Iron Road
Annual Report 2022

Plain-text annual report

CONTENTS 1 2 3 4 5 6 7 8 OVERVIEW Corporate Directory CHAIRMAN'S LETTER OPERATIONS REPORT 2 4 7 Message from the Chairman Central Eyre Iron Project Gawler Iron Project 13 Global Mineral Resource and Ore Reserve Statement DIRECTORS' REPORT 14 Directors' report overview 18 Remuneration report OPERATING AND FINANCIAL REVIEW 26 Company strategy and operating activities FINANCIAL STATEMENTS 28 Financial statements overview 29 Consolidated Income Statement and Statement of Comprehensive Income 30 Consolidated Statement of Financial Position 31 Consolidated Statement of Changes in Equity 32 Consolidated Statement of Cash Flows 33 Notes to the consolidated financial statements SIGNED STATEMENTS 53 Directors' declaration 54 Independent auditor's report ASX INFORMATION 60 ASX Additional Information 1 1 O V E R V I E W 1 IRON ROADANNUAL REPORT 2022OVERVIEWCHAIRMAN'S LETTEROPERATIONS REPORTOPERATING AND FINANCIAL REVIEWFINANCIAL STATEMENTSDIRECTORS' REPORTSIGNED REPORTSASX INFORMATION123456783 2 MESSAGE FROM THE CHAIRMAN Dear Shareholder On behalf of the Board, I am pleased to present the Annual Report for the year ended 30 June 2022. Extreme volatility in global steel and iron ore market conditions has been a dominant feature over the past 18 months. This volatility has impacted the earnings profile and outlook for producers and resulted in polarising sentiment toward project developers alike. Over the course of this period extending into September 2022, iron ore pricing benchmarks rallied to and subsequently retraced more than 50% from all-time highs recorded in both nominal and real terms. After initial and broad-based COVID-19 stimulus measures in China delivered a sharp recovery and boost to overall market conditions, protracted and re-occurring lockdowns have weighed heavily on Chinese economic activity and related steel consumption. Unsurprisingly, China’s GDP growth has continued to fall short of government targets with decreasing rates of crude steel production pressuring iron ore prices lower since the 2021 record highs. The world ex-China has similarly recorded a contraction in crude steel production more recently as global economic conditions have deteriorated. Although volatile and adverse market conditions have contributed to the Company not achieving satisfactory outcomes relating to its key objectives through the financial year, both the Board and Management remain committed to crystallising appropriate value from our asset base. The positive counterpoint to a high-barriers-to-entry industry is the dearth of credible and high-quality advanced development projects globally in lower risk jurisdictions. Your Company retains conviction that the Central Eyre Iron Project possesses the requisite attributes that will ultimately attract, on acceptable terms, an incumbent producer and/or a steel producer wanting to strategically address real and enduring feedstock security of supply concerns. Specifically related to wider infrastructure business opportunities, our Cape Hardy Stage I (grain-led) port development proposal with partners Eyre Peninsula Cooperative Bulk Handling (EPCBH) and Macquarie Capital was unable to make commercial headway during the year. However, strong underlying grower and wider stakeholder support remains entrenched for a multi-commodity, multi-user port at Cape Hardy that will underpin diverse regional growth opportunities for Eyre Peninsula communities. Complementary to the Central Eyre Iron Project, a parallel Cape Hardy related focus for Iron Road has been the early validation of market interest in the longer-term development of Cape Hardy as a green hydrogen hub and industrial precinct. I C H A R M A N S ' L E T T E R Assisted by our green hydrogen specialist advisor, WSP Australia, a shortlist of 10 domestic and international proponents have requested to partake in a competitive Expression of Interest phase that is targeted to close during 4Q CY2022, with the successful proponent or consortium of proponents expected to enter preliminary commercial arrangements with the Company. Global energy market insecurity, particularly in Europe, has driven increased levels of Cape Hardy related interest, with the parties primarily comprising globally significant players in the power generation business and emerging energy transition groups with a focus on harnessing quality renewable energy resources. I thank you, my fellow shareholders for your ongoing support as we augment relentless endeavour with pragmatism and flexibility to realise positive outcomes associated with your Company’s large-scale and long-life assets of national significance. Peter Cassidy Chairman IRON ROADANNUAL REPORT 2022OVERVIEWCHAIRMAN'S LETTEROPERATIONS REPORTOPERATING AND FINANCIAL REVIEWFINANCIAL STATEMENTSDIRECTORS' REPORTSIGNED REPORTSASX INFORMATION12345678 4 OPERATIONS REPORT Central Eyre Iron Project (CEIP, IRD 100%) Wudinna Long term employee village Kyancutta Warramboo Ceduna Streaky Bay Streaky Bay Infrastructure corridor Kimba Poochera Minnipa Central Eyre Central Eyre Iron Project Iron Project Wudinna Kimba Warramboo Port Augusta Whyalla Port Pirie Borefield Lock Power transmission line Elliston Lock Rudall Yadnarie Rudall Tooligie Cowell W AY Cleve H H I G O L N C LI N Port Neill Moonta Cummins Tumby Bay Cape Hardy Port Precinct SPENCER GULF Port Lincoln Karkoo Highway Exploration Licence Mining Lease Infrastructure corridor Borefield Power transmission line Yeelanna Kapinnie Cape Hardy Port Precinct Port Neill 0 5 10 Kilometres 0 50 100 Kilometres Adelaide SA 01 Location of the CEIP, showing the mine, infrastructure corridor and port The CEIP is situated on the Eyre Peninsula, South Australia. The proposed mine at Warramboo is located approximately 30 kilometres southeast of the regional centre of Wudinna and the proposed port, seven kilometres south of Port Neill at Cape Hardy. The mine and port are planned to be linked by an infrastructure corridor with road haulage the preferred method for iron concentrate transport. The corridor includes a power line and water pipeline over part of its length. The beneficiation plant located at the mine will produce a high quality, low impurity iron concentrate that will serve as a clean, superior blending product for steel mill customers. Production of 12Mtpa of 67% iron concentrate is projected over an initial mine life of 22 years. The lower capital, 12Mtpa production strategy demonstrates the potential for highly competitive operating margins (See ASX announcement Revised CEIP Development Strategy dated 25 February 2019). Hosting Australia’s largest magnetite Ore Reserve with a Definitive Feasibility Study (DFS) and post-DFS optimisation studies complete, the CEIP will be an intergenerational asset producing consistent premium quality, high-grade iron concentrate over many decades. Iron Road’s key focus continues to centre on patient and productive CEIP engagement with potential strategic partners. Proposals that offer shareholders value with respect to the quality and advanced status of the Company’s asset base continue to be evaluated. A well understood feature of the high barriers to entry iron ore industry is the scarcity of credibly advanced, high product grade, greenfield development opportunities globally. This thematic continues to provide fundamental support for development prospects of the CEIP irrespective of short-term volatility in iron ore prices. The Wood Mackenzie June 2022 chart on the following page categorises the project pipeline according to expected product grade, post-tax Internal Rate of Return (IRR) and annual nameplate design capacity (relative circle sizes). In conjunction with each project’s respective (internal) CAPEX and OPEX estimates, Wood Mackenzie’s base case iron ore price forecasts and associated premiums or discounts that apply respectively to products above or below the reference 62% Fe grade for Sinter Fines, underpin the IRR metrics shown. OPERATIONS REPORT Wood Mackenzie Global Iron Ore Project Pipeline - June 2022 5 3 R E P O R T O P E R A T O N S I Notes: Blue/orange circles denote advanced project status (ie. construction phase or BFS/DFS completed). Dotted circles denote projects at PFS or scoping study stage. Central Eyre data sourced from Iron Road’s post DFS and subsequent optimisation studies ASX announcement – “Revised CEIP development strategy reduces project CAPEX requirements by 56%”, 25 February 2019. Iron Road 2018-19 data escalated to real terms in-line with CPI. IRR calculated using Wood Mackenzie’s Q2 2022 price forecasts. Importantly, as per the notes above, Wood Mackenzie differentiate projects that are either under construction or well advanced from the remaining balance of earlier stage projects that in total, comprise their view of the global project pipeline. The depth of project work undertaken and the de-risked aspects of the CEIP in comparison with peer project developers in Australia is evidenced by capitalised exploration and evaluation expenditure on the Company’s balance sheet as of 30 June 2022 (audited value of $123.1 million). An additional $10.6 million of capitalised property, plant and equipment primarily relates to circa 1,200 hectares of strategic port precinct land situated at Cape Hardy. In total, approximately $180 million (nominal terms) has been expended to date by the Company. The following attributes of the CEIP are identified as the key value drivers for potential strategic partners, particularly in the context of targeting a credible timeframe to Financial Close, commencing construction and ultimately exporting high- grade, low impurity iron concentrate. Iron Road’s development experience is in line with that of industry more widely. Obtaining regulatory approvals and concluding Native Title Agreements is a key differentiator. For all greenfield projects, these are resource intensive and time-consuming processes that in many instances may add unexpected challenges and result in significant delays to project delivery timeframes. IRON ROADANNUAL REPORT 2022OVERVIEWCHAIRMAN'S LETTEROPERATIONS REPORTOPERATING AND FINANCIAL REVIEWFINANCIAL STATEMENTSDIRECTORS' REPORTSIGNED REPORTSASX INFORMATION12345678 6 OPERATIONS REPORT Key CEIP Value Driver Characteristics Geology Largest magnetite Ore Reserve in Australia Well understood magnetite gneiss orebody Mine life capable of delivering 589Mt of premium 66.7% Fe concentrate at P80 106µm 478 diamond drill holes (160,025m) & 22 RC drill holes (3,208m), 42,680 XRF iron ore suite assays, 7,928 DTR tests, 609 QEMSCAN Very coarse-grained texture (1.5mm average magnetite grain size) Low processing risk vs. very hard, fine-grained WA banded iron formation magnetite; significant material handling advantages Metallurgy Low impurities and low variability across orebody Negligible S & P, SiO2 & Al2O3 easily separated; uniform mineralogy 60% waste rejection at front end of process plant Offsets relatively low in-situ Fe grade & simplifies downstream beneficiation Flowsheet validation Independently verified; 12Mtpa, 21.5Mtpa and 24Mtpa scenarios provide optionality Ancillaries and Port site Access to groundwater, power upgrades, port Strategic and natural deep-water port site presents minimal impacts Approvals and Native Title State and Federal Government Primary Approvals & wider stakeholder support Mineral Lease & Development Approval granted for 21.5Mtpa operation; Federal EPBC approval; local govt. & community support Indigenous Land Use Agreement (ILUA) Mine site, infrastructure corridor and port (landside & gulfside) with the Barngarla traditional owners; export royalty regime agreed The financial model shared with those potential strategic partners engaging formally with Iron Road reflects the lower capital 12Mtpa CEIP delivery model. Iron ore price assumptions underpinning the projected commercial returns in the matrix below are for high- grade 65% Fe Fines CFR China. Iron Road’s modelling assumes the 65% Fe Fines CFR China index will trade at a circa long-run 15-20% average premium to benchmark 62% Fe Fines CFR China. CEIP – key metrics and economics Preferred Lower Capital, Lower Risk 12Mtpa CEIP Delivery Model Operating Parameters Concentrate production (dry) Concentrate grade Life of Mine Life of Mine concentrate (dry) Strip ratio Mean power demand Financial Metrics 12Mtpa Capital Cost Capital intensity FOB operating cost 1 ex state royalty and sustaining capex 66.7% Fe 22 years 250Mt 0.97:1 167MW US$1.74 billion US$134/wmt US$44.50/wmt1 IRR and NPV10 Sensitivity at Financial Close2 High Grade 65% Iron Index Price (US$/dmt) 90 100 110 120 D S U / D U A 0.717 0.750 0.800 25.0% / US$949M 33.5% / US$1.68B 40.8% / US$2.41B 47.5% / US$3.13B 22.1% / US$761M 30.8% / US$1.49B 38.2% / US$2.22B 44.8% / US$2.95B 17.7% / US$473M 26.8% / US$1.21B 34.3% / US$1.94B 41.0% / US$2.66B 2 geared, post-tax IRR and NPV10 at financial close, tax rate of 30% Refer to ASX announcement “Revised CEIP Development Strategy Reduces Project Capex Requirements by 56%” on 25 February 2019 Of significance, the 12Mtpa delivery model and associated economic metrics are representative of a “first phase” cumulative Life of Mine output of 250Mt 66.7% Fe concentrate. This lower capital “first phase” represents less than 50% of the 589Mt of high-grade product the Warramboo orebodies can deliver (estimated primarily from the Ore Reserve), which signals asset valuation upside compared with the projected returns in the previous table. State and Federal Government Primary Approvals already received for a 21.5Mtpa CEIP operation provides Iron Road and a preferred strategic industry partner with the flexibility and optionality on the ultimate financing and development strategy. 7 3 R E P O R T O P E R A T O N S I OPERATIONS REPORT Gawler Iron Project (GIP, IRD 90-100% iron ore rights) The Gawler Iron Project (GIP) is located approximately 25km north of the standard gauge Trans-Australian Railway that connects to the Central Australia Railway at Tarcoola. The GIP hosts mineralisation anticipated to support a small to medium scale hematite / magnetite iron ore mining operation with the potential to produce a quality iron ore using a simple beneficiation process. The GIP comprises several magnetite occurrences outcropping at surface, one of which is proven to encompass a significant oxidised (hematite) cap. This prospect and another have been systematically RC / diamond drilled (105 drillholes in total) and undergone mineralogical analysis and metallurgical test work. 300,000mE 400,000mE 500,000mE IRD 100% Iron Ore Rights IRD 90% Iron Ore Rights Coober Pedy R O D I R R O C L I A R S T U A R T H I G H W A Y EL5998 EL5767 EL6569 EL6569 EL6502 Challenger Mine Commonwealth Hill I - N W R A D E D A L E D A I 6,700,000mN EL6012 EL6012 EL6012 EL6502 EL6502 EL6173 EL6532 EL6532 EL6173 TRANS A UST R A L I A N RAILWAY Wynbring 6,600,000mN 0 25 50 Kilometres Tarcoola Location of Gawler tenements Drilling at NW Fingerpost Hill, 2010 IRON ROADANNUAL REPORT 2022OVERVIEWCHAIRMAN'S LETTEROPERATIONS REPORTOPERATING AND FINANCIAL REVIEWFINANCIAL STATEMENTSDIRECTORS' REPORTSIGNED REPORTSASX INFORMATION12345678 8 OPERATIONS REPORT Iron Ore Market In Q2 CY2022, 62% Fe Fines averaged circa US$138/dmt with the high-grade 65% Fe index averaging approximately US$161/ dmt. To be sure, this price performance reflected still robust underlying fundamentals for the sector despite these index averages both declining 31% year-on-year compared with the historical records for Q2 CY2021 (US$200/dmt and US$233/ dmt respectively). At a May 2022 Global Metals, Mining & Steel Conference, Vale S.A., the industry’s highest grade iron ore producer amongst top global suppliers, noted that underestimated supply-side restrictions were a major contributing factor leading to market consensus iron ore price forecasts consistently falling short of actual commodity price performance. Notwithstanding demand-side challenges materialising from the latter part of Q2 CY2022, Vale’s analysis indicated that 2022 is likely to be the 7th consecutive year (2016-2022 inclusive) where market analysts’ median iron ore price forecast (1-year forward looking) will be lower than the subsequent average yearly price realised. Mine depletion rates (orebody replacement and declining grades), complex licensing processes requiring adherence to stringent Environmental, Social and Governance (ESG) standards, careful traditional landowner engagement and continued industry capital discipline are critical industry factors that will likely provide fundamental support for enduring constraints on the supply-side. Green Hydrogen / Green Manufacturing Planning Iron Road has developed, with the aid of experienced industry consultants, documentation for an initial market sounding and a later formal Expression of Interest (EoI) for the potential future development of Cape Hardy as a green hydrogen hub and industrial precinct. This development is complementary to the already well-established designs for the CEIP iron concentrate handling at the port and preliminary designs for grain handling and storage facilities. During March 2022 and at the request of the South Australian Department for Energy and Mining (DEM), Iron Road hosted a visit to Cape Hardy that included Mr. Martijn Coopman, Program Manager International Hydrogen Supply Chains for the Port of Rotterdam Authority, to showcase the site and outline Iron Road’s aspirations and concept plan for the hub and precinct. During late May 2022 Iron Road engaged WSP Australia to commence a market sounding process to gauge commercial interest in the development of Cape Hardy as a green hydrogen hub and industrial precinct. The technical support and extensive market reach of WSP Australia was employed to target a shortlist of domestic and international green hydrogen proponents and associated entities. Both WSP Australia and the South Australian Government have recognised Cape Hardy as a credible, future green hydrogen production hub. The Company’s market sounding process was well timed with respect to the Australian Hydrogen Conference, held during 31 May – 1 June 2022 in Adelaide, which attracted more than 700 delegates. Strong South Australian government support for Cape Hardy was evident with the Premier, Hon Peter Malinauskas MP referring to Cape Hardy in his opening address with introductions facilitated by representatives from the Department for Energy and Mining (DEM). These introductions were further strengthened at the Australia Japan Business Co-operation Committee (AJBCC) dinner attended by the Company’s General Manager and CEO at the invitation of the Department for Trade & Investment (DTI). Projected Iron ore volumes depletion (2021 -2030) - Mt Iron ore volumes depletion (2021 - 2030) - Mt 277 473 83 Total Australia Brazil Source: Vale and PWC Mine 2021 Report ~30% of current seaborne supply 66 China 47 Others OPERATIONS REPORT 9 3 R E P O R T O P E R A T O N S I Iron Road's Principal Advisor-Stakeholder Engagement, Tim Scholz (second left) with Richard Day, Director Strategy, Policy and Communications, Growth and Low Carbon Division, DEM, Saindhav Tamhane, Program Manager Hydrogen, DEM (far left) and Martijn Coopman, Program Manager International Hydrogen Supply Chains, Port of Rotterdam (far right) at the 1,200ha Cape Hardy port precinct on Eyre Peninsula, South Australia. Late in July 2022 Iron Road advised that the Company had concluded the market sounding process gauging commercial interest in the longer-term development of Cape Hardy as a green hydrogen hub and industrial precinct. As a result, ten domestic and international green hydrogen proponents requested to partake in the Company’s formal EoI process following the execution of non-disclosure agreements and access to relevant Cape Hardy data room material. Interested parties primarily comprise globally significant players in the power generation business and emerging energy transition groups with a focus on harnessing quality renewable energy resources for green hydrogen production. The competitive EoI phase is targeted to close later this year, with the successful proponent or consortium of proponents expected to enter into preliminary commercial arrangements with Iron Road. The EoI phase will still be accessible to other proponents who may not have participated in this market sounding process. In addition to the strategic physical attributes of Cape Hardy, Iron Road has primary development approval for the port site as a high-grade iron concentrate and multi-commodity export facility. The CEIP, including the proposed logistics chain, may ultimately provide offtake for hydrogen and derivative products. In addition, value-adding opportunities such as green pellet and/or green steel production would also benefit from a longer- term hydrogen development at Cape Hardy. Australian Hydrogen Conference – Australia Japan Business Co-operation Committee (AJBCC) dinner 1 June 2022 (Photo: DTI, SA Government) IRON ROADANNUAL REPORT 2022OVERVIEWCHAIRMAN'S LETTEROPERATIONS REPORTOPERATING AND FINANCIAL REVIEWFINANCIAL STATEMENTSDIRECTORS' REPORTSIGNED REPORTSASX INFORMATION12345678 10 OPERATIONS REPORT Cape Hardy Stage I port proposal Iron Road, Eyre Peninsula Co-operative Bulk Handling (EPCBH) and Macquarie Capital (Macquarie) are parties to a September 2020 Joint Development Agreement (JDA) based on advancement of the originally proposed Cape Hardy Stage I multi-user, multi-commodity (grain-led) port facility. During November 2021, Portalis (the proposed partnership) provided an update on the grain-led Cape Hardy Stage I port development. Informed by grower feedback, Portalis confirmed that the joint developers consider alternative development pathways. As a logical medium and long-term freight advantaged location for Eyre Peninsula grain exports, investigations continue into the optimal business case for grain handling, storage and export facilities at Cape Hardy. Short- term activities centre on monitoring of existing supply chain / logistics performance associated with the current harvest. With Iron Road having incurred significant expenditure to date relating to JDA activities, both EPCBH and Macquarie are understanding of Iron Road’s primary ongoing focus on both the CEIP and Cape Hardy green hydrogen hub / industrial precinct proposal. Infrastructure Australia’s February 2022 Infrastructure Priority List noted the Federal Government’s $25 million commitment towards developing and constructing the Cape Hardy port that will ultimately bring together agriculture, mining, green hydrogen, green manufacturing and indigenous business into a multi-user, multi-commodity manufacturing and export hub in South Australia. Eyre Peninsula Power Upgrade As a large-scale, long-life proposed mining and beneficiation operation, the Company’s CEIP will be a significant consumer of power and a stable demand anchor located at the south- western end of the National Electricity Market (NEM). This presents a clear opportunity for development proponents of proximate, low-cost renewable energy resources on the Eyre Peninsula with a viable connection to an upgraded grid that further supports take-up of low carbon emission generation into the NEM. ElectraNet’s Eyre Peninsula link, the upgraded HV transmission line from Cultana to Port Lincoln is well underway, with energisation anticipated by the end of 2022. This provides significant new connection potential for the CEIP or other regional developments in the central Eyre, including the proposed Cape Hardy Green Hydrogen hub, noting that any development at scale will require substantial augmentation. The Eyre Peninsula Link comprises a new 270 kilometre, high-voltage transmission line to be constructed from Cultana to Port Lincoln, via Yadnarie (Image- Electranet) OPERATIONS REPORT Dawn Taylor, BDAC board member, Larry Ingle, CEO Iron Road and Jason Bilney, BDAC Chair at the Barngarla community authorisation meeting, Whyalla Norrie, 25 September 2021. 11 3 R E P O R T O P E R A T O N S I CEIP Indigenous Land Use Agreement (ILUA) Following an extended period of collaboration and negotiations, the parties to the CEIP ILUA executed a Deed of Novation and Variation of the CEIP ILUA. The parties involved are Iron Road, Barngarla Determination Aboriginal Corporation (BDAC), Barngarla Aboriginal Corporation (BAC), South Australian Native Title Services Ltd (SANTS) and the South Australian Government. An application was submitted to the Native Title Registrar late in 2021 to register the amended CEIP ILUA in the Register of Indigenous Land Use Agreements. This will give effect to the agreement pursuant to the Native Title Act 1993 (Cth), which, among other things, includes native title consents for the CEIP, including the proposed Cape Hardy port. Registration is now complete. Amendments build on and broaden commercial arrangements with the Barngarla that reflect multiple opportunities associated with the proposed Cape Hardy port precinct. An industry competitive royalty arrangement set at a universal rate per tonne will apply equivalently to bulk commodities, including high-grade iron concentrate and other minerals, as well as grain and green hydrogen / ammonia export over the life of the asset. These royalty arrangements incorporate escalation mitigating features. Other arrangements include a Barngarla educational scholarship fund and associated administration plan, along with indigenous business contracting and employment opportunity provisions. Flexibility has now been embedded into the location of the CEIP infrastructure corridor to enable an optimised mine to port haulage route and allows for more efficient grain logistics opportunities across the Eyre Peninsula. Map illustrating the CEIP ILUA area IRON ROADANNUAL REPORT 2022OVERVIEWCHAIRMAN'S LETTEROPERATIONS REPORTOPERATING AND FINANCIAL REVIEWFINANCIAL STATEMENTSDIRECTORS' REPORTSIGNED REPORTSASX INFORMATION12345678Malgra (CP)Lipson Island (CP)Hincks (CP)CaralueBluff (CP)Barwell (CP)DarkeRange (CP)MoodyTank (CP)Carappee Hill (CP)Rudall(CP)VerranTanks (CP)Wharminda(CP)BascombeWell (CP)Poolgarra(CR)Cortlinye (CR)Cunyarie (CR)Mootra (CR)Peachna(CP)Shannon(CP)Pinkawillinie(CP)Hambidge (WA)Hincks (WA)PinkawillinieReservoir (CR)Lacroma (CR)Tola (CR)Corrobinnie Hill (CP)Cocata (CP)BirdseyeHighwayBirdseyeHighwayEyreHighwayTodHighwayEyreHighwayFlinders HighwayTod HighwayLincolnHighwayInfrastructure Corridor PowerlineArea 5Offshore Operating AreaArea 3Long Term Employee VillageArea 2Mining Lease BoundaryArea 1Onshore Port Development AreaArea 4Borefield AreaArea 6Infrastructure CorridorArea 6Infrastructure CorridorWudinnaKimbaPort NeillCumminsLockKyancuttaRudallCleveSurrender AreaCR Vol 5763 Fol 258Excluded AreaCR Vol 5763 Fol 257OOA-1OOA-6IC-23IC-1PL-13PL-1Surrender AreasCR Vol 5767 Fol 510CR Vol 5767 Fol 511CR Vol 5755 Fol 175CR Vol 5755 Fol 176Excluded AreasCR Vol 5767 Fol 508CR Vol 5767 Fol 509CR Vol 5767 Fol 513CR Vol 5755 Fol 177Surrender AreaCR Vol 5768 Fol 621Excluded AreaCR Vol 5772 Fol 864CR Vol 5773 Fol 876635000063400006330000632000063100006300000629000062800006270000626000062500006240000623000062200006210000635000063400006330000632000063100006300000629000062800006270000626000062500006240000623000062200006210000630000620000610000600000590000580000570000560000550000540000630000620000610000600000590000580000570000560000550000540000LegendTownCoordinate PointsMain RoadILUA AreaILUA Area: Area Beyond Intertidal AreaILUA Area: Surrender AreaConservation Park01020kmINDIGENOUS LAND USEAGREEMENTBarngarla Central Eyre Iron ProjectGDA 1994 MGA Zone 53 12 OPERATIONS REPORT Surveying of control point at Cape Hardy Community & Stakeholder Engagement Iron Road engaged directly with various South Australian state government agencies and the CEIP Taskforce, which includes representatives from Department of Energy and Mines (DEM), as well as independent advisors. The Company also continued close engagement with the Department for Trade and Investment (DTI) and Austrade representatives within Australia and Asia. Iron Road maintains regular contact with the Federal Government’s Department of Infrastructure, Transport, Regional Development and Communications given the Commonwealth’s $25 million commitment towards developing and constructing the proposed Cape Hardy port. Corporate On 16 December 2021 Iron Road announced a placement of ordinary shares in the Company (Shares) raising up to $5 million for an aggregate subscription of up to $5.175 million. Proceeds from the placement, along with existing cash reserves, are to be used to further advance the Company’s assets and fund general working capital requirements. The placement involves up to three investments by Bulk Commodity Holdings, LLC (the Investor), a US-based institutional investor, with each investment being made by way of a prepayment of Shares (Subscription Shares) to be issued by the Company. The initial investment raised $1,250,000 for $1,337,500 worth of Subscription Shares and the second investment will raise $1,250,000 for $1,337,500 worth of Subscription Shares. The second investment was triggered, following exercise of an option by the Company, with funds expected to be received from October 2022. A third investment raising up to $2,500,000 may be conducted by mutual consent of the Investor and the Company. The bespoke terms of the placement effectively defer the issuance of Shares to the Investor across three separate investments and are specifically targeted to minimise the dilutionary impact for current IRD shareholders. Further details are available in ASX Release of 6 December 2021. 13 3 R E P O R T O P E R A T O N S I OPERATIONS REPORT Global mineral resource and ore reserves statement Table 1: CEIP Ore Reserve Summary 2020 and 2021 Resource Classification Proved Probable Total Metric Tonnes (Mt) 2,131 1,550 3,681 Fe (%) 15.55 14.40 15.07 SiO2 (%) 53.78 53.58 53.70 Al2O3 (%) 12.85 12.64 12.76 The Ore Reserves estimated for CEIP, involving mine planning, is based on and fairly represents information and supporting documentation compiled by Mr Bob McCarthy, a Member of the Association of Professional Engineers and Geoscientists of British Columbia (Canada) and a full-time employee of SRK Consulting (North America). Mr McCarthy has sufficient experience relevant to the style of mineralisation and the type of deposits under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr McCarthy consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. The Ore Reserves estimated for the CEIP involving aspects other than mine planning is based on and fairly represents information and supporting documentation compiled by Mr Larry Ingle, a Member of the Australian Institute of Mining and Metallurgy and a full-time employee of Iron Road Limited. Mr Ingle has sufficient experience relevant to the style of mineralisation and the type of deposits under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr Ingle consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. This report includes results that have previously been released under JORC 2012 by the Company on 2 May 2016. The Company is not aware of any new information or data that materially affects the information included in this announcement and all material assumptions and technical parameters underpinning the Ore Reserve continue to apply and have not materially changed. Table 2: CEIP Global Mineral Resource 2020 and 2021 Location Classification Murphy South/Rob Roy Boo-Loo/Dolphin Total Measured Indicated Inferred Indicated Inferred Tonnes (Mt) Fe (%) 2,222 15.69 474 15.6 667 796 351 4,510 16 16.0 17 16 SiO2 (%) 53.70 53.7 53 53.3 53 53 Al2O3 (%) 12.84 12.8 12 12.2 12 13 P (%) 0.08 0.08 0.08 0.07 0.09 0.08 LOI (%) 4.5 4.5 4.3 0.6 0.7 3.5 The Murphy South/Rob Roy Mineral Resource estimate was carried out following the guidelines of the JORC Code (2004) by Iron Road Limited and peer reviewed by Xstract Mining Consultants. The Murphy South - Boo-Loo/Dolphin oxide and transition Resource estimate was carried out following the guidelines of the JORC Code (2004) by Coffey Mining Limited. The Boo-Loo/Dolphin fresh Mineral Resource estimate was carried out following the guidelines of the JORC Code (2012) by Iron Road Limited and peer reviewed by AMC Consultants. This report includes results that have previously been released under JORC 2004 and JORC 2012 by the Company on 30 June 2010, 28 May 2013 and 27 February 2015. The Company is not aware of any new information or data that materially affects the information included in these announcements and all material assumptions and technical parameters underpinning the Mineral Resource continue to apply and have not materially changed. Table 3: CEIP Indicative Concentrate Specification – 106 micron (p80)* Iron (Fe) 66.7% Silica (SiO2) 3.36% Alumina (Al2O3) 1.90% Phosphorous (P) 0.009% * The concentrate specifications given here are based on current data from metallurgical test work, bulk samples and simulation modelling designed specifically to emulate the proposed beneficiation plant. IRON ROADANNUAL REPORT 2022OVERVIEWCHAIRMAN'S LETTEROPERATIONS REPORTOPERATING AND FINANCIAL REVIEWFINANCIAL STATEMENTSDIRECTORS' REPORTSIGNED REPORTSASX INFORMATION12345678 15 4 R E P O R T I D R E C T O R S ' DIRECTORS' REPORT Throughout this report, the consolidated entity is referred to as the Group. Events since the end of the financial year No matters or circumstances have arisen since 30 June 2022 that have significantly affected the Group’s operations, results or state of affairs. Likely developments and expected results of operations Likely developments in the operations of the Group and expected results of these operations in future financial years have been included in the Operating and Financial Review. Environmental regulation The Group’s operations are subject to environmental regulation of exploration activities on its mineral tenements. No on- ground exploration or other exploration activity was undertaken during the financial year and there were no breaches of any environmental requirements. The Group’s proposed CEIP Infrastructure is subject to the Environment Protection and Biodiversity Conservation Act 1999 (Cth) as this element of the Project was declared a ‘Controlled Action’ on 26 August 2014. The Group has reviewed its energy consumption and greenhouse gas emissions for the reporting year, with both found to be below the reporting threshold as specified within the National Greenhouse and Energy Reporting Act 2007 (Cth) (NGER). Directors and Company Secretary The following persons were directors of Iron Road Ltd during the whole of the financial year and up to the date of this report: Peter Cassidy Jerry Ellis AO Ian Hume Glen Chipman Jaroslaw Kopias – Company Secretary Principal activities The principal activity of the Group during the year was the exploration and evaluation of the Group’s iron ore interests at the Central Eyre Iron Project (CEIP) in South Australia including pursuit of the Cape Hardy Stage I multi-user, multi-commodity port facility and other long-term business development opportunities associated with the Cape Hardy port site. Dividends No dividends were paid, declared or recommended during the year ended 30 June 2022. Corporate governance statement Iron Road Ltd and the Board are committed to achieving and demonstrating high standards of corporate governance. Iron Road’s corporate governance statement was approved by the Board and can be viewed at www.ironroadlimited.com.au/ index.php/about-us/corporate-governance. Review of operations Information on the operations and financial position of the Group and its business strategies and prospects is set out in the review of operations and activities on page 26 of this report. Significant changes in the state of affairs There were no significant changes in the state of affairs of the Group during the financial year. IRON ROADANNUAL REPORT 2022OVERVIEWCHAIRMAN'S LETTEROPERATIONS REPORTOPERATING AND FINANCIAL REVIEWFINANCIAL STATEMENTSDIRECTORS' REPORTSIGNED REPORTSASX INFORMATION12345678 16 DIRECTORS' REPORT Peter Cassidy CHAIRMAN Jerry Ellis AO NON-EXECUTIVE DIRECTOR Dr Cassidy has been an international private capital investor since the 1990’s. He holds a degree in geology and a first class honours degree in chemistry from the University of Tasmania and a PhD in coal science from Monash University. No other directorships of listed companies have been held in the last three years. Mr Ellis has had a long and distinguished career in business, particularly in the resources sector. Mr Ellis’ career includes three decades at BHP, chairing the company from 1997 to 1999. He also served on the boards of a number of listed companies and governing bodies including Newcrest Mining, Aurora Gold, the International Copper Association, Australia and New Zealand Banking Group, the International Council on Metals and the Environment and the American Mining Congress. In September 2020 Mr Ellis was appointed Chairman of North Stawell Minerals (ASX:NSM). Mr Ellis is the former Chairman of Alzheimers Australia (NSW), former Chancellor of Monash University, former President of the Minerals Council of Australia and former Chairman of the Australia- Japan Foundation and the Australian National Occupational Health and Safety Commission. 17 4 R E P O R T I D R E C T O R S ' DIRECTORS' REPORT Ian Hume NON-EXECUTIVE DIRECTOR Glen Chipman EXECUTIVE DIRECTOR Mr Hume's career in the resources industry stretches back several decades, primarily in the fields of managed fund investments, capital raising and project development. Mr Hume was a Founding Partner of The Sentient Group, a manager of closed end private equity funds specialising in global investments in the natural resource industries. Prior to the founding of The Sentient Group, Mr Hume was a consultant to AMP’s Private Capital Division. In the three years immediately prior to the end of the financial year, Mr Hume served as a director of the following companies: » Golden Minerals Company » African Energy Resources Limited* * denotes current directorship Mr Chipman has been engaged with Iron Road since 2013 across commercial, strategy, project optimisation, investor relations and capital raising. He was appointed Executive Director in November 2019 having joined the board as a non-executive director in March 2018. Mr Chipman has a chemical engineering background and more than 20 years of combined industry, mineral economics and equity capital markets experience including with Bank of America Merrill Lynch, Citi and Iron Road’s major shareholder, the Sentient Global Resources Funds. Within the three years immediately prior to the end of the financial year, Mr Chipman served as a director of Brazilian high grade iron ore producer Ferrous Resources Limited. On 1 August 2019, Mr Chipman resigned his directorship from Ferrous following its acquisition by Vale S.A. IRON ROADANNUAL REPORT 2022OVERVIEWCHAIRMAN'S LETTEROPERATIONS REPORTOPERATING AND FINANCIAL REVIEWFINANCIAL STATEMENTSDIRECTORS' REPORTSIGNED REPORTSASX INFORMATION12345678 18 DIRECTORS' REPORT Remuneration report Meetings of directors There were three board meetings held during the year ended 30 June 2021 with attendance as follows: Unissued ordinary shares of the Company subject to vesting and exercise of unquoted performance rights at the date of this report are: Peter Cassidy Jerry Ellis AO Ian Hume Glen Chipman 0 1 2 3 Board meeting attendance Unissued Shares Under Option Unissued ordinary shares of the Company subject to vesting and exercise of unquoted options (warrants) at the date of this report are: Date Rights Granted KPI Vesting Expiry Date Number of Rights 24 November 2020 24 November 2020 31 December 2023 2,601,000 24 November 2020 19 February 2021 31 December 2025 5,000,000 15 March 2021 31 December 2021 31 December 2024 1,650,000 24 August 2021 31 December 2021 31 December 2024 1,080,000 10,331,000 On 24 August 2021 4,050,000 unvested performance rights were granted to Glen Chipman, Executive Director, following approval by shareholders. Of these, 1,080,000 have vested but have not been exercised with the balance of 2,970,000 lapsing during the year. These options and rights do not entitle the holders to participate in any share issue of the Company or any other body corporate. Grant date Estimated expiry date Exercise price Number of options 9 October 2020 31 December 2025 $0.07376 25,000,000 9 October 2020 31 December 2025 $0.07376 15,000,000 Remuneration report The directors present the Iron Road Ltd 2022 remuneration report, outlining key aspects of the remuneration policy and framework and the remuneration awarded during the year. 40,000,000 The report is structured as follows: In September 2020 Iron Road, Macquarie Capital and Eyre Peninsula Co-operative Bulk Handling (EPCBH) entered into a Joint Development Agreement (JDA) to progress the Cape Hardy Stage I port development. The terms of the JDA included the issuance of 40 million unlisted Iron Road warrants to Macquarie during the period with vesting contingent on Financial Close and Commercial Operations being achieved for the Cape Hardy Stage I port. An initial 25 million tranche is exercisable from Financial Close with the second 15 million tranche exercisable from the Commercial Operations Date (COD). All warrants provide the holder with a right to acquire shares in Iron Road and have an exercise price of $0.07376. This exercise price is broadly equivalent to Iron Road’s October 2018 entitlement offer price reflecting the Company’s last capital raise prior to the JDA with the warrants expiring 24 months post COD. a) Key management personnel (KMP) covered in this report b) Remuneration policy and link to performance c) Elements of remuneration d) Remuneration expenses for executive KMP e) Contractual arrangements for executive KMP f) Non-executive director arrangements g) Additional statutory information a) Key management personnel covered in this report Executive and Non-executive directors: Peter Cassidy – Chairman Jerry Ellis AO – Non-executive Director Ian Hume – Non-executive Director Glen Chipman – Executive Director Other key management personnel: Larry Ingle – Chief Executive Officer 19 4 R E P O R T I D R E C T O R S ' DIRECTORS' REPORT Remuneration report b) Remuneration policy and link to performance The remuneration policy of Iron Road Ltd has been designed to align director and executive objectives with shareholder and business objectives by providing a fixed remuneration component and offering specific long term incentives based on key performance areas. The Board of Iron Road Ltd believes the remuneration policy is appropriate and effective in its ability to attract and retain high calibre executives and directors to manage the Group. The remuneration policy, detailing the terms and conditions for the Chief Executive Officer and other senior executives, was developed by the Board. All executives receive a base salary (which is determined by factors such as skills and relevant experience) and superannuation. The Board reviews executive packages annually by reference to the Group’s results, executive performance and relevant information on prevailing remuneration practices across the resources sector for comparable roles within other listed organisations. The Group has in place a Performance Share Plan and a Share Option Plan which form part of the Group’s remuneration policy and provides the Group with a mechanism for driving long term performance for shareholders and the retention of executives. The Board has the discretion to issue shares or rights to acquire shares and offers may be subject to performance criteria consistent with the Group’s key strategic objectives. The plan is administered by the Board which has the discretion to determine which persons are eligible to participate in the plan. Additional information on these plans is contained in section c). In the event of serious misconduct or a material misstatement in the Group’s financial statements, the Board can cancel or defer performance-based remuneration and may also claw back performance-based remuneration paid in previous financial years. Directors, executives and other employees receive a superannuation guarantee contribution required by the government and do not receive any other retirement benefits. Some individuals, however, may choose to sacrifice part of their salary towards superannuation. Statutory performance indicators The Board aims to align executive remuneration to strategic and business objectives. As required by the Corporations Act 2001 (Cth), the figures below show the Group’s financial performance over the last five years. However, these are not necessarily consistent with the measures used in determining the variable amounts of remuneration to be awarded to KMP. As a consequence, there may not always be a direct correlation between the statutory key performance measures and the variable remuneration awarded. c) Elements of remuneration Fixed annual remuneration Executives receive their fixed remuneration as cash and statutory superannuation. Fixed remuneration is reviewed annually by the Board and benchmarked against market data for comparable roles in listed companies across the resources sector. Long term incentives The remuneration policy has been designed to align the long-term objectives between the Group, its directors and executives by encouraging strong performance in the realisation of the Group’s growth strategy and the enhancement of shareholder value. The Company has a Performance Share Plan (“PSP”) and Share Option Plan (“SOP”) as part of its overall remuneration strategy as approved by shareholders at the 2020 Annual General Meeting. The PSP and SOP provide for the issue of Performance Rights or Options to directors, executives, employees or contractors of the Company and its associated bodies corporate as an incentive to maximise the return to shareholders over the long term and to assist in the attraction and retention of key personnel. Awards under the plans may include specific performance criteria that are to be satisfied within defined time restrictions. A copy of the PSP and SOP rules is available on the Company’s website www.ironroadlimited.com.au/index.php/about-us/ corporate-governance For details of individual interests in options and performance rights at year end, refer to page 23. Revenue Loss before tax Share price at 30 June Basic loss per share (cents) 30 June 2022 $ 30 June 2021 $ 30 June 2020 $ 30 June 2019 $ 30 June 2018 $ 38 50,265 50,762 21,351 1,844 (4,025,955) (5,435,595) (1,769,964) (2,161,350) (3,253,530) 0.145 (0.51) 0.265 (0.74) 0.063 (0.26) 0.053 (0.31) 0.100 (0.48) IRON ROADANNUAL REPORT 2022OVERVIEWCHAIRMAN'S LETTEROPERATIONS REPORTOPERATING AND FINANCIAL REVIEWFINANCIAL STATEMENTSDIRECTORS' REPORTSIGNED REPORTSASX INFORMATION12345678 20 DIRECTORS' REPORT Remuneration report d) Remuneration expenses for KMP The following table shows details of the remuneration expense recognised for the Group’s KMP for the current and previous financial year measured in accordance with the requirements of the accounting standards. Annual and long service leave expense represents the movement in provisions and as a result there are timing differences in the reported remuneration between years. Fixed remuneration Short term employee benefits Long term benefits Name Year $ Non-executive Directors Salary / fees Non- monetary benefits $ Annual and long service leave $ Post employment benefits Superannuation Variable remuneration Share based payments Performance rights* $ $ Total $ Peter Cassidy Jerry Ellis Ian Hume Executive Directors Glen Chipman (Executive Director) Other key management personnel Chief Executive Officer Larry Ingle Total Directors and KMP 2022 2021 2022 2021 2022 2021 85,000 42,500 65,000 35,000 65,000 35,000 2022 2021 306,795 57,500 2022 2021 2022 2021 372,500 330,400 894,295 500,400 - - - - - - - - - - - - - - - - - - - - - - - - - 405,785 85,000 448,285 - 327,430 - 327,430 65,000 362,430 65,000 362,430 12,727 - 27,500 278,100 625,122 - - 57,500 27,605 17,549 40,332 17,549 27,500 25,000 55,000 25,000 237,992 204,648 665,597 577,597 516,092 1,265,293 1,505,719 1,808,242 * Performance rights under the executive LTI scheme are expensed over the vesting period and reversed if performance conditions are not met. Refer to page 46 for additional information. Non-executive directors were paid minimal (or no) Director fees between April 2018 and December 2020 and as a result were issued performance rights approved by shareholders at the Annual General Meeting on 24 November 2020. From 1 January 2021 the Company has resumed paying Director fees. Mr Chipman was remunerated as a full-time employee of the Group commencing on 19 July 2021. In the previous financial year Mr Chipman was a representative of Iron Road’s major shareholder, the Sentient Global Resources Funds (Sentient) and did not receive any remuneration directly from the Group. The Directors fees disclosed above for 2021 were payable to Sentient. During the year, 4,050,000 (2021: 12,101,000) performance rights were granted as remuneration to KMP. The share-based payments expense is recognised at fair value over the vesting period for performance rights granted. The share-based payments for each KMP reflect the attributable portion of performance rights in the relevant financial year. No cash bonuses were paid to executive KMP during the financial year. 21 4 R E P O R T I D R E C T O R S ' DIRECTORS' REPORT Remuneration report e) Contractual arrangements for executive KMP Larry Ingle Chief Executive Officer Glen Chipman Executive Director Fixed remuneration $400,000 including statutory superannuation $350,000 including statutory superannuation Contract duration No fixed term arrangement No fixed term arrangement Notice by the individual/company Six months Six months f) Non-executive director arrangements Details of non-executive director fees and performance rights expensed during the year are included in the remuneration table above. Directors fees accrued and not paid at 30 June 2022 total $53,750 (2021: $277,500). The maximum aggregate amount of fees that can be paid to non executive directors is currently $400,000 per annum which was approved by shareholders at the 2012 AGM on 23 November 2012. g) Additional statutory information Remuneration mix for financial year 2022 Glen Chipman Larry Ingle Jerry Ellis AO Ian Hume Peter Cassidy 56% 64% 44% 36% 100% 100% 100% 0% 20% 40% 60% 80% 100% Fixed At Risk Long term incentives are currently provided by way of performance rights or options and are calculated on the value of the right or option expensed during the year. Terms and conditions of share-based payment arrangements Performance rights The Iron Road Performance Share Plan (“PSP”) was adopted in November 2020 as part of the Group’s remuneration policy to encourage long term performance and retention of Directors, senior executives, employees and contractors of the Company or its associated body corporate. It is targeted at those whose responsibilities provide them with opportunity to significantly influence long term shareholder value. The plan is administered by the Board which has discretion over persons eligible to participate and any performance criteria attached to performance rights. Performance rights under the PSP entitle its holder to an ordinary share which can be exercised once the right has become exercisable and provided it has not lapsed. The Board may determine that certain performance conditions must be satisfied before the right becomes exercisable. If the performance conditions are satisfied, the rights vest and become exercisable although satisfaction of any vesting condition will not automatically trigger the exercise of the right. The fair value of the rights is determined using Monte Carlo simulation with reference to the market price and expected share price volatility of Iron Road Ltd shares at the grant date. Rights are granted under the plan for nil consideration and carry no dividend or voting rights. Once vested and exercised, any share acquired by participants will rank equally with all existing shares of the same class. Should the participants’ employment cease due to genuine redundancy, resignation under reasonable circumstances if so determined by the Board, death or invalidity, the unvested performance rights will not lapse and may vest or the performance criteria may be waived. IRON ROADANNUAL REPORT 2022OVERVIEWCHAIRMAN'S LETTEROPERATIONS REPORTOPERATING AND FINANCIAL REVIEWFINANCIAL STATEMENTSDIRECTORS' REPORTSIGNED REPORTSASX INFORMATION12345678 22 DIRECTORS' REPORT Remuneration report The following performance rights were granted during the year ended 30 June 2022: a) Employee Performance Rights granted to Glen Chipman – rights that vest subject to various performance conditions as follows KPI Grant date Expiry date Fair value at grant date Balance at start of period Granted during the period Lapsed during the period Balance at end of period Vested and exercisable at end of period 30 June 2022 #1 #2 #3 #4 Total 24 August 2021 31 December 2024 $0.161 24 August 2021 31 December 2024 $0.144 24 August 2021 31 December 2024 $0.153 24 August 2021 31 December 2024 $0.153 - - - - 1,080,000 - 1,080,000 1,080,000 720,000 (720,000) 450,000 (450,000) 1,800,000 (1,800,000) - - - - - - - 4,050,000 (2,970,000) 1,080,000 1,080,000 KPI 1 IRD share price 1 - VWAP for calendar year 2021 of a minimum 20 cents including year-end close The table below outlines the inputs used in Monte Carlo fair valuation of the Employee Performance Rights: KPI 2 IRD share price 2 - VWAP for July-December 2021 of a minimum 30 cents including year-end close KPI 3 Attract non-grain trade value accretive Cape Hardy port business commitments via respective indicative agreements KPI 4 Obtaining initial investment in the Central Eyre Iron Project (CEIP) from a single partner of no less than $50 million in relation to a % interest in the CEIP at an IRD see-through valuation determined substantial and acceptable by the Board of the Company, which amount will be set prior to the date of issue. Exercise Price Right Life Underlying Share Price Expected Share Price Volatility Risk Free Interest Rate Weighted Average Fair Value Weighted Average Contractual Life Nil 3.3 years $0.195 112.65% 0.02% $0.154 3.3 years Options Shareholdings The Share Option Plan (“SOP”) was adopted in November 2020 as part of the Group’s remuneration policy to encourage long term performance and retention of Directors, senior executives, employees and contractors of the Company or its associated body corporate. Participants are granted options, some of which vest on issue and others that vest if certain market and non-market vesting conditions are met. Options are granted under the plan for nil consideration, carry no dividend or voting rights and expire if not exercised within five years from issue. When exercisable, each option is convertible into one ordinary share. 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 any guaranteed benefits. There are no unissued ordinary shares of Iron Road Ltd under option for directors and KMP as at 30 June 2022. Changes to director and KMP holdings over the year to 30 June 2022 are shown below: Ordinary Shares held by: 30 June 2021 Acquired 30 June 2022 Peter Cassidy 10,350,002 88,889 10,438,891 Jerry Ellis AO Ian Hume 760,445 6,898,785 - - 760,445 6,898,785 Glen Chipman 1,164,535 625,000 1,789,535 KMP Larry Ingle Total 423,380 1,327,715 1,751,095 19,597,147 2,041,604 21,638,751 Shares were acquired on market and by exercise of vested performance rights. None of the shares above are held nominally by the directors or KMP. 23 4 R E P O R T I D R E C T O R S ' DIRECTORS' REPORT Remuneration report Performance Rights Past Director Performance Rights Director Grant date Expiry date 30 June 2022 Fair value at grant date Balance at start of period Granted during the year Lapsed during the year Balance at end of period Vested and exercisable at end of period Peter Cassidy 24 November 2020 31 December 2023 $0.145 913,000 Ian Hume Jerry Ellis Total 24 November 2020 31 December 2023 $0.145 844,000 24 November 2020 31 December 2023 $0.145 844,000 2,601,000 - - - - - - - - 913,000 913,000 844,000 844,000 844,000 844,000 2,601,000 2,601,000 Future Director Performance Rights Director Grant date Expiry date 30 June 2022 Fair value at grant date Balance at start of period Granted during the year Lapsed during the year Balance at end of period Vested and exercisable at end of period Peter Cassidy 24 November 2020 31 December 2025 $0.137 2,000,000 Ian Hume Jerry Ellis Total 24 November 2020 31 December 2025 $0.137 1,500,000 24 November 2020 31 December 2025 $0.137 1,500,000 5,000,000 - - - - - - - - 2,000,000 2,000,000 1,500,000 1,500,000 1,500,000 1,500,000 5,000,000 5,000,000 Executive Performance Rights Grant date Expiry date 30 June 2022 Directors Fair value at grant date Balance at start of period Granted during the year Lapsed during the year Exercised during the year Balance at end of period Vested and exercisable at end of period Glen Chipman 31 December 2024 $0.144 - $0.161 - 4,050,000 (2,970,000) - 1,080,000 1,080,000 KMP Larry Ingle Total 31 December 2024 $0.214 - $0.226 4,500,000 - (3,300,000) (1,200,000) - - 4,500,000 4,050,000 (6,270,000) (1,200,000) 1,080,000 1,080,000 Voting of shareholders Annual General Meeting held on 24 November 2021 Iron Road Ltd received more than 99% of “yes” votes on its remuneration report for the 2021 financial year. The company did not receive any specific feedback at the Annual General Meeting or throughout the year on its remuneration practices. This is the end of the audited remuneration report. IRON ROADANNUAL REPORT 2022OVERVIEWCHAIRMAN'S LETTEROPERATIONS REPORTOPERATING AND FINANCIAL REVIEWFINANCIAL STATEMENTSDIRECTORS' REPORTSIGNED REPORTSASX INFORMATION12345678 24 DIRECTORS' REPORT Remuneration report Insurance of directors and officers Non-audit services During the financial year, Iron Road Ltd paid an insurance premium to insure the directors and officers of the Group and its controlled entities. No details of the nature of the liabilities covered and the amount of premium paid in respect of the directors and officers liability insurance policy have been disclosed as such disclosure is prohibited under the terms of the policy. The Group has also entered into a Deed of Indemnity, Insurance and Access with each director. In summary, the Deed provides for: » access to corporate records for each director for a period after ceasing to hold office in the company; The Group may decide to engage the auditor on assignments additional to their statutory audit duties where the auditors expertise and experience with the Group are important. The Board is satisfied that the provision of non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001 and none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants. Details of the amounts paid or payable to the auditor (PricewaterhouseCoopers, Australia) for audit and non-audit services provided during the year are set out in Note 17. » the provision of directors and officers liability insurance; and Auditor’s independence declaration » indemnity for legal costs incurred by directors in carrying out the business affairs of the company. Proceedings on behalf of the company No person has applied to the Court under section 237 of the Corporations Act 2001 (Cth) for leave to bring proceedings on behalf of the Group, or to intervene in any proceedings to which the Group is a party, for the purpose of taking responsibility on behalf of the Group for all or part of those proceedings. A copy of the Auditor's Independence Declaration as required under section 307C of the Corporations Act 2001 is set out on page 25. Signed in accordance with a resolution of the directors, for and on behalf of the Board by: Peter Cassidy Chairman 20 September 2022 25 4 R E P O R T I D R E C T O R S ' DIRECTORS' REPORT Auditor's Independence Declaration Auditor’s Independence Declaration As lead auditor for the audit of Iron Road Ltd for the year ended 30 June 2022, I declare that to the best of my knowledge and belief, there have been: (a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and (b) no contraventions of any applicable code of professional conduct in relation to the audit. This declaration is in respect of Iron Road Ltd and the entities it controlled during the period. M. T. Lojszczyk Partner PricewaterhouseCoopers Adelaide 20 September 2022 PricewaterhouseCoopers, ABN 52 780 433 757 Level 11, 70 Franklin Street, ADELAIDE SA 5000, GPO Box 418, ADELAIDE SA 5001 T: +61 8 8218 7000, F: +61 8 8218 7999, www.pwc.com.au Liability limited by a scheme approved under Professional Standards Legislation. IRON ROADANNUAL REPORT 2022OVERVIEWCHAIRMAN'S LETTEROPERATIONS REPORTOPERATING AND FINANCIAL REVIEWFINANCIAL STATEMENTSDIRECTORS' REPORTSIGNED REPORTSASX INFORMATION12345678 26 OPERATING AND FINANCIAL REVIEW Company strategy and operating activities The Group’s primary focus during the year has been continuing to advance potential partnership proposals and investment models for the Company’s Central Eyre Iron Project (CEIP) including pursuit of the proposed Cape Hardy multi-user, multi-commodity port facility and other long-term business development opportunities associated with the Cape Hardy port site. During the year the Company commenced a market sounding process to gauge commercial interest in the development of Cape Hardy as a green hydrogen hub and industrial precinct. The technical support and extensive market reach of WSP Australia was employed to target a shortlist of domestic and international green hydrogen proponents and associated entities. Both WSP Australia and the South Australian Government have recognised Cape Hardy as a credible, future green hydrogen production hub. Changes in financial position The Group’s net assets decreased by 1% this year (2022: $133,821,946 from 2021: $135,826,447). In August 2021 the Company raised approximately $0.5 million in equity from the Group’s major shareholder the Sentient Global Resources Funds towards repayment of the balance of the Sentient Global Resources Fund IV loan facility and outstanding Director Fees. In December 2021 Iron Road announced a placement of ordinary shares in the Company raising up to $5 million for an aggregate subscription of up to $5.175 million to further advance the Company’s assets and fund general working capital requirements. During the year $1.25 million was received from this facility (refer Note 9 for further details). The Group currently has no cash generating assets in operation and $1,894,350 of available cash at 30 June 2022. There remains material uncertainty as to the Group's ability to continue as a going concern as defined under the accounting standards (refer to Note 18a (iv) for further details). Operating results for the year Risk management Operational, financial, environmental, and regulatory risks are considered and addressed by management, with specific areas of significant risk referred by management to the Board. The Board considers that it is important for all Board members to be a part of this process and as such has not established a separate risk management committee. The principal activities of the Group during the year and associated expenditure was geared to the Company’s operating focus summarised above. The Group incurred an operating loss after income tax for the year ended 30 June 2022 of 4,025,955 (2021: $5,435,595). Share based payments expense decreased by $1.7 million of which $1.2 million related to the expensing of unlisted Iron Road warrants held by Macquarie Capital with vesting contingent on Financial Close and Commercial Operations being achieved for the Cape Hardy Stage I port development. The balance of the reduction relates to performance-based remuneration for key management personnel. Offsetting this reduction is an increase of $0.4 million in other employment expenses (refer Notes 4 and 15 for further details). 28 FINANCIAL STATEMENTS For the year ended 30 June 2022 CONTENTS Financial statements Notes to the consolidated financial statements Consolidated Income Statement and Statement of Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Structure of notes and materiality Note disclosures are split into five sections shown below to enable a better understanding of how the Group performed. Page 29 Page 30 Page 31 Page 32 Page 33 KEY NUMBERS STRUCTURES CAPITAL ADDITIONAL INFORMATION UNRECOGNISED ITEMS 1. Cash 2. Exploration 10. Controlled entities 11. Segment information 3. Property, plant and equipment 12. Related parties 14. Share Capital 17. Remuneration of auditors 20. Commitments 15. Reserves and Share based payments 18. Accounting policies 21. Contingencies 19. Risk management 22. Events after reporting date 4. Operating activities 13. Parent entity 16. Loss per share information 5. Provisions 6. Taxation 7. Prepayments and other receivables 8. Trade payables 9. Subscriptions to be settled Accounting policies and critical accounting judgements applied to the preparation of financial statements have been moved to the relevant section. Information is only being included in the Notes to the extent that it has been considered material and relevant to the understanding of the financial statements. CONSOLIDATED INCOME STATEMENT AND STATEMENT OF COMPREHENSIVE INCOME For the year ended 30 June 2022 29 Note 2022 ($) 2021 ($) Revenue and other income Other income Expenses Loss on disposal of assets Depreciation Employee benefits expense Exploration expenses Finance charges General expenses Professional fees Travel and accommodation Marketing Rent and administration Share based payments - Cape Hardy Stage I Warrants Loss before income tax Income tax expense Loss for the period Other comprehensive loss for the period Total comprehensive income for the period attributable to owners of Iron Road Ltd Loss per share attributable to the ordinary equity holders of the company: Basic and diluted loss per share (cents) 3 4 2 4 15 6 16 38 50,265 - (46,826) (34,000) (46,829) (2,266,907) (2,441,857) (479,211) (155,500) (97,857) (596,516) (19,573) (16,091) (264,208) (83,304) (4,025,955) - (478,151) - (68,357) (890,896) (47,357) (9,249) (252,663) (1,216,501) (5,435,595) - (4,025,955) (5,435,595) - - (4,025,955) (5,435,595) Cents (0.51) Cents (0.74) 6 The above consolidated income statement and statement of comprehensive income should be read in conjunction with the notes to the consolidated financial statements. S T A T E M E N T S I F N A N C A L I IRON ROADANNUAL REPORT 2022OVERVIEWCHAIRMAN'S LETTEROPERATIONS REPORTOPERATING AND FINANCIAL REVIEWFINANCIAL STATEMENTSDIRECTORS' REPORTSIGNED REPORTSASX INFORMATION12345678 30 CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 30 June 2022 ASSETS Current assets Cash and cash equivalents Bank term deposits Prepayments and other receivables Total current assets Non-current assets Exploration and evaluation expenditure Property, plant and equipment Total non-current assets Total assets LIABILITIES Current liabilities Trade and other payables Subscription to be settled Provisions Total current liabilities Non-current liabilities Provisions Total non-current liabilities Total liabilities Net assets EQUITY Contributed equity Reserves Accumulated losses Total equity Note 2022 ($) 2021 ($) 1 1 7 2 3 1,894,350 45,000 49,872 1,989,222 123,096,527 10,582,537 133,679,064 135,668,286 4,747,945 45,000 94,080 4,887,025 122,725,631 9,699,192 132,424,823 137,311,848 Note 2022 ($) 2021 ($) 8 9 5 5 Note 14 15 609,733 924,400 307,261 1,841,394 4,946 4,946 1,846,340 133,821,946 2022 ($) 178,731,844 8,249,008 (53,158,906) 133,821,946 1,212,609 - 271,695 1,484,304 1,097 1,097 1,485,401 135,826,447 2021 ($) 177,406,872 7,552,526 (49,132,951) 135,826,447 The above consolidated statement of financial position should be read in conjunction with the notes to the consolidated financial statements. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the year ended 30 June 2022 Attributable to owners of Iron Road Ltd Contributed Equity Accumulated losses Reserves Total Equity Note $ $ $ $ Balance at 1 July 2020 162,093,715 (43,697,356) 4,766,758 123,163,117 Loss for the year - (5,435,595) Transactions with owners in their capacity as owners: Contributions to equity net of transaction costs Share based payments - employees Share based payments - Cape Hardy Stage I Warrants Balance at 30 June 2021 Loss for the year Transactions with owners in their capacity as owners: Contributions to equity net of transaction costs Share based payments - employees Share based payments - Cape Hardy Stage I Warrants 14 15 15 14 15 15 15,313,157 - - - - - - - (5,435,595) 15,313,157 1,569,267 1,569,267 1,216,501 1,216,501 177,406,872 (49,132,951) 7,552,526 135,826,447 - (4,025,955) - (4,025,955) 1,324,972 - - - - - - 1,324,972 613,178 613,178 83,304 83,304 Balance at 30 June 2022 178,731,844 (53,158,906) 8,249,008 133,821,946 The above consolidated statement of changes in equity should be read in conjunction with the notes to the consolidated financial statements. 31 6 I F N A N C A L I S T A T E M E N T S IRON ROADANNUAL REPORT 2022OVERVIEWCHAIRMAN'S LETTEROPERATIONS REPORTOPERATING AND FINANCIAL REVIEWFINANCIAL STATEMENTSDIRECTORS' REPORTSIGNED REPORTSASX INFORMATION12345678 32 CONSOLIDATED STATEMENT OF CASH FLOWS For the year ended 30 June 2022 Cash flows from operating activities Payments to suppliers and employees (inclusive of GST) Government grant received Interest received Note 2022 ($) 2021 ($) (2,929,760) (2,546,179) - 38 50,000 265 Net cash outflow from operating activities 4 (2,929,722) (2,495,914) Cash flows from investing activities Payments for term deposits Proceeds from term deposits Payments for exploration and evaluation Payments for property, plant and equipment Proceeds from sale of assets Net cash outflow from investing activities Cash flows from financing activities Proceeds from issue of shares Share issue transaction costs Subscriptions received Proceeds of short term finance Repayment of short term finance Net cash inflow from financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year (180,000) 180,000 (370,896) (930,171) - (1,301,067) 496,868 (26,556) 1,250,000 - (343,118) 1,377,194 (2,853,595) 4,747,945 1,894,350 (180,000) 180,000 (765,871) - 13,000 (752,871) 15,614,728 (301,571) - 1,000,000 (8,656,882) 7,656,275 4,407,490 340,455 4,747,945 14 9 1 The above consolidated statement of cash flows should be read in conjunction with the notes to the consolidated financial statements. 33 6 I F N A N C A L I S T A T E M E N T S NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2022 KEY NUMBERS 1. Cash Where we spent money Cash expenditure from operating activities during the year was $383,581 higher than the prior year at $2,929,760 (2021: $2,546,179) mainly resulting from the reinstatement of Director fees and the remunerated appointment of Executive Director, Mr Glen Chipman in July 2021. Share capital and other funding raised during the year was mainly invested into progressing the CEIP, including Cape Hardy Stage I port (see note 2) and used to repay $343,118 in short term finance from Sentient Global Resources Fund IV (2021: $8,656,882). Cash and cash equivalents at 30 June 2022 were $1,894,350 (2021: $4,747,945) and bank term deposits held were $45,000 (2021: $45,000). The bank term deposit of $45,000 is held as security for the Group’s credit card facility. Cash at bank earns a floating interest rate based on the at call daily rate. Funds held in a term deposit facility for 3 months or more have been reclassified to bank term deposits in the consolidated statement of financial position per AASB 107. 2022 $4,900,500 2021 $12,270,503 Exploration and evaluation Employee benefits expense Professional fees Rent and administration Share issue transaction costs $ 944,367 $1,401,042 $596,516 $323,066 $ 26,556 Purchase of property, plant and equipment $930,171 Repayment of borrowings Other $643,118 $35,664 Exploration and evaluation $1,388,210 Employee benefits expense $623,936 Professional fees Rent and administration $890,896 $352,402 Share issue transaction costs $301,571 Repayment of borrowings $8,656,882 Other $56,606 IRON ROADANNUAL REPORT 2022OVERVIEWCHAIRMAN'S LETTEROPERATIONS REPORTOPERATING AND FINANCIAL REVIEWFINANCIAL STATEMENTSDIRECTORS' REPORTSIGNED REPORTSASX INFORMATION12345678 34 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2022 KEY NUMBERS 2. Exploration Exploration and evaluation expenditure capitalised in relation to CEIP for the year ended 30 June 2022 totalled $370,896 (2021: $765,861). The total capitalised exploration and evaluation expenditure relating to the CEIP at 30 June 2022 was $123,096,527 (2021: $122,725,631). From 1 January 2019 expenditure on maintaining the mining lease that has not progressed the CEIP has been expensed. The total exploration expense for the year was $479,211 (2021: $478,151). The CEIP asset is tested for impairment periodically or when events or circumstances indicate the carrying value may not be recoverable. For the year ended 30 June 2022, the directors deemed the current capitalisation of development of the CEIP mineral resource to be appropriate, as the Group continues to refine mining and processing methods and capital cost estimates. The Group’s exploration and evaluation policy is to capitalise and carry forward exploration and evaluation expenditure where a JORC compliant mineral resource has been identified. This appropriately recognises that these projects are in an advanced exploration, evaluation or feasibility phase. Expenditure incurred in the acquisition of rights to explore is capitalised, classified as tangible or intangible and recognised as an exploration and evaluation asset. Exploration and evaluation assets are measured at cost at time of recognition. Recoverability of the carrying amount of exploration and evaluation assets is dependent on successful development and commercial exploitation, or alternatively, sale of the respective areas of interest. For areas of interest where a JORC compliant mineral resource is yet to be identified or where exploration rights are no longer current, the capitalised values are subsequently impaired and charged to the profit and loss. Recoverability of exploration and evaluation assets The Group’s accounting policy requires management make certain assumptions as to future events and circumstances. Exploration and evaluation costs are carried forward based on the accounting policy set out above. Should development not be possible, or the existence of ore reserves not allow for economic development, amounts recorded may require impairment in future periods. Iron Road periodically evaluates the economic potential of the CEIP using discounted cashflow modelling techniques. The model includes assumptions for production volumes, forecast iron ore pricing, foreign exchange rates and project costs, which are updated for the latest available data. 3. Property, plant and equipment During the year ended 30 June 2022, the Group invested $930,171 in property, plant and equipment (2021: nil). All property, plant and equipment is stated at historical cost less accumulated depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Reconciliation of the carrying amounts of property, plant and equipment: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2022 KEY NUMBERS 3. Property, plant and equipment (continued) Year ended 30 June 2021 Opening net book value Disposals Depreciation charge Closing net book amount At 30 June 2021 Cost or fair value Accumulated depreciation Net book amount Year ended 30 June 2022 Opening net book value Additions Depreciation charge Closing net book amount At 30 June 2022 Cost or fair value Accumulated depreciation Net book amount LAND AND BUILDINGS PLANT AND EQUIPMENT Land ($) Buildings & Improvements ($) Plant & Equipment ($) Motor Vehicles ($) Total ($) 9,025,418 (47,000) - 8,978,418 8,978,418 - 8,978,418 8,978,418 898,044 - 9,876,462 9,876,462 - 9,876,462 670,292 - (21,526) 648,766 847,518 (198,752) 648,766 648,766 - (21,467) 627,299 847,518 (220,219) 627,299 95,958 - (24,828) 71,130 772,039 (700,909) 71,130 71,130 32,127 (24,886) 78,371 764,895 (686,524) 78,371 1,353 - (475) 878 40,097 (39,219) 878 878 - (473) 405 40,097 (39,692) 405 9,793,021 (47,000) (46,829) 9,699,192 10,638,072 (938,880) 9,699,192 9,699,192 930,171 (46,826) 10,582,537 11,528,972 (946,435) 10,582,537 In July 2021 the Group purchased 24 hectares of gulf front land at Cape Hardy for $0.9 million plus transaction costs, adding to the 1,100+ hectare greenfield site. The Group’s land holdings are predominantly located at the Cape Hardy Port precinct. Other Cape Hardy project costs are included in the capitalised exploration and evaluation balance (refer Note 2). Depreciation methods and useful lives Subsequent costs are included in the assets’ carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All repairs and maintenance are charged to profit and loss during the reporting period in which they are incurred. Land is not depreciated and depreciation on other assets is calculated using the straight-line method to allocate their cost or revalued amounts, net of their residual values, over their estimated useful lives as follows: » Computer equipment 3 - 4 years » Office equipment 3 - 20 years » Plant and equipment 3 - 20 years » Buildings & improvements 4 - 40 years » Motor vehicles 5 - 10 years In the case of leasehold improvements, the allocation of cost is over the term of the lease. The assets’ residual values and useful lives are reviewed and adjusted if appropriate at the end of each reporting period. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with the carrying amount and included in profit or loss. 35 6 I F N A N C A L I S T A T E M E N T S IRON ROADANNUAL REPORT 2022OVERVIEWCHAIRMAN'S LETTEROPERATIONS REPORTOPERATING AND FINANCIAL REVIEWFINANCIAL STATEMENTSDIRECTORS' REPORTSIGNED REPORTSASX INFORMATION12345678 36 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2022 KEY NUMBERS 4. Operating activities Operating expenses were $4,025,993 for the year ended 30 June 2022 (2021: $5,485,860) and include the following: 1,800,000 1,800,000 1,600,000 1,600,000 1,400,000 1,400,000 1,200,000 1,200,000 1,000,000 1,000,000 800,000 800,000 600,000 600,000 400,000 400,000 200,000 200,000 0 0 Salaries and other employee benefits Salaries and other employee benefits Superannuation Superannuation Employee benefits expense Total Total Salaries and other employee benefits 2022 2022 $2,266,907 $2,266,907 $966,017 2021 2021 $2,441,857 $2,441,857 $515,364 Salaries and other employee benefits $966,017 $515,364 Superannuation Superannuation Directors’ fees Directors’ fees $99,152 $99,152 $215,000 $215,000 $74,726 $74,726 $282,500 $282,500 Share based payments - Directors and employees Share based payments - Directors and employees $986,738 $986,738 $1,569,267 $1,569,267 Directors’ fees Directors’ fees Share based Share based payments - Directors payments - Directors and employees and employees Share based payments – employee benefits expense includes the value of performance rights granted to Non-executive Directors, KMP, employees and consultants of $986,738 (2021: $1,569,267) (Refer Note 15). 450,000 450,000 400,000 400,000 350,000 350,000 300,000 300,000 250,000 250,000 200,000 200,000 150,000 150,000 100,000 100,000 50,000 50,000 0 0 Professional fees Total Total Consulting Consulting Legal Legal Accounting & audit Accounting & audit ASX & ASIC ASX & ASIC 2022 2022 2021 2021 $596,516 $596,516 $890,896 $890,896 $179,319 $179,319 $247,150 $247,150 $170,495 $390,456 $170,495 $390,456 $173,039 $202,502 $173,039 $202,502 $73,663 $73,663 $50,788 $50,788 Consulting Consulting Legal Legal Accounting Accounting & Audit & Audit ASX & ASIC ASX & ASIC Share based payments – Cape Hardy Stage I Warrants Share based payments – Cape Hardy Stage I Warrants expense of $83,304 relates to professional services supplied by Macquarie Capital (2021: $1,216,501). Refer Note 15 for additional information. Reconciliation of loss after income tax to net cash outflow from operating activities is as follows: Net loss for the period Depreciation Finance charges Share based payments - Directors and employees Share based payments - Cape Hardy Stage I Warrants Gain/(loss) on disposal of asset Change in operating assets and liabilities Decrease/(increase) in other receivables (Decrease)/increase in trade payables Increase/(decrease) in other provisions Net cash outflow from operating activities 2022 ($) (4,025,955) 46,826 155,500 986,739 83,304 - 44,208 (259,758) 39,415 2021 ($) (5,435,595) 46,829 - 1,569,267 1,216,501 34,000 (49,011) 149,050 (26,955) (2,929,722) (2,495,914) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2022 KEY NUMBERS 5. Provisions Provisions CURRENT NON CURRENT Annual leave $ Long service leave $ Sub-total $ Long service leave $ Carrying amount as at 1 July 2021 119,394 152,301 Movement in provision during the year 106,038 19,698 Amounts used or paid out during the year (90,170) - 271,695 125,736 (90,170) 1,097 3,849 - Total $ 272,792 129,585 (90,170) Carrying amount as at 30 June 2022 135,262 171,999 307,261 4,946 312,207 The employee benefits provision covers the Group’s liability for long service leave and annual leave. This provision represents a present obligation resulting from past events, where it is probable that an outflow of resources will be required to settle the obligation. The current portion of this liability includes all accrued annual leave and the unconditional entitlements to long service leave where employees have completed the required period of service. However, based on experience, the Group does not expect all employees to take the full amount of accrued leave or require payment within twelve months. Short term employee benefit obligations Liabilities for wages and salaries, including non-monetary benefits and accumulating leave that are expected to be settled wholly within twelve months after the end of the period in which the employees render the related service are recognised in respect of employees’ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. All other short-term employee benefit obligations are presented as payables. Other long term employee benefit obligations The liabilities for long service leave and annual leave are not expected to be settled wholly within twelve months after the end of the period in which the employees render the related service. Consequently, they are recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Notwithstanding the classification of annual leave as a long term employee benefit, the related obligations are presented as current liabilities in the balance sheet if the Group does not have an unconditional right to defer settlement for at least twelve months after the reporting date, regardless of when actual settlement is expected to occur. The following amounts reflect leave that is not expected to be taken or paid within twelve months: Annual leave obligations expected to be settled after twelve months 81,157 71,636 Current long service leave obligations to be settled after twelve months 176,945 153,398 Total current leave obligations expected to be settled after twelve months 258,102 225,034 2022 $ 2021 $ 37 6 I F N A N C A L I S T A T E M E N T S IRON ROADANNUAL REPORT 2022OVERVIEWCHAIRMAN'S LETTEROPERATIONS REPORTOPERATING AND FINANCIAL REVIEWFINANCIAL STATEMENTSDIRECTORS' REPORTSIGNED REPORTSASX INFORMATION12345678 38 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2022 KEY NUMBERS 6. Taxation Iron Road Ltd and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation. As a consequence, these entities are taxed as a single entity and the deferred tax assets and liabilities of these entities are set off in the consolidated financial statements. This note provides an analysis of the Group’s income tax expense, amounts recognised and deferred tax assets and liabilities. The income tax expense of nil for the year ended 30 June 2022 (2021: nil) represents the tax payable on the current year’s taxable loss adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses. Deferred income tax is determined using a tax rate applicable at the end of the reporting period and expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Reconciliation of income tax benefit to prima facie tax Loss from continuing operations before income tax benefit Tax at the Australian tax rate of 30% (2021: 30%) Tax effect of amounts which are not deductible/(assessable) in calculating taxable income Current year tax losses not recognised Income tax expense 2022 $ 2021 $ (4,025,955) (5,435,595) (1,207,787) (1,630,678) 321,213 886,574 - 785,912 844,766 - Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, tax is also recognised in other comprehensive income or directly in equity. Deferred tax assets and liabilities The balance of deferred tax assets comprises temporary differences attributable to: Tax losses Business related costs Accrued expenses Total recognised and unrecognised deferred tax assets The balance of deferred tax liabilities comprises temporary differences attributable to: Exploration expenditure Total deferred tax liabilities Net deferred tax assets Deferred tax assets not recognised Net deferred tax assets 2022 $ 2021 $ 46,257,333 45,400,264 62,947 179,778 76,718 157,508 46,500,058 45,634,490 34,075,298 34,075,298 12,424,760 34,101,004 34,101,004 11,533,486 (12,424,760) (11,533,486) - - A net deferred tax asset of $12,424,760 (2021: $11,533,486) has not been recognised as it is not probable within the immediate future that taxable profits will be available against which temporary differences and tax losses can be utilised. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2022 KEY NUMBERS 7. Prepayments and other receivables Prepayments and other receivables for the year ended 30 June 2022 were $49,872 (2021: $94,080). 39 $49,872 2022 $94,080 2021 GST receivable Prepayments Other receivables $15,706 $33,988 $178 GST receivable - Prepayments Other receivables $63,205 $30,697 $178 - As at 30 June 2022 there were no other receivables that were past due or impaired (2021: nil). At initial recognition, the Group measures a financial asset at its fair value plus transaction costs that are directly attributable to the acquisition of the financial asset. Loans and receivables are subsequently carried at amortised cost using the effective interest method. Exposure to risk is considered in Note 19(a). Due to the short-term nature of current receivables, their carrying amount is assumed to approximate fair value. 8. Trade payables Trade payables Accruals Short term loan facility Total trade and other payables 2022 $ 500,828 108,905 - 609,733 2021 $ 713,252 156,239 343,118 1,212,609 During the year the Group repaid the remaining balance of $343,118 in short term loan facility from Sentient Global Resources Fund IV through the issue of shares as approved by shareholders at the General Meeting on 24 August 2021. Trade payables includes $339,539 in annual mining lease rental fees associated with the CEIP mineral lease ML6467 (2021: $433,465). All amounts are unsecured and are presented as current liabilities unless payment is not due within 12 months from the reporting date. The carrying amount of trade and other payables are assumed to approximate their fair values, due to their short-term nature. 6 I F N A N C A L I S T A T E M E N T S IRON ROADANNUAL REPORT 2022OVERVIEWCHAIRMAN'S LETTEROPERATIONS REPORTOPERATING AND FINANCIAL REVIEWFINANCIAL STATEMENTSDIRECTORS' REPORTSIGNED REPORTSASX INFORMATION12345678 40 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2022 KEY NUMBERS 9. Subscription to be settled Subscription to be settled Opening balance 1 July Subscription funds received Initial Subscription Shares issued Subscription Shares issued Finance charge Closing balance 2022 $ - 1,250,000 (113,100) (300,000) 87,500 924,400 2021 $ - - - - - - During the year, the Company entered into a Subscription Agreement (Agreement) with Bulk Commodity Holdings, LLC (the Investor), a US based investor, for a private placement of shares for an aggregate subscription price of up to $5,175,000 over three separate investments. Proceeds from the placement, along with existing cash reserves, are to be used to further advance the Company’s assets and fund general working capital requirements. The bespoke terms of the placement effectively defer the issuance of shares to the Investor across three separate investments (by up to 12 months for each of the first & second investments) and are specifically targeted to minimise the dilutionary impact for current shareholders. The agreement provides for an initial investment of $1.25 million for $1.34 million worth of ordinary shares (Subscription Shares), by way of the Investor making a prepayment for Subscription Shares. The Company received the first investment of $1.25 million prepayment on 22 December 2021 and will issue the Subscription Shares, at the Investor’s request, within 12 months of the date of the funding. The Purchase Price of the Subscription Shares will be equal to $0.40 initially, representing a premium of approximately 111% to the closing price of the Company's shares on 15 December 2021. Subject to the Floor Price described below, the Purchase Price will reset to the average of the five daily volume weighted average prices selected by the Investor during the 20 consecutive trading days immediately prior to the date of the Investor’s notice to issue shares, less a 7.5% discount (or a 10% discount if the Subscription Shares are issued later than nine months after the initial investment). The difference between proceeds of the initial investments and the value of the subscription shares that may be issued has been treated as a finance cost. The Purchase Price will, nevertheless, be the subject of the Floor Price of $0.15. If the Purchase Price formula results in a price that is less than the Floor Price, the Company may forego issuing shares and instead opt to repay the applicable subscription amount in cash (with a 5% premium), subject to the Investor’s right to receive Subscription Shares at the Floor Price in lieu of such cash repayment. The Purchase Price will not be the subject of a cap/ceiling price. The Company will also have the right (but not obligation) to forego issuing shares in relation to the Investor’s request for issuance and instead opt to repay the subscription amount by making a payment to the Investor equal to the market value of the shares that would have otherwise been issued. The Company made an initial issuance of 580,000 Subscription Shares (Initial Subscription Shares) to the Investor on 16 December 2021, towards the ultimate number of Subscription Shares to be issued. Alternatively, in lieu of applying these shares towards the aggregate number of the Subscription Shares to be issued by the Company, the Investor may make a further payment to the Company equal to the value of these shares determined using the Purchase Price (incorporating a 7.5% discount) at the time of the payment. The fair market value of the Initial Subscription Shares of $113,100 has been offset against any future subscriptions to be settled. During the year the Investor requested the issuance of 1,833,239 shares to settle $300,000 of subscriptions. The weighted average price of the Subscription Shares issued under the agreement was $0.164. Under the agreement, the Company issued 337,771 fully paid ordinary shares on 16 December 2021, in satisfaction of a $68,000 fee payable to the Investor. This amount has been expensed as a finance charge. The second investment of $1.25 million for $1.34 million worth of Subscription Shares and its funding has been exercised at the discretion of the Company. Settlement is expected to occur from October 2022. A third investment of raising up to $2.5 million may be undertaken by mutual consent of the Investor and the Company. The Company is under no obligation to draw down on this investment and the Investor is under no obligation to provide it. The financial liability was initially recognised at fair value, net of transaction costs incurred and subsequently measured at amortised cost. When the entity issues equity instruments to extinguish the liability (debt for equity swap), a gain or loss is recognised in profit or loss, which is measured as the difference between the carrying amount of the financial liability and the fair value of the equity instruments issued. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2022 STRUCTURES 10. Controlled entities The Group has the following corporate structure. All subsidiaries are 100% owned (2021: 100%) and located and registered in Australia. Iron Road Ltd IRD Portalis Holdings Pty Ltd IRD Group Finance Pty Ltd IRD (Central Eyre) Pty Ltd IRD Port Assets Holdings Pty Ltd IRD Port Assets Midco Pty Ltd IRD Port Assets Pty Ltd DORMANT IRD Portalis Pty Ltd IRD’s Portalis Partnership SPV IRD Mining Operations Pty Ltd Holder of the CEIP Mining Lease IRD (Gawler) Pty Ltd Eyre Exploration Pty Ltd DORMANT DORMANT 41 6 11. Segment information Operating segments are reported in a manner consistent with the internal reporting provided to the Board of Directors and management of the Group. These internal management reports are reviewed monthly and are aligned with the information provided in the statement of comprehensive income, statement of financial position and statement of cash flows. The Group does not have any customers or operating segments with discrete financial information and all of the Group’s assets and liabilities are located within Australia. As a result no reconciliation is required. S T A T E M E N T S I F N A N C A L I IRON ROADANNUAL REPORT 2022OVERVIEWCHAIRMAN'S LETTEROPERATIONS REPORTOPERATING AND FINANCIAL REVIEWFINANCIAL STATEMENTSDIRECTORS' REPORTSIGNED REPORTSASX INFORMATION12345678 42 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2022 STRUCTURES 12. Related parties The parent entity of the Group and the ultimate parent entity and controlling party is The Sentient Global Resources Funds (Sentient) which at 30 June 2022 owned 72.30% (2021: 72.62%) of the issued ordinary shares of Iron Road Ltd. The following transactions occurred with Sentient: Proceeds of issue from shares Short term finance - loan Short term finance - repayment Director's fees (April 2018 to June 2021) 2022 ($) 496,868 - (343,118) - 2021( $) 8,656,882 1,000,000 (8,656,882) (170,000) During the year the Group repaid the remaining balance of $343,118 in short term loan facility from Sentient Global Resources Fund IV through the issue of shares as approved by shareholders at the General Meeting on 24 August 2021. Director fees outstanding at the start of the year relating to Mr Glen Chipman for the period April 2018 to March 2021 of $153,750 were settled via an issue of shares to Sentient as approved by the shareholders at the same General Meeting. The remaining balance of $16,250 relating to April to June 2021 was paid during the year. Shareholders also approved the issue of the following securities issued to Glen Chipman under the Performance Share Plan at the General Meeting held on 24 August 2021; Employee Performance Rights granted to Glen Chipman – rights that vest subject to various performance conditions as follows: KPI Grant date Expiry date Fair value at grant date Balance at start of period Granted during the period Lapsed during the period Balance at end of period Vested and exercisable at end of period 30 June 2022 #1 #2 #3 #4 Total 24 August 2021 31 December 2024 $0.161 24 August 2021 31 December 2024 $0.144 24 August 2021 31 December 2024 $0.153 24 August 2021 31 December 2024 $0.153 - - - - 1,080,000 - 1,080,000 1,080,000 720,000 (720,000) 450,000 (450,000) 1,800,000 (1,800,000) - - - - - - - 4,050,000 (2,970,000) 1,080,000 1,080,000 KPI 1 IRD share price 1 - VWAP for calendar year 2021 of a minimum 20 cents The table below outlines the inputs used in Monte Carlo fair valuation of the Employee Performance Rights: KPI 2 IRD share price 2 - VWAP for July-December 2021 of a minimum 30 cents KPI 3 Attract non-grain trade value accretive Cape Hardy port business commitments via respective indicative agreements KPI 4 Obtaining initial investment in the Central Eyre Iron Project (CEIP) from a single partner of no less than $50 million in relation to a % interest in the CEIP at an IRD see-through valuation determined substantial and acceptable by the Board of the Company. Exercise Price Right Life Underlying Share Price Expected Share Price Volatility Risk Free Interest Rate Weighted Average Fair Value Weighted Average Contractual Life All transactions were made on standard commercial terms and conditions and at market rates. Nil 3.3 years $0.195 112.65% 0.02% $0.154 3.0 years NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2022 STRUCTURES 12. Related parties (continued) 13. Parent entity information Transactions with Directors and other Key Management Personnel having authority and responsibility over the Group’s activities are as follows: $1,400,000 $1,200,000 $1,400,000 $1,000,000 $1,200,000 $800,000 $1,000,000 $600,000 $800,000 $400,000 $600,000 $200,000 $400,000 0 $200,000 0 Short term employee benefits Short term employee benefits Long term employee benefits Long term employee benefits Post employment benefits Post employment benefits Performance rights expensed Performance rights expensed Total Short term employee benefits Total Long term employee benefits Short term employee benefits Post employment benefits Long term employee benefits Performance rights expensed Post employment benefits 2022 2021 $1,505,719 2022 $894,295 $1,505,719 $40,332 $894,295 $55,000 $40,332 $516,092 $55,000 $1,808,242 2021 $500,400 $1,808,242 $17,549 $500,400 $25,000 $17,549 $1,265,293 $25,000 The individual financial statements for the parent entity show the following amounts (refer table below): The financial information for the parent entity, Iron Road Ltd, has been prepared on the same basis as the consolidated financial statements, except as set out below. (i) Investments in subsidiaries, associates and joint ventures. Investments in subsidiaries are accounted for at cost in the financial statements of Iron Road Ltd. (ii) Tax consolidation Iron Road Ltd and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation. The head entity, Iron Road Ltd, and the controlled entities in the tax consolidated group account for their own current and deferred tax amounts. These tax amounts are measured as if each entity in the tax consolidated group continues to be a stand-alone taxpayer in its own right. In addition to its own current and deferred tax amounts, Iron Road Ltd also recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled entities in the tax consolidated group. The company has not provided any financial guarantees as at 30 June 2022 and has no contingent liabilities as at 30 June 2022. $516,092 Performance rights expensed Detailed remuneration disclosures are provided in the Remuneration Report on page 23. Share based payments – employee benefits expense includes the value of performance rights granted to Non-executive Directors and KMP of $516,092 (2021: $1,265,293) (Refer Note 15). $1,265,293 43 6 I F N A N C A L I Parent entity financial statements ASSETS Total current assets Total non-current assets Total assets LIABILITIES Total current liabilities Total non-current liabilities Total liabilities Net assets EQUITY Issued capital Reserves Accumulated losses Total equity Loss for the year Total comprehensive loss for the year S T A T E M E N T S 2022 $ 13,910,464 122,278,103 136,188,567 1,841,394 4,946 1,846,340 134,342,227 178,731,844 8,249,008 (52,638,625) 134,342,227 (3,981,842) (3,981,842) 2021 $ 15,901,017 121,887,000 137,788,017 1,484,305 1,097 1,485,402 136,302,615 177,406,872 7,552,526 (48,656,783) 136,302,615 (5,347,392) (5,347,392) IRON ROADANNUAL REPORT 2022OVERVIEWCHAIRMAN'S LETTEROPERATIONS REPORTOPERATING AND FINANCIAL REVIEWFINANCIAL STATEMENTSDIRECTORS' REPORTSIGNED REPORTSASX INFORMATION12345678 44 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2022 CAPITAL 14. Equity and reserves Share capital Opening balance 1 July 2022 Shares 2021 Shares 2022 $ 2021 $ 792,279,280 693,683,634 177,406,872 162,093,715 Shares issued as part of 1 for 7 non-renounceable rights issue - 74,444,467 - 10,422,225 Issue of shares in Share placement 2,311,014 19,767,444 496,868 4,250,000 Issue of shares to consultant as consideration for services Issue of shares in Share Purchase Plan (SPP) - - 465,116 3,918,619 Issue of initial placement shares under subscription agreement 580,000 Issue of shares as consideration for fees under subscription agreement 337,771 - - - - - 1,833,239 1,650,000 - - - 113,100 68,000 300,000 373,560 100,000 842,503 - - - - (26,556) (301,571) 798,991,304 792,279,280 178,731,844 177,406,872 Settlement of subscription shares Exercise of Employee Performance Rights Cost of issues Balance 30 June In August 2021 the Group issued 2,311,014 shares to Sentient Global Resources Fund IV to repay the remaining balance of $343,118 in short term loan facility and Director fees relating to the period April 2018 to March 2021 of $153,750, as approved by shareholders at the General Meeting on 24 August 2021. On 16 December 2021 Iron Road announced a placement of ordinary shares in the Company raising up to $5 million for an aggregate subscription of up to $5.175 million. Proceeds from the placement, along with existing cash reserves, are to be used to further advance the Company’s assets and fund general working capital requirements. In accordance with the terms of the placement 337,771 shares were issued in satisfaction of a fee payable to the Investor and 580,000 initial shares were issued which may contribute towards the ultimate number of Subscription Shares to be issued (See Note 9). A further 1,833,239 Subscription Shares have been issued as at 30 June 2022. Ordinary shares entitle the holder to participate in dividends and to share in the proceeds of winding up of the Group in proportion to the number of and amounts paid on the shares held. 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. Ordinary shares have no par value and the company does not have a limited amount of authorised capital. Dividends There have been no dividends paid during the current or prior financial years. 45 6 I F N A N C A L I S T A T E M E N T S NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2022 CAPITAL 15. Reserves and Share-based payments Share Based Payment Reserve 2022 Options & Rights 2021 Options & Rights 2022 $ 2021 $ Opening balance 1 July 58,201,000 - 7,552,526 4,766,758 Past Director Performance Rights granted Future Director Performance Rights granted 2,601,000 5,000,000 377,145 683,500 Employee Performance Rights granted 4,050,000 10,600,000 1,047,778 508,622 Employee Performance Rights lapsed (10,270,000) Share-based payments - employee benefits expense Employee Performance Rights exercised (1,650,000) - - Performance Rights - movement in reserve (61,040) - 986,738 (373,560) 1,569,267 - 613,178 1,569,267 Cape Hardy Stage I Warrants issued 40,000,000 83,304 1,216,501 Share-based payments - Cape Hardy Stage I Warrants expense 83,304 1,216,501 Balance 30 June 50,331,000 58,201,000 8,249,008 7,552,526 The share-based payment reserve is used to recognise the value of options and performance rights granted. Options and Performance rights with vesting conditions are expensed throughout the vesting period and should they fail to vest before the expiry date, no amount is recognised. During the year, Share based payments – employee benefits expense, included the value of performance rights granted to Non- executive Directors, KMP, employees and consultants of $986,738 (2021: $1,569,267). The value of vested performance rights exercised during the year was $373,560 (2021: nil). Share based payments – Cape Hardy Stage I Warrants expense of $83,304 relates to professional services supplied by Macquarie Capital (2021: $1,216,501). Share-based compensation benefits are provided to Directors, KMP, employees and consultants through the Iron Road Ltd Performance Share Plan and Share Option Plan. Performance rights The Iron Road Performance Share Plan (“PSP”) was implemented in November 2020 as part of the Group’s remuneration policy to encourage long term performance and retention of Directors, senior executives, employees or contractors of the Company or its associated body corporate. It is targeted at those whose responsibilities provide them with opportunity to significantly influence long term shareholder value. The plan is administered by the Board which has discretion over persons eligible to participate and any performance criteria attached to performance rights. Performance rights under the PSP entitle the holder to an ordinary share which can be exercised once the right has become exercisable and provided it has not lapsed. The Board may determine that certain performance conditions must be satisfied before the right becomes exercisable. If the performance conditions are satisfied, the rights vest and become exercisable although satisfaction of any vesting condition will not automatically trigger the exercise of the right. The fair value of the rights is determined using Monte Carlo simulation with reference to the market price and expected share price volatility of Iron Road Ltd shares at the grant date. Rights are granted under the plan for nil consideration and carry no dividend or voting rights. Once vested and exercised, any share acquired by participants will rank equally with all existing shares of the same class. Should the participants’ employment cease due to genuine redundancy, resignation under reasonable circumstances (if so determined by the Board), death or invalidity, the unvested performance rights will not lapse and may vest or the performance criteria may be waived. IRON ROADANNUAL REPORT 2022OVERVIEWCHAIRMAN'S LETTEROPERATIONS REPORTOPERATING AND FINANCIAL REVIEWFINANCIAL STATEMENTSDIRECTORS' REPORTSIGNED REPORTSASX INFORMATION12345678 46 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2022 CAPITAL 15. Reserves and Share-based payments The following performance rights were granted during the year ended 30 June 2022: Employee Performance Rights granted to Glen Chipman – rights that vest subject to various performance conditions as follows: KPI Grant date Expiry date Fair value at grant date Balance at start of period Granted during the period Lapsed during the period Balance at end of period Vested and exercisable at end of period 30 June 2022 #1 #2 #3 #4 Total 24 August 2021 31 December 2024 $0.161 24 August 2021 31 December 2024 $0.144 24 August 2021 31 December 2024 $0.153 24 August 2021 31 December 2024 $0.153 - - - - 1,080,000 - 1,080,000 1,080,000 720,000 (720,000) 450,000 (450,000) 1,800,000 (1,800,000) - - - - - - - 4,050,000 (2,970,000) 1,080,000 1,080,000 KPI 1 IRD share price 1 - VWAP for calendar year 2021 of a minimum 20 cents The table below outlines the inputs used in Monte Carlo fair valuation of the Employee Performance Rights: KPI 2 IRD share price 2 - VWAP for July-December 2021 of a minimum 30 cents KPI 3 Attract non-grain trade value accretive Cape Hardy port business commitments via respective indicative agreements KPI 4 Obtaining initial investment in the Central Eyre Iron Project (CEIP) from a single partner of no less than $50 million in relation to a % interest in the CEIP at an IRD see-through valuation determined substantial and acceptable by the Board of the Company. Exercise Price Right Life Underlying Share Price Expected Share Price Volatility Risk Free Interest Rate Weighted Average Fair Value Weighted Average Contractual Life Nil 3.3 years $0.195 112.65% 0.02% $0.154 3.0 years The following performance rights are on issue at 30 June: Grant date Expiry date 30 June 2021 Fair value at grant date Balance at start of period Granted during the year Lapsed during the year Exercised during the year Balance at end of period Vested and exercisable at end of period 15 March 2021 31 December 2024 $0.214 - $ 0.226 Total 30 June 2022 - - 10,600,000 10,600,000 - - - - 10,600,000 10,600,000 - - 15 March 2021 31 December 2024 $0.214 - $ 0.226 10,600,000 - (7,300,000) (1,650,000) 1,650,000 1,650,000 24 August 2021 31 December 2024 $0.144 - $ 0.161 - 4,050,000 (2,970,000) 1,080,000 1,080,000 Total 10,600,000 4,050,000 (10,270,000) (1,650,000) 2,730,000 2,730,000 47 6 I F N A N C A L I S T A T E M E N T S NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2022 CAPITAL Options Share Option Plan The Share Option Plan (“SOP”) was implemented in November 2020 as part of the Group’s remuneration policy to encourage long term performance and retention of Directors, senior executives, employees or contractors of the Company or its associated body corporate. Participants are granted options, some of which vest on issue and others that vest if certain market and non-market vesting conditions are met. Options are granted under the plan for nil consideration, carry no dividend or voting rights and expire if not exercised within five years from issue. When exercisable, each option is convertible into one ordinary share. 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 any guaranteed benefits. There are no unissued ordinary shares of Iron Road Ltd under option for directors and KMP as at 30 June 2022. Cape Hardy Stage I Warrants In September 2020 Iron Road, Macquarie Capital and Eyre Peninsula Co-operative Bulk Handling (EPCBH) entered into a Joint Development Agreement which included the issue of 40 million unlisted Iron Road warrants to Macquarie with vesting contingent on Financial Close and Commercial Operations under being achieved for the Cape Hardy Stage I port. An initial 25 million tranche is exercisable from Financial Close with the second 15 million tranche exercisable from the Commercial Operations Date (COD). All warrants provide the holder with a right to acquire shares in Iron Road and had an exercise price of $0.075 - equivalent to Iron Road’s October 2018 entitlement offer price - and expiry of 24 months post COD. The exercise price was reduced to $0.07376 in accordance with the terms of the warrants following completion of the December 2020 entitlement offer. Tranche Grant date Expiry date 30 June 2021 Exercise price Fair value at grant date Balance at start of period Granted during the year Lapsed during the year Balance at end of period Vested and exercisable at end of period 9 October 2020 24 months from COD $0.07376 $0.132 9 October 2020 24 months from COD $0.07376 $0.132 1 2 Total - - - 25,000,000 15,000,000 40,000,000 30 June 2021 1 2 Total 9 October 2020 24 months from COD $0.07376 $0.132 25,000,000 9 October 2020 24 months from COD $0.07376 $0.132 15,000,000 40,000,000 - - - - - - - - - 25,000,000 15,000,000 40,000,000 25,000,000 15,000,000 40,000,000 - - - - - - A total of $83,304 was recognised as Share Based Payment – Cape Hardy Stage I Warrants expense in the year (2021: $1,216,501). 16. Loss per share Basic earnings per share is calculated by dividing: the profit attributable to owners of the company, i) excluding any costs of servicing equity other than ordinary shares, and ii) the weighted average number of ordinary shares outstanding during the financial year. Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account: the after income tax effect of interest and other financing i) costs associated with dilutive potential ordinary shares, and ii) the weighted average number of additional ordinary Basic and diluted earnings per share Total basic loss per share attributable to the ordinary equity owners of the company (cents) Total diluted loss per share attributable to the ordinary equity owners of the company (cents) Loss from continuing operations attributable to the members of the group used in calculating basic earnings per share ($) 2022 2021 (0.51) (0.74) (0.51) (0.74) (4,025,955) (5,435,595) shares that would have been outstanding, assuming the conversion of all dilutive potential ordinary shares. Weighted average number of shares used as the denominator is 795,453,025 (2021: 736,636,637). IRON ROADANNUAL REPORT 2022OVERVIEWCHAIRMAN'S LETTEROPERATIONS REPORTOPERATING AND FINANCIAL REVIEWFINANCIAL STATEMENTSDIRECTORS' REPORTSIGNED REPORTSASX INFORMATION12345678 48 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2022 ADDITIONAL INFORMATION 17. Remuneration of auditors 18. Accounting policies During the year ended 30 June 2022, total fees paid or payable for services provided by PricewaterhouseCoopers and its related practices were as follows: PricewaterhouseCoopers (Australia) 2022 $ 2021 $ Total remuneration for audit and other assurance services 79,634 72,709 Total remuneration for tax services 5,100 5,100 Total remuneration of PricewaterhouseCoopers (Australia) 84,734 77,809 It is the Group’s policy to employ PricewaterhouseCoopers (PwC) on assignments additional to their statutory audit duties where PwC expertise and experience is important. These assignments are principally audit and assurance services and taxation advice. PwC is awarded assignments on a competitive basis and it is the Group’s policy to seek competitive tenders for all major projects. Summary of significant accounting policies The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial statements are for the consolidated entity consisting of Iron Road Ltd and its controlled entities. The financial statements were authorised for issue by the directors on 20 September 2022. The directors have the power to amend and reissue the financial statements. (a) Basis of preparation of historical financial information These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board and the Corporations Act 2001. Iron Road Ltd is a for-profit entity for the purpose of preparing the financial statements. Iron Road Ltd is a company limited by shares, incorporated and domiciled in Australia. The financial statements are presented in Australian Dollars. (i) Compliance with IFRS The consolidated financial statements of Iron Road Ltd also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). (ii) Historical cost convention These financial statements have been prepared under the historical cost convention. (iii) Critical accounting estimates The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statement are disclosed in Note 18(h). (iv) Going concern For the year ended 30 June 2022 the Group experienced a loss of $4,025,955. In addition, it is noted that combined operating and investing cash outflows of $4,230,789 were incurred during the year ended 30 June 2022. The Group currently has no cash generating assets in operation and $1,894,350 of available cash at 30 June 2022. 49 6 I F N A N C A L I S T A T E M E N T S NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2022 ADDITIONAL INFORMATION In addition to the second investment placement of $1.25 million with Bulk Commodity Holdings LLC. (Note 9) the continuing viability of the Group and its ability to continue as a going concern and meet its debts and commitments as they fall due is dependent on the Group being successful in: 1) raising further funds through a placement or entitlement offer; and/or 2) funding from a project partner. As a result of these matters, there is a material uncertainty that may cast significant doubt on the Group’s ability to continue as a going concern and, therefore, that it may be unable to realise its assets and discharge its liabilities in the normal course of business. However, the directors believe that the Group will be successful in implementing a combination of the above matters and, accordingly, have prepared the financial report on a going concern basis. (v) New and amended standards adopted by the Group There are no standards that are not yet effective and that would be expected to have a material impact on the Group in the current or future reporting periods and on foreseeable future. (vi) New standards and interpretations not yet adopted There are no new standards that are not yet effective and that would be expected to have a material impact on the Group in the current or future reporting periods and on foreseeable future transactions. (b) Principles of consolidation The consolidated financial statements incorporate the assets and liabilities of all controlled entities of Iron Road Ltd as at 30 June 2022 and the results of all controlled entities for the year then ended. Iron Road Ltd and its controlled entities together are referred to in this financial report as the Group. Controlled entities are all entities (including special purpose entities) over which the Group has control. The Group controls an entity when the Group is exposed to or has rights to variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Controlled entities are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases. The acquisition method of accounting is used to account for business combinations by the Group. Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of controlled entities have been changed where necessary to ensure consistency with the policies adopted by the Group. c) Goods and service tax (GST) Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the balance sheet. Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flows. d) Investment and other financial assets The Group classifies its financial assets as loans and receivables. Management determines the classification of its investments at initial recognition. Financial assets are initially measured at fair value plus transaction costs that are directly attributable to the acquisition of the financial asset. For loans and receivables, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a Group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or Group of financial assets that can be reliably estimated. e) Foreign currency translation (i) Functional and presentation currency Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in Australian dollars, which is Iron Road’s functional and presentation currency. (ii) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions are recognised in profit or loss. IRON ROADANNUAL REPORT 2022OVERVIEWCHAIRMAN'S LETTEROPERATIONS REPORTOPERATING AND FINANCIAL REVIEWFINANCIAL STATEMENTSDIRECTORS' REPORTSIGNED REPORTSASX INFORMATION12345678 50 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2022 ADDITIONAL INFORMATION f) Revenue recognition 19. Risk management Interest income on bank term deposits is calculated on the term of the deposit and the bank interest rate at lodgement date and accrued in revenue from continuing operations. g) Leases As a lessee the Group will recognise a right-of-use asset, representing its right to use the underlying asset, and a lease liability, for all leases with a term of more than 12 months; exempting those leases where the underlying asset is deemed to be of a low value. The Group recognises a right-of-use asset and a lease liability at the lease commencement date, i.e. when the underlying asset is first available for use. The right-of-use asset is initially measured to be equal to the lease liability and adjusted for any lease incentives received, initial direct costs and estimates of costs to dismantle or remove the underlying leased asset. Subsequently the right-of-use asset is measured at cost less any accumulated depreciation and impairment losses, and adjusted for certain re-measurements of the lease liability. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate, adjusted for asset-specific factors. The lease liability is subsequently increased by the interest cost on the lease liability and decreased by lease payments made. h) Critical accounting estimates and judgements Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances. The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed in Note 2. Exploration and evaluation assets. Counterparties without an external credit rating: Financial assets with no default in the past Cash at bank and fixed term deposits with a credit rating: AA- Total The Group’s activities expose it to a variety of financial and market risks (including interest rate risk and price risk), credit risk and liquidity risk. The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework. Management monitors and manages the financial risks relating to the operations of the Group through regular reviews of the risks, to minimise potential adverse effects on the financial performance and position of the Group. a) Credit risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial asset fails to meet its contractual obligations and arises principally from the Group’s receivables, cash and cash equivalents and bank term deposits. The maximum exposure to credit risk at the end of the reporting period is the carrying amount of each class of cash and cash equivalent and bank term deposit. Exposure to credit risk The carrying amount of the Group’s financial assets represents the maximum credit exposure. There are no significant concentrations of credit risks, whether through exposure to individual customers or specific industry sectors. The Group’s maximum exposure to credit risk at the reporting date was $1,989,222 (2021: $4,887,025). The credit quality of financial assets that are neither past due not impaired can be assessed by reference to external credit ratings (if available) or to historical information about counterparty default rates. Financial assets that are neither past due nor impaired are as follows: 2022 $ 2021 $ 49,872 94,080 1,939,350 1,989,222 4,792,945 4,887,025 51 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2022 ADDITIONAL INFORMATION b) Liquidity risk c) Market 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. Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates which will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising returns. The following market risk exposures have been assessed: The Group manages liquidity risk by maintaining adequate reserves and continuously monitoring forecast and actual cash flows. Typically, the Group ensures that it has sufficient cash on demand to meet expected operational expenses for a period of 60 days, including the servicing of financial obligations. This excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters. The Group received $1,250,000 in subscriptions to be settled during the year with a balance at 30 June 2022 of $924,400 – See note 9 (2021: nil). A further $1,250,000 is expected to be received from October 2022. The following are the contractual maturities of undiscounted financial liabilities, including estimated interest payments and excluding the impact of netting agreements: (i) Currency risk The Group operates in Australian dollars with infrequent and low value transactions in other currencies. Such transactions present immaterial currency risk. (ii) Interest rate risk Exposure arises from assets bearing variable interest rates. With consideration of the cash balance at 30 June 2022 and the Group’s intention to hold fixed rate assets to maturity, the impact of interest rate risk is considered to be immaterial. (iii) Price Risk Changes in commodity prices may impact the Group’s projected cash flows in future years and may impact the assessment of the carrying value of its assets. However, given the company is not yet in production, changes in commodity prices do not currently impact the Group’s profit or loss or its cash flows. d) Capital risk management The Group’s objectives when managing capital are to safeguard their ability to continue as a going concern. There were no changes to the Group’s approach to capital management during the year. The Group is not subject to externally imposed capital requirements. 6 I F N A N C A L I S T A T E M E N T S Contractual maturities of financial liabilities Less than 6 months Total contractual cash flows Carrying amount At 30 June 2022 Trade and other payables Total non-derivatives At 30 June 2021 Trade and other payables Total non-derivatives There are no derivative financial instruments. 609,733 609,733 1,212,609 1,212,609 609,733 609,733 1,212,609 1,212,609 609,733 609,733 1,212,609 1,212,609 IRON ROADANNUAL REPORT 2022OVERVIEWCHAIRMAN'S LETTEROPERATIONS REPORTOPERATING AND FINANCIAL REVIEWFINANCIAL STATEMENTSDIRECTORS' REPORTSIGNED REPORTSASX INFORMATION12345678 52 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2022 21. Contingencies There are no material contingent liabilities or contingent assets of the Group at reporting date. 22. Events after reporting date No matters or circumstances have arisen since 30 June 2022 that have significantly affected the Group’s operations, results or state of affairs. UNRECOGNISED ITEMS 20. Commitments Mining tenements All of the Group tenements are situated in the South Australia. In order to maintain an interest in mining and exploration tenements, the Group is committed to meet the conditions under which the tenements were granted. The timing and amount of exploration expenditure commitments and obligations of the Group are subject to the minimum expenditure commitments required as per the Mining Act 1971. The following obligations are not provided for in the financial report: Exploration and mineral expenditure commitments Within one year Later than one year but no later than five years Total exploration expenditure commitments 2022 $ 2021 $ 66,667 652,540 132,158 - 198,825 652,540 The Group’s interest in mining and exploration tenements is as follows: South Australia Tenement Reference Warramboo ML6467 Lock Mulgathing EL5934 EL6425 EL6012 EL6173 EL6502 EL6532 EL5767 EL5998 EL6569 Interest 100% 100% 100% 100% Iron Ore rights 100% Iron Ore rights 100% Iron Ore rights 100% Iron Ore rights 100% Iron Ore rights 90% Iron Ore rights 90% Iron Ore rights Lease commitments The Group’s entered into a month to month lease on its new office in Adelaide in January 2019. Consequently, the total commitments for minimum payments in relation to operating leases for the year ended 30 June 2022 were nil (2021: nil). Capital commitments There were no outstanding contractual commitments as at 30 June 2022 (2021: nil). DIRECTORS' DECLARATION Iron Road Limited and its Controlled Entities The directors’ of the Group declare that: 1. The consolidated financial statements, comprising the consolidated income statement and statement of comprehensive income, consolidated statement of financial position, consolidated statement of changes in equity, consolidated statement of cash flows and accompanying notes are in accordance with the Corporations Act 2001 and: a) comply with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and b) give a true and fair view of the Group’s financial position as at 30 June 2022 and of its performance for the financial year ended on that date. 2. In the directors’ opinion, there are reasonable grounds to believe that the Group will be able to pay its debts as and when they become due and payable. 3. The remuneration disclosures included in the directors’ report (as part of audited Remuneration Report), for the year ended 30 June 2022, comply with section 300A of the Corporations Act 2001. 4. The directors’ have been given the declarations by the chief executive officer and finance manager required by section 295A of the Corporations Act 2001. 5. The Group has included in the notes to the consolidated financial statements an explicit and unreserved statement of compliance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board. This declaration is made in accordance with a resolution of the Board of directors and is signed for and on behalf of the directors by Peter Cassidy. Peter Cassidy Chairman 20 September 2022 53 7 I S G N E D R E P O R T S IRON ROADANNUAL REPORT 2022OVERVIEWCHAIRMAN'S LETTEROPERATIONS REPORTOPERATING AND FINANCIAL REVIEWFINANCIAL STATEMENTSDIRECTORS' REPORTSIGNED REPORTSASX INFORMATION12345678 INDEPENDENT AUDITOR'S REPORT Independent auditor’s report To the members of Iron Road Ltd Report on the audit of the financial report Our opinion In our opinion: The accompanying financial report of Iron Road Ltd (the Company) and its controlled entities (together the Group) is in accordance with the Corporations Act 2001, including: (a) 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 then ended (b) complying with Australian Accounting Standards and the Corporations Regulations 2001. What we have audited The Group financial report comprises: • • • • • • the consolidated statement of financial position as at 30 June 2022 the consolidated income statement and statement of comprehensive income for the year then ended the consolidated statement of changes in equity for the year then ended the consolidated statement of cash flows for the year then ended the notes to the consolidated financial statements, which include significant accounting policies and other explanatory information the directors’ declaration. 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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional & 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. PricewaterhouseCoopers, ABN 52 780 433 757 Level 11, 70 Franklin Street, ADELAIDE SA 5000, GPO Box 418, ADELAIDE SA 5001 T: +61 8 8218 7000, F: +61 8 8218 7999 Liability limited by a scheme approved under Professional Standards Legislation. 55 7 I S G N E D R E P O R T S IRON ROADANNUAL REPORT 2022OVERVIEWCHAIRMAN'S LETTEROPERATIONS REPORTOPERATING AND FINANCIAL REVIEWFINANCIAL STATEMENTSDIRECTORS' REPORTSIGNED REPORTSASX INFORMATION12345678 56 INDEPENDENT AUDITOR'S REPORT Material uncertainty related to going concern We draw attention to Note 18(a)(iv) in the financial report, which indicates that the Group incurred a loss for the year ended 30 June 2022 of $4,025,955. In addition, it is noted that combined operating and investing cash outflows of $4,230,789 were incurred during the year ended 30 June 2022. The Group currently has no cash-generating assets in operations and with $1,894,350 of available cash at balance date required additional future funding as detailed in Note 18(a)(iv). These conditions, along with other matters set forth in Note 18(a)(iv), indicate that a material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter. Our audit approach An audit is designed to provide reasonable assurance about whether the financial report is free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial report. We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial report as a whole, taking into account the geographic and management structure of the Group, its accounting processes and controls and the industry in which it operates. Materiality Audit scope Key audit matters • • • Our audit focused on where the Group made subjective judgements; for example, significant accounting estimates involving assumptions and inherently uncertain future events. Our audit focused on where the Group made subjective judgements; for example, significant accounting / estimates involving assumptions and inherently uncertain future events. The Group’s accounting processes are performed at their head office in Adelaide, which is where we performed our audit procedures. • • Amongst other relevant topics, we communicated the following key audit matters to the Audit and Risk Committee: Carrying value of exploration and evaluation assets (Refer to note 2) These are further described in the Key audit matters section of our report, except for the matter which is described in the material uncertainty related to going concern section. • For the purpose of our audit we used overall Group materiality of $1,356,000, which represents approximately 1% of the Group’s total assets. • We applied this threshold, together with qualitative considerations, to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements on the financial report as a whole. • We chose Group total assets because, in our view, it is the metric against which the performance of the Group is most commonly measured given it is an exploration and evaluation company that has no production or sales. • We utilised a 1% threshold based on our professional judgement, noting it is within the range of commonly accepted thresholds in the mining industry. INDEPENDENT AUDITOR'S REPORT Key audit matter Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report for the current period. The key audit matter was addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on this matter. Further, any commentary on the outcomes of a particular audit procedure is made in that context. We communicated the key audit matter to the Board. In addition to the matter described in the Material uncertainty related to going concern section, we have determined the matter described below to be the key audit matter to be communicated in our report. Key audit matter How our audit addressed the key audit matter Carrying value of exploration and evaluation assets (Refer to note 2) As at 30 June 2022 the Group holds $123,096,527 in exploration and evaluation assets on its balance sheet. The Group accounts for exploration and evaluation activities in accordance with the policy in note 2 of the financial report. The amount recorded at balance date relates entirely to the Group’s Central Eyre Iron Project (CEIP). Judgement is required by the Group to determine whether there were indicators of impairment of the exploration and evaluation assets, due to the need to make estimates about future events and circumstances, such as whether the resources may be economically viable to develop in the future. The carrying value of exploration and evaluation assets was considered a key audit matter given the size of the balance recorded on the consolidated statement of financial position at 30 June 2022 and the fact that determination of the balance involves significant judgement made by the Group as outlined above. We performed the following procedures: • • • • evaluated the Group’s assessment that there had been no indicators of impairment during the current period with reference to the requirements of Australian Accounting Standards. considered the latest available information regarding the CEIP through inquiries of management and the directors, and review of press releases. inquired of management and the directors as to whether there had been any changes to, and obtained evidence to support, the Group’s right of tenure to the CEIP. This includes identifying the licence status recorded by the South Australian Department of State Development. evaluated disclosures made in the financial statements in light of Australia Accounting Standards. 57 7 I S G N E D R E P O R T S IRON ROADANNUAL REPORT 2022OVERVIEWCHAIRMAN'S LETTEROPERATIONS REPORTOPERATING AND FINANCIAL REVIEWFINANCIAL STATEMENTSDIRECTORS' REPORTSIGNED REPORTSASX INFORMATION12345678 58 INDEPENDENT AUDITOR'S REPORT Other information The directors are responsible for the other information. The other information comprises the information included in the annual report for the year ended 30 June 2022, but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and we do not and will not express an opinion or any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the directors for the financial report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the 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 have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial report. A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website at: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our auditor's report. INDEPENDENT AUDITOR'S REPORT Report on the remuneration report Our opinion on the remuneration report We have audited the remuneration report included in pages 18 to 24 of the directors’ report for the year ended 30 June 2022. In our opinion, the remuneration report of Iron Road Ltd 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. PricewaterhouseCoopers M. T. Lojszczyk Partner Adelaide 20 September 2022 59 7 I S G N E D R E P O R T S IRON ROADANNUAL REPORT 2022OVERVIEWCHAIRMAN'S LETTEROPERATIONS REPORTOPERATING AND FINANCIAL REVIEWFINANCIAL STATEMENTSDIRECTORS' REPORTSIGNED REPORTSASX INFORMATION12345678 60 ASX ADDITIONAL INFORMATION For the year ended 30 June 2022 Additional information required by the Australian Securities Exchange Ltd and not shown elsewhere in this report is shown below. All information is current as at 31 August 2022. Distribution of equity securities Analysis of number of equity security holders by size of holding: Spread of holding 1-1,000 1,001-5,000 5,001-10,000 10,001-100,000 100,001 and over Total holders Total securities Number of holders Shares held Percentage of ordinary fully paid shares Unquoted rights Unquoted warrants 171 676 371 812 212 2,242 60,562 2,083,036 2,953,047 26,064,045 768,700,614 0.01% 0.26% 0.37% 3.26% 96.10% - - - - 6 6 - - - - 1 1 799,861,304 100.00% 9,461,000 40,000,000 All unquoted warrants are held by Macquarie Corporate Holdings Pty Limited. There are 600 holders of less than a marketable parcel of ordinary shares (calculated at 14.5 cents per share). Twenty largest shareholders Substantial shareholder The names of the twenty largest shareholders of quoted ordinary shares are: Holder name Shares held Percentage of ordinary fully paid shares These substantial shareholders have notified the company in accordance with section 671B of the Corporations Act 2001 (Cth): 1 Sentient Executive GP IV Limited 496,989,991 62.13% Shares held 2 HSBC Custody Nominees (Australia) Limited 90,228,873 11.28% 3 Sentient Executive GP III Limited 4 Sentient Executive GP II Limited 5 JEM Investment Fund Holdings Pty Ltd 6 DEVIPO Pty Ltd 7 Cedarose Pty Ltd 8 SEISUN Capital Pty Ltd 9 CM & SM Anderson 10 Geoffrey John Paul 11 BNP Paribas Nominees Pty Ltd 12 Citicorp Nominees Pty Limited 51,558,593 29,131,005 7,255,118 6,898,785 5,724,314 4,714,577 3,639,535 3,100,000 2,947,664 2,700,377 13 HSBC Custody Nominees (Australia) Limited - A/C 2 2,543,484 14 Glen Anthony Chipman 15 BNP Paribas Noms Pty Ltd 16 Jonathan James Kent 17 Bond Street Custodians Limited 18 Claire Margaret Stocks 19 Andrew James Stocks 20 Frazel Pty Limited 1,789,535 1,696,859 1,602,000 1,560,037 1,442,657 1,442,656 1,323,418 6.45% 3.64% 0.91% 0.86% 0.72% 0.59% 0.46% 0.39% 0.37% 0.34% 0.32% 0.22% 0.21% 0.20% 0.20% 0.18% 0.18% 0.17% Total 718,289,478 89.82% Sentient Executive GP II, Limited 29,131,005 Sentient Executive GP III, Limited 51,558,593 Sentient Executive GP IV, Limited 496,989,991 Total holding 577,679,589 Voting rights All ordinary shares are fully paid and carry one vote per share without restriction. There are no voting rights attaching to unquoted performance rights and warrants on issue. Buy back There is no current on-market buy-back. 

Continue reading text version or see original annual report in PDF format above