ANNUAL REPORT 2022
Producing all the magnet REOs to drive a net zero carbon future
1
This annual report covers the consolidated entity of Ionic Rare
Earths Limited (“IonicRE”) and its subsidiaries. The consolidated
entity’s functional and presentation currency is AUD ($).
A description of the consolidated entity’s operations and of its
principal activities is included in the review of operations and
activities in the directors’ report.
Directors
T B Benson - Chairman
T J Harrison - Managing Director
J Kelley - Executive Director
M E McGarvie - Non-Executive Director
Company Secretary
B D Dickson
Registered Office and Principal Place of Business
Level 1
34 Colin Street
West Perth WA 6005
Telephone:
Fax:
08 6187 7500
08 6187 7599
Share Registry
Computershare Investor Services Pty Ltd
Level 11
172 St. George’s Terrace
Perth WA 6000
Telephone: 1300 787 272
Auditors
BDO Audit (WA) Pty Ltd
Level 9, Mia Yellagonga Tower 2
5 Spring Street
Perth WA 6000
Bank
National Australia Bank
Level 1, Gateway Building
177-179 Davy Street
Booragoon WA 6154
Solicitors
K & L Gates
Level 32
44 St. George’s Terrace
Perth WA 6000
Stock Exchange
Australian Securities Exchange
Code: IXR
Website
www.ionicre.com.au
2
Directors’ Report Contents
DIRECTORS’ REPORT
DIRECTORS’ DECLARATION
AUDITOR’S INDEPENDENCE DECLARATION
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
CONSOLIDATED STATEMENT OF CASH FLOWS
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
INDEPENDENT AUDITOR’S REPORT
CORPORATE GOVERNANCE STATEMENT
ASX ADDITIONAL INFORMATION
2
27
28
30
31
32
33
34
58
63
69
COMPETENT PERSON STATEMENT:
Information in this report that relates to previously reported Exploration Targets and Exploration Results has been crossed-ref-
erenced in this report to the date that it was originally reported to ASX. Ionic Rare Earths Limited confirms that it is not aware
of any new information or data that materially affects information included in the relevant market announcements.
The information in this report that relates to Mineral Resources for the Makuutu Rare Earths deposit was first released to the
ASX on 3 May 2022 and is available to view on www.asx.com.au. Ionic Rare Earths Limited confirms that it is not aware of any
new information or data that materially affects information included in the relevant market announcement, and that all mate-
rial assumptions and technical parameters underpinning the estimates in the announcement continue to apply and have not
materially changed.
1
DIRECTORS
The names and details of the directors of Ionic Rare Earths Limited in office during the financial year and until the date of this
report are as follows. Directors were in office for the whole of the financial year, unless otherwise stated.
T Benson B.Sc
(Chairman) – appointed 31 August 2020
Mr Benson has extensive experience as an investment banker and has served on a number of ASX listed company boards
as both Chairman and Director. He has specialised in cross border transactions within the natural resources sector across
China, Africa and SE Asia, and has been an adviser to Chinese State-Owned Enterprises (SOE’s). His specialist activities
include corporate funding solutions within the natural resources domain. Trevor holds a Bachelor of Science Degree from
the University of Western Australia.
Other Public Company Directorships in the past 3 years
Walkabout Resources Ltd (resigned 19 October 2020)
Cannon Resources Limited (resigned 27 June 2022)
T Harrison B.Eng (Chem), Fellow AusIMM
(Managing Director) – appointed 21 December 2020
Mr. Harrison holds a Bachelor of Chemical Engineering degree from Adelaide University and has over 20 years of experience
and an extensive and successful track record in the fields of both mineral processing and hydrometallurgy across multiple
commodities, including significant battery and technology metals experience.
This has involved roles in project development, from process development, through studies and engineering, and
commissioning and operations. Mr. Harrison is a Fellow of the Australian Institute for Mining and Metallurgy (AusIMM).
Mr. Harrison has been instrumental in driving the development of Makuutu and identifying opportunities for enhanced value
creation through downstream refining.
Other Public Company Directorships in the past 3 years
Viridis Mining and Minerals Limited (appointed 17 February 2022)
J Kelley
(Executive Director) – appointed 7 July 2021
Ms. Kelley has previously held roles at the highest levels of international leadership and has played a crucial role in supporting
U.S. military operations spanning over 60 countries, collectively known as the U.S. Coalition Allies. Ms. Kelley’s networks in,
and knowledge of, Europe, the Middle East, Asia, and South and Central America have helped advance American interests
during the most critical points in current history. A former honorary ambassador to U.S. Central Command General Mattis
and CIA Director David Petraeus. Ms. Kelley received the Pentagon’s esteemed Joint Chiefs of Staff Award for her leadership,
along with the Multi-National Military Forces Award, an honour only bestowed upon a few individuals.
Other Public Company Directorships in the past 3 years
Nil
2
Directors’ Report M McGarvie MBT, MAICD, FAIM
(Non-Executive Director) – appointed 16 July 2021
Mr. McGarvie is a senior mining executive with an extensive portfolio of technical/managerial appointments in a career
exceeding 45 years in mine development, mineral processing, operational and management roles across Australia, Africa
and the Middle East. He has had a long and distinguished career in the mining industry, a significant portion of this with Iluka
Resources Limited and prior entities, including development roles within its mineral sands operation at Eneabba, Western
Australia and a major role in returning the Sierra Rutile mineral sands operation in Sierra Leone (operated by Iluka) to profitable
operations following the civil war in that country.
Other Public Company Directorships in the past 3 years
Nil
B Dickson B.Bus, FCPA, FGIA, MAICD
(Company Secretary) – appointed a director on 21 November 2014 (resigned as a director on 21 December 2020).
Mr. Dickson has over 20 years’ experience in the financial management of companies, principally companies in early stage
development of its resource or production and offers broad financial management skills. He has been Company Secretary
and Chief Financial Officer (CFO) for a number of successful resource companies listed on the ASX.
Other Public Company Directorships in the past 3 years
Rox Resources Limited (resigned 30 June 2021)
B Marwood
(Non-Executive Director) – Appointed 21 December 2020 (resigned 16 July 2021)
Mr Marwood is a mining engineer and resources industry executive with more than 30 years of experience. He was
instrumental in bringing into production the copper mines at Kipoi (DRC) and Rapu (Philippines); completing development of
the Svartliden gold mine (Sweden) and has managed numerous feasibility studies and advanced stage resource projects in
Australia, Africa, North America and Asia. He has worked in senior roles for groups such as Normandy Mining Ltd, Dragon
Mining Ltd, Lafayette Mining Ltd, Moto Goldmines Ltd, Tiger Resources Ltd and Perseus Mining Ltd before his most recent
role as Managing Director of Consolidated Zinc Limited.
Other Public Company Directorships in the past 3 years
Consolidated Zinc Limited
Middle Island Resources Limited
3
INTERESTS IN THE SHARES AND OPTIONS OF THE COMPANY
As at the date of this report the interests of the directors in the securities of the company were:
Number of Ordinary Shares* Number of Options over Ordinary Shares*
T Benson
T Harrison
J Kelley (appointed 7 July 2021)
M McGarvie (appointed 16 July 2021)
B Marwood (resigned 16 July 21)
-
8,050,000
3,500,000
-
-
* represents holding at time of resignation if director resigned during the year
INTERESTS IN CONTRACTS OR PROPOSED CONTRACTS WITH THE COMPANY
25,000,000
50,000,000
-
3,000,000
-
During or since the end of the financial year, no director has had any interest in a contract or proposed contract with the
company being an interest the nature of which has been declared by the director in accordance with Section 300(11)(d) of
the Corporations Act 2001.
DIRECTORS’ MEETINGS
During the year five directors’ meetings were held. The number of meetings attended by each director was as follows:
No. of meetings held while in office
Meetings attended
T Benson
T Harrison
J Kelley
M McGarvie
B Marwood
5
5
5
5
1
5
5
5
5
-
As at the date of this report, the company did not have audit, remuneration or nomination committees, as the directors
believe the size of the company does not warrant their existence.
DIVIDENDS PAID OR PROPOSED
The company has not paid any dividends since the commencement of the financial year, and no dividends are proposed to
be paid.
CORPORATE INFORMATION
The Financial Statements of Ionic Rare Earths Limited for the year ended 30 June 2022 were authorised for issue in
accordance with a resolution of the directors on 22 September 2022. The group’s functional and presentation currency is
AUD ($).
Ionic Rare Earths Limited is a company limited by shares incorporated in Australia whose shares are publicly traded on the
Australian Securities Exchange.
Principal Activities
The principal activity during the year of the group was investment in the mining and resource sector.
The group’s business is conducted from operations located in Australia and Uganda through its 51% owned affiliate Rwenzori
Rare Metals Limited. During the year the Company sold its 100% owned subsidiary Minera San Cristobal, SA which had
conducted operations in Nicaragua.
Employees
Other than the Directors the group had 3 employees at 30 June 2022 (2021: 1).
4
Directors’ Report 43% Magnet Rare Earths
to enable net zero carbon
applications and deployment
into key defence and high
end applications.
5
OPERATING AND FINANCIAL REVIEW
Covid-19
On 24 March 2020 and in response to the worsening COVID-19 pandemic and the ensuing global uncertainties and volatilities
the Company suspended its exploration activities at Makuutu. In coming to this decision, the company considered advice
and noted the actions of regulatory bodies and authorities in the jurisdictions of both Australia and Uganda.
The company took that step to safeguard the wellbeing and safety of its African-based team, contractors and the community
in which the company operates. Additionally, at that time the company implemented necessary policies and procedures
which include “no travel”, “social distancing”, “no congregating in groups” and “working from home where possible”.
While some restrictions have eased and the impact of COVID-19 is not expected to significantly affect the 2022/23 work
program at Makuutu or SerenTech, the Company will continue to monitor the situation with the wellbeing of staff, contractors
and community being of the utmost importance.
The Company was not eligible for and did not receive any government grants during the period.
Overview
Makuutu, Rare Earth Elements (IonicRE 51% earning up to 60%)
Makuutu is one of the world’s largest ionic adsorption clay (IAC) hosted Rare Earth Element (REE) deposits, located 120
km east of Kampala in Uganda. Makuutu is 100% owned by Ugandan company Rwenzori Rare Metals Ltd (RRM), of which
IonicRE owns 51% and will move to 60% ownership on the completion of the Feasibility Study due by the end of October
2022.
The Makuutu Rare Earths Project is well serviced by existing high quality infrastructure including roads, rail, power
infrastructure and cell communications. The installed infrastructure is illustrated in Figure 1.
The Makuutu deposit stretches 37 km in length and has demonstrated potential for a long life, low-cost source of magnet
and heavy REEs. These IAC deposit types are prevalent in southern China and Myanmar, which have been the source of more
the 95% the world’s lowest cost heavy REE production; however, these deposits are being exhausted and Makuutu represents
one of only a handful of such deposits outside of southern China that are development ready.
The Makuutu deposit is shallow, with less than three metres of cover, with a clay and saprolite zone with an average thickness
of nine metres, suggesting low-cost bulk mining methods with low strip ratio should be possible. Processing will be via
simple acidified salt desorption heap leaching, breaking the chemical ionic bond which extracts the REEs (in a chemical
form) from the ore into a pregnant leach solution (PLS).
The PLS is concentrated up using membrane technology, from which the rare earths are precipitated as a mixed rare earth
carbonate (MREC) product; a product which attracts both a higher payability and achieves a high basket price due to the
dominant high value magnet and heavy rare earths which make up over 70% of the product basket.
The Project has the potential of generating a high margin product with a potential operating life exceeding 30 years. The
Project is also prospective for a low-cost Scandium co-product.
6
Directors’ Report
Figure 1: Makuutu Rare Earths Project Location with major existing infrastructure
A competitive advantage of Makuutu is its proximity to existing infrastructure. The Makuutu site is approximately 10km from
Highway 109 which is a sealed bitumen road connecting to Kampala, to Kenya and on to the Port of Mombasa. All weather
access roads connecting the site to the adjacent sealed bitumen highway already exist. A rail line lies within 10 kilometres
north of the Makuutu site near the town of Iganga. There are four hydroelectric power plants located within 65 km of the
project area, with total installed generating capacity of approximately 810 MW, providing an abundant supply of cheap power
to the Project.
Water will be sourced at the project by harvesting water from the Makuutu site, given the Project location in a positive
rainfall environment, and a net positive process water balance will require membrane processes to be used to manage site
discharge water for reagent recovery. Excess water management will be a key focus of the Project to ensure environmental
standards are met, and reagent consumption is minimised.
A workforce of semi-skilled and artisanal workers is available in nearby towns and population centres. The closest major
population centre is Iganga, which has a population of 50,000. The town of Mayuge is approximately 10 km from the Project
site and the intent is to source local operations staff from the immediate districts and train staff accordingly. The operation
is to be staffed by a residential workforce. No fly in – fly out is envisaged, and the number of expatriate staff is intended to
be low, and to be phased out over time.
Industrial facilities are available in the city of Jinja, approximately 40 km from the Project area. Additional industrial facilities
are available on the outskirts of Kampala.
7
Updated Mineral Resource Estimate
On 3 May 2022, IonicRE announced a substantial 70% increase to the total mineral Resource Estimate (MRE) and a material
increase in resource classification. The updated MRE is estimated at 532 million tonnes at 640ppm Total Rare Earth Oxide
(TREO), above a cut-off grade of 200ppm TREO minus CeO2. The indicated component of the MRE has been increased to
404 million tonnes at 670 ppm TREO, representing a 512% increase on the previous March 2021 Indicated resource estimate
(refer Table 1 and Figure 2).
Figure 2: Mineral Resource Estimate (MRE) areas by classification. Green shading on Indicated resource areas and blue
on Inferred resource areas.
The updated MRE is now being used to complete mine planning activities which will feed into the Makuutu Feasibility Study,
which is due to be completed later in Q4 2022, and submitted to the Ugandan Government as part of the mining licence
application by the end of October 2022.
Table 1: Makuutu Resource above 200ppm TREO-CeO2 Cut-off Grade (ASX: 3 May 2022)
Resource
Classification
Tonnes
(millions)
TREO
(ppm)
TREO-CeO2
(ppm)
LREO
(ppm)
HREO
(ppm)
CREO
(ppm)
Sc2O3
(ppm)
Indicated Resource
Inferred Resource
Total Resource
404
127
532
670
540
640
450
360
430
500
400
480
170
140
160
230
180
220
30
30
30
Rounding has been applied to 1Mt and 10ppm which may influence averaging calculation.
All REO are tabulated in ASX announcement 3 May 2022, with formulas defining composition of (Light Rare Earth Oxides
(“LREO”), HREO and Critical Rare Earth Oxides (“CREO”) and Sc2O3 formula provided.
This updated MRE cements Makuutu amongst the world’s largest ionic adsorption clay (IAC) deposits, with the potential to
significantly increase, and as a globally strategic resource for low-cost, high-margin and long-term security of magnet and
heavy rare earth oxide (HREO) supply.
Additionally, the updated Makuutu MRE contains a significant portion of highly valuable HREO (25%) and critical rare earth
oxides (CREO, 34%), which collectively account for a substantial 42% of the Resource mineralisation.
The reported resources designated by each of the areas is detailed within Table 2, the resource areas shown by resource
classification in Figure 2.
8
Directors’ Report Table 2: Mineral Resources by Area (ASX: 3 May 2022)
Classification
Indicated Resource
Inferred Resource
Total Resource
Area
Tonnes
(millions)
TREO
(ppm)
TREO-
CeO2
(ppm)
Tonnes
(millions)
TREO
(ppm)
TREO-
CeO2
(ppm)
Tonnes
(millions)
TREO
(ppm)
TREO-
CeO2
(ppm)
A
B
C
D
E
31
580
400
Central Zone
151
Central Zone
East
F
G
H
I
Total
Resource
59
18
9
6
129
404
780
750
630
750
800
540
540
490
420
500
550
350
13
26
3
6
18
12
12
7
5
7
19
580
410
490
560
430
670
650
590
710
680
530
390
290
350
400
280
460
430
400
450
480
350
13
26
35
6
18
163
72
25
14
13
148
532
580
410
570
560
430
770
730
620
730
740
540
390
290
400
400
280
530
480
410
480
510
350
640
430
670
450
127
540
360
Rounding has been applied to 1Mt and 10ppm which may influence averaging calculations.
The distribution of resource tonnes above cut-off grade is dominated by the combined higher grade Makuutu Central and
Makuutu Central East Zones. These areas were not joined in the previous MRE (3rd March 2021), however following the Phase
4 drilling they now provide a continuous resource area over 5.5km long and 3km wide for a combined 234 million tonnes or
44% of the total resource and 52% of the total Indicated Resource above cut-off.
Revised Exploration Target
On 1 June 2022, the Company advised of an update to the Makuutu Exploration Target and associated planning of the Phase
5 exploration program.
Following the recent update to the Makuutu MRE, a review was completed to establish further exploration potential at
Makuutu and plan the work programs to be conducted over the next 12 months.
The revised Exploration Target, which is additional to the 3 May 2022 MRE, range for additional potential mineralisation at
Makuutu has been estimated at;
216 – 535 million tonnes grading 400 – 600 ppm TREO*
*This Exploration Target is conceptual in nature but is based on reasonable grounds and assumptions. There has been
insufficient exploration to estimate a Mineral Resource and it is uncertain if further exploration will result in the estimation
of a Mineral Resource.
9
Figure 3: Makuutu Exploration Targets on Ternary Radiometric Image and Phase 3 RAB Intercepts
A new exploration program is being prepared to evaluate potential extension of REE bearing clays across the larger 298
km2 tenement area which contains a 37-km long IAC mineralisation system, including the new tenement to the northwest,
EL00257.
Field based mapping was initiated in Q2 2022, as illustrated by photos below in Figure 4.
Figure 4: Field mapping activities underway across untested radiometric anomalies and granite
outcroppings at Makuutu
10
Directors’ Report Community Engagement
Community engagement activities have continued to increase at Makuutu with various dignitaries visiting site and providing
support for the development of the Makuutu Project.
During a visit to Uganda in May, IonicRE Chairman Trevor Benson and Managing Director Tim Harrison, along with other
representatives of RRM, met with the Kyabazinga of Busoga, His Majesty William Wilberforce Gabula Nadiope IV, and key
representatives of the Busoga Kingdom, to discuss initiatives to prioritise employment and business opportunities for local
stakeholders.
Figure 5: Top Row – Left, IonicRE leadership meeting with Kyabazinga of Busoga, William Wilberforce Gabula Nadiope
IV (2nd from left), and right, meeting with local leadership at Makuutu. Middle Row - Rt. Hon. Lukia Nakadama, 3rd
Deputy Prime Minister (front row, centre) and delegation at a Makuutu consultation meeting, and right, Hon. Ruth
Nankabirwa Ssentamu, Minister of Energy and Mineral Development, visiting Makuutu and endorsing the activities
of RRM in progressing Makuutu towards a mining license application. Bottom Row – local stakeholder engagement
meetings discussing voluntary resettlement and planning for the Makuutu Project.
11
Stakeholder engagements have been well communicated with significant support received from Government representatives
and other local officials. During the reporting period, RRM hosted the 3rd Deputy Prime Minister of Uganda, Rt. Hon Lukia
Nakadama, the Minister of Energy and Mineral Development, the Hon. Ruth Nankabirwa Ssentamu. In addition to the relevant
Ministers the Project has also engaged Presidential Advisors, representatives from the Busoga Kingdom and Chiefdoms, and
MPs from the Project districts who have all discussed the Project with local stakeholders and provided their support to the
activities completed by RRM.
Work continued into the new financial year (FY 2023) in Uganda with two ESIA public hearings scheduled in August for the
Environmental and Social Impact Assessment (ESIA). Plans are in place to action land access consents with local Project
Affected Persons (PAPs) for a voluntary Resettlement Action Plan (RAP) which is expected to be completed by the end of
August.
Discussion with Ugandan government officials indicate that the ESIA submitted in December 2021, which also focused on
RL 1693, is in the final stages of assessment.
Social License to Operate
Creating shared value for all stakeholders is of utmost importance to IonicRE. As we progress our business to become an
early mover as a circular economy magnet and heavy metals rare earth miner, refiner and recycler, this commitment requires
significant social effort to work with the Ugandan Government and the Bugweri and Mayuge Districts.
IonicRE is focused on transparency and developing key partnerships with a wide range of Ugandan stakeholders to assist
the Ugandan Government achieve the goals of employment and growth attained through the mining sector in the near term.
Working towards the vision and goals set out in the Third National Development Plan (NDPIII).
At the core, IonicRE is focused on securing a prosperous, safe and healthy future for the Makuutu Project and its communities.
The programs over the financial year to 30 June 2022 included:
•
•
Renovated the Natural Resource Office Block at Bugweri District
Renovated the Buwaaya police post
• Due to poor drinking water quality, serviced 11 community boreholes across the project area
• Donated 86 tree seedlings to Mayuge District in commemoration of the water and environment week
• Donated balls to Makuutu football team in support of youth sports
• Donated COVID19 PPE to Buwaiswa Health Centre 3 in Mayuge, Makuutu Health Centre 3 in Bugweri and
Buwunga Health Centre 3 in Bugiri.
Figure 6: (above left) the original Natural Resources Office Block, (above right) Renovated the Natural Resource Office
Block at Bugweri District
12
Directors’ Report Figure 7: Serviced 11 community boreholes across the project area
Figure 8: 86 tree seedlings donated to Mayuge District
In addition to these efforts our team in Uganda continued to contribute to community programs such as:
•
•
•
•
•
Condone with bereaved families in the villages where we are currently operating.
Offer modest support to Makuutu boda boda association elections and swearing-in ceremonies.
Support the St. James Church of Uganda-Makandwa Parish and St. James Church of Uganda- Makuutu in
preparation for the visit of the Arch-Deacon.
RRM also donated a Delivery bed to the Health Centre 4 maternity ward and refreshments at the women’s day
celebrations in Idudi.
We supported and made contributions to Bugiri District in celebration of the Day of the African Child on 28th June
2022.
Feasibility Study
Work programs continued throughout the financial year to enable the company to submit a mining licence application in
Uganda by the end of October 2022.
Feasibility study activity has continued with mine plan optimisation commencing to incorporate the larger MRE into the
Project. Metallurgical test work continues and good progress has been made on demonstration of the ability to heap leach
Makuutu IAC mineralisation with heap leach columns successfully being operated at 5m.
Capital and operating cost estimation is progressing well, with the study due to be completed in October 2022 and will form
a key component of the mining licence application.
13
Acquisition of Seren Technologies Ltd advances vertical integration plans
The acquisition of UK based Seren Technologies Limited (SerenTech) in April 2022, a leading private rare earth separation
and magnet recycling technology company, provides IonicRE with unique opportunity to become a fully integrated, circular
economy supplier of magnet rare earths.
SerenTech is commercialising technology using ionic liquids for separation and refining of rare earth elements (REE), which
includes the full cohort of the proposed basket from Makuutu, consisting of the lanthanides series, Lanthanum (La), to
Lutetium (Lu), plus Scandium (Sc) and Yttrium (Y).
SerenTech has an exclusive “patent and know-how” licence from Queens University Belfast allowing it to develop and
commercialise technology relating to Multifunctional Amide Ionic Liquids for Separation of Rare Earth metals (MAIL).
SerenTech has also developed further know-how in this area and lodged a further four (4) global patents, providing a pipeline
of opportunities in which to deploy the technology.
The application of SerenTech patented technology has achieved separated and refined products to high purity with REO
grades above 99.9% demonstrated at pilot scale in two key applications;
•
•
Mining ore concentrate: the pilot scale plant has processed concentrate received from supply chain stake holders and
achieved separation of REEs; and
Permanent magnet (Neodymium-Iron-Boron, NdFeB) recycling: the pilot scale plant has processed spent permanent
magnets received from supply chain stake holders and achieved extraction of recycled rare earth oxides at purity 99.9%
plus.
The technology has application potential to other critical raw materials.
SerenTech has the scope to provide IonicRE with a step change in magnet recycling capability, for near term REE production
potential from magnet and swarf recycling which is forecast to provide a growing portion of the REE supply chain in the
future.
The acquisition delivers IonicRE with established capability (IP, team and know-how), unique technology and application
potential.
Acquisition Rationale
The acquisition of SerenTech delivers IonicRE an immediate rare earth separation and refining capability to target high
purity products. Most attractive is the demonstrated capability to recycle NdFeB magnets via extraction of the individual REE
content to produce high purity REO products, which we expect will provide a step change to magnet recycling appeal globally.
This will create a significant opportunity where IonicRE will maximise its control, and market share, through supplying the
unique rare earth basket from Makuutu, at a time when significant shortfalls are forecasted.
SerenTech has demonstrated capability to separate magnet rare earths Neodymium (Nd), Praseodymium (Pr), Dysprosium
(Dy) and Terbium (Tb) for modest capital requirements. This presents an opportunity for targeted deployment in key markets
in the US, Europe and Asia where existing inventories of magnets exist and where the current recycling technology fails to
be able to achieve separated high purity REOs critical for high intensity permanent magnets, thus providing a step change
advantage and the ability to take an early mover position in new NdPr and DyTb supply.
Impressively, work to date has demonstrated capability for REEs to achieve near complete extraction from lower quality
spent magnets and waste (swarf) to near complete recovery to high value rare earth oxide (REO) product quality exceeding
99.9% REO.
This presents a potential opportunity to provide a first mover advantage post acquisition to IonicRE in the industrial elemental
extraction of REEs from spent magnets and waste, enabling near term magnet REO production capability to satisfy growing
demand and lagging new supply chains.
14
Directors’ Report Figure 9: Magnet recycling potential of ionic liquids technology developed by SerenTech.
Figure 10: Mixer Settler pilot plant located at Queens University Ionic Liquids Laboratory (QUILL) at QUB.
The integration of SerenTech continues with a view to relocating the pilot plant activities from Queens University Belfast
(QUB), and establishing a new standalone facility in Belfast to house the Company’s test work facilities and a new magnet
recycling demonstration plant.
Strategic Partner Engagement
Throughout the financial year, IonicRE continued to engage with potential partners across the full rare earths supply chain
across key western markets. Engagement with groups across North America, Europe, India, Japan and the UK continues
with potential to leverage IonicRE’s unique offering into new supply chains required across these markets, including magnet
recycling, to facilitate manufacturing across EV, renewable energy and military and defence applications.
Discussions continue and the Company will update the market accordingly.
15
Good Governance – Caring for the environment, people and prosperity of the planet!
The mining sector can demonstrate through affirmative action that the challenges that are posed with climate change can be
addressed with science-based data collection through of Environment, Social and Governance (ESG) reporting.
In the new financial year IonicRE will report on all ESG pillars which will demonstrate setting high standards in reporting and
assurance processes. Our focus is to become a global circular economy participant in magnet and heavy metal rare earths.
This requires strong pillars in ESG reporting and operations. As our project at Makuutu matures along with our refining and
recycling technologies, IonicRE will prepare science based Environmental, Social Governance reports which follow globally
accepted frameworks.
Operating Results
The Group’s income was $224,450 (2021: $215,161) and the loss was $4,644,087 (2021: $2,377,629) for the financial
year. Salaries, wages and consulting fee-based payments of $1,403,526 (2021: $677,232) and share based payments of
$1,506,993 (2021: $979,763) account for approximately 62.7% (2021: 69%) of this year’s loss.
Operating income
Operating loss
Year in Review
2022
$
2021
$
224,450
215,161
(4,644,087)
(2,377,629)
16
Directors’ Report Review of Financial Position
During the year, the Group raised $28,139,053 (after all expenses)
through the issue of 405,405,406 fully paid shares and $1,755,000
through the exercise of 206,000,000 options.
As a result of those raisings the directors believe that at the date of this
report the Group has a sound capital structure and is in a position to
progress the planned exploration on the Company’s mineral properties.
During the year the Group acquired a 100% interest Seren Technologies
Limited. Acquisition terms were:
(a) Payment of a non-refundable deposit of US$150,000;
(b) Payment of US$1,000,000 in cash to the Sellers (or their nominees);
(c) issue to the Sellers (or their nominees) 48 million fully paid ordinary
shares (Shares). The Shares must remain in escrow for a period of
12 months from the issue date of the Shares;
(d) pay the Sellers 25% of any licence fee received by IonicRE from a
third party to use the technology for magnet recycling or rare earth
separation technology (Milestone 1 Payment), to a maximum of
US$1,500,000; and
(e) Upon reaching commercial production for a magnet recycling
plant or rare earth separation and refining plant developed using
the technology and designed for a scale exceeding 100 tonne per
annum Rare Earth Oxide equivalent production capacity or greater
(Milestone 2) pay the Sellers US$1,500,000 less the total Milestone
At 30 June 2022 the cash balance of the group stood at $26,759,731
(2021: $11,055,530).
17
LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS
IonicRE will continue to advance the Makuutu Rare Earth Project with the aim of finalising a feasibility study by the end of
October 2022. Upon the successful completion of the feasibility study it is expected that a decision on further investment
into the Makuutu project will be made. In addition, it will progress its downstream operations through the magnet recycling
research being undertaken by Seren Technologies Limited.
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
During or since the financial year, the company has paid premiums in respect of a contract insuring all the directors of Ionic
Rare Earths Limited against legal costs incurred in defending proceedings for conduct involving:
(a) a wilful breach of duty; or
(b)
a contravention of sections 182 or 183 of the Corporations Act 2001, as permitted by section 199B of the Corporations
Act 2001.
The total amount of insurance contract premiums paid was $36,925 (2021: $22,000).
ENVIRONMENTAL REGULATION AND PERFORMANCE
The company is subject to significant environmental regulation in respect of its exploration activities. It aims to ensure the
appropriate standard of environmental care is achieved and in so doing, is aware of all relevant environmental legislation. The
directors of the company are not aware of any breach of environmental legislation for the year under review. The directors
have considered compliance with the National Greenhouse and Energy Reporting Act 2007 which requires entities to report
annual greenhouse gas emissions and energy use. The directors have assessed that the Company has no current reporting
requirements but may be required to report in the future.
PROCEEDINGS ON BEHALF OF COMPANY
No person has applied for leave of court to bring proceedings on behalf of the Company or intervene in any proceedings to
which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those
proceedings. The Company was not a party to or intervened in any proceedings during the year.
18
Directors’ Report REMUNERATION REPORT (Audited)
This remuneration report outlines the director and executive remuneration arrangements of the Company and the Group in
accordance with the requirements of the Corporations Act 2001 and its Regulations. For the purposes of this report, key
management personnel (KMP) of the Group are defined as those persons having authority and responsibility for planning,
directing and controlling the major activities of the Company and the Group, directly or indirectly, including any director
(whether executive or otherwise) of the parent company.
For the purposes of this report, the term ‘executive’ encompasses the chief executive and secretaries of the Parent and the
Group.
Details of key management personnel during the whole or part of the financial period
T B Benson
Chairman (Non-Executive Director)
T J Harrison
Managing Director - (appointed 21 December 2020, previously CEO)
J Kelley
Director (Executive Director) – (appointed 7 July 2021)
M McGarvie
Director (Non-Executive Director) – (appointed 16 July 2021)
B J Marwood
Director (Non-Executive Director) – (appointed 21 December 2020, resigned 16 July 2021)
B D Dickson
Finance Director – (resigned as a director 21 December 2020, continues as Company Secretary)
Remuneration philosophy
The Board of Directors is responsible for determining and reviewing compensation arrangements for the directors. The Board
assesses the appropriateness of the nature and amount of emoluments of such officers on a periodic basis by reference
to relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the
retention of a high-quality board and executive team. Such officers are given the opportunity to receive their base emolument
in a variety of forms including cash and other non-cash payments. It is intended that the manner of payment chosen will be
optimal for the recipient without creating undue cost for the company.
To assist in achieving these objectives, the Board links the nature and amount of executive directors’ and officers’ emoluments
on an annual basis based on individual performance and market conditions.
In the event of serious misconduct or a material misstatement in the Group’s financial statements, the Board can reduce,
cancel or defer performance-based remuneration and may also claw back performance-based remuneration paid in previous
financial years.
Remuneration consultants were not engaged during the year.
Remuneration structure
In accordance with best practice corporate governance, the structure of non-executive director and executive remuneration
is separate and distinct.
Compensation of Directors and Executive Officer
(i) Compensation Policy
The Board of Directors of Ionic Rare Earths Limited is responsible for determining and reviewing compensation arrangements
for the directors and the Chief Executive Officer.
(ii) Non-Executive Director Compensation
Objective
The Board seeks to set aggregate compensation at a level that provides the company with the ability to attract and retain
directors of the highest calibre, whilst incurring a cost that is acceptable to shareholders.
Structure
The Constitution and the ASX Listing Rules specify that the aggregate compensation of non-executive directors shall be
determined from time to time by a general meeting. An amount not exceeding the amount determined is then divided
between the directors as agreed and reviewed annually. The latest determination was in 2011 when shareholders approved
an aggregate remuneration of $400,000 per year. The Board may consider advice from external consultants as well as the
fees paid to non-executive directors of comparable companies when undertaking the annual review process. No consultants
were used during the year.
19
REMUNERATION REPORT (Audited) (Continued)
Non-executive directors have long been encouraged by the Board to hold shares in the company (purchased by the director
on market). It is considered good governance for directors to have an equity interest in the company on which board they sit.
(iii) Executive Compensation
Objective
The entity aims to reward executives with a level and mix of compensation commensurate with their position and
responsibilities within the entity so as to:
• align the interests of executives with those of shareholders; and
• ensure total compensation is competitive by market standards.
Structure
The Board periodically assesses the appropriateness of the nature and amount of emoluments of such officers on a periodic
basis by reference to relevant employment market conditions with overall objective of ensuring maximum stakeholder
benefit from the retention of a high quality board and executive team. Such officers are given the opportunity to receive their
base emolument in a variety of forms including cash and other non-cash benefits. It is intended that the manner of payment
chosen will be optimal for the recipient without creating undue cost for the company.
(iv) Fixed Compensation
Objective
Fixed compensation is reviewed annually by the Board. The process consists of a review of individual performance, relevant
comparative compensation in the market and internally and, where appropriate, external advice on policies and practices.
Structure
Executives are given the opportunity to receive their fixed remuneration in a variety of forms including cash and other non-
cash benefits.
(v) Variable Compensation
Objective
The objective is to link the achievement of the company’s targets with the compensation received by the executives charged
with meeting those targets.
Currently, the company does not restrict executives from entering into arrangements to protect the value of unvested Long-
Term Incentives. However, under the Securities Dealing Policy, members of the Board are required to advise the Company
Secretary of any shareholdings including any hedging arrangements.
Share-based compensation
Options or shares may be issued to directors and executives as part of their remuneration. The options or shares are not
issued based on performance criteria but are issued to the directors and executives of Ionic Rare Earths Limited to increase
goal congruence between executives, directors and shareholders.
During the year 23,000,000 options (2021: 60,000,000) were issued to key management personnel, details of the options
are set out elsewhere in this report. No shares were issued during 2022 (2021: nil) in lieu of cash directors’ fee, however
3,500,000 shares were issued as a sign on incentive (2021: Nil) and 3,300,000 shares were issued as a result of performance
shares meeting its vesting conditions (2021: Nil), details of the shares and options issued are set out elsewhere in this report.
Structure
Actual payments granted to each KMP are determined by the Board who meet periodically to assess the achievements of the
company’s targets. There are currently no targets established.
Employment contracts
Remuneration and other terms of employment for the following KMP are formalised in service agreements, the terms of
which are set out below:
20
Directors’ Report REMUNERATION REPORT (Audited) (Continued)
Mr T J Harrison, Managing Director:
• Term of agreement – to 31 December 2022.
•
Fixed consulting fee of $30,000 per month
• Termination by either party with six months’ notice.
Mr B D Dickson, Company Secretary:
• Term of agreement – to 31 December 2022.
•
Fixed consulting fee of $12,500 per month
• Payment of termination benefit on early termination by the employer, other than for gross misconduct, includes an amount
equal to the amounts due for the balance of the term of the contract from the date of termination or the equivalent of 6
months remuneration whichever is the greater.
Compensation of Key Management Personnel (Consolidated and Parent)
Compensation of each director and the executive officer of the parent and group are as follows:
Short term
Post-
employment
Share based
payments
Total
Total
options
related
Salaries
and fees
Non-
Monetary
Benefit1
Super-
annuation
30 June 2022
$
$
$
$
$
$
Directors
T Benson
T Harrison
J Kelley2,3
M McGarvie4
B Dickson
Total
248,000
360,000
201,771
59,000
150,000
9,366
9,366
9,212
8,981
-
24,800
-
-
142,350
348,764
190,2493
5,000
85,410
424,516
142,350
718,130
284,700
401,232
158,391
-
85,410
-
142,350
292,350
142,350
1,018,771
36,925
29,800
909,123
1,994,619
654,810
30 June 2021
$
$
$
$
$
$
Directors
T Benson5
T Harrison10
B Marwood6
B Dickson7
A Rovira8
M Steffens9
Total
118,367
362,500
9,581
120,000
25,000
18,888
6,060
3,920
3,820
3,480
3,480
1,240
11,243
-
9,581
19,162
2,375
-
211,400
224,100
347,070
211,400
590,520
224,100
-
22,982
-
112,050
112,050
254,692
112,050
142,905
112,050
-
20,128
-
654,336
22,000
42,361
659,600
1,378,297
659,600
1. The Non-Monetary Benefit relates to the Directors’ Indemnity Insurance.
2. Appointed 7 July 2021
3. $157,500 relates to the issue of 3,500,000 sign on incentive shares
4. Appointed 16 July 2021
5. Appointed 31 August 2020
6. Appointed 21 December 2020, resigned 16 July 2021
7. Resigned 21 December 2020, continues as Company Secretary
8. Resigned 21 December 2020
9. Resigned 31 August 2020
10. Includes a $50,000 bonus met through the issue of 3,571,428 fully paid
ordinary shares as a result of Mr. Harrison meeting a performance
criteria of the Company completing a positive scoping study before 1
November 2020
21
REMUNERATION REPORT (Audited) (Continued)
Compensation Options: Granted and Vested during the year.
During the year 23,000,000 compensation options were granted (2021: 60,000,000). The weighted average fair value of the
options granted was 2.85 cents. The price was calculated by using the Black Scholes Option valuation methodology applying
the following inputs:
Grant date
Number of options issued
Weighted average exercise price (cents)
Weighted average life of the option (years)
Weighted average underlying share price (cents)
Expected share price volatility (%)
Risk free interest rate (%)
Fair value per options
30 Nov 2021
23,000,000
6.4
3.0
4.4
120
0.87
0.0285
There were no alterations to the terms and conditions of options granted as remuneration since their grant date. During
the financial period 10,000,000 Compensation options were exercised (2021: Nil); No Compensation Options were forfeited
(2021: Nil).
Performance Rights: Granted and Vested during the year.
On 24 November 2021 the Company issued 10,000,000 Performance Rights to Mr Tim Harrison and 3,500,000 Performance
Rights to Ms Jill Kelley with the following vesting conditions (Refer to Note 20).
(a)
to be issued to Mr Harrison:
(i)
3.3 million Performance Rights will vest when the Company’s VWAP share price is above 6 cents for a period
of 30 consecutive days (Tranche A). This vesting condition was met on 6 May 2022 and as a result 3.3 million
shares were issued and the performance rights cancelled;
(ii) 3.3 million Performance Rights will vest when the Company’s VWAP share price is above 8 cents for a period
of 30 consecutive days (Tranche B); and
(iii) 3.4 million Performance Rights will vest when the Company’s VWAP share price is above 10 cents for a period
of 30 consecutive days (Tranche C).
(b)
to be issued to Ms Jill Kelley will vest when the Company signs its first offtake agreement as a result of Ms Kelley’s
introduction.
The Company’s remuneration policy prohibits directors and executives from entering into transactions or arrangements
which limit the economic risk of participating in unvested entitlements.
Apart from the issue of options and performance rights the company currently has no other performance-based remuneration
component built into director and executive remuneration (2021: Nil).
Performance Rights held by Key Management Personnel
2022
Specified Directors
Balance
1 July 2021
Granted
Lapsed
Vested
Sold
-
-
-
-
-
-
-
-
10,000,000
-
3,500,000
-
-
13,500,000
-
-
-
-
-
-
-
-
(3,300,000)
-
-
-
-
(3,300,000)
-
-
-
-
-
-
-
T Benson
T Harrison
B Marwood1
J Kelley
M McGarvie
B Dickson
Total
22
Balance
30 June 2022
-
6,700,000
-
3,500,000
-
-
10,200,000
Directors’ Report REMUNERATION REPORT (Audited) (Continued)
Shareholdings of Key Management Personnel
2022
Specified Directors
T Benson
T Harrison
B Marwood1
J Kelley
M McGarvie
B Dickson
Total
Balance
1 July 2021
Purchased
On Exercise
of Options
Share-based
payment
Sold
Balance
30 June 2022
-
4,750,000
-
-
-
4,658,034
9,408,034
-
-
-
-
-
-
-
-
-
-
-
-
5,000,000
-
3,300,0002
-
3,500,0003
-
-
-
-
-
-
-
(9,658,034)
-
8,050,000
-
3,500,000
-
-
5,000,000
6,800,000
(9,658,034)
11,550,000
Option Holdings of Key Management Personnel
2022
T B Benson
T J Harrison
B J Marwood1
J Kelley
M McGarvie
B D Dickson
Total
Balance at
beginning
of year
1 July 2021
Granted
Options
Exercised
Options
Lapsed
Balance at
end of year
Vested at 30 June 2022
20,000,000
5,000,000
40,000,000
10,000,000
-
-
-
-
-
3,000,000
-
-
-
-
-
20,000,000
5,000,000
(5,000,000)
80,000,000
23,000,000
(5,000,000)
-
-
-
-
-
-
-
30 June
2022
Vested &
Exercisable
Unvested
25,000,000
25,000,000
50,000,000
50,000,000
-
-
-
-
3,000,000
3,000,000
20,000,000
20,000,000
98,000,000
98,000,000
-
-
-
-
-
-
-
1. Holdings as at date of retirement or resignation as a director
2.
3.
Issued as a result of the vesting of 3,300,000 Performance Rights
Issued as a sign on incentive
Other Transactions
The Company has entered into a sub-lease agreement on normal commercial terms with Azure Minerals Limited, a company
of which Mr Rovira is a director. During the year, the Company paid sub-lease fees totalling $12,721 (2021: $9,255).
Amounts due and unpaid at 30 June 2022 to Key Management Personnel include consulting fees of $65,866.
23
REMUNERATION REPORT (Audited) (Continued)
Company’s Performance
Company’s share price performance
The Company’s share price performance shown in the below graph for the year ended 30 June 2022 and is a reflection of
the Company’s performance during the year.
The variable component of the executives’ remuneration, which at this stage only includes share options, is indirectly linked
to the Company’s share price performance.
Company's Share Price
0.10
0.09
0.08
0.07
0.06
0.05
0.04
0.03
0.02
0.01
$
D
U
A
e
c
i
r
P
e
r
a
h
S
0.00
1/07/2021
1/08/2021
1/09/2021
1/10/2021
1/11/2021
1/12/2021
1/01/2022
1/02/2022
1/03/2022
1/04/2022
1/05/2022
1/06/2022
Loss per share
Below is information on the Company’s loss per share for the previous four financial years and for the current year ended
30 June 2022.
Basic loss per share (cents)
2022
(0.13)
2021
(0.08)
2020
(0.07)
2019
(0.06)
2018
(0.24)
Voting and comments made at the company’s 2021 Annual General Meeting
IonicRE received a 98.4% “yes” vote on its remuneration report for the 2021 financial year. The company did not receive any
specific feedback at the AGM or throughout the year on its remuneration practices.
End of Remuneration Report (Audited)
24
Directors’ Report
CORPORATE GOVERNANCE
In recognising the need for the highest standards of corporate behaviour and accountability, the directors of the company
support and have adhered to the principles of corporate governance. The company’s corporate governance statement is
contained in the additional Australian Securities Exchange information section of this annual report.
SHARE OPTIONS
At the date of this report, there were 199,000,000 (2021: 361,000,000) share options outstanding.
Balance at the beginning of the year
Share option movements during the year
Issued
Lapsed/
Exercised
Total number
of Options
361,000,000
Exercisable at 6.4 cents, on or before 30 Nov ’24
44,000,000
-
44,000,000
Exercisable at 1.8 cents, on or before 30 Nov ‘22
Exercisable at 0.75 cents, on or before 31 July ‘21
-
-
(20,000,000)
(20,000,000)
(186,000,000)
(186,000,000)
Total options issued and exercised in the year to 30 June 2022
44,000,000
(206,000,000)
(162,000,000)
Total
199,000,000
The balance is comprised the following:
Date Granted
Expiry Date
Exercise Price (cents)
23 December 2019
24 March 2020
12 August 2020
3 December 2020
3 December 2020
24 February 2021
1 February 2021
9 December 2021
17 December 2021
Total number of options
outstanding at the date of
this report
30 November 2022
30 November 2022
30 November 2022
30 November 2022
30 November 2023
28 February 2024
28 February 2024
30 November 2024
30 November 2024
1.8
1.8
1.8
1.8
2.15
6.0
6.0
6.4
6.4
Number of
Options
20,000,000
20,000,000
30,000,000
10,000,000
40,000,000
25,000,000
10,000,000
6,000,000
38,000,000
199,000,000
No person entitled to exercise any option referred to above has or had, by virtue of the option, a right to participate in any
share issue of any other body corporate.
During the financial year 20,000,000 options exercisable at $0.018 and 186,000,000 options exercisable at $0.0075 were
exercised. No options have been exercised since the end of the financial year.
On 24 November 2021 the Company issued 10,000,000 Performance Rights to Mr Tim Harrison and 3,500,000 Performance
Rights to Ms Jill Kelley with the following vesting conditions.
(a)
to be issued to Mr Harrison:
(i)
3.3 million Performance Rights will vest when the Company’s VWAP share price is above 6 cents for a period
of 30 consecutive days (Tranche A). This vesting condition was met on 6 May 2022 and as a result 3.3 million
shares were issued and the performance rights cancelled;
(ii) 3.3 million Performance Rights will vest when the Company’s VWAP share price is above 8 cents for a period of
30 consecutive days (Tranche B); and
25
(iii) 3.4 million Performance Rights will vest when the Company’s VWAP share price is above 10 cents for a period of
30 consecutive days (Tranche C).
(b)
to be issued to Ms Jill Kelley will vest when the Company signs its first offtake agreement as a result of Ms Kelley’s
introduction.
NON AUDIT SERVICES
The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s
expertise and experience with the company and/or the Group are important.
Details of the amount paid or payable to the auditor (BDO Audit (WA) Pty Ltd) for audit during the year are set out below. There
were no non-audit services during this or the previous year.
During the year the following fees were paid or payable for services provided by the auditor of the parent entity and its related
practices.
Consolidated
2021
$
2020
$
1. Audit Services
BDO Audit (WA) Pty Ltd
Audit and review of financial reports
52,557
41,903
AUDITOR’S INDEPENDENCE DECLARATION
We have obtained an independence declaration from our auditors, BDO Audit (WA) Pty Ltd, as presented on page 26 of this
Annual Report.
EVENTS AFTER REPORTING DATE
On 8 September 2022 the Group announced the grant of £1.72 million (approximately A$2.9 million) from the UK Government
Advanced Propulsion Centre (“APC”) to Seren Technologies (“SerenTech”), a 100% owned subsidiary of IonicRE, based in
Belfast, UK.
On 31 January 2020, the World Health Organisation (WHO) announced a global health emergency because of a new strain
of coronavirus originating in Wuhan, China (COVID-19 outbreak) and the risks to the international community as the virus
spreads globally beyond its point of origin. Because of the rapid increase in exposure globally, on 11 March 2020, the WHO
classified the COVID-19 outbreak as a pandemic.
The full impact of the COVID-19 outbreak continues to evolve at the date of this report. The Group is therefore uncertain as to
the full impact that the pandemic will have on its financial condition, liquidity, and future results of operations during FY2023.
Management is actively monitoring the global situation and its impact on the Group’s financial condition, liquidity, operations,
suppliers, industry, and workforce. Given the daily evolution of the COVID-19 outbreak and the global responses to curb its
spread, the Group is not able to estimate the effects of the COVID-19 outbreak on its results of operations, financial condition,
or liquidity for the 2023 financial year.
No other matter or circumstance has arisen since the end of the financial year which significantly affected or may significantly
affect the operations of the group, the results of those operations, or the state of affairs of the group in future financial years.
Signed in accordance with a resolution of the directors,
T Benson
Chairman
Perth, 23 September 2022
26
Directors’ Report
DIRECTORS’ DECLARATION
In accordance with a resolution of the directors of Ionic Rare Earths Limited, I state that:
1)
In the opinion of the directors:
(a)
the financial statements, notes and additional disclosures included in the directors’ report designated as
audited, of the consolidated entity are in accordance with the Corporations Act 2001, including:
(i)
(ii)
giving a true and fair view of the consolidated entity’s financial position as at 30 June 2022 and of their
performance for the year ended on that date; and
complying with Australian Accounting Standards which, as stated in accounting policy Note 2 to the
Financial Statements, constitutes explicit and unreserved compliance with International Financial
Reporting Standards (IFRS), the Corporations Regulations 2001 and other mandatory professional
reporting requirements.
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 ending 30 June 2022.
On behalf of the Board
T Benson
Chairman
Perth, 23 September 2022
27
Auditors Declaration of Independence
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
Level 9, Mia Yellagonga Tower 2
5 Spring Street
Perth WA 6000
PO Box 700 West Perth WA 6872
Australia
DECLARATION OF INDEPENDENCE BY JARRAD PRUE TO THE DIRECTORS OF IONIC RARE EARTHS
LIMITED
As lead auditor of Ionic Rare Earths Limited for the year ended 30 June 2022, I declare that, to the
best of my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Ionic Rare Earths Limited and the entities it controlled during the
period.
Jarrad Prue
Director
BDO Audit (WA) Pty Ltd
Perth
23 September 2022
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia
Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO
International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability
limited by a scheme approved under Professional Standards Legislation
28
Financial Report
29
29
Consolidated Statement Of Profit Or Loss
And Other Comprehensive Income For Year Ended 30 June 2022
CONSOLIDATED
Notes
Other income
Interest Received
Other income
Expenses
Depreciation
Amortisation
Interest expense
Consultants
Directors’ fees (excluding executives)
Executives’ salaries, wages and consulting fees
3
3
Legal fees
Travel and accommodation
Administration expenses
Insurance
Promotion
Share based payments
Loss on sale of subsidiary
Research & development
2022
$
4,018
220,432
(31,956)
(28,699)
(2,733)
(63,852)
(358,771)
(980,903)
(358,434)
(218,856)
(740,282)
(60,113)
(439,403)
20
(1,506,993)
-
(77,542)
2021
$
1,212
213,949
-
-
-
(102,524)
(103,886)
(470,822)
(43,086)
(10,750)
(500,366)
(28,297)
(161,673)
(979,763)
(191,623)
-
Loss from continuing operations before income tax
(4,644,087)
(2,377,629)
Income tax credit/(expense)
Loss for the year
Other comprehensive income
4
-
-
(4,644,087)
(2,377,629)
Items that may be reclassified subsequently to profit or loss:
Foreign currency translation differences
Other comprehensive income net of tax
(4,600)
(4,600)
(589,586)
(589,586)
Total comprehensive loss for the year, net of tax
(4,648,687)
(2,967,215)
Attributable to:
Equity holders of the parent
Non-controlling interests
(4,648,687)
(2,967,215)
-
-
(4,648,687)
(2,967,215)
Total Loss per share for loss attributable to the ordinary equity holders
Basic loss per share (cents)
Diluted loss per share (cents)
14
14
(0.13)
(0.13)
(0.08)
(0.08)
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with
the accompanying notes.
30
Consolidated Statement Of Financial Position
As At 30 June 2022
Notes
CONSOLIDATED
2022
$
2021
$
ASSETS
Current assets
Cash and cash equivalents
12
26,759,731
11,055,530
Receivables
Other
Total current assets
Non-current assets
Right to use assets
Investments
Plant & equipment
Intangibles - Patents
Exploration & evaluation expenditure
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Payables
Lease Liability
Total current liabilities
Non-Current liabilities
Deferred tax liability
Lease liability
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Issued capital
Reserves
Accumulated losses
Total equity
6
7
8
531,096
65,351
63,604
15,530
27,356,178
11,134,664
35,886
-
3,932,173
3,536,269
253,872
5,077,796
12,314,681
21,614,408
-
-
3,409,530
6,945,799
48,970,586
18,080,463
613,705
27,645
641,350
31,890
7,318
39,208
394,698
-
394,698
-
-
-
680,558
394,698
48,290,028
17,685,765
10
11
76,957,059
43,393,406
8,910,505
7,225,808
(37,577,536)
(32,933,449)
48,290,028
17,685,765
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
31
Consolidated Statement Of Changes In Cash Flows
For Year Ended 30 June 2022
Cash flows from operating activities
Payments to suppliers and employees
Interest received
Notes
CONSOLIDATED
2022
$
2021
$
(3,586,152)
(1,333,717)
4,018
1,212
Net cash flows used in operating activities
12
(3,582,134)
(1,332,505)
Cash flows from investing activities
Receipt of government R&D rebate
Receipt of grants
Cash acquired on acquisition of subsidiary
Proceeds from sale of subsidiary
Deconsolidation of subsidiary
Payments for plant and equipment
Payment for investments
Payment for acquisition of subsidiary
Payments for patents
Payment for capitalised exploration
Net cash flows used in investing activities
Cash flows from financing activities
1,908
54,089
82,695
-
-
(79,412)
213,949
-
-
53,436
(11,456)
-
-
(1,210,048)
(1,592,572)
(104,658)
-
-
(8,963,221)
(3,165,136)
(10,601,171)
(4,119,255)
Proceeds from issue of ordinary shares (net of transaction costs)
29,894,053
15,677,357
Net cash flows from financing activities
29,894,053
15,677,357
Net increase in cash and cash equivalents
15,710,748
10,225,597
Cash and cash equivalents at the beginning of the financial year
11,055,530
829,933
Effect of exchange rate changes on cash and cash equivalents
(6,547)
-
Cash and cash equivalents at the end of the financial year
12
26,759,731
11,055,530
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
32
Consolidated Statement Of Changes In Equity
For Year Ended 30 June 2022
Issued
Capital
Convertible
Notes
Reserve
Share
Option
Reserve
Foreign
Currency
Translation
Reserve
Accumulated
Losses
Total
At 1 July 2021
43,393,406
136,403
7,678,995
(589,590)
(32,933,449)
17,685,765
-
(4,644,087)
(4,644,087)
(4,600)
-
(4,600)
(4,600)
(4,644,087)
(4,648,687)
Loss for the period
Other comprehensive loss
Total comprehensive loss for the
period
-
-
-
Shares issued during the period
31,968,600
Transaction costs
(1,860,947)
Share based transaction costs
3,456,000
Vesting of performance rights
Share based payments
Foreign currency translation
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,896)
1,295,289
-
395,904
At 30 June 2022
76,957,059
136,403
8,972,388
(198,286)
(37,577,536)
48,290,028
Issued
Capital
Convertible
Notes
Reserve
Share
Option
Reserve
Foreign
Currency
Translation
Reserve
Accumulated
Losses
Total
At 1 July 2020
27,938,424
136,403
6,216,857
(233,604)
(30,555,820)
3,502,260
-
(2,377,629)
(2,377,629)
(589,586)
-
(589,586)
(589,586)
(2,377,629)
(2,967,215)
Loss for the period
Other comprehensive loss
Total comprehensive loss for the
period
-
-
-
Shares issued during the period
16,955,000
Transaction costs
(1,017,643)
Vesting of performance rights
386,100
Share based transaction costs
(868,475)
Share based payments
Foreign currency translation
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(386,100)
868,475
979,763
-
233,600
At 30 June 2021
43,393,406
136,403
7,678,995
(589,590)
(32,933,449)
17,685,765
Changes in Equity should be read in conjunction with the accompanying notes.
33
-
-
-
-
-
-
31,968,600
(1,860,947)
3,456,000
(1,896)
1,295,289
395,904
-
-
-
-
-
-
16,955,000
(1,017,643)
-
-
979,763
233,600
-
-
-
-
-
-
-
-
-
-
Notes To The Consolidated Financial Statements
For Year Ended 30 June 2022
1.
CORPORATE INFORMATION
The Consolidated Financial report of Ionic Rare Earths Limited for the year ended 30 June 2022 was authorised for
issue in accordance with a resolution of the directors on 22 September 2022. The consolidated financial statements
and notes represent those of Ionic Rare Earths Limited and its controlled entities (the “Group”). The consolidated
entity’s functional and presentation currency is AUD ($). The separate financial statements of the parent entity, Ionic
Rare Earths Limited, have not been presented within this financial report as permitted by the Corporations Act 2001.
Ionic Rare Earths Limited is a company limited by shares incorporated in Australia whose shares are publicly traded
on the Australian Securities Exchange.
The nature of the operations and principal activities of the Group are described in the Directors’ Report.
2.
(a)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Preparation
The Financial report is a general-purpose Financial report, which has been prepared in accordance with the
requirements of the Corporations Act 2001, Australian Accounting Standards, Australian Accounting Interpretations
and other authoritative pronouncements of the Australian Accounting Standards Board. The Financial report has
also been prepared on an accruals basis. The Group is a for-profit entity for the purpose of preparing the financial
statements.
Australian Accounting Standards set out accounting policies that the AASB has concluded that would result in a
financial report containing relevant and reliable information about transactions, events and conditions. Compliance
with Australian Accounting Standards ensures that the financial reports and notes also comply with International
Financial Reporting Standards.
b)
Adoption of new and amended accounting standards
The Company has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by
the Australian Accounting Standards Board (“AASB”) that are mandatory for the current reporting period. There has
been no material impact on the financial statements by their adoption.
A number of other standards, amendments to standards and interpretations issued by the AASB which are not
materially applicable to the Group have not been applied in preparing these consolidated financial statements.
(c)
Basis of consolidation
The parent entity and its subsidiaries are collectively referred to as the “Group”. The parent of this Group is Ionic
Rare Earths Limited. Entities (including structured entities) over which the parent (or the Group) directly or indirectly
exercises control are called “subsidiaries”. The consolidated financial statements incorporate the assets, liabilities
and results of all subsidiaries. The Group controls an entity when the Group is exposed to, or has rights to, variable
returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.
A list of the Group’s subsidiaries is provided in Note 9.
The assets, liabilities and results of subsidiaries are fully consolidated into the financial statements of the Group from
the date on which control is obtained by the Group. The consolidation of a subsidiary is discontinued from the date
that control ceases. Intercompany transactions, balances and unrealised gains or losses on transactions between
group companies are fully eliminated on consolidation. Accounting policies of subsidiaries have been changed and
adjustments made where necessary to ensure uniformity of the accounting policies adopted by the Group.
Equity interests in a subsidiary not attributable, directly or indirectly, to the Group are referred to as ‘non-controlling
interests’. The Group recognises any non-controlling interests in subsidiaries on a case-by-case basis either at fair
value or at the non-controlling interests’ proportionate share of the subsidiary’s net assets. Non-controlling interests
are shown separately within the equity section of the statement of financial position and statement of profit or loss
and other comprehensive income.
34
2.
d)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Significant accounting estimates and assumptions
The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of
future events. The key estimates and assumptions that have a significant risk of causing a material adjustment to
the carrying amounts of certain assets and liabilities within the next annual reporting period are:
Asset vs Business
Management have determined the acquisition of Seren Technologies to be an asset acquisition using the concentration
test available under AASB 3 Business Combinations, where by the fair value of the assets of Seren Technologies is
concentrated in the intangibles acquired.
Fair value of assets acquired
Fair value of the intangible assets acquired has been determined using the market approach based on the purchase
price of the acquisition of Seren Technologies. Management deem the purchase price to be the most accurate
representation of the fair value of the assets purchased on acquisition date.
Milestone 1 and 2 payments were deemed to have nil value as management have determined these payments to be
contingent liabilities as it is not probable at this stage that the performance obligations will be met.
Treatment of expenditure on the Makuutu project
Management have applied judgement in the treatment of expenditure incurred on the Makuutu Project in Uganda.
(see further details on the acquisition in Note 6).
Expenditure incurred in order to acquire the project has been capitalised as an initial cost of an investment in associate
(being Rwenzori Rare Metals Limited (‘RML”)) which represents the group’s 51% interest in RML which the group
has significant influence over. In addition, exploration expenditure incurred during the period to increase the group’s
interest to 51% has been capitalised as a further investment in RML and to exploration and evaluation expenditure.
Management have determined that they have significant influence as they do not have control over the management
direction and control over the activities and operations of the Makuutu project.
The group assesses whether there is objective evidence that the investment in associate is impaired by reference
to the underlying project held by RML which is in exploration stage. Management have in accordance with AASB
6: Exploration and Evaluation of Mineral Assets, performed a review of impairment indicators on the investment in
associate which included the review of the rights to tenure and future planned expenditure.
During the earn in period contributed expenditure incurred is deemed to be capitalised exploration and evaluation
expenditure, as opposed to contributions towards the associate. Once an earn in milestone has been met, expenditure
is transferred from capitalised exploration and evaluation expenditure to Investment in Associate.
Share based payments
The Company measures the cost of equity-settled transactions with employees by reference to the fair value of the
equity instruments at the date at which they are granted. The fair value is determined using the binominal or implied
barrier formula. For options issued in this financial year, the assumptions detailed as per Note 20 were used.
Exploration and evaluation costs
Exploration and evaluation costs are written off in the year they are incurred apart from acquisition costs (including
costs such as the earn-in payments relating to the Makuutu project) which are carried forward where right of tenure
of the area of interest is current and are expected to be recouped through sale or successful development and
exploitation of the area of interest or, where exploration and evaluation activities in the area of interest have not
reached a stage that permits reasonable assessment of the existence of economically recoverable reserves. The
future recoverability of exploration and evaluation expenditure is dependent on a number of factors, including whether
the Group decides to exploit the related lease itself, or, if not, whether it successfully recovers the related exploration
and evaluation assets through sale.
Factors that could impact the future recoverability include the level of reserves and resources, future technological
changes, which could impact the cost of mining, future legal changes (including changes to environmental restoration
obligations) and changes to commodity prices.
To the extent that capitalised exploration and evaluation expenditure is determined not to be recoverable in the future,
profits and net assets will be reduced in the period in which this determination is made.
35
Notes To The Consolidated Financial Statements
For Year Ended 30 June 2022
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(e)
Investments in Associates
Associates
Associates are all entities over which the Group has significant influence but not control or joint control. This is
generally the case where the Group holds between 20% and 50% of the voting rights or in other cases with greater
than 50% where control has still not been obtained due to the lack of controls over the relevant activities. Investments
in associates are accounted for by using the equity method of accounting after being initially recognised at cost.
Equity method
Under the equity method of accounting, the investments are initially recognised at cost and adjusted thereafter to
recognise the Group’s share of the post-acquisition profits or losses of the investee in profit or loss, and the Group’s
share of movements in other comprehensive income of the investee in other comprehensive income. Dividends
received or receivable from associates and joint ventures are recognised as a reduction in the carrying amount of the
investment.
When the Group’s share of losses in an equity-accounted investment equals or exceeds its interest in the entity,
including any other unsecured long-term receivables, the Group does not recognise further losses, unless it has
incurred obligations or made payments on behalf of the other entity.
Unrealised gains on transactions between the Group and its associates and joint ventures are eliminated to the
extent of the Group’s interest in these entities. Unrealised losses are also eliminated unless the transaction provides
evidence of an impairment of the asset transferred. Accounting policies of equity accounted investees have been
changed where necessary to ensure consistency with the policies adopted by the Group.
The carrying amount of equity-accounted investments is tested for impairment each reporting period.
(f)
Cash and cash equivalents
Cash and cash equivalents in the statement of financial position comprise cash at the bank and short-term deposits
with an original maturity of three months or less that are readily convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value.
(g) Other receivables
Other receivables are recognised initially at fair value and subsequently measured at amortised cost using the
effective interest method, less an allowance for impairment.
(h)
Foreign currency translation
Both the functional and presentation currency of Ionic Rare Earths Limited and its Australian subsidiaries is Australian
dollars (A$).
Transactions in foreign currencies are initially recorded in the functional currency at the exchange rates ruling at the
date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the rate
of exchange ruling at the end of the reporting period. Non-monetary items measured at historical cost continue to be
carried at the exchange rate at the date of the transaction.
All resulting exchange differences in the consolidated financial statements are taken to the statement of profit or loss
and other comprehensive income.
Group companies
The financial results and position of foreign operations, whose functional currency is different from the Group’s
presentation currency, are translated as follows:
•
•
•
Assets and liabilities are translated at exchange rates prevailing at the end of the reporting period;
Income and expenses are translated at average exchange rates for the period; and
Retained earnings are translated at the exchange rates prevailing at the date of the transaction.
Exchange differences arising on translation of foreign operations with functional currencies other than Australian
dollars are recognised in other comprehensive income and included in the foreign currency translation reserve in the
statement of financial position. These differences are recognised in profit or loss in the period in which the operation
is disposed.
36
2.
(i)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income tax
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered
from or paid to the taxation authorities based on the current period’s taxable income. The tax rates and tax laws used
to compute the amount are those that are enacted or substantively enacted by the end of the reporting period.
Deferred income tax is provided on all temporary differences at the end of the reporting period between the tax bases
of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences except:
•
•
when the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability
in a transaction that is not a business combination and that, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss; or
when the taxable temporary difference is associated with investments in subsidiaries, associates or interests in
joint ventures, and the timing of the reversal of the temporary difference can be controlled and it is probable that
the temporary difference will not reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax
credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the
deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilised,
except:
•
•
when the deferred income tax asset relating to the deductible temporary difference arises from the initial
recognition of an asset or liability in a transaction that is not a business combination and, at the time of the
transaction, affects neither the accounting profit nor taxable profit or loss; or
when the deductible temporary difference is associated with investments in subsidiaries, associates or interests
in joint ventures, in which case a deferred tax asset is only recognised to the extent that it is probable that the
temporary difference will reverse in the foreseeable future and taxable profit will be available against which the
temporary difference can be utilised.
The carrying amount of deferred income tax assets is reviewed at each end of the reporting period and reduced to
the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred
income tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed at each end of the reporting period and are recognised
to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when
the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively
enacted at the end of the reporting period.
Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or loss.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax
assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and
the same taxation authority.
Tax consolidation legislation
Ionic Rare Earths Limited and its wholly owned Australian controlled entities have implemented the tax consolidation
legislation as of 1 July 2003.
The head entity, Ionic Rare Earths Limited and the controlled entities in the tax consolidated group continue to account
for their own current and deferred tax amounts. The Group has applied the group allocation approach in determining
the appropriate amount of current taxes and deferred taxes to allocate to members of the tax consolidated group.
37
Notes To The Consolidated Financial Statements
For Year Ended 30 June 2022
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(j)
Other taxes
Revenues, expenses and assets are recognised net of the amount of GST except:
•
where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in
which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item
as applicable; and
•
receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or
payables in the statement of financial position.
Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of cash flows
arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority, are
classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation
authority.
(k)
Trade and other payables
Trade payables and other payables are carried at amortised costs and represent liabilities for goods and services
provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged
to make future payments in respect of the purchase of these goods and services.
(l)
Share-based payment transactions
The Group provides benefits to directors, employees and consultants of the Group (with shareholders’ approval) in
the form of share-based payment transactions, whereby directors, employees and consultants render services in
exchange for options over shares (‘equity-settled transactions’).
The cost of these equity-settled transactions with employees is measured by reference to the fair value at the date at
which they are granted. The fair value is determined by an external valuer using a binomial model.
In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked
to the price of the shares of Ionic Rare Earths Limited (‘market conditions’).
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period
in which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully
entitled to the award (‘vesting date’).
The cumulative expense recognised for equity-settled transactions at each End of the reporting period until vesting
date reflects (i) the extent to which the vesting period has expired and (ii) the number of awards that, in the opinion
of the directors of the Group, will ultimately vest. This opinion is formed based on the best available information at
reporting date. No adjustment is made for the likelihood of market performance conditions being met as the effect of
these conditions is included in the determination of fair value at grant date.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon
a market condition. Where the terms of an equity-settled award are modified, as a minimum an expense is recognised
as if the terms had not been modified. In addition, an expense is recognised for any increase in the value of the
transaction as a result of the modification, as measured at the date of modification.
Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense
not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled
award and designated as a replacement award on the date that it is granted, the cancelled and new award are treated
as if they were a modification of the original award, as described in the previous paragraph.
The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of earnings
per share.
38
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(m)
Contributed equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options
are shown in equity as a deduction, net of tax, from the proceeds.
Effective 1 July 1998, the corporations legislation abolished the concepts of authorised capital and par value shares.
Accordingly, the company does not have authorised capital nor par value in respect of its issued capital.
Basic earnings per share is calculated as net profit attributable to members of the parent, adjusted to exclude any
costs of servicing equity (other than dividends) and preference share dividends, divided by the weighted average
number of ordinary shares, adjusted for any bonus element.
(n)
Earnings per share
Diluted earnings per share is calculated as net profit attributable to members of the parent, adjusted for:
•
•
•
•
costs of servicing equity (other than dividends) and preference share dividends;
the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been
recognised as expenses; and
other non-discretionary changes in revenues or expenses during the period that would result from the dilution
of potential ordinary shares:
divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for
any bonus element.
(o)
Comparative figures
When required by accounting standards comparative figures have been adjusted to conform to changes in the
presentation for the current financial year.
(p)
Exploration and development expenditure
Exploration and evaluation costs are written off in the year they are incurred apart from acquisition costs, including
costs such as the earn-in payments relating to the Makuutu project, which are carried forward where right of tenure
of the area of interest is current and they are expected to be recouped through sale or successful development and
exploitation of the area of interest or, where exploration and evaluation activities in the area of interest have not
reached a stage that permits reasonable assessment of the existence of economically recoverable reserves.
Where an area of interest is abandoned or the directors decide that it is not commercial, any accumulated acquisition
costs in respect of that area are written off in the financial period the decision is made. Each area of interest is also
reviewed at the end of each accounting period and accumulated costs written off to the extent that they will not be
recoverable in the future.
Amortisation is not charged on costs carried forward in respect of areas of interest in the development phase until
production commences.
(q)
Intangible assets
Accounting policy
Patents, trademarks and licences
Trademarks, licences and patents acquired as part of an asset acquisition are recognised at the fair value at
acquisition date. They have a finite useful life and are subsequently carried at cost less accumulated amortisation
and impairment losses.
Amortisation methods and useful lives
The group amortises intangible assets with a limited useful life using the straight-line method over the following
periods:
•
Patents, trademarks and licences 20 years
39
Notes To The Consolidated Financial Statements
For Year Ended 30 June 2022
3. EXPENSES AND LOSSES
Profit/(loss) from continuing operations before income tax includes the
following specific expenses
Salaries & wages expenses
Operating lease rentals
Directors’ benefit expense (excluding executive directors)
4. INCOME TAX
Statement of profit or loss and other comprehensive income
Current income tax benefit/(expense)
Deferred income tax benefit/(expense)
Income tax benefit/(expense) reported in the statement of profit or loss and
other comprehensive income
A reconciliation between tax expense and the product of accounting profit/(loss)
before income tax multiplied by the Group’s applicable income tax rate is as follows:
Accounting loss before income tax
At the Group’s statutory income tax rate of 26% (2021: 26%)
Less: Share options expenses during the year
Exploration expenditure
Government grants exempt from tax
Other expenditure not allowable for income tax purposes
Current year tax losses not brought to account
2022
$
2021
$
980,903
470,822
40,800
358,771
12,255
103,886
-
-
-
-
-
-
(4,644,087)
(2,377,629)
(1,207,463)
(618,185)
391,818
254,738
-
(43,249)
77,581
-
(55,627)
49,822
(781,313)
(369,252)
781,313
369,252
Income tax (benefit)/expense reported in the consolidated statement of profit or
loss and other comprehensive income
-
-
Deferred Income Tax
Deferred income tax at 30 June relates to the following:
Deferred tax liabilities
Prepayments
Total deferred tax liabilities
Deferred tax assets
Accrued expenses
Capital raising costs
Tax assets/losses recognised /(not brought to account)
Total deferred tax assets
Net deferred tax liabilities/(asset)
40
(16,991)
(16,991)
5,200
45,304
(33,513)
16,991
-
(4,038)
(4,038)
5,200
19,377
(20,539)
4,038
-
4. INCOME TAX (Continued)
Other than to offset deferred tax liabilities the Group has not recognised tax losses arising in Australia of $15,299,605 (2021:
$13,432,620) that may be available for offset against future taxable profits of the companies in which the losses arose. The
potential benefit of carried forward losses will only be obtained if assessable income is derived of a nature and, of an amount
sufficient to enable the benefit from the deductions to be realised or the benefit can be utilised by the Company provided that :
(i)
(ii)
(iii)
the provisions of deductibility imposed by law are complied with;
the group satisfies the continuity of ownership test from the period the losses were incurred to the time they
are to be utilised; and
no change in tax legislation adversely affect the realisation or the benefit from the deductions.
Tax Consolidation
Ionic Rare Earths Limited and its 100% owned Australian subsidiaries have formed a tax consolidated group. Members of the
group entered into a tax sharing arrangement in order to allocate the income tax expense to the wholly owned subsidiaries
on a pro-rata basis. The agreement provides for the allocation of income tax liabilities should the head entity default on its
tax payment obligations. At the reporting date, the possibility of default is remote.
Tax effect accounting by members of the tax consolidated group
The allocation of taxes under the tax sharing and funding agreement is recognised as an increase/decrease in the subsidiaries’
inter-company accounts with the tax consolidated group head company, Ionic Rare Earths Limited. The group has applied
the group allocation approach in determining the appropriate amount of current taxes to allocate to members of the tax
consolidated group.
5. OPERATING SEGMENT
The Group has based its operating segment on the internal reports that are reviewed and used by the Board of Directors
(“Board”) (the chief operating decision makers) in assessing performance and in determining the allocation of resources.
The Group does not have production and is only currently involved in exploration activities. As a consequence, activities in
the operating segment are identified by the Board based on the manner in which resources are allocated and the nature of
the resources provided.
Based on this criterion, the Board has determined that the Group has one operating segment, being exploration, and the
segment operations and results are the same as the Group’s results.
During the period the Company conducted its activities across three geographic locations, being Australia, Uganda and
United Kingdom (2021: Australia, Uganda and Nicaragua).
2022
Australia
Nicaragua
$
$
U.K.
$
Uganda
$
Total
$
Revenues
Loss
Non-current assets
Total assets
Total liabilities
(4,482,931)
87,304
27,137,060
(627,325)
2021
Australia
Nicaragua
Revenues
Loss
Non-current assets
Total assets
Total liabilities
$
$
215,161
(2,186,007)
(191,622)
-
11,134,664
(394,698)
-
-
-
-
-
-
-
-
(161,156)
-
(4,644,087)
5,280,251
16,246,853
21,614,408
5,586,673
16,246,853
48,970,586
(53,223)
U.K.
$
Uganda
$
-
-
-
(680,548)
Total
$
215,161
(2,377,629)
-
-
-
-
-
6,945,799
6,945,799
6,945,799
18,080,463
-
(394,698)
41
Notes To The Consolidated Financial Statements
For Year Ended 30 June 2022
6. INVESTMENTS
An amount of $3,932,173 has been presented in the financial statements as an Investment in Associates. This represents
amounts incurred to acquire an interest in Rwenzori Rare Metals Limited which holds 100% of the Makuutu Rare Earth
Elements project. Refer to note 19 for further information. This includes the amounts set out below.
Subscription for initial 20% interest in Rwenzori Rare Metals Limited
US$100,000 paid to Rare Earth Elements Africa Pty Ltd
29,179,517 fully paid shares issued to Rare Earth Elements Africa Pty Ltd
100,000,000 fully paid shares issued to Southern Cross Mining Pty Ltd
50,000,000 options (exercise price) of $0.005 issued to SCM
Expenditure on exploration and evaluation for additional 11% interest
2022
$
2021
$
148
148,035
233,436
800,000
325,000
954,689
148
148,035
233,436
800,000
325,000
954,689
Expenditure on exploration and evaluation for additional 15% interest
1,166,337
1,166,337
Expenditure on exploration and evaluation for additional 5% interest
498,210
498,210
Movement in foreign exchange
(193,682)
(589,586)
3,932,173
3,536,269
Summarised financial information for associate – Rwenzori Rare Metals Limited (RRM)
The table below summarises the financial information for the associate that is relevant to Ionic Rare Earths Limited. The
information disclosed reflects the amounts presented in the financial statements of RRM and not Ionic Rare Earths Limited
share of those amounts. They have been amended to reflect adjustments, if any, made by Ionic Rare Earths Limited when
using the equity method, including fair value adjustments and modifications for differences in accounting policy.
Current assets
Cash
Non-current assets
Plant and equipment
Other
Current Liabilities
Payables
Net assets
Groups share in %
Groups share in $
Fair value uplift
Carrying amount
318,867
110,693
89,179
70,783
31,284
38,533
(33,318)
(123,499)
445,511
57,011
51%
227,211
3,704,962
3,932,173
51%
29,076
3,507,541
3,536,617
The fair value uplift is attributable to IonicRE’s contribution towards exploration in excess of their share of the net assets of
RRM.
The Company’s may increase its interest in RRM from 51% to 60% by the completion of a bankable feasibility study.
42
7. INTAGIBLES - PATENTS
At Cost (a)
Accumulated amortisation
Carrying amount at the end of the financial year
Opening carrying value
Additions (net of amortisation) – acquisition of patents (a)
Amortisation charge
Carrying amount at the end of the financial year
2022
$
5,244,733
(166,937)
5,077,796
-
5,088,550
(10,754)
5,077,796
2021
$
-
-
-
-
-
-
-
(a) On 8 December 2021, the Group announced that it had reached agreement to acquire 100% of the shares in Seren
technologies Limited; the acquisition was completed on 21 April 2022. As a result of the asset acquisition, intangibles
were acquired at the fair value of $5,088,550 which included $3,456,000 through the issue of 48,000,000 shares at
a price on issue date of $0.072, with the remaining paid in cash. Refer to note 19 (c) for disclosure relating to future
milestone payments which have been recognised as contingent liabilities.
8. EXPLORATION AND EVALUATION EXPENDITURE
At Cost (a)
Impairment of exploration & evaluation expenditure
Carrying amount at the end of the financial year
Carrying amount at the beginning of the financial year
Additions
Carrying amount at the end of the financial year
2022
$
2021
$
12,314,681
3,409,530
-
-
12,314,681
3,409,530
3,409,530
8,905,151
12,314,681
525,697
2,883,833
3,409,530
(a) This amount represents contribution to expenditure to earn a 51% interest in Rwenzori Rare Metals Limited which hold
the Makuutu exploration licence.
Recovery of the capitalised amount is dependent upon:
(i)
(ii)
(iii)
the continuance of the Group’s right to tenure of the area of interest;
the results of future exploration; and
the successful development and commercial exploitation, or alternatively sale.
9. INTEREST IN SUBSIDIARIES
The subsidiaries listed below have share capital consisting solely of ordinary shares.
Each country of incorporation is also its principal place of business.
Name of Subsidiary
Seren Technologies Limited
Goldcap Resources Pty Limited
Country of
Incorporation
England
Australia
% equity held by consolidated entity
2022
100
-
2021
-
100
During the period Goldcap Resources Pty Limited was deregistered.
There are no significant restrictions over the Group’s ability to access or use assets and settle liabilities of the group.
43
Notes To The Consolidated Financial Statements
For Year Ended 30 June 2022
10. ISSUED CAPITAL
(a) Issued and paid up capital
Fully paid ordinary shares
Less: capital raising costs
2022
$
2021
$
82,782,854
47,358,254
(5,825,795)
(3,964,848)
76,957,059
43,393,406
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to
the number and amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a meeting
in person or by proxy is entitled to one vote, and upon a poll each share is entitled to one vote.
(b) Movements in ordinary share capital
2022
2021
Number of shares
$
Number of shares
$
Beginning of the financial year
3,206,399,514
43,393,406
2,161,328,050
27,938,424
Issued during the year
Issue at $0.074
Issue at $0.0075
Issue at $0.018
Issue at $0.017
Issue at $0.045
Issue at $0.072
Issue at $0.040
Issue at $0.005
Issue at $0.014
Issue at $0.008
Issue at $0.0044
Issue at $0.0039
Issue at $0.0034
Cost of share issues
(i)
(ii)
(ii)
(iii)
(iv)
(v)
(i)
(ii)
(vi)
(i)
(iii)
(iii)
(iii)
405,405,406
30,000,000
-
-
186,000,000
1,395,000
154,000,000
1,155,000
20,000,000
3,300,000
3,500,000
360,000
56,100
157,500
48,000,000
3,456,000
-
-
-
-
-
-
-
-
300,000,000
12,000,000
50,000,000
250,000
3,571,428
50,000
437,500,036
3,500,000
33,300,000
33,300,000
33,400,000
145,200
128,700
112,200
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,860,947)
-
(1,886,118)
End of the financial year
3,872,604,920
76,957,059
3,206,399,514
43,393,406
Funds raised from the share placements during the 2022 and 2021 year were used to progress the Group’s exploration
activities and for general working capital.
(i)
(ii)
Exercise of options
Issued on vesting of performance rights
(iii) Sign on incentive shares
(iv)
Issued as part payment to acquire Seren Technologies Limited (refer note 7)
(v)
Issued in lieu of cash bonus.
44
(c) Movements in unlisted options on issue
At balance date, there were 199,000,000 (2021: 361,000,000) share options outstanding.
Balance at the beginning of the year
Share option movements during the year
Issued
Exercised
Lapsed
Total number
of Options
361,000,000
Total options issued and lapsed in the year to 30 June 2022
44,000,000
(206,000,000)
-
(162,000,000)
Balance at the end of the year
The balance of options on issue is comprised of the following:
Date Granted
Expiry Date
Exercise Price (cents)
23 December 2019
24 March 2020
12 August 2020
3 December 2020
3 December 2020
24 February 2021
1 February 2021
9 December 2021
17 December 2021
30 November 2022
30 November 2022
30 November 2022
30 November 2022
30 November 2023
28 February 2024
28 February 2024
30 November 2024
30 November 2024
1.8
1.8
1.8
1.8
2.15
6.0
6.0
6.4
6.4
Total number of options outstanding at the date of this report
(c) Movements in unlisted performance rights
At balance date, there were 10,200,000 (2021: Nil) performance rights outstanding.
Issued
Vested
Lapsed
199,000,000
Number of
Options
20,000,000
20,000,000
30,000,000
10,000,000
40,000,000
25,000,000
10,000,000
6,000,000
38,000,000
199,000,000
Total number of
Rights
-
Balance at the beginning of the year
Performance rights movements during the year
Total performance rights issued and vested in the
year to 30 June 2022
Balance at the end of the year
(d) Capital Management
13,500,000
(3,300,000)
-
10,200,000
10,200,000
When managing capital, management’s objective is to ensure the Group continues as a going concern as well as to maintain
optimal returns to shareholders and benefits for other stakeholders. Management also aims to maintain a capital structure
that ensures the lowest cost of capital available to the Group.
The Group is not exposed to any externally imposed capital requirements.
45
Notes To The Consolidated Financial Statements
For Year Ended 30 June 2022
11. RESERVES
Share Option Reserve
Balance at beginning of year
Vesting of performance rights
Movement during the year
Balance at the end of year
Convertible Note Equity Reserve
Balance at beginning of year
Movement during the year
Balance at the end of year
Foreign Currency Translation Reserve
Balance at beginning of year
Movement during the year
Balance at the end of year
Nature and purpose of reserves
2022
$
2021
$
7,678,995
(1,896)
1,295,289
8,972,388
6,216,857
(386,100)
1,848,238
7,678,995
136,403
136,403
-
-
136,403
136,403
(589,590)
391,304
(198,286)
(233,604)
(355,986)
(589,590)
Share option reserve
This reserve records the value of options issued to directors, employees and associates as part of their remuneration.
Convertible note equity reserve
This reserve records the equity portion attributable to the convertible notes at the time of issue.
Foreign currency translation reserve
This reserve is used to record exchange differences arising from the translation of foreign controlled subsidiaries.
12. STATEMENT OF CASH FLOWS
Reconciliation of the net profit/(loss) after tax to the net cash flows from operations
Net loss
Depreciation
Amortisation
Share based payments
Fees paid through share issue
Loss on sale of subsidiary
R&D income classified as Investing Activity
Grants classified as Investing Activity
Changes in assets and liabilities
Trade receivables
Prepayments
Trade and other creditors
2022
$
2021
$
(4,644,087)
(2,377,629)
31,956
10,754
1,506,993
-
-
(218,523)
(1,908)
(467,437)
(44,513)
244,631
-
-
979,763
50,000
191,623
(213,949)
-
(46,848)
(8,989)
93,524
Net cash flows used in operating activities
(3,582,134)
(1,332,505)
46
12. STATEMENT OF CASH FLOWS (Continued)
(a) Reconciliation of cash
Cash balance comprises:
Cash at bank
Short term deposit
Closing cash balance
2022
$
2021
$
26,726,230
11,022,029
33,501
33,501
26,759,731
11,055,530
Cash at bank earns interest at floating rates based on daily bank deposit rates.
Short term deposits are made at various periods on call, depending on the immediate cash requirements of the Group and
earn interest at the respective short term deposit rates. At 30 June 2022, the Group had borrowing facilities of $30,000
(2021: $30,000). The short term deposit is provided as security for $30,000 of the facilities. This facility is unutilised at 30
June 2022.
The fair value of cash and cash equivalents is $26,759,731 (2021: $11,055,530).
The effective interest rate on cash at bank was 0.1% (2021: 0.1%).
Refer to Note 18 for risk exposure.
(b) Non-cash investing and financing activities
During the financial year the Group undertook the following non-cash investing and financing activities.
3,500,000 fully paid shares issued to Ms. Jill Kelley as a performance incentive
157,500
48,000,000 fully paid shares issued to Seren AG as part consideration for the
acquisition of Seren Technologies Limited
3,456,000
-
-
3,571,428 fully paid shares issued to Horizon Metallurgy Pty Ltd in lieu of cash
bonus
-
50,000
3,613,500
50,000
13. EVENTS OCCURRING AFTER THE REPORTING PERIOD
On 8 September 2022 the Group announced the grant of £1.72 million (approximately A$2.9 million) from the UK Government
Advanced Propulsion Centre (“APC”) to Seren Technologies (“SerenTech”), a 100% owned subsidiary of IonicRE, based in
Belfast, UK.
On 31 January 2020, the World Health Organisation (WHO) announced a global health emergency because of a new strain
of coronavirus originating in Wuhan, China (COVID-19 outbreak) and the risks to the international community as the virus
spreads globally beyond its point of origin. Because of the rapid increase in exposure globally, on 11 March 2020, the WHO
classified the COVID-19 outbreak as a pandemic.
The full impact of the COVID-19 outbreak continues to evolve at the date of this report. The Group is therefore uncertain as to
the full impact that the pandemic will have on its financial condition, liquidity, and future results of operations during FY2022.
Management is actively monitoring the global situation and its impact on the Group’s financial condition, liquidity, operations,
suppliers, industry, and workforce. Given the daily evolution of the COVID-19 outbreak and the global responses to curb its
spread, the Group is not able to estimate the effects of the COVID-19 outbreak on its results of operations, financial condition,
or liquidity for the 2022 financial year.
No other matter or circumstance has arisen since the end of the financial year which significantly affected or may significantly
affect the operations of the group, the results of those operations, or the state of affairs of the group in future financial years.
47
Notes To The Consolidated Financial Statements
For Year Ended 30 June 2022
14. LOSS PER SHARE
Basic loss per share amounts are calculated by dividing net loss for the year attributable to ordinary Owners of the parent,
adjusted to exclude any costs of servicing equity, divided by the weighted average number of ordinary shares, adjusted for
any bonus element.
Diluted loss per share amounts are calculated by dividing the net loss attributable to ordinary Owners of the parent by the
weighted average number of ordinary shares during the year plus the weighted average number of ordinary shares that
would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.
The following reflects the income / (loss) and share data used in the calculations of basic and diluted loss per share:
2022
CENTS
(a) Basic and diluted loss per share
From continuing operations attributable to the ordinary Owners of the company
(0.13)
$
(b) Reconciliations of losses used in calculating losses per share
Loss attributable to the ordinary Owners of the company used in calculating
basic and diluted earnings per share
2021
CENTS
(0.08)
$
From continuing operations
(4,644,087)
(2,377,629)
Weighted average number of ordinary shares on issue used in the calculation
of continuing and discontinued basic and diluted earnings per share
3,480,509,348
2,875,075,245
Effect of dilutive securities
Options on issue at reporting date could potentially dilute basic loss per share in the future. The effect in the current year
is to decrease the loss per share hence they are considered anti-dilutive. Accordingly, diluted loss per share has not been
disclosed.
15. AUDITOR’S REMUNERATION
Amounts received or due and receivable by BDO Audit (WA) Pty Ltd or associated entities for:
An audit or review of the financial report of the entity
52,557
52,557
41,903
41,903
16. KEY MANAGEMENT PERSONNEL
Compensation of key management personnel by compensation
2022
$
1,055,696
29,800
909,123
2021
$
676,336
42,361
659,600
1,994,619
1,378,297
Short-term
Post-employment
Share-based payment
48
17. RELATED PARTY DISCLOSURE
(a) Subsidiaries
The consolidated financial statements include the financial statement of Ionic Rare Earths Limited and the subsidiaries listed
in the following table.
Name
Country of
incorporation
Equity interest
2022 2021
Seren Technologies Limited
Goldcap Resources Pty Ltd
England
Australia
(b) Ultimate parent
Ionic Rare Earths Limited is the ultimate parent entity.
(c) Other
%
100
-
%
-
100
The Company has entered into a sub-lease agreement on normal commercial terms with Azure Minerals Limited, a company
of which Mr Rovira is a director. During the year the Company paid sub-lease fees totalling $12,721 (2021: $9,255).
(d) Loans to/from Key Management Personnel
There were no loans outstanding to or from key management personnel as at 30 June 2022 (2021: Nil).
(e) Other transactions and balances with Key Management Personnel
Amounts due and unpaid at 30 June 2022 to Key Management Personnel includes consulting fees of $27,500 to Coolform
Investments Pty Ltd, a related party of B D Dickson and consulting fees of $38,366 to Horizon Metallurgy Pty Ltd, a related
party of TJ Harrison.
18.
FINANCIAL INSTRUMENTS
(a) Financial Risk Management
The Group’s financial instruments comprise receivables, payables and cash.
The Group’s main risks arising from the financial instruments are:
interest rate risk,
liquidity risk,
(i)
(ii)
(iii) credit risk
(iv) foreign currency risk.
Risk Exposures and Responses
(i) Interest Rate Risk
Interest rate risk is the risk that changes in interest rates will affect the Group’s income. The objective of interest rate risk
management is to manage and control risk exposures within acceptable parameters, while optimising any return. As the
Group has interest bearing assets, the Group’s income and operating cash flows are exposed to changes in market interest
rates. The assets are short term interest bearing deposits. The Group does not have any policy in place and no financial
instruments are employed to mitigate interest rate risks.
49
Directors’ Report
18.
FINANCIAL INSTRUMENTS (Continued)
(i) Interest Rate Risk (Continued)
At reporting date, the Group had the following financial assets exposed to Australian and English variable interest rate risk:
Financial Assets – Cash at Bank
Australia
England
2022
$
2021
$
26,547,615
11,055,530
212,116
-
26,759,731
11,055,530
The Group has no interest bearing liabilities and is therefore not exposed to interest rate risks.
The following sensitivity analysis is based on the interest rate risk exposures in existence at the end of the reporting period.
The 1% sensitivity is based on reasonable possible change over the financial year using the observed range for the historic
2 years.
At 30 June, if interest rates had moved, as illustrated in the table below, with all variables held constant, post tax profit and
equity would have been affected as follows:
Judgements of reasonably possible
movements:
CONSOLIDATED
+1% (100 basis points)
-1% (100 basis points)
Post tax profit
Higher/(Lower)
2022
$
2021
$
Equity
Higher/(Lower)
2022
$
2021
$
267,597
(267,597)
110,555
(110,555)
267,597
110,555
(267,597)
(110,555)
The movements in profit and equity are due to higher/lower interest costs from variable rate cash balances.
(ii) Liquidity Risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach
to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when
due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s
reputation.
The table below reflects all contractually fixed pay-offs and receivables for settlement, repayments and interest resulting
from recognised financial assets and liabilities. Undiscounted cash flows of financial liabilities are presented.
The Group has no derivative financial instruments.
The remaining contractual maturities of the Group’s financial liabilities are:
6 months or less
6 – 12 months
1 – 5 years
2022
$
627,144
14,206
7,318
648,668
2021
$
394,698
-
-
394,698
Maturity analysis of financial assets and liability based on management’s expectation
The risk implied from the values shown in the table below, reflects a balanced view of cash inflows and (outflows). Leasing
obligations, trade payables and other financial liabilities mainly originate from the financing of assets used in our ongoing
operations such as property, plant and equipment and investments in working capital e.g. inventories and trade receivables.
These assets are considered in the Group’s overall liquidity risk.
50
18.
FINANCIAL INSTRUMENTS (Continued)
(ii) Liquidity Risk (Continued)
<6 months
6 – 12 months
1 – 5 years
> 5 years
$
$
$
$
Total
$
CONSOLIDATED
Year ended 30 June 2022
Financial assets
Cash & cash equivalents
26,759,731
Trade & other receivables
Financial liabilities
Trade & other payables
Net Maturity
Year ended 30 June 2021
Financial assets
531,096
27,290,827
627,144
26,663,683
Cash & cash equivalents
11,055,530
Trade & other receivables
Financial liabilities
Trade & other payables
Net Maturity
(iii) Credit Risk
63,605
11,119,135
394,698
10,724,437
-
-
-
-
-
-
14,206
(14,206)
7,318
(7,318)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
26,759,731
531,096
27,290,827
648,668
26,642,159
11,055,530
63,605
11,119,135
394,698
10,724,437
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its
contractual obligations and arises principally from transactions with customers and investments.
The Group’s exposure to credit risk arises from potential default of the counter party, with a maximum exposure equal to
the carrying amount of the financial assets of the Group, which comprises of cash and cash equivalents, trade and other
receivables and available for sale financial assets.
The Group does not hold any credit derivatives to offset its exposure.
The Group trades only with recognised, creditworthy third parties, and as such collateral is not requested nor is it the Group’s
policy to securitise its trade and other receivables.
It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures.
Receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not
significant.
The Group places its cash deposits with institutions with a credit rating of AA or better and only with major banks.
Fair value
The fair values of financial assets and liabilities approximate their carrying amounts shown in the statement of financial
position due to their short-term nature. The carrying amounts of financial assets and liabilities as described in the statement
of financial position are as follows:
51
Notes To The Consolidated Financial Statements
For Year Ended 30 June 2022
18.
FINANCIAL INSTRUMENTS (Continued)
(iii) Credit Risk (Continued)
CONSOLIDATED
CARRYING AMOUNT
AGGREGATE NET FAIR VALUE
FINANCIAL ASSET
Cash
Receivables
Total financial assets
FINANCIAL LIABILITIES
2022
$
2021
$
2022
$
2021
$
26,759,731
11,055,530
26,759,731
11,055,530
531,096
63,605
531,096
63,605
27,290,827
11,119,135
27,290,827
11,119,135
Trade creditors and accruals and other creditors
Total financial liabilities
648,668
648,668
394,698
394,698
648,668
648,668
394,698
394,698
The following methods and assumptions are used to determine the net fair values of financial assets and liabilities:
Cash and cash equivalent: The carrying amount approximates fair value because of their short-term to maturity.
Receivables and payables: The carrying amount approximates fair value.
(iv) Foreign Currency Risk
Foreign currency risk is the risk that changes in foreign exchange rates will affect the Group’s income or the value of its
holdings of financial instruments. The Group is exposed to currency risk on purchases that are denominated in a currency
other than the respective functional currencies of Group entities, primarily the United Sates Dollar (USD) and English pound
(GBP). The currencies in which the transactions primarily are denominated are USD and GBP.
The Group has not entered into any derivative financial instruments to hedge such transactions and anticipated future
receipts or payments that are denominated in a foreign currency.
Group’s investments in its subsidiaries are not hedged as those currency positions are considered to be long term in
nature.
Exposure to currency risk
The Group’s exposure to foreign currency risk at reporting date, expressed in Australian dollars (AUD), was:
Cash
Trade Receivables
Trade Payables
Gross Statement of Financial Position Exposure
Forward exchange contracts
Net Exposure
The following significant exchange rates applied during the year:
2022
2021
212,116
110,693
-
142,916
355,032
-
-
106,090
216,783
-
355,032
216,783
Average rate
Reporting date spot rate
AUD/US$
AUD/GBP
2022
0.7256
0.5455
2021
0.7469
0.5546
2022
0.6892
0.5674
2021
0.7507
0.5426
52
18.
FINANCIAL INSTRUMENTS (Continued)
Sensitivity analysis
Over the reporting period there have been significant movements in the Australian dollar when compared to other currencies,
it is therefore considered reasonable to review sensitivities base on a 10% movement in the Australian dollar. A 10 percent
movement of the Australian dollar against the British Pound at 30 June would have had no effect on equity and loss. A 10
percent movement of the Australian dollar against the British Pound at 30 June would have affected equity and loss by
the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant. The
analysis was performed on the same basis for 2021.
30 June 2022
British Pound
30 June 2021
British Pound
Equity
Profit or loss
$
+/- 16,115
-
$
-
-
19. PARENT ENTITY FINACIAL INFORMATION
(a) Summary Financial Information
The following information has been extracted from the books and records of the parent and has been prepared in accordance
with Accounting Standards:
STATEMENT OF FINANCIAL POSITION
ASSETS
Current assets
Non-Current assets
Total assets
LIABILITIES
Current liabilities
Non-Current liabilities
Total liabilities
EQUITY
Issued capital
Reserves
Share-option
Convertible note equity
Foreign Currency Reserve
Accumulated loses
Total Equity
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Total loss
Total comprehensive loss
2022
$
2021
$
27,700,381
11,119,135
21,216,972
6,961,328
48,917,353
18,080,463
620,007
7,319
627,326
394,698
-
394,698
76,957,059
43,393,406
8,972,388
7,678,995
136,403
136,403
(193,686)
(589,590)
(37,582,136)
(32,933,449)
48,290,028
17,685,765
(4,482,930)
(2,132,574)
(4,482,930)
(2,132,574)
53
Notes To The Consolidated Financial Statements
For Year Ended 30 June 2022
19. PARENT ENTITY FINANCIAL INFORMATION (Continued)
(b) Guarantees
Ionic Rare Earths Limited has not entered into any guarantees, in the current or previous financial year, in relation to the debts
of its subsidiaries.
(c) Contingent liabilities
On 19 August 2019, the Group received shareholder approval to acquire up to a 60% interest in the Makuutu rare earths
project (Makuutu). Makuutu is owned 100% by Ugandan registered Rwenzori Rare Metals Limited (RRM) which at the time
was owned 85% by South African registered Rare Earth Elements Africa Proprietary Limited (REEA). IonicRE has entered into
a binding option agreement with both companies that enables it to acquire up to a 60% direct interest in RRM, and thereby
up to a 60% indirect interest in Makuutu. The Group currently has a 51% interest in RRM and to increase to 60% it must
fund, to completion, a bankable feasibility study, which is in progress. Additionally, there remains a milestone payment of
US$375,000, payable in cash or IonicRE shares at the election of the Vendor, on conversion of existing licences to mining
licences.
On 8 December 2021, the Group announced that it had reached agreement to acquire 100% of the shares in Seren technologies
Limited; the acquisition was completed on 21 April 2022. In addition to the acquisition payments, which have been made, the
agreement provided for the payment of certain milestone payments, being;
(a)
(b)
pay the Sellers 25% of any licence fee received by IonicRE from a third party to use the technology for magnet
recycling or rare earth separation technology (Milestone 1 Payment), to a maximum of US$1,500,000.
Upon reaching commercial production for a magnet recycling plant or rare earth separation and refining plant
developed using the technology and designed for a scale exceeding 100 tonne per annum Rare Earth Oxide
equivalent production capacity or greater (Milestone 2) pay the Sellers US$1,500,000 less the total Milestone 1
Payments paid to the Sellers (Milestone 2 Payment).
20. SHARE BASED PAYMENTS
Details of each class of option issues are set out below.
(a) Employee and consultants’ option plan
The establishment of the Ionic Rare Earths Limited Employee Share Option Plan (“Plan”) was approved by shareholders at
the Annual General Meeting held on 24 November 2021. The plan is designed to provide long-term incentives for employees
and certain contractors to deliver long term shareholder returns. Participation in the plan is at the Board’s discretion and no
individual has a contractual right to participate in the plan or to receive guaranteed benefits. In addition, under the Plan, the
Board determines the terms of the options including exercise price, expiry date and vesting conditions, if any.
Options granted under the plan carry no dividend or voting rights. When exercised, each option is convertible into an ordinary
share of the company with full dividend and voting rights. During the year 44,000,000 options were issued pursuant to the
plan (2021: Nil)
2022
Grant Date
Expiry
Date
Exer-
cise
Price
(cents)
Value
per
option
at grant
date
(cents)
30 Nov ‘21
30 Nov ‘24
6.4
2.85
TOTAL
Balance
at the
start of
the year
Granted
during
the year
Number
Number
-
-
44,000,000
44,000,000
Weighted average exercise price
6.4
Exer-
cised
during
the
year
Number
-
-
-
Lapsed
during
the
year
Balance at
end of the
year
Number
Number
Vested and
Exercis-
able at
end of the
year
Number
-
-
-
44,000,000
44,000,000
44,000,000 44,000,000
6.4
6.4
The weighted average remaining contractual life of share options outstanding at the end of the period was 2.42 years
(2021: Nil years).
54
20. SHARE BASED PAYMENTS (Continued)
Fair value of options granted.
During the 2022 financial year the weighted average fair value of the options granted was 2.85 cents. The price was calculated
by Black Scholes Option valuation methodology applying the following inputs
Number of options issued
44,000,000
Weighted average exercise price (cents)
Weighted average life of the option (years)
Weighted average underlying share price (cents)
Expected share price volatility (%)
Risk free interest rate (%)
Fair value per option (cents)
(b) Directors and executive options
6.4
3.0
4.4
120
0.87
2.847
During the year no options were issued to directors and senior executives other than through the Ionic Rare Earths Limited
Employee Share Option Plan (2021: 60,000,000). Set out below are summaries of options issued to senior executives.
2022
Grant Date
Expiry
Date
Exer-
cise
Price
Value
per
option
at grant
date
Balance at
the start of
the year
Granted
during
the year
Exercised
during the
year
Lapsed
during
the
year
Balance at
end of the
year
Vested and
Exercisable
at end of
the year
(cents)
(cents)
Number
Number
Number
Number
Number
Number
23 Dec ‘19
30 Nov ‘22
24 Mar ‘20
30 Nov ‘22
3 Dec ‘20
30 Nov ‘22
1.8
1.8
1.8
3 Dec ‘20
30 Nov ‘23
2.15
0.58
0.27
0.99a
1.12b
TOTAL
Weighted average exercise price
30,000,000
20,000,000
10,000,000
40,000,000
100,000,000
$0.019
-
-
-
-
-
-
10,000,000
-
-
-
10,000,000
$0.018
-
-
-
-
-
-
20,000,000
20,000,000
20,000,000
20,000,000
10,000,000
10,000,000
40,000,000
40,000,000
90,000,000
90,000,000
$0.019
$0.019
2021
Grant Date
Expiry
Date
Exer-
cise
Price
Value
per
option
at grant
date
Balance at
the start of
the year
Granted
during
the year
Exercised
during
the
year
Lapsed
during the
year
Balance at
end of the
year
Vested and
Exercisable
at end of the
year
(cents)
(cents)
Number
Number
Number
Number
Number
Number
15 Dec ‘17
30 Nov ‘20
23 Dec ‘19
30 Nov ‘22
24 Mar ‘20
30 Nov ‘22
3 Dec ‘20
30 Nov ‘22
1.3
1.8
1.8
1.8
3 Dec ‘20
30 Nov ‘23
2.15
0.35
0.58
0.27
0.99a
1.12b
22,000,000
-
40,000,000
20,000,000
-
-
10,000,000
50,000,000
TOTAL
82,000,000
60,000,000
Weighted average exercise price
$0.017
$0.021
-
-
-
-
-
-
-
22,000,000
-
-
10,000,000
30,000,000
30,000,000
-
-
20,000,000
20,000,000
10,000,000
10,000,000
10,000,000
40,000,000
40,000,000
42,000,000 100,000,000 100,000,000
$0.016
$0.019
$0.019
The weighted average remaining contractual life of share options outstanding at the end of the period was 0.86 years
(2021: 1.82 years).
55
Notes To The Consolidated Financial Statements
For Year Ended 30 June 2022
20. SHARE BASED PAYMENTS (Continued)
(c) Performance Share Rights
During the period 10,000,000 Performance Rights were granted to Mr Tim Harrison and 3,500,000 Performance Rights to Ms
Jill Kelley. The vesting conditions of the Performance Rights are:
(a)
issued to Mr Harrison:
i. 3,3000,000 Performance Rights will vest when the Company’s VWAP share price is above 6 cents for a period of 30
consecutive days (Tranche A);
ii. 3,300,000 million Performance Rights will vest when the Company’s VWAP share price is above 8 cents for a period
of 30 consecutive days (Tranche B); and
iii. 3,400,000 Performance Rights will vest when the Company’s VWAP share price is above 10 cents for a period of 30
consecutive days (Tranche C).
(b) Those issued to Ms Jill Kelley will vest when the Company signs its first offtake agreement as a result of Ms Kelley’s
introduction.
The Company has valued the Performance Rights issued to Mr. Tim Harrison using the Monte Carlo Valuation approach.
The valuation of an option using the Monte Carlo Approach incorporates the probability of meeting the relevant performance
conditions using a function of a number of variables and was calculated using the following assumptions:
Variable
Tranche A
Input
Tranche B
Input
Share price (cents)
Share price target (cents)
Risk free interest rate
Volatility
Effective life
Fair Value (cents per Right)
4.7
6.0
0.99%
120%
3 years
1.7
4.7
8.0
0.99%
120%
3 years
0.8
Tranche C
Input
4.7
10.0
0.99%
120%
3 years
0.4
The Company considered the probability of the Performance Rights issued to Ms Jill Kelley vesting to be more than likely and
valued them based on the share price at the date of issue using the Black-Scholes Model using the following assumptions:
Variable
Share price (cents)
Risk free interest rate
Volatility
Effective Life
Fair Value (cents per Right)
Input
4.7
0.99%
120%
3.0 years
4.7
Total expenses arising from the issue of Performance Rights recognised during the year were $96,813 (2021: Nil).
(d) Incentive Share Issue
During the period 3,500,000 fully paid ordinary shares were issued to Ms Jill Kelley as a sign on incentive. These shares were
valued at the closing price of the shares as trading on the ASX, being 4.5 cents per share.
Total expenses arising from the issue of Incentive Shares recognised during the year was $157,500 (2021: Nil).
56
20. SHARE BASED PAYMENTS (Continued)
(e) Options issued to unrelated Parties
No options were issued to unrelated parties during the 2022 year. During the 2021 year three tranches of options were issued
to unrelated consultants in lieu of cash fees. The services provided by the consultants were unable to be accurately valued
and as such a value was placed on the options issued. The price of each option was calculated by using the Binominal Option
valuation methodology applying the following inputs:
Grant date
Number of options issued
Expiry date (years)
Underlying share price (cents)
Exercise price (cents)
Expected share price volatility (%)
Risk free interest rate (%)
Fair value per option
12 August 2020
24 February 2021
1 February 2021
40,000,000
25,000,000*
10,000,000
2.34
1.10
1.80
100
0.27
3.00
0.50
6.0
112
0.1
0.005
0.035
3.00
0.37
6.0
112
0.1
0.012
*25,000,000 options were issued in relation to share issue costs, therefore have been offset against ordinary shares.
There were no other share based payments to unrelated parties during the 2022 or 2021 financial years.
Total expenses arising from share-based payment transactions during the period were as follows:
Options issued under Ionic Rare Earths Employee Share Option Plan (a)
Options issued to executives (b)
Performance share rights issued (c)
Incentive share Issue (d)
Options issued to unrelated parties (e)
Total
Consolidated
2022
$
2021
$
1,252,680
659,600
96,813
157,500
-
1,506,993
-
-
320,163
979,763
57
Independent Auditor’s Report
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
Level 9, Mia Yellagonga Tower 2
5 Spring Street
Perth WA 6000
PO Box 700 West Perth WA 6872
Australia
INDEPENDENT AUDITOR’S REPORT
To the members of Ionic Rare Earths Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Ionic Rare Earths Limited (the Company) and its subsidiaries
(the Group), which comprises the consolidated statement of financial position as at 30 June 2022, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement
of changes in equity and the consolidated statement of cash flows for the year then ended, and notes
to the financial report, 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:
(i)
Giving a true and fair view of the Group’s financial position as at 30 June 2022 and of its
financial performance for the year ended on that date; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the Financial
Report section of our report. We are independent of the Group in accordance with the Corporations
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code)
that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia
Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO
International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability
limited by a scheme approved under Professional Standards Legislation
58
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
Carrying value of Investment in Associate
Key audit matter
How the matter was addressed in our audit
At 30 June 2022, the carrying value of the
equity accounted investment in associate
Rwenzori Rare Metals Limited (“RRM”) who
holds 100% interest in the Makuutu Rate Earth
Elements Project in Uganda is disclosed in Note
6.
At each reporting period, the value of the
equity accounted investment in RRM needs to
be assessed for indicators of impairment. If
indicators of impairment exist, the recoverable
amount needs to be estimated.
The assessment of the carrying value of the
equity accounted investment in RRM was a key
audit matter due to the judgement involved in
determining the appropriate accounting
treatment and determining whether there are
any indicators to suggest that the investment in
associate could be impaired.
Our procedures included, but were not limited to:
•
•
•
•
•
•
Considering the appropriateness of
management’s assessment of significant
influence over RRM and accounting for the
interest as an investment in associate;
Considering management’s assessment of
indicators that the investment in associate
could be impaired;
Verifying the Group’s contribution to RRM’s
exploration and evaluation expenditure to
earn its equity interest in RMM during the
year and confirming the Group’s percentage
ownership of RRM;
Reviewing the calculation for the carrying
value of the investment including the
Group’s share in RRM’s loss;
Reviewing ASX announcements, Board of
Directors meetings minutes to assess for
potential indicators of impairment; and
Assessing the adequacy of the related
disclosures in Notes 2 and 6 to the financial
report.
59
Independent Auditor’s Report
Carrying value of Exploration and Evaluation Expenditure
Key audit matter
How the matter was addressed in our audit
At 30 June 2022 the carrying value of
capitalised exploration expenditure was
disclosed in Note 8.
As the carrying value of the exploration assets
represent a significant asset of the Group, we
considered it necessary to assess whether any
facts or circumstances exist to suggest that the
carrying amount of these assets may exceed its
recoverable amount.
Judgement is applied in determining the
treatment of exploration expenditure in
accordance with Australian Accounting
Standard AASB 6 Exploration for and Evaluation
of Mineral Resources. In particular, whether
facts and circumstances indicate that the
exploration and evaluation assets should be
tested for impairment.
Our procedures included, but were not limited to:
•
•
•
•
•
Obtaining a schedule of the areas of
interest held by the Group and assessing
whether the rights to tenure of the areas of
interest remained current at balance date;
Considering the status of the ongoing
exploration programmes in the respective
areas of interest by holding discussions with
management, and reviewing the Group’s
exploration budgets, ASX announcements
and director’s minutes;
Considering whether any area of interest
had reached a stage where a reasonable
assessment of economically recoverable
reserves existed;
Considering whether any facts or
circumstances existed to suggest
impairment testing was required; and
Assessing the adequacy of the related
disclosures in Note 2 and Note 8 to the
financial report.
60
Asset Acquisition
Key audit matter
As disclosed in the financial report, the Group
completed the acquisition of Seren Technologies
Limited during the year.
The group treated the transaction as an asset
acquisition, rather than a business combination.
Accounting for this transaction is complex and
requires management to exercise judgement to
determine the appropriate accounting treatment
including whether the acquisition should be
classed as an asset acquisition or business
combination, estimating the fair value of the net
assets acquired and estimating the fair value of
the purchase consideration.
How the matter was addressed in our audit
Our procedures included, but were not limited
to the following:
•
•
•
•
•
Assessing management’s conclusion of
the acquisition meeting the definition of
an asset acquisition;
Reviewing the acquisition agreement to
understand the key terms and conditions
of the acquisition;
Assessing management’s calculation of
the total consideration including the key
assumptions made in determining the
contingent consideration;
Evaluating the assumptions and the
methodology used in management’s
determination of the fair value of assets
acquired and liabilities assumed; and
Assessing the adequacy of the related
disclosures in Note 2 and Note 7 to the
financial report.
Other information
The directors are responsible for the other information. The other information comprises the
information in the Group’s annual report for the year ended 30 June 2022, but does not include the
financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, 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.
61
Independent Auditor’s Report
In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has 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.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 17 to 22 of the directors’ report for the
year ended 30 June 2022.
In our opinion, the Remuneration Report of Ionic Rare Earths Limited, for the year ended 30 June 2022,
complies with section 300A of the Corporations Act 2001.
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.
BDO Audit (WA) Pty Ltd
Jarrad Prue
Director
Perth
23 September 2022
62
Corporate Governance Statement
Approach to Corporate Governance
Ionic Rare Earths Limited ACN 083 646 477 (Company) has established a corporate governance framework, the key
features of which are set out in this statement. In establishing its corporate governance framework, the Company has
referred to the recommendations set out in the ASX Corporate Governance Council’s Corporate Governance Principles and
Recommendations 4th edition. The Company has followed each recommendation where the Board has considered the
recommendation to be an appropriate benchmark for its corporate governance practices. Where the Company’s corporate
governance practices follow a recommendation, the Board has made appropriate statements reporting on the adoption of
the recommendation. In compliance with the “if not, why not” reporting regime where, after due consideration, the Company’s
corporate governance practices do not follow a recommendation, the Board has explained the reasons for not following
the recommendation and disclosed what, if any, alternative practices the Company has adopted instead of those in the
recommendation.
The following governance-related documents can be found on the Company’s website at
https://ionicre.com.au/governance/
Charters
Board
Audit and Risk Committee
Nomination Committee
Remuneration Committee
Policies and procedures
Policy and Procedure for the Selection and (Re)Appointment of Directors
Process for Performance Evaluations
Securities Trading Policy
Code of Conduct (summary)
Diversity Policy (summary)
Continuous Disclosure Policy (summary)
Continuous Disclosure Compliance Procedures (summary)
Shareholder Communication and Investor Relations Policy
Whistle Blower Policy
Anti-Bribery and Corruption Policy
The Company reports below on whether it has followed each of the recommendations during the Reporting Period.
This statement was approved by a resolution of the Board on, and the information in this statement is current as at 23
September 2022.
Principle 1: Lay solid foundations for management and oversight
Recommendation 1.1
The Company has established the respective roles and responsibilities of its Board and management, and those matters
expressly reserved to the Board and those delegated to management and has documented this in its Board Charter, which is
disclosed on the Company’s website.
Recommendation 1.2
The Company undertakes appropriate checks before appointing a person or putting forward to shareholders a candidate
for election as a director and provides shareholders with all material information in its possession relevant to a decision on
whether or not to elect or re-elect a director. The checks which are undertaken, and the information provided to shareholders
are set out in the Company’s Policy and Procedure for the Selection and (Re)Appointment of Directors, which is disclosed on
the Company’s website.
63
Corporate Governance Statement
The Company appointed Ms Jill Kelley on 7 July 2021 and Mr Max McGarvie on 16 July 2021; the checks referred to in the
Company’s policies and Procedures for the selection and (Re)Appointment of Directors were undertaken.
The Company provided shareholders with all material information in relation to the election of Ms Jill Kelley and Mr Max
McGarvie at its 2021 Annual General Meeting.
Recommendation 1.3
The Company has a written agreement with each director and senior executive setting out the terms of their appointment.
The material terms of any employment, service or consultancy agreement the Company, or any of its child entities, has
entered into with its Chief Executive Officer, any of its directors, and any other person or entity who is related party of the
Chief Executive Officer or any of its directors has been disclosed in accordance with ASX Listing Rule 3.16.4 (taking into
consideration the exclusions from disclosure outlined in that rule).
Recommendation 1.4
The Company Secretary is accountable directly to the Board, through the Chair, on all matters to do with the proper functioning
of the Board.
Recommendation 1.5
The Company has a Diversity Policy, a summary of which is disclosed on the Company’s website. However, the Diversity
Policy does not include requirements for the Board to set measurable objectives for achieving gender diversity and to assess
annually both the objectives and the Company’s progress in achieving them. Nor has the Board set measurable objectives
for achieving gender diversity. Given the Company’s stage of development as an exploration company, the number of
employees in Australia and the nature of the labour market in Uganda and Nicaragua, the Board considers that it is not
practical to set measurable objectives for achieving gender diversity.
The respective proportions of men and women on the Board, in senior executive positions and across the whole organisation
are set out in the following table. “Senior executive” for these purposes means a person who makes, or participates in the
making of, decisions that affect the whole or a substantial part of the business or has the capacity to affect significantly the
Company’s financial standing. During the Reporting Period, this included the Finance Director & Company Secretary:
Whole organisation (including the Board)
Senior executive positions
Board
Recommendation 1.6
Proportion of women
3 out of 8 (37%)
1 out of 3 (33%)
1 out of 4 (25%)
The Chair is responsible for evaluation of the Board and, when deemed appropriate, Board committees and individual
directors in accordance with the process disclosed in the Company’s Process for Performance Evaluations.
During the Reporting Period, an evaluation of the Board, its committees and individual directors took place in accordance
with the process disclosed in the Company’s Process for Performance Evaluations.
The Chairperson’s performance is evaluated by the other members of the Board in accordance with the process disclosed in
the Company’s Process for Performance Evaluations.
During the Reporting Period, an evaluation of the Chairperson took place in accordance with the process disclosed in the
Company’s Process for Performance Evaluations.
Recommendation 1.7
The Chief Executive Officer is responsible for evaluating the performance of senior executives in accordance with the process
disclosed in the Company’s Process for Performance Evaluations.
The Chairman is responsible for evaluating the Chief Executive Officer in accordance with the process disclosed in the
Company’s Process for Performance Evaluations.
During the Reporting Period, an evaluation of the Company’s senior executives took place in accordance with the process
disclosed in the Company’s Process for Performance Evaluations.
64
Principle 2: Structure the board to be effective and add value
Recommendation 2.1
The Board has not established a separate Nomination Committee. The Board believes that there would be no efficiencies
or other benefits gained by establishing a separate Nomination Committee. Accordingly, the Board performs the role of
the Nomination Committee. Although the Board has not established a separate Nomination Committee, it has adopted a
Nomination Committee Charter which describes the role, composition, functions and responsibilities of the full Board in its
capacity as the Nomination Committee. The Company’s Nomination Committee Charter is disclosed on the Company’s
website.
The Board carries out those functions which are delegated to it in the Company’s Nomination Committee Charter. When
matters that are within the responsibility of the full Board in its capacity as the Nomination Committee are considered, they
are marked as separate agenda items at Board meetings. The Board deals with any conflicts of interest that may occur when
nomination related matters are considered by ensuring that the director with conflicting interests is not party to the relevant
discussions.
Recommendation 2.2
The mix of skills and diversity for which the Board is looking to achieve in membership of the Board is represented by
the Board’s current composition, which includes extensive geological experience and qualifications, experience in mineral
processing, experience in operating in locations outside of Australia, accounting qualifications and financial management
skills, leadership, governance and strategy.
While the Company is at exploration and feasibility stage, it does not wish to increase the size of the Board and considers
that the Board weighted towards technical experience is appropriate at this stage of the Company’s development. External
consultants may be brought in with specialist knowledge to address areas where this is an attribute deficiency in the Board.
Recommendation 2.3
The Board considers the independence of directors having regard to the relationships listed in Box 2.3 of the Principles &
Recommendations.
Details of the Board of directors, their appointment date, length of service and independence status is as follows:
Director’s name
Appointment date
Length of service at
30/06/2022
Independence status
T Benson
31 August 2020
22 months
Independent
Non-executive Chairman
T Harrison
Managing Director
J Kelley
Executive Director
M McGarvie
Non-executive director
Recommendation 2.4
12 December 2020
18 months
Not Independent
7 July 2021
12 months
Not Independent
16 July 2021
12 months
Independent
The Board has does not have a majority of directors who are independent. The Board does not wish to increase its size at
present and considers that the current composition of the Board is adequate for the Company’s current size and operations,
and includes an appropriate mix of skills and expertise relevant to the Company’s business.
Recommendation 2.5
The Chair is Mr Trevor Benson an independent director and is not the CEO of the Company.
Recommendation 2.6
The Company has an induction program that it uses when new directors join the Board and when new senior executives are
appointed. The goal of the program is to assist new directors to participate fully and actively in Board decision-making at
the earliest opportunity and to assist senior executives to participate fully and actively in management decision-making at
the earliest opportunity.
65
Corporate Governance Statement
The full Board in its capacity as the Nomination Committee regularly reviews whether the directors as a group have the skills,
knowledge and familiarity with the Company and its operating environment required to fulfil their role on the Board and the
Board committees effectively using a Board skills matrix. Where any gaps are identified, the full Board in its capacity as the
Nomination Committee considers what training or development should be undertaken to fill those gaps. In particular, the
full Board in its capacity as the Nomination Committee ensures that any director who does not have specialist accounting
skills or knowledge has a sufficient understanding of accounting matters to fulfil his or her responsibilities in relation to the
Company’s financial statements.
Principle 3: Instil a culture of acting lawfully, ethically and responsibly
Recommendation 3.1
The Company expects that its board and senior executives will conduct themselves with integrity and honesty in accordance
with the Code of Conduct. Directors, executives and employees shall deal with the Company’s customers, suppliers,
competitors, shareholders and each other with honesty, fairness and integrity and observe the rule and spirit of the legal and
regulatory environment in which the Company operates.
The Company aims to increase shareholder value within an appropriate framework which safeguards the rights and interests
of the Company’s shareholders and the financial community and to comply with systems of control and accountability which
the Company has in place as part of its corporate governance with openness and integrity.
The Company is to comply with all legislative and common law requirements which affect its business wherever it operates.
Where the Company has operations overseas, it shall comply with the relevant local laws as well as any applicable Australian
laws. Any transgression from the applicable legal rules is to be reported to the Managing Director as soon as a person
becomes aware of such a transgression.
Recommendation 3.2
The Company has established a Code of Conduct for its directors, senior executives and employees, a summary of which
is disclosed on the Company’s website. Any breach of that code is reported to the board at the next meeting of directors.
Recommendation 3.3
The Company has adopted a Whistleblower Policy to encourage the raising of any concerns or reporting of instances of
any violations (or suspected violations) of the Code of Conduct (or any potential breach of law or any other legal or ethical
concern) without the fear of intimidation or reprisal.
Recommendation 3.4
The Company has established an anti-bribery and corruption policy which is disclosed on the Company’s website. Any breach
of that policy is immediately reported to the Chief Executive Officer and Chairman of the board of directors.
Principle 4: Safeguard the integrity of corporate reports
Recommendation 4.1
The Board has not established a separate Audit and Risk Committee. The Board believes that there would be no efficiencies
or other benefits gained by establishing a separate Audit and Risk Committee. Accordingly, the Board performs the role of
the Audit and Risk Committee. Although the Board has not established a separate Audit and Risk Committee, it has adopted
an Audit and Risk Committee Charter which describes the role, composition, functions and responsibilities of the full Board
in its capacity as the Audit and Risk Committee. The Company’s Audit and Risk Committee Charter is disclosed on the
Company’s website.
The Board carries out those functions which are delegated to it in the Company’s Audit and Risk Committee Charter. When
matters that are within the responsibility of the full Board in its capacity as the Audit and Risk Committee are considered,
they are marked as separate agenda items at Board meetings. The Board deals with any conflicts of interest that may occur
when audit or risk related matters are considered by ensuring that the director with conflicting interests is not party to the
relevant discussions.
The Company has also established a Procedure for the Selection, Appointment and Rotation of its External Auditor, which
is an appendix to its Audit and Risk Committee Charter disclosed on the Company’s website. The Board is responsible for
the initial appointment of the external auditor and the appointment of a new external auditor when any vacancy arises, as
recommended by the Audit and Risk Committee (or its equivalent). Candidates for the position of external auditor must
demonstrate complete independence from the Company through the engagement period. The Board may otherwise select
an external auditor based on criteria relevant to the Company’s business and circumstances. The performance of the external
auditor is reviewed on an annual basis by the Audit and Risk Committee (or its equivalent) and any recommendations are
made to the Board.
66
Recommendation 4.2
Before the Board approved the Company financial statements for the half year ended 31 December 2021 and the full-year
ended 30 June 2022, it received from the Managing Director and the Chief Financial Officer a declaration that, in their opinion,
the financial records of the Company for the relevant financial period have been properly maintained and that the financial
statements for the relevant financial period comply with the appropriate accounting standards and give a true and fair view
of the financial position and performance of the Company and the consolidated entity and that the opinion has been formed
on the basis of a sound system of risk management and internal control which is operating effectively (Declaration).
Recommendation 4.3
Processes are in place to verify the integrity of the Company’s periodic corporate reports released to the market and not
audited or reviewed by the external auditor. Examples of periodic corporate reports released by the company include
quarterly cash flow reports. IonicRE has adopted a Continuous Disclosure Policy which sets out how market announcements
are prepared and released and has appointed the Company Secretary as the Continuous Disclosure officer who oversees
the drafting of and approves the final release of announcements. The Company Secretary is responsible for satisfying him/
herself that the content of any announcement is accurate and not misleading and is supported by appropriate verification.
Principle 5: Make timely and balanced disclosure
Recommendation 5.1
The Company has established written policies and procedures for complying with its continuous disclosure obligations under
the ASX Listing Rules. A summary of the Company’s Continuous Disclosure Policy and Continuous Disclosure Compliance
Procedures are disclosed on the Company’s website.
Recommendation 5.2
The Company secretary circulates all material market announcements to the board prior to release to ASX.
Recommendation 5.3
All new presentations are released to ASX Markets Platform ahead of any presentation to investors.
Principle 6: Respect the rights of security holders
Recommendation 6.1
The Company provides information about itself and its governance to investors on its website at www.ionicre.com.au.
Recommendation 6.2
The Company has designed and implemented an investor relations program to facilitate effective two-way communication
with investors. The program is set out in the Company’s Shareholder Communication and Investor Relations Policy, which is
disclosed on the Company’s website.
Recommendation 6.3
The Company has in place a Shareholder Communication and Investor Relations Policy (disclosed on the Company’s
website) which outlines the policies and processes that it has in place to facilitate and encourage participation at meetings
of shareholders.
Recommendation 6.4
All resolutions put to meetings of shareholders are decided by way of a poll.
Recommendation 6.5
The Company engages its share registry to manage the majority of communications with shareholders. Shareholders are
encouraged to receive correspondence from the company electronically, thereby facilitating a more effective, efficient and
environmentally friendly communication mechanism with shareholders. Shareholders not already receiving information
electronically can elect to do so through the share registry, Computershare Investor Services Pty Ltd at www.computershare.
com.au.
Principle 7: Recognise and manage risk
Recommendation 7.1
The Board has not established a separate Audit and Risk Committee. The Board performs the role of the Audit and Risk
Committee. Please refer to the disclosure above in relation to Recommendation 4.1.
67
Corporate Governance Statement
Recommendation 7.2
The full Board in its capacity as the Audit and Risk Committee reviews the Company’s risk management framework annually
to satisfy itself that it continues to be sound, to determine whether there have been any changes in the material business
risks the Company faces and to ensure that the Company is operating within the risk appetite set by the Board. The Board
carried out these reviews during the Reporting Period.
Recommendation 7.3
The Company does not have an internal audit function. To evaluate and continually improve the effectiveness of the
Company’s risk management and internal control processes, the Board relies on ongoing reporting and discussion of the
management of material business risks as outlined in the Company’s Risk Management Policy.
Recommendation 7.4
As the Company is not in production, the Company has not identified any material exposure to any environmental and/or
social sustainability risks. However, the Company does have a material exposure to the following economic risks:
i.
ii.
Market risk – movements in commodity prices. The Company manages its exposure to market risk by monitoring
market conditions and making decisions based on industry experience.
Future capital risk – cost and availability of funds to meet the Company’s business requirements. The Company
manages this risk by maintaining adequate reserves by continuously monitoring forecast and actual cash flows.
Principle 8: Remunerate fairly and responsibly
Recommendation 8.1
The Board has not established a separate Remuneration Committee. The Board believes that there would be no efficiencies
or other benefits gained by establishing a separate Remuneration Committee. Accordingly, the Board performs the role of
the Remuneration Committee. Although the Board has not established a separate Remuneration Committee, it has adopted
a Remuneration Committee Charter which describes the role, composition, functions and responsibilities of the full Board
in its capacity as the Remuneration Committee. The Company’s Remuneration Committee Charter is disclosed on the
Company’s website.
The Board carries out those functions which are delegated to it in the Company’s Remuneration Committee Charter. When
matters that are within the responsibility of the full Board in its capacity as the Remuneration Committee are considered,
they are marked as separate agenda items at Board meetings. The Board deals with any conflicts of interest that may occur
when remuneration related matters are considered by ensuring that the director with conflicting interests is not party to the
relevant discussions.
Recommendation 8.2
Details of remuneration, including the Company’s policy on remuneration, are contained in the “Remuneration Report”
which forms of part of the Directors’ Report and commences at page 23. The Company has not adopted a policy regarding
the deferral of performance-based remuneration and the reduction, cancellation or clawback of the performance-based
remuneration in the event of serious misconduct or a material misstatement in the Company’s financial statements as other
punitive measures, including dismissal, are available to be utilised by the Company.
Recommendation 8.3
The Company’s Securities Trading Policy includes a statement of the Company’s policy on prohibiting executives and directors
from entering into transactions which limit the economic risk of participating in any equity-based remuneration scheme.
68
ASX Additional Information
Additional information required by the Australian Securities Exchange Ltd and not disclosed elsewhere in this report is as
follows. The information is current as at 9 September 2022.
Statement of shareholdings
Range
Names of 20 largest shareholders
100,001 or
more
BNP Paribas Pty Ltd
Mr Bilal Ahmad
Citicorp Nominees Pty Limited
Mr Sufian Ahmad
JGM Property Investments Pty Ltd
BNP Paribas Noms Pty Ltd
Markovic Family No 2 Pty Ltd
Seren AG
HSBC Custody Nominees (Australia) Limited
Mr.Bongani Raziya
Compusure Superannuation Pty Ltd
Stecol Consulting Pty Ltd
Upsky Equity Pty Ltd
BNP Paribas Nominees Pty Ltd
Reco Holdings Pty Ltd
Mr Gary Temple
Shordean Pty Ltd
Mr Torbjoern Smooth Fredriksen + Ms Emi Ono
Rainmaker Holdings (WA) Pty Ltd
JLM Corporation Pty Ltd
Various
Various
Various
Various
10,001 -
100,000
5,001 –
10,000
1,001 –
5000
1 – 1,000
Various
Total
Ordinary Shares
Fully paid
No of
holders
No. of shares
held
% held
188,777,871
168,500,000
121,004,155
111,000,000
104,650,000
69,016,480
53,350,000
48,000,000
29,298,408
29,179,517
25,000,000
25,000,000
22,250,000
22,173,161
21,500,000
20,285,072
17,984,497
17,001,700
16,175,676
15,000,000
4.87
4.35
3.12
2.87
2.70
1.78
1.38
1.24
0.76
0.75
0.65
0.65
0.57
0.57
0.56
0.52
0.46
0.44
0.42
0.39
29.05
63.71
92.76
7.03
20
3,920
1,125,146,537
2,467,046,552
Sub-total
3,940
3,592,193,089
6,208
272,302,453
868
233
312
7,399,312
0.19
599,452
0.02
110,614
0
11561
3,872,604,920
100.00
Holding an unmarketable parcel
1,668
10,922,397
69
ASX Additional Information
The Company has the following unquoted securities on issue.
Security
30 November 2022, 1.8 cent options
30 November 2023, 2.15 cent options
28 February 2024, 6.0 cent options
30 November 2024, 6.4 cent options
Share Rights held by T Harrison
Share Rights held by J Kelley
Number
80,000,000
40,000,000
35,000,000
44,000,000
6,700,000
3,500,000
Restricted Securities
There are no restricted securities, though 48,000,000 shares held by Seren AG are subject to voluntary escrow until 22 April 2023.
Voting Rights
All ordinary shares carry one vote per share without restriction.
Substantial Shareholders
As at 9 September 2022 there are no substantial shareholders who have notified the company in accordance with section
671B of the Corporations Act 2001
: Schedule of Mining Tenements Held
Project
Makuutu
Location
RL 1693
RL00007
RL00234
EL00147
EL00148
EL00257
Location
Type of Concession
Percentage Held*
Uganda
Uganda
Uganda
Uganda
Uganda
Uganda
Retention Licence
Retention Licence
Retention Licence
Exploration
Exploration
Exploration
51%
51%
51%
51%
51%
51%
* IonicRE may earn up to a 60% interest
MINERAL RESOURCES ESTIMATION GOVERNANCE STATEMENT
Governance of IonicRE’s mineral resources is a responsibility of the Executive Management of the Company.
The Makuutu mineral resource was first estimated in March 2020 and has been updated several times, the last on 30 May 2022.
IonicRe has ensured that its mineral resources estimates are subject to appropriate levels of governance and internal
controls. The mineral resources reported have been estimated by independent external consultants who are experienced
in best practices in modelling and estimation methods. The consultants have also undertaken reviews of the quality and
suitability of the underlying information used to generate the resource estimations. Additionally, the Company carries out
regular internal peer reviews of processes and contractors engaged.
Competent Persons named by IonicRE are members of the Australian Institute of Mining and Metallurgy and/or the Australian
Institute of Geoscientists and/or of a “Recognised Professional Organisation”, as included in a list on the JORC and ASX
websites.
Makuutu Mineral Resource Estimate above 200ppm TREO-CeO2 Cut-off Grade (ASX: 30 May 2022)
Resource
Classification
Indicated Resource
Inferred Resource
Total Resource
Tonnes
(millions)
TREO
(ppm)
TREO-CeO2
(ppm)
LREO
(ppm)
404
127
532
670
540
640
450
360
430
500
400
480
HREO
(ppm)
170
140
160
CREO
(ppm)
230
180
220
Sc2O3
(ppm)
30
30
30
Rounding has been applied to 1Mt and 10ppm which may influence averaging calculation. All REO are tabulated in MRE
announcement dated 30 May 2022 with formulas defining composition of Light Rare Earth Oxides (LREO), Heavy Rare Earth
Oxides (HREO), Critical Rare Earth Oxides (CREO) and Total Rare Earth Oxides (TREO).
70
www.ionicre.com.au