More annual reports from Fresenius Medical Care:
2021 ReportFlinders Mines Limited
ABN 46 091 118 044
Annual Report
for the year ended 30 June 2019
For personal use only
Flinders Mines Limited
Annual Report - 30 June 2019
Contents Page
Corporate Directory
Chairman’s Report
Directors' Report
Auditors Independence Report
Financial Statements
Directors’ Declaration
Independent Auditor's Report to the Members
Additional Information
Corporate Governance Statement
Interest in Mining Tenements
Mineral Resources and Ore Reserves Information
3
4
5
14
15
31
32
36
37
38
39
2
For personal use only
Flinders Mines Limited
Corporate Directory
Corporate Directory
Board of Directors
Neil Warburton
Independent Non-Executive Chair
The Hon. Cheryl Edwardes, AM
Independent Non-Executive Deputy Chair
Non-Executive Director
Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Chief Executive Officer
Michael Wolley
Evan Davies
Shannon Coates
James Gurry
Executive Officer
David McAdam
Company Secretary
Sarah Wilson
Shannon Coates
Registered Office
45 Ventnor Avenue
West Perth WA 6005
Telephone: 08 9389 4483
Email: info@flindersmines.com
Website: www.flindersmines.com
Share Registry
Computershare Investor Services Pty Ltd
Level 11, 172 St Georges Terrace
Perth WA 6000
Telephone: 08 9323 2000
Website: www.computershare.com.au
Auditors
KPMG
235 St Georges Terrace
Perth WA 6000
Securities Exchange Listing
Shares in Flinders Mines Limited are quoted on the Australian Securities Exchange under trading code FMS.
3
For personal use only
Flinders Mines Limited
Chairman’s Report
Chairman’s Report
Dear Shareholders,
I am pleased to present the Company’s Annual Report for the year ended 30 June 2019.
During the year, the Company completed a strategic review to identify the best path forward to progress the
Company’s Pilbara Iron Ore Project (PIOP) and unlock value for all shareholders. Following the strategic review
conducted by the Company with the assistance of an independent corporate advisory firm and as announced on
13 December 2018, the Company applied to the ASX for the removal of the Company from the official list of the
ASX under ASX Listing Rule 17.11. This process was subsequently withdrawn on 10 April 2019.
The Company then confirmed that a PIOP Infrastructure Committee had been established on the 31 May 2019,
comprising members who are independent of the Company’s largest shareholder, TIO (NZ) Limited (Infrastructure
Committee). The Infrastructure Committee is chaired by non -executive independent director Cheryl Edwardes.
Flinders announced on 17 June 2019 that the Infrastructure Committee had sought a proposal from BBIG and
commenced preliminary discussions with BBIG concerning potential future arrangements to progress the PIOP.
The Infrastructure Committee engaged an independent consultant, PwC, to undertake a review of all potential
infrastructure options for the PIOP, with key findings of the review announced to shareholders on 2 September
2019.
The key findings of the PwC review of potential infrastructure options for the PIOP determined that BBI Group Pty
Ltd (BBIG) represented the most favourable potential infrastructure pathway for the PIOP through the Balla Balla
Infrastructure Project (BBIG Project). The Company further advised it had signed a non-binding terms sheet (Terms
Sheet) with BBIG in relation to a farm-in and joint venture arrangement for the PIOP development and at the time
of writing this address, Flinders is negotiating binding agreements to give effect to the principles in the Terms Sheet
(Transaction Documents).
The main material advantages for Flinders Shareholders contained in the Terms Sheet are;
•
•
•
•
•
•
•
Flinders interest in the mining joint venture to be free carried to Final Investment Decision (FID);
provision of foundation customer status and first priority status on the planned BBIG infrastructure for the
PIOP;
BBIG to arrange all debt and equity financing for the integrated development;
BBIG to secure long-term offtake agreements with its customers;
Flinders to retain control of PIOP until FID, and FID does not occur in an agreed timeframe, Flinders to
retain 100% of the PIOP;
provision of significant governance protocols and minority shareholder protections; and
optionality for Flinders to convert to a royalty or other revenue stream at FID or continue to be free carried
to first production (subject to pro rata responsibility for capital cost overruns above an agreed contingency
during construction).
Importantly, the Proposed Transaction will be subject to Flinders’ shareholder approval, with TIO excluded from
voting as it is a related party to BBIG. An independent expert’s report will also be prepared, which will opine on
whether the proposed transaction with BBIG is fair and reasonable to all Flinders shareholders.
At the same time as announcing the BBIG Terms Sheet, we entered into a $5 million loan facility agreement (Loan
Facility) with PIO Mines Pty Limited, a subsidiary of TIO, to assist Flinders in completing due diligence and
negotiation of the Transaction Documents and to meet its short term capital requirements, and a subscription
agreement (Subscription Agreement) with TIO for them to subscribe for a maximum of $6 million in relation to a
future rights issue.
The progress made during the 2019 financial year puts the Company in good stead to progress the PIOP and
unlock value for all Flinders’ shareholders.
The Canegrass Project had limited work conducted during the year however remains a project which the company
is maintaining in good standing.
In conclusion, I would like to welcome Cheryl Edwardes to the Board and thank her for her tireless contribution
since accepting the role of Chair of the PIOP Infrastructure Committee. I would also like to thank our CEO, Mr
David McAdam, his experienced team and all directors for their valuable contribution to the Company and all
shareholders for their continued support.
I look forward to reporting further progress on our projects during the 2020 financial year.
Neil Warburton
Chairman
Perth, Western Australia
18 September 2019
4
For personal use only Flinders Mines Limited
Directors’ Report
Directors' Report
Your Directors present their report on the Consolidated Entity comprising Flinders Mines Limited (the ‘Company’
or ‘Flinders’) and its controlled entities (‘the Group’) for the financial year ended 30 June 2019.
Directors
The following persons held office as Directors of Flinders Mines Limited from the start of the financial year to the
date of this report, unless otherwise stated.
Neil Warburton
Cheryl Edwardes
Michael Wolley
Evan Davies
Shannon Coates
James Gurry
David McAdam 1
Non-Executive Chair
Non-Executive Deputy Chair
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Executive Director
Appointed 19 October 2017
Appointed 17 June 2019
Appointed 19 October 2017
Appointed 19 October 2017
Appointed 20 June 2018
Appointed 18 September 2019
Appointed 19 October 2017
1 Mr McAdam resigned as Executive Director and was appointed as Chief Executive Officer on 9 July 2019.
Company Secretary
Sarah Wilson held the position of Company Secretary from 20 November 2018 to 30 August 2019 and is joint
company secretary with Shannon Coates from 30 August 2019.
Ms Coates was previously appointed Company Secretary on 9 May 2017 and resigned on 20 November 2018. Ms
Coates was subsequently appointed joint Company Secretary with Ms Wilson on 30 August 2019.
Information on Directors and Officers
Neil Warburton
Qualifications
Experience
Independent Non-Executive Chair
Assoc. MinEng WASM, MAusIMM, FAICD
Mr Warburton has over 38 years’ experience in corporate and all areas of
mining operations. Mr Warburton held senior positions with Barminco
Limited culminating in being the Chief Executive Officer from August 2007
to March 2012. He successfully grew Barminco into Australia and West
Africa’s largest underground hard rock mining contractor before expanding
to non-executive director roles on ASX listed and private mining companies.
Interest in FMS Shares and
Options at the date of this report
Nil
Special responsibilities
Chair of Nominations and Remuneration Committee and member of Audit
and Risk Committee and PIOP Infrastructure Committee.
Directorships held in other ASX
listed entities in the last three
years
Non-Executive Director of Independence Group Limited (October 2015 to
date),
Previously a Non-Executive Director of Australian Mines Limited (April 2003
to December 2017), Peninsula Energy Limited (February 2013 to April
2016), Namibian Copper NL (September 2014 to December 2016), Red
Mountain Mining Limited (May 2006 to July 2016) and Coolgardie Minerals
Limited (July 2017 to March 2019).
The Hon.Cheryl Edwardes, AM
Qualifications
Independent Non-Executive Deputy Chair
LLM, B. Juris, BA
Experience
A lawyer by training, Mrs Edwardes is former Minister in the Western
Australian Legislative Assembly with extensive experience and knowledge
of WA’s legal and regulatory framework relating to mining projects,
environmental, native title and heritage and land access. Mrs Edwardes
was appointed in August 2017 as a part-time member of the Foreign
Investment Review Board for a five-year period. Ms Edwardes assists the
clients of FTI Consulting within a range of complex statutory approvals
required for resources and infrastructure projects. She also chairs the Port
Hedland International Airport and is a Commissioner of the WA Football
Commission.
Interest in FMS Shares and
Options at the date of this report
Nil
Special responsibilities
Chair of PIOP Infrastructure Committee and Audit and Risk Committee and
member of Nominations and Remuneration Committee.
Directorships held in other ASX
listed entities in the last three
years
Non-Executive Chair of Vimy Resources (May 2014 to date) and Non-
Executive Director of AusCann Group Holdings Limited (May 2016 to date).
Previously a Non-Executive Director of Atlas Iron Limited (May 2015 to
October 2018) and CropLogic Limited (March 2018 to February 2019).
5
For personal use only Flinders Mines Limited
Directors’ Report
Michael Wolley
Non-Executive Director
Qualifications
Experience
BE (Chemical and Materials, 1st Class Hons), MMan
Mr Wolley had a 15-year career with Mobil Oil Australia Pty Ltd in a range
of roles including engineering, operations, strategic planning and business
development. Mr Wolley was previously Chief Operating Officer for Lynas
Corporation and is currently Vice President Minerals for the Todd
Corporation.
Interest in FMS Shares and
Options at the date of this report
Nil
Special responsibilities
Member of Nominations and Remuneration Committee and Audit and Risk
Committee.
Directorships held in other ASX
listed entities in the last three
years
Previously a Non-Executive Director of Red Mountain Mining Limited (April
2011 to July 2016) and Wolf Minerals Limited (June 2013 to October 2018).
Evan Davies
Qualifications
Experience
Non-Executive Director
BTP, MSc, MPhil
Mr Davies has previously held leadership roles in Rainbow Corporation and
Brierley Properties Group (New Zealand). Mr Davies was Managing
Director of Sky City Entertainment Group (New Zealand) from 1996 to 2007,
which he grew from a single site to have business operations through New
Zealand and Australia.
Mr Davies has been Managing Director of Todd Properties Group since
2008.
Interest in FMS Shares and
Options at the date of this report
Nil
Special responsibilities
Member of Nominations and Remuneration Committee and Audit and Risk
Committee.
Directorships held in other ASX
listed entities in the last three
years
Nil
Shannon Coates
Independent Non-Executive Director /Joint Company Secretary
Qualifications
Experience
LLB, BA (Jur), GAICD, GIA
Ms Coates is a non-executive director and Chartered Secretary. She is a
qualified lawyer and has over 20 years’ experience in corporate law and
compliance. Ms. Coates is currently Managing Director of Evolution
Corporate Services, a boutique corporate advisory firm providing company
secretarial and corporate advisory support
to boards and various
committees across a variety of industries including financial services,
resources, oil and gas, manufacturing and technology.
Interest in FMS Shares and
Options at the date of this report
Nil
Special responsibilities
Member of Audit and Risk Committee and PIOP Infrastructure Committee
and Nominations and Remuneration Committee
Directorships held in other ASX
listed entities in the last three
years
Non-Executive Director of Vmoto Limited (May 2014 to date) and Kopore
Metals Limited (October 2015 to date).
6
For personal use only
James Gurry
Qualifications
Experience
Flinders Mines Limited
Directors’ Report
Independent Non-Executive Director
B.Com (Hons)
Mr Gurry is a leading equity analyst with extensive research experience in
the iron ore sector. His most recent role was as Director – Corporate &
Investment Bank, and Head of Natural Resources Equity Research with
Deutsche Bank Equities Australia, and previous roles have included equity
research with Credit Suisse Equities in both Sydney and London where he
was Head of Mining Company Research. He started his career in the
Transaction Advisory Services Division of Ernst & Young, Melbourne
Interest in FMS Shares and
Options at the date of this report
Nil
Special responsibilities
Member of PIOP Infrastructure Committee
Directorships held in other ASX
listed entities in the last three
years
Nil
David McAdam
Chief Executive Officer
Qualifications
Experience
BE (Chemical, 1st Class Hons), MBA, FAICD, FIEAust
In the past 20 years, Mr McAdam has been focused on senior management
leadership roles in design and construction organisations that focus on the
resource and infrastructure industries. In these roles he has led the
creation and re-establishment of a series of highly successful engineering
companies across a range of industries in a variety of locations. These
roles have included responsibilities as a director in listed and private
organisations.
Interest in FMS Shares and
Options at the date of this report
Nil
Special responsibilities
Member of Nominations and Remuneration Committee and PIOP
Infrastructure Committee.
Directorships held in other ASX
listed entities in the last three
years
Nil
Sarah Wilson
Joint Company Secretary
Experience
Meeting of Directors
Ms Wilson is a Corporate Advisor with Evolution Corporate Services Pty Ltd
and has over 8 years’ experience in company secretarial, corporate advisory
and corporate governance roles, which have included the provision of
company secretarial services to resource companies. Ms Wilson holds a
Certificate in Governance Practice and is a Certified Member of the
Governance Institute of Australia.
The numbers of meetings of the Company's Board of Directors and of each Board committee held during the year
ended 30 June 2019, and the numbers of meetings attended by each Director were:
Full
meetings
of
Directors
Audit &
Risk
Committee
Nominations
&
Remuneration
Committee
PIOP
Infrastructure
Committee1
Strategic
Review
Committee2
Corporate
Governance
Committee3
A
24
2
27
27
26
26
B
27
2
27
27
27
27
A
2
-
-
2
2
2
B
2
-
-
2
2
2
A
2
-
2
2
2
2
B
2
-
2
2
2
2
A
3
2
3
-
-
2
B
3
2
3
-
-
3
A
5
-
6
6
5
6
B
6
-
6
6
6
6
A
1
-
1
1
1
1
B
1
-
1
1
1
1
N Warburton
C Edwardes4
D McAdam
M Wolley
E Davies
S Coates
A = Number of meetings attended.
B = Number of meetings held during the time the Director held office or was a member of the committee during the
year.
1 = The Board established the Pilbara Iron Ore Project (‘PIOP’) Infrastructure Committee on 31 May 2019.
7
For personal use only Flinders Mines Limited
Directors’ Report
2 = The Board established the Strategic Review Committee on 7 September 2018 and ceased on 11 June 2019.
3 = The Board resolved to cease the Corporate Governance Committee on 18 July 2018. Corporate Governance
is a standing agenda item at each Board Meeting and as such, Corporate Governance is undertaken by the full
Board. On 9 July 2019, responsibility for corporate governance was mandated to the Audit and Risk Committee.
4 = Ms Edwardes was appointed as a Non-Executive Director on 17 June 2019.
Principal Activities
The Group's principal continuing activities during the year consisted of mineral exploration. There were no
significant changes in the nature of the activities of the Group during the year.
Dividends
No dividends have been declared or paid during the financial year (2018: $nil).
Operating Results and Financial Position
The net result of operations for the financial year was a loss of $5.457m (2018: loss of $1.810m).
Review of Operations
Corporate
De-listing from the ASX
Following a strategic review conducted by the Company with the assistance of an independent corporate advisory
firm and as announced on 13 December 2018, the Company applied to the ASX for the removal of the Company
from the official list of the ASX under ASX Listing Rule 17.11. This process was subsequently withdrawn on 10
April 2019.
Capital raising and Debt Repayment
In August 2018, the Company completed a rights issue raising $8.275m (before costs) by issuing 118,218,635 fully
paid ordinary shares at $0.07 per share. These proceeds were used to repay the PIO Mines Pty Ltd loan facility in
entirety, $5.131m including accrued interest with the remaining being used for working capital purposes of the
Group.
Board Renewal Process
On 17 June 2019, the Hon. Ms Cheryl Edwardes AM was appointed as an independent Non-Executive Director.
Ms Edwardes was also appointed as Deputy Chair of the Board, Chair of the Audit and Risk Committee and PIOP
Infrastructure Committee and member of the Nominations and Remuneration Committee.
Subsequent to year end, Mr McAdam resigned as Executive Director and was appointed as Chief Executive Officer
of the Group on 9 July 2019.
Strategic Path
On 31 May 2019, the Board established the PIOP Infrastructure Committee to consider and make
recommendations to the Board on potential infrastructure alternatives for the PIOP. The PIOP Infrastructure
Committee comprises Ms Edwardes (Chair), Mr Warburton, Mr McAdam and Ms Coates.
The PIOP Infrastructure Committee engaged PriceWaterhouseCoopers (PwC) as an independent consultant to
assess the potential infrastructure alternatives for PIOP, including BBI Group Pty Ltd’s (BBIG) Balla Balla
infrastructure project, based on the following criteria:
•
•
•
•
•
sufficient existing or proposed port and rail capacity to accommodate the PIOP’s anticipated ore volumes;
timeliness of delivery of the required infrastructure solution;
potential to assist Flinders in securing development finance for the PIOP;
commercial motivation and technical capacity of the counterparty to delivery an infrastructure solution;
and
economic viability of the infrastructure solution in relation to the PIOP and its capacity to deliver
appropriate returns to shareholders.
In the June 2019 quarter, the PIOP Infrastructure Committee also commenced preliminary discussions with BBIG
around a potential infrastructure arrangement.
Subsequent to year end, PwC concluded their independent review with BBIG’s Balla Balla infrastructure project
being the most favourable PIOP infrastructure pathway. On 2 September 2019, the Company signed a non-binding
term sheet with BBIG in relation to a farm-in and joint venture arrangement for the PIOP development.
To support working capital, the Company also entered into a $5m Loan Facility and $6m Subscription Agreement
with TIO (NZ) Limited (TIO), the major shareholder.
Going concern
The Independent Auditor’s Report contains an emphasis of matter paragraph in relation to going concern. Refer to
Note 2(d) of the Financial Statements.
8
For personal use only
Flinders Mines Limited
Directors’ Report
Pilbara Iron Ore Project, Western Australia
During the year ended 30 June 2019, the Company focussed on the progression of an infrastructure solution to
unlock the value in the PIOP. Accordingly, no material work was completed on ground or through in-house
technical analysis.
Canegrass, Western Australia
The Company engaged CSA Global Pty Ltd to design and execute an exploration work programme at the
Canegrass Project and update the Mineral Resource in accordance with JORC Code 2012 Edition.
Activities targeted both extensions to the Vanadium Inferred Mineral Resource and potential gold mineralisation at
the Honeypot prospect. Refer to the “Canegrass Project Exploration Update” announcement made on the ASX
on 22 January 2019.
Likely Developments and Business Strategies
The likely developments of the Group and the expected results of those developments in the current financial year
are as follows:
• Continue the progression of the non-binding Terms Sheet signed with BBI Group Pty Ltd in relation to the
farm-in and joint venture arrangement for the PIOP; and
• Continue active exploration activity at the Group’s Canegrass tenements in Western Australia.
Events Subsequent to the End of the Reporting Period
On 9 July 2019, Mr David McAdam resigned as Executive Director and was appointed Chief Executive Officer.
Details of his revised contract are included in the Remuneration Report.
On 30 August 2019, Ms Shannon Coates was appointed as Joint Company Secretary with Ms Sarah Wilson.
On 2 September 2019, the Company entered into a non-binding Terms Sheet with BBI Group Pty Ltd in relation to
a farm-in and joint venture arrangement for the PIOP development. The Company intends to negotiate binding
agreements to give effect to the principles in the Terms Sheet. The binding agreements will be the subject of
shareholder approval with TIO excluded from voting.
The major terms of the Terms Sheet are:
•
•
Flinders interest in the joint venture to be free carried to Final Investment Decision;
provision of foundation customer status for the PIOP and infrastructure solution to unlock the currently
stranded PIOP orebody;
• BBIG to arrange all debt and equity financing for the integrated development;
• BBIG to secure long-term offtake agreements with its customers;
•
Flinders to retain control of PIOP until FID, and FID does not occur in an agreed timeframe, Flinders to
retain 100% of the PIOP;
provision of significant governance protocols and minority shareholder protections; and
optionality for Flinders to convert to a royalty or other revenue stream at FIDS or continue to be free carried
to first production (subject to pro rata responsibility for capital cost overruns above an agreed contingency
during construction).
•
•
Should shareholders approve the binding agreements and upon completion of the binding agreements, success
fees of $1.7m to various advisors will become payable.
In addition, the Company entered into a $5m Loan Facility with PIO Mines Pty Ltd (a subsidiary of its major
shareholder, TIO) and Subscription Agreement with TIO for a maximum of $6m in relation to a future rights issue.
The major terms of the Loan Facility are:
unsecured, $5m loan;
interest rate of 6 month Bank Bill Swap Rate and a margin of 2%; and
•
•
• maturity on the earlier of 30 April 2020 or within 14 days of the closing of any capital raising.
As at the date of this report, this loan is fully drawn.
The major terms of the Subscription Agreement are:
•
•
final TIO board approval once terms of the rights issue are determined; and
launch of the rights issue no later than 30 April 2020.
On 18 September 2019, the Company announced the appointment of Mr James Gurry as an Independent Non-
Executive Director.
Environmental Regulation
The Group's operations are subject to significant environmental regulation under both Commonwealth and relevant
State legislation in relation to the discharge of hazardous waste and materials arising from any exploration or mining
activities and development conducted by the Group on any of its tenements. The Group believes it has complied
with all environmental obligations.
9
For personal use only
Flinders Mines Limited
Directors’ Report
Remuneration Report
Audited Remuneration Report
This report sets out the remuneration arrangements in place for Directors and senior management of the Company
and the Group in accordance with the requirements of the Corporations Act 2001 and its regulations. For the
purposes of the report, Key Management Personnel (‘KMP’) of the Group 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 Executive or otherwise) of the Company.
Key Management Personnel Covered in this Report
The names and positions of the KMP of the Company and the Group during the financial year were:
Neil Warburton
Cheryl Edwardes
David McAdam1
Michael Wolley
Evan Davies
Shannon Coates
Independent Non-Executive Chair
Independent Non-Executive Deputy Chair
Chief Executive Officer
Non-Executive Director
Non-Executive Director
Independent Non-Executive Director
1 Mr McAdam resigned as Executive Director on 9 July 2019 and was appointed Chief Executive Officer.
Remuneration Governance
The Nominations and Remuneration Committee is a sub-committee of the Board. It is primarily responsible for
making recommendations and assisting the Board to:
•
•
ensure that it is of an effective composition, size and commitment to adequately discharge its
responsibilities and duties;
independently ensure that the Company adopts and complies with remuneration policies that attract,
retain and motivate high calibre executives and Directors to encourage enhanced performance by the
Company; and
• motivate Directors and management to pursue the long-term growth and success of the Company within
an appropriate framework.
Use of Remuneration Consultants
During the year the Nominations and Remuneration Committee sought advice from BDO regarding market data
and advice in relation to Director fees and the Company’s overall remuneration framework. Such consultants
were engaged by and reported directly to the Nominations and Remuneration Committee and were required to
confirm in writing, their independence from the Company’s senior management and other executives.
Consequently, the Board of Directors is satisfied that the recommendations were made free from undue influence
from any member of the KMP.
The recommendations from BDO were provided directly to the Nominations and Remuneration Committee as an
input to remuneration decision-making processes. These recommendations were considered along with other
factors by the Committee in makings its remuneration decisions and recommendations to the Board of Directors.
The fees paid to BDO for this market data and advice were $8,750.
Executive Remuneration Policy and Framework
The Group's policy for determining the nature and amounts of emoluments of senior executives is as follows:
In determining executive remuneration, the Board aims to ensure that remuneration practices are:
•
•
competitive and reasonable, enabling the Company to attract and retain key talent; and
aligned to the Company's strategic and business objectives and the creation of shareholder value.
The remuneration of Mr McAdam (Executive Director until 9 July 2019 and Chief Executive Officer from 9 July
2019) is determined by the Directors as part of the terms and conditions of his employment which are subject to
review from time to time. The employment conditions for Mr McAdam’s Executive Director and Chief Executive
Officer roles were formalised in applicable Services Agreements.
Mr McAdam’s Executive Director Services Agreement commenced on 27 February 2017 and details the consulting
fee per day, a maximum number of days per week during which the services are to be performed, term of the
agreement and termination clauses. Subsequent to year end upon Mr McAdam’s appointment as Chief Executive
Officer this agreement was superseded by the Chief Executive Officer Service Agreement which details the
consulting fee per day, term of agreement and termination clauses. The Services Agreement is for a minimum 6-
month term commencing on 17 June 2019, with 3 months’ notice by either Mr McAdam or the Company, applicable
after 3 months. Any part of the notice that is paid out by the Company is calculated at 4 days per week. The
Chief Executive Officer Services Agreement also includes a short-term incentive of $200,000 plus GST in the event
the Company has a binding agreement approved by the Company’s shareholders for an infrastructure solution for
the PIOP before 31 December 2019.
The Company has no other short or long-term performance related milestones and obligations on its KMP.
10
For personal use only Flinders Mines Limited
Directors’ Report
Non-Executive Directors Remuneration Policy
Non-Executive Directors receive a Directors fee and are eligible for fees for extra exertion and consulting services,
at the discretion of the full Board. Fees provided to Non-Executive Directors are inclusive of superannuation and
salary sacrifice, if applicable.
Fees are reviewed annually by the Board's Nominations and Remuneration Committee considering comparable
roles and market data provided by an independent remuneration adviser.
Non-Executive Directors fees are determined within an aggregate Directors' fee pool limit, which is periodically
recommended for approval by shareholders. The maximum currently stands at $750,000 per rolling 12-month
period and was approved by shareholders at the Annual General Meeting on 6 November 2009. The Board may
apportion any amount up to this maximum amount amongst the Non-Executive Directors as it determines. Directors
are also entitled to be paid reasonable travel, accommodation and other expenses incurred in performing their
duties as Directors.
Non-Executive Directors do not participate in schemes designed for remuneration of executives, nor do they receive
options or bonus payments and are not provided with retirement benefits other than salary sacrifice and statutory
superannuation.
During the year ended 30 June 2019, based on independent remuneration advice received from BDO, Messrs
Warburton, McAdam, Wolley and Davies and Ms Coates were paid an extra exertion fee of $64,000 each in addition
to their Directors fees in relation to the Strategic Review, additional Board and committee meetings for these
additional services provided. These exertion fees are excluded from the maximum aggregate Director fee pool of
$750,000 per rolling 12-months.
Details of Remuneration
The following tables show details of the remuneration received by the Directors and KMP of the Group for the
current and previous financial year.
2019
Salary & Fees
Non-Executive Directors
N Warburton
C Edwardes 1
M Wolley 2
E Davies 2
S Coates
Subtotal Non-Executive
Directors
Executive Director
D McAdam 3
Total
Exertion Fee
4
$
64,000
-
64,000
64,000
64,000
256,000
$
188,000
4,180
119,000
119,000
102,596
532,776
645,750
1,178,526
64,000
320,000
Superannuation
Total
$
-
397
-
-
16,404
16,801
-
16,801
$
252,000
4,577
183,000
183,000
183,000
805,577
709,750
1,515,327
1 Ms Edwardes was appointed on 17 June 2019, $4,577 in Non-Executive Director Fees were payable to Ms
Edwardes for the period 17 June 2019 to the year ending 30 June 2019.
2 Messrs Wolley and Davies Non-Executive Director Fees are paid directly to the Company’s major shareholder,
TIO.
3 Mr McAdam’s remuneration includes $539,000 for executive services and $170,750 for Director services.
4 These exertion fees relate to additional services provided by the Directors in relation to the Strategic Review and
additional board and committee meetings and are excluded from the maximum aggregate Director fee pool of
$750,000 per rolling 12-months.
2018
Non-Executive Directors
N Warburton
M Wolley 1
E Davies 1
R Kennedy 2
S Coates 3
Subtotal Non-Executive Directors
Executive Directors
D McAdam 4
Total
Salary & Fees
$
Superannuation
$
188,000
119,000
119,000
88,744
3,344
518,088
590,000
1,108,088
-
-
-
507
318
825
-
825
Total
$
188,000
119,000
119,000
89,251
3,662
518,913
590,000
1,108,913
1 Messrs Wolley and Davies Non-Executive Director Fees are paid directly to the Company’s major shareholder,
TIO.
2 Deceased 20 March 2018.
3 Ms Coates was appointed as a Non-Executive Director on 20 June 2018 and as at 30 June 2018, $3,662 in Non-
Executive Director Fees were payable to Ms Coates for the period 20 June 2018 to the year ending 30 June 2018.
11
For personal use only
4 Mr McAdam’s remuneration includes $520,000 for Executive services and $70,000 for Director services.
Flinders Mines Limited
Directors’ Report
No remuneration
exercised/lapsed during the years ended 30 June 2019 and 30 June 2018.
linked
is
to performance and no share-based payments were received/granted or
Terms of Employment
Mr McAdam’s terms of employment as Executive Director was formalised in a Service Agreement. Material terms
relating to the duration and termination as at 30 June 2019 are set out below:
Name
D McAdam
Compensation
$2,500 per day
for a
maximum of 4 days per
week
Notice Period and Term
Rolling 3-month term and notice period post 1 March
2019 at the Board’s discretion.
Subsequent to year end, the Executive Director’s Service Agreement was replaced with a Chief Executive Officer
Service Agreement which contains the following material terms:
Name
D McAdam
Compensation
$3,250 per day
for a
minimum of 4 days per
week
Notice Period and Term
Minimum 6-month term commencing on 17 June 2019,
with 3 months’ notice by either Mr McAdam or the
Company, applicable after 3 months. Any part of the
notice that is paid out by the Company is calculated at
4 days per week.
The Chief Executive Officer Services Agreement also includes a short-term incentive, whereby Mr McAdam will be
entitled to a one-off payment of $200,000 plus GST in the event the Company has a binding agreement approved
the Company’s shareholders for an infrastructure solution for the PIOP before 31 December 2019.
Share holdings
No Directors or KMP held a relevant interest in shares in the Company during the 2019 and 2018 financial year.
There were no shares granted during the reporting period as compensation.
Other Transactions with KMP and their Related Parties
During the year ended 30 June 2019, the Group utilised the tenement management and field services of BBI Group
Pty Ltd, a subsidiary of its major shareholder, TIO. The total value of these services was $145,600 (2018:
$172,595). This agreement was terminated on 24 June 2019.
During the year ended 30 June 2019, the Group paid Director fees to TIO, its major shareholder, for Director
services provided by Mr Wolley and Mr Davies. The total value of these services was $366,000 (2018: $238,000).
In August 2018, the Group repaid a $5.0 million loan facility with PIO Mines Pty Ltd (‘PIO’), a subsidiary of its major
shareholder, TIO. In March 2019, the Group received a further $3.0 million loan from PIO. At 30 June 2019, the
total value outstanding to PIO is $3,032,183. Interest is capitalised quarterly at a rate of BBSW plus a 2% margin.
This loan is repayable on 30 June 2022.
During the year ended 30 June 2019, the Group received Company Secretarial services from Evolution Corporate
Services, a company of which Ms Coates and Ms Wilson are employees of. The total value of these services was
$95,352 (2018: $2,167).
The above transactions are all entered on arm’s length terms.
End of the Audited Remuneration Repot.
Options Granted over Unissued Shares
There are no unissued ordinary shares of Flinders Mines Limited under option at the date of this report.
Non- Audit Services
During the year KPMG, the Group’s auditor, has performed certain other services in addition to the audit and review
of the financial statements.
The Board has considered the non-audit services provided during the year by the auditor and is satisfied that the
provision of those non-audit services during the year by the auditor is compatible with and did not compromise, the
auditor independence requirements of the Corporations Act 2001 as the non-audit services provided do not
undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for
Professional Accountants, as they did not involve reviewing or auditing the auditor’s own work, acting in a
management or decision making capacity for the Group, acting as advocate for the Group or jointly sharing risks
and rewards.
The Company paid $37,294 to the auditor of the Group, KPMG for provision of taxation advice services and $4,613
for other assurance services.
12
For personal use only
Flinders Mines Limited
Directors’ Report
Indemnification and Insurance of Officers
The Company has taken out an insurance policy insuring Directors and Officers of the Company against any liability
arising from a claim bought by a third party against the Company or its current or former Directors or Officers and
against liabilities for costs and expense incurred by them in defending any legal proceedings arising out of their
conduct while acting in their capacity as a Director or Officer of the Company, other than conduct involving a wilful
breach of duty in relation to the Company.
The Company indemnifies each of the Directors and Officers of the Company. Under its Constitution, the
Company will indemnify those Directors or Officers against any claim or for any expenses or costs which may arise
as a result of work performed in their respective capacities as Directors or Officers of the Company or any related
entities.
Indemnification of Auditors
The Company has not indemnified its auditors, KPMG.
Rounding
The amounts contained in the financial report have been rounded to the nearest $1,000 (unless otherwise stated)
pursuant to the option available to the Company under ASIC Legislative Instrument 2016/191. The Company is
an entity to which this class order applies.
Auditor’s independence declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is
set out on the following page.
This report is made in accordance with a resolution of Directors.
Neil Warburton
Non-Executive Chair
Perth, Western Australia
18 September 2019
13
For personal use only Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001
To the Directors of Flinders Mines Limited
I declare that, to the best of my knowledge and belief, in relation to the audit of Flinders Mines Limited
for the financial year ended 30 June 2019 there have been:
i.
ii.
no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
KPMG
R Gambitta
Partner
Perth
18 September 2019
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under
Professional Standards Legislation.
For personal use only
Flinders Mines Limited
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the year ended 30 June 2019
Finance income
Other income
Administrative expenses
Other expenses
Finance costs
Loss before income tax
Income tax (expense)/benefit
Loss for the year
Items that may be reclassified to profit or loss:
Other comprehensive income
Other comprehensive loss for the year
attributable to owners of the Company
Loss per share attributable to ordinary
equity holders:
Basic and diluted loss per share
Notes
5
5
5
5
6
7
2019
$’000
56
1
(5,434)
(25)
(55)
(5,457)
(13)
(5,470)
-
(5,470)
Cents
(0.159)
The above statement should be read in conjunction with the accompanying notes.
2018
$’000
105
49
(1,718)
(117)
(112)
(1,793)
(17)
(1,810)
-
(1,810)
Cents
(0.058)
15
For personal use only Current assets
Cash and cash equivalents
Trade and other receivables
Other current assets
Total current assets
Non-current assets
Exploration and evaluation
Plant and equipment
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Loans and borrowings
Total current liabilities
Non-current liabilities
Loans and borrowings
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Accumulated losses
Total equity
Flinders Mines Limited
Consolidated Statement of Financial Position
As at 30 June 2019
Notes
8
9
10
11
12
12
13
2019
$’000
1,700
83
379
2,162
61,126
1
61,127
63,289
672
-
672
3,000
3,000
3,672
59,617
2018
$’000
3,301
84
468
3,853
58,461
4
58,465
62,318
436
5,000
5,436
-
-
5,436
56,882
147,064
(87,447)
59,617
138,859
(81,977)
56,882
The above statement should be read in conjunction with the accompanying notes.
16
For personal use only Flinders Mines Limited
Consolidated Statement of Changes in Equity
For the year ended 30 June 2019
Contributed
equity
$’000
Accumulated
losses
$’000
Balance at 1 July 2017
Loss for the year
Total comprehensive loss for the year
Transactions with owners in their capacity
as owners:
Contributions of equity, net of costs and tax
138,859
-
-
-
Balance as at 30 June 2018
138,859
Loss for the year
Total comprehensive loss for the year
-
-
(80,167)
(1,810)
(1,810)
-
(81,977)
(5,470)
(5,470)
Total equity
$’000
58,692
(1,810)
(1,810)
-
56,882
(5,457)
(5,457)
Transactions with owners in their capacity
as owners:
Contributions of equity, net of costs and tax
Balance as at 30 June 2019
8,192
147,051
-
(87,447)
8,192
59,617
The above statement should be read in conjunction with the accompanying notes.
17
For personal use only Flinders Mines Limited
Consolidated Statement of Cash Flows
For the year ended 30 June 2019
Notes
Cash flows from operating activities
Payments to suppliers and employees
Interest expense
Interest received
Net cash outflow from operating activities
8
Cash flows from investing activities
Proceeds from sale of plant and equipment
Proceeds
financial assets
Payments for exploration activities
from sale of available-for-sale
Net cash outflow from investing activities
Cash flows from financing activities
Proceeds from issues of shares
Transaction costs
Proceeds from borrowings
Repayment of borrowings
Net cash inflow from financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at the beginning
of the year
Cash and cash equivalents at the end of
the year
8
2019
$’000
(5,034)
(131)
56
(5,109)
-
-
(2,722)
(2,722)
8,275
(45)
3,000
(5,000)
6,230
(1,601)
3,301
1,700
The above statement should be read in conjunction with the accompanying notes.
2018
$’000
(1,687)
-
105
(1,582)
14
73
(10,219)
(10,132)
-
(52)
5,000
-
4,948
(6,766)
10,067
3,301
18
For personal use only Flinders Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
1
Corporate information
The consolidated financial report of Flinders Mines Limited for the year ended 30 June 2019 was authorised for
issue in accordance with a resolution of the Directors on 18 September 2019. The Board of Directors has the
power to amend the consolidated financial statements after issue.
Flinders Mines Limited (the ‘Company’ or ‘Flinders’) is a for-profit company limited by shares whose shares are
publicly traded on the Australian Securities Exchange. The Company and its subsidiaries were incorporated and
domiciled in Australia. The registered office and principal place of business of the Company is 45 Ventnor Avenue,
West Perth, WA 6005.
The amounts contained in the financial report have been rounded to the nearest $1,000 (unless otherwise stated)
pursuant to the option available to the Company under ASIC Instrument 2016/191. The Company is an entity to
which this Instrument applies.
2
Reporting entity
The Consolidated Financial Statements comprise of the Company and its subsidiaries, (together referred to as the
‘Consolidated Entity’ or the ‘Group’).
3
Basis of preparation
The Consolidated 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 and the Corporations Act 2001. The Consolidated Financial Statements also comply with
International Financial Reporting Standards as issued by the International Accounting Standards Board.
These financial statements have been prepared under the historical cost convention except for certain financial
assets and liabilities which are required to be measured at fair value.
a)
Basis of consolidation
Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is
exposed to, or has rights to, variable returns from its involvement with the entity and could affect those returns
through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which
control is transferred to the Group. They are deconsolidated from the date that control ceases.
The acquisition method of accounting is used to account for business combinations by the Group.
Intercompany transactions, balances and unrealised gains on transactions between Group companies are
eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of
the transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure
consistency with the policies adopted by the Group.
b)
Goods and services tax (‘GST’)
Revenues, expenses and assets are recognised net of the amount of GST except:
•
•
when the GST incurred on a purchase of goods and services is not recoverable from the taxation authority,
in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense
item as applicable; and
receivables and payables, which are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or
payables in the statement of financial position.
Cash flows are included in the statement of cash flows on a net basis and the GST component of cash flows arising
from investing and financing activities, which is recoverable from, or payable to, the taxation authority are classified
as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable
from, or payable to, the taxation authority.
c)
Comparatives
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in
presentation for the current financial year.
d)
Going Concern
As at 30 June 2019, the Group has a net current asset surplus of $1.490m and incurred a net loss for the year
ended 30 June 2019 of $5.470m, with net operating cash outflows of $5.109m.
A twelve-month cash flow forecast shows that the Group will need to raise additional funds in order to repay the
short-term loan provided by PIO Mines Pty Ltd (PIO), a subsidiary of its major shareholder TIO (NZ) Limited (TIO)
and to meet working capital forecasts.
As announced to the ASX on 2 September 2019, the Group has negotiated an unsecured loan agreement with PIO
of $5m with the proceeds being used for working capital purposes. The terms of this loan include, a maturity date
of 30 April 2020 or within 14 days of the closing of a capital raise with an interest rate of BBSW plus a 2% margin.
This loan has since been drawn in full. In addition to this loan, the Group has also entered a Subscription
Agreement with TIO for TIO to subscribe for up to $6.0m in Flinders shares before 30 April 2020 via a not
19
For personal use only Flinders Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
underwritten, non-renounceable pro rata rights issue. The Subscription Agreement is subject to TIO board
approval.
On 2 September 2019 the Group also announced that it had entered into non-binding term sheet with BBI Group
Pty Ltd, a related party of TIO establishing the basis for negotiating the future development and operation of the
PIOP. The Term sheet contemplates finalisation of documentation and approval by the Company’s shareholders
before 31 December 2019 by which time the Directors expect a more detailed assessment of the funding
requirements and timetable will be available.
In addition to the requirement to repay the PIO Loan of $5m the Group will need funding in addition to that
contemplated by the Subscription Agreement for working capital needs over the course of the foreseeable future.
The Directors are confident that sufficient additional funding will be achieved through the ultimate approval and use
of the Subscription Agreement, together with securing additional debt or equity funding or a combination of both.
The successful completion of documentation consistent with the Term Sheet, the approval of the TIO Board of the
subscription Agreement, together with the source of additional debt or equity funding remains uncertain and
together they present a material uncertainty to the ability of the Company and the Group to continue as a going
concern.
If the Company is unable to continue as a going concern, it may be required to realise its assets and/or settle its
liabilities other than in the ordinary course of business and at amounts different from those stated in this financial
report.
4
Segment information
Identification of reportable segments
Management has determined the operating segments based on the reports reviewed and used by the Board of
Directors (the chief operating decision maker) that are used to make strategic decisions. The Group is managed
primarily based on geographical area of interest, since the diversification of Group operations inherently has notably
different risk profiles and performance assessment criteria. Operating segments are therefore determined on the
same basis.
Reportable segments disclosed are based on aggregating operating segments where the segments are considered
to have similar economic characteristics and are also similar with respect to the following:
•
•
external regulatory requirements
geographical and geological styles
Operations
The Group has exploration operations in iron ore mineralisation, gold and base metals. The costs associated with
the Pilbara Iron Ore Project are reported on in the Pilbara Iron Ore segment and the costs associated with
Canegrass gold and base metals are reported in the Canegrass segment.
Accounting policies developed
Unless stated otherwise, all amounts reported to the Board of Directors as chief decision maker with respect to
operating segments are determined in accordance with accounting policies that are consistent to those adopted in
the Consolidated Financial Statements of the Group.
2019
Segment result
Impairment of assets
Capital expenditure
Total segment assets
Total segment liabilities
2018
Segment result
Impairment of assets
Capital expenditure
Total segment assets
Total segment liabilities
Pilbara Iron Ore
$’000
-
-
1,984
59,891
105
Canegrass
$’000
-
-
691
1,235
38
-
-
9,097
57,917
156
-
-
474
544
6
Other
$’000
(25)
(25)
25
-
-
(65)
(65)
65
-
-
A reconciliation of segment loss to operating loss before income tax is provided as follows:
Total segment loss
Finance income
Profit on disposal of assets
Administrative expenses
Non-mine site rehabilitation
Finance cost
Loss before income tax
2019
$’000
(25)
56
1
(5,434)
-
(55)
(5,457)
Total
$’000
(25)
(25)
2,700
61,126
143
(65)
(65)
9,636
58,461
162
2018
$’000
(65)
105
49
(1,718)
(52)
(112)
(1,793)
20
For personal use only 4
Segment information (continued)
Reportable segments' assets are reconciled to total assets as follows:
Flinders Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
Segment assets
Unallocated:
Cash and cash equivalents
Trade and other receivables
Other current assets
Plant and equipment
Total assets
2019
$’000
61,126
1,700
83
379
1
63,289
Reportable segments' liabilities are reconciled to total liabilities as follows:
Segment liabilities
Unallocated:
Trade and other payables
Loans and borrowings
Total liabilities
5
Income and expenses
Finance revenue
Interest received
Administrative expenses
Compliance
Depreciation
Insurance
Consultants
Administration costs
Salary and Wages (including Director Fees)
Legal costs
Occupancy costs
Other expense
Exploration expenditure expensed
Non-mine site rehabilitation
Finance expense
Interest expense
Bank fees
6
Income tax expense
2019
$’000
143
529
3,000
3,672
2019
$’000
56
(225)
-
(338)
(1,894)
(198)
(1,424)
(1,280)
(75)
(5,434)
(25)
-
(25)
(53)
(2)
(55)
2018
$’000
58,461
3,301
84
429
4
62,279
2018
$’000
162
274
5,000
5,436
2018
$’000
105
(149)
(22)
(170)
(471)
(213)
(603)
(45)
(45)
(1,718)
(65)
(52)
(117)
(110)
(2)
(112)
The prima facie income tax expense on pre-tax accounting losses from continuing operations reconciles to the
income tax expense in the financial statements as follows:
Loss from continuing operations before income tax
Tax at the Australian tax rate of 30% (2017: 30%)
Tax effect of amounts which are not deductible (taxable) in
calculating taxable income:
Other non-allowable items
Temporary differences not bought to account
Tax expense
2019
$’000
(5,457)
(1,637)
-
1,650
13
2018
$’000
(1,793)
(538)
19
536
17
The tax rate used in the above reconciliation is the corporate tax rate of 30% payable by Australian corporate
entities on taxable profits under Australian Tax Law. There has been no change in this tax rate since the previous
reporting period.
21
For personal use only Flinders Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
6
Income tax expense (continued)
A deferred tax asset (‘DTA’) on the timing differences has not been recognised as they do not meet the recognition
criteria as outlined in below. A DTA has not been recognised in respect of tax losses either as realisation of the
benefit is not regarded as probable.
The taxation benefits will only be obtained if:
a)
b)
c)
the Consolidated Entity derives future assessable income of a nature and of an amount sufficient to enable
the benefit from the deduction for the loss to be realised;
the Consolidated Entity continues to comply with the conditions for deductibility imposed by law; and
no changes in tax legislation adversely affect the consolidated entity in realising the benefits from the
deductions for the loss.
The Consolidated Entity’s ability to realise and recognise the deferred tax asset in the future is dependent on the
Consolidated Entity satisfying the ‘Continuity of Ownership’ or ‘Same Business’ tests. The Company has assessed
that Continuity of Ownership testing has been failed as at 30 June 2016 and the Same Business test will be required
to be passed in order for the Group’s tax losses to remain available. At present, the Company is of the opinion
that the Same Business Test will be met.
The Group has net DTAs arising in Australia of $25.382m (2018: $23.873m) that are available for offset indefinitely
against future taxable profits of the companies in which the losses arose.
The income tax expense or benefit for the period is the tax payable on the current period’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.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the
deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction
other than a business combination that at the time of the transaction affects neither accounting nor taxable profit
nor loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially
enacted by the reporting date and are expected to apply when the related deferred income tax asset is realised or
the deferred income tax liability is settled.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable
that future taxable amounts will be available to utilise those temporary differences or losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and
tax bases of investments in controlled entities where the Parent entity is able to control the timing of the reversal
of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets
and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax
liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net
basis, or to realise the asset and settle the liability simultaneously.
Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly
in equity.
7
Loss per share
Loss used in calculating basic and diluted loss per share
Loss used in calculating basic and diluted loss per share
from continuing operations
Weighted average number of ordinary shares used in the
calculation of basic and diluted loss per share
2019
$’000
(5,470)
(5,470)
2018
$’000
(1,793)
(1,793)
2019
Number
3,443,478,128
2018
Number
3,114,608,516
Basic earnings/loss per share is determined by dividing net profit or loss after income tax attributable to members
of the Company, excluding any costs of servicing equity other than ordinary shares, by the weighted average
number of ordinary shares outstanding during the financial year.
Diluted earnings per share adjusts the figures used in the determination of basic earnings/loss per share to take
into account the after income tax effect of interest and other financing costs associated with dilutive potential
ordinary shares by the weighted average number of shares assumed to have been issued for no consideration in
relation to potential ordinary shares.
22
For personal use only 8
Cash and cash equivalents
Cash at bank and in hand
Term deposits
Flinders Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
2019
$’000
1,670
30
1,700
2018
$’000
3,241
60
3,301
Cash and short-term deposits comprise of cash at bank and in hand and short-term deposits with an original
maturity of three months or less.
Reconciliation of loss for the year to net cash flows from operations:
Loss for the year
Depreciation
Exploration expenditure expensed
Profit on disposal of assets
Profit on disposal of available-for-sale financial assets
Income tax expense
Changes in operating assets and liabilities
Decrease in trade and other receivables
Decrease/(increase) in other assets
Increase/(decrease) in trade and other payables
Net cash flows from operating activities
9
Other assets
Other current assets
2019
$’000
(5,470)
-
25
(1)
-
13
1
89
234
(5,109)
2019
$’000
379
379
2018
$’000
(1,793)
22
65
(7)
(42)
17
5
18
150
(1,582)
2018
$’000
468
468
Other current assets represents the prepaid portion of rates and rents of the Group’s tenements and corporate
insurances.
10
Exploration and evaluation expenditure
Opening balance
Expenditure incurred
Impairment loss
Closing balance
2019
$’000
58,461
2,690
(25)
61,126
2018
$’000
48,890
9,636
(65)
58,461
The ultimate recoupment of costs carried forward for areas of interest in the exploration and evaluation phases is
dependent upon the successful development and commercial exploitation, or sale, of the respective areas of
interest. For areas which do not meet the criteria of the accounting policy, those amounts are charged to the
Consolidated Statement of Comprehensive Income. During the years ending 30 June 2019 and 30 June 2018
expenditure relating to depreciation and tenement administrative services was written off.
Exploration and evaluation costs related to an area of interest are written off as incurred except they may be carried
forward as an item in the consolidated statement of financial position where the rights of tenure of an area are
current and one of the following conditions is met:
•
•
the costs are expected to be recouped through successful development and exploitation of the area of
interest, or alternatively, by its sale; and
exploration and/or evaluation activities in the area of interest have not at the end of each reporting period
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 are
continuing.
Capitalised costs include costs directly related to exploration and evaluation activities in the relevant area of
interest. General and administrative costs are allocated to an exploration or evaluation asset only to the extent that
those costs can be related directly to operational activities in the area of interest to which the asset relates.
Capitalised exploration and evaluation expenditure is written off where the above conditions are no longer satisfied.
Exploration and evaluation expenditure incurred subsequent to the acquisition in respect of an exploration asset
acquired is accounted for in accordance with the policy outlined above.
All capitalised exploration and evaluation expenditure is assessed for impairment if facts and circumstances
indicate that an impairment may exist. Exploration and evaluation assets are also tested for impairment once
commercial reserves are found, before the assets are transferred to development properties.
23
For personal use only 11
Trade and other payables
Trade payables
Other payables 1
Flinders Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
2019
$’000
252
420
672
2018
$’000
190
246
436
1 Included in Other payables is accrued interest of $32k payable on the PIO Mines Pty Limited loan. Refer Note
12.
These amounts represent liabilities for goods and services provided to the Group prior to the end of financial year
which are unpaid. The amounts are unsecured, non-interest bearing 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.
12
Loans and Borrowings
Current PIO Loan1
Non-current PIO Loan2
2019
$’000
-
3,000
2018
$’000
5,000
-
1 On 6 November 2017, the Company announced that it had entered into an unsecured $5m short term loan facility
with PIO Mines Pty Limited, a subsidiary of its major shareholder, TIO (NZ) Limited.
The key terms are as follows:
•
•
•
Repayable on or before 31 August 2018;
Interest payable on repayment date at a rate of 3.885% per annum; and
Funds must be used to complete the PIOP maturation work programs.
This loan and applicable interest was repaid in August 2018.
2 On 15 March 2019, the Company announced that it had executed a Variation to the Loan Agreement previously
announced on 20 February 2019 with PIO Mines Pty Ltd, a subsidiary of its major shareholder, TIO (NZ) Limited.
The key terms are as follows:
•
•
•
Unsecured loan amount of up to $32.9m, with use of proceeds being to fund a proposed Buy-Back (up to
$25.3m), plus working capital ($3.0m) and potential Company tax associated with the Buy-Back (up to
$4.6m);
Capitalised interest quarterly at a rate of BBSW plus a 2% margin; and
Repayable on or before 30 June 2022.
The proposed Buy-Back was cancelled during April 2019 as a result of the withdrawal of the de-listing from the
ASX application, therefore $29.9m of the Loan Agreement is not available to be drawn. As at 30 June 2019, the
remaining $3m loan is fully drawn.
Refer to Note 23 for details of an additional working capital loan provided by PIO Mines Pty Ltd.
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.
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 reporting period.
24
For personal use only Flinders Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
13
Contributed equity
Issued share capital is recognised at the fair value of the consideration received by the Company. Any transaction
costs arising on the issue of ordinary shares are recognised, net of tax, directly in equity as a reduction of the share
proceeds received.
Issued shares:
At 1 July 2017
As at 30 June 2018
Shares issued pursuant to a non-renounceable rights issue
Share issue costs
As at 30 June 2019
Ordinary shares
Number of shares
$’000
3,336,951,446
3,336,951,446
118,218,635
-
3,485,170,081
138,859
138,859
8,275
(70)
147,064
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in
proportion to the number of and amounts paid on the shares held.
On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one
vote, and upon a poll each share is entitled to one vote.
Ordinary shares have no par value and the Company does not have a limited amount of authorised capital.
Capital risk management
The Group's debt and capital includes ordinary share capital and short-term debt. There are no externally imposed
capital requirements.
Management effectively manages the Group’s capital by assessing the Group’s financial risks and adjusting its
capital structure in response to changes in these risks and in the market. These responses include the management
of debt levels, distributions to shareholders and share issues.
There have been no changes in the strategy adopted by management to control the capital of the Group since the
prior year. This strategy is to ensure that the Group has no debt.
14
Financial risk management
The Group's activities expose it to a variety of financial risks: interest rate risk; credit risk and liquidity risk. The
Group's overall risk management program focuses on the unpredictability of financial markets and seeks to
minimise potential adverse effects on the financial performance of the Group.
Risk management is carried out by management under policies approved by the Board of Directors. Management
identifies, evaluates and hedges financial risks in close co-operation with the Group's operating units. The Board
provides principles for overall risk management, as well as policies covering specific areas, such as interest rate
risk, credit risk, and use of financial instruments and investment of excess liquidity where appropriate.
The Group's financial instruments consist mainly of deposits with banks, accounts receivable and payable and
loans to related parties.
Interest rate risk
The Group’s exposure to market risk for changes in interest rates arise from variable interest rate exposure on
cash, fixed deposits and interest-bearing liabilities.
The Group’s policy is to manage its exposure to interest rate risk by holding cash in short-term, fixed rate and
variable rate deposits with reputable high credit quality financial institutions. With interest bearing liabilities,
consideration is also given to the potential renewal of existing positions, alternative financing and the mix of fixed
and variable interest rates.
The following table summarises the financial assets and liabilities of the Group, together with the effective interest
rates as at the balance date.
2019
Cash and cash
equivalents
Trade and
other
receivables
Trade and
other payables
Loans and
borrowings
Floating
interest
rate
$’000
1,670
-
-
-
Fixed interest maturing in:
1
–
< 1 year
years
5
> 5 years Non-
$’000
30
$’000
-
$’000
-
-
-
-
-
-
3,000
-
-
-
interest
bearing
$’000
-
83
672
-
Average interest rates
Floating
Fixed
%
1.45%
%
2.12%
-
-
-
-
-
3.88%
25
For personal use only 14
Financial risk management (continued)
Flinders Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
Fixed interest maturing in:
1
–
< 1 year
years
5
> 5 years Non-
Floating
interest
rate
$’000
3,241
2018
Cash and cash
equivalents
Trade and
other
receivables
Trade and
other payables
Loans and
borrowings
$’000
60
$’000
-
$’000
-
-
-
-
-
-
5,000
-
-
-
-
-
-
Average interest rates
Floating
Fixed
%
1.70%
%
2.68%
-
-
-
-
-
3.92%
interest
bearing
$’000
-
84
436
-
As at 30 June 2019, if interest rates had moved by 1%, with all other variables being held constant, post-tax loss
and equity would have been affect by +/- $0.017m (2018: +/- $0.0.33m).
The movements in loss after income tax are due to higher/lower interest costs from fixed and variable rate debt
and cash balances during the relevant year. Reasonably possible movements in interest rates were determined
based on observations of historical movements in the past two years.
The net exposure at balance date is representative of what the Group was and is expecting to be exposed to in the
next twelve months from balance date.
Credit risk
Credit risk arises from the financial assets of the Group, and it’s exposure to credit risk arises from potential default
of the counter party, with a maximum exposure equal to the carrying amount of the instruments. The Group’s
exposure to credit risk is minimal and results only from its exposure in cash and cash equivalents and trade
receivables.
Liquidity risk
The Group’s objective is to ensure sufficient liquid funds are available to meet the Group’s financial commitments
in a timely and cost-effective manner.
The Group’s treasury function continually reviews the Group’s liquidity position including cash flow forecasts to
determine the forecast liquidity position and maintain appropriate liquidity levels. Sensitivity analysis is conducted
to ensure that the Group has the ability to meet commitments.
2019
Cash and cash equivalents
Trade and other receivables
Trade and other payables
Loans and borrowings
Net outflow
2018
Cash and cash equivalents
Trade and other receivables
Trade and other payables
Loans and borrowings
Net outflow
15
Subsidiaries
< 1 year
$’000
1,700
83
(672)
1,111
3,301
84
(436)
(5,000)
(2,051)
1 – 5 years
$’000
-
-
-
(3,000)
(3,000)
-
-
-
-
-
Total
$’000
1,700
83
(672)
(3,000)
(1,889)
3,301
84
(436)
(5,000)
(2,051)
The Consolidated Financial Statements include the financial statements of Flinders Mines Limited and the
subsidiaries listed in the following table:
Name of entity
FME Exploration Services Pty Ltd
Flinders Canegrass Pty Ltd
Flinders Diamonds Pty Ltd
Flinders Iron Pty Ltd
16
Interests in exploration projects
Country of
incorporation Class of shares
Australia
Australia
Australia
Australia
Ordinary
Ordinary
Ordinary
Ordinary
Equity holding %
2018
2019
100
100
100
100
100
100
100
100
The Company maintains 100% of the rights to explore for and, if warranted, develop mining operations on PNX
Metals Jamestown Project, EL 5557 tenement, located in South Australia, for diamonds, barium, talc and
phosphate.
26
For personal use only 17
Parent entity information
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Issued capital
Accumulated losses
Total equity
Loss for the year
Total comprehensive loss for the year
The Company has no material contingent liabilities.
18
Contingent assets and liabilities
Flinders Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
2019
$’000
2,139
61,127
672
3,000
147,064
(87,470)
59,594
(5,473)
(5,473)
2018
$’000
3,794
58,465
5,436
-
138,820
(81,997)
56,823
(1,843)
(1,843)
The Group had no contingent assets or liabilities at 30 June 2019 (2018: nil).
19
Remuneration of auditors
During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its
related practices and non-related audit firms:
Auditing and reviewing of financial reports
Taxation advice services
Other assurance services
2019
$
43,000
37,294
4,613
84,907
2018
$
30,000
-
-
30,000
The auditor of the parent entity for the year ended 30 June 2019 and 30 June 2018 is KPMG.
20
Commitments
Exploration and evaluation expenditure commitments
In order to maintain current rights of tenure to exploration tenements, the Group is required to meet the minimum
expenditure requirements specified by various State and Territory Governments. These obligations are subject to
renegotiation when application for a mining lease is made and at other times. These obligations are not provided
for in this financial report.
The minimum level of exploration commitment expected in the year ending 30 June 2019 for the Group is
approximately $1.400m (2018: $1.400m). These obligations are expected to be fulfilled in the normal course of
operations.
21
Related party transactions
Parent entity
The Parent Entity within the Group is Flinders Mines Limited.
Loans to subsidiaries
Loans between entities in the wholly owned Group are non-interest bearing, unsecured and are payable upon
reasonable notice having regard to the financial situation of the entity.
21
Related party transactions (continued)
Other transactions with related parties
During the year ended 30 June 2019, the Group utilised the tenement management and field services of BBI Group
Pty Ltd, a subsidiary of its major shareholder, TIO. The total value of these services was $145,600 (2018:
$172,595). This agreement was terminated on 24 June 2019
During the year ended 30 June 2019, the Group paid Director fees to TIO, its major shareholder, for Director
services provided by Mr Wolley and Mr Davies. The total value of these services was $366,000 (2018: $238,000).
In August 2019, the Group repaid a $5.0 million loan facility with PIO Mines Pty Ltd (‘PIO’), a subsidiary of its major
shareholder, TIO. In March 2019, the Group received a further $3.0 million loan from PIO. At 30 June 2019, the
total value outstanding to PIO is $3,032,183. Interest is capitalised quarterly at a rate of BBSW plus a 2% margin.
This loan is repayable on 30 June 2022.
During the year ended 30 June 2019, the Group received Company Secretarial services from Evolution Corporate
Services, a company of which Ms Coates and Ms Wilson are employees of. The total value of these services was
$95,352 (2018: $2,167).
The above transactions are all entered on arm’s length terms.
27
For personal use only Flinders Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
22
Key management personnel disclosures
Details of key management personnel
The names and positions of the KMP of the Company and the Group during the financial year were:
Neil Warburton
Cheryl Edwardes
Michael Wolley
Evan Davies
Shannon Coates
David McAdam 1
Independent Non-Executive Chair
Independent Non-Executive Deputy Chair
Non-Executive Director
Non-Executive Director
Independent Non-Executive Director
Executive Director
1 Mr McAdam resigned as Executive Director on 9 July 2019 and was appointed Chief Executive Officer.
Compensation of key management personnel
Short-term employee benefits
Post-employment benefits
2019
$
1,498,526
16,801
1,515,327
2018
$
1,108,088
825
1,108,913
23
Events occurring after the reporting period
On 9 July 2019, Mr David McAdam resigned as Executive Director and was appointed Chief Executive Officer.
Details of his revised contract are included in the Remuneration Report.
On 30 August 2019, Ms Shannon Coates was appointed as Joint Company Secretary with Ms Sarah Wilson.
On 2 September 2019, the Company entered into a non-binding Terms Sheet with BBI Group Pty Ltd in relation to
a farm-in and joint venture arrangement for the PIOP development. The Company intends to negotiate binding
agreements to give effect to the principles in the Terms Sheet. The binding agreements will be the subject of
shareholder approval with TIO excluded from voting.
The major terms of the Terms Sheet are:
•
•
•
•
•
•
•
Flinders interest in the joint venture to be free carried to Final Investment Decision;
provision of foundation customer status for the PIOP and infrastructure solution to unlock the currently
stranded PIOP orebody;
BBIG to arrange all debt and equity financing for the integrated development;
BBIG to secure long-term offtake agreements with its customers;
Flinders to retain control of PIOP until FID, and FID does not occur in an agreed timeframe, Flinders to
retain 100% of the PIOP;
provision of significant governance protocols and minority shareholder protections; and
optionality for Flinders to convert to a royalty or other revenue stream at FIDS or continue to be free carried
to first production (subject to pro rata responsibility for capital cost overruns above an agreed contingency
during construction).
Should shareholders approve the binding agreements and upon completion of the binding agreements, success
fees of $1.7m to various advisors will become payable.
In addition, the Company entered into a $5m Loan Facility with PIO Mines Pty Ltd (a subsidiary of its major
shareholder, TIO) and Subscription Agreement with TIO for a maximum of $6m in relation to a future rights issue.
The major terms of the Loan Facility are:
unsecured, $5m loan;
interest rate of 6 month Bank Bill Swap Rate and a margin of 2%; and
•
•
• maturity on the earlier of 30 April 2020 or within 14 days of the closing of any capital raising.
As at the date of this report, this loan is fully drawn.
The major terms of the Subscription Agreement are:
•
•
final TIO board approval once terms of the rights issue are determined; and
launch of the rights issue no later than 30 April 2020.
On 18 September 2019, the Company announced the appointment of Mr James Gurry as an Independent Non-
Executive Director
28
For personal use only
Flinders Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
24
Critical accounting estimates and assumptions
The preparation of the consolidated financial statements requires management to make estimates and
assumptions. These estimates and assumptions are continually evaluated and are based on historical experience
and other factors, including expectations of future events that may have a financial impact on the Group and that
are believed to be reasonable under the circumstances.
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by
definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are
discussed below:
Exploration and evaluation
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 area of interest 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 reserves and resources, future
technological changes which could impact the cost of mining, future legal changes (including changes to
environmental obligations) and changes to commodity prices.
To the extent that capitalised exploration and evaluation expenditure is determined not to be recoverable in the
future, this will reduce profits and net assets in the period in which this determination is made.
In addition, exploration and evaluation expenditure is capitalised if rights to tenure of the area of interest are current
and activities in the area of interest have not yet reached a stage which permits a reasonable assessment of the
existence or otherwise of economically recoverable reserves. To the extent that is determined in the future that this
capitalised expenditure should be written off, this will reduce profits and net assets in the period in which this
determination is made.
25
Changes in accounting policy
In the year ended 30 June 2019, the directors have reviewed all the new and revised Standards and Interpretations
issued by the AASB that are relevant to the Company and effective for the current annual reporting period.
As a result of this review, the directors have determined that there is no material impact of the new and revised
Standards and Interpretations on the Company and, therefore, no material change is necessary to Group
accounting policies.
26
New accounting standards and interpretations
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet
effective and have not been adopted by the Group for the year ended 30 June 2019 with relevant standards and
interpretations outlined below.
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet
effective and have not been adopted by the Group for the year ended 30 June 2019 are outlined below.
a)
IFRIC 23 Uncertainty over Income Tax Treatments (effective from 1 July 2019)
This Interpretation clarifies the application of the recognition and measurement criteria in AASB 112 Income Taxes
when there is uncertainty over income tax treatments. The Interpretation specifically addresses the following:
•
•
•
•
whether an entity considers uncertain tax treatments separately;
the assumptions an entity makes about the examination of tax treatments by taxation authorities;
how an entity determines taxable profit, tax bases, unused tax losses, unused tax credits and tax rates;
and
how an entity considers changes in facts and circumstances.
Interpretation 23 is a clarification treatment of uncertain tax positions. The Group is not expecting a material impact
on the adoption of the interpretation. The Group has considered the impact on its Consolidated Financial
Statements and assessed that the effect of the new standard will be minimal.
b)
Annual Improvements 2015-2017 (effective 1 July 2019)
The amendments clarify certain requirements in: AASB 3 Business Combinations and AASB 11 Joint
Arrangements – previously held interest in a joint operation; AASB 112 Income Taxes – income tax consequences
of payments on financial instruments classified as equity; AASB 123 Borrowing Costs – borrowing costs eligible for
capitalisation.
The Group has considered the impact on its Consolidated Financial Statements and assessed that the effect of the
new standard will be minimal.
29
For personal use only Flinders Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
26
c)
New accounting standards and interpretations (continued)
Conceptual Framework for Financial Reporting (effective 1 July 2020)
The revised Conceptual Framework for Financial Reporting (the Conceptual Framework) is not a standard, and
none of the concepts override those in any standard or any requirements in a standard. The purpose of the
Conceptual Framework is to assist the Board in developing standards, to help preparers develop consistent
accounting policies if there is no applicable standard in place and to assist all parties to understand and interpret
the standards.
The Group has considered the impact on its Consolidated Financial Statements and assessed that the effect of the
new framework will be minimal.
d)
Amendments to AASB 10 and AASB 128 – Sale or Contribution of Assets between an Investor and its
Associate or Joint Venture (effective 1 July 2022)
The amendments clarify that a full gain or loss is recognised when a transfer to an associate or joint venture
involves a business as defined in AASB 3 Business Combinations. Any gain or loss resulting from the sale or
contribution of assets that does not constitute a business, however, is recognised only to the extent of unrelated
investors’ interests in associate or joint venture.
The Group has considered the impact on its Consolidated Financial Statements and assessed that the effect of the
new standard will be minimal.
e)
Amendments to AASB 119 - Employee benefits on plan amendment, curtailment or settlement (effective
1 July 2019)
These amendments require an entity to use updated assumptions to determine current service cost and net interest
for the remainder of the period after a plan amendment, curtailment or settlement; and recognise in profit or loss
as part of past service cost, or a gain or loss on settlement, any reduction in a surplus, even if that surplus was not
previously recognised because of the impact of the asset ceiling.
The Group has considered the impact on its Consolidated Financial Statements and assessed that the effect of the
new standard will be minimal.
There are no other standards that are not yet effective and that would be expected to have a material impact on
the entity in the current or future reporting periods and on foreseeable future transactions.
f)
AASB 16 Leases (effective from 1 July 2019)
AASB 16 distinguishes leases and services contracts based on whether an identified asset is controlled by the
customer. Distinctions between operating leases (previously off-balance sheet) and finance leases (previously
on balance sheet) are removed under the new standard and replaced by the concept of right of use. Where an
entity has control over and an ongoing right to use an asset, that asset will be recognised on the balance sheet as
an asset with a corresponding liability.
The Group has considered the impact on its consolidated Financial Statements and assessed that the effect of the
new standard is minimal. The Group will continue to assess its contracts and other arrangements that may be
impacted by the introduction of the revised standard
30
For personal use only Flinders Mines Limited
Directors’ Declaration
30 June 2019
In the Directors' opinion:
(a)
the Financial Statements and notes 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 30 June 2019 and of
its performance for the year ended on that date, and
with reference to Note 2(d), there are reasonable grounds to believe that the Company will be able to pay
its debts as and when they become due and payable, and
the financial statements and notes thereto are in accordance with the International Financial Reporting
Standards issued by the International Accounting Standards Board.
(b)
(c)
The Directors have been given the declarations by the Executive Director and Chief Financial Officer required by
section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of Directors.
Neil Warburton
Non-Executive Chair
Perth, Western Australia
18 September 2019
31
For personal use only Independent Auditor’s Report
To the shareholders of Flinders Mines Limited
Report on the audit of the Financial Report
Opinion
We have audited the Financial Report of Flinders
Mines Limited (the Company).
In our opinion, the accompanying Financial Report
of the Company is in accordance with the
Corporations Act 2001, including:
• giving a true and fair view of the Group’s
financial position as at 30 June 2019 and of its
financial performance for the year ended on
that date; and
The Financial Report comprises:
• Consolidated Statement of financial position as
at 30 June 2019
• Consolidated Statement of profit or loss and
other comprehensive income, Consolidated
Statement of changes in equity, and
Consolidated Statement of cash flows for the
year then ended
• Notes including a summary of significant
•
complying with Australian Accounting
Standards and the Corporations Regulations
2001
accounting policies
• Directors’ Declaration.
The Group consists of the Company and the entities
it controlled at the year-end or from time to time
during the financial year.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the
audit of the Financial Report section of our report.
We are independent of the Group in accordance with the Corporations Act 2001 and the ethical
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (the Code) that are relevant to our audit of the Financial Report in Australia. We
have fulfilled our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the Directors of Flinders Mines Limited, would be in the same terms if given to the Directors as at
the time of this Auditor’s Report.
Material uncertainty related to going concern – emphasis of matter
We draw attention to Note 2(d), “Going Concern” in the 30 June 2019 Financial Report. The conditions
disclosed in Note 2(d), indicate a material uncertainty exists that may cast significant doubt on the
Company’s ability to continue as a going concern and, therefore, whether it will realise its assets and
discharge its liabilities in the normal course of business, and at the amounts stated in the 30 June 2019
Financial Report. Our conclusion is not modified in respect of this matter.
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under
Professional Standards Legislation.
For personal use only
In concluding there is a material uncertainty related to going concern, we evaluated the extent of
uncertainty regarding events or conditions casting significant doubt of the Company’s plans to raise in the
company’s assessment of going concern. Our approach involved:
• Evaluating the feasibility, quantum and timing of the Company’s plans to raise additional funding to
address going concern
• Assessing the Company’s cash flow forecasts and plans to address going concern, in particular the
funding of ongoing administration and exploration and evaluation costs and the progression of the
Pilbara Iron Ore Project (PIOP) non-binding Term Sheet with BBI Group Pty Ltd (BBIG) announced on 2
September 2019
• Determining the completeness of the Company’s going concern disclosures for the principal matters
casting significant doubt on the Company’s ability to continue as a going concern, the Company’s
plans to address these matters and the material uncertainty
Key Audit Matters
Key Audit Matters are those matters that, in our professional judgement, were of most significance in our
audit of the Financial Report of the current year.
These matters were addressed in the context of our audit of the Financial Report as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
In addition to the matter described in the Material uncertainty related to going concern section, we have
determined the matter described below to be a Key Audit Matter.
Exploration and Evaluation Expenditure $61.126 million
Refer to Note 10 to the Financial Report
The key audit matter
How the matter was addressed in our audit
Exploration and evaluation expenditure capitalised
(E&E) is a key audit matter due to:
•
•
the significance of the activity to the Group’s
business and the balance (being 96.6% of total
assets); and
the greater level of audit effort to evaluate the
Group’s application of the requirements of
AASB 6 Exploration for and Evaluation of
Mineral Resources to the Pilbara Iron Ore
Project (PIOP) in particular the evaluation of
development options to progress the feasibility
of the project. The presence of impairment
indicators would necessitate a detailed analysis
by the Group of the value of E&E. Given the
criticality of this to the scope of our work, we
involved senior team members to challenge
the Group’s determination that no such
indicators existed.
Our procedures included:
• Evaluating the Group’s accounting policy to
recognise exploration and evaluation assets
using the criteria in the accounting standard;
• We assessed the Group’s determination of its
areas of interest for consistency with the
definition in the accounting standard. This
involved analysing the licenses in which the
Group holds an interest and the exploration
programmes planned for those for consistency
with documentation such as license related
technical conditions and planned work
programmes
• For each area of interest, we assessed the
Group’s current rights to tenure by checking the
ownership of the relevant license to government
registries. We also tested for compliance with
conditions, such as minimum expenditure
requirements, on a sample of licenses;
For personal use only
The key audit matter
How the matter was addressed in our audit
In assessing the conditions allowing capitalisation
of relevant expenditure, we focused on:
•
the determination of the areas of interest
(areas);
• documentation available regarding rights to
tenure, via licensing, and compliance with
relevant conditions, to maintain current rights
to an area of interest and the Group’s intention
and capacity to continue the relevant E&E
activities;
•
the Group’s determination of whether the E&E
are expected to be recouped through
successful development and exploitation of the
area of interest.
In assessing the presence of impairment
indicators, we focused on those that may draw
into question the commercial continuation of E&E
activities for PIOP where significant capitalised
E&E exists. In addition to the assessments above,
and given the financial position of the group, we
paid particular attention to:
• The ability of the Group to fund the
continuation of activities
Results from latest activities regarding the
existence or otherwise of economically
recoverable reserves.
• We tested the Group’s additions to E&E for the
year by evaluating a statistical sample of
recorded expenditure. We tested consistency to
underlying records, the capitalisation
requirements of the Group’s accounting policy,
and the requirements of the accounting
standard;
• We evaluated Group documents, such as
minutes of Board meetings, for consistency
with their stated intentions for continuing E&E in
certain areas. We challenged this through
interviews with key operational and finance
personnel.
• We obtained project and corporate budgets
identifying areas with existing funding and those
requiring alternate funding sources. We
compared this for consistency with areas with
E&E, for evidence of the ability to fund
continued activities.
We analysed the Group’s determination of
recoupment through successful development and
exploitation of the area by evaluating the Group’s
documentation of planned future activities including
work programmes, project budgets and
infrastructure options for a sample of areas.
Other Information
Other Information is financial and non-financial information in Flinders Mines Limited’s annual reporting
which is provided in addition to the Financial Report and the Auditor’s Report. The Directors are
responsible for the Other Information.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not
express an audit opinion or any form of assurance conclusion thereon, with the exception of the
Remuneration Report and our related assurance opinion.
In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In
doing so, we 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.
We are required to report if we conclude that there is a material misstatement of this Other Information,
and based on the work we have performed on the Other Information that we obtained prior to the date of
this Auditor’s Report we have nothing to report.
For personal use only
Responsibilities of the Directors for the Financial Report
The Directors are responsible for:
• preparing the Financial Report that gives a true and fair view in accordance with Australian
Accounting Standards and the Corporations Act 2001
•
implementing necessary internal control to enable the preparation of a Financial Report that gives a
true and fair view and is free from material misstatement, whether due to fraud or error
• assessing the Group and Company’s ability to continue as a going concern and whether the use of
the going concern basis of accounting is appropriate. This includes disclosing, as applicable,
matters related to going concern and using the going concern basis of accounting unless they
either intend to liquidate the Group and Company or to cease operations, or have no realistic
alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objective is:
•
•
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 Australian Auditing Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error. They 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:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our Auditor’s
Report.
Report on the Remuneration Report
Directors’ 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 responsibilities
We have audited the Remuneration Report included in pages 10 to 12 of the Directors’ report for the year
ended 30 June 2019.
Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
KPMG
R Gambitta
Partner
Perth
18 September 2019
For personal use only
Flinders Mines Limited
Additional Information
As at 5 September 2019
Additional information required by the Australian Securities Exchange Limited and not shown elsewhere in this
report is as follows. The information is current as at 5 September 2019.
Issued Equity Capital
Number of holders
Number on issue
Voting Rights
Ordinary Shares
4,028
3,485,170,081
Options
Nil
Nil
Voting rights, on a show of hands, are one vote for every registered holder of Ordinary Shares and on a poll, are
one vote for each share held by registered holders of Ordinary Shares. Options do not carry any voting rights.
Distribution of Holdings of Equity Securities
Holding ranges
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Unmarketable Parcels
Number of Equity Security Holders
Ordinary Shares
363
445
670
1,756
794
4,028
Units
36,809
1,626,710
5,470,138
65,364,754
3,412,671,670
3,485,170,081
The number of shareholders holding less than a marketable parcel (which as at 5 September 2019 was 9,091
Shares) was 1,194.
Substantial Shareholders
TIO (NZ) Limited
OCJ Investment (Australia) Pty Ltd
Various Requisitioning Shareholders1
Number of Ordinary
Shares
1,936,250,459
758,160,000
210,302,405
Percentage (%)
55.56
21.75
6.03
1 On 13 March 2019, various Shareholders lodged a Form 603 (Becoming a Substantial Shareholder Notice) with
ASX disclosing an association pursuant to sections 12(2)(b) or (c) of the Corporations Act by reason of notices
issued under sections 203D and 249D of the Corporations Act requiring the Company to call and arrange to hold
a general meeting to consider resolutions to remove, as directors of the Company, Mr Neil Warburton, Mr Michael
Wolley, Mr Evan Davies and any other persons appointed as directors of the Company prior to the requisitioned
meeting, and to elect Mr Brendon Dunstan as a director of the Company. These resolutions were subsequently not
carried at a general meeting of shareholders on 9 May 2019.
On Market Buy Back
There is no current on-market buy-back.
For personal use only Top 20 Shareholders
Rank Name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
20
TIO (NZ) LIMITED
OCJ INVESTMENT (AUSTRALIA) PTY LTD
MR KENNETH MARTIN KEANE
CITICORP NOMINEES PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
MR KENNETH MARTIN KEANE + MS SALLY MORTON
ROBERTS
Continue reading text version or see original annual report in PDF format above