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2023 ReportANNUAL REPORT 2020 FOCUSED ON HIGH-VALUE ZIRCON ABOUT IMAGE RESOURCES Image Resources NL (ASX: IMA) is a mineral sands focused mining company operating an open-cut mine and ore processing facility at its 100%-owned, high-grade, zircon-rich Boonanarring Project, located 80km north of Perth in the infrastructure rich North Perth Basin. BOONANARRING PROJECT OPERATIONAL PERFORMANCE A uniquely rich and valuable mineral sands project. Demonstrating a solid track record of operational performance. SOCIAL LICENSE Integrated into the local community with an GROWTH Exciting exploration upside and an enviable portfolio of environmentally friendly ethos. potential development projects. IMAGE BUSINESS FLOWCHART Social License and Community y t i n u m m o C d n a e s n e c L i l i a c o S Mining Processing Trucking Shipping Classic dry, open- 3.7Mtpa conventional HMC trucked to Bulk shipments to China out cut mining utilising wet concentrate plant Bunbury port. of Bunbury WA under life-of- standard truck and producing a high- shovel fleet. quality HMC. mine offtake contracts based on market prices. Rehabilitation Solar Farm Once mining is On average 25% of complete, overburden is electricity requirements returned (as required), generated from solar. topsoil is replaced and the land is re-seeded. Social License and Community Global Markets for Mineral Sands Zircon and titanium contained in Image HMC is further processed into final products with a wide range of applications globally. y t i n u m m o C d n a e s n e c L i l i a c o S 2020 HIGHLIGHTS A$176 million CY2020 revenue Up 21% year-on-year 312,000 tonnes HMC tonnes sold Up 31% year-on-year A$86 million Project EBITDA Up 19% year-on-year CONTENTS 2 2 5 8 16 20 21 26 32 33 34 35 36 37 38 61 62 66 68 Business Review Chairman’s Report Managing Director’s Report Review of Operations Resources and Reserves Schedule Financial Report 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 MINING Classic dry, open-cut mining utilising standard truck and shovel fleet. CHAIRMAN’S REPORT Dear Shareholders, On behalf of your Board of Directors, I am pleased to report that your Company has completed another very successful year of operation despite the challenges posed by I am also pleased to report that despite all the challenges posed by COVID-19, your Company was able to achieve its production and sales targets and control its costs so as to meet all its original market guidance ranges. This is the onset and persistence of the testimony to our operating team and their COVID-19 pandemic. outstanding efforts. Your Company has now successfully The emergence of the COVID-19 pandemic completed its second full year (CY2020) will almost certainly be recorded as one of the most unexpected, life-changing of mining operations and, as forecast, results were better than those achieved in events in recent history. The actions taken CY2019. by governments around the world to minimise the spread of the virus and loss of lives, affected the lives and livelihoods of individuals and families, businesses and organisations, in arguably every community, city, state and nation on earth. KEY HIGHLIGHTS: • Total revenue of A$176m (up from A$146m in CY2019); In Australia, we are perhaps luckier than • Project EBITDA of A$86m most other countries with limited exposure (up from A$72m in CY2019); to the virus, particularly in the mining industry. I am pleased to advise your Company proactively responded to all the necessary changes to day-to-day business operations as required by State and Commonwealth government mandates and recommendations, and continues to do its part to minimise the spread of the virus. We also adapted to changing global economic conditions as needed. • Net Profit after Tax of A$25m (up from A$21m in CY2019). We finished the year in a very similar cash position as CY2019 with A$51m in the bank, however where CY2019 ended with a net debt position of A$6m, CY2020 ended with a net cash position of A$34m. “ DESPITE THE CHALLENGES FROM COVID-19, WE ACHIEVED PRODUCTION AND SALES TARGETS AND CONTROLLED COSTS TO MEET ALL OUR ORIGINAL MARKET GUIDANCE RANGES. ” REHABILITATION Once mining is complete, overburden is returned (as required), topsoil is replaced and the land is re-seeded. Subsequent to the end of CY2020, on land surface in accordance with license I also want to thank my fellow Directors 10 February 2021, as a result of our conditions and approved proposals and for their leadership and guidance strong cash position, the remaining high plans. In CY2020 your company has to direct the Company through the interest debt was repaid and Image successfully completed the rehabilitation unprecedented challenges posed by moved to a debt-free position three of an initial 13-hectare section of the COVID-19. months earlier than originally scheduled. mine, including revegetation. This action has allowed your Board to consider the payment of an inaugural dividend to all shareholders. Your Board places a strong emphasis employees of your Company, I want to on health and safety and is pleased to say thank you to all our shareholders report only a single lost time injury for for your continuing support. Your Finally, on behalf of the Board and Your Board is particularly proud of the CY2020. Company’s environmental achievements. Construction was finalised on a solar farm at Boonanarring to incorporate renewable energy for 25% of its average electricity requirements, at no additional cost to the Company. This has established Image as one of the few mining companies in Australia with the green credentials of using direct solar power to significantly reduce our carbon footprint. 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 another very productive year. I would also like to acknowledge the strong leadership of our senior executive Team under the direction of our Managing Director Mr Patrick Mutz. Your Team successfully navigated the Company through the Board is cognisant of the continuing challenges facing the Company and we are confident that with our proven operational Team and your Company’s debt-free position, unhindered by lenders restrictions on investment opportunities going forward, we will continue to be successful in 2021 and beyond. In addition, while we are actively mining novel challenges of CY2020, and they we are also conducting progressive are well positioned to lead the Company Robert Besley Non-Executive Chairman rehabilitation to restore the original through its next phase of ‘growth’. 2 Image Resources NL 2020 Annual Report 3 “ IN ADDITION TO MEETING MARKET GUIDANCE, WE HAVE INCORPORATED RENEWABLE SOLAR POWER AND COMPLETED REHABILITATION OF 13-HECTARES OF INITIAL MINE AREA. ” MANAGING DIRECTOR’S REPORT Dear Shareholders, Despite the significant challenges posed by COVID-19 during the 2020 calendar year, our Image Team was able to successfully complete its second full year as an active mining With numerous companies throughout Australia cancelling their annual guidance due to the uncertainties of economic impacts from the pandemic, Image considered changing its guidance, but refrained based on indications that China company and tenaciously maintained was proactively dealing with the virus and and met its original market guidance, its economy was showing early signs of despite most other operating recovery by the end of June. companies cancelling their guidance As a consequence of positive relations due to global economic uncertainties. with our off-take partners, our Team was Following on the heels of the updated Ore Reserve estimate for Boonanarring published in December 2019, which resulted in a significant increase in heavy mineral ore grade, albeit with lower overall ore tonnes, your Team delivered record high heavy mineral concentrate (HMC) production in Q1 and very similar results in Q2. These results were achieved despite the significant challenges of having to modify day-to-day work practices and responding to the various travel restrictions implemented by State and Commonwealth government medical authorities and regulators to prevent the spread of COVID-19. However, due to the onset of the virus, which triggered major declines in global markets, HMC sales to our off-take partners in China were curtailed to record low levels in Q1. Sales improved to more reasonable levels in Q2, but due to record HMC production in 1H, HMC inventory reached record highs at the end of Q2. able to achieve record high HMC sales in Q3, and then exceed that sales record in Q4 to end the year within the original market guidance sales range. Tonnes of HMC sold in CY2020 were 31% higher than in CY2019, however revenue was only 20% higher than 2019 due to circumstances outside of Image’s control, being a softening of zircon prices and quarter to quarter increase in the USD:AUD foreign exchange rate, which amounted to a 14% unfavourable increase in the exchange rate for the year. Our Team also achieved HMC production for 2020 within its market guidance range with production being 13% higher than in CY2019. Importantly, from a cost control standpoint, project operating costs in dollar terms were 10% lower than the lower end of the guidance range, and cash costs per tonne of HMC sold were at the lower end of their guidance ranges. SOLAR FARM On average 25% of electricity requirements generated from solar. 2020 Annual Report 5 PROCESSING 3.7Mtpa conventional wet concentrate plant producing a high-quality HMC. 4 Image Resources NL The net result of meeting original sales guidance and Your company has also taken the bold step of successfully controlling costs, was completing the successfully demonstrating concurrent mining and year with a revenue to cost ratio of just under 2:1, mine rehabilitation, by completing rapid rehabilitation and having $51 million cash in the bank and a net of the first thirteen-hectare area of the Boonanarring cash position of $34 million. mine, including re-establishment of the vegetation. Subsequent to the end of the year, this strong cash Topsoil was removed from this initial area of the mine balance was the catalyst for early repayment of the in April 2018, followed by mining, tailings disposal, remaining debt and paving the way for your Board overburden return, recontouring and topsoil return. of Directors to consider offering shareholders an This area was then reseeded and re-vegetation inaugural dividend. established in August 2020, just 28 months after Your company may only be two years old as an initial topsoil removal. active miner, however management has from Your company has also taken a proactive approach the outset been focused on aspects of the to reduce its carbon footprint by working with business beyond just mining operations. These Sunrise Energy Group to install a solar farm adjacent include the health, safety and well-being of our to the Boonanarring wet concentration plant. This employees, consultants, contractors, visitors and farm is designed to provide on average 25% of members of the local community; protection of the Boonanarring project electricity requirements from environment; local employment; positive landowner renewable solar energy. and community relations and support for local business and not-for-profit organisations. In short, your company has been and remains focused on maintaining its social license to operate. The farm became operative in September 2020, and for the full December quarter, 30% of the project’s electricity requirements were supplied from the solar farm, at unit costs slightly below grid power costs. This makes your company the only mineral sands mining company in Australia with the green credentials of using solar power directly to offset a significant portion of its carbon emissions. CY2020 results have cemented your company as a credible mining operator, and this allows a greater focus on a ‘growth’ strategy for 2021. This will include: • continuing profitable operations and growing total ore reserves inventory for longer projected mine life; • scoping study on other project(s) in our current portfolio such as Bidaminna, for its potential as a second profitable mining centre operating in parallel with current dry mining operations; • evaluation of currently held Erayinia gold tenement to determine economic viability; and • assessment of projects outside of our current portfolio for potential involvement with targets with long-lived ore reserves. I want to thank all our employees, contractors, consultants, offtake partners and local landowners and community members for all their diligent effort and support to help our company achieve such positive results for CY2020, especially given the challenges of the COVID pandemic. Finally, I wish to thank our Board of Directors and all our shareholders for their continuing support over this very challenging past year. The Image Team and I look forward to what promises to be another very exciting year of operations and opportunities for ‘growth’ for Image Resources. Patrick Mutz Managing Director 6 Image Resources NL 2020 Annual Report 7 REVIEW OF OPERATIONS Image Resources NL (“Image” or “the Company”) successfully completed its second full year (CY2020) of operations 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 met or beat market guidance despite the novel challenges stemming from negative global economic impacts following the emergence of COVID-19 and the variety of restrictive measures implemented by State and Commonwealth governments to effectively control the spread of the virus. 2020 IN REVIEW Operations In CY2020, the Company successfully completed its second full year as an active mining company. In the March 2020 quarterly report the Company announced record high quarterly heavy mineral concentrate (HMC) production at 84kt with mining and processing activities relatively unaffected by the emergence of COVID-19. HMC sales were however impacted during the quarter with only 45kt shipped in total and with a 3rd shipment planned for the quarter delayed in to early April 2020. Despite the uncertainties created by COVID-19 the Company maintained its original guidance on sales, production and costs. During the March quarter, Sunrise Energy Group commenced construction of a 2.3MW solar farm at Boonanarring, designed to supply the project with, on average, 25% of its electricity requirements. In the June 2020 quarterly report, the Company outlined another very strong HMC production quarter at 84kt. Shipments increased moderately to 65kt for the quarter with HMC inventory building to 114kt. The average realised price for the half-year of A$646/t HMC against C1 cash costs of A$371/t, generated a strong margin of over A$275/t HMC shipped. 8 Image Resources NL TRUCKING HMC trucked to Bunbury port. ONE LTI Zero Image Employee LTIs A$76 million Project Net Cashflow 306,000 tonnes HMC produced Up 13% year on year SOLAR POWER Installed and supplying on average 25% of mine site power REHABILITATION Completed on initial 13 hectares mined By the end of the June quarter the Company had only a small remaining net debt with a cash balance of A$36 million against outstanding loan notes of A$38 million. Once again, despite the ongoing effects of COVID-19 on the global economy, the Company maintained its original guidance on sales, production and costs. In the September 2020 quarter sales increased 43% to a record high of almost 93kt resulting in an improvement in the net cash position of the Company to A$22 million. Higher sales resulted in a reduction in HMC stocks to 83kt. C1 Costs and AISC per tonne of HMC sold decreased by around 25% compared to the June quarter and, despite a fall in sales price per tonne HMC, mainly due to lower zircon content in HMC sold, margins, based on C1 costs, increased slightly to A$279/t. Once again, original guidance on sales, production and costs was maintained. During the September quarter, Sunrise Energy Group completed construction and commissioning of the solar farm at Boonanarring and the first supply of renewable power was supplied to the mine. The December 2020 quarter was highlighted with new record high HMC sales of 110kt. The net cash position increased to A$34 million at year end with an additional A$11 million being received in early January 2021 for a late December shipment. The Australian dollar price per tonne for HMC dropped slightly mainly due to a strengthening AUD against the USD, however strong sales maintained margins at A$274/t HMC sold. The net result of record sales in the September and December quarters was a confirmation that the Company had met, or beat, its original market guidance ranges in all areas for CY2020. For the full December quarter, the solar farm supplied approximately 30% of total electricity requirements at Boonanarring at a slightly lower cost than grid power. The acceleration of HMC sales in 2H to the Company’s off-take partners resulted in total sales of 312kt for CY2020 (compared to 237kt in CY2019), and with HMC production of 306kt, HMC stocks decreased to 51kt at 31 December 2020 (compared to 57kt at the end of CY2019). The average HMC realised price for the full year was A$566 per tonne (CY2019: A$616/t) reflecting slightly lower average zircon grades in HMC sold and lower average zircon market prices compared to 2019.The Boonanarring project generated EBITDA of A$85.0 million for 2020 (2019: A$72.5 million) an increase of 17% year on year. Production and sales guidance for CY2021 are 290-320kt HMC production and 300-330kt HMC sales; broadly in line with CY2020 guidance. 2020 Annual Report 9 Start of Rehabilitation on First Image Land Mined Mineral Sands Commodity 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, and ilmenite) 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 Subsequent to the end of this reporting period, in February 2021, it was announced that the Company had fully repaid its debt, three months earlier than scheduled under the Loan Note Subscription Agreement. As a result, all loan note securities have been, or are being, released, eliminating any restrictions on the Company’s ability to consider an inaugural dividend or consider potential investment opportunities. SOCIAL LICENSE was largely offset by increasing prices for ilmenite and rutile. A softening in zircon prices continued into the first quarter Safety of 2020, however prices for ilmenite and rutile continued to strengthen. For the remainder of 2020, zircon prices remained stable whilst titanium prices continued to improve, However, lower zircon grades in HMC sold in the second half of 2020 combined with a strengthening AUD against USD exchange rate, resulted in a drop in average HMC realised prices. HMC prices decreased from an average A$659 per tonne in Q1 2020 to an average A$521 per tonne in Q4, for an overall average A$566 per tonne for CY2020 due to shipments being heavily weighted to the second half of the year. Corporate Image recorded one contractor related lost-time injury (LTI) during calendar year 2020 (2019: 2 LTIs). 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 was Sales revenue for the year was A$176 million (2019: A$146 reasonably steady for whole of CY2020 and in line with the million) with project operating and selling costs of A$90 second half of in CY2019. million (2019: A$74 million) and with full year CY2020 project EBITDA of A$86 million (2019: A$72 million). During 2020 the Community Company generated a Net Profit After Tax of A$24.8 million (2019: A$20.8 million). As at 31 December 2020 Image had a cash position of A$50.8 million (2019: A$49.9 million) and debt of A$17 million (2019: A$56.4 million). For CY2020, the Company generated net cash flow from mine operating activities of A$75.8 million (2019: A$62.9 million). Image continues to proudly contribute to the local community, including through local employment. At year end approximately 50% of the workforce at Boonanarring lived locally to the operation or within local regional shires. In addition, the Company has an active and varied community support and engagement program. As just one example, Image provides access to a local community group to graze sheep and cattle on land owned by the Company that is not being utilised for mining activities, with proceeds from the sale of these animals being for the benefit of the local community. Cows grazing on Image land for the benefit of the local Gingin community Commissioning of the solar farm was completed in September 2020 and for the full December quarter, approximately 30% of electricity requirements for Boonanarring were supplied as renewable solar energy from the farm, at costs slightly below grid power prices. The use of solar power at Boonanarring provides Image Resources with green credentials and positions the Company as one of the very few mining companies in Australia to directly utilise solar energy to offset a substantial portion of its grid based energy supply, and thereby significantly reducing its carbon emissions. Solar farm Environment Image is committed to minimising any potential long-term adverse impacts of its Operations on the environment. The Company strives to maintain compliance with all of its license requirements while it actively seeks to identify and incorporate lasting improvements to certain aspects of the environment such as soil water retention, by using terracing and blending clayey materials in the topsoils. In CY2020 the Company demonstrated its commitment to concurrent mine rehabilitation by successfully completing rehabilitation, including topsoil replacement and re-vegetation, of 13 hectares of the mine, only 28 months following initial topsoil removal. The Company has also taken actions to minimise its carbon footprint by working with Sunrise Energy Group to complete the construction and commissioning of the 2.3MW solar farm at Boonanarring, even though the project is fully and adequately supplied with all its electricity requirements from the grid. 10 Image Resources NL 2020 Annual Report 11 SHIPPING Bulk shipments to China out of Bunbury WA under life-of-mine offtake contracts based on market prices. Ore Reserves and Mineral Resources Statement The goal was set with with expectations that additional Ore It is important to point out that the potential quantity and A number of other project areas are being investigated The Company’s Ore Reserves and Mineral Resources Statement has been updated for depletion of ore from mining at Boonanarring through 31 December 2020 and is presented below. Estimated Ore Reserves at Boonanarring as at 31 December 2020, comprised 6.1Mt of ore, grading 7.8% total heavy mineral (HM), with an assemblage of 24.6% zircon in HM, for total contained zircon of 117kt. In addition, the company has 9.5Mt of Ore Reserves, grading 8.1% HM and 10.6% zircon in HM at Atlas, with a planned move of the wet concentration plant and other infrastructure to Atlas after the depletion of reserves at Boonanarring. Exploration Reserves would be identified in the 3.5km long Boonanarring Southern Extension area covering Boonanarring Blocks E and F, which has existing access and would require only minimal additional environmental approval. However, the mineralisation in this area proved to be too low in heavy mineral grade and zircon content (given its depth), to qualify as Ore Reserves. Consequently, the Company’s focus was re-directed to other surrounding target areas including Boonanarring Northern Extension Area, Boonanarring Northwestern Extension Area and Gingin North. New mineralisation has been identified in all three target areas, and preliminary study results provide sufficient confidence to assign Exploration Targets as presented in Table 5. Preliminary study results were conducted by an independent consultant and were based on drill samples analysed by independent grade in the Exploration Targets are conceptual in nature, that including Regans Ford, Red Gully and Gingin South. These are there has been insufficient exploration to estimate Mineral currently being assessed for potential future development and Resources and that it is uncertain if further exploration will drilling programmes will be considered where a project area result in the estimation of Mineral Resources or Ore Reserves. has been determined to have sufficient high-level economics Mineral Resources and Ore Reserves can only be determined and prospects for permissibility for future mining. with the rigor of detailed review and assessment by qualified JORC Code Competent Persons. Such reviews were commenced prior to the end of CY2020 for each of these areas and will be reported separately in CY2021 when the assessments are complete. Subsequent to the end of the reporting period, on 2 March 2021, the Company announced the finalisation of a Farm- in Agreement with the owners of the King Gold Prospect, which is located within Image’s Erayinia gold tenement and has historic gold drilling intercepts that outline a thick, gold While the Company believes sufficient drilling and assaying, bearing supergene layer that extends onto Erayinia. This including composite analysis for mineralogy, have been Farmin provides Image with a low risk, low-cost opportunity, conducted to finalise Mineral Resources estimates, further without obligation, to evaluate the King mineralisation and drilling and assaying will be completed if and as required to if deemed attractive to earn up to 80% ownership of the enable the conversion of the Exploration Targets to Mineral prospect. Full details of the Farmin were included in the ASX The Company’s exploration portfolio remains almost laboratories and included heavy mineral determination and Resources estimates. In any case, Mineral Resources announcement of 3 March 2021. exclusively focused on heavy mineral sands, with the XRF analysis. Composite samples were then created from estimates are expected to be completed in Q1 2021. exception being two adjoining tenements with a focus on gold. the individual 1m drill sample sachets and were analysed for All tenements are located in Western Australia and all mineral mineralogy using a combination of internal XRF measurements sands related tenements are located in the North Perth Basin and QEMSCAN analysis by external laboratories. across a combined area of 1,134 square kilometres. The two gold tenements cover a combined area of 116 square Table 5 – Exploration Targets Tonnes (million) HM Grade (%) Zircon Grade (% in HM) Relative Strip Ratio* kilometres. The vast majority of exploration expenditures during CY2020 involved drilling, analysis and study work under Project ‘MORE’ with the objective of rapidly assessing areas of Project / Deposit Northern Extension potential new Ore Reserves, firstly within economic pumping or hauling distance from the Boonanarring wet concentration Northwestern Extension plant (WCP), and later in the year, within economic proximity of the Atlas project. The objective of project ‘MORE’ was achieved, however the goal of identifying two years of new Ore Reserves at Boonanarring was not achieved. Gingin North Totals 3-4 4-5 8-9 15-18 10-12 18-20 Same expected in 1H 2021. 5-6 4-6 6-7 8-10 Shallower 6-8 Shallower 10-11 Drilling programs are also being conducted on several other project areas to meet minimum expenditure requirements, investigate new mineralisation extensions, advance the understanding of the mineralised system and enhance the size of existing Mineral Resources. Note: * - compared to current Boonanarring strip ratio (approx. 6:1) Exploration also focussed on identifying additional Mineral Resources and Ore Reserves within economic pumping or hauling distance from the WCP once it is re-located to the Atlas Project area, with the goal of extending the mine-life to beyond the current Ore Reserves at Atlas. Preliminary results appear promising from two nearby, 100%-owned projects, Helene and Hyperion. Both projects have existing Mineral “ Resources and Ore Reserves studies underway with reporting THE COMPANY’S EXPLORATION PORTFOLIO REMAINS ALMOST EXCLUSIVELY FOCUSED ON HEAVY MINERAL SANDS, WITH THE EXCEPTION BEING TWO ADJOINING TENEMENTS WITH A FOCUS ON GOLD AND ALL IN WESTERN AUSTRALIA. ” 12 Image Resources NL 2020 Annual Report 13 DELIVERING MINERAL SANDS COMMODITIES FOR SUSTAINABLE GLOBAL GROWTH ZrO 2 - ZIRCON Zircon and its derivatives have a vast array of applications. The largest market for zircon is the ceramics industry. Approximately 54% of zircon that is produced is used in finely ground form in the ceramics industry. 14% is used by the foundry industry, and approximately 11 - 14% is used in refractory applications. CERAMICS The ceramics industry, by volume, is the largest market for zircon, consuming over half of the zircon produced globally. 85% of this is used in tile production. FOUNDRY SANDS & COATINGS Zircon is widely used in the foundry industry, mostly in the form of SAND and FLOUR (milled sand) for casting and refractory applications. REFRACTORIES Refractories are materials that are designed to maintain strength, dimensional stability and chemical resistance at high temperature. Some refractory applications include refractory mortar, refractory linings for glass and metal furnaces as well as fibres, nozzles, slide gates and valves. OTHER Other applications include: pigments in paints; cosmetics and catalysts; heavy industry uses such as continued advancement in casting and moulding processes; and it has an increasing role in biomedical implants and advanced ceramics. 14 Image Resources NL GLOBAL MARKETS FOR MINERAL SANDS Zircon and titanium contained in Image HMC is further processed into final products with a wide range of applications globally. TiO 2 - TITANIUM DIOXIDE Titanium dioxide is produced in two main forms. The primary form, comprising over 98 percent of total production, is pigment grade titanium dioxide. The other form is as an ultrafine (nanomaterial) product. This form is selected when different properties, such as transparency and maximum ultraviolet light absorption, are required. NANOMATERIALS Titanium dioxide nanoparticles are used in sunscreens, self-cleaning windows, light emitting diodes and solar cells. PAINTS AND COATINGS Titanium dioxide provides opacity and durability, while helping to ensure the longevity of paint and protection of the painted surface. PLASTICS, PAPER, ADHESIVES AND RUBBER Titanium dioxide can help minimise the brittleness, fading and cracking that can occur in plastics and other materials as a result of light exposure. It can also make paper whiter, brighter and more opaque. COSMETICS Pigment-grade titanium dioxide is used in some cosmetics to aid in hiding blemishes and brightening skin. Boonanarring High Grade HMC under the microscope 2020 Annual Report 15 MINERAL RESOURCES & ORE RESERVES STATEMENT ORE RESERVES – MATERIAL MINING PROJECTS MINERAL RESOURCES – MATERIAL MINING PROJECT The estimated Ore Reserves at Boonanarring have been updated to include depletion from mining through 31 December 2020 The estimated Mineral Resources at Boonanarring have been updated to include depletion from mining through 31 December and thereby represent remaining Ore Reserves as at 31 December 2020. 2020 and thereby represent remaining Mineral Resources as at 31 December 2020. Table 1 – Ore Reserves Summary – JORC Code 2012 – as at 31 December 2020 Table 3 – Mineral Resources Summary – JORC Code 2012 – as at 31 December 2020 Ore Reserves - Strand Deposits; in accordance with the JORC Code (2012) Mineral Resources - Strand Deposits; in accordance with the JORC Code (2012) @ 2.0% HM Cut-off Project / Deposit Category Tonnes (million) HM (%) Slimes (%) HM Tonnes (million) VHM (%) Ilmenite (%) Leucoxene (%) Rutile (%) Zircon (%) Project / Deposit Category Tonnes (million) HM (%) Slimes (%) HM Tonnes (million) VHM (%) Ilmenite (%) Leucoxene (%) Rutile (%) Zircon (%) Proved Probable Probable Boonanarring1 Boonanarring1 Total Boonanarring Atlas2 Total Atlas Total Ore Reserves 3.9 2.2 6.1 9.5 9.5 15.6 8.1 7.3 7.8 8.1 8.1 8.0 13 18 15 15 15 15 0.32 0.16 0.5 0.8 0.8 1.3 81 81 81 73 73 76 52 44 49 50 50 50 3.0 4.8 3.6 4.5 4.5 4.1 2.9 4.6 3.5 7.5 7.5 6.0 23 28 24 11 11 16 1 2 Refer to Boonanarring Ore Reserves release 10 March 2021 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 2019 (Table 2). The material changes arise from mining depletion from 1 October 2019 through 31 December 2020. Refer to the Company’s ASX release dated 10 March 2021 for further information. For the period between 1 October 2019 and 31 December 2020 the Company is not aware of any new information or data that materially affects the Ore Reserve at Boonanarring other than the changes shown due to mining depletion. Boonanarring Boonanarring Boonanarring Boonanarring Total Atlas Atlas Atlas Total Atlas Measured Indicated Inferred Measured Indicated Inferred Sub-Total Atlas/Boonanarring 7.4 7.1 1.4 15.9 9.9 6.4 1.8 18.1 34.0 7.3 5.4 3.5 6.1 7.9 3.7 4.0 6.0 6.0 13 17 18 15 16 17 20 17 16 0.54 0.38 0.05 1.0 0.8 0.2 0.1 1.1 2.1 77 79 78 78 71 56 41 66 72 51 48 53 50 49 42 29 46 48 4.0 8.3 5.0 5.7 4.2 3.4 3.3 4.0 4.8 3.1 4.7 4.1 3.8 7.2 4.7 4.4 6.5 5.2 19 18 16 19 11 6.8 4.8 9.3 14 The Company’s Mineral Resources at Boonanarring show changes from the Mineral Resources as at 1 October 2019 (Table 4). The material changes arise primarily from mining depletion from 1 October 2019 through 31 December 2020, 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. For the period between 1 October 2019 and 31 December 2020 the Company is not aware of any new information or data that materially affects the Mineral Resource Estimate at Boonanarring other than the As shown in Tables 1 & 2, the Company’s Ore Reserves at Atlas are unchanged from 1 October 2019 and the Company is not changes shown due primarily to normal mining depletion. aware of any new information or data that materially affects this information for the period ending 31 December 2020. Table 2 – Comparative Ore Reserves Summary – JORC Code 2012 Ore Reserves – Strand Deposits Project / Deposit As at 1 October 2019 Boonanarring Atlas Total Ore Reserves As at 31 December 2020 Boonanarring Atlas Total Ore Reserves Tonnes (million) HM (%) Slimes (%) HM Tonnes (million) VHM (%) Ilmenite (%) Leucoxene (%) Rutile (%) Zircon (%) 10.7 9.5 20.2 6.1 9.5 15.6 8.9 8.1 8.5 7.8 8.1 8.0 16 15 16 15 15 15 0.9 0.8 1.7 0.5 0.8 1.3 80 73 77 81 73 76 46 50 48 49 50 50 3.2 4.5 3.8 3.6 4.5 4.1 2.5 7.5 4.7 3.5 7.5 6.0 28 11 20 24 11 16 DRILLING PROGRAMS ARE ALSO BEING CONDUCTED ON SEVERAL OTHER PROJECT AREAS, INCLUDING BIDAMINNA, ATLAS, HYPERION AND HELENE TO ADVANCE THE UNDERSTANDING OF THE MINERALISED SYSTEM AND ENHANCE THE SIZE OF EXISTING MINERAL RESOURCES. The Company’s Mineral Resources at Atlas are unchanged from 1 October 2019 (Tables 3 & 4) and the Company is not aware of any new information or data that materially affects this information for the period ending 31 December 2020. Table 4 – Comparative Mineral Resources Summary – JORC Code 2012 Mineral Resources – Strand Deposits @ 2.0% HM Cut-off Project / Deposit As at 1 October 2019 Boonanarring Atlas Total Ore Reserves As at 31 December 2020 Boonanarring Atlas Total Ore Reserves GOVERNANCE CONTROLS Tonnes (million) HM (%) Slimes (%) HM Tonnes (million) VHM (%) Ilmenite (%) Leucoxene (%) Rutile (%) Zircon (%) 30.3 18.1 48.4 15.9 18.1 34.0 6.0 6.0 6.0 6.1 6.0 6.0 17 17 17 15 17 16 1.8 1.1 2.9 1.0 1.1 2.1 73 66 70 79 66 72 46 46 46 50 46 48 3.6 4.0 3.7 5.7 4.0 4.8 2.7 6.5 4.1 3.8 6.5 5.2 20 9.3 16 19 9.3 14 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. 16 Image Resources NL 2020 Annual Report 17 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 2020 are shown in the tables below. There has been no change in these Mineral Resources from 31 December 2019. 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 Helene Hyperion Indicated Indicated Cooljarloo Nth Total Volume (million) Tonnes (million) HM (%) Slimes (%) HM Tonnes (million) VHM (%) Ilmenite (%) Leucoxene (%) Rutile (%) Zircon (%) 6.4 2.4 8.8 13.2 5.0 18.2 4.3 6.3 4.8 19 19 19 0.57 0.32 0.88 89 69 82 75 56 68 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 Nth 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 78 77 79 91 92 89 90 89 89 88 57 57 57 51 68 67 65 66 65 66 65 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 Regans Ford Regans Ford Indicated Inferred Regans Ford Total Volume (million) Tonnes (million) HM (%) Slimes (%) HM Tonnes (million) VHM (%) Ilmenite (%) Leucoxene (%) Rutile (%) Zircon (%) 4.5 0.5 5.0 9.0 0.9 9.9 9.9 6.5 9.6 6.3 17 19 17 16 0.9 0.1 1.0 5.8 94 90 94 79 70 68 70 57 10.0 7.7 9.9 5.2 4.3 4.4 4.3 4.2 10 10 10 13 Grand Totals 49.1 93.0 Mineral Resources - Dredge deposits; in accordance with JORC Code (2012) @ 1.0% HM Cut-off Project / Deposit Category Titan Titan Indicated Inferred Total Titan Total Telesto Calypso Bidaminna Indicated Inferred Inferred Volume BCM (million) Tonnes (million) HM (%) Slimes (%) HM Tonnes (million) VHM (%) Ilmenite (%) Leucoxene (%) Rutile (%) Zircon (%) 10.3 58.5 68.8 1.7 27.1 26.3 21.2 115.4 136.6 3.5 51.5 44.6 1.8 1.9 1.9 3.8 1.7 3.0 2.1 22 19 19 18 14 3.6 15 0.38 2.2 2.6 0.13 0.85 1.3 4.9 86 86 86 83 86 97 88 72 72 72 68 68 83 73 1.5 1.5 1.5 0.7 1.6 7.2 2.6 3.1 3.1 3.1 5.6 5.1 1.0 3.2 9.5 9.5 9.5 9.5 10.8 5.5 9.0 Total Dredge 123.9 236.2 This Mineral Resources and Ore Reserves Statement as a whole has been approved by George Sakalidis who is the Executive Advisor - Exploration 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. 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 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 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: 10 March 2021 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. 18 Image Resources NL 2020 Annual Report 19 FINANCIAL REPORT Your directors present their report on the Company for the year ended 31 December 2020. DIRECTORS The following persons were directors of Image Resources NL (“ Image”) during the year and up to the date of this report, unless DIRECTOR’S REPORT DDiirreeccttoorrss RReeppoorrtt stated otherwise: Robert Besley Patrick Mutz Chaodian Chen Aaron Chong Veoy Soo Huangcheng Li (Alternate: Dennis Lee ) Peter Thomas George Sakalidis (Retired 29 May 2020) 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 $24,783,000 (for the year to 31 December 2019: Profit of $20,832,000). Basic profit per share for the year was 2.53 cents (year to 31 December 2019: Profit of 2.14 cents). Diluted profit / loss per share for the year was 2.44 cents (year to 31 December 2019: Profit of 2.10 cents). DIVIDENDS No amounts have been paid or declared by way of dividend by the Company since the end of the previous financial year. On March 10, 2021 the Company confirmed an intention to pay a final unfranked dividend of 2c per share. Dividend Policy The Company has a very basic dividend policy that provides for the Board of Directors, as soon as practicable after the end o f 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 Excess Cash defined as cash held by the Company, other than cash that the Board considers is necessary or desirable to be retained b y 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 the year are discussed in detail above. SIGNIFICANT EVENTS SUBSEQUENT TO REPORTING DATE Other than the following matter s: On 20 January 2021, the Company’s thirtieth shipment of 14,588 Metric Tonnes of HMC finished loading backed by a letter of credit. Subsequently, on 28 January 2021 , full payment for the shipment was received by Image, in USD. On 10 February 2021, the Company repaid the balance of the Senior Secured Loan Notes facilit y. The repayment amount including interest was US$13,819,793. On 11 February 2021, the Company’s thirty first and thirty second cargoes totalling 26,248 Metric Tonnes of HMC finished loading backed by a letter of credit to two customers. Subsequently, on 18 and 23 February 2021, full payment for the shipment was received by Image, in USD. On 25 February 2021, the Company’s thirty third cargo totalling 19,398 Metric Tonnes of HMC finished loading backed by a letter of credit. Subsequently, on 5 March 2021, full payment for the shipment was received by Image, in USD . There were no other material significant events subsequent to the reporting date. LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS The Review of Operations se t out on pages 8 to 13 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. 21 Image Resources NL - 7 - 2020 Annual Report 21 DIRECTOR’S REPORT (CONT.) DDiirreeccttoorrss RReeppoorrtt ((ccoonntt..)) 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, Head of Exploration, 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 significant breaches of these regulations. 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 Geoscientists. 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; and Australmin Holdings Limited (acquired by Newcrest) which brought into production a gold mine in WA and mineral sands mine in N S W. More recently he was a founding Director of KBL Mining Limited which operated the Mineral Hill copper-gold mine in NSW and was Chairman of Silver City Minerals Limited, which explored for silver-lead-zinc in the Broken Hill District. He was a Non -Executive and independent Director of Murray Zircon from commencement of development and production of the Mindarie Mineral Sands Project until June 2016. He also serves on the Company’s audit and remuneration committees. During the past three years he has served as a director of the following other listed companies: Silver City Minerals Limited - appointed 5 March 2010, resigned effective 28 February 2019. Patrick Mutz Managing Director Fei (Eddy) Wu Non-Executive Director Patrick Mutz has more than 40 years of international mining industry experience in technical (metallurgist), managerial, consulting and executive roles in all aspects of the industry from exploration 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 the USA in 1998, he has served as CEO / Managing Director of a number of publicly listed a nd private mining companies based in South Australia, Victoria and Western Australia, primarily involved with project development and company transitioning from exploration 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 and processing operations of its 100% -owned Mindarie Mineral Sands Project in South Australia, where he led the company on its goal of becoming a successful new mining company in South Australia. Mr Mutz has not been a director of any other listed public companies in the past 3 years. 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, Middle Island Resources Limited – continuing. continuing. Peter Thomas Non-Executive Director DIRECTOR’S 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 Mr Chen founded Orient Zirconic in 1995 and has built the company into a leading company in the zirconium industry. He served as President and Chairman of the company until mid -2013 when China National Nuclear Corporation (CNNC) became the largest shareholder in Orient Zirconic. He became the Chairman of Murray Zircon when the company was founded in 2011 as a result of Orient Zirconic’s first investment in mining in Australia. Mr Chen is the Vice President of China non- ferrous metals industry association titanium zirconium & Hafnium Bran ch. He holds an EMBA degree and is a Certified Engineer. He also owns a number of patents involving the processing of zircon. Mr Chen has not been a director of any other listed public companies in the past 3 years. Guangdong Orient Zirconic Ind Sci & Tech Co., Ltd, resigned 9 November 2016 . Reappointed 11 January 2020. Mr Wu has solid operational experience in the Australian resource and mining industry. He specialises in combining the strengths 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 appointed as a Non-Executive Director of Murray Zircon in e arly 2013. He was the CEO of Queensland Mining Corporation Limited (QMC) from August 2013 until January 2018. He is currently 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 School, 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. 22 Image Resources NL - 8 - - 9 - 2020 Annual Report 23 DIRECTOR’S REPORT (CONT.) DDiirreeccttoorrss RReeppoorrtt ((ccoonntt..)) 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 general merchandising, precious stones and certification businesses. Mr Li graduated from Tamkang University and in 1981 founded Leecot ex 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 Group”) 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 executive 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 acquired by the group. He was also found ing 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 raising for, emerging companies in th e 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). During the year, the committee held one meeting. All members attended this meeting. REMUNERATION COMMITTEE At the date of this report the Remuneration Committee (“ committee”) comprises Messrs Thomas, Wu (with Mr Wu undertaking DIRECTOR’S REPORT (CONT.) DDiirreeccttoorrss RReeppoorrtt ((ccoonntt..)) MEETINGS OF DIRECTORS During the financial year ended 31 December 2020, there were six 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 6 6 6 6 3 6 6 6 6 6 6 6 6 3 6 0 0 6 1 - - 1 - 1 - - - 1 - - 1 - 1 - - - 2 - 2 - - 2 - - - 2 - 2 - - 2 - - - Robert Besley Patrick Mutz Peter Thomas Aaron Soo George Sakalidis (Retired 29 May 2020) Fei (Eddy) Wu Chaodian Chen Huangcheng Li Dennis Lee (Alternate for 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 20 20. 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 d uties 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 matter with the chairman (where it is reasonable that the chairman be consu lted) the role of the Chair of that committee) and Soo. During the year, the committee held two meetings. All members attended these or, if it is the chairman that wishes to seek the advice or it is unreasonable that he be consulted, another director (if that be meetings. reasonable). The advice is to be made immediately available to all Board members other than to a director against whom privil ege 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 and officers of the Company against all losses or liabilities incurred by each dire ctor and officer in their capacity as directors and officers of the Company. During the year an amount of $121,704 (the year to 31 December 2019 : $70,902) was incurred in insurance premiums for this purpose. 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 the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on 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 Corporations Act 2001 is set out in th is annual report. 24 Image Resources NL - 10 - - 11 - 2020 Annual Report 25 RReemmuunneerraattiioonn RReeppoorrtt ((aauuddiitteedd)) REMUNERATION REPORT - AUDITED RReemmuunneerraattiioonn RReeppoorrtt –– aauuddiitteedd ((ccoonntt..)) REMUNERATION REPORT - AUDITED (CONT.) 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 co ntrolling 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: Employee Share Plan The Image Employee Share Plan (ESP) was implemented after shareholder approval at the Shareholder General Meeting held on 13 February 2018. Key Management Personnel Position Robert Besley Patrick Mutz Peter Thomas Aaron Soo Fei (Eddy) Wu Chaodian Chen Huangcheng Li George Sakalidis 1 John McEvoy Todd Colton Non-Executive Chairman Managing Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Executive Technical Director / Head of Exploration Chief Financial Officer Chief Operating Officer Note 1. Mr Sakalidis retired as Executive Technical Director on 29 May 2020 and subsequently became Head of Exploration The Company’s policy for determining the nature and amount of emoluments of key management personnel is set out below: Key Management Personnel Remuneration an d 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 managemen t 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 thereof 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, includi ng 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 th ey are achieved; and review and, if necessary, improve any existing benefit progra mmes established for employees. 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 considere d to be an effective way to align the objectives of management with the interests of shareholders. 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 share price exceeds the share price after the offer is made to the employee. Furthermore, the plan does not give rise to a tax 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. During the 31 December 2020 year 12,875,014, ESP shares were issued. Of these 1,013,163 shares were issued to Directors. 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 t o the Issue 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; The Plan Shares rank pari passu with all issued fully paid shares in respect of voting rights, dividends and entitlement 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 repaid 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 listi ng for quotation on ASX. 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 t he Participant must pay any 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 is 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 contributions 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 requests. 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 performance 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 cond itions and to encourage the continued services of key managemen t personnel. Use of Remuneration Consultants The Company did not employ the services of a remuneration consultant during the financial year ended 31 December 20 20 to make a remuneration recomme ndation in relation to any Key Management Personnel. 26 Image Resources NL - 12 - - 13 - 2020 Annual Report 27 RReemmuunneerraattiioonn RReeppoorrtt –– aauuddiitteedd ((ccoonntt..)) REMUNERATION REPORT - AUDITED (CONT.) RReemmuunneerraattiioonn RReeppoorrtt –– aauuddiitteedd ((ccoonntt..)) REMUNERATION REPORT - AUDITED (CONT.) Current Board Remuneration Structure The current remuneration structure for the board is as follows: Director Annual Directors Fees Committee Fees Mr R Besley (Non-Executive Chairman) $100,000 inclusive of super Mr P Mutz (Managing Director) $501,000 inclusive of super - - Mr P Thomas (Non-Executive Director) $60,000 inclusive of super $6,000 inclusive of super Mr A Soo (Non-Executive Director) $60,000 1 $6,000 Mr F Wu (Non-Executive Director) $60,000 inclusive of super $12,000 inclusive of super Mr C Chen (Non-Executive Director) Mr H Li (Non-Executive Director) $60,000 1 $60,000 1 - - Note 1: No super is required to be paid as the Directors are permanent foreign residents . Key Management Personnel Remuneration Table 1: Remuneration for the year ended 31 December 2020 Short-term benefits Directors Fees/Salary ($) 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 78,162 52,512 54,763 55,252 51,763 51,763 - - - - - - Patrick Mutz 464,691 132,431 George Sakalidis 196,372 19,160 Executive Officers John McEvoy Todd Colton Total 334,279 36,000 337,000 100,702 1,676,557 288,293 - - - - - - - - - - - 7,425 4,989 - 5,249 - - 25,309 20,442 22,841 25,000 111,255 - - - - - - - - - - - Total ($) 85,587 57,501 54,763 60,501 51,763 51,763 622,431 235,974 393,120 462,702 2,076,105 28 Image Resources NL - 14 - Table 2: Remuneration for the year ended 31 December 201 9 Short-term benefits Directors Fees/Salary ($) 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 327,159 122,216 Todd Colton Total 325,000 141,909 1,494,711 483,763 Compensation Options as at 31 December 2020 Nil Key Management Personnel Contracts - - - - - - - - - - - 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 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 - $501,000 per annum (from 1 July 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 and towards airfares for travel between Adela ide 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 exploration sites as and when necessary . The agreement may be terminated by the Comp any by the provision of three months written notice. The employee may terminate the contract by the provision of two months’ notice. George Sakalidis – Head of Exploration (From 29 May 2020) and Executive Director – Exploration (Retired 29 May 2020) • • • Base Salary - $241,220 per annum (from 1 July 2020) 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 $1 66 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 n otice by either the Company or Mr Sakalidis. John McEvoy – Chief Financial Officer • • • Base Salary - $364,23 9 per annum (from 1 July 2020) 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. - 15 - 2020 Annual Report 29 RReemmuunneerraattiioonn RReeppoorrtt –– aauuddiitteedd ((ccoonntt..)) REMUNERATION REPORT - AUDITED (CONT.) RReemmuunneerraattiioonn RReeppoorrtt –– aauuddiitteedd ((ccoonntt..)) REMUNERATION REPORT - AUDITED (CONT.) Todd Colton – Chief Operating Officer Shares held by Key Management Personnel Constitution. Conditions are reviewed at least ann ually by the Remuneration Committee. There are no termination benefits for Peter Thomas 2,104,306 • • • Base Salary - $374,000 per annum (from 1 July 2020) 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. Shareholders approved the aggregate fees to be paid to Directors to be $ 500,000 per annum on 29 May 2020. Each Non-Executive Director’s actual remuneration for the year ended 31 December 20 20 and the year to 31 December 201 9 is shown above. Each Non-Executive Director has an unspecified term of appointment, which is subject to the Company’s any Non-Executive Director. Base fees for each non-executive director during their period in office were as follows: Base Fees per annum $ 82,850 51,763 51,763 51,763 51,763 51,763 Audit Committee Fee $ Remuneration Committee Fee $ - - 3,000 3,000 - - 2,738 5,738 - 5,738 - - Robert Besley Peter Thomas Aaron Soo Fei (Eddy) Wu Chaodian Chen Huang Cheng Li Fees are inclusive of superannuation where required. 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 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 related entities are set out below: Name Directors 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 Robert Besley 566,667 100,000 Aaron Soo 14,330,000 Fei Wu Chaodian Chen - - Huang Cheng Li 136,445,311 George Sakalidis 5,147,865 Patrick Mutz 2,641,343 Executive Officers John McEvoy Todd Colton Totals 3,035,885 1,312,429 - - - - - - 436,632 1,013,163 749,211 790,834 - - - - - - - - - - - - - - - - - - - - 666,667 2,104,306 14,330,000 - - 136,445,311 5,584,497 3,654,506 3,785,096 2,103,263 168,673,646 165,583,806 100,000 2,989,840 Other Equity-related KMP Transactions There have been no other transactions involving equity ins truments, 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 conducted between the Company and KMP or their related partie s, 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 favourable than those reasonably expected under arm’s len gth dealings with unrelated There are no guaranteed rate increases fixed in the contracts of any of the key management personnel. persons. Options and Rights Granted as Remuneration During the financial year no options were iss ued 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. This Report of Directors, incorporating the Remunera tion Report, is signed in accordance with a resolution of the directors ROBERT BESLEY CHAIRMAN Perth, 10 March 202 1 30 Image Resources NL - 16 - - 17 - 2020 Annual Report 31 AUDITOR’S INDEPENDENCE DECLARATION AAuuddiittoorr’’ss IInnddeeppeennddeennccee DDeeccllaarraattiioonn CORPORATE GOVERNANCE STATEMENT CCoorrppoorraattee ggoovveerrnnaannccee ssttaatteemmeenntt Image Resources NL and the Board are committed to achieving and demonstrating the highest standards of corporate governance. Image Resources NL has reviewed i ts corporate governance practices against the Corporate Governance Principles and Recommendations (3rd edition) published by the ASX Corporate Governance Council. The 2020 Corporate Governance Statement is dated at 5 February 202 1 and reflects the corporate governance practices in place throughout the period ended 31 Decembe r 2020. The 20 20 Corporate Governance Statement was approved by the Board on 5 February 202 1. A description of the Company’s current corporate governance practi ces is set out in the Company’s Corporate Governance Statement which can be viewed at www.imageres.com.au. Auditor's Independence Declaration As auditor for the audit of Image Resources NL for the period ended 31 December 2020, 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. Elderton Audit Pty Ltd Nicholas Hollens Managing Director 10 March 2021 Perth 32 Image Resources NL - 18 - - 19 - 2020 Annual Report 33 SSttaatteemmeenntt ooff pprrooffiitt oorr lloossss aanndd ootthheerr STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME ccoommpprreehheennssiivvee iinnccoommee For the Year Ended 31 December 2020 For the Year Ended 31 December 2020 SSttaatteemmeenntt ooff ffiinnaanncciiaall ppoossiittiioonn STATEMENT OF FINANCIAL POSITION As at 31 December 2020 As at 31 December 2020 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 Finance income Financing costs Profit before tax Income tax expense 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 tax Earnings per share Basic earnings per share Diluted earnings per share Notes 3 3 3 3 6 5 5 Year to 31 Dec 2020 ($000) 176,378 (104,224) 72,154 151 (8,262) (10,248) (4,684) (4,980) (44) (1,896) (1,887) 40,304 36 (5,817) 34,523 (9,740) 24,783 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 2 - 24,785 20,832 Cents Cents 2.53 2.44 2.14 2.10 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 Income tax payable Total current liabilities Non-current liabilities Provisions Borrowings Deferred tax liabilities 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. The accompanying notes form part of these financial statements. Notes 7 8 12 9 10 6 11 13 14 15 6 14 15 6 16 17 17 31 Dec 2020 ($000) 50,761 12,191 20,441 392 83,785 82,806 - 4,951 87,757 171,542 19, 610 903 17,199 1,282 38,994 19,807 10 4,101 23,918 62,912 108,6 30 110,607 27,883 (29,860) 108,6 30 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 34 Image Resources NL - 20 - - 21 - 2020 Annual Report 35 SSttaatteemmeenntt ooff cchhaannggeess iinn eeqquuiittyy STATEMENT OF CHANGES IN EQUITY For the Year Ended 31 December 2020 For the Year Ended 31 December 2020 Issued Capital ($000) Financial Assets at FVOCI ($000) Warrants Reserve ($000) Profit Reserve Account ($000) Accumulated Losses ($000) Total ($000) Balance at 1 January 2019 103,170 10 4,314 Comprehensive Profit Operating profit for the year Other comprehensive income Total comprehensive profit 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 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 Balance at 1 January 2020 108,553 10 3,088 Comprehensive profit Operating profit for the year Other comprehensive income Transfer to profit reserve – dividend Total comprehensive profit for the year Transactions with owners capacity as owners in their Shares issued during the year Shares cancelled during the year Cost of share issue Total transactions with owners in their capacity as owners - - - - 2,511 (447) (10) 2,054 - 2 - 2 - - - - - - - - - - - - (50,692) 56,802 20,832 20,832 - - 20,832 20,832 - - - - 4,179 (22) - 4,157 (29,860) 81,791 (29,860) 81,791 24,783 24,783 - - - - - - - - - - - - - 24,783 (24,783) 24,783 - - - - - - - - - 2 - 24,785 2,511 (447) (10) 2,054 STATEMENT OF CASH FLOWS SSttaatteemmeenntt ooff ccaasshh fflloowwss For the Year Ended 31 December 2020 For the Year Ended 31 December 2020 CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Payments to suppliers and contractors Interest received Interest paid Other income Notes Year to 31 Dec 2020 ($000) Year to 31 Dec 2019 ($000) 164,854 145,409 (93,543) (79,479) 36 50 (6,560) (3,061) 151 - Net cash from / (used in) operating activities 7 64,938 62,919 CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of property, plant and equipment Purchase of property, plant and equipment Payments for exploration and evaluation Net cash used in investing activities 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 used in financing activities Net increase in cash held Cash at beginning of the year Effect of exchange fluctuations on cash held Cash at the end of the year 1 (16,362) (4,841) 76 (9,794) (3,164) (21,202) (12,882) - (10) - - 1,534 (39) 109 566 (38,313) (14,186) (38,323) (12,016) 5,413 49,935 (4,587) 50,761 38,021 11,886 28 49,935 16 15 15 7 Balance at 31 December 2020 110,607 12 3,088 24,783 (29,860) 108,630 The accompanying notes form part of these financial statements. The accompanying notes form part of these financial statements . 36 Image Resources NL - 22 - - 23 - 2020 Annual Report 37 NNootteess ttoo tthhee ffiinnaanncciiaall ssttaatteemmeennttss NOTES TO THE FINANCIAL STATEMENTS For the Year Ended 31 December 2020 For the Year Ended 31 December 2020 NNootteess ttoo tthhee ffiinnaanncciiaall ssttaatteemmeennttss ((ccoonntt..)) NOTES TO THE FINANCIAL STATEMENTS (CONT.) For the Year Ended 31 December 2020 For the Year Ended 31 December 2020 This financial report includes the financial statements and notes of the Company . Sale of goods 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 10 March 2021, subject to minor typographical amendments. Revenue from the sale of goods is reco gnised at the point in time when the customer obtains control of the goods, which 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 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 The following is a summary of the material accounting policies adopted by the Company in the preparation of the financial report. amortised cost of a financial asset and allocating the interest income over the relevant pe riod using the effective interest 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 rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset. Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards. Material Other revenue accounting policies adopted in the preparation of this financial report are presented below and have been consistently applie d Other revenue is recognised when it is received or when the right to receive payment is established. 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 basis of accounting has been applied. Going Concern These financial statements have been prepared on the going concern basis, which contemplates the continuity of normal 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 business activities and the realisation of assets and discharge of lia bilities in the normal course of business. The Directors Functional and Presentation Currency consider the going concern basis of preparation to be appropriate based on forecast future cash flows. Both the functional and presentation currency of Image is Austra lian Dollars. 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. The following standards were applied for the first time during the current reporti ng period: 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 cur rencies are retranslated at the rate of exchange at balance date. • • • Conceptual Framework for Financial Reporting and AASB 2019 -1 References to the Conceptual Framework . All translation differences relating to transactions and balances denominated in foreign currency are taken to the Statement AASB 2018-6 Definition of a Business. AASB 2018-7 Definition of Material. of Profit and Loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange The amendments listed above did not have any impact on the amounts r ecognised in prior periods, did not affect the current rate as at the date of the initial transaction. Non -monetary items measured at fair value in a foreign currency are translated period and is not expected to significantly affect future periods. using the exchange rate at the date when the fair val ue was determined. Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. d) Exploration and Evaluation Expenditure ACCOUNTING POLICIES a) Revenue Recognition The Company recognises revenue as follows: Revenue from contracts with customers 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 Statement 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. Revenue is recognised at an amount that reflects the consideration to which the Company is expected to be entitled in e) Asset Acquisitions 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 the transaction price which takes into account estimates of variable consideration and t he 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 good or service to 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 acquisiti on 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 be delivered; and recognises revenue when or as each performance obli gation is satisfied in a manner that depicts the mine properties based on the stage of development reached at the date of acquisition. transfer to the customer of the goods or s ervices promised. f) Goods and Services Tax (GST) Variable consideration within the transaction price, if any, reflects concessions provided to the customer such as discounts, rebates and refunds, any potential bonuses receivable from the customer and any other contingent events. Such e stimates are determined using either the 'expected value' or 'most likely amount' method. The measurement of variable consideration Revenues, expenses and assets are recognised net of the amount of GST except where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority. In these circumstances, the GST is recogn ised as part of the cost of acquisition of the asset or as part of the expense item as applicable. Receivables and payables in the is subject to a constraining principle whereby revenue will only be recognised to the extent that it is highly probable that Statement of Financial Position are shown inclusive of GS T. a significant reversal in the amount of cumulative revenue recognised will not occur. The measurement constraint continues 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 form of a separate refund liability. - 24 - 38 Image Resources NL The net amount of GST recoverable from, or payable to, the taxat ion authority is included as part of receivables or payables in the Statement of Financial Position. - 25 - 2020 Annual Report 39 NNootteess ttoo tthhee ffiinnaanncciiaall ssttaatteemmeennttss ((ccoonntt..)) NOTES TO THE FINANCIAL STATEMENTS (CONT.) For the Year Ended 31 December 2020 For the Year Ended 31 December 2020 NNootteess ttoo tthhee ffiinnaanncciiaall ssttaatteemmeennttss ((ccoonntt..)) NOTES TO THE FINANCIAL STATEMENTS (CONT.) For the Year Ended 31 December 2020 For the Year Ended 31 December 2020 Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of investing and k) Inventory financing activities, which are dis closed as operating cash flows. Inventories of heavy mineral concentrate are valued at the lower of an average weighted cost and net realisable value Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation (NRV). Cost comprises direct costs and an appropriate proportion of fixed and variable expenditure including depreciation authority. g) Income Tax The income tax expense for the year comprises current income tax expense and deferred t ax 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. and amortisation. Inventories of consumable supplies and spare par ts 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. Current tax liabilities and assets are therefore measured at the amounts expected to be paid to or recovered from the l) Property, plant, and equipment relevant taxation authority. Property, plant and equipment is stated at historical cost, less accumulated depreciation and accumulated impairment Deferred income tax expense reflects movement s in deferred tax asset and deferred tax liability balances during the year losses, if any. Historical cost includes expenditure that is directly attributable to the acquisition of the items and costs as well as unused tax losses, if any in fact are brought to account. incurred in bringing the asset into us e. Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax base s of assets Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when and liabilities and their carrying amounts in the finan cial statements. Deferred tax assets also result where amounts have it is probable that future economic benefits associated with the item flow to the Company a nd the cost of the item can be been fully expensed but future tax deductions are available. No deferred income tax will be recognised from the initial measured reliably. recognition of an asset or liability, excluding a business combina tion, where there is no effect on accounting or taxable profit or loss. 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 Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the year when the a sset is commissioning and production, and also includes other attributable costs incurred before production commences. These realised or the liability is settled, based on tax rates en acted or substantively enacted at reporting date. Their measurement costs are capitalised to the extent they are expected to be recouped through successful exploitation of the related mi ning also reflects the manner in which management expects to recover or settle the carrying amount of the related asset or project. Once production commences, these costs are amortised over the estimated economic life of the mine on a units liability. Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is 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 ag ainst the related production. probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised. At each reporting date, the entity assesses whether there is any indication that an asset may be impaired. Where an Current tax assets and liabilities are offset where a legally enforce able right of set-off exists and it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and liabilities are offset where a legally enforceable right of set -off exists, the deferred tax assets and liabilities relate to 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 us e. income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where it Depreciation is intended that net settlement or simultaneous realisation and settlement o f the respective asset and liability will occur in 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 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 At each reporting date, the Company reviews the carrying values of its tangible and intangible assets to determine whether the income statement when the asset is derecognised. 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 expensed to the Statement of Profit or Loss The assets’ residual values, useful lives and depreciation methods are review ed at each reporting period and adjusted prospectively, if appropriate. and Other Comprehensive Income. This policy has no application where paragraph (d) Exploration and Evaluation m) Borrowings 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 weig hted 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. 40 Image Resources NL - 26 - 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 expe nsed 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. - 27 - 2020 Annual Report 41 NNootteess ttoo tthhee ffiinnaanncciiaall ssttaatteemmeennttss ((ccoonntt..)) NOTES TO THE FINANCIAL STATEMENTS (CONT.) For the Year Ended 31 December 2020 For the Year Ended 31 December 2020 NNootteess ttoo tthhee ffiinnaanncciiaall ssttaatteemmeennttss ((ccoonntt..)) NOTES TO THE FINANCIAL STATEMENTS (CONT.) For the Year Ended 31 December 2020 For the Year Ended 31 December 2020 n) Investments and other financial assets p) Leases Investments and other financial assets are initially measured at fair value. Transaction costs are included as part of the The Company adopted AASB 16 on the required effective date 1 Ja nuary 2019. 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. 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 being the present va lue 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 Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and t he recognition changes with a higher expense at lease commencement due to a higher lease liability at the time. Company has transferred substantially all the risks and rewards of ownership. When there is no reasonable expectation of recovering part or all of a financial asset, it's carrying value is written off. Financial assets at fair value through profit or lo ss 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 Financial assets not measured at amortised cost or at fair value through other comprehensive income are classified as leases on its balance sheet but to account for the lease expense on a straight-line basis over the remaining lease term. 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. 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 Financial assets at fair value through other comprehensive income payments that existed at the date of transition. 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. 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 Impairment of financial assets AASB 16. The Company recognises a loss allowance for expected credit losses on financial assets which are either measured at On transition to AASB 16 the weighted average incremental borrowing rate applied to lease liabilities recognised under amortised cost or fair value through other comprehensive income. The measurement of the loss allowance depends upon AASB 16 was 8%. The Company has benefited from the use of hindsight for determining the lease term when considering the Company’s assessment at the end of each reporting period as to whether the financial instrument's credit risk has options to extend and terminate leases. Thi s resulted in recognition a right-of-use asset $195,791 and a lease liability of increased significantly since initial recognition, based on reasonable and supportable information that i s available, without $195,791. It also resulted in recognition of additional expense for the year ended 31 December 2019 of $5,000. undue cost or effort to obtain. Where there has not been a significant increase 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 attributable to a default event that is possible within the next 12 months. Where a financial asset has become credit impaired or where q) Contributed Equity 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. it is determined that credit risk has increased significantly, the loss allowanc e is based on the asset's lifetime expected r) Comparative Figures credit losses. The amount of expected credit loss recognised is measured on the basis of the probability weighted present value of anticipated cash shortfalls over the life of the instrument discounted at the ori ginal effective interest rate. For financial assets measured at fair value through other comprehensive 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. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm’s length transactions, reference to similar 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. instruments and option pricing models. The expression “fair value” – and derivatives thereof – wherever used in this report t) Critical Accounting Estimates, Assumptions and Judgements bears the meaning ascribed to that expression by the Australian Accounting Standards Board. Impairment The Company makes estimates and assumptions c oncerning 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 At each reporting date, the Company assesses whether there is objective evidence that a financial instrument has been a significant risk of causing a material adjustment to the ca rrying amounts of assets and liabilities within the next financial impaired. In the case of available -for-sale financial instruments, a prolonged decline in the value of the instrument is year are discussed below. Estimates and underlying assumptions are reviewed on an ongoing basis, with revisions considered to determine whether an impairment has ar isen. Impairment losses are recognised in the profit or loss. recognised in the period in which the estimates are revised and future period s affected. 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 s ignificant 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 fina ncial 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. 42 Image Resources NL - 28 - 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 Gene rating Unit (CGU) is determined as the higher of value-in-use and fair value less costs of disposal estimated on the basis of discounted present value of the future cash flows (a level 3 fair value estimation method). The estimates of discounted future cas h 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 sell that production future product prices based on the Company’s assessment of forecast short and long term prices for each of the key products - 29 - 2020 Annual Report 43 NNootteess ttoo tthhee ffiinnaanncciiaall ssttaatteemmeennttss ((ccoonntt..)) NOTES TO THE FINANCIAL STATEMENTS (CONT.) For the Year Ended 31 December 2020 For the Year Ended 31 December 2020 NNootteess ttoo tthhee ffiinnaanncciiaall ssttaatteemmeennttss ((ccoonntt..)) NOTES TO THE FINANCIAL STATEMENTS (CONT.) For the Year Ended 31 December 2020 For the Year Ended 31 December 2020 • • • 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 Note 2 Operating Segments Segment Information Identification of reportable segments Determination of Mineral Resources and Ore Reserves The determination of reserves impacts the accounting for asset carrying values, depreciation and amortisation rates, and provision for decommissioning and restoration. The information in this report as it relates to ore reserves, mineral resources or mineralisation is reported in accordance with the AusIMM “Australian Code for Reporting of Identified Mineral Resources and Ore Reserves 2012”. The information has been prepared by or under supervision of competent persons as identifi ed by the Code. There are numerous uncertainties inherent in estimating mineral resources and ore reserves 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. Rehabilitation and Site Restoration Provision Significant estimates and assumptions are made in determining the pro vision 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, technologi cal changes, regulatory changes, cost incre ases 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 management to assess the likelihood that the Company will generate taxable earnings in future p eriods, 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 c ash flows and taxable income differ signifi cantly from estimates, the 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 f uture 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. The income tax expense has bee n estimated and calculated based on managem ent’s best knowledge of current income tax legislation. There may be differences with the treatment of individual jurisdiction provisions but these are not expected to have any material impact on the amounts as re ported. u) New Accounting Standards for Applic ation 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 standar ds 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 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 the 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 plus one buyer outside the primary offtake agreements . 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. 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 Realised foreign currency loss Finance Income Interest income Finance Costs Interest expense Amortisation of capitalised borrowing costs Other financing costs Year to 31 Dec 2020 ($000) Year to 31 Dec 2019 ($000) 176,378 146,196 (74,105) (27,713) (5,749) 3,343 (66,359) (17,678) (5,263) 7,089 (104,224) (82,211) 72,154 63,985 (1,896) (1,797) 36 48 (5,670) - (147) (5,817) (9,655) - (390) (10,045) Rounding of amounts All amounts i n the financial statements have been rounded to the nearest thousand dollars, except as Note 4 Auditors Remuneration indicated, in accordance with the ASIC Corporations Instrument 2016/191. Amounts received or due and receivable by the auditors of the Company for: - Auditing and reviewing the financial reports – (Elderton Audit Pty Ltd) 54 54 44 Image Resources NL - 30 - - 31 - 2020 Annual Report 45 NNootteess ttoo tthhee ffiinnaanncciiaall ssttaatteemmeennttss ((ccoonntt..)) NOTES TO THE FINANCIAL STATEMENTS (CONT.) For the Year Ended 31 December 2020 For the Year Ended 31 December 2020 NNootteess ttoo tthhee ffiinnaanncciiaall ssttaatteemmeennttss ((ccoonntt..)) NOTES TO THE FINANCIAL STATEMENTS (CONT.) For the Year Ended 31 December 2020 For the Year Ended 31 December 2020 Note 5 Basic earnings per share Earnings Per Share Diluted earnings per share Year to 31 Dec 2020 (Cents) 2.53 2.44 Year to 31 Dec 2019 (Cents) 2.14 2.10 ($000) ($000) 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 24,783 20,832 Weighted average number of ordinary shares used in the calculation of basic earnings per share at 31 December 2020 981,236,917 971,794,723 Number of Number of shares shares 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 981,236,917 971,794,723 35,810,714 18,208,229 Weighted average number of ordinary shares (diluted) at 31 December 2020 1,017,047,631 990,003,952 The Company had Nil (2019: Nil) options over fully paid ordinary shares on issue at balance date. Note 6 Income Tax Income tax expense Current tax Deferred tax Income tax expense in the statement of profit or loss 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 before tax Prima facie tax on operating profit at statutory rate of 30% (20 19: 30%) Non-deductible expenses 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 ($000) ($000) 1,282 8,458 9,740 - 8,385 8,385 34,523 10,357 36 (30) (3) (620) 9,740 29,217 8,765 89 - (7) - (462) 8,385 The Corporate tax rate payable by the Company if the Company was required to pay income tax in the year ended 31 December 2020 was 30% (31 December 2019: 30%). The deferred tax asset held on the balance sheet is calculated at the 30% income tax rate. Deferred tax assets and liabilities Deferred tax assets Deferred tax liabilities Net deferred tax assets / (liabilities) 46 Image Resources NL Composition of and movements in deferred tax assets and liabilities during the year Tax losses Property, plant and equipment Unrealised foreign exchange gains Provisions and accruals Capital raising costs Mine rehabilitation Borrowing costs Receivables Inventories Investments Net deferred tax assets / (liabilities) Assets Liabilities 2020 ($000) - - 1,940 366 245 2,787 - - - - 2019 ($000) 7,350 2020 ($000) - 2019 ($000) - - (5,578) (1,988) 1,374 258 362 1,164 - - - - - - - - - - - - (2,869) (3,799) (4) (984) (4) (4) (355) (4) Net 2020 ($000) (5,578) 1,940 366 245 2,787 (2,869) (4) (984) (4) 2019 ($000) 7,350 (1,988) 1,374 258 362 1,164 (3,799) (4) (355) (4) 5,338 10,508 (9,439) (6,150) (4,101) 4,358 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 Depreciation and amortisation expense Exploration and evaluation expense Loss on sale of property, plant and equipment Realised foreign currency loss Unrealised foreign currency (gain) / loss Interest expense Share based payments expense Borrowing costs Changes in operating assets and liabilities: Increase in trade and other receivables relating to operating activities Decrease in prepayments Increase in inventory Increase in trade and other payables relating to operating activities Increase / (decrease) in current borrowings Increase in provisions Cash flow from operations Note 8 Trade receivables Trade and Other Receivables GST and tax refundable Other receivables 31 Dec 2020 ($000) 50,745 16 50,761 24,783 9,740 33,496 4,980 44 2,978 617 - - (359) (11,598) 77 (3,652) 3,662 (45) 215 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 64,938 62,919 11,342 792 57 12,191 - 592 1 593 2020 Annual Report 47 5,338 (9,439) (4,101) 10,508 (6,150) 4,358 - 32 - - 33 - NNootteess ttoo tthhee ffiinnaanncciiaall ssttaatteemmeennttss ((ccoonntt..)) NOTES TO THE FINANCIAL STATEMENTS (CONT.) For the Year Ended 31 December 2020 For the Year Ended 31 December 2020 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 i mmaterial to state separately. Set out below are the leased assets carrying amounts recognised and the movements during the period. Year ended 31 December 2019 Balance at 1 January 2019 Additions Depreciation Closing Net Book Year ended 31 December 2020 Balance at 1 January 2020 Additions Depreciation Closing Net Book Motor Office Vehicles Equipment ($000) ($000) Total ($000) - 178 (67) 111 111 53 (86) 78 - 18 (7) 11 11 - (6) 5 - 196 (74) 122 122 53 (92) 83 Set out below are the carrying amounts of lease liabilities (included under borrowings, Note 15) Opening Net Book Value Additions Accretion of interest Payments Closing Net Book Value Current Non-Current Note 11 Other Financial Assets (11,855) (5,749) (33,530) Non-Current Loans to Employees – (Employee Share Plan) Loans to Key Management Personnel (Employee Share Plan) Equity investments at fair value – shares in listed corporations 31 Dec 2020 ($000) 31 Dec 2019 ($000) 127 57 16 (95) 105 95 10 3,391 1,532 28 4,951 - 196 12 (81) 127 72 55 1,909 949 27 2,885 NNootteess ttoo tthhee ffiinnaanncciiaall ssttaatteemmeennttss ((ccoonntt..)) For the Year Ended 31 December 2020 NOTES TO THE FINANCIAL STATEMENTS (CONT.) For the Year Ended 31 December 2020 Note 9 Other Assets – Current Restricted cash – security for guarantees Prepayments 31 Dec 2020 ($000) 57 335 392 31 Dec 2019 ($000) 54 414 468 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. Note 10 Property, Plant and Equipment Plant and Land and Mine Borrowing Total Equipment Buildings Development ($000) ($000) ($000) Costs ($000) ($000) Year ended 31 December 2019 Balance at 1 January 2019 Additions Mine closure and rehabilitation asset Disposals Transfers Depreciation 48,905 4,331 - (901) 523 (13,256) 11,394 75 - - - - Closing Net Book Value 39,602 11,469 At 31 December 2019 Cost Accumulated Depreciation Net Book Value Year ended 31 December 2020 Balance at 1 January 2020 Additions Mine closure and rehabilitation asset Disposals Depreciation 53,720 (14,118) 11,469 - 39,602 11,469 39,602 1,713 - (45) (15,926) 11,469 6,919 - - - 19,131 3,374 10,655 - (523) (4,502) 28,135 32,978 (4,843) 28,135 28,135 7,386 4,781 - 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 16,376 - - - 95,582 16,018 4,781 (45) Closing Net Book Value 25,344 18,388 28,447 10,627 82,806 At 31 December 2020 Cost Accumulated Depreciation 55,351 (30,007) 18,388 - 45,145 (16,698) 21,968 (11,341) 140,852 (58,046) Net Book Value 25,344 18,388 28,447 10,627 82,806 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 for 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 . Borrowing costs incurred financing the senior debt facility were f ully capitalised to property, plant and equipment. Depreciation on plant and equipment, mine development and borrowing costs is charged to the inventory cost base. 48 Image Resources NL - 34 - - 35 - 2020 Annual Report 49 NNootteess ttoo tthhee ffiinnaanncciiaall ssttaatteemmeennttss ((ccoonntt..)) NOTES TO THE FINANCIAL STATEMENTS (CONT.) For the Year Ended 31 December 2020 For the Year Ended 31 December 2020 NNootteess ttoo tthhee ffiinnaanncciiaall ssttaatteemmeennttss ((ccoonntt..)) NOTES TO THE FINANCIAL STATEMENTS (CONT.) For the Year Ended 31 December 2020 For the Year Ended 31 December 2020 Note 12 Inventory Current Ore stockpiles Heavy mineral concentrate and other intermediate stockpiles Stores and consumables 31 Dec 2020 ($000) 2,259 16,689 1,493 20,441 31 Dec 2019 ($000) 466 15,139 1,184 16,789 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. A mine closure and rehabilitation provisio n is recognised at the commencement of a mining project and/or construction based on the estimated costs necessary to m eet legislative requirements by estimating future costs and discounting these to a present value. The provision is recognised as a liabil ity, separated into current (estimated costs arising within twelve months) and non- current components based on the expe cted 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 t o 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. Adjustments to the esti mated amount and timing of future closure and rehabilitation cash flows are a normal occurrence in light of the significant judgements an d estimates involved and are dealt with on a prospective basis as they arise. 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 benefi ts 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 amorti sation charges. The mine closure and rehabilitation provision does not include any amounts related to remediation cost s associated with NRV is the estimated selling price in the ord inary course of business less the estimated costs of production and to complete the unforeseen circumstances. sale. Note 13 Trade and Other Payables Trade creditors Accruals GST and tax payable Other payables 10,787 8,509 235 79 8,150 7,759 190 111 19,610 16,210 Trade creditors, accruals, GST and tax payables and other payables are normally settled on 30 Day term s. 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 liabilities unless payment is not due within 12 months from the Note 15 Borrowings Current Lease liabilities Interest bearing loan – Senior Secured Loan Notes Non-Current Lease liabilities Interest bearing loan – Senior Secured Loan Notes Interest Rate (8%) (13%) (8%) (13%) 31 Dec 2020 ($000) 95 17,104 17,199 10 - 10 31 Dec 2019 ($000) 73 37,606 37,679 55 18,803 18,858 reporting date. Note 14 Provisions Current Employee leave benefits Non-Current Employee leave benefits Mine closure and rehabilitation 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 amounted to US$38,865,000 plus capitalised interest of US$7,257, 672. US$26,347,241 was repaid during the year ended 31 903 692 December 2020. (2019: US$6,586,810). US$13,173,620 is the balance at 31 December 2020 (31 December 2019: US$39,520,861). 87 19,720 19,807 82 15,298 15,380 The key terms of the loan include a loan period of three years from 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 principal is be ing repaid in seven equal instalments starting in the 1 8 th month following drawdown. Drawdown occurred on 25 May 2018. Mine closure and rehabilitation obligations 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 reh abilitation obligations. The mine closure and rehabilitation provis ion is recorded as a liability at fair value, assuming a risk -free discount rate equivalent to the 5 year Australian US Government bond rate of 0.99% as at 31 December 2020 (31 December 2019: 0.99%) and an inflation factor of 1.0% (31 December 2018: 2.1%). Although the ultimate amount to be incurred is uncertain, management has, at 31 December 2020, estimated the asset r etirement cost of work completed to date using an expected remaining mine life of 2 years and a total undiscounted estimated cash flow of $19,718,091 (31 December 2019: $14,724,787). Management’s estimate of the underlying asset retirement costs are indepe ndently reviewed by an external consultant on a regular basis for completeness. Recognition and measurement of 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. 50 Image Resources NL - 36 - - 37 - 2020 Annual Report 51 NNootteess ttoo tthhee ffiinnaanncciiaall ssttaatteemmeennttss ((ccoonntt..)) For the Year Ended 31 December 2020 NOTES TO THE FINANCIAL STATEMENTS (CONT.) For the Year Ended 31 December 2020 NNootteess ttoo tthhee ffiinnaanncciiaall ssttaatteemmeennttss ((ccoonntt..)) NOTES TO THE FINANCIAL STATEMENTS (CONT.) For the Year Ended 31 December 2020 For the Year Ended 31 December 2020 108,553 957,247,598 103,170 The Company had the following warrants over un-issued fully paid ordinary share s at Warrants Year to 31 Dec 2020 Year to 31 Dec 2019 No. ($000) No. ($000) Note 16 Issued Capital Contributed Equity – Ordinary Shares At the beginning of the period Employee share plan shares issued at $0.1 95 Employee shares cancelled Shares issued on exercise of warrants at $0.11385 Employee share plan shares issued at $0.1 95 Employee share plan shares issued at $0. 267 Share issue costs 980,979,899 12,875,014 (1,715,220) - - - - 2,510 (446) - - - (10) - - 13,475,000 1,303,813 8,953,488 - - - 2,760 254 2,391 (22) Balance at the end of the period 992,139,693 110,607 980,979,899 108,553 Terms and Conditions of Contributed E quity Ordinary shares have the right to receive dividends as declared and, in the event of winding 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 thereon. 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 to profit reserve account 31 Dec 2020 No. 31 Dec 2019 No. 14,285,714 21,525,000 14,285,714 21,525,000 35,810,714 35,810,714 ($000) ($000) (29,860) 24,783 (24,783) (29,860) (50,692) 20,832 - (29,860) At a general meeting every shareholder present in person or by proxy, representative or attorney has: a) o n a show of hands, one vote; and b) on a poll, one vote for each fully paid share held . a) Summaries of warrants granted Note 17 Reserves and Accumulated Losses Reserves Fair value reserve of financial assets Profit Reserve – Dividend Warrants reserve Closing balance Fair Value Reserve of Financial Assets Balance at the beginning of the period Changes in the fair value of equity investments Balance at the end of the period Profit Reserve Account Balance at the beginning of the period Transfer from accumulated losses 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 2020 ($000) 12 24,783 3,088 27,883 10 2 12 - 24,783 24,783 3,088 - - 3,088 31 Dec 2019 ($000) 10 - 3,088 3,098 10 - 10 - - - 4,314 - (1,226) 3,088 The profits from the year ended 31 December 2020 was transferred to a profit reserve to be applied against future dividend payments. 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. 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 2020 35,810,714 - - WAEP 2020 0.1204 - - Number 2019 35,810,714 - - WAEP 2019 0.1204 - - 35,810,714 0.1204 35,810,714 0.1204 35,810,714 0.1204 35,810,714 0.1204 b) Weighted average remaining contractual life The weighted average remaining contractual life for the warrants outstanding as at 31 December 20 20 is between 2 and 3 years (31 December 2019: Between 3 and 4 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 2019 : $0.11385 to $0.1365). d) Weighted average fair value The weighted average fair value of warrants granted during the year was Nil (31 December 2019: Nil). 52 Image Resources NL - 38 - - 39 - 2020 Annual Report 53 NNootteess ttoo tthhee ffiinnaanncciiaall ssttaatteemmeennttss ((ccoonntt..)) NOTES TO THE FINANCIAL STATEMENTS (CONT.) For the Year Ended 31 December 2020 For the Year Ended 31 December 2020 NNootteess ttoo tthhee ffiinnaanncciiaall ssttaatteemmeennttss ((ccoonntt..)) NOTES TO THE FINANCIAL STATEMENTS (CONT.) For the Year Ended 31 December 2020 For the Year Ended 31 December 2020 e) Warrants pricing model Outside of the NPB Project the Company’s other tenements may contain dredge mining targets which c ould be subject to Native The fair value of the warrants granted during the year ending 31 December 2018 was estimated as at the date of grant using a Title claim. Black-Scholes option pricing model taking into account the terms and conditions upon which the warrants were granted. The Company is not in a position at this time to assess the likely effect of any Native Title claim impacting the Company. The following table lists the inputs to the model used for the year ended 31 December 2018. During 2020, the Company purchased two properties to the north of the Boonanarring project with a view to adding to the 31 Dec 2018 31 Dec 2018 Tranche A Tranche B Dividend yield (%) Expected volatility (%) Risk-free interest rate (%) Expected life of warrants (years) Warrant exercise prices ($) Weighted average share price at grant date ($) Nil 85% 2.50% 5.02 $0.091 $0.13 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 reserve base. Note 20 Significant Events Subsequent to Reporting Date Other than the following matter s: On 20 January 2021, The Company’s thirtieth shipment of 14,588 Metric Tonnes of HMC finished loading backed by a letter of credit. Subsequently, on 28 January 2021, full payment for the shipment was received by Image, in USD. On 10 February 2021, The Company repaid the balance of the Senior S ecured Loan Notes facility. The repayment amount including interest was US$13,819,793. On 9 and 10 February 2021, The Company’s thirty first and thirty second cargoes totalling 26,248 Metric Tonnes of HMC finished loading backed by a letter of credit to two customers. Subsequently, on 18 and 23 February 2021, full payment for the shipment was received by Image, in USD. On 25 February 2021, the Company’s thirty third cargo totalling 19,398 Metric Tonnes of HMC finished loading backed by a letter of credit. Subsequently, on 5 March 2021, full payment for the shipment was received by Image, in USD . that the historical volatility was indica tive of future trends, which may also not necessarily be the actual outcome. No other There were no other material significant events subsequent to the reporting date. features of warrants granted were incorporated into the measurement of fair value. Note 18 Tenement Expenditure and Leasing Commitments The Company has certain obligation s to perform minimum exploration work on the tenements in which it has an interest. Thes e 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 $1,646,967. Application for exemption from all or some of the prescribed expenditure con ditions 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. Note 21 Employee Benefits Employee Share Plan Under the terms of the Image Share P lan (“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 loan granted by the Company. The issue price is determined by the Directors 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 plan 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 prescribed expenditure conditions are not met with respe ct to a tenement, that tenement is liable to forfeiture. if the employee is currently employed. The Company has the ability to diminish its exposure under these conditions through the application of a variety of techniques including applying for exemptions (from the regulatory expenditure obli gations), surrendering tenements, relinquishing portions of tenements or entering into farm-out agreements whereby third parties bear the burdens of such obligation in whole or in part. The Company has leased office premises at 23 Ventnor Avenue, West Per th, WA. The lease expired on 31 July 2020 and was renewed for twelve months to 31 July 202 1. The commitment for the 2021 financial year is $141,646 including all outgoings and car parking. Note 19 Tenement Access The interests of holders of freehold land encroached by the Tenements are 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 secur ed 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 finalised negotiations with the Traditional Owners and their representatives in regard to the Native Title claim affecting part of the Atlas deposit and being the subject of a regis tered (but undetermined) claim. The agreement is in the process of being signed by all parties. 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 awar e, 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. 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 Number 2020 12,854,104 12,875,014 WASIP 2020 0.230 0.195 WASLP 2020 0.224 0.195 Number 2019 3,504,152 10,257,301 - - - (907,349) Cancelled during the year (1,715,220) 0.260 0.260 - WASIP 2019 0.120 0.260 0.120 - Outstanding at 31 December 24,013,898 0.205 0.205 12,854,104 0.230 Exercisable at 31 December 11,138,884 0.225 0.217 3,900,616 0.150 WASLP 2019 0.120 0.250 0.120 - 0.224 0.120 Equity-Settled Share Based Payments The Directors may, in their absolute discretion, grant options to Directors and full or part time employees of the Company for nil consideration in accordance with guidelines established by the Directors. The exercise price of the option is set by the Boar d of Directors. Unvested options may terminate upon cessation of employment in accordance with the terms on which the options were granted. The share-based payments expense for the year ending 31 December 2020 and year to 31 December 2019 was Nil. There were no options issued during the year ended 31 December 2020 and year to 31 December 2019. 54 Image Resources NL - 40 - - 41 - 2020 Annual Report 55 NNootteess ttoo tthhee ffiinnaanncciiaall ssttaatteemmeennttss ((ccoonntt..)) NOTES TO THE FINANCIAL STATEMENTS (CONT.) For the Year Ended 31 December 2020 For the Year Ended 31 December 2020 NNootteess ttoo tthhee ffiinnaanncciiaall ssttaatteemmeennttss ((ccoonntt..)) NOTES TO THE FINANCIAL STATEMENTS (CONT.) For the Year Ended 31 December 2020 For the Year Ended 31 December 2020 NOTE 22 RELATED PARTY AND RELATED ENTITY TRANSACTIONS NOTE 23 CONTINGENT LIABILITIES Other than those matters disclosed in Notes 1 8 and 19, there are no contingent liabilities or commitments. Key Management Personnel Compensation Short- term employee benefits Post-employment benefits Equity-settled share-based payments Short-term employee benefits 31 Dec 2020 ($000) 1,965 111 - 2,076 31 Dec 2019 ($000) 1,979 102 - 2,081 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 These amounts include fees and benefits paid to non -executive Chair and non-executive directors as well as all salary and paid The main risks the Company is exposed to throug h its financial instruments, are commodity price, interest rate and liquidity leave benefits awarded to executive directors and other KMP. Post-employment benefits risks. Interest Rate Risk These amounts are the costs of superannuation contributions payable for the period. Exposure to interest rate risk arises on financial assets and financial liabilities recognised at reporti ng date whereby a Equity-settled share-based payments future change in interest rates will affect future cash flows or the fair value of fixed rate financial instruments. This amount is calculated as the fair value of the options and represents the value of the services received during the per iod Liquidity Risk the options are held over the financial period. This value 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 in formation has been included in the Remunerat ion Report section of the Directors Report. Transactions with other related parties Transactions between related parties are on commercial terms and conditions, no more favourable than those available to other parties unless otherwise stated. Transactions with directors, director -related parties and related entities other than those disclosed elsewhere in this financial report are as follows: The Company manages liquidity risk by monitoring forecast cash flows, cash reserves, liquid investments, r eceivables, financial liabilities and commitmen ts. Capital Risk Management controls the capital of the Company in order to maintain the appropriate working capital position to ensure that the Company can fund its operation, 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 adjusting its capital structure in response to changes in these risks and in the market. The working capital position of the Company at 31 December 2020 and 31 December 201 9 was as follows: Revenue Concentrate Sales - Orient Zirconic Resources (Australia) Pty Ltd Expenses 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 – 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 2020 ($000) 53,105 (1) - - (10) - - Year to 31 Dec 2019 ($000) - - (89) (4,000) (417) 75 1,116 (2) (4) 53,092 (3,319) Total amounts owing to directors and/or director -related parties and related entities at 31 December 2020 were Nil (31 December 2019: $Nil ). All transactions were incurred on normal commercial terms and were arm’s length transactions. Orient Zirconic Resources (Australia) Pty Ltd is a related party due to its 5.22% interest in the shares of the Company and Director Chaodian Chen being a director of its owner Guangdong Orient Zirconic In Sci & Tech Co., Ltd. Murray Zircon Pty Ltd is a related party due to it holding a 20.53% interest in the shares of the Company. 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 2020 ($000) 50,706 55 12,191 20,441 (19,610) (17,199) 46,584 31 Dec 2019 ($000) 49,935 55 593 16,789 (16,902) (37,679) 12,791 Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. Credit risk arises from cas h and deposits with financial institutions as well as credit exposures to outstanding receivables. The Company is not exposed to credit risk through sales of mineral sands 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 collateral 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 St atement of Financial Position and notes to the financial statements. The Company has lodged cash deposits (designated as restricted cash above) totalling $54,667 (201 9: $54,667) with the bank as collateral security for office lease property managers for re ntal guarantees and also security for company credit cards. 56 Image Resources NL - 42 - - 43 - 2020 Annual Report 57 NNootteess ttoo tthhee ffiinnaanncciiaall ssttaatteemmeennttss ((ccoonntt..)) For the Year Ended 31 December 2020 NOTES TO THE FINANCIAL STATEMENTS (CONT.) For the Year Ended 31 December 2020 NNootteess ttoo tthhee ffiinnaanncciiaall ssttaatteemmeennttss ((ccoonntt..)) NOTES TO THE FINANCIAL STATEMENTS (CONT.) For the Year Ended 31 December 2020 For the Year Ended 31 December 2020 The following table provides information regarding the credit risk relating to cash and cash equivalents , term deposits and restricted cash based on Standard & Poors credit ratings: AA- rated Financial Instruments 31 Dec 202 0 ($000) 50,816 31 Dec 2019 ($000) 49,990 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 instru ments. Weighted Average Effective Interest Rate % Fixed Interest Rate ($000) Floating Interest Rate ($000) Non- Interest Bearing ($000) Net Financial Assets (17,199) 50,816 (7,391) 26,226 31 December 2020 Financial Assets: Cash and cash equivalents Restricted cash Trade and other receivables Equity investments at fair value Total Financial Assets 0.003% Financial Liabilities: Trade and other payables and provisions Borrowings Total Financial Liabilities 13% 31 December 2019 Financial Assets: Cash and cash equivalents Restricted cash Trade and other receivables Equity investments at fair value Total Financial Assets 0.02% Financial Liabilities: Trade and other payables and provisions Borrowings Total Financial Liabilities 13% Total ($000) 50,761 55 - - 50,761 55 - - - - - 19,610 - 19,610 19,610 17,199 36,809 Floating Interest Rate ($000) 49,935 55 - - 49,990 Non- Interest Bearing ($000) - - 593 27 620 - - - 16,983 - 16,983 Total ($000) 49,935 55 593 27 50,610 16,983 56,537 73,520 - - - - - - 17,199 17,199 - - - - - - 56,537 56,537 Weighted Average Effective Interest Rate % Fixed Interest Rate ($000) The table below summarises the maturity profile of the Company’s’ financial liabilities according to their contractual 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 2020 Trade and other payables and provisions Borrowings 31 December 2019 Trade and other payables and provisions Borrowings Less than 3 months ($000) 19,610 8,552 28,162 Less than 3 months ($000) 16,902 9,402 26,304 3 to 12 Months ($000) - 8,552 8,552 3 to 12 Months ($000) - 28,205 28,205 1 to 5 years ($000) - - - 1 to 5 years ($000) - 18,803 18,803 Total ($000) 19,610 17,104 36,714 Total ($000) 16,902 56,410 73,312 Please refer to Note 15 for further details of the Senior Secured Debt Facility . b) Financial Instruments Measured at Fair Value • • • 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 (derived 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 2020 Financial Assets: Financial assets at fair value through profit or loss: Equity investments at fair value: - Listed investments 31 December 2019 Financial Assets: Financial assets at fair value through profit or loss: Equity investments at fair value: - Listed investments Level 1 ($000) Level 2 ($000) Level 3 ($000) Total ($000) 28 28 - - - - 28 28 Level 1 ($000) Level 2 ($000) Level 3 ($000) Total ($000) 27 27 - - - - 27 27 12,191 12,191 28 28 The financial instruments recognised at fair value in the sta tement 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 50,816 12,219 63,035 hierarchy consists of the following levels: Net Financial Assets (56,537) 49,990 (16,363) (22,910) 58 Image Resources NL 2020 Annual Report 59 - 44 - - 45 - NNootteess ttoo tthhee ffiinnaanncciiaall ssttaatteemmeennttss ((ccoonntt..)) For the Year Ended 31 December 2020 NOTES TO THE FINANCIAL STATEMENTS (CONT.) For the Year Ended 31 December 2020 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 2020 ($000) (1,015) 1,015 1,015 (1,015) 31 Dec 2019 ($000) (1,000) 1,000 1,000 (1,000) (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 2020 and performance for the year ended on that date of the Company; and the audited remuneration disclosures set out in the Remun eration Report section of the Directors’ Report for the year ended 31 December 2020 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) the financial records of the company for the financial year have been properly maintained in acco rdance with section 286 of the Corporations Act 2001; (b) the financial statements and the notes for the financial year comply with Accounting Standards; and (c) 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 statem ent of compliance with International Financial Reporting Standards. This declaration is made in accordance with a resolution of the Board of Directors. ROBERT BESLEY CHAIRMAN PERTH Dated this 10 March 202 1 60 Image Resources NL - 46 - - 47 - 2020 Annual Report 61 IInnddeeppeennddeenntt AAuuddiittoorr’’ss RReeppoorrtt ((ccoonntt..)) INDEPENDENT AUDITOR’S REPORT IInnddeeppeennddeenntt AAuuddiittoorr’’ss RReeppoorrtt ((ccoonntt..)) INDEPENDENT AUDITOR’S REPORT (CONT.) Provision for Rehabilitation Refer to Note 14, Provisions and accounting policy Notes 1o and 1t Key Audit Matter How our audit addressed the key audit matter Independent Audit Report to the members of Image Resources NL Report on the Audit of the Financial Report Opinion We have audited the financial report of Image Resources NL (the Company), which comprises the statement of financial position as at 31 December 2020, 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. In our opinion, the accompanying financial report of the Company is in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the Company's financial position as at 31 December 2020 and of its financial performance for the year then ended; and (ii) complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described 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. 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. Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current year. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matter described below to be a key audit matter to be communicated in our report. 62 Image Resources NL - 48 - As at 31 December 2020, the company has a liability of $19,720,000 to the rehabilitation, of estimated decommissioning and restoration relating to areas in operation Boonanarring but not yet rehabilitated. disturbed relating during cost The provision is based upon current cost estimates and has been determined on a discounted basis with reference to current legal requirements and technology. At each reporting date the rehabilitation liability is reviewed and line with re-measured changes in observable assumptions, timing and the latest estimates of the costs to be incurred based on area of disturbance at reporting date. in is a key audit matter as the This area determination of liability involves a level of complex calculations and significant management judgement. restoration the 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 provision estimate. • Testing the accuracy of historical rehabilitation expenditure. provisions by comparing restoration and actual to • Assessing the planned timing of environmental restoration and demobilisation provisions through comparison to mine plans and reserves. • Assessing the competence, scope and objectivity of the company’s external experts used in determination of the provisions estimate. • Analysed inflation rate and discount assumptions in t he 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. Revenue Recognition Refer to Note 3, Operating sale revenue and accounting policy Notes 1a Key Audit Matter How our audit addressed the key audit matter The entity has reported revenue of AUD176 million from sales of minerals. Our audit work included, but was not restricted to, the following: The application of recognition accounting standards is complex and involves a number of key judgements and estimates. revenue There is also a risk around the timing of revenue recognition, particularly focused on the contractual terms of delivery and location of the customers. Based on these factors, we have identified revenue recognition as a key risk for our audit • considering the appropriateness of the revenue recognition accounting policies. • understanding the significant revenue processes including performance of an end to end walkthrough of the revenue assurance process and identifying the relevant controls. • performing cut off procedures • 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 - 49 - 2020 Annual Report 63 IInnddeeppeennddeenntt AAuuddiittoorr’’ss RReeppoorrtt ((ccoonntt..)) INDEPENDENT AUDITOR’S REPORT (CONT.) INDEPENDENT AUDITOR’S REPORT (CONT.) IInnddeeppeennddeenntt AAuuddiittoorr’’ss RReeppoorrtt ((ccoonntt..)) 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. • 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. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon. 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. 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. 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. 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. Responsibilities of Directors for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the 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. 64 Image Resources NL - 50 - 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 19 to 24 of the directors’ report for the year ended 31 December 2020. 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. Opinion In our opinion, the Remuneration Report of Image Resources NL for the year ended 31 December 2020 complies with section 300A of the Corporations Act 2001. Elderton Audit Pty Ltd Nicholas Hollens Managing Director 10 March 2021 Perth - 51 - 2020 Annual Report 65 AASSXX aaddddiittiioonnaall IInnffoorrmmaattiioonn ASX ADDITIONAL INFORMATION AASSXX aaddddiittiioonnaall IInnffoorrmmaattiioonn ASX ADDITIONAL INFORMATION (CONT.) 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 Paradice Investment Management Pty Ltd Number of Ordinary Shares 203,663,951 172,770,065 64,183,760 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 option s 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 23 February 2021. 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 290 523 379 989 467 2,648 141,117 1,631,619 3,026,754 39,555,469 947,784,734 992,139,693 The number of shareholders holding less than a marketable parcel of shares are: 586 779,643 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 Murray Zircon Pty Ltd Vestpro International HSBC Custody Nominees (Australia) Limited Orient Zirconic Resources (Australia) Pty Ltd J P Morgan Nominees Australia Pty Limited Brazil Farming Pty Ltd Citicorp Nominees Pty Limited Perfect Well Industrial Limited Brazil Farming Pty Ltd 10 10 Ava Cartel Sdn Bhd TQ International 11 Miss Choy Fuan Ku 12 Pontian Orico Plantations Sdn Bhd 13 Mrs Shumei Chen 14 Delphi Unternehmensberatung Aktiengesellschaft 15 National Nominees Limited 16 17 Ribton Superannuation Fund Pty Ltd Sparta AG 17 Mr Lim Pang Soo 18 BNP Paribas Nominees Pty Ltd 19 Miss Chong Yuen Soo 20 UBS Nominees Pty Ltd Number of shares 151,902,001 131,936,921 80,236,204 51,761,950 38,507,684 27,700,000 25,610,040 22,420,082 20,197,109 18,000,000 18,000,000 14,330,000 11,539,728 11,092,500 11,049,332 10,864,565 10,100,000 10,000,000 10,000,000 8,571,180 8,122,043 6,438,232 Percentage of ordinary shares 15.31% 13.30% 8.09% 5.22% 3.88% 2.79% 2.58% 2.26% 2.04% 1.81% 1.81% 1.44% 1.16% 1.12% 1.11% 1.10% 1.02% 1.01% 1.01% 0.86% 0.82% 0.65% 698,379,571 70.39% 66 Image Resources NL - 52 - - 53 - 2020 Annual Report 67 SCHEDULE OF TENEMENTS SScchheedduullee ooff TTeenneemmeennttss Location Tenement Status Tenement Granted ERAYINIA Granted Granted Granted MADOONIA DOWNS COOLJARLOO BIDAMINNA NTH Granted COOLJARLOO Granted GINGIN Granted REGANS FORD SOUTH Granted Granted Granted QUINNS HILL BOOTINE BIDAMINNA - PARK Granted BRYALANA Granted BLUE LAKE Granted CHAPMAN HILL Granted Granted Granted Granted Granted MUNBINIA DARLING RANGE WOOLKA MUNBINIA WEST WINOOKA NORTH Granted BIBBY SPRINGS Granted Granted Granted BOONANARRING WEST MIMEGARRA REGANS FORD NORTH Other Holder ARF Maslin 10% Entity’s Interest (%) 100 100 100 100 100 100 100 100 100 90 100 100 100 100 100 100 100 100 100 100 100 100 Application BIDAMINNA SOUTH 100% pending Granted ORANGE SPRINGS Granted RED GULLY NORTH Granted Granted NAMMEGARRA SADDLE HILL 100 100 100 100 Application WINOOKA SOUTH 100% pending Granted Granted CHAPMAN HILL NORTH GINGINUP HILL Granted WOOLKA SOUTH Granted BOONANARRING HILL 100 100 100 100 Application COOLJARLOO EAST 100% pending Application BLUE LAKE WEST Application COONABIDGEE Granted BOONANARRING Granted GINGIN SOUTH Granted Granted RED GULLY BOONANARRING 100% pending 100% pending 100 100 100 100 Application ATLAS 100% pending Granted BOONANARRING NORTH 100 E28/1895 E28/2742 E70/2636 E70/2844 E70/2898 E70/3032 E70/3041 E70/3100 E70/3192 E70/3298 E70/3494 E70/3720 E70/3892 E70/3997 E70/4077 E70/4244 E70/4631 E70/4656 E70/4663 E70/4689 E70/4779 E70/4794 E70/4795 E70/4919 E70/4946 E70/4949 E70/5034 E70/5192 E70/5193 E70/5213 E70/5268 E70/5306 E70/5552 E70/5646 E70/5661 G70/0250 M70/448 M70/1192 M70/1194 M70/1305 M70/1311 P28/1320 Granted KING PROSPECT Earning up to 100% Westex Resources P/L – Rocky Reef Mining P/L and P28/1321 Granted KING PROSPECT Earning up to 100% Westex Resources P/L – 100% 100% Rocky Reef Mining P/L and P70/1516 P70/1520 R70/0051 R70/0062 Granted COOLJARLOO JV 100 Application COOLJARLOO 100% pending Granted Granted COOLJARLOO NAMBUNG 100 100 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 WA WA WA WA WA WA 68 Image Resources NL - 54 - CORPORATE DIRECTORY DIRECTORS Mr Robert Besley Mr Patrick Mutz Non-Executive Chairman Managing Director Mr Chaodian Chen Non-Executive Director Mr Huancheng Li Non-Executive Director Mr Aaron Chong Veoy Soo Non-Executive Director Mr Peter Thomas Non-Executive Director Mr Fei Wu Non-Executive Director COMPANY SECRETARY Mr Dennis Wilkins (DW Corporate) PRINCIPAL PLACE OF BUSINESS & REGISTERED OFFICE Ground Floor 23 Ventnor Avenue West Perth WA 6005 CONTACT DETAILS +61 8 9485 2410 T: 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 +61 (0) 2 9698 5414 (International) 1300 288 664 (within Australia) T: T: 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 992,139,963 fully paid ordinary shares www.imageres.com.au
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