FE Limited
ABN 31 112 731 638
AND CONTROLLED ENTITIES
ANNUAL REPORT 2019
Corporate Directory
Annual Report 2019
CORPORATE DIRECTORY
Australian Business Number
31 112 731 638
Country of Incorporation
Australia
Board of Directors
Antony Sage
Mark Hancock
Nicholas Sage
Non-Executive Chairman
Executive Director
Non-Executive Director
Company Secretary
Catherine Grant-Edwards
Melissa Chapman
Principal Administrative Office
and Registered Office
32 Harrogate Street
West Leederville, WA 6007
Telephone:
Facsimile:
+61 (0)8 6181 9793
+61 (0)8 9380 9666
Share Registry
Auditors
ASX
Link Market Services
Level 12 QV1 Building
250 St Georges Terrace
Perth WA 6000
Telephone:
Website:
Ernst & Young
11 Mounts Bay Road
Perth, WA 6000
+61 1300 554 474
www.linkmarketservices.com.au
Fe Limited’s fully paid ordinary shares are quoted on the Official List of
ASX. The ASX code is FEL.
Contents
Annual Report 2019
CONTENTS
DIRECTORS’ REPORT
AUDITOR’S INDEPENDENCE DECLARATION TO DIRECTORS
CORPORATE GOVERNANCE STATEMENT
STATEMENT OF COMPREHENSIVE INCOME
STATEMENT OF FINANCIAL POSITION
STATEMENT OF CHANGES IN EQUITY
STATEMENT OF CASH FLOWS
NOTES TO THE FINANCIAL STATEMENTS
DIRECTORS’ DECLARATION
INDEPENDENT AUDITOR’S REPORT
SCHEDULE OF TENEMENTS
ADDITIONAL SHAREHOLDER INFORMATION
2
19
20
21
22
23
24
25
51
52
56
58
1
Directors’ Report
Annual Report 2019
The directors of Fe Limited (FEL or the Company) present their report and the financial statements comprising
FEL and its controlled entities (together the Group) for the year ended 30 June 2019 (year).
DIRECTORS’ REPORT
DIRECTORS
The names and details of the Company’s directors in office during the year and until the date of this report are
as follows. All directors were in office for the entire period unless stated otherwise.
Antony Sage, (B com, FCPA, CA, FTIA) Non-Executive Chairman
Mr Antony Sage has in excess of 30 years’ experience in the fields of corporate advisory services, funds
management and capital raising. Mr Antony Sage is based in Western Australia and has been involved in the
management and financing of listed mining and exploration companies for over 20 years. Mr Antony Sage has
operated in Argentina, Brazil, Peru, Romania, Russia, Sierra Leone, Guinea, Cote d’Ivoire, Congo, South Africa,
Indonesia, China and Australia. Mr Antony Sage is currently chairman of ASX-listed companies, Cape Lambert
Resources Ltd (which was AIM Company of the year in 2008), European Lithium Limited and Fe Ltd. Mr Antony
Sage is also a Non-Executive Director of National Stock Exchange of Australia (“NSX”) listed International
Petroleum Ltd. Mr Antony Sage is also the sole owner of A League football club Perth Glory that plays in the
National competition in Australia. Mr Antony Sage currently is, or has been a director of the following listed
entities in the three years immediately before the end of the current financial year:
▪ Cape Lambert Resources Limited (December 2000 to Present);
▪
▪
▪ Cauldron Energy Limited (June 2009 to November 2018).
International Petroleum Limited* (January 2006 to Present);
European Lithium Limited (September 2016 to Present); and
* Listed on National Stock Exchange of Australia
Interest in Shares & Options at
date of this report:
6,423,010 fully paid ordinary shares (indirectly held)
2,750,000 fully paid ordinary shares
6,500,000 unlisted options at $0.045 expiring 31 May 2020
10,000,000 unlisted options at $0.02 expiring 31 May 2021
Mark Hancock, (B.Bus, CA, FFin) Executive Director (Appointed 1 September 2019)
Mr Mark Hancock has over 30 years’ experience in key financial, commercial and marketing roles across a
variety of industries with a strong focus on natural resources. During his 13 years at Atlas Iron Ltd, Mr Hancock
served in numerous roles including CCO, CFO, Executive Director and Company Secretary. Mr Mark Hancock is
currently a director or has been a director of the following listed companies in the three years immediately
before the end of the current financial year:
▪ Centaurus Metals Ltd (September 2011 to Present).
Interest in Shares & Options at
date of this report:
2,500,000 unlisted options at $0.02 expiring 31 May 2021 (not yet
issued, subject to receipt of shareholder approval)
Nicholas Sage, Non-Executive Director
Mr Nicholas Sage is an experienced marketing and communications professional with in excess of 25 years in
various management and consulting roles. Mr Nicholas Sage is based in Western Australia and currently
consults to various companies and has held various managements roles with Tourism Western Australia. He also
runs his management consulting business. Mr Nicholas Sage is currently a director or has been a director of the
following listed companies in the three years immediately before the end of the current financial year:
International Goldfields Limited (January 2018 to Present); and
▪
▪ Cauldron Energy Limited (June 2015 to February 2019).
Interest in Shares & Options at
date of this report:
1,500,000 unlisted options at $0.045 expiring 31 May 2020
2,500,000 unlisted options at $0.02 expiring 31 May 2021
2
Directors’ Report
Annual Report 2019
Kenneth Keogh, Non-Executive Director (Resigned 1 September 2019)
Mr Keogh is a finance professional with experience in both financing and developing projects in the mining, oil &
gas and renewables industries. Mr Keogh is based in Western Australia where he consults to various private
companies and holds a key management position at UON Pty Ltd. Mr Keogh runs his own successful investment
firm which holds interest in exploration and mining companies, mining services and hospitality businesses. Mr
Keogh holds a Bachelor of Art (Accounting and Finance) from Dublin Business School and holds an MBA from the
Australian Institute of Business. Mr Kenneth Keogh is currently a director or has been a director of the following
listed companies in the three years immediately before the end of the current financial year:
▪
International Goldfields Limited (January 2018 to Present).
Interest in Shares & Options at
date of this report:
766,300 fully paid ordinary shares (indirectly held)
4,500,000 unlisted options at $0.045 expiring 31 May 2020
5,000,000 unlisted options at $0.02 expiring 31 May 2021
JOINT COMPANY SECRETARY
Catherine Grant-Edwards
Ms Grant-Edwards has a Bachelor of Commerce degree from the University of Western Australia, majoring in
Accounting and Finance. She commenced her career at Ernst & Young, where she qualified as an Accountant
with the Chartered Accountants Australia & New Zealand (CAANZ) in 2007. Ms Grant-Edwards has over 15
years experience in accounting and finance and currently provides accounting and company secretarial services
to several listed resource companies.
Melissa Chapman
Ms Chapman is a certified practising accountant with over 15 years of experience in the mining industry. She has
worked extensively in Australia and the United Kingdom. Ms Chapman has a Bachelor of Accounting from
Murdoch University and has been a member of CPA Australia since 2000. Melissa has completed a Graduate
Diploma of Corporate Governance with the Governance Institute of Australia, and the company directors course
with the Australian Institute of Company Directors.
PRINCIPAL ACTIVITIES AND SIGNIFICANT CHANGES STATE OF AFFAIRS
The Company is an Australian mineral exploration company with interests in various projects and tenements
prospective for battery metals, copper, iron ore, gold and base metals located in Australia. The company is
focused on the exploration of battery metal projects.
There have been no changes in the state of affairs of the Group other than those disclosed in the review of
corporate activities and review of operations.
DIVIDENDS AND DISTRIBUTIONS
No dividends or distributions were paid to members during the year and none were recommended or declared
for payment (30 June 2018: nil).
REVIEW OF OPERATIONS
CORPORATE
Operating Results
The consolidated loss after income tax for the year ended 30 June 2019 amounted to $1,668,158 (30 June
2018: $1,082,275).
Board Changes
There were no changes made to the board of directors during the year ended 30 June 2019. Refer to Significant
Events Subsequent to Reporting Date for details of board changes on 1 September 2019.
3
Directors’ Report
Annual Report 2019
Annual General Meeting
The Company’s annual general meeting was held on 30 November 2018 (AGM). All resolutions put to the
meeting were passed on a show of hands.
Iron Ore Royalty
During the year, FEL received a royalty payment of $211,729 in relation to mining conducted by Mineral
Resources Ltd (ASX: MIN) at its Deception iron ore mine during the March 2019 quarter. A further royalty of
$241,498 has been accrued at balance date in respect of mining activities during the June 2019 quarter.
FEL holds a 1.5% Dry Metric Tonne, FOB Royalty (Evanston Iron Ore Royalty) in respect to M77/1259 that is
located approximately 20kms north of the Windarling mine. The Evanston Iron Ore Royalty area is located in the
Southern Yilgarn Iron Province of Western Australia.
Placements
On 8 May 2019, the Company completed a placement to sophisticated and professional investors raising a total
of $400,000 (Placement A) through the issue of Shares at an issue price of $0.02 per Share (Placement A
Shares), with one free attaching Option for every two Placement A Shares issued at an exercise price of $0.03
each expiring 2 years from date of issue (Placement A Options).
In addition to the above, at 30 June 2019, the Company had received firm commitment of $75,000 from
investors to participate in the Placement B and proposed to issue 5,000,000 Placement B Shares (Proposed
Placement B Shares) to such investors at an issue price of $0.015 per Share, subject to shareholder approval.
Shares issued
During the year, the Company issued the following fully paid ordinary shares:
▪
▪
▪
▪
▪
2,750,000 shares to a director (following receipt of shareholder approval at the AGM) (Director
Shares);
20,000,000 shares (Placement A Shares);
48,500,000 shares (Placement B Shares);
2,406,990 shares (issued to advisors in settlement of invoices for corporate advisory services and
capital raising costs) (Advisor Shares); and
12,500,000 ordinary shares (escrowed until 23 November 2019) (Consideration Shares pursuant to the
Mercury Acquisition (refer below)).
Shares released from escrow
On 6 November 2018, 25,000,000 shares in the Company were released from escrow.
Options issued
During the year, the Company issued the following unlisted options:
▪
▪
▪
▪
▪
12,500,000 unlisted options at $0.045 expiring 31 May 2020 to directors (following receipt of
shareholder approval at the AGM);
7,500,000 unlisted options at $0.045 expiring 31 May 2020 to a consultant (following receipt of
shareholder approval at the AGM);
5,625,000 unlisted options at $0.03 expiring 13 March 2021 (Placement A Options);
3,125,000 unlisted options at $0.03 expiring 12 April 2021 (Placement A Options); and
1,250,000 unlisted options at $0.03 expiring 8 May 2021 (Placement A Options).
4
Directors’ Report
Annual Report 2019
Mercury Transaction
On 21 February 2019, the Company entered into an agreement (as varied on 8 March 2019, 20 May 2019 and
14 June 2019) (Acquisition Agreement) to acquire the Pippingarra Lithium Project and the Marble Bar Lithium
Project (together the Projects) (refer Figure 1 and Figure 2) from Mercury Resources Group Pty Ltd (an
unrelated private exploration and mining group) (Mercury) (Mercury Transaction). Pursuant to the
Acquisition Agreement, consideration comprises:
(a) 12,500,000 shares subject to six months escrow from date of issue (Consideration Shares);
(b) 15,000,000 unlisted options with an exercise price of 2.5 cents each expiring on 31 March 2022
(Consideration Options);
(c) a 1% net smelter royalty;
(d) up to $100,000 in cash, payable in instalments as follows:
a. $50,000 paid 23 May 2019; and
b. $50,000 payable at formal completion;
(e) a further tranche of shares with a total value of $250,000 (using an issue price equal to the Shares’ 5
day VWAP) upon the Company announcing a JORC Resource of 50,000,000 tonnes @ 1% Li2O within 24
months from completion (to be issued subject to prior shareholder approval).
The Consideration Shares were issued on 23 May 2019 using the Company’s 15% capacity pursuant to Listing
Rule 7.1.
The Company deems the Mercury Transaction to have been substantially completed on 23 May 2019. At balance
date, the only condition to formal completion remained the issue of the Consideration Options. Shareholder
approval for the issue of the Consideration Options was obtained at the Company’s General Meeting held 8
August 2019 (General Meeting).
Under the terms of the Acquisition Agreement, FEL was granted the sole and exclusive right to access and
undertake exploration on the tenements during the pre-completion period. Exploration activities have been
conducted by FEL during the year (refer details below).
Option to Earn-In Macarthur Minerals Limited Transaction
On 14 May 2019, the Company announced that it had entered into an exclusive option agreement (Option
Agreement) with Macarthur Lithium Pty Ltd (MLi), a wholly owned subsidiary of Macarthur Minerals Limited
(Macarthur) (TSX-V:MMS) to acquire an interest of up to 75% in 18 tenements (Project). The Project
tenements are highly prospective for gold, copper and lithium in proximity to numerous known hard rock lithium
and gold deposits in the central and eastern Pilbara (refer Figure 1, Figure 3 and Schedule 1).
Under the terms of the Option Agreement, MLi granted FEL a 45 day option to enable FEL to conduct due
diligence and secure the required funding to proceed with exercising the option. The Company paid a non-
refundable option fee to MLi of $100,000 in cash (Option Fee).
On 27 June 2019, FEL elected to exercise the option to earn-in, and the parties have agreed that the payment
terms of the $400,000 payable to MLi (being the Option Exercise Fee) be extended to 31 August 2019.
On 28 August 2019, the parties entered into a revised agreement to replace the existing Option Agreement
(Revised Option Agreement). Pursuant to the Revised Option Agreement, the Option Exercise Fee was equity
settled on 29 August 2019 via the issue of 26,666,667 ordinary shares (at a deemed issue price of $0.015
each). For the purposes of determining the Stage 1, Stage 2, and Stage 3 earn in periods (detailed below), the
parties have acknowledged the formal Exercise Date to be 29 August 2019.
5
Directors’ Report
Annual Report 2019
Pursuant to the Revised Option Agreement, FEL holds the right to earn-in up to 75% interest in the Project, on
the following terms:
1) Stage 1 - Initial 25% interest in the Project by:
a. undertaking expenditure on the Project tenements of no less than the minimum expenditure
commitment; and
b. payment to MLi of $500,000 in cash or ordinary FEL shares (based on the 5-day VWAP prior to
the issue date) at FEL’s election,
within 1 year from the Exercise Date;
2) Stage 2 - Further 30% interest in the Project by:
a. undertaking further expenditure on the Project tenements of no less than the minimum
expenditure commitment ; and
b. payment to MLi of $500,000 in cash or shares (based on the 5-day VWAP prior to the issue
date) at FEL’s election,
within 2 years from the Exercise Date;
3) Stage 3 - Further 20% interest in the Project by:
a. undertaking expenditure on the Project tenements of no less than the minimum expenditure
commitment; and
b. payment to MLi of $750,000 in cash or shares (based on 5-day VWAP prior to the issue date) at
FEL’s election,
within 3 years from the Exercise Date.
FEL will act as JV manager. MLi will have a free carried until a pre-feasibility study is completed.
FEL can withdraw from the earn-in at any time and without penalty.
Existing Business and Focus
The Company remains focused on its activities within the mineral exploration industry on its retained tenements
and interests in various projects and tenements prospective for battery metals, copper, iron ore, gold and base
metals located in Australia.
With the introduction of the Pippingarra Lithium Project and the Marble Bar Lithium Project and the Macarthur
Minerals Lithium and Gold Tenements Earn-In Project to the Company’s portfolio, and in line with the Company’s
renewed focus on assets located in Australia, the Board has elected to exit from the Kasombo Project located in
the Democratic Republic of Congo.
The Company has interests in several highly prospective projects in the Bryah Basin region of Western Australia
with joint venture partners Auris Minerals Ltd (formerly RNI NL), Alchemy Resources Ltd, Independence Group
NL, Westgold Resources Limited, Billabong Gold Pty Ltd and Sandfire Resources NL, which are mostly free-
carried with no contributing responsibilities, until Decision to Mine.
PROJECTS
Western Australia
The Company holds, or has rights or interests in, various tenements prospective for lithium, iron, nickel, copper
and gold located in Western Australia.
Pippingarra Lithium Project and the Marble Bar Lithium Project
As detailed above, the Company acquired 100% beneficial interest in six tenements from Mercury in May 2019.
The tenements acquired represent the Pippingarra Lithium Project and the Marble Bar Lithium Project (together
the Projects) (refer Figure 1 and Figure 3). The Company has commenced early exploration activities on its
recently acquired tenure towards the end of the financial year.
6
Directors’ Report
Annual Report 2019
Macarthur Minerals Lithium and Gold Tenements Project (Right to Earn-In up to 75%)
As detailed above, the Company has secured the right to earn up to 75% interest in eighteen tenements
pursuant to the Option Agreement with MLi. The Macarthur Minerals Lithium and Gold Project tenements are
highly prospective for gold, copper and lithium in proximity to numerous known hard rock lithium and gold
deposits in the central and eastern Pilbara (refer Figure 1, Figure 3 and Schedule 1). The Company has
commenced early exploration activities on its recently acquired tenure towards the end of the financial year.
Bryah Basin Joint Venture Projects - FEL 20% rights
FEL, via its wholly owned subsidiary Jackson Minerals Pty Ltd (Jackson Minerals), has a 20% interest in
tenements covering an area of 804 km² in the highly prospective Bryah Basin proximal to Sandfire Resources NL
(ASX: SFR) Doolgunna Project and DeGrussa copper gold mine.
The Bryah Basin Project tenements are subject to joint ventures and farm-ins with Westgold Resources Limited
(ASX: WGX), Billabong Gold Pty Ltd (Billabong), Alchemy Resources (Three Rivers) Ltd (ASX: ALY), Auris
Minerals Ltd (ASX:AUR) and SFR, refer Figure 4.
The Bryah Basin is emerging as a highly prospective and largely under-explored mineral field with potential for
further discovery of gold and base metals.
Forrest Project - AUR/FEL - E52/1671 (Forrest), E52/1659 (Wodger & Big Billy), P52/1494-1496
The Forrest, Wodger and Big Billy Prospects are located along a 12km mineralized copper/gold trend which hosts
multiple targets for volcanogenic massive sulphide (VMS) style mineralization. FEL holds a 20% interest in all
minerals in two exploration licences and three prospecting licences (E52/1659 and E52/1671 and P52/1494-
1496) within AUR’s Forrest Project. WGX acquired AUR’s 80% gold right interests in E52/1659 and E52/1671 via
Metals X Ltd. FEL’s 20% interests in all minerals are free carried until Decision to Mine.
The Wodger and Forrest prospects are confirmed as priority gold and copper prospects in AUR’s Bryah Basin
exploration portfolio.
AUR has completed aircore, RC and diamond drilling, geological interpretations and down hole electromagnetic
surveys (DHEM) at the Forrest Project during the year to further explore the potential of VMS hosted copper and
associated gold mineralisation discovered in 2014. AUR has reported that geological interpretations at the
Forrest Project highlights significantly more prospective Narracoota Formation (host to the Horseshoe Lights Cu-
Au VMS deposit) than was previously mapped and that the scope of the mineralised system has been
significantly expanded to the north, see ASX:AUR Announcements 4 February 2019 for details. More recently
AUR announced that a new style of copper mineralisation was intersected in diamond drill hole FPDD002
(448.5m depth) at the Forrest Prospect. The mineralised intervals within FPDD002 were the first wholly copper-
sulphide intersections recorded at the Forrest Prospect. Significant drilling results from FPDD002 include 8.5m @
1.06% Cu and 0.42g/t Au from 382m (including 1m @ 1.55% Cu and 3.33g/t Au from 389.5m). Other
significant historic and recent drilling intercepts at the Forrest Prospect include 9.65m @ 5.00% Cu and 1.91g/t
Au from 142.4m in FGDD001, 9.55m @ 2.25% Cu and 0.66g/t Au from 204.1m in FGDD003, 9.0m @ 5.78% Cu
and 1.41g/t Au from 76m in FPRC025, 11m @ 4.83% Cu and 1.18g/t Au from 76m in FPRC022 and 4m @ 34.1
g/t Au from 12m in FPRC024, see ASX:AUR Announcements 4 February 2019 and 29 April 2019.
At the Wodger Prospect geological interpretations along a 6km corridor of prospective strike between Wodger
and Big Billy suggested that the area is underlain by the prospective Upper Narracoota Formation volcanic units
in contact with overlying sediments of the Ravelstone Formation. Aircore drilling conducted along this corridor
has largely confirmed this interpretation and the prospective ‘Upper contact’ has been mapped at a broad scale.
Better intersections returned include 8m @ 0.13% Cu from 24m, 12m @ 0.52% Cu from 36m and 8m @ 0.12%
Cu from 68m in WRAC203 at Wodger North and 4m @ 0.49g/t Au and 0.80% Cu from 16m in WRAC155 and 4m
@ 1.69g/t Au from 24m in WRAC165 at Big Billy South. Refer to ASX:AUR Announcement 5 December 2018 for
details.
The Wodger aircore drilling highlighted three additional exploration targets for further focused work. Follow-up
RC drilling intersected malachite in five holes at the expected target depths and returned an interval of 6m at
2.80% Cu from 305m including 1m @ 8.28% Cu and 5.74g/t Au from 309m in WDRC018. Further diamond
drilling intersected a discrete, semi-massive zone of 25% chalcopyrite that returned an intersection of 1.8m @
1.73% Cu from 335m including 0.2m @ 9.62% Cu and 0.10g/t Au from 336.6m in WRDD005. Down hole
electromagnetic (DHEM) surveying has identified a subtle in-hole conductor in Wodger diamond hole WRDD005
and further modelling is required to fully evaluate this anomaly. Additional diamond drilling is required at both
7
Directors’ Report
Annual Report 2019
the Forrest and Wodger Prospects to further evaluate the copper mineralisation at depth. Refer to ASX:AUR
announcement 4 February 2019 and 29 April 2019 for full details and drilling results.
Morck Well Project - AUR/SFR/FEL- E51/1033, E52/1613, E52/1672
The Morck Well project is located in the eastern part of the Bryah Basin and contains approximately 40km strike
length of the highly prospective Narracoota Volcanic Formation. The northern boundary of Morck Well is adjacent
to SFR’s DeGrussa-Doolgunna exploration tenements. FEL holds a 20% interest in all minerals in three
exploration licences (E51/1033, E52/1613 and E52/1672) within AUR’s Morck Well project. SFR has a farm-in
and joint venture with FEL and AUR where SFR can earn an interest in the Morck Well Project tenements by
completing a minimum spend of $2.0m on exploration over 2 years. Refer to ASX:AUR announcement 27
February 2018 for details.
SFR has completed an extensive and systematic air-core drilling campaign during the year on the Morks Well
Project focusing on the Karalundi and Narracoota Formations. Highly encouraging supergene and fresh massive
sulphide mineralization was intersected at the northeast end of the Morck Well JV area. Significant assays
returned from the air-core drilling included 1m @ 1,250ppm Cu (MWAC0424) and 10m @ 1,630ppm Cu
(MWAC0758). Refer to ASX:AUR Announcement 18 October 2018 for results and further details.
SFR also completed follow-up diamond and RC drilling at Morcks Well during the year. Significant base metal
geochemistry results included 1m @ 0.80% Cu, 61ppb Au, 112ppm Zn and 156ppm Pb in RC hole MWRC0010
from 183m. RC and diamond drilling continues to highlight the prospectivity of the Morck Well JV area where the
joint venture spend to date is approximately $9.4M. Refer to ASX:AUR announcement 19 July 2019 for full
details and drilling results.
Peak Hill Project Base Metals Rights – ALY/IGO/FEL - E52/1668, E52/1678, E52/1722 and
E52/1730
The Peak Hill project covers approximately 45km strike of the prospective Narracoota Volcanic Formation
sequence in the Bryah Basin and is proximal to SFR’s Doolgunna Project and the recently discovered Monty
Prospect.
ALY has entered into a farm-in and joint venture with SFR (refer to ASX:FEL 14 August 2018 and ASX:ALY 5
November 2014 for relevant information and diagrams). SFR is earning up to 70% interest in base metals rights,
excluding iron ore rights, in relation to whole area of E52/1722 and parts of E52/1668, E52/1678 and E52/1730.
FEL holds a 20% interest in all minerals in these tenements free carried to Decision to Mine.
SFR has completed aircore drilling at the Neptune Prospect on E52/1722. The drilling targeted the Karalundi
sediments that host the DeGrussa copper-gold deposit. SFR has received several anomalous copper and gold
results and has completed follow up ground moving loop electromagnetic (MLEM) surveys to further improve
targeting of the host volcanogenic massive sulphide (VMS) horizon. Processing of the MLEM data is ongoing and
follow up RC drilling is to commence soon, refer to ASX:ALY announcement 8 July 2019 for full details and
drilling results.
Peak Hill Project All Mineral Rights - ALY/Billabong/FEL - E52/1668, E52/1678, E52/1730,
P52/1538, P52/1539
Billabong, through an assignment of interests from NST, entered into a Farm-In and Joint Venture agreement
with ALY (refer to ASX:ALY 24Feb2015), in regard to parts of E52/1668, E52/1678, E52/1730 (excluding those
parts being farmed into by SFR) and also to earn an 80% interest in the whole of E52/1852. FEL retains its 20%
free carried interests in all minerals to decision to mine, via wholly owned subsidiary Jackson Minerals.
Mt Ida Iron Ore Project - Mt Ida Gold
Mt Ida Iron Ore Project is approximately 80km northwest of the operational railway at Menzies, which offers
access to existing port facilities at Esperance. The Project area covers part of the Mt Ida - Mt Bevan banded iron
formation, which is currently being explored and evaluated by Jupiter Mines Limited and Legacy Iron Ore
Limited.
The Mt Ida Iron Ore Project (Mt Ida Iron Project) provides FEL the rights to explore and mine for iron ore on
exploration license E29/640 and mining leases M29/2, M29/165 and M29/422 held by Mt Ida Gold Pty Ltd,
covering approximately 120km2 in the emerging Yilgarn Iron Province. The rights give provision for FEL to retain
revenue from any iron ore product it mines from the tenure. FEL has no registered interest in these tenements.
8
Directors’ Report
Annual Report 2019
Evanston Iron Ore Royalty - Mineral Resources Ltd
FEL holds a 1.5% Dry Metric Tonne, FOB Royalty over two tenements (E77/1322 and M77/1259) within the
Evanston Iron Ore Project located in the Southern Yilgarn Iron Province of Western Australia approximately
20kms north of the Windarling mine. The Evanston Iron Ore Project is located in the Southern Yilgarn Iron
Province of Western Australia and covers an area of 167km², of which E77/1322 and M77/1259 cover a
combined area of 76.92km². M77/1259 forms part of Mineral Resources Ltd Koolyanobbing Iron Ore Project.
Mineral Resources Limited are continuing to mine iron ore at their Koolyanobbing Project. FEL has recognised
$452,846 in royalty income in the year ended 30 June 2019 for ore mined at the Deception deposit on
M77/1259.
Figure 1: Pippingarra Lithium Project, Marble Bar Lithium Project and Macarthur Minerals Lithium and Gold
Project tenements
9
Directors’ Report
Annual Report 2019
Figure 2: Pippingarra Lithium Project and Marble Bar Lithium Project
10
Directors’ Report
Annual Report 2019
Figure 3: Macarthur Minerals Lithium and Gold Tenements
Schedule 1: Macarthur Minerals Lithium and Gold Tenements
Tenement
Status
Jurisdiction
Project
Holder1
Holder1Shares %
Current Area
Area Unit
Expiry Date
E45/4685
E45/4693
E45/4702
E45/4708
E45/4709
E45/4710
E45/4711
E45/4732
E45/4735
E45/4747
E45/4764
E45/4779
E45/4824
E45/4848
E46/1114
E46/1115
E46/1210
E45/5324
LIVE
LIVE
LIVE
LIVE
LIVE
LIVE
LIVE
LIVE
LIVE
LIVE
LIVE
LIVE
LIVE
LIVE
LIVE
LIVE
LIVE
LIVE
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
MARBLE BAR
INDEE
HILLSIDE
PANORAMA
PANORAMA
HILLSIDE
HILLSIDE
PANORAMA
STRELLEY GORGE
HILLSIDE
MARBLE BAR
PANORAMA
PANORAMA
TAMBOURAH
NOREENA DOWNS
NOREENA DOWNS
NOREENA DOWNS
NORTH TAMBOURAH
MACL
MACL
MACL
MACL
MACL
MACL
MACL
MACL
MACL
MACL
MACL
MACL
MACL
MACL
MACL
MACL
MACL
MACL
100
100
100
100
100
100
100
100
100
100
11
100
100
100
100
100
100
100
11
11
15
41
27
22
22
40
43
5
2
4
33
65
1
35
21
14
4
SB
SB
SB
SB
SB
SB
SB
SB
SB
SB
SB
SB
SB
SB
SB
SB
SB
BL
11/01/2022
20/11/2022
19/11/2022
20/11/2022
20/11/2022
19/11/2022
19/11/2022
20/11/2022
20/11/2022
20/11/2022
9/08/2022
15/01/2023
4/12/2022
13/12/2022
9/11/2022
9/11/2022
1/07/2023
4/04/2024
Directors’ Report
Annual Report 2019
Figure 4: FEL exploration tenement portfolio in the Bryah Basin showing AUR, ALY, SFR and Billabong JV areas
Competent Person Statement
The information in this report is compiled and collected by Mr Olaf Frederickson, who is a Member of the
Australasian Institute of Geoscientists. Mr Frederickson has sufficient experience that is relevant to the style of
mineralisation, type of deposit under consideration and to the activity being undertaken to qualify as a
Competent Person as defined in the 2012 edition of the Australasian Code for Reporting of Exploration, Results,
Mineral Resource and Ore Reserves (JORC Code 2012). Mr Frederickson consents to the inclusion in the report of
the matters based on this information in the form and context in which it appears.
SIGNIFICANT EVENTS SUBSEQUENT TO REPORTING DATE
As announced 6 August 2019, FEL received notice of a royalty payment of $241,498 to be received in relation to
mining conducted by MIN at its Deception iron ore mine during the June 2019 quarter. These funds were
received on 8 August 2019.
On 6 August 2019, the Company announced the results of its initial two field reconnaissance field trips to assess
each of the Macarthur Minerals Lithium and Gold Tenements and the tenements forming the Pippingarra Lithium
Project and the Marble Bar Lithium Project for access and to identity target rocks for further exploration.
The Company held an extraordinary general meeting on 8 August 2019 (GM). All resolutions put to the meeting
were passed on a show of hands.
▪
▪
The following securities were issued on 19 August 2019, as approved by shareholders at the GM:
5,000,000 shares following receipt of $75,000 (being the Proposed Placement B Shares);
33,976,749 unlisted options exercisable at $0.02 each on or before 31 May 2021 (including the
Placement B Options and the 2019 Director Options (detailed below));
15,000,000 unlisted options exercisable at $0.025 each on or before 31 March 2022 (being the
Consideration Options).
▪
On 28 August 2019, the FEL and Macarthur executed a Revised Option Agreement. Pursuant to this, the Option
Exercise Fee was equity settled on 29 August 2019 via the issue of 26,666,667 ordinary shares (at a deemed
12
Directors’ Report
Annual Report 2019
issue price of $0.015 each). The terms of the Stage 1, Stage 2, and Stage 3 earn in were revised under the
Revised Option Agreement (as detailed above).
On 1 September 2019, Mr Mark Hancock was appointed as Executive Director of the Company. Mr Kenneth
Keogh resigned as a Director on this date.
There have been no other events subsequent to 30 June 2019 up to the date of this report that would materially
affect the operations of the Group or its state of affairs which have not otherwise been disclosed in this financial
report.
ENVIRONMENTAL REGULATION AND PERFORMANCE
The Group continues to meet all environmental obligations across its tenements. No reportable incidents
occurred during the year. Environmental regulations applicable to the Group include the Environmental
Protection Act 1994.
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
The Company has entered into a Deed of Access, Insurance and Indemnity with each of the directors. Under the
terms of these Deeds, the Company has undertaken, subject to restrictions in the Corporations Act, to:
•
•
indemnify each director in certain circumstances;
advance money to a director for the payment of any legal costs incurred by a director in defending legal
proceedings before the outcome of those proceedings is known (subject to an obligation by the director
to repay any money advanced if a court determines that the director was not entitled to it);
• maintain directors’ and officers’ insurance cover in favour of each director whilst they remain a director
•
of Fe Limited and for a run out year after ceasing to be such a director; and
provide each director with access to Board papers and other documents provided or available to the
director as an officer of Fe Limited.
During the year, the Company had in place and paid premiums for insurance policies indemnifying directors and
officers of the Company against certain liabilities incurred in the conduct of business or in the discharge of their
duties as directors or officers. The contracts of insurance contain confidentiality provisions that preclude
disclosure of the premium paid, the nature of the liability covered by the policies, the limit of liability and the
name of the insurer.
INDEMNIFICATION OF AUDITORS
To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young, as part of the
terms of its audit engagement agreement against claims by third parties arising from the audit (for an
unspecified amount). No payment has been made to indemnify Ernst & Young during or since the financial year.
LIKELY DEVELOPMENTS AND FUTURE RESULTS
The Company remains focused on its activities within the mineral exploration industry on its retained tenements
and interests and is also investigating projects for future acquisition.
DIRECTORS’ MEETINGS
The following table sets out the number of directors’ meetings held during the year and the number of meetings
attended by each director (while they were a director).
Director
Antony Sage
Nicholas Sage
Kenneth Keogh
Eligible to Attend
1
1
1
Attended
1
1
1
13
Directors’ Report
Annual Report 2019
REMUNERATION REPORT (AUDITED)
This Report outlines the remuneration arrangements in place for key management personnel (KMP) who are
defined as those persons having authority and responsibility for planning and directing the major activities of the
Group, directly or indirectly, including any director (whether executive or otherwise) of the parent company.
Details of Key Management Personnel
Directors
A Sage
N Sage
Director (Non-Executive Chairman)
Director (Non-Executive)
K Keogh (Resigned 1 September 2019)
Director (Non-Executive)
M Hancock (Appointed 1 September 2019)
Director (Executive)
Remuneration Philosophy
The performance of the Group depends on the quality of its directors, executives and employees. Consequently,
the Group must attract, motivate and retain appropriately qualified industry personnel.
The following principles are embodied in the remuneration framework:
•
•
provide competitive rewards to attract and retain high calibre executives, directors and employees; and
link executive rewards to shareholder value.
Remuneration Policy
During the year, the Company did not have a separately established remuneration committee. The Board is
responsible for determining and reviewing remuneration arrangements for the executive and non-executive
directors and the Chairman. The Board assesses the appropriateness of the nature and amount of remuneration
of such officers on a yearly basis by reference to relevant employment market conditions with the overall
objective of ensuring maximum stakeholder benefit from retention of a high quality board. The directors are
given the opportunity to receive their base emolument in a variety of forms including cash and fringe benefits. It
is intended that the manner of payment chosen will be optimal for the recipient without creating undue cost for
the Company.
Considering the nature of the Company’s operations, the remuneration of executive and non-executive directors
is not dependent on the satisfaction of any specific performance conditions of the Company. Remuneration and
share based payments are issued to align directors’ interests with that of shareholders.
The Group has a policy which restricts executives and directors entering into contracts to hedge their exposure
to options granted as part of their remuneration package.
Remuneration report at 2018 AGM
The 2018 remuneration report received positive shareholder support at the 2018 Annual General Meeting
whereby of the proxies received 99.93% voted in favour of the adoption of the remuneration report.
Performance and Shareholder Wealth
Below is a table summarising key performance a statistics for the Group and the Company’s share price over the
last five financial years. Comparative statistics have not been adjusted for the impact of the new accounting
standards.
Financial year
Profit / (Loss) after tax
‘000s
30 June 2015
30 June 2016
30 June 2017
30 June 2018
30 June 2019
(1,276)
(655)
(296)
(1,082)
(1,668)
14
Profit / (Loss) per
share
(Cents)
(0.58)
(0.29)
(0.11)
(0.32)
(0.44)
Share Price
(Cents)
1.30
3.60
2.40
2.40
1.70
Directors’ Report
Annual Report 2019
Non-Executive Chairman’s Remuneration
The Company aims to reward the Chairman with a level and mix of remuneration commensurate with his
position and responsibilities within the Company to:
•
•
align the interests of the Chairman with those of shareholders; and
ensure that total remuneration is competitive by market standards.
Mr Antony Sage is entitled to receive $120,000 per annum.
On 22 February 2018, the Directors in their discretion, acknowledging that Okewood Pty Ltd (Okewood)
previously agreed to reduced fees during the period from 1 April 2016 to 31 January 2018, agreed to issue
2,750,000 shares to Okewood at a deemed issue price of 4 cents per share, subject to shareholder approval
(Director Shares). The Director Shares were issued during the year, and a share based payment expense of
$38,500 has been recognised in this period.
Non-Executive Director Remuneration
The Board seeks to set remuneration of non-executive directors at a level which provides the Company with the
ability to attract and retain directors of the highest calibre, whilst incurring a cost which is acceptable to
shareholders.
On 18 October 2016, the Company entered into a consulting agreement with Pembury Nominees Pty Ltd
(Pembury), a company controlled by Mr Nicholas Sage, for the provision of non-executive director services.
Under the agreement, Mr Nicholas Sage is entitled to receive $36,000 per annum.
On 6 February 2017, the Company entered into a consulting agreement with EK Holdings Group Pty Ltd (EK
Holdings), a company controlled by Mr Kenneth Keogh, for the provision of non-executive director services.
Under the agreement, Mr Kenneth Keogh is entitled to receive $36,000 per annum.
EK Holdings received an additional $5,000 during the year for consulting services rendered in respect of a road
show conducted by the Company.
As approved previously by shareholders, the maximum aggregate amount of remuneration payable to non-
executive directors is $1,000,000. Summary details of remuneration for non-executive directors are given in the
table below.
Executive Directors’ Remuneration
During the financial year, the Company did not have any executive directors.
Compensation of Key Management Personnel
Consolidated
Short-
Term
Post-
Employment
Year ended 30 June
2019
Salary &
Fees
$
Superannuation
$
Share-
based
Payment
Share
Options
(iv)
$
Total
$
%
Performance
Based
%
Comprising
Options
Directors
A Sage (i)
N Sage (ii)
K Keogh (iii)
Total
120,000
36,000
41,000
197,000
-
-
-
-
74,181
8,912
17,929
101,022
194,181
44,912
58,929
298,022
-
-
-
-
38%
20%
30%
34%
For the year ended 30 June 2019:
(i) $120,000 was paid or payable to Okewood Pty Ltd a company that Mr Antony Sage is a director of.
(ii) $36,000 was paid or payable to Pembury Nominees Pty Ltd a company that Mr Nicholas Sage is a director
of.
(iii) $41,000 was paid or payable to EK Holdings Group Pty Ltd a company that Mr Keogh is a director of.
(iv) This amount refers to the share based payment expense recorded in the statement of comprehensive
income in the period in respect of the Director Shares, options issued, and options to be issued (subject to
shareholder approval). The recorded values of options will only be realised by the KMPs in the event the
Company’s share price exceeds the option exercise price.
15
Directors’ Report
Annual Report 2019
Consolidated
Year ended 30 June
2018
Short-
Term
Salary &
Fees
$
Post-
Employment
Superannuation
$
Share-
based
Payment
Share
Options
$
Total
$
%
Performance
Based
%
Comprising
Options
Directors
A Sage
N Sage
K Keogh
Executives
E von Puttkammer
Total
85,000
36,000
36,000
28,000
185,000
Shareholdings of Key Management Personnel
-
-
-
-
-
30,595
7,060
21,181
115,595
43,060
57,181
-
58,836
28,000
243,836
-
-
-
-
-
26%
16%
37%
-
24%
30 June 2019
Directors
A Sage (i)(ii)(iii)
N Sage
K Keogh (i)
Balance at 1
July 2018
Granted as
remuneration
Net change
other
Balance at
30 June 2019
3,923,010
-
766,300
4,689,310
2,750,000
-
-
2,750,000
2,500,000
-
-
2,500,000
9,173,010
-
766,300
9,939,310
(i) Indirectly held.
(ii) Mr A Sage acquired 2,500,000 shares for $50,000 consideration during the year via off market
transfers.
30 June 2018
Directors
A Sage (i)(ii)(iii)
N Sage
K Keogh
Executives
E Von Puttkammer (iv)
Balance at 1
July 2017
Granted as
remuneration
Net change
other
Balance at
30 June 2018
2,071,699
-
766,300
83,333
2,921,332
-
-
-
-
-
1,851,311
-
-
(83,333)
1,767,978
3,923,010
-
766,300
-
4,689,310
(i) Indirectly held.
(ii) Mr A Sage acquired 1,851,311 shares for $50,601 consideration during the year via on market transfers
(iii) Excludes 2,750,000 shares which have been agreed to be issued to Mr A Sage, subject to shareholder
approval.
(iv) On the date of her resignation as Company Secretary, Ms Von Puttkammer held 83,333 shares.
Option and right holdings of Key Management Personnel
30 June
2019
Directors
A Sage
N Sage
K Keogh
Balance at 1
July 2018
Acquired
/granted
during year
(i)
6,500,000
1,500,000
4,500,000
12,500,000
10,000,000
2,500,000
5,000,000
17,500,000
Lapsed
during Year
Balance at
30 June
2019
Exercisable
Not
Exercisable
-
-
-
-
16,500,000
4,000,000
9,500,000
30,000,000
6,500,000 10,000,000
2,500,000
1,500,000
5,000,000
4,500,000
17,500,000
12,500,000
(i) Refers to 17,500,000 unlisted options with no vesting conditions granted to directors at an exercise
price of $0.02 each and an expiry date of 31 May 2021, which were subject to receipt of shareholder
approval at 30 June 2019 (the 2019 Director Options). The options vested immediately on receipt of
shareholder approval on 8 August 2019. These options were granted to directors as remuneration for
services performed to motivate and reward the performance of the holders in their respective role as
Directors in a manner that aligns the holders’ interests with the Company and minimises cash spend.
16
Directors’ Report
Annual Report 2019
30 June
2018
Directors
A Sage
N Sage
K Keogh
Balance at 1
July 2017
Acquired
/granted
during year
(i)
Lapsed
during Year
Balance at
30 June
2018
Exercisable
Not
Exercisable
-
-
-
-
6,500,000
1,500,000
4,500,000
12,500,000
-
-
-
-
6,500,000
1,500,000
4,500,000
12,500,000
-
-
-
-
6,500,000
1,500,000
4,500,000
12,500,000
(i) Refers to 12,500,000 unlisted options with no vesting conditions granted to directors at an exercise
price of $0.045 each and an expiry date of 31 May 2020, subject to receipt of shareholder approval (the
2018 Director Options). Shareholder approval for the issue of the 2018 Director Options was received
during the year ended 30 June 2019.
Options awarded, vested and lapsed during the year
Share options do not carry any voting rights and can be exercised once the vesting conditions have been met
until their expiry date.
On 31 May 2019, the Directors agreed to issue a total of 17,500,000 unlisted options with no vesting conditions
to directors at an exercise price of $0.02 each and an expiry date of 31 May 2021, subject to receipt of
shareholder approval (2019 Director Options). The options will vest immediately on receipt of shareholder
approval.
Shareholder approval for the issue of the 2019 Director Options was received at the Company’s general meeting
held 8 August 2019 and the securities were issued on 19 August 2019. The grant date is therefore after the
period in which services have begun to be rendered. Therefore, the grant date fair value presented in the 30
June 2019 financial statements is provisional, estimated by reference to the period end share price. This
provisional amount will be revised in the next financial period.
Details of the 2019 Director Options awarded to directors during the year ended 30 June 2019 are summarised
as follows:
Number of
Options
Exercise price
per option
Expiry date
Estimated fair value of
options at grant date
A Sage
N Sage
K Keogh
10,000,000
2,500,000
5,000,000
$0.02
$0.02
$0.02
31 May 2021
31 May 2021
31 May 2021
$0.0081
$0.0081
$0.0081
Transactions with directors, director related entities and other related parties
During the year ended 30 June 2019, an aggregate amount of $139,439 (30 June 2018: $154,659) was paid or
payable to Cape Lambert Resources Ltd (Cape Lambert) for reimbursement of rent, travel costs, and
exploration expenditure costs. At 30 June 2019, $44,664 was payable to Cape Lambert (30 June 2018:
$83,896).
During the year ended 30 June 2019, an aggregate amount of $34,488 (30 June 2018: nil) was paid or payable
to European Lithium Ltd (European Lithium) for reimbursement of travel costs. At 30 June 2019, $5,495 was
payable to European Lithium (30 June 2018: nil).
Cauldron Energy Ltd (Cauldron) was a director related entity until 25 February 2019. During the period 1 July
2018 to 25 February 2019, an aggregate amount of $2,004 (30 June 2018: $40,671) was paid or payable to
Cauldron Energy Ltd (Cauldron) for reimbursement of consultant costs. At 30 June 2019, $42,674 was payable
to Cauldron (30 June 2018: $40,671). Mr Nicholas Sage was a director of Cauldron until 25 February 2019. Mr
Antony Sage was a director of Cauldron until 22 November 2018.
End of Remuneration Report
17
Directors’ Report
Annual Report 2019
AUDITOR’S INDEPENDENCE DECLARATION
Section 307C of the Corporations Act 2001 (Cth) requires the Company’s auditor, Ernst & Young, to provide the
directors of the Company with an Independence Declaration in relation to the audit of the financial report. This
Independence Declaration for the year is set out on page 19 and forms part of this Directors’ Report. The
Directors are satisfied with the independence of the auditor.
NON-AUDIT SERVICES
No non-audit services were provided to the Group by the auditor, Ernst & Young, during the year.
This report is signed in accordance with a resolution of the Board of Directors.
Mr Antony Sage
Non-Executive Chairman
12 September 2019
18
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Auditor’s Independence Declaration to the Directors of Fe Limited
As lead auditor for the audit of the financial report of Fe Limited for the year ended 30 June 2019,
I declare to the best of my knowledge and belief, there have been:
a.
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b.
no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Fe Limited and the entities it controlled during the financial year.
Ernst & Young
V L Hoang
Partner
Perth
12 September 2019
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
MH:DA:FEL:008
19
Corporate Governance Statement
Annual Report 2019
CORPORATE GOVERNANCE STATEMENT
In March 2014, the ASX Corporate Governance Council released a third edition of the ASX Corporate Governance
Council’s Principles and Recommendations (ASX Principles).
The Company’s Corporate Governance Statement for the year ended 30 June 2019 (which reports against these
ASX Principles) may be accessed from the Company’s website at www.felimited.com.au.
20
Statement of Comprehensive income
Annual Report 2019
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2019
Notes
Consolidated
Year ended
30 June 2019
Year ended
30 June 2018
3(a)
3(b)
3(c)
14(a)
8(c)
3(d)
4
Interest revenue
Other income
Employee benefits expense and director
remuneration
Exploration and evaluation expenditure
Legal costs
Share-based payment expense
Accounting and audit fees
Consultants costs
Compliance costs
Travel costs
Write off of exploration assets
Other expenses
Loss before income tax
Income tax expense
Loss after income tax
Other comprehensive income
Items that may be reclassified subsequently to
profit or loss:
-
Other comprehensive income/(loss) for the
year
$
$
2,979
452,846
455,825
5,727
419,611
425,338
(192,000)
(157,000)
(490,792)
(7,863)
(136,852)
(86,862)
(96,167)
(88,487)
(39,721)
(735,000)
(250,239)
(1,668,158)
-
(1,668,158)
(635,164)
(68,591)
(58,836)
(64,425)
(151,690)
(128,530)
(42,337)
-
(201,040)
(1,082,275)
-
(1,082,275)
-
-
-
-
Total comprehensive loss for the year
(1,668,158)
(1,082,275)
Loss per share attributable to ordinary equity
holders of the parent
- basic loss for the year (cents per share)
- diluted loss for the year (cents per share)
5
5
(0.44)
(0.44)
(0.32)
(0.32)
21
Statement of Financial Position
Annual Report 2019
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2019
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Other assets
Total Current Assets
Non-Current Assets
Exploration and evaluation expenditure
Plant and equipment
Total Non-Current Assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Trade and other payables
Total Current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Accumulated losses
Reserves
TOTAL EQUITY
Notes
Consolidated
30 June
2019
30 June
2018
$
$
760,801
256,530
9,775
1,027,106
975,670
3,946
979,616
2,006,722
894,442
13,486
4,141
912,069
735,000
174
735,174
1,647,243
682,354
682,354
682,354
292,729
292,729
292,729
1,324,368
1,354,514
40,770,054
(41,481,535)
2,035,849
1,324,368
39,381,064
(39,813,377)
1,786,827
1,354,514
6
7
8
9
10
11
12
13
22
Statement of Changes in Equity
Annual Report 2019
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2019
Contributed
equity
Accumulated
losses
Share based
payments
reserve
Total
Consolidated
$
$
$
$
Balance at 1 July 2018
Loss for the year ended
30 June 2019
Other comprehensive income
Transactions with owners in their
capacity as owners:
Shares issued during the year (net of
share issue costs)
Share based payments
Balance at 30 June 2019
39,381,064
(39,813,377)
1,786,827
1,354,514
-
-
-
(1,668,158)
-
(1,668,158)
-
-
-
(1,668,158)
-
(1,668,158)
1,350,490
38,500
40,770,054
-
-
(41,481,535)
-
249,022
2,035,849
1,350,490
287,522
1,324,368
Consolidated
$
$
$
$
Contributed
equity
Accumulated
losses
Share based
payments
reserve
Total
Balance at 1 July 2017
Loss for the year ended
30 June 2018
Other comprehensive income
Transactions with owners in their
capacity as owners:
Shares issued during the year (net of
share issue costs)
Exercise of options
Share based payments
Balance at 30 June 2018
37,395,564
(38,731,102)
1,727,991
392,453
-
-
-
(1,082,275)
-
(1,082,275)
-
-
-
(1,082,275)
-
(1,082,275)
1,704,250
281,250
-
39,381,064
-
-
-
(39,813,377)
-
-
58,836
1,786,827
1,704,250
281,250
58,836
1,354,514
23
Statement of Cash Flows
Annual Report 2019
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2019
Notes
Consolidated
Year ended 30
June 2019
$
Year ended
30 June 2018
$
Cash flows from operating activities
Receipt of royalty
Interest received
Payments to suppliers and employees
Payments for exploration and evaluation costs
215,538
2,979
(752,010)
(574,616)
Net cash flows used in operating activities
6(a)
(1,108,109)
Cash flows from investing activities
Proceeds on sale of investment
Purchase of plant and equipment
Payments for exploration assets
Loan to related party
Repayment of loan to related party
Net cash flows from/(used in) investing activities
Cash flows from financing activities
Proceeds from shares issued (net of costs)
Proceeds from exercise of options
Net cash flows from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
8
11
11
6
-
(3,842)
(150,000)
-
-
(153,842)
1,128,310
-
1,128,310
(133,641)
894,442
760,801
38,168
5,727
(800,257)
(399,598)
(1,155,960)
377,253
-
-
(65,000)
65,000
377,253
969,250
281,250
1,250,500
471,793
422,649
894,442
24
Notes to the Consolidated Financial Statements
Annual Report 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1
CORPORATE INFORMATION
The financial report of Fe Limited (FEL or the Company) and the financial statements comprising FEL
and its controlled entities (together the Group) for the year ended 30 June 2019 was authorised for
issue in accordance with a resolution of the directors on 12 September 2019.
FEL is a for profit company limited by shares incorporated and domiciled in Australia.
The nature of the operations and principal activities of the Company are mineral exploration and
project development which is further described in the Directors' Report.
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a)
Basis of preparation
The financial report is a general-purpose financial report, which has been prepared in accordance with
the requirements of the Corporations Act 2001 (Cth), Australian Accounting Standards and other
authoritative pronouncements of the Australian Accounting Standards Board.
The financial report has been prepared on a historical cost basis, except for available-for-sale financial
assets which are carried at fair value. The financial report is presented in Australian dollars unless
otherwise stated.
(b)
Statement of compliance
The financial report complies with Australian Accounting Standards as issued by the Australian
Accounting Standards Board and International Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board.
(c)
Going concern
The financial statements have been prepared on a going concern basis which contemplates the
continuity of normal business activities and the realisation of assets and the settlement of liabilities in
the ordinary course of business.
At balance date, the Group had cash and cash equivalents of $760,801 (30 June 2018: $894,442) and
a net working capital surplus of $344,752 (30 June 2018: $619,340 surplus).
Additional funding will be necessary for the Group to continue its planned exploration activities
associated with its projects in the next 12 months.
At the date of this report, the directors are satisfied there are reasonable grounds to believe that the
Group will be able to continue its planned operations and the Group will be able to meet its
obligations as and when they fall due because the directors are confident that the Group will be able
to obtain the additional funding required either through a further capital raising, continued support
from its existing shareholders, and from receipt of anticipated royalty payments.
Should the Group not achieve the matters set out above, there is uncertainty whether the Group
would continue as a going concern and therefore whether it would realise its assets and extinguish its
liabilities in the normal course of business and at the amounts stated in the financial report. The
financial statements do not include any adjustment relating to the recoverability or classification of
recorded asset amounts or to the amounts or classification of liabilities that might be necessary
should the Group not be able to continue as a going concern.
(d)
New standards, interpretations and amendments adopted by the Group
New accounting standards adopted in the current period
The Company has adopted all of the new, revised or amending Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board (AASB) that are mandatory for
the current reporting period. Adoption of these standards and interpretations did not have a material
impact on the statements of financial position or performance of the Group.
25
Notes to the Consolidated Financial Statements
Annual Report 2019
AASB 9 Financial Instruments (AASB 9)
AASB 9 replaces AASB 139 Financial Instruments: Recognition and Measurement (AASB 139) for
annual periods beginning on or after 1 January 2018, bringing together all three aspects of the
accounting for financial instruments: classification and measurement; impairment; and hedge
accounting.
The Group has applied AASB 9 retrospectively, with the initial application date of 1 July 2018.
AASB 9 largely retains the existing requirements of AASB 139 for the classification and measurement
of financial liabilities, however, it eliminates the previous AASB 139 categories for financial assets
held to maturity, receivables and available for sale. Under AASB 9, on initial recognition a financial
asset is classified as measured at:
(a) Amortised cost;
(b) Fair Value through Other Comprehensive Income (FVOCI) – debt investment;
(c) FVOCI – equity investment; or
(d) Fair Value through Profit or Loss (FVTPL)
The classification of financial assets under AASB 9 is generally based on the business model in which
a financial asset is managed and its contractual cash flow characteristics. A financial asset (unless it
is a trade receivable without a significant financing component that is initially measured at the
transaction price) is initially measured at fair value plus, for an item not at FVTPL, transaction costs
that are directly attributable to its acquisition. For financial assets measured at amortised cost, these
assets are subsequently measured at amortised cost using the effective interest method. The
amortised cost is reduced by impairment losses.
Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss.
Any gain or loss on derecognition is recognised in profit or loss.
As of 30 June 2018, the Company’s financial instruments consist of cash and cash equivalents, trade
and other receivables and trade and other payables.
Cash and cash equivalents and trade and other receivables previously designated as receivables
under AASB 139 are now classified as financial assets at amortised cost under AASB 9. The trade and
other payables are designated as other financial liabilities, which are measured at amortised cost.
The cash and cash equivalents, trade and other receivables, trade and other payables approximate
their fair value due to their short-term nature.
Other financial liabilities (as reported in the balance sheet) are reported as financial liabilities and
measured through the fair value through the profit and loss.
Impairment of financial assets
In relation to the financial assets carried at amortised cost, AASB 9 requires an expected credit loss
model to be applied as opposed to an incurred credit loss model under AASB 139. The expected
credit loss model requires the Group to account for expected credit losses and changes in those
expected credit losses at each reporting date to reflect changes in credit risk since initial recognition
of the financial asset. In particular, AASB 9 requires the Group to measure the loss allowance at an
amount equal to lifetime expected credit loss (“ECL”) if the credit risk on the instrument has
increased significantly since initial recognition. On the other hand, if the credit risk on the financial
instrument has not increased significantly since initial recognition, the Group is required to measure
the loss allowance for that financial instrument at an amount equal to the ECL within the next 12
months.
As at 1 July 2018, the directors of the Company reviewed and assessed the Group’s existing financial
assets for impairment using reasonable and supportable information. In accordance with AASB 9,
where the directors concluded that it would require undue cost and effort to determine the credit risk
of a financial asset on initial recognition, the Group recognises lifetime ECL. Given the nature of the
Group’s business and the nature of its financial assets subject to impairment assessment, there was
no material impact arising from the application of the new impairment requirements of AASB 9. As
26
Notes to the Consolidated Financial Statements
Annual Report 2019
all of the Group’s cash deposits and other current receivables which are measured at amortised cost
are short term (i.e., less than 12 months), and the Group has credit rating and risk management
policies in place, the change to a forward-looking expected credit loss approach did not have a
material impact on the amounts recognised in the financial statements. The result of the assessment
is as follows:
Class of financial
instrument
presented in the
statement of
financial position
Cash and cash
equivalents
Trade and other
receivables
Trade and other
payables
Original measurement category and
amount under AASB 139 at 1 July
2018
New measurement category and
amount under AASB 9 at 1 July
2018
Loans and receivables
Loans and receivables
Financial Liability at
amortised cost
$894,442
$13,486
$292,729
Financial assets at
amortised cost
Financial assets at
amortised cost
Financial liability at
amortised cost
$894,442
$13,486
$292,729
The change in classification has not resulted in any re-measurement adjustment at 1 July 2018.
AASB 15 Revenue from Contracts with Customers (AASB 15)
The Group has adopted AASB 15 as issued in May 2014 with the date of initial application being 1
July 2018. In accordance with the transitional provisions in AASB 15 the standard has been applied
using the full retrospective approach.
AASB 15 supersedes AASB 18 Revenue and related Interpretations and it applies to all revenue
arising from contracts with customers, unless those contracts are in the scope of other standards.
The new standard establishes a five-step model to account for revenue arising from contracts with
customers. Under AASB 15, revenue is recognised at an amount that reflects the consideration to
which an entity expects to be entitled in exchange for transferring goods or services to a customer.
At 1 July 2017 and at 1 July 2018 it was determined that the adoption of AASB 15 had no impact on
the Group.
New accounting standards and interpretations issued but not yet effective
Australian Accounting Standards and Interpretations that have recently been issued or amended but
are not yet mandatory, have not been early adopted by the Company for the annual reporting period
ended 30 June 2019. The Company’s assessment of the impact of these new or amended Accounting
Standards and Interpretations, most relevant to the Company, are set out below.
Application
date of
standard
Application
date for
FEL
1 January
2019
1 July
2019
Reference
Title
Summary
AASB 16
Leases
AASB 16 requires lessees to account for all leases under a
single on balance sheet model in a similar way to finance
leases under AASB 117 Leases. The standard includes two
recognition exemptions for lessees – leases of ’low-value’
assets (e.g., personal computers) and short-term leases
(i.e., leases with a lease term of 12 months or less).
At the commencement date of a lease, a lessee will
recognise a liability to make lease payments (i.e., the lease
liability) and an asset representing the right to use the
underlying asset during the lease term (i.e., the right-of-
use asset).
Lessees will be required to separately recognise the interest
expense on the lease liability and the depreciation expense
on the right-of-use asset.
Lessees will be required to remeasure the lease liability
27
Notes to the Consolidated Financial Statements
Annual Report 2019
Reference
Title
Summary
Application
date of
standard
Application
date for
FEL
upon the occurrence of certain events (e.g., a change in the
lease term, a change in future lease payments resulting
from a change in an index or rate used to determine those
payments). The lessee will generally recognise the amount
of the remeasurement of the lease liability as an adjustment
to the right-of-use asset.
The Group is currently assessing the impact of AASB 16 on
its financial performance and financial position.
AASB
Interpretation 23,
and relevant
amending
standards
Uncertainty
over Income
Tax
Treatments
The Interpretation clarifies the application of the recognition
and measurement criteria in AASB 112 Income Taxes when
there is uncertainty over income tax treatments. The
Interpretation specifically addresses the following:
- Whether an entity considers uncertain tax treatments
1 January
2019
1 July
2019
AASB 2018-1
Not yet issued by
the AASB
Australian
Amendments
to Australian
Accounting
Standards –
Annual
Improvement
s 2015-2017
Cycle
Conceptual
Framework
for Financial
Reporting and
relevant
amending
standards
1 January
2019
1 July
2019
1 January
2020
1 July
2020
-
-
-
separately
The assumptions an entity makes about the
examination of tax treatments by taxation authorities
How an entity determines taxable profit (tax loss), tax
bases, unused tax losses, unused tax credits and tax
rates
How an entity considers changes in facts and
circumstances.
The amendments clarify certain requirements in:
• AASB 3 Business Combinations and AASB 11 Joint
Arrangements - previously held interest in a joint
operation
• AASB 112 Income Taxes - income tax consequences of
payments on financial instruments classified as equity
• AASB 123 Borrowing Costs - borrowing costs eligible for
capitalisation.
The revised Conceptual Framework includes some new
concepts, provides updated definitions and recognition
criteria for assets and liabilities and clarifies some important
concepts. It is arranged in eight chapters, as follows:
• Chapter 1 – The objective of financial reporting
• Chapter 2 – Qualitative characteristics of useful financial
information
• Chapter 3 – Financial statements and the reporting entity
• Chapter 4 – The elements of financial statements
• Chapter 5 – Recognition and derecognition
• Chapter 6 – Measurement
• Chapter 7 – Presentation and disclosure
• Chapter 8 – Concepts of capital and capital maintenance
Amendments to References to the Conceptual Framework in
IFRS Standards has also been issued, which sets out the
amendments to affected standards in order to update
references to the revised Conceptual Framework. The
changes to the Conceptual Framework may affect the
application of IFRS in situations where no standard applies
to a particular transaction or event. In addition, relief has
been provided in applying IFRS 3 and developing accounting
policies for regulatory account balances using IAS 8, such
that entities must continue to apply the definitions of an
asset and a liability (and supporting concepts) in the 2010
Conceptual Framework, and not the definitions in the
revised Conceptual Framework.
28
Notes to the Consolidated Financial Statements
Annual Report 2019
Reference
Title
Summary
AASB 2018-7
Definition of
Material
(Amendments
to AASB 101
and AASB
108)
This Standard amends AASB 101 Presentation of Financial
Statements and AASB 108 Accounting Policies, Changes in
Accounting Estimates and Errors to align the definition of
‘material’ across the standards and to clarify certain aspects
of the definition. The amendments clarify that materiality
will depend on the nature or magnitude of information. An
entity will need to assess whether the information, either
individually or in combination with other information, is
material in the context of the financial statements. A
misstatement of information is material if it could
reasonably be expected to influence decisions made by the
primary users.
Application
date of
standard
Application
date for
FEL
1 January
2020
1 July
2020
The Company is in the process of determining the impact of the above on its financial statements.
The Company has not elected to early adopt any new Standards or Interpretations.
(e)
Basis of consolidation
The consolidated financial statements comprise the financial statements of Fe Limited and its
subsidiaries as at and for the year ended 30 June 2019.
Subsidiaries are all those entities over which Fe Limited has control. Control is achieved when the
Group is exposed, or has rights, to variable returns from its involvement with the investee and has
the ability to affect those returns through its power over the investee. Specifically, the Group controls
an investee if and only if the Group has:
•
•
•
Power over the investee (i.e. existing rights that give it the current ability to direct the
relevant activities of the investee);
Exposure, or rights, to variable returns from its involvement with the investee; and
The ability to use its power over the investee to affect its returns.
The financial statements of the Company’s subsidiaries are prepared for the same reporting period as
the Company, using consistent accounting policies. 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.
Subsidiaries are consolidated from the date on which control is transferred to the Group and cease to
be consolidated from the date on which control is transferred out of the Group.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. The
acquisition method of accounting involves recognising at acquisition date, separately from goodwill,
the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the
acquiree. The identifiable assets acquired and the liabilities assumed are measured at their fair values
at the date of acquisition. Any difference between the fair value of the consideration and the fair
values of the identifiable net assets acquired is recognised as goodwill or a gain on bargain purchase.
A change in the ownership interest of a subsidiary that does not result in a loss of control, is
accounted for as an equity transaction.
(f)
Cash and cash equivalents
Cash and short-term deposits in the statement of financial position comprise cash at bank and in hand
and short-term deposits with an original maturity of three months or less.
For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash
equivalents as defined above, net of outstanding bank overdrafts.
(g)
Trade and other receivables
Trade receivables are measured initially at the transaction price determined under AASB 15. Other
receivables are initially recognised at fair value. Receivables that are held to collect contractual cash
flows and are expected to give rise to cash flows representing solely payments of principle and
interest are classified and subsequently measured at amortised cost. Receivables that do not meet
29
Notes to the Consolidated Financial Statements
Annual Report 2019
the criteria for amortised cost are measured at fair value through profit or loss. Following initial
recognition, the amortised cost is calculated using the effective interest method.
The Group assesses on a forward-looking basis the expected credit loss associated with its trade and
short term receivables carried at amortised cost. The expected credit loss is calculated based on the
lifetime expected credit loss. In determining the expected credit loss the Group assesses the profile of
the debtors and compares with historical recoverability trends, adjusted for factors that are specific to
the debtors’ general economic conditions and an assessment of both the current and forecast
conditions as a reporting date.
The Group considers an event of default has occurred when a financial asset is more than 90 days
past due or external sources indicate that the debtor is unlikely to pay its creditors, including the
Group. A financial asset is credit impaired when there is evidence that the counterparty is in
significant financial difficulty or a breach of contract, such as a default event has occurred. The Group
writes off a financial asset when there is information indicating the counterparty is in severe financial
difficulty and there is no realistic prospect of recovery and not subject to enforcement activity.
(h)
Exploration and evaluation
Exploration and evaluation expenditure in relation to the Company’s mineral tenements, other than
acquisition costs, is expensed as incurred. Acquisition costs in relation to mineral tenements are
capitalised and carried forward provided the rights to tenure of the area of the interest are current
and such costs are expected to be recouped through successful development, or by sale, or where
exploration and evaluation activities have not, at balance date, reached a stage to allow a reasonable
assessment regarding the existence of economically recoverable reserves. When the Directors decide
to progress the development of an area of interest all further expenditure incurred relating to the area
will be capitalised. Projects are advanced to development status and classified as mine development
when it is expected that further expenditure can be recouped through sale or successful development
and exploitation of the area of interest. Such expenditure is carried forward up to commencement of
production at which time it is amortised over the life of the economically recoverable reserves. All
projects are subject to detailed review on an annual basis and accumulated costs written off to the
extent that they will not be recoverable in the future.
(i)
Property, plant and equipment
Plant and equipment is stated at cost less accumulated depreciation and any impairment in value.
Land is measured at cost.
Depreciation is calculated on a reducing balance basis over the estimated useful life of the asset as
follows:
Plant and equipment – 3 to 5 years
(j)
Impairment of non-financial assets
At each reporting date, the Group assesses whether there is any indication that an asset may be
impaired. Where an indicator of impairment exists, the Group makes a formal estimate of
recoverable amount. Where the carrying amount of an asset exceeds its recoverable amount the
asset is considered impaired and is written down to its recoverable amount.
An assets recoverable amount is the greater of the assets fair value less costs to sell and its value in
use. For an asset that does not generate largely independent cash inflows, the recoverable amount is
determined for the cash-generating unit to which the asset belongs. 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. In
determining fair value less costs of disposal, recent market transactions are taken into account. If no
such transactions can be identified, an appropriate valuation model is used. These calculations are
corroborated by valuation multiples, quoted share prices for publicly traded companies or other
available fair value indicators.
30
Notes to the Consolidated Financial Statements
Annual Report 2019
(k)
Trade and other payables
Trade payables and other payables are carried at cost and represent liabilities for goods and services
provided to the Group prior to the end of the financial year that are unpaid and arise when the Group
becomes obliged to make future payments in respect of the purchase of these goods and services.
(l)
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.
Where the Group expects some or all of a provision to be reimbursed, for example under an insurance
contract, the reimbursement is recognised as a separate asset but only when the reimbursement is
virtually certain. The expense relating to any provision is presented in the statement of
comprehensive income net of any reimbursement.
If the effect of the time value of money is material, provisions are determined by discounting the
expected future cash flows at a pre-tax rate that reflects current market assessments of the time
value of money and, where appropriate, the risks specific to the liability.
Where discounting is used, the increase in the provision due to the passage of time is recognised as a
finance cost.
(m)
Contributed equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new
shares or options are shown in equity as a deduction, net of tax, from the proceeds.
(n)
Interest revenue and other income
Interest
Interest revenue is recognised using the effective interest rate method.
Royalty income
Royalty income is recognised as revenue when the right to receive payment is established.
(o)
Income tax and other taxes
Deferred income tax is provided on all temporary differences at the reporting date between the tax
bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences:
•
•
except where the deferred income tax liability arises from the initial recognition of an asset or
liability in a transaction that is not a business combination and, at the time of the transaction,
affects neither the accounting profit nor taxable profit or loss; and
in respect of taxable temporary differences associated with investments in subsidiaries,
associates and interests in joint ventures, except where the timing of the reversal of the
temporary differences can be controlled and it is probable that the temporary differences will
not reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of
unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be
available against which the deductible temporary differences, and the carry-forward of unused tax
assets and unused tax losses can be utilised:
•
except where the deferred income tax asset relating to the deductible temporary difference
arises from the initial recognition of an asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects neither the accounting profit nor
taxable profit or loss; and
31
Notes to the Consolidated Financial Statements
Annual Report 2019
•
in respect of deductible temporary differences associated with investments in subsidiaries,
associates and interests in joint ventures, deferred tax assets are only recognised to the extent
that it is probable that the temporary differences will reverse in the foreseeable future and
taxable profit will be available against which the temporary differences can be utilised.
The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to
the extent that it is no longer probable that sufficient taxable profit will be available to allow all or
part of the deferred income tax asset to be utilised.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to
the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that
have been enacted or substantively enacted at the reporting date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in the
statement of comprehensive income.
Other taxes
Revenues, expenses and assets are recognised net of the amount of GST except:
• where the GST incurred on a purchase of goods and services is not recoverable from the taxation
authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as
part of the expense item as applicable; and
•
receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of
receivables or payables in the statement of financial position.
Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of
cash flows arising from investing and financing activities, which is recoverable from, or payable to,
the taxation authority, are classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable
to, the taxation authority.
(p)
Earnings per share
Basic earnings per share is calculated as net profit/(loss) attributable to members of the Company,
adjusted to exclude any costs of servicing equity (other than dividends) and preference share
dividends, divided by the weighted average number of ordinary shares, adjusted for any bonus
element.
Diluted earnings per share is calculated as net profit/(loss) attributable to members of the Company,
adjusted for:
•
•
•
•
Costs of servicing equity (other than dividends) and preference share dividends;
The after tax effect of dividends and interest associated with the dilutive potential ordinary
shares that have been recognised as expenses; and
Other non-discretionary changes in revenues or expenses during the year that would result
from the dilution of potential ordinary shares;
Divided by the weighted average number of ordinary shares and dilutive potential ordinary
shares, adjusted for any bonus element.
Where a loss has been reported the dilutive effects of options are not adjusted for, in accordance with
AASB 133 Earnings per share.
(q)
Operating segments
An operating segment is a component of an entity that engages in business activities from which it
may earn revenues and incur expenses (including revenues and expenses relating to transactions with
other components of the same entity), whose operating results are regularly reviewed by the entity’s
chief operating decision maker to make decisions about resources to be allocated to the segment and
32
Notes to the Consolidated Financial Statements
Annual Report 2019
assess their performance and for which discrete financial information is available. This includes start-
up operations which are yet to earn revenues.
Operating segments have been identified based on the information provided to the chief operating
decision makers – being the board of directors.
(r)
Investment in joint arrangements
Joint arrangements are arrangements of which two or more parties have joint control. Joint Control is
the contractual agreed sharing of control of the arrangement which exists only when decisions about
the relevant activities require unanimous consent of the parties sharing control. Joint arrangements
are classified as ether a joint operation or a joint venture, based on the rights and obligations arising
from the contractual obligations between the parties to the arrangement.
To the extent the joint arrangement provides the Group with rights to the individual assets and
obligations arising from the joint arrangement, the arrangement is classified as a joint operation and
as such, the Group recognises its:
Assets, including its share of any assets held jointly
Liabilities, including its share of liabilities incurred jointly;
•
•
• Revenue from the sale of its share of the output arising from the joint operation;
•
•
Share of revenue from the sale of the output by the joint operation; and
Expenses, including its share of any expenses incurred jointly
To the extent the joint arrangement provides the Group with rights to the net assets of the
arrangement, the investment is classified as a joint venture and accounted for using the equity
method. Under the equity method, the cost of the investment is adjusted by the post-acquisition
changes in the Group’s share of the net assets of the venture.
(s)
Share based payments
The Group provides benefits to employees (including Directors) in the form of share-based payment
transactions, whereby employees render services in exchange for shares or rights over shares
(equity-settled transactions).
The cost of equity-settled transactions is determined by the fair value at the date when the grant is
made using an appropriate valuation model. That cost is recognised, together with a corresponding
increase in other capital reserves in equity, over the period in which the performance and/or service
conditions are fulfilled in employee benefits expense. The cumulative expense recognised for equity-
settled transactions at each reporting date until the vesting date reflects the extent to which the
vesting period has expired and the Consolidated Entities best estimate of the number of equity
instruments that will ultimately vest.
The statement of profit or loss expense or credit for a period represents the movement in cumulative
expense recognised as at the beginning and end of that period and is recognised in employee benefits
expense.
Until an award has vested, any amounts recorded are contingent and will be adjusted if more or fewer
awards vest than were originally anticipated to do so. Any award subject to a market condition is
considered to vest irrespective of whether or not the market condition is fulfilled, provided that all
other conditions are satisfied.
If a non-vesting condition is within the control of the Group, Company or the employee, the failure to
satisfy the condition is treated as a cancellation. If a non-vesting condition within the control of
neither the Group, Company nor employee is not satisfied during the vesting period, any expense for
the award not previously recognised is recognised over the remaining vesting period, unless the
award is forfeited.
If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the
terms had not been modified. An additional expense is recognised for any modification that increases
the total fair value of the share-based payment arrangement, or is otherwise beneficial to the
employee, as measured at the date of modification.
If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and
any expense not yet recognised for the award is recognised immediately. However, if a new award is
33
Notes to the Consolidated Financial Statements
Annual Report 2019
substituted for the cancelled award, and designated as a replacement award on the date that it is
granted, the cancelled and new award are treated as if they were a modification of the original award,
as described in the previous paragraph.
The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the
computation of dilutive earnings per share.
(t)
Intangible assets
Intangible assets acquired separately are recorded at cost less accumulated amortisation and
impairment. Amortisation is charged on a straight-line basis over their estimated useful lives. The
estimated useful life and amortisation method is reviewed at the end of each annual reporting period,
with any changes in these accounting estimates being accounted for on a prospective basis.
(u)
Significant accounting estimates and assumptions
The carrying amounts of certain assets and liabilities are often determined based on estimates and
assumptions of future events. The key estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying amounts of certain assets and liabilities within the next
annual reporting year are:
Capitalised Exploration and evaluation expenditure
The future recoverability of capitalised exploration and evaluation expenditure is dependent on a
number of factors, including whether the Group decides to exploit the related lease itself or, if not
whether it successfully recovers the related exploration and evaluation asset through sale.
Factors which could impact the future recoverability include the level of proved, probable and inferred
mineral resources, future technological changes which could impact the cost of mining, future legal
changes (including changes to environmental restoration obligations) and changes to commodity
prices.
To the extent that capitalised exploration and evaluation expenditure is determined not to be
recoverable in the future, this will reduce profits and net assets in the period in which this
determination is made.
In addition, exploration and evaluation expenditure is capitalised if activities in the area of interest
have not yet reached a stage which permits a reasonable assessment of the existence or otherwise of
economically recoverable reserves. To the extent that it is determined in the future that this
capitalised expenditure should be written off, this will reduce profits and net assets in the period in
which this determination is made.
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. The fair value is determined by an appropriate
valuation model, using the assumptions as discussed in note 14.
Taxes
Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable
profit will be available against which the losses can be utilised. Significant management judgement is
required to determine the amount of deferred tax assets that can be recognised, based upon the
likely timing and the level of future taxable profits together with future tax planning strategies.
The Group has tax losses carried forward. These losses relate to subsidiaries that have a history of
losses, do not expire and may not be used to offset taxable income elsewhere in the Group. The
subsidiaries neither have any taxable temporary differences nor any tax planning opportunities
available that could partly support the recognition of these losses as deferred tax assets. On this
basis, the Group has determined that it cannot recognise deferred tax assets on the tax losses carried
forward.
34
Notes to the Consolidated Financial Statements
Annual Report 2019
Classification of royalty interests as intangible assets
The Group has royalty interests over two tenements (E77/1322 and M77/1259) within the Evanston
Iron Ore Project located in the Southern Yilgarn Iron Province of Western Australia approximately
20kms north of the Windarling mine. The royalties, although entitling the Group to cash upon the
commencement of production, are not considered to be financial assets. The Group considers that
they do not have an unconditional right to receive cash as the Group cannot force the operator to
produce and, furthermore, the counterparty can avoid the payment of cash by deciding not to
produce. The royalties received are derived from the rights attached to the underlying mineral
resources. The royalty rights have therefore been accounted for as intangible assets which are carried
at cost. On initial recognition no value was assigned to the royalty as probability of production was
considered remote.
3 REVENUE, INCOME AND EXPENSES
(a) Revenue
Interest
(b) Other income
Royalty income (i)
Gain on sale of tenement interests (ii)
Gain on sale of investment (ii)
(c) Employment benefits expense
Directors fees
2019
$
2018
$
2,979
5,727
452,846
-
-
452,846
42,359
319,980
57,272
419,611
(192,000)
(157,000)
(i) Royalty income earned in relation to mining conducted by Mineral Resources Ltd (ASX: MIN) at its
Deception iron ore mine. FEL holds a 1.5% Dry Metric Tonne, FOB Royalty in respect to
M77/1259.
(ii) As announced 27 February 2018, the Company and Auris Minerals Limited (Auris) (ASX: AUR)
entered into an agreement with Sandfire Resources NL (Sandfire) (ASX: SFR) in relation to their
Morck’s Well East Project (AUR 80%:FEL 20%) and AUR’s 100% owned Doolgunna Project located
in Western Australia’s Cryah Basin (Farm-In Agreement). Pursuant to the terms of the Farm-In
Agreement, the Company was to receive $300,000 in cash or shares (at Sandfire’s election) as
consideration. As elected by Sandfire, FEL received 41,502 shares on 7 March 2018 (valued at
$319,980). This has been recoded as a gain on sale of tenement interests in the statement of
comprehensive income. These shares were subsequently sold by FEL for total proceeds of
$377,252, resulting in a gain on sale of investment of $57,272.
(d) Other expenses
Occupancy rental expenses
Insurance
Corporate advisory and marketing expenses
Depreciation expense
Other
4
INCOME TAX
(a) Income tax expense
The major components of income tax expense are:
Current tax
Deferred tax
Income tax expense reported in the statement of comprehensive
income
35
2019
$
2018
$
(36,736)
(21,929)
(163,064)
(70)
(28,440)
(250,239)
(36,736)
(17,306)
(112,830)
(74)
(34,094)
(201,040)
2019
$
2018
$
-
-
-
-
-
-
Notes to the Consolidated Financial Statements
Annual Report 2019
(b) Reconciliation between aggregate tax expense recognised in
the statement of comprehensive income and tax expense
calculated per the statutory tax rate
Accounting loss before tax
Tax at the statutory income tax rate of 27.5%
Tax effect on impairment losses
Tax effect on non-temporary differences
Unrecognised tax losses and temporary differences
Income tax expense reported in statement of comprehensive income
(c) Deferred tax liabilities
Accrued income
Less offset by deferred tax asset
Deferred tax liabilities
(d) Deferred tax assets
Accrued expenditure
Tax losses
Unrealised capital tax losses
Less offset against deferred tax liabilities
Deferred tax assets not recognised
The Group has not formed a tax consolidated group.
2019
$
2018
$
(1,668,158)
(1,082,275)
(458,743)
202,125
147,983
108,635
-
(297,626)
292
190,957
106,377
-
2019
$
2018
$
-
-
-
-
-
-
-
-
5,775
2,771,201
359,736
3,136,712
-
3,136,712
4,964
2,663,277
359,736
3,028,077
-
3,028,077
The Group offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current
tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income
taxes levied by the same tax authority. The Group has tax losses which arose in Australia of $10,077,095
(2018: $9,685,008) that are available indefinitely for offsetting against future taxable profits of the
companies in which the losses arose.
Deferred tax assets have not been recognised in respect of these losses as they may not be used to offset
taxable profits elsewhere in the Group, they have arisen in companies that have been loss-making for some
time, and there is no other evidence of recoverability in the near future.
5 LOSS PER SHARE
Basic loss per share
Continuing operations
2019
Cents
2018
Cents
(0.44)
(0.44)
(0.32)
(0.32)
Basic loss per share amounts are calculated by dividing net loss for the year attributable to ordinary equity
holders of the Company by the weighted average number of shares on issue during the year.
Diluted earnings per share amounts are calculated by dividing the net profit/(loss) attributable to
shareholders by the weighted average number of shares on issue during the period (adjusted for the effects
of dilutive options). Where a loss has been reported the dilutive effects of options are not adjusted for, in
accordance with AASB 133 Earnings per share.
36
Notes to the Consolidated Financial Statements
Annual Report 2019
The following reflects the income and share data used in the basic and diluted earnings/(loss) per share
computations:
Loss used in calculation of basic loss per share
Continuing operations
2019
$
2018
$
(1,668,158)
(1,668,158)
(1,082,275)
(1,082,275)
2019
No.
2018
No.
Weighted average number of ordinary shares for basic loss per
share
Effect of dilution:
Unlisted options
Adjusted weighted average number of ordinary shares for
diluted loss per share
The unlisted options outstanding at balance date were found to have an anti-dilutive effect on the
calculation. Therefore, at 30 June 2019 and 30 June 2018, the basic loss per share is equal to the diluted
earnings per share.
383,041,786
383,041,786
-
335,837,899
335,837,899
-
6
CASH AND CASH EQUIVALENTS
Cash and cash equivalents
Cash at bank and on hand
2019
$
2018
$
760,801
894,442
Cash at bank and on hand earns interest at the floating rates based on daily bank deposit rates.
(a) Reconciliation of net loss after tax to net cash flows from operations
2019
$
2018
$
Net loss for the period
(1,668,158)
(1,082,275)
Adjustments for:
Depreciation
Share-based payment expense
Gain on sale of tenements
Corporate advisor fees in the current year settled via issue of shares
Impairment of exploration assets
Gain on sale of investment
Changes in assets and liabilities
Decrease/(increase) in trade and other receivables
Decrease/(increase) in prepayments
(Decrease)/increase in trade and other payables
Net cash used in operating activities
70
136,852
-
26,205
735,000
-
74
58,836
(319,980)
-
-
(57,272)
(243,044)
(1,134)
(93,900)
(1,108,109)
(8,419)
(278)
253,354
(1,155,960)
37
Notes to the Consolidated Financial Statements
Annual Report 2019
7
TRADE AND OTHER RECEIVABLES
Current
Accrued royalty receivable (a)
Other receivables (b)
2019
$
2018
$
241,498
15,032
256,530
-
13,486
13,486
(a) This accrued receivable represents FEL’s entitlement to a royalty payment in relation to mining
conducted by MIN at its Deception iron ore mine during the June 2019 quarter. Refer note 3(b)(i)
for further details.
(b) Other receivables are amounts which generally arise from transactions outside the usual operating
activities of the Group and are non-interest bearing with no fixed terms. Other receivables do not
contain impaired assets, are not past due date and are expected to be received in full.
Due to the short term nature of these receivables, their carrying value is assumed to approximate
their fair value. The maximum exposure to credit risk is the fair value of receivables. It is not the
Group’s policy to transfer (on-sell) receivables to special purpose entities.
8
EXPLORATION ASSETS
Acquisition Cost – Mercury Transaction (a)
Acquisition Cost – Macarthur Minerals Transaction (b)
Acquisition Cost – Kasombo Project (c)
Movements in exploration assets
Carrying value at beginning of period
Consideration in shares
Consideration in options
Cash consideration paid
Cash consideration payable (d)
Cash Option Fee paid
Option Exercise Fee payable (d)
Write off (c)
Closing value at end of year
2019
$
2018
$
475,670
500,000
-
975,670
735,000
225,000
150,670
50,000
50,000
100,000
400,000
(735,000)
975,670
-
-
735,000
735,000
-
735,000
-
-
-
-
-
-
735,000
a) On 21 February 2019, the Company entered into an agreement (as varied on 8 March 2019, 20
May 2019 and 14 June 2019) (Acquisition Agreement) to acquire the Pippingarra Lithium
Project and the Marble Bar Lithium Project (together the Projects) from Mercury Resources
Group Pty Ltd (an unrelated private exploration and mining group) (Mercury) (Mercury
Transaction). Pursuant to the Acquisition Agreement, consideration comprises:
1) 12,500,000 shares subject to six months escrow from date of issue (Consideration
Shares);
2) 15,000,000 unlisted options with an exercise price of 2.5 cents each expiring on 31
March 2022 (Consideration Options);
3) a 1% net smelter royalty;
4) $100,000 in cash, payable in instalments as follows:
(i)
$50,000 paid 23 May 2019;
(ii)
$50,000 payable at formal completion;
38
Notes to the Consolidated Financial Statements
Annual Report 2019
5) a further tranche of shares with a total value of $250,000 (using an issue price equal to
the Shares’ 5 day VWAP) upon the Company announcing a JORC Resource of 50,000,000
tonnes @ 1% Li2O within 24 months from completion (to be issued subject to prior
shareholder approval).
At 30 June 2019, the only condition to formal completion remained the issue of the Consideration
Options (now issued). Under the terms of the Acquisition Agreement, FEL was granted the sole
and exclusive right to access and undertake exploration on the tenements during the pre-
completion period. Exploration activities have been conducted by FEL during the year. The
Company deems the Mercury Transaction to have been substantially completed on 23 May 2019
and as such has capitalised the acquisition costs in the statement of financial position at 30 June
2019.
The Consideration Shares were issued on 23 May 2019. The fair value of the Consideration
Shares paid of $225,000, based on the Company’s share price on 23 May 2019 of $0.018 per
share, has been used to record the value of exploration and evaluation assets on initial
recognition in accordance with the Group’s accounting policies.
The Consideration Options were issued 19 August 2019, following receipt of shareholder approval
at the Company’s general meeting held 8 August 2019 (General Meeting). The fair value of the
Consideration Options of $150,670 has been determined in reference to the share price on 23
May 2019. Refer note 14(d) for further details regarding this share based payment.
b) On 14 May 2019, the Company announced that it had entered into an exclusive option agreement
(Option Agreement) with Macarthur Lithium Pty Ltd (MLi), a wholly owned subsidiary of
Macarthur Minerals Limited (Macarthur) (TSX-V:MMS) to acquire an interest of up to 75% in 19
tenements (Project). The Project tenements are highly prospective for gold, copper and lithium
in proximity to numerous known hard rock lithium and gold deposits in the central and eastern
Pilbara.
Under the terms of the Option Agreement, MLi granted FEL a 45 day option to enable FEL to
conduct due diligence and secure the required funding to proceed with exercising the option. The
Company paid a non-refundable option fee to MLi of $100,000 in cash (Option Fee).
On 27 June 2019, FEL elected to exercise the option to earn-in, and the parties have agreed that
the payment terms of the $400,000 payable to MLi (being the Option Exercise Fee) be
extended to 31 August 2019.
On 28 August 2019, the parties entered into a revised agreement to replace the existing Option
Agreement (Revised Option Agreement). Pursuant to the Revised Option Agreement, the
Option Exercise Fee was equity settled on 29 August 2019 via the issue of 26,666,667 ordinary
shares (at a deemed issue price of $0.015 each). For the purposes of determining the Stage 1,
Stage 2, and Stage 3 earn in periods (detailed below), the parties have acknowledged the formal
Exercise Date to be 29 August 2019.
Pursuant to the Revised Option Agreement, FEL holds the right to earn-in up to 75% interest in
the Project, on the following terms:
1) Stage 1 - Initial 25% interest in the Project by:
a. undertaking expenditure on the Project tenements of no less than the minimum
expenditure commitment; and
b. payment to MLi of $500,000 in cash or ordinary FEL shares (based on the 5-day VWAP
prior to the issue date) at FEL’s election,
within 1 year from the Exercise Date;
2) Stage 2 - Further 30% interest in the Project by:
a. undertaking further expenditure on the Project tenements of no less than the minimum
expenditure commitment ; and
b. payment to MLi of $500,000 in cash or shares (based on the 5-day VWAP prior to the
issue date) at FEL’s election,
within 2 years from the Exercise Date;
3) Stage 3 - Further 20% interest in the Project by:
39
Notes to the Consolidated Financial Statements
Annual Report 2019
a. undertaking expenditure on the Project tenements of no less than the minimum
expenditure commitment; and
b. payment to MLi of $750,000 in cash or shares (based on 5-day VWAP prior to the issue
date) at FEL’s election,
within 3 years from the Exercise Date.
FEL will act as JV manager. MLi will have a free carried until a pre-feasibility study is completed.
FEL can withdraw from the earn-in at any time and without penalty.
c) With the introduction of the Pippingarra Lithium Project and the Marble Bar Lithium Project and
the Macarthur Minerals Lithium and Gold Tenements Earn-In Project to the Company’s portfolio,
and in line with the Company’s renewed focus on assets located in Australia, the Board has
elected to exit from the Kasombo Project located in the Democratic Republic of Congo. As a
result, a write off expense for the full carrying value of $735,000 has been recognised in the year
ended 30 June 2019.
d) Included in trade and other payables at 30 June 2019 (refer note 10).
9
PLANT AND EQUIPMENT
Gross carrying value at cost
Accumulated depreciation
Movements in plant and equipment
Carrying value at beginning of year
Additions
Disposals
Depreciation charge for the period
Carrying value at end of year
10 TRADE AND OTHER PAYABLES
Trade payables (a)
Payable to Mercury (refer note 8)
Payable to Macarthur (refer note 8)
Other payables and accruals (b)
Kasombo Acquisition Pre-Settlement Exploration Expenditure (c)
2019
$
2018
$
4,562
(616)
3,946
720
(546)
174
2019
$
2018
$
174
3,842
-
(70)
3,946
248
-
-
(74)
174
2019
$
2018
$
137,782
50,000
400,000
45,442
49,130
682,354
89,294
-
-
154,305
49,130
292,729
(a) Trade payables are non-interest bearing and are normally settled on 30-day terms.
(b) Other payables are non-interest bearing and have varying terms.
(c) Pursuant to the Kasombo Acquisition agreement, FEL is required to reimburse Cape Lambert for
expenditure incurred by Cape Lambert since acquisition of its interest in the Kasombo Project (Pre-
Settlement Expenditure) up to maximum amount of $125,000 (subject to ASX’s confirmation
that it is reimbursement of expenditure incurred in the development of the asset). FEL has received
a final invoice for Pre-Settlement Expenditure from Cape Lambert for $99,130, which has been
recorded in exploration and evaluation expenditure in the statement of comprehensive income. FEL
had initially advanced Cape Lambert $50,000 as a contribution towards the Pre-Settlement
Expenditure, such that the outstanding balance of the invoiced amount at balance date is $49,130.
40
Notes to the Consolidated Financial Statements
Annual Report 2019
11 CONTRIBUTED EQUITY
Ordinary shares
Issued and fully paid
2019
$
2018
$
40,770,054
39,381,064
Ordinary shares have no par value and the Company does not have a limited amount of authorised capital.
Movements in ordinary shares on issue
Balance at beginning of year
Kasombo Acquisition
Placement
Exercise of options
Shares issued to director (a)
Placement (b)
Placement (c)
Settlement of invoices (d)
Consideration Shares to Mercury (e)
Share issue costs
Balance at end of year
2019
No. of shares
2019
$
2018
No. of shares
2018
$
370,877,963
-
-
-
2,750,000
20,000,000
48,500,000
2,406,990
12,500,000
-
457,034,953
39,381,064
-
-
-
38,500
400,000
727,500
36,105
225,000
(38,115)
40,770,054
293,169,629
35,000,000
33,333,334
9,375,000
-
-
-
-
37,395,564
735,000
1,000,000
281,250
-
-
-
-
-
370,877,963
(30,750)
39,381,064
(a) Refer note (14)(b)(i) for further details.
(b) On 8 May 2019, the Company completed a placement to sophisticated and professional investors
raising a total of $400,000 (Placement A) through the issue of Shares at an issue price of $0.02
per Share (Placement A Shares), with one free attaching Option for every two Placement A
Shares issued at an exercise price of $0.03 each expiring 2 years from date of issue (Placement A
Options).
(c) As announced on 4 June 2019, the Company completed three placements to sophisticated and
professional investors raising a total of $727,500 (Placement B) for the issue of Shares at an issue
price of $0.015 per Share (Placement B Shares). Subject to receipt of shareholder approval, one
free option will be issued for every four Placement B Shares with the options having an exercise
price of $0.02 each expiring 31 May 2021 (Placement B Options).
In addition to the above, at 30 June 2019, the Company had received firm commitment of $75,000
from investors to participate in the Placement B and proposed to issue 5,000,000 Placement B
Shares (Proposed Placement B Shares) to such investors at an issue price of $0.015 per Share,
subject to shareholder approval.
(d) On 4 June 2019, the Company issued 2,406,990 Shares at a market price of $0.015 per Share to
settle an amount of $36,105 invoiced by Pinnacle in relation to brokerage fees and corporate
advisory services (Pinnacle Shares). Under the terms of the arrangement, the Company agreed
to issue Pinnacle with one Option for every four Pinnacle Shares issued with the option having an
exercise price of $0.02 each expiring 31 May 2021, subject to receipt of shareholder approval and
completion of the issue of the Proposed Placement B Shares (Pinnacle Options).
(e) On 23 May 2019, the Company issued 12,500,000 Consideration Shares to Mercury pursuant to the
Acquisition Agreement (refer note 8(a)). The fair value of the Consideration Shares paid of
$225,000, based on the Company’s share price on 23 May 2019 of $0.018 per Share. The
Consideration Shares are escrowed until 23 November 2019.
41
Notes to the Consolidated Financial Statements
Annual Report 2019
12 ACCUMULATED LOSSES
2019
2018
$
$
Accumulated losses
(41,481,535)
(39,813,377)
Movements in accumulated losses
Balance at beginning of year
Net profit/(loss) for the year
Balance at end of year
13 RESERVES
Share based payments reserve
Movements in reserve
Balance at beginning of year
Share-based payments made during the year
(refer note 14)
Balance at end of year
Nature and purpose of reserve
(39,813,377)
(1,668,158)
(41,481,535)
(38,731,102)
(1,082,275)
(39,813,377)
2019
2018
$
$
2,035,849
1,786,827
1,786,827
1,727,991
249,022
2,035,849
58,836
1,786,827
This reserve is used to record the value of share based payments made to directors, consultants, and as
consideration to acquire assets (in the form of unlisted options).
14 SHARE-BASED PAYMENTS
Share based payment transactions recognised during the year were as follows:
(a) Share-based payments expensed through profit and loss:
Shares (i)
Options
(b) Share-based payments capitalised in exploration assets:
Shares (ii)
Options
2019
$
2018
$
38,500
98,352
136,852
225,000
150,670
375,670
-
58,836
58,836
735,000
-
735,000
Total share-based payments
512,522
793,836
(i) On 22 February 2018, the Directors in their discretion, acknowledging that Okewood Pty Ltd
(Okewood), a company controlled by Mr Antony Sage, previously agreed to reduced fees during
the period from 1 April 2016 to 31 January 2018, agreed to issue 2,750,000 shares to Okewood
at a deemed issue price of 4 cents per share, subject to shareholder approval (Director
Shares). The expense recorded in respect of the Director Share has been determined in
reference to the share price at the date of grant, being 1.4 cents at 30 November 2018.
Shareholder approval for the issue of the Director Shares was received at the Company’s AGM
and the Director Shares were subsequently issued on 24 December 2018.
(ii) Refer note 8.
42
Notes to the Consolidated Financial Statements
Annual Report 2019
(c) Summary of options granted
The following table illustrates the number (No.) and weighted average exercise prices (WAEP) of, and
movements in options during the year:
2019
No.
2019
WAEP
2018
No.
2018
WAEP
Outstanding at the beginning of the year
Options granted (d)
Options expired
Outstanding at the end of the year
Exercisable at the end of the year
Not exercisable at the end of the year
12,500,000
40,000,000
-
52,500,000
20,000,000
32,500,000
$0.045
$0.027
-
$0.045
$0.045
$0.022
-
12,500,000
-
12,500,000
-
12,500,000
-
$0.045
-
$0.045
-
$0.045
(d) Options granted
The following unlisted options were granted during the year ended 30 June 2019:
▪
▪
7,500,000 unlisted options at $0.045 expiring 31 May 2020 with no vesting conditions issued to
consultant (Consultant Options)
15,000,000 unlisted options at $0.025 expiring 31 March 2022 with no vesting conditions
(being the Consideration Options) (subject to receipt of shareholder approval) (not issued at
30 June 2019)
▪ On 31 May 2019, the Directors agreed to issue a total of 17,500,000 unlisted options with no
vesting conditions at $0.02 expiring 31 May 2021 (subject to receipt of shareholder approval)
(2019 Director Options) (not issued at 30 June 2019), as follows:
▪
▪
▪
10,000,000 Director Options to Mr Antony Sage (or nominee);
5,000,000 Director Options to Mr Kenneth Keogh (or nominee); and
2,500,000 Director Options to Mr Nicholas Sage (or nominee).
The fair value of options granted during the year ended 30 June 2019 was determined using a Black-Scholes
option pricing model. The following table lists the inputs to the model for the options issued:
Expiry date
Valuation date
Dividend yield (%)
Expected volatility (%)
Risk free interest rate (%)
Exercise price ($)
Discount (%)
Expected life of options (years)
Share price at grant date ($)
Value per option ($)
Consultant
Options
2019 Director
Options
Consideration
Options
31 May 2020
30 November 2018
Nil
133%
2.04%
$0.045
Nil
1.50
$0.014
$0.0048
31 May 2021
30 June 2019
Nil
100%
1.01%
$0.020
Nil
1.92
$0.017
$0.0081
31 March 2022
23 May 2019
Nil
100%
1.21%
$0.025
Nil
3.02
$0.018
$0.0100
The following options were granted during the year ended 30 June 2018:
▪ On 21 March 2018, the Directors agreed to issue a total of 12,500,000 unlisted options with no
vesting conditions to directors at an exercise price of $0.045 each and an expiry date of 31 May
2020, subject to receipt of shareholder approval (Director Options), as follows:
▪
▪
▪
6,500,000 Director Options to Mr Antony Sage (or nominee);
4,500,000 Director Options to Mr Kenneth Keogh (or nominee); and
1,500,000 Director Options to Mr Nicholas Sage (or nominee).
As detailed in the Company’s 2018 Annual Report, a provisional estimate of the fair value of the Director
Options was determined by reference to the 30 June 2018 share price of the Company. Based on the
provisional estimate, a share-based payment expense of $58,836 was recorded in the year ended 30 June
43
Notes to the Consolidated Financial Statements
Annual Report 2019
2018. Shareholder approval for the issue of the Director Options was received at the Company’s annual
general meeting held 30 November 2018 (AGM) and the Director Options were issued on 24 December
2018. The table below reflects the final valuation of the Director Options.
The fair value of options granted during the year ended 30 June 2018 was determined using a Black-Scholes
option pricing model. The following table lists the inputs to the model for the options issued:
Expiry date
Valuation date
Dividend yield (%)
Expected volatility (%)
Risk free interest rate (%)
Exercise price ($)
Discount (%)
Expected life of options (years)
Share price at grant date ($)
Value per option ($)
Director Options
31 May 2020
30 November 2018
Nil
133%
2.04%
$0.045
Nil
1.5 years
$0.014
$0.0048
(e) Weighted average remaining contractual life
The weighted average remaining contractual life for the options outstanding as at 30 June 2019 is 1.83
years (2018: 1.92 years).
(f) Fair value
The fair value of options granted during the year ended 30 June 2019 was $0.0082 (30 June 2018:
$0.0118).
(g) Option expired
During the year ended 30 June 2019, nil options expired (2018: nil).
(h) Refer to note 11(d) for amounts settled in shares.
15 OTHER UNLISTED OPTIONS
The following refers to unlisted options issued by the Company which do not constitute a share based
payment.
(a) Options granted during the year
There were a total of 10,000,000 unlisted options issued during the year at various exercise prices and
expiry dates (2018: nil), being the Placement A Options.
(b) Options exercised during the year
During the year, there was nil received in proceeds from the exercise of unlisted options (2018: $281,250).
(c) Options expired during the year
There were no unlisted options that expired during the year (2018: nil).
(d) Options on issue
The following unlisted options were on issue at 30 June 2019:
▪
▪
▪
5,625,000 unlisted options at $0.03 expiring 13 March 2021
3,125,000 unlisted options at $0.03 expiring 12 April 2021
1,250,000 unlisted options at $0.03 expiring 8 May 2021
44
Notes to the Consolidated Financial Statements
Annual Report 2019
16 SEGMENT INFORMATION
The Group has identified its operating segments based on the internal reports that are reviewed and used
by the board of directors in assessing performance and in determining the allocation of resources. The
Group has only one operating segment, being mineral exploration. The financial results from the segment
are equivalent to the financial statement of the Company as a whole. The accounting policies used by the
Consolidated Group in reporting segment internally are the same as those contained in note 2 to the
accounts. The Consolidated Group’s non-current assets are located in Australia.
17 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group’s objective with regard to financial risk management is to ensure the effective management of
business risks crucial to the financial integrity of the business without affecting the ability of the Group to
operate efficiently or execute its business plans and strategies.
The Board has overall responsibility for the determination of the Group’s risk management objectives and
policies and has the responsibility for designing and operating processes that ensure the effective
management of all significant financial risks to the business. The Board may delegate specific responsibilities
as appropriate.
Capital risk management
The Group’s capital base comprises its ordinary shareholders equity, which was $1,343,043 at 30 June 2019
(30 June 2018: $1,354,514). The Group manages its capital to ensure that the entities in the group will be
able to continue to meet its working capital requirements and operate as a going concern while seeking to
maximise the return to stakeholders.
In making its decisions to adjust its capital structure, either through new share issues or consideration of
debt, the Group considers not only its short-term working capital needs but also its long-term operational
and strategic objectives. The Board continually monitors the capital requirements of the Group.
The Group is not subject to any externally imposed capital requirements.
Financial instrument risk exposure and management
The Group’s principal financial instruments comprise cash and short-term deposits, receivables and
payables. The main risks arising from the Group’s financial instruments are interest rate and credit risk. The
Board reviews and agrees policies for managing each of these risks and they are summarised below.
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the
basis of measurement and the basis on which income and expenses are recognised, in respect of each class
of financial asset, financial liability and equity instrument are disclosed in note 2 to the financial statements.
Interest rate risk
The Group’s exposure to changes in market interest rates relates primarily to the Group’s cash and short-
term deposits with a floating interest rate.
At the reporting date, the Group had the following financial assets exposed to variable interest rate risk:
Financial assets
Cash and cash equivalents
Note
6
2019
$
2018
$
760,801
760,801
894,442
894,442
45
Notes to the Consolidated Financial Statements
Annual Report 2019
The following sensitivity analysis is based on the interest rate risk exposures in existence at the reporting
date and based on judgements of reasonably possible movements:
Consolidated
+1% (100 basis points)
-0.5% (50 basis points)
Post Tax Loss
(Higher)/Lower
2019
$
7,608
(3,804)
2018
$
8,944
(4,472)
Equity
Higher/(Lower)
2019
$
2018
$
-
-
-
-
A sensitivity analysis is derived from a review of historical movements and management’s judgment of
future trends. The analysis was performed on the same basis as 2018.
Credit risk
Credit risk arises from the financial assets of the Group, which comprise cash and cash equivalents and
trade and other receivables. The Group’s exposure to credit risk arises from potential default of the counter
party, with a maximum exposure equal to the carrying amount of these instruments. Exposure at reporting
date is addressed in each applicable note.
The Group trades only with recognised and creditworthy third parties.
In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure
to bad debts is not significant. Other than the cash balance with a AA credited bank and an accrued royalty
receivable that was subsequently collected in full, there are no other significant concentrations of credit risk
within the Group.
Liquidity risk
Liquidity risk arises from the Group’s management of working capital. It is the risk that the Group will
encounter difficulty in meeting its financial obligations as they fall due. The Group’s objective is to ensure
that it will always have sufficient liquidity to meet its liabilities through ensuring it has sufficient cash
reserves to meet its ongoing working capital and long-term operational and strategic objectives. The Group
manages liquidity risk by maintaining adequate borrowing facilities and monitoring forecast and actual cash
flows on an ongoing basis.
The following table summarises the maturity profile of the Group’s liabilities. The table has been drawn up
based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company
can be required to pay.
Consolidated
30 June 2019
Trade and other payables
30 June 2018
Trade and other payables
Less than 6
months
$
6 months to
1 year
1 year to 5
years
$
$
Total
$
682,354
682,354
292,729
292,729
-
-
-
-
-
-
-
-
682,354
682,354
292,729
292,279
The Group has determined that the carrying value of financial liabilities is approximately equal to its fair value.
Fair value estimation
The fair value of financial assets and liabilities must be estimated for recognition and measurement or for
disclosure purposes. The Directors consider that the carrying amount of financial assets and financial
liabilities recorded in the financial statements approximates their fair values as the carrying value less
impairment provision of trade receivables and payables are assumed to approximate their fair values due to
their short-term nature.
46
Notes to the Consolidated Financial Statements
Annual Report 2019
18 COMMITMENTS AND CONTINGENCIES
Commitments
Office Rental Commitments
On 30 April 2018, the Group entered into a sub-lease with Cape Lambert Resources Ltd for office premises
for a lease period terminating on 31 March 2020. The expenditure commitment with respect to rent payable
under the sub-lease arrangement is as follows:
Within one year
After one year but less than five years
More than five years
Contingencies
2019
$
2018
$
27,549
-
-
27,549
36,732
27,549
-
64,281
Contingent Liability - Mercury Transaction Consideration in Shares
Pursuant to the Acquisition Agreement in relation to the Mercury Transaction, FEL has agreed to issue a
further tranche of shares with a total value of $250,000 (using an issue price equal to the Shares’ 5 day
VWAP) upon the Company announcing a JORC Resource of 50,000,000 tonnes @ 1% Li2O within 24 months
from completion as part of the consideration for the project (to be issued subject to prior shareholder
approval). This obligation is considered a contingent liability at 30 June 2019.
At 30 June 2019 there were no other contingent liabilities or contingent assets.
19 CONTROLLED ENTITIES
The consolidated financial statements include the financial statements of Fe Limited and the subsidiaries
listed in the following table.
Subsidiary
Jackson Minerals Pty Ltd
Mooloogool Pty Ltd
Bulk Ventures Ltd
Bulk Ventures (Bermuda) Limited
Country of
Incorporation
Equity interest
%
2019
2018
Australia
Australia
Australia
Bermuda
100
100
100
100
100
100
100
100
47
Notes to the Consolidated Financial Statements
Annual Report 2019
20 PARENT ENTITY FINANCIAL INFORMATION
Current Assets
Non-Current assets
Total Assets
Current Liabilities
Non-current liabilities
Total Liabilities
Net assets
Issued Capital
Accumulated losses
Share Based Payment reserve
Total Shareholder’s Equity
Loss for the period
Total comprehensive loss for the period
2019
$
2018
$
1,027,106
979,616
2,006,722
682,354
-
682,354
912,069
735,174
1,647,243
292,729
-
292,729
1,324,368
1,354,514
40,770,054
(41,481,535)
2,035,849
1,324,368
39,381,064
(39,813,377)
1,786,827
1,354,514
2019
2018
(1,668,158)
(1,668,158)
(1,082,275)
(1,082,275)
There were no guarantees entered into by the parent entity in relation to the debts of its subsidiaries (30
June 2018: nil).
Commitments, contingent liabilities and contingent assets of the parent entity are the same as those of the
Group as detailed at note 18.
21 AUDITORS’ REMUNERATION
Amounts received or due and receivable by Ernst & Young Australia for:
An audit or review of the financial report of the entity and any other entity
in the Group:
Amounts paid or payable relating to current year audit and half year
review
2019
2018
$
$
32,258
32,258
28,403
28,403
22 RELATED PARTY DISCLOSURES
Note 19 provides the information about the Group’s structure including the details of the subsidiaries and
the holding company.
Transactions with directors, director related entities and other related parties
During the year ended 30 June 2019, an aggregate amount of $139,439 (30 June 2018: $154,659) was
paid or payable to Cape Lambert Resources Ltd (Cape Lambert) for reimbursement of rent, travel costs,
and exploration expenditure costs. At 30 June 2019, $44,664 was payable to Cape Lambert (30 June 2018:
$83,896).
During the year ended 30 June 2019, an aggregate amount of $34,488 (30 June 2018: nil) was paid or
payable to European Lithium Ltd (European Lithium) for reimbursement of travel costs. At 30 June 2019,
$5,495 was payable to European Lithium (30 June 2018: nil).
Cauldron Energy Ltd (Cauldron) was a director related entity until 25 February 2019. During the period 1
July 2018 to 25 February 2019, an aggregate amount of $2,004 (30 June 2018: $40,671) was paid or
payable to Cauldron Energy Ltd (Cauldron) for reimbursement of consultant costs. At 30 June 2019,
48
Notes to the Consolidated Financial Statements
Annual Report 2019
$42,674 was payable to Cauldron (30 June 2018: $40,671). Mr Nicholas Sage was a director of Cauldron
until 25 February 2019. Mr Antony Sage was a director of Cauldron until 22 November 2018.
Significant shareholders
As at 30 June 2019, Cape Lambert held a 31.91% interest in the issued capital of FEL (30 June 2018:
39.33%).
Terms and conditions of transactions with related parties other than KMP
The sales to and purchases from related parties are made on terms equivalent to those that prevail in arm’s
length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement
occurs in cash. There have been no guarantees provided or received for any related party receivables or
payables.
Transactions with key management personnel
Compensation of key management personnel
Short term employee benefits
Share based payments
Interests held by Key Management Personnel
2019
$
2018
$
197,000
101,022
298,022
185,000
58,836
243,836
Movements in share options held by key management personnel to purchase ordinary shares is summarised
as follows:
Balance at
1 July
2018
Acquired
/granted
during
year (i)
Lapsed
during
Year
Balance at
30 June
2019
Exer-
cisable
Not Exer-
cisable
Exercise
Price
Expiry Date
6,500,000
-
1,500,000
-
4,500,000
-
12,500,000
-
10,000,000
-
2,500,000
-
5,000,000
17,500,000
-
-
-
-
-
6,500,000
10,000,000
1,500,000
2,500,000
4,500,000
5,000,000
30,000,000
6,500,000
-
1,500,000
-
4,500,000
-
12,500,000
-
10,000,000
-
2,500,000
-
5,000,000
17,500,000
$0.045 31 May 2020
$0.020 31 May 2021
$0.045 31 May 2020
$0.020 31 May 2021
$0.045 31 May 2020
$0.020 31 May 2021
Directors
A Sage
N Sage
K Keogh
(i) Refers to 2019 Director Options as detailed at note 14(d).
30 June 2018
Directors
A Sage
N Sage
K Keogh
Balance
at 1 July
2017
Acquired
/granted
during year
(i)
Lapsed
during
Year
Balance at
30 June
2018
Exer-
cisable
Not Exer-
cisable
Exercise
Price
Expiry Date
-
-
-
-
6,500,000
1,500,000
4,500,000
12,500,000
-
-
-
-
6,500,000
1,500,000
4,500,000
12,500,000
-
-
-
-
6,500,000
1,500,000
4,500,000
12,500,000
$0.045
$0.045
$0.045
31 May 2020
31 May 2020
31 May 2020
(i) Refers to 2018 Director Options which were granted in March 2018 and issued on 24 December 2018
following receipt of shareholder approval.
Shares issued to directors or director related entities
Following receipt of shareholder approval at the AGM, on 24 December 2018 a total of 2,750,000 Director
Shares were issued to Okewood, as detailed at note 14(b)(i).
49
Notes to the Consolidated Financial Statements
Annual Report 2019
23 EVENTS AFTER THE REPORTING DATE
As announced 6 August 2019, FEL received notice of a royalty payment of $241,498 to be received in
relation to mining conducted by MIN at its Deception iron ore mine during the June 2019 quarter. These
funds were received on 8 August 2019.
On 6 August 2019, the Company announced the results of its initial two field reconnaissance field trips to
assess each of the Macarthur Minerals Lithium and Gold Tenements and the tenements forming the
Pippingarra Lithium Project and the Marble Bar Lithium Project for access and to identity target rocks for
further exploration.
The Company held an extraordinary general meeting on 8 August 2019 (GM). All resolutions put to the
meeting were passed on a show of hands.
▪
▪
The following securities were issued on 19 August 2019, as approved by shareholders at the GM:
5,000,000 shares following receipt of $75,000 (being the Proposed Placement B Shares);
33,976,749 unlisted options exercisable at $0.02 each on or before 31 May 2021 (including the
Placement B Options and the 2019 Director Options (detailed below));
15,000,000 unlisted options exercisable at $0.025 each on or before 31 March 2022 (being the
Consideration Options).
▪
On 28 August 2019, the FEL and Macarthur executed a Revised Option Agreement. Pursuant to this, the
Option Exercise Fee was equity settled on 29 August 2019 via the issue of 26,666,667 ordinary shares (at a
deemed issue price of $0.015 each). The terms of the Stage 1, Stage 2, and Stage 3 earn in were revised
under the Revised Option Agreement (as detailed above).
On 1 September 2019, Mr Mark Hancock was appointed as Executive Director of the Company. Mr Kenneth
Keogh resigned as a Director on this date.
There have been no other events subsequent to 30 June 2019 up to the date of this report that would
materially affect the operations of the Group or its state of affairs which have not otherwise been disclosed
in this financial report.
50
Directors’ Declaration
Annual Report 2019
DIRECTORS’ DECLARATION
In accordance with a resolution of the directors of Fe Limited, I state that:
1.
In the opinion of the directors:
a) the financial statements and notes of Fe Limited for the year ended 30 June 2019 are in
accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the Group’s financial position as at 30 June 2019 and its
performance for the year ended on that date; and
(ii) complying with Accounting Standards (including the Australian Accounting Interpretations)
and the Corporations Regulations 2001;
b) the financial statements and notes also comply with International Financial Reporting Standards
as disclosed in note 2(b);
c) subject to the matters described in note 2(c), there are reasonable grounds to believe that the
Company will be able to pay its debts as and when they become due and payable;
2.
This declaration has been made after receiving the declarations required to be made to the Directors in
accordance with section 295A of the Corporations Act 2001 for the year ended 30 June 2019.
On behalf of the Board
Mr Antony Sage
Non-Executive Chairman
12 September 2019
51
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Independent Auditor's Report to the Members of Fe Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Fe Limited (the Company) and its subsidiaries (collectively the
Group), which comprises the consolidated statement of financial position as at 30 June 2019, the
consolidated statement of comprehensive income, the consolidated statement of changes in equity and
the consolidated statement of cash flows for the year then ended, notes to the financial statements,
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:
a)
giving a true and fair view of the consolidated financial position of the Group as at 30 June 2019
and of its consolidated financial performance for the year ended on that date; and
b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting
Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the
Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Material uncertainty related to going concern
We draw attention to Note 2(c) of the financial report, which describes the principal conditions that raise
doubt about the Group’s ability to continue as a going concern. These events or conditions indicate that a
material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going
concern. Our opinion is not modified in respect of this matter.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial report of the current year. These matters were addressed in the context of our audit
of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate
opinion on these matters. In addition to the matter described in the Material uncertainty related to going
concern section of our report, we have determined the matter described below to be the key audit matter
to be communicated in our report. Our description of how our audit addressed the matter is provided in
that context.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
52
MH:DA:FEL:009
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of material
misstatement of the financial report. The results of our audit procedures, including the procedures
performed to address the matters below, provide the basis for our audit opinion on the accompanying
financial report.
Carrying value of capitalised exploration and evaluation assets
Why significant
How our audit addressed the key audit matter
As disclosed in Note 8, as at 30 June 2019,
the Group held capitalised exploration and
evaluation expenditure assets of $975,670.
The carrying value of exploration and
evaluation expenditure is assessed for
impairment by the Group when facts and
circumstances indicate that the carrying
value of exploration and evaluation
expenditure assets may exceed their
recoverable amount.
The determination as to whether there are
any indicators to require an exploration and
evaluation asset to be assessed for
impairment, involves a number of judgments
including whether the Group has tenure, will
be able to perform ongoing expenditure and
whether there is sufficient information for a
decision to be made that the area of interest
is not commercially viable. During the year,
the Group recognised an impairment charge
of $735,000 in relation to one of its areas of
interest. The Group determined that there
had been no indicators of impairment for its
other areas of interest.
In performing our procedures, we:
►
►
►
Considered the Group’s right to explore in the relevant areas
of interest, which included obtaining and assessing
supporting documentation such as the project acquisition
agreements
Considered the Group’s intention to carry out significant
exploration and evaluation activity in the relevant
exploration area, which included assessment of the Group’s
cash-flow forecast models, discussions with senior
management and Directors as to the intentions and strategy
of the Group
Considered whether the exploration activities within each
area of interest have reached a stage where the
commercially viable resource estimate could be made, which
included obtaining and assessing supporting documentation
such as exploration reports and the Group's announcements
in the Australian Stock Exchange in relation to its mineral
resources
►
Assessed the adequacy of the disclosure included in the
financial report.
Information Other than the Financial Report and Auditor’s Report Thereon
The directors are responsible for the other information. The other information comprises the information
included in the Group’s Annual Report for the year ended 30 June 2019, but does not include the
financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon, with the exception of the Remuneration Report and
our related assurance opinion.
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.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
53
MH:DA:FEL:009
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 Group’s ability to
continue as a going concern, disclosing, as applicable, matters relating 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 have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial report, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud
may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial report or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the Group to cease to continue as
a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events in a
manner that achieves fair presentation.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
54
MH:DA:FEL:009
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated to the directors, we determine those matters that were of most
significance in the audit of the financial report of the current year and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should
not be communicated in our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
Report on the Audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report of the directors' report for the year ended 30 June 2019.
In our opinion, the Remuneration Report of Fe Limited for the year ended 30 June 2019, complies with
section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the Remuneration Report, based on our audit conducted in accordance with Australian
Auditing Standards.
Ernst & Young
V L Hoang
Partner
Perth
12 September 2019
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
55
MH:DA:FEL:009
Schedule of Tenements
Annual Report 2019
SCHEDULE OF TENEMENTS
As at 2 September 2019:
Tenement
reference
Project & Location
Interest
Notes
E52/1659
E52/1668
E52/1671
E52/1678
E52/1722
E52/1730
P52/1538
P52/1539
P52/1494
P52/1495
P52/1496
E45/4759
E45/4691
E45/4669
E45/4690
E45/4724
E45/4746
Forrest (Milgun) – Western Australia
Peak Hill – Western Australia
Forrest (Milgun) – Western Australia
Peak Hill – Western Australia
Peak Hill – Western Australia
Peak Hill – Western Australia
Peak Hill – Western Australia
Peak Hill – Western Australia
Forrest (Milgun) – Western Australia
Forrest (Milgun) – Western Australia
Forrest (Milgun) – Western Australia
Pippingarra
Pippingarra
Marble Bar
Marble Bar
Marble Bar
Marble Bar
E51/1033-I
E52/1613-I
Morcks Well
Morcks Well
E52/1672-I
Morcks Well
E45/4685
E45/4693
E45/4702
E45/4708
E45/4709
E45/4710
E45/4711
E45/4732
E45/4735
E45/4747
E45/4764
E45/4779
E45/4824
E45/4848
E45/5324
E46/1114
E46/1115
E46/1210
Marble Bar
Indee
Hillside
Panorama
Panorama
Hillside
Hillside
Panorama
Strelley Gorge
Hillside
Marble Bar
Panorama
Panorama
Tambourah
North Tambourah
Noreena Downs
Noreena Downs
Noreena Downs
20%
20%
20%
20%
20%
20%
20%
20%
20%
20%
20%
100%
100%
100%
100%
100%
100%
20%
20%
20%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1, 2, 3
4
1, 2, 3
4
5
4
4
4
1
1
1
6
6
6
6
6
6
7, 8, 9
7, 8, 9
7, 8, 9
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
NOTES:
1
2
Peak Hill Sale Agreement: Auris Exploration Pty Ltd (AUR - previously known as Grosvenor Gold Pty Ltd)
80% (Operator) and FEL (via Jackson Minerals) 20% in all minerals free carried to decision to mine.
Westgold Resources Limited owns 80% gold rights, Auris Exploration Pty Ltd (Auris)(previously known as
Grosvenor Gold Pty Ltd) (Operator) holds 80% interest in all minerals other than gold and FEL (via
Jackson Minerals) holds 20% in all minerals free carried to decision to mine.
3 Westgold Resources Limited has first right of refusal over disposal of AUR 80% interest.
56
Schedule of Tenements
Annual Report 2019
4
5
6
7
8
9
ALY 80% reducing to 10% in all minerals once SFR and Billabong (Operator) earn in under respective JV
agreements with ALY. Billabong earning 70% interest in all minerals in part of this tenement and SFR
earning 70% in base metals only (excluding Iron Ore) in the remaining tenement area. FEL (via Jackson
Minerals) holds 20% in all minerals in the whole of the tenements free carried to decision to mine.
Alchemy 80% reducing to 10% in all minerals once SFR (Operator) earn in under JV agreement with
ALY. SFR earning 70% in base metals only (excluding iron ore) in the whole of the tenement area by sole
funding exploration expenditure. FEL (via Jackson Minerals) holds 20% in all minerals free carried to
decision to mine.
The acquisition of these tenements under the Mercury Transaction was substantially completed 23 May
2019.
Peak Hill Sale Agreement: Auris Exploration Pty Ltd (Auris - previously known as Grosvenor Gold Pty Ltd)
80% (Operator) and Jackson Minerals Pty Ltd 20% in all minerals.
Jackson Iron Ore Royalty: Auris Exploration Pty Ltd (Auris) (previously known as Grosvenor Gold Pty Ltd)
(Operator) to pay PepinNini Robinson Range Pty Ltd (PRR) a 0.8% gross revenue royalty from the sale or
disposal of iron ore. Jackson Minerals Pty Ltd holds 20% in all minerals.
Sandfire Farm-in: Subject to a Farm-in Letter Agreement between SFR, AUR and FEL. If SFR makes a
Discovery on the tenements and a JV is formed then the interests in the tenements will be 70% SFR, 24%
AUR and 6% FEL. Full details of the agreement are described in the Auris ASX announcement dated 27
February 2018.
10
Macarthur Lithium Earn-In: Subject to an Option and Earn In Agreement between MLi and FEL. FEL
exercised its right to earn in on 27 June 2019. FEL holds the right to acquire an interest of up to 75% in
the tenements, refer to ASX:FEL announcement dated 14 May 2019 for full details of the agreement.
57
Additional Shareholder Information
Annual Report 2019
ADDITIONAL SHAREHOLDER INFORMATION
Shares
The total number of Shares on issue as at 2 September 2019 was 476,201,620 (excludes Escrowed Shares),
held by 877 registered Shareholders. 530 shareholders hold less than a marketable parcel, based on the market
price of a share as at 2 September 2019.
Each Share carries one vote per Share without restriction.
Escrowed Shares
In addition to the Shares noted above, there are 12,500,000 Escrowed Shares on issue at 2 September 2019,
held by 1 Shareholder. These Escrowed Shares will be released from escrow 23 November 2019.
Quoted Options
The Company does not have any quoted Options on issue.
Unquoted Options
Unquoted Options on issue at 2 September 2019 are as follows:
▪
▪
▪
▪
▪
▪
20,000,000 unlisted options at $0.045 expiring 31 May 2020
5,625,000 unlisted options at $0.03 expiring 13 March 2021
3,125,000 unlisted options at $0.03 expiring 12 April 2021
1,250,000 unlisted options at $0.03 expiring 8 May 2021
33,976,749 unlisted options at $0.02 expiring 31 May 2021
15,000,000 unlisted options at $0.025 expiring 31 March 2022
Twenty Largest Shareholders
As at 2 September 2019, the twenty largest Shareholders (including Escrowed Shares) were as shown in the
following table and held 78.64% of the Shares.
Legal Holder
DEMPSEY RESOURCES PTY LTD
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CAULDRON ENERGY LIMITED
MACARTHUR MINERALS LIMITED
DEMPSEY RESOURCES PTY LTD
WHITEY TIGER PTY LTD
MR JOHN CHARLES CHERRY
MERCURY RESOURCES GROUP PTY LIMITED*
WISEVEST PTY LTD
1
2
3
4
5
6
7
8
8
9
10 MR ALEXANDER JOHN PEDEN & MRS MARY LOUISA PEDEN
10
11
S&A CONSULTING D.O.O.
H & K SUPER MANAGEMENT PTY LTD
ANTONY WILLIAM PAUL SAGE & LUCY FERNANDES SAGE
BOSTON FIRST CAPITAL PTY LTD
13
14 GOLDFIRE ENTERPRISES PTY LTD
15
16 MR ANTHONY ROBERT RAMAGE
17 MR ANTHONY ROBERT RAMAGE
18
19 OKEWOOD PTY LTD
20 MRS LILIANA TEOFILOVA
FRED PARRISH INVESTMENTS PTY LTD
12
SUBURBAN HOLDINGS PTY LIMITED
Total
*Escrowed until 23 November 2019.
58
Holding
120,848,635
42,924,890
28,380,000
28,153,112
26,666,667
25,000,000
14,895,018
12,500,000
12,500,000
11,000,000
10,000,000
10,000,000
6,600,000
6,423,010
4,979,477
4,253,728
4,103,546
3,500,000
3,300,000
2,845,449
2,750,000
2,671,890
384,295,422
%
24.73
8.78
5.81
5.76
5.46
5.12
3.05
2.56
2.56
2.25
2.05
2.05
1.35
1.31
1.02
0.87
0.84
0.72
0.68
0.58
0.56
0.55
78.64
Additional Shareholder Information
Annual Report 2019
Distribution Schedule
A distribution schedule of the number of Shareholders, by size of holding, as at 2 September 2019 is below
(including Escrowed Shares):
Size of holdings
1 – 1000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Number of Shareholders
72
161
133
314
198
878
59