Magnes um
2022 Annual Report
Latrobe Magnesium Limited and its Controlled Entities
ABN 52 009 173 611
LATROBE MAGNESIUM LIMITED and its Controlled Entities
ABN 52 009 173 611
INDEX
Page
Company Directory ................................................................................................................... 3
Review of Operations .............................................................................................................. 4
Directors’ Report ...................................................................................................................... 9
Auditor’s Independence Declaration ..................................................................................... 18
Directors’ Declaration ............................................................................................................. 19
Statement of Profit or Loss and Other Comprehensive Income ............................................. 20
Statement of Financial Position .............................................................................................. 21
Statement of Changes in Equity ............................................................................................. 22
Statement of Cash Flows ....................................................................................................... 23
Notes to the Financial Statements ......................................................................................... 24
Independent Auditor’s Report ................................................................................................. 49
Additional Information ............................................................................................................. 52
2
LATROBE MAGNESIUM LIMITED and its Controlled Entities
ABN 52 009 173 611
COMPANY DIRECTORY
Directors
Jock Murray, Chairman
David Paterson, CEO
Philip Bruce
John Lee
Michael Wandmaker
Michelle Blackburn
Registered Office and
Principal Place of Business
Suite 504
80 Clarence Street
Sydney NSW 2000
Telephone: (02) 9279 2033
Auditors
Nexia Sydney Audit Pty Limited
Level 16
1 Market Street
Sydney NSW 2000
Chief Executive Officer
David Paterson
Secretary
John Lee
Bankers
National Australia Bank Limited
Mezzanine Level
255 George Street
Sydney NSW 2000
Solicitors
Minter Ellison
Level 40
1 Farrer Place
Sydney NSW 2000
Share Registry
Stock Exchange
Computershare Investor Services Pty Limited
Australian Securities Exchange
Level 3
60 Carrington Street
Sydney NSW 2000
20 Bridge Street
Sydney NSW 2000
Telephone: 1 300 850 505
ASX CODE: LMG
www.latrobemagnesium.com
3
LATROBE MAGNESIUM LIMITED and its Controlled Entities
ABN 52 009 173 611
REVIEW OF OPERATIONS
LATROBE MAGNESIUM PROJECT
1. Overview
During the year, the Company has made significant progress with its Latrobe Magnesium Project in the following
areas:
• Officially awarded EPCM to Mincore, further detailed engineering of the demonstration plant commenced.
• Completed value engineering summary and trade-off study reports, adding value to the project.
• Completed site surveying and underground service location.
• Completed repairs of existing fences and construction of RTL subdivision fencing.
• Completed architectural drawings for the administration building refurbishment. Contract package for the
administration building, security gatehouse and carpark were tendered and awarded for construction to
allow mobilisation for major construction contractors. Construction works are expected to be completed in
September 2022.
• Completed site clean-up, electrical services restoration and other remedial works to get ready for
construction works of the demonstration plant.
• Completed HAZOP findings and electrical engineering has commenced with the power distribution and
control system design.
• Tenders for the long lead items, Spray Roaster and Reduction Furnace, are partially awarded.
• Tender packages for other major equipment such as briquetting plant, filters, pumps, evaporator,
automation, thickeners, agitators, non-metallic tanks, scrubber, RO Plant and cooling tower have been
prepared.
• Continued test work undertaken with CSIRO for the detailed design and modelling of the reduction furnace
area including briquette loading and product unloading.
• Finalising the process flowsheet and updating the mass and energy balance to incorporate new test work
and vendor data.
• Completed sub-lease agreement with RTL Mining & Earthworks Pty Ltd to utilise 20,000 m² of Lot 6 of
Hazelwood N site to establish a new base for its transport operation.
• Exercised option in December 2021 to purchase 320 Tramway Road site at the agreed price of $5 million,
$2.25 million paid by cash, $2.25 million by LMG shares at 10 cents per share and $500,000 by LMG shares
at 0.095 per share in February 2022. This included the crane purchase.
• Completed two capital raisings by placements in October and November 2021 raising a total of $14.5 million
to fund the magnesium project.
• Completed facility agreement for $23 million in project funding plus capitalized interest, with $20 million to
be drawn for construction purposes up to $39 million construction budget and a $3 million standby line
available as a contingency to fund any construction cost over-run.
• Regional Development Grant Agreement with the State of Victoria and LMG was signed on 29th June 2022
for the provision of funding to support the demonstration plant. This funding will depend upon LMG reaching
milestones in 2023.
2. Magnesium Markets
In the calendar year ended 31 December 2021, the primary world production of magnesium increased to 1.085
million tonnes. China’s estimated primary production for the calendar year 2021 was approximately 88% of the
world’s production. Some 50% of China’s production is used locally. World growth in demand is expected to
continue at an annual rate between 6% and 7% until 2027 when it is projected the market will require some 2
million tonnes.
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LATROBE MAGNESIUM LIMITED and its Controlled Entities
ABN 52 009 173 611
REVIEW OF OPERATIONS
Australian and New Zealand consumption of magnesium has been recorded in the order of 7,000 tonnes per
annum. All this magnesium is imported.
During the year, the magnesium price traded at all time high with prices FOB China hitting US$10,664 in
September 2021. The spot prices as at 30 June 2022 were, as follows:
FOB China
US$ per tonne
30-Jun-22
3,996
30-Jun-21
3,260
Owing to United States anti-dumping duties, the USA delivered price was in the order of double the FOB China
price per tonne.
With the adoption of light-weighting of motor vehicles and the legislated emission standards in many countries
in the World, there is a growing demand by car companies to use more magnesium and aluminium sheet in
cars. The car business has adopted aluminium sheet in outside panels and with this sheet there is up to 6
percent of magnesium. With the development of new magnesium alloys and new production techniques, the
use of magnesium car parts and sheet provides many exciting opportunities.
3.
100,000 PFS Study
In February 2022, LMG met with local suppliers and contractors at Town Hall for the major construction and
equipment packages that needed to be issued, with the goal to prioritise local suppliers within the Latrobe Valley.
LMG has awarded a Pre-Feasibility Study (PFS) for its 100,000 tpa magnesium plant to Bechtel, a global
engineering, construction, and project management company. The PFS will evaluate strategic options to
leverage and develop the 100,000tpa plant at an overseas location, to be selected during the PFS. Upon
completion of the PFS, LMG will hold discussions with potential joint venture partners who wish to participate in
its project.
The project is expected to generate in order of $1B in annual revenue and an EBITDA is estimated to be in the
order of $600M whilst generating net-zero CO2 emissions using LMG's unique technology and a renewable
energy source.
4. Ash Supply Agreement
On 10 March 2021, EnergyAustralia announced that they would be closing their Yallourn Power Station in mid
2028. LMG believes there is sufficient fly ash that can be mined from their current ash repository and the fly
ash produced over the next seven years to provide sufficient feedstock to supply a 10,000 tpa magnesium plant
for a period of 25 years. New agreements will need to be entered into between LMG and EnergyAustralia before
the expansion of LMG’s plant can take place.
LMG has announced that, once it has successfully operated its demonstration plant, it will be expanding the
plant to a 10,000tpa capacity. Further Geotech work is required to be undertaken to determine the Yallourn ash
supply that can be used. This work will be completed in 2022. Then the final size of the Latrobe Plant will be
determined.
5. Community Briefings
LMG has also updated its website so that it is more interactive with all stakeholders. It also has a Linkedin and
Twitter sites for the provision of information. In September 2021, LMG organised an investor webinar to update
all stakeholders on the progress of the Latrobe magnesium project.
LMG has committed to hold two further Community briefings through the development of the project and report
on the emissions and other matters. It is currently planning a Community briefing in early October 2022. LMG
believes in having a social licence with the Community in which it operates.
5
LATROBE MAGNESIUM LIMITED and its Controlled Entities
ABN 52 009 173 611
REVIEW OF OPERATIONS
6.
Latrobe Council Planning Permit
On 5 June 2020, LMG’s application to the Latrobe City Council for planning approval to use and develop the
site for a 3,000 tpa magnesium plant at 320 Tramway Road Hazelwood North was approved and a certificate
issued. It has since reduced the size of the demonstration plant to 1,000tpa of magnesium.
LMG will need to get an additional approval for the construction of a 10,000 tpa plant. LMG remains committed
to progressing this project to safely re-process mining waste, generating jobs and developing a new clean
magnesium industry in the Latrobe Valley. LMG is currently investigating the use of renewables for its 10,000tpa
plant from a nearby solar farm project.
7.
EPA Planning Approval
On 16 September 2020, LMG’s application to the Environmental Protection Authority (EPA) for its research,
development and demonstration application for its initial 3,000 tpa magnesium plant at 320 Tramway Road
Hazelwood North was approved and a certificate issued. The approval allows LMG to operate the plant for a
period of 12 months post the commissioning stage.
The EPA’s approval comes with mainly standard conditions which need to be fulfilled before construction and/or
commissioning of the plant. An additional approval will be required for the 10,000 tpa plant.
8.
The Magnesium Metal Production Facility
Most of the site preparation work for the construction of the “demonstration-scale” magnesium metal production
facility using ash from the Yallourn W power station as raw material, has been completed. Construction has
commenced on site in the first quarter 2022.
The chosen site, at 320 Tramway Road, Hazelwood North, is part of an industrial zone, but still relatively close
to the Yallourn Power Station, in order to minimise transport of the ash. The plan is to re-purpose the existing
buildings, bringing in new equipment and facilities. The bulk of the production facility is to be housed within the
existing building located at the southern end of the site. Truck access will be from Second Avenue (not the
main road) and loading/unloading will be on the west side of the existing building.
The extraction of magnesium from brown coal fly ash is a new industrial process. It will involve dissolving
magnesium from the ash and its recovery as solid magnesium oxide. This can then be reduced to magnesium
metal using the conventional high-temperature process. Because the magnesium is removed to a high degree,
the material remaining should be able to be utilised as a cement substitute in the construction industry.
The process is anticipated to have 62 percent reduction in carbon emissions compared to the usual normal
magnesium Chinese industry performance. This is due to the lower concentration of carbonates in the fly ash,
compared with the normal dolomite ore feedstock. Also, the key chemical consumable, ferrosilicon, is
manufactured using hydro-electricity.
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LATROBE MAGNESIUM LIMITED and its Controlled Entities
ABN 52 009 173 611
REVIEW OF OPERATIONS
9.
Purchase of 320 Tramway Road, Hazelwood North
On 16 December 2021, the Company exercised its option to purchase the site, where its magnesium production
facility is situated, from the landlord for its fixed price of $5 million, which included the cost of the cranes.
The settlement of the purchase was completed on 8 February 2022. The total purchase price of the property
and its cranes was $5,000,000 paid as follows:
Cash payment
Issue of 22.5 million LMG shares @ $0.10
Issue of 8.3 million LMG shares @ $0.095
Total Purchase Price
$
1,961,900
2,250,000
788,100
5,000,000
Land and Property
Crane Equipment
$
2,119,000
2,881,000
Total Purchase Price
5,000,000
RnD Equipment Pty Ltd were nominated as the purchaser of the 10 cranes from the Tramway Road’s owners.
These cranes will be used to automate the loading and unloading of the smelters and are eligible for the
Company’s Research and Development rebate.
320 Tramway Road property contains 14,000m2 of buildings in the form of an administration building and a
number of large industrial buildings which are 12 metres high. These buildings are ideal to house LMG’s
demonstration plant.
The site is close to rail, freeway, gas and water pipelines. In addition, the site is near to a new solar power
development which has been permitted by the Latrobe City Council and the Victorian State Government. Given
LMG can connect to this solar farm development, its magnesium and other products will produce zero or very
little CO2 emissions.
The purchase of the site allows the company to plan its future expansions, obtain appropriate business
insurance, save rent through the construction phase and benefit from its own site improvements.
10. Warrant Issue
Under the October 2018 funding agreement with RnD Funding Pty Ltd, LMG issued 12,495,000 unlisted
warrants. The warrants have an exercise price of $0.02 and are exercisable for a period up to 3 years post the
drawdown dates. All 12,495,000 unlisted warrants were exercised by RnD Funding Pty Ltd at $0.02 in October
2021, December 2021 and March 2022.
Under the October 2019 funding agreement with RnD Funding Pty Ltd, LMG has issued 35,889,199 unlisted
warrants. The warrants have an exercise price of $0.03 and are exercisable for a period up to 3 years post the
drawdown date. In November 2021, 12,666,000 warrants were exercised at $0.03 by RnD Funding Pty Ltd.
The remaining 23,223,199 warrants are exercisable at $0.03 prior to 15 October 2022.
Under the 16 May 2022 funding agreement with RnD Funding Pty Ltd, LMG has issued 80,000,001 warrants at
different strike prices and dates, as follows:
Warrant Amount
8,888,889
8,888,889
8,888,889
8,888,889
8,888,889
8,888,889
8,888,889
8,888,889
8,888,889
Expiry Date
31/03/25
30/06/25
30/09/25
31/12/25
31/03/26
30/06/26
30/09/26
31/12/26
30/06/27
Exercise Price
$0.18
$0.18
$0.18
$0.24
$0.24
$0.24
$0.30
$0.30
$0.30
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LATROBE MAGNESIUM LIMITED and its Controlled Entities
ABN 52 009 173 611
REVIEW OF OPERATIONS
11. Capital Raisings
On 19 October 2021, the Company issued 120,000,000 fully paid ordinary shares at $0.025 per share to
sophisticated and professional investors pursuant to a private placement, raising gross proceeds of $3 million.
In addition, the company issued 60,000,000 options, on a one for two free basis for each ordinary share issued
under the placement. The options were issued at an exercise price of 4 cents for a term of 2 years payable on
or before 26 October 2023.
On 19 November 2021, the Company issued 115,000,000 fully paid ordinary shares at $0.10 per share to
sophisticated and professional investors pursuant to a private placement, raising gross proceeds of $11.5
million. In addition, the company issued 28,750,000 options, on a one for four free basis for each ordinary share
issued under the placement. The options were issued at an exercise price of 4 cents for a term of 23 months
payable on or before 26 October 2023.
On 19 November 2021, the Company issued 4.5 million options at an exercise price of 4 cents for a term of 23
months payable on or before 26 October 2023 for the payment of marketing costs associated with the November
capital raising. An additional 25.5 million options were issued in January 2022 on the same terms and for the
same reason.
The total proceeds of $14.5 million provides funding to continue the development of the Company’s
demonstration plant.
12. Project Funding
On 13 December 2021, LMG signed a binding term sheet with RnD Funding Pty Ltd (“RnD Funding”) for the
provision of $23 million of loan funding. The facility agreement was signed on 16 May 2022 and is available to
be drawn in three tranches:
(i) $10,000,000 in full, was drawn on 24 June 2022;
(ii) $10,000,000 in full, on or before 30 September 2022; and
(iii) standby line of $3,000,000 available to be drawn between 1 January 2023 and 30 June 2023.
Mandate fee is 1.25% and establishment fee is 1% which are paid in LMG shares.
Interest rate is 12% per annum up to 31 October 2023 and conditionally 14% per annum for the rest of the term.
The term of the loan is five years from the date of the first drawdown and the interest rate chargeable is 12%
per annum to 31 October 2023. It is LMG’s intention to repay the loan before 31 October 2023 from R&D
refundable tax offsets and refinancing of the residual amount of the facility. If not repaid, the interest rate will
be reset to higher levels.
The facility is secured by a mortgage deed on the 320 Tramway Road, Hazelwood North property which has
been valued at $8.3 million owned by Latrobe Magnesium Limited as the mortgagor, and the lender, RnD
Funding Pty Ltd as the mortgagee.
8
LATROBE MAGNESIUM LIMITED and its Controlled Entities
ABN 52 009 173 611
DIRECTORS’ REPORT
The Directors present their report together with the financial report of Latrobe Magnesium Limited (“Company”)
and of the Group, being the Company and its subsidiaries for the financial year ended 30 June 2022 and the
auditor’s report thereon.
DIRECTORS
The following persons were Directors of Latrobe Magnesium Limited during the financial year and up to the date
of this report unless otherwise stated.
Jock Murray
David Paterson
K A Torpey
P F Bruce
J R Lee
M F Wandmaker Non Executive Director (appointed on 1 April 2022)
M L Blackburn
Chairman
CEO & Executive Director
Non Executive Director (deceased on 8 February 2022)
Non Executive Director
Non Executive Director
Non Executive Director (appointed on 1 September 2022)
PRINCIPAL ACTIVITIES
During the year the principal continuing activities of the Group consisted of:
• Contract packages for the administration building, security gatehouse and carpark were awarded for
construction to allow mobilisation for major construction contractors. Construction works are expected to
be completed in September 2022.
• Completed site clean-up, electrical services restoration and other remedial works to get ready for
construction works of the demonstration plant.
• Tenders for the long lead items, Spray Roaster and Reduction Furnace, are partially awarded.
• Tender packages for other major equipment such as briquetting plant, filters, pumps, evaporator,
automation, thickeners, agitators, non-metallic tanks, scrubber, RO plant and cooling tower are being
awarded.
• Continued test work undertaken with CSIRO for the detailed design and modelling of the reduction furnace
area including briquette loading and product unloading.
• Completed two capital raisings by placements in October and November 2021 raising a total of $14.5 million
to fund the magnesium project.
• Exercised option in December 2021 to purchase 320 Tramway Road site at the agreed price of $5 million,
$1.96 million paid by cash, $2.25 million by LMG shares at 10 cents per share and $0.79 million by LMG
shares at 9.5 cents per share, both issues made in February 2022.
• Completed facility agreement in June 2022 for $23 million in project funding plus capitalized interest, with
$20 million to be drawn in 2022 and a $3 million standby line available in 2023, as a contingency to fund
any construction cost over-run.
• Finalising Regional Development Grant Agreement with the State of Victoria providing LMG up to $1 million
grant.
OPERATING RESULTS
The consolidated net loss of the Group after providing for income tax amounted to $3,205,891 compared to a
net profit of $120,256 for the previous corresponding period. The loss was mainly due to the costs incurred in
expanding the owner’s team management, ongoing test work on Yallourn fly-ash. The 2021 net loss reported
in the prior year of $2,352,959 has been restated to a profit of $120,256 due to recognition of a tax losses
deferred tax asset of $2,473,215 in relation to 2021 income tax liability amounting to $1,674,756, which is
assessed resulting from a prior year adjustment to the 2021 income tax return.
Further information on review of operations of the Group is shown separately in the Directors’ Review of
Operations on Page 4 to 8 of this report.
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LATROBE MAGNESIUM LIMITED and its Controlled Entities
ABN 52 009 173 611
DIRECTORS’ REPORT
Dividends
The Directors have not recommended the payment of a final dividend.
Significant Changes in the State of Affairs
The significant change in the state of affairs of the Group during the financial year is an increase in the
contributed equity of $14,583,849 from $33,943,635 to $48,527,484 as a result of issuing the following fully paid
ordinary shares:
Date
Purpose
14 Oct 2021
28 Oct 2021
Payment of financial costs pursuant to lending
agreement
Private Placement
minus placement fees
18 Oct 2021
Exercise of unlisted warrants
19 Nov 2021
Private Placement
minus placement fees
minus financing costs, Black-Scholes value of
30,000,000 options @ $0.04
15 Dec 2021
Exercise of unlisted warrants
23 Dec 2021
Exercise of listed options
08 Feb 2022
Payment of 50% 320 Tramway Rd purchase price
Payment of crane equipment in 320 Tramway Rd
14 Feb 2022
Exercise of listed options
29 Mar 2022
Exercise of unlisted warrants
30 Jun 2022
Payment of financial costs pursuant to lending
agreement
Shares Issues
$/Share
Amount $
1,155,306
0.0277
31,976
120,000,001
0.025
12,666,000
11,500,000
0.03
0.10
4,165,000
969,434
22,500,000
8,319,809
913,750
4,165,000
6,917,191
0.02
0.04
0.10
0.095
0.04
0.02
0.0784
3,000,000
(180,000)
379,980
11,500,000
(690,000)
(3,255,634)
83,300
38,777
2,250,000
788,100
36,550
83,300
517,500
14,583,849
MATTERS SUBSEQUENT TO BALANCE DATE
On 2 September 2022, LMG executed the full contract with Tenova for the delivery of their spray roaster by May
2023 at a cost of $5.8 million.
There is no other matter or circumstance that has arisen since 30 June 2022 that has significantly affected or
may significantly affect:
(a)
(b)
(c)
the operations, in financial years subsequent to 30 June 2022, of the Group;
the results of those operations; or
the state of affairs, in financial years subsequent to 30 June 2022, of the Group.
On 25 August 2022, the financial report was authorised to be signed by a resolution of Directors.
LIKELY DEVELOPMENTS
Except for information disclosed on certain developments and the expected results of those developments
included in this report under review of operations, further information on likely developments in the operations
of the Group and the expected results of those operations have not been disclosed in this report because the
Directors believe it would be likely to result in unreasonable prejudice to the Group.
At the date of completion of the financial report, the Group is continuing to monitor and respond to the effects
of COVID-19. The Group has implemented appropriate COVID-19 policies designed to minimise the risk of
transmission of COVID-19 among its workforce and local communities while minimising the risk of disruption to
its ongoing business activities.
10
LATROBE MAGNESIUM LIMITED and its Controlled Entities
ABN 52 009 173 611
DIRECTORS’ REPORT
ENVIRONMENTAL REGULATIONS
The Group’s operations will be subject to normal State and Federal Environmental Regulations. There were no
breaches of these regulations during the year or to the date of this report.
INFORMATION ON DIRECTORS
John Stephen Murray AO – Non-Executive Chairman
Mr Murray studied economics and history with the Royal Military College at Duntroon before studying
engineering management at the Royal Military College of Science in the UK. He also holds qualifications in
international politics from Deakin University. Prior to his foray into business, Mr Murray had a distinguished
military career over almost 30 years before retiring as a Colonel in 1994. He brings a wealth of senior
management and directorship experience with a particular focus on infrastructure, project management and
freight logistics.
He managed numerous projects in his role with NSW Department for Transport including the production of a
ten-year development plan for the State's transport infrastructure and services and chairing the $2 billion
Parramatta Rail Link Company project. He acted as an adviser for operational planning and infrastructure for
the Sydney, Beijing, and London Olympic Games. In addition to these roles, he held numerous directorships
including non-executive chairman of Omni Tanker Holding Pty Ltd, The Hills Motorway (M2) Limited and Country
Pipelines Pty Ltd. He was on the board of Terminals Australia for five years. Roles currently held by Mr Murray
include strategic adviser for law firm, King & Wood Mallesons in the government infrastructure sector.
Date of appointment as Director
Other current public company directorships
Former public company directorships in last 3 years
Special responsibilities
Interests in securities
1 May 2015
None
None
Chairman of the Board of Directors
17,715,559 ordinary shares in Latrobe Magnesium
Limited, registered in the name of MurraySetter Pty
Limited as trustee for the MurraySetter Trust.
David Oliver Paterson – Chief Executive Officer
Mr Paterson is a qualified Chartered Accountant and a graduate from the University of Queensland. Prior to
forming Europacific in 1990, he was a group manager of the Corporate Services Division of Tricontinental
Corporation Limited responsible for NSW and Queensland. He also worked for Coopers & Lybrand in Brisbane
and Sydney in their Corporate Services Division. He has been involved in a wide range of corporate advisory
assignments and underwritings for both debt and equity for a number of public and private companies. Mr
Paterson has experience in the property and mining industries in relation to project financing, financial analysis,
valuations; and the raising of debt and equity.
Date of appointment as Director
Other current public company directorships
Former public company directorships in last 3 years
Special responsibilities
Interests in securities
23 August 2002
None
None
Chief Executive Officer
Member of Audit Committee
132,538,284 ordinary shares in Latrobe Magnesium
Limited, 21,467,762 held as a direct interest and
111,070,522 registered in the name of Rimotran Pty
Limited as trustee for the David Paterson Super Fund.
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LATROBE MAGNESIUM LIMITED and its Controlled Entities
ABN 52 009 173 611
DIRECTORS’ REPORT
Philip Francis Bruce – Non-Executive Director
Mr Bruce is a director of P F Bruce & Associates, which provides corporate and project management services.
He is a mining engineer with over thirty years resource industry experience in Australia, South Africa, West
Africa, South America and Indonesia in project development and corporate management. He was the CEO of
PT BHP Indonesia and managing director of Triako Resources Limited and Pure Alumina Limited. He also held
Board positions with Ausmelt Limited, Buka Minerals Limited, Bassari Resources Limited and Archean Star
Resources Inc. He was general manager of development for Plutonic Resources Limited and was technically
responsible for acquisition and development of resource projects in its growth from $35 million to over $1 billion
market capitalisation.
Date of appointment as Director
Other current public company directorships
Former public company directorships in last 3 years None
None
Special responsibilities
13,665,986 ordinary shares in Latrobe Magnesium
Interests in securities
Limited, registered in the name of Diazill Pty Limited
as trustee for the PB Superannuation Fund.
4 September 2003
Director of Ora Gold Limited
John Robert Lee – Non-Executive Director
Mr Lee has a broad range of commercial skills and experiences in both the public and private sectors. He has
held senior management roles in the Federal Department of Employment and Industrial Relations. He was also
senior private secretary and principal adviser to Tony Street, a senior federal cabinet minister. In the private
sector, Mr Lee has held a number of senior management positions with a number of major corporations including
Henry Jones IXL, Elders Building Supplies and Woolworths Limited. He is the founder of Stockholder Relations
Pty Ltd, a management consultancy specialising in corporate advisory, investor relations and corporate
governance.
10 December 2010
Date of appointment as Director
Other current public company directorships
None
Former public company directorships in last 3 Years None
Special responsibilities
Interests in securities
Chairman of Audit Committee
7,274,297 ordinary shares in Latrobe Magnesium
Limited, registered in the name of Stockholder
Relations Pty Limited of which Mr Lee is a Director.
Michael Frederick Wandmaker – Non-Executive Director
Mr Wandmaker has recently been the Managing Director of Melbourne Water for more than 7 years. Prior to
that he was the COO and Acting CEO of publicly listed UGL. He has also held leadership positions as CEO of
Silcar, Vice President of Siemens Canada and President of FT Services as well as senior roles within other
Utilities and Engineering/construction companies. He is an experienced senior executive with a strong track
record of success in building and implementing corporate strategies to deliver operational excellence and
profitable growth in large, complex asset intensive organisations.
Mr Wandmaker brings a breadth and depth of leadership and operational experience at chief executive level
covering a wide range of public and private industry sectors. He has had significant M&A experience, and
successfully integrating large complex (unionised) construction, engineering, infrastructure, defence and utility
businesses. Graduated from Monash University with a Bachelor of Engineering, Mechanical and Computing,
he has worked both internationally and in Australia managing large scale engineering projects. He is a Fellow
of the Institute of Engineers and has qualified as a GAICD, providing a depth of engineering expertise to
complement LMG’s skill-based Board.
Date of appointment as Director
1 April 2022
None
Other current public company directorships
Former public company directorships in last 3 years None
None
Special responsibilities
None
Interests in securities
12
LATROBE MAGNESIUM LIMITED and its Controlled Entities
ABN 52 009 173 611
DIRECTORS’ REPORT
Michelle Leanne Blackburn – Non-Executive Director
Michelle brings a breadth and depth of corporate advice experience, covering a wide range of public and private
industry sectors. She has had extensive experience in complex environmental law and has represented
Australian States and Federal governments and local and international legal entities over more than 20 years.
Her early experience was in legal roles in the Victorian Government; before practicing for many years as a
solicitor, including as a Senior Associate at Minter Ellison Lawyers; principal of her own legal practice in
Gippsland and as a Partner at Corrs Chambers Westgarth, managing Victoria and Western Australian
environment and planning teams.
Graduating from Melbourne University with a Bachelor of Laws (hons), with a Masters in Social Science
(Planning and Environment) from RMIT University and having been an Honorary Senior Fellow at the University
of Melbourne designing and delivering a Juris Doctor subject, Michelle has significant academic credentials.
Michelle has been a Director of South Gippsland Water, Chairman of Lifeline Gippsland and a Director of
Interchange Gippsland. She has also served as a Member of the Victorian Civil and Administrative Tribunal
sitting in its planning and environment list. With significant environmental law experience and as an Accredited
Mediator and a Graduate of the AICD, Michelle broadens the skills and experiences of LMG’s skill-based Board.
1 September 2022
Date of appointment as Director
Other current public company directorships
None
Former public company directorships in last 3 Years None
None
Special responsibilities
Interests in securities
None
Company Secretary
Mr John Lee who has been a Director to the Company since 10 December 2010 became Company Secretary
on 1 July 2013.
MEETINGS OF DIRECTORS
The number of meetings of the Company’s Board of Directors and of each Board Committee held during the
year ended 30 June 2022 and the number of meetings attended by each Director was:
Director
J S Murray
D O Paterson
K A Torpey
P F Bruce
J R Lee
M F Wandmaker
Directors’ Meetings
Audit Committee Meetings
Attended
6
6
3
6
6
2
Held Whilst in Office
6
6
3
6
6
2
Attended
-
2
-
-
2
-
Held Whilst in Office
-
2
-
-
2
-
The Board has yet to appoint a Nomination and a Remuneration Committee. The matters that would normally
be the responsibility of these committees are dealt with by the full Board of Directors.
Retirement, Election and Continuation in Office of Directors
Mr J R Lee is the Director retiring by rotation at the next Annual General Meeting of the Company. Mr Lee being
eligible in accordance with Article 12.2 of the Company’s constitution offers himself for re-election. His
background, experience and qualifications are detailed on Page 12.
Mr M F Wandmaker, appointed during the year, and being eligible, offers himself for election. His background,
experience and qualification are detailed on Page 12.
Ms M L Blackburn, appointed during the year, and being eligible, offers herself for election. Her background,
experience and qualification are detailed on Page 13.
13
LATROBE MAGNESIUM LIMITED and its Controlled Entities
ABN 52 009 173 611
DIRECTORS’ REPORT
REMUNERATION REPORT - AUDITED
This report outlines the Remuneration Arrangements in place for each key management person of Latrobe
Magnesium Limited. Principles used to determine the nature and amount of remuneration are:
Competitiveness and reasonableness
Acceptability to shareholders
Performance linkage / alignment of executive compensation
Transparency
Appropriateness for level of operations
Remuneration Committee
The Board has not yet formed a separate Remuneration Committee and all matters that would normally be the
responsibility of a Remuneration Committee are dealt with by the full Board of Directors.
Key Management Personnel
The full Board of Directors sets remuneration policies and practices generally and makes specific
recommendations on remuneration packages and other terms of employment for Executive Directors, other
Senior Executives and Non-Executive Directors.
Executive remuneration and other terms of employment are reviewed annually having regard to performance
against goals set at the start of the year, relevant comparative information and independent expert advice. As
well as basic salary, remuneration packages include superannuation.
Directors and executives are also able to participate in an Employee Share Acquisition Plan. Remuneration
packages are set at levels that are intended to attract and retain executives capable of managing the Group’s
operations.
Remuneration of Non-Executive Directors is determined by the Board within the maximum amount approved by
shareholders from time to time. The Board undertakes an annual review of its performance and the performance
of the Board Committees against goals set at the start of the year.
Details of the nature and amount of each element of the emoluments of each Director of Latrobe Magnesium
Limited and each specified officer of the Company and the Group receiving the highest emoluments are set out
in the following tables.
The information which follows through to the section titled “Share Options Granted to Key Management
Personnel” is subject to audit by the external auditors.
2022
Directors
J S Murray
D O Paterson
K A Torpey
P F Bruce
J R Lee
M F Wandmaker
2021
Directors
J S Murray
D O Paterson
K A Torpey
P F Bruce
J R Lee
Base
Emoluments
$
62,500
355,802
21,737
38,404
48,404
12,500
539,347
Base
Emoluments
$
45,000
311,604
26,808
26,808
26,808
437,028
Equity Options
Bonuses
$
-
-
-
-
-
-
$
-
150,000
-
-
20,000
-
170,000
Equity Options
Bonuses
$
-
-
-
-
-
-
$
-
-
-
-
-
-
Total
$
62,500
505,802
21,737
38,404
68,404
12,500
709,347
Total
$
45,000
311,604
26,808
26,808
26,808
437,028
Performance
Related
%
-
30%
-
-
29%
24%
Performance
Related
%
-
-
-
-
-
-
There are no additional management executives employed by Latrobe Magnesium Limited who are identified
as Key Management Personnel other than those already disclosed.
14
LATROBE MAGNESIUM LIMITED and its Controlled Entities
ABN 52 009 173 611
DIRECTORS’ REPORT
Service Agreements
There are currently no service agreements in place formalising the terms of remuneration of Directors or other
key management personnel of the Company and the Group. The Board reviewed all Directors’ emoluments in
2021, the recommendations were approved by shareholders in the 2021 Annual General Meeting.
Shareholdings
Number of shares held by Directors and Other Key Management Personnel of Parent Entity
Directors & Other
Key Management
Personnel
J S Murray
D O Paterson
* K A Torpey
P F Bruce
J R Lee
M F Wandmaker
Balance at
1 July 2021
17,715,559
132,538,285
102,962,553
13,665,986
7,274,297
-
* Deceased on 8 February 2022
Acquired under
Share Purchase
Plan for
Shareholders
-
-
-
-
-
-
Acquired
Under Debt
Conversion to
Equity
-
-
-
-
-
-
Net Change
- Other
Balance at
30 June 2022
-
(1)
102,962,553*
-
-
-
17,715,559
132,538,284
-
13,665,986
7,274,297
-
Share Options Granted to Key Management Personnel
Granted - No options were granted to key management personnel over unissued shares during the financial
year.
Exercised - No options were exercised by key management personnel during or in the period since the end of
the financial year and up to the date of this report.
No options expired during or since the end of the financial year.
Expiry -
Balance - No options outstanding as at 30 June 2022
END OF AUDITED REMUNERATION REPORT
UNLISTED WARRANTS
Under the October 2018 funding agreement with RnD Funding Pty Ltd, LMG issued 12,495,000 unlisted
warrants. The warrants have an exercise price of $0.02 and are exercisable for a period up to 3 years post the
drawdown dates. All 12,495,000 unlisted warrants were exercised by RnD Funding Pty Ltd at $0.02 in October
2021, December 2021 and March 2022.
Under the October 2019 funding agreement with RnD Funding Pty Ltd, LMG has issued 35,889,199 unlisted
warrants. The warrants have an exercise price of $0.03 and are exercisable for a period up to 3 years post the
drawdown date. In November 2021, 12,666,000 warrants were exercised at $0.03 by RnD Funding Pty Ltd.
The remaining 23,223,199 warrants are exercisable at $0.03 prior to 15 October 2022.
Under the June 2022 funding agreement with RnD Funding Pty Ltd, LMG has issued 80,000,001 warrants at
different strike prices and dates, as follows:
Warrant Amount
8,888,889
8,888,889
8,888,889
8,888,889
8,888,889
8,888,889
8,888,889
8,888,889
8,888,889
Expiry Date
31/03/25
30/06/25
30/09/25
31/12/25
31/03/26
30/06/26
30/09/26
31/12/26
30/06/27
Exercise Price
$0.18
$0.18
$0.18
$0.24
$0.24
$0.24
$0.30
$0.30
$0.30
15
LATROBE MAGNESIUM LIMITED and its Controlled Entities
ABN 52 009 173 611
DIRECTORS’ REPORT
Unlisted Warrants
Total warrants outstanding at beginning of the period
Granted in the period
Exercised in the period
Lapsed in the period
Outstanding at the end of the period
48,384,199
80,000,001
(25,161,000)
-
103,223,200
LISTED OPTIONS
On 19 October 2021, the Company issued 120,000,001 fully paid ordinary shares at $0.025 per share to
sophisticated and professional investors pursuant to a private placement. In addition, the company issued
60,000,000 options, on a one for two free basis for each ordinary share issued under the placement. The
options were issued at an exercise price of 4 cents expiring on 26 October 2023.
On 19 November 2021, the Company issued 115,000,000 fully paid ordinary shares at $0.10 per share to
sophisticated and professional investors pursuant to a private placement. In addition, the company issued
28,750,000 options, on a one for four free basis for each ordinary share issued under the placement. The
options were issued at an exercise price of 4 cents expiring 26 October 2023.
On 19 November 2021, the Company issued 4,500,000 listed options to Peak Assets Management Pty Ltd
being part of the capital raising fees in lieu of cash payment. The balance of 25,500,000 listed options were
issued in January 2022 after the AGM. The options were issued at an exercise price of 4 cents expiring 26
October 2023. The value of 30,000,000 options is $3,255,634 calculated by Black-Scholes method.
As at 30 June 2022, five shareholders exercised a total of 1,883,184 options at $0.04.
Listed Options
Total options outstanding at beginning of the period
Granted in the period
Exercised in the period
Lapsed in the period
Outstanding at the end of the period
-
118,750,001
(1,883,184)
-
116,866,817
INDEMNIFICATION
During or since the end of financial year, the Company has not been indemnified or made a relevant agreement
to indemnify an officer or auditor of the Company or any related body corporate against liability incurred as such
an officer or auditor. The Company maintains a Directors and Officers Liability Insurance, including company
securities cover.
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied for leave of court to bring proceedings on behalf of the Company or intervene in any
proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company
for all or any part of those proceedings. The Company was not a party to any such proceedings during the year.
16
LATROBE MAGNESIUM LIMITED and its Controlled Entities
ABN 52 009 173 611
DIRECTORS’ REPORT
NON-AUDIT SERVICES
The Company may decide to employ the auditor on assignments additional to their statutory audit duties where
the auditor’s expertise and experience with the Company and/or the Group are important.
Details of the amounts paid or payable to Nexia Sydney Audit Pty Ltd and related entities for services provided
during the year are set out below:
Audit and Review of Financial Reports
Taxation and Other Services
$
65,000
11,000
---------
76,000
=====
The Board of Directors ensure that the provision of the non-audit services is compatible with the general
standard of independence for auditors imposed by the Corporations Act 2001.
AUDITORS’ INDEPENDENT DECLARATION
A copy of the auditors’ independence declaration as required under Section 307C of the Corporations Act 2001
is set out on Page 18 and forms part of this report.
This report is made in accordance with a resolution of the Directors.
J S Murray
Chairman
Sydney
29 September 2022
D O Paterson
Chief Executive Officer
17
To the Board of Directors of Latrobe Magnesium Limited
Auditor’s Independence Declaration under section 307C of the Corporations Act 2001
As lead audit director for the audit of the financial statements of Latrobe Magnesium Limited for the
financial year ended 30 June 2022, I declare that to the best of my knowledge and belief, there have
been no contraventions of:
(a)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit;
and
(b)
any applicable code of professional conduct in relation to the audit.
Yours sincerely
Nexia Sydney Audit Pty Ltd
Stephen Fisher
Director
Dated: 29 September 2022
Sydney
18
LATROBE MAGNESIUM LIMITED and its Controlled Entities
ABN 52 009 173 611
DIRECTORS’ DECLARATION
In the directors' opinion:
•
•
•
•
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting
Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes comply with International Financial Reporting Standards as
issued by the International Accounting Standards Board as described in Note 1 to the financial statements;
the attached financial statements and notes give a true and fair view of the consolidated entity's financial
position as at 30 June 2022 and of its performance for the financial year ended on that date; and
there are reasonable grounds to believe that the company will be able to pay its debts as and when they
become due and payable.
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act
2001.
On behalf of the directors
J S Murray
Chairman
Sydney
29 September 2022
D O Paterson
Chief Executive Officer
19
LATROBE MAGNESIUM LIMITED and its Controlled Entities
ABN 52 009 173 611
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the year ended 30 June 2022
Note
GROUP
2022
$
2021
$
Revenue
Finance income
Other income
Expenses
Administration expenses
Employee benefit expenses
Finance cost
Research and evaluation expenses
Total expenses
Loss before Income Tax
Income tax benefit
Loss/(profit) attributable to members of the parent
entity
Other Comprehensive Income
Other Comprehensive Income for the year
3
3
4
16,412
1,329,952
1,346,364
8,656
837,913
846,569
(2,992,678)
(1,248,616)
(672,866)
(31,976)
(854,735)
(379,526)
(904,645)
(666,741)
(4,552,255)
(3,199,528)
(3,205,891)
-
(2,352,959)
2,473,215
(3,205,891)
120,256
-
-
Total Comprehensive Income
(3,205,891)
120,256
Basic and diluted loss per share (cents per share)
18
Note
GROUP
2022
(0.22)
2021
0.009
The above statement should be read in conjunction with the accompanying notes.
20
LATROBE MAGNESIUM LIMITED and its Controlled Entities
ABN 52 009 173 611
STATEMENT OF FINANCIAL POSITION
As at 30 June 2022
Note
GROUP
2022
$
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Total Current Assets
NON-CURRENT ASSETS
Trade and other receivables
Plant and equipment
Demonstration plant
Right-of-use asset
Intangible assets
Land, Property & Equipment
Total Non-Current Assets
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Lease liabilities
Income Tax Payable
Total Current Liabilities
NON CURRENT LIABILITIES
Borrowings
Lease liabilities
Deferred income
Total Non Current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
5
6
6
7
8
9
10
11
12
9
13
9
8
2021
$
954,249
2,255,701
3,209,950
158,037
22,054
1,322,570
689,239
6,905,851
-
15,246,819
3,499,352
18,746,171
85,973
13,753
6,262,575
80,333
6,916,460
5,282,390
18,641,484
9,097,751
37,387,655
12,307,701
1,962,297
9,731
1,647,756
3,619,784
5,507,314
72,190
5,481,346
11,060,850
14,680,634
1,817,747
92,276
1,647,756
3,557,779
-
606,127
3,983,724
4,589,851
8,147,630
22,707,021
4,160,071
14
15, 16
48,527,484
7,383,847
33,943,635
382,240
(33,204,310)
(30,165,804)
22,707,021
4,160,071
The above statement should be read in conjunction with the accompanying notes.
21
LATROBE MAGNESIUM LIMITED and its Controlled Entities
ABN 52 009 173 611
STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2022
GROUP
Note
Issued
Capital
$
Reserves
$
Accumulated
Losses
$
Total
$
Balance at 1 July 2020
33,562,283
382,240
(30,286,060)
3,658,463
Total comprehensive income
-
Shares issued during the period
14
381,352
-
-
120,256
120,256
-
381,352
Balance at 1 July 2021
33,943,635
382,240
(30,165,804)
4,160,071
Exercise of warrants
Reserves recognised
15, 16
Total comprehensive income
-
-
-
Shares issued during the period
14
14,583,849
(167,385)
167,385
-
7,168,992
-
7,168,992
-
-
(3,205,891)
(3,205,891)
-
14,583,849
Balance at 30 June 2022
48,527,484
7,383,847
(33,204,310)
22,707,021
The above statement should be read in conjunction with the accompanying notes.
22
LATROBE MAGNESIUM LIMITED and its Controlled Entities
ABN 52 009 173 611
STATEMENT OF CASHFLOWS
For the year ended 30 June 2022
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from operations
Payments to suppliers and employees
Interest and other financial costs paid
Interest received
GROUP
2022
$
2021
$
Note
814,413
8,817,342
(4,569,889)
(1,711,321)
-
(1,227,970)
16,412
8,656
Net cash (used in) / from operating activities
17b
(3,739,064)
5,886,707
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment
Payment to acquire Demonstration Plant
Payment to acquire property
Payment of International Patent expenditure
Rent and deposit bonds
Net cash (used in) investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares
Transaction costs related to issue of shares
Proceeds from exercise of warrants and options
Repayment of Borrowing
Proceeds from Borrowing
Transaction costs related to borrowings
Repayment of lease liabilities
Short term lending
-
(22,475)
(3,363,636)
(1,322,571)
(2,302,238)
-
(10,609)
(8,316)
(15,973)
(184,873)
(5,692,456)
(1,538,235)
14,788,100
(870,000)
621,908
-
-
-
-
(3,642,363)
9,500,000
310,000
(100,000)
-
(198,418)
(100,389)
(17,500)
-
Net cash from / (used in) financing activities
23,724,090
(3,432,752)
Net increase in cash and cash equivalents held
14,292,570
915,720
Cash and cash equivalents at beginning of the financial year
954,249
38,529
Cash and cash equivalents at end of financial year
17a
15,246,819
954,249
The above statement should be read in conjunction with the accompanying notes.
23
LATROBE MAGNESIUM LIMITED and its Controlled Entities
ABN 52 009 173 611
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2022
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of the financial statements are set out below. These
policies have been consistently applied to all the years presented, unless otherwise stated.
New or amended Accounting Standards and Interpretations adopted
The consolidated entity has adopted all the new or amended Accounting Standards and Interpretations issued
by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early
adopted.
The following Accounting Standards and Interpretations are most relevant to the consolidated entity. These new
Standards have not had a material financial impact on its financial statements:
AASB 2020-8: Amendments to Australian Accounting Standards – Interest Rate Benchmark Reform – Phase 2
This Standard amends the Standards listed to help entities to provide financial statement users with useful
information about the effects of the interest rate benchmark reform on those entities’ financial statements. As a
result of these amendments, an entity: will not have to derecognise or adjust the carrying amount of financial
instruments for changes required by the reform, but will instead update the effective interest rate to reflect the
change to the alternative benchmark rate; will not have to discontinue its hedge accounting solely because it
makes changes required by the reform, if the hedge meets other hedge accounting criteria; and will be required
to disclose information about new risks arising from the reform and how it manages the transition to alternative
benchmark rates.
AASB 2021-3 Amendment to AASB 16 Leases - COVID-19 rent concessions
Extends the practical expedient contained in AASB 2020-4 and permits lessees not to assess whether rent
concessions as a direct consequence of the COVID-19 pandemic that reduce lease payments originally due on
or before 30 June 2022 are lease modifications and, instead, to account for those rent concessions as if they
were not lease modifications.
Basis of Preparation
These general-purpose financial statements have been prepared in accordance with Australian Accounting
Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') and the
Corporations Act 2001, as appropriate for for-profit oriented entities. These financial statements also comply
with International Financial Reporting Standards as issued by the International Accounting Standards Board
('IASB').
Historical cost convention
The financial statements have been prepared under the historical cost convention, except for, where applicable,
the revaluation of financial assets and liabilities at fair value through profit or loss, financial assets at fair value
through other comprehensive income, investment properties, certain classes of property, plant and equipment
and derivative financial instruments.
Critical accounting estimates and judgements
The preparation of the financial statements requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of applying the consolidated entity's accounting
policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and
estimates are significant to the financial statements, are disclosed in note 1(w).
24
LATROBE MAGNESIUM LIMITED and its Controlled Entities
ABN 52 009 173 611
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2022
Prior Period Error
Income Tax and Deferred Income Liability
As a result of a credit note of $15.85 million provided to the Company dated 25 June 2021 from Mincore, a
taxable income was derived in the 2021 financial year, such that there is income tax payable of $1,647,756 at
30 June 2021 after recoupment of available tax losses. Due to the credit note not being delivered to the
Company until towards the end of the 2022 financial year, the income tax payable was not recorded in the 2021
annual report or December 2021 half-year financial report. Consequential adjustments have been made in the
2022 annual report to correct in the comparative year presented the material prior period error to recognise:
i)
ii)
iii)
income tax payable of $1,647,756 as at 30 June 2021
income tax benefit of $2,473,215 for the year ended 30 June 2021 for previously unrecognised tax losses
carried forward from prior period now utilised
reduction of deferred income liability by $4,120,971 as at 30 June 2021, being $15.85 million assessable
amount at 26% tax rate. As the credit note relates to amounts previously received in respect of research
and development tax incentive for the demonstration plant design and construction, which funding had
been recognised as deferred income liability, that liability has also been reduced to reflect its partial
repayment through the utilised tax losses.
30 June 2021
Income tax (expense)/benefit
Profit/(loss) attributable to members of the parent entity
Total comprehensive income
Basic and diluted loss per share (cents per share)
Adjustments made to the statement of profit or loss and
other comprehensive income year ended 30 June 2021:
-
-
-
-
Adjustments made to the statement of financial position:
-
Income tax payable
- Deferred income liability
Adjustments made to the statement of changes in equity
-
Total comprehensive income
Balance before
correction
$
Effect of
correction
$
Balance as
presented
$
-
(2,359,959)
(2,359,959)
(0.26)
2,473,215
2,473,215
2,473,215
0.269
-
8,104,695
1,647,756
(4,120,971)
2,473,215
120,256
120,256
0.009
1,647,756
3,983,724
(2,352,959)
2,473,215
120,256
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated
entity only. Supplementary information about the parent entity is disclosed in note 26.
a.
Principles of Consolidation
The consolidated financial statements comprise the financial statements of Latrobe Magnesium Limited
and its subsidiaries at 30 June each year ("the Group"). Subsidiaries are entities over which the Group
has exposure to variable returns from its involvement with the subsidiaries and has the ability to affect
those returns through its power over the subsidiaries. Consolidated financial statements include all
subsidiaries from the date that control commences until the date that control ceases. The financial
statements of subsidiaries are prepared for the same reporting period as the parent, using consistent
accounting policies.
All inter-Company balances and transactions between entities in the Group, including any unrealised
profits or losses, have been eliminated on consolidation.
Minority interests in the results and equity of subsidiaries are shown separately in the consolidated
income statement and balance sheet respectively.
Subsidiaries are accounted for in the parent entity financial statements at cost.
A list of controlled entities is contained in Note 19 to the financial statements.
b.
Income Tax
The Group adopts the liability method of tax-effect accounting whereby the income tax expense is based
on the profit from ordinary activities adjusted for any non-assessable or disallowed items. It is calculated
using the tax rates that have been enacted or are substantially enacted by the balance sheet date.
25
LATROBE MAGNESIUM LIMITED and its Controlled Entities
ABN 52 009 173 611
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2022
Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences
arising between the tax bases of assets and liabilities and their carrying amounts in the financial
statements. No deferred income tax will be recognised from the initial recognition of an asset or liability,
excluding a business combination, where there is no effect on accounting or taxable profit or loss.
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is
realised or liability is settled. Deferred tax is credited in the income statement except where it relates to
items that may be credited directly to equity, in which case the deferred tax is adjusted directly against
equity.
Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be
available against which deductible temporary differences can be utilised. Deferred tax assets in relation
to tax losses are not brought to account unless there is convincing evidence of realisation of the benefit.
The amount of benefits brought to account or which may be realised in the future is based on the
assumption that no adverse change will occur in income tax legislation and the anticipation that the Group
will derive sufficient future assessable income to enable the benefit to be realised and comply with the
conditions of deductibility imposed by the law.
Latrobe Magnesium Limited and its wholly-owned Australian subsidiaries have formed an income tax
group under the Tax Consolidation Regime. Each entity in the Group recognises its own current and
deferred tax liabilities, except for any deferred tax liabilities resulting from unused tax losses and tax
credits, which are immediately assumed by the parent entity. The current tax liability of each Group entity
is then subsequently assumed by the parent entity. The Group notified the ATO on 2 January 2003 that
it had formed an income tax group to apply from 1 July 2002. The tax group has entered a tax sharing
agreement whereby each Company in the Group contributes to the income tax payable in proportion to
their contribution to the net profit before tax of the tax group.
c.
Foreign Currency Transactions and Balances
Functional and presentation currency
The functional currency of each of the Group’s entities is measured using the currency of the primary
economic environment in which that entity operates. The consolidated financial statements are presented
in Australian dollars which is the parent entity’s functional and presentation currency.
Transaction and balances
Foreign currency transactions are translated into functional currency using the exchange rates prevailing
at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange
rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the
date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at
the date when fair values were determined.
Exchange differences arising on the translation of monetary items are recognised in the income
statement, except where deferred in equity as a qualifying cash flow or net investment hedge.
Exchange differences arising on the translation of non-monetary items are recognised directly in equity
to the extent that the gain or loss is directly recognised in equity otherwise the exchange difference is
recognised in the income statement.
d.
Plant and Equipment
Plant and equipment are stated at historical cost, including costs directly attributable to bringing the asset
to the location and condition necessary for it to be capable of operating in the manner intended by
management, less depreciation and any impairment.
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 assets’ employment and subsequent disposal. The
expected net cash flows have been discounted to their present value in determining recoverable amounts.
26
LATROBE MAGNESIUM LIMITED and its Controlled Entities
ABN 52 009 173 611
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2022
Depreciation
The depreciable amount of all fixed assets is depreciated on a diminishing value basis over their useful
lives to the 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
Plant and equipment - diminishing value
Depreciation Rate
35%
The asset’s residual values and useful lives are reviewed and adjusted if appropriate, at each balance
sheet date.
Gains and losses on disposals are calculated as the difference between the net disposal proceeds and
the asset's carrying amount and are included in the income statement in the year that the item is
derecognised.
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.
e.
Intangible assets
Intangible assets acquired as part of a business combination, other than goodwill, are initially measured
at their fair value at the date of the acquisition. Intangible assets acquired separately are initially
recognised at cost. Indefinite life intangible assets are not amortised and are subsequently measured at
cost less any impairment. Finite life intangible assets are subsequently measured at cost less
amortisation and any impairment. The gains or losses recognised in profit or loss arising from the
derecognition of intangible assets are measured as the difference between net disposal proceeds and
the carrying amount of the intangible asset. The method and useful lives of finite life intangible assets are
reviewed annually. Changes in the expected pattern of consumption or useful life are accounted for
prospectively by changing the amortisation method or period.
Research and development
Research costs are expensed in the period in which they are incurred. Development costs are capitalised
when it is probable that the project will be a success considering its commercial and technical feasibility;
the consolidated entity is able to use or sell the asset; the consolidated entity has sufficient resources;
and intent to complete the development and its costs can be measured reliably. Capitalised development
costs are amortised on a straight-line basis over the period of their expected benefit, once the project is
complete and ready to use, being their finite life of 10 years.
Patents
Significant costs associated with patents and trademarks are deferred and amortised on a straight-line
basis over the period of their expected benefit, being their finite life of 20 years.
f.
Right-of-use assets
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is
measured at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any
lease payments made at or before the commencement date net of any lease incentives received, any
initial direct costs incurred, and, except where included in the cost of inventories, an estimate of costs
expected to be incurred for dismantling and removing the underlying asset, and restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the
estimated useful life of the asset, whichever is the shorter. Where the consolidated entity expects to
obtain ownership of the leased asset at the end of the lease term, the depreciation is over its estimated
useful life. Right-of use assets are subject to impairment or adjusted for any remeasurement of lease
liabilities.
The consolidated entity has elected not to recognise a right-of-use asset and corresponding lease liability
for short-term leases with terms of 12 months or less and leases of low-value assets. Lease payments
on these assets are expensed to profit or loss as incurred.
27
LATROBE MAGNESIUM LIMITED and its Controlled Entities
ABN 52 009 173 611
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2022
Lease liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability is initially
recognised at the present value of the lease payments to be made over the term of the lease, discounted
using the interest rate implicit in the lease or, if that rate cannot be readily determined, the consolidated
entity's incremental borrowing rate. Lease payments comprise of fixed payments less any lease
incentives receivable, variable lease payments that depend on an index or a rate, amounts expected to
be paid under residual value guarantees, exercise price of a purchase option when the exercise of the
option is reasonably certain to occur, and any anticipated termination penalties. The variable lease
payments that do not depend on an index or a rate are expensed in the period in which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying
amounts are remeasured if there is a change in the following: future lease payments arising from a change
in an index or a rate used; residual guarantee; lease term; certainty of a purchase option and termination
penalties. When a lease liability is remeasured, an adjustment is made to the corresponding right-of use
asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down.
g.
Government grants
Government grants relating to costs are deferred and recognised in profit or loss over the period
necessary to match them with the costs that they are intended to compensate. Grants relating to
expense items are recognised as income immediately.
h.
Impairment of Non-Financial Assets
At each reporting date the Group assesses whether there is any indication that individual assets are
impaired. Where impairment indicators exist, recoverable amount is determined and impairment losses
are recognised in the income statement where the asset's carrying value exceeds its recoverable amount.
Recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the
purpose of assessing value in use, the estimated future cash flows are discounted to their present value
using a pre-tax discount rate that reflects current market assessments of the time value of money and
the risks specific to the asset. Where it is not possible to estimate recoverable amount for an individual
asset, recoverable amount is determined for the cash-generating unit to which the asset belongs.
i.
Investments and other financial assets
Investments and other financial assets are initially measured at fair value. Transaction costs are included
as part of the initial measurement, except for financial assets at fair value through profit or loss. Such
assets are subsequently measured at either amortised cost or fair value depending on their classification.
Classification is determined based on both the business model within which such assets are held and the
contractual cash flow characteristics of the financial asset unless, an accounting mismatch is being
avoided.
Financial assets are derecognised when the rights to receive cash flows have expired or have been
transferred and the consolidated entity has transferred all the risks and rewards of ownership. When there
is no reasonable expectation of recovering part or all a financial asset, its carrying value is written off.
Financial assets at fair value through profit or loss
Financial assets not measured at amortised cost or at fair value through other comprehensive income
are classified as financial assets at fair value through profit or loss. Typically, such financial assets will
be either: (i) held for trading, where they are acquired for the purpose of selling in the short-term with an
intention of making a profit, or a derivative; or (ii) designated as such upon initial recognition where
permitted. Fair value movements are recognised in profit or loss.
Financial assets at fair value through other comprehensive income
Financial assets at fair value through other comprehensive income include equity investments which the
consolidated entity intends to hold for the foreseeable future and has irrevocably elected to classify them
as such upon initial recognition.
28
LATROBE MAGNESIUM LIMITED and its Controlled Entities
ABN 52 009 173 611
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2022
Impairment of financial assets
The consolidated entity recognises a loss allowance for expected credit losses on financial assets which
are either measured at amortised cost or fair value through other comprehensive income. The
measurement of the loss allowance depends upon the consolidated entity's assessment at the end of
each reporting period as to whether the financial instrument's credit risk has increased significantly since
initial recognition, based on reasonable and supportable information that is available, without undue cost
or effort to obtain.
Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-
month expected credit loss allowance is estimated. This represents a portion of the asset's lifetime
expected credit losses that is attributable to a default event that is possible within the next 12 months.
Where a financial asset has become credit impaired or where it is determined that credit risk has
increased significantly, the loss allowance is based on the asset's lifetime expected credit losses. The
amount of expected credit loss recognised is measured based on the probability weighted present value
of anticipated cash shortfalls over the life of the instrument discounted at the original effective interest
rate.
For financial assets measured at fair value through other comprehensive income, the loss allowance is
recognised within other comprehensive income. In all other cases, the loss allowance is recognised in
profit or loss.
j.
Finance Costs
Finance 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 finance costs are recognised in income in the period in which they are incurred.
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, and bank overdrafts. Bank overdrafts
are shown within short-borrowings in current liabilities on the balance sheet.
l.
Revenue
Interest
Interest revenue is recognised as interest accrues using the effective interest method. This is a method
of calculating the amortised cost of a financial asset and allocating the interest income over the relevant
period using the effective interest rate, which is the rate that exactly discounts estimated future cash
receipts through the expected life of the financial asset to the net carrying amount of the financial asset.
Research and development tax rebate
Research and development tax rebate is recognised when it is received or when the right to receive
payment is established.
m.
Trade and Other Payables
Trade and other payables represent liabilities for goods and services provided to the Group prior to the
year end and which are unpaid. These amounts are unsecured and have up to 60-day payment terms.
n.
Interest bearing liabilities
All loans and borrowings are initially recognised at fair value, net of transaction costs incurred.
Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of
transaction costs) and the redemption amount is recognised in the income statement over the period of
the loans and borrowings using the effective interest method.
All borrowings are classified as current liabilities unless the Group has an unconditional right to defer
settlement of the liability for at least 12 months after the balance sheet date.
29
LATROBE MAGNESIUM LIMITED and its Controlled Entities
ABN 52 009 173 611
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2022
o.
Other liabilities
Other liabilities comprise non-current amounts due to related parties that do not bear interest and are
repayable in more than 366 days from balance sheet date. As these are non-interest bearing, fair value
at initial recognition requires an adjustment to discount these loans using a market-rate of interest for a
similar instrument with a similar credit rating (Group's incremental borrowing rate). The discount is
credited to the income statement immediately and amortised using the effective interest method.
The component parts of compound instruments (convertible securities) issued by the Group are classified
separately as financial liabilities and equity in accordance with the substance of the contractual
arrangements and the definitions of a financial liability and an equity instrument. A conversion option that
will be settled by the exchange of a fixed amount of cash or another financial asset for a fixed number of
the Company’s own equity instruments is an equity instrument.
At the date of issue, the fair value of the liability component is estimated using the prevailing market
interest rate for similar non-convertible instruments. This amount is recognised as a liability on an
amortised cost basis using the effective interest method until extinguished upon conversion or at the
instrument’s maturity date.
The conversion option classified as equity is determined by deducting the amount of the liability
component from the fair value of the compound instrument as a whole. This is recognised and included
in equity, net of income tax effects, and is not subsequently remeasured.
p.
Provisions
Provisions for legal claims, service warranties and make good obligations are recognised when the Group
has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of
economic resources will be required to settle the obligation and the amount can be reliably estimated.
For service warranties, the likelihood that an outflow will be required to settle the obligation is determined
by considering the class of obligations as a whole. Provisions are not recognised for future operating
losses.
Where the effect of the time value of money is material, provisions are determined by discounting the
expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of
money and, where appropriate, the risks specific to the liability.
q.
Share-based payments
For equity-settled share-based payment transactions, the Company measures the goods or services
received, and the corresponding increase in equity, directly, at the fair value of the goods or services
received.
r.
Comparative Figures
When required by Accounting Standards, comparative figures have been adjusted to conform to changes
in presentation for the current financial year.
s.
Contributed equity
Ordinary shares are classified as equity (refer Note 14).
Costs directly attributable to the issue of new shares or options are shown as a deduction from the equity
proceeds. Costs directly attributable to the issue of new shares or options associated with the acquisition
of a business are included as part of the purchase consideration.
t.
Dividends
Provision is made for dividends declared and no longer at the discretion of the Group, on or before the
end of the financial year but not distributed at balance date.
30
LATROBE MAGNESIUM LIMITED and its Controlled Entities
ABN 52 009 173 611
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2022
u.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to members of Latrobe
Magnesium Limited, adjusted for the weighted average number of ordinary shares outstanding during the
financial year, adjusted for bonus elements in ordinary shares during the year.
The weighted average number of issued shares outstanding during the financial year does not include
shares issued as part of the Employee Share Loan Plan that are treated as in-substance options.
Diluted earnings per share
Earnings used to calculate diluted earnings per share are calculated by adjusting the basic earnings by
the after-tax effect of dividends and interest associated with dilutive potential ordinary shares. The
weighted average number of shares used is adjusted for the weighted average number of ordinary shares
that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.
v.
Goods and Services Tax (GST)
Revenues, expenses are recognised net of GST except where GST incurred on a purchase of goods and
services is not recoverable from the taxation authority, in which case the GST is recognised as part of
the cost of acquisition of the asset or as part of the expense item.
Receivables and payables are stated with the amount of GST included. The net amount of GST
recoverable from, or payable to, the taxation authority is included as part of receivables or payables in
the balance sheet.
Cash flows are included in the cash flow statement on a gross basis and the GST component of cash
flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation
authority are classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable
to, the taxation authority.
w.
Critical Accounting Estimates and Judgments
The Directors evaluate, estimate and make judgements which are 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.
Impairment
The Group assesses impairment at each reporting date by evaluating conditions specific to the Group
that may lead to an impairment of assets. Where an impairment trigger exists, the recoverable amount
of the asset is determined. Value in use calculations performed in recoverable amounts incorporate a
number of key estimates. No impairment has been recognised in respect of the intangible assets for the
year ended 30 June 2022 because:
1.
2.
3.
the Company's internal valuations indicate that the recoverable amounts of the assets are greater
than the book value of the assets;
the magnesium price supports this valuation; and
the Company is utilising the proven Thermal Reduction Process in its process with estimates of its
capital and operating costs which are based on its preliminary feasibility study and subsequent
reports.
The key assumptions are adjusted to incorporate risks with a particular segment, and are summarised as
follows:
• budgeted cash flow period of 20 years, which approximates the project’s life, based on current inputs;
•
• magnesium metal price of US$3,500 per tonne is used which represents the average price FOB
initial production of 1,000 tonnes increasing to 10,000 tonnes;
China and double the price for the United States.
31
LATROBE MAGNESIUM LIMITED and its Controlled Entities
ABN 52 009 173 611
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2022
• market information for forward exchange rates;
• operating costs and inputs based upon third party consultant’s estimates and the feasibility study;
•
• pre-tax discount rates of 10% and 15%.
capital costs based upon the detailed feasibility study; and
Coronavirus (COVID-19) pandemic
Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic
has had, or may have, on the Consolidated Entity based on known information. This consideration
extends to the nature of the Consolidated Entity’s business operations, supply chain and staffing. There
does not currently appear to be either any significant impact upon the financial statements or any
significant uncertainties with respect to events or conditions which may impact the Consolidated Entity
unfavourably as at the reporting date or subsequently because of the Coronavirus (COVID-19) pandemic.
x.
New Accounting Standards and Interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are
not yet mandatory, have not been early adopted by the consolidated entity for the annual reporting period
ended 30 June 2022. The consolidated entity's assessment of the impact of these new or amended
Accounting Standards and Interpretations, most relevant to the consolidated entity, are set out below.
The Group is still assessing but does not currently expect these new Standards to have a material
financial impact on its financial statements:
AASB 2020-3: Annual Improvements to IFRS Standards 2018–2020 and Other Amendments (applies
from years commencing on or after 1 January 2022)
This Standard amends: the application of AASB 1 by a subsidiary that becomes a first-time adopter after
its parent in relation to the measurement of cumulative translation differences; AASB 3 to update
references to the Conceptual Framework for Financial Reporting; AASB 9 to clarify when the terms of a
new or modified financial liability are substantially different from the terms of the original financial liability;
AASB 116 to require an entity to recognise the sales proceeds from selling items produced while
preparing property, plant and equipment for its intended use and the related cost in profit or loss, instead
of deducting the amounts received from the cost of the asset; AASB 137 to specify the costs that an entity
includes when assessing whether a contract will be loss-making; and AASB 141 to align the fair value
measurement requirements in AASB 141 with those in other Australian Accounting Standards.
AASB 2020-1: Amendments to Australian Accounting Standards – Classification of Liabilities as Current
or Non-Current (applies from years commencing on or after 1 January 2023)
Amends AASB 101 to clarify that liabilities are classified as either current or non-current, depending on
the rights that exist at the end of the reporting period. Classification is unaffected by the expectations of
the entity or events after the reporting date (for example, the receipt of a waiver, a breach of covenant,
or settlement of the liability).
AASB 2021-2: Amendments to Australian Accounting Standards – Disclosure of Accounting Policies and
Definition of Accounting Estimates (applies from years commencing on or after 1 January 2023)
This Standard amends: AASB 7, to clarify that information about measurement bases for financial
instruments is expected to be material to an entity’s financial statements; AASB 101, to require entities
to disclose their material accounting policy information rather than their significant accounting policies;
AASB 108, to clarify how entities should distinguish changes in accounting policies and changes in
accounting estimates; AASB 134, to identify material accounting policy information as a component of a
complete set of financial statements; and AASB Practice Statement 2, to provide guidance on how to
apply the concept of materiality to accounting policy disclosures. Additional conforming amendments to
AASB 1049, AASB 1054, and AASB 1060 were made by AASB 2021-6.
32
LATROBE MAGNESIUM LIMITED and its Controlled Entities
ABN 52 009 173 611
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2022
NOTE 2: FINANCIAL RISK MANAGEMENT OBJECTIVES
The consolidated entity's activities expose it to a variety of financial risks: market risk (including foreign currency
risk, price risk and interest rate risk), credit risk and liquidity risk. The consolidated entity's overall risk
management program focuses on the unpredictability of financial markets and seeks to minimise potential
adverse effects on the financial performance of the consolidated entity. The consolidated entity uses derivative
financial instruments such as forward foreign exchange contracts to hedge certain risk exposures. Derivatives
are exclusively used for hedging purposes, i.e., not as trading or other speculative instruments. The
consolidated entity uses different methods to measure different types of risk to which it is exposed. These
methods include sensitivity analysis in the case of interest rate, foreign exchange and other price risks, ageing
analysis for credit risk and beta analysis in respect of investment portfolios to determine market risk.
Risk management is conducted by senior finance executives ('finance') under policies approved by the Board
of Directors ('the Board'). These policies include identification and analysis of the risk exposure of the
consolidated entity and appropriate procedures, controls, and risk limits. Finance identifies, evaluates and
hedges financial risks within the consolidated entity's operating units. Finance reports to the Board monthly.
(i)
Liquidity risk
Liquidity risk arises from the Group’s management of working capital. It is the risk that the Group will encounter
difficulty in meeting its financial obligations as they fall due.
The Group’s policy is to ensure that it will always have sufficient cash or access to funds to allow it to meet its
liabilities when they become due. To achieve this aim, it seeks to maintain cash balances (or agreed facilities)
to meet expected requirements for a period of at least 90 days.
The Group’s exposure to liquidity risk has been assessed as minimal. There are no past due payables at
balance date.
The Board receives cash flow projections on a bimonthly basis as well as information regarding cash balances.
At the balance sheet date, these projections indicated that the Group expected to have sufficient liquid resources
to meet its obligations under all reasonably expected circumstances.
(ii)
Interest Rate Risk
The Group’s exposure to interest risk arises when the value of financial instruments fluctuates as a result of
changes in market interest rates and the effective weighted average interest rates on classes of financial assets
and financial liabilities.
The Group’s exposure to interest rate risk only extends to cash and cash equivalents and borrowings at balance
date. The Group’s exposure to interest rate risk at 30 June 2022 and 30 June 2021 is set out in the following
tables:
CONSOLIDATED
Year ended
30 June 2022
Weighted
Average
Interest
Rate
Floating
Interest
Rate
%
$
Financial assets
Cash & cash equivalents
0.3
1,130,412
Trade & other receivables
Total Financial Assets
Financial liabilities
-
1,130,412
Borrowings
12.0
Trade and other payables
-
-
Net financial assets
1,130,412
$
-
-
-
-
-
-
Fixed Interest maturing in
1 year or
less
Over 1 to 5
years
More
than 5
years
$
-
-
Non-
interest
bearing
$
Total
$
14,116,407 15,246,819
3,585,325
3,585,325
- 17,701,732
18,832,144
$
-
-
-
(5,507,314)
-
(5,507,314)
-
-
-
-
(5,507,314)
(1,962,297)
(1,962,297)
15,739,435 11,362,533
33
LATROBE MAGNESIUM LIMITED and its Controlled Entities
ABN 52 009 173 611
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2022
Year ended
30 June 2021
Financial assets
Cash & cash equivalents
Trade & other receivables
Total Financial Assets
Financial liabilities
Borrowings
Trade and other payables
Net financial assets
Weighted
Average
Interest
Rate
%
0.3
Floating
Interest
Rate
$
900,736
-
900,736
-
-
900,736
Fixed Interest maturing in
1 year
or less
Over 1 to
5 years
$
-
-
-
-
-
-
$
-
-
-
-
-
-
More
than 5
years
$
Non-
interest
bearing
$
Total
$
-
-
-
-
-
-
53,513
2,413,738
954,249
2,413,738
2,467,251
3,367,987
-
(1,817,747)
-
(1,817,747)
649,504
1,550,240
(iii) Foreign exchange currency risk
The Group is exposed to fluctuations in foreign currencies arising from the sale and purchase of goods and
services in currencies other than the Group’s measurement currency.
There was no exposure to foreign currency risk at balance date because the Group had purchased some euro
currency.
(iv) Share market risk
The Company relies greatly on equity markets to raise capital for its magnesium project development activities,
and is thus exposed to equity market volatility.
When market conditions require prudent capital management, in consultation with its professional advisers, the
Group looks to alternative sources of funding, including debt financing and joint venture participation.
(v) Credit risk
Credit risk arises principally when the other party to a financial instrument fails to discharge its obligations in
respect of that instrument. The Group’s exposure to credit risk arises from potential default of the counter party,
with the maximum exposure equal to the carrying amount of these instruments.
Trade and receivable balances are monitored on an ongoing basis with the Group’s exposure to bad debts
minimal. There was no exposure to trade receivable credit risk at balance date. 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 Group.
Other receivables comprise GST. Credit worthiness of debtors is undertaken when appropriate.
(vi) Commodity risk
Commodity price risk arises when the fair value of future cash flows of a financial instrument will fluctuate
because of changes in commodity market prices.
The Group had no exposure to commodity price risk at balance date. The Group’s potential exposure to
commodity price risk will materialise in the event that development of the Group’s Latrobe Magnesium Project
proceeds.
(vii) Market risk
Market risk does not arise as the Group does not use interest bearing, tradeable or foreign currency financial
instruments.
As the financial assets held by the company as at 30 June 2022 were cash and cash equivalents and trade and
other receivables, and the value of these financial assets are not affected by the short-term movement in interest
rates, a market risk sensitivity has not been performed.
(viii) Equity price risk
Equity price risk arises from investments in equity securities and Latrobe Magnesium Limited’s issued capital.
The Group had no exposure to investments in equity securities at balance date.
34
LATROBE MAGNESIUM LIMITED and its Controlled Entities
ABN 52 009 173 611
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2022
The capacity of the Company to raise capital from time to time may be influenced by either or both market
conditions and the price of the Company’s listed securities at that time.
Fair value of financial assets and liabilities
The fair value of all monetary financial assets and financial liabilities of Latrobe Magnesium approximate their
carrying value.
There are no off-balance sheet financial asset and liabilities at year-end. All financial assets and liabilities are
denominated in Australian dollars.
NOTE 3: LOSS FROM ORDINARY ACTIVITIES
The following revenue and expense items are relevant in explaining the
financial performance for the period.
(i)
(ii)
Revenue
Finance Income
Other Income
Research and development tax rebate
Government Grants
Expenses
Depreciation – Equipment
Depreciation – Lease
Research and evaluation expenses
Directors and CEO fees
NOTE 4: INCOME TAX EXPENSE
The prima facie tax on loss from ordinary activities before income tax is
reconciled to the income tax benefit as follows:
Loss from ordinary activities before income tax
Prima facie tax benefit/(expense) on loss from ordinary activities before
income tax at 30% (2021: 26%)
Permanent differences relating to R&D claim
Decrease / Increase in income tax benefit due to timing differences
Tax losses not brought to account as deferred tax asset
Recognition of tax losses as deferred tax asset
Income tax (expense) / benefit attributable to loss from ordinary
activities before income tax
GROUP
2022
$
2021
$
16,412
8,656
1,329,952
-
1,346,364
7,406
191,647
854,735
709,347
814,413
23,500
846,569
1,992
133,953
666,741
437,028
GROUP
2022
$
2021
$
(3,205,891)
(2,352,959)
961,768
611,769
(917,208)
449,481
(494,041)
-
-
(486,776)
(124,993)
-
2,473,215
2,473,325
35
LATROBE MAGNESIUM LIMITED and its Controlled Entities
ABN 52 009 173 611
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2022
Net deferred tax asset not taken to account
The potential future income tax benefit arising from tax losses has not been taken to account because of the
absence of convincing evidence of the realisation of the benefit.
Benefit of tax losses carried forward:
Tax losses carried forward
Capital losses
2021 Prior Year Adjustment - Assessable Income
A credit note in respect of contract services not provided in 2021, which is
treated as assessable income
Revenue losses to offset
Taxable amount to be assessed
Tax payable at 26%
GROUP
2022
$
849,651
818,514
1,668,165
2021
$
296,342
682,095
978,437
-
-
-
-
15,849,888
(9,512,365)
6,337,523
1,647,756
The deferred tax asset will only be recognised if:
i.
the Group derives future assessable income of a nature and an amount sufficient to enable the benefit to
be realised;
the Group continues to comply with the conditions for deductibility imposed by the law; and
ii.
iii. no changes in tax legislation adversely affect the Group in realising the benefit.
NOTE 5: CASH AND CASH EQUIVALENTS
Cash at bank
NOTE 6: TRADE AND OTHER RECEIVABLES
CURRENT
R&D tax concession rebate
GST recoverable
RND Funding loan receivable
Rent bond
Refundable prepayment
NON-CURRENT
Rent and deposit bonds
GROUP
2022
2021
$
$
15,246,819
954,249
GROUP
2022
2021
$
2,827,574
59,617
517,500
46,123
48,538
$
814,413
40,704
-
46,123
1,354,461
3,499,352
2,255,701
85,973
158,037
There are no balances within trade and other receivables that are impaired and are past due. It is expected
these balances will be received when due. Impaired assets are provided for in full.
36
LATROBE MAGNESIUM LIMITED and its Controlled Entities
ABN 52 009 173 611
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2022
NOTE 7: PLANT AND EQUIPMENT
Plant and equipment at cost
Accumulated depreciation
Total Plant and Equipment
GROUP
2022
$
23,178
(9,425)
13,753
2021
$
30,372
(8,318)
22,054
Movements in Carrying Amounts
Between the beginning and the end of the current financial year, movements in the carrying amounts for each
class of plant and equipment are:
Balance at 1 July
Additions
Disposal
Depreciation expense
Carrying amount at 30 June
NOTE 8: DEMONSTRATION PLANT
Capitalised costs of the Demonstration Plant (i)
Capitalised borrowing costs(ii)
Plant and Equipment
2021
2022
$
1,571
22,475
-
(1,992)
$
22,054
-
(896)
(7,405)
13,753
22,054
GROUP
2022
$
6,224,403
38,172
2021
$
1,322,570
-
6,262,575
1,322,570
(i) Engineering studies and design work has completed and tenders of the construction contracts and
equipment have been awarded. Construction work of the initial 1,000 tpa magnesium plant has
commenced. These costs have been capitalised as demonstration plant asset of $6,224,403.
(ii) The construction loan facility of $23 million (refer to Note 13) was finalised on 16 May 2022 with an
approximately five year loan term. The first $10 million was drawn on 24 June 2022. It is classified as a
non current liability as the first loan repayment instalment is not due until 12 July 2024 with repayment
permitted without penalty from 31 October 2023. The loan finance costs comprised of mandate fee and
establishment fee of $517,500 were paid by issue of LMG shares and other transaction costs of $100,000
was paid in cash. Under the facility agreement, 80,000,001 unlisted warrants were issued with the value
of $3,913,358 calculated by the Black-Scholes method. The finance costs and warrants fair value issued
under the terms of the facility agreement are initially set-off against the loan facility proceeds as loan
transaction costs but are eligible borrowing costs for capitalisation progressively to the demonstration plant
asset (until its completion) as they are unwound to the loan carrying value over the loan term. The interest
on the loan is also an eligible borrowing cost.
Capital Commitments
The Company has committed to $9.56 million of future capital expenditure on the Demonstration Plant at 30
June 2022 to Mincore.
37
LATROBE MAGNESIUM LIMITED and its Controlled Entities
ABN 52 009 173 611
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2022
Deferred Income Liability
As the plant is now expected to be completed by 30 June 2023, the reduced deferred income from R&D incentive
received for the demonstration plant design and construction continues to be classified as a non-current liability.
Once the plant is constructed the deferred income will be reclassified as an offset against the non-current plant
asset.
The adjustment of the Deferred Income as a result of the receipt of a credit note of $15,849,888 against the
Mincore invoice amount of $18,632,000 is summarised below.
R&D Tax Concession Refund
Less assessable credit note of $15,849,888 at income tax rate of 26%
Plus R&D claim in 2022
NOTE 9: LEASING COMMITMENTS
Right of Use Assets - the Company is committed on following leases:
Right of Use Asset
Accumulated Depreciation
Lease Liability
Interest Expense for the year
Lease Payments during the year
Lease Liability at end of year
Current Lease Liability
Non Current Lease Liability
Total Lease Liability
Lease Commitments
George St
Sydney
Clarence St
Sydney
Right of use of assets
Value of Lease
Accumulated Depreciation
Lease Liability
Interest Expense
Lease Payment
Current Liability
Non Current Liability
Jul-19
to Nov-21
154,976
(154,976)
-
154,976
10,526
-165,501
-
-
-
-
Dec-21
to Nov-24
74,000
(14,389)
59,611
74,000
1,751
-14,614
61,137
5,617
55,520
61,137
Tramway
Road
Apr-21
to Dec-21
184,017
(184,017)
-
184,017
3,483
-187,500
-
-
-
-
GROUP
2022
$
3,983,724
-
1,497,622
2021
$
8,104,695
(4,120,971)
-
5,481,346
3,983,724
GROUP
2022
$
462,726
(382,393)
80,333
462,726
16,537
(397,342)
81,921
9,731
72,190
81,921
2021
$
879,984
(190,745)
689,239
879,984
17,160
(198,741)
698,403
92,277
606,126
698,403
Traralgon
Traralgon
Total
May-21
to May 22
May-22
to May 23
24,867
(24,867)
-
24,867
613
-25,480
-
-
-
-
24,867
(4,144)
20,722
24,867
164
-4,247
20,784
4,114
16,670
20,784
462,726
(382,393)
80,333
462,726
16,537
(397,342)
81,921
9,731
72,190
81,921
38
LATROBE MAGNESIUM LIMITED and its Controlled Entities
ABN 52 009 173 611
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2022
• Sydney Lease – The George Street office lease expired on 30 November 2021.
The new Administration Office is now at 80 Clarence Street, Sydney.
1 December 2021 to 30 November 2024.
$2,959 as at 1 December 2021.
Term:
Monthly rent
Rental increase 4% per annum
Interest rate
Incremental borrowing rate 4.52% at 1 December 2021 to measure lease liability
• Hazelwood North Lease – Magnesium Plant and associated facilities
The Company purchased this site at 320 Tramway Road, Hazelwood North on 8 February 2022. The
leasing commitment was cancelled on 16 December 2021 and lease liability adjusted.
• Traralgon Lease – Operation Unit
Term:
Monthly rent
Rental increase N/A
Interest rate
21 May 2021 to 20 May 2022, renewed 21 May 2022 to 20 May 2023
$2,123 as at 21 May 2022.
Incremental borrowing rate 4.52% at 1 May 2022 to measure lease liability
NOTE 10: INTANGIBLE ASSETS
Acquired in-process research and development, at cost
Acquired in 2017 with the Ecoengineers Pty Ltd acquisition
Closing balance
International Patent for the Hydromet Process.
GROUP
2022
$
5,684,000
1,080,000
6,764,000
152,460
2021
$
5,684,000
1,080,000
6,764,000
141,851
Total Intangible Assets
6,916,460
6,905,851
Latrobe Magnesium Project is based in the Latrobe Valley in Victoria. As the project is not held ready for use,
the Company is required to perform an annual impairment test. The key assumptions underlying this impairment
test have been based on data provided in the Company’s preliminary feasibility study and subsequent reports.
The key assumptions are adjusted to incorporate risks with a particular segment, and are summarised as
follows:
budgeted cash flow period of 20 years, which approximates the project’s life, based on current inputs;
initial production of 1,000 tonnes per annum increasing to 10,000 tonnes;
•
•
• magnesium metal price of US$3,500 per tonne is used which represents the price FOB China and double
the price for the United States;
• market information for forward exchange rates;
•
•
•
operating costs based upon third party consultant’s estimates;
capital costs based upon the detailed feasibility study; and
pre-tax discount rates of 10% for the 1,000tpa plant and 15% for the 10,000tpa plant owing to the degree
of design and engineering complete on each.
39
LATROBE MAGNESIUM LIMITED and its Controlled Entities
ABN 52 009 173 611
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2022
NOTE 11 LAND, PROPERTY & EQUIPMENT
The purchase price together with capitalised costs are summarised below:
320 Tramway Road, Hazelwood North, VIC 3840
Land and property
Crane equipment
Stamp duty
Administration building improvement
Total
GROUP
2022
$
2,119,000
2,881,000
150,875
131,515
5,282,390
2021
$
-
-
-
On 16 December 2021, the Company exercised its option to purchase the site, where its magnesium production
facility is situated, from the landlord for its fixed price of $5 million, which included the cost of the cranes. The
settlement of the purchase was completed on 8 February 2022 and the final price of the property including its
crane equipment was $5,000,000 paid as follows:
Cash payment
Issue of 22.5 million LMG shares @ $0.10
Issue of 8.3 million LMG shares @ $0.095
Total Purchase Price
$
1,961,900
2,250,000
788,100
5,000,000
Land and Property
Crane Equipment
$
2,119,000
2,881,000
Total Purchase Price
5,000,000
NOTE 12: TRADE AND OTHER PAYABLES
Trade creditors and accrued expenses
Employee annual leave accrued
Total
NOTE 13: BORROWINGS - SECURED
Non Current
First draw down on 24 June 2022
Interest accrued
Less transaction costs
Plus transaction costs amortisation
Carrying value as at 30 June 2022
GROUP
2022
$
1,927,561
34,736
1,962,297
2021
$
1,801,877
15,870
1,817,747
GROUP
2022
$
10,000,000
23,333
(4,530,866)
14,847
5,507,314
2021
$
-
-
-
40
LATROBE MAGNESIUM LIMITED and its Controlled Entities
ABN 52 009 173 611
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2022
The construction loan facility was finalized on 16 June 2022, the terms and conditions are as follows:
Lender
RnD Funding Pty Ltd
Loan Term
Four years and nine months expiring 31 March 2027
Total Loan
$23 million
$10,000,000 was drawn on 24 Jun 2022
$10,000,000 to be drawn around 30 September 2022
$ 3,000,000 standby line to be drawn between Jan-Jun 2023
Interest Rate
12% per annum up to 31 October 2023, 1.4% per annum thereafter
Financing Costs Mandate fee 1.25% and establishment fee 1% totaling $517,500 paid by issue of LMG
shares. Transaction costs $100,000 paid by cash.
80 million warrants issued to the lender at a fair value of $3,913,358. The financing costs
are subtracted from the loan proceeds and unwound over the loan term of 4 years and 9
months to 31 March 2027.
The facility is secured by a mortgage deed on the 320 Tramway Road, Hazelwood North property which has
been valued at $8.3 million owned by Latrobe Magnesium Limited as the mortgagor, and the lender, RnD
Funding Pty Ltd as the mortgagee.
NOTE 14: ISSUED CAPITAL
(a) Ordinary Shares Issued and Fully Paid
Balance at beginning of reporting period
GROUP
2022
$
2021
$
33,943,635 33,562,283
12 Jan 2021 17,334,182 shares issued at $0.022 to convert outstanding fees owing
-
381,352
to Directors and Project Director.
14 Oct 2021 1,155,306 shares issued at $0.0277 to pay finance costs pursuant a
31,976
lending agreement in 2019
28 Oct 2021 120,000,001 shares issued at $0.025 pursuant to a private placement,
minus placement fees at 6%
18 Nov 2021 12,666,000 shares issued at $0.03 pursuant to exercise of unlisted
warrants
19 Nov 2021 115,000,000 shares issued at $0.10 pursuant to a private placement,
minus placement fees at 6%
3,000,000
(180,000)
379,980
11,500,000
(690,000)
19 Nov 2021 30,000,000 options @ $0.04 expiring 26 Oct 2023, valued by Black-
(3,255,634)
Scholes method, for capital raising costs
15 Dec 2021 4,165,000 shares issued at $0.02 pursuant to exercise of unlisted
83,300
warrants
23 Dec 2021 969,434 shares issued @ $0.04 pursuant to exercise of listed options
38,777
08 Feb 2022 22,500,000 shares issued at $0.10 being payment for 50% of the
2,250,000
purchase price of 320 Tramway Road
08 Feb 2022 8,319,809 shares issued at $0.095 being payment of crane equipment
788,100
14 Feb 2022 913,750 shares issued @ $0.04 pursuant to exercise of listed options
29 Mar 2022 4,165,000 shares issued at $0.02 pursuant to exercise of unlisted
36,550
83,300
warrants
30 Jun 2022 6,917,191 shares issued at $0.0784 being financing costs pursuant to
517,500
lending agreement
-
-
-
-
-
-
-
-
-
-
-
-
48,527,484 33,943,635
41
LATROBE MAGNESIUM LIMITED and its Controlled Entities
ABN 52 009 173 611
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2022
(b) Shares on Issue
Balance at beginning of reporting period
No.
No.
1,313,837,251
1,296,503,069
Share on Issues:
•
•
•
•
•
•
•
•
•
•
•
•
12 January 2021
14 October 2021
28 October 2021
18 November 2021
19 November 2021
15 December 2021
23 December 2021
08 February 2022
08 February 2022
14 February 2022
29 March 2022
30 June 2022
17.334,182
-
-
-
-
-
-
1,155,306
120,000,001
12,666,000
115,000,000
4,165,000
969,434
22,500,000
8,319,809
913,750
4,165,000
6,917,191
Balance at end of reporting period
1,610,608,742
1,313,837,251
Fully paid ordinary shares
Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in proportion to the
number of shares held.
At shareholder meetings each ordinary share is entitled to one vote when a poll is called.
Options
There were no unissued shares under option.
Employee Share Plan Scheme
For information relating to the Latrobe Magnesium Limited Share Plan Acquisition Plan, refer to Note 23:
Employee Benefits. No shares were issued during the financial year.
Capital Management
The Group considers its capital to comprise its ordinary share capital and reserves.
In managing its capital, the Group’s primary objective is to maintain a sufficient funding base to enable the
Group to meet its working capital and the development of its Latrobe magnesium project.
In making decisions to adjust its capital structure to achieve these aims, either through altering its dividend
policy, new share issues, or consideration of debt, the Group considers not only its short-term position but also
its long-term operational and strategic objectives.
• Completed two capital raisings by placements in October and November 2021 raising a total of $14.5 million
to fund the magnesium project.
• Completed facility agreement for $23 million in project funding plus capitalized interest, $10 million was
drawn on 24 June 2022, $10 million to be drawn in September 2022 and a $3 million standby line available
in 2023, as a contingency to fund any construction cost over-run.
• Finalising a Regional Development Grant agreement with the State of Victoria for a grant of up to $1 million.
NOTE 15: UNLISTED WARRANTS
Under the October 2018 funding agreement with RnD Funding Pty Ltd, LMG issued 12,495,000 unlisted
warrants. The warrants have an exercise price of $0.02 and are exercisable for a period up to 3 years post the
drawdown dates. All 12,495,000 unlisted warrants were exercised by RnD Funding Pty Ltd at $0.02 on October
21, December 21 and March 2022.
Under the October 2019 funding agreement with RnD Funding Pty Ltd, LMG has issued 35,889,199 unlisted
warrants. The warrants have an exercise price of $0.03 and are exercisable for a period up to 3 years post the
drawdown date. In November 2021, 12,666,000 warrants were exercised at $0.03 by RnD Funding Pty Ltd.
The remaining 23,223,199 warrants are exercisable at $0.03 prior to 15 October 2022.
42
LATROBE MAGNESIUM LIMITED and its Controlled Entities
ABN 52 009 173 611
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2022
Under the funding agreement signed on 16 May 2022 with RnD Funding Pty Ltd, LMG has issued 80,000,001
warrants at different strike prices and dates as below:
Warrant Amount
8,888,889
8,888,889
8,888,889
8,888,889
8,888,889
8,888,889
8,888,889
8,888,889
8,888,889
Expiry Date
31/03/25
30/06/25
30/09/25
31/12/25
31/03/26
30/06/26
30/09/26
31/12/26
30/06/27
Exercise Price
$0.18
$0.18
$0.18
$0.24
$0.24
$0.24
$0.30
$0.30
$0.30
Unlisted Warrants
Total warrants outstanding at beginning of the period
Granted in period
Exercised in the period
Lapsed in the period
Outstanding at the end of the period
48,384,199
80,000,001
(25,161,000)
-
103,223,200
Warrant Reserves
Calculated by Black-Scholes
Issued under funding agreement October 2019
Issued under funding agreement May 2022
Carrying value as at 30 June 2022
NOTE 16 LISTED OPTIONS
Warrants
23,223,199
80,000,001
Value
$214,845
$3,913,358
103,223,200
$4,128,213
On 19 October 2021, the Company issued 120,000,001 fully paid ordinary shares at $0.025 per share to
sophisticated and professional investors pursuant to a private placement. In addition, the company issued
60,000,000 options, on a one for two free basis for each ordinary share issued under the placement. The
options were issued at an exercise price of 4 cents expiring on 26 October 2023.
On 19 November 2021, the Company issued 115,000,000 fully paid ordinary shares at $0.10 per share to
sophisticated and professional investors pursuant to a private placement. In addition, the company issued
28,750,000 options, on a one for four free basis for each ordinary share issued under the placement. The
options were issued at an exercise price of 4 cents expiring 26 October 2023.
On 19 November 2021, the Company issued 4,500,000 listed options to Peak Assets Management Pty Ltd
being part of the capital raising fees in lieu of cash payment. The balance of 25,500,000 listed options were
issued in January 2022 after the AGM. The options were issued at an exercise price of 4 cents expiring 26
October 2023.
As at 30 June 2022, five shareholders exercised a total of 1,883,184 options at $0.04.
Listed Options
Total options outstanding at beginning of the period
Granted in the period
Exercised in the period
Lapsed in the period
Outstanding at the end of the period
-
118,750,001
(1,883,184)
-
116,866,817
43
LATROBE MAGNESIUM LIMITED and its Controlled Entities
ABN 52 009 173 611
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2022
Option Reserve
The value of 30,000,000 options issued on 19 November 2021 to Peak Assets Management is $3,255,634
calculated by Black-Scholes method.
NOTE 17: CASH FLOW INFORMATION
a. Reconciliation of Cash
Cash at the end of the financial year as shown in the statement of cash
flow is reconciled to items in the statement of financial position as follows:
Cash at Bank
b. Reconciliation of cash flow from operating activities to operating
loss after income tax:
Net (loss) / profit
Profit / Loss Adjustment of non-cash items:
Deferred tax asset recognized on tax losses
Depreciation of equipment
Depreciation of leases
Loss on disposal of assets
Interest expense to measure lease liabilities
Convert directors’ & consultant’s outstanding fees to shares
Changes in Assets and Liabilities:
Decrease / (Increase) in receivables and other assets
Increase / (Decrease) in trade and other payables
Net Cash (used in) / from Operating Activities
GROUP
2022
$
2021
$
15,246,819
954,249
(3,205,891)
120,256
-
7,406
191,647
895
(623)
-
(2,473,215)
1,992
133,954
-
11,898
381,352
(2,111,488)
1,378,990
6,646,882
1,063,588
(3,739,064)
5,886,707
c. Acquisition and Disposal of Entities
There was no acquisition and disposal of controlled entities during the 2022 or 2021 financial years.
d. Non-cash Financing and Investing Activities
2021-22
Fully Paid Ordinary Shares
14-Oct-21
8-Feb-22
1,155,306 shares issued at $0.0277 to pay for transaction costs
22,500,000 shares issued at $0.10 to pay for 50% of the property
purchase price
30-Jun-22
6,917,191 shares issued at $0.0784 to pay for transaction costs
Increase in issued capital
Decrease in trade and other payables
Warrants and Options
$
31,976
2,250,000
517,500
2,799,476
2,799,476
Refer to Notes 15 and 16 for details of Warrants and Options issued
during 2021-22.
2020-21
Fully Paid Ordinary Shares
12-Jan-21
17,334,182 shares issued at $0.022 to convert outstanding fees
owing to Directors and officer.
Increase in issued capital
Decrease in trade and other payables
$
381,352
381,352
44
LATROBE MAGNESIUM LIMITED and its Controlled Entities
ABN 52 009 173 611
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2022
NOTE 18: LOSS PER SHARE
GROUP
2022
2021
Reconciliation of loss to net loss:
(a) Basic and diluted earnings / (loss) per share
cents per share
(0.22)
0.009
(b) Earnings / (Loss) used in the calculation of EPS
$
(3,205,891)
120,256
(c) Weighted average number of ordinary shares
outstanding during the year used in calculation of
basic and diluted EPS
share
1,490,473,832
1,305,740,051
There were 103,223,200 unissued shares under warrants at 30 June 2022 (2021: 48,384,199) and 116,866,817
unissued shares under options at 30 June 2022 (2021: Nil). The warrants and options issued have not been
considered for the diluted EPS calculation as their effect would be anti-dilutive.
NOTE 19: CONTROLLED ENTITIES
Country of
Incorporation
Percentage Owned
2020
2021
Parent Entity:
Latrobe Magnesium Limited
Subsidiaries of Latrobe Magnesium Limited
Money Management WA Pty Ltd
Gold Mines of WA Pty Ltd
Magnesium Investments Pty Ltd
Ecoengineers Pty Ltd
Australia
Australia
Australia
Australia
Australia
%
-
100
100
100
100
%
-
100
100
100
100
NOTE 20: SEGMENT REPORTING
AASB 8: Operating Segments requires operating segments to be identified on the basis of internal reports about
components of the Group that are regularly reviewed by the chief operating decision maker in order to allocate
resources to the segments and to assess their performance. As a result, following the adoption of AASB 8, the
Board of Directors believes there is only one operating segment and this is reflected in management’s reporting
processes.
AASB 8 requires a management approach under which segment information is presented on the same bases
as that used for internal reporting purposes. The Group consists of one business segment being the
development of its Latrobe magnesium project.
NOTE 21: RELATED PARTY TRANSACTIONS
Transactions between related parties are on normal commercial terms and conditions, no more favourable than
those available to other parties unless otherwise stated. Transactions with and amounts receivable from and
payable to Directors of related parties or their director related entities which:
(i)
occur within a normal employee, customer or supplier relationship on terms and conditions no more
favourable than those which it is reasonable to expect the entity would have adopted if dealing with the
director or director related entities at arms length in the same circumstances;
45
LATROBE MAGNESIUM LIMITED and its Controlled Entities
ABN 52 009 173 611
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2022
(ii)
do not have the potential to adversely affect decisions about the allocations of scarce resources made
by users of the financial report, or the discharge of accountability by the directors if disclosed in the
financial report only by general description; and
(iii)
are not trivial or domestic in nature;
must be excluded from the detailed disclosures required. Such transactions and amounts receivable or payable
shall be disclosed in the financial report by general description.
Other related entities
(i)
Director’s fees were paid to J S Murray Pty Ltd of which J S Murray
is a principal.
(ii) Director’s fees were paid to Famallon Pty Ltd of which K A Torpey
is a principal.
(iii) Director’s fees were paid to Stockholders Relation Pty Ltd of which
J R Lee is a principal.
(iv) Director’s fees were paid to Wandmaker Consultants Pty Ltd of
which M F Wandmaker is a principal
(v) Director’s loan provided by D O Paterson, principal loan plus fee
and interest, repaid on 7 January 2021.
(vi) Director’s loan provided by Famallon Pty Ltd of which K A Torpey
is a principal, principal loan plus fee and interest, repaid on 7
January 2021.
Key Management Personnel compensation
GROUP
2022
$
2021
$
62,500
45,000
21,737
26,808
68,404
26,808
12,500
-
-
-
292,086
280,545
Disclosure details relating to key management personnel including remuneration are provided in the
Remuneration Report contained within the Directors’ Report. Remuneration is entirely comprised of short-term
benefits (salaries and fees) totaling $709,347 (2021: $437,028).
NOTE 22: CONTINGENT LIABILITIES AND CONTINGENT ASSETS
As set out at Note 1, the company has incurred an income tax liability of $1,647,756 in respect of the year ended
30 June 2021 as a result of an amended income tax return to be lodged. It is possible that a shortfall tax penalty
may be imposed by the Australian Taxation Office but any penalty amount is yet to be assessed.
There are no other contingent liabilities or contingent assets for the year ended 30 June 2022 (2021: Nil).
NOTE 23: EMPLOYEE BENEFITS
Employees Share Acquisition Plan
The Shareholders approved at the last AGM changes to the Group’s Share Acquisition Plan. The Plan provides
for eligible participants to purchase shares in the Company tax effectively through salary sacrifice and for the
Board to issue shares to its employees as long term incentive bonuses.
NOTE 24: EVENTS SUBSEQUENT TO REPORTING DATE
On 2 September 2022, LMG executed the full contract with Tenova for the delivery of their spray roaster by May
2023 at a cost of $5.8 million.
There are no other significant events subsequent to reporting date which will affect the operations and state of
affairs of the Group.
46
LATROBE MAGNESIUM LIMITED and its Controlled Entities
ABN 52 009 173 611
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2022
NOTE 25: GOING CONCERN
For the year ended 30 June 2022 the Group reported a loss after tax of $3,205,891 (2021: profit after tax of
$120,256) and net cash outflows from operating activities of $3,739,064 (2021: inflows $5,886,707). The
Company has secured a construction loan facility of $23 million with an approximately five year loan term. It is
able to repay its trade creditors from its cash on hand, Regional Development Grant (when received) and GST
refund.
NOTE 26: PARENT ENTITY INFORMATION
As at, and throughout, the financial year ended 30 June 2022 the parent entity of the Group was Latrobe
Magnesium Limited.
Result of parent entity
Profit / (Loss) for the period
Other comprehensive income
Total comprehensive income for the period
Financial position of the financial entity at year end
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net Assets
Total equity of the parent entity comprising of
Issued capital
Reserves
Accumulated Losses
Total equity
2022
$
(3,205,891)
-
(3,205,891)
2021
$
120,256
-
120,256
18,746,171
18,702,823
37,448,994
3,209,950
9,150,090
12,369,040
3,619,785
3,557,779
11,060,850
14,680,635
4,589,850
8,147,630
22,768,359
4,221,410
48,527,484
33,943,635
7,383,847
(33,142,972)
382,240
(30,104,465)
22,768,359
4,221,410
Parent entity contingencies
The parent entity has no significant contingent liabilities.
Parent entity capital commitments for the acquisition of property, plant or equipment.
The parent entity has not entered any contractual commitments for the acquisition of property, plant or
equipment.
Parent entity guarantees in respect of the debts of the subsidiaries
The parent entity has entered into deed of guarantee with the effect that its subsidiaries guarantee the secured
loan detailed in Note 13, to Latrobe Magnesium Limited.
47
LATROBE MAGNESIUM LIMITED and its Controlled Entities
ABN 52 009 173 611
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2022
NOTE 27: AUDITOR’S REMUNERATION
Details of the amounts paid or payable to Nexia Sydney Audit Pty Limited or related entities for services provided
during the year are set out below.
Audit and Review of Financial Reports
Taxation and other services
GROUP
2022
$
65,000
11,000
2021
$
50,000
8,000
76,000
58,500
The Board of Directors ensure that the provision of the non-audit services is compatible with the general
standard of independence for auditors imposed by the Corporations Act 2001.
48
Independent Auditor’s Report to the Members of Latrobe Magnesium Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Latrobe Magnesium Limited (the Company and its subsidiaries (the
Group)), which comprises the consolidated statement of financial position as at 30 June 2022, the
consolidated statement of profit or loss and other comprehensive income, consolidated statement of
changes in equity and consolidated statement of cash flows for the year then ended, and notes to the
financial statements, including a summary of significant accounting policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act
2001, including:
i) giving a true and fair view of the Group’s financial position as at 30 June 2022 and of its financial
performance for the year then ended; and
ii) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the ‘auditor’s responsibilities for the audit of the financial report’ section
of our report. We are independent of the Group in accordance with the Corporations Act 2001 and the
ethical requirements of the Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics
for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit
of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given
to the directors of the Company, would be in the same terms if given to the directors as at the time of this
auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
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.
49
Key audit matter
How our audit addressed the key audit matter
Capitalised Development Costs ($6,764,000)
Our audit procedures included, amongst others:
Refer to note 10 to the financial statements
Included in the Group’s intangible assets are
capitalised development costs of $6,764,000 in
respect of the acquired in-process research and
development cost in relation to extracting
magnesium from fly ash.
The capitalised development costs are considered
to be a key audit matter as they represent 18% of
the total assets of the Group and the
determination of whether the costs can be
capitalised in accordance with AASB 138 -
Intangible Assets and/or if an impairment charge
is necessary involves significant estimates and
judgments made by management, including
estimating future cash flows.
▪ We assessed the development costs against
the requirements for capitalisation contained
in AASB 138 Intangible Assets;
▪ We reviewed the company’s management
prepared development asset “value in use”
impairment model and tested the capital
investment and chemical components
amounts included in the model for
consistency with the internal and external
data sources for these amounts;
▪ We assessed and challenged management's
key assumptions and estimates used to
determine the recoverable amount of the
assets, including those relating to output
pricing, input costs, growth assumptions and
discount rates;
▪ We performed sensitivity analysis in relation
to all the significant inputs to assess whether
the carrying value of the capitalised
development costs exceeded its recoverable
amount;
▪ We compared the net assets of the Group to
the Group’s market capitalisation;
▪ We tested the mathematical accuracy of the
underlying ‘value in-use’ calculations; and
▪ We assessed whether appropriate disclosure
regarding significant areas of uncertainty has
been made in the financial report.
Other information
The directors are responsible for the other information. The other information comprises the information
in Latrobe Magnesium Limited’s annual report for the year ended 30 June 2022, but does not include the
financial report and the auditor’s report thereon. Our opinion on the financial report does not cover the
other information and we do not express any form of assurance conclusion thereon. In connection with
our audit of the financial report, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial report or our
knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of the other
information we are required to report that fact. We have nothing to report in this regard.
Directors’ responsibility 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
50
report that gives a true and fair view and is free from material misstatement, whether due to fraud or
error.
In preparing the financial report, the directors are responsible for assessing the Group’s ability to continue
as a going concern, disclosing, as applicable, matters 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 responsibility 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 Australian
Auditing and Assurance Standards Board website at:
www.auasb.gov.au/admin/file/content102/c3/ar2_2020.pdf. This description forms part of our auditor’s
report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 14 to 15 of the directors’ Report for the year
ended 30 June 2022.
In our opinion, the Remuneration Report of Latrobe Magnesium Limited for the year ended 30 June 2022,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing
Standards.
Nexia Sydney Audit Pty Ltd
Stephen Fisher
Director
Dated: 29 September 2022
Sydney
51
LATROBE MAGNESIUM LIMITED and its Controlled Entities
ABN 52 009 173 611
ADDITIONAL INFORMATION
The following additional information is required by the Australian Securities Exchange Ltd in respect of listed
public companies only.
SHAREHOLDING
a.
Distribution of Shareholders as at 26 September 2022.
Range
Total holders
Units
% Units
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 Over
Total
239
673
1,354
3,854
1,540
7,660
94,009
2,519,857
11,038,910
158,428,969
1,438,744,870
1,610,826,615
0.01
0.16
0.69
9.83
89.31
100.00
b.
Unmarketable Parcels as at 26 September 2022.
Minimum Parcel Size
Holders
Units
Minimum $500.00 parcel at
$0.082 per unit
6,098
1,180
4,137,337
c.
Substantial Shareholders as at 26 September 2022.
No.
Shareholder Name
1 Rimotran Pty Ltd
57 Rimotran Pty Ltd
8 David Oliver Paterson
Total
2
Famallon Pty Ltd
87 Famallon Pty Ltd
9
Famallon Pty Ltd
Total
d.
Voting Rights
Number of Fully Paid
Ordinary Shares Held
Interest
(%)
107,025,522
4,045,000
21,467,762
132,538,285
80,194,358
2,852,239
19,915,956
102,962,553
6.64
0.25
1.33
8.22
4.98
0.18
1.24
6.40
The voting rights attached to each class of equity security are as follows:
Ordinary shares
(i)
At meetings of members each member is entitled to vote in person or by proxy or attorney or, in
the case of a member which is a body corporate, by representative duly authorized.
(ii) On a poll every member is entitled to vote and be present in person or by proxy or attorney or
representative duly authorized shall have one (1) vote for each fully paid share of which they are
a holder.
52
LATROBE MAGNESIUM LIMITED and its Controlled Entities
ABN 52 009 173 611
ADDITIONAL INFORMATION
e.
Twenty largest shareholders as at 26 September 2022.
Rank Top Shareholders
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
Rimotran Pty Ltd
Famallon Pty Ltd
Gibbs Plumbing Services Pty Ltd
CSH Engineering Pty Ltd
BNP Paribas Nominees Pty Ltd ACF Clearstream
Ableside Pty Ltd
JJ Wolfe Holdings Pty Limited
David Oliver Paterson
Famallon Pty Ltd
Murraysetter Pty Ltd
Citicorp Nominees Pty Limited
HSBC Custody Nominees (Australia) Limited
Diazill Pty Limited
Number of Fully Paid
Ordinary Shares Held
Holding
%
107,025,522
80,194,358
6.64
4.98
42,066,000
2.61
32,768,044
30,307,146
27,776,639
24,385,969
21,467,762
19,915,956
17,715,559
16,900,860
13,669,206
13,665,986
2.03
1.88
1.72
1.51
1.33
1.24
1.10
1.05
0.85
0.85
Mr Leslie Robert Knight + Mrs Heather Margery Knight + Mr
Timothy Paul Knight
12,000,000
0.74
RND Funding Pty Limited
Mrs Carmela Adele Murray
RND Funding Pty Limited
Mrs Robyn Ann Lys
Mr John Charles Catterson + Mrs Margaret Catterson
20
Thackeray Pty Ltd
Total
11,077,344
10,580,777
10,578,710
10,000,000
9,885,846
0.69
0.66
0.66
0.62
0.61
8,500,000
0.53
520,481,684
32.31
CORPORATE GOVERNANCE STATEMENT
The Corporate Governance Statement can be viewed at the following location on the Company’s website
https://www.latrobemagnesium.com/investor-center/governance-documents
53