ANNUAL REPORT
2021
Firefinch Annual Report Review of Operations • 1
2 • Firefinch Annual Report Review of Operations
CORPORATE
DIRECTORY
Directors
Dr Alistair Cowden Non-Executive Chairman
Dr Michael Anderson Managing Director
Mr Mark Hepburn Non-Executive Director
Mr Brendan Borg Non-Executive Director
Mr Brett Fraser Non-Executive Director
Mr Bradley Gordon Non-Executive Director
Chief Financial Officer
Mr Thomas Plant
Company Secretary
Mr Nathan Bartrop
Registered Address and
Principal Place of Business
Share Registry
Level 3, 31 Ventnor Avenue, West Perth WA 6005
Computershare Investor Services Pty Limited
Level 11, 172 St Georges Terrace, Perth WA 6000
Telephone: 1300 850 505 (investors within Australia)
Telephone: +61 (03) 9415 4000
Email: web.queries@computershare.com.au
Website: www.investorcentre.com
Auditors
PricewaterhouseCoopers Australia
Brookfield Place, Level 15, 125 St Georges Terrace
Perth WA 6000
Securities Exchange
Australian Securities Exchange
Level 40, Central Park, 152-158 St Georges Terrace
Perth WA 6000
Telephone: 131 ASX (131 279) (within Australia)
Telephone: +61 (02) 9338 0000
Facsimile: +61 (02) 9227 0885
Website: www.asx.com.au
ASX Code: FFX
Firefinch Annual Report Review of Operations • 3
CONTENTS
Letter from the Chair
8
Review of Operations
10
Directors Report
30
Corporate Governance Statement
59
Auditor’s Independence Declaration
61
Financial Report
Consolidated Statement of Profit or Loss and Other
Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
62
63
64
65
66
Directors’ Declaration
103
Independent Auditor’s Report
104
ASX Additional Information
110
Firefinch Annual Report Review of Operations • 5
Y
FIREFINCH
responsibly delivering
shareholder wealth
REBUILDING
a world-class gold mine
CREATING
Leo Lithium to be a
Top 10 lithium producer
SAFELY PRODUCING GOLD Morila produced 45,789
ounces of gold, largely underpinned by tailings retreatment.
Total Recordable Injury Rate (TRIFR) of 1.43 (as at 31/12/21)
RESUMED MINING AND MILLING Morila plant
refurbished, milling recommenced and mining of satellite
pits underway. Invested $11.15 million in plant and
infrastructure, $10.4 million in drilling and $29.78 million in
pre-stripping
RESOURCE AND RESERVES No formal resources
or reserves outside of tailings on acquisition in November
2020. Based on Firefinch’s modelling and drilling, global
Mineral Resources now at 2.5 million ounces of gold
ESG PRIORITISED PROVIDING JOBS AND
COMMUNITY SUPPORT Staff and contractors on
site up from 350 to 2000 with a 97% Malian workforce. In
excess of 60% Malian sourced procurement and services
complemented with investment in training, health,
education and local community infrastructure
A FOCUS ON GROWTH Plan to grow production to
over 100,000 ounces of gold in 2022 and up to 200,000
ounces by 2024. Five drill rigs at Morila aiming to grow
resources and sustain production
6 • Firefinch Annual Report
Y
A STRONG COMPANY Firefinch has A$149 million in
cash reserves and is fully funded to reach full production
from the Morila Super Pit. Strong local workforce on site
supported by a talented corporate team in Perth
DELIVERED SUBSTANTIAL VALUE Share price up
from $0.185 (4/01/2021) to $0.865 (31/12/21) representing
a 368% gain. Market capitalisation up from $145 million to
$1.02 billion
LITHIUM EXPOSURE An updated Definitive Feasibility
Study was completed on the $4.1 billion (post tax NPV)
Goulamina lithium project and a Joint Venture with global
lithium giant Ganfeng was concluded
LEO LITHIUM Goulamina development is substantially
funded for Stage 1 with Ganfeng to contribute US$130
million cash and to provide a minimum of US$40 million
in debt. Leo Lithium is to be spun out on ASX with
shareholders receiving an in-specie distribution and the
company to conduct a pro-rata entitlement at the same
time. Firefinch will retain 20% of Leo, differentiating itself
from other gold plays
7
LETTER FROM
THE CHAIR
Fellow Shareholders,
It has been a fantastic year
for the Company and its
shareholders. Under the dynamic
leadership of our Managing
Director Mike Anderson our team
has achieved major milestones:
• Firefinch is firmly established
as an open pit gold producer
at the Morila Gold Mine
• Morila is fully funded to grow
to 200,000 ounces of gold
per annum by 2024
• We have seen spectacular
drill intercepts around
Morila which hint at the
further potential of this
already large, 10-million-
ounce endowment including
resources and past
production
• We have created almost
2000 direct jobs at Morila.
The mine was due to close
before Firefinch acquired it
in 2020, we can rightly be
proud of the value we are
adding to the community in
Mali
• A transformative Joint
Venture has been secured
at Goulamina with the
world’s largest lithium
chemical producer, Ganfeng,
validating this tier 1 deposit
• The Joint Venture sees
Goulamina substantially
funded for Stage 1
construction, Stage 1 offtake
secured, and construction
and engineering activities
commenced
• We are progressing the
proposed demerger of the
Goulamina interest into
Leo Lithium Limited. Leo,
subject to Shareholder
and regulatory approvals,
will be listed on ASX and
shareholders will receive a
pro-rata free distribution of
Leo shares
• Simon Hay, former CEO
of Galaxy Resources who
delivered the $5 billion
merger of equals with
Orocobre Limited, to create
the world’s fifth largest
lithium producer Allkem
(ASX:AKE) has joined Leo as
Managing Director to drive
the mine to production and
growth
• Finally, shareholders have
seen terrific growth with
the share price appreciating
from $0.185 (4/01/2021) to
$0.865 (31/12/2021)
These achievements are not
accidental, we set out with a
clear strategy of acquiring a
gold asset to permit lithium
markets to recover and for value
to be realised at Goulamina.
We have successfully achieved
that, and both international and
local institutions and our retail
shareholders have strongly
supported raising the capital
needed to drive that strategy.
We now embark on a new phase
for the Company, Firefinch will
focus on delivering its production
target at Morila of 100,000
ounces of gold in 2022 and up
to 200,000 ounces by 2024,
Dr Alistair Cowden
Non-Executive Chairman
8 • Firefinch Annual Report
sustainably, responsibly and
efficiently. It will also continue
to aggressively drill to materially
increase resources and reserves.
Should the demerger proceed,
the Company will retain a
20% interest in Leo Lithium
once it lists, a major strategic
differentiator for a West African
gold producer that provides us
with optionality to follow the
lithium story or grow beyond
Morila.
Leo will tell its own story, but
we look forward to all of us
becoming shareholders, enjoying
the journey through construction,
production to production growth
and to see the fruits of a growing
relationship with Ganfeng.
To close, I affirm your Board is
committed to investing in the
community in Mali. This report
describes many of the good
things we do in Mali, and I have
already mentioned the jobs we
have created. Leo will also create
more than 1000 jobs. We know
we can do better. The Company
has come from a low base very
quickly and we are striving to
do better than best practice in
engagement and contribution
to our communities, minimising
our impact on the environment
and ensuring we treat all staff,
contractors and partners with
respect. We aim to produce our
first sustainability report later this
year.
It has been a pleasure to Chair
your Board and on your behalf,
I extend thanks to all of our
Board, our staff and especially
those who spent repeated
periods in quarantine as part of
managing your assets in Mali.
The Government of Mali has had
a difficult year but my thanks to
His Excellency Lamine Seydou
TRAORE, Minister of Mines,
Energy and Water, in particular
for his support of our endeavour
to build two world class
businesses in Mali.
Sincerely,
Alistair Cowden
Chairman
Firefinch Annual Report • 9
SENEGAL
Sabadala
5.4Moz
Mako
3.6Moz
Massawa
3Moz
Yatela 3Moz
Sadiola 12Moz
Loulou 12.5Moz
Tabakoto 4.3Moz
Gounkoto 5.4Moz
Fekola 7.1Moz
Boto 2.6Moz
MALI
MALI
BAMAKO
N
0
100km
Lefa 7.8Moz
Siguiri 6.6Moz
GOULAMINA LITHIUM PROJECT
MORILA GOLD MINE
GUINEA
Koulekan 0.3Moz
Yanfolila 1.8Moz
Kodieran 2Moz
Tri K 2.5Moz
Kalana 3.3Moz
Syama 7Moz
BURKINA
FASO
KANKAN
Sissingue 1.3Moz
IVORY COAST
Tongon 4Moz
Banfora
2.5Moz
REVIEW OF
OPERATIONS
OVERVIEW OF
FIREFINCH
Over 97% of our
2000 strong
workforce are
Malian
Firefinch Limited (the Company
or Firefinch) is a responsible
miner and actively engages with
the surrounding community by
seeking to buy local, employ
local and back local socio-
economic initiatives. This is all
while operating in a manner that
safeguards the environment
and regards employee safety
and wellbeing as a top priority.
The Company endeavours
to make a difference to our
local communities on multiple
levels – by providing a safe and
rewarding workplace, following
best environmental practices and
contributing economic benefits
regionally by employing and
expanding locally.
During 2021, Firefinch Limited
continued to ramp up operations
at the Morila Gold Mine (Morila
or Morila Gold Project) in Mali
after transitioning from tailings
reprocessing to hard rock mining.
Production for the year was
Goulamina core showing lithium pegmatite
Gold bullion produced at Morila
10 • Firefinch Annual Report Review of Operations
45,789 ounces of gold which
was in line with the Company’s
guidance. Morila is forecast to
produce over 100,000 ounces of
gold in 2022.
Key achievements in 2021 at
Morila included the successful
recommissioning of the crushing
and grinding circuits, reinstating
the mill, the recommencement
of open pit mining and a solid
safety performance. Mineral
Resources were increased to 2.5
million ounces of contained gold
in the Indicated and Inferred
categories, with 1.3 million
ounces in the Indicated category
(refer to Resources and Reserves
Statement).
Intensive drilling continued at
the Morila deposit, its satellite
deposits and the Company’s
adjacent Massigui Gold Project.
The drilling returned several
high-grade intersections which
should lead to further Resource
upgrades.
At the world class Goulamina
Lithium Project (Goulamina),
Firefinch has announced a
50:50 incorporated joint venture
(Joint Venture or Goulamina
Joint Venture) with a subsidiary
of the world’s largest lithium
producer by production capacity,
Jiangxi Ganfeng Lithium Co. Ltd
(Ganfeng). The Joint Venture
will develop and operate the
Goulamina Lithium Project, which
is one of the largest undeveloped
lithium projects globally. Subject
to sahreholder approval, Firefinch
intends to demerge its interest
in Goulamina into Leo Lithium
Limited (Leo or Leo Lithium), a
separate lithium-focussed entity
to be listed on the ASX.
During 2021, the Company
updated the Definitive
Feasibility Study (DFS
Update) for Goulamina (refer
ASX Announcement dated
6 December 2021). The DFS
Update delivered a plan for
a 2-stage project, initially 2.5
million tonnes per annum and
expanding to 4 million tonnes
per annum throughput. The
DFS Update demonstrates
exceptional financial returns at
this higher production rate. The
spodumene concentrate price
assumption in the DFS Update is
based on an average US$978 per
tonne, less than half of today’s
spot prices.
Firefinch Annual Report Review of Operations • 11
MORILA
MINE
The Company purchased its
interest in the Morila Gold Mine
in November 2020 from Barrick
Gold Corporation (Barrick) and
AngloGold Ashanti (AngloGold),
who each held an effective 40%
interest in Morila with the State
of Mali owning the remaining
20%. Barrick’s interest in Morila
came about through its US$18
billion merger with Randgold
Resources (Randgold). Morila
produced some 7.5 million
ounces of gold under previous
ownership at grades that were
among the highest in the world,
earning it the moniker “Morila
the Gorilla”.
12 • Firefinch Annual Report Review of Operations
HEALTH & SAFTEY
At Morila, “Safety is the Number
1 Priority” and during the year
we have increased the focus
on keeping our employees and
contractors safe, increased
safety resources, restructured
the health and safety team to
provide a dedicated focus on
safety and re-emphasised a
number of safety programs.
Our group TRIFR was 1.43 for
2021 however a number of high
potential incidents provided a
reminder to maintain vigilance.
There was a focus on monitoring
and managing the spread of
COVID-19 at Morila, and in local
and regional communities in
2021. Polymerase chain reaction
(PCR) testing equipment was
acquired for Morila, and the
neighbouring communities.
Casual and random testing is
performed on a daily basis,
and all non-local employees
are tested on arrival to site.
COVID-19 case numbers peaked
in quarter four of 2021 with
levels now declined to 1 - 2 per
week.
Firefinch has undertaken to
immunise its workforce against
COVID-19 with 807 single
vaccinated, and 714 double
vaccinated employees at the end
of February 2022.
Morila has implemented a best-
in-class program to control
malaria in the workplace and
communities and malaria cases
for employees and contractors
are consistently below historic
levels. In conjunction with the
Government of Mali, malaria
vaccination programs for
employees and community
members were also undertaken
in 2021.
Pictured: Strict health and safety protocols are in place
to protect our workforce, including COVID protocols
Firefinch Annual Report Review of Operations • 13
w
• Drinking water wells installed
in local communities
• Rehabilitation of and
equipment for the Finkola
Health Centre
• Support of the Women’s
Association for the
establishment and growth of
their market gardens
• Support for a local
•
beekeeping business
• Community road and
drainage maintenance
• Paying the salaries of 10
teachers from Sanso and
Domba villages
Installation of a
multifunctional centre for
women in the village of
N’tiola
Installation of solar
streetlights in the village of
Sanso
•
COMMUNITY
The Morila Gold Mine had social
programs established prior to
acquisition, implemented by
Barrick and AngloGold. These
were reshaped to support the
social strategy required for the
re-establishment of a large-
scale mining operation rather
than closure as was previously
planned prior to acquisition by
Firefinch.
Community engagement is
a central pillar of our social
programs. We have shared
our key message with village
chiefs, elders, youth, woman
and local officials that we are
re-establishing a safe and
sustainable mining operation
with significant investment, and
community employment and
benefits will flow from that.
Key elements of the 2021
Communities Plan included:
14 • Firefinch Annual Report Review of Operations
w
Projects such as construction
of the Morila village youth
centre and telephone network
improvements in Morila village
will continue in 2022, and the
Community Development Plan
will be refreshed in conjunction
with community leaders.
The 2019 Malian Mining Code
provides for a framework for
local community development
and procurement, and Morila has
already commenced work with
the Malian Mines Department
to allow implementation of the
framework in 2023. To support
implementation, a social baseline
study reflecting the Morila Life
of Mine Plan will be completed in
2022, as well as a refresh of the
Agricultural Business strategy.
The Agricultural Business
strategy was established
to support ongoing local
employment and economic
benefit generation post mine
closure.
The International Finance
Corporation Environmental and
Social Performance Standards
(IFC Standards) underpin
Morila’s social program. Morila
compensation and re-settlement
processes were upgraded in
2021 to comply with the IFC
Standards.
Pictured Left: Water well
installed at Keikoro
Above: Donation of school
supplies at Sanso
15
INFRASTRUCTURE
UPGRADES AND
CAPITAL WORKS
The Morila acquisition included
the mine, tenements and
infrastructure required of a
large and remote gold mining
operation. The infrastructure
included the processing plant,
power station, accommodation
camp and offices. The processing
plant is a conventional Carbon
in Leach (CIL) facility that
commenced operating in 2000.
91% recoveries (average) were
experienced when treating fresh
since inception in 2000. The
plant was upgraded in 2004 and
again in 2014 with additional
capacity installed in the crushing,
gravity gold, leach and CIL
16 • Firefinch Annual Report Review of Operations
circuits.
The focus during 2021 has
been to assess all infrastructure
(processing and non-processing)
and implement a fit-for-purpose
capital works programme to
bring the processing plant back
to full production capacity.
Major projects completed in 2021
included:
• Civil engineering works
around the crushing circuit
• Sandblasting, painting of the
mill steel framework, and
re-lining
• Replacement of corroded
structural steelwork, and
walkways and handrails in
the processing plant
• Vendor inspection and
refurbishment of crushers,
mills and material handling
equipment
• Refurbishment of the
laboratory buildings
and installation of new
equipment in partnership
with MSA Labs
• Upgrade of the power
station including
refurbishment of existing
medium speed generators,
sourcing of hire generators
as temporary power while
the main generators are
being overhauled, and
tendering for a new hybrid
power solution and power
purchase agreement
• Refurbishment of main
drains on the tailings
storage facility (TSF) and
establishment of short-term
depositional areas
• Design of final TSF for
planned life of mine
Firefinch Annual Report Review of Operations • 17
Pictured Left: Ball mill refurbishment and plant structural steel
replacement Top: PhotonAssay lab technology to be installed
at Morila (Pic Source: Chrysos) Below: Morila Processing Plant
w
PRODUCTION
Morila has been producing gold
continuously for 22 years with
production to December 2021
totalling 7.66 million ounces of
gold. This is in addition to the
current Mineral Resource of 2.5
million ounces (refer Resources
and Reserves Statement for
detailed breakdown by deposit
and resource category).
The 2021 plan was to supplement
and then replace tailings as the
primary mill feed with feed from
open pit mining of the satellite
deposits until ore became
available from the main Morila pit
(Morila Super Pit). The material
mined via hydraulic sluicing of
tailings reduced to approximately
from 435,000 tonnes per month
to 100,000 tonnes per month
during the year. Hydraulic
sluicing will cease in April 2022.
Tailings with mineralisation
(~0.5g/t gold) that could not be
hydraulically mined have been
mechanically mined and hauled
to the Run of Mine (ROM) pad
for stockpiling and have been
scheduled for processing in Q1
2022.
Open pit mining operations
commenced at the Morila Pit 5
and Viper deposits in the second
half of 2021. The open pit mining
contract was awarded to a joint
venture between international
mining contractor Mota-Engil
and Malian owned and operated
contractor Inter-Mining Services
(MEIM JV). The MEIM JV contract
has an estimated value of
approximately US$360 million
and includes site preparation and
mining operations at the Viper
and N’tiola satellite pits, Stage 1
of the Morila Super Pit and ROM
stockpile management.
Haulage of ore from the satelite
pits to the Morila processing
plant is undertaken by EGTF, a
local Malian contractor. EGTF
is also contracted to complete
open pit mining on an as needs
basis so that material movement
can be accelerated where
possible.
Pictured:
Viper and Adder Pits
18 • Firefinch Annual Report Review of Operations
Firefinch Annual Report Review of Operations • 19
RESOURCES AND RESERVES
The Mineral Resource Estimate (MRE) for the Morila
Gold Project is 2.5 million ounces in the Indicated and
Inferred categories as tabulated below and detailed in
the Resource and Reserves Statement which includes
tables prescribed by the 2012 Australasian Code for
Reporting of Exploration Results, Mineral Resources and
Ore Reserves (JORC Code). Key changes from the 2020
MRE are a new Mineral Resource for the Morila deposit
(2.2 million contained ounces of gold in the Indicated
and Inferred categories), updated MREs for the satellite
pits (with contained gold increasing from 113,000 ounces
to the current 290,000 ounces of contained gold in the
Indicated and Inferred categories)and removal of the
Morila Tailings Resource due to depletion by mining.
The updated MREs were used to create the first Ore
Reserves for the Morila Gold Project (refer table below)
and the initial mining schedule in May 2021. The Ore
Reserves remain current as at 31 December 2021. No Ore
Reserves were defined in the 2020 Annual Report.
MORILA GOLD PROJECT MINERAL RESOURCES
DEPOSIT
INDICATED
INFERRED
TOTAL
Tonnes
(millions)
Grade
(g/t)
Ounces
(‘000)
Tonnes
(millions)
Grade
(g/t)
Ounces
(‘000)
Tonnes
(millions)
Grade
(g/t)
Morila Pit 1
21.2
1.60
1,090
Morila NE 2
Samacline 2
Morila Pit 5 3
0.40
0.92
N’Tiola 3
Viper 3
Domba 3
Koting 3
2.55
2.47
0.20
0.65
1.03
1.16
1.75
1.04
12
84
92
11
22
17.5
0.21
3.74
0.14
0.35
0.75
0.25
0.28
Total
27.45
1.49
1,313
23.17
1.37
3.07
2.56
1.14
1.03
1.10
1.61
0.94
1.56
770
21
308
5
12
27
13
8
38.6
0.21
3.74
0.54
2.90
3.23
0.46
0.93
1,160
50.62
1.50
3.07
2.56
0.98
1.03
1.15
1.67
1.01
1.52
Ounces
(‘000)
1,860
21
308
17
96
119
25
30
2,474
1 The Morila Pit resource is quoted using a 0.4g/t gold cut-off grade
2 The Samacline and Morila NE resources are quoted using a 1.8g/t gold cut-off grade
3 The N’Tiola, Viper, Morila Pit 5, Domba and Koting resources are quoted using a 0.4g/t gold cut-off grade
Numbers in the above table may not appear to sum correctly due to rounding
MORILA GOLD PROJECT ORE RESERVES
DEPOSIT
PROBABLE
Morila Pit 1
N’Tiola 2
Viper 3
Koting 3
Total
Tonnes
(millions)
19.8
2.13
1.30
0.63
23.8
Grade
(g/t)
1.47
0.76
1.46
0.98
1.40
Ounces (‘000)
Tonnes
(millions)
932.0
74
43
20
1,070
19.8
2.1
1.30
0.63
23.8
1 The Morila Ore Reserve is quoted using a 0.43 g/t gold cut-off grade
2 The N’Tiola Ore Reserve is quoted using a 0.51 g/t gold cut-off grade
3 The Viper and Koting Ore Reserves are quoted using a 0.49 g/t gold cut-off grade
Numbers in the above table may not appear to sum correctly due to rounding
20 • Firefinch Annual Report Review of Operations
TOTAL
Grade
(g/t)
1.47
1.08
1.46
0.98
1.40
Ounces (‘000)
932
74
43
20
1,070
GOVERNANCE
Firefinch maintains strong
governance and internal controls in
respect of its estimates of Mineral
Resources and Ore Reserves.
Firefinch ensures its sampling
techniques, data collection, data
veracity and the application of
the collected data is at a high
level of industry standard. Reverse
Circulation and diamond drilling is
carried out under supervision by
against peer comparisons to ensure
Firefinch geologists. All completed
assumptions and modifying factors
holes are subject to downhole
are valid. Further details can be
surveys and collar coordinates
found in the Resource and Reserve
surveyed with differential GPS. All
Statement.
drill holes are logged by Firefinch
geologists. Diamond core is oriented
and photographed. Firefinch employs
field QA/QC procedures, including
COMPETENT PERSONS
STATEMENTS
The information in this report that
The information in this report that
relates to Ore Reserves is extracted
from the 2021 Resources and
Reserves Statement and based on
addition of standards, blanks and
relates to Exploration Results and
information compiled by Mr Ross
duplicates ahead of assaying which is
Mineral Resources is extracted from
Cheyne. Mr Cheyne is an employee
undertaken using industry standards
including fire assay at accredited
the 2021 Resources and Reserves
Statement and compiled under
of Orelogy Consulting Pty Ltd and is
a Fellow of the Australian Institute of
laboratories. Assay data is managed
the supervision of Mr Bill Oliver. Mr
Mining and Metallurgy (Membership
by an independent database
Oliver is an employee of Firefinch
# 109345). Mr Cheyne has sufficient
manager and continually validated.
and a member of the Australian
experience which is relevant to the
Resource estimation is undertaken by
Institute of Geoscientists and the
style of mineralisation and type of
in-house geologists using geological
Australasian Institute of Mining and
deposit under consideration and the
interpretation and industry standard
Metallurgy. Mr Oliver has sufficient
activity he is undertaking to qualify
estimation techniques. Reporting is
experience which is relevant to the
as a Competent Person as defined in
in accordance with the JORC Code
style of mineralisation and type of
the JORC Code. Mr Cheyne consents
with parameters including cut off
deposit under consideration and the
to the inclusion in the report of the
grades, top cuts and classification
activity he is undertaking to qualify
matters based on his information
dependent on the style and nature
as a Competent Person as defined in
in the form and context in which it
of mineralisation being assessed.
the JORC Code. Mr Oliver consents
appears.
Ore Reserve estimation is carried
to the inclusion in the report of the
out by independent consultants
matters based on his information
Pictured: Mining operations at the Viper
using industry standards and
in the form and context in which it
benchmarking Firefinch data
appears.
satellite pit with locally owned and
operated contractor EGTF
Firefinch Annual Report Review of Operations • 21
DRILLING
During 2021, an intensive drilling
campaign commenced at Morila
targeting potential extensions
to high grade mineralisation
intersected in historical drilling.
Drilling also aimed to improve
the delineation of mineralisation
within initial mining areas to
support Mineral Resources and
Ore Reserves upgrades.
Several notable results have been
received from drilling. Drilling
at Morila North East returned
10.5 metres at 34.0g/t gold
from 309.2 metres (MRD0001)
and 4.0 metres at 13.6g/t gold
from 315.2 metres (MRD0028).
These results are interpreted to
represent extensions of one of
the main mineralised lodes at
Morila.
Drilling at Morila East returned
5.0 metres at 30.3g/t gold from
294.6 metres (including 1 metre
at 128g/t gold) and 0.90 metres
at 35.9g/t gold from 228.2
metres (MRD0026); and 1.15
metres at 31.2g/t gold from 174
metres (MRD0021). These results
are down-dip of mineralisation
previously mined at Morila
and challenge the historical
interpretation of mineralisation
being truncated to the east of
the pit by faulting.
well outside the main pit and
separated from the lodes
previously mined.
Drilling of the existing Resource
at Morila has delineated down-
dip extensions to mineralisation
below the current planned pit
design in the north-western
portion of the deposit; the area
where pre-stripping of waste has
commenced. Drilling successfully
intersected a number of high-
grade zones such as 7.5 metres
at 5.99g/t gold including 2.7
metres at 15.9g/t gold and
6.3 metres at 6.95g/t gold
(MRD0015), 3.3 metres at 7.12g/t
gold including 0.9 metres
at 25.0g/t gold (MRD0011),
3.7 metres at 6.81 g/t gold
(MRD0006) and 3.3 metres at
6.93 g/t gold (MRD0009).
Results from all drilling over the
past six months will be used
to update the Morila Mineral
Resource during 2022 which is
anticipated to convert deeper
Inferred Resources to Indicated
Resources. A Mineral Resource
update will also inform an update
of the Stage 1 Morila Super Pit
design, allow detailed planning
of the Stage 2 Morila Super Pit
design and further refine the
2022-2023 mining schedule.
On the western side of Morila,
results in drillhole MRD0018
of 15.0 metres at 7.61g/t gold
from 263.0 metres, including
9.0 metres at 11.1g/t gold and
2.8 metres at 23.7g/t gold
from 236.4 metres, including
0.8 metres at 82.0g/t gold are
significant as they may represent
a new zone of mineralisation
Mining at Viper commenced
in August 2021 following a
substantive drilling campaign
(refer ASX Announcements
dated 29 March 2021, 10 June
2021, 10 August 2021 and 22
October 2021). Drilling has also
been carried out at the N’Tiola,
Beledjo-Koting, K2 and K3
prospects.
22 • Firefinch Annual Report Review of Operations
then be progressed with close
spaced drilling to enable Mineral
Resources to be delineated.
Regional exploration has
also commenced across
the Massigui permits with a
programme of aircore drilling
to test geochemical anomalies
delineated in a combination of
Firefinch and historical surface
sampling.
Pictured:
Drilling of MRD0018 at Morila West
MASSIGUI
The Company owns a
landholding of 409km2
contiguous with the Morila
mining license (which in itself
covers an area of 211km2). This is
held in five prospecting licences
and one exploitation licence,
which was granted on March 24
2022.
The Finkola exploitation licence
contains the Beledjo-Koting
deposit, which has a resource
of 0.93 million tonnes at 1.01g/t
in the Indicated and Inferred
categories (refer to the Reserves
and Resources tables).
Drilling during 2021 has tested
targets along strike from Beledjo,
namely the K2, K3 and K3 South
prospects. Mineralisation has
been identified at all prospects
and these will be evaluated
to ascertain those which are
economically viable. These will
23
GOULAMINA
The Company completed and
published a DFS Update for
the Goulamina Lithium Project.
The DFS Update confirmed that
Goulamina is among the world’s
highest quality lithium assets
with robust economics, detailing
a long life, large scale, low-cost
open pit operation.
Goulamina is one of the
world’s best hard rock lithium
assets for scale and cost of
production when compared
to current operations and
prospective projects and
delivers outstanding returns
with a post-tax NPV of $4.1
billion and post-tax IRR of 83%,
more than double the original
DFS (refer ASX Announcement
dated 6 December 2021). A key
advantage is the quality of the
6% Li2O spodumene concentrate
product, being high in grade and
low in impurities. The project is
shown to be simple and robust
with high grades and low strip
ratios enhancing profitability.
24 • Firefinch Annual Report Review of Operations
108.5 million tonnes at 1.45% Li2O
21 years minimum
52 million tonnes at 1.51 % Li2O
KEY METRICS OF THE DFS UPDATE ARE:
Mineral Resources (M,I&I)
Mine Life
Ore Reserves (Proven and Probable)
Average Spodumene concentrate production
Stage 1:
Stage 2:
Life of Mine:
Concentrate specifications
Annual Mine throughput
Pre-tax NPV (8%)2
Pre-tax IRR (real)
Post-tax NPV (8%)
Post-tax IRR (real)
Capital Cost (Stage 1)
Capital Cost (Stage 2)
Cash Costs (Life of Mine)
All in sustaining cost (AISC) Life of Mine
506,000 tonnes
831,000 tonnes1
726,000 tonnes
6% Li2O, <0.6% Fe2O3, low mica
2.3 rising to 4.0 million tonnes
$5.6 billion (US$4.0 billion)
97.8%
$4.1 billion (US$2.9 billion)
83%
US$255 million
US$70 million
US$312 per tonne concentrate (FOB)
US$365 per tonne concentrate (FOB)
1 Average spodumene production during the first 5 years of full production of Stage 2
2 US$1,250/tonne real applied for the first 5 years of production, and long-term weighted average of US$900/
tonne real applied for the balance of mine life
Cautionary statement: The production inventory and forecast financial
information referred to in the Stage 2 metrics comprises Proven Ore Reserves
(9.9%), Probable Ore Reserves (53.6%) and Inferred Mineral Resources
(36.5%). The Inferred Mineral Resource included in the inventory is 30 million
tonnes at 1.3% Li2O. The Inferred Mineral Resource has been scheduled on
a preliminary basis with all Inferred material mined after the Ore Reserves.
The Inferred Mineral Resource does not have a material effect on the
technical and economic viability of the Project. There is a lower level of
geological confidence associated with Inferred Mineral Resources and there
is no certainty that further exploration work will result in the determination
of Indicated Mineral Resources or that the production target itself will be
realised. Note: All dollar figures are in real terms.
The DFS Update incorporated
the building of a 2.3 million tonne
per annum throughput plant
whilst making allowance in the
design for the infrastructure and
equipment to accommodate
the construction of a Stage 2
expansion to increase plant
throughput to 4.0 million
tonnes per annum. The Stage
2 expansion is envisaged to be
constructed approximately 18
months after commissioning of
Stage 1. This staged approach
allows the process flow sheet to
be optimised for full production
based on operating experience.
An additional US$15 million in
capital cost has been included
in the Stage 1 Capex estimate
to facilitate the optionality
to readily expand to Stage 2
operations.
As part of the DFS Update,
Proven and Probable Ore
Reserves were derived from
Measured and Indicated Mineral
Resources contained within the
final pit design and scheduled
to be processed through the
planned processing facility. The
Ore Reserve does not include
any material classified as Inferred
and Inferred Resources are not
included in economic analysis.
The Ore Reserve is contained
within an open pit containing 169
million tonnes of waste resulting
in a waste to ore strip ratio of
3.3:1 with a total of 222 million
tonnes of ore plus waste mined
over the life of mine. Included in
the waste material is 1.8 million
tonnes of Inferred Mineral
Resource which is not reported
to Ore Reserves and is an
opportunity to provide additional
reserves with further drilling.
The Ore Reserve is detailed
in the table below and further
details are contained in the ASX
Announcement of 20 October
2020.
Firefinch Annual Report Review of Operations • 25
Pictured:
Drilling at Goulamina
GOULAMINA LITHIUM PROJECT ORE RESERVES
PROVEN
PROBABLE
TOTAL
Tonnes
(millions)
Grade
(% Li2O)
Tonnes Li2O
(‘000)
Tonnes
(millions)
Grade
(% Li2O)
Tonnes Li2O
(‘000)
Tonnes
(millions)
Grade
(% Li2O)
Tonnes
Li2O (‘000)
8.1
1.55
125
44.0
1.50
660
52.0
1.51
785
1 All resources are quoted above a 0% Li2O cut-off due to the proposed method of mining and processing (“whole of ore”), further information in the ASX Announcement of 20 October 2020.
2 Numbers in the above table may not appear to sum correctly due to rounding.
GOULAMINA LITHIUM PROJECT MINERAL RESOURCES
DEPOSIT
MEASURED
INDICATED
INFERRED
TOTAL
Tonnes
(millions)
Grade
Li2O %
4.3
0.6
1.47
1.69
Tonnes
Li2O
(‘000)
62
33
Main
Sangar I
Sangar II
West I
3.5
1.67
59
West II
Danaya
Tonnes
(millions)
Grade
Li2O %
Tonnes
Li2O
(‘000)
Tonnes
(millions)
Grade
Li2O %
Tonnes
Li2O
(‘000)
Tonnes
(millions)
Grade
Li2O %
Tonnes
Li2O
(‘000)
7.2
19.3
10.1
9.9
1.9
7.8
1.21
1.61
1.54
1.43
1.43
1.43
1.48
87
311
156
141
30
112
832
2.6
11.9
4.8
6.6
14.5
43.9
1.05
1.54
1.45
1.48
1.30
1.38
28
183
70
97
188
606
14.1
1.26%
177
31.8
1.66%
527
14.9
1.52%
226
20.0
1.49%
297
22.3
1.35%
300
108.5
1.45
1,570
Total
8.4
1.57
133
56.2
1 All resources are quoted above a 0% Li2O cut-off due to the proposed method of mining and processing (“whole of ore”), further information in the AXS Announcement of 8 July 2020.
2 Numbers in the above table may not appear to sum correctly due to rounding.
Firefinch is confident that there is considerable
exploration upside beyond the current Mineral Resource
and this potential will be tested in the drilling program
approved by the Joint Venture partners.
COMPETENT PERSONS STATEMENT
The information in this announcement that relates to
Exploration Results, Exploration Targets and Mineral
Resources at Goulamina is based on information
compiled by Mr Simon McCracken. Mr McCracken is
an employee of Firefinch Limited and a member of the
Australian Institute of Geoscientists. Mr McCracken has
sufficient experience which is relevant to the style of
mineralisation and type of deposit under consideration
and the activity he is undertaking to qualify as a
Competent Person as defined in the 2012 Edition of the
“Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves (‘the JORC Code’)”.
Mr McCracken consents to the inclusion in the report of
the matters based on his information in the form and
context in which it appears.
A Measured, Indicated and Inferred Mineral Resource
Estimate for Goulamina of 108.5 million tonnes at
1.45% Li2O was published during 2020 (refer ASX
Announcement dated 8 July 2020). The resource
represents a 48% uplift in Measured and Indicated
Resources compared to the previous Mineral Resource
and is detailed in the table below
Some 43.9 million tonnes of Inferred Mineral Resources
at a grade of 1.38% Li2O lie within, beneath or along strike
from the final pit design. That pit was been constrained
by the limit of available Indicated and Measured
Resources and a US$666 per tonne optimisation. Recent
pit optimisations estimated using a US$900 per tonne
spodumene concentrate price and including Inferred
Mineral Resources demonstrate that the pit will be much
larger, and it is conservative to include 30 million tonnes
of Inferred Mineral Resource at a grade of 1.3% Li2O in
the life of mine production target. Detailed evaluation
of those Inferred Mineral Resources has provided
confidence that with the drilling underway, and assuming
results are in line with expectations, a high proportion is
likely to convert to Indicated Resources and be available
for inclusion in Ore Reserve estimates. Work continues
on open pit optimisation, design and scheduling based
on new long-term pricing.
26 • Firefinch Annual Report Review of Operations
COMMUNITY
In 2021, Firefinch, along with
its consultant Digby Wells,
established a committee to act
as the monitoring body for the
economic displacement process,
and advise on environmental,
and social matters affecting
Goulamina and neighbouring
villages. The committee
comprises of Prefect of
Bougouni, the acting Sub-Prefect
of Faragouaran, Mayors of Danou
(Torakoro), Faragouaran and
Kouroulamini, representatives
of technical services and
neighbouring villages. This is an
important step in the process
of community engagement and
Environmental and Social Impact
Assessment. It should be noted
that no dwellings need to be
relocated as part of the project
development, and compensation
will largely be based on the
acquisition of cleared farmland.
The committee will initially
advise on early works
commencing in 2022, namely
road access upgrades, water
infrastructure developments and
site clearing activities.
DEMERGER
Firefinch announced its intention
to demerge its interest in
Goulamina into a separate ASX
listed lithium-focused company
to be called Leo Lithium. Subject
to shareholder and regulatory
approvals, eligible Firefinch
shareholders on the record
date will receive an in-specie
distribution of Leo Lithium
shares at no cost as part of the
demerger. Firefinch will retain
20% of the issued capital of Leo
Lithium following the demerger.
In conjunction with Leo Lithium
seeking admission to ASX, Leo
Lithium proposes to undertake
a pro rata entitlement offer to
fund working capital, costs of the
demerger and permit flexibility
to accelerate expenditure at
Goulamina. A prospectus for the
entitlement offer will be made
available when the Leo Lithium
shares are offered under the
entitlement offer. Eligible Leo
Lithium shareholders who wish
to acquire Leo Lithium shares
under the entitlement offer will
need to complete the application
form that will accompany the
entitlement offer prospectus.
This will be sent to Leo
Lithium shareholders following
implementation of the demerger.
Pictured: Dr Michael Anderson,
Managing Director of Firefinch
and Simon Hay, Managing
Director of Leo Lithium
Firefinch Annual Report Review of Operations • 27
OTHER
PROJECTS
DANKASSA
Highly encouraging results were
returned, with broad zones of
shallow gold mineralisation
intersected in holes adjacent
to, and directly along strike
from, one another. To date the
Company has investigated
approximately 4km of
prospective strike within the
much more extensive 12km long
trend. While the Company’s
focus is currently on Morila, the
coherent bedrock gold anomaly
within the Dankassa Gold Trend
indicates there is potential
to discover economic gold
mineralisation.
The Dankassa Gold Project is
situated approximately 110km
by road south of Bamako, the
capital city of Mali, and to
the north of the Goulamina
Lithium Project. The Dankassa
Gold Project covers an area
of 112km2 and consists of two
research permits (Makono and
Sanankoroni) which are held
100% by wholly owned Firefinch
entities.
Reconnaissance drilling
undertaken by Firefinch in
2011-2012 defined a 12km long,
gold zone in the north of the
Project area: the Dankassa
Gold Trend. Aircore and auger
drilling conducted by Firefinch
has delineated coherent gold
anomalies in bedrock within
the Dankassa Gold Trend. Two
priority areas within the broader
trend were targeted for follow up
drilling.
28 • Firefinch Annual Report Review of Operations
TABULATION OF PERMITS
NAME
KM2
NUMBER
STATUS
OWNER
Morila
211.2
PE 99/15
Permit Expiry: 4 August 2029/
Convention Expiry: June 2022
Société des Mines de Morila
SA (Morila SA)
MORILA GOLD PROJECT
MASSIGUI GOLD PROJECT
Finkola
34.2
PEGM 2022/29
Expiry: 24 March 2034
Birimian Gold Mali SARL
Diokélébougou
100
PR 21/1127
Expiry date: 14 April 2024
Birimian Gold Mali SARL
Finkola-Sud
Finkola Nord
N’Tiola
Makono
Sanankoroni
98
32
64
32
80
PR 13/672
Renewal in progress.
Timbuktu Ressources SARL
PR 20/1081
Expiry date: 1 April 2023
Sudquest SARL
PR 21/1198
Expiry date: 7 November 2024
Birimian Gold Mali SARL
DANKASSA GOLD PROJECT
PR 21/1126
Expiry date: 14 April 2024
Birimian Gold Mali SARL
PR 16/805
Renewal in progress.
Timbuktu Ressources SARL
GOULAMINA LITHIUM PROJECT
Torakoro
100
PE 19/25
Expiry date: 23 August 2049
Timbuktu Ressources SARL
Firefinch Annual Report Review of Operations • 29
Directors’ Report
DIRECTORS
The following persons were directors of the Company during the financial year and up to the date of this
report, unless otherwise stated
Chairman (appointed 18 February 2019)
Dr Alistair Cowden
Dr Michael Anderson Managing Director (appointed 6 April 2021)
Mark Hepburn
Brendan Borg
Brett Fraser
Bradley Gordon
Non-Executive Director (appointed 14 November 2018)
Non-Executive Director (appointed 14 November 2018)
Non-Executive Director (appointed 11 November 2020)
Non-Executive Director (appointed 6 April 2021)
PRINCIPAL ACTIVITIES
During the year the principal activities of the Group during the year consisted of:
• Production of gold from Morila, its 80% owned gold mine in southern Mali;
• Evaluation of the Goulamina Lithium Project, also in southern Mali; and
• Mineral exploration and evaluation activities in Mali.
There have been no significant changes in the nature of those activities during the year.
GOING CONCERN
The Group made a loss for the year of $43,952,826 (2020: $1,043,816 profit) and had net cash outflows
from operating activities of $12,909,047 (2020: $6,128,870). As at 31 December 2021, the Group's cash
and cash equivalents were $148,881,533 (2020: $24,476,274) and the Group had net working capital of
$99,489,354 (2020: $17,916,091).
Considering the Group’s positive net cash position and the forecasted cash flows over the next 12 months,
the Directors expect that the Group can continue its normal business activities and meet its debts as and
when they fall due, subject to any changes to the underlying assumptions on which those forecasts have
been made. The Directors therefore have determined it is appropriate for the financial statements to be
prepared on a going concern basis.
FINANCIAL RESULTS
The Group made a loss for the year of $43,952,826 (2020: $1,043,816 profit). The net assets of the Group
have increased by $152,539,568 to $251,932,804 at 31 December 2021 (2020: $99,393,236).
As at 31 December 2021, the Group's cash and cash equivalents increased by $131,618,457 to $148,881,533
(2020: $24,476,274) and had working capital of $99,489,354 (2020: $17,916,091).
The following table represents the Group’s performance over the past five years.
Firefinch Limited Annual Report | 31 December 2021
30
Directors’ Report
Year ended
31 December 2021
Year ended
31 December 2020
Year ended
31 December 2019
Year ended
31 December 2018
Year ended
30 June 2017
(43,952,826)
1,043,816
(3,504,280)
(4,067,681)
(5,667,818)
nil
251,932,804
0.865
nil
99,393,236
0.175
nil
27,166,106
0.097
nil
25,740,323
0.164
nil
11,435,753
0.640
Profit/ (loss) for the
period, $
Dividends paid, $
Net assets, $
Share price, $
CORPORATE
Dividends
There were no dividends paid or recommended during the year ended 31 December 2021 (2020: No
dividends were paid or recommended).
Issue of securities
During the year the Company issued 396,228,969 fully paid shares.
On 28 June 2021, the Company successfully completed a placement to raise $47 million (before costs) to
fund the ramp-up of activities at Morila and continue exploration and resource development. This resulted
in the issue of 117,187,206 ordinary fully paid shares at an issue price of $0.40 per share to sophisticated
investors and shareholders
On 26 November 2021, Firefinch issued 88,560,906 ordinary fully paid shares under a Share Purchase Plan
at an issue price of $0.58 per share, raising $51 million to advance the Morila Gold Project and progress
exploration and development activities at Goulamina Lithium Project.
On 13 December 2021, the Company successfully completed a $100 million Institutional Placement.
149,253,732 ordinary fully paid shares were issued at $0.67 offer price per share. The Placement
represented a proactive corporate initiative to provide funding certainty for the Company’s growth plans
at Morila and the Goulamina and remove reliance on debt funding.
In addition, the following options were exercised during the year:
• 28,936,573 options with an exercise price $0.15 per share; and
• 2,000,000 options with an exercise price of $0.40 per share.
A further 10,305,600 performance rights were converted into shares during the year and the Company
granted a total of 12,667,800 performance rights to its directors, key management personnel and
employees.
Change of Directors and Officers
On 6 April 2021, Mr Bradley Gordon joined the Firefinch board as Non-Executive Director and Dr Michael
Anderson was appointed Managing Director.
On 23 August 2021, Mr Thomas Plant was appointed as Chief Financial Officer following the resignation of
Mr Eric Hughes as Chief Financial Officer and Company Secretary. Mr Nathan Bartrop was appointed as
Company Secretary on 23 August 2021.
Firefinch Limited Annual Report | 31 December 2021
31
Directors’ Report
Strategic Initiatives
On 16 June 2021, the Company announced that it had executed a binding term sheet with Ganfeng to
establish a 50:50 incorporated joint venture to develop and operate the Goulamina Lithium Project. Under
the terms of the joint venture, Ganfeng is required to provide up to US$194 million of funding to support
the development of the Goulamina Lithium Project, consisting of equity funding of US$130 million and up
to US$64 million in debt funding. Further information on the Goulamina Lithium Project is contained in the
Review of Operations above. As at the date of this report the final condition precedent with respect to
Ganfeng’s investment into the Goulamina Lithium Project has been satisfied. Refer to the Matters
Subsequent to Balance Date on page 34.
During the year, the Firefinch Board decided to make preparations to put a proposal to shareholders
regarding a demerger of its interest in the Joint Venture from the Group’s gold business. Structurally
separating the Group’s distinct businesses and creating two standalone ASX-listed companies has been
determined as the best means to deliver value to shareholders. As this proposal is still in development and
will be subject to further Board approval, as well as regulatory, and shareholder approvals, the Group’s
interest in the Joint Venture is not classified as held-for-sale as at 31 December 2021.
EXTERNAL FACTORS AFFECTING GROUP RESULTS
Commodity prices
The Group's operating revenues are sourced from the sale of gold and to a much lesser degree, silver. These
commodities are priced by external markets which are subject to fluctuation.
The Group did not enter any hedging contacts during the year to manage its commodity price risk. All sales
of refined gold and silver during the year were priced using the London AM Gold Fixing price. Subject to a
variety of factors, gold sales take place approximately every two weeks.
Exposure to economic, environmental and social sustainability risks
The Group has potentially material exposure to economic, environmental, social and governance risks,
including changes in community expectations, and environmental, social and governance legislation
(including, for example, those matters related to climate change). The Group employs suitably employed
personnel to assist with the management of its exposure to these risks. The Group’s approach to risk
management is discussed in more detail in the Group’s Corporate Governance Statement and Risk
Management Policy which can be found on the Group’s website.
COVID-19
General
The global pandemic arising from the outbreak and spread of COVID-19 is having a material effect on global
economic markets and the operation of a wide variety of businesses, including those in the mining industry
and particularly in developing countries such as Mali. The global economic outlook is facing unprecedented
uncertainty due to the pandemic, which has had and may continue to have a significant impact on the
mining industry, the macro-economic environment in which the Group operates, and capital markets
generally.
Firefinch Group
The COVID-19 pandemic represents a risk for the Group at the Morila Gold Mine and this is expected to
continue into the foreseeable future.
During the year 120 cases of COVID-19 infection were identified among employees and contractors at the
Morila Gold Mine.
Firefinch Limited Annual Report | 31 December 2021
32
Directors’ Report
The risk of COVID-19 introduction and spread at the Morila Gold Mine and the associated business
continuity and instability is being managed using Morila’s COVID-19 management plan. The management
plan is focussed on ensuring the health and safety of our people, maintaining safe operations and
supporting the local community.
Key controls within Morila’s COVID-19 management plan to mitigate the risk of introduction and spread of
COVID-19 and to manage the resulting impact on operations include:
• Monitoring local, regional and global pandemic data and information
•
•
Site access restrictions
Surveillance, screening and testing (PCR and rapid antigen)
• Personal, workplace hygiene and PPE
• Vaccination roll-out
• Community and government engagement
• External and internal stakeholder engagement
• Contact tracing and case management at the site level
• Business continuity planning
To date, COVID-19 has not materially impacted operations at Morila. While we remain confident that the
measures that we have put in place will enable Morila to remain fully operational, the potential unchecked
spread of COVID-19, and the development of new variants globally, remains a risk to the Group at this time.
Given the potential for changes to Morila’s operating environment due to the direct and indirect impact of
COVID-19, it is challenging to forecast future gold production or costs with full confidence. Every effort is
being applied to maintaining “business as usual” and achieving internal production and cost targets, but
success cannot be guaranteed.
Other external factors and risks
• Operational factors including mine grades, geotechnical factors, mill performance and workforce
capability;
Contained metal (tonnes and grade) are estimated annually and published in resource and reserves
statements, however actual production in terms of tonnes and grade often varies (favourably and
unfavourably) as ore bodies can be complex or inconsistent.
• Exploration success or otherwise;
The reserves and resource base depletes as a result of mining, resulting in the Group’s ability to find or
replace reserves/resources presenting a significant business risk. To mitigate this risk, the Group
undertakes a substantial exploration program with the objective of replenishing resources and reserves
annually.
• Operating costs including supply chain, labour markets and productivity;
Supply chain issues, such as those being experienced across the globe at this time, can materially impact
the productivity of an operation especially as a result of the location of the Group's operations. As such,
it is challenging to forecast future gold production or costs with full confidence. Every effort is being
applied to maintaining “business as usual” and achieving internal production and cost targets, but
success cannot be guaranteed.
Firefinch Limited Annual Report | 31 December 2021
33
Directors’ Report
Labour is one of the main cost drivers in the business and as such can materially impact the productivity
and profitability of an operation.
• Changes in government and/or legislation;
A rise in nationalist sentiment presents an operational risk to the Group.
Sovereign risk associated with changes of government, including coup d’etats, can result in sanctions
as is the case with the current ECOWAS sanctions in Mali.
Fiscal policy changes can materially impact the profitability of the Group.
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
There have been no significant changes in the state of affairs of the Group during the year not otherwise
disclosed in the Review of Operations above or the Consolidated Financial Statements.
MATTERS SUBSEQUENT TO BALANCE DATE
On 4 January 2022, the board of Firefinch and Jiangxi Ganfeng Lithium Co. Ltd (Ganfeng) approved a Final
Investment Decision for the Goulamina Lithium Project. The parties have agreed to waive the FID condition
to the payment of the final US$91 million upon the formation of the incorporated Joint Venture. The major
remaining condition precedent to the formation of the Goulamina Joint Venture is the transfer of the
Project Exploitation Licence to a single purpose Malian subsidiary as required by Malian legislation. The
transfer is expected in early 2022 and, upon the satisfaction of other condition precedents, will allow the
formation of the Goulamina Joint Venture.
In January 2022, mining activities commenced as scheduled at the Morila Super Pit. Initial activities
comprise pre-stripping of waste from the first stage of the Morila Super Pit. Ore mining is currently forecast
to commence during Q2 2022, with the Morila Super Pit becoming a consistent source of ore in the second
half of 2022.
On 10 January 2022, Simon Hay joined Leo Lithium Limited as Managing Director.
On 28 March 2022, the Company announced that the transfer of the Exploitation Licence for the Goulamina
Lithium Project to Lithium du Mali SA, a wholly owned entity of Mali Lithium BV (Mali Lithium) has occurred.
This represented the satisfaction of the final condition precedent with respect to Ganfeng’s investment into
the Goulamina Lithium Project. Firefinch and Ganfeng now each hold a 50% interest in Mali Lithium. The
satisfaction of this condition triggers US$130 million of equity funding to be provided to Mali Lithium by
Ganfeng, with US$39 million to be released from escrow and received by Mali Lithium and a further US$91
million to be transferred to Mali Lithium by Ganfeng shortly. Ganfeng remains obliged to provide either
US$40 million of Ganfeng direct debt or source US$64 million of third-party debt.
LIKELY DEVELOPMENTS
The Group intends to maintain safe operations at the Morila Gold Project, including:
•
•
continuing production from the Viper satellite pit;
safely ramping up production at the Morila Super Pit; and
• developing the N’Tiola and Beledjo-Koting satellite pits.
Exploration and evaluation activities will continue on existing tenements, and opportunities to expand the
Group's tenement portfolio will be evaluated should they arise.
Firefinch Limited Annual Report | 31 December 2021
34
Directors’ Report
There are no other likely developments of which the Directors are aware which could be expected to
significantly affect the results of the Group’s operations in subsequent financial years not otherwise
disclosed in the Review of Operations or the Matters Subsequent to Balance Date sections of the Directors’
Report.
ENVIRONMENTAL REGULATIONS
The Group holds various permits issued by the relevant mining and environmental protection authorities
that regulate its exploration and mining activities in Mali. These permits include requirements, limitations
and prohibitions on exploration and mining activities in the interest of environmental protection. The
holder of such permits must therefore adhere to the various conditions which regulate environment
rehabilitation of areas disturbed during the course of the Group’s exploration and exploitation activities.
There have been no significant known breaches during the year of environmental laws or permit conditions
by the Group while conducting its operations.
INFORMATION ON DIRECTORS
The names, qualifications, experience and special responsibilities of the directors in office during or since
the end of the financial year are as follows. Directors were in office for the entire financial year unless
otherwise stated.
Dr Alistair Cowden – Non-Executive Chairman (from 1 May 2021)
Executive Chairman (6 April 2020 - 30 April 2021)
Non-Executive Chairman (18 February 2019 - 6 April 2020)
Dr. Cowden has more than 40 years of experience as a mining executive, director and geologist in the
mining industry in Australia, Africa, Asia and Europe.
Dr. Cowden has been part of the discovery, development and operation of numerous mines in Australia,
Africa and Europe and has extensive experience across all aspects of the mining industry including
mergers, acquisitions and financing that created significant wealth for shareholders.
Dr. Cowden has an Honours degree in Geology from Edinburgh University and a PhD in Geology from the
University of London.
Former directorships in the last three years
Copper Mountain Mining Corporation
Echo Resources Limited
Altona Mining Limited
9 April 2018 - 5 November 2020
1 August 2019 - 15 October 2019
2 January 2011 - 9 April 2018
Firefinch Limited Annual Report | 31 December 2021
35
Directors’ Report
Dr Michael Anderson – Manging Director
(Appointed 6 April 2021)
Dr. Anderson has more than 30 years of extensive management and technical experience in the mining
industry in Australia and Africa.
Dr. Anderson helped to lead Taurus Management Fund’s investment into numerous West African gold
producers. As Managing Director of Exco Resources, he led the Company to a number of major
achievements including the successful development of the White Dam Gold Mine and the advancement
of resource development, feasibility studies and approvals for the Cloncurry Copper Project ahead of its
ultimate sale to Xstrata for $175 million.
Dr Anderson has a BSc. (1st Class Honours in Mining Geology) and a PhD in Mining Geology, both from
the Royal School of Mines, Imperial College, University of London.
Other current directorships:
American West Metals Limited
28 May 2021 - present
Former directorships in the last three years:
Hot Chili Limited
Tiger Resources Limited
Finders Resources Limited
14 December 2011 - 4 November 2020
8 August 2019 - 6 November 2020 (delisted 3 Feb 2020)
1 October 2016 - 6 May 2019
Mr Mark Hepburn – Non-Executive Director
(Appointed 14 November 2018)
Mr Hepburn is a Corporate and Financial Markets Executive with over 28 years' experience in a range
of management and board positions for Institutional Stockbroking and Derivatives Trading desks for
major Financial Institutions.
His career has included roles in Sydney with Deutsche Bank and Macquarie Bank, managing global
derivatives distribution sales teams. Mr Hepburn has worked as an Executive Director of a leading Perth
stockbroking firm during which time he was involved in numerous fund-raising transactions for ASX
listed industrial and resource companies. Mr Hepburn was also Managing Director of his own Corporate
Advisory firm which specialised in executing corporate and equity transactions for ASX listed resources
companies.
His experience also includes working as a corporate executive within mining companies and he has been
a member of the Australian Institute of Company Directors since 2008.
Mr Hepburn has a degree in Economics and Finance (B.Econ. & Fin 1992 UWA) and has been a member
of the Australian Institute of Company Directors since 2008.
Other current directorships:
Castile Resources Limited
29 November 2019 - present
Former directorships in the last three years:
Sihayo Gold Limited
1 August 2018 - 26 November 2019
Firefinch Limited Annual Report | 31 December 2021
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Directors’ Report
Mr Brendan Borg – Non-Executive Director
(Appointed 14 November 2018)
Mr Borg is a consultant geologist who has specialised in the "battery materials" sector including lithium,
graphite and cobalt mineralisation, participating in numerous successful projects, in an investment
and/or operational capacity.
Mr Borg has more than 20 years’ experience gained working in management, operational and project
development roles in the exploration and mining industries, with companies including Rio Tinto Iron
Ore, Magnis Resources Limited, IronClad Mining Limited, Lithex Resources Limited and Sibelco Australia
Limited. Brendan operates a geological consulting business Borg Geoscience Pty Ltd.
Mr Borg holds a Master of Science in Hydrogeology and Groundwater Management (University of
Technology Sydney), a Bachelor of Science in Geology/Environmental Science (Monash University) and
is a member of AusIMM and IAH.
Other current directorships:
Kuniko Limited
Sarytogan Graphite Limited
1 April 2021 - present
29 November 2021 - present
Former directorships in the last three years:
Celsius Resources Limited
Tempus Resources Limited
18 April 2017 - 17 March 2021
18 April 2018 - 1 February 2021
Mr Brett Fraser – Non-Executive Director
(Appointed 11 November 2020)
Brett is an experienced ASX director, currently holding a position as Director of central-west African iron
ore company, Sundance Resources Limited. Mr Fraser’s deep knowledge (acquired over 30 years’
corporate finance experience) is a great asset to the Company, particularly regarding business
acquisitions, business strategy and restructuring, and corporate governance. Mr Fraser is a Fellow of
CPA Australia, a Fellow of Financial Services Institute of Australasia, and a Fellow of the Governance
Institute of Australia. He holds a Bachelor of Business (Accounting) and a Graduate Diploma in Finance
(SIA).
Other current directorships:
Sundance Resources Limited
10 March 2018 - present
Former directorships in the last three years:
Blina Minerals
Aura Energy Limited
Holista Colltech Limited
Empire Resources Limited
26 September - 19 September 2019
24 August 2005 - 18 November 2019
21 February 2020 - 2 July 2020
17 July 2018 - 2 October 2018
Firefinch Limited Annual Report | 31 December 2021
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Directors’ Report
Mr Bradley Gordon – Non-Executive Director
(Appointed 6 April 2021)
Mr Gordon is a seasoned resource industry executive with 30 years’ experience in the gold, copper
and mineral sands industries. Mr Gordon has deep operational and gold industry experience, both in large
scale open pit mining and underground operations.
Mr Gordon has significant African experience, particularly as CEO of Acacia Mining. Mr Gordon was CEO
of Intrepid Mines for five years during which its market capitalisation increased to A$1.4 billion through
a series of corporate deals with the value primarily driven by the discovery and development of the world-
class Tujuh Bukit gold-copper-silver project in Indonesia. He was CEO of Emperor Mines in Fiji and
Managing Director of Placer Dome Asia Pacific. He has supervised operations at mines such as Porgera in
PNG, Kanowna Belle, Paddington and Kundana all in Western Australia.
Mr Gordon holds a Mining Engineering degree from the Western Australia School of Mines (Curtin
University) and an Executive MBA from INSEAD, France.
Other current directorships:
Aus Tin Mining Limited
Laneway Resources Limited
17 May 2021 – present
11 December 2020 - present
Former directorships in the last three years:
None
Mr Eric Hughes, BCom – Company Secretary
(Appointed 26 February 2019- resigned 23 August 2021)
Mr Hughes has more than 20 years’ experience in senior finance executive roles with ASX-listed
resource companies. He has a proven track record of structuring, evaluating, financing, developing and
operating resource projects in Australia, Turkey, South Africa and Finland. Mr Hughes also brings
experience in the negotiation and execution of major financial and corporate transactions. Mr Hughes
holds a Bachelor of Business – Business Law from Curtin University, is a CPA and a registered tax agent.
He has previously held executive director and Non-Executive Director roles in ASX-listed resource
companies.
Mr Nathan Bartrop – Company Secretary
(Appointed 23 August 2021)
Mr Bartrop is a corporate governance professional with over 10 years’ experience in ASX Listing Rules
compliance, corporate advisory and corporate governance. Mr Bartrop has assisted numerous listed
and dual listed entities across a wide range of industries as Company Secretary. During his career Nathan
has also worked as an ASX listings compliance adviser at ASX in Perth and Sydney, where he was actively
involved in the new listing of companies on ASX and advising listed entities on their compliance with
ASX listing rules.
Mr Bartrop holds a Bachelor of Laws and Commerce from the University of Western Australia and a
Graduate Diploma of Applied Corporate Governance from the Governance Institute of Australia. Nathan
is a Fellow and WA State Council member of the Governance Institute of Australia.
Firefinch Limited Annual Report | 31 December 2021
38
Directors’ Report
DIRECTORS’ MEETINGS
The number of meetings of the directors and the number of meetings attended by each director during
the year ended 31 December 2021.
Directors
A. Cowden
M. Anderson (1)
B. Borg
B. Fraser
M. Hepburn
B. Gordon (2)
Directors’ Meetings
Remuneration and
Nomination Committee
Corporate Social
Responsibility
Committee
Audit Committee
Number
eligible to
attend
Number
Attended
Number
eligible to
attend
Number
Attended
Number
eligible to
attend
Number
Attended
Number
eligible to
attend
Number
Attended
8
6
8
8
8
6
8
6
8
7
8
5
2
-
2
2
2
-
2
-
2
2
2
-
1
-
-
1
-
1
1
-
-
1
-
1
-
-
3
3
3
-
-
-
3
3
2
-
(1) M. Anderson was appointed as Managing Director on 6 April 2021.
(2) B. Gordon was appointed as Non-Executive Director on 6 April 2021.
DIRECTORS’INTERESTS
The following relevant interests in shares and performance rights of the Company were held directly and
beneficially by the directors as at the date of this report:
Fully paid
ordinary shares
Listed Options
Unlisted
performance/share
rights
Unlisted Options
Non-Executive Directors
Dr A. Cowden
M. Hepburn
B. Fraser
B. Borg
B Gordon
9,103,448
2,339,224
336,206
14,578,448
-
Executive Directors
M Anderson
1,301,724
-
-
-
-
-
-
-
-
750,000
-
750,000
6,800,000
-
-
-
-
-
-
Firefinch Limited Annual Report | 31 December 2021
39
Directors’ Report
REMUNERATION REPORT (AUDITED)
This report outlines the remuneration arrangements in place for the Company’s Non-Executive Directors,
Executive Directors and other Key Management Personnel (KMP) for the year ended 31 December 2021 in
accordance with the Corporations Act 2001 (the Act) and its regulations. For the purpose of this report,
KMP are defined as those persons having authority and responsibility for planning, directing and controlling
the major activities of the Company and the Group, directly or indirectly, including any director (whether
exclusive or otherwise) of the Parent entity. This information has been audited as required by section
308(3C) of the Act.
KMPs of the Company during the financial year ended 31 December 2021:
Position
Commenced/ Resigned
Alistair Cowden
Executive Chairman
Michael Anderson
Managing Director
Appointed 6 April 2020
Appointed 6 April 2021
Mark Hepburn
Non-Executive Director
Appointed 14 November 2018
Brendan Borg
Non-Executive Director
Appointed 14 November 2018
Brett Fraser
Non-Executive Director
Appointed 11 November 2020
Bradley Gordon
Non-Executive Director
Appointed 6 April 2021
Eric Hughes
Chief Financial Officer/ Company
Secretary
Appointed 26 February 2019 / resigned 23 August 2021
Thomas Plant
Chief Financial Officer
Appointed 23 August 2021
Andrew Taplin
Chief Operating Officer
Appointed 2 November 2020
The Remuneration Report has been set out under the following main headings:
1. Remuneration Governance
2. Executive Remuneration Framework
3. 2021 KMP Long Term Incentive Plan Terms
4. 2021 KMP Short Term Incentive Plan Terms
5. 2021 Non-Executive Director Remuneration Framework
6. 2021 Non-Executive Director Equity Plan Terms
7. Details of Remuneration
8. Service Agreements
9. Share Based Compensation
10. Additional Information
1. Remuneration Governance
a) Remuneration and Nomination Committee
The Board formed the Remuneration and Nomination Committee (RNC) in 2021 which is governed by a
Remuneration Committee Charter. In 2021, the RNC comprised of:
Mr Brendan Borg
Dr Alistair Cowden
Mr Brett Fraser
Committee Chairman
Committee Member
Committee Member
The RNC has worked with KMP and management to apply a robust governance framework and to ensure
the Company’s remuneration strategy supports the creation of sustainable shareholder value.
Firefinch Limited Annual Report | 31 December 2021
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Directors’ Report
In relation to remuneration, the responsibilities of the RNC include:
I.
II.
III.
IV.
V.
VI.
VII.
reviewing the Company's Remuneration Policy and making appropriate recommendations to the
Board. In considering the Company’s Remuneration Policy, the Committee refers to the guidelines
for non-executive director remuneration and executive remuneration set out in the commentary
to recommendation 8.2 in the ASX Principles and Recommendations;
reviewing senior executives'
recommendations to the Board;
remuneration and
incentives, and making appropriate
reviewing the remuneration framework for non-executive directors, including the process by which
the pool of directors’ fees approved by shareholders is allocated to directors, and making
appropriate recommendations to the Board;
reviewing and making recommendations to the Board on short and long-term incentive
compensation plans, including equity based plans;
reviewing superannuation arrangements for directors, senior executives and other employees;
reviewing termination payments;
reviewing remuneration related reporting requirements, including disclosing a summary of the
Company’s policies and practices (if any) regarding the deferral of performance-based
remuneration and the reduction, cancellation, or clawback of performance-based remuneration in
the event of serious misconduct or a material misstatement in the Company’s financial statements;
VIII.
reviewing whether there is any gender or other inappropriate bias in remuneration for directors,
senior executives, or other employees;
IX. monitoring compliance with applicable
legal and regulatory requirements relevant to
remuneration-related matters and any changes in the legal and regulatory framework in relation
to remuneration; and
X.
performing such other functions as assigned by law or the Company’s Constitution.
b) Use of Remuneration Advisors
The Committee’s Charter allows the RNC access to specialist, external remuneration advice about
remuneration structure and levels.
In the reporting period, The Reward Practice Pty Ltd was engaged to provide remuneration market data for
Non-Executive Director (NED) roles, Non-Executive Chairman and NED fee pool. The recommendations and
adoptions of which were not applied until 2022.
During 2021, external advice was not sought on executive remuneration.
c) Remuneration Policy
The Company adopted a Remuneration Policy during the reporting period.
The Remuneration Policy serves to guide the RNCs recommendations on remuneration and the Board’s
adoption of those recommendations and covers all employees of the Group, including KMP, executives and
employees of Firefinch subsidiaries. The RNC administers the Remuneration Policy.
The Policy seeks to provide the foundation for competitive remuneration to attract, motivate and retain
high quality individuals in order to deliver Firefinch’s strategy. Remuneration and incentive programs are
structured to reward employees for their individual and collective contribution to the Company’s success
and business objectives, for appropriate risk-taking, for outperformance and for creating and enhancing
value for shareholders.
Firefinch Limited Annual Report | 31 December 2021
41
Directors’ Report
The Policy informs the RNC on matters including:
i. Remuneration market positioning (taking into consideration industry benchmarks, market forces
and talent availability);
ii. Remuneration mix including fixed and variable remuneration strategies;
iii. Setting remuneration; and
iv. Reviewing remuneration levels annually
2. Executive Remuneration Framework
a) Executive Remuneration Framework
The following remuneration framework was adopted in 2021. The Board sought to ensure that the
framework is best fit for purpose and aligns with shareholder value creation.
The framework covers executives of the Company. NED remuneration is dealt with separately below.
Remuneration Category
Purpose of Category
Fixed remuneration
Fixed remuneration consists of base salary, superannuation, and
other non-monetary benefits such as employee leave.
At-risk remuneration – Short
Term Incentive (STI)
At-risk remuneration – Long Term
Incentive (LTI)
Fixed remuneration is linked to the market rate of the role and is
intended to compensate for fulfilling the scope of the employees
roles and responsibilities and the employees skills, experience, and
qualifications.
The primary purpose of the STI is to incentivise executives to
achieve the annual STI performance targets set by the Board at the
beginning of the period. The STI performance targets clearly set out
the annual performance targets the Board requires from executives
and achievement of the targets is determined by the Board at the
end of the annual period.
The STI comprises an annual award which is measured over a 12
month performance period and is payable in cash.
The performance targets are contained in a balanced scorecard with
financial and non-financial measures, as well as a mixture between
corporate and personal measures.
At the Boards’ absolute discretion, in the event of a fatality, no
payout will be made.
The LTI is designed to incentivise executives in the creation of long-
term shareholder value as evidenced by market and nonmarket
measures, by rewarding executives for the achievement of long-
term performance targets set by the Board at the beginning of the
long-term performance period. The long-term targets are set out by
the Board to provide clear and measurable direction as to what the
Board and shareholders require from executives by the end of the
long-term performance period.
Firefinch Limited Annual Report | 31 December 2021
42
Directors’ Report
b) Remuneration Mix and Incentive Opportunity
The remuneration mix and incentive opportunity includes a fixed remuneration component, a Short Term
Incentive Scheme (STI) and a Long Term Incentive Scheme (LTI).
The table below outlines the incentive opportunity as a percentage of fixed remuneration.
Incentive Opportunity
STI Target
STI Stretch
LTI
Maximum Incentive Opportunity
Managing Director
Key Management
Personnel
30%
30%
50%
45%
100%
60%
150%
105%
3. 2021 KMP Long Term Incentive Plan Terms
In 2021, the Board awarded Performance Rights to KMP to earn their at-risk LTI remuneration.
Dr Michael Anderson – Managing Director
The following table details the award and conditions of a long-term incentive award made to Dr Anderson
during 2021.
How is the award
delivered?
Date of award?
What is the quantum of
the award?
What are the performance
conditions?
The award is delivered through the issue of Performance Rights (Rights)
under the Firefinch Limited Awards Plan (previously adopted as the Mali
Lithium Limited Awards Plan) approved by shareholders on 27 May 2019.
An award was made on 27 May 2021.
6,800,000 Rights divided into Tranches with an expiry date of 28 May
2024.
Tranche 1 – 2,266,667 Rights
The Tranche 1 Rights will vest if the 10-day volume-weighted average
price (VWAP) of the Company’s shares is at a 15 cent premium to the 10-
day VWAP of the Company’s shares prior to the grant date. The
performance hurdle will first be tested on 6 April 2023 (Test Date 1), at
which point vesting may occur if the performance hurdle has been
satisfied, if not, the performance hurdle will be tested again on 6 April
2024 (Test Date 2).
The testing dates are procedural in that the VWAPs are tested on Test
Date 1 and Test Date 2, however if at any point over the performance
period, the VWAP hurdle is met, then the vesting condition is considered
to be achieved.
Tranche 2 – 2,266,667 Rights
The Tranche 2 Rights will vest subject to the Company achieving a
minimum of 250,000 ounces of gold production per annum. The
performance hurdle will first be tested on Test Date 1, at which point
vesting may occur if the performance hurdle has been satisfied, if not,
the performance hurdle will be tested again on Test Date 2.
Firefinch Limited Annual Report | 31 December 2021
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Directors’ Report
Tranche 3 – 1,133,333 Rights
The Tranche 3 Rights will vest subject to Morila Gold’s Ore Reserves being
equal to, or greater than 1,000,000 ounces of gold (with the meaning
given to that definition in the 2012 JORC Code) by Test Date 2.
Tranche 4 – 566,667 Rights
The Tranche 4 Rights will vest subject to the completion of 36 months of
nil Lost Time Injuries by Test Date 2.
Tranche 5 – 566,666 Rights
The Tranche 5 Rights will vest subject to the alignment of Environmental
and Social Governance reporting to a Company adopted international
standard/framework as determined by the Board by Test Date 2.
The Rights are also subject to baseline conditions which must be met and
satisfied at each of the testing dates in addition to the relevant
performance hurdles for the respective tranches. The baseline conditions
include nil workplace fatalities at the Company’s premises or operational
sites and two years of continuous service in the role as Managing
Director.
Retention award and alignment of strategic objectives with that of the
company.
6 April 2021 to 6 April 2024.
No Rights have vested in 2021.
Why were the
performance conditions
selected?
What is the performance
period?
Have any or all of the
awards vested during
2021?
Mr Andrew Taplin – Chief Operating Officer
The following table details the award and conditions of a long-term incentive award made to Mr Taplin
during 2021 and details on the partial vesting of that award.
How is the award
delivered?
Date of award?
What is the quantum of
the award?
What are the performance
conditions?
The award is delivered through the issue of Performance Rights (Rights)
under the Firefinch Limited Awards Plan (previously adopted as the Mali
Lithium Limited Awards Plan) approved by shareholders on 27 May 2019.
500,000 Rights were awarded on 2 November 2020.
1,000,000 Rights were awarded on 1 March 2021.
1,500,000 Rights, with 500,000 expiring on 14 October 2022 and
1,000,000 expiring on 1 July 2023.
500,000 Rights are based on the completion of two years of service from
date of employment which will be tested for vesting on 14 October 2022.
1,000,000 Rights are based the following conditions on the basis that
vesting will occur on achieving any two of the following four vesting
conditions (continually tested):
Firefinch Limited Annual Report | 31 December 2021
44
Directors’ Report
Test 1
The Company’s share price has traded on ASX at 10 cent premium to the
price on the three days of trading after the announcement of the Morila
acquisition for 20 consecutive Trading Days in which sales of Firefinch
shares are recorded;
Test 2
A JORC Code compliant resource of at least 2,000,000 ounces of gold is
defined at the Morila Gold Mine;
Test 3
Open pit production is recommenced at the main Morila open pit; or
Test 4
The Company enters into a sale, joint venture or financing agreement in
respect of the Goulamina Lithium Project which delivers an implied
valuation of at least $100 million for Goulamina as at the date of
execution.
Retention award and alignment of strategic objectives with that of the
company.
2 November 2020 to 1 July 2023.
In June 2021 the Board tested and determined that the performance
conditions applicable to 1,000,000 of Rights had been satisfied (based on
achieving Test 1, Test 2 and Test 3) and these 1,000,000 Rights therefore
vested on 30 June 2021.
Mr Taplin currently has 500,000 unvested Rights.
Why were the
performance conditions
selected?
What is the performance
period?
Have any or all of the
awards vested during
2021?
Mr Eric Hughes – Chief Financial Officer and Company Secretary (resigned 23 August 2021)
The following table details the grant, testing and vesting of an award made to Mr Hughes.
How is the award
delivered?
Date of award?
What is the quantum of
the award?
What are the performance
conditions?
The award is delivered through the issue of Performance Rights (Rights)
under the Mali Lithium Limited Awards Plan approved by shareholders on
27 May 2019.
An award was made on 30 July 2020.
1,500,000 Rights with an expiry date of 1 July 2023.
The Rights will vest subject to at least two of the following four vesting
conditions being met:
Test 1
The Company’s share price has traded on ASX at 10 cent premium to the
price on the three days of trading after the announcement of the Morila
Firefinch Limited Annual Report | 31 December 2021
45
Directors’ Report
acquisition for 20 consecutive Trading Days in which sales of Firefinch
shares are recorded;
Test 2
A JORC Code compliant resource of at least 2,000,000 ounces of gold is
defined at the Morila Gold Mine;
Test 3
Open pit production is recommenced at the main Morila open pit; or
Test 4
The Company enters into a sale, joint venture or financing agreement in
respect of the Goulamina Lithium Project which delivers an implied
valuation of at least $100 million for Goulamina as at the date of
execution.
Retention award and alignment of strategic objectives with that of the
company.
1 July 2020 to 1 July 2023.
The Board determined that the performance conditions applicable to
1,500,000 Rights were satisfied and therefore the Rights vested on 30
June 2021.
Why were the
performance conditions
selected?
What is the performance
period?
Have any or all of the
awards vested during
2021?
Mr Thomas Plant – Chief Financial Officer
No grants were made to Mr Plant during the reporting period, nor does Mr Plant have any Rights
currently on foot as part of an equity award.
4. 2021 KMP Short Term Incentive Plan Terms
Effective 1 July 2021, the Board set out STI performance targets for KMP to earn their at-risk STI
remuneration.
The incentive opportunity for each KMP is divided between a corporate and personal scorecard with
performance targets for both. The corporate targets are the same for all KMP listed. Personal targets are
not included in this report.
The following table summarises the Corporate 2021 STI targets for the performance period 1 July 2021 to
30 June 2022 (STI Plan).
Firefinch Limited Annual Report | 31 December 2021
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Directors’ Report
Performance
Area
Performance
Measure
% of
Scorecard
Target
Stretch at 150%
10% over budget gold
production and 5% under
budget operating
expenditure per the LOMP.
Board discretionary
assessment regarding safety
performance and
community relations
performance.
Implement Board approved
program on time and within
10% of budget.
Increase Morila Project Ore
Reserves such that the mine
life is extended by four years
or 350,000 ounces.
Board discretion.
25%
25%
25%
25%
Morila-
Production
and Cost
Group ESG
Group
Resource and
Reserve
Performance
against Life of
Mine Plan
(LOMP)
Safety,
Environmental
and Social
Performance
Delivery of
the
Exploration
Plan by
30 June 2022
Goulamina
Project
Development
Execution of
Goulamina
DFS Update,
FID and
successful de-
merger on
time
5% over budget gold
production, and on
budget operating
expenditure per the
LOMP.
Board discretionary
assessment regarding
safety performance and
community relations
performance.
Implement Board
approved program on
time and within 10% of
budget.
Increase Morila Project
Ore Reserves such that
the mine life is extended
by three years or 250,000
ounces.
Board endorsed effective
completion of the DFS
update by Q4, 2021, FID
by Q4, 2021 and
successful de-merger by
Q1, 2022. Board
discretionary assessment
on valuation of de-
merged company
valuation.
The assessment and any payment outcome for the above STI Plan will not be made until after the end of
the performance period, being 30 June 2022.
For the period 1 July 2020 to 30 June 2021, the Board made an STI cash based award to the Managing
Director and KMP based on an assessment of individual performance to the contribution of company
milestones. These payments are reflected in Table 2.
5. Non-Executive Director Remuneration Framework
a) Non-Executive Director remuneration
Non-Executive Directors (NEDs) are paid in cash plus statutory superannuation. The Board may determine
that fees may be paid by securities or a combination of cash and securities (the issue of securities subject
to shareholder approval as required), whether pursuant to the terms of an equity plan or otherwise. Such
determination is given regard to market practice and applicable corporate governance principles.
Fees paid to NEDs cover all activities associated with their role on the Board. The Board may from time to
time determined that additional fees are payable to NED’s who chair or are members of Board
subcommittees or who perform special duties or extra services on behalf of the Company.
Firefinch Limited Annual Report | 31 December 2021
47
Directors’ Report
Consistent with the Company’s Constitution, the aggregate quantum of all fees (including superannuation)
paid to NEDs in each financial year must not exceed the aggregate NED fee pool amount set by shareholders
from time to time in General Meetings.
NEDs are not provided with retirement benefits other than statutory superannuation entitlements.
The RNC will review NED fees annually and report its findings to the Board, together with any
recommendations (if considered appropriate) for revised fees.
The Board retains discretion to adopt the RNC recommendations with or without amendments. In setting
NED fees, the Board will have regard to market rates and the circumstances of the Company and the
resulting expected workloads of the Directors.
b) Directors’ fee limits
The aggregate amount of fees payable to Non-Executive Directors is subject to approval by shareholders.
The maximum aggregate amount of fees that is approved for payment to Non-Executive Directors is
$600,000 per annum, excluding the value of approved share-based payments. This limit was approved by
shareholders at the General Meeting on 28 May 2021.
Table 1 – Annual board and committee fees payable to Directors
Position
Chairman
Non- Executive Directors
Committee chairman
Committee member
$
120,548
72,329
6,027
3,014
(1) The fees are inclusive of superannuation guarantee and effective from 1 July 2021.
6. Statutory performance indicators
The Group aims to align executive remuneration to our strategic and business objectives and the creation
of shareholder wealth. The table below shows measures of the Group’s financial performance over the last
five years as required by the Corporations Act 2001. However, these are not necessarily consistent with the
measures used in determining the variable amounts of remuneration to be awarded to KMPs. As a
consequence, there may not always be a direct correlation between the statutory key performance
measures and the variable remuneration awarded.
Statutory disclosure key performance indicators of the Group over the last five years.
Profit/(Loss) for the period, $
Dividends paid, $
Net assets, $
Share price, $
Year ended
31 December
2021
(43,952,826)
nil
251,932,804
0.865
Year ended
31 December
2020
Year ended
31 December
2019
Year ended
31 December
2018
1,043,816
(3,504,280)
(4,067,681)
nil
nil
nil
99,393,236
27,166,106
25,740,323
0.175
0.097
0.164
Year ended
30 June
2017
(5,667,818)
nil
11,435,753
0.640
Firefinch Limited Annual Report | 31 December 2021
48
Directors’ Report
7. 2021 Non-Executive Director Equity Plan Terms
The Board has awarded Performance Rights to NEDs on the following basis.
Dr Alistair Cowden
Mr Brendan Borg
Mr Mark Hepburn
The table below details the grant, testing and vesting of an award made to Dr Cowden, Mr Borg and Mr
Hepburn.
How is the award
delivered?
The award is delivered through the issue of Performance Rights (Rights)
under the Mali Lithium Limited Awards Plan approved by shareholders on
27 May 2019.
Date of award?
An award was made on 23 October 2020.
What is the quantum of
the award?
Dr Alistair Cowden – 2,000,000 Rights expiring on 4 November 2023.
Mr Brendan Borg – 750,000 Rights expiring on 4 November 2023.
Mr Mark Hepburn – 750,000 Rights expiring on 4 November 2023.
What are the performance
conditions?
The Rights will vest subject to at least two of the following four vesting
conditions being met:
Test 1
The Company’s share price has traded on ASX at a 10 cent premium or
above to the VWAP for the three days after the acquisition of Morila was
announced (being $0.1971) for 20 consecutive Trading Days in which
sales of Firefinch shares are recorded;
Test 2
Definition of a JORC Code compliant Inferred Mineral Resource of at
least 2,000,000 ounces of gold (or equivalent) on the Morila Exploitation
Permit and the Company’s Malian subsidiary’s tenements adjoining the
Morila Exploitation Permit at a minimum average grade of 1.0 grams per
tonne of gold (or equivalent);
Test 3
The Company maintaining production from the Morila Gold Mine
beyond the date provided for in the Closure Plan of May 2021 or
expanding production at the Morila Gold Mine by commencing open pit
production from the Exploitation Permit (after any extension of its term);
or
Test 4
The Company enters into a sale, joint venture or financing agreement in
respect of the Company’s Goulamina Lithium Project which delivers an
implied valuation of at least $100 million for Goulamina as at the date of
execution.
Firefinch Limited Annual Report | 31 December 2021
49
Directors’ Report
Why were the
performance conditions
selected?
Dr Cowden held the role of Executive Chairman prior to the appointment
of a Managing Director.
Mr Borg and Mr Hepburn held the role of NED prior to the appointment
of an executive team.
What is the performance
period?
Have any or all of the
awards vested during
2021?
The performance conditions were selected to align the behaviours of
working directors with long term value creation for shareholders.
Each Right will be able to vest at any time after 12 months from the date
of issue and if the Chairman has provided continual service to the Board
for at least 18 months and remains a director at the time of vesting.
The Board determined that the performance conditions applicable to
3,500,000 Rights were satisfied and therefore the Rights vested on 3
November 2021.
Mr Brett Fraser
Mr Bradley Gordon
The following table details the award and conditions of a long-term incentive award made separately to
each Mr Fraser and Mr Gordon during 2021.
How is the award
delivered?
The award is delivered through the issue of Performance Rights (Rights)
under the Firefinch Limited Awards Plan (previously adopted as the Mali
Lithium Limited Awards Plan) approved by shareholders on 27 May 2019.
Date of award?
An award was made on 27 May 2021.
What is the quantum of
the award?
What are the performance
conditions?
1,500,000 Rights (750,000 Rights each) with an expiry date of 1 July
2023.
The Rights will vest subject to at least two of the following four vesting
conditions being met:
Test 1
The 10-day VWAP of the Company’s shares is at a 15 cent premium to
the 10-day VWAP of the Company’s shares prior to the grant date;
Test 2
Definition of a JORC Code compliant Ore Reserve of at least 1,500,000
ounces of gold on the Morila Exploitation Permit and the Company’s
Malian subsidiary’s tenements adjoining the Morila Exploitation Permit
at a minimum average grade of 1.0 grams per tonne of gold;
Test 3
The Company commencing production from the Morila Super Pit;
Test 4
The Company successfully completing the demerger of the Goulamina
Lithium Project, with “LithiumCo” successfully listing on the ASX (or
Firefinch Limited Annual Report | 31 December 2021
50
Directors’ Report
other recognised exchange) and achieving a market capitalisation of at
least $200 million; or
The vesting conditions attached to the Rights will be continuously tested
from 28 May 2022 until 1 July 2023. However, the Rights will only be
able to vest after 12 months from the date of issue and if the NED has
provided continual service to the Board for at least 18 months and
remains a NED at the time of vesting.
The performance conditions were selected to align the behaviours of
working directors with long term value creation for shareholders.
28 May 2021 to 1 July 2023.
Why were the
performance conditions
selected?
What is the performance
period?
Firefinch Limited Annual Report | 31 December 2021
51
Directors’ Report
8. Details of Remuneration
Details of the remuneration of the Directors and KMP of the Group (as defined in AASB 124 Related Party Disclosures) are set out in the following table.
Table 2 – Directors and Executive KMP’s remuneration for the year ended 31 December 2021
2021 – Group
Short-term
Post-
employment
Salary &
Fees
Cash bonus
Other
Superannuation
Short-term
Annual leave
paid
Termination
benefits
Total monetary
remuneration
Equity-settled share-
based payments
Performance /
share rights (4)
Options
Total
remuneration
$
$
$
$
$
$
$
$
$
$
P
e
r
f
o
r
m
a
n
c
e
%
Directors
M Hepburn
B Borg
B Fraser
B Gordon (1)
A Cowden (2)
M Anderson (3)
Directors total
Executive KMP
E Hughes (5)
T Plant (6)
A Taplin
70,320
72,603
72,602
49,315
292,502
-
-
-
-
-
397,508
50,000
954,850
50,000
195,658
50,000
131,067
-
385,872
100,000
Executive KMP total
712,597
150,000
TOTAL REMUNERATION
1,667,447
200,000
-
-
-
-
-
-
-
-
-
-
-
6,858
7,082
7,082
4,849
22,204
17,208
65,283
32,451
8,538
22,631
63,620
-
-
-
-
-
-
-
-
-
-
-
-
-
-
77,178
79,685
79,684
54,164
314,706
464,716
116,691
116,691
171,199
171,199
311,175
645,795
1,070,133
1,532,750
41,893
156,000
-
-
-
-
476,002
139,605
508,503
41,893
156,000
1,124,110
161,315
-
175,935
337,250
128,903
41,893
156,000
2,194,243
1,870,000
-
-
-
-
-
-
-
-
-
-
-
-
193,869
60%
196,376
59%
250,883
68%
225,363
76%
625,881
50%
1,110,511
58%
2,602,883
637,317
25%
139,605
-
684,438
26%
1,461,360
4,064,243
(1) Mr Gordon was appointed as Non-Executive Director on 6 April 2021.
(2) The salary and fees paid during the financial year include the additional fees of $73,059 for managing the Goulamina Joint Venture and Leo Lithium demerger processes.
(3) Mr Anderson was appointed as Managing Director on 6 April 2021.
(4) Vesting expense for the year of performance / share rights issues to the directors under the terms of the Company’s long-term incentive plans approved by shareholders on 23 October 2020. The fair value of the
performance / share rights is calculated at the date of grant date.
(5) Mr Hughes resigned on 23 August 2021.
(6) Mr Plant was appointed as Chief Financial Officer on 23 August 2021.
Firefinch Limited Annual Report | 31 December 2021
52
Directors’ Report
Table 2 (continued) – Directors and Executive KMP’s remuneration for the year ended 31 December 2020
2020 – Group
Short-term
Post-
employment
Salary &
Fees
Cash bonus
Other
Superannuation
Short-term
Annual leave
paid
Termination
benefits
Total monetary
remuneration
Equity-settled share-
based payments
Performance /
share rights (5)
Options (6)
Total
remuneration
$
$
$
$
$
$
$
$
$
$
P
e
r
f
o
r
m
a
n
c
e
%
Directors
M Hepburn
B Borg
B Fraser (1)
N O’Brien (2)
A Cowden (3)
C Evans (4)
Directors total
Executive KMP
E Hughes
A Taplin (7)
59,178
59,178
8,219
16,438
270,708
127,782
541,503
-
-
-
-
-
-
-
274,833
8,000
63,051
-
Executive KMP total
337,884
8,000
TOTAL REMUNERATION
879,387
8,000
-
-
-
-
-
-
-
-
-
-
-
5,622
5,622
624
2,851
19,370
10,030
44,119
21,343
3,616
24,959
-
-
-
-
-
-
-
-
13,111
-
32,289
116,667
64,800
64,800
8,843
32,400
290,078
286,768
22,059
22,059
-
-
58,825
-
-
-
-
-
86,859
25%
86,859
25%
8,843
32,400
-
-
348,903
17%
-
(305,044)
(18,276)
-
32,289
129,778
747,689
102,943
(305,044)
545,588
-
-
-
-
-
-
304,176
66,667
370,843
115,209
5,658
120,867
-
-
-
419,385
27%
72,325
8%
491,710
69,078
32,289
129,778
1,118,532
223,810
(305,044)
1,037,298
(1) Mr Fraser was appointed Non-Executive Director on 11 November 2020.
(2) Mr O’Brien resigned on 6 April 2020. Mr O’Brien received a further three months remuneration totalling $13,111 (excluding superannuation) under a fixed term employment contract.
(3)
(4) Mr Evans resigned as Managing Director on 6 April 2020.
(5)
Dr Cowden was appointed as Executive Chairman on 6 April 2020.
Vesting expense for the year of performance / share rights issues to the directors under the terms of the Company’s long-term incentive plans approved by shareholders on 23 October 2020. The fair value of
the performance / share rights is calculated at the date of grant date.
(6) Options forfeited upon resignation of the Managing Director.
(7) Mr Taplin was appointed as Chief Operating Officer on 2 November 2020.
Firefinch Limited Annual Report | 31 December 2021
53
Directors’ Report
9. Service Agreements
Remuneration and other terms of employment of the Managing Director, Executive Chairman, Chief
Operating Officer and Chief Financial Officer are formalised in employment agreements. Major provisions
of the agreements relating to the remuneration of these positions are set out below.
Remuneration of Executive Chairman, Dr Alistair Cowden
Dr Alistair Cowden moved to a position of Non- Executive Chairman from 6 April 2020 after holding a
position of Executive Chairman. Dr Cowden’s contract terms with the Company are outlined below.
Fixed remuneration
Dr Cowden was paid an annual salary of $450,000 inclusive of statutory entitlements from 1 November
2020 to 30 April 2021. From 1 May 2021, the annual salary is $120,548 inclusive of statutory entitlements
and in addition, the audit and remuneration committees’ membership fees of $6,027 per annum and fees
of $120,548 for managing the Goulamina Joint Venture and Leo Lithium demerger process.
Remuneration of Managing Director, Dr Michael Anderson (Appointed 6 April 2021)
On 6 April 2021 the Company appointed Dr Anderson as Managing Director and his employment contract
with the Company outlines the following terms:
Fixed remuneration
Dr Andersons’ annual salary was set at $528,306 per annum plus statutory superannuation and is $549,438
per annum plus statutory superannuation from 1 July 2021.
Variable remuneration
Dr Anderson is eligible to earn a performance related short-term incentive calculated with respect to each
financial year during his employment. Dr Anderson is eligible to participate in the Company’s Long Term
Incentive scheme.
Termination of contract
The Company may terminate Dr Andersons’ employment at any time on six months’ notice, of which at
least 3 months must be paid in lieu. Dr Anderson may terminate his employment with the Company at any
time on 6 months’ notice.
Remuneration of Chief Financial Officer and Company Secretary, Mr Eric Hughes (resigned 23 August
2021)
Fixed remuneration
Mr Hughes’s annual salary was $300,000 per annum, plus statutory superannuation and $312,000 from 1
July 2021.
Variable remuneration
Mr Hughes was eligible to earn a performance related short-term incentive calculated with respect to each
financial year during his employment. Mr Hughes was eligible to participate in the Company’s Long Term
Incentive scheme.
Remuneration of Chief Financial Officer, Mr Thomas Plant (appointed 23 August 2021)
Mr Thomas Plant was appointed on 23 August 2021 as Chief Financial Officer and his employment contract
with the Company outlines the following terms:
Firefinch Limited Annual Report | 31 December 2021
54
Directors’ Report
Fixed remuneration
Mr Plant’s annual salary is $350,000 per annum, plus statutory superannuation effective 23 August 2021.
Variable remuneration
Mr Plant is eligible to earn a performance related short-term incentive calculated with respect to each
performance year during his employment. Mr Plant is eligible to participate in the Company’s Long Term
Incentive scheme.
Termination of contract
Mr Plant and the Company may terminate the contract by giving three months’ notice.
Remuneration of Chief Operating Officer, Mr Andrew Taplin
Mr Andrew Taplin was appointed 2 November 2020 as Chief Operating Officer and his employment contract
with Firefinch outlines the terms of his employment.
Fixed remuneration
Mr Taplin’s annual salary was set at $400,000 per annum, inclusive of statutory superannuation and is
$393,438 base salary per annum plus statutory superannuation from 1 July 2021.
Variable remuneration
Mr Taplin is eligible to earn a performance related short-term incentive calculated with respect to each
performance year during his employment. Mr Taplin is eligible to participate in the Company’s Long Term
Incentive scheme
Termination of contract
Mr Taplin and the Company may terminate the contract by giving three months’ notice.
10. Share Based Compensation
KMP are eligible to participate in the Firefinch LTI scheme. The terms and conditions of the performance
rights included in remuneration of Directors and KMP in the current or a future reporting period are set out
below. The Black Scholes pricing model was used to determine a fair value of performance rights at a grant
date with non-market vesting conditions and a barrier-up trinomial pricing model was used for performance
rights with market vesting conditions. Performance rights granted carry no dividend or voting rights. When
exercisable, the performance rights are convertible into one ordinary share per right.
Table 3 – Key terms of share-based compensation held by Directors and KMP as at 31 December 2021
Item
Grant date
Number
Exercise price, $
Fair value, $
Total fair value, $
Performance
rights (1)
2 November
2020
500,000
nil
0.140
70,000
Performance period (yrs)
2
Expiry date
Vesting conditions
2-Nov-22
2 years
continuous
employment
Performance
rights (2)
Performance
rights (3)
Performance
rights (4)
Performance
rights (5)
Performance
rights (6)
Performance
rights (7)
27 May 2021
27 May 2021
27 May 2021 27 May 2021 27 May 2021 27 May 2021
2,266,667
2,266,667
1,133,333
566,667
566,666
1,500,000
nil
0.323
nil
0.385
nil
0.385
732,133
872,667
436,333
3
3
3
nil
0.385
-
3
nil
0.385
nil
0.385
218,166
577,500
3
2.1
28-May-24
28-May-24
28-May-24
28-May-24
28-May-24
1-Jul-23
Share price
appreciation
Gold
production
Ore reserve
Safety metric
ESG
(7)
(1) The assessed fair value of performance rights at a grant date is allocated equally over the performance period (24-month period) from
2 November 2020 to 2 November 2022, over which the individuals and the Company’s performance is assessed, and the amount is
included in the remuneration tables above.
Firefinch Limited Annual Report | 31 December 2021
55
Directors’ Report
(2) The performance rights will vest subject to the 10-day volume-weighted average price (VWAP) of the Company’s share price being at a
$0.15 premium to the 10-day VWAP to the Company’s VWAP prior to the date of grant.
(3) The performance rights will vest on the Company achieving a minimum of 250,000 ounces of gold production per annum.
(4) The performance rights will vest on Morila Gold’s Ore Reserves (with the meaning given to that definition in the 2012 JORC Code) at the
end of the performance period (being 6 April 2021) are equal to or greater than 1,000,000 ounces of gold.
(5) The performance rights will vest on completion of 36 months of nil lost time injuries.
(6) The performance rights will vest on aligning Environmental and Social Governance reporting to a Company adopted international
standard / framework as determined by the Board.
(7) The performance rights will vest subject to at least two of the following four vesting conditions being satisfied:
•
•
•
•
The 10-day VWAP of the Company’s share price is at a $0.15 premium to the Company’s 10-day VWAP prior to the date of grant;
Definition of a JORC Compliant Ore Reserve of at least 1,500,000 ounces of gold on the Morila Exploitation Permit and the
Company’s Malian subsidiary’s tenements adjoining the Morila Exploitation Permit at a minimum average grade of 1.0 grams per
tonne of gold;
The Company commencing production from the Morila Super Pit; or
The Company successfully completing the demerger of the Goulamina Lithium Project, with “LithiumCo” successfully listing on
the ASX (or other recognised exchange) and achieving a market capitalisation of at least $200 million.
Further information relating to the portion of Directors and KMP’s remuneration as an equity compensation
are set out in the following table.
Table 4 – Value of share-based compensation
Name
Directors
M Hepburn
B Borg
B Fraser
B Gordon
A Cowden
M Anderson
Executive KMP
E Hughes
A Taplin
Value recognised, exercised or lapsed in the year ended December 2021
1.
Total fair value of:
Performance
/share rights, $
Grant date
Value recognised
$
Performance /
share rights
Exercised
$
Performance
/share rights
Lapsed
$
Performance / share
rights
(8) Amount paid
per share on
exercise
138,750
138,750
288,750
288,750
370,000
2,259,299
319,260
70,000
140,000
23-Oct-20
23-Oct-20
27-May-21
27-May-21
23-Oct-20
27-May-21
30-Jul-20
2-Nov-20
1-Mar-21
-
-
171,199
171,199
116,691
116,691
-
-
-
311,175
645,795
-
35,935
-
161,315
-
140,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
The movement in performance /share right holdings for KMP and Directors during the year are set out in
the following table:
Table 5 – Movement of performance / share rights granted to Directors and KMPs during the year
Equity instrument
Balance at
start of
the year
Granted
during the
year as
remuneration
Exercised
during the
year
Forfeited /
lapsed
Balance at
end of the
year
Vested
during the
year
Vested and
exercisable
at the end of
the year
Name
Directors
M Hepburn
Performance right
2,750,000
B Borg
B Fraser
Performance right
750,000
Performance right
B Gordon
Performance right
(2,750,000)
-
(750,000)
-
-
750,000
750,000
-
-
A Cowden
Performance right
2,000,000
-
(2,000,000)
M Anderson
Performance right
-
6,800,000
-
Executive KMP
E Hughes
A Taplin
Share/performance
right
Performance right
2,000,000
-
(2,000,000)
500,000
1,000,000
(1,000,000)
-
-
-
-
-
-
-
-
-
-
750,000
750,000
-
6,800,000
-
500,000
-
-
-
-
-
-
-
-
-
-
-
-
Firefinch Limited Annual Report | 31 December 2021
56
Directors’ Report
Details of remuneration: share-based compensation benefits
The following table details the percentage of the available grant that vested in the financial year and the
percentage forfeited because specified performance criteria was not satisfied. The maximum value of the
performance/ share rights yet to vest has been determined as the fair value amount of the performance /
share rights at a grant date.
Table 6 – Performance/share rights granted/vested/unvested as at 31 December 2021
Equity instrument
Number of
rights granted
Financial
year
granted
Vested in
current
financial
year
Vested in
prior financial
year
Financial year in
which vested or
may vest
Total value yet to
recognise before
vesting
No
Yr
%
%
Yr
$
Name
Directors
M Hepburn
Performance rights
750,000
2020
B Borg
Performance rights
750,000
2020
100
100
B Fraser
Performance rights
750,000
2021
-
B Gordon
Performance rights
750,000
2021
A Cowden
Performance rights
2,000,000
2020
100
M Anderson
Performance rights
6,800,000
2021
Executive KMP
E Hughes
A Taplin
Share rights
500,000
2019
Performance rights
1,500,000
2020
100
100
Performance rights
500,000
2020
-
Performance rights
1,000,000
2021
100
-
-
-
-
-
-
-
-
2021
2021
2022
2022
2021
-
-
117,551
117,551
-
2023 / 2024
1,613,505
2021
2021
2022
2021
-
-
28,256
-
11. Additional Information
Loans to directors and executives
There were no loans outstanding at the reporting date to directors or executives.
Other transactions with KMP and or their related parties
There were no other related party transactions for the year ended 31 December 2021 (2020: Nil).
Firefinch Limited Annual Report | 31 December 2021
57
Directors’ Report
Table 7 – Shareholdings
The number of shares in the Company held by each Director and KMP and their related parties during the
year ended 31 December 2021 is set out below:
2021 – Group
Group KMP
Directors
M Hepburn
B Borg
B Fraser
B Gordon
A Cowden
M Anderson
Executive KMP
E Hughes (2)
T Plant
A Taplin
Balance at 31
December 2020
Rights
entitlement
Received during the
year on vesting
Other changes
during the year (1)
Balance at date
of resignation
Balance at 31
December 2021
1,112,500
12,500,000
-
-
6,250,000
-
1,875,000
-
-
51,724
103,448
86,206
-
103,448
51,724
2,825,000
(1,650,000)
1,825,000
-
-
2,750,000
150,000
250,000
-
-
-
1,250,000
-
-
-
-
-
-
-
-
-
2,000,000
-
(3,875,000)
-
45,000
1,000,000
-
-
-
2,339,224
14,578,448
336,206
-
9,103,448
1,301,724
-
45,000
1,000,000
(1) Other changes during the year represent on-market purchase or sale of shares.
(2) Mr Hughes resigned as Chief Financial Officer on 23 August 2021 and is not considered KMP from this date. On date of resignation, Mr
Hughes held 3,875,000 shares.
Table 8 – Options, performance rights and performance shares
The numbers of options, performance rights and share rights outstanding in the Company held by each
Director, KMP and their related parties during the year ended 31 December 2021 is set out below:
2021 – Group
Group KMP
Directors
Balance at 31
December 2020
Granted as
remuneration
Exercised
Forfeited /
lapsed
Balance at date
of resignation
Balance at 31
December 2021
Vested and
Exercisable
Unvested
M Hepburn
2,825,000 (1)
1,825,000 (2)
- (2,825,000)
- (1,825,000)
B Borg
B Fraser
B Gordon
A Cowden
M Anderson
Executive KMP
E Hughes
T Plant
A Taplin
-
-
750,000
750,000
-
-
2,750,000 (3)
- (2,750,000)
-
6,800,000
-
2,000,000
-
- (2,000,000)
-
-
500,000
1,000,000 (1,000,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
750,000
750,000
-
6,800,000
-
-
500,000
-
-
-
-
-
-
-
-
-
-
-
750,000
750,000
-
6,800,000
-
-
500,000
(1) Includes 75,000 options acquired and paid for in cash.
(2) Includes 1,075,000 options acquired and paid for in cash.
(3) Includes 750,000 options acquired and paid for in cash.
End of Remuneration Report
Firefinch Limited Annual Report | 31 December 2021
58
Directors’ Report
Indemnification and Insurance of Directors, Officers and Auditors
The Company has executed agreements with the Directors and Officers of the Company indemnifying them
against all losses or liabilities incurred by each Director or Officer in their capacity as Directors or Officer of
a Group Company to the extent permitted by the Corporation Act 2001. The indemnification specifically
excludes wilful acts of negligence.
The Company has paid insurance premiums in respect of Directors’ and Officers’ Liability Insurance
contracts for the current officers of the Company, including officers of the Company’s controlled entities.
The liabilities insured are damages and legal costs that may be incurred in defending civil or criminal
proceedings that may be brought against the officers in their capacity as officers of entities in the Group.
The total amount of insurance premiums paid has not been disclosed for confidentiality reasons.
Proceedings on Behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring
proceedings on behalf of Firefinch, or to intervene in any proceedings to which Firefinch is a party, for the
purpose of taking responsibility on behalf of Firefinch for all or part of those proceedings.
No proceedings have been brought or intervened in on behalf of Firefinch with leave of the Court under
section 237 of the Corporations Act 2001.
Non-Audit Services
The Directors are satisfied that the provision of non-audit services is compatible with the general standard
of independence for auditors imposed by the Corporations Act 2001. The Directors are satisfied that the
provision of non-audit services by the auditor, as set out below, did not compromise the auditor
independence requirements of the Corporations Act 2001 for the following reasons:
• all non-audit services have been reviewed by the Board to ensure they do not impact the impartiality
and objectivity of the auditor; and
• none of the services undermine the general principles relating to auditor independence as set out in
APES 110 Code of Ethics for Professional Accountants.
During the year, PricewaterhouseCoopers, the Company’s auditor, provides taxation compliance services,
in addition to their statutory audits. Non-audit fees amounted to $2,040 (2020: $15,300). Details of
remuneration paid to the auditor can be found within the financial statements at note 25.
Corporate Governance Statement
The ASX Corporate Governance Council (CGC) has developed corporate governance principles and
recommendations for listed entities. ASX listing rule 4.10.3 requires that listed entities disclose the extent
to which they have followed the CGC’s recommendations and, where a recommendation has not been
followed, the reasons why.
Firefinch’s corporate governance statement can be found on the Company’s website at the following link:
https://firefinchltd.com/corporate-governance/
Firefinch Limited Annual Report | 31 December 2021
59
Directors’ Report
AUDITOR’S INDEPENDENCE DECLARATION
The lead auditor's independence declaration under section 307C of the Corporations Act 2001 for the year
ended 31 December 2021 has been received and can be found on page 61 of the annual report.
DR MICHAEL ANDERSON
Managing Director
Dated 31 March 2022
Firefinch Limited Annual Report | 31 December 2021
60
Auditor’s Independence Declaration
As lead auditor for the audit of Firefinch Limited for the year ended 31 December 2021, I declare that
to the best of my knowledge and belief, there have been:
(a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit, and
(b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Firefinch Limited and the entities it controlled during the period.
Helen Bathurst
Partner
PricewaterhouseCoopers
Perth
31 March 2022
PricewaterhouseCoopers, ABN 52 780 433 757
Brookfield Place, 125 St Georges Terrace, PERTH WA 6000, GPO Box D198, PERTH WA 6840
T: +61 8 9238 3000, F: +61 8 9238 3999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME
for the year ended 31 December 2021
Continuing operations
Revenue
Cost of sales
Gross (Loss)/ Profit
Interest income
Other income
Corporate and other expenses
Depreciation
Director fees
Note
2021
$
2020
$
5
5
7
109,081,978
(133,086,125)
20,338,624
(17,408,600)
(24,004,147)
2,930,024
4,744
136,928
141,672
(14,541,226)
(156,306)
(875,957)
5,341
409,263
414,604
(631,968)
(221,698)
(747,688)
Employee salaries and other employment related costs
(4,142,910)
(1,649,486)
Finance costs
Share-based payments
Foreign exchange gain/ (loss)
(Loss)/Profit before Tax
Income tax (expense)/ benefit
Net (Loss)/Profit for the Year
Other Comprehensive (Loss)/Profit
Items that may be reclassified subsequently to profit or loss
Exchange difference on translation of foreign operations
Total Comprehensive (Loss)/Profit for the Year
(Loss)/Profit for the Period Attributable to:
Owners of Firefinch Limited
Non-controlling interest
Total Comprehensive (Loss)/Profit Attributable to:
Owners of Firefinch Limited
Non-controlling interest
(950,666)
(2,462,126)
4,890,030
(42,101,636)
6
(1,851,190)
(112,394)
(37,585)
1,432,534
1,376,343
(332,527)
(43,952,826)
1,043,816
(682,411)
(554,710)
(44,635,237)
489,106
(42,226,024)
(1,726,802)
114,322
929,494
(43,952,826)
1,043,816
(42,771,953)
(329,446)
(1,863,284)
(44,635,237)
818,552
489,106
Earnings per share:
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
8
8
(4.86)
(4.86)
0.03
0.03
The consolidated statement of profit or loss and other comprehensive income is to be read in conjunction with the accompanying notes.
Firefinch Limited Annual Report | 31 December 2021
62
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 2021
Note
2021
$
2020
$
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Total Current Assets
Non-Current Assets
Property, plant, and equipment
Right of use asset
Exploration and evaluation expenditure
Other receivables
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Lease liabilities
Provisions
Interest bearing liabilities
Current tax liabilities
Total Current Liabilities
Non- Current Liabilities
Lease liabilities
Provisions
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Issued capital
Reserves
Accumulated losses
Non-controlling interest
Total Equity
9
10
11
12
16
13
10
15
16
15
17
6
16
15
19
20
21
29
148,881,533
13,236,843
34,532,489
24,476,274
14,016,341
37,272,200
196,650,865
75,764,815
103,622,190
532,064
32,684,085
15,750,609
303,027
29,970
59,607,354
10,690,169
152,588,948
70,630,520
349,239,813
146,395,335
50,707,672
9,581,390
150,479
3,122,904
28,551
155,577
14,768,304
16,877,494
4,655,098
3,597,808
73,404,457
30,240,820
393,187
-
23,509,365
16,761,279
23,902,552
16,761,279
97,307,009
47,002,099
251,932,804
99,393,236
323,402,393
128,689,714
7,079,976
5,300,261
(78,791,825)
(36,565,801)
242,260
1,969,062
251,932,804
99,393,236
The consolidated statement of financial position is to be read in conjunction with the accompanying notes.
Firefinch Limited Annual Report | 31 December 2021
63
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2021
Note
Issued
Capital
Accumulated
Losses
Foreign
Exchange
Translation
Reserve
Share-based
Payment
Reserve
Non-
Controlling
Interest
Balance at 1 January 2020
58,028,843 (36,680,123)
1,284,862
4,532,524
$
$
$
$
$
-
Total
$
27,166,106
Non-controlling interest on acquisition
Profit for the year
Other comprehensive income for the year
Total comprehensive income for the year
Transaction with owners, directly in equity
-
-
-
-
-
114,322
-
(554,710)
114,322
(554,710)
Shares issued during the year (net of costs)
70,660,871
Share-based payments
-
-
-
-
-
-
-
-
-
-
37,585
1,039,568
1,039,568
929,494
1,043,816
-
(554,710)
929,494
489,106
-
-
70,660,871
37,585
Balance at 31 December 2020
128,689,714 (36,565,801)
730,152
4,570,109
1,969,062
99,393,236
Balance at 1 January 2021
128,689,714 (36,565,801)
730,152
4,570,109
1,969,062
99,393,236
Loss for the year
(42,226,024)
Other comprehensive income for the year
-
-
(682,411)
-
-
(1,726,802)
(43,952,826)
-
(682,411)
Total comprehensive income for the year
- (42,226,024)
(682,411)
- (1,726,802)
(44,635,237)
Transaction with owners, directly in equity
Shares issued during the year (net of costs)
Share based payments
19
20
194,712,679
-
-
-
-
-
-
2,462,126
- 194,712,679
-
2,462,126
Balance at 31 December 2021
323,402,393 (78,791,825)
47,741
7,032,235
242,260 251,932,804
The consolidated statement of changes in equity is to be read in conjunction with the accompanying notes.
Firefinch Limited Annual Report | 31 December 2021
64
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2021
Cash Flows from Operating Activities
Proceeds in the course of operations
Payments to suppliers and employees
Income taxes paid
Interest received
Interest paid
Note
2021
$
2020
$
113,150,074
12,206,628
(124,164,734)
(18,131,289)
(1,098,061)
(209,550)
4,744
(801,070)
5,341
-
Net Cash from Operating Activities
26
(12,909,047)
(6,128,870)
Cash Flows from Investing Activities
Payments for exploration and evaluation expenditure
Payments for mine development expenditure
Payments made for plant and equipment
Proceeds from sale of plant and equipment
Payments for acquisition of operations, net of cash acquired
Net Cash Used in Investing Activities
Cash Flows from Financing Activities
Proceeds from issue of shares
Payments for capital raising
Net Cash Provided by Financing Activities
Net Increase/(Decrease) in Cash Held
Cash and cash equivalents at the beginning of the year
Change in foreign currency held
(4,552,618)
(3,197,670)
(49,907,411)
-
(633,320)
(17,977)
-
-
105
(45,995,175)
(55,093,349)
(49,210,717)
203,378,436
73,075,749
(8,665,758)
(3,665,053)
194,712,678
69,410,696
126,710,282
14,071,109
17,263,076
915,303
3,793,194
(601,227)
Cash and Cash Equivalents at the End of the Year
9
144,888,661
17,263,076
The consolidated statement of cash flows is to be read in conjunction with the accompanying notes.
Firefinch Limited Annual Report | 31 December 2021
65
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
1. BASIS OF PREPARATION
These are the consolidated financial statements and notes of Firefinch Limited (Firefinch or the Company) and controlled entities
(collectively the Group). Firefinch is a company limited by shares, domiciled and incorporated in Australia.
The financial statements were authorised for issue on 31 March 2022 by the Directors of the Company.
The nature of the operations and principal activities of the Group are described in the Director’s Report.
The financial statements comprise the consolidated financial statements of the Group. For the purposes of preparing the
consolidated financial statements, the Company is a for-profit entity. Material accounting policies adopted in the preparation of
these financial statements are presented below. They have been consistently applied unless otherwise stated. Where necessary,
comparative information is reclassified and restated for consistency with current period disclosures.
Statement of compliance
These financial statements are general purpose financial statements which have been prepared in accordance with Australian
Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (AAS Board) and the Corporations
Act 2001. The consolidated financial statements of the Group also comply with International Financial Reporting Standards (IFRS)
as issued by the International Accounting Standards Board (IASB).
Historical cost convention
The financial statements have been prepared under the historical cost convention, except for financial instruments and share
based payments, which have been measured at fair value.
Going concern
The Group made a loss for the year of $43,952,826 (2020: $1,043,816 profit) and had net cash outflows from operating activities
of $12,909,047 (2020: $6,128,870). As at 31 December, 2021 the Group's cash and cash equivalents were $148,881,533 (2020:
$24,476,274) and the Group had net working capital of $99,489,354 (2020: $17,916,091).
Considering the Group’s positive net cash position and the forecasted cash flows over the next 12 months, the Directors expect
that the Group can continue its normal business activities and meet its debts as and when they fall due, subject to any changes
to the underlying assumptions on which those forecasts have been made. The Directors therefore have determined it is
appropriate for the financial statements to be prepared on a going concern basis.
Significant accounting estimates and judgments
The preparation of consolidated financial statements requires management to make judgements, estimates and assumptions
that affect the application of policies and reported amounts of assets and liabilities, income and expenses. These estimates and
associated assumptions are based on historical experience and various factors that are believed to be reasonable under the
circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that
are not readily apparent from other sources.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the
period in which the estimate is revised and in any future periods affected.
Firefinch Limited Annual Report | 31 December 2021
66
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
2. PRINCIPLES OF CONSOLIDATION
Subsidiaries
The Group financial statements consolidate those of the Company and all its subsidiaries. The Company controls a subsidiary if
it is exposed or has rights to variable returns from its involvement with the subsidiary and has the ability to affect those returns
through its power over the activities of the subsidiary.
All transactions and balances between Group companies are eliminated on consolidation, including unrealised gains and losses
on transactions between Group companies. Where unrealised losses on intra-group asset sales are reversed on consolidation,
the underlying asset is also tested for impairment from a group perspective. Amounts reported in the financial statements of
subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group.
Profit or loss and other comprehensive income of subsidiaries acquired or disposed of during the period are recognised from the
effective date of acquisition, or up to the effective date of disposal, as applicable.
Functional and presentation currency
Items included in the financial statements of each entity within the Group are measured using the currency of the primary
economic environment in which the entity operates (the “functional currency”). The functional currency of Firefinch Limited is
Australian dollars.
The financial report is presented in Australian dollars.
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at
year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the profit or loss.
Group companies and foreign operations
The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that
have a functional currency different from the presentation currency are translated into the presentation currency as follows:
• assets and liabilities for each Statement of Financial Position presented are translated at the closing rate at the reporting
date;
•
income and expenses for each statement of profit or loss and other comprehensive income are translated at average
exchange rates (unless this is not a reasonable approximation of the rates prevailing on the transaction dates, in which
case income and expenses are translated at the dates of the transactions); and
• all resulting exchange differences are recognised in other comprehensive income.
On consolidation, foreign exchange differences arising from the translation of any net investment in foreign entities, and of
borrowings and other financial instruments designated as hedges of such investments, are recorded in a reserve in equity. When
a foreign operation is sold or any borrowings forming part of the net investment are repaid, a proportionate share of such
exchange differences are recognised in the consolidated statement of profit or loss and other comprehensive income, as part of
the gain or loss on sale where applicable.
3.
NEW ACCOUNTING STANDARDS
New and revised accounting standards affecting amounts reported and/or disclosures in the financial statements
The Group has consistently applied the accounting policies to all periods presented in the financial statements. The Group has
considered the implications of new and amended Accounting Standards applicable for annual reporting periods beginning after
1 January 2021 but determined that their application to the financial statements is either not relevant or not material.
New Accounting Standards and Interpretations not yet mandatory or early adopted
Certain new accounting standards and interpretations have been published that are not mandatory for 31 December 2021
reporting periods and have not been early adopted by the group. The Group’s assessment of the impact of these new standards
and interpretations is that they would not have a material impact on the entity in the current or future reporting periods and on
foreseeable future transactions.
Firefinch Limited Annual Report | 31 December 2021
67
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
4. SEGMENT INFORMATION
Description of segments
The operating segments are based on the reports reviewed by the chief operating decision makers and Board of Directors that
are used to make strategic decisions. The Group reports on a business segment basis as its risks and rates of return are different
for each of the various business segments in which it operates, and this is the format of the information provided to the executive
management team and Board of Directors.
The Group operated in three segments being Morila, Mali Exploration and Corporate. The segment information is prepared in
conformity with the Group’s accounting policies. The Group comprises the following main segments:
Morila
Mining, development and exploration activities at the Morila Gold Project
Mali Exploration
Lithium and gold exploration and evaluation activities in Mali
Corporate
Investing activities and corporate management
Revenue is derived from an external customer arising from the sale of gold doré reported under the Morila segment.
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision
makers. The chief operating decision makers, who are responsible for allocating resources and assessing performance of the
operating segments, have been identified as the executive management team and Board of Directors of the parent entity.
Segment information
2021
Revenue and other income
Revenue
Other income
Total segment
Results
Operating profit / (loss) before tax
Income tax
Net profit/(loss)
Included within segment results:
Depreciation and amortisation
Share-based payments
Foreign exchange gain / (loss)
Segment assets
Current assets
Non-current assets
Total segment assets
Segment liabilities
Current liabilities
Non-current liabilities
Total liabilities
Morila
$
Mali
Exploration
$
Corporate
$
Total
Consolidated
$
109,081,978
108,043
109,190,021
-
28,886
28,886
-
109,081,978
4,743
141,672
4,743
109,223,650
(30,864,381)
(1,851,190)
26,044
(11,263,299)
(42,101,636)
-
-
(1,851,190)
(32,715,571)
26,044
(11,263,299)
(43,952,826)
(2,999)
-
-
-
(153,307)
(156,306)
(2,462,126)
(2,462,126)
4,864,572
(1,578)
27,036
4,890,030
48,858,340
935,375
146,857,150
196,650,865
115,140,840
33,498,652
3,949,456
152,588,948
163,999,180
34,434,027
150,806,606
349,239,813
70,628,811
23,509,365
1,482,746
1,292,900
73,404,457
-
393,187
23,902,552
94,138,176
1,482,746
1,686,087
97,307,009
Firefinch Limited Annual Report | 31 December 2021
68
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
2020
Revenue and other income
Revenue
Other income
Total segment
Results
Operating profit / (loss) b/tax
Income tax
Net profit
Included within segment results:
Depreciation and amortisation
Share-based payments
Foreign exchange gain / (loss)
Segment assets
Current assets
Non-current assets
Total segment assets
Segment liabilities
Current liabilities
Non-current liabilities
Total liabilities
Morila
$
Mali
Exploration
$
Corporate
$
Total
Consolidated
$
20,338,624
292,347
20,630,971
-
-
-
-
20,338,624
122,257
414,604
122,257
20,753,228
4,857,020
(332,527)
(36,229)
(3,444,448)
-
-
1,376,343
(332,527)
4,524,493
(36,229)
(3,444,448)
1,043,816
-
-
1,378,570
(88,241)
-
54,256
(133,457)
(37,585)
(292)
(221,698)
(37,585)
1,432,534
41,988,686
42,883,330
457,270
26,135,631
27,435,292
281,928
68,581,587
70,600,550
84,872,016
27,892,562
26,417,559
139,182,137
21,660,670
16,761,279
348,685
1,018,267
-
-
23,027,622
16,761,279
38,421,949
348,685
1,018,267
39,788,901
Firefinch Limited Annual Report | 31 December 2021
69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
5. REVENUE AND OTHER INCOME
Revenue
Revenue recognised from sale of gold doré
Other income
Cash stimulus received from the government
Other sales
Consolidated
2021
$
2020
$
109,081,978
20,338,624
109,081,978
20,338,624
-
136,928
117,500
291,763
136,928
409,263
RECOGNITION & MEASUREMENT
Revenue recognition
Revenue is measured as the amount of consideration that the Group expects to be entitled to in exchange for transferring
goods to its customers. The Group recognises revenue when (or as) the performance obligations, as determined by contracts
with the customers, have been satisfied. The following criteria are also applicable to specific revenue transactions:
Sales of Gold doré
The Group recognises revenue from gold doré sales as its obligations are satisfied in accordance with an agreed contract
between the Group and its customers. Revenue is recognised when the gold doré has been collected from the mine site by
the customer. It is at this point that control over the gold doré has been passed to the customer and the Group has fulfilled
its obligations under the contract. Revenue from the sales is recognised based on a market price on the date of sale.
Interest income
Interest income is recognised in the income statement as it accrues, using the effective interest method.
Government grants
Grants from the government are recognised at the fair value where it is a reasonable assurance that the grant will be received
and the Group will comply with the conditions attached to the grant.
Other sales
The revenue from other sales that do not arise from the ordinary activities of the group are recognised at the point of a sale,
when a buyer takes immediate ownership of the purchased goods.
SIGNIFICANT JUDGEMENTS AND ESTIMATES
Revenue from contracts with customers
Revenue from contracts with customers is recognised when a customer obtains control of the promised asset and the Group
satisfies its performance obligations under the contract. The Revenue is allocated to each performance obligation. The Group
considers the terms of the contract in determining the transaction price. The transaction value is based on the amount the
entity expects to be entitled to upon an initial assay prepared on collection of the goods.
Firefinch Limited Annual Report | 31 December 2021
70
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
6. INCOME TAX
Reconciliation of income tax expense to prima facie tax payable
The prima facie tax payable/ (benefit) on profit/ (loss) from ordinary activities
before income tax is reconciled to the income tax expense as follows:
Accounting profit/ (loss) before tax
Prima facie tax on operating loss at 30.0% (2020: 30.0%)
Add / (less) tax effect of:
Permanent expenses/(benefits)
Movement in temporary tax expenses/(benefits) - Australia
Movement in temporary tax expenses/(benefits) - foreign operations
Tax losses not recognised
Income tax expenses
Current tax liabilities
Provision for income tax – Mali
Deferred tax assets/liabilities unrecognised
Mine development expenditure
Accruals and provisions
Prepayments
Property, plant and equipment
Inventory
Section 40-880 costs
Net deferred tax asset not brought into account
Net deferred tax assets
Tax losses and deductible temporary differences
Consolidated
2021
$
2020
$
(42,101,636)
(12,630,491)
1,376,343
412,903
3,394,994
(116,855)
9,261,407
1,942,135
1,851,190
(23,975)
(94,190)
10,683
27,106
332,527
4,655,098
3,597,808
645,339
5,324,693
-
5,271,081
(2,165,555)
(1,269,473)
58,453
7,224,469
596,655
58,453
415,683
(11,684,054)
(4,475,744)
-
-
Total carried forward tax losses of $26,596,818 at 31 December 2021 (31 December 2020: $17,955,149) are available for offset
against future assessable income, provided the relevant loss recoupment rules are satisfied. The deductible temporary
differences and tax losses do not expire under current tax legislation. Deferred tax assets have not been recognised in respect
of these items because it is not probable that future taxable profit will be available against which Company can utilise the benefits
thereof.
RECOGNITION & MEASUREMENT
The income tax expense or benefit for the year is the tax payable on the current year’s taxable income based on the applicable
income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary
differences and to unused tax losses.
The current income tax charge is calculated on a basis of the tax laws enacted or substantively enacted at the end of the year in
the countries where the Company’s subsidiaries and associated operate and generate taxable income. Management periodically
evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation.
It establishes provisions where appropriate, on the basis of amounts expected to be paid to the tax authorities.
Firefinch Limited Annual Report | 31 December 2021
71
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
SIGNIFICANT JUDGEMENTS AND ESTIMATES
Judgement is required in determining whether deferred tax assets are recognised in the statement of financial position. Deferred
tax assets, including those arising from unutilised tax losses, require management to assess the likelihood that the Group will
generate taxable earnings in future years allowing to utilise the recognised deferred tax assets. Estimates of future taxable income
are based on forecast cash flows from operations and the application of existing tax laws in each jurisdiction. To the extent that
future cash flows and taxable income differ significantly from estimates, the ability of the Group to realise the net deferred tax
assets recorded at the reporting date could be impacted. Additionally, future changes in tax laws in jurisdictions in which the
Group operates could limit the ability of the Group to obtain tax deductions in future years.
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or
paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or
substantively enacted by the balance date in the countries where the Group’s subsidiaries operate and generate taxable income.
Deferred income tax is provided for on all temporary differences at balance date between the tax base of assets and liabilities
and their carrying amounts for financial reporting purposes. No deferred income tax will be recognised from the initial recognition
of goodwill or of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit
or loss. No deferred income tax will be recognised in respect of temporary differences associated with investments in subsidiaries
if the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary differences will
not reverse in the near future.
Firefinch Limited Annual Report | 31 December 2021
72
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
7. CORPORATE AND OTHER EXPENSES
Consultancy services
Insurances
Travel
Indirect taxes and duties
Employee related costs
Administrative expenses
8. EARNINGS PER SHARE
Consolidated
2021
$
2020
$
(2,005,086)
(2,115,910)
(593,014)
(5,239,521)
(2,562,907)
(2,024,788)
(723,696)
(147,332)
(180,115)
(307,252)
-
726,427
(14,541,226)
(631,968)
Consolidated
2021
$
2020
$
(a) Reconciliation of earnings to profit or loss
Profit /(loss) used in the calculation of basic and diluted EPS
(42,226,024)
114,322
(b) Weighted average number of ordinary shares outstanding during the year
used in calculation of basic EPS
Weighted average number of dilutive equity instruments outstanding
(c) Weighted average number of ordinary shares outstanding during the year
used in calculation of basic EPS
(d) Earnings per share
Basic EPS (cents per share)
Diluted EPS (cents per share)
No. of shares
No. of shares
868,081,575
404,324,952
N/A
N/A
868,081,575
404,324,952
$
(4.86)
(4.86)
$
0.03
0.03
As at 31 December 2021, the Group has nil unissued shares under options (2020: 31,064,913) and 11,212,800 under performance/share
rights on issue (2020: 8,850,600).
RECOGNITION & MEASUREMENT
Basic earnings per share
Basic earnings per share is calculated by dividing the net result attributable to owners of the parent, excluding any costs of
servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial
year, adjusted for any bonus element.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after
income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted
average number of ordinary shares assumed to have been issued for no consideration in relation to dilutive potential ordinary
shares.
Firefinch Limited Annual Report | 31 December 2021
73
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
9. CASH AND CASH EQUIVALENTS
Cash at bank and in hand (1)
Short-term deposits (2)
Reconciliation to cash flow statement
Balance as above
Bank overdrafts (see note 17)
Balance per statement of cash flows
(1) Cash at bank earns interest at floating rates based on daily bank deposit rates.
(2) Security deposit required as per the Company’s office lease agreement.
Consolidated
2021
$
148,695,047
2020
$
24,443,784
186,486
32,490
148,881,533
24,476,274
148,881,533
24,476,274
(3,992,872)
(7,213,198)
144,888,661
17,263,076
RECOGNITION & MEASUREMENT
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held
at call with financial institutions with an original maturity not exceeding three months, highly liquid investments that are readily
convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. If
greater than three months, principal amounts can be redeemed in full, with interest payable at the same cash rate from inception
as per the agreement with each bank.
Firefinch Limited Annual Report | 31 December 2021
74
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
10.
TRADE AND OTHER RECEIVABLES
Current
Trade debtors (1) (2)
Prepayments (3)
GST receivable
Other receivable
Non-current
VAT paid (4)
Security deposits
Consolidated
2021
$
5,637,337
6,053,739
839,862
705,905
2020
$
9,695,692
3,442,156
363,998
514,495
13,236,843
14,016,341
15,664,413
10,581,706
86,196
108,463
15,750,609
10,690,169
(1) Trade and sundry debtors are non-interest bearing and generally are on 30-day terms.
(2) The Group has analysed the probability of default events and concluded that no credit losses will likely occur.
(3) Prepayments relate to insurances and services prepaid throughout the Group.
(4) The Group is entitled to a statutory VAT refund of $31.1m (AUD equivalent) of which it is currently forecasting to receive $15.6m (AUD
equivalent).
RECOGNITION & MEASUREMENT
Trade and other receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost less expected credit losses
Trade receivables are generally due for settlement within 30 days. They are presented as current assets unless collection is not
expected for more than 12 months after the reporting date.
Due to the short-term nature of the current receivables, their carrying amount is assumed to approximate their fair value. The
carrying amount of the long-term receivable deposits is assumed to approximate fair value as the security deposits have a
market-based interest rate.
The group applies the AASB 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss
allowance for all trade receivables and contract assets.
Trade receivables and contract assets are written off where there is no reasonable expectation of recovery. Indicators that there
is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with the
group, and a failure to make contractual payments for a period of greater than 120 days past due.
Impairment losses on trade receivables and contract assets are presented as net impairment losses within operating profit.
Subsequent recoveries of amounts previously written off are credited against the same line item.
Loan and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active
market. They are included in current assets, except for those with maturities greater than 12 months after the year-end which
are classified as non-current assets. Loans and receivables are included in receivables in the statement of financial position.
Loans and receivables are subsequently carried at amortised cost using the effective interest method.
Firefinch Limited Annual Report | 31 December 2021
75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
11.
INVENTORIES
Current
Gold doré on hand
Gold in circuit at cost
Consumable supplies (1)
Ore – tailings at cost
Consolidated
2021
$
2020
$
1,561,476
1,458,877
497,691
432,761
31,512,136
12,987,721
-
23,354,027
34,532,489
37,272,200
(1) Consumable supplies include reagents, fuel and general stores items.
RECOGNITION & MEASUREMENT
Gold doré, gold in circuit and tailings are physically measured or estimated and stated at the lower of cost and net realisable
value. Cost comprises direct material, direct labour and an appropriate proportion of variable and fixed overhead expenditure,
the latter being allocated on the basis of normal operating capacity. Costs are assigned to individual items of inventory on the
basis of weighted average costs in getting such inventories to their existing location and condition, based on weighted average
costs incurred during the year in which such inventories were produced. Net realisable value is the estimated selling price in the
ordinary course of business, less estimated costs of completion and costs of selling the final product. Inventories of consumable
supplies and spare parts expected to be used in production are valued at weighted average cost.
SIGNIFICANT JUDGEMENTS AND ESTIMATES
Net realisable value tests are performed at least quarterly and represent the estimated future sales price of the product based
on prevailing spot metals prices at the reporting date, less estimated costs to complete production and bring the product to sale.
Stockpiles are measured by estimating the number of tonnes added and removed from the stockpile, the number of contained
gold ounces based on assay data, and the estimated recovery percentage based on the expected processing method. Stockpile
tonnages are verified by periodic surveys.
Firefinch Limited Annual Report | 31 December 2021
76
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
12. PROPERTY, PLANT AND EQUIPMENT
2020
Cost
Accumulated depreciation
Reconciliation
Carrying amount at the beginning of the period
Additions
Depreciation
Reclassification
Disposals
Foreign currency translation movement
Carrying amount at the end of the year
2021
Cost
Accumulated depreciation
Reconciliation
Carrying amount at the beginning of the period
Additions
Depreciation
Reclassification (1)
Disposals
Foreign currency translation movement
Carrying amount at the end of the year
Plant and
Equipment
$
Consolidated
Mine
Total
Development
$
828,892
(525,865)
303,027
498,152
17,977
(222,309)
-
-
9,207
303,027
$
828,892
(525,865)
303,027
498,152
17,977
(222,309)
-
-
9,207
303,027
-
-
-
-
-
-
-
-
-
-
1,335,626
(573,528)
102,860,092
104,195,718
-
(573,528)
762,098
102,860,092
103,622,190
303,027
798,361
(156,306)
(165,042)
(5,423)
(12,519)
762,098
-
303,027
62,215,791
63,014,152
-
(156,306)
40,644,301
40,479,259
-
-
(5,423)
(12,519)
102,860,092
103,622,190
(1) Exploration and evaluation expenditure relating to the Morila Gold Project (including satellite pits) have been tested for impairment and
reclassified to a mine development asset. This value includes $34,181,710 recognised on the acquisition of the Morila Gold Project in
November 2020.
RECOGNITION & MEASUREMENT
Property, plant and equipment
Buildings and all other property, plant and equipment are stated at historical cost less accumulated depreciation and impairment
losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are
included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future
economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other
repairs and maintenance are charged to the statement of comprehensive income during the financial year in which they are
incurred. Property, plant and equipment directly engaged in mining operations are depreciated over the shorter of expected
economic life or over the remaining life of the mine on a units-of-production basis. Assets which are depreciated on a basis other
than units-of-production method are typically depreciated on a straight-line basis over their estimated useful lives as follows:
Firefinch Limited Annual Report | 31 December 2021
77
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
Item Estimated useful life (years)
Plant and equipment 3-10
Buildings 20
Leasehold improvements 3
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each year. An asset’s carrying
amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated
recoverable amount. Gains and losses on disposals are determined by comparing proceeds with the carrying amount and are
recognised in the statement of comprehensive income.
Mine Development
The capitalised mine development represents the costs incurred in preparing the mine for production and includes plant and
equipment under construction, stripping and waste removal costs incurred before commercial production commences. These
costs are capitalised to the extent that they are expected to be recouped through the successful exploitation of the related
mining leases. Amortisation of the costs carried forward for the development phase is not being charged pending the
commencement of commercial production.
Mine development assets are assessed for impairment if an impairment trigger is identified. For the purposes of impairment
testing, capitalised mine development assets are allocated to the cash generating unit (CGU) to which the development activity
relates. In considering the asset for impairment, the Group needs to determine the recoverable amount of each CGU. The
recoverable amount is determined as the higher of the asset’s fair value less costs of disposal and value in use.
Impairment of assets
Intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment or
more frequently if events or changes in circumstances indicate that they may be impaired. Other assets are tested for impairment
whenever events or changes in circumstances indicate that the carrying amount exceeds its recoverable amount. An impairment
loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount
is the higher of an asset’s fair value less costs of disposal and value in use.
Value in use is the present value of the future cash flows expected to be derived from the asset or CGU. In estimating value in
use, a pre-tax discount rate is used which reflects current market assessments of the time value of money and the risks specific
to the asset. Fair value less costs of disposal is the amount the CGU can be sold to a knowledgeable and willing market participant
in an arm’s length transaction, less the disposal costs. In estimating fair value less costs of disposal, discounted cash flow
methodology is utilised, and a post-tax discount rate is used.
For the purposes of assessing impairment, assets are grouped at the levels for which there are separately identifiable cash inflows
which are largely independent of the cash inflows from other assets or groups of assets (CGU). Non-financial assets other than
goodwill that suffered impairment are reviewed for possible reversal of the impairment at the end of each year.
SIGNIFICANT JUDGEMENTS AND ESTIMATES
Mine Development
The management assesses the stage of each mine under development/construction to determine when a mine moves into the
commercial production phase, this being when the mine is substantially complete and ready for its intended use. The criteria
used to assess the start date are determined based on the unique nature of each mine development/construction project. The
Group considers various relevant criteria to assess when the commercial production phase is considered to have commenced.
At this point, all related amounts are reclassified to from a mine development asset to a mine property. Some of the criteria
used to identify the production start date include, but not limited to:
•
•
•
•
Level of capital expenditure incurred compared with the original construction cost estimate
Completion of a reasonable period of testing of the mine plant and equipment
The mine is producing at a pre-determined level of design capacity
Ability to sustain ongoing production of ore
When the mine development project moves into the commercial production phase, the capitalisation of certain mine
development costs ceases and costs are either regarded as forming part of the cost of inventory or expensed, except for costs
that qualify for capitalisation relating to mining property additions or improvements or mineable reserve development. It is also
the point of time when depreciation based on the units-of-production method commences.
Firefinch Limited Annual Report | 31 December 2021
78
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
13.
EXPLORATION AND EVALUATION EXPENDITURE
Exploration and evaluation expenditure at cost:
Exploration – Goulamina project (1)
Exploration – Other projects (2)
Exploration – Morila project (3)
Reconciliation of exploration and evaluation expenditure
Carrying amount at beginning of the year
Exploration expenditure during the year
Exploration asset on acquisition of Morila
Exploration expenditure reclassified to mine development (3)
Foreign currency translation
Carrying amount at the end of the year (4)
Consolidated
2021
$
2020
$
22,521,242
10,162,843
-
21,510,990
5,675,087
32,421,277
32,684,085
59,607,354
59,607,354
11,679,974
24,486,347
2,847,845
-
34,181,710
(40,644,301)
-
2,041,058
(1,908,548)
32,684,085
59,607,354
(1) The expenditure represents exploration and evaluation costs of the Goulamina Lithium Project.
(2) The total capitalised expenditure comprises the exploration and evaluation costs relating to the gold tenements in Mali in the areas of
Dankassa and Massigui.
(3) Exploration and evaluation expenditure relating to the Morila Gold Project (including satellite pits) have been tested for impairment and
reclassified to a mine development asset. Refer to note 12.
(4) The ultimate recoupment of this expenditure is dependent upon successful development and commercial exploitation, or alternatively, sale
of the respective areas of interest. There is no information up to the date of this report which would result in an impairment trigger due to
potential loss of tenements.
RECOGNITION & MEASUREMENT
Exploration and evaluation expenditures in relation to each separate area of interest with current tenure are carried forward to
the extent that:
(i)
(ii)
such expenditures are expected to be recouped through successful development and exploration of the area of interest,
or alternatively, by its sale; or
exploration and evaluation activities in the area of interest have not at the reporting date reached a stage which permits a
reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant
operations in, or in relation to, the area of interest is continuing.
Exploration and evaluation assets are initially measured at cost and include acquisition of rights to explore, studies, exploratory
drilling, trenching and sampling and associated activities and an allocation of depreciation and amortisation of assets used in
exploration and evaluation activities. General and administrative costs are only included in the measurement of exploration and
evaluation costs where they are related directly to operational activities in a particular area of interest.
In the event that an area of interest is abandoned or, if facts and circumstances suggest that the carrying amount of an
exploration and evaluation asset is impaired, then the accumulated costs carried forward are written off in the year in which the
assessment is made.
Where a decision has been made to proceed with development in respect of a particular area of interest, the relevant exploration
and evaluation asset is tested for impairment and the balance is then reclassified as ‘mine development asset’.
Firefinch Limited Annual Report | 31 December 2021
79
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
SIGNIFICANT JUDGEMENTS AND ESTIMATES
Management determines when an area of interest should be abandoned. When a decision is made that an area of interest is not
commercially viable, all costs that have been capitalised in respect of that area of interest are written off. In determining this,
assumptions, including the maintenance of title, ongoing expenditure and prospectivity are made.
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 Ore Reserves and
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.
14.
TRADE AND OTHER PAYABLES
Current
Trade payables and accruals (1)
Royalties payables
Other liabilities (2)
Consolidated
2021
$
2020
$
49,379,031
7,636,729
613,572
715,069
585,489
1,359,172
50,707,672
9,581,390
(1) Trade and other creditors are non-interest bearing and are normally settled on 30-day terms.
(2) Other liabilities include withholding taxes, payroll related taxes and contributions payable to the government agencies.
RECOGNITION & MEASUREMENT
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year that are
outstanding. The amounts are unsecured and are usually paid within 30 days of recognition. Trade and other payables are
presented as current liabilities unless payment is not due within 12 months from the reporting date. They are recognised initially
at their fair value and subsequently measured at amortised cost using the effective interest method.
Firefinch Limited Annual Report | 31 December 2021
80
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
15. PROVISIONS
Current
Employee entitlements
Reconciliation of current provision
Carrying amount at the beginning of the year
Increase in provision during the year
Foreign currency translation movement
Carrying amount at the end of the year
Non-current
Employee entitlements
Rehabilitation and decommissioning (1)
Reconciliation of non-current provision – employee entitlements
Carrying amount at the beginning of the year
Acquired through business combination of Morila
Increase in provision during the year
Foreign currency translation movement
Carrying amount at the end of the year
Reconciliation of non-current provision – rehabilitation and decommissioning
Carrying amount at the beginning of the year
Acquired through business combination of Morila
Increase/(decrease) in provision during the year
Accretion
Foreign currency translation movement
Carrying amount at the end of the year
Consolidated
2021
$
2020
$
3,122,904
3,122,904
155,577
2,965,002
2,325
155,577
155,577
77,219
78,358
-
3,122,904
155,577
Consolidated
2021
$
2020
$
1,625,553
1,161,395
21,883,812
15,599,884
23,509,365
16,761,279
1,161,395
-
-
1,118,573
390,707
73,451
105,103
(62,281)
1,625,553
1,161,395
15,599,884
-
-
16,803,993
5,043,848
(268,464)
244,882
995,199
-
(935,645)
21,883,812
15,599,884
(1) The provision for rehabilitation and decommissioning relates to the Morila Gold Project (including satellite pits). The timing of settlement
of those obligations will be reviewed and updated based on the additional development and mining activities at the mine.
RECOGNITION & MEASUREMENT
Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, and it is
probable that an outflow of resources will be required to settle the obligation and a reliable estimate can be made of the amount
of the obligation. Provisions are not recognised for future operating losses. Provisions are measured as the present value of
management’s best estimate of the expenditure required to settle the present obligation at the end of the year. The discount
rate used to determine the present value reflects current market assessments of the time value of money and the risks specific
to the liability. The increase in the provision due to the passage of time is recognised as an interest expense.
Firefinch Limited Annual Report | 31 December 2021
81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
Employee benefits
(a) Short-term obligations
Liabilities for employee benefits that are expected to be settled within 12 months of the reporting date represent present
obligations resulting from employees' services provided to the reporting date. They are measured at the amounts expected to
be paid when the liabilities are settled. Non-accumulating non-monetary benefits, such as medical care, housing, cars and free
or subsidised goods and services, are expensed based on the net marginal cost to the Group as the benefits are taken by the
employees.
(b) Other long-term employee benefit obligations
The Group's obligation in respect of long-term employee benefits other than defined benefit plans, such as long service leave,
is the amount of future benefit that employees have earned in return for their service in the current and prior periods plus
related on-costs. Expected future benefit payments are discounted using market yields at the end of the year on high quality
corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows. Any
actuarial gains or losses are recognised in profit or loss in the period in which they arise.
(c) Retirement benefit obligations
Contributions are made by the Group to superannuation funds as stipulated by statutory requirements and are charged as
expenses when incurred.
(d) Termination benefits
When applicable, the Group recognises a liability and expense for termination benefits at the earlier of: (a) the date when the
Group can no longer withdraw the offer for termination benefits; and (b) when the Group recognises costs for restructuring
pursuant to AASB 137 Provisions, Contingent Liabilities and Contingent Assets and the costs include termination benefits. In
either case, unless the number of employees affected is known, the obligation for termination benefits is measured on the basis
of the number of employees expected to be affected. Termination benefits that are expected to be settled wholly before 12
months after the annual reporting period in which the benefits are recognised are measured at the (undiscounted) amounts
expected to be paid. All other termination benefits are accounted for on the same basis as other long-term employee benefits.
Rehabilitation provision
A provision for restoration and rehabilitation is recognised when there is a present obligation as a result of development activities
undertaken and it is probable that an outflow of economic benefits will be required to settle the obligation, and the amount of
the provision can be measured reliably. The estimated future obligations include the costs of abandoning sites, removing facilities
and restoring the affected areas. The provision for future restoration costs is the best estimate of the present value of the
expenditure required to settle the restoration obligation at the balance date. Future restoration costs are reviewed annually and
any changes in the estimate are reflected in the present value of the restoration provision at each balance date. The initial
estimate of the restoration and rehabilitation provision is capitalised into the cost of the related asset and amortised on the
same basis as the related asset, unless the present obligation arises from the production of inventory in the year, in which case
the amount is included in the cost of production for the year. Changes in the estimate of the provision for restoration and
rehabilitation are treated in the same manner, except that the unwinding of the effect of discounting on the provision is
recognised as a finance cost rather than being capitalised into the cost of the related asset.
SIGNIFICANT JUDGEMENTS AND ESTIMATES
Rehabilitation provision
The value of the current restoration and rehabilitation provision is based on a number of assumptions, including the nature of
restoration activities required, the valuation at the present value of future obligations that necessitate estimation of the cost of
the work required, the timing of future cash flows and the appropriate risk- free discount rate. In addition, provisions are based
on the assumption that no significant changes will occur in relevant legislation covering restoration of mineral properties. A
change in any, or a combination, of these assumptions used to determine current provisions could have a material impact to the
carrying value of the provision.
Firefinch Limited Annual Report | 31 December 2021
82
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
16.
LEASES
Right of use assets
Right of use assets - buildings
Accumulated depreciation
Net carrying amount at the end of the year
Lease liabilities
Current
Non-current
Reconciliation of lease liabilities
Carrying amount at the beginning of the year
Additions
Interest expense
Payments
Carrying amount at the end of the year
Consolidated
2021
$
2020
$
638,828
(106,764)
239,635
(209,665)
532,064
29,970
2021
$
2020
$
(150,479)
(393,187)
(543,666)
28,551
638,828
14,576
(138,289)
543,666
28,551
-
28,551
106,832
-
9,923
(88,204)
28,551
RECOGNITION & MEASUREMENT
The Group leases offices. Rental contracts are typically made for fixed periods of 1 month to 3 years and may have extension
options as described below. Contracts may contain both lease and non-lease components. The Group allocates the consideration
in the contract to the lease and non-lease components based on their relative stand-alone prices. However, for leases of real
estate for which the group is a lessee, it has elected not to separate lease and non-lease components and instead accounts for
these as a single lease component. Lease terms are negotiated on an individual basis and contain a wide range of different terms
and conditions. The lease agreements do not impose any covenants other than the security interests in the leased assets that
are held by the lessor. Leased assets may not be used as security for borrowing purposes.
Assets and liabilities arising from a lease contract are initially measured on a present value basis. Leases measurement includes
the net present value of the following lease components:
-
-
-
-
-
fixed payments (including in-substance fixed payments), less any lease incentives receivable;
variable lease payment that are based on an index or a rate, initially measured using the index or rate as at the
commencement date;
amounts expected to be payable by the group under residual value guarantees;
the exercise price of a purchase option if the group is reasonably certain to exercise that option; and
payments of penalties for terminating the lease, if the lease term reflects the group exercising that option.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which
is generally the case for leases in the Group, the lessee’s incremental borrowing rate is used, being the rate that the individual
lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar
economic environment with similar terms, security and conditions.
When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against
the right-of-use asset.
Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease
period to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
Firefinch Limited Annual Report | 31 December 2021
83
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
Right-of-use assets are generally depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis.
If the group is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset’s
useful life.
Payments associated with short-term leases of offices, equipment and vehicles and all leases of low-value assets are recognised
on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less.
None of the leases entered into by the Group provide residual value guarantees.
17.
INTEREST BEARING LIABILITIES
Current
Unsecured
Bank overdraft (1)
Other loan (2)
Total unsecured interest-bearing liabilities
Consolidated
2021
$
2020
$
3,992,872
10,775,432
7,213,198
9,664,296
14,768,304
16,877,494
The effective average interest rate (excluding local taxes) charged on the Group’s interest-bearing liabilities at 31 December
2021 was 3.77% (2020: 4.67%)
(1) The Group has an unsecured bank overdraft facility denominated in CFA with the Banque de Développement du Mali SA. The facility is
subject to an annual revision in November 2022 and has a limit of CFA 3.0 billion ($7.1 million). As at 31 December 2021, $3.2 million of the
facility was unused.
(2) The Group has an unsecured USD denominated loan from the Government of the Republic of Mali (Government). The Group inherited the
loan on the acquisition of Morila in 2020. The initial loan balance of US$1.6 million, which is documented in the 1992 Morila Establishment
Convention (Morila Convention), was intended as compensation to the Government for the previous exploration work undertaken by it on
the Morila exploration permit. The Morila Convention does not specify a borrowing limit or repayment date. All interest on the loan is
capitalised.
RECOGNITION & MEASUREMENT
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at
amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in
profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan
facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be
drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable
that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over
the period of the facility to which it relates.
Borrowings are removed from the statement of financial position when the obligation specified in the contract is discharged,
cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred
to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in
profit or loss as other income or finance costs.
Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for
at least 12 months after the year.
Firefinch Limited Annual Report | 31 December 2021
84
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
18.
FINANCIAL RISK MANAGEMENT
Set out below is an overview of financial instruments held by the Group as at 31 December 2021 and 31 December 2020.
Interest
bearing
$
Non-
interest
bearing
$
Total
$
2021
Interest
bearing
$
Non-
interest
bearing
$
2020
Total
$
Financial Assets
Cash and cash equivalents 148,881,533
-
148,881,533
24,476,274
-
24,476,274
Trade and other receivables
Non-current receivables
-
-
13,236,843
13,236,843
89,196
89,196
-
-
14,016,341
14,016,341
108,463
108,463
Total Financial Assets
148,881,533
13,326,039
162,207,572
24,476,274
14,124,804
38,601,078
Financial Liabilities
Trade and other payables
-
50,707,672
50,707,672
-
9,581,390
9,581,390
Current loans
14,768,304
-
14,768,304
16,877,494
-
16,877,494
Total Financial Liabilities
14,768,304
50,707,672
65,475,976
16,877,494
9,581,390
26,458,884
Net Financial (Liabilities)/
Assets
134,113,229
(37,381,633)
96,731,596
7,598,780
4,543,414
12,142,194
The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and price risk),
credit risk, liquidity risk and equity price risk. The Group therefore has an overall risk management program that focuses on the
unpredictability of financial and precious metal commodity markets and seeks to minimise potential adverse effects on the
financial performance of the Group.
The Group uses different methods to measure different types of risk to which it is exposed including sensitivity analysis in the
case of interest rate, foreign exchange and other price risks and aging analysis for credit risk. Risk management is carried out by
the board of directors with assistance from suitably qualified external and internal advisors as required. The Board provides
written principles for overall risk management and further policies will evolve commensurate with the evolution and growth of
the Group.
Market Risk
(a) Foreign currency exchange risk
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily
with respect to the US dollar (USD) and West African CFA franc (CFA). Foreign exchange risk arises from commercial transactions
and recognised assets and liabilities denominated in a currency that is not the entity’s functional currency and net investments
in foreign operations. The risk is measured using sensitivity analysis and cash flow forecasting. In addition, the parent entity has
intercompany receivables from its subsidiaries denominated in USD which are eliminated on consolidation. The gains or losses
on re-measurement of these intercompany receivables from USD to AUD are not eliminated on consolidation as those loans are
not considered to be part of the net investment in the subsidiaries.
Firefinch Limited Annual Report | 31 December 2021
85
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
The Group’s exposure to foreign currency risk at the end of the year, expressed in Australian dollars, was as follows.
USD
CFA
2021
EUR
USD
CFA
2020
EUR
Financial Assets
Cash and cash equivalents
-
7,126,273
Intercompany loans
37,284,417
Trade and other receivables
-
-
Total Financial Assets
37,284,417
7,126,273
Financial Liabilities
Trade and other payables
Bank overdraft
Loan
(55,508,135)
-
-
-
(3,992,872)
(10,775,432)
Total Financial Liabilities
(55,508,135)
(14,768,304)
-
-
-
-
-
-
-
-
-
588,506
37,278,819
-
-
37,278,819
588,506
-
-
-
-
(11,874,091)
-
(2,974)
-
-
(7,213,198)
(9,664,296)
-
-
(11,874,091)
(16,877,494)
(2,974)
Sensitivity
The following table summarises the sensitivity of financial instruments held at balance date to movement in the exchange rate
of AUD to USD with all other variables held constant and AUD to CFA with all other variables held constant. The sensitivity is
based on management’s estimate of reasonably possible changes over a financial year.
2021
2020
2021
2020
Change in USD rate
Impact on profit or loss
before tax and equity, $
+10%
-10%
+10%
-10%
1,656,702
(2,024,858)
(3,388,984)
4,142,091
Change in CFA rate
Impact on profit or loss
before tax and equity, $
+10%
-10%
+10%
-10%
767,285
(760,436)
2,493,607
(572,033)
The Group’s exposure to other foreign currency movements is not material.
(b) Interest rate risk
Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows or the fair value of financial
instruments. The Group’s exposure to market risk for changes to interest rates relates primarily to its earnings on cash and term
deposits and borrowings.
Based on the financial assets and liabilities held at reporting date, with all other variables assumed to be held constant, the table
below sets out the notional effect on consolidated profit or loss after tax for the year and on equity at 31 December 2021 under
varying hypothetical changes in prevailing interest rates.
100 basis points increase in interest rate
100 basis points decrease in interest rate
2021
$
211,672
(211,672)
2020
$
87,127
(232,360)
Firefinch Limited Annual Report | 31 December 2021
86
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
(c) Price risk
The Group is exposed to commodity price risk for its future gold production at the Morila Gold Mine. These risks are measured
using sensitivity analysis and cash flow forecasting. As at the end of the financial year, the Group did not have in place any
derivative instruments to manage its commodity price risk.
Credit Risk
Credit risk represents the loss that would be recognised if counterparties failed to perform as contracted under a financial
instrument resulting in a financial loss to the Group and arises from deposits with banks and financial institutions, favourable
derivative financial instruments as well as credit exposures to customers including outstanding receivables and committed
transactions. The Group measures credit risk on a fair value basis. The Group does not have any significant credit risk exposure
to a single counterparty or any Group of counterparties having similar characteristics.
The carrying amount of financial assets recorded in the financial statements, net of any provisions for losses, represents the
Group’s maximum exposure to credit risk without taking account of the fair value of any collateral or other security obtained.
Financial Assets
Cash and cash equivalents
Trade and other receivables
Non-current receivables
2021
$
2020
$
148,881,533
13,236,843
89,196
24,476,274
14,016,341
108,463
Total Financial Assets
162,204,572
38,601,078
The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external credit ratings
as follows:
Financial assets
Westpac Bank - AA-/A+ (1)
Banks in Mali - BB rated (2)
Unrated
2021
$
2020
$
145,724,650
23,863,337
3,111,828
13,368,094
559,849
14,177,892
162,204,572
38,601,078
(1) Represents the long-term credit rating of Westpac Banking Corporation as at 28 March 2022 by Standard and Poor’s and Fitch Ratings
respectively.
(2) Represents the long-term credit rating of Bank of Africa as at 28 March 2022 by Fitch Ratings.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to
managing liquidity is to ensure, that as far as possible, it will always have sufficient liquidity to meet its liabilities when due, under
both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding
through an adequate amount of committed credit facilities and the ability to close out market positions. The Group manages
liquidity risk by continuously monitoring forecast and actual cash flows and matching the maturity profile of financial assets and
liabilities. As at 31 December 2021 the Group had sufficient cash reserves to meet its requirements. The financial liabilities of the
Group at reporting date were trade and other payables and interest-bearing borrowings incurred in the normal course of the
business. The trade and other payable were non-interest bearing and were due within the normal 30-60 days terms of creditor
payments.
Firefinch Limited Annual Report | 31 December 2021
87
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
Maturities of financial liabilities
The following table analyses the Group’s financial liabilities based on their contractual maturities.
2021
Financial liabilities due for payment:
Trade and other payables
Loan
Bank overdraft
Lease liabilities
Financial assets:
Cash and cash equivalents
Trade and other receivables
1-3 months
$
3-12 months
$
12+ months
$
Total
$
50,262,894
-
3,992,872
-
444,778
10,775,432
-
-
-
-
50,707,672
10,755,432
3,992,872
150,479
393,187
546,666
54,255,766
11,370,689
393,187
66,002,642
148,881,533
8,059,221
156,940,754
-
5,177,622
5,177,622
-
-
-
148,881,533
13,236,843
162,118,376
Net inflow/(outflow) of financial instruments
102,684,988
(6,193,067)
(393,187)
96,115,734
2020
Financial liabilities due for payment:
Trade and other payables
Loan
Bank overdraft
Lease liabilities
Financial assets:
Cash and cash equivalents
Trade and other receivables
1-3 months
$
3-12 months
$
12+ months
$
Total
$
9,130,127
-
7,213,198
-
451,263
9,664,296
-
28,551
16,343,325
10,144,110
24,476,274
10,775,854
35,252,128
-
3,240,487
3,240,487
-
-
-
-
-
-
-
-
-
9,581,390
9,664,296
7,213,198
28,551
26,487,435
24,476,274
14,016,341
38,492,615
12,005,180
Net inflow/(outflow) of financial instruments
18,908,803
(6,903,623)
Fair value estimation
The fair value of financial assets and financial liabilities held by the Group must be estimated for recognition and measurement
or for disclosure purposes. All financial assets and financial liabilities of the Group at the balance date are recorded at amounts
approximating their fair value.
The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values due
to their short-term nature.
Financial instruments whose carrying values is equivalent to fair value due to their nature include:
•
•
•
•
Cash and cash equivalents;
Trade and other receivables;
Trade and other payables; and
Loans and bank overdraft.
At the end of the financial year the Group did not have financial instruments other than those with carrying amounts which are
reasonable approximation of fair value.
Firefinch Limited Annual Report | 31 December 2021
88
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
19.
ISSUED CAPITAL
(a) Issued and paid-up share capital
Consolidated
2021
$
2020
$
1,178,136,200 (2020: 781,907,231) ordinary shares fully paid
323,402,393
128,689,714
Movement in ordinary shares
Balance at the beginning of the year
781,907,231
317,348,112
128,689,714
58,028,843
2021
No
2020
No
2021
$
2020
$
Shares issued during the period:
Share allotment - placements (1)
Share allotment – SPP (2)
Exercise of listed options (3)
Exercise of unlisted options (4)
Conversion of performance rights (5)
Transaction costs relating to share issues
266,440,938
402,736,345
146,874,883
64,437,820
88,560,906
61,468,750
51,365,326
9,835,000
28,921,525
354,024
4,338,228
53,104
2,000,000
10,305,600
-
-
-
-
800,000
-
-
-
(8,665,758)
(3,665,053)
Balance at the end of the year
1,178,136,200
781,907,231
323,402,393
128,689,714
(1)
117,187,206 ordinary fully paid shares were issued at $0.40 per share through a placement in June 2021 and 149,253,732 ordinary fully
paid shares were issued at $0.67 per share through a placement in December 2021.
Share were issued at $0.58 per share pursuant to Share Purchase Plan (SPP) announced in November 2021.
Listed options expiring on 17 October 2021 were exercised at $0.15.
(2)
(3)
(4) Unlisted options expiring on 20 February 2022 were exercised at $0.40.
(5)
Vested performance rights issued to Directors and employees were transferred into shares at nil consideration.
(b) Movements in performance / share rights
At beginning of the year
Forfeited during the year
Issued during the year (1) (2) (3)
Converted to shares during the year
Balance at the end of the year
2021
No.
2020
No.
8,850,600
7,500,000
-
(7,000,000)
12,667,800
8,350,600
(10,305,600)
-
11,212,800
8,850,600
(1) 8,300,000 performance rights were issued to directors with nil exercise price as per the shareholders’ approval at the Annual General
Meeting held on 27 May 2021. 1,500,000 performance rights expire on 1 July 2023 and 6,800,000 performance rights expire on 28 May
2024.
(2) 1,955,00 share rights were issued to employees under the Awards Plan. The share rights expire on 1 July 2023 and have nil exercise price.
(3) 2,412,800 performance rights were issued to Société des Mines de Morila SA (Morila SA) employees under the Awards Plan. The
performance rights expire on 31 December 2023 and have nil exercise price.
Firefinch Limited Annual Report | 31 December 2021
89
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
(c) Movements in options
At beginning of the year
Listed options exercised (at $0.15)
Unlisted options exercised (at $0.40)
Expired options
Balance at the end of the year
RECOGNITION & MEASUREMENT
2021
No.
2020
No.
31,064,913
31,418,937
(28,936,513)
(354,024)
(2,000,000)
(128,400)
-
-
-
31,064,913
Ordinary shares are classified as equity and incremental costs directly attributable to the issue of new shares are shown in equity
as a deduction, net of tax, from the proceeds. If the Company reacquires its own equity instruments for the purpose of reducing
its issued capital, for example as the result of a share buy-back, those instruments are deducted from equity and the associated
shares are cancelled. No gain or loss is recognised in the profit or loss and the consideration paid including any directly
attributable incremental costs (net of tax) is recognised directly in equity.
(d) Capital Management
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising
the return to stakeholders through the optimisation of the debt and equity balance.
The capital structure of the Group consists of cash and cash equivalents, borrowings and equity attributable to equity holders of
the parent, comprising issued capital, reserves and accumulated losses. Operating cash flows are used to maintain and expand
operations, as well as to make routine expenditures and general administrative outgoings. Group’s strategy is to ensure
appropriate liquidity is maintained to meet anticipated operating requirements, with a view to initiating appropriate funding as
required.
The working capital position of the Group at 31 December 2021 was:
Cash and cash equivalents
Trade and other receivables
Trade and other payables
Bank overdraft
Current tax asset/(liabilities)
Lease liability
Current provisions
Working capital position
Consolidated
2021
$
2020
$
148,881,533
24,476,274
13,236,843
14,016,341
(50,707,672)
(9,581,390)
(3,992,872)
(7,213,198)
(4,655,095)
(3,597,808)
(150,479)
(28,551)
(3,122,904)
(155,577)
99,489,354
17,916,091
Firefinch Limited Annual Report | 31 December 2021
90
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
20. RESERVES
Foreign currency translation reserve
Share-based payment reserve
Movement in share-based payment reserve
Balance at beginning of the year
Vesting expense of performance/share rights issued during the year
Vesting expense of prior years’ performance/ share rights
Forfeited performance /share rights during the year
Balance at the end of the year
Consolidated
2021
$
2020
$
47,741
730,152
7,032,235
4,570,109
7,079,976
5,300,261
Consolidated
2021
$
2020
$
4,570,109
1,421,101
1,041,025
4,532,524
291,959
50,670
-
(305,044)
7,032,235
4,570,109
RECOGNITION & MEASUREMENT
Share-based payments
The share-based payments reserve is used to record the fair value of options, performance rights and share rights issued to
employees and consultants but not exercised. 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 were granted. The fair value of equity instruments granted is
determined using Black-Scholes method or Monte Carlo simulation model and recognised over the vesting period. Refer to note
27 for further details.
Foreign currency translation reserve
The foreign currency translation reserve comprises all foreign exchange differences arising from the translation of the financial
statements of foreign operations where their functional currency is different to the presentation currency of the reporting entity
along with the Company’s movement in its associate’s foreign currency translation reserve.
Non-controlling interest’s reserve
The non-controlling interest’s reserve records the difference between the fair value of the amount by which the non-controlling
interests were adjusted to record their initial relative interest and the consideration paid.
.
Firefinch Limited Annual Report | 31 December 2021
91
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
21. RETAINED EARNINGS / (ACCUMULATED LOSSES)
Movements in accumulated losses were as follows.
Balance at beginning of the year
Net loss for the year attributable to owners of the parent
Balance at the end of the year
Consolidated
2021
$
2020
$
(36,565,801)
(36,680,123)
(42,226,024)
114,322
(78,791,825)
(36,565,801)
22.
SUBSIDIARIES
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries:
Name of Subsidiary
Birimian Gold (Mali) Pty Limited
Birimian Gold Mali SARL
Birimian Gold Liberia Inc
Sudquest SARL
Timbuktu Ressources SARL
Leo Lithium Limited (formerly Goulamina
Holdings Pty Ltd)
Lithium du Mali SA
Firefinch Services Pty Ltd
Morila Limited
Société des Mines de Morila SA
Mali Lithium BV (1)
Place of
Incorporation
Australia
Mali
Liberia
Mali
Mali
Australia
Mali
Australia
Jersey
Mali
Netherlands
Consolidated Entity Interest, %
2021
2020
100
100
100
100
100
100
100
100
100
80
100
100
100
100
100
100
100
100
100
100
80
-
(1) Mali Lithium BV was incorporated in the Netherlands in October 2021 and at 31 December 2021 was 100% owned by Leo Lithium Limited
(formerly Goulamina Holdings Pty Ltd).
Firefinch Limited Annual Report | 31 December 2021
92
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
23. PARENT ENTITY DISCLOSURE
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Equity
Issued capital
Reserve
Accumulated losses
Total equity
(Loss) for the year
Other comprehensive income
Total comprehensive (loss) / income
Parent
2021
$
2020
$
147,389,214
82,400,464
26,135,631
74,275,872
229,789,678
100,411,503
1,292,900
393,187
1,686,087
1,018,267
-
1,018,267
323,402,393
8,317,095
(103,615,897)
128,689,714
5,854,972
(35,151,450)
228,103,591
99,393,236
(68,464,447)
-
(68,464,447)
(335,328)
-
(335,328)
Contingent liabilities of the parent entity:
There are no guarantees entered into by Firefinch Limited for the debts of its subsidiaries as at 31 December 2021 (2020: nil)
RECOGNITION & MEASUREMENT
The financial information for the parent entity, Firefinch Limited has been prepared on the same basis as the consolidated
financial statements, except as set out below.
Investments in subsidiaries, associates and joint venture entities
Investments in subsidiaries, associates and joint venture entities are accounted for at cost in the financial statements of Firefinch
Limited. Dividends from associates are recognised in the parent entity’s profit or loss, rather than being deducted from the
carrying amount of these investments. No dividends were received in 2021 (2020: nil).
Firefinch Limited Annual Report | 31 December 2021
93
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
24. RELATED PARTY DISCLOSURES
(a) Identity of related parties
The consolidated entity has a related party relationship with its subsidiaries (see note 22) and with its key management
personnel (refer below).
(b) Transaction with other related parties
The consolidated entity had no transactions with any other related party during the year ended 31 December 2021.
(c) Key management personnel compensation
The key management personnel compensation included in ‘Employee benefits expenses’ and ‘Share based payments’ is as
follows.
Short-term employee benefits
Post-employment benefits
Termination benefits
Share-based payments
Total compensation
Details of remuneration disclosures are provided in the remuneration report on pages 40-58
25. REMUNERATION OF AUDITORS
Amounts paid or payable to PwC Australia for:
Audit services
Tax advisory services
Amounts paid or payable to auditors in Mali:
Audit services by Sec Diarra SARL to Société des Mines de Morila SA
Audit services by Sylla et Associes SARL to Birimian Gold Mali SARL, Timbuktu Ressources
SARL and Sudquest SARL
Consolidated
2021
$
1,909,340
128,903
156,000
1,870,000
2020
$
919,676
69,078
129,778
(81,234)
4,064,243
1,037,298
Consolidated
2021
$
327,565
2,040
329,605
2020
$
146,464
15,300
161,764
56,310
79,314
14,286
70,596
400,201
14,626
93,940
255,704
Firefinch Limited Annual Report | 31 December 2021
94
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
26. RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES
Reconciliation of cash flow from operating activities to (loss)/profit after income tax
Profit/(Loss) after income tax
(43,952,826)
1,043,816
Consolidated
2021
$
2020
$
Non-cash flows in (loss)/profit from ordinary activities:
Depreciation and amortisation
Non-cash cost of production
Net share-based payments expensed
Foreign exchange (gain)/loss
Backcharges income
Other
Changes in operating assets and liabilities:
(Increase)/decrease in inventory
(Increase)/decrease in trade and other receivables
(Increase)/decrease in prepayments
(Increase)/decrease in other assets
Increase/(decrease) in trade and other payables
Increase/(decrease) in provisions
Increase/(decrease) in tax liability
Cash flow from operating activities
156,307
221,698
-
8,600,329
2,462,126
(3,974,729)
(136,928)
112,089
37,585
358,532
-
(88,030)
(20,614,318)
(2,793,396)
(1,671,774)
(5,321,900)
(2,631,436)
(479,827)
(68,360)
83,899
47,287,581
(10,621,619)
10,230,528
(1,161,211)
304,160
3,579,787
(12,909,047)
(6,128,870)
Firefinch Limited Annual Report | 31 December 2021
95
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
27.
SHARE BASED PAYMENTS
(a) Performance/share rights
Share rights/performance rights were issued to employees of the Company under the terms of the Awards Plan (Plan) approved
by shareholders on 29 May 2020. Performance rights were issued to Directors of the Company as per the shareholders’ approval
at the General Meeting held on 27 May 2021. These share rights/performance rights were issued at nil consideration and each
share right/performance right will convert to an ordinary share upon satisfaction of vesting criteria.
The following table illustrates the number and movements in share rights and performance rights during the year. The weighted
average exercise price of all performance rights granted in 2021 was nil.
Grant date
Equity instrument
Expiry date
Exercise
price
2021
26/02/2019
Share rights (1)
30/07/2020
Share rights (2)
16/09/2020
Share rights (2)
23/10/2020
Perform. rights (3)
02/11/2020
Perform. rights (4)
01/01/2021 Perform. rights (5)
27/05/2021
Perform. rights (6)
27/05/2021
Perform. rights (7) (8)
27/05/2021
Perform. rights (7) (9)
27/05/2021
Perform. rights (7) (10)
27/05/2021
Perform. rights (7) (11)
27/05/2021
Perform. rights (7) (12)
9/07/2021
Perform. rights (13)
26/02/2021
01/07/2023
01/07/2023
01/07/2023
14/10/2022
01/07/2023
01/07/2023
28/05/2024
28/05/2024
28/05/2024
28/05/2024
28/05/2024
31/12/2023
$
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
Balance at
start of the
year
Number
Granted
during the
year
Number
Exercised
during the
year
Number
Balance at
end of the
year
Forfeited
/ lapsed
Number Number
Vested and
exercisable
at the end
of the year
Number
500,000
3,880,600
470,000
3,500,000
500,000
-
-
-
-
-
-
-
-
-
-
-
-
(500,000)
(3,880,600)
(470,000)
(3,500,000)
-
1,955,000
(1,955,000)
1,500,000
2,266,667
2,266,667
1,133,333
566,667
566,666
-
-
-
-
-
-
-
(10,305,600)
2,412,800
-
8,850,600 12,667,800
-
-
-
-
-
-
-
-
-
-
500,000
-
- 1,500,000
- 2,266,667
- 2,266,667
- 1,133,333
-
-
566,667
566,666
- 2,412,800
- 11,212,800
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1) Share rights issued to KMP with nil exercise price and vesting condition being two years of a consecutive service with the Company.
(2) Share rights issued to employees under the Awards Plan with vesting upon meeting any two of the following four performance hurdles: (i)
the Company’s share price has traded on ASX at a $0.10 premium to the price on the three days of trading after the announcement of the
Morila acquisition for 20 consecutive trading days; (ii) a JORC Code compliant resource of at least 2,000,000 ounces of gold is defined at the
Morila Gold Mine; (iii) open pit production is recommenced at the main Morila open pit; and (iv) the Company enters into a sale, joint venture
or financing agreement in respect of the Goulamina Lithium Project. The share rights vested on 30 June 2021.
(3) Performance rights were issued to the Directors of the Company as per the shareholders’ approval given on 23 October 2020 with vesting
upon meeting any two of the following four vesting conditions: (i) the Company’s share price has traded on ASX at a $0.10 premium or above
to the VWAP of the three days after the announcement of the Morila acquisition for 20 consecutive trading days in which sales of Firefinch
shares are recorded; (ii) definition of a JORC Code compliant Inferred Mineral Resource of at least 2,000,000 ounces of gold (or equivalent)
on the Morila Exploitation Permit and the Company’s Malian subsidiary’s tenements adjoining the Morila Exploitation Permit at a minimum
average grade of 1.0 grams per tonne of gold (or equivalent); (iii) maintaining production from Morila beyond the date provided for in the
closure plan on acquisition of May 2021 or expanding production at the Morila Gold Mine by commencing open pit production from the
Exploitation Permit (after any extension of its term); and (iv) the Company enters into a sale, joint venture or financing agreement in respect
of the Goulamina Lithium Project. The performance rights vested on 30 June 2021.
(4) Performance rights were issued on commencement of employment of the KMP with vesting condition being completion of two years of
continuous employment with the Company.
(5) Performance rights issued to employees under the Awards Plan with vesting upon meeting any two of the following four performance hurdles:
(i) the Company’s share price has traded on ASX at a $0.10 premium to the price on the three days of trading after the announcement of the
Morila acquisition for 20 consecutive trading days; (ii) a JORC Code compliant resources of at least 2,000,000 ounces of gold is defined at the
Morila Gold Mine; (iii) open pit production is recommenced at the main Morila open pit; and (iv) the Company enters into a sale, joint venture
or financing agreement in respect of the Goulamina Lithium Project. The performance rights vested on 30 June 2021.
(6) The performance rights issued to Directors of the Company as per the shareholders’ approval on 27 May 2021 with vesting upon meeting any
two of the following four performance hurdles: (i) the 10-day VWAP of the Company’s share price is at a $0.15 premium to the Company’s
10-day VWAP prior to the date of grant; (ii) definition of a JORC Compliant Ore Reserve of at least 1,500,000 ounces of gold on the Morila
Exploitation Permit and the Company’s Malian subsidiary’s tenements adjoining the Morila Exploitation Permit at a minimum average grade
of 1.0 grams per tonne of gold; (iii) the Company commencing production from the Morila Super Pit; and (iv) the Company successfully
completing the demerger of the Goulamina Lithium Project, with “LithiumCo” successfully listing on the ASX (or other recognised exchange)
and achieving a market capitalisation of at least $200 million.
(7) The performance rights issued to Managing Director of the Company as per the shareholders’ approval on 27 May 2021.
Firefinch Limited Annual Report | 31 December 2021
96
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
(8)
The performance rights will vest subject to the Company’s 10-day VWAP being at a 15 cent premium to the Company’s 10-day VWAP prior
to the date of grant.
The performance rights will vest on the Company achieving a minimum of 250,000 ounces of gold production per annum.
(9)
(10) The performance rights will vest on Morila Gold’s Ore Reserves (with the meaning given to that definition in the 2012 JORC Code) at the
end of the performance period (being 6 April 2021) are equal to or greater than 1,000,000 ounces of gold.
(11) The performance rights will vest on completion of 36 months of nil lost time injuries.
(12) The performance rights will vest on aligning Environmental and Social Governance (ESG) reporting to a Company adopted international
standard / framework as determined by the Board.
(13) The performance rights issued to Morila SA mine staff under the Long-Term Incentive Scheme approved by the Board on 26 March 2021.
The performance rights have the following vesting conditions attached to them: (i) 30% will vest upon the mine plan and plant feed plans
delivering the quantity and quality of ore required to achieve the budget, without material changes to material sequencing; (ii) 30% will
vest upon the process plant achieving the level of availability and throughput necessary to achieve the production budget; (iii) 20% will vest
on maintenance of JORC Code compliant Ore Reserves above 500,000 ounces of gold at the Morila Gold Mine throughout the performance
period; and (iv) 20% will vest upon conformance with industry benchmark ESG standards, and where necessary gap closure plan.
Grant date
Equity instrument Expiry date
2020
26/02/2019
Share rights (1)
27/05/2019
Share rights (2)
27/05/2019
Share rights (2)
26/02/2021
17/03/2022
17/03/2022
27/05/2019
27/05/2019
27/05/2019
27/05/2019
30/07/2020
16/09/2020
23/10/2020
02/11/2020
17/03/2022
Share rights (2)
Perform. rights (2) 17/03/2021
Perform. rights (2) 17/09/2021
Perform. rights (2) 17/03/2022
01/07/2023
Share rights (3)
01/07/2023
Share rights (3)
Perform. rights (4) 01/07/2023
Perform. rights (5) 14/10/2022
Exercise
price
$
Balance at
start of the
year
Number
Granted
during the
year
Number
Exercised
Forfeited /
during
the year
lapsed
Number Number
Balance at
end of the
year
Number
Vested and
exercisable
at the end
of the year
Number
nil
500,000
0.40 1,000,000
0.55 1,000,000
1.00 1,000,000
nil 1,000,000
nil 1,000,000
nil 2,000,000
nil
-
nil
nil
-
-
nil
-
7,500,000
-
-
-
-
-
-
-
-
-
500,000
- (1,000,000)
- (1,000,000)
- (1,000,000)
- (1,000,000)
- (1,000,000)
- (2,000,000)
-
-
-
-
-
-
3,880,600
470,000
3,500,000
500,000
8,350,600
-
-
-
- 3,880,600
-
470,000
3,500,000
-
500,000
- (7,000,000) 8,850,600
-
-
-
-
-
-
-
-
-
-
-
-
The fair value of the equity-settled performance rights granted was estimated as at the grant date using a Black Scholes model
for performance rights with non-market conditions and a barrier-up trinomial pricing model was used for performance rights
with market vesting conditions, taking into account the terms and conditions upon which the performance rights and share
rights were granted.
The following table lists the inputs to the model used for the performance rights issued during the year ended 31 December
2021.
Grant date
Exercise
Price
Expiry date
Expected life
of
performance/
share rights
(years)
Price of
underlying
shares at grant
date
$
2021
01/01/2021
27/05/2021
27/05/2021
27/05/2021
27/05/2021
27/05/2021
27/05/2021
09/07/2021
nil
nil
nil
nil
nil
nil
nil
nil
01/07/2023
01/07/2023
28/05/2024
28/05/2024
28/05/2024
28/05/2024
28/05/2024
31/12/2023
2.5
2.1
3.1
3.1
3.1
3.1
3.1
2.5
0.18
0.385
0.385
0.385
0.385
0.385
0.385
0.40
Dividends
expected
on shares
Volatility
%
80
80
80
80
80
80
80
80
%
nil
nil
nil
nil
nil
nil
nil
nil
Risk-free
interest rate
Estimated
vesting date
%
0.110
0.072
0.065
0.065
0.065
0.065
0.065
0.036
30/06/2021
28/05/2022
06/04/2023
06/04/2023
06/04/2024
06/04/2024
06/04/2024
31/12/2023
Firefinch Limited Annual Report | 31 December 2021
97
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
(b) Options
No options were issued during the year ending 31 December 2021. The following table illustrates the number and movements in
options during the year.
Grant date
Equity instrument Expiry date
Exercise
price
Balance at
start of the
year
Granted
during the
year
Exercised
during the
year
Forfeited /
lapsed
Balance at
end of the
year
$
Number
Number
Number
Number
Number
Vested and
exercisable
at the end
of the year
Number
2021
15/12/2018 Unlisted options
20/02/2022
0.40
2020
15/12/2018
Unlisted options
20/02/2022
0.40
2,000,000
2,000,000
2,000,000
2,000,000
- (2,000,000)
- (2,000,000)
-
-
-
-
-
-
-
-
-
-
- 2,000,000 2,000,000
- 2,000,000 2,000,000
RECOGNITION & MEASUREMENT
The Group provides benefits to employees (including directors) of the Group in the form of share-based payment transactions,
whereby employees render services in exchange for shares or rights over shares (‘equity-settled transactions’). The cost of these
equity-settled transactions with employees is measured by reference to the fair value at the date at which they are granted. The
fair value is determined by an internal valuation using a Black Scholes option pricing model and Monte Carlo methodology as
appropriate.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which
the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award
(‘vesting date’). The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date
reflects (i) the extent to which the vesting period has expired and (ii) the number of options or performance rights that, in the
opinion of the directors of the Group, will ultimately vest. This opinion is formed based on the best available information at
balance date. No adjustment is made for the likelihood of market performance conditions being met as the effect of these
conditions is included in the determination of fair value at grant date. No expense is recognised for awards that do not ultimately
vest, except for awards where vesting is conditional upon a market condition.
Where 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.
Firefinch Limited Annual Report | 31 December 2021
98
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
28. COMMITMENTS
Exploration commitments
With respect to the Group’s exploration tenements in Mali, the Group submits budgeted exploration expenditure as part of the
licence application and renewal requirements. In assessing subsequent renewal applications, the mining authorities review actual
expenditure against budgets previously submitted. These amounts do not become legal obligations of the Group and actual
expenditure does vary depending on the outcome of the actual activities.
Within one year
After one year but not more than five years
2021
$
2020
$
7,337,135
3,489,131
-
-
7,337,135
3,489,131
29. NON-CONTROLLING INTEREST
Non-controlling interest
A non-controlling interest of 20% in Morila SA was accounted for as an equity transaction resulting in the following:
Movement in non-controlling interest during the period
Balance at the start of the year
Balance on acquisition
Allocated (loss)/profit for the period
Foreign currency movements
Balance at the end of the year
RECOGNITION & MEASUREMENT
2021
$
2020
$
1,969,062
-
(1,726,802)
-
-
1,039,568
950,651
(21,157)
242,260
1,969,062
The Group recognises non-controlling interests in an acquired entity either at fair value or at the non-controlling interest’s
proportionate share of the acquired entity’s net identifiable assets. This decision is made on an acquisition-by-acquisition basis.
For the non-controlling interests in Morila SA, the Group elected to recognise the non-controlling interests at its proportionate
share of the acquired net identifiable assets.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statement of profit
or loss, statement of comprehensive income, statement of changes in equity and balance sheet respectively.
Firefinch Limited Annual Report | 31 December 2021
99
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
30. BUSINESS COMBINATIONS - ACQUISITION OF MORILA
Transaction details
On 10 November 2020, Firefinch Limited completed the acquisition of an 80% interest in the Morila gold mine in Mali. Morila is
an operating gold mine and has 4.5 million tonnes per annum processing plant and all infrastructure required for a remote mine
site. Following the satisfaction of conditions precedent to completion of the transaction, Barrick Gold Corporation and AngloGold
Ashanti Limited (Vendors) advised that the final acquisition price was US$29.7 million (approximately $41.44 million). Firefinch
acquired 100% interest in Morila Limited, incorporated in Jersey, which in turn owns an 80% interest in Morila SA, the owner of
the Morila gold mine. The Government of Mali owns the remaining 20% of Morila SA.
At 31 December 2020, the acquisition accounting balances recognised were provisional due to ongoing work finalising asset
valuations, provision balances and tax related matters. The acquisition accounting for this transaction has now been finalised
finalised and no changes to the provisional acquisition accounting were made.
The following table details both the provisional and final acquisition accounting balances.
Assets
Bank overdraft
Trade receivables
VAT paid
Other receivables
Inventory
Exploration and evaluation expenditure recognised on acquisition
Total assets
Liabilities
Trade and other payables
Provisions
Loans
Total liabilities
Net assets acquired
Fair Value
recognised on
acquisition
(Final)
Fair Value
recognised on
acquisition
(Provisional)
$
$
(4,554,734)
(4,554,734)
1,501,902
14,762,657
2,535,728
44,202,556
34,180,873
1,501,902
14,762,657
2,535,728
44,202,556
34,180,873
92,628,982
92,628,982
21,992,275
17,922,567
47,512,950
21,992,275
17,922,567
47,512,950
87,427,792
87,427,792
5,201,190
5,201,190
RECOGNITION & MEASUREMENT
The acquisition method of accounting is used to account for business combinations by the Group.
The initial accounting for a business combination involves identifying and determining the fair values to be assigned to the
acquiree’s identifiable assets, liabilities and contingent liabilities and the cost of the combination. If the initial accounting for a
business combination can be determined only provisionally by the end of the period the Group will account for the combination
using those provisional values. Any adjustments to those provisional values as a result, of completing the initial accounting will
be recognised within twelve months of the acquisition date.
Firefinch Limited Annual Report | 31 December 2021
100
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
31. CONTINGENCIES
Tax Assessment
Partial Amended Notice of Tax Assessment (2017)
Morila SA received a partial amended notice of assessment for the year ended 31 December 2017 on 18 January 2021 (2017
Assessment). The 2017 Assessment advised that the Malian tax department (Tax Department) disputes the amounts due in
relation to various employment taxes, withholding taxes and VAT paid by, or claimed by Morila SA for the tax year ending 31
December 2017.
The 2017 Assessment also advises that the Tax Department believes that Morila SA has materially understated its income from
gold sales in 2017. In 2017, the mine produced approximately 70,000 ounces of gold and sold 67,612 ounces of gold for net
revenue received of US$92.65 million. The mine has reviewed its records and has no reason to revise the amount of gold produced
or revenue. Firefinch notes that this gold production was disclosed to public exchanges by the previous owners of Morila SA:
Barrick Gold Corporation and AngloGold Ashanti Limited.
The Tax Department has advised that, based on advice from the government department responsible for customs and exports,
it believes the revenue from gold sales for 2017 should be US$146.9 million. The Tax Department did not provide a basis for this
higher estimate. The Company’s internal records and sales receipts from Rand Refinery in South Africa confirm its production and
revenue as disclosed in its 2017 tax return. The Company is confident that the source of information utilised by the Tax
Department to establish Morila SA gold sales is incorrect.
The Company also believes the assessment of employment tax, withholding tax, VAT and gold revenue is incorrect and has lodged
an objection to the 2017 Assessment with the Tax Department together with supporting documentation.
On the above basis, no amounts have been recorded for any potential liability in relation to these matters, as the Group believes
it is probable that the taxation authority will accept the Group's tax treatment in the past. The Group has not disclosed an
estimate of the potential liability as it cannot reasonably predict the outcome.
Partial Amended Notice of Tax Assessment (2018)
Morila SA received a partial amended notice of assessment for the year ended 31 December 2018 on 31 December 2021 (2018
Assessment). As with the 2017 Assessment, the 2018 Assessment advised that the Tax Department disputes the amounts due in
relation to various employment taxes, withholding taxes and VAT paid by, or claimed by Morila SA for the tax year ending 31
December 2018.
Unlike the 2017 Assessment, the 2018 Assessment does not include a claim that Morila SA has materially understated its income
from gold sales in the year. The Company believes the assessment of employment tax, withholding tax and VAT is incorrect and
has lodged an objection to the 2018 Assessment with the Tax Department together with supporting documentation.
On the above basis, no amounts have been recorded for any potential liability in relation to these matters, as the Group believes
it is probable that the taxation authority will accept the Group's tax treatment in the past. The Group has not disclosed an
estimate of the potential liability as it cannot reasonably predict the outcome.
Goulamina – Fees Payable on Commercial Production
Vendor fee
As a result of the Group acquiring the Goulamina Lithium Project in March 2016, the vendor is entitled to receive a final payment
of US$200,000 should the project reach commercial production.
Founders fee
Pursuant to the Establishment Convention in relation to the Goulamina Lithium Project entered into by Timbuktu Ressources
SARL, a wholly owned subsidiary, with the State of Mali, it has been agreed that a “Founder’s Fee” (the Fee) is payable to the
State of Mali represented by the Direction Nationale de la Géologie et des Mines (Department of Geology and Mines) (DNGM).
Although agreed to by the holder of an exploration permit, the Fee is payable by the exploitation company that must be formed
in Mali to accept a transfer of the exploitation (mining) permit once granted to the holder of the exploration permit. The
establishment of an exploitation company to hold the exploitation permit is a requirement of article 65 of the 2019 Mining Code.
The Fee is defined as a fixed amount payable in USD to the State of Mali in each relevant applicable Establishment Convention
and is payable to the DNGM should the Goulamina Lithium Project reach commercial production.
The Fee is intended to compensate the State of Mali for previous geological work it has undertaken over the area subject to the
exploration permit. In the case of the Goulamina Lithium Project, the Fee is US$300,800.
Firefinch Limited Annual Report | 31 December 2021
101
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
32. EVENTS OCCURING AFTER THE END OF YEAR DATE
On 4 January 2022, the board of Firefinch and Jiangxi Ganfeng Lithium Co. Ltd (Ganfeng)approved a Final Investment Decision for
the Goulamina Lithium Project. The parties have agreed to waive the FID condition to the payment of the final US$91 million
upon the formation of the incorporated Joint Venture. The major remaining Condition Precedent to the formation of the
Goulamina Joint Venture is the transfer of the Project Exploitation Licence to a single purpose Malian subsidiary as required by
Malian legislation. The transfer is expected in early 2022 and, upon the satisfaction of other Condition Precedents, will allow the
formation of the Goulamina Joint Venture.
In January 2022, mining activities commenced as scheduled at the Morila Super Pit. Initial activities comprise pre-stripping of
waste from the first stage of the Morila Super Pit. Ore mining is currently forecast to commence during Q2 2022, with the Morila
Super Pit becoming a consistent source of ore in the second half of 2022.
On 10 January 2022, Simon Hay joined Leo Lithium Limited as Managing Director.
On 28 March 2022, the Company announced that the transfer of the Exploitation Licence for the Goulamina Lithium Project to
Lithium du Mali SA, a wholly owned entity of Mali Lithium BV (Mali Lithium) has occurred. This represented the satisfaction of
the final condition precedent with respect to Ganfeng’s investment into the Goulamina Lithium Project. Firefinch and Ganfeng
now each hold a 50% interest in Mali Lithium. The satisfaction of this condition triggers US$130 million of equity funding to be
provided to Mali Lithium by Ganfeng, with US$39 million to be released from escrow and received by Mali Lithium and a further
US$91 million to be transferred to Mali Lithium by Ganfeng shortly. Ganfeng remains obliged to provide either US$40 million of
Ganfeng direct debt or source US$64 million of third-party debt.
Firefinch Limited Annual Report | 31 December 2021
102
Directors’ Declaration
In the Directors’ opinion:
(a)
the financial statements and notes set out on pages 62 to 102 are in accordance with the Corporations Act 2001, including:
(i)
(ii)
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional
reporting requirements, and
giving a true and fair view of the consolidated entity’s financial position as at 31 December 2021 and of its
performance for the financial year ended on that date, and
(b)
there are reasonable grounds to believe that the Group will be able to pay its debts as and when they become due and
payable, and
Note 1 confirms that the financial statements also comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board.
The Directors have been given the declarations by the Managing Director and Chief Financial Officer required by section 295A
of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on behalf of the directors
by:
DR MICHAEL ANDERSON
Managing Director
Dated 31 March 2022
Firefinch Limited Annual Report | 31 December 2021
103
Independent auditor’s report
To the members of Firefinch Limited
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial report of Firefinch Limited (the Company) and its controlled entities
(together the Group) is in accordance with the Corporations Act 2001, including:
(a) giving a true and fair view of the Group's financial position as at 31 December 2021 and of its
financial performance for the year then ended, and
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The Group financial report comprises:
•
•
•
•
•
•
the consolidated statement of financial position as at 31 December 2021
the consolidated statement of changes in equity for the year then ended
the consolidated statement of cash flows for the year then ended
the consolidated statement of profit or loss and other comprehensive income for the year then
ended
the notes to the consolidated financial statements, which include significant accounting policies
and other explanatory information, and
the directors’ declaration.
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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Independence
We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence
Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.
PricewaterhouseCoopers, ABN 52 780 433 757
Brookfield Place, 125 St Georges Terrace, PERTH WA 6000, GPO Box D198, PERTH WA 6840
T: +61 8 9238 3000, F: +61 8 9238 3999
Liability limited by a scheme approved under Professional Standards Legislation.
Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an
opinion on the financial report as a whole, taking into account the geographic and management
structure of the Group, its accounting processes and controls and the industry in which it operates.
Materiality
•
For the purpose of our audit we used overall Group materiality of $3.5 million, which represents
approximately 1% of the Group’s total assets.
• We applied this threshold, together with qualitative considerations, to determine the scope of our audit and
the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements on the
financial report as a whole.
• We consider total assets to be the most appropriate benchmark to use as the basis for our materiality
calculations as it is most reflective of the scale and operations of the Group during the financial year.
• We utilised a 1% threshold based on our professional judgement, noting it is within the range of commonly
acceptable thresholds.
Audit Scope
• Our audit focused on where the Group made subjective judgements; for example, significant accounting
estimates involving assumptions and inherently uncertain future events.
•
The accounting processes are structured around a group finance function at the Group’s head office in
Perth which receives information from a finance function in Mali. Component auditors, operating under our
instructions, performed audit procedures over the Group's Morila Limited operations' financial information.
These procedures, combined with the work performed by us which included reviewing component auditors'
work, as the Group engagement team, provided sufficient appropriate audit evidence as a basis for our
opinion on the Group financial report as a whole.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report for the current period. The key audit 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. Further, any commentary on the outcomes of a
particular audit procedure is made in that context. We communicated the key audit matters to the Audit
Committee.
Key audit matter
How our audit addressed the key audit matter
Finalisation of the Morila Limited business
combination
(Refer to note 30 of the financial report)
On 10 November 2020, Firefinch Limited completed
the acquisition of an 80% interest in Morila Limited for
purchase consideration of US$29.7 million.
The acquisition of a business is complex and the
accounting standards require the Group to identify all
assets and liabilities of the newly acquired subsidiary
and estimate the fair value of each item. Given the
short period of time between acquisition date and the
year end, the Group assigned provisional fair values
to the identified assets and liabilities at 31 December
2020. No adjustment was made as part of the
finalisation of provisional fair values. The finalisation
of these fair values was a key audit matter given its
significance to the Group and that significant
judgement was involved in determining provisional
and final fair values to the assets and liabilities
acquired.
Rehabilitation and decommissioning provisions
(Refer to note 15 of the financial report)
At 31 December 2021 the consolidated statement of
financial position included provisions for rehabilitation
and decommissioning of $21.9 million as a result of its
obligations to restore and rehabilitate the environment
which has been disturbed by Morila’s mining
operations.
Rehabilitation and decommissioning activities are
governed by a combination of legislative requirements
and Group policies. This was a key audit matter given
the determination of these provisions required
judgement by the Group in the assessment of the
nature and extent of the work to be performed, the
We focussed on significant judgements made in
finalising the provisional fair value measurements of
Morila Limited’s assets and liabilities by assessing
new information obtained about facts and
circumstances that existed at the acquisition date in
respect of the following matters amongst others:
• Capitalised exploration and evaluation
expenditure; We inspected the revised life of
mine plan approved by the directors, in
conjunction with the Group’s accounting policies
to consider the classification as exploration and
evaluation versus mine development, and
• Rehabilitation provision; We assessed key
revised assumptions including expected timing
and quantum of cash outflows to rehabilitate the
Morila operations based on new information
obtained that informs the estimation at
acquisition date.
We also evaluated the adequacy of the disclosures
made in note 30 to the financial statements in light of
the requirements of Australian Accounting Standards.
We performed the following procedures over the
Group’s rehabilitation provision, amongst others.
We evaluated key assumptions utilised in the
rehabilitation models by performing the following
procedures:
• Developed an understanding of how the Group
identified the relevant methods, assumptions or
sources of data, and the need for changes in
them, that are appropriate for developing the
rehabilitation provision in the context of the
Australian Accounting Standards.
Key audit matter
future cost of performing the work, the timing of when
the rehabilitation will take place and economic
assumptions such as the discount rate for future cash
outflows associated with the rehabilitation and
decommissioning provisions
Basis of preparation of the financial report (going
concern assumption)
As described in Note 1 to the financial report, the
financial statements have been prepared by the
Group on a going concern basis, which contemplates
that the Group will continue to meet its commitments,
realise its assets and settle its liabilities in the normal
course of business.
The Group continues to ramp up operations at the
Morila gold mine, transitioning from tailings
reprocessing to hard rock mining, but does not
currently generate a commercial level of revenue.
In determining the appropriateness of their going
concern basis of preparation of the financial report,
the Group has made a number of judgements,
including the capital expenditure required at the
Morila pit and associated satellite pits and expected
cash inflows from gold dore sales. Assessing the
appropriateness of the Group’s basis of preparation
for the financial report was a key audit matter due to
its importance to the financial report and the level of
judgement involved in forecasting future cash flows
How our audit addressed the key audit matter
• Evaluated the competency and independence of
the experts retained by the Group to assist with
the assessment of its rehabilitation obligations.
• Examined the Group’s assessment of significant
changes in future cost estimates from the prior
year and at acquisition date.
•
Tested on a sample basis, the future
rehabilitation costs to comparable data from
external parties and management’s experts.
• Considered the appropriateness of the discount
rates and inflation rates utilised in calculating
the provision by comparing them to current
market consensus.
We considered the appropriateness of the going
concern assumption used in preparing the financial
report by performing the following procedures,
amongst others:
•
•
•
•
•
evaluated the Group’s assessment of its ability
to continue as a going concern, including
whether the period covered is at least 12
months from the date of approval of the financial
report and that relevant information of which we
are aware from the audit was included
inquired of management and the directors
whether they were aware of any events or
conditions, including beyond the period of the
assessment that may cast significant doubt on
the Group’s ability to continue as a going
concern
evaluated selected data and assumptions used
in the Group’s cash flow forecasts, including
agreeing assumptions to external and internal
data, where available
developed an understanding of what forecast
expenditure in the cash flow forecast is
committed, and what could be considered
discretionary
evaluated the adequacy of the disclosures
made in the financial report, including the basis
for the directors’ conclusion that the Group is a
going concern in light of the requirements of the
Australian Accounting Standards.
Other information
The directors are responsible for the other information. The other information comprises the
information included in the annual report for the year ended 31 December 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 conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of
this auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
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 have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing
and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our
auditor's report.
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 40 to 58 of the directors’ report for the
year ended 31 December 2021.
In our opinion, the remuneration report of Firefinch Limited for the year ended 31 December 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.
PricewaterhouseCoopers
Helen Bathurst
Partner
Perth
31 March 2022
Additional Information for Listed Public Companies
The information set out below is as at 23 March 2022, pursuant to the requirements of ASX Listing Rule 4.10.
1
a.
b.
c.
Share Capital
Ordinary share capital
1,178,136,200 ordinary fully paid shares held by 8,883 shareholders.
Performance Rights over Unissued Shares
There are currently 54 holders of performance rights over unissued shares, holding 11,043,600 performance rights.
Voting Rights
The voting rights attached to each class of equity security are as follows:
• Ordinary shares: Each ordinary share is entitled to one vote when a poll is called, otherwise each member present at
a meeting or by proxy has one vote on a show of hands.
• Unlisted Options/performance rights: Options/performance rights do not entitle the holders to vote in respect of
that equity instrument, nor participate in dividends, when declared, until such time as the options are exercised or
performance shares convert and subsequently registered as ordinary shares.
d. Substantial Shareholders
Details of substantial shareholders disclosed in substantial holder notices given to the Company are as follows
Holder
Van Eck Associates Corporation
e. Distribution Schedule of Ordinary Shares
Number of ordinary
shares held
59,481,303
Percentage of
capital held
5.05
Category (size of holding)
Number of
holders
Number of
ordinary shares
Percentage
of capital
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – and over
861
2,222
1,400
3,282
1,118
8,883
553,851
6,133,347
10,771,808
120,630,451
1,040,046,743
1,178,136,200
0.05
0.52
0.91
10.24
88.28
100.00
f. Unmarketable Parcels of Ordinary Shares
There were 213 shareholders of ordinary Shares who held less than a marketable parcel of shares.
g. On-Market Buy-Back and Purchase
There is no current on-market buy-back and there were no securities purchased on market for the purposes of an employee
incentive scheme or to satisfy the entitlements of the holders of options or other rights to acquire securities granted under an
employee incentive scheme.
h.
Item 7 of section 611 Corporations Act (Item 7)
There are no securities approved for the purposes of Item 7 which have not yet completed.
i. Restricted Securities
The Company has no restricted securities.
Firefinch Limited Annual Report | 31 December 2021
110
Additional Information for Listed Public Companies
k.
20 Largest Shareholders
Rank Name
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
•
•
•
•
•
•
•
•
HSBC Custody Nominees Limited
J P Morgan Nominees Australia Pty Limited
Citicorp Nominees Pty Limited
UBS Nominees Pty Ltd
BNP Paribas Noms Pty Ltd
BNP Paribas Nominees Pty Ltd ACF Clearstream
Zero Nominees Pty Ltd
Capital Di Limited
BNP Paribas Nominees Pty Ltd
BNP Paribas Nominees Pty Ltd
National Nominees Limited
BNP Paribas Nominees Pty Ltd Six Sis Ltd
Washington H Soul Pattinson & Co Ltd
Mr Phillip Richard Perry
Borg Geoscience Pty Ltd
Macquarie Bank Limited
CS Third Nominees Pty Limited
Mr Gareth John Edwards
Mr Alistair Cowden + Mrs Rosemary Cowden
Desgail Pty Ltd
Total
Number of Ordinary
Fully Paid Shares Held
% Held of Issued
Ordinary Capital
194,013,130
16.47
81,142,809
64,527,445
25,052,420
22,238,415
21,503,115
19,535,000
17,950,000
17,618,229
17,291,718
17,252,451
14,384,652
14,250,000
9,863,224
7,557,500
7,462,687
7,231,997
6,800,000
6,791,793
6,250,000
6.89
5.48
2.13
1.89
1.83
1.66
1.52
1.50
1.47
1.46
1.22
1.21
0.84
0.64
0.63
0.61
0.58
0.58
0.53
578,716,585
49.12
Firefinch Limited Annual Report | 31 December 2021
111