Image Resources
Annual Report 2019

Plain-text annual report

ANNUAL REPORT 2019 FOCUSED ON HIGH-VALUE ZIRCON IN PURSUIT OF KNOWLEDGE INNOVATION EXCELLENCE ABOUT US Image Resources NL (ASX: IMA) is Australia’s newest mineral sands mining company focused on operating open-cut mining and ore processing operations at its 100%-owned, high-grade and zircon rich Boonanarring Project located 80km north of Perth in the infrastructure- rich North Perth Basin in Western Australia. CONTENTS Chairman’s Report Managing Director’s Report Review of Operations Resources and Reserves Schedule Directors’ Report Remuneration Report Auditor’s Independence Declaration Corporate Governance Statement Statement of Profit or Loss and Other Comprehensive Income Statement of Financial Position Statement of Changes in Equity Statement of Cash Flows Notes to and forming part of the Financial Statements Directors’ Declaration Independent Auditor’s Report ASX Additional Information Schedule of Tenements 2 4 6 12 16 21 27 28 29 30 31 32 33 57 58 62 64 2019 Annual Report 1 CHAIRMAN’S REPORT Our path of developing the Boonanarring Project and transitioning into production has been a short, but very successful one. Dear Shareholders, On behalf of your Board of Directors, I am proud to report that in 2019 your Company has completed a very successful transition from We finished the year in very strong fashion with A$50m cash in the bank and completed the 1st quarterly debt repayment in the November to end the year with a total debt of A$56m. We are already assessing options for the early retirement exploration company to a profitable mining of our high yield debt and the opportunities this may allow, company, has performed beyond our original expectations and has a very bright future. Across the past two years, your Company has gone from strength to strength. Our path of developing the Boonanarring Project and transitioning into production has been a short, but very successful one. The project was constructed on time and on budget in 2018, and it was then catapulted into full production in an extraordinarily short ramp-up period of just two months. This type of performance is very rare and it added tremendous value to the Company’s bottom line. Your Company has now successfully completed its inaugural full year (CY2019) of operating as an active mining company, and the results were better than expected. Key highlights: • Profitability achieved in March quarter; • Positive cashflow achieved in June quarter; • Total revenue of A$146m; • Project EBITDA of A$73m; • Net Profit after Tax of A$21m including consideration of a dividend payment and/or investment into a potential second operating centre. On behalf of your Board, I would like to thank and congratulate all our employees, (operations, exploration and corporate) as well as our contractors and consultants on a very productive 2019. I would also like to acknowledge the senior executive team of our COO, Mr Todd Colton, CFO, Mr John McEvoy, Exploration Director, Mr George Sakalidis, and our Managing Director Mr Patrick Mutz who led the Company through these very exciting times. I also want to thank my fellow Directors for their leadership and guidance to direct the Company through the many decisions required to pave the way for the development and operation of the Boonanarring Project. And finally, on behalf of the Board and employees of your Company, I want to say thank you to all our shareholders for your continuing support. Your Board believes that while we have had a very productive year, the journey for Image Resources has only just begun, and we look forward to continuing success through 2020 and beyond. Robert Besley Non-Executive Chairman 28 February 2020 IN PURSUIT OF KNOWLEDGE 2 Image Resources NL 2019 Annual Report 3 MANAGING DIRECTOR’S REPORT Dear Shareholders, During the 2019 calendar year your Company successfully completed its inaugural full year as an active mining company and proactively met or exceeded market guidance which was increased twice during the year. The launch into active ore processing and heavy mineral concentrate (HMC) production at Boonanarring in December 2018, following the strong performance of completing construction on-time and on-budget, set your Company on a firm path to transition into a profitable mining company. During CY2019 our Team (which includes all our employees, contractors and consultants) capitalised on that successful launch and delivered a banner performance operationally and financially. Your Team hit the ground running in January by demonstrating how a great ore deposit, married with the right plant and equipment and operated by a very competent and experienced team can achieve very positive and rare results; that being the ramp-up to exceed full production levels in only the second month of operation. The Team went on to exceed production expectations for the full year. In Q1 2019 it became evident that the ore grade in the 2017 Ore Reserve had been underestimated. We determined that a very high-grade core within the eastern strand of the deposit had not been adequately delineated with the standard 20m drilling spacing. In Q2 we embarked on a close-spaced drilling program to reassess the Mineral Resources and Ore Reserve. As a result of the higher than expected ore grade and strong operational performance, your Company became profitable in Q1, and cashflow positive in Q2. This allowed the start of an accelerated exploration program in Q3 to identify additional mineralisation for conversion to Mineral Resources and Ore Reserves to extend the mine life at Boonanarring. STRIVING FOR EXCELLENCE We are proud that our operational achievements occurred in conjunction with strong local community support and with very credible performance under our health, safety and environmental programs. Our Team went on to complete the year with total production of By almost every measure, the performance of your Company 270k tonnes of HMC; significantly higher than originally forecast. can be considered stellar for a start-up mining company, which They also did so at slightly below forecast operating costs, and rapidly transitioned to a profitable enterprise in its inaugural year significantly below forecast HMC unit costs. And, as importantly of production, and growing its cash reserves to within striking as the operating results, the Team maintained very credible distance of being able to retire its debt. We closed the year with performance in the area of health, safety and environment, as A$50m of cash in the bank and total debt of A$56m. well as proactive community engagement, while we continue to pursue the installation of a solar farm; all to ensure your Company maintains its social licence to operate. Your Team also successfully marketed the Company’s high quality HMC through our off-take partners. We completed the sale of 12 bulk shipments of HMC during the year, for total revenue of A$146m. We also ended the year with a very healthy HMC inventory of 57k tonnes with an estimated market value of over A$30m. In December, we published our updated Ore Reserve, which resulted in a very positive 24% higher heavy mineral ore grade and 50% higher in-situ zircon grade. The updated Ore Reserve also resulted in a decrease in total ore tonnes in the reserve, which was an unexpected and disappointing result. However, as demonstrated by the identification of new mineralisation in the 50mRL Strandline in December, drilling in this area will almost certainly provide the basis for additional Mineral Resources and Ore Reserves. To that end we have sharpened our focus This provides a very solid base on which to continue to grow your Company in 2020 and beyond, with forecast higher production and improved economics. I would like to thank all our employees, contractors, consultants, offtake partners and local landowners and community members for all the amazing work and support that has made the results of this past year possible. Finally, thank you to our Board of Directors and shareholders for your continuing support over the past year. We look forward to reporting on what we believe will be another very positive year of operations for Image Resources. and elevated the priority to add new Ore Reserves as rapidly Patrick Mutz as practicable and extend the mine life at Boonanarring under a formal project codenamed Project ‘MORE’, which has the full Managing Director 28 February 2020 support of the Board and executive management. 4 Image Resources NL 2019 Annual Report 5 REVIEW OF OPERATIONS RESEARCHING INNOVATION Image Resources NL (“Image” or “the Company”) successfully completed its first full year (CY2019) as an active mining company operating at the Company’s 100%-owned, high-grade, zircon-rich Boonanarring Mineral Sands Project (Boonanarring) in the North Perth Basin located 80 Kilometres north of Perth. During the year the Company achieved profitability in Q1, positive cashflow in Q2 and met market guidance for the full year, which was raised twice during the year. 2019 in Review Safety Operations • Image experienced zero reported lost-time injuries (LTI) • In CY2019, the Company successfully completed its throughout the construction; and commissioning period inaugural full year as an active mining company. The year of 2018, and ramp-up and active mining and processing was highlighted by a number of unexpected, but positive through September 2019 (total 18 months). However, developments. in October 2019 the Company recorded its first LTI associated with the rapidly evolving and very important area of mental health. And in November, a second LTI was recorded as a result of a minor shoulder injury which occurred in June 2019, but which did not improve with restricted duties and eventually required corrective surgery and was assessed as an LTI. • Image maintains its proactive promotion of a positive safety culture which includes safety programs and procedures that encourage job safety analysis and planning as well as active incident reporting for the purpose of continuous improvement of the health, safety and well-being of all employees, contractors, visitors and members of the community as well as protection of the environment. The success of these programs is monitored through the use of regular internal Health, Safety and Environment audits and monthly Positive Performance Indicator (PPI) scoring. PPI scoring improved quarter on quarter in CY2019. • In January 2019, in only the second month of operations following the start of ore processing operations at Boonanarring in December 2018, heavy mineral concentrate (HMC) production ramped up to exceed the forecast long-term average monthly HMC production of 20kt. • In the March quarter, it was determined that the Boonanarring eastern strand of the deposit contained a very high-grade core of ore that had not been adequately delineated by the drilling used to determine Mineral Resources and Ore Reserves. This led to a detailed, close-space drilling program commencing in April 2019, to delineate the eastern strand and culminated with updated Mineral Resources and Ore Reserves estimates published in December 2019. The updated Ore Reserves outlined 24% higher heavy mineral ore grade and 50% higher in-situ zircon grade. The downside to the updated Ore Reserves was a loss of ore tonnes due to the identification, during active mining and ore processing, of the presence of iron-rich laterite within the ore zones, which assays as heavy mineral. Community • In May 2019, an unexpected ore horizon located just • Image continues to proudly contribute to the local community, including through local employment. At year end 59% of the workforce at Boonanarring lived locally to the operation or within regional shires. In addition, the Company has an active and varied community support and engagement program. • In September 2019 the Company hosted a formal event at Boonanarring to commemorate the opening of the mine. The event was attended by over 250 invited guests including local landowners, local community representatives, Shire representatives, government officials, Image shareholders (domestic and international), plus Image contractors and consultants as well as Image employees and directors. below the modelled base of the mine was discovered and found to contain ‘ultra’ high-grade (UHG) ore or direct shipping ore, as it contained up to 95% heavy minerals (HM) and up to 75% zircon in the HM. The zircon has been determined to be all premium grade, with low iron content. A total of approximately 3kt of UHG ore was mined and added to the HMC storage pad. This material is being stockpiled for the addition of additional UHG that may be mined in the future, before determining the best market outlet for this high-grade and high-quality material. Image maintains proactive health, safety and environmental protection programs 6 Image Resources NL 2019 Annual Report 7 ZIRCON PRODUCTS & APPLICATIONS Zircon sand is processed into zirconium compounds and intermediate products for a variety of applications including ceramics (tiles and sanitary ware), foundry sands (metal castings), refractories (furnace linings), as well as zirconium metal and many other uses. Operations (continued) • In July 2019, following the achievement of positive cashflow in the June quarter, an expanded exploration budget was approved to allow drilling to commence with the purpose of identifying additional mineralisation for conversion to Mineral Resources and Ore Reserves with the goal of increasing mine-life at Boonanarring. As a result of this drilling, in December 2019, the Company announced the identification of a new mineralised strandline located to the west of the current Boonanarring deposit, with the potential to extend for up to 40km from Image’s Gingin South tenement to the northern part of the Boonanarring Northern Extension Area (NEA) identified in 2017. If mineralisation in this new area can be converted to Mineral Resources and Ore Reserves, the norther half of this area could be within economic pumping distance of the current location of the Boonanarring wet concentration plant. • In August 2019, Image successfully completed a replacement of the trommel unit associated with the ore feed preparation plant (FPP) so as to increase ore throughput during times of higher clay content of the ore. This low-cost modification proved to be effective in increasing the ore processing rate to meet and exceed the design rate of 500 dry tonnes per hour. In November 2019, very low-cost modifications were also made to the HMC cleaning and dewatering circuits to allow increased HMC processing capacity. • In August 2019, Image also executed a purchase option agreement to acquire a block of land with a 1.3km long section of mineralised strike-length in the Boonanarring NEA with immediate access for drilling. Additional access for drilling is being sought from surrounding landowners. • In November 2019, the Boonanarring operations team completed the successful relocation of the FPP from Block ‘C’ to Block ‘B’. With higher grades encountered in Block B production for December 2019 was a new monthly record high at 31.4kt of HMC produced. This new production record demonstrated that the new trommel added to the FPP and modifications made to the HMC cleaning and dewatering circuits achieved their objective. • As a result of the higher than expected HM ore grades and zircon grades in the HM, HMC production for CY2019 exceeded expectations such that market guidance was raised twice during the year. The Company met that higher guidance with the production of 270kt of HMC. • HMC sales to the Company’s off-take partners averaged one shipment per month, in line with expectations, for total sales of 237.5kt for the year. The higher HMC production level compared to sales resulted in HMC stocks of 57kt at the end of December. • The average HMC realised price for the full year was $616 per tonne, compared to C1 cash costs (which include mining, processing, general and administration and concentrate transport costs) of $327 per tonne. The Boonanarring project reported EBITDA of $72.5 million for the full calendar year, which was 4% above the upper limit of guidance. • Guidance for calendar years 2020 and 2021 has been increased and set at 300-330kt of HMC production and sales, due mainly to the higher HM ore grades forecast in Blocks A and B. Mineral Sands Prices and FX • Boonanarring HMC prices are based on the underlying content of zircon (as ZrO2+HfO2) and titanium dioxide (as TiO2) and benchmark prices for the various products (zircon, rutile, ilmenite and leucoxene) at appropriate quality specifications. The majority of the value of Boonanarring HMC is derived from the zircon content, with underlying zircon prices remaining strong and broadly flat for calendar year 2019, but with some price softening during the December quarter, which was largely offset by increasing prices for ilmenite, leucoxene and rutile. • Overall HMC prices increased from an average $517 per tonne in Q1 to an average $661 per tonne in Q4, for an overall average $616 per tonne for the year. The increasing HMC unit prices during the year were primarily due to increasing zircon grades in the HMC. • AUD/USD foreign exchange rate remained below 0.70 for much of the year whilst, having opened and closed the year at 0.70. 8 Image Resources NL 2019 Annual Report 2019 Annual Report 9 9 Corporate Sales revenue for the year was $146.2 million with project operating and selling costs of $73.7 million and with full year project EBITDA of $72.5 million. During 2019 the Company generated a Net Profit After Tax of $20.8 million (2018: $3.3 million). As at 31 December 2019 Image had a cash position of A$49.9 million and debt of A$56.4 million. The Company generated net cash flow from operating activities of A$62.9 million. In November 2019 the Company completed its first scheduled loan note repayment, including interest, totalling US$8.15 million (A$12.17 million). The remaining debt is scheduled to be repaid in six further quarterly instalments with the next repayment due in February 2020. A loan associated with the June 2016 Asset Sale and Purchase Agreement from Murray Zircon Pty Ltd of A$4 million was fully repaid in July 2019. Updated Ore Reserves and Mineral Resources Estimates Updated Ore Reserves and Mineral Resources estimates were announced to the ASX on 20 December 2019. Estimated Ore Reserves as at 1 October 2019, comprises 10.7Mt of ore, grading 8.9% total heavy mineral (THM), with an assemblage of 27.5% zircon, for total contained zircon of 0.26Mt. This represents a 24% increase in THM grade, a 21% increase in zircon assemblage and a 50% increase in the in-situ zircon grade. Excluding depletion from production, there was a 33% reduction in ore tonnes due primarily to the identification of iron-rich laterite material which assayed as heavy mineral, and a 3% increase in total tonnes of contained zircon. Exploration During 2019 significant effort was directed at work associated with a close-spaced (5m) drilling program designed to adequately delineate the high grade core in the Eastern Strand, which was used to update the Mineral Resources and Ore Reserves Estimates at Boonanarring. In addition, a new mineralised area was identified in the north western portion of the Boonanarring Northern Extension Area (NEA). A drilling programme was completed late in 2019. Initial results are very promising outlining two shallow high-grade strands of 1.2km in length which will be followed up promptly in 2020 with additional work expected to include composites for evaluation of the assemblages to be used in a new Mineral Resources estimate of this area. An initial programme was also completed over a 1.3km length of the NEA. This programme has shown that the high-grade core within the eastern strand of the current Ore Reserves extends under the Brand Highway (Brand). Additional drilling is being planned to determine the exact position of the deposit relative to the Brand and will require drilling along the Brand and to the east. Additional drilling is expected to add significantly to the delineation of mineralization in the NEA and its possible linkage with the Red Gully Deposit 5km to the north. Other drilling aimed at extending the mine-life at Boonanarring identified a new mineralized shoreline trend to the west of and parallel to the Boonanarring Ore Reserves area and may potentially extend for up to 40 km on the 48-55m RL. This includes previously identified mineralisation in the western sections of Image’s Gingin South and Gingin North projects and has now been found to include the recently identified Boonanarring West mineralisation and the Boonanarring Northwest Extension. In December 2019, the identification of this new mineralised area, dubbed the 510mRL Strandline, was announced, and additional promising, shallow, high-grade results were announced in January 2020. Drilling results in the NEA were sufficiently positive that the Board approved the exercise of a land purchase option over a 1.3km section of the NEA target area. Subsequent to the end of the year the purchase option was exercised and the purchase was finalised in February 2020. TITANIUM DIOXIDE PRODUCTS & APPLICATIONS Titanium dioxide (TiO2) from rutile and ilmenite is processed into titanium-based products, primarily as an ultra- white pigment for use in paint, paper and plastics, but also in welding rods (flux coating), as well as titanium metal for a variety of applications including in aircraft, spacecraft, motor vehicles and medical implants. 10 10 Image Resources NL Image Resources NL 2019 Annual Report 11 MINERAL RESOURCES & ORE RESERVES STATEMENT Ore Reserves – Material Mining Projects Mineral Resources – Material Mining Project In December 2019, the Company provided an update of the estimated Ore Reserves at Boonanarring (refer to the Company’s In December 2019, the Company provided an update of the Mineral Resources at Boonanarring (refer to the Company’s ASX ASX release dated 20 December 2019 and Table 1). release dated 20 December 2019 and Table 3). Table 1 – Ore Reserve Summary – JORC Code 2012 – as at 1 October 2019 Table 3 – Mineral Resource Summary – JORC Code 2012 – as at 1 October 2019 High Grade Ore Reserves - Strand Deposits; in accordance with the JORC Code (2012) High Grade Mineral Resources - Strand Deposits; in accordance with the JORC Code (2012) @ 2.0% HM Cut-off Project / Deposit Category Boonanarring1 Boonanarring1 Total Boonanarring Atlas2 Total Atlas Total Ore Reserves Proved Probable Probable Tonnes (million) 3.5 7.1 10.7 9.5 9.5 20.2 HM (%) 13.9 6.4 8.9 8.1 8.1 8.5 Slimes (%) HM Tonnes (million) VHM (%) Ilmenite (%) Leucoxene (%) Rutile (%) Zircon (%) 16.0 16.0 16.0 15.5 15.5 15.8 0.5 0.5 0.9 0.8 0.8 1.7 82.7 76.6 79.6 73.3 73.3 76.8 44 49 46 50.7 50.7 48.3 4.6 1.7 3.2 4.5 4.5 3.8 2.2 2.8 2.5 7.5 7.5 4.7 31.9 23.1 27.5 10.6 10.6 19.9 1. Refer to Boonanarring Ore Reserves release 20 December 2019 2. Atlas Reserves refer to the 30 May 2017 release “Ore Reserves Update for 100% Owned Atlas Project” The Company’s Ore Reserves at Boonanarring show changes from the Ore Reserves as at 1 October 2018 (Table 2). The material changes arise from mining depletion as well as changes in the Mineral Resources resulting from the elimination of low grade, low-zircon ore in the overlying layer found to contain a significant proportion of iron-rich laterite which assays as heavy mineral, and the elimination of laterite-rich zones in the main ore strands. Refer to the Company’s ASX release dated 20 December 2019 for further information. For the period between 1 October 2019 and 31 December 2019 the Company is not aware of any new information or data that materially affects the Ore Reserve at Boonanarring other than changes due to normal mining depletion. Project / Deposit Category Tonnes (million) Boonanarring Boonanarring Boonanarring Boonanarring Total Atlas Atlas Atlas Total Atlas Measured Indicated Inferred Measured Indicated Inferred Sub-Total Atlas/Boonanarring 8.8 14.6 6.9 30.3 9.9 6.4 1.8 18.1 48.4 HM (%) 10.3 4.6 3.5 6.0 7.9 3.7 4.0 6.0 Slimes (%) HM Tonnes (million) VHM (%) Ilmenite (%) Leucoxene (%) Rutile (%) Zircon (%) 14 17 20 17.0 16.1 17.3 19.9 16.9 0.9 0.7 0.2 1.8 0.8 0.2 0.1 1.1 78.1 71.2 59.4 72.7 71.0 56.5 41.5 65.9 46 48 45 46 49.1 41.6 29.0 46.1 3.8 2.6 4.9 3.6 4.2 3.4 3.3 4.0 2.3 2.7 3.9 2.7 7.2 4.7 4.4 6.5 26.0 17.9 5.6 20.4 10.5 6.8 4.8 9.3 6.0 17.0 2.9 70.1 46.1 3.7 4.1 16.2 The Company’s Mineral Resources at Boonanarring show changes from the Mineral Resources as at 1 October 2018 (Table 4). The material changes arise from mining depletion as well as changes resulting from the elimination of low grade, low-zircon ore in the overlying layer found to contain a significant proportion of iron-rich laterite which assays as heavy mineral, and the elimination of laterite-rich zones in the main ore strands. Refer to the Company’s ASX release dated 20 December 2019 for further information. For the period between 1 October 2019 and 31 December 2019 the Company is not aware of any new information or data that materially affects the Mineral Resource Estimate at Boonanarring other than changes due to normal As shown in Table 2the Company’s Ore Reserves at Atlas are unchanged from 1 October 2018 and the Company is not aware of mining depletion. any new information or data that materially affects the information for the three months ended 31 December 2019. Table 2 – Comparative Ore Reserves Summary – JORC Code 2012 Project / Deposit As at 1 October 2018 Boonanarring Atlas Total Ore Reserves As at 1 October 2019 Boonanarring Atlas Total Ore Reserves High Grade Ore Reserves – Strand Deposits Tonnes (million) HM (%) Slimes (%) HM Tonnes (million) VHM (%) Ilmenite (%) Leucoxene (%) Rutile (%) Zircon (%) 19.86 9.5 29.3 10.7 9.5 20.2 7.2 8.1 7.5 8.9 8.1 8.5 16.1 15.5 15.9 16.0 15.5 15.8 1.43 0.8 2.19 0.9 0.8 1.7 77.2 73.3 75.8 79.6 73.3 76.8 50.4 50.7 50.5 46 50.7 48.3 1.8 4.5 2.7 3.2 4.5 3.8 2.4 7.5 4.2 2.5 7.5 4.7 22.7 10.6 18.4 27.5 10.6 19.9 The updated Ore Reserve in 2019 included a 24% increase in total heavy mineral (HM) ore grade and a 50% increase in the in-situ zircon grade of the ore, and 9.2Mt less ore tonnes (post depletion for production) due to the removal of iron-rich laterite assaying as heavy mineral in the previous Ore Reserve. 12 Image Resources NL The Company’s Mineral Resources at Atlas are unchanged from 1 October 2018 (Table 4) and the Company is not aware of any new information or data that materially affects the information for the three months ended 31 December 2019. Table 4 – Comparative Mineral Resources Summary – JORC Code 2012 Project / Deposit As at 31 December 2018 Boonanarring Atlas Total Ore Reserves As at 31 December 2019 Boonanarring Atlas Total Ore Reserves High Grade Mineral Resources – Strand Deposits @ 2.0% HM Cut-off Tonnes (million) HM (%) Slimes (%) HM Tonnes (million) VHM (%) Ilmenite (%) Leucoxene (%) Rutile (%) Zircon (%) 43.49 18.1 61.6 30.3 18.1 48.4 5.6 6.0 5.7 6.0 6.0 6.0 18 16.9 17.7 17.0 16.9 17.0 2.45 1.09 3.54 1.8 1.09 2.9 72.2 65.9 70.3 72.7 65.9 70.1 49.0 46.1 48.1 46 46.1 46.1 2.2 4.0 2.8 3.6 4.0 3.7 2.6 6.5 3.8 2.7 6.5 4.1 18.4 9.3 15.6 20.4 9.3 16.2 Governance Controls Mineral Resources and Ore Reserves are compiled by qualified Image Resources personnel and / or independent consultants following industry standard methodology and techniques. The underlying data, methodology, techniques and assumptions on which estimates are prepared are subject to internal peer review by senior Company personnel, as is JORC compliance. Where deemed necessary or appropriate, estimates are reviewed by independent consultants. Competent Persons named by the Company are members of the Australasian Institute of Mining and Metallurgy and / or the Australian Institute of Geoscientists and qualify as Competent Persons as defined in the JORC Code 2012. 2019 Annual Report 13 Mineral Resources – Non-Material Projects Competent Person Statement And Previously Reported Information The Mineral Resources for the Company’s non-material mining projects as at 31 December 2019 are show in the tables below. There has been no change in these Mineral Resources from 31 December 2018. There are no Ore Reserves reported in relation to these non-material projects. Mineral Resources - Strand Deposits; in accordance with JORC Code (2012) @ 2.0% HM Cut-off Project / Deposit Category Volume (million) Tonnes (million) HM (%) Slimes (%) HM Tonnes (million) VHM (%) Ilmenite (%) Leucoxene (%) Rutile (%) Zircon (%) Helene Hyperion Indicated Indicated Cooljarloo Nth Total 6.4 2.4 8.8 13.2 5.0 18.2 4.3 6.3 4.8 18.6 19.0 18.7 0.57 0.32 0.88 88.7 69.4 81.8 74.6 55.8 67.9 0.0 0.0 0.0 3.6 6.3 4.6 10.5 7.3 9.4 Previously Reported Mineral Resources - Strand Deposits; in accordance with JORC Code (2004) @ 2.5% HM Cut-off Project / Deposit Category Volume (million) Tonnes (million) HM (%) Slimes (%) HM Tonnes (million) VHM (%) Ilmenite (%) Leucoxene (%) Rutile (%) Zircon (%) Gingin Nth Gingin Nth Gingin Nth4 Total Gingin Sth Gingin Sth Gingin Sth Gingin Sth Total Red Gully Red Gully Red Gully Total Indicated Inferred Measured Indicated Inferred Indicated Inferred Sub-Total Gingin & Red Gully 0.7 0.6 1.3 0.9 3.2 0.4 4.5 1.9 1.5 3.4 9.2 1.3 1.1 2.4 1.5 5.8 0.7 8.1 3.4 2.6 6.0 16.5 5.7 5.2 5.5 4.4 6.5 6.5 6.1 7.8 7.5 7.7 6.6 15.7 14.0 15.0 7.2 7.1 8.4 7.3 11.5 10.7 11.2 9.8 0.1 0.1 0.1 0.1 0.4 0.0 0.5 0.3 0.2 0.5 1.1 75.4 78.4 76.7 79.4 90.6 91.6 89.2 89.7 89.0 89.4 87.8 57.4 57.3 57.3 50.7 67.6 67.4 65.3 66.0 65.4 65.7 64.5 9.3 11.3 10.2 15.3 9.8 7.5 10.3 8.3 8.2 8.2 9.4 3.2 3.7 3.4 5.6 5.1 5.8 5.2 3.1 3.0 3.1 4.1 5.5 6.0 5.7 7.8 8.1 10.9 8.3 12.4 12.3 12.4 9.7 Historic Deposit Mineral Resources - Strand deposit; in accordance with JORC Code (2004) @ 2.5% HM Cut-off Project / Deposit Category Volume (million) Tonnes (million) HM (%) Slimes (%) HM Tonnes (million) VHM (%) Ilmenite (%) Leucoxene (%) Rutile (%) Zircon (%) Regans Ford Regans Ford Regans Ford Total Grand Totals Indicated Inferred 4.5 0.5 5.0 9.0 0.9 9.9 49.1 93.0 9.9 6.5 9.6 6.3 16.8 18.5 17.0 16.0 0.9 0.1 1.0 5.8 94.3 90.5 94.1 79.1 70.0 68.3 69.9 56.7 10.0 7.7 9.9 5.2 4.3 4.4 4.3 4.2 10.0 10.1 10.0 13.0 Mineral Resources - Dredge deposits; in accordance with JORC Code (2012) @ 1.0% HM Cut-off Project / Deposit Category Volume BCM (million) Tonnes (million) HM (%) Slimes (%) HM Tonnes (million) VHM (%) Ilmenite (%) Leucoxene (%) Rutile (%) Zircon (%) Titan Titan Total Titan Telesto Calypso Indicated Inferred Indicated Inferred 10.3 58.5 68.8 1.7 27.1 21.2 115.4 136.6 3.5 51.5 1.8 1.9 1.9 3.8 1.7 22.1 18.9 19.4 18.4 13.7 0.38 2.2 2.6 0.13 0.85 86.0 85.9 85.9 83.3 85.6 71.9 71.8 71.8 67.5 68.1 1.5 1.5 1.5 0.7 1.6 3.1 3.1 3.1 5.6 5.1 9.5 9.5 9.5 9.5 10.8 Mineral Resources - Dredge deposits; in accordance with JORC Code (2004) @ 1.0% HM Cut-off Project / Deposit Category Volume BCM (million) Tonnes (million) HM (%) Slimes (%) HM Tonnes (million) VHM (%) Ilmenite (%) Leucoxene (%) Rutile (%) Zircon (%) Bidaminna Total Dredge Inferred 26.3 44.6 123.9 236.2 3.0 2.1 3.6 15.2 1.3 4.9 96.8 87.8 83.1 73.1 7.2 2.6 1.0 3.2 5.5 9.0 as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. This information was prepared and first disclosed under the JORC Code 2004. It has not been updated since to comply with the JORC Code 2012 on the basis that the information has not materially changed since it was last reported. The information in this table that relates to tonnes, grades and mineral assemblage for Regans Ford Deposit (not part of the Company’s material mining projects) is based on historic information published by Iluka Resources Limited and indicating the mineral resources were compiled in accordance with the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. This information was prepared and first disclosed under the JORC Code 2004. It has not been updated since to comply with the JORC Code 2012 on the basis that the information has not materially changed since it was last reported. This report includes information that relates to Ore Reserves and Mineral Resources which were prepared and first disclosed under JORC Code 2012. The information was extracted from the Company’s previous ASX announcements as follows: • • • • • • • • Boonanarring Mineral Resources and Ore Reserves: 20 December 2019 Atlas Ore Reserves: 30 May 2017 Atlas Mineral Resources: 8 May 2017 Helene Mineral Resources: 31 Oct 2019 Hyperion Mineral Resources: 31 Oct 2019 Titan Mineral Resources: 31 Oct 2019 Telesto South Mineral Resources: 31 Oct 2019 Calypso Mineral Resources: 31 Oct 2019 The Company confirms it is not aware of any new information or data that materially affects the information included in the original market announcements and, in the case of reporting of Ore Reserves and Mineral Resources, that all material assumptions and technical parameters underpinning the estimates in the relevant market announcements continue to apply and have not materially changed. The Company confirms that the form and context in which any Competent Person’s findings are presented have not been materially modified from the original market announcement. This report includes information that relates to Ore Reserves and Mineral Resources for non-material mining projects of the Company which were prepared and first disclosed under JORC Code 2004. The information was extracted from the Company’s previous ASX announcements as follows: • • • • Gingin North Mineral Resources: 31 Mar 2011 Gingin South Mineral Resources: 21 Jul 2011 Red Gully Mineral Resources: 9 Mar 2011 Bidaminna Mineral Resources: 23 Jun 2008 The Company confirms it is not aware of any new information or data that materially affects the information included in the original market announcements and, in the case of reporting of Ore Reserves and Mineral Resources, that all material assumptions and technical parameters underpinning the estimates in the relevant market announcements continue to apply and have not materially changed. The Company confirms that the form and context in which any Competent Person’s findings are presented have not been materially modified from the original market announcement. This information was prepared and first disclosed under the JORC Code 2004. It has not been updated since to comply with the JORC Code 2012 on the basis that the information has not materially changed since it was last reported. This Mineral Resources and Ore Reserves Statement as a whole has been approved by George Sakalidis who is the Exploration Director of Image Resources NL. George Sakalidis is a Member of the Australasian Institute of Mining and Metallurgy (AusIMM) and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. George Sakalidis has given his prior written consent to the inclusion in this report of the Mineral Resources and Ore Reserves statement in the form and context in which it appears. The information in this report that relates to the Boonanarring Ore Reserves estimate is based on and fairly represents, information which has been prepared by Mr Per Scrimshaw, Member of the Australasian Institute of Mining and Metallurgy (AusIMM). Mr Scrimshaw is a full- time employee of Entech Pty Ltd and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. The information in this report that relates to the Atlas Ore Reserves estimate is based on and fairly represents, information which has been prepared by Mr Jarrod Pye, Mining Engineer and then full-time employee of Image Resources, under the direction of Andrew Law, then of Optiro, who is a Fellow of the Australasian Institute of Mining and Metallurgy. Mr Law has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. The information in this report that relates to the Boonanarring and Atlas Mineral Resource estimates is based on and fairly represents, information which has been prepared by Mrs Christine Standing, who is a Member of the Australasian Institute of Mining and Metallurgy (AusIMM) and the Australian Institute of Geoscientists (AIG). Mrs Standing is a full-time employee of Optiro Pty Ltd and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which she is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. The information in this report that relates to the Helene, Hyperion, Titan, Telesto and Calypso Mineral Resource estimates is based on and fairly represents, information which has been prepared by Mr Lynn Widenbar BSc, MSc, DIC MAusIMM MAIG employed by Widenbar & Associates who is a consultant to the Company. Lynn Widenbar has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. The information in this report that relates to the Gingin North, Gingin South and Red Gully Mineral Resource estimates (not part of the Company’s material mining projects) is based on and fairly represents, information which has been prepared by Mr Lynn Widenbar BSc, MSc, DIC MAusIMM MAIG employed by Widenbar & Associates who is a consultant to the Company. Lynn Widenbar has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. This information was prepared and first disclosed under the JORC Code 2004. It has not been updated since to comply with the JORC Code 2012 on the basis that the information has not materially changed since it was last reported. The information in this report that relates to the Bidaminna Mineral Resource estimate (not part of the Company’s material mining projects) is based on and fairly represents, information which has been prepared by Mr Lynn Widenbar BSc, MSc, DIC MAusIMM MAIG employed by Widenbar & Associates who is a consultant to the Company. Lynn Widenbar has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person 14 Image Resources NL 2019 Annual Report 15 FINANCIAL REPORT STRIVING FOR EXCELLENCE Directors’ Report DDiirreeccttoorrss RReeppoorrtt Your directors present their report on the Company for the year ended 31 December 2019 . DIRECTORS The following persons were directors of Image Resources NL (“ Image”) during the year and up to the date of this report, unless stated otherwise: Robert Besley Patrick Mutz Chaodian Chen Aaron Chong Veoy Soo Huangcheng Li (Alternate: Dennis Lee appointed 5 February 2020) Peter Thomas George Sakalidis Fei Wu PRINCIPAL ACTIVITIES The principal activities of the Company during the year was the operation of the 100%-owned, high-grade, zircon-rich Boonanarring mineral sands project located 80km north of Perth in WA and exploration of tenements in the North Perth basin . RESULTS FROM OPERATIONS During the year the Company recorded an operating profit of $20,832,000 (for the year to 31 December 2018: profit of $3,311,000). Basic profit per share for the year was 2.14 cents (year to 31 December 2018: Profit of 0.39 cents). Diluted profit / loss per share for the year was 2.10 cents (year to 31 December 2018: Profit of 0.39 cents). DIVIDENDS No amounts have been paid or declared by way of dividend by the Company since the end of the previous financial year and the directors do not recommend the payment of any dividend. Dividend Policy The Company has a very basic dividend pol icy that provides for the Board of Directors, as soon as practicable after the end of a Company financial year, and to the extent permitted by law, to distribute to Shareholders as a dividend, all Excess Cash held at the end of that Financial Year; with Ex cess Cash defined as cash held by the Company, other than cash that the Board considers is necessary or desirable to be retained by the Company for the Company’s existing liabilities and future activities. REVIEW OF OPERATIONS A review of operations is covered elsewhere in this Annual Report. SIGNIFICANT CHANGES IN STATE OF AFFAIRS All significant changes in the state of affairs of the Company during th e year are discussed in detail above. SIGNIFICANT EVENTS SUBSEQUENT TO REPORTING DATE Other than the following matters:  On 30 January 2020, The Company’s thirteenth shipment of 20, 475 Dry Metric Tonnes of HMC finished loading backed by a letter of credit. Subsequently, on 6 February 2020, full payment for the shipment was received by Image, in USD.  On 10 February 2020, The Company completed its second scheduled loan note repayment including interest of US$7,871,238 for the Senior Secured Loan Notes facility. There were no other material significant events subsequent to the reporting date. LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS The Review of Operations and Mineral Resources and Ore Reserves Statement sections set out on pages 3 to 15 of this Annual Financial Report, provide an indication of the company’s likely development and expected results. In the opinion of the Directors, disclosure of any further information about these matters and the impact on Image Resources operations could result in unreasonable prejudice to the Company and has not been included in this report . ENVIRONMENTAL ISSUES The Company carries out operations in Australia which are subject to environmental regulations under both Commonwealth and State legislation in relation to those activities. The Company’s MD, Exploration Director, COO and Operations Manager are responsible for monitoring and reporting on compliance with all environmental regulations. During or since the financial year there have been no known signif icant breaches of these regulations. - 15 - 2019 Annual Report 17 Directors’ Report (cont.) DDiirreeccttoorrss RReeppoorrtt ((ccoonntt..)) INFORMATION ON DIRECTORS AND COMPANY SECRETARIES Robert Besley Chairman Appointed as Director and Chair on 8 June 2016 Robert Besley and has more than 40 years’ experience in the mining industry. Mr Besley has served in a number of Government and industry advisory roles including several years as Deputy Chairman of the NSW Minerals Council. He holds a BSc (Hons) in Economic Geology from the University of Adelaide and is a Member of the Australian Institute of Geoscientis ts. He managed the creation, listing and operation of two successful mining companies; CBH Resources Limited which he led as Managing Director from a small exploration company to Australia’s 4th largest zinc producer ; Directors’ Report (cont.) DDiirreeccttoorrss RReeppoorrtt ((ccoonntt..)) Aaron Chong Veoy Soo Non-Executive Director Mr Soo has been a long term supporter and shareholder in Image Resources. Mr Soo is an advocate & solicitor practising in West Malaysia with 20 years of experience in legal practice and currently a partner in Stanley Ponniah, Ng & Soo, Advocates & Solicitors. He also serves on the Company’s audit committee. Mr Soo has not been a director of any other listed public companies in the past 3 years. Chaodian Chen Non-Executive Director and Australmin Holdings Limited (acqui red by Newcrest) which brought into production a gold mine in WA and mineral sands Mr Chen founded Orient Zirconic in 1995 and has built the company into a leadi ng company in the zirconium industry. He served mine in NSW. More recently he was a founding Director of KBL Mining Limited which operated the Mineral Hill copper -gold mine as President and Chairman of the company until mid -2013 when China National Nuclear Corporation (CNNC) became the largest in NSW and was Chairman of Silver City Minerals Limited, which explor ed for silver-lead-zinc in the Broken Hill District. He was shareholder in Orient Zirconic. He became the Chairman of Murray Zircon when the compa ny was founded in 2011 as a result a Non-Executive and independent Director of Murray Zircon from commencement of development and production of the Mindarie of Orient Zirconic’s first investment in mining in Australia. Mr Chen is the Vice President of China non -ferrous metals industry Mineral Sands Project until June 2016. He also serves on the Company’s audit and remuneration committees. During the past association titanium zirconium & Hafnium Bran ch. He holds an EMBA degree and is a Certified Engineer. He also owns a number three years he has served as a director of the following other listed companies: of patents involving the processing of zircon . Mr Chen has not been a director of any other listed public companies in the past  Silver City Minerals Limited - appointed 5 March 2010, resigned effective 28 February 2019. 3 years. Patrick Mutz Managing Director Patrick Mutz has more than 30 years of international mining industry experience in technical (metallurgist), managerial, consulting and executive roles in all aspects of the industry from explorat ion through project development, mining and mine rehabilitation. He has operational experience in open cut, underground, and in -situ mining and related processing, on projects in the USA, Germany, Africa and Australia. Since his arrival in Australia from t he USA in 1998, he has served as CEO / Managing Director of a number of publicly listed and private mining companies based in South Australia, Victoria and Western Australia , primarily involved with project development and company transitioning from explor ation to production. Mr Mutz is a Fellow of the AusIMM. He holds a Bachelor of Science (Honours) and an MBA from the University of Phoenix in the US. Prior to joining Image Patrick was CEO of Murray Zircon Pty Ltd focusing on the development and mining an d processing operations of its 100%- owned Mindarie Mineral Sands Project in South Australia, where he led the company on its goal of becoming South Australia’s newest mineral sands mining company at that time. Mr Mutz has not been a director of any other listed public companies in the past 3 years. Peter Thomas Non-Executive Director Mr Thomas, having served on ASX listed company boards for over 30 years, has been a non -executive director of Image Resources NL since 10 April 2002. For over 30 years until June 2011, he ran a legal practise on his own account specialising in the delivery of wide ranging legal, corporate and commercial advice to listed explorers and miners. He serves on the Company’s remuneration committee. During the past three years he has served as a director of the following other listed companies:  Emu NL – appointed August 2007, continuing.  Middle Island Resources Limited – continuing. George Sakalidis Executive Director - Exploration Mr Sakalidis is an exploration geophysicist with over 35 years’ industry experience. His career has included extensive gold, diamond, base metals and mineral sands exploration. Mr Sakalidis has been involved in a number of significant mineral discoveries in Western Australia, including the Three Rivers and Rose gold deposits, the Dongara Mineral Sands Deposits, the Boonanarring-Gingin South-Hyperion Mineral Sands Deposits and he was involved in the tenement applications over the Silver Swan nickel deposit. He was also involved with the tenement application for the recently discovered Monty Copper mineralisation adjacent to the Degrussa Copper deposit. He was the founding Director of Magnetic Minerals Limited, which was taken over in March 2003 after he was instrumental in the discovery of the Dongara mineral sand deposits north of Eneabba. He is a founding Director and is currently an Executive Director of this Company (since listing on 4 July 2002) and is Managing Director of Magnetic Resources NL (which listed on 5 April 2007). Mr Sakalidis is also a founding director of ASX listed companies Meteoric Resources NL, Emu NL, and Potash West NL. During the past three years he has also served as a director of the following other listed companies:  Meteoric Resources NL - appointed February 2004,  Magnetic Resources NL - appointed August 2006, resigned November 2017. resigned October 2014, reappointed 29 January 2016.  Guangdong Orient Zirconic Ind Sci & Tech Co., Ltd, resigned 9 November 2016. Reappointed 11 January 2020. Fei (Eddy) Wu Non-Executive Director Mr Wu has solid operational experience in the Australian resource and mining industry. He specialises in combining the streng ths of Australian upstream mining with Chinese downstream processing and end use to optimise the strategy for resource development and maximise the resource value. As the first CEO of Murray Zircon, he built and led the team to complete the development and start-up at the Mindarie mineral sands project in late 2012. Mr Wu was app ointed as a Non-Executive Director of Murray Zircon in early 2013. He was the CEO of Queensland Mining Corporation Limited (QMC) from August 2013 until January 2018. He is currently a Non -Executive Director of QMC and the CEO of WIM Resources Pty Ltd. Eddy graduated from the University of Science and Technology, Beijing. He holds a Master’s Degree in Commerce (Finance) from the Australian National University and a Master’s Degree in Science from Cass Business S chool, City University London. He also serves on the Company’s audit and remuneration committees as Chair of both. During the past three years he has also served as a director of the following other listed company:  Queensland Mining Corporation Limited. Appointed 9 August 2013, resigned 31 January 2018. Huangcheng Li Non-Executive Director Mr Li is an investor from Taiwan, with more than 30 years of experience investing in various industries ranging from the gene ral merchandising, precious stones and certification businesses. Mr Li graduated from Tamka ng University and in 1981 founded Leecotex International Limited in Taiwan and Capital 88 International Limited in Hong Kong in 1993 where he served as the Managing Director. In 2015 Mr Li acquired a 49% ownership interest in Giochi Preziosi Group (“GP Gro up”) and served as the Vice President until July 2017. GP Group is a leading global toy company and has undergone a process of diversification and has expanded into new sectors and markets where it has successfully operated. Currently, Mr Li is the co -founder of Lee & Wu Company Limited, a company focusing support towards high-tech industries in the development of new material applications . Mr Li has not been a director of any other listed public companies in the past 3 years. Dennis Wilkins Company Secretary (Appointed 25 September 2012) Mr Wilkins is the founder and principal of DW Corporate Pty Ltd, a leading privately held corporate advisory firm servicing the natural resources industry. Since 1994 he has been a director of, and involved in the executiv e management of, several publicly listed resource companies with operations in Australia, PNG, Scandinavia and Africa. From 1995 to 2001 he was the Finance Director of Lynas Corporation Ltd during the period when the Mt Weld Rare Earths project was acquire d by the group. He was also founding director and advisor to Atlas Iron Limited at the time of Atlas’ initial public offering in 2006. Since July 2001 Mr Wilkins has been running DW Corporate Pty Ltd, where he advises on the formation of, and capital rais ing for, emerging companies in the Australian resources sector. AUDIT COMMITTEE At the date of this report the members of the Company’s audit committee comprise Messrs Besley, Soo and Wu (with Mr Wu undertaking the role of the Chair of that committee). D uring the year, the committee held one meeting. All members attended this meeting. 18 Image Resources NL - 16 - - 17 - 2019 Annual Report 19 Directors’ Report (cont.) DDiirreeccttoorrss RReeppoorrtt ((ccoonntt..)) RReemmuunneerraattiioonn RReeppoorrtt ((aauuddiitteedd)) Remuneration Report - audited REMUNERATION COMMITTEE At the date of this report the Remuneration Committee (“ committee”) comprises Messrs Besley, Thomas and Wu (with Mr Wu undertaking the role of the Chair of that committee). During the year, the committee held one meeting . All members attended Names and positions held of key management personnel (defined by the Australian Accounting Standards as being “those people having authority and responsibility for planning, directing, and controlling the activities of an entity, either directly or indirectly. This includes an entity's directors”) in office at any time during the financial year were: this meeting. MEETINGS OF DIRECTORS During the financial year ended 31 December 2019, there were seven meetings of directors held. Attendances by each director during the year were as follows: Directors’ Meetings Audit Committee Remuneration Committee Number Number Number Number Number Number eligible attended eligible attended eligible attended to attend to attend to attend 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 6 1 - - 1 - 1 - - 1 - - 1 - 1 - - 1 - 1 - - 1 - - 1 - - - - 1 - - Robert Besley Patrick Mutz Peter Thomas Aaron Soo George Sakalidis Fei (Eddy) Wu Chaodian Chen Huangcheng Li OPTIONS At the date of this report, there were no options held over ordinary paid shares. No options were issued to directors or executives as remuneration during the year ended 31 December 201 9. CORPORATE STRUCTURE Image is a no liability company incorporated and domiciled in Australia. ACCESS TO INDEPENDENT ADVICE Each director has the right, so long as he is acting reasonably in the interests of the Company and in the discharge of his duties as a director, to seek independent professional advice and recover the reasonable costs thereof from the Company. The advice shall only be sought after consultation about the mat ter with the chairman (where it is reasonable that the chairman be consulted) or, if it is the chairman that wishes to seek the advice or it is unreasonable that he be consulted, another director (if tha t be reasonable). The advice is to be made immediately available to all Board members other than to a director against whom privilege is claimed. INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS The Company has entered into agreements indemnifying, to the extent permitted by law, all the directors an d officers of the Company against all losses or liabilities incurred by each director and officer in their capacity as directors and officers o f the Company. During the year an amount of $70,902 (the year to 31 December 2018 : $46,426) was incurred in insurance premiums for this purpose. Key Management Personnel Position Robert Besley Patrick Mutz Peter Thomas Aaron Soo Non-Executive Chairman Managing Director Non-Executive Director Non-Executive Director George Sakalidis Executive Director – Exploration Fei (Eddy) Wu Chaodian Chen Huangcheng Li John McEvoy Todd Colton Non-Executive Director Non-Executive Director Non-Executive Director Chief Financial Officer Chief Operating Officer The Company’s policy for determining the nature and amount of emoluments of key management personnel is set out below: Key Management Personnel Remuneration and Incentive Policies The Remuneration committee’s mandate is to make recommendations to the Boar d with respect to appropriate and competitive remuneration and incentive policies (including basis for paying and the quantum of any bonuses), for key management personnel and others as considered appropriate to be singled out for special attention, which: • • • • motivates them to contribute to the growth and success of the Company within an appropriate control framework; aligns the interests of key leadership with the interests of the Company’s shareholders; are paid within any limits imposed by the Constitution and make recommendations to the Board with respect to the need for increases to any such amount at the Company’s annual general meeting; and in the case of directors, only permits participation in equity -based remuneration schemes after appropriate disclos ure to, due consideration by and with the approval of the Company’s shareholders. Non-Executive Directors • • The committee is to ensure that non-executive directors are not provided with retirement benefits other than statutory superannuation entitlements. To the extent that the Company adopts a remuneration structure for its non -executive directors other than in the form of cash and superannuation, the disclosure there of shall be made to stakeholders and approvals obtained as required by law and the ASX listing rules. Incentive Plans and Benefits Programs The committee is to: • • • review and make recommendations concerning long -term incentive compensation plans, including the use of equity - based plans. Except as otherwise delegated by the Board, the committee will act on behalf of the Board to administer equity-based and employee benefit plans, and as such will discharge any responsibilities under those plans, including making and authorising grants, in accordance with the terms of those plans; ensure that, where practicable, incentive plans are designed around appropriate and realistic performance targets that measure relative performance and provide remuneration when they are achieved; and review and, if necessary, improve any existing benefit programmes establish ed for employees. PROCEEDINGS ON BEHALF OF THE COMPANY No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of Employee Share Plan The Image Employee Share Plan (ESP) was implemented after shareholder approval at the Shareholder General Meeting held the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on on 13 February 2018. behalf of the Company for all or part of those proceedings. AUDITOR’S INDEPENDENCE DECLARATION A copy of the auditor’s independence declaration as required under section 307C of the Corporati ons Act 2001 is set out in this annual report. The purpose of the ESP is to give an additional incentive to employees of the Company to provide dedicated and ongoing commitment and effort to the Company, and for the Company to reward its employees for their efforts. It is considered to be a n effective way to align the objectives of management with the interests of shareholders. 20 Image Resources NL - 17 - - 18 - 2019 Annual Report 21 RReemmuunneerraattiioonn RReeppoorrtt –– aauuddiitteedd ((ccoonntt..)) Remuneration Report - audited (cont.) RReemmuunneerraattiioonn RReeppoorrtt –– aauuddiitteedd ((ccoonntt..)) Remuneration Report - audited (cont.) The plan rewards share price growth. The plan shares are of value to the holder of the shares only to the extent to which the Current Board Remuneration Structure share price exceeds the share price after the offer is made to the employee. Furthermore, the plan does not give rise to a ta x The current remuneration structure for the board is as follows: liability on issue (unlike some options) therefore encouraging long term holdings. Issue of Plan Shares to Directors of the Company requires prior approval of Shareholder in accordance with Listing Rule 10.14 . Director Annual Directors Fees Committee Fees Mr R Besley (Non-Executive Chairman) $60,000 + statutory super $5,000 + statutory super During the 31 December 2019 year 10,257,301 ESP shares were issued. Of these 1,303,813 shares were issued to Directors. Mr P Mutz (Managing Director) $479,000 inclusive of super - • • • • • • • • • The principal provisions of the plan include: The Plan is available to all executive Directors and employees of the Company; The Company may at any time, in its absolute discretion, make an offer to an Eligible Employee; The number of Plan Shares issued to an Eligible Employee is determined by the Directors of the Company; The issue price is the volume weighted average price of shares in the 5 trading days prior to the Iss ue Date; The person accepting the offer (“Participant”) is deemed to have agreed to borrow from the Company on the terms of the loan agreement referred to below an amount to fund the purchase of the Plan Shares; Mr P Thomas (Non-Executive Director) $43,526 inclusive of super $5,000 + statutory super Mr A Soo (Non-Executive Director) $43,526 1 - Mr F Wu (Non-Executive Director) $43,526 inclusive of super $5,000 + statutory super Mr C Chen (Non-Executive Director) Mr H Li (Non-Executive Director) $43,526 1 $43,526 1 - - - The Plan Shares rank pari passu with all iss ued fully paid shares in respect of voting rights, dividends and entitlement Mr G Sakalidis (Executive Technical Director) $225,000 inclusive of super to participate in any bonus or rights issues; Plan participants may not dispose of any ESP Shares within 12 months of the issue date; Until the loan to the Participant is fully re paid the Company has control over the disposal of the Plan Shares; and Application will be made as soon as practicable after the allotment of the Plan Shares for listing for quotation on ASX. Note 1: No super is required to be paid as the Directors are permanent foreign residents . Key Management Personnel Remuneration Table 1: Remuneration for the year ended 31 December 201 9 The principal provisions of the loan agreement include: • • • • The amount lent will be an advance equal to the issue price of the Plan Shares multiplied by the number of Plan Shares issued: The repayment date is the date falling 3 years after the Issue Date. The loan can be repaid at any time but the Participant must pay an y amount outstanding on the date the employee ceases to be an employee of Image (or such late date as determined by Image at its discretion. All dividends declared and paid on the Plan Shares will be applied towards the repayment of the advance and there i s no interest on the advance. A holding lock will be placed on the Plan Shares until the loan is fully repaid. Retirement and Superannuation Payments Prescribed benefits were provided by the Company to direct ors by way of superannuation contribut ions to externally managed complying superannuation funds during the year. These benefits were paid as superannuation contributions to satisfy (at least) the requirements of the Superannuation Contribution Guarantee Act and in satisfaction of any salary sacrifice re quests. All contributions were made to accumulation type funds selected by the director and accordingly actuarial assessments were not required. Relationship between Company Performance and Remuneration There is no relationship between the financial perfor mance of the Company for the current or previous financial year and the remuneration of the key management personnel. Remuneration is set having regard to market conditions and to encourage the continued services of key management personnel. Use of Remuneration Consultants The Company did not employ the services of a remuneration consultant during the financial year ended 31 December 201 9 to make a remuneration recommendation in relation to any Key Management Personnel. Short-term benefits Directors Fees/Salary ($) Other Fees & contractual payments ($) Non- monetary benefits ($) Post- employment Share-based payments Statutory superann uation ($) Equity- settled share based payments ($) Non-Executive Directors Robert Besley Peter Thomas Aaron Soo Fei (Eddy) Wu Chaodian Chen Huang Cheng Li Executive Directors 53,333 36,625 32,254 36,625 32,254 32,254 - - - - - - Patrick Mutz 426,133 202,500 George Sakalidis 193,074 17,138 Executive Officers John McEvoy Todd Colton Total 327,159 122,216 325,000 141,909 1,494,711 483,763 - - - - - - - - - - - 5,067 3,479 - 3,479 - - 23,867 18,342 22,840 25,000 102,074 - - - - - - - - - - - Total ($) 58,400 40,104 32,254 40,104 32,254 32,254 652,500 228,554 472,215 491,909 2,080,548 - 19 - 22 Image Resources NL - 21 - 2019 Annual Report 23 RReemmuunneerraattiioonn RReeppoorrtt –– aauuddiitteedd ((ccoonntt..)) Remuneration Report - audited (cont.) RReemmuunneerraattiioonn RReeppoorrtt –– aauuddiitteedd ((ccoonntt..)) Remuneration Report - audited (cont.) Table 1: Remuneration for the year ended 31 December 2018 John McEvoy – Chief Financial Officer Short-term benefits Directors Fees/Salary ($) Other Fees & contractual payments ($) Non- monetary benefits ($) Post- employment Share-based payments Statutory superann uation ($) Equity- settled share based payments ($) Non-Executive Directors Robert Besley Peter Thomas Aaron Soo Fei (Eddy) Wu Chaodian Chen Huang Cheng Li Executive Directors 45,000 35,000 30,000 35,000 30,000 22,151 - - - - - - Patrick Mutz 319,821 110,663 George Sakalidis 147,821 - Executive Officers John McEvoy Todd Colton 1 Total 274,062 40,000 27,084 - 965,939 150,663 Note 1 Mr Colton became a KMP on 1 December 2018. Compensation Options as at 31 December 2019 Nil Key Management Personnel Contracts - - - - - - - - - - - 4,275 3,325 - 3,325 - - 20,167 14,043 21,420 2,083 68,638 - - - - - - - - - - - Total ($) 49,275 38,325 30,000 38,325 30,000 22,151 450,651 161,864 335,482 29,167 1,185,240 Remuneration arrangements for Key Management Personnel are formalised in employment agreements. The following outlines the details of contracts: Executives Patrick Mutz – Managing Director • • • • Base Salary - $479,000 per annum (from 1 January 2020) inclusive of superannuation Performance bonus – participates in a Company-wide executive performance incentive scheme. Allowances – from 1 January 2019, the Company will contribute up to $ 40,000 per 12 month period or proportion thereof for accommodation whilst located in Perth a nd towards airfares for travel between Adelaide and Perth. The Company provides a Company vehicle for use on Company business and commuting between his place of residence in the Perth area and the corporate office and the Company’s various mining and explo ration sites as and when necessary . The agreement may be terminated by the Company by the provision of three months written notice. The employee may terminate the contract by the provision of two months’ notice. George Sakalidis – Executive Director – Exploration • • • Base Salary - $225,000 per annum (from 1 December 2018) inclusive of superannuation based on a 70% commitment of time being an average of 28 hours work per week. Salary is paid monthly based on a rate of $155 per hour inclusive of 9.5% superannuation. Performance bonus – participates in a Company-wide executive performance incentive scheme. The agreement may be terminated by the provision of one month’s written notice by either the Company or Mr Sakalidis. • • • Base Salary - $350,000 per annum (from 1 December 2018) inclusive of superannuation. Performance bonus – participates in a Company-wide executive performance incentive scheme. The agreement may be terminated by the provision of three month’s written notice by either the Company or Mr McEvoy. Todd Colton – Chief Operating Officer • • • Base Salary - $350,000 per annum (from 1 December 2018) inclusive of superannuation. Performance bonus – participates in a Company-wide executive performance incentive scheme. The agreement may be terminated by the provision of three month’s written notice by either the Company or Mr Colton. Non-Executives Clause 91 (1) of the Company’s Constitution provides that Directors are entitled to receive Directors’ fees within the limits approved by shareholders in general meeting. Shareholde rs approved the aggregate fees to be paid to Directors to be $300,000 per annum on 30 November 2009. Each Non-Executive Director’s actual remuneration for the year ended 31 December 201 9 and the year to 31 December 201 8 is shown above. Each Non-Executive Director has an unspecified term of appointment, which is subject to the Company’s Constitution. Conditions are reviewed at least annually by the Remuneration Committee. There are no termination benefits for any Non-Executive Director. Base fees for each non- executive director during their period in office were as follows: Base Fees per annum $ 48,333 31,625 32,254 31,625 32,254 32,254 Audit Committee Fee $ Remuneration Committee Fee $ - - - - - - 5,000 5,000 - 5,000 - - Superannuation % 9.5 9.5 - 9.5 - - Robert Besley Peter Thomas Aaron Soo Fei (Eddy) Wu Chaodian Chen Huang Cheng Li Consultant Agreements DW Corporate Services Pty Ltd: provides the services of Dennis Wilkins as Company Secretary. These services are provided under a services agreement for a fixed monthly retainer fee of $2,000 plus additional services charged at specified hourly ra tes. Four months’ written notice of term ination is required from either party. Guaranteed Rate Increases There are no guaranteed rate increases fixed in the contracts of any of the key management personnel. Options and Rights Granted as Remuneration During the financial year no options were issued to key management personnel to acquire fully paid ordinary shares. Options held by Key Management Personnel No Key Management Person or their related entities held options in the Com pany during the financial year. 24 Image Resources NL - 22 - - 22 - 2019 Annual Report 25 RReemmuunneerraattiioonn RReeppoorrtt –– aauuddiitteedd ((ccoonntt..)) Remuneration Report - audited (cont.) Auditor’s Independence Declaration Shares held by Key Management Personnel The number of shares in the company held at the beginning and end of the year and net movements during the financial year by key management personnel and/or their r elated entities are set out below: Balance at Beginning of Year or Date of Appointment Purchased during the Year Award under Employee Share Plan Other Changes during the Year Balance at End of Year or Date of Retirement Name Directors Robert Besley Peter Thomas 566,667 2,104,306 - - Aaron Soo 12,473,000 1,857,000 Fei Wu Chaodian Chen - - Huang Cheng Li 136,445,311 - - - - - - - - - George Sakalidis 4,378,489 25,024 744,352 Patrick Mutz 1,000,000 1,641,343 Executive Officers John McEvoy Todd Colton Totals 2,425,887 716,860 609,999 605,569 - 160,110,520 1,882,024 3,601,263 - - - - - - - - - - - 566,667 2,104,306 14,330,000 - - 136,445,311 5,147,865 2,641,343 3,035,885 1,312,429 165,583,806 Auditor's Independence Declaration As auditor for the audit of Image Resources NL for the period ended 31 December 2019, I declare that, to the best of my knowledge and belief, there have been: I) II) no contraventions of the independence requirements of the Corporations Act 2001 in relation to the audit; and no contraventions of any applicable code of professional conduct in relation to the audit. Other Equity-related KMP Transactions There have been no other transactions involving equity instruments, apart from those described in the tables above, relating to options, rights and shareholdings. Other Transactions with KMP and/or their Related Parties There were no other transactions conduc ted between the Company and KMP or their related parties, apart from those disclosed above relating to equity, compensation and loans, that were conducted other than in accordance with normal employee, customer or supplier relationships on terms no more fa vourable than those reasonably expected under arm’s length dealings with unrelated persons. This Report of Directors, incorporating the Remuneration Report, is s igned in accordance with a resolution of the directors Elderton Audit Pty Ltd Nicholas Hollens Managing Director 28 February 2020 Perth ROBERT BESLEY CHAIRMAN Perth, 28 February 2020 26 Image Resources NL - 24 - 2019 Annual Report 27 T +61 8 6324 2900 E info@eldertongroup.com A Level 2, 267 St Georges Terrace, Perth WA 6000 ABN 51 609 542 458 W www.eldertongroup.com P PO Box 983 West Perth WA 6872 Corporate governance statement CCoorrppoorraattee ggoovveerrnnaannccee ssttaatteemmeenntt SSttaatteemmeenntt ooff pprrooffiitt oorr lloossss aanndd ootthheerr Statement of profit or loss and other comprehensive income ccoommpprreehheennssiivvee iinnccoommee For the Year Ended 31 December 2019 For the Year Ended 31 December 2019 Image Resources NL and the Board are committed to achieving and demonstrating the highest standards of corporate governance. Image Resources NL has reviewed its corporate governance practices against the Corporate Governance Principles and Recommendations (3rd edition) published by the ASX Corporate Governance Council. The 2019 Corporate Governance Statement is dated at 25 February 2020 and reflects the corporate governance practices in place throughout the period ended 31 December 2019. The 2019 Corporate Governance Statement was approved by the Board on 25 February 2020. A description of the Company’s current corporate governance practices is set out in the Company’s Corporate Governance Statement which can be viewed at www.imageres.com.au. Continuing operations Operating sales revenue Cost of sales Gross profit Other income Government royalties Shipping and other selling costs Corporate expenses Exploration and evaluation expenses Other expenses Realised foreign currency gain / (loss) Unrealised foreign currency gain / (loss) Operating profit / (loss) Finance income Financing costs Profit / (loss) before tax Income tax (expense) / benefit Net profit after tax Other comprehensive income Changes in the fair value of available -for-sale financial assets Total comprehensive income for the period, net of t ax Earnings per share Basic earnings per share Diluted earnings per share The accompanying notes form part of these financial statements. Notes 3 3 3 3 6 5 5 Year to 31 Dec 2019 ($000) 146,196 (82,211) 63,985 - (6,932) (7,500) (4,627) (3,345) (1,009) (1,797) 439 39,214 48 (10,045) 29,217 (8,385) 20,832 - 20,832 Year to 31 Dec 2018 ($000) - - - 15 - - (3,211) (1,371) (733) 706 (4,015) (8,609) 426 (1,250) (9,433) 12,743 3,310 10 3,320 Cents Cents 2.14 2.10 0.39 0.39 28 Image Resources NL - 26 - - 27 - 2019 Annual Report 29 Statement of financial position SSttaatteemmeenntt ooff ffiinnaanncciiaall ppoossiittiioonn As at 31 December 2019 As at 31 December 2019 SSttaatteemmeenntt ooff cchhaannggeess iinn eeqquuiittyy Statement of changes in equity For the Year Ended 31 December 2019 For the Year Ended 31 December 2019 Current assets Cash and cash equivalents Trade and other receivables Inventory Other assets Total current assets Non-current assets Property, plant and equipment Deferred Tax Assets Other financial assets Total non-current assets Total assets Current liabilities Trade and other payables Provisions Borrowings Total current liabilities Non-Current Liabilities Provisions Borrowings Total non-current liabilities Total liabilities Net assets Equity Issued capital Reserves Accumulated losses Total equity The accompanying notes form part of these financial statements. Notes 7 8 12 9 10 6 11 13 14 15 14 15 16 17 17 31 Dec 2019 ($000) 49,935 593 16,789 468 67,785 95,582 4,358 2,885 102,825 170,610 16,210 692 37,679 54,581 15,380 18,858 34,238 88,819 81,791 108,553 3,098 (29,860) 81,791 31 Dec 2018 ($000) 11,886 1,463 9,247 536 23,132 101,062 12,743 447 114,252 137,384 11,667 454 12,565 24,686 4,508 51,388 55,896 80,582 56,802 103,170 4,324 (50,692) 56,802 Issued Capital ($000) Financial Assets at FVOCI ($000) Warrants Reserve ($000) Employee Benefit Reserve ($000) Accumulated Losses ($000) Total ($000) Balance at 1 January 2018 68,917 Comprehensive Profit Operating profit for the year Other comprehensive income Total comprehensive loss for the year Transactions with owners capacity as owners in their Shares issued during the year Cost of share issue Warrants issued during the year Options expired during the year - - - 35,735 (1,482) - - Total transactions with owners in their capacity as owners 34,253 - - 10 10 - - - - - - - - - - - 4,314 42 (54,044) 14,915 - - - - - - 3,310 3,310 - 10 3,310 3,320 - - - 35,735 (1,482) 4,314 - (42) 42 - 4,314 (42) 42 38,567 Balance at 31 December 2018 103,170 10 4,314 Balance at 1 January 2019 103,170 10 4,314 Comprehensive profit Operating profit for the year Other comprehensive income Total comprehensive loss for the year Transactions with owners capacity as owners in their Shares issued during the year Cost of share issue Warrants exercised during the year Options expired during the year Total transactions with owners in their capacity as owners - - - 4,179 (22) 1,226 - 5,383 - - - - - - - - - - - - (1,226) - (1,226) Balance at 31 December 2019 108,553 10 3,088 - - - - - - - - - - - (50,692) 56,802 (50,692) 56,802 20,832 20,832 - - 20,832 20,832 - - - - - 4,179 (22) - - 4,157 (29,860) 81,791 The accompanying notes form part of these financial statements . 30 Image Resources NL - 28 - - 29 - 2019 Annual Report 31 Statement of cash flows SSttaatteemmeenntt ooff ccaasshh fflloowwss For the Year Ended 31 December 2019 For the Year Ended 31 December 2019 Notes CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Payments to suppliers and contractors Interest received Interest paid Net cash from / (used in) operating activities 7 CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of property, plant and equipment Purchase of property, plant and equipment Payments for exploration and evaluation Proceeds from sale of investments Year to 31 Dec 2019 ($000) 145,409 (79,479) 50 (3,061) 62,919 76 (9,794) (3,164) - Year to 31 Dec 2018 ($000) 7 (2,630) 425 (201) (2,399) 2 (64,144) (1,435) 15 Net cash (used in) investing activities (12,882) (65,562) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from new issues of shares Payments for share issue costs Proceeds from employee loan repayments Proceeds from interest bearing loan Repayment of borrowings Net cash inflows (used in) / from financing activities Net increase in cash held Cash at beginning of the year Effect of exchange fluctuations on cash held 16 15 15 1,534 (39) 109 566 (14,186) (12,016) 38,021 11,886 28 25,085 (1,484) - 51,386 (47) 74,940 6,979 4,423 484 Cash at the end of the year 7 49,935 11,886 The accompanying notes form part of these financial statements. NNootteess ttoo tthhee ffiinnaanncciiaall ssttaatteemmeennttss Notes to the financial statements For the Year Ended 31 December 2019 For the Year Ended 31 December 2019 This financial report includes the financial statements and notes of the Company . Note 1 Statement of Significant Accounting Policies Basis of Preparation The financial report is a general -purpose financial report that has been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. The financial statements were authorised for issue on 6 February 2020, subject to minor typographical amendments. The following is a summary of the material accounting policies adopted by the Company in the preparation of the financial rep ort. Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a financial report containing relevant and reliable information about transactions, events and conditions. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards. Material accounting policies adopted in the preparation of this financial report are presented below and have been consistently applie d unless otherwise stated. Reporting Basis and Conventions The financial report has been prepared on an accruals basis and is based on historical costs modified by the revaluation of selected non-current assets, financial assets and financial liabilities for which the fair value ba sis of accounting has been applied. Going Concern These financial statements have been prepared on the going concern basis, which contemplates the continuity of normal business activities and the realisation of assets and discharge of liabilities in the no rmal course of business. The Directors consider the going concern basis of preparation to be appropriate based on forecast future cash flows. New or amended Accounting Standards and Interpretations adopted The Company has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period. Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. New or Amended Accounting Standards and Interpretations Adopted The following Accounting Standards and Interpretations are most relevant to the Company: AASB 16 Leases The AASB issued a new standard which, amongst other things, has the impact of requiring the Company to account for material operating leases in a similar manner to which it already accounts for finance leases. The Company adopted AASB 16 on the required effective date 1 January 2019. The adoption of the AASB resulted in equipment that was previously being classified as operating lease now recognised on the balance sheet. This resulted in recognition of a right -of-use asset and a corresponding liability bei ng the present value of future lease payments. Over the life of the lease, the lease liability will incur interest expense and is reduced as lease payments are made. The right-of-use asset is amortised on a straight-line basis over its lease term. The pattern of expense recognition changes with a higher expense at lease commencement due to a higher lease liability at the time. Image Resources adopted AASB 16 using the modified retrospective approach. There is no restatement of comparative periods and the lease liability has been set to the same value as the right -of-use asset. Image Resources has elected to apply practical expedients allowed under the modified retrospective approach and not recognise short -term or low-value leases on its balance sheet but to account for the lease expense on a straight line basis over the remaining lease term. The Company has elected not to include initial direct costs in the measurement of the right -of-use asset for operating leases in existence at the date of initial appli cation of AASB 16, being 1 January 2019. At this date, the Company has also elected to measure the right-of-use assets at an amount equal to the lease liability adjusted for any prepaid or accrued lease payments that existed at the date of transition. Instead of performing an impairment review on the right -of-use assets at the date of initial application, the Company has relied on its historic assessment as to whether leases were onerous immediately before the date of initial application of AASB 16. 32 Image Resources NL - 29 - - 31 - 2019 Annual Report 33 NNootteess ttoo tthhee ffiinnaanncciiaall ssttaatteemmeennttss ((ccoonntt..)) Notes to the financial statements (cont.) For the Year Ended 31 December 2019 For the Year Ended 31 December 2019 NNootteess ttoo tthhee ffiinnaanncciiaall ssttaatteemmeennttss ((ccoonntt..)) Notes to the financial statements (cont.) For the Year Ended 31 December 2019 For the Year Ended 31 December 2019 On transition to AASB 16 the weighted average incremental borrowing rate applied to lease liabilities recognised under AASB All translation differences relating to transactions and balances denominated in foreign curr ency are taken to the Statement 16 was 8%. The Company has benefited from the use of hindsight for determining the lease term wh en considering options to of Profit and Loss. extend and terminate leases. This resulted in recognition a right-of-use asset $195,791 and a lease liability of $195,791. It also resulted in recognition of additional expense for the year ended 31 December 2019 of $5,000. Refer to notes 15 and 18 for the Company’s lease commitments. ACCOUNTING POLICIES a) Revenue Recognition The Company recognises revenue as follows: Revenue from contracts with customers Revenue is recognised at an amount that reflects the consideration to which th e Company is expected to be entitled in exchange for transferring goods or services to a customer. For each contract with a customer, the Company: identifies the contract with a customer; identifies the performance obligations in the contract; determines t he transaction price which takes into account estimates of variable consideration and the time value of money; allocates the transaction price to the separate performance obligations on the basis of the relative stand -alone selling price of each distinct g ood or service to be delivered; and recognises revenue when or as each performance obligation is satisfied in a manner that depicts the transfer to the customer of the goods or services promised. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of the initial transaction. Non -monetary items measured at fair value in a foreign currency are translated using the exchange rate at the date when the fair value was determined. d) Exploration and Evaluation Expenditure All exploration and evaluation expenditure is expensed to the Statement of Profit or Loss and other Comprehensive Income as incurred. The effect of this write -off is to decrease the profit incurred from continuing operations as disclosed in the Statement of Profit or Loss and other Comprehensive Income and to decrease the carrying values in the Statemen t of Financial Position. That the carrying value of mineral assets, as a result of the operation of this policy, is zero does not necessarily reflect the board’s view as to the market value of that asset. e) Asset Acquisitions The cost method is used for all acquisitions of assets regardless of whether shares or other assets are acquired. Cost is determined as the fair value of assets given up at the date of acquisition plus costs incidental to the acquisition. Costs relating to the acquisition of new areas of interest are classified as either exploration and evaluation expenditure or mine properties based on the stage of development reached at the date of acquisition. Variable consideration within the transaction price, if any , reflects concessions provided to the customer such as discounts, f) Goods and Services Tax (GST) rebates and refunds, any potential bonuses receivable from the customer and any other contingent events. Such estimates Revenues, expenses and assets are recognised net of the amount of GST except where the GST incurred on a purchase are determined using either the 'expected value' or 'most likely amou nt' method. The measurement of variable consideration of goods and services is not recoverable from the taxation authority. In these circumstances, the GST is recognised as is subject to a constraining principle whereby revenue will only be recognised to the extent that it is highly probable that part of the cost of acquisition of the asset or as part of the expense item as appli cable. Receivables and payables in the a significant reversal in the amount of cumulative revenue recognised will no t occur. The measurement constraint continues Statement of Financial Position are shown inclusive of GST. until the uncertainty associated with the variable consideration is subsequently resolved. Amounts received that are subject to the constraining principle are initially recognised as deferred revenue in the for m of a separate refund liability. Sale of goods 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 P osition. Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of investing and Revenue from the sale of goods is recognised at the point in time when the customer obtains control of the goods, which financing activities, which are disclosed as operating cash flows. is generally at the time of delivery. Rendering of services Revenue from a contract to provide services is recognised over time as the services are rendered based on either a fixed Commitments and contingencies are disclosed net of the amoun t of GST recoverable from, or payable to, the taxation authority. g) Income Tax price or an hourly rate. Interest Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asse t to the net carrying amount of the financial asset. Other revenue Other revenue is recognised when it is received or when the right to receive payment is established. b) Employee Benefits Provision is made for the Company’s liability for employee benefits arising from services rendered by non-casual employees to balance date. Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled. c) Foreign Currency Translation Functional and Presentation Currency Both the functional and presentation currency of Image is Australian Dollars. Foreign Currency Translation Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rat e of exchange at balance date. 34 Image Resources NL - 32 - The income tax expense for the year comprises current income tax expense and deferred tax expense. Current income tax expense charged to the Statement of Profit or Loss and Other Comprehensive Income is the tax payable on taxable income calculated using applicable income tax rates enacted, or substantially enacted, as at reporting date. Current tax liabilities and assets are therefore measured at the amounts expected to be p aid to or recovered from the relevant taxation authority. Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as well as unused tax losses, if any in fact are brought to account. Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets also result where amounts have been fully expensed but future tax deductions are available. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss. Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates enacted or substantively enacted at reporting date. Their measureme nt also reflects the manner in which management expects to recover or settle the carrying amount of the related asset or liability. Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised. Current tax assets and liabilities are offset where a legally enforceable right of set -off exists and it is intended that net settlement or simultaneous re alisation and settlement of the respective asset and liability will occur. Deferred tax assets - 33 - 2019 Annual Report 35 Notes to the financial statements (cont.) NNootteess ttoo tthhee ffiinnaanncciiaall ssttaatteemmeennttss ((ccoonntt..)) For the Year Ended 31 December 2019 For the Year Ended 31 December 2019 and liabilities are offset where a legally enforceable right of set -off exists, the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur i n future periods in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled. h) Cash and Cash Equivalents Cash and cash equivalents include cash on hand, deposits held at call with banks and other short -term highly liquid investments with original maturities of three months or less. i) Impairment of Assets At each reporting date, the Company reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expe nsed to the Statement of Profit or Loss and Other Comprehensive Income. This policy has no application where paragraph ( d) Exploration and Evaluation Expenditure applies. j) Earnings per Share (i) Basic Earnings per Share – Basic earnings per share (EPS) is determined by dividing the loss from continuing operations after related income tax expense by the weighted average number of ordinary shares outstanding during the financial year. (ii) Diluted Earnings per Share – Options that are considered to be dilutive are taken into consideration when calculating the diluted earnings per share. k) Inventory Inventories of heavy mineral concentrate are valued at the lower of an average weighted cost and net realisable value (NRV). Cost comprises direct costs and an appropriate proportion of fixed and variable expenditure including depreciation and amortisation. Inventories of consumable supplies and spare parts to be used in production are valued at weighted average cost. NRV is the estimated selling price in the ordinary course of business less the estimated costs of production and to complete the sale. l) Property, plant, and equipment Property, plant and equipment is stated at historical cost, less accumulated depreciation and accumulated impairment losses, if any. Historical cost includes expenditure that is directly attributable to the acquisition of the items and costs incurred in bringing the asset into use. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as a ppropriate, only when it is probable that future economic benefits associated with the item flow to the Company and the cost of the item can be measured reliably. Mine development costs are capitalised to property, plant and equipment only once a decision to mine is made and the development is fully funded. Mine development expenditure represents the cost incurred in preparing mines for commissioning and production, and also includes other attributable costs incurred before production commences. These costs are capitalised to the extent they are expected to be recouped through successful exploitation of the related mining project. Once production commences, these costs are amortised over the estimated economic life of the mine on a units of production basis. Mine development costs are written off if the mine property is abandoned. Development costs incurred to maintain production are expensed as incurred against the related production. At each reporting date, the entity assesses whether there is any indicatio n that an asset may be impaired. Where an indicator of impairment exists, the entity makes a formal assessment of recoverable amount. Where the carrying amount of an asset exceeds its recoverable amount the asset is considered impaired and is written down to its recoverable amount. Recoverable amount is the greater of fair value less costs of disposal and value in use. - 34 - 36 Image Resources NL NNootteess ttoo tthhee ffiinnaanncciiaall ssttaatteemmeennttss ((ccoonntt..)) Notes to the financial statements (cont.) For the Year Ended 31 December 2019 For the Year Ended 31 December 2019 Depreciation Depreciation is provided on a straight-line or units of production basis on all plant and equipment commencing from the time the asset is held ready for use. Major depreciation periods are: • • Plant and equipment – 1 to 5 years Motor vehicles – 3 to 5 years An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de -recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement when the asset is derecognised. The assets’ residual values, useful lives and depreciation methods are reviewed at each reporting period and adjusted prospectively, if appropriate. m) Borrowings Recognition and Measurement Borrowings are initially recognised at fair value and revalued where the borrowings are denominated in a foreign currency. Transaction costs paid on the establishment of loan facilities are capitalised to property, plant and equipment to the extent that it is probable that some or all of the facility will be drawn down and that the borrowings are directly related to the purchase of property, plant and equipment. Where there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is expensed to profit and loss. Borrowing costs incurred after the property, plant and equipment is installed and operating are expensed to the profit and loss statement directly. Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period. The fair value of financial liabilities carried at amortised cost approximates their carrying values. n) Investments and other financial assets Investments and other financial assets are initially measured at fair value. Transaction costs are included as part of the initial measurement, except for financial assets at fair value through profit or loss. Such assets are subsequently measured at either amortised cost or fair value depending on their classification. Classification is determined based on both the business model within which such assets are held and the contractual cash flow characteristics of the financial asset unless, an accounting mismatch is being avoided. Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the Company has transferred substantially all the risks and rewards of ownership. When there is no reasonable expectat ion of recovering part or all of a financial asset, it's carrying value is written off. Financial assets at fair value through profit or loss Financial assets not measured at amortised cost or at fair value through other comprehensive income are classified as financial assets at fair value through profit or loss. Typically, such financial assets will be either: (i) held for trading, where they are acquired for the purpose of selling in the short -term with an intention of making a profit, or a derivative; or (ii) designated as such upon initial recognition where permitted. Fair value movements are recognised in profit or loss. Financial assets at fair value through other comprehensive income Financial assets at fair value through other comprehensive income include equity investments which the Company intends to hold for the foreseeable future and has irrevocably elected to classify them as such upon initial recognition. Impairment of financial assets The Company recognises a loss allowance for expected credit losses on financial assets which are either measured at amortised cost or fair value through other comprehensive income. The measurement of the loss allowance depends upon the Company’s assessment at the end of each reporting period as to whether the financial instrument's credit risk has increased significantly since initial recognition, based on reasonable and supportable information that is available, without undue cost or effort to obtain. Where there has not been a significant i ncrease in exposure to credit risk since initial recognition, a 12 -month expected credit loss allowance is estimated. This represents a portion of the asset's lifetime expected credit losses that is attribut able to a default event that is possible within t he next 12 months. Where a financial asset has become credit impaired or where - 35 - 2019 Annual Report 37 NNootteess ttoo tthhee ffiinnaanncciiaall ssttaatteemmeennttss ((ccoonntt..)) Notes to the financial statements (cont.) For the Year Ended 31 December 2019 For the Year Ended 31 December 2019 NNootteess ttoo tthhee ffiinnaanncciiaall ssttaatteemmeennttss ((ccoonntt..)) Notes to the financial statements (cont.) For the Year Ended 31 December 2019 For the Year Ended 31 December 2019 it is determined that credit risk has increased significantly, the loss allowance is based on the asset's lifetime expected credit losses. The amount of expected credit loss rec ognised is measured on the basis of the probability weighted present Instead of performing an impairment review on the right -of-use assets at the date of initial application, the Comp any has relied on its historic assessment as to whether leases were onerous immediately before the date of initial application of value of anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate. AASB 16. For financial assets measured at fair value through other comprehe nsive income, the loss allowance is recognised within other comprehensive income. In all other cases, the loss allowance is recognised in profit or loss. Fair Value Fair value is determined based on closing market prices for all quoted investments. Valuat ion techniques are applied to On transition to AASB 16 the weighted average incremental borrowing rate applied to lease liabilities recognised und er AASB 16 was 8%. The Company has benefited from the use of hindsight for determining the lease term when considering options to extend and terminate leases. This resulted in recognition a right -of-use asset $195,791 and a lease liability of $195,791. It also resulted in recognition of additional expense for the year ended 31 December 2019 of $5,000. determine the fair value for all unlisted securities, including recent arm’s length transactions, reference to similar q) Contributed Equity instruments and option pricing models. The expression “fair value” – and derivatives thereof – wherever used in this report bears the meaning ascribed to that expression by the Australian Accounting Standards Board. Impairment At each reporting date, the Company assesses whether there is objective evidence that a financial instrument has been impaired. In the case of available-for-sale financial instruments, a prolonged decline in the value of the instrument is considered to determine whether an impairment has arisen. Impairment losses are recognised in the profit or loss. Financial Guarantees Where material, financial guarantees issued, which require the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due, are recognised as a financial liability at fair value on initial recognition. The guarantee is subsequently measured at the higher of the best estimate of the obligation and the amount initially recognised less, when appropriate, cumulative amortisation in accordance with AASB 118: Revenue. Where the entity gives guarantees in exchange for a fee, revenue is recognised under AASB 118. The fair value of financial guarantee contracts has been assessed using a probability weighted discounted cash flow approach. The probability has been based on: • • • the likelihood of the guaranteed party defaulting in a year period; the proportion of the exposure that is not expected to be recovered due to the guaranteed party defaulting; and the maximum loss exposed if the guaranteed party were to default. De-recognition Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the asset is transferred to another party whereby the entity no longer has any significant continuing involvement in the risks and benefits associated with the asset. Financial liabilities are derecognised where the related obligations are either discharged, cancelled or expired. The difference between the carrying value of the financial liability extinguished or transferred to another party and the fair value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in profit or loss. o) Provisions Provisions are recognised when the Company has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured. p) Leases The Company adopted AASB 16 on the required effective date 1 January 2019. The adoption of the AASB resulted in equipment that was previously being classifi ed as operating lease now recognised on the balance sheet. This resulted in recognition of a right -of-use asset and a corresponding liability being the present value of future lease payments. Over the life of the lease, the lease liability will incur inter est expense and is reduced as lease payments are made. The right-of-use asset is amortised on a straight-line basis over its lease term. The pattern of expense recognition changes with a higher expense at lease commencement due to a higher lease liability at the time. Image Resources adopted AASB 16 using the modified retrospective approach. There is no restatement of comparative periods and the lease liability has been set to the same value as the right -of-use asset. Image Resources has elected to apply practical expedients allowed under the modified retrospective approach and not recognise short -term or low-value leases on its balance sheet but to account for the lease expense on a straight -line basis over the remaining lease term. The Company has elected not to include initial direct costs in the measurement of the right -of-use asset for operating leases in existence at the date of initial application of AASB 16, being 1 January 2019. At this date, the Company has also elected to measure the right-of-use assets at an amount equal to the lease liability adjusted for any prepaid or accrued lease payments that existed at the date of transition. 38 Image Resources NL - 36 - Ordinary 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 directly in equity as a reduction of the share proceeds received. r) Comparative Figures When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year. s) Segment Reporting Operating segments are reported in a manner that is consistent with the internal reporting to the chief operating decision maker (“CODM”), which has been identified by the Company as the Managing Director and other members of the Board of directors. t) Critical Accounting Estimates, Assumptions and Judgements The Company makes estimates and assumptions concerning the future in applying its accounting policies. 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 financi al year are discussed below. Estimates and underlying assumptions are reviewed on an ongoing basis, with revisions recognised in the period in which the estimates are revised and future periods affected. Impairment of Property, Plant and Equipment and Mine Development Expenditure Non-current assets are assessed for impairment when there is an indication that their carrying amount may not be recoverable. The recoverable amount of each Cash Generating Unit (CGU) is determined as the higher of value -in-use and fair value less costs of disposal es timated on the basis of discounted present value of the future cash flows (a level 3 fair value estimation method). The estimates of discounted future cash flows for each CGU are based on significant assumptions including: • • • • • • estimates of the quantities of mineral reserves and ore resources for which there is a high degree of confidence of economic extraction and the timing of access to these reserves and ore resources: future production levels and the ability to s ell that production future product prices base d on the Company’s assessment of forecast short and long term prices for each of the key products future exchange rates for the Australian dollar compared to the US dollar using external forecasts by recognised economic forecasters future cash costs of production, sustaining capital expenditure, rehabilitation and mine closure the asset specific discount rate applicable to the CGU Determination of Mineral Resources and Ore Reserves The determination of reserves impacts the accounting for asset carrying val ues, depreciation and amortisation rates, and provision for decommissioning and restoration. The information in this report as it relates to ore reserves, mineral resource s or mineralisation is reported in accordance with the AusIMM “Australian Code for Re porting of Identified Mineral Resources and Ore Reserves 2012”. The information has been prepared by or under supervision of competent persons as identified by the Code. There are numerous uncertainties inherent in estimating mineral resources and ore rese rves and assumptions that are valid at the time of estimation may change significantly when new information becomes available. Changes in the forecast prices of commodities, exchange rates, production costs or recovery rates may change the economic status of reserves and may ultimately result in the reserves being restated. - 37 - 2019 Annual Report 39 NNootteess ttoo tthhee ffiinnaanncciiaall ssttaatteemmeennttss ((ccoonntt..)) Notes to the financial statements (cont.) For the Year Ended 31 December 2019 For the Year Ended 31 December 2019 NNootteess ttoo tthhee ffiinnaanncciiaall ssttaatteemmeennttss ((ccoonntt..)) Notes to the financial statements (cont.) For the Year Ended 31 December 2019 For the Year Ended 31 December 2019 Rehabilitation and Site Restoration Provision Significant estimates and assumptions are made in determining the provision for rehabilitation of the mine as there are numerous factors that will affect the ultimate liability payable. These factors include estimates of the extent and costs of rehabilitation activities, technological changes, regulatory changes, cost increases as compared to inflation rates, and changes in discount rates. These uncertainties may result in future actual expenditure differing from amounts currently provided. Recovery of Deferred Tax Assets Judgement is required in determining whether deferred tax assets are recognised in the Consolidated Statement of Financial Position. Deferred tax assets, including those arising from unutilised tax losses, require manag ement to assess the likelihood that the Company will generate taxable earnings in future periods, in order to utilise recognised deferred tax assets. Estimates of future taxable income are based on forecast cash flows from operations and the application of existing tax laws. To the extent that future cash flows and taxable income differ significantly from estimates, t he ability of the Company to realise net deferred tax assets could be impacted. Additionally, future changes in tax laws could limit the ability of the Company to obtain tax deductions in future periods. The Company has unrecognised deferred tax assets arising from tax losses and other temporary differences. The ability of the Company to utilise its tax losses is subject to meeting the relevant statutory tests. Note 3 Revenue and Expenses Sales Revenue Concentrate sales Operating Expenses Mine operating costs Depreciation and amortisation Amortisation of capitalised borrowing costs Inventory movement Cost of sales Gross Profit Other Expenses The income tax expense has been estimated and calculated based on management’s best knowledge of current income tax legislation. There may be differences with the treatment of individual jurisdiction provisions but these are not expected Realised foreign currency (loss) / gain to have any material impact on the amounts as reported. u) New Accounting Standards for Application in Future Years There are a number of new Accounting standards and Interpretations issued by the AASB that are not yet mandatorily applicable to the Company and have not been applied in preparing these financial statements. The Company does not plan to adopt these standards early. These standards are not expected to have a material impact on the Company in the current or future period until mandatory adoption. v) Rounding Rounding of amounts All amounts in the financial statements have been rounded to the nearest thousand dollars, except as indicated, in accordance with the ASIC Corporations Instrument 2016/191. Note 2 Operating Segments Segment Information Identification of reportable segments The Company has identified that it operates in only one segment based on the internal reports that are reviewed and used by the board of directors (chief operating decision makers) in assessing performance and determining t he allocation of resources. The Company is a minerals sands production and exploration company. Currently all the Company’s mineral sands tene ments and resources are located in Western Australia. Revenue and assets by geographical region The Company's revenue is derived from sources and assets located wholly within Australia . Major customers The Company currently provides products to two off -takers. Financial information Reportable items required to be disclosed in this note are consistent with the information disclosed in the Statement of Profit or Loss and Other Comprehensive Income and Statement of Financial Position and are not duplicated here. 40 Image Resources NL - 38 - Year to 31 Dec 2019 ($000) Year to 31 Dec 2018 ($000) 146,196 - (66, 359) (17,678) (5,263) 7,089 (82,211) 63,985 (1,797) 48 (9,655) - (390) (4,302) (974) - 5,276 - - 706 426 (917) (4) (329) (10,045) (1,250) 54 40 (Cents) (Cents) 2.14 2.10 0.39 0.39 ($000) ($000) 20,832 3,311 Number of Number of shares shares Finance Income Interest income Finance Costs Interest expense Amortisation of capitalised borrowing costs Other financing costs Note 4 Auditors Remuneration Amounts received or due and receivable by the auditors of the Company for: - Auditing and reviewing the financial reports – Eldertons Audit Pty Ltd (formerly Greenwich & Co Audit Pty Ltd) Note 5 Basic earnings per share Earnings Per Share Diluted earnings per share Reconciliation of earnings used in calculating earnings per share Profit attributable to ordinary equity holders of the Company used in calculating basic and diluted earnings per share Weighted average number of ordinary shares used in the calculation of basic earnings per share at 31 December 2019 971,794,723 859,218,824 Weighted average number of ordinary shares used in the calculation of diluted earnings per share Weighted average number of ordinary shares (basic) Effect of warrants on issue 971,794,723 859,218,824 18,208,229 - Weighted average number of ordinary shares (diluted) at 31 December 2019 990,003,952 859,218,824 The Company had Nil (2018: Nil) options over fully paid ordinary shares on issue at balance date. - 39 - 2019 Annual Report 41 NNootteess ttoo tthhee ffiinnaanncciiaall ssttaatteemmeennttss ((ccoonntt..)) Notes to the financial statements (cont.) For the Year Ended 31 December 2019 For the Year Ended 31 December 2019 Note 6 Income Tax Reconciliation of income tax expense to prima facie tax payable The prima facie tax payable on profit / (loss) from ordinary activities before tax is reconciled to the income tax (expense) / benefit as follows: Accounting profit / (loss) before tax Prima facie tax on operating profit / (loss) at statutory rate of 30% (2018: 27.5%) Non-deductible expenses Tax effect on temporary differences brought to account Non-assessable income Capital raising costs charged to equity Tax losses brought to account as a deferred tax asset Under provision in prior year Income tax (expense) / benefit Year to 31 Dec 2019 ($000) Year to 31 Dec 2018 ($000) 29,217 (8,765) (89) - - 7 - 462 (8,385) (8,609) 2,583 (1,286) 2,030 4 - 9,412 - 12,743 The Corporate tax rate payable by the Company if the Company was required to pay income tax in the year ended 31 December 2019 was 30% (31 December 2018 It was 27.5% as it was a Base Rate Entity for taxation purposes). Company NNootteess ttoo tthhee ffiinnaanncciiaall ssttaatteemmeennttss ((ccoonntt..)) For the Year Ended 31 December 2019 Notes to the financial statements (cont.) For the Year Ended 31 December 2019 Note 7 Cash and Cash Equivalents Cash at bank Deposits at call Cash flows from operating activities reconciliation Operating profit after income tax Income tax expense / (benefit) Depreciation and amortisation expense Exploration and evaluation expense (Profit) / loss on sale of property, plant and equipment Impairment of property, plant and equipment Realised foreign currency (gain) / loss Unrealised foreign currency (gain) / loss Profit on sale of available for sale financial assets Interest expense Share based payments expense Borrowing costs budgets indicate that the company will not be a Base Rate Entity in future years and will be required to pay income tax at the Changes in operating assets and liabilities: standard income tax rate of 30%. The deferred tax asset held o n the balance sheet is calculated at the 30% income tax rate Increase in trade and other receivables relating to operating activities Recognised deferred tax assets and liabilities (Increase) in prepayments Increase in inventory Assets Liabilities Net Increase in trade and other payables relating to operating activities Tax losses Property, plant and equipment 2019 ($000) (7,350) - 2018 ($000) (16,131) - Unrealised foreign exchange gains (1,374) (1,204) Provisions and accruals Capital raising costs Mine rehabilitation Borrowing costs Receivables Inventories Investments (258) (362) (1,164) - - - - (181) (503) - - - - - 2019 ($000) - 1,988 - - - - 2018 ($000) - 521 - - - - 3,799 4,750 4 355 4 1 - 4 2019 ($000) (7,350) 1,988 (1,374) (258) (362) (1,164) 3,799 4 355 4 2018 ($000) (16,131) 521 (1,204) (181) (503) - 4,750 1 - 4 Net tax (assets) / liabilities (10,508) (18,019) 6,150 5,276 (4,358) (12,743) Deferred tax assets of $12,742,798 at 31 December 2018 were recognised in relation to unused tax losses at 30%, due to taxable income being forecast from the Boonanarring project. Increase in current borrowings Increase in provisions Cash flow from operations Note 8 GST and tax refundable Trade and Other Receivables Other receivables Other receivables (At 31 December 2018) represented an amount expected to be recovered for expenses incurred dismantling the wet concentrator plant at Mindarie, South Australia offset by additional equipment purchased from Murray Zircon Pty Ltd. Note 9 Other Assets – Current Restricted cash – security for guarantees Prepayments 54 414 468 54 482 536 Restricted cash represents term deposits held by the Company’s bank as security for a bank guarantee ($34,667) in favour of the property manager in relation to operating lease commitments for the office premises and security for the Company credit card ($20,000). Deposits at call consist of term deposits with maturity dates greater than three months. 42 Image Resources NL - 40 - - 40 - 2019 Annual Report 43 31 Dec 2019 ($000) 49,920 15 49,935 20,832 8,385 22,948 3,345 1,011 - 1,094 (439) - 5,394 98 246 (105) 70 (7,542) 7,366 6 210 31 Dec 2018 ($000) 11,871 15 11,886 3,311 (12,743) 355 1,371 (1) 734 (684 ) 4015 (15) 693 - 4 (2) (7) (4,301) 4,466 - 405 62,919 (2,399) 592 1 593 487 976 1,463 NNootteess ttoo tthhee ffiinnaanncciiaall ssttaatteemmeennttss ((ccoonntt..)) Notes to the financial statements (cont.) For the Year Ended 31 December 2019 For the Year Ended 31 December 2019 NNootteess ttoo tthhee ffiinnaanncciiaall ssttaatteemmeennttss ((ccoonntt..)) For the Year Ended 31 December 2019 Notes to the financial statements (cont.) For the Year Ended 31 December 2019 Note 10 Property, Plant and Equipment Set out below are the carrying amounts recognised and the movements during the period. Plant and Land and Mine Borrowing Total Equipment Buildings Development ($000) ($000) ($000) Year ended 31 December 2018 Balance at 1 January 2018 Additions Mine closure and rehabilitation asset Disposals Impairments Transfer to inventory Depreciation 12,701 37,892 - (1) (734) (293) (660) 1,941 9,453 - - - - - Closing Net Book Value 48,905 11,394 At 31 December 2018 Cost Accumulated Depreciation Net Book Value Year ended 31 December 2019 Balance at 1 January 2019 Additions Mine closure and rehabilitation asset Disposals Transfers Depreciation 49,767 (862) 48,905 48,905 4,331 - (901) 523 (13,256) 11,394 - 11,394 11,394 75 - - - - Closing Net Book Value 39,602 11,469 At 31 December 2019 Cost Accumulated Depreciation Net Book Value 53,720 (14,118) 11,469 - 39,602 11,469 - 15,074 4,398 - - - (341) 19,131 19,472 (341) 19,131 19,131 3,374 10,655 - (523) (4,502) 28,135 32,978 (4,843) 28,135 Costs ($000) - 21,961 - - - - ($000) 14,642 84,380 4,398 (1) (734) (293) (329) (1,330) 21,632 101,062 21,961 (329) 21,632 102,594 (1,532) 101,062 21,632 101,062 7 - - - 7,787 10,655 (901) - (5,263) (23,021) 16,376 95,582 21,968 (5,592) 16,376 120,135 (24,553) 95,582 Property, plant and equipment includes the purchase of a wet concentration mineral sands processing plant and ancillary mining and processing equipment from Murray Zircon on 8 June 2016 for $11,935,028 and construction costs incurred building the Boonanarring Mine. Mine development expenditure represents the cost incurred in preparing mines fo r commissioning and production, other attributable costs incurred before production commences and mine closure and rehabilitation costs. Land represents farm lots at Boonanarring which the company has acquired . Impairments of plant and equipment represent the write down in the value of plant and equipment purchased from Murray Zircon Pty Ltd and not used in the construction of the Boonanarring mine. Borrowing costs incurred financing the senior debt facility were fully capitalised to property, plant and equ ipment. Depreciation on plant and equipment, mine development and borrowing costs is charged to the inventory cost base. Leases The Company has lease contracts for motor vehicles and office equipment used in its operations. The leases have lease terms between 3 and 5 years. The company’s obligations under its leases are secured by the lessor’s title to the leased assets. The right of use assets is included in Plant and Equipment above as their values are too immaterial to state separately . Year ended 31 December 2019 Balance at 1 January 2019 Additions Depreciation Closing Net Book Motor Office Total Vehicles Equipment ($000) ($000) ($000) - 178 (67) 111 - 18 (7) 11 Set out below are the carrying amounts of lease liabilities (included under borrowings, Note 15) As at 1 January 2019 Additions Accretion of interest Payments As at 31 December 2019 Current Non-Current Note 11 Other Financial Assets Non-Current Loans to Employees – (Employee Share Plan) Loans to Key Management Personnel (Employee Share Plan) Available-for-sale financial assets – shares in listed corporations Note 12 Inventory Current Ore stockpiles Heavy mineral concentrate and other intermediate stockpiles Stores and consumables 31 Dec 2019 ($000) 196 12 (81) 127 72 55 1,909 949 27 2,885 466 15,139 1,184 16,789 - 196 (74) 122 31 Dec 2018 ($000) - - - - - - 241 179 27 447 1,254 7,262 731 9,247 Inventories of heavy mineral concentrate are valued at the lower of an average weighted cost and net realisable value (NRV). Cost comprises direct costs and an appropriate proportion of fixed and variable expenditure including depreciation a nd amortisation. Inventories of consumable supplies and spare parts to be used in production are valued at weighted average cost. NRV is the estimated selling price in the ordinary course of business less the estimated costs of production and to complete the sale. 44 Image Resources NL - 41 - - 42 - 2019 Annual Report 45 NNootteess ttoo tthhee ffiinnaanncciiaall ssttaatteemmeennttss ((ccoonntt..)) For the Year Ended 31 December 2019 Notes to the financial statements (cont.) For the Year Ended 31 December 2019 Note 13 Trade and Other Payables Trade creditors Accruals GST and tax payable Other payables 31 Dec 2019 ($000) 8,150 7,759 190 111 31 Dec 2018 ($000) 7,527 3,899 186 55 16,210 11,667 Trade creditors, accruals, GST and tax payables and other payables are normally settled on 30 Day terms. These amounts represent liabilities for goods and services provided to the Company prior to the end of financial year which a re unpaid. Trade and other payables are presented as current liab ilities unless payment is not due within 1 2 months from the reporting date. Note 14 Provisions Current Employee leave benefits Non-Current Employee leave benefits Mine closure and rehabilitation 692 454 82 15,298 15,380 110 4,398 4,508 Mine closure and rehabilitation obligation s The calculation of the mine closure and rehabilitation provision requires assumptions such as application of environmental legislation, plant closure dates, available technologies, engineering costs and inflation and discount rates. A change in any of the assumptions used may have a material impact on the carrying value of mine closure and rehabilitation obligations. The mine closure and rehabilitation provision is recorded as a liability at fair val ue, assuming a risk-free discount rate equivalent to the 5 year Australian US Government bond rate of 0.99% as at 31 December 2019 (31 December 2018 : N/A) and an inflation factor of 2.1% (31 December 2018: 2.25%). Although the ultimate amount to be incurre d is uncertain, management has, at 31 December 2019, estimated the asset retirement cost of work completed to date using an expected remaining mine life of 3 years and a total undiscounted estimated cash flow of $ 14,724,787 (31 December 2018 : $4,517,185). Management’s estimate of the underlying asset retirement costs are independently reviewed by an external consultant on a regular basis for completeness. Recognition and measurement of provisions probable that an outflow of economic benefits will result and that outflow can be reliably measured. A mine closure and rehabilitation provision is recognised at the commencement of a minin g project and/or construction based on the estimated costs necessary to meet legislative requirements by estimating future costs and discounting these to a present value. The provision is recognised as a liability, separated into current (estimated costs arising within twelve months) and non- current components based on the expected timing of these cash flows. A corresponding asset is included property, plant and equipment (mine development assets section), only to the extent that it is probable that future economic benefits associated with the restoration expenditure will flow to the entity, and is amortised over the life of the mine. At each reporting date the mine closure and rehabilitation provision is re -measured in line with changes in discount rates and timing or amounts of the costs to be incurred. Adjus tments to the estimated amount and timing of future closure and rehabilitation cash flows are a normal occurrence in light of the significant judgements and estimates involved and are dealt with on a NNootteess ttoo tthhee ffiinnaanncciiaall ssttaatteemmeennttss ((ccoonntt..)) Notes to the financial statements (cont.) For the Year Ended 31 December 2019 For the Year Ended 31 December 2019 Note 15 Borrowings Current Lease liabilities Interest bearing loan – Murray Zircon Pty Ltd Interest bearing loan – Senior Secured Loan Notes Non-Current Lease liabilities Interest bearing loan – Senior Secured Loan Notes Interest Rate (8%) (5%) (13%) (8%) (13%) 31 Dec 2019 ($000) 31 Dec 2018 ($000) 73 - 37,606 37,679 55 18,803 18,858 - 4,000 8,565 12,565 - 51,388 51,388 Loan – Murray Zircon Pty Ltd a) The loan was with Murray Zircon Pty Ltd and was fully drawn down on 8 June 2016 on completion of the transaction with Murray Zircon and Orient Zirconic. Murray Zircon is a related party due to it holding a 19.56% interest in the shares of the Company. The loan was repaid on 1 July 2019. b) Senior Secured Debt Facility. A senior secured debt facility which raised A$50,000,000 from the issue of senior secured loan notes. The senior loan notes amount to US$38,865,000 plus capitalised interest of US$7,257, 672. US$6,586,810 was repaid on 12 November 2019. US$37,606,681 is the current portion of the loan at 31 December 201 9 (31 December 2018: US$6,117,808). The key terms of the loan include a loan period of three years f rom draw down, an interest rate of 14% for the first fifteen months following draw down and 13% thereafter for the balance of the loan. Interest for the first fifteen months was added to the loan amount and thereafter paid quarterly in arrears. The princip al is being repaid in seven equal instalments starting in the 18 th month following drawdown. Drawdown occurred on 25 May 2018. Note 16 Issued Capital Contributed Equity – Ordinary Shares Year to 31 Dec 2019 Year to 31 Dec 2018 No. ($000) No. ($000) At the beginning of the period 957,247,598 103,170 611,289,987 Underwritten issue of shares at $0.10 Loan note holder bonus shares valued at $0.1111 Shares issued for decision to mine valued at Employee share plan shares issued at $0.12 Shares issued on exercise of options at $0.085 Shares issued on exercise of warrants at $0.11385 13,475,000 Employee share plan shares issued at $0.195 Employee share plan shares issued at $0. 267 Share issue costs 1,303,813 8,953,488 - 2,760 254 2,391 (22) 250,000,000 56,255,000 35,198,459 3,504,152 1,000,000 - 68,917 25,000 6,252 3,977 421 85 (1,482) 103,170 Balance at the end of the period 980,979,899 108 ,653 957,247,598 Terms and Conditions of Contributed Equity Ordinary shares have the right to receive dividends as declared and, in the event of windi ng up of the Company, to participate in the proceeds from the sale of all surplus assets in proportion to the number of shares held, regardless of the amount paid up Provisions are recognised when the Company has a legal or constructive obligation, as a result of past events, for w hich it is $0.1130 prospective basis as they arise. thereon. Changes in the liability relating to mine closure and rehabilitation obligations are added to or deducted from the related asset (where it is probable that future economic benefits will flow to the entity), other than the unwinding of the discount which is recognised as a financing expense in the Statement of Profit and Loss and Other Comprehensive Income. Changes in the asset value have a corresponding adjustment to future amortisation charges. The mine closure and rehabilitation provision does not include any amounts related t o remediation costs associated with unforeseen circumstances. 46 Image Resources NL - 44 - At a general meeting every shareholder present in person or by proxy, representat ive or attorney has: a) on a show of hands, one vote; and b) on a poll, one vote for each fully paid share held . - 45 - 2019 Annual Report 47 NNootteess ttoo tthhee ffiinnaanncciiaall ssttaatteemmeennttss ((ccoonntt..)) Notes to the financial statements (cont.) For the Year Ended 31 December 2019 For the Year Ended 31 December 2019 Note 17 Reserves and Accumulated Losses Reserves Available-for-sale financial assets reserve Share based payments reserve Warrants reserve Closing balance Reserve – Available for Sale Financial Assets Balance at the beginning of the period Changes in the fair value of available for sale financial assets Balance at the end of the period Reserve – Share Based Payments Balance at the beginning of the period Options expired Exercise of options Balance at the end of the period Reserve – Warrants Balance at the beginning of the period Issue of warrants Exercise of warrants Balance at the end of the period 31 Dec 2019 ($000) 10 - 3,088 3,098 10 - 10 - - - - 4,314 - (1,226) 3,088 31 Dec 2018 ($000) 10 - 4,314 4,324 - 10 10 42 (29) (13) - - 4,314 - 4,314 a) The employee benefits reserve is used to recognise the fair value of options issued. During the year to 31 December 2018, the value previously ascribed to options that lapsed and exercised during the year was transferred to retained losses. b) The warrants reserve is used to recognise the fair value of warrants issued. During the year to 31 December 2019, the value previously ascribed to warrants that were exercised during the year was transferred to retained losses. Warrants The Company had the following warrants over un-issued fully paid ordinary shares at the end of the year: Exercisable at $0.1365 on or before 20 May 2023 Exercisable at $0.11385 on or before 24 May 2023 Accumulated Losses Opening balance Profit / (loss) for the year Transfer from share-based payments 31 Dec 2019 No. 31 Dec 2018 No. 14,285,714 21,525,000 14,285,714 35,000,000 35,810,714 49,285,714 ($000) ($000) (50,692) 20,832 - (54,045) 3,311 42 (29,860) (50,692) 48 Image Resources NL - 45 - NNootteess ttoo tthhee ffiinnaanncciiaall ssttaatteemmeennttss ((ccoonntt..)) Notes to the financial statements (cont.) For the Year Ended 31 December 2019 For the Year Ended 31 December 2019 a) Summaries of warrants granted The following table details the number and weighted average exercise prices (WAEP) and movements in warrants issued during the year. Outstanding at 1 January Issued during the year Exercised during the year Outstanding at 31 December Exercisable at 31 December Number 2019 49,285,714 - (13,475,000) WAEP 2019 0.1204 - - Number 2018 - WAEP 2018 - 49,285,714 0.1204 - - 35,810,714 0.1204 49,285,714 0.1204 35,810,714 0.1204 49,285,714 0.1204 b) Weighted average remaining contractual life The weighted average remaining contractual life for the warrants outstanding as at 31 December 201 9 is between 3 and 4 years (31 December 2018: Between 4 and 5 years). c) Range of exercise price The range of exercise prices for warrants outstanding at the end of the year was $0.11385 to $0.1365 (31 December 2018 : $0.11385 to $0.1365). d) Weighted average fair value The weighted average fair value of warrants granted during the year was Nil (31 December 2018: $0.0875). e) Warrants pricing model The fair value of the warrants granted during the year ending 31 December 2018 was estimated as at the date of grant using a Black-Scholes option pricing model taking into account th e terms and conditions upon which the warrants were granted. The following table lists the inputs to the model used for the year ended 31 December 2018. 31 Dec 2018 31 Dec 2018 Tranche A Tranche B Dividend yield (%) Expected volatility (%) Risk-free interest rate (%) Expected life of warrants (years) Warrant exercise prices ($) Nil 85% 2.50% 5.02 $0.091 Weighted average share price at grant $0.13 date ($) Nil 85% 2.47% 4.95 $0.79 $0.12 The minimum life of the Warrants is the length of any vesting period. The maximum life is based on the expiry date. For the purposes of these warrants the exercise date is estimated as the expiry date. The expected volatility reflects the assumption that the historical volatility was indicative of future trends, whic h may also not necessarily be the actual outcome. No other features of warrants granted were incorporated into the measurement of fair value. Note 18 Tenement Expenditure and Leasing Commitments The Company has certain obligations to perform minimum explor ation work on the tenements in which it has an interest. These obligations vary from time to time. The aggregate of the prescribed expenditure conditions applicable to the granted tenemen ts for the next twelve months amounts to $1,578,300 . Application for exemption from all or some of the prescribed expenditure conditions will be made but no assurance is given that any such application will be granted. Nevertheless, the Company is optimistic, given it s level of expenditure in the North Perth Basin, that it would likely be granted exemptions , on a project basis, in respect of the prescribed expenditure conditions applicable to many of its North Perth Basin tenements. If the prescribed expenditure condit ions are not met with respect to a tenement, that tene ment is liable to forfeiture. - 47 - 2019 Annual Report 49 NNootteess ttoo tthhee ffiinnaanncciiaall ssttaatteemmeennttss ((ccoonntt..)) Notes to the financial statements (cont.) For the Year Ended 31 December 2019 For the Year Ended 31 December 2019 NNootteess ttoo tthhee ffiinnaanncciiaall ssttaatteemmeennttss ((ccoonntt..)) Notes to the financial statements (cont.) For the Year Ended 31 December 2019 For the Year Ended 31 December 2019 The Company has the ability to diminish its exposure under these conditions through the application of a variety of technique s Equity-Settled Share Based Payments including applying for exemptions (from the regulatory expenditure obligations), surrendering tene ments, relinquishing portions The Directors may, in their absolute discretion, grant options to Directors and full or part time employees of the Company for nil of tenements or entering into farm -out agreements whereby third parties bear the burdens of such obligation in whole or in part. consideration in accordance with guidelines established by the Directors. The exercise price of the option is set by the Board of The Company has leased office premises at 23 Ventnor Avenue, West Perth, WA. The lease expired on 31 January 2020 and was renewed for six months to 31 July 2020. The commitment for the 20 20 financial year is $97,908 including all outgoings and Directors. Unvested options may terminate upon cessation of employment in accordance with the terms on which the options were granted. car parking. The share-based payments expense for the year ending 31 December 2019 and year to 31 December 2018 was Nil. Note 19 Tenement Access The interests of holders of freehold land encroached by the Tenements a re given special recognition by the Mining Act (WA). As a general proposition, a tenement holder must obtain the consent of the owner of freehold before conducting operations on such freehold land. Unless it already has secured such rights, there can be no assurance that the Company will secure rights to access those portions of the Tenements encroaching freehold land. The Company has commenced negotiations with the Traditional Owners and their represe ntatives in regard to the Native Title claim affecting part of the Atlas deposit and being the subject of a registered (but undetermined) claim. This is the only deposit forming part of the high grade dry mining targets within the North Perth Basin (NPB) Project which has, insofar as the Company is aware, any potential to be subject to Native Title. However, heritage aspects of the remaining areas of the project still have to be taken into consideration. Outside of the NPB Project the Company’s other tenements may contain dredge mining targets which could be subject to Native Title claim. The Company is not in a position at this time to assess the likely effect of any Native Title claim impacting the Company. The Company is in advanced negotiations wi th a number of landholders with a view to signing purchase agreements on properties required to expand reserves at the Boonanarring project to the north. Note 20 Significant Events Subsequent to Reporting Date Other than the following matter:  On 30 January 2020, The Company’s thirteenth shipment of 20, 475 Dry Metric Tonnes of HMC finished loading backed by a letter of credit. Subsequently, on 6 February 2020, full payment for the shipment was received by Image, in USD.  On 10 February 2020, The Company completed its second scheduled loan note repayment including i nterest of a) Summaries of options granted The following table details the number and weighted average exercise prices (WAEP) and movements in employee share options issued during the year. Outstanding at 1 January Granted during the year Converted to shares during the year Expired during the year Outstanding at 31 December Exercisable at 31 December b) Weighted average remaining contractual life Not applicable. c) Range of exercise price Number 2019 WAEP 2019 - - - - - - - - - - - - Number 2018 WAEP 2018 3,000,000 0.09250 - - (1,000,000) 0.08500 (2,000,000) 0.09625 - - - - The range of exercise prices for options outstanding at the end of the year was $0 as no employee options were outstanding (31 December 2018: $0). d) Weighted average fair value The weighted average fair value of options gr anted during the year was Nil (the year to 31 December 2017 : Nil). US$7,871,238 for the Senior Secured Loan Notes facility. e) Option pricing model There were no other material significant events subsequent to the reporting date. There were no share options granted during the year ending 31 December 2019 or 31 December 2018. Note 21 Employee Benefits Employee Share Plan Under the terms of the Image Share Plan (“ESP”), as approved by shareholders, Image may, in its absolute discretion, make an offer of ordinary fully paid shares in Image to any Eligible Employee, to be funded by a limited recourse interest free l oan granted by the Company. The issue price is determined by the Direc tors and is not to be less than the volume weighted average price of shares in the 5 trading days prior to the Issue Date. Eligible Employees use the abovementioned loan to acquire the p lan shares. The loan amount per share may in certain circumstances be more than the issue price where shareholder approval is required for the issue and the share price is more than the issue price. The shares may be sold 12 months after their issue date generally only if the employee is currently employed. The following table illustrates the number, weighted average share loan prices (WASLP) and weighted average share issue price (WASIP), and movements in plan shares during the year. Outstanding at 1 January Granted during the year Sold during the year 3,504,152 10,257,301 (907,349) Outstanding at 31 December 12,854,104 Exercisable at 31 December 3,900,616 50 Image Resources NL 0.12 0.26 0.12 0.23 0.15 - 48 - Number 2019 WASIP 2019 WASLP 2019 Number 2018 - 3,504,152 - 3,504,152 0.12 0.25 0.12 0.22 0.12 3,504,152 WASIP 2018 WASLP 2018 - 0.12 - 0.12 0.12 - 0.12 - 0.12 0.12 f) Details of options 31 December 2018 Balance at Beginning of Year No. Exercised Lapsed Balance at End of Year No. No. No. Managing Director 3,000,000 (1,000,000) (2,000,000) Total 3,000,000 (1,000,000) (2,000,000) - - i) Details of Managing Director Options Number 1,500,000 1,500,000 Grant Date 30 November 2016 30 November 2016 Expiry 4 December 2018 4 December 2018 Vesting Date 30 November 2016 30 April 2017 Exercise Price $0.085 $0.10 The options can be exercised at any time after t he vesting date and prior to the expiry date. - 49 - 2019 Annual Report 51 NNootteess ttoo tthhee ffiinnaanncciiaall ssttaatteemmeennttss ((ccoonntt..)) For the Year Ended 31 December 2019 Notes to the financial statements (cont.) For the Year Ended 31 December 2019 NNootteess ttoo tthhee ffiinnaanncciiaall ssttaatteemmeennttss ((ccoonntt..)) Notes to the financial statements (cont.) For the Year Ended 31 December 2019 For the Year Ended 31 December 2019 NOTE 22 RELATED PARTY AND RELATED ENTITY TRANSACTIONS Transactions with directors, director -related parties and related entities other than those disclosed elsewhere in this financial NOTE 23 CONTINGENT LIABILITIES Other than those matters disclosed in Notes 1 8 and 19, there are no contingent liabilities or commitments. report are as follows: Orient Zirconic Resources (Australia) Pty Ltd – Chaodian Chen Leeman Pty Ltd, a George Sakalidis related party, hire of specialised equipment Magnetic Resources NL, a George Sakalidis related party, purchase of stationary Murray Zircon Pty Ltd – Interest on $4,000,000 loan (Note 17) Murray Zircon Pty Ltd – Vehicle repairs, flights & camp meals, car hire Murray Zircon Pty Ltd – Loan Repayment Murray Zircon Pty Ltd – Additional equipment – poly pipe Murray Zircon Pty Ltd – Purchase of Image Resources Equipment Murray Zircon Pty Ltd – Refund of Wet Concentrator Plant dismantling costs incurred by Image Resources Spouse of Patrick Mutz – The Company purchases travel expenses from a national travel agency of which his spouse is an agent and receives a commission. The amount disclosed is an estimate of the fees and commissions which is shared between the agency and the spouse of Patrick Mutz Year to 31 Dec 201 9 ($) - - (238) (88,697) - (4,000,000) (417,500) 75,230 1,116,368 Year to 31 Dec 2018 ($) - (3,150) (1,996) (200,000) (5,955) - - - - NOTE 24 FINANCIAL INSTRUMENTS DISCLOSURE a) Financial Risk Management Policies The Company’s financial instruments consist of deposits with banks, receivables, available-for-sale financial assets, payables and borrowings. Risk management policies are approved and reviewed by the board. The use of hedging derivative instruments is not contemplated at this stage of the Company’s development. Specific Financial Risk Exposure and Management The main risks the Company is exposed to through its financial instruments, are commodity price, interest rate and liquidity risks. Interest Rate Risk Exposure to interest rate risk arises on financial assets and fina ncial liabilities recognised at reporting date whereby a future change in interest rates will affect future cash flows or the fair value of fixed rate financial instruments. Liquidity Risk (3,583) (3,730) (3,318,420) (214,831) The Company manages liquidity risk by monitoring forecast cash flow s, cash reserves, liquid investments, receivables, financial liabilities and commitments. Total amounts owing to directors and/or director -related parties and related entities at 31 December 2019 were Nil (31 December 2018 : $Nil ). All transactions were incurred on normal commercial terms and were arm’s length transactions. Murray Zircon Pty Ltd is a related party due to it holding a 19.56% interest in the shares of the Company. Compensation of key management personnel of the Company Short- term employee benefits Post-employment benefits Equity-settled share-based payments Short-term employee benefits 31 Dec 2019 ($000) 31 Dec 2018 ($000) 1,978,474 102,074 - 1,116,602 68,638 - 2,080,548 1,185,240 These amounts include fees and benefits paid to non -executive Chair and non-executive directors as well as all salary and paid leave benefits awarded to executive directors and other KMP. Post-employment benefits These amounts are the costs of superannuation contributions payable for the period. Equity-settled share-based payments Capital Risk Management controls the capital of the Company in order to maintain the appropriate worki ng capital position to ensure that the Company can fund its oper ation, continue as a going concern and continue to provide returns for shareholders and benefits for other stakeholders. Capital is managed by assessing the Company’s financial risks and adjus ting its capital structure in response to changes in these risks and in the market. The working capital position of the Company at 31 December 2019 and 31 December 201 8 was as follows: Cash and cash equivalents Restricted cash Trade and other receivables Inventory Trade and other payables and provisions Borrowings Working capital position Credit Risk 31 Dec 2019 ($000) 49,935 55 593 16,789 (16,902) (37,679) 12,791 31 Dec 2018 ($000) 11,886 55 1,463 9,247 (12,232) (12,565) (2,146) Credit risk refers to the risk that a counterparty will default on its contractua l obligations resulting in financial loss to the Company. Credit risk arises from cash and deposits with financial institutions as well as credit exposures to outstanding This amount is calculated as the fair value of the options and represents the value of the services received during the perio d receivables. the options are held over the financial period. This v alue was calculated using the Black -Scholes option pricing model. Further information on the share-based payment transaction is disclosed in Note 21. Further key management personnel remuneration information has been included in the Remuneration Report section of the Directors Report. The Company is not exposed to credit risk through sales of mineral sand s product due to a letter of credit being in place prior to a mineral sands shipment leaving port. The maximum exposure to credit risk, excluding the value of any collate ral or other security, at balance date to recognised financial assets, is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the Statement of Financial Position and notes to the financial statements. The Company has lodged cash deposits (designated as restricted cash above) totalling $54,667 (201 8: $54,667) with the bank as collateral security for office lease property managers for rental guarantees and also security for company credit cards. 52 Image Resources NL - 49 - - 51 - 2019 Annual Report 53 NNootteess ttoo tthhee ffiinnaanncciiaall ssttaatteemmeennttss ((ccoonntt..)) For the Year Ended 31 December 2019 Notes to the financial statements (cont.) For the Year Ended 31 December 2019 NNootteess ttoo tthhee ffiinnaanncciiaall ssttaatteemmeennttss ((ccoonntt..)) For the Year Ended 31 December 2019 Notes to the financial statements (cont.) For the Year Ended 31 December 2019 The following table provides information regarding the credit risk relating to cash and cash equivalents , term deposits and The table below summarises the maturity profile of the Company’s’ financial liabilities according to their contractual restricted cash based on credit ratings: A rated Financial Instruments 31 Dec 2019 ($000) 49,990 31 Dec 2018 ($000) 11,941 The Company holds no derivative instruments, forward exchange contracts or interest rate swaps. Financial Instrument composition and maturity analysis The table below reflects the undiscounted contractual settlement terms for financial instruments . Weighted Average Effective Interest Rate % Fixed Interest Rate ($000) Floating Interest Rate ($000) Non- Interest Bearing ($000) 31 December 2019 Financial Assets: Cash and cash equivalents Restricted cash Trade and other receivables Available-for-sale financial assets Total Financial Assets 0.02% Financial Liabilities: Trade and other payables and provisions Borrowings Total Financial Liabilities 13% - - - - - - 56,537 56,537 49,935 55 - - 49,990 - - 593 27 620 - - - 16,983 - 16,983 Total ($000) 49,935 55 593 27 50,610 16,983 56,537 73,520 Net Financial Assets (56,537) 49,990 (16,363) (22,910 ) 31 December 2018 Financial Assets: Cash and cash equivalents Restricted cash Trade and other receivables Available-for-sale financial assets Total Financial Assets 0.57% Financial Liabilities: Trade and other payables and provisions Borrowings Total Financial Liabilities 12.5% Weighted Average Effective Interest Rate % Fixed Interest Rate ($000) Floating Interest Rate ($000) 11,886 55 - - Non- Interest Bearing ($000) - - 1,463 27 Total ($000) 11,886 55 1,463 27 11,941 1,490 13,431 - - - 12,232 - 12,232 12,232 63,953 76,185 - - - - - - 63,953 63,953 maturities. The amounts disclosed are based on contractual undiscounted cash flows. As a result, these balances may not agree with the amounts disclosed in the statement of financial position: 31 December 2019 Trade and other payables and provisions Borrowings 31 December 2018 Trade and other payables and provisions Borrowings Less than 3 months ($000) 16,902 9,402 26,304 Less than 3 months ($000) 12,232 4,000 16,232 3 to 12 Months ($000) - 28,205 28,205 3 to 12 Months ($000) - 8,565 8,565 1 to 5 years ($000) - 18,803 18,803 1 to 5 years ($000) - 51,388 51,388 Total ($000) 16,902 56,410 73,312 Total ($000) 12,232 63,953 76,185 Please refer to Note 15 for further details of the Senior Secured Debt Facility . b) Financial Instruments Measured at Fair Value The financial instruments recognised at fair value in the statement of financial position have been analysed and classified using a fair value hierarchy reflecting the significance of the inputs used in making the measurements. The fair value hierarchy consists of the following levels: • • • Quoted prices in active markets for identical assets or liabilities (Level 1); Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (der ived from prices) (Level 2); and Inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3). 31 December 2019 Financial Assets: Financial assets at fair value through profit or loss: Available-for-sale financial assets: - Listed investments 31 December 2018 Financial Assets: Financial assets at fair value through profit or loss: Available-for-sale financial assets: - Listed investments Level 1 ($000) Level 2 ($000) Level 3 ($000) Total ($000) 27 27 - - - - 27 27 Level 1 ($000) Level 2 ($000) Level 3 ($000) Total ($000) 27 27 - - - - 27 27 Net Financial Assets (63,953) 11,941 (10,742) (62,754) 54 Image Resources NL - 52 - - 52 - 2019 Annual Report 55 NNootteess ttoo tthhee ffiinnaanncciiaall ssttaatteemmeennttss ((ccoonntt..)) For the Year Ended 31 December 2019 Notes to the financial statements (cont.) For the Year Ended 31 December 2019 DDiirreeccttoorrss DDeeccllaarraattiioonn Directors’ Declaration Sensitivity Analysis – Interest rate risk The directors of the Company declare that: The Company has performed a sensitivity analysis relating to its exposure to interest rate risk at balance date. The sensitivity analysis demonstrates the effect on the financial period results and equity which could result from a change in 1. the accompanying financial statements and notes are in accordance with the Corporations Act 2001 and: this risk. As at balance date, the effect on loss and equity as a result of changes in the interest rate on financial assets, with all other variables remaining constant would be as follows: Change in loss – increase/(decrease): - - Increase in interest rate by 2% Decrease in interest rate by 2% Change in equity – increase/(decrease): Increase in interest rate by 2% - - Decrease in interest rate by 2% 31 Dec 2019 ($000) (500) 500 500 (500) 31 Dec 2018 ($000) (119) 119 119 (119) (a) (b) (c) comply with Accounting Standards and the Corporations Act 2001; give a true and fair view of the financial position as at 31 December 201 9 and performance for the year ended on that date of the Company; and the audited remuneration disclosures set out in the Remuneration Report section of the Directors’ Report for the year ended 31 December 2019 complies with section 300A of the Corporations Act 2001; 2. the Chief Financial Officer has declared pursuant to section 295A(2) of the Corporations Act 2001 that : (a) (b) (c) the financial records of the company for the financial year have been properly maintained in accordance with section 286 of the Corporations Act 2001; the financial statements and the notes for the financial year comply with Accounting Standards; and the financial statements and notes for the financial year give a true and fair view; 3. 4. in the directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable; the directors have included in the notes to the financial statements an explicit and unreserved statement of compliance with International Financial Reporting Standa rds. This declaration is made in accordance with a resolution of the Board of Directors. ROBERT B ESLEY CHAIRMAN PERTH Dated this 28 February 2020 56 Image Resources NL - 53 - - 55 - 2019 Annual Report 57 Independent Auditor’s Report Independent Auditor’s Report (cont.) Independent Audit Report to the members of Image Resources NL Report on the Audit of the Financial Report Opinion Independent Audit Report to the members of Image Resources NL We have audited the financial report of Image Resources NL (the Company), which comprises the statement of financial position as at 31 December 2019, the statement of profit or loss and other comprehensive income, the statement of changes in equity, the statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and the directors' declaration. Report on the Audit of the Financial Report In our opinion, the accompanying financial report of the Company is in accordance with the Corporations Act 2001, including: Opinion in line with changes in observable assumptions, timing and the latest estimates of the costs to be incurred based on area of disturbance at reporting date. This area is a key audit matter as the determination of the restoration liability involves a level of complex calculations significant management judgement. and • Assessing the planned timing of environmental restoration and demobilisation provisions through comparison to mine plans and reserves. • Assessing the competence, scope and objectivity of company’s external experts used in determination of provisions estimate. the the • Analysed inflation rate and discount assumptions in the provision calculation to current market data and economic forecasts. • Evaluating the completeness of the provisions estimate to the company’s analysis of each operating location to identify where disturbance requires rehabilitation or demobilisation and our understanding of the company’s operations. (i) giving a true and fair view of the Company's financial position as at 31 December 2019 and of its financial performance We have audited the financial report of Image Resources NL (the Company), which comprises the statement of financial position as at 31 December 2019, the statement of profit or loss and other comprehensive income, the statement of changes for the year then ended; and in equity, the statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and the directors' declaration. (ii) complying with Australian Accounting Standards and the Corporations Regulations 2001. In our opinion, the accompanying financial report of the Company is in accordance with the Corporations Act 2001, including: Basis for Opinion (i) giving a true and fair view of the Company's financial position as at 31 December 2019 and of its financial performance for the year then ended; and We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described as in the Auditor's Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Company in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board's APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. (ii) complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for Opinion In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described as in the Auditor's Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Company in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board's APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. Key Audit Matters In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. report of the current year. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matter described below to be a key audit matter to be communicated in our report. Key Audit Matters Provision for Rehabilitation Refer to Note 14, Provisions and accounting policy Notes 1o and 1t Key Audit Matter As at 31 December 2019, the company has a liability of $15,298,000 relating to the estimated rehabilitation, decommissioning and cost of restoration relating to areas disturbed during operation in Boonanarring but not yet rehabilitated. Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current year. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matter described below to be a key audit matter to be communicated in our report. How our audit addressed the key audit matter Our audit work included, but was not restricted to, the following: • Obtaining an Independent expert valuation report and external underlying documentation for their determination of future required activities, their timing and associated cost estimations. We also determined the nature and quantum of costs contained in the How our audit addressed the key audit matter provision estimate. Our audit work included, but was not restricted to, the following: Provision for Rehabilitation Refer to Note 14, Provisions and accounting policy Notes 1o and 1t The provision is based upon current cost estimates Key Audit Matter and has been determined on a discounted basis As at 31 December 2019, the company has a with reference to current legal requirements and liability of $15,298,000 relating to the estimated the technology. At each rehabilitation, decommissioning and cost of rehabilitation liability is reviewed and re-measured to areas disturbed during restoration relating operation in Boonanarring but not yet rehabilitated. reporting date • Testing the accuracy of historical restoration and rehabilitation provisions by comparing to actual expenditure. • Obtaining an Independent expert valuation report and external underlying documentation for their determination of future required activities, their timing and associated cost estimations. We also determined the nature and quantum of costs contained in the provision estimate. 58 Image Resources NL The provision is based upon current cost estimates and has been determined on a discounted basis with reference to current legal requirements and the technology. At each reporting date rehabilitation liability is reviewed and re-measured • Testing the accuracy of historical restoration and rehabilitation provisions by comparing to actual expenditure. Revenue Recognition Refer to Note 3, Operating sale revenue and accounting policy Notes 1a Key Audit Matter The entity has reported revenue of AUD146 million from sales of minerals. How our audit addressed the key audit matter Our audit work included, but was not restricted to, the following: • considering the appropriateness of the revenue recognition The application of revenue recognition accounting standards is complex and involves a number of key judgements and estimates. There is also a risk around the timing of revenue recognition, particularly focused on the contractual terms of delivery and location of the customers. In the entity has first time recognized addition, revenue in its financial statements. accounting policies. • understanding including performance of an end to end walkthrough of the revenue assurance process and identifying the relevant controls. revenue processes the significant • testing the design and operating effectiveness of the relevant controls • performing cut off procedures Based on these factors, we have identified revenue recognition as a key risk for our audit • assessing the transfer of control to the customer by reviewing contracts and shipping documentation. • verifying a sample of transactions with supporting documents • ensuring adequate disclosure in the financial statements Other Information The directors are responsible for the other information. The other information obtained at the date of this auditor's report is included in the annual report, but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed on the other information obtained prior to the date of this auditor's report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. 2019 Annual Report 59 Independent Auditor’s Report (cont.) Independent Auditor’s Report (cont.) INDEPENDENT AUDITOR’S REPORT Responsibilities of Directors for the Financial Report Opinion In our opinion, the Remuneration Report of Image Resources NL for the year ended 31 December 2019 complies with section 300A of the Corporations Act 2001. Elderton Audit Pty Ltd Nicholas Hollens Managing Director 28 February 2020 Perth The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the 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 objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial report. As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. • Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial report of the current year and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on the Remuneration Report We have audited the Remuneration Report included in pages 21 to 26 of the directors’ report for the year ended 31 December 2019. The directors of Image Resources NL are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit in accordance with Australian Auditing Standards. 60 Image Resources NL - 55 - 2019 Annual Report 61 ASX Additional Information ASX ADDITIONAL INFORMATION ASX Additional Information (cont.) ASX ADDITIONAL INFORMATION Image Resources NL (ASX: IMA) provides the following information as required by the ASX Listing Rules. The information is Substantial shareholders: The names of substantial shareholders who have notified the Company in accordance with section 617B of the Corporations Act 2001 are: Murray Zircon Pty Ltd together with Orient Zirconic Resources (Australia) Pty Ltd, Guangdong Orient Zirconic Ind. Sci. Tech. Co. Ltd. And XQ (HK) Enterprises Limited Li Huang Cheng and Vestpro International Limited Number of Ordinary Shares 266,084,033 172,770,065 Voting Rights The voting rights attaching to ordinary shares are governed by the Constitution. On a show of hands every person present who is a Member or representative of a member shall have one vote, and on a poll, every member present in person or by proxy or by attorney or duly authorised representative shall have one vote for each fully paid ordinary share held. None of the options have any voting rights. Unquoted Securities Class Holders of 20% or more of the class Number of Securities Number of Holders Holder Name Number of Securities Warrants exercisable at $0.1365 expiring 14,285,714 20/05/2023 Warrants exercisable at $0.11385 expiring 21,525,000 2 1 Jett Capital Advisors 12,035,714 LLC UBS Nominees Pty 21,525,000 24/05/2023 Ltd current as at 14 February 2020. Distribution of Equity Securities 1 1,001 5,001 10,001 100,001 - - - - 1,000 5,000 10,000 100,000 and over Ordinary shares Number of holders Number of shares 285 518 318 856 398 2,375 151,942 1,571,123 2,615,312 35,173,576 941,467,946 980,979,899 The number of shareholders holding less than a marketable parcel of shares are: 481 489,006 Twenty Largest Shareholders: The names of the twenty largest holders of quoted ordinary shares are: Listed ordinary shares 1 2 3 4 5 6 7 8 9 9 Murray Zircon Pty Ltd Vestpro International HSBC Custody Nominees (Australia) Limited Orient Zirconic Resources (Australia) Pty Ltd Million Up Ltd National Nominees Limited Citicorp Nominees Pty Limited Perfect Well Industrial Limited Ava Cartel Sdn Bhd TQ International 10 Miss Choy Fuan Ku 11 Pontian Orico Plantations Sdn Bhd 12 Mrs Shumei Chen 13 14 15 Delphi Unternehmensberatung Aktiengesellschaft Brazil Farming Pty Ltd Ribton Superannuation Fund Pty Ltd 16 Mr Lim Pang Soo 17 18 UBS Nominees Pty Ltd J P Morgan Nominees Australia Pty Limited 19 Miss Chong Yuen Soo 20 Target Range Pty Ltd Number of shares 191,902,001 131,936,921 62,305,125 51,761,950 40,624,754 26,370,821 22,971,964 22,420,082 18,000,000 18,000,000 14,330,000 11,539,728 11,050,000 11,049,332 10,500,000 10,100,000 10,000,000 9,350,147 8,418,936 8,122,043 7,300,000 Percentage of ordinary shares 19.56% 13.45% 6.35% 5.28% 4.14% 2.69% 2.34% 2.29% 1.83% 1.83% 1.46% 1.18% 1.13% 1.13% 1.07% 1.03% 1.02% 0.95% 0.86% 0.83% 0.74% 698,053,804 71.16% 62 Image Resources NL - 59 - - 60 - 2019 Annual Report 63 Schedule of Tenements SCHEDULE OF TENEMENTS Location Tenement Status Project Equity (%) Holder/Manager Other CORPORATE DIRECTORY Directors WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA E28/1895 Granted ERAYINIA E70/2636 Granted COOLJARLOO E70/2844 Granted BIDAMINNA NTH E70/2898 Granted COOLJARLOO E70/3032 Granted GINGIN E70/3041 Granted REGANS FORD SOUTH E70/3100 Granted QUINNS HILL E70/3192 Granted BOOTINE E70/3298 Granted BIDAMINNA -PARK E70/3494 Granted BRYALANA E70/3720 Granted BLUE LAKE E70/3892 Granted CHAPMAN HILL E70/3997 Granted MUNBINIA E70/4077 Granted DARLING RANGE E70/4244 Granted WOOLKA E70/4245 Granted WINOOKA M70/0448 Granted GINGIN SOUTH M70/1192 Granted RED GULLY M70/1194 Granted BOONANARRING P70/1516 Granted COOLJARLOO M70/1311 Granted BOONANARRING NORTH G70/0250 Granted BOONANARRING R70/0051 Granted COOLJARLOO NORTH M70/1305 Application ATLAS P70/1520 Application COOLJARLOO E70/4631 Granted MUNBINIA WEST E70/4656 Granted WINOOKA NORTH E70/4663 Granted BIBBY SPRINGS E70/4689 Granted BOONANARRING WEST E70/4779 Granted MIMEGARRA E70/4794 Granted REGANS FORD NORTH E70/4795 Application BIDAMINNA SOUTH E70/4919 Granted ORANGE SPRINGS E70/4946 Granted RED GULLY NORTH E70/4949 Granted NAMMEGARRA E28/2742 Granted MADOONIA DOWNS E70/5192 Application WINOOKA SOUTH E70/5193 Granted CHAPMAN HILL NORTH E70/5213 Application GINGINUP HILL E70/5268 Granted WOOLKA SOUTH E70/5306 Application BOONANARRING HILL 100% 100% 100% 100% 100% 100% 100% 100% 90% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% pending grant 100% pending grant 100% 100% 100% 100% 100% 100% 100% pending grant 100% 100% 100% 100% 100% pending grant 100% 100% pending grant 100% 100% pending grant 64 Image Resources NL - 61 - Mr Robert Besley Mr Patrick Mutz Mr Chaodian Chen Mr Aaron Chong Veoy Soo Mr Huancheng Li Mr Peter Thomas Mr George Sakalidis Mr Fei Wu Non-Executive Chairman Managing Director Non-Executive Director Non-Executive Director Non-Executive Director (Alternate: Dennis Lee appointed 5 February 2020) Non-Executive Director Executive Director - Exploration Non-Executive Director ARF Maslin 10% DORAL JV Company Secretary Mr Dennis Wilkins (DW Corporate) Principal Place of Business & Registered Office Ground Floor 23 Ventnor Avenue West Perth WA 6005 Contact Details T: +61 8 9485 2410 E: info@imageres.com.au W: www.imageres.com.au Australian Business Number Auditors ABN: 57 063 977 579 Share Registry Automic Pty Ltd Level 5 126 Phillip Street, Sydney NSW 2000 T: 1300 288 664 (within Australia) T: +61 (0) 2 9698 5414 (International) E: hello@automic.com.au W: www.automicgroup.com.au Elderton Audit Pty Ltd (Formerly Greenwich & Co Audit Pty Ltd) Level 2 267 St Georges Terrace Perth WA 6000 T: +61 8 6324 2900 Stock Exchange Australian Securities Exchange (ASX) ASX Code - IMA (Fully paid shares) Issued Capital 980,979,899 fully paid ordinary shares n g i s e D & n o i t a c i n u m m o C t h g i s n I 

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