and
during the year ended 30 June 2022.
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
Details
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
B.Comm
Independent Non-Executive Chairman
13 June 2008
N/A
14 years 3 months
Mr McGown is an investment banker with over 40 years of experience consulting to
companies in Australia and internationally, particularly in the natural resources sector.
He holds a Bachelor of Commerce degree, was a Fellow of the Institute of Chartered
Accountants and 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.
Sipa Resources Limited - 11 March 2015 to present
QMetco Limited (formerly Realm Resources Limited) - 31 May 2018 to present.
Venturex Resources Limited – 8 February 2021 to 9 June 2021
B.Econ, CPA
Managing Director
31 March 2020
N/A
2 year 6 months (as Managing Director)
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.
Current ASX listed
directorships
Former ASX listed
directorships in the
last three years
None
None
36
ESSENTIAL METALS ANNUAL REPORT 2022
DIRECTORS’ REPORT Director
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
Details
B App Sc (Geology) Grad Dip Min Ec
Independent Non-Executive Director
24 January 2020
N/A
2 year 9 months
Mr Payne is a Fellow of the Australasian Institute of Mining and Metallurgy 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 initial major 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
B. App Sci (Metallurgy), MSc Min. Econ, GradDipBus
Independent Non-Executive Director
1 August 2020
N/A
2 year 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 Kingfisher Mining Limited and Nico 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.
Current ASX listed
directorships
Former ASX listed
directorships in the
last three years
Kingfisher Mining Limited – 4 December 2018 to present
Nico Resources Limited – 29 April 2021 to present
Poseidon Nickel Limited – 1 June 2022 to present
Nelson Resources Limited – 1 February 2019 to 31 May 2022
Millennium Minerals Limited – 27 August 2019 to 7 September 2020
DIRECTORS’ SHAREHOLDINGS
As at the date of this report, the interests of the directors in the shares, options and performance rights
of Essential Metals Limited were:
Director
C. McGown
T. Spencer
P. Payne
W. Hallam
Ordinary
Shares
2,177,031
1,289,411
930,569
200,000
Unlisted
Share Options
1,000,002
1,500,000
600,000
600,000
Unlisted
Performance Rights
-
1,750,463
-
-
ESSENTIAL METALS ANNUAL REPORT 2022
37
DIRECTORS’ REPORT 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. Travaglini
A. Dunn
Unlisted
performance
rights
795,918
585,945
520,839
Issuing entity
Essential Metals Limited
Essential Metals Limited
Essential Metals Limited
Number of ordinary
shares under option/
right
795,918
585,945
520,839
DIRECTORS’ MEETINGS
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). Ten board meetings were held during the financial year.
The remuneration and audit committees were suspended on 31 March 2020 with the full board of
directors assuming the responsibilities of these committees from that date.
Director
C McGown
T Spencer
P Payne
W Hallam
Board of Director’s Meetings
Eligible
Attended
9
9
9
9
9
9
9
9
COMPANY SECRETARY
Name
Details
Carl Travaglini
Qualifications
Company Secretary
Appointment date
Resignation date
Length of service
Biography
CA, ACG (CS)
31 March 2020
N/A
2 year 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 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
14 years’ experience in financial reporting, corporate governance and risk management
38
ESSENTIAL METALS ANNUAL REPORT 2022
DIRECTORS’ REPORT PRINCIPAL ACTIVITIES
The principal activities of the Group during the current reporting period consisted of mineral
exploration in Western Australia.
On 4 January 2022 the Company completed the sale of wholly owned Canadian subsidiary Pioneer
Canada Lithium Corp. which held Essential’s 51% interest in the Mavis Lake Lithium Project in Canada.
There were no other significant changes in the nature of the Group’s principal activities during the
financial year.
RESULTS OF OPERATIONS
The consolidated net loss after income tax for the financial year was $1,407,000 (2021: $1,383,000 loss)
which included project exploration write-offs/write-downs of $113,000 (2021: $477,000).
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 $3,188,000 (2021: $2,488,000) on exploration and
evaluation expenditure. This includes $3,185,000 of exploration and evaluation expenditure capitalised
to the Statement of Financial Position (2021: $2,388,000) and $3,000 exploration expensed to the
Statement of Profit and Loss and Other Comprehensive Income (2021: $100,000) where the Group does
not yet hold the rights to tenure. The Group’s exploration and evaluation efforts were focussed during
the reporting period on:
The Pioneer Dome Lithium Project in Western Australia.
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 Limited, Novo Resources Corp, Black Cat Syndicate
Limited, Maximus Resources Limited and Australian Nickel Company Limited, were active in the Acra,
Kangan, Balagundi, Wattle Dam-Larkinville and Blair-Golden Ridge joint ventures, respectively.
Exploration write-downs totalled $113,000 (2021: $477,000) 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 2022 the Group had cash reserves of $10,527,000 (2021: $5,466,000). The movement in
cash is detailed in the Statement of Cash Flows on page 60 of this report.
FUTURE DEVELOPMENTS, BUSINESS STRATEGIES AND PROSPECTS FOR
FUTURE FINANCIAL YEARS
The Group is advancing the following projects:
(i)
Exploration and pre-development activities at the Pioneer Dome Lithium Project located
approximately 50km north of Norseman, WA;
(ii) Exploration activities at the Juglah Dome Project, prospective for gold and VHMS deposits,
located approximately 60km east-southeast of Kalgoorlie, WA;
(iii) Exploration activities at the Blair - Golden Ridge Project (gold) located approximately 20km
south-east of Kalgoorlie; and
ESSENTIAL METALS ANNUAL REPORT 2022
39
DIRECTORS’ REPORT
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 for review 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. The Board has also established a “Whistle Blower”
protocol to ensure all employees have, if required, access to such a process.
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://www.essmetals.com.au/corporate-governance.
EMPLOYEES
The Group employed five permanent employees as at 30 June 2022 (2021: five employees) and two
casual employees (2021: two casual employees).
ENVIRONMENTAL REGULATIONS
The Group holds various licences that regulate its activities in Australia. 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 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
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.
There was no other significant change in the state of affairs of the Group during the current
reporting period.
40
ESSENTIAL METALS ANNUAL REPORT 2022
DIRECTORS’ REPORT SUBSEQUENT EVENTS
Subsequent to the end of the current financial year but before the date of this report the Group
issued 1,546,362 ordinary shares upon the exercise of ESSO listed options exercisable at $0.15 on or
before 30 November 2022 for gross proceeds of $232,000 before share issue costs.
On 17 August 2022 the Group issued 430,985 unlisted performance rights to employees under the
Group’s shareholder approved Equity Incentive Plan for the 2022/23 financial year. The Managing
Director is entitled to receive 219,718 unlisted performance rights on the same terms, subject to
Shareholder approval.
The performance rights are subject to the following vesting criteria:
a)
Absolute TSR: 50% of the granted performance rights will be subject to a vesting condition,
whereby the Absolute Total Shareholder Return (Absolute TSR) must exceed 25%. Absolute TSR
is measured as follows:
‘Absolute TSR’ = [(Ending Price – Beginning Price) + Dividends]/Beginning Price.
‘Beginning Price’ = Closing price on 30 June 2022.
‘Ending Price’ = Closing price on 30 June 2025.
b) Relative TSR: 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 70% of the 10 peer group of companies over the performance period.
To be clear, this vesting condition can only be met if the Company’s TSR is positive.
The Peer Group of companies is as follows:
GL1 Global Lithium Limited
MLS Metals Australia Limited
GT1 Green Technology Metals Limited
EFE
Eastern Resources Limited
LPI Lithium Power International Limited
OCN Oceana Lithium Limited
RDT Red Dirt Metals Limited
CHR
Charger Metals Limited
MRR Minrex Resources Limited
AAJ
Aruma Resources Limited
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, 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)
On 4 January 2022 the Company completed the sale of 100% of the shares held in Pioneer Canada
Lithium Corp. (BC1082452) (British Columbia, Canada).
ESSENTIAL METALS ANNUAL REPORT 2022
41
DIRECTORS’ REPORT
CAPITAL STRUCTURE
LISTED SHARES AND OPTIONS ON ISSUE
On 4 August 2021 the Company announced a $5,000,000 placement of new fully paid ordinary shares
to sophisticated and professional investors through the issue of 40,000,000 new fully paid ordinary
shares at an issue price of $0.125 per new share. Tranche 1 totalling 36,780,000 shares were issued on
11 August 2021. Tranche 2 totalling 3,220,000 shares were issued on 22 September 2021 including
1,200,000 shares issued to Directors of the Company.
As at the date of this report, the Group had 248,033,787 fully paid ordinary shares on issue (ASX:ESS)
and 19,174,367 listed share options on issue (ASX:ESSO).
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
Essential Metals Ltd
Essential Metals Ltd
Essential Metals Ltd
Essential Metals Ltd
Essential Metals Ltd
Essential Metals Ltd
Essential Metals Ltd
Essential Metals Ltd
Essential Metals Ltd
Essential Metals Ltd
Essential Metals Ltd
Essential Metals Ltd
Essential Metals Ltd
Essential Metals Ltd
Essential Metals Ltd
Listed Share Option
Unlisted Share Option
Unlisted Share Option
Unlisted Share Option
Unlisted Share Option
Unlisted Share Option
Unlisted Share Option
Unlisted Share Option
Unlisted Share Option
Unlisted Share Option
Unlisted Share Option
Unlisted Share Option
Unlisted Performance Right
Unlisted Performance Right
Unlisted Performance Right
Number
19,174,367
713,890
500,000
500,000
500,000
500,000
533,334
533,334
533,334
200,000
200,000
200,000
1,145,610
500,000
2,067,602
Class of
shares
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Exercise
price of
option
Expiry
date of
option/right
$0.15
$0.45
$0.20
$0.25
$0.35
$0.45
$0.25
$0.35
$0.25
$0.125
$0.175
$0.225
N/A
N/A
N/A
30-Nov-2022
30-Nov-2022
10-Aug-2023
31-Jan-2024
31-Jan-2024
31-Jan-2024
30-Jun-2024
30-Jun-2024
30-Jun-2024
30-Sep-2024
30-Sep-2024
30-Sep-2024
30-Jun-2024
31-Jan-2024
30-Jun-2025
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 2022 3,889,569 ESSO listed share options (2021: Nil) and
1,680,556 unlisted share options were exercised (2021: Nil).
PERFORMANCE RIGHTS CONVERTED
During the financial year ended 30 June 2022 100,000 unlisted performance rights were converted into
ordinary shares (2021: Nil).
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.
42
ESSENTIAL METALS ANNUAL REPORT 2022
DIRECTORS’ REPORT 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 55. Other than $4,000 paid for equity incentive valuation services, there
were no amounts paid or payable to the Group’s auditors BDO Audit (WA) Pty Ltd, for non-assurance
services performed during the year ended 30 June 2022 (2021: Nil). Refer to Note 28 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.
ESSENTIAL METALS ANNUAL REPORT 2022
43
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
Other KMP remuneration
Details of remuneration
Share-based compensation
Key terms of employment agreements with executive KMPs
Relationship between the remuneration policy and company performance
Page
44
44
45
46
47
50
52
53
54
A. INTRODUCTION
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 (‘KMP’) for the financial year ended 30 June 2022.
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 KMP 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
Executive Directors
Mr Timothy Spencer
Other KMP
Mr Carl Travaglini
Mr Andrew Dunn
Independent Non-executive Chairman
Independent Non-executive director
Independent Non-executive director
Managing Director
Chief Financial Officer & Company Secretary
Exploration Manager
The above named persons held their current position for the whole of the financial year and since the
end of the financial year unless otherwise stated.
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 and as at the date of this report the board continues to assume the responsibilities of
the Remuneration Committee with executive and 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 Board of Directors responsibilities include reviewing the remuneration arrangements for the
executive and non-executive directors and 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 KMP, including their base salary, short-term
and long-term incentives, superannuation, termination payments and service contracts.
Further information relating to the role of the Board in relation to remuneration can be found within
the Corporate Governance Report provided on the Company’s website.
44
ESSENTIAL METALS ANNUAL REPORT 2022
DIRECTORS’ REPORT 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 highly skilled KMP 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 KMP 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 KMP 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 the Managing Director and other KMP has three components:
Remuneration
elements
Fixed Remuneration
Purpose
Pay for meeting role
requirements
Category
Fixed Pay
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
Definition of
pay category
Pay linked to the present
value or market rate of
the role.
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.
ESSENTIAL METALS ANNUAL REPORT 2022
45
DIRECTORS’ REPORT
To link KMP remuneration with the Company’s performance, the Company’s policy is to endeavour to
provide an appropriate portion of each KMP’s total remuneration as ‘at risk’. The following graph sets
out the mix of remuneration for all KMP between fixed, STIs and LTIs for the 2022 financial year.
Annual General Meeting voting results
The Company received strong support for its 2021 Remuneration Report as evidenced by voting results
at the Company’s 2021 Annual General Meeting (AGM).
The Board assesses the appropriateness of the nature of the amount of remuneration of KMP 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 management
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 did not employ the services of a remuneration consultant for the current financial year
ended 30 June 2022 or previous financial year ended 30 June 2021.
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.
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 are entitled to receive unlisted share options which are presented as LTI remuneration in
the Remuneration Report.
Non-executive directors are not entitled to termination payments.
46
ESSENTIAL METALS ANNUAL REPORT 2022
DIRECTORS’ REPORT E. OTHER KMP REMUNERATION
The Company aims to reward KMP with a level of remuneration commensurate with their position
and responsibilities within the Company so as to:
Reward KMP for Company and individual performance against targets set by reference to
appropriate benchmarks;
Reward KMP 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); and
Long-term incentives (equity based).
Fixed remuneration
KMP receive a fixed base cash salary and other associated benefits. KMP also receive superannuation
at a rate equivalent to the superannuation guarantee contribution required by Australian legislation,
which was 10% throughout the financial year ended 30 June 2022. No KMP receive any other
retirement benefits.
Fixed remuneration of KMP will be set by the Board each year and is based on market relativity and
individual performance. In setting fixed remuneration for KMP, individual performance, skills, expertise
and experience are also taken into account to determine where the KMP’s remuneration should sit
within the market range.
Fixed remuneration for KMP will be reviewed annually to ensure each KMP’s remuneration remains
fair and competitive. However, there is no guarantee that fixed remuneration will be increased in any
service contracts for KMP.
Short-term incentives
Under the Company’s remuneration policy, all employees, including the Managing Director and other
KMP, 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 KMP remuneration
and the potential for creation of shareholder wealth.
The objective of the Short-Term Incentive (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
ESSENTIAL METALS ANNUAL REPORT 2022
47
DIRECTORS’ REPORT
(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. STI awarded - hurdle met by 30 June 2022:
Successful completion of the sale of wholly owned subsidiary Pioneer Canada Lithium Corp.
which held the Company’s 51% interest in the Mavis Lake Lithium Project as announced on
5 January 2022.
B. STIs forfeited - hurdles not met by 30 June 2022:
New project generation;
significant advancements to existing projects;
execution of a farm-out joint venture; and
KMP STIs
A – STIs awarded
Timothy Spencer
Carl Travaglini
Andrew Dunn
B – STIs forfeited
Timothy Spencer
Carl Travaglini
Andrew Dunn
Maximum
$163,000
$78,000
$45,000
$40,000
$122,250
$58,500
$33,750
$30,000
Granted
$40,750
$19,500
$11,250
$10,000
-
-
-
-
%
33%
33%
33%
33%
-
-
-
-
Long-term incentives
Long-term incentives (LTIs) are issued under the Company’s Equity Incentive Plan (EIP) approved
by shareholders at the AGM held on 15 December 2020. The purpose of issuing LTIs is to reward
the management team in a manner which aligns this element of remuneration with the creation of
shareholder wealth. As such LTIs are issued to employees who are able to influence the generation of
shareholder wealth and thus have an impact on the Company’s performance. LTIs issued to employees
are delivered in the form of performance rights. The terms of LTIs issued under the Company’s EIP 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;
48
ESSENTIAL METALS ANNUAL REPORT 2022
DIRECTORS’ REPORT
(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.
This vesting condition can 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.
ESSENTIAL METALS ANNUAL REPORT 2022
49
DIRECTORS’ REPORT
F. DETAILS OF REMUNERATION
Fixed remuneration
Variable remuneration
2022
Base
salary
$
Other
$
Super-
annuation
ETPs
$
STIs
Cash
$
LTIs6
Non-cash
$
Total
$
Performance
based
Current Disclosed KMP
Non-executive Directors
C McGown1
P Payne2
W Hallam2
Executive Director
T Spencer3
Other KMP
C Travaglini4
A Dunn5
Total
Remuneration
82,500
54,545
54,545
261,000
225,000
200,000
877,591
-
-
-
-
5,455
5,455
6,412
26,950
2,443
9,787
18,642
23,625
21,000
82,484
-
-
-
-
-
-
-
-
-
-
-
-
-
82,500
60,000
60,000
19,500
78,157
392,019
11,250
10,000
40,750
26,467
23,175
127,798
288,785
263,961
1,147,265
0%
0%
0%
25%
13%
13%
15%
Notes:
1 - Mr McGown’s director fees were paid to Resource Investment Capital Advisors Pty Ltd.
- Mr McGown’s director fees were increased to $85,000 per annum plus 10.5% superannuation effective 1 July 2022.
2 - Mr Payne and Mr Hallam’s director fees were increased to $60,000 per annum plus 10.5% superannuation effective 1 July 2022.
3
- Mr Spencer’s ‘other benefits’ relate to the cost of working director insurance coverage, the cost of car parking at the Company’s premises and a
provision for accrued annual leave entitlements.
- Mr Spencer accrued a cash bonus for the current financial year for successfully meeting KPIs as at 30 June 2022 as stated above.
- Mr Spencer’s base salary increased from $250,000 to $260,000 per annum effective 1 July 2021.
4 - Mr Travaglini’s ‘other benefits’ relate to the cost of car parking at the Company’s premises and a provision for accrued annual leave entitlements.
- Mr Travaglini accrued a cash bonus for the current financial year for successfully meeting KPIs as at 30 June 2022 as stated above.
- Mr Travaglini’s base salary increased from $215,000 to $225,000 per annum effective 1 July 2021.
5 - Mr Dunn’s ‘other benefits’ relate to the cost of car parking at the Company’s premises and a provision for accrued annual leave entitlements.
- Mr Dunn accrued a cash bonus for the current financial year for successfully meeting KPIs as at 30 June 2022 as stated above.
- Mr Dunn’s base salary increased from $180,000 to $200,000 per annum effective 1 July 2021.
6 - Current period apportionment of unlisted performance rights share based payment expense
50
ESSENTIAL METALS ANNUAL REPORT 2022
DIRECTORS’ REPORT
Fixed remuneration
Variable remuneration
2021
Base
salary
$
Other
$
Super-
annuation
ETPs
$
STIs
Cash
$
LTIs6
Non-cash
$
Total
$
Performance
based
Current Disclosed KMP
Non-executive Directors
C McGown1
P Payne2
W Hallam3
Executive Director
T Spencer4
Other KMP
C Travaglini5
A Dunn6
Totals
82,500
54,794
50,228
250,000
215,000
142,912
795,434
3,996
3,996
3,996
-
5,205
4,772
5,493
24,225
13,407
15,638
46,526
20,731
13,833
68,766
-
-
-
-
-
-
-
-
-
-
(20,278)
30,000
23,600
66,218
93,995
82,596
5,000
13,732
298,450
3,225
2,700
10,925
13,536
5,676
66,266
265,899
180,759
987,917
0%
32%
29%
6%
6%
5%
8%
Former Disclosed KMP
Other KMP
S Kerr7
Total
Remuneration
44,011
839,445
1,153
47,680
4,181
72,947
15,739
15,739
-
10,925
(6,840)
59,426
58,244
1,046,161
0%
7%
Notes:
1 - Mr McGown’s director 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. A share based payment expense was also recognised in the current financial year for replacement
unlisted share options issued to Mr McGown on 7 July 2020 following shareholder approval.
2 - 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 Hallam was appointed on 1 August 2020.
- Mr Hallam’s ‘other benefits’ relate to an allocation of the cost of Director’s and Officer’s insurance coverage during the period.
4 - Mr Spencer’s ‘other benefits’ relate to an allocation of the cost of Director’s and Officer’s insurance coverage during the period, the cost of
working director insurance coverage, the cost of car parking at the Company’s premises and a provision for accrued annual leave entitlements.
- Mr Spencer accrued a cash bonus for the current financial year for successfully meeting KPIs as at 30 June 2021 as stated above.
- Unlisted share options issued to Mr Spencer in the financial year ended 30 June 2018 lapsed in the current financial year resulting in a reduction
to the LTI share based payment expense.
5
- Mr Travaglini’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 a provision for accrued annual leave entitlements.
- Mr Travaglini’s base salary increased to from $200,000 to $215,000 per annum effective 25 August 2020 in line with the terms of his Executive
Services Agreement.
6 - Mr Dunn became a KMP on 14 September 2020.
- Mr Dunn’s ‘other benefits’ relate to the cost of car parking at the Company’s premises and a provision for accrued annual leave entitlements.
- Mr Dunn accrued a cash bonus for the current financial year for successfully meeting KPIs as at 30 June 2021 as stated above.
7 - Mr Kerr ceased to be a KMP on 28 September 2020.
- Mr Kerr’s ‘other benefits’ relate to the cost of car parking at the Company’s premises and a provision for accrued annual leave entitlements.
- Unlisted share options issued to Mr Kerr in the financial year ended 30 June 2018 both lapsed and cancelled upon cessation of employment in
the current financial year resulting in a negative LTI share based payment expense.
ESSENTIAL METALS ANNUAL REPORT 2022
51
DIRECTORS’ REPORT
G. SHARE-BASED COMPENSATION
The following table sets out the type and number of LTIs granted to KMP during the current
financial year:
KMP
C Travaglini
A Dunn
T Spencer
Total
Class
Grant Date
Number
Unvested Performance Rights
Unvested Performance Rights
Unvested Performance Rights
27-Jul-2021
27-Jul-2021
23-Nov-2021
459,184
408,163
795,918
1,663,265
Exercise
Price
N/A
N/A
N/A
Expiry Date
30-Jun-2025
30-Jun-2025
30-Jun-2025
Vested
during year
33%
33%
33%
The movement in equity instruments over shares for KMP in the current year was as follows:
Share
Options
C McGown
P Payne
W Hallam
T Spencer
Totals
Balance at
1 July 2021
Granted as
compensation
1,176,472
776,470
600,000
1,676,470
4,229,412
-
-
-
-
-
Exercised
-
-
-
(176,470)
(176,470)
Lapsed or
cancelled
-
-
-
-
-
Performance
Rights
Balance at
1 July 2021
Granted as
compensation
T Spencer
C Travaglini
A Dunn
Totals
954,545
393,182
245,455
1,593,182
795,918
459,184
408,163
1,663,265
Exercised
-
(100,000)
-
(100,000)
Lapsed or
cancelled
-
-
-
-
Balance
vested &
exercisable
at
30 June
2022
1,176,472
776,470
600,000
1,500,000
4,052,942
Balance
vested &
exercisable
at
30 June
2022
-
-
-
-
Vested
during year
-
-
-
-
-
Vested
during year
-
-
-
-
Balance at
30 June
2022
1,176,472
776,470
600,000
1,500,000
4,052,942
Balance at
30 June
2022
1,750,463
752,366
653,618
3,156,447
All equity instruments issued to KMP were made in accordance with the provisions of the Group’s
Equity Incentive Plan.
There were no unlisted share options exercised and 100,000 unlisted performance rights converted
during the current reporting period by KMP.
Further details of the Group’s Equity Incentive Plan and of equity incentives issued during the current
and prior financial years are contained in Note 18 to the financial statements.
52
ESSENTIAL METALS ANNUAL REPORT 2022
DIRECTORS’ REPORT The number of shares in the Company held during the current reporting period by each KMP, including
their related parties, are set out below:
Acquired upon
exercise of
ESSO listed
share options
Acquired
Upon
conversion
of unlisted
performance
rights
-
-
-
176,470
-
176,470
-
-
-
-
100,000
100,000
Balance at
1 July 2021
1,600,561
554,099
-
712,941
196,470
3,064,071
Acquired
through
Placement
participation
400,000
200,000
200,000
400,000
-
1,200,000
Balance at
30 June 2022
2,000,561
754,099
200,000
1,289,411
296,470
4,540,541
C McGown¹
P Payne²
W Hallam
T Spencer³
C Travaglini
Totals
Notes:
1 Mr McGown’s shares are held under the nominee account Ionikos Pty Ltd ATF . Mr McGown has a relevant interest in
Ionikos Pty Ltd and is a beneficiary of the McGown Super Fund A/C.
2 Mr Payne’s shares are held under the nominee account Payne Geological Services Pty Ltd ATF . Mr Payne has a relevant
interest in Payne Geological Services Pty Ltd and is a beneficiary of the Payne Super Fund A/C.
3 Mr Spencer’s shares are held under the nominee account . Mr Spencer is a beneficiary of the Spencer Investment A/C.
H. KEY TERMS OF EMPLOYMENT AGREEMENTS WITH EXECUTIVE KMP
Summary of contractual terms
Element of remuneration
Refer to the above Remuneration table.
Fixed Remuneration
Contract duration
Notice by individual
Notice by Company
Termination of employment
by the Company (without
cause)
Indefinite subject to termination with or without cause
Managing Director – 3 months
Chief Financial Officer and Company Secretary – 2 months
Exploration Manager – 2 months
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 - 2 months
STI entitlement and LTI forfeiture is assessed by the Board
Termination of employment
by the Company (with cause)
or by the individual
Any benefits due to the Managing Director, Chief Financial Officer / Company
Secretary and Exploration Manager under the Company’s STI and LTI plans, subject
to ASX Listing Rule 10.18 and the Corporations Act.
ESSENTIAL METALS ANNUAL REPORT 2022
53
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:
Management is motivated to pursue long-term growth and success of the Company within
an appropriate control framework;
interests of management 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 2022:
Revenue ($’000)
Net profit/(loss) before tax ($’000)
Net profit/(loss) after tax ($’000)
Net earnings/(loss) after tax per share
(cents per share)1
Share price at end of year (cents per share)
Absolute total shareholder return2
Relative total shareholder return2
2022
-
(1,407)
(1,407)
(0.59)
35.5
274%
80%
2021
106
(1,383)
(1,383)
(0.77)
9.5
(14%)
36%
2020
9,127
1,361
1,361
0.90
11
-
73%
2019
10,528
273
273
0.18
11
n/a
n/a
2018
243
(3,528)
(3,528)
(2.7)
19
n/a
n/a
Note:
1 Includes diluted earnings/(loss) after tax per share.
2 Absolute total shareholder return and relative total shareholder return were not relevant to LTI performance prior to 2020.
Other director related party transactions
There were no other transactions with related parties during or outstanding at the end of the current
reporting period.
There were no loans paid to or received from KMP during or outstanding at the end of the current or
comparative reporting periods.
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,
28 September 2022
54
ESSENTIAL METALS ANNUAL REPORT 2022
DIRECTORS’ REPORT
AUDITORS’ INDEPENDENCE
DECLARATION
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
Level 9, Mia Yellagonga Tower 2
5 Spring Street
Perth WA 6000
PO Box 700 West Perth WA 6872
Australia
DECLARATION OF INDEPENDENCE BY PHILLIP MURDOCH TO THE DIRECTORS OF ESSENTIAL METALS
LIMITED
As lead auditor of Essential Metals Limited for the year ended 30 June 2022, I declare that, to the best
of my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Essential Metals Limited and the entities it controlled during the
period.
Phillip Murdoch
Director
BDO Audit (WA) Pty Ltd
Perth
28 September 2022
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia
Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO
International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability
limited by a scheme approved under Professional Standards Legislation
ESSENTIAL METALS ANNUAL REPORT 2022
55
FINANCIAL
REPORT
56
ESSENTIAL METALS ANNUAL REPORT 2022
CONSOLIDATED STATEMENT OF
PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
2021
CONTINUING OPERATIONS
Revenue from sale of goods
Cost of sales
GROSS PROFIT
Other income
Interest income
Exploration expenditure
Employee benefits expense (incl. director fees)
Compliance & regulatory expenses
Consultancy expenses
Business development & investor relations
Administration costs
Interest expense
Exploration and evaluation expenditure written off
Depreciation – Right-of-use assets
Depreciation – Plant, equipment and motor vehicles
Loss on disposal of plant, equipment and motor vehicles
Foreign exchange differences
Share based payments
LOSS BEFORE TAX
Income tax
Notes
30 June 2022
$’000
30 June 2021
$’000
7
8
10
14
11
-
-
-
526
30
(3)
(783)
(188)
(274)
(219)
(143)
(10)
(113)
(32)
(14)
(18)
(1)
(165)
(1,407)
-
106
(1)
105
567
46
(100)
(738)
(166)
(93)
(106)
(133)
(17)
(477)
(84)
(23)
(35)
(22)
(107)
(1,383)
-
LOSS FOR THE PERIOD FOR CONTINUING OPERATIONS
(1,407)
(1,383)
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
TOTAL OTHER COMPREHENSIVE INCOME/(LOSS)
13
(91)
75
(16)
17
(172)
(155)
TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE PERIOD, NET OF
INCOME TAX
(1,423)
(1,538)
EARNINGS PER SHARE FROM CONTINUING OPERATIONS
Basic and diluted net loss per share attributable to ordinary equity
holders
9
(0.59c)
(0.77c)
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction
with the accompanying notes.
Essential Metals Limited – 2022 Annual Report
44
57
ESSENTIAL METALS ANNUAL REPORT 2022
CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
21
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Investments
Prepayments
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Exploration and evaluation expenditure
Right-of-use assets
Plant, equipment and motor vehicles
Bank restricted deposits
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 2022
$’000
30 June 2021
$’000
12(a)
13
14
15
16
17
20
21
10,527
443
113
44
11,127
16,726
253
95
21
17,095
5,466
15
273
36
5,790
15,430
171
147
22
15,770
28,221
21,560
564
1,122
43
1,729
210
210
223
755
47
1,025
132
132
1,938
1,157
26,283
20,403
50,150
1,350
(25,217)
26,283
44,538
1,193
(25,328)
20,403
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
Essential Metals Limited – 2022 Annual Report
45
58
ESSENTIAL METALS ANNUAL REPORT 2022
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
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c
ESSENTIAL METALS ANNUAL REPORT 2022
CONSOLIDATED STATEMENT OF
CASH FLOWS
For the year ended 30 June 2021
Notes
30 June 2022
$’000
30 June 2021
$’000
12(b)
CASH FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Interest received
Other income received
Exploration expensed
Government incentives received
NET CASH USED IN OPERATING ACTIVITIES
INVESTING ACTIVITIES
Payments for exploration and evaluation
Payments for plant and equipment
Receipts from sales of plant, equipment and motor vehicles
Proceeds from the relinquishment of tenement rights
Proceeds from the sale of listed investments
Proceeds from the sale of subsidiaries
Payments relating to the disposal of subsidiaries
Payments for the purchase of royalty rights
Government incentives received
NET CASH FROM/(USED IN) INVESTING ACTIVITIES
FINANCING ACTIVITIES
Repayment of lease liabilities
Proceeds from the issue of shares
Payments for share issue transaction costs
NET CASH FROM FINANCING ACTIVITIES
NET INCREASE 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
12(a)
-
(1,500)
20
13
(3)
-
(1,470)
(2,787)
(17)
-
401
2,965
485
(85)
-
-
962
(50)
5,965
(346)
5,569
5,061
5,466
-
10,527
369
(1,225)
22
21
(100)
36
(877)
(2,512)
(72)
35
325
322
-
-
(150)
131
(1,921)
(81)
4,190
(236)
3,873
1,075
4,391
-
5,466
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
Essential Metals Limited – 2022 Annual Report
48
60
ESSENTIAL METALS ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
CONTENTS
Note
1
2
3
4
Item
General information
New or amended Accounting Standards and Interpretations adopted
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
Operating segments
Non-current asset disposal
Revenue
Other income
Earnings per share
Employee benefits expense
Income tax expense
Notes to the statement of cash flows
Assets
Investments
Exploration and evaluation expenditure
Liabilities
Trade and other payables
Provisions
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
62
63
63
65
77
78
79
79
80
80
81
82
83
83
84
84
85
87
88
90
91
91
95
96
96
96
97
97
98
Essential Metals Limited – 2022 Annual Report
49
61
ESSENTIAL METALS ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
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:
Level 3, 1292 Hay Street
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 24 September 2022. The
directors have the power to amend and reissue the financial report.
28
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 it controls an investee by the facts and circumstances indicating if 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
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.
Essential Metals Limited – 2022 Annual Report
50
62
ESSENTIAL METALS ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS (continued)
The acquisition of subsidiaries is 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 any new subsidiaries 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 IFRS 9 when applicable, or
the cost on initial recognition of an investment in an associate or a joint venture.
Presentation and functional currency and rounding
The functional and presentation currencies of these financial statements are both Australian Dollars ($). Foreign
4.
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. NEW OR AMENDED ACCOUNTING STANDARDS AND INTERPRETATIONS ADOPTED
The Group has adopted all of the new or Amended Accounting Standards and Interpretations issued by the Australian
Accounting Standards Board (AASB) that are mandatory for the current reporting period.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early
adopted.
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:
Capitalised Mineral Exploration
The accounting policy for exploration and evaluation expenditure is set out in accounting policy Note 4.7. The
application of this policy necessarily requires management to make certain estimates and assumptions as to future
Essential Metals Limited – 2022 Annual Report
51
63
ESSENTIAL METALS ANNUAL REPORT 2022
The acquisition of subsidiaries is 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 any new subsidiaries 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 IFRS 9 when applicable, or
the cost on initial recognition of an investment in an associate or a joint venture.
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. NEW OR AMENDED ACCOUNTING STANDARDS AND INTERPRETATIONS ADOPTED
The Group has adopted all of the new or Amended Accounting Standards and Interpretations issued by the Australian
Accounting Standards Board (AASB) that are mandatory for the current reporting period.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early
adopted.
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.
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS (continued)
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:
Capitalised Mineral Exploration
The accounting policy for exploration and evaluation expenditure is set out in accounting policy Note 4.7. 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
Essential Metals Limited – 2022 Annual Report
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.
4.7.
51
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 4.11. 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 in the period in which they change or become known.
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 19. Any fluctuations
in volatility, interest rates and market measures will impact on the Company’s share-based payment expense in the
statement of profit or loss in the period that the fluctuation occurs.
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 and are included in the calculation of the lease term unless or until the Company
decides that an option to extend a contract will not be exercised resulting in a revaluation of the present value of the
associated remaining lease payments impacting on ROU assets and depreciation, lease liabilities and interest
expenditure in the period the reassessment occurs.
Provision for Canadian income tax
The Group has recognised an income tax provision to allow for any potential income tax payable by the Group to the
Canadian Revenue Authority (CRA) in relation to the sale of wholly owned subsidiary Pioneer Canada Lithium Corp
(PCLC) on 4 January 2022. As at the date of this Report the CRA was unable to provide the Group with the expected
amount or timing of any income tax payable. The provision has been recorded using the full A$385,000 receivable
recognised by the Group at the end of the current reporting period, being the balance of the sale proceeds held in
trust by the purchaser’s legal counsel until such time that the CRA can complete their assessment of the income tax
payable (if any) on the sale of PCLC.
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.
64
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ESSENTIAL METALS ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS (continued)
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
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 sales to customers. For all sales, revenue is recognised when control has
transferred, being on delivery to the customer.
Costs directly attributable to the recognition of revenue are recognised within cost of sales in the corresponding
reporting period to which the related revenue is recognised.
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.
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS (continued)
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 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.
Exploration and evaluation expenditure that is capitalised may include costs of licence acquisitions, technical services
and studies and exploration drilling and testing. Any costs incurred prior to the acquisition of the legal rights to explore
an area are expensed as incurred.
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 the extent that it can be
recovered 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; or
substantive expenditure on further exploration for and evaluation of mineral resources in a specific area is
neither budgeted nor planned; or
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.
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.
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS (continued)
Exploration related government grants
Government grants (such as a 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. Refer Note 4.18 for further information on Government Grants.
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 farminee;
•
• 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 farminee 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.
4.6 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.
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.
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ESSENTIAL METALS ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS (continued)
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 (ii) 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 (iii) 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.
(ii) 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).
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS (continued)
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 Investment 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 13).
(iii) Financial assets at FVTPL
Financial assets that do not meet the criteria for being measured at amortised cost or FVTOCI (see (i) to (ii) 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 (ii) 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 22.
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
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS (continued)
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.
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.
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.
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS (continued)
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.
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 22.
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.
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS (continued)
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.
4.7 Impairment of assets (other than exploration and evaluation 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”).
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FINANCIAL STATEMENTS (continued)
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.
4.8 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.
4.9 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.
4.10 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.
4.11 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
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FINANCIAL STATEMENTS (continued)
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.
4.12 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.
4.13 Leases
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.
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.
74
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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.
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 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.
4.14 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.
4.15 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”).
The Group has in place an Equity Incentive Plan to provide these benefits to KMP and employees.
The cost of these equity-settled transactions 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 and a peer group of companies (“market conditions”).
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 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.
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS (continued)
4.16 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).
4.17 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.
4.18 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 and exploration and evaluation assets) 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 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.
Exploration related government grants are offset against exploration expenditure incurred and capitalised.
76
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS (continued)
4.19 Interest in joint arrangements
Joint arrangements are those arrangements in which the Group has joint control, established by contractual
agreement and requiring unanimous consent for strategic, financial and operating decisions. Joint arrangements are
classified as either joint operations or a joint venture, based on the contractual rights and obligations between the
parties to the arrangement.
Joint operations: In a joint operation the Group has rights to the assets and obligations for the liabilities relating to the
arrangement. This includes situations in which the parties benefit from the joint activity through the sharing of output,
rather than by receiving a share of results of trading. Interests in joint operations are reported in the Financial
Statements by including the Group’s proportionate share of assets employed in the arrangement, the share of
liabilities incurred in relation to the arrangement and the share of any revenue or expenses earned or incurred.
Joint ventures: A joint venture is a joint arrangement in which the parties that share joint control have rights to the
net assets of the arrangement. A separate vehicle, not the parties, will have the rights to the assets and obligations to
the liabilities relating to the arrangement. More than an insignificant amount of output is sold to third parties, which
indicates the joint venture is not dependent on the parties to the arrangement for funding. Joint ventures are
accounted for using the equity accounting method.
Details relating to the Group’s interests in mineral exploration projects which are subject to joint arrangements are
detailed in Note 23(b).
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 two operating
segments; being operations and corporate/unallocated expenditure. Assets are allocated to a segment if its utilised
by that segment. During the current period the operations and exploration segments reported in the prior year were
combined into one operations reporting segment for internal reporting to the chief operating decision maker.
(b) Measurement of segment information
All information presented above is measured in a matter consistent with that in the financial statements.
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ESSENTIAL METALS ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS (continued)
(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 2022
$’000
$’000
Operations¹
Unallocated
Total
$’000
-
-
(1,290)
(1,407)
Revenue
Loss before tax
Income tax
Loss after tax
Segment assets
Segment liabilities
-
(117)
-
(117)
16,900
1,018
-
(1,290)
11,321
920
Year ended 30 June 2021
$’000
$’000
Operations
Unallocated
Revenue
Loss before tax
Income tax
Loss after tax
Segment assets
Segment liabilities
1062
(480)
-
(480)
15,589
837
-
(903)
-
(903)
5,971
320
-
(1,407)
28,221
1,938
Total
$’000
106
(1,383)
-
(1,383)
21,560
1,157
Notes:
1 – The Operations segment incorporated the Exploration segment during the current reporting period.
2 – Revenue relates to the sale of alluvial gold provided to the Company from third party prospecting activities.
The revenue reported above represents revenue generated from external customers. There was no inter-segment
revenue during the year.
6. NON-CURRENT ASSET DISPOSAL
On 4 January 2022 the Company completed the sale of wholly owned Canadian subsidiary Pioneer Canada Lithium
Corp. to a subsidiary of Critical Resources Limited (ASX:CRR) for the following consideration:
$750,000 cash payment ($375,000 withheld pending an income tax assessment).
34,000,000 shares in Critical Resources Limited.
§
§
§ Milestone payments:
- $750,000 cash payment following the definition of a Mineral Resource Estimate (as defined in the JORC
Code 2012) for the Mavis Lake Lithium Project with a volume of not less than 5.0 million tonnes
containing not less than 50,000 tonnes of Li2O using a cut-off grade of not less than 0.4% Li2O.
- $750,000 cash payment following the definition of a Mineral Resource Estimate (as defined in the JORC
Code 2012) for the Mavis Lake Lithium Project with a volume of not less than 10.0 million tonnes
containing not less than 100,000 tonnes of Li2O using a cut-off grade of not less than 0.4% Li2O.
The Group announced on 25 October 2021 that this subsidiary would be sold to take advantage of the strong
sentiment in the lithium sector to divest a non-core, early-stage exploration asset located in Canada, consistent with
its focus on its Western Australian lithium and gold projects.
78
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS (continued)
Details of the disposal:
Total sale consideration
Carrying amount of net assets disposed
Derecognition of foreign currency reserve
Disposal costs (including income tax provision)
Loss on disposal before income tax
Loss on disposal after income tax
2022
$’000
2021
$’000
2,154
(1,774)
91
(471)
-
-
-
-
-
-
-
-
The disposal asset was disclosed within ‘Operations’ segment assets within the current reporting period (2021:
‘Exploration’ segment assets). Refer to Note 5 for further details.
7. REVENUE
Other revenue – Sale of alluvial gold1
Total revenue
Note:
1 Sale of alluvial gold provided to the Company from third party prospecting activities.
8. OTHER INCOME
Blair-Golden Ridge Joint Venture exclusivity, option exercise & other contractual fees
Subsidiary sale exclusivity and option exercise fees
Other income
Income received for the cancellation of tenement applications²
Listed shares received as consideration for royalty sale
Government grants1
Reallocation of JobKeeper government grants to capitalised exploration expenditure
Total other income
2022
$’000
2021
$’000
-
-
106
106
2022
$’000
2021
$’000
400
100
26
-
-
-
-
526
125
-
7
200
200
167
(132)
567
Notes:
1 No JobKeeper government grants were recognised during the current reporting period (2021: $138,000). Nil (2021: $131,700) in JobKeeper
payments was offset during the current reporting period against the capitalised exploration expenditure to which it related with the balance
classified as other income in line with the Group’s accounting policies.
2 Received as compensation for withdrawing contested tenement applications.
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ESSENTIAL METALS ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS (continued)
9. EARNINGS PER SHARE
The following reflects the earnings and share data used in the calculations of basic and diluted earnings per share 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
2022
$’000
2021
$’000
(1,407)
(1,383)
237,876,807
179,237,995
Basic and diluted earnings per share – cents per share
(0.59c)
(0.77c)
10. EMPLOYEE BENEFITS EXPENSE
Salaries, wages and superannuation
Salaries and wages capitalised to E&E asset
Director fees and charges1
Termination benefits
Total employee benefits expense
Note:
1 – Refer Note 27 for details of KMP remuneration.
2022
$’000
2021
$’000
1,251
(670)
202
-
783
1,176
(663)
197
28
738
80
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS (continued)
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 (2021 - Nil). Further deferred tax assets and liabilities will be settled net wherever
possible and are therefore offset.
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 (loss)/profit before tax
Tax (benefit)/expense at the applicable corporate tax rate of 25% (2021: 26%)
Increase in income tax due to tax effect of:
Share based payment expense
Non-deductible expenditure
Current year tax losses not recognised
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 25% (2021: 26%)
Deferred tax assets
Employee provisions
Other provisions and accruals
Rehabilitation assets and liabilities
Plant and equipment
ROU assets
Tax losses
Set-off of deferred tax liabilities
Net deferred tax assets
Deferred tax liabilities
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 25% (2021: 26%)
Deductible temporary differences
Tax revenue losses
Tax capital losses
Total unrecognised deferred tax assets
2022
$’000
2021
$’000
-
-
-
-
-
-
(1,407)
(352)
(1,383)
(360)
43
449
-
-
(101)
(40)
-
10
8
174
(24)
-
3,833
4,002
(4,002)
-
28
3
366
(13)
-
(24)
-
15
11
174
(37)
2
3,103
3,268
(3,268)
-
(3,998)
(3,268)
(4)
-
(4,002)
4,002
-
125
7,992
595
8,712
-
-
(3,268)
3,268
-
67
8,093
595
8,755
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ESSENTIAL METALS ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS (continued)
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
Term deposits
Total cash and cash equivalents
2022
$’000
2021
$’000
5,527
5,000
10,527
2,466
3,000
5,466
(b) Reconciliation of the (loss)/profit from ordinary activities after income tax to the net cash flows used in
operating activities
(Loss)/profit from ordinary activities after income tax
Non-cash items:
Revaluation of listed investments
Depreciation
Unrealised foreign exchange (gain)/loss
Exploration written off
Share-based payments expense
Other non-cash transactions
Change in operating assets and liabilities:
Decrease/(increase) in prepayments
Decrease/(increase) in receivables
(Decrease)/increase in current payables
(Decrease)/increase in provisions
Net cash (outflows) used in/inflows received from operating activities
(c) Reconciliation of liabilities arising from financing activities
Opening lease liabilities
Financing cash flows
Non-cash changes1
Balance at 30 June
Note:
1 - Non-cash changes relate to the termination of previous leases and take up of new leases.
2022
$’000
2021
$’000
(1,407)
(1,383)
(646)
46
1
113
165
43
(80)
(428)
361
362
(1,470)
-
106
23
477
107
(140)
(23)
381
(428)
3
(877)
2022
$’000
2021
$’000
179
(50)
124
253
289
(81)
(29)
179
82
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS (continued)
(d) Stand-by credit facilities
As at the current reporting date the Group had a business credit card facility available totalling $30,000 (2021:
$30,000) of which $8,000 (2021: $12,000) was utilised.
13.
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.
The following table shows the movement in equity instruments at FVOCI during the current and previous reporting
periods:
(b) Equity Investments at fair value through other comprehensive income
Opening balance
Acquisition of equity investments1
Changes in fair values recognised in other comprehensive income
Changes in fair values recognised directly in retained losses
Disposal of equity investments
Current investments – Equity instruments
2022
$’000
2021
$’000
273
1,394
75
1,518
(3,147)
113
568
200
(172)
-
(323)
273
Note:
1 - During the year ended 30 June 2022, the Group completed the sale of its wholly owned Canadian subsidiary Pioneer Canada Lithium Corp to
Critical Resources Limited (ASX: CRR) for $750,000 in cash and $1,394,000 CRR listed shares as consideration, being 34 million CRR shares valued at
$0.041 per share. In line with the Group’s accounting policies the CRR shares were valued at fair value through other comprehensive income.
14. EXPLORATION AND EVALUATION EXPENDITURE
Non-current – In the exploration and evaluation phase
Opening balance
Expenditure for the period1
Foreign currency translation – Mavis Lake
Sale of subsidiary
Exploration expenditure written off
Closing balance at 30 June
Note:
1 – Includes capitalised plant, equipment and motor vehicle depreciation expense.
2022
$’000
2021
$’000
15,430
3,085
-
(1,675)
(113)
16,727
13,666
2,231
10
-
(477)
15,430
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
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ESSENTIAL METALS ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS (continued)
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 $1,775,000 (2021: $477,000) which related primarily to the write-down of costs
pertaining to tenements relinquished through the sale of wholly owned Canadian subsidiary Pioneer Canada Lithium
Corp. during the year.
15. TRADE AND OTHER PAYABLES
Current (Unsecured)
Trade creditors
Other creditors and accruals
Total trade and other payables
2022
$’000
2021
$’000
373
191
564
83
140
223
Amounts shown as current are expected to be settled within 12 months.
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.
16. PROVISIONS
Current
Employee entitlements1
Rehabilitation provision2
Canadian income tax provision3
Total current provisions
Notes:
2022
$’000
2021
$’000
40
696
385
1,121
59
696
-
755
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 for rehabilitation remains current and has not materially
changed in value from the prior reporting period due to the Sinclair Mine remaining in care and maintenance under a Mine Closure Plan that is
due to be reviewed in the financial year ended 30 June 2023.
3 – The Canadian income tax provision allows for any potential income tax payable by the Group to the Canadian Revenue Authority (CRA) in
relation to the sale of wholly owned subsidiary Pioneer Canada Lithium Corp (PCLC) on 4 January 2022. As at the date of this Report the CRA
was unable to provide the Group with the expected amount or timing of any income tax payable. The provision has been recorded using the full
A$385,000 receivable recognised by the Group at the end of the current reporting period, being the balance of the sale proceeds held in trust
by the purchaser’s legal counsel until such time that the CRA can complete their assessment of the income tax payable (if any) on the sale of
PCLC.
84
Essential Metals Limited – 2022 Annual Report
72
ESSENTIAL METALS ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS (continued)
17. CONTRIBUTED EQUITY
(a) Ordinary shares on issue – fully paid
Total contributed equity
246,487,425
200,817,300
50,150
2022
Shares
2021
Shares
2022
$’000
2021
$’000
44,538
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 4 August 2021 the Company announced a placement of new fully paid ordinary shares to sophisticated and
professional investors through the issue of 40 million new fully paid ordinary shares at an issue price of $0.125 per
new share for gross proceeds of $5 million.
Essential Metals Limited – 2022 Annual Report
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85
ESSENTIAL METALS ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS (continued)
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 19.
(b) Share movements during the current and prior reporting periods
Date
Number of shares
Issue price
$’000
Opening Balance 1 July 2020
10:1 Share Consolidation
Placement share issue
Placement share issue costs
Placement option valuation
1,508,758,765
17 Jul 2020
(1,357,882,338)
-
23 Nov 2020
24,103,288
$0.085
-
-
-
-
Share Purchase Plan share issue
16 Dec 2020
25,176,342
$0.085
Share Purchase Plan share issue costs
Share Purchase Plan option valuation
Contractor share issue
14 Jan 2021
Closing balance at 30 June 2021
Placement share issue – Tranche 1
ESSO option exercise
Placement share issue - Directors
Placement share issue – Tranche 2
Placement share issue costs
Performance rights conversion
ESSO option exercise
ESSO option exercise
ESSO option exercise
Unlisted broker option exercise
ESSO option exercise
Unlisted broker option exercise
ESSO option exercise
ESSO option exercise
ESSO option exercise
ESSO option exercise
Unlisted option exercise
ESSO option exercise
ESSO option exercise
Option exercise costs
ESSO option exercise valuation reallocation
Closing balance at 30 June 2022
11 Aug 2021
20 Aug 2021
22 Sep 2021
22 Sep 2021
24 Nov 2021
24 Nov 2021
24 Dec 2021
25 Jan 2022
25 Jan 2022
4 Feb 2022
4 Feb 2022
3 Mar 2022
1 Apr 2022
29 Apr 2022
6 May 2022
6 May 2022
6 May 2022
16 Jun 2022
-
-
661,243
200,817,300
36,780,000
22,674
1,200,000
2,020,000
-
100,000
600,000
5,882
1,096,412
450,000
104,704
1,050,000
11,764
84,624
1,259,409
29,411
180,556
637,000
37,689
-
-
-
$0.125
$0.150
$0.125
$0.125
-
-
$0.150
$0.150
$0.150
$0.200
$0.150
$0.200
$0.150
$0.150
$0.150
$0.150
$0.450
$0.150
$0.150
-
-
246,487,425
41,184
-
2,049
(166)
(337)
2,140
(71)
(314)
53
44,538
4,598
3
150
252
(445)
-
90
1
164
90
16
210
2
13
189
4
81
96
6
(8)
100
50,150
86
Essential Metals Limited – 2022 Annual Report
74
ESSENTIAL METALS ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS (continued)
18. EQUITY INCENTIVES
Set out below are movements in equity incentives in the current and prior reporting periods:
2022
Opening
balance
Granted
Exercised/
converted
Expired/
cancelled
Closing
balance
Unlisted options
Exercisable at 35 cents on or before 30/11/21
Exercisable at 45 cents on or before 30/11/22
894,446
894,446
-
-
-
(894,446)
(180,556)
Exercisable at 20 cents on or before 10/08/23
-
2,000,000
(1,500,000)
Exercisable at 25 cents on or before 31/01/24
Exercisable at 35 cents on or before 31/01/24
Exercisable at 45 cents on or before 31/01/24
Exercisable at 25 cents on or before 30/06/24
Exercisable at 35 cents on or before 30/06/24
Exercisable at 45 cents on or before 30/06/24
Exercisable at 12.5 cents on or before 30/09/24
Exercisable at 17.5 cents on or before 30/09/24
Exercisable at 22.5 cents on or before 30/09/24
Listed options
Exercisable at 15 cents on or before 30/11/22
Total options
500,000
500,000
500,000
533,334
533,334
533,334
200,000
200,000
200,000
24,610,298
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(3,889,569)
-
713,890
500,000
500,000
500,000
500,000
533,334
533,334
533,334
200,000
200,000
200,000
20,720,729
-
-
-
-
-
-
-
-
-
-
-
-
30,099,192
2,000,000
(5,570,125)
(894,446)
25,634,621
Performance rights
Exercisable on or before 31/12/23 (vested)
Exercisable on or before 31/01/24 (unvested)
100,000
500,000
Exercisable on or before 30/06/24 (unvested)
1,653,378
-
-
-
Exercisable on or before 30/06/25 (unvested)
-
2,067,602
(100,000)
-
-
-
-
-
-
500,000
(507,768)
1,145,610
-
2,067,602
Total performance rights
2,253,378
2,067,602
(100,000)
(507,768)
3,713,212
Total equity instruments
32,352,570
4,067,602
5,670,125
(1,402,214)
29,347,833
Essential Metals Limited – 2022 Annual Report
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87
ESSENTIAL METALS ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS (continued)
Opening
balance
Granted
Exercised/
converted
Expired/
cancelled
Closing
balance
2021
Unlisted options
Exercisable at 26 cents on or before 27/10/20
Exercisable at 50 cents on or before 27/10/20
Exercisable at 75 cents on or before 27/10/20
Exercisable at 35 cents on or before 30/11/21
Exercisable at 45 cents on or before 30/11/22
Exercisable at 25 cents on or before 31/01/24
Exercisable at 35 cents on or before 31/01/24
Exercisable at 45 cents on or before 31/01/24
Exercisable at 25 cents on or before 30/06/24
Exercisable at 35 cents on or before 30/06/24
Exercisable at 45 cents on or before 30/06/24
Exercisable at 12.5 cents on or before 30/09/24
Exercisable at 17.5 cents on or before 30/09/24
Exercisable at 22.5 cents on or before 30/09/24
Listed options
Exercisable at 15 cents on or before 30/11/22
223,334
223,334
223,334
1,200,002
1,200,002
500,000
500,000
500,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
533,334
533,334
533,334
200,000
200,000
200,000
24,610,298
Total options
4,570,006
26,810,300
Performance rights
Exercisable on or before 25/09/24 (unvested)
Exercisable on or before 31/01/24 (unvested)
Exercisable on or before 31/12/23 (vested)
819,548
500,000
100,000
-
-
-
Exercisable on or before 30/06/24 (unvested)
-
1,653,378
Total performance rights
1,419,548
1,653,378
Total equity instruments
5,989,554
28,463,678
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(223,334)
(223,334)
(223,334)
(305,556)
(305,556)
-
-
-
-
-
-
-
-
-
-
-
-
-
894,446
894,446
500,000
500,000
500,000
533,334
533,334
533,334
200,000
200,000
200,000
24,610,298
(1,281,114)
30,099,192
(819,548)
-
-
-
-
500,000
100,000
1,653,378
(819,548)
2,253,378
(2,100,662)
32,352,570
19. SHARE-BASED PAYMENTS
(a) Equity Incentive Plan
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 15 December 2020.
Options
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.
Performance Rights
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
Essential Metals Limited – 2022 Annual Report
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88
ESSENTIAL METALS ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS (continued)
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.
(b) Unlisted share options over unissued shares
The following table illustrates the number and weighted average exercise prices of and movements in unlisted share
options (on a post-consolidation basis) during the current and prior financial years:
2022
2021
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
30,099,192
2,000,000
(5,570,125)
(894,446)
25,634,621
Vested and exercisable at the end of the year
25,634,621
Weighted
average
exercise price
$0.19
$0.20
$0.17
$0.35
$0.18
$0.18
Number
4,570,006
26,810,300
-
(1,281,114)
30,099,192
30,099,192
Weighted
average
exercise price
$0.40
$0.16
-
$0.45
$0.19
$0.19
The range of exercise prices for options outstanding at the end of the current financial year was 12.5 cents and 45
cents (2021: 12.5 cents and 75 cents).
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 2022 was $108,000 (2021: $725,000). The following
table illustrates the inputs used to calculate the fair value of options issued during the current financial year.
Item
Share price at grant date
Broker Options
$0.135
Exercise price
Grant date
Vesting date
Expiry date
Days to expiry
Number of options issued
Volatility
Risk-free interest rate
Valuation per option
Valuation per option class
$0.200
2/08/2021
2/08/2021
10/08/2023
738
2,000,000
94.65%
0.13%
$0.054
$108,000
(c) Unlisted Performance Rights
Refer to Note 19 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 2022 was $312,000 (2021: $108,000). The fair value of performance rights expensed to the statement
of profit or loss and other comprehensive income during the year ended 30 June 2022 totalled $149,000 (2021:
$59,000).
Essential Metals Limited – 2022 Annual Report
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89
ESSENTIAL METALS ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS (continued)
The terms of performance rights issued to eligible employees during the current year include:
(i)
The value and resulting number of rights 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) Rights will be granted at the discretion of the Board, but must be demonstrably linked to:
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. This vesting condition can only be
met if the Company’s absolute TSR is positive.
20. RESERVES
Equity incentive reserve
Financial asset revaluation reserve
Foreign exchange reserve
Total reserves
2022
$’000
2021
$’000
1,336
14
-
1,350
1,163
(61)
91
1,193
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 4.6 and
accumulated in a separate reserve in equity. Amounts are reclassified to retained earnings 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
Share based payment expense
Reversal of lapsed options
Valuation of ESSO listed options issued
Transfer to equity of ESSO listed options exercised during the year
Closing balance
2022
$’000
2021
$’000
1,163
108
165
-
-
(100)
1,336
405
112
107
(112)
651
-
1,163
The equity incentive reserve records items recognised on valuation of director, employee and contractor equity
incentives. Information relating to the Group’s Equity Incentive Plan, 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 19.
90
Essential Metals Limited – 2022 Annual Report
78
ESSENTIAL METALS ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS (continued)
21. ACCUMULATED LOSSES
Accumulated losses at the beginning of the year
Net (loss)/profit attributable to members
Transfer from financial asset revaluation reserve – derecognition of investment
Accumulated losses at the end of the year
22. FINANCIAL INSTRUMENTS
2022
$’000
(25,328)
(1,668)
2,779
(24,217)
2021
$’000
(23,844)
(1,383)
(101)
(25,328)
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 and equity market 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
2022
$’000
2021
$’000
10,527
443
113
11,083
504
504
5,466
15
273
5,754
223
223
Essential Metals Limited – 2022 Annual Report
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91
ESSENTIAL METALS ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS (continued)
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.
Recurring fair value measurements
At 30 June 2022
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 2021
Financial assets
Financial assets at fair value through other comprehensive income
Australian listed equity securities
Canadian listed equity securities
Total financial assets
-
113
113
193
80
273
-
-
-
-
-
-
-
113
113
193
80
273
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
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ESSENTIAL METALS ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS (continued)
balances on company credit cards. Refer Note 12(c) for further details. Trade and other payables, the only financial
liability of the Group, are due within 3 months.
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.
2022
Weighted
average
interest rate
Less than
1 month
$’000
1-3
months
$’000
3 months-
>5 years
$’000
No fixed
term
$’000
Total
$’000
-
0.10%
1.25%
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
-
0.65%
-
-
-
-
68
5,527
-
-
5,595
504
-
-
504
-
-
-
-
-
-
-
-
-
-
-
5,000
-
5,000
-
-
-
-
375
-
-
113
488
-
-
-
-
443
5,527
5,000
113
11,082
504
-
-
504
2021
Weighted
average
interest rate
Less than
1 month
$’000
1-3
months
$’000
3 months-
>5 years
$’000
No fixed
term
$’000
Total
$’000
-
0.01%
0.40%
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
-
0.22%
-
-
-
-
15
2,466
-
-
2,481
223
-
-
223
-
-
3,000
-
3,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
273
273
-
-
-
-
15
2,466
3,000
273
5,754
223
-
-
223
(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.
Essential Metals Limited – 2022 Annual Report
81
93
ESSENTIAL METALS ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS (continued)
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 Australian banks
with a minimum A Credit Rating.
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.
(d) Commodity price risk
The Group was not exposed to any material commodity risk during and at the end of the current reporting period.
(e) Foreign exchange risk
The Group disposed of its wholly owned Canadian subsidiary during the current reporting period. The related
capitalised exploration and evaluation balance was written off during the current reporting period and has removed
any related foreign exchange risk exposure in relation to this balance that was denominated in Canadian dollars.
The Group is exposed to foreign exchange risk arising from equity investments listed on the Toronto Stock Exchange
(TSXV), although given the size of these investments the directors to not anticipate that significant fluctuations in
related foreign currencies would result in a material change to the valuation of these assets at the end of the current
reporting period.
(f) Price risk on investments
The Group is exposed to equity price risks arising from equity investments. The Group’s investments are listed on the
Australian Securities Exchange (ASX) and Toronto Stock Exchange (TSXV).
The financial asset revaluation reserve component 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 (2021: Nil).
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.
94
Essential Metals Limited – 2022 Annual Report
82
ESSENTIAL METALS ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS (continued)
23. GROUP COMPOSITION
(a) List of subsidiaries
Golden Ridge North Kambalda Pty Ltd
Western Copper Pty Ltd
Pioneer Canada Lithium Corp.1
Ownership percentage
Place of
incorporation
Principal
activities
Australia
Australia
Canada
Exploration
Exploration
Exploration
2022
100%
100%
0%
2021
100%
100%
100%
Note:
1 - On 4 January 2022 the Company completed the sale of wholly owned Canadian subsidiary Pioneer Canada Lithium Corp. to a subsidiary of Critical
Resources Limited (ASX:CRR).
(b) Third party interests
The Group's interests in farm-ins and unincorporated joint ventures are listed below.
Third party partner or
third party holder
Northern Star Limited (“NST”)
Novo Resources Corp. (“NVO”)
ESS Interest held
Third party participating equity
At 30 June 2021
30 June
2022
30 June
2021
NST hold a 75% interest. Ardea
Resources Limited retains 100% of
the nickel laterite rights on
E27/278, E27/520, E28/1746.
NVO holds a 70% interest in gold
and precious metals rights.
25%
25%
100%
100%
Black Cat Syndicate Limited (“BCS”)
BCS may earn a 75% interest.
100%
100%
Maximus Resources Limited (“MXR”)
Maximus Resources Limited (“MXR”)
Maggie Hays Hill
(Nickel)
Blair-Golden Ridge
(Nickel)
Mavis Lake
(Lithium)
Poseidon Nickel Ltd (“POS”)
Australian Nickel Company Ltd (“ANCO”)
International Lithium Corp. (“ILC”)
25% Au
20% Ni
25% Au
20% Ni
20% Ni
20% Ni
20%
20%
100%
100%
-
51%
MXR holds a 75% interest on gold
minerals and 80% on nickel
minerals.
MXR holds a 100% interest on gold
minerals and 80% on nickel
minerals. Ardea Resources Limited
has a pre-emptive right to nickel
laterite ore.
POS holds an 80% interest all
minerals.
ANCO may earn a 75% interest on
nickel minerals.
ILC held a 49% interest in the Mavis
Lake Lithium Joint Venture. ESS
disposed of the subsidiary in which
the Mavis Lake Lithium Joint
Venture was held on 4 January
2022.
Project
Acra
(Gold)
Kangan
(Gold)
Balagundi
(Gold)
Larkinville
(Gold/Nickel)
Wattle Dam
(Gold/Nickel)
Note: 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 4.5. There were no capital
commitments or contingent liabilities arising out of the Group’s third-party interest activities as at 30 June 2022 (2021: Nil).
Essential Metals Limited – 2022 Annual Report
83
95
ESSENTIAL METALS ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS (continued)
UNRECOGNISED ITEMS
24. CONTINGENT LIABILITIES
There were no material contingent liabilities as at 30 June 2022 (2021: Nil).
25. 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 $446,000
(2021: $297,000). This commitment does not include the expenditure commitments which are the responsibility of
the joint venture partners, amounting to $1,994,000 (2021: $1,936,000).
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), and as such the Group does not report
exploration expenditure commitments beyond the 12 month period following the current reporting date.
(b) Capital commitments
There were no ongoing capital commitments as at 30 June 2022 (2021: Nil).
26. SUBSEQUENT EVENTS
On 17 August 2022 the Group issued 430,985 unlisted performance rights to employees under the Group’s
shareholder approved Equity Incentive Plan for the 2022/23 financial year. The Managing Director is entitled to receive
219,718 unlisted performance rights on the same terms, subject to shareholder approval.
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.
96
Essential Metals Limited – 2022 Annual Report
84
ESSENTIAL METALS ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS (continued)
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.
27. RELATED PARTIES
Parent entity and subsidiaries
The ultimate parent entity of the Group is Essential Metals Limited. Interests in other entities are set out in Note 23.
Key management personnel
Key management personnel compensation comprised the following:
Current disclosed KMP
Short-term employee benefits
Post-employment benefits
Share-based payments
Former disclosed KMP
Short-term employee benefits
Post-employment benefits
Share-based payments
Employment termination payments
2022
$
2021
$
936,983
852,885
82,484
127,798
68,766
66,266
1,147,265
987,917
-
-
-
-
-
45,164
4,181
(6,840)
15,739
59,426
Total key management personnel compensation
1,147,265
1,046,161
Other director related party transactions
There were no other transactions with related parties during or outstanding at the end of the current reporting period.
28. REMUNERATION OF AUDITORS
Audit services
Audit or review of Group financial reports by BDO
Audit or review of Group financial reports by Deloitte
Other services
Corporate finance services
Total
2022
$
2021
$
38,554
-
-
57,500
3,800
42,354
-
57,500
Note: The auditor of the Group changed from Deloitte Touche Tohmatsu to BDO Audit (WA) Pty Ltd following Shareholder approval at the
Company’s 2021 Annual General Meeting held on 23 November 2021.
Essential Metals Limited – 2022 Annual Report
85
97
ESSENTIAL METALS ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS (continued)
29. PARENT ENTITY INFORMATION
Current assets
Total assets
Current liabilities
Total liabilities
Contributed equity
Accumulated losses
Equity incentive reserve
Financial asset revaluation reserve
Loss for the period
Total comprehensive income/(loss) for the period
2022
$’000
2021
$’000
11,126
22,125
1,726
1,936
5,782
14,474
1,018
1,150
50,150
44,538
(31,311)
(32,316)
1,336
14
(330)
1,097
1,163
(61)
(2,516)
(2,671)
Other information
The parent entity did not enter into any guarantees in relation to the debts of its subsidiaries in 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 24. The parent entity did not have contractual commitments at the end of the
current or prior financial year other than disclosed in Note 25.
END OF THE FINANCIAL REPORT
98
Essential Metals Limited – 2022 Annual Report
86
ESSENTIAL METALS ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS (continued)
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 2022 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 2022 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
28 September 2022
Essential Metals Limited – 2022 Annual Report
87
99
ESSENTIAL METALS ANNUAL REPORT 2022
INDEPENDENT AUDITOR’S
REPORT
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
Level 9, Mia Yellagonga Tower 2
5 Spring Street
Perth WA 6000
PO Box 700 West Perth WA 6872
Australia
INDEPENDENT AUDITOR'S REPORT
To the members of Essential Metals Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Essential Metals Limited (the Company) and its subsidiaries
(the Group), which comprises the consolidated statement of financial position as at 30 June 2022, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement
of changes in equity and the consolidated statement of cash flows for the year then ended, and notes
to the financial report, including a summary of significant accounting policies and the directors’
declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(i)
Giving a true and fair view of the Group’s financial position as at 30 June 2022 and of its
financial performance for the year ended on that date; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the Financial
Report section of our report. We are independent of the Group in accordance with the Corporations
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code)
that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia
Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO
International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability
limited by a scheme approved under Professional Standards Legislation
100
ESSENTIAL METALS ANNUAL REPORT 2022 INDEPENDENT AUDITOR’S
REPORT
Carrying value of exploration and evaluation assets
Key audit matter
How the matter was addressed in our audit
At 30 June 2022 the carrying value of exploration
and evaluation assets was disclosed in Note 14 of
the financial report.
As the carrying value of these exploration and
evaluation assets represents a significant asset of
the Group, we considered it necessary to assess
whether any facts or circumstances exist to
suggest that the carrying amount of this asset may
exceed its recoverable amount.
Judgement is applied in determining the treatment
of exploration expenditure in accordance with
Australian Accounting Standard AASB 6 Exploration
for and Evaluation of Mineral Resources. In
particular:
Whether the conditions for capitalisation are
satisfied;
Which elements of exploration and evaluation
expenditures qualify for recognition; and
Whether facts and circumstances indicate
that the exploration and expenditure assets
should be tested for impairment.
Our procedures included, but were not limited
to:
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;
Holding discussions with management as
to the status of ongoing exploration
programmes in the respective areas of
interest;
Considering whether any such areas of
interest had reached a stage where a
reasonable assessment of economically
recoverable reserves existed;
Considering whether any facts or
circumstances existed to suggest
impairment testing was required;
Verifying, on a sample basis, exploration
and evaluation expenditure capitalised
during the year for compliance with the
recognition and measurement criteria of
AASB 6; and
Reviewing the treatment of the sale of
the Mavis Lake project which occurred
during the period, which included:
• Reviewing the key executed
transaction documents to understand
the key terms and conditions of the
transaction; and
•
Evaluating the accuracy of the net
loss recognised.
We also assessed the adequacy of the related
disclosures in Note 4.7 and Note 14 to the
financial statements.
101
ESSENTIAL METALS ANNUAL REPORT 2022 INDEPENDENT AUDITOR’S
REPORT
Other information
The directors are responsible for the other information. The other information comprises the
information in the Group’s annual report for the year ended 30 June 2022, but does not include the
financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf
This description forms part of our auditor’s report.
102
ESSENTIAL METALS ANNUAL REPORT 2022 INDEPENDENT AUDITOR’S
REPORT
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 44 to 54 of the directors’ report for the
year ended 30 June 2022.
In our opinion, the Remuneration Report of Essential Metals Limited, for the year ended 30 June 2022,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
BDO Audit (WA) Pty Ltd
Phillip Murdoch
Director
Perth
28 September 2022
103
ESSENTIAL METALS ANNUAL REPORT 2022 ADDITIONAL SHAREHOLDER
INFORMATION
The following additional information is required by the Australian Securities Exchange. The information was current
as at 20 September 2022.
(a) Top 20 quoted shareholders
Rank Holder name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
CITICORP NOMINEES PTY LIMITED
BNP PARIBAS NOMINEES PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CS FOURTH NOMINEES PTY LIMITED
BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM
BNP PARIBAS NOMS PTY LTD
MORGAN STANLEY AUSTRALIA SECURITIES (NOMINEE) PTY LIMITED
IONIKOS PTY LTD 1
MR THOMAS WAYNE SPILSBURY & MRS MARCEY EVA SPILSBURY
MR JIUMIN YAN
DAY LIVIN PTY LTD
MR CHRISTOPHER ALLAN EAGLESHAM
RAFE PTY LTD
MR MARK KEVIN PROCTOR
MR MICHAEL WILLIAM GAULE
MR TIMOTHY GERARD SPENCER
NO LIMIT HOLDINGS PTY LTD
MR CEDRIC DESMOND PARKER
NO BULL HEALTH PTY LTD
20 WARBONT NOMINEES PTY LTD
%
6.04
2.35
1.29
1.16
1.08
1.07
0.95
0.79
0.77
0.75
0.75
0.65
0.56
0.55
0.53
0.52
0.46
0.43
0.40
0.40
Number of
shares
14,987,406
5,821,529
3,201,583
2,875,770
2,681,185
2,646,284
2,344,759
1,970,364
1,910,080
1,865,000
1,848,000
1,600,555
1,400,000
1,370,483
1,319,671
1,289,411
1,130,785
1,060,000
1,000,000
999,316
21.50
53,322,181
Note:
1 - Beneficial owner is Non-Executive Chairman of the Company, Craig McGown, who has a total shareholding of 2,177,031 ordinary shares.
(b) Distribution of quoted ordinary shares
Size of parcel
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,000 +
Total
Number of
share holders
Number of
shares
% Issued
share capital
620
1,861
1,148
2,298
404
6,331
268,729
5,462,286
9,334,829
79,686,856
153,281,087
248,033,787
0.11%
2.20%
3.76%
32.13%
61.80%
100.00%
104
Essential Metals Limited – 2022 Annual Report
90
ESSENTIAL METALS ANNUAL REPORT 2022
ADDITIONAL SHAREHOLDER
INFORMATION
(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 was 634 (holding
282,929 shares).
(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) Top 20 quoted ESSO option holders
Rank Holder name
1
2
3
4
5
6
7
8
9
10
11
12
12
12
13
14
14
14
14
14
15
16
17
18
18
19
BASILDENE PTY LTD
MR BILAL AHMAD
FRANCIS HOLDINGS (WA) PTY LTD
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
MR MARK KEVIN PROCTOR
INSURANCE SERVICES (WA) PTY LTD
MR WARREN THOMAS BROWN & MRS ROSLYN UNA BROWN
MR DAVID ANTON PETRUS
TURNER SHEPHERD PTY LTD
MR MERVYN PETER AIM & MRS SANDRA MARY AIM
ABN AMRO CLEARING SYDNEY NOMINEES PTY LTD
MR SHAYNE TIMOTHY FIELDER & MR GORDON WINSTON PICKARD
MR WARREN THOMAS BROWN
MR PAUL GARNET FARMER
MRS CHINIQUE WYATT
MAGNIM PTY LTD
MR MERVYN PETER AIM & MRS SANDRA MARY AIM
MR NON HUYNH NGUYEN
MRS MARGARET HELEN HOWARD & MR WILLIAM JOHN HOWARD
KOOYAP PTY LTD
MRS ALICE MARIE JOYCE HENNESSY
M & M CHAN PTY LTD
MR MATTHEW JOHN WAKEFIELD & DR SUZANNE ELIZABETH PEARSON
MR POH SENG TAN
LCL VENTURE PTY LTD
MR JAMES PAUL ANDERSON & MS BERNADETTE MARIE SLOYAN
20
MRS HEATHER XIAOQIN HUANG
%
18.92
11.97
6.22
4.60
4.41
4.25
3.27
2.75
2.61
1.43
1.38
1.30
1.30
1.30
1.10
0.92
0.92
0.92
0.92
0.92
0.90
0.83
0.82
0.78
0.78
0.77
Number of
options
3,627,093
2,295,000
1,192,738
882,353
845,470
815,643
627,346
527,345
500,000
274,646
264,796
250,000
250,000
250,000
210,000
176,470
176,470
176,470
176,470
176,470
172,700
160,000
157,119
150,000
150,000
147,058
0.63
120,000
76.93
14,751,657
Essential Metals Limited – 2022 Annual Report
91
105
ESSENTIAL METALS ANNUAL REPORT 2022
ADDITIONAL SHAREHOLDER
INFORMATION
(g) Unquoted equity securities
Equity security type
Security Code
Issued to
Number on issue
Exercise price
Expiry date
Directors
Broker
Directors
Directors
Directors
Directors
Directors
Directors
Directors
Directors
Directors
Directors
Directors
Employees
Employees
Directors
713,890
500,000
500,000
500,000
500,000
533,334
533,334
533,334
200,000
200,000
200,000
500,000
454,545
691,065
1,271,684
795,918
8,627,104
$0.45
$0.20
$0.25
$0.35
$0.45
$0.25
$0.35
$0.45
$0.125
$0.175
$0.225
N/A
N/A
N/A
N/A
N/A
30-Nov-2022
10-Aug-2023
31-Jan-2024
31-Jan-2024
31-Jan-2024
30-Jun-2024
30-Jun-2024
30-Jun-2024
20-Sept-2024
20-Sept-2024
20-Sept-2024
31-Jan-2024
30-Jun-2024
30-Jun-2024
30-Jun-2025
30-Jun-2025
Options
Options
Options
Options
Options
Options
Options
Options
Options
Options
Options
ESSOPT6
ESSOPT17
ESSOPT7
ESSOPT8
ESSOPT9
ESSOPT10
ESSOPT11
ESSOPT12
ESSOPT14
ESSOPT15
ESSOPT16
Performance Rights
ESSPR3
Performance Rights
Performance Rights
Performance Rights
Performance Rights
ESSPR5&6
ESSPR5&6
ESSPR7&8
ESSPR7&8
MINERAL RESOURCE STATEMENT
As at 30 June 2022
The Dome North Lithium Project
Project area
Cade Deposit
Davy Deposit
Heller Deposit
Total
Glossary
Li2O – Lithium Oxide
Category
Indicated
Inferred
Inferred
Inferred
Tonnes
(Mt)
5.4
2.8
2.3
0.7
11.2
Grade
(Li2O %)
1.30
1.18
1.13
1.02
1.21
Tonnes Li2O
70,000
33,000
25,000
8,000
136,000
106
Essential Metals Limited – 2022 Annual Report
92
ESSENTIAL METALS ANNUAL REPORT 2022 (g) Unquoted equity securities
Equity security type
Security Code
Issued to
Number on issue
Exercise price
Expiry date
Options
Options
Options
Options
Options
Options
Options
Options
Options
Options
Options
ESSOPT6
ESSOPT17
ESSOPT7
ESSOPT8
ESSOPT9
ESSOPT10
ESSOPT11
ESSOPT12
ESSOPT14
ESSOPT15
ESSOPT16
Directors
Broker
Directors
Directors
Directors
Directors
Directors
Directors
Directors
Directors
Directors
713,890
500,000
500,000
500,000
500,000
533,334
533,334
533,334
200,000
200,000
200,000
Performance Rights
ESSPR3
Directors
500,000
ESSPR5&6
Performance Rights
Performance Rights
MINERAL RESOURCE
STATEMENT
Performance Rights
Performance Rights
Employees
Employees
ESSPR7&8
ESSPR5&6
ESSPR7&8
1,271,684
Directors
Directors
454,545
691,065
795,918
$0.45
$0.20
$0.25
$0.35
$0.45
$0.25
$0.35
$0.45
$0.125
$0.175
$0.225
N/A
N/A
N/A
N/A
N/A
30-Nov-2022
10-Aug-2023
31-Jan-2024
31-Jan-2024
31-Jan-2024
30-Jun-2024
30-Jun-2024
30-Jun-2024
20-Sept-2024
20-Sept-2024
20-Sept-2024
31-Jan-2024
30-Jun-2024
30-Jun-2024
30-Jun-2025
30-Jun-2025
8,627,104
Category
Indicated
Inferred
Inferred
Inferred
Tonnes
(Mt)
Grade
(Li2O %)
Tonnes Li2O
5.4
2.8
2.3
0.7
11.2
1.30
1.18
1.13
1.02
1.21
70,000
33,000
25,000
8,000
136,000
MINERAL RESOURCE STATEMENT
As at 30 June 2022
The Dome North Lithium Project
Project area
Cade Deposit
Davy Deposit
Heller Deposit
Total
Glossary
Li2O – Lithium Oxide
Essential Metals Limited – 2022 Annual Report
92
107
ESSENTIAL METALS ANNUAL REPORT 2022
COMPETENT PERSONS
STATEMENTS
COMPETENT PERSON STATEMENTS
Exploration Results
The information in this Report which relates to exploration results is based on information compiled by Mr Andrew
Dunn. Mr Dunn (MAIG), Exploration Manager who is employed full-time by Essential Metals Limited, compiled the
technical aspects of this Report, other than pertaining to the Joint Ventures. Mr Dunn is eligible to receive equity-
based securities in Essential Metals Limited under the Company’s employee incentive schemes. Mr Dunn is a member
of the Australian Institute of Geoscientists and has sufficient experience that is relevant to this style of mineralization
and type of deposit under consideration and to the activity that is being reported on to qualify as a Competent Person
as defined in the 2012 edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and
Ore Reserves”. Mr Dunn consents to the inclusion in the Report of the matters in the form and context in which it
appears.
Mineral Resource Estimates - Dome North Lithium Project
The information in this Report that relates to Mineral Resources for the Dome North Lithium Project is based on and
fairly represents information compiled by Competent Person Mr Lauritz Barnes. Mr Barnes is a consultant to the
Company and is a member of both the Australasian Institute of Mining and Metallurgy and the Australian Institute of
Geoscientists. Mr Barnes has sufficient experience of relevance to the styles of mineralisation and types of deposits
under consideration, and to the activities undertaken to qualify as Competent Persons as defined in the 2012 Edition
of the Joint Ore Reserves Committee (JORC) Australasian Code for Reporting of Exploration Results, Mineral Resources
and Ore Reserves. Mr Barnes consents to the inclusion in the Report of the matter in the form and context in which it
appears.
Reference to previous market announcements
The Company confirms that it is not aware of any new information or data that materially affects the information
included in the original market announcements and that all material assumptions and technical parameters
underpinning the estimates in the relevant market announcements continue to apply and have not materially
changed. The company confirms that the form and context in which Exploration Results or Competent Person’s
findings are presented have not been materially modified from the original market announcements.
108
Essential Metals Limited – 2022 Annual Report
93
ESSENTIAL METALS ANNUAL REPORT 2022
FORWARD LOOKING
STATEMENTS
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 – 2022 Annual Report
94
109
ESSENTIAL METALS ANNUAL REPORT 2022
TENEMENT
REGISTER
Tenement Register (Consolidated Basis) as at 30 June 2022
Tenement
Holder
Pioneer Dome Project Located 133km SSE of Kalgoorlie, WA
Essential Metals Limited
E15/1515
Essential Metals Limited
E15/1522
Essential Metals Limited
E15/1725
Essential Metals Limited
E63/1669
Essential Metals Limited
E63/1782
Essential Metals Limited
E63/1783
Essential Metals Limited
E63/1785
Essential Metals Limited
E63/1825
Essential Metals Limited
E63/2118
Essential Metals Limited
L63/77
M63/665
Essential Metals Limited
Golden Ridge Nickel Project Located 30km SE of Kalgoorlie, WA
Golden Ridge North Kambalda Pty Ltd
E26/186
Golden Ridge North Kambalda Pty Ltd
E26/211
Golden Ridge North Kambalda Pty Ltd
E26/212
Golden Ridge North Kambalda Pty Ltd
M26/220
Golden Ridge North Kambalda Pty Ltd
M26/222
Golden Ridge North Kambalda Pty Ltd
M26/284
Golden Ridge North Kambalda Pty Ltd
M26/285
Golden Ridge North Kambalda Pty Ltd
L26/272
Juglah Dome Project Located 60km ESE of Kalgoorlie, WA
E25/585
Regional Projects, Located in WA
E15/1710
Kangan Lithium & Gold Projects Located 80km S of Port Hedland, (Wodgina) WA
E45/4948
E47/3318-I
E47/3321-I
E47/3945
Balagundi Gold & Base Metals Project Located 25km NE of Kalgoorlie, WA
E27/558
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
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
Essential Metals Limited
Essential Metals Limited
Essential Metals Limited
Essential Metals Limited
Essential Metals Limited
Western Copper Pty Ltd
Notes
Status
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
1, 2
1, 2
1, 2
1, 2
1, 2
1, 2
1, 2
1, 2
3
Granted
Granted
Granted
Granted
Granted
Granted
5
4, 5
4, 5
5
6
Granted
7, 8
7, 8
8
7, 8
8
7, 8
7, 8
8
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
110
ESSENTIAL METALS ANNUAL REPORT 2022
Essential Metals Limited – 2022 Annual Report
95
TENEMENT
REGISTER
Tenement
Holder
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 Nickel JV, Located 140km SE of Southern Cross
Essential Metals Limited / Maximus Resources Limited
Essential Metals Limited / Maximus Resources Limited
E63/1784
Ravensthorpe Copper-Gold Project Located 340km SW of Kalgoorlie, WA
Essential Metals Limited / Poseidon Nickel Limited
E74/379-I
Galaxy Lithium Australia Limited
E74/399
E74/406
Galaxy Lithium Australia Limited
Galaxy Lithium Australia Limited
Katanning Gold Project
E70/5040
E70/5042
E70/5043
E70/5044
Ausgold Exploration Pty Ltd
Ausgold Exploration Pty Ltd
Ausgold Exploration Pty Ltd
Ausgold Exploration Pty Ltd
Notes
Status
9, 10
9, 10
9, 10
9, 10
9, 10
9, 10
9, 10
9, 10
9, 10
9, 10
11
11
12
13
13
13
14
14
14
14
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Note
1
2
3
4
5
6
7
8
Golden Ridge North Kambalda Pty Ltd is a wholly owned subsidiary of Essential Metals Limited.
Nickel sulphides rights are subject to the Australian Nickel Company Ltd Farmin/Joint venture.
Western Copper Pty Ltd is a 100% owned subsidiary of Essential Metals Limited.
Subject to a 1.5% NSR royalty right held by FMG Pilbara Pty Ltd.
Kangan Gold JV Agreement: Novo Resources Corp holds a 70% Project Interest in gold and precious metals
mineral rights.
Balagundi Farmin/JV Agreement: Black Cat Syndicate Limited is earning a 75% Project interest.
Heron Resources Limited retains nickel laterite ore rights.
Acra JV Agreement: Northern Star Resources Limited 75% interest. Essential Metals Limited 25% free
carried interest.
Heron Resources Limited retains pre-emptive right to purchase nickel laterite ore.
9
10 Wattle Dam Nickel JV Agreement: Title, Mineral Rights held by Maximus Resources Limited. Essential
Metals Limited 20% free carried interest in nickel sulphide minerals.
Larkinville West JV Agreement: Maximus Resources Limited 75%, Essential Metals Limited 25% free carried
interest, except nickel rights which are subject to the Wattle Dam JV.
Maggie Hays Lake JV Agreement: Poseidon Nickel Limited 80%, Essential Metals Limited 20% & free carried
interest to commencement of mining.
Title and lithium/tantalum rights held by Galaxy Lithium Australia Limited. Essential Metals Limited holds a
1.5% net smelter royalty.
Essential Metals Limited holds a 1.5% net smelter royalty.
11
12
13
14
Essential Metals Limited – 2022 Annual Report
96
ESSENTIAL METALS ANNUAL REPORT 2022
111
PRINCIPAL REGISTERED OFFICE
Level 3,
1292 Hay Street,
West Perth,
Western Australia 6005
Telephone: +61 8 9322 6974
Email: info@essmetals.com.au
essmetals.com.au