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2021 ReportFlinders Mines Limited
ABN 46 091 118 044
Annual Report
for the year ended 30 June 2020
For personal use only
Flinders Mines Limited
Annual Report - 30 June 2020
Contents Page
Corporate Directory
Chairman’s Report
Directors' Report
Auditors Independence Declaration
Financial Statements
Directors’ Declaration
Independent Auditor's Report to the Members
Additional Information
Interest in Mining Tenements
Mineral Resources and Ore Reserves Information
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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
Michael Wolley
Evan Davies
James Gurry
Officers
Non-Executive Director
Non-Executive Director
Independent Non-Executive Director
Andrew Whitehead
General Manager
Joint Company Secretaries
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.
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Flinders Mines Limited
Chairman’s Report
Chairman’s Report
Dear Shareholders,
I am pleased to present the Flinders Mines Limited Annual Report for the financial year ended 30 June 2020, a
landmark year that saw the Company complete a strategic transaction with BBI Group Pty Ltd (BBIG) to progress
the Company’s flagship Pilbara Iron Ore Project (PIOP) in Western Australia and unlock value for all shareholders
(Transaction).
Following Flinders’ shareholder approval of the Transaction in March 2020, the Company announced on 4
September 2020 that all conditions precedent for the farm-in incorporated joint venture with BBIG had been
satisfied or waived and the joint venture could proceed.
The formation of the joint venture will allow BBIG to start the feasibility studies for the PIOP development and
perform its other obligations under the farm-in agreement for its initial 10% voting interest in the incorporated joint
venture entity, PIOP Mine Co NL. Flinders retains 100% economic ownership of PIOP Mine Co NL until a final
investment decision (FID) by BBIG.
The main material advantages for Flinders Shareholders derived from the Transaction are:
•
•
•
•
•
•
•
Flinders interest in the mining joint venture to be free carried to 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 for PIOP iron ore products;
Flinders to retain control of PIOP until FID, and if 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 at FID or continue to be free carried to first production as a
40% equity holder in PIOP Mine Co NL (subject to pro rata responsibility for capital cost overruns above
an agreed contingency during construction).
During the financial year, the Company raised a total of $13.743 million (before costs) via two pro-rata non-
renounceable equity raisings. Funds raised under the Entitlement Offers were used to repay the $7 million
unsecured loan (including accrued interest) from PIO, a subsidiary of Flinders’ major shareholder, TIO (NZ) Limited
(TIO), costs of the Offers and to provide working capital.
During the year, laboratory metallurgical test work was conducted on RC chip samples from the Company’s
Canegrass vanadiferous, titaniferous, magnetite (VTM) project to commence the assessment of the ore
characteristics. The preliminary results on the small number of samples showed the upgrading of certain minerals.
However, further testwork is required and being planned to determine whether the results were a common feature
within Canegrass, or whether anomalous to the small samples selected for the testwork.
During the year we welcomed new independent Non-Executive Director Mr James Gurry and, following a review
of the Company’s executive requirements as it moves into the next phase of development of the PIOP, in June
2020, the Company appointed Dr Andrew Whitehead as General Manager. Dr Whitehead has more than 20 years’
experience across mining, resources, banking, finance, manufacturing, advisory and government and in multiple
jurisdictions, including China.
The Company ended the financial year with $4.1 million in cash and a long-term unsecured fully drawn debt facility
of $3 million, repayable by 30 June 2022.
In conclusion, I would like to thank the Board and our staff for their significant contribution to the Company and all
shareholders for their continued support. In particular, on behalf of the Board, I would like to recognise our former
CEO, David McAdam’s significant contribution over the last few years culminating in shareholders approving the
farm-in agreement with BBIG in March 2020.
The progress made during the 2020 financial year puts the Company, via its joint venture partner to progress the
PIOP and unlock significant value for all Flinders’ shareholders and I look forward to reporting further progress
during the 2021 financial year.
Neil Warburton
Chairman
Perth, Western Australia
22 September 2020
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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 2020.
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.
Title
Non-Executive Chairman
Name
Neil Warburton
The Hon. Cheryl Edwardes AM Non-Executive Deputy Chair
Michael Wolley
Evan Davies
James Gurry
Shannon Coates
David McAdam 1
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Executive Director
Appointment
19 October 2016
17 June 2019
19 October 2016
19 October 2016
18 September 2019
20 June 2018
19 October 2016
Resignation
25 November 2019
9 July 2019
1 Mr McAdam resigned as Executive Director and was appointed as Chief Executive Officer on 9 July 2019. Mr
McAdam resigned as Chief Executive Officer on 23 March 2020 with his 3-month notice period bringing his last
effective day to 23 June 2020.
Company Secretary
On 30 August 2019, Ms Shannon Coates was appointed as Joint Company Secretary with Ms Sarah Wilson. Ms
Coates resigned as a Director on 25 November 2019.
Information on Directors
Neil Warburton
Qualifications
Experience
Independent Non-Executive Chair
Assoc. MinEng WASM, MAusIMM, FAICD
Mr Warburton has over 40 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, member of Audit and
Risk Committee and member of the PIOP Infrastructure Committee.
Directorships held in other ASX
listed entities in the last three
years
Non-Executive Director of IGO Limited (October 2015 to date).
Previously a Non-Executive Director of Australian Mines Limited (April 2003
to December 2017) and Coolgardie Minerals Limited (July 2017 to May
2020).
The Hon. Cheryl Edwardes,
AM
Qualifications
Experience
Interest in FMS Shares and
Options at the date of this report
Special responsibilities
Directorships held in other ASX
listed entities in the last three
years
Independent Non-Executive Deputy Chair
LLM, B. Juris, BA
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.
516,149 fully paid ordinary shares.
Chair of PIOP Infrastructure Committee and Audit and Risk Committee and
member of Nominations and Remuneration Committee.
Non-Executive Chair of Vimy Resources (May 2014 to date) and Nuheara
Limited (January 2020 to date).
Previously a Non-Executive Director of CropLogic Limited (March 2018 to
February 2019) and AusCann Group Holding Limited (May 2016 to January
2020).
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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 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
James Gurry
Qualifications
Experience
Interest in FMS Shares and
Options at the date of this report
Special responsibilities
Independent Non-Executive Director
B.Com (Hons), CA, GAICD
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
1,012,345 fully paid ordinary shares.
Member of PIOP Infrastructure Committee, Audit and Risk Committee and
Nominations and Remuneration Committee.
Directorships held in other ASX
listed entities in the last three
years
Nil
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Directors’ Report
David McAdam
Executive Director (resigned 9 July 2019)
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 until his resignation
as Executive Director and member of the PIOP Infrastructure Committee
until his resignation as Chief Executive Officer.
Directorships held in other ASX
listed entities in the last three
years
Nil
Shannon Coates
Independent Non-Executive Director (resigned 25 November 2019)
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, PIOP Infrastructure Committee and
Nominations and Remuneration Committee until her resignation as Director.
Directorships held in other ASX
listed entities in the last three
years
Non-Executive Director of Vmoto Limited (May 2014 to date) and Bellevue
Gold Limited (May 2020 to date).
Previously a Director of Kopore Metals Limited (October 2015 to March
2020).
Sarah Wilson
Joint Company Secretary
Experience
Meeting of Directors
Ms Wilson is a Corporate Advisor with Evolution Corporate Services Pty Ltd
and has over 10 years’ experience in company secretarial, corporate
advisory and corporate governance roles, which have included the provision
of company secretarial services to a number of 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 2020, and the numbers of meetings attended by each Director were:
Full meetings
of Directors
Audit & Risk
Committee
Nominations &
Remuneration
Committee
PIOP
Infrastructure
Committee
N Warburton
C Edwardes
M Wolley
E Davies
J Gurry 1
S Coates 2
D McAdam 3
A
19
19
19
19
13
8 4
1 5
B
19
19
19
19
13
8
1
A
2
2
2
2
1
1 6
2 7
B
2
2
2
2
1
1
-
A
3
3
3
3
3
3 8
-
B
3
3
3
3
3
-
-
A
15
15
3
3
7
14
15
B
15
15
-
-
7
15
15
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Directors’ Report
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 = Mr Gurry was appointed as a Director on 18 September 2019.
2 = Ms Coates resigned as a Director on 25 November 2019 however remained as Joint Company Secretary.
3 = Mr McAdam resigned as Executive Director on 9 July 2019 however remained as Chief Executive Officer.
4 = Ms Coates attended 11 Full Meetings of Directors in her capacity as Joint Company Secretary following her
resignation as Director.
5 = Mr McAdam attended 18 Full Meetings of Directors in his capacity as Chief Executive Officer, following his
resignation as Executive Director.
6 = Ms Coates attended 1 Committee Meeting in her capacity as Joint Company Secretary following her resignation
as a Director.
7 = Mr McAdam attended 2 Committee Meetings as an Invitee.
8 = Ms Coates attended 3 Committee Meetings in her capacity as Joint Company Secretary following her resignation
as a Director.
Principal Activities
The Group's principal continuing activities during the year consisted of progression of finding an infrastructure
solution for its Pilbara Iron Ore Project (PIOP) and mineral exploration on its Canegrass Project.
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 (2019: $nil).
Operating Results and Financial Position
The net result of operations for the financial year was a loss of $8.038 million (2019: loss of $5.470 million).
Review of Operations
Corporate
Director and Management Changes
As part of the Board renewal process to seek wider Board representation of shareholders, and as announced on
17 June 2019, the Company appointed Mr James Gurry as a Non-Executive Director on 18 September 2019, with
Ms Shannon Coates resigning as a Director following a period of transition on 25 November 2019.
Following the successful General Meeting vote on the proposed Farm-In Agreement with BBI Group Pty Ltd (BBIG)
on 3 March 2020, the Board assessed a range of executive and governance resource requirements and resolved
that Mr David McAdam’s employment contract as Chief Executive Officer would end on 23 March 2020, with a 3
month notice period bringing his last effective day to 23 June 2020.
Following the completion of the abovementioned Board and management assessment, Dr Andrew Whitehead was
appointed as the Company’s Perth based General Manager on 17 June 2020.
PIOP Farm-In Transaction
As announced on 17 June 2019, the Company established a PIOP Infrastructure Committee on 31 May 2019, a
committee independent of its largest shareholder, TIO (NZ) Limited (TIO), to consider potential future infrastructure
and capital alternatives for the PIOP. PricewaterhouseCoopers completed a review of all potential infrastructure
solutions by assessing currently operating ports and proposed ports as well as associated rail infrastructure in the
Pilbara region against key criteria, including, timing, current and future port capacity, project approval status, upfront
capital expenditure requirements and the strategic importance of the PIOP against the potential infrastructure
provider.
This independent review found the BBIG Balla Balla Infrastructure Project to be the most favourable transport
option for the PIOP to meet its requirements. Following completion of this review, the Company announced on 2
September 2019, it had negotiated a non-binding Terms Sheet with BBIG to jointly develop the PIOP.
On 28 November 2019, the Company announced it had entered into binding agreements with BBIG in relation to
a farm-in incorporated joint venture for the PIOP, subject to shareholder approval, with the Company’s largest
shareholder, TIO, excluded from voting (Transaction).
The Extraordinary General Meeting was held on 3 March 2020, at which Shareholders voted in favour of the
proposed Transaction.
The key terms of the Transaction are:
•
•
•
•
•
Flinders interest in the joint venture to be free carried to Final Investment Decision (FID);
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 if FID does not occur in an agreed timeframe, Flinders to
retain 100% of the PIOP;
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Directors’ Report
•
•
provision of significant governance protocols and minority shareholder protections; and
optionality for Flinders to convert to a royalty 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).
Following shareholder approval of the Transaction, the Company progressed its conditions precedent to the
transaction documents, including obtaining Foreign Investment Review Board approval on 1 June 2020 and set up
of an incorporated joint venture vehicle, PIOP Mine Co NL. Following the establishment of PIOP Mine Co NL, the
tenements related to the PIOP were transferred to PIOP Mine Co NL, along with the relevant regulatory approvals.
Subsequent to year end, Flinders was notified that BBIG had received its Foreign Investment Review Board
approval and that all conditions precedent were now complete. Full and final completion of the Transaction
occurred on 3 September 2020. Completion will enable the advancement of the PIOP feasibility studies to
potentially bring PIOP Iron ore to market.
Short-term Loan Facility
On 2 September 2019, the Company announced that it agreed a Loan Facility and Subscription Agreement with
PIO Mines Pty Limited, a subsidiary of the Company’s largest shareholder, TIO (Loan Facility). This Loan Facility
was for an amount of $5.000 million, at an interest rate of the 6-month bank bill swap rate (BBSR) with a 2% per
annum margin. The Loan Facility was unsecured and has a maturity of the earlier of 30 April 2020 or within 14
days of the closing of any capital raising the Company may undertake.
On 20 December 2019, the Company announced that the terms of this Loan Facility were varied to make available,
a further $2.000 million.
This Loan Facility was fully drawn to $7.000 million in January 2020.
Subscription Agreement
On 2 September 2019, the Company also entered into a Subscription Agreement with its largest shareholder, TIO.
The Company intended to undertake a pro rata rights issue post the shareholder general meeting seeking approval
for the Transaction, to repay the abovementioned Loan Facility and for working capital purposes.
TIO agreed to subscribe for the number of the Company’s shares under the pro rata rights issue equal to the lesser
of its pro rata entitlement of $6.000 million, subject to, amongst other things, TIO Board approval once the terms
of the rights issue were determined and no later than 30 April 2020.
On 20 December 2019, the Company announced that the terms of this Subscription Agreement were varied, with
TIO subscribing to a further $2.000 million (maximum $8.000 million) and subject to the same conditions as above.
Capital Raisings
In March 2020, the Company announced a non-renounceable entitlement offer at $0.025 to raise up to $14.520
million in order to repay its Loan Facility with PIO Mines Pty Ltd of $7.000 million and accrued interest and fees
associated with the BBIG Transaction. If the proceeds were insufficient for the Company to repay the Loan Facility
in full whilst retaining a $3.000 million working capital balance, then the Loan Facility would be partially repaid, with
the remaining amount due on or before 30 June 2020 and a second capital raising would be considered to ensure
the balance of the Loan Facility was repaid by 30 June 2020.
In April 2020, the Company announced that it had received valid applications for a total of 347,892,602 fully paid
ordinary shares for a total of $8,697,315.80. In accordance with the above paragraph, $5,624,406.80 of the Loan
Facility principal and accrued interest was repaid to PIO Mines Pty Lt in late April 2020.
In May 2020, the Company announced a further non-renounceable entitlement offer at $0.013 to raise up to $5.500
million in order to repay the remaining Loan Facility amount and provide working capital funds. In June 2020, the
Company announced that it had received valid applications for 388,123,198 fully paid ordinary shares for a total of
$5,045,601.57. Following the receipt of these funds and before 30 June 2020, the remaining outstanding
$1,495,885.90 in principal and accrued interest of the Loan Facility was repaid to PIO Mines Pty Ltd.
Pilbara Iron Ore Project, Western Australia
During the year ended 30 June 2020, the Company focussed on the progression of an infrastructure solution to
unlock the value in the PIOP. As part of this process, a Scoping Study was released on 7 January 2020. The
Scoping Study was based on data acquired and developed during the Maturation Programme undertaken in 2017
and 2018, including updated metallurgical, hydrogeological and geotechnical assessments.
Canegrass, Western Australia
The Company engaged CSA Global Pty Ltd to design and execute an exploration program with the objective to
collect metallurgical drill samples from the Vanadium Titanium Magnetite (‘VTM’) Mineral Resource, complete
preliminary metallurgical testwork on the VTM samples and continue the evaluation of the gold potential.
The program included on ground activities including soil sampling and three RC drill holes (294m total).
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Directors’ Report
Soil sampling programme
In November 2019, Flinders completed a soil sampling programme on E58/236 targeting gold mineralisation along
a structural trend north of the Honeypot gold prospect. A total of 29 soil samples were collected at 40m spacing
along two W-E oriented lines 1km apart. In addition, 23 soil samples were collected in the north of E58/521 targeting
VTM mineralisation. The results of these soil sampling activities showed no anomalous results were observed.
Drill programme
In December 2019, Flinders completed three Reverse Circulation Percussion (RCP) drill holes.
•
•
•
E58/236 – 1 drill hole 126m
E58/232 - 1 drill hole 60m (Kinks)
E58/282 – 1 drill hole 108m (Fold Nose)
The purpose was to collect Resource Grade samples for metallurgical test work. The drill holes were collared on a
previously cleared drill section and adjacent to known mineralisation.
Preliminary results on the 147 assays were encouraging showing the upgrading of certain minerals. Further test
work is required and being planned to determine whether the encouraging results were a common feature within
Canegrass, or whether anomalous to the small samples selected for the test work.
COVID-19 Pandemic Response
In March 2020, the COVID-19 outbreak was declared a pandemic by the World Health Organisation. At the date of
this report, the pandemic, together with the various Government measures so far introduced, have not significantly
affected the Company itself, as outlined below.
The Company has implemented controls as necessary to protect the health and safety of its workforce and their
families while ensuring a safe environment to allow activities to continue.
The Company’s COVID-19 response protocols reinforce and operate concurrently with public health advice to
include:
•
•
•
•
•
•
social distancing protocols;
suspension of large indoor gatherings;
cancellation of all non-essential travel;
flexible and remote working plans for employees;
self-isolation following international travel, development of symptoms, or interaction with a confirmed case
of COVID; and
increased focus on cleaning and sanitation.
No adjustments have been made to the Group’s result as at 30 June 2020 for the impacts of COVID-19. However,
the scale and duration of possible future Government measures, and their impact on the Company’s activities,
necessarily remains uncertain.
Likely Developments and Business Strategies
The likely developments of the Group and the expected results of those developments are as follows:
•
•
Following completion of the Farm-In Agreement conditions precedent, BBIG commenced its feasibility
study on 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 20 August 2020, the Company received notification from BBIG that it had received a no objection notification
from the Foreign Investment Review Board in relation to its application to acquire its initial 10% voting interest in
PIOP Mine Co NL, subject to BBIG complying with customary conditions.
On 4 September 2020, the Company announced that all conditions precedent had been completed in relation to
the PIOP Farm-In Agreement. Completion of all conditions precedent will enable the advancement of the PIOP
feasibility studies to bring PIOP Iron ore to market.
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. Subject to ongoing rehabilitation, the
Group believes it has complied with all environmental obligations.
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Directors’ Report
Heritage and Community Relations
The Company recognises the importance of establishing relationships with the Traditional Owners that are based
on trust and mutual advantage and are respectful of the needs and concerns of the communities located within the
regions in which it operates. The Company has agreements in place with the Traditional Owners and is committed
to building strong relationships by:
•
•
•
•
•
Being open and transparent in its communications;
Improving cross-cultural awareness through training and education;
Developing community relations management procedures that include business alliances;
Being sensitive to the values and heritage issues of the local communities; and
Being a good neighbour.
Audited Remuneration Report
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
The Hon. Cheryl Edwardes AM
Michael Wolley
Evan Davies
James Gurry
Shannon Coates
David McAdam1
Andrew Whitehead
Independent Non-Executive Chair
Independent Non-Executive Deputy Chair
Non-Executive Director
Non-Executive Director
Independent Non-Executive Director (appointed 18 September 2019)
Independent Non-Executive Director (resigned 25 November 2019)
Chief Executive Officer (resigned 23 March 2020)
General Manager (appointed 17 June 2020)
1 Mr McAdam resigned as Executive Director on 9 July 2019 and was appointed Chief Executive Officer. Mr
McAdam resigned as Chief Executive Officer on 23 March 2020, with his 3-month notice period bringing his last
effective day to 23 June 2020.
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 in relation to additional
Director fees. 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 $11,500.
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
to 23 June 2020) was determined by the Directors as part of the terms and conditions of his employment which
were 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.
11
For personal use only
Flinders Mines Limited
Directors’ Report
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.
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 was 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 was to be paid out by the Company is calculated at 4 days per week. The Chief Executive
Officer Services Agreement also included a short-term incentive of $200,000 plus GST in the event the Company
had a binding agreement approved by the Company’s shareholders for an infrastructure solution for the PIOP
before 31 March 2020. This was subsequently paid on 3 April 2020.
The Company has no other short or long-term performance related milestones and obligations on its KMP.
The remuneration of the Company’s General Manager, Dr Whitehead, 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 Dr Whitehead’s role were formalised in a Contractor Agreement.
Dr Whitehead’s term commenced on 17 June 2020 and the Contractors Agreement 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 notice period.
Terms of Employment
Dr Whitehead’s terms of employment as General Manager was formalised in a Contractor Agreement and
contained the following material terms:
Name
A Whitehead
Compensation
$3,000 per week (2 days
per week)
Notice Period and Term
Term of 12 months, subject to an annual review.
Notice period of 30 days.
The previous Chief Executive Officer Service Agreement with Mr McAdam contained the following material terms:
Name
D McAdam
Compensation
$3,250 per day
for a
minimum of 4 days per
week. This was revised
to a maximum of 4 days
per week in March 2020.
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 included a short-term incentive, whereby Mr McAdam was
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 March 2020. This was paid in
April 2020.
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 2020, Messrs Warburton, Gurry and Ms Edwardes and Ms Coates were paid
additional fees as detailed in the table below in relation to the considerable additional time committed by the
independent Non-Executive Directors during the PIOP infrastructure review process, BBIG transaction negotiations
and associated meetings.
For the year ended 30 June 2021, the Board resolved to reduce the director fees paid to the Non-Executive
Chairperson from $188,000 to $100,000 per annum and Non-Executive Directors from $119,000 to $70,000 per
annum.
12
For personal use only Flinders Mines Limited
Directors’ Report
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.
2020
Salary &
Service
Contract
Additional
Fees 2
N Warburton
C Edwardes
M Wolley 1
E Davies 1
J Gurry
S Coates 4
Subtotal Non-
Executive
Directors
$
Non-Executive Directors
$
188,000
108,676
119,000
119,000
86,523
43,331
664,530
45,000
60,000
-
-
30,000
37,000
172,000
Other KMP
PIOP
Infrastructure
Committee
Chair Fee
$
-
50,000
-
-
-
-
50,000
Success
Fee 3
Super-
annuation
Total
$
-
-
-
-
-
-
-
$
$
-
10,324
-
-
8,220
4,116
22,660
233,000
229,000
119,000
119,000
124,743
84,447
909,190
D McAdam
A Whitehead 5
Subtotal Other
KMP
Total
942,500
6,000
948,500
-
-
-
-
-
-
200,000
-
200,000
-
-
-
1,142,500
6,000
1,148,500
1,613,030
172,000
50,000
200,000
22,660
2,057,690
1 Messrs Wolley and Davies Non-Executive Director Fees are paid directly to the Company’s major shareholder,
TIO.
2 These additional fees are noted in the Non-Executive Director Remuneration Policy section and are excluded
from the maximum aggregate Director fee pool of $750,000 per rolling 12-months.
3 Mr McAdam was paid a success fee as a result of the successful outcome of the General Meeting held in March
2020 as noted in the Executive Remuneration Policy and Framework section.
4 Ms Coates resigned on 25 November 2019.
5 Dr Whitehead was appointed on 17 June 2020.
2019
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
Salary &
Service
Contract
$
188,000
4,180
119,000
119,000
102,596
532,776
Additional
Fees 4
$
64,000
-
64,000
64,000
64,000
256,000
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 additional 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.
No remuneration
exercised/lapsed during the years ended 30 June 2020 and 30 June 2019.
linked
is
to performance and no share-based payments were received/granted or
13
For personal use only Flinders Mines Limited
Directors’ Report
Share holdings
Name
N Warburton
C Edwardes
M Wolley
E Davies
J Gurry
S Coates
D McAdam
A Whitehead
Held at 1 July
2019
-
-
-
-
-
-
-
-
as
Granted
compensation
-
-
-
-
-
-
-
-
On exercise of
options/rights
Other Changes Held at 30 June
2020
-
-
-
-
-
-
-
-
-
516,149
-
-
1,012,345
-
-
-
-
516,149
-
-
1,012,345
-
-
-
Other changes refer to sales/purchases on market and participation in entitlement offers.
There were no shares granted during the reporting period as compensation (2019: nil).
Other Transactions with KMP and their Related Parties
During the year ended 30 June 2020, the Company paid Director fees to TIO, its major shareholder, for Director
services provided by Messrs Wolley and Davies. The total value of these services was $238,000 (2019:
$366,000).
In April and June 2020, the Company repaid the $7.000 million Loan Facility plus accrued interest of $120,293 with
PIO Mines Pty Ltd (PIO), a subsidiary of its major shareholder, TIO. As at 30 June 2020, the Company has an
unsecured $3.000 million loan with PIO, repayable on 30 June 2022. Interest is capitalised annually at a rate of
BBSW plus a 2% margin. The value of interest capitalised at 30 June 2020 is $122,409.
During the year ended 30 June 2020 and up until the date of Ms Coates resignation as a Director, 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 $70,244 (2019: $95,352).
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 paid in the period ended 30
June 2019 $154,560. This agreement was terminated on 24 June 2019.
The above transactions are all entered into at arm’s length terms.
Voting and comments made at the Company’s 2019 Annual General Meeting
At the Company’s 2019 Annual General Meeting (AGM), there were no comments or queries on the remuneration
report. However, 31.89% of shareholders voted against the remuneration report resulting in a second strike (2018
AGM: 34.18% of votes were cast against the remuneration report, resulting in the first strike). In the 2019 Notice
of Meeting, the Company included a contingent resolution to hold another general meeting within 90 days (Spill
Meeting) if a second strike occurred. 64.45% of Shareholders did not vote in favour of a Spill Meeting. In the
year ending 30 June 2020, no further action has been taken in response to the second strike.
For the year ended 30 June 2021, the Board resolved to reduce the fees paid to the Non-Executive Chairperson
from $188,000 to $100,000 per annum and Non-Executive Directors from $119,000 to $70,000 per annum.
Options Granted over Unissued Shares
End of the Audited Remuneration Repot.
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 $185,861 to the auditor of the Group, KPMG, for provision of taxation advice services.
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 page 16.
14
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.
This report is made in accordance with a resolution of Directors.
Neil Warburton
Non-Executive Chair
Perth, Western Australia
22 September 2020
15
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 2020 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
KPM_INI_01
R Gambitta
Partner
Perth
22 September 2020
PAR_SIG_01
PAR_NAM_01
PAR_POS_01
PAR_DAT_01
PAR_CIT_01
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 2020
Finance income
Other income
Administrative & other expenses
Finance costs
Loss before income tax
Income tax expense
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
2020
$’000
17
29
(7,873)
(211)
(8,038)
(48)
(8,086)
-
(8,086)
Cents
(0.197)
The above statement should be read in conjunction with the accompanying notes.
2019
$’000
56
1
(5,459)
(55)
(5,457)
(13)
(5,470)
-
(5,470)
Cents
(0.159)
17
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
Provisions
Total current liabilities
Non-current liabilities
Loans and borrowings
Provisions
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 2020
Notes
8
9
10
11
13
12
13
14
2020
$’000
4,101
47
405
4,553
64,982
-
64,982
69,535
502
85
587
3,122
665
3,787
4,374
2019
$’000
1,700
83
379
2,162
61,126
1
61,127
63,289
640
-
640
3,032
-
3,032
3,672
65,161
59,617
160,694
(95,533)
65,161
147,064
(87,447)
59,617
The above statement should be read in conjunction with the accompanying notes.
18
For personal use only Flinders Mines Limited
Consolidated Statement of Changes in Equity
For the year ended 30 June 2020
Contributed
equity
$’000
Accumulated
losses
$’000
138,859
-
-
8,205
147,064
-
-
(81,977)
(5,470)
(5,470)
-
(87,447)
(8,086)
(8,086)
Total equity
$’000
56,882
(5,470)
(5,470)
8,205
59,617
(8,086)
(8,086)
13,630
160,694
-
(95,533)
13,630
65,161
Balance at 1 July 2018
Loss for the year
Total comprehensive loss for the year
Transactions with owners in their capacity
as owners:
Contributions of equity, net of costs
Balance as at 30 June 2019
Loss for the year
Total comprehensive loss for the year
Transactions with owners in their capacity
as owners:
Contributions of equity, net of costs
Balance as at 30 June 2020
The above statement should be read in conjunction with the accompanying notes.
19
For personal use only Flinders Mines Limited
Consolidated Statement of Cash Flows
For the year ended 30 June 2020
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
Payments for exploration activities
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 increase (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
2020
$’000
(7,868)
(120)
17
(7,971)
(3,209)
(3,209)
13,743
(162)
7,000
(7,000)
13,581
2,401
1,700
4,101
The above statement should be read in conjunction with the accompanying notes.
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
20
For personal use only Flinders Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
1
Corporate information
The consolidated financial report of Flinders Mines Limited for the year ended 30 June 2020 was authorised for
issue in accordance with a resolution of the Directors on 22 September 2020. 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.
21
For personal use only Flinders Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
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.
2020
Segment result
Capital expenditure
Total segment assets
Total segment liabilities
2019
Segment result
Capital expenditure
Total segment assets
Total segment liabilities
Pilbara Iron Ore
$’000
-
2,387
63,028
823
-
1,984
59,891
105
Canegrass
$’000
-
719
1,954
12
-
691
1,235
38
A reconciliation of segment loss to operating loss before income tax is provided as follows:
Total segment loss
Finance income
Other income
Administrative and other expenses
Finance cost
Loss before income tax
Reportable segments' assets are reconciled to total assets as follows:
Segment assets
Unallocated:
Cash and cash equivalents
Trade and other receivables
Other current assets
Plant and equipment
Total assets
2020
$’000
-
17
29
(7,873)
(211)
(8,038)
2020
$’000
64,982
4,101
47
405
-
69,535
Reportable segments' liabilities are reconciled to total liabilities as follows:
Segment liabilities
Unallocated:
Trade and other payables
Loans and borrowings
Total liabilities
2020
$’000
835
417
3,122
4,374
Total
$’000
-
3,106
64,982
835
-
2,675
61,126
143
2019
$’000
-
56
1
(5,459)
(55)
(5,457)
2019
$’000
61,126
1,700
83
379
1
63,289
2019
$’000
143
497
3,032
3,672
22
For personal use only 5
Income and expenses
Finance revenue
Interest received
Other income
Other income
Administrative expenses
Compliance
Insurance
Consultants
Administration costs
Salary and Wages (including Director Fees)
Legal costs
Occupancy costs
Other expense
Exploration expenditure expensed
Finance expense
Interest expense
Bank fees
6
Income tax expense
Flinders Mines Limited
Notes to the Consolidated Financial Statements
30 June 2020
2020
$’000
17
29
(245)
(351)
(4,139)
(389)
(953)
(1,736)
(44)
(7,857)
(16)
(16)
(210)
(1)
(211)
2019
$’000
56
1
(225)
(338)
(1,894)
(198)
(1,424)
(1,280)
(75)
(5,434)
(25)
(25)
(53)
(2)
(55)
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% (2019: 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
2020
$’000
(8,038)
(2,412)
(9)
2,469
48
2019
$’000
(5,457)
(1,637)
-
1,650
13
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.
The Group has DTAs arising in Australia of $23.484 million (2019: $25.382 million) that are available for offset
against future taxable profits of the companies in which the losses arose.
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 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.
23
For personal use only Flinders Mines Limited
Notes to the Consolidated Financial Statements
30 June 2020
6
Income tax expense (continued)
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.
Tax Consolidation
The Company and its wholly owned Australian resident entities have formed a tax-consolidated group with effect
from 1 July 2018 and are therefore taxed as a single entity from that date. The head entity within the tax
consolidated group is Flinders Mines Limited. $120.510 million in carry forward revenue tax losses were
transferred into the tax-consolidated group at formation. The Company has assessed that these losses are able
to be carried forward under the Continuity of Ownership test as at 30 June 2020.
The head entity, in conjunction with other members of the tax-consolidated group, have entered into a tax funding
arrangement which sets out the funding obligations of members of the tax-consolidated group in respect of tax
amounts. Any current tax liabilities (or assets) and deferred tax assets arising from unused tax losses of the
subsidiaries are assumed by the head entity and are recognised by the Company as intercompany receivables (or
payables). Contributions to fund the current tax liabilities are payable as per the tax funding arrangement and reflect
the timing of the head entity’s obligation to make payments for tax liabilities to the relevant tax authorities.
The head entity in conjunction with other members of the tax-consolidated group has also entered into a tax sharing
agreement. The tax sharing agreement provides for the determination of the allocation of income tax liabilities
between the entities should the head entity default on its tax payment obligations. No amounts have been
recognised in the financial statements in respect of this agreement as payment of any amounts under the tax
sharing agreement is considered remote.
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
2020
$’000
(8,086)
(8,086)
2020
Number
2019
$’000
(5,470)
(5,470)
2019
Number
Weighted average number of ordinary shares used in the
calculation of basic and diluted loss per share
4,098,827,112
3,443,478,128
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.
24
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
30 June 2020
2020
$’000
4,071
30
4,101
2019
$’000
1,670
30
1,700
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
Exploration expenditure expensed
Other income
Interest expenses (net of paid part)
Income tax expense
Changes in operating assets and liabilities
Decrease in trade and other receivables
(Increase)/decrease in other assets
(Decrease)/increase in trade and other payables
Net cash flows from operating activities
9
Other current assets
Other current assets
2020
$’000
(8,086)
16
(29)
90
48
36
(26)
(20)
(7,971)
2020
$’000
405
405
2019
$’000
(5,470)
25
(1)
32
13
1
89
202
(5,109)
2019
$’000
379
379
Other current assets represent the prepaid portion of rates and rents of the Group’s tenements and corporate
insurances.
10
Exploration and evaluation expenditure
Opening balance
Expenditure incurred
Recognition of rehabilitation asset
Exploration expenditure expensed
Closing balance
2020
$’000
61,126
3,122
750
(16)
64,982
2019
$’000
58,461
2,690
-
(25)
61,126
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 2020 and 30 June 2019
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.
25
For personal use only 11
Trade and other payables
Trade payables
Other payables
Flinders Mines Limited
Notes to the Consolidated Financial Statements
30 June 2020
2020
$’000
194
308
502
2019
$’000
252
420
672
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
Non-current PIO Loan
2020
$’000
3,122
2019
$’000
3,032
The Company has an unsecured loan facility of $3.000 million with PIO Mines Pty Ltd (“Loan Facility”), a subsidiary
of its major shareholder, TIO (NZ) Limited.
The key terms of the Loan Facility are as follows:
•
•
Interest on the Loan Facility is capitalised annually at a rate of BBSW plus a 2% margin; and
A repayment date of 30 June 2022.
As at 30 June 2020, the Loan Facility is fully drawn.
Accrued interest at 30 June 2020 has been capitalised to the loan totalling $0.122 million (2019: $0.032 million).
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.
13
Provisions
Current Rehabilitation provision
Non-Current Rehabilitation provision
2020
$’000
85
665
750
2019
$’000
-
-
-
Rehabilitation provision
A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation
that can be measured reliably, and it is probable that an outflow of economic benefits will be required to settle the
obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects
current market assessments of the time value of money and the risks specific to the liability.
A provision is made for the estimated cost of rehabilitation relating to areas disturbed during exploration activities,
such as drill holes, collars and track creation, undertaken at the PIOP up to reporting date but not yet rehabilitated.
Provision has been made in full for all disturbed areas at the reporting date based on current estimates of costs to
rehabilitate such areas, discounted to their present value based on expected future cash flows. The estimated
cost of rehabilitation includes the current cost of re-contouring, topsoiling and revegetation, employing legislative
requirements. Changes in estimates are dealt with on a prospective basis as they arise.
Uncertainty exists as to the amount of rehabilitation obligations which will be incurred due to the impact of changes
in environmental legislation. The provision is recognised as a non-current liability with a corresponding asset
included in property, plant and equipment.
At each reporting date the rehabilitation liability is re-measured in line with changes in discount rates and timing or
amount of costs to be incurred. Changes in the liability relating to rehabilitation of mine infrastructure and
dismantling obligations are added to or deducted from the related asset, other than the unwinding of the discount
which is recognised as finance costs in profit or loss as it occurs.
26
For personal use only Flinders Mines Limited
Notes to the Consolidated Financial Statements
30 June 2020
13
Provisions (continued)
If the change in liability results in a decrease in the liability that exceeds the carrying amount of the asset, the asset
is written down to nil and the excess is recognised immediately in the income statement. If the change in the
liability results in an addition to the cost of the asset, the recoverability of the new carrying amount is considered.
Where there is an indication that the new carrying amount is not fully recoverable, an impairment test is performed
with the write-down recognised in profit or loss in the period in which it occurs.
14
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.
Number of shares
$’000
Issued shares:
At 1 July 2018
Shares issued pursuant to a non-renounceable rights issue
Share issue costs
As at 30 June 2019
Shares issued pursuant to a non-renounceable rights issue
Share issue costs
As at 30 June 2020
3,366,951,446
118,218,635
-
3,485,170,081
736,015,800
-
4,221,185,881
138,859
8,275
(70)
147,064
13,743
(113)
160,694
Ordinary shares
On 28 April 2020, the Company completed a pro-rata non-renounceable entitlement offer at $0.025 cents per share,
raising approximately $8.697 million (before costs).
On 25 June 2020, the Company completed a second pro-rata non-renounceable entitlement offer at $0.013 cents
per share, raising approximately $5.045 million (before costs).
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 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 is able to fund its future activities.
15
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.
27
For personal use only Flinders Mines Limited
Notes to the Consolidated Financial Statements
30 June 2020
15
Financial risk management (continued)
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.
2020
Cash and
cash
equivalents
Trade and
other
receivables
Trade and
other payables
Loans and
borrowings
2019
Cash and cash
equivalents
Trade and
other
receivables
Trade and
other payables
Loans and
borrowings
Floating
interest
rate
$’000
4,071
-
-
-
Floating
interest
rate
$’000
1,670
-
-
-
Fixed interest maturing in:
< 1 year
1 – 5 years > 5 years Non-
Average interest rates
Floating
Fixed
$’000
30
$’000
-
$’000
-
-
-
-
-
-
3,122
-
-
-
interest
bearing
$’000
-
47
503
-
Fixed interest maturing in:
1
–
< 1 year
years
5
> 5 years Non-
$’000
30
$’000
-
$’000
-
-
-
-
-
-
3,032
-
-
-
interest
bearing
$’000
-
83
640
-
%
0.45%
%
0.91%
-
-
-
-
2.54%
-
Average interest rates
Floating
Fixed
%
1.45%
%
2.12%
-
-
3.88%
-
-
-
As at 30 June 2020, a movement of 1% in interest rates, with all other variables being held constant, results in an
immaterial movement in post-tax loss and equity.
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 its 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.
28
For personal use only Flinders Mines Limited
Notes to the Consolidated Financial Statements
30 June 2020
15
Financial risk management (continued)
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.
2020
Cash and cash equivalents
Trade and other receivables
Trade and other payables
Loans and borrowings
Net outflow
2019
Cash and cash equivalents
Trade and other receivables
Trade and other payables
Loans and borrowings
Net outflow
16
Subsidiaries
< 1 year
$’000
4,101
47
(503)
-
3,645
1,700
83
(640)
-
1,111
1 – 5 years
$’000
-
-
-
(3,122)
(3,122)
-
-
-
(3,032)
(3,032)
Total
$’000
4,101
47
(503)
(3,122)
523
1,700
83
(640)
(3,032)
(1,889)
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
PIOP Mine Co NL 1
Country of
incorporation Class of shares
Australia
Australia
Australia
Australia
Australia
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Equity holding %
2019
2020
100
100
100
100
100
100
100
100
-
100
1 PIOP Mine Co NL was incorporated in Australia on 29 October 2019.
17
Interests in exploration projects
The Company maintains 100% of the rights to explore for and, if warranted, develop mining operations on PNX
Metals Jamestown Project, EL 6430 Tenement (previously EL5557), located in South Australia, for diamonds,
barium, talc and phosphate.
18
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.
19
Contingent assets and liabilities
2020
$’000
4,523
64,232
503
3,122
160,645
(95,516)
65,129
(8,046)
(8,046)
2019
$’000
2,139
61,127
640
3,032
147,064
(87,470)
59,594
(5,473)
(5,473)
The Group had no contingent assets or liabilities at 30 June 2020 (2019: nil).
29
For personal use only 20
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:
Flinders Mines Limited
Notes to the Consolidated Financial Statements
30 June 2020
Auditing and reviewing of financial reports
Taxation advice services
Other assurance services
2020
$
65,524
185,861
-
251,385
2019
$
43,000
37,294
4,613
84,907
The auditor of the parent entity for the year ended 30 June 2020 and 30 June 2019 is KPMG.
21
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 2020 for the Group is
approximately $1.331 million (2019: $1.400 million). These obligations are expected to be fulfilled in the normal
course of operations.
22
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.
Other transactions with related parties
During the year ended 30 June 2020, the Company paid Director fees to TIO, its major shareholder, for Director
services provided by Messrs Wolley and Davies. The total value of these services was $238,000 (2019:
$366,000).
In April and June 2020, the Company repaid the $7.000 million Loan Facility plus accrued interest of $120,293 with
PIO Mines Pty Ltd (‘PIO’), a subsidiary of its major shareholder, TIO. As at 30 June 2020, the Company has an
unsecured $3.000 million loan with PIO, repayable on 30 June 2022. Interest is capitalised annually at a rate of
BBSW plus a 2% margin. The value of interest capitalised at 30 June 2020 is $122,409.
During the year ended 30 June 2020 and up until the date of Ms Coates resignation as a Director, 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 $70,244 (2019: $95,352).
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 paid in the period ended 30
June 2019 $154,560. This agreement was terminated on 24 June 2019.
The above transactions are all entered into at arm’s length terms.
23
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 1
James Gurry 2
David McAdam 3
Andrew Whitehead 4
Independent Non-Executive Chair
Independent Non-Executive Deputy Chair
Non-Executive Director
Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Chief Executive Officer
General Manager
30
For personal use only
Flinders Mines Limited
Notes to the Consolidated Financial Statements
30 June 2020
23
Key management personnel disclosures (continued)
1 On 30 August 2019, Ms Shannon Coates was appointed as Joint Company Secretary with Ms Sarah Wilson. Ms
Coates resigned as a Director on 25 November 2019.
2 On 18 September 2019, the Company announced the appointment of Mr James Gurry as an Independent Non-
Executive Director
3 On 9 July 2019, Mr David McAdam resigned as Executive Director and was appointed Chief Executive Officer.
Mr McAdam subsequently resigned as Chief Executive Officer on 23 March 2020, with a 3-month notice period
making his last effective day 23 June 2020.
4 On 17 June 2020, Dr Andrew Whitehead was appointed as General Manager.
Compensation of key management personnel
Short-term employee benefits
Post-employment benefits
2020
$
2,035,030
22,660
2,057,690
2019
$
1,498,526
16,801
1,515,327
24
Events occurring after the reporting period
On 20 August 2020, the Company received notification from BBIG that it had received a no objection notification
from the Foreign Investment Review Board in relation to its application to acquire its initial 10% voting interest in
PIOP Mine Co NL, subject to BBIG complying with customary conditions.
On 4 September 2020, the Company announced that all conditions precedent had been completed in relation to
the PIOP Farm-In Agreement. Completion of all conditions precedent will enable the advancement of the PIOP
feasibility studies to bring PIOP Iron ore to market.
25
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.
Rehabilitation
The Group assesses rehabilitation liabilities annually. The provision recognised is based on an assessment of the
estimated cost of closure and reclamation of the areas using internal information concerning environmental issues
in the exploration area, together with input from various environmental consultants, discounted to present value.
Significant estimation is required in determining the provision for site rehabilitation as there are many factors that
may affect the timing and ultimate cost to rehabilitate sites where mining and/or exploration activities have
previously taken place. These factors include future development/exploration activity, changes in the cost of goods
and services required for restoration activity and changes to the legal and regulatory framework. These factors may
result in future actual expenditure differing from the amounts currently provided.
31
For personal use only Flinders Mines Limited
Notes to the Consolidated Financial Statements
30 June 2020
26
Changes in accounting policy
In the year ended 30 June 2020, 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.
27
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 2020 with relevant standards and
interpretations outlined below.
a)
AASB 2018-6 Amendments to Australian Accounts Standards – Definition of Material (effective 1 July
2020)
These amendments clarify the definition of “material” and its application across AASB Standards and other
pronouncements. The principal amendments are to AASIC 101 Presentation of Financial Statements.
The Group has considered the impact on its Consolidated Financial Statements and assessed that the effect of the
change will be minimal.
b)
AASB 2014-10 Amendments to Australian Accounting Standards – 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.
c)
AASB 2020-3 Amendments to Australian Accounting Standards – Annual Improvements 2018-2020 and
Other Amendments (effective 1 July 2022)
The subject of the principal amendments to the Standards are set out below:
AASB 1 First-time Adoption of Australian Accounting Standards
The amendment allows a subsidiary that becomes a first-time adopter after its parent to elect to measure
cumulative translation differences for all foreign operations at the carrying amount that would be included in the
parent’s consolidated financial, based on the parents date of transition, if no adjustment were made for
consolidation procedures and for the effects of the business combination in which the parent acquired the
subsidiary.
AASB 9 Financial Instruments
The amendment clarifies that an entity includes only fees paid or received between the borrower and the lender
and fees paid or received by either the borrower or the lender on the other’s behalf when assessing whether the
terms of a new or modified financial liability are substantially different from the terms of the original financial liability.
AASB 116 Property, Plant and Equipment
The amendment requires an entity to recognise the sales proceeds from selling items produced while preparing
property, plant and equipment for its intended use and the related costs in profit or loss, instead of deducting the
amounts received from the cost of the asset.
AASB 137 Provisions, Contingent Liabilities and Contingent Assets
The amendment specifies the costs an entity includes when assessing whether a contract will be loss-making
consists of the incremental costs of fulfilling that contract and an allocation of other costs that relate directly to
fulfilling contracts.
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.
32
For personal use only Flinders Mines Limited
Directors’ Declaration
30 June 2020
In the Directors' opinion:
(a)
the Consolidated Financial Statements and notes and Remuneration Report 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 2020 and of
its performance for the year ended on that date, and
(b)
(c)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable, and
the financial statements and notes thereto are in accordance with the International Financial Reporting
Standards issued by the International Accounting Standards Board.
The Directors have been given the declarations as 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
22 September 2020
33
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 2020 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 2020
• 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 (including Independence Standards) (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.
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 period.
This matter was 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 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
Capitalised Exploration and Evaluation $64.982m
Refer to Note 10 to the Financial Report
The key audit matter
How the matter was addressed in our audit
Capitalised Exploration and evaluation expenditure
(E&E) is a key audit matter due to:
•
•
the significance of the activity to the Group’s
business and the balance (being 93.45% 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.
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 details of the farm-in incorporated joint
venture with BBI Group Pty Ltd, in which
Flinders would be free carried to Final
Investment Decision.
• Results from latest activities regarding the
existence or otherwise of economically
recoverable reserves.
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;
• We tested the Group’s additions to E&E for the
year by evaluating a 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 and
project budgets for a sample of areas.
For personal use only
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.
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: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf.
This description forms part of our Auditor’s Report.
For personal use only
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 11 to 14 of the Directors’ report for the
year ended 30 June 2020.
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
22 September 2020
For personal use only
Flinders Mines Limited
Additional Information
As at 31 August 2020
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 31 August 2020.
Issued Equity Capital
Number of holders
Number on issue
Voting Rights
Ordinary Shares
4,060
4,221,185,881
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
368
419
634
1,786
853
4,060
Units
38,953
1,524,514
5,150,787
65,597,002
4,148,874,625
4,221,185,881
The number of shareholders holding less than a marketable parcel (which as at 31 August 2020 was 9,804 Shares)
was 1,191.
Substantial Shareholders
TIO (NZ) Limited 1
OCJ Investment (Australia) Pty Ltd 2
Various Requisitioning Shareholders 3
1 As lodged on ASX on 29 April 2020.
2 As lodged on ASX on 3 February 2017.
Number of Ordinary
Shares
2,258,958,869
758,160,000
210,302,405
Percentage (%)
58.93
21.75
6.03
3 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.
38
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
TIO (NZ) LIMITED
OCJ INVESTMENT (AUSTRALIA) PTY LTD
MR KENNETH MARTIN KEANE
CITICORP NOMINEES PTY LIMITED
MR KENNETH MARTIN KEANE + MS SALLY MORTON
ROBERTS
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