J U P I T E R M I N E S L I M I T E D A N N U A L R E P O R T 2 0 1 9 20 1 9A N N U A L R E P O R T CORPORATE DIRECTORY Australian Business Number 51 105 991 740 Directors Brian Gilbertson Non-executive Chairman; Non-independent Paul Murray Non-executive Director; Independent Andrew Bell Non-executive Director; Independent Yeongjin Heo Non-executive Director; Non-independent Priyank Thapliyal Executive Director Melissa North Executive Director Executives Priyank Thapliyal Chief Executive Officer Melissa North Finance Director and Company Secretary Principal and Registered Office Level 10 16 St Georges Terrace Perth WA 6000 Telephone: Facsimile: Email: (08) 9346 5500 (08) 9481 5933 info@jupitermines.com Share Registry Link Market Services Limited QV1 Building Level 12 250 St Georges Terrace Perth WA 6000 Telephone: Fax: Email: Website: 1300 554 474 (02) 9287 0303 registrars@linkmarketservices.com.au www.linkmarketservices.com.au Auditors Grant Thornton Audit Pty Ltd Level 43 152-158 St Georges Terrace Perth WA 6000 Telephone: Facsimile: Email: Website: (08) 9480 2000 (08) 9322 7787 info.wa@au.gt.com www.grantthornton.com.au CONTENTS CHAIRMAN’S LETTER OPERATING AND FINANCIAL REVIEW Tshipi Borwa Manganese Mine Tshipi Environmental, Social & Governance Report Marketing and Manganese Market Central Yilgarn Iron Ore Projects MINERAL RESOURCES AND ORE RESERVES UPDATE DIRECTORS’ REPORT REMUNERATION REPORT CORPORATE GOVERNANCE STATEMENT ANNUAL FINANCIAL REPORT STATEMENT OF CONSOLIDATED PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME STATEMENT OF CONSOLIDATED FINANCIAL POSITION STATEMENT OF CONSOLIDATED CHANGES IN EQUITY STATEMENT OF CONSOLIDATED CASH FLOWS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DIRECTORS’ DECLARATION INDEPENDENT AUDITOR’S REPORT ADDITIONAL INFORMATION FOR LISTED COMPANIES GLOSSARY OF TERMS AND ABBREVIATIONS 2 3 3 4 8 8 9 17 22 29 40 41 42 43 44 45 72 73 77 80 1 ANNUAL REPORT 2019 CHAIRMAN’S LETTER Dear Shareholders, On behalf of the Board of Jupiter Mines, I am pleased to present the Annual Report for the financial year ending 28 February 2019. I start by congratulating both the Jupiter and Tshipi management teams on an outstanding year. Jupiter successfully navigated its first full year as an ASX listed company, and the Tshipi Borwa mine continued from strength to strength, achieving record sales of 3.5 million tonnes of manganese ore. Tshipi paid out over ZAR 3 billion in dividends to its shareholders, and Jupiter in turn paid out $147 million, resulting in a dividend yield of 22% on the year-end share price. These distributions equate to a 93% payout ratio, well above the Company’s indicated 70% dividend policy. The iron ore market has strengthened recently, spurred by the drive towards higher grade iron ore feed in China and supply issues. Subsequent to the year end, Jupiter announced a strategic review of its iron ore assets. The Board has always maintained that these assets have significant intrinsic value, given especially their proximity to existing, and now potentially available, Esperance logistics and rail and port infrastructure. Sound governance remains high on the Board’s agenda. There was a large vote against the 2018 Remuneration Report and Director re- elections at the July 2018 AGM. Over the year, Jupiter met with various investors and proxy advisors to understand their concerns, and I urge you to read the 2019 Remuneration Report which addresses these in full. The Jupiter Board and executive team remuneration terms remain unchanged, which we believe to be appropriate for our size and structure and which fully aligns with our high dividend payout policy. Since our last Annual Report, we have welcomed two new directors onto the Jupiter Board. Ms Melissa North, who has been Jupiter’s Chief Financial Officer since 2012, was appointed a director on 14 March 2019, recognising her large contribution to the affairs of the company. Mr Yeongjin Heo was appointed in February 2019 as POSCO’s representative after Mr Sungwon Yoon’s resignation. I look forward to their contributions to the Company’s progress in years to come. Looking ahead, we shall continue to focus on the possible expansion of Tshipi, on possibly increasing Jupiter’s stake in Tshipi and on regional consolidation and co-development opportunities within the Kalahari manganese field. I again thank all shareholders for your continued support of Jupiter and look forward to further successes in the 2020 financial year. Yours Faithfully, Brian Gilbertson Chairman 2 CHAIRMAN’S LETTER JUPITER MINES LIMITED OPERATING AND FINANCIAL REVIEW Jupiter Mines Limited (“Jupiter” or the “Company”) has an interest in two areas: a 49.9% share in Tshipi é Ntle Manganese Mining Proprietary Limited (“Tshipi”), which operates the Tshipi Borwa Manganese mine (“Tshipi Borwa”) in South Africa; and in Australia, the Central Yilgarn Iron Project (“CYIP”), which includes the Mount Ida Magnetite Project (“Mount Ida”) and Mount Mason Hematite Project (“Mount Mason”). TSHIPI BORWA MANGANESE MINE The Tshipi Borwa mine is an open-pit manganese mine with an integrated ore processing plant located in the Kalahari Manganese Fields, in the Northern Cape Province of South Africa, which is the largest manganese bearing geological formation in the world. Tshipi remains the largest manganese mine in South Africa and one of the five largest globally, with a long–life resource and low operating costs. Figure 1. Tshipi Manganese Mine Location Map During the year, Tshipi Borwa broke their export volume record when the team shipped 3,511,461 tonnes. Cost of production remained steady, averaging USD2.27 per dmtu over the year, up from USD2.09 in FY2018. This was mainly due to the mechanics of increased royalties as a result of the higher manganese price realised during FY2019. The Tshipi management team continue to monitor further cost optimisation initiatives, as well as converting as much road to rail logistics as allowable within the Transnet network, over and above their 2.3 million tonne allocation. Tshipi has consistently increased its production, with 3,448,523 tonnes produced in FY2019. Tshipi’s state of the art rail load-out facility can ultimately accommodate 5 million tonnes per annum, and expansion plans are currently being evaluated. Mined volume Production Sales Average CIF price achieved (high grade lumpy) Average cost of production Average cost of production Unit Bcm Tonnes Tonnes CIF, USD/dmtu FOB, ZAR/dmtu FOB, USD/dmtu FY2019 11,234,344 3,448,523 3,511,461 6.41 30.66 2.27 FY2018 10,578,010 3,637,155 3,336,177 4.82 25.58 2.09 4 3.5 3 2.5 2 1.5 1 0.5 0 FY16 FY17 FY18 FY19 Figure 2: Tshipi Production and Sales since FY2016 Production (mt) Sales (mt) OPER ATING AND FINANCIAL REVIEW 3 ANNUAL REPORT 2019 With continued strong cash generation, Tshipi declared and paid dividends of ZAR3.215 billion for the FY2019. Whilst Tshipi was served a Section 54 notice in August 2018, it was testament to the management team that it was lifted within a few days. Tshipi continues to reassess where necessary any developments to their processes and operations. This also extends to the improvement of the lost time injury rate which increased during the year. Please refer to the Tshipi Environmental, Social and Governance Report below for further details. TSHIPI ENVIRONMENTAL, SOCIAL & GOVERNANCE REPORT Tshipi is committed to sustainable development and continual improvement to minimise the impact on the environment and providing lasting benefits to the surrounding communities. Tshipi places strong emphasis on worker safety and its open-pit operations provides inherent safety advantages. Environment Tshipi is committed to sound environmental management of its operations to ensure that it complies with regulatory requirements, including adopting a comprehensive framework for managing air quality and hydrocarbons and for monitoring noise and water. Water management Tshipi Borwa is situated in a low rainfall, but high evaporation area and as such priority is given to reusing water. Tshipi Borwa has three main catchment areas at the mine site; the open pit, the stormwater dam and the dirty water dam. Potable water is supplied by Sedibeng Water. Ground water seepage into the open pit from wall faces as well as rainwater during storm events is pumped into the dirty water dam. This water is used for dust suppression on the roads and in the processing plant. Priority is given to reusing dirty water, treated sewage effluent and stormwater collected within the dirty water dam for non-potable, process water uses before abstraction of water from clean water sources. Approximately 85% of potable water use is recycled into the dirty water dam. Solid waste management All waste is collected, sorted and temporarily stored on site. Contractors remove this waste from site for reuse or disposal at authorised waste disposal facilities. As part of Tshipi’s Corporate Social Investment Program, ITSOSO, a local BEE company has been appointed a contractor for the removal of all domestic waste. Power generation Tshipi Borwa currently runs independently of the national grid. The generator plant consists of six diesel driven generators designed to operate in synchronisation with each other. Tshipi is in the process of connecting to the national grid with a new substation to be built. The generator plant will then be used for back-up power. The connection to the national grid will decrease operating costs and limit the use of diesel. Agricultural land potential, Ecosystems & Biodiversity and Historical & Archaeological sites The soil fertility at Tshipi Borwa is low and erodibility is high thereby limiting the agricultural potential of the land. Two protected species (Camel Thorn and Grey Camel Thorn) are located at Tshipi Borwa and should any removal/relocation of these species be required, Tshipi has the necessary permits in place. There are no historical and archaeological sites at Tshipi Borwa. Safety Tshipi Borwa is a surface, open-pit mine, which is one of the safest types of mining operations. Along with this inherent safety advantage, Tshipi places emphasis on worker safety programmes and procedures and implements a comprehensive framework to mitigate risks, including risk assessments, a “stop and fix” policy and “near miss” reporting. The below table shows an example the outcomes of the risk assessment process and lists the key mining risks identified and control mitigations (not exhaustive). 4 OPER ATING AND FINANCIAL REVIEW JUPITER MINES LIMITED SUMMARY OF KEY MINING RISK ASSESSMENTS NUMBER ACTIVITY KEY CONTROLS 1 2 3 Travelling with vehicles on access / haul roads No pedestrian traffic Properly designed roads Set speed limits Positioning of hauling equipment for loading Set minimum clearance distances between equipment Loading with an excavator Warning signage Positive radio communication Traffic control Use of Proximity Detection System ("PDS") Excavator approved by Resident Engineer No loading of large boulders Set minimum clearance distances between equipment Positive radio communication Warning signage 4 Drilling activities Drill rig approved by Resident Engineer Set minimum clearance distances between equipment 5 Blasting activities Positive radio communication Warning signage Active dust suppression Blast signed off Safe blasting radius set Competent certified blasting ticket holders utilised Positive radio communication Warning signage Limited contiguous activities Evacuation procedures enforced Properly supervised clearance procedure Limited pit access 6 Feeding primary crusher Equipment approved by Resident Engineer Traffic control Positive radio communication Warning signage Limited pedestrian traffic Enforced speed limits Dust suppression 7 8 Tipping material on top of RoM (“Run of Mine”) pad Equipment approved by Resident Engineer Dozing activities Equipment approved by Resident Engineer Use of PDS Positive radio communication Warning signage Limited pedestrian traffic Use of PDS Positive radio communication Warning signage Traffic control Limited pedestrian traffic No operating in blind spots To date, no fatality has occurred at Tshipi Borwa. OPER ATING AND FINANCIAL REVIEW 5 ANNUAL REPORT 2019 The below graph shows Tshipi Borwa’s historical safety performance: Tshipi Borwa’s Safety Performance 6 5 4 3 2 1 0 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 LTIs1 LTIR2 TRIFR3 1 LTIs (Lost Time Injuries) 2 LTIR (Lost Time Injury Rate) 3 TRIFR (Total Recordable Injury Frequency Rate) Six LTI’s occurred during the financial year ended 28 February 2019 (one in the financial year ended 28 February 2018). Tshipi’s management have implemented corrective measures in order to reduce the number of LTI’s to a target of zero. Health & Corporate Social Responsibility Tshipi provides free onsite health screening and medical surveillance to all employees as well as HIV/AIDS testing and counselling and monitoring of other chronic diseases. Human resource development is viewed as key to the long-term success of Tshipi. Some of the initiatives that Tshipi provides is the sponsorship of adult basic training in the local communities and the provision of scholarships and bursaries for students from the local communities to complete trade tests as well as tertiary education. Over 200 people are expected to benefit from these programs in 2019. Social Economic Development Tshipi Borwa is situated in the Joe Morolong Local Municipality in the Northern Cape and contributes to the John Taolo Gaetsewe District Municipality. Tshipi has constant formal and informal engagements with the surrounding communities to ensure that any concerns are listened to and resolved. Tshipi has undertaken several initiatives to improve the local communities, some of which are listed below: A water infrastructure project which provides the Maphiniki Community with a sustainable water supply A health care clinic in the Heuningvlei area within the Joe Morolong Municipality Road projects School development projects These initiatives are ongoing and new projects are implemented to facilitate the development of the local communities. 6 OPER ATING AND FINANCIAL REVIEW JUPITER MINES LIMITED FINANCIAL SUMMARY Set out below is a summary of Tshipi’s audited Statement of Consolidated Profit or Loss and Statement of Financial Position: ZAR’000 INCOME STATEMENT: Revenue Cost of goods sold Gross margin Other income Administrative expenses Impairment of property, plant and equipment / loss on derecognition Other operating expenses Operating profit Finance income Finance expenses Profit before royalties and taxation Royalties Profit before taxation Taxation Profit after taxation BALANCE SHEET: Current assets Royalties prepaid Inventory Trade and other receivables Cash and cash equivalents Contract fulfilment cost assets Contract assets Total current assets Non-current assets Property, plant and equipment Mineral rights Other financial assets Total non-current assets Total assets Current liabilities Tax payable Royalties payable Trade and other payables Contract liabilities Total current liabilities Non-current liabilities Decommissioning and rehabilitation provision Deferred tax Total non-current liabilities Total liabilities Equity Share capital and share premium Retained earnings Contributed assets reserve Total equity Total equity and liabilities Year Ended 28 February 2019 Year Ended 28 February 2018 10,147,867 (4,674,368) 5,473,499 6,818 (12,030) (2,259) (25,013) 5,441,015 307,361 (3,752) 5,744,624 (537,048) 5,207,576 (1,458,548) 3,749,028 - 309,275 1,028,017 543,124 52,869 167,828 2,101,113 2,240,181 183,957 30,714 2,454,852 4,555,965 55,780 4,588 411,832 52,869 525,069 43,470 585,699 629,169 1,154,238 321,359 2,963,407 116,961 3,401,727 4,555,965 7,140,808 (3,982,254) 3,158,554 6,531 (5,628) (20,825) (40,852) 3,097,780 34,771 (91,034) 3,041,517 (329,511) 2,712,006 (810,537) 1,901,469 6,087 382,153 882,016 209,562 - - 1,479,818 2,179,741 189,104 24,972 2,393,817 3,873,635 7,372 - 385,382 - 392,754 45,797 567,234 613,031 1,005,785 321,359 2,429,530 116,961 2,867,850 3,873,635 OPER ATING AND FINANCIAL REVIEW 7 ANNUAL REPORT 2019 MARKETING & THE MANGANESE MARKET Jupiter continued its operations in South Africa (“Jupiter SA”) as an agent marketing its 49.9% share of Tshipi manganese ore. For the financial year to 28 February 2019, Jupiter SA recorded marketing fee income of $13,116,608 (2018: $10,048,724). A total of 1,736,049 tonnes were sold for the year, against a budget of 1,596,000 tonnes. Whilst the manganese price softened slightly during the financial year, it remained robust at an average of USD6.00 per dmtu (37% FOB Port Elizabeth). FY18 average USD4.69/dmtu FY19 average USD6.00/dmtu u t m d / D S U 9 8 7 6 5 4 3 2 1 0 6 1 0 2 n a J 6 1 0 2 b e F 6 1 0 2 r a M 6 1 0 2 r p A 6 1 0 2 y a M 6 1 0 2 n u J 6 1 0 2 l u J 6 1 0 2 g u A 6 1 0 2 p e S 6 1 0 2 t c O 6 1 0 2 v o N 6 1 0 2 c e D 7 1 0 2 n a J 7 1 0 2 b e F 7 1 0 2 r a M 7 1 0 2 r p A 7 1 0 2 y a M 7 1 0 2 n u J 7 1 0 2 l u J 7 1 0 2 g u A 7 1 0 2 p e S 7 1 0 2 t c O 7 1 0 2 v o N 7 1 0 2 c e D 8 1 0 2 n a J 8 1 0 2 b e F 8 1 0 2 r a M 8 1 0 2 r p A 8 1 0 2 y a M 8 1 0 2 n u J 8 1 0 2 l u J 8 1 0 2 g u A 8 1 0 2 p e S 8 1 0 2 t c O 8 1 0 2 v o N 8 1 0 2 c e D 9 1 0 2 n a J 9 1 0 2 b e F 9 1 0 2 r a M Source: Pricing data sourced from Metal Bulletin Figure 3: Manganese prices 2016 to March 2019 – 37% FOB Port Elizabeth South Africa remains the leading manganese suppliers to the seaborne market and accounts for over 35% of global production excluding China. An increase in demand over the year can be attributed to changes in Chinese environmental restrictions which increased manganese imports. CENTRAL YILGARN IRON PROJECTS The Central Yilgarn Iron Project is located 130km by road northwest of the town of Menzies. The CYIP consists of the long-life Mount Ida Magnetite project and the smaller Mount Mason Hematite DSO project. Both projects are planned around existing infrastructure in the region, including the Leonora to Esperance railway line, and the Port of Esperance. The flagship Mount Ida Magnetite Project has the high quality JORC mineral resources to be a tier one long-life magnetite mine. The Mount Mason high-grade hematite mineralisation is located approximately 12km northwest of the Mount Ida Magnetite Project. It has the potential to be a low–cost start-up, near term project with a short payback period. Both projects remained on care and maintenance with no work being undertaken during the financial year. The assets hold great value, particularly in the current iron ore market and with regional infrastructure availability. The advanced nature of these projects, their proximity to established and available infrastructure and the size and quality of the mineral resources provides an attractive opportunity to commence both high-grade DSO hematite and magnetite concentrate production. Jupiter again commissioned an independent valuation of its Central Yilgarn iron ore assets in line with valuation and accounting standards for the financial year. The valuation recommended the Mount Ida Magnetite Project to be valued at between $4 million and $16 million, and the Mount Mason DSO Hematite Project valued at between $0.3 million and $1.2 million. Given the positive movements in the iron ore market, it was resolved to reverse prior year impairments of $1,177,243. These amounts have been recognised in the Statement of Profit or Loss and Other Comprehensive Income. Further information is provided at Note 13 of the financial statements. Figure 4: CYIP Project Location Map 8 OPER ATING AND FINANCIAL REVIEW JUPITER MINES LIMITED MINERAL RESOURCES AND ORE RESERVES UPDATE Jupiter reports mineral resources and ore reserves in accordance with the 2012 edition of the Australasian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves (the JORC Code) as required by Chapter 5 of the ASX Listing Rules. TSHIPI MINERAL RESOURCES AND ORE RESERVES Tshipi is a long mine life and a large JORC Mineral Resource Position. The following tables show the mineral resources and ore reserves of the Tshipi Mine in accordance with the JORC Code (2012) as at 28 February 2019, and comparison to previous year. Mineral Resource Estimation Current Mineral Resource Estimate: Zone Tonnes Mn (%) Fe (%) SG (t/m3) Thickness(m) Category Measured Indicated Inferred X Y Z M C N Supergene Sub-Total X Y Z M C N Sub-Total X Y Z M C N 17 903 000 8 013 000 7 976 000 15 306 000 28 235 000 13 133 000 1 745 000 92 314 000 31 918 000 7 019 000 14 416 000 17 263 000 30 350 000 11 071 000 112 039 000 53 829 000 25 170 000 20 963 000 49 600 000 51 224 000 26 508 000 32.03 22.28 32.66 38.28 36.58 35.48 36.30 34.24 31.47 23.28 31.80 37.52 36.62 35.02 33.68 30.72 25.81 31.40 34.14 35.40 34.41 32.47 33.16 4.85 5.74 5.91 4.72 3.70 5.02 4.71 4.67 5.05 5.37 6.40 5.13 3.72 5.46 4.93 5.33 5.14 5.67 5.06 4.13 5.41 5.02 4.92 3.54 3.30 3.59 3.76 3.66 3.65 3.49 3.61 3.50 3.28 3.55 3.74 3.68 3.67 3.59 3.52 3.35 3.57 3.67 3.66 3.67 3.58 3.59 Total Mineral Resource 431 652 000 Sub-Total 227 298 000 Tonnes are rounded down to 1 000t; Mineral Resources are reported as inclusive of Ore Reserves; Mineral Resource grades and tonnages are reported in situ; Explicit (modelled losses) as well as an additional 5% geological loss have been applied; The maximum depth of the Mineral Resource is 372m below surface. Competent Person: Stewart Nupen Figure 5: Current Mineral Resource estimate of the Tshipi Mine in accordance with JORC Code (2012) as at 28 February 2019 OPER ATING AND FINANCIAL REVIEW 7.56 3.30 3.00 5.32 9.61 3.73 8.47 6.52 9.91 3.98 4.52 4.86 8.70 3.12 7.07 8.19 4.68 3.10 6.48 6.95 3.36 6.12 6.45 9 ANNUAL REPORT 2019 Zone Tonnes Mn (%) Fe (%) SG (t/m3) Previous Mineral Resource Estimate: Classification Measured Indicated Inferred X Y Z M C N 19 305 000 9 532 000 9 104 000 16 945 000 31 982 000 13 733 000 Supergene 1 999 000 Sub-Total 102 602 000 X Y Z M C N 37 272 000 6 237 000 16 712 000 15 417 000 32 957 000 10 858 000 Sub-Total 119 455 000 X Y Z M C N 67 955 000 22 730 000 22 802 000 43 817 000 53 450 000 26 726 000 31.87 22.24 32.52 38.15 36.40 35.62 36.44 34.07 31.20 23.10 31.39 37.79 36.69 34.95 33.51 30.92 25.41 31.39 34.67 35.35 34.43 32.52 33.13 4.81 5.74 5.78 4.63 3.74 4.87 4.70 4.63 4.91 5.45 6.33 5.27 3.74 5.46 4.91 5.22 5.35 5.73 5.10 4.13 5.41 5.04 4.91 3.55 3.32 3.60 3.76 3.66 3.65 3.49 3.61 3.50 3.28 3.54 3.74 3.68 3.66 3.58 3.52 3.35 3.57 3.68 3.66 3.66 3.58 3.59 Total Mineral Resource 459 541 000 Sub-Total 237 483 000 Competent Person: Stewart Nupen Tonnes are rounded down to 1 000t No geological loss applied Figure 6: Previous Mineral Resource estimate of the Tshipi Mine in accordance with JORC Code (2012) as at 31 December 2017 1 0 OPER ATING AND FINANCIAL REVIEW JUPITER MINES LIMITED Comparison with Previous Mineral Resource Estimate: Zone Tonnes Mn (%) Classification Measured Indicated Inferred X Y Z M C N Supergene -1 402 000 -1 519 000 -1 128 000 -1 639 000 -3 747 000 -600 000 -254 000 Sub-Total -10 288 000 X Y Z M C N -5 354 000 782 000 -2 296 000 1 846 000 -2 607 000 213 000 Sub-Total -7 416 000 X Y Z M C N -14 126 000 2 440 000 -1 839 000 5 783 000 -2 226 000 -218 000 0.16 0.05 0.15 0.13 0.18 -0.14 -0.14 0.17 0.27 0.18 0.41 -0.27 -0.07 0.07 0.17 -0.21 0.40 0.01 -0.53 0.04 -0.02 -0.05 0.04 Fe (%) 0.04 -0.00 0.13 0.09 -0.04 0.15 0.01 0.04 0.14 -0.08 0.07 -0.15 -0.03 0.01 0.02 0.10 -0.20 -0.06 -0.04 -0.01 -0.00 -0.02 0.01 SG (t/m3) -0.01 -0.01 -0.01 -0.00 -0.00 -0.01 -0.00 -0.00 0.00 0.00 0.01 0.00 -0.00 0.01 0.01 -0.00 0.00 -0.00 -0.01 0.00 0.00 0.00 0.00 Total Mineral Resource -27 889 000 Sub-Total -10 185 000 Figure 7: Reconciliation between 28 February 2019 and 31 December 2017 Mineral Resource Estimate in accordance with JORC Code (2012) The changes to the Mineral Resource estimates are due to mining depletion, an increase in the Measured Mineral Resource extents, a downgrade of certain parts of the Measured Mineral Resource to Indicated Mineral Resources and the application of a 5% geological loss. These have collectively resulted in the Measured Mineral Resources decreasing by 10.3Mt, Indicated Mineral Resources decreasing by 7.4Mt and the Inferred Mineral Resources decreasing by 10.2Mt. Historically, a global loss of 9% has been applied to the Ore Reserve estimate and no losses have been applied to the Mineral Resource statement. A review of the Mine’s losses has informed the decision to split the 9% global loss into a 5% geological loss (applied in the Mineral Resource estimate), a 2% mining loss and a 2% processing loss (applied in the Ore Reserve estimate). OPER ATING AND FINANCIAL REVIEW 1 1 ANNUAL REPORT 2019 Ore Reserve Estimate Current Tshipi Ore Reserves statement: Zone Tonnes Mn (%) Fe (%) SG (t/m3) Proved Probable Z M C N Supergene 3 475 000 11 538 000 21 946 000 7 813 000 836 000 Sub-total 45 608 000 Z M C N 3 900 000 12 333 000 24 268 000 8 133 000 Sub-total 48 634 000 Total 94 242 000 32.66 38.47 36.67 34.99 37.46 36.55 32.38 38.21 36.71 34.91 36.44 36.49 6.06 4.85 3.74 5.38 4.87 4.50 6.67 5.19 3.71 5.62 4.64 4.57 3.60 3.77 3.67 3.66 3.52 3.69 3.58 3.76 3.68 3.68 3.69 3.69 Tonnes are rounded down to 1 000t; Mining loss of 2%; Processing loss of 2% Competent Person: Jonathan Buckley Figure 8: Ore reserves of the Tshipi Mine in accordance with JORC Code (2012) as at 28 February 2019 Previous Ore Reserves statement: Proved Probable Total Competent Person: Jonathan Buckley Tonnes are rounded down to 1 000t Total loss of 9% Zone Tonnes Mn (%) SG (t/m3) Z M C N Supergene 2 913 000 12 181 000 24 379 000 7 410 000 766 000 Sub-total 47 649 000 Z M C N 3 265 000 9 230 000 21 749 000 4 517 000 Sub-total 38 761 000 86 410 000 31.62 38.01 36.47 34.36 37.03 36.25 32.12 38.20 36.83 33.86 36.41 36.32 3.59 3.77 3.68 3.65 3.51 3.69 3.56 3.75 3.68 3.65 3.68 3.69 Figure 9: Previous Ore Reserve Statement of the Tshipi Mine in accordance with JORC Code (2012) as at 31 December 2017 1 2 OPER ATING AND FINANCIAL REVIEW JUPITER MINES LIMITED Comparison with Previous Ore Reserve Statement: Proved Probable Total Zone Tonnes Mn (%) SG (t/m3) Z M C N Supergene 562 000 -643 000 -2 433 000 403 000 70 000 Sub-Total -2 041 000 Z M C N Sub-Total 635 000 3 103 000 2 519 000 3 616 000 9 873 000 7 832 000 1.04 0.46 0.20 0.63 0.43 0.30 0.26 0.01 -0.12 1.05 0.03 0.17 0.01 0.00 -0.01 -0.02 0.01 0.00 0.02 0.01 0.00 0.03 0.01 0.00 Figure 10: Reconciliation between 28 February 2019 and 31 December 2017 Ore Reserve in accordance with JORC Code (2012) Depletion due to mining during the period 31 December 2017 to 28 February 2019 was approximately 3.9Mt. Although the introduction of a geological loss to the Mineral Resource statement resulted in a 5% drop in the Mineral Resources (before mining depletion), the decrease did not impact the Ore Reserves or Life of Mine, as the geological loss was accounted for in the prior Ore Reserve estimate as a component of a global loss of 9%. The Measured Mineral Resource classification change would have resulted in a decrease in the Proven Ore Reserves; however, the impact was offset by additional drilling completed before 28 February 2019. The information in this report with respect of the Tshipi mine that relates to Reporting of Mineral Resources and Ore Reserves estimation is based on information compiled by Mr Stewart Nupen and Mr Jonathan Buckley. Mr Jonathan Buckley is a Fellow of the Southern African Institute of Mining and Metallurgy. Mr Stewart Nupen is a member of the Southern African Institute of Mining and Metallurgy. Mr Nupen and Mr Buckley are employed by The Mineral Corporation. They have sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which being undertaking to qualify as a “Competent Person” as defined in the JORC Code. Mr Buckley and Mr Nupen consent to the inclusion in this report of the statements based on their information in the form and context in which they appear. OPER ATING AND FINANCIAL REVIEW 1 3 ANNUAL REPORT 2019 MOUNT IDA MINERAL RESOURCE ESTIMATES The following tables show the Mineral Resource estimates of the Mount Ida project in accordance with the JORC Code (2012) as at 7 February 2018. There has been no material between the date of the below statements and the end of the financial year. There have been no material changes since the last mineral resource estimate (ASX announcement: 16 April 2018) therefore no reconciliation is shown. Central Zone based on Unweathered BIF with a 10% Magnetic Fe block grade cut-off Zone/Class Material Tonnes x106 Central In situ total 1,062 Indicated In situ Magnetic 38.45% Central Inferred Central Total Concentrate In situ total 409 169 In situ Magnetic 32.12% Concentrate 54 In situ total 1,231 In situ Magnetic 37.58% Concentrate 463 Fe (%) 30.23 25.64 66.69 27.03 21.31 66.34 29.79 35.05 66.65 SiO2 (%) 48.47 2.64 6.86 51.68 2.34 7.28 48.91 2.60 6.91 Al2O3 (%) 1.88 0.02 0.05 2.40 0.02 0.05 1.95 0.02 0.05 CaO (%) 2.70 0.07 0.17 2.92 0.06 0.17 2.73 0.06 0.17 P (%) 0.07 0.01 0.01 0.07 0.01 0.02 0.07 0.01 0.01 S (%) 0.28 0.09 0.23 0.31 0.10 0.32 0.28 0.09 0.24 LOI (%) -0.56 -1.14 -2,97 -0.43 -0.96 -2.98 -0.54 -1.12 -2.97 South and North Zone based on Unweathered BIF with a 10% Magnetic Fe block grade cut-off Zone/Class Material Tonnes x106 South In situ total 567 Indicated In situ Magnetic 34.26% North Inferred Concentrate In situ total 194 48 In situ Magnetic 42.36% Concentrate Nth + Sth In situ total 20 615 Total In situ Magnetic 34.89% Concentrate 214 Fe (%) 28.63 22.93 66.93 31.63 28.32 66.85 28.86 23.35 66.92 SiO2 (%) 49.92 2.26 6.60 48.82 2.97 7.02 49.84 2.32 6.64 Al2O3 (%) 2.35 0.02 0.06 1.54 0.01 0.03 2.28 0.02 0.05 CaO (%) 3.47 0.07 0.21 2.20 0.07 0.16 3.37 0.07 0.20 P (%) 0.07 0.01 0.02 0.07 0.01 0.02 0.07 0.01 0.02 S (%) 0.36 0.17 0.50 0.12 0.04 0.09 0.34 0.16 0.46 LOI (%) -0.65 -1.02 -2.96 -0.84 -1.32 -3.11 -0.67 -1.04 -2.98 MgO (%) 3.00 0.05 0.12 3.33 0.05 0.15 3.05 0.05 0.12 MgO (%) 2.76 0.05 0.14 2.07 0.05 0.13 2.71 0.05 0.14 Combined Central, South and North Zones based on Unweathered BIF with a 10% Magnetic Fe block grade cut-off Zone/Class Material Central Indicated Central Inferred Central Total In situ total In situ Magnetic Concentrate In situ total In situ Magnetic Concentrate In situ total In situ Magnetic Tonnes x106 1,062 38.45% 408 784 34.29% 269 1,846 36.68% Fe (%) 30.23 25.64 66.69 28.47 22.91 66.81 29.48 24.48 SiO2 (%) 48.47 2.64 6.86 50.24 2.32 6.77 49.22 2.50 Al2O3 (%) 1.88 0.02 0.05 2.31 0.02 0.05 2.06 0.02 CaO (%) 2.70 0.07 0.17 3.28 0.07 0.20 2.95 0.07 P (%) 0.07 0.01 0.01 0.07 0.01 0.02 0.07 0.01 S (%) 0.28 0.09 0.23 0.34 0.15 0.43 0.30 0.11 LOI (%) -0.56 -1.14 -2.97 -0.62 -1.02 -2.98 -0.58 -1.09 MgO (%) 3.00 0.05 0.12 2.84 0.05 0.14 2.94 0.05 MnO (%) 0.07 0.01 0.02 0.10 0.01 0.02 0.08 0.01 0.02 MnO (%) 0.09 0.01 0.03 0.06 0.02 0.05 0.09 0.01 0.04 MnO (%) 0.07 0.01 0.02 0.09 0.01 0.03 0.08 0.01 1 4 OPER ATING AND FINANCIAL REVIEW JUPITER MINES LIMITED Combined Central, South and North Zones based on Unweathered BIF with a 10% Magnetic Fe block grade cut-off Zone/Class Material Tonnes x106 Concentrate 677 Fe (%) 66.74 SiO2 (%) 6.83 Al2O3 (%) 0.05 CaO (%) 0.18 P (%) 0.01 S (%) 0.31 LOI (%) -2.97 MgO (%) 0.13 MnO (%) 0.03 Figure 11: Mineral resource estimates for Mount Ida in accordance with JORC Code (2012) MOUNT MASON MINERAL RESOURCE ESTIMATES The following tables show the mineral resources estimates of the Mount Mason project in accordance with the JORC Code (2012) as at 7 February 2018. There has been no material between the date of the below statements and the end of the financial year. There have been no material changes since the last mineral resource estimate (ASX announcement: 16 April 2018) therefore no reconciliation is shown. Classification Tonnes Fe (%) 4,800,000 60.3 1,080,000 59.4 10.41 320,000 58.4 14.10 SiO2 (%) 7.37 Al2O3 (%) 2.90 3.47 4.37 3.01 P (%) 0.05 0.06 0.08 0.05 S (%) 0.01 0.01 0.01 0.01 CaO (%) 0.03 0.03 0.03 0.03 MgO (%) 0.04 0.05 0.06 0.04 LOI (%) 2.63 2.55 2.88 2.62 Total Measured + Indicated 5,900,000 60.1 7.92 Measured Indicated Inferred Figure 12: Mineral resource estimates Mount Mason in accordance with JORC Code (2012) The information in this report with respect to the CYIP that relates to mineral resource estimates is based on information compiled by Dr Michael Cunningham (Mount Mason) and Mr Rodney Brown (Mount Ida), who are each Members of the Australasian Institute of Mining and Metallurgy and the Australian Institute of Geoscientists. Dr Cunningham and Mr Brown are employed by SRK Consulting. They have sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which being undertaking to qualify as a “Competent Person” as defined in the JORC Code. Dr Cunningham and Mr Brown consent to the inclusion in this report of the statements based on their information as provided in the Independent Geologists Report dated February 2018, in the form and context in which they appear. SUMMARY OF GOVERNANCE ARRANGEMENTS AND INTERNAL CONTROLS Mineral Resource and Ore Reserves are estimated by suitably qualified Jupiter or Tshipi personnel or external consultants in accordance with the requirements of the JORC Code, industry standard techniques and internal guidelines for the estimation and reporting of Ore Reserves and Mineral Resources. All Mineral Resource estimates and supporting documentation are prepared and reviewed by a suitably qualified external Competent Person. All Ore Reserves estimates supporting documentation are prepared and reviewed by a suitably qualified external Competent Person. All Ore Reserve estimates are prepared in conjunction with feasibility studies and Company budgets which consider all material factors. The Mineral Resources and Ore Reserves Statement included in the Annual Report is reviewed by a suitably qualified external Competent Person prior to its inclusion. OPER ATING AND FINANCIAL REVIEW 1 5 ANNUAL REPORT 2019 SCHEDULE OF MINERAL TENEMENTS LEASE NAME STATUS APPLIED DATE GRANT DATE EXPIRY DATE CURRENT AREA CURRENT COMMITMENT CURRENT RENT G37/36 General Purpose – Graten Well Granted 3/04/2009 17/01/2011 16/01/2032 358.62 Ha G29/21 Mt Mason Granted 22/05/2009 23/03/2010 22/03/2031 95.00 Ha G29/23 Mt Mason Granted 5/05/2012 7/02/2013 6/02/2034 1,256.73 Ha L29/116 Mt Mason Granted 7/06/2012 3/01/2013 2/01/2034 25.48 Ha L29/117 Mt Mason Granted 7/06/2012 7/12/2012 6/12/2033 90.14 Ha L29/118 Mt Mason Granted 7/06/2012 9/11/2012 8/11/2033 11.67 Ha L29/119 Mt Mason Granted 28/08/2012 30/07/2013 29/07/2034 52.76 Ha L29/120 Mt Mason Granted 30/09/2012 7/02/2013 6/02/2034 1,720.05 Ha L29/121 Mt Mason Granted 30/09/2012 30/07/2013 29/07/2034 64.31 Ha L29/123 Mt Mason Granted 25/11/2012 26/03/2013 25/03/2034 23.13 Ha L29/132 Mt Mason Granted 17/06/2016 08/11/2016 27/11/2028 300.00 Ha - - - - - - - - - - - $5,923.50 $1,567.50 $20,724.00 $429.00 $1,501.50 $198.00 $874.50 $10,860.50 $1,072.50 $396.00 $4,966.50 M29/408 Mt Mason Granted 6/02/2006 28/11/2007 27/11/2028 300.00 Ha $30,100.00 $5,628.70 G29/22 Mt Ida Granted 11/01/2011 6/09/2012 5/09/2033 9,634.00 Ha L29/100 Mt Ida Granted 11/01/2011 11/11/2011 10/11/2032 775.00 Ha L29/106 Mt Ida Granted 18/03/2011 20/06/2012 19/06/2033 119.44 Ha L29/78 Mt Ida Granted 1/09/2009 24/06/2010 23/06/2031 6,341.00 Ha L29/79 Mt Ida Granted 12/01/2010 24/08/2010 23/08/2031 6,886.00 Ha L29/81 Mt Ida Granted 13/05/2010 12/09/2011 11/09/2032 26,020.34 Ha L29/99 Mt Ida Granted 12/11/2010 24/02/2012 23/02/2033 64,550.49 Ha L36/214 Mt Ida Granted 5/09/2012 17/06/2013 16/06/2034 19,703.86 Ha L36/215 Mt Ida Granted 20/10/2012 1/08/2013 31/07/2034 29,849.54 Ha L36/216 Mt Ida Granted 20/10/2012 1/08/2013 31/07/2034 17,632.43 Ha L36/217 Mt Ida Granted 20/10/2012 1/08/2013 31/07/2034 5,882.25 Ha L37/203 Mt Ida Granted 3/05/2010 27/06/2011 26/06/2032 68,952.89 Ha L57/45 Mt Ida Granted 5/09/2012 19/08/2013 18/08/2034 8,703.48 Ha L57/46 Mt Ida Granted 05/09/2012 05/12/2014 04/12/2035 31,741.86 Ha L29/122 Mt Ida Granted 30/09/2012 03/04/2014 2/04/2035 6,590.72 Ha - - - - - - - - - - - - - - - $158,911.50 $12,787.50 $1,980.00 $3,170.50 $3,443.00 $13,010.50 $32,275.50 $9,852.00 $14,925.00 $8,816.50 $2,941.50 $34,476.50 $4,352.00 $15,871.00 $3,295.50 M29/414 Mt Ida Granted 11/01/2011 25/11/2011 24/11/2032 6,461.00 Ha $646,000.00 $120,802.00 L29/131 Mt Ida Granted 12/02/2015 17/12/2015 16/12/2036 541.07 Ha - $8,943.00 All tenements are held 100% by Jupiter Mines Limited. 1 6 OPER ATING AND FINANCIAL REVIEW JUPITER MINES LIMITED DIRECTORS’ REPORT In accordance with a resolution of Directors, the Directors present their Report together with the Financial Report of Jupiter Mines Limited (“Jupiter”) and its wholly owned subsidiaries (together referred to as the “Consolidated Entity” or “Group”) for the financial year ended 28 February 2019 and the Independent Auditor’s Report thereon. Directors The Directors of Jupiter at any time during or since the end of the financial year are as follows: Non-Executive Brian Gilbertson Paul Murray Andrew Bell Sungwon Yoon (resigned 4 February 2019) Yeongjin Heo (appointed 4 February 2019) Executive Priyank Thapliyal Melissa North (appointed 14 March 2019) Additional information is provided below regarding the current Directors. Brian Gilbertson the LSE, taking the company into the FTSE 100. Separately, Mr Gilbertson worked to merge the gold operations of Gencor and Gold Fields of South Africa, creating Gold Fields Limited, a leader in the world gold mining industry. He served as its first Chairman until October 1998. In 2001, Billiton plc merged with BHP Limited to create what is widely regarded as the world’s premier resources company, BHP Billiton plc. Mr Gilbertson was appointed its second Chief Executive on 1 July 2002. In late 2003, Mr Gilbertson led mining group Vedanta Resources plc (Vedanta) to the first primary listing of an Indian company on the London Stock Exchange in the second largest IPO of the year (USD876 million). He served as Chairman of Vedanta until July 2004. He was appointed President of Sibirsko-Uralskaya Aluminium Company (SUAL), the smaller aluminium producer in Russia and led that company into the USD30 billion merger with RUSAL and the alumina assets of Glencore International A.G., creating the largest aluminium company in the world. Mr Gilbertson established Pallinghurst Advisors LLP and Pallinghurst (Cayman) GP L.P. during 2005 and 2007 respectively, to develop opportunities on behalf of a group of natural resource investors. Mr Gilbertson is the non-executive chairman of Gemfields Group Limited (previously Pallinghurst Resources Limited), a company listed on the Johannesburg Stock Exchange (JSE: GML) and is a director of various companies controlled by GML. BSc (Maths and Physics), BSc (Hons) (Physics), MBL, PMD45 Mr Gilbertson is a British and South African citizen. He has not been a Director of any other ASX listed company in the past three years. (Chairman; Non-Executive Director; Member of the Remuneration and Nomination Committee) Mr Gilbertson was appointed a Director on 22 June 2010 and subsequently appointed a member of the Remuneration and Nomination Committee on 15 March 2018. Mr Gilbertson has extensive experience in the global natural resources industry. He was Managing Director of Rustenburg Platinum Mines Limited in the 1980’s, a period during which the company gained recognition as the world’s foremost producer of platinum. In the 1990’s, as Executive Chairman of Gencor Limited, he led the restructuring of the South African mining industry into the post-Apartheid era, transforming Gencor Limited into a focused mineral and mining group. During this period, he held ultimate responsibility for Impala Platinum Holdings, for Samancor Limited (the world’s largest producer of manganese and chrome ore and alloys) and for Trans-Natal Coal Corporation (a major coal producer and exporter). Important new initiatives included the Hillside and Mozal aluminium smelters, the Columbus stainless steel plant, and the purchase of the international mining assets (Billiton plc) of the Royal Dutch Shell Group. In 1997, Gencor Limited restructured its non-precious metals interests as Billiton plc. With Mr Gilbertson as Executive Chairman, Billiton plc raised USD1.5 billion in an initial public offering on Paul Murray FFin, CPA (Independent Non-Executive Director; Remuneration Committee Chairman; Audit Committee Chairman) Paul is a founding director of Jupiter Mines Limited and was Chairman at the time of formation in August 2003. Paul was appointed as a Director of the Company on 20 August 2003. He has served continuously since that time as Chairman of both the Audit Committee and the Remuneration and Nomination Committee. In addition to attending to various statutory duties as required, Paul has a strong record of attendance at Company board and shareholder meetings and contributes to consideration and discussions in respect of matters on the Company’s business papers. Apart from academic qualifications which are relevant to his roles, Paul has held positions on boards of a number of ASX listed companies. Mining experience includes exploration for and mining of tin in the New England district of NSW and service on the boards of successful Australian oil and gas companies, Basin Oil NL and Reef Oil NL. DIRECTORS’ REPORT 1 7 ANNUAL REPORT 2019 Andrew Bell B.A. (Hons), M.A., LLB (Hons) (Independent Non-Executive Director; Audit Committee Member; Remuneration Committee Member) Andrew was appointed as a Director of Jupiter on 4 June 2008 and subsequently appointed a member of both the Audit Committee and the Remuneration and Nomination Committee on 15 March 2018. Andrew is Chairman of Red Rock Resources plc, and African Battery Metals plc, being companies listed on the AIM market of the London Stock Exchange Ltd. He was a natural resources analyst in London in the 1970s, then specialised in investment and investment banking covering the Asia region. Andrew has been involved in the resource and mining sectors in Asia since the 1990s and has served on the Boards of a number of listed resource companies. Yeongjin Heo B.A. Law (Seoul National University); MBA (University of Leeds) (Non-Executive Director; Audit Committee Member) Mr Heo was appointed as a Director of Jupiter and Member of the Audit Committee on 4 February 2019. Mr Heo is the President of POSCO Australia Pty Ltd, a significant shareholder of the Company. After joining POSCO in 1995, Mr Heo worked across the strategic planning and raw materials areas. Mr Heo brings significant experience in the resource industry to Jupiter. Mr Heo has not been a Director of any other ASX listed companies in the past three years. Priyank Thapliyal Metallurgical Engineer, B Tech (IIT-Kanpur, India), M Eng, MBA (McMaster, Canada), MBA (Ivey Business School, Canada) (Executive Director; Chief Executive Officer) his departure in October 2005 to co-found Pallinghurst Resources LLP, the KCM stake was valued at USD 1 billion and Vedanta had a market capitalisation of USD 7.5 billion. Priyank was instrumental in delivering Pallinghurst Resources’ steel feed strategy via Jupiter. That has led to the creation of the flagship Tshipi Mine, from what was a greenfield project, into one of the largest, long-life and low-cost assets of strategic importance. Prior to Vedanta, Priyank was a mining and metals investment banker with CIBC World Markets in Toronto Canada, is a qualified Metallurgical Engineer, MBA and former Falconbridge employee. Mr Thapliyal has not been a Director of any other ASX listed companies in the past three years. Melissa North B.Com; CA (Executive Director; Company Secretary) Melissa North joined Jupiter Mines in May 2012 as Group Financial Controller and was subsequently appointed CFO and Company Secretary on 15 November 2012. Melissa was appointed Finance Director on 14 March 2019. Prior to joining Jupiter, Melissa held various roles in finance management and business advisory services over almost a decade, including Group Financial Controller positions within the Chime Communications Group (London) and other large media agencies in the United Kingdom. Ms North qualified as a Chartered Accountant in 2004 after extensive work experience at Grant Thornton Perth (now Crowe Horwath). Over her time with Jupiter, Melissa has played a critical role in the development of the Company, culminating in its ASX listing in April 2018 and its subsequent evolution into a successful ASX 300 company. Melissa has not been a Director of any other ASX listed companies in the past three years. Principal Activities The principal activities of Jupiter during the year have been the operation of the Tshipi Manganese Mine in South Africa and the sale of manganese ore. Priyank Thapliyal was appointed as a Director of the Company on 4 June 2008. Priyank joined Sterlite Industries in 2000 and worked alongside Mr Anil Agarwal (owner) to implement the strategies that led to the creation of Vedanta Resources plc, a FTSE 100 company. Vedanta floated on the London Stock Exchange (LSE) in December 2003 and raised USD 870 million in its IPO, in what was the largest mining IPO on the LSE that year, and also the first primary listing of an Indian company on the LSE. The success of the Vedanta IPO was instrumental in other emerging market mining companies seeking LSE listings. Review of Financial Results and Operations The consolidated results of Jupiter for the year ended 28 February 2019 was a profit of $138,033,499 after a $51,016,370 tax expense (2018: profit of $92,205,663 after a $5,584,142 tax expense). Further details of the results of the Consolidated Entity are set out in the accompanying financial statements in this Annual Report. Significant Changes in the State of Affairs During the year, the Company undertook an equal access share buy-back in March 2018, reducing the issued capital of the Company by 116,182,215 ordinary shares. Refer to Note 18. Subsequent to the LSE listing, he led Vedanta’s first major overseas acquisition via the USD 50 million controlling investment in Konkola Copper Mines (KCM) in Zambia in 2004. At the time of Jupiter was admitted to the official list of the Australian Securities Exchange on 18 April 2018, following a $240 million Initial Public Offering (“IPO”). 1 8 DIRECTORS’ REPORT JUPITER MINES LIMITED Dividends In respect of the 2019 financial year, the Directors have declared the following dividends: Dividend Dividend per share Total dividend Payment date Interim unfranked, wholly conduit foreign income Final unfranked, wholly conduit foreign income $0.050 $0.025 $0.075 $97,949,552 Paid 10 October 2018 $48,974,775 Paid 21 May 2019 $146,924,327 Financial Position At 28 February 2019, Jupiter held $72,848,680 in cash and cash equivalents (2018: $76,544,487), had a carrying value of investments using the equity method of $422,841,742 (2018: $385,267,255) and carrying value of exploration expenditure of $10,800,000 (2018: $8,700,000). Significant Events After Reporting Date These financial statements were authorised for issue on 28 May 2019 by Director Priyank Thapliyal. Likely Developments, Business Strategies and Prospects The operations at the Tshipi Borwa Manganese Mine are expected to continue in a similar manner to present. The Directors intend Jupiter to proceed with the development of Jupiter’s Mount Ida Magnetite and Mount Mason DSO Hematite projects should access to infrastructure become available the projects are economically viable. Subsequent to year end, Jupiter announced it has launched a process to review its strategic options with regards to these projects. Environmental Regulations and Performance Jupiter’s operations are subject to general environmental regulation under the laws of the States and Territories of Australia and South Africa. The various exploration interests held by Jupiter impose future environmental obligations for site remediation following sampling and drilling programs. The Board is aware of these requirements and management is charged with ensuring compliance. The Directors are not aware of any breaches of these environmental regulations and licence obligations during the year. Please refer to the Tshipi Environmental, Social & Governance Report in the Operating and Financial Review on page 4 for full details. Meetings – Attendance by Directors Board Meetings The number of Directors’ meetings and the number of meetings attended by each of the Directors of Jupiter during the financial year under review are: Director Brian Gilbertson Paul Murray Priyank Thapliyal Andrew Bell Sungwon Yoon Yeongjin Heo Melissa North Number of meetings held during tenure of the Director Number of meetings attended 7 7 7 7 6 1 - 7 7 41 7 6 1 - 1 Priyank Thapliyal did not attend 3 meetings due to illness as announced to ASX on 9 May 2018. DIRECTORS’ REPORT 1 9 ANNUAL REPORT 2019 Committee Meetings The number of committee meetings and the number of meetings attended by each of the Directors of Jupiter during the financial year under review are: Director Paul Murray Andrew Bell Sungwon Yoon Yeongjin Heo Audit Committee meetings attended Audit Committee meetings held during tenure Remuneration Committee meetings attended Remuneration Committee meetings held during tenure 2 2 2 - 2 2 2 - 2 2 - - 2 2 - - Directors’ Interests Particulars of Directors’ interests in securities as at the date of this report are as follows: Director Ordinary Shares Options over Ordinary Shares Brian Gilbertson 1 Paul Murray Priyank Thapliyal Andrew Bell 2 Sungwon Yoon 3 Yeongjin Heo 3 Melissa North - 1,190,000 33,939,917 - - - - - - - - - - - 1 Brian Gilbertson as the Chairman of Gemfields Group Limited (previously Pallinghurst Resources Limited) has a relevant interest in Pallinghurst Consolidated (Cayman) Limited (PCCL). PCCL is the registered owner of 145,845,372 Ordinary Shares in the Company at the date of this report. 2 Andrew Bell as the Chairman and Director of Red Rock Resources plc has a relevant interest in Red Rock Resources plc (RRR). RRR is the registered owner of 18,524,914 Ordinary Shares in the Company at the date of this report. 3 Yeongjin Heo (and Sungwon Yoon prior to resignation) is the Managing Director of POSCO Australia Pty Ltd, has a relevant interest in POSCO Australia Pty Ltd (POSCO) and POSCO Australia GP PTY LTD (POSA GP). POSCO is the registered owner of 22,948,152 Ordinary Shares and POSA GP is the registered owner of 112,044,320 in the Company at the date of this report. Contracts with Directors There are no agreements with any of the Directors other than remuneration agreements. Auditor’s Independence Declaration The Lead Auditor’s Independence Declaration for the year ended 28 February 2019 has been received and can be found on pages XX to XX of the Annual Report. Indemnification and Insurance of Officers and Auditors Since the end of the previous financial year, Jupiter has paid premiums to insure the Directors and Officers of the Consolidated Entity. Details of the nature of the liabilities covered and the amount of premium paid in respect of Directors’ and Officers’ insurance policies preclude disclosure to third parties. Jupiter has not paid any premiums in respect of any contract insuring its auditor against a liability incurred in that role as an auditor of Jupiter. In respect of non-audit services, Grant Thornton Audit Pty Ltd, Jupiter’s auditor has the benefit of an indemnity to the extent Grant Thornton Audit Pty Ltd reasonably relies on information provided by Jupiter, which is false, misleading or incomplete. No amount has been paid under this indemnity during the financial year ending 28 February 2019 or to the date of this Report. 2 0 DIRECTORS’ REPORT JUPITER MINES LIMITED Non-Audit Services The Board of Directors is satisfied that the provision of non-audit services during the financial year is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The Directors are satisfied that the services disclosed below did not compromise the external auditor’s independence for the following reasons: all non-audit services are reviewed and approved by the Audit Committee prior to commencement to ensure they do not adversely affect the integrity and objectivity of the auditor; and the nature of the services provided does not compromise the general principles relating to auditor independence in accordance with APES 110: Code of Ethics for Professional Accountants set by the Accounting Professional and Ethical Standards Board. The following fees were paid or payable to Grant Thornton Australia Limited for non-audit services provided during the year ended 28 February 2019: Taxation Corporate finance $54,081 (2018: $32,100) $10,000 (2018: $60,000) Corporate Governance The Directors aspire to maintain the standards of Corporate Governance appropriate to Jupiter. Jupiter’s Corporate Governance Statement is set out on pages 29 to 39 of this Report. Proceedings on behalf of Jupiter No person has applied for leave of Court to bring proceedings on behalf of Jupiter or intervene in any proceedings to which Jupiter is a party for the purpose of taking responsibility on behalf of Jupiter for all or any part of those proceedings. Jupiter was not a party to any such proceedings during the year. The Consolidated Entity was not a party to any such proceedings during the reporting year. This report is signed in accordance with a resolution of the Board of Directors. Priyank Thapliyal Perth 28 May 2019 DIRECTORS’ REPORT 2 1 ANNUAL REPORT 2019 REMUNERATION REPORT Letter from Remuneration and Nomination Committee Chairman Dear Shareholders I am pleased to present the 2019 Remuneration Report for Jupiter Mines Limited. The Committee and Board have been working hard since the Company’s 2018 Annual General Meeting to fully understand the issues of shareholders and proxy advisors which ultimately led to a vote of over 25% against the 2018 Remuneration Report. The fact is Jupiter is ultimately a very unique company, which does not often fit within industry or advisor standards and guidelines, and it would be inappropriate of Jupiter to conform to some of these. Jupiter has maintained a clear mission since listing in April 2018 - that it will remain a single asset company, focused on delivering cash to its shareholders. The Company does this via a lean, low-cost remuneration structure, with only two executives. Jupiter currently has a market capital of $686 million, with remuneration of total key management personnel a low $3 million1 in comparison. Please refer to the “Voting at the Company’s last Annual General Meeting and issues resulting from stakeholder engagement” section in the following audited Remuneration Report for full details regarding the key issues we have found after engaging with shareholders and proxy advisors, and Jupiter’s explanation of its position. The Committee and Board have considered in full and in detail the issues from the stakeholder engagement and have determined that Jupiter’s current remuneration strategy remains appropriate given its structure and size. Both Committee and Board will continue to review remuneration levels and structure to ensure consistency with industry and region averages. I would like to take this opportunity to thank all shareholders for their ongoing support of Jupiter. I recommend this remuneration report to all shareholders and proxy advisors and welcome suggestions and the opportunity to discuss it with you before or at the Annual General Meeting. Yours faithfully Paul Murray Independent Non-Executive Director Chairman, Remuneration and Nomination Committee 1 Excludes one-off bonuses in relation to ASX listing in April 2018. 2 2 REMUNER ATION REPORT JUPITER MINES LIMITED REMUNERATION REPORT (AUDITED) The Directors of Jupiter Mines Limited present the Remuneration Report for Non-Executive Directors, Executive Directors and other Key Management Personnel, prepared in accordance with the Corporations Act 2001 and the Corporations Regulations 2001. The Remuneration Report is set out under the following main headings: (a) Principles used to determine the nature and amount of remuneration (b) Details of remuneration (c) Service agreements (d) Share-based remuneration (e) Bonuses included in remuneration; and (f) Other information. (a) Principles used to determine remuneration strategy and structure The principles of the Group’s executive strategy and frameworks are: to align rewards to business outcomes that deliver value to shareholders to drive a high performance culture and rewarding high performing individuals; and to ensure remuneration is competitive in the relevant employment market place to support the attraction, motivation and retention of executive talent. The Board has established a Remuneration and Nomination Committee which operates in accordance with its charter as approved by the Board and is responsible for determining and reviewing compensation arrangements for the Directors and the Executive Team. The remuneration structure that has been adopted by the Group consists of the following components: The payment of bonuses and other incentive payments are reviewed by the Remuneration and Nomination Committee annually as part of the review of executive remuneration and a recommendation is put to the Board for approval. All bonuses and incentives must be linked to pre-determined performance criteria. Short Term Incentive (STI) Jupiter performance measures involve the use of annual performance objectives. The performance measures have been set after consultation with the Directors and executives and are specifically tailored to the areas where each executive has a level of control. The measures target areas the Board believes hold the greatest potential for expansion and profit. The key performance indicators (KPIs) for the Executive Team are summarised as follows: Performance areas: Financial: net profit before tax and impairments and distributions to shareholders; and Non-financial: discretionary strategic and/or project based objectives set by the Board Remuneration vs NPAT & Shareholder Distributions 150 125 100 75 50 25 0 5% 4% 3% 2% 1% 0% FY17 FY18 FY19 fixed remuneration being annual salary; and Total executive and KMP remuneration Distributions to shareholders short term incentives, being employee bonuses. Remuneration as % of NPAT1 1 FY2017 NPAT has been reduced for the reversal of impairment of $143m recognised in that year. The Remuneration and Nomination Committee assess the appropriateness of the nature and amount of remuneration on a periodic basis by reference to recent employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of a high quality Board and Executive Team. REMUNER ATION REPORT (AUDITED) 2 3 ANNUAL REPORT 2019 Voting at the Company’s last Annual General Meeting and issues resulting from stakeholder engagement Jupiter Mines Limited received 55.16% votes for and 44.84% votes against its Remuneration Report for the financial year ending 28 February 2018, resulting in a “First Strike” being recorded. Jupiter has engaged with shareholders and proxy advisors following the 2018 Annual General Meeting and report the below key issues along with the Company’s position: 1. Lack of executive long-term performance based incentives The concerns voiced centred around Jupiter’s CEO, Priyank Thapliyal, lack of long-term performance objectives. Prior to the Jupiter IPO, Mr Thapliyal held 21.1 million shares (1.08%), which he increased by purchasing a further 2.1 million shares in the IPO. Mr Thapliyal now holds some 33 million shares (1.73%), which, save for 10 million shares allotted as IPO bonus, he has purchased with his own personal funds, a substantial portion of his own net assets. Mr Thapliyal has participated in all previous capital raisings and has not sold any shares except as part of the Company share buy-backs. Mr Thapliyal is committed to growing his holding in the future using his own personal funds. Whilst Jupiter does not employ any formal long-term incentive plan, the above clearly evidences Mr Thapliyal’s long term performance objectives align with those of other Jupiter shareholders. 2. Independence and structure of Board Some groups cited that the current Board structure was inappropriate now Jupiter is ASX listed and an ASX 300 company. Jupiter considers Paul Murray and Andrew Bell to be independent directors, regardless of their related holdings in Jupiter (being 0.06% and 0.95% respectively) and neither director has any other relationship with Jupiter. Both Mr Murray and Mr Bell bring valuable financial and resources experience to the Jupiter Board and are wholly committed to the Company and Board workload requirements. Diversity remains a key issue for Jupiter and other ASX 300 companies. Jupiter appointed its first female director, Ms Melissa North, subsequent to the year end. Her appointment adds the skills and experience necessary for Jupiter’s long term success and succession planning. It is important to note that Jupiter will appoint any new Board member on their merits and not to solely achieve industry targets or norms. Jupiter believes the Board structure suits the current need of the Company and its shareholders but continues to review this on an ongoing basis in conjunction with stakeholder feedback. 3. Suitability of CEO annual bonus Jupiter’s CEO is currently entitled to an annual bonus equal to 1% of the value of amounts distributed to shareholders each financial year. Some groups have expressed a view that this is not directly linked to Mr Thapliyal’s performance, but rather the performance of the Tshipi management team and a derivative of the prevailing manganese prices. Tshipi is the exclusive crown jewel asset of Jupiter for now. On behalf of Jupiter, Mr Thapliyal has been instrumental in the creation of Tshipi from a greenfield project into the world class asset that it is now. He is heavily involved in setting the strategic direction of Tshipi and all material operational matters. Therefore, his performance in intrinsically linked to that of Tshipi and Jupiter is of the belief his annual incentive is reflective of this. Jupiter aims to be a high yielding investment with a dividend policy of over 70% (currently 93%), therefore the Board believes this type of bonus is aligned to the Company’s mission. Consequences of performance on shareholder wealth In considering the Group’s performance and benefits for shareholder wealth, the Board have regard to the following items in respect of the current financial year and the previous four financial years: Item EPS ($ per share) 2019 2018 2017 2016 2015 0.0706 0.0434 0.0902 (0.0756) (0.0410) Cash distributions to shareholders ($) 146,924,327 82,881,285 70,635,693 - - Net profit/(loss) after tax ($) 138,033,499 92,205,663 200,099,335 (172,396,327) (31,869,576) Share of profit/(loss) from Tshipi investment ($) 188,505,385 94,040,638 41,474,035 (6,936,157) 18,406,525 2 4 REMUNER ATION REPORT (AUDITED) JUPITER MINES LIMITED d e t a e r l n o i t a r e n u m e r e c n a m r o f r e p f o % l a t o T : d e s a b - e r a h S i e c v r e s g n o L n o i t a u n n a r e p u S - t r o h s r e h t O s t n e m y a p e v a e l l s t n e a v u q e & i s t fi e n e b m r e t s u n o b h s a C s e e f l y r a a s & h s a C r a e Y l l w o e b e b a t e h t n i n w o h s e r a d e t i m L i s e n M i r e t i p u J f o ) P M K ( l e n n o s r e P t n e m e g a n a M y e K h c a e f o n o i t a r e n u m e r e h t l f o t n e m e e h c a e f o t n u o m a d n a e r u t a n e h t f o s l i a t e D n o i t a r e n u m e r f o s l i a t e D ) b ( m r e t - g n o L s t fi e n e b - t s o P t n e m y o p m e l s t fi e n e b l s t fi e n e b e e y o p m e m r e t - t r o h S l e n n o s r e P t n e m e g a n a M y e K r e h t o & r o t c e r i D - % 9 7 8 . % 1 . 7 5 % 3 2 2 . - - - - - - - - - - , 5 1 0 3 6 8 6 8 4 6 3 5 , 9 6 8 9 0 2 , 0 0 5 2 3 1 , 3 8 0 2 2 , 0 0 0 6 6 , 0 0 5 , 8 3 0 0 0 0 6 , 0 0 5 7 3 , 4 8 1 , 8 5 - 3 8 5 9 , 7 0 1 , 4 - - - - - - - - - - - - , 9 3 7 2 9 3 , 6 1 , 7 0 7 3 5 1 , 4 % 8 . 1 8 % 4 0 0 . , 0 5 5 0 8 1 , 1 - , 6 1 0 0 5 2 , 7 7 0 7 , 3 5 1 , 4 - - - - - - - - - - - - - - - - - 0 7 8 7 1 , , 3 4 2 9 6 4 , 1 9 1 9 , 1 5 7 7 4 2 2 4 , 6 8 4 2 2 , - - - - - - - - - - 7 4 2 , 2 4 6 8 4 , 2 2 - - - - - - - - - - - - - - - , 5 1 0 3 6 8 - 3 5 5 , 6 0 3 6 8 6 7 8 1 , 0 0 8 6 4 , 3 8 5 0 4 1 , - - - - - - - - - - 0 0 5 2 3 1 , 2 3 8 0 2 2 , 0 0 0 6 6 , 0 0 5 , 8 3 0 0 0 0 6 , 0 0 5 7 3 , 4 8 1 , 8 5 2 3 8 5 9 , - 7 0 1 , 4 6 9 7 , 5 7 7 , 1 , 6 9 3 0 6 2 , 1 , 5 1 8 9 0 9 9 4 2 , 8 4 2 9 1 0 2 8 1 0 2 9 1 0 2 8 1 0 2 9 1 0 2 8 1 0 2 9 1 0 2 8 1 0 2 9 1 0 2 8 1 0 2 9 1 0 2 8 1 0 2 9 1 0 2 8 1 0 2 9 1 0 2 8 1 0 2 . M G A 8 1 0 2 ’ s y n a p m o C t a s r e d o h e r a h s l f o l i a v o r p p a g n e b e t a d t n a g t a s r i l e u a V . 8 1 0 2 l i r p A n i r e t i p u J f o g n i t s i l X S A l y r a t e r c e S y n a p m o C & r o t c e r i D h t r o N a s s i l e M t n e d n e p e d n - n o N i ; n a m r i a h C n o s t r e b l i G n a i r B s r o t c e r i D e v i t u c e x e - n o N t n e d n e p e d n I ; r o t c e r i D y a r r u M l u a P t n e d n e p e d n I ; r o t c e r i D l l e B w e r d n A t n e d n e p e d n - n o N i ; r o t c e r i D n o o Y n o w g n u S t n e d n e p e d n - n o N i ; r o t c e r i D o e H n i j g n o e Y s r o t c e r i D e v i t u c e x E l a y i l p a h T k n a y i r P O E C & r o t c e r i D e e y o p m E l u f s s e c c u s o t n o i t a e r n l i s e r a h s f o e u s s i ff o e n O 1 l a t o T 9 1 0 2 l a t o T 8 1 0 2 . s u n o b h c a e n o s l i a t e d r o f ) e ( n o i t c e s o t r e f e r e s a e P l REMUNER ATION REPORT (AUDITED) 2 5 ANNUAL REPORT 2019 The relative proportions of remuneration that are linked to performance and those that are fixed are as follows: Executive Directors Priyank Thapliyal Melissa North (c) Service agreements Fixed Remuneration At risk: Short-term incentives (STI) 12.04% 42.86% 87.96% 57.14% Remuneration and other terms of employment for the Executive Directors and other key management personnel are formalised in a Service Agreement. The major provisions of the agreements relating to remuneration are set out below: Priyank Thapliyal – Chief Executive Officer Subject Base salary Annual Bonus Confidentiality Termination Restrictive covenants Provision The Executive is entitled to receive an annual salary of £400,000 (with no pension or superannuation contributions). The Executive will be entitled to receive a bonus (Annual Bonus) equal to 1% of the value of amounts paid by way of: (i) a dividend; (ii) a distribution, payment or return of capital; or (iii) the acceptance of equal access buy-back offers made to all Shareholders, paid or made by the Company to its Shareholders at any time after the listing date until the date of termination of the Executive’s employment. The Annual Bonus is payable in cash. The Executive must keep the Company’s confidential information confidential, except in certain circumstances, including where the disclosure is required by law or the Company provides prior written consent. The Company may terminate the Executive’s employment by giving 6 months’ written notice and payment of an amount equal to 6 months’ salary and the amount of Annual Bonus paid in the 12 months prior to termination. The Company may make payment in lieu of notice, comprising an amount of up to 12 months’ salary and the amount of Annual Bonus paid in the 12 months prior to termination. The Company may otherwise terminate the employment immediately for misconduct or other matters that are usual grounds for summary dismissal. The Executive may terminate the Executive’s employment by giving 6 months’ written notice. In the event of a change of control (within the meaning of section 50AA of the Corporations Act) and diminution in the duties and responsibilities of the Executive as a chief executive officer of a public listed company, the Executive may elect to terminate the employment and become entitled to receive a payment equal to 12 months’ salary and the amount of Annual Bonus paid in the 12 months prior to termination. The Executive is subject to post-employment restraints on engaging in a business for the production, purchase, sale or marketing of manganese ore, and soliciting the employees, suppliers or clients of the Company or Tshipi é Ntle. The restraint has potential effect globally for up to 6 months following termination of employment. 2 6 REMUNER ATION REPORT (AUDITED) JUPITER MINES LIMITED Melissa North – Finance Director and Company Secretary Subject Base salary Annual Bonus Other entitlements Confidentiality Termination Restrictive covenants Provision The Executive is entitled to receive an annual salary of $257,600 inclusive of superannuation. Following the end of each financial year commencing after 28 February 2018, and the Executive being employed at the date of release of the Company’s financial statements for the financial year to which the bonus relates, the Executive may be entitled to an annual bonus of an amount to be determined by the Board in its absolute discretion. The Executive is entitled to a computer and mobile phone allowance, and reimbursement of all out of pocket expenses necessarily incurred by the Finance Director in the performance of her duties, including expenses relating to entertainment, meals and travelling. The Executive must keep the Company’s confidential information confidential, except in certain circumstances, including where the disclosure is required by law or the Company provides prior written consent. The Company may terminate the Executive’s employment by giving 3 months’ written notice. The Company may make payment in lieu of notice. The Company may otherwise terminate the employment immediately for misconduct or other matters that are usual grounds for summary dismissal. The Executive may terminate the Executive’s employment by giving 3 months’ written notice. In the event of a change of control (within the meaning of section 50AA of the Corporations Act) and diminution in the duties and responsibilities of the Executive as a finance director and company secretary of a public listed company, the Executive may elect to terminate the employment and become entitled to receive a payment equal to 6 months’ salary and the amount of Annual Bonus paid in the 12 months prior to termination. The Executive is subject to post-employment restraints on soliciting the Company’s employees, suppliers or clients. The restraint has potential effect globally for up to 6 months following termination of employment. (d) Share-based remuneration The Company granted a one-off share issue to Priyank Thapliyal in relation to its successful ASX listing in April 2018, which was approved by shareholders on 10 July 2018. The Company has not granted any other share-based remuneration and does not plan to adopt any such remuneration plans. (e) Bonuses included in remuneration Details of the short-term incentive cash bonuses awarded as remuneration to each key management personnel, the percentage of the available bonus that was paid in the financial year, and the percentage that was forfeited because the person did not meet the service and performance criteria is set out below. No part of the bonus is payable in future years. Executive Grant date Nature of compensation Service or performance criteria Financial year related to Included in remuneration ($) Percentage vested during the year Percentage forfeited during the year Priyank Thapliyal 17 September 2018 Cash bonus 19 February 2019 Cash bonus Melissa North 19 March 2018 Cash bonus 18 April 2018 Cash bonus 28 February 2019 Cash bonus Distribution of cash to shareholders Distribution of cash to shareholders Completion of March 2018 share buy-back Listing of Jupiter Mines on ASX Discretionary financial year bonus, to be employed at date of release of 2019 financial statements 2019 979,4961 2019 489,7481 100% 100% 2019 40,000 100% 2019 141,553 100% 2019 125,0001 100% 1 Accrued but not paid at balance date. REMUNER ATION REPORT (AUDITED) - - - - - 2 7 ANNUAL REPORT 2019 (f) Other information Shares held by directors and key management personnel The number of ordinary shares in the Company during the 2019 reporting period held by each of the Group’s key management personnel, including their related parties, is set out below: Balance at start of year Granted as remuneration Sold down per April 2018 IPO Other changes Held at the end of reporting period Director Brian Gilbertson1 Andrew Bell2 Sungwon Yoon3 Paul Murray 379,948,385 24,657,516 351,675,003 1,199,400 - - - - Priyank Thapliyal 22,432,728 10, 650, 530 Yeongjin Heo3 Melissa North - - - - (212,028,012) (22,075,001) 145,845,372 (4,700,000) (1,432,602) 18,524,914 (196,250,213) (155,424,790) (9,400) 856, 659 - 1,190,000 33,939,917 134,992,472 134,992,472 - - - - - - 1 Brian Gilbertson as the Chairman of Gemfields Group Limited (previously Pallinghurst Resources Limited) has a relevant interest in Pallinghurst Consolidated (Cayman) Limited (PCCL). PCCL is the registered owner of 145,845,372 Ordinary Shares in the Company at balance date. 2 Andrew Bell as the Chairman and Director of Red Rock Resources plc has a relevant interest in Red Rock Resources plc (RRR). RRR is the registered owner of 18,524,914 Ordinary Shares in the Company at balance date. 3 Yeongjin Heo (previously Sungwon Yoon) is the Managing Director of POSCO Australia Pty Ltd, has a relevant interest in POSCO Australia Pty Ltd (POSCO) and POSCO Australia GP PTY LTD (POSA GP). POSCO is the registered owner of 22,948,152 Ordinary Shares and POSA GP is the registered owner of 112,044,320 shares in the Company at balance date. None of the shares included in the table above are held nominally by key management personnel. Other transactions with key management personnel Director fees paid to Andrew Bell Consultants, a company in which Mr A Bell has a beneficial interest Director fees paid to Mr P Murray Director fees paid to Mr B Gilbertson Expenses reimbursed to Pallinghurst Advisors LLP, a company in which Mr B Gilbertson has a beneficial interest Expenses reimbursed to Pallinghurst GP Limited, a company in which Mr B Gilbertson has a beneficial interest Expenses reimbursed to Mr B Gilbertson Expenses reimbursed to Mr P Thapliyal Expenses reimbursed to Mr P Murray End of Audited Remuneration Report Consolidated Group February 2019 $ February 2018 $ 60,000 37,500 66,000 132,500 35,440 38,500 - 226,729 45,866 44,932 93,259 100,812 471 17,622 103,678 - 2 8 REMUNER ATION REPORT (AUDITED) JUPITER MINES LIMITED CORPORATE GOVERNANCE STATEMENT 1. Overview The Company’s Board of Directors (the “Board”) is responsible for the overall corporate governance of the Company, and it recognises the need for the highest standards of ethical behaviour and accountability. It is committed to administering its corporate governance structures to promote integrity and responsible decision-making. Accordingly, where appropriate the Company has sought to adopt the ‘Corporate Governance Principles and Recommendations’ (Third Edition) (ASX Recommendations) published by the ASX Corporate Governance Council. The corporate governance principles and practices adopted by the Company may depart from those generally applicable to ASX-listed companies under ASX Recommendations where the Board considers compliance is not appropriate having regard to the nature and size of the Company’s business and operations. The Company sets out below its “if not why not” report in relation to those matters of corporate governance where the Company’s practice departs from the ASX Recommendations, to the extent that they are currently applicable to the Company. This statement is current as at 28 May 2019 and has been approved by the Board. ASX Corporate Governance Principles and Recommendations Principle ASX Recommendation Comply Comments Principle 1 – Lay solid foundation for management and oversight 1.1 A listed entity should disclose: Yes (a) the respective roles and responsibilities of its board and management; and (b) those matters expressly reserved to the board and those delegated to management. Jupiter has adopted a Board Charter that discloses the role and responsibilities of the Board. Under the Board Charter, the Board is responsible for the overall operation and stewardship of the Company and, in particular, is responsible for: oversight of control and accountability systems; appointing and removing the Chief Executive Officer, Finance Director and Company Secretary; approving the annual operating budget; approving and monitoring the progress of major capital and operating expenditure; monitoring compliance with all legal and regulatory obligations; reviewing any risk management system (which may be a series of systems established on a per-project basis); monitoring any executive officer’s performance; and approving and monitoring financial and other reporting to the market, shareholders of the Company (Shareholders), employees and other stakeholders. A copy of the Board Charter can be found on the Company’s website at www.jupitermines.com/about-us/ corporate-governance CORPOR ATE GOVERNANCE STATEMENT 2 9 ANNUAL REPORT 2019 Principle ASX Recommendation Comply Comments 1.2 A listed entity should: Yes (a) undertake appropriate checks before appointing a person, or putting forward to security holders a candidate for election, as a director; and (b) provide security holders with all material information in its possession relevant to a decision on whether or not to elect or re-elect a director. Jupiter conducts background checks of candidates for the position of director of the Company (Director) prior to their appointment or nomination for election by Shareholders, including checks as to good character, experience, education, qualifications, criminal history and bankruptcy. The Company does not propose to conduct specific checks prior to nominating an existing Director for re- election by Shareholders at a general meeting on the basis that each incumbent Director is required to submit to the ASX ‘good fame and character’ assessment during the Company’s admission to the official list of ASX. As a matter of practice, Jupiter includes in its notices of meeting a brief biography and other material information in relation to each Director who stands for election or re- election, including relevant qualifications and professional experience of the nominated Director for consideration by Shareholders. The Company has entered into an employment contract with Priyank Thapliyal, the Company’s Chief Executive Officer, and Melissa North, the Company’s Finance Director, who are engaged on a full-time basis. The Company has entered into letters of engagement with each of its non-executive Directors setting out the key terms and conditions of their engagement. A listed entity should have a written agreement with each director and senior executive setting out the terms of their appointment. Yes 1.3 1.4 The company secretary of a listed entity should be accountable directly to the board, through the chair, on all matters to do with the proper functioning of the board. Yes The Company Secretary reports directly, and is accountable, to the Board through the Chairman of the Board (Chairman) in relation to all governance matters. The Company Secretary also advises and supports the Board to implement adopted governance procedures and co-ordinates the circulation of meeting agendas and papers. 3 0 CORPOR ATE GOVERNANCE STATEMENT JUPITER MINES LIMITED Principle ASX Recommendation Comply Comments 1.5 A listed entity should: No (a) have a diversity policy which includes requirements for the board or a relevant committee of the board to set measurable objectives for achieving gender diversity and to assess annually both the objectives and the entity’s progress in achieving them; (b) disclose that policy or a summary of it; and (c) disclose as at the end of each reporting period the measurable objectives for achieving gender diversity set by the board or a relevant committee of the board in accordance with the entity’s diversity policy and its progress towards achieving them, and either: (i) the respective proportions of men (ii) and women on the board, in senior executive positions and across the whole organisation (including how the entity has defined “senior executive” for these purposes); or (iii) if the entity is a “relevant employer” under the Workplace Gender Equality Act, the entity’s most recent “Gender Equality Indicators”, as defined in and published under that Act. Given the Company’s main asset is its interest in the Tshipi Borwa Manganese Mine (Tshipi Project), which it holds through its indirect 49.9% interest in Tshipi é Ntle, and Jupiter itself has few employees, Jupiter has not adopted a formal diversity policy at this stage. Subsequent to year-end, the Company has appointed its first female Director to the Board. The Company has a policy to select the best available officers and staff for each relevant position in a non- discriminatory manner based on merit. Notwithstanding this, the Board respects and values the benefits that diversity (e.g. gender, age, ethnicity, cultural background, disability and martial/family status etc.) brings in relation to expanding the Company’s perspective and thereby improving corporate performance, increasing Shareholder value and maximising the probability of achieving the Company’s objectives. The Board is committed to developing a diverse workplace where appointments or advancements are made on a fair and equitable basis. 1.6 A listed entity should: Yes (a) have and disclose a process for periodically evaluating the performance of the board, its committees and individual directors; and (b) disclose, in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in accordance with that process. The Remuneration and Nomination Committee is responsible for the evaluation of the Board’s performance and its individual Directors. Jupiter has also adopted in its Board Charter a commitment to review its own performance at intervals considered appropriate by the Chairman. The same performance review mechanism is also present in the Audit Committee and Remuneration and Nomination Committee Charters. 1.7 A listed entity should: (a) have and disclose a process for periodically evaluating the performance of its senior executives; and (b) disclose, in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in accordance with that process. Jupiter will continue to disclose if and when it has conducted any performance evaluations. Yes The Board is responsible for monitoring the performance of executive officers. The Board has established policies to ensure that Jupiter remunerates fairly and responsibly. The Company designed its remuneration policy to ensure that the level and composition of remuneration is competitive, reasonable and appropriate to attract and maintain Directors with the requisite skills and experience to guide the Company towards achieving its objectives. Jupiter will continue to disclose if and when it has conducted any performance evaluations. CORPOR ATE GOVERNANCE STATEMENT 3 1 ANNUAL REPORT 2019 Principle ASX Recommendation Comply Comments Principle 2 – Structure the board to add value 2.1 The board of a listed entity should: Yes (a) have a nomination committee which: (i) has at least three members, a majority of whom are independent directors; and (ii) is chaired by an independent director, and disclose: (iii) the charter of the committee; (iv) the members of the committee; and (v) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) if it does not have a nomination committee, disclose that fact and the processes it employs to address board succession issues and to ensure that the board has the appropriate balance of skills, knowledge, experience, independence and diversity to enable it to discharge its duties and responsibilities effectively. The Board has established a Remuneration and Nomination Committee (RN Committee). The RN Committee Charter discloses the RN Committee’s role and responsibilities. The RN Committee presently consists of Paul Murray, Andrew Bell and Brian Gilbertson. Mr Murray and Mr Bell are the Company’s only Directors who are both independent and non-executive. Mr Murray is the chairman of the RN Committee. Jupiter will continue to disclose at the end of each reporting period the number of times the RN Committee met throughout the relevant period. The RN Committee Charter is available on Jupiter’s website at www.jupitermines.com/about-us/corporate- governance 2.2 A listed entity should have and disclose a board skills matrix setting out the mix of skills and diversity that the board currently has or is looking to achieve in its membership. No Jupiter does not currently have a skills or diversity matrix in relation to its Board members. The Board considers that such a matrix is not necessary given the current state of operations. The RN Committee is presently responsible for ensuring the Directors have the appropriate mix of competencies to enable the Board to discharge its responsibilities effectively. The Board may adopt such a matrix later as the Company’s operations evolve. The Board considers that Mr Paul Murray and Mr Andrew Bell are independent Directors because they are free from any business or other relationship with the Company that could materially interfere with, or reasonably be perceived to materially interfere with, the independent exercise of their judgement as Directors. The Company appointed Mr Murray as a Director on 20 August 2003 and Mr Bell as a Director on 19 May 2008. 2.3 A listed entity should disclose: Yes (a) the names of the directors considered by the board to be independent directors; (b) if the director has an interest, position, association or relationship of the type described in Box 2.3 but the board is of the opinion that it does not compromise the independence of the director, the nature of interest, position, association or relationship in question and an explanation of why the board is of that opinion; and (c) the length of service of each director. 3 2 CORPOR ATE GOVERNANCE STATEMENT JUPITER MINES LIMITED Principle ASX Recommendation Comply Comments 2.4 A majority of the board of a listed entity should be independent directors. No 2.5 The chair of the board of a listed entity should be an independent director and, in particular, should not be the same person as the CEO of the entity. No A majority of the Board are not independent Directors. Two of the Board’s five Directors, being Mr Paul Murray and Mr Andrew Bell are considered independent. The Company does not consider Mr Brian Gilbertson independent because he is the non-executive chairman of, and a shareholder in, Gemfields Group Limited (previously Pallinghurst Resources Limited), the ultimate parent company of Pallinghurst Consolidated (Cayman) Limited (“PCCL”), being a substantial Shareholder of the Company. Subsequent to year end however, PCCL announced it would be selling its entire share in the Company and therefore the Company would seek to classify Mr Gilbertson as independent thereafter. The Company does not consider Mr Yeongjin Heo independent because he is the managing director of POSCO Australia Pty Ltd, a significant shareholder of Jupiter. The Company does not consider Mr Priyank Thapliyal independent because Jupiter employs him in an executive capacity, as the Company’s Chief Executive Officer. The Company does not consider Ms Melissa North independent because Jupiter employs him in an executive capacity, as the Company’s Finance Director. The Company believes that the current structure of the Board is the most appropriate given the size and current operations of the Company. The Chairman, Mr Brian Gilbertson, is not an independent Director. The Board believes an independent non- executive Chairman is not necessary as Mr Gilbertson’s experience and industry knowledge makes him the most appropriate person to lead the Board at this time. As stated in 2.4 above, Mr Gilbertson will be recognised as independent subsequent to PCCL’s sale of its interest in the Company. Mr Priyank Thapliyal is the Chief Executive Officer and is not the Chairman. CORPOR ATE GOVERNANCE STATEMENT 3 3 ANNUAL REPORT 2019 Principle ASX Recommendation Comply Comments 2.6 A listed entity should have a program for inducting new directors and provide appropriate professional development opportunities for directors to develop and maintain the skills and knowledge needed to perform their role as directors effectively. Yes Induction program When a Director is appointed, they receive with their appointment letter a copy of the Company’s constitution, corporate governance policies and charters. The contents of this due diligence pack contain sufficient information to allow the new Director to gain an understanding of the rights, duties, responsibilities and role of the Board, Board committees and the executive team. The Company Secretary arranges for new Directors to undertake an induction program to enable them to gain an understanding of: the Company’s operations and the industry sectors in which it operates; the Company’s financial, strategic, operational and risk management position; their rights, duties and responsibilities; and any other relevant information. As part of this induction program, a new Director will meet with all incumbent Directors (if this has not already taken place). Director development In order to achieve continuing improvement in Board performance, all Directors are encouraged to undergo continual professional development. Principle 3 – Act ethically and responsibly 3.1 A listed entity should have a code of conduct for its directors, senior executives and employees and disclose that code or a summary of it. Yes The Board believes that the success of Jupiter has been, and will continue to be, enhanced by a strong ethical culture within the organisation. Jupiter has a Code of Conduct and Ethics (Code) which sets the standards that all Directors, officers, employees, consultants and contractors and all other people representing the Company are expected to comply with in relation to all commercial operations. The Code also outlines the procedure for reporting any breaches of the Code and the possible disciplinary action the Company may take in respect of any breaches. In addition to their obligations under the Corporations Act 2001 (Cth) (Corporations Act) in relation to inside information, all Directors, employees and consultants have a duty of confidentiality to Jupiter in relation to confidential information they possess. In fulfilling their duties, each Director dealing with corporate governance matters may obtain independent professional advice at Jupiter’s expense after consultation with the Chairman. The Company ensures that all incumbent and new personnel have a copy of the Code. It is also available on Jupiter’s website at www.jupitermines.com/about-us/ corporate-governance 3 4 CORPOR ATE GOVERNANCE STATEMENT JUPITER MINES LIMITED Principle ASX Recommendation Comply Comments Principle 4 – Safeguard integrity in corporate reporting 4.1 The board of a listed entity should: Yes The Company has established an Audit Committee to assist the Board in its oversight responsibilities in relation to financial management and reporting, external audit and financial risk management of the Company and safeguarding the independence of the external auditor. The Audit Committee Charter sets out the functions, operating mechanisms and responsibilities of the Audit Committee. The Audit Committee presently consists of Paul Murray, Andrew Bell and Mr Yeongjin Heo. Mr Murray and Mr Bell are the Company’s only Directors who are both independent and non-executive. Mr Murray acts as the chairman of the Audit Committee. The Audit Committee Charter also requires that all committee members have a working familiarity with basic accounting and finance practices and that at least one member have financial expertise. A copy of the Audit Committee Charter is available on Jupiter’s website at www.jupitermines.com/about-us/ corporate-governance Yes As a matter of practice, Jupiter obtains declarations from its Chief Executive Officer and Finance Director substantially in the form referred to in Recommendation 4.2 before approving its financial statements. (a) should have an audit committee which: (i) has at least three members, all of whom are non-executive directors and a majority of whom are independent directors; and (ii) is chaired by an independent director, who is not the chair of the board, and disclose: (iii) the charter of the committee; (iv) the relevant qualifications and experience of the members of the committee; and (v) in relation to each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings, or (b) if it does not have an audit committee, disclose that fact and the processes it employs that independently verify and safeguard the integrity of its corporate reporting, including the processes for the appointment and removal of the external auditor and the rotation of the audit engagement partner. The board of a listed entity should, before it approves the entity’s financial statements for a financial period, receive from its CEO and CFO a declaration that, in their opinion, the financial records of the entity have been properly maintained and that the financial statements comply with the appropriate accounting standards and give a true and fair view of the financial position and performance of the entity and that the opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively. 4.2 4.3 A listed entity that has an AGM should ensure that its external auditor attends its AGM and is available to answer questions from security holders relevant to the audit. Yes In accordance with the Company’s constitution and the applicable provisions of the Corporations Act, the Company requests its external auditor to attend each annual general meeting and be available to answer shareholder questions about the conduct of the audit and the preparation and content of the auditor’s report. CORPOR ATE GOVERNANCE STATEMENT 3 5 ANNUAL REPORT 2019 Principle ASX Recommendation Comply Comments Principle 5 – Make timely and balanced disclosure 5.1 A listed entity should have a written policy for complying with its continuous disclosure obligations under the Listing Rules and disclose that policy or a summary of it. Yes Jupiter has adopted a Continuous Disclosure Policy. Principle 6 – Respect the rights of security holders 6.1 6.2 A listed entity should provide information about itself and its governance to investors via its website. Yes A listed entity should design and implement an investor relations program to facilitate effective two-way communication with investors. Yes Jupiter is a “disclosing entity” pursuant to section 111AR of the Corporations Act and, as such, is required to comply with the continuous disclosure requirements of Chapter 3 of the Listing Rules and section 674 of the Corporations Act. The Company is committed to observing its disclosure obligations under the Corporations Act and its obligations under the Listing Rules. Following admission to the ASX, the Company will post all announcements provided to ASX on its website. A copy of the Continuous Disclosure Policy is available on Jupiter’s website at www.jupitermines.com/about-us/ corporate-governance Information about Jupiter and its corporate governance, including copies of the Company’s various corporate governance policies and charters, are available on its website at www.jupitermines.com/about-us. Jupiter has adopted a Shareholder Communications Policy to promote effective communication with Shareholders, ensure all relevant information is disseminated to Shareholders effectively and to encourage the participation of Shareholders at Company general meetings. The Company communicates with Shareholders: following admission to ASX, through releases to the market via the ASX; through Jupiter’s website; through information provided directly to Shareholders; and at general meetings. 3 6 CORPOR ATE GOVERNANCE STATEMENT JUPITER MINES LIMITED Principle ASX Recommendation Comply Comments 6.3 A listed entity should disclose the policies and processes it has in place to facilitate and encourage participation at meetings of security holders. Yes 6.4 A listed entity should give security holders the option to receive communications from, and send communications to, the entity and its security registry electronically. Yes Jupiter supports Shareholder participation in general meetings and seeks to provide appropriate mechanisms for such participation, including by ensuring that meetings are held at convenient times and places to encourage Shareholder participation. In preparing for general meetings, Jupiter drafts the notice of meeting and related explanatory information so that they provide all of the information that is relevant to Shareholders in making decisions on matters to be voted on by them at the meeting. This information is presented clearly and concisely so that it is easy to understand and not ambiguous. Jupiter uses general meetings as a tool to effectively communicate with Shareholders and allow Shareholders a reasonable opportunity to ask questions of the Board of Directors and to participate in the meeting. Mechanisms for encouraging and facilitating Shareholder participation are reviewed regularly to encourage the highest level of Shareholder participation. Jupiter considers that communicating with Shareholders by electronic means is an efficient way to distribute information in a timely and convenient manner. Jupiter provides new Shareholders with the option to receive communications from Jupiter electronically and encourages them to do so. Existing Shareholders are also encouraged to request communications electronically. Jupiter will provide all Shareholders that have opted to receive communications electronically with notifications when it uploads an announcement or other communication (including an annual reports and notice of meeting) to the ASX announcements platform. Principle 7 – Recognise and manage risk 7.1 The board should: (a) have a committee or committees to oversee risk, each of which: (i) has at least three members, a majority of whom are independent directors; and (ii) is chaired by an independent director, and disclose: (iii) the charter of the committee; (iv) the members of the committee; and (v) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) if it does not have a risk committee or committees that satisfy (a) above, disclose that fact and the processes it employs for overseeing the entity’s risk management framework. No Jupiter does not have a separate risk management committee. The Board as a whole is broadly responsible for risk management, including the review of any risk management system or series of systems that may be implemented by management on a per-project basis. The Audit Committee is responsible for the management of financial risk. The Board considers that, given the Company’s current scope of operations and the fact that only Mr Thapliyal holds an executive position, efficiencies or other benefits would not be gained by establishing a separate risk management committee at present. As the Company’s operations evolve, the Board will reconsider the appropriateness of forming a separate risk management committee. CORPOR ATE GOVERNANCE STATEMENT 3 7 ANNUAL REPORT 2019 Principle ASX Recommendation Comply Comments 7.2 The board or a committee of the board should review the entity’s risk management framework at least annually to satisfy itself that it continues to be sound; and disclose, in relation to each reporting period, whether such a review has taken place. Yes 7.3 A listed entity should disclose: Yes (a) if it has an internal audit function, how the function is structured and what role it performs; or (b) if it does not have an internal audit function, that fact and the processes it employs for evaluating and continually improving the effectiveness of its risk management and internal control processes. 7.4 A listed entity should disclose whether it has any material exposure to economic, environmental and social sustainability risks and, if it does, how it manages or intends to manage those risks. Yes The Board has responsibility for the monitoring of risk management and reviews the Company’s risk management framework on an annual basis to ensure that the framework continues to be effective. The Company will continue to disclose the outcome of the annual risk management review in its annual reports. Jupiter does not currently have an internal audit function. This function is undertaken by relevant staff under the direction of the Board. The Company has adopted internal control procedures, including the following: the Company has authorisation limits in place for expenditure and payments; a Director or senior manager must not approve a payment to themselves or a related party, other than standard salary/directors fees in accordance with their Board approved remuneration; the Company prepares cash flow forecasts which include materiality thresholds and which are regularly reviewed; and the Company regularly reviews its other financial materiality thresholds. The Board and senior management are charged with evaluating and considering improvements to the Company’s risk management and internal control processes on an ongoing basis. The Board considers that an internal audit function is not currently necessary given the current size and scope of the Company’s operations. As the Company’s operations evolve, the Board will reconsider the appropriateness of adopting an internal audit function. Jupiter’s primary business is the production and export of manganese via its 49.9% beneficial interest in the Tshipi Project in South Africa. As such, the Company is exposed to the unique risks to which Tshipi é Ntle is exposed. This includes, but is not limited to, the following key risks: fluctuations in the price of manganese ore; fluctuations in third party contractor costs; any reduction in the global demand for steel; risks arising from mining operations being concentrated at one mine; economic, political or social instability in South Africa may effect operations or profits; and a range of other economic, environmental and social sustainability risks faced by all other mining industry companies in an open economy. 3 8 CORPOR ATE GOVERNANCE STATEMENT JUPITER MINES LIMITED Principle ASX Recommendation Comply Comments Principle 8 – Remunerate fairly and responsibly 8.1 The board of a listed entity should have a remuneration committee which: Yes The Company has established a RN Committee to assist the Board in fulfilling its responsibilities with respect to: (a) has at least three members, a majority of whom are independent directors; (b) is chaired by an independent director, and disclose: (c) the charter of the committee; remuneration policies for non–executive Directors; remuneration policies for executive Directors; remuneration policies for executive management; equity participation; human resources policies; and (d) the members of the committee; and any other matters referred to the RN Committee by the (e) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings. Board. The RN Committee Charter sets out the functions, operating mechanisms and responsibilities of the committee. The RN Committee presently consists of Paul Murray, Andrew Bell and Brian Gilbertson. Mr Murray and Mr Bell are the Company’s only Directors who are both independent and non-executive. Mr Murray acts as the chairman of the RN Committee. Following admission to the ASX, Jupiter will continue to disclose at the end of each reporting period the number of times the committee met throughout the relevant period. A copy of the RN Committee Charter is available on Jupiter’s website at www.jupitermines.com/about-us/ corporate-governance 8.2 8.3 A listed entity should separately disclose its policies and practices regarding the remuneration of non-executive directors and the remuneration of executive directors and other senior executives. Yes Jupiter’s policies and practices regarding the remuneration of executive and non-executive Directors and other senior executives will be set out in the remuneration report contained in Jupiter’s annual report for each financial year. Yes A listed entity which has an equity-based remuneration scheme should have a policy on whether participants are permitted to enter into transactions (whether through the use of derivatives or otherwise) which limit the economic risk of participating in the scheme; and disclose that policy or a summary of it. Furthermore, Jupiter’s remuneration policies and practices are subject to review by the RN Committee, as set out in the Company’s RN Committee Charter. Jupiter’s Share Trading Policy states the requirements for all Directors, executives, employees, contractors and consultants of the Company dealing in the Company’s Securities. The policy provides that Directors and senior executives must not at any time enter into a transaction (e.g. writing a call option) that operates or is intended to operate to limit the economic risk of holdings of unvested Jupiter securities under any equity-based remuneration schemes offered by the Company. A copy of the Share Trading Policy is available on Jupiter’s website at www.jupitermines.com/about-us/corporate- governance CORPOR ATE GOVERNANCE STATEMENT 3 9 ANNUAL REPORT 2019 ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 28 FEBRUARY 2019 ABN 51 105 991 740 CONSOLIDATED ENTITY 4 0 CORPOR ATE GOVERNANCE STATEMENT JUPITER MINES LIMITED STATEMENT OF CONSOLIDATED PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 28 FEBRUARY 2019 Revenue Cost of sales Gross profit Other income Employee benefits expense Depreciation of property, plant and equipment Amortisation of intangible assets Administrative expenses Other expenses Profit from operations Share of profit from joint venture entities using the equity method Reversal of/(impairment of) exploration and evaluation asset Gain on sale of assets held for sale Finance income Finance costs Foreign exchange (loss)/gain Profit before income tax Income tax expense Net profit attributable to members of parent entity Other comprehensive income Items that may be subsequently transferred to profit or loss: Translation of foreign currency financial statements Fair value movements on available-for-sale financial assets Items not to be reclassified to profit or loss in subsequent periods Change in the fair value of equity instruments carried at FVOCI Other comprehensive income/(loss) for the period, net of tax Consolidated Group Note February 2019 $ February 2018 $ 2 2 2 10 11 14 13 3 19 19 19 13,116,608 - 13,116,608 645,559 9,635,129 328,655 9,963,784 238,697 (7,462,473) (1,498,751) (763) 2,740 (87,404) (3,920,195) 2,294,072 (287) (12,244) (51,795) (2,264,161) 6,375,243 188,505,385 94,040,638 1,177,243 (4,119,418) - 980,907 (578,223) (3,329,515) 189,049,869 (51,016,370) 345,447 282,538 (139,845) 1,005,202 97,789,805 (5,584,142) 138,033,499 92,205,663 (310,412) - (496,638) (807,050) 268,608 656,408 - 925,016 Total comprehensive income for the period 137,226,449 93,130,679 Profit for the year attributable to: Owners of the parent Total comprehensive income/(loss) attributable to: Owners of the parent Overall Operations Basic earnings per share Diluted earnings per share 137,226,449 92,205,663 (807,050) 925,016 0.0706 0.0706 0.0434 0.0434 The Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes. STATEMENT OF CONSOLIDATED PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME 4 1 ANNUAL REPORT 2019 STATEMENT OF CONSOLIDATED FINANCIAL POSITION AS AT 28 FEBRUARY 2019 ASSETS CURRENT ASSETS Cash and cash equivalents Trade and other receivables Other current assets TOTAL CURRENT ASSETS NON-CURRENT ASSETS Available for sale financial assets Equity instruments at fair value through other comprehensive income Property, plant and equipment Intangible assets Investments accounted for using the equity method Exploration and evaluation assets Deferred tax asset TOTAL NON-CURRENT ASSETS TOTAL ASSETS LIABILITIES CURRENT LIABILITIES Trade and other payables Income tax payable Dividend payable Employee benefits TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Deferred tax liability TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Issued capital Reserves Accumulated profits TOTAL EQUITY Consolidated Group Note February 2019 $ February 2018 $ 6 7 12 8 10 11 14 13 3 15 3 16 3 18 19 72,848,680 76,544,487 85,369,828 45,863,083 57,884 70,381 158,276,392 122,477,951 - 1,043,702 547,064 4,965 7,217 - 6,366 1,985 422,841,742 385,267,255 10,800,000 8,700,000 1,355,163 302,484 435,556,151 395,321,792 593,832,543 517,799,743 84,082,617 44,675,780 - 4,331,957 48,974,776 125,078 - 52,447 133,182,471 49,060,184 51,156,721 51,156,721 2,581,865 2,581,565 184,339,192 51,642,049 409,493,351 466,157,694 410,435,400 433,003,602 298,453 1,105,503 (1,240,502) 32,048,589 409,493,351 466,157,694 The above Statement of Financial Position should be read in conjunction with the accompanying notes. 4 2 STATEMENT OF CONSOLIDATED FINANCIAL POSITION JUPITER MINES LIMITED STATEMENT OF CONSOLIDATED CHANGES IN EQUITY FOR THE YEAR ENDED 28 FEBRUARY 2019 Note Ordinary Issued Capital $ Balance at 1 March 2017 526,639,293 Profit attributable to members of parent entity Total other comprehensive income for the year Total comprehensive income/(loss) for the year - - - Shares bought back 18 (93,635,691) - Balance as at 28 February 2018 433,003,602 268,608 Profit attributable to members of parent entity Change in accounting policy arising from AASB 9 Total other comprehensive income/(loss) for the year Total comprehensive income for the year - - - - $ - - 268,608 268,608 - - Foreign Currency Translation Reserve Equity Instruments at FVOCI Reserve Financial Assets Reserve Accumulated Profits/ (Losses) Total $ - - - - - - - $ $ $ 180,488 (51,395,961) 475,423,820 - 92,205,663 92,205,663 656,408 - 925,016 656,408 92,205,663 93,130,679 - (8,761,112) (102,396,803) 836,896 32,048,590 466,157,696 - 138,033,499 138,033,499 836,896 (836,896) (310,412) (496,638) - - - - (807,050) (310,412) (340,258) (836,896) 138,033,499 137,226,449 Shares bought back Equity share based payment Dividends paid/declared 18 18 (26,721,909) 4,153,707 - - - - - - - Balance as at 28 February 2019 410,435,400 (41,804) 340,258 - - - - (24,398,266) (51,120,175) - 4,153,707 (146,924,327) (146,924,327) (1,240,502) 409,493,351 The Statement of Changes in Equity should be read in conjunction with the accompanying notes. STATEMENT OF CONSOLIDATED CHANGES IN EQUIT Y 4 3 ANNUAL REPORT 2019 STATEMENT OF CONSOLIDATED CASH FLOWS FOR THE YEAR ENDED 28 FEBRUARY 2019 CASH FLOWS FROM OPERATING ACTIVITIES Payments to suppliers and employees Other income Income taxes paid Net cash (used in)/from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant and equipment Purchase of intangible assets Payments for exploration and evaluation of mining reserves Sale of assets held for sale Dividend received from investments Interest received Taxes paid Net cash from investing activities CASH FLOWS FROM FINANCING ACTIVITIES Share buy-backs Proceeds from loan repayments Dividend paid Net cash used in financing activities Consolidated Group Note February 2019 $ February 2018 $ 23 10 11 14 (8,264,623) (1,500,317) 15,790,578 17,293,092 (8,207,440) (5,391,702) (681,485) 10,401,073 (4,518) (2,492) (919,011) - (1,500) (6,900) (874,927) 3,071,641 150,918,449 27,744,378 318,997 306,254 (4,187,458) - 146,123,967 30,238,946 18 (51,120,175) (102,396,803) - 52,452,358 (97,949,552) - (149,069,727) (49,944,445) Net decrease in cash and cash equivalents held (3,627,245) (9,304,452) Cash and cash equivalents at beginning of financial period 6 76,544,487 84,709,260 Effect of exchange rates on cash holdings in foreign currencies (68,562) 1,139,679 Cash and cash equivalents at the end of the financial period 72,848,680 76,544,487 The Statement of Cash Flows should be read in conjunction with the accompanying notes. 4 4 STATEMENT OF CONSOLIDATED CASH FLOWS JUPITER MINES LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 FEBRUARY 2019 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES These consolidated financial statements and notes represent those of Jupiter Mines Limited (“Jupiter”) and its Controlled Entities (the “Consolidated Group” or “Group”). The principal activities of Jupiter during the year have been investment in the operating Tshipi Borwa Manganese Mine in South Africa and the sale of manganese ore. The separate financial statements of the parent entity, Jupiter Mines Limited, have not been presented within this financial report as permitted by the Corporations Act 2001. The financial statements were authorised and issued by the Board of Directors on 28 May 2019. Basis of Preparation These general purpose financial statements have been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a financial report containing relevant and reliable information about transactions, events and conditions. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards. Material accounting policies adopted in the preparation of this financial report are presented below and have been consistently applied unless otherwise stated. In preparing the consolidated financial statements, all inter-Group balances and transactions between entities in the Consolidated Group have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with those adopted by the parent entity. Business Combinations The Group applies the acquisition method in accounting for business combinations. The consideration transferred by the Group to obtain control of a subsidiary is calculated as the sum of the acquisition-date fair values of assets transferred, liabilities incurred, and the equity interests issued by the Group, which includes the fair value of any asset or liability arising from a contingent consideration arrangement. Acquisition costs are expensed as incurred. The Group recognises identifiable assets acquired and liabilities assumed in a business combination regardless of whether they have been previously recognised in the acquiree’s financial statements prior to the acquisition. Assets acquired and liabilities assumed are generally measured at their acquisition-date fair values. Goodwill is stated after separate recognition of identifiable intangible assets. It is calculated as the excess of the sum of: (a) fair value of consideration transferred, (b) the recognised amount of any non-controlling interest in the acquire, and (c) acquisition- date fair value of any existing equity interest in the acquiree, over the acquisition-date fair values of identifiable net assets. If the fair values of identifiable net assets exceed the sum calculated above, the excess amount (i.e. gain on a bargain purchase) is recognised in profit or loss immediately. (b) Interests in Joint Ventures The financial report has been prepared on an accruals basis and is based on historical costs, modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities. All amounts in the financial report have been rounded to the nearest dollar. Tables may not cast in all instances due to rounding. The Group acquired an interest in Tshipi é Ntle Manganese Mining Proprietary Limited (“Tshipi”), a joint venture entity, in October 2010. The Group’s accounting policy for joint ventures was considered by the Directors as part of the deliberation on the Tshipi acquisition, and had not been formally considered or articulated previously. Jupiter Mines Limited is a for-profit entity for the purpose of preparing the financial statements. (a) Principles of Consolidation The Group financial statements consolidate those of the Parent Company and all of its subsidiaries as of 28 February 2019. The parent controls a subsidiary if it is exposed, or has rights, to variable returns from its involvement with the subsidiary and has the ability to affect those returns through its power over the subsidiary. All subsidiaries have a reporting date of 28 February. A list of controlled entities is contained in Note 9 to the financial statements. A joint venture is an arrangement that the Group controls jointly with one or more other investors, and over which the Group has rights to a share of the arrangement’s net assets rather than direct rights to underlying assets and obligations for underlying liabilities. Investments in joint ventures are accounted for using the equity method. Any goodwill or fair value adjustment attributable to the Group’s share in the associate or joint venture is not recognised separately and is included in the amount recognised as investment. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 4 5 ANNUAL REPORT 2019 The carrying amount of the investment in associates and joint ventures is increased or decreased to recognise the Group’s share of the profit or loss and other comprehensive income of the associate and joint venture, adjusted where necessary to ensure consistency with the accounting policies of the Group. (d) Property, Plant and Equipment Each class of property, plant and equipment is carried at cost as indicated less, where applicable, any accumulated depreciation and impairment losses. Unrealised gains and losses on transactions between the Group and its associates and joint ventures are eliminated to the extent of the Group’s interest in those entities. Where unrealised losses are eliminated, the underlying asset is also tested for impairment. (c) Income Tax The income tax expense (revenue) for the year comprises current income tax expense (income) and deferred tax expense (income). Current income tax expense charged to profit or loss is the tax payable on taxable income. Current tax liabilities (assets) are measured at the amounts expected to be paid to (recovered from) the relevant taxation authority. Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as well unused tax losses. Current and deferred income tax expense (income) is charged or credited outside profit or loss when the tax relates to items that are recognised outside profit or loss. Except for business combinations, no deferred income tax is recognised from the initial recognition of an asset or liability, where there is no effect on accounting or taxable profit or loss. Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the year when the asset is realised, or the liability is settled, and their measurement also reflects the manner in which management expects to recover or settle the carrying amount of the related asset or liability. Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised. Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint ventures, deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be controlled and it is not probable that the reversal will occur in the foreseeable future. Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and liabilities are offset where: (a) a legally enforceable right of set- off exists; and (b) the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur in future years in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled. Plant and equipment Plant and equipment are measured on the cost basis. The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the asset’s employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts. The cost of fixed assets constructed within the Consolidated Group includes the cost of materials, direct labour, borrowing costs and an appropriate proportion of fixed and variable overheads. Subsequent costs are included in the asset’s 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. All other repairs and maintenance are charged to the Statement of Profit or Loss and Other Comprehensive Income during the financial year in which they are incurred. Depreciation The depreciable amount of all fixed assets is depreciated on a straight-line basis over their useful lives to the Consolidated Group commencing from the time the asset is held ready for use. The depreciation rates used for each class of depreciable assets are: Class of Fixed Asset Depreciation Rate Leasehold improvements Furniture & fittings Plant & equipment: Motor vehicles Site equipment 20.00% 33.33% 12.50% 33.33% The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date. 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. These gains and losses are included in the Statement of Profit or Loss and Other Comprehensive Income. 4 6 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS JUPITER MINES LIMITED (e) Exploration and Evaluation Expenditure The adoption of AASB 9 has mostly impacted the following areas: The application of the Group’s accounting policy for exploration and evaluation expenditure requires judgment in determining whether it is likely that future economic benefits are likely either from future exploitation or sale or where activities have not reached a stage which permits a reasonable assessment of the existence of reserves. The determination of a Joint Ore Reserves Committee (JORC) resource is itself an estimation process that requires varying degrees of uncertainty depending on sub- classification and these estimates directly impact the point of deferral of exploration and evaluation expenditure. The deferral policy requires management to make certain estimates and assumptions about future events or circumstances, in particular whether an economically viable extraction operation can be established. Estimates and assumptions made may change if new information becomes available. If, after expenditure is capitalised, information becomes available suggesting that the recovery of expenditure is unlikely, the amount capitalised is written off in the Statement of Profit or Loss and Other Comprehensive Income in the year when the new information becomes available. (f) Leases Leases of fixed assets where substantially all the risks and benefits incidental to the ownership of the asset, but not the legal ownership that is transferred to entities in the Consolidated Group, are classified as finance leases. Finance leases are capitalised by recognising an asset and a liability at the lower of the amounts equal to the fair value of the leased property or the present value of the minimum lease payments, including any guaranteed residual values. Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the year. Leased assets are depreciated on a straight-line basis over the shorter of their estimated useful lives or the lease term. Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are recognised as expenses in the years in which they are incurred. Lease incentives under operating leases are recognised as a liability and amortised on a straight-line basis over the lease term. (g) Financial Instruments AASB 9 Financial Instruments replaces AASB 139’s “Financial Instruments: Recognition and Measurement” requirements. It makes major changes to the previous guidance on the classification and measurement of financial assets and introduces an “expected credit loss” model for impairment of financial assets. When adopting AASB 9, the Group elected not to restate prior periods. Rather differences, if any, arising from the adoption of AASB 9 in relation to classification, measurement, and impairment are recognised in opening retained earnings as at 1 March 2018. the classification and measurement of the Group’s financial assets. Management holds most financial assets to hold and collect the associated cash flows. However, investments previously classified as available-for-sale (AFS) investments are now measured at fair value through other comprehensive income. the impairment of financial assets applying the expected credit loss model. This applies now to the Group’s trade receivables. For trade receivables, the Group applies a simplified model of recognising lifetime expected credit losses as these items do not have a significant financing component. the measurement of equity investments in other listed entities. These investments were classified as available-for-sale under AASB 139. The Group chose to make the irrevocable election on transition to classify these investments as Equity FVTOCI as permitted by AASB 9. the recognition of gains and losses arising from the Group’s from own credit risk. The Group continues to elect the fair value option for any financial liabilities which means that fair value movements from changes in the Group’s own credit risk would be presented in other comprehensive income rather than profit or loss. Recognition and derecognition Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial instrument. Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and substantially all the risks and rewards are transferred. A financial liability is derecognised when it is extinguished, discharged, cancelled or expires. Classification and initial measurement of financial assets Financial assets are classified according to their business model and the characteristics of their contractual cash flows. Except for those trade receivables that do not contain a significant financing component and are measured at the transaction price in accordance with AASB 15, all financial assets are initially measured at fair value adjusted for transaction costs (where applicable). Subsequent measurement of financial assets For the purpose of subsequent measurement, financial assets, other than those designated and effective as hedging instruments, are classified into the following two categories: Financial assets at amortised cost Equity instruments at FVTOCI NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 4 7 ANNUAL REPORT 2019 All income and expenses relating to financial assets that are recognised in profit or loss are presented within finance costs, finance income or other financial items, except for impairment of trade receivables which is presented within other expenses. Financial assets at amortised cost Financial assets with contractual cash flows representing solely payments of principal and interest and held within a business model of ‘hold to collect’ contractual cash flows are accounted for at amortised cost using the effective interest method. The Group’s trade and most other receivables fall into this category of financial instruments as well as bonds that were previously classified as held-to-maturity under AASB 139. Equity instruments at fair value through other comprehensive income (Equity FVTOCI) Investments in equity instruments that are not held for trading are eligible for an irrevocable election at inception to be measured at FVTOCI. Under this category, subsequent movements in fair value are recognised in other comprehensive income and are never reclassified to profit or loss. Dividend income is taken to profit or loss unless the dividend clearly represents return of capital. Trade and other receivables The Group makes use of a simplified approach in accounting for trade and other receivables and records the loss allowance at the amount equal to the expected lifetime credit losses. In using this practical expedient, the Group uses its historical experience, external indicators and forward-looking information to calculate the expected credit losses using a provision matrix. The Group allows 1% for amounts that are 30 to 60 days past due, 1.5% for amounts that are between 60 and 90 days past due and writes off fully any amounts that are more than 90 days past due. Financial assets at fair value through other comprehensive income The Group recognises 12 months expected credit losses for financial assets at FVTOCI. As most of these instruments have a high credit rating, the likelihood of default is deemed to be small. However, at each reporting date the Group assesses whether there has been a significant increase in the credit risk of the instrument. In assessing these risks, the Group relies on readily available information such as the credit ratings issued by the major credit rating agencies for the respective asset. The Group only holds simple financial instruments for which specific credit ratings are usually available. In the unlikely event that there is no or only little information on factors influencing the ratings of the asset available, the Group would aggregate similar instruments into a portfolio to assess on this basis whether there has been a significant increase in credit risk. In addition, the Group considers other indicators such as adverse changes in business, economic or financial conditions that could affect the borrower’s ability to meet its debt obligation or unexpected changes in the borrowers operating results. Should any of these indicators imply a significant increase in the instrument’s credit risk, the Group recognises for this instrument or class of instruments the lifetime expected credit losses. Classification and measurement of financial liabilities As the accounting for financial liabilities remains largely unchanged from AASB 139, the Group’s financial liabilities were not impacted by the adoption of AASB 9. However, for completeness, the accounting policy is disclosed below. The Group’s financial liabilities include only trade and other payables. Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs unless the Group designated a financial liability at fair value through profit or loss. Subsequently, financial liabilities are measured at amortised cost using the effective interest method. All interest-related charges and, if applicable, changes in an instrument’s fair value that are reported in profit or loss are included within finance costs or finance income. 4 8 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS JUPITER MINES LIMITED Reconciliation of financial instruments on adoption of AASB 9 The table below shows the classification of each class of financial assets under AASB 139 and AASB 9 as at 1 March 2018: Financial assets Original classification under AASB 139 New classification under AASB 9 AASB 139 Carrying Amount AASB 9 Carrying Amount Cash and cash equivalents Loans and receivables Amortised cost $76,554,487 $76,554,487 Trade and other receivables Loans and receivables Amortised cost $45,863,083 $45,863,083 Shares in listed companies1 Available for sale financial assets at fair value Fair value through Other Comprehensive Income (“FVTOCI”) $1,043,702 $1,043,702 1 These investments in other listed securities were classified as Available-for-Sale under AASB 139. The Group chose to make the irrevocable election on transition to classify these investments as Equity FVTOCI as permitted by AASB 9 as the shares are not held for trading purposes. (h) Impairment of Non-Financial Assets At each reporting date, the Group reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to the Statement of Profit or Loss and Other Comprehensive Income. Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Impairment testing is performed annually for goodwill and intangible assets with indefinite lives. (i) Employee Benefits Provision is made for the Company’s liability for employee benefits arising from services rendered by employees to reporting date. Employee benefits that are expected to be settled wholly within one year have been measured at the amounts expected to be paid when the liability is settled. Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits. Those cash flows are discounted using market yields on high quality corporate bonds with terms to maturity that match the expected timing of cash flows. (j) Provisions Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured. (k) Cash and Cash Equivalents Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, less credit card facilities used. Bank overdrafts are shown as short-term borrowings in liabilities. (l) Trade and Other Receivables Trade receivables are initially measured at their transaction price. Subsequent to initial recognition, they are measured at amortised cost using the effective interest method. The Group makes use of the simplified approach in accounting for trade and other receivables and records the loss allowance at the amount equal to the expected lifetime credit losses. At each reporting date, the Branch recognises the change in lifetime expected credit losses in profit or loss as an impairment gain or loss. (m) Revenue and Other Income AASB 15 replaces AASB 118 Revenue, AASB 111 Construction Contracts and several revenue-related Interpretations. AASB 15 Revenue from Contracts with Customers outlines a single comprehensive model of accounting for revenue arising from contracts with customers and supersedes the previous revenue recognition criteria in AASB 118 Revenue. The core principle is that an entity recognises revenue based on a five-step model to reflect the transfer of goods or services, measured at the amount to which the Branch expects to be entitled to in exchange for those goods or services. The application of the five-step model in AASB 15 requires the exercise of judgement, considering all facts and circumstances relevant to each contract - the relevant judgements have been disclosed in note 1. The standard also provides guidance on the accounting treatment of costs attributable to fulfilling the contract, as well as the incremental costs of obtaining the contract. In terms of AASB 15, the Branch identifies each separate performance obligation contained in the contract and allocates a portion of the contract revenue to each performance obligation. Revenue is then only recognised on the satisfaction of each of the relevant performance obligations. Revenue from contracts with customers is recognised when control is transferred to the customer. AASB 15 replaces AASB 118 and all related amendments and interpretations. AASB 15 Revenue from Contracts with Customers has been adopted using the full retrospective method. Interest revenue is recognised using the effective interest rate method, which, for floating rate financial assets, is the rate inherent in the instrument. Full details are provided at Note 2. All revenue is stated net of the amount of goods and services tax (GST). NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 4 9 ANNUAL REPORT 2019 (n) Borrowing Costs Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily take a substantial period of time to prepare for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. All other borrowing costs are recognised in the Statement of Profit or Loss and Other Comprehensive Income in the period in which they are incurred. activities have not reached a stage which permits a reasonable assessment of the existence of reserves. This policy requires management to make certain estimates and assumptions as to future events and circumstances, in particular whether an economically viable extraction operation can be established. Any such estimates and assumptions may change as new information becomes available. If, after having capitalised the expenditure under the policy, a judgement is made that recovery of the expenditure is unlikely, the relevant capitalised amount will be written off to the Statement of Profit or Loss and Other Comprehensive Income. (o) Goods and Services Tax (GST) Key judgements – revenue from contracts with customers Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Taxation Office (ATO). 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 ATO is included with other receivables or payables in the statement of financial position. 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 ATO are presented as operating cash flows included in receipts from customers or payments to suppliers. (p) Trade and Other Payables Trade and other payables are carried at cost and due to their short term nature they are not discounted. They represent liabilities for goods and services provided to the Group prior to the end of the financial period that are unpaid and arise when Jupiter becomes obliged to make future payments in respect of the purchase of these goods and services. The amounts are unsecured and are usually paid within 30 days of recognition. (q) Comparative Figures When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial period. (r) Critical Accounting Estimates and Judgements The Directors evaluate estimates and judgements incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the Group. Key estimates – Impairment of non-financial assets The Group assesses impairment at each reporting date by evaluating conditions specific to the Group that may lead to impairment of assets. Where an impairment trigger exists, the recoverable amount of the asset is determined. Key judgements – Exploration and evaluation expenditure The Group’s accounting policy for exploration and evaluation expenditure results in certain items of expenditure being capitalised for an area of interest where it is considered likely to be recoverable by future exploitation or sale or where the The Jupiter Mines Limited (External Profit Company) (“ SA Branch”) acted as an agent, as opposed to a principal, for all sales contracts entered into during the financial year. In determining whether the SA Branch acted as an agent, management considered elements of control and risks assumed by the SA Branch. The SA Branch earned a fixed percentage marketing fee for the sales contracts, assumed limited risks (inventory, pricing) and although the SA Branch obtained legal title of the goods this was only obtained momentarily and did not demonstrate that the SA Branch controlled the goods. Based on these factors, the Branch considered it was acting in an agency relationship. The revenue and associated trade receivables and trade payables balances are calculated based on management’s best estimate of the metal and moisture content of the ore shipped to customers. Extensive sampling and surveying is performed prior to shipment in an effort to ensure the accuracy of these estimations. Due to the inherent limitations of sampling and the method of transport, variances in the metal and moisture content measured on arrival at the discharge port may be different from those estimated by management on the date of the sale. Variances in the metal and moisture content of the shipped ore on arrival at the discharge port will have an impact on the profitability of the SA Branch. (s) Foreign Currency Translation (i) Functional and presentation currency The functional and presentation currency of Jupiter and its subsidiaries is Australian dollars ($). The presentation and functional currency for the interest in Tshipi is the South African Rand. The results are translated into Australian dollars for disclosure in Jupiter’s consolidated accounts. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. (ii) Translation of interest in Joint Venture functional currency to presentation currency The results of the South African Joint Venture interest are translated into Australian dollars using an average rate over the period of the transactions. Assets and liabilities are translated at exchange rates prevailing at reporting dates. 5 0 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS JUPITER MINES LIMITED New accounting standards not yet effective New/revised pronouncement Superseded pronouncement Nature of change AASB 16 Leases AASB 117 Leases AASB 16: Effective date (annual reporting periods ending on or after ….) 1 January 2019 Int. 4 Determining whether an Arrangement contains a Lease replaces AASB 117 Leases and some lease-related Interpretations requires all leases to be accounted for ‘on-balance sheet’ by lessees, other than short-term and low value asset leases Int. 115 Operating Leases—Lease Incentives provides new guidance on the application of the definition of lease and on sale and lease back accounting largely retains the existing lessor accounting requirements in AASB 117 requires new and different disclosures about leases Int. 127 Evaluating the Substance of Transactions Involving the Legal Form of a Lease NOTE 2: REVENUE Sales revenue Cost of sales Marketing fee revenue Gross profit Other income Other income Likely impact on initial application The entity is yet to undertake a detailed assessment of the impact of AASB 16. However, based on the entity’s preliminary assessment, the Standard is not expected to have a material impact on the transactions and balances recognised in the financial statements when it is first adopted for the year ending 28 February 2020. Consolidated Group February 2019 $ February 2018 $ - - (413,595) 328,655 13,116,608 10,048,724 13,116,608 9,963,784 645,559 645,559 238,697 238,697 The “SA Branch” is registered in South Africa for the purpose of the sale and export of Jupiter’s share of Tshipi manganese ore. The negative sales revenue and cost of sales in FY2018 were due to adjustments made at between load port and discharge port. From 1 March 2017, Jupiter earned only a marketing fee on an agency basis, meaning ore is purchased by Jupiter Mines (South Africa) via Jupiter Mines (Australia). AASB 15 Revenue from Contracts with Customers outlines a single comprehensive model of accounting for revenue arising from contracts with customers and supersedes the previous revenue recognition criteria in AASB 118 Revenue. The core principle is that an entity recognises revenue based on a five-step model to reflect the transfer of goods or services, measured at the amount to which the SA Branch expects to be entitled to in exchange for those goods or services. The application of the five-step model in AASB 15 requires the exercise of judgement, considering all facts and circumstances relevant to each contract - the relevant judgements have been disclosed in note 1. The standard also provides guidance on the accounting treatment of costs attributable to fulfilling the contract, as well as the incremental costs of obtaining the contract. In terms of AASB 15, the SA Branch identifies each separate performance obligation contained in the contract and allocates a portion of the contract revenue to each performance obligation. Revenue is then only recognised on the satisfaction of each of the relevant performance obligations. Revenue from contracts with customers is recognised when control is transferred to the customer. AASB 15 replaces AASB 118 and all related amendments and interpretations. AASB 15 Revenue from Contracts with Customers has been adopted using the full retrospective method. Sale of Manganese Ore The SA Branch undertook an assessment on the impact of the new revenue standard by reviewing the contractual terms of manganese ore sale agreements. The primary focus was to identify whether the SA Branch is acting in a principle or agency capacity on the basis of whether the SA Branch controls the manganese ore before it is transferred to the customer. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 5 1 ANNUAL REPORT 2019 Marketing fee income is determined based on the final metal and moisture content at the discharge port. On the bill of lading date, the provisional marketing fee income is recognised based on the load port metal and moisture content which is considered to be the best estimate. Once the final metal and moisture content is determined on finalisation of the sales transaction, typically between 2 and 3 months later, the marketing fee income initially recognised is adjusted subsequently. At the reporting period, the fair value of the original marketing fee income and associated receivable is adjusted by reference to the best estimate of the actual metal and moisture content. The changes in fair value are recorded as an adjustment to marketing fee income. On the bill of lading date, there is no uncertainty regarding Jupiter’s entitlement to the marketing fee as their responsibilities under the marketing fee arrangement have been performed and they have an unconditional right to the marketing fee on this date. The marketing fee amount receivable will only be adjusted for the final metal and moisture content, as stated above. Jupiter invoices Tshipi for the marketing fee once the final metal and moisture content can be determined and the customer has paid Tshipi for the final invoice. The payment is typically three months after the marketing fee income was first recognised and the contract is therefore considered to be short term in nature. Under AASB 15, the accounting for marketing fee income will remain unchanged in that marketing fee income will be recognised when control passes to the customer, which will continue to be the date of delivery when risks and rewards passed to the customer under the previous accounting standard AASB 118. The adoption of the standard did not impact profit or loss for the period, there was no impact on the statement of cash flows and there was no required adjustment to the opening balance of retained earnings. Given the Branch only takes control of the goods momentarily before control passes to the customer as well as the limited risks which the Branch assumes the Branch is considered to be acting in an agency capacity. The nature of the SA Branch’s contracts are to arrange for the goods (manganese ore) to be provided by another party (Tshipi) and therefore the SA Branch is acting in an agency capacity, facilitating the sale between Tshipi and the customer. Under the previous accounting standard, AASB 118, all sales contracts entered into, where the purchase price of the manganese ore was equal to the selling price, the SA Branch was also considered to have been acting in an agency capacity. Marketing Fee Income The SA Branch receives a fixed commission on each sale based on the FOB selling price. The amount and timing of revenue to be recognised from marketing fee income under AASB 15 was considered below against the five step model: There is a contract with Tshipi, for each parcel sold, which entitles the SA Branch to receive the commission. The contract has commercial substance and both parties are committed to performing their obligations; The performance obligation for the SA Branch in respect to each sale is that the SA Branch needs to facilitate the sale between the customer and Tshipi; The transaction price can be determined as it is calculated as a fixed percentage of the FOB selling price; There is only one performance obligation in the contract and therefore the whole transaction price has been allocated to this performance obligation; Revenue is recognised when the performance obligation is satisfied. The performance obligation of the SA Branch is considered to be satisfied when control passes from Tshipi to the customer. Control passes to the customer when the ore passes over the rail of the vessel (bill of lading date), this is when the customer has the obligation to pay for the goods transferred and when risk and rewards of ownership are transferred to the customer. 5 2 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS JUPITER MINES LIMITED NOTE 3: INCOME TAX EXPENSE AND DEFERRED TAXES The major components of tax expense and the reconciliation of the expected tax expense based on the domestic effective tax rate of Jupiter Mines at 30% (2018: 30%) and the reported tax expense in the profit or loss are as follows: Tax expense comprises: (a) Current tax Add: Deferred income tax relating to origination and reversal of temporary differences Origination and reversal of timing differences Utilisation of unused tax losses Recognition of deferred tax assets tax losses Under/(over) provision in respect of prior years Tax Expense (b) Accounting profit before tax Domestic tax rate for Jupiter Mines Limited at 30% (2018: 30%) Tax rate differential Other expenditure not allowed or allowable for income tax purposes Deferred Tax Asset losses not brought to account Under provision in respect of prior years Share of profit in equity accounted investments Deferred tax adjustment on Tshipi investment Income tax expense Consolidated Group February 2019 $ February 2018 $ 3,448,222 6,354,708 48,684,161 - (1,269,180) (1,137,146) 398,033 - 153,167 (31,453) 51,016,370 5,584,142 189,049,869 97,789,805 56,714,961 (258,569) 3,108,264 - 153,167 29,336,942 (1,614,911) 438,261 3,786,681 - (46,572,620) (26,331,379) 37,871,167 51,016,370 - 5,584,142 Deferred taxes arising from temporary differences and unused tax losses can be summarised as follows: Deferred Tax Assets (Liabilities) Liabilities Property, plant and equipment Exploration Other Investments using the equity method Balance as at 28 February 2019 Assets Trade and other receivables Pension and other employee obligations Provisions Other Tax losses Balance as at 28 February 2019 Net Deferred Tax Liabilities Opening balance 1 March 2018 Recognised in Profit and Loss During the Year Closing Balance 28 February 2019 11,087 (2,592,900) (52) - (2,581,865) 107,782 5,950 15,450 173,301 - 302,484 (2,279,381) (236) (630,000) (94,458) (47,850,162) (48,574,856) (107,782) 21,878 2,760 (133,356) 1,269,180 1,052,680 (47,522,176) 10,851 (3,222,900) (94,510) (47,850,162) (51,156,721) - 27,828 18,210 39,945 1,269,180 1,355,163 (49,801,558) The equity method of accounting under AASB 128 and AASB 112 for income taxes requires the recording of an income tax expense and a deferred tax liability for changes in the equity of an investment where a gain on the sale of the investment could be subject to tax. As a result of the migration to Australia during the year of Jupiter Kalahari SA (now Jupiter Kalahari Pty Ltd), the controlled entity which holds the investment in Tshipi e Ntle Manganese Mining Proprietary Limited, a future gain arising on disposal of the investment will now be prima facie be subject to tax. Accordingly, whilst the Group is not intending to realise its investment, it is required to record a current year income tax expense and an increase in the deferred tax liability of $47,850,162, which is the amount of tax referrable to the cumulative net prior years’ and current years’ increase in the equity value of the investment. Notwithstanding the recognition of the above non-cash charge, the Group has determined that that migration of Jupiter Kalahari to Australia will result in an improved Group corporate structure for shareholders. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 5 3 ANNUAL REPORT 2019 NOTE 4: AUDITORS’ REMUNERATION Amounts paid or payable to the auditors of the Company and charged as an expense were: Audit and review of the financial statements Auditors of Jupiter Mines Limited Auditors of subsidiary or related entities Remuneration for audit and review of financial statements Other non-audit services Taxation and other services Corporate finance Total other service remuneration Total auditors’ remuneration Consolidated Group February 2019 $ February 2018 $ 148,453 11,739 160,192 54,081 10,000 64,081 224,273 140,262 182,798 323,060 32,100 60,000 92,100 415,160 NOTE 5: EARNINGS PER SHARE Both the basic and diluted earnings per share have been calculated using the profit attributable to shareholders of the parent Company (Jupiter Mines Limited). Reconciliation of earnings to net profit for the year Net profit Weighted average number of ordinary shares outstanding during the year used in calculating basic EPS and dilutive EPS Consolidated Group February 2019 $ February 2018 $ 138,033,499 92,205,663 No. No. 1,955,297,513 2,126,815,701 Profit per share $0.0706 $0.0434 NOTE 6: CASH AND CASH EQUIVALENTS Cash at bank and in hand Short-term bank deposits Restricted cash Cash in transit Consolidated Group February 2019 $ February 2018 $ 11,283,723 9,375,739 61,564,957 10,237,361 - - 52,766,038 4,165,349 72,848,680 76,544,487 The effective interest rate on short-term bank deposits was 2.07%; (February 2018: 0.34%) the term deposits range between 30 and 90 days. Restricted cash in 2018 represented funds that were held in trust for payment of the equal access share buy-back proceeds to shareholders on 19 March 2018. Cash in transit in 2018 represented an inter-account transfer effected on 28 February 2018 but not cleared until 1 March 2018. 5 4 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS JUPITER MINES LIMITED NOTE 7: TRADE AND OTHER RECEIVABLES Trade receivables GST and VAT receivables Income tax refundable Sundry receivables Consolidated Group February 2019 $ February 2018 $ 83,765,330 45,679,877 167,417 276,341 1,160,740 93,363 - 89,843 85,369,828 45,863,083 All of the Group’s trade and other receivables have been reviewed for indicators of impairment. It was found that the Group’s exposure to bad debts is not significant. Due to the short term nature of these receivables, their carrying value is assumed to approximate their fair value. Details regarding the foreign exchange and interest rate risk exposure are disclosed in Note 26. The majority of trade receivables represent amounts receivable by Jupiter South Africa branch relating to the sale of manganese ore to third party customers. Refer to Note 2 for further details. NOTE 8: EQUITY INSTRUMENTS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME Financial assets at FVOCI includes equity instruments. The Group chose to make the irrevocable election on transition to classify listed equity securities as Equity FVOCI: Shares in listed corporations NOTE 9: INTERESTS IN SUBSIDIARIES Controlled entities consolidated Parent Entity: Jupiter Mines Limited Subsidiaries of Jupiter Mines Limited: Future Resources Australia Pty Limited Central Yilgarn Iron Pty Limited Broadgold Corporation Pty Limited Jupiter Kalahari Pty Ltd* Jupiter Mines Limited (Incorporated in Australia) External Profit Company South Africa During the period all Controlled Entities with the exception of Jupiter Kalahari Pty Ltd were dormant. * During the year, Jupiter Kalahari S.A. was migrated from Luxembourg to Australia and registered as Jupiter Kalahari Pty Ltd. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Consolidated Group February 2019 $ February 2018 $ 547,064 - Percentage Owned (%)* Country of Incorporation February 2019 February 2018 Australia Australia Australia Australia Australia 100 100 100 100 100 100 100 100 100 100 5 5 ANNUAL REPORT 2019 NOTE 10: PROPERTY, PLANT AND EQUIPMENT Details of the Group’s property, plant and equipment and their carrying amounts are as follows: Gross carrying amount Balance as at 1 March 2018 Additions Leasehold Improvements Plant and Equipment Furniture and Fittings $ $ $ Total $ 110,923 3,733,292 195,740 4,039,955 - 4,518 - 4,518 Balance as at 28 February 2019 110,923 3,737,810 195,740 4,044,473 Depreciation and impairment Balance as at 1 March 2018 Depreciation (110,923) (3,726,926) (195,740) (4,033,589) - (5,919) - (5,919) Balance as at 28 February 2019 (110,923) (3,732,845) (195,740) (4,039,508) Carrying amount as at 28 February 2019 - 4,965 - 4,965 Gross carrying amount Balance as at 1 March 2017 Additions Leasehold Improvements Plant and Equipment Furniture and Fittings $ $ $ Total $ 110,923 3,731,792 195,740 4,038,455 - 1,500 - 1,500 Balance as at 28 February 2018 110,923 3,733,292 195,740 4,039,955 Depreciation and impairment Balance as at 1 March 2017 Depreciation (110,923) (3,405,351) (195,740) (3,712,014) - (321,575) - (321,575) Balance as at 28 February 2018 (110,923) 3,726,926 (195,740) (4,033,589) Carrying amount as at 28 February 2018 - 6,366 - 6,366 Depreciation charges of $5,156 relating to the CYIP assets are capitalised to Exploration and Evaluation Assets. Other depreciation is expensed to the Statement of Profit or Loss and Other Comprehensive Income of $763. 5 6 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS JUPITER MINES LIMITED NOTE 11: INTANGIBLE ASSETS Detail of the Group’s other intangible assets and their carrying amounts are as follows: Gross carrying amount Balance as at 1 March 2018 Additions, separately acquired Balance as at 28 February 2019 Amortisation and impairment Balance as at 1 March 2018 Reversal of amortisation Balance as at 28 February 2019 Carrying amount at 28 February 2019 Gross carrying amount Balance as at 1 March 2017 Additions, separately acquired Balance as at 28 February 2018 Amortisation and impairment Balance as at 1 March 2017 Amortisation Balance as at 28 February 2018 Carrying amount as at 28 February 2018 Software Licenses $ 345,012 2,492 347,504 Total $ 345,012 2,492 347,504 (343,027) (343,027) 2,740 2,740 (340,287) (340,287) 7,217 7,217 Software Licenses $ 338,112 6,900 345,012 Total $ 338,112 6,900 345,012 (330,783) (330,783) (12,244) (12,244) (343,027) (343,027) 1,985 1,985 Intangible assets have finite useful lives. The current amortisation charges for intangible assets are included under depreciation and amortisation expense per the Statement of Profit or Loss and Other Comprehensive Income. All software is amortised over 3 years. NOTE 12: OTHER CURRENT ASSETS Deposits Consolidated Group February 2019 $ February 2018 $ 57,884 57,884 70,381 70,381 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 5 7 ANNUAL REPORT 2019 NOTE 13: EXPLORATION AND EVALUATION ASSETS Opening Balance Additions Reversal of impairment/(impairment) Closing Balance Costs carried forward in respect of the following areas of interest: Mount Mason Mount Ida Consolidated Group February 2019 $ February 2018 $ 8,700,000 11,632,006 922,757 1,177,243 1,187,412 (4,119,418) 10,800,000 8,700,000 800,000 600,000 10,000,000 8,100,000 10,800,000 8,700,000 Jupiter again commissioned an independent valuation of its iron ore assets in line with valuation and accounting standards. The valuation recommended the Mount Ida Magnetite Project to be valued at between $4 million and $16 million, and the Mount Mason DSO Hematite Project valued at between $0.3 million and $0.8 million. After examining market conditions, the Board has resolved to adopt valuations of $10 million for Mount Ida and $0.8 million for Mount Mason and recognised a reversal of prior year impairments of $1,012,430 and $164,813 million respectively. These amounts have been recognised in Statement of Profit or Loss and Other Comprehensive Income. NOTE 14: INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD Set out below is the Joint Venture held by the Group as at 28 February 2019, in which the opinion of the Directors, are material to the Group. The entity listed below has share capital consisting solely of ordinary shares, which are held directly by the Group. The country of incorporation or registration is also their principal place of business, and the proportion of the Group’s ownership interest is the same as the proportion of voting rights held. Interest in this entity is held through a fully controlled entity, Jupiter Kalahari Pty Ltd. Name of Entity Tshipi é Ntle Manganese Mining Proprietary Limited Ownership interest held by the Group Country of Incorporation February 2019 February 2018 Nature of Relationship Measurement Method South Africa 49.9% 49.9% Joint Venture Joint Venture Summarised Financial Information Tshipi é Ntle Manganese Mining Proprietary Limited Opening carrying value of joint venture Share of profit using the equity method Dividend paid Other movements Decrease of shareholder loan Total investments using the equity method February 2019 $ February 2018 $ 385,267,255 345,556,557 188,505,385 94,040,638 (150,918,449) (27,744,378) (12,449) - - (26,585,562) 422,841,742 385,267,255 5 8 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS JUPITER MINES LIMITED February 2019 $ February 2018 $ 210,782,558 153,052,585 246,269,470 247,584,419 457,052,028 400,637,005 52,674,648 40,621,222 63,117,905 63,403,729 115,792,553 104,024,951 - - 341,259,475 296,612,054 54,485,916 21,674,291 Current assets (a) Non-current assets Total assets Current liabilities (b) Non-current liabilities Total liabilities Net assets (a) (b) Includes cash and cash equivalents Includes financial liabilities (excluding trade and other payables) 11,359,877 762,461 Revenue Profit for the year Other comprehensive income for the year Total other comprehensive income for the year Depreciation and amortisation Tax expense - - - - 377,766,335 188,458,149 - - - - 55,293,434 41,093,863 146,968,850 80,333,838 In accordance with the Group’s accounting policies and processes, the Group performs impairment testing annually at 28 February. The Board has considered its Tshipi investment with regards to impairments indicators under AASB 136 and both internal and external sources of information and does not believe any indicators to exist. Hence an independent valuation has not been commissioned for the 2019 financial year. NOTE 15: TRADE AND OTHER PAYABLES Trade payables Sundry payables and accrued expenses Consolidated Group February 2019 $ February 2018 $ 82,217,567 43,432,749 1,865,050 1,243,031 84,082,617 44,675,780 Due to the short term nature of these payables, their carrying value is assumed to approximate to their fair value. The majority of trade payables represent amounts payable to Tshipi relating to the purchase of manganese ore. Refer to Note 2 for further information. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 5 9 ANNUAL REPORT 2019 NOTE 16: CURRENT PROVISIONS All provisions are considered current. The carrying amounts and movements in the provisions account are as follows: Carrying amount 1 March 2018 – employee benefits Additional provisions Amount utilised Reversals Carrying amount 28 February 2019 Carrying amount 1 March 2017 – employee benefits Additional provisions Amount utilised Reversals Carrying amount 28 February 2018 NOTE 17: EMPLOYEE REMUNERATION Expenses recognised for employee benefits are analysed below: Employee benefits - expense Salary and wages Superannuation costs Payroll and other taxes Bonuses paid/payable Employee benefits expense 52,447 99,671 (27,040) - 125,078 18,972 45,612 (4,474) (7,663) 52,447 1,650,617 576,805 47,180 16,726 5,747,950 7,462,473 23,376 555 898,015 1,498,751 Bonuses relate to payments paid or accrued to the Chief Executive Officer and Finance Director. Refer to Remuneration Report for further details. NOTE 18: EQUITY The share capital of Jupiter Mines consists only of fully paid ordinary shares; the shares do not have a par value. All shares are equally eligible to receive dividends and the repayment of capital and represent one vote at the shareholders’ meeting of Jupiter Mines. Shares issued and fully paid: Beginning of the year 2019 No. Shares 2018 No. Shares February 2019 $ February 2018 $ 2,064,522,718 2,281,835,383 433,003,602 526,639,293 13 March 2017 share buy-back ($0.5264 per share) 5 December 2017 share buy-back ($0.2767 per share) - - (134,190,158) (83,122,507) - - (70,635,693) (22,999,998) 19 March 2018 share buy-back ($0.023 per share) (116,182,215) 18 July 2018 director share issue to CEO (value at grant date) 10,650,530 - - (26,721,909) 4,153,707 - - Total contributed equity at 28 February 1,958,991,033 2,064,522,718 410,435,400 433,003,602 6 0 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS JUPITER MINES LIMITED NOTE 19: RESERVES Balance at 1 March 2017 Foreign Currency Translation Reserve $ - Net exchange differences on translation foreign operations 268,608 Current year movement, net of tax Balance as at 28 February 2018 Change in accounting policy arising from AASB 9 Current year movement, net of tax Balance as at 28 February 2019 - 268,608 - (310,412) (41,804) Equity Instruments at FVOCI Reserve Financial Assets Reserve $ - - - - 836,896 (496,638) 340,258 180,488 - 656,408 836,896 (836,896) - - Total $ 180,488 268,608 656,408 1,105,503 - (807,050) 298,453 NOTE 20: CAPITAL AND LEASING COMMITMENTS The Group leases an office under an operating lease. The future minimum lease payments are as follows: Non-cancellable operating leases contracted for but not capitalised in financial statements: Minimum lease payments Not later than 12 months Between 12 months and 5 years Consolidated Group February 2019 $ February 2018 $ 52,797 13,294 66,091 13,039 - 13,039 This is made up of a non-cancellable lease of 2 years however it can be subleased (with prior consent of Lessor). Amounts include rent, outgoings and cleaning with 4.5% annual rent review increase. It does not take into account reduced guarantees or returned deposits or incentives. Figures based on 1 year and 3 months (1 March 2019 to 31 May 2020) which is the end of the lease. The expense recognised for the operating lease was $54,809 (2018: $54,960). The property lease is non-cancellable for two years, with rent payable monthly in advance. Expenditure Commitments In order to maintain current rights of tenure to mining tenements, the Company and Group are required to perform minimum work to meet the requirements specified by various State governments. These obligations can be reduced by selective relinquishment of exploration tenure or application for expenditure exemptions. Due to the nature of the Company and Group’s operations in exploring and evaluating areas of interest, it is very difficult to forecast the nature and amount of future expenditure. It is anticipated that expenditure commitments for the next twelve months will be tenement rentals of $503,888 (2018: $474,484) and exploration expenditure of $676,100 (2018: $676,100). NOTE 21: CONTINGENT LIABILITIES AND ASSETS Contingent liabilities The parent entity has provided guarantees to third parties in relation to the performance and obligations of controlled entities in respect of banking facilities. At reporting date, the value of these guarantees and facilities are $57,884 (2018: $57,884). Total utilised at reporting date was $57,884 (2018: $57,884). Contingent assets No contingent assets exist as at 28 February 2019 or 28 February 2018. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 61 ANNUAL REPORT 2019 NOTE 22: SEGMENT REPORTING The Group operates in the mining industry. The Group has identified its operating segments based on the internal reports that are reviewed and used by the chief operating decision makers (the Board of Directors and key management) in assessing performance and determining the allocation of resources. The Group segments are structured primarily on the basis of its exploration and production interests. These are considered to be the Central Yilgarn Iron Exploration Project (Iron Ore), located in Australia, the producing Tshipi Mine (Manganese) located in South Africa, and Jupiter’s South African branch which carries out the sale of manganese ore. The remaining items of revenue, expenses, assets and liabilities relate to corporate operations. Any transactions between reportable segments have been offset for these purposes. Segment information for the reporting period is as follows: CYIP – Iron Ore (Australia) Jupiter Mines – Manganese (South Africa) Tshipi – Manganese (South Africa) 28 February 2019 Marketing fee revenue Cost of sales Other income Employee benefits expense Other expenses Segment operating profit Share of profit from joint venture entities using the equity method Reversal of impairment of exploration and evaluation assets 1,177,243 $ - - - - - - - $ 13,116,608 - - (417,509) (427,282) 12,271,817 - - Total $ 13,116,608 - - (417,509) (427,282) 12,271,817 $ - - - - - - Finance costs Foreign exchange gain Total Corporate Net profit before tax from continuing operations Segment assets Corporate assets Total assets Segment liabilities Corporate liabilities Total liabilities 188,505,385 188,505,385 - - - 1,177,243 (470,871) 829,704 - (470,871) 829,704 1,177,243 12,630,650 188,505,385 202,313,278 (13,263,409) 189,049,869 10,800,000 90,164,207 422,841,742 523,805,949 70,026,594 593,832,543 - (82,276,954) - (82,276,954) (102,062,238) (184,339,192) 6 2 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS JUPITER MINES LIMITED CYIP – Iron Ore (Australia) Jupiter Mines – Manganese (South Africa) Tshipi – Manganese (South Africa) 28 February 2018 Sale of manganese ore Marketing fee revenue Cost of sales Other income Employee benefits expense Other expenses Segment operating profit Share of profit from joint venture entities using the equity method Impairment of investment in joint venture entities (4,119,418) $ - - - - - - - $ (413,595) 10,048,724 328,655 - (378,143) (327,381) 9,258,260 - - Total $ (413,595) 10,048,724 328,655 - (378,143) (327,381) 9,258,260 $ - - - - - - - Finance costs Foreign exchange loss Total Corporate Net profit before tax from continuing operations Segment assets Corporate assets Total assets Segment liabilities Corporate liabilities Total liabilities 94,040,638 94,040,638 - - - (4,119,418) (158,204) (478,321) - (158,204) (478,321) (4,119,418) 8,621,736 94,040,638 98,542,956 (753,250) 97,789,805 8,705,157 49,892,882 385,267,255 443,865,294 73,934,449 517,799,743 - (44,752,145) - (44,752,145) (6,889,904) (51,642,049) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 6 3 ANNUAL REPORT 2019 NOTE 23: RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES Profit after income tax Adjustments for: Depreciation and amortisation Impairment/(reversal of impairment) of exploration interests Interest accrued and not yet paid Foreign exchange differences Consolidated Group February 2019 $ February 2018 $ 138,033,499 92,205,663 (1,977) 12,531 (1,177,243) 4,119,418 (34,710) (173) 3,282,948 (3,286,639) Share of profit from joint venture entities using equity method (188,505,385) (94,040,638) Assets held for sale Equity based share payment Net changes in working capital: - 2,726,193 4,153,707 - (Increase)/decrease in trade and other receivables (76,735,084) (35,070,025) (Increase)/decrease in other assets Increase/(decrease) in trade payables and other creditors Increase/(decrease) in provisions Increase/(decrease) in deferred tax liability Net cash (used in)/from operating activities - (17,225) 72,707,657 44,521,672 72,926 863 47,522,177 (770,567) (681,485) 10,401,073 NOTE 24: EVENTS AFTER THE REPORTING DATE These financial statements were authorised for issue on 28 May 2019 by Director Priyank Thapliyal. No adjusting or significant non-adjusting events have occurred between the reporting data and the date of authorisation. 6 4 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS JUPITER MINES LIMITED NOTE 25: RELATED PARTY TRANSACTIONS The Group’s related parties include its associates and joint venture, key management and others as described below. Unless otherwise stated, none of the transactions incorporate special terms and conditions and no guarantees were given or received. Outstanding balances are settled in cash. Transactions with key management personnel: Director fees paid to Andrew Bell Consultants, a company in which Mr A Bell has a beneficial interest Director fees paid to Mr P Murray Director fees paid to Mr B Gilbertson Expenses reimbursed to Pallinghurst Advisors LLP, a company in which Mr B Gilbertson has a beneficial interest Expenses reimbursed to Pallinghurst GP Limited, a company in which Mr B Gilbertson has a beneficial interest Expenses reimbursed to Mr B Gilbertson Expenses reimbursed to Mr P Thapliyal Expenses reimbursed to Mr P Murray Short term employee benefits Salaries including bonuses Superannuation & equivalents Other short-term benefits Total short-term employee benefits Share-based payments Total remuneration Transactions with joint ventures: Consolidated Group February 2019 $ February 2018 $ 60,000 37,500 66,000 132,500 35,440 38,500 - 226,729 45,866 44,932 93,259 100,812 471 17,622 103,678 - 2,715,401 1,050,398 42,247 17,870 2,775,518 4,153,707 6,959,225 22,486 - 1,072,884 - 1,072,884 Trade amounts receivable from Tshipi é Ntle Manganese Mining Proprietary Limited (Marketing, management fee and other fees) Trade amounts payable to Tshipi é Ntle Manganese Mining Proprietary Limited (Purchases and other charges) 5,621,153 24,944 80,609,630 44,342,305 NOTE 26: FINANCIAL INSTRUMENT RISK The Group’s financial instruments consist mainly of deposits with banks, short-term investments, accounts receivable and payable. The totals for each category of financial instruments, measured in accordance with AASB 9 as detailed in the accounting policies to these financial statements, are as follows: Financial Assets Cash and cash equivalents Trade and other receivables Equity instruments at FVOCI Other current assets Financial Liabilities Trade and other payables Consolidated Group February 2019 $ February 2018 $ 72,848,680 76,544,487 85,369,828 45,863,083 547,064 57,884 1,043,702 70,381 158,823,456 123,521,653 84,082,617 44,675,781 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 6 5 ANNUAL REPORT 2019 Consolidated Group February 2019 $ February 2018 $ 84,082,617 44,675,781 Financial Risk Management Policies The Directors monitor the Group’s financial risk management policies and exposures and approves financial transactions. The Directors’ overall risk management strategy seeks to assist the Group in meeting its financial targets, while minimising potential adverse effects on financial performance. Its functions include the review of credit risk policies and future cash flow requirements. Specific Financial Risk Exposures and Management The main risks the Group is exposed to through its financial instruments are credit risk, liquidity risk and market risk consisting of interest rate risk, liquidity risk and equity price risk. (a) Credit Risk Exposure to credit risk relating to financial assets arises from the potential non-performance by counterparties of contract obligations that could lead to a financial loss to the Group. Credit risk is managed through the maintenance of procedures (such procedures include the utilisation of systems for the approval, granting and renewal of credit limits, regular monitoring of exposures against such limits and monitoring of the financial stability of significant customers and counterparties), ensuring to the extent possible, that customers and counterparties to transactions are of sound credit worthiness. Such monitoring is used in assessing receivables for impairment. Risk is also minimised through investing surplus funds in financial institutions that maintain a high credit rating, or in entities that the Directors have otherwise cleared as being financially sound. Credit Risk Exposures The maximum exposure to credit risk by class of recognised financial assets at reporting date, excluding the value of any collateral or other security held, is equivalent to the carrying value and classification of those financial assets (net of any provisions) as presented in the statement of financial position. Credit risk also arises through the provision of financial guarantees, as approved at Board level, given to parties securing the liabilities of certain subsidiaries. Trade and other receivables that are neither past due or impaired are considered to be of high credit quality. Aggregates of such amounts are as detailed in Note 7. There are no amounts of collateral held as security in respect of trade and other receivables. The Group does not have any material credit risk exposure to any single receivable or group of receivables under financial instruments entered into by the Consolidated Group. Credit risk related to balances with banks and other financial institutions is managed by investing cash with major financial institutions in both cash on deposit and term deposit accounts. Interest rates on major deposits that are re-invested are at a fixed rate on a monthly basis. (b) Liquidity risk Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or otherwise meeting its obligations related to financial liabilities. The Group manages this risk through the following mechanisms: preparing forward looking cash flow analysis in relation to its operational, investing and financing activities; monitoring undrawn credit facilities; obtaining funding from a variety of sources; maintaining a reputable credit profile; managing credit risk related to financial assets; and only investing surplus cash with major financial institutions; and comparing the maturity profile of financial liabilities with the realisation profile of financial assets. The Group has no significant exposure to liquidity risk due to the level of cash and cash equivalents detailed at Note 6. The Group manages liquidity risk by monitoring immediate and forecast cash requirements and ensuring adequate cash reserves are maintained. 6 6 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS JUPITER MINES LIMITED The tables below reflect an undiscounted contractual maturity analysis for financial liabilities. Cash flows realised from financial assets reflect management’s expectation as to the timing of realisation. Actual timing may therefore differ from that disclosed. The timing of cash flows presented in the table to settle financial liabilities reflects the earliest contractual settlement dates. Within 1 Year 1 to 5 Years Over 5 Years Total 2019 $ 2018 $ 2019 $ 2018 $ 2019 $ 2018 $ 2019 $ 2018 $ Consolidated Group Financial liabilities due for payment Trade and other payables 84,082,617 44,675,780 Total expected outflows 84,082,617 44,675,780 Financial assets – cash flows realisable Cash and cash equivalents 72,848,680 76,544,487 Trade and other receivables 85,369,828 45,863,083 - - - - - - - - Equity instruments at FVOCI - - 547,064 1,043,702 Other current assets 57,884 70,381 Total anticipated inflows 158,276,392 122,477,951 547,064 - Net inflow on financial instruments (c) Market Risk 74,193,775 77,802,171 547,064 1,043,702 - - - - - - - - - - - - - - - - 84,082,617 44,675,780 84,082,617 44,675,780 72,848,680 76,544,487 85,369,828 45,863,083 547,064 1,043,702 57,884 70,381 158,822,856 123,521,653 74,740,839 78,845,873 Market risk arises from the Groups use of interest bearing and foreign currency financial instruments. It is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in interest rates (interest rate risk), foreign exchange (currency risk) or other market factors (other price risk). (i) Interest rate risk Exposure to interest rate risk arises on financial assets and financial liabilities recognised at the end of the reporting period whereby a future change in interest rates will affect future cash flows or the fair value of fixed rate financial instruments. The financial assets and financial liabilities with exposure to interest rate risk are detailed below: Financial Assets Cash and cash equivalents Other current assets Financial Liabilities Short term borrowings Long term borrowings Consolidated Group February 2019 $ February 2018 $ 72,848,680 76,544,487 57,884 70,381 72,906,564 76,614,868 - - - - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 6 7 ANNUAL REPORT 2019 (ii) Foreign exchange risk Jupiter operates internationally and is exposed to foreign exchange risk arising from various currency exposures primarily with respect to the Australian Dollar and South African Rand. Jupiter’s exposure to currency risk is on cash, trade receivables, and borrowings. Foreign currency risk is the risk of exposure to transactions that are denominated in a currency other than the Australian dollar. The carrying amounts of the Group’s financial assets and liabilities are denominated in four different currencies as set out below: 28 February 2019 Financial Assets 60,569,245 2,886,697 AUD ZAR EUR 418 USD Total $ 9,392,320 72,848,680 (iii) Other price risk Price risk relates to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices largely due to demand and supply factors for commodities. As the Group does not derive revenue from sale of products, the effect on profit and equity as a result of changes in the price risk is not considered material. The fair value of the mining projects will be impacted by commodity price changes (predominantly iron ore, nickel and uranium) and could impact future revenues once operational. However, management monitors current and projected commodity prices. (iv) Summarised sensitivity analysis The following table summarises the sensitivity of the Jupiter Group’s financial assets and financial liabilities to interest rate risk and foreign exchange risk. Management have reviewed interest rate and foreign exchange risk and determined the rates applied to be appropriate. Interest Rate Risk Foreign Exchange Risk -50 bps +50 bps -10% +10% Carrying Amount $ Profit $ Other Equity $ Profit $ Other Equity $ Profit $ Other Equity $ Profit $ Other Equity $ 28 February 2019 Financial Assets Cash and cash equivalents 72,848,680 (364,243) Receivables 85,369,828 Equity instruments at FVOCI 547,064 Other current assets 57,884 Financial Liabilities Trade and other payables 84,082,617 - - - - Total increase/(decrease) (364,243) - - - - - - 364,243 - - - - 364,243 - - - - - - - (8,536,983) - - 8,408,262 (128,721) - - - - - - - 8,536,983 - - (8,408,262) 128,721 - - - - - - 6 8 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS JUPITER MINES LIMITED $ 8 1 0 2 $ 9 1 0 2 , 7 8 4 4 4 5 , 6 7 , 0 8 6 8 4 8 2 7 , $ - 8 1 0 2 9 1 0 2 , 3 8 0 3 6 8 5 4 , 8 2 8 9 6 3 , , 5 8 , 3 8 0 3 6 8 5 4 , , 2 0 7 3 4 0 , 1 4 6 0 7 4 5 , , 2 0 7 3 4 0 , 1 4 6 0 7 4 5 , 1 8 3 0 7 , 4 8 8 7 5 , 1 8 3 0 7 , 4 8 8 7 5 , $ - 8 2 8 9 6 3 , , 5 8 - - - - 3 5 6 , 1 2 5 , 3 2 1 , 6 5 4 3 2 8 8 5 1 , 6 6 1 , 7 7 9 6 4 , 7 7 7 , 4 7 9 5 8 , - , 0 8 7 5 7 6 4 4 , , 7 1 6 2 8 0 4 8 , , 0 8 7 5 7 6 4 4 , , 7 1 6 2 8 0 4 8 , 0 8 7 , 5 7 6 , 4 4 7 1 6 , 2 8 0 4 8 , 0 8 7 , 5 7 6 , 4 4 7 1 6 , 2 8 0 4 8 , - - $ 8 1 0 2 $ 9 1 0 2 $ 8 1 0 2 $ 9 1 0 2 $ 8 1 0 2 $ 9 1 0 2 $ 8 1 0 2 $ 9 1 0 2 8 % 1 0 2 9 % 1 0 2 : s t e s s A l i a c n a n F i - - - - - - - - - - - - - - - - - - - - - , 9 0 2 9 7 1 , 0 1 , 7 5 9 4 6 5 , 1 6 8 7 2 , 5 6 3 , 6 6 , 3 2 7 3 8 2 , 1 1 4 3 0 . 7 0 2 . s t i s o p e D d n a h s a C - - - - - - - - - - - - - - - - - - s t e s s A l i a c n a n F i r e h t O s t e s s A t n e r r u C r e h t O l s e b a v e c e R i , 9 0 2 9 7 1 , 0 1 , 7 5 9 4 6 5 , 1 6 8 7 2 , 5 6 3 , 6 6 3 2 7 , 3 8 2 , 1 1 s t e s s A l i a c n a n F i l a t o T : s e i t i l i b a L i l i a c n a n F i - - - - - - - - - - e t a R t s e r e t n I e v i t c e ff E e g a r e v A d e t h g e W = R E A W I i s e i t i l i b a L i l i a c n a n F i l a t o T l s e b a y a p y r d n u s d n a e d a r T l a t o T g n i r a e B t s e r e t n I - n o N s r a e Y 5 r e v O s r a e Y 5 o t 1 r a e Y n h t i i W e t a R t s e r e t n I g n i t a o F l R I E A W g n i r u t a M e t a R t s e r e t n I d e x F i ) v ( NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 6 9 ANNUAL REPORT 2019 (d) Net Fair Value The net fair values of cash and cash equivalents and non-interest bearing monetary financial assets and liabilities approximates their carrying value. The net fair value of financial assets and financial liabilities is based upon market prices where a market exists or by discounting the expected future cash flows by the current interest rates for assets and liabilities with similar risk profiles. Listed equity investments have been valued by reference to market prices prevailing at reporting date. Financial Assets Cash at bank February 2019 February 2018 Carrying Amount $ Net Fair Value $ Carrying Amount $ Net Fair Value $ 72,848,680 72,848,680 76,544,487 76,544,487 Trade and other receivables 85,369,828 85,369,828 45,863,083 45,863,083 Available for sale financial assets Equity instruments at FVOCI Other current assets Financial Liabilities Trade and other payables - 547,064 57,884 - 1,043,702 1,043,702 547,064 70,381 - 70,381 - 70,381 158,380,966 158,380,966 123,521,653 123,521,653 84,082,617 84,082,617 44,675,780 44,675,780 NOTE 27: FAIR VALUE MEASUREMENT The financial instruments recognised at fair value in the statement of financial position have been analysed and classified using a fair value hierarchy reflecting the significance of the inputs used in making the measurements. The fair value hierarchy consists of the following levels: Level 1: quoted prices in active markets for identical assets or liabilities; Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices); and Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). Group – as at 28 February 2019 Financial assets Equity instruments at FVOCI Group – as at 28 February 2018 Financial assets Level 1 $ 547,064 Level 1 $ Level 2 $ - Level 2 $ Level 3 $ Total $ - 547,064 Level 3 $ Total $ Available for sale financial assets 1,043,702 - - 1,043,702 7 0 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS JUPITER MINES LIMITED NOTE 28: PARENT COMPANY INFORMATION ASSETS Current assets Non-current assets TOTAL ASSETS LIABILITIES Current liabilities Non-Current liabilities TOTAL LIABILITIES NET ASSETS EQUITY Contributed equity Financial assets reserve Accumulated losses TOTAL EQUITY FINANCIAL PERFORMANCE Profit for the period Other comprehensive income/(loss) TOTAL COMPREHENSIVE INCOME The parent company commitments are reflected in Note 20. Consolidated Group February 2019 $ February 2018 $ 296,773,308 110,281,625 214,985,973 347,567,100 511,759,054 457,848,725 130,472,445 47,350,621 7,570,235 2,581,866 138,042,680 49,932,487 373,716,374 407,916,238 410,435,400 433,003,601 340,258 836,896 (37,059,284) (25,924,259) 373,716,374 407,916,238 152,264,505 6,062,935 (496,638) 151,767,867 656,408 6,719,343 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 7 1 ANNUAL REPORT 2019 DIRECTORS’ DECLARATION The Directors of Jupiter Mines Limited declare that: 1. the financial statements, notes and the additional disclosures included in the Directors Report designated as audited, of the consolidated entity are in accordance with the Corporations Act 2001 including: (a) complying with Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and (b) give a true and fair view of the financial position as at 28 February 2019 and of the performance for the year ended on that date of the company and consolidated entity; 2. The financial statements and notes also comply with International Financial Reporting Standards as disclosed in Note 1. 3. There are reasonable grounds to believe that Jupiter Mines Limited will be able to pay its debts as and when they become due and payable. 4. This declaration has been made after receiving the declarations required to be made to the Directors in accordance with section 295A of the Corporations Act 2001 for the financial year ended 28 February 2019. Signed on behalf of the Board of Directors Priyank Thapliyal Perth 28 May 2019 7 2 INDEPENDENT AUDITOR’S REPORT JUPITER MINES LIMITED INDEPENDENT AUDITOR’S REPORT Central Park Level 43, 152-158 St Georges Terrace Perth WA 6000 Correspondence to: PO Box 7757 Cloisters Square Perth WA 6850 T +61 8 9480 2000 F +61 8 9322 7787 E info.wa@au.gt.com W www.grantthornton.com.au Auditor’s Independence Declaration To the Directors of Jupiter Mines Limited In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of Jupiter Mines Limited for the year ended 28 February 2019, 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. Grant Thornton Audit Pty Ltd Chartered Accountants M J Hillgrove Partner – Audit & Assurance Perth, 28 May 2019 Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389 www.grantthornton.com.au ‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited. Liability limited by a scheme approved under Professional Standards Legislation. INDEPENDENT AUDITOR’S REPORT 7 3 ANNUAL REPORT 2019 INDEPENDENT AUDITOR’S REPORT Central Park Level 43, 152-158 St Georges Terrace Perth WA 6000 Correspondence to: PO Box 7757 Cloisters Square Perth WA 6850 T +61 8 9480 2000 F +61 8 9322 7787 E info.wa@au.gt.com W www.grantthornton.com.au Independent Auditor’s Report To the Members of Jupiter Mines Limited Report on the audit of the financial report Opinion We have audited the financial report of Jupiter Mines Limited (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 28 February 2019, the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies, and the Directors’ declaration. In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including: a giving a true and fair view of the Group’s financial position as at 28 February 2019 and of its performance for the year ended on that date; and b complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389 www.grantthornton.com.au ‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited. Liability limited by a scheme approved under Professional Standards Legislation. 74 INDEPENDENT AUDITOR’S REPORT JUPITER MINES LIMITED INDEPENDENT AUDITOR’S REPORT Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key audit matter How our audit addressed the key audit matter Impairment on Investments accounted for using the equity method Note 1(b) and Note 14 The Group recorded an investment accounted for under the equity method totalling $422,841,742 (2018: $385,267,255) at 28 February 2019 in relation to its 49.9% ownership in Tshipi e’Ntle Manganese Mining Proprietary Limited. The Group recognises this investment as a joint venture using the equity method in accordance with AASB 128: Investment in Associates and Joint Ventures, and is considered for impairment in the event of significant or prolong decline in value. Management assesses impairment on an annual basis in accordance with AASB 136 “Impairment of Assets”. This area is a key audit matter due to the significant balance carried by the Group that management have assess using estimates and judgements that required specific valuation expertise and analysis. Our procedures included, amongst others: Considering the appropriateness of the method applied by the Group to perform the valuation of the investment utilising the equity method in accordance with the requirements of the accounting standards; Procedures included obtaining the key valuation inputs, including the long term manganese price, ore reserves and discount rates and performing the following: Critically assessing the inputs and assumptions; Engaging the services of an independent geologist acting as an auditor’s expert to evaluate the assessment made by the management expert; Engaging the services of a specialist to evaluate the weight average cost of capital relevant to the South African market; Assessing the competencies of the expert in line ASA 500 as a managements expert; and Assessing the competencies of the experts in line ASA 620 Using the work of an Auditors Expert and Assessing the adequacy of related disclosures in Note 1(b) and Note 14. Information other than the financial report and auditor’s report thereon The Directors are responsible for the other information. The other information comprises the information included in the Group’s annual report for the year ended 28 February 2019, 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 express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors for the financial report The Directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the Directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. ADDITIONAL INFORMATION FOR LISTED COMPANIES 7 5 ANNUAL REPORT 2019 INDEPENDENT AUDITOR’S REPORT In preparing the financial report, the Directors are responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters 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 this financial report. A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our auditor’s report. Report on the remuneration report Opinion on the remuneration report We have audited the Remuneration Report included in pages 23 to 28 of the Directors’ report for the year ended 28 February 2019. In our opinion, the Remuneration Report of Jupiter Mines Limited, for the year ended 28 February 2019 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. Grant Thornton Audit Pty Ltd Chartered Accountants M J Hillgrove Partner – Audit & Assurance Perth, 28 May 2019 76 ADDITIONAL INFORMATION FOR LISTED COMPANIES JUPITER MINES LIMITED ADDITIONAL INFORMATION FOR LISTED COMPANIES Additional information required by the ASX listing rules and not disclosed elsewhere in this report is set out below. The information is effective as at 27 May 2019. Substantial shareholders The number of substantial shareholders and their associates are set out below: Name Number of fully paid ordinary shares % holding Stichting Pensioenfonds ABP (and its associ-ate Pallinghurst EMG African Queen L.P.) Pallinghurst Consolidated (Cayman) Limited POSCO Australia GP Pty Ltd (and its associate POSCO Australia Pty Ltd) AMCI Euro Holdings B.V. 1 Hans J. Mende1 Fritz R. Kundrun1 289,075,945 145,845,375 134,992,472 145,845,375 252,458,801 240,251,846 14.76 7.44 6.89 7.44 12.88 12.26 1 AMCI Euro Holdings B.V. (“AMCI”), and, by way of association, Hans J. Mende and Fritz R. Kundrun (HJM Jupiter L.P. and FRK Jupiter L.P., respectively), have a relevant interest by way of a right to acquire 145,845,372 ordinary shares in Jupiter pursuant to the Sale and Purchase Agreement between AMCI and Pallinghurst Consolidated (Cayman) Limited, to be effected after the release of this report. Voting rights Ordinary Shares: On a show of hands, every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote. Distribution of equity security holders Holding 1 – 1,000 1,001 – 5,000 5,000 – 10,000 10,000 – 100,000 100,000 and over Total Number of shareholders Number of shares % of capital 123 646 576 1,832 440 3,617 32,685 1,984,358 4,799,239 69,725,229 1,882,449,522 1,958,991,033 3.40 17.86 15.92 50.65 12.16 100.00 Shareholders with less than a marketable parcel As at 27 May 2019 there were 158 shareholders on the register holding less than a marketable parcel ($500) based on the closing market price of $0.35. Securities subject to voluntary escrow Voluntary Escrow Deeds were entered into during Jupiter’s Initial Public Offering in 2018 to prevent any sale of Shares as follows: (a) for 50% of the Escrowed Shares, until the date that the Company releases to ASX its audited financial statements for the financial year ending 28 February 2019; and (b) for the remaining 50% of the Escrowed Shares (the “Escrow Release Condition”): (i) if the following occurs: (A) the Company releases to ASX its reviewed financial statements for the half financial year ending 31 August 2018; and (B) the VWAP of Shares traded on ASX for any 20 consecutive trading days is 20% or more above the IPO Offer Price following release to ASX of the Company’s reviewed financial statements for the half financial year ending 31 August 2018, until the date that the Escrow Release Condition is satisfied; and ADDITIONAL INFORMATION FOR LISTED COMPANIES 7 7 ANNUAL REPORT 2019 (ii) if the Escrow Release Condition is not satisfied, until the date that the Company announces to ASX its reviewed financial statements for the half financial year ending 31 August 2019. However, these restrictions do not apply to the sale, transfer, disposal or cancellation (as applicable) of the relevant Escrowed Shares in the following circumstances: (a) where an Escrowed Shareholder accepts an offer under a takeover bid (as defined in the Corporations Act) in relation to their Shares, provided holders of not less than 50% of the Shares not subject to restrictions then on issue have accepted the takeover bid; (b) where the Shares of an Escrowed Shareholder are to be transferred or cancelled as part of a merger by way of a scheme of arrangement under Part 5.1 of the Corporations Act; or (c) where an Escrowed Shareholder elects to dispose of any Escrowed Shares pursuant to a buy-back of Shares or a reduction of capital conducted by the Company. The Voluntary Escrow Deeds in any event terminate no later than 2 years after the date they were entered into. Following the release of this Annual Report, 50% of Escrowed Shares will be released from Escrow per condition (a) de-scribed above. The below table sets out the balance of Escrowed Shares after the release: Escrowed shareholder Pallinghurst Consolidated (Cayman) Limited POSCO Australia GP Pty Ltd HJM Jupiter L.P. FRK Jupiter L.P. EMG Jupiter L.P. POSCO Australia Pty Ltd Priyank Thapliyal Red Rock Resources plc Total Twenty largest shareholders Number of shares escrowed 72,922,686 56,022,160 49,131,714 46,703,227 42,723,031 11,474,076 10,564,693 9,262,457 298,804,044 Shareholder Number of shares held % of issued capital 1 2 3 4 5 6 7 8 9 10 11 12 13 Stichting Pensioenfonds ABP (and its associate Pallinghurst EMG African Queen L.P.) HSBC Custody Nominees (Australia) Limited Citicorp Nominees Pty Limited Pallinghurst Consolidated (Cayman) Limited1 POSCO Australia GP Pty Ltd (and its associate POSCO Australia Pty Ltd) JP Morgan Nominees Australia Pty Limited HJM Jupiter L.P.1 FRK Jupiter L.P. 1 EMG Jupiter L.P. National Nominees Pty Limited Priyank Thapliyal UBS Nominees Pty Ltd BNP Paribas Noms Pty Ltd 14 Warbont Nominees Pty Ltd 15 16 17 18 19 Red Rock Resources plc Brispot Nominees Pty Ltd BNP Paribas Nominees Pty Ltd Ilwella Pty Ltd HSBC Custody Nominees (Australia) Limited – A/C 2 20 CS Fourth Nominees Pty Limited Total 289,075,945 232,414,350 207,657,914 145,845,375 134,992,472 102,500,513 106,613,429 94,406,454 85,446,062 51,202,099 33,939,917 24,139,669 31,741,336 22,200,177 18,524,914 17,127,929 16,962,588 15,100,589 13,255,741 10,721,108 14.76 11.86 10.60 7.44 6.89 5.23 5.44 4.82 4.36 2.61 1.73 1.23 1.62 1.13 0.95 0.87 0.87 0.77 0.68 0.55 1,653,868,578 84.42 1 AMCI Euro Holdings B.V. (“AMCI”), and, by way of association, Hans J. Mende and Fritz R. Kundrun (HJM Jupiter L.P. and FRK Jupiter L.P., respectively), have a relevant interest by way of a right to acquire 145,845,372 ordinary shares in Jupiter pursuant to the Sale and Purchase Agreement between AMCI and Pallinghurst Consolidated (Cayman) Limited, to be effected after the release of this report. 7 8 GLOSSARY OF TERMS AND ABBREVIATIONS JUPITER MINES LIMITED Unissued equity securities There are no unissued equity securities. Securities exchange The Company is listed on the Australian Securities Exchange. GLOSSARY OF TERMS AND ABBREVIATIONS 7 9 ANNUAL REPORT 2019 GLOSSARY OF TERMS AND ABBREVIATIONS Term/Abbreviation Definition AASB CIF CYIP EPS FOB FVOCI FY2018 FY2019 JKPL LTI LTIR TRIFR Australian Accounting Standards Board Cost, Insurance and Freight Central Yilgarn Iron Projects Earnings per share Free on Board Fair value through other comprehensive income Financial year ended 28 February 2018 Financial year ended 28 February 2019 Jupiter Kalahari Pty Ltd Lost time injuries Lost time injury rate Total recordable injury frequency rate 8 0 GLOSSARY OF TERMS AND ABBREVIATIONS JUPITER MINES LIMITED J U P I T E R M I N E S L I M I T E D A N N U A L R E P O R T 2 0 1 9 Level 10, 16 St Georges Terrace Perth, Western Australia, 6000 T +61 8 9346 5500 F +61 8 9481 5933 www.jupitermines.com
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