FE Limited
ABN 31 112 731 638
AND CONTROLLED ENTITIES
ANNUAL REPORT 2021
Corporate Directory
Annual Report 2021
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
Unit 3, 32 Harrogate Street
West Leederville, WA 6007
Telephone:
+61 (08) 6181 9793
Share Registry
Link Market Services
Level 12, QV1 Building
250 St Georges Terrace
Perth WA 6000
Telephone:
1300 554 474 (within Australia)
+61 (2) 8280 7761 (overseas)
Auditors
ASX
Website:
www.linkmarketservices.com.au
Stantons
Level 2, 1 Walker Avenue
West Perth, WA 6005
Fe Limited’s fully paid ordinary shares are quoted on the Official List of
ASX. The ASX code is FEL.
Contents
Annual Report 2021
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
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Directors’ Report
Annual Report 2021
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 2021.
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 more than 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 Cyclone Metals Ltd
(previously Cape Lambert Resources Limited) (which was AIM Company of the year in 2008), and is the
chairman of ASX-listed company, European Lithium Limited. 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:
▪
▪
▪
▪
Cyclone Metals Limited (previously Cape Lambert Resources Ltd) (December 2000 to Present);
European Lithium Limited (September 2016 to Present);
International Petroleum Limited (January 2006 to September 2019); and
Cauldron Energy Limited (June 2009 to November 2018).
Interest in shares & options at
date of this report:
21,673,010 fully paid ordinary shares
7,500,000 unlisted options at $0.03 expiring 31 August 2022
7,500,000 unlisted options at $0.06 expiring 30 June 2023
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);
Strandline Resources Ltd (August 2020 to Present); and
Cyclone Metals Limited (previously Cape Lambert Resources Ltd) (February 2020 to August 2020).
Interest in shares & options at
date of this report:
2,500,000 fully paid ordinary shares
7,500,000 unlisted options at $0.03 expiring 31 August 2022
7,500,000 unlisted options at $0.06 expiring 30 June 2023
Nicholas Sage, Non-Executive Director
Mr Nicholas Sage is a marketing and communications professional with more than 25 years’ experience in
various management and consulting roles. Mr Nicholas Sage is based in Western Australia and currently
consults to various companies and has held various management 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:
None
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Annual Report 2021
JOINT COMPANY SECRETARY
Catherine Grant-Edwards and Melissa Chapman
Ms Catherine Grant‐Edwards (Chartered Accountant (CA)) and Ms Melissa Chapman (Certified Practicing
Accountant (CPA), AGIA/ACIS, GAICD) are appointed as Joint Company Secretary. Ms Chapman and Ms Grant-
Edwards are directors of Bellatrix Corporate Pty Ltd (Bellatrix), a company that provides company secretarial
and accounting services to several ASX listed companies. Between them, Ms Grant‐Edwards and Ms Chapman
and have over 30 years’ experience in the provision of accounting, finance and company secretarial services to
public listed resource and private companies in Australia and the UK, and in the field of public practice external
audit.
PRINCIPAL ACTIVITIES AND SIGNIFICANT CHANGES STATE OF AFFAIRS
The Company is an Australian mineral exploration and development company with interests in various projects
and tenements prospective for iron ore, copper and gold 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 2020: nil).
REVIEW OF OPERATIONS
CORPORATE
Operating Results
The consolidated loss after income tax for the year ended 30 June 2021 amounted to $2,510,540 (30 June
2020: $5,908,179 profit after income tax).
Board Change
On 17 September 2020 Mr Tony Sage assumed the role of Executive Chairman (transitioned from Non-Executive
Chairman).
Corporate Appointment
On 28 September 2020, the Company announced the appointment of experienced iron ore executive Mr Jeremy
Sinclair as Projects Director.
Annual General Meeting
The Company’s annual general meeting (AGM) was held on 25 November 2020. All resolutions put to the
meeting were passed and decided by way of a poll.
Constitution Amended
On 25 November 2020, the Company adopted an amended Constitution, as approved by special resolution of
shareholders at the Company’s AGM.
Placement
On 18 February 2021, the Company announced it had successfully completed a placement to sophisticated and
professional investors at an issue price of $0.045 raising $5.5 million (before capital raising costs) (Placement).
On 24 February 2021, the Company issued 123,381,655 Placement shares. Funds raised under the Placement
were planned to be expended to fully fund development of the low capex, direct shipping JWD Project and
drilling and approvals work at the Yarram Iron Ore Project.
Wiluna Iron JV Transaction
As announced 17 September 2020, FEL entered a binding agreement to acquire a 51% interest in the Mining
Rights Agreement held by Gold Valley Iron Ore Pty Ltd (GVIO) over the Wiluna West JWD deposit (JWD Mining
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Annual Report 2021
Rights or JWD Iron Ore Project) (Wiluna Transaction). Consideration included $500,000 in cash and
12,500,000 shares at a deemed issue price of $0.020 upon settlement with a further commitment to fund a
$125,000 instalment due to GWR Group on 30 September 2020, to prepay the first 50% instalment royalty
($225,000), and to provide a working capital facility to the Wiluna Iron Project JV (Wiluna Iron JV) of $3.0m
following decision to mine. A further $250,000 is payable in cash or shares (at FEL’s election) upon a decision to
mine (refer Significant Events Subsequent to Reporting Date). Additional payments to satisfy the Mining Rights
Agreement will be met by the JV. Settlement of this acquisition occurred on 29 September 2020.
Pursuant to the underlying JWD Mining Rights Agreement, the first 300,000 tonnes were to be mined and
trucked off the tenements with 21 months from the PMP approval date of 16 January 2020. As announced on 14
May 2021, the Company and GWR Group Ltd (GWR) have agreed a number of amendments to the JWD Mining
Rights Agreement. One of the key elements of the changes has been to adjust the methodology by which royalty
and rehabilitation obligations are funded, thereby assisting FEL’s working capital during ramp up. FEL has agreed
to guarantee its subsidiary company’s obligations to GWR as part of these changes. The other key change is to
extend the timeframe by which FEL has to extract the first 300,000 tonnes of ore (from October 2021 to January
2022), providing additional operational flexibility to FEL. Consideration payable to GWR for agreeing to the
changes included a payment of $125,000 in cash, an increase in the royalty it pays by A$1 per tonne when the
headline iron ore price is above US$145, and granting GWR an option to purchase up to 50,000 tonnes of JWD
fines material from the mine gate at estimated cost plus A$10 per tonne. To extend its right to extract for a
further 2.7MT from JWD, FEL is required to pay $4.25m to GWR prior to expiry of the right extension deadline in
January 2022.
As announced on 25 May 2021, FEL paid a A$1m refundable deposit to its joint venture partner to secure an
option to increase its interest in JWD from 51% to 60% for consideration of A$2.5m. This option was exercised
subsequent to year end (refer Significant Events Subsequent to Reporting Date).
Yarram Iron JV Transaction
On 22 December 2020, the Company advised it had completed the transaction (initially announced to ASX on 21
August 2020) to acquire a 50% interest in the Yarram iron ore project (Yarram Iron JV) in the Northern
Territory (Yarram Transaction). Completion of the transaction was effected on 22 December 2020, via FEL
purchasing a 50% share in Gold Valley Iron and Manganese Pty Ltd (GVIM), being the entity which owns the
Yarram Iron Ore Rights.
Consideration included:
▪
▪
▪
$1.0m in cash (adjusted for $55k liabilities assumed);
31,250,000 shares valued at $0.5m based on a deemed issue price of $0.016 (issued on 22 December
2020);
$1.9m subscription amount payable to GVIM in relation to 500,000 GVIM shares acquired by FEL’s
wholly owned subsidiary Yarram FE Pty Ltd, being:
o a minimum payment of $1,500,000A; and
o up to an additional $400,000 as directed by the Board of GVIM (to cover certain historical
costs);
at a date to be determined by the Board of GVIM.
A Note, if the minimum payment amount is unpaid at payment date, shares to be cancelled proportionally to the
unpaid amount.
Further contingent consideration of $0.5m in cash and $1.0m in cash and/or shares (at FEL’s election) is payable
on achieving a JORC indicated resource milestone.
Receipt of Proceeds from Sale of Iron Ore Royalty
On 22 September 2020, the Company announced that FEL and TRR Services Australia Pty Ltd, a wholly owned
subsidiary of Trident Resources PLC (LSX: TRR) (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.
Sale of Pilbara Exploration Tenements
On 17 June 2021, the Company announced that it had entered two separate binding agreements with Global
Lithium Ltd (ASX:GL1) (Global Lithium) and Mercury Resources Group Pty Ltd (Mercury Resources) to
dispose of its Pilbara exploration tenure for a total cash consideration of $550,000, with a trailing royalty on
certain of the tenements.
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Annual Report 2021
The transactions with Global Lithium and Mercury Resources were completed subsequent to year end.
Withdrawal from Joint Venture with Macarthur
On 17 September 2020 the Company announced that it had elected to withdraw from the joint venture with
Macarthur.
Shares issued
During the year the Company issued the following shares:
▪
▪
▪
▪
▪
▪
▪
123,381,655 shares were issued pursuant to the Placement
12,500,000 ordinary shares, being consideration shares in relation to the Wiluna Transaction
31,250,000 ordinary shares, being consideration shares in relation to the Yarram Transaction
36,476,749 ordinary shares upon exercise of unlisted options at $0.02 expiring 31 May 2021 (including
2,355,415 shares issued pursuant to the underwriting arrangement) raising $729,535
2,125,000 shares were issued following exercise of unlisted options at $0.03 expiring 13 March 2021
raising $63,750
5,000,000 shares were issued following exercise of unlisted options at $0.025 expiring 31 March 2022
raising $125,000
10,000 shares were issued to the underwriter pursuant to the options underwriting arrangement
Option movements
During the year the following unlisted options were issued:
▪
▪
▪
▪
▪
30,000,000 unlisted options exercisable at $0.03 expiring 31 August 2022
5,000,000 unlisted options exercisable at $0.04 expiring 31 August 2023 (subject to vesting conditions)
5,000,000 unlisted options exercisable at $0.035 expiring 12 October 2023
5,000,000 unlisted options exercisable at $0.045 expiring 12 April 2024
5,000,000 unlisted options exercisable at $0.06 expiring 12 October 2024
During the year the following unlisted options were exercised:
▪
▪
▪
5,000,000 unlisted options at $0.025 expiring 31 March 2022
36,476,749 unlisted options at $0.02 expiring 31 May 2021
2,125,000 unlisted options at $0.03 expiring 13 March 2021
During the year the following unlisted options expired:
▪
▪
▪
3,500,000 unlisted options at $0.03 expired on 13 March 2021
3,125,000 unlisted options at $0.03 expired on 12 April 2021
1,250,000 unlisted options at $0.03 expired on 8 May 2021
PROJECTS
Western Australia
The Company holds or has rights or interests in various projects and tenements prospective for iron ore, gold
and copper located in Australia.
The Company has divested its tenure in the East Pilbara and Pippingarra areas. No further exploration is being
conducted on these projects.
The Company’s focus in Western Australia remains in iron ore, through its JWD Iron Ore Project, recently
brought into production. FEL also retains minor interests in the Bryah Basin, Peak Hill, Mount Ida and Morck Well
projects, none of which are within the Company’s operation control.
JWD Iron Ore Project - Wiluna Iron JV (51%) (Western Australia)
As previously announced, on 29 September 2020 FEL completed its acquisition of a 51% interest in the Mining
Rights Agreement held by the GVIO over the Wiluna West JWD deposit (being the Wiluna Transaction).
On 15 December 2020, the Company advised it lodged its Works Approval application for the JWD Iron Ore
Project (JWD) with the WA Department of Water and Environmental Regulation (DWER). The Works Approval
was subsequent granted in March of this year.
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Annual Report 2021
During the year, the Company engaged key contractors for mining and crush and screen and executed an
agreement providing accommodation for the mine via an existing nearby accommodation village at the nearby
Lake Way Project (Salt Lake Potash Ltd). Preliminary site works were commenced in April with the full mining
fleet mobilised to site by the end of June to allow development of the open pit to commence in early June.
Yarram Project – Yarram Iron JV (50%) (Northern Territory)
The Company holds a 50% interest in Gold Valley Iron and Manganese Pty Ltd, the owner of the iron ore rights
over the Yarram project, located some 110km from Darwin Port. Iron ore rights are held within a joint venture
area that partially contains a central mining licence with current exploration licences either side.
Activities during the year were focussed around obtaining the necessary approvals to progress the project. A
Mining Management Plan (MMP) for an initial round of deposit definition drilling within the granted mining licence
was submitted and subsequently approved by the Northern Territory mines department. An application for a
sacred site clearance certificate through the Aboriginal Areas Protection Authority (AAPA) has since been
submitted with approval anticipated during Q3 2021. Drilling is expected to be completed prior to the 2021 wet
season and will provide information to aid in estimation of a JORC compliant resource as well as for feasibility
studies including environmental, metallurgical and mining studies.
Pippingarra Lithium Project and the Marble Bar Lithium Project – FEL 100% rights
On 17 June 2021, the Company announced the divestment of both the Pippingarra Gold and Marble Bar Lithium
projects.
Macarthur Minerals Lithium and Gold Tenements Project – FEL Right to Earn-In up to 75%
On 17 September 2020, the Company announced that it had elected to withdraw from the joint venture with
Macarthur Minerals.
Bryah Basin Joint Venture Projects - FEL 20% rights
FEL, via its wholly owned subsidiary Jackson Minerals Pty Ltd (Jackson Minerals), has a 20% interest in
tenements covering an area of 804 km² in the highly prospective Bryah Basin proximal to Sandfire Resources NL
(ASX:SFR) Doolgunna Project and DeGrussa copper gold mine.
The Bryah Basin Project tenements are subject to joint ventures and farm-ins with Billabong Gold Pty Ltd
(Billabong), Alchemy Resources (Three Rivers) Ltd (ASX: ALY), Auris Minerals Ltd (ASX:AUR) and SFR.
The Bryah Basin is a highly prospective and largely under-explored mineral field with potential for further
discovery of gold and base metals.
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 which has been met. SFR can earn a 70%
interest in the Morck Well Project tenements by continuing to sole fund exploration to a discovery of not less
than 50,000 tonnes contained Cu (or metal equivalent) and completion of a feasibility study on such a discovery.
If SFR makes a discovery and completes a feasibility study then the interests in the tenements will be 70% SFR,
24% AUR and 6% FEL. Refer Auris ASX announcement dated 27 February 2018.
Air core drilling continued at the Morck Well JV Project during the year with over 1,100 holes for over 87,500
metres of drilling completed by the AUR/SFR Joint Venture. AUR have announced significant gold and copper
results returned from the regional first pass and 800 x 100m space infill air core drilling. Significant results
returned include 10m at 2.05g/t Au from 65m including 5m at 3.01g/t Au from 65m in MWAC3574, 15m at
1.03g/t Au from 100m including 10m at 1.27g/t Au from 100m in MWAC3749, 5m at 1.44g/t Au from 45m in
MWAC3883B, 5m at 0.89g/t Au from 50m in MWAC3545, 5m at 1.60 g/t Au from 55m in MWAC3036, 10m at
0.88 g/t Au from 110m including 5m at 1.13g/t from 110m in MWAC2691 and 10m at 0.42% Cu from 40m
including 5m at 0.64% Cu from 40m in MWAC2870. Results show areas remain open along strike to the east
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and west of significant results. Refer to ASX:AUR announcements dated 23 October 2020, 20 April 2021 and 22
July 2021 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, via wholly owned subsidiary Jackson Minerals.
Peak Hill Project All Mineral Rights - ALY/SFR/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.
Figure 1: 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,
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Annual Report 2021
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
Extraordinary General Meeting
The Company held an Extraordinary General Meeting on 12 July 2021 (July 2021 EGM). All resolutions put to
the meeting were passed and decided by way of a poll.
Further Milestones Achieved at JWD Project
Subsequent to year end, export capacity and a path to market was secured with the execution of key
agreements with Mt Gibson Iron Limited and the Mid West Port Authority and a long term haulage contract with
Campbells Transport.
Crushing and screening commenced in early July 2021 with first ore leaving site via road trains on the 11 July
2021. The Company continues to focus on the ramp up of haulage from the mine, with key development work
for the mine now complete.
As announced on 27 July 2021, the Company, via its wholly owned subsidiary Wiluna FE Pty Ltd, has entered an
exclusive offtake agreement with leading international trading house Glencore International AG (Glencore), for
100% of the JWD product (iron ore lumps and fines) over the life of FEL’s operations at the mine, subject to
GWR Group Ltd’s existing right to elect to purchase up to 50,000 tonnes of fines product at the mine gate.
Pursuant to the terms of the offtake agreement, Glencore has provided a US$7.5 million prepayment, which will
be repaid by FEL in five instalments of US$1.5m plus applicable interest, from shipments 2 to 6, or within 6
months of the prepayment being received, whichever is the earlier.
Increase of JWD Interest to 60%
As announced on 25 May 2021, FEL paid a A$1m refundable deposit to its joint venture partner to secure an
option to increase its interest in JWD from 51% to 60% for consideration of A$2.5m.
Following receipt of shareholder approval at the Company’s EGM held 12 July 2021 to issue equity to complete
this transaction, FEL has exercised its option and elected to settle payment of the consideration amount via the
issue of 43,859,649 shares. Subsequent to year end, the $1m refundable deposit has been repaid to FEL and on
28 July 2021 the shares have been issued.
Commencement of hedging program
As announced on 10 August 2021, the Company commenced hedging a portion of its production. The aim of the
hedging program is to provide downside protection for the iron ore price, while maintaining some upside
exposure to high iron ore prices in strong markets and doing so in a way that minimises the upfront cash cost of
entering the hedge.
Volatility of Iron Ore Prices
The market price of iron ore has been volatile and has seen a decline in the period subsequent to 30 June 2021.
The Company is continuing to advance its iron ore projects (including its JWD Project operations), has
commenced a hedging program (as detailed above), is taking steps to mitigate cash outflow, and will continue to
monitor the market price of iron ore prices and the impact this may have on planned activities.
The Company makes note of the contingent liability disclosed in relation to the Wiluna Iron JV (in which FEL has
a 60% interest at the date of release of this report). Should the Wiluna Iron JV elect to exercise its option to
extract a further 2.7Mt from the JWD deposit, an amount of $4,250,000 will be payable to GWR Group, as
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required to satisfy the underlying Mining Rights Agreement. Unless otherwise negotiated with GWR Group, this
payment will be due in January 2022.
Sale of Pilbara Exploration Tenements
On 17 June 2021, the Company announced that it had entered two separate binding agreements with Global
Lithium and Mercury Resources to dispose of its Pilbara exploration tenure for a total cash consideration of
$550,000, with a trailing royalty on certain of the tenements. The transactions completed subsequent to year
end.
FEL Acquires 60% Interest in Mature Copper / Gold Project at Tennant Creek
On 24 September 2021, the Company announced that it had entered into a binding agreement to acquire a 60%
interest in the exploration assets the Tennant Creek Project (located in the Nothern Territory) from Gecko Mining
Company Pty Ltd (GMC) (Tennant Creek Acquisition). Under the terms of the agreement, FEL will acquire
the interest in the tenement package for $5,000,000 cash (payable in three instalments), 85,000,000 shares,
and 75,000,000 unlisted options exercisable at $0.10 expiring 3 years from date of issue. The issue of securities
pursuant to the Tennant Creek Acquisition are subject to shareholder approval.
With effect from completion, FEL and GMC will form a joint venture in respect of the Tennant Creek Project
tenements. The joint venture will be in the form of an unincorporated joint venture and FEL will be the manager
of the joint venture. FEL will pay the first $10,000,000 of joint venture expenditure incurred.
Placement for $5 Million
On 24 September 2021, the Company announced that it had received commitments to raise $5,000,000 through
a placement of 100,000,000 ordinary shares (Placement Shares) to sophisticated investors at $0.05 per share.
Investors will also be issued one option (exercise price $0.06, expiring 2 years from issue) for every two shares
issued (Placement Options). Funds raised will be used towards funding of the Tennant Creek Acquisition,
expenditure on the Company’s existing projects (Yarram and JWD), exploration expenditure on the Tennant
Creek Project tenement package, and for general working capital.
Lead Manager for the Placement, Evolution Capital Advisors are entitled to fees of 6% of the amount raised and
20,000,000 options (Lead Manager Options) on the same terms as the Placement Options.
The Placement Shares will be issued without shareholder approval relying on the Company’s capacity under
Listing Rule 7.1. The Placement Options and Lead Manager Options will be issued subject to receipt of
shareholder approval, and the Company will seek to have the options quoted.
Shares Issued
The following shares were issued subsequent to year end:
▪
▪
▪
▪
4,807,692 shares issued in settlement of the $250,000 consideration component payable upon decision
to mine in respect of the JWD Project
43,859,649 shares issued upon FEL’s exercise of its option to acquire an additional 9% interest in the
JWD Project
6,000,000 shares issued upon exercise of unlisted options exercisable at $0.03 expiring 31 August
2022, raising $180,000
7,000,000 shares issued upon exercise of unlisted options exercisable at $0.025 expiring 31 March
2022, raising $175,000
Options Issued
The following unlisted options were issued subsequent to year end:
▪
▪
▪
▪
15,000,000 unlisted options exercisable at $0.06 expiring 30 June 2023 with vesting conditions issued
to directors (or their nominees) following receipt of shareholder approval at the July 2021 EGM
1,000,000 unlisted options exercisable at $0.074 expiring 31 December 2022 issued pursuant to the
Company’s Employee Securities Incentive Plan (ESIP) (ESIP approved by shareholders at the July 2021
EGM)
3,000,000 unlisted options exercisable at $0.04 expiring 31 August 2023 with vesting conditions issued
pursuant to the Company’s ESIP
14,500,000 unlisted options exercisable at $0.06 expiring 30 June 2023 with vesting conditions issued
pursuant to the Company’s ESIP
There have been no other events subsequent to 30 June 2021 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.
9
Directors’ Report
Annual Report 2021
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 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 2001, to:
•
•
indemnify each director in certain circumstances;
advance money to a director for the payment of any legal costs incurred by a director in defending legal
proceedings before the outcome of those proceedings is known (subject to an obligation by the director
to repay any money advanced if a court determines that the director was not entitled to it);
• maintain directors’ and officers’ insurance cover in favour of each director whilst they remain a director
•
of Fe Limited and for a run out year after ceasing to be such a director; and
provide each director with access to Board papers and other documents provided or available to the
director as an officer of Fe Limited.
During the year, the Company had in place and paid premiums for insurance policies indemnifying directors and
officers of the Company against certain liabilities incurred in the conduct of business or in the discharge of their
duties as directors or officers. The contracts of insurance contain confidentiality provisions that preclude
disclosure of the premium paid, the nature of the liability covered by the policies, the limit of liability and the
name of the insurer.
INDEMNIFICATION OF AUDITORS
To the extent permitted by law, the Company has agreed to indemnify its auditors, 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
The following table sets out the number of directors’ meetings held during the year and the number of meetings
attended by each director.
Director
T Sage
M Hancock
N Sage
Eligible
3
3
3
Attended
3
3
3
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
M Hancock
N Sage
Director (transitioned from role as Non-Executive Chairman to
Executive Chairman 17 September 2020)
Director (Executive)
Director (Non-Executive)
Other Key Management Personnel
J Sinclair
Project Director
10
Directors’ Report
Annual Report 2021
Remuneration Philosophy
The performance of the Group depends on the quality of its directors, executives and employees. Consequently,
the Group must attract, motivate and retain appropriately qualified industry personnel.
The following principles are embodied in the remuneration framework:
•
•
provide competitive rewards to attract and retain high calibre executives, directors and employees; and
link executive rewards to shareholder value.
Remuneration Policy
During the year, the Company did not have a separately established remuneration committee. The Board is
responsible for determining and reviewing remuneration arrangements for the executive and non-executive
directors and the Chairman. The Board assesses the appropriateness of the nature and amount of remuneration
of such officers on a yearly basis by reference to relevant employment market conditions with the overall
objective of ensuring maximum stakeholder benefit from retention of a high-quality board. The directors are
given the opportunity to receive their base emolument in a variety of forms including cash and fringe benefits. It
is intended that the manner of payment chosen will be optimal for the recipient without creating undue cost for
the Company.
Considering the nature of the Company’s operations, the remuneration of executive and non-executive directors
is not dependent on the satisfaction of any specific performance conditions of the Company. Remuneration and
share-based payments are issued to align directors’ interests with that of shareholders.
The Group has a policy which restricts executives and directors entering into contracts to hedge their exposure
to options granted as part of their remuneration package.
Remuneration report at 2021 AGM
The 2020 remuneration report received positive shareholder support at the 2020 AGM whereby of the proxies
received 99.56% voted in favour of the adoption of the remuneration report.
Performance and Shareholder Wealth
Below is a table summarising key performance statistics for the Group as well as 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 2017
30 June 2018
30 June 2019
30 June 2020
30 June 2021
(296)
(1,082)
(1,668)
5,908
(2,511)
Profit / (Loss) per
share
(Cents)
(0.11)
(0.32)
(0.44)
1.22
(0.44)
Share Price
(Cents)
2.40
2.40
1.70
1.30
5.10
Executive Chairman’s Remuneration – Mr Antony Sage
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 arrangement 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 for the period between 1 July 2020 to 16 September 2020 (in role of Non-
Executive Chairman); and
$180,000 per annum for the period between 17 September 2020 to 30 June 2021 (in role of Executive
Chairman).
11
Directors’ Report
Annual Report 2021
Executive Director Remuneration – Mr Mark Hancock
The Company has 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. Mr Hancock was
entitled to receive remuneration of:
•
•
$48,000 per annum for the period between 1 July 2020 to 16 September 2020; and
$120,000 per annum for the period between 17 September 2020 to 30 June 2021.
Non-Executive Director Remuneration – Mr Nicholas Sage
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.
As approved previously by shareholders, the maximum aggregate amount of remuneration payable to non-
executive directors is $1,000,000.
The Company has 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. Mr Nicholas Sage was
entitled to receive remuneration of:
•
•
$36,000 per annum for the period between 1 July 2020 to 16 September 2020; and
$60,000 per annum for the period between 17 September 2020 to 30 June 2021.
Other Key Management Personnel Remuneration – Mr Jeremy Sinclair
The Company has entered into a consulting agreement with Verbain Nominees Pty Ltd trading as ValMax
(ValMax) in respect of services provided by Mr Jeremy Sinclair in the role of Projects Director effective from 1
October 2021 (Commencement Date). Consulting fees payable under the agreement were as follows:
•
•
$280,000 per annum for the period between 1 October 2020 to 30 April 2021; and
$320,000 per annum for the period between 1 May 2021 to 30 June 2021.
Pursuant to the terms of the consulting agreement, a total of 10,000,000 unlisted options were granted (refer
below for details).
The Company has agreed to the following performance incentive payments (Performance Incentive
Payments) as part of Mr Jeremy Sinclair’s remuneration package:
•
•
•
$100,000 milestone payment upon first ore ship from JWD Project within 10 months from
Commencement Date, the payment amount reducing by 1/3 per month after that, with no payment
made if takes more than 13 months;
$100,000 milestone payment for completion of 300kt (+/-10%) of shipments from JWD Project and
completion of Phase 2 feasibility assessment within 14 months, from Commencement Date, amount
reducing by 1/2 per month after that, with no payment made if takes more than 16 months;
$50,000 milestone payment on achieving decision to mine at Yarram within 16 months from
Commencement Date.
No Performance Incentive Payments have been made in the year ended 30 June 2021.
12
Directors’ Report
Annual Report 2021
Compensation of Key Management Personnel
Consolidated
Year ended 30 June
2021
Short-
Term
Salary &
Fees
$
Post-
Employment
Superannuation
$
Share-
based
Payment
Share
Options (i)
$
Total
$
%
Performance
Based
%
Comprising
Options
Directors
A Sage
M Hancock
N Sage
Other KMP
J Sinclair
Total
167,500
105,000
55,000
216,667
544,167
-
-
-
-
-
117,080
117,080
33,342
284,580
222,080
88,342
66,357
333,859
283,024
878,026
-
-
-
-
-
41%
53%
38%
23%
38%
(i) 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
Year ended 30 June
2020
Short-
Term
Salary &
Fees
$
Post-
Employment
Superannuat
ion
$
Share-based
Payment
Share Options
(i)
%
Performance
Based
%
Comprising
Options
Total
$
$
Directors
A Sage
M Hancock
N Sage
K Keogh
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%
(i) 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.
Shareholdings of Key Management Personnel
30 June 2021
Directors
A Sage(i)
M Hancock
N Sage
Other KMP
J Sinclair
(i)
Indirectly held.
30 June 2020
Directors
A Sage(i)
M Hancock
N Sage
K Keogh(i)(ii)
Balance at 1
July 2020
Granted as
remuneration
Exercise of
options
Net change
other
Balance at
30 June 2021
9,173,010
-
-
-
9,173,010
-
-
-
-
-
12,500,000
2,500,000
-
230,000
15,230,000
-
-
-
-
-
21,673,010
2,500,000
-
230,000
24,403,010
Balance at 1
July 2019
Granted as
remuneration
Exercise of
options
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.
13
Directors’ Report
Annual Report 2021
Option and right holdings of Key Management Personnel
30 June
2021
Directors
A Sage
M Hancock
N Sage
Other KMP
J Sinclair
Balance at
1 July
2020
Acquired
/granted
during
year(i)
10,000,000
2,500,000
2,500,000
15,000,000
15,000,000
2,500,000
Exercised Net change
other
Balance at
30 June
2021
Exercis-
able
Not
Exercis-
able
(12,500,000) 2,500,000(ii) 15,000,000
- 15,000,000
2,500,000
- (2,500,000)(iii)
(2,500,000)
7,500,000
7,500,000
2,500,000
7,500,000
7,500,000
-
-
15,000,000
10,000,000
42,500,000
(230,000)
(15,230,000)
230,000 10,000,000
230,000 42,500,000
5,000,000
5,000,000
22,500,000 20,000,000
(i)
Includes 7,500,000 unlisted options with vesting conditions granted to each of Mr Tony Sage (or
nominee) and Mr Mark Hancock (or nominee) (total of 15,000,000 options) at an exercise price of $0.06
each and an expiry date of 30 June 2023, which were formally issued on 4 August 2021 following receipt
of shareholder approval at the Company’s July 2021 EGM. 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) On 5 January 2021, Mr Antony Sage sold 2,500,000 unlisted options at an exercise price of $0.02
expiring 31 May 2021 via an off market transfer for $20,000. On 29 January 2021, Mr Antony Sage
purchased 5,000,000 unlisted options at an exercise price of $0.025 expiring 31 March 2022 for
$100,000.
(iii) On 4 December 2020, Mr Nicholas Sage sold 2,500,000 unlisted options at an exercise price of $0.02
expiring 31 May 2021 via an off market transfer for $2,500.
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)
(ii)
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.
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).
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.
Options awarded to Directors
Following receipt of shareholder approval at the AGM held 25 November 2020, the Company issued a total of
17,500,000 unlisted options exercisable at $0.03 expiring 31 August 2022 to Directors Mr Tony Sage (7,500,000
options), Mr Mark Hancock (7,500,000 options) and Mr Nicholas Sage (2,500,000 options) (or their nominees)
(Director A Options).
Details of the Director A Options awarded to directors during the year ended 30 June 2021 are summarised as
follows:
Number of
Options
Exercise price
per option
Expiry date
Fair value of options
at grant date
A Sage
M Hancock
N Sage
7,500,000
7,500,000
2,500,000
$0.03
$0.03
$0.03
31 August 2022
31 August 2022
31 August 2022
$0.0133
$0.0133
$0.0133
As announced on 26 April 2021, the Directors agreed to issue a total of 15,000,000 unlisted options with vesting
14
Directors’ Report
Annual Report 2021
conditions to directors at an exercise price of $0.06 each and an expiry date of 30 June 2023, subject to receipt
of shareholder approval (Director B Options). Shareholder approval for the issue of the Director Options was
received at the Company’s general meeting held 12 July 2021 and the securities were formally issued on 4
August 2021. The grant date fair value presented in the 30 June 2021 financial statements is provisional,
estimated by reference to the period end share price. This provisional amount will be revised and adjusted for in
the next financial year.
Vesting conditions in respect of the Director B Options are as follows:
▪
▪
▪
40% vest upon successful earn-in to JWD by meeting Stage 1 earn-in milestone by exporting 300,000
tonnes by 31 January 2022;
26.67% vest and become exercisable upon export of 1MT from JWD by 31 December 2022; and
33.33% vest and become exercisable upon export of 0.25MT from Yarram by 31 December 2022.
Details of the Director B Options awarded are summarised as follows:
T Sage
M Hancock
Number of
Options
Exercise price
per option
Expiry date
7,500,000
7,500,000
$0.06
$0.06
30 June 2023
30 June 2023
Estimated fair value of
options at grant date
$0.0246
$0.0246
Options awarded to Other KMP
Pursuant to the terms of the Projects Director consulting agreement with Mr Jeremy Sinclair, the Company
agreed to issue:
▪
▪
5,000,000 unlisted options exercisable at $0.03 expiring 31 August 2022 with no vesting conditions
(Projects Director A Options); and
5,000,000 unlisted options exercisable at $0.04 expiring 31 August 2023 with vesting conditions
(Projects Director B Options).
The Projects Director B Options shall vest upon achieving first ore on ship from the Yarram project.
Details of the Projects Director A Options awarded are summarised as follows:
J Sinclair
5,000,000
$0.03
31 August 2022
$0.0103
Number of
Options
Exercise price
per option
Expiry date
Fair value of options at
grant date
Details of the Projects Director B Options awarded are summarised as follows:
J Sinclair
5,000,000
$0.04
31 August 2023
$0.0114
Number of
Options
Exercise price
per option
Expiry date
Fair value of options at
grant date
No unlisted options awarded to Directors of other KMP lapsed during the year ended 30 June 2021.
Transactions with directors, director related entities and other related parties
During the year ended 30 June 2021, an aggregate amount of $750 (30 June 2020: $27,957) was paid or
payable to Cyclone Metals Ltd (Cyclone) for reimbursement of rent and other corporate costs. At 30 June 2021,
nil was payable to Cyclone (30 June 2020: $44,664). During the year ended 30 June 2021, an aggregate
amount of $754 was received or receivable from Cyclone for reimbursement of travel costs. At 30 June 2021,
$754 was receivable from Cyclone (30 June 2020: nil).
During the year ended 30 June 2021, an aggregate amount of $15,313 (30 June 2020: $16,986) was paid or
payable to European Lithium Ltd (European Lithium) for reimbursement of travel and other corporate costs.
At 30 June 2021, $538 was payable to European Lithium (30 June 2020: nil).
During the year ended 30 June 2021, an aggregate amount of $52,300 (30 June 2020: $59,148) was paid or
payable to Okewood Pty Ltd (Okewood) for rent and corporate box sponsorship. At 30 June 2021, nil was
payable to Okewood (30 June 2020: $9,148). Mr Antony Sage is a director of Okewood.
End of Remuneration Report
15
Directors’ Report
Annual Report 2021
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 17 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
29 September 2021
16
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
29 September 2021
Board of Directors
Fe Limited
32 Harrogate Street
West Leederville, WA 6017
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 2021,
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
(An Authorised Audit Company)
Martin Michalik
Director
Liability limited by a scheme approved under Professional Standards Legislation
Stantons Is a member of the Russell
Bedford International network of firms
17
Corporate Governance Statement
Annual Report 2021
CORPORATE GOVERNANCE STATEMENT
The Company’s Corporate Governance Statement for the year ended 30 June 2021 (which reports against the
ASX Corporate Governance Council’s Principles and Recommendations) may be accessed from the Company’s
website at www.felimited.com.au.
18
Consolidated Statement of Comprehensive income
Annual Report 2021
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2021
Notes
Consolidated
Year ended
30 June 2021
Year ended
30 June 2020
$
$
3(a)
3(b)
3(c)
21(a)
11, 12
3(d)
4
Interest revenue
Other income
Employee benefits expense and director
remuneration
Exploration and evaluation expenditure
Legal costs
Share-based payment expense
Accounting and audit fees
Consultancy fees
Compliance costs
Travel costs
Exploration assets write offs
Share of net losses of joint venture accounted
for using the equity method
Other expenses
(Loss)/profit before income tax
Income tax expense
(Loss)/profit after income tax
Other comprehensive income
Items that may be reclassified subsequently to
profit or loss:
Net fair value gain / (loss) on available-for-sale
financial assets
Transfer loss on available-for-sale financial
assets to profit and loss
Other comprehensive (loss)/income for the
year
Total comprehensive (loss)/income for the
year
(Loss)/earnings per share attributable to
ordinary equity holders of the parent
- basic (loss)/earnings for the year (cents per
share)
- diluted (loss)/earnings for the year (cents
per share)
5
5
The accompanying notes form part of these financial statements.
58,551
62,986
121,537
(364,677)
(551,914)
(35,788)
(754,554)
(179,847)
(143,236)
(136,887)
(9,779)
-
(78,770)
(376,625)
(2,510,540)
-
(2,510,540)
1,662
8,526,379
8,528,041
(202,000)
(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
-
-
-
-
-
-
(2,510,540)
5,908,179
(0.44)
(0.44)
1.22
1.22
19
Consolidated Statement of Financial Position
Annual Report 2021
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2021
Notes
Consolidated
ASSETS
Current Assets
Cash and cash equivalents
Restricted cash
Trade and other receivables
Other assets
Financial asset
Held for sale assets
Total Current Assets
Non-Current Assets
Exploration and evaluation expenditure
Mine properties and development costs
Plant and equipment
Investments accounted for using the equity method
Total Non-Current Assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Trade and other payables
Income tax payable
Total Current Liabilities
Non-Current Liabilities
Provision for rehabilitation
Total Non-Current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Accumulated losses
Reserves
TOTAL EQUITY
The accompanying notes form part of these financial statements.
6
7
8
9
10
11
12
13
14
15
16
17
30 June
2021
30 June
2020
$
$
5,830,848
109,242
1,664,064
1,412,479
77,562
250,000
9,344,195
-
2,892,656
26,242
3,266,230
6,185,128
15,529,323
5,144,592
-
2,650,000
38,044
42,140
-
7,874,776
250,000
-
2,635
-
252,635
8,127,411
2,340,293
78,896
2,419,189
278,430
78,896
357,326
160,140
160,140
-
-
2,579,329
357,326
12,949,994
7,770,085
18
19
20
48,172,188
(38,083,896)
2,861,702
12,949,994
41,236,293
(35,573,356)
2,107,148
7,770,085
20
Consolidated Statement of Changes in Equity
Annual Report 2021
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2021
Consolidated
$
$
$
$
Contributed
equity
Accumulated
losses
Share-based
payments
reserve
Total
Balance at 1 July 2020
(Loss) for the year ended
30 June 2021
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 2021
41,236,293
(35,573,356)
2,107,148
7,770,085
-
-
-
(2,510,540)
(2,510,540)
-
-
-
(2,510,540)
-
(2,510,540)
6,935,895
-
48,172,188
-
-
(38,083,896)
-
754,554
2,861,702
6,935,895
754,554
12,949,994
Contributed
equity
Accumulated
losses
Share-based
payments
reserve
Total
Consolidated
$
$
$
$
Balance at 1 July 2019
Profit 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
The accompanying notes form part of these financial statements.
21
Consolidated Statement of Cash Flows
Annual Report 2021
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2021
Notes
Consolidated
Year ended
30 June 2021
$
Year ended
30 June 2020
$
Cash flows from operating activities
Receipt of royalty
Interest received
Payments to suppliers and employees
Payments for exploration and evaluation costs
Transfer of funds to restricted cash
Net cash flows (used in)/from 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
Advance payment (additional 9% interest JWD Project)
Payments for capitalised mine development
Proceeds from sale of royalty asset
Investment in joint venture
Net cash flows (used in)/from investing activities
10
3(b)(i)
Cash flows from financing activities
Proceeds from shares issued (net of costs)
Proceeds on exercise of options
Loan advance to unrelated party
Repayment of loan from unrelated party
Net cash flows from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
6
-
58,551
(1,408,226)
(693,488)
(109,242)
(2,152,405)
(26,463)
-
(30,000)
(1,080,000)
(1,000,000)
(2,226,671)
2,650,000
(1,634,100)
(3,347,234)
5,267,625
918,270
(500,000)
500,000
6,185,895
686,256
5,144,592
5,830,848
2,221,965
1,662
(683,008)
(1,001,969)
-
538,650
-
450,525
(57,549)
(50,000)
-
-
3,460,690
-
3,803,666
41,475
-
-
-
41,475
4,383,791
760,801
5,144,592
The accompanying notes form part of these financial statements.
22
Notes to the Consolidated Financial Statements
Annual Report 2021
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 2021 was authorised for
issue in accordance with a resolution of the directors on 29 September 2021.
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 $5,830,848 (30 June 2020: $5,144,592)
and a net working capital surplus of $6,815,764 (excluding restricted cash) (30 June 2020:
$7,517,450 surplus).
Subsequent to 30 June 2021 the Company announced the following:
▪
▪ Receipt of $355,000 in funds from exercise of unlisted options;
▪ Receipt of refundable deposit of $1,000,000 (in connection with the option to increase
interest in JWD from 51% to 60%; FEL electing to settle payment of the $2,500,000
consideration for the additional interest in equity);
That it has, via its wholly owned subsidiary Wiluna FE Pty Ltd, entered an exclusive offtake
agreement with leading international trading house Glencore International AG (Glencore),
for 100% of the JWD product (iron ore lumps and fines) over the life of FEL’s operations at
the mine, subject to GWR Group Ltd’s existing right to elect to purchase up to 50,000 tonnes
of fines product at the mine gate. Pursuant to the terms of the offtake agreement, Glencore
has provided a US$7.5 million prepayment (received 2 August 2021), which will be repaid by
FEL in five instalments of US$1.5m plus applicable interest, from shipments 2 to 6, or within
6 months of the prepayment being received, whichever is the earlier;
▪ Commenced a hedging program to provide downside protection for the iron ore price;
▪
That is entered into a binding agreement to acquire a 60% interest in the exploration assets
the Tennant Creek Project (located in the Nothern Territory) from Gecko Mining Company Pty
Ltd (GMC) (Tennant Creek Acquisition). Consideration for the Tennant Creek Acquisition
includes $5,000,000 (payable in three instalments). Under the agreement, FEL will pay the
first $10,000,000 of joint venture expenditure incurred (timing of which is not defined); and
That it had received commitments to raise $5,000,000 (before costs) via a placement to
sophisticated investors (Placement).
▪
23
Notes to the Consolidated Financial Statements
Annual Report 2021
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 Company’s existing projects (Yarram Project and JWD Project), payment of
Tennant Creek Project Acquisition cash consideration, and expenditure on the Tennant Creek Project
tenement package.
The ability of the Group to continue as a going concern is dependent on it being able to either
generate sufficient cashflow from operations or successfully raise additional funding in the next 12
months, to pursue its current strategy. 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, funding from the exercise of unlisted
options, funding pursuant to the offtake arrangement with Glencore, and through realisation of value
upon sale of product from the JWD Project.
Should the Group not achieve the matters set out above, there is uncertainty whether the Group
would continue as a going concern and therefore whether it would realise its assets and extinguish its
liabilities in the normal course of business and at the amounts stated in the financial report. The
financial statements do not include any adjustment relating to the recoverability or classification of
recorded asset amounts or to the amounts or classification of liabilities that might be necessary
should the Group not be able to continue as a going concern.
(d)
New standards, interpretations and amendments adopted by the Group
In the year ended 30 June 2021, the Directors have reviewed all the new and revised Standards and
Interpretations issued by the AASB that are relevant to the Company and effective for the year end
reporting period beginning on or after 1 July 2020.
As a result of this review, the Directors have applied all new and amended Standards and
Interpretations that were effective as at 1 July 2020 including:
Conceptual Framework for Financial Reporting and relevant amending standards
The Group has adopted the conceptual framework for financial reporting and relevant amending
standards with the date of initial application being 1 July 2020.
The revised Conceptual Framework includes some new concepts, provides updated definitions and
recognition criteria for assets and liabilities and clarifies some important concepts. It is arranged in
eight chapters, as follows:
▪ Chapter 1 – The objective of financial reporting
▪ Chapter 2 – Qualitative characteristics of useful financial information
▪ Chapter 3 – Financial statements and the reporting entity
▪ Chapter 4 – The elements of financial statements
▪ Chapter 5 – Recognition and derecognition
▪ Chapter 6 – Measurement
▪ Chapter 7 – Presentation and disclosure
▪ Chapter 8 – Concepts of capital and capital maintenance
Amendments to References to the Conceptual Framework in IFRS Standards has also been issued,
which sets out the amendments to affected standards in order to update references to the revised
Conceptual Framework. The changes to the Conceptual Framework may affect the application of IFRS
in situations where no standard applies to a particular transaction or event. In addition, relief has
been provided in applying IFRS 3 and developing accounting policies for regulatory account balances
using IAS 8, such that entities must continue to apply the definitions of an asset and a liability (and
supporting concepts) in the 2010 Conceptual Framework, and not the definitions in the revised
Conceptual Framework.
At 1 July 2020 it was determined that the adoption of the conceptual framework for financial reporting
and relevant amending standards had no impact on the Group.
AASB 2018-7 Definition of Material (Amendments to AASB 101 and AASB 108)
The Group has adopted AASB 2018-7 with the date of initial application being 1 July 2020.
24
Notes to the Consolidated Financial Statements
Annual Report 2021
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.
At 1 July 2020 it was determined that the adoption of AASB 2018-7 had no impact on the Group.
(e)
New accounting standards and interpretations not yet effective
The Australian Accounting Standards Board (AASB) has issued a number of new and amended
Accounting Standards and Interpretations that have mandatory application dates for future reporting
periods, some of which are relevant to the Group. The Group has decided not to early adopt any of
these new and amended pronouncements. The Group’s assessment of the new and amended
pronouncements that are relevant to the Group but applicable in future reporting periods is set out
below.
Application
date of
standard
Application
date for
Group
1 January
2022
1 July
2022
Reference
Title
Summary
AASB 2020-
3
Amendments to
Australian
Accounting
Standards –
Annual
Improvements
2018 – 2020 and
Other
Amendments
AASB 2020-3 amends AASB 1 First-time Adoption
of Australian Accounting Standards, AASB 3
Business Combinations, AASB 9 Financial
Instruments, AASB 116 Property, Plant and
Equipment, AASB 137 Provisions, Contingent
Liabilities and Contingent Assets and AASB 141
Agriculture. The main amendments relate to:
(a) AASB 1 – simplifies the application by a
subsidiary that becomes a first-time adopter
after its parent in relation to the
measurement of cumulative translation
differences;
(b) AASB 3 – updates references to the
Conceptual Framework for Financial
Reporting;
(c) AASB 9 – clarifies the fees an entity includes
when assessing whether the terms of a new
or modified financial liability are substantially
different from the terms of the original
financial liability;
(d) AASB 116 – requires an entity to recognise
the sales proceeds from selling items
produced while preparing PP&E for its
intended use and the related cost in profit or
loss, instead of deducting the amounts
received from the cost of the asset;
(e) AASB 137 – specifies the costs that an entity
includes when assessing whether a contract
will be loss making; and
(f) AASB 141 – removes the requirement to
exclude cash flows from taxation when
measuring fair value, thereby aligning the fair
value measurement requirements in AASB
141 with those in other Australian Accounting
Standards.
The likely impact of this accounting standard on
the financial statements of the Group has not been
determined
AASB 2014-
10
Amendments to
Australian
Accounting
Standards – Sale
AASB 2014-10 amends AASB 10: Consolidated
Financial Statements and AASB 128: Investments
in Associates and Joint Ventures to clarify the
accounting for the sale or contribution of assets
1 January
2022
1 July
2022
25
Notes to the Consolidated Financial Statements
Annual Report 2021
Reference
Title
Summary
Application
date of
standard
Application
date for
Group
or Contribution of
Assets between
an Investor and
its Associate or
Joint Venture,
AASB 2015-10:
Amendments to
Australian
Accounting
Standards –
Effective Date of
Amendments to
AASB 10 and
AASB 128 and
AASB 2017-5:
Amendments to
Australian
Accounting
Standards –
Effective Date of
Amendments to
AASB 10 and
AASB 128 and
Editorial
Corrections
Amendments to
Australian
Accounting
Standards –
Classification of
Liabilities as
Current or Non-
current; and
Amendments to
Australian
Accounting
Standards –
Classification of
Liabilities as
Current or Non-
current – Deferral
of Effective Date
Amendments to
Australian
Accounting
Standards –
Disclosure of
Accounting
Policies and
Definition of
Accounting
Estimates
AASB 2020-
1 and AASB
2020-6
AASB 2021-
2
between an investor and its associate or joint
venture by requiring:
(a) a full gain or loss to be recognised when a
transaction involves a business, whether it is
housed in a subsidiary or not; and
(b) a partial gain or loss to be recognised when a
transaction involves assets that do not
constitute a business, even if these assets are
housed in a subsidiary.
This accounting standard is not expected to have a
material impact on the financial statements of the
Group.
1 January
2023
1 July
2023
1 January
2023
1 July
2023
AASB 2020-1 amends AASB 101 Presentation of
Financial Statements to clarify requirements for
the presentation of liabilities in the statement of
financial position as current or non-current. It
requires a liability to be classified as current when
entities do not have a substantive right to defer
settlement at the end of the reporting period.
AASB 2020-6 defers the mandatory effective date
of amendments that were originally made in AASB
2020-1 so that the amendments are required to
be applied for annual reporting periods beginning
on or after 1 January 2023 instead of 1 January
2022. They will first be applied by the Group in
the financial year commencing 1 July 2023.
The likely impact of this accounting standard on
the financial statements of the Group has not been
determined.
AASB 2020-1 amends AASB 7 Financial
Instruments: Disclosures, AASB 101 Presentation
of Financial Statements, AASB 108 Accounting
Policies, Changes in Accounting Estimates and
Errors, AASB 134 Interim Financial Reporting and
AASB Practice Statement 2 Making Materiality
Judgements. The main amendments relate to:
(a) AASB 7 – clarifies that information about
measurement bases for financial instruments
is expected to be material to an entity’s
financial statements;
(b) AASB 101 – requires entities to disclose their
material accounting policy information rather
than their significant accounting policies;
(c) AASB 108 – clarifies how entities should
distinguish changes in accounting policies and
changes in accounting estimates;
(d) AASB 134 – to identify material accounting
policy information as a component of a
26
Notes to the Consolidated Financial Statements
Annual Report 2021
Reference
Title
Summary
Application
date of
standard
Application
date for
Group
complete set of financial statements; and
(e) AASB Practice Statement 2 – to provide
guidance on how to apply the concept of
materiality to accounting policy disclosures.
The likely impact of this accounting standard on
the financial statements of the Group has not been
determined.
(f)
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 2021.
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.
(g)
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.
(h)
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
27
Notes to the Consolidated Financial Statements
Annual Report 2021
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.
(i)
Exploration and evaluation
Exploration and evaluation expenditure in relation to the Company’s mineral tenements, other than
acquisition costs, is expensed as incurred. Acquisition costs in relation to mineral tenements are
capitalised and carried forward provided the rights to tenure of the area of the interest are current
and such costs are expected to be recouped through successful development, or by sale, or where
exploration and evaluation activities have not, at balance date, reached a stage to allow a reasonable
assessment regarding the existence of economically recoverable reserves. When the Directors decide
to progress the development of an area of interest all further expenditure incurred relating to the area
will be capitalised. Projects are advanced to development status and classified as mine development
when it is expected that further expenditure can be recouped through sale or successful development
and exploitation of the area of interest. Such expenditure is carried forward up to commencement of
production at which time it is amortised over the life of the economically recoverable reserves. All
projects are subject to detailed review on an annual basis and accumulated costs written off to the
extent that they will not be recoverable in the future.
(j)
Mine property and development costs
Recognition and measurement
Expenditure on the acquisition and development of mine properties within an area of interest are
carried forward at cost separately for each area of interest. Accumulated expenditure is amortised on
a straight line basis over the expected life of the operation. A regular review is undertaken of each
area of interest to determine the appropriateness of continuing to carry forward costs in relation to
that area of interest.
Amortisation
The Group applies the life of mine method of amortisation to its mine properties and development
costs.
Impairment
The Group assess each asset or cash generating unit (CGU) at the end of each reporting period to
determine whether an indication of impairment exists. Where an indicator of impairment exists, a
formal estimate of the recoverable mount is made, which is considered to be the higher of value in
use (VIU) (being net present value of expected future cash flows of the relevant cash generating
unit) and fair value less costs to sell (FVLCS). The future recoverability of capitalised mine
development expenditure is dependent on a number of factors, including the level of proved, probable
and inferred mineral resources, future technological changes, which could impact the cost, future
legal changes (including changes to environmental restoration obligations) and changes to commodity
prices.
The Group regularly reviews the carrying values of its mine development assets in the context of
independent expert valuations, internal and external consensus forecasts for commodity prices and
foreign exchange rates, with the application of appropriate discount rates for the assets concerned.
To the extent that capitalised mine development expenditure is determined not to be recoverable in
the future, this will reduce profit in the period in which this determination is made. Capitalised mine
development expenditure is assessed for recoverability in a manner consistent with property, plant
and equipment as described below.
28
Notes to the Consolidated Financial Statements
Annual Report 2021
(k)
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
(l)
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.
(m)
Financial Instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial
liability or equity instrument of another entity.
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.
Financial Liabilities
Initial recognition and measurement
All financial liabilities are recognised initially at fair value adjusted for transaction costs, except where
the instrument is classified as fair value through profit or loss, in which case transaction costs are
immediately recognised as expenses in profit or loss.
Classification of financial liabilities
Financial liabilities classified as held-for-trading, contingent consideration payable by the group for
the acquisition of a business, and financial liabilities designated at FVTPL, are subsequently measured
at fair value. All other financial liabilities recognised by the group are subsequently measured at
amortised cost.
29
Notes to the Consolidated Financial Statements
Annual Report 2021
The Group’s financial liabilities include trade and other payables.
(n)
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
not previously recognised by the date of the sale of the non-current asset is recognised at the date of
derecognition.
(o)
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.
(p)
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.
(q)
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.
(r)
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.
(s)
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.
30
Notes to the Consolidated Financial Statements
Annual Report 2021
Deferred income tax liabilities are recognised for all taxable temporary differences:
•
except where the deferred income tax liability arises from the initial recognition of an asset or
liability in a transaction that is not a business combination and, at the time of the transaction,
affects neither the accounting profit nor taxable profit or loss; and
•
in respect of taxable temporary differences associated with investments in subsidiaries,
associates and interests in joint ventures, except where the timing of the reversal of the
temporary differences can be controlled and it is probable that the temporary differences will
not reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of
unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be
available against which the deductible temporary differences, and the carry-forward of unused tax
assets and unused tax losses can be utilised:
•
•
except where the deferred income tax asset relating to the deductible temporary difference
arises from the initial recognition of an asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects neither the accounting profit nor
taxable profit or loss; and
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.
(t)
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:
31
Notes to the Consolidated Financial Statements
Annual Report 2021
- 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.
(u)
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.
(v)
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.
The Group undertakes a number of activities through joint arrangements. A joint arrangement is an
arrangement over which two or more parties have joint control. Joint control is the contractually
agreed sharing of control over an arrangement which exists only when the decisions about the
relevant activities (being those that significantly affect the returns of the arrangement) require the
unanimous consent of the parties sharing control.
The Group’s joint arrangements are in the form of a joint operation (with respect to the Wiluna Iron
JV) and a joint venture (with respect to the Yarram Iron JV).
(i)
Joint operation
A joint operation is a type of joint arrangement in which the parties with joint control of the
arrangement have rights to the assets and obligations for the liabilities in relation to the
arrangement.
The Group recognises in relation to its joint operations:
Assets, including its share of any assets held jointly
Liabilities, including its share of any liabilities held jointly
▪
▪
▪ Revenue from the sale of its share of the output arising from the joint operation
▪
▪
Share of the revenue from the sale of the output by the joint operation
Expenses, including its share of any expenses incurred jointly
These amounts have been incorporated in the financial statements under the appropriate
classifications.
The Wiluna Iron JV is accounted for as a joint operation.
(ii)
Joint venture
A joint venture is an arrangement that the Group controls jointly with one or more other investors,
and over which the Group has rights to a share of the arrangement’s net assets rather than direct
rights to underlying assets and obligations for underlying liabilities.
32
Notes to the Consolidated Financial Statements
Annual Report 2021
The joint venture is accounted for using the equity method. Under the equity method, the share of
the profits or losses of the joint venture is recognized in profit or loss and the share of the
movements in equity is recognized in other comprehensive income. Investments in joint ventures
are carried in the statement of financial position at cost plus post-acquisition changes in the Group’s
share of net assets of the joint venture.
Any goodwill or fair value adjustment attributable to the Group’s share in the joint venture is not
recognized separately and is included in the amount recognized as investment.
The carrying amount of the investment in joint venture is increased or decreased to recognize the
Group’s share of the profit or loss and other comprehensive income of the joint venture, adjusted
where necessary to ensure consistency with the accounting policies of the Group.
Unrealised gains and losses on transactions between the Group and the joint venture are eliminated
to the extent of the Group’s interest in those entities. Where unreleased losses are eliminated, the
underlying asset is also tested for impairment.
The Yarram Iron JV is accounted for as a joint venture.
(w)
Share-based payments
The Group provides benefits to employees (including Directors) in the form of share-based payment
transactions, whereby employees render services in exchange for shares or rights over shares
(equity-settled transactions).
The cost of equity-settled transactions is determined by the fair value at the date when the grant is
made using an appropriate valuation model. That cost is recognised, together with a corresponding
increase in other capital reserves in equity, over the period in which the performance and/or service
conditions are fulfilled in employee benefits expense. The cumulative expense recognised for equity-
settled transactions at each reporting date until the vesting date reflects the extent to which the
vesting period has expired and the Consolidated Entities best estimate of the number of equity
instruments that will ultimately vest.
The statement of profit or loss expense or credit for a period represents the movement in cumulative
expense recognised as at the beginning and end of that period and is recognised in employee benefits
expense.
Until an award has vested, any amounts recorded are contingent and will be adjusted if more or fewer
awards vest than were originally anticipated to do so. Any award subject to a market condition is
considered to vest irrespective of whether or not the market condition is fulfilled, provided that all
other conditions are satisfied.
If a non-vesting condition is within the control of the Group, Company or the employee, the failure to
satisfy the condition is treated as a cancellation. If a non-vesting condition within the control of
neither the Group, Company nor employee is not satisfied during the vesting period, any expense for
the award not previously recognised is recognised over the remaining vesting period, unless the
award is forfeited.
If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the
terms had not been modified. An additional expense is recognised for any modification that increases
the total fair value of the share-based payment arrangement, or is otherwise beneficial to the
employee, as measured at the date of modification.
If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and
any expense not yet recognised for the award is recognised immediately. However, if a new award is
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.
33
Notes to the Consolidated Financial Statements
Annual Report 2021
(x)
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.
(y)
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.
(z)
Significant accounting estimates and assumptions
The carrying amounts of certain assets and liabilities are often determined based on estimates and
assumptions of future events. The key estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying amounts of certain assets and liabilities within the next
annual reporting year are:
Capitalised exploration and evaluation expenditure
The future recoverability of capitalised exploration and evaluation expenditure is dependent on a
number of factors, including whether the Group decides to exploit the related lease itself or, if not
whether it successfully recovers the related exploration and evaluation asset through sale.
Factors which could impact the future recoverability include the level of proved, probable and inferred
mineral resources, future technological changes which could impact the cost of mining, future legal
changes (including changes to environmental restoration obligations) and changes to commodity
prices.
To the extent that capitalised exploration and evaluation expenditure is determined not to be
recoverable in the future, this will reduce profits and net assets in the period in which this
determination is made.
In addition, exploration and evaluation expenditure is capitalised if activities in the area of interest
have not yet reached a stage which permits a reasonable assessment of the existence or otherwise of
34
Notes to the Consolidated Financial Statements
Annual Report 2021
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 21.
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.
3 REVENUE, INCOME AND EXPENSES
(a) Revenue
Interest
Other interest earned
(b) Other income
Management fee income
Rental recharges 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 10)
Fair value gain/(loss) on financial asset through profit
and loss (refer note 10)
Recovery of receivable
2021
$
8,551
50,000
58,551
29,400
28,164
-
-
-
-
5,422
-
62,986
2020
$
1,662
-
1,662
-
-
6,650,000
1,441,157
402,000
48,525
(15,409)
106
8,526,379
(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.
35
Notes to the Consolidated Financial Statements
Annual Report 2021
(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
Employee salaries & wages
Payroll Tax
(d) Other expenses
Occupancy rental expenses
Insurance
Corporate advisory and marketing expenses
Depreciation expense
Stamp Duty
Other
4
INCOME TAX
(a) Income tax expense
The major components of income tax expense are:
Current tax
Deferred tax
Income tax expense reported in the statement of comprehensive
income
2021
$
(327,500)
(20,400)
(16,777)
(364,677)
(61,129)
(57,937)
-
(2,856)
(210,228)
(44,475)
(376,625)
2020
$
(202,000)
-
-
(202,000)
(36,700)
(31,700)
(44,317)
(1,311)
-
(102,334)
(216,362)
2021
$
2020
$
-
-
-
2021
$
78,896
-
78,896
2020
$
(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
(2,510,540)
5,987,075
Tax at the statutory income tax rate of 26% (2020: 27.5%)
Tax effect on impairment losses
Tax effect on non-temporary differences
Unrecognised tax losses and temporary differences
Utilised tax losses
Utilised capital losses
Income tax expense reported in statement of comprehensive income
(652,740)
-
197,691
455,049
-
-
-
1,646,446
199,559
33,176
54,127
(31,654)
(1,822,758)
78,896
36
Notes to the Consolidated Financial Statements
Annual Report 2021
(c) Deferred tax liabilities
Accrued income
Less: offset by deferred tax asset
Deferred tax liabilities
(d) Deferred tax assets
Accrued expenditure
Provision for rehabilitation
Employee leave provision
Loss on financial assets
Tax losses
Less: offset against deferred tax liabilities
Deferred tax assets not recognised
The Group has not formed a tax consolidated group.
2021
2020
$
7
(7)
-
$
-
-
-
-
5,980
41,636
5,022
2,597
3,238,129
3,653,100
(7)
3,653,093
3,988
-
-
4,238
2,951,283
2,959,509
-
2,959,509
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 $3,238,129
(tax effected) (2020: $2,951,283) that are available indefinitely for offsetting against future taxable profits
of the companies in which the losses arose. In addition, the Group has capital losses of $7,656,081 tax
effected (2020: $8,097,778) which are not shown in the above table.
Deferred tax assets have not been recognised in respect of these losses as they may not be used to offset
taxable profits elsewhere in the Group, they have arisen in companies that have been loss-making for some
time, and there is no other evidence of recoverability in the near future.
5 EARNINGS/(LOSS) PER SHARE
Basic earnings/(loss) per share
Continuing operations
Diluted earnings/(loss) per share
Continuing operations
2021
Cents
(0.44)
(0.44)
(0.44)
(0.44)
2020
Cents
1.22
1.22
1.22
1.22
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 2021 the diluted earnings per share is equal to the basic earnings per share as
the options on issue as at 30 June 2021 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
2021
$
2020
$
(2,510,540)
(2,510,540)
5,908,179
5,908,179
37
Notes to the Consolidated Financial Statements
Annual Report 2021
2021
No.
2020
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
574,508,178
483,719,885
-
-
574,508,178
483,719,885
The unlisted options outstanding at 30 June 2021 and 30 June 2020 were found to have an anti-dilutive
effect on the calculation. Therefore, at 30 June 2021 and 30 June 2020, 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
2021
$
2020
$
5,830,848
5,144,592
Cash at bank and on hand earns interest at the floating rates based on daily bank deposit rates.
(a) Reconciliation of net (loss) / profit after tax to net cash flows from operations
2021
$
2020
$
Net (loss) / profit for the year
(2,510,540)
5,908,179
Adjustments for:
Depreciation
Gain on royalty asset sale
Share-based payment expense
Share of net losses of joint venture accounted for using equity method
Gain on sale of exploration assets
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
(Increase) / decrease in restricted cash
(Increase) / decrease in trade and other receivables
(Increase) in prepayments
Increase in trade and other payables
(Decrease) / increase in tax payable
2,856
-
754,554
78,770
-
-
-
(5,422)
830,758
(109,242)
(396,438)
(374,435)
407,492
-
(472,623)
1,311
(6,650,000)
67,038
-
(402,000)
725,670
(48,525)
15,409
(6,291,097)
-
795,840
(32,769)
79,601
78,896
921,568
Net cash flow (used in) / from operating activities
(2,152,405)
538,650
(b) Non-cash investing and financing activities
During the year ended 30 June 2021, FEL issued 12,500,000 ordinary shares as part consideration for
the Wiluna Transaction, representing a non-cash payment of $250,000. Refer note 13(a) for further
details.
During the year ended 30 June 2021, FEL issued 31,250,000 ordinary shares pursuant to the Yarram
Transaction, representing a non-cash payment of $500,000 being part of the initial cost of investment
accounted for using the equity method. Refer to note 15(b) for further details.
38
Notes to the Consolidated Financial Statements
Annual Report 2021
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 18(f) 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 3(b)(iii) for further details.
7 RESTRICTED CASH
Restricted cash
8 TRADE AND OTHER RECEIVABLES
Current
Trade receivables
Net GST receivable
Royalty asset sale receivable (a)
Accrued interest receivable
Other receivable (b)
2021
$
109,242
2020
$
-
2021
$
2020
$
1,888
252,580
-
27
1,409,569
1,664,064
-
-
2,650,000
-
-
2,650,000
(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) Relates to amounts receivables in respect of the Wiluna Iron Joint Operation, including advances of
$1,380,169 and management fees receivable of $29,400.
Other receivables are amounts which generally arise from transactions outside the usual operating
activities of the Group and are non-interest bearing with no fixed terms. Other receivables do not
contain impaired assets, are not past due date and are expected to be received in full.
Due to the short term nature of these receivables, their carrying value is assumed to approximate
their fair value. The maximum exposure to credit risk is the fair value of receivables. It is not the
Group’s policy to transfer (on-sell) receivables to special purpose entities.
9 OTHER ASSETS
Advance payment (additional 9% interest JWD Project) (a)
Prepaid production royalty (JWD Project)
Prepaid expenses
2021
$
1,000,000
114,750
297,729
1,412,479
2020
$
-
-
38,044
38,044
(a) As announced on 25 May 2021, FEL paid a $1,000,000 refundable deposit to its joint venture
partner to secure an option to increase its interest in JWD from 51% to 60% for consideration of
$2,500,000. This option was exercised subsequent to 30 June 2021. The $1,000,000 refundable
deposit has been repaid on 27 July 2021.
39
Notes to the Consolidated Financial Statements
Annual Report 2021
10 FINANCIAL ASSET
Fair value through profit or loss (FVTPL) – equity investment
77,562
42,140
2021
$
2020
$
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
42,140
-
-
30,000
5,422
77,562
-
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.
11 HELD FOR SALE ASSETS
Exploration assets - Pilbara exploration assets
Movements:
Balance at beginning of year
Exploration assets reclassified as held for sale (refer note 12(a))
Write-off (refer note 12(a))
Transferred back to exploration assets (refer note 12(a))
Balance at end of year
12 EXPLORATION ASSETS
Acquisition Cost – Pilbara exploration assets
Movements in exploration assets
Carrying value at beginning of period
Consideration in shares (Wiluna Iron Joint Operation) (note
13(a)
Cash consideration and payments pursuant to transaction
agreement (Wiluna Iron Joint Operation) (note 13(a))
Transferred to Mine Properties and Development Costs (Wiluna
Iron Joint Venture) (note 13(a))
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 2021
2021
$
250,000
-
250,000
-
-
250,000
2020
$
-
-
475,670
(225,670)
(250,000)
-
2021
$
2020
$
-
-
250,000
250,000
250,000
250,000
850,000
(1,100,000)
-
(250,000)
-
-
975,670
-
-
-
(500,000)
(475,670)
250,000
250,000
On 17 June 2021, the Company announced that it had entered two separate binding agreements
with Global Lithium Ltd (ASX:GL1) (Global Lithium) and Mercury Resources Group Pty Ltd
(Mercury Resources) to dispose of its Pilbara exploration tenure for a total cash consideration
of $550,000, with a trailing royalty on certain of the tenements. The transactions completed
subsequent to year end.
40
Notes to the Consolidated Financial Statements
Annual Report 2021
The carrying value of the Pilbara exploration tenements have been reclassified as held for sale at
30 June 2021 (refer note 11).
30 June 2020
The exploration asset carrying value of $475,670 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 11).
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
11) back to exploration assets.
13 MINE PROPERTIES AND DEVELOPMENT COSTS
Acquisition Costs – Wiluna Iron JV
Expenditure Capitalised – Wiluna Iron JV
Movements
Carrying value at beginning of period
Transferred from Exploration Assets (Wiluna Iron JV) (a)
Milestone consideration paid in cash (decision to mine) (b)
Expenditure incurred (c)
Amortisation (d)
Closing value at end of year
2021
$
2020
$
1,330,000
1,562,656
2,892,656
-
1,100,000
230,000
1,562,656
-
2,892,656
-
-
-
-
-
-
-
-
-
(a) As announced 17 September 2020, FEL entered a binding agreement to acquire a 51% interest in the
Mining Rights Agreement held by the Gold Valley Iron Ore Pty Ltd (GVIO) over the Wiluna West JWD
deposit (JWD Mining Rights or JWD Iron Ore Project) (Wiluna Transaction). Consideration
included $500,000 in cash and 12,500,000 shares (deemed value of $250,000) upon settlement with a
further commitment to fund a $125,000 instalment due to GWR Group on 30 September 2020, and to
prepay an amount of $225,000 representing the first 50% instalment of a royalty.
The initial $1,100,000 cost of acquisition of the Wiluna Transaction was transferred from exploration
assets to mine properties and development costs on 1 January 2021.
(b) In April 2021, the Company made a payment of $230,000 in cash to GVIO, representing an advance
payment of the additional consideration payable (as agreed to be varied from $250,000) pursuant to
the Wiluna Transaction upon a decision to mine.
Subsequent to 30 June 2021, the cash advance was refunded to FEL (plus interest of $20,000), and
4,807,692 shares were issued in settlement of the $250,000 consideration component payable upon
decision to mine in respect of the JWD Project.
(c) Development activities were carried out over the period from 1 January 2021 to 30 June 2021. Costs
incurred in respect of the development of the JWD Iron Ore Project have been capitalised from 1
January 2021.
(d) Production of the JWD Iron Ore Project commenced subsequent to year end. Accordingly, amortisation
of mine property and development costs will commence from 1 July 2021.
41
Notes to the Consolidated Financial Statements
Annual Report 2021
14 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
2021
$
31,025
(4,783)
26,242
2,635
26,463
(2,856)
26,242
2020
$
4,562
(1,927)
2,635
3,946
-
(1,311)
2,635
15 INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
(a) Reconciliation of carrying amount of investments accounted for using the equity method
Yarram Iron JV
Initial cost of investment (b)
Share of profit/(loss) of joint venture
Share of reserves
2021
$
2020
$
3,345,000
(78,770)
-
3,266,230
-
-
-
-
(b) On 22 December 2020, the Company advised it had completed the transaction (initially announced
to ASX on 21 August 2020) to acquire a 50% interest in the Yarram iron ore project (Yarram Iron
JV) in the Northern Territory (Yarram Transaction). Completion of the transaction was effected
on 22 December 2020, via FEL (via its wholly owned subsidiary Yarram FE Pty Ltd (Yarram FE))
purchasing a 50% share in Gold Valley Iron and Manganese Pty Ltd (GVIM), being the entity which
owns the Yarram Iron Ore Rights.
The initial cost of investment summarised as follows:
Cash1
Shares2
Subscription amount payable to GVIM3
Cost of investment
$
945,000
500,000
1,900,000
3,345,000
1 Cash consideration pursuant to agreement of $1,000,000 less $55,000 liabilities assumed.
2 Being 31,250,000 shares valued at $500,000 based on deemed issue price of $0.016 per share
(refer to note 18).
3 Refers to subscription funds payable in relation to 500,000 shares in GVIM, being:
(i) a minimum payment of $1,500,000; and
(ii) up to an additional $400,000 as directed by the Board of GVIM;
at a date to be determined by the Board of GVIM.
Note, if the minimum payment amount is unpaid at payment date, shares to be cancelled
proportionally to the unpaid amount.
42
Notes to the Consolidated Financial Statements
Annual Report 2021
(c) Summarised financial information for the Yarram Iron JV
The tables below provide summarised consolidated financial information for the Yarram Iron JV
company (GVIM) and its wholly owned subsidiary (Yarram Iron Pty Ltd). The information disclosed
reflects the amounts presented in the financial statements of the joint venture and not FEL’s share
of those amounts.
Summarised balance sheet:
2021
$
2020
$
ASSETS
Current Assets
Trade and other receivables
Other assets
Total Current Assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Trade and other payables
Total Current Liabilities
TOTAL LIABILITIES
NET ASSETS
Reconciliation of carrying amounts:
Opening net assets
Loss for the period
Closing net assets/(liabilities)
Group’s 50% share:
Group’s share in JV’s net assets/(liabilities)
Cost of investment
Carrying amount
1,211,345
99,596
1,310,941
1,310,941
546
546
546
1,310,395
-
(157,540)
(157,540)
(78,770)
3,345,000
3,266,230
-
-
-
-
-
-
-
-
-
-
-
-
-
-
16 TRADE AND OTHER PAYABLES
Trade payables (a)
Employee related liabilities
Subscription funds payable (b)
Other payables and accruals (c)
Kasombo Acquisition Pre-Settlement Exploration Expenditure
2021
$
404,292
104,865
1,210,900
620,236
-
2,340,293
2020
$
105,673
-
-
123,627
49,130
278,430
(a) Trade payables are non-interest bearing and are normally settled on 30-day terms.
(b) Relates to the initial subscription funds payable for shares in GVIM of $1,900,000 (refer to note
15(b)), adjusted for $689,100 in payments made by FEL for and on behalf of the Yarram Iron JV.
(c) Other payables are non-interest bearing and have varying terms.
43
Notes to the Consolidated Financial Statements
Annual Report 2021
17 PROVISION FOR REHABILITATION
Provision for rehabilitation – JWD Project (a)
2021
$
160,140
2020
$
-
(a) The provision for rehabilitation of $160,140 recorded in the statement of financial position at 30
June 2021 reflects the Group’s 51% share of the total $314,000 provision for rehabilitation of
Wiluna Iron JV (accounted for as a joint operation in accordance with the accounting policy set at
note 2(v)). The provision for rehabilitation of $314,000 of Wiluna Iron JV has been calculated using
the Rehabilitation Estimate Calculation pursuant to the Mining Rehabilitation Fund Regulations 2013
based on an estimate of area of disturbance (calculated at $414,000), less $100,000 which has
been prepaid pursuant to an agreement.
18 CONTRIBUTED EQUITY
Ordinary shares
Issued and fully paid
2021
$
2020
$
48,172,188
41,236,293
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 – completion shares (Wiluna
JWD acquisition) (a)
Shares issued – completion shares
(Yarram JV acquisition) (b)
Shares issued – placement at $0.045 per
share (c)
Shares issued – exercise of options (d)
Shares issued – placement at $0.015 per
share (e)
Shares issued - Settlement of Macarthur
earn-in agreement option fee (f)
Shares issue costs – shares issued to
option underwriter
Share issue costs
Balance at end of year
(a) Refer to note 12.
(b) Refer to note 15.
2021
No. of shares
2021
2020
$ No. of shares
2020
$
488,701,620
12,500,000
41,236,293
250,000
457,034,953
-
40,770,054
-
31,250,000
500,000
123,381,655
5,552,174
43,601,749
918,285
-
-
-
-
-
-
-
-
5,000,000
75,000
-
10,000
-
460
26,666,667
-
400,000
-
-
699,445,024
(285,024)
48,172,188
-
488,701,620
(8,761)
41,236,293
(c) On 18 February 2021, the Company announced it had successfully completed a placement to
sophisticated and professional investors at an issue price of $0.045 raising $5.5 million (before
capital raising costs) (Placement). On 24 February 2021, the Company issued 123,381,655
Placement shares.
(d) During the year ended 30 June 2021, the Company raised a total of $918,285 from the exercise of
the following unlisted options:
▪
▪
▪
5,000,000 unlisted options at $0.025 expiring 31 March 2022
36,476,749 unlisted options at $0.02 expiring 31 May 2021
2,125,000 unlisted options at $0.03 expiring 13 March 2021
(e) 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 (2019 Placement).
44
Notes to the Consolidated Financial Statements
Annual Report 2021
In addition to the above, at 30 June 2019, the Company had received firm commitment of $75,000
from investors to participate in the 2019 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.
2019 Placement investors received one free option for every four 2019 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 ended 30 June
2020.
(f) On 28 August 2019, FEL and Macarthur Minerals Limited 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).
Options over ordinary shares
Unlisted options
2021
No.
2020
No.
79,000,000
61,746,749
Movements in unlisted options on
issue
Balance at
1 July 2020
Granted
Exercised
Expired/
lapsed
No.
No.
No.
No.
Share-based payments (refer note
21):
Unlisted options at $0.020 expiring
31/05/2021
Unlisted options at $0.025 expiring
31/03/2022
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
Unlisted options at $0.030 expiring
31/08/2022
Unlisted options at $0.040 expiring
31/08/2023
Unlisted options at $0.030 expiring
31/08/2022
Unlisted options at $0.030 expiring
31/08/2022
Unlisted options at $0.030 expiring
31/08/2022
Unlisted options at $0.035 expiring
12/10/2023
Unlisted options at $0.045 expiring
12/04/2024
Unlisted options at $0.060 expiring
12/10/2024
Unlisted options at $0.060 expiring
30/06/2023
Unlisted options at $0.074 expiring
31/12/2022
Unlisted options at $0.04 expiring
31/08/2023
17,500,000
15,000,000
2,500,000
2,500,000
601,748
-
-
-
-
-
(17,500,000)
(5,000,000)
(2,500,000)
(2,500,000)
(601,748)
-
-
-
-
-
-
-
-
5,000,000
5,000,000
17,500,000
2,500,000
5,000,000
5,000,000
5,000,000
5,000,000
- 15,000,0001
-
-
1,000,0001
3,000,0001
-
-
-
-
-
-
-
-
-
-
-
38,101,748
69,000,000
(28,101,748)
45
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balance at
30 June
2021
No.
-
10,000,000
-
-
-
5,000,000
5,000,000
17,500,000
2,500,000
5,000,000
5,000,000
5,000,000
5,000,000
15,000,000
1,000,000
3,000,000
79,000,000
Notes to the Consolidated Financial Statements
Annual Report 2021
Movements in unlisted options on
issue
Balance at
1 July 2020
Granted
Exercised
Expired/
lapsed
No.
No.
No.
No.
Balance at
30 June
2021
No.
Free-attaching options (refer note
22):
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
13,375,001
23,375,001
-
-
-
-
-
(2,125,000)
(3,500,000)
-
-
(3,125,000)
(1,250,000)
(13,375,001)
-
(15,500,001)
(7,875,000)
-
-
-
-
-
TOTAL
61,476,749
69,000,000
(43,601,749)
(7,875,000)
79,000,000
1Being options granted in year ended 30 June 2021 which were issued in August 2021.
19 ACCUMULATED LOSSES
2021
2020
$
$
Accumulated losses
(38,083,896)
(35,573,356)
Movements in accumulated losses
Balance at beginning of year
Net (loss)/profit for the year
Balance at end of year
20 RESERVES
Share-based payments reserve
Movements in reserve
Balance at beginning of year
Share-based payments made during the year
(refer note 21)
Balance at end of year
Nature and purpose of reserve
(35,573,356)
(2,510,540)
(38,083,896)
(41,481,535)
5,908,179
(35,573,356)
2021
2020
$
$
2,861,702
2,107,148
2,107,148
2,035,849
754,554
2,861,702
71,299
2,107,148
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).
46
Notes to the Consolidated Financial Statements
Annual Report 2021
21 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 included in statement of financial position:
Shares (exploration assets)
Shares (investment accounted for using equity method)
(c) Share-based payments expensed through equity:
Options
2021
$
-
754,554
754,554
250,000
500,000
750,000
2020
$
-
67,038
67,038
-
-
-
-
-
4,261
4,261
Total share-based payments
1,504,554
71,299
(i) During the year, the Company issued or granted the following options:
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
17,500,000 unlisted options exercisable at $0.03 expiring 31 August 2022 issued to
Directors Mr Tony Sage (7,500,000 options), Mr Mark Hancock (7,500,000 options) and
Mr Nicholas Sage (2,500,000 options) (or their nominees) (Director Options A);
2,500,000 unlisted options exercisable at $0.03 expiring 31 August 2022 issued to
consultants for provision of accounting and company secretarial services (Consultant
Options);
5,000,000 unlisted options exercisable at $0.03 expiring 31 August 2022 issued to the
Project Director (or nominee) (Project Director Options A);
5,000,000 unlisted options exercisable at $0.04 expiring 31 August 2023 with vesting
conditions issued to the Project Director (or nominee) (Project Director Options B);
5,000,000 unlisted options exercisable at $0.035 expiring 12 October 2023 granted to
corporate advisors (Advisor Options A);
5,000,000 unlisted options exercisable at $0.045 expiring 12 April 2024 granted to
corporate advisors (Advisor Options B);
5,000,000 unlisted options exercisable at $0.06 expiring 12 October 2024 granted to
corporate advisors (Advisor Options C);
5,000,000 unlisted options exercisable at $0.03 expiring 31 August 2022 issued to
consultants and employees for the provision of services (Employee and Consultant
Options);
15,000,000 unlisted option exercisable at $0.06 expiring 30 June 2023 with vesting
conditions granted to Directors Mr Tony Sage (7,500,000 options) and Mr Mark
Hancock (7,500,000 options) (or their nominees) (Director Options B), subject to
receipt of shareholder approval;
1,000,000 unlisted options exercisable at $0.074 expiring 31 December 2022 granted
to an employee (Employee Options A); and
3,000,000 unlisted options exercisable at $0.04 expiring 31 August 2023 with vesting
conditions granted to an employee (Employee Options B).
47
Notes to the Consolidated Financial Statements
Annual Report 2021
(d) Fair value of options issued
The fair value of unlisted options issued and granted during the year has been determined using a
Black-Scholes option pricing model. The following table lists the inputs to the model for each class of
options:
Director
Options A
Consultant
Options
Project
Director
Options A
Project
Director
Options B
31 Aug 2023
27 Sep 2020
Nil
100%
0.27%
$0.040
Nil
2.93
$0.023
$0.0114
Employee and
Consultant
Options
31 Aug 2022
21 Feb 2021
Nil
100%
0.10%
$0.03
Nil
Expiry date
Valuation date
Dividend yield (%)
Expected volatility (%)
Risk free interest rate (%)
Exercise price ($)
Discount (%)
Expected life of options
(years)
Share price at grant date ($)
Value per option ($)
31 Aug 2022
25 Nov 2020
Nil
100%
0.09%
$0.030
Nil
31 Aug 2022
25 Nov 2020
Nil
100%
0.09%
$0.030
Nil
31 Aug 2022
27 Sep 2020
Nil
100%
0.26%
$0.030
Nil
1.76
$0.028
$0.0133
1.76
$0.028
$0.0133
1.93
$0.023
$0.0103
Expiry date
Valuation date
Dividend yield (%)
Expected volatility (%)
Risk free interest rate (%)
Exercise price ($)
Discount (%)
Expected life of options
(years)
Share price at grant date ($)
Value per option ($)
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 ($)
Advisor
Options A
Advisor
Options B
Advisor
Options C
12 Oct 2023
8 Dec 2020
Nil
100%
0.11%
$0.035
Nil
12 Apr 2024
8 Dec 2020
Nil
100%
0.11%
$0.045
Nil
12 Oct 2024
8 Dec 2020
Nil
100%
0.20%
$0.060
Nil
2.84
$0.028
$0.0156
3.35
$0.028
$0.0154
3.85
$0.028
$0.0152
1.52
$0.0500
$0.0299
Director
Options B1
Employee
Options A2
Employee
Options B2
30 Jun 2023
30 Jun 2021
Nil
100%
0.04%
$0.060
Nil
31 Dec 2022
3 May 2021
Nil
100%
0.07%
$0.074
Nil
31 Aug 2023
22 Mar 2021
Nil
100%
0.09%
$0.040
Nil
2.00
1.66
2.44
$0.051
$0.0246
$0.057
$0.0236
$0.045
$0.0266
1 During the year ended 30 June 2021, the Directors agreed to issue a total of 15,000,000 unlisted
options with vesting conditions to directors at an exercise price of $0.06 each and an expiry date of 30
June 2023, subject to receipt of shareholder approval (being the Director Options B). Shareholder
approval for the issue of the Director Options B was received at the Company’s general meeting held
12 July 2021 and the securities were issued on 4 August 2021. The grant date is therefore after the
period in which services have begun to be rendered. Therefore, the grant date fair value presented in
the 30 June 2021 financial statements is provisional, estimated by reference to the period end share
price. This provisional amount will be revised in the next financial period.
2 Relates to unlisted options granted to employees during the year ended 30 June 2021, which were
48
Notes to the Consolidated Financial Statements
Annual Report 2021
formally issued on 4 August 2021 under the Company’s employee securities incentive plan which was
approved by shareholders at the Company’s general meeting held 12 July 2021.
(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:
Outstanding at the beginning of the year
Options granted
Options exercised
Options expired
Outstanding at the end of the year
Exercisable at the end of the year
Not exercisable at the end of the year
(f) Weighted average remaining contractual life
2021
No.
38,101,748
69,000,000
(28,101,748)
-
79,000,000
50,000,000
29,000,000
2021
WAEP
$0.022
$0.042
$0.021
-
$0.040
$0.031
$0.055
2020
No.
52,500,000
5,601,748
-
(20,000,000)
38,101,748
38,101,748
-
2020
WAEP
$0.031
$0.020
-
$0.045
$0.022
$0.022
-
The weighted average remaining contractual life for the options outstanding as at 30 June 2021 is 1.71
years (2020: 1.31 years).
(g) Fair value
The fair value of options granted during the year ended 30 June 2021 was $0.0178 (30 June 2020:
$0.0057).
(h) Option expired
During the year ended 30 June 2021, nil options expired (2020: 20,000,000).
22 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 nil unlisted options issued during the year (2020: 13,375,001).
(b) Options exercised during the year
During the year, there was $331,250 received in proceeds from the exercise of unlisted options (2020: nil).
(c) Options expired during the year
The following unlisted options expired during the year (2020: nil):
▪
▪
▪
3,500,000 unlisted options at $0.03 expired 13 March 2021
3,125,000 unlisted options at $0.03 expired 12 April 2021
1,250,000 unlisted options at $0.03 expired 8 May 2021
(d) Options on issue
There were no unlisted options on issue at 30 June 2021 (2020: 23,375,001).
49
Notes to the Consolidated Financial Statements
Annual Report 2021
23 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 and development. The financial results
from the segment are equivalent to the financial statement of the Company as a whole. The accounting
policies used by the Group in reporting segment internally are the same as those contained in note 2 to the
accounts. The Group’s non-current assets are located in Australia.
24 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group’s objective regarding 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 $12,949,994 at 30 June
2021 (30 June 2020: $7,770,085). The Group manages its capital to ensure that the entities in the Group
will be able to continue to meet its working capital requirements and operate as a going concern while
seeking to maximise the return to stakeholders.
In making its decisions to adjust its capital structure, either through new share issues or consideration of
debt, the Group considers not only its short-term working capital needs but also its long-term operational
and strategic objectives. The Board continually monitors the capital requirements of the Group.
The Group is not subject to any externally imposed capital requirements.
Financial instrument risk exposure and management
The Group’s principal financial instruments comprise cash and short-term deposits, receivables and
payables. The main risks arising from the Group’s financial instruments are interest rate and credit risk. The
Board reviews and agrees policies for managing each of these risks and they are summarised below.
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the
basis of measurement and the basis on which income and expenses are recognised, in respect of each class
of financial asset, financial liability and equity instrument are disclosed in note 2 to the financial statements.
The Group’s financial assets and financial liabilities are as follows:
Financial assets
Cash and cash equivalents
Restricted cash
Financial liabilities
Trade and other payables
Income tax payable
Provision for rehabilitation
Note
2021
$
2020
$
6
16
17
5,830,848
109,242
5,940,090
5,144,592
-
5,144,592
2,340,293
78,896
160,140
2,579,329
278,430
78,896
-
357,326
50
Notes to the Consolidated Financial Statements
Annual Report 2021
Market risk
Market risk is the risk that changes in market prices will affect the Group’s income or the value of its
holdings of financial instruments. At 30 June 2021, the Group was exposed to interest rate risk.
Beyond 30 June 2021, the nature of the transactions undertaken by and entered into by the Group in
respect of the JWD Project is such that the Group’s exposure to market risk will include commodity price
fluctuation (iron ore) and USD foreign currency fluctuation (cash, sales, Glencore loan facility).
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
Restricted cash
Note
6
7
2021
$
2020
$
5,830,848
109,242
5,940,090
5,144,592
-
5,144,592
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
2021
$
59,401
(29,700)
2020
$
59,401
(29,700)
Equity
Higher/(Lower)
2021
$
-
-
2020
$
-
-
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 2020.
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, 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.
51
Notes to the Consolidated Financial Statements
Annual Report 2021
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 expected date of settlement.
Consolidated
30 June 2021
Trade and other payables
Subscription funds payable
Employee leave provisions
Income tax payable
30 June 2020
Trade and other payables
Less than 6
months
$
6 months to 1
year
$
1 year to 5
years
$
1,110,079
-
-
78,896
1,188,975
357,326
357,326
-
-
19,314
-
19,314
-
-
Total
$
1,110,079
1,210,900
19,314
78,896
2,419,189
-
1,210,900
-
-
1,210,900
-
-
357,326
357,326
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.
25 COMMITMENTS AND CONTINGENCIES
Commitments
Office Rental Commitments
The Group has entered into a 12-month lease with Okewood for office premises for a lease term expiring 31
March 2022. The expenditure commitments with respect to rent payable under lease arrangement is as
follows:
Within one year
After one year but less than five years
More than five years
Exploration Expenditure Commitments
2021
$
2020
$
56,250
-
-
56,250
-
-
-
-
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 Australia are as follows:
2021
$
159,750
-
-
159,750
2020
$
35,930
-
-
35,930
Within one year
After one year but less than five years
More than five years
Contingencies
Contingent Liabilities of FEL in respect to the Wiluna Transaction
52
Notes to the Consolidated Financial Statements
Annual Report 2021
FEL has agreed to provide a working capital facility of $3m to the Wiluna Iron JV following decision to mine
($3m Facility) (repayable against sale proceeds).
The Company previously disclosed a contingent liability being the further consideration of $250,000 payable
to GVIO in cash or shares (at FEL’s election) upon a decision to mine. This has been satisfied in the year
ended 30 June 2021.
The Company previously disclosed a contingent liability being payment of $225,000 upon decision to mine,
being the final prepaid 50% instalment royalty obligation associated with the project. This has been
satisfied in the year ended 30 June 2021.
As announced on 25 May 2021, FEL paid a A$1m refundable deposit to its joint venture partner to secure an
option to increase its interest in JWD from 51% to 60% for consideration of A$2.5m. This option constitutes
a contingent asset at 30 June 2021. The option was exercised subsequent to year end (refer Significant
Events Subsequent to Reporting Date).
Contingent Liabilities of Wiluna Iron JV (in which FEL has a 51% interest at 30 June 2021)
Additional payments will be required by the JV to satisfy the underlying Mining Rights Agreement, as
follows:
▪
Should the Wiluna Iron JV elect to exercise its option to extract a further 2.7Mt from the JWD
deposit, an amount of $4,250,000 will be payable;
▪ Royalties are payable to GWR Group on the basis of iron ore price and to a third party; and
▪
$3.50 per tonne for each tonne sold in excess of 3Mt.
On 30 June 2021, FEL entered into an agreement with a third party to relocate its operations from Shed 4 at
Geraldton to secondary facility (to be built) (Relocation Agreement), which would in turn facilitate FEL
entering into a subsequent arrangement with Mt Gibson Iron (MGI) to utilise Shed 4 for its JWD project
operations. Pursuant to the Relocation Agreement, FEL agreed to provide a $300,000 as security to cover
the capital required to prepare and make available the secondary facility to the third party. Obligation to
make the security payment remained subject to certain conditions precedent at 30 June 2021 and therefore
represents a contingent liability at balance date. The security amount was paid in July 2021.
Contingent Liabilities of FEL in respect to the Yarram Transaction
A milestone payment will be payable by FEL to Gold Valley Brown Stone Pty Ltd if the Company discovers a
JORC indicated resource of greater than 3MT with greater than 60% Fe, as follows:
▪
▪
$1,500,000 cash; or at FEL’s election; and
$500,000 in cash and $1,000,000 in FEL shares (calculated as 10-day VWAP upon announcement of
Milestone Resource).
At 30 June 2021 there were no other contingent liabilities or contingent assets.
26 CONTROLLED ENTITIES AND ASSOCIATED ENTITIES
The consolidated financial statements include the financial statements of Fe Limited and the subsidiaries
listed in the following table.
Country of
Incorporation
Equity interest
%
2021
2020
Subsidiaries:
Wiluna FE Pty Ltd
Yarram FE Pty Ltd
Jackson Minerals Pty Ltd
Mooloogool Pty Ltd
Bulk Ventures Ltd
Bulk Ventures (Bermuda) Limited
Associates:
Gold Valley Iron and Manganese Pty Ltd
Yarram Iron Pty Ltd
Australia
Australia
Australia
Australia
Australia
Bermuda
Australia
Australia
53
100
100
100
100
100
100
50
50
-
-
100
100
100
100
-
-
Notes to the Consolidated Financial Statements
Annual Report 2021
27 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 shareholders’ equity
Profit/(loss) for the period
Total comprehensive profit/(loss) for the period
2021
$
2020
$
6,819,876
6,909,940
13,729,816
(779,822)
(779,822)
7,874,775
252,635
8,127,410
(278,430)
-
(278,430)
12,949,994
7,848,980
48,172,188
(38,083,896)
2,861,702
12,949,994
41,236,293
(35,494,461)
2,107,148
7,848,980
(2,589,435)
(2,589,435)
5,987,074
5,987,074
The parent entity, on behalf of its subsidiary Wiluna FE Pty Ltd, has provided a guarantee to GWR Group
Limited (GWR) in respect of amounts payable or owing under or in connection with the Minerals Rights
Agreement (being the agreement between GWR and GVIO pursuant to which the JWD Mining Rights are
held) (30 June 2020: nil).
Commitments, contingent liabilities and contingent assets of the parent entity are the same as those of the
Group as detailed at note 25.
28 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
2021
2020
$
$
44,904
25,905
-
3,286
44,904
29,191
54
Notes to the Consolidated Financial Statements
Annual Report 2021
29 RELATED PARTY DISCLOSURES
Note 26 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 2021, an aggregate amount of $750 (30 June 2020: $27,957) was paid or
payable to Cyclone Metals Ltd (Cyclone) for reimbursement of rent and other corporate costs. At 30 June
2021, nil was payable to Cyclone (30 June 2020: $44,664). During the year ended 30 June 2021, an
aggregate amount of $754 was received or receivable from Cyclone for reimbursement of travel costs. At
30 June 2021, $754 was receivable from Cyclone (30 June 2020: nil). Mr Antony Sage is a director of
Cyclone.
During the year ended 30 June 2021, an aggregate amount of $15,313 (30 June 2020: $16,986) was paid
or payable to European Lithium Ltd (European Lithium) for reimbursement of travel and other corporate
costs. At 30 June 2021, $538 was payable to European Lithium (30 June 2020: nil). Mr Antony Sage is a
director of European Lithium.
During the year ended 30 June 2021, an aggregate amount of $52,300 (30 June 2020: $59,148) was paid
or payable to Okewood Pty Ltd (Okewood) for rent and corporate box sponsorship. At 30 June 2021, nil
was payable to Okewood (30 June 2020: $9,148). Mr Antony Sage is a director of Okewood.
Significant shareholders
As at 30 June 2021, Cyclone held a 20.89% interest in the issued capital of FEL (30 June 2020: 29.84%).
Terms and conditions of transactions with related parties other than KMP
The sales to and purchases from related parties are made on terms equivalent to those that prevail in arm’s
length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement
occurs in cash. There have been no guarantees provided or received for any related party receivables or
payables.
Transactions with key management personnel
Compensation of key management personnel
Short-term employee benefits
Share-based payments
2021
$
544,167
333,859
878,026
2020
$
202,000
52,576
254,576
Interests held by Key Management Personnel
Movements in shares held by key management personnel is as follows:
30 June 2021
Directors
A Sage(i)
M Hancock
N Sage
Other KMP
J Sinclair
(i)
Indirectly held.
Balance at 1
July 2020
Granted as
remuneration
Exercise of
options
Net change
other
Balance at
30 June 2021
9,173,010
-
-
-
9,173,010
-
-
-
-
-
12,500,000
2,500,000
-
230,000
15,230,000
-
-
-
-
-
21,673,010
2,500,000
-
230,000
24,403,010
55
Notes to the Consolidated Financial Statements
Annual Report 2021
Movements in unlisted options held by key management personnel to purchase ordinary shares is
summarised as follows:
30 June
2021
Balance at 1
July 2020
Acquired
/granted
during
year
Exercised Other change Lapsed
during
Year
Balance at
30 June
2021
Exer-
cisable
Not Exer-
cisable
Ex. Price
Exp.
Date
Directors
A Sage
M Hancock
N Sage
Other KMP
J Sinclair
Note
(i)
(ii)
(iii)
(iii)
(iv)
(v)
10,000,000
-
-
-
2,500,000
-
-
2,500,000
-
- (7,500,000)
- (5,000,000)
-
-
- (2,500,000)
-
-
-
-
7,500,000
7,500,000
7,500,000
7,500,000
-
2,500,000
-
-
(230,000)
15,000,000 42,500,000 (15,230,000)
5,000,000
5,000,000
-
-
-
-
(2,500,000)
5,000,000
-
-
-
-
-
(2,500,000)
-
-
-
230,000
230,000
-
-
-
-
-
-
-
-
-
-
-
-
-
7,500,000 7,500,000
-
7,500,000
-
-
7,500,000 7,500,000
-
7,500,000
-
-
2,500,000 2,500,000
- $0.02 31 May 2021
- $0.025 31 Aug 2022
- $0.03 31 Aug 2022
7,500,000 $0.06 30 Jun 2023
- $0.02 31 May 2021
- $0.03 31 Aug 2022
7,500,000 $0.06 30 Jun 2023
- $0.02 31 May 2021
- $0.03 31 Aug 2022
5,000,000 5,000,000
-
5,000,000
-
-
-
-
-
- 42,500,000 22,500,000 20,000,000
- $0.03 31 Aug 2022
5,000,000 $0.04 31 Aug 2023
- $0.02 31 May 2021
(i) Other change includes the sale of 2,500,000 unlisted options exercisable at $0.02 expiring 31 May 2021 for $20,000
consideration.
(ii) Acquired includes the purchase of 5,000,000 unlisted options exercisable at $0.025 expiring 31 August 2022 for $100,000
consideration.
(iii) Includes 7,500,000 unlisted options with vesting conditions granted to each of Mr Tony Sage (or nominee) and Mr Mark
Hancock (or nominee) (total of 15,000,000 options) at an exercise price of $0.06 each and an expiry date of 30 June 2023,
which were formally issued on 4 August 2021 following receipt of shareholder approval at the Company’s July 2021 EGM (being
the Director Options B).
(iv) Other change includes the sale of 2,500,000 unlisted options exercisable at $0.02 expiring 31 May 2021 for $2,500
consideration.
(v) Relates to participation in exercise of 230,000 unlisted options exercisable at $0.02 expiring 31 May 2021 pursuant to an
underwritten options arrangement.
Shares issued to directors or director related entities
There were nil shares issued to directors during the year ended 30 June 2021 in relation to remuneration
(2020: nil).
30 EVENTS AFTER THE REPORTING DATE
Extraordinary General Meeting
The Company held an Extraordinary General Meeting on 12 July 2021 (July 2021 EGM). All resolutions put
to the meeting were passed and decided by way of a poll.
Further Milestones Achieved at JWD Project
Subsequent to year end, export capacity and a path to market was secured with the execution of key
agreements with Mt Gibson Iron Limited and the Mid West Port Authority and a long term haulage contract
with Campbells Transport.
Crushing and screening commenced in early July 2021 with first ore leaving site via road trains on the 11
July 2021. The Company continues to focus on the ramp up of haulage from the mine, with key
development work for the mine now complete.
As announced on 27 July 2021, the Company, via its wholly owned subsidiary Wiluna FE Pty Ltd, has
entered an exclusive offtake agreement with leading international trading house Glencore International AG
(Glencore), for 100% of the JWD product (iron ore lumps and fines) over the life of FEL’s operations at the
mine, subject to GWR Group Ltd’s existing right to elect to purchase up to 50,000 tonnes of fines product at
the mine gate. Pursuant to the terms of the offtake agreement, Glencore has provided a US$7.5 million
prepayment, which will be repaid by FEL in five instalments of US$1.5m plus applicable interest, from
shipments 2 to 6, or within 6 months of the prepayment being received, whichever is the earlier.
56
Notes to the Consolidated Financial Statements
Annual Report 2021
Increase of JWD Interest to 60%
As announced on 25 May 2021, FEL paid a A$1m refundable deposit to its joint venture partner to secure an
option to increase its interest in JWD from 51% to 60% for consideration of A$2.5m.
Following receipt of shareholder approval at the Company’s EGM held 12 July 2021 to issue equity to
complete this transaction, FEL has exercised its option and elected to settle payment of the consideration
amount via the issue of 43,859,649 shares. Subsequent to year end, the $1m refundable deposit has been
repaid to FEL and on 28 July 2021 the shares have been issued.
Commencement of hedging program
As announced on 10 August 2021, the Company commenced hedging a portion of its production. The aim of
the hedging program is to provide downside protection for the iron ore price, while maintaining some upside
exposure to high iron ore prices in strong markets and doing so in a way that minimises the upfront cash
cost of entering the hedge.
Volatility of Iron Ore Prices
The market price of iron ore has been volatile and has seen a decline in the period subsequent to 30 June
2021. The Company is continuing to advance its iron ore projects (including its JWD Project operations),
has commenced a hedging program (as detailed above), is taking steps to mitigate cash outflow, and will
continue to monitor the market price of iron ore prices and the impact this may have on planned activities.
The Company makes note of the contingent liability disclosed in relation to the Wiluna Iron JV (in which FEL
has a 60% interest at the date of release of this report). Should the Wiluna Iron JV elect to exercise its
option to extract a further 2.7Mt from the JWD deposit, an amount of $4,250,000 will be payable to GWR
Group, as required to satisfy the underlying Mining Rights Agreement. Unless otherwise negotiated with
GWR Group, this payment will be due in January 2022.
Sale of Pilbara Exploration Tenements
On 17 June 2021, the Company announced that it had entered two separate binding agreements with Global
Lithium and Mercury Resources to dispose of its Pilbara exploration tenure for a total cash consideration of
$550,000, with a trailing royalty on certain of the tenements. The transactions completed subsequent to
year end.
FEL Acquires 60% Interest in Mature Copper / Gold Project at Tennant Creek
On 24 September 2021, the Company announced that it had entered into a binding agreement to acquire a
60% interest in the exploration assets the Tennant Creek Project (located in the Nothern Territory) from
Gecko Mining Company Pty Ltd (GMC) (Tennant Creek Acquisition). Under the terms of the agreement,
FEL will acquire the interest in the tenement package for $5,000,000 cash (payable in three instalments),
85,000,000 shares, and 75,000,000 unlisted options exercisable at $0.10 expiring 3 years from date of
issue. The issue of securities pursuant to the Tennant Creek Acquisition are subject to shareholder
approval.
With effect from completion, FEL and GMC will form a joint venture in respect of the Tennant Creek Project
tenements. The joint venture will be in the form of an unincorporated joint venture and FEL will be the
manager of the joint venture. FEL will pay the first $10,000,000 of joint venture expenditure incurred.
Placement for $5 Million
On 24 September 2021, the Company announced that it had received commitments to raise $5,000,000
through a placement of 100,000,000 ordinary shares (Placement Shares) to sophisticated investors at
$0.05 per share. Investors will also be issued one option (exercise price $0.06, expiring 2 years from issue)
for every two shares issued (Placement Options). Funds raised will be used towards funding of the
Tennant Creek Acquisition, expenditure on the Company’s existing projects (Yarram and JWD), exploration
expenditure on the Tennant Creek Project tenement package, and for general working capital.
Lead Manager for the Placement, Evolution Capital Advisors are entitled to fees of 6% of the amount raised
and 20,000,000 options (Lead Manager Options) on the same terms as the Placement Options.
57
Notes to the Consolidated Financial Statements
Annual Report 2021
The Placement Shares will be issued without shareholder approval relying on the Company’s capacity under
Listing Rule 7.1. The Placement Options and Lead Manager Options will be issued subject to receipt of
shareholder approval, and the Company will seek to have the options quoted.
Shares Issued
The following shares were issued subsequent to year end:
▪
▪
▪
▪
4,807,692 shares issued in settlement of the $250,000 consideration component payable upon
decision to mine in respect of the JWD Project
43,859,649 shares issued upon FEL’s exercise of its option to acquire an additional 9% interest in
the JWD Project
6,000,000 shares issued upon exercise of unlisted options exercisable at $0.03 expiring 31 August
2022, raising $180,000
7,000,000 shares issued upon exercise of unlisted options exercisable at $0.025 expiring 31 March
2022, raising $175,000
Options Issued
The following unlisted options were issued subsequent to year end:
▪
▪
▪
▪
15,000,000 unlisted options exercisable at $0.06 expiring 30 June 2023 with vesting conditions
issued to directors (or their nominees) following receipt of shareholder approval at the July 2021
EGM
1,000,000 unlisted options exercisable at $0.074 expiring 31 December 2022 issued pursuant to
the Company’s Employee Securities Incentive Plan (ESIP) (ESIP approved by shareholders at the
July 2021 EGM)
3,000,000 unlisted options exercisable at $0.04 expiring 31 August 2023 with vesting conditions
issued pursuant to the Company’s ESIP
14,500,000 unlisted options exercisable at $0.06 expiring 30 June 2023 with vesting conditions
issued pursuant to the Company’s ESIP
There have been no other events subsequent to 30 June 2021 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.
58
Directors’ Declaration
Annual Report 2021
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 2021 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 2021 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 2021.
On behalf of the Board
Mr Antony Sage
Executive Chairman
29 September 2021
59
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 2021, 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 2021 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.
Material Uncertainty Relating to Going Concern
Without modifying our audit opinion expressed above, attention is drawn to the following matter.
As referred to in Note 2(c) to the financial statements, the consolidated financial statements have been prepared on
a going concern basis. At 30 June 2021, the Group had cash and cash equivalents of $5,830,848, a net working
capital surplus of $6,815,764 (excluding restricted cash) and incurred a loss after income tax of $2,510,540.
The ability of the Group to continue as a going concern and meet its planned exploration, administration and other
commitments is dependent upon the Group raising further working capital and/or successfully exploiting its mineral
assets. In the event that the Group is not successful in raising further working capital or successfully exploiting its
mineral assets, the Group may not be able to meet its liabilities as and when they fall due and the realisable value
of the Group’s current and non-current assets may be significantly less than book values.
Liability limited by a scheme approved under Professional Standards Legislation
Stantons Is a member of the Russell
Bedford International network of firms
60
Key Audit Matters
In addition to the matter described in the Material Uncertainty Related to Going Concern section, we have
determined the following matters to be Key Audit Matters to be communicated in our report.
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the financial report of the current period. These matters were addressed in the context of our audit of the financial
report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key Audit Matters
How the matter was addressed in the audit
Accounting for Joint Operations
The Group has a joint arrangement with Gold Valley
Iron Ore Pty Ltd. Under the arrangement, the Group
owns 51% of the Wiluna Iron JV.
Inter alia, our audit procedures included the
following:
i. Reviewing the management’s assessment and
judgement of concluding that the arrangement
is a
the accounting
treatment relative to the relevant account
standards and ensuring the correct treatment is
adopted.
joint operation and
ii. Reviewing the consolidation worksheets to
ensure that the Wiluna Iron JV has been
joint operation and
accounted
therefore, the Group has accounted for their
share of the assets, liabilities and expenses
(proportionate basis) of the joint operation.
for as a
iii. Examining the directors’ assessment of the
carrying value of the Mine properties and
development costs recorded by
joint
operation, ensuring the veracity of the data
presented and that the management has
considered the effect of potential impairment
indicators in accordance with the relevant
standards.
the
iv. Performing substantive audit procedures over
the joint operation in relation to the assets,
liabilities and expenses of the joint operation;
and
v. Assessing the adequacy of the disclosures
included in the financial statements.
the
Under AASB 11 - Joint Arrangements (“AASB 11”), if
a party has the right to the assets and the obligations
for
the
arrangement is considered to be a “joint operation” and
those assets and liabilities should be recognised by
the parties to the joint arrangement.
joint arrangement,
liabilities of a
Management have determined that the arrangement
constitutes a joint operation and therefore, the Group
has the rights to the assets, and obligations for the
liabilities of the joint arrangement. On consolidation,
the Group accounts for its proportionate shares of the
assets, liabilities, revenues and expenses of the
project.
Accounting for the Wiluna Iron JV is a key audit matter
due to:
•
•
The significance of the total assets and
liabilities of the joint operation; and
The nature and complexities involved in
accounting as well as the judgement in
determination of whether the Group has an
interest in the net assets or the rights to the
assets and obligations for liabilities and
therefore,
in
accordance with the relevant accounting
standards.
the accounting
treatment
61
Inter alia, our audit procedures
following:
included
the
i. Reviewing the management’s assessment and
judgement in concluding that the arrangement
is a joint venture.
ii. Ensuring
that
the management correctly
applied the Equity method as per AASB 128 -
Investments in Associates and Joint Ventures,
reviewing management’s workings to ensure
initial recognition of the investment at costs and
subsequent recognition of the share of the loss
recorded in the period post-acquisition by the
JV.
iii. Performing substantive audit procedures over
the joint venture’s accounts in relation to the
assets, liabilities and expenses of the joint
venture.
iv. Understanding management’s process
for
impairment
the existence of
identifying
indicators in respect of its interest in the joint
venture and evaluating the effectiveness of
such process.
v. Assessing the adequacy of the disclosures
included in the financial statements.
Joint venture accounted for under the equity
method
During the period the Group entered into a joint
arrangement with Gold Valley Brown Stone Pty Ltd.
Under the arrangement, the Group owns 50% interest
in the Yarram Iron JV through its subsidiary Yarram Fe
Pty Ltd.
The management have determined
the
arrangement constitutes a joint venture as per AASB
11 Joint Arrangements (“AASB 11”) due to the
following reasons:
that
• The Group has joint control over the Yarram Iron
JV together with the other shareholders; and
• The Group has the rights to its respective share
of the net assets of the Yarram Iron JV.
In accordance with AASB 128 - Investments in
Associates and Joint Ventures (“AASB 128”), the
Group has initially recognised the investment in the JV
at cost and then applied the equity method, decreasing
the carrying amount to recognise the investor’s share
of the loss.
The Group accounted for 50% of the loss incurred by
the JV in the period totalling $78,770 and recognised
an investment in the JV as at 30 June 2021 amounting
to $3,266,230
Accounting for the Yarram Iron JV is a key audit matter
due to:
•
The significance of the investment of the joint
venture; and
•
The nature and complexities involved in
accounting as well as the judgement in
determination of whether the Group has an
interest in the net assets or the rights to the
assets and obligations for liabilities and
in
therefore,
accordance with the relevant accounting
standards.
the accounting
treatment
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 2021 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
62
conclude that there is a material misstatement of this other information, we are required to report that fact. We have
nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the directors determine is necessary to enable the preparation of the financial report that gives a true and
fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic
alternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material
misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the
Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of this financial report.
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.
63
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
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 10 to 15 of the directors’ report for the year ended 30
June 2021.
In our opinion, the Remuneration Report of Fe Limited for the year ended 30 June 2021 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
(An Authorised Audit Company)
Martin Michalik
Director
West Perth, Western Australia
29 September 2021
64
Schedule of Tenements
Annual Report 2021
SCHEDULE OF TENEMENTS
As at 31 August 2021:
Schedule of tenement interests of the Company and its subsidiary entities:
Tenement reference
Project & Location
Interest
Notes
E52/1668
E52/1678
E52/1722
E52/1730
P52/1538
P52/1539
P52/1494
P52/1495
P52/1496
E45/4759
E45/4691
E45/4690
E45/4746
M53/971-I
M53/972-I
M53/1018-I
M53/1078-I
L53/115
L53/146
MLN1163
ELR125
ELR146
E29/640
M29/2
M29/165
M29/422
NOTES:
Peak Hill - Western Australia
Peak Hill - Western Australia
Peak Hill - Western Australia
Peak Hill - Western Australia
Peak Hill - Western Australia
Peak Hill - Western Australia
Forrest (Milgun) - Western Australia
Forrest (Milgun) - Western Australia
Forrest (Milgun) - Western Australia
Pippingarra – Western Australia
Pippingarra – Western Australia
Marble Bar – Western Australia
Marble Bar – Western Australia
Wiluna West – Western Australia
Wiluna West – Western Australia
Wiluna West – Western Australia
Wiluna West – Western Australia
Wiluna West – Western Australia
Wiluna West – Western Australia
Yarram – Northern Territory
Yarram – Northern Territory
Yarram – Northern Territory
Mt Ida – Western Australia
Mt Ida – Western Australia
Mt Ida – Western Australia
Mt Ida – Western Australia
20%
20%
20%
20%
20%
20%
20%
20%
20%
100%
100%
100%
100%
60%
60%
60%
60%
60%
60%
50%
50%
50%
100%
100%
100%
100%
2
2
3
2
2
2
1
1
1
7
7
7
7
4
4
4
4
4
4
5
5
5
6
6
6
6
1
2
3
4
5
6
7
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.
ALY 80% reducing to 10% in all minerals or base metals only once SFR and Billabong (Operator) earn in
under respective JV agreements with ALY. Billabong is earning 70% interest in all minerals in part of this
tenement and SFR has earnt 70% interest 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.
ALY 80% reduced to 10% in base metals only (excluding iron ore) as SFR (Operator) earns in under JV
agreement with ALY. SFR has earnt a 70% interest 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.
FEL (via Wiluna FE Pty Ltd) hold a 60% interest in the Mining Rights Agreement over the Wiluna West
JWD deposit (iron ore rights).
FEL (via Yarram FE Pty Ltd) holds a 50% interest in Gold Valley Iron and Manganese Pty Ltd, the owner
of the iron ore rights over the Yarram Project.
FEL hold 100% interest in iron ore rights over the Mt Ida Project tenements via the Mt Ida Iron Ore
Rights Sale Agreement.
Subject to settlement FEL has sold 100% interests in all mineral rights held for E45/4690, 4691, 4746
and 4759 pursuant to a Binding Terms Sheet agreement with Mercury Resources Group Pty Ltd dated 16
June 2021. FEL will retain a 1% Net Smelter Royalty payable on any product sales from the tenement
package in the future.
65
Schedule of Tenements
Annual Report 2021
The mining tenements with beneficial interest held in farm-in/farm-out agreements
Farm-in/out
Agreement and
Tenement reference
E51/1033-I
E52/1613-I
E52/1672-I
NOTES:
Project & Location
Interest
Notes
Morck Well – Western Australia
Morck Well – Western Australia
Morck Well – Western Australia
20%
20%
20%
1, 2, 3
1, 2, 3
1, 2, 3
1
2
3
Peak Hill Sale Agreement: Auris Exploration Pty Ltd (Auris - previously known as Grosvenor Gold Pty Ltd)
80% (Operator) and Jackson Minerals Pty Ltd 20% in all minerals.
Jackson Iron Ore Royalty: Auris Exploration Pty Ltd (Auris) (previously known as Grosvenor Gold Pty Ltd)
(Operator) to pay PepinNini Robinson Range Pty Ltd (PRR) a 0.8% gross revenue royalty from the sale or
disposal of iron ore. Jackson Minerals Pty Ltd holds 20% in all minerals.
Sandfire Farm-in: Subject to a Farm-in Letter Agreement between SFR, AUR and FEL. If SFR makes a
Discovery on the tenements and a JV is formed then the interests in the tenements will be 70% SFR, 24%
AUR and 6% FEL. Full details of the agreement are described in the Auris ASX announcement dated 27
February 2018.
66
Additional Shareholder Information
Annual Report 2021
ADDITIONAL SHAREHOLDER INFORMATION
As at 31 August 2021:
Shares
The total number of Shares on issue as at 31 August 2021 was 757,112,365, held by 1,901 registered
Shareholders. 310 shareholders hold less than a marketable parcel, based on the market price of a share as at
31 August 2021.
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 31 August 2021, the twenty largest Shareholders were as shown in the following table and held 60.64% of
the Shares.
1
2
3
4
5
6
7
8
Legal Holder
DEMPSEY RESOURCES PTY LTD
GOLD VALLEY IRON ORE PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
DEMPSEY RESOURCES PTY LTD
CAULDRON ENERGY LIMITED
ANTONY WILLIAM PAUL SAGE & LUCY FERNANDES SAGE
ANT NICHOLSON PTY LTD
WHITEY TIGER PTY LTD
8
9
10 MACARTHUR MINERALS LIMITED
11 MRS SAMANTHA HELEN LOUISE YOUNG
12
13 WFM CORPORATION PTY LTD
14
15
16
17
18
19 OKEWOOD PTY LTD
20
H & K SUPER MANAGEMENT PTY LTD
ADKSK SUPERFUND PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
BNP PARIBAS NOMINEES PTY LTD SIX SIS LTD
JAPL NOMINEES PTY LTD
KUN SONG
COLLEGE SEARCH PTY LTD
Total
Holding
120,848,635
53,667,341
43,599,664
34,850,371
25,828,909
25,300,000
17,913,868
16,423,010
15,270,000
14,895,018
13,666,667
12,500,000
10,000,000
8,900,000
8,250,000
8,000,000
6,387,720
6,207,239
6,115,052
5,250,000
5,250,000
459,123,494
%
15.96
7.09
5.76
4.60
3.41
3.34
2.37
2.17
2.02
1.97
1.81
1.65
1.32
1.18
1.09
1.06
0.84
0.82
0.81
0.69
0.69
60.64
Distribution Schedule
A distribution schedule of the number of Shareholders, by size of holding, as at 31 August 2021 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
26,980
535,806
2,032,872
39,298,302
715,218,405
757,112,365
%
0.00%
0.07%
0.27%
5.19%
94.47%
100.00%
Number of
Shareholders
81
170
251
902
497
1,901
67
Additional Shareholder Information
Annual Report 2021
Quoted Options
The Company does not have any quoted Options on issue.
Unquoted Options
At 31 August 2021 the Company has on issue 84,500,000 Unquoted Options on issue. The names of security holders holding more than 20% of an unlisted class of
security are listed below.
Holder
Bell Potter Nominees
Esplanade Consultancy Pty Ltd
Mark Hancock & Julie Hancock
Alan Jepson
Okewood Pty Ltd
Mr Matthew Campbell Ramsden
Jeremy Andrew Sinclair
Holders individually less than 20%
Total
Unlisted
Unlisted
Options
Options
$0.03
$0.025
31/08/2022
31/03/2022
-
-
-
4,000,000
7,500,000
-
-
-
7,500,000
-
-
-
-
-
- 12,000,000
4,000,000 27,000,000
Unlisted
Options
$0.04
31/08/2023
-
-
-
-
-
3,000,000
5,000,000
-
8,000,000
Unlisted
Options
$0.035
12/10/2023
5,000,000
-
-
-
-
-
-
-
5,000,000
Unlisted
Options
$0.045
12/04/2024
5,000,000
-
-
-
-
-
-
-
5,000,000
Unlisted
Unlisted
Unlisted
Options
Options
Options
$0.074
$0.06
$0.06
31/12/2022
30/06/2023
12/10/2024
-
-
5,000,000
-
-
-
-
7,500,000
-
1,000,000
-
-
-
7,500,000
-
-
-
-
-
-
-
- 14,500,000 14,500,000
5,000,000 29,500,000 29,500,000
68