ioneer Ltd
Annual Report 2020

Plain-text annual report

Annual Report 2020 ioneer Ltd ABN 76 098 564 606 Contents Highlights ................................................... 1 Directors’ report ....................................... 17 Chairman’s letter ......................................... 2 Auditor’s independence declaration ........... 24 Who we are ....................................................4 Remuneration report ................................. 25 Operational report ...................................... 6 Financial statements ................................. 45 Environmental and social responsibility report .................................. 11 Board of Directors .................................... 14 Senior Executives ...................................... 15 Financial report ......................................... 16 Directors’ declaration ................................. 70 Independent auditors report ...................... 71 Other information ..................................... 76 Shareholder and ASX information .............. 79 Corporate directory .................................IBC AGM The ioneer Annual General Meeting will be held at 10am on Friday, 6 November 2020. In response to government restrictions and the potential health risks associated with COVID-19, this year the Company’s AGM will be held virtually. There will not be a physical meeting where shareholders can attend but shareholders can participate in the meeting online via https://web.lumiagm.com/379453410. ioneer Annual Report 2020 IONEER Providing the materials for a sustainable and thriving planet. Demonstrated potential to become a world-class lithium-boron project DFS confirms plans for a large, long life, low cost operation Co-production of lithium and boron on-site secures ioneer’s position as the lowest cost lithium producer in the world Strategically advantageous location in a tier-one mining jurisdiction with easy access to key US and Asian markets Set to produce two materials essential in a modern world and well-positioned to capitalise on forecast electric vehicle demand boom in 2023 Substantially completed offtake for boron production, while advancing discussions with a range of potential strategic and funding partners Highly experienced board and management with necessary skills to develop, build and operate a world-class lithium-boron mine Engaged top-tier mining, engineering, processing and environmental partners in Fluor, Golder, Veolia, and SNC Lavalin 100%-OWNED RHYOLITE RIDGE Lithium-Boron Project in Nevada, USA 26-YEAR PLUS MINE LIFE 20,600 tonnes lithium carbonate forecast annually in years 1-3 22,000 tonnes lithium hydroxide forecast annual production from year 4 174,400 tonnes boric acid forecast annual production WORLD-SCALE RESOURCE Large Mineral Resource of 146.5 million tonnes Large Ore Reserve of 60.0 million tonnes Ore Mined over 26 years of 63.8 million tonnes Significant expansion potential LOWEST COST LITHIUM PRODUCER GLOBALLY benefitting from co-production of boron, unique mineralogy and physical properties of asset A STRATEGIC ASSET as the US looks to diversify and secure its supply of battery metals 1 Chairman’s letter It’s been a milestone period for the Company. In particular, the delivery of the DFS confirmed our  long-held view that Rhyolite Ridge is a world-class asset with robust economics for a low cost, large- scale and long-life Project. James D. Calaway Executive Chairman Dear Shareholders, It is with great pride and enthusiasm that ioneer presents the Company’s 2020 Annual Report. It has been a year of significant progress for ioneer. The extensive work delivered in FY 2020 allows the Company to start the new year with momentum to complete the Project engineering, obtain environmental approvals, fund the project, and commence construction of our flagship Rhyolite Ridge Lithium-Boron project in Nevada, USA. Central to this momentum was the delivery of the Definitive Feasibility Study (DFS) in April 2020. The DFS was delivered almost four years to the day that ioneer’s CEO first set foot on the Rhyolite Ridge deposit. The DFS results confirmed our belief that the project was a world-class asset with a large reserve and resource, long life, and an all-in sustaining cash cost at the very bottom of the global lithium cost curve. The conclusion of the DFS was the culmination of four years of hard work by ioneer and its committed team of contractors. The achievement of this key milestone, informed by our world class Pilot Plant, has given the Company high confidence in the robust economics of the Project and a discerning understanding of our flowsheets and construction plans. The confidence from this extensive work led the Company to continue detailed engineering activities, even in these challenging times, in order to be construction ready in Q2 2021, and achieve first production in mid-2023. Our Project is also compelling from an environmental perspective. Our core mission is to produce the materials necessary for a sustainable future. To honour this mission, our plans have been very carefully designed to deliver an environmentally sensitive and economically feasible project that ensures the least possible impact to local flora and fauna. We have worked for more than two years to complete multiple environmental baseline studies, which comprise the basis of our Plan of Operations – a major undertaking this past year. We are pleased that this work has been extensively reviewed and accepted by the Bureau of Land Management (BLM) allowing the Environmental Impact Study (“EIS”) approval process to continue. Central to Project delivery is our funding strategy, a key component of which is the identification of a strategic partner whose interests and capabilities support and advance our business plans. We have been engaged in discussions with a range of strategic players over the past year; however, we realised that the results of the work related to the Pilot Plant and the delivery of our comprehensive DFS were key to advancing those discussions to conclusion. Now, as the 2020 fiscal year closes, we are pleased to have important potential partners continuing their detailed due diligence. Once the strategic partnering process is completed, ioneer will assess remaining capital requirements to support our ‘Final Investment Decision’ (FID) with the support of Goldman Sachs, who are assisting and advising the Company in completing our funding solution. We were also very pleased to have appointed experienced finance and investment manager, Julian Babarczy, to the ioneer Board in June 2020. Our achievements this year have been delivered in spite of a challenging overall macro environment, which had a notable impact on the lithium sector. Lithium prices have materially deteriorated, putting a number of projects under significant pressure, with those on the higher end of the cost curve taking the brunt of the downturn. This situation has been exasperated and prolonged by the COVID-19 pandemic. The complete shutdown of the global auto sector in the first half of 2020 slashed demand, exposed growing lithium stockpiles, and greatly impacted the pre- pandemic mismatch between supply and demand. As a result, the anticipated 2020 work down of lithium inventories has been delayed into late 2020 or early 2021. We anticipate that the industry will continue to face headwinds in the short-term, and are therefore controlling what is within our control during this time, remaining laser-focused on securing our funding and permitting, while preparing for the mid-term to ensure that we are ideally placed to capitalise on demand recovery and likely supply shortages, as governments across the globe increasingly promulgate incentive systems to rapidly reduce reliance on fossil fuels and lowering greenhouse gas emissions. The plethora of new and exciting electric vehicle offerings across a wider price point in the mid-term, coupled with 2 ioneer Annual Report 2020 these governmental policies will drive the surge in electric vehicle uptake globally. ioneer believes these likely developments will shift the winds in the industry, and usher in a strong tailwind for lithium producers at the bottom of the cost curve. To this end, Rhyolite Ridge is extremely well-positioned as the only DFS level project in the United States and the most advanced lithium project in North America. Even more, Rhyolite Ridge’s unique minerology enables us to generate two important revenue streams, with the co-production of boron solidifying the Project’s position at the very bottom of the global lithium cost curve, while benefitting ioneer with critically important revenue stability. Let me take a moment to thank our remarkable team, led by our able and dedicated CEO, Bernard Rowe. The growing Reno- based team, along with our terrific engineering, procurement and construction partner, Fluor Corporation, and related support contractors, have continued to meet the challenge of demonstrating excellence in execution and driving our Project to conclusion despite the difficulties of COVID-19 we have faced this year. Spirits are high, and the team remains fully committed to our core mission to make ioneer a leading, environmentally sensitive producer of the materials critical to a sustainable future. I also want to thank our Board of Directors, who are as dedicated as our management team, for the past year of endless work, commitment to good governance, and wise counsel. And finally, I want to thank our shareholders for their patience, understanding and support in a year where the macro conditions of our industry have translated into disappointing market performance. As we enter into the new fiscal year, we are optimistic about what lies ahead for our Company and look forward to delivering on our objectives and driving value for our shareholders. With appreciation, James D. Calaway Executive Chairman ioneer Ltd Document No.: RR30-1000-91-PM-REP-0000 March 2020 IONEER USA Corp. Rhyolite Ridge Lithium-Boron Project Definitive Feasibility Study (DFS) Report ioneer Managing Director, Bernard Rowe, standing on outcrop hill leading a site visit Looking north toward outcrop hill at the Rhyolite Ridge Lithium-Boron Project Rhyolite Ridge Process Plant A key milestone was the delivery of the DFS in April 2020 3 Who we are The Company’s 100%-owned Rhyolite Ridge Lithium-Boron Project in Nevada, USA provides a substantial foundation for ioneer to become a responsible and profitable producer of the materials necessary for a  sustainable future. Nevada is one of the most attractive, mining-friendly jurisdictions globally with a large pool of skilled labour, well-established infrastructure, and proximity to the Tesla Gigafactory and California ports. Rhyolite Ridge is a strategically important deposit as the USA works to secure and diversify its supply of battery metals and other critical metals essential to modern life and the future. The Company has a highly experienced board and management with the necessary skills to develop, build and operate a world- class lithium-boron mine in the United States. The ioneer team is complemented by top-tier mining, engineering, processing and environmental partners including Fluor, Golder, Veolia, and SNC Lavalin. ioneer is an emerging lithium-boron producer that is set to become the single most attractive lithium project globally. Rhyolite Ridge is one of only two known large lithium-boron deposits globally. In 2020, ioneer delivered its DFS which confirmed the Project’s scale, long life and potential to become a low-cost and globally significant producer of both lithium and boron products. Rhyolite Ridge’s unique mineralogy and physical properties of the Rhyolite Ridge ore allows for a flowsheet that combines commercially available processes and equipment to produce lithium and boron end-products at the mine site without the need for solar evaporation or high-temperature roasting. Revenue generated from the operation is forecast to be split between lithium (70%) and boron (30%), ensuring a diversified and stable revenue mix. Importantly, with the boron credit, ioneer is set to achieve an all-in sustaining cash cost at the bottom of the cost curve for lithium globally. Lithium and boron are used in a diverse range of everyday items and innovative technologies that are essential to modern life. Lithium in particular is linked directly to emerging clean technologies and is an irreplaceable component for batteries essential to electric vehicles. ioneer is well-positioned to capitalise on the lithium supply deficit forecast to rapidly accelerate by 2023. Lithium carbonate (years 1-3), lithium hydroxide (year 4 onwards) and boric acid end products will be produced at site, differentiating Rhyolite Ridge from other projects. Satellite image of the basin outline with drill holes highlights expansion opportunities to the north, south and east 4 ioneer Annual Report 2020 Low-risk, mining friendly jurisdiction proximate to the Pacific coast  for entrance into US and Asian end markets. Rhyolite Ridge ADVANTAGES COMPELLING PROJECT ECONOMICS Long mine life with rapid payback of capital: 5.2 years from first production. LOWEST COST LITHIUM PRODUCER GLOBALLY All in sustaining cash cost at the bottom of the global lithium cost curve with co-production of boron. LARGE DEPOSIT 26-year mine life with verified  expansion potential. WELL-DEFINED PROCESS FLOWSHEET Open pit, low cost, proven technology. LOW RISK LOCATION US Advantage, mining friendly jurisdiction proximal to Tesla Gigafactory and California export ports. SUSTAINABLE PROJECT Small footprint, low emissions, low water usage. 5 Operational report At an all-in sustaining cash cost of $2,510 per metric tonne net of boric acid revenue, Rhyolite Ridge is the single most attractive lithium resource to economically produce lithium carbonate, lithium hydroxide, and boric acid globally. Bernard Rowe CEO and Managing Director The fiscal year ended June 2020 was a significant one for ioneer, delivering its Definitive Feasibility Study (DFS) that validated Rhyolite Ridge as a world-class resource with significant value creation potential. The DFS demonstrates ioneer’s potential to become a major, low-cost and long-term US source of lithium and a credible alternative to spodumene and brine deposits that dominate supply in the lithium market today. The unique mineralogy and physical properties of the lithium- boron ore at Rhyolite Ridge, combined with the commercially available processes and equipment, have enabled ioneer to secure its position at the bottom of the global lithium cost curve. At an all in sustaining cash cost to produce battery grade lithium hydroxide of $2,510 per metric tonne net of boric acid revenue, Rhyolite Ridge is the single most attractive lithium resource to economically produce lithium carbonate, lithium hydroxide, and boric acid globally. Over the past year, ioneer has also achieved: • A 280% upgrade to the Ore Reserve estimate for Rhyolite Ridge and a 26% increase in boron grades; • Significant progress in its state and federal permitting processes; • Expansion of its research agreement with the University of Nevada, Reno (UNR) for the conservation of Tiehm’s buckwheat, with the study yielding early success in germination rates; and, • Continued discussions with a range of potential strategic and financing partners. • Significant boric acid offtake and sales and distribution agreements. Definitive Feasibility Study In April 2020, ioneer delivered its Rhyolite Ridge DFS, undertaken by independent and globally recognised engineering firm Fluor Enterprises (Fluor) along with a world class team of associated engineering and equipment suppliers. The DFS validates Rhyolite Ridge as a world-class resource with significant value creation potential due to its very low-cost, large-scale operation and long mine life. 6 ioneer Annual Report 2020 The Project is located in Nevada, United States, a stable, low-risk mining-friendly jurisdiction with a large pool of skilled labour and well-established infrastructure. Importantly, its location places the project in close proximity to the Tesla Gigafactory and California export ports, enabling it to supply key US and Asian end markets. The DFS places Rhyolite Ridge as the single most attractive Project for the economic production of lithium carbonate, lithium hydroxide and boric acid globally. The DFS analysis positions ioneer, on an LCE basis, as the lowest cost lithium producer globally with an estimated all-in sustaining cash cost to produce battery grade lithium hydroxide of US$2,510 per metric tonne net of boric acid revenue. The DFS also confirms that the Project has the most stable overall operating cost structure for the production of lithium carbonate and battery grade lithium hydroxide due to the scale and reliability of its boric acid credit. The extensive bench and pilot scale testwork conducted by Fluor, Kemetco Research and Kappes Cassiday, with support from Veolia and FLSmidth, has proven highly successful with excellent recoveries, the innovative use of proven processing technologies, and the production of high purity lithium and boric acid products. During the extensive DFS process, Project plans were further developed and refined, helping to ensure predictable, sustainable and very low operating costs for the life of the Project. This includes the addition of a steam turbine for power generation, which will provide the entire operation with enough energy to be fully self-sufficient. The current 26-year mine plan is made up almost entirely of Reserve material (94%), and of that nearly 50% is Proved Ore Reserve. The resource remains open in three directions allowing for a potential extension to the life of the mine or expansion opportunities in the future. Compelling project economics confirmed by DFS After-tax NPV (8% real) US$1.27B Unlevered After-tax IRR ~21% Annual After-tax Cashflow US$193M Annual Revenue US$422M Estimated Capex US$785M Rapid payback 5.2 years DFS SCHEMATIC OF RHYOLITE RIDGE PROCESSING PLANT 7 Operational report continued Reserve & Resource upgrade In April 2020, ioneer announced a 280% upgrade to the Ore Reserve estimate for Rhyolite Ridge, based on a mining study completed by Golder Associates Inc. (Golder) for the Rhyolite Ridge DFS. The Ore Reserve increased by 44.2 mt and is now estimated to contain: • 60.0 mt at 1,800 ppm lithium (equivalent to 1.0% lithium carbonate) and 15,400 ppm boron (equivalent to 8.8% boric acid); • 0.6 mt of equivalent lithium carbonate and 5.3 mt of equivalent boric acid. Approximately half (47%) of the Ore Reserve is now classified as Proved, the highest confidence category, with lithium and boron grades in the Proved Reserve higher than those in the Probable Reserve category. The planned Stage 1 quarry is exclusively Proved Reserves with higher-than-average lithium grades, which will provide higher cash flow in the early years of the Project. Compared with the 2018 Ore Reserve estimate (prepared by RPM Global), the overall lithium grade remained the same at 1.0% lithium carbonate, while the boron grade increased by 26% in the total Ore Reserve, significantly lifting boric acid production. The 2020 Mineral Resource is now estimated to contain: • 146.5 mt at 1,600 ppm lithium (equivalent to 0.9% lithium carbonate) and 14,200 ppm boron (equivalent to 8.1% boric acid); • 1.2 mt of equivalent lithium carbonate and 11.9 mt of equivalent boric acid. The Ore Reserve provides the foundation for a very long Project mine life and the Mineral Resource underpins clear potential for expansion and extension. Pilot Plant ioneer continued to operate its full-simulation Pilot Plant located in Vancouver, Canada, under the oversight of Kemetco Research Inc, one of Canada’s largest privately-owned contract research and development laboratories, specialising in extractive metallurgy, chemical processing and specialty chemical analysis. Extensive testwork was undertaken to simulate and optimise the proposed commercial flowsheet for the DFS. This work has continued to play a critical role in ensuring a comprehensive understanding of the process flowsheet and has resulted in improved engineering design and operating plans. Initial boric acid produced by the Pilot Plant contained very low levels of impurities and was found to be a premium-grade product. Further analysis confirmed that the lithium carbonate produced at the Pilot Plant met or exceeded the specifications required by customers for technical grade lithium carbonate. The Pilot Plant has continued to play an important role in deepening discussions with potential partners and has been demonstrated to 20 potential strategic and financing partners throughout the year. Output from the Pilot Plant will continue to be used to advance discussions with potential customers and partners. 8 State and federal permitting process ioneer has progressed significantly in state and federal permitting processes. Plan of Operations submitted A formal Project Plan of Operations has been submitted to the United States Bureau of Land Management (BLM) for the Rhyolite Ridge Project. Submission of the Plan is a significant step toward Project approval. The Plan includes 14 baseline studies completed by the ioneer team and specialist consultants over a 2-year period on areas of study including air quality, biology, cultural resources, groundwater, recreation, socioeconomics, soils and rangeland. The BLM has contracted Stantec to prepare and complete an Environmental Impact Statement for Rhyolite Ridge as part of the National Environmental Policy Act (NEPA) process. ioneer’s Plan reflects its strong commitment to creating a sustainable, environmentally friendly operation in line with its vision of becoming a responsible and profitable producer of the materials necessary for a sustainable future. This includes a low emissions processing plant, an extraction process designed for low energy consumption and substantially reduced water usage, a small surface mine footprint, and significant investment into its Tiehm’s buckwheat protection plan. Air & Water Quality permits submitted A formal application for a Class II Air Quality Permit has been submitted by ioneer for the Rhyolite Ridge Project. Produced by Trinity Consultants, an international environmental consulting firm that specialises in industrial air quality issues, projected results of the permit application are indicative of ioneer’s commitment to environmental stewardship. With off-grid, internally generated zero carbon dioxide power, low emissions and minimal hazardous air pollutants, Project source emissions are projected to be between 5% and 60% below the applicable permitting thresholds, and a “minor source” for all permitted emissions. An application was also submitted to the Nevada Division of Environmental Protection, Bureau of Mining Regulation and Reclamation (BMRR) for a Water Pollution Control Permit, necessary for the construction of any mining facility. Water pollution control permits are subject to public review and notice requirements and must be reviewed every five years. Economic Impact Study In May 2020, ioneer released in Nevada the results of a report assessing the estimated economic impact of the Rhyolite Ridge Lithium-Boron Project. The Economic Impact Study was developed by Applied Analysis, an independent, Nevada-based consulting firm with extensive experience in preparing economic and fiscal impact analyses. Applied Analysis reviewed and analysed the economic, fiscal and social impacts associated with the Project from construction through the proposed mine’s expected life. The findings of the Study suggest that the Project will generate between US$15 billion to US$35 billion in total economic output, including a total labour income of US$3 billion to US$6 billion, based on the firm’s “median” case assumptions over the modelled 26 and 60-year mine life. ioneer Annual Report 2020 Tiehm’s buckwheat preservation In April 2020, ioneer announced the expansion of its research agreement with the University of Nevada, Reno (UNR), funding a five-year study that will focus on the successful propagation and growth of Tiehm’s buckwheat at its Rhyolite Ridge Project. The expanded agreement comes following researchers reporting early success, with the UNR research team successfully growing over one thousand Tiehm’s buckwheat seedlings from seeds collected at Rhyolite Ridge in supercell pots at the UNR greenhouse. Seedlings have been planted at Rhyolite Ridge in a demonstration of ioneer’s commitment to proactively protect the Tiehm’s buckwheat population and ensuring it thrives in its natural environment. ioneer has continued to engage with community and government stakeholders, including participation in public workshops associated with the listing process for Tiehm’s buckwheat and providing information to the related government agencies. Environmental stewardship is at the core of ioneer’s mission to develop the unique Rhyolite Ridge Lithium-Boron operation that will produce large quantities of vital materials critical to reducing greenhouse gas emissions. Pilot Plant impurity removal reactors Kemetco Pilot Plant site visit Rhyolite Ridge Processing Plant Plant Utilities Sulphur Supply Power Plant Evaporation/Crystallization Lithium Hydroxide Circuit (Expansion) Vat Leach Plant Reagents Lithium Carbonate Circuit Boric Acid Circuit Sulphuric Acid Plant Ore handling/Sizing and Storage 9 Operational report continued Strategic Partner & Offtake discussions Over the last 12 months, ioneer has made notable progress on its funding solution process, with the support of its financial advisors. In December 2019 and May 2020, ioneer made announcements related to three separate offtake and sales and distribution agreements for its boric acid supply, securing nearly 100% of its boric acid production in years one through three of operations. ioneer has continued to advance its discussions with a wide range of strategic players who could become part of its funding solution. In November 2019, ioneer completed a fully subscribed underwritten institutional placement to professional and sophisticated investors, raising A$40million at A$0.20 per share, the proceeds of which are being used to advance the Project toward a Final Investment Decision through the completion of the DFS, advancing its detailed engineering, completion of the environmental approval process, and ongoing working capital. Ongoing Offtake Discussions Product samples from ioneer’s Pilot Plant have been sent to over 30 potential customers for offtake negotiations. During the year, ioneer signed significant agreements with several key partners: • A binding offtake agreement with Dalian Jinma Boron Technology Group Co. Ltd for 105,000 tonnes per annum of boric acid for five years, which included a distribution agreement for the territories of China and Taiwan, commencing in Q1 2023. • A three-year sales and distribution agreement with Kintamani Resources Pte Limited for the territories of Malaysia, Indonesia, Singapore, Thailand, Vietnam and the Philippines. • A three-year sales and distribution agreement with Boron Bazar Limited (Boron Bazar) for the territories of Bangladesh, India, Pakistan and Myanmar. Together the Agreement accounted for 100% of ioneer’s first year of boric acid production and over 80% of years two and three boric acid production, with highly respected boron sales and distribution companies in key Asian jurisdictions. The signing of these Agreements substantially completes the core components of ioneer’s Asian boric acid marketing plan to secure direct offtake or distribution and sales agreements with recognised industry participants for major Asian countries. ioneer has also signed a letter of intent with Shell Canada for the purchase of 60% of sulphur requirements, totalling 250,000 tonnes annually. This represents one of the first steps toward securing key reagents for the proposed acid leaching of the Project’s lithium- boron Searlesite ore. Strategic Partnering ioneer intends to fund its Project with various sources of capital including strategic partnering, debt and equity. ioneer views a strategic partner as central to this funding solution. It is currently in advanced discussions with a wide range of strategic players who would become part of this funding solution. These discussions are progressing well, despite the economic disturbance of COVID-19, which is a strong reflection of the significant value that ioneer is positioned to deliver over the life of the Project. ioneer, along with its advisors, will seek to continue engaging with various interested parties as we move closer to securing the Project’s funding solution. Bernard Rowe Managing Director Lithium Carbonate product sample 10 ioneer Annual Report 2020 Environmental and social responsibility report At ioneer, our mission is rooted in producing the materials necessary for a sustainable future as we work to become a globally significant  and responsible producer and supplier of lithium and boron. Over the course of fiscal year 2020, we continued to develop the Baseline Studies and Plan of Operations for the Rhyolite Ridge Project. Central to this Plan is the responsible extraction of lithium and boron and providing shared economic, environmental and social value. With ESR at the core of our business, the adoption of best-in- class practices is a future area of focus for the Company. As we progress toward construction and into production, we are committed to continuing to expand our disclosure and reporting practices in this area. This year, we are pleased to lay the foundation for the future by establishing sustainability pillars that will drive our efforts for years to come. Clean energy Environment People & Community CLEAN ENERGY Producing the materials for a greener future ioneer is set to become a globally significant supplier of lithium carbonate, lithium hydroxide and boric acid, which are vital materials to reducing greenhouse gas emissions and creating a globally sustainable future. Lithium is a critical raw material to enable technologies that may reduce contributions to climate change. It is an irreplaceable component for lithium-ion batteries, which are essential to electric vehicles (EVs) and green energy storage systems that lead to emission reductions. As a result of the global push toward decarbonisation and green energy solutions, the global lithium market has also been expanding rapidly. According to Benchmark Minerals, EVs are predicted to reach 10% of total new car sales globally by 2025, driving demand for lithium-ion batteries above 400 GWh that same year. A significant portion of the global demand for lithium-ion batteries comes from China, where the government is pushing for all-electric battery cars and plug-in hybrids to account for at least 20% of its vehicle sales by 2025. Meanwhile, China already produces 55% of lithium-ion batteries globally, and its share is forecast to grow to 65%, according to Bloomberg. In the U.S. and Europe, there is significant growth in demand forecast in key auto markets yet very little domestic supply is in the pipeline. Rhyolite Ridge will be a secure, reliable and sustainable source of this critical raw material, ready to be sold directly into these global battery supply chains. Boron is a rare, critical raw material and one of the most versatile elements in the world. With more than 130 unique applications, from glass, to insulation, to agriculture and industrial uses. Boron is also an important component in powerful magnets for electric cars and wind turbines as well as advanced glass for solar panels. With global demand for boric acid consistently rising at 4% annually, the market for boric acid is expected to start tightening dramatically as soon as 2021. Without Rhyolite Ridge, demand is expected to exceed supply by 2024, which supports the assumption that the market needs additional capacity. Through the environmentally-sensitive development of the Rhyolite Ridge Lithium-Boron Project, ioneer will unlock much needed western supply of lithium and boric acid to support global initiatives toward decarbonisation and clean energy solutions across a wide range of end uses and geographies. ENVIRONMENT Environmentally-friendly operation The unique mineralogy of Rhyolite Ridge allows both lithium and boron to be extracted in a low-cost and environmentally responsible manner. We will produce lithium carbonate, lithium hydroxide and boric acid using off-grid, energy-efficient processes with minimal carbon dioxide (CO2) emissions from heat and electricity generation, resulting in a processing plant with low emissions of greenhouse gases and minimal hazardous air pollutants. The final processing design was derived after thousands of hours of bench 11 Environmental and social responsibility report continued and pilot plant tests with our partner Kemetco Research, and extensive work by the Project’s engineering team, led by Fluor. Water usage associated with the process is extremely low compared to other lithium producers that utilise brine extraction and solar evaporation. The design is based on the recycling of the majority of water usage, which further reduces make-up water demand. Community engagement has been a critical component of our strategy and workstreams since day one and we continue to create and invest in local initiatives to further support and deepen our relationships in the community. In 2020, we have hosted two community meetings, bringing together a significant number of community members and ioneer representatives to discuss the Project and the opportunities that it will afford Esmeralda County. Low-energy consumption, substantially reduced water usage, and a relatively small surface footprint make Rhyolite Ridge a sustainable, environmentally friendly operation. Air quality on site will be strictly maintained with the Project’s use of the lowest emission class of mobile equipment, and technology deployed in its sulphuric acid plant that guarantees the lowest possible rate of emissions in large acid plants. ioneer has conducted in-depth analysis to quantify the emissions of greenhouse gases generated from the Project, the results of which confirmed that the Project realises a significant benefit from the facility’s on-site power generation, thanks to its state of the art sulphuric acid plant. Tiehm’s buckwheat We are committed to protecting the local flora and fauna in the region. A critical component of our environmental strategy is the preservation of Tiehm’s buckwheat, a small perennial herb that is native to Rhyolite Ridge. We have developed and implemented a comprehensive Tiehm’s buckwheat protection plan, that includes strict environmental protection measures. These measures have been in place since exploration commenced at Rhyolite Ridge in 2016. In line with this initiative, ioneer announced in April 2020 the expansion of its research agreement with the University of Nevada, Reno (UNR), advising that it would fund a 5-year research and propagation program with UNR. This followed early success by the UNR research team growing more than a thousand Tiehm’s buckwheat seedlings in the UNR greenhouse from seeds collected at the site, with germination rates far exceeding initial expectations and a high transplant survival rate. ioneer has actively participated in workshops associated with state listing processes for Tiehm’s buckwheat. This included ioneer representatives delivering presentations to participants on its efforts to ensure that the plant and its habitat are protected, and that the potential impacts caused by development of the Rhyolite Ridge Project are minimised. We remain in close coordination with the Nevada Division of Forestry (Department of Conservation and Natural Resources) and the U.S. Fish and Wildlife Service. PEOPLE & COMMUNITY There is significant potential for ioneer to make a positive impact on the environment across the globe and that potential starts in and with the support of the local communities in which we operate. The Rhyolite Ridge Project could have a tremendous positive economic impact on Esmeralda County, adjacent counties, the state of Nevada and the entire country over multiple decades. In the near term, it is expected to create 400-500 construction jobs and 200-300 high-paying operating jobs. ioneer Sustainable World Scholarship In June 2020, we were proud to announce recipients of our inaugural ioneer Sustainable World Scholarship, which was established to invest in Nevada’s future by supporting Tonopah High School students pursuing higher education. In response to unprecedented hardships experienced by this year’s graduating students, we increased our commitment to the scholarship program by selecting three recipients. The scholarships will provide financial support to the recipients throughout their 4 year college education. TAAF Airmen’s Memorial ioneer is a proud sponsor of the Tonopah Army Air Field (TAAF) Airmen’s Memorial, which honours the 121 airmen that lost their lives at the TAAF during World War II. The memorial includes a plaque with the names of the airmen, a B-24 Liberator engine, as well as benches and landscaping to create a public space for the community on Main Street. The memorial has served as a reminder of Tonopah’s rich military history and generated significant community interest and support. Our People Over the past year we have expanded our team with a range of experts from the mining, finance and energy industries who are committed to supporting ioneer toward achieving our sustainability vision. The high-quality additions to our Board and Management team bring the relevant skills and experience to foster and support our vision for sustainability. Their leadership and governance of initiatives, now and into the future, will ensure that ioneer is able to become a responsible and profitable producer. The ioneer Board is continuing an overall evaluation of its Board and management team, seeking the right composition and structure as we enter this next phase of growth. We continue our commitment to building a culture that reflects our values of being imaginative, caring, committed and responsible. Governance We are committed to ensuring best practice and operate within the frameworks of a number of internal policies. The Disclosure, Diversity, Shareholder Communications, Trading, Whistleblower and Anti-Bribery & Corruption policies, as well as the overarching Code of Conduct, make clear our commitment to ensuring ethical and sustainable operations for our employees, partners, shareholders and other key stakeholders. Transparency and best practice are formally monitored through management level committee charters, including the Audit and Risk Committee Charter, Nomination and Remuneration Committee Charter and Board and Governance Charter. 12 ioneer Annual Report 2020 Planting underway of Tiehm’s buckwheat at Rhyolite Ridge Tiehm’s buckwheat seedlings UNR greenhouse Dyer community meeting January 2020 Dyer community meeting July 2020 Recipients of the ioneer Sustainable World Scholarship from Tonopah High School Transplanted Tiehm’s buckwheat Community meeting July 2020 13 Board of Directors Mr James D Calaway Executive Chairman BA (Econ), MA (PP&E) Former: Non-exec Chairman of Orocobre James Calaway has considerable experience and success in building young companies into successful commercial enterprises. He was the non-executive chairman Orocobre Ltd for 8 years, helping lead the company from its earliest development to becoming a significant producer of lithium carbonate and a member of the ASX 300. Mr Bernard Rowe Managing Director BAppSc (Geology) (Hons) Founding Managing Director of INR since IPO in 2007 Bernard Rowe is a geologist, manager and company director with more than 25 years’ international experience in mineral exploration and mine development. His diverse mineral industry experience includes gold, copper, zinc, diamond, lithium and boron exploration in Australia, Europe, Africa, North America and South America. Mr Julian Babarczy Independent Non-executive Director B.Bus, Grad Dip. (Mineral Exploration Geosciences), CFA Former: Head of Australian Equities, Regal Funds Management Julian Babarczy has over 20 years finance and investment industry experience, over two-thirds of which was as a key member of the investment and leadership team at Sydney-based Regal Funds Management, one of Australia’s largest actively managed and arguably most successful hedge funds. Julian has broad investment experience across a range of sectors, with a notable speciality in natural resources. Mr Alan Davies Independent Non-executive Director B.Bus (Accounting), LLB, LLM Former: CEO Energy & Industrial Minerals, Rio Tinto Alan Davies has 20 years of experience in running and leading mining businesses, most recently as chief executive, Energy & Minerals with Rio Tinto. He has significant experience in industrial minerals businesses including borates where he led the Rio Tinto Borax business and the Jadar lithium-boron deposit in Serbia. Mr Patrick Elliott Independent Non-executive Director B.Comm, MBA Mineral Economics Former: Head of corporate finance for Morgan Grenfell Australia Limited Patrick Elliott is an experienced resources and industrial sector company director. In a career spanning over 45 years he has held senior executive positions with Consolidated Gold Fields Australia Limited and Morgan Grenfell Australia Limited. He then became an early stage venture capital investor with an emphasis on resources. Mr John Hofmeister Independent Non-executive Director BA (Political Science), MA (Political Science), PhD (Houston), D.Lit (Kansas State) Former: President of Shell Oil Company (USA) John Hofmeister was the president of Shell Oil Company (U.S.A.) from 2005 to 2008 and director of human resources. John also has held executive leadership positions in General Electric Company, Nortel Network Corporation and AlliedSignal (now Honeywell International Inc.). 14 ioneer Annual Report 2020 Senior Executives Mr Ian Bucknell Chief Financial Officer & Company secretary B.Bus (Accounting), FCPA, GAICD Former: CFO & Company Secretary AWE Limited and Drillsearch Energy Limited Ian Bucknell is responsible for the finance, investor relations, IT and company secretarial functions of the company. He has more than 20 years of international resource sector experience, most recently as chief financial officer and company secretary of AWE Limited. Mr Ken Coon Vice President Human Resources BS.Bus Administration (Human Resources) Former: HR VP Shell Downstream Technologies and Entergy HR Director Nuclear Division Ken Coon is responsible for the human resource function of the company. He has more than 30 years of human resources experience holding international and regional leadership roles with Royal Dutch Shell’s downstream refining and chemicals organization and Entergy, a large US Gulf Coast utility company. Mr Yoshio Nagai Vice President Commercial Sales & Marketing Former: MD Fenic International Pte Ltd, Sales VP Rio Tinto Yoshio Nagai is responsible for the sales and marketing function of the company. He has more than 20 years chemical and mining industry sales and marketing experience, most recently as Sales Vice President at the Rio Tinto Group Company accountable for borates, salt and talc products, in Asia and the USA. Mr Matt Weaver Senior Vice President of Engineering and Operations BS Mech Engineering, MBA Former: Project Manager BHPB, Guinea Alumina Corp Matt Weaver is responsible for all engineering and operational aspects of the Rhyolite Ridge lithium-boron Project in Nevada and for delivering the project through the Definitive Feasibility Study and project execution and into full commercial production. He has 30 years international mining, having worked with BHP, Rio Tinto and Newmont, and several junior mining companies. 15 Financial Report For the year ended 30 June 2020 Table of contents Directors’ report ..................................................................... 17 Auditor’s independence declaration ...................................... 24 Remuneration report .............................................................. 25 Financial statements ............................................................... 41 Consolidated statement of profit and  loss and other comprehensive income ............................ 41 Consolidated statement of financial position  .......................................................... 42 Consolidated statement of cashflows  ...................................................................... 43 Consolidated statement of changes in equity ......................................................... 44 Directors’ declaration ............................................................. 70 Independent auditor’s report ................................................. 71 Other information ................................................................... 76 Shareholder and ASX information .......................................... 79 Corporate directory .............................................................. IBC 16 ioneer Annual Report 2020 Directors’ report Directors’ Report The directors of ioneer Ltd present their report together with the consolidated financial statements of ioneer Ltd (‘ioneer’ or the ‘Company’) and its controlled entities (collectively the Group) for the financial year ended 30 June 2020 and the Auditor’s report thereon. Operating and financial review The operating and financial review forms part of the Directors’ Report and has been prepared in accordance with section 299A of the Corporations Act 2001 (Cth). The information provided aims to assist users better understand the operations and financial position of the Group. To assist users, financial information included in this review contains non-IFRS financial information. The principal activity of the Group continues to be the development of the Rhyolite Ridge Lithium-Boron Project (Project) in Nevada, United States of America. Highlights of the financial year ended 30 June 2020 • • • The Definitive Feasibility Study (DFS) for Rhyolite Ridge was delivered in April, showing compelling Project economics with an after-tax NPV of US$1.265 billion, and an unlevered, after tax IRR of 20.8%. o Confirmed plans for a large, long-life, low-cost operation with an all-in sustaining cash cost to produce lithium carbonate equivalent at the bottom of the global lithium cost curve. Total Ore Reserve for Rhyolite Ridge increased 280% to 60.5 million metric tonnes (mt) over the 26-year mine life. Significant progress was made on permitting the project: o o The Project Plan of Operations was submitted to the United States Bureau of Land Management. Key air and water quality permit applications were completed and submitted to relevant US regulatory bodies. o Announced funding for a five-year study under a collaboration with the University of Nevada, Reno following successful results from a Tiehm’s Buckwheat growing trial from seed collected at Rhyolite Ridge. • Key milestones were achieved in sales & marketing: o o Samples of high-quality lithium and boron end-products produced at the Pilot Plant were sent to thirty potential off-take partners. Lithium carbonate confirmed to contain exceptionally low levels of impurities, meeting or exceeding customer specifications, in addition to previously announced high-purity lithium hydroxide. o Binding boric acid offtake agreement signed with the Dalian Jinma Group; a large diversified private o Chinese company focused on boron related products. Three-year boric acid Distribution and Sales Agreements signed with Kintamani Resources Pte Limited, and Boron Bazar Limited, covering critical additional territories in Asia. • On the corporate front: o Strategic partner discussions are progressing well with a range of potential strategic funding partners for Rhyolite Ridge. o Completion of $40 million fully underwritten institutional placement with cornerstone investment from Centaurus Capital LP Experienced finance and investment manager Julian Babarczy joined the board as non-executive director. o Summary of performance and financial position Year ended 30 June Mineral Resource: Measured and Indicated Inferred Mineral Resource: Total (1) Total operating cash flows Investing cash flows Financing cash flows - equity Total cash used in the financial year Net cash Capitalised exploration Net assets Net loss after tax Unit mt mt mt A$'000 A$'000 A$,000 A$'000 A$'000 A$,000 A$,000 A$,000 30-Jun-20 127.0 19.5 146.5 (6,773) (44,354) 38,676 (12,451) 38,268 44,362 130,046 (5,446) 30-Jun-19 130.5 24.0 154.5 (4,923) (30,401) 563 (34,761) 48,604 33,627 95,656 (941) % Change (3%) (19%) (5%) 38% 46% >100% (64%) (21%) 32% 36% >100% (1) For further detail and Mineral Resources and Ore Reserves refer to Other information set out on page 76. IONEER LTD ANNUAL REPORT 17 17 Directors’ reportRemuneration reportFinancial statementsOther informationShareholder and ASX informationCorporate directory Directors’ report Business strategy Our Purpose - we exist to enable a sustainable world for all. Our Mission - we responsibly and profitably provide the materials necessary for realising a sustainable planet. Our Vision - we see a world in which our global population, our environment and all future generations are thriving. Our Values - we are imaginative, caring, committed and responsible. ioneer’s business strategy is focused on developing the 100%-owned Rhyolite Ridge Lithium-Boron Project in Nevada, USA. We believe in an electrified future and the strategic imperative for the USA to develop a domestic battery materials supply chain. We actively promote the development of this battery materials supply chain and look to be a thought leader in this space. Opportunities The focus of the company is developing Rhyolite Ridge. After successfully delivering this Project, ioneer will pursue other growth initiatives from its existing portfolio (the current estimated resource is open to the north, south and east and does not include the north basin tenements) as well as new opportunities where they are value accretive and where balance sheet capacity exists to support future development. Material business risks The following material business risks have been identified as key issues that have the potential to impact the Company’s performance: • Health, safety and environmental risks, are of critical importance in ensuring we safely and responsibly build • and operate a sustainable business. Execution of the Project, including meeting schedule, permitting and budget, could be subject to changes in industry and economic conditions. • Offtake risk, including volume and price risks associated with the sale of technical grade lithium carbonate and boric acid, counterparty risk and contract terms. Pricing of lithium is likely to be largely subject to the rate of uptake in electric vehicles. • Continuing access to debt and capital markets to fund the Project. • Sovereign risk relating to the expected fiscal, tax and regulatory environment in jurisdictions that ioneer does business. • Maintaining the company’s social licence to operate by proactively engaging communities, regulators and other key stakeholders. • COVID-19 has significantly increased uncertainty in markets. Impact of COVID-19 COVID-19 delayed the completion and delivery of the Definitive Feasibility Study (‘DFS’) by a month. In response to COVID-19, the Company revised its forward plans and confirmed it had adequate capital to progress the Project until the end of 2021. The revised capital plan ensured funding to complete the DFS, the Bureau of Land Management Environmental Impact Study permitting process and to maintain its core team, including critical contractor personnel, required to ensure continuity and the rapid re-acceleration of activities. Unfortunately, a small number of redundancies were made. Travel restrictions have impacted international travel by senior staff and offices were closed for a period with staff working from home. Most staff continue to work a mix of home and office based hours. 18 IONEER LTD 2020 ANNUAL REPORT 18 Directors’ report continuedioneer Annual Report 2020 Directors qualification and experience The following persons were directors of ioneer Ltd during the whole of the financial year and up to the date of this report. Their qualifications and experience are: Directors’ report Mr James D Calaway Chairman BA (Econ), MA (PP&E) Mr Bernard Rowe Managing Director BAppSc (Geology) (Hons) James was appointed a director in April 2017 and has served as Chairman since June 2017. James was the Non-Executive Chairman of Orocobre Ltd for eight years until his retirement in July 2016. He led Orocobre from early development to become a significant producer of lithium carbonate and a member of the ASX 300. James is currently Chairman Distributed Power Partners Inc, a US international distributed power development company which is a leader in clustered distributed solar power development. He has also been a chair of several other U.S. corporate boards including the Centre for Houston's Future, and the Houston Independent School District Foundation. Bernard was appointed managing director in August 2007. He has more than 25 years’ international experience in mineral exploration and mine development. His diverse mineral industry experience includes gold, copper, zinc, diamond, lithium and boron exploration in Australia, Europe, Africa, North America and South America. He led the Company’s listing on the ASX in 2007 with a focus on gold and copper exploration in Nevada and Peru. In early 2016 Bernard visited a little-known lithium-boron deposit in southern Nevada – later to be renamed Rhyolite Ridge. He realised the potential opportunity and quickly secured a 12-month option over the Project to give the Company sufficient time to fully assess and evaluate the unique and poorly understood deposit. Bernard is a member of the Australian Institute of Geoscientists, the Society of Economic Geologist and the Geological Society of Nevada. Mr Julian Babarczy Director B.Bus (Marketing) Grad Dip. (Mineral Exploration Geosciences), CFA Julian joined the board as a non-executive director in June 2020. He has over 20 years finance and investment industry experience, over two-thirds of which was as a key member of the investment and leadership team at Sydney- based Regal Funds Management, one of Australia's largest actively managed and arguably most successful hedge funds. Julian has broad investment experience across a range of sectors, with a notable speciality in natural resources. Member of the Nomination and Remuneration Committee He is currently the chief investment officer at a private investment company, Jigsaw Investments, a non-executive director of Oovvuu a privately held video media company and chairman of Perpetual Resources Limited, an explorer of silica sands. Julian is a graduate of the CFA Institute. Mr Alan Davies Director B.Bus (Accounting), LLB, LLM Member of the Audit & Risk Committee Member of the Nomination and Remuneration Committee Alan joined the board as a non-executive director in May 2017. He has expertise in running and leading mining businesses with Rio Tinto, most recently as chief executive, Energy & Minerals. Former roles include chief executive, Diamonds & Minerals and chief financial officer of Rio Tinto Iron Ore. Alan held management positions in Australia, London and the US for Rio Tinto's Iron Ore and Energy businesses, and has run and managed operations in Africa, Asia, Australia, Europe and North and South America. He is also a former director Rolls Royce Holdings plc. He is currently the chief executive officer of the Moxico Resources PLC a Zambian copper and zinc explorer and developer. He is also Chairman of Trigem DMCC, a vertically integrated diamond and coloured stone service provider. Alan is a Fellow of the Institute of Chartered Accountants in Australia. IONEER LTD 2020 ANNUAL REPORT 19 19 Directors’ reportRemuneration reportFinancial statementsOther informationShareholder and ASX informationCorporate directory Directors’ report Mr Patrick Elliott Director B.Comm, UNSW MBA Mineral Economics Chair of the Audit & Risk Committee Member of the Nomination and Remuneration Committee Mr John Hofmeister Director BA (Political Science), MA (Political Science), PhD (Houston), D.Lit (Kansas State) Pat joined the board as a non-executive director in 2003. He is an experienced resources and industrial company director. In a career spanning over 45 years he has held senior executive positions with Consolidated Gold Fields Australia Limited and Morgan Grenfell Australia Limited. Pat is currently executive chairman of Argonaut Resources NL, Cap-XX Limited and Tamboran Resources Limited. He is also a non-executive director of Kirrama Resources Limited and Rockfire Resources plc. Pat was executive chairman of Variscan Mines Limited until his retirement in September 2018. John joined the board as a non-executive director in May 2017. John was the president of Shell Oil Company (U.S.A.) from 2005 to 2008 and director of human resources. Mr. Hofmeister also has held executive leadership positions in General Electric Company, Nortel Network Corporation and AlliedSignal (now Honeywell International Inc.). Chair of the Nomination and Remuneration Committee He founded Citizens for Affordable Energy. He is also a key member of the United States Energy Security Council. Member of the Audit & Risk Committee John currently serves as non-executive director of Applus+ and was formerly a non-executive director of Hunting Plc London (United Kingdom). Company secretary Mr Ian Bucknell B.Bus (Accounting), FCPA, GAICD Chief Financial Officer and Company secretary Ian joined ioneer in November 2018 as chief financial officer and became Company Secretary in April 2019. Ian is responsible for the finance, investor relations, IT and company secretarial functions of the company. He has more than 20 years of international resource sector experience, most recently as chief financial officer and company secretary of AWE Limited and previously held the position of chief financial officer of Drillsearch Energy Limited. 20 IONEER LTD 2020 ANNUAL REPORT 20 Directors’ report continuedioneer Annual Report 2020 Directors’ interests in shares and options Directors’ interests in shares and options as at 30 June 2020 and at the date of this report are set out in the table below: Directors’ report Director JD Calaway B Rowe J Babarczy A Davies P Elliott J Hofmeister Shares held Options held Shares held Options held As at 30 June 2020 As at 30 June 2020 At report date At report date 31,600,000 61,475,918 13,600,000 2,750,152 19,446,722 2,411,231 40,684,507 - - 1,184,507 31,600,000 61,475,918 13,600,000 2,750,152 684,507 19,446,722 1,184,507 2,411,231 40,684,507 - - 1,184,507 684,507 1,184,507 Directors’ meetings Director’s attendance at Directors meetings are shown in the following table: Board meetings Audit and risk committee meetings Remuneration committee meetings Directors JD Calaway B Rowe J Babarczy A Davies P Elliott J Hofmeister Meetings eligible to attend 10 10 1 10 10 10 Meetings attended 10 10 1 10 10 9 Meetings eligible to attend - - - 3 3 3 Meetings attended - - - 3 3 3 Meetings eligible to attend - - 1 3 3 3 Meetings attended - - 1 3 3 3 IONEER LTD 2020 ANNUAL REPORT 21 21 Directors’ reportRemuneration reportFinancial statementsOther informationShareholder and ASX informationCorporate directory Directors’ report Indemnification and insurance of directors and officers Indemnification The Company has not, during or since the end of the financial period, in respect of any person who is or has been an officer of the Company or a related body corporate, indemnified or made any relevant agreement for indemnifying against a liability incurred as an officer, including costs and expenses in successfully defending legal proceedings. Insurance premiums During the financial period the Company has paid premiums to insure each of the directors and officers against liabilities for costs and expenses incurred by them in defending any legal proceedings arising out of their conduct while acting in the capacity of director or officer of the Company, other than conduct involving a wilful breach of duty in relation to the Company. The premiums paid are not disclosed as such disclosure is prohibited under the terms of the contract. Indemnification of Auditors To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young Australia, as part of the terms of the audit engagement agreement against claims by third parties arising from the audit (for an unspecified amount). No payment has been made to indemnify Ernst & Young Australia during or since the financial year. Remuneration report The remuneration report set on pages 25 to 40 forms part of the Directors report for the year ended 30 June 2020. Corporate governance statement Details of the Company’s corporate governance practices are included in the Corporate Governance Statement set out on the Company’s website. Dividends No dividend has been proposed or paid since the start of the year. Shares – issued and unissued Issued shares Unissued shares: Options Performance rights (1) 30 June 2020 Number 1,680,202,466 30 June 2019 Number 1,474,983,509 43,738,028 9,586,056 47,430,840 1,391,786 (1) The 2019 LTI Performance rights were proposed to KMPs as 40% time-based and 60% performance based. 1,125,434 performance rights were granted during the period in relation to the 40% time-based portion. The 60% performance-based awards were not granted in the period. Whilst the time-based awards were granted, they have not been announced on the ASX pending the issue of the full award. (refer ASX release dated 15 September 2020). Since the end of the financial year the following additional shares, options or performance rights have been granted: • • 1,954,948 Performance rights have vested and new shares issued. 16,113,484 Performance rights have been granted (including deferred STI, 2019 & 2020 LTI and retention on employment awards). Environmental performance The Group holds exploration licences issued by the relevant government authorities which specify guidelines for environmental impacts in relation to exploration activities. The licence conditions provide for the full rehabilitation of the areas of exploration in accordance with regulatory guidelines and standards. There have been no known breaches of the licence conditions. 22 IONEER LTD 2020 ANNUAL REPORT 22 Directors’ report continuedioneer Annual Report 2020 Directors’ report Audit and non-audit services The directors are satisfied that the provision of non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. There were no non-audit services provided during the current financial year. Auditor’s independence declaration A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 forms part of this report and is set out on page 24. Matters subsequent to the end of the financial period Other than where stated at Note 9.5 to the Financial Statements, there were at the date of this report no matters or circumstances which have arisen since 30 June 2020 that have significantly affected or may significantly affect: • • • the operations of the Company, the results of those operations, or the state of affairs of the Company. Rounding off The Group is of a kind referred to in ASIC Corporations (rounding in Financial / Directors’ Report) Instrument 2016/191 and in accordance with that Class Order, amounts in the financial statements and directors’ reports have been rounded off to the nearest thousand dollars, unless otherwise stated. Signed at Sydney this 17th day of September 2020 in accordance with a resolution of the Directors. James D Calaway Executive Chairman Bernard Rowe Managing Director IONEER LTD 2020 ANNUAL REPORT 23 23 Directors’ reportRemuneration reportFinancial statementsOther informationShareholder and ASX informationCorporate directory Auditor’s independence declaration Ernst & Young 200 George Street Sydney NSW 2000 Australia GPO Box 2646 Sydney NSW 2001 Tel: +61 2 9248 5555 Fax: +61 2 9248 5959 ey.com/au Auditor’s Independence Declaration to the Directors of ioneer Ltd As lead auditor for the audit of the financial report of ioneer Ltd for the financial year ended 30 June 2020, I declare to the best of my knowledge and belief, there have been: a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and b) no contraventions of any applicable code of professional conduct in relation to the audit. This declaration is in respect of ioneer Ltd and the entities it controlled during the financial year. Ernst & Young Scott Nichols Partner Sydney 17 September 2020 A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation 24 ioneer Annual Report 2020 Remuneration report – audited Remuneration report – audited ioneer Ltd For the year ended 30 June 2020 For the year ended 30 June 2020 Message to shareholders Dear Shareholder, This letter seeks to provide introductory comments to this year’s remuneration report and insight as to the thinking of the Nomination & Remuneration Committee (Committee) in remuneration outcomes. Financial Year 2020 was a significant year of delivery for ioneer. Most notably the Definitive Feasibility Study (DFS) for Rhyolite Ridge was delivered in April 2020, which was the culmination of 18 months of engineering effort. In addition, significant progress was made on permitting the Project, completing extensive bench and pilot scale testwork, signing a number of offtake agreements for boric acid and in developing funding plans for the Project. These milestones were achieved in a period of uncertainty caused by COVID-19, where the company was forced to reduce headcount, and more was expected from fewer people. Within this context, the Committee agreed that the significant achievements of the team should be recognised and the need to retain and motivate ioneer’s small core team for delivery of future crucial milestones was critically important. Our remuneration strategy and practice is to target Key Management Personnel (KMP) at approximately the median level for comparable businesses of a similar size when objectives are achieved. The standardisation of KMP contracts was completed during the 2019 financial year. Changes to the Board and executive As we progress the Rhyolite Ridge Project through its next stages of business growth, we continue to evaluate the board and management team to suit the future needs of the Company. As such, during the financial year, Julian Babarczy was appointed to the board in June 2020 and Ken Coon and Yoshio Nagai were appointed as vice president of human resources and vice president commercial sales and marketing in July and August 2020, respectively. There were no other changes to KMP in the period. Remuneration outcomes for executives During the year, Willis Towers Watson (WTW), was re-appointed as remuneration consultant to the Committee, aided by Glenn Gilchrist, an experienced human resource professional with a global background. Based on their review of KMP remuneration the following outcomes were agreed: • • • Fixed remuneration – In the financial year, the chief executive officer received an increase in fixed remuneration of 11%, to bring his remuneration in line with our remuneration strategy. Further amendments to base salary have been agreed for financial year 2021 based on benchmarking analysis completed. Short term incentive (STI) annual bonus payments - The chief executive officer, chief financial officer, vice president human resources, vice president commercial sales and marketing and senior vice president engineering and operations received awards largely at target of 75%, 50%, 37%, 37% and 60% of base salary respectively. The awards to the vice president human resources and vice president commercial sales and marketing were pro-rated for time worked. The senior vice president engineering and operations received an award of 10% above target to recognise his exceptional efforts in delivering the DFS. Long term incentive (LTI) annual equity grant awards - The KMP were awarded LTI grants at target. The LTI at risk award of remuneration for the chief financial officer and senior vice president engineering and operations were increased from 50% of base salary to 60% of base salary based upon a competitive peer group review. The Committee and Board believe that these outcomes align our executive remuneration with competitive benchmarks and will support our transition and growth as a company. Our remuneration policy includes annual performance criteria and standard review cycles. Remuneration outcomes for the board There is no change to non-executive director remuneration or the non-executive director fee pool. During the financial year, Mr Calaway was paid a ‘special exertion fee’ to compensate him for what was considered a short-term undertaking of supporting our small management team. With the impact of COVID-19, travel restrictions on Australian based staff and an extended Project schedule, it became apparent that Mr Calaway’s continued efforts would be required through financial year 2021 and as such he was appointed an executive of the Company for a 12-month period, effective 1 July 2020. We will continue to keep shareholders abreast of KMP and non-executive director remuneration policies and payments in as simple, clear and transparent manner as possible, recognising the importance of these matters to all shareholders and to our executives and directors. The Board is committed to fair, competitive, effective and responsible remuneration policies and practices and to fully communicating its decisions for review and voting approval by shareholders, who will judge our decisions and practices. John Hofmeister Chairman, Nomination & Remuneration Committee IONEER LTD 2020 ANNUAL REPORT 25 25 Directors’ reportRemuneration reportFinancial statementsOther informationShareholder and ASX informationCorporate directory Remuneration report Key terms used in this report Act AGM ASX FID INR KMP LTI Corporations Act 2001 (Cth) Annual General Meeting Australian Securities Exchange Final Investment Decision ioneer Key management personnel Long-term incentive MD NED Option Plan Rights Rights Plan STI Managing director Non-executive director Share Option Plan Share rights Performance Rights Plan Short-term incentive 26 IONEER LTD 2020 ANNUAL REPORT 26 Remuneration report – audited continuedFor the year ended 30 June 2020ioneer Annual Report 2020 Remuneration report 1. Introduction The directors of ioneer Ltd (“ioneer” or the “Company”) present the Remuneration Report prepared in accordance with section 300A of the Corporations Act 2001 (“the Act”) for the consolidated entity for the year ended 30 June 2020. This Remuneration Report which forms part of the Directors Report outlines the remuneration strategy, framework and practices adopted by the consolidated entity in accordance with the requirements of the Act and its regulations. This information has been audited as required by section 308 (3C) of the Act. This report details remuneration information pertaining to directors and executives who are the ‘Key Management Personnel’ (“KMP”) of the consolidated entity. KMP are defined as those persons having authority and responsibility for planning, directing and controlling the activities of the consolidated entity, directly or indirectly, including any director (whether executive or otherwise) of ioneer. The following non-executive directors (“NEDs”) and executives have been identified as KMP for the purpose of this report: Non-executive directors James D Calaway (1) Julian Babarczy Alan Davies Patrick Elliott John Hofmeister Non-executive chairman Non-executive director Non-executive director Non-executive director Non-executive director Appointed Appointed 5 April 2017 Appointed 1 June 2020 Appointed 23 May 2017 Appointed 30 April 2003 Appointed 23 May 2017 Executive director and executives Bernard Rowe Ian Bucknell (2) Ken Coon Yoshio Nagai Matt Weaver Managing director Chief financial officer and company secretary Vice president human resources Appointed 23 August 2007 Appointed 14 November 2018 Appointed 1 July 2019 Vice president commercial sales and marketing Appointed 1 August 2019 Senior vice president – engineering and operations Appointed 28 November 2017 (1) Mr Calaway was appointed an executive on 1 July 2020. For the purposes of the Remuneration Report for financial year 2020 he is considered a non-executive director. (2) Mr Bucknell was appointed company secretary on 1 April 2019. IONEER LTD 2020 ANNUAL REPORT 27 27 Directors’ reportRemuneration reportFinancial statementsOther informationShareholder and ASX informationCorporate directory Remuneration report 2. Remuneration governance Remuneration governance is overseen by the Nomination & Remuneration Committee. The Committee is a committee of the Board established in accordance with the Company’s constitution and authorised by the Board to assist it in fulfilling its statutory, fiduciary and regulatory responsibilities. The ASX Corporate Governance Council’s “Corporate Governance Principles and Recommendations” (ASX Recommendations) recommend that the Company has formal and rigorous processes for the appointment and reappointment of directors to the Board. The Committee was established to assist the Board by undertaking the roles and exercising the responsibilities set out in the Nomination & Remuneration Committee Charter. A copy of this Charter is available on the Company’s website. The Committee aims to bring transparency, focus and independent judgment to these roles. The Committee will review and make recommendations to the Board on matters relevant to these roles and responsibilities, and as required to satisfy the Corporations Act, ASX Recommendations and ASX Listing Rule requirements relevant to these roles and responsibilities. The Committee currently comprises the following independent non-executive directors: John Hofmeister (Chairman); Julian Babarczy; (1) • • • Alan Davies; and • Patrick Elliott. (1) Julian Babarczy was appointed to the Committee on 17 June 2020. 2.1. Role The role of the Committee is defined in the Charter and is to assist and advise the Board on: Nomination • • • • • • • succession planning generally; induction and continuing professional development programs for directors; the development and implementation of a process for evaluating the performance of the Board, its committees and directors; the process for recruiting a new director, including evaluating the balance of skills, knowledge, experience, independence and diversity on the Board and, in the light of this evaluation, preparing a description of the role and capabilities required for a particular appointment; determining board size and balance of skills as the Company develops and evolves and becomes more complex as progress is made from project development to full operations; the appointment and re-election of directors including with consideration to the appropriate director tenure and length of service for the Company; and appointment and succession planning for the Managing Director (or such person performing the function of a chief executive officer) and other senior executives, with the objective of having a Board of a size and composition conducive to making appropriate decisions, with the benefit of a variety of perspectives and skills and in the best interests of the Company as a whole. Remuneration Policies and practices are designed to: • • • enable the Company to attract, retain and motivate directors, executives and employees who will create value for shareholders within an appropriate risk management framework, by providing remuneration packages that are equitable and externally competitive; be fair and appropriate having regard to the performance of the Company and the relevant director, executive or employee and the interests of shareholders; and comply with relevant legal requirements. 2.2. Responsibilities Nomination The Committee is responsible for: • Board size: making recommendations regarding the size of the Board which would most encourage efficient decision making; current board size range is 6-8; ensuring geographic balance, including directors with Australia residence; • Director competencies: making recommendations regarding the necessary and desirable competencies of • directors; Skills matrix: developing a Board skills matrix setting out the mix of skills and diversity that the Board currently has or is looking to achieve in its membership against the desirable range of skills; IONEER LTD 2020 ANNUAL REPORT 28 28 Remuneration report – audited continuedFor the year ended 30 June 2020ioneer Annual Report 2020 • Director recommendations: developing and reviewing the process for the selection, appointment and re- Remuneration report election of directors, and making recommendations to the Board by: o evaluating the balance of skills, experience, independence, knowledge and diversity of directors sitting on the Board; evaluating current needs under the circumstances of the short and long term requirements of the business as well as changes in strategy, external environment and anticipated terms of current directors; in light of this evaluation, preparation of a description of the role and capabilities required for a particular appointment within the context of shorter and longer term business considerations; and sourcing candidates from the available market including with the possible assistance of a third-party provider, and reviewing recommendations from other sources including current directors, advisors, significant shareholders, management, and industry experts; assuring the candidates possess both the personal qualities of integrity, courage, curiosity, interpersonal skills, interest in the business and the industry, business acumen, ability and capacity to contribute and the appropriate and necessary competencies and skills as described above within the matrix; reviewing the current diversity represented on the Board with the backdrop of the Company’s Diversity Policy to assist with the sourcing and targeting of candidates; interviewing and evaluating candidates along with obtaining appropriate checks and references and putting forward the candidate for appointment and election as a director to the Chairman, Managing Director, and full Board; o o o o o o • Providing information: providing security holders with material information in the Committee’s possession relevant to a decision as to whether or not to elect or re-elect a director; • Assessing performance: implementing a process to evaluate the performance of the chairperson, Board, Board committees, individual directors and senior executives on an annual basis to support governance improvement, efficient Board processes and effective decision making and to address issues that may arise from the review; • Assessing time commitment: reviewing the time required to be committed by non-executive directors to properly fulfil their duties to the Company and whether non-executive directors are meeting these requirements; • Assessing independence: assisting the Board in assessing the independence of each non-executive director; • Succession plans: reviewing Board and senior executive succession plans and processes, including for the Managing Director and other senior executive positions and being conscious of each director’s tenure, to maintain an appropriate balance of skills, experience, expertise and diversity; and; • Governance matters: reviewing and making recommendations in relation to any corporate governance issues as requested by the Board from time to time. Remuneration General The Committee is responsible for informing itself of market-based, publicly available and relevant competitive remuneration committee information and developing, reviewing and making recommendations to the Board on: • Directors’ fees: the Company’s remuneration framework for directors, including, the process by which any pool • • • • • • of directors’ fees approved by shareholders is allocated to directors; Senior executives: the remuneration packages to be awarded to senior executives; Bias: reviewing whether there are any gender or other inappropriate bias in remuneration for directors, senior executives or other employees; Policies: the Company’s recruitment, retention and termination policies for the Managing Director and senior executives and any changes to those policies; Incentive schemes: incentive schemes, if appropriate, for the Managing Director and senior executives; Equity-based programs: equity-based remuneration plans, if appropriate, for senior executives and other employees; Superannuation and retirement benefits: superannuation and retirement benefit arrangements for directors, senior executives and other employees; and • Other perquisites: applying certain other benefits as determined appropriate based upon market and competitive information. Incentive schemes and equity-based remuneration For any incentive schemes or equity-based plans which are adopted, the Committee is responsible for: Reviewing: reviewing their terms (including any eligibility criteria and performance hurdles); • • Administration: overseeing their administration (including compliance with applicable laws that restrict participants from hedging the economic risk of their security holdings) and disclosing its policy on whether participants are permitted to enter into transactions (whether through the use of derivatives or otherwise) which limit the economic risk of participating in the scheme; Shareholder approval: considering whether shareholder approval is required or desirable for the schemes or plans and for any changes to them; and Payments and awards: ensuring that payments and awards of equity are made in accordance with their terms and any shareholder approval. • • IONEER LTD 2020 ANNUAL REPORT 29 29 Directors’ reportRemuneration reportFinancial statementsOther informationShareholder and ASX informationCorporate directory Remuneration report 2.3. Remuneration advisors The Committee engaged the services of Willis Towers Watson (WTW), and an experienced HR consultant, Glenn Gilchrist to support the Vice President HR, Ken Coon in providing remuneration advice. WTW and Glenn Gilchrist provided analysis and advice on competitive benchmarking and executive remuneration targets and structures for Australia and the USA. In addition, Watson Mangioni, Mullin, Hoard & Brown LLP and Glenn Gilchrist, were engaged to provide advice on senior executive contracts as well as several other human resource activities. The Committee and its advisors are satisfied that the advice provided by each individual party is free from bias from the KMP to whom the recommendations apply. The fees paid to the individual advisors for this work were as follows: Willis Towers Watson Glenn Gilchrist Mullin Hoard & Brown LLP Watson Mangioni Total fees Year ended 30 June 2020 $ 51,013 41,327 12,362 19,185 123,887 30 IONEER LTD 2020 ANNUAL REPORT 30 Remuneration report – audited continuedFor the year ended 30 June 2020ioneer Annual Report 2020 Remuneration report 3. Remuneration arrangements 3.1. Managing director and executives ioneer’s remuneration framework and executive reward strategy provides a mix of fixed and variable remuneration with a blend of short and long-term incentives. The key elements of the remuneration packages are as follows: • • • • Fixed: Annual base salary. Variable short-term incentive: annual cash bonus. Variable equity: options and performance rights granted under shareholder approved equity incentive plans (refer 3.2, Equity Incentive Plans in this Remuneration Report). Post-employment benefits: superannuation contributions and similar retirement benefits savings for non- Australian executives. The ioneer executive compensation strategy provides for fair, competitive remuneration that aligns potential rewards with the Company’s objectives while being transparent to shareholders. Key remuneration elements are reviewed annually to determine appropriate awards based upon factors such as individual performance, Company results and competitive benchmark survey data. The following is a brief description of the approach for each element: • Base salary is reviewed annually and adjusted based upon individual performance and competitive benchmarks that may be reviewed from time to time to ensure competitiveness. • • Annual (short-term) cash bonuses are reviewed annually with awards granted based upon individual performance and Company results. Bonus targets are benchmarked from time to time to ensure competitiveness. Bonuses may range from 0 to 200% of target. The Board reserves the right to grant bonuses larger than 200% for exceptional contributions to Company objectives. Equity (long-term) grants are reviewed annually with a portion of the grants being performance based and a portion restricted time based. The Board has a current practice of granting a ratio of 60% performance-based equity rights and 40% restricted time-based equity rights. Typically, equity grants awarded as part of the Company’s annual review cycle will vest over a 3-year period. Vesting of performance-based grants are reviewed with the time-based grants at the time of vesting with the size of the vested award to be based upon the degree to which pre-established objectives were achieved, and the overall value of the vested award determined by market share price. Performance based equity grants may range between 0 and 200% at time of vesting based upon achievement of pre-established business targets. Equity targets are benchmarked from time to time to ensure competitiveness. 3.2. Equity Incentive Plans The Company has three share schemes in operation: • • • The Equity Incentive Plan (current); The Share Option Plan (historic); and The Performance Rights Plan (historic). Under these plans ordinary shares have been granted to senior executives, employees and a number of consultants. Whilst there are a number of options and performance rights on issue under the terms and conditions of previous schemes, all financial year 2019 and 2020 grants and issues of options or rights have been made under the Equity Incentive Plan. Equity Incentive Plan The Group established an Equity Incentive Plan following the AGM held on 31 October 2018. The purpose of this Equity Incentive Plan (“the Plan”) is to provide eligible persons the opportunity to participate in the growth and profits of the Company and to attract, motivate and retain their services to promote the Company’s long-term success. Key features include: The Board may at its discretion make invitations to or grant awards to eligible persons. • • Award means an option or a performance right to acquire a share in the capital of the Company. • Eligible persons include executive directors or executive officers of the Group, employees, contractors or consultants of the group or any other person. • A participant may not sell or assign awards. • Within 30 days after the vesting date in respect of a vested performance right, the Company must either allocate shares or procure payment to the participant of a cash amount equal to the market price of the shares which would have otherwise been allocated. • At any time during the exercise period a participant may exercise any or all of their vested options by paying the exercise price. IONEER LTD 2020 ANNUAL REPORT 31 31 Directors’ reportRemuneration reportFinancial statementsOther informationShareholder and ASX informationCorporate directory The following table summarises the key features of the performance rights (PRs) granted under the terms and conditions of the Equity Incentive plan for the year ended 30 June 2020: Remuneration report Performance Rights – Time-based Year of Grant Participants Purpose Financial year 2020 All executives Time based PRs were issued for a variety of purposes including: • Performance rights at hire are used to attract and retain executives and senior leaders (retention on employment) Part payment of 2019 short term incentives (deferred STI) • • Make up LTI equity grants for 2017, 2018 not granted • LTI equity grant – 2019 (40% time based portion) Instruments issued PRs are rights to acquire ordinary shares in the Company for nil consideration, conditional on the achievement of time-based hurdles (continuing employment). Vesting There are various vesting dates. See section 5 of the Remuneration Report for more information. Generally, the purpose of the PR defines the vesting period: • Retention on employment – Agreements with early recruits included vesting in equal instalments after 12, 24, and 36 months. However, since mid-2019 a standard approach of vesting after 3 years has been implemented Deferred STIs – vest in 12 months from the award date • • Make up equity grants – vest 36 months after the assumed award date (i.e. 2018 make- up awards vest 1 July 2021) Performance Rights – Performance-based A number of performance based PRs were proposed in financial year 2020 but not granted until after the financial year due to ongoing work by the Nomination and Remuneration Committee to finalise the performance conditions and to complete a ‘fair value’ valuation. The table below summarises the key features of the performance-based performance rights proposed under the terms and conditions of the Equity Incentive plan for the year ended 30 June 2020: Year of Grant Participants Purpose Instruments issued Financial year 2020 All executive KMP as at 30 June 2019 (2019 award) and as at 30 June 2020 (2020 award) LTI equity grants (performance based) – 60% of the annual LTI equity grant is performance based for all executives. PRs which are rights to acquire up to 2 ordinary shares in the Company for nil consideration, conditional on the achievement of pre-determined performance hurdles within defined time restrictions. Vesting 3 years from grant Performance measurement date Performance conditions 30 June The Board will employ discretion in assessing Project results and determining vesting of performance units; below, at or above targets: INR share price compared to comparator group (2019 and 2020 awards) Construction schedule on pace for start-up as stated at FID (2019 award) • • • Major USA lithium producer to market, start-up achieved as stated at FID (2020 award) • Top quartile HSE & Community performance (North American Mining Projects) (2019 and 2020 awards) Project spend within margin established at FID (2019 award) Final project construction spend within margin established at FID (2020 award) Start-up production levels within margin established at FID (2020 award) Recruiting on track for start-up (FID plan) (2019 award) 80% products sold for first 3 years of production (2019 and 2020 awards) • • • • • Options No options were issued to the KMPs during the financial year ended 2020 (2019: nil) under the equity incentive plan. Options were issued to non-executive directors under the plan, however. The particulars of the options awarded are included in section 7 of the Remuneration Report. Share Option Plan The Group established a Share Option Plan in 2010 (and reconfirmed it at the 2016 AGM) to assist in the attraction, retention and motivation of the KMP’s as well as the retention of key consultants. No options and performance rights were issued in financial year 2020 (2019: nil) under this plan. Key features include: Full or part time employees or consultants of the Group are eligible to participate. • • Options issued pursuant to the plan will be issued free of charge. • Options cannot be transferred and are not quoted on the ASX. IONEER LTD 2020 ANNUAL REPORT 32 32 Remuneration report – audited continuedFor the year ended 30 June 2020ioneer Annual Report 2020 Remuneration report • Options expire 90 days after the participant resigns from the Company. The exercise price of the options, at grant date, shall be as the directors in their absolute discretion determine, provided the exercise price shall not be less than the weighted average of the last sale price of the Company’s shares on ASX at the close of business on each of the 5 business days immediately preceding the date on which the directors resolve to grant the options. The directors may limit the total number of options which may be exercised under the plan in any year. • A summary of options on issue is set out in note 5.1 of the financial statements. Performance Rights Plan In addition to the Share Option Plan discussed above, the Group established the Performance Rights Plan at the 2016 AGM to assist in the attraction, retention and motivation of the Company’s directors, executives, employees and senior consultants. No options and performance rights were issued in financial year 2020 (2019: nil) under this plan. Key features include: • • • • • The Board will determine the number of performance rights to be granted to eligible employees (or their nominees), the vesting conditions and expiry date of the performance rights in its sole discretion. The performance rights are not transferable unless the Board determines otherwise, or the transfer is required by law and provided that the transfer complies with the Corporations Act. Subject to the Corporations Act and the Listing Rules and restrictions on reducing the rights of a holder of performance rights, the Board will have the power to amend the performance rights plan as it sees fit. If a vesting condition of a performance right is not achieved by the milestone date, then the performance right will lapse. The performance rights will be granted for nil consideration. Upon exercise of the performance rights, shares will be issued on a one for one basis on the same terms as the Company's existing shares. A summary of performance rights on issue is set out in note 5.1 of the financial statements. IONEER LTD 2020 ANNUAL REPORT 33 33 Directors’ reportRemuneration reportFinancial statementsOther informationShareholder and ASX informationCorporate directory 3.3. Service agreements Remuneration report Managing director Term Effective Date Remuneration Termination Executives Term Effective date Remuneration Termination Equity at hire Chief financial officer Senior vice president engineering & operations Vice president human resources Vice president commercial sales & marketing Open term agreement A new contract was established effective 1 July 2019 • • • • • • Fixed remuneration (refer section 4.1 of this Remuneration Report) At risk STI: 75% of Base salary Actual awards may range from 0 to 200% contingent upon individual and company performance compared to established targets. The Board reserves the right to grant bonuses above 200% for truly exceptional contributions to the business At risk LTI: 80% of Base salary A portion of equity will be performance based while a portion will be restricted time based as determined by the Board. Current portions are 60% and 40% respectively. Performance based awards may range from 0 to 200% based upon achievement of pre-established targets By executive: 6 months’ notice By Company: 6 months’ notice Open term agreements New contracts were established effective 1 July 2019 • • • • • • • • • • • Fixed remuneration (refer section 4.1 of this Remuneration Report) At risk STI: o o 50% of base salary - chief financial officer and senior vice president engineering & operations 40% of base salary - vice president human resources and vice president commercial sales & marketing Actual awards may range from 0 to 200% contingent upon individual and company performance compared to established targets. The Board reserves the right to grant bonuses above 200% for truly exceptional contributions to the business At risk LTI: o o 60% of base salary - chief financial officer and senior vice president engineering & operations 40% of base salary - vice president human resources and vice president commercial sales & marketing A portion of equity will be performance based while a portion will be restricted time based as determined by the Board. Current portions are 60% and 40% respectively. Performance based awards may range from 0 to 200% based upon achievement of pre-established targets By executive: 3 months’ notice By Company: 6 months’ notice Participated immediately at 100% of base salary in Equity Incentive Plan, with restricted time- based rights that vest in equal portions over 3 years from an agreed effective date of 14 November 2018 (date of hire) Received AUD$100,000 Company equity rights grant with restricted time-based vesting 12 months after 14 November 2018 Participated immediately at 100% of base salary in Equity Incentive Plan, with restricted time- based rights that vest in equal portions over 3 years from agreed effective date of 27 November 2017 (date of hire). One equity vesting tranche remains Participated immediately at 40% of base salary in Equity Incentive Plan, with restricted time- based rights that vest over 3 years from agreed effective date of 1 July 2019 (date of hire) Participated immediately at 40% of base salary in Equity Incentive Plan, with restricted time- based rights that vest over 3 years from agreed effective date of 1 August 2019 (date of hire) 34 IONEER LTD 2020 ANNUAL REPORT 34 Remuneration report – audited continuedFor the year ended 30 June 2020ioneer Annual Report 2020 Remuneration report 4. Remuneration outcomes of Managing director and executives 4.1. Remuneration tables Details of the nature and amount of each element of remuneration of the managing director and each of the named executives are as follows: Salary Cash Bonus (1) Non- monetary benefits Superannuation and employee benefits Performance rights Total Proportion of Remuneration that is performance based % of remuneration that consists of options/rights 2020 Bernard Rowe (2) Ian Bucknell Ken Coon Yoshio Nagai Matt Weaver Total 2019 Bernard Rowe Ian Bucknell Matt Weaver Joanna Morbey Total 428,179 350,000 300,717 320,560 373,972 1,773,427 362,000 224,053 349,455 146,208 1,081,716 $ $ $ - 9,770 15,686 - - 25,456 - 3,080 - - 494,619 175,000 55,369 128,224 145,709 998,921 175,500 55,000 88,063 - 318,563 3,080 $ 25,000 38,022 - 29,725 84,858 177,604 40,613 21,285 52,311 20,124 134,333 $ - 355,804 43,090 42,165 365,271 806,330 $ 947,798 928,596 414,863 520,673 969,810 3,781,739 - 62,466 145,928 - 208,394 578,113 365,884 635,756 166,332 1,746,085 % 52% 57% 24% 33% 53% 48% 30% 15% 14% 0% 18% % 0% 38% 10% 8% 38% 21% 0% 17% 23% 0% 12% (1) All KMP had the option to take the 2020 bonus as cash or as a 12-month performance right with a 20% premium provided for equity. The equity portion of the cash bonuses is excluded from the cash bonus above because they have not been granted until post year-end. (2) A number of equity grants announced in the 2019 financial report as part of Bernard Rowe’s remuneration in financial year 2020 require shareholder approval and will be put to members at the 2020 Annual General Meeting. See section 4.4 below for more detail. Bernard Rowe’s cash bonus includes $300,000 in relation to the 2020 STI award plus an additional amount of $194,619 representing the deferred 2019 STI amount that has been agreed to be paid in cash rather than awarded as equity. 4.2. Fixed remuneration As part of the remuneration work undertaken during the financial year, adjustments to base salary were agreed for the managing director to standardise his base salaries to benchmarked comparatives. The Nomination & Remuneration Committee approved increases to fixed remuneration for financial year 2020, as shown below. Base salary (1) % Increase 30 June 2020 30 June 2019 Bernard Rowe Ian Bucknell Ken Coon Yoshio Nagai Matt Weaver 11% 0% n/a n/a 0% A$ 401,000 350,000 - - - US$ - - 225,000 240,000 250,000 A$ 362,000 350,000 - - - US$ - - - - 250,000 (1) Note, base salaries are shown in the above table at contract amounts, where KMP have not worked a full year it will not agree to the Remuneration table in section 4.1 of this report. 4.3. Short-term performance benefits included in remuneration The Company’s approach to the granting and vesting of short-term performance benefits is set out above, in section 3, Remuneration arrangements. The chief executive officer, chief financial officer, vice president human resources, vice president commercial sales and marketing and senior vice president engineering and operations received awards largely at target of 75%, 50%, 37%, 37% and 60% of base salary respectively. The awards to the vice president human resources and vice president commercial sales and marketing were pro-rated for time worked. The senior vice president engineering and operations received an award 10% above target to recognise his exceptional efforts in delivering the DFS. Cash bonuses of $998,921 were accrued for KMP for the year ended 30 June 2020 and were paid after balance date (2019: $318,563). IONEER LTD 2020 ANNUAL REPORT 35 35 Directors’ reportRemuneration reportFinancial statementsOther informationShareholder and ASX informationCorporate directory Remuneration report 4.4. Analysis of long-term performance benefits included in remuneration The Company’s approach to the granting of equity awards is set out above, in section 3, Remuneration arrangements. The KMP were awarded LTI grants at target. The chief financial officer and senior vice president engineering and operations LTI awards were increased from 50% of base salary to 60% of base salary based upon a competitive peer group review. The number of performance rights granted to the executives under the LTI plan is calculated as remuneration at 1 July [year] x [insert] % / Market Value. The Market Value is the market value of a fully paid ordinary share in the Company, calculated using a 10 day VWAP, up to and including the date the performance rights performance period commences. Performance rights The number and value of rights granted during the current and previous financial year to KMP is detailed below: Year ended 30 June 2020 Purpose Retention on employment (1) Retention on employment (1) Retention on employment (1) 2019 LTI Grant - time based (2) Deferred STI 2019 Retention on employment Retention on employment Make-up LTI grant 2018 2019 LTI Grant - time based (2) Deferred STI 2019 Vesting period (months ) 12 24 36 36 12 36 36 24 36 12 Grant date Vesting Date Number 8/08/2019 8/08/2019 8/08/2019 8/08/2019 8/08/2019 14/11/2019 14/11/2020 14/11/2021 1/07/2022 1/07/2020 1/07/2019 1/07/2022 1/08/2019 1/08/2022 8/08/2019 8/08/2019 8/08/2019 1/07/2021 1/07/2022 1/07/2020 244,382 244,378 244,378 517,751 488,166 1,739,055 956,145 956,145 741,120 741,120 1,519,208 607,683 796,787 2,923,678 6,359,998 Market value per right $ 0.2387 0.2387 0.2387 0.1352 0.1352 0.1352 0.1862 0.1352 0.1352 0.1352 Award Value (3) $ 58,334 58,333 58,333 70,000 66,000 311,000 129,271 129,271 137,996 137,996 205,397 82,159 107,726 395,281 973,548 Ian Bucknell Sub total Ken Coon Sub total Yoshio Nagai Sub total Matt Weaver Sub total Total Year ended 30 June 2019 Ian Bucknell Total Retention on employment 12 14/11/2018 14/11/2019 418,936 418,936 100,000 100,000 0.2387 (1) Whilst the vesting period commences 14 November 2018, the grant date is 8 August 2019, being the date terms were finalised. These awards represent 50% of entitlement due to an administrative error. The balance awarded post year-end (refer table below) (2) The 2019 LTI performance rights were proposed to KMPs as 40% time based and 60% performance-based awards. The performance-based awards were not granted in the period. Whilst the time-based awards were granted, they have not been announced on the ASX pending the issue of the full award (refer ASX release dated 15 September 2020). (3) The fair value of performance rights is determined at the time of grant per AASB 2. Refer note 7.3. In addition to the above performance rights granted in the period, a number of other performance rights were awarded but not granted in the period as they require either shareholder approval in relation to awards to the managing director or pending finalisation of the performance hurdles. It is anticipated that these grants will be made in financial year 2021 post the AGM. The number and value of rights proposed but not granted during the current financial year to KMP is detailed below: Purpose Bernard Rowe Ian Bucknell Make-up equity grant 2018 (1) 2019 LTI Grant - time based (1) 2019 LTI Grant - performance based (1) Retention on employment (3) Retention on employment (3) Retention on employment (3) 2019 LTI Grant - performance based (3) Matt Weaver 2019 LTI Grant - performance based (3) Vesting period (months) Vesting date Number Market Value $ 24 36 36 12 24 36 36 36 1/07/2021 1/07/2022 1/07/2022 14/11/2019 14/11/2020 14/11/2021 1/07/2022 2,766,272 1,106,509 1,659,763 244,382 244,378 244,378 776,627 374,000 149,600 224,400 58,334 58,333 58,333 105,000 1/07/2022 899,736 121,644 Market value per right $ 0.1352 0.1352 0.1352 0.2387 0.2387 0.2387 0.1352 0.1352 (1) Awards to Bernard Rowe are subject to shareholder approval at the 2020 AGM. (2) An additional 2017 Make-up equity grant with a fair value of $374,000, now past the Board’s proposed vesting date of 1 July 2020, is to be granted to Bernard Rowe as 2,766,272 shares, subject to shareholder approval at the 2020 AGM. (3) Refer ASX release dated 15 September 2020. IONEER LTD 2020 ANNUAL REPORT 36 36 Remuneration report – audited continuedFor the year ended 30 June 2020ioneer Annual Report 2020 Remuneration report 5. Interests held by managing director and senior executives Movement in interest in equity After the financial year end, the Board has agreed to put minimum share ownership positions in place for the managing director and senior executives. Ordinary shares 2020 Bernard Rowe Ian Bucknell Matt Weaver (1) 2019 Bernard Rowe Joanna Morbey (2) Matt Weaver Balance at the start of the year Acquired Disposed Other Balance at the end of the year 61,475,918 - 673,526 62,149,444 61,475,918 19,606,000 187,100 81,269,018 - 663,318 140,105 803,423 - - 486,426 486,426 - - - - - - - - - (250,000) - (250,000) - (19,356,000) - (19,356,000) 61,475,918 663,318 813,631 62,952,867 61,475,918 - 673,526 62,149,444 (1) Acquired shares are shown net of US taxes remitted on behalf of the employee at date of vesting. (2) Joanna Morbey resigned from the Company effective 1 April 2019. Movement in performance rights Year ended 30 June Vesting Date Balance at the start of the year Number rights granted Vested Balance at the end of the year 2020 Ian Bucknell - retention on employment Ian Bucknell - retention on employment Ian Bucknell - retention on employment Ian Bucknell - retention on employment Ian Bucknell - 2019 STI Ian Bucknell - 2019 LTI (2) Ken Coon - retention on employment Yoshio Nagai - retention on employment Matt Weaver (1) - retention on employment Matt Weaver (1) - retention on employment Matt Weaver - 2019 STI Matt Weaver - catch up LTIs Matt Weaver - 2019 LTI (2) Total 2019 Ian Bucknell - retention on employment Matt Weaver (1) - retention on employment Matt Weaver (1) - retention on employment Matt Weaver (1) - retention on employment Total 14/11/2019 14/11/2019 14/11/2020 14/11/2021 1/07/2020 1/07/2022 1/07/2022 1/08/2022 27/11/2019 27/11/2020 1/07/2020 1/07/2021 1/07/2022 14/11/2019 27/11/2018 27/11/2019 27/11/2020 418,936 - - - - - - - 486,425 486,425 - - - 1,391,786 - 486,426 486,425 486,425 - 244,382 244,378 244,378 488,166 517,751 956,145 741,120 - - 796,787 1,519,208 607,683 6,359,998 (418,936) (244,382) - - - - - - (486,425) - - - - (1,149,743) 418,936 - - (486,426) - - - - - - 244,378 244,378 488,166 517,751 956,145 741,120 - 486,425 796,787 1,519,208 607,683 6,602,041 418,936 - 486,425 486,425 1,459,276 418,936 (486,426) 1,391,786 Issued under the 2016 Performance Rights Plan as described in section 3.2 of this Remuneration report. (1) (2) The 2019 LTI performance rights were proposed to KMPs as 40% time based and 60% performance-based awards. The performance-based awards were not granted in the period. Whilst the time-based awards were granted, they have not been announced on the ASX pending the issue of the full award (refer ASX release dated 15 September 2020). (3) All other performance rights are issued under the 2018 Equity Incentive Plan as described in section 3.2 of this Remuneration report. IONEER LTD 2020 ANNUAL REPORT 37 37 Directors’ reportRemuneration reportFinancial statementsOther informationShareholder and ASX informationCorporate directory Remuneration report 6. Remuneration outcomes of non-executive directors Non-executive directors Total remuneration for all non-executive directors, last voted upon by shareholders at the 2017 Annual General Meeting of the Company, is not to exceed $1,000,000 per annum, inclusive of superannuation (excluding special exertion fees). This total pool enables the Company in the future, if required, to provide for: • Adequate financial incentives, commensurate with the market to attract and retain suitably qualified and experienced directors to replace existing non-executive directors; • Appropriate arrangements to be put in place to ensure a smooth transition on replacement of directors, including a period of overlap if required; and Increases in non-executive directors in the future should it be considered appropriate. • Total remuneration paid to non-executive directors in the financial year was $651,562 (2019: $547,674) in addition $411,606 was paid as special exertion fees to James Calaway. The non-executive director fees included $180,000 paid in the form of options. The board believes that providing remuneration to directors in the form of options in consideration for their services as directors more effectively aligns the interests of directors with those of shareholders, by giving directors an opportunity to share in the success of the company. In addition, given the pre-production stage of the Project, it conserves cash. Directors are also entitled to be paid reasonable travelling, accommodation and other expenses incurred as a consequence of their attendance at Board meetings and otherwise in the execution of their duties as directors. The Chair of the Audit & Risk Committee and the Chair of the Nomination & Remuneration Committee receive an additional $7,276 (USD5,000) per annum to reflect the time spent in managing the Committees. The Board has determined that there will be no increase in fees payable to non-executive directors for the financial year ending 30 June 2021. The board has determined to put to shareholders at the 2020 Annual General Meeting, that non-executive directors receive $45,000 in options of the Company in lieu of receipt of directors’ fees in cash. Special exertion fee During the financial year, from August 2019 to June 2020, Mr Calaway was paid a ‘special exertion fee’ of US$25,000 per month to compensate him for what was considered a short-term undertaking of supporting our small management team in sales and marketing efforts, the delivery and marketing of the DFS and activities associated with funding the Project and related strategic partnering discussions. With the impact of COVID-19, travel restrictions on Australian based staff and an extended Project schedule, it became apparent that Mr Calaway’s continued efforts would be required through financial year 2021 and as such he was appointed an executive of the Company for a 12-month period, effective 1 July 2020. He will continue to receive US$25,000 per month for this work in addition to his usual chairman fees. Details of the nature and amount of each element of the remuneration of each of the non-executive directors of ioneer Ltd paid during the year ended 30 June 2020 are set out in the following table. Fees (1) Non- monetary benefits Superannuation Options Special exertion (2) Total 2020 James D Calaway Julian Babarczy (3) Alan Davies Patrick Elliott John Hofmeister Total 2019 James D Calaway Alan Davies Patrick Elliott John Hofmeister Total $ 225,725 5,520 75,255 82,531 82,531 471,562 213,837 71,279 71,279 71,279 427,674 $ - - - - - - - - - - - $ - - - - - - - - - - - $ $ $ 45,000 - 45,000 45,000 45,000 180,000 30,000 30,000 30,000 30,000 120,000 411,606 - - - - 411,606 - - - - - 682,331 5,520 120,255 127,531 127,531 1,063,168 243,837 101,279 101,279 101,279 547,674 % of remuneration that consists of options/rights % 7% 0% 37% 35% 35% 17% 12% 30% 30% 30% 22% (1) Directors fees are set in USD with the chairman fees being US$150,000, non-executive directors US$50,000, plus US$5,000 for each of the chairs of the board committees. James Calaway has been paid US$25,000 per month as a special exertion fee from 1 August 2019 to 30 June 2020. Julian Babarczy was appointed to the Board effective 1 June 2020. (2) (3) IONEER LTD 2020 ANNUAL REPORT 38 38 Remuneration report – audited continuedFor the year ended 30 June 2020ioneer Annual Report 2020 Remuneration report 7. Interests held by non-executive directors Movement in equity The board has no approved minimum shareholding guidelines for non-executive directors at the date of this report. However, generally non-executive directors have appropriate shareholdings and the board will continue to monitor investor expectation in this regard. Ordinary shares 2020 James D Calaway Julian Babarczy (1) Alan Davies Patrick Elliott John Hofmeister 2019 James D Calaway Alan Davies Patrick Elliott John Hofmeister Balance at the start of the year Acquired Disposed Other Balance at the end of the year 31,600,000 - 2,365,898 19,446,722 1,461,231 54,873,851 31,600,000 1,997,298 19,446,722 310,000 53,354,020 - - 384,254 - 950,000 1,334,254 - 368,600 - 1,151,231 1,519,831 - - - - - - - - - - - - 13,600,000 - - - 13,600,000 - - - - - 31,600,000 13,600,000 2,750,152 19,446,722 2,411,231 69,808,105 31,600,000 2,365,898 19,446,722 1,461,231 54,873,851 (1) Julian Babarczy was appointed to the Board effective 1 June 2020 and held these shares at the date of appointment. Movement in performance rights There are no performance rights on issue for non-executive directors Options The following options were issued during the financial year. Participants All non-executive directors as at 30 June 2019 Instruments issued Options issued at an exercise price equal to the VWAP for the Company’s shares over the 10 trading days immediately before the date of the 2019 AGM. Fair value Date of grant Vesting Expiry date $45,000 14 November 2019 1 year from the date of grant – 14 November 2020 5 years from the date of grant - 14 November 2024 IONEER LTD 2020 ANNUAL REPORT 39 39 Directors’ reportRemuneration reportFinancial statementsOther informationShareholder and ASX informationCorporate directory Remuneration report Movement in options Year ended 30 June 2020 Vesting Date Expiry Date Balance at beginning of financial year Granted as remuneration (1) Exercised Exercise price Amount paid Balance as at end of financial year James D Calaway Sub total Julian Babarczy Sub total Alan Davies Sub total Patrick Elliott Sub total John Hofmeister Sub total Total 13/04/17 13/04/17 13/04/17 09/11/19 14/11/20 13/04/22 13/04/22 13/04/22 09/11/23 14/11/24 23/05/18 23/05/19 23/05/20 09/11/19 14/11/20 23/05/22 23/05/22 23/05/22 09/11/23 14/11/24 09/11/19 14/11/20 09/11/23 14/11/24 23/05/18 23/05/19 23/05/20 09/11/19 14/11/20 23/05/22 23/05/22 23/05/22 09/11/23 14/11/24 Number 16,000,000 12,000,000 12,000,000 357,710 - 40,357,710 - - 200,000 200,000 100,000 357,710 - 857,710 357,710 - 357,710 200,000 200,000 100,000 357,710 - 857,710 42,430,840 Number - - - - 326,797 326,797 - - - - - - 326,797 326,797 - 326,797 326,797 - - - - 326,797 326,797 1,307,188 $ 0.150 0.200 0.250 0.242 0.243 - - 0.200 0.200 0.200 0.242 0.243 0.024 0.243 0.200 0.200 0.200 0.242 0.243 Number - - - - - - - - - - - - - - - - - - - - - - - - $ - - - - - - - - - - - - - - - - - - - - - - - - Number 16,000,000 12,000,000 12,000,000 357,710 326,797 40,684,507 - - 200,000 200,000 100,000 357,710 326,797 1,184,507 357,710 326,797 684,507 200,000 200,000 100,000 357,710 326,797 1,184,507 43,738,028 Year ended 30 June 2019 Vesting Date Expiry Date Balance at beginning of financial year Granted as remuneration (1) Exercised Exercise price Amount paid Balance as at end of financial year James D Calaway Sub total Alan Davies Sub total Patrick Elliott Sub total John Hofmeister Sub total Total 13/04/17 13/04/17 13/04/17 09/11/19 23/05/18 23/05/19 23/05/20 09/11/19 13/04/22 13/04/22 13/04/22 09/11/23 23/05/22 23/05/22 23/05/22 09/11/23 09/11/19 09/11/23 23/05/18 23/05/19 23/05/20 09/11/19 23/05/22 23/05/22 23/05/22 09/11/23 Number 16,000,000 12,000,000 12,000,000 - 40,000,000 200,000 200,000 100,000 - 500,000 - - 200,000 200,000 100,000 - 500,000 41,000,000 Number - - - 357,710 357,710 - - - 357,710 357,710 357,710 357,710 - - - 357,710 357,710 1,430,840 $ 0.150 0.200 0.250 0.242 0.200 0.200 0.200 0.242 0.024 0.200 0.200 0.200 0.242 Number - - - - - - - - - - - - - - - - - - $ - - - - - - - - - - - - - - - - - - Number 16,000,000 12,000,000 12,000,000 357,710 40,357,710 200,000 200,000 100,000 357,710 857,710 357,710 357,710 200,000 200,000 100,000 357,710 857,710 42,430,840 (1) These options and those issued in 2019, were issued under the Equity Incentive Plan established at the 2018 AGM. All other options were issued under the previous Share Option Plan which was initially established in 2010 and reconfirmed at the 2016 AGM. Refer to section 3.2 of this remuneration report for further details. 40 IONEER LTD 2020 ANNUAL REPORT 40 Remuneration report – audited continuedFor the year ended 30 June 2020ioneer Annual Report 2020 Consolidated statement of profit and Consolidated statement of profit and loss and other comprehensive income loss and other comprehensive income For the year ended 30 June 2020 For the year ended 30 June 2020 Exploration expenditure written off Other income Employee benefits expensed Other expenses Results from operating activities Finance income Finance costs Net finance income Loss before tax Income tax expense Loss for the year Loss attributable to equity holders of the company Items that may be reclassified subsequently to profit and loss Foreign currency translation difference on foreign operations Other comprehensive income (net of tax) Total comprehensive profit / (loss) for the year Total comprehensive income / (loss) attributable to the owners of the company Earnings per share Basic loss per ordinary share Diluted loss per ordinary share Note 4.5 2.2 7.1 2.3 2.4 2.4 2.4 3.1 2.5 2.5 2020 A$'000 (81) 138 (5,063) (3,250) (8,256) 2,838 (28) 2,810 (5,446) - (5,446) (5,446) (175) (175) (5,621) (5,621) 2020 Cents (0.34) (0.34) 2019 A$'000 (177) - (1,956) (3,227) (5,360) 4,426 (7) 4,419 (941) - (941) (941) 1,566 1,566 625 625 2019 Cents (0.06) (0.06) The consolidated statement of profit and loss and other comprehensive income should be read in conjunction with the accompanying notes. IONEER LTD 2020 ANNUAL REPORT 41 41 Directors’ reportRemuneration reportFinancial statementsOther informationShareholder and ASX informationCorporate directory Consolidated statement of financial position As at 30 June 2020 Current assets Cash assets Receivables Total current assets Non-current assets Receivables Plant and equipment Right of use asset Exploration and evaluation expenditure Total non-current assets Total assets Current liabilities Payables Provisions Total current liabilities Non-Current liabilities Payables - non-current Total Non-current liabilities Total liabilities Net assets Equity Contributed equity Reserves Accumulated losses Total equity Note 4.1 4.2 4.2 4.3 4.4 4.5 4.6 4.7 4.6 5.1 5.2 2020 A$'000 38,268 58 38,326 337 9 322 94,824 95,492 133,818 3,097 271 3,368 404 404 3,772 130,046 153,290 9,837 (33,081) 130,046 2019 A$'000 48,604 319 48,923 211 41 - 49,366 49,619 98,541 2,718 167 2,886 - - 2,886 95,656 113,013 10,277 (27,635) 95,656 The consolidated statement of financial position should be read in conjunction with the accompanying notes. 42 IONEER LTD 2020 ANNUAL REPORT 42 Consolidated statement of financial positionAs at 30 June 2020ioneer Annual Report 2020 Consolidated statement of cashflows For the year ended 30 June 2020 Cash flows from operating activities Payment to suppliers and employees Interest and other finance costs paid Net cash flows used in operating activities Cash flows from investing activities Expenditure on mining exploration Purchase of equipment Interest received Net cash flows used in investing activities Cash flows from financing activities Proceeds from the issue of shares Proceeds from exercise of options Equity raising expenses Payments of lease liability Net cash flows received from financing activities Net increase (decrease) in cash held Cash at the beginning of the financial year Effect of exchange rate fluctuations on balances of cash held in USD Closing cash carried forward Note 4.1 4.3 5.1 5.1 5.1 4.1 2020 A$'000 (6,745) (28) (6,773) (45,080) (21) 747 (44,354) 40,000 578 (1,799) (103) 38,676 (12,451) 48,604 2,115 38,268 2019 A$'000 (4,923) (4,923) (32,063) (48) 1,710 (30,401) - 688 (125) - 563 (34,761) 80,539 2,826 48,604 The consolidated statement of cash flows should be read in conjunction with the accompanying notes. IONEER LTD 2020 ANNUAL REPORT 43 43 Consolidated statement of cash flowsFor the year ended 30 June 2020Directors’ reportRemuneration reportFinancial statementsOther informationShareholder and ASX informationCorporate directory Consolidated statement of changes in equity For the year ended 30 June 2020 Issued capital Note A$'000 Foreign currency translation reserve A$'000 Equity compensation reserve Accumulated losses Total equity A$'000 A$'000 A$'000 8,383 (26,694) 94,140 As at 1 July 2018 112,451 Loss for the year ended 30 June 2019 Other comprehensive income Foreign currency translation differences on foreign operations Total other comprehensive income Total comprehensive income for the year Issue of share capital Share- based payments Share issue costs As at 30 June 2019 - - - - 5.1 5.2 5.1 687 - (125) 113,013 - - 1,566 1,566 1,566 - - - 1,566 - - - - - 328 - 8,711 As at 1 July 2019 113,013 1,566 8,711 Loss for the year ended 30 June 2020 Other comprehensive income Foreign currency translation differences on foreign operations Total other comprehensive income Total comprehensive income for the year Issue of share capital Ordinary shares cash Proceeds from unlisted options exercised Share- based payments Share Based payments expensed/capitalised Fair value of unlisted options exercised Fair value of performance rights vested Share issue costs Transactions with owners in their capacity as owners - - - - 40,000 578 - 1,076 422 (1,799) 5.1 5.1 5.2 5.2 5.2 5.1 - (175) (175) (175) - - - - - - - - - - - - 1,233 (1,076) (422) - (941) (941) - - (941) - - - 1,566 1,566 625 687 328 (125) (27,635) 95,655 (27,635) (5,446) 95,655 (5,446) - - (175) (175) (5,446) (5,621) - - - - - - 40,000 578 1,233 - - (1,799) - As at 30 June 2020 153,290 1,391 8,446 (33,081) 130,047 The consolidated statement of changes in equity should be read in conjunction with the accompanying notes. 44 IONEER LTD 2020 ANNUAL REPORT 44 Consolidated statement of changes in equityFor the year ended 30 June 2020ioneer Annual Report 2020 Notes to and forming part of the financial statements Notes to and forming part of the financial statements Section 1. Basis of preparation 1.1. Reporting entity The financial report of ioneer Ltd for the year ended 30 June 2020 was authorised for issue in accordance with a resolution of the Directors on 17 September 2020. ioneer Ltd is a for profit company limited by shares and incorporated in Australia whose shares are publicly traded on the Australian Securities Exchange under the ticker code “INR”. The registered office of the Company is suite 5.03, 140 Arthur Street, North Sydney, NSW 2060 Australia. The Company is principally engaged in the development of the Rhyolite Ridge lithium-boron deposit in the state of Nevada, United States of America. Further information about the nature of the Group’s operations and activities is provided in the directors’ report. Information on the group structure is set out in Section 8 of this report and information on other related party disclosures of the Group is provided in Section 9. 1.2. Basis of preparation • • • • • • • The financial report is a general-purpose financial report, which has been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001, as appropriate for for-profit oriented entities. These financial statements comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board ('IASB'), including new or amended accounting standards effective for reporting periods beginning 1 July 2019. Unless otherwise stated, the accounting policies disclosed have been consistently applied. The financial report has been prepared on a historical cost basis. The financial statements have been presented in Australian dollars which is the parent entity’s functional currency. The financial statements have been prepared on the going concern basis which assumes the company and consolidated entity will have sufficient cash to pay its debts as and when they become payable for a period of at least 12 months from the date the financial report was authorised for issue. The group is of a kind referred to in ASIC Corporations (Rounding in Financial / Directors Reports) Instrument 2016/191, and as such amounts presented in the financial and directors have been rounded to the nearest $1,000 (where rounding is permitted), unless otherwise stated. 1.3. New and amended accounting standards and interpretations The Group applies, for the first time, AASB 16 Leases. The nature and effect of these changes are disclosed below. The following standards and interpretations which became effective and were applied for the first time during the year ended 30 June 2020 were assessed to have no material impact on the Group’s consolidated financial statements and disclosures: AASB interpretation 23 – Uncertainty over income tax treatments Clarification on accounting income tax treatments that have yet to be accepted by tax authorities. Several other standard amendments and interpretations were applicable for the first time from 1 July 2019, but were not relevant to the Group and does not impact the Group’s consolidated financial statements. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective. AASB 16 Leases AASB 16 supersedes AASB 117 Leases, IFRIC 4 Determining whether an Arrangement contains a Lease, SIC-15 Operating Leases-Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. The standard sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for most leases under a single on-balance sheet model. The Group adopted AASB 16 using the modified retrospective method of adoption with the date of initial application of 1 July 2019. Under this method, the standard is applied retrospectively with the cumulative effect of initially applying the standard recognised at the date of initial application. The Group elected to use the transition practical expedient IONEER LTD 2020 ANNUAL REPORT 45 45 Directors’ reportRemuneration reportFinancial statementsOther informationShareholder and ASX informationCorporate directory allowing the standard to be applied only to contracts that were previously identified as leases applying AASB 117 and IFRIC 4 at the date of initial application. The Group also elected to use the recognition exemptions for lease contracts that, at the commencement date, have a lease term of 12 months or less and do not contain a purchase option (‘short- term leases’), and lease contracts for which the underlying asset is of low value (‘low-value assets’). a) Nature of the effect of adoption of AASB 16 The Group has lease contracts for various rented offices. Before the adoption of AASB 16, the Group classified each of its leases (as lessee) at the inception date as either a finance lease or an operating lease. All leases were classified as operating leases as the risks and rewards incidental to ownership of the leased asset had not passed to the Group. As an operating lease, the leased property was not capitalised, and the lease payments were recognised as rent expense in profit or loss on a straight-line basis over the lease term. Any prepaid rent and accrued rent were recognised under Prepayments and Trade and other payables, respectively. Upon adoption of AASB 16, the Group applied a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The standard provides specific transition requirements and practical expedients, which has been applied by the Group. The Group recognised right-of-use assets and lease liabilities for those leases previously classified as operating leases, except for short-term leases and leases of low-value assets. The right-of-use assets were recognised based on the amount equal to the lease liabilities, adjusted for any related prepaid and accrued lease payments previously recognised. Lease liabilities were recognised based on the present value of the remaining lease payments, discounted using the incremental borrowing rate at the date of initial application. The Group also applied the available practical expedients wherein it: • • • • • Used a single discount rate to a portfolio of leases with reasonably similar characteristics Relied on its assessment of whether leases are onerous immediately before the date of initial application Applied the short-term leases exemptions to leases with lease term that ends within 12 months at the date of initial application Excluded the initial direct costs from the measurement of the right-of-use asset at the date of initial application Used hindsight in determining the lease term where the contract contains options to extend or terminate the lease b) Amounts recognised in the statement of financial position and profit or loss The effect of adopting AASB 16, is as follows: Impact on consolidated statement of financial position (Increase/(decrease)) Assets Right of use asset Total Assets Liabilities Payables - lease liabilities Total Liabilities Equity Retained Losses Total Equity Impact of consolidated statement of profit and loss (increase/(decrease)) Finance expense - lease interest General and administration expenses Loss for the period 30 June 2020 $’000 30 June 2019 $’000 322 322 333 333 (11) (11) 7 4 11 - - - - - - - - - The Group recognised rent expense from short-term leases of $92,000 for the twelve months ended 30 June 2020. 46 IONEER LTD 2020 ANNUAL REPORT 46 Notes to and forming part of the financial statements continuedioneer Annual Report 2020 1.4. Basis of consolidation Controlled entities Controlled entities are entities controlled by the Company. Control exists when the Company has the power, directly or indirectly to govern the financial and operating policies of an entity so as to obtain benefits from its operations. The financial statements of controlled entities are included in the consolidated financial statements from the date control commences until the date that control ceases. With the exception of the wind up of three Canadian entities during the financial year there has been no change in the control of any subsidiaries during the financial period. All subsidiaries are 100% owned by the Company (2019: 100%). Transactions eliminated on consolidation All inter-company balances and transactions, including unrealised profits arising from intra-group transactions, have been eliminated in full. Accounting polices The financial statements of subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. 1.5. Critical accounting estimates and judgements The preparation of these financial statements in conformity with Australian Accounting Standards has required management to make judgements, estimates and assumptions which impact the application of policies and reported amounts of assets and liabilities, income and expenses. These estimates and associated assumptions are based on historical knowledge and various other factors that are believed to be reasonable in the circumstance. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed regularly and revisions to accounting estimates are reviewed in the period in which the estimate is revised. The most significant estimates and assumptions which have a significant risk of causing material adjustment to the carrying amounts of assets and liabilities within the next financial year relate to: Reserve estimates Reserves are estimates of the amount of product that can be economically and legally extracted, processed and sold from the Groups properties under current and foreseeable economic conditions. The group determines and reports reserves under the standards incorporated in the Australian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves, 2012 edition (the JORC code). The determination of ore reserves includes estimates and assumptions about a range of geological, technical and economic factors including quantities, grades, production techniques, recovery rates, commodity prices and exchange rates. Change in ore reserve impact the assessment of recoverability of exploration and evaluation assets. Estimating the quantity and /or grade of reserves requires the size, shape and depth of ore to be determined by analysing geological data. This process may require complex and difficult judgements to interpret the data. Additional information about the Group’s Reserves and Resources is set out on page 76. Exploration and evaluation assets The Group’s policy for exploration and evaluation expenditure is set out in note 4.5. The application of this policy requires certain judgements, estimates and assumptions as to the future events and circumstances, in particular the assessment of whether economic quantities of reserves will be found. Any such estimates and assumptions may change as new information becomes available. If, after capitalisation of expenditure under the policy, it is concluded that the capitalised expenditure will not be recovered by future exploitation or sale, then the relevant amount will be written off in the statement of profit or loss. Changes in assumptions may result in a material adjustment to the carrying amount of exploration and evaluation assets. Share-based payment transactions The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity investments at the date on which they are granted. Additional information is set out in note 7.3, Share-based payments. IONEER LTD 2020 ANNUAL REPORT 47 47 Directors’ reportRemuneration reportFinancial statementsOther informationShareholder and ASX informationCorporate directory 1.6. Foreign Currency Transactions and Balances Functional and presentation currency The functional currency of each of the Group’s entities is measured using the currency of the primary economic environment in which that entity operates. The functional currency of the entities in the Group is predominantly Australian Dollars, with the exception of ioneer USA Corporation and ioneer Minerals Corporation who both have a functional currency of United States Dollars, effective from 1 July 2018. The consolidated financial statements continue to be presented in Australian dollars, which is the parent entity’s functional currency. Transactions and balances Foreign currency transactions are translated at the foreign exchange rate at the date of the transaction. Monetary assets and liabilities denominated in a foreign currency at the end of the reporting period are translated at the year-end exchange rate. Exchange differences arising on the translation of monetary items are recognised in the statement of profit or loss. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Exchange differences arising on the translation of non-monetary items are recognised directly in other comprehensive income to the extent that the underlying gain or loss is recognised in other comprehensive income; otherwise the exchange difference is recognised in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated at foreign exchange rates at the dates the fair value was determine. Presentation of foreign exchange gains and losses in the statement of profit or loss The Group presents its foreign exchange gains and losses within net financing income /expense in the statement of profit or loss. 1.7. Comparatives Where applicable, comparative figures have been adjusted to conform to any changes in presentation for the current financial year. 48 IONEER LTD 2020 ANNUAL REPORT 48 Notes to and forming part of the financial statements continuedioneer Annual Report 2020 Section 2. Financial performance 2.1. Operating segments An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. An operating segment’s operating results are reviewed regularly by the Chief Operating Decision Maker (CODM) to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. The Managing Director is considered to be the CODM and is empowered by the Board to allocate resources and assess the performance of the Group. Segment results that are reported to the CODM include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Description of segments The Company operates predominantly as a mineral exploration and development company. The operating segments are based on the reports reviewed by the Managing Director for assessing performance and determining the allocation of resources and strategic decision making within the Group. North America Australia Represents activity in the US, primarily in relation to Rhyolite Ridge and the Reno office. Represents head office expenditure, including ASX listing costs, exchange gains and losses and corporate assets (predominantly cash). Segment information provided to the CODM: Segment information North America Exploration expenditure - non core Other income Reportable segment profit / (loss) Employee benefits and other expenses Net financing (expense) / income Net loss before income tax Segment assets Exploration assets Other assets Total assets Segment liabilities Payables Provisions Total current liabilities Payables Total non-current liabilities Total liabilities Net assets 2020 $’000 (81) 138 57 (2,841) 1 (2,783) 94,824 9,764 104,588 2,095 189 2,284 404 404 2,688 101,900 2019 $’000 (177) - (177) (562) (6) (745) 49,366 891 50,257 2,007 95 2,102 - - 2,102 48,156 Major customers The Company has no customers and nil revenues (2019: nil). Australia 2020 $’000 2019 $’000 - - - (4,620) 4,424 (196) - 48,284 48,284 711 72 784 - - - - - (5,473) 2,809 (2,663) - 29,230 29,230 1,002 82 1,084 - - 1,084 28,146 Total 2020 $’000 (81) 138 57 (8,313) 2,810 (5,446) 94,824 38,994 133,818 3,097 271 3,368 404 404 2019 $’000 (177) - (177) (5,183) 4,419 (941) 49,366 49,175 98,541 2,718 167 2,886 - - 2,886 95,656 784 47,500 3,772 130,046 (1) IONEER LTD 2020 ANNUAL REPORT 49 49 Directors’ reportRemuneration reportFinancial statementsOther informationShareholder and ASX informationCorporate directory 2.2. Other income Write back of reclamation bonds Total other income 30 June 2020 $’000 30 June 2019 $’000 138 138 - - The Group has recognised in non-current receivables during the period, outstanding reclamation bonds previously written off as exploration expenditure. 2.3. Other expenses General and administrative expenses Consulting and professional costs Depreciation and amortisation Total other expenses 2.4. Net finance income Interest income Net foreign exchange gain Finance income Bank charges Lease interest Finance expense Net finance income 1,975 1,224 51 3,250 721 2,117 2,838 (20) (8) (28) 1,729 1,487 11 3,227 1,660 2,766 4,426 (7) - (7) 2,810 4,419 Interest income is recorded at the effective interest rate applicable to the financial instrument. Interest is recognised as it accrues (using the effective interest method, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial instrument) to the net carrying amount of the financial asset. 50 IONEER LTD 2020 ANNUAL REPORT 50 Notes to and forming part of the financial statements continuedioneer Annual Report 2020 2.5. Earnings per share Earnings used in calculating earnings per share Basic and diluted loss Weighted average number of ordinary shares used as the denominator Issued ordinary shares - opening balance Effect of shares issued 30 June 2020 $’000 30 June 2019 $’000 (5,446) (941) Number Number 1,474,983,509 122,026,219 1,469,497,083 2,361,488 Weighted average number of ordinary shares 1,597,009,728 1,471,858,571 Weighted average number of ordinary shares (diluted) Weighted average number of ordinary shares at 30 June for basic EPS Effect of dilution from options and rights on issue Weighted average number of ordinary shares adjusted for effect of dilution 1,597,009,728 53,324,084 1,471,858,571 48,822,626 1,650,333,812 1,520,681,197 Basic loss per share attributable to the ordinary equity holders of the company Diluted loss per share attributable to the ordinary equity holders of the company Cents Cents (0.34) (0.34) (0.06) (0.06) Basic EPS is calculated by dividing the profit for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year. Diluted EPS is calculated by dividing the profit attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares. The impact the potential ordinary shares is treated as dilutive only when their conversion to ordinary shares would decrease EPS. IONEER LTD 2020 ANNUAL REPORT 51 51 Directors’ reportRemuneration reportFinancial statementsOther informationShareholder and ASX informationCorporate directory Section 3. Taxation 3.1. Taxation Tax expense comprises: Income tax Current tax benefit / (expense) Tax expense related to movements in deferred tax balances Total tax (expense) / benefit Numerical reconciliation between tax (expense) / benefit and pre-tax net result: Profit /(Loss) before tax Prima facie taxation benefit at 30% Decrease / (increase) in income tax benefit due to: Non-deductible expenses Foreign exchange and other translation adjustments Additional tax deductible expenditure Un-recognised tax losses relating to current year Adjustments for prior years Income tax (expense) / benefit 30 June 2020 $’000 30 June 2019 $’000 - - - (5,446) (1,634) 287 (616) (82) 2,142 (97) - - - - (941) (282) 85 (869) (46) 1,112 - - No provision for income tax is considered necessary in respect of the Company for the year ended 30 June 2020. No recognition has been given to any future income tax benefit which may arise from operating losses not claimed for tax purposes. The Group has estimated tax loss positions across the group as follows: Non-recognised tax losses - revenue Balance at the beginning of the period Movement during the period Balance at the end of the period Non-recognised tax losses - capital Balance at the beginning of the period Movement during the period Balance at the end of the period Jurisdiction Australia Revenue AUD$'000 USA Revenue US$'000 Canada Revenue CAD$'000 9,908 4,290 14,198 4,729 2,008 6,737 490 (356) 134 Capital AUD$'000 Capital US$'000 Capital CAD$'000 1,142 6,165 7,307 - - - 6,275 (6,275) - Total revenue and capital losses not recognised 21,505 6,737 134 These amounts will only be obtained if: • • • the Company and Controlled Entities derive future assessable income of a nature and of an amount sufficient to enable the benefit from the deductions for the losses to be realised, the Company and Controlled Entities continue to comply with the conditions for deductibility imposed by the law, and no changes in tax legislation adversely affect the Company and Controlled Entities in realising the benefit from the deductions for the losses, i.e. current tax legislation permits carried forward tax losses to be carried forward indefinitely. ioneer Ltd is not part of an Australian tax-consolidated group. Current and deferred tax amounts (if any) are measured as a stand-alone taxpayer. There are no tax funding arrangements or tax sharing agreements in place. The group has additional tax value embedded in the Rhyolite Ridge exploration asset. Future deductibility is expected against anticipated assessable income from the Project once in production. 52 IONEER LTD 2020 ANNUAL REPORT 52 Notes to and forming part of the financial statements continuedioneer Annual Report 2020 Section 4. Invested and working capital 4.1. Cash assets Cash at bank Short term deposits Total cash assets Cash flow reconciliation Reconciliation of net cash outflow from operating activities to operating loss after tax Loss for the period Adjustments to reconcile profit to net cash flows: Depreciation Other income Exploration expenditure written-off Share-based payments Net foreign exchange differences - unrealised Interest income Lease liabilities Change in assets and liabilities during the financial year: Increase in trade and other receivables Increase / (decrease) in accounts payable Net cash used in operating activities 30 June 2020 $’000 30 June 2019 $’000 17,386 20,882 38,268 (5,446) 53 (138) 81 682 (2,116) (721) 103 (243) 972 (6,773) 2,338 46,265 48,604 (941) 11 - 177 182 (2,827) (1,660) - (413) 548 (4,923) Cash assets in the consolidated statement of financial position comprise cash at bank and deposits with an average maturity of three months or less. 4.2. Receivables Current Interest receivable Other debtors Total current trade and other receivables Non-current Other debtors Total non-current trade and other receivables 3 55 58 337 337 26 293 319 211 211 Receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest rate method less provision for impairment. Impairment losses are recognised in the profit and loss. IONEER LTD 2020 ANNUAL REPORT 53 53 Directors’ reportRemuneration reportFinancial statementsOther informationShareholder and ASX informationCorporate directory 4.3. Plant and equipment Plant and equipment - at cost Less accumulated depreciation Total plant and equipment Reconciliation of the movement Opening balance Additions Disposals Depreciation expense Foreign exchange translation difference Closing balance 30 June 2020 $’000 30 June 2019 $’000 78 (69) 9 41 21 (2) (51) - 9 54 (13) 41 5 47 - (11) - 41 Tangible plant and equipment assets are stated at cost less accumulated depreciation and any impairment in value. Depreciation is calculated on a straight-line basis over the useful life of the asset being between 1-4 years. An item of plant and equipment is derecognised upon disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in the statement of comprehensive income in the period the item is derecognised. At each reporting date, the Group assesses whether there is any indication that an asset may be impaired. Where an indicator of impairment exists, the Group makes a formal estimate 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 to sell and value in use. 4.4. Right of Use Asset Premises - at cost Less accumulated depreciation Total Right of Use Asset Reconciliation of the movement Opening balance Impact of adoption at 1 July 2019 Additions Depreciation expense Closing balance 434 (112) 322 - 177 257 (112) 322 - - - - - - - - The Group adopted the following new accounting policy upon adoption of AASB 16, which has been applied from the date of initial application: The Group recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Unless the Group is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognised right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term. Right-of-use assets are subject to impairment 54 IONEER LTD 2020 ANNUAL REPORT 54 Notes to and forming part of the financial statements continuedioneer Annual Report 2020 4.5. Exploration and evaluation expenditure Exploration and evaluation expenditure incurred by or on behalf of the Group is accumulated separately for each area of interest. Such expenditure comprises net direct costs and an appropriate portion of related overhead expenditure but does not include general overheads or administrative expenditure not having a specific connection with a particular area of interest. Exploration and evaluation costs in relation to separate areas of interest for which rights of tenure are current are brought to account in the year in which they are incurred and carried forward provided that: • • such costs are expected to be recouped through successful development and exploitation of the area, or alternatively through its sale; or exploration and/or evaluation activities in the area have not yet reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves. Once a development decision has been taken, all past and future exploration and evaluation assets in respect of the area of interest are tested for impairment and transferred to the cost of development. To date, no development decision has been made. The Directors assess at each reporting date whether there is an indication that an asset has been impaired and for exploration and evaluation costs carried forward whether the above carry forward criteria are met. No indicator of impairment has been identified as at 30 June 2020. When the above criteria do not apply or when the Directors assess that the carrying value may exceed the recoverable amount the accumulated costs in respect of areas of interest are written off in the Statement of profit and loss and other comprehensive income. Exploration and evaluation expenditure Reconciliation of movement Opening balance Additions - Rhyolite Ridge Exploration expenditure - non core Exploration expenditure - written off Foreign exchange translation difference Carrying amount at the end of the financial year 30 June 2020 $’000 30 June 2019 $’000 94,824 49,366 44,362 81 (81) 1,096 94,824 49,366 14,915 33,627 177 (177) 824 49,366 The above amounts represent costs of areas of interest carried forward as an asset in accordance with the accounting policy described above. The ultimate recoupment of exploration and evaluation expenditure in respect of an area of interest carried forward is dependent upon the discovery of commercially viable reserves and the successful development and exploitation of the respective areas or alternatively sale of the underlying areas of interest for at least their carrying value. Amortisation, in respect of the relevant area of interest, is not charged until a mining operation has commenced. All exploration and evaluation costs carried forward relate to the Rhyolite Ridge Lithium–Boron Project in Nevada, USA. Exploration and evaluation expenditure on all other tenements owned by the Company has been fully impaired. 4.6. Payables Current Trade creditors and other payables Accrued expenses Lease Liabilities Total current payables Non-Current Trade creditors and other payables Lease Liabilities Total non-current payables Total current and non-current payables 1,557 1,335 205 3,097 276 128 404 3,501 2,232 486 - 2,718 - - - 2,718 All financial liabilities are recognised initially at fair value net of directly attributable transaction costs. After initial measurement, financial liabilities are subsequently measured at amortised cost. Current payables, other than lease liabilities, due to their short-term nature are measured at amortised cost and are not discounted. IONEER LTD 2020 ANNUAL REPORT 55 55 Directors’ reportRemuneration reportFinancial statementsOther informationShareholder and ASX informationCorporate directory The current payables, other than lease liabilities, are unsecured and are non-interest bearing generally on 30-60 day terms. The carrying amounts approximate fair value. The Group adopted the following new accounting policy upon adoption of AASB 16, which has been applied from the date of initial application: At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in - substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating a lease, if the lease term reflects the Group exercising the option to terminate. The variable lease payments that do not depend on an index or a rate are recognised as expense in the period on which the event or condition that triggers the payment occurs. In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset. 4.7. Provisions Employee entitlements Current Provision for employee benefits 30 June 2020 $’000 30 June 2019 $’000 271 167 Provision is made for the Group’s liability for employee benefits arising from services rendered by employees to the end of the reporting period. 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. Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits. In determining the liability, consideration is given to employee wages increases and the probability that the employee may satisfy vesting requirements. Those cash flows are discounted using market yields on high quality corporate bonds with terms to maturity that match the expected timing of cash flows. 56 IONEER LTD 2020 ANNUAL REPORT 56 Notes to and forming part of the financial statements continuedioneer Annual Report 2020 Section 5. Capital structure 5.1. Share capital Ordinary shares 1,680,202,466 (2019:1,474,983,509) ordinary shares, fully paid 153,290 113,013 30 June 2020 $’000 30 June 2019 $’000 Reconciliation of movement: Balance at the beginning of the financial year Ordinary shares Exercise of unlisted options (1) Performance rights vested (2) Share issue costs Balance at the end of the financial period Year ended 30 June 2020 Number Year ended 30 June 2019 Number Year ended 30 June 2020 $’000 Year ended 30 June 2019 $’000 1,474,983,509 1,469,497,083 200,000,000 3,750,000 1,468,957 - 1,680,202,466 - 5,000,000 486,426 - 1,474,983,509 113,013 40,000 1,654 422 (1,799) 153,290 112,451 - 687 - (125) 113,013 (1) Value of unlisted options exercised equals the sum of the exercise price received plus the fair value transferred from the equity compensation reserve (2) Ordinary shares issued to US employees upon vesting of performance rights are issued net of US taxes. Ordinary shares are classified as equity. Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the Company. They have the right to receive dividends as declared and, in the event of winding up the Company, to participate in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held. Incremental costs directly attributable to the issue of new shares, options or rights are shown in equity as a deduction from the proceeds. Management controls the capital of the Group in order to maintain a sustainable debt to equity ratio, generate long-term shareholder value and ensure that the Group can fund its operations and continue as a going concern. The Group is not subject to any externally imposed capital requirements. During the year ended 30 June 2020 the Company issued: • • • • 200,000,000 shares as a consequence of a share placement in November 2019. 3,750,000 shares as a consequence of unlisted options being exercised under the Share Option plan. 982,532 shares as a consequence of Performance Rights vesting under the Equity Incentive Plan. 486,425 shares as a consequence of Performance Rights vesting under the Performance Rights Plan During the year ended 30 June 2019 the Company issued: • • 5,000,000 shares as a consequence of unlisted options being exercised under the Share Option plan. 486,426 shares as a consequence of Rights vesting under the Performance Rights Plan. IONEER LTD 2020 ANNUAL REPORT 57 57 Directors’ reportRemuneration reportFinancial statementsOther informationShareholder and ASX informationCorporate directory Share schemes The Company has three share schemes in operation: • • • The Share Option Plan; The Performance Rights Plan; and The Equity Incentive Plan. Under these plans ordinary shares have been granted to senior executives, employees and a number of consultants. Further details about the operation of these plans are set out in note 7.3, Shared-based payments. The Equity Incentive Plan is capable of issuing both options and performance rights. The pre-existing Share Option Plan and the Performance Rights Plan will be phased out as existing options and rights are issued or expire. The movement in options and performance rights issued under these plans is set out in the following tables. Share options Movement in options on issue for the year ended 30 June 2020 Grant date Vesting date Expiry date 13-Apr-17 13-Apr-17 13-Apr-22 13-Apr-17 13-Apr-17 13-Apr-22 13-Apr-17 13-Apr-17 13-Apr-22 13-Apr-17 23-May-18 23-May-22 13-Apr-17 23-May-19 23-May-22 13-Apr-17 23-May-20 23-May-22 09-Jan-18 09-Jan-18 09-Jan-20 09-Jan-18 09-Jan-18 09-Jan-20 09-Jan-18 09-Jan-18 09-Jan-20 09-Jan-18 09-Jan-18 09-Jan-20 09-Nov-18 09-Nov-19 09-Nov-23 NED's(1) NED's(1) NED's(1) NED's(1) NED's(1) NED's(1) Advisors Advisors Advisors Advisors NED's (1) NED's(1),(2) 14-Nov-19 14-Nov-20 14-Nov-24 FV per option at grant date Exercise price $ 0.122 0.113 0.106 0.063 0.088 0.105 0.304 0.289 0.275 0.263 0.126 0.138 $ 0.150 0.200 0.250 0.200 0.200 0.200 0.125 0.150 0.175 0.200 0.242 0.243 Opening balance 16,000,000 12,000,000 12,000,000 400,000 400,000 200,000 1,250,000 1,250,000 1,250,000 1,250,000 1,430,840 Issued Exercised Expired - - - - - - (1,250,000) (1,250,000) - - - - - - - - (625,000) (625,000) (625,000) (625,000) Closing balance 16,000,000 12,000,000 12,000,000 400,000 400,000 200,000 - - - - - 1,307,188 - - - - 1,430,840 1,307,188 Movement for the year ended 30 June 2020 47,430,840 1,307,188 (3,750,000) (1,250,000) 43,738,028 Movement in options on issue for the year ended 30 June 2019 Grant date Vesting date Expiry date 31-Jan-17 31-Jan-17 31-Jan-19 31-Jan-17 31-Jan-17 31-Jan-19 31-Jan-17 31-Jan-17 31-Jan-19 31-Jan-17 31-Jan-17 31-Jan-19 31-Jan-17 31-Jan-17 30-Jan-19 31-Jan-17 31-Jan-17 30-Jan-19 13-Apr-17 13-Apr-17 13-Apr-22 13-Apr-17 13-Apr-17 13-Apr-22 13-Apr-17 13-Apr-17 13-Apr-22 13-Apr-17 23-May-18 23-May-22 13-Apr-17 23-May-19 23-May-22 13-Apr-17 09-Jan-18 23-May-20 09-Jan-18 23-May-22 09-Jan-20 09-Jan-18 09-Jan-18 09-Jan-20 09-Jan-18 09-Jan-18 09-Jan-20 09-Jan-18 09-Jan-18 09-Jan-20 Advisors Advisors Advisors Advisors Advisors Advisors NED's(1) NED's(1) NED's(1) NED's(1) NED's(1) NED's(1) Advisors Advisors Advisors Advisors NED's(1) 07-Nov-18 07-Nov-19 07-Nov-23 FV per option at grant date $ 0.038 0.033 0.029 0.026 0.033 0.026 0.122 0.113 0.106 0.063 0.088 0.105 0.304 0.289 0.275 0.263 0.126 Exercise price $ 0.125 0.150 0.175 0.200 0.150 0.020 Opening balance 2,500,000 2,500,000 2,500,000 2,500,000 1,100,000 1,000,000 0.150 16,000,000 0.200 12,000,000 0.250 12,000,000 400,000 400,000 200,000 1,250,000 1,250,000 1,250,000 1,250,000 0.200 0.200 0.200 0.125 0.150 0.175 0.200 0.242 Issued Exercised Expired Closing balance (2,500,000) (2,500,000) - - - - - - - - - - - - - - - - - (2,500,000) (2,500,000) (1,100,000) (1,000,000) - - - - - - - - - - - - - - - - - 16,000,000 12,000,000 12,000,000 400,000 400,000 200,000 1,250,000 1,250,000 1,250,000 1,250,000 1,430,840 - 1,430,840 Movement for the year ended 30 June 2019 58,100,000 1,430,840 (5,000,000) (7,100,000) 47,430,840 (1) NED’s refers to Non-executive directors. (2) During the current financial year each non-executive director was granted 326,797 options under the new Equity Incentive Plan in lieu of director fees. For further details refer to the remuneration report. (3) Other refers to options held by various KMP, other employees or ex-employees. 58 IONEER LTD 2020 ANNUAL REPORT 58 - - - - - - - - - - - - - - - - - - - - - - - - - - - Notes to and forming part of the financial statements continuedioneer Annual Report 2020 Performance rights Movement in performance rights on issue for the year ended 30 June 2020 Class B(1) Class C(1) Class D (2) Grant date Vesting date 27-Nov-17 27-Nov-19 27-Nov-17 27-Nov-20 14-Nov-18 14-Nov-19 Retention on employment - KMP (3) 08-Aug-19 14-Nov-19 Retention on employment - KMP (3) 08-Aug-19 14-Nov-20 Retention on employment - KMP (3) 08-Aug-19 14-Nov-21 Retention on employment - staff 06-May-19 06-May-20 Retention on employment - staff 06-May-19 06-May-21 Retention on employment - staff 06-May-19 06-May-22 STI - KMP LTI - KMP (4) Retention on employment - staff Catch-up LTIs - KMP Retention on employment - staff Retention on employment - KMP Retention on employment - staff Retention on employment - staff Retention on employment - staff Retention on employment - staff 08-Aug-19 08-Aug-19 01-Jul-19 08-Aug-19 01-Jul-19 01-Jul-19 01-Jul-19 15-Jul-19 15-Jul-19 15-Jul-19 01-Jul-20 01-Jul-22 01-Jul-20 01-Jul-21 01-Jul-21 01-Jul-22 01-Jul-22 15-Jul-20 15-Jul-21 15-Jul-22 Retention on employment - KMP 01-Aug-19 01-Aug-22 Retention on employment - staff (5) 01-Aug-19 01-Aug-22 Retention on employment - staff 14-Oct-19 14-Oct-22 Retention on employment - staff 31-Mar-20 31-Mar-23 Special Award 30-Jun-20 30-Jun-23 Market Value per right at grant date Opening balance Issued Exercised Closing balance $ Number Number Number Number 0.225 0.225 0.239 0.239 0.239 0.239 0.190 0.190 0.190 0.135 0.135 0.135 0.135 0.135 0.135 0.135 0.185 0.185 0.185 0.186 0.186 0.184 0.085 0.122 486,425 486,425 418,936 - - - - - - - - - - - - - - - - - - - - - - - - 244,382 244,378 244,378 251,021 251,021 251,021 1,284,953 1,125,434 169,457 1,519,208 169,457 956,145 169,457 256,156 256,156 256,156 741,120 204,580 169,699 555,435 480,000 (486,425) - - 486,425 (418,936) (244,382) - - (251,021) - - - - - - - - - - - - - (204,580) - - - - - 244,378 244,378 - 251,021 251,021 1,284,953 1,125,434 169,457 1,519,208 169,457 956,145 169,457 256,156 256,156 256,156 741,120 - 169,699 555,435 480,000 Movement for the year ended 30 June 2020 1,391,786 9,799,614 (1,605,344) 9,586,056 Movement in performance rights on issue for the year ended 30 June 2019 Grant date Vesting date 27-Nov-17 27-Nov-18 27-Nov-17 27-Nov-19 27-Nov-17 27-Nov-20 14-Nov-18 14-Nov-19 Market Value per right at grant date $ 0.225 0.225 0.225 0.239 Class A(1) Class B(1) Class C(1) Class D (2) Issued Number - Exercised Number (486,426) Opening balance Number 486,426 486,425 486,425 - - - 418,936 Closing balance Number - 486,425 486,425 418,936 - - - Movement for the year ended 30 June 2019 1,459,276 418,936 (486,426) 1,391,786 (1) (2) (3) (4) The Class A, B & C Performance Rights granted on 27 November 2017 are service based performance rights and vest over time. The vesting price is nil. These Performance Rights were issued under the terms of the 2016 Performance Rights Plan. The Class D Performance Rights were granted on 14 November 2018 are service based performance rights and vest over time. The vesting price is nil. These Performance Rights were granted under the terms of the Equity Incentive Plan established at the 2018 Annual General Meeting. These retention on employment awards represent 50% of entitlement due to an administrative error. The balance were awarded post year-end (refer ASX release dated 15 September 2020). The 2019 LTI performance rights were proposed to KMPs as 40% time based and 60% performance-based awards. The performance-based awards were not granted in the period. Whilst the time-based awards were granted, they have not been announced on the ASX pending the issue of the full award (refer ASX release dated 15 September 2020). (5) At the Board’s discretion, performance rights were partially subject to accelerated vesting due to redundancy with the remainder lapsing. For further details regarding the Equity Incentive Plan (2018), the Option Plan and Performance Rights Plan refer to note 7.3. IONEER LTD 2020 ANNUAL REPORT 59 59 Directors’ reportRemuneration reportFinancial statementsOther informationShareholder and ASX informationCorporate directory 5.2. Reserves Equity compensation reserve Balance at the beginning of period Share based payment expensed/capitalised Fair value of unlisted options exercised Fair value of performance rights vested Balance at the end of the financial period Foreign currency translation reserve Balance at the beginning of period Foreign currency translation differences for foreign operations Balance at the end of the financial period Total reserves 30 June 2020 $’000 30 June 2019 $’000 8,711 1,233 (1,076) (422) 8,446 1,566 (175) 1,391 9,837 8,383 328 - - 8,711 - 1,566 1,566 10,277 The equity compensation reserve is used to recognise the value of equity settled share-based payments provided to employees, directors and consultants. The fair value of such compensation is measured using generally accepted valuation methodologies for pricing financial instruments, and incorporates all factors and assumptions that knowledgeable, willing market participants would consider in setting the price. The fair value of instruments granted is recognised as an expense or capitalised if appropriate over the vesting period with a corresponding increase in equity. The foreign currency translation reserve comprises all foreign exchange differences arising from the following: • • The translation of the financial statements of foreign operations where the functional currency is different to the functional currency of the parent entity; and Exchange differences arise on the translation of monetary items which form part of the net investment in the foreign operation. 60 IONEER LTD 2020 ANNUAL REPORT 60 Notes to and forming part of the financial statements continuedioneer Annual Report 2020 Section 6. Financial instruments 6.1. Classification and measurement The carrying values of financial assets and liabilities of the Group approximate their fair value. The Group measures and recognises in the statement of financial position on a recurring basis certain assets and liabilities at fair value in accordance with AASB 13 Fair value measurement. The fair value must be estimated for recognition and measurement or for disclosure purposes in accordance with the following hierarchy: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2: 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); and Level 3: Inputs for the asset or liabilities which are not based on observable market data (unobservable inputs). The Group has no financial assets where the carrying amount exceeds net fair values at balance date. The Group’s receivables at balance date are detailed in Section 4.2 of this report. 6.2. Financial risk management Framework The Group is involved in activities that expose it to a variety of financial risks including: a) Credit risk b) Liquidity risk c) Capital management risk d) Market risk related to commodity pricing, interest rates and currency fluctuations. The Board of Directors has overall responsibility for the establishment and oversight of the financial risk management framework of the Group. Management is responsible for monitoring the financial risks. The objective of the financial risk management strategy is to minimise the impact of volatility in financial markets on the financial performance, cash flows and shareholder returns. This requires the identification and analysis of relevant financial risks and possible impact on the achievement of the Group’s objectives. The Group does not undertake any hedging activities. a) Credit risk Credit risk is the risk of sustaining a financial loss as a result of the default by a counterparty to make full and timely payments on transactions which have been executed, after allowing for set-offs which are legally enforceable. Credit risk arises from investments in cash and cash equivalents with banks and credit exposure to customers and/or suppliers. Receivables and cash and cash equivalents represent the Group’s maximum exposure to credit risk. There are no trade receivables past due or impaired at the end of the reporting period (2019: Nil). IONEER LTD 2020 ANNUAL REPORT 61 61 Directors’ reportRemuneration reportFinancial statementsOther informationShareholder and ASX informationCorporate directory b) Liquidity risk Liquidity risk is the risk that the Group will not have sufficient liquidity to meet its financial obligations as they fall due. The Group manages liquidity risk by continually monitoring forecast and actual cash flows and matching maturity profiles of financial assets and liabilities. Short and long-term cash flow projections are prepared periodically and submitted to the Board. Contractual cash flows Consolidated - 2020 Payables Consolidated - 2019 Payables Note 4.6 4.6 Less than 1 year $’000 1-2 years $’000 2-5 years $’000 More than 5 years $’000 3,135 408 2,718 0 0 0 0 0 Total $’000 3,543 2,718 c) Capital management risk The overriding objective of the Group’s capital management strategy is to increase shareholder returns whilst maintaining the flexibility to pursue the strategic initiatives within a prudent capital structure. The primary objective of the capital management policy is to ensure the Group maintains a strong credit rating and appropriate capital ratios to support the development of the Company’s assets. The Company manages its capital structure and makes adjustments to it in light of economic conditions. During the financial year the company undertook a capital raise through the issue of new shares. The Board believes that this capital raise secures the Company’s financial position until the ‘decision to mine’ stage of the Rhyolite Ridge Lithium-Boron Project. d) Market risk Foreign exchange risk The Group operates internationally and is exposed to foreign exchange risk arising from foreign currency exposures, primarily with respect to United States dollars. The Company operates bank accounts in US Dollars. Over 79% of the Company’s cash reserves are held in US Dollars. The Directors are satisfied that the future operations of the company will be in the USA so it is prudent to hold cash reserves in US dollars to avoid any unnecessary currency exposure. Average rate for the year ended 30 June 2020 Spot rate at the end of the reporting period 2020 Exchange rates applied during the year: AUD / USD Financial instruments denominated in United States dollars Financial assets Cash Trade and other receivables Financial liabilities Trade and other payables 0.6714 2020 A$’000 30,377 32 2,443 0.6863 2019 A$’000 45,335 91 2,007 An increase in AUD:USD foreign exchange rates of 10% will result in a $2,762,000 (30 June 2019: $4,121,000) increase in current year loss and decrease in US dollar currency bank balances. In addition, there would be an $3,000 (30 June 2019: $11,000) decrease in US dollar receivables with nil impact on current year loss because the impact is taken to foreign currency translation reserve. 62 IONEER LTD 2020 ANNUAL REPORT 62 Notes to and forming part of the financial statements continuedioneer Annual Report 2020 A decrease in AUD:USD foreign exchange rates of 10% will result in a $3,375,000 (30 June 2019: $5,037,000) decrease in current year loss and an increase in US dollar currency bank balances. In addition, there would be a $3,000 (30 June 2019: $13,000) increase in US dollar receivables with nil impact on current year loss because the impact is taken to foreign currency translation reserve. In addition an increase in AUD:USD foreign exchange rates of 10% will result in a $222,000 (30 June 2019: $191,000) increase in payables. A decrease in AUD:USD foreign exchange rates of 10% will result in a $271,000 (30 June 2019: $233,000) decrease in payables. There would be nil impact on current year loss because the difference is taken to foreign currency translation reserve. Interest rate risk The Company’s exposure to interest rate risk, which is the risk that a financial instrument’s value will fluctuate as a result of reasonable possible changes in the market interest rates arise in relation to the Company’s bank balances. The Company does not engage in any hedging or derivative transactions to manage interest rate risk. An increase of interest rates of 1% will result in a $473,000 (30 June 2019 $659,000) decrease in the current year loss and an increase in interest income related to cash deposits. A decrease of interest rates of 1% will result in a $473,000 (30 June 2019 $659,000) increase in current year loss and decrease in interest income related to cash deposits. Commodity price risk The Company is exposed to future commodity price risk. This risk arises from its activities directed at exploration and development of mineral commodities. If commodity prices fall, the market for companies exploring for these commodities is affected. The Company does not hedge its exposures. IONEER LTD 2020 ANNUAL REPORT 63 63 Directors’ reportRemuneration reportFinancial statementsOther informationShareholder and ASX informationCorporate directory Section 7. Employee benefits and KMP disclosures 7.1. Employee benefits expensed Director fees Employee benefits expense Share-based payments Total employee benefit expense 7.2. Key management personnel disclosure Key management personnel (KMP) comprised the following: Short-term employee Post-employment benefits Share-based payments Total payments to KMP 30 June 2020 30 June 2019 $’000 $’000 883 3,498 682 5,063 3,859 - 986 4,845 428 1,346 182 1,956 1,831 134 328 2,294 Transactions with directors and KMP With the exception of the disclosures within this note, no director or executive has entered into any material contracts with the Group since the end of the previous financial year and there were no material contracts involving directors’ or executive interests existing at year end. The Company has entered into indemnity deeds to indemnify executives of the Company against certain liabilities incurred in the course of performing their duties. 64 IONEER LTD 2020 ANNUAL REPORT 64 Notes to and forming part of the financial statements continuedioneer Annual Report 2020  Share-based payments 7.3. Share-based compensation is provided to employees via rights or options to acquire shares in the Company. As described in note 5.1, Share capital, the Company has three share schemes in operation. Under these plans, options or performance rights which may be converted into ordinary shares have been granted to senior executives, employees and a number of consultants. The cost of these equity-settled transactions is determined by reference to the fair value at the date at which they are granted. The fair value of the options granted is determined using the Black & Scholes option pricing model. The fair value of the performance rights granted with time based hurdles is determined by using the 10 day VWAP of the Company’s fully paid share capital, up to and including the date the performance rights are issued, and for the performance based performance rights the fair value is determined by using a Monte Carlo model for the valuation of the performance rights subject to the relative TSR performance hurdle and for those rights subject to the business objectives, the valuation is equal to the value of the share price at grant date, multiplied by the number of shares anticipated to vest. The cumulative expense recognised for equity-settled transactions at each reporting date reflects: i. ii. the extent to which the vesting period has expired, and the number of awards that, in the opinion of the directors of the Company, will ultimately vest. This opinion is formed based on the best available information at balance date. Where an equity-settled award is cancelled, the estimate is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. Each plan is described in more detail below. Equity Incentive Plan – established at the 2018 AGM A new Equity Incentive Plan was established following the AGM held on 31 October 2018. The purpose of the new Equity Incentive Plan (“the Plan”) is to provide eligible persons the opportunity to participate in the growth and profits of the Company and to attract, motivate and retain their services to promote the Company’s long-term success. Under the terms of the Plan, the Board may at its discretion invite eligible persons to participate in a grant of awards. An award may be either an option or performance right, to acquire a share in the capital of the Company in accordance with the Plan rules. Options and rights issued under the terms and condition of the new ioneer Equity Incentive Plan are as follows: Key terms Expiry Date Type Options Non-Executive Directors The options were issued at an exercise price equal to the VWAP for the Company’s shares over the 10 trading days immediately before the date of the AGM. The options vest after 12 months and expire 60 months from the date of issue. Performance rights – time-based Retention on Employment • Agreements with early recruits included vesting in equal instalments after 12, 24 and 36 months. However, since mid-2019 a standard approach of vesting after 3 years has been implemented. • Conditional on the achievement of continuing employment Tranche 1: 9 Nov 23 Tranche 2: 14 Nov 24 N/A Deferred STI • 12 month vesting period from 1 July the year following N/A the relevant STI period • Conditional on the achievement of continuing employment Make-up LTI grants for 2017 & 2018 • 36 month vesting period from 1 July 2017 & 1 July 2018 N/A respectively • Conditional on the achievement of continuing employment LTI grants • 36 month vesting period from 1 July of relevant period • Conditional on the achievement of continuing N/A employment IONEER LTD 2020 ANNUAL REPORT 65 65 Directors’ reportRemuneration reportFinancial statementsOther informationShareholder and ASX informationCorporate directory Type Key terms Expiry Date Performance rights – performance-based LTI grants • • 36 month vesting period from 1 July of relevant period The Board will employ discretion in assessing Project results and determining the vesting of performance units; below, at or above targets (up to 200%) N/A Key features include: The Board may at its discretion make invitations to or grant awards to eligible persons. • • Award means an option or a performance right to acquire a Share in the capital of the Company. • Eligible Persons include executive directors or executive officers of the Group, employees, contractors or consultants of the group or any other person. • A participant may not sell or assign awards. • Within 30 days after the vesting date in respect of a vested performance right, the Company must either allocate shares or procure payment to the participant of a cash amount equal to the market price of the shares which would have otherwise been allocated. • At any time during the exercise period a participant may exercise any or all of their vested options by paying the exercise price. Whilst there are a number of options and performance rights remaining on issue under the terms and conditions of previous schemes, no further options or rights will be issued under these pre-existing schemes which are described below. Share Option Plan The Group established a Share Option Plan in 2010 (and reconfirmed it at the 2016 AGM) to assist in the attraction, retention and motivation of KMP and in the retention of key consultants. Key features include: Full or part time employees or consultants of the Group are eligible to participate. • • Options issued pursuant to the plan will be issued free of charge. • Options cannot be transferred and are not quoted on the ASX. • Options expire if not exercised 90 days after a participant resigns from the Company. • The exercise price of the options, at grant date, shall be as the directors in their absolute discretion determine, provided the exercise price shall not be less than the weighted average of the last sale price of the Company’s shares on ASX at the close of business on each of the 5 business days immediately preceding the date on which the directors resolve to grant the options. The directors may limit the total number of options which may be exercised under the plan in any year. • A summary of options on issue is set out in note 5.1. Performance Rights Plan In addition to the Share Option Plan discussed above, the Group established the Performance Rights Plan at the 2016 AGM to assist in the attraction, retention and motivation of the Company’s directors, executives, employees and senior consultants. Key features include: • • • • • The Board will determine the number of performance rights to be granted to eligible employees (or their nominees), the vesting conditions and expiry date of the performance rights in its sole discretion. The performance rights are not transferable unless the Board determines otherwise, or the transfer is required by law and provided that the transfer complies with the Corporations Act. Subject to the Corporations Act and the Listing Rules and restrictions on reducing the rights of a holder of performance rights, the Board will have the power to amend the Performance Rights Plan as it sees fit. If a vesting condition of a performance right is not achieved by the milestone date, then the performance right will lapse. The performance rights will be granted for nil consideration. Upon exercise of the rights, shares will be issued on a one for one basis on the same terms as the Company's existing Shares. A summary of performance rights on issue is set out in note 5.1. 66 IONEER LTD 2020 ANNUAL REPORT 66 Notes to and forming part of the financial statements continuedioneer Annual Report 2020 Section 8. Group structure 8.1. Parent entity disclosures Result for the parent entity Loss for the period Total comprehensive loss for the period Financial position of the parent entity Current assets Non-current assets Total assets Current liabilities Total liabilities Net assets Contributed equity Reserves Accumulated losses Total equity 30 June 2020 $’000 30 June 2019 $’000 (8,829) (8,829) 138,441 162 138,603 1,083 1,083 137,520 153,291 8,446 (24,217) 137,520 (240) (240) 107,001 118 107,119 784 784 106,335 113,013 8,711 (15,389) 106,335 Parent entity contingencies and disclosures Commitments of the Company as at reporting date are disclosed in note 9.1 to the financial statements. Parent entity guarantees in respect of debts of its subsidiaries No guarantees have been entered into by the Company in relation to the debts of its subsidiaries. 8.2. Controlled entities Controlled entities of ioneer Ltd ioneer USA Corporation ioneer Minerals Corporation ioneer holdings USA Inc. ioneer holdings Nevada Inc. Gerlach Gold LLC Paradigm AZ LLC PGPL Minerals USA Pty Limited PGPL Diamonds Pty Limited PGPL Minerals Middle America Pty Limited PGPL Minerals South America Pty Limited Paradigm Canadian Diamonds Pty Limited Banlona Pty Ltd Paradigm Nevada Pty Ltd Paradigm Geoscience (North America) Pty Ltd (1) Deregistration completed 31 July 2019 (2) Dissolution registered 16 June 2020. Note Country of incorporation USA USA USA USA USA USA Canada Canada Canada Canada Canada Australia Australia Australia 2 2 2 1 1 1 2020 ownership interest 100 100 100 100 100 100 100 100 - - - - - - 2019 ownership interest 100 100 - - 100 100 100 100 100 100 100 100 100 100 IONEER LTD 2020 ANNUAL REPORT 67 67 Directors’ reportRemuneration reportFinancial statementsOther informationShareholder and ASX informationCorporate directory Section 9. Other disclosures 9.1. Capital and other commitments Payable within one year Water rights Non-cancellable lease commitments Exploration and evaluation expenditure commitments Sub total Payable after one year but not later than five years Water rights Non-cancellable lease commitments Exploration and evaluation expenditure commitments Sub total Payable later than five years Water rights Non-cancellable operating lease rental commitments Exploration and evaluation expenditure commitments Sub total Total commitments Water rights 30 June 2020 $’000 30 June 2019 $’000 269 44 253 566 603 51 506 1,160 - - - - 1,726 113 192 204 509 148 216 408 771 - - - - 1,280 The Company has secured water rights via exclusive options to enter long-term leases. In addition, there is an option to purchase these water rights and associated land at any time at the Company’s sole election, this is a discretionary purchase and is excluded from the commitments disclosed above. Non-cancellable lease commitments Included within non-cancellable lease commitments is the lease of a neighbouring property to the Rhyolite Ridge Lithium-Boron Project. The Company has entered an option agreement to purchase this property. The cost of this discretionary purchase is excluded from the commitments disclosed above. Exploration licence expenditure requirements In order to maintain the Company’s tenements in good standing with the various mines departments and comply with the underlying option agreements, the Company will be required to pay annual claim maintenance fees. It is likely that the granting of new licenses and changes in license areas at renewal or expiry will change the expenditure commitment to the Company from time to time. 68 IONEER LTD 2020 ANNUAL REPORT 68 Notes to and forming part of the financial statements continuedioneer Annual Report 2020 9.2. Contingent liabilities Settlement of Rhyolite Ridge The Company entered an option agreement to purchase Rhyolite Ridge from Boundary Peak Minerals LLC on 3 June 2016. The Company has made 4 progress payments to Boundary Peak under the agreement. A final payment will fall due following Board making a ‘decision to mine’ the Rhyolite Ridge property. Once this decision is made, the Company is required under the terms of the contract to either: • • Pay Boundary Peak LLC US$3 million, or Issue shares (or a mix of both shares and cash) to Boundary Peak LLC, to the equivalent of US$3 million at a fixed exchange rate of USD $0.75 = AUD$1.00. At the date of this report the decision to mine has not yet been made by the Company. There are no other known contingent liabilities as at 30 June 2020. 9.3. Auditors remuneration Audit services Ernst & Young Audit and review of financial statements 30 June 2020 $ 30 June 2019 $ 46,100 44,300 9.4. Related Party disclosures Non-key management personnel disclosures The Group has a related party relationship with its controlled entities, refer to note 8.2. The Company and its controlled entities engage in a variety of related party transactions in the ordinary course of business. These transactions are conducted on normal terms and conditions. Key management personnel disclosures For all related party transactions with key management personnel, refer to note 7.2, Key management personnel disclosures. 9.5. Events after reporting date There has not been in the period since 30 June 2020 and up to the date of this report any other item, transaction or event of a material and unusual nature likely in the opinion of directors, to substantially affect the operations of the Group, the results of those operations or the state of affairs of the Group in subsequent financial years. IONEER LTD 2020 ANNUAL REPORT 69 69 Directors’ reportRemuneration reportFinancial statementsOther informationShareholder and ASX informationCorporate directory Directors’ declaration Directors’ declaration In accordance with a resolution of the Directors of ioneer Ltd, I state that: (1) In the opinion of the Directors: (a) The financial statements and notes of the Consolidated Entity are in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the Consolidated Entity's financial position as at 30 June 2020 and of its performance for the year ended on that date; and complying with Accounting Standards and the Corporations Regulations 2001; and (ii) there are reasonable grounds to believe that the Consolidated Entity will be able to pay its debts as and when they become due and payable. (b) (2) This declaration has been made after receiving the declarations required to be made to the Directors in accordance with section 295A of the Corporations Act 2001 for the financial year ended 30 June 2020. On behalf of the Board James D Calaway Executive Chairman Sydney, 17th September 2020 70 IONEER LTD 2020 ANNUAL REPORT 70 ioneer Annual Report 2020 Independent auditor’s report Ernst & Young 200 George Street Sydney NSW 2000 Australia GPO Box 2646 Sydney NSW 2001 Tel: +61 2 9248 5555 Fax: +61 2 9248 5959 ey.com/au Independent Auditor's Report to the Members of ioneer Ltd Report on the Audit of the Financial Report Opinion We have audited the financial report of ioneer Ltd (the Company) and its subsidiaries (collectively the Group), which comprises the consolidated statement of financial position as at 30 June 2020, the consolidated statement of profit and loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, 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 Group is in accordance with the Corporations Act 2001, including: a) b) giving a true and fair view of the consolidated financial position of the Group as at 30 June 2020 and of its consolidated financial performance for the year ended on that date; and 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 in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the 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 (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation 71 Directors’ reportRemuneration reportFinancial statementsOther informationShareholder and ASX informationCorporate directory Key Audit Matters Key audit matters are those matters that, in our professional judgment, 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, but we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context. We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial report. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying financial report. Carrying value of capitalised exploration and evaluation expenditure Why significant How our audit addressed the key audit matter At 30 June 2020 the Group recorded capitalised exploration & evaluation (E&E) assets of $94.8 million relating to the Rhyolite Ridge project. The carrying value of exploration and evaluation expenditure is assessed for impairment when facts and circumstances indicate the capitalised exploration and evaluation expenditure may exceed its recoverable amount. The determination as to whether there are any indicators to require the Group’s Rhyolite Ridge project to be assessed for impairment involves judgment, including whether: the Group has tenure; the Group’s ability and intention to continue to evaluate and develop the Rhyolite Ridge project; and whether the results of the Group’s exploration and evaluation work to date are sufficiently progressed for a decision to be made as to the commercial viability or otherwise of the project. Given the value of the balance and the judgmental nature of impairment indicator assessments associated with exploration and evaluation assets, we consider this a key audit matter. Our audit procedures included the following: ► Considered the Group’s right to explore in the relevant exploration area which included obtaining and assessing relevant documentation such as license agreements. ► Considered the Group’s intention to carry out significant exploration and evaluation activity in the relevant exploration area which included assessment of the Group’s cash-flow forecast models and discussions with senior management and Directors as to the intentions and strategy of the Group. ► Assessed the Group’s consideration of the existence of any indicators of impairment at 30 June 2020. ► Considered the adequacy of disclosures included within Note 4.5 of the financial report. A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation 72 Independent auditor’s report continuedioneer Annual Report 2020 Information Other than the Financial Report and Auditor’s Report Thereon The directors are responsible for the other information. The other information comprises the Company’s 2020 Annual Report, but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and we do not and will not express any form of assurance conclusion thereon, with the exception of the Remuneration Report and our related assurance opinion. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. Auditor's Responsibilities for the Audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgment 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 Group’s internal control. A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation 73 Directors’ reportRemuneration reportFinancial statementsOther informationShareholder and ASX informationCorporate directory Independent auditor’s report continued • • • • 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 Group’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 Group to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion. We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated to 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 Audit of the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in pages 25 to 40 within the directors' report for the year ended 30 June 2020. In our opinion, the Remuneration Report of ioneer Ltd for the year ended 30 June 2020, complies with section 300A of the Corporations Act 2001. A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation 74 ioneer Annual Report 2020 Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. Ernst & Young Scott Nichols Partner Sydney 17 September 2020 A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation 75 Directors’ reportRemuneration reportFinancial statementsOther informationShareholder and ASX informationCorporate directory Other information Other information Mineral Resources and Ore Reserves Summarised below are the current Mineral Resources and Ore Reserves for the South Basin at ioneer’s 100%-owned Rhyolite Ridge Lithium-Boron Project in Nevada, USA. Following completion of the DFS program, ioneer released the lithium-boron (searlesite) Mineral Resource & Ore Reserve Estimates tabulated below. Summary of 2020 Mineral Resource & Ore Reserve Estimates Rhyolite Ridge Lithium-Boron Project Metric Tonnes Li Grade B Grade Equivalent Grade Equivalent Contained Tonnes (Mt) (ppm) (ppm) Li2CO3 % H2BO3 % Li2CO3 kt H2BO3 kt Mineral Resource Measured Resource Indicated Resource Measured and Indicated Resource Inferred Resource Total Mineral Resource Ore Reserve Proved Reserve Probable Reserve Total Proved and Probable Ore Reserve 39.0 88.0 127.0 19.5 146.5 29.0 31.5 60.0 1,700 1,550 1,600 1,600 1,600 1,900 1,700 14,550 14,150 14,270 13,800 14,200 16,250 14,650 1,800 15,400 0.9 0.8 0.8 0.9 0.9 1.0 0.9 1.0 8.3 8.1 8.2 7.9 8.1 9.3 8.4 8.8 360 730 3,240 7,110 1,090 10,350 170 1,530 1,250 11,890 290 280 2,700 2,620 580 5,310 Note: Totals may not add due to rounding. Mineral Resources reported on a dry in-situ basis. Golder Associates Inc. (‘Golder’) estimated the Ore Reserve and Mineral Resource and provided the mining study for the Rhyolite Ridge Definitive Feasibility Study (‘DFS’). The 2020 Mineral Resource is similar to the 2019 Mineral Resource and is now estimated to contain: • • 146.5mt at 1,600ppm lithium (equivalent to 0.9% lithium carbonate) and 14,200ppm boron (equivalent to 8.1% boric acid) 1.2mt of equivalent lithium carbonate and 11.9mt of equivalent boric acid. Lithium grades are highest in the southwest portion of the South Basin, where the planned Stage 1 quarry of the DFS is located. The Stage 1 quarry will source ore exclusively from the Proved Ore Reserve detailed below. The Ore Reserve is now estimated to contain: • 60.0mt at 1,800ppm lithium (equivalent to 1.0% lithium carbonate) and 15,400ppm boron (equivalent to 8.8% boric acid) • Containing 0.6mt of equivalent lithium carbonate and 5.3mt of equivalent boric acid. Approximately half of the Ore Reserve is now classified as Proved, the highest confidence category, with lithium and boron grades in the Proved Reserve being higher than those in the Probable Reserve. The 60mt Ore Reserve provides the foundation for a very long mine life at the Rhyolite Ridge Project, with clear potential for expansion and extension further underpinned by the 146mt Mineral Resource. Importantly, the planned Stage 1 quarry is exclusively Proved Reserves with higher than average lithium grades which will provide higher cash flow in the early years of the Project. The lithium-boron mineralisation remains open, particularly to the south where it continues to shallow and is generally higher in grade, and we expect further increases to Resources and Reserves with additional drilling. 76 IONEER LTD 2020 ANNUAL REPORT 76 ioneer Annual Report 2020 Glossary and Abbreviations B Boron Carbonate minerals Calcite and dolomite DFS H2BO3 GSC INR Definitive Feasibility Study Boric acid Global Geoscience Limited ioneer Ltd K-feldspar Potassium feldspar km kt K2SO4 Li Li2CO3 LCE mt Mt PFS ppm Kilometre Kilotonne Potassium sulphate Lithium Lithium carbonate Lithium carbonate equivalent Million tonnes Metric tonnes Pre-Feasibility Study Parts per million Searlesite Sodium borosilicate mineral Sepiolite Magnesium silicate IONEER LTD 2020 ANNUAL REPORT 77 77 Directors’ reportRemuneration reportFinancial statementsOther informationShareholder and ASX informationCorporate directory Other information continued Schedule of tenements As at 30 June 2020 Project Country Tenement ID Tenement Name Area (km2) Interest at 30 June 2020 Rhyolite Ridge Rhyolite Ridge Rhyolite Ridge Rhyolite Ridge Rhyolite Ridge (1) SM GD CLD New Morenci Tokop Tokop (1) Tokop (1) USA USA USA USA USA USA USA USA USA USA USA USA NMC1118666 NMC1117360 NMC1171536 NMC1179516 NMC 1129523 NMC1166813 NMC1166909 NMC1167799 AMC393550 NMC883619 NMC285234 NMC814692 NLB claims (160) SLB claims (199) SLM claims (122) RR claims (65) BH claims (81) SM claims (96) GD claims (13) CLD claims (65) MP claims (2) TK claims (73) Path Patents (11) Path Unpatented (5) 13 16.5 9.7 5.4 7 7.7 1.1 5.2 0.12 4.82 0.74 0.4 100% 100% 100% 100% 0% 100% 100% 100% 100% 100% 0% 0% (1) There is an option to purchase 100% 78 IONEER LTD 2020 ANNUAL REPORT 78 ioneer Annual Report 2020 Shareholder and ASX information Shareholder & ASX information Information relating to shareholders at 14 September 2020 (per ASX Listing Rule 4.10) Issued capital The Company has 1,681,913,032 fully paid shares on issue. Options on issue including holders of more than 20% The Company has on issue 43,738,028 options and 7,875,490 Performance rights. There are no listed options or performance rights. ASX listing Listed on the Australian Securities Exchange 19 December 2007 ASX Code: INR (previously GSC) ABN: 76 098 564 606 Voting rights There are no restrictions on voting rights. On a show of hands every member present or by proxy shall have one vote and upon a poll each share shall have one vote. Where a member holds shares, which are not fully paid, the number of votes to which that member is entitled on a poll in respect of those part paid shares shall be that fraction of one vote which the amount paid up bears to the total issued price thereof. Option holders have no voting rights until the options are exercised. Top 20 shareholders as at 14 September 2020 Name Shares % HSBC Custody Nominees (Australia) Limited - GSCO ECA Citicorp Nominees Pty Limited HSBC Custody Nomiees (Australia) Limited JP Morgan Nominees Australia Pty Limited Holdrey Pty Ltd Mopti Pty Limited Ransdale Investments Pty Ltd Vista Grove Investments Pty Ltd Lithium Investors Americas LLC UBS Nominees Pty Ltd Kolley Pty Ltd FNL Investments Pty Ltd Mr Darien Charles Jagger Investment Holdings Pty Ltd White Swan Nominees Pty Ltd BNP Paribas Nominees Pty Ltd Deck Chair Holdings Pty Ltd Mahsor Holdings Pty Ltd Quality Life Pty Ltd Kembla No 20 Pty Ltd Total Securities of Top 20 holdings 160,744,666 136,309,325 108,347,723 79,642,671 66,800,000 55,591,402 43,500,000 37,011,705 31,600,000 22,492,970 21,717,000 20,000,000 20,000,000 20,000,000 19,964,713 19,360,122 18,500,000 18,179,943 16,624,590 15,900,000 9.557% 8.104% 6.442% 4.735% 3.972% 3.305% 2.586% 2.201% 1.879% 1.337% 1.291% 1.189% 1.189% 1.189% 1.187% 1.151% 1.100% 1.081% 0.988% 0.945% 932,286,830 55.430% IONEER LTD 2020 ANNUAL REPORT 79 79 Directors’ reportRemuneration reportFinancial statementsOther informationShareholder and ASX informationCorporate directory Shareholder & ASX information Distribution of shareholders 1 - 1000 1,001 - 5,000 5,001 - 10,000 10,000 - 100,000 100,001 - over Holders Total Units 98 531 524 12,521 1,718,303 4,300,539 1,872 79,090,939 928 1,596,790,730 3,953 1,681,913,032 Unmarketable parcels Minimum $500 parcel at $0.10 per unit Minimum parcel size Holders 5,000 542 Substantial shareholders The following are substantial shareholders registered as at 14 September 2020. Name Centaurus Capital LP Shares % 154,558,476 9.189% On-market buy-back There is no current on-market buy-back. Competent Persons Statement In respect of Mineral Resources and Ore Reserves referred to in this presentation and previously reported by the Company in accordance with JORC Code 2012, the Company confirms that it is not aware of any new information or data that materially affects the information included in the public report titled “Rhyolite Ridge Ore Reserve Increased 280% to 60 million tonnes” dated 30 April 2020 and released on ASX. Further information regarding the Mineral Resource estimate can be found in that report. All material assumptions and technical parameters underpinning the estimates in the report continue to apply and have not materially changed. In respect of production targets referred to in this presentation, the Company confirms that it is not aware of any new information or data that materially affects the information included in the public report titled “ioneer Delivers Definitive Feasibility that Confirms Rhyolite Ridge as a World-Class Lithium and Boron Project” dated 30 April 2020. Further information regarding the production estimates can be found in that report. All material assumptions and technical parameters underpinning the estimates in the report continue to apply and have not materially changed. 80 IONEER LTD 2020 ANNUAL REPORT 80 Shareholder and ASX information continuedioneer Annual Report 2020 Corporate directory Directors James D. Calaway Executive Chairman Bernard Rowe Managing Director Julian Babarczy Non-Executive Director Alan Davies Non-Executive Director Patrick Elliott Non-Executive Director John Hofmeister Non-Executive Director Company Secretary Ian Bucknell Auditor Ernst & Young 200 George Street Sydney NSW 2000 Offices Sydney (Registered Office) Suite 503 140 Arthur Street North Sydney NSW 2060 Australia Telephone: +61 (2) 9922-5800 Website: e-mail: www.ioneer.com info@ioneer.com Reno 9460 Double R. Blvd, Reno Nevada 89521 United States of America Share Registrar Boardroom Pty Limited Grosvenor Place Level 12, 225 George Street Sydney NSW 2000 Telephone: 1300 737 760 81 Directors’ reportRemuneration reportFinancial statementsOther informationShareholder and ASX informationCorporate directory 

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