Fe Limited
Annual Report
20201
Corporate Directory
Annual Report 2020
CORPORATE DIRECTORY
Australian Business Number
31 112 731 638
Country of Incorporation
Australia
Board of Directors
Antony Sage
Mark Hancock
Nicholas Sage
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:
Stantons International
Level 2, 1 Walker Avenue
West Perth, WA 6005
+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 2020
CONTENTS
DIRECTORS’ REPORT
AUDITOR’S INDEPENDENCE DECLARATION TO DIRECTORS
CORPORATE GOVERNANCE STATEMENT
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
CONSOLIDATED STATEMENT OF CASH FLOWS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DIRECTORS’ DECLARATION
INDEPENDENT AUDITOR’S REPORT
SCHEDULE OF TENEMENTS
ADDITIONAL SHAREHOLDER INFORMATION
2
21
22
23
24
25
26
27
55
56
59
60
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Directors’ Report
Annual Report 2020
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 2020 (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) Executive Chairman (transitioned from Non-Executive Chairman to
Executive Chairman effective 17 September 2020)
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 a director of ASX-listed Cape Lambert Resources Ltd
(which was AIM Company of the year in 2008), and is the chairman of ASX-listed companies 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).
European Lithium Limited (September 2016 to Present);
International Petroleum Limited (January 2006 to September 2019); and
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
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);
▪
▪ Cape Lambert Resources Ltd (February 2020 to August 2020).
Strandline Resources Ltd (August 2020 to Present); and
Interest in Shares & Options at
date of this report:
2,500,000 unlisted options at $0.02 expiring 31 May 2021
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:
2,500,000 unlisted options at $0.02 expiring 31 May 2021
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Annual Report 2020
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 resignation:
766,300 fully paid ordinary shares (indirectly held)
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.
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 2019: nil).
REVIEW OF OPERATIONS
CORPORATE
Operating Results
The consolidated profit after income tax for the year ended 30 June 2020 amounted to $5,908,179 (30 June
2019: $1,668,158 loss after income tax).
Board Changes
On 1 September 2019, Mr Mark Hancock was appointed as Executive Director of the Company. Mr Kenneth
Keogh resigned as a Director on 1 September 2019.
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Annual Report 2020
Annual General Meeting
The Company’s annual general meeting was held on 22 November 2019 (AGM). All resolutions put to the
meeting were passed on a show of hands.
Extraordinary General Meetings
The Company held an Extraordinary General Meeting on 8 August 2019 (August 2019 EGM). All resolutions
put to the meeting were passed on a show of hands.
The Company held an Extraordinary General Meeting on 22 May 2020 (May 2020 EGM). All resolutions put to
the meeting were passed and decided by way of a poll.
Placement
During the year, the Company received $75,000 in funding pursuant to a placement to sophisticated and
professional investors at an issue price of $0.015 per share (Placement). Shareholder approval for the issue of
5,000,000 shares was obtained at the August 2019 EGM.
Completion of Sale of Iron Ore Royalty
On 3 June 2020, FEL completed its sale of the Evanston Iron Ore Royalty to TRR Services Australia Pty Ltd, a
wholly owned subsidiary of Trident Resources PLC (LSX: TRR) (Trident) (Royalty Asset Sale). The total sale
price of the Royalty Asset Sale was $6.65 million (to be received in two instalments), as set out below.
Upon completion, FEL received the first instalment of the sale price. This instalment was for $3.46 million, being
the $4 million first instalment payable under the contract less the March 2020 quarter royalty previously
received by FEL of $0.54 million (received in the June 2020 quarter), which is attributable to the purchaser given
the effective date of the transaction of 1 January 2020.
A second instalment (originally $3 million) was due to FEL on 4 June 2021 (being 12 months after completion
date), with the instalment secured over the royalty. As announced 22 September 2020, FEL and Trident
reached agreement to advance settlement of the second tranche sale proceeds and in return for Trident
accelerating the payment, FEL has agreed to discount the amount owing to $2.65m. The second tranche
payment was received by FEL on 24 September 2020.
Iron Ore Royalty
During the year, FEL received the following royalty payments in relation to mining conducted by Mineral
Resources Ltd (ASX: MIN) at its Deception iron ore mine:
▪
▪
▪
▪
▪
$241,498 in relation to June 2019 quarter mining (included in FEL’s statement of comprehensive income
for the year ended 30 June 2019) (receipted during the year)
$20,666 in relation to adjustments to prior period ore mined (receipted during the year)
$657,359 in relation to September 2019 quarter mining (receipted during the year)
$763,132 in relation to December 2019 quarter mining (receipted during the year)
$539,310 in relation to March 2020 quarter mining (receipted during the year and deducted from the
first tranche instalment of the Royalty Asset Sale)
Prior to the Royalty Asset Sale, FEL held 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. M77/1259 forms part of Mineral Resources Ltd
(MIN) Koolyanobbing Iron Ore Project.
Sale of Interest in E52/1671 and E52/1659
During December 2019, the Company entered into a sale and purchase agreement (Agreement) with Westgold
Resources Limited (ASX: WGX) subsidiary Aragon Resources Pty Ltd (Aragon) to sell its 20% interest (held via
FEL’s wholly owned subsidiary Jackson Minerals Pty Ltd) in tenements E52/1671 and E52/1659 located in the
Bryah Basin. Pursuant to the terms of the Agreement FEL received 200,000 fully paid ordinary shares in WGX
(valued at $402,000) upon completion of the transaction.
Earn-In Macarthur Minerals Lithium and Gold Tenements
As disclosed in the 2019 annual report, 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 a
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Annual Report 2020
package of tenements (Project). The Project includes tenements 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 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, 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 shares (Macarthur Shares).
The terms of the Stage 1, Stage 2, and Stage 3 earn in were revised under the Revised Option Agreement, as
set out below. For the purposes of determining the Stage 1, Stage 2, and Stage 3 earn in periods (detailed
below), the parties had acknowledged the formal exercise date to be 29 August 2019 but this was subsequently
extended to September 2020 (Exercise Date).
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 project 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 project 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 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 further project 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 can withdraw from the earn-in at any time and without penalty.
As detailed in the Projects summary below, tenements in the Macarthur package outside of those identified as
focus tenements have been reviewed and either recommended for relinquishment or retention to allow a more
cost effective and focused approach on areas considered to have higher exploration value. Accordingly, the
parties agreed that FEL would focus on the Hillside, Panorama and Strelley tenement packages during the year
period, leaving the remainder to be retained by Macarthur, refer figure 2 and Schedule 1.
As detailed in subsequent events, the Company announced on 17 September 2020 that it had elected to
withdraw from the joint venture with Macarthur, and accordingly did not earn-in on Stage 1.
Mercury Transaction
As disclosed in the 2019 annual report, 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) 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;
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Annual Report 2020
(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 (paid during year ended 30 June 2020);
(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.
The Company deems the Mercury Transaction to have been substantially completed on 23 May 2019. At 30
June 2019, 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 August 2019
EGM.
Shares issued
During the year the Company issued the following shares:
▪
▪
5,000,000 ordinary shares (being the Placement shares); and
26,666,667 ordinary shares for settlement of the Macarthur Option Exercise Fee (being the Macarthur
Shares).
Options issued
During the year the Company issued the following options:
▪
▪
▪
33,976,749 unlisted options exercisable at $0.02 expiring 31 May 2021 (approved for issue at the
August 2019 EGM);
15,000,000 unlisted options exercisable at $0.025 expiring 31 May 2021 (being Consideration Options
issued pursuant to the Mercury Acquisition as approved for issue at the August 2019 EGM); and
2,500,000 unlisted options exercisable at $0.02 expiring 31 May 2021 (approved for issue at the AGM).
Securities Released from Escrow
On 23 November 2019 a total of 12,500,000 ordinary shares were released from escrow.
PROJECTS
Western Australia
The Company holds, or has rights or interests in, various projects and tenements prospective for battery metals,
copper, iron ore, gold and base metals located in Australia.
Pippingarra Lithium Project and the Marble Bar Lithium Project
FEL acquired 100% beneficial interest in six tenements from Mercury Resources Group Pty Ltd (an unrelated
private exploration and mining group) (Mercury) in May 2019. The tenements acquired represent the
Pippingarra Lithium Project and the Marble Bar Lithium Project (together the Projects) (refer Figure 1). The
Company undertook early exploration activities including desk top reviews, field reconnaissance and exploration
planning during the year.
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Annual Report 2020
Figure 1: Pippingarra Lithium Project, Marble Bar Lithium Project and Macarthur Minerals Lithium and Gold
Earn-In Project Tenements
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Macarthur Minerals Lithium and Gold Tenements Project – FEL Right to Earn-In up to 75%
FEL had secured the right to earn up to 75% interest in eighteen tenements pursuant to an option agreement
with Macarthur Lithium Pty Ltd (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 2).
During the period, the Company focused its exploration efforts on the Hillside tenement group. An early
reconnaissance visit resulted in the collection of 36 rock chip samples with 8 returning significant base and
precious metal grades all from a mapped 14km long line identified by several outcropping mineralized gossanous
exposures, refer figure 3.
The Company then planned, prepared and executed a preliminary phase of drilling intented to identify the
extension and morphology of the mineralized zone beneath the surface. Drillholes were designed to intercept the
anticipated below ground extension of the surface gossan with at least two intersections across strike and
nominally 1km spacing along strike. A limited number of additional holes were included to test known gold
bearing quartz reefs.
Drill hole locations and depths were adjusted in the field during the drilling program dependant on logged results
from each drill hole. Sulphides were intercepted in several holes with some suggesting the presence of massive
sulphides. No visible valuable oxide minerals were logged suspected to be due to intense leaching in the upper
30 – 50 metre profile.
A total of 1,798m were drilled from 36 holes and the program was completed on 20 November 2019. All
samples were collected from the field approximately a week later and were freighted to Perth for arrival in the
ALS lab in the first week of December. Refer to ASX announcement on 10 February 2020 for results of this
drilling program.
All of the time in the field was dedicated to the drilling program which left no time for further exploration on the
manganese prospect to the east. Additional manganese targets have been identified from aerial reviews of the
area and will be followed up in future field visits.
Remaining tenements in the Macarthur package have been reviewed and either recommended for relinquishment
or retention to allow a more cost effective and focused approach on areas considered to have higher exploration
value.
The parties had agreed that FEL will focus on the Hillside, Panorama and Strelley tenement packages leaving the
remainder to be retained by Macarthur, refer figure 2 and Schedule 1.
As detailed in subsequent events, the Company announced on 17 September 2020 that it had elected to
withdraw from the joint venture with Macarthur, and accordingly did not earn-in on Stage 1.
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Figure 2: Macarthur Minerals Lithium and Gold Tenements Retained by FE Limited by agreement.
Schedule 1:
Tenement
Status
Jurisdiction
Project
Holder
Holder %
Current Area
Area Unit
Expiry Date
E45/4685
E45/4708
E45/4709
E45/4732
E45/4735
E45/4764
E45/4779
E45/4824
LIVE
LIVE
LIVE
LIVE
LIVE
LIVE
LIVE
LIVE
WA
WA
WA
WA
WA
WA
WA
WA
HILLSIDE
HILLSIDE
HILLSIDE
PANORAMA
STRELLEY
GORGE
PANORAMA
PANORAMA
HILLSIDE
MACL
MACL
MACL
MACL
MACL
MACL
MACL
MACL
100
100
100
100
100
100
100
100
11
27
22
43
5
4
33
65
SB
SB
SB
SB
SB
SB
SB
SB
11/01/2022
20/11/2022
20/11/2022
20/11/2022
20/11/2022
9/08/2022
15/01/2023
4/12/2022
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Figure 3: Hillside rock chip results
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Picture 1 – Drilling operations at Hillside were conducted during the period.
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 approximately 600 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 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 & Bib Billy), P52/1494-1496
During the period, the Company entered into a sale and purchase agreement (Agreement) with Westgold
Resources Limited (ASX: WGX) subsidiary Aragon Resources Pty Ltd (Aragon) to sell its 20% interest in
tenements E52/1671 and E52/1659 located in the Bryah Basin. FEL no longer hold any interest in E52/1671 and
E52/1659.
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 continued regional Air Core (AC) drilling, with a total of 628 holes for 57,246 metres, (MWAC2352 –
MWAC2872 & MWAC2901 – MWAC3106) completed during the period. Highly significant gold mineralisation,
including the maximum result of 5m @ 4.76g/t Au from 70m (MWAC2682), was intersected within 100m x
1,600m spaced air core drilling in the western extremity of the project within tenement E52/1613. Single metre
sampling completed on significant air core drilling returned a maximum result of 7m @ 6.09g/t Au from 48m
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including 3m @ 10.6g/t Au from 49m. Infill air core drilling is planned to follow up this significant drilling.
Refer to ASX:AUR announcements 17 July 2020 for full details and drilling results.
SFR also completed five exploration diamond drill holes and six Reverse Circulation (RC) drill holes for a total
drill advance of 4,134. Drilling was designed to test the stratigraphy in proximity to geophysical and geochemical
anomalies to the west and southwest of the Frenchy’s Prospect (E51/1033) and to test more regional
electromagnetic (EM) targets on E52/1672. The drilling helped to further improve the geological interpretation of
the area and track the potential host sedimentary horizon along strike. No significant assays were received.
Refer to ASX:AUR announcement 24 October 2019 and 28 January 2020 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 Monty Prospect.
ALY has entered into a formal joint venture with SFR (refer to ASX:ALY 23 September 2019 for relevant
information and diagrams). SFR has earned a 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 continued aircore drilling at the Neptune Prospect on E52/1722 and on the southern portion of E52/1730
during the year. The drilling targeted the Karalundi sediments that host the DeGrussa copper-gold deposit. ALY
has announced that “Sandfire’s aircore drilling program has been very productive and appears to be confirming
the potential for significant copper and gold mineralisation at the Neptune prospect”. Anomalous results have
been returned from drill holes PHAC1212, 1216, and 1228 (E52/1722) and PHAC 1472 (E52/1730). Significant
results include 5m at 2.0g/t Au from 65m in PHAC1212, 20m at 0.11% Cu from 85m in PHAC1216 and 5m at
0.6g/t Au from 55m in PHAC1472. Ground moving loop electromagnetic (MLEM) surveys to further improve
targeting of the host volcanogenic massive sulphide (VMS) horizon have also been completed and interpretation
is ongoing. Refer to ASX:ALY announcements 23 September 2019 and 30 January 2020 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 24 February 2015), 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.
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Figure 4: FEL exploration tenement portfolio in the Bryah Basin showing AUR, ALY, SFR and Billabong JV areas
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.
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 21 August 2020, FEL entered into a binding conditional Heads of Agreement to acquire a 50%
interest in the Yarram Iron Ore Project located in Northern Territory (Yarram). Consideration includes A$1.5 m
in cash and shares, with further contingent consideration of A$0.5m in cash and A$1.0m in cash and/or shares
(at FEL’s election) payable on achieving a JORC indicated resource milestone. FEL is to cover certain historical
and future costs (refer ASX Announcement dated 21 August 2020 for a summary of the key terms of the
acquisition). Completion remains subject to conditions precedent, which are envisaged to be satisfied prior to
the long stop date of 90 days from signing the Heads of Agreement (being 16 November 2020).
On 20 August 2020, the Board resolved, subject to receipt of shareholder approval, to issue a total of
25,000,000 unlisted options with an exercise price of $0.03 expiring 31 August 2022 (Options). Recipients of
13
Directors’ Report
Annual Report 2020
the Options includes Non-Executive Director Tony Sage or his nominee (7,500,000 Options), Executive Director
Mark Hancock or his nominee (7,500,000 Options), Non-Executive Director Nicholas Sage or his nominee
(2,500,000 Options), and various unrelated third party consultants to the Company (7,500,000 Options).
As announced 17 September 2020, FEL announced it had entered a binding agreement to acquire a 51% interest
in the Mining Rights Agreement held by the Gold Valley Iron Ore Pty Ltd (GV) over the Wiluna West JWD deposit
(Wiluna West JWD Mining Rights) wholly owned by GWR Group Limited (GWR) (JWD Mining Rights
Acquisition). Consideration of A$500,000 in cash and 12.5 million shares is payable upon settlement with a
further commitment to fund a A$125,000 instalment due to GWR Group on 30 September 2020 and to provide a
working capital facility to the JV of A$3million following decision to mine. A further $250,000 is payable in cash
or shares (at FEL’s election) upon a decision to mine. Additional payments to satisfy the Mining Rights
Agreement will be met by the JV. FEL will operate the Joint Venture with its 51% interest and look to commence
operations as soon as practically possible to meet the obligations under the Mining Rights Agreement that a
minimum of 300,000 tonnes is mined and trucked with 21 months from the PMP approval date. Settlement of
this acquisition occurred on 29 September 2020.
On 17 September 2020 the Company announced that it had elected to withdraw from the joint venture with
Macarthur. The board decided to prioritise the remaining earn-in payments and expenditure required on the
Macarthur tenure for its brownfields projects (such as Yarram and Wiluna West JWD Mining Rights) which the
Company considers presents a higher earnings potential for it over a shorter time frame and with a lower risk
profile.
To ensure the company is well resourced to progress the Yarram and Wiluna West JWD Mining Rights projects
Non-Executive Chairman Mr Tony Sage has agreed to assume the role of Executive Chairman and Executive
Director Mr Mark Hancock has agreed to increase his time commitment to the company, effective from 17
September 2020. Mr Sage and Mr Hancock’s monthly remuneration has increased to $15,000 and $10,000
respectively to reflect this additional time commitment.
On 22 September 2020, the Company announced that FEL and Trident had reached agreement to advance
settlement of the second tranche sale proceeds in respect of the Royalty Asset Sale. In return for Trident
accelerating the payment, FEL agreed to discount the amount owing to $2.65m. The second tranche payment
was received by FEL on 24 September 2020.
The following securities were issued subsequent to the reporting date up until the date of release of this report:
▪
▪
500,000 shares were issued on 17 September 2020 following the exercise of 500,000 unlisted options at
$0.02 expiring 31 May 2021; and
12,500,000 shares were issued to GV on 24 September 2020 pursuant to the JWD Mining Rights
Acquisition.
On 28 September 2020, the Company announced the appointment of experienced iron ore executive Mr Jeremy
Sinclair as Projects Director.
There have been no other events subsequent to 30 June 2020 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.
14
Directors’ Report
Annual Report 2020
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, Stantons International, 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 Stantons International 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
There were no formal board meetings held during the year. All matters were resolved via written circular
resolutions.
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
Director (transitioned from role as Non-Executive
Chairman to Executive Chairman 17 September 2020)
M Hancock (Appointed 1 September 2019)
Director (Executive)
N Sage
Director (Non-Executive)
K Keogh (Resigned 1 September 2019)
Director (Non-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.
15
Directors’ Report
Annual Report 2020
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 2019 AGM
The 2019 remuneration report received positive shareholder support at the 2019 AGM whereby of the proxies
received 99.88% 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 2016
30 June 2017
30 June 2018
30 June 2019
30 June 2020
(655)
(296)
(1,082)
(1,668)
5,908
Profit / (Loss) per
share
(Cents)
(0.29)
(0.11)
(0.32)
(0.44)
1.22
Share Price
(Cents)
3.60
2.40
2.40
1.70
1.30
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.
The consulting contract for Mr Antony Sage’s services are provided through Okewood Pty Ltd (Okewood),
pursuant to which Okewood is entitled to receive $120,000 per annum.
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 was entitled to receive $36,000 per annum.
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
On 1 September 2019, the Company entered into a consulting agreement with Haven Resources Pty Ltd (Haven
Resources), a company controlled by Mr Mark Hancock, for the provision of executive director services. Under
the agreement, Mr Mark Hancock is entitled to receive $48,000 per annum.
16
Directors’ Report
Annual Report 2020
Compensation of Key Management Personnel
Consolidated
Short-
Term
Post-
Employment
Year ended 30 June
2020
Salary &
Fees
$
Superannuation
$
Share-
based
Payment
Share
Options
(v)
$
Total
$
%
Performance
Based
%
Comprising
Options
Directors
A Sage (i)
M Hancock (ii)
N Sage (iii)
K Keogh (iv)
Total
120,000
40,000
36,000
6,000
202,000
-
-
-
-
-
22,622
12,988
5,655
11,311
52,576
142,622
52,988
41,655
17,311
254,576
-
-
-
-
-
16%
25%
14%
65%
21%
For the year ended 30 June 2020:
(i) $120,000 was paid or payable to Okewood Pty Ltd a company that Mr Antony Sage is a director of.
(ii) $40,000 was paid or payable to Haven Resources Pty Ltd a company that Mr Mark Hancock is a director of.
(iii) $36,000 was paid or payable to Pembury Nominees Pty Ltd a company that Mr Nicholas Sage is a director
of.
(iv) $6,000 was paid or payable to EK Holdings Group Pty Ltd a company that Mr Keogh is a director of.
(v) This amount refers to the share based payment expense recorded in the statement of comprehensive
income in the period in respect of options issued. 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.
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 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.
Shareholdings of Key Management Personnel
30 June 2020
Directors
A Sage (i)
M Hancock
N Sage
K Keogh (i)(ii)
Balance at 1
July 2019
Granted as
remuneration
Net change
other
Balance at
30 June 2020
9,173,010
-
-
766,300
9,939,310
-
-
-
-
-
-
-
-
(766,300)
(766,300)
9,173,010
-
-
-
9,173,010
(i) Indirectly held.
(ii) At the date of his resignation as a Director, Mr K Keogh held 766,300 shares.
17
Directors’ Report
Annual Report 2020
30 June 2019
Directors
A Sage (i)(ii)
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.
Option and right holdings of Key Management Personnel
30 June
2020
Directors
A Sage
M Hancock
N Sage
K Keogh (ii)
Balance at
1 July
2019
Acquired
/granted
during
year (i)
Lapsed
during
Year
Net
change
other
Balance at
30 June
2020
Exercisable
Not
Exercisable
16,500,000
-
4,000,000
9,500,000
30,000,000
-
2,500,000
-
-
2,500,000
(6,500,000)
-
(1,500,000)
-
(8,000,000)
-
-
-
(9,500,000)
(9,500,000)
10,000,000
2,500,000
2,500,000
-
15,000,000
10,000,000
2,500,000
2,500,000
-
15,000,000
-
-
-
-
-
(i) Refers to 2,500,000 unlisted options with no vesting conditions granted to a director at an exercise price
of $0.02 each and an expiry date of 31 May 2021, which were issued on 6 December 2019 following
receipt of shareholder approval at Company’s AGM (the Director B Options as defined below). These
options were granted as remuneration for services performed to motivate and reward the performance
of the holder in his role as a Director in a manner that aligns the holders’ interests with the Company
and minimises cash spend.
(ii) At the date of his resignation as a Director, Mr K Keogh held 9,500,000 options (including 4,500,000
unlisted options which expired on 31 May 2020 subsequent to his resignation).
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
Net change
other
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 Director A 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.
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 (Director A Options). Shareholder approval for the issue of the Director A Options was
received at the Company’s general meeting held 8 August 2019 and the securities were issued on 19 August
2019. The options vested immediately. The grant date fair value presented in the 30 June 2019 financial
statements was provisional, estimated by reference to the period end share price. This provisional amount has
been revised and adjusted for in the current year.
18
Directors’ Report
Annual Report 2020
Details of the Director A Options awarded to directors during the year ended 30 June 2019 are summarised as
follows:
Number of
Options
Exercise price
per option
Expiry 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
1 Reflected in 30 June 2019 annual report
2 Reflected in this 30 June 2020 annual report
Estimated
fair value of
options at
grant date1
$0.0081
$0.0081
$0.0081
Revised fair
value of
options at
grant date2
$0.0058
$0.0058
$0.0058
The Board agreed to issue a total of 2,500,000 unlisted options with no vesting conditions to Mr Hancock upon
his appointment as a director, at an exercise price of $0.02 each and an expiry date of 31 May 2021, subject to
receipt of shareholder approval (Director B Options). Shareholder approval for the issue of the Director B
Options was received at the Company’s AGM and the securities were issued on 6 December 2019. The options
vested immediately.
Details of the Director B Options awarded are summarised as follows:
Number of
Options
Exercise price
per option
Expiry date
M Hancock
2,500,000
$0.02
31 May 2021
Fair value of
options at
grant date
$0.0052
Transactions with directors, director related entities and other related parties
During the year ended 30 June 2020, an aggregate amount of $27,957 (30 June 2019: $139,439) was paid or
payable to Cape Lambert Resources Ltd (Cape Lambert) for reimbursement of rent and other corporate costs.
At 30 June 2020, $44,664 was payable to Cape Lambert (30 June 2019: $44,664).
During the year ended 30 June 2020, an aggregate amount of $16,986 (30 June 2019: $34,488) was paid or
payable to European Lithium Ltd (European Lithium) for reimbursement of travel and other corporate costs.
At 30 June 2020, nil was payable to European Lithium (30 June 2019: $5,495).
During the year ended 30 June 2020, an aggregate amount of $59,148 (30 June 2019: nil) was paid or payable
to Okewood Pty Ltd (Okewood) for rent and corporate box sponsorship. At 30 June 2020, $9,148 was payable
to Okewood (30 June 2019: nil). Mr Antony Sage is a director of Okewood.
End of Remuneration Report
19
Directors’ Report
Annual Report 2020
AUDITOR’S INDEPENDENCE DECLARATION
Section 307C of the Corporations Act 2001 (Cth) requires the Company’s auditor, Stantons International, 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 21 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, Stantons International, during the year.
This report is signed in accordance with a resolution of the Board of Directors.
Mr Antony Sage
Executive Chairman
30 September 2020
20
PO Box 1908
West Perth WA 6872
Australia
Level 2, 1 Walker Avenue
West Perth WA 6005
Australia
Tel: +61 8 9481 3188
Fax: +61 8 9321 1204
ABN: 84 144 581 519
www.stantons.com.au
Stantons International Audit and Consulting Pty Ltd
trading as
Chartered Accountants and Consultants
30 September 2020
Board of Directors
Fe Limited
32 Harrogate Street
West Leederville, WA 6007
Dear Directors
RE:
FE LIMITED
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following
declaration of independence to the directors of Fe Limited.
As Audit Director for the audit of the financial statements of Fe Limited for the year ended 30 June 2020,
I declare that to the best of my knowledge and belief, there have been no contraventions of:
(i)
(ii)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
any applicable code of professional conduct in relation to the audit.
Yours sincerely
STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LTD
Martin Michalik
Director
Liability limited by a scheme approved
under Professional Standards Legislation
21
Corporate Governance Statement
Annual Report 2020
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 2020 (which reports against these
ASX Principles) may be accessed from the Company’s website at www.felimited.com.au.
22
Consolidated Statement of Comprehensive income
Annual Report 2020
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2020
Notes
Consolidated
Year ended
30 June 2020
Year ended
30 June 2019
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
Profit/(loss) before income tax
Income tax expense
Profit/(loss) after income tax
3(a)
3(b)
3(c)
16(a)
9, 10
3(d)
4
Other comprehensive income
Items that may be reclassified subsequently to
profit or loss:
-
Other comprehensive income/(loss) for the
year
Total comprehensive profit/(loss) for the
year
Earnings/(loss) per share attributable to
ordinary equity holders of the parent
- basic earnings/(loss) for the year (cents per
share)
- diluted earnings/(loss) for the year (cents per
5
5
share)
The accompanying notes form part of these financial statements.
$
$
1,662
8,526,379
8,528,041
2,979
452,846
455,825
(202,000)
(192,000)
(976,888)
(22,818)
(67,038)
(122,622)
(96,000)
(91,958)
(19,610)
(725,670)
(216,362)
5,987,075
(78,896)
5,908,179
(490,792)
(7,863)
(136,852)
(86,862)
(96,167)
(88,487)
(39,721)
(735,000)
(250,239)
(1,668,158)
-
(1,668,158)
-
-
-
-
5,908,179
(1,668,158)
1.22
1.22
(0.44)
(0.44)
23
Consolidated Statement of Financial Position
Annual Report 2020
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2020
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Financial asset
Held for sale assets
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
Income tax payable
Total Current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Accumulated losses
Reserves
TOTAL EQUITY
Notes
Consolidated
30 June
2020
30 June
2019
$
$
6
7
8
9
10
11
12
4
13
14
15
5,144,592
2,650,000
42,140
-
38,044
7,874,776
250,000
2,635
252,635
8,127,411
760,801
256,530
-
-
9,775
1,027,106
975,670
3,946
979,616
2,006,722
278,430
78,896
357,326
357,326
682,354
-
682,354
682,354
7,770,085
1,324,368
41,236,293
(35,573,356)
2,107,148
7,770,085
40,770,054
(41,481,535)
2,035,849
1,324,368
The accompanying notes form part of these financial statements.
24
Consolidated Statement of Changes in Equity
Annual Report 2020
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2020
Consolidated
$
$
$
$
Contributed
equity
Accumulated
losses
Share based
payments
reserve
Total
Balance at 1 July 2019
Profit/(loss) for the year ended
30 June 2020
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 2020
40,770,054
(41,481,535)
2,035,849
1,324,368
-
-
-
5,908,179
-
5,908,179
-
-
-
5,908,179
-
5,908,179
466,239
-
41,236,293
-
-
(35,573,356)
4,261
67,038
2,107,148
470,500
67,038
7,770,085
Consolidated
$
$
$
$
Contributed
equity
Accumulated
losses
Share based
payments
reserve
Total
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
The accompanying notes form part of these financial statements.
25
Consolidated Statement of Cash Flows
Annual Report 2020
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2020
Notes
Consolidated
Year ended 30
June 2020
$
Year ended
30 June 2019
$
Cash flows from operating activities
Receipt of royalty
Interest received
Payments to suppliers and employees
Payments for exploration and evaluation costs
Net cash flows from/(used in) operating activities
6(a)
Cash flows from investing activities
Purchase of plant and equipment
Proceeds on sale of investment
Purchase of investment
Payments for exploration assets
Proceeds from sale of royalty asset
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)
Net cash flows from financing activities
8
10
3(b)(i)
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
6
2,221,965
1,662
(683,008)
(1,001,969)
538,650
215,538
2,979
(752,010)
(574,616)
(1,108,109)
-
450,525
(57,549)
(50,000)
3,460,690
-
-
3,803,666
41,475
41,475
4,383,791
760,801
5,144,592
(3,842)
-
-
(150,000)
-
-
-
(153,842)
1,128,310
1,128,310
(133,641)
894,442
760,801
The accompanying notes form part of these financial statements.
26
Notes to the Consolidated Financial Statements
Annual Report 2020
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 2020 was authorised for
issue in accordance with a resolution of the directors on 30 September 2020.
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 $5,144,592 (30 June 2019: 760,801)
and a net working capital surplus of $7,517,449 (30 June 2019: $344,752 surplus).
Additional funding may be necessary for the Group to continue its planned exploration activities
associated with its projects in the next 12 months, including expenditure and commitments
associated with the Yaram Project (acquisition announced 21 August 2020) and JWD Mining Rights
(acquisition announced 17 September 2020).
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 the second instalment payment from the Royalty
Asset Sale of $2,650,000 (received in September 2020).
(d)
New standards, interpretations and amendments adopted by the Group
New accounting standards adopted in the current period
In the year ended 30 June 2020, the Directors have reviewed all of the new and revised Standards
and Interpretations issued by the AASB that are relevant to the Group and effective for the year end
reporting period beginning on or after 1 July 2019.
27
Notes to the Consolidated Financial Statements
Annual Report 2020
As a result of this review, the Directors have determined that there is no material impact of the new
and revised Standards and Interpretations on the Group and therefore no material change is
necessary to Group accounting policies, other than the following:
Interpretation 23 Uncertainty over Income Tax Treatments
The Group has adopted Interpretation 23 with the date of initial application being 1 July 2019.
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 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
At 1 July 2019 it was determined that the adoption of Interpretation 23 had no impact on the Group.
AASB 2018-1 Australian Amendments to Australian Accounting Standards – Annual
Improvements 2015-2017 Cycle
The Group has adopted AASB 2018-1 with the date of initial application being 1 January 2019.
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.
At 1 July 2019 it was determined that the adoption of AASB 2018-1 had no impact on the Group.
AASB 16 - Leases
The Group has adopted AASB 16 with the date of initial application being 1 July 2019.
AASB 16 eliminates the operating and finance lease classifications for lessees currently accounted for
under AASB 117 Leases. It instead requires an entity to bring most leases into its statement of
financial position in a similar way to how existing finance leases are treated under AASB 117. An
entity will be required to recognise a lease liability and a right of use asset in its statement of
financial position for most leases. There are some optional exemptions for leases with a period of 12
months or less and for low value leases. Lessor accounting remains largely unchanged from AASB
117.
The Group has elected to apply the modified retrospective approach available under the AASB 16
when transitioning to the new standard, whereby the Company has recorded a right of use asset at
the date of initial application of leases previously classified as an operating lease applying AASB 117,
and measured that right of use asset at an amount equal to the lease liability, adjusted by the
amount of any prepaid or accrued lease payments relating to that lease recognised in the statement
of financial position immediately before the date of initial application.
At 1 July 2019 it was determined that the adoption of AASB 16 had no impact on the Group.
Refer note 2(w) for the lease accounting policy applicable from 1 July 2019.
28
Notes to the Consolidated Financial Statements
Annual Report 2020
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 Group for the annual reporting period
ended 30 June 2020. The potential effect of these Standards is yet to be fully determined.
Reference Title
Summary
Not yet
issued by
the AASB
Conceptual
Framework for
Financial
Reporting and
relevant
amending
standards
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
Application
date of
standard
Application
date for the
Group
1 January
2020
1 July 2020
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.
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.
AASB
2018-7
Definition of
Material
(Amendments
to AASB 101
and AASB
108)
1 January
2020
1 July 2020
(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 2020.
29
Notes to the Consolidated Financial Statements
Annual Report 2020
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
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
30
Notes to the Consolidated Financial Statements
Annual Report 2020
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.
(k)
Financial Assets
Investments are recognised and derecognised on trade date where purchase or sale of an investment
is under a contract whose terms require delivery of the investment within the timeframe established
by the market concerned, and are initially measured at fair value, net of transaction costs.
The Group has the following financial assets:
Financial Assets at Fair Value through Profit or Loss
Shares held for trading have been classified as financial assets at fair value through profit or loss.
Financial assets held for trading purposes are stated at fair value, with any resultant gain or loss
recognised in profit or loss. The fair value of investments that are actively traded in organised
financial markets is determined by reference to quoted market bid prices at the close of business on
the reporting date. Assets in this category are classified as current assets if they are expected to be
realised within 12 months otherwise they are classified as non-current assets.
(l)
Assets classified as held for sale
Non-current assets are classified as held for sale and measure at the lower of their carrying amount
and fair value less costs to sell if their carrying amount will be recovered principally through a sale
transaction instead of use. They are not depreciated or amortised. For an asset to be classified as
held for sale, it must be available for immediate sale in its present condition and its sale must be
highly probable.
An impairment loss is recognised for any initial or subsequent write-down of the asset to fair value
less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of
an asset, but not in excess of any cumulative impairment loss previously recognised. A gain or loss
31
Notes to the Consolidated Financial Statements
Annual Report 2020
not previously recognised by the date of the sale of the non-current asset is recognised at the date of
derecognition.
(m)
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.
(n)
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.
(o)
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.
(p)
Interest revenue and other income
Interest
Income is recognised as the interest accrues (using the effective interest method, which is the rate
exactly discounts estimated future cash flow receipts through the expected life of the financial
instrument) to the net carrying amount of the financial asset.
Royalty income
Revenue from royalties is recognised in the period of production of the underlying iron ore being
produced. Royalty agreements that are based on production, sales, and other measures are
recognised by reference to the underlying arrangements
(q)
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
32
Notes to the Consolidated Financial Statements
Annual Report 2020
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
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.
(r)
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.
33
Notes to the Consolidated Financial Statements
Annual Report 2020
(s)
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
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.
(t)
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.
(u)
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.
34
Notes to the Consolidated Financial Statements
Annual Report 2020
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
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.
(v)
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.
(w)
Leases
Right of use asset
The Group recognises right-of-use assets at the commencement date of the lease (i.e., the date the
underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated
depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost
of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred,
and lease payments made at or before the commencement date less any lease incentives received.
Unless the Group is reasonably certain to obtain ownership of the leased asset at the end of the lease
term, the recognised right-of-use assets are depreciated on a straight-line basis over the shorter of
its estimated useful life and the lease term. Right-of-use assets are subject to impairment.
Lease Liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the
present value of lease payments to be made over the lease term. The lease payments include fixed
payments (including in-substance fixed payments) less any lease incentives receivable, variable lease
payments that depend on an index or a rate, and amounts expected to be paid under residual value
guarantees. The lease payments also include the exercise price of a purchase option reasonably
certain to be exercised by the Group and payments of penalties for terminating a lease, if the lease
term reflects the Group exercising the option to terminate. The variable lease payments that do not
depend on an index or a rate are recognised as expense in the period on which the event or condition
that triggers the payment occurs.
In calculating the present value of lease payments, the Group uses the incremental borrowing rate at
the lease commencement date if the interest rate implicit in the lease is not readily determinable.
After the commencement date, the amount of lease liabilities is increased to reflect the accretion of
interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities
is remeasured if there is a modification, a change in the lease term, a change in the in-substance
fixed lease payments or a change in the assessment to purchase the underlying asset.
The Group has elected not to recognise right of use assets and lease liabilities for short term leases
and low value assets.
(x)
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:
35
Notes to the Consolidated Financial Statements
Annual Report 2020
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 16.
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.
Classification of royalty interests as intangible assets
The Group held 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.
36
Notes to the Consolidated Financial Statements
Annual Report 2020
3 REVENUE, INCOME AND EXPENSES
(a) Revenue
Interest
(b) Other income
Gain on Royalty Asset Sale (i)
Royalty income (ii)
Gain on sale of tenement interests (iii)
Gain on sale of financial asset (refer note 8)
Fair value gain/(loss) on financial asset through profit
and loss (refer note 8)
Recovery of receivable
2020
$
2019
$
1,662
2,979
6,650,000
1,441,157
402,000
48,525
(15,409)
106
8,526,379
-
452,846
-
-
-
-
452,846
(i) On 3 June 2020, FEL completed its sale of the Evanston Iron Ore Royalty to TRR Services Australia
Pty Ltd, a wholly owned subsidiary of Trident Resources PLC (LSX: TRR) (Trident) (Royalty
Asset Sale). The total sale price of the Royalty Asset Sale was $6.65 million (to be received in
two instalments), as set out below.
Upon completion, FEL received the first instalment of the sale price. This instalment was for $3.46
million, being the $4 million first instalment payable under the contract less the March 2020
quarter royalty previously received by FEL of $0.54 million (received in the June 2020 quarter),
which is attributable to the purchaser given the effective date of the transaction of 1 January
2020.
A second instalment (originally $3 million) was due to FEL on 4 June 2021 (being 12 months after
completion date), with the instalment secured over the royalty. As announced 22 September
2020, FEL and Trident reached agreement to advance settlement of the second tranche sale
proceeds and in return for Trident accelerating the payment, FEL has agreed to discount the
amount owing to $2.65m. The second tranche payment was received by FEL on 24 September
2020.
(ii) Royalty income earned in relation to mining conducted by Mineral Resources Ltd (ASX: MIN) at its
Deception iron ore mine. FEL held a 1.5% Dry Metric Tonne, FOB Royalty in respect to M77/1259
until completion of the Royalty Asset Sale referred to at note 3(i)).
(iii) During December 2019, the Company entered into a sale and purchase agreement (Agreement)
with Westgold Resources Limited (ASX: WGX) subsidiary Aragon Resources Pty Ltd (Aragon) to
sell its 20% interest (held via FEL’s wholly owned subsidiary Jackson Minerals Pty Ltd) in
tenements E52/1671 and E52/1659 located in the Bryah Basin. Pursuant to the terms of the
Agreement FEL received 200,000 fully paid ordinary shares in WGX upon completion of the
transaction. The fair value of the WGX shares acquired upon date of completion of the transaction
of $402,000 has been fully recognised in the statement of comprehensive income, as the
tenements were previously carried at nil value.
(c) Employment benefits expense
Directors fees
(d) Other expenses
Occupancy rental expenses
Insurance
Corporate advisory and marketing expenses
Depreciation expense
Other
37
2020
$
2019
$
(202,000)
(192,000)
$
$
(36,700)
(31,700)
(44,317)
(1,311)
(102,334)
(216,362)
(36,736)
(21,929)
(163,064)
(70)
(28,440)
(250,239)
Notes to the Consolidated Financial Statements
Annual Report 2020
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
(b) Reconciliation between aggregate tax expense recognised in
the statement of comprehensive income and tax expense
calculated per the statutory tax rate
Accounting profit/(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
Utilised tax losses
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
Loss on financial assets
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.
2020
$
2019
$
78,896
-
78,896
-
-
-
2020
$
2019
$
5,987,075
(1,668,158)
1,646,446
199,559
33,176
(1,789)
(1,798,496)
78,896
(458,743)
202,125
147,983
108,635
-
-
2020
$
2019
$
-
-
-
-
-
-
-
-
3,988
4,238
1,004,358
359,736
1,372,318
-
1,372,318
5,775
-
2,771,201
359,736
3,136,712
-
3,136,712
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 $3,652,209
(2019: $10,134,929) 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.
38
Notes to the Consolidated Financial Statements
Annual Report 2020
5 EARNINGS/(LOSS) PER SHARE
Basic earnings/(loss) per share
Continuing operations
Diluted earnings/(loss) per share
Continuing operations
2020
Cents
2019
Cents
1.22
1.22
1.22
1.22
(0.44)
(0.44)
(0.44)
(0.44)
Basic earnings/(loss) per share amounts are calculated by dividing net profit/(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.
In the year ended 30 June 2020 the diluted earnings per share is equal to the basic earnings per share as
the options on issue as at 30 June 2020 are anti-dilutive.
The following reflects the income and share data used in the basic and diluted earnings/(loss) per share
computations:
Profit/(loss) used in calculation of basic and diluted earnings/(loss)
per share
Continuing operations
2020
$
2019
$
5,908,179
5,908,179
(1,668,158)
(1,668,158)
2020
No.
2019
No.
Weighted average number of ordinary shares
earnings/(loss) per share
Effect of dilution:
Unlisted options
Adjusted weighted average number of ordinary shares for diluted
earnings/(loss) per share
for basic
483,719,885
383,041,786
-
-
483,719,885
383,041,786
The unlisted options outstanding at 30 June 2020 and 30 June 2019 were found to have an anti-dilutive
effect on the calculation. Therefore, at 30 June 2020 and 30 June 2019, the basic earnings/(loss) per share
is equal to the diluted earnings/(loss) per share.
6 CASH AND CASH EQUIVALENTS
Cash and cash equivalents
Cash at bank and on hand
2020
$
2019
$
5,144,592
760,801
Cash at bank and on hand earns interest at the floating rates based on daily bank deposit rates.
39
Notes to the Consolidated Financial Statements
Annual Report 2020
(a) Reconciliation of net profit/(loss) after tax to net cash flows from operations
Net profit/(loss) for the year
5,908,179
(1,668,158)
2020
$
2019
$
Adjustments for:
Depreciation
Gain on Royalty Asset Sale
Share-based payment expense
Gain on sale of exploration assets
Corporate advisor fees in the current year settled via issue of shares
Impairment of exploration assets
Gain on sale of financial asset
Fair value gain/loss on financial asset through profit and loss
Changes in assets and liabilities
Decrease/(increase) in trade and other receivables
Decrease/(increase) in prepayments
(Decrease)/increase in trade and other payables
(Decrease)/increase in tax payable
Net cash flow from/(used in) operating activities
(b) Non-cash investing and financing activities
1,311
(6,650,000)
67,038
(402,000)
-
725,670
(48,525)
15,409
70
-
136,852
-
26,205
735,000
-
-
795,840
(32,769)
79,601
78,896
538,650
(243,044)
(1,134)
(93,900)
-
(1,108,109)
During the year ended 30 June 2020, FEL issued 26,666,667 ordinary shares pursuant to the Revised
Option Agreement in respect of the transaction with Macarthur, representing a non-cash payment of
$400,000. Refer note 10(b) for further details.
During the year ended 30 June 2020, the Company sold its 20% interest (held via FEL’s wholly owned
subsidiary Jackson Minerals Pty Ltd) in tenements E52/1671 and E52/1659. The tenement interests,
which were previously carried at nil value, were sold for $402,000 worth of shares in Westgold
Resources Limited (ASX: WGX) resulting in a gain recognised in the statement of comprehensive income
and constituting a non-cash transaction. Refer to note note 3(iii) for further details.
7 TRADE AND OTHER RECEIVABLES
Current
Royalty Asset Sale receivable (a)
Accrued royalty receivable (b)
Other receivables (c)
2020
$
2019
$
2,650,000
-
-
2,650,000
-
241,498
15,032
256,530
(a) As detailed at note 3(i), this amount refers to the second instalment of $2.65 million. The carrying
value is assumed to approximate the fair value. The maximum exposure to credit risk is the fair
value of receivable. FEL’s recoverability of the instalment is secured by the royalty. FEL received
payment of this receivable on 24 September 2020.
(b) 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.
(c) 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 (being those noted at note 7(b) and note 7(c)),
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.
40
Notes to the Consolidated Financial Statements
Annual Report 2020
8 FINANCIAL ASSET
2020
$
2019
$
Fair value through profit or loss (FVTPL) – equity investment
42,140
Movements
Balance at beginning of year
Equity investment acquired (refer note 3(iii))
Sale of equity investment (a)
Purchase of equity investment
FVTPL
Balance at end of the year
-
402,000
(402,000)
57,549
(15,409)
42,140
-
-
-
-
-
-
-
(a) During the year end ended 30 June 2020, the Company sold its holding of 200,000 WGX shares. Total
proceeds received upon sale of the shares was $450,525, resulting in a $48,525 gain on sale of financial
assets being recorded in the statement of comprehensive income.
9 HELD FOR SALE ASSETS
Exploration assets
Movements:
Balance at beginning of year
Exploration assets reclassified as held for sale (refer note 10(a))
Write off (refer note 10(a))
Transferred back to exploration assets (refer note 10(a))
Balance at end of year
10 EXPLORATION ASSETS
Acquisition Cost – Mercury Transaction (a)
Acquisition Cost – Macarthur Minerals Transaction (b)
Movements in exploration assets
Carrying value at beginning of period
Consideration in shares (refer note 16(b))
Consideration in options (refer note 16(b))
Cash consideration
Cash Option Fee
Option Exercise Fee payable (settled in shares)
Write off
Transferred to assets classified as held for sale (a)
Transferred from assets classified as held for sale (a)
Closing value at end of year
a) 30 June 2019:
2020
$
2019
$
-
-
475,670
(225,670)
(250,000)
-
-
-
-
2020
$
2019
$
250,000
-
250,000
475,670
500,000
975,670
975,670
-
-
-
-
-
(500,000)
(475,670)
250,000
250,000
735,000
225,000
150,670
100,000
100,000
400,000
(735,000)
-
-
975,670
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:
41
Notes to the Consolidated Financial Statements
Annual Report 2020
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 (paid during year ended 30 June
2020);
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).
The Mercury Transaction was substantially completed on 23 May 2019 and the acquisition costs
included 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 16(ii) for further details regarding this share based payment.
30 June 2020:
The exploration asset carrying value of $476,670 was transferred to assets classified as held for
sale at 31 December 2019. During the period in which the exploration asset was held for sale, the
Company negotiated a sale of the assets for $250,000; this sale however did not eventuate. The
Board determined it appropriate to write down the carrying value of the Mercury Project to
$250,000, and accordingly recognised an impairment write off of $225,670 during the year ended
30 June 2020 (refer note 9).
At 30 June 2020, the Board determined that rather than seeking to realise value on the Mercury
Project via divestment, it would continue with exploration activities. Accordingly, the residual
exploration asset carrying value of $250,000 was transferred from held for sale assets (refer note
9) back to exploration assets.
b) 30 June 2019:
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.
42
Notes to the Consolidated Financial Statements
Annual Report 2020
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 had acknowledged the formal
Exercise Date to be 29 August 2019 but this was subsequently extended to September 2020.
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.
Subsequent to year end, FEL announced it had elected to withdraw from the joint venture with
Macarthur, and accordingly did not earn-in on Stage 1. The Company has recognised an impairment
write off for the full carrying value of $500,000 in the year ended 30 June 2020.
11 PLANT AND EQUIPMENT
Gross carrying value at cost
Accumulated depreciation
Movements in plant and equipment
Carrying value at beginning of year
Additions
Depreciation charge for the period
Carrying value at end of year
2020
$
2019
$
4,562
(1,927)
2,635
4,562
(616)
3,946
2020
$
2019
$
3,946
-
(1,311)
2,635
174
3,842
(70)
3,946
43
Notes to the Consolidated Financial Statements
Annual Report 2020
12 TRADE AND OTHER PAYABLES
Trade payables (a)
Payable to Mercury
Payable to Macarthur
Other payables and accruals (b)
Kasombo Acquisition Pre-Settlement Exploration Expenditure (c)
2020
$
2019
$
105,673
-
-
123,627
49,130
278,430
137,782
50,000
400,000
45,442
49,130
682,354
(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) As detailed in the 30 June 2019 Annual report, 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. Payment of this amount was subsequently settled on
30 July 2020.
13 CONTRIBUTED EQUITY
Ordinary shares
Issued and fully paid
2020
$
2019
$
41,236,293
40,770,054
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
Shares issued to director
Placement
Settlement of invoices
Consideration Shares to Mercury
Placement (a)
Settlement of Macarthur earn-in
agreement option fee (b)
Share issue costs
Balance at end of year
2020
No. of shares
2020
$
2019
No. of shares
2019
$
457,034,953
-
-
-
-
5,000,000
40,770,054
-
-
-
-
75,000
370,877,963
2,750,000
20,000,000
2,406,990
12,500,000
48,500,000
39,381,064
38,500
400,000
36,105
225,000
727,500
26,666,667
-
488,701,620
400,000
(8,761)
41,236,293
-
-
457,034,953
-
(38,115)
40,770,054
(a) As announced on 4 June 2019, the Company completed three placements to sophisticated and
professional investors raising a total of $727,500 for the issue of Shares at an issue price of $0.015
per Share (Placement).
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 and proposed to issue 5,000,000 Placement Shares
(Additional Placement Shares) to such investors at an issue price of $0.015 per Share, subject
to shareholder approval. Shareholder approval for the issue of Additional Placement Shares was
received at the Company’s general meeting held 8 August 2019.
Placement investors received one free option for every four Placement Shares with the options
having an exercise price of $0.02 each expiring 31 May 2021 (Placement Options). Accordingly,
a total of 13,375,001 Placement Options were issued during the year.
44
Notes to the Consolidated Financial Statements
Annual Report 2020
(b) On 28 August 2019, FEL and Macarthur executed a Revised Option Agreement. Pursuant to this,
the Option Exercise Fee of $400,000 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) (refer to note 10(b)).
Options over ordinary shares
Unlisted options
Movements in unlisted options on issue
2020
No.
2019
No.
61,746,749
62,500,000
Balance at
1 July
2019
No.
Granted
Expired/
lapsed
No.
No.
Balance at
30 June
2020
No.
Share based payments (refer note 16):
Unlisted options at $0.045 expiring 31/05/2020
20,000,000
Unlisted options at $0.020 expiring 31/05/2021 17,500,0001
Unlisted options at $0.025 expiring 31/05/2021 15,000,0001
-
Unlisted options at $0.020 expiring 31/05/2021
-
Unlisted options at $0.020 expiring 31/05/2021
-
Unlisted options at $0.020 expiring 31/05/2021
52,500,000
-
-
-
2,500,000
2,500,000
601,748
5,601,748
(20,000,000)
-
-
-
-
-
(20,000,000)
-
17,500,000
15,000,000
2,500,000
2,500,000
601,748
38,101,748
Free-attaching options (refer note 17):
Unlisted options at $0.030 expiring 13/03/2021
Unlisted options at $0.030 expiring 12/04/2021
Unlisted options at $0.030 expiring 08/05/2021
Unlisted options at $0.020 expiring 31/05/2021
5,625,000
3,125,000
1,250,000
-
10,000,000
-
-
-
13,375,001
13,375,001
-
-
-
-
-
5,625,000
3,125,000
1,250,000
13,375,001
23,375,001
TOTAL
62,500,000
18,976,749
(20,000,000)
61,476,749
1Being options granted in year ended 30 June 2020 which were issued in 30 June 2020.
14 ACCUMULATED LOSSES
2020
2019
$
$
Accumulated losses
(35,573,356)
(41,481,535)
Movements in accumulated losses
Balance at beginning of year
Net profit/(loss) for the year
Balance at end of year
15 RESERVES
Share based payments reserve
Movements in reserve
Balance at beginning of year
Share-based payments made during the year
(refer note 16)
Balance at end of year
45
(41,481,535)
5,908,179
(35,573,356)
(39,813,377)
(1,668,158)
(41,481,535)
2020
2019
$
$
2,107,148
2,035,849
2,035,849
1,786,827
71,299
2,107,148
249,022
2,035,849
Notes to the Consolidated Financial Statements
Annual Report 2020
Nature and purpose of reserve
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).
16 SHARE-BASED PAYMENTS
Share based payment transactions recognised during the year were as follows:
(a) Share-based payments expensed through profit and loss:
Shares
Options (i)
(b) Share-based payments capitalised in exploration assets:
Shares (refer note 10)
Options (refer note 10) (ii)
(c) Share-based payments expensed through equity:
Options (iii)
Total share-based payments
(i) During the year, the Company issued the following options:
2020
$
2019
$
-
67,038
67,038
-
-
-
38,500
98,352
136,852
225,000
150,670
375,670
4,261
4,261
-
-
71,299
512,522
▪
▪
▪
▪
▪
10,000,000 unlisted options exercisable at $0.02 expiring 31 May 2021 issued to
Director Mr Tony Sage (or nominee) (Director A Options);
5,000,000 unlisted options exercisable at $0.02 expiring 31 May 2021 issued to
Director Mr Kenneth Keogh (or nominee) (Director A Options);
2,500,000 unlisted options exercisable at $0.02 expiring 31 May 2021 issued to
Director Mr Nicholas Sage (or nominee) (Director A Options);
2,500,000 unlisted options exercisable at $0.02 expiring 31 May 2021 issued to
Director Mr Mark Hancock (or nominee) (Director B Options); and
2,500,000 unlisted options exercisable at $0.02 expiring 31 May 2021 issued to a
consultant (Consultant Options).
(ii) During the year, the Company issued the following options to Mercury, being Consideration
Options pursuant to the asset acquisition disclosed in the Company’s Annual Report for the year
ended 30 June 2019:
▪
15,000,000 unlisted options exercisable at $0.025 expiring 31 March 2022
The value in respect of these options was reflected in the financial statements as at 30 June
2019 (reflecting the period in which the options were granted).
(iii) During the year, the Company issued the following options in respect of brokerage services
provided to the Company (expense recognised through equity as share issue costs):
▪
601,748 unlisted options exercisable at $0.02 expiring 31 May 2021 (Advisor
Options).
46
Notes to the Consolidated Financial Statements
Annual Report 2020
(d) Fair value of options issued
The fair value of unlisted options issued during the period has been determined using a Black-Scholes
option pricing model. The following table lists the inputs to the model for Director A Options, Director B
Options, Consultant Options, and Advisor Options:
Director A
Options1
Director B
Options
Consultant
Options
Advisor
Options
Expiry date
Valuation date
Dividend yield (%)
Expected volatility (%)
Risk free interest rate (%)
Exercise price ($)
Discount (%)
Expected life of options (years)
Share price at grant date ($)
Value per option ($)
31 May 2021
8 Aug 2019
Nil
100%
0.73%
$0.020
Nil
1.81
$0.014
$0.0058
31 May 2021
22 Nov 2019
Nil
100%
0.79%
$0.020
Nil
1.52
$0.014
$0.0052
31 May 2021
8 Aug 2019
Nil
100%
0.73%
$0.020
Nil
1.81
$0.014
$0.0058
31 May 2021
19 Aug 2019
Nil
100%
0.73%
$0.020
Nil
1.78
$0.016
$0.0071
1As detailed in the Company’s 2019 Annual Report, a provisional estimate of the fair value of the
Director A Options was determined by reference to the 30 June 2019 share price of the Company.
Based on the provisional estimate, a share-based payment expense of $61,642 was recorded in the
year ended 30 June 2019 (based on a provisional valuation of $0.0081 per option). Shareholder
approval for the issue of the Director A Options was received at the Company’s general meeting
held 8 August 2019 and the Director A Options were issued on 19 August 2019. The table above
reflects the final valuation of the Director A Options.
(e) 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:
2020
No.
2020
WAEP
2019
No.
2019
WAEP
Outstanding at the beginning of the year
Options granted
Options expired
Outstanding at the end of the year
Exercisable at the end of the year
Not exercisable at the end of the year
52,500,000
5,601,748
(20,000,000)
38,101,748
38,101,748
-
$0.031
$0.020
$0.045
$0.022
$0.022
-
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
(f) Weighted average remaining contractual life
The weighted average remaining contractual life for the options outstanding as at 30 June 2020 is 1.31
years (2019: 1.83 years).
(g) Fair value
The fair value of options granted during the year ended 30 June 2020 was $0.0057 (30 June 2019:
$0.0082).
(h) Option expired
During the year ended 30 June 2020, 20,000,000 options expired (2019: nil).
47
Notes to the Consolidated Financial Statements
Annual Report 2020
17 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 13,375,001 unlisted options exercisable at $0.02 expiring 31 May 2021 issued during
the year (2019: 10,000,000), being the Placement Options.
(b) Options exercised during the year
During the year, there was nil received in proceeds from the exercise of unlisted options (2019: nil).
(c) Options expired during the year
There were no unlisted options that expired during the year (2019: nil).
(d) Options on issue
The following unlisted options were on issue at 30 June 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
13,375,001 unlisted options at $0.02 expiring 31 May 2021
18 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.
19 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 $7,770,085 at 30 June 2020
(30 June 2019: $1,324,368). 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.
48
Notes to the Consolidated Financial Statements
Annual Report 2020
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
2020
$
2019
$
5,144,592
5,144,592
760,801
760,801
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
2020
$
51,446
(25,723)
2019
$
7,608
(3,804)
Equity
Higher/(Lower)
2020
$
2019
$
-
-
-
-
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 2019.
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 the instalment
receivable in respect of the Royalty Asset Sale royalty which is secured, 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.
49
Notes to the Consolidated Financial Statements
Annual Report 2020
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 2020
Trade and other payables
30 June 2019
Trade and other payables
Less than 6
months
$
6 months to
1 year
1 year to 5
years
$
$
Total
$
357,326
357,326
682,354
682,354
-
-
-
-
-
-
-
-
357,326
357,326
682,354
682,354
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.
20 COMMITMENTS AND CONTINGENCIES
Commitments
Office Rental Commitments
The Group entered into a sub-lease with Cape Lambert Resources Ltd for office premises for a lease period
which terminated on 31 March 2020. The expenditure commitments with respect to rent payable under this
sub-lease arrangement is as follows:
Within one year
After one year but less than five years
More than five years
Exploration Expenditure Commitments
2020
$
2019
$
-
-
-
-
27,549
-
-
27,549
In order to maintain rights to tenure to tenements, the Group is required to fulfil various minimum
expenditure requirements up until expiry of licenses. The expected expenditure commitments with respect
to the exploration grounds in Western Australia are as follows:
Within one year
After one year but less than five years
More than five years
Contingencies
2020
$
2019
$
35,930
-
-
35,930
-
-
-
-
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
50
Notes to the Consolidated Financial Statements
Annual Report 2020
from completion as part of the consideration for the project (to be issued subject to prior shareholder
approval). In addition, FEL has agreed to provide Mercury with a 1% net smelter royalty in respect of the
Mercury tenements. These obligations are considered contingent liabilities at 30 June 2020.
At 30 June 2020 there were no other contingent liabilities or contingent assets.
Commitments and contingencies arising subsequent to 30 June 2020
As announced 21 August 2020, FEL entered into a binding conditional Heads of Agreement to acquire a 50%
interest in the Yarram Iron Ore Project located in Northern Territory (Yarram). Consideration includes
A$1.5 m in cash and shares, with further contingent consideration of A$0.5m in cash and A$1.0m in cash
and/or shares (at FEL’s election) payable on achieving a JORC indicated resource milestone. FEL is to cover
certain historical and future costs (refer ASX Announcement dated 21 August 2020 for a summary of the
key terms of the acquisition).
As announced 17 September 2020, FEL announced it had entered a binding agreement to acquire a 51%
interest in the Mining Rights Agreement held by the Gold Valley Iron Ore Pty Ltd (GV) over the Wiluna West
JWD deposit (Wiluna West JWD Mining Rights) wholly owned by GWR Group Limited (GWR) (JWD
Mining Rights Acquisition). Consideration of A$500,000 in cash and 12.5 million shares is payable upon
settlement with a further commitment to fund a A$125,000 instalment due to GWR Group on 30 September
2020 and to provide a working capital facility to the JV of A$3 million following decision to mine. A further
$250,000 is payable in cash or shares (at FEL’s election) upon a decision to mine. Additional payments to
satisfy the Mining Rights Agreement will be met by the JV.
21 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
%
2020
2019
Australia
Australia
Australia
Bermuda
100
100
100
100
100
100
100
100
22 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
Profit/(loss) for the period
Total comprehensive profit/(loss) for the period
51
2020
$
2019
$
7,874,775
252,635
8,127,410
278,430
-
278,430
1,027,106
979,616
2,006,722
682,354
-
682,354
7,848,980
1,324,368
41,236,293
(35,494,461)
2,107,148
7,848,980
40,770,054
(41,481,535)
2,035,849
1,324,368
2020
2019
5,987,074
5,987,074
(1,668,158)
(1,668,158)
Notes to the Consolidated Financial Statements
Annual Report 2020
There were no guarantees entered into by the parent entity in relation to the debts of its subsidiaries (30
June 2019: nil).
Commitments, contingent liabilities and contingent assets of the parent entity are the same as those of the
Group as detailed at note 20.
23 AUDITORS’ REMUNERATION
Amounts received or due and receivable by Stantons International 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
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
Total
24 RELATED PARTY DISCLOSURES
2020
2019
$
$
25,905
-
3,286
32,258
29,191
32,258
Note 21 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 2020, an aggregate amount of $27,957 (30 June 2019: $139,439) was paid
or payable to Cape Lambert Resources Ltd (Cape Lambert) for reimbursement of rent and other corporate
costs. At 30 June 2020, $44,664 was payable to Cape Lambert (30 June 2019: $44,664). Mr Mark Hancock
was a director of Cape Lambert during the period of 11 February 2020 to 4 August 2020. Mr Antony Sage is
a director of Cape Lambert.
During the year ended 30 June 2020, an aggregate amount of $16,986 (30 June 2019: $34,488) was paid
or payable to European Lithium Ltd (European Lithium) for reimbursement of travel and other corporate
costs. At 30 June 2020, nil was payable to European Lithium (30 June 2019: $5,495). Mr Antony Sage is a
director of European Lithium.
During the year ended 30 June 2020, an aggregate amount of $59,148 (30 June 2019: nil) was paid or
payable to Okewood Pty Ltd (Okewood) for rent and corporate box sponsorship. At 30 June 2020, $9,148
was payable to Okewood (30 June 2019: nil). Mr Antony Sage is a director of Okewood.
Significant shareholders
As at 30 June 2020, Cape Lambert held a 29.84% interest in the issued capital of FEL (30 June 2019:
31.91%).
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.
52
Notes to the Consolidated Financial Statements
Annual Report 2020
Transactions with key management personnel
Compensation of key management personnel
Short term employee benefits
Share based payments
Interests held by Key Management Personnel
2020
$
2019
$
202,000
52,576
254,576
197,000
101,022
298,022
Movements in share options held by key management personnel to purchase ordinary shares is summarised
as follows:
30 June
2020
Directors
A Sage
M Hancock
N Sage
K Keogh (ii)
Balance at
1 July
2019
Acquired
/granted
during
year (i)
Lapsed during
Year
Balance at
30 June
2020 (or
resignation
date)
Exer-
cisable
Not
Exer-
cisable
Ex.
Price
Exp. Date
6,500,000
10,000,000
-
-
- 2,500,000
-
-
-
-
30,000,000 2,500,000
1,500,000
2,500,000
4,500,000
5,000,000
(6,500,000)
-
-
(1,500,000)
-
(4,500,000)
-
(12,500,000)
-
10,000,000
2,500,000
-
2,500,000
-
5,000,000
20,000,000
-
10,000,000
2,500,000
-
2,500,000
-
5,000,000
20,000,000
- $0.045 31 May 2020
- $0.020 31 May 2021
-
$0.02 31 May 2021
- $0.045 31 May 2020
- $0.020 31 May 2021
- $0.045 31 May 2020
- $0.020 31 May 2021
-
(i) Refers to Director B Options as detailed at note 16.
(ii) At the date of his resignation as a Director, Mr K Keogh held 9,500,000 options (including 4,500,000
unlisted options which expired on 31 May 2020, subsequent to his resignation).
30 June
2019
Directors
A Sage
N Sage
K Keogh
Balance at
1 July
2018
Acquired
/granted
during
year (i)
Lapsed
during
Year
Balance at
30 June
2019
Exer-
cisable
Not Exer-
cisable
Ex. Price Exp. 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
(i) Refers to Director A Options as detailed at note 16.
Shares issued to directors or director related entities
There were nil shares issued to directors during the year ended 30 June 2020 in relation to remuneration
(2019: 2,750,000 shares).
25 EVENTS AFTER THE REPORTING DATE
As announced 21 August 2020, FEL entered into a binding conditional Heads of Agreement to acquire a 50%
interest in the Yarram Iron Ore Project located in Northern Territory (Yarram). Consideration includes
A$1.5 m in cash and shares, with further contingent consideration of A$0.5m in cash and A$1.0m in cash
and/or shares (at FEL’s election) payable on achieving a JORC indicated resource milestone. FEL is to cover
certain historical and future costs (refer ASX Announcement dated 21 August 2020 for a summary of the
key terms of the acquisition). Completion remains subject to conditions precedent, which are envisaged to
be satisfied prior to the long stop date of 90 days from signing the Heads of Agreement (being 16 November
2020).
53
Notes to the Consolidated Financial Statements
Annual Report 2020
On 20 August 2020, the Board resolved, subject to receipt of shareholder approval, to issue a total of
25,000,000 unlisted options with an exercise price of $0.03 expiring 31 August 2022 (Options). Recipients
of the Options includes Non-Executive Director Tony Sage or his nominee (7,500,000 Options), Executive
Director Mark Hancock or his nominee (7,500,000 Options), Non-Executive Director Nicholas Sage or his
nominee (2,500,000 Options), and various unrelated third party consultants to the Company (7,500,000
Options).
As announced 17 September 2020, FEL announced it had entered a binding agreement to acquire a 51%
interest in the Mining Rights Agreement held by the Gold Valley Iron Ore Pty Ltd (GV) over the Wiluna West
JWD deposit (Wiluna West JWD Mining Rights) wholly owned by GWR Group Limited (GWR) (JWD
Mining Rights Acquisition). Consideration of A$500,000 in cash and 12.5 million shares is payable upon
settlement with a further commitment to fund a A$125,000 instalment due to GWR Group on 30 September
2020 and to provide a working capital facility to the JV of A$3million following decision to mine. A further
$250,000 is payable in cash or shares (at FEL’s election) upon a decision to mine. Additional payments to
satisfy the Mining Rights Agreement will be met by the JV. FEL will operate the Joint Venture with its 51%
interest and look to commence operations as soon as practically possible to meet the obligations under the
Mining Rights Agreement that a minimum of 300,000 tonnes is mined and trucked with 21 months from the
PMP approval date. Settlement of this acquisition occurred on 29 September 2020.
On 17 September 2020 the Company announced that it had elected to withdraw from the joint venture with
Macarthur. The board decided to prioritise the remaining earn-in payments and expenditure required on the
Macarthur tenure for its brownfields projects (such as Yarram and Wiluna West JWD Mining Rights) which
the Company considers presents a higher earnings potential for it over a shorter time frame and with a
lower risk profile.
To ensure the company is well resourced to progress the Yarram and Wiluna West JWD Mining Rights
projects Non-Executive Chairman Mr Tony Sage has agreed to assume the role of Executive Chairman and
Executive Director Mr Mark Hancock has agreed to increase his time commitment to the company, effective
from 17 September 2020. Mr Sage and Mr Hancock’s monthly remuneration has increased to $15,000 and
$10,000 respectively to reflect this additional time commitment.
On 22 September 2020, the Company announced that FEL and Trident had reached agreement to advance
settlement of the second tranche sale proceeds in respect of the Royalty Asset Sale. In return for Trident
accelerating the payment, FEL agreed to discount the amount owing to $2.65m. The second tranche
payment was received by FEL on 24 September 2020.
The following securities were issued subsequent to the reporting date up until the date of release of this
report:
▪
▪
500,000 shares were issued on 17 September 2020 following the exercise of 500,000 unlisted
options at $0.02 expiring 31 May 2021;
12,500,000 shares were issued to GV on 24 September 2020 pursuant to the JWD Mining Rights
Acquisition.
On 28 September 2020, the Company announced the appointment of experienced iron ore executive Mr
Jeremy Sinclair as Projects Director.
There have been no other events subsequent to 30 June 2020 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.
54
Directors’ Declaration
Annual Report 2020
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 2020 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 2020 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)
c)
the financial statements and notes also comply with International Financial Reporting Standards
as disclosed in note 2(b);
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 2020.
On behalf of the Board
Mr Antony Sage
Executive Chairman
30 September 2020
55
Stantons International Audit and Consulting Pty Ltd
trading as
Chartered Accountants and Consultants
PO Box 1908
West Perth WA 6872
Australia
Level 2, 1 Walker Avenue
West Perth WA 6005
Australia
Tel: +61 8 9481 3188
Fax: +61 8 9321 1204
ABN: 84 144 581 519
www.stantons.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 (“the Group”), which
comprises the consolidated statement of financial position as at 30 June 2020, 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, and 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:
(i)
giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its financial
performance for the year then ended; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor's Responsibilities for the Audit of the Financial Report section of our
report. We are independent of the Company 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.
Key Audit Matters
We have not determined any key audit matters to be communicated in our report.
Other Information
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 2020, 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 opinion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial report or our knowledge
obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we
conclude that there is a material misstatement of this other information, we are required to report that fact. We have
nothing to report in this regard.
Liability limited by a scheme approved
under Professional Standards Legislation
56
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the directors determine is necessary to enable the preparation of the financial report that gives a true and
fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic
alternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material
misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the
Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with Australian Auditing Standards, we exercise professional judgement and
maintain professional scepticism throughout the audit. An audit involves performing procedures to obtain audit
evidence about the amounts and disclosures in the financial report.
The procedures selected depend on the auditor's judgement, including the assessment of the risks of material
misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity's preparation of the financial report that gives a true and fair view 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 entity's internal control.
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.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of
accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial report.
We 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.
We 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.
We 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.
The Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements.
We also provide the Directors with a statement that we have complied with relevant ethical requirements regarding
57
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 with the Directors, we determine those matters that were of most significance in
the audit of the financial report of the current period and are therefore 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 Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 15 to 19 of the directors’ report for the year ended 30
June 2020.
In our opinion, the Remuneration Report of Fe Limited for the year ended 30 June 2020 complies with section 300A
of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in
accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LTD
(Trading as Stantons International)
(An Authorised Audit Company)
Martin Michalik
Director
West Perth, Western Australia
30 September 2020
58
Schedule of Tenements
Annual Report 2020
SCHEDULE OF TENEMENTS
As at 25 September 2020:
Tenement
P52/1494
P52/1495
P52/1496
Project & Location
Forrest (Milgun) – Western Australia
Forrest (Milgun) – Western Australia
Forrest (Milgun) – Western Australia
E51/1033-I
Morcks Well
E52/1613-I
E52/1672-I
Morcks Well
Morcks Well
E52/1668
E52/1678
E52/1722
E52/1730
P52/1538
P52/1539
E45/4759
E45/4691
E45/4669
E45/4690
E45/4724
E45/4746
Peak Hill – Western Australia
Peak Hill – Western Australia
Peak Hill – Western Australia
Peak Hill – Western Australia
Peak Hill – Western Australia
Peak Hill – Western Australia
Pippingarra
Pippingarra
Marble Bar
Marble Bar
Marble Bar
Marble Bar
Interest
20%
20%
20%
20%
20%
20%
20%
20%
20%
20%
20%
20%
100%
100%
100%
100%
100%
100%
Notes
1
1
1
1, 2, 3
1, 2, 3
1, 2, 3
4
4
5
4
4
4
6
6
6
6
6
6
NOTES:
1
2
3
4
5
6
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.
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, refer to ASX:ASX announcement dated 27 February 2018 for full details of agreement.
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) earns 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.
Mercury Transaction: The acquisition of these tenements under the Mercury Transaction was substantially
completed 23 May 2019.
59
Additional Shareholder Information
Annual Report 2020
ADDITIONAL SHAREHOLDER INFORMATION
As at 25 September 2020:
Shares
The total number of Shares on issue as at 25 September 2020 was 501,701,620, held by 953 registered
Shareholders. 463 shareholders hold less than a marketable parcel, based on the market price of a share as at
25 September 2020.
Each Share carries one vote per Share without restriction.
Escrowed Shares
The Company does not have any Escrowed Shares on issue.
Twenty Largest Shareholders
As at 25 September 2020, the twenty largest Shareholders were as shown in the following table and held
74.77% of the Shares.
1
2
3
4
5
6
7
8
8
9
10
11
12
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
GOLD VALLEY IRON ORE PTY LTD
MR ALEXANDER JOHN PEDEN & MRS MARY LOUISA PEDEN
H & K SUPER MANAGEMENT PTY LTD
CITICORP NOMINEES PTY LIMITED
ANTONY WILLIAM PAUL SAGE & LUCY FERNANDES SAGE
18
19
20
MR ROBERT MICHAEL AVERY & MRS CHERYL MAY AVERY
FRED PARRISH INVESTMENTS PTY LTD
ACN 139 886 025 PTY LTD
Total
Distribution Schedule
Holding
120,848,635
40,009,234
35,965,831
28,153,112
26,666,667
25,000,000
14,895,018
12,500,000
12,500,000
9,892,443
6,600,000
6,457,064
6,423,010
4,400,000
4,371,340
4,200,000
4,103,546
3,400,000
3,050,000
%
24.09
7.97
7.17
5.61
5.32
4.98
2.97
2.49
2.49
1.97
1.32
1.29
1.28
0.88
0.87
0.84
0.82
0.68
0.61
2,845,449
2,820,000
375,101,349
0.57
0.56
74.77
A distribution schedule of the number of Shareholders, by size of holding, as at 25 September 2020 is below:
Size of holdings
1 – 1000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Number of
Shares
484,447,088
15,717,647
1,022,902
487,727
26,256
501,701,620
%
96.56%
3.13%
0.20%
0.10%
0.01%
100.00%
Number of
Shareholders
235
356
129
161
72
953
60
Additional Shareholder Information
Annual Report 2020
Quoted Options
The Company does not have any quoted Options on issue.
Unquoted Options
At 25 September 2020 the Company has on issue 60,976,749 Unquoted Options on issue. The names of security
holders holding more than 20% of an unlisted class of security are listed below.
Holder
Mr Anthony Robert Ramage
S&A Consulting D.O.O
Okewood Pty Ltd
Mercury Resources Group Pty
Limited
Holders individually less than
20%
Total
Unlisted
Options
$0.03
13/03/2021
1,250,000
-
-
Unlisted
Options
$0.03
12/04/2021
-
3,125,000
-
Unlisted
Options
$0.03
08/05/2021
-
1,250,000
-
Unlisted
Options
$0.02
31/05/2021
-
-
10,000,000
Unlisted
Options
$0.025
31/03/2022
-
-
-
-
-
-
-
15,000,000
4,375,000
5,625,000
-
3,125,000
-
1,250,000
25,976,749
35,976,749
-
15,000,000
61
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